CPA REVIEW
REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS
INTELLECTUAL PROPERTY LAW
PATENTS
The primary purpose of the patent system is not the reward
of the individual but the advancement of the
arts and sciences.
The function of a patent is to add to the sum of useful
knowledge and one of the purposes of the patent system is
to encourage dissemination of information concerning
discoveries and inventions.
Coverage of patents
1. Invention – any technical solution of a problem in
any field of human activity which is new, involves
an inventive step and is industrially applicable. It
may be, or may relate to, a product, or process, or
an improvement of any of the foregoing (Sec. 21,
IPC).
2. Utility Model – An invention qualifies for
registration as a utility model if it is new and
industrially applicable (Sec. 109, IPC).
3. Industrial Design – any composition of lines or
colors or any three-dimensional form, whether or
not associated with lines or colors, provided that
such composition or form gives a special
appearance to and can serve as pattern for an
industrial product or handicraft. It must be new or
ornamental (Sec. 112, 113 IPC).
Term or duration of a patent
The term of a patent shall be twenty (20) years from the
filing date of the application. (IPC, Sec. 54)
Right to a patent
The right to a patent belongs to the inventor, his heirs, or
assigns. When two (2) or more persons have jointly made
an invention, the right to a patent shall belong to them
jointly. (IPC, Sec. 28)
Assignment of Patent Rights
For a valid assignment of patent rights, the assignment
must be in writing and must be duly notarized. (IPC, Sec.
105)
I. Patentable inventions
Any technical solution of a problem in any field of
human activity which is:
a. new;
b. involves an inventive step;
c. and is industrially applicable.
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It may be, or may relate to, a product, or process, or an
improvement of any of the foregoing (IPC, Sec. 21).
Criteria for Patentability
1. Novelty – An invention shall not be considered
new if it forms part of a prior art (Sec. 23, IPC).
2. Inventive Step –if, having regard to prior art, it is
not obvious to a person skilled in the art at the time
of the filing date or priority date of the application
claiming the invention.
3. Industrially Applicable – An invention that can be
produced and used in any industry (IPC, Sec. 27).
1. Novelty
Prior Art
a. Everything which has been made available to the
public anywhere in the world, before the filing
date or the priority date of the application
claiming the invention; and
b. The whole contents of an earlier published
Philippine application or application with earlier
priority date of a different inventor.
Public disclosure
The ultimate goal of a patent system is to bring new designs
and technologies into the public through disclosure; hence
ideas, once disclosed to the public without protection of a
valid patent, are subject to appropriation without
significant restraint.
XPN: Non-prejudicial disclosure – the disclosure of
information contained in the application during the 12-
month period before the filing date or the priority date of
the application.
2. Inventive step
GR: An invention involves an inventive step if, having
regard to prior art, it is not obvious to a person skilled in the
art at the time of the filing date or priority date of the
application claiming the invention (IPC Sec. 26).
XPN: In the case of drugs and medicines, there is no
inventive step if the invention results from the mere
discovery of a new form or new property of a known
substance which does not result in the enhancement of the
known efficacy of that substance (IPC, as amended by R.A.
9502, Sec. 26.2).
Person skilled in the art
A person skilled in the art is a person with ordinary skills
in a certain art or field who is aware of what is a common
general knowledge in the field at the time of the application.
3. Industrial Applicability
An invention that can be produced and used in any
industry meets the industrial application requirement of
patent registrability. This means an invention is not merely
theoretical, but also has a practical purpose. If the invention
is a product, it should be able to produce a product and if
the invention is a process, it should be able to lay out a
process.
II. Utility Model
Requisites for an invention to be considered as a utility
model
If it is new and industrially applicable. A model of
implement or tools of any industrial product even if not
possessed of the quality of invention but which is of
practical utility (IPC, Sec. 109.1).
4. Schemes, rules and methods of performing mental acts,
playing games or doing business, and programs for
computers;
5. Anything which is contrary to public order or morality
(IPC as amended by R.A. 9502, Sec. 22);
6. Methods for treatment of the human or animal body;and
7. In the case of drugs and medicines, mere discovery of a
new form or new property of a known substance which
does not result in the enhancement of the efficacy of that
substance
Ownership of a Patent
Persons entitled to a patent
1. Inventor, his heirs, or assigns (IPC, Sec 28);
2. Joint invention – Jointly by the inventors (IPC, Sec.
28);
3. Two or more persons invented separately and
independently of each other – To the person who
filed an application;
4. Two or more applications are filed – the applicant
who has the earliest filing date or, the earliest
priority date. First to file rule (IPC, Sec. 29).
Inventions Created Pursuant to a Commission

Term of a utility model Pursuant to a commission: The person who commissions

Seven (7) years from date of filing of the application (IPC, the work shall own the patent, unless otherwise provided
Sec. 109.3). in the contract.

III. Industrial Design
An industrial design is not considered new if it differs from
prior designs only in minor respects that can be mistaken as
such prior designs by an ordinary observe
Term of an Industrial Design
Pursuant to employment: In case the employee made the
invention in the course of his employment contract, the
patent shall belong to:
a. The employee, if the inventive activity is not a part
of his regular duties even if the employee uses the
time, facilities and materials of the employer;

Five (5) years from the date of filing with 2 five-year term b. The employer, if the inventive activity is the result
renewals upon payment of fees (IPC, Sec. 118.2). of the performance of his regularly assigned
duties, unless there is an agreement, express or
Invention vs. Utility model vs. Industrial design implied, to the contrary (IPC, Sec. 30).

Elements Term of Protection First-To-File Rule

Invention -New Twenty (20) years
-Inventive from the date of filing 1. If two (2) or more persons have made the invention
Step with payment of separately and independently of each other, the
-Industrial annuities. No renewal right to the patent shall belong to the person who
Applicability (IPC, Sec. 54). filed an application for such invention, or
Utility -New Seven (7) years from 2. Where two or more applications are filed for the
Model -Industrial the date of filing same invention, to the applicant which has the
Applicability Without renewal (IPC, earliest filing date (IPC, Sec. 29).
Sec. 109.3).
Industrial -New or Five (5) years from the Civil Infringement
Design Ornamental date of filing with 2 The making, using, offering for sale, selling, or importing a
five-year term patented product or a product obtained directly or
renewals upon indirectly from a patented process, or the use of a patented
payment of fees (IPC, process without the authorization of the patentee
Sec. 118.2). constitutes patent infringement.

Non-Patentable Inventions Contributory Infringement

1. Plant varieties or animal breeds or essentially biological
process for the production of plants or animals. This
provision shall not apply to micro-organisms and non-
biological and microbiological processes;
2. Aesthetic creations;
3. Discoveries, scientific theories and mathematical
methods;
Anyone who actively induces the infringement of a patent
or provides the infringer with a component of a patented
product or of a product produced because of a patented
process knowing it to be especially adopted for infringing
the patented invention and not suitable for substantial non-
infringing use shall be liable as a contributory infringer and
shall be jointly and severally liable with the infringer. (Sec.
76.6, IPC)

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Criminal Infringement
If infringement is repeated by the infringer or by anyone in
connivance with him after finality of the judgment of the
court against the infringer, the offenders shall, without
prejudice to the institution of a civil action for damages, be
criminally liable. (IPC, Sec. 84)
Tests in Patent Infringement
Literal Infringement
The extent of protection conferred by the patent shall be
determined by the claims, which are to be interpreted in
the light of description and drawings. (Sec. 75, IPC)
Doctrine of Equivalents
According to the doctrine of equivalents, an infringement
also occurs when a device appropriates a prior invention
by incorporating its innovative concept and, despite some
modification and change, performs substantially the same
function in substantially the same way to achieve
substantially the same result.
TRADEMARK
Mark means 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.
Trade name means the name or designation identifying or
distinguishing an enterprise.
Marks which may be registered
Any word, name, symbol, emblem, device, figure, sign,
phrase, or any combination thereof except those
enumerated under Section 123, IPC.
Duration or Effectivity of Trademark Registration
It remains in force for 10 years, subject to indefinite
renewals of 10 years each.
Non-registrable marks
1. Consists of immoral, deceptive or scandalous
matter or falsely suggest a connection with persons,
institutions, beliefs, or national symbols;
2. Consists of the flag or coat of arms or other insignia
of the Philippines or any of its political
subdivisions, or of any foreign nation;
3. Consists of a name, portrait or signature identifying
a particular living individual except by his written
consent, or the name, signature, or portrait of a
deceased President of the Philippines, during the
life of his widow except by written consent of the
widow;
4. Identical with a registered mark belonging to a
different proprietor or a mark with an earlier filing
or priority date, in respect of:
a. The same goods or services, or
b. Closely related goods or services, or
c. If it nearly resembles such a mark as to be
likely to deceive or cause confusion;
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5. Is identical with an internationally well-known
mark, whether or not it is registered here, used for
identical or similar goods or services;
6. Is identical with an internationally well-known
mark which is registered in the Philippines with
respect to non-similar goods or services. Provided,
that the interests of the owner of the registered
mark are likely to be damaged by such use;
7. Is likely to mislead the public as to the nature,
quality, characteristics or geographical origin of the
goods or services;
8. Consists exclusively of signs that are generic for the
goods or services that they seek to identify;
9. Consists exclusively of signs that have become
customary or usual to designate the goods or
services in everyday language and established
trade practice;
10. Consists exclusively that may serve in trade to
designate the kind, quality, quantity, intended
purpose, value, geographical origin, time or
production of the goods or rendering of the
services, or other characteristics of the goods or
services;
11. Consists of shapes that may be necessitated by
technical factors or by the nature of the goods
themselves or factors that affect their intrinsic
value;
12. Consists of color alone, unless defined by a given
form; or
13. Is contrary to public order or morality. (IPC, Sec.
123)
Rights conferred to the Owner of a Registered Mark
The owner of a registered mark shall have the exclusive
right to:
a. Use the mark for one’s own goods or services;
b. Prevent third parties from using, without his
consent, signs or containers which are identical or
similar to the registered trademark where such use
would result in a likelihood of confusion.
c. In case of the use of an identical sign for identical
goods or services, a likelihood of confusion shall be
presumed. (IPC, Secs. 147, 147.1)
Two (2) tests to determine colorable imitation
1. Dominancy Test
It focuses on the similarity of the prevalent features of the
competing marks. If the competing trademark contains the
main or essential or dominant features of another, and
confusion and deception are likely to result, infringement
takes place.
e.g. Nestle’s “NAN” vs. 5M Enterprise’ “NANNY”
McDonald’s Corp.’s “BIG MAC” vs. L.C. Big
Mak Burger, Inc.’s “BIG MAK”
UFC Philippines (now merged with NutriAsia) “PAPA”
vs. Barrio Fiesta
Manufacturing’s “PAPA BOY & DEVICE”
2. Holistic Test
The trademarks in their entirety as they appear in their
respective labels are considered in relation to the goods to
which they are attached.
e.g. Emerald Garment’s “STYLISTIC MR. LEE” vs. Unauthorized use of a The passing off of one’s
H.D. Lee’s “LEE” trademark. goods as those of
2. Mighty Corp’s “GALLO” for cigarettes vs. E. & another.
J.’s “GALLO” for wines Fraudulent intent is Fraudulent intent is
Unnecessary. Unnecessary.
WELL-KNOWN MARKS Prior registration of the Registration is not
trademark is a prerequisite necessary.
A mark cannot be registered if it is identical with, or to the action.
confusingly similar to, or constitutes a translation of a mark
which is considered by the competent authority of the COPYRIGHT
Philippines to be well-known internationally and in the
Philippines, whether or not it is registered here, as being A right over literary and artistic works which are original
already the mark of a person other than the applicant for intellectual creations in the literary and artistic domain
registration, and used for identical or similar goods or protected from the moment of creation (IPC, Sec. 171.1).
services: Provided, That in determining whether a mark is
well-known, account shall be taken of the knowledge of the Duration of the Author’s Copyright
relevant sector of the public, rather than of the public at
large, including knowledge in the Philippines which has Copyright shall last during the lifetime of the author and 50
been obtained as a result of the promotion of the mark. years after his death.

e.g. “Harvard” Elements of copyrightability

Declaration of Actual Use 1. Originality – Must have been created by the

The applicant or the registrant shall file a declaration of
actual use (DAU) of the mark with evidence to that effect,
within three (3) years from the filing date of the application.
Otherwise, the application shall be refused or the mark shall
be removed from the Register by the Director. (IPC, Sec.
124.2)
author’s own skill, labor, and judgment without
directly copying or evasively imitating the work of
another
2. Expression – Must be embodied in a medium
sufficiently permanent or stable to permit it to be
perceived, reproduced or communicated for a
period more than a transitory duration.

Also, a declaration of actual use and evidence shall be filed Principle of automatic protection: Works are protected by
within one year from the fifth anniversary of the the sole fact of their creation irrespective of their content,
registration. Failure to submit the fifth anniversary use and quality or purpose. Such rights are conferred from the
evidence to that effect shall merit the cancellation of the moment of creation.
mark.
Copyrightable Works
Renewal of registration
1. Literary and Artistic Works
A certificate of registration may be renewed for periods of a. Books, pamphlets, articles and other writings
ten (10) years at its expiration. Each request for renewal of b. Lectures, sermons, addresses, dissertations
registration must be made within 6 months before the prepared for oral delivery, whether or not reduced
expiration of the registration or within 6 months after such in writing or other material form
expiration on payment of the additional fee prescribed. c. Letters
(IPC, Sec. 146) d. Dramatic, choreographic works
e. Musical compositions
Trademark infringement f. Works of Art
g. Periodicals and Newspapers
Use without consent of the trademark owner of any h. Works relative to Geography, topography,
reproduction, counterfeit, copy or colorable limitation of architecture or science
any registered mark or trade name. Such use is likely to i. Works of Applied art
cause confusion or mistake or to deceive purchasers or j. Works of a Scientific or technical character
others as to the source or origin of such goods or services, k. Photographic works
or identity of such business. l. Audiovisual works and cinematographic works
m. Pictorial illustrations and advertisements
UNFAIR COMPETITION n. Computer programs; and
o. Other literary, scholarly, scientific and artistic
It is the passing off (or palming off) or attempting to pass works (IPC, Sec. 172.1).
off upon the public of the goods or business of one person
as the goods or business of another with the end and 2. Derivative Works
probable effect of deceiving the public. a. Dramatizations, translations, adaptations,
bridgements, arrangements, and other alterations
It is the giving of goods the general appearance of the goods of literary or artistic works;
of his competitor with the intention of deceiving the public b. Collections of literary, scholarly, or artistic works
that the goods are those of his competitor. and compilations of data and other materials which
are original by reason of the selection or
Trademark Infringement v. Unfair Competition coordination or arrangement of their contents (IPC,
Sec.173).
Infringement of TM Unfair Competition

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 Non-Copyrightable Works

1. Idea, procedure, system, method or operation,

concept, principle, discovery or mere data as such
2. News of the day and other items of press
information
3. Any official text of a legislative, administrative or
legal nature, as well as any official translation
thereof
4. Pleadings
5. Decisions of courts and tribunals
6. Any work of the government of the Philippines
7. TV programs, format of TV programs
7. Systems of bookkeeping; and
8. Statutes.

Term of protection

1. For performances not incorporated in recordings,

50 years from the end of the year in which the
performance took place; and
2. For sound or image and sound recordings and for
performances incorporated therein, 50 years from
the end of the year in which the recording took
place.
3. In case of broadcasts, the term shall be 20 years
from the date the broadcast took place. The
extended term shall be applied only to old works
with subsisting protection under the prior law (IPC,
Sec. 215).

Doctrine of Fair Use

“Fair use” permits a secondary use that “serves the

copyright objective of stimulating productive thought and
public instruction without excessively diminishing the
incentives for creativity”.

Factors that should be considered in order to determine fair

use
1. Purpose and character of the use, including
whether such use is of a commercial nature or is for
non-profit educational purpose;
2. Nature of the copyrighted work;
3. Amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and
4. Effect of the use upon the potential market for
or value of the copyrighted work.

If you copy to the extent that you reduce the marketability

of the book, it is no longer fair use.

Copyright Infringement
A person infringes a right protected under this Act
when one:
a. Directly commits an infringement;
b. Benefits from the infringing activity of another
person who commits an infringement if the person
benefiting has been given notice of the infringing
activity and has the right and ability to control the
activities of the other person;
c. With knowledge of infringing activity, induces,
causes or materially contributes to the infringing
conduct of another

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