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G.R.

L-24919 January 28, 1980
JAMES HOWARD BOOTHE and JOHN MORTON, II, petitioners,
vs.
THE DIRECTOR OF PATENTS, respondent.
Picazo & Agcaoili for petition.
Office of the Solicitor General for respondent.
MELENCIO-HERRERA, J.:
Sought to be reviewed herein is the Decision of the Director of Patents, dated December 9, 1964, denying
priority rights under section 15 of our Patent Law (Republic Act No. 165) to petitioners, as foreign
applicants for Letters Patent, for their invention of "Chemotherapeutic Materials and Methods of Preparing
the same.
Petitioners James Howard Boothe and John Morton II, chemists, citizens and residents of the United States,
claim to be the inventors of a new antibiotic designated as "tetracycline", a new derivative of
chlortetracycline (popularly known as "aureomycin")
On February 19, 1954, petitioners applied for Letters Patent covering said invention to respondent Director
of Patents claiming the right of priority granted to foreign applicants under section 15 of the Patent Law
(RA 165). Receipt of petitioners' application was acknowledged by respondent Director on March 6, 1954.
On April 14, 1954, petitioners filed with respondent Director a legalized copy of their Application for Letters
Patent in the United States for the same invention (U.S. Serial No. 342556). Said legalized copy indicated
that the application in the United States was filed on March 16, 1963. 1 This latter date is of crucial
importance to petitioners' cause under section 15 of the Patent Law, which provides that:
Section 15. Application previously filed abroad. — An application for patent for an invention
filed in this country by any person who has previously regularly filed an application for a
patent for the same invention in a foreign country, which by treaty, convention or law
affords similar privileges to citizens of the Philippines, shall have the same force and effect
as the same application would have if filed in this country on the date on which the
application for patent for the same invention was first filed in such foreign country: Provided,
That the application in this country is filed within twelve months from the earliest date on
which such foreign application was filed and a certified copy of the foreign application
together with a translation thereof into English, if not in the English language, is filed within
six months from the date of filing in the Philippines, unless the Director for good cause
shown shall extend the time for filing such certified copy: And provided, further, that no
patent shall be granted on an application for patent for an invention which had been
patented or described in a printed publication in this or any foreign country more than one
year before the date of the actual filing of the application in this country, or which had been
in public use or sale in this country for more than one year prior to such filing.
Under the foregoing provision, petitioners would be entitled to the priority date of March 16, 1953 if their
application is considered filed in the Philippines as of March 5, 1954, since the latter date would fall within
the one-year period prior to March 5, 1954.
On February 7, 1958, petitioners informed respondent Director that in interference proceedings in the
United States, Letters Patent for a similar invention as theirs was awarded to Pfizer and Co., which had filed
its application ahead and that they failed to obtain any U.S. patent for their own invention. Petitioners,
however, observed and requested:
In the Philippines, however, the situation is at least the reverse. Pfizer and Co. did not file or
else filed an application after the above application has already been filed. The said above
application therefore is good and valid.
We request, therefore, that the present application be granted on the basis of the claims
originally filed. 2

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On August 5, 1959, in Paper No. 6, 3 Patent Examiner, Lydia Nueva España, rejected all of petitioners'
claims in view of "Philippine Patent No. 254 — November 29, 1956", apparently referring to a local Patent
obtained by Pfizer and Co., presumably covering the same invention. Additionally, petitioners were advised
that the "Specification" they had submitted was "incomplete" and that responsive action should be filed
them four months from date of mailing, which was also August 5, 1959. Paper No. 6 precipitated a series of
communications between the aforementioned Patent Examiner and petitioners, who apparently failed to
meet the deadline of four months for filing their responsive action.
On October 9, 1961, petitioners requested for clarification of Paper No. 6, particularly as to why their
Specification was considered incomplete.
In response, Supervising Patent Examiner Nelia de Castro informed petitioners as follows:
With respect to applicant's request for clarification as to the meaning of the second to the
last sentence contained in Paper 6, attention is called to the fact that the specification which
was originally filed is incomplete and not in accordance with Rule 62 of the Revised Rules.
Said specification ends on Page 9 with the incomplete sentence "The refractive indices of
this crystalline phase were found —
It appears from further from a comparison between the submitted 9 pages of the
specification and 2 pages of the claims on one hand and the corresponding pages of the
legalized copy of the U.S. application on the other that the present application does not
correspond with the said certified copy of the U.S. Application. The present application
cannot therefore be granted priority date under section 15 are requested by applicant. 4
On July 3, 1962, petitioners submitted two complete copies of the Specification, which included nine
additional pages, and reiterated their request for priority right in the Philippines. 5
On October 2, 1962, Chief Patent Examiner Nicanor Mapili issued Paper No. 20 rejecting the additional nine
pages of Specification submitted by petitioners, and ruling:
xxx xxx xxx
The filing of the alleged complete copy Of the specification is an attempt to effect a remedy
to the previous finding of incompleteness as stated in the 2nd to the last paragraph of Office
Action mailed Aug. 5, 1959, marked Paper 6. This cannot be allowed inasmuch as 9 pages of
new matter are actually proposed to be added to the specification.
This action is made final for purpose of appeal

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Petitioners moved for reconsideration on the ground that their application falls under the exception
provided for in Rule 47 of the Revised Rules of Practice in Patent Cases in that the missing nine pages
submitted by them are not really new matter but a mere "minor informality."
On February 5, 1963, Chief Patent Examiner Mapili issued Paper No. 22 denying petitioners' Motion for
Reconsideration and the findings of Examiner de Castro as follows:
The basis of the examiner's finding is applicant's verification on file, exclusive of what is in
an alleged corresponding application in the US as evidenced by a certified copy of record.
The only use of such certified a copy is to give proof to an earlier filing date as provided for
such section 15 of the Patent Law and to use the inventors' oath therein to complete the
form requirements relative to his application in a dance with the provisions of section 13(3)
of the same law.
The provisions of section 15 of the Patent Law, under which the present application was
filed, provides for a for filing. This deadline cannot be extended directly or indirectly by the
filing of an imperfect application which can be freely amended or rectified at a later date. If
this can be done legally, the restrictive provisions of section 15 will be nullified. 7
Adversely affected, petitioners appealed to dent Director of Patents.

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In their Brief filed with respondent Directors petitioners prayed for 1) revocation of the of the Chief Patent
Examiner, 8 2) admission of their Specification submitted on July 3, 1962; and 3) allowance of their
application on the merits.
On December 9, 1964, respondent Director rendered the questioned Decision, the dispositive portion of
which reads:
WHEREFORE, the appeal is hereby sustained. The additional pages to the specification are
hereby admitted, but the application shall not be extended priority rights under section 15 of
the Patent Law. Let the filing date of this application be changed from March 5, 1954 to April
14, 1954. The application is hereby remanded to the Chief Patent Examiner for proper action
and for further examination on the merits. 9
In reaching the foregoing conclusion, respondent Director opined that the portions subsequently supplied
in the local application are not new matter a comparison between the foreign and local applications
showed that the foreign application included the missing portions of the local one. However, respondent
Direct qualified that petitioners' application may be considered complete only on April 14, 1954 when the
certified copy of the foreign application was submitted. Consequently, the instant application is to be
considered an ordinary application, not entitled to the right of priority granted by section 15 of the Patent
Law, inasmuch as said application was not complete within the meaning of Rules 47 and 48 of the Revised
Rules of Practice in Patent Case when first filed on March 5, 1954.
Petitioners filed a Motion for Partial Reconsideration of the above-mentioned Decision questioning that
portion of respondent Director's ruling barring them from entitlement to the right of priority under section
15 of the Patent Law contending that their appeal centered merely on the issue of whether or not the
additional nine pages of Specification they had submitted should be treated as new matter.
On June 10, 1965, respondent Director denied reconsideration for lack of merit, and explained:
... It should be emphasized that under Rule 262 (b) of the Revised Rules of Practice in Patent
Cases, it is stated that should the Director have any knowledge of any ground not involved
in the appeal for rejecting any claim, he may include in his decision a statement to that
effect with his reasons for so holding, which statement shall constitute a rejection of the
claim. Priority claims are covered by the rule: 10
On June 11, 1965, petitioners filed a Second Motion for reconsideration on the ground that priority rights
are governed by convention and treaty, while invention claims are governed exclusively by the Statute and
Rules of Practice. Respondent Director denied that Motion for lack of merit on August 24, 1965.
Hence, this recourse.
On January 9, 1967, we deemed the case submitted for decision, after petitioners had filed their Brief on
February 12, 1966, and respondent Director, through the Solicitor General, his Brief on June 9, 1966.
On June 9, 1968, Republic Act No. 5434 was enacted providing that final Orders and Decisions of the
Director of Patents in ex parte and inter partes proceedings are appealable to the Court of Appeals. Since
no provision for retroactivity exists in said Act this Tribunal has resolved to retain jurisdiction over this case.
Petitioners maintain before this Court that:
RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING THAT PETITIONERS' APPLICATION,
SERIAL NO. 952, MAY NOT BE TREATED AS FILED UNDER SECTION 15 AS AMENDED, OF
REPUBLIC ACT NO. 165 KNOWN AS THE PATENT LAW.
and in support thereof stress that:
1) The Director had no jurisdiction to decide the question of whether or not the Philippine
Application should be treated as filed under Section 15 of the Act;
2) The Director had no jurisdiction to decide the question of whether or not the Philippine
Application was incomplete under Rules 47 and 48 of the Revised Rules of Practice in Patent
Cases;

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3) The Director misconstrued and misapplied Rules 47 and 48 of the Rules;
4) The Director misconstrued and misapplied Rule 262 (b) of the Rules.
For resolution, therefore, are the following issues: the scope of the powers of the Director of Patents in
cases appealed to him and the correctness of his application of Rules 47, 48 and 262(b) of the Revised
Rules of Practice in Patent Cases.
The facts unfolded call for an affirmance of respondent Director's rulings.
Explicit in Rule 262 of the Revised Rules of Practice in Patent Cases is the power and authority of
respondent Director to decide petitioners' appeal in the manner that he did, and we quote:
262. Decision by the Director. — (a) The Director, in his decision, may affirm or reverse the
decision of the Principal Examiner in whole or in part on the ground and on the claims
specified by the Examiner. The affirmance of the rejection of a claim on any of the grounds
specified constitutes a general affirmance of the decision of the Principal Examiner on that
claim, except as to any ground specifically reversed.
(b) Should the Director have knowledge of any grounds not involved in the appeal for
rejecting any claim he may include in his decision a statement to that effect with his reasons
for so holding which statement shall constitute a rejection of the claims. ...
In other words, respondent Director is empowered to consider grounds which may have come to his
knowledge other than those specifically raised in an appeal He need not confine himself only to issues
invoked. Besides, the question of new matter is inextricably linked with the right of priority on which
petitioners have anchored their application. As early as Paper No. 18, supra, the Supervising Patent
Examiner had concluded that inasmuch as the submitted pages did not correspond with the certified copy
of the U.S. application, "the present application cannot therefore be granted priority date under section 16
as requested by applicant." Again, in Paper No. 22,supra, the Chief Patent Examiner made mention of
petitioner' imperfect application and the fact that the deadline for filinf required by section 15 of the Patent
Law cannot be extended directly or indirectly otherwise "the restrictive provisions of section 15 will be
nullified."
It is also far-fetched for petitioners to claim that in ruling on petitioners' right of priority, respondent
Director had contravened Rule 254 of the Revised Rules of Practice in Patent cases, which provides that the
Director of Patents exercises no direct control, direction and supervision over the Principal Examiner and
the Executive Examiner. What respondent Director exercised was his authority to review the decisions of
Patent Examiners, as explicitly provided for in the last paragraph of the same Rules 254, as follows:
xxx xxx xxx
The only supervision which the Director of Patent may lawfully exercise over the Principal
Examiners and the Executive Examiner is a general supervision, exercised through a review
of the recommendations they may make for the grant of a patent, and through a review of
their decision by petition and appeal.
Similarly untenable is petitioners' contention that respondent Director had misconstrued and misapplied
Rules 47 and 48 of the Revised Rules of Practice in Patent Cases. The said Rules provide:
47. Application accepted and filed for examination only w hen complete — An application for
an invention patent will not be accepted and placed upon the files for examination until all
its required parts, complying with the rules relating thereto are received except that 'certain
minor informalities may be waived subject to subsequent correction, whenever required.
If the papers and parts are incomplete, or so defective that they cannot be accepted as a
complete application for examination, the applicant will be notified; the papers will be held
four months for completion and if not by then completed, will be stored as an abandoned
incomplete application and eventually destroyed or otherwise disposed of.
48. Serial number and filing date of application — Complete applications are numbered in
regular order, and the applicant win be informed of the serial number and filing date of the

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application by a filing receipt. The filing date of the applicant is the, date on which the
complete application, acceptable for placing on the files for examination, is received in the
Patent Office; or the date on which the last part completing such application is received, in
the case of an incomplete or defective application completed within four months. The
Executive Examiner shall be in charge of fixing the filing date and serial number of an
application.
Under the aforecited provisions, it is imperative that the application be complete in order that it may be
accepted. It is essential to the validity of Letters Patent that the specifications be full, definite, and
specific. 11 The purpose of requiring a definite and accurate description of the process is to apprise the
public of what the patentee claims as his invention, to inform the Courts as to what they are called upon to
construe, and to convey to competing manufacturers and dealers information of exactly what they are
bound to avoid. 12
The specification which petitioners submitted on March 5, 1954 was far from complete. That defect was
one of substance and not merely one of form. What petitioners claimed as their invention was not
completely determinable therefrom. Petitioners' application could be deemed as complete only on July 2,
1963 when they submitted the additional pages on the Specifications and Claims. Respondent Director,
therefore, did not err in converting petitioners' application into an ordinary application filed on April 14,
1954, not only for their having failed to complete their application within the four-month period provided
for by Rules 47 and 48, Revised Rules of Practice in Patent Cases, and as required of them by Paper No. 6,
but also for their having failed to file a complete application within twelve months from March 16, 1953,
the date of the foreign application For, to be entitled to the filing date of the patent application, an
invention disclosed in a previously filed application must be described within the instant application in such
a manner as to enable one skilled in the art to use the same for a legally adequate utility. 13
All told, we sustain respondent Director's findings in the absence of error or abuse of power or lack of
jurisdiction or grave abuse of discretion. 14 We have held that in the absence of arbitrariness, and provided
they are supported by substantial evidence, as in this case, the conclusions reached by the Director of
Patents are to be accorded respect and must be upheld. 15
WHEREFORE, we hereby affirm the Decision of respondent Director of Patents dated December 9, 1964.
SO ORDERED.

G.R. No. L-32160 January 30, 1982
DOMICIANO A. AGUAS, petitioner,
vs.
CONRADO G. DE LEON and COURT OF APPEALS, respondents.
FERNANDEZ, J.:
This is a petition for certiorari to review the decision of the Court of Appeals in CA G.R. NO. 37824-R
entitled "Conrado G. de Leon, plaintiff-appelle vs. Dominciano Aguas and F.H. Aquino and Sons,
defendants-appellants," the dispositive portion of which reads:
WHEREFORE, with the modification that plintiff-applee's award of moral damages is hereby
redured to P3,000.00, the appealed judgment is hereby affirmed, in all othe respects, with
costs against appellants. 1

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658 is of great utility and of great value to plaintiff and of great benefit to the public who has demanded and purchased tiles embodying the said invention in very large quantities and in very rapidly increasing quant ies. 658 was unlawfully acquired by making it appear in the application in relation thereto that the process is new and that the plaintiff is the owner of the process when in truth and in fact the process incorporated in the patent application has been known and used in the Philippines by almost all tile makers long before the alleged use and registration of patent by plaintiff Conrado G.00. that the registration of the alleged invention did not confer any right on the plaintiff because the registration was unlawfully secured and was a result of the gross misrepresentation on the part of the plaintiff that his alleged invention is a new and inventive process. Conrado G. not known or used by others in this country before his invention thereof. Aquino & Sons is guilty of infringement by making and furnishing to the defendant Domiciano A.000. de Leon. de Leon filed in the Court of First Instance of Rizal at Quezon City a complaint for infringement of patent against Domiciano A. Declaring plaintiff's patent valid and infringed: 2. that as a result of the defendants' wrongful conduct. agents. 658. 109. using or selling. not patented or described in any printed publication anywhere before his invention thereof. Aguas the engravings.On April 14. 2 On April 14.4 The trial court rendered a decision dated December 29. the same having been used by several tile-making factories in the Philippines and abroad years before the alleged invention by de Leon. H. Aguas infringed Letters of Patent No. that he has given direct and personal notice to the defendants of their said acts of infringement and requested them to desist. 110 issued on December 21.s patented invention. and has respected plaintiff's right therein and thereunder. manufacturing. that if the aforesaid infringement is permitted to continue. 1962.000. that there is an urgent need for the immediate issuance of a preliminary injunction. Aquino and Sons alleging that being the original first and sole inventor of certain new and useful improvements in the process of making mosaic pre-cast tiles. b) defendant has been granted valid patents (Patents No. castings and devises designed and intended for use in apparatus for the making 6 . and continue to so infringe causing great and irreparable damage to plaintiff. and c) that he can not be guilty of infringement because his products are different from those of the plaintiff. associates. Aguas and F. it is not patentable.00. 1962. their officers. that said invention was new. that the allegation of the plaintiff that Patent No. or more than one year prior to his application for patent thereof. plaintiff has suffered and the defendants are liable to pay him. and having complied in all respects with the statute and the rules of the Philippine Patent Office. that Letters Patent No. the truth being that a) the invention of plaintiff is neither inventive nor new. confederates. 1961) on designs for concrete decorative wall tiles. H. and from making. but nevertheless. not patented in any foreign country by him or his legal representatives on application filed more than one year prior to his application in this country. use and sell throughout the Philippines the improvements set forth in said Patent No. further losses and damages and irreparable injury will be sustained by the plaintiff. that plaintiff has been compelled to go to court for the protection and enforcement of his and to engage the service of counsel. Granting a perpetual injunction restraining defendants. that the defendant Domiciano A. and any and all persons acting under their authority from making and/or using and/or vending tiles embodying said patented invention or adapted to be used in combination embodying the same. judgment is hereby rendered in favor of plaintiff and against the defendants: 1. that the invention patented by said Patent No. 1962. thereby incurring attorney's fees and expenses of litigation in the sum of P5. he lawfully filed and prosecuted an application for Philippine patent. engravings. defendants have refused and neglected to desist and have disregarded such request. castings and devices designed and intended of tiles embodying plaintiff. 658 was lawfully granted and issued to him. in addition to actual damages and loss of profits which would be determined upon proper accounting. 658. 3 On May 23. the dispositive portion of which reads: WHEREFORE. hence. the defendant Domiciano A. 1965. that he has complied with the Philippine statues relating to marking patented tiles sold by him. Patent No. that the public has in general acknowledged the validity of said Patent No. 658 by making. moral and exemplary or corrective damages in the sum of P90. Aguas filed his answer denying the allegations of the plaintiff and alleging that: the plaintiff is neither the original first nor sole inventor of the improvements in the process of making mosaic pre-cast tiles. 108. useful. that plaintiff has the exclusive license to make. employees. 658 is of great value to plaintiff and of great benefit to the public is a mere conclusion of the plaintiff. an order granting the plaintiff's petition for a Writ of Preliminary Injunction was issued. using and selling tiles embodying said patent invention and that defendant F.

assigning the following errors. (d) P5. III THE TRIAL COURT ERRED IN NOT ORDERING THE CANCELLATION OF PLAINTIFF-APPELLEE'S LETTERS PATENT NO. 7 The petitioner assigns the following errors supposedly committed by the Court of Appeals: 7 . engravings.99 by way of actual damages.00 by way of attorney's fees and (e) costs of suit. with the modification that plaintiff-appellee's award of moral damages was reduced to P3. Ordering that each and all of the infringing tiles.00. (c) P5. II THE TRIAL COURT ERRED IN HOLDING THAT THE PATENT OF PLAINTIFF IS VALID BECAUSE IT IS AN IMPROVEMENT OR THE AGE-OLD TILE MAKING SYSTEM. 3. AGUAS IS GUILTY OF INFRINGEMENT DESPITE THE FACT THAT PLAINTIFF'S PATENT IS NOT A VALID ONE.00 by way of moral damages. 6 I THE TRIAL COURT ERRED IN NOT HOLDING THAT PLAINTIFF'S PATENT FOR THE 'PROCESS OF MAKING MOSAIC PRE-CAST TILE' IS INVALID BECAUSE SAID ALLEGED PROCESS IS NOT AN INVENTION OR DISCOVERY AS THE SAME HAS ALREADY LONG BEEN USED BY TILE MANUFACTURERS BOTH ABROAD AND IN THIS COUNTRY. 658.000. LIABLE FOR DAMAGES.000.LIKE THE COMPOSITION AND PROPORTION OF INGREDIENTS USED AND THE STRUCTURAL DESIGNS OF THE MOULD AND THE TILE PRODUCED . and from aiding and abetting or in any way contributing to the infringement of said patent.of tiles embodying plaintiff's patented invention. IV THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT DOMICIANO A. (b) P50. IN ACCORDANCE WITH THE PERTINENT PROVISIONS OF THE PATENT LAW. the Court of Appeals affirmed the decision of the trial court.THAT OF THE DEFENDANT ARE DIFFERENT.000. INSTEAD OF THE PLAINTIFF. 5 The defendant Domiciano Aguas appealed to the Court of Appeals. V THE TRIAL COURT ERRED IN NOT HOLDING THAT THE DEFENDANT COULD NEVER BE GUILTY OF INFRINGEMENT OF PLAINTIFF'S PATENT BECAUSE EVEN IN MATTERS NOT PATENTED BY THE PLAINTIFF .000.00 by way of exemplary damages. 1969. REPUBLIC ACT 165. castings and devices.020. VI THE TRIAL COURT ERRED IN NOT DISMISSING THE COMPLAINT AND IN HOLDING THE DEFENDANT. and from offering or advertising so to do. On August 5. Ordering the defendants to jointly and severally pay to the plaintiff the following sums of money. 4. which are in the possession or under the control of defendants be delivered to plaintiff. to wit: (a) P10. EXHIBIT L. AND ATTORNEY'S FEES.

Exh. as found by the Court of Appeals. defendant Aguas' mould is made to fit a 4-1/4 x 4-1/4 inch tile.H. Second error. Republic Act No. Letters Patent No. de Leon. artistic slope of easement and critical depth of the engraving that plaintiff wanted for his moulds. 74-75). a patent for the old and non-patentable process of making mosaic pre-cast tiles. said office issued in his favor Letters Patent No. Third error. as amended provides: "Any invention of a new and useful machine.000.000. as confirmed by it (the Court of Appeals). Aquino & Sons engraved the moulds embodying plaintiff's patented improvement for the manufacture of pre-cast tiles. 9 The patent right of the private respondent expired on May 5. purchased from plaintiff. that engraver Enrique Aquino knew that the moulds he was engraving for plaintiff were the latter's very own. 8 . whereas plaintiff's mould turns out tiles 4 x 4 inches in size.00 moral damages was reduced to P3. particularly the contents of the letters patent. that the moulds which F. through a representative.It is now respectfully submitted that the Court of Appeals committed the following errors involving questions of law. Leonardo. — When it did not conclude that the letters patent of the respondent although entitled on the cover page as a patent for improvements. 10 The errors will be discuss only to The petitioner questioned the validity of the patent of the private respondent. determine the right of said private respondent to damages. which possession the new features and characteristics covered by plaintiff's parent. Conrado G. 658 was issued by the Philippine Patent Office to the private respondent. easement. — As a corollary. process. "A" to "E"). 165. defendant Aguas requested Aquino to make engravings of the same type and bearing the characteristics of plaintiff's moulds. are: The basic facts borne out by the record are to the effect that on December 1. de Leon. lip width and critical depth of the deepest depression. or an improvement of the foregoing.. "A" to "E"). and that the only significant difference between plaintiff's mould and that engraved by Aquino for Aguas is that. plaintiff furnishing said defendant the actual model of the tiles in escayola and explained to said engraver the plans. 1959 plaintiffappellee filed a patent application with the Philippine Patent Office. tiles shaped out of these moulds at the back of which was imprinted plaintiff's patent number (Exhs. Section 7. that the alleged improvements introduced by the respondent in the manufacture of mosaic pre-cast tiles are not patentable. 658 for a "new and useful improvement in the process of making mosaic pre-cast tiles" (Exh. as a building contractor. Conrado G.00. and on May 5. — When it did not conclude from the admitted facts of the case. It should be noted that the private respondent does not claim to be the discoverer or inventor of the old process of tile-making. 1977. In fact. to protect his rights as the inventor of "an alleged new and useful improvement in the process of making mosaic pre-cast tiles. the same being not new. shall be patentable. "1" to "3" and Exhs. is not an invention or discovery. that defendant F. that subsequently. when it sentenced the herein petitioner to pay the damages enumerated in the decision of the lower court (Record on Appeal.H. on the basis of the body of the same. subject of said patent. or an improvement of the old system of making tiles. L and the pieces of physical evidence introduced consisting of samples of the tiles and catalouges. that defendant Aguas personally. manufactured product or substance. that Mr. 1960. He only claims to have introduced an improvement of said process. that both plaintiff's and defendant Aguas' tiles are sculptured pre-cast wall tiles intended as a new feature of construction and wag ornamentation substantially Identical to each other in size. Mr. 8 The facts. Aquino knew that the moulds he was asked to engrave for defendant Aguas would be used to produce cement tiles similar to plaintiff's. to wit: First error. was in truth and in fact. including an explanation of the lip width. on the ground that the process." 11 Indeed. "L"). contain the very same characteristic features of plaintiff's mould and that Aguas used these moulds in the manufacture of his tiles which he actually put out for sale to the public (Exhs. specifications and the details of the engravings as he wanted them to be made. but with the modification that the amount of P50. pp. Aquino & Sons eventually engraved for Aguas and for which it charged Aguas double the rate it charged plaintiff De Leon. useful and inventive.

despite said thinness. during the trial. While it is true that the matter of easement. though thin and light. "D" and "D-1") is a most critical feature. we find that plaintiff-appellee has introduced an improvement in the process of tilemaking. 237). 12 The validily of the patent issued by the Philippines Patent Office in favor of the private respondent and the question over the inventiveness. protrusions and depressions are known to some sculptors. lip width. with corresponding easement and lip width to such degree as leaves the tile as thin as 1/8 of an inch at its thinnest portion. appellee's improvement consists in the solution to the old critical problem by making the protrusions on his moulds attain an optimum height. still. to be able to produce a new and useful wall tile. strong optimum thickness of appellee's new tiles of only 1/8 of an inch at the deepest easement (Exhs. composed of experts in their field. This commercial success is evidence of patentability (Walker on Patents. 658 show that although some of the steps or parts of the old process of tile making were described therein. Moreover. in the new critical depth. There is. In fact. depth. I. it appears that appellee has been deriving considerable profit from his manufacture and sale of such tiles. The Claims and Specifications of Patent No. from any earlier source but. suggestive of discovery and inventiveness. appellant was challenged by appellee to present a tile of the same kind as those produced by the latter. More so. Some of the novel features of the private respondent's improvements are the following: critical depth. De Leon never claimed to have invented the process of tile-making. amounts to an invention. Ideal composition of cement and fine river sand.. Dellers Edition. so that the engraving thereon would be deep enough to produce tiles for sculptured and decorative purposes. the Court of Appeals said: Appellant has not adduced evidence sufficient to overcome the above established legal presumption of validity or to warrant reversal of the findings of the lower court relative to the validity of the patent in question. No proof was adduced to show that any tile of the same kind had been produced by others before appellee. among other ingredients that makes possible the production of tough and durable wall tiles. The easement caused by the inclination of the protrusions of the patented moulds is for the purpose of facilitating the removal of the newly processed tile from the female die. Vol. accepted the thinness of the private respondent's new tiles as a discovery. There is no indication in the records of this case and this Court is unaware of any fact. plaintiff has succeeded in producing a new product . The improved lip width of appellee's tiles ensures the durability of the finished product preventing the flaking off of the edges. which proceeds not merely from mechanical skill. others previous to his discovery thereof. as we have already pointed out. easement and field of designs of the new tiles. the freshly formed tile remains strong enough for its intended purpose. he could not present any. There is a presumption that the Philippines Patent Office has correctly determined the patentability of the improvement by the private respondent of the process in question. especially considering that. or known to.a concrete sculptured tile which could be utilized for walling and decorative purposes. there were novel and inventive features mentioned in the process. novelty and usefulness of the improved process therein specified and described are matters which are better determined by the Philippines Patent Office. p. Anent this matter. the clear preponderance of evidence bolsters said presumption of validity of appellee's patent. The technical staff of the Philippines Patent Office. the engraving of deep designs in such a way as to make the tiles decorative. 9 . lip width. no concrete proof that the improved process of tile-making described in appellee's patent was used by. sodium silicate and screened fine sand. despite the fact that appellant had every chance to do so.. therefore. 13 The contention of the petitioner Aguas that the letters patent of de Leon was actually a patent for the old and non-patentable process of making mosaic pre-cast tiles is devoid of merit. In fact. by the issuance of the patent in question. By using his improved process. have. by using them all together.The Court of Appeals found that the private respondent has introduced an improvement in the process of tile-making because: . Evidently. if the totality of all these features are viewed in combination with the Ideal composition of cement. said improvement consisting among other things. which would tend to show that concrete wall tiles similar to those produced by appellee had ever been made by others before he started manufacturing the same.

c) P5.00 by way of attomey's fees and e) Costs of suit because: 10 . 14 The petitioner also contends that the improvement of respondent is not patentable because it is not new. lip width. 17 that these tiles have also depth. this Court finds that Patent No. which previously had not been achieved by tiles made out of the old process of tile making. suffice it to say that what is in issue here is the process involved in tile making and not the design. Both the trial court and the Court of Appeals found as a fact that the petitioner Domiciano A. b) P50. useful and inventive. provided that a certain critical depth is maintained in relation to the dimensions of the tile. As regards the allegation of the petitioner that the private respondent copied some designs of Pomona. The old type of tiles were usually intended for floors although there is nothing to prevent one from using them for walling purposes.020. There is no similarity between the Pomona Tiles and de Leon's tiles. The respondent's improvement is indeed inventive and goes beyond the exercise of mechanical skill. The only issue then to be resolved is the amount of damages that should be paid by Aguas.000. and the fact that the tiles can be mass produced in commercial quantities and can be conveniently stock-piled.99 by way of actual damages. He has introduced a new kind of tile for a new purpose. Aguas did infringe de Leon's patent. There may be depressions but these depressions are too shallow to be considered engraved. 658 was legally issued. They are heavy and massive. He has overcome the problem of producing decorative tiles with deep engraving. is assured. but with sufficient durability. The designs are embossed and not engraved as claimed by the petitioner. easement and field of designs. while in ceramics fire is used. 16 The petitioner also claims that changing the design from embossed to engraved tiles is neither new nor inventive because the Machuca Tile Factory and the Pomona Tile Manufacturing Company have been manufacturing decorative wall tiles that are embossed as well as engraved.00 moral damages. Cement tiles are made with the use of water. the process and/or improvement being patentable. especially if deep engravings are made on the tile.00 by way of moral damages. De Leon's invention has therefore brought about a new and useful kind of tile. d) P5. There is no showing that this case falls under one of the exceptions when this Court may overrule the findings of fact of the Court of Appeals.000. Besides. These tiles are neither artistic nor ornamental. 15 Durability inspite of the thinness and lightness of the tile.artistic and suitable for wall ornamentation. 21 The lower court awarded the following damages: 22 a) P10. 20The process involved in making cement tiles is different from ceramic tiles. 19 The Machuca tiles are different from that of the private respondent. In view of the foregoing.00 by way of exemplary damages. 18 and that the private respondent had copied some designs of Pomona. The records disclose that de Leon's process is an improvement of the old process of tile making. the Machuca tiles are heavy and massive. The tiles produced from de Leon's process are suitable for construction and ornamentation. The Pomona tiles are made of ceramics. He has improved the old method of making tiles and pre-cast articles which were not satisfactory because of an intolerable number of breakages. In its decision the Court of Appeals affirmed the amount of damages awarded by the lower court with the modification that the respondent is only entitled to P3.000.000. This contention is without merit. handled and packed without any intolerable incidence of breakages.

37824-R appealed from is hereby affirmed. which can be safely be considered the amount by which he enriched himself when he infringed plaintiff's patent.s.00 awarded by the lower court is warranted by the circumstances.n.R. he made a gross income of P3.020.s. t. 42 of the Patent Law any patentee whose rights have been infringed is entitled to damages which.00 to be paid jointly and severally by defendants. the Court hereby awards plaintiff exemplary damages in the sum of P5.) The wantonness and evident bad faith characterizing defendants' prejudicial acts against plaintiff justify the assessment of moral damages in plaintiff's favor. the decision of the Court of Appeals in CA G. 28. 1964). 2219 NCC). SO ORDERED. 36.99. plaintiff's character and reputation have been unnecessarily put in question because defendants.33. 28.R. THE HONORABLE COURT OF APPEALS and SUSANA LUCHAN. respondents. No. In addition.. said acts of defendants have caused plaintiff considerable mental suffering.000. MAGUAN (formerly ROSARIO C.000. by their acts of infringement have created a doubt or suspicion in the public mind concerning the truth and honesty of plaintiff's advertisements and public announcements of his valid patent.00. Ambrosio Padilla Law Offices for petitioner. according to the circumstances of the case may be in a sum above the amount found as actual damages sustained provided the award does not exceed three times the amount of such actual damages. vs. Considering the wantonness of the infringement committed by the defendants who knew all the time about the existence of plaintiff's patent. "Willful injury to property may be a legal ground for awarding moral damages if the court should find that. he is entitled to an award of moral damages in the sum of P50. 1986 ROSARIO C. t.. There is no reason to reduce the amount of damages and attorneys fees awarded by the trial court as modified by the Court of Appeals. And in order to discourage patent infringements and to give more teeth to the provisions of the patent law thus promoting a stronger public policy committed to afford greater incentives and protection to inventors. though we do not believe the amount of P50. 11 . without pronouncement as to costs. L-45101 November 28. Id. Necessarily.An examination of the books of defendant Aguas made before a Commissioner reveals that during the period that Aguas was manufacturing and selling tiles similar to plaintiff's. WHEREFORE. G. considering especially. and owner of the likewise reputed House of Pre-Cast. plaintiff was unstandably very sad. under the circumstances such damages are justly due" (Art.000.000. 23 In reducing the amount of moral damages the Court of Appeals said: As regards the question of moral damages it has been shown that as a result of the unlawful acts of infringment committed by defendants.00 by way of compensating appellee for his moral suffering. Feb. We feel that said amount should be reduced to P3. the fact that he staked everything on his pre-cast tile business (p. petitioner.340. TAN). he worried and became nervous and lost concentration on his work in connection with his tile business (pp. 30. Considering the status of plaintiff as a reputable businessman.n. Under Sec. the Court feels there is reason to grant plaintiff maximum damages in the sum of P10.

1977 for Our decision is this petition for review on certiorari of the two Resolutions of the Court of Appeals. pp. further alleged that petitioner's patents in question are void on the following grounds: (1) at the time of filing of application for the patents involved. HONRADO. (Taken from allegations in the Answer.R. for a period of 5years fromApril 5. Susana Luchan v. Tan. 4. 19908. 93). and prayed. 864. Rosario C. petitioner explained such production and sale constitute infringement of said patents and therefore its immediate discontinuance is demanded. 1184. Tan). No. (Rollo. Rosario C. p. and (2) the person to whom the patents were issued was not the true and actual author of the utility models applied for. p. pp. 90). filed a complaint for damages with injunction and preliminary injunction against private respondent with the then Court of First Instance of Rizal. pp.PARAS. petitioner informed private respondent that the powder puffs the latter is manufacturing and selling to various enterprises particularly those in the cosmetics industry. Hon. (2) Utility Model Letters Patent No. dated November 4. Rollo. UM-109 for a period of 5 years from October 6. 6-7). private respondent assailed the validity of the patents involved and filed with the Philippine Patent Office petitions for cancellation of (1) Utility Model Letter Patent Extension No. UM-450 (extended and/or renewed under Extension No. and neither did she derive her rights from any true and actual author of these utility models. 840. Rollo. In a letter dated July 10. (3) Utility Model Letters Patent Extension No. otherwise it will be compelled to take judicial action. par.(Petition. docketed as Civil Case No." wherein it ruled for the dismissal of the petition for lack of merit and at the same time nullifying the writ of preliminary injunction it had previously issued. denying the motion for reconsideration of the first resolution above-mentioned. Pasig Branch. 1971) 2. for the following reasons: 12 . on August 24. 1976." It is undisputed that petitioner is a patent holder of powder puff namely: 1. par. petitioner. among others. 1974. 1972) 3. that a writ of preliminary injunction be immediately issued (Complaint. SP-04706. as amended by R. UM 1184. 838. UM110 for a period of 5 years from January 26. 55 of R. et al. 839. Petitioner is doing business under the firm name and style of SWAN MANUFACTURING" while private respondent is likewise doing business under the firm name and style of "SUSANA LUCHAN POWDER PUFF MANUFACTURING. titled "SUSANA LUCHAN v. Rollo.A. for infringing the aforesaid letters patent. or even only substantially Identical to the products covered by petitioner's patents and. UM-1184 (Inter Partes Case No. by way of affirmative defenses. 1976. 1974 (Annex "D". Private respondent replied stating that her products are different and countered that petitioner's patents are void because the utility models applied for were not new and patentable and the person to whom the patents were issued was not the true and actual author nor were her rights derived from such author. 1976 in CA-G. Rosario C. 1974. Rollo. Extension UM-109. Susana Luchan v. UM-110 (Inter Partes Case No. setting aside its Decision of February 16. J. 165. (Taken from allegations in the Answer. 10. resemble Identical or substantially Identical powder puffs of which the former is a patent holder under Registration Certification Nos. In view thereof.A. 7-8). Rollo. private respondent alleged that the products she is manufacturing and offering for sale are not Identical. p. And on July 25. In her answer. the utility models applied for were not new and patentable under Sec. UM-109 (Inter Partes Case No. 86).:p Submitted on December 9. Susana Luchan v. and the second. 94-95). Tan). the first dated July 6. 1974. UM-423 (extended and/or renewed under Extension No. Extension UM-110 and Utility Model No.

19908. 1975 (Annex "D". 148-171) reiterating among other things the invalidity of petitioner's patents and prayed that the trial court be restrained from enforcing or continuing to enforce the following: (1) Order dated September 18. 1974. the proceedings complained of in the petition to wit: 1) Order dated September 18. and Order dated September 11. 1974 denying petitioner's motion petition for reconsideration. 13 . Rollo. (2) Writ of preliminary injunction dated September 18. and Utility Model No. 125) granting the preliminary injunction prayed for by petitioner. 1. selling or causing to be sold. THEREFORE. Rollo. making or causing to be made. respondents. the trial court issued an Order (Annex "K". 423 (Extension No. (CA Decision. or using or causing to be used in accordance with. 1975. SO ORDERED. and with respect to UM1184. pp. servants and employees from directly or indirectly manufacturing. and (b) applicant's claims in her applications. p. Rollo. with costs. 1976. and (3) Order dated September 11. UM-110). pp. the same is hereby dismissed and the preliminary injunction previously issued by this Court is hereby set aside. the trial court denied private respondent's motion for reconsideration (Annex "N". UM-109). Rollo. with respect to UM-423 and UM450. are hereby ENJOINED to RESTRAIN from enforcing or continuing to enforce. p. simple one which has been well known to the cosmetics industry since years previous to her filing of applications. (Answer. granting the preliminary injunction. In an Order dated September 11. of "construction" or process of manufacturing the utility models applied for. all issued in connection with Civil Case No. powder puffs of the kind applied for were then already existing and publicly being sold in the market. On September 18. UNTIL FURTHER ORDERS FROM THIS COURT. finding no merit in the herein petition. respondent court promulgated a decision the dispositive portion of which reads: WHEREFORE. 132). 1975.(a) since years prior to the filing of applications for the patents involved. granting the preliminary injunction. or embodying the utility models of the Philippine Patent Office Utility Model Letters Patent Nos. you. Rollo. On October 15. the Writ of Preliminary Injunction was issued by the respondent Court of Appeals as follows: NOW. p. the corresponding writ was subsequently issued (Annex "K-1". 1974. 1184 or from infringement upon or violating said letters patent in any way whatsoever (Annex " K-1 ". 1974. (Annex "P". 131). 142). and which belonged to no one except to the general public. Rollo. her claim in her application of a unitary powder puff. denying petitioner's motion for reconsideration. 131) enjoining the herein private respondent (then defendant) and all other persons employed by her. 2) Writ of Preliminary Injunction dated September 18. Rollo. 189). and which belonged to no one except to the general public. p. 93-94). p. In challenging these Orders private respondent filed a petition for certiorari with the respondent court on September 29.73) On February 16. 450 (Extension No. Rollo. both in the Philippines and abroad. was but an limitation of a product well known to the cosmetics industry since years previous to her firing of application. Rollo. p. such cannot be the basis for preliminary injunction (Motion for Reconsideration. 1974. p. 1975. Private respondent questioned the propriety of the trial court's issuance of the Writ of Preliminary Injunction arguing that since there is still a pending cancellation proceedings before the Philippine Patent Office concerning petitioner's patents. her agents. were but a complicated and impractical version of an old. Consequently. No. 1974. and/or any person/persons acting on your stead.

without giving due course to the petition. to be inadequate. p. on July 6. the dispositive portion of which reads: WHEREFORE. 1976. p. pp. p. Reviewing on reconsideration. Feeling aggrieved. Without pronouncement as to costs. finding the lower court's position to have been opposed to Patent Law. 218-226). p. Thus. 351) while private respondent filed her brief on August 25. 186). 1976. private respondent moved to reconsider the afore-mentioned Decision based on the following grounds: I THAT THIS HONORABLE COURT ERRED IN NOT APPRECIATING THE EXISTENCE OF A FAIR QUESTION OF INVALIDITY OF PRIVATE RESPONDENT'S PATENTS. petitioner filed her Reply (Rollo.ln said decision respondent court stated that in disposing of the petition it tackled only the issue of whether the court a quo acted with grave abuse of discretion in issuing the challenged orders. p. pp. under the circumstances. respondent court considered it a grave abuse of discretion when the court a quo issued the writ being questioned without looking into the defenses alleged by herein private respondent. 290) which was filed on December 16. denied the same for lack of merit. (Motion for Reconsideration. this petition. 15-16) may be reduced to three main issues: (1) Whether or not in an action for infringement the Court a quo had jurisdiction to determine the invalidity of the patents at issue which invalidity was still pending consideration in the patent office. not persuaded by the grounds embodied in the motion for reconsideration filed by herein petitioner (Annex "V ". p. Thereafter. The writ of certiorari is ordered issued. our decision is hereby set aside. the situation calls for a denial of the writ of preliminary injunction pending the evaluation of the evidence presented (Rollo. 323) and on May 30. it considered the remedy of appeal. thereby maintaining the same stand it took in its July 6. 1977 (Rollo. 1976 Resolution (Rollo. In a Resolution dated November 4. 14 . are hereby set aside. 1977 (Rollo. 1977. Section 45 and 46 of the Patent Law allow the court to make a finding on the validity or invalidity of patents and in the event there exists a fair question of its invalidity. respondent court made a complete turnabout from its original decision and promulgated a Resolution. It made clear the question of whether the patents have been infringed or not was not determined considering the court a quo has yet to decide the case on the merits (Ibid. 190). SO ORDERED. p. Thus. On December 3. Thereafter. Hence. the petition was given due course (Rollo. II THAT THIS HONORABLE COURT ERRED IN NOT REJECTING THE THEORY OF RESPONDENT JUDGE THAT HE HAS NO JURISDICTION TO INVALIDATE THE PATENTS UPON GROUND OF LACK OF NOVELTY OF THE PRODUCTS PATENTED. Rollo. the challenged orders. this Court required respondent to file her Comment (Rollo. Accordingly. 345). 281). 359). p. respondent court.. petitioner having failed to file reply brief. Petitioner filed her brief on July 14. (CA Resolution. Petition). The assignment of errors raised by the petitioner in this case (Rollo. 359). 1976. the Court resolved to declare the case submitted for decision on December 9. 226). p. Rollo. p. Exhibit H and H-1 and the order denying the motion for reconsideration (Annex "K". pp. Said court noticed that contrary to the lower courts position that the court a quohad no jurisdiction to determine the question of invalidity of the patents. respondent court gave weight to private respondent's allegation that the latter's products are not identical or even only substantially identical to the products covered by petitioner's patents. The writ of preliminary injunction previously ordered by this Court and ordered lifted by the Decision now being set aside is hereby reinstated and made permanent. Rollo. 227). 1977 (Rollo. 1976 (Rollo. Further. p. 291-316).

. (Frank. or selling by any person without the authorization of the patentee constitutes infringement of the patent (Sec. on the mistaken notion that such question in within the exclusive jurisdiction of the patent office. or if it is the subject matter of a validity issued patent in the Philippines granted on an application filed before the filing of the application for patent therefor. v. more specifically. a single instance of public use of the invention by a patentee for more than two years (now for more than one year only under Sec. there is created a prima faciepresumption of its correctness and validity.A.M. 42.A. Chua. there is even less reason to doubt that the trial court has jurisdiction to declare the patents in question invalid. Chua. will be fatal to.M. II. the questions of invention. are open to judicial examination. Invention not considered new or patentable. F." Upon such certification. supra) it is generally held that in patent cases a preliminary injunction will not issue for patent 15 . The decision of the Commissioner (now Director) of Patent in granting the patent is presumed to be correct.M. et al. it is ministerial on the part of the patent office to execute the judgment.(2) Whether or not the Court a quo committed grave abuse of discretion in the issuance of a writ of preliminary injunction. respondent Court of Appeals was satisfied that there is a prima facie showing of a fair question of invalidity of petitioner's patents on the ground of lack of novelty. 790-791 [1933]. Under the present Patent Law. Accordingly. R. F. novelty or prior use. 57 Phil. using. F. 40 Phil. But where the plaintiff introduces the patent in evidence. et al. Yaptico & Co. It has been repeatedly held that an invention must possess the essential elements of novelty . The burden of proof to substantiate a charge of infringement is with the plaintiff.. originality and precedence and for the patentee to be entitled to protection. use and sell the patented article or product and the making. 46 of the same law which provides that if the Court shall find the patent or any claim thereof invalid. 9. issue an order cancelling the patent or the claims found invalid and shall publish a notice thereof in the Official Gazette. 221-222). the Director shall on certification of the final judgment . The law provides: SEC. Vargas v. (Rollo. 207 [1933]). 37. pp. 199 [1919]. the invention must be new to the world. 165). As pointed out by said appellate court said evidence appeared not to have been considered at all by the court a quo for alleged lack of jurisdiction. Yaptico & Co. as correctly stated by respondent Court of Appeals. 165). or if it had been in public use or on sale in the Philippines for more than one year before the application for a patent therefor. Yaptico & Co. The first issue has been laid to rest in a number of cases where the Court ruled that "When a patent is sought to be enforced. Frank and Gohn v.. A patentee shall have the exclusive right to make. this conclusion is reinforced by Sec. R. The burden of going forward with the evidence (burden of evidence) then shifts to the defendant to overcome by competent evidence this legal presumption. Thus. After a careful review of the evidence consisting of 64 exhibits and oral testimonies of five witnesses presented by private respondents before the Court of First Instance before the Order of preliminary injunction was issued as well as those presented by the petitioner. (3) Whether or not certiorari is the proper remedy. — An invention shall not be considered new or capable of being patented if it was known or used by others in the Philippines before the invention thereof by the inventor named in an application for patent for the invention. Then. 9 of the Patent Law) before the date of his application for his patent. under American Law from which our Patent Law was derived (Vargas v. Kosuyama Vargas v. The question then in the instant case is whether or not the evidence introduced by private respondent herein is sufficient to overcome said presumption. and each of them. and Vargas v." (Vargas v. and the same is in due form. Any patentee whose rights have been infringed upon may bring an action before the proper CFI now (RTC) and to secure an injunction for the protection of his rights (Sec. or if it was patented or described in any printed publication in the Philippines or any foreign country more than one year before the application for a patent therefor. Defenses in an action for infringement are provided for in Section 45 of the same law which in fact were availed of by private respondent in this case. supra). Kosuyana 59 Phil. the validity of the patent when issued.

the trial court failed to satisfy the two requisites necessary if an injunction is to issue. Quintillan. 67 SCRA 508." (Rollo. Argel. respondent appellate court is of the view that ordinary appeal is obviously inadequate. 291-292). the trial court nonetheless issued the writ of preliminary injunction which under the circumstances should be denied." Relative thereto "the judge whose order is under attack is merely a nominal party. A parallel was drawn from a decision of the Supreme Court in the case of Sanchez v. Rule 65 of the Revised Rules of Court where it shall be the duty of such person or persons interested in sustaining the proceedings in court. Hon.. Alcasid v. 16 . 95 SCRA 359). 69 SCRA 328 [1976] where the First Division of the Supreme Court ruled that "The prerogative writ of certiorari may be applied for by proper petition notwithstanding the existence of the regular remedy of an appeal in due cause when among other reasons. Samson. Inc. p. pp. Rollo. 1967) and the dissolution of the writ is proper where applicant has doubtful title to the disputed property. (Rollo. 406). The issuance of letters patent. 70 SCRA 378). 286-287). 28 of the Patent Law and not to a defense against an action for infringement under Sec. Sayo. It will be noted that the validity of petitioner's patents is in question for want of novelty. C. 524. private respondent's contention that such refers to the filing of petitions for cancellation in the Patent Office under Sec. p. under our jurisprudence. as a general rule because of the injurious consequences a writ of injunction may bring. "since sufficient proofs have been introduced in evidence showing a fair question of the invalidity of the patents issued for such models. it is elementary that the trial judge is a mere nominal party as clearly provided in Section 5. it is but right that the evidence be looked into. 735-736. Honrado. All these notwithstanding. (Sangki v. 402) In the same manner. As to petitioner's claim of prescription. pp. III. wherefore. In cases of infringement of patent no preliminary injunction will be granted unless the patent is valid and infringed beyond question and the record conclusively proves the defense is sham. Tarona v." Private respondent maintains the position that the resolutions sought to be appealed from had long become final and executory for failure of Hon. 128 SCRA 276). 102 Phil. As found by respondent Court of Appeals.infringement unless the validity of the patent is clear and beyond question. Private respondent contends that powder puffs Identical in appearance with that covered by petitioner's patents existed and were publicly known and used as early as 1963 long before petitioner was issued the patents in question. 194-199).. (Ramos v. Court of Appeals.. There is no dispute that petitioner has seasonably petitioned. 45 thereof which may be raised anytime. Reynaldo P. Under the circumstances. pp. a judge in his official capacity should not be made to appear as a party seeking reversal of a decision that is unfavorable to the action taken by him.A. to appeal by certiorari from the resolutions of respondent Court of Appeals. 21 SCRA 1392. Comelec. For failure to determine first the validity of the patents before aforesaid issuance of the writ. the right to the relief demanded must be clear and unmistakable. the trial court judge. Lim Se v. namely: the existence of the right to be protected and the violation of said right. (Rollo. On the other hand. it appears obvious that the trial court committed a grave abuse of discretion which makes certiorari the appropriate remedy. (Ibid." (Hon. (Buayan Cattle Co. v. As correctly observed by respondent Court of Appeals. is not sufficient to support such drastic relief (8 Deller's Walker on Patents p. Under the above established principles. the broader interests of justice so require or an ordinary appeal is not an adequate remedy. standing alone. is evident under aforesaid law. 288). evaluated and determined on the merits so that the matter of whether the patents issued were in fact valid or not may be resolved. Such contention is untenable. the injunctive order of the trial court is of so general a tenor that petitioner may be totally barred from the sale of any kind of powder puff. December 26. (List of Exhibits. "to appear and defend. both in his or their own behalf and in behalf of the court or judge affected by the proceedings.

: 17 . 82542 September 29. Assignors to ALLEN & HANBURYS. Castillo. respondent. petitioners. J. SO ORDERED. LTD. G. Pison for respondent. Teodoro B.. UNITED LABORATORIES. No. GRIÑO-AQUINO. Laman. the assailed resolutions of the Court of Appeals are hereby AFFIRMED. vs. 1988 BARRY JOHN PRICE. Tan & Pantaleon Law Offices for petitioners.PREMISES CONSIDERED.R. JOHN WATSON CLITHERON and JOHN BRADSHAW.

versus Barry John Price. 2. After the hearing. assignors to Allen & Hanburys Ltd. 1683. given or made on account with reflection or return of the product previously delivered. SP-09308) which dismissed the appeal on December 4. possesses the capability to use the subject compound in the manufacture of a useful product or of making dosage formulations containing the said compound. In case Petitioner's product containing the patented substance shall contain one or more active ingredients as admixed product.) The patentees appealed the decision to the Court of Appeals (CA-G. or measured by the production. 13540 which was granted to them on June 26. The petition further alleged that the patent relates to medicine and that petitioner. respondent United Laboratories. Inc. or otherwise dispose of such medicines or pharmaceutical preparations in the country.The petitioners are the owners-assignees of Philippine Patent No. c) Credits or allowances. The royalties shall be computed after the end of each calendar quarter for all goods containing the patented substance herein involved. in finding that the respondent possess the legally required capability to make use of the petitioner's patented compound in the manufacture of a useful product. 3 of which provides as follows: 3. "United Laboratories. excise or government charge included in such amount.1980 for a pharmaceutical compound known as "aminoalkyl furan derivatives.5) PER CENT OF THE NET SALES in Philippine currency.R.') for the issuance of a compulsory license to use the patented compound in its own brands of medicines and pharmaceuticals and to sell. 1982. distribute. granting UNILAB a compulsory license subject to ten (1 0) terms and conditions No. 18 . without affording the parties an opportunity to negotiate the terms and conditions freely and by themselves. the Philippine Patent Office rendered a decision on June 2. the royalty to be paid shall be determined in accordance with the following formula: Net Sales on Value of Admixed Product Patented Substance Royalty = _______________ x 0. if any. included in such amount. petitioner shall pay the respondent a royalty on all license products containing the patented substance made and sold by the Petitioner in the amount equivalent to TWO AND ONE HALF (2. (or UNILAB) filed in the Philippine Patent Office a petition Inter Partes Case No. quantity or cash discounts and broker's or agent's or distributor's commissions. b) Trade. Inc. Payments should be made to Respondent's authorized representative in the Philippines. which has had long experience in the business of manufacturing and selling pharmaceutical products. if any. 13540 lessa) Transportation charges or allowances. No.025 x ___________________ (Value of Pa Value of tended Substance) Active Ingredients 4. 35-36. in upholding the Director's unilateral determination of the terms and conditions of the compulsory license. if any. and d) Any tax." On October 1. use or delivery of the products. 1 987. transportation. (pp. made and sold during the preceding quarter and to be paid by the Petitioner at its place of business on or before the thirtieth day of the month following the end of each calendar quarter. allowed or paid. By virtue of this license. sale. Rollo. 1986. John Watson CLITHERON and John Bradshaw. The terms 'net sales' means the gross billed for the product pertaining to Letters Patent No. They have come to his Court praying for a review of the Appellate Court's decision on the grounds that it erred: 1.

5% is just and reasonable.D.5% provided for by the Director of Patents is reasonable. 44-45. what UNILAB has with the compulsory license is the bare right to use the patented chemical compound in the manufacture of a special product. when only one claim of the patent was controverted and 4. or process subject of the compulsory license is involved in an industrial project approved by the Board of Investments. shall operate as a deed granting a. there is always a presumption of regularity in the performance of one's official duties.—If the Director finds that a case for the grant of license under Section 34. order the grant of an appropriate license. 1263.—(1)If the Director finds that a case for the grant of a license under Sec. the royalty rate of 2. If the product. However. The first assignment of error has no merit. GRANT OF LICENSE. 10-11. Therefore. pp. Paragraph 3.3. (pp. Section 35-B. as amended by Presidential Decree No.5% royalty rate is unfair to respondentappellant as to amount to an undue deprivation of its property right. not before. distributed. the same rule of royalty shall be paid whenever two or more patents are involved.5% royalty fixed by the Director of Patents 'is just and reasonable. Moreover. he may order the grant of an appropriate license and in default of agreement among the parties as to the terms and conditions of the license he shall fix the terms and conditions of the license in the order. and under Section 35 of P. Also. and disposed locally. The Court of Appeals found that the 2.license executed by the patentee and the other patties in interest. GRANT OF LICENSE. said provision grants to the Director of Patents the use of his sound discretion in fixing the percentage for the royalty rate and We find that the Director of Patents committed no abuse of this discretion. amending portions of Republic Act No. in affirming the Director's award of the entire patent to the respondent.' We quote its observations hereunder: Respondent-appellant contends further that the 2. 35. filing its petition for compulsory licensing. which royalty shall be distributed to the patentees in rates proportional to the extent of commercial use by the licensee giving preferential values to the holder of the oldest subsisting product patent. 165. The royalty rate of 2. Besides. he shall within one hundred eighty (180) days from the date the petition was filed. provides: (3) A compulsory license shall only be granted subject to the payment of adequate royalties commensurate with the extent to which the invention is worked. Republic Act No. when final. the special product to be manufactured by UNILAB will only be used. without any technical assistance from herein respondent-appellant. Thus. The order of the Director granting a license under this Chapter. hereof made out. We do not hold this view. This he is authorized to do under Section 36 of Republic Act No. The order shall state the terms and conditions of the license which he himself must fix in default of an agreement on the matter manifested or submitted by the parties during the hearing. 36. 34 hereof has been made out. The terms and conditions of the compulsory license were fixed by the Director of Patents after a hearing and careful consideration of the evidence of the parties and in default of an agreement between them as to the terms of the license.165 which reads: Sec. royalty payments shall not exceed five per cent (5%) of the net wholesale price (as defined in Section 33-A) of the products manufactured under the license. the royalty payable to the patentee or patentees shall not exceed three per cent (3%) of the net wholesale price (as defined in Section 34-A) of the patented commodity and/or commodity manufactured under the patented process. Rollo) 19 . 165 which provides: Sec. 1263. in considering evidence that UNILABs capability to use the compound was acquired after. substance. CA Decision.

21. De Gala Sison vs. and liquid preparations.. Inc. 20. 65 SCRA 575. IPC 1349. Helmut Weber.. Graham John Durant et al. 13. The patented invention in this case relates to medicine and is necessary for public health as it can be used as component in the manufacture of anti-ulcer medicine. July 27. Inc. August 31. United Laboratories. Squibb & Sons. et al. that it has the necessary equipment and technological expertise for the development of solid dosage forms or for tablet. Standard Brands. that it is the leading drug manufacturer in the country. Oceanic Pharmacal Inc.. Inc. June 10. Goduco vs. June 29. Inc. and that it maintains standards and procedures to ensure the quality of its products. vs. Pfizer Corp. vs. 1981. IPC 929. vs. Boehringer Ingelhelm. the petitioner cannot complain of a deprivation of property rights without just compensation. 1983.V. Albert Anthony Carr. IPC 1627. Inc.R. Gruppo Lepetit S. Drugmaker's Laboratories v. Inc. IPC 1179. Van Gelder et al. Identical terms and conditions had been prescribed for the grant of compulsory license in a good number of patent cases (United Laboratories. In any event.. Inc. the Court of Appeals did not commit a reversible error in affirming it (Philippine Nut Industry.. Bristol-Myers Company. Maggi. that its capability to use the patented compound was only acquired after the petition for compulsory licensing had been filed. United Laboratories. 1984. as alleged by the patentee (although it is denied by UNILAB). United Laboratories. IPC 1184. IPC 1731. 1983. Inc.Furthermore. vs. vs. 1983.1983. Inc.. IPC 1906. the important thing is that such capability was proven to exist during the hearing of the petition. Pepsi-Cola Bottling Company of the P. United Laboratories. IPC 1759. Gaw Liu 44 SCRA 143. Sy Ching vs. Therefore. Even if it were true. The Director's finding that UNILAB has the capability to use the patented compound in the manufacture of an anti-ulcer pharmaceutical preparation is a factual finding which is supported by substantial evidence. IPC 1185. July 11. vs. September 22. Noxides and dehydrates thereof. Doctors Pharmaceuticals. Herningen et al.A. The compound ranitidine hydrochloride named in Claim 45 is also covered by General Claim I and several other sub-generic claims. January 10.. June 8. 20 . Drugmaker's Laboratories. Maggi. as pointed out in the respondent's comment on the petition. GMBH. 8 SCRA 595.. The invention in this case relates to new aminoalkyl derivatives which have histamine H 2 blocking activity. IPC 949. United Laboratories. United Laboratories. Inc. since the petitioner will be paid royalties on the sales of any products the licensee may manufacture using any or all of the patented compounds.. Inc. SO ORDERED. IPC 1549. 19 SCRA 289. Ramos vs.1984. August 14. or. vs. August 27. having the general formula (I) and physiologically acceptable salts. Boehringer Ingelheim. IPC 1679. capsule. vs. Superior Pharmacraft Inc. hence. Inc. IPC 1555. The Director of Patents did not err in granting a compulsory license over the entire patented invention for there is no law requiring that the license be limited to a specific embodiment of the invention. vs. 1982. vs. Manalo. Janssen Pharmaceutical N. E. et al.. 14 SCRA 282. Dec. 1981. Of indubitable relevance to this point is the evidence that UNILAB has been engaged in the business of manufacturing drugs and pharmaceutical products for the past thirty (30) years. vs. a license for Claim 45 alone would not be fully comprehensive. 1987. vs. Sept. 1987). 1984. United Laboratories. 30. 1981. United Laboratories Inc. Dec. to a particular claim. the petition for review is denied for lack of merit. Inc.. vs.I. WHEREFORE. vs.1982. Aug. Court of Appeals. et al.

UM-6938 3 covering an aerial fuze which was published in the September-October-1990. Jr. marketing and/or profiting therefrom. private respondent. respondents. Tirso D. 2 On January 23. 1993 AND MAY 11. COURT OF APPEALS AND FLORO INTERNATIONAL CORP. true and actual inventor of an aerial fuze denominated as "Fuze. should it proceed with the scheduled testing by the military on December 7.G. 93-1856 BEFORE THE RESPONDENT JUDGE IS HEREBY ORDERED DISMISSED AND HIS ORDERS THEREIN OF DECEMBER 29. In response to private respondent's demand. Mr. Branch 88. MARTINEZ. petitioner began supplying the AFP with the said aerial fuze.A. He learned that petitioner was claiming the aforesaid aerial fuze as its own and planning to bid and manufacture the same commercially without license or authority from private respondent. 118708 February 2. INC. THE COMPLAINT FOR INJUNCTION AND DAMAGES. and that the only difference between the two fuzes are miniscule and merely cosmetic in nature. Gregory Floro. that private respondent's aerial fuze is identical in every respect to the petitioner's fuze. Vol. CIVIL CASE NO. petitioner filed on December 8. private respondent on December 3. sent a letter 5 to petitioner advising it of its existing patent and its rights thereunder. 34425 entitled "Floro International Corp. production.-G. private respondent was granted by the Bureau of Patents. Trademarks and Technology Transfer (BPTTT). 1994 ARE ORDERED SET ASIDE. and/or from performing any other act in connection 21 . The complaint alleged. To protect its right. PDR 77 CB4" which it developed as early as December 1981 under the Self-Reliance Defense Posture Program (SRDP) of the AFP. Inc. Hon. the dispositive portion of which reads: WHEREFORE. 1990. No.R.R. SP No. vs. warning petitioner of a possible court action and/or application for injunction. 5 issue of the Bureau of Patent's Official Gazette.C Cruz and Creser Precision System.: This petition for review on certiorari assails the decision 1 of the Court of Appeals dated November 9. J. Petitioner prayed that a temporary restraining order and/or writ of preliminary injunction be issued enjoining private respondent including any and all persons acting on its behalf from manufacturing. distribution and sale of military armaments.. 1993. III. 1993 a complaint 6 for injunction and damages arising from the alleged infringement before the Regional Trial Court of Quezon City. among others: that petitioner is the first. 1998 CRESER PRECISION SYSTEMS. Private respondent is a domestic corporation engaged in the manufacture. 1994 in C. through its president. vs. No. THE PETITION IS HEREBY GRANTED. 1993. that sometime in 1986..".. 4 Sometime in November 1993. a Letters Patent No. discovered that petitioner submitted samples of its patented aerial fuze to the Armed Forces of the Philippines (AFP) for testing. munitions. airmunitions and other similar materials. petitioner.

1994. Thus.000. "this court finds the foregoing to be untenable. private respondent on June 27. SO ORDERED. The last actual. On December 10. Thereafter. legal representatives or assignees. title or interest to the patented invention. that petitioner's available remedy is to file a petition for cancellation of patent before the Bureau of Patents. the trial court issued a temporary restraining order. peaceable uncontested status existing prior to this controversy was the plaintiff manufacturing and selling its own aerial fuzes PDR 77 CB4 which was ordered stopped through the defendant's letter. Aggrieved. UM-6983) the validity of which is being questioned in this case. With the issuance of the order. 10. it is only logical to conclude that it was the plaintiff's aerial fuze that was copied or imitated which gives the plaintiff the right to have the defendant enjoined "from manufacturing. the operations of the plaintiff continue. pertinent portions of which read: For resolution before this Court is the Motion for Reconsideration filed by the defendant and the plaintiff's Opposition thereto. After the hearings. premises considered. and from profiting therefrom. the order issued by the Court in effect maintained the status quo. let the writ of preliminary injunction be issued by the branch Clerk of this Court enjoining the defendant and any and all persons acting on its behalf or by and under its authority. mandamus and prohibition 10 before respondent Court of Appeals raising as grounds the following: 22 . his heirs. from manufacturing. RA 165 to include only "the first true and actual inventor. the trial court issued an Order 8 granting the issuance of a writ of preliminary injunction against private respondent the dispositive portion of which reads: WHEREFORE. Defendant further contends that the order in issue is disruptive of the status quo. RA 165) qualified by Sec. and from profiting therefrom and/or performing any other act in connection therewith until further orders from this Court. 1993.therewith or tending to prejudice and deprive it of any rights. Private respondent moved for reconsideration but this was denied by the trial court in its Order 9 of May 11.00. this court believes that the defendant will not suffer irreparable injury by virtue of said order. true and actual inventor of the aerial fuze. WHEREFORE. On December 27. Sec. the trial court directed the parties to submit their respective memoranda in support of their positions. with both parties presenting their evidence. 1994. On December 29. upon posting of the corresponding bond by plaintiff in the amount of PHP 200. 10 merely enumerates the persons who may have an invention patented which does not necessarily limit to these persons the right to institute an action for infringement." With regards to the defendant's assertion that an action for infringement may only be brought by "anyone possessing right. On the contrary. use and sell the same and that it stands to suffer irreparable damage and injury if it is enjoined from the exercise of its property rights over its patent. plaintiffs application for the issuance of a writ of preliminary injunction is granted and. During the hearing for the issuance of the preliminary injunction. privileges and benefits to which it is duly entitled as the first. 1993. Lastly. private respondent submitted its memorandum 7 alleging that petitioner has no cause of action to file a complaint for infringement against it since it has no patent for the aerial fuze which it claims to have invented. to those of plaintiff. It is undisputed that the plaintiff has developed itsaerial fuze way back in 1981 while the defendant began manufacturing the same only in 1987. marketing and/or selling aerial fuzes identical. 1993. hearings were held on the application of petitioner for the issuance of a writ of preliminary injunction. marketing and/or sellingaerial fuzes identical to those of the plaintiff. the Motion for Reconsideration is hereby denied for lack of merit. filed a petition for certiorari. The Court finds no sufficient cause to reconsider its order dated December 29. that private respondent as the patent holder cannot be stripped of its property right over the patented aerial fuze consisting of the exclusive right to manufacture." (Section 42. and/or from performing any other act in connection therewith until further orders from this Court. 1993. The defendant's claim is primarily hinged on its patent (Letters Patent No. the plaintiff has amply proven its entitlement to the relief prayed for.

under Section 42 of the Patent Law (R. may be likened to a civil action for infringement under Section 42 of the Philippine Patent Law.A. the latter not having any patent for the aerial fuze which it claims to have invented and developed and allegedly infringed by private respondent. of the exclusive right. The trial court acted in grave abuse of discretion and/or in excess of jurisdiction in granting the preliminary injunction. We find the above arguments untenable. only the patentee or his successors-in-interest may file an action for infringement. The phrase "anyone possessing any right. or as grantees. It advances the theory that while the absence of a patent may prevent one from lawfully suing another for infringement of said patent. Civil action for infringement.A. b. Under the aforequoted law. — Any patentee. It is petitioner's contention that it can file. As a patentee. the case being an action for cancellation or invalidation of private respondent's Letters Patent over its own aerial fuze. since whatever right one has to the invention covered by the patent arises alone from the grant of patent. and e. 11 Hence. or anyone possessing any right. using or selling the invention. d. the respondent court rendered the now assailed decision reversing the trial court's Order of December 29. 42. While petitioner claims to be the first inventor of the aerial fuze. may bring a civil action before the proper Court of First Instance (now Regional Trial court). there can be no infringement of a patent until a patent has been issued. Petitioner has no cause of action for infringement against private respondent. this present petition. assignees. an action for infringement not as a patentee but as an entity in possession of a right. 165. A patent. c. explicitly provides: Sec. it has no legal basis or cause of action to institute the petition for injunction and damages arising from the alleged infringement by private respondent. 15 Further. The trial court acted in grave abuse of discretion and/or in excess of jurisdiction in granting the preliminary injunction thereby depriving private respondent of its property rights over the patentedaerial fuze and cause it irreparable damages. use and vend his own invention. the world is free to copy and use it with impunity. whose rights have been infringed. He has the right to make.a. 1993 and dismissing the complaint filed by petitioner. Section 42 of R. a person or entity who has not been granted letters patent over an invention and has not acquired any light or title thereto either as assignee or as licensee. however. such absence does not bar the first true and actual inventor of the patented invention from suing another who was granted a patent in a suit for declaratory or injunctive relief recognized under American patent laws. refers only to the patentee's successors-in-interest. to recover from the infringer damages sustained by reason of the infringement and to secure an injunction for the protection of his right. Therefore. 13 In short. the remedy of declaratory judgment or injunctive suit on patent invalidity relied upon by petitioner cannot be likened to the civil action for infringement under Section 42 of the Patent Law. . has no cause of action for infringement because the right to maintain an infringement suit depends on the existence of the patent. petitioner points out. title or interest in and to the patented invention" upon which petitioner maintains its present suit. 12 Moreover. assignees or grantees since actions for infringement of patent may be brought in the name of the person or persons interested. still it has no right of property over the same upon which it can maintain a suit unless it obtains a patent therefor. it being disruptive of the status quo. On November 9. The motion for reconsideration was also denied on January 17. he has the exclusive right of making. . an inventor has no common-law right to a monopoly of his invention. The reason for 23 . 165). 1995. This remedy. title or interest in and to the patented invention. 14 Petitioner admits it has no patent over its aerial fuze. Under American jurisprudence. otherwise known as the Patent Law. the proper venue is the Office of the Director of Patents. but if he voluntarily discloses it. gives the inventor the right to exclude all others. such as by offering it for sale. . The trial court acted in grave abuse of discretion and/or in excess of jurisdiction in finding that petitioner has fully established its clear title or right to preliminary injunction. whether as patentee. 1994. title or interest in and to the patented invention.

DAVIDE. anyone who has no patent over an invention but claims to have a right or interest thereto can not file an action for declaratory judgment or injunctive suit which is not recognized in this jurisdiction.: 24 . There is a presumption that the Philippine Patent Office has correctly determined the patentability of the improvement by the private respondent of the process in question. we sustain the assailed decision of the respondent Court of Appeal. petitioner's remedy is not to file an action for injunction or infringement but to file a petition for cancellation of private respondent's patent. COURT OF APPEALS. Hence. INC. Thus. Petitioner however failed to do so. No pronouncement as to costs. Thus." In the case of Aguas vs. in the absence of error or abuse of power or lack of jurisdiction or grave abuse of discretion. 16 we stated that: The validity of the patent issued by the Philippine Patent Office in favor of the private respondent and the question over the investments.this is that the said remedy is available only to the patent holder or his successors-in-interest. under Section 28 of the aforementioned law. 1997 SMITH KLINE & FRENCH LABORATORIES. JR. J.. it has in its favor not only the presumption of validity of its patent. De Leon. He can. but that of a legal and factual first and true inventor of the invention. accepted the thinness of the private respondent's new tiles as a discovery. have. WHEREFORE. the decision of the Court of Appeals is hereby AFFIRMED.. vs. file a petition for cancellation of the patent within three (3) years from the publication of said patent with the Director of Patents and raise as ground therefor that the person to whom the patent was issued is not the true and actual inventor. by the issuance of the patent in question. SO ORDERED. it can not now assail or impugn the validity of the private respondent's letters patent by claiming that it is the true and actual inventor of the aerial fuze. Said person. is not left without any remedy. The technical Staff of the Philippines Patent Office. however. LTD. As such. respondents. 121867 July 24. In fine.R. petitioner. novelty and usefulness of the improved process therein specified and described are matters which are better determined by the Philippines Patent Office. No. 6938 issued to it on January 23. TRADEMARKS AND TECHNOLOGY TRANSFER and DOCTORS PHARMACEUTICALS. 1990 by the Bureau of Patents. composed of experts in their field. BUREAU OF PATENTS. G. as correctly ruled by the respondent Court of Appeals in its assailed decision: "since the petitioner (private respondent herein) is the patentee of the disputed invention embraced by letters of patent UM No.

included in such amount. 165 for violating the due process and equal protection clauses of the Constitution. 1263. there is hereby issued a license in favor of the herein [private respondent]. 165 (An Act Creating a Patent Office Prescribing Its Powers and Duties. with the dispositive portion thereof providing: NOW. Petitioner is a foreign corporation with principal office at Welwyn Garden City. arguing that private respondent had no cause of action and lacked the capability to work the patented product. allowed or paid.This is an appeal under Rule 45 of the Rules of Court from the decision 1 4 November 1994 of the Court of Appeals in CA-G. 165. medicine or that which is necessary for public health or public safety. and that it had the capability to work the patented product or make use of it in its manufacture of medicine. subject to the following terms and conditions: 1. Regulating the Issuance of Patents. Private respondent is a domestic corporation engaged in the business of manufacturing and distributing pharmaceutical products. That [private respondent] be hereby granted a non-exclusive and non-transferable license to manufacture. inter alia. Inc. THEREFORE. quantity or cash discounts and broker's or agent's or distributor's commissions. Trademarks and Technology Transfer (BPTTT) granting a compulsory non-exclusive and non-transferable license to private respondent to manufacture. 12207 unless this license is terminated in the manner hereinafter provided and that no right or license is hereby granted to [private respondent] under any patent to [petitioner] or [sic] other than recited herein. 33520. [sic] under Letters Patent No. if any. petitioner challenged the constitutionality of Sections 34 and 35 of R. After appropriate proceedings. SP No. The petition was filed pursuant to the provisions of Section 34 of Republic Act No. Petitioner opposed. Petitioner also maintained that it was capable of satisfying the demand of the local market in the manufacture and marketing of the medicines covered by the patented product. Private respondent alleged that the grant of Philippine Letters Patent No. (b) Trade. No. it filed a petition for compulsory licensing 3 with the BPTTT for authorization to manufacture its own brand of medicine from the drug Cimetidine and to market the resulting product in the Philippines. 5. use and sell in the Philippines its own brands of pharmaceutical products containing petitioner's patented pharmaceutical product known as Cimetidine. if any. It owns Philippine Letters Patent No. 12207. 12207. England. that the petition was filed beyond the two-year protective period provided in Section 34 of R. given or made on account of rejection or return of the patented product previously delivered.A. less — (a) Transportation charges or allowances. by virtue of the powers vested in this Office by Republic Act No. the BPTTT handed down its decision on 14 February 1994. On 30 March 1987. (c) Credits or allowances. as amended by Presidential Decree No. The term "net scale" [sic] means the gross amount billed for the product pertaining to Letters Patent No..A. 2. and 25 . 1978.5%) of the net sales in Philippine currency. use and sell in the Philippines its own brands of pharmaceutical products containing [petitioner's] patented invention which is disclosed and claimed in Letters Patent No. and Appropriating Funds Therefor).R. the petition failed to specifically divulge how private respondent would use or improve the patented product. 12207 issued on November 29. Finally. No. if any. 165. [private respondent] shall pay [petitioner] a royalty on all license products containing the patented substance made and sold by [private respondent] in the amount equivalent to TWO AND ONE HALF PERCENT (2. That the license granted herein shall be for the remaining life of said Letters Patent No. which provides for the compulsory licensing of a particular patent after the expiration of two years from the grant of the latter if the patented invention relates to. 12207 issued by the BPTTT for the patent of the drug Cimetidine. 12207 was issued on 29 November 1978. By virtue of this license. and that private respondent was motivated by the pecuniary gain attendant to the grant of a compulsory license. which affirmed the 14 February 1994 decision 2 of the Director of the Bureau of Patents. United Laboratories.

10. to terminate the license granted to its. or measured by the production sale. Payments should be made to [petitioner's] authorized representative in the Philippines. the matter shall be submitted for arbitration before the Director of Bureau of Patents. [Petitioner] shall have the right to terminate the license granted to [private respondent] by giving the latter thirty (30) days notice in writing to that effect. [Private respondent] shall adopt and use its own trademark or labels on all its products containing the patented substance herein involved. use of delivery of the products. the royalty to be paid shall be determined in accordance with the following formula: Net Sales on Value of Patented ROYALTY = Admixed Product x 0. said product hereinafter identified as admixed product. 5. The royalties shall be computed after the end of each calendar quarter to all goods containing the patented substance herein involved.(d) Any tax.025 x Substance —————————— ———————— Value of Patented Value of Other Substance Active Ingredients 4. Trademarks and Technology Transfer. transportation. 6. Trademarks and Technology Transfer or any ranking official of the Bureau of Patents. This License shall inure to the benefit of each of the parties herein. (b) Any termination of this license as provided for above shall not in any way operate to deny [petitioner] its rights or remedies. excise or government charge included in such amount. either at laws [sic] or equity. to the extent necessary to be made at the expense of [petitioner] by a certified public accountant appointed by [petitioner] and acceptable to [private respondent]. to the subsidiaries and assigns of [petitioner] and to the successors and assigns of [private respondent]. In case [private respondent's] product containing the patented substance shall contain one or more active ingredients admixed therewith. 8. Trademarks and Technology Transfer duly delegated by him. In case of dispute as to the enforcement of the provisions of this license. [Private respondent] shall comply with the laws on drugs and medicine requiring previous clinical tests and approval of proper government authorities before selling to the public its own products manufactured under the license. [sic] giving [petitioner] thirty (30) days-notice in writing to that effect. 9. [Private respondent] shall keep records in sufficient detail to enable [petitioner] to determine the royalties payable and shall further permit its books and records to be examined from time to time at [private respondent's] premises during office hours. and 26 . 7. and (c) Notice of termination of this license shall be filed with the Bureau of Patents. in the event that [private respondent] default [sic] in the payment of royalty provided herein or if [private respondent] shall default in the performance of other convenants or conditions of this agreement which are to be performed by [private respondent]: (a) [Private respondent] shall have the right provided it is not in default to payment or royalties or other obligations under this agreement. or relieve [private respondent] of the payment of royalties or satisfaction of other obligations incurred prior to the effective date of such termination. made and sold during the precedent quarter and to be paid by [private respondent] at its place of business on or before the thirtieth day of the month following the end of each calendar quarter.

the award of compulsory license is a valid exercise of police power. RA 165 allows it in cases where the invention relates to food and medicine. 6 the Court of Appeals affirmed in toto the challenged decision. 27 .5% OF THE NET WHOLESALE PRICE IN PHILIPPINE CURRENCY WAS RENDERED WITHOUT ANY FACTUAL BASIS AND AMOUNTS TO EXPROPRIATION OF PRIVATE PROPERTY WITHOUT JUST COMPENSATION WHICH IS VIOLATE OF THE CONSTITUTION. . it relates to medicine. Doctors Pharmaceuticals. viz. We do not agree to [sic] petitioner's contention that the fixing of the royalty at 2. ." As to the claim by the petitioner that it has the capacity to work the patented product although it was not shown that any pretended abuse has been committed. [IT] VIOLATES INTERNATIONAL LAW AS EMBODIED IN THE PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY AND MUST ACCORDINGLY BE SET ASIDE AND MODIFIED. 5 In its decision of 4 November 1994. Section 35-B. 1987. THE BPTTT'S PRONOUNCEMENT FIXING THE ROYALTY AT 2." [Parke Davis v. Paragraph 3. as amended by P. Hence. 14 SCRA 1053]. (subject matter of latters Patent No. hence. the applicant was able to show that Cimetidine. . We quote its findings and conclusion upon which the affirmance is anchored. II . The patented invention relates to compound and compositions used in inhibiting certain actions of the histamine. [IT] IS AN INVALID EXERCISE OF POLICE POWER. 1978 has been in effect for more than two (2) years. . 34 (1) e. . R. The Director of Patents also considered in determining that the applicant has the capability to work or make use of the patented product in the manufacture of a useful product. 4 Petitioner then appealed to the Court of Appeals by way of a petition for review. .R.11. This license take [sic] effect immediately. which was docketed as CA-G. Moreover. 1267. No. 33520. the subject letters Patent No.. 12207 issued on November 29. 12207) is necessary for the manufacture of an anti-ulcer drug/medicine. after hearing and careful consideration of the evidence presented. .5% of the net wholesale price amounted to expropriation of private property without just compensation. which is necessary for the promotion of public health. [IT] SHOULD NOT HAVE PROCEEDED TO DECIDE THE CASE BELOW FOR FAILURE OF PRIVATE RESPONDENT TO AFFIRMATIVELY PROVE THE JURISDICTIONAL FACT OF PUBLICATION. It appears that at the time of the filing of the petition for compulsory license on March 24. Inc. states: Sec. machines and equipment as well as permit to manufacture different drugs containing patented active ingredients such as ethambutol of American Cyanamid and Ampicillin and Amoxicillin of Beecham Groups. the Director of Patents ruled that — "there is ample evidence to show that [private respondent] possesses such capability. No.: An assiduous scrutiny of the impugned decision of the public respondent reveals that the same is supported by substantial evidence. We find that the granting of compulsory license is not simply because Sec. Ltd. 165. In this case. III CONCEDING ARGUENDO THE QUESTIONED DECISION'S VALIDITY. (1) . . Petitioner claimed that the appealed decision was erroneous because: I .A. IV .D. Terms and Conditions of Compulsory License. SP No. thus the reason for granting compulsory license "is intended not only to give a chance to others to supply the public with the quantity of the patented article but especially to prevent the building up of patent monopolities [sic]. 35-B. having competent personnel.

in Price vs. distributed. or process subject of the compulsory license is involved in an industrial project approved by the Board of Investments. In Parke Davis & Co. the proper regulation and/or promotion of which requires a technical or special training. petitioner filed the instant petition for review on certiorari with the following assignment of errors: I THE HON. substance. relevant to said field.SEC. G. and disposed locally. 1988] Its motion for reconsideration having been denied in the resolution 7 of 31 August 1995. in connection with the enforcement of laws affecting particular fields of activity. vs. Further. the Director of Patents exercised his discretion and ruled that a rate of 2. No. 50141. that it always is necessary that the local drug companies should sell at much lower (than) the prices of said foreign drug entities. et al. to the effect that — The legal presumption is that official duty has been performed. Minute Resolution. the royalty rate of 2. Inc. The policy and practice underlying our Administrative Law is that courts of justice should respect the findings of fact of said administrative agencies. manifestly and patently insubstantial. In sum. Therefore. The foregoing provision grants the Director of Patents the use of his sound discretion in fixing the percentage for the royalty rate.5% was deemed to be just and reasonable. Besides. [L-27004. et al. aside from a good knowledge and grasp of the overall conditions. Beautifont. royalty payments shall not exceed five percent (5%) of the net wholesale price (as defined in Section 33-A) of the products manufactured under the license. DPI and Tiburcio. UNILAB.R. UNILAB. without any technical assistance from herein respondent-appellant. However. (3) A compulsory license shall only be granted subject to the payment of adequate royalties commensurate with the extent to which the invention is worked.R. 76695. 124 SCRA 115] it was held that — "liberal treatment in trade relations should be afforded to local industry for as reasoned out by respondent company. among them being the petitioner herein.. . No. what UNILAB has with the compulsory license is the bare right to use the patented chemical compound in the manufacture of a special product. obtaining in the nations. [G. the royalty payable to the patentee or patentees shall not exceed three percent (3%) of the net wholesale price (as defined in Section 34-A) of the patented commodity and/or commodity manufactured under the patented process. to wit [166 SCRA 133]: Moreover. August 6.5% of the net wholesale price is fair enough for the parties. And it is particularly strong as regards administrative agencies vested with powers said to be quasijudicial in nature. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BPTTT'S DECISION VIOLATES INTERNATIONAL LAW AS EMBODIED IN (A) THE PARIS CONVENTION FOR THE PROTECTION OF 28 . considering the well-entrenched jurisprudence sustaining the position of respondents. the petitioner cannot complain of a deprivation of property rights without just compensation [Price v. 1988]. . the award of royalty rate of 2. 1983.5% is just and reasonable. In the instant case.(2) . unless there is absolutely no evidence in support thereof or such evidence is clearly. It appearing that herein petitioner will be paid royalties on the sales of any products [sic] the licensee may manufacture using any or all of the patented compounds. October 3. it is so difficult to compete with the industrial grants [sic] of the drug industry. the special product to be manufactured by UNILAB will only be used. January 29. foreign produce licensor can later on ask for an increase in percentage rate of royalty fixed by the Director of Patents if local sales of license should increase. v. 1988. September 19.. If the product. L-82542. We take note of the well-crafted petition submitted by petitioner albeit the legal milieu and a good number of decided cases militate against the grounds posited by petitioner." Besides. We reiterate the rule in Basay Mining Corporation vs. the same rate of royalty shall be distributed to the patentees in rates proportional to the extent of commercial use by the licensee giving preferential values to the holder of the oldest subsisting product patent. Court of Appeals.

Such a compulsory license shall be non-exclusive and shall not be transferable. fits well within the aforequoted provisions of Article 5 of the Paris Convention. (2) Each country of the union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent. No. We resolved to give due course to the petition and required the parties to submit their respective memoranda." however. 10 Certainly. 9 Pertinent portions of said Article 5. it is plain that the treaty does not preclude the inclusion of other forms or categories of abuses. even in the form of the grant of a sublicense. In is thus clear that Section A (2) of Article 5 above unequivocally and explicitly respects the right of member countries to adopt legislative measures to provide for the grant of compulsory licenses to prevent abuses which might result from the exercise of the exclusive rights conferred by the patent.5% OF THE NET WHOLESALE PRICE IN PHILIPPINE CURRENCY WAS RENDERED WITHOUT ANY FACTUAL BASIS AND AMOUNTS TO EXPORTATION OF PRIVATE PROPERTY WITHOUT JUST COMPENSATION AND IS IN VIOLATION OF THE CONSTITUTIONAL RIGHT TO DUE PROCESS. AND MUST ACCORDINGLY BE SET ASIDE AND MODIFIED. No. failure to work. II THE HON. No.A. we find this petition to be without merit. COURT OF APPEALS ERRED IN NOT HOLDING THE BPTTT'S ACTION WAS RENDERED NULL AND VOID FOR FAILURE OF PRIVATE RESPONDENT TO AFFIRMATIVELY PROVE THE JURISDICTIONAL FACT OF PUBLICATION AS REQUIRED BY LAW. Section A. with that of public respondent filed only on 7 February 1997. ABSENT ANY SHOWING BY EVIDENCE OF AN OVERWHELMING PUBLIC NEED FOR A COMPULSORY LICENSE OVER CIMETIDINE IN FAVOR OF PRIVATE RESPONDENT.A. After a careful perusal of the pleadings and evaluation of the arguments adduced by the parties. 165. . even if the Act was enacted prior to the Philippines' adhesion to the Convention. In its first assigned error. it shall be refused if the patentee justifies his inaction by legitimate reasons. 8 or "Paris Convention. whichever period expires last. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BPTTT'S PRONOUNCEMENT FIXING THE ROYALTY FOR AN INVOLUNTARY LICENSE AT 2. An example provided of possible abuses is "failure to work. the growth of monopolies was among the abuses which Section A. 29 . 165. as such is merely supplied by way of an example. and which our Congress likewise wished to prevent in enacting R. provide: A. 1156 which eventually became R. . except with that part of the enterprise or goodwill which exploits such license. petitioner invokes Article 5 of the Paris Convention for the Protection of Industrial Property. Article 5 of the Convention foresaw. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BPTTT'S DECISION IS AN INVALID EXERCISE OF POLICE POWER.INDUSTRIAL PROPERTY AND (B) THE GATT TREATY.A. for example. In the explanatory note of Bill No. URUGUAY ROUND." for short. IV THE HON. of which the Philippines became a party thereto only in 1965. 165. III THE HON. xxx xxx xxx (4) A compulsory license may not be applied for on the ground of failure to work or insufficient working before the expiration of a period of four years from the date of filing of the patent application or three years from the date of the grant of the patent. which they did. . but also to prevent the growth of monopolies. Section 34 of R. the legislative intent in the grant of a compulsory license was not only to afford others an opportunity to provide the public with the quantity of the patented product.

Grounds for Compulsory Licensing — (1) Any person may apply to the Director for the grant of a license under a particular patent at any time after the expiration of two years from the date of the grant of the patent. are not in derogation of. Importation shall not constitute "working. No.A. Article Two. the establishment of any new trade or industry in the Philippines is prevented. (b) If the demand for the patented article in the Philippines is not being met to an adequate extent and on reasonable terms. of Chapter VIII read as follows: Sec. — (1) If the Director finds that a case for the grant is a license under Section 34 hereof has been made out. Parenthetically. (3) The term "worked" or "working" as used in this section means the manufacture and sale of the patented article. No. without satisfactory reason. provides for a system of compulsory licensing under a particular patent. it must be noted that paragraph (4) of Section A. as amended by Presidential Decree No. or (e) If the patented invention or article relates to food or medicine or manufactured products or substances which can be used as food or medicine. a compulsory license shall be granted to the petitioner provided that he has proved his capability to work the patented product or to make use of the patented product in the manufacture of a useful product. or to employ the patented process. promulgated on 14 December 1977. Article 5 of the Paris Convention setting time limitations in the application for a compulsory license refers only to an instance where the ground therefor is "failure to work or insufficient working. Neither may petitioner validly invoke what it designates as the GATT Treaty. 1263. And it may not be doubted that the aforequoted provisions of R.A." xxx xxx xxx Sec. The case at bar refers more particularly to subparagraph (e) of paragraph 1 of Section 34 — the patented invention or article relates to food or medicine or manufactured products or substances which can be used as food or medicine. Uruguay Round. 11 Forming integral parts thereof are the Agreement Establishing the World 30 . of the patented machine. Grant of License. Sections 34 and 35. under any of the following circumstances: (a) If the patented invention is not being worked within the Philippines on a commercial scale. in or by means of a definite and substantial establishment or organization in the Philippines and on a scale which is reasonable and adequate under the circumstances. order the grant of an appropriate license. 35. although capable of being so worked. 165. the recognized right of treaty signatories under Article 5. lease or use of the patented article or working of the patented process or machine for production.R. Section A (2) of the Paris Convention. or the trade or industry therein is unduly restrained." and not to any ground or circumstance as the treaty signatories may reasonably determine. The order shall state the terms and conditions of the license which he himself must fix in default of an agreement on the matter manifested or submitted by the parties during the hearing. or is necessary for public health or public safety. he shall. as amended. by reason of refusal of the patentee to grant a license or licenses on reasonable terms. or the application of the patented process for production. but are consistent with. 34. (2) In any of the above cases. This act is better known as the Uruguay Final Act signed for the Philippines on 15 April 1994 by Trade and Industry Secretary Rizalino Navarro. 165. (2) A compulsory license sought under Section 34-B shall be issued within one hundred twenty days from the filing of the proponent's application or receipt of the Board of Investment's endorsement. (d) If the working of the invention within the country is being prevented or hindered by the importation of the patented article. or is necessary for public health or public safety. (c) If. within one hundred eighty days from the date the petition was filed. or by reason of the conditions attached by the patentee to licensee or to the purchase.

Accordingly. Costs against petitioner. in the exercise of its power under Section 21 of Article VII of the Constitution. the patentee is not entirely deprived of any proprietary right. It cannot likewise be claimed that petitioner was unduly deprived of its property rights. this treaty has no retroactive effect. suffice it to say that full-blown adversarial proceedings were conducted before the BPTTT pursuant to the Patent Law. It is now settled that this rule applies with equal force to quasi-judicial bodies 18 such as the BPTTT. since the challenged BPTTT decision was rendered on 14 February 1994. 17 we ruled that where the issue of jurisdiction is raised for the first time on appeal. as R. 97 concurring in the ratification by the President of the Agreement.Trade Organization. and (6) the Court of Appeals. In Pantranco North Express. Compulsory licensing of a patent on food or medicine without regard to the other conditions imposed in Section 34 [now Section 35] is not an undue deprivation of proprietary interests over a patent right because the law sees to it that even after three years of complete monopoly something is awarded to the inventor in the form of bilateral and workable licensing agreement and a reasonable royalty to be agreed upon by the parties and in default of such an agreement. the Director of Patents may fix the terms and conditions of the license. SO ORDERED. As to due the process argument. On the contrary. Doctors' Pharmaceuticals. and the Understanding on Commitments in Financial Services. As to the fourth assigned error. Here. Inc. petitioner cannot avail of the provisions of the GATT treaty. (5) the findings of fact are conflicting. the party invoking it is so barred on the ground of laches or estoppel under the circumstances therein stated. we find the findings of fact and conclusions of respondent Court of Appeals and that of the BPTTT to be fully supported by the evidence and the applicable law and jurisprudence on the matter. Wellestablished is the principle that the findings of facts of the latter are conclusive. SP No. (4) the judgment is premised on a misapprehension of facts. in making its findings. petitioner have not furnished any cogent reason to depart from this rule. we hold that petitioner can no longer assail the jurisdiction of the BPTTT. Petitioner's claim of violations of the due process and eminent domain clauses of the Bill of Rights are mere conclusions which it failed to convincingly support. but subsequently. After all. food or medicine should be conditioned to allowing any person to manufacture. Inc. Court of Appeals. use. the petition is hereby DENIED and the challenged decision of the Court of Appeals in CA-G. 15 In Parke. 31 . It was only on 14 December 1994 that the Philippine Senate. v. The second and third assigned errors relate more to the factual findings of the Court of Appeals. 16 we held: The right to exclude others from the manufacturing. or vend the same after a period of three [now two] years from the date of the grant of the letters patent. he has been given the period of three years [now two years] of complete monopoly over the patent. 12 The Agreement establishing the World Trade Organization includes various agreements and associated legal instruments. raising this issue only for the first time on appeal. (2) the inference made is manifestly absurd. adopted Senate Resolution No. No. The President signed the instrument of ratification on 16 December 1994. (3) there is grave abuse of discretion in the appreciation of facts. We agree with the Court of Appeals that the BPTTT exhaustively studied the facts and its findings were fully supported by substantial evidence. the law recognizes just compensation in the form of royalties.R.. Davis & Co. 165 not only grants the patent holder a protective period of two years to enjoy his exclusive rights thereto. 33520 is AFFIRMED in toto. the Ministerial Declarations and Decisions. WHEREFORE. v. 13 But plainly. using.A. In fact. went beyond the issues of the case and the same is contrary to the admissions of both the appellant and appellee. 14 Petitioner has not convinced us that the instant case falls under any of the exceptions. unless: (1) the conclusion is a finding grounded entirely on speculation or conjecture. or vending an invention relating to.

R. Trademarks and Technology Transfer is hereby AFFIRMED. Likewise assailed is the July 25. arguing that the private respondent had no cause of action and failed to allege how it intended to work the patented product. and that private respondent is capable of using the patented product in the manufacture of a useful product. 6 After both parties were heard.4 The petition for compulsory license stated that Cimetidine is useful as an antihistamine and in the treatment of ulcers. J. Finally. petitioner also claimed that the grant of a compulsory license to private respondent would not promote public safety and that the latter was only motivated by pecuniary gain.10 It explained further that the provisions of the Patent Law permitting the grant of a compulsory license are intended not only to give a chance to others to supply the public with the quantity of the 32 . Private respondent invoked Section 34 (1) (e) of Republic Act No. INC. John Collin Emmett and Robin Genellin on November 29. Petitioner is the assignee of Letters Patent No. 121267 October 23.G. raising the following arguments: (1) the BPTTT's decision is violative of the Paris Convention for the Protection of Industrial Property.: This petition for review on certiorari assails the Decision dated January 27. or is necessary for public health or public safety. the dispositive portion of which states: WHEREFORE. (2) said decision is an invalid exercise of police power.2 On August 21. or manufactured substances which can be used as food or medicine. manufacture and sell in the Philippines its own brand of pharmaceutical products containing Cimetidine and ordered the payment by private respondent to petitioner of royalties at the rate of 2. 5 Petitioner opposed the petition for compulsory license. defendant-appellant. LTD. which states that an application for the grant of a compulsory license under a particular patent may be filed with the BPTTT at any time after the lapse of two (2) years from the date of grant of such patent.9 In affirming the decision of the BPTTT. 1995 Resolution of the Court of Appeals denying the motion for reconsideration filed by petitioner Smith Kline and French Laboratories. Petitioner further stated that its manufacture. (4) the petition for compulsory license should have been dismissed by the BPTTT for failure to prove the jurisdictional requirement of publication. No. Trademarks and Technology Transfer (BPTTT) granting a compulsory license to private respondent Danlex Research Laboratories for the use of the pharmaceutical product Cimetidine.3 (the Patent Law) the law then governing patents. which relates to derivatives of heterocyclicthio or lower alkoxy or amino lower alkyl thiourea. Said patent was issued by the BPTTT to Graham John Durant. ureas or guanadines. COURT OF APPEALS and DANLEX RESEARCH LABORATORIES.7 Petitioner thereafter filed with the Court of Appeals a petition for review of the decision of the BPTTT. with costs against the Petitioner.. 1978. there was no need to grant a compulsory license to private respondent to manufacture. 8 On January 27. 1995 of the Court of Appeals in CA-G.R. hence. the Court of Appeals promulgated its Decision. and therefore necessary for the promotion of public health and safety. (3) the rate of royalties payable to petitioner as fixed by the BPTTT was rendered without factual basis and amounts to an expropriation of private property without just compensation. SP No. the BPTTT rendered a decision directing the issuance of a compulsory license to private respondent to use. private respondent filed with the BPTTT a petition for compulsory license to manufacture and produce its own brand of medicines using Cimetidine. 337701 which affirmed the decision of the Bureau of Patents. KAPUNAN. the appellate court held that the grant of a compulsory license to private respondent for the manufacture and use of Cimetidine is in accord with the Patent Law since the patented product is medicinal in nature. 165. 2001 SMITH KLINE & FRENCH LABORATORIES. use and sales of Cimetidine satisfied the needs of the Philippine market. 1995. vs. SO ORDERED. and the decision of the Bureau of Patents.5% of net sales in Philippine currency. if the patented invention or article relates to food or medicine. Ltd. 1989. the petition is DENIED. plaintiff-appellee. use and sell the same. 12207 covering the pharmaceutical product Cimetidine.

16 According to petitioner. time and other resources in the research and development. 24 33 . 14 Petitioner thus filed the present petition on September 15. The respondent Court erred in holding that compulsory licensing will not create a confusion that the patented product is the brainchild of private respondent Danlex and not of petitioner.20 Petitioner opines that the inclusion of grounds for the grant of a compulsory license in Section 34 of the Patent Law other than those provided under the Paris Convention constitutes a violation of the Philippines' obligation to adhere to the provisions of said treaty. to refrain from marketing a product similar to Cimetidine. 17 It argues further that the provisions of the Patent Law on compulsory licensing contravene the Convention of Paris for the Protection of Industrial Property18 (Paris Convention).The respondent Court erred in finding that the jurisdictional requirement of publication in a newspaper of general circulation for three (3) consecutive weeks has been complied with by private respondent Danlex. Thus. 12 The Court of Appeals also ruled that contrary to petitioner's claim. 21 It is also contended by petitioner that the grant of a compulsory license to private respondent will allow the latter to liberally manufacture and sell medicinal products containing Cimetidine without even extending to petitioner due recognition for pioneering the development and worldwide acceptance of said invention. petitioner filed a motion for reconsideration thereof as well as a motion for the issuance of a temporary restraining order against private respondent's sister company. within four years from the date of filing of the patent application or three years from the date of grant of the patent. 22 Petitioner likewise asseverates that the rate of royalty fixed by the BPTTT at 2. it says. II.Assuming that the grant of compulsory license is in order. IV. taking into consideration its huge investments of money. with the following assignment of errors: I. which allegedly permits the granting of a compulsory license over a patented product only to prevent abuses which might result from the exercise of the exclusive rights conferred by the patent.15 While petitioner concedes that the State in the exercise of police power may regulate the manufacture and use of medicines through the enactment and implementation of pertinent laws.5% of net sales fixed by the BPTTT unreasonable. and will unreasonably dilute petitioner's right over the patent. as well as marketing of Cimetidine.23 Lastly. petitioner claims that the appellate court erred in ruling that private respondent had complied with the requirement of publication of the notice of the filing of the petition for compulsory license because private respondent failed to formally offer in evidence copies of the notice of filing of the petition and notice of the date of hearing thereof as published and the affidavits of publication thereof. The respondent Court erred in upholding the validity of the decision of public respondent BPTTT which is an arbitrary exercise of police power and is violative of international law. 11 Neither did the appellate court find the royalty rate of 2. Inc. but both motions were denied by the Court of Appeals in its Resolution of July 25.patented article but especially to prevent the building up of patent monopolies. Petitioner also claims that the grant of a compulsory license to private respondent unjustly deprives it of a reasonable return on its investment. considering that petitioner is able to provide an adequate supply of i to satisfy the needs of the Philippine market. Montreal Pharmaceutical. considering that what was granted under the compulsory license is only the right to manufacture Cimetidine. private respondent complied with the requirement of publication under the Patent Law and had submitted proof of such compliance. III. the BPTTT did not properly acquire jurisdiction over the petition for compulsory license.19 or on the ground of failure to work or insufficient working of the patented product. whichever expires last.5% of the net wholesale price in peso does not amount to expropriation of private property without just compensation.5% of net sales is grossly inadequate. the respondent Court still erred in holding that the BPTTT decision fixing the royalty at 2.13 Not satisfied with the appellate court's decision. 1995. 1995. it states that such exercise is valid only if the means employed are reasonably necessary for the accomplishment of the purpose and if not unduly oppressive. and royalty rates identical to that fixed by the BPTTT have been prescribed for the grant of compulsory license in a good number of patent cases. without any technical assistance from petitioner. It is further alleged that such rate has no factual basis since the appellate court and the BPTTT relied solely on analogous cases and did not explain how such rate was arrived at. the grant of a compulsory license to private respondent is an invalid exercise of police power since it was not shown that there is an overwhelming public necessity for such grant.

The Court of Appeals did not err in affirming the validity of the grant by the BPTTT of a compulsory license to private respondent for the use. and the compulsory license applied for by private respondent is for the use.) The grant of the compulsory license satisfies the requirements of the foregoing provision. (3) The term "worked" or "working" as used in this section means the manufacture and sale of the patented article. We found no inconsistency between Section 34 and the Paris Convention and held that: 34 . Importation shall not constitute "working". private respondent adopted the reasoning of the Court of Appeals in the assailed decision and prayed that the petition be denied for lack of merit. Section A(2) of the Paris Convention states: Each country of the union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent. the establishment of any new trade or industry in the Philippines is prevented. of patented machine. (e) If the patented invention or article relates to food or medicine or manufactured substances which can be used as food or medicine. use and sale of Cimetidine. vs. (b) If the demand of the patented article in the Philippines is not being met to an adequate extent and on reasonable terms. or to employ the patented process. manufacture and sale of a medicinal product. Petitioner's contention that Section 34 of the Patent Law contravenes the Paris Convention because the former provides for grounds for the grant of a compulsory license in addition to those found in the latter. 25 The petition has no merit. although capable of being so worked. for example. both the appellate court and the BPTTT found that private respondent had the capability to workCimetidine or to make use thereof in the manufacture of a useful product. or the trade or industry therein is unduly restrained. by reason of refusal of the patentee to grant a license or licenses on reasonable terms. lease or use of the patented article or working of the patented process or machine for production. (d) If the working of the invention within the country is being prevented or hindered by the importation of the patented article. or is necessary for public health or public safety. a compulsory license shall be granted to the petitioner provided that he has proved his capability to work the patented product or to make use of the patented product in the manufacture of a useful product.26 This issue has already been resolved by this Court in the case of Smith Kline & French Laboratories. More than ten years have passed since the patent for Cimetidine was issued to petitioner and its predecessors-ininterest. Furthermore. The said grant is in accord with Section 34 of the Patent Law which provides: Grounds for Compulsory Licensing. under any of the following circumstances: (a) If the patented invention is not being worked within the Philippines on a commercial scale. failure to work.27 where petitioner herein questioned the BPTTT's grant of a compulsory license to Doctors Pharmaceuticals. manufacture and sale of Cimetidine.In its Comment to the Petition. (Emphasis supplied. Ltd.— (1) Any person may apply to the Director for the grant of a license under a particular patent at any time after the expiration of two years from the date of the grant of the patent. Court of Appeals. (2) In any of the above cases. or the application of the patented process for production. or by reason of the conditions attached by the patentee to licensee or to the purchase. without satisfactory reason. Inc. Article 5. is likewise incorrect. (c) If. also for the manufacture. in or by means of a definite and substantial establishment or organization in the Philippines and on a scale which is reasonable and adequate under the circumstances.

royalty payments shall not exceed five percent (5%) of the net wholesale price (as defined in Section 33-A) of the products manufactured under the license.—(1) If the Director finds that a case for the grant of a license under Section 34 hereof has been made out. An example provided of possible abuses is "failure to work. Such fears are unfounded since. the royalty payable to the patentee or patentees shall not exceed three percent (3%) of the net wholesale price (as defined in Section 33-A) of the patented commodity/and or commodity manufactured under the patented process. In the explanatory note of Bill No. as the appellate court pointed out in the assailed decision. 12207. use and sell Cimetidine for at least two years from its grant in November. may contain obligations and restrictions both for the licensee and for the registered owner of the patent. Section 34 of R. use and sell the patented invention by virtue of a compulsory license. Certainly. 28(Emphasis supplied. xxx Section 35-B. petitioner had already enjoyed exclusive rights to manufacture. The order shall state the terms and conditions of the license which he himself must fix in default of an agreement on the matter manifested or submitted by the parties during the hearing. 165. he shall. even if the Act was enacted prior to the Philippines' adhesion to the Convention. fits well within the aforequoted provisions of Article 5 of the Paris Convention. the same rate of royalty shall be paid whenever two or more patents are involved. the disadvantage is far outweighed by the benefits resulting from the grant of the compulsory license. as such. Said law provides: Sec. 165. within one hundred eighty days from the date the petition was filed. No. petitioner as owner of the patent would still receive remuneration for the use of such product in the form of royalties. 1156 which eventually became R. and the consequent reduction in the prices thereof. (3) A compulsory license shall only be granted subject to the payment of adequate royalties commensurate with the extent to which the invention is worked.29 Even assuming arguendo that such confusion may indeed occur. or process subject of the compulsory license is involved in an industrial project approved by the Board of Investments. fixed in accordance with Section 35. No. If the product. Anent the perceived inadequacy of the royalty awarded to petitioner.30 There is likewise no basis for the allegation that the grant of a compulsory license to private respondent results in the deprivation of petitioner's property without just compensation. Grant of License. which royalty shall be distributed to the patentees in 35 . – (1) A compulsory license shall be nonexclusive. by the grant of the compulsory license. the legislative intent in the grant of a compulsory license was not only to afford others an opportunity to provide the public with the quantity of the patented product.5% of net wholesale price fixed by the Director of the BPTTT is in accord with the Patent Law.A. Even if other entities like private respondent are subsequently allowed to manufacture. 165. Article 5 of the Convention foresaw. However.) Neither does the Court agree with petitioner that the grant of the compulsory license to private respondent was erroneous because the same would lead the public to think that the Cimetidine is the invention of private respondent and not of petitioner.A.A. is merely supplied by way of an example. 1978. and which our Congress likewise wished to prevent in enacting R. Terms and Conditions of Compulsory License. but this shall be without prejudice to the licensee's right to oppose an application for such a new license. order the grant of an appropriate license. 35. It must be pointed out that as owner of Letters Patent No. (2) The terms and conditions of a compulsory license. 12 May 957. it is plain that the treaty does not preclude the inclusion of other forms of categories of abuses. the Court of Appeals correctly held that the rate of 2. 998]. House of Representatives.It is thus clear that Section A(2) of Article 5 [of the Paris Convention] unequivocally and explicitly respects the right of member countries to adopt legislative measures to provide for the grant of compulsory licenses to prevent abuses which might result from the exercise of the exclusive rights conferred by the patent. such as an increased supply of pharmaceutical products containing Cimetidine. but also to prevent the growth of monopolies [Congressional Record. the growth of monopolies was among the abuses which Section A. substance. private respondent as licensee explicitly acknowledges that petitioner is the source of the patented product Cimetidine." however. No.

which are considered as experts in their respective fields. DAVIS & COMPANY. The law explicitly provides that the rate of royalty shall not exceed five percent (5%) of the net wholesale price.rates proportional to the extent of commercial use by the licensee giving preferential values to the holder of the oldest subsisting product patent. 1981 PARKE. 33 There was thus no error on the part of the Court of Appeals in affirming the royalty rate fixed by the Director of the BPTTT. the petition is hereby DENIED for lack of merit and the Decision of the Court of Appeals is hereby AFFIRMED. 165. the Director of the BPTTT may fix the terms thereof. without any technical assistance from the licensor. 36 . The rule is that factual findings of administrative bodies. the Court holds that petitioner is estopped from questioning the same since it did not raise the issue of lack of jurisdiction at the earliest possible opportunity.R. No. citing Price vs. G. 35 The Court notes that petitioner raised this contention for the first time when it appealed the case to the appellate court. are accorded not only respect but even finality if the same are supported by substantial evidence.. as to the alleged lack of jurisdiction of the BPTTT over the petition filed by private respondent for failure to comply with the publication requirement under Section 35-F of R. vs. No. plaintiff-appellant.34 Finally. during the hearings before the BPTTT. L-27361 May 29. i.31 ruled as such. WHEREFORE. since it was not shown that the latter erred or abused his discretion in prescribing said rate. in the absence of any agreement between the parties with respect to a compulsory license. xxx Under the aforequoted provisions.A. including the rate of the royalty payable to the licensor. SO ORDERED. this Court had earlier noted in the Price case that identical royalty rates have been prescribed by the Director of the BPTTT in numerous patent cases. The Court agrees with the appellate court's ruling that the rate of royalty payments fixed by the Director of the BPTTT is reasonable.32 Furthermore. considering that the compulsory license awarded to private respondent consists only of the bare right to use the patented invention in the manufacture of another product.e. United Laboratories. The appellate court.

using or causing to be used. 279 was legally issued to plaintiff' by the Patent Office of the Republic of the Philippines for an invention entitled "Therapeutically Valuable Esters and Method for Obtaining the same". C-712. that the laws of the United States of America allow corporate or juristic citizens of the Philippines to file in said country. through its whollyowned local subsidiary. alleging. 279 (which covers "Chloramphenicol Palmitate"). Rizal. U. Parke. Caloocan City. damage and prejudice of plaintiff. among others. advertising and selling "Venimicetin Suspension". 1 and V-LAB Drughouse Corporation. with principal office situated in Detroit Michigan. Caloocan City and 126 Gen. 1966.ñët First Compulsory License in the Philippines by Parke-Davis Company Detroit Michigan. that since that date. and have deprive plaintiff of legitimate returns which plaintiff would have otherwise would have falsely and deseptively concealed that the same contains "Chloramphenicol" and "Chloramphenicol Palmitate" are entirely different substances. among others. 1 any kind of license for any product. under the name "Venimicetin Suspension". Inc. 181) dealt with plaintiff's Letters Patent No. defendants' statement will still be false and misleading. that defendants. 279. Inc.. Caloocan City Branch. 1 has knowingly infringed and is still knowingly infringing Claim 4 of said Letters Patent No. the said Complaint with Preliminary Injunction against Doctors' Pharmaceuticals. Grace Park. established a market and a continuing demand for "Chloramphenicol Palmitate" in the Philippines and has for many years sold and is still selling this product in the Philippines that defendants have derived unlawful gains and profits from the aforesaid infringement to the great and irreparable injury. that defendant No. causing to be sold. that the compulsory licensing case between plaintiff and defendant No. the substance covered by said Claim 4 of said plaintiff's Letters Patent No. U. the owner of said Letters Patent No.. and that defendants' use of the aforesaid false statement is designed to induce persons to purchase and physicians to prescribe the use of "Venimicetin Suspension" in the mistaken belief that it is Identical with the "Chloramphenicol Palmitate" product manufactured and sold in the Philippines by plaintiff's subsidiary or that the active ingredient in said product has been obtained from plaintiff and/or that said product has been made under the supervision or control of plaintiff – thereby causing damage or loss to plaintiff. 279 of plaintiff by selling. has at great expense. J. otherwise referred to as defendant No. 2.A. that plaintiff is a foreign corporation organized and existing under the laws of the State of Michigan. plaintiff has been and still is. Davis & Company.A. 1957. 1 has not even applied for a compulsory license under plaintiff's Letters Patent No.. have falsely and deceptively use plaintiffs name and represented that defendant No. that defendant No. Evangelista Street.. that defendants be enjoined from performing the acts complained of as infringement of patent and unfair competition and to pay the plaintiff all damages due thereto by reason of said acts. 1966. U. 1 of the latter's medicine called "Venimicetin Suspension" which contains "Chloramphenicol Palmitate": that plaintiff. Davis & Company filed with the Court of First Instance of Rizal. the following words: 1äwphï1. the compulsory license will not cover defendants' "Venimicetin Suspension" which actually contains "Chloramphenicol Palmitate" and. the complaint for damages for infringement of patent and unfair competition. otherwise referred to as defendant No. ABAD SANTOS. that plaintiff has never granted defendant No. that even if said resolution does become final. the only patent which covers "Chloramphenicol Palmitate". defendantsappellees. that the resolution of the Director of Patents fixing the terms and conditions of the compulsory license for "Chloramphenicol" has not yet become final as the same is still subject to a pending motion for reconsideration. in Civil Case No.A.S. with preliminary injunction. 279 which is still in force in the Philippines. 1 in the Philippine Patent Office (Inter Partes Case No. filed by the herein appellant against the herein appellees. 50 (which covers "Chloramphenicol") and not with plaintiff's Letters Patent No. dismissing. therefore.S. 37 . Letters Patent No. 1 holds a license from plaintiff for said medicine with. inter alia. that defendant No. actions for infringement of patents and for unfair competition: that defendants 1 and 2 are corporations organized and existing under the laws of the Philippines with offices respectivrely located at 354-B San Diego Street.: This is an appeal from the order of the Court of First Instance of Rizal dated August 22.DOCTORS' PHARMACEUTICALS.S. the plaintiff prayed. willfully and without the consent or authorization of plaintiff. on the ground of lack of cause of action. On the basis of the foregoing allegations. On May 5. a domestic corporation with main office at Mandaluyong. 279 by acting as distributor of defendant No. that on March 21. and V-LAB DRUGHOUSE CORPORATION. 279. knowingly infringed and is still knowingly investigation Claim 4 of said letters Patent No. Parke. 2 has likewise. INC. "Chloramphenicol Palmitate".

the plaintiff filed on May 24. the substance is referred to as "Chloramphenicol". among others. THE SUBSTANCE HAS BEEN DENOMINATED AS Chloramphenicol Palmitate it is the opinion of the Court that "Chloramphenicol" and "Chloramphenicol Palmitate are the same. granting the defendant. 50. Before the court could act on the plaintiff's motion for contempt. the defendants filed their Reply to Opposition alleging. "Chloramphenicol". V-Lab Drughouse Corporation being merely a sales representative of the defendant. and the Court being of the opinion that there is no cause of action with respect to the principal defendant.ñët xxx xxx xxx After a careful consideration of the arguments for and against the motion to dismiss. 279 is the same and that is. a motion to punish defendants for contempt. Davis & Company. "Chloramphenicol Palmitate". in Letters Patent No. among others. to wit: 1äwphï1." Alleging that the defendants have not complied with such order. On the basis of the foregoing pleadings. causing to be sold. Letters Patent No. the substance known as "Chloramphenicol".279." On June 17. by selling. by deceiving and misleading the purchasers who are trade to believe that "Venimicetin Suspension" is covered by a compulsory license from the plaintiff. and in view of the fact that the substance covered by Letters Patent No. alleging. among others. that in advertising and selling their product "Venimicetin Suspension. 1 "was granted a compulsory license to manufacture. namely." never do they state that the same contains "Chloramphenicol Palmitate" They pointed out that even in the annexes of plaintiff's complaint (consisting of the packages and labels allegedly used by the defendants in said product). Inc. This. Doctors" Pharmaceuticals. and. the plaintiff filed its Rejoinder to Reply to Opposition alleging among others. 1966. On July 5. Annex "C" of the Motion to Dismiss. Doctors' Pharmaceuticals. 1966. the plaintiff filed its Opposition to Motion to Dismiss controverting. with the Letters Patent subject of the compulsory licensing case. 50. Parke. namely. Letters Patent No.. that while the packages and labels of defendants' "Venimicetin Suspension" indicate that the same contains "Chloramphenicol". the difference being merely in the taste. causing to be sold or causing to be used any 'Chloramphenicol Palmitate' not manufactured by plaintiff or plaintiff's wholly-owned subsidiary. from exercising the right granted it by Letters Patent No. Inc. is likewise of the opinion that there is no cause of action with respect to the defendant. using or causing to be used "Chloramphenicol Palmitate" in their medicine called "Venimicetin Suspension". The defendant. 1966. applying the rule that a motion to dismiss hypothetically admits the truth of the allegations of the complaint. defendants' contention that the complaint states no cause of action. 1966. and the Letters Patent subject of the complaint. the petitioner 38 . use and sell its own brands of medicinal preparation containing 'chloramphenicol'. the right to use and import "Chloramphenicol". plaintiff pointed out. thus. Inc. that the complaint states no cause of action against them since defendant No. affirmed by the Supreme Court. among others. defendants are guilty of (1) infringement of patent. It would further render nugatory the decision of the Director of Patents. 279 would be tantamount to preventing the defendant. On June 27. the truth of the matter is that said product does not contains said substance but the subtance covered by letters Patents No. namely.. the defendants filed a Motion to Dismiss. Doctors' Pharmaceuticals. 50 and Letters Patent No. the Court of First Instance issued an order which. 1966. 279. because while under Letters Patent No. It is likewise the opinion of this Court that there is no cause of action for unfair competition because a perusal of the records of this case will show that under paragraph 7 of the Resolution of the Director of Patents. using. "Chloramphenicol Palmitate".On May 6. is expressly alleged in the complaint. 1966. dated May 25. with the substance covered by the compulsory licensing case. 50. namely. 1966. the Court of First Instance of Rizal issued the order dated August 22. temporarily restrained the defendants "from directly or indirectly selling. Plaintiff pointed out that the defendants have confused the substance which is the subject matter of the complaint. Inc. only the substance "Chloramphenicol" is stated – showing that the substance involved is Cloramphenicol and not "Chloramphenicol Palmitate". 279.. which dismissed the complaint on the ground of lack of cause of action. by concealing that said medicine contains "Chloramphenicol". and this Court to state that there was infringement of Patent with respect to Letters Patent No. and (2) unfair competition. namely. V-LAB Drughouse Corporation.

Inc. the Court will no longer pass upon the issue of contempt. It is axiomatic that in resolving a motion to dismiss a complaint on the ground of failure to state a cause of action. the lower court had ruled against its veracity. it would not have Dismissed. Inc..ñët SEC. U.ñët WHEREFORE.S. This is clearly an error considering that the said assumed fact cannot qualify as something which the court could take judicial notice of nor was it competent to so find in the absence of evidence formally presented to that effect. & Co. For defendants would then be guilty of infringement of patent by selling. using. The restraining order heretofore issued is hereby lifted and set aside. Having reached the above conclusion. finding the ground of lack of cause of action to be well-taken. of Michigan. without the consent or authority of the plaintiff as the holder of Letters Patent No. or selling by any person without the authorization of the patentee. on the ground of failure to state a cause of action. and such making. As can be gleaned from the appealed order. the court should hypothetically assume the truth of the factual allegations of the complaint (except allegations of facts the falsity of which the court may take judicial notice of) and determine whether on the basis thereof. instead of hypothetically assuming the truth of the factual allegations of the complaint. U. it necessarily would have to conclude that the complaint states causes of action for infringement of patent and for unfair competition. The claim of the plaintiff that the representation: First Compulsory License in the Philippines by Parke Davis Company.(Doctors' Pharmaceuticals. No. 1äwphï1.A. without pronouncement as to costs.) 39 . (Emphasis supplied. Davis. the lower court premised its ruling that there is no cause of action for infringement of patent on the assumption that "Chloramphenicol" (the substance covered by Letters Patent No.. 165 provide:1äwphï1. throughout the territory of the Philippines for the term of the patent. 279. – A patentee shall have the exclusive right to make. Had the lower court applied the foregoing formula.) shall adopt and use its owntrademarks or labels on all its products containing Chloramphenicol under license from Parke. constitutes infringement of the patent. using and causing to be used "Chloramphenicol Palmitate". the complainant is entitled to the relief demanded. RIGHTS OF PATENTEES.A. 50) and "Chloramphenicol Palmitate" (the substance covered by Letters Patent No. the allegations in the complaint that "Chloramphenicol" and "Chloramphenicol Palmitate" are entirely different substances and that "Venimicetin Suspension" actually contains "Chloramphenicol Palmitate" and not "Chloramphenicol" as indicated in its package and label. Had the lower court hypothetically assumed as true. Detroit Michigan. causing to be sold. The existence of two patents separately covering said substances simply militates against said factual assumption and requires the presentation of evidence sufficient to convince the court that said substances are indeed the same. Hence. instead of hypothetically assuming the truth of the plaintiff's allegation that "Chloramphenicol" and "Chloramphenicol Palmitate are two different substances.S. SO ORDERED. 279) are the same. article or product. 37. We are thus tasked with the resolution of the issue of whether or not the lower court correctly dismissed the complaint for damages for infringement of patent and unfair competition on the ground of failure to state a cause of action.A. is false and has a definite tendency to deceive possible purchasers and distort the facts is not well-taken in view of the above-mentioned (Par. Sections 37 and 42 of R. the lower court had ruled against their veracity and consequently concluded that the complaint states no cause of action. this case is ordered DISMISSED. For. Claim 4 of which allegedly covers said substance. Thus. the pertinent portions of which We have heretofore quoted. the present appeal. for the purpose of the motion to dismiss. and to use the patented process for the purpose of industry or commerce. the complaint for damages for infringement of patent and unfair competition. use and sell the patented machine. 7) of the Resolution of the Director of Patents.

whose rights have been infringed. the appealed order of dismissal is hereby set aside and the complaint for damages for infringement of patent and unfair competition is hereby reinstated.: Through this petition for review in certiorari of a decision of the Court of Appeals affirming the decision of the trial court. may bring a civil action before the proper Court of First Instance. 166 provides. THE HONORABLE COURT OF APPEALS. or anyone possessing any right. No. INC.1äwphï1.respondents. to recover from the infringed. WHEREFORE. Likewise. Clearly. the lower court erred in dismissing. Alinio for private respondent. G.ñët In particular. 1993 PASCUAL GODINES. and without in any way limiting the scope of unfair competition. No. on the ground of failure to state a cause of action. Section 29 of R..A. petitioner Pascual Godines seeks to reverse the adverse decision of the Court a quo that he was liable for infringement of patent and unfair competition. 42. SPECIAL FOURTH DIVISION and SV-AGRO ENTERPRISES. J. damages sustained by reason of the infringement and to secure an injunction for the protection of his rights.R. the defendants would be guilty of unfair competition by falsely stating that defendant No. 97343 September 13.. vs. the following shall be deemed guilty of unfair competition: xxx xxx xxx (c) Any person who shall make any false statement in the course of trade . . petitioner.inter alia.SEC. ROMERO. title or interest in and to the patented invention. the complaint for damages for infringement of patent and unfair competition. – Any patentee. Anonat for petitioner. The dispositive portion of the assailed decision is hereby quoted to wit: 40 . CIVIL ACTION FOR INFRINGEMENT . and that it is covered by a compulsory license from the plaintiff. Jesus S. Arturo M. Without pronouncement as costs.. l's medicine called "Venimicetin Suspension" contains "Chloramphenicol" when in fact it actually contains "Chloramphenicol Palmitate".

SVAgro Industries filed before the Regional Trial Court a complaint for infringement of patent and unfair competition. On October 31. herein private respondent. with costs against appellant. 41 . 1 The patent involved in this case is Letters Patent No. The V-belt drives the pulley attached to the transmission gear which in turn drives the shaft where the paddy wheels are attached. with the elimination of the award for attorney's fees. it discovered that power tillers similar to those patented by private respondent were being manufactured and sold by petitioner herein. to wit: that he was not engaged in the manufacture and sale of the power tillers as he made them only upon the special order of his customers who gave their own specifications. hence.000. (4) a protective water covering for the engine main drive. In accordance with the patent. plus the further sum of Eighty Thousand Pesos (P80. (3) a pair of paddy wheels. Thereafter. Inc. private respondent manufactured and sold the patented power tillers with the patent imprinted on them.000. pipe at the V-shaped end. SV-Agro Industries caused the publication of the patent in Bulletin Today.00) as reimbursement of attorney's fees and other expenses of litigation. Petitioner maintains the defenses which he raised before the trial and appellate courts. private respondent notified Pascual Godines about the existing patent and demanded that the latter stop selling and manufacturing similar power tillers. 1979. 4 The decision was affirmed by the appellate court. from Magdalena Villaruz.. 1976." 3 The above mentioned patent was acquired by SV-Agro Industries Enterprises. UM-2236 issued by the Philippine Patent Office to one Magdalena S. Declaring the writ of preliminary injunction issued by this Court against defendant as permanent.000. Zamboanga del Sur branch." 2 The patented hand tractor works in the following manner: "the engine drives the transmission gear thru the V-belt. the further sum of Eight Thousand Pesos (P8. Upon petitioner's failure to comply with the demand. the main components of which are the following: "(1) a vacuumatic house float. Ordering the defendant to pay the plaintiff. (7) an engine foundation on the top midportion of the vacuumatic housing float to which the main engine drive is detachedly installed. Consequently. this petition was filed. by virtue of a Deed of Assignment executed by the latter in its favor. The operator handles the hand tractor through a handle which is inclined upwardly and supported by a pair of substanding pipes and reinforced by a U-shaped G. and (10) an idler pulley installed on the engine foundation. After trial. The engine drives the transmission gear by tensioning of the V-belt which is controlled by the idler pulley. its chairman and president. The dispositive portion of the decision reads as follows: WHEREFORE. the judgment appealed from is hereby AFFIRMED. the court held Pascual Godines liable for infringement of patent and unfair competition.I. and against defendant Pascual Godines: 1. Inc. (2) a harrow with adjustable operating handle. he could not be liable for infringement of patent and unfair competition. JUDGMENT is hereby rendered in favor of the plaintiff SVAgro Industries Enterprises. Villaruz on July 15.. Upon investigation. premises considered. 2. It covers a utility model for a hand tractor or power tiller.WHEREFORE. a newspaper of general circulation. (9) a V-belt connection to the engine main drive with transmission gear through the pulley. and to pay the costs of the suit.00) for unrealized profits during the period defendant was manufacturing and selling copied or imitation floating power tiller. 3. Ordering defendant Pascual Godines to pay plaintiff the sum of Fifty Thousand Pesos (P50. and that those made by him were different from those being manufactured and sold by private respondent. (5) a transmission case. a driven pulley and a transmission shaft. (6) an operating handle. SO ORDERED. SV-Agro Industries suffered a decline of more than 50% in sales in its Molave. (8) a frontal frame extension above the quarter — circularly shaped water covering hold (sic) in place the transmission case. In 1979.00) as damages to its business reputation and goodwill.

In dismissing the first argument of petitioner herein. ". and that said appellate court's findings of fact are conclusive upon this Court. repeat jobs and material wastage. to determine whether there is exact identity of all material elements. This was 42 . 1984. The three power tillers were placed alongside with each other. No document was (sic) ever been presented showing such job orders. and (b) the doctrine of equivalents. a protective water covering. the Court of Appeals quoted the findings of the court. Defendant admitted to the Court that two (2) of the power inspected on March 12. 2) it would be unbelievable that defendant would fabricate power tillers similar to the turtle power tillers of plaintiff upon specifications of buyers without requiring a job order where the specification and designs of those ordered are specified. design and appearance. Viewed from any perspective or angle. At the center was the turtle power tiller of plaintiff. meaning that defendant is principally a manufacturer of power tillers. resort must be had. top and back views for purposes of comparison (see Exhibits H-4 to H-28). 5 Of general acceptance is the rule imbedded in our jurisprudence that ". both the floating power tillers of the defendant and the turtle power tiller of the plaintiff are virtually the same. p. the court must juxtapose the claims of the patent and the accused product within the overall context of the claims and specifications. In operation. attached to the side of the vacuumatic housing float and supported by the upstanding G." 6 The fact that petitioner herein manufactured and sold power tillers without patentee's authority has been established by the courts despite petitioner's claims to the contrary. a transmission box housing the transmission gears. infringement is made out and that is the end of it. The question now arises: Did petitioner's product infringe upon the patent of private respondent? Tests have been established to determine infringement. These are (a) literal infringement. . the jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals in a petition for certiorari under Rule 45 of the Rules of Court is limited to the review of errors of law. configuration. to wit: It is the contention of defendant that he did not manufacture or make imitations or copies of plaintiff's turtle power tiller as what he merely did was to fabricate his floating power tiller upon specifications and designs of those who ordered them. However. selling and distributing them long before plaintiff started selling its turtle power tiller in Zamboanga del Sur and Misamis Occidental. This is contrary to the usual business and manufacturing practice. this contention appears untenable in the light of the following circumstances: 1) he admits in his Answer that he has been manufacturing power tillers or hand tractors. the power tiller of the defendant is identical and similar to that of the turtle power tiller of plaintiff in form.We find no merit in his arguments. not upon specification and design of buyers." 8 To determine whether the particular item falls within the literal meaning of the patent claims. If accused matter clearly falls within the claim. . but costly because it involves a trial and error method. . 1984. were manufactured and sold by him (see TSN. 7 In using literal infringement as a test. the floating power tiller of the defendant operates also in similar manner as the turtle power tiller of plaintiff. pipes and an engine base at the top midportion of the vacuumatic housing float to which the engine drive may be attached. 7). considering that he is an engineer by profession and proprietor of the Ozamis Engineering shop. This is not only time consuming. but upon his own specification and design. and it is rather unusual for defendant to manufacture something without the specification and designs. side. Defendant judicially admitted two (2) units of the turtle power tiller sold by him to Policarpio Berondo. to the words of the claim. In appearance and form.I. On the other hand. . March 12. it is also highly unusual for buyers to order the fabrication of a power tiller or hand tractor and allow defendant to manufacture them merely based on their verbal instructions. in the first instance. The question of whether petitioner was manufacturing and selling power tillers is a question of fact better addressed to the lower courts. a handle which is V-shaped and inclined upwardly. Both have the circularly-shaped vacuumatic housing float. 9 The trial court made the following observation: Samples of the defendant's floating power tiller have been produced and inspected by the court and compared with that of the turtle power tiller of the plaintiff (see Exhibits H to H28). a paddy in front. Witness Rodrigo took photographs of the same power tillers (front. The parts or components thereof are virtually the same. and on both sides thereof were the floating power tillers of defendant (Exhibits H to H-2).

and substantial. not by the names of things. identity in the test. employed for 11 years as welder of the Ozamis Engineering. albeit with some modification and change. . August 19. use and sell the patented machine. in infringement of patent." said Justice Brown.admitted by the defendant himself in court that they are operating on the same principles. it is necessary and sufficient to constitute equivalency that the same function can be performed in substantially the same way or manner. as amended. it is also observed that petitioner also called his power tiller as a floating power tiller. it is not essential to show that the defendant adopted the device or process in every particular. according to this doctrine." 13 The reason for the doctrine of equivalents is that to permit the imitation of a patented invention which does not copy any literal detail would be to convert the protection of the patent grant into a hollow and useless thing. inter alia: Sec. form. mere differences of form or name are immaterial. providing. similarities or differences are to be determined. . "it may be said that no device can be adjudged an infringement that does not substantially correspond with the patent. would be so obviously unjust that no court could be expected to adopt it. but in the light of what elements do. The law will protect a patentee against imitation of his patent by other forms and proportions. Proof of an adoption of the substance of the thing will be sufficient. p. But a careful examination between the two power tillers will show that they will operate on the same fundamental principles. they are the same. 13) 10 Moreover. and accomplish substantially the same result. Petitioner's argument that his power tillers were different from private respondent's is that of a drowning man clutching at straws. The patent issued by the Patent Office referred to a "farm implement but more particularly to a turtle hand tractor having a vacuumatic housing float on which the engine drive is held in place. . the harrow housing with its operating handle and the paddy wheel protective covering. — A patentee shall have the exclusive right to make. would be enough to take the copied matter outside the claim. And. We are compelled to arrive at no other conclusion but that there was infringement. the trial court observed: Defendant's witness Eduardo Cañete. Recognizing that the logical fallback position of one in the place of defendant is to aver that his product is different from the patented one. "In one sense. according to establish jurisprudence. or by the same or substantially the same. even though they differ in name. 16 We pronounce petitioner liable for infringement in accordance with Section 37 of Republic Act No. or shape. article or product. rather than technical. 14 In this case. More specifically. . (TSN. but where these tests are satisfied. If two devices do the same work in substantially the same way. 1987. But another construction. performs substantially the same function in substantially the same way to achieve substantially the same result. throughout the territory of the Philippines for the terms of 43 . . "(a)n infringement also occurs when a device appropriates a prior invention by incorporating its innovative concept and. principle or mode of operation. 12 Thus. 15 It also stated: To establish an infringement. and hence outside the reach of the law." 11 It appears from the foregoing observation of the trial court that these claims of the patent and the features of the patented utility model were copied by petitioner. courts have adopted the doctrine of equivalents which recognizes that minor modifications in a patented invention are sufficient to put the item beyond the scope of literal infringement. Right of Patentees. Such imitation would leave room for — indeed encourage — the unscrupulous copyist to make unimportant and insubstantial changes and substitutions in the patent which. which would limit these words to exact mechanism described in the patent. and to use the patented process for the purpose of industry or commerce. the operating handle. . 37. and therefore actually involved in the making of the floating power tillers of defendant tried to explain the difference between the floating power tillers made by the defendant. though adding nothing. 165.

or the devices or words thereon. vs. inter alia: Sec. . using. . WHEREFORE. . either as to the goods themselves or in the wrapping of the packages in which they are contained. DECISION CARPIO-MORALES. rights and remedies. Petitioner. as assignee. who in selling his goods shall give them the general appearance of goods of another manufacturer or dealer. 166. 29. goats.S. 44 . a corporation existing by virtue of the laws of the state of Pennsylvania. suffice it to say that Republic Act No. G. cattle and goats. The letters patent provides in its claims2 that the patented invention consisted of a new compound named methyl 5 propylthio-2-benzimidazole carbamate and the methods or compositions utilizing the compound as an active ingredient in fighting infections caused by gastrointestinal parasites and lungworms in animals such as swine. filed on October 8. — . 145611 for the aforesaid invention was issued to petitioner for a term of seventeen (17) years. or in any other feature of their appearance. the decision of the Court of Appeals is hereby AFFIRMED and this petition DENIED for lack of merit. and even pet animals. (Emphasis ours) As far as the issue regarding unfair competition is concerned. before the Philippine Patent Office (now Bureau of Patents. which would be likely to influence purchasers that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer. distributes and sells veterinary products including Impregon. Tryco Pharma Corporation (private respondent) is a domestic corporation that manufactures. 2003 SMITH KLINE BECKMAN CORPORATION. provides. or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade. and such making. premises considered. ." The application bore Serial No. Unfair competition. horses.: Smith Kline Beckman Corporation (petitioner). R. THE HONORABLE COURT OF APPEALS and TRYCO PHARMA CORPORATION. 1981. xxx xxx xxx In particular. a drug that has Albendazole for its active ingredient and is claimed to be effective against gastro-intestinal roundworms. No. cattle. 1976. we find no reversible error in the decision of the Court of Appeals affirming with modification the decision of the trial court.the patent. xxx xxx xxx Considering the foregoing. sheep. 18989. 126627 August 14. or selling by any person without the authorization of the Patentee constitutes infringement of the patent. the following shall be deemed guilty of unfair competition: (a) Any person. . as amended.) and licensed to do business in the Philippines. tapeworms and fluke infestation in carabaos. lungworms. Letters Patent No. J. Trademarks and Technology Transfer) an application for patent over an invention entitled "Methods and Compositions for Producing Biphasic Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate. Respondents. On September 24. United States of America (U. and without in any way limiting the scope of unfair competition.

480. P1. 166 (The Trademark Law) for advertising and selling as its own the drug Impregon although the same contained petitioner’s patented Albendazole. 17280 filed on June 17. P300. patent as implying that Albendazole is different from methyl 5 propylthio-2-benzimidazole carbamate.7 Private respondent in its Answer8 averred that Letters Patent No. as it is hereby. (Underscoring supplied) On appeal. Defendant Tryco Pharmaceutical Corporation is hereby awarded P330. the Court of Appeals. 14561 does not cover the substance Albendazole for nowhere in it does that word appear. 18989 which was filed on October 8. It likewise found that private respondent was not guilty of deceiving the public by misrepresenting that Impregon is its product. such substance is unpatentable.000. the Court of Appeals thus ruled that Patent Application Serial No. Pursuant to Sec. Private respondent lodged a Counterclaim against petitioner for such amount of actual damages as may be proven.646 in the U. 165 (The Patent Law). 8 and 9 of Letters Patent No. SO ORDERED.3 It claimed that its patent covers or includes the substance Albendazole such that private respondent.000.Petitioner sued private respondent for infringement of patent and unfair competition before the Caloocan City Regional Trial Court (RTC). The Writ of injunction issued in connection with the case is hereby ordered DISSOLVED.000. 3. covering the same compound subject of Patent Application Serial No. 46 of the Patents Law. Applying Section 17 of the Patent Law. using. the Director of Bureau of Patents is hereby directed to cancel Letters Patent No. by Decision of April 21. 14561 4 as well as committed unfair competition under Article 189. 17280. citing the jurisprudentially 45 . 1976 was a divisional application of Patent Application Serial No. the appellate court considered the U. 1995. 9 the dispositive portion of which reads: WHEREFORE. that there is no proof that it passed off in any way its veterinary products as those of petitioner.000.S. Branch 125 of the Caloocan RTC issued a temporary restraining order against private respondent enjoining it from committing acts of patent infringement and unfair competition. 6 A writ of preliminary injunction was subsequently issued. selling. 14561 issued to the plaintiff and to publish such cancellation in the Official Gazette. the trial court rendered a Decision dated July 23. 1995 or still within one year from the filing of a patent application abroad in compliance with the one-year rule under Section 15 of the Patent Law. and that petitioner is not the registered patent holder. that Letters Patent No. paragraph 1 of the Revised Penal Code and Section 29 of Republic Act No. 5 On motion of petitioner. 18989 was deemed filed on June 17. the application for the issuance thereof having been filed beyond the one year period from the filing of an application abroad for the same invention covered thereby. declared that Letters Patent No. DISMISSED. 7. 1974 of its Foreign Application Priority Data No. 14561. that the Bureau of Food and Drugs allowed it to manufacture and market Impregon with Albendazole as its known ingredient. And it rejected the submission that the compound in Letters Patent No.00 in exemplary damages.S. 10 upheld the trial court’s finding that private respondent was not liable for any infringement of the patent of petitioner in light of the latter’s failure to show that Albendazole is the same as the compound subject of Letters Patent No. in violation of Section 15 of Republic Act No. 4. The appellate court.00 actual damages and P100. 14561 issued by the then Philippine Patents Office is hereby declared null and void for being in violation of Sections 7.00 attorney’s fees as prayed for in its counterclaim but said amount awarded to defendant is subject to the lien on correct payment of filing fees.00 in attorney’s fees. by manufacturing. Finding for private respondent. well within one year from petitioner’s filing on June 19. 1975 with the Philippine Patent Office. 14561 is null and void. Noting petitioner’s admission of the issuance by the U. 14561 was not void as it sustained petitioner’s explanation that Patent Application Serial No.000. of a patent for Albendazole in the name of Smith Kline and French Laboratories which was petitioner’s former corporate name. and P150. however. in view of the foregoing.000. 14561 was not patentable. plaintiff’s complaint should be.00 in moral damages.S. The Letters Patent No. 1991. 9 and 15 of the Patents Law. that even if the patent were to include Albendazole. infringed Claims 2. and causing to be sold and used the drug Impregon without its authorization.

is substantially the same as methyl 5 propylthio-2-benzimidazole carbamate covered by its patent since both of them are meant to combat worm or parasite infestation in animals. 14561 are different from each other. absurd. Albendazole. Finally. assigning as errors the following: I. S. speculative. petitioner concludes that both methyl 5 propylthio-2benzimidazole carbamate and the U. AND THAT CONSEQUENTLY TRYCO IS ANSWERABLE FOR PATENT INFRINGEMENT. by definition of a divisional application. conjectural. Thus the appellate court disposed: WHEREFORE. 46 . the active ingredient it alleges was appropriated by private respondent for its drug Impregon. Hence. Godofredo C. It cites the "unrebutted" testimony of its witness Dr. hence.-patented Albendazole are dependent on each other and mutually contribute to produce a single result. then. thereby making Albendazole as much a part of Letters Patent No. thereby making them truly identical.00 in attorney’s fees as not falling under any of the instances enumerated by law where recovery of attorney’s fees is allowed. 14561 and for its cancellation are deleted therefrom. 14561. IS INCLUDED IN PETITIONER’S LETTERS PATENT NO. without basis.000. patent for Albendazole indicates that the same and the compound in Letters Patent No.14 private respondent contends that application of the doctrine of equivalents would not alter the outcome of the case. or contrary to the findings culled by the court of origin. conflicting. for in spite of the fact that the word Albendazole does not appear in petitioner’s letters patent. the judgment appealed from is AFFIRMED with the MODIFICATION that the orders for the nullification of Letters Patent No. the former is an improvement or improved version of the latter thereby making both substances still substantially the same. Petitioner likewise points out that its application with the Philippine Patent Office on account of which it was granted Letters Patent No. II. it ruled that petitioner established itself to be the one and the same assignee of the patent notwithstanding changes in its corporate name. such a compound is just one of several independent inventions alongside Albendazole under petitioner’s original patent application. Orinion) that the chemical formula in Letters Patent No. THE ACTIVE INGREDIENT IN TRYCO’S "IMPREGON" DRUG. Petitioner adds that the two substances substantially do the same function in substantially the same way to achieve the same results. SO ORDERED.S. beyond merely applying the literal infringement test. Unless the factual findings of the appellate court are mistaken.established presumption that the Patent Office’s determination of patentability is correct. Petitioner argues that under the doctrine of equivalents for determining patent infringement. Petitioner concedes in its Sur-Rejoinder13 that although methyl 5 propylthio-2-benzimidazole carbamate is not identical with Albendazole. 14561 as the other substance is.000.00 representing lost profits.S. Petitioner thus submits that the appellate court should have gone beyond the literal wordings used in Letters Patent No. It assails too the award of P100. which granted a patent for Albendazole. 14561 was merely a divisional application of a prior application in the U. and that since it was on account of a divisional application that the patent for methyl 5 propylthio-2-benzimidazole carbamate was issued.00 ATTORNEY’S FEES. 14561 refers to the compound Albendazole. 14561.000. tainted with grave abuse of discretion. THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT ALBENDAZOLE. With respect to the award of actual damages in favor of private respondent in the amount of P330. Petitioner’s motion for reconsideration of the Court of Appeals’ decision having been denied 11 the present petition for review on certiorari12 was filed. petitioner assails the same as highly speculative and conjectural.15 this Court does not review them. THE COURT OF APPEALS GRAVELY ERRED IN AWARDING TO PRIVATE RESPONDENT TRYCO PHARMA CORPORATION P330. Orinion (Dr. it has ably shown by evidence its sameness with methyl 5 propylthio-2-benzimidazole carbamate. It stresses that the existence of a separate U.000. In its Comment. only questions of law may be raised in a petition for review on certiorari before this Court. Albendazole and methyl 5 propylthio-2-benzimidazole carbamate being two different compounds with different chemical and physical properties. As has repeatedly been held.00 ACTUAL DAMAGES AND P100.

17 And so are the courts bound which may not add to or detract from the claims matters not expressed or necessarily implied. that is." 24 What this only means is that petitioner’s methyl 5 propylthio-2-benzimidazole carbamate is an invention distinct from the other inventions claimed in the original application divided out.From an examination of the evidence on record. the patentee is bound thereby and may not claim anything beyond them. 18 It bears stressing that the mere absence of the word Albendazole in Letters Patent No.20 In other words. and the patented methods. 16 In the case at bar. 14561 is not determinative of Albendazole’s non-inclusion in the claims of the patent. nothing more is asserted and accordingly substantiated regarding the method or means by which Albendazole weeds out parasites in animals. this Court finds nothing infirm in the appellate court’s conclusions with respect to the principal issue of whether private respondent committed patent infringement to the prejudice of petitioner. petitioner’s evidence fails to explain how Albendazole is in every essential detail identical to methyl 5 propylthio-2-benzimidazole carbamate. Albendazole being one of those other inventions. And no extrinsic evidence had been adduced to prove that Albendazole inheres in petitioner’s patent in spite of its omission therefrom or that the meaning of the claims of the patent embraces the same. it comes into play when two or more inventions are claimed in a single application but are of such a nature that a single patent may not be issued for them." that is.23 The applicant thus is required "to divide. the patentee having the burden to show that all three components of such equivalency test are met. 14561. The doctrine of equivalents provides that an infringement also takes place when a device appropriates a prior invention by incorporating its innovative concept and. From a reading of the 9 claims of Letters Patent No. Otherwise.19 Yet again. As for the concept of divisional applications proffered by petitioner. 14561 in relation to the other portions thereof. While both compounds have the effect of neutralizing parasites in animals. petitioner’s evidence consists primarily of its Letters Patent No. 14561 fails to yield anything at all regarding Albendazole. the principle or mode of operation must be the same or substantially the same. the compound methyl 5 propylthio-2-benzimidazole carbamate. Apart from the fact that Albendazole is an anthelmintic agent like methyl 5 propylthio-2-benzimidazole carbamate. When the language of its claims is clear and distinct. the compound’s being anthelmintic but nontoxic for animals or its ability to destroy parasites without harming the host animals. performs substantially the same function in substantially the same way to achieve substantially the same result. 22 As stated early on. even if the patentee may have been entitled to something more than the words it had chosen would include. While petitioner concedes that the mere literal wordings of its patent cannot establish private respondent’s infringement. its general manager in the Philippines for its Animal Health Products Division. Orinion. All that the claims disclose are: the covered invention. The burden of proof to substantiate a charge for patent infringement rests on the plaintiff. even though it performs the same function and achieves the same result. thus giving no information on whether that method is substantially the same as the manner by which petitioner’s compound works. The testimony of Dr.21 The doctrine of equivalents thus requires satisfaction of the function-means-and-result test. a scrutiny of petitioner’s evidence fails to convince this Court of the substantial sameness of petitioner’s patented compound and Albendazole. by which it sought to show that its patent for the compound methyl 5 propylthio-2-benzimidazole carbamate also covers the substance Albendazole. it urges this Court to apply the doctrine of equivalents. methyl 5 47 . nor may they enlarge the patent beyond the scope of that which the inventor claimed and the patent office allowed. the language of Letter Patent No. and the testimony of Dr. he not having been presented or qualified as an expert witness who has the knowledge or expertise on the matter of chemical compounds. whereas those inventions not elected may be made the subject of separate applications which are called "divisional applications. compositions or preparations involving the compound to maximize its efficacy against certain kinds of parasites infecting specified animals. identity of result does not amount to infringement of patent unless Albendazole operates in substantially the same way or by substantially the same means as the patented compound. although with some modification and change. no mention is made of the compound Albendazole. to limit the claims to whichever invention he may elect. While Albendazole is admittedly a chemical compound that exists by a name different from that covered in petitioner’s letters patent. Orinion lends no support to petitioner’s cause.

instead.26 While indemnification for actual or compensatory damages covers not only the loss suffered (damnum emergens) but also profits which the obligee failed to obtain (lucrum cessans or ganacias frustradas).00 which it finds reasonable under the circumstances.00 and that sales plummeted to zero after the issuance of the injunction. this Court does not sustain the award of actual damages and attorney’s fees in favor of private respondent.1âwphi1 The foregoing discussions notwithstanding. 30 WHEREFORE.000. computed at the rate of 30% of its alleged P100. The award of actual or compensatory damages and attorney’s fees to private respondent. private respondent having been allegedly forced to litigate as a result of petitioner’s suit. Even if a claimant is compelled to litigate with third persons or to incur expenses to protect its rights.29 There exists no evidence on record indicating that petitioner was moved by malice in suing private respondent. be established with certainty. it is necessary to prove the actual amount of damages with a reasonable degree of certainty based on competent proof and on the best evidence obtainable by the injured party. The claimed actual damages of P330.000. however.000. This Court.propylthio-2-benzimidazole carbamate would not have been the subject of a divisional application if a single patent could have been issued for it as well as Albendazole.000. Tryco Pharma Corporation. were supported by the testimonies of private respondent’s President 25 and Executive Vice-President that the average monthly sale of Impregon was P100.00 as temperate or moderate damages.00 representing lost profits or revenues incurred by private respondent as a result of the issuance of the injunction against it. the assailed decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION. 48 . SO ORDERED. grants private respondent temperate or moderate damages in the amount of P20. this Court does not sustain the grant by the appellate court of attorney’s fees to private respondent anchored on Article 2208 (2) of the Civil Code. it having suffered some pecuniary loss the amount of which cannot. 27 The testimonies of private respondent’s officers are not the competent proof or best evidence obtainable to establish its right to actual or compensatory damages for such damages also require presentation of documentary evidence to substantiate a claim therefor. 28 In the same vein. from the nature of the case. still attorney’s fees may not be awarded where no sufficient showing of bad faith could be reflected in a party’s persistence in a case other than an erroneous conviction of the righteousness of his cause. it is hereby awarded the amount of P20.000. is DELETED.00 monthly gross sales for eleven months.

new or useful. "E. BELLOSILLO. and that after her husband's separation from the shop she organized Besco Metal Manufacturing (BESCO METAL. In support of her petition for cancellation petitioner further alleged that (a) the utility model covered by the letters patent of respondent had been known or used by others in the Philippines for more than one (1) year before she filed her application for letters patent on 9 December 1979." (b) a brochure distributed by Manila Gas Corporation disclosing a pictorial representation of Ransome Burner made by Ransome Torch and Burner Company. "D. UM-4609 for a gas burner registered in the name of respondent Melecia Madolaria who subsequently assigned the letters patent to New United Foundry and Manufacturing Corporation (UNITED FOUNDRY. petitioner. (b) the specification of the letters patent did not comply with the requirements of Sec.R.: The primary purpose of the patent system is not the reward of the individual but the advancement of the arts and sciences. RA No. 1997 ANGELITA MANZANO. as Assignor to NEW UNITED FOUNDRY MANUFACTURING CORPORATION. COURT OF APPEALS. (c) a brochure distributed by Esso Gasul or Esso Standard Eastern. true and actual inventor of the utility model covered by the letters patent. Petitioner presented the following documents which she correspondingly marked as exhibits: (a) affidavit of petitioner alleging the existence of prior art. marked Exh. Petitioner presented in evidence an alleged model of an LPG burner marked Exh. (c) respondent Melecia Madolaria was not the original. an LPG gas burner. was not inventive. and testified that it was given to her in January 1982 by one of her customers 49 ." and. with doubts as to patentability resolved in favor of the Patent Office. (d) the letters patent was secured by means of fraud or misrepresentation. for brevity). This is a matter which is properly within the competence of the Patent Office the official action of which has the presumption of correctness and may not be interfered with in the absence of new evidence carrying thorough conviction that the Office has erred. The function of a patent is to add to the sum of useful knowledge and one of the purposes of the patent system is to encourage dissemination of information concerning discoveries and inventions. No. J. and MELECIA MADOLARIA. Inc. marked Exh. 165.. "K" and covered by the Letters Patent of respondent. UM-4609 was issued. 113388 September 5. its findings must be accepted if they are consistent with the evidence. vs. Petitioner alleged that (a) the utility model covered by the letters patent. 14. (b) the products which were produced in accordance with the utility model covered by the letters patent had been in public use or on sale in the Philippines for more than one (1) year before the application for patent therefor was filed. and. as amended. for brevity) for the casting of LPG burners one of which had the configuration." Testifying for herself petitioner narrated that her husband Ong Bun Tua worked as a helper in the UNITED FOUNDRY where respondent Melecia Madolaria used to be affiliated with from 1965 to 1970. in this case. USA. respondents. 1 Petitioner Angelita Manzano filed with the Philippine Patent Office on 19 February 1982 an action for the cancellation of Letters Patent No. form and component parts similar to those being manufactured by UNITED FOUNDRY. true and actual inventor nor did she derive her rights from the original. that Ong helped in the casting of an LPG burner which was the same utility model of a burner for which Letters Patent No.G. marked Exh. of the Philippines showing a picture of another similar burner with top elevation view and another perspective view of the same burner. Since the Patent Office is an expert body preeminently qualified to determine questions of patentability. "A.

The exhibits also show a detachable burner mouth having a plurality of upwardly existing undulations adopted to act as 50 . he was able to cast several models incorporating the additions to the innovations introduced in the models. machine and buffing section. that the company manufactured early models of single-piece types of burners where the mouth and throat were not detachable. that in the latter part of 1978 respondent Melecia Madolaria confided in him that complaints were being brought to her attention concerning the early models being manufactured. presented by petitioner. Various tests were conducted on the latest model in the presence and under the supervision of Melecia Madolaria and they obtained perfect results. among others. UM-4609 and the previously known model of Esso Standard Eastern. Ong testified that he worked as a helper in the UNITED FOUNDRY from 1965 to 1970 where he helped in the casting of LPG burners with the same form. private respondent discovered the solution to all the defects of the earlier models and.. therefore. Hence. Petitioner submits that the differences cited by the Court of Appeals between the utility model of private respondent and the models of Manila Gas Corporation and Esso Standard Eastern." which was allegedly manufactured in 1974 or 1975 and sold by her in the course of her business operation in the name of BESCO METAL. and. namely. that private respondent again made some innovations. Inc. are more imaginary than real. "L. that in his early years with the company.who allegedly acquired it from UNITED FOUNDRY. The records and evidence also do not support the petitioner's contention that Letters Patent No. who testified. the cup-shaped burner mouth and threaded hole on the side are shown to be similar to the utility model of private respondent.. they could not serve as anticipatory bars for the reason that they were undated. Sandiego issued Decision No. and Manila Gas Corporation. Petitioner presented two (2) other witnesses. "E. Inc. Private respondent. based on her latest sketches and specifications." "E-1. UNITED FOUNDRY was engaged in the manufacture of different kinds of gas stoves as well as burners based on sketches and specifications furnished by customers. On 7 July 1986 the Director of Patents Cesar C. presented only one witness. (b) in rendering judgment based on misapprehension of facts. Not one of the various pictorial representations of business clearly and convincingly showed that the devices presented by petitioner was identical or substantially identical with the utility model of the respondent. Petitioner claimed that this "Ransome" burner (Exh. if disclosed. would have resulted in the refusal by the Philippine Patent Office to issue the Letters Patent under inquiry. (c) in relying mainly on the testimony of private respondent's sole witness Rolando Madolaria. The dates when they were distributed to the public were not indicated and. Also presented by petitioner was a burner cup of an imported "Ransome" burner marked Exh "M" which was allegedly existing even before the patent application of private respondent. UM-4609 in the name of private respondent. that after a few months.. making such imaginary differences grounded entirely on speculation. that he was the General Supervisor of the UNITED FOUNDRY in the foundry. were useless prior art references. Petitioner also presented in evidence her own model of an LPG burner called "Ransome" burner marked Exh." "F" and "F-1" or the brochures of Manila Gas Corporation and Esso Standard Eastern. configuration and mechanism as that of the model covered by the Letters Patent issued to private respondent. Inc. She alleges that based on Exhs. 86-56 denying the petition for cancellation and holding that the evidence of petitioner was not able to establish convincingly that the patented utility model of private respondent was anticipated. No evidence whatsoever was presented by petitioner to show that the then applicant Melecia Madolaria withheld with intent to deceive material facts which. (d) in not cancelling Letters Patent No. The decision also stated that even assuming that the brochures depicted clearly each and every element of the patented gas burner device so that the prior art and patented device became identical although in truth they were not. her husband Ong Bun Tua and Fidel Francisco. UM-4609 was obtained by means of fraud and/or misrepresentation. surmises and conjectures. Rolando Madolaria testified that private respondent decided to file her application for utility model patent in December 1979. Francisco testified that he had been employed with the Manila Gas Corporation from 1930 to 1941 and from 1952 up to 1969 where he retired as supervisor and that Manila Gas Corporation imported "Ransome" burners way back in 1965 which were advertised through brochures to promote their sale. "L") had the same configuration and mechanism as that of the model which was patented in favor of private respondent Melecia Madolaria. on the other hand. that he was then instructed by private respondent to cast several experimental models based on revised sketches and specifications. Rolando Madolaria. Petitioner elevated the decision of the Director of Patents to the Court of Appeals which on 15 October 1993 affirmed the decision of the Director of Patents. this petition for review on certiorari alleging that the Court of Appeals erred (a) in relying on imaginary differences which in actuality did not exist between the model of private respondent covered by Letters Patent No.

an application for a patent therefor should be denied.gas passage when the cover is attached to the top of said cup-shaped mouth all of which are the same as those in the patented model. 4 Hence. Finally. 2 It has been repeatedly held that an invention must possess the essential elements of novelty. and for the patentee to be entitled to the protection the invention must be new to the world. the former by a patent for a design and the latter by a patent for a utility model. will hold it void and ineffective. The element of novelty is an essential requisite of the patentability of an invention or discovery. originality and precedence. may be protected by the author thereof. a utility model shall not be considered "new" if before the application for a patent it has been publicly known or publicly used in this country or has been described in a printed publication or publications circulated 51 . USA. the Philippine Patent Office found her invention novel and patentable. The burden of proving want of novelty is on him who avers it and the burden is a heavy one which is met only by clear and satisfactory proof which overcomes every reasonable doubt. but which is of practical utility by reason of its form. are undated cannot overcome the fact of their circulation before private respondent filed her application for utility model patent. fabricated by Ransome Torch and Burner Company of Oakland. 55 of the same law provides — Sec. Inc. assembly and disassembly of the models of petitioner and private respondent. it is argued that the testimony of private respondent's lone witness Rolando Madolaria should not have been given weight by the Patent Office and the Court of Appeals because it contained mere afterthoughts and pretensions. Petitioner also denies as substantial difference the short cylindrical tube of the burner mouth appearing in the brochures of the burners being sold by Manila Gas Corporation and the long cylindered tube of private respondent's model of the gas burner.. as amended. original and ornamental design for an article of manufacture and (b) any new model of implements or tools or of any industrial product or of part of the same.. The findings of the Patent Office and the Court of Appeals that the brochures of Manila Gas Corporation and Esso Standard Eastern. Inc. If a device or process has been known or used by others prior to its invention or discovery by the applicant. Inc. and also to the "Ransome" burner depicted in the old brochures of Manila Gas Corporation and Esso Standard Eastern. manufactured product or substance. configuration. which is the law on patents. and if the application has been granted. which does not possess the quality of invention. the court. 3 In issuing Letters Patent No. process or an improvement of any of the foregoing.. disappeared before 1979 and reappeared only during the Martial Law years as Petrophil Corporation. 55. Petitioner argues that the actual demonstration made during the hearing disclosed the similarities in form. construction or composition. in the same manner and subject to the same provisions and requirements as relate to patents for inventions insofar as they are applicable except as otherwise herein provided. Section 7 of RA No. Petitioner further contends that the utility model of private respondent is absolutely similar to the LPG burner being sold by petitioner in 1975 and 1976. operation and mechanism and parts between the utility model of private respondent and those depicted in the brochures. UM-4609 to Melecia Madolaria for an "LPG Burner" on 22 July 1981. We cannot sustain petitioner. Inventians patentable. form and mechanism as that of the private respondent's patented model. 165. expressly provides — Sec. California. especially when considered through actual physical examination. The issuance of such patent creates a presumption which yields only to clear and cogent evidence that the patentee was the original and first inventor. in a judicial proceeding in which the validity of the patent is drawn in question. Petitioner thus asks this Court to take judicial notice of the fact that Esso Standard Eastern. Sec. Petitioner also emphasizes that the brochures indicated the telephone number of Manila Gas Corporation as 5-79-81 which is a five (5) numbered telephone number existing before 1975 because telephones in Metro Manila started to have six (6) numbers only after that year. Any invention of a new and useful machine. shall be patentable. Petitioner faults the Court of Appeals for disregarding the testimonies of Ong Bun Tua and Fidel Francisco for their failure to produce documents on the alleged importation by Manila Gas Corporation of "Ransome" burners in 1965 which had the same configuration. 7. Design patents and patents for utility models. Further. — (a) Any new.

This is not the way to prove that Exh. "L" anticipates Letters Patent No. it is worthwhile to point out that petitioner also presented Exh. This Office.within the country. The dates when they were distributed to the public were not indicated and. "L" was really manufactured before the filing of the aforesaid application which matured into Letters Patent No. "L" would disclose that there is no indication of the time or date it was manufactured. as only the cup was presented so that the same could not be compared to the utility model (subject matter of this case) which consists of several other detachable parts in combination to form the complete LPG burner." petitioner claimed it to be her own model of LPG burner allegedly manufactured sometime in 1974 or 1975 and sold by her in the course of her business operation in the name of Besco Metal Manufacturing. the standard of evidence sufficient to overcome the presumption of legality of the issuance of UM-4609 to respondent Madolaria was not legally met by petitioner in her action for the cancellation of the patent. this Office finds the same as unreliable evidence to show anticipation. "C" and "D. "E" and "F" and on the alleged fact that Manila Gas Corporation was importing from the United States "Ransome" burners. UM-4609 through Exhs. only one item of the prior art may be used at a time. thus has no way of determining whether Exh. the model marked Exh. and more significantly. Neither did his wife." Another factor working against the Petitioner's claims is that an examination of Exh. they are useless prior art references. 5 As found by the Director of Patents. "K" does not show whether or not it was manufactured and/or cast before the application for the issuance of patent for the LPG burner was filed by Melecia Madolaria. For anticipation to occur. Not one of the various pictorial representations of burners clearly and convincingly show that the device presented therein is identical or substantially identical in construction with the aforesaid utility model. used or described within the country. With respect to Exh. "L" would show that it does not bear the word "Ransome" which is the burner referred to as the product being sold by the Petitioner. therefore. It is relevant and material to state that in determining whether novelty or newness is negatived by any prior art. although in truth they are not. Thus the Director of Patents explained his reasons for the denial of the petition to cancel private respondent's patent — Scrutiny of Exhs. "M" are missing. 218 USPQ 781. "D" and "E" readily reveals that the utility model (LPG Burner) is not anticipated. which burner was denominated as "Ransome" burner xxx xxx xxx But a careful examination of Exh. 6 52 . (Kalman v. subject matter of the cancellation proceeding. "M" which is the alleged burner cup of an imported "Ransome" burner. Kimberly Clark. It observed that there is no date indicated therein as to when it was manufactured and/or imported before the filing of the application for issuance of patent of the subject utility model. "L. He could not even present any importation papers relating to the alleged imported ransome burners. 789) Even assuming gratia arguendi that the aforesaid brochures do depict clearly on all fours each and every element of the patented gas burner device so that the prior art and the said patented device become identical. xxx xxx xxx It must likewise be pointed out that Ong Bun Tua testified on the brochures allegedly of Manila Gas and of Esso Gasul marked Exhs. But the same could not be given credence since he himself admitted during cross-examination that he has never been connected with Manila Gas Corporation. some component parts of Exh. UM-4609. At this juncture. the prior art must show that each element is found either expressly or described or under principles of inherency in a single prior art reference or that the claimed invention was probably known in a single prior art device or practice. or if it is substantially similar to any other utility model so known. Again. What is more. they cannot serve as anticipatory bars for the reason that they are undated. xxx xxx xxx Furthermore.

Whether evidence presented comes within the scope of prior art is a factual issue to be resolved by the Patent Office. WHEREFORE. The technical staff of the Philippine Patent Office composed of experts in their field has by the issuance of the patent in question accepted private respondent's model of gas burner as a discovery. She argues that contrary to the decision of the Patent Office and the Court of Appeals. 53 . fraud attended the acquisition of patent by private respondent. The rule is settled that the findings of fact of the Director of Patents. 9 Finally. 7 The validity of the patent issued by the Philippine Patent Office in favor of private respondent and the question over the inventiveness. Its jurisdiction is limited to reviewing and revising errors of law imputed to the lower court. Pursuant to the requirement of clear and convincing evidence to overthrow the presumption of validity of a patent. 10 There is question of fact when the doubt or difference arises as to the truth or falsehood of alleged facts or when the query necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses. petitioner would want this Court to review all over again the evidence she presented before the Patent Office.The above findings and conclusions of the Director of Patent were reiterated and affirmed by the Court of Appeals. it may be held insufficient. are conclusive on this Court when supported by substantial evidence. existence and relevance of specific surrounding circumstances. Petitioner has failed to show compelling grounds for a reversal of the findings and conclusions of the Patent Office and the Court of Appeals. The Supreme Court is not a trier of facts. especially when affirmed by the Court of Appeals. Costs against petitioner. The Decision of the Court of Appeals affirming that of the Philippine Patent Office is AFFIRMED. The alleged failure of the Director of Patents and the Court of Appeals to accord evidentiary weight to the testimonies of the witnesses of petitioner showing anticipation is not a justification to grant the petition. It has been held that the question on priority of invention is one of fact. the Petition is DENIED. The validity of patent is decided on the basis of factual inquiries. There is a presumption that the Office has correctly determined the patentability of the model 8 and such action must not be interfered with in the absence of competent evidence to the contrary. its findings of fact being conclusive and not reviewable by this Court. 11 Time and again we have held that it is not the function of the Supreme Court to analyze or weigh all over again the evidence and credibility of witnesses presented before the lower tribunal or office. their relation to each other and to the whole and the probabilities of the situation. the evidence she presented clearly proves that the patented model of private respondent is no longer new and. novelty and usefulness of the improved model of the LPG burner are matters which are better determined by the Patent Office. as what occurred in this case. Novelty and utility are likewise questions of fact. SO ORDERED. therefore. it has been held that oral testimony to show anticipation is open to suspicion and if uncorroborated by cogent evidence.