PATENTS

a.Boothe v. Director of PatentsGR No. L 24919 January 28, 1980

Facts: Petitioners James Howard Boothe and John Morton II (citizens and residents of the US) were chemists claiming to be the inventors of a new antibiotic designated as tetracycline, a new derivative of chlortetrahycycline (popularly known as aureomycin). Petitioners applied for Letter Patent covering their invention to respondent Director of Patents claiming the right of priority granted to foreign applicants under Section 15 of the Patent Law (RA 165). Petitioners filed with respondent Director of Patent a legalized copy of their Application for Letters of Patent in the US for the same invention. Under the provision stated Section 15 of the Patent Law, petitioners would be entitled to the priority date if their application is considered filed in the Philippines since the letter date would fall within the one-year period. Petitioners informed Director that in interference proceedings in the US, Letters Patent for a similar invention as theirs was awarded to Pfizer and Co. which filed its application ahead and that failed to obtain any US patent for their own invention. Petitioners observed and requested that their application was good and valid on the basis of the claims originally filed. It was denied referring to local patent obtained by Pfizer and Co over same invention and that the specification that was submitted is incomplete for they failed to meet the deadline for filing their responsive claim.Petitioners submitted 2 complete copies after and even filed for reconsideration hereinafter but still Chief Patent rejected and denied such submission, and has decided that specification admitted but application not to be extended priority rights under Section 15 of the Patent Law inasmuch as said application was not within the meanings of Rule 47 and 48 as to the said submission were not really a new matter but a mere minor informality. Respondent Director was alleged that he has no jurisdiction to decide the question for said application and erred in deciding upon said application.

Issue:WON the scope of the powers of the Director of Patent in the cases appealed to him and the correctness of his application of Rules 47 and 48, 262 of the Revised Rules of Practice in Patent cases are valid and tenable.

Held:Respondent Director is empowered to consider grounds which may have come to his knowledge other than those specifically raised in an appeal. He need not confined himself only to issues invoked. It was earlier concluded by the Supervising Patent Examiner that inasmuch as the submitted pages did not correspond with the certified copy of the US application, the present application cannot therefore be granted priority date under Section 15 as requested by applicant. What Respondent Director exercised was within his authority to review the decisions of Patents Examiners. Similarly petitioners contention is untenable that the respondent Director misapplied and misconstrued Rules 47 and 48 in Patent Cases. Under the aforecited provisions, it is imperative that the application be complete in order that it may be accepted. It is essential to the validity of Letters Patent that the specification be full, definite and specific. The purpose of said requirement is to apprise the public of that patentee claims as his invention, to inform Courts as to what they are called to construe, and to convey to competing manufacturers and dealers information what they are bound to avoid. The defect was one of substance and not merely one of form. An invention disclosed in a previously filed application must be described within the instant application such a manner as to enable one skilled in the art to use the same for a legally adequate utility.

b.Aguas vs. De LeonG.R. No. L-32160 January 30, 1982

FACTS:

This is a petition for certiorari to review the decision of the Court of Appeals.

On April 14, 1962, respondent Conrado de Leon filed in the CFI of Rizal at Quezon City a complaint for infringement of patent against petitioner Domiciano Aguas and F.H. Aquino and Sons alleging among others that being the original first and sole inventor of certain new and useful improvements in the process of making mosaic pre-cast tiles, and thereafter lawfully acquired from the Philippine Patent Office, Patent No. 658, the latter infringed the same by making, using and selling tiles embodying said patent invention. A writ of Preliminary Injuction was subsequently issued.

Petitioner Aguas, in his answer, denied the allegations and instead averred inter alia that respondent De Leon is neither the original first nor sole inventor of the improvements in the process of making mosaic pre-cast tiles, the same having been used by several tile-making factories both here and abroad years before the alleged invention by De Leon; hence, it is not patentable.

The trial court and the Court of Appeals, upon appeal rendered judgment in favor of respondent de Leon. Thus, this petition.

ISSUE:

Whether or not the alleged invention or discovery of respondent is patentable.

HELD:

Yea. It should be noted that the private respondent does not claim to be the discoverer or inventor of the old process of tile-making. He only claims to have introduced an improvement of said process. In fact, Letters Patent No. 658 was issued by the Philippine Patent Office to the private respondent Conrado G. De Leon, to protect his rights as the inventor of an alleged new and useful improvement in the process of making pre-cast tiles. Indeed, section 7, Republic Act No. 165, as amended provides: Any invention of a new and useful machine, manufactured product or substance, process, or an improvement of the foregoing, shall be patentable.

c.

ROSARIO C. MAGUAN (formerly ROSARIO C. TAN), petitioner, vs.THE HONORABLE COURT OF APPEALS and SUSANA LUCHAN, respondents.G.R. L-45101 November 28, 1986FACTS:Petitioner is doing business under the firm name and style of SWAN MANUFACTURING" while private respondent is likewise doing business under the firm name and style of "SUSANA LUCHAN POWDER PUFF MANUFACTURING."It is undisputed that petitioner is a patent holder of powder puff. In a letter, petitioner informed private respondent that the powder puffs the latter is manufacturing and selling to various enterprises particularly those in the cosmetics industry, resemble Identical or substantially Identical powder puffs of which the former is a patent holder under Registration Certification; petitioner explained such production and sale constitute infringement of said patents and therefore its immediate discontinuance is demanded, otherwise it will be compelled to take judicial action.Private respondent replied stating that her products are different and countered that petitioner's patents are void because the utility models applied for were not new and patentable and the person to whom the patents were issued was not the true and actual author nor were her rights derived from such author. private respondent assailed the validity of the patents involved and filed with the Philippine Patent Office petitions for cancellation of (1) Utility Model Letter Patent Extension. In view thereof, petitioner, filed a complaint for damages with injunction and preliminary injunction against private respondent. The trial court issued an Order granting the preliminary injunction prayed for by petitioner.issues:(1) Whether or not in an action for infringement the Court a quo had jurisdiction to determine the invalidity of the patents at issue which invalidity was still pending consideration in the patent office.(2) Whether or not the Court a quo committed grave abuse of discretion in the issuance of a writ of preliminary injunction.HELD:1. YES. the Court ruled that "When a patent is sought to be enforced, the questions of invention, novelty or prior use, and each of them, are open to judicial examination." Under the present Patent Law, there is even less reason to doubt that the trial court has jurisdiction to declare the patents in question invalid. A patentee shall have the exclusive right to make, use and sell the patented article or product and the making, using, or selling by any person without the authorization of the patentee constitutes infringement of the patent (Sec. 37, R.A. 165). Any patentee whose rights have been infringed upon may bring an action before the proper CFI now (RTC) and to secure an injunction for the protection of his rights (Sec. 42, R.A. 165). Defenses in an action for infringement are provided for in Section 45 of the same law which in fact were availed of by private respondent in this case. Then, as correctly stated by respondent Court of Appeals, this conclusion is reinforced by Sec. 46 of the same law which provides that if the Court shall find the patent or any claim thereof invalid, the Director shall on certification of the final judgment ... issue an order cancelling the patent or the claims found invalid and shall publish a notice thereof in the Official Gazette." Upon such certification, it is ministerial on the part of the patent office to execute the judgment. The burden of proof to substantiate a charge of infringement is with the plaintiff. But where the plaintiff introduces the patent in evidence, and the same is in due form, there is created a prima facie presumption of its correctness and validity. The decision of the Commissioner (now Director) of Patent in granting the patent is presumed to be correct. The burden of going forward with the evidence (burden of evidence) then shifts to the defendant to overcome by competent evidence this legal presumption.The question then in the instant case is whether or not the evidence introduced by private respondent herein is sufficient to overcome said presumption.There is a prima facie showing of a fair question of invalidity of petitioner's patents on the ground of lack of novelty. 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 protection, the invention must be new to the world. Accordingly, a single instance of public use of the invention by a patentee for more than two years (now for more than one year only under Sec. 9 of the Patent Law) before the date of his application for his patent, will be fatal to, the validity of the patent when issued.2. YES. Under our jurisprudence, as a general rule because of the injurious consequences a writ of injunction may bring, the right to the relief demanded must be clear and unmistakable. For failure to determine first the validity of the patents before aforesaid issuance of the writ, the trial court failed to satisfy the two requisites necessary if an injunction is to issue, namely: the existence of the right to be protected and the violation of said right. Under the above established principles, it appears obvious that the trial court committed a grave abuse of discretion.

d.PRICE V. UNITED LABORATORIESG.R. No. 82542 September 29, 1988

FACTS:The petitioners are the owners-assignees of Philippine Patent No. 13540 which was granted to them on June 26,1980 for a pharmaceutical compound known as "aminoalkyl furan derivatives." On October 1, 1982, respondent United Laboratories, Inc. (or UNILAB) filed in the Philippine Patent Office a petition Inter Partes Case No. 1683, "United Laboratories, Inc. versus Barry John Price, John Watson CLITHERON and John Bradshaw, assignors to Allen & Hanburys Ltd.') for the issuance of a compulsory license to use the patented compound in its own brands of medicines and pharmaceuticals and to sell, distribute, or otherwise dispose of such medicines or pharmaceutical preparations in the country. The petition further alleged that the patent relates to medicine and that petitioner, which has had long experience in the business of manufacturing and selling pharmaceutical products, possesses the capability to use the subject compound in the manufacture of a useful product or of making dosage formulations containing the said compound.

ISSUE:Whether or notDirector of Patent has unilateral determination of the terms and conditions of the compulsory license, without affording the parties an opportunity to negotiate the terms and conditions freely and by themselves.

HELD:Yes.The terms and conditions of the compulsory license were fixed by the Director of Patents after a hearing and careful consideration of the evidence of the parties and in default of an agreement between them as to the terms of the license. This he is authorized to do under Section 36 of Republic Act No. 165 which provides:Sec. 36. GRANT OF LICENSE.If the Director finds that a case for the grant of license under Section 34, hereof made out, he may order the grant of an appropriate license and in default of agreement among the parties as to the terms and conditions of the license he shall fix the terms and conditions of the license in the order.

The order of the Director granting a license under this Chapter, when final, shall operate as a deed granting a- license executed by the patentee and the other patties in interest.

and under Section 35 of P.D. 1263, amending portions of Republic Act No.165 which reads:

Sec. 35. GRANT OF LICENSE.(1)If the Director finds that a case for the grant of a license under Sec. 34 hereof has been made out, he shall within one hundred eighty (180) 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.

The Court of Appeals found that the 2.5% royalty fixed by the Director of Patents 'is just and reasonable.' We quote its observations hereunder:

Respondent-appellant contends further that the 2.5% royalty rate is unfair to respondent-appellant as to amount to an undue deprivation of its property right. We do not hold this view. The royalty rate of 2.5% provided for by the Director of Patents is reasonable. Paragraph 3, Section 35-B, Republic Act No. 165, as amended by Presidential Decree No. 1263, provides:(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 per cent (5%) of the net wholesale price (as defined in Section 33-A) of the products manufactured under the license. If the product, substance, or process subject of the compulsory license is involved in an industrial project approved by the Board of Investments, the royalty payable to the patentee or patentees shall not exceed three per cent (3%) of the net wholesale price (as defined in Section 34-A) of the patented commodity and/or commodity manufactured under the patented process; the same rule of royalty shall be paid whenever two or more patents are involved, which royalty shall be distributed to the patentees in rates proportional to the extent of commercial use by the licensee giving preferential values to the holder of the oldest subsisting product patent.

Thus, said provision grants to the Director of Patents the use of his sound discretion in fixing the percentage for the royalty rate and We find that the Director of Patents committed no abuse of this discretion. Also, there is always a presumption of regularity in the performance of one's official duties.

Moreover, what UNILAB has with the compulsory license is the bare right to use the patented chemical compound in the manufacture of a special product, without any technical assistance from herein respondent-appellant. Besides, the special product to be manufactured by UNILAB will only be used, distributed, and disposed locally. Therefore, the royalty rate of 2.5% is just and reasonable.

e.CRESER PRECISION SYSTEMS, INC., vs. COURT OF APPEALS AND FLORO INTERNATIONAL CORP.G.R. No. 118708. February 2, 1998

FACTS:Private respondent is a domestic corporation engaged in the manufacture, production, distribution and sale of military armaments, munitions, airmunitions and other similar materials.

On January 23, 1990, private respondent was granted by the Bureau of Patents, Trademarks and Technology Transfer (BPTTT), a Letters Patent No. UM-6938[3] covering an aerial fuze which was published in the September-October 1990, Vol. III, No. 5 issue of the Bureau of Patents Official Gazette.

Sometime in November 1993, 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. To protect its right, private respondent on December 3, 1993, sent a letter to petitioner advising it fro its existing patent and its rights thereunder, warning petitioner of a possible court action and/or application for injunction, should it proceed with the scheduled testing by the military on December 7, 1993.

In response to private respondents demand, petitioner filed on December 8, 1993 a complaint for injunction and damages arising from the alleged infringement before the Regional Trial Court of Quezon City, Branch 88. The complaint alleged, among others: that petitioner is the first, true and actual inventor of an aerial fuze denominated as Fuze, PDR 77 CB4 which is developed as early as December 1981 under the Self-Reliance Defense Posture Program (SRDP) of the AFP; that sometime in 1986, petitioner began supplying the AFP with the said aerial fuze; that private respondents aerial fuze is identical in every respect to the petitioners fuze; and that the only difference between the two fuzes are miniscule and merely cosmetic in nature. Petitioner prayed that a temporary restraining order and/or writ of preliminary injunction be issued enjoining private respondent including any and all persons acting on its behalf from manufacturing, marketing and/or profiting therefrom, and/or from performing any other act in connection therewith or tending to prejudice and deprive it of any rights, privileges and benefits to which it is duly entitled as the first, true and actual inventor of the aerial fuze.

On December 10, 1993, the trial court issued a temporary restraining order. Thereafter, hearings were held on the application of petitioner for the issuance of a writ of preliminary injunction. After the hearings, the trial court directed the parties to submit their respective memoranda in support of their positions.

On December 27, 1993, private respondent submitted its memorandum alleging that petitioner has no cause of action to file a complaint of infringement against it since it has no patent for the aerial fuze which it claims to have invented; that petitioners available remedy is to file a petition for cancellation of patent before the Bureau of Patents; that private respondent as the patent holder cannot be stripped of its property right over the patented aerial fuze consisting of the exclusive right to manufacture, use and sell the same and that it stands to suffer irreparable damage and injury if it is enjoined from the exercise of its property right over its patent.

ISSUE:Whether or not petitioners can file, under Section 42 of the Patent Law (R.A. 165), an action for infringement not as a patentee but as an entity in possession of a right, title or interest in and to the patented invention

HELD:No. 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 First Instance (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.

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 actions for 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. 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 the existence of the patent.

Petitioner admits it has no patent over its aerial fuze. Therefore, it has no legal basis or cause of action to institute the petition for injunction and damages arising from the alleged infringement by private respondent. While petitioner claims to be the first inventor of the aerial fuze, still it has no right of property over the same upon which it can maintain a suit unless it obtains a patent therefor. Under American jurisprudence, and inventor has no common-law right to a monopoly of his invention. He has the right to make, use and vend his own invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of making, using or selling the invention.

f. Smith Kline & French Laboratories vs CA and Danlex Research Laboratories Inc 386 SCRA 9 Compulsory LicenseFACTS:In August 1989, Danlex Research Laboratories petitioned before Bureau of Patents, Trademarks and Technology Transfer (BPTTT) that it may be granted a compulsory license for the use and manufacture of the pharmaceutical productCimetidine. Private respondent invoked Section 34 (1) (e) of Republic Act No. 165,[3](the Patent Law) the law then governing patents, which states that an application for the grant of a compulsory license under a particular patent may be filed with the BPTTT at any time after the lapse of two (2) years from the date of grant of such patent, 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 Cimetidineis useful as an antihistamine and in the treatment of ulcers.Cimetidineis originally patented to Smith Kline and French Laboratories, Ltd. in 1978, and the said patent is still in force at the time of application by Danlex Research.The BPTTT grantedthe applicationof Danlex Research together with a provision that Danlex Research should be paying 2.5% of the net wholesale price as royalty payment to Smith Kline. This was affirmed by the Court of Appeals.Smith Kline assailed the grant as it argued, among others, that the same is an invalid exercise of police power because there is no overwhelming public necessity for such grant considering that Smith Kline is able to provide an adequate supply of it to satisfy the needs of the Philippine market; that a provision in the Philippine Patent Laws is violative of the Paris Convention to which the Philippines is a signatory. It is also contended by petitioner that the grant of a compulsory license to private respondent will allow the latter to liberally manufacture and sell medicinal products containingCimetidinewithout even extending to petitioner due recognition for pioneering the development and worldwide acceptance of said invention, and will unreasonably dilute petitioners right over the patent. Petitioner likewise asseverates that the rate of royalty fixed by the BPTTT at 2.5% of net sales is grossly inadequate,To explain the second contention, Smith Kline states that the Paris Convention only allows compulsory licensing if the original licensee (patent holder) has failed to work on the patent; that therefore, the provision in the Philippine Patent Laws which adds other grounds for the granting of compulsory license i.e. monopoly, is invalid and contrary to the Paris Convention.ISSUE:Whether or not Smith Kline is correct in assailing the validity of exercise of police power and the violation of Paris Convention

HELD:No. 1) Compulsory licensingSection 34 of the Patent Law which provides: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 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 is being 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 of the 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 granting is a valid exercise of police power.The grant of the compulsory license satisfies the requirements of the foregoing provision.More than ten years have passed since the patent forCimetidinewas issued to petitioner and its predecessors-in-interest, and the compulsory license applied for by private respondent is for the use, manufacture and sale of a medicinal product.Furthermore, both the appellate court and the BPTTT found that private respondent had the capability to workCimetidineor to make use thereof in the manufacture of a useful product.2) Paris ConventionOn the second contention, Article 5, Section A(2) of the Paris Convention states: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.[ It is clear that Section A(2) of Article 5 [of the Paris Convention] 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 of categories of abuses. 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.

3) Inadequacy of the royalty awarded to petitioner.Court of Appeals correctly held that the rate of 2.5% of net wholesale price fixed by the Director of the BPTTTis 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.x x xSection 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 products manufactured under the license.If the product, substance, or process subject of the compulsory license is involved in an industrial project approved by the Board of Investments, the royalty payable to the patentee or patentees shall not exceed three percent (3%) of the net wholesale price (as defined in Section 33-A) of the patented commodity/and or commodity manufactured under the patented process; the same rate of royalty shall be paid whenever two or more patents are involved; which royalty shall be distributed to the patentees in rates proportional to the extent of commercial use by the licensee giving preferential values to the holder of the oldest subsisting product patent.x x xUnder the aforequoted provisions, in the absence of any agreement between the parties with respect to a compulsory license, the Director of the BPTTT may fix the terms thereof, including the rate of the royalty payable to the licensor.The law explicitly provides that the rate of royalty shall not exceed five percent (5%) of the net wholesale price.The Court agrees with the appellate courts ruling that the rate of royalty payments fixed by the Director of the BPTTT is reasonable.The appellate court, citingPrice vs. United Laboratories, ruled as such, considering that the compulsory license awarded to private respondent consistsonly of the bare right to use the patented invention in the manufacture of another product, without any technical assistance from the licensor

g.

SMITH KLINE & FRENCH LABORATORIES, LTD., petitioner, vs. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER and DOCTORS PHARMACEUTICALS, INC., respondents.

[G.R. No. 121867. July 24, 1997]

FACTS:

This is an appeal under Rule 45 of the Rules of Court from the decision[1] of 4 November 1994 of the Court ofAppeals in CA-G.R. SP No. 33520, which affirmed the 14 February 1994 decision[2] of the Director of the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) granting a compulsory non-exclusive and non-transferable license to private respondent to manufacture, use and sell in the Philippines its own brands of pharmaceutical products containing petitioners patented pharmaceutical product known asCimetidine.

On 30 March 1987, private respondent filed a petition for compulsory licensing with the BPTTT for authorization to manufacture its own brand of medicine from the drug Cimetidine and to market the resulting product in the Philippines. The petition was filed pursuant to the provisions of Section 34 of Republic Act No. 165 (An Act Creating a Patent Office Prescribing Its Powers and Duties, Regulating the Issuance of Patents, and Appropriating Funds Therefor), which provides for the compulsory licensing of a particular patent after the expiration of two years from the grant of the latter if the patented invention relates to, inter alia, medicine or that which is necessary for public health or public safety.

Petitioners claim: SMITH KLINE & FRENCH LABORATORIES, LTD owns Philippine Letters Patent No. 12207 issued by the BPTTT for the patent of the drug Cimetidine.

It argued that DOCTORS PHARMACEUTICALS, INC. had no cause of action and lacked the capability to work the patented product; the petition failed to specifically divulge how DOCTORS PHARMACEUTICALS, INC. would use or improve the patented product; and that DOCTORS PHARMACEUTICALS, INC. was motivated by the pecuniary gain attendant to the grant of a compulsory license. It also maintained that it was capable of satisfying the demand of the local market in the manufacture and marketing of the medicines covered by the patented product. Finally, It challenged the constitutionality of Sections 34 and 35 of R.A. No. 165 for violating the due process and equal protection clauses of the Constitution. It also invoked Article 5 of the Paris Convention for the Protection of Industrial Property,or Paris Convention, for short, of which the Philippines became a party thereto only in 1965.

Respondents claim: DOCTORS PHARMACEUTICALS, INC. is a domestic corporation engaged in the business of manufacturing and distributing pharmaceutical products. It alleged that the grant of Philippine Letters Patent No. 12207 was issued on 29 November 1978; that the petition was filed beyond the two-year protective period provided in Section 34 of R.A. No. 165; and that it had the capability to work the patented product or make use of it in its manufacture of medicine.

BPTTT handed down its decision on 14 February 1994, issuing a license in favor of the private respondent. Petitioner then appealed to the Court of Appeals by way of petition for review. However, the CA affirmed the decision in toto. :

h. Parke Davis vs Doctors PharmaceuticalsG.R. No. L-22221August 31, 1965

FACTS: Petitioner Parke Davis & Company is a foreign corporation organized and existing under the laws of the State of Michigan, U.S.A., with principal office in the City of Detroit, and as such is the owner of a patent entitled "Process for the Manufacturing of Antibiotics" which was issued by the Philippine Patent Office on February 9, 1950. The patent relates to a chemical compound represented by a formula commonly calledchloramphenicol. The patent contains ten claims, nine of which are process claims, and the other is a product claim to the chemical substancechloramphenicol. Respondent Doctors' Pharmaceuticals, Inc., on the other hand, is a domestic corporation duly organized under the Corporation Law with principal office situated in Caloocan City.

On October 9, 1959, Doctors Pharmaceuticals general manager wrote a letter to Parke Davis & Company requesting that it be granted a voluntary license "to manufacture and produce our own brand of medicine, containing chloramphenicol, and to use, sell, distribute, or otherwise dispose of the same in the Philippines under such terms and conditions as may be deemed reasonable and mutually satisfactory," to which Parke Davis & Company replied requesting information concerning the facilities and plans for the manufacture ofchloramphenicol. The latter answered saying that it did not intend to manufacture chloramphenicol itself but its purpose was merely to use it in its own brand of medicinal preparations, emphasizing that its request for license was based on an express provision of the Philippine law which has reference to patents that had been in existence for more than three years from their dates of issue. Hence, it reiterated its request that said license be granted under such terms and conditions as may be reasonable and mutually satisfactory.

As apparently Parke Davis & Company was not inclined to grant the request for a voluntary license, Doctors' Pharmaceuticals, Inc. filed on March 11, 1960 a petition with the Director of Patents, which was later amended, praying that it be granted a compulsory license under Letters Patent No. 50 granted to Parke Davis & Company based on the following grounds: (1) the patented invention relates to medicine and is necessary for public health and safety; (2) Parke Davis & Company is unwilling to grant petitioner a voluntary license under said patent by reason of which the production and manufacture of needed medicine containingchloramphenicolhas been unduly restrained to a certain extent that it is becoming a monopoly; (3) the demand for medicine containingchloramphenicolis not being met to an adequate extent and on reasonable prices; and (4) the patented invention is not being worked in the Philippines on a commercial scale.

In its petition, Doctors' Pharmaceuticals, Inc. prayed that it be authorized to manufacture, use, and sell its own products containingchloramphenicolas well as choose its own brand or trademark.

Parke Davis & Company filed a written opposition setting up the following affirmative defenses: (1) a compulsory license may only be issued to one who will work the patent and respondent does not intend to work it itself but merely to import the patented product; (2) respondent has not requested any license to work the patented invention in the Philippines; (3) respondent is not competent to work the patented invention; (4) to grant respondent the requested license would be against public interest and would only serve its monetary interest; and (5) the patented invention is not necessary for public health and safety.

At the hearing held on November 14, 1962, respondent abandoned the second, third and fourth grounds of its petition and confined itself merely to the first ground, to wit: that the patented invention relates to medicine and is necessary for public health and safety.

The Director of Patents rendered on November 15, 1963 his decision granting to respondent the license prayed for. The parties are ordered to submit, within THIRTY (30) days from their receipt of a copy of this decision, a licensing agreement, and in default thereof, they may submit within the same period their respective proposals. It must be shown that negotiations as to the terms and conditions thereof have been made between the parties, and if there are points of disagreement the Director of Patents shall fix such terms and conditions. If, within the said period, no licensing agreement is filed or no negotiations transpires between the parties, the Director of Patents shall issue the licensing agreement in such terms and conditions as may be just and reasonable under the circumstances.In due time, Parke Davis & Company interposed the present petition for review.

ISSUE: W/N the Director of Patents gravely abused his discretion in ordering the grant of compulsory license to respondent under Section 34(d) of Republic Act No. 165 for the manufacture of preparations containing chloramphenicolunder Letters Patent No. 50 issued to petitioner

HELD: NO. Any person may apply for the grant of a license under any of the circumstances stated in Section 34 (a), (b), (c) or (d), which are in the disjunctive, showing that any of the circumstances thus enumerated would be sufficient to support the grant, as evidenced by the use of the particle "or" between paragraphs (c) and (d). As may be noted, each of these circumstances stands alone and is independent of the others. And from them we can see that in order that any person may be granted a license under a particular patented invention relating to medicine under Section 34(d), it is sufficient that the application be made after the expiration of three years from the date of the grant of the patent and that the Director should find that a case for granting such license has been made out. Since in the instant case it is admitted by petitioner that the chemical substancechloramphenicolis a medicine, while Letters Patent No. 50 covering said substance were granted to Parke Davis & Company on February 9, 1950, and the instant application for license under said patent was only filed in 1960, verily the period that had elapsed then is more than three years, and so the conditions for the grant of the license had been fulfilled

The claim that a compulsory license cannot be granted to respondent because the latter does not intend to work the patented invention itself but merely to import it has also no legal nor factual basis.

In the first place, Section 34 of Republic Act No. 165 does not require the petitioner of a license to work the patented invention if the invention refers to medicine, for the term "worked" or "working" used in said section does not apply to the circumstance mentioned in subsection (d), which relates to medicine or to one necessary for public health and public safety.In its strict sense, the term "worked" or "working" mentioned in the last paragraph of Section 34 of the Patent Law "has no applicability to those cited patented matters and the qualification of the petitioner to work the invention is immaterial, it being not a condition precedent before any person may apply for the grant of the license."

In the second place, it is not the intention of respondent to work or manufacture the patented invention itself but merely to manufacture its brand of medicinal preparations containing such substance. And even if it be required that respondent should work itself the invention that it intends to use in the manufacture of its own brand of medicinal preparations said respondent would not be found wanting for it is staffed with adequate and competent personnel and technicians; it has several laboratories where medicines are prepared for safety and quality; it is equipped with machines for subdividing antibiotics; and it has capsule-filling machines and adequate personnel and facilities to test the quality ofchloramphenicol

Finally, it is not a valid ground to refuse the license applied for the fact that the patentee is working the invention and as such has the exclusive right to the invention for a term of 17 years. The reason for it being that the provision permitting the grant of compulsory license is intended not only to give a chance to others to supply the public with the quantity of the patented article but especially to prevent the building up of patent monopolies

The right to exclude others from the manufacturing, using, or vending an invention relating to food or medicine should be conditioned to allowing any person to manufacture, use, or vend the same after a period of three years from the date of the grant of the letters patent. After all, the patentee is not entirely deprived of any proprietary right. In act, he has been given the period of three years of complete monopoly over the patent. Compulsory licensing of a patent on food or medicine without regard to the other conditions imposed in Section 34 is not an undue deprivation of proprietary interests over a patent right because the law sees to it that even after three years of complete monopoly something is awarded to the inventor in the form of a bilateral and workable licensing agreement and a reasonable royalty to be agreed upon by the parties and in default of such agreement, the Director of Patents may fix the terms and conditions of the license

i. GODINEZ VS CA

RESPONDENTS CONTENTION: Petitioner infringes their patented power tillers.

PETITIONERS CONTENTION: He was not engaged in the manufacture and sale of the power tillers as he made them only upon the special order of his customers who gave their own specifications; hence, he could not be liable for infringement of patent and unfair competition; and that those made by him were different from those being manufactured and sold by private respondent.

FACTS:The patent involved in this case is Letters Patent No. UM-2236 issued by the Philippine Patent Office to one Magdalena S. Villaruz on July 15, 1976. It covers a utility model for a hand tractor or power tiller, the main components of which are the following: "(1) a vacuumatic house float; (2) a harrow with adjustable operating handle; (3) a pair of paddy wheels; (4) a protective water covering for the engine main drive; (5) a transmission case; (6) an operating handle; (7) an engine foundation on the top midportion of the vacuumatic housing float to which the main engine drive is detachedly installed; (8) a frontal frame extension above the quarter circularly shaped water covering hold (sic) in place the transmission case; (9) a V-belt connection to the engine main drive with transmission gear through the pulley, and (10) an idler pulley installed on the engine foundation." The above mentioned patent was acquired by SV-Agro Industries Enterprises, Inc., herein private respondent, from Magdalena Villaruz, its chairman and president, by virtue of a Deed of Assignment executed by the latter in its favor. On October 31, 1979, SV-Agro Industries caused the publication of the patent in Bulletin Today, a newspaper of general circulation.In accordance with the patent, private respondent manufactured and sold the patented power tillers with the patent imprinted on them. In 1979, SV-Agro Industries suffered a decline of more than 50% in sales in its Molave, Zamboanga del Sur branch. Upon investigation, it discovered that power tillers similar to those patented by private respondent were being manufactured and sold by petitioner herein. Consequently, private respondent notified Pascual Godines about the existing patent and demanded that the latter stop selling and manufacturing similar power tillers. Upon petitioner's failure to comply with the demand, SV-Agro Industries filed before the Regional Trial Court a complaint for infringement of patent and unfair competition.

ISSUE:Whether or not petitioner's product infringe upon the patent of private respondent.

HELD:Tests have been established to determine infringement. These are (a) literal infringement; and (b) the doctrine of equivalents. In using literal infringement as a test, ". . . resort must be had, in the first instance, to the words of the claim. If accused matter clearly falls within the claim, infringement is made out and that is the end of it." To determine whether the particular item falls within the literal meaning of the patent claims, the court must juxtapose the claims of the patent and the accused product within the overall context of the claims and specifications, to determine whether there is exact identity of all material elements.

Moreover, it is also observed that petitioner also called his power tiller as a floating power tiller. The patent issued by the Patent Office referred to a "farm implement but more particularly to a turtle hand tractor having a vacuumatic housing float on which the engine drive is held in place, the operating handle, the harrow housing with its operating handle and the paddy wheel protective covering." 11 It appears from the foregoing observation of the trial court that these claims of the patent and the features of the patented utility model were copied by petitioner. We are compelled to arrive at no other conclusion but that there was infringement.

Recognizing that the logical fallback position of one in the place of defendant is to aver that his product is different from the patented one, courts have adopted the doctrine of equivalents which recognizes that minor modifications in a patented invention are sufficient to put the item beyond the scope of literal infringement. Thus, according to this doctrine, "(a)n infringement also occurs when a device appropriates a prior invention by incorporating its innovative concept and, albeit with some modification and change, performs substantially the same function in substantially the same way to achieve substantially the same result."The reason for the doctrine of equivalents is that to permit the imitation of a patented invention which does not copy any literal detail would be to convert the protection of the patent grant into a hollow and useless thing. Such imitation would leave room for indeed encourage the unscrupulous copyist to make unimportant and insubstantial changes and substitutions in the patent which, though adding nothing, would be enough to take the copied matter outside the claim, and hence outside the reach of the law.