Republic Act No.

8293

AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND

ESTABLISHING THE INTELLECTUAL PROPERTY OFFICE, PROVIDING FOR
ITS POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the

Philippines in Congress assembled::

PART I THE INTELLECTUAL PROPERTY OFFICE

Section 1. Title. - This Act shall be known as the

"Intellectual Property Code of the Philippines."

Section 2. Declaration of State Policy. - The

State recognizes that an effective intellectual
and industrial property system is vital to the
development of domestic and creative activity,
facilitates transfer of technology, attracts
foreign investments, and ensures market access for
our products. It shall protect and secure the
exclusive rights of scientists, inventors,
artists and other gifted citizens to their
intellectual property and creations, particularly
when beneficial to the people, for such periods
as provided in this Act.

The use of intellectual property bears a social

function. To this end, the State shall promote the
diffusion of knowledge and information for the
promotion of national development and progress and
the common good.

It is also the policy of the State to streamline

administrative procedures of registering patents,
trademarks and copyright, to liberalize the
registration on the transfer of technology, and
to enhance the enforcement of intellectual
property rights in the Philippines. (n)

Section 3. International Conventions and

Reciprocity. - Any person who is a national or who

is domiciled or has a real and effective

industrial establishment in a country which is a
party to any convention, treaty or agreement

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relating to intellectual property rights or the
repression of unfair competition, to which the
Philippines is also a party, or extends reciprocal
rights to nationals of the Philippines by law,
shall be entitled to benefits to the extent
necessary to give effect to any provision of such
convention, treaty or reciprocal law, in addition
to the rights to which any owner of an
intellectual property right is otherwise entitled
by this Act. (n)

A. Intellectual Property Rights

Section 4. Definitions. - 4.1. The term

"intellectual property rights" consists of:

a) Copyright and Related Rights;

b) Trademarks and Service Marks;

c) Geographic Indications;
d) Industrial Designs;

e) Patents;

f) Layout-Designs (Topographies) of Integrated

Circuits; and

g) Protection of Undisclosed Information (n,

TRIPS).

4.2. The term "technology transfer arrangements"

refers to contracts or agreements involving the

transfer of systematic knowledge for the
manufacture of a product, the application of a
process, or rendering of a service including
management contracts; and the transfer,
assignment or licensing of all forms of
intellectual property rights, including licensing
of computer software except computer software
developed for mass market.

4.3. The term "Office" refers to the Intellectual

Property Office created by this Act.

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4.4. The term "IPO Gazette" refers to the gazette
published by the Office under this Act. (n)

MIGHTY CORPORATION and LA CAMPANA FABRICA DE

TABACO, INC. vs. E. & J. GALLO
WINERY and THE ANDRESONS GROUP, INC.

In this petition for review on certiorari under

Rule 45, petitioners Mighty Corporation and La
Campana Fabrica de Tabaco, Inc. (La Campana) seek
to annul, reverse and set aside: (a) the November
15, 2001 decision1[1] of the Court of Appeals (CA)
in CA-G.R. CV No. 65175 affirming the November 26,
1998 decision,2[2] as modified by the June 24,
1999 order,3[3] of the Regional Trial Court of
Makati City, Branch 57 (Makati RTC) in Civil Case
No. 93-850, which held petitioners liable for, and
permanently enjoined them from, committing
trademark infringement and unfair competition,
and which ordered them to pay damages to

respondents E. & Group,

and The Andresons J. Gallo Winery
Inc. (Gallo Winery)
(Andresons); (b) the
July 11, 2002 CA resolution denying their motion
for reconsideration4[4] and (c) the aforesaid
Makati RTC decision itself.

I.

The Factual Background

Respondent Gallo Winery is a foreign corporation

not doing business in the Philippines but
organized and existing under the laws of the State

of California,
where United States
all its wineries of America
are located. Gallo (U.S.),
Winery
produces different kinds of wines and brandy
products and sells them in many countries under
different registered trademarks, including the
GALLO and ERNEST & JULIO GALLO wine trademarks.

Respondent domestic corporation, Andresons, has

been Gallo Winerys exclusive wine importer and

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distributor in the Philippines since 1991, selling
these products in its own name and for its own
account.5[5]

Gallo Winerys GALLO wine trademark was registered

in the principal register of the Philippine Patent
Office (now Intellectual Property Office) on
November 16, 1971 under Certificate of
Registration No. 17021 which was renewed on
November 16, 1991 for another 20 years.6[6] Gallo
Winery also applied for registration of its ERNEST
& JULIO GALLO wine trademark on October 11, 1990
under Application Serial No. 901011-00073599-PN
but the records do not disclose if it was ever
approved by the Director of Patents.7[7]

On the other hand, petitioners Mighty Corporation

and La Campana and their sister company, Tobacco
Industries of the Philippines (Tobacco
Industries), are engaged in the cultivation,
manufacture, distribution and sale of tobacco
products for which they have been using the GALLO
cigarette trademark since 1973. 8[8]

The Bureau of Internal Revenue (BIR) approved

Tobacco Industries use of GALLO 100s cigarette
mark on September 14, 1973 and GALLO filter
cigarette mark on March 26, 1976, both for the
manufacture and sale of its cigarette products.
In 1976, Tobacco Industries filed its
manufacturers sworn statement as basis for BIRs
collection of specific tax on GALLO
cigarettes.9[9]

On February 5, 1974, Tobacco Industries applied

for, but eventually did not pursue, the
registration of the GALLO cigarette trademark in

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the principal register of the then Philippine
Patent Office.10[10]

In May 1984, Tobacco Industries assigned the GALLO

cigarette trademark to La Campana which, on July
16, 1985, applied for trademark registration in
the Philippine Patent Office.11[11] On July 17,
1985, the National Library issued Certificate of
Copyright Registration No. 5834 for La Campanas
lifetime copyright claim over GALLO cigarette
labels.12[12]

Subsequently, La Campana authorized Mighty

Corporation to manufacture and sell cigarettes
bearing the GALLO trademark.13[13] BIR approved
Mighty Corporations use of GALLO 100s cigarette
brand, under licensing agreement with Tobacco
Industries, on May 18, 1988, and GALLO SPECIAL
MENTHOL 100s cigarette brand on April 3,
1989.14[14]

Petitioners claim that GALLO cigarettes have been

sold in the Philippines since 1973, initially by
Tobacco Industries, then by La Campana and finally
by Mighty Corporation.15[15]

On the other hand, although the GALLO wine

trademark was registered in the Philippines in
1971, respondents claim that they first introduced
and sold the GALLO and ERNEST & JULIO GALLO wines
in the Philippines circa 1974 within the then U.S.
military facilities only. By 1979, they had
expanded their Philippine market through
authorized distributors and independent
outlets.16[16]

Respondents claim that they first learned about

the existence of GALLO cigarettes in the latter

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part of 1992 when an Andresons employee saw such
cigarettes on display with GALLO wines in a Davao
supermarket wine cellar section.17[17] Forthwith,
respondents sent a demand letter to petitioners
asking them to stop using the GALLO trademark, to
no avail.

II.

The Legal Dispute

On March 12, 1993, respondents sued petitioners

in the Makati RTC for trademark and tradename
infringement and unfair competition, with a prayer
for damages and preliminary injunction.

Respondents charged petitioners with violating

Article 6bis of the Paris Convention for the
Protection of Industrial Property (Paris
Convention)18[18] and RA 166 (Trademark
Law),19[19] specifically, Sections 22 and 23 (for
trademark infringement),20[20] 29 and 3021[21]
(for unfair competition and false designation of
srcin) and 37 (for tradename
infringement).22[22] They claimed that
petitioners adopted the GALLO trademark to ride
on Gallo Winerys GALLO and ERNEST & JULIO GALLO
trademarks established reputation and popularity,
thus causing confusion, deception and mistake on
the part of the purchasing public who had always
associated GALLO and ERNEST & JULIO GALLO
trademarks with Gallo Winerys wines. Respondents
prayed for the issuance of a writ of preliminary
injunction and ex parte restraining order, plus
P2 million as actual and compensatory damages, at
least P500,000 as exemplary and moral damages, and

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at least P500,000 as attorneys fees and litigation
expenses.23[23]

In their answer, petitioners alleged, among other

affirmative defenses, that: petitioners GALLO
cigarettes and Gallo Winerys wines were totally
unrelated products; Gallo Winerys GALLO trademark
registration certificate covered wines only, not
cigarettes; GALLO cigarettes and GALLO wines were
sold through different channels of trade; GALLO
cigarettes, sold at P4.60 for GALLO filters and
P3 for GALLO menthols, were low-cost items
compared to Gallo Winerys high-priced luxury wines
which cost between P98 to P242.50; the target
market of Gallo Winerys wines was the middle or
high-income bracket with at least P10,000 monthly
income while GALLO cigarette buyers were farmers,
fishermen, laborers and other low-income workers;
the dominant feature of the GALLO cigarette mark
was the rooster device with the manufacturers name

clearly indicated as MIGHTY CORPORATION while, in

the case of Gallo Winerys wines, it was the full
names of the founders-owners ERNEST & JULIO GALLO
or just their surname GALLO; by their inaction and
conduct, respondents were guilty of laches and
estoppel; and petitioners acted with honesty,
justice and good faith in the exercise of their
right to manufacture and sell GALLO cigarettes.

In an order dated April 21, 1993,24[24] the Makati

RTC denied, for lack of merit, respondents prayer
for the issuance of a writ of preliminary
injunction,25[25] holding that respondents GALLO
trademark registration certificate covered wines
only, that respondents wines and petitioners
cigarettes were not related goods and respondents
failed to prove material damage or great
irreparable injury as required by Section 5, Rule
58 of the Rules of Court.26[26]

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On August 19, 1993, the Makati RTC denied, for
lack of merit, respondents motion for
reconsideration. The court reiterated that
respondents wines and petitioners cigarettes were
not related goods since the likelihood of
deception and confusion on the part of the
consuming public was very remote. The trial court
emphasized that it could not rely on foreign
rulings cited by respondents because the[se] cases
were decided by foreign courts on the basis of
unknown facts peculiar to each case or upon
factual surroundings which may exist only within
their jurisdiction. Moreover, there [was] no
showing that [these cases had] been tested or
found applicable in our jurisdiction.27[27]

On February 20, 1995, the CA likewise dismissed

respondents petition for review on certiorari,
docketed as CA-G.R. No. 32626, thereby affirming
the Makati RTCs denial of the application for

issuance of a writ of preliminary injunction

against petitioners.28[28]

After trial on the merits, however, the Makati

RTC, on November 26, 1998, held petitioners liable
for, and permanently enjoined them from,
committing trademark infringement and unfair
competition with respect to the GALLO trademark:

WHEREFORE, judgment is rendered in favor of the

plaintiff (sic) and against the defendant (sic),
to wit:

a. permanently restraining and enjoining

defendants, their distributors, trade outlets,
and all persons acting for them or under their
instructions, from (i) using E & Js registered
trademark GALLO or any other reproduction,
counterfeit, copy or colorable imitation of said
trademark, either singly or in conjunction with
other words, designs or emblems and other acts of
similar nature, and (ii) committing other acts of
unfair competition against plaintiffs by
manufacturing and selling their cigarettes in the

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successors-in-interest, herein petitioners,
either under the Trademark Law or the Paris
Convention.

Respondents GALLO trademark

registration is limited to
wines only

We also note that the GALLO trademark registration

certificates in the Philippines and in other
countries expressly state that they cover wines
only, without any evidence or indication that
registrant Gallo Winery expanded or intended to
expand its business to cigarettes.63[63]

Thus, by strict application of Section 20 of the

Trademark Law, Gallo Winerys exclusive right to
use the GALLO trademark should be limited to
wines, the only product indicated in its
registration certificates. This strict statutory
limitation on the exclusive right to use
trademarks was amply clarified in our ruling in
Faberge, Inc. vs. Intermediate Appellate
Court:64[64]

Having thus reviewed the laws applicable to the

case before Us, it is not difficult to discern
from the foregoing statutory enactments that
private respondent may be permitted to register
the trademark BRUTE for briefs produced by it
notwithstanding petitioner's vehement
protestations of unfair dealings in marketing its
own set of items which are limited to: after-shave
lotion, shaving cream, deodorant, talcum powder
and toilet soap. Inasmuch as petitioner has not
ventured in the production of briefs, an item
which is not listed in its certificate of
registration, petitioner cannot and should not be
allowed to feign that private respondent had
invaded petitioner's exclusive domain. To be sure,
it is significant that petitioner failed to annex
in its Brief the so-called eloquent proof that
petitioner indeed intended to expand its mark BRUT
to other goods (Page 27, Brief for the Petitioner;
page 202, Rollo). Even then, a mere application

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by petitioner in this aspect does not suffice and
may not vest an exclusive right in its favor that
can ordinarily be protected by the Trademark Law.
In short, paraphrasing Section 20 of the Trademark
Law as applied to the documentary evidence adduced
by petitioner, the certificate of registration
issued by the Director of Patents can confer upon
petitioner the exclusive right to use its own
symbol only to those goods specified in the
certificate, subject to any conditions and
limitations stated therein. This basic point is
perhaps the unwritten rationale of Justice Escolin
in Philippine Refining Co., Inc. vs. Ng Sam (115
SCRA 472 [1982]), when he stressed the principle
enunciated by the United States Supreme Court in
American Foundries vs. Robertson (269 U.S. 372,
381, 70 L ed 317, 46 Sct. 160) that one who has
adopted and used a trademark on his goods does not
prevent the adoption and use of the same trademark
by others for products which are of a different
description. Verily, this Court had the occasion
to observe in the 1966 case of George W. Luft Co.,
Inc. vs. Ngo Guan (18 SCRA 944 [1966]) that no
serious objection was posed by the petitioner
therein since the applicant utilized the emblem
Tango for no other product than hair pomade in
which petitioner does not deal.

This brings Us back to the incidental issue raised

by petitioner which private respondent sought to
belie as regards petitioner's alleged expansion
of its business. It may be recalled that
petitioner claimed that it has a pending
application for registration of the emblem BRUT
33 for briefs (page 25, Brief for the Petitioner;
page 202, Rollo) to impress upon Us the Solomonic
wisdom imparted by Justice JBL Reyes in Sta. Ana
vs. Maliwat (24 SCRA 1018 [1968]), to the effect
that dissimilarity of goods will not preclude
relief if the junior user's goods are not remote
from any other product which the first user would
be likely to make or sell (vide, at page 1025).
Commenting on the former provision of the
Trademark Law now embodied substantially under
Section 4(d) of Republic Act No. 166, as amended,
the erudite jurist opined that the law in point
does not require that the articles of manufacture

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of the previous user and late user of the mark
should possess the same descriptive properties or
should fall into the same categories as to bar the
latter from registering his mark in the principal
register. (supra at page 1026).

Yet, it is equally true that as aforesaid, the

protective mantle of the Trademark Law extends
only to the goods used by the first user as
specified in the certificate of registration
following the clear message conveyed by Section
20.

How do We now reconcile the apparent conflict

between Section 4(d) which was relied upon by
Justice JBL Reyes in the Sta. Ana case and Section
20? It would seem that Section 4(d) does not
require that the goods manufactured by the second
user be related to the goods produced by the
senior user while Section 20 limits the exclusive
right of the senior user only to those goods
specified in the certificate of registration. But
the rule has been laid down that the clause which
comes later shall be given paramount significance
over an anterior proviso upon the presumption that
it expresses the latest and dominant purpose.
(Graham Paper Co. vs. National Newspapers Asso.
(Mo. App.) 193 S.W. 1003; Barnett vs. Merchant's
L. Ins. Co., 87 Okl. 42; State ex nel Atty. Gen.
vs. Toledo, 26 N.E., p. 1061; cited by Martin,
Statutory Construction Sixth ed., 1980 Reprinted,
p. 144). It ineluctably follows that Section 20
is controlling and, therefore, private respondent
can appropriate its symbol for the briefs it
manufactures because as aptly remarked by Justice
Sanchez in Sterling Products International Inc.
vs. Farbenfabriken Bayer (27 SCRA 1214 [1969]):

Really, if the certificate of registration were

to be deemed as including goods not specified
therein, then a situation may arise whereby an
applicant may be tempted to register a trademark
on any and all goods which his mind may conceive
even if he had never intended to use the trademark
for the said goods. We believe that such omnibus
registration is not contemplated by our Trademark
Law. (1226).

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NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS AND RESPONDENTS
GOODS OR BUSINESS

A crucial issue in any trademark infringement case

is the likelihood of confusion, mistake or deceit
as to the identity, source or srcin of the goods
or identity of the business as a consequence of
using a certain mark. Likelihood of confusion is
admittedly a relative term, to be determined
rigidly according to the particular (and sometimes
peculiar) circumstances of each case. Thus, in
trademark cases, more than in other kinds of
litigation, precedents must be studied in the
light of each particular case. 65[65]

There are two types of confusion in trademark

infringement. The first is confusion of goods when
an otherwise prudent purchaser is induced to
purchase one product in the belief that he is
purchasing another, in which case defendants goods
are then bought as the plaintiffs and its poor
quality reflects badly on the plaintiffs
reputation. The other is confusion of business
wherein the goods of the parties are different but
the defendants product can reasonably (though
mistakenly) be assumed to srcinate from the
plaintiff, thus deceiving the public into
believing that there is some connection between
the plaintiff and defendant which, in fact, does
not exist.66[66]

In determining the likelihood of confusion, the

Court must consider: [a] the resemblance between
the trademarks; [b] the similarity of the goods
to which the trademarks are attached; [c] the
likely effect on the purchaser and [d] the
registrants express or implied consent and other
fair and equitable considerations.

Petitioners and respondents both use GALLO in the

labels of their respective cigarette and wine
products. But, as held in the following cases, the
use of an identical mark does not, by itself, lead

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to a legal conclusion that there is trademark
infringement:

(a) in Acoje Mining Co., Inc. vs. Director of

Patent,67[67] we ordered the approval of
Acoje Minings application for registration
of the trademark LOTUS for its soy sauce
even though Philippine Refining Company had
prior registration and use of such identical
mark for its edible oil which, like soy
sauce, also belonged to Class 47;

(b) in Philippine Refining Co., Inc. vs. Ng Sam

and Director of Patents,68[68] we upheld the
Patent Directors registration of the same
trademark CAMIA for Ng Sams ham under Class
47, despite Philippine Refining Companys
prior trademark registration and actual use
of such mark on its lard, butter, cooking
oil (all of which belonged to Class 47),
abrasive detergents, polishing materials and
soaps;

(c) in Hickok Manufacturing Co., Inc. vs. Court

of Appeals and Santos Lim Bun Liong,69[69]
we dismissed Hickoks petition to cancel
private respondents HICKOK trademark
registration for its Marikina shoes as
against petitioners earlier registration of
the same trademark for handkerchiefs,
briefs, belts and wallets;

(d) in Shell Company of the Philippines vs.

Court of Appeals,70[70] in a minute
resolution, we dismissed the petition for
review for lack of merit and affirmed the
Patent Offices registration of the trademark
SHELL used in the cigarettes manufactured by
respondent Fortune Tobacco Corporation,
notwithstanding Shell Companys opposition as
the prior registrant of the same trademark

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Intermediate Appellate Court (203 SCRA 59 [1991]).
As pointed out by the BPTTT:

Regarding the applicability of Article 8 of the

Paris Convention, this Office believes that there
is no automatic protection afforded an entity
whose tradename is alleged to have been infringed
through the use of that name as a trademark by a
local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate
Appellate Court, et. al., G.R. No. 75420, 15
November 1991, the Honorable Supreme Court held
that:

The Paris Convention for the Protection of

Industrial Property does not automatically
exclude all countries of the world which have
signed it from using a t radename which happens to
be used in one country. To illustrate if a taxicab
or bus company in a town in the United Kingdom or
India happens to use the tradename Rapid
Transportation, it does not necessarily follow
that Rapid can no longer be registered in Uganda,
Fiji, or the Philippines.

This office is not unmindful that in (sic) the

Treaty of Paris for the Protection of Intellectual
Property regarding well-known marks and possible
application thereof in this case. Petitioner, as
this office sees it, is trying to seek refuge
under its protective mantle, claiming that the
subject mark is well known in this country at the
time the then application of NSR Rubber was filed.
However, the then Minister of Trade and Industry,
the Hon. Roberto V. Ongpin, issued a memorandum
dated 25 October 1983 to the Director of Patents,
a set of guidelines in the implementation of
Article 6bis of the Treaty of Paris. These
conditions are:

a) the mark must be internationally

known;
b) the subject of the right must be a

trademark,
or anythingnot a patent or copyright
else;
c) the mark must be for use in the same

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 or similar kinds of goods; and
d) the person claiming must be the
owner of the mark (The Parties
Convention Commentary on the Paris
Convention. Article by Dr. Bogsch,
Director General of the World
Intellectual Property Organization,

Geneva, Switzerland, 1985)

From the set of facts found in the records, it is
ruled that the Petitioner failed to comply with
the third requirement of the said memorandum that
is the mark must be for use in the same or similar
kinds of goods. The Petitioner is using the mark
CANON for products belonging to class 2 (paints,
chemical products) while the Respondent is using
the same mark for sandals (class 25).

Hence, Petitioner's contention that its mark is

well-known at the time the Respondent filed its
application for the same mark should fail.
(Emphasis supplied.)

Consent of the Registrant and

Other air, Just and Equitable
Considerations

Each trademark infringement case presents a unique

problem which must be answered by weighing the
conflicting interests of the litigants.124[124]

Respondents claim that GALLO wines and GALLO

cigarettes flow through the same channels of
trade, that is, retail trade. If respondents
assertion is true, then both goods co-existed
peacefully for a considerable period of time. It
took respondents almost 20 years to know about the
existence of GALLO cigarettes and sue petitioners
for trademark infringement. Given, on one hand,
the long period of time that petitioners were
engaged in the manufacture, marketing,
distribution and sale of GALLO cigarettes and, on
the other, respondents delay in enforcing their
rights (not to mention implied consent,
acquiescence or negligence) we hold that equity,
justice and fairness require us to rule in favor

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of petitioners. The scales of conscience and
reason tip far more readily in favor of
petitioners than respondents.

Moreover, there exists no evidence that

petitioners employed malice, bad faith or fraud,
or that they intended to capitalize on respondents
goodwill in adopting the GALLO mark for their
cigarettes which are totally unrelated to
respondents GALLO wines. Thus, we rule out
trademark infringement on the part of petitioners.

PETITIONERS ARE ALSO NOT LIABLE

FOR UNFAIR COMPETITION

Under Section 29 of the Trademark Law, any person

who employs deception or any other means contrary
to good faith by which he passes off the goods
manufactured by him or in which he deals, or his
business, or services for those of the one having
established such goodwill, or who commits any acts
calculated to produce said result, is guilty of
unfair competition. It includes the following
acts:

(a) Any person, who in selling his goods shall

give them the general appearance of goods of
another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the
packages in which they are contained, or the
devices or words thereon, or in any other feature
of their appearance, which would be likely to
influence purchasers to believe that the goods
offered are those of a manufacturer or dealer
other than the actual manufacturer or dealer, or
who otherwise clothes the goods with such
appearance as shall deceive the public and defraud
another of his legitimate trade, or any subsequent
vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;

(b) Any person who by any artifice, or device, or

who employs any other means calculated to induce
the false belief that such person is offering the
services of another who has identified such
services in the mind of the public;

(c) Any person who shall make any false statement

in the course of trade or who shall commit any
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other act contrary to good faith of a nature
calculated to discredit the goods, business or
services of another.

The universal test question is whether the public

is likely to be deceived. Nothing less than
conduct tending to pass off one mans goods or
business as that of another constitutes unfair
competition. Actual or probable deception and
confusion on the part of customers by reason of
defendants practices must always appear.125[125]
On this score, we find that petitioners never
attempted to pass off their cigarettes as those
of respondents. There is no evidence of bad faith
or fraud imputable to petitioners in using their
GALLO cigarette mark.

All told, after applying all the tests provided

by the governing laws as well as those recognized
by jurisprudence, we conclude that petitioners are
not liable for trademark infringement, unfair
competition or damages.

WHEREFORE, finding the petition for review

meritorious, the same is hereby GRANTED. The
questioned decision and resolution of the Court
of Appeals in CA-G.R. CV No. 65175 and the
November 26, 1998 decision and the June 24, 1999
order of the Regional Trial Court of Makati,
Branch 57 in Civil Case No. 93-850 are hereby
REVERSED and SET ASIDE and the complaint against
petitioners DISMISSED.

B. Differences between Copyrights, Trademarks and

Patent

1. PEARL & DEAN (PHIL.), INCORPORATED vs.

SHOEMART, INCORPORATED, and NORTH EDSA MARKETING,
INCORPORATED.

In the instant petition for review on certiorari

under Rule 45 of the Rules of Court, petitioner
Pearl & Dean (Phil.) Inc. (P & D) assails the May
22, 2001 decision126[1] of the Court of Appeals

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reversing the October 31, 1996 decision127[2] of
the Regional Trial Court of Makati, Branch 133,
in Civil Case No. 92-516 which declared private
respondents Shoemart Inc. (SMI) and North Edsa
Marketing Inc. (NEMI) liable for infringement of
trademark and copyright, and unfair competition.

FACTUAL ANTECEDENTS

The May 22, 2001 decision of the Court of

Appeals128[3] contained a summary of this dispute:

Plaintiff-appellant Pearl and Dean (Phil.), Inc.

is a corporation engaged in the manufacture of
advertising display units simply referred to as
light boxes. These units utilize specially printed
posters sandwiched between plastic sheets and
illuminated with back lights. Pearl and Dean was
able to secure a Certificate of Copyright
Registration dated January 20, 1981 over these
illuminated display units. The advertising light
boxes were marketed under the trademark Poster
Ads. The application for registration of the
trademark was filed with the Bureau of Patents,
Trademarks and Technology Transfer on June 20,
1983, but was approved only on September 12, 1988,
per Registration No. 41165. From 1981 to about
1988, Pearl and Dean employed the services of
Metro Industrial Services to manufacture its
advertising displays.

Sometime in 1985, Pearl and Dean negotiated with

defendant-appellant Shoemart, Inc. (SMI) for the
lease and installation of the light boxes in SM
City North Edsa. Since SM City North Edsa was
under construction at that time, SMI offered as
an alternative, SM Makati and SM Cubao, to which
Pearl and Dean agreed. On September 11, 1985,
Pearl and Deans General Manager, Rodolfo Vergara,
submitted for signature the contracts covering SM
Cubao and SM Makati to SMIs Advertising Promotions
and Publicity Division Manager, Ramonlito Abano.
Only the contract for SM Makati, however, was
returned signed. On October 4, 1985, Vergara wrote
Abano inquiring about the other contract and

46 | Page
the patentability of its invention before the IPO
and the public the petitioner would be protected
for 50 years. This situation could not have been
the intention of the law.

In the oft-cited case of Baker vs. Selden146[21],

the United States Supreme Court held that only the
expression of an idea is protected by copyright,
not the idea itself. In that case, the plaintiff
held the copyright of a book which expounded on a
new accounting system he had developed. The
publication illustrated blank forms of ledgers
utilized in such a system. The defendant
reproduced forms similar to those illustrated in
the plaintiffs copyrighted book. The US Supreme
Court ruled that:

There is no doubt that a work on the subject of

book-keeping, though only explanatory of well
known systems, may be the subject of a copyright;
but, then, it is claimed only as a book. x x x.
But there is a clear distinction between the
books, as such, and the art, which it is, intended
to illustrate. The mere statement of the
proposition is so evident that it requires hardly
any argument to support it. The same distinction
may be predicated of every other art as well as
that of bookkeeping. A treatise on the composition
and use of medicines, be they old or new; on the
construction and use of ploughs or watches or
churns; or on the mixture and application of
colors for painting or dyeing; or on the mode of
drawing lines to produce the effect of
perspective, would be the subject of copyright;
but no one would contend that the copyright of the
treatise would give the exclusive right to the art
or manufacture described therein. The copyright
of the book, if not pirated from other works,
would be valid without regard to the novelty or
want of novelty of its subject matter. The novelty
of the art or thing described or explained has
nothing to do with the validity of the copyright.
To give to the author of the book an exclusive
property in the art described therein, when no
examination of its novelty has ever been

61 | Page
officially made, would be a surprise and a fraud
upon the public. That is the province of letters
patent, not of copyright. The claim to an
invention of discovery of an art or manufacture
must be subjected to the examination of the Patent
Office before an exclusive right therein can be
obtained; and a patent from the government can
only secure it.

The difference between the two things, letters

patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take
the case of medicines. Certain mixtures are found
to be of great value in the healing art. If the
discoverer writes and publishes a book on the
subject (as regular physicians generally do), he
gains no exclusive right to the manufacture and
sale of the medicine; he gives that to the public.
If he desires to acquire such exclusive right, he
must obtain a patent for the mixture as a new art,

manufacture or composition of matter. He may

copyright his book, if he pleases; but that only
secures to him the exclusive right of printing and
publishing his book. So of all other inventions
or discoveries.

The copyright of a book on perspective, no matter

how many drawings and illustrations it may
contain, gives no exclusive right to the modes of
drawing described, though they may never have been
known or used before. By publishing the book
without getting a patent for the art, the latter
is given to the public.

x x x

Now, whilst no one has a right to print or publish

his book, or any material part thereof, as a book
intended to convey instruction in the art, any
person may practice and use the art itself which
he has described and illustrated therein. The use
of the art is a totally different thing from a
publication of the book explaining it. The
copyright of a book on bookkeeping cannot secure
the exclusive right to make, sell and use account

books Whether
book. preparedthe
upon
art the plan
might set forth
or might in such
not have been
patented, is a question, which is not before us.

62 | Page
It was not patented, and is open and free to the
use of the public. And, of course, in using the
art, the ruled lines and headings of accounts must
necessarily be used as incident to it.

The plausibility of the claim put forward by the

complainant in this case arises from a confusion
of ideas produced by the peculiar nature of the
art described in the books, which have been made
the subject of copyright. In describing the art,
the illustrations and diagrams employed happened
to correspond more closely than usual with the
actual work performed by the operator who uses the
art. x x x The description of the art in a book,
though entitled to the b enefit of copyright, lays
no foundation for an exclusive claim to the art
itself. The object of the one is explanation; the
object of the other is use. The former may be
secured by copyright. The latter can only be
secured, if it can be secured at all, by letters

patent. (underscoring supplied)

ON THE ISSUE OF TRADEMARK INFRINGEMENT

This issue concerns the use by respondents of the

mark Poster Ads which petitioners president said
was a contraction of poster advertising. P & D was
able to secure a trademark certificate for it, but
one where the goods specified were stationeries
such as letterheads, envelopes, calling cards and
newsletters.147[22] Petitioner admitted it did
not commercially engage in or market these goods.
On the contrary, it dealt in electrically operated
backlit advertising units and the sale of
advertising spaces thereon, which, however, were
not at all specified in the trademark certificate.

Under the circumstances, the Court of Appeals

correctly cited Faberge Inc. vs. Intermediate
Appellate Court,148[23] where we, invoking
Section 20 of the old Trademark Law, ruled that
the certificate of registration issued by the
Director of Patents can confer (upon petitioner)
the exclusive right to use its own symbol only to
those goods specified in the certificate, subject

63 | Page
to any conditions and limitations specified in the
certificate x x x. One who has adopted and used a
trademark on his goods does not prevent the
adoption and use of the same trademark by others
for products which are of a different
description.149[24] Faberge, Inc. was correct and
was in fact recently reiterated in Canon Kabushiki
Kaisha vs. Court of Appeals.150[25]

Assuming arguendo that Poster Ads could validly

qualify as a trademark, the failure of P & D to
secure a trademark registration for specific use
on the light boxes meant that there could not have
been any trademark infringement since
registration was an essential element thereof.

ON THE ISSUE OF UNFAIR COMPETITION

If at all, the cause of action should have been

for unfair competition, a situation which was
possible even if P & D had no registration.151[26]
However, while the petitioners complaint in the
RTC also cited unfair competition, the trial court
did not find private respondents liable therefor.
Petitioner did not appeal this particular point;
hence, it cannot now revive its claim of unfair
competition.

But even disregarding procedural issues, we

nevertheless cannot hold respondents guilty of
unfair competition.

By the nature of things, there can be no unfair

competition under the

it is applicable law on copyrights
to disputes over the although
use of
trademarks. Even a name or phrase incapable of
appropriation as a trademark or tradename may, by
long and exclusive use by a business (such that
the name or phrase becomes associated with the
business or product in the mind of the purchasing
public), be entitled to protection against unfair
competition.152[27] In this case, there was no

64 | Page
evidence that P & Ds use of Poster Ads was
distinctive or well-known. As noted by the Court
of Appeals, petitioners expert witnesses himself
had testified that Poster Ads was too generic a
name. So it was difficult to identify it with any
company, honestly speaking.153[28] This crucial
admission by its own expert witness that Poster
Ads could not be associated with P & D showed
that, in the mind of the public, the goods and
services carrying the trademark Poster Ads could
not be distinguished from the goods and services
of other entities.

This fact also prevented the application of the

doctrine of secondary meaning. Poster Ads was
generic and incapable of being used as a trademark
because it was used in the field of poster
advertising, the very business engaged in by
petitioner. Secondary meaning means that a word
or phrase srcinally incapable of exclusive

appropriation with reference to an article in the

market (because it is geographically or otherwise
descriptive) might nevertheless have been used for
so long and so exclusively by one producer with
reference to his article that, in the trade and
to that branch of the purchasing public, the word
or phrase has come to mean that the article was
his property.154[29] The admission by petitioners
own expert witness that he himself could not
associate Poster Ads with petitioner P & D because
it was too generic definitely precluded the
application of this exception.

Having discussed the most important and critical

issues, we see no need to belabor the rest.

All told, the Court finds no reversible error

committed by the Court of Appeals when it reversed
the Regional Trial Court of Makati City.

WHEREFORE, the petition is hereby DENIED and the

decision of the Court of Appeals dated May 22,
2001 is AFFIRMED in toto.

65 | Page
 (c) Description of the invention and one (1)
or more claims in Filipino or English.

40.2. If any of these elements is not submitted

within the period set by the Regulations, the
application shall be considered withdrawn. (n)

Section 41. According a Filing Date. - The Office

shall examine whether the patent application

satisfies the requirements for the grant of date
of filing as provided in Section 40 hereof. If the
date of filing cannot be accorded, the applicant
shall be given an opportunity to correct the
deficiencies in accordance with the implementing
Regulations. If the application does not contain
all the elements indicated in Section 40, the
filing date should be that date when all the
elements are received. If the deficiencies are not
remedied within the prescribed time limit, the
application shall be considered withdrawn. (n)

Section 42. Formality Examination. - 42.1. After

the patent application has been accorded a filing
date and the required fees have been paid on time
in accordance with the Regulations, the applicant
shall comply with the formal requirements
specified by Section 32 and the Regulations within
the prescribed period, otherwise the application
shall be considered withdrawn.

42.2. The Regulations shall determine the

procedure for the re-examination and revival of
an application as well as the appeal to the
Director of Patents from any final action by the
examiner. (Sec. 16, R.A. No. 165a)

Section 43. Classification and Search. - An

application that has complied with the formal
requirements shall be classified and a search
conducted to determine the prior art. (n)

Section 44. Publication of Patent Application. -

44.1. The patent application shall be published
in the IPO Gazette together with a search document
established by or on behalf of the Office citing
any documents that reflect prior art, after the
expiration of eighteen ( 18) months from the
filing date or priority date.

78 | Page
44.2. After publication of a patent application,
any interested party may inspect the application
documents filed with the Office.

44.3. The Director General subject to the approval

of the Secretary of Trade and Industry, may
prohibit or restrict the publication of an
application, if in his opinion, to do so would be
prejudicial to the national security and interests
of the Republic of the Philippines. (n)

Section 45. Confidentiality Before Publication. -

A patent application, which has not yet been
published, and all related documents, shall not
be made available for inspection without the
consent of the applicant. (n)

Section 46. Rights Conferred by a Patent

Application After Publication. - The applicant
shall have all the rights of a patentee under
Section 76 against any person who, without his
authorization, exercised any of the rights
conferred under Section 71 of this Act in relation
to the invention claimed in the published patent
application, as if a patent had been granted for
that invention: Provided, That the said person
had:

46.1. Actual knowledge that the invention that he

was using was the subject matter of a published
application; or

46.2. Received written notice that the invention

that he was
published using was
application the identified
being subject matter
in the of a
said
notice by its serial number: Provided, That the
action may not be filed until after the grant of
a patent on the published application and within
four (4) years from the commission of the acts
complained of. (n)

Section 47. Observation by Third Parties. -

Following the publication of the patent
application, any person may present observations
in writing concerning the patentability of the
invention. Such observations shall be
communicated to the applicant who may comment on
them. The Office shall acknowledge and put such

79 | Page
observations and comment in the file of the
application to which it relates. (n)

Section 48. Request for Substantive Examination.

- 48.1. The application shall be deemed withdrawn
unless within six (6) months from the date of
publication under Section 41, a written request
to determine whether a patent application meets
the requirements of Sections 21 to 27 and Sections
32 to 39 and the fees have been paid on time.

48.2. Withdrawal of the request for examination

shall be irrevocable and shall not authorize the
refund of any fee. (n)

Section 49. Amendment of Application. - An

applicant may amend the patent application during
examination: Provided, That such amendment shall
not include new matter outside the scope of the
disclosure contained in the application as filed.
(n)

Section 50. Grant of Patent. - 50.1. If the

application meets the requirements of this Act,
the Office shall grant the patent: Provided, That
all the fees are paid on time.

50.2. If the required fees for grant and printing

are not paid in due time, the application shall
be deemed to be withdrawn.

50.3. A patent shall take effect on the date of

the publication of the grant of the patent in the
IPO Gazette. (Sec. 18, R.A. No. 165a)

Section 51. Refusal of the Application. - 51.1.

The final order of refusal of the examiner to
grant the patent shall be appealable to the
Director in accordance with this Act.

51.2. The Regulations shall provide for the

procedure by which an appeal from the order of
refusal from the Director shall be undertaken. (n)

Section 52. Publication Upon Grant of Patent. -

52.1. The grant of the patent together with other
related information shall be published in the IPO
Gazette within the time prescribed by the
Regulations.

80 | Page
52.2. Any interested party may inspect the
complete description, claims, and drawings of the
patent on file with the Office. (Sec. 18, R.A. No.
165a)

Section 53. Contents of Patent. - The patent shall

be issued in the name of the Republic of the
Philippines under the seal of the Office and shall
be signed by the Director, and registered together
with the description, claims, and drawings, if
any, in books and records of the Office. (Secs.
19 and 20, R.A. No. 165a)

Section 54. Term of Patent. - The term of a patent

shall be twenty (20) years from the filing date
of the application. (Sec. 21, R.A. No. 165a)

Section 55. Annual Fees. - 55.1. To maintain the

patent application or patent, an annual fee shall
be paid upon the expiration of four (4) years from
the date the application was published pursuant
to Section 44 hereof, and on each subsequent
anniversary of such date. Payment may be made
within three (3) months before the due date. The
obligation to pay the annual fees shall terminate
should the application be withdrawn, refused, or
cancelled.

55.2. If the annual fee is not paid, the patent

application shall be deemed withdrawn or the
patent considered as lapsed from the day following
the expiration of the period within which the
annual fees were due. A notice that the
application is deemed withdrawn or the lapse of a
patent for non-payment of any annual fee shall be
published in the IPO Gazette and the lapse shall
be recorded in the Register of the Office.

55.3. A grace period of six (6) months shall be

granted for the payment of the annual fee, upon
payment of the prescribed surcharge for delayed
payment. (Sec. 22, R.A. No. 165a)

Section 56. Surrender of Patent. - 56.1. The owner

of the patent, with the consent of all persons
having grants or licenses or other right, title
or interest in and to the patent and the invention
covered thereby, which have been recorded in the
Office, may surrender his patent or any claim or
81 | Page
claims forming part thereof to the Office for
cancellation.

56.2. A person may give notice to the Office of

his opposition to the surrender of a patent under
this section, and if he does so, the Bureau shall
notify the proprietor of the patent and determine
the question.

56.3. If the Office is satisfied that the patent

may properly be surrendered, he may accept the
offer and, as from the day when notice of his
acceptance is published in the IPO Gazette, the
patent shall cease to have effect, but no action
for infringement shall lie and no right
compensation shall accrue for any use of the
patented invention before that day for the
services of the government. (Sec. 24, R.A. No.
165a)

Section 57. Correction of Mistakes of the Office.

- The Director shall have the power to correct,
without fee, any mistake in a patent incurred
through the fault of the Office when clearly
disclosed in the records thereof, to make the
patent conform to the records. (Sec. 25, R.A. No.
165)

Section 58. Correction of Mistake in the

Application. - On request of any interested person
and payment of the prescribed fee, the Director
is authorized to correct any mistake in a patent
of a formal and clerical nature, not incurred
through the fault of the Office. (Sec. 26, R.A.
No. 165a)

Section 59. Changes in Patents. - 59.1. The owner

of a patent shall have the right to request the
Bureau to make the changes in the patent in order
to:

(a) Limit the extent of the protection

conferred by it;

(b) Correct obvious mistakes or to correct

clerical errors; and

(c) Correct mistakes or errors, other than

those referred to in letter (b), made in good

82 | Page
85 | Page
Invention Patent Application Procedures

1. Application for Invention Patent

The application for a grant of Philippine

Patent (for Invention) must be filed with the
Bureau of Patents (BOP) of the Intellectual

Property Office (IPO) through the Receiving

Section/Counter of the Administrative, Financial
and Human Resource Development Services Bureau
(AFHRDSB) located at the ground floor of the IPO
Building. To obtain a filing date, the following
has to be submitted:

(a) Properly filled-out Request Form

for a Grant of Philippine Patent;

(b) Name, address and signature of

applicant(s); for non-resident applicant, the
name and address of his/her/their resident agent;
and
(c) Description of the invention and
one or more claims.

NOTE: It is advised that any drawing/s necessary

to understand the subject invention should be
submitted at the time of filing so that there
would not be a possible change in filing date due
to late submission/filing of said drawing/s .
(Rule 602 of the IRR)The other formal
requirements, which are not needed to obtain a
filing date, but maybe included at the time of
filing are:

(a) A filing fee (for big or small

entities) which maybe paid during application
filing or within one month from the date of
filing. The application shall be deemed
automatically cancelled/withdrawn in case of non-
payment of such fees;

(b) Drawing(s) necessary to understand

the invention;

(c) An abstract; and

86 | Page
 (d) If the priority of an earlier filed
application is being claimed, the details of the
claim, i.e. filing date, file number and country
of srcin.

2. Formality Examination

Upon receipt of the application, the

examiner checks if the application satisfies the

formal requirements needed for the grant of a
filing date. The date of filing is very important
under the present “first-to-file” system because
it serves to determine, in case of a dispute with
another applicant for the same invention, who has
the right to the patent.

3. Publication of Unexamined Application

After the formality examination, search

and the classification of the field of technology
to which the invention is
assigned, the application together with the
results of the search (which contains a list of
published patent applications or issued patents
for inventions, which are identical or equivalent
to those claimed by the application), will be
published in the IPO Gazette (after the expiration
of 18 months from the filing date or priority
date). After the publication of the application,
any person may present observations in writing
concerning the patentability of the invention.
Such observation shall be communicated to the
applicant who may comment on them.

4. Request for Substantive Examination

Substantive examination is conducted upon request

The request for substantive examination

of the application must be filed within six (6)
months from the date of the publication. The
application is considered withdrawn if no request
is made within that period. If the examiner finds
reason to refuse the registration of the
application, i.e. the application is not new,
inventive or industrially applicable, the Bureau
shall notify the applicant of the reason for
refusal/rejection giving the applicant the chance
to defend or amend the application.

87 | Page
 5. Decision to Grant Patent Registration or
Decision of Refusal

If the examiner finds no reason for

refusal of the application, or if the notice of
reason for refusal is satisfactorily complied with
by amendment or correction, the examiner issues a
decision to grant the patent registration.
Otherwise, the examiner refuses the application.
6. Inspection of Records

The grant of a patent together with

other information shall be published in the IPO
Gazette within six (6) months. Any interested
party may inspect the complete description,
claims, and drawings of the patent on file with
the Office.

7. Appeal

(a) Every applicant may appeal to the

Director of Patents the final refusal of the
examiner to grant the patent within two (2) months
from the mailing date of the final refusal. The
decision or order of the Director shall become
final and executory fifteen (15) days after
receipt of a copy by the appellant unless within
the same period, a motion for reconsideration is
filed with the Director or an appeal to the
Director General is filed together with the
payment of the required fee. (b) The decision of
the Director General may be appealed to the Court

of Appeals.
satisfied withIf the
the decision
applicant
of is
the still
Court not
of
Appeals, he may appeal to the Supreme Court.

CHAPTER VI
CANCELLATION OF PATENTS AND SUBSTITUTION OF
PATENTEE

Section 61. Cancellation of Patents. - 61.1. Any

interested person may, upon payment of the

88 | Page
required fee, petition to cancel the patent or any
claim thereof, or parts of the claim, on any of
the following GROUNDS:

(a) That what is claimed as the invention is

not new or Patentable;

(b) That the patent does not disclose the

invention in a manner sufficiently clear and

complete for it to be carried out by any person
skilled in the art; or

(c) That the patent is contrary to public

order or morality.

61.2. Where the grounds for cancellation relate

to some of the claims or parts of the claim,
cancellation may be effected to such extent only.
(Secs. 28 and 29, R.A. No. 165a)

Section 62. Requirement of the Petition. - The

petition for cancellation shall be in writing,
verified by the petitioner or by any person in his
behalf who knows the facts, specify the grounds
upon which it is based, include a statement of the
facts to be relied upon, and filed with the
Office. Copies of printed publications or of
patents of other countries, and other supporting
documents mentioned in the petition shall be
attached thereto, together with the translation
thereof in English, if not in the English
language. (Sec. 30, R.A. No. 165)

Section 63. Notice of Hearing. - Upon filing of a

petition for cancellation, the Director of Legal
Affairs shall forthwith serve notice of the filing
thereof upon the patentee and all persons having
grants or licenses, or any other right, title or
interest in and to the patent and the invention
covered thereby, as appears of record in the
Office, and of notice of the date of hearing
thereon on such persons and the petitioner. Notice
of the filing of the petition shall be published
in the IPO Gazette. (Sec. 31, R.A. No. 165a)

Section 64. Committee of Three. - In cases

involving highly technical issues, on motion of
any party, the Director of Legal Affairs may order
that the petition be heard and decided by a

89 | Page
committee composed of the Director of Legal
Affairs as chairman and two (2) members who have
the experience or expertise in the field of
technology to which the patent sought to be
cancelled relates. The decision of the committee
shall be appealable to the Director General. (n)

Section 65. Cancellation of the Patent. - 65.1.

If the Committee finds that a case for
cancellation has been proved, it shall order the
patent or any specified claim or claims thereof
cancelled.

65.2. If the Committee finds that, taking into

consideration the amendment made by the patentee
during the cancellation proceedings, the patent
and the invention to which it relates meet the
requirement of this Act, it may decide to maintain
the patent as amended: Provided, That the fee for
printing of a new patent is paid within the time
limit prescribed in the Regulations.

65.3. If the fee for the printing of a new patent

is not paid in due time, the patent should be
revoked.

65.4. If the patent is amended under Subsection

65.2 hereof, the Bureau shall, at the same time
as it publishes the mention of the cancellation
decision, publish the abstract, representative
claims and drawings indicating clearly what the
amendments consist of. (n)

Section The Effect

Claim. - 66. of Cancellation
rights conferred of Patent
by the patent or
or any
specified claim or claims cancelled shall
terminate. Notice of the cancellation shall be
published in the IPO Gazette. Unless restrained
by the Director General, the decision or order to
cancel by Director of Legal Affairs shall be
immediately executory even pending appeal. (Sec.
32, R.A. No. 165a)

CHAPTER VII
REMEDIES OF A PERSON WITH A RIGHT TO A PATENT

Section 67. Patent Application by Persons Not

Having the Right to a Patent. . - 67.1. If a person
referred to in Section 29 other than the

90 | Page
Section 71. Rights Conferred by Patent. - 71.1. A
patent shall confer on its owner the following
exclusive rights:

(a) Where the subject matter of a patent is a

product, to restrain, prohibit and prevent any
unauthorized person or entity from making,
using, offering for sale, selling or importing
that product;
(b) Where the subject matter of a patent is a
process, to restrain, prevent or prohibit any
unauthorized person or entity from using the
process, and from manufacturing, dealing in,
using, selling or offering for sale, or
importing any product obtained directly or
indirectly from such process.

71.2. Patent owners shall also have the right to

assign, or transfer by succession the patent, and
to conclude licensing contracts for the same.
(Sec. 37, R.A. No. 165a)

Section 72. Limitations of Patent Rights. - The

owner of a patent has no right to prevent third
parties from performing, without his
authorization, the acts referred to in Section 71
hereof in the following circumstances:

72.1. Using a patented product which has been put

on the market in the Philippines by the owner of
the product, or with his express consent, insofar
as such use is performed after that product has

been so put on the said market;

72.2. Where the act is done privately and on a
non-commercial scale or for a non-commercial
purpose: Provided, That it does not significantly
prejudice the economic interests of the owner of
the patent;

72.3. Where the act consists of making or using

exclusively for the purpose of experiments that
relate to the subject matter of the patented
invention;

72.4. Where the cases,

for individual act consists
in a of the preparation
pharmacy or by a
medical professional, of a medicine in accordance

92 | Page
with a medical prescription or acts concerning the
medicine so prepared;

72.5. Where the invention is used in any ship,

vessel, aircraft, or land vehicle of any other
country entering the territory of the Philippines
temporarily or accidentally: Provided, That such
invention is used exclusively for the needs of the
ship, vessel, aircraft, or land vehicle and not
used for the manufacturing of anything to be sold
within the Philippines. (Secs. 38 and 39, R.A. No.
165a)

Section 73. Prior User. - 73.1. Notwithstanding

Section 72 hereof, any prior user, who, in good
faith was using the invention or has undertaken
serious preparations to use the invention in his
enterprise or business, before the filing date or
priority date of the application on which a patent
is granted, shall have the right to continue the
use thereof as envisaged in such preparations
within the territory where the patent produces its
effect.

73.2. The right of the prior user may only be

transferred or assigned together with his
enterprise or business, or with that part of his
enterprise or business in which the use or
preparations for use have been made. (Sec. 40,
R.A. No. 165a)

Section 74. Use of Invention by Government. -

74.1. A Government agency or third person
authorized by the Government may exploit the
invention even without agreement of the patent
owner where:

(a) The public interest, in particular,

national security, nutrition, health or the
development of other sectors, as determined by
the appropriate agency of the government, so
requires; or

(b) A judicial or administrative body has

determined that the manner of exploitation, by
the owner of the patent or his licensee is
anti-competitive.

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74.2. The use by the Government, or third person
authorized by the Government shall be subject,
mutatis mutandis, to the conditions set forth in
Sections 95 to 97 and 100 to 102. (Sec. 41, R.A.
No. 165a)

Section 75. Extent of Protection and

Interpretation of Claims. - 75.1. The extent of
protection conferred by the patent shall be
determined by the claims, which are to be
interpreted in the light of the description and
drawings.

75.2. For the purpose of determining the extent

of protection conferred by the patent, due account
shall be taken of elements which are equivalent
to the elements expressed in the claims, so that
a claim shall be considered to cover not only all
the elements as expressed therein, but also
equivalents. (n)

Patent Infringement

1. Tests in patent infringement

a. Literal Infringement - In using literal

infringement as a test, ". . . resort must be had,
in the first instance, to the words of the claim.
If accused matter clearly falls within the claim,

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arrangement due to reason(s) attributable to the
licensee;

87.10. Those which require payments for patents

and other industrial property rights after their
expiration, termination arrangement;

87.11. Those which require that the technology

recipient shall not contest the validity of any

of the patents of the technology supplier;

87.12. Those which restrict the research and

development activities of the licensee designed
to absorb and adapt the transferred technology to
local conditions or to initiate research and
development programs in connection with new
products, processes or equipment;

87.13. Those which prevent the licensee from

adapting the imported technology to local
conditions, or introducing innovation to it, as
long as it does not impair the quality standards
prescribed by the licensor;

87.14. Those which exempt the licensor for

liability for non-fulfilment of his
responsibilities under the technology transfer
arrangement and/or liability arising from third
party suits brought about by the use of the
licensed product or the licensed technology; and

87.15. Other clauses with equivalent effects.

(Sec. 33-C (2), R.A 165a)

Section 88. Mandatory Provisions. - The following

provisions shall be included in voluntary license
contracts:

88.1. That the laws of the Philippines shall

govern the interpretation of the same and in the
event of litigation, the venue shall be the proper
court in the place where the licensee has its
principal office;

88.2. Continued access to improvements in

techniques and processes related to the technology
shall be made available during the period of the
technology transfer arrangement;

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88.3. In the event the technology transfer
arrangement shall provide for arbitration, the
Procedure of Arbitration of the Arbitration Law
of the Philippines or the Arbitration Rules of the
United Nations Commission on International Trade
Law (UNCITRAL) or the Rules of Conciliation and
Arbitration of the International Chamber of
Commerce (ICC) shall apply and the venue of
arbitration shall be the Philippines or any
neutral country; and

88.4. The Philippine taxes on all payments

relating to the technology transfer arrangement
shall be borne by the licensor. (n)

CHAPTER X
COMPULSORY LICENSING

Section 93. Grounds for Compulsory Licensing. -

The Director of Legal Affairs may grant a license
to exploit a patented invention, even without the
agreement of the patent owner, in favor of any
person who has shown his capability to exploit the
invention, under any of the following
circumstances:

93.1. National emergency or other circumstances

of extreme urgency;

93.2. Where the public interest, in particular,

national security, nutrition, health or the
development of other vital sectors of the national
economy as determined by the appropriate agency
of the Government, so requires; or

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93.3. Where a judicial or administrative body has
determined that the manner of exploitation by the
owner of the patent or his licensee is anti-
competitive; or

93.4. In case of public non-commercial use of the

patent by the patentee, without satisfactory
reason;

93.5. If the patented invention is not being

worked in the Philippines on a commercial scale,
although capable of being worked, without
satisfactory reason: Provided, That the
importation of the patented article shall
constitute working or using the patent. (Secs. 34,
34-A, 34-B, R.A. No. 165a)

Section 94. Period for Filing a Petition for a

Compulsory License. - 94.1. A compulsory license
may not be applied for on the ground stated in
Subsection 93.5 before the expiration of a period
of four (4) years from the date of filing of the
application or three (3) years from the date of
the patent whichever period expires last.

94.2. A compulsory license which is applied for

on any of the grounds stated in Subsections 93.2,
93.3, and 93.4 and Section 97 may be applied for
at any time after the grant of the patent. (Sec.
34(1), R.A. No. 165)

Section 95. Requirement to Obtain a License on

Reasonable Commercial Terms. - 95.1. The license

will onlytobeobtain
efforts grantedauthorization
after the petitioner
from thehas made
patent
owner on reasonable commercial terms and
conditions but such efforts have not been
successful within a reasonable period of time.

95.2. The requirement under Subsection 95.1 shall

not apply in the following cases:

(a) Where the petition for compulsory license

seeks to remedy a practice determined after
judicial or administrative process to be anti-
competitive;

(b) In situations of national emergency or

other circumstances of extreme urgency;

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100.3. The license shall be non-assignable, except
with that part of the enterprise or business with
which the invention is being exploited;

100.4. Use of the subject matter of the license

shall be devoted predominantly for the supply of
the Philippine market: Provided, That this
limitation shall not apply where the grant of the
license is based on the ground that the patentee's
manner of exploiting the patent is determined by
judicial or administrative process, to be anti-
competitive.

100.5. The license may be terminated upon proper

showing that circumstances which led to its grant
have ceased to exist and are unlikely to recur:
Provided, That adequate protection shall be
afforded to the legitimate interest of the
licensee; and

100.6. The patentee shall be paid adequate

remuneration taking into account the economic
value of the grant or authorization, except that
in cases where the license was granted to remedy
a practice which was determined after judicial or
administrative process, to be anti-competitive,
the need to correct the anti-competitive practice
may be taken into account in fixing the amount of
remuneration. (Sec. 35-B, R.A. No. 165a)

Section 101. Amendment, Cancellation, Surrender

of Compulsory License. - 101.1. Upon the request
of the patentee or the licensee, the Director of
Legal Affairs may amend the decision granting the
compulsory license, upon proper showing of new
facts or circumstances justifying such amendment.

101.2. Upon the request of the patentee, the said

Director may cancel the compulsory license:

(a) If the ground for the grant of the

compulsory license no longer exists and is
unlikely to recur;

(b) If the licensee has neither begun to

supply the domestic market nor made serious
preparation therefor;

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 (c) If the licensee has not complied with the
prescribed terms of the license;

101.3. The licensee may surrender the license by

a written declaration submitted to the Office.

101.4. The said Director shall cause the

amendment, surrender, or cancellation in the

Register, notify the patentee, and/or the

licensee, and cause notice thereof to be published
in the IPO Gazette. (Sec. 35-D, R.A. No. 165a)

Section 102. Licensee's Exemption from Liability.

- Any person who works a patented product,
substance and/or process under a license granted
under this Chapter, shall be free from any
liability for infringement: Provided however,
That in the case of voluntary licensing, no
collusion with the licensor is proven. This is
without prejudice to the right of the rightful
owner of the patent to recover from the licensor
whatever he may have received as royalties under
the license. (Sec. 35-E, R.A. No. 165a)

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