G.R. No.
L-32747 November 29, 1984 trademark FRUIT FOR EVE is being used on ladies' panties and pajamas
FRUIT OF THE LOOM, INC., petitioner, vs. COURT OF APPEALS and
GENERAL GARMENTS CORPORATION, respondents.
MAKASIAR, J.:
This is a petition for review on certiorari of the decision dated October 8,
1970 of the former Court of Appeals reversing the decision of the defunct
Court of First Instance of Manila, Branch XIV, ordering the cancellation of
private respondent's registration of the trademark FRUIT FOR EVE,
enjoining it permanently from using trademark and ordering it to pay herein
petitioner P10,000.00 as attorney's fees.
Petitioner, a corporation duly organized and existing under the laws of the
State of Rhode Island, United States of America, is the registrant of a
trademark, FRUIT OF THE LOOM, in the Philippines Patent Office and was
issued two Certificates of Registration Nos. 6227 and 6680, on November
29, 1957 and July 26, 1958, respectively. The classes of merchandise
covered by Registration Certificate No. 6227 are, among others, men's,
women's and children's underwear, which includes women's panties and
which fall under class 40 in the Philippine Patent Office's classification of
goods. Registration Certificate No. 6680 covers knitted, netted and textile
fabrics.
Private respondent, a domestic corporation, is the registrant of a trademark
FRUIT FOR EVE in the Philippine Patent Office and was issued a
Certificate of Registration No. 10160, on January 10, 1963 covering
garments similar to petitioner's products like women's panties and
pajamas.
On March 31, 1965 petitioner filed before the lower court, a complaint for
infringement of trademark and unfair competition against the herein private
respondent. Petitioner principally alleged in the complaint that private
respondent's trademark FRUIT FOR EVE is confusingly similar to its
trademark FRUIT OF THE LOOM used also on women's panties and other
textile products. Furthermore, it was also alleged therein that the color get-
up and general appearance of private respondent's hang tag consisting of
a big red apple is a colorable imitation to the hang tag of petitioner.
On April 19, 1965, private respondent filed an answer invoking the special
defense that its registered trademark is not confusingly similar to that of
petitioner as the latter alleged. Likewise, private respondent stated that the
only whereas petitioner's trademark is used even on men's underwear and
pajamas.
At the pre-trial on May 5, 1965, the following admissions were made: (1)
That the trademark FRUIT OF THE LOOM has been registered with the
Bureau of Patents and it does not bear the notice 'Reg. Phil. Patent Off.',
and (2) That the trademark FRUIT FOR EVE has been registered with the
Bureau of Patents and it bears the notice "Reg. Phil. Patent Off." and (3)
That at the time of its registration, plaintiff filed no opposition thereto.
After trial, judgment was rendered by the lower court in favor of herein
petitioner, the dispositive portion of which reads as follows:
Judgment is, therefore, rendered ordering the Bureau of Patents to cancel
the registration of the Trademark "Fruit for Eve", permanently enjoining
Defendant from using the trademark "Fruit for Eve", ordering Defendant to
pay plaintiff the sum of P10,000.00 as attorney's fees and to pay the costs.
Both parties appealed to the former Court of Appeals, herein petitioner's
appeal being centered on the failure of the trial court to award damages in
its favor. Private respondent, on the other hand, sought the reversal of the
lower court's decision.
On October 8, 1970, the former Court of Appeals, as already stated,
rendered its questioned decision reversing the judgment of the lower court
and dismissing herein petitioner's complaint.
Petitioner's motion for reconsideration having been denied, the present
petition was filed before this Court.
The first and second arguments advanced by petitioner are that the
respondent court committed an error in holding that the word FRUIT, being
a generic word, is not capable of exclusive appropriation by petitioner and
that the registrant of a trademark is not entitled to the exclusive use of
every word of his mark. Otherwise stated, petitioner argues that the
respondent court committed an error in ruling that petitioner cannot
appropriate exclusively the word FRUIT in its trademark FRUIT OF THE
LOOM.
The third and fourth arguments submitted by petitioner which We believe is
the core of the present controversy, are that the respondent court erred in
holding that there is no confusing similarity in sound and appearance
between the two trademarks in question. According to petitioner, the
prominent and dominant features in both of petitioner's and private
respondent's trademark are the word FRUIT and the big red apple design;
that ordinary or average purchasers upon seeing the word FRUIT and the
big red apple in private respondent's label or hang tag would be led to
believe that the latter's products are those of the petitioner, The resolution
of these two assigned errors in the negative will lay to rest the matter in
litigation and there is no need to touch on the other issues raised by
petitioner. Should the said questions be resolved in favor of petitioner, then
the other matters may be considered.
Petitioner, on its fifth assigned error, blames the former Court of Appeals
for not touching the question of the fraudulent registration of private
respondent's trademark FRUIT FOR EVE. As may be gleaned from the
questioned decision, respondent court did not pass upon the argument of
petitioner that private respondent obtained the registration of its trademark
thru fraud or misrepresentation because of the said court's findings that
there is no confusing similarity between the two trademarks in question.
Hence, said court has allegedly nothing to determine as to who has the
right to registration because both parties have the right to have their
respective trademarks registered.
Lastly, petitioner asserts that respondent court should have awarded
damages in its favor because private respondent had clearly profited from
the infringement of the former's trademark.
The main issue involved in this case is whether or not private respondent's
trademark FRUIT FOR EVE and its hang tag are confusingly similar to
petitioner's trademark FRUIT OF THE LOOM and its hang tag so as to
constitute an infringement of the latter's trademark rights and justify the
cancellation of the former.
In cases involving infringement of trademark brought before this Court it
has been consistently held that there is infringement of trademark when the
use of the mark involved would be likely to cause confusion or mistake in
the mind of the public or to deceive purchasers as to the origin or source of
the commodity (Co Tiong Sa vs. Director of Patents, 95 Phil. 1; Alhambra
Cigar & Cigarette Co. vs. Mojica, 27 Phil. 266; Sapolin Co. vs. Balmaceda,
67 Phil. 705; La Insular vs. Jao Oge, 47 Phil. 75).
In cases of this nature, there can be no better evidence as to whether there
is a confusing similarity in the contesting trademarks than the labels or
hang tags themselves. A visual presentation of the labels or hang tags is
the best argument for one or the other, hence, We are reproducing
hereunder pictures of the hang tags of the products of the parties to the
case. The pictures below are part of the documentary evidence appearing
on page 124 of the original records.
Petitioner asseverates in the third and fourth assignment of errors, which,
as We have said, constitute the main argument, that the dominant features
of both trademarks is the word FRUIT. In determining whether the
trademarks are confusingly similar, a comparison of the words is not the
only determinant factor. The trademarks in their entirety as they appear in
their respective labels or hang tags must also be considered in relation to
the goods to which they are attached. The discerning eye of the observer
must focus not only on the predominant words but also on the other
features appearing in both labels in order that he may draw his conclusion
whether one is confusingly similar to the other (Bristol Myers Co. vs.
Director of Patents, 17 SCRA 131).
In the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE, the lone
similar word is FRUIT. WE agree with the respondent court that by mere
pronouncing the two marks, it could hardly be said that it will provoke a
confusion, as to mistake one for the other. Standing by itself, FRUIT OF
THE LOOM is wholly different from FRUIT FOR EVE. WE do not agree
with petitioner that the dominant feature of both trademarks is the word
FRUIT for even in the printing of the trademark in both hang tags, the word
FRUIT is not at all made dominant over the other words.
As to the design and coloring scheme of the hang tags, We believe that
while there are similarities in the two marks like the red apple at the center
of each mark, We also find differences or dissimilarities which are glaring
and striking to the eye such as:
1. The shape of petitioner's hang tag is round with a base that looks like a
paper rolled a few inches in both ends; while that of private respondent is
plain rectangle without any base.
2. The designs differ. Petitioner's trademark is written in almost semi-circle
while that of private respondent is written in straight line in bigger letters
than petitioner's. Private respondent's tag has only an apple in its center
but that of petitioner has also clusters of grapes that surround the apple in
the center.
3. The colors of the hang tag are also very distinct from each other.
Petitioner's hang tag is fight brown while that of respondent is pink with a
white colored center piece. The apples which are the only similarities in the
hang tag are differently colored. Petitioner's apple is colored dark red, while
that of private respondent is light red.

The similarities of the competing trademarks in this case are completely

lost in the substantial differences in the design and general appearance of
their respective hang tags. WE have examined the two trademarks as they
appear in the hang tags submitted by the parties and We are impressed
more by the dissimilarities than by the similarities appearing therein. WE
hold that the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE do
not resemble each other as to confuse or deceive an ordinary purchaser.
The ordinary purchaser must be thought of as having, and credited with, at
least a modicum of intelligence (Carnation Co. vs. California Growers
Wineries, 97 F. 2d 80; Hyram Walke and Sons vs. Penn-Maryland Corp.,
79 F. 2d 836) to be able to see the obvious differences between the two
trademarks in question. Furthermore, We believe that a person who buys
petitioner's products and starts to have a liking for it, will not get confused
and reach out for private respondent's products when she goes to a
garment store.

These findings in effect render immaterial the other errors assigned by

petitioner which are premised on the assumption that private respondent's
trademark FRUIT FOR EVE had infringed petitioner's trademark FRUIT OF
THE LOOM.

WHEREFORE, THE DECISION APPEALED FROM IS AFFIRMED.

COSTS AGAINST PETITIONER.

SO ORDERED
G.R. No. 115115 July 18, 1995
CONRAD AND COMPANY, INC., petitioner, vs. HON. COURT OF
APPEALS, FITRITE INC., and VICTORIA BISCUITS CO., INC.,
respondents.
VITUG, J.:
In an Amended Decision, dated 20 April 1994, the Court of Appeals
reversed an order of the Regional Trial Court ("RTC") which dismissed Civil
Case No. 91-3119 for "Injunction with Damages with Prayer for Preliminary
Injunction" filed by herein private respondents Fitrite, Inc., and Victoria
Biscuits Co., Inc., against petitioner Conrad and Company, Inc.
The RTC, acting on a motion to dismiss filed by petitioner, ordered the
dismissal of the complaint. Accordingly, for purposes of this review, the
facts alleged in the complaint, narrated by the appellate court and
hereunder reproduced, should be deemed hypothetically admitted.
. . . Plaintiffs appellants FITRITE, INC. and VICTORIA BISCUIT CO., INC.
[private respondents here], both domestic corporations, are engaged in the
business of manufacturing, selling and distributing biscuits and cookies
bearing the trademark "SUNSHINE" in the Philippines. Defendant
CONRAD AND COMPANY [petitioner here] is also engaged in the
business of importing, selling and distributing biscuits and cookies in the
Philippines.
Sometime in April 1982, plaintiff FITRITE filed in the Bureau of Patents,
Trademarks and Technology Transfer (hereto referred as BPTTT)
applications for registration of the trademark "SUNSHINE," both in the
Supplemental and Principal Registers, to be used on biscuits and cookies.
Since March 31, 1981 FITRITE had exclusively used this trademark in the
concept of owner on its biscuits and cookies. On May 20, 1983
FITRITE's application for this trademark in the Supplemental Register was
approved by the BPTTT and FITRITE was issued a Certificate of
Registration No. SR-6217 for a term of 20 years from the date of approval.
On March 22, 1990 FITRITE's application for the same trademark in the
Principal Register was approved by BPTTT and FITRITE was issued a
Certificate of Registration No. 47590 for a term of 20 years from said date
of approval. On June 28, 1984 FITRITE authorized its sister company, co-
plaintiff VICTORIA BISCUIT CO., to use this trademark on its biscuits and
cookies, as well as to manufacture, promote, sell and distribute products
bearing said trademark.
On September 7, 1990, FITRITE assigned its trademark "SUNSHINE AND
DEVICE LABEL," together with its interest and business goodwill to said
VICTORIA BISCUIT. From the time FITRITE was issued the Certificate of
Registration for this trademark on May 20, 1983 up to the filing of the
complaint a quo FITRITE and VICTORIA BISCUIT have been
manufacturing, selling and distributing on a massive scale biscuits and
cookies bearing this trademark; so that through the years of extensive
marketing of plaintiffs' biscuits and cookies with this trademark, their
products have become popularly known and enjoyed wide acceptability in
Metro Manila and in the provinces.
Then sometime in June 1990, through the affidavit executed on May 30,
1990 by defendant CONRAD's own Import Manager and Executive
Assistant by the name of Raul Olaya, plaintiffs succeeded in tracing and
discovered that CONRAD had been importing, selling and distributing
biscuits and cookies, and other food items bearing this trademark in the
Philippines. Although CONRAD had never before been engaged in the
importation, sale and distribution of products similar to those of plaintiffs, on
April 18, 1988 CONRAD was suddenly designated exclusive importer and
dealer of the products of "Sunshine Biscuits, Inc." for sale in the Philippine
market; and on April 21, 1988, per the affidavit of said Raul Olaya,
CONRAD made its first importation, which was continuously repeated up to
the present (May 30, 1990 [date of the affidavit]), altogether consisting of
51,575 cartons and amounting to $579,224.35.
Those acts of CONRAD, done without plaintiffs' consent, were deliberately
calculated to mislead and deceive the purchasers by making them believe
that its (CONRAD'S) "Sunshine" products had originated from plaintiffs and
thereby inducing them to patronize those products, all to the damage and
prejudice of both the purchasing public and plaintiffs. Through their
counsel, plaintiffs addressed a letter to CONRAD demanding, among other
things, that it cease and desist from continuing with those acts, but the
demand was ignored. Being acts of infringement and unfair competition in
violation of plaintiffs' rights, plaintiffs can validly avail themselves of the
remedies against infringement under Sec. 23 of Republic Act No. 166, as
amended, as well as of the remedies against unfair competition under
Sec. 29 of the same statute.1
In seeking the dismissal of the complaint filed by private respondents with
the trial court, petitioner invoked, among other grounds, litis pendentia, the
doctrine of primary jurisdiction and failure to state a cause of action.
The trial court, agreeing with petitioner, granted the motion to dismiss the
complaint in an Order, dated 26 February 1992, reading thusly:
The Court agrees with defendant that internationally accepted trademarks
enjoy protection under Philippine laws. Defendant having been granted
distributorship by Sunshine Biscuits USA over Philippine territory it follows
that the resolution of the issue with respect to the ownership of Sunshine
Biscuits which is the basis of plaintiffs' claim is lodged under the exclusive
jurisdiction of the BPTTT. The action filed by defendant's principal in whose
name the trademark "SUNSHINE BISCUITS" is alleged to be registered in
the United States should be considered as including defendant Conrad and
Company, Inc., it being the beneficiary/agent/assignee of said Sunshine
Biscuits, Inc. Thus, the Court finds the ground of forum shopping applicable
to the case at bar. It cannot also be denied that there is another action
pending between the same parties for the same cause. Plaintiffs, therefore,
should not have filed this case with this court. It must, therefore, be
summarily dismissed. The ground of litis pendentia is no doubt meritorious.
The doctrine of primary jurisdiction should be made to apply in this case
considering that the BPTTT had already acquired jurisdiction over the suit
brought by defendant's principal against the plaintiffs involving the right of
plaintiffs to use said trademark. No doubt the BPTTT is better situated,
considering its experience and special knowledge to determine the matters
of fact involved. Indeed, the rulings laid down by the Supreme Court on the
point is along this trend.
WHEREFORE, premises considered, the Motion To Dismiss filed by
defendant is hereby GRANTED. The instant case filed by plaintiffs is
hereby ordered DISMISSED.2 (Emphasis ours)
Unsuccessful in their attempt to have the order reconsidered, private
respondents brought the case to the Court of Appeals (CA-G.R. CV No.
38822).
In an amended decision, dated 20 April 1994, the appellate court reversed
the order of the trial court and ordered the reinstatement of the case,
holding, in part, thusly:
1. It was a motion to dismiss that CONRAD filed instead of an answer
where its "affirmative defense" could have been alleged and later raised in
a motion for preliminary hearing for reception of evidence and not, as
CONRAD did, raise such defense in a mere motion to dismiss, although
such defense involved factual matters outside of the allegations contained
in the complaint;
2. No evidence whatever had been introduced before the outright
dismissal, despite the fact that the factual issues involved in CONRAD's
"affirmative defense" were whether the "SUNSHINE" trademark has been
registered in the United States of America as claimed by CONRAD; if so
registered, whether such registration antedated the registered trademark of
FITRITE in the Philippines; whether Sunshine Biscuits, Inc., CONRAD's
principal, is the actual registrant thereof; and whether CONRAD is truly an
agent of Sunshine Biscuits, Inc. who is protected by the alleged American
"SUNSHINE" trademark and therefore vested with the legal capacity to
raise such "affirmative defense" in the action a quo; etc.; and
3. Unless and until FITRITE's certificates both in the Supplemental and
Principal Registers as registrant of said "SUNSHINE" trademark are
cancelled by BPTTT, or so long as said "SUNSHINE" trademark has not
been successfully proved by CONRAD in the action a quo as belonging to
Sunshine Biscuits, Inc. or so long as said trademark has not been
successfully proved by Sunshine Biscuits, Inc. in the cancellation
proceeding before BPTTT as belonging to it (Sunshine Biscuits), for all
legal intents and purposes the trademark belongs to FITRITE and all those
acts of importing, selling and distributing by CONRAD constitute
infringement as defined in said Sec. 22 of Republic Act No. 166, as
amended.
xxx xxx xxx
In sum, we find the appeal impressed with merit, considering that FITRITE
is the registrant of the "SUNSHINE" trademark in the Philippines; that
CONRAD's claim that its principal, Sunshine Biscuits, Inc., is the registrant
of a "SUNSHINE" trademark in the United States of America is a mere
allegation still subject to proof; that there is no identity of causes of action
and because the cause before BPTTT is the cancellability of FITRITE's
registration while the cause in the case a quo is infringement by CONRAD
of said "SUNSHINE" trademark of FITRITE; that there is implied admission
that CONRAD has been importing, selling and distributing biscuits, cookies
and other food items bearing said "SUNSHINE" trademark without
FITRITE's consent; that so long as the cancellation proceeding remains
pending in BPTTT, said "SUNSHINE" trademark belongs exclusively to
FITRITE in the Philippines, and any person using it without FITRITE's
consent is guilty of infringement.
WHEREFORE, the Court hereby:
(1) SETS ASIDE the appealed order dated February 26, 1992 dismissing
the complaint a quo;
(2) REINSTATES the complaint;
(3) ORDERS defendant Conrad and Company, Inc. to file its answer within
the reglementary period from receipt hereof;
(4) ORDERS the lower court to proceed with the action a quo, although for
a good cause shown the lower court, in its sound discretion, may suspend
the action pending outcome of the cancellation proceeding between
Sunshine Biscuits, Inc. and Fitrite, Inc. in Inter Partes Case
No. 3397 before BPTTT, subject to the condition provided for in No. (5)
below;
(5) ORDERS defendant-appellee Conrad and Company, Inc. to desist and
refrain from importing, manufacturing, selling and distributing in the
Philippines any goods bearing the trademark "SUNSHINE & DEVICE
LABEL" registered in FITRITE's name pending final decision in the action a
quo, it being understood that this order, to effect such desistance and
enjoin defendant-appellee from the aforesaid activities, shall be considered
as the Writ of Injunction itself and an integral part of this Amended
Decision.
No pronouncement as to costs.
SO ORDERED.3 (Emphasis ours.)
In the instant petition for review, which has additionally prayed for a writ of
preliminary injunction or for a temporary restraining order, petitioner tells us
that the appellate court has erred —
1. When it ordered the issuance of a writ of preliminary injunction, upon
private respondents, posting of a bond in the sum of P10,000.00, despite
the pendency of the cancellation proceedings in Inter Partes case Nos.
3397 and 3739, and in subsequently amending its decision by issuing the
writ of preliminary injunction itself.
2. When respondent court failed to apply and totally disregarded the
provisions of the Paris Convention for the protection of industrial property,
as well as the memorandum of the Minister of Trade, dated November 20,
1980.
3. In holding that the doctrine of primary jurisdiction by the Bureau of
Patents, Trademarks and Technology Transfer (BPTTT) is not applicable in
this case, and in further holding that the issues involved in this case is not
whether the "SUNSHINE" trademark in question is registerable or
cancellable.
4. Respondent court erred in holding that the ground of litis pendentia
under the Rules of Court does not apply in this case for the reason that the
cause of action in the cancellation proceedings before the BPTTT is not the
same as the cause of action in the case a quo.
5. In ordering the lower court to proceed with the action a quo, although for
a good cause shown the lower court, in its sound discretion, may suspend
the action pending outcome of the cancellation proceeding between
Sunshine Biscuits, Inc. and Fitrite, Inc. in inter partes Case No. 3397 and
3739 before BPTTT.4
The petition was given due course; however, neither a writ of preliminary
injunction nor a restraining order was issued by this Court.
Unadorned, the issues would revolve simply around the question of
whether or not the Court of Appeals committed reversible error (1) in
allowing the trial court to proceed with the case for "injunction with
damages" filed by private respondents notwithstanding the pendency of an
administrative case for the cancellation of the former's trademark filed by
supposedly "petitioner's principal" with the Bureau of Patents, Trademarks
and Technology Transfer ("BPTTT"); and (2) in meanwhile issuing an
injunction order against petitioner.
We find for private respondents.
The assailed amended decision of the appellate court reinstated the
complaint for "Injunction with Damages with Prayer for Preliminary
Injunction" filed by private respondents with the trial court and ordered
petitioner to file its answer. The appellate court enjoined petitioner in the
meantime from importing, manufacturing, selling and distributing in the
Philippines goods bearing the trademark "Sunshine and Device Label" duly
registered with BPTTT in private respondents' name.
Petitioner, invoking the case of Developers Group of Companies vs. Court
of Appeals (219 SCRA 715), contends that the "Petitions for Cancellation"
of Fitrite's Certificate of Registration No. SR-6217 and No. 47590 in the
Supplemental Register and the Principal Register, respectively, which
Sunshine Biscuits, Inc., of the United States of America filed in 1989 and in
1990 (docketed Inter Partes Case No. 3397 and 3739) with BPTTT cast a
cloud of doubt on private respondents' claim of ownership and exclusive
right to the use of the trademark "Sunshine." Considering that this matter is
at issue before the BPTTT, which has primary jurisdiction over the case,
petitioner argues, an injunctive relief from any court would be precipitate
and improper.
The appellate court, in disposing of petitioner's argument, points out:
Notwithstanding those provisions, it is CONRAD's contention — relying on
the ruling in Industrial Enterprises, Inc. vs. Court of Appeals (G.R. No.
88550, 184 SCRA 426 [1990]) — that, because technical matters or
intricate issues of fact regarding the ownership of the trademark in question
are involved, its determination requires the expertise, specialized skills and
knowledge of the proper administrative body, which is BPTTT, which has
the primary jurisdiction over the action a quo; and therefore the trial court
should, and as it correctly did, yield its jurisdiction to BPTTT.
The trial court erred in adopting such fallacious argument. The issue
involved in the action a quo is not whether the "SUNSHINE" trademark in
question is registerable or cancellable — which is the issue pending in
BPTTT that may be technical in nature requiring "expertise, specialized
skills and knowledge" — since the trademark has already been registered
in both the Supplemental and Principal Registers of BPTTT in the name of
FITRITE; actually, the issue involved in the action a quo is whether
CONRAD's acts of importing, selling and distributing biscuits, cookies and
other food items bearing said registered "SUNSHINE" trademark in the
Philippines without the consent of its registrant (FITRITE) constitute
infringement thereof in contemplation of Sec. 22 of Republic Act No. 166,
as amended. Under Sec. 22, the elements that constitute infringement are
simply (1) the use by any person, without the consent of the registrant, (2)
of any registered mark or trade-name in connection with the sale, business
or services, among other things, bearing such registered mark or trade-
name. This, clearly, is a factual question that does not require any
specialized skill and knowledge for resolution to justify the exercise of
primary jurisdiction by BPTTT.
But, even assuming — which is not the case — that the issue involved here
is technical in nature requiring specialized skills and knowledge, still
Industrialized Enterprises does not authorize the outright dismissal of a
case originally cognizable in the courts; what it says is where primary
jurisdiction comes into play in a case "the judicial process is suspended
pending referral of such issues to the administrative body for its view.5
We cannot see any error in the above disquisition. It might be mentioned
that while an application for the administrative cancellation of a registered
trademark on any of the grounds enumerated in Section 176 of Republic
Act No. 166, as amended, otherwise known as the Trade-Mark Law, falls
under the exclusive cognizance of BPTTT (Sec. 19, Trade-Mark Law), an
action, however, for infringement or unfair competition, as well as the
remedy of injunction and relief for damages, is explicitly and
unquestionably within the competence and jurisdiction of ordinary courts.
Private respondents are the holder of Certificate of Registration No. 47590
(Principal Register) for the questioned trademark. In Lorenzana vs.
Macagba, 154 SCRA 723, cited with approval in Del Monte Corporation vs.
Court of Appeals, 181 SCRA 410, we have declared that registration in the
Principal Register gives rise to a presumption of validity of the registration
and of the registrant's ownership and right to the exclusive use of the mark.
It is precisely such a registration that can serve as the basis for an action
for infringement.7 An invasion of this right entitles the registrant to court
protection and relief. Section 23 and Section 27, Chapter V, of the Trade-
Mark Law provides:
Sec. 23. Actions, and damages and injunction for infringement. — Any
person entitled to the exclusive use of a registered mark or trade-name
may recover damages in a civil action from any person who infringes his
rights, and the measure of the damages suffered shall be either the
reasonable profit which the complaining party would have made, had the
defendant not infringe his said rights, or the profit which the defendant
actually made out of the infringement, or in the event such measure of
damages cannot be readily ascertained with reasonable certainty, then the
court may award as damages a reasonable percentage based upon the
amount of gross sales of the defendant or the value of the services in
connection with which the mark or trade-name was used in the
infringement of the rights of the complaining party. In cases where actual
intent to mislead the public or to defraud the complaining party shall be
shown, in the discretion of the court, the damages may be doubled.
The complaining party, upon proper showing, may also be granted
injunction.
Sec. 27. Jurisdiction of [Regional Trial Court]. All actions under this
Chapter and Chapters VI and VII hereof shall be brought before the proper
[Regional Trial Court].
Surely, an application with BPTTT for an administrative cancellation of a
registered trade mark cannot per se have the effect of restraining or
preventing the courts from the exercise of their lawfully conferred
jurisdiction. A contrary rule would unduly expand the doctrine of primary
jurisdiction which, simply expressed, would merely behoove regular courts,
in controversies involving specialized disputes, to defer to the findings of
resolutions of administrative tribunals on certain technical matters. This
rule, evidently, did not escape the appellate court for it likewise decreed
that for "good cause shown, the lower court, in its sound discretion, may
suspend the action pending outcome of the cancellation proceedings"
before BPTTT.
Needless to say, we cannot at this stage delve into the merits of the
cancellation case. In this instance, the sole concern, outside of the
jurisdictional aspect of the petition hereinbefore discussed, would be that
which focuses on the propriety of the injunction order of the appellate court.
On this score, the appellate court has said:
court of its injunction order. Petitioner, itself, does not even appear to be a
party in the administrative case (Inter Partes Case No. 3397). The
averment that Sunshine USA is petitioner's principal, and that it has a prior
foreign registration that should be respected conformably with the
Convention of the Union of Paris for the Protection of Industrial Property
are mere asseverations in the motion to dismiss which, along with some
other factual assertions, are yet to be established.
All given, we find no reversible error on the part of the appellate court in its
appealed decision.
In closing, the Court would urge the Bureau of Patents, Trademarks and
Technology Transfer to resolve with dispatch the administrative cases
(Inter Partes Case No. 3397 and No. 3739) referred to in this decision.
WHEREFORE, the petition for review is DENIED for lack of merit, and the
questioned amended decision of the Court of Appeals is AFFIRMED. Costs
against petitioner.

Thus, having the exclusive right over said trademark, FITRITE should be
protected in the use thereof (Philips Export B.V. vs. Court of Appeals, G.R.
No. 96161, 206 SCRA 457 [1992]); and considering that it is apparent from
the record that the invasion of the right FITRITE sought to protect is
material and substantial; that such right of FITRITE is clear and
unmistakable; and that there is an urgent necessity to prevent serious
damage to FITRITE's business interest, goodwill and profit, thus under the
authority of Sec. 23 of said Republic Act No. 166, as amended, a
preliminary injunction may be issued in favor of FITRITE to maintain the
status quo pending trial of the action a quo on the merits without prejudice
to the suspension of such action if the aforesaid cancellation proceeding
before the BPTTT has not been concluded. 8 (Emphasis supplied.)

The appellate court's finding that there is an urgent necessity for the
issuance of the writ of preliminary injunction pending resolution by BPTTT
of the petition for cancellation filed by Sunshine USA in Inter Partes Case
No. 3397 would indeed appear to have merit. The prematurity of
petitioner's motion to dismiss places the case at bench quite apart from
that of Developers Group of Companies, Inc. vs. Court of Appeals, 219
SCRA 715. The allegations of the complaint, perforced hypothetically
deemed admitted by petitioner, would here justify the issuance by appellate
G.R. No. 139300. March 14, 2001
AMIGO MANUFACTURING, Inc., Petitioner, v. CLUETT PEABODY CO.,
INC., respondent.
DECISION
PANGANIBAN, J.:
The findings of the Bureau of Patents that two trademarks are confusingly
and deceptively similar to each other are binding upon the courts, absent
any sufficient evidence to the contrary. In the present case, the Bureau
considered the totality of the similarities between the two sets of marks and
found that they were of such degree, number and quality as to give the
overall impression that the two products are confusingly if not deceptively
the same.
Statement of the Case
Petitioner Amigo Manufacturing Inc. challenges, under Rule 45 of the Rules
of Court, the January 14, 1999 Resolution[1 of the Court of Appeals (CA) in
CA-GR SP No. 22792, which reversed, on reconsideration, its own
September 29, 1998 Decision. [2 The dispositive portion of the assailed
Resolution reads as follows:
WHEREFORE, the Motion for Reconsideration is GRANTED, and the
Decision dated September 29, 1998 REVERSED. Consequently, the
decision rendered by the Director of Patents dated September 3, 1990 is
hereby AFFIRMED.
The Decision of the Director of Patents, referred to by the CA, disposed as
follows:
WHEREFORE, the Petition is GRANTED. Consequently, Certificate of
Registration No. SR-2206 issued to Respondent-Registrant [herein
petitioner] is hereby cancelled.
Let the records of this case be remanded to the Patent/Trademark Registry
and EDP Division for appropriate action in accordance with this Decision.
Petitioner also seeks the reversal of the June 30, 1999 CA Resolution[3
denying its own Motion for Reconsideration.
The Facts
The facts, which are undisputed, are summarized by the Court of Appeals
in its original Decision, as follows:
The source of the controversy that precipitated the filing by [herein
Respondent] Cluett Peabody Co., Inc. (a New York corporation) of the
present case against [herein Petitioner] Amigo Manufacturing Inc. (a
Philippine corporation) for cancellation of trademark is [respondents] claim
of exclusive ownership (as successor in interest of Great American Knitting
Mills, Inc.) of the following trademark and devices, as used on mens socks:
a) GOLD TOE, under Certificate of Registration No. 6797 dated September
22, 1958;
b) DEVICE, representation of a sock and magnifying glass on the toe of a
sock, under Certificate of Registration No. 13465 dated January 25, 1968;
c) DEVICE, consisting of a plurality of gold colored lines arranged in
parallel relation within a triangular area of toe of the stocking and spread
from each other by lines of contrasting color of the major part of the
stocking under Certificate of Registration No. 13887 dated May 9, 1968;
and
d) LINENIZED, under Certificate of Registration No. 15440 dated April 13,
1970.
On the other hand, [petitioners] trademark and device GOLD TOP,
Linenized for Extra Wear has the dominant color white at the center and a
blackish brown background with a magnified design of the socks garter,
and is labeled Amigo Manufacturing Inc., Mandaluyong, Metro Manila,
Made in the Philippines.
In the Patent Office, this case was heard by no less than six Hearing
Officers: Attys. Rodolfo Gilbang, Rustico Casia, M. Yadao, Fabian Rufina,
Neptali Bulilan and Pausi Sapak. The last named officer drafted the
decision under appeal which was in due court signed and issued by the
Director of Patents (who never presided over any hearing) adversely
against the respondent Amigo Manufacturing, Inc. as heretofore mentioned
(supra, p.1).
The decision pivots on two point: the application of the rule of idem sonans
and the existence of a confusing similarity in appearance between two
trademarks (Rollo, p. 33).4
Ruling of the Court of Appeals
In its assailed Resolution, the CA held as follows:
After a careful consideration of [respondents] arguments and a re-
appreciation of the records of this case. [w]e find [respondents] motion for
reconsideration meritorious. As shown by the records, and as correctly held
by the Director of Patents, there is hardly any variance in the appearance
of the marks GOLD TOP and GOLD TOE since both show a representation
of a mans foot wearing a sock, and the marks are printed in identical
lettering. Section 4(d) of R.A. No. 166 declares to be unregistrable, a mark
which consists o[r] comprises a mark or trademark which so resembles a
mark or tradename registered in the Philippines of tradename previously
used in the Philippines by another and not abandoned, as to be likely,
when applied to or used in connection with the goods, business or services
of the applicant, to cause confusion or mistake or to deceive the
purchasers. [Petitioner]s mark is a combination of the different registered
marks owned by [respondent]. As held in Del Monte Corporation v. Court of
Appeals, 181 SCRA 410 (1990), the question is not whether the two
articles are distinguishable by their label when set aside but whether the
general confusion made by the article upon the eye of the casual purchaser
who is unsuspicious and off his guard, is such as to likely result in
confounding it with the original. As held by the Court in the same decision[,]
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. Furthermore, [petitioner]s mark is only registered with the
Supplemental Registry which gives no right of exclusivity to the owner and
cannot overturn the presumption of validity and exclusiv[ity] given to a
registered mark.
Finally, the Philippines and the United States are parties to the Union
Convention for the Protection of Industrial Property adopted in Paris on
March 20, 1883, otherwise known as the Paris Convention. (Puma
Sportschuhfabriken Rudolf Dassler K.G. v. Intermediate Appellate Court,
158 SCRA 233). [Respondent] is domiciled in the United States of America
and is the lawful owner of several trademark registrations in the United
States for the mark GOLD TOE.
xxx
By virtue of the Philippines membership to the Paris Union, trademark
rights in favor of the [respondent] were created. The object of the
Convention is to accord a national of a member nation extensive protection
against infringement and other types of unfair competition. (Puma
Sportschuhfabriken Rudolf Dassler K.G. v. Intermediate Appellate Court,
158 SCRA 233; La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373)
Hence, this Petition.
Issues
In its Memorandum, petitioner raises the following issues for the
consideration of this Court:
I
Whether or not the Court of Appeals overlooked that petitioners trademark
was used in commerce in the Philippines earlier than respondents actual
use of its trademarks, hence the Court of Appeals erred in affirming the
Decision of the Director of Patents dated September 3, 1990.
II
Since the petitioners actual use of its trademark was ahead of the
respondent, whether or not the Court of Appeals erred in canceling the
registration of petitioners trademark instead of canceling the trademark of
the respondent.
III
Whether or not the Court of Appeals erred in affirming the findings of the
Director of Patents that petitioners trademark [was] confusingly similar to
respondents trademarks.
IV
Whether or not the Court of Appeals erred in applying the Paris Convention
in holding that respondent ha[d] an exclusive right to the trademark gold
toe without taking into consideration the absence of actual use in the
Philippines.
In the main, the Court will resolve three issues: (1) the date of actual use of
the two trademarks; (2) their confusing similarities, and (3) the applicability
of the Paris Convention.
The Courts Ruling
The Petition has no merit.
First Issue :
Dates of First Use of Trademark and Devices
Petitioner claims that it started the actual use of the trademark Gold Top
and Device in September 1956, while respondent began using the
trademark Gold Toe only on May 15, 1962. It contends that the claim of
respondent that it had been using the Gold Toe trademark at an earlier
date was not substantiated. The latters witnesses supposedly contradicted
themselves as to the date of first actual use of their trademark, coming up
with different dates such as 1952, 1947 and 1938.
We do not agree. Based on the evidence presented, this Court concurs in
the findings of the Bureau of Patents that respondent had actually used the
trademark and the devices in question prior to petitioners use of its own.
During the hearing at the Bureau of Patents, respondent presented Bureau
registrations indicating the dates of first use in the Philippines of the
trademark and the devices as follows: a) March 16, 1954, Gold Toe; b)
February 1, 1952, the Representation of a Sock and a Magnifying Glass; c)
January 30, 1932, the Gold Toe Representation; and d) February 28, 1952,
Linenized.
The registration of the above marks in favor of respondent constitutes
prima facie evidence, which petitioner failed to overturn satisfactorily, of
respondents ownership of those marks, the dates of appropriation and the
validity of other pertinent facts stated therein. Indeed, Section 20 of
Republic Act 166 provides as follows:
Sec. 20. Certificate of registration prima facie evidence of validity. - A
certificate of registration of a mark or trade-name shall be prima facie
evidence of the validity of the registration, the registrant's ownership of the
mark or trade-name, and of the registrant's exclusive right to use the same
in connection with the goods, business or services specified in the
certificate, subject to any conditions and limitations stated
therein.9cräläwvirtualibräry
Moreover, the validity of the Certificates of Registration was not
questioned. Neither did petitioner present any evidence to indicate that
they were fraudulently issued. Consequently, the claimed dates of
respondents first use of the marks are presumed valid. Clearly, they were
ahead of petitioners claimed date of first use of Gold Top and Device in
1958.
Section 5-A of Republic Act No. 166[10 states that an applicant for a
trademark or trade name shall, among others, state the date of first use.
The fact that the marks were indeed registered by respondent shows that it
did use them on the date indicated in the Certificate of Registration.
On the other hand, petitioner failed to present proof of the date of alleged
first use of the trademark Gold Top and Device. Thus, even assuming that
respondent started using it only on May 15, 1962, we can make no finding
that petitioner had started using it ahead of respondent.
Furthermore, petitioner registered its trademark only with the supplemental
register. In La Chemise Lacoste v. Fernandez,[11 the Court held that
registration with the supplemental register gives no presumption of
ownership of the trademark. Said the Court:
The registration of a mark upon the supplemental register is not, as in the
case of the principal register, prima facie evidence of (1) the validity of
registration; (2) registrants ownership of the mark; and (3) registrants
exclusive right to use the mark. It is not subject to opposition, although it
may be cancelled after its issuance. Neither may it be the subject of
interference proceedings. Registration [i]n the supplemental register is not
constructive notice of registrants claim of ownership. A supplemental
register is provided for the registration because of some defects
(conversely, defects which make a mark unregistrable on the principal
register, yet do not bar them from the supplemental register.) (Agbayani, II
Commercial Laws of the Philippines, 1978, p. 514, citing Uy Hong Mo v.
Titay & Co., et al., Dec. No. 254 of Director of Patents, Apr. 30, 1968.
As to the actual date of first use by respondent of the four marks it
registered, the seeming confusion may have stemmed from the fact that
the marks have different dates of first use. Clearly, however, these dates
are indicated in the Certificates of Registration.
In any case, absent any clear showing to the contrary, this Court accepts
the finding of the Bureau of Patents that it was respondent which had prior
use of its trademark, as shown in the various Certificates of Registration
issued in its favor. Verily, administrative agencies findings of fact in matters
falling under their jurisdiction are generally accorded great respect, if not
finality. Thus, the Court has held:
x x x. By reason of the special knowledge and expertise of said
administrative agencies over matters falling under their jurisdiction, they
are in a better position to pass judgment thereon; thus, their findings of fact
in that regard are generally accorded great respect, if not finality, by the
courts. The findings of fact of an administrative agency must be respected
as long as they are supported by substantial evidence, even if such
evidence might not be overwhelming or even preponderant. It is not the
task of an appellate court to weigh once more the evidence submitted
before the administrative body and to substitute its own judgment for that of
the administrative agency in respect of sufficiency of evidence.12
Second Issue :
Similarity of Trademarks
Citing various differences between the two sets of marks, petitioner assails
the finding of the director of patents that its trademark is confusingly similar
to that of respondent. Petitioner points out that the director of patents erred
in its application of the idem sonans rule, claiming that the two trademarks
Gold Toe and Gold Top do not sound alike and are pronounced differently.
It avers that since the words gold and toe are generic, respondent has no
right to their exclusive use.
The arguments of petitioner are incorrect. True, it would not be guilty of
infringement on the basis alone of the similarity in the sound of petitioners
Gold Top with that of respondents Gold Toe. Admittedly, the pronunciations
of the two do not, by themselves, create confusion.
The Bureau of Patents, however, did not rely on the idem sonans test
alone in arriving at its conclusion. This fact is shown in the following portion
of its Decision:
As shown by the drawings and labels on file, the mark registered by
Respondent-Registrant under Registration No. SR-2206 is a combination
of the abovementioned trademarks registered separately by the petitioner
in the Philippines and the United States.
With respect to the issue of confusing similarity between the marks of the
petitioner and that of the respondent-registrant applying the tests of idem
sonans, the mark GOLD TOP & DEVICE is confusingly similar with the
mark GOLD TOE. The difference in sound occurs only in the final letter at
the end of the marks. For the same reason, hardly is there any variance in
their appearance. GOLD TOE and GOLD TOP are printed in identical
lettering. Both show [a] representation of a mans foot wearing a sock.
GOLD TOP blatantly incorporates petitioners LINENIZED which by itself is
a registered mark.
The Bureau considered the drawings and the labels, the appearance of the
labels, the lettering, and the representation of a mans foot wearing a sock.
Obviously, its conclusion is based on the totality of the similarities between
the parties trademarks and not on their sounds alone.
In Emerald Garment Manufacturing Corporation v. Court of Appeals,[14
this Court stated that in determining whether trademarks are confusingly
similar, jurisprudence has developed two kinds of tests, the Dominancy
Test [15 and the Holistic Test. [16 In its words:
In determining whether colorable imitation exists, jurisprudence has
developed two kinds of tests the Dominancy Test applied in Asia Brewery,
Inc. v. Court of Appeals and other cases and the Holistic Test developed in
Del Monte Corporation v. Court of Appeals and its proponent cases.
As its title implies, the test of dominancy focuses on the similarity of the
prevalent features of the competing trademarks which might cause
confusion or deception and thus constitutes infringement.
xxx
. . . . If the competing trademark contains the main or essential or dominant
features of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not necessary; nor is it
necessary that the infringing label should suggest an effort to imitate. [C.
Neilman Brewing Co. v. Independent Brewing Co., 191 F., 489, 495, citing
Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at
issue in cases of infringement of trademarks is whether the use of the
marks involved would be likely to cause confusion or mistakes in the mind
of the public or deceive purchasers. (Auburn Rubber Corporation vs.
Hanover Rubber Co., 107 F. 2d 588; x x x.)
xxx
On the other side of the spectrum, the holistic test mandates that the
entirety of the marks in question must be considered in determining
confusing similarity.
In the present case, a resort to either the Dominancy Test or the Holistic
Test shows that colorable imitation exists between respondents Gold Toe
and petitioners Gold Top. A glance at petitioners mark shows that it
definitely has a lot of similarities and in fact looks like a combination of the
trademark and devices that respondent has already registered; namely,
Gold Toe, the representation of a sock with a magnifying glass, the Gold
Toe representation and linenized.
Admittedly, there are some minor differences between the two sets of
marks. The similarities, however, are of such degree, number and quality
that the overall impression given is that the two brands of socks are
deceptively the same, or at least very similar to each another. An
examination of the products in question shows that their dominant features
are gold checkered lines against a predominantly black background and a
representation of a sock with a magnifying glass. In addition, both products
use the same type of lettering. Both also include a representation of a
mans foot wearing a sock and the word linenized with arrows printed on the
label. Lastly, the names of the brands are similar -- Gold Top and Gold
Toe. Moreover, it must also be considered that petitioner and respondent
are engaged in the same line of business.
Petitioner cannot therefore ignore the fact that, when compared, most of
the features of its trademark are strikingly similar to those of respondent. In
addition, these representations are at the same location, either in the sock
itself or on the label. Petitioner presents no explanation why it chose those
representations, considering that these were the exact symbols used in
respondents marks. Thus, the overall impression created is that the two
products are deceptively and confusingly similar to each other. Clearly,
petitioner violated the applicable trademark provisions during that time.
Let it be remembered that duly registered trademarks are protected by law
as intellectual properties and cannot be appropriated by others without
violating the due process clause. An infringement of intellectual rights is no
less vicious and condemnable as theft of material property, whether
personal or real.
Third Issue :
The Paris Convention
Petitioner claims that the Court of Appeals erred in applying the Paris
Convention. Although respondent registered its trademark ahead, petitioner
argues that the actual use of the said mark is necessary in order to be
entitled to the protection of the rights acquired through registration.
As already discussed, respondent registered its trademarks under the
principal register, which means that the requirement of prior use had
already been fulfilled. To emphasize, Section 5-A of Republic Act 166
requires the date of first use to be specified in the application for
registration. Since the trademark was successfully registered, there exists
a prima facie presumption of the correctness of the contents thereof,
including the date of first use. Petitioner has failed to rebut this
presumption.
Thus, applicable is the Union Convention for the Protection of Industrial
Property adopted in Paris on March 20, 1883, otherwise known as the
Paris Convention, of which the Philippines and the United States are
members. Respondent is domiciled in the United States and is the
registered owner of the Gold Toe trademark. Hence, it is entitled to the
protection of the Convention. A foreign-based trademark owner, whose
country of domicile is a party to an international convention relating to
protection of trademarks,[17 is accorded protection against infringement or
any unfair competition as provided in Section 37 of Republic Act 166, the
Trademark Law which was the law in force at the time this case was
instituted.
In sum, petitioner has failed to show any reversible error on the part of the
Court of Appeals. Hence, its Petition must fail.
WHEREFORE, the Petition is hereby DENIEDand the assailed Resolution
AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 112012 April 4, 2001
SOCIETE DES PRODUITS NESTLE, S.A. and NESTLE PHILIPPINES,
INC., petitioners, vs. COURT OF APPEALS and CFC CORPORATION.,
respondents.
YNARES-SANTIAGO, J.:
This is a petition for review assailing the Decision of the Court of Appeals in
CA-G.R. SP No. 24101,1 reversing and setting aside the decision of the
Bureau of Patents, Trademarks and Technology Transfer (BPTTT),2 which
denied private respondent’s application for registration of the trade-mark,
FLAVOR MASTER.
On January 18, 1984, private respondent CFC Corporation filed with the
BPTTT an application for the registration of the trademark "FLAVOR
MASTER" for instant coffee, under Serial No. 52994. The application, as a
matter of due course, was published in the July 18, 1988 issue of the
BPTTT’s Official Gazette.
Petitioner Societe Des Produits Nestle, S.A., a Swiss company registered
under Swiss laws and domiciled in Switzerland, filed an unverified Notice of
Opposition,3 claiming that the trademark of private respondent’s product is
"confusingly similar to its trademarks for coffee and coffee extracts, to wit:
MASTER ROAST and MASTER BLEND."
Likewise, a verified Notice of Opposition was filed by Nestle Philippines,
Inc., a Philippine corporation and a licensee of Societe Des Produits Nestle
S.A., against CFC’s application for registration of the trademark FLAVOR
MASTER.4 Nestle claimed that the use, if any, by CFC of the trademark
FLAVOR MASTER and its registration would likely cause confusion in the
trade; or deceive purchasers and would falsely suggest to the purchasing
public a connection in the business of Nestle, as the dominant word
present in the three (3) trademarks is "MASTER"; or that the goods of CFC
might be mistaken as having originated from the latter.
In answer to the two oppositions, CFC argued that its trademark, FLAVOR
MASTER, is not confusingly similar with the former’s trademarks, MASTER
ROAST and MASTER BLEND, alleging that, "except for the word MASTER
(which cannot be exclusively appropriated by any person for being a
descriptive or generic name), the other words that are used respectively
with said word in the three trademarks are very different from each other –
in meaning, spelling, pronunciation, and sound". CFC further argued that
its trademark, FLAVOR MASTER, "is clearly very different from any of
Nestle’s alleged trademarks MASTER ROAST and MASTER BLEND,
especially when the marks are viewed in their entirety, by considering their
pictorial representations, color schemes and the letters of their respective
labels."
In its Decision No. 90-47 dated December 27, 1990, the BPTTT denied
CFC’s application for registration.5 CFC elevated the matter to the Court of
Appeals, where it was docketed as CA-G.R. SP No. 24101.
The Court of Appeals defined the issue thus: "Does appellant CFC’s trade
dress bear a striking resemblance with appellee’s trademarks as to create
in the purchasing public’s mind the mistaken impression that both coffee
products come from one and the same source?"
As stated above, the Court of Appeals, in the assailed decision dated
September 23, 1993, reversed Decision No. 90-47 of the BPTTT and
ordered the Director of Patents to approve CFC’s application. The Court of
Appeals ruled:
Were We to take even a lackadaisical glance at the overall appearance of
the contending marks, the physical discrepancies between appellant CFC’s
and appellee’s respective logos are so ostensible that the casual purchaser
cannot likely mistake one for the other. Appellant CFC’s label (Exhibit "4")
is predominantly a blend of dark and lighter shade of orange where the
words "FLAVOR MASTER", "FLAVOR" appearing on top of "MASTER",
shaded in mocha with thin white inner and outer sidings per letter and
identically lettered except for the slightly protruding bottom curve of the
letter "S" adjoining the bottom tip of the letter "A" in the word "MASTER",
are printed across the top of a simmering red coffee cup. Underneath
"FLAVOR MASTER" appears "Premium Instant Coffee" printed in white,
slim and slanted letters. Appellees’ "MASTER ROAST" label (Exhibit "7"),
however, is almost double the width of appellant CFC’s. At the top is
printed in brown color the word "NESCAFE" against a white backdrop.
Occupying the center is a square-shaped configuration shaded with dark
brown and picturing a heap of coffee beans, where the word "MASTER" is
inscribed in the middle. "MASTER" in appellees’ label is printed in taller
capital letters, with the letter "M" further capitalized. The letters are shaded
with red and bounded with thin gold-colored inner and outer sidings. Just
above the word "MASTER" is a red window like portrait of what appears to
be a coffee shrub clad in gold. Below the "MASTER" appears the word
"ROAST" impressed in smaller, white print. And further below are the
inscriptions in white: "A selection of prime Arabica and Robusta coffee."
With regard to appellees’ "MASTER BLEND" label (Exhibit "6") of which
only a xeroxed copy is submitted, the letters are bolder and taller as
compared to appellant CFC’s and the word "MASTER" appears on top of
the word "BLEND" and below it are the words "100% pure instant coffee"
printed in small letters.
From the foregoing description, while the contending marks depict the
same product, the glaring dissimilarities in their presentation far outweigh
and dispel any aspect of similitude. To borrow the words of the Supreme
Court in American Cyanamid Co. v. Director of Patents (76 SCRA 568),
appellant CFC’s and appellees’ labels are entirely different in size,
background, colors, contents and pictorial arrangement; in short, the
general appearances of the labels bearing the respective trademarks are
so distinct from each other that appellees cannot assert that the dominant
features, if any, of its trademarks were used or appropriated in appellant
CFC’s own. The distinctions are so well-defined so as to foreclose any
probability or likelihood of confusion or deception on the part of the
normally intelligent buyer when he or she encounters both coffee products
at the grocery shelf. The answer therefore to the query is a clear-cut NO.6
Petitioners are now before this Court on the following assignment of errors:
1. RESPONDENT COURT GRAVELY ERRED IN REVERSING AND
SETTING ASIDE THE DECISION (NO. 90-47) OF THE DIRECTOR OF
THE BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY
TRANSFER (BPTTT) DATED DECEMBER 27, 1990.
2. RESPONDENT COURT ERRED IN FINDING THAT APPELLANT
CFC’S TRADE DRESS IS BEYOND THE SCOPE OF THE
PROSCRIPTION LAID DOWN BY JURISPRUDENCE AND THE
TRADEMARK LAW.
3. RESPONDENT COURT ERRED IN HOLDING THAT THE TOTALITY
RULE, RATHER THAN THE TEST OF DOMINANCY, APPLIES TO THE
CASE.
4. RESPONDENT COURT ERRED IN INVOKING THE TOTALITY RULE
APPLIED IN THE CASES OF BRISTOL MYERS V. DIRECTOR OF
PATENTS, ET AL. (17 SCRA 128), MEAD JOHNSON & CO. V. NVJ VAN
DORF LTD., (7 SCRA 768) AND AMERICAN CYANAMID CO. V.
DIRECTOR OF PATENTS (76 SCRA 568).
The petition is impressed with merit.
A trademark has been generally defined as "any word, name, symbol or
device adopted and used by a manufacturer or merchant to identify his
goods and distinguish them from those manufactured and sold by others."7
A manufacturer’s trademark is entitled to protection. As Mr. Justice
Frankfurter observed in the case of Mishawaka Mfg. Co. v. Kresge Co.:8
The protection of trade-marks is the law’s recognition of the psychological
function of symbols. If it is true that we live by symbols, it is no less true
that we purchase goods by them. A trade-mark is a merchandising short-
cut which induces a purchaser to select what he wants, or what he has
been led to believe he wants. The owner of a mark exploits this human
propensity by making every effort to impregnate the atmosphere of the
market with the drawing power of a congenial symbol. Whatever the means
employed, the aim is the same --- to convey through the mark, in the minds
of potential customers, the desirability of the commodity upon which it
appears. Once this is attained, the trade-mark owner has something of
value. If another poaches upon the commercial magnetism of the symbol
he has created, the owner can obtain legal redress.
Section 4 (d) of Republic Act No. 166 or the Trademark Law, as amended,
which was in force at the time, provides thus:
Registration of trade-marks, trade-names and service-marks on the
principal register. - There is hereby established a register of trade-marks,
trade-names and service marks which shall be known as the principal
register. The owner of a trade-mark, trade-name 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:
xxx xxx xxx
(d) Consists of or comprises a mark or trade-name which so resembles a
mark or trade-name registered in the Philippines or a mark or trade-name
previously used in the Philippines by another and not abandoned, as to be
likely, when applied to or used in connection with the goods, business or
services of the applicant, to cause confusion or mistake or to deceive
purchasers;
xxx xxx xxx
(Emphasis supplied)
The law prescribes a more stringent standard in that there should not only
be confusing similarity but that it should not likely cause confusion or
mistake or deceive purchasers.
Hence, the question in this case is whether there is a likelihood that the
trademark FLAVOR MASTER may cause confusion or mistake or may
deceive purchasers that said product is the same or is manufactured by the
same company. In other words, the issue is whether the trademark
FLAVOR MASTER is a colorable imitation of the trademarks MASTER
ROAST and MASTER BLEND.
Colorable imitation denotes such a close or ingenious imitation as to be
calculated to deceive ordinary persons, or such a resemblance to the
original as to deceive an ordinary purchaser giving such attention as a
purchaser usually gives, as to cause him to purchase the one supposing it
to be the other.9 In determining if colorable imitation exists, jurisprudence
has developed two kinds of tests - the Dominancy Test and the Holistic
Test.10 The test of dominancy focuses on the similarity of the prevalent
features of the competing trademarks which might cause confusion or
deception and thus constitute infringement. On the other side of the
spectrum, the holistic test mandates that the entirety of the marks in
question must be considered in determining confusing similarity.11
In the case at bar, the Court of Appeals held that:
The determination of whether two trademarks are indeed confusingly
similar must be taken from the viewpoint of the ordinary purchasers who
are, in general, undiscerningly rash in buying the more common and less
expensive household products like coffee, and are therefore less inclined to
closely examine specific details of similarities and dissimilarities between
competing products. The Supreme Court in Del Monte Corporation v. CA,
181 SCRA 410, held that:
"The question is not whether the two articles are distinguishable by their
labels when set side by side but whether the general confusion made by
the article upon the eye of the casual purchaser who is unsuspicious and
off his guard, is such as to likely result in his confounding it with the
original. As observed in several cases, the general impression of the
ordinary purchaser, buying under the normally prevalent conditions in trade
and giving the attention such purchasers usually give in buying that class of
goods, is the touchstone."
From this perspective, the test of similarity is to consider the two marks in
their entirety, as they appear in the respective labels, in relation to the
goods to which they are attached (Bristol Myers Company v. Director of
Patents, et al., 17 SCRA 128, citing Mead Johnson & Co. v. NVJ Van Dorp,
Ltd., et al., 7 SCRA 768). The mark must be considered as a whole and not
as dissected. If the buyer is deceived, it is attributable to the marks as a
totality, not usually to any part of it (Del Monte Corp. v. CA, supra), as what
appellees would want it to be when they essentially argue that much of the
confusion springs from appellant CFC’s use of the word "MASTER" which
appellees claim to be the dominant feature of their own trademarks that
captivates the prospective consumers. Be it further emphasized that the
discerning eye of the observer must focus not only on the predominant
words but also on the other features appearing in both labels in order that
he may draw his conclusion whether one is confusingly similar to the other
(Mead Johnson & Co. v. NVJ Van Dorp, Ltd., supra).12
The Court of Appeals applied some judicial precedents which are not on all
fours with this case. It must be emphasized that in infringement or
trademark cases in the Philippines, particularly in ascertaining whether one
trademark is confusingly similar to or is a colorable imitation of another, no
set rules can be deduced. Each case must be decided on its own merits.13
In Esso Standard, Inc. v. Court of Appeals,14 we ruled that the likelihood of
confusion is a relative concept; to be determined only according to the
particular, and sometimes peculiar, circumstances of each case. In
trademark cases, even more than in any other litigation, precedent must be
studied in light of the facts of the particular case. The wisdom of the
likelihood of confusion test lies in its recognition that each trademark
infringement case presents its own unique set of facts. Indeed, the
complexities attendant to an accurate assessment of likelihood of
confusion require that the entire panoply of elements constituting the
relevant factual landscape be comprehensively examined.15
The Court of Appeals’ application of the case of Del Monte Corporation v.
Court of Appeals16 is, therefore, misplaced. In Del Monte, the issue was
about the alleged similarity of Del Monte’s logo with that of Sunshine Sauce
Manufacturing Industries. Both corporations market the catsup product
which is an inexpensive and common household item.
Since Del Monte alleged that Sunshine’s logo was confusingly similar to or
was a colorable imitation of the former’s logo, there was a need to go into
the details of the two logos as well as the shapes of the labels or marks,
the brands printed on the labels, the words or lettering on the labels or
marks and the shapes and colors of the labels or marks. The same criteria,
however, cannot be applied in the instant petition as the facts and
circumstances herein are peculiarly different from those in the Del Monte
case.
In the same manner, the Court of Appeals erred in applying the totality rule
as defined in the cases of Bristol Myers v. Director of Patents;17 Mead
Johnson & Co. v. NVJ Van Dorf Ltd.;18 and American Cyanamid Co. v.
Director of Patents.19 The totality rule states that "the test is not simply to
take their words and compare the spelling and pronunciation of said words.
In determining whether two trademarks are confusingly similar, the two
marks in their entirety as they appear in the respective labels must be
considered in relation to the goods to which they are attached; the
discerning eye of the observer must focus not only on the predominant
words but also on the other features appearing on both labels."20
As this Court has often declared, each case must be studied according to
the peculiar circumstances of each case. That is the reason why in
trademark cases, jurisprudential precedents should be applied only to a
case if they are specifically in point.
In the above cases cited by the Court of Appeals to justify the application of
the totality or holistic test to this instant case, the factual circumstances are
substantially different. In the Bristol Myers case, this Court held that
although both BIOFERIN and BUFFERIN are primarily used for the relief of
pains such as headaches and colds, and their names are practically the
same in spelling and pronunciation, both labels have strikingly different
backgrounds and surroundings. In addition, one is dispensable only upon
doctor’s prescription, while the other may be purchased over-the-counter.
In the Mead Johnson case, the differences between ALACTA and ALASKA
are glaring and striking to the eye. Also, ALACTA refers to "Pharmaceutical
Preparations which Supply Nutritional Needs," falling under Class 6 of the
official classification of Medicines and Pharmaceutical Preparations to be
used as prescribed by physicians. On the other hand, ALASKA refers to
"Foods and Ingredients of Foods" falling under Class 47, and does not
require medical prescription.
In the American Cyanamid case, the word SULMET is distinguishable from
the word SULMETINE, as the former is derived from a combination of the
syllables "SUL" which is derived from sulfa and "MET" from methyl, both of
which are chemical compounds present in the article manufactured by the
contending parties. This Court held that the addition of the syllable "INE" in
respondent’s label is sufficient to distinguish respondent’s product or
trademark from that of petitioner. Also, both products are for medicinal
veterinary use and the buyer will be more wary of the nature of the product
he is buying. In any case, both products are not identical as SULMET’s
label indicates that it is used in a drinking water solution while that of
SULMETINE indicates that they are tablets.
It cannot also be said that the products in the above cases can be bought
off the shelf except, perhaps, for ALASKA. The said products are not the
usual "common and inexpensive" household items which an
"undiscerningly rash" buyer would unthinkingly buy.In the case at bar, other
than the fact that both Nestle’s and CFC’s products are inexpensive and
common household items, the similarity ends there. What is being
questioned here is the use by CFC of the trademark MASTER. In view of
the difficulty of applying jurisprudential precedents to trademark cases due
to the peculiarity of each case, judicial fora should not readily apply a
certain test or standard just because of seeming similarities. As this Court
has pointed above, there could be more telling differences than similarities
as to make a jurisprudential precedent inapplicable.
Nestle points out that the dominancy test should have been applied to
determine whether there is a confusing similarity between CFC’s FLAVOR
MASTER and Nestle’s MASTER ROAST and MASTER BLEND.
We agree.
As the Court of Appeals itself has stated, "[t]he determination of whether
two trademarks are indeed confusingly similar must be taken from the
viewpoint of the ordinary purchasers who are, in general, undiscerningly
rash in buying the more common and less expensive household products
like coffee, and are therefore less inclined to closely examine specific
details of similarities and dissimilarities between competing products."21
The basis for the Court of Appeals’ application of the totality or holistic test
is the "ordinary purchaser" buying the product under "normally prevalent
conditions in trade" and the attention such products normally elicit from
said ordinary purchaser. An ordinary purchaser or buyer does not usually
make such scrutiny nor does he usually have the time to do so. The
average shopper is usually in a hurry and does not inspect every product
on the shelf as if he were browsing in a library.22
The Court of Appeals held that the test to be applied should be the totality
or holistic test reasoning, since what is of paramount consideration is the
ordinary purchaser who is, in general, undiscerningly rash in buying the
more common and less expensive household products like coffee, and is
therefore less inclined to closely examine specific details of similarities and
dissimilarities between competing products.
This Court cannot agree with the above reasoning. If the ordinary
purchaser is "undiscerningly rash" in buying such common and inexpensive
household products as instant coffee, and would therefore be "less inclined
to closely examine specific details of similarities and dissimilarities"
between the two competing products, then it would be less likely for the
ordinary purchaser to notice that CFC’s trademark FLAVOR MASTER
carries the colors orange and mocha while that of Nestle’s uses red and
brown. The application of the totality or holistic test is improper since the
ordinary purchaser would not be inclined to notice the specific features,
similarities or dissimilarities, considering that the product is an inexpensive
and common household item.
It must be emphasized that the products bearing the trademarks in
question are "inexpensive and common" household items bought off the
shelf by "undiscerningly rash" purchasers. As such, if the ordinary
purchaser is "undiscerningly rash", then he would not have the time nor the
inclination to make a keen and perceptive examination of the physical
discrepancies in the trademarks of the products in order to exercise his
choice.
While this Court agrees with the Court of Appeals’ detailed enumeration of
differences between the respective trademarks of the two coffee products,
this Court cannot agree that totality test is the one applicable in this case.
Rather, this Court believes that the dominancy test is more suitable to this
case in light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the elementary postulate
of the law on trademarks and unfair competition that confusing similarity is
to be determined on the basis of visual, aural, connotative comparisons
and overall impressions engendered by the marks in controversy as they
are encountered in the realities of the marketplace.23 The totality or holistic
test only relies on visual comparison between two trademarks whereas the
dominancy test relies not only on the visual but also on the aural and
connotative comparisons and overall impressions between the two
trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test
of dominancy and held that:
From the evidence at hand, it is sufficiently established that the word
MASTER is the dominant feature of opposer’s mark. The word MASTER is
printed across the middle portion of the label in bold letters almost twice the
size of the printed word ROAST. Further, the word MASTER has always
been given emphasis in the TV and radio commercials and other
advertisements made in promoting the product. This can be gleaned from
the fact that Robert Jaworski and Atty. Ric Puno Jr.., the personalities
engaged to promote the product, are given the titles Master of the Game
and Master of the Talk Show, respectively. In due time, because of these
advertising schemes the mind of the buying public had come to learn to
associate the word MASTER with the opposer’s goods.
x x x. It is the observation of this Office that much of the dominance which
the word MASTER has acquired through Opposer’s advertising schemes is
carried over when the same is incorporated into respondent-applicant’s
trademark FLAVOR MASTER. Thus, when one looks at the label bearing
the trademark FLAVOR MASTER (Exh. 4) one’s attention is easily
attracted to the word MASTER, rather than to the dissimilarities that exist.
Therefore, the possibility of confusion as to the goods which bear the
competing marks or as to the origins thereof is not farfetched. x x x.24
In addition, the word "MASTER" is neither a generic nor a descriptive term.
As such, said term can not be invalidated as a trademark and, therefore,
may be legally protected. Generic terms25 are those which constitute "the
common descriptive name of an article or substance," or comprise the
"genus of which the particular product is a species," or are "commonly
used as the name or description of a kind of goods," or "imply reference to
every member of a genus and the exclusion of individuating characters," or
"refer to the basic nature of the wares or services provided rather than to
the more idiosyncratic characteristics of a particular product," and are not
legally protectable. On the other hand, a term is descriptive26 and
therefore invalid as a trademark if, as understood in its normal and natural
sense, it "forthwith conveys the characteristics, functions, qualities or
ingredients of a product to one who has never seen it and does not know
what it is," or "if it forthwith conveys an immediate idea of the ingredients,
qualities or characteristics of the goods," or if it clearly denotes what goods
or services are provided in such a way that the consumer does not have to
exercise powers of perception or imagination.
Rather, the term "MASTER" is a suggestive term brought about by the
advertising scheme of Nestle. Suggestive terms27 are those which, in the
phraseology of one court, require "imagination, thought and perception to
reach a conclusion as to the nature of the goods." Such terms, "which
subtly connote something about the product," are eligible for protection in
the absence of secondary meaning. While suggestive marks are capable of
shedding "some light" upon certain characteristics of the goods or services
in dispute, they nevertheless involve "an element of incongruity,"
"figurativeness," or " imaginative effort on the part of the observer."
This is evident from the advertising scheme adopted by Nestle in promoting
its coffee products. In this case, Nestle has, over time, promoted its
products as "coffee perfection worthy of masters like Robert Jaworski and
Ric Puno Jr."
In associating its coffee products with the term "MASTER" and thereby
impressing them with the attributes of said term, Nestle advertised its
products thus:
Robert Jaworski. Living Legend. A true hard court hero. Fast on his feet.
Sure in every shot he makes. A master strategist. In one word, unmatched.
MASTER ROAST. Equally unmatched. Rich and deeply satisfying. Made
from a unique combination of the best coffee beans - Arabica for superior
taste and aroma, Robusta for strength and body. A masterpiece only
NESCAFE, the world’s coffee masters, can create.
In closing, it may not be amiss to quote the case of American Chicle Co. v.
Topps Chewing Gum, Inc.,30 to wit:
Why it should have chosen a mark that had long been employed by
[plaintiff] and had become known to the trade instead of adopting some
other means of identifying its goods is hard to see unless there was a
deliberate purpose to obtain some advantage from the trade that [plaintiff]
had built up. Indeed, it is generally true that, as soon as we see that a
second comer in a market has, for no reason that he can assign,
plagiarized the "make-up" of an earlier comer, we need no more; . . . [W]e
feel bound to compel him to exercise his ingenuity in quarters further afield.
WHEREFORE, in view of the foregoing, the decision of the Court of
Appeals in CA-G.R. SP No. 24101 is REVERSED and SET ASIDE and the
decision of the Bureau of Patents, Trademarks and Technology Transfer in
Inter Partes Cases Nos. 3200 and 3202 is REINSTATED.
SO ORDERED.

MASTER ROAST. Coffee perfection worthy of masters like Robert

Jaworski.28

In the art of conversation, Ric Puno Jr. is master. Witty. Well-informed.

Confident.

In the art of coffee-making, nothing equals Master Roast, the coffee

masterpiece from Nescafe, the world’s coffee masters. A unique
combination of the best coffee beans - Arabica for superior taste and
aroma, Robusta for strength and body. Truly distinctive and rich in flavor.

Master Roast. Coffee perfection worthy of masters like Ric Puno Jr.29

The term "MASTER", therefore, has acquired a certain connotation to

mean the coffee products MASTER ROAST and MASTER BLEND
produced by Nestle. As such, the use by CFC of the term "MASTER" in the
trademark for its coffee product FLAVOR MASTER is likely to cause
confusion or mistake or even to deceive the ordinary purchasers.
G.R. No. 154342 July 14, 2004
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO,
INC., petitioner, vs. E. & J. GALLO WINERY and THE ANDRESONS
GROUP, INC., respondents.
DECISION
CORONA, J.:
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 of
the Court of Appeals (CA) in CA-G.R. CV No. 65175 affirming the
November 26, 1998 decision,2 as modified by the June 24, 1999 order,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. &
J. Gallo Winery (Gallo Winery) and The Andresons Group, Inc.
(Andresons); (b) the July 11, 2002 CA resolution denying their motion for
reconsideration4 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, United States of America (U.S.), where all its wineries are
located. Gallo 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 Winery’s
exclusive wine importer and distributor in the Philippines since 1991, selling
these products in its own name and for its own account.5
Gallo Winery’s 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 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
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
The Bureau of Internal Revenue (BIR) approved Tobacco Industries’ use of
GALLO 100’s 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 manufacturer’s
sworn statement as basis for BIR’s collection of specific tax on GALLO
cigarettes.9
On February 5, 1974, Tobacco Industries applied for, but eventually did not
pursue, the registration of the GALLO cigarette trademark in the principal
register of the then Philippine Patent Office.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 On July 17, 1985, the National Library
issued Certificate of Copyright Registration No. 5834 for La Campana’s
lifetime copyright claim over GALLO cigarette labels.12
Subsequently, La Campana authorized Mighty Corporation to manufacture
and sell cigarettes bearing the GALLO trademark.13 BIR approved Mighty
Corporation’s use of GALLO 100’s cigarette brand, under licensing
agreement with Tobacco Industries, on May 18, 1988, and GALLO
SPECIAL MENTHOL 100’s cigarette brand on April 3, 1989.14
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
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
Respondents claim that they first learned about the existence of GALLO
cigarettes in the latter part of 1992 when an Andresons employee saw such
cigarettes on display with GALLO wines in a Davao supermarket wine
cellar section.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
and RA 166 (Trademark Law),19 specifically, Sections 22 and 23 (for
trademark infringement),20 29 and 3021 (for unfair competition and false
designation of origin) and 37 (for tradename infringement).22 They claimed
that petitioners adopted the GALLO trademark to ride on Gallo Winery’s
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 Winery’s 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 at least P500,000
as attorney’s fees and litigation expenses.23
In their answer, petitioners alleged, among other affirmative defenses, that:
petitioner’s GALLO cigarettes and Gallo Winery’s wines were totally
unrelated products; Gallo Winery’s 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 Winery’s high-priced luxury wines
which cost between P98 to P242.50; the target market of Gallo Winery’s
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 manufacturer’s name clearly
indicated as MIGHTY CORPORATION while, in the case of Gallo Winery’s
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 the Makati RTC denied, for lack of
merit, respondent’s prayer for the issuance of a writ of preliminary
injunction,25 holding that respondent’s 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
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
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 RTC’s denial of the application for issuance of a writ of preliminary
injunction against petitioners.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 & J’s 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 domestic or export markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs –
(i) actual and compensatory damages for the injury and prejudice and
impairment of plaintiffs’ business and goodwill as a result of the acts and
conduct pleaded as basis for this suit, in an amount equal to 10% of
FOURTEEN MILLION TWO HUNDRED THIRTY FIVE THOUSAND
PESOS (PHP14,235,000.00) from the filing of the complaint until fully paid;
(ii) exemplary damages in the amount of PHP100,000.00;
(iii) attorney’s fees and expenses of litigation in the amount of
PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED."
On June 24, 1999, the Makati RTC granted respondent’s motion for partial
reconsideration and increased the award of actual and compensatory
damages to 10% of P199,290,000 or P19,929,000.30
On appeal, the CA affirmed the Makati RTC decision and subsequently
denied petitioner’s motion for reconsideration.
III.
The Issues
Petitioners now seek relief from this Court contending that the CA did not
follow prevailing laws and jurisprudence when it held that: [a] RA 8293
(Intellectual Property Code of the Philippines [IP Code]) was applicable in
this case; [b] GALLO cigarettes and GALLO wines were identical, similar or
related goods for the reason alone that they were purportedly forms of vice;
[c] both goods passed through the same channels of trade and [d]
petitioners were liable for trademark infringement, unfair competition and
damages.31
Respondents, on the other hand, assert that this petition which invokes
Rule 45 does not involve pure questions of law, and hence, must be
dismissed outright.
IV.
Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CA’S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must
raise only "questions of law"32 (that is, the doubt pertains to the application
and interpretation of law to a certain set of facts) and not "questions of fact"
(where the doubt concerns the truth or falsehood of alleged facts),33
otherwise, the petition will be denied. We are not a trier of facts and the
Court of Appeals’ factual findings are generally conclusive upon us.34
This case involves questions of fact which are directly related and
intertwined with questions of law. The resolution of the factual issues
concerning the goods’ similarity, identity, relation, channels of trade, and
acts of trademark infringement and unfair competition is greatly dependent
on the interpretation of applicable laws. The controversy here is not simply
the identity or similarity of both parties’ trademarks but whether or not
infringement or unfair competition was committed, a conclusion based on
statutory interpretation. Furthermore, one or more of the following
exceptional circumstances oblige us to review the evidence on record:35
(1) the conclusion is grounded entirely on speculation, surmises, and
conjectures;
(2) the inference of the Court of Appeals from its findings of fact is
manifestly mistaken, absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) the appellate court, in making its findings, went beyond the issues of the
case, and the same are contrary to the admissions of both the appellant
and the appellee;
(6) the findings are without citation of specific evidence on which they are
based;
(7) the facts set forth in the petition as well as in the petitioner's main and
reply briefs are not disputed by the respondents; and
(8) the findings of fact of the Court of Appeals are premised on the absence
of evidence and are contradicted [by the evidence] on record.36
In this light, after thoroughly examining the evidence on record, weighing,
analyzing and balancing all factors to determine whether trademark
infringement and/or unfair competition has been committed, we conclude
that both the Court of Appeals and the trial court veered away from the law
and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for
trademark infringement and unfair competition committed during the
effectivity of the Paris Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were
held liable not only under the aforesaid governing laws but also under the
IP Code which took effect only on January 1, 1998, or about five years after
the filing of the complaint:
Defendants’ unauthorized use of the GALLO trademark constitutes
trademark infringement pursuant to Section 22 of Republic Act No. 166,
Section 155 of the IP Code, Article 6bis of the Paris Convention, and Article
16 (1) of the TRIPS Agreement as it causes confusion, deception and
mistake on the part of the purchasing public.38 (Emphasis and
underscoring supplied)
The CA apparently did not notice the error and affirmed the Makati RTC
decision:
In the light of its finding that appellants’ use of the GALLO trademark on its
cigarettes is likely to create confusion with the GALLO trademark on wines
previously registered and used in the Philippines by appellee E & J Gallo
Winery, the trial court thus did not err in holding that appellants’ acts not
only violated the provisions of the our trademark laws (R.A. No. 166 and
R.A. Nos. (sic) 8293) but also Article 6bis of the Paris Convention.39
(Emphasis and underscoring supplied)
We therefore hold that the courts a quo erred in retroactively applying the
IP Code in this case.
It is a fundamental principle that the validity and obligatory force of a law
proceed from the fact that it has first been promulgated. A law that is not
yet effective cannot be considered as conclusively known by the populace.
To make a law binding even before it takes effect may lead to the arbitrary
exercise of the legislative power.40 Nova constitutio futuris formam
imponere debet non praeteritis. A new state of the law ought to affect the
future, not the past. Any doubt must generally be resolved against the
retroactive operation of laws, whether these are original enactments,
amendments or repeals.41 There are only a few instances when laws may
be given retroactive effect,42 none of which is present in this case.
The IP Code, repealing the Trademark Law,43 was approved on June 6,
1997. Section 241 thereof expressly decreed that it was to take effect only
on January 1, 1998, without any provision for retroactive application. Thus,
the Makati RTC and the CA should have limited the consideration of the
present case within the parameters of the Trademark Law and the Paris
Convention, the laws in force at the time of the filing of the complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair competition have a
common conception at their root, that is, a person shall not be permitted to
misrepresent his goods or his business as the goods or business of
another, the law on unfair competition is broader and more inclusive than
the law on trademark infringement. The latter is more limited but it
recognizes a more exclusive right derived from the trademark adoption and
registration by the person whose goods or business is first associated with
it. The law on trademarks is thus a specialized subject distinct from the law
on unfair competition, although the two subjects are entwined with each
other and are dealt with together in the Trademark Law (now, both are
covered by the IP Code). Hence, even if one fails to establish his exclusive
property right to a trademark, he may still obtain relief on the ground of his
competitor’s unfairness or fraud. Conduct constitutes unfair competition if
the effect is to pass off on the public the goods of one man as the goods of
another. It is not necessary that any particular means should be used to
this end.44
In Del Monte Corporation vs. Court of Appeals,45 we distinguished
trademark infringement from unfair competition:
(1) Infringement of trademark is the unauthorized use of a trademark,
whereas unfair competition is the passing off of one's goods as those of
another.
(2) In infringement of trademark fraudulent intent is unnecessary, whereas
in unfair competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a
prerequisite to the action, whereas in unfair competition registration is not
necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,46 an international agreement binding
on the Philippines and the United States (Gallo Winery’s country of
domicile and origin) prohibits "the [registration] or use of a trademark which
constitutes a reproduction, imitation or translation, liable to create
confusion, of a mark considered by the competent authority of the country
of registration or use to be well-known in that country as being already the
mark of a person entitled to the benefits of the [Paris] Convention and used
for identical or similar goods. [This rule also applies] when the essential
part of the mark constitutes a reproduction of any such well-known mark or
an imitation liable to create confusion therewith." There is no time limit for
seeking the prohibition of the use of marks used in bad faith.47
Thus, under Article 6bis of the Paris Convention, the following are the
elements of trademark infringement:
(a) registration or use by another person of a trademark which is a
reproduction, imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of
registration or use48 to be well-known in that country and is already the
mark of a person entitled to the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable
for infringement when, among others, he "uses without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any
registered mark or tradename in connection with the sale, offering for sale,
or advertising of any goods, business or services or in connection with
which such use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or services,
or identity of such business; or reproduce, counterfeit, copy or colorably
imitate any such mark or tradename and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services."49 Trademark
registration and actual use are material to the complaining party’s cause of
action.
Corollary to this, Section 20 of the Trademark Law50 considers the
trademark registration certificate as prima facie evidence of the validity of
the registration, the registrant’s ownership and exclusive right to use the
trademark in connection with the goods, business or services as classified
by the Director of Patents51 and as specified in the certificate, subject to
the conditions and limitations stated therein. Sections 2 and 2-A52 of the
Trademark Law emphasize the importance of the trademark’s actual use in
commerce in the Philippines prior to its registration. In the adjudication of
trademark rights between contending parties, equitable principles of
laches, estoppel, and acquiescence may be considered and applied.53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the
following constitute the elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for sale,
or advertising of any goods, business or services or in connection with
which such use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or services,
or identity of such business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by another person and such
reproduction, counterfeit, copy or colorable imitation is applied to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended
to be used upon or in connection with such goods, business or services as
to likely cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or
assignee.
In summary, the Paris Convention protects well-known trademarks only (to
be determined by domestic authorities), while the Trademark Law protects
all trademarks, whether well-known or not, provided that they have been
registered and are in actual commercial use in the Philippines. Following
universal acquiescence and comity, in case of domestic legal disputes on
any conflicting provisions between the Paris Convention (which is an
international agreement) and the Trademark law (which is a municipal law)
the latter will prevail.54
Under both the Paris Convention and the Trademark Law, the protection of
a registered trademark is limited only to goods identical or similar to those
in respect of which such trademark is registered and only when there is
likelihood of confusion. Under both laws, the time element in commencing
infringement cases is material in ascertaining the registrant’s express or
implied consent to another’s use of its trademark or a colorable imitation
thereof. This is why acquiescence, estoppel or laches may defeat the
registrant’s otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition
precedent to any finding of liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents’ own judicial admission, the GALLO wine trademark was
registered in the Philippines in November 1971 but the wine itself was first
marketed and sold in the country only in 1974 and only within the former
U.S. military facilities, and outside thereof, only in 1979. To prove
commercial use of the GALLO wine trademark in the Philippines,
respondents presented sales invoice no. 29991 dated July 9, 1981
addressed to Conrad Company Inc., Makati, Philippines and sales invoice
no. 85926 dated March 22, 1996 addressed to Andresons Global, Inc.,
Quezon City, Philippines. Both invoices were for the sale and shipment of
GALLO wines to the Philippines during that period.55 Nothing at all,
however, was presented to evidence the alleged sales of GALLO wines in
the Philippines in 1974 or, for that matter, prior to July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR
authorization letters, forms and manufacturer’s sworn statement, it appears
that petitioners and its predecessor-in-interest, Tobacco Industries, have
indeed been using and selling GALLO cigarettes in the Philippines since
1973 or before July 9, 1981.56
In Emerald Garment Manufacturing Corporation vs. Court of Appeals,57 we
reiterated our rulings in Pagasa Industrial Corporation vs. Court of
Appeals,58 Converse Rubber Corporation vs. Universal Rubber Products,
Inc.,59 Sterling Products International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft,60 Kabushi Kaisha Isetan vs. Intermediate Appellate
Court,61 and Philip Morris vs. Court of Appeals,62 giving utmost
importance to the actual commercial use of a trademark in the Philippines
prior to its registration, notwithstanding the provisions of the Paris
Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained to agree with petitioner's
contention that private respondent failed to prove prior actual commercial
use of its "LEE" trademark in the Philippines before filing its application for
registration with the BPTTT and hence, has not acquired ownership over
said mark.
Actual use in commerce in the Philippines is an essential prerequisite for
the acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A
of the Philippine Trademark Law (R.A. No. 166) x x x
xxx xxx xxx
The provisions of the 1965 Paris Convention for the Protection of Industrial
Property relied upon by private respondent and Sec. 21-A of the
Trademark Law (R.A. No. 166) were sufficiently expounded upon and
qualified in the recent case of Philip Morris, Inc. v. Court of Appeals (224
SCRA 576 [1993]):
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines must
subordinate an international agreement inasmuch as the apparent clash is
being decided by a municipal tribunal (Mortisen vs. Peters, Great Britain,
High Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras,
International Law and World Organization, 1971 Ed., p. 20). Withal, the fact
that international law has been made part of the law of the land does not by
any means imply the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as applied in most
countries, rules of international law are given a standing equal, not
superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for
infringement irrespective of lack of business activity in the Philippines on
account of Section 21-A of the Trademark Law but the question of whether
they have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the
Philippines in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for infringement,
the entity need not be actually using the trademark in commerce in the
Philippines. Such a foreign corporation may have the personality to file a
suit for infringement but it may not necessarily be entitled to protection due
to absence of actual use of the emblem in the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having obtained
several registration certificates for its various trademarks "LEE," "LEE
RIDERS," and "LEESURES" in both the supplemental and principal
registers, as early as 1969 to 1973. However, registration alone will not
suffice. In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft (27 SCRA 1214 [1969]; Reiterated in Kabushi Isetan vs.
Intermediate Appellate Court (203 SCRA 583 [1991]) we declared:
xxx xxx xxx
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
prerequisite in the acquisition of the right of ownership over a trademark.
xxx xxx xxx
The credibility placed on a certificate of registration of one's trademark, or
its weight as evidence of validity, ownership and exclusive use, is qualified.
A registration certificate serves merely as prima facie evidence. It is not
conclusive but can and may be rebutted by controverting evidence.
xxx xxx xxx
In the case at bench, however, we reverse the findings of the Director of
Patents and the Court of Appeals. After a meticulous study of the records,
we observe that the Director of Patents and the Court of Appeals relied
mainly on the registration certificates as proof of use by private respondent
of the trademark "LEE" which, as we have previously discussed are not
sufficient. We cannot give credence to private respondent's claim that its
"LEE" mark first reached the Philippines in the 1960's through local sales
by the Post Exchanges of the U.S. Military Bases in the Philippines (Rollo,
p. 177) based as it was solely on the self-serving statements of Mr. Edward
Poste, General Manager of Lee (Phils.), Inc., a wholly owned subsidiary of
the H.D. Lee, Co., Inc., U.S.A., herein private respondent. (Original
Records, p. 52) Similarly, we give little weight to the numerous vouchers
representing various advertising expenses in the Philippines for "LEE"
products. It is well to note that these expenses were incurred only in 1981
and 1982 by LEE (Phils.), Inc. after it entered into a licensing agreement
with private respondent on 11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently shown that it has been in the
business of selling jeans and other garments adopting its "STYLISTIC MR.
LEE" trademark since 1975 as evidenced by appropriate sales invoices to
various stores and retailers. (Exhibit 1-e to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526
[1982]) and Converse Rubber Corp. v. Universal Rubber Products, Inc.,
(147 SCRA 154 [1987]), respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the
mark prior to its registration. There is no dispute that respondent
corporation was the first registrant, yet it failed to fully substantiate its claim
that it used in trade or business in the Philippines the subject mark; it did
not present proof to invest it with exclusive, continuous adoption of the
trademark which should consist among others, of considerable sales since
its first use. The invoices submitted by respondent which were dated way
back in 1957 show that the zippers sent to the Philippines were to be used
as "samples" and "of no commercial value." The evidence for respondent
must be clear, definite and free from inconsistencies. "Samples" are not for
sale and therefore, the fact of exporting them to the Philippines cannot be
considered to be equivalent to the "use" contemplated by law. Respondent
did not expect income from such "samples." There were no receipts to
establish sale, and no proof were presented to show that they were
subsequently sold in the Philippines.
xxx xxx xxx
For lack of adequate proof of actual use of its trademark in the Philippines
prior to petitioner's use of its own mark and for failure to establish
confusing similarity between said trademarks, private respondent's action
for infringement must necessarily fail. (Emphasis supplied.)
In view of the foregoing jurisprudence and respondents’ judicial admission
that the actual commercial use of the GALLO wine trademark was
subsequent to its registration in 1971 and to Tobacco Industries’
commercial use of the GALLO cigarette trademark in 1973, we rule that, on
this account, respondents never enjoyed the exclusive right to use the
GALLO wine trademark to the prejudice of Tobacco Industries and its
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
Thus, by strict application of Section 20 of the Trademark Law, Gallo
Winery’s 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
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 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 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).
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 origin 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
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 defendant’s goods are then bought as the plaintiff’s and its poor
quality reflects badly on the plaintiff’s reputation. The other is "confusion of
business" wherein the goods of the parties are different but the defendant’s
product can reasonably (though mistakenly) be assumed to originate 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
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 registrant’s 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 to a legal conclusion
that there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent,67 we ordered the
approval of Acoje Mining’s 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
we upheld the Patent Director’s registration of the same trademark CAMIA
for Ng Sam’s ham under Class 47, despite Philippine Refining Company’s
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 we dismissed Hickok’s petition to cancel private respondent’s
HICKOK trademark registration for its Marikina shoes as against
petitioner’s earlier registration of the same trademark for handkerchiefs,
briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court of Appeals,70 in a minute
resolution, we dismissed the petition for review for lack of merit and
affirmed the Patent Office’s registration of the trademark SHELL used in
the cigarettes manufactured by respondent Fortune Tobacco Corporation,
notwithstanding Shell Company’s opposition as the prior registrant of the
same trademark for its gasoline and other petroleum products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals,71 we dismissed
ESSO’s complaint for trademark infringement against United Cigarette
Corporation and allowed the latter to use the trademark ESSO for its
cigarettes, the same trademark used by ESSO for its petroleum products,
and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation,72 we affirmed the rulings of the Patent Office and the CA that
NSR Rubber Corporation could use the trademark CANON for its sandals
(Class 25) despite Canon Kabushiki Kaisha’s prior registration and use of
the same trademark for its paints, chemical products, toner and dyestuff
(Class 2).
Whether a trademark causes confusion and is likely to deceive the public
hinges on "colorable imitation"73 which has been defined as "such
similarity in form, content, words, sound, meaning, special arrangement or
general appearance of the trademark or tradename in their overall
presentation or in their essential and substantive and distinctive parts as
would likely mislead or confuse persons in the ordinary course of
purchasing the genuine article."74
Jurisprudence has developed two tests in determining similarity and
likelihood of confusion in trademark resemblance:75
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of
Appeals76 and other cases,77 and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of
Appeals78 and its preceding cases.79
The Dominancy Test focuses on the similarity of the prevalent features of
the competing trademarks which might cause confusion or deception, and
thus infringement. If the competing trademark contains the main, essential
or dominant features of another, and confusion or deception is likely to
result, infringement takes place. Duplication or imitation is not necessary;
nor is it necessary that the infringing label should suggest an effort to
imitate. The question is whether the use of the marks involved is likely to
cause confusion or mistake in the mind of the public or deceive
purchasers.80
On the other hand, the Holistic Test requires that the entirety of the marks
in question be considered in resolving confusing similarity. Comparison of
words is not the only determining factor. The trademarks in their entirety as
they appear in their respective labels or hang tags must also be considered
in relation to the goods to which they are attached. The discerning eye of
the observer must focus not only on the predominant words but also on the
other features appearing in both labels in order that he may draw his
conclusion whether one is confusingly similar to the other.81
In comparing the resemblance or colorable imitation of marks, various
factors have been considered, such as the dominant color, style, size,
form, meaning of letters, words, designs and emblems used, the likelihood
of deception of the mark or name's tendency to confuse82 and the
commercial impression likely to be conveyed by the trademarks if used in
conjunction with the respective goods of the parties.83
Applying the Dominancy and Holistic Tests, we find that the dominant
feature of the GALLO cigarette trademark is the device of a large rooster
facing left, outlined in black against a gold background. The rooster’s color
is either green or red – green for GALLO menthols and red for GALLO
filters. Directly below the large rooster device is the word GALLO. The
rooster device is given prominence in the GALLO cigarette packs in terms
of size and location on the labels.84
The GALLO mark appears to be a fanciful and arbitrary mark for the
cigarettes as it has no relation at all to the product but was chosen merely
as a trademark due to the fondness for fighting cocks of the son of
petitioners’ president. Furthermore, petitioners adopted GALLO, the
Spanish word for rooster, as a cigarette trademark to appeal to one of their
target markets, the sabungeros (cockfight aficionados).85
Also, as admitted by respondents themselves,86 on the side of the GALLO
cigarette packs are the words "MADE BY MIGHTY CORPORATION," thus
clearly informing the public as to the identity of the manufacturer of the
cigarettes.
On the other hand, GALLO Winery’s wine and brandy labels are diverse. In
many of them, the labels are embellished with sketches of buildings and
trees, vineyards or a bunch of grapes while in a few, one or two small
roosters facing right or facing each other (atop the EJG crest, surrounded
by leaves or ribbons), with additional designs in green, red and yellow
colors, appear as minor features thereof.87 Directly below or above these
sketches is the entire printed name of the founder-owners, "ERNEST &
JULIO GALLO" or just their surname "GALLO,"88 which appears in
different fonts, sizes, styles and labels, unlike petitioners’ uniform casque-
font bold-lettered GALLO mark.
Moreover, on the labels of Gallo Winery’s wines are printed the words
"VINTED AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO,
CALIFORNIA."89
The many different features like color schemes, art works and other
markings of both products drown out the similarity between them – the use
of the word “GALLO” ― a family surname for the Gallo Winery’s wines and
a Spanish word for rooster for petitioners’ cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants are actually in
competition; but confusion of business may arise between non-competing
interests as well.90
Thus, apart from the strict application of Section 20 of the Trademark Law
and Article 6bis of the Paris Convention which proscribe trademark
infringement not only of goods specified in the certificate of registration but
also of identical or similar goods, we have also uniformly recognized and
applied the modern concept of "related goods."91 Simply stated, when
goods are so related that the public may be, or is actually, deceived and
misled that they come from the same maker or manufacturer, trademark
infringement occurs.92
Non-competing goods may be those which, though they are not in actual
competition, are so related to each other that it can reasonably be
assumed that they originate from one manufacturer, in which case,
confusion of business can arise out of the use of similar marks.93 They
may also be those which, being entirely unrelated, cannot be assumed to
have a common source; hence, there is no confusion of business, even
though similar marks are used.94 Thus, there is no trademark infringement
if the public does not expect the plaintiff to make or sell the same class of
goods as those made or sold by the defendant.95
In resolving whether goods are related,96 several factors come into play:
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the
package, wrapper or container 97
(d) the nature and cost of the articles98
(e) the descriptive properties, physical attributes or essential characteristics
with reference to their form, composition, texture or quality
(f) the purpose of the goods99
(g) whether the article is bought for immediate consumption,100 that is,
day-to-day household items101
(h) the fields of manufacture102
(i) the conditions under which the article is usually purchased103 and
(j) the channels of trade through which the goods flow,104 how they are
distributed, marketed, displayed and sold.105
The wisdom of this approach is its recognition that each trademark
infringement case presents its own unique set of facts. No single factor is
preeminent, nor can the presence or absence of one determine, without
analysis of the others, the outcome of an infringement suit. Rather, the
court is required to sift the evidence relevant to each of the criteria. This
requires that the entire panoply of elements constituting the relevant factual
landscape be comprehensively examined.106 It is a weighing and
balancing process. With reference to this ultimate question, and from a
balancing of the determinations reached on all of the factors, a conclusion
is reached whether the parties have a right to the relief sought.107
A very important circumstance though is whether there exists a likelihood
that an appreciable number of ordinarily prudent purchasers will be misled,
or simply confused, as to the source of the goods in question.108 The
"purchaser" is not the "completely unwary consumer" but is the "ordinarily
intelligent buyer" considering the type of product involved.109 He is
"accustomed to buy, and therefore to some extent familiar with, the goods
in question. The test of fraudulent simulation is to be found in the likelihood
of the deception of some persons in some measure acquainted with an
established design and desirous of purchasing the commodity with which
that design has been associated. The test is not found in the deception, or
the possibility of deception, of the person who knows nothing about the
design which has been counterfeited, and who must be indifferent between
that and the other. The simulation, in order to be objectionable, must be
such as appears likely to mislead the ordinary intelligent buyer who has a
need to supply and is familiar with the article that he seeks to
purchase."110
Hence, in the adjudication of trademark infringement, we give due regard to
the goods’ usual purchaser’s character, attitude, habits, age, training and
education. 111
Applying these legal precepts to the present case, petitioner’s use of the
GALLO cigarette trademark is not likely to cause confusion or mistake, or
to deceive the "ordinarily intelligent buyer" of either wines or cigarettes or
both as to the identity of the goods, their source and origin, or identity of
the business of petitioners and respondents.
Obviously, wines and cigarettes are not identical or competing products.
Neither do they belong to the same class of goods. Respondents’ GALLO
wines belong to Class 33 under Rule 84[a] Chapter III, Part II of the Rules
of Practice in Trademark Cases while petitioners’ GALLO cigarettes fall
under Class 34.
We are mindful that product classification alone cannot serve as the
decisive factor in the resolution of whether or not wines and cigarettes are
related goods. Emphasis should be on the similarity of the products
involved and not on the arbitrary classification or general description of
their properties or characteristics. But the mere fact that one person has
adopted and used a particular trademark for his goods does not prevent
the adoption and use of the same trademark by others on articles of a
different description. 112
Both the Makati RTC and the CA held that wines and cigarettes are related
products because: (1) "they are related forms of vice, harmful when taken
in excess, and used for pleasure and relaxation" and (2) "they are grouped
or classified in the same section of supermarkets and groceries."
We find these premises patently insufficient and too arbitrary to support the
legal conclusion that wines and cigarettes are related products within the
contemplation of the Trademark Law and the Paris Convention.
First, anything –- not only wines and cigarettes ― can be used for pleasure
and relaxation and can be harmful when taken in excess. Indeed, it would
be a grave abuse of discretion to treat wines and cigarettes as similar or
related products likely to cause confusion just because they are pleasure-
giving, relaxing or potentially harmful. Such reasoning makes no sense.
Second, it is common knowledge that supermarkets sell an infinite variety
of wholly unrelated products and the goods here involved, wines and
cigarettes, have nothing whatsoever in common with respect to their
essential characteristics, quality, quantity, size, including the nature of their
packages, wrappers or containers.113
Accordingly, the U.S. patent office and courts have consistently held that
the mere fact that goods are sold in one store under the same roof does
not automatically mean that buyers are likely to be confused as to the
goods’ respective sources, connections or sponsorships. The fact that
different products are available in the same store is an insufficient
standard, in and of itself, to warrant a finding of likelihood of confusion.114
In this regard, we adopted the Director of Patents’ finding in Philippine
Refining Co., Inc. vs. Ng Sam and the Director of Patents:115
In his decision, the Director of Patents enumerated the factors that set
respondent’s products apart from the goods of petitioner. He opined and
we quote:
"I have taken into account such factors as probable purchaser attitude and
habits, marketing activities, retail outlets, and commercial impression likely
to be conveyed by the trademarks if used in conjunction with the respective
goods of the parties, I believe that ham on one hand, and lard, butter, oil,
and soap on the other are products that would not move in the same
manner through the same channels of trade. They pertain to unrelated
fields of manufacture, might be distributed and marketed under dissimilar
conditions, and are displayed separately even though they frequently may
be sold through the same retail food establishments. Opposer’s products
are ordinary day-to-day household items whereas ham is not necessarily
so. Thus, the goods of the parties are not of a character which purchasers
would likely attribute to a common origin.
The observations and conclusion of the Director of Patents are correct. The
particular goods of the parties are so unrelated that consumers, would not,
in any probability mistake one as the source of origin of the product of the
other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-
competing and are totally unrelated products not likely to cause confusion
vis-à-vis the goods or the business of the petitioners and respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in
cartons or packages and smoked. There is a whale of a difference between
their descriptive properties, physical attributes or essential characteristics
like form, composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not.
GALLO wines are patronized by middle-to-high-income earners while
GALLO cigarettes appeal only to simple folks like farmers, fishermen,
laborers and other low-income workers.116 Indeed, the big price difference
of these two products is an important factor in proving that they are in fact
unrelated and that they travel in different channels of trade. There is a
distinct price segmentation based on vastly different social classes of
purchasers.117
GALLO cigarettes and GALLO wines are not sold through the same
channels of trade. GALLO cigarettes are Philippine-made and petitioners
neither claim nor pass off their goods as imported or emanating from Gallo
Winery. GALLO cigarettes are distributed, marketed and sold through
ambulant and sidewalk vendors, small local sari-sari stores and grocery
stores in Philippine rural areas, mainly in Misamis Oriental, Pangasinan,
Bohol, and Cebu.118 On the other hand, GALLO wines are imported,
distributed and sold in the Philippines through Gallo Winery’s exclusive
contracts with a domestic entity, which is currently Andresons. By
respondents’ own testimonial evidence, GALLO wines are sold in hotels,
expensive bars and restaurants, and high-end grocery stores and
supermarkets, not through sari-sari stores or ambulant vendors.119
Furthermore, the Makati RTC and the CA erred in relying on Carling
Brewing Company vs. Philip Morris, Inc.120 to support its finding that
GALLO wines and GALLO cigarettes are related goods. The courts a quo
should have taken into consideration the subsequent case of IDV North
America, Inc. and R & A Bailey Co. Limited vs. S & M Brands, Inc.:121
IDV correctly acknowledges, however, that there is no per se rule that the
use of the same mark on alcohol and tobacco products always will result in
a likelihood of confusion. Nonetheless, IDV relies heavily on the decision in
John Walker & Sons, Ltd. vs. Tampa Cigar Co., 124 F. Supp. 254, 256
(S.D. Fla. 1954), aff’d, 222 F. 2d 460 (5th Cir. 1955), wherein the court
enjoined the use of the mark "JOHNNIE WALKER" on cigars because the
fame of the plaintiff’s mark for scotch whiskey and because the plaintiff
advertised its scotch whiskey on, or in connection with tobacco products.
The court, in John Walker & Sons, placed great significance on the finding
that the infringers use was a deliberate attempt to capitalize on the senior
marks’ fame. Id. At 256. IDV also relies on Carling Brewing Co. v. Philip
Morris, Inc., 297 F. Supp. 1330, 1338 (N.D. Ga. 1968), in which the court
enjoined the defendant’s use of the mark "BLACK LABEL" for cigarettes
because it was likely to cause confusion with the plaintiff’s well-known mark
"BLACK LABEL" for beer.
xxx xxx xxx
Those decisions, however, must be considered in perspective of the
principle that tobacco products and alcohol products should be considered
related only in cases involving special circumstances. Schenley Distillers,
Inc. v. General Cigar Co., 57C.C.P.A. 1213, 427 F. 2d 783, 785 (1970).
The presence of special circumstances has been found to exist where
there is a finding of unfair competition or where a ‘famous’ or ‘well-known
mark’ is involved and there is a demonstrated intent to capitalize on that
mark. For example, in John Walker & Sons, the court was persuaded to
find a relationship between products, and hence a likelihood of confusion,
because of the plaintiff’s long use and extensive advertising of its mark and
placed great emphasis on the fact that the defendant used the trademark
‘Johnnie Walker with full knowledge of its fame and reputation and with the
intention of taking advantage thereof.’ John Walker & Sons, 124 F. Supp.
At 256; see Mckesson & Robbins, Inc. v. P. Lorillard Co., 1959 WL 5894,
120 U.S.P.Q. 306, 307 (1959) (holding that the decision in John Walker &
Sons was ‘merely the law on the particular case based upon its own
peculiar facts’); see also Alfred Dunhill, 350 F. Supp. At 1363 (defendant’s
adoption of ‘Dunhill’ mark was not innocent). However, in Schenley, the
court noted that the relation between tobacco and whiskey products is
significant where a widely known arbitrary mark has long been used for
diversified products emanating from a single source and a newcomer
seeks to use the same mark on unrelated goods. Schenley, 427 F.2d. at
785. Significantly, in Schenley, the court looked at the industry practice and
the facts of the case in order to determine the nature and extent of the
relationship between the mark on the tobacco product and the mark on the
alcohol product.
The record here establishes conclusively that IDV has never advertised
BAILEYS liqueurs in conjunction with tobacco or tobacco accessory
products and that IDV has no intent to do so. And, unlike the defendant in
Dunhill, S & M Brands does not market bar accessories, or liqueur related
products, with its cigarettes. The advertising and promotional materials
presented a trial in this action demonstrate a complete lack of affiliation
between the tobacco and liqueur products bearing the marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M Brands had no intent, by
adopting the family name ‘Bailey’s’ as the mark for its cigarettes, to
capitalize upon the fame of the ‘BAILEYS’ mark for liqueurs. See Schenley,
427 F. 2d at 785. Moreover, as will be discussed below, and as found in
Mckesson & Robbins, the survey evidence refutes the contention that
cigarettes and alcoholic beverages are so intimately associated in the
public mind that they cannot under any circumstances be sold under the
same mark without causing confusion. See Mckesson & Robbins, 120
U.S.P.Q. at 308.
Taken as a whole, the evidence here demonstrates the absence of the
‘special circumstances’ in which courts have found a relationship between
tobacco and alcohol products sufficient to tip the similarity of goods
analysis in favor of the protected mark and against the allegedly infringing
mark. It is true that BAILEYS liqueur, the world’s best selling liqueur and
the second best selling in the United States, is a well-known product. That
fact alone, however, is insufficient to invoke the special circumstances
connection here where so much other evidence and so many other factors
disprove a likelihood of confusion. The similarity of products analysis,
therefore, augers against finding that there is a likelihood of confusion.
(Emphasis supplied).
In short, tobacco and alcohol products may be considered related only in
cases involving special circumstances which exist only if a famous mark is
involved and there is a demonstrated intent to capitalize on it. Both of these
are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations took
place in the late 1980s and the 1990s, that is, after Tobacco Industries’ use
of the GALLO cigarette trademark in 1973 and petitioners’ use of the same
mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical,
similar nor related goods, a requisite element under both the Trademark
Law and the Paris Convention.
Second, the GALLO trademark cannot be considered a strong and distinct
mark in the Philippines. Respondents do not dispute the documentary
evidence that aside from Gallo Winery’s GALLO trademark registration, the
Bureau of Patents, Trademarks and Technology Transfer also issued on
September 4, 1992 Certificate of Registration No. 53356 under the
Principal Register approving Productos Alimenticios Gallo, S.A’s April 19,
1990 application for GALLO trademark registration and use for its "noodles,
prepared food or canned noodles, ready or canned sauces for noodles,
semolina, wheat flour and bread crumbs, pastry, confectionery, ice cream,
honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar,
species and ice."122
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha
vs. Court of Appeals and NSR Rubber Corporation,123 "GALLO" cannot be
considered a "well-known" mark within the contemplation and protection of
the Paris Convention in this case since wines and cigarettes are not
identical or similar goods:
We agree with public respondents that the controlling doctrine with respect
to the applicability of Article 8 of the Paris Convention is that established in
Kabushi Kaisha Isetan vs. 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 tradename 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, not a patent or copyright or
anything else;
c) the mark must be for use in the same 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
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 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 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 man’s goods or business
as that of another constitutes unfair competition. Actual or probable
deception and confusion on the part of customers by reason of defendant’s
practices must always appear.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.

Costs against respondents.

SO ORDERED.
G.R. No. 166115 February 2, 2007
McDONALD’S CORPORATION, Petitioner, vs. MACJOY FASTFOOD
CORPORATION, Respondent.
DECISION
GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the Rules of Court,
herein petitioner McDonald’s Corporation seeks the reversal and setting
aside of the following issuances of the Court of Appeals (CA) in CA-G.R.
SP No. 57247, to wit:
1. Decision dated 29 July 20041 reversing an earlier decision of the
Intellectual Property Office (IPO) which rejected herein respondent MacJoy
FastFood Corporation’s application for registration of the trademark
"MACJOY & DEVICE"; and
2. Resolution dated 12 November 20042 denying the petitioner’s motion for
reconsideration.
As culled from the record, the facts are as follows:
On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic
corporation engaged in the sale of fast food products in Cebu City, filed
with the then Bureau of Patents, Trademarks and Technology Transfer
(BPTT), now the Intellectual Property Office (IPO), an application, thereat
identified as Application Serial No. 75274, for the registration of the
trademark "MACJOY & DEVICE" for fried chicken, chicken barbeque,
burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks
under classes 29 and 30 of the International Classification of Goods.
Petitioner McDonald’s Corporation, a corporation duly organized and
existing under the laws of the State of Delaware, USA, filed a verified
Notice of Opposition3 against the respondent’s application claiming that the
trademark "MACJOY & DEVICE" so resembles its corporate logo,
otherwise known as the Golden Arches or "M" design, and its marks
"McDonalds," McChicken," "MacFries," "BigMac," "McDo," "McSpaghetti,"
"McSnack," and "Mc," (hereinafter collectively known as the MCDONALD’S
marks) such that when used on identical or related goods, the trademark
applied for would confuse or deceive purchasers into believing that the
goods originate from the same source or origin. Likewise, the petitioner
alleged that the respondent’s use and adoption in bad faith of the
"MACJOY & DEVICE" mark would falsely tend to suggest a connection or
affiliation with petitioner’s restaurant services and food products, thus,
constituting a fraud upon the general public and further cause the dilution
of the distinctiveness of petitioner’s registered and internationally
recognized MCDONALD’S marks to its prejudice and irreparable damage.
The application and the opposition thereto was docketed as Inter Partes
Case No. 3861.
Respondent denied the aforementioned allegations of the petitioner and
averred that it has used the mark "MACJOY" for the past many years in
good faith and has spent considerable sums of money for said mark’s
extensive promotion in tri-media, especially in Cebu City where it has been
doing business long before the petitioner opened its outlet thereat
sometime in 1992; and that its use of said mark would not confuse
affiliation with the petitioner’s restaurant services and food products
because of the differences in the design and detail of the two (2) marks.
In a decision4 dated December 28, 1998, the IPO, ratiocinating that the
predominance of the letter "M," and the prefixes "Mac/Mc" in both the
"MACJOY" and the "MCDONALDS" marks lead to the conclusion that there
is confusing similarity between them especially since both are used on
almost the same products falling under classes 29 and 30 of the
International Classification of Goods, i.e., food and ingredients of food,
sustained the petitioner’s opposition and rejected the respondent’s
application, viz:
WHEREFORE, the Opposition to the registration of the mark MACJOY &
DEVICE for use in fried chicken and chicken barbecue, burgers, fries,
spaghetti, palabok, tacos, sandwiches, halo-halo, and steaks is, as it is
hereby, SUSTAINED. Accordingly, Application Serial No. 75274 of the
herein Respondent-Applicant is REJECTED.
Let the filewrapper of MACJOY subject matter of this case be sent to the
Administrative, Financial and Human Resources Development Bureau for
appropriate action in accordance with this Decision, with a copy to be
furnished the Bureau of Trademarks for information and to update its
record.
SO ORDERED.
In time, the respondent moved for a reconsideration but the IPO denied the
motion in its Order5 of January 14, 2000.
Therefrom, the respondent went to the CA via a Petition for Review with
prayer for Preliminary Injunction6 under Rule 43 of the Rules of Court,
whereat its appellate recourse was docketed as CA-G.R. SP No. 57247.
Finding no confusing similarity between the marks "MACJOY" and
"MCDONALD’S," the CA, in its herein assailed Decision7 dated July 29,
2004, reversed and set aside the appealed IPO decision and order, thus:
WHEREFORE, in view of the foregoing, judgment is hereby rendered by us
REVERSING and SETTING ASIDE the Decision of the IPO dated 28
December 1998 and its Order dated 14 January 2000 and ORDERING the
IPO to give due course to petitioner’s Application Serial No. 75274.
SO ORDERED.
Explains the CA in its decision:
xxx, it is clear that the IPO brushed aside and rendered useless the glaring
and drastic differences and variations in style of the two trademarks and
even decreed that these pronounced differences are "miniscule" and
considered them to have been "overshadowed by the appearance of the
predominant features" such as "M," "Mc," and "Mac" appearing in both
MCDONALD’S and MACJOY marks. Instead of taking into account these
differences, the IPO unreasonably shrugged off these differences in the
device, letters and marks in the trademark sought to be registered. The
IPO brushed aside and ignored the following irrefutable facts and
circumstances showing differences between the marks of MACJOY and
MCDONALD’S. They are, as averred by the petitioner [now respondent]:
1. The word "MacJoy" is written in round script while the word
"McDonald’s" is written in single stroke gothic;
2. The word "MacJoy" comes with the picture of a chicken head with cap
and bowtie and wings sprouting on both sides, while the word
"McDonald’s" comes with an arches "M" in gold colors, and absolutely
without any picture of a chicken;
3. The word "MacJoy" is set in deep pink and white color scheme while
"McDonald’s" is written in red, yellow and black color combination;
4. The façade of the respective stores of the parties are entirely different.
Exhibits 1 and 1-A, show that [respondent’s] restaurant is set also in the
same bold, brilliant and noticeable color scheme as that of its wrappers,
containers, cups, etc., while [petitioner’s] restaurant is in yellow and red
colors, and with the mascot of "Ronald McDonald" being prominently
displayed therein." (Words in brackets supplied.)
Petitioner promptly filed a motion for reconsideration. However, in its
similarly challenged Resolution8 of November 12, 2004, the CA denied the
motion, as it further held:
Whether a mark or label of a competitor resembles another is to be
determined by an inspection of the points of difference and resemblance as
a whole, and not merely the points of resemblance. The articles and
trademarks employed and used by the [respondent] Macjoy Fastfood
Corporation are so different and distinct as to preclude any probability or
likelihood of confusion or deception on the part of the public to the injury of
the trade or business of the [petitioner] McDonald’s Corporation. The
"Macjoy & Device" mark is dissimilar in color, design, spelling, size,
concept and appearance to the McDonald’s marks. (Words in brackets
supplied.)
Hence, the petitioner’s present recourse on the following grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT’S
"MACJOY & DEVICE" MARK IS NOT CONFUSINGLY SIMILAR TO
PETITIONER’S "McDONALD’S MARKS." IT FAILED TO CORRECTLY
APPLY THE DOMINANCY TEST WHICH HAS BEEN CONSISTENTLY
APPLIED BY THIS HONORABLE COURT IN DETERMINING THE
EXISTENCE OF CONFUSING SIMILARITY BETWEEN COMPETING
MARKS.
A. The McDonald’s Marks belong to a well-known and established "family
of marks" distinguished by the use of the prefix "Mc" and/or "Mac" and the
corporate "M" logo design.
B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioner’s
McDonald’s Marks and the Respondent’s "Macjoy & Device" mark. As
such, the marks are confusingly similar under the Dominancy Test.
C. Petitioner’s McDonald’s Marks are well-known and world-famous marks
which must be protected under the Paris Convention.
II.
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION
OF THE IPO DATED 28 DECEMBER 1998 AND ITS ORDER DATED 14
JANUARY 2000 WERE NOT BASED ON SUBSTANTIAL EVIDENCE.
In its Comment, the respondent asserts that the petition should be
dismissed outright for being procedurally defective: first, because the
person who signed the certification against forum shopping in behalf of the
petitioner was not specifically authorized to do so, and second, because
the petition does not present a reviewable issue as what it challenges are
the factual findings of the CA. In any event, the respondent insists that the
CA committed no reversible error in finding no confusing similarity between
the trademarks in question.
The petition is impressed with merit.
Contrary to respondent’s claim, the petitioner’s Managing Counsel, Sheila
Lehr, was specifically authorized to sign on behalf of the petitioner the
Verification and Certification10 attached to the petition. As can be gleaned
from the petitioner’s Board of Director’s Resolution dated December 5,
2002, as embodied in the Certificate of the Assistant Secretary dated
December 21, 2004,11 Sheila Lehr was one of those authorized and
empowered "to execute and deliver for and on behalf of [the petitioner] all
documents as may be required in connection with x x x the protection and
maintenance of any foreign patents, trademarks, trade-names, and
copyrights owned now or hereafter by [the petitioner], including, but not
limited to, x x x documents required to institute opposition or cancellation
proceedings against conflicting trademarks, and to do such other acts and
things and to execute such other documents as may be necessary and
appropriate to effect and carry out the intent of this resolution." Indeed, the
afore-stated authority given to Lehr necessarily includes the authority to
execute and sign the mandatorily required certification of non-forum
shopping to support the instant petition for review which stemmed from the
"opposition proceedings" lodged by the petitioner before the IPO.
Considering that the person who executed and signed the certification
against forum shopping has the authority to do so, the petition, therefore, is
not procedurally defective.
As regards the respondent’s argument that the petition raises only
questions of fact which are not proper in a petition for review, suffice it to
say that the contradictory findings of the IPO and the CA constrain us to
give due course to the petition, this being one of the recognized exceptions
to Section 1, Rule 45 of the Rules of Court. True, this Court is not the
proper venue to consider factual issues as it is not a trier of facts.12
Nevertheless, when the factual findings of the appellate court are mistaken,
absurd, speculative, conjectural, conflicting, tainted with grave abuse of
discretion, or contrary to the findings culled by the court of origin,13 as
here, this Court will review them.
The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines
a "trademark" as 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 in by others.14
Under the same law, the registration of a trademark is subject to the
provisions of Section 4 thereof, paragraph (d) of which is pertinent to this
case. The provision reads:
Section 4. Registration of trademarks, trade-names and service-marks on
the principal register. – There is hereby established a register of
trademarks, tradenames and service-marks which shall be known as the
principal register. The owner of the trade-mark, trade-name or service-mark
used to distinguish his goods, business or services of others shall have the
right to register the same on the principal register, unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or trade-name which so resembles a
mark or trade-name registered in the Philippines or a mark or trade-name
previously used in the Philippines by another and not abandoned, as to be
likely, when applied to or used in connection with the goods, business or
services of the applicant, to cause confusion or mistake or to deceive
purchasers;
xxx xxx xxx
Essentially, the issue here is whether there is a confusing similarity
between the MCDONALD’S marks of the petitioner and the respondent’s
"MACJOY & DEVICE" trademark when applied to Classes 29 and 30 of the
International Classification of Goods, i.e., food and ingredients of food.
In determining similarity and likelihood of confusion, jurisprudence has
developed two tests, the dominancy test and the holistic test.15 The
dominancy test focuses on the similarity of the prevalent features of the
competing trademarks that might cause confusion or deception.16 In
contrast, the holistic test requires the court to consider the entirety of the
marks as applied to the products, including the labels and packaging, in
determining confusing similarity.17 Under the latter test, a comparison of
the words is not the only determinant factor.18 1awphi1.net
Here, the IPO used the dominancy test in concluding that there was
confusing similarity between the two (2) trademarks in question as it took
note of the appearance of the predominant features "M", "Mc" and/or "Mac"
in both the marks. In reversing the conclusion reached by the IPO, the CA,
while seemingly applying the dominancy test, in fact actually applied the
holistic test. The appellate court ruled in this wise:
Applying the Dominancy test to the present case, the IPO should have
taken into consideration the entirety of the two marks instead of simply
fixing its gaze on the single letter "M" or on the combinations "Mc" or
"Mac". A mere cursory look of the subject marks will reveal that, save for
the letters "M" and "c", no other similarity exists in the subject marks.
We agree with the [respondent] that it is entirely unwarranted for the IPO to
consider the prefix "Mac" as the predominant feature and the rest of the
designs in [respondent’s] mark as details. Taking into account such
paramount factors as color, designs, spelling, sound, concept, sizes and
audio and visual effects, the prefix "Mc" will appear to be the only similarity
in the two completely different marks; and it is the prefix "Mc" that would
thus appear as the miniscule detail. When pitted against each other, the
two marks reflect a distinct and disparate visual impression that negates
any possible confusing similarity in the mind of the buying public. (Words in
brackets supplied.)
Petitioner now vigorously points out that the dominancy test should be the
one applied in this case.
We agree.
In trademark cases, particularly in ascertaining whether one trademark is
confusingly similar to another, no set rules can be deduced because each
case must be decided on its merits.19 In such cases, even more than in
any other litigation, precedent must be studied in the light of the facts of the
particular case.20 That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are
specifically in point.21
While we agree with the CA’s detailed enumeration of differences between
the two (2) competing trademarks herein involved, we believe that the
holistic test is not the one applicable in this case, the dominancy test being
the one more suitable. In recent cases with a similar factual milieu as here,
the Court has consistently used and applied the dominancy test in
determining confusing similarity or likelihood of confusion between
competing trademarks.22
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,23 a case where
the trademark "Big Mak" was found to be confusingly similar with the "Big
Mac" mark of the herein the petitioner, the Court explicitly held:
This Court, xxx, has relied on the dominancy test rather than the holistic
test. The dominancy test considers the dominant features in the competing
marks in determining whether they are confusingly similar. Under the
dominancy test, courts give greater weight to the similarity of the
appearance of the product arising from the adoption of the dominant
features of the registered mark, disregarding minor differences. Courts will
consider more 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.
Moreover, in Societe Des Produits Nestle, S.A. v. CA24 the Court, applying
the dominancy test, concluded that the use by the respondent therein of
the word "MASTER" for its coffee product "FLAVOR MASTER" was likely
to cause confusion with therein petitioner’s coffee products’ "MASTER
ROAST" and "MASTER BLEND" and further ruled:
xxx, the totality or holistic test is contrary to the elementary postulate of the
law on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in controversy as they are
encountered in the marketplace. The totality or holistic test only relies on
visual comparisons between two trademarks whereas the dominancy test
relies not only on the visual but also on the aural and connotative
comparisons and overall impressions between the two trademarks.
Applying the dominancy test to the instant case, the Court finds that herein
petitioner’s "MCDONALD’S" and respondent’s "MACJOY" marks are
confusingly similar with each other such that an ordinary purchaser can
conclude an association or relation between the marks.
To begin with, both marks use the corporate "M" design logo and the
prefixes "Mc" and/or "Mac" as dominant features. The first letter "M" in both
marks puts emphasis on the prefixes "Mc" and/or "Mac" by the similar way
in which they are depicted i.e. in an arch-like, capitalized and stylized
manner.25
For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and
aurally catches the attention of the consuming public. Verily, the word
"MACJOY" attracts attention the same way as did "McDonalds,"
"MacFries," "McSpaghetti," "McDo," "Big Mac" and the rest of the
MCDONALD’S marks which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of
fastfood products. Indisputably, the respondent’s trademark application for
the "MACJOY & DEVICE" trademark covers goods under Classes 29 and
30 of the International Classification of Goods, namely, fried chicken,
chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioner’s
trademark registration for the MCDONALD’S marks in the Philippines
covers goods which are similar if not identical to those covered by the
respondent’s application.
Thus, we concur with the IPO’s findings that:
In the case at bar, the predominant features such as the "M," "Mc," and
"Mac" appearing in both McDonald’s marks and the MACJOY & DEVICE"
easily attract the attention of would-be customers. Even non-regular
customers of their fastfood restaurants would readily notice the
predominance of the "M" design, "Mc/Mac" prefixes shown in both marks.
Such that the common awareness or perception of customers that the
trademarks McDonalds mark and MACJOY & DEVICE are one and the
same, or an affiliate, or under the sponsorship of the other is not far-
fetched.
The differences and variations in styles as the device depicting a head of
chicken with cap and bowtie and wings sprouting on both sides of the
chicken head, the heart-shaped "M," and the stylistic letters in "MACJOY &
DEVICE;" in contrast to the arch-like "M" and the one-styled gothic letters
in McDonald’s marks are of no moment. These minuscule variations are
overshadowed by the appearance of the predominant features mentioned
hereinabove.
Thus, with the predominance of the letter "M," and prefixes "Mac/Mc" found
in both marks, the inevitable conclusion is there is confusing similarity
between the trademarks Mc Donald’s marks and "MACJOY AND DEVICE"
especially considering the fact that both marks are being used on almost
the same products falling under Classes 29 and 30 of the International
Classification of Goods i.e. Food and ingredients of food.
With the existence of confusing similarity between the subject trademarks,
the resulting issue to be resolved is who, as between the parties, has the
rightful claim of ownership over the said marks.
We rule for the petitioner.
A mark is valid if it is distinctive and hence not barred from registration
under the Trademark Law. However, once registered, not only the mark’s
validity but also the registrant’s ownership thereof is prima facie
presumed.26
Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the
provision regarding the protection of industrial property of foreign nationals
in this country as embodied in the Paris Convention28 under which the
Philippines and the petitioner’s domicile, the United States, are adherent-
members, the petitioner was able to register its MCDONALD’S marks
successively, i.e., "McDonald’s" in 04 October, 197129 ; the corporate logo
which is the "M" or the golden arches design and the "McDonald’s" with the
"M" or golden arches design both in 30 June 197730 ; and so on and so
forth.31
On the other hand, it is not disputed that the respondent’s application for
registration of its trademark "MACJOY & DEVICE" was filed only on March
14, 1991 albeit the date of first use in the Philippines was December 7,
1987.32
Hence, from the evidence on record, it is clear that the petitioner has duly
established its ownership of the mark/s.
Respondent’s contention that it was the first user of the mark in the
Philippines having used "MACJOY & DEVICE" on its restaurant business
and food products since December, 1987 at Cebu City while the first
McDonald’s outlet of the petitioner thereat was opened only in 1992, is
downright unmeritorious. For the requirement of "actual use in commerce x
x x in the Philippines" before one may register a trademark, trade-name
and service mark under the Trademark Law33 pertains to the territorial
jurisdiction of the Philippines and is not only confined to a certain region,
province, city or barangay.
Likewise wanting in merit is the respondent’s claim that the petitioner
cannot acquire ownership of the word "Mac" because it is a personal name
which may not be monopolized as a trademark as against others of the
same name or surname. As stated earlier, once a trademark has been
registered, the validity of the mark is prima facie presumed. In this case,
the respondent failed to overcome such presumption. We agree with the
observations of the petitioner regarding the respondent’s explanation that
the word "MACJOY" is based on the name of its president’s niece, Scarlett No pronouncement as to costs.
Yu Carcell. In the words of the petitioner:
SO ORDERED.
First of all, Respondent failed to present evidence to support the foregoing
claim which, at best, is a mere self-serving assertion. Secondly, it cannot
be denied that there is absolutely no connection between the name
"Scarlett Yu Carcel" and "MacJoy" to merit the coinage of the latter word.
Even assuming that the word "MacJoy" was chosen as a term of
endearment, fondness and affection for a certain Scarlett Yu Carcel,
allegedly the niece of Respondent’s president, as well as to supposedly
bring good luck to Respondent’s business, one cannot help but wonder
why out of all the possible letters or combinations of letters available to
Respondent, its president had to choose and adopt a mark with the prefix
"Mac" as the dominant feature thereof. A more plausible explanation
perhaps is that the niece of Respondent’s president was fond of the food
products and services of the Respondent, but that is beside the point." 34

By reason of the respondent’s implausible and insufficient explanation as to

how and why out of the many choices of words it could have used for its
trade-name and/or trademark, it chose the word "MACJOY," the only
logical conclusion deducible therefrom is that the respondent would want to
ride high on the established reputation and goodwill of the MCDONALD’s
marks, which, as applied to petitioner’s restaurant business and food
products, is undoubtedly beyond question.

Thus, the IPO was correct in rejecting and denying the respondent’s
application for registration of the trademark "MACJOY & DEVICE." As this
Court ruled in Faberge Inc. v. IAC,35 citing Chuanchow Soy & Canning Co.
v. Dir. of Patents and Villapanta:36

When one applies for the registration of a trademark or label which is

almost the same or 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 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.

WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed

Decision and Resolution of the Court of Appeals in CA-G.R. SP NO.
57247, are REVERSED and SET ASIDE and the Decision of the
Intellectual Property Office in Inter Partes Case No. 3861 is REINSTATED.
G.R. No. 143993 August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES,
INC., petitioners, vs. L.C. BIG MAK BURGER, INC., FRANCIS B. DY,
EDNA A. DY, RENE B. DY, WILLIAM B. DY, JESUS AYCARDO,
ARACELI AYCARDO, and GRACE HUERTO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26 November 1999 of
the Court of Appeals2 finding respondent L.C. Big Mak Burger, Inc. not
liable for trademark infringement and unfair competition and ordering
petitioners to pay respondents P1,900,000 in damages, and of its
Resolution dated 11 July 2000 denying reconsideration. The Court of
Appeals' Decision reversed the 5 September 1994 Decision3 of the
Regional Trial Court of Makati, Branch 137, finding respondent L.C. Big
Mak Burger, Inc. liable for trademark infringement and unfair competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a corporation
organized under the laws of Delaware, United States. McDonald's
operates, by itself or through its franchisees, a global chain of fast-food
restaurants. McDonald's4 owns a family of marks5 including the "Big Mac"
mark for its "double-decker hamburger sandwich."6 McDonald's registered
this trademark with the United States Trademark Registry on 16 October
1979.7 Based on this Home Registration, McDonald's applied for the
registration of the same mark in the Principal Register of the then
Philippine Bureau of Patents, Trademarks and Technology ("PBPTT"), now
the Intellectual Property Office ("IPO"). Pending approval of its application,
McDonald's introduced its "Big Mac" hamburger sandwiches in the
Philippine market in September 1981. On 18 July 1985, the PBPTT allowed
registration of the "Big Mac" mark in the Principal Register based on its
Home Registration in the United States.
Like its other marks, McDonald's displays the "Big Mac" mark in items8 and
paraphernalia9 in its restaurants, and in its outdoor and indoor signages.
From 1982 to 1990, McDonald's spent P10.5 million in advertisement for
"Big Mac" hamburger sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner McGeorge"), a domestic
corporation, is McDonald's Philippine franchisee.11
Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a
domestic corporation which operates fast-food outlets and snack vans in
Metro Manila and nearby provinces.12 Respondent corporation's menu
includes hamburger sandwiches and other food items.13 Respondents
Francis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo,
Araceli Aycardo, and Grace Huerto ("private respondents") are the
incorporators, stockholders and directors of respondent corporation.14
On 21 October 1988, respondent corporation applied with the PBPTT for
the registration of the "Big Mak" mark for its hamburger sandwiches.
McDonald's opposed respondent corporation's application on the ground
that "Big Mak" was a colorable imitation of its registered "Big Mac" mark for
the same food products. McDonald's also informed respondent Francis Dy
("respondent Dy"), the chairman of the Board of Directors of respondent
corporation, of its exclusive right to the "Big Mac" mark and requested him
to desist from using the "Big Mac" mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6 June 1990
sued respondents in the Regional Trial Court of Makati, Branch 137
("RTC"), for trademark infringement and unfair competition. In its Order of
11 July 1990, the RTC issued a temporary restraining order ("TRO")
against respondents enjoining them from using the "Big Mak" mark in the
operation of their business in the National Capital Region.15 On 16 August
1990, the RTC issued a writ of preliminary injunction replacing the TRO.16
In their Answer, respondents admitted that they have been using the name
"Big Mak Burger" for their fast-food business. Respondents claimed,
however, that McDonald's does not have an exclusive right to the "Big
Mac" mark or to any other similar mark. Respondents point out that the
Isaiyas Group of Corporations ("Isaiyas Group") registered the same mark
for hamburger sandwiches with the PBPTT on 31 March 1979. One
Rodolfo Topacio ("Topacio") similarly registered the same mark on 24 June
1983, prior to McDonald's registration on 18 July 1985. Alternatively,
respondents claimed that they are not liable for trademark infringement or
for unfair competition, as the "Big Mak" mark they sought to register does
not constitute a colorable imitation of the "Big Mac" mark. Respondents
asserted that they did not fraudulently pass off their hamburger sandwiches
as those of petitioners' Big Mac hamburgers.17 Respondents sought
damages in their counterclaim.
In their Reply, petitioners denied respondents' claim that McDonald's is not
the exclusive owner of the "Big Mac" mark. Petitioners asserted that while
the Isaiyas Group and Topacio did register the "Big Mac" mark ahead of
McDonald's, the Isaiyas Group did so only in the Supplemental Register of
the PBPTT and such registration does not provide any protection.
McDonald's disclosed that it had acquired Topacio's rights to his
registration in a Deed of Assignment dated 18 May 1981.18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment ("RTC Decision")
finding respondent corporation liable for trademark infringement and unfair
competition. However, the RTC dismissed the complaint against private
respondents and the counterclaim against petitioners for lack of merit and
insufficiency of evidence. The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a registered trademark for plaintiff
McDonald's, and as such, it is entitled [to] protection against infringement.
xxxx
There exist some distinctions between the names "B[ig] M[ac]" and "B[ig]
M[ak]" as appearing in the respective signages, wrappers and containers of
the food products of the parties. But infringement goes beyond the physical
features of the questioned name and the original name. There are still
other factors to be considered.
xxxx
Significantly, the contending parties are both in the business of fast-food
chains and restaurants. An average person who is hungry and wants to eat
a hamburger sandwich may not be discriminating enough to look for a
McDonald's restaurant and buy a "B[ig] M[ac]" hamburger. Once he sees a
stall selling hamburger sandwich, in all likelihood, he will dip into his pocket
and order a "B[ig] M[ak]" hamburger sandwich. Plaintiff McDonald's fast-
food chain has attained wide popularity and acceptance by the consuming
public so much so that its air-conditioned food outlets and restaurants will
perhaps not be mistaken by many to be the same as defendant
corporation's mobile snack vans located along busy streets or highways.
But the thing is that what is being sold by both contending parties is a food
item – a hamburger sandwich which is for immediate consumption, so that
a buyer may easily be confused or deceived into thinking that the "B[ig]
M[ak]" hamburger sandwich he bought is a food-product of plaintiff
McDonald's, or a subsidiary or allied outlet thereof. Surely, defendant
corporation has its own secret ingredients to make its hamburger
sandwiches as palatable and as tasty as the other brands in the market,
considering the keen competition among mushrooming hamburger stands
and multinational fast-food chains and restaurants. Hence, the trademark
"B[ig] M[ac]" has been infringed by defendant corporation when it used the
name "B[ig] M[ak]" in its signages, wrappers, and containers in connection
with its food business. xxxx
Did the same acts of defendants in using the name "B[ig] M[ak]" as a
trademark or tradename in their signages, or in causing the name "B[ig]
M[ak]" to be printed on the wrappers and containers of their food products
also constitute an act of unfair competition under Section 29 of the
Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition is broader and
more inclusive than the law concerning the infringement of trademark,
which is of more limited range, but within its narrower range recognizes a
more exclusive right derived by the adoption and registration of the
trademark by the person whose goods or services are first associated
therewith. xxx Notwithstanding the distinction between an action for
trademark infringement and an action for unfair competition, however, the
law extends substantially the same relief to the injured party for both cases.
(See Sections 23 and 29 of Republic Act No. 166)
Any conduct may be said to constitute unfair competition if the effect is to
pass off on the public the goods of one man as the goods of another. The
choice of "B[ig] M[ak]" as tradename by defendant corporation is not
merely for sentimental reasons but was clearly made to take advantage of
the reputation, popularity and the established goodwill of plaintiff
McDonald's. For, as stated in Section 29, a person is guilty of unfair
competition who in selling his goods shall give them the general
appearance, of goods of another manufacturer or dealer, either as 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 likely influence purchasers to believe that the
goods offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer. Thus, plaintiffs have established their valid cause
of action against the defendants for trademark infringement and unfair
competition and for damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs McDonald's
Corporation and McGeorge Food Industries, Inc. and against defendant
L.C. Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16 August 1990]
is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs actual
damages in the amount of P400,000.00, exemplary damages in the
amount of P100,000.00, and attorney's fees and expenses of litigation in
the amount of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B.
Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace Huerto, as
well as all counter-claims, are dismissed for lack of merit as well as for
insufficiency of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment ("Court of
Appeals' Decision") reversing the RTC Decision and ordering McDonald's
to pay respondents P1,600,000 as actual and compensatory damages and
P300,000 as moral damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this Court
that the use of defendants-appellants of its corporate name – the whole
"L.C. B[ig] M[ak] B[urger], I[nc]." which appears on their food packages,
signages and advertisements is an infringement of their trademark "B[ig]
M[ac]" which they use to identify [their] double decker sandwich, sold in a
Styrofoam box packaging material with the McDonald's logo of umbrella
"M" stamped thereon, together with the printed mark in red bl[o]ck capital
letters, the words being separated by a single space. Specifically, plaintiffs-
appellees argue that defendants-appellants' use of their corporate name is
a colorable imitation of their trademark "Big Mac".
xxxx
To Our mind, however, this Court is fully convinced that no colorable
imitation exists. As the definition dictates, it is not sufficient that a similarity
exists in both names, but that more importantly, the over-all presentation,
or in their essential, substantive and distinctive parts is such as would likely
MISLEAD or CONFUSE persons in the ordinary course of purchasing the
genuine article. A careful comparison of the way the trademark "B[ig]
M[ac]" is being used by plaintiffs-appellees and corporate name L.C. Big
Mak Burger, Inc. by defendants-appellants, would readily reveal that no
confusion could take place, or that the ordinary purchasers would be
misled by it. As pointed out by defendants-appellants, the plaintiffs-
appellees' trademark is used to designate only one product, a double
decker sandwich sold in a Styrofoam box with the "McDonalds" logo. On
the other hand, what the defendants-appellants corporation is using is not a
trademark for its food product but a business or corporate name. They use
the business name "L.C. Big Mak Burger, Inc." in their restaurant business
which serves diversified food items such as siopao, noodles, pizza, and
sandwiches such as hotdog, ham, fish burger and hamburger. Secondly,
defendants-appellants' corporate or business name appearing in the food
packages and signages are written in silhouette red-orange letters with the
"b" and "m" in upper case letters. Above the words "Big Mak" are the upper
case letter "L.C.". Below the words "Big Mak" are the words "Burger, Inc."
spelled out in upper case letters. Furthermore, said corporate or business
name appearing in such food packages and signages is always
accompanied by the company mascot, a young chubby boy named Maky
who wears a red T-shirt with the upper case "m" appearing therein and a
blue lower garment. Finally, the defendants-appellants' food packages are
made of plastic material.
xxxx
xxx [I]t is readily apparent to the naked eye that there appears a vast
difference in the appearance of the product and the manner that the
tradename "Big Mak" is being used and presented to the public. As earlier
noted, there are glaring dissimilarities between plaintiffs-appellees'
trademark and defendants-appellants' corporate name. Plaintiffs-appellees'
product carrying the trademark "B[ig] M[ac]" is a double decker sandwich
(depicted in the tray mat containing photographs of the various food
products xxx sold in a Styrofoam box with the "McDonald's" logo and
trademark in red, bl[o]ck capital letters printed thereon xxx at a price which
is more expensive than the defendants-appellants' comparable food
products. In order to buy a "Big Mac", a customer needs to visit an air-
conditioned "McDonald's" restaurant usually located in a nearby
commercial center, advertised and identified by its logo - the umbrella "M",
and its mascot – "Ronald McDonald". A typical McDonald's restaurant
boasts of a playground for kids, a second floor to accommodate additional
customers, a drive-thru to allow customers with cars to make orders
without alighting from their vehicles, the interiors of the building are well-
lighted, distinctly decorated and painted with pastel colors xxx. In buying a
"B[ig] M[ac]", it is necessary to specify it by its trademark. Thus, a customer
needs to look for a "McDonald's" and enter it first before he can find a
hamburger sandwich which carry the mark "Big Mac". On the other hand,
defendants-appellants sell their goods through snack vans xxxx
Anent the allegation that defendants-appellants are guilty of unfair
competition, We likewise find the same untenable.
Unfair competition is defined as "the employment of deception or any other
means contrary to good faith by which a person shall pass off the goods
manufactured by him or in which he deals, or his business, or service, for
those of another who has already established good will for his similar good,
business or services, or any acts calculated to produce the same result"
(Sec. 29, Rep. Act No. 166, as amended).
To constitute unfair competition therefore it must necessarily follow that
there was malice and that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced by plaintiffs-
appellees that defendants-appellants deliberately tried to pass off the
goods manufactured by them for those of plaintiffs-appellees. The mere
suspected similarity in the sound of the defendants-appellants' corporate
name with the plaintiffs-appellees' trademark is not sufficient evidence to
conclude unfair competition. Defendants-appellants explained that the
name "M[ak]" in their corporate name was derived from both the first
names of the mother and father of defendant Francis Dy, whose names are
Maxima and Kimsoy. With this explanation, it is up to the plaintiffs-
appellees to prove bad faith on the part of defendants-appellants. It is a
settled rule that the law always presumes good faith such that any person
who seeks to be awarded damages due to acts of another has the burden
of proving that the latter acted in bad faith or with ill motive. 21
Petitioners sought reconsideration of the Court of Appeals' Decision but the
appellate court denied their motion in its Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT
RESPONDENTS' CORPORATE NAME "L.C. BIG MAK BURGER, INC." IS
NOT A COLORABLE IMITATION OF THE MCDONALD'S TRADEMARK
"BIG MAC", SUCH COLORABLE IMITATION BEING AN ELEMENT OF
TRADEMARK INFRINGEMENT.
A. Respondents use the words "Big Mak" as trademark for their products
and not merely as their business or corporate name.
B. As a trademark, respondents' "Big Mak" is undeniably and
unquestionably similar to petitioners' "Big Mac" trademark based on the
dominancy test and the idem sonans test resulting inexorably in confusion
on the part of the consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER
THE INHERENT SIMILARITY BETWEEN THE MARK "BIG MAK" AND
THE WORD MARK "BIG MAC" AS AN INDICATION OF RESPONDENTS'
INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES OF
ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals' Decision and
reinstate the RTC Decision.
In their Comment to the petition, respondents question the propriety of this
petition as it allegedly raises only questions of fact. On the merits,
respondents contend that the Court of Appeals committed no reversible
error in finding them not liable for trademark infringement and unfair
competition and in ordering petitioners to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition are proper for
a petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words "Big Mak" not
only as part of the corporate name "L.C. Big Mak Burger, Inc." but also as a
trademark for their hamburger products, and (b) whether respondent
corporation is liable for trademark infringement and unfair competition.23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are Proper for a Petition
for Review
A party intending to appeal from a judgment of the Court of Appeals may
file with this Court a petition for review under Section 1 of Rule 45 ("Section
1")24 raising only questions of law. A question of law exists when the doubt
or difference arises on what the law is on a certain state of facts. There is a
question of fact when the doubt or difference arises on the truth or falsity of
the alleged facts.
Here, petitioners raise questions of fact and law in assailing the Court of
Appeals' findings on respondent corporation's non-liability for trademark
infringement and unfair competition. Ordinarily, the Court can deny due
course to such a petition. In view, however, of the contradictory findings of
fact of the RTC and Court of Appeals, the Court opts to accept the petition,
this being one of the recognized exceptions to Section 1.26 We took a
similar course of action in Asia Brewery, Inc. v. Court of Appeals27 which
also involved a suit for trademark infringement and unfair competition in
which the trial court and the Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used "Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling that the
corporate name "L.C. Big Mak Burger, Inc." appears in the packaging for
respondents' hamburger products and not the words "Big Mak" only.
The contention has merit.
The evidence presented during the hearings on petitioners' motion for the
issuance of a writ of preliminary injunction shows that the plastic wrappings
and plastic bags used by respondents for their hamburger sandwiches bore
the words "Big Mak." The other descriptive words "burger" and "100% pure
beef" were set in smaller type, along with the locations of branches.28
Respondents' cash invoices simply refer to their hamburger sandwiches as
"Big Mak."29 It is respondents' snack vans that carry the words "L.C. Big
Mak Burger, Inc."30
It was only during the trial that respondents presented in evidence the
plastic wrappers and bags for their hamburger sandwiches relied on by the
Court of Appeals.31 Respondents' plastic wrappers and bags were
identical with those petitioners presented during the hearings for the
injunctive writ except that the letters "L.C." and the words "Burger, Inc." in
respondents' evidence were added above and below the words "Big Mak,"
respectively. Since petitioners' complaint was based on facts existing
before and during the hearings on the injunctive writ, the facts established
during those hearings are the proper factual bases for the disposition of the
issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA 166"),
the law applicable to this case,32 defines trademark infringement as
follows:
Infringement, what constitutes. — Any person who [1] shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection with the sale,
offering for sale, or advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or [2] reproduce, counterfeit, copy, or
colorably imitate any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services, shall be
liable to a civil action by the registrant for any or all of the remedies herein
provided.33
Petitioners base their cause of action under the first part of Section 22, i.e.
respondents allegedly used, without petitioners' consent, a colorable
imitation of the "Big Mac" mark in advertising and selling respondents'
hamburger sandwiches. This likely caused confusion in the mind of the
purchasing public on the source of the hamburgers or the identity of the
business.
To establish trademark infringement, the following elements must be
shown: (1) the validity of plaintiff's mark; (2) the plaintiff's ownership of the
mark; and (3) the use of the mark or its colorable imitation by the alleged
infringer results in "likelihood of confusion."34 Of these, it is the element of
likelihood of confusion that is the gravamen of trademark infringement.35
On the Validity of the "Big Mac"Mark and McDonald's Ownership of
such Mark
A mark is valid if it is "distinctive" and thus not barred from registration
under Section 436 of RA 166 ("Section 4"). However, once registered, not
only the mark's validity but also the registrant's ownership of the mark is
prima facie presumed.37
Respondents contend that of the two words in the "Big Mac" mark, it is only
the word "Mac" that is valid because the word "Big" is generic and
descriptive (proscribed under Section 4[e]), and thus "incapable of
exclusive appropriation."38
The contention has no merit. The "Big Mac" mark, which should be treated
in its entirety and not dissected word for word,39 is neither generic nor
descriptive. Generic marks are commonly used as the name or description
of a kind of goods,40 such as "Lite" for beer41 or "Chocolate Fudge" for
chocolate soda drink.42 Descriptive marks, on the other hand, convey the
characteristics, functions, qualities or ingredients of a product to one who
has never seen it or does not know it exists,43 such as "Arthriticare" for
arthritis medication.44 On the contrary, "Big Mac" falls under the class of
fanciful or arbitrary marks as it bears no logical relation to the actual
characteristics of the product it represents.45 As such, it is highly
distinctive and thus valid. Significantly, the trademark "Little Debbie" for
snack cakes was found arbitrary or fanciful.46
The Court also finds that petitioners have duly established McDonald's
exclusive ownership of the "Big Mac" mark. Although Topacio and the
Isaiyas Group registered the "Big Mac" mark ahead of McDonald's,
Topacio, as petitioners disclosed, had already assigned his rights to
McDonald's. The Isaiyas Group, on the other hand, registered its
trademark only in the Supplemental Register. A mark which is not
registered in the Principal Register, and thus not distinctive, has no real
protection.47 Indeed, we have held that registration in the Supplemental
Register is not even a prima facie evidence of the validity of the registrant's
exclusive right to use the mark on the goods specified in the certificate.48
On Types of Confusion
Section 22 covers two types of confusion arising from the use of similar or
colorable imitation marks, namely, confusion of goods (product confusion)
and confusion of business (source or origin confusion). In Sterling Products
International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et
al.,49 the Court distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is the confusion of
goods "in which event the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other." xxx
The other is the confusion of business: "Here though the goods of the
parties are different, the defendant's product is such as might reasonably
be assumed to originate with the plaintiff, and the public would then be
deceived either into that belief or into the belief that there is some
connection between the plaintiff and defendant which, in fact, does not
exist."
Under Act No. 666,50 the first trademark law, infringement was limited to
confusion of goods only, when the infringing mark is used on "goods of a
similar kind."51 Thus, no relief was afforded to the party whose registered
mark or its colorable imitation is used on different although related goods.
To remedy this situation, Congress enacted RA 166 on 20 June 1947. In
defining trademark infringement, Section 22 of RA 166 deleted the
requirement in question and expanded its scope to include such use of the
mark or its colorable imitation that is likely to result in confusion on "the
source or origin of such goods or services, or identity of such business."52
Thus, while there is confusion of goods when the products are competing,
confusion of business exists when the products are non-competing but
related enough to produce confusion of affiliation.53
On Whether Confusion of Goods and Confusion of Business are
Applicable
Petitioners claim that respondents' use of the "Big Mak" mark on
respondents' hamburgers results in confusion of goods, particularly with
respect to petitioners' hamburgers labeled "Big Mac." Thus, petitioners
alleged in their complaint:
1.15. Defendants have unduly prejudiced and clearly infringed upon the
property rights of plaintiffs in the McDonald's Marks, particularly the mark
"B[ig] M[ac]". Defendants' unauthorized acts are likely, and calculated, to
confuse, mislead or deceive the public into believing that the products and
services offered by defendant Big Mak Burger, and the business it is
engaged in, are approved and sponsored by, or affiliated with, plaintiffs.54
(Emphasis supplied)
Since respondents used the "Big Mak" mark on the same goods, i.e.
hamburger sandwiches, that petitioners' "Big Mac" mark is used, trademark
infringement through confusion of goods is a proper issue in this case.
Petitioners also claim that respondents' use of the "Big Mak" mark in the
sale of hamburgers, the same business that petitioners are engaged in,
results in confusion of business. Petitioners alleged in their complaint:
1.10. For some period of time, and without the consent of plaintiff
McDonald's nor its licensee/franchisee, plaintiff McGeorge, and in clear
violation of plaintiffs' exclusive right to use and/or appropriate the
McDonald's marks, defendant Big Mak Burger acting through individual
defendants, has been operating "Big Mak Burger", a fast food restaurant
business dealing in the sale of hamburger and cheeseburger sandwiches,
french fries and other food products, and has caused to be printed on the
wrapper of defendant's food products and incorporated in its signages the
name "Big Mak Burger", which is confusingly similar to and/or is a colorable
imitation of the plaintiff McDonald's mark "B[ig] M[ac]", xxx. Defendant Big
Mak Burger has thus unjustly created the impression that its business is
approved and sponsored by, or affiliated with, plaintiffs. xxxx
2.2 As a consequence of the acts committed by defendants, which unduly
prejudice and infringe upon the property rights of plaintiffs McDonald's and
McGeorge as the real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonald's marks, and which are
likely to have caused confusion or deceived the public as to the true
source, sponsorship or affiliation of defendants' food products and
restaurant business, plaintiffs have suffered and continue to suffer actual
damages in the form of injury to their business reputation and goodwill, and
of the dilution of the distinctive quality of the McDonald's marks, in
particular, the mark "B[ig] M[ac]".55 (Emphasis supplied)
Respondents admit that their business includes selling hamburger
sandwiches, the same food product that petitioners sell using the "Big Mac"
mark. Thus, trademark infringement through confusion of business is also a
proper issue in this case.
Respondents assert that their "Big Mak" hamburgers cater mainly to the
low-income group while petitioners' "Big Mac" hamburgers cater to the
middle and upper income groups. Even if this is true, the likelihood of
confusion of business remains, since the low-income group might be led to
believe that the "Big Mak" hamburgers are the low-end hamburgers
marketed by petitioners. After all, petitioners have the exclusive right to use
the "Big Mac" mark. On the other hand, respondents would benefit by
associating their low-end hamburgers, through the use of the "Big Mak"
mark, with petitioners' high-end "Big Mac" hamburgers, leading to
likelihood of confusion in the identity of business.
Respondents further claim that petitioners use the "Big Mac" mark only on
petitioners' double-decker hamburgers, while respondents use the "Big
Mak" mark on hamburgers and other products like siopao, noodles and
pizza. Respondents also point out that petitioners sell their Big Mac double-
deckers in a styrofoam box with the "McDonald's" logo and trademark in
red, block letters at a price more expensive than the hamburgers of
respondents. In contrast, respondents sell their Big Mak hamburgers in
plastic wrappers and plastic bags. Respondents further point out that
petitioners' restaurants are air-conditioned buildings with drive-thru service,
compared to respondents' mobile vans.
These and other factors respondents cite cannot negate the undisputed
fact that respondents use their "Big Mak" mark on hamburgers, the same
food product that petitioners' sell with the use of their registered mark "Big
Mac." Whether a hamburger is single, double or triple-decker, and whether
wrapped in plastic or styrofoam, it remains the same hamburger food
product. Even respondents' use of the "Big Mak" mark on non-hamburger
food products cannot excuse their infringement of petitioners' registered
mark, otherwise registered marks will lose their protection under the law.
The registered trademark owner may use his 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 has recognized that the registered trademark owner
enjoys protection in product and market areas that are the normal potential
expansion of his business. Thus, the Court has declared:
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).56 (Emphasis supplied)
On Whether Respondents' Use of the "Big Mak" Mark Results in
Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has developed two
tests, the dominancy test and the holistic test.57 The dominancy test
focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion. In contrast, the holistic test
requires the court to consider the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing
similarity.
The Court of Appeals, in finding that there is no likelihood of confusion that
could arise in the use of respondents' "Big Mak" mark on hamburgers,
relied on the holistic test. Thus, the Court of Appeals ruled that "it is not
sufficient that a similarity exists in both name(s), but that more importantly,
the overall presentation, or in their essential, substantive and distinctive
parts is such as would likely MISLEAD or CONFUSE persons in the
ordinary course of purchasing the genuine article." The holistic test
considers the two marks in their entirety, as they appear on the goods with
their labels and packaging. It is not enough to consider their words and
compare the spelling and pronunciation of the words.58
Respondents now vigorously argue that the Court of Appeals' application of
the holistic test to this case is correct and in accord with prevailing
jurisprudence.
This Court, however, has relied on the dominancy test rather than the
holistic test. The dominancy test considers the dominant features in the
competing marks in determining whether they are confusingly similar.
Under the dominancy test, courts give greater weight to the similarity of the
appearance of the product arising from the adoption of the dominant
features of the registered mark, disregarding minor differences.59 Courts
will consider more 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.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,60 the Court
ruled:
xxx It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size,
form and color, while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant features of another,
and confusion and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to imitate. (G. Heilman Brewing Co.
vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead
Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of
infringement of trademarks is whether the use of the marks involved would
be likely to cause confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F.
2d 588; xxx) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of
Patents,61 Phil. Nut Industry, Inc. v. Standard Brands Inc.,62 Converse
Rubber Corporation v. Universal Rubber Products, Inc.,63 and Asia
Brewery, Inc. v. Court of Appeals.64 In the 2001 case of Societe Des
Produits Nestlé, S.A. v. Court of Appeals,65 the Court explicitly rejected the
holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary postulate of the
law on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in controversy as they are
encountered in the realities of the marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section
155.1 of the Intellectual Property Code which defines infringement as the
"colorable imitation of a registered mark xxx or a dominant feature thereof."
Applying the dominancy test, the Court finds that respondents' use of the
"Big Mak" mark results in likelihood of confusion. First, "Big Mak" sounds
exactly the same as "Big Mac." Second, the first word in "Big Mak" is
exactly the same as the first word in "Big Mac." Third, the first two letters in
"Mak" are the same as the first two letters in "Mac." Fourth, the last letter in
"Mak" while a "k" sounds the same as "c" when the word "Mak" is
pronounced. Fifth, in Filipino, the letter "k" replaces "c" in spelling, thus
"Caloocan" is spelled "Kalookan."
In short, aurally the two marks are the same, with the first word of both
marks phonetically the same, and the second word of both marks also
phonetically the same. Visually, the two marks have both two words and six
letters, with the first word of both marks having the same letters and the
second word having the same first two letters. In spelling, considering the
Filipino language, even the last letters of both marks are the same.
Clearly, respondents have adopted in "Big Mak" not only the dominant but
also almost all the features of "Big Mac." Applied to the same food product
of hamburgers, the two marks will likely result in confusion in the public
mind.
The Court has taken into account the aural effects of the words and letters
contained in the marks in determining the issue of confusing similarity.
Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.,66 the
Court held:
The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are
confusingly similar in sound: "Gold Dust" and "Gold Drop"; "Jantzen" and
"Jass-Sea"; "Silver Flash" and "Supper Flash"; "Cascarete" and "Celborite";
"Celluloid" and "Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo
Hoo". Leon Amdur, in his book "Trade-Mark Law and Practice", pp. 419-
421, cities, as coming within the purview of the idem sonans rule, "Yusea"
and "U-C-A", "Steinway Pianos" and "Steinberg Pianos", and "Seven-Up"
and "Lemon-Up". In Co Tiong vs. Director of Patents, this Court
unequivocally said that "Celdura" and "Cordura" are confusingly similar in
sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the
name "Lusolin" is an infringement of the trademark "Sapolin", as the sound
of the two names is almost the same. (Emphasis supplied)
Certainly, "Big Mac" and "Big Mak" for hamburgers create even greater
confusion, not only aurally but also visually.
Indeed, a person cannot distinguish "Big Mac" from "Big Mak" by their
sound. When one hears a "Big Mac" or "Big Mak" hamburger
advertisement over the radio, one would not know whether the "Mac" or
"Mak" ends with a "c" or a "k."
Petitioners' aggressive promotion of the "Big Mac" mark, as borne by their
advertisement expenses, has built goodwill and reputation for such mark
making it one of the easily recognizable marks in the market today. This
increases the likelihood that consumers will mistakenly associate
petitioners' hamburgers and business with those of respondents'.
Respondents' inability to explain sufficiently how and why they came to
choose "Big Mak" for their hamburger sandwiches indicates their intent to
imitate petitioners' "Big Mac" mark. Contrary to the Court of Appeals'
finding, respondents' claim that their "Big Mak" mark was inspired by the
first names of respondent Dy's mother (Maxima) and father (Kimsoy) is not
credible. As petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived
at a more creative choice for a corporate name by using the names of his
parents, especially since he was allegedly driven by sentimental reasons.
For one, he could have put his father's name ahead of his mother's, as is
usually done in this patriarchal society, and derived letters from said names
in that order. Or, he could have taken an equal number of letters (i.e., two)
from each name, as is the more usual thing done. Surely, the more
plausible reason behind Respondents' choice of the word "M[ak]",
especially when taken in conjunction with the word "B[ig]", was their intent
to take advantage of Petitioners' xxx "B[ig] M[ac]" trademark, with their
alleged sentiment-focused "explanation" merely thought of as a convenient,
albeit unavailing, excuse or defense for such an unfair choice of name.67
Absent proof that respondents' adoption of the "Big Mak" mark was due to
honest mistake or was fortuitous,68 the inescapable conclusion is that
respondents adopted the "Big Mak" mark to "ride on the coattails" of the
more established "Big Mac" mark.69 This saves respondents much of the
expense in advertising to create market recognition of their mark and
hamburgers.70
Thus, we hold that confusion is likely to result in the public mind. We
sustain petitioners' claim of trademark infringement.
On the Lack of Proof of Actual Confusion
Petitioners' failure to present proof of actual confusion does not negate
their claim of trademark infringement. As noted in American Wire & Cable
Co. v. Director of Patents,71 Section 22 requires the less stringent
standard of "likelihood of confusion" only. While proof of actual confusion is
the best evidence of infringement, its absence is inconsequential.72
On the Issue of Unfair Competition
Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:
xxxx
Any person who will employ deception or any other means contrary to good
faith by which he shall pass 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 shall commit any acts calculated to
produce said result, shall be guilty of unfair competition, and shall be
subject to an action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair competition:
(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 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; or
(c) Any person who shall make any false statement in the course of trade
or who shall commit any other act contrary to good faith of a nature
calculated to discredit the goods, business or services of another.
(Emphasis supplied)
The essential elements of an action for unfair competition are (1) confusing
similarity in the general appearance of the goods, and (2) intent to deceive
the public and defraud a competitor.74 The confusing similarity may or may
not result from similarity in the marks, but may result from other external
factors in the packaging or presentation of the goods. The intent to deceive
and defraud may be inferred from the similarity of the appearance of the
goods as offered for sale to the public.75 Actual fraudulent intent need not
be shown.76
Unfair competition is broader than trademark infringement and includes
passing off goods with or without trademark infringement. Trademark
infringement is a form of unfair competition.77 Trademark infringement
constitutes unfair competition when there is not merely likelihood of
confusion, but also actual or probable deception on the public because of
the general appearance of the goods. There can be trademark infringement
without unfair competition as when the infringer discloses on the labels
containing the mark that he manufactures the goods, thus preventing the
public from being deceived that the goods originate from the trademark
owner.78
To support their claim of unfair competition, petitioners allege that
respondents fraudulently passed off their hamburgers as "Big Mac"
hamburgers. Petitioners add that respondents' fraudulent intent can be
inferred from the similarity of the marks in question.79
Passing off (or palming off) takes place where the defendant, by imitative
devices on the general appearance of the goods, misleads prospective
purchasers into buying his merchandise under the impression that they are
buying that of his competitors.80 Thus, the defendant gives his goods the
general appearance of the goods of his competitor with the intention of
deceiving the public that the goods are those of his competitor.
The RTC described the respective marks and the goods of petitioners and
respondents in this wise:
The mark "B[ig] M[ac]" is used by plaintiff McDonald's to identify its double
decker hamburger sandwich. The packaging material is a styrofoam box
with the McDonald's logo and trademark in red with block capital letters
printed on it. All letters of the "B[ig] M[ac]" mark are also in red and block
capital letters. On the other hand, defendants' "B[ig] M[ak]" script print is in
orange with only the letter "B" and "M" being capitalized and the packaging
material is plastic wrapper. xxxx Further, plaintiffs' logo and mascot are the
umbrella "M" and "Ronald McDonald's", respectively, compared to the
mascot of defendant Corporation which is a chubby boy called "Macky"
displayed or printed between the words "Big" and "Mak."81 (Emphasis
supplied)
Respondents point to these dissimilarities as proof that they did not give
their hamburgers the general appearance of petitioners' "Big Mac"
hamburgers.
The dissimilarities in the packaging are minor compared to the stark
similarities in the words that give respondents' "Big Mak" hamburgers the
general appearance of petitioners' "Big Mac" hamburgers. Section 29(a)
expressly provides that the similarity in the general appearance of the
goods may be in the "devices or words" used on the wrappings.
Respondents have applied on their plastic wrappers and bags almost the
same words that petitioners use on their styrofoam box. What attracts the
attention of the buying public are the words "Big Mak" which are almost the
same, aurally and visually, as the words "Big Mac." The dissimilarities in
the material and other devices are insignificant compared to the glaring
similarity in the words used in the wrappings.
Section 29(a) also provides that the defendant gives "his goods the general
appearance of goods of another manufacturer." Respondents' goods are
hamburgers which are also the goods of petitioners. If respondents sold
egg sandwiches only instead of hamburger sandwiches, their use of the
"Big Mak" mark would not give their goods the general appearance of
petitioners' "Big Mac" hamburgers. In such case, there is only trademark
infringement but no unfair competition. However, since respondents chose
to apply the "Big Mak" mark on hamburgers, just like petitioner's use of the
"Big Mac" mark on hamburgers, respondents have obviously clothed their
goods with the general appearance of petitioners' goods.
writ is indispensable to prevent further acts of infringement by respondent
corporation. Also, the amount of actual damages is a reasonable
percentage (11.9%) of respondent corporation's gross sales for three
(1988-1989 and 1991) of the six years (1984-1990) respondents have used
the "Big Mak" mark.84
The RTC also did not err in awarding exemplary damages by way of
correction for the public good85 in view of the finding of unfair competition
where intent to deceive the public is essential. The award of attorney's fees
and expenses of litigation is also in order.86

Moreover, there is no notice to the public that the "Big Mak" hamburgers WHEREFORE, we GRANT the instant petition. We SET ASIDE the
are products of "L.C. Big Mak Burger, Inc." Respondents introduced during Decision dated 26 November 1999 of the Court of Appeals and its
the trial plastic wrappers and bags with the words "L.C. Big Mak Burger, Resolution dated 11 July 2000 and REINSTATE the Decision dated 5
Inc." to inform the public of the name of the seller of the hamburgers. September 1994 of the Regional Trial Court of Makati, Branch 137, finding
However, petitioners introduced during the injunctive hearings plastic respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and
wrappers and bags with the "Big Mak" mark without the name "L.C. Big unfair competition.
Mak Burger, Inc." Respondents' belated presentation of plastic wrappers
and bags bearing the name of "L.C. Big Mak Burger, Inc." as the seller of SO ORDERED.
the hamburgers is an after-thought designed to exculpate them from their
unfair business conduct. As earlier stated, we cannot consider
respondents' evidence since petitioners' complaint was based on facts
existing before and during the injunctive hearings.

Thus, there is actually no notice to the public that the "Big Mak"
hamburgers are products of "L.C. Big Mak Burger, Inc." and not those of
petitioners who have the exclusive right to the "Big Mac" mark. This clearly
shows respondents' intent to deceive the public. Had respondents' placed a
notice on their plastic wrappers and bags that the hamburgers are sold by
"L.C. Big Mak Burger, Inc.", then they could validly claim that they did not
intend to deceive the public. In such case, there is only trademark
infringement but no unfair competition.82 Respondents, however, did not
give such notice. We hold that as found by the RTC, respondent
corporation is liable for unfair competition.

The Remedies Available to Petitioners

Under Section 2383 ("Section 23") in relation to Section 29 of RA 166, a

plaintiff who successfully maintains trademark infringement and unfair
competition claims is entitled to injunctive and monetary reliefs. Here, the
RTC did not err in issuing the injunctive writ of 16 August 1990 (made
permanent in its Decision of 5 September 1994) and in ordering the
payment of P400,000 actual damages in favor of petitioners. The injunctive
G.R. No. 172276 August 8, 2010
SOCIETE DES PRODUITS NESTLE, S.A., Petitioner,
vs.
MARTIN T. DY, JR., Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules of
Court. The petition challenges the 1 September 2005 Decision and 4 April
2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62730, finding
respondent Martin T. Dy, Jr. (Dy, Jr.) not liable for trademark infringement.
The Court of Appeals reversed the 18 September 1998 Decision of the
Regional Trial Court (RTC), Judicial Region 7, Branch 9, Cebu City, in Civil
Case No. CEB-19345.
The Facts
Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign
corporation organized under the laws of Switzerland. It manufactures food
products and beverages. As evidenced by Certificate of Registration No. R-
14621 issued on 7 April 1969 by the then Bureau of Patents, Trademarks
and Technology Transfer, Nestle owns the "NAN" trademark for its line of
infant powdered milk products, consisting of PRE-NAN, NAN-H.A., NAN-1,
and NAN-2. NAN is classified under Class 6 — "diatetic preparations for
infant feeding."
Nestle distributes and sells its NAN milk products all over the Philippines. It
has been investing tremendous amounts of resources to train its sales
force and to promote the NAN milk products through advertisements and
press releases.
Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from
Australia and repacks the powdered milk into three sizes of plastic packs
bearing the name "NANNY." The packs weigh 80, 180 and 450 grams and
are sold for ₱8.90, ₱17.50 and ₱39.90, respectively. NANNY is is also
classified under Class 6 — "full cream milk for adults in [sic] all ages." Dy,
Jr. distributes and sells the powdered milk in Dumaguete, Negros Oriental,
Cagayan de Oro, and parts of Mindanao.
In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from
using "NANNY" and to undertake that he would stop infringing the "NAN"
trademark. Dy, Jr. did not act on Nestle’s request. On 1 March 1990, Nestle
filed before the RTC, Judicial Region 7, Branch 31, Dumaguete City, a
complaint against Dy, Jr. for infringement. Dy, Jr. filed a motion to dismiss
alleging that the complaint did not state a cause of action. In its 4 June
1990 order, the trial court dismissed the complaint. Nestle appealed the 4
June 1990 order to the Court of Appeals. In its 16 February 1993
Resolution, the Court of Appeals set aside the 4 June 1990 order and
remanded the case to the trial court for further proceedings.
Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed
with the trial court a motion to transfer the case to the RTC, Judicial Region
7, Branch 9, Cebu City, which was designated as a special court for
intellectual property rights.
The RTC’s Ruling
In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for
infringement. The trial court held:
If determination of infringement shall only be limited on whether or not the
mark used would likely cause confusion or mistake in the minds of the
buying public or deceive customers, such in [sic] the most considered view
of this forum would be highly unlikely to happen in the instant case. This is
because upon comparison of the plaintiff’s NAN and defendant’s NANNY,
the following features would reveal the absence of any deceptive tendency
in defendant’s NANNY: (1) all NAN products are contained tin cans [sic],
while NANNY are contained in plastic packs; (2) the predominant colors
used in the labels of NAN products are blue and white, while the
predominant colors in the plastic packings of NANNY are blue and green;
(3) the labels of NAN products have at the bottom portion an elliptical
shaped figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name "Nestle", while the plastic packs of NANNY
have a drawing of milking cows lazing on a vast green field, back-dropped
with snow covered mountains; (4) the word NAN are [sic] all in large, formal
and conservative-like block letters, while the word NANNY are [sic] all in
small and irregular style of letters with curved ends; and (5) all NAN
products are milk formulas intended for use of [sic] infants, while NANNY is
an instant full cream powdered milk intended for use of [sic] adults.
The foregoing has clearly shown that infringement in the instant case
cannot be proven with the use of the "test of dominancy" because the
deceptive tendency of the unregistered trademark NANNY is not apparent
from the essential features of the registered trademark NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-
29971, Aug. 31, 1982, the Supreme Court took the occasion of discussing
what is implied in the definition of "infringement" when it stated: "Implicit in
this definition is the concept that the goods must be so related that there is
likelihood either of confusion of goods or business. x x x But as to whether
trademark infringement exists depends for the most part upon whether or
not the goods are so related that the public may be, or is actually, deceived
and misled that they came from the same maker or manufacturer. For non-
competing goods may be those which, though they are not in actual
competition, are so related to each other that it might reasonably be
assumed that they originate from one manufacturer. Non-competing goods
may also be those which, being entirely unrelated, could not reasonably be
assumed to have a common source. In the former case of related goods,
confusion of business could arise out of the use of similar marks; in the
latter case of non-related goods, it could not."
Furthermore, in said case the Supreme Court as well discussed on when
goods may become so related for purposes of infringement when it stated:
"Goods are related when they belong to the same class or have same
descriptive properties; when they possess the same physical attributes or
essential characteristics with reference to their form, composition, texture
or quality. They may also be related because they serve the same purpose
or are sold in grocery stores. x x x
Considering that defendant’s NANNY belongs to the same class as that of
plaintiff’s NAN because both are food products, the defendant’s
unregistered trade mark NANNY should be held an infringement to
plaintiff’s registered trademark NAN because defendant’s use of NANNY
would imply that it came from the manufacturer of NAN. Furthermore, since
the word "nanny" means a "child’s nurse," there might result the not so
remote probability that defendant’s NANNY may be confused with infant
formula NAN despite the aparent [sic] disparity between the features of the
two products.
Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.
The Court of Appeals’ Ruling
In its 1 September 2005 Decision, the Court of Appeals reversed the trial
court’s 18 September 1998 Decision and found Dy, Jr. not liable for
infringement. The Court of Appeals held:
[T]he trial court appeared to have made a finding that there is no colorable
imitation of the registered mark "NAN" in Dy’s use of "NANNY" for his own
milk packs. Yet it did not stop there. It continued on applying the "concept
of related goods."
The Supreme Court utlilized the "concept of related goods" in the said case
of Esso Standard Easter, Inc. versus Court of Appeals, et al. wherein two
contending parties used the same trademark "ESSO" for two different
goods, i.e. petroleum products and cigarettes. It rules that there is
infringement of trademark involving two goods bearing the same mark or
label, even if the said goods are non-competing, if and only if they are so
related that the public may be, or is actually, deceived that they originate
from the one maker or manufacturer. Since petroleum products and
cigarettes, in kind and nature, flow through different trade channels, and
since the possibility of confusion is unlikely in the general appearances of
each mark as a whole, the Court held in this case that they cannot be so
related in the context of infringement.
In applying the concept of related goods in the present case, the trial court
haphazardly concluded that since plaintiff-appellee’s NAN and defendant-
appellant’s NANNY belong to the same class being food products, the
unregistered NANNY should be held an infringement of Nestle’s NAN
because "the use of NANNY would imply that it came from the
manufacturer of NAN." Said court went on to elaborate further: "since the
word "NANNY" means a "child’s nurse," there might result the not so
remote probability that defendant’s NANNY may be confused with infant
formula NAN despite the aparent (sic) disparity between the features of the
two products as discussed above."
The trial court’s application of the doctrine laid down by the Supreme Court
in the Esso Standard case aforementioned and the cases cited therein is
quite misplaced. The goods of the two contending parties in those cases
bear similar marks or labels: "Esso" for petroleum products and cigarettes,
"Selecta" for biscuits and milk, "X-7" for soap and perfume, lipstick and nail
polish. In the instant case, two dissimilar marks are involved — plaintiff-
appellee’s "NAN" and defendant-appellant’s "NANNY." Obviously, the
concept of related goods cannot be utilized in the instant case in the same
way that it was used in the Esso Standard case.
In the Esso Standard case, the Supreme Court even cautioned judges that
in resolving infringement or trademark cases in the Philippines, particularly
in ascertaining whether one trademark is confusingly similar to or is a
colorable imitation of another, precedent must be studied in the light of the
facts of the particular case. Each case must be decided on its own merits.
In the more recent case of Societe Des Produits Nestle S.A. Versus Court
of Appeals, the High Court further stressed that due to the peculiarity of the
facts of each infringement case, a judicial forum should not readily apply a
certain test or standard just because of seeming similarities. The entire
panoply of elements constituting the relevant factual landscape should be
comprehensively examined.
While it is true that both NAN and NANNY are milk products and that the
word "NAN" is contained in the word "NANNY," there are more glaring
dissimilarities in the entirety of their trademarks as they appear in their
respective labels and also in relation to the goods to which they are
attached. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing in both labels
in order that he may draw his conclusion whether one is confusingly similar
to the other. Even the trial court found these glaring dissimilarities as
above-quoted. We need not add more of these factual dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2,
are all infant preparations, while NANNY is a full cream milk for adults in
[sic] all ages. NAN milk products are sold in tin cans and hence, far
expensive than the full cream milk NANNY sold in three (3) plastic packs
containing 80, 180 and 450 grams and worth ₱8.90, ₱17.50 and ₱39.90
per milk pack. The labels of NAN products are of the colors blue and white
and have at the bottom portion an elliptical shaped figure containing inside
it a drawing of nestling birds, which is overlapped by the trade-name
"Nestle." On the other hand, the plastic packs NANNY have a drawing of
milking cows lazing on a vast green field, back-dropped with snow-capped
mountains and using the predominant colors of blue and green. The word
NAN are [sic] all in large, formal and conservative-like block letters, while
the word NANNY are [sic] all in small and irregular style of letters with
curved ends. With these material differences apparent in the packaging of
both milk products, NANNY full cream milk cannot possibly be an
infringement of NAN infant milk.1avvphi1
Moreover, NAN infant milk preparation is more expensive than NANNY
instant full cream milk. The cheaper price of NANNY would give, at the very
first instance, a considerable warning to the ordinary purchaser on whether
he is buying an infant milk or a full cream milk for adults. A cursory
examination of the packaging would confirm the striking differences
between the products in question.
In view of the foregoing, we find that the mark NANNY is not confusingly
similar to NAN. Dy therefore cannot be held liable for infringement.
Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the
Court of Appeals denied the motion for lack of merit. Hence, the present
petition.
Issue
The issue is whether Dy, Jr. is liable for infringement.
The Court’s Ruling
The petition is meritorious.
Section 22 of Republic Act (R.A.) No. 166, as amended, states:
Infringement, what constitutes. — Any person who shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection with the sale,
offering for sale, or advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or reproduce, counterfeit, copy or
colorably imitate any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services, shall be
liable to a civil action by the registrant for any or all of the remedies herein
provided.
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.
In Prosource International, Inc. v. Horphag Research Management SA, the
Court laid down the elements of infringement under R.A. Nos. 166 and
8293:
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A,
9-A, and 20 thereof, the following constitute the elements of trademark
infringement:
"(a) A trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent Office[;]
(b) [It] is used by another person in connection with the sale, offering for
sale, or advertising of any goods, business or services or in connection
with which such use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or services,
or identity of such business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by another person and such
reproduction, counterfeit, copy or colorable imitation is applied to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended
to be used upon or in connection with such goods, business or services as
to likely cause confusion or mistake or to deceive purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and
(d) [S]uch act is done without the consent of the trademark registrant or
assignee."
On the other hand, the elements of infringement under R.A. No. 8293 are
as follows:
·The trademark being infringed is registered in the Intellectual Property
Office; however, in infringement of trade name, the same need not be
registered;
·The trademark or trade name is reproduced, counterfeited, copied, or
colorably imitated by the infringer;
·The infringing mark or trade name is used in connection with the sale,
offering for sale, or advertising of any goods, business or services; or the
infringing mark or trade name is applied to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services;
·The use or application of the infringing mark or trade name is likely to
cause confusion or mistake or to deceive purchasers or others as to the
goods or services themselves or as to the source or origin of such goods or
services or the idenity of such business; and
·It is without the consent of the trademark or trade name owner or the
assignee thereof.
Among the elements, the element of likelihood of confusion is the
gravamen of trademark infringement. There are two types of confusion in
trademark infringement: confusion of goods and confusion of business. In
Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, the Court distinguished the two types of confusion:
Callman notes two types of confusion. The first is the confusion of goods
"in which event the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other." In
which case, "defendant’s goods are then bought as the plaintiff’s, and the
poorer quality of the former reflects adversely on the plaintiff’s reputation."
The other is the confusion of business: "Here though the goods of the
parties are different, the defendant’s product is such as might reasonably
be assumed to originate with the plaintiff, and the public would then be
deceived either into that belief or into the belief that there is some
connection between the plaintiff and defendant which, in fact, does not
exist."
There are two tests to determine likelihood of confusion: the dominancy
test and holistic test. The dominancy test focuses on the similarity of the
main, prevalent or essential features of the competing trademarks that
might cause confusion. Infringement takes place when the competing
trademark contains the essential features of another. Imitation or an effort
to imitate is unnecessary. The question is whether the use of the marks is
likely to cause confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels and
packaging, in determining confusing similarity. The focus is not only on the
predominant words but also on the other features appearing on the labels.
In cases involving trademark infringement, no set of rules can be deduced.
Each case must be decided on its own merits. Jurisprudential precedents
must be studied in the light of the facts of each particular case. In
McDonald’s Corporation v. MacJoy Fastfood Corporation, the Court held:
In trademark cases, particularly in ascertaining whether one trademark is
confusingly similar to another, no set rules can be deduced because each
case must be decided on its merits. In such cases, even more than in any
other litigation, precedent must be studied in the light of the facts of the
particular case. That is the reason why in trademark cases, jurisprudential
precedents should be applied only to a case if they are specifically in point.
In the light of the facts of the present case, the Court holds that the
dominancy test is applicable. In recent cases with similar factual milieus,
the Court has consistently applied the dominancy test. In Prosource
International, Inc., the Court applied the dominancy test in holding that
"PCO-GENOLS" is confusingly similar to "PYCNOGENOL." The Court
held:
The trial and appellate courts applied the Dominancy Test in determining
whether there was a confusing similarity between the marks
PYCNOGENOL and PCO-GENOL. Applying the test, the trial court found,
and the CA affirmed, that:
"Both the word[s] PYCNOGENOL and PCO-GENOLS have the same suffix
"GENOL" which on evidence, appears to be merely descriptive and furnish
no indication of the origin of the article and hence, open for trademark
registration by the plaintiff through combination with another word or
phrase such as PYCNOGENOL, Exhibits "A" to "A-3." Furthermore,
although the letters "Y" between P and C, "N" between O and C and "S"
after L are missing in the [petitioner’s] mark PCO-GENOLS, nevertheless,
when the two words are pronounced, the sound effects are confusingly
similar not to mention that they are both described by their manufacturers
as a food supplement and thus, identified as such by their public
consumers. And although there were dissimilarities in the trademark due to
the type of letters used as well as the size, color and design employed on
their individual packages/bottles, still the close relationship of the
competing product’s name is sounds as they were pronounced, clearly
indicates that purchasers could be misled into believing that they are the
same and/or originates from a common source and manufacturer."
We find no cogent reason to depart from such conclusion.
This is not the first time the Court takes into account the aural effects of the
words and letters contained in the marks in determining the issue of
confusing similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia &
Co., et al., cited in McDonald’s Corporation v. L.C. Big Mak Burger, Inc.,
the Court held:
"The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are
confusingly similar in sound: "Gold Dust" and ""Gold Drop"; "Jantzen" and
"Jass-Sea"; "Silver Flash" and Supper Flash"; "Cascarete" and "Celborite";
"Celluloid" and "Cellonite"; "Chartreuse" and Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and Hoo
Hoo." Leon Amdur, in his book "Trade-Mark Law and Practice," pp. 419-
421, cities [sic], as coming within the purview of the idem sonans rule,
"Yusea" and "U-C-A," "Steinway Pianos" and "Steinberg Pianos," and
"Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of Patents, this
Court unequivocally said that "Celdura" and "Condura" are confusingly
similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795
that the name "Lusolin" is an infringement of the trademark "Sapolin," as
the sound of the two names is almost the same."
In McDonald’s Corporation v. MacJoy Fastfood Corporation, the Court
applied the dominancy test in holding that "MACJOY" is confusingly similar
to "MCDONALD’S." The Court held:
While we agree with the CA’s detailed enumeration of differences between
the two (2) competing trademarks herein involved, we believe that the
holistic test is not the one applicable in this case, the dominancy test being
the one more suitable. In recent cases with a similar factual milieu as here,
the Court has consistently used and applied the dominancy test in
determining confusing similarity or likelihood of confusion between
competing trademarks.
xxxx
Applying the dominancy test to the instant case, the Court finds that herein
petitioner’s "MCDONALD’S" and respondent’s "MACJOY" marks are are
confusingly similar with each other that an ordinary purchaser can conclude
an association or relation between the marks.
To begin with, both marks use the corporate "M" design logo and the
prefixes "Mc" and/or "Mac" as dominant features. x x x
For sure, it is the prefix "Mc," and abbreviation of "Mac," which visually and
aurally catches the attention of the consuming public. Verily, the word
"MACJOY" attracts attention the same way as did "McDonalds,"
"MacFries," "McSpaghetti," "McDo," "Big Mac" and the rest of the
MCDONALD’S marks which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of
fastfood products. Indisputably, the respondent’s trademark application for
the "MACJOY & DEVICE" trademark covers goods under Classes 29 and
30 of the International Classification of Goods, namely, fried chicken,
chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioner’s
trademark registration for the MCDONALD’S marks in the Philippines
covers goods which are similar if not identical to those covered by the
respondent’s application.
In McDonald’s Corporation v. L.C. Big Mak Burger, Inc., the Court applied
the dominancy test in holding that "BIG MAK" is confusingly similar to "BIG
MAC." The Court held:
This Court x x x has relied on the dominancy test rather than the holistic
test. The dominancy test considers the dominant features in the competing
marks in determining whether they are confusingly similar. Under the
dominancy test, courts give greater weight to the similarity of the
appearance of the product arising from the adoption of the dominant
features of the registered mark, disregarding minor differences. Courts will
consider more 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.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court
ruled:
x x x It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size,
form and color, while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant features of another,
and confusion and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to imitate. (G. Heilman Brewing Co.
vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead
Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of
infringement of trademarks is whether the use of the marks involved would
be likely to cause confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F.
2d 588; x x x)
xxxx
The test of dominancy is now explicitly incorporated into law in Section
155.1 of the Intellectual Property Code which defines infringement as the
"colorable imitation of a registered mark x x x or a dominant feature
thereof."
Applying the dominancy test, the Court finds that respondents’ use of the
"Big Mak" mark results in likelihood of confusion. First, "Big Mak" sounds
exactly the same as "Big Mac." Second, the first word in "Big Mak" is
exactly the same as the first word in "Big Mac." Third, the first two letters in
"Mak" are the same as the first two letters in "Mac." Fourth, the last letter
"Mak" while a "k" sounds the same as "c" when the word "Mak" is
pronounced. Fifth, in Filipino, the letter "k" replaces "c" in spelling, thus
"Caloocan" is spelled "Kalookan."
In Societe Des Produits Nestle, S.A v. Court of Appeals, the Court applied
the dominancy test in holding that "FLAVOR MASTER" is confusingly
similar to "MASTER ROAST" and "MASTER BLEND." The Court held:
While this Court agrees with the Court of Appeals’ detailed enumeration of
differences between the respective trademarks of the two coffee products,
this Court cannot agree that totality test is the one applicable in this case.
Rather, this Court believes that the dominancy test is more suitable to this
case in light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the elementary postulate
of the law on trademarks and unfair competition that confusing similarity is
to be determined on the basis of visual, aural, connotative comparisons
and overall impressions engendered by the marks in controversy as they
are encountered in the realities of the marketplace. The totality or holistic
test only relies on visual comparison between two trademarks whereas the
dominancy test relies not only on the visual but also on the aural and
connotative comparisons and overall impressions between the two
trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test
of dominancy and held that:
From the evidence at hand, it is sufficiently established that the word
MASTER is the dominant feature of opposer’s mark. The word MASTER is
printed across the middle portion of the label in bold letters almost twice the
size of the printed word ROAST. Further, the word MASTER has always
been given emphasis in the TV and radio commercials and other
advertisements made in promoting the product. x x x In due time, because
of these advertising schemes the mind of the buying public had come to
learn to associate the word MASTER with the opposer’s goods.
x x x. It is the observation of this Office that much of the dominance which
the word MASTER has acquired through Opposer’s advertising schemes is
carried over when the same is incorporated into respondent-applicant’s
trademark FLAVOR MASTER. Thus, when one looks at the label bearing
the trademark FLAVOR MASTER (exh. 4) one’s attention is easily attracted
to the word MASTER, rather than to the dissimilarities that exist. Therefore,
the possibility of confusion as to the goods which bear the competing
marks or as to the origins thereof is not farfetched.
Applying the dominancy test in the present case, the Court finds that
"NANNY" is confusingly similar to "NAN." "NAN" is the prevalent feature of
Nestle’s line of infant powdered milk products. It is written in bold letters
and used in all products. The line consists of PRE-NAN, NAN-H.A., NAN-1,
and NAN-2. Clearly, "NANNY" contains the prevalent feature "NAN." The
first three letters of "NANNY" are exactly the same as the letters of "NAN."
When "NAN" and "NANNY" are pronounced, the aural effect is confusingly
similar.
In determining the issue of confusing similarity, the Court takes into
account the aural effect of the letters contained in the marks. In Marvex
Commercial Company, Inc. v. Petra Hawpia & Company, the Court held:
It is our considered view that the trademarks "SALONPAS" and "LIONPAS"
are confusingly similar in sound.
Both these words have the same suffix, "PAS", which is used to denote a
plaster that adheres to the body with curative powers. "PAS," being merely
descriptive, furnishes no indication of the origin of the article and therefore
is open for appropriation by anyone (Ethepa vs. Director of Patents, L-
20635, March 31, 1966) and may properly become the subject of a
trademark by combination with another word or phrase.
xxxx
The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are
confusingly similar in sound: "Gold Dust" and ""Gold Drop"; "Jantzen" and
"Jass-Sea"; "Silver Flash" and Supper Flash"; "Cascarete" and "Celborite";
"Celluloid" and "Cellonite"; "Chartreuse" and Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and Hoo
Hoo." Leon Amdur, in his book "Trade-Mark Law and Practice," pp. 419-
421, cities [sic], as coming within the purview of the idem sonans rule,
"Yusea" and "U-C-A," "Steinway Pianos" and "Steinberg Pianos," and
"Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of Patents, this
Court unequivocally said that "Celdura" and "Condura" are confusingly
similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795
that the name "Lusolin" is an infringement of the trademark "Sapolin," as
the sound of the two names is almost the same.
The scope of protection afforded to registered trademark owners is not
limited to protection from infringers with identical goods. The scope of
protection extends to protection from infringers with related goods, and to
market areas that are the normal expansion of business of the registered
trademark owners. Section 138 of R.A. No. 8293 states:
Certificates of Registration. — A certificate of registration of a mark shall be
prima facie evidence of validity of the registration, the registrant’s
ownership of the mark, and of the registrant’s exclusive right to use the
same in connection with the goods or services and those that are related
thereto specified in the certificate. (Emphasis supplied)
In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, "Non-
competing goods may be those which, though they are not in actual
competition, are so related to each other that it can reasonably be
assumed that they originate from one manufacturer, in which case,
confusion of business can arise out of the use of similar marks." In that
case, the Court enumerated factors in determining whether goods are
related: (1) classification of the goods; (2) nature of the goods; (3)
descriptive properties, physical attributes or essential characteristics of the
goods, with reference to their form, composition, texture or quality; and (4)
style of distribution and marketing of the goods, including how the goods
are displayed and sold.
NANNY and NAN have the same classification, descriptive properties and
physical attributes. Both are classified under Class 6, both are milk
products, and both are in powder form. Also, NANNY and NAN are
displayed in the same section of stores — the milk section.
prospective purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR 56 et sq; 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). (Emphasis supplied)
WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September
2005 Decision and 4 April 2006 Resolution of the Court of Appeals in CA-
G.R. CV No. 62730 and REINSTATE the 18 September 1998 Decision of
the Regional Trial Court, Judicial Region 7, Branch 9, Cebu City, in Civil
Case No. CEB-19345.
SO ORDERED.

The Court agrees with the lower courts that there are differences between
NAN and NANNY: (1) NAN is intended for infants while NANNY is intended
for children past their infancy and for adults; and (2) NAN is more
expensive than NANNY. However, as the registered owner of the "NAN"
mark, Nestle should be free to use its mark on similar products, in different
segments of the market, and at different price levels. In McDonald’s
Corporation v. L.C. Big Mak Burger, Inc., the Court held that the scope of
protection afforded to registered trademark owners extends to market
areas that are the normal expansion of business:

xxx

Even respondent’s use of the "Big Mak" mark on non-hamburger food

products cannot excuse their infringement of petitioners’ registered mark,
otherwise registered marks will lose their protection under the law.

The registered trademark owner may use his 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 has recognized that the registered trademark owner
enjoys protection in product and market areas that are the normal potential
expansion of his business. Thus, the Court has declared:

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
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, Parañaque
City, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
TRENDWORKS INTERNATIONAL CORPORATION, Petitioner-Intervenor,
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, Parañaque
City, Respondents.
RESOLUTION
PERALTA, J.:
For resolution are the twin Motions for Reconsideration1 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).
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.
Later, respondents moved to quash the search warrants, arguing that there
was no confusing similarity between petitioner’s "Skechers" rubber shoes
and its "Strong" rubber shoes.
On November 7, 2002, the RTC issued an Order6 quashing the search
warrants and directing the NBI to return the seized goods. The RTC agreed
with respondent’s 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.
Aggrieved, petitioner filed a petition for certiorari7 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.
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-Intervention11 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 Decision12 dismissing the
petition.
Both petitioner and petitioner-intervenor filed separate motions for
reconsideration.
In petitioner’s 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.
(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.
(f) THE SEARCH WARRANT COURT OVERSTEPPED ITS DISCRETION.
THE LAW IS CLEAR. THE DOMINANCY TEST SHOULD BE USED.
(g) THE COURT OF APPEALS COMMITTED ERRORS OF
JURISDICTION.13
On the other hand, petitioner-intervenor’s motion for reconsideration raises
the following errors for this Court’s consideration, to wit:
(a) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT
ACTED CONTRARY TO LAW AND JURISPRUDENCE IN ADOPTING
THE ALREADY-REJECTED 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 COURT’S
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 petitioner-intervenor
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 petitioner’s stylized "S" is within an oval design, to this
Court’s 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 petitioner’s
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 petitioner’s 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 petitioner’s trademark.
Indubitably, the likelihood of confusion is present as purchasers will
associate the respondent’s use of the stylized "S" as having been
authorized by petitioner or that respondent’s product is connected with
petitioner’s business.
Both the RTC and the CA applied the Holistic Test in ruling that respondent
had not infringed petitioner’s 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 Court’s mind such dissimilarities do not outweigh the stark and
blatant similarities in their general features. As can be readily observed by
simply comparing petitioner’s Energy20 model and respondent’s 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 respondent’s shoes are very similar to
petitioner’s 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 respondent’s
shoes, near the upper part, appears the stylized "S," placed in the exact
location as that of the stylized "S" on petitioner’s 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 petitioner’s shoes, near the heel
counter, appears "Skechers Sport Trail" written in white lettering. However,
on respondent’s shoes appears "Strong Sport Trail" noticeably written in
the same white lettering, font size, direction and orientation as that of
petitioner’s shoes. On top of the heel collar of petitioner’s shoes are two
grayish-white semi-transparent circles. Not surprisingly, respondent’s
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 respondent’s products will cause
confusion and mistake in the eyes of the public. Respondent’s shoes may
not be an exact replica of petitioner’s 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 McDonald’s 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 petitioner’s 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 respondent’s shoes contain some dissimilarities with
petitioner’s shoes, this Court cannot close its eye to the fact that for all
intents and purpose, respondent had deliberately attempted to copy
petitioner’s 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.
G.R. No. 78413 November 8, 1989
CAGAYAN VALLEY ENTERPRISES, INC., Represented by its
President, Rogelio Q. Lim, petitioner, vs. THE HON. COURT OF
APPEALS and LA TONDEÑA, INC., respondents.
REGALADO, J.:
This petition for review on certiorari seeks the nullification of the decision of
the Court of Appeals of December 5, 1986 in CA-G.R. CV No. 06685 which
reversed the decision of the trial court, and its resolution dated May 5, 1987
denying petitioner's motion for reconsideration.
The following antecedent facts generative of the present controversy are
not in dispute.
Sometime in 1953, La Tondeña, Inc. (hereafter, LTI for short) registered
with the Philippine Patent Office pursuant to Republic Act No. 623 1 the
350 c.c. white flint bottles it has been using for its gin popularly known as
"Ginebra San Miguel". This registration was subsequently renewed on
December 4, 1974. 2
On November 10, 1981, LTI filed Civil Case No. 2668 for injunction and
damages in the then Branch 1, Court of First Instance of Isabela against
Cagayan Valley Enterprises, Inc. (Cagayan, for brevity) for using the 350
c.c., white flint bottles with the mark "La Tondeña Inc." and "Ginebra San
Miguel" stamped or blown-in therein by filling the same with Cagayan's
liquor product bearing the label "Sonny Boy" for commercial sale and
distribution, without LTI's written consent and in violation of Section 2 of
Republic Act No. 623, as amended by Republic Act No. 5700. On the same
date, LTI further filed an ex parte petition for the issuance of a writ of
preliminary injunction against the defendant therein. 3 On November 16,
1981, the court a quo issued a temporary restraining order against
Cagayan and its officers and employees from using the 350 c.c. bottles
with the marks "La Tondeña" and "Ginebra San Miguel." 4
Cagayan, in its answer, alleged the following defenses:
1. LTI has no cause of action due to its failure to comply with Section 21 of
Republic Act No. 166 which requires the giving of notice that its aforesaid
marks are registered by displaying and printing the words "Registered in
the Phil. Patent Office" or "Reg Phil. Pat. Off.," hence no suit, civil or
criminal, can be filed against Cagayan;
2. LTI is not entitled to any protection under Republic Act No. 623, as
amended by Republic Act No. 5700, because its products, consisting of
hard liquor, are not among those contemplated therein. What is protected
under said law are beverages like Coca-cola, Royal Tru-Orange, Lem-o-
Lime and similar beverages the bottles whereof bear the words "Reg Phil.
Pat. Off.;"
3. No reservation of ownership on its bottles was made by LTI in its sales
invoices nor does it require any deposit for the retention of said bottles; and
4. There was no infringement of the goods or products of LTI since
Cagayan uses its own labels and trademark on its product.
In its subsequent pleadings, Cagayan contended that the bottles they are
using are not the registered bottles of LTI since the former was using the
bottles marked with "La Tondeña, Inc." and "Ginebra San Miguel" but
without the words "property of" indicated in said bottles as stated in the
sworn statement attached to the certificate of registration of LTI for said
bottles.
On December 18, 1981, the lower court issued a writ of preliminary
injunction, upon the filing of a bond by LTI in the sum of P50,000.00,
enjoining Cagayan, its officers and agents from using the aforesaid
registered bottles of LTI. 6
After a protracted trial, which entailed five (5) motions for contempt filed by
LTI against Cagayan, the trial court rendered judgment 7 in favor of
Cagayan, ruling that the complaint does not state a cause of action and
that Cagayan was not guilty of contempt. Furthermore, it awarded
damages in favor of Cagayan.
LTI appealed to the Court of Appeals which, on December 5, 1986
rendered a decision in favor of said appellant, the dispositive portion
whereof reads:
WHEREFORE, the decision appealed from is hereby SET ASIDE and
judgment is rendered permanently enjoining the defendant, its officers and
agents from using the 350 c.c. white flint bottles with the marks of
ownership "La Tondeña, Inc." and "Ginebra San Miguel", blown-in or
stamped on said bottles as containers for defendant's products.
The writ of preliminary injunction issued by the trial court is therefore made
permanent.
Defendant is ordered to pay the amounts of:
(1) P15,000.00 as nominal or temperate damages;
(2) P50,000.00 as exemplary damages;
(3) P10,000.00 as attorney's fees; and
(4) Costs of suit.
On December 23, 1986, Cagayan filed a motion for reconsideration which
was denied by the respondent court in its resolution dated May 5, 1987,
hence the present petition, with the following assignment of errors:
I. The Court of Appeals gravely erred in the decision granting that "there is,
therefore, no need for plaintiff to display the words "Reg. Phil. Pat. Off." in
order for it to succeed in bringing any injunction suit against defendant for
the illegal use of its bottles. Rep. Act No. 623, as amended by Rep. Act No.
5700 simply provides and requires that the marks or names shall be
stamped or marked on the containers."
II. The Court of Appeals gravely erred in deciding that "neither is there a
reason to distinguish between the two (2) sets of marked bottles-those
which contain the marks "Property of La Tondeña, Inc., Ginebra San
Miguel," and those simply marked La Tondeña Inc., Ginebra San Miguel'.
By omitting the words "property of" plaintiff did not open itself to violation of
Republic Act No. 623, as amended, as having registered its marks or
names it is protected under the law."
III. The Honorable Court of Appeals gravely erred in deciding that the
words "La Tondeña, Inc. and Ginebra San Miguel" are sufficient notice to
the defendant which should have inquired from the plaintiff or the Philippine
Patent Office, if it was lawful for it to re-use the empty bottles of the plaintiff.
IV. The Honorable Court of Appeals gravely erred in deciding that
defendant-appellee cannot claim good faith from using the bottles of
plaintiff with marks "La Tondeña, Inc." alone, short for the description
contained in the sworn statement of Mr. Carlos Palanca, Jr., which was a
requisite of its original and renewal registrations.
V. The Honorable Court of Appeals gravely erred in accommodating the
appeal on the dismissals of the five (5) contempt charges.
VI. The Honorable Court of Appeals gravely erred in deciding that the
award of damages in favor of the defendant-appellee, petitioner herein, is
not in order. Instead it awarded nominal or temperate, exemplary damages
and attorney's fees without proof of bad faith. 9
The pertinent provisions of Republic Act No. 623, as amended by Republic
Act No. 5700, provides:
SECTION 1. Persons engaged or licensed to engage in the manufacture,
bottling, or selling of soda water, mineral or aerated waters, cider, milk,
cream or other lawful beverages in bottles, boxes, casks, kegs, or barrels
and other similar containers, or in the manufacturing, compressing or
selling of gases such as oxygen, acytelene, nitrogen, carbon dioxide
ammonia, hydrogen, chloride, helium, sulphur, dioxide, butane, propane,
freon, melthyl chloride or similar gases contained in steel cylinders, tanks,
flasks, accumulators or similar containers, with the name or the names of
their principals or products, or other marks of ownership stamped or
marked thereon, may register with the Philippine Patent Office a
description of the names or marks, and the purpose for which the
containers so marked and used by them, under the same conditions, rules,
and regulations, made applicable by law or regulation to the issuance of
trademarks.
SEC. 2. It shall be unlawful for any person, without the written consent of
the manufacturer, bottler, or seller, who has succesfully registered the
marks of ownership in accordance with the provisions of the next preceding
section, to fill such bottles, boxes, kegs, barrels, steel cylinders, tanks,
flasks, accumulators or other similar containers so marked or stamped, for
the purpose of sale, or to sell, disposed of, buy or traffic in, or wantonly
destroy the same, whether filled or not, to use the same, for drinking
vessels or glasses or drain pipes, foundation pipes, for any other purpose
than that registered by the manufacturer, bottler or seller. Any violation of
this section shall be punished by a fine of not more than one thousand
pesos or imprisonment of not more than one year or both.
SEC. 3. The use by any person other than the registered manufacturer,
bottler or seller, without written permission of the latter of any such bottle,
cask, barrel, keg, box, steel cylinders, tanks, flask, accumulators, or other
similar containers, or the possession thereof without written permission of
the manufacturer, by any junk dealer or dealer in casks, barrels, kegs
boxes, steel cylinders, tanks, flasks, accumulators or other similar
containers, the same being duly marked or stamped and registered as
herein provided, shall give rise to a prima facie presumption that such use
or possession is unlawful.
The above-quoted provisions grant protection to a qualified manufacturer
who successfully registered with the Philippine Patent Office its duly
stamped or marked bottles, boxes, casks and other similar containers. The
mere use of registered bottles or containers without the written consent of
the manufacturer is prohibited, the only exceptions being when they are
used as containers for "sisi," bagoong," "patis" and similar native products.
It is an admitted fact that herein petitioner Cagayan buys from junk dealers
and retailers bottles which bear the marks or names La Tondeña Inc." and
"Ginebra San Miguel" and uses them as containers for its own liquor
products. The contention of Cagayan that the aforementioned bottles
without the words "property of" indicated thereon are not the registered
bottles of LTI, since they do not conform with the statement or description
in the supporting affidavits attached to the original registration certificate
and renewal, is untenable.
Republic Act No. 623 which governs the registration of marked bottles and
containers merely requires that the bottles, in order to be eligible for
registration, must be stamped or marked with the names of the
manufacturers or the names of their principals or products, or other marks
of ownership. No drawings or labels are required but, instead, two
photographs of the container, duly signed by the applicant, showing clearly
and legibly the names and other marks of ownership sought to be
registered and a bottle showing the name or other mark or ownership,
irremovably stamped or marked, shall be submitted.
The term "Name or Other Mark of Ownership" means the name of the
applicant or the name of his principal, or of the product, or other mark of
ownership. The second set of bottles of LTI without the words "property of"
substantially complied with the requirements of Republic Act No. 623, as
amended, since they bear the name of the principal, La Tondeña Inc., and
of its product, Ginebra San Miguel. The omitted words "property of" are not
of such vital indispensability such that the omission thereof will remove the
bottles from the protection of the law. The owner of a trade-mark or trade-
name, and in this case the marked containers, does not abandon it by
making minor modifications in the mark or name itself. 13 With much more
reason will this be true where what is involved is the mere omission of the
words "property of" since even without said words the ownership of the
bottles is easily Identifiable. The words "La Tondeña Inc." and "Ginebra
San Miguel" stamped on the bottles, even without the words "property of,"
are sufficient notice to the public that those bottles so marked are owned
by LTI.
The claim of petitioner that hard liquor is not included under the term "other
lawful beverages" as provided in Section I of Republic Act No. 623, as
amended by Republic Act No. 5700, is without merit. The title of the law
itself, which reads " An Act to Regulate the Use of Duly Stamped or
Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar
Containers" clearly shows the legislative intent to give protection to all
marked bottles and containers of all lawful beverages regardless of the
nature of their contents. The words "other lawful beverages" is used in its
general sense, referring to all beverages not prohibited by law. Beverage is
defined as a liquor or liquid for drinking. 14 Hard liquor, although regulated,
is not prohibited by law, hence it is within the purview and coverage of
Republic Act No. 623, as amended.
Republic Act No. 623, as amended, has for its purpose the protection of the
health of the general public and the prevention of the spread of contagious
diseases. It further seeks to safeguard the property rights of an important
sector of Philippine industry. As held by this Court in Destileria Ayala, Inc.
vs. Tan Tay & Co., the purpose of then Act 3070, was to afford a person a
means of Identifying the containers he uses in the manufacture,
preservation, packing or sale of his products so that he may secure their
registration with the Bureau of Commerce and Industry and thus prevent
other persons from using them. Said Act 3070 was substantially reenacted
as Republic Act No. 623.
The proposition that Republic Act No. 623, as amended, protects only the
containers of the soft drinks enumerated by petitioner and those similar
thereto, is unwarranted and specious. The rule of ejusdem generis cannot
be applied in this case. To limit the coverage of the law only to those
enumerated or of the same kind or class as those specifically mentioned
will defeat the very purpose of the law. Such rule of ejusdem generis is to
be resorted to only for the purpose of determining what the intent of the
legislature was in enacting the law. If that intent clearly appears from other
parts of the law, and such intent thus clearly manifested is contrary to the
result which would be reached by the appreciation of the rule of ejusdem
generis, the latter must give way.18
Moreover, the above conclusions are supported by the fact that the
Philippine Patent Office, which is the proper and competent government
agency vested with the authority to enforce and implement Republic Act
No. 623, registered the bottles of respondent LTI as containers for gin and
issued in its name a certificate of registration with the following findings:
It appearing, upon due examination that the applicant is entitled to have the
said MARKS OR NAMES registered under R.A. No. 623, the said marks or
names have been duly registered this day in the PATENT OFFICE under
the said Act, for gin, Ginebra San Miguel. 19
While executive construction is not necessarily binding upon the courts, it is
entitled to great weight and consideration. The reason for this is that such
construction comes from the particular branch of government called upon
to implement the particular law involved. 20
Just as impuissant is petitioners contention that respondent court erred in
holding that there is no need for LTI to display the words "Reg Phil. Pat.
Off." in order to succeed in its injunction suit against Cagayan for the illegal
use of the bottles. To repeat, Republic Act No. 623 governs the registration
of marked bottles and containers and merely requires that the bottles
and/or containers be marked or stamped by the names of the manufacturer
or the names of their principals or products or other marks of ownership.
The owner upon registration of its marked bottles, is vested by law with an
exclusive right to use the same to the exclusion of others, except as a
container for native products. A violation of said right gives use to a cause
of action against the violator or infringer.
While Republic Act No. 623, as amended, provides for a criminal action in
case of violation, a civil action for damages is proper under Article 20 of the
Civil Code which provides that every person who, contrary to law, wilfully or
negligently causes damage to another, shall indemnify the latter for the
same. This particular provision of the Civil Case was clearly meant to
complement all legal provisions which may have inadvertently failed to
provide for indemnification or reparation of damages when proper or called
for. In the language of the Code Commission "(t)he foregoing rule pervades
the entire legal system, and renders it impossible that a person who suffers
damage because another has violated some legal provisions, should find
himself without relief." 21 Moreover, under Section 23 of Republic Act No.
166, as amended, a person entitled to the exclusive use of a registered
mark or tradename may recover damages in a civil action from any person
who infringes his rights. He may also, upon proper showing, be granted
injunction.
It is true that the aforesaid law on trademarks provides:
SEC. 21. Requirements of notice of registration of trade-mark.-The
registrant of a trade-mark, heretofore registered or registered under the
provisions of this Act, shall give notice that his mark is registered by
displaying with the same as used the words 'Registered in the Philippines
Patent Office' or 'Reg Phil. Pat. Off.'; and in any suit for infringement under
this Act by a registrant failing so to mark the goods bearing the registered
trade-mark, no damages shall be recovered under the provisions of this
Act, unless the defendant has actual notice of the registration.
Even assuming that said provision is applicable in this case, the failure of
LTI to make said marking will not bar civil action against petitioner
Cagayan. The aforesaid requirement is not a condition sine qua non for
filing of a civil action against the infringer for other reliefs to which the
plaintiff may be entitled. The failure to give notice of registration will not
deprive the aggrieved party of a cause of action against the infringer but, at
the most, such failure may bar recovery of damages but only under the
provisions of Republic Act No. 166.
However, in this case an award of damages to LTI is ineluctably called for.
Petitioner cannot claim good faith. The record shows that it had actual
knowledge that the bottles with the blown-in marks "La Tondeña Inc." and
"Ginebra San Miguel" are duly registered. In Civil Case No. 102859 of the
Court of First Instance of Manila, entitled "La Tondeña Inc. versus Diego
Lim, doing business under the name and style 'Cagayan Valley Distillery,' "
a decision was rendered in favor of plaintiff therein on the basis of the
admission and/or acknowledgment made by the defendant that the bottles
marked only with the words "La Tondeña Inc." and "Ginebra San Miguel"
are registered bottles of LTI. 22
Petitioner cannot avoid the effect of the admission and/or acknowledgment
made by Diego Lim in the said case. While a corporation is an entity
separate and distinct from its stock-holders and from other corporations
with which it may be connected, where the discreteness of its personality is
used to defeat public convenience, justify wrong, protect fraud, or defend
crime, the law will regard the corporation as an association of persons, or
in the case of two corporations, merge them into one. When the
corporation is the mere alter ego or business conduit of a person, it may be
disregaded. 23
Petitioner's claim that it is separate and distinct from the former Cagayan
Valley Distillery is belied by the evidence on record. The following facts
warrant the conclusion that petitioner, as a corporate entity, and Cagayan
Valley Distillery are one and the same. to wit: (1) petitioner is being
managed by Rogelio Lim, the son of Diego Lim, the owner and manager of
Cagayan Valley Distellery; (2) it is a family corporation; 24 (3) it is an
admitted fact that before petitioner was incorporated it was under a single
proprietorship; 25 (4) petitioner is engaged in the same business as
Cagayan Valley Distillery, the manufacture of wines and liquors; and (5) the
factory of petitioner is located in the same place as the factory of the former
Cagayan Valley Distillery.
It is thus clear that herein petitioner is a mere continuation and successor
of Cagayan Valley Distillery. It is likewise indubitable that the admission
made in the former case, as earlier explained, is binding on it as cogent
proof that even before the filing of this case it had actual knowledge that
the bottles in dispute were registered containers of LTI As held in La
Campana Coffee Factory, Inc., et al. vs. Kaisahan Ng Mga Manggagawa
sa La Campana (KKM), et al., 26 where the main purpose in forming the
corporation was to evade one's subsidiary liability for damages in a criminal
case, the corporation may not be heard to say that it has a personality
separate and distinct from its members, because to allow it to do so would
be to sanction the use of the fiction of corporate entity as a shield to further
an end subversive of justice.
Anent the several motions of private respondent LTI to have petitioner cited
for contempt, we reject the argument of petitioner that an appeal from a
verdict of acquittal in a contempt, proceeding constitutes double jeopardy.
A failure to do something ordered by the court for the benefit of a party
constitutes civil contempt. 27 As we held in Converse Rubber Corporation
vs. Jacinto Rubber & Plastics Co., Inc.:
...True it is that generally, contempt proceedings are characterized as
criminal in nature, but the more accurate juridical concept is that contempt
proceedings may actually be either civil or criminal, even if the distinction
between one and the other may be so thin as to be almost imperceptible.
But it does exist in law. It is criminal when the purpose is to vindicate the
authority of the court and protect its outraged dignity. It is civil when there is
failure to do something ordered by a court to be done for the benefit of a
party (3 Moran Rules of Court, pp. 343-344, 1970 ed.; see also Perkins vs.
Director of Prisons, 58 Phil. 272; Harden vs. Director of Prisons, 81 Phil.
741.) And with this distinction in mind, the fact that the injunction in the
instant case is manifestly for the benefit of plaintiffs makes of the contempt
herein involved civil, not criminal. Accordingly, the conclusion is inevitable
that appellees have been virtually found by the trial court guilty of civil
contempt, not criminal contempt, hence, the rule on double jeopardy may
not be invoked. 28
The contempt involved in this case is civil and constructive in nature, it
having arisen from the act of Cagayan in violating the writ of preliminary
injunction of the lower court which clearly defined the forbidden act, to wit:
NOW THEREFORE, pending the resolution of this case by the court, you
are enjoined from using the 350 c.c. white flint bottles with the marks La
Tondeña Inc.,' and 'Ginebra San Miguel' blown-in or stamped into the
bottles as containers for the defendant's products. 19
On this incident, two considerations must be borne in mind. Firstly, an
injunction duly issued must be obeyed, however erroneous the action of
the court may be, until its decision is overruled by itself or by a higher court.
30 Secondly, the American rule that the power to judge a contempt rests
exclusively with the court contemned does not apply in this Jurisdiction.
The provision of the present Section 4, Rule 71 of the Rules of Court as to
where the charge may be filed is permissive in nature and is merely
declaratory of the inherent power of courts to punish contumacious
conduct. Said rules do not extend to the determination of the jurisdiction of
Philippine courts. 31 In appropriate case therefore, this Court may, in the
interest of expedient justice, impose sanctions on contemners of the lower
courts.
Section 3 of Republic Act No. 623, as amended, creates a prima facie
presumption against Cagayan for its unlawful use of the bottles registered
in the name of LTI Corollarily, the writ of injunction directing petitioner to
desist from using the subject bottles was properly issued by the trial court.
Hence, said writ could not be simply disregarded by Cagayan without
adducing proof sufficient to overcome the aforesaid presumption. Also,
based on the findings of respondent court, and the records before us being
sufficient for arbitrament without remanding the incident to the court a quo
petitioner can be adjudged guilty of contempt and imposed a sanction in
this appeal since it is a cherished rule of procedure for this Court to always
strive to settle the entire controversy in a single proceeding, 32 We so
impose such penalty concordant with the preservative principle and as
demanded by the respect due the orders, writs and processes of the courts
of justice.
WHEREFORE, judgment is hereby rendered DENYING the petition in this
case and AFFIRMING the decision of respondent Court of Appeals.
Petitioner is hereby declared in contempt of court and ORDERED to pay a
fine of One Thousand Pesos (P1,000.00), with costs.
SO ORDERED.