Consequentially, plaintiff is required to file with the Court a bond executed to defendants
G.R. No. 115758 March 19, 2002
ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS
LABORATORY, petitioner,
vs.
HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and
COMPANY, and ANG TIAM CHAY, respondents.
DE LEON, JR., J.:
1
Before us is a petition for review on certiorari of the Decision dated May 24, 1993 of the
2
Court of Appeals setting aside and declaring as null and void the Orders dated
February 10, 1992 and March 19, 1992 of the Regional Trial Court, Branch 90, of
Quezon City granting the issuance of a writ of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and
damages with a prayer for the issuance of a writ of preliminary injunction, docketed as
Civil Case No. Q-91-10926, against the respondents Summerville General
Merchandising and Company (Summerville, for brevity) and Ang Tiam Chay.
The petitioner's complaint alleges that petitioner, doing business under the name and
style of KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun
Su and Oval Facial Cream Container/Case, as shown by Certificates of Copyright
Registration No. 0-1358 and No. 0-3678; that she also has patent rights on Chin Chun
Su & Device and Chin Chun Su for medicated cream after purchasing the same from
Quintin Cheng, the registered owner thereof in the Supplemental Register of the
Philippine Patent Office on February 7, 1980 under Registration Certificate No. 4529;
that respondent Summerville advertised and sold petitioner's cream products under the
brand name Chin Chun Su, in similar containers that petitioner uses, thereby misleading
the public, and resulting in the decline in the petitioner's business sales and income; and,
that the respondents should be enjoined from allegedly infringing on the copyrights and
patents of the petitioner.
The respondents, on the other hand, alleged as their defense that Summerville is the
exclusive and authorized importer, re-packer and distributor of Chin Chun Su products
manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese manufacturing
company authorized Summerville to register its trade name Chin Chun Su Medicated
Cream with the Philippine Patent Office and other appropriate governmental agencies;
that KEC Cosmetics Laboratory of the petitioner obtained the copyrights through
misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of
the patent registration certificate, to distribute and market Chin Chun Su products in the
Philippines had already been terminated by the said Taiwanese Manufacturing
Company.
After due hearing on the application for preliminary injunction, the trial court granted the
same in an Order dated February 10, 1992, the dispositive portion of which reads:
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the
style of KEC Cosmetic Laboratory, for preliminary injunction, is hereby granted.
in the amount of five hundred thousand pesos (P500,000.00) to the effect that plaintiff
will pay to defendants all damages which defendants may sustain by reason of the
injunction if the Court should finally decide that plaintiff is not entitled thereto.
3
SO ORDERED.
The respondents moved for reconsideration but their motion for reconsideration was
4
denied by the trial court in an Order dated March 19, 1992.
On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 27803, praying for the nullification of the said writ of
preliminary injunction issued by the trial court. After the respondents filed their reply and
almost a month after petitioner submitted her comment, or on August 14 1992, the latter
moved to dismiss the petition for violation of Supreme Court Circular No. 28-91, a
circular prohibiting forum shopping. According to the petitioner, the respondents did not
state the docket number of the civil case in the caption of their petition and, more
significantly, they did not include therein a certificate of non-forum shopping. The
respondents opposed the petition and submitted to the appellate court a certificate of
non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803
ruling in favor of the respondents, the dispositive portion of which reads:
WHEREFORE, the petition is hereby given due course and the orders of respondent
court dated February 10, 1992 and March 19, 1992 granting the writ of preliminary
injunction and denying petitioners' motion for reconsideration are hereby set aside and
declared null and void. Respondent court is directed to forthwith proceed with the trial of
Civil Case No. Q-91-10926 and resolve the issue raised by the parties on the merits.
5
SO ORDERED.
In granting the petition, the appellate court ruled that:
The registration of the trademark or brandname "Chin Chun Su" by KEC with the
supplemental register of the Bureau of Patents, Trademarks and Technology Transfer
cannot be equated with registration in the principal register, which is duly protected by
the Trademark Law.1âwphi1.nêt
xxx xxx xxx
As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:
"Registration in the Supplemental Register, therefore, serves as notice that the
registrant is using or has appropriated the trademark. By the very fact that the trademark
cannot as yet be on guard and there are certain defects, some obstacles which the use
must still overcome before he can claim legal ownership of the mark or ask the courts to
vindicate his claims of an exclusive right to the use of the same. It would be deceptive
for a party with nothing more than a registration in the Supplemental Register to posture
before courts of justice as if the registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the Patent office action on
application Serial No. 30954 that 'registrants is presumed to be the owner of the mark
until after the registration is declared cancelled' is, therefore, misplaced and grounded
on shaky foundation. The supposed presumption not only runs counter to the precept
embodied in Rule 124 of the Revised Rules of Practice before the Philippine Patent
Office in Trademark Cases but considering all the facts ventilated before us in the four
interrelated petitions involving the petitioner and the respondent, it is devoid of factual
basis. As even in cases where presumption and precept may factually be reconciled, we
have held that the presumption is rebuttable, not conclusive, (People v. Lim Hoa, G.R.
No. L-10612, May 30, 1958, Unreported). One may be declared an unfair competitor
even if his competing trademark is registered (Parke, Davis & Co. v. Kiu Foo & Co., et al.,
6
60 Phil 928; La Yebana Co. v. chua Seco & Co., 14 Phil 534)."
The petitioner filed a motion for reconsideration. This she followed with several motions
to declare respondents in contempt of court for publishing advertisements notifying the
public of the promulgation of the assailed decision of the appellate court and stating that
genuine Chin Chun Su products could be obtained only from Summerville General
Merchandising and Co.
In the meantime, the trial court went on to hear petitioner's complaint for final injunction
7
and damages. On October 22, 1993, the trial court rendered a Decision barring the
petitioner from using the trademark Chin Chun Su and upholding the right of the
respondents to use the same, but recognizing the copyright of the petitioner over the
oval shaped container of her beauty cream. The trial court did not award damages and
costs to any of the parties but to their respective counsels were awarded Seventy-Five
Thousand Pesos (P75,000.00) each as attorney's fees. The petitioner duly appealed the
said decision to the Court of Appeals.
8
On June 3, 1994, the Court of Appeals promulgated a Resolution denying the
petitioner's motions for reconsideration and for contempt of court in CA-G.R. SP No.
27803.
Hence, this petition anchored on the following assignment of errors:
I exclusion of others.
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE
ON PETITIONER'S MOTION TO DISMISS.
II
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO
PROMPTLY RESOLVE PETITIONER'S MOTION FOR RECONSIDERATION.
III
IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR
RECONSIDERATION, THE HONORABLE COURT OF APPEALS DENIED
PETITIONER'S RIGHT TO SEEK TIMELY APPELLATE RELIEF AND VIOLATED
PETITIONER'S RIGHT TO DUE PROCESS.
IV
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE
9
THE PRIVATE RESPONDENTS IN CONTEMPT.
The petitioner faults the appellate court for not dismissing the petition on the ground of
violation of Supreme Court Circular No. 28-91. Also, the petitioner contends that the
appellate court violated Section 6, Rule 9 of the Revised Internal Rules of the Court of
Appeals when it failed to rule on her motion for reconsideration within ninety (90) days
from the time it is submitted for resolution. The appellate court ruled only after the lapse
of three hundred fifty-four (354) days, or on June 3, 1994. In delaying the resolution
thereof, the appellate court denied the petitioner's right to seek the timely appellate relief.
Finally, petitioner describes as arbitrary the denial of her motions for contempt of court
against the respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the
grounds for the issuance of a writ of preliminary injunction is a proof that the applicant is
entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, either for a
limited period or perpetually. Thus, a preliminary injunction order may be granted only
when the application for the issuance of the same shows facts entitling the applicant to
10
the relief demanded. This is the reason why we have ruled that it must be shown that
the invasion of the right sought to be protected is material and substantial, that the right
of complainant is clear and unmistakable, and, that there is an urgent and paramount
11
necessity for the writ to prevent serious damage.
In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order
on the ground that she is entitled to the use of the trademark on Chin Chun Su and its
container based on her copyright and patent over the same. We first find it appropriate
to rule on whether the copyright and patent over the name and container of a beauty
cream product would entitle the registrant to the use and ownership over the same to the
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing
the goods (trademark) or services (service mark) of an enterprise and shall include a
12
stamped or marked container of goods. In relation thereto, a trade name means the
13
name or designation identifying or distinguishing an enterprise. Meanwhile, the scope
of a copyright is confined to literary and artistic works which are original intellectual
creations in the literary and artistic domain protected from the moment of their
14
creation. Patentable inventions, on the other hand, refer to any technical solution of a
problem in any field of human activity which is new, involves an inventive step and is
15
industrially applicable.
Petitioner has no right to support her claim for the exclusive use of the subject trade
name and its container. The name and container of a beauty cream product are proper
subjects of a trademark inasmuch as the same falls squarely within its definition. In order
to be entitled to exclusively use the same in the sale of the beauty cream product, the
user must sufficiently prove that she registered or used it before anybody else did. The
petitioner's copyright and patent registration of the name and container would not
guarantee her the right to the exclusive use of the same for the reason that they are not
appropriate subjects of the said intellectual rights. Consequently, a preliminary injunction
order cannot be issued for the reason that the petitioner has not proven that she has a
clear right over the said name and container to the exclusion of others, not having
proven that she has registered a trademark thereto or used the same before anyone did.
We cannot likewise overlook the decision of the trial court in the case for final injunction
and damages. The dispositive portion of said decision held that the petitioner does not
have trademark rights on the name and container of the beauty cream product. The said
decision on the merits of the trial court rendered the issuance of the writ of a preliminary
injunction moot and academic notwithstanding the fact that the same has been appealed
in the Court of Appeals. This is supported by our ruling in La Vista Association, Inc. v.
16
Court of Appeals , to wit:
Considering that preliminary injunction is a provisional remedy which may be granted at
any time after the commencement of the action and before judgment when it is
established that the plaintiff is entitled to the relief demanded and only when his
complaint shows facts entitling such reliefs xxx and it appearing that the trial court had
already granted the issuance of a final injunction in favor of petitioner in its decision
rendered after trial on the merits xxx the Court resolved to Dismiss the instant petition
having been rendered moot and academic. An injunction issued by the trial court after it
has already made a clear pronouncement as to the plaintiff's right thereto, that is, after
the same issue has been decided on the merits, the trial court having appreciated the
evidence presented, is proper, notwithstanding the fact that the decision rendered is not
yet final xxx. Being an ancillary remedy, the proceedings for preliminary injunction
cannot stand separately or proceed independently of the decision rendered on the merit
of the main case for injunction. The merit of the main case having been already
determined in favor of the applicant, the preliminary determination of its non-existence
ceases to have any force and effect. (italics supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any
question on the preliminary injunctive order moot and academic despite the fact that the
decision granting a final injunction is pending appeal. Conversely, a decision denying
the applicant-plaintiff's right to a final injunction, although appealed, renders moot and
academic any objection to the prior dissolution of a writ of preliminary injunction.
this Court not to revive a dissolved writ of injunction in favor of a party without any legal
right thereto merely on a technical infirmity. The granting of an injunctive writ based on a
technical ground rather than compliance with the requisites for the issuance of the same
is contrary to the primary objective of legal procedure which is to serve as a means to
dispense justice to the deserving party.
The petitioner likewise contends that the appellate court unduly delayed the resolution of
her motion for reconsideration. But we find that petitioner contributed to this delay when
she filed successive contentious motions in the same proceeding, the last of which was
on October 27, 1993, necessitating counter-manifestations from private respondents
with the last one being filed on November 9, 1993. Nonetheless, it is well-settled that
non-observance of the period for deciding cases or their incidents does not render such
17
judgments ineffective or void. With respect to the purported damages she suffered due
to the alleged delay in resolving her motion for reconsideration, we find that the said
issue has likewise been rendered moot and academic by our ruling that she has no right
over the trademark and, consequently, to the issuance of a writ of preliminary
injunction.1âwphi1.nêt
Finally, we rule that the Court of Appeals correctly denied the petitioner's several
motions for contempt of court. There is nothing contemptuous about the advertisements
complained of which, as regards the proceedings in CA-G.R. SP No. 27803 merely
announced in plain and straightforward language the promulgation of the assailed
Decision of the appellate court. Moreover, pursuant to Section 4 of Rule 39 of the
Revised Rules of Civil Procedure, the said decision nullifying the injunctive writ was
immediately executory.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals dated May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED.
With costs against the petitioner.
SO ORDERED.

The petitioner argues that the appellate court erred in not dismissing the petition for
certiorari for non-compliance with the rule on forum shopping. We disagree. First, the
petitioner improperly raised the technical objection of non-compliance with Supreme
Court Circular No. 28-91 by filing a motion to dismiss the petition for certiorari filed in the
appellate court. This is prohibited by Section 6, Rule 66 of the Revised Rules of Civil
Procedure which provides that "(I)n petitions for certiorari before the Supreme Court and
the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed. Before
giving due course thereto, the court may require the respondents to file their comment
to, and not a motion to dismiss, the petition xxx (italics supplied)". Secondly, the issue
was raised one month after petitioner had filed her answer/comment and after private
respondent had replied thereto. Under Section 1, Rule 16 of the Revised Rules of Civil
Procedure, a motion to dismiss shall be filed within the time for but before filing the
answer to the complaint or pleading asserting a claim. She therefore could no longer
submit a motion to dismiss nor raise defenses and objections not included in the
answer/comment she had earlier tendered. Thirdly, substantial justice and equity require
 *
G.R. No. 120961. October 17, 1996.
DISTILLERIA WASHINGTON, INC. or WASHINGTON DISTILLERY, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS and LA TONDEÑA DISTILLERS,
INC., respondents.
VITUG, J.:p
The initiatory suit was instituted on 02 November 1987 with the trial court (docketed Civil
Case No. 87-42639) for manual delivery with damages instituted by La Tondeña
Distillers, Inc. ("LTDI"), against Distilleria Washington ("Washington"). LTDI, under a
claim of ownership, sought to seize from Distilleria Washington 18,157 empty "350 c.c.
white flint bottles" bearing the blown-in marks of "La Tondeña Inc." and "Ginebra San
Miguel." The court, on application of LTDI, issued an order of replevin on 05 November
1987 for the seizure of the empty gin bottles from Washington. These bottles, it was
averred, were being used by Washington for its own "Gin Seven" products without the
consent of LTDI.
LTDI asserted that, being the owner and registrant of the bottles, it was entitled to the
protection so extended by Republic Act ("R.A.") No. 623, as amended, notwithstanding
its sale of the Ginebra San Miguel gin product contained in said bottles.
Washington countered that R.A. No. 623, invoked by LTDI, should not apply to gin, an
alcoholic beverage which is unlike that of "soda water, mineral or aerated water, ciders,
milks, cream, or other lawful beverages" mentioned in the law, and that, in any case,
ownership of the bottles should, considering the attendant facts and circumstances, be
held lawfully transferred to the buyers upon the sale of the gin and containers at a single
price.
After hearing the parties, the trial court rendered its decision, dated 03 December 1991,
holding against LTDI; viz:
WHEREFORE, premises considered, the complaint is hereby DISMISSED and plaintiff
is ordered:
1. To return to defendant the 18,157 empty bottles seized by virtue of the writ for the
Seizure of Personal Property issued by this Court on November 6, 1987;
2. In the event of failure to return said empty bottles, plaintiff is ordered to indemnify
defendant in the amount of P18,157.00 representing the value of the bottles.
1
3. Costs against plaintiff.
LTDI appealed the decision to the Court of Appeals (CA-G.R. CV No. 36971). The
appellate court reversed the court a quo and ruled against Washington; thus:
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE. The
appellant, being the owner, is authorized to retain in its possession the 18,157 bottles
registered in its name delivered to it by the sheriff following their seizure from the
appellee pursuant to the writ of replevin issued by the trial court on November 6, 1987.
2
Costs against the appellee.
Washington is now before this Court assailing the reversal of the trial court's decision. In
its petition, Washington points out that —
4.00.a. Under the undisputed facts, petitioner is the lawful owner of the personal
properties (18,157 empty bottles) involved in the petition. Respondent LTDI is precluded
by law from claiming the same;
4.00.b. The decision and resolution appealed from violate equity and applicable canons
in the interpretation and construction of statutes; and
4.00.c. Liquor products are not covered by Republic Act. No. 623. The holding of the
Court in Cagayan Valley Enterprises, Inc. vs. Honorable Court of Appeals, 179 SCRA
218 [1989] should be reviewed and reconsidered in light of the Constitution and House
3
Bill No. 20585.
It is a fact that R.A. No. 623 extends trademark protection in the use of containers duly
registered with the Philippine Patent Office. The pertinent provisions of R.A. 623, as
amended, so reads:
Sec. 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
manufacture, compressing or selling of gases such as oxygen, acetylene, nitrogen,
carbon dioxide, ammonia, hydrogen, chloride, helium, sulphur dioxide, butane, propane,
freon, methyl chloride or similar gases contained in steel cylinders, tanks, flasks,
accumulators or similar containers, with their names 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 are 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 successfully 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, dispose 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,
4
shall give rise to a prima facie presumption that such use or possession is unlawful.
As the outset, the Court must state that is sees no cogent reason for either departing
from or changing the basic rule it laid down in Cagayan Valley Enterprises,
5
Inc., vs. Court of Appeals. The Court has there held:
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 form 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 "properly 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.
xxx xxx xxx
The claim of petitioner that hard liquor is not included under the term "other lawful
beverages" as provided in Section 1 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.
Hard liquor, although regulated, is not prohibited by law, hence it is within the purview
6
and coverage of Republic Act No. 623, as amended.
Given the nature of the action in Cagayan, as well as its factual milieu, the Court indeed
hardly has had a choice but to sustain the registrant's right to the injunctive writ against
the unauthorized use of its containers. The case before us, however, goes beyond just
seeking to have such use stopped but it so takes on even the ownership issue as well.
Parenthetically, petitioner is not here being charged with a violation of Section 2 of R.A.
No. 623 or of the Trademark Law. The instant suit is one for replevin (manual delivery)
where the claimant must be able to show convincingly that he is either the owner or
clearly entitled to the possession of the object sought to be recovered. Replevin is a
possessory action the gist of which focuses on the right of possession that, in turn, is
dependent on a legal basis that, not infrequently, looks to the ownership of the object
sought to be replevied.
It is to be pointed out that a trademark refers to a word, name, symbol, emblem, sign or
device or any combination thereof adopted and used by a merchant to identify, and
distinguish from others, his goods of commerce. It is basically an intellectual creation
7
that is susceptible to ownership and, consistently therewith, gives rise to its own
elements of jus posidendi, jus utendi, jus fruendi, jus disponendi, and jus abutendi,
along with the applicable jus lex, comprising that ownership. The incorporeal right,
however, is distinct from the property in the material object subject to it. Ownership in
one does not necessarily vest ownership in the other. Thus, the transfer or assignment
of the intellectual property will not necessarily constitute a conveyance of the thing it
covers, nor would a conveyance of the latter imply the transfer or assignment of the
8
intellectual right.
R.A. No. 623 evidently does not disallow the sale or transfer of ownership of the marked
bottles or containers. In fact, the contrary is implicit in the law; thus —
Sec. 5. No action shall be brought under this Act against any person to whom the
registered manufacturer, bottler or seller, has transferred by way of sale, any of the
containers herein referred to, but the sale of the beverage contained in the said
containers shall not include the sale of the containers unless specifically so provided.
Sec. 6. The provisions of this Act shall not be interpreted as prohibiting the use of bottles
as containers for "sisi," "bagoong," "patis," and similar native products.
Scarcely disputed are certain and specific industry practices in the sale of gin: The
manufacturer sells the product in marked containers, through dealers, to the public in
supermarkets, grocery shops, retail stores and other sales outlets. The buyer takes the
item; he is neither required to return the bottle nor required to make a deposit to assure
its return to the seller. He could return the bottle and get a refund. A number of bottles at
times find their way to commercial users. It cannot be gainsaid that ownership of the
containers does pass on to the consumer albeit subject to the statutory limitation on the
use of the registered containers and to the trademark right of the registrant. The
statement in Section 5 of R.A. 623 to the effect that the "sale of beverage contained in
the said containers shall not include the sale of the containers unless specifically so
provided" is not a rule of proscription. It is a rule of construction that, in keeping with the
spirit and intent of the law, establishes at best a presumption (of non-conveyance of the
container) and which by no means can be taken to be either interdictive or conclusive in
character. Upon the other hand, LTDI's sales invoice, stipulating that the "sale does not
include the bottles with the blown-in marks of ownership of La Tondeña Distillers,"
cannot affect those who are not privies thereto.
While it may be unwarranted then for LTDI to simply seize the empty containers, this
Court finds it to be legally absurd, however, to still allow petitioner to recover the
possession thereof. The fact of the matter is that R.A. 623, as amended, in affording
trademark protection to the registrant, has additionally expressed a prima
facie presumption of illegal use by a possessor whenever such use or possession is
without the written permission of the registered manufacturer, a provision that is neither
arbitrary nor without appropriate rationale. Indeed, the appellate court itself has made a
finding of such unauthorized use by petitioner. The Court sees no other logical purpose
for petitioner's insistence to keep the bottles, except for such continued use. The
practical and feasible alternative is to merely require the payment of just compensation
to petitioner for the bottles seized from it by LTDI. Conventional wisdom, along with
equity and justice to both parties, dictates it.
WHEREFORE, the decision of the appellate court is MODIFIED by ordering LTDI to pay
petitioner just compensation for the seized bottles. Instead, however, of remanding the
case to the Court of Appeals to receive evidence on, and thereafter resolve, the
assessment thereof, this Court accepts and accordingly adopts the quantification of
P18,157.00 made by the trial court. No costs.
SO ORDERED.
ANA L. ANG, petitioner,
vs.
TORIBIO TEODORO, respondent.
OZAETA, J.:
Petitioner has appealed to this Court by certiorari to reverse the judgment of the Court of
Appeals reversing that of the Court of First Instance of Manila and directing the Director
of Commerce to cancel the registration of the trade-mark "Ang Tibay" in favor of said
petitioner, and perpetually enjoining the latter from using said trade-mark on goods
manufactured and sold by her.
Respondent Toribio Teodoro, at first in partnership with Juan Katindig and later as sole
proprietor, has continuously used "Ang Tibay," both as a trade-mark and as a
trade-name, in the manufacture and sale of slippers, shoes, and indoor baseballs since
1910. He formally registered it as trade-mark on September 29, 1915, and as
trade-name on January 3, 1933. The growth of his business is a thrilling epic of Filipino
industry and business capacity. Starting in an obscure shop in 1910 with a modest
capital of P210 but with tireless industry and unlimited perseverance, Toribio Teodoro,
then an unknown young man making slippers with his own hands but now a prominent
business magnate and manufacturer with a large factory operated with modern
machinery by a great number of employees, has steadily grown with his business to
which he has dedicated the best years of his life and which he has expanded to such
proportions that his gross sales from 1918 to 1938 aggregated P8,787,025.65. His sales
in 1937 amounted to P1,299,343.10 and in 1938, P1,133,165.77. His expenses for
advertisement from 1919 to 1938 aggregated P210,641.56.
Petitioner (defendant below) registered the same trade-mark "Ang Tibay" for pants and
shirts on April 11, 1932, and established a factory for the manufacture of said articles in
the year 1937. In the following year (1938) her gross sales amounted to P422,682.09.
Neither the decision of the trial court nor that of the Court of Appeals shows how much
petitioner has spent or advertisement. But respondent in his brief says that petitioner
"was unable to prove that she had spent a single centavo advertising "Ang Tibay" shirts
and pants prior to 1938. In that year she advertised the factory which she had just built
and it was when this was brought to the attention of the appellee that he consulted his
attorneys and eventually brought the present suit."
The trial court (Judge Quirico Abeto) presiding absolved the defendant from the
complaint, with costs against the plaintiff, on the grounds that the two trademarks are
dissimilar and are used on different and non-competing goods; that there had been no
exclusive use of the trade-mark by the plaintiff; and that there had been no fraud in the
use of the said trade-mark by the defendant because the goods on which it is used are
essentially different from those of the plaintiff. The second division of the Court of
Appeals, composed of Justices Bengson, Padilla, Lopez Vito, Tuason, and Alex Reyes,
with Justice Padilla as ponente, reversed that judgment, holding that by uninterrupted an
exclusive use since 191 in the manufacture of slippers and shoes, respondent's
trade-mark has acquired a secondary meaning; that the goods or articles on which the
two trade-marks are used are similar or belong to the same class; and that the use by
petitioner of said trade-mark constitutes a violation of sections 3 and 7 of Act No. 666.
The defendant Director of Commerce did not appeal from the decision of the Court of
Appeals.
First. Counsel for the petitioner, in a well-written brief, makes a frontal sledge-hammer
attack on the validity of respondent's trade-mark "Ang Tibay." He contends that the
phrase "Ang Tibay" as employed by the respondent on the articles manufactured by him
is a descriptive term because, "freely translate in English," it means "strong, durable,
lasting." He invokes section 2 of Act No. 666, which provides that words or devices
which related only to the name, quality, or description of the merchandise cannot be the
subject of a trade-mark. He cites among others the case of Baxter vs. Zuazua (5 Phil.,
16), which involved the trade-mark "Agua de Kananga" used on toilet water, and in
which this Court held that the word "Kananga," which is the name of a well-known
Philippine tree or its flower, could not be appropriated as a trade-mark any more than
could the words "sugar," "tobacco," or "coffee." On the other hand, counsel for the
respondent, in an equally well-prepared and exhaustive brief, contend that the words
"Ang Tibay" are not descriptive but merely suggestive and may properly be regarded as
fanciful or arbitrary in the legal sense. The cite several cases in which similar words
have been sustained as valid trade-marks, such as "Holeproof" for hosiery, 1 "ideal for
tooth brushes, 2 and "Fashionknit" for neckties and sweaters. 3
We find it necessary to go into the etymology and meaning of the Tagalog words "Ang
Tibay" to determine whether they are a descriptive term, i.e., whether they relate to the
quality or description of the merchandise to which respondent has applied them as a
trade-mark. The word "ang" is a definite article meaning "the" in English. It is also used
as an adverb, a contraction of the word "anong" (what or how). For instance, instead of
saying, "Anong ganda!" ("How beautiful!"), we ordinarily say, "Ang ganda!" Tibay is a
root word from which are derived the verb magpatibay (to strenghten; the nouns
pagkamatibay (strength, durability), katibayan (proof, support, strength), katibay-tibayan
(superior strength); and the adjectives matibay (strong, durable, lasting), napakatibay
(very strong), kasintibay or magkasintibay (as strong as, or of equal strength). The
phrase "Ang Tibay" is an exclamation denoting administration of strength or durability.
For instance, one who tries hard but fails to break an object exclaims, "Ang tibay!" (How
strong!") It may also be used in a sentence thus, "Ang tibay ng sapatos mo!" (How
durable your shoes are!") The phrase "ang tibay" is never used adjectively to define or
describe an object. One does not say, "ang tibay sapatos" or "sapatos ang tibay" is
never used adjectively to define or describe an object. One does not say, "ang tibay
sapatos" or "sapatos ang tibay" to mean "durable shoes," but "matibay na sapatos" or
"sapatos na matibay."
From all of this we deduce that "Ang Tibay" is not a descriptive term within the meaning
of the Trade-Mark Law but rather a fanciful or coined phrase which may properly and
legally be appropriated as a trade-mark or trade-name. In this connection we do not fail
to note that when the petitioner herself took the trouble and expense of securing the
registration of these same words as a trademark of her products she or her attorney as
well as the Director of Commerce was undoubtedly convinced that said words (Ang
Tibay) were not a descriptive term and hence could be legally used and validly
registered as a trade-mark. It seems stultifying and puerile for her now to contend
otherwise, suggestive of the story of sour grapes. Counsel for the petitioner says that the
function of a trade-mark is to point distinctively, either by its own meaning or by
association, to the origin or ownership of the wares to which it is applied. That is correct,
and we find that "Ang Tibay," as used by the respondent to designate his wares, had
exactly performed that function for twenty-two years before the petitioner adopted it as a
trade-mark in her own business. Ang Tibay shoes and slippers are, by association,
known throughout the Philippines as products of the Ang Tibay factory owned and
operated by the respondent Toribio Teodoro.
Second. In her second assignment of error petitioner contends that the Court of Appeals
erred in holding that the words "Ang Tibay" had acquired a secondary meaning. In view
of the conclusion we have reached upon the first assignment of error, it is unnecessary
to apply here the doctrine of "secondary meaning" in trade-mark parlance. This doctrine
is to the effect that a word or phrase originally incapable of exclusive appropriation with
reference to an article of the market, because geographically or otherwise descriptive,
might nevertheless have been used so long and so exclusively by one producer with
reference to his article that, in that trade and to that branch of the purchasing public, the
word or phrase has come to mean that the article was his product. (G. & C. Merriam Co.
vs. Salfield, 198 F., 369, 373.) We have said that the phrase "Ang Tibay," being neither
geographic nor descriptive, was originally capable of exclusive appropriation as a
trade-mark. But were it not so, the application of the doctrine of secondary meaning
made by the Court of Appeals could nevertheless be fully sustained because, in any
event, by respondent's long and exclusive use of said phrase with reference to his
products and his business, it has acquired a proprietary connotation. (Landers, Frary,
and Clark vs. Universal Cooler Corporation, 85 F. [2d], 46.)
Third. Petitioner's third assignment of error is, that the Court of Appeals erred in holding
that pants and shirts are goods similar to shoes and slippers within the meaning of
sections 3 and 7 of Act No. 666. She also contends under her fourth assignment of error
(which we deem convenient to pass upon together with the third) that there can neither
be infringement of trade-mark under section 3 nor unfair competition under section 7
through her use of the words "Ang Tibay" in connection with pants and shirts, because
those articles do not belong to the same class of merchandise as shoes and slippers.
The question raised by petitioner involve the scope and application of sections 3,7, 11,
13, and 20 of the Trade-Mark Law (Act No. 666.) Section 3 provides that "any person
entitled to the exclusive use of a trade-mark to designate the origin or ownership of
goods he has made or deals in, may recover damages in a civil actions from any person
who has sold goods of a similar kind, bearing such trade-mark . . . The complaining
party . . . may have a preliminary injunction, . . . and such injunction upon final hearing, if
the complainant's property in the trade-mark and the defendant's violation thereof shall
be fully established, shall be made perpetual, and this injunction shall be part of the
judgment for damages to be rendered in the same cause." Section 7 provides that any
person who, in selling his goods, shall give them the general appearance of the goods of
another either in the wrapping of the packages, or in 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 the complainant, shall be guilty of unfair
competition, and shall be liable to an action for damages and to an injunction, as in the
cases of trade-mark infringement under section 3. Section 11 requires the applicant for
registration of a trade-mark to state, among others, "the general class of merchandise to
which the trade-mark claimed has been appropriated." Section 13 provides that no
alleged trade-mark or trade name shall be registered which is identical with a registered
or known trade-mark owned by another and appropriate to the same class of
merchandise, or which to nearly resembles another person's lawful trade-mark or
trade-name as to be likely to cause confusion or mistake in the mind of the public, or to
deceive purchasers. And section 2 authorizes the Director of Commerce to establish
classes of merchandise for the purpose of the registration of trade-marks and to
determine the particular description of articles included in each class; it also provides
that "an application for registration of a trade-mark shall be registered only for one class
of articles and only for the particular description of articles mentioned in said
application."
We have underlined the key words used in the statute: "goods of a similar kin," "general
class of merchandise," "same class of merchandise," "classes of merchandise," and
"class of articles," because it is upon their implications that the result of the case hinges.
These phrases, which refer to the same thing, have the same meaning as the phrase
"merchandise of the same descriptive properties" used in the statutes and jurisprudence
of other jurisdictions.
The burden of petitioner's argument is that under sections 11 and 20 the registration by
respondent of the trade-mark "Ang Tibay" for shoes and slippers is no safe-guard
against its being used by petitioner for pants and shirts because the latter do not belong
to the same class of merchandise or articles as the former; that she cannot be held guilty
of infringement of trade-mark under section 3 because respondent's mark is not a valid
trade-mark, nor has it acquired a secondary meaning; that pants and shirts do not
possess the same descriptive properties as shoes and slippers; that neither can she be
held guilty of unfair competition under section 7 because the use by her of the
trade-mark "Ang Tibay" upon pants and shirts is not likely to mislead the general public
as to their origin or ownership; and that there is now showing that she in unfairly or
fraudulently using that mark "Ang Tibay" against the respondent. If we were interpreting
the statute for the first time and in the first decade of the twentieth century, when it was
enacted, and were to construe it strictly and literally, we might uphold petitioner's
contentions. But law and jurisprudence must keep abreast with the progress of mankind,
and the courts must breathe life into the statutes if they are to serve their purpose. Our
Trade-mark Law, enacted nearly forty years ago, has grown in its implications and
practical application, like a constitution, in virtue of the life continually breathed into it. It
is not of merely local application; it has its counterpart in other jurisdictions of the
civilized world from whose jurisprudence it has also received vitalizing nourishment. We
have to apply this law as it has grown and not as it was born. Its growth or development
abreast with that of sister statutes and jurisprudence in other jurisdictions is reflected in
the following observation of a well-known author:
This fundamental change in attitude first manifested itself in the year 1915-1917. Until
about then, the courts had proceeded on the theory that the same trade-mark, used on
un-like goods, could not cause confusion in trade and that, therefore, there could be no
objection to the use and registration of a well-known mark by a third party for a different
class of goods. Since 1916 however, a growing sentiment began to arise that in the
selection of a famous mark by a third party, there was generally the hidden intention to
"have a free ride" on the trade-mark owner's reputation and good will. (Derenberg,
Trade-Mark Protection & Unfair Trading, 1936 edition, p. 409.)
In the present state of development of the law on Trade-Marks, Unfair Competition, and
Unfair Trading, the test employed by the courts to determine whether noncompeting
goods are or are not of the same class is confusion as to the origin of the goods of the
second user. Although two noncompeting articles may be classified under two different
classes by the Patent Office because they are deemed not to possess the same
descriptive properties, they would, nevertheless, be held by the courts to belong to the
same class if the simultaneous use on them of identical or closely similar trade-marks
would be likely to cause confusion as to the origin, or personal source, of the second
user's goods. They would be considered as not falling under the same class only if they
are so dissimilar or so foreign to each other as to make it unlikely that the purchaser
would think the first user made the second user's goods.
Such construction of the law is induced by cogent reasons of equity and fair dealing. The
courts have come to realize that there can be unfair competition or unfair trading even if
the goods are non-competing, and that such unfair trading can cause injury or damage
to the first user of a given trade-mark, first, by prevention of the natural expansion of his
business and, second, by having his business reputation confused with and put at the
mercy of the second user. Then noncompetitive products are sold under the same mark,
the gradual whittling away or dispersion of the identity and hold upon the public mind of
the mark created by its first user, inevitably results. The original owner is entitled to the
preservation of the valuable link between him and the public that has been created by
his ingenuity and the merit of his wares or services. Experience has demonstrated that
when a well-known trade-mark is adopted by another even for a totally different class of
goods, it is done to get the benefit of the reputation and advertisements of the originator
of said mark, to convey to the public a false impression of some supposed connection
between the manufacturer of the article sold under the original mark and the new articles
being tendered to the public under the same or similar mark. As trade has developed
and commercial changes have come about, the law of unfair competition has expanded
to keep pace with the times and the element of strict competition in itself has ceased to
be the determining factor. The owner of a trade-mark or trade-name has a property right
in which he is entitled to protection, since there is damage to him from confusion of
reputation or goodwill in the mind of the public as well as from confusion of goods. The
modern trend is to give emphasis to the unfairness of the acts and to classify and treat
the issue as a fraud.
A few of the numerous cases in which the foregoing doctrines have been laid down in
one form or another will now be cited: (1) In Teodoro Kalaw Ng Khe vs. Level Brothers
Company (G.R. No. 46817), decided by this Court on April 18, 1941, the respondent
company (plaintiff below) was granted injunctive relief against the use by the petitioner
of the trade-mark "Lux" and "Lifebuoy" for hair pomade, they having been originally used
by the respondent for soap; The Court held in effect that although said articles are
noncompetitive, they are similar or belong to the same class. (2) In Lincoln Motor Co. vs.
Lincoln Automobile Co. (44 F. [2d], 812), the manufacturer of the well-known Lincoln
automobile was granted injunctive relief against the use of the word "Lincoln" by another
company as part of its firm name. (3) The case of Aunt Jemima Mills Co. vs. Rigney &
Co. (247 F., 407), involved the trade-mark "Aunt Jemima," originally used on flour, which
the defendant attempted to use on syrup, and there the court held that the goods,
though different, are so related as to fall within the mischief which equity should prevent.
(4) In Tiffany & Co., vs. Tiffany Productions, Inc. (264 N.Y.S., 459; 23 Trade-mark
Reporter, 183), the plaintiff, a jewelry concern, was granted injunctive relief against the
defendant, a manufacturer of motion pictures, from using the name "Tiffany." Other
famous cases cited on the margin, wherein the courts granted injunctive relief, involved
the following trade-marks or trade-names: "Kodak," for cameras and photographic
supplies, against its use for bicycles. 4 "Penslar," for medicines and toilet articles,
against its use for cigars; 5 "Rolls-Royce," for automobiles. against its use for radio
tubes; 6 "Vogue," as the name of a magazine, against its use for hats; 7 "Kotex," for
sanitary napkins, against the use of "Rotex" for vaginal syringes; 8 "Sun-Maid," for
raisins, against its use for flour; 9 "Yale," for locks and keys, against its use for electric
flashlights; 10 and "Waterman," for fountain pens, against its use for razor blades.
11lawphil.net
Against this array of famous cases, the industry of counsel for the petitioner has enabled
him to cite on this point only the following cases: (1) Mohawk Milk Products vs. General
Distilleries Corporation (95 F. [2d], 334), wherein the court held that gin and canned milk
and cream do not belong to the same class; (2) Fawcett Publications, Inc. vs. Popular
Mechanics Co. (80 F. [2d], 194), wherein the court held that the words "Popular
Mechanics" used as the title of a magazine and duly registered as a trade-mark were not
infringed by defendant's use of the words "Modern Mechanics and Inventions" on a
competitive magazine, because the word "mechanics" is merely a descriptive name; and
(3) Oxford Book Co. vs. College Entrance Book Co. (98 F. [2d], 688), wherein the
plaintiff unsuccessfully attempted to enjoin the defendant from using the word
"Visualized" in connection with history books, the court holding that said word is merely
descriptive. These cases cites and relied upon by petitioner are obviously of no decisive
application to the case at bar.
We think reasonable men may not disagree that shoes and shirts are not as unrelated
as fountain pens and razor blades, for instance. The mere relation or association of the
articles is not controlling. As may readily be noted from what we have heretofore said,
the proprietary connotation that a trade-mark or trade-name has acquired is of more
paramount consideration. The Court of Appeals found in this case that by uninterrupted
and exclusive use since 1910 of respondent's registered trade-mark on slippers and
shoes manufactured by him, it has come to indicate the origin and ownership of said
goods. It is certainly not farfetched to surmise that the selection by petitioner of the same
trade-mark for pants and shirts was motivated by a desire to get a free ride on the
reputation and selling power it has acquired at the hands of the respondent. As
observed in another case, 12 the field from which a person may select a trade-mark is
practically unlimited, and hence there is no excuse for impinging upon or even closely
approaching the mark of a business rival. In the unlimited field of choice, what could
have been petitioner's purpose in selecting "Ang Tibay" if not for its fame?
Lastly, in her fifth assignment of error petitioner seems to make a frantic effort to retain
the use of the mark "Ang Tibay." Her counsel suggests that instead of enjoining her from
using it, she may be required to state in her labels affixed to her products the inscription:
"Not manufactured by Toribio Teodoro." We think such practice would be unethical and
unworthy of a reputable businessman. To the suggestion of petitioner, respondent may
say, not without justice though with a tinge of bitterness: "Why offer a perpetual apology
or explanation as to the origin of your products in order to use my trade-mark instead of
creating one of your own?" On our part may we add, without meaning to be harsh, that a
self-respecting person does not remain in the shelter of another but builds one of his
own.
The judgment of the Court of Appeals is affirmed, with costs against the petitioner in the
three instances. So ordered.
ETEPHA, A.G., petitioner, vs. DIRECTOR OF PATENTS and WESTMONT
PHARMACEUTICALS, INC., respondents.
SANCHEZ, J.:
To the question: May trademark ATUSSIN be registered, given the fact that
PERTUSSIN, another trademark, had been previously registered in the Patent Office?
— the Director of Patents answered affirmatively. Hence this appeal.
On April 23, 1959, respondent Westmont Pharmaceuticals, Inc., a New York corporation,
sought registration of trademark "Atussin" placed on its "medicinal preparation of
expectorant antihistaminic, bronchodilator sedative, ascorbic acid (Vitamin C) used in
the treatment of cough". The trademark is used exclusively in the Philippines since
January 21, 1959.1
Petitioner, Etepha, A. G., a Liechtenstin (principality) corporation, objected. Petitioner
claims that it will be damaged because Atussin is so confusedly similar to its Pertussin
(Registration No. 6089, issued on September 25, 1957) used on a preparation for the
treatment of coughs, that the buying public will be misled into believing that Westmont's
product is that of petitioner's which allegedly enjoys goodwill.
1. The objects of a trademark are "to point out distinctly the origin or ownership of the
articles to which it is affixed, to secure to him who has been instrumental in bringing into
market a superior article or merchandise the fruit of his industry and skill, and to prevent
fraud and imposition."2 Our over-all task then is to ascertain whether or not Atussin so
resembles Pertussin "as to be likely, when applied to or used in connection with the
goods ... of the applicant, to cause confusion or mistake or to deceive purchasers".3 And,
we are to be guided by the rule that the validity of a cause for infringement is predicated
upon colorable imitation. The phrase "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, and to cause him to purchase the one supposing it to be
the other."4
2. That the word "tussin" figures as a component of both trademarks is nothing to
wonder at. The Director of Patents aptly observes that it is "the common practice in the
drug and pharmaceutical industries to 'fabricate' marks by using syllables or words
suggestive of the ailments for which they are intended and adding thereto distinctive
prefixes or suffixes".5 And appropriately to be considered now is the fact that,
concededly, the "tussin" (in Pertussin and Atussin) was derived from the Latin root-word
"tussis" meaning cough.6
"Tussin" is merely descriptive; it is generic; it furnishes to the buyer no indication of the
origin of the goods; it is open for appropriation by anyone. It is accordingly barred from
registration as trademark. With jurisprudence holding the line, we feel safe in making the
statement that any other conclusion would result in "appellant having practically a
monopoly"7 of the word "tussin" in a trademark.8
While "tussin" by itself cannot thus be used exclusively to identify one's goods, it may
properly become the subject of a trademark "by combination with another word or
phrase".9 And this union of words is reflected in petitioner's Pertussin and respondent's
Atussin, the first with prefix "Per" and the second with Prefix "A".1äwphï1.ñët
3. A practical approach to the problem of similarity or dissimilarity is to go into the whole
of the two trademarks pictured in their manner of display. Inspection should be
undertaken from the viewpoint of a prospective buyer. The trademark complained of
should be compared and contrasted with the purchaser's memory (not in juxtaposition)
of the trademark said to be infringed. 10 Some such factors as "sound; appearance;
form, style, shape, size or format; color; ideas connoted by marks; the meaning, spelling,
and pronunciation, of words used; and the setting in which the words appear" may be
considered. 11 For, indeed, trademark infringement is a form of unfair competition. 12
We take a casual look at the two labels — without spelling out the details — bearing in
mind the easy-to-remember earmarks thereof. Respondent's label underscores the
trademark Atussin in bold, block letters horizontally written. In petitioner's, on the other
hand, Pertussin is printed diagonally upwards and across in semiscript style with
flourishes and with only the first letter "P" capitalized. Each label plainly shows the
source of the medicine: petitioner's at the foot bears "Etepha Ltd. Schaan Fl", and on top,
"Apothecary E. Taeschner's"; respondent's projects "Westmont Pharmaceuticals, Inc.
New York, USA" at the bottoms, and on the lower left side the word "Westmont" upon a
white diamond shaped enclosure and in red ink — a color different from that of the
words above and below it. Printed prominently along the left, bottom and right edges of
petitioner's label are indications of the use: "for bronchial catarrh — whopping-cough —
coughs and asthma". Respondent's for its part briefly represents what its produce
actually is - a "cough syrup". The two labels are entirely different in colors, contents,
arrangement of words thereon, sizes, shapes and general appearance. The contrasts in
pictorial effects and appeals to the eye is so pronounced that the label of one cannot be
mistaken for that of the other, not even by persons unfamiliar with the two trademarks.
13
On this point the following culled from a recent decision of the United States Court of
Customs and Patent Appeals (June 15, 1956) is persuasive: 14
Confusion is likely between trademarks, however, only if their over-all presentations in
any of the particulars of sound, appearance, or meaning are such as would lead the
purchasing public into believing that the products to which the marks are applied
emanated from the same source. In testing this issue, fixed legal rules exist — if not in
harmony, certainly in abundance — but, in the final analysis, the application of these
rules in any given situation necessarily reflects a matter of individual judgment largely
predicated on opinion. There is, however, and can be no disagreement with the rule that
the purchaser is confused, if at all, by the marks as a whole.
4. We now consider exclusively the two words — Pertussin and Atussin — as they
appear on the respective labels. As previously adverted to, these words are presented
to the public in different styles of writing and methods of design. The horizontal plain,
block letters of Atussin and the diagonally and artistically upward writing of Pertussin
leave distinct visual impressions. One look is enough to denude the mind of that
illuminating similarity so essential for a trademark infringement case to prosper.
5. As we take up Pertussin and Atussin once again, we cannot escape notice of the fact
that the two words do not sound alike — when pronounced. There is not much phonetic
similarity between the two. The Solicitor General well-observed that in Pertussin the
pronunciation of the prefix "Per", whether correct or incorrect, includes a combination of
three letters P, e and r; whereas, in Atussin the whole starts with the single letter A
added to suffix "tussin". Appeals to the ear are disimilar. And this, because in a word
combination, the part that comes first is the most pronounced. An expositor of the
applicable rule here is the decision in the Syrocol-Cheracol controversy. 15 There, the
ruling is that trademark Syrocol (a cough medicine preparation) is not confusedly similar
to trademark Cheracol (also a cough medicine preparation). Reason: the two words "do
not look or sound enough alike to justify a holding of trademark infringement", and the
"only similarity is in the last syllable, and that is not uncommon in names given drug
compounds".

6. In the solution of a trademark infringement problem, regard too should be given to the
class of persons who buy the particular product and the circumstances ordinarily
attendant to its acquisition. 16 The medicinal preparation clothed with the trademarks in
question, are unlike articles of everyday use such as candies, ice cream, milk, soft
drinks and the like which may be freely obtained by anyone, anytime, anywhere.
Petitioner's and respondent's products are to be dispensed upon medical prescription.
The respective labels say so. An intending buyer must have to go first to a licensed
doctor of medicine; he receives instructions as to what to purchase; he reads the
doctor's prescription; he knows what he is to buy. He is not of the incautious, unwary,
unobservant or unsuspecting type; he examines the product sold to him; he checks to
find out whether it conforms to the medical prescription. The common trade channel is
the pharmacy or the drugstore. Similarly, the pharmacist or druggist verifies the
medicine sold. The margin of error in the acquisition of one for the other is quite remote.

We concede the possibility that buyers might be able to obtain Pertussin or Attusin
without prescription. When this happens, then the buyer must be one throughly familiar
with what he intends to get, else he would not have the temerity to ask for a medicine —
specifically needed to cure a given ailment. In which case, the more improbable it will be
to palm off one for the other. For a person who purchases with open eyes is hardly the
man to be deceived.

For the reasons given, the appealed decision of the respondent Director of Patents —
giving due course to the application for the registration of trademark ATTUSIN is hereby
affirmed. Costa against petitioner. So ordered.
PRIBHDAS J. MIRPURI, petitioner, vs. COURT OF APPEALS, DIRECTOR OF
PATENTS and the BARBIZON CORPORATION, respondents.
PUNO, J.:
The Convention of Paris for the Protection of Industrial Property is a multi-lateral treaty
which the Philippines bound itself to honor and enforce in this country. As to whether or
not the treaty affords protection to a foreign corporation against a Philippine applicant for
the registration of a similar trademark is the principal issue in this case.
On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of petitioner Pribhdas
J. Mirpuri, filed an application with the Bureau of Patents for the registration of the
trademark "Barbizon" for use in brassieres and ladies undergarments. Escobar alleged
that she had been manufacturing and selling these products under the firm name "L &
BM Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation organized and doing business
under the laws of New York, U.S.A., opposed the application. It claimed that:
The mark BARBIZON of respondent-applicant is confusingly similar to the trademark
BARBIZON which opposer owns and has not abandoned.
That opposer will be damaged by the registration of the mark BARBIZON and its
business reputation and goodwill will suffer great and irreparable injury.
That the respondent-applicant's use of the said mark BARBIZON which resembles the
trademark used and owned by opposer, constitutes an unlawful appropriation of a mark
previously used in the Philippines and not abandoned and therefore a statutory violation
of Section 4 (d) of Republic Act No. 166, as amended. 1
This was docketed as Inter Partes Case No. 686 (IPC No. 686). After filing of the
pleadings, the parties submitted the case for decision.
On June 18, 1974, the Director of Patents rendered judgment dismissing the opposition
and giving due course to Escobar's application, thus:
WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,
Application Serial No. 19010 for the registration of the trademark BARBIZON, of
respondent Lolita R. Escobar, is given due course.
IT IS SO ORDERED. 2
This decision became final and on September 11, 1974, Lolita Escobar was issued a
certificate of registration for the trademark "Barbizon." The trademark was "for use in
"brassieres and lady's underwear garments like panties." 3
Escobar later assigned all her rights and interest over the trademark to petitioner
Pribhdas J. Mirpuri who, under his firm name then, the "Bonito Enterprises," was the
sole and exclusive distributor of Escobar's "Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of Use of
the trademark required under Section 12 of Republic Act (R.A.) No. 166, the Philippine
Trademark Law. Due to this failure, the Bureau of Patents cancelled Escobar's
certificate of registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled trademark. Mirpuri
filed his own application for registration of Escobar's trademark. Escobar later assigned
her application to herein petitioner and this application was opposed by private
respondent. The case was docketed as Inter Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
(a) The Opposer has adopted the trademark BARBIZON (word), sometime in June 1933
and has then used it on various kinds of wearing apparel. On August 14, 1934, Opposer
obtained from the United States Patent Office a more recent registration of the said mark
under Certificate of Registration No. 316,161. On March 1, 1949, Opposer obtained from
the United States Patent Office a more recent registration for the said trademark under
Certificate of Registration No. 507,214, a copy of which is herewith attached as Annex
"A." Said Certificate of Registration covers the following goods — wearing apparel:
robes, pajamas, lingerie, nightgowns and slips;
(b) Sometime in March 1976, Opposer further adopted the trademark BARBIZON and
Bee design and used the said mark in various kinds of wearing apparel. On March 15,
1977, Opposer secured from the United States Patent Office a registration of the said
mark under Certificate of Registration No. 1,061,277, a copy of which is herein enclosed
as Annex "B." The said Certificate of Registration covers the following goods: robes,
pajamas, lingerie, nightgowns and slips;
(c) Still further, sometime in 1961, Opposer adopted the trademark BARBIZON and a
Representation of a Woman and thereafter used the said trademark on various kinds of
wearing apparel. Opposer obtained from the United States Patent Office registration of
the said mark on April 5, 1983 under Certificate of Registration No. 1,233,666 for the
following goods: wearing apparel: robes, pajamas, nightgowns and lingerie. A copy of
the said certificate of registration is herewith enclosed as Annex "C."
(d) All the above registrations are subsisting and in force and Opposer has not
abandoned the use of the said trademarks. In fact, Opposer, through a wholly-owned
Philippine subsidiary, the Philippine Lingerie Corporation, has been manufacturing the
goods covered by said registrations and selling them to various countries, thereby
earning valuable foreign exchange for the country. As a result of respondent-applicant's
misappropriation of Opposer's BARBIZON trademark, Philippine Lingerie Corporation is
prevented from selling its goods in the local market, to the damage and prejudice of
Opposer and its wholly-owned subsidiary.
(e) The Opposer's goods bearing the trademark BARBIZON have been used in many
countries, including the Philippines, for at least 40 years and has enjoyed international
reputation and good will for their quality. To protect its registrations in countries where
the goods covered by the registrations are being sold, Opposer has procured the
registration of the trademark BARBIZON in the following countries: Australia, Austria,
Abu Dhabi, Argentina, Belgium, Bolivia, Bahrain, Canada, Chile, Colombia, Denmark,
Ecuador, France, West Germany, Greece, Guatemala, Hongkong, Honduras, Italy,
Japan, Jordan, Lebanon, Mexico, Morocco, Panama, New Zealand, Norway, Sweden,
Switzerland, Syria, El Salvador, South Africa, Zambia, Egypt, and Iran, among others;
(f) To enhance its international reputation for quality goods and to further promote
goodwill over its name, marks and products, Opposer has extensively advertised its
products, trademarks and name in various publications which are circulated in the
United States and many countries around the world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in the Philippines by one
Lolita R. Escobar under Registration No. 21920, issued on September 11, 1974, in
violation of Article 189 (3) of the Revised Penal Code and Section 4 (d) of the Trademark
Law. Herein respondent applicant acquired by assignment the "rights" to the said mark
previously registered by Lolita Escobar, hence respondent-applicant's title is vitiated by
the same fraud and criminal act. Besides, Certificate of Registration No. 21920 has been
cancelled for failure of either Lolita Escobar or herein respondent-applicant, to
seasonably file the statutory affidavit of use. By applying for a re-registration of the mark
BARBIZON subject of this opposition, respondent-applicant seeks to perpetuate the
fraud and criminal act committed by Lolita Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and BARBIZON
and Representation of a Woman trademarks qualify as well-known trademarks entitled
to protection under Article 6bis of the Convention of Paris for the Protection of Industrial
Property and further amplified by the Memorandum of the Minister of Trade to the
Honorable Director of Patents dated October 25, 1983 [sic], 4 Executive Order No. 913
dated October 7, 1963 and the Memorandum of the Minister of Trade and Industry to the
Honorable Director of Patents dated October 25, 1983.
(i) The trademark applied for by respondent applicant is identical to Opposer's
BARBIZON trademark and constitutes the dominant part of Opposer's two other marks
namely, BARBIZON and Bee design and BARBIZON and a Representation of a Woman.
The continued use by respondent-applicant of Opposer's trademark BARBIZON on
goods belonging to Class 25 constitutes a clear case of commercial and criminal piracy
and if allowed registration will violate not only the Trademark Law but also Article 189 of
the Revised Penal Code and the commitment of the Philippines to an international treaty.
5
Replying to private respondent's opposition, petitioner raised the defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the business name
"Barbizon International." Petitioner registered the name with the Department of Trade
and Industry (DTI) for which a certificate of registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition
for cancellation of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's certificate
of registration, and declared private respondent the owner and prior user of the business
name "Barbizon International." Thus:
WHEREFORE, the petition is hereby GRANTED and petitioner is declared the owner
and prior user of the business name "BARBIZON INTERNATIONAL" under Certificate of
Registration No. 87-09000 dated March 10, 1987 and issued in the name of respondent,
is [sic] hereby ordered revoked and cancelled. . . . . 6
Meanwhile, in IPC No. 2049, the evidence of both parties were received by the Director
of Patents. On June 18, 1992, the Director rendered a decision declaring private
respondent's opposition barred by res judicata and giving due course to petitioner's
application for registration, to wit:
WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is hereby
DECLARED BARRED by res judicata and is hereby DISMISSED. Accordingly,
Application Serial No. 45011 for trademark BARBIZON filed by Pribhdas J. Mirpuri is
GIVEN DUE COURSE.
SO ORDERED. 7
Private respondent questioned this decision before the Court of Appeals in CA-G.R. SP
No. 28415. On April 30, 1993, the Court of Appeals reversed the Director of Patents
finding that IPC No. 686 was not barred by judgment in IPC No. 2049 and ordered that
the case be remanded to the Bureau of Patents for further proceedings, viz:
WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the Director of
Patents in Inter Partes Case No. 2049 is hereby SET ASIDE; and the case is hereby
remanded to the Bureau of Patents for further proceedings, in accordance with this
pronouncement. No costs. 8
In a Resolution dated March 16, 1994, the Court of Appeals denied reconsideration of its
decision. 9 Hence, this recourse.
Before us, petitioner raises the following issues:
1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN INTER
PARTES CASE NO. 686 RENDERED ON JUNE 18, 1974, ANNEX C HEREOF,
CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE BEFORE THE DIRECTOR
OF PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED THE
PRINCIPLE OF RES JUDICATA IN DISMISSING PRIVATE RESPONDENT
BARBIZON'S OPPOSITION TO PETITIONER'S APPLICATION FOR REGISTRATION
FOR THE TRADEMARK BARBIZON, WHICH HAS SINCE RIPENED TO
CERTIFICATE OF REGISTRATION NO. 53920 ON NOVEMBER 16, 1992;
3. WHETHER OR NOT THE REQUISITE THAT A "JUDGMENT ON THE MERITS"
REQUIRED A "HEARING WHERE BOTH PARTIES ARE SUPPOSED TO ADDUCE
EVIDENCE" AND WHETHER THE JOINT SUBMISSION OF THE PARTIES TO A
CASE ON THE BASIS OF THEIR RESPECTIVE PLEADINGS WITHOUT
PRESENTING TESTIMONIAL OR DOCUMENTARY EVIDENCE FALLS WITHIN THE
MEANING OF "JUDGMENT ON THE MERITS" AS ONE OF THE REQUISITES TO
CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND INDUSTRY
CANCELLING PETITIONER'S FIRM NAME "BARBIZON INTERNATIONAL" AND
WHICH DECISION IS STILL PENDING RECONSIDERATION NEVER OFFERED IN
EVIDENCE BEFORE THE DIRECTOR OF PATENTS IN INTER PARTES CASE NO.
2049 HAS THE RIGHT TO DECIDE SUCH CANCELLATION NOT ON THE BASIS OF
THE BUSINESS NAME LAW (AS IMPLEMENTED BY THE BUREAU OF DOMESTIC
TRADE) BUT ON THE BASIS OF THE PARIS CONVENTION AND THE TRADEMARK
LAW (R.A. 166) WHICH IS WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION
OF THE DIRECTOR OF PATENTS. 10
Before ruling on the issues of the case, there is need for a brief background on the
function and historical development of trademarks and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word,
name, symbol, emblem, sign or device or any combination thereof adopted and used by
a manufacturer or merchant to identify his goods and distinguish them from those
manufactured, sold or dealt in by others. 11 This definition has been simplified in R.A.
No. 8293, the Intellectual Property Code of the Philippines, which defines a "trademark"
as "any visible sign capable of distinguishing goods." 12 In Philippine jurisprudence, the
function of a trademark is to point out distinctly the origin or ownership of the goods to
which it is affixed; to secure to him, who has been instrumental in bringing into the
market a superior article of merchandise, the fruit of his industry and skill; to assure the
public that they are procuring the genuine article; to prevent fraud and imposition; and to
protect the manufacturer against substitution and sale of an inferior and different article
as his product. 13
Modern authorities on trademark law view trademarks as performing three distinct
functions: (1) they indicate origin or ownership of the articles to which they are attached;
(2) they guarantee that those articles come up to a certain standard of quality; and (3)
they advertise the articles they symbolize. 14
Symbols have been used to identify the ownership or origin of articles for several
centuries. 15 As early as 5,000 B.C., markings on pottery have been found by
archaeologists. Cave drawings in southwestern Europe show bison with symbols on
their flanks. 16 Archaeological discoveries of ancient Greek and Roman inscriptions on
sculptural works, paintings, vases, precious stones, glassworks, bricks, etc. reveal some
features which are thought to be marks or symbols. These marks were affixed by the
creator or maker of the article, or by public authorities as indicators for the payment of
tax, for disclosing state monopoly, or devices for the settlement of accounts between an
entrepreneur and his workmen. 17
In the Middle Ages, the use of many kinds of marks on a variety of goods was
commonplace. Fifteenth century England saw the compulsory use of identifying marks
in certain trades. There were the baker's mark on bread, bottlemaker's marks, smith's
marks, tanner's marks, watermarks on paper, etc. 18 Every guild had its own mark and
every master belonging to it had a special mark of his own. The marks were not
trademarks but police marks compulsorily imposed by the sovereign to let the public
know that the goods were not "foreign" goods smuggled into an area where the guild
had a monopoly, as well as to aid in tracing defective work or poor craftsmanship to the
artisan. 19 For a similar reason, merchants also used merchants' marks. Merchants
dealt in goods acquired from many sources and the marks enabled them to identify and
reclaim their goods upon recovery after shipwreck or piracy. 20
With constant use, the mark acquired popularity and became voluntarily adopted. It was
not intended to create or continue monopoly but to give the customer an index or
guarantee of quality. 21 It was in the late 18th century when the industrial revolution
gave rise to mass production and distribution of consumer goods that the mark became
an important instrumentality of trade and commerce. 22 By this time, trademarks did not
merely identify the goods; they also indicated the goods to be of satisfactory quality, and
thereby stimulated further purchases by the consuming public. 23 Eventually, they came
to symbolize the goodwill and business reputation of the owner of the product and
became a property right protected by law. 24 The common law developed the doctrine of
trademarks and tradenames "to prevent a person from palming off his goods as
another's, from getting another's business or injuring his reputation by unfair means, and,
from defrauding the public." 25 Subsequently, England and the United States enacted
national legislation on trademarks as part of the law regulating unfair trade. 26 It became
the right of the trademark owner to exclude others from the use of his mark, or of a
confusingly similar mark where confusion resulted in diversion of trade or financial injury.
At the same time, the trademark served as a warning against the imitation or faking of
products to prevent the imposition of fraud upon the public. 27
Today, the trademark is not merely a symbol of origin and goodwill; it is often the most
effective agent for the actual creation and protection of goodwill. It imprints upon the
public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for
further satisfaction. In other words, the mark actually sells the goods. 28 The mark has
become the "silent salesman," the conduit through which direct contact between the
trademark owner and the consumer is assured. It has invaded popular culture in ways
never anticipated that it has become a more convincing selling point than even the
quality of the article to which it refers. 29 In the last half century, the unparalleled growth
of industry and the rapid development of communications technology have enabled
trademarks, tradenames and other distinctive signs of a product to penetrate regions
where the owner does not actually manufacture or sell the product itself. Goodwill is no
longer confined to the territory of actual market penetration; it extends to zones where
the marked article has been fixed in the public mind through advertising. 30 Whether in
the print, broadcast or electronic communications medium, particularly on the Internet,
31 advertising has paved the way for growth and expansion of the product by creating
and earning a reputation that crosses over borders, virtually turning the whole world into
one vast marketplace.
This is the mise-en-scene of the present controversy. Petitioner brings this action
claiming that "Barbizon" products have been sold in the Philippines since 1970.
Petitioner developed this market by working long hours and spending considerable
sums of money on advertisements and promotion of the trademark and its products.
Now, almost thirty years later, private respondent, a foreign corporation, "swaggers into
the country like a conquering hero," usurps the trademark and invades petitioner's
market. 32 Justice and fairness dictate that private respondent be prevented from
appropriating what is not its own. Legally, at the same time, private respondent is barred
from questioning petitioner's ownership of the trademark because of res judicata. 33
Literally, res judicata means a matter adjudged, a thing judicially acted upon or decided;
a thing or matter settled by judgment. 34 In res judicata, the judgment in the first action
is considered conclusive as to every matter offered and received therein, as to any other
admissible matter which might have been offered for that purpose, and all other matters
that could have been adjudged therein. 35 Res judicata is an absolute bar to a
subsequent action for the same cause; and its requisites are: (a) the former judgment or
order must be final; (b) the judgment or order must be one on the merits; (c) it must have
been rendered by a court having jurisdiction over the subject matter and parties; (d)
there must be between the first and second actions, identity of parties, of subject matter
and of causes of action. 36
The Solicitor General, on behalf of respondent Director of Patents, has joined cause with
petitioner. Both claim that all the four elements of res judicata have been complied with:
that the judgment in IPC No. 686 was final and was rendered by the Director of Patents
who had jurisdiction over the subject matter and parties; that the judgment in IPC No.
686 was on the merits; and that the lack of a hearing was immaterial because
substantial issues were raised by the parties and passed upon by the Director of Patents.
37
The decision in IPC No. 686 reads as follows:
xxx xxx xxx.
Neither party took testimony nor adduced documentary evidence. They submitted the
case for decision based on the pleadings which, together with the pertinent records,
have all been carefully considered.
Accordingly, the only issue for my disposition is whether or not the herein opposer would
probably be damaged by the registration of the trademark BARBIZON sought by the
respondent-applicant on the ground that it so resembles the trademark BARBIZON
allegedly used and owned by the former to be "likely to cause confusion, mistake or to
deceive purchasers."
On record, there can be no doubt that respondent-applicant's sought-to-be-registered
trademark BARBIZON is similar, in fact obviously identical, to opposer's alleged
trademark BARBIZON, in spelling and pronunciation. The only appreciable but very
negligible difference lies in their respective appearances or manner of presentation.
Respondent-applicant's trademark is in bold letters (set against a black background),
while that of the opposer is offered in stylish script letters.
It is opposer's assertion that its trademark BARBIZON has been used in trade or
commerce in the Philippines prior to the date of application for the registration of the
identical mark BARBIZON by the respondent-applicant. However, the allegation of facts
in opposer's verified notice of opposition is devoid of such material information. In fact, a
reading of the text of said verified opposition reveals an apparent, if not deliberate,
omission of the date (or year) when opposer's alleged trademark BARBIZON was first
used in trade in the Philippines (see par. No. 1, p. 2, Verified Notice of Opposition, Rec.).
Thus, it cannot here and now be ascertained whether opposer's alleged use of the
trademark BARBIZON could be prior to the use of the identical mark by the herein
respondent-applicant, since the opposer attempted neither to substantiate its claim of
use in local commerce with any proof or evidence. Instead, the opposer submitted the
case for decision based merely on the pleadings.
On the other hand, respondent-applicant asserted in her amended application for
registration that she first used the trademark BARBIZON for brassiere (or "brasseire")
and ladies underwear garments and panties as early as March 3, 1970. Be that as it may,
there being no testimony taken as to said date of first use, respondent-applicant will be
limited to the filing date, June 15, 1970, of her application as the date of first use (Rule
173, Rules of Practice in Trademark Cases).
From the foregoing, I conclude that the opposer has not made out a case of probable
damage by the registration of the respondent-applicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,
Application Serial No. 19010, for the registration of the trademark BARBIZON of
respondent Lolita R. Escobar, is given due course.38
The decision in IPC No. 686 was a judgment on the merits and it was error for the Court
of Appeals to rule that it was not. A judgment is on the merits when it determines the
rights and liabilities of the parties based on the disclosed facts, irrespective of formal,
technical or dilatory objections. 39 It is not necessary that a trial should have been
conducted. If the court's judgment is general, and not based on any technical defect or
objection, and the parties had a full legal opportunity to be heard on their respective
claims and contentions, it is on the merits although there was no actual hearing or
arguments on the facts of the case. 40 In the case at bar, the Director of Patents did not
dismiss private respondent's opposition on a sheer technicality. Although no hearing
was conducted, both parties filed their respective pleadings and were given opportunity
to present evidence. They, however, waived their right to do so and submitted the case
for decision based on their pleadings. The lack of evidence did not deter the Director of
Patents from ruling on the case, particularly on the issue of prior use, which goes into
the very substance of the relief sought by the parties. Since private respondent failed to
prove prior use of its trademark, Escobar's claim of first use was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the Solicitor General
allege that IPC No. 686 and IPC No. 2049 also comply with the fourth requisite of res
judicata, i.e., they involve the same parties and the same subject matter, and have
identical causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties and the same
subject matter. Petitioner herein is the assignee of Escobar while private respondent is
the same American corporation in the first case. The subject matter of both cases is the
trademark "Barbizon." Private respondent counter-argues, however, that the two cases
do not have identical causes of action. New causes of action were allegedly introduced
in IPC No. 2049, such as the prior use and registration of the trademark in the United
States and other countries worldwide, prior use in the Philippines, and the fraudulent
registration of the mark in violation of Article 189 of the Revised Penal Code. Private
respondent also cited protection of the trademark under the Convention of Paris for the
Protection of Industrial Property, specifically Article 6bis thereof, and the implementation
of Article 6bis by two Memoranda dated November 20, 1980 and October 25, 1983 of
the Minister of Trade and Industry to the Director of Patents, as well as Executive Order
(E.O.) No. 913.
The Convention of Paris for the Protection of Industrial Property, otherwise known as the
Paris Convention, is a multilateral treaty that seeks to protect industrial property
consisting of patents, utility models, industrial designs, trademarks, service marks, trade
names and indications of source or appellations of origin, and at the same time aims to
repress unfair competition. 41 The Convention is essentially a compact among various
countries which, as members of the Union, have pledged to accord to citizens of the
other member countries trademark and other rights comparable to those accorded their
own citizens by their domestic laws for an effective protection against unfair competition.
42 In short, foreign nationals are to be given the same treatment in each of the member
countries as that country makes available to its own citizens. 43 Nationals of the various
member nations are thus assured of a certain minimum of international protection of
their industrial property. 44
The Convention was first signed by eleven countries in Paris on March 20, 1883. 45 It
underwent several revisions — at Brussels in 1900, at Washington in 1911, at The
Hague in 1925, at London in 1934, at Lisbon in 1958, 46 and at Stockholm in 1967. Both
the Philippines and the United States of America, herein private respondent's country,
are signatories to the Convention. The United States acceded on May 30, 1887 while
the Philippines, through its Senate, concurred on May 10, 1965. 47 The Philippines'
adhesion became effective on September 27, 1965, 48 and from this date, the country
obligated itself to honor and enforce the provisions of the Convention. 49
In the case at bar, private respondent anchors its cause of action on the first paragraph
of Article 6bis of the Paris Convention which reads as follows:
Article 6bis
(1) The countries of the Union undertake, either administratively if their legislation so
permits, or at the request of an interested party, to refuse or to cancel the registration
and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or
a 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 this Convention and used for identical or
similar goods. These provisions shall also apply when the essential part of the mark
constitutes a reproduction of any such well-known mark or an imitation liable to create
confusion therewith.
(2) A period of at least five years from the date of registration shall be allowed for
seeking the cancellation of such a mark. The countries of the Union may provide for a
period within which the prohibition of use must be sought.
(3) No time limit shall be fixed for seeking the cancellation or the prohibition of the use of
marks registered or used in bad faith. 50
This Article governs protection of well-known trademarks. Under the first paragraph,
each country of the Union bound itself to undertake to refuse or cancel the registration,
and prohibit the use of a trademark which is a reproduction, imitation or translation, or
any essential part of which trademark constitutes a reproduction, liable to create
confusion, of a mark considered by the competent authority of the country where
protection is sought, to be well-known in the country as being already the mark of a
person entitled to the benefits of the Convention, and used for identical or similar goods.
Art. 6bis was first introduced at The Hague in 1925 and amended in Lisbon in 1952. 51 It
is a self-executing provision and does not require legislative enactment to give it effect in
the member country. 52 It may be applied directly by the tribunals and officials of each
member country by the mere publication or proclamation of the Convention, after its
ratification according to the public law of each state and the order for its execution. 53
The essential requirement under Article 6bis is that the trademark to be protected must
be "well-known" in the country where protection is sought. The power to determine
whether a trademark is well-known lies in the "competent authority of the country of
registration or use." This competent authority would be either the registering authority if
it has the power to decide this, or the courts of the country in question if the issue comes
before a court. 54
Pursuant to Article 6bis, on November 20, 1980, then Minister Luis Villafuerte of the
Ministry of Trade issued a Memorandum to the Director of Patents. The Minister ordered
the Director that:
Pursuant to the Paris Convention for the Protection of Industrial Property to which the
Philippines is a signatory, you are hereby directed to reject all pending applications for
Philippine registration of signature and other world-famous trademarks by applicants
other than its original owners or users.
The conflicting claims over internationally known trademarks involve such name brands
as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior,
Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and
Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of such
trademarks should be asked to surrender their certificates of registration, if any, to avoid
suits for damages and other legal action by the trademarks' foreign or local owners or
original users.
You are also required to submit to the undersigned a progress report on the matter.
For immediate compliance. 55
Three years later, on October 25, 1983, then Minister Roberto Ongpin issued another
Memorandum to the Director of Patents, viz:
Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the
rule-making and adjudicatory powers of the Minister of Trade and Industry and provides
inter alia, that "such rule-making and adjudicatory powers should be revitalized in order
that the Minister of Trade and Industry can . . . apply more swift and effective solutions
and remedies to old and new problems . . . such as infringement of internationally-known
tradenames and trademarks . . ." and in view of the decision of the Intermediate
Appellate Court in the case of LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI
[AC-G.R. SP NO. 13359 (17) June 1983] 56 which affirms the validity of the
MEMORANDUM of then Minister Luis R. Villafuerte dated 20 November 1980
confirming our obligations under the PARIS CONVENTION FOR THE PROTECTION
OF INDUSTRIAL PROPERTY to which the Republic of the Philippines is a signatory,
you are hereby directed to implement measures necessary to effect compliance with our
obligations under said Convention in general, and, more specifically, to honor our
commitment under Section 6bis 57 thereof, as follows:
1. Whether the trademark under consideration is well-known in the Philippines or is a
mark already belonging to a person entitled to the benefits of the CONVENTION, this
should be established, pursuant to Philippine Patent Office procedures in inter partes
and ex parte cases, according to any of the following criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the trademark being
considered is already well-known in the Philippines such that permission for its use by
other than its original owner will constitute a reproduction, imitation, translation or other
infringement;
(b) that the trademark is used in commerce internationally, supported by proof that
goods bearing the trademark are sold on an international scale, advertisements, the
establishment of factories, sales offices, distributorships, and the like, in different
countries, including volume or other measure of international trade and commerce;
(c) that the trademark is duly registered in the industrial property office(s) of another
country or countries, taking into consideration the date of such registration;
(d) that the trademark has long been established and obtained goodwill and international
consumer recognition as belonging to one owner or source;
(e) that the trademark actually belongs to a party claiming ownership and has the right to
registration under the provisions of the aforestated PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include tradenames,
service marks, logos, signs, emblems, insignia or other similar devices used for
identification and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel the registration
of, trademarks which constitute a reproduction, translation or imitation of a trademark
owned by a person, natural or corporate, who is a citizen of a country signatory to the
PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY.
4. The Philippine Patent Office shall give due course to the Opposition in cases already
or hereafter filed against the registration of trademarks entitled to protection of Section
6bis of said PARIS CONVENTION as outlined above, by remanding applications filed by
one not entitled to such protection for final disallowance by the Examination Division.
5. All pending applications for Philippine registration of signature and other
world-famous trademarks filed by applicants other than their original owners or users
shall be rejected forthwith. Where such applicants have already obtained registration
contrary to the abovementioned PARIS CONVENTION and/or Philippine Law, they shall
be directed to surrender their Certificates of Registration to the Philippine Patent Office
for immediate cancellation proceedings.
xxx xxx xxx. 58
In the Villafuerte Memorandum, the Minister of Trade instructed the Director of Patents
to reject all pending applications for Philippine registration of signature and other
world-famous trademarks by applicants other than their original owners or users. The
Minister enumerated several internationally-known trademarks and ordered the Director
of Patents to require Philippine registrants of such marks to surrender their certificates of
registration.
In the Ongpin Memorandum, the Minister of Trade and Industry did not enumerate
well-known trademarks but laid down guidelines for the Director of Patents to observe in
determining whether a trademark is entitled to protection as a well-known mark in the
Philippines under Article 6bis of the Paris Convention. This was to be established
through Philippine Patent Office procedures in inter partes and ex parte cases pursuant
to the criteria enumerated therein. The Philippine Patent Office was ordered to refuse
applications for, or cancel the registration of, trademarks which constitute a reproduction,
translation or imitation of a trademark owned by a person who is a citizen of a member
of the Union. All pending applications for registration of world-famous trademarks by
persons other than their original owners were to be rejected forthwith. The Ongpin
Memorandum was issued pursuant to Executive Order No. 913 dated October 7, 1983
of then President Marcos which strengthened the rule-making and adjudicatory powers
of the Minister of Trade and Industry for the effective protection of consumers and the
application of swift solutions to problems in trade and industry. 59
Both the Villafuerte and Ongpin Memoranda were sustained by the Supreme Court in
the 1984 landmark case of La Chemise Lacoste, S.A. v. Fernandez. 60 This court ruled
therein that under the provisions of Article 6bis of the Paris Convention, the Minister of
Trade and Industry was the "competent authority" to determine whether a trademark is
well-known in this country. 61
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years after the
adoption of the Paris Convention in 1965. In the case at bar, the first inter partes case,
IPC No. 686, was filed in 1970, before the Villafuerte Memorandum but five (5) years
after the effectivity of the Paris Convention. Article 6bis was already in effect five years
before the first case was instituted. Private respondent, however, did not cite the
protection of Article 6bis, neither did it mention the Paris Convention at all. It was only in
1981 when IPC No. 2049 was instituted that the Paris Convention and the Villafuerte
Memorandum, and, during the pendency of the case, the 1983 Ongpin Memorandum
were invoked by private respondent.
The Solicitor General argues that the issue of whether the protection of Article 6bis of
the Convention and the two Memoranda is barred by res judicata has already been
answered in Wolverine Worldwide, Inc. v. Court of
Appeals. 62 In this case, petitioner Wolverine, a foreign corporation, filed with the
Philippine Patent Office a petition for cancellation of the registration certificate of private
respondent, a Filipino citizen, for the trademark "Hush Puppies" and "Dog Device."
Petitioner alleged that it was the registrant of the internationally-known trademark in the
United States and other countries, and cited protection under the Paris Convention and
the Ongpin Memorandum. The petition was dismissed by the Patent Office on the
ground of res judicata. It was found that in 1973 petitioner's predecessor-in-interest filed
two petitions for cancellation of the same trademark against respondent's
predecessor-in-interest. The Patent Office dismissed the petitions, ordered the
cancellation of registration of petitioner's trademark, and gave due course to
respondent's application for registration. This decision was sustained by the Court of
Appeals, which decision was not elevated to us and became final and
executory. 63
Wolverine claimed that while its previous petitions were filed under R.A. No. 166, the
Trademark Law, its subsequent petition was based on a new cause of action, i.e., the
Ongpin Memorandum and E.O. No. 913 issued in 1983, after finality of the previous
decision. We held that the said Memorandum and E.O. did not grant a new cause of
action because it did "not amend the Trademark Law," . . . "nor did it indicate a new
policy with respect to the registration in the Philippines of world-famous trademarks." 64
This conclusion was based on the finding that Wolverine's two previous petitions and
subsequent petition dealt with the same issue of ownership of the trademark. 65 In other
words, since the first and second cases involved the same issue of ownership, then the
first case was a bar to the second case.
In the instant case, the issue of ownership of the trademark "Barbizon" was not raised in
IPC No. 686. Private respondent's opposition therein was merely anchored on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause damage to private
respondent's business reputation and goodwill; and
(c) that Escobar's use of the trademark amounts to an unlawful appropriation of a mark
previously used in the Philippines which act is penalized under Section 4 (d) of the
Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several issues summarized as
follows:
(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its products
such as robes, pajamas, lingerie, nightgowns and slips;
(b) that the trademark "BARBIZON" was registered with the United States Patent Office
in 1934 and 1949; and that variations of the same trademark, i.e., "BARBIZON" with Bee
design and "BARBIZON" with the representation of a woman were also registered with
the U.S. Patent Office in 1961 and 1976;
(c) that these marks have been in use in the Philippines and in many countries all over
the world for over forty years. "Barbizon" products have been advertised in international
publications and the marks registered in 36 countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was based on
fraud; and this fraudulent registration was cancelled in 1979, stripping Escobar of
whatsoever right she had to the said mark;
(e) Private respondent's trademark is entitled to protection as a well-known mark under
Article 6bis of the Paris Convention, Executive Order No. 913, and the two Memoranda
dated November 20, 1980 and October 25, 1983 of the Minister of Trade and Industry to
the Director of Patents;
(f) Escobar's trademark is identical to private respondent's and its use on the same class
of goods as the latter's amounts to a violation of the Trademark Law and Article 189 of
the Revised Penal Code.
IPC No. 2049 raised the issue of ownership of the trademark, the first registration and
use of the trademark in the United States and other countries, and the international
recognition and reputation of the trademark established by extensive use and
advertisement of private respondent's products for over forty years here and abroad.
These are different from the issues of confusing similarity and damage in IPC No. 686.
The issue of prior use may have been raised in IPC No. 686 but this claim was limited to
prior use in the Philippines only. Prior use in IPC No. 2049 stems from private
respondent's claim as originator of the word and symbol "Barbizon," 66 as the first and
registered user of the mark attached to its products which have been sold and
advertised worldwide for a considerable number of years prior to petitioner's first
application for registration of her trademark in the Philippines. Indeed, these are
substantial allegations that raised new issues and necessarily gave private respondent a
new cause of action. Res judicata does not apply to rights, claims or demands, although
growing out of the same subject matter, which constitute separate or distinct causes of
action and were not put in issue in the former action. 67
Respondent corporation also introduced in the second case a fact that did not exist at
the time the first case was filed and terminated. The cancellation of petitioner's
certificate of registration for failure to file the affidavit of use arose only after IPC No. 686.
It did not and could not have occurred in the first case, and this gave respondent another
cause to oppose the second application. Res judicata extends only to facts and
conditions as they existed at the time judgment was rendered and to the legal rights and
relations of the parties fixed by the facts so determined. 68 When new facts or
conditions intervene before the second suit, furnishing a new basis for the claims and
defenses of the parties, the issues are no longer the same, and the former judgment
cannot be pleaded as a bar to the subsequent action. 69
It is also noted that the oppositions in the first and second cases are based on different
laws. The opposition in IPC No. 686 was based on specific provisions of the Trademark
Law, i.e., Section 4 (d) 70 on confusing similarity of trademarks and Section 8 71 on the
requisite damage to file an opposition to a petition for registration. The opposition in IPC
No. 2049 invoked the Paris Convention, particularly Article 6bis thereof, E.O. No. 913
and the two Memoranda of the Minister of Trade and Industry. This opposition also
invoked Article 189 of the Revised Penal Code which is a statute totally different from
the Trademark Law. 72 Causes of action which are distinct and independent from each
other, although arising out of the same contract, transaction, or state of facts, may be
sued on separately, recovery on one being no bar to subsequent actions on others. 73
The mere fact that the same relief is sought in the subsequent action will not render the
judgment in the prior action operative as res judicata, such as where the two actions are
based on different statutes. 74 Res judicata therefore does not apply to the instant case
and respondent Court of Appeals did not err in so ruling.
Intellectual and industrial property rights cases are not simple property cases.
Trademarks deal with the psychological function of symbols and the effect of these
symbols on the public at large. 75 Trademarks play a significant role in communication,
commerce and trade, and serve valuable and interrelated business functions, both
nationally and internationally. For this reason, all agreements concerning industrial
property, like those on trademarks and tradenames, are intimately connected with
economic development. 76 Industrial property encourages investments in new ideas
and inventions and stimulates creative efforts for the satisfaction of human needs. They
speed up transfer of technology and industrialization, and thereby bring about social and
economic progress. 77 These advantages have been acknowledged by the Philippine
government itself. The Intellectual Property Code of the Philippines declares that "an
effective intellectual and industrial property system is vital to the development of
domestic and creative activity, facilitates transfer of technology, it attracts foreign
investments, and ensures market access for our products." 78 The Intellectual Property
Code took effect on January 1, 1998 and by its express provision, 79 repealed the
Trademark Law, 80 the Patent Law, 81 Articles 188 and 189 of the Revised Penal Code,
the Decree on Intellectual Property, 82 and the Decree on Compulsory Reprinting of
Foreign Textbooks. 83 The Code was enacted to strengthen the intellectual and
industrial property system in the Philippines as mandated by the country's accession to
the Agreement Establishing the World Trade Organization (WTO). 84

The WTO is a common institutional framework for the conduct of trade relations among
its members in matters related to the multilateral and plurilateral trade agreements
annexed to the WTO Agreement. 85 The WTO framework ensures a "single undertaking
approach" to the administration and operation of all agreements and arrangements
attached to the WTO Agreement. Among those annexed is the Agreement on
Trade-Related Aspects of Intellectual Property Rights or TRIPs. 86 Members to this
Agreement "desire to reduce distortions and impediments to international trade, taking
into account the need to promote effective and adequate protection of intellectual
property rights, and to ensure that measures and procedures to enforce intellectual
property rights do not themselves become barriers to legitimate trade." To fulfill these
objectives, the members have agreed to adhere to minimum standards of protection set
by several Conventions. 87 These Conventions are: the Berne Convention for the
Protection of Literary and Artistic Works (1971), the Rome Convention or the
International Convention for the Protection of Performers, Producers of Phonograms
and Broadcasting Organisations, the Treaty on Intellectual Property in Respect of
Integrated Circuits, and the Paris Convention (1967), as revised in Stockholm on July 14,
1967. 88

A major proportion of international trade depends on the protection of intellectual

property rights. 89 Since the late 1970's, the unauthorized counterfeiting of industrial
property and trademarked products has had a considerable adverse impact on domestic
and international trade revenues. 90 The TRIPs Agreement seeks to grant adequate
protection of intellectual property rights by creating a favorable economic environment to
encourage the inflow of foreign investments, and strengthening the multi-lateral trading
system to bring about economic, cultural and technological independence. 91

The Philippines and the United States of America have acceded to the WTO Agreement.
This Agreement has revolutionized international business and economic relations
among states, and has propelled the world towards trade liberalization and economic
globalization. 92 Protectionism and isolationism belong to the past. Trade is no longer
confined to a bilateral system. There is now "a new era of global economic cooperation,
reflecting the widespread desire to operate in a fairer and more open multilateral trading
system." 93 Conformably, the State must reaffirm its commitment to the global
community and take part in evolving a new international economic order at the dawn of
the new millenium.

IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the Court
of Appeals in CA-G.R. SP No. 28415 are affirmed.

SO ORDERED.
ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D., AND
STYLE OF ZUNECA PHARMACEUTICAL, PETITIONERS, VS. NATRAPHARM, INC.,
RESPONDENT.
DECISION
CAGUIOA, J.:
Businesses generally thrive or perish depending on their reputation among customers.
Logically, consumers gravitate towards products and services they believe are of a
certain quality and provide perceived benefits. Thus, entrepreneurs and businesses
actively seek to set apart their reputation and goodwill from every other enterprise with
the goal of being the top-of-mind choice for the consumers. As signs differentiating the
wares or services offered by enterprises, trademarks serve this purpose of making the
products and services of each business uniquely memorable. Trademarks have several
functions: they indicate the origin or ownership of the articles or services in which they
are used; they guarantee that the articles or services come up to a certain standard of
quality; and they advertise the articles and services they symbolize.1 Indeed, the
goodwill of a business, as symbolized and distinguished by its trademarks, helps ensure
that the enterprise stands out, stays afloat, and possibly flourish amidst the sea of
commercial activity where the consumers' continued patronage is a lifebuoy that may
determine life or death.
Faced with this intrinsic need to survive, enterprises are becoming increasingly aware of
the need to protect their goodwill and their brands. The State, too, is interested in the
protection of the intellectual property of enterprises and individuals who have exerted
effort and money to create beneficial products and services.2 In line with this, and
considering the extent to which intellectual property rights impact on the viability of
businesses, a common controversy in the field of intellectual property law is to whom
these rights pertain.
In this case of first impression, this is precisely the issue at hand. This case concerns
trademarks which are used for different types of medicines but are admitted by both
parties to be confusingly similar. Exacerbating this controversy on the issue of
ownership, however, are conflicting interpretations on the rules on the acquisition of
ownership over trademarks, muddled by jurisprudential precedents which applied
principles inconsistent with the current law. Thus, in resolving this issue, the Court
needed to examine and ascertain the meaning and intent behind the rules that affect
trademark ownership.
Facts
This is a Petition for Review on Certiorari3 (Petition) under Rule 45 with Prayer for
Temporary Restraining Order (TRO) and/or Preliminary Injunction filed by petitioners
Zuneca Pharmaceutical, Akram Arain and/or Venus Arain, M.D., and Style of Zuneca
Pharmaceutical (collectively, Zuneca) assailing the Decision4 dated October 3, 2013
and Resolution5 dated March 19, 2014 of the Court of Appeals (CA) in CA-G.R. CV No.
99787. The CA denied Zuneca's appeal and affirmed the Decision6 dated December 2,
2011 of the Regional Trial Court of Quezon City, Branch 93 (RTC) in Civil Case No.
Q-07-61561, which found Zuneca liable for trademark infringement under Sections 155
to 155.27 of Republic Act No. (R.A.) 8293,8 also known as the Intellectual Property
Code of the Philippines (IP Code), and awarded damages in favor of respondent
Natrapharm, Inc. (Natrapharm).
Petitioner Zuneca Pharmaceutical has been engaged in the importation, marketing, and
sale of various kinds of medicines and drugs in the Philippines since 1999.9 It imports
generic drugs from Pakistan and markets them in the Philippines using different brand
names.10 Among the products it has been selling is a drug called carbamazepine under
the brand name "ZYNAPS", which is an anti-convulsant used to control all types of
seizure disorders of varied causes like epilepsy.11 Petitioner Venus S. Arain, M.D. (Dr.
Arain) was the proprietor of Zuneca Pharmaceutical before Zuneca, Inc. was
incorporated.12 Akram Arain, meanwhile, is the husband of Dr. Arain, who later on
became the President of Zuneca, Inc.13
Natrapharm, on the other hand, is a domestic corporation engaged in the business of
manufacturing, marketing, and distribution of pharmaceutical products for human
relief.14 One of the products being manufactured and sold by Natrapharm
is citicoline under the trademark "ZYNAPSE", which is indicated for the treatment of
cerebrovascular disease or stroke.15 The trademark "ZYNAPSE" was registered with
the Intellectual Property Office of the Philippines (IPO) on September 24, 200716 and is
covered by Certificate of Trademark Registration No. 4-2007-005596.17
On November 29, 2007, Natrapharm filed with the RTC a Complaint against Zuneca for
Injunction, Trademark Infringement, Damages and Destruction with Prayer for TRO
and/or Preliminary Injunction, alleging that Zuneca's "ZYNAPS" is confusingly similar to
its registered trademark "ZYNAPSE" and the resulting likelihood of confusion is
dangerous because the marks cover medical drugs intended for different types of
illnesses.18 Consequently, Natrapharm sought to enjoin Zuneca from using "ZYNAPS"
or other variations thereof, in addition to its demand for Zuneca's payment of Two Million
Pesos (P2,000,000.00) in damages; Five Million Pesos (P5,000,000.00) in exemplary
damages; and Three Hundred Thousand Pesos (P300,000.00) as attorney's fees,
expenses of litigation, and costs of suit.19 Further, it prayed that all infringing goods,
labels, signs, etc. of Zuneca be impounded and destroyed without compensation.20
In its Answer (With Compulsory Counterclaim and Prayer for Preliminary Injunction),
Zuneca claimed that it has been selling carbamazepine under the mark "ZYNAPS" since
2004 after securing a Certificate of Product Registration on April 15, 2003 from the
Bureau of Food and Drugs (BFAD, now Food and Drug Administration).21 It alleged that
it was impossible for Natrapharm not to have known the existence of "ZYNAPS" before
the latter's registration of "ZYNAPSE" because Natrapharm had promoted its products,
such as "Zobrixol" and "Zcure", in the same publications where Zuneca had advertised
"ZYNAPS".22 Further, Zuneca pointed out that both Natrapharm and Zuneca had
advertised their respective products in identical conventions.23 Despite its knowledge of
prior use by Zuneca of "ZYNAPS", Natrapharm had allegedly fraudulently appropriated
the "ZYNAPSE" mark by registering the same with the IPO.24 As the prior user, Zuneca
argued that it is the owner of "ZYNAPS" and the continued use by Natrapharm of
"ZYNAPSE" causes it grave and irreparable damage.25
On the basis of such arguments, Zuneca insisted that it is Natrapharm which should be
liable for damages.26 On this score, Zuneca prayed that its counterclaims against
Natrapharm be granted by the RTC,27 namely, the cancellation of Natrapharm's
"ZYNAPSE" registration; the prohibition of Natrapharm from manufacturing, advertising,
selling, and distributing "ZYNAPSE" products; the destruction of "ZYNAPSE" products
and labels; the payment of Two Million Pesos (P2,000,000.00), or double such amount,
in the discretion of the court, as damages for fraudulent registration; and the payment of
Five Million Pesos (P5,000,000.00) as moral damages, Two Million Pesos
(P2,000,000.00) as exemplary damages, Three Hundred Thousand Pesos
(P300,000.00) as attorney's fees, and Fifty Thousand Pesos (P50,000.00) as costs of
suit.28
Subsequently, after a summary hearing, the prayer for TRO was denied.29 The
preliminary injunction and counter preliminary injunction prayed for by the parties were
likewise rejected.30
As summarized by the CA, the following evidence were presented during the trial:
First to testify on the part of Natrapharm was Cristina Luna Ravelo who is the vice
president for marketing of Natrapharm. According to her, she was the one who
conceptualized the name "ZYNAPSE"[,] taking it from "Synapse" which was a
publication she sponsored when she was the product manager of [the Philippine]
Neurological Association. Further[,] "Synapse" is a neurological term referring to the
junction between 2 nerves where nerve signals are transmitted, hence appropriate for a
medicine for stroke. Afterwardfs], the witness verified using the research tool IMS-PPI,
which lists the pharmaceutical products marketed in the Philippines, any other
cerebroprotective products (CO4A) that [are] confusingly similar with "ZYNAPSE".
Finding none in the list covering the period of the fourth quarter of 2004 up to the first
quarter of 2007, the witness proceeded with the registration of "ZYNAPSE" with the IPO.
After the IPO issued a [certificate of trademark registration], the BFAD, in turn, released
a Certificate of Product Listing for "ZYNAPSE". The witness likewise revealed that she
was informed in late September 2007 of the existence of "ZYNAPS" after a sales
personnel had informed her of such drug being sold in Visayas and Mindanao. After
learning this, the witness brought the matter to Dr. Arain, but no resolution was agreed
upon by the parties due to a difference in opinion.
On cross-examination, the witness averred that she did not check with drugstores and
other publications for similar brand names as "ZYNAPSE", as she only relied with [the]
IMS[-PPI]. Further, the witness explained that the formulation of the drug "ZYNAPSE" is
owned by Patriot Pharmaceutical [(Patriot)] and this formulation is marketed by
Natrapharm through the brand name "ZYNAPSE".
On re-direct, the witness clarified that she did not conduct any field survey to find if there
[we]re similar brand names as "ZYNAPSE", because of the difficulty posed by inquiring
from each [of the 3,000 to 4,000 drug stores] nationwide. In addition, it was x x x
Natrapharm's strategy to remain quiet about [its] product.
Next to testify was Jeffrey Silang, the Analyst Programmer of Natrapharm. His function
[was] to create a system and generate reports for accounting, inventory and sales for
Natrapharm. The witness stated that Patriot is a mere supplier of Natrapharm and that
Natrapharm has other suppliers. The witness then identified a sales report which
indicate[d] that WMMC Hospital bought several quantities of "ZYNAPSE" products from
Natrapharm. Also included in said report [was] an entry "non-psyche Patriot" which
represented] its supplier.
On cross-examination, the witness reiterated that Patriot supplies the raw materials to
Natrapharm. Natrapharm, in turn, repackage[s] these materials to bear the brand
"ZYNAPSE". The witness also admitted that he d[id] not know exactly why "ZYNAPSE"
is qualified as non-psyche, as he is a mere Information Technology expert.
Last to testify was Atty. Caesar J. Poblador who identified his Judicial Affidavit dated
[November 4, 2009 which contained] the several invoices charged by his law firm to
Natrapharm in consideration of the law firm's legal service.
On the part of [Zuneca], Dr. Arain took the stand and identified her Supplemental
Affidavit dated [February 12, 2010. On said Affidavit, it [was] stated that Dr. Arain
established Zuneca [Pharmaceutical] in 1999. Subsequently, [Zuneca, Inc.] was
incorporated on [January 8, 2008 and [it] took over the business of Zuneca
Pharmaceutical. Verily, among the products that Zuneca sells is [carbamazepine] with
the brand name "ZYNAPS" for which Zuneca applied for a Certificate of Product
Registration (CPR) from BFAD. On [April 15, 2003, Zuneca was able to obtain a CPR
over its [carbamazepine] product valid for five (5) years which was [then] renewed for
another five (5) years or until [April 15, 2013. Zuneca then started importing
[carbamazepine] "ZYNAPS" in December 2003 and began promoting, marketing and
selling them in 2004. In order to promote "ZYNAPS", Zuneca advertised it through paid
publications such as the (1) Philippine Pharmaceutical Directory or PPD; (2) PPD's
Better Pharmacy; and (3) PPD's Philippine Pharmaceutical Directory Review (PPDr).
Apparently, said publications also cover[ed] the different products of Natrapharm and its
affiliate [Patriot]. Allegedly, the two companies (Natrapharm and Patriot) participated as
partners in a medical symposi[um] on [October 22 to 23, 2009.
When asked why she did not register her trademark with the IPO, x x x [Dr.] Arain
answered that she could not find the time because of the illness of her father.
On cross-examination, Dr. Arain testified that she remained as an adviser of Zuneca,
Inc., after its incorporation. She then told her husband, who became the President of
Zuneca, Inc. and the vice president about the dispute with Natrapharm. Further, the
witness admitted that she did not secure an advertising page for "ZYNAPS" in the [PPD].
Last to testify was Emmanuel Latin, the president of Medicomm Pacific (Medicomm).
The witness attested that Medicomm is engaged in the publication of lists of drugs which
it gives to doctors as reference in the preparation of prescriptions for their patients. The
witness then enumerated their publications as PPD, PPDr, and PPD's Better Pharmacy
which the company publishes annually and distributes to doctors for free. According to
the witness, several years ago, Medicomm invited pharmaceutical companies to list with
its publications for free. Thereafter, the said pharmaceutical companies started
advertising with Medicomm for a fee which then became the source of revenues for
Medicomm. The witness also affirmed that Zuneca, Natrapharm and Patriot are
advertisers of PPD.
However, the witness admitted that "ZYNAPSE" [was] not listed in the PPD.31
The RTC Ruling
After trial, the RTC issued its Decision32 dated December 2, 2011, the dispositive
portion of which states:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of
[Natrapharm] and against [Zuneca].
[Zuneca], jointly and severally, [is] hereby directed to pay [Natrapharm] the following
amounts, to wit:
One Million Pesos (P1,000,000.00) as damages;
One Million Pesos (P1,000,000.00) as exemplary damages;
Two Hundred Thousand Pesos (P200,000.00) as attorney's fees;
and the Costs.
[Zuneca is] further enjoined from henceforth using ["ZYNAPS"] or any other variations
thereto which are confusingly similar to [Natrapharm's "ZYNAPSE".]
It is likewise ordered that all infringing goods, labels, signs, prints, packages, wrappers,
receptacles and advertisements in possession of [Zuneca], bearing the registered mark
or any reproduction, counterfeit, copy or colourable imitation thereof, all plates, molds,
matrices and other means of making the same, implements, machines and other items
related to the conduct, and predominantly used, by [Zuneca] in such infringing activities,
be disposed of outside the channels of commerce or destroyed, without compensation.
The counterclaim of [Zuneca] is DISMISSED for lack of merit.
SO ORDERED.33
The RTC ruled that the first filer in good faith defeats a first user in good faith who did not
file any application for registration.34 Hence, Natrapharm, as the first registrant, had
trademark rights over "ZYNAPSE" and it may prevent others, including Zuneca, from
registering an identical or confusingly similar mark.35 Moreover, the RTC ruled that
there was insufficient evidence that Natrapharm had registered the mark "ZYNAPSE" in
bad faith.36 The fact that "ZYNAPS" and Natrapharm's other brands were listed in the
Philippine Pharmaceutical Directory (PPD) was not sufficient to show bad faith since
Zuneca's own witness admitted to not having complete knowledge of the drugs listed in
the PPD.37 Natrapharm should also therefore be accorded the benefit of the doubt that
it did not have complete knowledge of the other brand names listed in the
PPD.38 Further, following the use of the dominancy test, the RTC likewise observed that
"ZYNAPS" was confusingly similar to "ZYNAPSE".39 To protect the public from the
disastrous effects of erroneous prescription and mistaken dispensation, the confusion
between the two drugs must be eliminated.40
The CA Ruling
Aggrieved, Zuneca appealed the RTC's Decision to the CA, raising the following issues:
(1) whether the RTC erred in ruling that the first-to-file trademark registrant in good faith
defeats the right of the prior user in good faith, hence, Natrapharm has the right to
prevent Zuneca from using or registering the trademark "ZYNAPS" or marks similar or
identical thereto; (2) whether the RTC erred in finding that Natrapharm was in good faith
when it registered the trademark "ZYNAPSE" for citicoline; (3) whether the RTC erred in
ruling that Zuneca is liable for trademark infringement and therefore liable for damages
and attorney's fees and should be enjoined from the use of the trademark "ZYNAPS"
and marks similar thereto, and that Zuneca's goods and materials in connection with the
trademark "ZYNAPS" must be disposed outside the channels of trade or destroyed
without compensation; and (4) whether the RTC erred in dismissing Zuneca's
counterclaims for lack of merit.41
In a Decision42 dated October 3, 2013, the CA denied Zuneca's appeal for lack of merit,
the dispositive portion of which states:
WHEREFORE, premises considered, the instant Appeal is DENIED for lack of merit,
and the assailed decision rendered by the Regional Trial Court of Quezon City, Branch
93 dated [December 2, 2011 is AFFIRMED.
SO ORDERED.43
In affirming the RTC, the CA stated that registration, not prior use, is the mode of
acquiring ownership of a trademark.44 The mark must be registered in order to acquire
ownership and the failure to do so renders the non-registering user susceptible to a
charge of infringement.45 Moreover, those who intend to register their mark need not
look at the other marks used by other persons but must confine only their search to the
marks found in the database of the IPO.46 If there are no similar or identical marks, the
mark should be registered as a matter of course.47 Hence, as the registered owner of
the trademark "ZYNAPSE", Natrapharm has every right to prevent all other parties from
using identical or similar marks in their business, as provided in the IP Code.48 Further,
only the registered owner of the trademark may file a civil action against the infringer
and seek injunction and damages.49
On the issue of good faith, the CA affirmed the findings of the RTC that Natrapharm had
no knowledge of the existence of "ZYNAPS" prior to the registration of
"ZYNAPSE".50 The CA also found that the testimony of Natrapharm's witness Cristina
Luna Ravelo51 (Ravelo) showed that Natrapharm was able to register "ZYNAPSE" after
it was cleared using the databases of the IPO and the BFAD.52 The CA ruled that good
faith is presumed and it was incumbent on Zuneca to show that Natrapharm was in bad
faith when it registered "ZYNAPSE", which Zuneca failed to show.53 The CA stated that
it was not enough that Zuneca and Natrapharm had exhibited in the same convention
two years prior to the registration of "ZYNAPSE" and ruled that it was unlikely that the
participants would remember each and every medicine or drug exhibited during said
convention.54 Besides, Zuneca failed to show that the people who had attended the
convention on behalf of Natrapharm were also the ones who were responsible for the
creation of "ZYNAPSE" or that they were still connected to Natrapharm at the time the
"ZYNAPSE" mark was registered with the IPO in 2007.55
In a Resolution56 dated March 19, 2014, the CA denied Zuneca's motion for
reconsideration.
Hence, Zuneca filed the instant Petition.
In compliance with the Court's Resolution57 dated June 2, 2014, Natrapharm filed its
Comment.58 Zuneca thereafter filed its Reply59 to Natrapharm's Comment. In a
Resolution60 dated June 6, 2016, the Court required each party to file their respective
Memoranda. In compliance with this, Natrapharm filed its Memorandum61 dated
September 6, 2016 and Zuneca filed its Memorandum62 dated September 16, 2016.
The Issues
As stated by Zuneca, the issues for the Court's resolution are as follows:
I
WHETHER OR NOT THE [CA] ERRED IN AFFIRMING THE RTC'S RULING THAT
THE FIRST-TO-FILE TRADEMARK REGISTRANT IN GOOD FAITH DEFEATS THE
RIGHT OF THE PRIOR USER IN GOOD FAITH, HENCE, [NATRAPHARM] HAS THE
RIGHT TO PREVENT [ZUNECA] FROM USING/REGISTERING THE TRADEMARK
"ZYNAPS" OR [MARKS] SIMILAR [OR] IDENTICAL THERETO.
II
WHETHER OR NOT THE [CA] ERRED IN AFFIRMING THE RTC'S FINDING THAT
[NATRAPHARM] WAS IN GOOD FAITH WHEN IT REGISTERED THE TRADEMARK
"ZYNAPSE" FOR [CITICOLINE].
III
WHETHER OR NOT THE [CA] ERRED IN AFFIRMING THE RTC'S RULING THAT
[ZUNECA IS] LIABLE FOR TRADEMARK INFRINGEMENT AND [IS] THUS LIABLE
FOR DAMAGES AND ATTORNEY'S FEES AND [IS] ENJOINED FROM THE USE OF
THE TRADEMARK "ZYNAPS" AND MARKS SIMILAR THERETO; AND THAT ALL [OF
ZUNECA'S] GOODS AND MATERIALS IN CONNECTION WITH THE TRADEMARK
"ZYNAPS" MUST BE DISPOSED OUTSIDE THE CHANNELS OF TRADE OR
DESTROYED WITHOUT COMPENSATION.
IV
WHETHER OR NOT THE [CA] ERRED IN AFFIRMING THE RTC'S DISMISSAL OF
[ZUNECA'S] COUNTERCLAIMS FOR LACK OF MERIT.
V
WHETHER OR NOT THE [CA] ERRED IN RULING THAT [ZUNECA], FOR FAILURE
TO REGISTER "ZYNAPS" AND FOR FAILURE TO OPPOSE [NATRAPHARM'S]
APPLICATION FOR "ZYNAPSE"[, IS] BARRED BY LACHES AND [IS] DEEMED TO
HAVE ABANDONED [ITS] TRADEMARK.63
It bears stressing at this juncture that the confusing similarity of the "ZYNAPS" and
"ZYNAPSE" marks was admitted by both parties.64 The resolution of this controversy
necessitates determining who has the right to prevent the other party from using its
confusingly similar mark. Thus, the following questions must be answered: (1) How is
ownership over a trademark acquired? (2) Assuming that both parties owned their
respective marks, do the rights of the first-to-file registrant Natrapharm defeat the rights
of the prior user Zuneca, i.e., may Natrapharm prevent Zuneca from using its mark? (3)
If so, should Zuneca be held liable for trademark infringement?
The Court's Ruling
Under the law, the owner of the mark shall have the exclusive right to prevent all third
parties not having the owner's consent from using identical or similar marks for identical
or similar goods or services where such use would result in a likelihood of confusion.65
Further, in Prosource International, Inc. v. Horphag Research Management SA,66 the
Court held that, to establish trademark infringement, the following elements must be
proven: (l)the trademark being infringed is registered in the IPO; (2) the trademark is
reproduced, counterfeited, copied, or colorably imitated by the infringer; (3) the infringing
mark is used in connection with the sale, offering for sale, or advertising of any goods,
business, or services; or the infringing mark 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; (4) the use or application of the infringing mark
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 identity of such business; and (5) it is without the consent of the trademark owner or
the assignee thereof.67
Thus, to determine the prevailing party in this controversy and the existence of
trademark infringement, the Court first has to rule on the issue of acquisition of
ownership of marks by both parties.
I. How trademark ownership is acquired
The RTC and the CA both ruled that, having been the first to register in good faith,
Natrapharm is the owner of the trademark "ZYNAPSE" and it has the right to prevent
others, including Zuneca, from registering and/or using a confusingly similar mark.
Zuneca, however, contends that, as the first user, it had already owned the "ZYNAPS"
mark prior to Natrapharm's registration and, invoking Berris Agricultural Co., Inc. v.
Abyadang 68 (Berris) and E. Y. Industrial Sales, Inc. et al. v. Shen Dar Electricity and
Machinery Co., Ltd.69 (E.Y. Industrial Sales, Inc.), its rights prevail over the rights of
Natrapharm, the first registrant of a confusingly similar mark.
The Court holds that Zuneca's argument has no merit because: (i) the language of the IP
Code provisions clearly conveys the rule that ownership of a mark is acquired through
registration; (ii) the intention of the lawmakers was to abandon the rule that ownership of
a mark is acquired through use; and (iii) the rule on ownership used in Berris and E.Y.
Industrial Sales, Inc. is inconsistent with the IP Code regime of acquiring ownership
through registration.
i. Under the IP Code, ownership
of a mark is acquired through registration
Special laws have historically determined and provided for the acquisition of ownership
over marks, and a survey thereof shows that ownership of marks is acquired either
through registration or use.
Spanish Royal Decree of October 26, 1888
As early as the Spanish regime, trademarks were already protected in the Philippines.
The Real Decreto de 26 de octubre de 188870 or the Spanish Royal Decree of October
26, 1888 provided for the concession and use of Philippine trademarks as follows:
Art. 4. Tudo fabricante, comerciante, agricultor ó industrial de otra clase, que
individual ó coleclivamente desee usar alguna marca para distinguir los productos de
una fábrica, los objetos de comercio, las primeras materias agrícolas ú otras
cualesquiera, ó la ganadería, y lo mismo los que deseen conservar la propiedad de
dibujos y modelos industriales, tendrán que solicitar el certificado de propiedad con
arregto a las prescripciones de esie decreto.
El que carezca de dicho certificado, no podrá usar marcas ó distintivo alguno para los
productos de su industria.Ꮮαwρhi৷ ni evitar que otros empleen sus estampaciones ó
dibujos industriales.
xxxx
Art. 21. El derecho á la propiedad de las marcas, dibujos, y modelos industriales que
esta disposición reconoce, se adquirirá por el certifwado y el cumplimienlo de las demás
disposiciones que la misma determina.
Based on the above provisions, one who wished to own and use a trademark had to
request for a certificate of ownership in accordance with the royal decree. The use of
unregistered trademarks was prohibited. In other words, because trademarks could not
be used without first securing the necessary certificate, the ownership of trademarks
under the Spanish Royal Decree of October 26, 1888 was acquired only by means of
registration.
Act No. 666
The manner of acquiring ownership over trademarks changed during the American
period. In 1903, Act No. 666 71 was enacted, which provided that the ownership of a
mark was acquired through actual use thereof. The pertinent provisions of said law are
reproduced below:
SECTION 2. Anyone who produces or deals in merchandise of any kind by actual use
thereof in trade may appropriate to his exclusive use a trade-mark, not so appropriated
by another, to designate the origin or ownership thereof: Provided, That a designation or
part of a designation which relates only to the name, quality, or description of the
merchandise or geographical place of its production or origin cannot be the subject of a
trade-mark.
SECTION 3. The ownership or possession of a trade-mark, heretofore or hereafter
appropriated, as in the foregoing section provided, shall be recognized and protected in
the same manner and to the same extent, as are other property rights known to the law.
To this end any person entitled to the exclusive use of a trade-mark to designate the
origin or ownership of goods he has made or deals in may recover damages in a civil
action from any person who has sold goods of a similar kind, bearing such trade-mark,
and the measure of the damages suffered, at the option of the complaining party, shall
be either the reasonable profit which the complaining party would have made had the
defendant not sold the goods with the trade-mark aforesaid, or the profit which the
defendant actually made out of the sale of the goods with the trade-mark, and in cases
where actual intent to mislead the public or to defraud the owner of the trade-mark shall
be shown, in the discretion of the court, the damages may be doubled. The complaining
party, upon proper showing, may have a preliminary injunction, restraining the
defendant temporarily from use of the trade-mark pending the hearing, to be granted or
dissolved in the manner provided in the Code of Civil Procedure, and such injunction
upon final hearing, if the complainant's property in the trade-mark and the defendant's
violation thereof shall be fully established, in these Islands, nor shall it be necessary to
show that the trade-mark shall be made perpetual, and this injunction shall be part of the
judgment for damages to be rendered in the same cause as above provided.
SECTION 4. In order to justify recovery for violation of trade-mark rights in the preceding
sections defined, it shall not be necessary to show that the trade-marks have been
registered under the royal decree of eighteen hundred and eight-eight, providing for
registration of trademarks in the Philippine Islands, in force during the Spanish
sovereignty in these Islands, nor shall it be necessary to show that the trade mark has
been registered under this Act. It shall be sufficient to invoke protection of his property in
a trade-mark if the party complaining shall prove that he has used the
trade-mark claimed by him upon his goods a sufficient length of time so that the use of
the trade-mark by another would be an injury to him and calculated to deceive the public
into the belief that the goods of that other were the goods manufactured or dealt in by
the complaining party. (Emphasis and underscoring supplied)
R.A. 166
On June 20, 1947, R.A. 166 72 (Trademark Law) was enacted and approved. It is worth
noting that the Trademark Law, as clarified through its subsequent amendment,
explicitly stated that actual use was a prerequisite for the ownership of marks.
Section 4 of the Trademark Law stated that the owner of the mark had the right to
register the same. Despite not categorically defining who the owner of the mark was, the
same section also provided that one could not register a mark that was previously used
and not abandoned by another. Consequently, prior use and non-abandonment
determined the ownership of the mark because it effectively barred someone else from
registering the mark and representing himself73 to be the owner thereof. In other words,
the only person who was entitled to register the mark, and therefore be considered as
the owner thereof, was the person who first used and who did not abandon the
mark, viz.:
SECTION 4. Registration of Trade-marks, Trade-names and Service-marks. - The To clarify, while it is the fact of registration which confers ownership of the mark and
owner of a trade-mark, trade-name or service-mark used to distinguish his goods, enables the owner thereof to exercise the rights expressed in Section 14775 of the IP
business or services from the goods, business or services of others shall have the right Code, the first-to-file rule nevertheless prioritizes the first filer of the trademark
to register the same, unless it: application and operates to prevent any subsequent applicants from registering marks
xxxx described under Section 123.1(d) of the IP Code.
(d) Consists of or comprises a mark or trade-name which so resembles a mark or Reading together Sections 122 and 123. l(d) of the IP Code, therefore, a registered mark
trade-name registered in the Philippines or a mark or trade-name previously used in the or a mark with an earlier filing or priority date generally bars the future registration of-
Philippines by another and not abandoned, as to be likely, when applied to or used in and the future acquisition of rights in - an identical or a confusingly similar mark, in
connection with the goods, business or services of the applicant, to cause confusion or respect of the same or closely-related goods or services, if the resemblance will likely
mistake or to deceive purchases[.] (Emphasis and underscoring supplied) deceive or cause confusion.
Civil Code The current rule under the IP Code is thus in stark contrast to the rule on acquisition of
When the Civil Code took effect in 1950, it included the rule that the owner of the ownership under the Trademark Law, as amended. To recall, the Trademark Law, as
trademark was the person, corporation, or firm registering the same, but said rule was amended, provided that prior use and non-abandonment of a mark by one person
made subject to the provisions of special laws. Hence, the manner of acquiring barred the future registration of an identical or a confusingly similar mark by a different
ownership was still through actual use because the special law in effect at that time was proprietor when confusion or deception was likely.76 It also stated that one acquired
the Trademark Law, viz.: ownership over a mark by actual use.77
CHAPTER 3 Once the IP Code took effect, however, the general rule on ownership was changed and
TRADEMARKS AND TRADENAMES repealed.78 At present, as expressed in the language of the provisions of the IP Code,
ART. 520. A trademark or tradename duly registered in the proper government bureau prior use no longer determines the acquisition of ownership of a mark in light of the
or office is owned by and pertains to the person, corporation, or firm registering the adoption of the rule that ownership of a mark is acquired through registration made
same, subject to the provisions of special laws. (Emphasis supplied) validly in accordance with the provisions of the IP Code.79 Accordingly, the trademark
Amendment to the Trademark Law provisions of the IP Code use the term "owner" in relation to registrations.80 This fact is
In 1951, the Trademark Law was amended by R.A. 638,74 which added Section 2-A, also apparent when comparing the provisions of the Trademark Law, as amended, and
among others. As previously mentioned, this amendment explicitly provided that the IP Code, viz.:
ownership over a mark was acquired through actual use, viz.:
Sec. 2-A. Ownership of trade-marks, trade-names and service-marks; how acquired. - Trademark Law, as amended IP Code
Anyone who lawfully produces or deals in merchandise of any kind or who engages in
any lawful business, or who renders any lawful service in commerce, by actual use Sec. 4. Registration of trade-marks, SECTION 123. Registrability. —
thereof in manufacture or trade, in business, and in the service rendered, may trade-names and service-marks on 123.1. A mark cannot be registered if
appropriate to his exclusive use a trade-mark, a trade-name, or a service-mark not so the principal register. - There is it:
appropriated by another, to distinguish Ms merchandise, business or service from the hereby established a register of (a) Consists of immoral, deceptive or
merchandise, business or services of others. The ownership or possession of a trade-mark, tradenames and scandalous matter, or matter which
trade-mark, trade-name, service-mark, heretofore or hereafter appropriated, as in this service-marks which shall be known may disparage or falsely suggest a
section provided, shall be recognized and protected in the same manner and to the as the principal register. The owner connection with persons, living or
same extent as are other property rights known to the law. (Emphasis and underscoring of a trade-mark, a trade-name or dead, institutions, beliefs, or national
supplied) servicemark used to distinguish his symbols, or bring them into contempt
IP Code goods, business or services from the or disrepute;
Forty-seven years later, upon the effectivity of the IP Code on January 1, 1998, the goods, business or services of others (b) Consists of the flag or coat of
manner of acquiring ownership of trademarks reverted to registration. This is expressed shall have the right to register the arms or other insignia of the
in Section 122 of the IP Code, viz.: same on the principal register, unless Philippines or any of its political
SECTION 122. How Marks are Acquired. - The rights in a mark shall be acquired it: subdivisions, or of any foreign nation,
through registration made validly in accordance with the provisions of this law. (Sec. 2-A, (a) Consists of or compnses immoral, or any simulation thereof;
R.A. No. 166a) (Emphasis and underscoring supplied) deceptive or scandalous matter; or (c) Consists of a name, portrait or
Related to this, Section 123. l(d) of the IP Code expresses the first-to-file rule as follows: matter which may disparage or signature identifying a particular
SECTION 123. Registrability. - 123.1. A mark cannot be registered if it: falsely suggest a com1ection with living individual except by his written
xxxx persons, living or dead, institutions, consent, or the name, signature, or
(d) Is identical with a registered mark belonging to a different proprietor or a mark with beliefs, or national symbols, or bring portrait of a deceased President of
an earlier filing or priority date, in respect of: them into contempt or disrepute; the Philippines, during the life of his
(i) The same goods or services, or (b) Consists of or comprises the flag widow, if any, except by written
(ii) Closely related goods or services, or or coat of arms or other insignia of consent of the widow;
(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion[.] the Philippines or any of its political (d) Is identical with a registered
(Emphasis and underscoring supplied)
 view of the Court that this does not imply that actual use is still a recognized mode of
subdivisions, or of any foreign nation, mark belonging to a different acquisition of ownership under the IP Code. Rather, these must be understood as
or any simulation thereof; proprietor or a mark with an earlier provisions that require actual use of the mark in order for the registered owner of a mark
(c) Consists of or compnses a name, filing or priority date, in respect of: to maintain87 his ownership.
pmirait, or signature identifying a (i) The same goods or services, or In the same vein, the prima facie nature of the certificate of registration88 is not
particular living individual except by (ii) Closely related goods or indicative of the fact that prior use is still a recognized mode of acquiring ownership
his written consent, or the name, services, or under the IP Code. Rather, it is meant to recognize the instances when the certificate of
signature, or portrait of a deceased (iii) If it nearly resembles such a registration is not reflective of ownership of the holder thereof, such as when: 1 the first
President of the Philippines, during mark as to be likely to deceive or registrant has acquired ownership of the mark through registration but subsequently lost
the life of his widow, if any, except by cause confusion; the same due to non-use89 or abandonment90 (e.g., failure to file the Declaration of
the written consent of the widow; xxx (Sec. 4, R.A. No. 166a) Actual Use91); 2 the registration was done in bad faith;92 3 the mark itself becomes
(d) Consists of or comprises a (Emphasis supplied) generic;93 4 the mark was registered contrary to the IP Code (e.g., when a generic mark
mark or trade-name which so was successfully registered for some reason);94 or 5 the registered mark is being used
resembles aa mark or trade-name by, or with the permission of, the registrant so as to misrepresent the source of the
registered in the Philippines or a goods or services on or in connection with which the mark is used.95
mark or trade-name previously ii. Legislative intent to abandon the
used in the Philippines by another rule that ownership of a mark is
and not abandoned, as to be likely, acquired through use
when applied to or used in The lawmakers' intention to change the system of acquiring rights over a mark is even
connection with the goods, more evident in the sponsorship speech of the late Senator Raul Roco for the IP Code.
business or services of the The shift to a new system was brought about by the country's adherence to treaties, and
applicant, to cause confusion or Senator Roco specifically stated that the bill abandons the rule that ownership of a mark
mistake or to deceive is acquired through use, thus:
purchasers; or Part III of the Code is the new law on trademarks.
x x x x (Emphasis supplied) On September 27, 1965, Mr. President, the Philippines adhered to the Lisbon Act of the
Paris Convention for the Protection of Industrial Property [(Paris Convention)]. This
Subparagraph (d) of the above provision of the Trademark Law was amended in the IP obliged the country to introduce a system of registration of marks of nationals of
Code to, among others, remove the phrase "previously used in the Philippines by member-countries of the Paris Convention which is based not on use in the Philippines
another and not abandoned."81 Under the Trademark Law, as amended, the first user but on foreign registration. This procedure is defective in several aspects: first, it
of the mark had the right81 to file a cancellation case against an identical or confusingly provides to a foreign applicant a procedure which is less cumbersome compared to what
mark registered in good faith by another person. However, with the omission in the IP is required of local applicants who need to establish prior use as a condition for filing a
Code provision of the phrase "previously used in the Philippines by another and not trademark; and second, it is incompatible with the "based on use" principle which is
abandoned,,"said right of the first user is no longer available. In effect, based on the followed in the present Trademark Law.
language of the provisions of the IP Code, even if the mark was previously used and not Furthermore, Mr. President, our adherence to the Paris Convention binds us to protect
abandoned by another person, a good faith applicant may still register the same and well-known- marks. Unfortunately, the provisions of 6bis of the Paris Convention on this
thus become the owner thereof, and the prior user cannot ask for the cancellation of the matter are couched in broad terms which are not defined in the Convention. This has
latter's registration. If the lawmakers had wanted to retain the regime of acquiring given rise to litigation between local businessmen using the mark and foreigners who
ownership through use, this phrase should have been retained in order to avoid conflicts own the well-known marks. The conflicting court decisions on this issue aggravate the
in ownership. The removal of such a right unequivocally shows the intent of the situation and they are a compendium of contradictory cases.
lawmakers to abandon the regime of ownership under the Trademark Law, as amended. The proposed [IP] Code seeks to correct these defects and provides solutions to
On this point, our esteemed colleagues Associate Justices Leonen and Lazaro-Javier these problems and make a consistency in ruling for future purposes.
have expressed their doubts regarding the abandonment of the ownership regime under To comply with [the Agreement on Trade-Related Aspects of Intellectual Property Rights
the Trademark Law, as amended, because of the continued requirement of actual use (TRIPS Agreement)]96 and other international commitments, this bill no longer requires
under the IP Code and because of the prima facie nature of a certificate of prior use of the mark as a requirement for filing a trademark application. It also
registration.82 In particular, Sections 124.2 83 and 14584 of the IP Code provide that abandons the rule that ownership of a mark is acquired through use by now requiring
the applicant/registrant is required to file a Declaration of Actual Use on specified registration of the mark in the Intellectual Property Office. Unlike the present law, it
periods, while Section 13885 provides that a certificate of registration of a mark shall establishes one procedure for the registration of marks. This feature will facilitate the
be prima facie evidence of the validity of the registration, the registrant's ownership of registration of marks.
the mark, and of the registrant's exclusive right to use the same in connection with the Senate Bill No. 1719 also no longer requires use or registration in the Philippines for the
goods or services and those that are related thereto specified in the certificate. protection of well-known marks. If the mark is registered, such registration can prohibit
Certainly, while the IP Code and the Rules86 of the IPO mandate that the its use by another in connection with goods or services which are not similar to those
applicant/registrant must prove continued actual use of the mark, it is the considered with respect to which the registration is applied for. This resolves many of the questions
that have remained unanswered by present law and jurisprudence.97 (Emphasis and
underscoring supplied)
The legislative intent to abandon the rule that ownership is acquired through use and to
adopt the rule that ownership is acquired through registration is therefore crystal clear.
On this score, Justice Leonen prudently cautions against deriving legislative intent from
these deliberations, especially since they are limited to the opinions of those present,
and neither consider the opinions of those who did not or were not able to speak, nor do
they account for changing circumstances.98 While this may be true, the Court is of the
considered view that this does not mean that its interpretation of the statute based on
such deliberations is inaccurate or wrong, especially in this case because, at the risk of
belaboring the point, the provisions of the IP Code and the legislative deliberations are
consistent in showing that the regime of ownership under the Trademark Law, as
amended, has been abandoned.
iii. Rule on ownership based on prior
use in Berris and E.Y. Industrial
Sales, Inc. inconsistent with the IP
Code regime of ownership through
registration
As mentioned, Zuneca argues that as the prior user, following Berris and E. Y. Industrial
Sales, Inc., it had already owned the "ZYNAPS" mark prior to Natrapharm's registration
of its confusingly similar mark, thus, its rights prevail over the rights of Natrapharm.
As will be further explained, however, a closer look at the cases cited by Zuneca reveals
that the rule on ownership used in resolving these cases is inconsistent with the rule on
acquisition of ownership through registration under the IP Code.
In Berris, Norvy Abyadang (Abyadang) filed a trademark application for "NS D-10 PLUS"
in 2004. This was opposed by Berris Agricultural Co., Inc. (Berris, Inc.) on the ground
that it was confusingly similar to its registered mark, "D-10 80 WP", which was applied
for in 2002 and eventually registered in 2004. The marks were indeed found to be
confusingly similar. However, in ruling that Bems, Inc. was the rightful owner of the mark,
the Court did not just decide based on the fact that Berris, Inc. filed the application and
registered the mark prior to Abyadang. Instead, it also contained the following
discussion with the conclusion that actual use was required to own a mark:
The basic law on trademark, infringement, and unfair competition is [the IP Code],
specifically Sections 121 to 170 thereof. It took effect on January 1, 1998. Prior to its
effectivity, the applicable law was [the Trademark Law], as amended.
Interestingly, [the IP Code] did not expressly repeal in its entirety [the Trademark Law,
as amended], but merely provided in Section 239.1 that [a]cts and parts of [a]cts
inconsistent with it were repealed. In other words, only in the instances where a
substantial and irreconcilable conflict is found between the provisions of [the IP Code]
and of [the Trademark Law, as amended] would the provisions of the latter be deemed
repealed.
[The IP Code] defines a "mark" as any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods. It also defines a "collective mark" as any visible sign
designated as such in the application for registration and capable of distinguishing the
origin or any other common characteristic, including the quality of goods or services of
different enterprises which use the sign under the control of the registered owner of the
collective mark.
On the other hand, [the Trademark Law, 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 by another. A trademark, being
a special property, is afforded protection by law. But for one to enjoy this legal protection,
x x x ownership of the trademark should rightly be established.
The ownership of a trademark is acquired by its registration and its actual use by the
manufacturer or distributor of the goods made available to the purchasing public.
Section 122 of [the IP Code] provides that the rights in a mark shall be acquired by
means of its valid registration with the IPO. A certificate of registration of a mark, once
issued, constitutes prima facie evidence of the validity of the registration, of 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. [The IP Code], however, requires the applicant for registration or the
registrant to file a declaration of actual use (DAU) of the mark, with evidence to that
effect, within three (3) years from the filing of the application for registration; otherwise,
the application shall be refused or the mark shall be removed from the register. In other
words, the prima facie presumption brought about by the registration of a mark may be
challenged and overcome, in an appropriate action, by proof of the nullity of the
registration or of non-use of the mark, except when excused. Moreover, the presumption
may likewise be defeated by evidence of prior use by another person, i.e., it will
controvert a claim of legal appropriation or of ownership based on registration by a
subsequent user. This is because a trademark is a creation of use and belongs to one
who first used it in trade or commerce.99 (Citations omitted; emphasis and underscoring
supplied)
In Berris, despite the fact that Berris, Inc. was eventually decided to be the owner of the
mark consistent with the rule on ownership under the IP Code, the Court mistakenly
gave undue weight to the fact of prior use.100 To be sure, it was unnecessary to also
anchor Berris, Inc.'s ownership of the mark on the fact that it was the prior user as this
was inconsistent with the express provisions of the IP Code and the legislative intent
behind the law. Stated differently, the Court's decision in Berris was correct based on
the fact that Berris, Inc. was the first to file the application and register the mark.
Significantly, in giving weight to the fact of prior use, the Court cited101 the author
Ruben E. Agpalo who had, in turn, cited jurisprudence decided under the Trademark
Law, as amended. As a result, the rule that prior use was determinative of ownership
was also used to resolve the issue of ownership in Berris. As stated, however, this is
contrary to the IP Code.
To repeat, after the IP Code became effective starting 1998, use was no longer required
in order to acquire or perfect ownership of the mark. In this regard, the Court now
rectifies the inaccurate statement in Berris that "[t]he ownership of a trademark is
acquired by its registration and its actual use."102 The rectified statement should thus
read: "Under the IP Code, the ownership of a trademark is acquired by its registration."
Any pronouncement in Berris inconsistent herewith should be harmonized accordingly.
To clarify, while subsequent use of the mark and proof thereof are required to prevent
the removal or cancellation of a registered mark or the refusal of a pending application
under the IP Code,103 this should not be taken to mean that actual use and proof
thereof are necessary before one can own the mark or exercise the rights of a trademark
owner.104
Likewise, the rule on acquiring ownership discussed in E. Y. Industrial Sales, Inc. is
inconsistent with the current rule under the IP Code. In said case, E.Y. Industrial Sales,
Inc. (EYIS) imported air compressors from Shen Dar from 1997 to 2004. In 1997, during
the effectivity of the Trademark Law, as amended, Shen Dar filed a trademark
application for "VESPA, Chinese Characters and Device" for use on air compressors
and welding machines. Subsequently, in 1999, or already during the effectivity of the IP
Code, EYIS filed a trademark application for "VESPA" for use on air compressors. On
January 18, 2004, the IPO issued the certificate of registration for "VESPA" in favor of
EYIS. Subsequently, on February 8, 2007, the certificate of registration for "VESPA,
Chinese Characters and Device" was issued in favor of Shen Dar.
Claiming to be the owner of the mark, Shen Dar filed 9887registration. The Bureau of
Legal Affairs (BLA) and the Director General of the IPO both ruled that EYIS was the
owner of the mark and likewise directed the cancellation of Shen Dar's certificate of
registration.
Once the case reached the Court, the dispute was resolved in favor of EYIS.
The ponencia cited Section 123.1(d), the first-to-file rule adopted by the IP Code, and
likewise included the following discussion in Shangri-la International Hotel Management,
Ltd. v. Developers Group of Companies, Inc.105 (Shangri-la) in concluding that the prior
user EYIS was the owner of the mark, viz.:
In any event, given the length of time already invested by the parties in the instant case,
this Court must write finis to the instant controversy by determining, once and for all, the
true owner of the mark "VESPA" based on the evidence presented.
[The IP Code] espouses the "first-to-file" rule as stated under Sec. 123.1 (d) which
states:
Section 123. Registrability. - 123.1. A mark cannot be registered if it:
xxxx
(d) Is identical with a registered mark belonging to a different proprietor or a mark with
an earlier filing or priority date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion, x x x
Under this provision, the registration of a mark is prevented with the filing of an earlier
application for registration. This must not, however, be interpreted to mean that
ownership should be based upon an earlier filing date. While [the IP Code] removed the
previous requirement of proof of actual use prior to the filing of an application for
registration of a mark, proof of prior and continuous use is necessary to establish
ownership of a mark. Such ownership constitutes sufficient evidence to oppose the
registration of a mark.
Sec. 134 of the IP Code provides that "any person who believes that he would be
damaged by the registration of a mark x x x" may file an opposition to the application.
The term "any person" encompasses the true owner of the mark - the prior and
continuous user.
Notably, the Court has ruled that the prior and continuous use of a mark may even
overcome the presumptive ownership of the registrant and be held as the owner of the
mark. As aptly stated by the Court in [Shangri-la]:
Registration, without more, does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration is merely a prima facie proof that the
registrant is the owner of the registered mark or trade name. Evidence of prior and
continuous use of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be declared owner in
an appropriate case.
xxxx
Ownership of a mark or trade name may be acquired not necessarily by registration but
by adoption and use in trade or commerce. As between actual use of a mark without
registration, and registration of the mark without actual use thereof, the former prevails
over the latter. For a rule widely accepted and firmly entrenched, because it has come
down through the years, is that actual use in commerce or business is a pre-requisite to
the acquisition of the right of ownership.
xxxx
By itself, registration is not a mode of acquiring ownership. When the applicant is not the
owner of the trademark being applied for, he has no right to apply for registration of the
same. Registration merely creates a prima facie presumption of the validity of the
registration, of the registrant's ownership of the trademark and of the exclusive right to
the use thereof. Such presumption, just like the presumptive regularity in the
performance of official functions, is rebuttable and must give way to evidence to the
contrary.106 (Citations omitted and emphasis supplied)
However, a careful reading of Shangri-la will unmistakably show that, despite having
been promulgated in 2006, the applicable law of the case was the Trademark Law, as
amended, considering the following excerpts:
While the present law on trademarks has dispensed with the requirement of prior actual
use at the time of registration, the law in force at the time of registration[, i.e., the
Trademark Law, as amended,! must be applied, and thereunder it was held that as a
condition precedent to registration of trademark, trade name or service mark, the same
must have been in actual use in the Philippines before the filing of the application for
registration. Trademark is a creation of use and therefore actual use is a prerequisite to
exclusive ownership and its registration with the Philippine Patent Office is a mere
administrative confirmation of the existence of such right.
xxxx
However, while the Philippines was already a signatory to the Paris Convention, the [IP
Codel only took effect on January 1, 1998, and in the absence of a retroactivitv clause,
[the Trademark Law, as amendedl still applies, x x x107 (Emphasis and underscoring
supplied)
It is worth noting that in E.Y. Industrial Sales, Inc., the Court upheld the factual finding
that the first actual use by EYIS was earlier than Shen Dar's. The earliest dates of use
by both parties therein were during the effectivity of the Trademark Law, as amended. It
is also important to reiterate that EYIS had applied and registered the mark under the IP
Code, while Shen Dar had applied for the mark under the Trademark Law, as amended,
and its registration was obtained after the effectivity of the IP Code.
To be sure, the rule used to resolve the issue of ownership in E. Y. Industrial Sales,
Inc. and Shangri-la should not be made to apply in a situation involving marks which are
both used and/or registered after the effectivity of the IP Code. In the case at bar, both
"ZYNAPS" and "ZYNAPSE" have been used and/or registered after the IP Code
became effective. Clearly, the use or citation of Trademark Law jurisprudence to resolve
the question on acquisition of ownership of marks in the case at bar or in cases involving
marks registered or first used under the IP Code will be irrelevant and inappropriate.
In light of the foregoing, Zuneca thus erred in using Berris and E. Y. Industrial Sales,
Inc. as bases for its argument that the prior user is the owner of the mark and its rights
prevail over the rights of the first-to-file registrant. To emphasize, for marks that are first
used and/or registered after the effectivity of the IP Code, ownership is no longer
dependent on the fact of prior use in light of the adoption of the first-to-file rule and the
rule that ownership is acquired through registration.
II. Bad faith and good faith in
trademark registration and use
In a bid to invalidate Natrapharm's rights as first registrant, Zuneca further argues that
Natrapharm had registered the mark fraudulently and in bad faith.108
The existence of bad faith in trademark registrations may be a ground for its cancellation
at any time by filing a petition for cancellation under Section 151 (b) of the IP Code, viz.:
SECTION 151. Cancellation. - 151.1. A petition to cancel a registration of a mark under
this Act may be filed with the Bureau of Legal Affairs by any person who believes that he
is or will be damaged by the registration of a mark under this Act as follows:
(a) Within five (5) years from the date of the registration of the mark under this Act.
(b) At any time, if the registered mark becomes the generic name for the goods or
services, or a portion thereof, for which it is registered, or has been abandoned, or its other provisions of this Act. also used as a name of or to identify
registration was obtained fraudulently or contrary to the provisions of this Act, or if the (Emphasis and underscoring a unique product or service. The
registered mark is being used by, or with the permission of, the registrant so as to supplied) primary significance of the registered
misrepresent the source of the goods or services on or in connection with which the mark to the relevant public rather
mark is used. If the registered mark becomes the generic name for less than all of the than purchaser motivation shall be
goods or services for which it is registered, a petition to cancel the registration for only the test for determining whether the
those goods or services may be filed. A registered mark shall not be deemed to be the registered mark has become the
generic name of goods or services solely because such mark is also used as a name of generic name of goods or services on
or to identify a unique product or service. The primary significance of the registered mark or in connection with which it has
to the relevant public rather than purchaser motivation shall be the test for determining been used. (Emphasis and
whether theregistered mark has become the generic name of goods or services on or in underscoring supplied)
connection with which it has been used, (n)
(c) At any time, if the registered owner of the mark without legitimate reason fails to use Resultantly - unlike the rule on acquisition of ownership - the pronouncements of the
the mark within the Philippines, or to cause it to be used in the Philippines by virtue of a Court relative to registrations obtained in bad faith under the Trademark Law, as
license during an uninterrupted period of three (3) years or longer. (Emphasis supplied) amended, still subsist even after the effectivity of the IP Code. Thus, the following cases
Notably, this ground for cancelling marks was already present under the Trademark Law, where the Court defined bad faith and fraud, although decided under the regime of the
as amended. The table below shows how the language in the IP Code provision mirrors Trademark Law, as amended, are still applicable.
the provision under the Trademark Law, as amended: The concepts of bad faith and fraud were defined in Mustang-Bekleidungswerke GmbH
+ Co. KG v. Hung Chiu Ming,109 a case decided by the Office of the Director General of
Trademark Law, as amended IP Code the IPO under the Trademark Law, as amended, viz.:
What constitutes fraud or bad faith in trademark registration? Bad faith means that the
CHAPTER IV SECTION 151. Cancellation. - 151.1. applicant or registrant has knowledge of prior creation, use and/or registration by
Cancellation of Registration A petition to cancel a registration of a another of an identical or similar trademark. In other words, it is copying and using
SECTION 17. Grounds for mark under this Act may be filed with somebody else's trademark. Fraud, on the other hand, may be committed by making
Cancellation. - Any person, who the Bureau of Legal Affairs by any false claims in connection with the trademark application and registration, particularly,
believes that he is or will be damaged person who believes that he is or will on the issues of origin, ownership, and use of the trademark in question, among other
by the registration of a mark or be damaged by the registration of a things.110
tradename, may, upon the payment mark under this Act as follows: The concept of fraud contemplated above is not a mere inaccurate claim as to the origin,
of the prescribed fee, apply to cancel xxxx ownership, and use of the trademark.Ꮮαwρhi৷ In civil law, the concept of fraud has been
said registration upon any of the (b) At any time, if the registered mark defined as the deliberate intention to cause damage or prejudice.111 The same
following grounds: becomes the generic name for the principle applies in the context of trademark registrations: fraud is intentionally making
(a) That the registered mark or goods or services, or a portion false claims to take advantage of another's goodwill thereby causing damage or
trade-name becomes the common thereof, for which it is registered, or prejudice to another. Indeed, the concepts of bad faith and fraud go hand-in-hand in this
descriptive name of an article or has been abandoned, or its context. There is no distinction between the concepts of bad faith and fraud in trademark
substance on which the atent has registration was obtained fraudulently registrations because the existence of one necessarily presupposes the existence of the
expired; or contrary to the provisions of this other.
(b) That it has been abandoned; Act, or if the registered mark is being Shangri-la supports the definition of bad faith in trademark registrations as knowledge
(c) That the registration was used by, or with the permission of, by the registrant of prior creation, use, and/or registration by another of an identical or
obtained fraudulently or contrary the registrant so as to misrepresent similar trademark. In said case, since respondent Developers Group of Companies,
to the provisions of section four, the source of the goods or services Inc.'s (DGI) president was a previous guest at one of petitioner's hotels, it was found that
Chapter II hereof; on or in connection with which the DGI was in bad faith when it appropriated and registered the "SHANGRI-LA" mark and
(d) That the registered mark or mark is used. If the registered mark the "S" logo, viz.:
trade-name has been assigned, and becomes the generic name for less The CA itself, in its Decision of May 15, 2003, found that the respondent's president and
is being used by, or with the than all of the goods or services for chairman of the board, Ramon Syhunliong, had been a guest at the petitioners' hotel
permission of, the assignee so as to which it is registered, a petition to before he caused the registration of the mark and logo, and surmised that he must have
misrepresent the source of the cancel the registration for only those copied the idea there[.]
goods, business or services in goods or services may be filed. A To jump from a recognition of the fact that the mark and logo must have been copied to
connection with which the mark or registered mark shall not be deemed a rationalization for the possibility that both the petitioners and the respondent
trade-name is used; or to be the generic name of goods or coincidentally chose the same name and logo is not only contradictory, but also
(e) That cancellation is authorized by services solely because such mark is manifestly mistaken or absurd. Furthermore, the "S" logo appears nothing like the "Old
English" print that the CA makes it out to be, but is obviously a symbol with oriental or
Asian overtones. At any rate, it is ludicrous to believe that the parties would come up
with the exact same lettering for the word "Shangri-La" and the exact same logo to
boot. As correctly observed by the petitioners, to which we are in full accord:
xxx When a trademark copycat adopts the word portion of another's trademark as his
own, there may still be some doubt that the adoption is intentional. But if he copies not
only the word but also the word's exact font and lettering style and in addition, he copies
also the logo portion of the trademark, the slightest doubt vanishes. It is then replaced
by the certainty that the adoption was deliberate, malicious and in bad faith.
It is truly difficult to understand why, of the millions of terms and combination of letters
and designs available, the respondent had to choose exactly the same mark and logo as
that of the petitioners, if there was no intent to take advantage of the goodwill of
petitioners' mark and logo.
One who has imitated the trademark of another cannot bring an action for infringement,
particularly against the true owner of the mark, because he would be coming to court
with unclean hands. Priority is of no avail to the bad faith plaintiff. Good faith is required
in order to ensure that a second user may not merely take advantage of the goodwill
established by the true owner."112 (Emphasis supplied)
Pagasa Industrial Corporation v. Court of Appeals113 likewise supports the definition of
bad faith as prior knowledge. In said case, the Court found that Pagasa registered the
"YKK" mark in bad faith because it had previously known that there was another person
using the mark. Hence, the Court affirmed the cancellation of the mark as decided by the
Director of Patents and the CA:
Pagasa appealed to the [CA] which in its decision dated February 6, 1980 affirmed the
cancellation. It found that prior to 1968 Pagasa knew that Yoshida was the registered
owner and user of the YKK trademark which is an acronym of its corporate name.
Tadao Yoshida, the president of Yoshida, and Tsutomu Isaka, the export manager,
visited in 1960 (1965) Pagasa's factory which was manufacturing zippers under
the Royal brand. Anacleto Chi, Pagasa's president, visited in turn Yoshida's factory in
Toyoma, Japan.
The Appellate Court concluded that Pagasa's knowledge that Yoshida was using the
YKK trademark precludes the application of the equitable principle of laches, estoppel
and acquiescence. It noted that Pagasa acted in bad faith. As observed by Yoshida's
counsel, Pagasa's registration of YKK as its own trademark was an act of ingratitude.
xxxx
Pagasa cannot rely on equity because he who comes into equity must come with clean
hands. Equity refuses to lend its aid in any manner to one seeking its active interposition
who has been guilty of unlawful or inequitable conduct in the matter with relation to
which he seeks relief (30 C.J.S. 1009).
"Registration is sufficient prima-facie proof that all acts necessary to entitle the mark to
registration were duly performed." (87 C.J.S. 421). Obviously, Yoshida's prior
registration is superior and must prevail.114 (Emphasis and underscoring supplied)
Birkenstock Orthopaedie GmbH and Co. KG v. Phil. Shoe Expo Marketing
Corp.115 also involved a finding that a party was in bad faith because it had known of
the existence and use by another person of the mark before said party appropriated and
registered the same, viz.:
In view of the foregoing circumstances, the Court finds the petitioner to be the true and
lawful owner of the mark "BIRKENSTOCK" and entitled to its registration, and that
respondent was in bad faith in having it registered in its name. In this regard, the Court
quotes with approval the words of the IPO Director General, viz.:
The facts and evidence fail to show that [respondent] was in good faith in using and in
registering the mark BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a
highly distinct and arbitrary mark. It is very remote that two persons did coin the same or
identical marks. To come up with a highly distinct and uncommon mark previously
appropriated by another, for use in the same line of business, and without any plausible
explanation, is incredible. The field from which a person may select a trademark is
practically unlimited. As in all other cases of colorable imitations, the unanswered riddle
is why, of the millions of terms and combinations of letters and designs available,
[respondent] had to come up with a mark identical or so closely similar to the [petitioner's]
if there was no intent to take advantage of the goodwill generated by the [petitioner's]
mark. Being on the same line of business, it is highly probable that the [respondent]
knew of the existence of BIRKENSTOCK and its use by the [petitioner], before
[respondent] appropriated the same mark and had it registered in its
name.116 (Emphasis supplied)
More importantly, however, there is also jurisprudential basis to declare these trademark
registrations done in bad faith as void. In the case of Shangri-La International Hotel
Management, Ltd. v. Developers Group of Companies, Inc.117 (Shangri-la Resolution),
the Court classified the respondent's registration as void due to the existence of bad
faith and because it failed to comply118 with the provisions of the Trademark Law, as
amended.
While the Court in the Shangri-la Resolution declared the trademark registration as void
based on two grounds, i.e., the presence of bad faith and the fact that the mark was
registered contrary to provisions of the law, either one of these grounds may be used as
sufficient basis for the courts or the IPO to declare trademark registrations as void.
A perusal of the above cancellation provisions in the IP Code and the Trademark Law,
as amended, would reveal that these two grounds differ from the others in the sense
that, unlike the other grounds for cancellation, they both exist prior to the registration.
That is, one can have a registration in bad faith only if he applied for the registration of
the mark despite knowing that someone else has created, used, or registered that mark.
In the same vein, an unregistrable mark which was mistakenly allowed to be registered
was already inherently unregistrable even prior to its registration.119 Accordingly,
because these marks should not have been registered in the first place, the presence of
either of these grounds renders them void. Thus, even if these marks subsequently
became registered, the registrations do not confer upon their owners the rights under
Section 147.1120 of the IP Code because the marks were registered contrary to the
provisions of the same law.121
To emphasize, the presence of bad faith alone renders void the trademark registrations.
Accordingly, it follows as a matter of consequence that a mark registered in bad faith
shall be cancelled by the IPO or the courts, as the case may be, after the appropriate
proceedings.
This concept of bad faith, however, does not only exist in registrations. To the mind of
the Court, the definition of bad faith as knowledge of prior creation, use and/or
registration by another of an identical or similar trademark is also applicable in the use of
trademarks without the benefit of registration.
Accordingly, such bad faith use is also appropriately punished in the IP Code as can be
seen in its unfair competition provisions.122
It is apparent, therefore, that the law intends to deter registrations and use of trademarks
in bad faith.
Concurrent with these aims, the law also protects prior registration and prior use of
trademarks in good faith.
Being the first-to-file registrant in good faith allows the registrant to acquire all the rights
in a mark. This can be seen in Section 122 vis-a-vis the cancellation provision in Section
155.1 of the IP Code. Reading these two provisions together, it is clear that when there
are no grounds for cancellation - especially the registration being obtained in bad faith or
contrary to the provisions of the IP Code, which render the registration void - the
first-to-file registrant acquires all the rights in a mark, thus:
SECTION 122. How Marks are Acquired. - The rights in a mark shall be acquired
through registration made validly in accordance with the provisions of this law. (Sec. 2-A,
R.A. No. 166a)
xxxx
SECTION 151. Cancellation. - 151.1. A petition to cancel a registration of a mark under
this Act may be filed with the Bureau of Legal Affairs by any person who believes that he
is or will be damaged by the registration of a mark under this Act as follows:
(a) Within five (5) years from the date of the registration of the mark under this Act.
(b) At any time, if the registered mark becomes the generic name for the goods or
services, or a portion thereof, for which it is registered, or has been abandoned, or
its registration was obtained fraudulently or contrary to the provisions of this Act, or if
the registered mark is being used by, or with the permission of, the registrant so as to
misrepresent the source of the goods or services on or in connection with which the
mark is used. If the registered mark becomes the generic name for less than all of the
goods or services for which it is registered, a petition to cancel the registration for only
those goods or services may be filed. A registered mark shall not be deemed to be the
generic name of goods or services solely because such mark is also used as a name of
or to identify a unique product or service. The primary significance of the registered mark
to the relevant public rather than purchaser motivation shall be the test for determining
whether the registered mark has become the generic name of goods or services on or in
connection with which it has been used,(n)
(c) At any time, if the registered owner of the mark without legitimate reason fails to use
the mark within the Philippines, or to cause it to be used in the Philippines by virtue of a
license during an uninterrupted period of three (3) years or longer. (Emphasis and
underscoring supplied)
In the same vein, prior users in good faith are also protected in the sense that they will
not be made liable for trademark infringement even if they are using a mark that was
subsequently registered by another person. This is expressed in Section 159.1 of the IP
Code, which reads:
SECTION 159. Limitations to Actions for Infringement. - Notwithstanding any other
provision of this Act, the remedies given to the owner of a right infringed under this Act
shall be limited as follows:
159.1. Notwithstanding the provisions of Section 155 hereof, a registered mark shall
have no effect against any person who, in good faith, before the filing date or the priority
date, was using the mark for the purposes of his business or enterprise: Provided, That
his right may only be transferred or assigned together with his enterprise or business or
with that part of his enterprise or business in which the mark is used. (Underscoring
supplied)
III. The resolution of the controversy
At this point, it is important to highlight that the following facts were no longer questioned
by both parties: (a) Natrapharm is the registrant of the "ZYNAPSE" mark which was
registered with the IPO on September 24, 2007;123 (b) Zuneca has been using the
"ZYNAPS" brand as early as 2004;124 and (c) "ZYNAPSE" and "ZYNAPS" are
confusingly similar125 and both are used for medicines.
In light of these settled facts, it is clear that Natrapharm is the first-to-file registrant of
"ZYNAPSE". Zuneca, on the other hand, is a prior user in good faith of a confusingly
similar mark, "ZYNAPS". What remains contentious is Natrapharm's good or bad faith as
Zuneca contends that the mark was registered in bad faith by Natrapharm. Indeed, if
Zuneca's contention turns out to be true, Natrapharm would not be the owner of
"ZYNAPSE" and it would not have the right under Section 147.1 of the IP Code to
prevent other entities, including Zuneca, from using confusingly similar marks for
identical or similar goods or services. Further, Natrapharm's infringement case would fail
because its "ZYNAPSE" registration would then be voided.
To be sure, the finding of good faith or bad faith is a matter of factual determination.
Considering that a petition for review on certiorari under Rule 45 should only raise
questions of law, it is improper to put into issue at this juncture the existence of bad faith
in Natrapharm's registration.
Further, it is a well-recognized rule that the factual findings of the RTC, its calibration of
the testimonies of the witnesses, and its assessment of their probative weight are given
high respect, if not conclusive effect, unless cogent facts and circumstances of
substance, which if considered, would alter the outcome of the case, were ignored,
misconstrued or misinterpreted.126
Assuming, however, that the Court should still review this factual issue, it finds no
reason to depart from the findings of facts of the RTC, which findings were affirmed by
the CA. In fact, the Court also conducted a review of the testimonies and evidence
presented by the parties and finds that the RTC and the CA were correct in their factual
findings.
The RTC ruled that there was no sufficient evidence to convince it that Natrapharm had
acquired the registration in bad faith.127 The RTC ruled as follows:
Apparently claiming an exception to the first-to-register rule, the defendants [Zuneca]
insist that the plaintiff [Natrapharm] knew of the existence of ["ZYNAPS"] at the time the
plaintiff filed its application for registration. The defendants support this position by
presenting a copy of the Philippine Pharmaceutical Directory (PPD) where ["ZYNAPS"]
is listed on the same page as the other brand names of the plaintiff.
However, defendant Arain admitted on cross[-]examination that even if ["ZYNAPS"] was
listed in the PPD, this does not give her complete knowledge of the brand names of the
other pharmaceuticals also listed in the same Directory. [Consistent] with this admission,
plaintiff should also be accorded the benefit of the doubt that it could not have complete
knowledge of the other brand names listed in the PPD.
Likewise, the defendants claim that in some medical conventions where Patriot, the
sister company of the plaintiff, attended, the ["ZYNAPS"] product of the defendants was
advertised and displayed.
It was, however, clearly shown that Patriot is not the same company as the plaintiff. It
could not be safely concluded that [the plaintiff] knew of ["ZYNAPS"] through Patriot.
In both arguments, this Court finds no sufficient evidence to convince it that there was
bad faith in the registration made by the plaintiff128
The CA thereafter upheld the finding of the RTC that Natrapharm was not aware of the
existence of "ZYNAPS" prior to the registration of "ZYNAPSE".129 The CA quoted and
affirmed the foregoing findings of the RTC.
The CA added that Natrapharm's good faith was established through the testimony of
Natraphann's witness, Ravelo, whose testimony essentially contained the following
points: (a) Natrapharm had used the BFAD and IPO databases and the Philippine
Pharmaceutical Index (PPI) - a research tool accepted by the Philippine pharmaceutical
industry which contains pharmaceutical products marketed in the Philippines in
determining whether "ZYNAPSE" was confusingly similar to an existing brand name in
the market;130 (b) only Ravelo, Mr. Gasgonia, Natraphann's Chief Operations Officer,
and Mrs. Agnes Casiding, Natraphann's Regulatory Manager, knew about the launch of
the new product;131 (c) she had based the name "ZYNAPSE" from an internal
newsletter in the Philippine Neurological Association as well as from the neurological
term "synapse" - the junction between two nerves where they transmit nerve signals -
which relates to the neurological problem of stroke;132 (d) she had checked the PPI as
far back as fourth quarter of 2004 and found that there was no confusingly similar
name;133 and (e) she had then submitted the name to Natrapharm's trademark lawyers
who had it registered with the IPO134 and then with the BFAD.135
The CA thus concluded that Zuneca failed to prove that Natrapharm had registered
"ZYNAPSE" in bad faith, viz.:
This Court would also like to add that even if both Zuneca and Natrapharm have
interacted with each other through a convention, it does not automatically mean that
Natrapharm already acted in bad faith in registering "ZYNAPSE". First, just like the PPD,
it is highly unlikely that the participants would remember each and every medicine or
drug exhibited during said convention. Secondly, the convention happened two (2) years
prior to the registration of "ZYNAPSE" and it is not proven that those who attended the
convention on the part of Natrapharm were the same people who were responsible for
the creation of "ZYNAPSE" or that they were still connected with Natrapharm in
2007. As a rule, good faith is always presumed, and upon him who alleges bad faith on
the part of a possessor rests the burden of proof. The appellants, however, miserably
failed to carry that burden.136 (Emphasis supplied)
The Court affirms the factual findings of the lower courts. Since Zuneca is making the
allegations of bad faith, it was incumbent on Zuneca to overcome the evidence that
Natrapharm was the owner of the mark "ZYNAPSE" and to show that Natrapharm had
registered "ZYNAPSE" in bad faith. However, Zuneca failed to show that the registration
was made fraudulently or in bad faith. In contrast, Natrapharm was able to convince the
lower courts, as it likewise convinces this Court, that it had acted in good faith when it
came up with the name "ZYNAPSE" and that it had no knowledge of Zuneca's use of
"ZYNAPS" after it had checked the PPI, BFAD, and IPO databases.
Zuneca's evidence clearly falls short of establishing that Natrapharm had knowledge of
the prior creation or use by Zuneca of the "ZYNAPS" mark. Zuneca's evidence only
tends to prove that there was a possibility that someone from Natrapharm might have
known of Zuneca's use of "ZYNAPS" because Natrapharm and Zuneca attended the
same conferences and that Zuneca had listed "ZYNAPS" in the PPD publication.
Such possibility is not, however, sufficient to prove bad faith, especially when weighed
against Natrapharm's evidence and explanation on how it coined "ZYNAPSE" and the
steps it took to ensure that there were no other marks that were confusingly similar to it.
Not only was Natrapharm able to explain the origin of the name, it was also able to show
that it had checked the IMS-PPI, IPO, and BFAD databases and found that there was no
brand name which was confusingly similar to "ZYNAPSE".
Since Natrapharm was not shown to have been in bad faith, it is thus considered to have
acquired all the rights of a trademark owner under the IP Code upon the registration of
the "ZYNAPSE" mark.
Consequently, Zuneca's counterclaims against Natrapharm were correctly dismissed by
the lower courts. To be sure, Zuneca did not have any right to prevent third parties,
including Natrapharm, from using marks confusingly similar to its unregistered
"ZYNAPS" mark because it is not an "owner of a registered mark" contemplated in
Section 147.1 of the IP Code.
In any event, while Natrapharm is the owner of the "ZYNAPSE" mark, this does not,
however, automatically mean that its complaint against Zuneca for injunction, trademark
infringement, damages, and destruction with prayer for TRO and/or preliminary
injunction should be granted. The application of Section 159.1 of the IP Code in the case
at bar results in Zuneca's exemption from liability for trademark infringement.
On the interpretation of Section 159.1 of the IP Code, Natrapharm argues that the
limitation to actions for infringement under this section means that only acts prior to the
filing and/or claim of priority of the registered mark are exempted. The good faith prior
user's use of the mark subsequent to the filing and/or registration date is, however, no
longer exempted and makes the prior user liable for infringement.137 This echoes the
CA which held that:
Moreover, the supremacy of the prior registrant over the prior user is further elucidated
in Section 159.1 of the same law x x x.
xxxx
Based on [said] provision, it is manifest that the prior-registrant (sic) cannot run after the
prior-user (sic) for any usage before the registration, but not after, as indicated by the
helping verb "was" in the phrase "was using the mark for the purposes of his business or
enterprise".138 (Emphasis supplied)
The Court believes, and so holds, that the above interpretation is erroneous.
If Section 159.1 of the IP Code is only meant to exempt from an action for infringement
the use in good faith prior to the filing or priority date of the subsequently registered mark,
then this entire provision would be rendered useless and a mere surplusage. Stated
otherwise, there is no point in adding Section 159.1 of the IP Code as an exception
under "Limitations to Actions for Infringement" because it merely repeats the general
rule that, after the mark has been registered, the registrant may file an infringement case
against third parties using an identical or confusingly similar mark in commerce without
its consent, when such use results in a likelihood of confusion.139 Even without Section
159.1 of the IP Code, a third party's prior use of an unregistered mark, if said mark
subsequently becomes registered by another, could not be considered as trademark
infringement because there was no trademark registration - a requirement for a
trademark infringement action to prosper - when the third party was using its mark.
More importantly, the proviso of Section 159.1 of the IP Code states: "[t]hat [the good
faith prior user's] right may only be transferred or assigned together with his enterprise
or business or with that part of his enterprise or business in which the mark is used." To
adhere to the theories of the CA and Natrapharm that the prior user's use of the identical
or confusingly similar mark subsequent to the filing or registration date of the registered
mark should be considered as trademark infringement renders this proviso useless and
nugatory and logically subjects the possible transferee or assignee to inevitable liability
for trademark infringement. The lawmakers could not have intended this absurd
outcome.
Read as a whole, Section 159.1 of the IP Code clearly contemplates that a prior user in
good faith may continue to use its mark even after the registration of the mark by the
first-to-file registrant in good faith, subject to the condition that any transfer or
assignment of the mark by the prior user in good faith should be made together with the
enterprise or business or with that part of his enterprise or business in which the mark is
used. The mark cannot be transferred independently of the enterprise and business
using it.
From the provision itself, it can be gleaned that while the law recognizes the right of the
prior user in good faith to the continuous use of its mark for its enterprise or business, it
also respects the rights of the registered owner of the mark by preventing any future use
by the transferee or assignee that is not in conformity with Section 159.1 of the IP Code.
Notably, only the manner of use by the prior user in good faith - that is, the use of its
mark tied to its current enterprise or business - is categorically mentioned as an
exception to an action for infringement by the trademark owner. The proviso in Section
159.1 of the IP Code ensures that, despite the transfer or assignment of its mark, the
future use by the assignee or transferee will not go beyond the specific confines of such
exception. Without the proviso, the prior user in good faith would have the free hand to
transfer or assign the "protected use" of its mark for any purpose to a third person who
may subsequently use the same in a manner unduly curtailing the rights of the
trademark owner. Indeed, this unilateral expansion of the exception by a third person
could not have been intended, and is guarded against, by the legislature through the
foregoing proviso.
In any event, the application of Section 159.1 of the IP Code necessarily results in at
least two entities - the unregistered prior user in good faith or their assignee or
transferee, on one hand; and the first-to-file registrant in good faith on the other -
concurrently using identical or confusingly similar marks in the market, even if there is
likelihood of confusion. While this situation may not be ideal, as eruditely explained in
the Concurring Opinion of Justice Perlas-Bernabe, the Court is constrained to apply
Section 159.1 of the IP Code as written.
To recall, the RTC imposed on Zuneca the following penalties in light of its finding that
Zuneca had committed trademark infringement, which penalties were later affirmed by
the CA:
Defendants, jointly and severally, are hereby directed to pay the plaintiff the following
amounts, to wit:
One Million Pesos (P1,000,000.00) as damages;
One Million Pesos (P1,000,000.00) as exemplary damages;
Two Hundred Thousand Pesos (P200,000.00) as attorney's
fees;
and the Costs.
Defendants are further enjoined from henceforth using Zynaps or any other variations
thereto which are confusingly similar to the plaintiffs Zynapse.
It is likewise ordered that all infringing goods, labels, signs, prints, packages, wrappers,
receptacles, and advertisements in possession of the defendants, bearing the registered
mark or any reproduction, counterfeit, copy, or colourable imitation thereof, all plates,
molds, matrices and other means of making the same, implements, machines, and other
items related to the conduct, and predominantly used, by the defendants in such
infringing activities, be disposed of outside the channels of commerce or destroyed,
without compensation.
The counterclaim of the defendants is DISMISSED for lack of merit.140
Because Zuneca is not liable for trademark infringement under Section 159.1 of the IP
Code, the Court finds that there is no basis for the above imposition of penalties.
The penalties ordered by the lower courts - that is, the payment of damages, injunction,
and destruction of goods of Zuneca - are based on Sections 156 and 157 of the IP Code,
which provide:
SECTION 156. Actions, and Damages and Injunction for Infringement. - 156.1. The
owner of a registered mark may recover damages 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 infringed his 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.
(Sec. 23, first par., R.A. No. 166a)
156.2. On application of the complainant, the court may impound during the pendency of
the action, sales invoices and other documents evidencing sales, (n)
156.3. In cases where actual intent to mislead the public or to defraud the complainant is
shown, in the discretion of the court, the damages may be doubled. (Sec. 23, first par.,
R.A. No. 166)
156.4. The complainant, upon proper showing, may also be granted injunction. (Sec. 23,
second par., R.A. No. 166a)
SECTION 157. Power of Court to Order Infringing Material Destroyed. - 157.1 In any
action arising under this Act, in which a violation of any right of the owner of the
registered mark is established, the court may order that goods found to be infringing
be, without compensation of any sort, disposed of outside the channels of commerce in
such a manner as to avoid any harm caused to the right holder, or destroyed; and all
labels, signs, prints, packages, wrappers, receptacles and advertisements in the
possession of the defendant, bearing the registered mark or trade name or any
reproduction, counterfeit, copy or colorable imitation thereof, all plates, molds, matrices
and other means of making the same, shall be delivered up and destroyed. (Emphasis
supplied)
A plain reading of the above provisions reveals that that these remedies may only be
ordered by the court if there was a finding that a party had committed infringement. Here,
because of the application of Section 159.1 of the IP Code, Zuneca is not liable for
trademark infringement. Consequently, it follows that the award of damages, issuance of
an injunction, and the disposition and/or destruction of allegedly infringing goods could
not be ordered by the court.
Indeed, directing the foregoing remedies despite a finding of the existence of a prior user
in good faith would render useless Section 159.1 of the IP Code, which allows the
continued use and, in certain situations, the transfer or assignment of its mark by the
prior user in good faith after the registration by the first-to-file registrant. To reiterate,
Section 159.1 of the IP Code contemplates a situation where the prior user in good faith
and the first-to-file registrant in good faith concurrently use identical or confusingly
similar marks in the market, even if there is likelihood of confusion.
While Section 147.1141 of the IP Code provides that the owner of a registered mark
shall have the exclusive right to prevent third parties' use of identical or similar marks for
identical or similar goods where such use would result in a likelihood of confusion, this
provision should be interpreted in harmony with Section 159.1 of the IP Code, especially
the latter's proviso which allows the transfer or assignment of the mark together with the
enterprise or business of the prior user in good faith or with that part of his enterprise or
business in which the mark is used. The lawmakers intended for the rights of the owner
of the registered mark in Section 147.1 to be subject to the rights of a prior user in good
faith contemplated under Section 159.1. Essentially, therefore, Section 159.1 is an
exception to the rights of the trademark owner in Section 147.1 of the IP Code.
Bearing in mind the current ownership regime based on registration under the IP Code
which likewise protects and respects the rights of prior users in good faith, it is thus
reasonable to infer that the new system of acquiring ownership effectively protects
potential entrants in the market. Consistent with the expressed State policy142 under
the law, the system under the IP Code encourages potential market entrants who may
lack resources to venture into business with the assurance that their intellectual property
rights are protected and may be enforced under the law, especially if they register their
marks.
By having a uniform, easily-verifiable system of acquiring ownership, potential
entrepreneurs have the guarantee that once they avail in good faith of the relatively
inexpensive procedure of registration with the IPO, they already have the upper-hand
against someone who could make a claim of ownership based on a supposed "prior
use" - an issue that may entail expensive and extensive litigation effectively favoring
those who have more resources. As explained, due to the change in the language of
Section 123.1 of the IP Code, the registered owners in good faith who dutifully maintain
their registrations generally do not have to worry that their rights over the registered
mark may one day be subject to a cancellation proceeding by someone with claims of
prior actual use. This uniform system of ownership also gives a sense of stability to
potential foreign entrepreneurs wanting to offer their products and services in the
Philippines because, if they register their marks in good faith and diligently maintain said
marks, they no longer have to worry about their ownership over the mark being attacked
by someone appearing out of the blue claiming to be a local prior user of the mark all
along. Such sense of stability given by the current system of acquiring trademark
ownership is in consonance with the expressed State policy that describes an effective
intellectual and industrial property system as one that "attracts foreign investments."143
In the same vein, those who do not have the resources to apply for trademark
registrations are protected from infringement cases and may exercise certain rights
under the law, albeit their rights under the IP Code are more limited compared to the
owners of the mark.
Lastly, as additional rationale for initiating the complaint for trademark infringement
against Zuneca and presumably to prevent the coexistence of the subject marks in the
market, Natrapharm points out the dire consequence of the possibility of medical
switching in the case at bar, especially since "ZYNAPSE" and "ZYNAPS" are admitted to
be confusingly similar.144 Allegedly, if a stroke patient who is supposed to
take citicoline ("ZYNAPSE") mistakenly ingests carbamazepine ("ZYNAPS"), said
patient will not only be not cured of stroke but also be exposed to the risk of suffering
Stevens-Johnson syndrome, a side effect of carbamazepine, which is a serious
systemic body-wide allergic reaction with a characteristic rash which attacks and
disfigures the skin and mucous membrane.145
While there is no issue as to the likelihood of confusion between "ZYNAPSE" and
"ZYNAPS", the Court believes that the evil of medical switching will likely not arise,
considering that the law requires the generic names of drugs to be written in
prescriptions.
R.A.6675146 (Generics Act of 1988), as amended by R.A. 9502147 or the Universally
Accessible Cheaper and Quality Medicines Act of 2008, reads:
SEC. 6. Who Shall Use Generic Terminology. - (a) All government health agencies and
their personnel as well as other government agencies shall use generic terminology or
generic names in all transactions related to purchasing, prescribing, dispensing and
administering of drugs and medicines.
(b) All medical, dental and veterinary practitioners, including private practitioners, shall
write prescriptions using the generic name. The brand name may be included if so
desired. (Emphasis supplied)
Pertinently, the said law also provides for the appropriate penalties for failure to comply
with these requirements. Section 12 of the Generics Act of 1988, as amended, reads:
SEC. 12. Penalty. - (A) Any person who shall violate Section 6(a) or 6(b) of this Act shall
suffer the penalty graduated hereunder, viz.:
(a) for the first conviction, he shall suffer the penalty of reprimand which shall be officially
recorded in the appropriate books of the Professional Regulation Commission.
(b) for the second conviction, the penalty of fine in the amount of not less than Ten
thousand pesos (Php10,000.00) but not exceeding Twenty- five thousand pesos
(Php25,000.00), at the discretion of the court.
(c) for the third conviction, the penalty of fine in the amount of not less than Twenty-five
thousand pesos (Php25,000.00) but not exceeding Fifty thousand pesos (Php50,000.00)
and suspension of his license to practice his profession for sixty (60) days at the
discretion of the court.
(d) for the fourth and subsequent convictions, the penalty of fine of not less than One
hundred thousand pesos (Php100,000.00) and suspension of his license to practice his
profession for one (1) year or longer at the discretion of the court.
xxxx
(C) The Secretary of Health shall have the authority to impose administrative sanctions
such as suspension or cancellation of license to operate or recommend suspension of
license to practice profession to the Professional Regulation Commission as the case
may be for the violation of this Act.
The administrative sanctions that shall be imposed by the Secretary of the Department
of Health shall be in a graduated manner in accordance with Section 12.A.
An administrative case may be instituted independently from the criminal case: Provided,
That, the dismissal of the criminal case or the withdrawal of the same shall in no
instance be a ground for the dismissal of the administrative case.
Still, even as the Generics Act of 1988, as amended, provides protection to the
consumers - and despite the Court's recognition of the respective rights under the IP
Code of the first registrant in good faith and the prior user in good faith - the Court is
nonetheless mindful of potential switching of medicines. As amply elaborated by Justice
Gesmundo in his Concurring Opinion, the issue on likelihood of confusion on medicines
may pose a significant threat to public health, hence, there is a need to improve our
intellectual property laws and the government's manner of regulation of drug names to
prevent the concurrent use in the market of confusingly similar names for medicines.
To further reduce therefore, if not totally eliminate, the likelihood of switching in this
case, the Court hereby orders the parties to prominently state on the packaging of their
respective products, in plain language understandable by people with no medical
background or training, the medical conditions that their respective drugs are supposed
to treat or alleviate and a warning indicating what "ZYNAPS" is not supposed to treat
and what "ZYNAPSE" is not supposed to treat, given the likelihood of confusion between
the two.
As well, by this Decision, the Court furnishes the Food and Drug Administration a copy
of this decision, and accordingly directs it to monitor the continuing compliance by the
parties of the above directives.
WHEREFORE, premises considered, the petition is PARTLY GRANTED and the Court
hereby declares petitioners ZUNECA PHARMACEUTICAL AND/OR AKRAM ARAIN
AND/OR VENUS ARAIN, M.D., AND STYLE OF ZUNECA PHARMACEUTICAL as the
prior users in good faith of the "ZYNAPS" mark and accordingly protected under Section
159.1 of the Intellectual Property Code of the Philippines.
The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 99787,
which affirmed the Decision of the Regional Trial Court of Quezon City, Branch 93 dated
December 2, 2011, are AFFIRMED insofar as they declared
respondent NATRAPHARM, INC. as the lawful registrant of the "ZYNAPSE" mark under
the Intellectual Property Code of the Philippines, and are SET ASIDE insofar as they
hold petitioners liable for trademark infringement and damages, directed the destruction
of petitioners' goods, and enjoined petitioners from using "ZYNAPS". Petitioners'
application for the issuance of a Temporary Restraining Order and/or Preliminary
Injunction is DENIED.
ZUNECA PHARMACEUTICAL AND/OR AKRAM ARAIN AND/OR VENUS ARAIN, M.D.,
AND STYLE OF ZUNECA PHARMACEUTICAL and NATRAPHARM, INC. are likewise
ORDERED to: (1) indicate on their respective packaging, in plain language
understandable by people with no medical background or training, the medical
conditions that their respective drugs are supposed to treat or alleviate and a warning
indicating what "ZYNAPS" is not supposed to treat and what "ZYNAPSE"
is not supposed to treat; and (2) submit to the Court a written report showing compliance
with this directive within thirty (30) days from receipt of this Decision.
Let a copy of this Decision be furnished the Food and Drug Administration which is, by
this Decision, directed to monitor the parties' continuing compliance with the above
directives.
Let copies of this Decision likewise be forwarded to the Senate President, the Speaker
of the House of Representatives, and the Intellectual Property Office, for their
information and guidance.
SO ORDERED.