1. United Feature Syndicate vs.
Musingwear OF JURISDICTION WHEN BY DISMISSING THE APPEAL TO IT FROM
Facts:
Petitioner’s claim:
Petitioner is asking for the cancellation of the registration of trademark
CHARLIE BROWN (Registration No. SR. 4224) in the name of respondent
MUNSINGWEAR, alleging that petitioner is damaged by the registration of
the trademark CHARLIE BROWN of T-Shirts under Class 25 with the
Registration No. SR-4224 dated September 12, 1979 in the name of
Munsingwear Creation Manufacturing Co., Inc., on the following grounds: (1)
that respondent was not entitled to the registration of the mark CHARLIE
BROWN, & DEVICE at the time of application for registration; (2) that
CHARLIE BROWN is a character creation or a pictorial illustration, the
copyright to which is exclusively owned worldwide by the petitioner; (3) that
as the owner of the pictorial illustration CHARLIE BROWN, petitioner has
since 1950 and continuously up to the present, used and reproduced the
same to the exclusion of others; (4) that the respondent-registrant has no
bona fide use of the trademark in commerce in the Philippines prior to its
application for registration.
Respondent’s claim:
-It uses, the trademark "CHARLIE BROWN" & "DEVICE" on children's wear
such as T-shirts, undershirts, sweaters, brief and sandos, in class 25;
whereas "CHARLIE BROWN" is used only by petitioner as character, in a
pictorial illustration used in a comic strip appearing in newspapers and
magazines. It has no trademark significance and therefore respondent-
registrant's use of "CHARLIE BROWN" & "DEVICE" is not in conflict with the
petitioner's use of "CHARLIE BROWN"
-Relied on the ruling on October 2, 1984 in which the Director of the
Philippine Patent Office rendered a decision in this case holding that a
copyright registration like that of the name and likeness of CHARLIE
BROWN may not provide a cause of action for the cancellation of a
trademark registration.
Issue: WHETHER THE RESPONDENT COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS
1|A G UI NA L DO , MANGUERA, MORALESC. & MORALES,
THE DECISION OF THE DIRECTOR OF PATENTS, IT KNOWINGLY
DISREGARDED ITS OWN DECISION IN AC-GR. SP. NO. 0342, WHICH
WAS AFFIRMED BY THIS HONORABLE SUPREME COURT TO THE
EFFECT THAT A COPYRIGHTED CHARACTER MAY NOT BE
APPROPRIATED AS A TRADEMARK BY ANOTHER UNDER
PRESIDENTIAL DECREE NO. 49.
Ruling: The petitioner is impressed with merit.
Since the name "CHARLIE BROWN" and its pictorial representation were
covered by a copyright registration way back in 1950 the same are entitled to
protection under PD No. 49, otherwise known as the "Decree on Intellectual
Property".
Aside from its copyright registration, petitioner is also the owner of several
trademark registrations and application for the name and likeness of
"CHARLIE BROWN" which is the duly registered trademark and copyright of
petitioner United Feature Syndicate Inc. as early as 1957 and additionally
also as TV SPECIALS featuring the "PEANUTS" characters "CHARLIE
BROWN”.
It is undeniable from the records that petitioner is the actual owner of said
trademark due to its prior registration with the Patent's Office.
2. Del Monte Corporation vs. CA
Facts: 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
Sauce’s 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
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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 Sauce’s logo is a colorable imitation of Del
Monte’s 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 Philpack’s 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 Sauce’s
bad faith and its intention to capitalize on the Del Monte’s reputation and
goodwill and pass off its own product as that of Del Monte.
2|A G UI NA L DO , MANGUERA, MORALESC. & MORALES,
3. Kabushiki Kaisha Isetan vs. IAC
Facts: Respondent NSR Rubber filed an application for registration of the
mark CANON for sandals. Petitioner Canon, a Japanese corporation,
opposed alleging it will be damaged by the registration. Petitioner presented
evidence that it was the owner of the mark CANON in various countries and
in the Philippines for goods such as paints, chemical products, toner and dye
stuff. BPTTT dismissed the opposition and gave due course to respondent’s
application. CA affirmed. Petitioner invokes Article 8 of the Paris Convention
which affords protection to a tradename whether or not it forms part of a
trademark.
Issue: Whether or not petitioner may be afforded protection of its trade
name.
Ruling: NO. The term “trademark” is defined by RA 166, the Trademark
Law, as including “any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or merchant to
identify his goods and distinguish them for those manufactured, sold or dealt
in by others.” Tradename is defined by the same law as including “individual
names and surnames, firm names, tradenames, devices or words used by
manufacturers, industrialists, merchants, agriculturists, and others to identify
their business, vocations, or occupations; the names or titles lawfully
adopted and used by natural or juridical persons, unions, and any
manufacturing, industrial, commercial, agricultural or other organizations
engaged in trade or commerce.” Simply put, a trade name refers to the
business and its goodwill; a trademark refers to the goods.
The Convention of Paris for the Protection of Industrial Property, otherwise
known as the Paris Convention, of which both the Philippines and Japan, the
country of petitioner, are signatories, is a multilateral treaty that seeks to
protect industrial property consisting of patents, utility models, industrial
designs, trademarks, service marks, trade names and indications of source
or appellations of origin, and at the same time aims to repress unfair
competition. We agree with public respondents that the controlling doctrine
with respect to the applicability of Article 8 of the Paris Convention is that
established in Kabushi Kaisha Isetan vs. IAC.As pointed out by the BPTTT:
“Regarding the applicability of Article 8 of the Paris Convention, this Office
believes that there is no automatic protection afforded an entity whose
tradename is alleged to have been infringed through the use of that name as
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a trademark by a local entity. To illustrate – if a taxicab or bus company in a
town in the United Kingdom or India happens to use the tradename “Rapid
Transportation”, it does not necessarily follow that “Rapid” can no longer be
registered in Uganda, Fiji, or the Philippines.”
4. Philips Export vs. CA
FACTS: Petitioner Philips Export B.V. (PEBV), aforeign corporation
organized under the laws of the Netherlands, although not engaged in
business here, is the registered owner of the trademarks PHILIPS
and PHILIPS SHIELD EMBLEM .
Respondent Standard Philips Corporation (Standard Philips), on the other
hand, was issued a Certificate of Registration by respondent Commission on
19 May 1982.
Petitioners filed a letter complaint with the Securities & Exchange
Commission (SEC) asking for the cancellation of the word “PHILIPS” from
Private Respondent’s corporate name.
As a result of Private Respondent’s refusal to amend its Articles of
Incorporation, Petitioners filed with the SEC. Alleging, among others, that
Private Respondent’s use of the word PHILIPS amounts to an infringement
and clear violation of Petitioners’ exclusive right to use the same considering
that both parties engage in the same business.
Private Respondent countered that Petitioner PEBV has no legal capacity to
sue; that its use of its corporate name is not at all similar to Petitioners’
trademark PHILIPS when considered in its entirety; and that its products
consisting of chain rollers, belts, bearings and cutting saw are grossly
different from Petitioners’ electrical products.
ISSUE: WON petitioner may sue private respondent.
HELD: YES. The Court declared that a corporation’s right to use its
corporate and trade name is a property right, a right in rem, which it may
assert and protect against the world in the same manner as it may protect its
tangible property, real or personal, against trespass or conversion. It is
regarded, to a certain extent, as a property right and one which cannot be
3|A G UI NA L DO , MANGUERA, MORALESC. & MORALES,
impaired or defeated by subsequent appropriation by another corporation in
the same field.
A name is peculiarly important as necessary to the very existence of a
corporation. Its name is one of its attributes, an element of its existence, and
essential to its identity.
A corporation acquires its name by choice and need not select a name
identical with or similar to one already appropriated by a senior corporation
while an individual’s name is thrust upon him. A corporation can no more use
a corporate name in violation of the rights of others than an individual can
use his name legally acquired so as to mislead the public and injure another
Our own Corporation Code, in its Section 18, expressly provides that:
No corporate name may be allowed by the Securities and Exchange
Commission if the proposed name is identical or deceptively or confusingly
similar to that of any existing corporation or to any other name already
protected by law or is patently deceptive, confusing or contrary to existing
law.Where a change in a corporate name is approved, the commission shall
issue an amended certificate of incorporation under the amended name.
The statutory prohibition cannot be any clearer. To come within its scope,
two requisites must be proven, namely:
(1) that the complainant corporation acquired a prior right over the use of
such corporate name; and
(2) the proposed name is either:
(a) identical; or
(b) deceptively or confusingly similar
to that of any existing corporation or to any other name already protected by
law; or
(c) patently deceptive, confusing or contrary to existing law.
In this regard, there is no doubt with respect to Petitioners’ prior adoption of’
the name ”PHILIPS” as part of its corporate name. Petitioners Philips
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Electrical and Philips Industrial were incorporated on 29 August 1956 and 25
May 1956, respectively, while Respondent Standard Philips was issued a
Certificate of Registration on 12 April 1982, twenty-six (26) years later (Rollo,
p. 16). Petitioner PEBV has also used the trademark “PHILIPS” on electrical
lamps of all types and their accessories since 30 September 1922.
The second requisite no less exists in this case. In determining the existence
of confusing similarity in corporate names, the test is whether the similarity is
such as to mislead a person, using ordinary care and discrimination. In so
doing, the Court must look to the record as well as the names themselves.
While the corporate names of Petitioners and Private Respondent are not
identical, a reading of Petitioner’s corporate names, to wit: PHILIPS
EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS
INDUSTRIAL DEVELOPMENT, INC., inevitably leads one to conclude that
“PHILIPS” is, indeed, the dominant word in that all the companies affiliated
or associated with the principal corporation, PEBV, are known in the
Philippines and abroad as the PHILIPS Group of Companies.
What is lost sight of, however, is that PHILIPS is a trademark or trade name
which was registered as far back as 1922. Petitioners, therefore, have the
exclusive right to its use which must be free from any infringement by
similarity. A corporation has an exclusive right to the use of its name, which
may be protected by injunction upon a principle similar to that upon which
persons are protected in the use of trademarks and tradenames (18 C.J.S.
574). Such principle proceeds upon the theory that it is a fraud on the
corporation which has acquired a right to that name and perhaps carried on
its business thereunder, that another should attempt to use the same name,
or the same name with a slight variation in such a way as to induce persons
to deal with it in the belief that they are dealing with the corporation which
has given a reputation to the name.
(5) FABERGE v. IAC
G.R. No. 71189, November 4, 1992
The Director of Patents authorized herein private respondent Co Beng Kay
to register the trademark ‘BRUTE’ for the briefs manufactured and sold by
his corporation. The petitioner then opposed the registration on the ground
based on similarity of said trademark with petitioner’s own symbol ‘BRUT’
4|A G UI NA L DO , MANGUERA, MORALESC. & MORALES,
which it previously registered for after shave lotion, shaving cream,
deodorant, talcum powder and toilet soap.
- Thereafter, respondent court, was initially persuaded by petitioner’s plea for
reversal directed against the permission granted by the Director of Patents
but the decision of the Second Special Cases Division was later
reconsidered in favour of herein private respondent.
FACTS: In the course of marketing petitioner’s ‘BRUT’ products and during
the pendency of its application for registration of the trademark ‘BRUT 33’
and ‘DEVICE’ for antiperspirant, personal deodorant, cream shave, after
shave/shower lotion, hair spray and hair shampoo, respondent Co Beng Kay
applied for registration of the disputed emblem ‘BRUTE’ for briefs.
- Opposition raised by petitioner anchored on similarity with its own symbol
and irreparable injury to the business reputation of the first user was to no
avail.
- Indeed, a look at the marks ‘BRUT’, ‘BRUT 33’ and ‘BRUTE’ shows that
such marks are not only similar in appearance but they are even similar in
sound and style of presentation. It is reasonable to believe that this similarity
is sufficient to cause confusion and even mistake and deception in the
buying public as to the origin for source of the goods bearing such
trademarks.
- The Director of Patents held that on account of the considerable time that
appellant has marketed its products bearing the trademarks ‘BRUT’ and
‘BRUT 33’, the appellant has earned and established immense good will
among its customers.
- If the appellee be allowed to use the trademark ‘BRUTE’ on the briefs
manufactured by him, appellee would be cashing in on the goodwill already
established by the appellant because, appellant’s cosmetics and appellee’s
briefs are not entirely unrelated since they are both directed to the fashion
trade.
- For the protection of goodwill, the SC held that when one applies for the
registration of trademark or label which is almost the same or very closely
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resembles one already used and registered by another, the application
should be rejected and dismissed outright.
- Private respondent echoes the glaring difference in physical appearance of
its products with petitioner’s own goods by stating the observations of the
Director of Patents, in that: The involved trademarks are grossly different in
their overall appearance that even at a distance, a would-be purchaser could
easily distinguish what is ‘BRUTE’ brief and what is ‘BRUT’ after shave
lotion, lotion and the like.
- The meaning and connotation of the bare words of oppose ‘BRUT’ and
‘BRUTE’ of respondent are clearly different and not likely to be confused with
each other.
* BRUT- dry
* BRUTE- ferocious, sensual and in Latin, signifies heavy
Co Beng Kay applied for the registration of the trademark 'BRUTE' to be
used it its underwear (briefs) products. The petitioner opposed on the ground
that there is similarity with their own symbol (BRUT, Brut33 & Device) used
on its aftershave, deodorant, cream shave, hairspray and hair
shampoo/soaps and that it would cause injury to their business reputation. It
must be noted that the petitioner never applied for registration of said
trademark for its brief products. The Patent Office allowed Co Beng Kay the
registration and this was further affirmed by the Court of Appeals.
RTC: The respondent was guilty of infringement of trademark.
CA: Found that there was no trademark infringement.
ISSUE: Whether or not respondent’s trademark infringe the existing
trademark of petitioner.
HELD: NO. The law defined infringement as the use without the consent of
the trademark owner of any reproduction, counterfeit, copy or colourable
imitation of any registered mark or tradename in connection with the sale,
offering for sale, or advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business.
5|A G UI NA L DO , MANGUERA, MORALESC. & MORALES,
- Co Beng Kay may rightly appropriate the mark. In this case, Sec. 20
(Philippine Intellectual Property Law) is controlling. The certificate of
registration issued confers the exclusive right to use its own symbol only to
those goods specified by the first user in the certificate, subject to any
conditions or limitations stated therein. Moreover, the two products are so
dissimilar that a purchaser of one (a brief) would not be misled or mistaken
into buying the other (such as an aftershave).
(6) ASIA BREWERY v CA
G.R. No. 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 BAEER product
which has been competing with SMC’s SAN MIGUEL PALE PILSE for a
share of local beer market.
RTC: Dismissed SMC’s complaint because ABI has not committed
trademark infringement and unfair competition against SMC.
CA: Reversed the decision of the trial court- ABI is guilty of infringement of
trademark and unfair competition.
- In due time, ABI appealed to this Court by a petition for certiorari under
Rule 45 of the Rules of Court.
ISSUES:
(1) Whether or not the words ‘PALE PILSEN’ may be exclusively
appropriated and used by SMC;
(2) Whether or not there is confusing similarity between the two trademarks.
HELD:
(1) NO. The fact that the words ‘pale pilsen’ are part of ABI’s trademark does
not constitute an infringement of SMC’s trademark: SAN MIGUEL PALE
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PILSEN, for “pale pilsen” 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 in Czechoslovakia and became
famous in the Middle Ages. “Pilsen” is a “primarily geographically descriptive
word,” hence, non-registrable and not appropriable by any beer
manufacturer. The words “pale pilsen” may not be appropriated by SMC for
its exclusive use even if they are part of its registered trademark: SAN
MIGUEL PALE PILSEN. No one may appropriate generic or descriptive
words. They belong to the public domain.
(2) NO. There is hardly any dispute that the dominant feature of SMC’s
trademark is the name of the product: SAN MIGUEL PALE PILSEN, written
in white Gothic letters with elaborate serifs at the beginning and end of the
letters “S” and “M” on an amber background across the upper portion of the
rectangular design. On the other hand, the dominant feature of ABI’s
trademark is the name: BEER PALE PILSEN, with the word “Beer” written in
large amber letters, larger than any of the letters found in the SMC label.
Furthermore, the use of ABI of the steine bottle, similar but not identical to
the SAN MIGUEL PALE PILSEN bottle, is not unlawful. SMC did not invent
but merely borrowed the bottle from abroad and there is neither patent nor
trademark protection for that bottle shape and design.
- The trial court perceptively observed that the word “BEER” does not appear
in SMC’s trademark, just as the words “SAN MIGUEL” do not appear in
ABI’s trademark. Hence, there is absolutely no similarity in the dominant
features of both trademarks. Neither in sound, spelling or appearance can
BEER PALE PILSEN be said to be confusingly similar to SAN MIGUEL
PALE PILSEN. No one who purchases BEER PALE PILSEN can possibly be
deceived that it is SAN MIGUEL PALE PILSEN. No evidence whatsoever
was presented by SMC proving otherwise. There is no confusing similarity
between the competing beers for the name of one is “SAN MIGUEL” while
the competitor is plain “BEER” and the points of dissimilarity between the
two outnumber their points of similarity.
6|A G UI NA L DO , MANGUERA, MORALESC. & MORALES,
(7) EMERALD GARMENT MANUFACTRUING CORP. v HON. CA
G.R. No. 100098, December 29, 1995
FACTS: On 18 September 1981, private respondent H.D. Lee Co., Inc. filed
with the Bureau of Patents, Trademarks & Technology Transfer (BPTTT) a
Petition for Cancellation of Registration No. SR 5054 for the trademark
"STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs, jackets,
jogging suits, dresses, shorts, shirts and lingerie under Class 25, issued on
27 October 1980 in the name of petitioner Emerald Garment Manufacturing
Corporation.
- Private respondent averred that petitioner's trademark "so closely
resembled its own trademark, 'LEE' as previously registered and used in the
Philippines cause confusion, mistake and deception on the part of the
purchasing public as to the origin of the goods.
- Petitioner contended that its trademark was entirely and unmistakably
different from that of private respondent and that its certificate of registration
was legally and validly granted.
- Subsequently, petitioner caused the publication of its application for
registration of the trademark ‘STYLISTIC MR. LEE’ in the Principal Register.
Private respondent, on the other hand, filed a notice of opposition to
petitioner’s application on the grounds that petitioner’s trademark was
confusingly similar to its ‘LEE’ trademark.
- On 19 July 1988, the Director of Patents rendered a decision granting
private respondent's petition for cancellation and opposition to registration.
The Director of Patents, using the test of dominancy, declared that
petitioner's trademark was confusingly similar to private respondent's mark
because "it is the word 'Lee' which draws the attention of the buyer and
leads him to conclude that the goods originated from the same
manufacturer. It is undeniably the dominant feature of the mark.
- Petitioner appealed to the CA. CA affirmed the decision of the Director of
Patents such that the word ‘LEE’ is the most prominent and distinctive
feature of the appellant’s trademark and all of the appellee’s LEE
trademarks. It is the mark which draws attention of the buyer and leads him
to conclude that the goods originated from the same manufacturer.
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ISSUE: Whether or not respondent-registrant’s trademark STYLISTIC
MR.LEE is confusingly similar with the petitioner’s trademarks LEE or
LEERIDERS, LEE-LENS and LEE-SURES.
HELD: In order to determine whether a particular name or mark is a
colourable imitation of another, no all-embracing rule seems possible in view
of great number of factors which must necessarily be considered in resolving
this question of fact. The essential element of infringement is colourable
imitation which as defined is a close or ingenious imitation as to be
calculated to deceive ordinary purchasers or such resemblance of the
infringing mark to the original as to deceive an ordinary purchaser giving
such attention as a purchaser usually gives, and to cause him to purchase
the one supposing it to be the other.
- To determine colourable imitation, two tests are developed- dominancy test
and holistic test. Applying the holistic test, the trademarks involved are taken
as a whole and rule that petitioners STYLISTIC MR.LEE is not confusingly
similar to private respondent’s LEE trademark.
- First, the products involved in this case are various kinds of jeans. These
are not your ordinary household items that are of minimal cost. Second, the
average Filipino consumer generally buys his jeans by brand. Finally, more
credit should be given to the ordinary purchaser. There is no cause for the
CA’s apprehension that petitioner’s products might be mistaken as another
variation or line of garments under private respondent’s LEE trademark.
- LEE is primarily a surname thus, private respondent cannot acquire
exclusive ownership over and singular use of said term.
- In the case at bar, the findings of the Director of Patents and the CA were
reversed. It was observed that they mainly relied on the registration
certificates as proof of use by private respondent of the trademark LEE.
- Although the Court decided in favor of the respondent, the appellee has
sufficiently established its right to prior use and registration of the trademark
"LEE" in the Philippines and is thus entitled to protection from any
infringement upon the same. The dissenting opinion of Justice Padilla is
more acceptable.
7|A G UI NA L DO , MANGUERA, MORALESC. & MORALES,
(8) PRO LINE SPORTS CENTER INC. v CA
FACTS: By virtue of merger with A.G Spalding Bros. Inc.,petitioner
QUESTOR, became the owner of the trademark ‘Spalding’. Co-petitioner
PRO LINE, a domestic corporation is the exclusive distributor of Spalding
sports products in the Philippines. Respondent UNIVERSAL, on the other
hand, is a domestic corporation engaged in the sale and manufacture of
sporting goods while co-respondent Monico Sehwani is impleaded in his
capacity as the president of the corporation.
- In 1981, Buncio, General Manager of PRO LINE sent a letter-complaint to
the NBI regarding the alleged manufacture of fake Spalding balls by
UNIVERSAL. The NBI then applied for a search warrant with the CFI. On
that same day, the Judge authorized the search of premises of UNIVERSAL
in Pasig. 1, 200 basketballs and volleyballs were seized and confiscated by
the NBI.
- 3 days later, on the motion of the NBI, Judge Vera issued another order,
this time to seal and padlock the molds, rubber mixer, boiler and other
instruments at the factory of UNIVERSAL.
- PRO LINE and QUESTOR filed a complaint for unfair competition against
respondent Sehwani together with all surnamed Sehwani and delos Reyes
before the Fiscal of Rizal. The complaint was dropped for the reason that
QUESTOR had indeed acquired the registration rights over the mark
Spalding.
CA: Affirmed the order of Judge Vera which lifted the seal and padlock on
the machineries of UNIVERSAL. The Minister of Justice overturned the
earlier dismissal of the complaint and ordered the Provincial Fiscal of Rizal
to file an Information for unfair competition against Sehwani. The latter
pleaded not guilty.
- Thereafter, UNIVERSAL and Sehwani filed a civil case for damages with
the RTC charging PRO LINE and QUESTOR maliciously and without legal
basis committed acts of damage and prejudice. Defendants PRO LINE and
QUESTOR denied all the allegations in the complaint and filed a
counterclaim for damages. RTC granted the claim of UNIVERSAL and the
CA affirmed the decision of the RTC.
I (IPL CASE DIGESTS - SEPT.8,2017)
ISSUES:
(1) Whether private respondent Sehwani and UNIVERSAL are entitled to
recover damages for the alleged wrongful recourse to court proceedings by
PRO LINE and QUESTOR.
(2) Whether petitioners counterclaim can be sustained.
HELD:
(1) PRO LINE and QUESTOR cannot be adjudged liable for damages for the
alleged unfounded suit. The complainants were unable to prove probable
cause and legal malice on the part of petitioner.
- UNIVERSAL failed to show that the filing of criminal case was bereft of
probable cause. In the case before us, then Minister of Justice Ricardo C.
Puno found probable cause when he reversed the Provincial Fiscal who
initially dismissed the complaint and directed him instead to file the
corresponding Information for unfair competition against private respondents
herein.i[7] The relevant portions of the directive are quoted hereunder:
The intent on the part of Universal Sports to deceive the public and to
defraud a competitor by the use of the trademark "Spalding" on basketballs
and volleyballs seems apparent. As President of Universal and as Vice
President of the Association of Sporting Goods Manufacturers, Monico
Sehwani should have known of the prior registration of the trademark
"Spalding" on basketballs and volleyballs when he filed the application for
registration of the same trademark on February 20, 1981, in behalf of
Universal, with the Philippine Patent Office. He was even notified by the
Patent Office through counsel on March 9, 1981, that "Spalding" was duly
registered with said office in connection with sporting goods, implements and
apparatus by A.G. Spalding & Bros., Inc. of the U.S.A.
That Universal has been selling these allegedly misbranded "Spalding" balls
has been controverted by the firms allegedly selling the goods. However,
there is sufficient proof that Universal manufactured balls with the trademark
"Spalding" as admitted by Monico himself and as shown by the goods
confiscated by virtue of the search warrant.
8|A G UI NA L DO , MANGUERA, MORALESC. & MORALES,
Jurisprudence abounds to the effect that either a seller or a manufacturer of
imitation goods may be liable for violation of Section 29 of Rep. Act No. 166
(Alexander v. Sy Bok, 97 Phil. 57). This is substantially the same rule
obtaining in statutes and judicial construction since 1903 when Act No. 666
was approved (Finlay Fleming vs. Ong Tan Chuan, 26 Phil. 579) x x x xii[8]
Petitioners PRO LINE and QUESTOR could not have been moved by legal
malice in instituting the criminal complaint for unfair competition which led to
the filing of the Information against Sehwani. Malice is an inexcusable intent
to injure, oppress, vex, annoy or humiliate. We cannot conclude that
petitioners were impelled solely by a desire to inflict needless and unjustified
vexation and injury on UNIVERSAL's business interests. A resort to judicial
processes is not per se evidence of ill will upon which a claim for damages
may be based. A contrary rule would discourage peaceful recourse to the
courts of justice and induce resort to methods less than legal, and perhaps
even violent.iii[9]
The criminal complaint for unfair competition, including all other legal
remedies incidental thereto, was initiated by petitioners in their honest belief
that the charge was meritorious. For indeed it was. The law brands business
practices which are unfair, unjust or deceitful not only as contrary to public
policy but also as inimical to private interests. In the instant case, we find
quite aberrant Sehwani's reason for the manufacture of 1,200 "Spalding"
balls, i.e., the pending application for trademark registration of UNIVERSAL
with the Patent Office, when viewed in the light of his admission that the
application for registration with the Patent Office was filed on 20 February
1981, a good nine (9) days after the goods were confiscated by the NBI. This
apparently was an afterthought but nonetheless too late a remedy. Be that
as it may, what is essential for registrability is proof of actual use in
commerce for at least sixty (60) days and not the capability to manufacture
and distribute samples of the product to clients.
Arguably, respondents' act may constitute unfair competition even if the
element of selling has not been proved. To hold that the act of selling is an
indispensable element of the crime of unfair competition is illogical because
if the law punishes the seller of imitation goods, then with more reason
should the law penalize the manufacturer. In this case, it was observed by
the Minister of Justice that the manufacture of the "Spalding" balls was
I (IPL CASE DIGESTS - SEPT.8,2017)
obviously done to deceive would-be buyers. The projected sale would have
pushed through were it not for the timely seizure of the goods made by the
NBI. That there was intent to sell or distribute the product to the public
cannot also be disputed given the number of goods manufactured and the
nature of the machinery and other equipment installed in the factory.
(2) We nonetheless affirm the dismissal of petitioners' counterclaim for
damages. A counterclaim partakes of the nature of a complaint and/or a
cause of action against the plaintiffs.iv[13] It is in itself a distinct and
independent cause of action, so that when properly stated as such, the
defendant becomes, in respect to the matter stated by him, an actor, and
there are two simultaneous actions pending between the same parties,
where each is at the same time both a plaintiff and defendant.v[14] A
counterclaim stands on the same footing and is to be tested by the same
rules, as if it were an independent action.vi[15]
Petitioners' counterclaim for damages based on the illegal and unauthorized
manufacture of "Spalding" balls certainly constitutes an independent cause
of action which can be the subject of a separate complaint for damages
against UNIVERSAL. However, this separate civil action cannot anymore be
pursued as it is already barred by res judicata, the judgment in the criminal
case (against Sehwani) involving both the criminal and civil aspects of the
case for unfair competition.
(9)CANON KABUSHIKI KAISHA vs CA
FACTS: NSR Rubber Corporation (private respondent) filed an application
for registration of the mark CANON for sandals in the Bureau of Patents,
Trademarks, and Technology Transfer (BPTTT). A Verified Notice of
Opposition was filed by petitioner, a foreign corporation duly organized and
existing under the laws of Japan, alleging that it will be damaged by the
registration of the trademark CANON in the name of private respondent.
Based on the records, the evidence presented by petitioner consisted of its
certificates of registration for the mark CANON in various countries covering
goods belonging to class 2 (paints, chemical products, toner, and dye stuff).
Petitioner also submitted in evidence its Philippine Trademark Registration
No. 39398, showing its ownership over the trademark CANON also under
class 2.
9|A G UI NA L DO , MANGUERA, MORALESC. & MORALES,
Bureau of Patent—issued its decision dismissing the opposition of
petitioner and giving due course to private respondents application for the
registration of the trademark CANON.
CA—affirmed the decision of the BPTTT.
Hence, this petition.
ISSUE: Whether or not petitioned is entitled to exclusive use of the mark
Canon.
RULING: No, the court held that petitioner is using the Canon mark for
products belonging to class 2, while respondent is using the mark for
sandals belonging to class 25.
Ordinarily, the ownership of a trademark or tradename is a property right that
the owner is entitled to protect as mandated by the Trademark Law.
However, when a trademark is used by a party for a product in which the
other party does not deal, the use of the same trademark on the latter’s
product cannot be validly objected to.
A review of the records shows that with the order of the BPTTT declaring
private respondent in default for failure to file its answer, petitioner had every
opportunity to present ex-parte all of its evidence to prove that its certificates
of registration for the trademark CANON cover footwear. The certificates of
registration for the trademark CANON in other countries and in the
Philippines as presented by petitioner, clearly showed that said certificates of
registration cover goods belonging to class 2 (paints, chemical products,
toner, dyestuff). On this basis, the BPTTT correctly ruled that since the
certificate of registration of petitioner for the trademark CANON covers class
2 (paints, chemical products, toner, dyestuff), private respondent can use the
trademark CANON for its goods classified as class 25 (sandals). Clearly,
there is a world of difference between the paints, chemical products, toner,
and dyestuff of petitioner and the sandals of private respondent.
In cases of confusion of business or origin, the question that usually arises is
whether the respective goods or services of the senior user and the junior
user are so related as to likely cause confusion of business or origin, and
thereby render the trademark or tradenames confusingly similar. Goods are
related when they belong to the same class or have the same descriptive
I (IPL CASE DIGESTS - SEPT.8,2017)
properties; when they possess the same physical attributes or essential
characteristics with reference to their form, composition, texture or quality.
They may also be related because they serve the same purpose or are sold
in grocery stores.
Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner
that carry the trademark CANON are unrelated to sandals, the product of
private respondent. We agree with the BPTTT, following the Esso doctrine,
when it noted that the two classes of products in this case flow through
different trade channels. The products of petitioner are sold through special
chemical stores or distributors while the products of private respondent are
sold in grocery stores, sari-sari stores and department stores. Thus, the
evident disparity of the products of the parties in the case at bar renders
unfounded the apprehension of petitioner that confusion of business or origin
might occur if private respondent is allowed to use the mark CANON.
(10) SHANGRI-LA INT’L HOTEL MGT. vs CA
DEVELOPMENT GROUP COMPANY vs CA (consolidated cases)
FACTS: The Shangri-La International Hotel Management, Ltd., Shangri-La
Properties, Inc., Makati Shangri-La Hotel and Resort, Inc. and Kuok
Philippine Properties, Inc. (hereinafter collectively referred as the "Shangri-
La Group"), filed with the Bureau of Patents, Trademarks and Technology
Transfer (BPTTT) a petition for the cancellation of the registration of the
"Shangri-La" mark and "S" device/logo issued to the Developers Group of
Companies, Inc., on the ground that the same was illegally and fraudulently
obtained and appropriated for the latter's restaurant business. The Shangri-
La Group alleged that it is the legal and beneficial owners of the subject
mark and logo; that it has been using the said mark and logo for its corporate
affairs and business since March 1962 and caused the same to be specially
designed for their international hotels in 1975, much earlier than the alleged
first use thereof by the Developers Group in 1982.
Almost three (3) years later, or on April 15, 1991, the Developers Group
instituted with the Regional Trial Court of Quezon City, Branch 99, a
complaint for infringement and damages with prayer for injunction, docketed
as Civil Case No. Q-91-8476, against the Shangri-La Group.
10 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
Likewise, the Shangri-La Group filed with the BPTTT its own application for
registration of the subject mark and logo. The Developers Group filed an
opposition to the application. The Shangri-La Group moved for the
suspension of the proceedings in the infringement case on account of the
pendency of the administrative proceedings before the BPTTT.
TC—denied the motion to suspend the proceedings in the infringement case.
(Shangri-La filed a petition for certiorari.)
CA—dismissed the petition.
Hence, this petition.
ISSUE: Whether or not despite the institution of an Inter Partes case for
cancellation of a mark with the BPTTT (now the Bureau of Legal Affairs,
Intellectual Property Office) by one party, the adverse party can file a
subsequent action for infringement with the regular courts of justice in
connection with the same registered mark.
RULING: YES.
Section 151.2 of Republic Act No. 8293, otherwise known as the Intellectual
Property Code, provides, as follows –
Section 151.2. Notwithstanding the foregoing provisions, the court
or the administrative agency vested with jurisdiction to hear and
adjudicate any action to enforce the rights to a registered mark shall
likewise exercise jurisdiction to determine whether the registration
of said mark may be cancelled in accordance with this Act. The
filing of a suit to enforce the registered mark with the proper court or
agency shall exclude any other court or agency from assuming
jurisdiction over a subsequently filed petition to cancel the same
mark. On the other hand, the earlier filing of petition to cancel
the mark with the Bureau of Legal Affairs shall not constitute a
prejudicial question that must be resolved before an action to
enforce the rights to same registered mark may be decided.
Hence, as applied in the case at bar, the earlier institution of an Inter
Partes case by the Shangri-La Group for the cancellation of the
I (IPL CASE DIGESTS - SEPT.8,2017)
"Shangri-La" mark and "S" device/logo with the BPTTT cannot
effectively bar the subsequent filing of an infringement case by
registrant Developers Group.
The rationale is plain: Certificate of Registration No. 31904, upon which the
infringement case is based, remains valid and subsisting for as long as it has
not been cancelled by the Bureau or by an infringement court. As such,
Developers Group's Certificate of Registration in the principal register
continues as "prima facie evidence of the validity of the registration, the
registrant's ownership of the mark or trade-name, and of the registrant's
exclusive right to use the same in connection with the goods, business or
services specified in the certificate." Since the certificate still subsists,
Developers Group may thus file a corresponding infringement suit and
recover damages from any person who infringes upon the former's rights.
Furthermore, the issue raised before the BPTTT is quite different from that
raised in the trial court. The issue raised before the BPTTT was whether the
mark registered by Developers Group is subject to cancellation, as the
Shangri-La Group claims prior ownership of the disputed mark. On the other
hand, the issue raised before the trial court was whether the Shangri-La
Group infringed upon the rights of Developers Group within the
contemplation of Section 22 of Republic Act 166.
The infringement case can and should proceed independently from the
cancellation case with the Bureau so as to afford the owner of certificates of
registration redress and injunctive writs. In the same light, so must the
cancellation case with the BPTTT (now the Bureau of Legal Affairs,
Intellectual Property Office) continue independently from the infringement
case so as to determine whether a registered mark may ultimately be
cancelled. However, the Regional Trial Court, in granting redress in favor of
Developers Group, went further and upheld the validity and preference of the
latter's registration over that of the Shangri-La Group.
With the decision of the Regional Trial Court upholding the validity of the
registration of the service mark "Shangri-La" and "S" logo in the name of
Developers Group, the cancellation case filed with the Bureau hence
becomes moot. To allow the Bureau to proceed with the cancellation case
would lead to a possible result contradictory to that which the Regional Trial
Court has rendered, albeit the same is still on appeal. Such a situation is
certainly not in accord with the orderly administration of justice. In any event,
11 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
the Court of Appeals has the competence and jurisdiction to resolve the
merits of the said RTC decision.
(11)McDONALD’S CORPORATION vs L.C BIG MAK BURGER
FACTS: Petitioner McDonalds Corporation (McDonalds) is a corporation
organized under the laws of Delaware, United States. McDonalds operates,
by itself or through its franchisees, a global chain of fast-food restaurants.
McDonalds owns a family of marks including the Big Mac mark for its
double-decker hamburger sandwich. McDonalds registered this trademark
with the United States Trademark Registry on 16 October 1979. Based on
this Home Registration, McDonalds applied for the registration of the same
mark in the Principal Register of the then Philippine Bureau of Patents,
Trademarks and Technology (PBPTT), now the Intellectual Property Office
(IPO). Pending approval of its application, McDonalds introduced its Big Mac
hamburger sandwiches in the Philippine market in September 1981. On 18
July 1985, the PBPTT allowed registration of the Big Mac mark in the
Principal Register based on its Home Registration in the United States.
Like its other marks, McDonalds displays the Big Mac mark in items and
paraphernalia in its restaurants, and in its outdoor and indoor signages.
From 1982 to 1990, McDonalds spent P10.5 million in advertisement for Big
Mac hamburger sandwiches alone.
Petitioner McGeorge Food Industries (petitioner McGeorge), a domestic
corporation, is McDonalds Philippine franchisee.
Respondent L.C. Big Mak Burger, Inc. (respondent corporation) is a
domestic corporation which operates fast-food outlets and snack vans in
Metro Manila and nearby provinces. Respondent corporations menu
includes hamburger sandwiches and other food items. Respondents Francis
B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo, Araceli
Aycardo, and Grace Huerto (private respondents) are the incorporators,
stockholders and directors of respondent corporation.
On 21 October 1988, respondent corporation applied with the PBPTT for the
registration of the Big Mak mark for its hamburger sandwiches. McDonalds
opposed respondent corporation’s application on the ground that Big Mak
was a colorable imitation of its registered Big Mac mark for the same food
products. McDonalds also informed respondent Francis Dy (respondent Dy),
I (IPL CASE DIGESTS - SEPT.8,2017)
the chairman of the Board of Directors of respondent corporation, of its
exclusive right to the Big Mac mark and requested him to desist from using
the Big Mac mark or any similar mark.
Petitioners sued respondents in the Regional Trial Court of Makati, Branch
137 (RTC), for trademark infringement and unfair competition.
RTC—issued a TRO against respondents enjoining them from using the Big
Mak mark in the operation of their business in the National Capital Region.
Respondent’s contention:
Respondents admitted that they have been using the name Big
Mak Burger for their fast-food business. Respondents claimed,
however, that McDonalds does not have an exclusive right to the
Big Mac mark or to any other similar mark. Respondents point out
that the Isaiyas Group of Corporations (Isaiyas Group) registered
the same mark for hamburger sandwiches with the PBPTT on 31
March 1979. One Rodolfo Topacio (Topacio) similarly registered
the same mark on 24 June 1983, prior to McDonalds registration on
18 July 1985. Alternatively, respondents claimed that they are not
liable for trademark infringement or for unfair competition, as the
Big Mak mark they sought to register does not constitute a
colorable imitation of the Big Mac mark. Respondents asserted that
they did not fraudulently pass off their hamburger sandwiches as
those of petitioners Big Mac hamburgers.
Petitioner’s Contention:
Petitioners denied respondents claim that McDonalds is not the
exclusive owner of the Big Mac mark. Petitioners asserted that
while the Isaiyas Group and Topacio did register the Big Mac mark
ahead of McDonalds, the Isaiyas Group did so only in the
Supplemental Register of the PBPTT and such registration does
not provide any protection. McDonalds disclosed that it had
acquired Topacios rights to his registration in a Deed of Assignment
RTC—finding respondent’s corporation liable for trademark infringement and
unfair competition.
12 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
CA—reversed the Decision of the RTC, ordering McDonalds to pay
respondents P1,600,000 as actual and compensatory damages and
P300,000 as moral damages.
Hence, this petition.
ISSUE:
1. Whether or not there is colorable imitation resulting in likelihood of
confusion;
2. Whether or not there is unfair competition.
RULING:
1. YES. In determining likelihood of confusion, jurisprudence has
developed two tests, the dominancy test and the holistic test. The
dominancy test focuses on the similarity of the prevalent features of
the competing trademarks that might cause confusion. In contrast,
the holistic test requires the court to consider the entirety of the
marks as applied to the products, including the labels and
packaging, in determining confusing similarity. This Court, however,
has relied on the dominancy test rather than the holistic test. The
test of dominancy is now explicitly incorporated into law in Section
155.1 of the Intellectual Property Code which defines infringement
as the “colorable imitation of a registered mark xxx or a dominant
feature thereof.”
Applying the dominancy test, the Court finds that respondents’ use
of the “Big Mak” mark results in likelihood of confusion. Aurally the
two marks are the same, with the first word of both marks
phonetically the same, and the second word of both marks also
phonetically the same. Visually, the two marks have both two words
and six letters, with the first word of both marks having the same
letters and the second word having the same first two letters. In
spelling, considering the Filipino language, even the last letters of
both marks are the same. Clearly, respondents have adopted in
“Big Mak” not only the dominant but also almost all the features of
“Big Mac.” Applied to the same food product of hamburgers, the two
marks will likely result in confusion in the public mind. Certainly,
“Big Mac” and “Big Mak” for hamburgers create even greater
confusion, not only aurally but also visually. Indeed, a person
I (IPL CASE DIGESTS - SEPT.8,2017)
 cannot distinguish “Big Mac” from “Big Mak” by their sound. When
one hears a “Big Mac” or “Big Mak” hamburger advertisement over
the radio, one would not know whether the “Mac” or “Mak” ends
with a “c” or a “k.”
2. YES. The essential elements of an action for unfair competition are
(1) confusing similarity in the general appearance of the goods, and
(2) intent to deceive the public and defraud a competitor. The
confusing similarity may or may not result from similarity in the
marks, but may result from other external factors in the packaging
or presentation of the goods. The intent to deceive and defraud
may be inferred from the similarity of the appearance of the goods
as offered for sale to the public. Actual fraudulent intent need not be
shown. Unfair competition is broader than trademark infringement
and includes passing off goods with or without trademark
infringement. Trademark infringement is a form of unfair
competition. Trademark infringement constitutes unfair competition
when there is not merely likelihood of confusion, but also actual or
probable deception on the public because of the general
appearance of the goods. There can be trademark infringement
without unfair competition as when the infringer discloses on the
labels containing the mark that he manufactures the goods, thus
preventing the public from being deceived that the goods originate
from the trademark owner.
Respondents’ goods are hamburgers which are also the goods of
petitioners. Since respondents chose to apply the “Big Mak” mark
on hamburgers, just like petitioner’s use of the “Big Mac” mark on
hamburgers, respondents have obviously clothed their goods with
the general appearance of petitioners’ goods. There is actually no
notice to the public that the “Big Mak” hamburgers are products of
“L.C. Big Mak Burger, Inc.” and not those of petitioners who have
the exclusive right to the “Big Mac” mark. This clearly shows
respondents’ intent to deceive the public. We hold that as found by
the RTC, respondent corporation is liable for unfair competition.
(12) SHANGRI-LA INTERNATIONAL vs DEVELOPER’S GROUP
FACTS: The core of the controversy are the Shangri-La mark and S logo.
Respondent DGCI claims ownership of said mark and logo in the Philippines
13 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
on the strength of its prior use thereof within the country. As DGCI stresses
at every turn, it filed on October 18, 1982 with the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT) pursuant to Sections 2 and 4
of Republic Act (RA) No. 166,[3] as amended, an application for registration
covering the subject mark and logo. On May 31, 1983, the BPTTT issued in
favor of DGCI the corresponding certificate of registration therefor, i.e.,
Registration No. 31904. Since then, DGCI started using the Shangri-La mark
and S logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels with
interest in hotels and hotel-related transactions since 1969. As far back as
1962, it adopted the name Shangri-La as part of the corporate names of all
companies organized under the aegis of the Kuok Group of Companies (the
Kuok Group). The Kuok Group has used the name Shangri-La in all Shangri-
La hotels and hotel-related establishments around the world which the Kuok
Family owned.
To centralize the operations of all Shangri-la hotels and the ownership of the
Shangri-La mark and S logo, the Kuok Group had incorporated in Hong
Kong and Singapore, among other places, several companies that form part
of the Shangri-La International Hotel Management Ltd. Group of Companies.
EDSA Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel and
Resort, Inc. were incorporated in the Philippines beginning 1987 to own and
operate the two (2) hotels put up by the Kuok Group in Mandaluyong and
Makati, Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM Group of
Companies adopted and used the distinctive lettering of the name Shangri-
La as part of their trade names.
Since 1975 and up to the present, the Shangri-La mark and S logo have
been used consistently and continuously by all Shangri-La hotels and
companies in their paraphernalia, such as stationeries, envelopes, business
forms, menus, displays and receipts.
The Kuok Group and/or petitioner SLIHM caused the registration of, and in
fact registered, the Shangri-La mark and S logo in the patent offices in
different countries around the world.
I (IPL CASE DIGESTS - SEPT.8,2017)
The petitioners filed with the BPTTT a petition, docketed as Inter Partes
Case praying for the cancellation of the registration of the Shangri-La mark
and S logo issued to respondent DGCI on the ground that the same were
illegally and fraudulently obtained and appropriated for the latter's restaurant
business. They also filed in the same office Inter Partes Case praying for the
registration of the same mark and logo in their own names.
RTC—rendered decision against SLIHM (petitioner), petitioner SLIHM’s use
of the mark and logo in dispute constitutes an infringement of DGCIs right
thereto.
CA—affirmed the decision of the RTC
ISSUE: Whether or not Respondent’s is the owner of the trademark.
RULING: NO.
Ownership of a mark or trade name may be acquired not necessarily by
registration but by adoption and use in trade or commerce. As between
actual use of a mark without registration, and registration of the mark without
actual use thereof, the former prevails over the latter. For 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 pre-requisite to
the acquisition of the right of ownership.
While the present law on trademarks has dispensed with the requirement of
prior actual use at the time of registration, the law in force at the time of
registration must be applied, and thereunder it was held that as a condition
precedent to registration of trademark, trade name or service mark, the
same must have been in actual use in the Philippines before the filing of the
application for registration. Trademark is a creation of use and therefore
actual use is a pre-requisite to exclusive ownership and its registration with
the Philippine Patent Office is a mere administrative confirmation of the
existence of such right.
By itself, registration is not a mode of acquiring ownership. When the
applicant is not the owner of the trademark being applied for, he has no
right to apply for registration of the same. Registration merely creates a
prima facie presumption of the validity of the registration, of the registrant's
ownership of the trademark and of the exclusive right to the use thereof.
14 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
Such presumption, just like the presumptive regularity in the performance of
official functions, is rebuttable and must give way to evidence to the contrary.
Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney
signboard artist allegedly commissioned to create the mark and logo
submitted his designs only in December 1982. This was two-and-a-half
months after the filing of the respondent’s trademark application on
October 18, 1982 with the BPTTT. It was also only in December 1982
when the respondent's restaurant was opened for business.
Respondent cannot now claim before the Court that the certificate of
registration itself is proof that the two-month prior use requirement
was complied with, what with the fact that its very own witness testified
otherwise in the trial court. And because at the time (October 18, 1982) the
respondent filed its application for trademark registration of the Shangri-La
mark and S logo, respondent was not using these in the Philippines
commercially, the registration is void.
Petitioners also argue that the respondent's use of the Shangri-La mark
and S logo was in evident bad faith and cannot therefore ripen into
ownership, much less registration.
Admittedly, the CA was not amiss in saying that the law requires the actual
use in commerce of the said trade name and S logo in the Philippines.
Hence, consistent with its finding that the bulk of the petitioners' evidence
shows that the alleged use of the Shangri-La trade name was done
abroad and not in the Philippines, it is understandable for that court to
rule in respondents favor. Unfortunately, however, what the CA failed to
perceive is that there is a crucial difference between the aforequoted
Section 2 and Section 2-A of R.A. No. 166. For, while Section 2 provides
for what is registrable, Section 2-A, on the other hand, sets out how
ownership is acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner
thereof and must have actually used the mark in commerce in the
Philippines for 2 months prior to the application for registration. Since
ownership of the trademark is required for registration, Section 2-A of the
same law sets out to define how one goes about acquiring ownership
thereof. Under Section 2-A, it is clear that actual use in commerce is also the
test of ownership but the provision went further by saying that the mark must
not have been so appropriated by another. Additionally, it is significant to
I (IPL CASE DIGESTS - SEPT.8,2017)
note that Section 2-A does not require that the actual use of a trademark
must be within the Philippines. Hence, under R.A. No. 166, as amended, one
may be an owner of a mark due to actual use thereof but not yet have the
right to register such ownership here due to failure to use it within the
Philippines for two months.
While the petitioners may not have qualified under Section 2 of R.A. No.
166 as a registrant, neither did respondent DGCI, since the latter also
failed to fulfill the 2-month actual use requirement. What is worse, DGCI
was not even the owner of the mark. For it to have been the owner, the
mark must not have been already appropriated (i.e., used) by someone
else. At the time of respondent DGCI's registration of the mark, the
same was already being used by the petitioners, albeit abroad, of
which DGCIs president was fully aware.
Thus, the owner of the mark is the Petitioner.
13. PHILIP MORRIS, INC v. FORTUNE TOBACCO CORP.
FACTS: Petitioner is a corporation organized under the laws of the State of
Virginia, United States of America is the registered owner of the trademark
"MARK VII" for cigarettes. Similarly, Petitioner (Benson & Hedges (Canada),
Inc.,)) a subsidiary of Petitioner is the registered owner of the trademark
"MARK TEN" for cigarettes.
As can be seen in Trademark Certificate of Registration No. 19053,
another subsidiary of Philip Morris, Inc., the Swiss company Fabriques de
Tabac Reunies, S.A., is the assignee of the trademark "LARK," which was
originally registered in 1964 by Ligget and Myers Tobacco Company.
On the other hand, Respondent is a company organized in the
Philippines, manufactures and sells cigarettes using the trademark "MARK."
All petitioners claimed that an infringement of their respective
trademarks had been committed. On that matter, they filed on August 18,
1982, a Complaint for Infringement of Trademark and Damages against
Respondent before the RTC Pasig.
Petitioners’ Arguments:
15 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
 Alleged that they are foreign corporations not doing business in the
Philippines and are suing on an isolated transaction. Also, the
countries in which they are domiciled grant to corporate or juristic
persons of the Philippines the privilege to bring action for
infringement, without need of a license to do business in those
countries.
 Being registered owners of the trademark "MARK VII" and "MARK
TEN" for cigarettes as evidenced by the corresponding certificates
of registration and an applicant for the registration of the trademark
"LARK MILDS". They claimed that they have registered the
aforementioned trademarks in their respective countries of origin
and that, by virtue of the long and extensive usage of the same,
these trademarks have already gained international fame and
acceptance.
 Claimed that Respondent, without any previous consent from any of
them, manufactured and sold cigarettes bearing the identical and/or
confusingly similar trademark "MARK". Accordingly, they argued
that Respondent’s use of the trademark "MARK" in its cigarette
products have caused and is likely to cause confusion or mistake,
or would deceive purchasers and the public in general into buying
these products under the impression and mistaken belief that they
are buying Petitioner’s products.
Respondent filed its Answer denying Petitioners’ material allegations
and averred that "MARK" is a common word, which cannot particularly
identify a product to be the product of the Petitioners.
 RTC - Respondent did not commit trademark infringement; It
expounded that "in order for a name, symbol or device to constitute
a trademark, it must, either by itself or by association, point
distinctly to the origin or ownership of the article to which it is
applied and be of such nature as to permit an exclusive
appropriation by one person". Applying such principle to the instant
case, the trial court was of the opinion that the words "MARK",
"TEN", "LARK" and the Roman Numerals "VII", either alone or in
combination of each other do not by themselves or by association
point distinctly to the origin or ownership of the cigarettes to which
they refer, such that the buying public could not be deceived into
I (IPL CASE DIGESTS - SEPT.8,2017)
 believing that [respondent’s] "MARK" cigarettes originated either
from the USA, Canada, or Switzerland.
TEST: likelihood of confusion or deception.
Petitioners’ failed to pass these tests as it neither presented
witnesses or purchasers attesting that they have bought
Respondent’s product believing that they bought Petitioners’
"MARK VII", "MARK TEN" or "LARK", and have also failed to
introduce in evidence a specific magazine or periodical circulated
locally, which promotes and popularizes their products in the
Philippines. It, moreover, elucidated that the words consisting of the
trademarks allegedly infringed by Respondent failed to show that
they have acquired a secondary meaning as to identify them as
Petitioners’ products. Hence, the court ruled that the Petitioners’
cannot avail themselves of the doctrine of secondary meaning.
 CA – Petitioners’ have the legal capacity to sue; Infringement issue
– in favour Respondent
ISSUES: (1) WON Petitioners’ have a legal capacity to sue? And (2) WON
Respondent is liable for infringement?
RULING:
(1) Yes, Petitioners’ standing to sue in Philippine courts had been
recognized. However, the registration of a trademark gives the
registrant, such as Petitioners’, advantages denied non-registrants
or ordinary users, like Respondent. While Petitioners’ enjoy the
statutory presumptions arising from such registration (i.e., as to the
validity of the registration, ownership and the exclusive right to use
the registered marks) they may not successfully sue on the basis
alone of their respective certificates of registration of trademarks.
For, petitioners are still foreign corporations. As such, they ought,
as a condition to availment of the rights and privileges vis-à-vis their
trademarks in this country, to show proof that, on top of Philippine
registration, their country grants substantially similar rights and
privileges to Filipino citizens pursuant to Section 21-A of R.A. No.
166.
16 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
As well, the fact that their respective home countries, namely, the
United States, Switzerland and Canada, are, together with the
Philippines, members of the Paris Union does not automatically
entitle petitioners to the protection of their trademarks in this
country absent actual use of the marks in local commerce and
trade.
True, the Philippines’ adherence to the Paris Convention effectively
obligates the country to honor and enforce its provisions as regards
the protection of industrial property of foreign nationals in this
country. However, any protection accorded has to be made subject
to the limitations of Philippine laws. Hence, despite Article 2 of the
Paris Convention which substantially provides that (1) nationals of
member-countries shall have in this country rights specially
provided by the Convention as are consistent with Philippine laws,
and enjoy the privileges that Philippine laws now grant or may
hereafter grant to its nationals, and (2) while no domicile
requirement in the country where protection is claimed shall be
required of persons entitled to the benefits of the Union for the
enjoyment of any industrial property rights, foreign nationals must
still observe and comply with the conditions imposed by Philippine
law on its nationals.
Considering that R.A. No. 166, as amended, specifically Sections
2 and 2-A thereof, mandates actual use of the marks and/or
emblems in local commerce and trade before they may be
registered and ownership thereof acquired. Therefore, Petitioners’
cannot, therefore, dispense with the element of actual use.
Their being nationals of member-countries of the Paris Union
does not alter the legal situation.
With the foregoing perspective, it may be stated right off that the
registration of a trademark unaccompanied by actual use thereof in
the country accords the registrant only the standing to sue for
infringement in Philippine courts. Entitlement to protection of such
trademark in the country is entirely a different matter.
Note: Registration does not confer upon the registrant an absolute right to
the registered mark. The certificate of registration merely constitutes prima
I (IPL CASE DIGESTS - SEPT.8,2017)
facie evidence that the registrant is the owner of the registered mark.
Evidence of non-usage of the mark rebuts the presumption of trademark
ownership, as what happened here when petitioners no less admitted not
doing business in this country.
(2) No, Respondent is not liable for infringement. The Court ruled
that even if the dominancy test were to be used, as urged by the
petitioners, but bearing in mind that a trademark serves as a tool to
point out distinctly the origin or ownership of the goods to which it is
affixed, the likelihood of confusion tantamount to infringement
appears to be farfetched. The reason for the origin and/or
ownership angle is that unless the words or devices do so point out
the origin or ownership, the person who first adopted them cannot
be injured by any appropriation or imitation of them by others, nor
can the public be deceived. Since the word "MARK," be it alone or
in combination with the word "TEN" and the Roman numeral "VII,"
does not point to the origin or ownership of the cigarettes to which
they apply, the local buying public could not possibly be confused
or deceived that respondent’s "MARK" is the product of petitioners
and/or originated from the U.S.A., Canada or Switzerland. And lest
it be overlooked, no actual commercial use of petitioners’ marks in
local commerce was proven. There can thus be no occasion for the
public in this country, unfamiliar in the first place with petitioners’
marks, to be confused.
(14) MCDONALD’S CORP v. MACJOY FASTFOOD CORP
FACTS: Respondent is a domestic corporation engaged in the sale of fast
food products in Cebu City, filed an application, for the registration of the
trademark MACJOY & DEVICE for fried chicken, chicken barbeque, burgers,
fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks under
classes 29 and 30 of the International Classification of Goods.
Petitioner is a corporation duly organized and existing under the
laws of the State of Delaware, USA, filed a verified Notice of Opposition
against the Respondent’s application claiming that the trademark MACJOY
& DEVICE so resembles its corporate logo, otherwise known as the Golden
Arches or M design, and its marks McDonalds, McChicken, MacFries,
BigMac, McDo, McSpaghetti, McSnack, and Mc such that when used on
identical or related goods, the trademark applied for would confuse or
17 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
deceive purchasers into believing that the goods originate from the same
source or origin. Likewise, the petitioner alleged that the respondents use
and adoption in bad faith of the MACJOY & DEVICE mark would falsely tend
to suggest a connection or affiliation with Petitioner’s restaurant services and
food products, thus, constituting a fraud upon the general public and further
cause the dilution of the distinctiveness of petitioners registered and
internationally recognized MCDONALDS marks to its prejudice and
irreparable damage.
Respondent denied the aforementioned allegations of the Petitioner
and averred that it has used the mark MACJOY for the past many years in
good faith and has spent considerable sums of money for said marks
extensive promotion in tri-media, especially in Cebu City where it has been
doing business long before the petitioner opened its outlet thereat sometime
in 1992; and that its use of said mark would not confuse affiliation with the
petitioners restaurant services and food products because of the differences
in the design and detail of the two (2) marks.
 IPO – rejected Respondent’s application; The predominance of the
letter M, and the prefixes Mac/Mc in both the MACJOY and the
MCDONALDS marks lead to the conclusion that there is confusing
similarity between them especially since both are used on almost
the same products falling under classes 29 and 30 of the
International Classification of Goods // DOMINANCY TEST
 CA – reversed IPO; 1. The word MacJoy is written in round script
while the word McDonalds is written in single stroke gothic; 2. The
word MacJoy comes with the picture of a chicken head with cap
and bowtie and wings sprouting on both sides, while the word
McDonalds comes with an arches M in gold colors, and absolutely
without any picture of a chicken; 3. The word MacJoy is set in deep
pink and white color scheme while McDonalds is written in red,
yellow and black color combination; 4. The facade of the respective
stores of the parties is entirely different. Respondent restaurant is
set also in the same bold, brilliant and noticeable color scheme as
that of its wrappers, containers, cups, etc., while Petitioner’s
restaurant is in yellow and red colors, and with the mascot of
Ronald McDonald being prominently displayed therein. // HOLISTIC
TEST
I (IPL CASE DIGESTS - SEPT.8,2017)
ISSUES: (1) WON there is a confusing similarity between the MCDONALDS
marks of the petitioner and the respondents MACJOY & DEVICE trademark
when applied to Classes 29 and 30 of the International Classification of
Goods? and (2) WON P is the prior-user?
RULING:
(1) The Court finds that herein petitioners MCDONALDS and
respondents MACJOY marks are confusingly similar with each
other such that an ordinary purchaser can conclude an association
or relation between the marks.
The Court used the DOMINANCY TEST:
 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.
 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. Indisputably, the
respondent’s trademark application for the MACJOY &
DEVICE trademark covers goods under Classes 29 and
30 of the International Classification of Goods, namely,
fried chicken, chicken barbeque, burgers, fries, spaghetti,
etc. Likewise, the petitioner’s trademark registration for
the MCDONALDS marks in the Philippines covers goods
which are similar if not identical to those covered by the
respondent’s application.
(2) Yes, Petitioner is the prior-user. Pursuant to Section 37of R.A.
No. 166, as amended, as well as the provision regarding the
protection of industrial property of foreign nationals in this country
as embodied in the Paris Convention under which the Philippines
18 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
and the petitioners domicile, the United States, are adherent-
members, the petitioner was able to register its MCDONALDS
marks successively, i.e., McDonalds in 04 October, 1971; the
corporate logo which is the M or the golden arches design and the
McDonalds with the M or golden arches design both in 30 June
1977; and so on and so forth.
On the other hand, it is not disputed that the respondent’s
application for registration of its trademark MACJOY & DEVICE
was filed only on March 14, 1991 albeit the date of first use in
the Philippines was December 7, 1987. Hence, from the evidence
on record, it is clear that the petitioner has duly established its
ownership of the mark/s. Respondents contention that it was the
first user of the mark in the Philippines having
used MACJOY & DEVICE on its restaurant business and food
products since December, 1987 at Cebu City while the first
McDonalds outlet of the petitioner thereat was opened only in 1992,
is downright unmeritorious. For the requirement of actual use in
commerce x x x in the Philippines before one may register a
trademark, trade-name and service mark under the Trademark Law
pertains to the territorial jurisdiction of the Philippines and is not
only confined to a certain region, province, city or barangay.
Likewise wanting in merit is the respondents claim that the
petitioner cannot acquire ownership of the word Mac because it is a
personal name which may not be monopolized as a trademark as
against others of the same name or surname. As stated earlier,
once a trademark has been registered, the validity of the mark
is prima facie presumed. In this case, the respondent failed to
overcome such presumption.
(15) SKECHERS USA INC. v. INTER PACIFIC INTERNATIONAL
TRADING CORP.
FACTS: Petitioner filed with RTC Manila an application for the issuance of
search warrants against an outlet and warehouse operated by Respondents
for infringement of trademark under Section 155, in relation to Section 170 of
Republic Act No. 8293, otherwise known as the Intellectual Property Code of
the Philippines.
I (IPL CASE DIGESTS - SEPT.8,2017)
 In the course of its business, petitioner has registered the
trademark SKECHERS and the trademark S (within an oval design) with the
Intellectual Property Office (IPO).
2 search warrants were issued by the RTC and were served on the
premises of Respondents. As a result of the raid, more than 6,000 pairs of
shoes bearing the S logo were seized.
Respondents moved to quash the search warrants, arguing that
there was no confusing similarity between Petitioners Skechers rubber
shoes and its Strong rubber shoes.
 RTC – issued an Order quashing the search warrants and directing
the NBI to return the seized goods. The RTC agreed with
Respondent’s view that Skechers rubber shoes and Strong rubber
shoes have glaring differences such that an ordinary prudent
purchaser would not likely be misled or confused in purchasing the
wrong article.
 CA – affirmed RTC
ISSUE: WON respondent is guilty of trademark infringement?
RULING: Yes, Respondent is guilty of trademark infringement. The
Court applying the Dominancy Test to the case at bar, this Court finds that
the use of the stylized S by respondent in its Strong rubber shoes infringes
on the mark already registered by petitioner with the IPO. While it is
undisputed that petitioners stylized S is within an oval design, to this Courts
mind, the dominant feature of the trademark is the stylized S, as it is
precisely the stylized S which catches the eye of the purchaser. Thus, even
if respondent did not use an oval design, the mere fact that it used the same
stylized S, the same being the dominant feature of petitioners trademark,
already constitutes infringement under the Dominancy Test.
Furthermore, respondent did not simply use the letter S, but it
appears to this Court that based on the font and the size of the lettering, the
stylized S utilized by respondent is the very same stylized S used by
petitioner; a stylized S which is unique and distinguishes petitioners
trademark. Indubitably, the likelihood of confusion is present as purchasers
will associate the respondents use of the stylized S as having been
19 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
authorized by petitioner or that respondents product is connected with
petitioners business.
While there may be dissimilarities between the appearances of the
shoes, to this Courts mind such dissimilarities do not outweigh the stark and
blatant similarities in their general features. As can be readily observed by
simply comparing petitioners Energy model and respondents Strong rubber
shoes, respondent also used the color scheme of blue, white and gray
utilized by petitioner. Even the design and wavelike pattern of the midsole
and outer sole of respondents shoes are very similar to petitioners shoes, if
not exact patterns thereof. At the side of the midsole near the heel of both
shoes are two elongated designs in practically the same location. Even the
outer soles of both shoes have the same number of ridges, five at the back
and six in front. On the side of respondents shoes, near the upper part,
appears the stylized S, placed in the exact location as that of the stylized S
on petitioners shoes. On top of the "tongue" of both shoes appears the
stylized S in practically the same location and size. Moreover, at the back of
petitioners shoes, near the heel counter, appears Skechers Sport Trail
written in white lettering. However, on respondents shoes appears Strong
Sport Trail noticeably written in the same white lettering, font size, direction
and orientation as that of petitioners shoes. On top of the heel collar of
petitioners shoes are two grayish-white semi-transparent circles. Not
surprisingly, respondents shoes also have two grayish-white semi-
transparent circles in the exact same location.
Note: 155. Remedies; Infringement. Any person who shall, without the
consent of the owner of the registered mark:
155.1. 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 including other preparatory steps
necessary to carry out the sale 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; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or
a dominant feature thereof and apply such reproduction, counterfeit, copy
or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used in commerce upon or in
I (IPL CASE DIGESTS - SEPT.8,2017)
connection with the sale, offering for sale, distribution, or advertising of
goods or services on or in connection with which such use is likely to
cause confusion, or to cause mistake, or to deceive, shall be liable in a
civil action for infringement by the registrant for the remedies hereinafter set
forth: Provided, That the infringement takes place at the moment any of the
acts stated in Subsection 155.1 or this subsection are committed regardless
of whether there is actual sale of goods or services using the infringing
material.
(16) LEVI STRAUSS INC. v. TONY LIM
FACTS: In 1972, LS & Co. granted petitioner a non-exclusive license to use
its registered trademarks and trade names for the manufacture and sale of
various garment products, primarily pants, jackets, and shirts, in the
Philippines. Presently, it is the only company that has authority to
manufacture, distribute, and sell products bearing the LEVIS trademarks or
to use such trademarks in the Philippines. These trademarks are registered
in over 130 countries, including the Philippines, and were first used in
commerce in the Philippines in 1946.
Sometime in 1995, petitioner lodged a complaint before the Inter-
Agency Committee on Intellectual Property Rights, alleging that a certain
establishment in Metro Manila was manufacturing garments using colorable
imitations of the LEVIS trademarks. Thus, surveillance was conducted on the
premises of respondent Tony Lim, doing business under the name Vogue
Traders Clothing Company. The investigation revealed that respondent was
engaged in the manufacture, sale, and distribution of products similar to
those of petitioner and under the brand name LIVES.
On December 13, 1995, operatives of the PNP Criminal
Investigation Unit served search warrants on respondents premises at 1042
and 1082 Carmen Planas Street, Tondo, Manila. As a result, several
items were seized from the premises.
The PNP Criminal Investigation Command (PNP CIC) then filed a
complaint against respondent before the DOJ for unfair competition under
the old Article 189 of the Revised Penal Code, prior to its repeal by Section
239 of RA No. 8293. The PNP CIC claimed that a confusing similarity could
be noted between petitioners LEVIs jeans and respondents LIVES denim
jeans and pants.
20 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES,
Respondent alleged that: (1) his products bearing the LIVES brand
name are not fake LEVIS garments; (2) LIVES is a registered
trademark, while the patch pocket design for LIVES pants has copyright
registration, thus conferring legal protection on his own intellectual property
rights, which stand on equal footing as LEVIS; (3) confusing similarity, the
central issue in the trademark cancellation proceeding lodged by petitioner,
is a prejudicial question that complainant, the police, and the court that
issued the search warrants cannot determine without denial of due process
or encroachment on the jurisdiction of the agencies concerned; and (4) his
goods are not clothed with an appearance which is likely to deceive the
ordinary purchaser exercising ordinary care.
Petitioner maintained that there is likelihood of confusion between
the competing products because: (1) a slavish imitation of petitioners arcuate
trademark has been stitched on the backpocket of LIVES jeans; (2) the
appearance of the mark 105 on respondents product is obviously a play on
petitioners 501 trademark; (3) the appearance of the word/phrase LIVES and
LIVES ORIGINAL JEANS is confusingly similar to petitioners LEVIS
trademark; (4) a red tab, made of fabric, attached at the left seam of the right
backpocket of petitioners standard five-pocket jeans, also appears at the
same place on LIVES jeans; (5) the patch used on LIVES jeans (depicting
three men on each side attempting to pull apart a pair of jeans) obviously
thrives on petitioners own patch showing two horses being whipped by two
men in an attempt to tear apart a pair of jeans; and (6) LEVIS jeans are
packaged and sold with carton tickets, which are slavishly copied by
respondent in his own carton ticket bearing the marks LIVES, 105, the horse
mark, and basic features of petitioners ticket designs, such as two red
arrows curving and pointing outward, the arcuate stitching pattern, and a
rectangular portion with intricate border orientation.
ISSUE: WON the issue of unfair competition
should be determined only at the point of sale?
RULING: We find no reason to go beyond the point of sale to determine
if there is probable cause for unfair competition.
We also find no basis to give weight to petitioners contention that
the post-sale confusion that might be triggered by the perceived similarities
between the two products must be considered in the action for unfair
competition against respondent.
I (IPL CASE DIGESTS - SEPT.8,2017)
 No inflexible rule can be laid down as to what will constitute unfair All these elements must be proven.
competition. Each case is, in the measure, a law unto itself. Unfair
competition is always a question of fact. The question to be determined in
every case is whether or not, as a matter of fact, the name or mark used by
the defendant has previously come to indicate and designate plaintiffs
goods, or, to state it in another way, whether defendant, as a matter of fact,
is, by his conduct, passing off defendants goods as plaintiffs goods or his
business as plaintiffs business. The universal test question is whether the
public is likely to be deceived.

In the case before us, we are of the view that the probability of
deception must be tested at the point of sale since it is at this point that the
ordinary purchaser mulls upon the product and is likely to buy the same
under the belief that he is buying another. The test of fraudulent simulation is
to be found in the likelihood of deception, or the possibility of 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.

Generally, unfair competition consists in employing deception or any other

means contrary to good faith by which any person shall pass off the goods
manufactured by him or in which he deals, or his business, or services
for those of the one having established goodwill, or committing any acts
calculated to produce such result.

Note: The elements of unfair competition under Article 189(1)of the Revised
Penal Code are:

(a) That the offender gives his goods the general appearance of the
goods of another manufacturer or dealer;

(b) That the general appearance is shown in the (1) goods themselves, or
in the (2) wrapping of their packages, or in the (3) device or words therein, or
in (4) any other feature of their appearance;

(c) That the offender offers to sell or sells those goods or gives other
persons a chance or opportunity to do the same with a like purpose; and

(d) That there is actual intent to deceive the public or defraud a

competitor.

21 | A G U I N A L D O , MANGUERA, MORALESC. & MORALES, I (IPL CASE DIGESTS - SEPT.8,2017)