Patent Case Digest

8/10/2019 Patent Case Digest

1/101 | P A T E N T C A S E S

CRESER PRECISION SYSTEMS, INC., petitioner, vs. COURT

OF APPEALS AND FLORO INTERNATIONAL CORP.,

respondents.

FACTS:

Private respondent is a domestic corporation engaged in

the manufacture, production, distribution and sale of

military armaments, munitions, airmunitions and other

similar materials. Respondent was granted by the Bureau

of Patents, Trademarks and Technology Transfer a LettersPatent No. UM-6938[3] covering an aerial fuze.

Private respondent, through its president, Mr. Gregory

Floro, Jr., discovered that petitioner submitted samples of

its patented aerial fuze to the Armed Forces of the

Philippines (AFP) for testing. He learned that petitioner was

claiming the aforesaid aerial fuze as its own and planning

to bid and manufacture the same commercially without

license or authority from private respondent.

ISSUE: Whether or not petitioner has cause of action

for infringement against private respondent,

HELD:

No, the petitioner not having any patent for the aerial fuze

which it claims to have invented and developed as

allegedly infringed by private respondent has no cause of

action for infringement.

Section 42 of R.A. 165, otherwise known as the Patent Law,

explicitly provides:

SECTION. 42. Civil action for infringement. Any patentee,

or anyone possessing any right, title or interest in and to

the patented invention, whose rights have been infringed,

may bring a civil action before the proper Court of FirstInstance (now Regional Trial court), to recover from the

infringer damages sustained by reason of the infringement

and to secure an injunction for the protection of his right. x

x x

Under the aforequoted law, only the patentee or his

successors-in-interest may file an action for infringement.

The phrase anyone possessing any right, title or interest in

and to the patented invention upon which petitioner

maintains its present suit, refers only to the patentees

successors-in-interest, assignees or grantees since actionsfor infringement of patent may be brought in the name of

the person or persons interested, whether as patentee,

assignees or grantees, of the exclusive right. Moreover,

there can be no infringement of a patent until a patent has

been issued, since whatever right one has to the invention

covered by the patent arises alone from the grant of

patent.[13] In short, a person or entity who has not been

granted letters patent over an invention and has not

acquired any right or title thereto either as assignee or as

licensee, has no cause of action for infringement because

the right to maintain an infringement suit depends on

existence of the patent.

Petitioner admits it has no patent over its aerial fu

Therefore, it has no legal basis or cause of action

institute the petition for injunction and damages ari

from the alleged infringement by private respond

While petitioner claims to be the first inventor of the ae

fuze, still it has no right of property over the same u

which it can maintain a suit unless it obtains a pattherefor. Under American jurisprudence, and inventor

no common-law right to a monopoly of his invention.

has the right to make, use and vend his own invention,

if he voluntarily discloses it, such as by offering it for s

the world is free to copy and use it with impunity. A pat

however, gives the inventor the right to exclude all oth

As a patentee, he has the exclusive right of making, u

or selling the invention.

Further, the remedy of declaratory judgment or injunc

suit on patent invalidity relied upon by petitioner can

be likened to the civil action for infringement under Sec

42 of the Patent Law. The reason for this is that the

remedy is available only to the patent holder or

successors-in-interest. Thus, anyone who has no pat

over an invention but claims to have a right or inte

thereto can not file an action for declaratory judgmen

injunctive suit which is not recognized in this jurisdict

Said person, however, is not left without any remedy.

can, under Section 28 of the aforementioned law, fi

petition for cancellation of the patent within three

years from the publication of said patent with the Direc

of Patents and raise as ground therefor that the perso

whom the patent was issued is not the true and actinventor. Hence, petitioners remedy is not to file an ac

for injunction or infringement but to file a petition

cancellation of private respondent patent. Petitio

however failed to do so. As such, it can not now assai

impugn the validity of the private respondents let

patent by claiming that it is the true and actual invento

the aerial fuze.

In the case of Aguas vs. De Leon, we stated that:

The validity of the patent issued by the Philippine PatOffice in favor of the private respondent and the quest

over the investments, novelty and usefulness of

improved process therein specified and described

matters which are better determined by the Philipp

patent Office, composed of experts in their field, have

the issuance of the patent in question, accepted

thinness of the private respondents new tiles a

discovery. There is a presumption that the Philipp

Patent Office has correctly determined the patentabilit

the improvement by the private respondent of the pro

in question.


2/102 | P A T E N T C A S E S

ROBERTO L. DEL ROSARIO, petitioner, vs. COURT OF

APPEALS AND JANITO CORPORATION, respondents.

FACTS:

Petitioner filed a complaint for patent infringement against

private respondent Janito Corporation. Roberto L. del

Rosario alleged that he was a patentee of an audioequipment and improved audio equipment commonly

known as the sing-along system or karaoke. He described

his sing-along system as a handy multi-purpose compact

machine which incorporates an amplifier speaker, one or

two tape mechanisms, optional tuner or radio and

microphone mixer with features to enhance ones voice,

such as the echo or reverb to stimulate an opera hall or a

studio sound, with the whole system enclosed in one

cabinet casing.

Petitioner learned that private respondent was

manufacturing a sing-along system bearing the trademark

miyata or miyata karaoke substantially similar if not

identical to the sing-along system covered by the patents

issued in his favor.

ISSUE: Whether or not there was patent infringement?

HELD:

Yes, both petitioners and respondents models involve

substantially the same modes of operation and produce

substantially the same if not identical results when used.

It is elementary that a patent may be infringed where the

essential or substantial features of the patented invention

are taken or appropriated, or the device, machine or othersubject matter alleged to infringe is substantially identical

with the patented invention. In order to infringe a patent,

a machine or device must perform the same function, or

accomplish the same result by identical or substantially

identical means and the principle or mode of operation

must be substantially the same.

It may be noted that respondent corporation failed to

present before the trial court a clear, competent and

reliable comparison between its own model and that of

petitioner, and disregarded completely petitioners UtilityModel No. 6237 which improved on his first patented

model. Notwithstanding the differences cited by

respondent corporation, it did not refute and disprove the

allegations of petitioner before the trial court that: (a) both

are used by a singer to sing and amplify his voice; (b) both

are used to sing with a minus-one or multiplex tapes, or

that both are used to play minus-one or standard cassette

tapes for singing or for listening to; (c) both are used to

sing with a minus-one tape and multiplex tape and to

record the singing and the accompaniment; (d) both are

used to sing with live accompaniment and to record the

same; (e) both are used to enhance the voice of the sin

using echo effect, treble, bass and other controls; (g) b

are equipped with cassette tape decks which are insta

with one being used for playback and the other,

recording the singer and the accompaniment, and b

may also be used to record a speakers voice

instrumental playing, like the guitar and other instrume

(h) both are encased in a box-like cabinets; and, (i) b

can be used with one or more microphones.

Utility modelThe Patent Law expressly acknowledges that any

model of implements or tools of any industrial prod

even if not possessed of the quality of invention but w

is of practical utility is entitled to a patent for utility mo

Here, there is no dispute that the letters patent issued

petitioner are for utility models of audio equipment.

In issuing, reissuing or withholding patents and extensi

thereof, the Director of Patents determines whether

patent is new and whether the machine or device is

proper subject of patent. In passing on an application,

Director decides not only questions of law but

questions of fact, i.e. whether there has been a prior pu

use or sale of the article sought to be patented. Wh

petitioner introduces the patent in evidence, if it is in

form, it affords a prima facie presumption of

correctness and validity. The decision of the Directo

Patents in granting the patent is always presumed to

correct, and the burden then shifts to respondent

overcome this presumption by competent evidence.

Under Sec. 55 of The Patent Law a utility model shall no

considered new if before the application for a patenhas been publicly known or publicly used in this country

has been described in a printed publication or publicat

circulated within the country, or if it is substantially sim

to any other utility model so known, used or descri

within the country. Respondent corporation failed

present before the trial court competent evidence that

utility models covered by the Letters Patents issued

petitioner were not new.

ANGELITA MANZANO, petitioner, vs. COURT OF APPEAand MELECIA MADOLARIA, as Assignor to NEW UNIT

FOUNDRY MANUFACTURING CORPORATI

respondents.

FACTS:

Petitioner Angelita Manzano filed with the Philipp

Patent Office an action for the cancellation of Let

Patent No. UM-4609 for a gas burner registered in

name of respondent Melecia Madolaria who subseque

assigned the letters patent to New United Foundry

Manufacturing Corporation (UNITED FOUNDRY,


3/103 | P A T E N T C A S E S

brevity). Petitioner alleged that (a) the utility model

covered by the letters patent, in this case, an LPG gas

burner, was not inventive, new or useful; (b) the

specification of the letters patent did not comply with the

requirements of Sec. 14, RA No. 165, as amended; (c)

respondent Melecia Madolaria was not the original, true

and actual inventor nor did she derive her rights from the

original, true and actual inventor of the utility model

covered by the letters patent; and, (d) the letters patent

was secured by means of fraud or misrepresentation. Insupport of her petition for cancellation petitioner further

alleged that (a) the utility model covered by the letters

patent of respondent had been known or used by others in

the Philippines for more than one (1) year before she filed

her application for letters patent on 9 December 1979; (b)

the products which were produced in accordance with the

utility model covered by the letters patent had been in

public use or on sale in the Philippines for more than one

(1) year before the application for patent therefor was

filed.

ISSUE: cancellation

HELD:

Section 7 of RA No. 165, as amended, which is the law on

patents, expressly provides -

Sec. 7. Inventions patentable. Any invention of a new and

useful machine, manufactured product or substance,

process or an improvement of any of the foregoing, shall

be patentable.

Further, Sec. 55 of the same law provides -

Sec. 55. Design patents and patents for utility models. - (a)Any new, original and ornamental design for an article of

manufacture and (b) any new model of implements or

tools or of any industrial product or of part of the same,

which does not possess the quality of invention, but which

is of practical utility by reason of its form, configuration,

construction or composition, may be protected by the

author thereof, the former by a patent for a design and the

latter by a patent for a utility model, in the same manner

and subject to the same provisions and requirements as

relate to patents for inventions insofar as they are

applicable except as otherwise herein provided.

The element of novelty is an essential requisite of the

patentability of an invention or discovery. If a device or

process has been known or used by others prior to its

invention or discovery by the applicant, an application for a

patent therefor should be denied; and if the application

has been granted, the court, in a judicial proceeding in

which the validity of the patent is drawn in question, will

hold it void and ineffective. It has been repeatedly held

that an invention must possess the essential elements of

novelty, originality and precedence, and for the patentee

to be entitled to the protection the invention must be

to the world.

In issuing Letters Patent No. UM-4609 to Mel

Madolaria for an LPG Burner on 22 July 1981,

Philippine Patent Office found her invention novel

patentable. The issuance of such patent create

presumption which yields only to clear and cog

evidence that the patentee was the original and

inventor. The burden of proving want of novelty is on who avers it and the burden is a heavy one which is

only by clear and satisfactory proof which overcomes ev

reasonable doubt. Hence, a utility model shall not

considered new if before the application for a paten

has been publicly known or publicly used in this country

has been described in a printed publication or publicat

circulated within the country, or if it is substantially sim

to any other utility model so known, used or descri

within the country.

As found by the Director of Patents, the standard

evidence sufficient to overcome the presumption

legality of the issuance of UM-4609 to respond

Madolaria was not legally met by petitioner in her act

for the cancellation of the patent. Thus the Directo

Patents explained his reasons for the denial of the peti

to cancel private respondents patent -

Scrutiny of Exhs. D and E readily reveals that the ut

model (LPG Burner) is not anticipated. Not one of

various pictorial representations of burners clearly

convincingly show that the device presented therei

identical or substantially identical in construction with

aforesaid utility model. It is relevant and material to s

that in determining whether novelty or newnessnegatived by any prior art, only one item of the prior

may be used at a time. For anticipation to occur, the p

art must show that each element is found either expre

or described or under principles of inherency in a sin

prior art reference or that the claimed invention

probably known in a single prior art device or pract

(Kalman v. Kimberly Clark, 218 USPQ 781, 789)

Even assuming gratia arguendi that the afore

brochures do depict clearly on all fours each and ev

element of the patented gas burner device so that

prior art and the said patented device become identalthough in truth they are not, they cannot serve

anticipatory bars for the reason that they are undated.

dates when they were distributed to the public were

indicated and, therefore, they are useless prior

references.

Furthermore, and more significantly, the model mar

Exh. K does not show whether or not it w

manufactured and/or cast before the application for

issuance of patent for the LPG burner was filed by Mele

Madolaria.


4/104 | P A T E N T C A S E S

ROMA DRUG and ROMEO RODRIGUEZ, as Proprietor of

ROMA DRUG, Petitioners,

vs.

THE REGIONAL TRIAL COURT OF GUAGUA, PAMPANGA,THE PROVINCIAL PROSECUTOR OF PAMPANGA, BUREAU

OF FOOD & DRUGS (BFAD) and GLAXO SMITHKLINE,

Respondents.

FACTS:

A team composed of the National Bureau of Investigation

(NBI) operatives and inspectors of the Bureau of Food and

Drugs (BFAD) conducted a raid on petitioner Roma Drug, a

duly registered sole proprietorship of petitioner Romeo

Rodriguez (Rodriguez) operating a drug store located at

San Matias, Guagua, Pampanga. The raid was conducted

pursuant to a search warrant issued by the Regional Trial

Court (RTC), Branch 57, Angeles City. The raiding team

seized several imported medicines, including Augmentin

(375mg.) tablets, Orbenin (500mg.) capsules, Amoxil

(250mg.) capsules and Ampiclox (500mg.). It appears that

Roma Drug is one of six drug stores which were raided on

or around the same time upon the request of SmithKline

Beecham Research Limited (SmithKline), a duly registered

corporation which is the local distributor of pharmaceutical

products manufactured by its parent London-based

corporation. The local SmithKline has since merged with

Glaxo Wellcome Phil. Inc to form Glaxo SmithKline, privaterespondent in this case. The seized medicines, which were

manufactured by SmithKline, were imported directly from

abroad and not purchased through the local SmithKline,

the authorized Philippine distributor of these products

ISSUE:

HELD:

Section 7 of Rep. Act No. 9502 amends Section 72 of the

Intellectual Property Code in that the later law

unequivocally grants third persons the right to import

drugs or medicines whose patent were registered in the

Philippines by the owner of the product:

Sec. 7. Section 72 of Republic Act No. 8293, otherwise

known as the Intellectual Property Code of the Philippines,

is hereby amended to read as follows:

"Sec. 72. Limitations of Patent Rights. The owner of a

patent has no right to prevent third parties from

performing, without his authorization, the acts referred to

in Section 71 hereof in the following circumstances:

"72.1. Using a patented product which has been put on the

market in the Philippines by the owner of the product, or

with his express consent, insofar as such use is performed

after that product has been so put on the said mar

Provided, That, with regard to drugs and medicines,

limitation on patent rights shall apply after a drug

medicine has been introduced in the Philippines

anywhere else in the world by the patent owner, or by

party authorized to use the invention: Provided,

further, That the right to import the drugs and medic

contemplated in this section shall be available to

government agency or any private third party;

"72.2. Where the act is done privately and on a n

commercial scale or for a non-commercial purpo

Provided, That it does not significantly prejudice

economic interests of the owner of the patent;

"72.3. Where the act consists of making or using exclusi

for experimental use of the invention for scien

purposes or educational purposes and such other activi

directly related to such scientific or educatio

experimental use;

"72.4. In the case of drugs and medicines, where the

includes testing, using, making or selling the inven

including any data related thereto, solely for purpo

reasonably related to the development and submissio

information and issuance of approvals by governm

regulatory agencies required under any law of

Philippines or of another country that regulates

manufacture, construction, use or sale of any prod

Provided, That, in order to protect the data submitted

the original patent holder from unfair commercial

provided in Article 39.3 of the Agreement on Trade-Rela

Aspects of Intellectual Property Rights (TRIPS Agreeme

the Intellectual Property Office, in consultation with appropriate government agencies, shall issue

appropriate rules and regulations necessary therein

later than one hundred twenty (120) days after

enactment of this law;

"72.5. Where the act consists of the preparation

individual cases, in a pharmacy or by a med

professional, of a medicine in accordance with a med

shall apply after a drug or medicine has been introduce

the Philippines or anywhere else in the world by the pat

owner, or by any party authorized to use the invent

Provided, further, That the right to import the drugs medicines contemplated in this section shall be availabl

any government agency or any private third party; xxx7

The unqualified right of private third parties such

petitioner to import or possess "unregistered impor

drugs" in the Philippines is further confirmed by

"Implementing Rules to Republic Act No. 95

promulgated on 4 November 2008.8 The relev

provisions thereof read:

Rule 9. Limitations on Patent Rights. The owner of a pat

has no right to prevent third parties from perform


5/105 | P A T E N T C A S E S

without his authorization, the acts referred to in Section 71

of the IP Code as enumerated hereunder:

(i) Introduction in the Philippines or Anywhere Else in the

World.

Using a patented product which has been put on the

market in the Philippines by the owner of the product, or

with his express consent, insofar as such use is performed

after that product has been so put on the said market:

Provided, That, with regard to drugs and medicines, the

limitation on patent rights shall apply after a drug ormedicine has been introduced in the Philippines or

anywhere else in the world by the patent owner, or by any

party authorized to use the invention: Provided, further,

That the right to import the drugs and medicines

contemplated in this section shall be available to any

government agency or any private third party.

The drugs and medicines are deemed introduced when

they have been sold or offered for sale anywhere else in

the world. (n)

It may be that Rep. Act No. 9502 did not expressly repeal

any provision of the SLCD. However, it is clear that the

SLCOs classification of "unregistered imported drugs" as

"counterfeit drugs," and of corresponding criminal

penalties therefore are irreconcilably in the imposition

conflict with Rep. Act No. 9502 since the latter indubitably

grants private third persons the unqualified right to import

or otherwise use such drugs. Where a statute of later date,

such as Rep. Act No. 9502, clearly reveals an intention on

the part of the legislature to abrogate a prior act on the

subject that intention must be given effect. When a

subsequent enactment covering a field of operation

coterminus with a prior statute cannot by any reasonable

construction be given effect while the prior law remains inoperative existence because of irreconcilable conflict

between the two acts, the latest legislative expression

prevails and the prior law yields to the extent of the

conflict. Irreconcilable inconsistency between two laws

embracing the same subject may exist when the later law

nullifies the reason or purpose of the earlier act, so that

the latter loses all meaning and function. Legis posteriors

priores contrarias abrogant.

For the reasons above-stated, the prosecution of petitioner

is no longer warranted and the quested writ of prohibitionshould accordingly be issued.

SMITH KLINE BECKMAN CORPORATION, petitioner, vs.

THE HONORABLE COURT OF APPEALS and TRYCO

PHARMA CORPORATION,respondents.

FACTS:

Smith Kline Beckman Corporation (petitioner), a

corporation existing by virtue of the laws of the state of

Pennsylvania, United States of America (U.S.) and licensed

to do business in the Philippines, filed as assignee, before

the Philippine Patent Office (now Bureau of Pate

Trademarks and Technology Transfer) an application

patent over an invention entitled Methods

Compositions for Producing Biphasic Parasiticide Acti

Using Methyl 5 Propylthio-2-Benzimidazole Carbamate.

The letters patent provides in its claims that the paten

invention consisted of a new compound named meth

propylthio-2-benzimidazole carbamate and the method

compositions utilizing the compound as an ac

ingredient in fighting infections caused by gastrointestparasites and lungworms in animals such as swine, she

cattle, goats, horses, and even pet animals.

Tryco Pharma Corporation (private respondent) is

domestic corporation that manufactures, distributes

sells veterinary products including Impregon, a drug t

has Albendazolefor its active ingredient and is claimed

be effective against gastro-intestinal roundwor

lungworms, tapeworms and fluke infestation in caraba

cattle and goats.

Petitioner sued private respondent for infringement

patent and unfair competition.

ISSUE:

Whether or not Albendazole, the active ingredient

trycos Impregon drug, is included in petitioners let

patent no. 14561, and that consequently tryco

answerable for patent infringement.

Whether private respondent committed pat

infringement to the prejudice of petitioner.

HELD: The burden of proof to substantiate a charge

patent infringement rests on the plaintiff. In the case

bar, petitioners evidence consists primarily of its Let

Patent No. 14561, and the testimony of Dr. Orinion,general manager in the Philippines for its Animal He

Products Division, by which it sought to show that

patent for the compound methyl 5 propylthio

benzimidazole carbamate also covers the substa

Albendazole.

From a reading of the 9 claims of Letters Patent No. 14

in relation to the other portions thereof, no mentio

made of the compound Albendazole. All that the cla

disclose are: the covered invention, that is, the compo

methyl 5 propylthio-2-benzimidazole carbamate; compounds being anthelmintic but nontoxic for animal

its ability to destroy parasites without harming the h

animals; and the patented methods, compositions

preparations involving the compound to maximize

efficacy against certain kinds of parasites infec

specified animals.

When the language of its claims is clear and distinct,

patentee is bound thereby and may not claim anyth

beyond them. And so are the courts bound which may

add to or detract from the claims matters not expresse


6/106 | P A T E N T C A S E S

necessarily implied, nor may they enlarge the patent

beyond the scope of that which the inventor claimed and

the patent office allowed, even if the patentee may have

been entitled to something more than the words it had

chosen would include.

It bears stressing that the mere absence of the word

Albendazole in Letters Patent No. 14561 is not

determinative of Albendazoles non-inclusion in the claims

of the patent. While Albendazole is admittedly a chemicalcompound that exists by a name different from that

covered in petitioners letters patent, the language of

Letter Patent No. 14561 fails to yield anything at all

regarding Albendazole. And no extrinsic evidence had

been adduced to prove that Albendazole inheres in

petitioners patent in spite of its omission therefrom or

that the meaning of the claims of the patent embraces the

same.

While petitioner concedes that the mere literal wordings of

its patent cannot establish private respondents

infringement, it urges this Court to apply the doctrine of

equivalents.

The doctrine of equivalents provides that an infringement

also takes place when a device appropriates a prior

invention by incorporating its innovative concept and,

although with some modification and change, performs

substantially the same function in substantially the same

way to achieve substantially the same result. Yet again, a

scrutiny of petitioners evidence fails to convince this Court

of the substantial sameness of petitioners patented

compound and Albendazole. While both compounds havethe effect of neutralizing parasites in animals, identity of

result does not amount to infringement of patent unless

Albendazole operates in substantially the same way or by

substantially the same means as the patented compound,

even though it performs the same function and achieves

the same result. In other words, the principle or mode of

operation must be the same or substantially the same.

The doctrine of equivalents thus requires satisfaction of

the function-means-and-result test, the patentee having

the burden to show that all three components of suchequivalency test are met.

As stated early on, petitioners evidence fails to explain

how Albendazole is in every essential detail identical to

methyl 5 propylthio-2-benzimidazole carbamate. Apart

from the fact that Albendazole is an anthelmintic agent like

methyl 5 propylthio-2-benzimidazole carbamate, nothing

more is asserted and accordingly substantiated regarding

the method or means by which Albendazole weeds out

parasites in animals, thus giving no information on whether

that method is substantially the same as the manner by

which petitioners compound works. The testimony of

Orinion lends no support to petitioners cause, he

having been presented or qualified as an expert witn

who has the knowledge or expertise on the matter

chemical compounds.

As for the concept of divisional applications proffered

petitioner, it comes into play when two or more inventi

are claimed in a single application but are of such a nat

that a single patent may not be issued for them. applicant thus is required to divide, that is, to limit

claims to whichever invention he may elect, whereas th

inventions not elected may be made the subject

separate applications which are called divisio

applications.What this only means is that petition

methyl 5 propylthio-2-benzimidazole carbamate is

invention distinct from the other inventions claimed in

original application divided out, Albendazole being on

those other inventions. Otherwise, methyl 5 propylthi

benzimidazole carbamate would not have been the sub

of a divisional application if a single patent could have b

issued for it as well as Albendazole.

SMITH KLINE & FRENCH LABORATORIES, LTD. plain

appellee, vs. COURT OF APPEALS and DANLEX RESEAR

LABORATORIES, INC., defendant-appellant.

FACTS:

Petitioner is the assignee of Letters Patent No. 12

covering the pharmaceutical product Cimetidine, wh

relates to derivatives of heterocyclicthio or lower alkox

amino lower alkyl thiourea, ureas or guanadines. S

patent was issued by the BPTTT to Graham John Dura

John Collin Emmett and Robin Genellin. Privrespondent filed with the BPTTT a petition for compuls

license to manufacture and produce its own brand

medicines using Cimetidine. Private respondent invo

Section 34 (1) (e) of Republic Act No. 165 (the Patent L

the law then governing patents, which states that

application for the grant of a compulsory license unde

particular patent may be filed with the BPTTT at any t

after the lapse of two (2) years from the date of gran

such patent, if the patented invention or article relate

food or medicine, or manufactured substances which

be used as food or medicine, or is necessary for puhealth or public safety. The petition for compulsory lice

stated that Cimetidine is useful as an antihistamine an

the treatment of ulcers, and that private responden

capable of using the patented product in the manufact

of a useful product.

Petitioner opposed the petition for compulsory lice

arguing that the private respondent had no cause of ac

and failed to allege how it intended to work the paten

product.

ISSUE:

HELD:


7/107 | P A T E N T C A S E S

The petition has no merit.

The Court of Appeals did not err in affirming the validity of

the grant by the BPTTT of a compulsory license to private

respondent for the use, manufacture and sale of

Cimetidine. The said grant is in accord with Section 34 of

the Patent Law which provides:

Grounds for Compulsory Licensing.(1) Any person mayapply to the Director for the grant of a license under a

particular patent at any time after the expiration of two

years from the date of the grant of the patent, under any

of the following circumstances:

(a) If the patented invention is not being worked within the

Philippines on a commercial scale, although capable of

being so worked, without satisfactory reason;

(b) If the demand of the patented article in the Philippines

is not being met to an adequate extent and on reasonable

terms;

(c) If, by reason of refusal of the patentee to grant a license

or licenses on reasonable terms, or by reason of the

conditions attached by the patentee to licensee or to the

purchase, lease or use of the patented article or working of

the patented process or machine for production, the

establishment of any new trade or industry in the

Philippines is prevented, or the trade or industry therein is

unduly restrained;

(d) If the working of the invention within the country isbeing prevented or hindered by the importation of the

patented article;

(e) If the patented invention or article relates to food or

medicine or manufactured substances which can be used

as food or medicine, or is necessary for public health or

public safety.

(2) In any of the above cases, a compulsory license shall be

granted to the petitioner provided that he has proved his

capability to work the patented product or to make use ofthe patented product in the manufacture of a useful

product, or to employ the patented process.

(3) The term worked or working as used in this section

means the manufacture and sale of the patented article, of

patented machine, or the application of the patented

process for production, in or by means of a definite and

substantial establishment or organization in the Philippines

and on a scale which is reasonable and adequate under the

circumstances. Importation shall not constitute working.

(Emphasis supplied.)

The grant of the compulsory license satisfies

requirements of the foregoing provision. More than

years have passed since the patent for Cimetidine

issued to petitioner and its predecessors-in-interest,

the compulsory license applied for by private responden

for the use, manufacture and sale of a medicinal prod

Furthermore, both the appellate court and the BP

found that private respondent had the capability to w

Cimetidine or to make use thereof in the manufacture useful product.

Petitioners contention that Section 34 of the Patent

contravenes the Paris Convention because the for

provides for grounds for the grant of a compulsory lice

in addition to those found in the latter, is likew

incorrect. Article 5, Section A(2) of the Paris Conven

states:

Each country of the union shall have the right to t

legislative measures providing for the grant of compuls

licenses to prevent the abuses which might result from

exercise of the exclusive rights conferred by the patent

example, failure to work.

This issue has already been resolved by this Court in

case of Smith Kline & French Laboratories, Ltd. vs. Cour

Appeals,[27] where petitioner herein questioned

BPTTTs grant of a compulsory license to Doct

Pharmaceuticals, Inc. also for the manufacture, use

sale of Cimetidine. We found no inconsistency betw

Section 34 and the Paris Convention and held that:

It is thus clear that Section A(2) of Article 5 [of the P

Convention] unequivocally and explicitly respects the r

of member countries to adopt legislative measures

provide for the grant of compulsory licenses to prev

abuses which might result from the exercise of

exclusive rights conferred by the patent. An exam

provided of possible abuses is failure to work; howe

as such, is merely supplied by way of an example, it is p

that the treaty does not preclude the inclusion of ot

forms of categories of abuses.

Section 34 of R.A. No. 165, even if the Act was enac

prior to the Philippines adhesion to the Convention,

well within the aforequoted provisions of Article 5 of

Paris Convention. In the explanatory note of Bill No. 1

which eventually became R.A. No. 165, the legisla

intent in the grant of a compulsory license was not onl

afford others an opportunity to provide the public with

quantity of the patented product, but also to prevent

growth of monopolies [Congressional Record, House

Representatives, 12 May 957, 998]. Certainly, the gro

of monopolies was among the abuses which Section


8/108 | P A T E N T C A S E S

Article 5 of the Convention foresaw, and which our

Congress likewise wished to prevent in enacting R.A. No.

165.[28] (Emphasis supplied.)

Neither does the Court agree with petitioner that the grant

of the compulsory license to private respondent was

erroneous because the same would lead the public to think

that the Cimetidine is the invention of private respondent

and not of petitioner. Such fears are unfounded since, as

the appellate court pointed out in the assailed decision, bythe grant of the compulsory license, private respondent as

licensee explicitly acknowledges that petitioner is the

source of the patented product Cimetidine. Even assuming

arguendo that such confusion may indeed occur, the

disadvantage is far outweighed by the benefits resulting

from the grant of the compulsory license, such as an

increased supply of pharmaceutical products containing

Cimetidine, and the consequent reduction in the prices

thereof.

There is likewise no basis for the allegation that the grant

of a compulsory license to private respondent results in the

deprivation of petitioners property without just

compensation. It must be pointed out that as owner of

Letters Patent No. 12207, petitioner had already enjoyed

exclusive rights to manufacture, use and sell Cimetidine for

at least two years from its grant in November, 1978. Even

if other entities like private respondent are subsequently

allowed to manufacture, use and sell the patented

invention by virtue of a compulsory license, petitioner as

owner of the patent would still receive remuneration for

the use of such product in the form of royalties.

Anent the perceived inadequacy of the royalty awarded to

petitioner, the Court of Appeals correctly held that the rateof 2.5% of net wholesale price fixed by the Director of the

BPTTT is in accord with the Patent Law. Said law provides:

Sec. 35. Grant of License.(1) If the Director finds that a

case for the grant of a license under Section 34 hereof has

been made out, he shall, within one hundred eighty days

from the date the petition was filed, order the grant of an

appropriate license. The order shall state the terms and

conditions of the license which he himself must fix in

default of an agreement on the matter manifested or

submitted by the parties during the hearing.

Section 35-B. Terms and Conditions of Compulsory License. (1) A compulsory license shall be non-exclusive, but this

shall be without prejudice to the licensees right to oppose

an application for such a new license.

(2) The terms and conditions of a compulsory license, fixed

in accordance with Section 35, may contain obligations and

restrictions both for the licensee and for the registered

owner of the patent.

(3) A compulsory license shall only be granted subject to

the payment of adequate royalties commensurate with the

extent to which the invention is worked. However, royalty

payments shall not exceed five percent (5%) of the net

wholesale price (as defined in Section 33-A) of the prod

manufactured under the license. If the product, substa

or process subject of the compulsory license is involve

an industrial project approved by the Board

Investments, the royalty payable to the patentee

patentees shall not exceed three percent (3%) of the

wholesale price (as defined in Section 33-A) of

patented commodity/and or commodity manufactu

under the patented process; the same rate of royalty s

be paid whenever two or more patents are involved; wroyalty shall be distributed to the patentees in ra

proportional to the extent of commercial use by

licensee giving preferential values to the holder of

oldest subsisting product patent.

Under the aforequoted provisions, in the absence of

agreement between the parties with respect to

compulsory license, the Director of the BPTTT may fix

terms thereof, including the rate of the royalty payable

the licensor. The law explicitly provides that the rate

royalty shall not exceed five percent (5%) of the

wholesale price.

SMITH KLINE & FRENCH LABORATORIES, LTD., petition

vs. COURT OF APPEALS, BUREAU OF PATEN

TRADEMARKS AND TECHNOLOGY TRANSFER

DOCTORS PHARMACEUTICALS, INC. respondents.

FACTS:

Petitioner is a foreign corporation with principal offic

Welwyn Garden City, England. It owns Philippine Let

Patent No. 12207 issued by the BPTTT for the patent of

drug Cimetidine.

Private respondent is a domestic corporation engagedthe business of manufacturing and distribu

pharmaceutical products. It filed a petition for compuls

licensing with the BPTTT for authorization to manufact

its own brand of medicine from the drug Cimetidine and

market the resulting product in the Philippines.

petition was filed pursuant to the provisions of Section

of Republic Act No. 165 (An Act Creating a Patent Of

Prescribing Its Powers and Duties, Regulating the Issua

of Patents, and Appropriating Funds Therefor), wh

provides for the compulsory licensing of a particular pat

after the expiration of two years from the grant of latter if the patented invention relates to, inter

medicine or that which is necessary for public health

public safety.

ISSUE:

HELD:

petitioner invokes Article 5 of the Paris Convention for

Protection of Industrial Property,*8+ or Paris Conventio

for short, of which the Philippines became a party ther

only in 1965.[9] Pertinent portions of said Article 5, Sect

A, provide:


9/109 | P A T E N T C A S E S

A. x x x

(2) Each country of the union shall have the right to

take legislative measures providing for the grant of

compulsory licenses to prevent the abuses which might

result from the exercise of the exclusive rights conferred by

the patent, for example, failure to work.

x x x

(4) A compulsory license may not be applied for on the

ground of failure to work or insufficient working before the

expiration of a period of four years from the date of filing

of the patent application or three years from the date of

the grant of the patent, whichever period expires last; it

shall be refused if the patentee justifies his inaction by

legitimate reasons. Such a compulsory license shall be

non-exclusive and shall not be transferable, even in the

form of the grant of a sub-license, except with that part of

the enterprise or goodwill which exploits such license.

It is thus clear that Section A(2) of Article 5 above

unequivocally and explicitly respects the right of member

countries to adopt legislative measures to provide for the

grant of compulsory licenses to prevent abuses which

might result from the exercise of the exclusive rights

conferred by the patent. An example provided of possible

abuses is "failure to work;" however, as such is merely

supplied by way of an example, it is plain that the treaty

does not preclude the inclusion of other forms or

categories of abuses.

Section 34 of R.A. No. 165, even if the Act was enactedprior to the Philippines adhesion to the Convention, fits

well within the aforequoted provisions of Article 5 of the

Paris Convention. In the explanatory note of Bill No. 1156

which eventually became R.A. No. 165, the legislative

intent in the grant of a compulsory license was not only to

afford others an opportunity to provide the public with the

quantity of the patented product, but also to prevent the

growth of monopolies. Certainly, the growth of monopolies

was among the abuses which Section A, Article 5 of the

Convention foresaw, and which our Congress likewise

wished to prevent in enacting R.A. No. 165.

R.A. No. 165, as amended by Presidential Decree No. 1263,

promulgated on 14 December 1977, provides for a system

of compulsory licensing under a particular patent. Sections

34 and 35, Article Two, of Chapter VIII read as follows:

SEC. 34. Grounds for Compulsory Licensing. -- (1) Any

person may apply to the Director for the grant of a license

under a particular patent at any time after the expiration of

two years from the date of the grant of the patent, under

any of the following circumstances:

(a) If the patented invention is not being wor

within the Philippines on a commercial scale, altho

capable of being so worked, without satisfactory reason

(b) If the demand for the patented article in

Philippines is not being met to an adequate extent and

reasonable terms;

(c) If, by reason of refusal of the patentee to gralicense or licenses on reasonable terms, or by reason of

conditions attached by the patentee to licensee or to

purchase, lease or use of the patented article or workin

the patented process or machine for production,

establishment of any new trade or industry in

Philippines is prevented, or the trade or industry there

unduly restrained;

(d) If the working of the invention within the cou

is being prevented or hindered by the importation of

patented article; or

(e) If the patented invention or article relates to f

or medicine or manufactured products or substances w

can be used as food or medicine, or is necessary for pu

health or public safety.

(2) In any of the above cases, a compulsory license s

be granted to the petitioner provided that he has pro

his capability to work the patented product or to make

of the patented product in the manufacture of a us

product, or to employ the patented process.

(3) The term "worked" or "working" as used in

section means the manufacture and sale of the paten

article, of the patented machine, or the application of

patented process for production, in or by means o

definite and substantial establishment or organization

the Philippines and on a scale which is reasonable

adequate under the circumstances. Importation shall

constitute "working."

x x x

SEC. 35. Grant of License. -- (1) If the Director finds th

case for the grant is a license under Section 34 hereof

been made out, he shall, within one hundred eighty d

from the date the petition was filed, order the grant o

appropriate license. The order shall state the terms

conditions of the license which he himself must fix

default of an agreement on the matter manifested

submitted by the parties during the hearing.

(2) A compulsory license sought under Section 34-B s

be issued within one hundred twenty days from the f


10/1010 | P A T E N T C A S E S

of the proponent's application or receipt of the Board of

Investment's endorsement.

The case at bar refers more particularly to subparagraph

(e) of paragraph 1 of Section 34 -- the patented invention

or article relates to food or medicine or manufactured

products or substances which can be used as food or

medicine, or is necessary for public health or public safety.

And it may not be doubted that the aforequoted provisions

of R.A. No. 165, as amended, are not in derogation of, butare consistent with, the recognized right of treaty

signatories under Article 5, Section A(2) of the Paris

Convention.

Parenthetically, it must be noted that paragraph (4) of

Section A, Article 5 of the Paris Convention setting time

limitations in the application for a compulsory license

refers only to an instance where the ground therefor is

"failure to work or insufficient working," and not to any

ground or circumstance as the treaty signatories may

reasonably determine.

Neither may petitioner validly invoke what it designates as

the GATT Treaty, Uruguay Round. This act is better known

as the Uruguay Final Act signed for the Philippines on 15

April 1994 by Trade and Industry Secretary Rizalino

Navarro. Forming integral parts thereof are the Agreement

Establishing the World Trade Organization, the Ministerial

Declarations and Decisions, and the Understanding on

Commitments in Financial Services.The Agreement

establishing the World Trade Organization includes various

agreements and associated legal instruments. It was only

on 14 December 1994 that the Philippine Senate, in theexercise of its power under Section 21 of Article VII of the

Constitution, adopted Senate Resolution No. 97 concurring

in the ratification by the President of the Agreement. The

President signed the instrument of ratification on 16

December 1994. But plainly, this treaty has no retroactive

effect. Accordingly, since the challenged BPTTT decision

was rendered on 14 February 1994, petitioner cannot avail

of the provisions of the GATT treaty.

Documents

Patent Case Digest