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COURT OF APPEALS March 19, 2002 Facts: Petitioner, doing business under the name and style of KEC Cosmetics Laboratory, applied for the issuance of a preliminary injunctive order on the ground that she is entitled to the use of the trademark on Chin Chun Su and its container based on her copyright and patent over the same. Private respondent, on the other hand, alleged that it is the exclusive and authorized importer, re-packer, and distributor of Chin Chun Su products manufactured by Shun-Yi Factory of Taiwan, and that the said Taiwanese manufacturing company authorized Summerville to register its trade name Chin Chun Su Medicated Cream with the Phil. Patent Office and other appropriate govt agencies. The lower court affirmed petitioners motion for preliminary injunction. Private respondents, through a petition for certiorari, appealed to the CA which denied petitioners motion, to which petitioner now appeals. The trial court continued hearing petitioners complaint for final injunction and damages. Said trial court rendered a Decision barring the petitioner from using the trademark Chin Chun Su and upholding the right of the respondents to use the same, but recognizing the copyright of the petitioner over the oval shaped container of her beauty cream. Issue: WON the copyright and patent over the name and container of a beauty cream product would entitle the registrant to the use and ownership over the same to the exclusion of others. Held: No. Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. Trademark: any visible sign capable of distinguishing the goods (trademark) or services(service mark) of an enterprise and shall include a stamped or marked container of goods. Trade name: the name or designation identifying or distinguishing an enterprise. Copyright: confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected from the moment of their creation. Patentable inventions: any technical solution of a problem in any field of human activity, which is new, involves an inventive step and is industrially applicable The mark and container of a beauty cream product are proper subjects of a trademark, not copyright or patent. In order to be entitled to exclusively use the same in the sale of beauty cream product, the user must

sufficiently prove that she registered or used it before anybody else did. Petitioners copyright and patent registration of the name and container would not guarantee her right to the exclusive use of the same for the reason that they are not appropriate subjects of the said intellectual rights. The Court also considered the trial courts finding on the final injunction and damages that the petitioner does not have trademark rights on the name and container of the beauty cream product. The issuance of a final injunction renders any question on the preliminary injunction moot and academic.

MCDONALDS VS. LC BIG MAK BURGER, INC. August 18, 2004 Facts: Petitioner, McDonalds Corporation (McDonalds) is a corporation organized under the laws of Delaware, US. It operates, by itself or through its franchisees, a global chain of fast food restaurants. It owns a family of marks including the Big Mac mark for its double decker hamburger sandwich. McDonalds registered his trademark with the US trademark registry sometime 1979. Based on home registration, McDonalds applied for registration of the same mark in principal registry of the then Philippine Bureau of Patents, Trademark and Technology (PBPTT), now the Intellectual Property Office (IPO). Pending approval of this application, McDonalds introduced its Big Mac hamburger sandwiches in the Philippine market in 1981. On 1985, the PBPTT, allowed registration of the Big Mac mark in the Philippine registry based on its home registration in the US. Like its other marks, McDonalds display the Big Mac mark in its item and paraphernalia in its restaurant, and its outdoor and indoor signages. Meanwhile, McGeorge Food Industries (Petitioner McGeorge) a domestic corporation, is a McDonalds Philippine franchisee. Respondent, LC Big Mak burger inc. is a domestic corporation which operates fast food outlets and snack vans in metro manila and nearby provinces. Respondents corporations menu includes hamburger sandwiches and other food items. Respondent Francis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huero are the incoporators, stockholders and directors of respondent corporation. On 1988, respondent corporation applied with the PBPTT for the registration of the Big Mak mark for its hamburger sandwiches. McDonalds opposed respondent corporations application on the ground that Big Mak was colorable imitation of its registered Big Mac mark for the same food products. McDonalds also informed respondent Francis Dy, the chairman of the board of directors of the respondent corporation, of its exclusive right to the Big Mac mark and requested him to desist from using the Big Mak mark or any similar mark.

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Having received no reply from respondent Dy, petitioners sued respondents in the RTC Makati for trademark infringement and unfair competition. RTC issued a temporary restraining order against respondents enjoinining them from using the Big Mak mark in the operation of their business in the NCR. On 1990, RTC issued a writ of preliminary injunction replacing the TRO. In their answer, respondents admitted that they have been using the 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 marks. Respondents point out that the Isaiyas group of corporations registered the same mark for hamburger sandwiches with the PBOTT on 1979. One Rodolfo Topacio similarly registered the same mark on 1983, prior to McDonalds registration on 1985. Alternatively, respondents claimed that they are not liable for trademark infringement and 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 Mak hamburgers. Respondents sought damages in their counterclaim. In their reply, 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 them, the Isaiyas group did so only in the supplemental register of 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. Issue: WON the acts of respondents in using the name Big Mak as a trademark or trade name in their signages, or in causing the name Big Mak to be printed on the wrappers and containers of their food products also constitute an act of unfair competition under section 29 of the trademark law. Held: Yes. The provision of the law concerning unfair competition is broader and more inclusive than that the law concerning the infringement of trademark, which is more limited range, but within its narrower range recognizes a more exclusive right derived by the adoption and registration of the trademark by the person whose goods or services are first associated therewith. Notwithstanding the distinction between an action for trademark infringement and an action for unfair competition, however, the law extends substantially the same relief to the injured party for both cases. Any conduct may be said to constitute unfair competition if the effect is to pass off on the public the goods of one man as the goods of another. The choice of Big Mak as trade name by defendant

corporation is not merely for sentimental reasons but was clearly made to take advantage of the reputation, popularity and the established goodwill of plaintiff McDonalds. For as stated in Section 29, a person is guilty of unfair competition who in selling his goods shall give them the general appearance, of goods of another manufacturer or dealer, either as goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their appearance, which would likely influence purchasers to believe that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer. Thus, plaintiffs have established their valid cause of action against the defendants for trademark infringement and unfair competition and for damages. N.B. TEST OF TRADEMARK INFRINGEMENT 1) Dominancy Test consists in seeking out the main, essential or dominant features of a mark. 2) Holistic Test takes stock of the other features of a mark, taking into consideration the entirety of the marks. DIFFERENTIATED FROM UNFAIR COMPETITION 1) Cause of action: in infringement, the cause of action is the unauthorized use of a registered trademark; in unfair competition, it is the passing off of ones goods as those of another merchant. 2) Fraudulent intent is not necessary in infringement, but necessary in UC. 3) Registration of trademarks: in infringement, it is a pre-requisite; in UC, it is not required. 4) Class of goods involved: in infringement, the goods must be of similar class; in UC, the goods need not be of the same class.

ANG VS. TEODORO December 14, 1942 Facts: Toribio Teodoro has continuously used "AngTibay," both as a trade-mark and as a trade-name, in the manufacture and sale of slippers, shoes, and indoor baseballs since 1910. He formally registered it as a trade-mark onSeptember 29, 1915, and as a trade-name on January 3, 1933. Ana Ang registered the same trade-mark"Ang Tibay" for pants and shirts on April 11,1932, and established a factory for themanufacture of said articles in the year 1937.

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Teodoro filed a complaint against Ang before the RTC. The trial court absolved the complaint on the grounds that the two trademarks are dissimilar and are used on different and non-competing goods; that there had been no exclusive use of the trade-mark by the plaintiff(petitioner); and that there had been no fraud in the use of the said trade-mark by the defendant because the goods on which it is used are essentially different from those of the plaintiff. The Court of Appeals reversed the trial courts judgment holding that by uninterrupted and exclusive use since 1910 in the manufacture of slippers and shoes, respondent's trade-mark has acquired a secondary meaning; that the goods or articles on which the two trade-marks are used are similar or belong to the same class; and that the use by petitioner of said trade-mark constitutes a violation of sections 3 and 7 of Act No. 666. Issues: (1) WON the trademark and trade name AngTibay is a descriptive word which will bar its registration. (2) WON the doctrine of secondary meaning can be applied to respondents trade-mark. Held: (1) No. The phrase "Ang Tibay" is an exclamation denoting admiration of strength or durability. The phrase "ang tibay" is never used adjectively to define or describe an object. "Ang Tibay" is not a descriptive term within the meaning of the Trade-Mark Law but rather a fanciful or coined phrase which may properly and legally be appropriated as a trade-mark or trade-name. (2) Yes. The Function of a trade-mark is to point distinctively, either by its own meaning or by association, to the origin or ownership of the wares to which it is applied. Ang Tibay, as used by the respondent to designate his wares, had exactly performed that function for 22 years before the petitioner adopted it as a trade-mark in her own business. Ang Tibay shoes and slippers are, by association, known throughout the Philippines as products of the Ang Tibay factory owned and operated by the respondent. Even if Ang Tibay, therefore, were not capable of exclusive appropriation as a trade-mark, the application of the doctrine of secondary meaning could nevertheless be fully sustained because, in any event, by respondents long and exclusive use of said phrase with reference to his products and his business, it has acquired a propriety connotation. N.B. Doctrine of Secondary Meaning This doctrine is to the effect that a word or phrase originally incapable of exclusive appropriation with reference to an article on the market, because geographically or otherwise descriptive, might nevertheless have been used so long and so

exclusively by one producer with reference to his article that, in that trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his product. The same trade-mark, used on unlike goods, could not cause confusion in trade and that ,therefore, there could be no objection to the use and registration of a well-known mark by a third party for a different class of goods. Although two noncompeting articles may be classified under two different classes by the Patent Office because they are deemed not to possess the same descriptive properties, they would, nevertheless, be held by the courts to belong to the same class if the simultaneous use on them of identical or closely similar trade-marks would be likely to cause confusion as to the origin, or personal source, of the second user's goods. They would be considered as not falling under the same class only if they are so dissimilar or so foreign to each other as to make it unlikely that the purchaser would think the first user made the second user's goods.

ARCE SONS BISCUIT January 28, 1961 Facts:





On August 31, 1955, respondent Selecta Biscuit Company, Inc., filed with the Philippine Patent Office a petition for the registration of the word "SELECTA" as trade-mark to be use in its bakery products alleging that it is in actual use thereof for not less than two months before said date and that "no other persons, partnership, corporation or association ... has the right to use said trade-mark in the Philippines, either in the identical form or in any such near resemblance thereto, as might be calculated to deceive." The name 'Selecta' was chosen by the organizers of defendant corporation who are Chinese citizens as a translation of the Chinese word 'ChingSuan' which means 'mapili' in Tagalog, and 'selected' in English. Its petition was referred to an examiner for study who found that the trade-mark sought to be registered resembles the word "SELECTA" used by the petitioner Arce and Sons and Company, in its milk and ice cream products so that its use by respondent will cause confusion as to the origin of their respective goods. Consequently, he recommended that the application be refused. However, upon reconsideration, the Patent Office ordered the publication of the application for purposes of opposition. Meanwhile, petitioner filed a case for unfair competition with the CFI, against the respondents. On September 28, 1958, the CFI decided in favor of the

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petitioner, perpetually enjoining respondent from using the name "SELECTA" as a trade-mark on the goods manufactured and/or sold by it. On December 7, 1958, and on the strength of the same evidence presented before the CFI, the Director of Patents rendered a decision dismissing petitioner's opposition and stating that the registration of the trade-mark "SELECTA" in favor of applicant Selecta Biscuits Company, Inc. will not cause confusion or mistake nor will deceive the purchasers as to the cause damage to petitioner. Issue: WON Selecta Biscuit may use the name Selecta as trade-mark on the goods manufactured and/or sold by it. Held: No. Petitioner, through its predecessor-in-interest, had made use of the word "SELECTA" not only as a trade-name indicative of the location of the restaurant where it manufactures and sells its products, but also as a trade-mark. This is not only in accordance with its general acceptation but with our law on the matter. Verily, the word 'SELECTA' has been chosen by petitioner and has been inscribed on all its products to serve not only as a sign or symbol that may indicate that they are manufactured and sold by it but as a mark of authenticity that may distinguish them from the products manufactured and sold by other merchants or businessmen. The Director of Patents, therefore, erred in holding that petitioner made use of that word merely as a trade-name and not as a trade-mark within the meaning of the law. A 'trade-mark' is a distinctive mark of authenticity through which the merchandise of a particular producer or manufacturer may be distinguished from that of others, and its sole function is to designate distinctively the origin of the products to which it is attached." The word 'SELECTA', it is true, may be an ordinary or common word in the sense that may be used or employed by any one in promoting his business or enterprise, but once adopted or coined in connection with one's business as an emblem, signor device to characterize its products, or as a badge of authenticity, it may acquire a secondary meaning as to be exclusively associated with its products and business. In this sense, its use by another may lead to confusion in trade and cause damage to its business. And this is the situation of petitioner when it used the word 'SELECTA' as a trade-mark. Thus, the law gives its protection and guarantees its use to the exclusion of all others a (G. & C. Merriam Co. v. Saalfield, 198 F. 369, 373). "The ownership or possession of a trademark, . . . shall be recognized and protected in the same manner and to the same extent, as are other property rights known to the law," thereby giving to any person entitled to the exclusive use of such trade-mark the right to recover damages in a civil

action from any person who may have sold goods of similar kind bearing such trade-mark (Sections 2Aand 23, Republic Act No. 166, as amended).

LEVI STRAUSS & CO. VS. CLINTON APPARELLE September 20, 2005 Facts: The case stemmed from the complaint for Trademark Infringement, Injunction and Damages filed by petitioners against respondent Clinton Aparelle and alternative defendant Olympian Garments, Inc., before the RTC of QC. The complaint alleged that petitioner is the owner by prior adoption and use since 1986 of the internationally famous Dockers and Design trademark, as evidenced by its valid and existing registrations in various member countries of the Paris Convention, including a registration in the Philippines. The petitioner further alleged that they discovered the presence of jeans under the brand name Paddocks using a device substantially similar to the Dockers and Design trademark owned by petitioner. According to the information, Clinton Aparelle manufactured the said jeans. Neither of the alternative defendants appeared on the first hearing date and the rescheduled hearing date. Clinton Aparelle claimed that it was not notified of such hearing. It alleged that only Olympian Garments had been issued with summons. Despite the absence of the summons, the lower court proceeded with the hearing for the issuance of TRO, and subsequently granted the same. The trial court also subsequently issued an order granting the writ of preliminary injunction prayed for in order to maintain status quo. The trial court based its ruling on the following evidence: (1) certified true copy of certificate of trademark registration; (2) pair of Dockers pants bearing the trademark; (3) pair of paddocks pants bearing the logo; (4) survey report purportedly proving that there was confusing similarity between the two; and (5) affidavits. Clinton Aparelle filed a motion to dismiss and motion for reconsideration of the order granting the writ of preliminary injunction. The trial court denied both motions, prompting the respondent to file a petition for certiorari, prohibition and mandamus, and a prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction. The CA issued an order granting respondents petition. The CA held that the trial court did not follow the procedure required by law for the issuance of a temporary restraining order as Clinton Aparelle was not duly notified of the date of the summary hearing for its issuance. The CA also held that the issuance of the writ of preliminary injunction is questionable as petitioners failed to sufficiently establish its material and substantial right to have the writ issued. It also questioned the admissibility of the affidavits, which were taken ex-parte. Lastly, it ruled that whatever material injury petitioner would suffer may be sufficiently compensated.

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Issue: WON respondents may be enjoined for trademark infringement. Held: No. Petitioners anchor their legal right to Dockers and Design trademark on the Certificate of Registration issued in their favor by the Bureau of Patents, Trademarks and Technology Transfer. According to Section 138 of Republic Act No. 8293, this Certificate of Registration is prima facie evidence of the validity of the registration, the registrants ownership of the mark and of the exclusive right to use the same in connection with the goods or services and those that are related thereto specified in the certificate. Section 147.1 of said law likewise grants the owner of the registered mark the exclusive right to prevent all third parties not having the owners consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered if such use results in a likelihood of confusion. However, attention should be given to the fact that petitioners registered trademark consists of two elements: (1) the word mark Dockers and (2) the wing-shaped design or logo. Notably, there is only one registration for both features of the trademark giving the impression that the two should be considered as a single unit. Clinton Apparelles trademark, on the other hand, uses the Paddocks word mark on top of a logo which according to petitioners is a slavish imitation of the Dockers design. The two trademarks apparently differ in their word marks (Dockers and Paddocks), but again according to petitioners, they employ similar or identical logos. It could thus be said that respondent only appropriates petitioners logo and not the word mark Dockers; it uses only a portion of the registered trademark and not the whole. Given the single registration of the trademark Dockers and Design and considering that respondent only uses the assailed device but a different word mark, the right to prevent the latter from using the challenged Paddocks device is far from clear. Stated otherwise, it is not evident whether the single registration of the trademark Dockers and Design confers on the owner the right to prevent the use of a fraction thereof in the course of trade. It is also unclear whether the use without the owners consent of a portion of a trademark registered in its entirety constitutes material or substantial invasion of the owners right. It is likewise not settled whether the wing-shaped logo, as opposed to the word mark, is the dominant or central feature of petitioners trademarkthe feature that prevails or is retained in the minds of the publican imitation of which creates the likelihood of deceiving the public and constitutes trademark infringement. In sum, there are vital matters which

have yet and may only be established through a fullblown trial. Trademark dilution is the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of: (1) competition between the owner of the famous mark and other parties; or (2) likelihood of confusion, mistake or deception. Subject to the principles of equity, the owner of a famous mark is entitled to an injunction against another persons commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark. This is intended to protect famous marks from subsequent uses that blur distinctiveness of the mark or tarnish or disparage it. Based on the foregoing, to be eligible for protection from dilution, there has to be a finding that: (1) the trademark sought to be protected is famous and distinctive; (2) the use by respondent of Paddocks and Design began after the petitioners mark became famous; and (3) such subsequent use defames petitioners mark. In the case at bar, petitioners have yet to establish whether Dockers and Design has acquired a strong degree of distinctiveness and whether the other two elements are present for their cause to fall within the ambit of the invoked protection. The Trends MBL Survey Report which petitioners presented in a bid to establish that there was confusing similarity between two marks is not sufficient proof of any dilution that the trial court must enjoin.

LEVI STRAUSS VS. VOGUE TRADERS CLOTHING CO. June 29, 2005 Facts: Levi Strauss & Co. obtained certificates of registration from the BPTTT for the following trademarks: LEVIS; 501; Two Horse Design; Two Horse Label; Two Horse Patch; Two Horse Label with Patterned Arcuate Design; Arcuate Design; and the composite trademarks, namely, Arcuate, Tab, and Two Horse Patch. Petitioner discovered the existence of some trademark registrations belonging to respondent which, in its view, were confusingly similar to its trademarks. Thus, it instituted two cases before the BPTTT for the cancellation of respondents trademark registrations, to wit: Inter Partes Case No. 4216, a petition for cancellation of Certificate of Registration No. 53918 (for LIVES) and Inter Partes Case No. 4217, a petition for cancellation of Certificate of Registration No. 8868 (for LIVES Label Mark). Petitioner then applied for the issuance of a search warrant on the premises of respondent Vogue Traders Clothing Company. On December 13, 1995, the

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search warrants were enforced and several goods belonging to respondent were seized. Meanwhile, it appears that criminal charges were filed against Tony Lim of respondent company in the Department of Justice, but the same were eventually dismissed and the search warrants were quashed. Consequently, on February 1, 1996, respondent filed a complaint for damages in the Regional Trial Court of Manila, Branch 50, against petitioner. In its amended answer with counterclaim, petitioner countered that respondents LIVES brand infringed upon its licensed brand name LEVIS. It sought to cancel respondents Copyright Registration No. I-3838 and enjoin the respondent from further manufacturing, selling, offering for sale, and advertising the denim jeans or slacks by using a design substantially, if not exactly similar to, or a colorable imitation of the trademarks of petitioner. During the pendency of the trial, the writ of preliminary injunction prayed for by the petitioner was granted. Respondent went to the CA, alleging Grave Abuse of Discretion. The CA rendered a decision in favor of the respondent, enjoining the trial court from further proceeding with the case until the Bureau of Patents, Trademarks and Technology Transfer has finally resolved Inter Partes Cases Nos. 4216 and 4217. Petitioner appealed to the SC, by way of a Petition for Review hence the instant case. Meanwhile, the trial court found that the respondent intended to appropriate, copy, and slavishly imitate the genuine appearance of authentic LEVIs jeans and pass off its LIVEs jeans as genuine LEVIs jeans. Respondent moved for the reconsideration of the decision, which was denied. Issue: WON Levi Strauss may enjoin the respondent from further manufacturing, selling, offering for sale, and advertising the denim jeans or slacks by using a design substantially, if not exactly similar to, or a colorable imitation of its trademarks, without a final adjudication of their respective rights. Held: Yes. (1) Petitioner is a holder of Certificate of Registration No. 1379-A for its Levis trademarks. The registration gives rise to a presumption of its validity and the right to the exclusive use of the same. An entity having a duly registered trademark can file a suit against another entity for the protection of its right. He may: (1) Apply to cancel the registration of another before the proper court or agency, which shall exclude any other court or agency from assuming jurisdiction over a subsequently filed petition to cancel the same mark; (2) Petition to cancel the mark with the Bureau of Legal Affairs [formerly BPTTT], the earlier filing of which shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to same registered mark may be decided; (3) Recover damages and in cases where actual intent to mislead the public or to defraud the complainant is shown, in the discretion of the court, the damages may be doubled; and (4) Upon proper showing, may also be granted injunction. It bears stressing that an action for infringement or unfair competition, including the available remedies of injunction and damages, in the regular courts can proceed independently or simultaneously with an action for the administrative cancellation of a

registered trademark in the BPTTT. As applied to the present case, petitioners prior filing of two inter partes cases against the respondent before the BPTTT for the cancellation of the latters trademark registrations, namely, LIVES and LIVES Label Mark, does not preclude petitioners right (as a defendant) to include in its answer (to respondents complaint for damages in Civil Case No. No. 9676944) a counterclaim for infringement with a prayer for the issuance of a writ of preliminary injunction. (2) The requirement of certification against forum shopping under the Rules is to be executed by the petitioner, or in the case of a corporation, its duly authorized director or officer, but not petitioners counsel whose professional services have been engaged to handle the subject case. The reason is that it is the petitioner who has personal knowledge whether there are cases of similar nature pending with the other courts, tribunals, or agencies. Thus, in the present case, the Court of Appeals should have outrightly dismissed the petition for certiorari filed by the respondent (as therein petitioner in the appeals court) due to the defective certification of non-forum shopping. (3) The writ did not have the effect of prejudging or disposing of the merits of the case, but merely enjoined the respondents acts of manufacturing, distributing, selling, or offering for sale the jeans which had allegedly incorporated exact or colorable imitations of the products belonging to petitioner. Petitioner has yet to establish during the trial that it is entitled to a permanent injunction by reason of respondents confusingly similar LIVES products. The sole object of a preliminary injunction is to preserve the status quo until the merits of the case can be heard. Since Section 4 of Rule 58 of the Rules of Civil Procedure gives the trial courts sufficient discretion to evaluate the conflicting claims in an application for a provisional writ which often involves a factual determination, the appellate courts generally will not interfere in the absence of manifest abuse of such discretion. N.B. The CA decision was reversed and set aside. Further, the court a quo was ordered to proceed with the civil case.

CANON KABUSHIKI KAISHA VS. CA July 20, 2000 Facts: NSR Rubber Corporation filed an application for registration of the mark CANON for sandals in the Bureau of Patents, Trademarks, and Technology Transfer(BPTTT). An opposition was filed by Canon Kabushiki Kaisha(CKK), a foreign corporation duly organized and existing under the laws of Japan. CKK alleged that it will be damaged by the registration of the trademark CANON in the name of NSR Rubber Corporation. The evidence presented by CKK 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). CKK also submitted in evidence its Philippine Trademark Registration No. 39398, showing its ownership over the trademark CANON also under class 2.

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However, the Bureau of Patents, Trademarks, and Technology Transfer (BPTTT) dismissed the petition of CKK and gave due course to NSRs application for the registration of the trademark CANON. According to BPTTT, the trademark CANON as used by CKK for its paints, chemical products, toner, and dye stuff, can be used by NSR for its sandals because the products of these two parties are dissimilar. Hence, CKK filed this case arguing that: a) it is entitled to exclusive use of the mark canon because it is its trademark and is used also for footwear; b) to allow NSR to register canon for footwear is to prevent CKK from using canon for various kinds of footwear, when in fact, CKK has earlier used said markfor said goods; and c) it is also entitled to the right to exclusively use canon to prevent confusion of business. Issue: WON NSR Rubber Corporation may be allowed to use the mark CANON. Held: Yes. 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. The certificates of registration for the trademark CANON in other countries and in the Philippines as presented by CKK, 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), NSR can use the trademark CANON for its goods classified as class 25 (sandals). Clearly, thereis a world of difference between the paints, chemical products, toner, and dyestuff of CKK and the sandals of NSR. The certificate of registration confers upon the trademark owner the exclusive right to use its own symbol only to those goods specified in the certificate, subject to the conditions and limitations stated therein. Thus, the exclusive right of CKK in this case to use the trademark CANON is limited only to the products covered by its certificate of registration. As to the argument of CKK that there could be confusion as to the origin of the goods, as well as confusion of business, if NSR is allowed to register the mark CANON, the SC ruled that 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 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. The paints, chemical products, toner and dyestuff of CKK that carry the trademark CANON are unrelated to sandals, the product of NSR. The two classes of products in this case flow through different trade channels. The products of CKK are sold through special chemical stores or distributors while the products of NSR are sold in grocery stores, sari-sari stores and department stores. Thus, the evident disparity of the products of the CKK and NSR renders unfounded the apprehension of CKK that confusion of

business or origin might occur if NSR is allowed to use the mark CANON.

FABERGE, INC. VS. IAC November 4, 1992 Facts: Co Beng Kay applied for the registration of the trademark 'BRUTE' to be used for its underwear (briefs) products. The petitioner opposed on the ground that there is similarity with their own symbol (BRUT, Brut 33 & 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. Issue: WON Co Beng Kay may be granted the application despite its similarity with petitioners symbol. Held: No. Co Beng Kay may rightly appropriate the mark. Since petitioner has not ventured into the production of briefs, an item not listed in its certificate of registration, it would have no cause of action. Section 20 of the Trademark Law provides that the certificate of registration can confer upon petitioner the exclusive right to use its own symbol only to those goods specified in the certificate. One who has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of different description. Really, if the certificate of registration were to be deemed as including goods not specified therein, then a situation may arise whereby an applicant may be tempted to register a trademark on any and all goods which his mind may conceive even if he had never intended to use the trademark for the said goods. We believe that such omnibus registration is not contemplated by our Trademark Law.

PEARL & DEAN VS. SM August 15, 2003 Facts: Facts: Pearl & Dean (P&D) is engaged in the manufacture of advertising display units referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with backlights. It was able to secure registration over these illuminated display units. The advertising light boxes were marketed under the trademark Poster Ads. In 1985, P&D negotiated with defendant Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM North Edsa. However, since SM North Edsa was under construction, SMI offered as alternative SM Makati and Cubao. During the signing

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of the Contract, SMI only returned the Contract with SM Makati. Manager of petitioner reminded SMI that their agreement includes SM Cubao. However, SMI did not bother to reply. Instead, respondent informed petitioner that they are rescinding the contract for SM Makati due to non-performance. Two years later, SMI engaged the services of EYD Rainbow Advertising to make the light boxes. These were delivered in a staggered basis and installed at SM Megamall and SM City. In 1989, petitioner received reports that exact copy of its light boxes was installed by SMI. It further discovered that North Edsa Marketing Inc. (NEMI), sister company of SMI, was set up primarily to sell advertising space in lighted display units located in SMIs different branches. Petitioner sent letters to respondents asking them to cease using the light boxes and the discontinued use of the trademark Poster Ads. Claiming that SMI and NEMI failed to meet its demand, petitioner filed a case for infringement of trademark and copy right, unfair competition and damages. SMI maintained that it independently developed its poster panels using commonly known techniques and available technology without notice of or reference to P&Ds copyright. In addition, it said that registration of Poster Ads obtained by petitioner was only for stationeries such as letterheads, envelopes and the like. Poster Ads is a generic term which cannot be appropriated as trademark, and, as such, registration of such mark is invalid. It also stressed that P&D is not entitled to the reliefs sought because the advertising display units contained no copyright notice as provided for by law. The RTC found SMI and NEMI jointly and severally liable for infringement of copyright and trademark, but the CA reversed the decision -- saying that it agreed with SMI that what was copyrighted was the technical drawings only and not the light boxes. Light boxes cannot be considered as either prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as copyrightable class O work. In addition, CA stressed that the protective mantle of the Trademark Law extends only to the goods used by the first user as specified in its certificate of registration. The registration of the trademark Poster Ads covers only stationeries such as letterheads, envelopes and calling cards and newsletter. Issues: (1) If the engineering or technical drawings of an advertising display unit are granted copyright protection is the light box depicted in such drawings ipso facto also protected by such copyright? (2) Should the light box be registered separately? (3) Can the owner of the registered trademark legally prevent others from using such mark if it is mere abbreviation of a term descriptive of his goods, services or business? Held:

(1) No. Copyright is purely statutory. As such, the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to the subjects and by the persons, and on the terms and conditions specified in the statute. Accordingly, it can cover only the works falling within the statutory enumeration or description. Petitioner secured copyright under classification class O work. Thus, copyright protection extended only to the technical drawings and not to the light box itself because the latter was not at all in the category of prints, pictorial illustrations, advertising copies, labels, tags and box wraps. What the law does not include, it excludes, and for the good reason: the light box was not a literary or artistic piece which could be copyrighted under the copyright law. And no less clearly, neither could the lack of statutory authority to make the light box copyrightable be remedied by the simplistic act of entitling the copyright certificate issued by the National Library as Advertising Display Units. It must be noted that copyright is confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected from the moment of their creation. (2) Yes. Petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could have protected its invention, if in fact it really was. And because it had no patent, petitioner could not legally prevent anyone from manufacturing or commercially using the contraption. To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies into the public through disclosure. Ideas, once, disclosed to the public without protection of a valid patent, are subject to appropriation without significant restraint. The Patent Law has a three-fold purpose: first, patent law seeks to foster and reward invention; second, it promotes disclosures of inventions to stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the stringent requirements for patent protection seek to ensure that ideas in the public domain remain there for the free use of the public. It is only after an exhaustive examination by the patent office that patent is issued. Therefore, not having gone through the arduous examination for patents, petitioner cannot exclude others from the manufacture, sale or commercial use of the light boxes on the sole basis of its copyright certificate over the technical drawings. (3) No. One who has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of a different description. Assuming that Poster Ads could validly qualify as a trademark, the failure of petitioner to secure a trademark registration for specific use on the light

Cases on the Intellectual Property Code

boxes meant that there could not have been any trademark infringement since registration was an essential element thereof. There is no evidence that petitioners use of poster Ads was distinctive or well-known. This fact also prevented the application of the doctrine of secondary meaning. Poster Ads was generic and incapable of being used as a trademark because it was used in the field of poster advertising the very business engaged in by petitioner.

Furthermore, the Czech trademark has long been abandoned in Czechoslovakia.

EMERALD GARMENT MANUFACTURING VS. CA December 29, 1995 Facts: On 18 September 1981 H.D. Lee Co., Inc.,(Delaware, U.S.A.) filed with the BPTTT a Petition for Cancellation of Registration No.SR 5054 (Supplemental Register) 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 27October 1980 in the name of Emerald Garment (Philippines). H.D. Lee Co. invokes Sec. 37 of R.A. No.166 (Trademark Law) and Art. VIII of the Paris Convention for the Protection of Industrial Property, averred that petitioner's trademark "so closely resembled its own trademark, 'LEE' as previously registered and used in the Philippines, and not abandoned, as to be likely, when applied to or used in connection with petitioner's goods, to cause confusion, mistake and deception on the part of the purchasing public as to the origin of the goods." The Director of Patents rendered a decision granting H.D. Lee's petition for cancellation and opposition to registration. Using the test of dominancy, Director of Patents 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." The CA affirmed the Director of Patents' decision. Issue: WON H. D. Lee's prior registration is enough to confer upon it the exclusive ownership of the trademark Lee. Held: No. It was only on the date of publication and issuance of the registration certificate that private respondent may be considered "officially" put on notice that petitioner has appropriated or is using said mark, which, after all, is the function and purpose of registration in the supplemental register. The essential element of infringement is colorable imitation. This term has been defined as "such 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."

BATA INDUSTRIES, LTD. VS. CA May 31, 1982 Facts: The respondent New Olympian Rubber Products sought to register the mark "BATA" for casual rubber shoe products, alleging it had used the said mark since the 1970s. The petitioner, a Canadian corporation opposed with its allegations that it owns and has not abandoned said trademark. The petitioner has no license to do business in the Philippines and the trademark has never been registered in the Philippines by any foreign entity. Bata Industries does not sell footwear under the said trademark in the Philippines nor does it have any licensing agreement with any local entity to sell its product.

Evidence shows that earlier, even before the World War II, Bata shoes made by Gerbec and Hrdina (Czech company) were already sold in the country. Some shoes made by the petitioner may have been sold in the Philippines until 1948. On the other hand, respondent spent money and effort to popularize the trademark "BATA" since the 70's. Moreover, it also secures 3 copyright registrations for the word "BATA". The Philippine Patent Office (PPO) dismissed the opposition by the petitioner while the Court of Appeals (CA) reversed said decision. However, a 2nd resolution by the CA affirmed the PPO decision. Issue: WON petitioner has the right to protect its goodwill alleged to be threatened with the registration of the mark. Held: No. Bata Industries has no Philippine goodwill that would be damaged by the registration of the mark. Any slight goodwill obtained by the product before World War II was completely abandoned and lost in the more than 35 years that passed since Manila's liberation from Japan. The petitioner never used the trademark either before or after the war. It is also not the successor-in-interest of Gerbec & Hrdina and there was no privity of interest between them,

Cases on the Intellectual Property Code

Colorable imitation refers to such similarity in form, content, words, sound, meaning, special arrangement, or general appearance of the trademark or trade name with that of the other mark or trade name in their over-all presentation or in their essential, substantive and distinctive parts as would likely mislead or confuse persons in the ordinary course of purchasing the genuine article. 2 TESTS: Test of Dominancy: If the competing trademark contains the main or essential or dominant features of another by reason of which confusion and deception are likely to result, the infringement takes place. Duplication or imitation is not necessary, a similarity in the dominant features of the trademark would be sufficient. The likelihood of confusion is further made more probable by the fact that both parties are engaged in the same line of business. It is well to reiterate that the determinative factor in ascertaining whether or not the marks are confusingly similar to each other is not whether the challenged mark would actually cause confusion or deception of the purchasers but whether the use of such mark would likely cause confusion or mistake on the part of the buying public. Holistic Test: Mandates that the entirety of the marks in question must be considered in determining confusing similarity. The trademarks in their entirety as they appear in their respective labels or hangtags must also be considered in relation to the goods to which they are attached. The discerning eye of the observer must focus not only on the predominant words but also on the other features appearing in both labels in order that he may draw his conclusion whether one is confusingly similar to the other. Moreover, "LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive ownership over and singular use of said term. Private respondent also failed to prove prior actual commercial use of its "LEE" trademark in the Philippines before filing its application for registration with the BPTTT and hence, has not acquired ownership over said mark. The Trademark Law is very clear -- it requires actual commercial use of the mark prior to its registration. There is no dispute that respondent corporation was the first registrant, yet it failed to fully substantiate its claim that it used in trade or business in the Philippines the subject mark; it did not present proof to invest it with exclusive, continuous adoption of the trademark which should consist among others, of considerable sales since its first use. For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of its own mark and for failure to establish confusing similarity between said trademarks, private respondent's action for infringement must necessarily fail.

ASIA BREWERY, INC. VS. CA July 5, 1993 Facts: San Miguel Corporation (SMC) filed a complaint against Asia Brewery Inc. (ABI) for infringement of trademark and unfair competition on account of the latter's BEER PALE PILSEN or BEER NA BEER product which has been competing with SMC's SAN MIGUEL PALE PILSEN for a share of the local beer market. The trial court dismissed SMC's complaint because ABI "has not committed trademark infringement or unfair competition against" SMC On appeal by SMC, the Court of Appeals reversed the decision rendered by the trial court, finding the defendant Asia Brewery Incorporated GUILTY of infringement of trademark and unfair competition. ABI then filed a petition for certiorari. Issue: WON the words PALE PILSEN as part of ABIs trademark constitute infringement of SMCs trademark. Held: No. The dominant feature of SMCs trademark is San Miguel Pale Pilsen while ABIs is Beer Pale Pilsen. The word Beer does not appear in SMCs product, nor the words San Miguel appear in ABIs product. Neither the sound, spelling nor appearance can Beer Pale Pilsen be said to be confusingly similar to San Miguel Pale Pilsen. San Miguel does not have exclusive rights to the generic or descriptive words pale and pilsen. Verily, generic or descriptive words belong to the public domain and cannot thus be appropriated. Neither does San Miguel have the exclusive right to use the 320 ml. steinie bottle with white rectangular label. The amber color is a functional feature of the beer bottle as the color prevents the transmission of light and provides the maximum protection to beer. The bottle capacity is the standard prescribed by the Metric System Board of the Department of Trade. The white label is the most economical to use and presents the strongest contrast to the bottle. San Miguel cannot claim monopoly to such features as the protection provided by law is confined to nonfunctional features. Further, Beer Pale Pilsen is not being passed off as San Miguel Beer Pale Pilsen. It does not result to confusion inasmuch as beer is ordered by brand, and is not taken freely from supermarket shelves. The points of dissimilarity of the products outnumber their points of similarity.


Cases on the Intellectual Property Code

April 4, 2001 Facts: On January 18, 1984, private respondent CFC Corporation filed with the BPTTT an application forthe registration of the trademark "FLAVOR MASTER" for instant coffee. Petitioner Societe Des Produits Nestle, S.A., a Swiss company registered under Swiss laws anddomiciled in Switzerland, filed an unverified Notice of Opposition, claiming that the trademark of private respondents product is "confusingly similar to its trademarks for coffee and coffee extracts, to wit: MASTER ROAST and MASTER BLEND." A verified Notice of Opposition was filed by Nestle Philippines, Inc., a Philippine corporation and alicensee of Societe Des Produits Nestle S.A., against CFCs application for registration of the trademark FLAVOR MASTER. Nestle claimed that the use, if any, by CFC of the trademark FLAVOR MASTER and its registration would likely cause confusion in the trade; or deceive purchasers and would falsely suggest to the purchasing public a connection in the business of Nestle, as the dominant word present in the three (3) trademarks is "MASTER"; or that the goods of CFC might be mistaken as having originated from the latter. In answer to the two oppositions, CFC argued that its trademark, FLAVOR MASTER, is not confusingly similar with the formers trademarks, MASTER ROAST and MASTER BLEND, alleging that, "except for the word MASTER (which cannot be exclusively appropriated by any person for being a descriptive or generic name), the other words that are used respectively with said word in the three trademarks are very different from each other in meaning, spelling, pronunciation, and sound". The BPTTT denied CFCs application for registration. The CA reversed the BPTTTs decision and ordered the Director of Patents to approve CFCs application. Hence this petition before the SC. Issue: WON the CA erred in reversing the decision of the BPTTT denying CFCs petition for registration. Held: Yes. Colorable imitation denotes such a close or ingenious imitation as to be calculated to deceive ordinary persons, or such a resemblance to the original as to deceive an ordinary purchaser giving such attention as a purchaser usually gives, as to cause him to purchase the one supposing it to be the other. In determining if colorable imitation exists, jurisprudence has developed two kinds of tests - the Dominancy Test and the Holistic Test.

The test of dominancy focuses on the similarity of the prevalent features of the competing trademarks which might cause confusion or deception and thus constitute infringement. On the other side of the spectrum, the holistic test mandates that the entirety of the marksin question must be considered in determining confusing similarity. The Court of Appeals erred in applying the totality rule as defined in the cases of Bristol Myers v. Director of Patents; Mead Johnson & Co. v. NVJ Van Dorf Ltd.; and American Cyanamid Co. v. Director of Patents. The totality rule states that "the test is not simply to take their word sand compare the spelling and pronunciation of said words. In determining whether two trademarks are confusingly similar, the two marks in their entirety as they appear in the respective labels must be considered in relation to the goods to which they are attached; the discerning eye of the observer must focus not only on the predominant words but also on the other features appearing on both labels. In the case at bar, other than the fact that both Nestles and CFCs products are inexpensive and common household items, the similarity ends there What is being questioned here is the use by CFC of the trademark MASTER. In view of the difficulty of applying jurisprudential precedents to trademark cases due to the peculiarity of each case, judicial fora should not readily apply a certain test or standard just because of seeming similarities. As this Court has pointed above, there could be more telling differences than similarities as to make a jurisprudential precedent inapplicable. The Court of Appeals held that the test to be applied should be the totality or holistic test, since what is of paramount consideration is the ordinary purchaser who is, in general, undiscerningly rash in buying the more common and less expensive household products like coffee, and is therefore less inclined to closely examine specific details of similarities and dissimilarities between competing products. This Court cannot agree with the above reasoning. If the ordinary purchaser is "undiscerningly rash" in buying such common and inexpensive household products as instant coffee, and would therefore be "less inclined to closely examine specific details of similarities and dissimilarities" between the two competing products, then it would be less likely for the ordinary purchaser to notice that CFCs trademark FLAVOR MASTER carries the colors orange and mocha while that of Nestles uses red and brown. The application of the totality or holistic test is improper since the ordinary purchaser would not be inclined to notice the specific features, similarities or dissimilarities, considering that the product is an inexpensive and common household item.

Cases on the Intellectual Property Code

Moreover, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair competition that confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and overall impressions engendered by the marks in controversy as they are encountered in the realities of the marketplace. The totality or holistic test only relies on visual comparison between two trademarks whereas the dominancy test relies not only on the visual but also on the aural and connotative comparisons and overall impressions between the two trademarks. In addition, the word "MASTER" is neither a generic nor a descriptive term. As such, said term cannot be invalidated as a trademark and, therefore, may be legally protected. Generic terms are those which constitute "the common descriptive name of an article or substance," or comprise the "genus of which the particular product is a species," or are "commonly used as the name or description of a kind of goods," or "imply reference to every member of a genus and the exclusion of individuating characters," or "refer to the basic nature of the wares or services provided rather than to the more idiosyncratic characteristics of a particular product," and are not legally protectable. On the other hand, a term is descriptive and therefore invalid as a trademark if, as understood in its normal and natural sense, it "forthwith conveys the characteristics, functions, qualities or ingredients of a product to one who has never seen it and does not know what it is," or "if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods," or if it clearly denotes what goods or services are provided in such a way that the consumer does not have to exercise powers of perception or imagination. Rather, the term "MASTER" is a suggestive term brought about by the advertising scheme of Nestle. Suggestive terms are those which, in the phraseology of one court, require "imagination, thought and perception to reach a conclusion as to the nature of the goods." Such terms, "which subtly connote something about the product," are eligible for protection in the absence of secondary meaning. While suggestive marks are capable of shedding "some light" upon certain characteristics of the goods or services in dispute, they nevertheless involve "an element of incongruity," "figurativeness," or " imaginative effort on the part of the observer." The term "MASTER", therefore, has acquired a certain connotation to mean the coffee products MASTER ROAST and MASTER BLEND produced by Nestle. As such, the use by CFC of the term "MASTER" in the trademark for its coffee product FLAVOR MASTER is likely to cause confusion or mistake or even to deceive the ordinary purchasers.

June 21, 2001 Facts: On June 21, 1988, the Shangri-La International Hotel Management, Ltd., Shangri-La Properties, Inc., Makati Shangri-La Hotel and Resort, Inc. and Kuok Philippine Properties, Inc., filed with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) a petition praying 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 latters 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 by the Developers Group in 1982. 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. Almost three (3) years later, the Developers Group instituted with the RTC a complaint for infringement and damages with prayer for injunction. When the Shangri-La Group moved for the suspension of the proceedings, the trial court denied such in a Resolution. The Shangri-La Group filed a Petition for Certiorari before the CA, which was dismissed. Issue: WON the infringement case could independently of the cancellation case. Held: Yes. The institution of an inter partes case for cancellation of a mark with the BPTT (now Bureau of Legal Affairs) does not bar the adverse party from filing a subsequent action for infringement with the regular courts of justice in connection with the same registered mark. This is because the certificate of registration, 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. Furthermore, the issue raised before the BPTT is quite different from that raised in the trial court. The issue raised before the BPTT was whether the mark registered by the 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 Shangri-La Group infringed upon the rights of Developers Group within the contemplation of Sec. 22 of R.A. 166. proceed


12 Cases on the Intellectual Property Code

NBI-MICROSOFT CORP. VS. HWANG June 21, 2005 Facts: In May 1993, Microsoft and Beltron Computer Philippines, Inc. entered into a Licensing Agreement. Under Section 2(a) of the Agreement Microsoft authorized Beltron, for a fee, to: Reproduce and install no more than one copy of Windows on each Customer System hard disk; Distribute directly or indirectly and license copies of Windows (reproduced as per Section 2 of the Agreement and/or acquired from an Authorized Replicator or Authorized Distributor. Their agreement allowed either party to terminate if one fails to comply with their respective obligations. Microsoft terminated the Agreement in June 1995 by reason of Beltrons non-payment of royalties. Later, Microsoft learned that Beltron was illegally copying and selling copies of Windows. Microsoft then sought the assistance of the National Bureau of Investigation. NBI agents made some purchase from Beltron where they acquired a computer unit preinstalled with Windows, 12 windows installer CDs packed as Microsoft products. The agents were not given the end-user license agreements, user manuals, and certificates of authenticity for the products purchased. They were given a receipt which has a header of T.M.T.C. (Phils) Inc. BELTRON COMPUTER. TMTC stands for Taiwan Machinery Display and Trade Center. A search warrant was subsequently issued where 2,831 CDs of Windows installers, among others, were seized. Based on the items seized from Beltron, Microsoft filed a case of copyright infringement against Beltron and TMTC as well as their officers (Hwang et al) before the Department of Justice (DOJ). Beltron, in its counter-affidavit, argued the following: That Microsofts issue with Beltron was really just to have leverage in forcing Beltron to pay the unpaid royalties; and that Microsoft should have filed a collection suit. That the computer unit allegedly purchased by the NBI agents from them cannot be decisively traced as coming from Beltron because the receipt issued to the agents did not list the computer unit as one of the items bought. That the 12 installers purchased by the agents which are actually listed in the receipt were not manufactured by Beltron but rather they were genuine copies purchased by TMTC from an authorized Microsoft seller in Singapore. That the 2,831 installers seized from them were not a property of Beltron but rather they were left to them by someone for safekeeping.

The DOJ secretary agreed with Beltron and dismissed the case. The Secretary ruled that the issue of the authority of Beltron to copy and sell Microsoft products should first be resolved in a civil suit. Microsoft appealed the decision of the DOJ secretary before the Supreme Court. Meanwhile, Beltron filed a motion to quash the search warrant before the RTC that issued the same. The RTC partially granted the quashal. The Court of Appeals reversed the RTC. Hwang et al did not appeal the CA decision. Issue: WON the gravamen of copyright infringement is merely unauthorized manufacturing of intellectual works. Held: No. Copyright infringement is not merely unauthorized manufacturing of intellectual works, but rather the unauthorized performance of any of the acts covered by Sec.5 i.e. to copy, distribute, multiply and sell intellectual works. Hence, any person who performs any of the acts under Section 5 without obtaining the copyright owners prior consent renders himself civilly and criminally liable for copyright infringement. Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the doing by any person, without the consent of the owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright. Being the copyright and trademark owner of Microsoft software, Microsoft acted well within its rights in filing the complaint before DOJ on the incriminating evidence obtained from Beltron. Hence, it was highly irregular for the DOJ to hold that Microsoft sought the issuance of the search warrants and the filing of the complaint merely to pressure Beltron to pay its overdue royalties to Microsoft. There is no basis for the DOJ to rule that Microsoft must await a prior resolution from the proper court of whether or not the Agreement is still binding between the parties. Beltron has not filed any suit to question Microsofts termination of the Agreement. Microsoft can neither be expected nor compelled to wait until Beltron decides to sue before Microsoft can seek remedies for violation of its intellectual property rights. Furthermore, the articles seized from Beltron are counterfeit per se because Microsoft does not (and could not have authorized anyone to) produce such CD installers The copying of the genuine Microsoft software to produce these fake CDs and their distribution are illegal even if the copier or distributor is a Microsoft licensee. As far as these installer CDROMs are concerned, the Agreement (and the alleged question on the validity of its termination) is


Cases on the Intellectual Property Code

immaterial to the determination of Beltrons liability for copyright infringement and unfair competition. Beltrons defense that the box of CD installers found in their possession was only left to them for safekeeping is not tenable.

PRO-LINE SPORTS CENTER VS. CA October 23, 1997 Facts: By virtue of its merger with A.G. Spalding Bros., Inc., on 31 December 1971, QUESTOR, a US-based corporation, became the owner of the trademark "Spalding", while PRO LINE is the exclusive distributor of "Spalding" sports products in the Philippines. UNIVERSAL, on the other hand, is a domestic corporation engaged in the sale and manufacture of sporting goods while Monico Sehwani is impleaded in his capacity as president of the corporation. 16 years ago, Edwin Dy Buncio, General Manager of PRO LINE, sent a letter-complaint to the NBI regarding the alleged manufacture of fake "Spalding" balls by UNIVERSAL. By virtue of a search warrant, some 1,200 basketballs and volleyballs marked "Spalding" were seized and confiscated by the NBI. The molds, rubber mixer, boiler and other instruments at UNIVERSAL's factory, which were too impracticable to be seized, were ordered by Judge Rizalina Vera to be sealed and padlocked, as the said items were simply too heavy to be removed from the premises and brought under the actual physical custody of the court. Upon motion of UNIVERSAL, Judge Vera ordered the lifting of the seal and padlock on the machineries, prompting the People of the Philippines, the NBI, together with PRO LINE and QUESTOR, to file with the CA a joint petition for certiorari and prohibition with preliminary injunction. The CA granted the TRO. Meanwhile, PRO LINE and QUESTOR filed a criminal complaint for unfair competition against respondent Monico Sehwani together with Robert, Kisnu, Arjan and Sawtri, all surnamed Sehwani, and Arcadio del los Reyes before the Provincial Fiscal of Rizal. The complaint was dropped on 24 June 1981 for the reason that it was doubtful whether QUESTOR had indeed acquired the registration rights over the mark "Spalding" from A. G. Spalding Bros., Inc., and complainants failed to adduce an actual receipt for the sale of "Spalding" balls by UNIVERSAL. On 9 July 1981 a petition for review seeking reversal of the dismissal of the complaint was filed with the Ministry of Justice. While this was pending, the CA rendered judgment affirming the order of Judge Vera. The People, NBI, PRO LINE and QUESTOR challenged the decision of the appellate court. Before the SC, a TRO was granted against the CA vis--vis the aforesaid decision.

In connection with the criminal complaint for unfair competition, the Minister of Justice issued on 10 September 1981 a Resolution overturning the earlier dismissal of the complaint and ordered the Provincial Fiscal of Rizal to file an Information for unfair competition against Monico Sehwani, which was complied with. Sehwani pleaded not guilty to the charge. But, while he admitted to having manufactured "Spalding" basketballs and volleyballs, he nevertheless stressed that this was only for the purpose of complying with the requirement of trademark registration with the Philippine Patent Office. He cited Chapter 1, Rule 43, of the Rules of Practice on Trademark Cases, which requires that the mark applied for be used on applicant's goods for at least sixty (60) days prior to the filing of the trademark application and that the applicant must show substantial investment in the use of the mark. He also disclosed that UNIVERSAL applied for registration with the Patent Office on 20 February 1981. After the prosecution rested its case, Sehwani filed a demurrer to evidence arguing that the act of selling the manufactured goods was an essential and constitutive element of the crime of unfair competition under Art. 189 of the Revised Penal Code, and the prosecution was not able to prove that he sold the products. In its Order of 12 January 1981 the trial court granted the demurrer and dismissed the charge against Sehwani. PRO LINE and QUESTOR impugned before the SC the dismissal of the criminal case. The SC consolidated the aforesaid criminal and civil cases, and found that: the dismissal by the trial court of the criminal case was based on the merits of the case which amounted to an acquittal and that the civil case had already been rendered moot and academic by the acquittal of Sehwani. Thereafter, UNIVERSAL and Sehwani filed a civil case for damages with the RTC of Pasig against PRO LINE and QUESTOR for the suits previously filed by the latter against the former, alleging that they were malicious and without legal bases. Defendants PRO LINE and QUESTOR denied all the allegations in the complaint and filed a counterclaim for damages based mainly on the unauthorized and illegal manufacture by UNIVERSAL of athletic balls bearing the trademark "Spalding." The trial court granted the claim of UNIVERSAL. On appeal, the decision of the trail court was only affirmed by the CA. Issue: WON the respondents' act may constitute unfair competition even if the element of selling has not been proved, thereby absolving the petitioners from liability for damages. Held: Yes. Arguably, respondents' act may constitute unfair competition even if the element of selling has not


Cases on the Intellectual Property Code

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 U. S. v. Manuel, the Court ruled that the test of unfair competition is whether certain goods have been intentionally clothed with an appearance which is likely to deceive the ordinary purchasers exercising ordinary care. In this case, it was observed by the Minister of Justice that the manufacture of the "Spalding" balls was 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. 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. 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. 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. We are more disposed, under the circumstances, to hold that PRO LINE as the authorized agent of QUESTOR exercised sound judgment in taking the necessary legal steps to safeguard the interest of its principal with respect to the trademark in question. If the process resulted in the closure and padlocking of UNIVERSAL's factory and the cessation of its business operations, these were unavoidable consequences of petitioners' valid and lawful exercise of their right. One who makes use of his own legal right does no injury. Qui jure suo utitur nullum damnum facit. If damage results from a person's exercising his legal rights, it is damnum absque injuria.

January 8, 1987 Facts: Universal Rubber Products filed an application with the Patents office for the registration of the trademark Universal Converse and Device used on rubber shoes and rubber slippers. Converse Rubber Corp. filed its opposition on the ground that the trademark is confusingly similar to the word converse which was part of its corporate name, and which would result in injury to its business reputation and goodwill. The director of Patents dismissed converse Rubbers opposition. With its motion for reconsideration denied, it filed a petition for review with the Supreme Court. Issue: Whether Universal Converse. Held: No. Converse Rubber has earned a business reputation and goodwill in the Philippines. The word converse has been associated with its products, converse chuck Taylor, Converse all Star, All Star Converse Chuck Taylor, or Converse Shoes Chuck and Taylor. Converse has grown to be identified with Converse rubber products and has acquired a second meaning within the context of trademark and trad ename laws. There is confusing similarity between Universal converse and Device and Converse Chuck Taylor and All Star Device which would confuse the public to the prejudice of Converse Rubber inasmuch as Universal Converse and Device is imprinted in a circular manner on the side of its rubber shoes, similar to that of Converse Chuck Taylor. The similarity in the general appearance of respondent's trademark and that of petitioner would evidently create a likelihood of confusion among the purchasing public. But even assuming, arguendo, that the trademark sought to be registered by respondent is distinctively dissimilar from those of the petitioner, the likelihood of confusion would still subsists, not on the purchaser's perception of the goods but on the origins thereof. By appropriating the word "CONVERSE," respondent's products are likely to be mistaken as having been produced by petitioner. The risk of damage is not limited to a possible confusion of goods but also includes confusion of reputation if the public could reasonably assume that the goods of the parties originated from the same source. Rubber can appropriate

AIR PHILIPPINES VS. PENNSWELL Facts: Petitioner Air Philippines Corporation is a domestic corporation engaged in the business of air transportation services. On the other hand, respondent Pennswell, Inc. was organized to engage






Cases on the Intellectual Property Code

in the business of manufacturing and selling industrial chemicals, solvents, and special lubricants. Respondent delivered and sold to petitioner sundry goods in trade. Under the contracts, petitioners total outstanding obligation amounted to P449,864.98 with interest at 14% per annum until the amount would be fully paid. For failure of the petitioner to comply with its obligation under said contracts, respondent filed a Complaint for a Sum of Money on 28 April 2000 with the RTC. In its Answer, petitioner alleged that it was defrauded in the amount of P592,000.00 by respondent for its previous sale of four items. Petitioner asserted that it was deceived by respondent which merely altered the names and labels of such goods. Petitioner asseverated that had respondent been forthright about the identical character of the products, it would not have purchased the items complained of. Moreover, petitioner alleged that when the purported fraud was discovered, a conference was held between petitioner and respondent on 13 January 2000, whereby the parties agreed that respondent would return to petitioner the amount it previously paid. However, petitioner was surprised when it received a letter from the respondent, demanding payment of the amount of P449,864.94, which later became the subject of respondents Complaint for Collection of a Sum of Money against petitioner. During the pendency of the trial, petitioner filed a Motion to Compel respondent to give a detailed list of the ingredients and chemical components of the following products. The RTC rendered an Order granting the petitioners motion. Respondent sought reconsideration of the foregoing Order, contending that it cannot be compelled to disclose the chemical components sought because the matter is confidential. It argued that what petitioner endeavored to inquire upon constituted a trade secret which respondent cannot be forced to divulge. The RTC gave credence to respondents reasoning, and reversed itself. Alleging grave abuse of discretion on the part of the RTC, petitioner filed a Petition for Certiorari under Rule 65 of the Rules of Court with the Court of Appeals, which denied the Petition and affirmed the Order dated 30 June 2004 of the RTC. Petitioners Motion for Reconsideration was denied. Unyielding, petitioner brought the instant Petition before SC. Issue: WON respondents products should be subject to compulsory disclosure. Held: No. The products are covered by the exception of trade secrets being divulged in compulsory disclosure. The Court affirms the ruling of the Court of Appeals which upheld the finding of the RTC that

there is substantial basis for respondent to seek protection of the law for its proprietary rights over the detailed chemical composition of its products. The Supreme Court has declared that trade secrets and banking transactions are among the recognized restrictions to the right of the people to information as embodied in the Constitution. SC said that the drafters of the Constitution also unequivocally affirmed that, aside from national security matters and intelligence information, trade or industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well as banking transactions (pursuant to the Secrecy of Bank Deposits Act), are also exempted from compulsory disclosure. A trade secret is defined as a plan or process, tool, mechanism or compound known only to its owner and those of his employees to whom it is necessary to confide it. The definition also extends to a secret formula or process not patented, but known only to certain individuals using it in compounding some article of trade having a commercial value. American jurisprudence has utilized the following factors to determine if an information is a trade secret, to wit: (1) the extent to which the information is known outside of the employers business; (2) the extent to which the information is known by employees and others involved in the business; (3) the extent of measures taken by the employer to guard the secrecy of the information; (4) the value of the information to the employer and to competitors; (5) the amount of effort or money expended by the company in developing the information; and (6) the extent to which the information could be easily or readily obtained through an independent source. Rule 27 sets an unequivocal proviso that the documents, papers, books, accounts, letters, photographs, objects or tangible things that may be produced and inspected should not be privileged. The documents must not be privileged against disclosure. On the ground of public policy, the rules providing for production and inspection of books and papers do not authorize the production or inspection of privileged matter; that is, books and papers which, because of their confidential and privileged character, could not be received in evidence. Such a condition is in addition to the requisite that the items be specifically described, and must constitute or contain evidence material to any matter involved in the action and which are in the partys possession, custody or control. In the case at bar, petitioner cannot rely on Section 77 of Republic Act 7394, or the Consumer Act of the Philippines, in order to compel respondent to reveal the chemical components of its products. While it is

Cases on the Intellectual Property Code

true that all consumer products domestically sold, whether manufactured locally or imported, shall indicate their general make or active ingredients in their respective labels of packaging, the law does not apply to respondent. Respondents specialized lubricants namely, Contact Grease, Connector Grease, Thixohtropic Grease, Di-Electric Strength Protective Coating, Dry Lubricant and Anti-Seize Compound are not consumer products. What is clear from the factual findings of the RTC and the Court of Appeals is that the chemical formulation of respondents products is not known to the general public and is unique only to it. Both courts uniformly ruled that these ingredients are not within the knowledge of the public. Since such factual findings are generally not reviewable by this Court, it is not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below. The revelation of respondents trade secrets serves no better purpose to the disposition of the main case pending with the RTC, which is on the collection of a sum of money. As can be gleaned from the facts, petitioner received respondents goods in trade in the normal course of business. To be sure, there are defenses under the laws of contracts and sales available to petitioner. On the other hand, the greater interest of justice ought to favor respondent as the holder of trade secrets. Weighing the conflicting interests between the parties, SC rules in favor of the greater interest of respondent. Trade secrets should receive greater protection from discovery, because they derive economic value from being generally unknown and not readily ascertainable by the public.


Cases on the Intellectual Property Code