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Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 185917

June 1, 2011

FREDCO MANUFACTURING CORPORATION Petitioner,


vs.
PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD
UNIVERSITY), Respondents.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 24 October 2008
Decision2 and 8 January 2009 Resolution3 of the Court of Appeals in
CA-G.R. SP No. 103394.

11. Denmark

36. South Africa

12. Ecuador

37. Switzerland

13. Egypt

38. Singapore

14. Finland

39. Slovak Republic

15. France

40. Spain

16. Great Britain

41. Sweden

17. Germany

42. Taiwan

18. Greece

43. Thailand

19. Hong Kong

44. Turkey

20. India

45. United Arab Emirates

21. Indonesia

46. Uruguay

22. Ireland

47. United States of America

23. Israel

48. Venezuela

24. Italy

49. Zimbabwe

25. Japan

50. European Community5

The Antecedent Facts


On 10 August 2005, petitioner Fredco Manufacturing Corporation
(Fredco), a corporation organized and existing under the laws of the
Philippines, filed a Petition for Cancellation of Registration No. 56561
before the Bureau of Legal Affairs of the Intellectual Property Office
(IPO) against respondents President and Fellows of Harvard College
(Harvard University), a corporation organized and existing under the
laws of Massachusetts, United States of America. The case was
docketed as Inter Partes Case No. 14-2005-00094.
Fredco alleged that Registration No. 56561 was issued to Harvard
University on 25 November 1993 for the mark "Harvard Veritas Shield
Symbol" for decals, tote bags, serving trays, sweatshirts, t-shirts, hats
and flying discs under Classes 16, 18, 21, 25 and 28 of the Nice
International Classification of Goods and Services. Fredco alleged that
the mark "Harvard" for t-shirts, polo shirts, sandos, briefs, jackets and
slacks was first used in the Philippines on 2 January 1982 by New York
Garments Manufacturing & Export Co., Inc. (New York Garments), a
domestic corporation and Fredcos predecessor-in-interest. On 24
January 1985, New York Garments filed for trademark registration of
the mark "Harvard" for goods under Class 25. The application matured
into a registration and a Certificate of Registration was issued on 12
December 1988, with a 20-year term subject to renewal at the end of
the term. The registration was later assigned to Romeo Chuateco, a
member of the family that owned New York Garments.

The name and mark "Harvard" was adopted in 1639 as the name of
Harvard College6 of Cambridge, Massachusetts, U.S.A. The name and
mark "Harvard" was allegedly used in commerce as early as 1872.
Harvard University is over 350 years old and is a highly regarded
institution of higher learning in the United States and throughout the
world. Harvard University promotes, uses, and advertises its name
"Harvard" through various publications, services, and products in
foreign countries, including the Philippines. Harvard University further
alleged that the name and the mark have been rated as one of the
most famous brands in the world, valued between US $750,000,000
and US $1,000,000,000.
Harvard University alleged that in March 2002, it discovered, through
its international trademark watch program, Fredcos website
www.harvard-usa.com. The website advertises and promotes the
brand name "Harvard Jeans USA" without Harvard Universitys
consent. The websites main page shows an oblong logo bearing the
mark "Harvard Jeans USA," "Established 1936," and "Cambridge,
Massachusetts." On 20 April 2004, Harvard University filed an
administrative complaint against Fredco before the IPO for trademark
infringement and/or unfair competition with damages.lawphi1
Harvard University alleged that its valid and existing certificates of
trademark registration in the Philippines are:

Fredco alleged that it was formed and registered with the Securities
and Exchange Commission on 9 November 1995 and had since then
handled the manufacture, promotion and marketing of "Harvard"
clothing articles. Fredco alleged that at the time of issuance of
Registration No. 56561 to Harvard University, New York Garments had
already registered the mark "Harvard" for goods under Class 25.
Fredco alleged that the registration was cancelled on 30 July 1998
when New York Garments inadvertently failed to file an affidavit of
use/non-use on the fifth anniversary of the registration but the right to
the mark "Harvard" remained with its predecessor New York Garments
and now with Fredco.

1. Trademark Registration No. 56561 issued on 25


November 1993 for "Harvard Veritas Shield Design" for
goods and services in Classes 16, 18, 21, 25 and 28
(decals, tote bags, serving trays, sweatshirts, t-shirts, hats
and flying discs) of the Nice International Classification of
Goods and Services;

Harvard University, on the other hand, alleged that it is the lawful


owner of the name and mark "Harvard" in numerous countries
worldwide, including the Philippines. Among the countries where
Harvard University has registered its name and mark "Harvard" are:

3. Trademark Registration No. 66677 issued on 8 December


1998 for "Harvard Graphics" for goods in Class 9. Harvard
University further alleged that it filed the requisite affidavits of
use for the mark "Harvard Veritas Shield Symbol" with the
IPO.

1. Argentina
2. Benelux

26. South Korea


27. Malaysia

3. Brazil

28. Mexico

4. Canada

29. New Zealand

5. Chile

30. Norway

6. China P.R.

31. Peru

7. Colombia

32. Philippines

8. Costa Rica

33. Poland

9. Cyprus

34. Portugal

10. Czech Republic

35. Russia

2. Trademark Registration No. 57526 issued on 24 March


1994 for "Harvard Veritas Shield Symbol" for services in
Class 41; Trademark Registration No. 56539 issued on 25
November 1998 for "Harvard" for services in Class 41; and

Further, on 7 May 2003 Harvard University filed Trademark Application


No. 4-2003-04090 for "Harvard Medical International & Shield Design"
for services in Classes 41 and 44. In 1989, Harvard University
established the Harvard Trademark Licensing Program, operated by
the Office for Technology and Trademark Licensing, to oversee and
manage the worldwide licensing of the "Harvard" name and
trademarks for various goods and services. Harvard University stated
that it never authorized or licensed any person to use its name and
mark "Harvard" in connection with any goods or services in the
Philippines.
In a Decision7 dated 22 December 2006, Director Estrellita BeltranAbelardo of the Bureau of Legal Affairs, IPO cancelled Harvard
Universitys registration of the mark "Harvard" under Class 25, as
follows:

WHEREFORE, premises considered, the Petition for Cancellation is


hereby GRANTED. Consequently, Trademark Registration Number
56561 for the trademark "HARVARD VE RI TAS SHIELD SYMBOL"
issued on November 25, 1993 to PRESIDENT AND FELLOWS OF
HARVARD COLLEGE (HARVARD UNIVERSITY) should be
CANCELLED only with respect to goods falling under Class 25. On the
other hand, considering that the goods of Respondent-Registrant
falling under Classes 16, 18, 21 and 28 are not confusingly similar with
the Petitioners goods, the Respondent-Registrant has acquired vested
right over the same and therefore, should not be cancelled.
Let the filewrapper of the Trademark Registration No. 56561 issued on
November 25, 1993 for the trademark "HARVARD VE RI TAS SHIELD
SYMBOL", subject matter of this case together with a copy of this
Decision be forwarded to the Bureau of Trademarks (BOT) for
appropriate action.

the IPO in Appeal No. 14-07-09 Inter Partes Case No. 14-2005-00094
is hereby AFFIRMED.
SO ORDERED.13
Fredco filed a motion for reconsideration.
In its Resolution promulgated on 8 January 2009, the Court of Appeals
denied the motion for lack of merit.
Hence, this petition before the Court.
The Issue

SO ORDERED.8

The issue in this case is whether the Court of Appeals committed a


reversible error in affirming the decision of the Office of the Director
General of the IPO.

Harvard University filed an appeal before the Office of the Director


General of the IPO. In a Decision9 dated 21 April 2008, the Office of the
Director General, IPO reversed the decision of the Bureau of Legal
Affairs, IPO.

The Ruling of this Court

The Director General ruled that more than the use of the trademark in
the Philippines, the applicant must be the owner of the mark sought to
be registered. The Director General ruled that the right to register a
trademark is based on ownership and when the applicant is not the
owner, he has no right to register the mark. The Director General noted
that the mark covered by Harvard Universitys Registration No. 56561
is not only the word "Harvard" but also the logo, emblem or symbol of
Harvard University. The Director General ruled that Fredco failed to
explain how its predecessor New York Garments came up with the
mark "Harvard." In addition, there was no evidence that Fredco or New
York Garments was licensed or authorized by Harvard University to
use its name in commerce or for any other use.

There is no dispute that the mark "Harvard" used by Fredco is the


same as the mark "Harvard" in the "Harvard Veritas Shield Symbol" of
Harvard University. It is also not disputed that Harvard University was
named Harvard College in 1639 and that then, as now, Harvard
University is located in Cambridge, Massachusetts, U.S.A. It is also
unrefuted that Harvard University has been using the mark "Harvard"
in commerce since 1872. It is also established that Harvard University
has been using the marks "Harvard" and "Harvard Veritas Shield
Symbol" for Class 25 goods in the United States since 1953. Further,
there is no dispute that Harvard University has registered the name
and mark "Harvard" in at least 50 countries.

The dispositive portion of the decision of the Office of the Director


General, IPO reads:
WHEREFORE, premises considered, the instant appeal is GRANTED.
The appealed decision is hereby REVERSED and SET ASIDE. Let a
copy of this Decision as well as the trademark application and records
be furnished and returned to the Director of Bureau of Legal Affairs for
appropriate action. Further, let also the Directors of the Bureau of
Trademarks and the Administrative, Financial and Human Resources
Development Services Bureau, and the library of the Documentation,
Information and Technology Transfer Bureau be furnished a copy of
this Decision for information, guidance, and records purposes.
SO ORDERED.10
Fredco filed a petition for review before the Court of Appeals assailing
the decision of the Director General.
The Decision of the Court of Appeals
In its assailed decision, the Court of Appeals affirmed the decision of
the Office of the Director General of the IPO.
The Court of Appeals adopted the findings of the Office of the Director
General and ruled that the latter correctly set aside the cancellation by
the Director of the Bureau of Legal Affairs of Harvard Universitys
trademark registration under Class 25. The Court of Appeals ruled that
Harvard University was able to substantiate that it appropriated and
used the marks "Harvard" and "Harvard Veritas Shield Symbol" in
Class 25 way ahead of Fredco and its predecessor New York
Garments. The Court of Appeals also ruled that the records failed to
disclose any explanation for Fredcos use of the name and mark
"Harvard" and the words "USA," "Established 1936," and "Cambridge,
Massachusetts" within an oblong device, "US Legend" and "Europes
No. 1 Brand." Citing Shangri-La International Hotel Management, Ltd.
v. Developers Group of Companies, Inc.,11 the Court of Appeals ruled:
One who has imitated the trademark of another cannot bring an action
for infringement, particularly against the true owner of the mark,
because he would be coming to court with unclean hands. Priority is of
no avail to the bad faith plaintiff. Good faith is required in order to
ensure that a second user may not merely take advantage of the
goodwill established by the true owner.12
The dispositive portion of the decision of the Court of Appeals reads:
WHEREFORE, premises considered, the petition for review is
DENIED. The Decision dated April 21, 2008 of the Director General of

The petition has no merit.

On the other hand, Fredcos predecessor-in-interest, New York


Garments, started using the mark "Harvard" in the Philippines only in
1982. New York Garments filed an application with the Philippine
Patent Office in 1985 to register the mark "Harvard," which application
was approved in 1988. Fredco insists that the date of actual use in the
Philippines should prevail on the issue of who has the better right to
register the marks.
Under Section 2 of Republic Act No. 166, 14 as amended (R.A. No.
166), before a trademark can be registered, it must have been actually
used in commerce for not less than two months in the Philippines prior
to the filing of an application for its registration. While Harvard
University had actual prior use of its marks abroad for a long time, it
did not have actual prior use in the Philippines of the mark "Harvard
Veritas Shield Symbol" before its application for registration of the mark
"Harvard" with the then Philippine Patents Office. However, Harvard
Universitys registration of the name "Harvard" is based on home
registration which is allowed under Section 37 of R.A. No. 166.15 As
pointed out by Harvard University in its Comment:
Although Section 2 of the Trademark law (R.A. 166) requires for the
registration of trademark that the applicant thereof must prove that the
same has been actually in use in commerce or services for not less
than two (2) months in the Philippines before the application for
registration is filed, where the trademark sought to be registered has
already been registered in a foreign country that is a member of the
Paris Convention, the requirement of proof of use in the commerce in
the Philippines for the said period is not necessary. An applicant for
registration based on home certificate of registration need not even
have used the mark or trade name in this country.16
Indeed, in its Petition for Cancellation of Registration No. 56561,
Fredco alleged that Harvard Universitys registration "is based on
home registration for the mark Harvard Veritas Shield for Class 25." 17
In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No.
8293),18 "[m]arks registered under Republic Act No. 166 shall remain in
force but shall be deemed to have been granted under this Act x x
x," which does not require actual prior use of the mark in the
Philippines. Since the mark "Harvard Veritas Shield Symbol" is now
deemed granted under R.A. No. 8293, any alleged defect arising from
the absence of actual prior use in the Philippines has been cured by
Section 239.2.19 In addition, Fredcos registration was already
cancelled on 30 July 1998 when it failed to file the required affidavit of
use/non-use for the fifth anniversary of the marks registration. Hence,
at the time of Fredcos filing of the Petition for Cancellation before the
Bureau of Legal Affairs of the IPO, Fredco was no longer the registrant
or presumptive owner of the mark "Harvard."
There are two compelling reasons why Fredcos petition must fail.

First, Fredcos registration of the mark "Harvard" and its identification


of origin as "Cambridge, Massachusetts" falsely suggest that Fredco or
its goods are connected with Harvard University, which uses the same
mark "Harvard" and is also located in Cambridge, Massachusetts. This
can easily be gleaned from the following oblong logo of Fredco that it
attaches to its clothing line:
Fredcos registration of the mark "Harvard" should not have been
allowed because Section 4(a) of R.A. No. 166 prohibits the registration
of a mark "which may disparage or falsely suggest a connection
with persons, living or dead, institutions, beliefs x x x." Section 4(a) of
R.A. No. 166 provides:
Section 4. Registration of trade-marks, trade-names and servicemarks on the principal register. There is hereby established a
register of trade-mark, trade-names and service-marks which shall be
known as the principal register. The owner of a trade-mark, a tradename or service-mark used to distinguish his goods, business or
services from the goods, business or services of others shall have the
right to register the same on the principal register, unless it:

Thus, this Court has ruled that the Philippines is obligated to assure
nationals of countries of the Paris Convention that they are afforded an
effective protection against violation of their intellectual property rights
in the Philippines in the same way that their own countries are
obligated to accord similar protection to Philippine nationals.23
Article 8 of the Paris Convention has been incorporated in Section 37
of R.A. No. 166, as follows:
Section 37. Rights of foreign registrants. Persons who are nationals
of, domiciled in, or have a bona fide or effective business or
commercial establishment in any foreign country, which is a party to
any international convention or treaty relating to marks or trade-names,
or the repression of unfair competition to which the Philippines may be
a party, shall be entitled to the benefits and subject to the provisions of
this Act to the extent and under the conditions essential to give effect
to any such convention and treaties so long as the Philippines shall
continue to be a party thereto, except as provided in the following
paragraphs of this section.
xxxx

(a) Consists of or comprises immoral, deceptive or scandalous


manner, or matter which may disparage or falsely suggest a
connection with persons, living or dead, institutions, beliefs, or
national symbols, or bring them into contempt or disrepute;
(b) x x x (emphasis supplied)
Fredcos use of the mark "Harvard," coupled with its claimed origin in
Cambridge, Massachusetts, obviously suggests a false connection
with Harvard University. On this ground alone, Fredcos registration of
the mark "Harvard" should have been disallowed.
Indisputably, Fredco does not have any affiliation or connection with
Harvard University, or even with Cambridge, Massachusetts. Fredco or
its predecessor New York Garments was not established in 1936, or in
the U.S.A. as indicated by Fredco in its oblong logo. Fredco offered no
explanation to the Court of Appeals or to the IPO why it used the mark
"Harvard" on its oblong logo with the words "Cambridge,
Massachusetts," "Established in 1936," and "USA." Fredco now claims
before this Court that it used these words "to evoke a lifestyle or
suggest a desirable aura of petitioners clothing lines." Fredcos
belated justification merely confirms that it sought to connect or
associate its products with Harvard University, riding on the prestige
and popularity of Harvard University, and thus appropriating part of
Harvard Universitys goodwill without the latters consent.
Section 4(a) of R.A. No. 166 is identical to Section 2(a) of the Lanham
Act,20 the trademark law of the United States. These provisions are
intended to protect the right of publicity of famous individuals and
institutions from commercial exploitation of their goodwill by others. 21
What Fredco has done in using the mark "Harvard" and the words
"Cambridge, Massachusetts," "USA" to evoke a "desirable aura" to its
products is precisely to exploit commercially the goodwill of Harvard
University without the latters consent. This is a clear violation of
Section 4(a) of R.A. No. 166. Under Section 17(c) 22 of R.A. No. 166,
such violation is a ground for cancellation of Fredcos registration of
the mark "Harvard" because the registration was obtained in violation
of Section 4 of R.A. No. 166.
Second, the Philippines and the United States of America are both
signatories to the Paris Convention for the Protection of Industrial
Property (Paris Convention). The Philippines became a signatory to
the Paris Convention on 27 September 1965. Articles 6bis and 8 of the
Paris Convention state:

Trade-names of persons described in the first paragraph of this


section shall be protected without the obligation of filing or
registration whether or not they form parts of marks.24
x x x x (Emphasis supplied)
Thus, under Philippine law, a trade name of a national of a State that is
a party to the Paris Convention, whether or not the trade name forms
part of a trademark, is protected "without the obligation of filing or
registration."
"Harvard" is the trade name of the world famous Harvard University,
and it is also a trademark of Harvard University. Under Article 8 of the
Paris Convention, as well as Section 37 of R.A. No. 166, Harvard
University is entitled to protection in the Philippines of its trade name
"Harvard" even without registration of such trade name in the
Philippines. This means that no educational entity in the Philippines
can use the trade name "Harvard" without the consent of Harvard
University. Likewise, no entity in the Philippines can claim, expressly or
impliedly through the use of the name and mark "Harvard," that its
products or services are authorized, approved, or licensed by, or
sourced from, Harvard University without the latters consent.
Article 6bis of the Paris Convention has been administratively
implemented in the Philippines through two directives of the then
Ministry (now Department) of Trade, which directives were upheld by
this Court in several cases.25 On 20 November 1980, then Minister of
Trade Secretary Luis Villafuerte issued a Memorandum directing the
Director of Patents to reject, pursuant to the Paris Convention, all
pending applications for Philippine registration of signature and other
world-famous trademarks by applicants other than their original
owners.26 The Memorandum states:
Pursuant to the Paris Convention for the Protection of Industrial
Property to which the Philippines is a signatory, you are hereby
directed to reject all pending applications for Philippine registration of
signature and other world-famous trademarks by applicants other than
its original owners or users.
The conflicting claims over internationally known trademarks involve
such name brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila,
Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein,
Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.

ARTICLE 6bis
(i) The countries of the Union undertake either administratively if their
legislation so permits, or at the request of an interested party, to refuse
or to cancel the registration and to prohibit the use of a trademark
which constitutes a reproduction, imitation or translation, liable to
create confusion or a mark considered by the competent authority of
the country as being already the mark of a person entitled to the
benefits of the present Convention and used for identical or
similar goods. These provisions shall also apply when the
essential part of the mark constitutes a reproduction of any such
well-known mark or an imitation liable to create confusion
therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the Union
without the obligation of filing or registration, whether or not it
forms part of a trademark. (Emphasis supplied)

It is further directed that, in cases where warranted, Philippine


registrants of such trademarks should be asked to surrender their
certificates of registration, if any, to avoid suits for damages and other
legal action by the trademarks foreign or local owners or original
users.
You are also required to submit to the undersigned a progress report
on the matter.
For immediate compliance.27
In a Memorandum dated 25 October 1983, then Minister of Trade and
Industry Roberto Ongpin affirmed the earlier Memorandum of Minister
Villafuerte. Minister Ongpin directed the Director of Patents to
implement measures necessary to comply with the Philippines
obligations under the Paris Convention, thus:
1. Whether the trademark under consideration is well-known
in the Philippines or is a mark already belonging to a person
entitled to the benefits of the CONVENTION, this should be

established, pursuant to Philippine Patent Office procedures


in inter partes and ex parte cases, according to any of the
following criteria or any combination thereof:
(a) a declaration by the Minister of Trade and
Industry that the trademark being considered is
already well-known in the Philippines such that
permission for its use by other than its original
owner will constitute a reproduction, imitation,
translation or other infringement;
(b) that the trademark is used in commerce
internationally, supported by proof that goods
bearing the trademark are sold on an international
scale, advertisements, the establishment of
factories, sales offices, distributorships, and the
like, in different countries, including volume or
other measure of international trade and
commerce;
(c) that the trademark is duly registered in the
industrial property office(s) of another country
or countries, taking into consideration the
dates of such registration;
(d) that the trademark has been long established
and obtained goodwill and general international
consumer recognition as belonging to one owner
or source;
(e) that the trademark actually belongs to a party
claiming ownership and has the right to
registration under the provisions of the aforestated
PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM,
shall include tradenames, service marks, logos, signs,
emblems, insignia or other similar devices used for
identification and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications
for, or cancel the registration of, trademarks which constitute
a reproduction, translation or imitation of a trademark owned
by a person, natural or corporate, who is a citizen of a
country signatory to the PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY.

has been filed in or in respect of, any jurisdiction other than


the Member State; or
(iii) that the mark is well known by the public at large in the
Member State.34 (Italics in the original decision; boldface
supplied)
Indeed, Section 123.1(e) of R.A. No. 8293 now categorically states that
"a mark which is considered by the competent authority of the
Philippines to be well-known internationally and in the Philippines,
whether or not it is registered here," cannot be registered by another
in the Philippines. Section 123.1(e) does not require that the wellknown mark be used in commerce in the Philippines but only that it be
well-known in the Philippines. Moreover, Rule 102 of the Rules and
Regulations on Trademarks, Service Marks, Trade Names and Marked
or Stamped Containers, which implement R.A. No. 8293, provides:
Rule 102. Criteria for determining whether a mark is well-known. In
determining whether a mark is well-known, the following criteria or any
combination thereof may be taken into account:
(a) the duration, extent and geographical area of any use of
the mark, in particular, the duration, extent and geographical
area of any promotion of the mark, including advertising or
publicity and the presentation, at fairs or exhibitions, of the
goods and/or services to which the mark applies;
(b) the market share, in the Philippines and in other
countries, of the goods and/or services to which the mark
applies;
(c) the degree of the inherent or acquired distinction of the
mark;
(d) the quality-image or reputation acquired by the mark;
(e) the extent to which the mark has been registered in the
world;
(f) the exclusivity of registration attained by the mark in the
world;
(g) the extent to which the mark has been used in the world;
(h) the exclusivity of use attained by the mark in the world;

x x x x28 (Emphasis supplied)


(i) the commercial value attributed to the mark in the world;
In Mirpuri, the Court ruled that the essential requirement under Article
6bis of the Paris Convention is that the trademark to be protected must
be "well-known" in the country where protection is sought. 29 The Court
declared that the power to determine whether a trademark is wellknown lies in the competent authority of the country of registration or
use.30 The Court then stated that the competent authority would either
be the registering authority if it has the power to decide this, or the
courts of the country in question if the issue comes before the courts.31
To be protected under the two directives of the Ministry of Trade, an
internationally well-known mark need not be registered or used in the
Philippines.32 All that is required is that the mark is well-known
internationally and in the Philippines for identical or similar goods,
whether or not the mark is registered or used in the Philippines. The
Court ruled in Sehwani, Incorporated v. In-N-Out Burger, Inc.:33
The fact that respondents marks are neither registered nor used
in the Philippines is of no moment. The scope of protection initially
afforded by Article 6bis of the Paris Convention has been expanded in
the 1999 Joint Recommendation Concerning Provisions on the
Protection of Well-Known Marks, wherein the World Intellectual
Property Organization (WIPO) General Assembly and the Paris Union
agreed to a nonbinding recommendation that a well-known mark
should be protected in a country even if the mark is neither
registered nor used in that country. Part I, Article 2(3) thereof
provides:
(3) [Factors Which Shall Not Be Required] (a) A Member State shall
not require, as a condition for determining whether a mark is a wellknown mark:
(i) that the mark has been used in, or that the mark has been
registered or that an application for registration of the mark
has been filed in or in respect of, the Member State:
(ii) that the mark is well known in, or that the mark has been
registered or that an application for registration of the mark

(j) the record of successful protection of the rights in the


mark;
(k) the outcome of litigations dealing with the issue of
whether the mark is a well-known mark; and
(l) the presence or absence of identical or similar marks
validly registered for or used on identical or similar goods or
services and owned by persons other than the person
claiming that his mark is a well-known mark. (Emphasis
supplied)
Since "any combination" of the foregoing criteria is sufficient to
determine that a mark is well-known, it is clearly not necessary that the
mark be used in commerce in the Philippines. Thus, while under the
territoriality principle a mark must be used in commerce in the
Philippines to be entitled to protection, internationally well-known
marks are the exceptions to this rule.
In the assailed Decision of the Office of the Director General dated 21
April 2008, the Director General found that:
Traced to its roots or origin, HARVARD is not an ordinary word. It
refers to no other than Harvard University, a recognized and respected
institution of higher learning located in Cambridge, Massachusetts,
U.S.A. Initially referred to simply as "the new college," the institution
was named "Harvard College" on 13 March 1639, after its first principal
donor, a young clergyman named John Harvard. A graduate of
Emmanuel College, Cambridge in England, John Harvard bequeathed
about four hundred books in his will to form the basis of the college
library collection, along with half his personal wealth worth several
hundred pounds. The earliest known official reference to Harvard as a
"university" rather than "college" occurred in the new Massachusetts
Constitution of 1780.

Records also show that the first use of the name HARVARD was in
1638 for educational services, policy courses of instructions and
training at the university level. It has a Charter. Its first commercial use
of the name or mark HARVARD for Class 25 was on 31 December
1953 covered by UPTON Reg. No. 2,119,339 and 2,101,295.
Assuming in arguendo, that the Appellate may have used the mark
HARVARD in the Philippines ahead of the Appellant, it still cannot be
denied that the Appellants use thereof was decades, even centuries,
ahead of the Appellees. More importantly, the name HARVARD was
the name of a person whose deeds were considered to be a
cornerstone of the university. The Appellants logos, emblems or
symbols are owned by Harvard University. The name HARVARD and
the logos, emblems or symbols are endemic and cannot be separated
from the institution.35
Finally, in its assailed Decision, the Court of Appeals ruled:
Records show that Harvard University is the oldest and one of the
foremost educational institutions in the United States, it being
established in 1636. It is located primarily in Cambridge,
Massachusetts and was named after John Harvard, a puritan minister
who left to the college his books and half of his estate.
The mark "Harvard College" was first used in commerce in the United
States in 1638 for educational services, specifically, providing courses
of instruction and training at the university level (Class 41). Its
application for registration with the United States Patent and
Trademark Office was filed on September 20, 2000 and it was
registered on October 16, 2001. The marks "Harvard" and "Harvard Ve
ri tas Shield Symbol" were first used in commerce in the the United
States on December 31, 1953 for athletic uniforms, boxer shorts,
briefs, caps, coats, leather coats, sports coats, gym shorts, infant
jackets, leather jackets, night shirts, shirts, socks, sweat pants,
sweatshirts, sweaters and underwear (Class 25). The applications for
registration with the USPTO were filed on September 9, 1996, the
mark "Harvard" was registered on December 9, 1997 and the mark
"Harvard Ve ri tas Shield Symbol" was registered on September 30,
1997.36
We also note that in a Decision37 dated 18 December 2008 involving a
separate case between Harvard University and Streetward
International, Inc.,38 the Bureau of Legal Affairs of the IPO ruled that
the mark "Harvard" is a "well-known mark." This Decision, which cites
among others the numerous trademark registrations of Harvard
University in various countries, has become final and executory.
There is no question then, and this Court so declares, that "Harvard" is
a well-known name and mark not only in the United States but also
internationally, including the Philippines. The mark "Harvard" is rated
as one of the most famous marks in the world. It has been registered in
at least 50 countries. It has been used and promoted extensively in
numerous publications worldwide. It has established a considerable
goodwill worldwide since the founding of Harvard University more than
350 years ago. It is easily recognizable as the trade name and mark of
Harvard University of Cambridge, Massachusetts, U.S.A.,
internationally known as one of the leading educational institutions in
the world. As such, even before Harvard University applied for
registration of the mark "Harvard" in the Philippines, the mark was
already protected under Article 6bis and Article 8 of the Paris
Convention. Again, even without applying the Paris Convention,
Harvard University can invoke Section 4(a) of R.A. No. 166 which
prohibits the registration of a mark "which may disparage or falsely
suggest a connection with persons, living or dead, institutions,
beliefs x x x."
WHEREFORE, we DENY the petition. We AFFIRM the 24 October
2008 Decision and 8 January 2009 Resolution of the Court of Appeals
in CA-G.R. SP No. 103394.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice

Aggrieved, petitioner filed a petition for certiorari 7 with the Court of


Appeals (CA) assailing the RTC Order. On November 17, 2003, the CA
issued a Decision8 affirming the ruling of the RTC.
Republic of the Philippines
SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 164321

March 23, 2011

SKECHERS, U.S.A., INC., Petitioner,


vs.
INTER PACIFIC INDUSTRIAL TRADING CORP., and/or INTER
PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO.,
LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG
FASHION SHOES TRADING and/or TAN TUAN HONG and/or
VIOLETA T. MAGAYAGA and/or JEFFREY R. MORALES and/or any
of its other proprietor/s, directors, officers, employees and/or
occupants of its premises located at S-7, Ed & Joe's Commercial
Arcade, No. 153 Quirino Avenue, Paraaque City, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
TRENDWORKS INTERNATIONAL CORPORATION, PetitionerIntervenor,
vs.
INTER PACIFIC INDUSTRIAL TRADING CORP. and/or INTER
PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO.,
LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG
FASHION SHOES TRADING and/or TAN TUAN HONG and/or
VIOLETA T. MAGAYAGA and/or JEFFREY R. MORALES and/or any
of its other proprietor/s, directors, officers, employees and/or
occupants of its premises located at S-7, Ed & Joe's Commercial
Arcade, No. 153 Quirino Avenue, Paraaque City, Respondents.
RESOLUTION
PERALTA, J.:
For resolution are the twin Motions for Reconsideration 1 filed by
petitioner and petitioner-intervenor from the Decision rendered in favor
of respondents, dated November 30, 2006.
At the outset, a brief narration of the factual and procedural
antecedents that transpired and led to the filing of the motions is in
order.
The present controversy arose when petitioner filed with Branch 24 of
the Regional Trial Court (RTC) of Manila an application for the
issuance of search warrants against an outlet and warehouse operated
by respondents for infringement of trademark under Section 155, in
relation to Section 170 of Republic Act No. 8293, otherwise known as
the Intellectual Property Code of the Philippines. 2 In the course of its
business, petitioner has registered the trademark "SKECHERS" 3 and
the trademark "S" (within an oval design) 4 with the Intellectual Property
Office (IPO).

Subsequently, petitioner filed the present petition9 before this Court


which puts forth the following assignment of errors:
A. WHETHER THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN CONSIDERING
MATTERS OF DEFENSE IN A CRIMINAL TRIAL FOR
TRADEMARK INFRINGEMENT IN PASSING UPON THE
VALIDITY OF THE SEARCH WARRANT WHEN IT SHOULD
HAVE LIMITED ITSELF TO A DETERMINATION OF
WHETHER THE TRIAL COURT COMMITTED GRAVE
ABUSE OF DISCRETION IN QUASHING THE SEARCH
WARRANTS.
B. WHETHER THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN FINDING THAT
RESPONDENTS ARE NOT GUILTY OF TRADEMARK
INFRINGEMENT IN THE CASE WHERE THE SOLE
TRIABLE ISSUE IS THE EXISTENCE OF PROBABLE
CAUSE TO ISSUE A SEARCH WARRANT.10
In the meantime, petitioner-intervenor filed a Petition-in-Intervention 11
with this Court claiming to be the sole licensed distributor of Skechers
products here in the Philippines.
On November 30, 2006, this Court rendered a Decision 12 dismissing
the petition.
Both petitioner and petitioner-intervenor filed separate motions for
reconsideration.
In petitioners motion for reconsideration, petitioner moved for a
reconsideration of the earlier decision on the following grounds:
(a) THIS HONORABLE COURT MUST RE-EXAMINE THE
FACTS OF THIS CASE DUE TO THE SIGNIFICANCE AND
REPERCUSSIONS OF ITS DECISION.
(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS
WITH THE UNAUTHORIZED REPRODUCTIONS OF THE
"S" TRADEMARK OWNED BY PETITIONER WERE
INTENDED FOR DISTRIBUTION IN THE PHILIPPINE
MARKET TO THE DETRIMENT OF PETITIONER
RETURNING THE GOODS TO RESPONDENTS WILL
ADVERSELY AFFECT THE GOODWILL AND REPUTATION
OF PETITIONER.
(c) THE SEARCH WARRANT COURT AND THE COURT OF
APPEALS BOTH ACTED WITH GRAVE ABUSE OF
DISCRETION.
(d) THE SEARCH WARRANT COURT DID NOT
PROPERLY RE-EVALUATE THE EVIDENCE PRESENTED
DURING THE SEARCH WARRANT APPLICATION
PROCEEDINGS.

Two search warrants5 were issued by the RTC and were served on the
premises of respondents. As a result of the raid, more than 6,000 pairs
of shoes bearing the "S" logo were seized.

(e) THE SOLID TRIANGLE CASE IS NOT APPLICABLE IN


THIS CASE, AS IT IS BASED ON A DIFFERENT FACTUAL
MILIEU. PRELIMINARY FINDING OF GUILT (OR ABSENCE
THEREOF) MADE BY THE SEARCH WARRANT COURT
AND THE COURT OF APPEALS WAS IMPROPER.

Later, respondents moved to quash the search warrants, arguing that


there was no confusing similarity between petitioners "Skechers"
rubber shoes and its "Strong" rubber shoes.

(f) THE SEARCH WARRANT COURT OVERSTEPPED ITS


DISCRETION. THE LAW IS CLEAR. THE DOMINANCY
TEST SHOULD BE USED.

On November 7, 2002, the RTC issued an Order 6 quashing the search


warrants and directing the NBI to return the seized goods. The RTC
agreed with respondents view that Skechers rubber shoes and Strong
rubber shoes have glaring differences such that an ordinary prudent
purchaser would not likely be misled or confused in purchasing the
wrong article.

(g) THE COURT OF APPEALS COMMITTED ERRORS OF


JURISDICTION.13
On the other hand, petitioner-intervenors motion for reconsideration
raises the following errors for this Courts consideration, to wit:

(a) THE COURT OF APPEALS AND THE SEARCH


WARRANT COURT ACTED CONTRARY TO LAW AND
JURISPRUDENCE IN ADOPTING THE ALREADYREJECTED HOLISTIC TEST IN DETERMINING THE
ISSUE OF CONFUSING SIMILARITY;
(b) THE COURT OF APPEALS AND THE SEARCH
WARRANT COURT ACTED CONTRARY TO LAW IN
HOLDING THAT THERE IS NO PROBABLE CAUSE FOR
TRADEMARK INFRINGEMENT; AND
(c) THE COURT OF APPEALS SANCTIONED THE TRIAL
COURTS DEPARTURE FROM THE USUAL AND
ACCEPTED COURSE OF JUDICIAL PROCEEDINGS
WHEN IT UPHELD THE QUASHAL OF THE SEARCH
WARRANT ON THE BASIS SOLELY OF A FINDING THAT
THERE IS NO CONFUSING SIMILARITY.14
A perusal of the motions submitted by petitioner and petitionerintervenor would show that the primary issue posed by them dwells on
the issue of whether or not respondent is guilty of trademark
infringement.
After a thorough review of the arguments raised herein, this Court
reconsiders its earlier decision.
The basic law on trademark, infringement, and unfair competition is
Republic Act (R.A.) No. 8293. Specifically, Section 155 of R.A. No.
8293 states:
Remedies; Infringement. Any person who shall, without the consent
of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale,
distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or
services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered
mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used in commerce upon or in connection with the sale, offering for
sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive, shall be liable in a civil action for
infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the
acts stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services using
the infringing material.15
The essential element of infringement under R.A. No. 8293 is that the
infringing mark is likely to cause confusion. In determining similarity
and likelihood of confusion, jurisprudence has developed tests the
Dominancy Test and the Holistic or Totality Test. The Dominancy Test
focuses on the similarity of the prevalent or dominant features of the
competing trademarks that might cause confusion, mistake, and
deception in the mind of the purchasing public. Duplication or imitation
is not necessary; neither is it required that the mark sought to be
registered suggests an effort to imitate. Given more consideration are
the aural and visual impressions created by the marks on the buyers of
goods, giving little weight to factors like prices, quality, sales outlets,
and market segments.16
In contrast, the Holistic or Totality Test necessitates a consideration of
the entirety of the marks as applied to the products, including the
labels and packaging, in determining confusing similarity. The
discerning eye of the observer must focus not only on the predominant
words, but also on the other features appearing on both labels so that
the observer may draw conclusion on whether one is confusingly
similar to the other.17
Relative to the question on confusion of marks and trade names,
jurisprudence has noted two (2) types of confusion, viz.: (1) confusion

of goods (product confusion), where the ordinarily prudent purchaser


would be induced to purchase one product in the belief that he was
purchasing the other; and (2) confusion of business (source or origin
confusion), where, although the goods of the parties are different, the
product, the mark of which registration is applied for by one party, is
such as might reasonably be assumed to originate with the registrant
of an earlier product, and the public would then be deceived either into
that belief or into the belief that there is some connection between the
two parties, though inexistent.18
Applying the Dominancy Test to the case at bar, this Court finds that
the use of the stylized "S" by respondent in its Strong rubber shoes
infringes on the mark already registered by petitioner with the IPO.
While it is undisputed that petitioners stylized "S" is within an oval
design, to this Courts mind, the dominant feature of the trademark is
the stylized "S," as it is precisely the stylized "S" which catches the eye
of the purchaser. Thus, even if respondent did not use an oval design,
the mere fact that it used the same stylized "S", the same being the
dominant feature of petitioners trademark, already constitutes
infringement under the Dominancy Test.
This Court cannot agree with the observation of the CA that the use of
the letter "S" could hardly be considered as highly identifiable to the
products of petitioner alone. The CA even supported its conclusion by
stating that the letter "S" has been used in so many existing
trademarks, the most popular of which is the trademark "S" enclosed
by an inverted triangle, which the CA says is identifiable to Superman.
Such reasoning, however, misses the entire point, which is that
respondent had used a stylized "S," which is the same stylized "S"
which petitioner has a registered trademark for. The letter "S" used in
the Superman logo, on the other hand, has a block-like tip on the
upper portion and a round elongated tip on the lower portion.
Accordingly, the comparison made by the CA of the letter "S" used in
the Superman trademark with petitioners stylized "S" is not
appropriate to the case at bar.
Furthermore, respondent did not simply use the letter "S," but it
appears to this Court that based on the font and the size of the
lettering, the stylized "S" utilized by respondent is the very same
stylized "S" used by petitioner; a stylized "S" which is unique and
distinguishes petitioners trademark. Indubitably, the likelihood of
confusion is present as purchasers will associate the respondents use
of the stylized "S" as having been authorized by petitioner or that
respondents product is connected with petitioners business.
Both the RTC and the CA applied the Holistic Test in ruling that
respondent had not infringed petitioners trademark. For its part, the
RTC noted the following supposed dissimilarities between the shoes,
to wit:
1. The mark "S" found in Strong Shoes is not enclosed in an
"oval design."
2. The word "Strong" is conspicuously placed at the backside
and insoles.
3. The hang tags and labels attached to the shoes bears the
word "Strong" for respondent and "Skechers U.S.A." for
private complainant;
4. Strong shoes are modestly priced compared to the costs
of Skechers Shoes.19
While there may be dissimilarities between the appearances of the
shoes, to this Courts mind such dissimilarities do not outweigh the
stark and blatant similarities in their general features. As can be readily
observed by simply comparing petitioners Energy 20 model and
respondents Strong21 rubber shoes, respondent also used the color
scheme of blue, white and gray utilized by petitioner. Even the design
and "wavelike" pattern of the midsole and outer sole of respondents
shoes are very similar to petitioners shoes, if not exact patterns
thereof. At the side of the midsole near the heel of both shoes are two
elongated designs in practically the same location. Even the outer
soles of both shoes have the same number of ridges, five at the back
and six in front. On the side of respondents shoes, near the upper
part, appears the stylized "S," placed in the exact location as that of
the stylized "S" on petitioners shoes. On top of the "tongue" of both
shoes appears the stylized "S" in practically the same location and
size. Moreover, at the back of petitioners shoes, near the heel counter,

appears "Skechers Sport Trail" written in white lettering. However, on


respondents shoes appears "Strong Sport Trail" noticeably written in
the same white lettering, font size, direction and orientation as that of
petitioners shoes. On top of the heel collar of petitioners shoes are
two grayish-white semi-transparent circles. Not surprisingly,
respondents shoes also have two grayish-white semi-transparent
circles in the exact same location.lihpwa1
Based on the foregoing, this Court is at a loss as to how the RTC and
the CA, in applying the holistic test, ruled that there was no colorable
imitation, when it cannot be any more clear and apparent to this Court
that there is colorable imitation. The dissimilarities between the shoes
are too trifling and frivolous that it is indubitable that respondents
products will cause confusion and mistake in the eyes of the public.
Respondents shoes may not be an exact replica of petitioners shoes,
but the features and overall design are so similar and alike that
confusion is highly likely.1avvphi1
In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co.,
Inc.,22 this Court, in a case for unfair competition, had opined that even
if not all the details are identical, as long as the general appearance of
the two products are such that any ordinary purchaser would be
deceived, the imitator should be liable, to wit:
From said examination, We find the shoes manufactured by
defendants to contain, as found by the trial court, practically all the
features of those of the plaintiff Converse Rubber Corporation and
manufactured, sold or marketed by plaintiff Edwardson Manufacturing
Corporation, except for their respective brands, of course. We fully
agree with the trial court that "the respective designs, shapes, the
colors of the ankle patches, the bands, the toe patch and the soles of
the two products are exactly the same ... (such that) at a distance of a
few meters, it is impossible to distinguish "Custombuilt" from "Chuck
Taylor." These elements are more than sufficient to serve as basis for a
charge of unfair competition. Even if not all the details just mentioned
were identical, with the general appearances alone of the two
products, any ordinary, or even perhaps even a not too perceptive and
discriminating customer could be deceived, and, therefore, Custombuilt
could easily be passed off for Chuck Taylor. Jurisprudence supports
the view that under such circumstances, the imitator must be held
liable. x x x23
Neither can the difference in price be a complete defense in trademark
infringement. In McDonalds Corporation v. L.C. Big Mak Burger. Inc., 24
this Court held:
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the
parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a
confusion of source, as where prospective purchasers would be misled
into thinking that the complaining party has extended his business into
the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is in any way
connected with the activities of the infringer; or when it forestalls the
normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am.
Jur. 576, 577). x x x25
Indeed, the registered trademark owner may use its mark on the same
or similar products, in different segments of the market, and at different
price levels depending on variations of the products for specific
segments of the market.26 The purchasing public might be mistaken in
thinking that petitioner had ventured into a lower market segment such
that it is not inconceivable for the public to think that Strong or Strong
Sport Trail might be associated or connected with petitioners brand,
which scenario is plausible especially since both petitioner and
respondent manufacture rubber shoes.
Withal, the protection of trademarks as intellectual property is intended
not only to preserve the goodwill and reputation of the business
established on the goods bearing the mark through actual use over a
period of time, but also to safeguard the public as consumers against
confusion on these goods.27 While respondents shoes contain some
dissimilarities with petitioners shoes, this Court cannot close its eye to
the fact that for all intents and purpose, respondent had deliberately
attempted to copy petitioners mark and overall design and features of
the shoes. Let it be remembered, that defendants in cases of
infringement do not normally copy but only make colorable changes.28
The most successful form of copying is to employ enough points of

similarity to confuse the public, with enough points of difference to


confuse the courts.29
WHEREFORE, premises considered, the Motion for Reconsideration is
GRANTED. The Decision dated November 30, 2006 is
RECONSIDERED and SET ASIDE.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice

The assailed decision reversed the Decision dated May 25, 2007 3
issued by the Director General of the Intellectual Property Office (IPO)
in Inter Partes Case No. 14-2004-00084. The IPO Director General
upheld Certificate of Registration (COR) No. 4-1999-005393 issued by
the IPO for the trademark "VESPA" in favor of petitioner E.Y. Industrial
Sales, Inc. (EYIS), but ordered the cancellation of COR No. 4-1997121492, also for the trademark "VESPA," issued in favor of respondent
Shen Dar Electricity and Machinery Co., Ltd. (Shen Dar). The Decision
of the IPO Director General, in effect, affirmed the Decision dated May
29, 20064 issued by the Director of the Bureau of Legal Affairs (BLA) of
the IPO.
The Facts
EYIS is a domestic corporation engaged in the production, distribution
and sale of air compressors and other industrial tools and equipment. 5
Petitioner Engracio Yap is the Chairman of the Board of Directors of
EYIS.6
Respondent Shen Dar is a Taiwan-based foreign corporation engaged
in the manufacture of air compressors.7
Both companies claimed to have the right to register the trademark
"VESPA" for air compressors.
From 1997 to 2004, EYIS imported air compressors from Shen Dar
through sales contracts. In the Sales Contract dated April 20, 2002, 8 for
example, Shen Dar would supply EYIS in one (1) year with 24 to 30
units of 40-ft. containers worth of air compressors identified in the
Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-39,
SD-67 and SD-68. In the corresponding Bill of Ladings, the items were
described merely as air compressors. 9 There is no documentary
evidence to show that such air compressors were marked "VESPA."
On June 9, 1997, Shen Dar filed Trademark Application Serial No. 41997-121492 with the IPO for the mark "VESPA, Chinese Characters
and Device" for use on air compressors and welding machines.10
On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999005393, also for the mark "VESPA," for use on air compressors.11 On
January 18, 2004, the IPO issued COR No. 4-1999-005393 in favor of
EYIS.12 Thereafter, on February 8, 2007, Shen Dar was also issued
COR No. 4-1997-121492.13

Republic of the Philippines


SUPREME COURT
Manila

In the meantime, on June 21, 2004, Shen Dar filed a Petition for
Cancellation of EYIS COR with the BLA. 14 In the Petition, Shen Dar
primarily argued that the issuance of the COR in favor of EYIS violated
Section 123.1 paragraphs (d), (e) and (f) of Republic Act No. (RA)
8293, otherwise known as the Intellectual Property Code (IP Code),
having first filed an application for the mark. Shen Dar further alleged
that EYIS was a mere distributor of air compressors bearing the mark
"VESPA" which it imported from Shen Dar. Shen Dar also argued that it
had prior and exclusive right to the use and registration of the mark
"VESPA" in the Philippines under the provisions of the Paris
Convention.15

FIRST DIVISION
G.R. No. 184850

October 20, 2010

E.Y. INDUSTRIAL SALES, INC. and ENGRACIO YAP, Petitioners,


vs.
SHEN DAR ELECTRICITY AND MACHINERY CO., LTD.,
Respondent.
DECISION

In its Answer, EYIS and Yap denied the claim of Shen Dar to be the
true owners of the mark "VESPA" being the sole assembler and
fabricator of air compressors since the early 1990s. They further
alleged that the air compressors that Shen Dar allegedly supplied them
bore the mark "SD" for Shen Dar and not "VESPA." Moreover, EYIS
argued that Shen Dar, not being the owner of the mark, could not seek
protection from the provisions of the Paris Convention or the IP Code.16
Thereafter, the Director of the BLA issued its Decision dated May 29,
2006 in favor of EYIS and against Shen Dar, the dispositive portion of
which reads:

VELASCO, JR., J.:


The Case
This Petition for Review on Certiorari under Rule 45 seeks to nullify
and reverse the February 21, 2008 Decision 1 and the October 6, 2008
Resolution2 rendered by the Court of Appeals (CA) in CA-G.R. SP No.
99356 entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y.
Industrial Sales, Inc. and Engracio Yap.

WHEREFORE, premises considered, the Petition for Cancellation is,


as it is hereby, DENIED. Consequently, Certificate of Registration No.
4-1999-[005393] for the mark "VESPA" granted in the name of E.Y.
Industrial Sales, Inc. on 9 January 2007 is hereby upheld.
Let the filewrapper of VESPA subject matter of this case be forwarded
to the Administrative, Financial and Human Resource Development
Services Bureau for issuance and appropriate action in accordance
with this DECISION and a copy thereof furnished to the Bureau of
Trademarks for information and update of its records.

SO ORDERED.17
Shen Dar appealed the decision of the BLA Director to the Director
General of the IPO. In the appeal, Shen Dar raised the following
issues:
1. Whether the BLA Director erred in ruling that Shen Dar
failed to present evidence;
2. Whether the registration of EYIS application was proper
considering that Shen Dar was the first to file an application
for the mark; and
3. Whether the BLA Director correctly ruled that EYIS is the
true owner of the mark.18

ruled that Shen Dar should be considered to have prior use of the mark
based on the statements made by the parties in their respective
Declarations of Actual Use. The CA added that EYIS is a mere
importer of the air compressors with the mark "VESPA" as may be
gleaned from its receipts which indicated that EYIS is an importer,
wholesaler and retailer, and therefore, cannot be considered an owner
of the mark.22
EYIS filed a motion for reconsideration of the assailed decision which
the CA denied in the assailed resolution.
Hence, the instant appeal.
Issues
EYIS and Yap raise the following issues in their petition:

Later, the IPO Director General issued a Decision dated May 25, 2007
upholding the COR issued in favor of EYIS while cancelling the COR of
Shen Dar, the dispositive portion of which reads:
WHEREFORE, premises considered, the appeal is DENIED.
Certificate of Registration No. 4-1999-005393 for the mark VESPA for
air compressor issued in favor of Appellee is hereby upheld.
Consequently, Certificate of Registration No. 4-1997-121492 for the
mark VESPA, Chinese Characters & Device for goods air compressor
and spot welding machine issued in favor of Appellant is hereby
ordered cancelled.
Let a copy of this Decision as well as the records of this case be
furnished and returned to the Director of Bureau of Legal Affairs for
appropriate action. Further, let also the Directors of the Bureau of
Trademarks, the Administrative, Financial and Human Resources
Development Services Bureau, and the Documentation, Information
and Technology Transfer Bureau be furnished a copy of this Decision
for information, guidance, and records purposes.19
Shen Dar appealed the above decision of the IPO Director General to
the CA where Shen Dar raised the following issues:
1. Whether Shen Dar is guilty of forum shopping;
2. Whether the first-to-file rule applies to the instant case;
3. Whether Shen Dar presented evidence of actual use;
4. Whether EYIS is the true owner of the mark "VESPA";
5. Whether the IPO Director General erred in cancelling
Shen Dars COR No. 4-1997-121492 without a petition for
cancellation; and
6. Whether Shen Dar sustained damages.20
In the assailed decision, the CA reversed the IPO Director General and
ruled in favor of Shen Dar. The dispositive portion states:
WHEREFORE, premises considered, the petition is GRANTED.
Consequently, the assailed decision of the Director General of the
Intellectual Property Office dated May 25, 2007 is hereby REVERSED
and SET ASIDE. In lieu thereof, a new one is entered: a) ordering the
cancellation of Certificate of Registration No. 4-1999-005393 issued on
January 19, 2004 for the trademark VESPA in favor of E.Y. Industrial
Sales, Inc.; b) ordering the restoration of the validity of Certificate of
Registration No. 4-1997-121492 for the trademark VESPA in favor of
Shen Dar Electricity and Machinery Co., Ltd. No pronouncement as to
costs.
SO ORDERED.21
In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar
did not formally offer its evidence before the BLA, such evidence was
properly attached to the Petition for Cancellation. As such, Shen Dars
evidence may be properly considered. The CA also enunciated that the
IPO failed to properly apply the provisions of Sec. 123.1(d) of RA 8293,
which prohibits the registration of a trademark in favor of a party when
there is an earlier filed application for the same mark. The CA further

A. Whether the Director General of the IPO correctly upheld


the rights of Petitioners over the trademark VESPA.
B. Whether the Director General of the IPO can, under the
circumstances, order the cancellation of Respondents
certificate of registration for VESPA, which has been
fraudulently obtained and erroneously issued.
C. Whether the Honorable Court of Appeals was justified in
reversing the findings of fact of the IPO, which affirm the
rights of Petitioner EYIS over the trademark VESPA and
when such findings are supported by the evidence on
record.
D. Whether this Honorable Court may review questions of
fact considering that the findings of the Court of Appeals and
the IPO are in conflict and the conclusions of the appellee
court are contradicted by the evidence on record.23
The Ruling of the Court
The appeal is meritorious.
First Issue:
Whether this Court may review the questions of fact presented
Petitioners raise the factual issue of who the true owner of the mark is.
As a general rule, this Court is not a trier of facts. However, such rule is
subject to exceptions.
In New City Builders, Inc. v. National Labor Relations Commission, 24
the Court ruled that:
We are very much aware that the rule to the effect that this Court is not
a trier of facts admits of exceptions. As we have stated in Insular Life
Assurance Company, Ltd. vs. CA:
[i]t is a settled rule that in the exercise of the Supreme Courts power of
review, the Court is not a trier of facts and does not normally undertake
the re-examination of the evidence presented by the contending
parties during the trial of the case considering that the findings of facts
of the CA are conclusive and binding on the Court. However, the Court
had recognized several exceptions to this rule, to wit: (1) when the
findings are grounded entirely on speculation, surmises or conjectures;
(2) when the inference made is manifestly mistaken, absurd or
impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the
findings of facts are conflicting; (6) when in making its findings the
Court of Appeals went beyond the issues of the case, or its findings are
contrary to the admissions of both the appellant and the appellee; (7)
when the findings are contrary to the trial court; (8) when the
findings are conclusions without citation of specific evidence on which
they are based; (9) when the facts set forth in the petition as well as in
the petitioners main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on
record; and (11) when the Court of Appeals manifestly overlooked

certain relevant facts not disputed by the parties, which, if properly


considered, would justify a different conclusion. (Emphasis supplied.)
In the instant case, the records will show that the IPO and the CA
made differing conclusions on the issue of ownership based on the
evidence presented by the parties. Hence, this issue may be the
subject of this Courts review.
Second Issue:
Whether evidence presented before the BLA must be formally
offered
Preliminarily, it must be noted that the BLA ruled that Shen Dar failed
to adduce evidence in support of its allegations as required under
Office Order No. 79, Series of 2005, Amendments to the Regulations
on Inter Partes Proceedings, having failed to formally offer its evidence
during the proceedings before it. The BLA ruled:
At the outset, we note petitioners failure to adduce any evidence in
support of its allegations in the Petition for Cancellation. Petitioner did
not file nor submit its marked evidence as required in this Bureaus
Order No. 2006-157 dated 25 January 2006 in compliance with Office
Order No. 79, Series of 2005, Amendments to the Regulations on Inter
Partes Proceedings.25 x x x
In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum
Circular No. 03, Series of 2005, which states:
Section 2.4. In all cases, failure to file the documentary evidences in
accordance with Sections 7 and 8 of the rules on summary
proceedings shall be construed as a waiver on the part of the parties.
In such a case, the original petition, opposition, answer and the
supporting documents therein shall constitute the entire evidence for
the parties subject to applicable rules.
The CA concluded that Shen Dar needed not formally offer its
evidence but merely needed to attach its evidence to its position paper
with the proper markings,26 which it did in this case.
The IP Code provides under its Sec. 10.3 that the Director General of
the IPO shall establish the procedure for the application for the
registration of a trademark, as well as the opposition to it:
Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs
shall have the following functions:
xxxx
10.3. The Director General may by Regulations establish the
procedure to govern the implementation of this Section.
Thus, the Director General issued Office Order No. 79, Series of 2005
amending the regulations on Inter Partes Proceedings, Sec. 12.1 of
which provides:
Section 12. Evidence for the Parties
12.1. The verified petition or opposition, reply if any, duly marked
affidavits of the witnesses, and the documents submitted, shall
constitute the entire evidence for the petitioner or opposer. The verified
answer, rejoinder if any, and the duly marked affidavits and documents
submitted shall constitute the evidence for the respondent. Affidavits,
documents and other evidence not submitted and duly marked in
accordance with the preceding sections shall not be admitted as
evidence.
The preceding sections referred to in the above provision refer to Secs.
7.1, 8.1 and 9 which, in turn, provide:
Section 7. Filing of Petition or Opposition
7.1. The petition or opposition, together with the affidavits of witnesses
and originals of the documents and other requirements, shall be filed
with the Bureau, provided, that in case of public documents, certified
copies shall be allowed in lieu of the originals. The Bureau shall check

if the petition or opposition is in due form as provided in the


Regulations particularly Rule 3, Section 3; Rule 4, Section 2; Rule 5,
Section 3; Rule 6, Section 9; Rule 7, Sections 3 and 5; Rule 8,
Sections 3 and 4. For petition for cancellation of layout design
(topography) of integrated circuits, Rule 3, Section 3 applies as to the
form and requirements. The affidavits, documents and other evidence
shall be marked consecutively as "Exhibits" beginning with the letter
"A".
Section 8. Answer
8.1. Within three (3) working days from receipt of the petition or
opposition, the Bureau shall issue an order for the respondent to file an
answer together with the affidavits of witnesses and originals of
documents, and at the same time shall notify all parties required to be
notified in the IP Code and these Regulations, provided, that in case of
public documents, certified true copies may be submitted in lieu of the
originals. The affidavits and documents shall be marked consecutively
as "Exhibits" beginning with the number "1".
Section 9. Petition or Opposition and Answer must be verified
Subject to Rules 7 and 8 of these regulations, the petition or opposition
and the answer must be verified. Otherwise, the same shall not be
considered as having been filed.
In other words, as long as the petition is verified and the pieces of
evidence consisting of the affidavits of the witnesses and the original of
other documentary evidence are attached to the petition and properly
marked in accordance with Secs. 7.1 and 8.1 abovementioned, these
shall be considered as the evidence of the petitioner. There is no
requirement under the abovementioned rules that the evidence of the
parties must be formally offered to the BLA.
In any case, as a quasi-judicial agency and as stated in Rule 2, Sec. 5
of the Regulations on Inter Partes Proceedings, the BLA is not bound
by technical rules of procedure. The evidence attached to the petition
may, therefore, be properly considered in the resolution of the case.
Third Issue:
Whether the IPO Director General can
validly cancel Shen Dars Certificate of Registration
In his Decision, the IPO Director General stated that, despite the fact
that the instant case was for the cancellation of the COR issued in
favor of EYIS, the interests of justice dictate, and in view of its findings,
that the COR of Shen Dar must be cancelled. The Director General
explained:
Accordingly, while the instant case involves a petition to cancel the
registration of the Appellees trademark VESPA, the interest of justice
requires that Certificate of Registration No. 4-1997-121492 be
cancelled. While the normal course of proceedings should have been
the filing of a petition for cancellation of Certificate of Registration No.
4-1997-121492, that would involve critical facts and issues that have
already been resolved in this case. To allow the Applicant to still
maintain in the Trademark Registry Certificate of Registration No. 41997-121492 would nullify the exclusive rights of Appellee as the true
and registered owner of the mark VESPA and defeat the purpose of
the trademark registration system.27
Shen Dar challenges the propriety of such cancellation on the ground
that there was no petition for cancellation as required under Sec. 151
of RA 8293.
Office Order No. 79, Series of 2005, provides under its Sec. 5 that:
Section 5. Rules of Procedure to be followed in the conduct of hearing
of Inter Partes cases.The rules of procedure herein contained
primarily apply in the conduct of hearing of Inter Partes cases. The
Rules of Court may be applied suppletorily. The Bureau shall not be
bound by strict technical rules of procedure and evidence but may
adopt, in the absence of any applicable rule herein, such mode of
proceedings which is consistent with the requirements of fair play and
conducive to the just, speedy and inexpensive disposition of cases,

and which will give the Bureau the greatest possibility to focus on the
contentious issues before it. (Emphasis supplied.)
The above rule reflects the oft-repeated legal principle that quasijudicial and administrative bodies are not bound by technical rules of
procedure. Such principle, however, is tempered by fundamental
evidentiary rules, including due process. Thus, we ruled in Aya-ay, Sr.
v. Arpaphil Shipping Corp.:28
That administrative quasi-judicial bodies like the NLRC are not bound
by technical rules of procedure in the adjudication of cases does not
mean that the basic rules on proving allegations should be entirely
dispensed with. A party alleging a critical fact must still support his
allegation with substantial evidence. Any decision based on
unsubstantiated allegation cannot stand as it will offend due process.
x x x The liberality of procedure in administrative actions is subject to
limitations imposed by basic requirements of due process. As this
Court said in Ang Tibay v. CIR, the provision for flexibility in
administrative procedure "does not go so far as to justify orders without
a basis in evidence having rational probative value." More specifically,
as held in Uichico v. NLRC:
It is true that administrative and quasi-judicial bodies like the NLRC are
not bound by the technical rules of procedure in the adjudication of
cases. However, this procedural rule should not be construed as a
license to disregard certain fundamental evidentiary rules.
This was later reiterated in Lepanto Consolidated Mining Company v.
Dumapis:29
While it is true that administrative or quasi-judicial bodies like the
NLRC are not bound by the technical rules of procedure in the
adjudication of cases, this procedural rule should not be construed as
a license to disregard certain fundamental evidentiary rules. The
evidence presented must at least have a modicum of admissibility for it
to have probative value. Not only must there be some evidence to
support a finding or conclusion, but the evidence must be substantial.
Substantial evidence is more than a mere scintilla. It means such
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion. Thus, even though technical rules of evidence
are not strictly complied with before the LA and the NLRC, their
decision must be based on evidence that must, at the very least, be
substantial.
The fact that no petition for cancellation was filed against the COR
issued to Shen Dar does not preclude the cancellation of Shen Dars
COR. It must be emphasized that, during the hearing for the
cancellation of EYIS COR before the BLA, Shen Dar tried to establish
that it, not EYIS, was the true owner of the mark "VESPA" and, thus,
entitled to have it registered. Shen Dar had more than sufficient
opportunity to present its evidence and argue its case, and it did. It was
given its day in court and its right to due process was respected. The
IPO Director Generals disregard of the procedure for the cancellation
of a registered mark was a valid exercise of his discretion.

review and revision of errors of law allegedly committed by the


appellate court, as its findings of fact are deemed conclusive. As such
this Court is not duty-bound to analyze and weigh all over again the
evidence already considered in the proceedings below. This rule,
however, is not without exceptions." The findings of fact of the Court of
Appeals, which are as a general rule deemed conclusive, may admit of
review by this Court:
(1) when the factual findings of the Court of Appeals and the
trial court are contradictory;
(2) when the findings are grounded entirely on speculation,
surmises, or conjectures;
(3) when the inference made by the Court of Appeals from its
findings of fact is manifestly mistaken, absurd, or impossible;
(4) when there is grave abuse of discretion in the
appreciation of facts;
(5) when the appellate court, in making its findings, goes
beyond the issues of the case, and such findings are
contrary to the admissions of both appellant and appellee;
(6) when the judgment of the Court of Appeals is premised
on a misapprehension of facts;
(7) when the Court of Appeals fails to notice certain relevant
facts which, if properly considered, will justify a different
conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation
of the specific evidence on which they are based; and
(10) when the findings of fact of the Court of Appeals are
premised on the absence of evidence but such findings are
contradicted by the evidence on record. (Emphasis
supplied.)
Thereafter, in Villaflor v. Court of Appeals, 31 this Court applied the
above principle to factual findings of quasi-judicial bodies, to wit:
Proceeding by analogy, the exceptions to the rule on conclusiveness of
factual findings of the Court of Appeals, enumerated in Fuentes vs.
Court of Appeals, can also be applied to those of quasi-judicial bodies
x x x. (Emphasis supplied.)
Here, the CA identified certain material facts that were allegedly
overlooked by the BLA and the IPO Director General which it opined,
when correctly appreciated, would alter the result of the case. An
examination of the IPO Decisions, however, would show that no such
evidence was overlooked.

Fourth Issue:
Whether the factual findings of the IPO are binding on the CA
Next, petitioners challenge the CAs reversal of the factual findings of
the BLA that Shen Dar and not EYIS is the prior user and, therefore,
true owner of the mark. In arguing its position, petitioners cite
numerous rulings of this Court where it was enunciated that the factual
findings of administrative bodies are given great weight if not
conclusive upon the courts when supported by substantial evidence.
We agree with petitioners that the general rule in this jurisdiction is that
the factual findings of administrative bodies deserve utmost respect
when supported by evidence. However, such general rule is subject to
exceptions.
In Fuentes v. Court of Appeals,30 the Court established the rule of
conclusiveness of factual findings of the CA as follows:
Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court
in cases brought to it from the Court of Appeals x x x is limited to the

First, as to the date of first use of the mark by the parties, the CA
stated:
To begin with, when respondents-appellees filed its application for
registration of the VESPA trademark on July 28, 1999, they stated
under oath, as found in their DECLARATION OF ACTUAL USE, that
their first use of the mark was on December 22, 1998. On the other
hand, [Shen Dar] in its application dated June 09, 1997 stated, likewise
under oath in their DECLARATION OF ACTUAL USE, that its first use
of the mark was in June 1996. This cannot be made any clearer. [Shen
Dar] was not only the first to file an application for registration but
likewise first to use said registrable mark.32
Evidently, the CA anchors its finding that Shen Dar was the first to use
the mark on the statements of the parties in their respective
Declarations of Actual Use. Such conclusion is premature at best.
While a Declaration of Actual Use is a notarized document, hence, a
public document, it is not conclusive as to the fact of first use of a
mark. The declaration must be accompanied by proof of actual use as
of the date claimed. In a declaration of actual use, the applicant must,
therefore, present evidence of such actual use.

The BLA ruled on the same issue, as follows:


More importantly, the private respondents prior adoption and
continuous use of the mark VESPA on air compressors is bolstered by
numerous documentary evidence consisting of sales invoices issued in
the name of E.Y. Industrial and Bill of Lading (Exhibits 4 to 375).
Sales Invoice No. 12075 dated March 27, 1995 antedates petitioners
date of first use on January 1, 1997 indicated in its trademark
application filed on June 9, 1997 as well as the date of first use in June
of 1996 as indicated in the Declaration of Actual Use submitted on
December 3, 2001 (Exhibit 385). The use by respondent registrant in
the concept of owner is shown by commercial documents, sales
invoices unambiguously describing the goods as "VESPA" air
compressors. Private respondents have sold the air compressors
bearing the "VESPA" to various locations in the Philippines, as far as
Mindanao and the Visayas since the early 1990s. We carefully
inspected the evidence consisting of three hundred seventy-one (371)
invoices and shipment documents which show that VESPA air
compressors were sold not only in Manila, but to locations such as
Iloilo City, Cebu City, Dumaguete City, Zamboanga City, Cagayan de
Oro City, Davao City, to name a few. There is no doubt that it is through
private respondents efforts that the mark "VESPA" used on air
compressors has gained business goodwill and reputation in the
Philippines for which it has validly acquired trademark rights.
Respondent E.Y. Industrials right has been preserved until the
passage of RA 8293 which entitles it to register the same.33
Comparatively, the BLAs findings were founded upon the evidence
presented by the parties. An example of such evidence is Invoice No.
12075 dated March 29, 199534 where EYIS sold four units of VESPA air
compressors to Veteran Paint Trade Center. Shen Dar failed to rebut
such evidence. The truth, as supported by the evidence on record, is
that EYIS was first to use the mark.
Moreover, the discrepancy in the date provided in the Declaration of
Actual Use filed by EYIS and the proof submitted was appropriately
considered by the BLA, ruling as follows:
On the contrary, respondent EY Industrial was able to prove the use of
the mark "VESPA" on the concept of an owner as early as 1991.
Although Respondent E.Y. indicated in its trademark application that its
first use was in December 22, 1998, it was able to prove by clear and
positive evidence of use prior to such date.

not preclude its being a manufacturer. Sec. 237 of the National Internal
Revenue Code states:
Section 237. Issuance of Receipts or Sales or Commercial
Invoices.All persons subject to an internal revenue tax shall, for each
sale and transfer of merchandise or for services rendered valued at
Twenty-five pesos (P25.00) or more, issue duly registered receipts or
sale or commercial invoices, prepared at least in duplicate, showing
the date of transaction, quantity, unit cost and description of
merchandise or nature of service: Provided, however, That where the
receipt is issued to cover payment made as rentals, commissions,
compensation or fees, receipts or invoices shall be issued which shall
show the name, business style, if any, and address of the purchaser,
customer or client.
The original of each receipt or invoice shall be issued to the purchaser,
customer or client at the time the transaction is effected, who, if
engaged in business or in the exercise of profession, shall keep and
preserve the same in his place of business for a period of three (3)
years from the close of the taxable year in which such invoice or
receipt was issued, while the duplicate shall be kept and preserved by
the issuer, also in his place of business, for a like period.
The Commissioner may, in meritorious cases, exempt any person
subject to an internal revenue tax from compliance with the provisions
of this Section. (Emphasis supplied.)
Correlatively, in Revenue Memorandum No. 16-2003 dated May 20,
2003, the Bureau of Internal Revenue defined a Sales Invoice and
identified its required information as follows:
Sales Invoices (SI)/Cash Invoice (CI) is written account of goods sold
or services rendered and the prices charged therefor used in the
ordinary course of business evidencing sale and transfer or agreement
to sell or transfer of goods and services. It contains the same
information found in the Official Receipt.
Official Receipt (OR) is a receipt issued for the payment of services
rendered or goods sold. It contains the following information:
a. Business name and address;
b. Taxpayer Identification Number;

In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791, 23


November 1966, the High Court clarified: Where an applicant for
registration of a trademark states under oath the date of his earliest
use, and later on he wishes to carry back his first date of use to an
earlier date, he then takes on the greater burden of presenting "clear
and convincing evidence" of adoption and use as of that earlier date.
(B.R. Baker Co. vs. Lebrow Bros., 150 F. 2d 580.)35
The CA further found that EYIS is not a manufacturer of air
compressors but merely imports and sells them as a wholesaler and
retailer. The CA reasoned:
Conversely, a careful perusal of appellees own submitted receipts
shows that it is not manufacturer but an importer, wholesaler and
retailer. This fact is corroborated by the testimony of a former
employee of appellees. Admittedly too, appellees are importing air
compressors from [Shen Dar] from 1997 to 2004. These matters, lend
credence to [Shen Dars] claim that the letters SD followed by a
number inscribed in the air compressor is only to describe its type,
manufacturer business name and capacity. The VESPA mark is in the
sticker which is attached to the air compressors. The ruling of the
Supreme Court, in the case of UNNO Commercial Enterprises, Inc. vs.
General Milling Corporation et al., is quite enlightening, thus We quote:
"The term owner does not include the importer of the goods bearing
the trademark, trade name, service mark, or other mark of ownership,
unless such importer is actually the owner thereof in the country from
which the goods are imported. Thus, this Court, has on several
occasions ruled that where the applicants alleged ownership is not
shown in any notarial document and the applicant appears to be
merely an importer or distributor of the merchandise covered by said
trademark, its application cannot be granted."36
This is a non sequitur. It does not follow. The fact that EYIS described
itself in its sales invoice as an importer, wholesaler and retailer does

c. Name of printer (BIR Permit No.) with inclusive serial


number of booklets and date of issuance of receipts.
There is no requirement that a sales invoice should accurately state
the nature of all the businesses of the seller. There is no legal ground
to state that EYIS "declaration" in its sales invoices that it is an
importer, wholesaler and retailer is restrictive and would preclude its
being a manufacturer.
From the above findings, there was no justifiable reason for the CA to
disregard the factual findings of the IPO. The rulings of the IPO
Director General and the BLA Director were supported by clear and
convincing evidence. The facts cited by the CA and Shen Dar do not
justify a different conclusion from that of the IPO. Hence, the findings
of the BLA Director and the IPO Director General must be deemed as
conclusive on the CA.
Fifth Issue:
Whether EYIS is the true owner of the mark "VESPA"
In any event, given the length of time already invested by the parties in
the instant case, this Court must write finis to the instant controversy
by determining, once and for all, the true owner of the mark "VESPA"
based on the evidence presented.
RA 8293 espouses the "first-to-file" rule as stated under Sec. 123.1(d)
which states:
Section 123. Registrability. - 123.1. A mark cannot be registered if it:
xxxx

(d) Is identical with a registered mark belonging to a different proprietor


or a mark with an earlier filing or priority date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to
deceive or cause confusion. (Emphasis supplied.)
Under this provision, the registration of a mark is prevented with the
filing of an earlier application for registration. This must not, however,
be interpreted to mean that ownership should be based upon an earlier
filing date. While RA 8293 removed the previous requirement of proof
of actual use prior to the filing of an application for registration of a
mark, proof of prior and continuous use is necessary to establish
ownership of a mark. Such ownership constitutes sufficient evidence to
oppose the registration of a mark.
Sec. 134 of the IP Code provides that "any person who believes that
he would be damaged by the registration of a mark x x x" may file an
opposition to the application. The term "any person" encompasses the
true owner of the markthe prior and continuous user.
Notably, the Court has ruled that the prior and continuous use of a
mark may even overcome the presumptive ownership of the registrant
and be held as the owner of the mark. As aptly stated by the Court in
Shangri-la International Hotel Management, Ltd. v. Developers Group
of Companies, Inc.:37
Registration, without more, does not confer upon the registrant an
absolute right to the registered mark. The certificate of registration is
merely a prima facie proof that the registrant is the owner of the
registered mark or trade name. Evidence of prior and continuous use
of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be
declared owner in an appropriate case.
xxxx
Ownership of a mark or trade name may be acquired not necessarily
by registration but by adoption and use in trade or commerce. As
between actual use of a mark without registration, and registration of
the mark without actual use thereof, the former prevails over the latter.
For a rule widely accepted and firmly entrenched, because it has come
down through the years, is that actual use in commerce or business is
a pre-requisite to the acquisition of the right of ownership.
xxxx
By itself, registration is not a mode of acquiring ownership. When the
applicant is not the owner of the trademark being applied for, he has no
right to apply for registration of the same. Registration merely creates a
prima facie presumption of the validity of the registration, of the
registrants ownership of the trademark and of the exclusive right to the
use thereof. Such presumption, just like the presumptive regularity in
the performance of official functions, is rebuttable and must give way to
evidence to the contrary.
Here, the incontrovertible truth, as established by the evidence
submitted by the parties, is that EYIS is the prior user of the mark. The
exhaustive discussion on the matter made by the BLA sufficiently
addresses the issue:
Based on the evidence, Respondent E.Y. Industrial is a legitimate
corporation engaged in buying, importing, selling, industrial
machineries and tools, manufacturing, among others since its
incorporation in 1988. (Exhibit "1"). Indeed private respondents have
submitted photographs (Exhibit "376", "377", "378", "379") showing an
assembly line of its manufacturing or assembly process.1avvphi1
More importantly, the private respondents prior adoption and
continuous use of the mark "VESPA" on air compressors is bolstered
by numerous documentary evidence consisting of sales invoices
issued in the name of respondent EY Industrial and Bills of Lading.
(Exhibits "4" to "375"). Sales Invoice No. 12075 dated March 27, 1995
antedates petitioners date of first use in January 1, 1997 indicated in

its trademark application filed in June 9, 1997 as well as the date of


first use in June of 1996 as indicated in the Declaration of Actual Use
submitted on December 3, 2001 (Exhibit "385"). The use by
respondent-registrant in the concept of owner is shown by commercial
documents, sales invoices unambiguously describing the goods as
"VESPA" air compressors. Private respondents have sold the air
compressors bearing the "VESPA" to various locations in the
Philippines, as far as Mindanao and the Visayas since the early 1990s.
We carefully inspected the evidence consisting of three hundred
seventy one (371) invoices and shipment documents which show that
"VESPA" air compressors were sold not only in Manila, but to locations
such as Iloilo City, Cebu City, Dumaguete City, Zamboanga City,
Cagayan de Oro City, Davao City to name a few. There is no doubt that
it is through private respondents efforts that the mark "VESPA" used
on air compressors has gained business goodwill and reputation in the
Philippines for which it has validly acquired trademark rights.
Respondent EY Industrials right has been preserved until the passage
of RA 8293 which entitles it to register the same. x x x38
On the other hand, Shen Dar failed to refute the evidence cited by the
BLA in its decision. More importantly, Shen Dar failed to present
sufficient evidence to prove its own prior use of the mark "VESPA." We
cite with approval the ruling of the BLA:
[Shen Dar] avers that it is the true and rightful owner of the trademark
"VESPA" used on air compressors. The thrust of [Shen Dars]
argument is that respondent E.Y. Industrial Sales, Inc. is a mere
distributor of the "VESPA" air compressors. We disagree.
This conclusion is belied by the evidence. We have gone over each
and every document attached as Annexes "A", "A" 1-48 which consist
of Bill of Lading and Packing Weight List. Not one of these documents
referred to a "VESPA" air compressor. Instead, it simply describes the
goods plainly as air compressors which is type "SD" and not "VESPA".
More importantly, the earliest date reflected on the Bill of Lading was
on May 5, 1997. (Annex "A"-1). [Shen Dar] also attached as Annex
"B" a purported Sales Contract with respondent EY Industrial Sales
dated April 20, 2002. Surprisingly, nowhere in the document does it
state that respondent EY Industrial agreed to sell "VESPA" air
compressors. The document only mentions air compressors which if
genuine merely bolsters respondent Engracio Yaps contention that
[Shen Dar] approached them if it could sell the "Shen Dar" or "SD" air
compressor. (Exhibit "386") In its position paper, [Shen Dar] merely
mentions of Bill of Lading constituting respondent as consignee in
1993 but never submitted the same for consideration of this Bureau.
The document is also not signed by [Shen Dar]. The agreement was
not even drafted in the letterhead of either [Shen Dar] nor [sic]
respondent registrant. Our only conclusion is that [Shen Dar] was not
able to prove to be the owner of the VESPA mark by appropriation.
Neither was it able to prove actual commercial use in the Philippines of
the mark VESPA prior to its filing of a trademark application in 9 June
1997.39
As such, EYIS must be considered as the prior and continuous user of
the mark "VESPA" and its true owner. Hence, EYIS is entitled to the
registration of the mark in its name.
WHEREFORE, the petition is hereby GRANTED. The CAs February
21, 2008 Decision and October 6, 2008 Resolution in CA-G.R. SP No.
99356 are hereby REVERSED and SET ASIDE. The Decision dated
May 25, 2007 issued by the IPO Director General in Inter Partes Case
No. 14-2004-00084 and the Decision dated May 29, 2006 of the BLA
Director of the IPO are hereby REINSTATED.
No costs.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 190065

August 16, 2010

DERMALINE, INC., Petitioner,


vs.
MYRA PHARMACEUTICALS, INC. Respondent.
DECISION

NACHURA, J.:
This is a petition for review on certiorari 1 seeking to reverse and set
aside the Decision dated August 7, 20092 and the Resolution dated
October 28, 20093 of the Court of Appeals (CA) in CA-G.R. SP No.
108627.
The antecedent facts and proceedings
On October 21, 2006, petitioner Dermaline, Inc. (Dermaline) filed
before the Intellectual Property Office (IPO) an application for
registration of the trademark "DERMALINE DERMALINE, INC."
(Application No. 4-2006011536). The application was published for
Opposition in the IPO E-Gazette on March 9, 2007.
On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra) filed a
Verified Opposition4 alleging that the trademark sought to be registered
by Dermaline so resembles its trademark "DERMALIN" and will likely
cause confusion, mistake and deception to the purchasing public. Myra
said that the registration of Dermalines trademark will violate Section
1235 of Republic Act (R.A.) No. 8293 (Intellectual Property Code of the
Philippines). It further alleged that Dermalines use and registration of
its applied trademark will diminish the distinctiveness and dilute the
goodwill of Myras "DERMALIN," registered with the IPO way back July
8, 1986, renewed for ten (10) years on July 8, 2006. Myra has been
extensively using "DERMALIN" commercially since October 31, 1977,
and said mark is still valid and subsisting.
Myra claimed that, despite Dermalines attempt to differentiate its
applied mark, the dominant feature is the term "DERMALINE," which is
practically identical with its own "DERMALIN," more particularly that
the first eight (8) letters of the marks are identical, and that
notwithstanding the additional letter "E" by Dermaline, the
pronunciation for both marks are identical. Further, both marks have
three (3) syllables each, with each syllable identical in sound and
appearance, even if the last syllable of "DERMALINE" consisted of four
(4) letters while "DERMALIN" consisted only of three (3).
Myra also pointed out that Dermaline applied for the same mark
"DERMALINE" on June 3, 2003 and was already refused registration
by the IPO. By filing this new application for registration, Dermaline
appears to have engaged in a fishing expedition for the approval of its
mark. Myra argued that its intellectual property right over its trademark
is protected under Section 1476 of R.A. No. 8293.
Myra asserted that the mark "DERMALINE DERMALINE, INC." is
aurally similar to its own mark such that the registration and use of
Dermalines applied mark will enable it to obtain benefit from Myras
reputation, goodwill and advertising and will lead the public into
believing that Dermaline is, in any way, connected to Myra. Myra
added that even if the subject application was under Classification 44 7
for various skin treatments, it could still be connected to the
"DERMALIN" mark under Classification 5 8 for pharmaceutical products,
since ultimately these goods are very closely related.
In its Verified Answer,9 Dermaline countered that a simple comparison
of the trademark "DERMALINE DERMALINE, INC." vis--vis Myras
"DERMALIN" trademark would show that they have entirely different
features and distinctive presentation, thus it cannot result in confusion,
mistake or deception on the part of the purchasing public. Dermaline
contended that, in determining if the subject trademarks are
confusingly similar, a comparison of the words is not the only
determinant, but their entirety must be considered in relation to the
goods to which they are attached, including the other features
appearing in both labels. It claimed that there were glaring and striking
dissimilarities between the two trademarks, such that its trademark
"DERMALINE DERMALINE, INC." speaks for itself (Res ipsa loquitur).
Dermaline further argued that there could not be any relation between
its trademark for health and beauty services from Myras trademark
classified under medicinal goods against skin disorders.
The parties failed to settle amicably. Consequently, the preliminary
conference was terminated and they were directed to file their
respective position papers.10
On April 10, 2008, the IPO-Bureau of Legal Affairs rendered Decision
No. 2008-7011 sustaining Myras opposition pursuant to Section
123.1(d) of R.A. No. 8293. It disposed

WHEREFORE, the Verified Opposition is, as it is, hereby SUSTAINED.


Consequently, Application Serial No. 4-2006-011536 for the mark
DERMALINE, DERMALINE, INC. Stylized Wordmark for Dermaline,
Inc. under class 44 covering the aforementioned goods filed on 21
October 2006, is as it is hereby, REJECTED.
Let the file wrapper of DERMALINE, DERMALINE, INC. Stylized
Wordmark subject matter of this case be forwarded to the Bureau of
Trademarks (BOT) for appropriate action in accordance with this
Decision.
SO ORDERED.12
Aggrieved, Dermaline filed a motion for reconsideration, but it was
denied under Resolution No. 2009-12(D)13 dated January 16, 2009.
Expectedly, Dermaline appealed to the Office of the Director General of
the IPO. However, in an Order 14 dated April 17, 2009, the appeal was
dismissed for being filed out of time.
Undaunted, Dermaline appealed to the CA, but it affirmed and upheld
the Order dated April 17, 2009 and the rejection of Dermalines
application for registration of trademark. The CA likewise denied
Dermalines motion for reconsideration; hence, this petition raising the
issue of whether the CA erred in upholding the IPOs rejection of
Dermalines application for registration of trademark.
The petition is without merit.
A trademark is any distinctive word, name, symbol, emblem, sign, or
device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them
from those manufactured, sold, or dealt by others. 15 Inarguably, it is an
intellectual property deserving protection by law. In trademark
controversies, each case must be scrutinized according to its peculiar
circumstances, such that jurisprudential precedents should only be
made to apply if they are specifically in point.16
As Myra correctly posits, as a registered trademark owner, it has the
right under Section 147 of R.A. No. 8293 to prevent third parties from
using a trademark, or similar signs or containers for goods or services,
without its consent, identical or similar to its registered trademark,
where such use would result in a likelihood of confusion.
In determining likelihood of confusion, case law has developed two (2)
tests, the Dominancy Test and the Holistic or Totality Test.
The Dominancy Test focuses on the similarity of the prevalent features
of the competing trademarks that might cause confusion or
deception.17 It is applied when the trademark sought to be registered
contains the main, essential and dominant features of the earlier
registered trademark, and confusion or deception is likely to result.
Duplication or imitation is not even required; neither is it necessary that
the label of the applied mark for registration should suggest an effort to
imitate. The important issue is whether the use of the marks involved
would likely cause confusion or mistake in the mind of or deceive the
ordinary purchaser, or one who is accustomed to buy, and therefore to
some extent familiar with, the goods in question. 18 Given greater
consideration are the aural and visual impressions created by the
marks in the public mind, giving little weight to factors like prices,
quality, sales outlets, and market segments.19 The test of dominancy is
now explicitly incorporated into law in Section 155.1 of R.A. No. 8293
which provides
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale,
distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or
services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; (emphasis supplied)
On the other hand, the Holistic Test entails a consideration of the
entirety of the marks as applied to the products, including labels and
packaging, in determining confusing similarity. The scrutinizing eye of
the observer must focus not only on the predominant words but also on
the other features appearing in both labels so that a conclusion may be
drawn as to whether one is confusingly similar to the other.20

Relative to the question on confusion of marks and trade names,


jurisprudence has noted two (2) types of confusion, viz: (1) confusion
of goods (product confusion), where the ordinarily prudent purchaser
would be induced to purchase one product in the belief that he was
purchasing the other; and (2) confusion of business (source or origin
confusion), where, although the goods of the parties are different, the
product, the mark of which registration is applied for by one party, is
such as might reasonably be assumed to originate with the registrant
of an earlier product, and the public would then be deceived either into
that belief or into the belief that there is some connection between the
two parties, though inexistent.21
In rejecting the application of Dermaline for the registration of its mark
"DERMALINE DERMALINE, INC.," the IPO applied the Dominancy
Test. It declared that both confusion of goods and service and
confusion of business or of origin were apparent in both trademarks. It
also noted that, per Bureau Decision No. 2007-179 dated December 4,
2007, it already sustained the opposition of Myra involving the
trademark "DERMALINE" of Dermaline under Classification 5. The IPO
also upheld Myras right under Section 138 of R.A. No. 8293, which
provides that a certification of registration of a mark is prima facie
evidence of the validity of the registration, the registrants ownership of
the mark, and of the registrants exclusive right to use the same in
connection with the goods and those that are related thereto specified
in the certificate.
We agree with the findings of the IPO. As correctly applied by the IPO
in this case, while there are no set rules that can be deduced as what
constitutes a dominant feature with respect to trademarks applied for
registration; usually, what are taken into account are signs, color,
design, peculiar shape or name, or some special, easily remembered
earmarks of the brand that readily attracts and catches the attention of
the ordinary consumer.22
Dermalines insistence that its applied trademark "DERMALINE
DERMALINE, INC." had differences "too striking to be mistaken" from
Myras "DERMALIN" cannot, therefore, be sustained. While it is true
that the two marks are presented differently Dermalines mark is
written with the first "DERMALINE" in script going diagonally upwards
from left to right, with an upper case "D" followed by the rest of the
letters in lower case, and the portion "DERMALINE, INC." is written in
upper case letters, below and smaller than the long-hand portion; while
Myras mark "DERMALIN" is written in an upright font, with a capital
"D" and followed by lower case letters the likelihood of confusion is
still apparent. This is because they are almost spelled in the same way,
except for Dermalines mark which ends with the letter "E," and they
are pronounced practically in the same manner in three (3) syllables,
with the ending letter "E" in Dermalines mark pronounced silently.
Thus, when an ordinary purchaser, for example, hears an
advertisement of Dermalines applied trademark over the radio,
chances are he will associate it with Myras registered mark.
Further, Dermalines stance that its product belongs to a separate and
different classification from Myras products with the registered
trademark does not eradicate the possibility of mistake on the part of
the purchasing public to associate the former with the latter, especially
considering that both classifications pertain to treatments for the
skin.1avvphi1
Indeed, the registered trademark owner may use its mark on the same
or similar products, in different segments of the market, and at different
price levels depending on variations of the products for specific
segments of the market. The Court is cognizant that the registered
trademark owner enjoys protection in product and market areas that
are the normal potential expansion of his business. Thus, we have held

Modern law recognizes that the protection to which the owner of a


trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the
parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a
confusion of source, as where prospective purchasers would be misled
into thinking that the complaining party has extended his business into
the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way
connected with the activities of the infringer; or when it forestalls the
normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am.
Jur. 576, 577).23 (Emphasis supplied)

Thus, the public may mistakenly think that Dermaline is connected to


or associated with Myra, such that, considering the current proliferation
of health and beauty products in the market, the purchasers would
likely be misled that Myra has already expanded its business through
Dermaline from merely carrying pharmaceutical topical applications for
the skin to health and beauty services.
Verily, when one applies for the registration of a trademark or label
which is almost the same or that very closely resembles one already
used and registered by another, the application should be rejected and
dismissed outright, even without any opposition on the part of the
owner and user of a previously registered label or trademark. This is
intended not only to avoid confusion on the part of the public, but also
to protect an already used and registered trademark and an
established goodwill.24
Besides, the issue on protection of intellectual property, such as
trademarks, is factual in nature. The findings of the IPO, upheld on
appeal by the same office, and further sustained by the CA, bear great
weight and deserves respect from this Court. Moreover, the decision of
the IPO had already attained finality when Dermaline failed to timely
file its appeal with the IPO Office of the Director General.
WHEREFORE, the petition is DENIED. The Decision dated August 7,
2009 and the Resolution dated October 28, 2009 of the Court of
Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs against
petitioner.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice

Held: Yes, the accused is guilty of trademark infringement.


Under the IP Code (RA No. 8293), trademark infringement is
committed when:
Remedies; Infringement. Any person who shall, without the consent
of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale,
distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or
services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or
FREDCO vs. HARVARD UNIVERSITY
Facts:
In 2005, Fredco Manufacturing Corporation filed a petition for
cancellation before the Bureau of Legal Affairs of the Philippine
Intellectual Property Office against the President and Fellows of
Harvard College for the registration of its mark Harvard Veritas Shield
Symbol under the Classes 16, 18, 21, 25 and 28 of the Nice
International Classification of Goods an Services alleging that its
predecessor-in-interest, New York Garments Manufacturing & Export
Co., Inc., has been already using the mark Harvard since 1985 when
it registered the same mark under Class 25 of the Nice Classification.
Thus, Harvard University is not a prior user of the mark in the
Philippines and, therefore, has no right to register the mark.
On the other hand, Harvard University claimed that the mark Harvard
has been adopted by Harvard University in Cambridge,
Massachusetts, USA since 1639.Furthermore, it alleges that the name
and mark Harvard and Harvard Veritas Shield Symbol is registered
in more than 50 countries, including the Philippines, and has been
used in commerce since 1872. In fact, the name and mark is rated as
one of the top brands of the world, being worth between $750M and
$1B.Decision of BLA-IPO. The Bureau of Legal Affairs, IPO ruled in
favour of Fredco ordering the cancellation of
Harvard Universitys mark under Class 25 only because the other
classes were not confusingly similar with respect to the goods and
services of Fredco. Decision of ODG-IPO Harvard University appealed
before the Office of the Director General of IPO wherein ODG-IPO
reversed the decision of BLA-IPO. The Director General ruled that the
applicant must also be the owner of the mark sought to be registered
aside from the use of it. Thus, Fredco is not the owner of the mark
because it failed to explain how its predecessor got the mark
Harvard. There was also no evidence of the permission of Harvard
University for Fredco to use the mark. Decision of the Court of Appeals
Fredco appealed the decision of the Director General before the Court
of Appeals, which then affirmed the decision of ODG-IPO considering
the facts found by the Director General. CA ruled that Harvard
University had been using the marks way before Fredco and the
petitioners failed to explain its use of the marks bearing the words
Harvard, USA, Established 1936 and Cambridge, Massachusetts
within an oblong device.

155.2. Reproduce, counterfeit, copy or colorably imitate a registered


mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used in commerce upon or in connection with the sale, offering for
sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive, shall be liable in a civil action for
infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the
acts stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services using
the infringing material. (emphasis supplied)
There is trademark infringement when the second mark used is likely
to cause confusion. There are two tests to determine this:
1. Dominancy Test the court focuses on the similarity of the
dominant features of the marks that might cause confusion in the mind
of the consumer. Duplication or imitation is not necessary. Even
accidental confusion may be cause for trademark infringement. More
consideration is given to the aural and visual impressions created by
the marks on the buyers and less weight is given to factors like price,
quality, sales outlets and market segments.
Applied to this case: The SC found that the use of the S symbol by
Strong rubber shoes infringes on the registered Skechers trademark. It
is the most dominant feature of the mark -- one that catches the
buyers eye first. Even if the accused claims that there was a difference
because the S used by Skechers is found inside an oval, the fact that
the accused used the dominant S symbol already constitutes
trademark infringement.
The SC disagreed with the CA reasoning that the S symbol is already
used for many things, including the Superman symbol. Even if this is
true, the fact that Strong used same stylized S symbol as that of the
Skechers brand makes this a case of trademark infringement. The
same font and style was used in this case. The Superman S symbol
is clearly different from the S in this case.
2. Holistic or Totality Test the court looks at the entirety of the
marks as applied to the products, including the labels and packaging.
You must not only look at the dominant features but all other features
appearing on both marks.
Applied to this case: Both RTC and CA used the Holistic Test to rule
that there was no infringement. Both courts argued the following
differences:

The mark S found in Strong Shoes is not


enclosed in an oval design.

The word Strong is conspicuously placed at the


backside and insoles.

The hang tags and labels attached to the shoes


bears the word Strong for respondent and
Skechers U.S.A. for private complainant;

Strong shoes are modestly priced compared to the


costs of Skechers Shoes.

SKECHERS, USA, INC. vs. INTER PACIFIC INDUSTRIAL TRADING


CORP.
Facts: Skechers, USA Inc. is the owner of the registered trademarks
Skechers and S within an oval logo.
Skechers filed a criminal case for trademark infringement against
several store-owners that were selling shoes branded as Strong and
bearing a similar S logo. The Regional Trial Court (RTC) issued
search warrants, allowing the National Bureau of Investigation (NBI) to
raid the stores and confiscate 6,000 pairs of shoes.
The accused moved to quash the warrants, saying that there was no
confusing similarity between the Skechers and the Strong brands.
The RTC granted the motion to quash and ordered the NBI to return
the seized goods. The court said that the two brands had glaring
differences and that an ordinary prudent consumer would not mistake
one for the other.
On certiorari, the Court of Appeals (CA) affirmed the RTC ruling.
The matter was elevated to the Supreme Court (SC).
Issue: Did the accused commit trademark infringement?

Also using the Holistic Test, the SC corrected the lower courts and
ruled that the striking similarities between the products outweigh the
differences argued by the respondents:

Same color scheme of blue, white and gray;

Same wave-like pattern on the midsole and the


outer sole;

Same elongated designs at the side of the midsole


near the heel;

Same number of ridges on the outer soles (five at


the back and six in front);

Same location of the stylized S symbol;

The words "Skechers Sport Trail" at the back of


the Skechers shoes and "Strong Sport Trail" at the
back of the Strong shoes, using the same font,
color, size, direction and orientation;

Same two grayish-white semi-transparent circles


on top of the heel collars.

The features and overall design of the two products are so similar that
there is a high likelihood of confusion.
Two products do not need to be identical, they just need to be similar
enough to confuse the ordinary buyer in order to constitute trademark
infringement (Converse Rubber Corporation v. Jacinto Rubber &
Plastic Co., 186 Phil. 85 [1980]). Also, the difference in price cannot be
a defense in a case for trademark infringement (McDonalds
Corporation v. L.C. Big Mak Burger, Inc., 480 Phil. 402, 434 [2004]).

There are two types of confusion:


1.

Product Confusion where the ordinary prudent purchaser


would be induced to purchase on product in the belief that
he was buying another.

2.

Source or Origin Confusion although the goods are


different, the use of the mark causes the consumer to
assume that both products originate from the same source.

Trademark law protects the owner not only from product confusion but
also from source confusion. Protection is not limited to the same or
similar products but extends to all cases where:

The consumer is misled into thinking that the


trademark owner extended his business into a
new field;

The consumer is misled into thinking that the


trademark owner is in any way connected to the
infringers activities; or

The infringement forestalls the normal potential


expansion of the trademark owners business.

Trademark law does not only protect the owners reputation and
goodwill, it also protects the consumers from fraud and confusion.
In this case, it is clear that there was an attempt to copy the trademark
owners mark and product design. In trademark infringement cases,
you do not need to copy another's mark or product exactly. Colorable
imitation is enough.

DERMALINE, INC. vs. MYRA PHARMACEUTICALS, INC.


Facts: Dermaline filed with the IPO an application to register the
trademark Dermaline. Myra opposed this alleging that the trademark
resembles its trademark Dermalin and will cause confusion, mistake
and deception to the purchasing public. Dermalin was registered way
back 1986 and was commercially used since 1977. Myra claims that
despite attempts of Dermaline to differentiate its mark, the dominant
feature is the term Dermaline to which the first 8 letters were identical
to that of Dermalin. The pronunciation for both is also identical.
Further, both have 3 syllables each with identical sound and
appearance.
Issue: W/N the IPO should allow the registration of the trademark
Dermaline. NO
Held: As Myra correctly posits, it has the right under Section 147 of
R.A. No. 8293 to prevent third parties from using a trademark, or
similar signs or containers for goods or services, without its consent,
identical or similar to its registered trademark, where such use would
result in a likelihood of confusion. In determining confusion, case law
has developed two (2) tests, the Dominancy Test and the Holistic or
Totality
Test.
The Dominancy Test focuses on the similarity of the prevalent features
of the competing trademarks that might cause confusion or deception.
Duplication or imitation is not even required; neither is it necessary that
the label of the applied mark for registration should suggest an effort to
imitate. Relative to the question on confusion of marks and trade
names, jurisprudence noted two (2) types of confusion, viz: (1)
confusion of goods (product confusion), where the ordinarily prudent
purchaser would be induced to purchase one product in the belief that
he was purchasing the other; and (2) confusion of business (source or
origin confusion), where, although the goods of the parties are
different, the product, the mark of which registration is applied for by
one party, is such as might reasonably be assumed to originate with
the registrant of an earlier product, and the public would then be
deceived either into that belief or into the belief that there is some
connection between the two parties, though inexistent.
Using this test, the IPO declared that both confusion of goods and
service and confusion of business or of origin were apparent in both
trademarks. While it is true that the two marks are presented
differently, they are almost spelled in the same way, except for
Dermalines mark which ends with the letter "E," and they are
pronounced practically in the same manner in three (3) syllables, with
the ending letter "E" in Dermalines mark pronounced silently. Thus,
when an ordinary purchaser, for example, hears an advertisement of
Dermalines applied trademark over the radio, chances are he will
associate it with Myras. When one applies for the registration of a
trademark or label which is almost the same or that very closely
resembles one already used and registered by another, the application
should be rejected and dismissed outright, even without any opposition
on the part of the owner and user of a previously registered label or
trademark.
Further, Dermalines stance that its product belongs to a separate and
different classification from Myras products with the registered
trademark does not eradicate the possibility of mistake on the part of
the purchasing public to associate the former with the latter, especially
considering that both classifications pertain to treatments for the skin.