G.R. No. 154342 July 14, 2004

MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC., petitioner, vs.E. & J. GALLO WINERY and THE ANDRESONS GROUP, INC., respondents.

FACTS

Respondent Gallo Winery is a foreign corporation not doing business in the Philippines but organized and existing under the laws of the State of California, United States of America (U.S.), where all its wineries are located. Gallo Winery produces different kinds of wines and brandy products and sells them in many countries under different registered trademarks, including the GALLO and ERNEST & JULIO GALLO wine trademarks.

Respondent domestic corporation, Andresons, has been Gallo Winerys exclusive wine importer and distributor in the Philippines since 1991, selling these products in its own name and for its own account.

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

On the other hand, petitioners Mighty Corporation and La Campana and their sister company, Tobacco Industries of the Philippines (Tobacco Industries), are engaged in the cultivation, manufacture, distribution and sale of tobacco products for which they have been using the GALLO cigarette trademark since 1973.

The Bureau of Internal Revenue (BIR) approved Tobacco Industries use of GALLO 100s cigarette mark on September 14, 1973 and GALLO filter cigarette mark on March 26, 1976, both for the manufacture and sale of its cigarette products. In 1976, Tobacco Industries filed its manufacturers sworn statement as basis for BIRs collection of specific tax on GALLO cigarettes.

On February 5, 1974, Tobacco Industries applied for, but eventually did not pursue, the registration of the GALLO cigarette trademark in the principal register of the then Philippine Patent Office.

In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana which, on July 16, 1985, applied for trademark registration in the Philippine Patent Office. On July 17, 1985, the National Library issued Certificate of Copyright Registration No. 5834 for La Campanas lifetime copyright claim over GALLO cigarette labels.

Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes bearing the GALLO trademark. BIR approved Mighty Corporations use of GALLO 100s cigarette brand, under licensing agreement with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL 100s cigarette brand on April 3, 1989.

Petitioners claim that GALLO cigarettes have been sold in the Philippines since 1973, initially by Tobacco Industries, then by La Campana and finally by Mighty Corporation.

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

Respondents claim that they first learned about the existence of GALLO cigarettes in the latter part of 1992 when an Andresons employee saw such cigarettes on display with GALLO wines in a Davao supermarket wine cellar section. Forthwith, respondents sent a demand letter to petitioners asking them to stop using the GALLO trademark, to no avail.

On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark and tradename infringement and unfair competition, with a prayer for damages and preliminary injunction.

Respondents charged petitioners with violating Article 6 of the Paris Convention for the Protection of Industrial Property (Paris Convention) and RA 166 (Trademark Law), specifically, Sections 22 and 23 (for trademark infringement), 29 and 30 (for unfair competition and false designation of origin) and 37 (for tradename infringement). They claimed that petitioners adopted the GALLO trademark to ride on Gallo Winerys GALLO and ERNEST & JULIO GALLO trademarks established reputation and popularity, thus causing confusion, deception and mistake on the part of the purchasing public who had always associated GALLO and ERNEST & JULIO GALLO trademarks with Gallo Winerys wines. Respondents prayed for the issuance of a writ of preliminary injunction and ex parte restraining order, plus P2 million as actual and compensatory damages, at least P500,000 as exemplary and moral damages, and at least P500,000 as attorneys fees and litigation expenses.

In their answer, petitioners alleged, among other affirmative defenses, that: petitioners GALLO cigarettes and Gallo Winerys wines were totally unrelated products; Gallo Winerys GALLO trademark registration certificate covered wines only, not cigarettes; GALLO cigarettes and GALLO wines were sold through different channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO menthols, were low-cost items compared to Gallo Winerys high-priced luxury wines which cost between P98 to P242.50; the target market of Gallo Winerys wines was the middle or high-income bracket with at least P10,000 monthly income while GALLO cigarette buyers were farmers, fishermen, laborers and other low-income workers; the dominant feature of the GALLO cigarette mark was the rooster device with the manufacturers name clearly indicated as MIGHTY CORPORATION while, in the case of Gallo Winerys wines, it was the full names of the founders-owners ERNEST & JULIO GALLO or just their surname GALLO; by their inaction and conduct, respondents were guilty of laches and estoppel; and petitioners acted with honesty, justice and good faith in the exercise of their right to manufacture and sell GALLO cigarettes.

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

RTC denied, for lack of merit, respondents motion for reconsideration.

After trial on the merits, however, the Makati RTC, held petitioners liable for, and permanently enjoined them from, committing trademark infringement and unfair competition with respect to the GALLO trademark.

On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioners motion for reconsideration.

ISSUE

Whether or not petitioners were liable for trademark infringement, unfair competition and damages. (No)

RULING

THE TRADEMARK LAW AND THE PARIS CONVENTION ARE THE APPLICABLE LAWS, NOT THE INTELLECTUAL PROPERTY CODE

We note that respondents sued petitioners on March 12, 1993 for trademark infringement and unfair competition committed during the effectivity of the Paris Convention and the Trademark Law.

Yet, in the Makati RTC decision of November 26, 1998, petitioners were held liable not only under the aforesaid governing laws but also under the IP Code which took effect only on January 1, 1998,

The CA apparently did not notice the error and affirmed the Makati RTC decision.

We therefore hold that the courts a quo erred in retroactively applying the IP Code in this case.

It is a fundamental principle that the validity and obligatory force of a law proceed from the fact that it has first been promulgated. A law that is not yet effective cannot be considered as conclusively known by the populace. To make a law binding even before it takes effect may lead to the arbitrary exercise of the legislative power.

DISTINCTIONS BETWEEN TRADEMARK INFRINGEMENT AND UNFAIR COMPETITION

In Del Monte Corporation vs. Court of Appeals, we distinguished trademark infringement from unfair competition:

(1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair competition is the passing off of one's goods as those of another.

(2) In infringement of trademark fraudulent intent is unnecessary, whereas in unfair competition fraudulent intent is essential.

(3) In infringement of trademark the prior registration of the trademark is a prerequisite to the action, whereas in unfair competition registration is not necessary.

Pertinent Provisions on Trademark Infringement under the Paris Convention and the Trademark Law

Under Article 6 of the Paris Convention, the following are the elements of trademark infringement:

(a) registration or use by another person of a trademark which is a reproduction, imitation or translation liable to create confusion,

(b) of a mark considered by the competent authority of the country of registration or use to be well-known in that country and is already the mark of a person entitled to the benefits of the Paris Convention, and

(c) such trademark is used for identical or similar goods.

Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the following constitute the elements of trademark infringement:

(a) a trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent Office

(b) is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or such trademark is reproduced, counterfeited, copied or colorably imitated by another person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services as to likely cause confusion or mistake or to deceive purchasers,

(c) the trademark is used for identical or similar goods, and

(d) such act is done without the consent of the trademark registrant or assignee.

In summary, the Paris Convention protects well-known trademarks only (to be determined by domestic authorities), while the Trademark Law protects all trademarks, whether well-known or not, provided that they have been registered and are in actual commercial use in the Philippines. Following universal acquiescence and comity, in case of domestic legal disputes on any conflicting provisions between the Paris Convention (which is an international agreement) and the Trademark law (which is a municipal law) the latter will prevail.

Under both the Paris Convention and the Trademark Law, the protection of a registered trademark is limited only to goods identical or similar to those in respect of which such trademark is registered and only when there is likelihood of confusion. Under both laws, the time element in commencing infringement cases is material in ascertaining the registrants express or implied consent to anothers use of its trademark or a colorable imitation thereof. This is why acquiescence, estoppel or laches may defeat the registrants otherwise valid cause of action.

Hence, proof of all the elements of trademark infringement is a condition precedent to any finding of liability.

THE ACTUAL COMMERCIAL USE IN THE PHILIPPINES OF GALLO CIGARETTETRADEMARK PRECEDED THAT OF GALLO WINE TRADEMARK.

By respondents own judicial admission, the GALLO wine trademark was registered in the Philippines in November 1971 but the wine itself was first marketed and sold in the country only in 1974 and only within the former U.S. military facilities, and outside thereof, only in 1979. To prove commercial use of the GALLO wine trademark in the Philippines, respondents presented sales invoice no. 29991 dated July 9, 1981.

On the other hand, by testimonial evidence supported by the BIR authorization letters, forms and manufacturers sworn statement, it appears that petitioners and its predecessor-in-interest, Tobacco Industries, have indeed been using and selling GALLO cigarettes in the Philippines since 1973 or before July 9, 1981.

In Emerald Garment Manufacturing Corporation vs. Court of Appeals, we reiterated our ruling of giving utmost importance to the actual commercial use of a trademark in the Philippines prior to its registration, notwithstanding the provisions of the Paris Convention.

Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No. 166) x x x

xxx xxx xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement irrespective of lack of business activity in the Philippines on account of Section 21-A of the Trademark Law but the question of whether they have an exclusive right over their symbol as to justify issuance of the controversial writ will depend on actual use of their trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that when a foreign corporation not licensed to do business in the Philippines files a complaint for infringement, the entity need not be actually using the trademark in commerce in the Philippines. Such a foreign corporation may have the personality to file a suit for infringement but it may not necessarily be entitled to protection due to absence of actual use of the emblem in the local market.

xxx xxx xxx

The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of validity, ownership and exclusive use, is qualified. A registration certificate serves merely as prima facie evidence. It is not conclusive but can and may be rebutted by controverting evidence.

For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of its own mark and for failure to establish confusing similarity between said trademarks, private respondent's action for infringement must necessarily fail.

In view of the foregoing jurisprudence and respondents judicial admission that the actual commercial use of the GALLO wine trademark was subsequent to its registration in 1971 and to Tobacco Industries commercial use of the GALLO cigarette trademark in 1973, we rule that, on this account, respondents never enjoyed the exclusive right to use the GALLO wine trademark to the prejudice of Tobacco Industries and its successors-in-interest, herein petitioners, either under the Trademark Law or the Paris Convention.

Respondents GALLO trademark registration is limited to wines only

We also note that the GALLO trademark registration certificates in the Philippines and in other countries expressly state that they cover wines only, without any evidence or indication that registrant Gallo Winery expanded or intended to expand its business to cigarettes.

Thus, by strict application of Section 20 of the Trademark Law, Gallo Winerys exclusive right to use the GALLO trademark should be limited to wines, the only product indicated in its registration certificates.

Yet, it is equally true that as aforesaid, the protective mantle of the Trademark Law extends only to the goods used by the first user as specified in the certificate of registration following the clear message conveyed by Section 20.

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

A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or deceit as to the identity, source or origin of the goods or identity of the business as a consequence of using a certain mark. Likelihood of confusion is admittedly a relative term, to be determined rigidly according to the particular (and sometimes peculiar) circumstances of each case.

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

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

Petitioners and respondents both use "GALLO" in the labels of their respective cigarette and wine products. But, as held in the following cases, the use of an identical mark does not, by itself, lead to a legal conclusion that there is trademark infringement.

Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable imitation" which has been defined as "such similarity in form, content, words, sound, meaning, special arrangement or general appearance of the trademark or tradename in their overall presentation or in their essential and substantive and distinctive parts as would likely mislead or confuse persons in the ordinary course of purchasing the genuine article."

Jurisprudence has developed two tests in determining similarity and likelihood of confusion in trademark resemblance:

The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks which might cause confusion or deception, and thus infringement. If the competing trademark contains the main, essential or dominant features of another, and confusion or deception is likely to result, infringement takes place. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public or deceive purchasers.

On the other hand, the Holistic Test requires that the entirety of the marks in question be considered in resolving confusing similarity. Comparison of words is not the only determining factor. The trademarks in their entirety as they appear in their respective labels or hang tags must also be considered in relation to the goods to which they are attached.

Applying the Dominancy and Holistic Tests, we find that the dominant feature of the GALLO cigarette trademark is the device of a large rooster facing left, outlined in black against a gold background. The roosters color is either green or red green for GALLO menthols and red for GALLO filters. Directly below the large rooster device is the word GALLO. The rooster device is given prominence in the GALLO cigarette packs in terms of size and location on the labels.84

The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as it has no relation at all to the product but was chosen merely as a trademark due to the fondness for fighting cocks of the son of petitioners president. Furthermore, petitioners adopted GALLO, the Spanish word for rooster, as a cigarette trademark to appeal to one of their target markets, the sabungeros (cockfight aficionados).85

Also, as admitted by respondents themselves,86 on the side of the GALLO cigarette packs are the words "MADE BY MIGHTY CORPORATION," thus clearly informing the public as to the identity of the manufacturer of the cigarettes.

On the other hand, GALLO Winerys wine and brandy labels are diverse. In many of them, the labels are embellished with sketches of buildings and trees, vineyards or a bunch of grapes while in a few, one or two small roosters facing right or facing each other (atop the EJG crest, surrounded by leaves or ribbons), with additional designs in green, red and yellow colors, appear as minor features thereof.87 Directly below or above these sketches is the entire printed name of the founder-owners, "ERNEST & JULIO GALLO" or just their surname "GALLO,"88 which appears in different fonts, sizes, styles and labels, unlike petitioners uniform casque-font bold-lettered GALLO mark.

Moreover, on the labels of Gallo Winerys wines are printed the words "VINTED AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO, CALIFORNIA."89

The many different features like color schemes, art works and other markings of both products drown out the similarity between them the use of the word GALLO a family surname for the Gallo Winerys wines and a Spanish word for rooster for petitioners cigarettes.

WINES AND CIGARETTES ARE NOT IDENTICAL, SIMILAR, COMPETING OR RELATED GOODS

Confusion of goods is evident where the litigants are actually in competition; but confusion of business may arise between non-competing interests as well.90

Thus, apart from the strict application of Section 20 of the Trademark Law and Article 6bis of the Paris Convention which proscribe trademark infringement not only of goods specified in the certificate of registration but also of identical or similar goods, we have also uniformly recognized and applied the modern concept of "related goods."91 Simply stated, when goods are so related that the public may be, or is actually, deceived and misled that they come from the same maker or manufacturer, trademark infringement occurs.92

In resolving whether goods are related,96 several factors come into play:

(a) the business (and its location) to which the goods belong

(b) the class of product to which the goods belong

(c) the product's quality, quantity, or size, including the nature of the package, wrapper or container 97

(d) the nature and cost of the articles98

(e) the descriptive properties, physical attributes or essential characteristics with reference to their form, composition, texture or quality

(f) the purpose of the goods99

(g) whether the article is bought for immediate consumption,100 that is, day-to-day household items101

(h) the fields of manufacture102

(i) the conditions under which the article is usually purchased103 and

(j) the channels of trade through which the goods flow,104 how they are distributed, marketed, displayed and sold.105

Hence, in the adjudication of trademark infringement, we give due regard to the goods usual purchasers character, attitude, habits, age, training and education. 111

Applying these legal precepts to the present case, petitioners use of the GALLO cigarette trademark is not likely to cause confusion or mistake, or to deceive the "ordinarily intelligent buyer" of either wines or cigarettes or both as to the identity of the goods, their source and origin, or identity of the business of petitioners and respondents.

Obviously, wines and cigarettes are not identical or competing products. Neither do they belong to the same class of goods. Respondents GALLO wines belong to Class 33 under Rule 84[a] Chapter III, Part II of the Rules of Practice in Trademark Cases while petitioners GALLO cigarettes fall under Class 34.

Both the Makati RTC and the CA held that wines and cigarettes are related products because: (1) "they are related forms of vice, harmful when taken in excess, and used for pleasure and relaxation" and (2) "they are grouped or classified in the same section of supermarkets and groceries."

We find these premises patently insufficient and too arbitrary to support the legal conclusion that wines and cigarettes are related products within the contemplation of the Trademark Law and the Paris Convention.

First, anything - not only wines and cigarettes can be used for pleasure and relaxation and can be harmful when taken in excess.

Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated products and the goods here involved, wines and cigarettes, have nothing whatsoever in common with respect to their essential characteristics, quality, quantity, size, including the nature of their packages, wrappers or containers.

Accordingly, the U.S. patent office and courts have consistently held that the mere fact that goods are sold in one store under the same roof does not automatically mean that buyers are likely to be confused as to the goods respective sources, connections or sponsorships. The fact that different products are available in the same store is an insufficient standard, in and of itself, to warrant a finding of likelihood of confusion.

Wines and cigarettes are non-competing and are totally unrelated products not likely to cause confusion vis--vis the goods or the business of the petitioners and respondents.

Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages and smoked. There is a whale of a difference between their descriptive properties, physical attributes or essential characteristics like form, composition, texture and quality.

GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are patronized by middle-to-high-income earners while GALLO cigarettes appeal only to simple folks like farmers, fishermen, laborers and other low-income workers.116 Indeed, the big price difference of these two products is an important factor in proving that they are in fact unrelated and that they travel in different channels of trade. There is a distinct price segmentation based on vastly different social classes of purchasers.117

GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO cigarettes are Philippine-made and petitioners neither claim nor pass off their goods as imported or emanating from Gallo Winery. GALLO cigarettes are distributed, marketed and sold through ambulant and sidewalk vendors, small local sari-sari stores and grocery stores in Philippine rural areas, mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu.118 On the other hand, GALLO wines are imported, distributed and sold in the Philippines through Gallo Winerys exclusive contracts with a domestic entity, which is currently Andresons. By respondents own testimonial evidence, GALLO wines are sold in hotels, expensive bars and restaurants, and high-end grocery stores and supermarkets, not through sari-sari stores or ambulant vendors.119

In short, tobacco and alcohol products may be considered related only in cases involving special circumstances which exist only if a famous mark is involved and there is a demonstrated intent to capitalize on it. Both of these are absent in the present case.

THE GALLO WINE TRADEMARK IS NOT A WELL-KNOWN MARK IN THE CONTEXT OF THE PARIS CONVENTION IN THIS CASE SINCE WINES AND CIGARETTES ARE NOT IDENTICAL OR SIMILAR GOODS

First, the records bear out that most of the trademark registrations took place in the late 1980s and the 1990s, that is, after Tobacco Industries use of the GALLO cigarette trademark in 1973 and petitioners use of the same mark in 1984.

GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods, a requisite element under both the Trademark Law and the Paris Convention.

Second, the GALLO trademark cannot be considered a strong and distinct mark in the Philippines. Respondents do not dispute the documentary evidence that aside from Gallo Winerys GALLO trademark registration, the Bureau of Patents, Trademarks and Technology Transfer also issued on September 4, 1992 Certificate of Registration No. 53356 under the Principal Register approving Productos Alimenticios Gallo, S.As April 19, 1990 application for GALLO trademark registration and use for its "noodles, prepared food or canned noodles, ready or canned sauces for noodles, semolina, wheat flour and bread crumbs, pastry, confectionery, ice cream, honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar, species and ice."122

Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber Corporation,123 "GALLO" cannot be considered a "well-known" mark within the contemplation and protection of the Paris Convention in this case since wines and cigarettes are not identical or similar goods:

Consent of the Registrant and Other air, Just and Equitable Considerations

Each trademark infringement case presents a unique problem which must be answered by weighing the conflicting interests of the litigants.124

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

Moreover, there exists no evidence that petitioners employed malice, bad faith or fraud, or that they intended to capitalize on respondents goodwill in adopting the GALLO mark for their cigarettes which are totally unrelated to respondents GALLO wines. Thus, we rule out trademark infringement on the part of petitioners.

PETITIONERS ARE ALSO NOT LIABLE FOR UNFAIR COMPETITION

Under Section 29 of the Trademark Law, any person who employs deception or any other means contrary to good faith by which he passes off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who commits any acts calculated to produce said result, is guilty of unfair competition. It includes the following acts:

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

(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that such person is offering the services of another who has identified such services in the mind of the public;

(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature calculated to discredit the goods, business or services of another.

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

All told, after applying all the tests provided by the governing laws as well as those recognized by jurisprudence, we conclude that petitioners are not liable for trademark infringement, unfair competition or damages.

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

ELIDAD KHO vs. CA

379 SCRA 410 Mercantile Law Intellectual Property Law on Copyright Proper Subjects of Copyright

Elidad Kho is the owner of KEC Cosmetics Laboratory and she was also the holder of copyrights over Chin Chun Suandits Oval Facial Cream Container/Case. She also bought the patent rights over the Chin Chun Su & DeviceandChin Chun Sufor medicated cream from one Quintin Cheng, who was the assignee of Shun Yi Factory a Taiwanese factory actually manufacturing Chin Chun Su products.

Kho filed a petition for injunction against Summerville General Merchandising and Company to enjoin the latter from advertising and selling Chin Chun Su products, in similar containers as that of Kho, for this is misleading the public and causing Kho to lose income; the petition is also to enjoin Summerville from infringing upon Khos copyrights.

Summerville in their defense alleged that they are the exclusive and authorized importer, re-packer and distributor of Chin Chun Su products; that Shun Yi even authorized Summerville to register its trade name Chin Chun Su Medicated Cream with the Philippine Patent Office; that Quintin Cheng, from whom Kho acquired her patent rights, had been terminated (her services) by Shun Yi.

ISSUE: Whether or not Kho has the exclusive right to use the trade name and its container.

HELD: No. Kho 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 (not copyright like what she registered for) 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. Khos 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.

PEARL & DEAN vs. SHOEMART

409 SCRA 231 Mercantile Law Intellectual Property Law on Copyright Copyrightable Subject

Pearl &Dean (Phil), Inc. is a corporation engaged in the manufacture of advertising display units called light boxes. In January 1981, Pearl &Dean was able to acquire copyrights over the designs of the display units. In 1988, their trademark application for Poster Ads was approved; they used the same trademark to advertise their light boxes.

In 1985, Pearl &Dean negotiated with Shoemart, Inc. (SM) so that the former may be contracted to install light boxes in the ad spaces of SM. Eventually, SM rejected Pearl &Deans proposal.

Two years later, Pearl & Dean received report that light boxes, exactly the same as theirs, were being used by SM in their ad spaces. They demanded SM to stop using the light boxes and at the same time asked for damages amounting to P20 M. SM refused to pay damages though they removedthe light boxes. Pearl &Dean eventually sued SM. SM argued that it did not infringe on Pearl &Deans trademark because Pearl &Deans trademark is only applicable to envelopes and stationeries and not to the type of ad spaces owned by SM. SM also averred that Poster Ads is a generic term hence it is not subject to trademark registration. SM also averred that the actual light boxes are not copyrightable. The RTC ruled in favor of Pearl &Dean. But the Court of Appeals ruled in favor of SM.

ISSUE: Whether or not the Court of Appeals is correct.

HELD: Yes. The light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable; what was copyrighted were the technical drawings only, and not the light boxes themselves. In other cases, it was held that there is no copyright infringement when one who, without being authorized, uses a copyrighted architectural plan to construct a structure. This is because the copyright does not extend to the structures themselves.

On the trademark infringement allegation, the words Poster Ads are a simple contraction of the generic term poster advertising.In the absence of any convincing proof that Poster Ads has acquired a secondary meaning in this jurisdiction, Pearl &Deans exclusive right to the use of Poster Ads is limited to what is written in its certificate of registration, namely, stationeries.

MIRPURI vs. CA

FACTS

Lolita Escobar applied with the Bureau of Patents for the registration of the trademark Barbizon, alleging that she had been manufacturing and selling these products since 1970. private respondent Barbizon Corp opposed the application in IPC No. 686. The Bureau granted the application and a certificate of registration was issued for the trademark Barbizon. Escobar later assigned all her rights and interest over the trademark to petitioner Mirpuri. In 1979, Escobar failed to file with the Bureau the Affidavit of Use of the trademark. Due to his failure, the Bureau cancelled the certificate of registration. Escobar reapplied and Mirpuri also applied and this application was also opposed by private respondent in IPC No. 2049, claiming that it adopted said trademark in 1933 and has been using it. It obtained a certificate from the US Patent Office in 1934. Then in 1991, DTI cancelled petitioners registration and declared private respondent the owner and prior user of the business name Barbizon International.

ISSUE

Whether or not the treaty (Paris Convention) affords protection to a foreign corporation against a Philippine applicant for the registration of a similar trademark.

HELD

The Court held in the affirmative. RA 8293 defines trademark as any visible sign capable of distinguishing goods. 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. 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. Nationals of the various member nations are thus assured of a certain minimum of international protection of their industrial property.

ANA ANG vs. TORIBIO TEODORO

Facts:

Respondent Toribio Teodoro 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. On September 29, 1915, he formally registered it as trade-mark and as trade-name on January 3, 1933.

Petitioner Ana Ang 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.

The Court of First Instance of Manila absolved the defendant (Ms. Ang) 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 Court of Appeals reversed said judgment, directing the Director of Commerce to cancel the registration of the trade-mark "Ang Tibay" in favor of petitioner, and perpetually enjoining the latter from using said trade-mark on goods manufactured and sold by her.

Thus, this case, a petition for certiorari.

Issue:

Are the goods or articles or which the two trademarks are used similar or belong to the same class of merchandise?

Ruling:

Yes, pants and shirts are goods closely similar to shoes and slippers. They belong to the same class of merchandise as shoes and slippers. They are closely related goods.

The Supreme Court affirmed the judgment of the Court of Appeals and added that although two non-competing articles may be classified under to 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 trademarks would be likely to cause confusion as to the origin, or personal source, of the second users 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 that the first user made the second users goods.

ARCE SONS AND COMPANY vs. SELECTA BISCUIT COMPANY,INC., ET AL.,

FACTS:

On August 31, 1955, Selecta Biscuit Company, Inc., filed with the PhilippinePatent Office a petition for the registration of the word"SELECTA" as trade-mark to be use in itsbakery products alleging that it is in actual use thereof for notless than two months before said date and that "no otherpersons,partnership, corporation or association ... has the right tousesaid trade-mark in thePhilippines, either in theidentical form or in any such near resemblance thereto, as might becalculated to deceive." Its petition was referred to an examiner for study who found that the trade-mark sought to be registered resembles the word "SELECTA" used by theAcre and Sons and Company in its milk and ice cream products so thatits use by respondent will cause confusion as tothe origin of their respective goods. Consequently, he recommended thatthe application be refused.

The Patent Office ordered the publication of theapplication for purposes of opposition. The Arce Sons and Company then filed their opposition claiming that the mark Selecta has already become identified with the name of Ramon Arce and its business. Moreover, that the mark was used continuously since 1933 while the respondent herein only used it during 1955.

ISSUE:

Is the wordSelecta registrable?

HELD:

A 'trade-mark' is a distinctive mark of authenticity through which the merchandise of a particularproducer or manufacturer may be distinguished from that of others, and its sole function is todesignate distinctively the origin oftheproducts to which it is attached."

The word 'SELECTA', it is true, may be an ordinary or common word in the sense that may be used oremployed by any onein promoting his business or enterprise, butonce adopted or coined in connection with one's business as anemblem, signor device to characterize its products, or asa badge ofauthenticity, it may acquire a secondary meaning as to be exclusively associated with its products and business. In this sense, its used by another may lead to confusion in trade and cause damage to its business. And this is the situation ofpetitioner when it used the word 'SELECTA' as a trade-mark. In this sense, the law gives its protection and guarantees its used to the exclusion of all others a(G. & C. Merriam Co. v.Saalfield, 198 F. 369, 373). And it is also in the sense that the law postulates that "The ownership or possession of a trade-mark, . . .shall be recognized and protected in the same manner and to the same extent, as are other property rights known to the law," thereby giving to any person entitled to the exclusive use of such trade-mark the right to recover damages in a civil action from any person who mayhave sold goods of similar kind bearing such trademark.

MCDONALDS CORP vs. LC BIG MAK

Petitioner McDonald's Corporation ("McDonald's") is a US corporation that operates a global chain of fast-food restaurants, with Petitioner McGeorge Food Industries ("McGeorge"), as the Philippine franchisee.

McDonald's owns the "Big Mac" mark for its "double-decker hamburger sandwich." with the US Trademark Registry on 16 October 1979.

Based on this Home Registration, McDonald's applied for the registration of the same mark in the Principal Register of the then Philippine Bureau of Patents, Trademarks and Technology ("PBPTT") (now IPO). On 18 July 1985, the PBPTT allowed registration of the "Big Mac."

Respondent L.C. Big Mak Burger, Inc. is a domestic corporation which operates fast-food outlets and snack vans in Metro Manila and nearby provinces. Respondent corporation's menu includes hamburger sandwiches and other food items.

On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the "Big Mak" mark for its hamburger sandwiches, which was opposed by McDonald's. McDonald's also informed LC Big Mak chairman of its exclusive right to the "Big Mac" mark and requested him to desist from using the "Big Mac" mark or any similar mark.

Having received no reply, petitioners sued L.C. Big Mak Burger, Inc. and its directors before Makati RTC Branch 137 ("RTC"), for trademark infringement and unfair competition.

RTC rendered a Decision finding respondent corporation liable for trademark infringement and unfair competition. CA reversed RTC's decision on appeal.

1ST ISSUE:W/N respondent corporation is liable for trademark infringement and unfair competition.

Ruling: Yes

Section 22 of Republic Act No. 166, as amended, defines trademark infringement as follows:

Infringement, what constitutes. - Any person who [1] shall use, without the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or [2] reproduce, counterfeit, copy, or colorably imitate any such mark or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided.

To establish trademark infringement, the following elements must be shown: (1) the validity of plaintiff's mark; (2) the plaintiff's ownership of the mark; and (3) the use of the mark or its colorable imitation by the alleged infringer results in "likelihood of confusion." Of these, it is the element of likelihood of confusion that is the gravamen of trademark infringement.

1st element:

A mark is valid if it is distinctive and not merely generic and descriptive.

The "Big Mac" mark, which should be treated in its entirety and not dissected word for word, is neither generic nor descriptive. Generic marks are commonly used as the name or description of a kind of goods, such as "Lite" for beer. Descriptive marks, on the other hand, convey the characteristics, functions, qualities or ingredients of a product to one who has never seen it or does not know it exists, such as "Arthriticare" for arthritis medication. On the contrary, "Big Mac" falls under the class of fanciful or arbitrary marks as it bears no logical relation to the actual characteristics of the product it represents. As such, it is highly distinctive and thus valid.

2nd element:

Petitioners have duly established McDonald's exclusive ownership of the "Big Mac" mark. Prior valid registrants of the said mark had already assigned his rights to McDonald's.

3rd element:

Section 22 covers two types of confusion arising from the use of similar or colorable imitation marks, namely, confusion of goods (confusion in which the ordinarily prudent purchaser would be induced to purchase one product in the belief that he was purchasing the other) and confusion of business (though the goods of the parties are different, the defendant's product is such as might reasonably be assumed to originate with the plaintiff, and the public would then be deceived either into that belief or into the belief that there is some connection between the plaintiff and defendant which, in fact, does not exist).

There is confusion of goods in this case since respondents used the "Big Mak" mark on the same goods, i.e. hamburger sandwiches, that petitioners' "Big Mac" mark is used.

There is also confusion of business due to Respondents' use of the "Big Mak" mark in the sale of hamburgers, the same business that petitioners are engaged in, also results in confusion of business. The registered trademark owner may use his mark on the same or similar products, in different segments of the market, and at different price levels depending on variations of the products for specific segments of the market. The registered trademark owner enjoys protection in product and market areas that are the normal potential expansion of his business.

Furthermore, In determining likelihood of confusion, the SC has relied on the dominancy test (similarity of the prevalent features of the competing trademarks that might cause confusion) over the holistic test (consideration of the entirety of the marks as applied to the products, including the labels and packaging).

Applying the dominancy test, Respondents' use of the "Big Mak" mark results in likelihood of confusion. Aurally the two marks are the same, with the first word of both marks phonetically the same, and the second word of both marks also phonetically the same. Visually, the two marks have both two words and six letters, with the first word of both marks having the same letters and the second word having the same first two letters.

Lastly, since Section 22 only requires the less stringent standard of "likelihood of confusion," Petitioners' failure to present proof of actual confusion does not negate their claim of trademark infringement.

2ND ISSUE: W/N Respondents committed Unfair Competition

Ruling: Yes.

Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:

Any person who will employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be subject to an action therefor.

The essential elements of an action for unfair competition are (1) confusing similarity in the general appearance of the goods, and (2) intent to deceive the public and defraud a competitor.

In the case at bar, Respondents have applied on their plastic wrappers and bags almost the same words that petitioners use on their styrofoam box. Further, Respondents' goods are hamburgers which are also the goods of petitioners. Moreover, there is actually no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big Mak Burger, Inc." This clearly shows respondents' intent to deceive the public.

SOCIETE DES PRODUITS NESTLE vs. CA

In 1984, CFC Corporation filed with the Bureau of Patents, Trademarks, and Technology Transfers an application for the registration of its trademark Flavor Master an instant coffee. Nestle opposed the application as it alleged that Flavor Master is confusingly similar to Nestle coffee products like Master Blend and Master Roast. Nestle alleged that in promoting their products, the word Master has been used so frequently so much so that when one hears the word Master it connotes to a Nestle product. They provided as examples the fact that theyve been using Robert Jaworski and Ric Puno Jr. as their commercial advertisers; and that in those commercials Jaworski is a master of basketball and that Puno is a master of talk shows; that the brand of coffee equitable or fit to them is Master Blend and Master Roast. CFC Corporation on the other hand alleged that the word Master is a generic and a descriptive term, hence not subject to trademark. The Director of Patents ruled in favor of Nestle but the Court of Appeals, using the Holistic Test, reversed the said decision.

ISSUE: Whether or not the Court of Appeals is correct.

HELD: No. The proper test that should have been used is the Dominancy Test. The application of the totality or holistic test is improper since the ordinary purchaser would not be inclined to notice the specific features, similarities or dissimilarities, considering that the product is an inexpensive and common household item. The use of the word Master by Nestle in its products and commercials has made Nestle acquire a connotation that if its a Master product it is a Nestle product. As such, the use by CFC of the term MASTER in the trademark for its coffee product FLAVOR MASTER is likely to cause confusion or mistake or even to deceive the ordinary purchasers.

In addition, the word MASTER is neither a generic nor a descriptive term. As such, said term can not be invalidated as a trademark and, therefore, may be legally protected.

Generic termsare those which constitute the common descriptive name of an article or substance, or comprise the genus of which the particular product is a species, or are commonly used as the name or description of a kind of goods, or imply reference to every member of a genus and the exclusion of individuating characters, or refer to the basic nature of the wares or services provided rather than to the more idiosyncratic characteristics of a particular product, and are not legally protectable.

On the other hand, a term is descriptiveand therefore invalid as a trademark if, as understood in its normal and natural sense, it forthwith conveys the characteristics, functions, qualities or ingredients of a product to one who has never seen it and does not know what it is, or if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods, or if it clearly denotes what goods or services are provided in such a way that the consumer does not have to exercise powers of perception or imagination.

Rather, the term MASTER is a suggestive term brought about by the advertising scheme of Nestle. Suggestive termsare those which, in the phraseology of one court, require imagination, thought and perception to reach a conclusion as to the nature of the goods. Such terms, which subtly connote something about the product, are eligible for protection in the absence of secondary meaning. While suggestive marks are capable of shedding some light upon certain characteristics of the goods or services in dispute, they nevertheless involve an element of incongruity, figurativeness, or imaginative effort on the part of the observer.

246 CORP vs. DAWAY

FACTS:

Montres Rolex S.A. and Rolex Centre Phil., Limited, owners/proprietors of Rolex and Crown Device, filed against 246 Corporation the instant suit for trademark infringement and damages with prayer for the issuance of a restraining order or writ of preliminary injunctionbefore the RTC of QC

o July 1996: 246 adopted and , since then, has been using without authority the mark Rolex in its business name Rolex Music Lounge as well as in its newspaper advertisements as Rolex Music Lounge, KTV, Disco & Party Club.

246 answered special affirmative defences: no confusion would arise from the use by petitioner of the mark Rolex considering that its entertainment business is totally unrelated to the items catered by respondents such as watches, clocks, bracelets and parts thereof

RTC: quashed the subpoena ad testificandum and denied petitioners motion for preliminary hearing on affirmative defenses with motion to dismiss

CA: affirmed

ISSUE: W/N RTC performed a grave abuse of discretion

HELD: NO. petition denied. RTC affirmed

The issue of whether or not a trademark infringement exists, is a question of fact that could best be determined by the trial court.

Section 123.1(f) of the Intellectual Property Code (Republic Act No. 8293)

o (f) Is identical with, or confusingly similar to, or constitutes a translation of a mark considered well-known in accordance with the preceding paragraph, which is registered in the Philippines with respect to goods or services which are not similar to those with respect to which registration is applied for: Provided, That use of the mark in relation to those goods or services would indicate a connection between those goods or services, and the owner of the registered mark: Provided, further, That the interest of the owner of the registered mark are likely to be damaged by such use

Section 123.1(f) is clearly in point because the Music Lounge of petitioner is entirely unrelated to respondents business involving watches, clocks, bracelets, etc. However, the Court cannot yet resolve the merits of the present controversy considering that the requisites for the application of Section 123.1(f), which constitute the kernel issue at bar, clearly require determination facts of which need to be resolved at the trial court. The existence or absence of these requisites should be addressed in a full blown hearing and not on a mere preliminary hearing. The respondent must be given ample opportunity to prove its claim, and the petitioner to debunk the same.

Victorias Milling Company, Inc. vs. Ong Su and the Honorable Tiburcio S. Evalle (G.R. No. L-28499)

PROCEDURE AND FACTS

On October 4,1963, Victorias Milling Company, Inc. filed with the Philippine Patent office a petition to cancel the registration of Ong Su trademark Valentine.

The petitioner allied that its trademark Victorias which was registered on November 9,1961 and diamond design has distinctive of its sugar long before the respondent used its trademark; that the registration of Valentine and design has caused and will cause great damage to petitioner by reason of mistake, confusion, or deception among the purchasers because it is similar to its Victorias trademark; that registration was fraudulently obtained by Ong Su and that Valentine falsely suggest a connection with Saint Valentine or with an institution or belief.

The respondent averred that he is doing business under the name and style Valentine Packaging and has registered the trademark Valentine with a design for sugar and was registered on June 20,1961; that the trademark Victorias with diamond design and the trademark Valentine with a design are two different marks; and that there is absolutely no likelihood of confusion, mistake or deception to purchasers through the concurrent use of the petitioners mark Victorias.

The Director of Patents denied the petition to cancel the certificate of registration of the respondent Ong Su covering the trademark Valentine. The decision of the Director of Patents was also affirmed by the Supreme Court.

LEGAL ISSUES

1. Whether or not the respondent director of patents erred in holding that petitioners registered diamond design is not an index of origin.

2. Whether or not the respondent director of patents erred in holding that petioner is required to establish that its diamond design has acquired a secondary meaning.

3. Whether or not the respondent director of patents erred in holding petitioners diamond design has not acquired a secondary meaning.

4. Whether or not the respondent director of patents erred in confining his comparison of petitioners and respondents respective trademarks to one sole item of their design, ignoring the complete labels as actually used in trade and seen by consumers.

5. Whether or not the respondent director of patents erred in taking the position that in cases of trademark cancellation involving among others

6. Whether or not the respondent director of patents erred in holding that because the literal portions of the respective trademarks in question, namely, the respective names Victorias and Valentine, have no similarity, there is no reasonable likelihood of purchaser confusion.

7. Whether or not the respondent director of patents erred in assuming that petioner, or the owner of any imitated or infringed trademark for that matter must establish actual purchaser confusion.

8. Whether or not the respondent director of patents erred in holding that the registration of the Valentine trademark by respondent Ong Su was not prudulently obtained.

9. Whether or not the respondent director of patents, acting through hearing officer Amando Marquez, erred in admitting respondent Ong Sus exhibits pertaining to one Mariano Ang said name not having been clearly established as an alias, although admittedly unauthorized, of respondent Ong Su.

HOLDING

1. The contention of petitioner that the diamond design in its trademark is an index of origin has no merit.

2. The petitioner was not able to establish a secondary meaning. The petioners has not shown that the design portion of the mark has been so used that purchasers recognize the design, standing alone, as indicating goods coming from registrant.

3. No, as correctly stated by the Director of Patents, common geometric shapes such as diamonds ordinarily are not regarded as index of origin for goods to which the remarks are applied. There is no evidence that the diamond design in the trademark of the petitioner has acquired a secondary meaning with respect to its sugar business.

4. No, The word Victorias is what identifies the sugar contained in the bag as the product of the petitioner.

5. No, the respondent trademark cannot be cancelled. The evidence is that Ong Su has been using his trademark since prior to the last World War and he obtained the registration therof on June 20,1961 while petitioner registered on November 9,1961.

6. No, it is clear that the words Valentine and Victorias are not similar in spelling and do not have a similar sound when pronounced.

7. No, The proposed testimony of Ernesto Duran that in February 1963 he went to Arangue market and bought one bag of sugar which he thought was Victorias and when he went home he found out that the sugar was marked Valentine is not sufficient evidence that the two trademarks ar so similar that buyers are confused.

8. No, there is no evidence that the respondent Ong Su had obtained the registration of his trademark Valentine and design by means of fraud. The said trademark was registered in the Philippines Patent Office before the petitioner registered its trademark.

9. No, the counsel of petitioner had already extensively cross-examined Ong Su as to a citizenship, alien certificate of registration and the other name Mariano Ang. It seems immaterial whether or not Ong Su has judicial authority to use Mariano Ang as an alias. There is evidence that even before the last World War, the trademark Valentine and design had been used under the name of either Ong Su or Mariano Ang.

REASON FOR A DECISION

There is no violation of trademark in this case. The petitioner never acquired secondary meaning in trademark used. There is no reasonable likelihood of purchasers confusion. Color alone, unless displayed in distinct or arbitrary design, does not function as trademark. Also, the printing sequences or arrangement of such legends as weight, contents and manufacturer packing, it is merely a matter pertaining to goods. A matter of unfair competition which the Patent office has no jurisdiction.

LYCEUM vs CA.

FACTS:

1. Petitioner had sometime commenced before in the SEC a complaint against Lyceum of Baguio, to require it to change its corporate name and to adopt another name not similar or identical with that of petitioner. SEC decided in favor of petitioner. Lyceum of Baguio filed petition for certiorari but was denied forlack of merit.

2. Armed with the resolution of the Court, petitioner instituted before the SEC to compel private respondents, which are also educational institutions, to delete word Lyceum from their corporate names and permanently to enjoin them from using such as part of their respective names.

3. Hearing officer sustained the claim of petitioner and held that the word Lyceum was capable of appropriation and that petitioner had acquired an enforceable right to the use of that word.

4. In an appeal, the decision was reversed by the SEC En Banc. They held that the word Lyceum to have become identified with petitioner as to render use thereof of other institutions as productive of consfusion about the identity of the schools concerned in the mind of the general public.

5. Petitioner went to appeal with the CA but the latter just affirmed the decision of the SEC En Banc.

HELD:

Under the corporation code, no corporate name may be allowed by the SEC if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. The policy behind this provision is to avoid fraud upon the public, which would have the occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration and supervision over corporations.

The corporate names of private respondents are not identical or deceptively or confusingly similar to that of petitioners. Confusion and deception has been precluded by the appending of geographic names to the word Lyceum. Furthermore, the word Lyceum has become associated in time with schools and other institutions providing public lectures, concerts, and public discussions. Thus, it generally refers to a school or an institution of learning.

Petitioner claims that the word has acquired a secondary meaning in relation to petitioner with the result that the word, although originally generic, has become appropriable by petitioner to the exclusion of other institutions.

The doctrine of secondary meaning is a principle used in trademark law but has been extended to corporate names since the right to use a corporate name to the exclusion of others is based upon the same principle, which underlies the right to use a particular trademark or tradename. Under this doctrine, a word or phrase originally incapable of exclusive appropriation with reference to an article in the market, because geographical or otherwise descriptive might nevertheless have been used for so long and so exclusively by one producer with reference to this article that, in that trade and to that group of purchasing public, the word or phrase has come to mean that the article was his produce. The doctrine cannot be made to apply where the evidence didn't prove that the business has continued for so long a time that it has become of consequence and acquired good will of considerable value such that its articles and produce have acquired a well known reputation, and confusion will result by the use of the disputed name.

Petitioner didn't present evidence, which provided that the word Lyceum acquired secondary meaning. The petitioner failed to adduce evidence that it had exclusive use of the word. Even if petitioner used the word for a long period of time, it hadnt acquired any secondary meaning in its favor because the appellant failed to prove that it had been using the same word all by itself to the exclusion of others.

PHILIPS EXPORT BV vs. CA

FACTS:

Philips Export B.V. (PEBV) filed with the SEC for the cancellation of the word Philips the corporate name of Standard Philips Corporation in view of its prior registration with the Bureau of Patents and the SEC. However, Standard Philips refused to amend its Articles of Incorporation so PEBV filed with the SEC a petition for the issuance of a Writ of Preliminary Injunction, however this was denied ruling that it can only be done when the corporate names are identical and they have at least 2 words different. This was affirmed by the SEC en banc and the Court of Appeals thus the case at bar.

ISSUE:

Whether or not Standard Philips can be enjoined from using Philips in its corporate name

RULING: YES

A corporations right to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against the whole world. According to Sec. 18 of the Corporation Code, no corporate name may be allowed if the proposed name is identical or deceptively confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing law.

For the prohibition to apply, 2 requisites must be present:(1) the complainant corporation must have acquired a prior right over the use of such corporate name and

(2) the proposed name is either identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or patently deceptive, confusing or contrary to existing law.

With regard to the 1st requisite, PEBV adopted the name Philips part of its name 26 years before Standard Philips. As regards the 2nd, the test for the existence of confusing similarity is whether the similarity is such as to mislead a person using ordinary care and discrimination. Standard Philips only contains one word, Standard, different from that of PEBV. The 2 companies products are also the same, or cover the same line of products. Although PEBV primarily deals with electrical products, it has also shipped to its subsidiaries machines and parts which fall under the classification of chains, rollers, belts, bearings and cutting saw, the goods which Standard Philips also produce. Also, among Standard Philips primary purposes are to buy, sell trade x x x electrical wiring devices, electrical component, electrical supplies. Given these, there is nothing to prevent Standard Philips from dealing in the same line of business of electrical devices. The use of Philips by Standard Philips tends to show its intention to ride on the popularity and established goodwill of PEBV.

PROSOURCE vs. HORPHAG

FACTS:

Respondent is a corporation and owner of trademark PYCNOGENOL, a food. Respondent later discovered that petitioner was also distributing a similar food supplement using the mark PCO-GENOLS since 1996. This prompted respondent to demand that petitioner cease and desist from using the aforesaid mark.

Respondent filed a Complaint for Infringement of Trademark with Prayer for Preliminary Injunction against petitioner, in using the name PCO-GENOLS for being confusingly similar. Petitioner appealed otherwise.

The RTC decided in favor of respondent. It observed that PYCNOGENOL and PCO-GENOLS have the same suffix "GENOL" which appears to be merely descriptive and thus open for trademark registration by combining it with other words and concluded that the marks, when read, sound similar, and thus confusingly similar especially since they both refer to food supplements.

On appeal to the CA, petitioner failed to obtain a favorable decision. The appellate court explained that under the Dominancy or the Holistic Test, PCO-GENOLS is deceptively similar to PYCNOGENOL.

ISSUE: Whether the names are confusingly similar.

RULING:

Yes. There is confusing similarity and the petition is denied. Jurisprudence developed two test to prove such.

The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion and deception, thus constituting infringement. If the competing trademark contains the main, essential and dominant features of another, and confusion or deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to imitate. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public or to deceive purchasers. Courts will consider more the aural and visual impressions created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets, and market segments.

The Holistic Test entails a consideration of the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity. Not only on the predominant words should be the focus but also on the other features appearing on both labels in order that the observer may draw his conclusion whether one is confusingly similar to the other.

SC applied the Dominancy Test.Both the words have the same suffix "GENOL" which on evidence, appears to be merely descriptive and furnish no indication of the origin of the article and hence, open for trademark registration by the plaintiff through combination with another word or phrase. When the two words are pronounced, the sound effects are confusingly similar not to mention that they are both described by their manufacturers as a food supplement and thus, identified as such by their public consumers. And although there were dissimilarities in the trademark due to the type of letters used as well as the size, color and design employed on their individual packages/bottles, still the close relationship of the competing products name in sounds as they were pronounced, clearly indicates that purchasers could be misled into believing that they are the same and/or originates from a common source and manufacturer.

COFFEE PARTNERS vs. SAN FRANSCISCO COFFEE

Facts:

The petitioner holds a business in maintaining coffee shops in the Philippines. It is registered with the Securities and Exchange Commission in January 2001. In its franchise agreement with Coffee Partners Ltd, it carries the trademark San Francisco Coffee. Respondent is engaged in the wholesale and retail sale of coffee that was registered in SEC in May 1995 under a registered business name of San Francisco Coffee &Roastery, Inc. It entered into a joint venture with Boyd Coffee USA to study coffee carts in malls.

When respondent learned that petitioner will open a coffee shop in Libis, Q.C. they sent a letter to the petitioner demanding them to stop using the name San Francisco Coffee as it causes confusion to the minds of the public. A complaint was also filed by respondents before the Bureau of Legal Affairs of the Intellectual Property Office for infringement and unfair competition with claims for damages. Petitioners contend that there are distinct differences in the appearance of their trademark and that respondent abandoned the use of their trademark when it joined venture with Boyd Coffee USA. The Bureau of Legal Affairs of the IPO held that petitioners trademark infringed on the respondents trade name as it registered its business name first with the DTI in 1995 while petitioner only registered its trademark in 2001.

Furthermore, it ruled that the respondent did not abandon the use of its trade name upon its joint venture with Boyd Coffee USA since in order for abandonment to exist it must be permanent, intentional and voluntary. It also held that petitioners use of the trademark "SAN FRANCISCO COFFEE" will likely cause confusion because of the exact similarity in sound, spelling, pronunciation, and commercial impression of the words "SAN FRANCISCO" which is the dominant portion of respondents trade name and petitioners trademark.Upon appeal before the office of the Director General of the IPO, the decision of its legal affairs was reversed declaring there was no infringement. The Court of Appeals however set aside its decision and reinstated the IPO legal affairs decision. Petitioner contends that the respondents trade name is not registered therefore a suit for infringement is not available.

Issue:

Whether or not the petitioners use of the trademark "SAN FRANCISCO COFFEE" constitutes infringement of respondents trade name "SAN FRANCISCO COFFEE & ROASTERY, INC.," even if the trade name is not registered with the Intellectual Property Office (IPO).

Ruling:

Registration of a trademark before the IPO is no longer a requirement to file an action for infringement as provided in Section 165.2 of RA 8293. All that is required is that the trade name is previously used in trade or commerce in the Philippines. There is no showing that respondent abandoned the use of its trade name as it continues to embark to conduct research on retailing coffee, import and sell coffee machines as among the services for which the use of the business name has been registered.

The court also laid down two tests to determine similarity and likelihood of confusion. The dominancy test focuses on similarity of the prevalent features of the trademarks that could cause deception and confusion that constitutes infringement. Exact duplication or imitation is not required. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public or to deceive consumers. the holistic test entails a consideration of the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity.15The discerning eye of the observer must focus not only on the predominant words but also on the other features appearing on both marks in order that the observer may draw his conclusion whether one is confusingly similar to the other. Applying either the dominancy test or the holistic test, petitioners "SAN FRANCISCO COFFEE" trademark is a clear infringement of respondents "SAN FRANCISCO COFFEE & ROASTERY, INC." trade name. The descriptive words "SAN FRANCISCO COFFEE" are precisely the dominant features of respondents trade name.And because both are involved in coffee business there is always the high chance that the public will get confused of the source of the coffee sold by the petitioner. Respondent has acquired an exclusive right to the use of the trade name "SAN FRANCISCO COFFEE & ROASTERY, INC." since the registration of the business name with the DTI in 1995.

FABERGE vs. IAC

Facts of the Case:

Co Beng Kay applied for the registration of the trademark 'BRUTE' to be used it its underwear (briefs) products. The petitioner opposed on the ground that there is similarity with their own symbol (BRUT, Brut33 & Device) used on its aftershave, deodorant, cream shave, hairspray and hair shampoo/soaps and that it would cause injury to their business reputation. It must be noted that the petitioner never applied for registration of said trademark for its brief products. The Patent Office allowed Co Beng Kay the registration and this was further affirmed by the Court of Appeals.

Issue: Is there confusing similarity between the challenged marks and that its use would likely cause confusion on the part of the purchasers?

HELD: NONE. Co Beng Kay may rightly appropriate the mark. In this case Sec. 20 (Philippine Intellectual Property Law) is controlling. The certificate of registration issued confers the exclusive right to use its own symbol only to those goods specified by the first user in the certificate, subject to any conditions or limitations stated therein. Moreover, the two products are so dissimilar that a purchaser of one (a brief) would not be misled or mistaken into buying the other (such as an aftershave).

BERRIS AGRI CORP vs. ABYADANG

FACTS:

Abyadang filed a trademark application with the IPO for the mark "NS D-10 PLUS" for use in connection with Fungicide. Berris Agricultural Co., Inc. filed an opposition against the trademark citing that it is confusingly similar with their trademark, "D-10 80 WP" which is also used for Fungicide also with the same active ingredient.

The IPO ruled in favor of Berries but on appeal with the CA, the CA ruled in favor of Abyadang.

ISSUE: Whether there is confusing similarity between the trademarks.

RULING:

Yes. The SC found that both products have the component D-10 as their ingredient and that it is the dominant feature in both their marks. Applying the Dominancy Test, Abyadang's product is similar to Berris' and that confusion may likely to occur especially that both in the same type of goods. Also using the Holistic Test, it was more obvious that there is likelihood of confusion in their packaging and color schemes of the marks. The SC states that buyers would think that Abyadang's product is an upgrade of Berris'.

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