ASIA BREWERY, INC. vs. THE HON.

COURT OF APPEALS and SAN MIGUEL

CORPORATION
G.R. 103543 July 5, 1993

Facts:

San Miguel Corporation (SMC) filed a complaint against Asia Brewery Inc. (ABI) for
infringement of trademark and unfair competition on account of the latter's BEER PALE
PILSEN or BEER NA BEER product which has been competing with SMC's SAN
MIGUEL PALE PILSEN for a share of the local beer market.

The trial court dismissed SMC's complaint because ABI "has not committed trademark
infringement or unfair competition against" SMC

On appeal by SMC, the Court of Appeals reversed the decision rendered by the trial
court, finding the defendant Asia Brewery Incorporated GUILTY of infringement of
trademark and unfair competition. ABI then filed a petition for certiorari.

Issue:

Are the words PALE PILSEN as part of ABIs trademark constitute infringement of
SMCs trademark?

Ruling:

No. The Supreme Court said it does not constitute an infringement as the words PALE
PILSEN, which are part of ABIs trademark, are generic words descriptive of the color
(pale), of a type of beer (pilsen), which is a light bohemian beer with a strong hops
flavor that originated in the City of Pilsen, Czechislovakia and became famous in the
Middle Ages.

The Supreme Court further said that the words "pale pilsen" may not be appropriated by
SMC for its exclusive use even if they are part of its registered trademark. No one may
appropriate generic or descriptive words. They belong to the public domain.

Petitioner ABI has neither infringed SMC's trademark nor committed unfair competition
with the latter's SAN MIGUEL PALE PILSEN product.
 Mighty Corporation vs ENJ Gallo Winers
FACTS

On March 12, 1993, respondents sued petitioners in the RTC-Makati for trademark and trade name
infringement and unfair competition, with a prayer for damages and preliminary injunction.

They claimed that petitioners adopted the Gallo trademark to ride on Gallo Winerys and Gallo and
Ernest & Julio Gallo trademarks established reputation and popularity, thus causing confusion,
deception and mistake on the part of the purchasing public who had always associated Gallo and Ernest
and Julio & Gallo trademarks with Gallo Winerys wines.

In their answer, petitioners alleged, among other affirmative defenses that: petitioners Gallo cigarettes
and Gallo Winerys wine were totally unrelated products. To wit:

1. Gallo Winerys GALLO trademark registration certificates covered wines only, and not cigarettes;

2. GALLO cigarettes and GALLO wines were sold through different channels of trade;
3. the target market of Gallo Winerys wines was the middle or high-income bracket while Gallo
cigarette buyers were farmers, fishermen, laborers and other low-income workers;

4. the dominant feature of the Gallo cigarette was the rooster device with the manufacturers name
clearly indicated as MIGHTY CORPORATION, while in the case of Gallo Winerys wines, it was the full
names of the founders-owners ERNEST & JULIO GALLO or just their surname GALLO;

On April 21, 1993, the Makati RTC denied, for lack of merit, respondents prayer for the issuance of a writ
of preliminary injunction.

On August 19, 1993, respondents motion for reconsideration was denied.

On February 20, 1995, the CA likewise dismissed respondents petition for review on certiorari.

After the trial on the merits, however, the Makati RTC, on November 26, 1998, held petitioners liable for,
permanently enjoined from committing trademark infringement and unfair competition with respect to
the GALLO trademark.

On appeal, the CA affirmed the Makati RTCs decision and subsequently denied petitioners motion for
reconsideration.

ISSUE

Whether GALLO cigarettes and GALLO wines were identical, similar or related goods for the reason alone
that they were purportedly forms of vice

HELD

At the time the cause of action accrued in this case, the IPC was not yet enacted so the relevant laws
used were the Trademark Law and the Paris Convention.

The SC held that there was no infringement. The use of the respondent of the mark Gallo for its wine
products was exclusive in nature. The court mentioned two types of confusion in Trademark
Infringement:

Confusion of Goods when an otherwise prudent purchaser is induced to purchase one product in the
belief that he is purchasing another, in which case defendants goods are then brought as the plaintiffs
and its poor quality reflects badly on the plaintiffs reputation.

Confusion of Business wherein the goods of the parties are different but the defendants product can
reasonably (though mistakenly) be assumed to originate from the plaintiff, thus deceiving the public into
believing that there is some connection between the plaintiff and defendant which, in fact, does not
exist.

In determining the likelihood of confusion, the Court must consider:

(a) the resemblance between the trademarks;

(b) the similarity of the goods to which the trademark is attached;

(c) the likely effect on the purchaser; and

(d) the registrants express or implied consent and other fair and equitable considerations.

In this case, the SC employing the dominancy test, concluded that there is no likelihood of confusion.
They materially differ in color scheme, art works and markings. Further, the two goods are not closely
related because the products belong to different classifications, form, composition and they have
different intended markets or consumers.

MANG INASAL PHILIPPINES, INC., PETITIONER, VS. IFP MANUFACTURING CORPORATION,

RESPONDENT.

The Facts

The Trademark Application and the Opposition

Respondent IFP Manufacturing Corporation is a local manufacturer of snacks and beverages.

On May 26, 2011, respondent filed with the Intellectual Property Office (IPO) an
application[3] for the registration of the mark "OK Hotdog Inasal Cheese Hotdog Flavor Mark"
(OK Hotdog Inasal mark) in connection with goods under Class 30 of the Nice Classification.
[4]
The said mark, which respondent intends to use on one of its curl snack products, appears as
follows:

The application of respondent was opposed[5] by petitioner Mang Inasal Philippines, Inc.

Petitioner is a domestic fast food company and the owner of the mark "Mang Inasal, Home of
Real Pinoy Style Barbeque and Device" Mang Inasal mark) for services under Class 43 of the
Nice Classification.[6] The said mark, which was registered with the IPO in 2006[7] and had been
used by petitioner for its chain of restaurants since 2003,[8] consists of the following insignia:

Petitioner, in its opposition, contended that the registration of respondent's OK Hotdog Inasal
mark is prohibited under Section 123.1(d)(iii) of Republic Act No. (RA) 8293. [9] Petitioner averred
that the OK Hotdog Inasal mark and the Mang Inasal mark share similaritiesboth as to their
appearance and as to the goods or services that they representwhich tend to suggest a false
connection or association between the said marks and, in that regard, would likely cause
confusion on the part of the public.[10] As petitioner explained:
 1. The OK Hotdog Inasal mark is similar to the Mang Inasal mark. Both marks feature the
same dominant elementi.e., the word "INASAL"printed and stylized in the exact
same manner, viz:

a. In both marks, the word "INASAL" is spelled using the same font style and red
color;

b. In both marks, the word "INASAL" is placed inside the same black outline and
yellow background; and

c. In both marks, the word "INASAL" is arranged in the same staggered format.

2. The goods that the OK Hotdog Inasal mark is intended to identify (i.e., curl snack
products) are also closely related to the services represented by the Mang Inasal mark
(i.e., fast food restaurants). Both marks cover inasal or inasal-flavored food products.

Petitioner's opposition was referred to the Bureau of Legal Affairs (BLA) of the IPO for hearing
and disposition.

Decisions of the IPO-BLA and the IPO-DG

On September 19, 2013, after due proceedings, the IPO-BLA issued a Decision [11] dismissing
petitioner's opposition. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the instant opposition is hereby DISMISSED. Let the
filewrapper [sic] of Trademark Application Serial No. 4-2011-006098 be returned, together with
a copy of this Decision, to the Bureau of Trademarks for further information and appropriate
action.

SO ORDERED.

Aggrieved, petitioner appealed the Decision of IPO-BLA to the Director General (DG) of the IPO.
[12]
On December 15, 2014, the IPO-DG rendered a Decision [13] dismissing the appeal of
petitioner. The fallo of the Decision accordingly reads:

Wherefore, premises considered, the appeal is hereby dismissed. Let a copy of this Decision be
furnished to the Director ofBureau ofLegal Affairs and the Director of Bureau of Trademarks for
their appropriate action and information. Further, let a copy of this Decision be furnished to the
library ofthe Documentation, Information and Technology Transfer Bureau for records purposes.

SO ORDERED.

Both the IPO-BLA and the IPO-DG were not convinced that the OK Hotdog Inasal mark is
confusingly similar to the Mang Inasal mark. They rebuffed petitioner's contention, thusly:

1. The OK Hotdog Inasal mark is not similar to the Mang Inasal mark. In terms of
appearance, the only similarity between the two marks is the word "INASAL." However,
there are other words like "OK," "HOTDOG," and "CHEESE" and images like that of curls
and cheese that are found in the OK Hotdog Inasal mark but are not present in the Mang
Inasal mark.[14]

In addition, petitioner cannot prevent the application of the word "INASAL" in the OK
Hotdog Inasal mark. No person or entity can claim exclusive right to use the
word "INASAL" because it is merely a generic or descriptive word that means barbeque
or barbeque products.[15]

2. Neither can the underlying goods and services of the two marks be considered as closely
related. The products represented by the two marks are not competitive and are sold in
different channels of trade. The curl snack products of the OK Hotdog Inasal mark are
sold in sari-sari stores, grocery stores and other small distributor outlets, whereas the
food products associated with the Mang Inasal mark are sold in petitioner's restaurants.
[16]

Resolutions of the CA and the Instant Appeal

On June 10, 2015, the CA issued a Resolution[17] denying the appeal of petitioner. Petitioner filed
a motion for reconsideration, but this too was denied by the CA through its Resolution [18] dated
December 2, 2015. The CA, in its Resolutions, simply agreed with the ratiocinations of the IPO-
BLA and IPO-DG.
 Hence, the instant appeal.

Here, petitioner prays for the reversal of the CA Resolutions. Petitioner maintains that the OK
Hotdog Inasal mark is confusingly similar to the Mang Inasal mark and insists that the
trademark application of respondent ought to be denied for that reason.
Our Ruling

We have examined the OK Hotdog Inasal and Mang Inasal marks under the lens of pertinent law
and jurisprudence. And, through it, we have determined the justness of petitioner's claim. By
our legal and jurisprudential standards, the respondent's OK Hotdog Inasal mark is, indeed,
likely to cause deception or confusion on the part of the public. Hence, contrary to what the
IPO-BLA, IPO-DG, and the CA had ruled, the respondent's application should have been denied.

We, therefore, grant the appeal.

The Proscription: Sec. 123.1 (d)(iii) of RA 8293

A mark that is similar to a registered mark or a mark with an earlier filing or priority date (earlier
mark) and which is likely to cause confusion on the part of the public cannot be registered with
the IPO. Such is the import of Sec. 123.1(d)(iii) of RA 8293:

SECTION 123. Registrability. -

123. 1. A mark cannot be registered if it:

xxxx

d. x x x:

i. xxx

ii. xxx

iii. ...nearly resembles [a registered mark belonging to a different proprietor or a mark with
an earlier filing or priority date] as to be likely to deceive or cause confusion.
The concept of confusion, which is at the heart of the proscription, could either refer
to confusion of goods or confusion of business. In Skechers U.S.A., Inc. v. Trendworks
International Corporation,[19] we discussed and differentiated both types of confusion, as
follows:

Relative to the question on confusion of marks and trade names, jurisprudence has noted two
(2) types of confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily
prudent purchaser would be induced to purchase one product in the belief that he was
purchasing the other; and (2) confusion of business (source or origin confusion), where,
although the goods of the parties are different, the product, the mark of which registration is
applied for by one party, is such as might reasonably be assumed to originate with the registrant
of an earlier product, and the public would then be deceived either into that belief or into the
belief that there is some connection between the two parties, though inexistent.

Confusion, in either of its forms, is, thus, only possible when the goods or services covered by
allegedly similar marks are identical, similar or re1ated in some manner. [20]

Verily, to fall under the ambit of Sec. 123.1(d)(iii) and be regarded as likely to deceive or cause
confusion upon the purchasing public, a prospective mark must be shown to meet two (2)
minimum conditions:

1. The prospective mark must nearly resemble or be similar to an earlier mark; and

2. The prospective mark must pertain to goods or services that are either identical, similar
or related to the goods or services represented by the earlier mark.

The rulings of the IPO-BLA, IPO-DG, and the CA all rest on the notion that the OK Hotdog Inasal
mark does not fulfill both conditions and so may be granted registration.

We disagree.

II

The OK Hotdog Inasal Mark Is Similar to the Mang Inasal Mark

The first condition of the proscription requires resemblance or similarity between a prospective
mark and an earlier mark Similarity does not mean absolute identity of marks. [21] To be regarded
as similar to an earlier mark, it is enough that a prospective mark be a colorable imitation of the
former.[22] Colorable imitation denotes such likeness in form, content, words, sound, meaning,
special arrangement or general appearance of one mark with respect to another as would likely
mislead an average buyer in the ordinary course of purchase.[23]

In determining whether there is similarity or colorable imitation between two marks, authorities
employ either the dominancy test or the holistic test.[24] In Mighty Corporation v. E. & J. Gallo
Winery,[25] we distinguished between the two tests as follows:

The Dominancy Test focuses on the similarity of the prevalent features of the competing
trademarks which might cause confusion or deception, and thus infringement. If the competing
trademark contains the main, essential or dominant features of another, and confusion or
deception is likely to result, infringement takes place. Duplication or imitation is not necessary;
nor is it necessary that the infringing label should suggest an effort to imitate. The question is
whether the use of the marks involved is likely to cause confusion or mistake in the mind of the
public or deceive purchasers.

On the other hand, the Holistic Test requires that the entirety of the marks in question be
considered in resolving confusing similarity. Comparison of words is not the only determining
factor. The trademarks in their entirety as they appear in their respective labels or hang tags
must also be considered in relation to the goods to which they are attached. The discerning eye
of the observer must focus not only on the predominant words but also on the other features
appearing in both labels in order that he may draw his conclusion whether one is confusingly
similar to the other. (citations omitted and emphasis supplied)

There are currently no fixed rules as to which of the two tests can be applied in any given case.
[26]
However, recent case law on trademark seems to indicate an overwhelming judicial
preference towards applying the dominancy test.[27] We conform.

Our examination of the marks in controversy yielded the following findings:

1. The petitioner's Mang Inasal mark has a single dominant featurethe

word "INASAL" written in a bold red typeface against a black outline and yellow
background with staggered design. The other perceptible elements of the marksuch as
the word "MANG" written in black colored font at the upper left side of the mark and
the phrase "HOME OF REAL PINOY STYLE BARBEQUE" written in a black colored stylized
font at the lower portion of the markare not as visually outstanding as the mentioned
 feature.

2. Being the sole dominant element, the word "INASAL," as stylized in the Mang Inasal
mark, is also the most distinctive and recognizable feature of the said mark.

3. The dominant element "INASAL," as stylized in the Mang Inasal mark, is different from
the term "inasaf' per se.The term "inasal" per se is a descriptive term that cannot be
appropriated. However, the dominant element "INASAL," as stylized in the Mang
Inasal mark, is not. Petitioner, as the registered owner of the Mang Inasal mark, can
claim exclusive use of such element.

4. The respondent's OK Hotdog Inasal mark, on the other hand, has three (3) dominant
features: (a) the word "INASAL" written in a bold red typeface against a black and yellow
outline with staggered design; (b) the word "HOTDOG" written in green colored font;
and (c) a picture of three pieces of curls. Though there are other observable elements in
the marksuch as the word "OK" written in red colored font at the upper left side of the
mark, the small red banner overlaying the picture of the curls with the words "CHEESE
HOTDOG FLAVOR" written on it, and the image of a block of cheese beside the picture of
the curlsnone of those are as prevalent as the two features aforementioned.

5. The dominant element "INASAL" in the OK Hotdog Inasal mark is exactly the same as
the dominant element"NASAL" in the Mang Inasal mark. Both elements in both marks
are printed using the exact same red colored font, against the exact same black outline
and yellow background and is arranged in the exact same staggered format.

6. Apart from the element "INASAL," there appear no other perceivable similarities
between the two marks.

Given the foregoing premises, and applying the dominancy test, we hold that the OK Hotdog
Inasal mark is a colorable imitation of the Mang Inasal mark.

First. The fact that the conflicting marks have exactly the same dominant element is key. It is
undisputed that the OK Hotdog Inasal mark copied and adopted as one of its dominant features
the "INASAL" element of the Mang Inasal mark. Given that the "INASAL" element is, at the same
time, the dominant and most distinctive feature of the Mang Inasal mark, the said element's
incorporation in the OK Hotdog Inasal mark, thus, has the potential to project the deceptive and
false impression that the latter mark is somehow linked or associated with the former mark.

Second. The differences between the two marks are trumped by the

overall impression created by their similarity. The mere fact that there are other elements in the
OK Hotdog Inasal mark that are not present in the Mang Inasal mark actually does little to
change the probable public perception that both marks are linked or associated. It is worth
reiterating that the OK Hotdog Inasal mark actually brandishes a literal copy of the most
recognizable feature of the Mang Inasal mark. We doubt that an average buyer catching a casual
glimpse of the OK Hotdog Inasal mark would pay more attention to the peripheral details of the
said mark than it would to the mark's more prominent feature, especially when the same
invokes the distinctive feature of another more popular brand.

All in all, we find that the OK Hotdog Inasal mark is similar to the Mang Inasal mark.

III

The Goods for which the Registration of the

OK Hotdog Inasal Mark Is Sought Are Related to the
Services Being Represented by the Mang Inasal Mark

The second condition of the proscription requires that the prospective mark pertain to goods or
services that are either identical, similar or related to the goods or services represented by the
earlier mark. While there can be no quibble that the curl snack product for which the
registration of the OK Hotdog Inasal mark is sought cannot be considered as identical or similar
to the restaurant services represented by the Mang Inasal mark, there is ample reason to
conclude that the said product and services may nonetheless be regarded as related to each
other.

Related goods and services are those that, though non-identical or non-similar, are so logically
connected to each other that they may reasonably be assumed to originate from one
manufacturer or from economically-linked manufacturers.[28] In determining whether goods or
services are related, several factors may be considered. Some of those factors recognized in our
jurisprudence are:[29]
1. the business (and its location) to which the goods belong;

2. the class of product to which the goods belong;

 3. the product's quality, quantity, or size, including the nature of the package, wrapper or
container;

4. the nature and cost of the articles;

5. the descriptive properties, physical attributes or essential characteristics with reference

to their form, composition, texture or quality;

6. the purpose of the goods;

7. whether the article is bought for immediate consumption, that is, day-to-day household
items;

8. the fields of manufacture;

9. the conditions under which the article is usually purchased, and

10. the channels of trade through which the goods flow, how they are distributed, marketed,
displayed and sold.

Relative to the consideration of the foregoing factors, however, Mighty

Corporation[30] significantly imparted:

The wisdom of this approach is its recognition that each trademark infringement case presents
its own unique set of facts. No single factor is preeminent, nor can the presence or absence of
one determine, without analysis of the others, the outcome of an infringement suit. Rather, the
court is required to sift the evidence relevant to each of the criteria. This requires that the entire
panoply of elements constituting the relevant factual landscape be comprehensively examined.
It is a weighing and balancing process. With reference to this ultimate question, and from a
balancing of the determinations reached on all of the factors, a conclusion is reached whether
the parties have a right to the relief sought.

A very important circumstance though is whether there exists a likelihood that an appreciable
number of ordinarily prudent purchasers will be misled, or simply confused, as to the source
of the goods in question. The "purchaser" is not the "completely unwary consumer" but is the
"ordinarily intelligent buyer" considering the type of product involved he is accustomed to buy,
and therefore to some extent familiar with, the goods in question. The test of fraudulent
simulation is to be found in the likelihood of the deception of some persons in some measure
acquainted with an established design and desirous of purchasing the commodity with which
that design has been associated. The test is not found in the deception, or the possibility of
deception, of the person who knows nothing about the design which has been counterfeited,
and who must be indifferent between that and the other. The simulation, in order to be
objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who
has a need to supply and is familiar with the article that he seeks to purchase.(citations
omitted and emphasis supplied)

Mindful of the foregoing precepts, we hold that the curl snack product for which the
registration of the OK Hotdog Inasal mark is sought is related to the restaurant services
represented by the Mang Inasal mark, in such a way that may lead to a confusion of business. In
holding so, we took into account the specific kind of restaurant business that petitioner is
engaged in, the reputation of the petitioner's mark, and the particular type of curls sought to be
marketed by the respondent, thus:

First. Petitioner uses the Mang Inasal mark in connection with its restaurant services that is
particularly known for its chicken inasal, i.e., grilled chicken doused in a special inasal marinade.
[31]
The inasal marinade is different from the typical barbeque marinade and it is what gives the
chicken inasal its unique taste and distinct orange color.[32] Inasal refers to the manner of grilling
meat products using an inasal marinade.

Second. The Mang Inasal mark has been used for petitioner's restaurant business since 2003.
The restaurant started in Iloilo but has since expanded its business throughout the country.
Currently, the Mang Inasal chain of restaurants has a total of 464 branches scattered throughout
the nation's three major islands.[33] It is, thus, fair to say that a sizeable portion of the population
is knowledgeable of the Mang Inasal mark.

Third. Respondent, on the other hand, seeks to market under the OK Hotdog Inasal mark curl
snack products which it publicizes as having a cheese hotdog inasal flavor.[34]

Accordingly, it is the fact that the underlying goods and services of both marks deal
with inasal and inasal-flavored products which ultimately fixes the relations between such
goods and services. Given the foregoing circumstances and the aforesaid similarity between the
marks in controversy, we are convinced that an average buyer who comes across the curls
marketed under the OK Hotdog Inasal mark is likely to be confused as to the true source of such
curls. To our mind, it is not unlikely that such buyer would be led into the assumption that the
curls are of petitioner and that the latter has ventured into snack manufacturing or, if not, that
the petitioner has supplied the flavorings for respondent's product. Either way, the reputation
of petitioner would be taken advantage of and placed at the mercy of respondent.
All in all, we find that the goods for which the registration of the OK Hotdog Inasal mark is
sought are related to the services being represented by the Mang Inasal mark.

IV

Conclusion

The OK Hotdog Inasal mark meets the two conditions of the proscription under Sec. 123.1(d)(iii)
ofRA 8293. First, it is similar to the Mang Inasal mark, an earlier mark Second, it pertains to
goods that are related to the services represented by such earlier mark Petitioner was,
therefore, correct; and the IPO-BLA, IPO-DG, and the CA's rulings must be reversed. The OK
Hotdog Inasal mark is not entitled to be registered as its use will likely deceive or cause
confusion on the part of the public and, thus, also likely to infringe the Mang Inasal mark The
law, in instances such as this, must come to the succor of the owner of the earlier mark.

WHEREFORE, premises considered, the petition is hereby GRANTED. We hereby render a

decision as follows:

1. REVERSING and SETTING ASIDE the Resolutions dated June 10, 2015 and December 2,
2015 of the Court of Appeals in CA-G.R. SP No. 139020;

2. SETTING ASIDE the Decision dated December 15, 2014 of the Director General of the
Intellectual Property Office in Appeal No. 14-2013-0052;

3. SETTING ASIDE the Decision dated September 19, 2013 of the Director of the Bureau of
Legal Affairs of the Intellectual Property Office in IPC No. 14-2012-00369; and

4. DIRECTING the incumbent Director General and Director of the Bureau of Legal Affairs of
the Intellectual Property Office to DENY respondent's Application No. 4-2011-006098 for
the registration of the mark "OK Hotdog Inasal Cheese Hotdog Flavor Mark."
 OK Hotdog Inasal is not an OK trademark for SC

The Supreme Court (SC) has ordered the Intellectual Property Office (IPO) to deny
the trademark application of OK Hotdog Inasal Cheese Hotdog Flavor.

In a recent 13-page decision, the SC 3rd Division granted the petition of Mang
Inasal Philippines, Inc., to overturn the IPO and the Court of Appeals (CA)
acceptance of IFP Manufacturing Corporations trademark application.

The High Court cited the similarity in the marks of the Mang Inasal restaurant chain
and the OK Hotdog Inasal curl snack.

Both marks prominently feature the word inasal in bold red typeface against a
black outline and yellow background with staggered design.

Being the sole dominant element, the word INASAL, as stylized in the Mang Inasal
mark, is also the most distinctive and recognizable feature of the said mark, the
decision noted.

Since both marks visually depict the word inasal in similar ways, the SC held that
OK Hotdog Inasal is a colorable imitation of Mang Inasal.

The SC also noted that IFP sought to trademark OK Hotdog Inasal for goods that
are related to Mang Inasals business, as both sell food items.

To our mind, it is not unlikely that such buyer would be led into the assumption
that the curls are of petitioner [Mang Inasal] and that [it] has ventured into snack
manufacturing or, if not, that the petitioner has supplied the flavorings, explained
the decision penned by Associate Justice Presbitero Velasco Jr.

ROBERTO CO vs. KENG HUAN JERRY YEUNG AND EMMA YEUNG G.R. No.
212705, 10 September 2014

FACTS:

Ruivivar bought a bottle of Greenstone from Royal Chinese Drug Store in Binondo, Man
ila, owned by Ling Na Lau. However, he doubted its authenticity because it had a differe
nt smell, and the heat it produced was not as strong as the original Greenstone he freque
ntly used. He then informed his brother-in-law Yeung, the owner of Greenstone Pharma
ceutical. The latter went to Royal and found 7 bottles of counterfeit Greenstone on displ
ay for sale. He was told by Pinky Lau the stores proprietor that the items came fro
m Co of KiaoAn Chinese Drug Store. According to Pinky, Co offered the products as Tie
nchi Fong Sap Oil Greenstone (Tienchi) which she eventually availed from him.

Sps. Yeung filed a civil complaint for trademark infringement and unfair competition be
fore the RTC against Ling Na Lau, her sister Pinky Lau, and Co for allegedly conspiring i
n the sale of counterfeit Greenstone products to the public.

The RTC ruled in favor of Sps. Yeung. It found that the Sps. Yeung had proven by prepo
nderance of evidence that the Laus and Co committed unfair competition through their
conspiracy to sell counterfeit Greenstone products that resulted in confusion and decept
ion not only to the ordinary purchaser, like Ruivivar, but also to the public. It, however,
did not find the Laus and Co liable for trademark infringement as there was no showing
that the trademark Greenstone was registered at the time the acts complained of occur
red. CA affirmed the RTC Decision.

ISSUE:

Whether or not only suit for unfair competition will prosper considering the trademark
was not registered.

HELD:
Yes, the defendants cannot be liable for trademark infringement. In the case at bar, the
Court defined unfair competition as the passing off (or palming off) or attempting to pas
s off upon the public of the goods or business of one person as the goods or business of a
nother with the end and probable effect of deceiving the public. This takes place where t
he defendant gives his goods the general appearance of the goods of his competitor with
the intention of deceiving the public that the goods are those of his competitor.

Here, it has been established that Co conspired with the Laus in the sale/distribution of
counterfeit Greenstone products to the public, which were even packaged in bottles iden
tical to that of the original, thereby giving rise to the presumption of fraudulent intent.

Although liable for unfair competition, the Court deems it apt to clarify that Co was prop
erly exculpated from the charge of trademark infringement considering that the registra
tion of the trademark Greenstone essential as it is in a trademark infringement case
was not proven to have existed during the time the acts complained of were committe
d. In this relation, the distinctions between suits for trademark infringement and unfair
competition prove useful: (a) the former is the unauthorized use of a trademark, wherea
s the latter is the passing off of ones goods as those of another; (b) fraudulent intent is u
nnecessary in the former, while it is essential in the latter; and (c) in the former, prior re
gistration of the trademark is a pre-requisite to the action, while it is not necessary in th
e latter.

In 1981, H.D Lee Co., Inc., a foreign company, filed an opposition against the trademark
application of Emerald Garment. Allegedly, the trademark Stylistic Mr. Lee sought to be
applied for by Emerald Garment is too confusingly similar with the brand Lee which has for its
variations Lee Riders, Lee Sures, and Lee Leens. The Director of Patents as well as the
Court of Appeals ruled in favor of H.D. Lee Co.

ISSUE: Whether or not the decision of the Court of Appeals is correct.

HELD: No. The Supreme Court considered that the trademarks involved as a whole and ruled
that Emerald Garments STYLISTIC MR. LEE is not confusingly similar to H.D. Lees LEE
trademark. The trademark Stylistic Mr. Lee, although on its label the word LEE is
prominent, the trademark should be considered as a whole and not piecemeal. The dissimilarities
between the two marks become conspicuous, noticeable and substantial enough to matter
especially in the light of the following variables that must be factored in.

First, the products involved in the case at bar are, in the main, various kinds of jeans. These are
not your ordinary household items like catsup, soysauce or soap which are of minimal cost.
Maong pants or jeans are not inexpensive. Accordingly, the casual buyer is predisposed to be
more cautious and discriminating in and would prefer to mull over his purchase. Confusion and
deception, then, is less likely.

Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does
not ask the sales clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani.
He is, therefore, more or less knowledgeable and familiar with his preference and will not easily
be distracted.

Finally, in line with the foregoing discussions, more credit should be given to the ordinary
purchaser. Cast in this particular controversy, the ordinary purchaser is not the completely
unwary consumer but is the ordinarily intelligent buyer considering the type of product
involved.

There is no cause for the Court of Appeals apprehension that Emerald Garments products might
be mistaken as another variation or line of garments under H.D. Lees LEE trademark. As
one would readily observe, H.D. Lees variation follows a standard format LEERIDERS,
LEESURES and LEELEENS. It is, therefore, improbable that the public would immediately
and naturally conclude that petitioners STYLISTIC MR. LEE is but another variation under
H.D. Lees LEE mark.

The issue of confusing similarity between trademarks is resolved by considering the distinct
characteristics of each case. In the present controversy, taking into account these unique factors,
we conclude that the similarities in the trademarks in question are not sufficient as to likely cause
deception and confusion tantamount to infringement.

Further, H.D. Lee failed to prove in court that it had prior actual commercial use of its LEE
trademark in the Philippines. H.D. Lee did show certificates of registrations for its brand but
registration is not sufficient. Actual use in commerce in the Philippines is an essential
prerequisite for the acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of the
Philippine Trademark Law (R.A. No. 166).

A rule widely accepted and firmly entrenched because it has come down through the years is that
actual use in commerce or business is a prerequisite in the acquisition of the right of ownership
over a trademark.

It would seem quite clear that adoption alone of a trademark would not give exclusive right
thereto. Such right grows out of their actual use. Adoption is not use. One may make
advertisements, issue circulars, give out price lists on certain goods; but these alone would not
give exclusive right of use. For trademark is a creation of use. The underlying reason for all these
is that purchasers have come to understand the mark as indicating the origin of the wares.
Flowing from this is the traders right to protection in the trade he has built up and the goodwill
he has accumulated from use of the trademark. Registration of a trademark, of course, has value:
it is an administrative act declaratory of a pre-existing right. Registration does not, however,
perfect a trademark right.

DELMONTE
Del Monte Corporation is an American corporation which is not engaged in business in the
Philippines. Though not engaging business here, it has given authority to Philippine Packing
Corporation (Philpack) the right to manufacture, distribute and sell in the Philippines various
agricultural products, including catsup, under the Del Monte trademark and logo. In 1965, Del
Monte also authorized Philpack to register with the Patent Office the Del Monte catsup bottle
configuration. Philpack was issued a certificate of trademark registration under the Supplemental
Register.

Later, Del Monte and Philpack learned that Sunshine Sauce Manufacturing was using Del Monte
bottles in selling its products and that Sunshine Sauces logo is similar to that of Del Monte. The
RTC of Makati as well as the Court of Appeals ruled that there was no infringement because the
trademarks used between the two are different in designs and that the use of Del Monte bottles
by Sunshine Sauce does not constitute unfair competition because as ruled in Shell Company vs
Insular Petroleum: selling oil in containers of another with markings erased, without intent to
deceive, was not unfair competition.

ISSUE: Whether or not there is unfair competition and infringement in the case at bar.

HELD: Yes. The Supreme Court recognizes that there really are distinctions between the designs
of the logos or trademarks of Del Monte and Sunshine Sauce. However, it has been that side by
side comparison is not the final test of similarity. Sunshine Sauces logo is a colorable
imitation of Del Montes trademark. The word catsup in both bottles is printed in white and the
style of the print/letter is the same. Although the logo of Sunshine is not a tomato, the figure
nevertheless approximates that of a tomato. The person who infringes a trade mark does not
normally copy out but only makes colorable changes, employing enough points of similarity to
confuse the public with enough points of differences to confuse the courts. What is undeniable is
the fact that when a manufacturer prepares to package his product, he has before him a boundless
choice of words, phrases, colors and symbols sufficient to distinguish his product from the
others. When as in this case, Sunshine chose, without a reasonable explanation, to use the same
colors and letters as those used by Del Monte though the field of its selection was so broad, the
inevitable conclusion is that it was done deliberately to deceive.

The Supreme Court also ruled that Del Monte does not have the exclusive right to use Del Monte
bottles in the Philippines because Philpacks patent was only registered under the Supplemental
Register and not with the Principal Register. Under the law, registration under the Supplemental
Register is not a basis for a case of infringement because unlike registration under the Principal
Register, it does not grant exclusive use of the patent. However, the bottles of Del Monte do say
in embossed letters: Del Monte Corporation, Not to be Refilled. And yet Sunshine Sauce
refilled these bottles with its catsup products. This clearly shows the Sunshine Sauces bad faith
and its intention to capitalize on the Del Montes reputation and goodwill and pass off its own
product as that of Del Monte.

MCDO VS MCJOY

Since 1987, MacJoy Devices had been operating in Cebu. MacJoy is a fast food restaurant which
sells fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-
halo and steaks. In 1991, MacJoy filed its application for trademark before the Intellectual
Property Office (IPO). McDonalds opposed the application as it alleged that MacJoy closely
resembles McDonalds corporate logo such that when used on identical or related goods, the
trademark applied for would confuse or deceive purchasers into believing that the goods
originate from the same source or origin that the use and adoption in bad faith of the MacJoy
and Device mark would falsely tend to suggest a connection or affiliation with McDonalds
restaurant services and food products, thus, constituting a fraud upon the general public and
further cause the dilution of the distinctiveness of McDonalds registered and internationally
recognized McDonaldS marks to its prejudice and irreparable damage.

The IPO ruled in favor of McDonalds. MacJoy appealed before the Court of Appeals and the
latter ruled in favor of MacJoy. The Court of Appeals, in ruling over the case, actually used the
holistic test (which is a test commonly used in infringement cases). The holistic test looks upon
the visual comparisons between the two trademarks. In this case, the Court of Appeals ruled that
other than the letters M and C in the words MacJoy and McDonalds, there are no real
similarities between the two trademarks. MacJoy is written in round script while
McDonalds is written in thin gothic. MacJoy is accompanied by a picture of a (cartoonish)
chicken while McDonalds is accompanied by the arches M. The color schemes between the
two are also different. MacJoy is in deep pink while McDonalds is in gold color.

ISSUE: Whether or not MacJoy infringed upon the trademark of McDonalds.

HELD: Yes. The Supreme Court ruled that the proper test to be used is the dominancy test. The
dominancy test not only looks at the visual comparisons between two trademarks but also the
aural impressions created by the marks in the public mind as well as connotative comparisons,
giving little weight to factors like prices, quality, sales outlets and market segments. In the case
at bar, the Supreme Court ruled that McDonalds and MacJoy marks are confusingly similar
with each other such that an ordinary purchaser can conclude an association or relation between
the marks. To begin with, both marks use the corporate M design logo and the prefixes Mc
and/or Mac as dominant features. The first letter M in both marks puts emphasis on the
prefixes Mc and/or Mac by the similar way in which they are depicted i.e. in an arch-like,
capitalized and stylized manner. For sure, it is the prefix Mc, an abbreviation of Mac, which
visually and aurally catches the attention of the consuming public. Verily, the word MACJOY
attracts attention the same way as did McDonalds, MacFries, McSpaghetti, McDo, Big
Mac and the rest of the MCDONALDS marks which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood products.

Further, the owner of MacJoy provided little explanation why in all the available names for a
restaurant he chose the prefix Mac to be the dominant feature of the trademark. The prefix
Mac and Macjoy has no relation or similarity whatsoever to the name Scarlett Yu Carcel,
which is the name of the niece of MacJoys president whom he said was the basis of the
trademark MacJoy. By reason of the MacJoys implausible and insufficient explanation as to how
and why out of the many choices of words it could have used for its trade-name and/or
trademark, it chose the word Macjoy, the only logical conclusion deducible therefrom is that
the MacJoy would want to ride high on the established reputation and goodwill of the
McDonalds marks, which, as applied to its restaurant business and food products, is
undoubtedly beyond question.

M.A. Clarke vs Manila Candy

Since 1905, M.A. Clarke has been producing and selling candies within the islands of the
Philippines. His trademark has always been an image of a rooster or locally known as manok
(Manoc). Thus, his candies have been known as Manok candies. He had the trademark
registered in November 1911. Later, two of his men left his employ and they established a
company of their own which was also geared to manufacture candies, the company was called
Manila Candy. For their trademark, they chose to use the image of two roosters which are in a
fighting position. In June 1912, Clarke sued Manila Candy for unfair competition.

ISSUE: Whether or not Manila Candy is guilty of unfair competition.

HELD: Yes. Though indeed, Manila Candys trademark of two roosters is visually different from
Clarkes trademark of an image of just one rooster, no reason has been suggested for the use of
this particular design with its predominant display of two roosters as the trademark of Manila
Candy other than that alleged by Clarke; that is to say, that Manila Candy well knowing that
Clarke had used a rooster as his trade-mark, hoped to secure an unfair advantage by misleading
the public, and inducing it to believe that its candies bearing a representation of two roosters
were made in Clarkes factory, which had always marked its goods with one or more picture/s of
a single rooster, and at the same time had made extensive use of this design in connection with
its advertising campaigns. There were a hundred other animals or images that could have been
used by Manila Candy to promote its new brand of candies yet it chose to use that of the
established trademark used by Clarke.

Samson vs Daway
(GR No 160054-55, July 21, 2004)

Facts:
The petitioner allegedly sold or offers the sale of garment product using the
trademark Caterpillar to the prejudice of its previous user, private
respondent in this case. The respondent filed the case to the RTC. The
petitioner contended that the case should be filed with the MTC because
violation of unfair competition is penalized with an imprisonment not
exceeding 6 years under RA 7691.

Issue:
Where do you file a suit for unfair competition?

Held:
The SC held that under Sec 163 of the IPC, actions for unfair competition
shall be brought before the proper courts with appropriate jurisdiction under
existing laws. The law contemplated in Sec 163 of IPC is the Trademark Law.
Sec 27 of Trademark Law states that action for unfair competition shall be
filed with the CFI (now RTC). Since RA 7691 is a general law and IPC in
relation to Trademark law is a special law, the latter shall prevail. Actions for
unfair competition therefore should be filed with the RTC.

Mighty Corporation vs ENJ Gallo Winers

(GR No 154342, July 14, 2004, Corona)

Facts:
Respondent manufacture wines and uses the trademark Gallo for its
product. On the other hand, the petitioner is a manufacturer of cigarette and
also uses Gallo in its products.

Issue:
Is there infringement?

Held:
At the time the cause of action accrued in this case, the IPC was not yet
enacted so the relevant laws used were the Trademark Law and the Paris
Convention.
The SC held that there was no infringement. The use of the respondent of
the mark Gallo for its wine products was exclusive in nature. The court
mentioned two types of confusion in Trademark Infringement:

Confusion of Goods when an otherwise prudent purchaser is induced to

purchase one product in the belief that he is purchasing another, in which
case defendants goods are then brought as the plaintiffs and its poor
quality reflects badly on the plaintiffs reputation.
Confusion of Business wherein the goods of the parties are different but
the defendants product can reasonably (though mistakenly) be assumed to
originate from the plaintiff, thus deceiving the public into believing that there
is some connection between the plaintiff and defendant which, in fact, does
not exist.

In determining the likelihood of confusion, the Court must consider:

(a) the resemblance between the trademarks;
(b) the similarity of the goods to which the trademark is attached;
(c) the likely effect on the purchaser; and
(d) the registrants express or implied consent and other fair and equitable
considerations.

In this case, the SC employing the dominancy test, concluded that there is
no likelihood of confusion. They materially differ in color scheme, art works
and markings. Further, the two goods are not closely related because he
products belong to different classifications, form, composition and they have
different intended markets or consumers.

Mc Donalds Corp vs LC Big Mak Burger Inc.

(GR No 143993, Aug 18, 2004)

The SC held that the respondent is liable for infringement because it violated
Sec 155.1 of the IPC which stated that any person who shall, without the
consent of the owner of the registered mark use in commerce any
reproduction, counterfeit, copy or colorable imitation of a registered mark or
the same container or a dominant feature thereof in connection with the
sale, offering for sale, distribution, advertising of any goods or services on or
in connection with which such use is likely to cause confusion, or to cause
mistake, or to deceive.

Addendum:
TEST OF TRADEMARK INFRINGEMENT
1) Dominancy Test consists in seeking out the main, essential or dominant
features of a mark.
2) Holistic Test takes stock of the other features of a mark, taking into
consideration the entirety of the marks.

DIFFERENTIATED FROM UNFAIR COMPETITION

1) Cause of action: in infringement, the cause of action is the unauthorized
use of a registered trademark; in unfair competition, it is the passing off of
ones goods as those of another merchant.
2) Fraudulent intent is not necessary in infringement, but necessary in UC.
3) Registration of trademarks: in infringement, it is a pre-requisite; in UC, it
is not required.
4) Class of goods involved: in infringement, the goods must be of similar
class; in UC, the goods need not be of the same class.

v infringement is a form of unfair competition

REMEDIES AVAILABLE IN CASE OF INFRINGEMENT OF A REGISTERED MARK

a) Sue for damages (Sec. 156.1);
b) Have the infringing goods impounded (Sec. 156.2);
c) Ask for double damages (Sec. 156.3)
d) Ask for injunction (156.4)
e) Have the infringing goods disposed of outside the channels of commerce
(Sec. 157.1)
f) Have the infringing goods destroyed (Sec. 157.1)
g) File criminal action (Sec. 170);
h) Administrative Sanctions

Smithklein Beckman vs CA
(Aug 14, 2003)

Facts:
Petitioner in this case filed an application for a patent of a drug used to kill
parasites in animals. Tyco Pharma opposed the application for patent
contending that the product of the petitioner proposed to be patented is
substantially the same as their product. The only difference is the use of one
ingredient. Tyco then contended that there is infringement of patent due to
violation of doctrine of equivalents.

Issue:
Is there infringement?

Held:
The SC in defining the Doctrine of Equivalents stated that infringement
also takes place when a particular devise appropriates a prior invention by
incorporating its innovative concept and although with some modification
and changes performs substantially the same function in substantially the
same way to achieve substantially the same result.

The SC held that this doctrine does not apply in the instant case because
Tyco Pharma failed to substantiate its claim that the two products works the
same way in fighting parasites in animals. Therefore, there was no
infringement.