construction of light boxes for its chain of stores.
Trademarks and Unfair Competition: Doctrine of Secondary Meaning
Revisited
The case of Pearl & Dean (Phil.), Inc. v. Shoemart, Inc. and North Edsa
Marketing, Inc. (G.R. No. 148222, August 15, 2003)
When can a generic phrase or word be allowed to be used as a
trademark? Is trademark infringement or unfair competition committed
when a generic mark is subsequently used by an entity other than the first
user?
The Law
Section 123 (h) of Republic Act No. 8293 or the Intellectual Property Code
("IP Code") disallows the registration of "signs that are generic for the
goods or services that they seek to identify." However, this rule admits of
an exception as when the mark or sign has obtained what jurisprudence
term as "secondary meaning." The doctrine of secondary meaning means
that a word or phrase originally incapable of exclusive appropriation with
reference to an article in the market has, through its long and exclusive use
by one entity has effectively been distinguished and identified as that
representing the user and its products.
The Case
Pearl & Dean, Inc. (P&D) is a corporation engaged in the manufacture of
advertising display units called light boxes. The light boxes were derived
from technical drawings, which were registered with the National Library.
P&D obtained a copyright certificate for the drawings, which were classified
under category "O" of the Intellectual Property Decree (P.D. 49). The
category pertains to "prints, pictorial illustrations, advertising copies, labels,
tags, and box wraps." The light boxes were marketed under the trademark
"Poster Ads" which was duly registered before the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT).
P&D negotiated with Shoemart, Inc. (SM) for the lease and installation of its
light boxes in two mall branches. For some reason, SM rescinded its
contract with P&D. Later, SM contracted with several entities for the
In time, P&D discovered that SM installed light boxes in several of its stores;
the light boxes are similar to those that P&D manufactures. P&D also found
out that SM used the trademark "Poster Ads" in marketing its own version
of the light boxes. Eventually, P&D demanded SM to refrain from using the
subject light boxes, to remove them from its establishments and to refrain
from using the trademark "Poster Ads". Not satisfied with SM's response to
its demands, P&D sued SM for infringement of trademark and copyright,
unfair competition and damages.
The trial court ruled in favor of P&D and found SM to have infringed P&D's
copyright and trademark "Poster Ads". On appeal, however, the Court of
Appeals reversed the trial court's ruling and declared that SM did not
infringe P&D's copyright.
The Supreme Court sustained the Court of Appeals decision that there was
no copyright infringement, trademark infringement and unfair competition
committed against P&D.
The Ruling
The High Court explained that the phrase "Poster Ads" is a mere
contraction of the term "poster advertising", which it considered as generic
owing to its use in the field of poster advertising. As such, it is difficult to
associate the trademark exclusively with P&D. Essentially, P&D's light boxes
carrying the trademark "Poster Ads" could not be distinguished from the
light boxes of SM carrying the same mark.
Further, the court pointed out the inapplicability of the doctrine of
secondary meaning in deciding that SM did not commit unfair competition.
While generic terms can obtain a secondary meaning through long and
exclusive use, this was unfortunately not the case with respect to the use of
the trademark "Poster Ads" by P&D. The Court observed that there is no
evidence that P&D's use of "Poster Ads" was distinctive or well-known for it
to have acquired a secondary meaning. In fact, the Court noted the
admission of P&D's expert witness that "it (referring to "Poster Ads") was
difficult to identify it with any company."
Facts: appropriated for a trademark and that P and D’s advertising display units
contained no copyright notice in violation of Section 27 of P.D. 49. NEMI
likewise repleaded the averments of SM and denied to have manufactured,
installed or advertised the display units. The RTC decided in favor of P and D
Plaintiff P and D is engaged in manufacturing advertising display units called
but on appeal the Court of Appeals reversed its decision. In its judgment its
as light boxes. These are specialty printed posters with plastic sheets and
stand is that the copyright of the plaintiff is limited to its technical drawings
illuminated back lights that are mainly used as stationeries. They secure
only and not the light boxes itself. When a drawing is technical, the
copyright registration over these advertising light boxes and marketed using
copyright over the drawing does not extend to actual object. Thus the CA is
the trademark “poster ads.” They applied for the registration of trademark
constrained to adopt the view of the respondents that the “poster ads” is a
before the Bureau of Patents, Trademark and Technology Transfer which
generic poster term ads and in the absence of convincing proof that such
was approved on September 12, 1988. P and D negotiated with the
wording acquired secondary meaning, the P and D’s exclusive right to use
defendant Shoemart for the lease and installation of the light boxes in SM
“poster ads” is limited to what is written on its certificate of registration
City North Edsa but was given an alternative to have them leased to SM
which is stationaries.
Makati and SM Cubao while the said branch was under construction. Only
the contract with SM Makati was returned with signature. In 1986 the
counsel of Shoemart informed P and D that it is rescinding its contract for
SM Makati due to non-performance of the terms thereof. Two years later,
the Metro Industrial Services, the same company contracted by the plaintiff
to fabricate their display units offered to construct light boxes for the
Shoemart chain of stores wherein 10 light boxes were created for them.
Upon the termination of contract with Metro Industrial Service, SM hired
EYD Rainbow Advertising Co. to make light boxes. When P and D knew
about the exact copies of its light boxes installed at SM City branches in
1989, it investigated and found out that North Edsa Marketing Inc (NEMI),
sister company of SM was primarily selling ad space in lighted display units.
P and D sent letter to both NEMI and SM enjoining them to cease from
using the subject light boxes and remove them from SM establishments. It
also demanded to discontinue the use of its trademark “poster ads” with
compensatory damages of 20M. SM suspended the lease of light boxes in
its branches while NEMI took down its advertisement for poster ads.
Claiming both failed to meet its demand P and D filed a case for
infringement of trademark, copyright, unfair competition and damages.

SM denied the charges against it and noted that the registration of mark
“poster ads” is limited to stationeries like letterhead and envelope. It
further stresses that it independently develop its own poster panels using
techniques and available technology without notice to P and D copyright. It
further contends that “poster ads” is a generic name that cannot be