LAW ON INTELLECTUAL PROPERTY Course Outline Atty. Risel G. Castillo-Taleon I.
INTELLECTUAL PROPERTY RIGHTS IN GENERAL 1.
Act and does not engage in business in the Philippines may bring a civi civill or admi admini nist stra rati tive ve acti action on here hereun unde derr for for oppo opposi siti tion on,, cancellation, cancellation, infringement, unfair competition, competition, or false designation of origin and false description, whether or not it is licensed to do business in the Philippines under existing laws. (Sec. 21-A, R. A. No. 166a)
Intell Intellect ectual ual Proper Property ty Righ Rights ts – Sec. Sec. 4 2.
Definitions. Sec. 4. Definitions.
4.1. The term "intellectual property rights" consists of: (a) Copyri Copyright ght and and Relate Related d Rights Rights;; (b) Tradem Trademark arkss and Servi Service ce Marks Marks;; (c) Geogra Geographi phicc Indica Indicatio tions; ns; (d) Indust Industria riall Desig Designs; ns; (e) Patents; (f) Layout-D Layout-Desig esigns ns (Topograp (Topographies hies)) of Integrated Integrated Circui Circuits; ts; and (g) Protectio Protection n of Undisclo Undisclosed sed Informat Information ion (n) [TRIPS] [TRIPS].. "technology ogy transfer transfer arrangem arrangements ents" " refe 4.2. 4.2. The term term "technol refers rs to contr contract actss or agreem agreement entss invol involvin ving g the transf transfer er of syste systemat matic ic knowledge for the manufacture of a product, the application of a process, or rendering of a service including management management contracts; and the transfer, assignment or licensing of all forms of intellectual intellectual property rights, including licensing of computer software except computer software developed for mass market.
4.3. 4.3. The term "Office" refers refers to the Intellec Intellectual tual Property Property Office Office created by this Act. 4.4 The term "IPO Gazette" refers refers to the gazette published by the Office under this Act. (n) DEFINITION Intellectual property rights – consists of: [ CTGIPLP] a) Copyrights and Related Rights b) Trademarks and Service Marks c) Geographic Indications d) Industrial Designs e) Patents f) Layout Designs (Topographies) of integrated Circuits g) Protection of Undisclosed Information a.
Righ Rightt of a Forei Foreign gner er to Sue Sue for Pro Prote tect ctio ion n of IP Rights – Sections 3 and 160
International Conventions Conventions and Reciprocity. Reciprocity. - Any person Sec. 3. International who is a national or who is domiciled or has a real and effective indus industri trial al establ establish ishmen mentt in a count country ry which which is a party party to any convention, convention, treaty or agreement r elating to intellectual property rights rights or the the repres repressio sion n of unfai unfairr compet competiti ition on,, to which which the the Philippines is also a party, or extends reciprocal rights to nationals of the Philippines by law, shall be entitled to benefits to the extent necessary to give effect to any provision of such convention, treaty or reciprocal law, in addition to the rights to which any owner of an intellectual property right is otherwise entitled by this Act. (n) Corporation to Sue in Trademark or Sec. 160. Right of Foreign Corporation Service Service Mark Enforceme Enforcement nt Action. Action. - Any Any fore foreig ign n nati nation onal al or juridical person who meets the requirements requirements of Section 3 of this MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Diff Differ eren ence cess betw betwee een n Copy Copyri righ ghts ts,, Trade Tradema mark rkss and and Patent
Copyright The The scop scopee of a copyright is confined to literary and art artist istic work orks which are original intellectual crea creati tion onss in the the literary and arti artist stic ic doma domain in prot protec ecte ted d from from the the mom moment ent of their creation.
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Trademark A trad tradem emar ark k is any any visible sign capable of dist distin ingu guis ishi hing ng the the goods goods (trademar (trademark) k) or serv servic ices es (se (servic rvicee mark) of an enterprise and and shal shalll incl includ udee a stam stampe ped d or mark marked ed container of goods. In rela relati tion on ther theret eto o, a trade name means the name name or design designati ation on identifying or disti stinguish uishiing an enterprise.
Patent Patentable inventions refer to any technical solu soluti tion on of a problem in any field of human human activ activity ity which which is new, involves an invent entive ive step and is industrially applicable.
Tech Techno nolo logy gy Trans Transfe ferr Arran Arrange geme ment ntss
DEFINITION Technolo Technology gy transfer transfer arrangeme arrangements nts – refe refers rs to cont contra ract ctss or agreements involving the transfer of systematic knowledge for the manufacture of a product, the application application of a process, or rendering of a service service includin including g manageme management nt contract contracts; s; and the transfer, transfer, assignment or licensing of all forms of intellectual property rights, including including licensing of computer software except computer software developed developed for mass market NATURE licensing contract contract contract between between an intellec intellectual tual property property right right owner owner (licensor), and a second party (licensee) who was granted the the auth author orit ity y to comm commer erci cial ally ly expl exploi oitt the the same same intellec intellectual tual property property right right under under specifie specified d terms terms and conditions regul regulati ation on of such such contr contract actss is neces necessar sary y to preve prevent nt practices that may have an adverse effect on competition and trade REQUIRED AND PROHIBITED STIPULATIONS failure failure to comply comply with the mandator mandatory y and prohibit prohibited ed clauses automatically render the TTA unenforceable Exceptio Exception: n: In certain certain exceptio exceptional nal cases (Sec. 91), the TTA may still be valid even if it contains a prohibited clause or it does not stipulate a mandatory clause if the same is approved and registered with the Documentation, Information and Technology Transfer Bureau.
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Voluntary License Contract – Sec. 85, 90, 91
granted by patent owner
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Sec. 85. Voluntary License Contract. - To encourage the transfer and dissemination of technology, prevent or control practices and conditi conditions ons that may in particul particular ar cases cases constitu constitute te an abuse abuse of intellectual intellectual property rights having an adverse effect on competition competition and trade, all technology transfer arrangements shall comply with the provisions of this Chapter. (n)
87.6. Those that obligate the licensee to transfer for free to the licensor licensor the inventio inventions ns or improveme improvements nts that may be obtained obtained through the use of the licensed technology;
Sec. 90. Rights of Licensee. - The licensee licensee shall shall be entitl entitled ed to exploit the subject matter of the technology transfer arrangement during the whole term of the technology transfer arrangement. (Sec. 33-C (1), R. A. 165a)
87.8. Those that prohibit the licensee to export the licensed product unless justified for the protection of the legitimate interest of the licensor such as exports to countries where exclusive licenses to manufacture and/or distribute the licensed product(s) have already been granted;
Exceptional Cases. - In exceptional or meritorious cases Sec. 91. Exceptional where substantial substantial benefits will accrue to the economy, such as high techn technolo ology gy conte content, nt, increa increase se in foreig foreign n excha exchang ngee earni earnings ngs,, employme employment nt generati generation, on, regional regional dispersal dispersal of industri industries es and/or and/or substitution with or use of local raw materials, or in the case of Board of Investments, registered companies with pioneer status, exemption from any of the above requirements may be allowed by the Documentation, Information and Technology Transfer Bureau after evaluation thereof thereof on a case by case basis. (n) VOLUNTARY LICENSE CONTRACT one of the ways by which an inventor may reap economic benefits from the invention is by granting authority to enterprises that can commercially exploit the invention, either by: manufacturing o distribution o retail selling o 2 objectives of the law: enco encour urag agee tran transf sfer er and and diss dissem emin inat atio ion n of o technology o prevent prevent practices practices that may have an adverse adverse effect on competition and trade 1.
87.7. Those that require payment of royalties to the owners of patents for patents which are not used;
87.9. Those which restrict the use of the technology supplied after the expiration of the technology transfer arrangement, except in cases of early termination of the technology transfer arrangement due to reason(s) attributable to the licensee; 87.10 87.10.. Those Those which which requir requiree paymen payments ts for patent patentss and other other indus industri trial al proper property ty right rightss after after their their expir expirati ation on,, termin terminati ation on arrangement; 87.11. Those which require that the technology recipient shall not contest the validity of any of the patents of the technology supplier; 87.12. Those which restrict the research and development activities of the the licen licensee see desig designe ned d to absor absorb b and adapt adapt the transf transferr erred ed techno technolo logy gy to local local cond conditi ition onss or to initia initiate te resear research ch and development development programs in connection connection with new products, processes or equipment; 87.13 87.13.. Those Those which which preven preventt the licen licensee see from from adapt adapting ing the imported technology to local conditions, conditions, or introducing introducing innovation to it, as long as it does not impair the quality standards prescribed by the licensor;
Proh Prohib ibit ited ed Clau Clause sess – Sec. Sec. 87
Sec. 87. Prohibited Clauses. - Except in cases under Section 91, the followi following ng provisions provisions shall shall be deemed prima facie to have have an adverse on competition and trade:
87.14. 87.14. Those Those which which exempt exempt the licensor licensor for liabilit liability y for nonnonfulfillme fulfillment nt of his responsi responsibili bilities ties under under the technol technology ogy transfer transfer arrangement and/or liability arising from third party suits brought about by the use of the licensed product or the licensed technology; and
87.1. 87.1. Those Those which which impose impose upon upon the licensee licensee the obligation obligation to acquire from a specific source capital goods, intermediate products, raw materials, and other technologies, or of permanently employing personnel indicated by the licensor;
87.15. Other clauses with equivalent effects. (Sec. 33-C[2], R. A. 165a)
87.2. Those pursuant to which the licensor reserves the right to fix the sale or resale prices of the products manufactured on the basis of the license;
Reason: They are deemed prima facie to have an adverse effect on competition and trade. Exception: In cases under Sec. 91. 2.
87.3. 87.3. Those Those that contain restrictions restrictions regarding regarding the volume volume and structure of production; 87.4 Those that prohibit the use of competitive technologies in a non-exclusive technology transfer agreement; 87.5. Those that establish a full or partial purchase option in favor of the licensor;
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Mand Mandat ator ory y Pro Provi visi sion onss – Sec Sec.. 88
Sec. 88. Mandatory Provisions. - The following provisions provisions shall be included in voluntary license contracts: 88.1 88.1.. That That the the laws laws of the the Phil Philip ippi pine ness shal shalll gove govern rn the the interpretation of the same and in the event of litigation, the venue shall be the proper court in the place where the licensee has its principal office;
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Sec. 85. Voluntary License Contract. - To encourage the transfer and dissemination of technology, prevent or control practices and conditi conditions ons that may in particul particular ar cases cases constitu constitute te an abuse abuse of intellectual intellectual property rights having an adverse effect on competition competition and trade, all technology transfer arrangements shall comply with the provisions of this Chapter. (n)
87.6. Those that obligate the licensee to transfer for free to the licensor licensor the inventio inventions ns or improveme improvements nts that may be obtained obtained through the use of the licensed technology;
Sec. 90. Rights of Licensee. - The licensee licensee shall shall be entitl entitled ed to exploit the subject matter of the technology transfer arrangement during the whole term of the technology transfer arrangement. (Sec. 33-C (1), R. A. 165a)
87.8. Those that prohibit the licensee to export the licensed product unless justified for the protection of the legitimate interest of the licensor such as exports to countries where exclusive licenses to manufacture and/or distribute the licensed product(s) have already been granted;
Exceptional Cases. - In exceptional or meritorious cases Sec. 91. Exceptional where substantial substantial benefits will accrue to the economy, such as high techn technolo ology gy conte content, nt, increa increase se in foreig foreign n excha exchang ngee earni earnings ngs,, employme employment nt generati generation, on, regional regional dispersal dispersal of industri industries es and/or and/or substitution with or use of local raw materials, or in the case of Board of Investments, registered companies with pioneer status, exemption from any of the above requirements may be allowed by the Documentation, Information and Technology Transfer Bureau after evaluation thereof thereof on a case by case basis. (n) VOLUNTARY LICENSE CONTRACT one of the ways by which an inventor may reap economic benefits from the invention is by granting authority to enterprises that can commercially exploit the invention, either by: manufacturing o distribution o retail selling o 2 objectives of the law: enco encour urag agee tran transf sfer er and and diss dissem emin inat atio ion n of o technology o prevent prevent practices practices that may have an adverse adverse effect on competition and trade 1.
87.7. Those that require payment of royalties to the owners of patents for patents which are not used;
87.9. Those which restrict the use of the technology supplied after the expiration of the technology transfer arrangement, except in cases of early termination of the technology transfer arrangement due to reason(s) attributable to the licensee; 87.10 87.10.. Those Those which which requir requiree paymen payments ts for patent patentss and other other indus industri trial al proper property ty right rightss after after their their expir expirati ation on,, termin terminati ation on arrangement; 87.11. Those which require that the technology recipient shall not contest the validity of any of the patents of the technology supplier; 87.12. Those which restrict the research and development activities of the the licen licensee see desig designe ned d to absor absorb b and adapt adapt the transf transferr erred ed techno technolo logy gy to local local cond conditi ition onss or to initia initiate te resear research ch and development development programs in connection connection with new products, processes or equipment; 87.13 87.13.. Those Those which which preven preventt the licen licensee see from from adapt adapting ing the imported technology to local conditions, conditions, or introducing introducing innovation to it, as long as it does not impair the quality standards prescribed by the licensor;
Proh Prohib ibit ited ed Clau Clause sess – Sec. Sec. 87
Sec. 87. Prohibited Clauses. - Except in cases under Section 91, the followi following ng provisions provisions shall shall be deemed prima facie to have have an adverse on competition and trade:
87.14. 87.14. Those Those which which exempt exempt the licensor licensor for liabilit liability y for nonnonfulfillme fulfillment nt of his responsi responsibili bilities ties under under the technol technology ogy transfer transfer arrangement and/or liability arising from third party suits brought about by the use of the licensed product or the licensed technology; and
87.1. 87.1. Those Those which which impose impose upon upon the licensee licensee the obligation obligation to acquire from a specific source capital goods, intermediate products, raw materials, and other technologies, or of permanently employing personnel indicated by the licensor;
87.15. Other clauses with equivalent effects. (Sec. 33-C[2], R. A. 165a)
87.2. Those pursuant to which the licensor reserves the right to fix the sale or resale prices of the products manufactured on the basis of the license;
Reason: They are deemed prima facie to have an adverse effect on competition and trade. Exception: In cases under Sec. 91. 2.
87.3. 87.3. Those Those that contain restrictions restrictions regarding regarding the volume volume and structure of production; 87.4 Those that prohibit the use of competitive technologies in a non-exclusive technology transfer agreement; 87.5. Those that establish a full or partial purchase option in favor of the licensor;
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Mand Mandat ator ory y Pro Provi visi sion onss – Sec Sec.. 88
Sec. 88. Mandatory Provisions. - The following provisions provisions shall be included in voluntary license contracts: 88.1 88.1.. That That the the laws laws of the the Phil Philip ippi pine ness shal shalll gove govern rn the the interpretation of the same and in the event of litigation, the venue shall be the proper court in the place where the licensee has its principal office;
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88.2 88.2.. Contin Continued ued access access to improv improveme ements nts in techn techniqu iques es and processes related to the technology shall be made available during the period of the technology transfer arrangement; 88.3. In the event the technology transfer arrangement shall provide for arbitration, the Procedure of Arbitration of the Arbitration Law of the Philippines or the Arbitration Rules of the United Nations Commissio Commission n on Internat Internationa ionall Trade Trade Law (UNCITRAL) (UNCITRAL) or the Rules of Conciliation Conciliation and Arbitration of the International Chamber of Commerce (ICC) shall apply and the venue of arbitration shall be the Philippines or any neutral country; and 88.4 88.4.. The The Philip Philippin pinee taxes taxes on all payme payment ntss relat relating ing to the technology transfer arrangement shall be borne by the licensor. (n) b.
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Compulsory Licensing
grant by the Director of Legal Affairs of a license to exploit a patented invention without the permission of the paten patentt holde holderr either either by manufa manufactu cturin ring g or parall parallel el importation o parallel importation – importation of drugs and medicines by a government agency or by any third party
NATURE This covers situations where licenses are awarded against the will of the patent owner. JURISDICTION Director of Legal Affairs has original jurisdiction over petitions for compulsory licensing of patents. 1.
Grou Ground ndss – Sec Sec.. 93, 93, 96, 96, 97 97
Grounds ds for Compulso Compulsory ry Licensin Licensing. g. - The Direct Sec. 93. Groun Director or of Legal Affairs may grant a license to exploit a patented invention, even without the agreement of the patent owner, in favor of any person who has shown his capability to exploit the invention, under any of the following circumstances:
93.1. 93.1. National National emergency emergency or other other circumsta circumstances nces of extreme extreme urgency; 93.2. 93.2. Where Where the public public interest interest,, in particula particular, r, national national security, security, nutrition, health or the development of other vital sectors of the national economy as determined by the appropriate agency of the Government, so requires; or 93.3. Where a judicial or administrative body has determined that the the manne mannerr of explo exploita itatio tion n by the the owne ownerr of the patent patent or his his licensee is anti-competitive; or
GROUNDS (EPiC3D) National National emergency or other circumstances of extreme urgency; When public interest so requires; Manner of exploitation of patent is anti- competitive; Public Public nonnon-comme ommerc rcia iall use use of the the pate patent nt with withou outt satisfactory reason; Patented invention invention is not being worked in the Philippines Philippines on a commercial scale although capable of being worked; and Where the demand for the patented drugs and medicines is not being met at an adequate extent and on reasonable terms. Compulso lsory ry Licens Licensin ing g of Patent Patentss Invol Involvin ving g SemiSemiSec. Sec. 96. 96. Compu Conductor Conductor Technology. Technology. - In the case of compulsory licensing of patents involving semi-conductor semi-conductor technology, the license may only be granted in case of public non-commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive. (n) Compulsor soryy Licens Licensee Based Based on Interd Interdepe epende ndence nce of Sec. Sec. 97. 97. Compul Patents. - If the invention protected by a patent, hereafter referred to as the "second patent," within the country cannot be worked without infringing another patent, hereafter referred to as the "first patent," granted on a prior application or benefiting from an earlier priority, a compulsory license may be granted to the owner of the secon second d patent patent to the extent extent necess necessary ary for the working working of his his invention, subject to the following conditions:
97.1. 97.1. The invention invention claimed in the second patent involves involves an important technical advance of considerable considerable economic significance significance in relation to the first patent; 97.2. The owner of the first patent shall be entitled to a crosslicense on reasonable terms to use the invention claimed in the second patent; 97.3. The use authorized in respect of the first patent shall be nonassignable except with the assignment of the second patent; and 97.4. The terms and conditions of Sections 95, 96 and 98 to 100 of this Act.(Sec. 34-C, R. A. No. 165a) Voluntary Licensing As to Grantor
Patent Owner No Specific Grounds
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93.4. In case of public non-commercial use of the patent by the patentee, without satisfactory reason; 93.5 93.5.. If the paten patented ted inventi invention on is not not being being worked worked in the Philipp Philippines ines on a commerci commercial al scale, scale, although although capable capable of being being worked, without satisfactory reason: Provided, That the importation of the paten patented ted articl articlee shall shall consti constitut tutee worki working ng or using using the patent. (Secs. 34, 34-A, and 34-B, R. A. No. 165a) MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Compulsory Licensing
Director of Legal Affairs As to Grounds Those mentioned under Section 10 of Republic Act 9502
Requir Requireme ement nt to to Obtai Obtain n a Lice License nse – Sec. Sec. 95 95
Sec. Sec. 95. 95. Requirement Requirement to Obtain a License on Reasonable Reasonable Commercial Terms. 95.1. The license will only be granted after the petitioner has made efforts to obtain authorization authorization from the patent owner on reasonable commercial terms and conditions but such efforts have not been successful within a reasonable period of time. 3
may be applied for at any time after the grant of the patent. (Sec. 34[1], R. A. No. 165)
95.2. The requirement under Subsection 95.1 shall not apply in the following cases:
PERIOD FOR FILING FOR A COMPULSORY LICENSE depends on the ground for the petition
(a) Where the petition for compulsory license seeks to remedy a practice determined after judicial or administrative process to be anti-competitive; (b) In situations of national emergency or other circumstances of extreme urgency; (c) In cases of public non-commercial use.
Ground If the patented version is not being worked in the Philippines on a commercial scale, although capable of being worked without satisfactory reason See sections 93.2, 93.3, 93.4 and 97 of the IPC
95.3. In situations of national emergency or other circumstances of extreme urgency, the right holder shall be notified as soon as reasonably practicable. 95.4. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly. (n) WHEN
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after the petitioner has made efforts to obtain authorization from the patent owner on a reasonable commercial terms and conditions but such efforts have not been successful within a reasonable period of time.
THIS REQUIREMENT SHALL NOT APPLY IN THE FOLLOWING CASES 1. Where the petition for compulsory license seeks to remedy a practice determined after judicial or administrative process to be anti-competitive; 2. In situations of national emergency or other circumstances of extreme urgency; o the right holder shall be notified as soon as reasonably practicable 3. In cases of public non-commercial use; and o where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government the right holder shall be informed promptly 4. In case where the demand for the patented drugs and medicines in the Philippines is not being met to an adequate extent and on reasonable terms, as determined by the Secretary of the DOH. o the right holder shall be informed promptly
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Period to File a Petition – Sec. 94
Sec. 94. Period for Filing a Petition for a Compulsory License. 94.1. A compulsory license may not be applied for on the ground stated in Subsection 93.5 before the expiration of a period of four (4) years from the date of filing of the application or three (3) years from the date of the patent whichever period expires last. 94.2. A compulsory license which is applied for on any of the grounds stated in Subsections 93.2, 93.3, and 93.4 and Section 97
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Period Before the expiration of a period years from the date of the fil application or three (3) years fro of the patent whichever period e Anytime after the grant of the pa
PATENTS NATURE AND DEFINITION Patent – set of exclusive rights granted by a state to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an invention ultimate goal: to bring new designs and technologies into the public domain through disclosure the law attempts to strike an ideal balance between the two interests: public which will benefit from new ideas o investors who must be protected o it is the right granted to an inventor by the State, or by the regional office acting for several States, which allows the inventor to exclude anyone else from commercially exploiting his invention for a limited period it is a statutory monopoly which protects against unlicensed use of the patented device or process even by the one who discovered it through independent research exclusive enjoyment is guaranteed for 20 years, but upon the expiration of that period, the knowledge of the invention inures to the people, who are thus enabled to practice it and profit by its use THREE-FOLD PURPOSE AND ULTIMATE GOAL 1. Patent law seeks to foster and reward invention 2. Promotes disclosure of inventions to stimulate further invention and to permit the public to practice the invention once the patent expires 3. The stringent requirements for patent protection seek to ensure that ideas in the public domain remain there for the free use of the public
Ultimate goal: bring new designs and technologies into the public domain through disclosure TERM OF PATENT The term of patent is 20 years counted from the filing date of application. upon expiration of that period, the knowledge of the invention inures to the people, who are thus enabled to practice it and profit from its use 1.
Patentable Inventions – Sec. 21, 23, 24, 25, 26, 27
Sec. 21. Patentable Inventions. - Any technical solution of a problem in any field of human activity which is new, involves an inventive step and is industrially applicable shall be patentable. It 4
may be, or may relate to, a product, or process, or an improvement of any of the foregoing. (Sec. 7, R. A. No. 165a) REQUISITES FOR PATENTABILITY (TINI-P) Any technical solution of a problem in any field of human activity Inventive step An invention involves an inventive step if, o 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. Novelty An invention shall not be considered new if it o forms part of a prior art. Industrial applicability o An invention that can be produced and used in any industry Patentable subject matter o An invention that does not fall within the prohibitions of a Non-Patentable Invention under Sec. 22 of the IPC. PATENTABLE INVENTIONS a product, such as a machine, a device, an article of manufacture, a composition of matter, a microorganism; a process, such as a method of use, a method of manufacturing, a non-biological process, a microbiological process; computer-related inventions; and an improvement of any of the foregoing -
Sec. 23. Novelty. - An invention shall not be considered new if it forms part of a prior art. (Sec. 9, R. A. No. 165a)
been disclosed by the office, or (b) in an application filed without the knowledge or consent of the inventor by a third party which obtained the information directly or indirectly from the inventor; or (c) A third party which obtained the information directly or indirectly from the inventor. 25.2. For the purposes of Subsection 25.1, "inventor" also means any person who, at the filing date of application, had the right to the patent. (n) Sec. 26. Inventive Step. - 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. (n) Sec. 27. Industrial Applicability. - An invention that can be produced and used in any industry shall be industrially applicable. (n) 2.
Non-Patentable Inventions – Sec. 22
Sec. 22. Non-Patentable Inventions. - The following shall be excluded from patent protection: 22.1. Discoveries, scientific theories and mathematical methods; 22.2. Schemes, rules and methods of performing mental acts, playing games or doing business, and programs for computers; 22.3 Methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practiced on the human or animal body. This provision shall not apply to products and composition for use in any of these methods;
Sec. 24. Prior Art. - Prior art shall consist of: 24.1. 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 24.2. The whole contents of an application for a patent, utility model, or industrial design registration, published in accordance with this Act, filed or effective in the Philippines, with a filing or priority date that is earlier than the filing or priority date of the application: Provided, That the application which has validly claimed the filing date of an earlier application under Section 31 of this Act, shall be prior art with effect as of the filing date of such earlier application: Provided further, That the applicant or the inventor identified in both applications are not one and the same. (Sec. 9, R. A. No. 165a) Sec. 25. Non-Prejudicial Disclosure. 25.1. The disclosure of information contained in the application during the twelve (12) months preceding the filing date or the priority date of the application shall not prejudice the applicant on the ground of lack of novelty if such disclosure was made by: (a) The inventor;
22.4. 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. Provisions under this subsection shall not preclude Congress to consider the enactment of a law providing sui generis protection of plant varieties and animal breeds and a system of community intellectual rights protection: 22.5. Aesthetic creations; and 22.6. Anything which is contrary to public order or morality. (Sec. 8, R. A. No. 165a) NON-PATENTABLE INVENTIONS (DAS-M2AAP2) Discoveries, scientific theories and mathematical methods, a law of nature, a scientific truth, or knowledge as such; Abstract ideas or theories, fundamental concepts apart from the means or processes for carrying the concept to produce a technical effect; Schemes, rules and methods of performing mental acts, playing games;
(b) A patent office and the information was contained (a) in another application filed by the inventor and should not have MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
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Method of doing business, such as method or system for transacting business without the technical means for carrying out the method or system; Methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practiced on the human or animal body. The non-patentability shall not apply to products and composition for use in any of these methods; Anything which is contrary to public order, health, welfare, or morality, or process for cloning or modifying the germ line genetic identity of humans or animals or uses of the human embryo; Aesthetic creations; Programs for computers; and Plant varieties or animal breeds or essentially biological process for the production of plants and animals. This provision shall not apply to microorganisms and nonbiological and microbiological processes. Ownership of a Patent
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Right to a Patent – Sec. 28
Sec. 28. 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. (Sec. 10, R. A. No. 165a) The right to a patent belongs to the inventor. Like any other property, patent may be acquired through succession or assignment. The right to a patent may also be subject of joint-ownership as when two or more persons have jointly made an invention. b.
First-to-File Rule – Sec. 29
Sec. 29. First to File Rule. - If two (2) or more persons have made the invention separately and independently of each other, the right to the patent shall belong to the person who filed an application for such invention, or where two or more applications are filed for the same invention, to the applicant who has the earliest filing date or, the earliest priority date. (3rd Sentence, Sec. 10, R. A. No. 165a.) FIRST-TO-FILE RULE there must be at least two persons who have made the invention separately and independently of each other it grants the patent rights of an invention to the person who first files a patent application for that invention, whether or not he is the inventor
c.
Inventions Created Pursuant to a Commission – Sec. 30
Sec. 30. Inventions Created Pursuant to a Commission. 30.1. The person who commissions the work shall own the patent, unless otherwise provided in the contract. 30.2. 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. MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
(b) The employer, if the invention is the result of the performance of his regularly-assigned duties, unless there is an agreement, express or implied, to the contrary. (n) When an invention is made by an employee in the course of his employment contract, the patent shall belong to: 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 Employer if the invention is the result of the performance of his regularly-assigned duties, unless there is an agreement, express or implied, to the contrary
d.
Right of Priority – Sec. 31
Sec. 31. Right of Priority. - An application for patent filed by any person who has previously applied for the same invention in another country which by treaty, convention, or law affords similar privileges to Filipino citizens, shall be considered as filed as of the date of filing the foreign application: Provided, That: (a) the local application expressly claims priority; (b) it is filed within twelve (12) months from the date the earliest foreign application was filed; and (c) a certified copy of the foreign application together with an English translation is filed within six (6) months from the date of filing in the Philippines. (Sec. 15, R. A. No. 165a) An application for patent filed by any person who has previously applied for the same invention in another country which by treaty, convention, or law affords similar privileges to Filipino citizens, shall be considered as filed as of the date of filing the foreign application: Provided, That: (a) the local application expressly claims priority; (b) it is filed within twelve (12) months from the date the earliest foreign application was filed; and (c) a certified copy of the foreign application together with an English translation is filed within six (6) months from the date of filing in the Philippines. 4.
Grounds for Cancellation of a Patent – Sec. 61
Sec. 61. Cancellation of Patents. 61.1. Any interested person may, upon payment of the required fee, petition to cancel the patent or any claim thereof, or parts of the claim, on any of the following grounds: (a) That what is claimed as the invention is not new or patentable; (b) That the patent does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by any person skilled in the art; or (c) That the patent is contrary to public order or morality. 61.2. Where the grounds for cancellation relate to some of the claims or parts of the claim, cancellation may be effected to such extent only. (Secs. 28 and 29, R. A. No. 165a) FORMALITIES Upon petition, notice and hearing by any interested person, and after payment of the required fee. The petition shall be: in writing; verified; specify the grounds upon which it is based; include a statement of facts; and 6
-
attach copies of printed publications, or of patents of other countries, together with their translations in English.
EFFECT Termination of rights conferred by the patent.s
GROUNDS The invention is not new or patentable The patent does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by any person skilled in the art The patent is contrary to public order or morality 5.
Remedy of the True and Actual Inventor – Sec. 29, 67, 68, 70
Sec. 29. First to File Rule. - If two (2) or more persons have made the invention separately and independently of each other, the right to the patent shall belong to the person who filed an application for such invention, or where two or more applications are filed for the same invention, to the applicant who has the earliest filing date or, the earliest priority date. Sec. 67. Patent Application by Persons Not Having the Right to a Patent. 67.1. If a person referred to in Section 29 other than the applicant, is declared by final court order or decision as having the right to the patent, such person may, within three (3) months after the decision has become final: (a) Prosecute the application as his own application in place of the applicant; (b) File a new patent application in respect of the same invention; (c) Request that the application be refused; or (d) Seek cancellation of the patent, if one has already been issued. 67.2. The provisions of Subsection 38.2 shall apply mutatis mutandis to a new application filed under Subsection 67.1(b). (n) Sec. 68. Remedies of the True and Actual Inventor. - If a person, who was deprived of the patent without his consent or through fraud is declared by final court order or decision to be the true and actual inventor, the court shall order for his substitution as patentee, or at the option of the true inventor, cancel the patent, and award actual and other damages in his favor if warranted by the circumstances. Sec. 70. Time to File Action in Court. - The actions indicated in Sections 67 and 68 shall be filed within one (1) year from the date of publication made in accordance with Sections 44 and 51, respectively. 6.
Rights Conferred by a Patent – Sec. 71, 55
The rights conferred by a patent depend on whether the subject matter is a product or a process.
71.1. A patent shall confer on its owner the following exclusive rights: (a) Where the subject matter of a patent is a product, to restrain, prohibit and prevent any unauthorized person or entity from making, using, offering for sale, selling or importing that product; (b) Where the subject matter of a patent is a process, to restrain, prevent or prohibit any unauthorized person or entity from using the process, and from manufacturing, dealing in, using, selling or offering for sale, or importing any product obtained directly or indirectly from such process. 71.2. Patent owners shall also have the right to assign, or transfer by succession the patent, and to conclude licensing contracts for the same. The patent thus is broader when its subject matter is a process since the owner does not only control the use of the process but also products obtained from such process, even those that are obtained indirectly from the same process. Sec. 55. Annual Fees. 55.1. To maintain the patent application or patent, an annual fee shall be paid upon the expiration of four (4) years from the date the application was published pursuant to Section 44 hereof, and on each subsequent anniversary of such date. Payment may be made within three (3) months before the due date. The obligation to pay the annual fees shall terminate should the application be withdrawn, refused, or cancelled. 55.2. If the annual fee is not paid, the patent application shall be deemed withdrawn or the patent considered as lapsed from the day following the expiration of the period within which the annual fees were due. A notice that the application is deemed withdrawn or the lapse of a patent for non-payment of any annual fee shall be published in the IPO Gazette and the lapse shall be recorded in the Register of the Office. 55.3. A grace period of six (6) months shall be granted for the payment of the annual fee, upon payment of the prescribed surcharge for delayed payment. 7.
Limitations of Patent Rights – Sec. 71, 72
Sec. 71. Rights Conferred by Patent. 71.1. A patent shall confer on its owner the following exclusive rights: (a) Where the subject matter of a patent is a product, to restrain, prohibit and prevent any unauthorized person or entity from making, using, offering for sale, selling or importing that product; (b) Where the subject matter of a patent is a process, to restrain, prevent or prohibit any unauthorized person or entity from using the process, and from manufacturing, dealing in, using, selling or offering for sale, or importing any product obtained directly or indirectly from such process.
Sec. 71. Rights Conferred by Patent. MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
7
71.2. Patent owners shall also have the right to assign, or transfer by succession the patent, and to conclude licensing contracts for the same. (Sec. 37, R. A. No. 165a)
in our Constitution that no one shall be deprived of life, liberty or property without due process of law. Sec. 74. Use of Invention by Government. -
Sec. 72. Limitations of Patent Rights. - The owner of a patent has no right to prevent third parties from performing, without his authorization, the acts referred to in Section 71 hereof in the following circumstances: 72.1 Using a patented product which has been put on the market in the Philippines by the owner of the product, or with his express consent, insofar as such use is performed after that product has been so put on the said market; 72.2. Where the act is done privately and on a non-commercial scale or for a non-commercial purpose: Provided, That it does not significantly prejudice the economic interests of the owner of the patent;
74.1. A Government agency or third person authorized by the Government may exploit the invention even without agreement of the patent owner where: (a) the public interest, in particular, national security, nutrition, health or the development of other sectors, as determined by the appropriate agency of the government, so requires; or (b) A judicial or administrative body has determined that the manner of exploitation, by the owner of the patent or his licensee, is anti-competitive. 74.2. The use by the Government, or third person authorized by the Government shall be subject, mutatis mutandis, to the conditions set forth in Sections 95 to 97 and 100 to 102. 8.
Patent Infringement – Sec. 76
72.3. Where the act consists of making or using exclusively for the purpose of experiments that relate to the subject matter of the patented invention;
Sec. 76. Civil Action for Infringement. -
72.4. Where the act consists of the preparation for individual cases, in a pharmacy or by a medical professional, of a medicine in accordance with a medical prescription or acts concerning the medicine so prepared;
76.1. The making, using, offering for sale, selling, or importing a patented product or a product obtained directly or indirectly from a patented process, or the use of a patented process without the authorization of the patentee constitutes patent infringement.
72.5. Where the invention is used in any ship, vessel, aircraft, or land vehicle of any other country entering the territory of the Philippines temporarily or accidentally: Provided, That such invention is used exclusively for the needs of the ship, vessel, aircraft, or land vehicle and not used for the manufacturing of anything to be sold within the Philippines. (Secs. 38 and 39, R. A. No. 165a)
76.2. Any patentee, or anyone possessing any right, title or interest in and to the patented invention, whose rights have been infringed, may bring a civil action before a court of competent jurisdiction, to recover from the infringer such damages sustained thereby, plus attorney’s fees and other expenses of litigation, and to secure an injunction for the protection of his rights.
a.
Prior User – Sec. 73
76.3. If the damages are inadequate or cannot be readily ascertained with reasonable certainty, the court may award by way of damages a sum equivalent to reasonable royalty.
Sec. 73. Prior User. 73.1. Notwithstanding Section 72 hereof, any prior user, who, in good faith was using the invention or has undertaken serious preparations to use the invention in his enterprise or business, before the filing date or priority date of the application on which a patent is granted, shall have the right to continue the use thereof as envisaged in such preparations within the territory where the patent produces its effect. 73.2. The right of the prior user may only be transferred or assigned together with his enterprise or business, or with that part of his enterprise or business in which the use or preparations for use have been made. The prior user cannot assign the right to use the patented product or process without giving up entirely his enterprise. b.
76.4. The court may, according to the circumstances of the case, award damages in a sum above the amount found as actual damages sustained: Provided, That the award does not exceed three (3) times the amount of such actual damages. 76.5. The court may, in its discretion, order that the infringing goods, materials and implements predominantly used in the infringement be disposed of outside the channels of commerce or destroyed, without compensation. 76.6. 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.
Use by the Government – Sec. 74 a.
The Government as a general rule is bound to respect the patent. This is so because patent is a property in itself and it is guaranteed MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Jurisdiction i.
AM No. 02-1-11 SC dated Feb 19, 2002 8
RE: DESIGNATION OF AN INTELLECTUAL PROPERTY JUDGE FOR MLA. EN BANC Quoted hereunder, for your information, is a resolution of this Court dated FEB 19 2002. A.M. No. 02-1-11-SC ( Re:Designation of an Intellectual Property Judge for Manila.)
(A) - Acting on the memorandum dated 15 January 2002 of Deputy Court Administrator Christopher O. Lock, favorably endorsed by Court Administrator Presbitero J. Velasco, Jr., the Court hereby designates Branch 24 of the Regional Trial Court of Manila, presided over by Judge ANTONIO M. EUGENIO, JR., as Special Intellectual Property Court for Manila in substitution of Branch 1 of said Court which was designated Special Intellectual Property Court, then presided over by Judge Rebecca de Guia Salvador (now Associate Justice of the Court of Appeals), pursuant to Administrative Order No. 113-95 dated 5 October 1995. As judge of the Special Intellectual Property Court, Judge Antonio M. Eugenio, Jr. shall try and decide cases involving violations of intellectual property rights under the Intellectual Property Code (R.A. No. 8293) committed within the City of Manila. The earlier designation of Branch 1 of the Regional Trial Court of Manila as a Special Intellectual Property Court is hereby REVOKED, and the cases involving violations of intellectual property rights earlier assigned to said Branch 1 pursuant to and by virtue of Administrative Order No. 113-95 are hereby re-assigned to Branch 24 of said Court. (B) - Furthermore, acting on the recommendation of Hon. Associate Justice Reynato S. Puno, Chairman of the Committee on Revision of the Rules of Court, and the Office of the Court Administrator, and in order to ensure speedy disposition of cases involving violations of intellectual property rights under the Intellectual Property Code (R.A. No. 8293), the following Regional Trial Courts (RTCs) are hereby designated Special Intellectual Property Courts: Region 1: 1) Hon. Antonio M. Esteves Presiding Judge, Branch 5 RTC, Baguio City 2) Hon. Manuel L. Argel Presiding Judge, Branch 65 RTC, Laoag City Region 2: 1) Hon. Rolando R. Velasco Presiding Judge, Branch 6 RTC, Aparri, Cagayan Region 5: 1) Hon. Vladimir B. Bruselas Presiding Judge, Branch 6 RTC, Legazpi City 2) Hon. Filemon B. Montenegro Presiding Judge, Branch 26 RTC, Naga City Region 8: 1) Hon. Frisco T. Lilagan MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Presiding Judge, Branch 34 RTC, Tacloban City Region 12: 1) Hon. Albert B. Abragan Presiding Judge, Branch 3 RTC, Iligan City The foregoing Special Intellectual Property Courts shall try and decide cases involving violations of intellectual property rights defined under the Intellectual Property Code committed within their respective territorial areas.Since there are only a few cases of violations of intellectual property rights now pending in other branches of the aforementioned Regional Trial Courts, such cases shall remain with and shall be decided by the branches to which they have been assigned. Only cases hereafter filed may be assigned to the above designated special courts. (C) - Finally, in order to ensure a just and equitable distribution of cases among the Judges concerned, all the aforementioned Special Intellectual Property Courts shall continue to participate in the raffles of other cases: Provided, however, that the Executive Judges concerned shall adopt a procedure whereby every intellectual property right case assigned to a Special Intellectual Property Court should be considered a case raffled to it and be duly credited to such court. ii.
Samson v Cabanos, June 28, 2005 GR 161693
SECOND DIVISION [G.R. No. 161693. June 28, 2005] MANOLO P. SAMSON, petitioner, vs. HON. VICTORIANO B. CABANOS, In his capacity as Acting Presiding Judge, Regional Trial Court of Antipolo City, Branch 71, PEOPLE OF THE PHILIPPINES and CATERPILLAR, INC., respondents. DECISION PUNO, J.: Petitioner Manolo P. Samson seeks the reversal of the orders dated January 22, 2003 and November 17, 2003 issued by Presiding Judge Felix S. Caballes and Acting Presiding Judge Victoriano B. Cabanos, respectively, of the Regional Trial Court (RTC) of Antipolo City, Branch 71, in relation to Criminal Case No. 02-23183. The assailed orders denied petitioners motion to quash the information for unfair competition filed against him before said court.[1]Petitioner also prayed that a temporary restraining order and/or preliminary injunction be issued to enjoin respondent judge from further proceeding with Criminal Case No. 02-23183 until the resolution of the instant petition. The Court issued a temporary restraining order on February 18, 2004. [2]
The background facts: Petitioner was charged with the crime of unfair competition before the RTC of Antipolo City in an Information that states: The undersigned Senior State Prosecutor of the Department of Justice hereby accuses MANOLO P. SAMSON for violation of Sec. 168.3 (a) in relation to Secs. 123.1 (e), 131.3 and 170 of RA 8293 otherwise known as the Intellectual Property Code of the Philippines, committed as follows: That on or about the first week of November 1999 and sometime prior or subsequent thereto, in Cainta, Rizal, Philippines, and within the jurisdiction of this Honorable Court, above-named 9
accused, owner/proprietor of ITTI Shoes Corporation located at F.P. Felix Avenue, Cainta, Rizal, did then and there willfully, unlawfully and feloniously distribute, sell and/or offer for sale CATERPILLAR products such as footwear, garments, clothing, bags, accessories and paraphernalia which are closely identical to and/or colorable imitations of the authentic Caterpillar products and likewise using trademarks, symbols and/or designs as would cause confusion, mistake or deception on the part of the buying public to the damage and prejudice of CATERPILLAR, INC., the prior adopter, user and owner of the following internationally famous marks: CATERPILLAR, CAT, CATERPILLAR, CAT, CATERPILLAR & DESIGN, CAT AND DESIGN, WALKING MACHINES and TRACK-TYPE TRACTOR & DESIGN. CONTRARY TO LAW. [3] Petitioner moved to quash the information on the ground that the court has no jurisdiction over the offense charged in the Information. He argued that Section 170 of Republic Act (R.A.) No. 8293 [4] provides that the penalty for violation of Section 168 thereof is imprisonment from two (2) to five (5) years and a fine ranging from fifty thousand pesos (P50,000.00) to two hundred thousand pesos (P200,000.00), and R.A. No. 7691 [5] amending Batas Pambansa (B.P.) Blg. 129 [6] vested the Metropolitan Trial Courts (MTC) exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years irrespective of the amount of the fine. [7] Presiding Judge Felix S. Caballes denied the motion for lack of merit in his order dated January 22, 2003.[8] Petitioner filed a motion for reconsideration which was likewise denied by Acting Presiding Judge Victoriano B. Cabanos. [9] Petitioner filed the instant petition for certiorari before this Court on pure question of law: Whether or not the respondent Regional Trial Court has jurisdiction over the offenses charged in the subject information where the penalty therein range from two (2) years to five (5) years, pursuant to Section 170 of R.A. 8293, in the light of the enactment of Republic Act No. 7691, amending B.P. Blg. 129, which vests exclusive original jurisdiction on the Metropolitan Trial Courts over all offenses punishable with imprisonment not exceeding six (6) years irrespective of the amount of fine, in relation to Section 163 of R.A. No. 8293. [10] Petitioner reiterates his argument before the trial court in support of his motion to quash. He contends that Section 170 of R.A. No. 8293 provides that the penalty to be imposed upon any person guilty of violation of Section 168 of the law is imprisonment from two (2) to five (5) years and a fine ranging from fifty thousand pesos (P50,000.00) to two hundred thousand pesos (P200,000.00). Under Section 2 of R.A. No. 7691, amending Section 32 of B.P. 129, the MTC shall exercise exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years irrespective of the fine. As petitioner is charged with an offense penalized by imprisonment not exceeding six (6) years, the jurisdiction to try the case lies with the MTC and not the RTC. In addition, petitioner submits that the old Trademark Law, R.A. No. 166, conferring jurisdiction on the Courts of First Instance (now RTC) over complaints for unfair competition, has been repealed by Section 239 of R.A. No. 8293. He cites the Courts decision in Mirpuri vs. Court of Appeals .[11] The petition must be dismissed. MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
It appears that petitioner had already raised the same issue and argument before this Court in the case of Samson vs. Daway, [12] decided on July 21, 2004. That case involved exactly the same facts and issue as in this case, except that the information for unfair competition against petitioner was filed before the RTC of Quezon City. We held in that case: The issues posed for resolution are - (1) Which court has jurisdiction over criminal and civil cases for violation of intellectual property rights? Xxx Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal penalty for infringement of registered marks, unfair competition, false designation of origin and false description or representation, is imprisonment from 2 to 5 years and a fine ranging from Fifty Thousand Pesos to Two Hundred Thousand Pesos, to wit: SEC. 170. Penalties . - Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00) to Two hundred thousand pesos (P200,000.00) shall be imposed on any person who is found guilty of committing any of the acts mentioned in Section 155 [Infringement], Section 168 [Unfair Competition] and Section 169.1 [False Designation of Origin and False Description or Representation]. Corollarily, Section 163 of the same Code states that actions (including criminal and civil) under Sections 150, 155, 164, 166, 167, 168 and 169 shall be brought before the proper courts with appropriate jurisdiction under existing laws, thus SEC. 163. Jurisdiction of Court . - All actions under Sections 150, 155, 164 and 166 to 169 shall be brought before the proper courts with appropriate jurisdiction under existing laws . (Emphasis supplied) The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The Trademark Law) which provides that jurisdiction over cases for infringement of registered marks, unfair competition, false designation of origin and false description or representation, is lodged with the Court of First Instance (now Regional Trial Court) SEC. 27. Jurisdiction of Court of First Instance . - All actions under this Chapter [V - Infringement] and Chapters VI [Unfair Competition] and VII [False Designatiion of Origin and False Description or Representation], hereof shall be brought before the Court of First Instance. We find no merit in the claim of petitioner that R.A. No. 166 was expressly repealed by R.A. No. 8293. The repealing clause of R.A. No. 8293, reads SEC. 239. Repeals. - 239.1. All Acts and parts of Acts inconsistent herewith , more particularly Republic Act No. 165, as amended; Republic Act No. 166 , as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as amended, are hereby repealed. (Emphasis added) Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its entirety, otherwise, it would not have used the phrases 10
parts of Acts and inconsistent herewith; and it would have simply stated Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as amended are hereby repealed. It would have removed all doubts that said specific laws had been rendered without force and effect. The use of the phrases parts of Acts and inconsistent herewith only means that the repeal pertains only to provisions which are repugnant or not susceptible of harmonization with R.A. No. 8293. Section 27 of R.A. No. 166, however, is consistent and in harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest jurisdiction over violations of intellectual property rights with the Metropolitan Trial Courts, it would have expressly stated so under Section 163 thereof. Moreover, the settled rule in statutory construction is that in case of conflict between a general law and a special law, the latter must prevail. Jurisdiction conferred by a special law to Regional Trial Courts must prevail over that granted by a general law to Municipal Trial Courts. In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws conferring jurisdiction over violations of intellectual property rights to the Regional Trial Court. They should therefore prevail over R.A. No. 7691, which is a general law. Hence, jurisdiction over the instant criminal case for unfair competition is properly lodged with the Regional Trial Court even if the penalty therefor is imprisonment of less than 6 years, or from 2 to 5 years and a fine ranging from P50,000.00 to P200,000.00. In fact, to implement and ensure the speedy disposition of cases involving violations of intellectual property rights under R.A. No. 8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002 designating certain Regional Trial Courts as Intellectual Property Courts. On June 17, 2003, the Court further issued a Resolution consolidating jurisdiction to hear and decide Intellectual Property Code and Securities and Exchange Commission cases in specific Regional Trial Courts designated as Special Commercial Courts. The case of Mirpuri v. Court of Appeals , invoked by petitioner finds no application in the present case. Nowhere in Mirpuri did we state that Section 27 of R.A. No. 166 was repealed by R.A. No. 8293. Neither did we make a categorical ruling therein that jurisdiction over cases for violation of intellectual property rights is lodged with the Municipal Trial Courts. The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A. No. 8293 was merely a backgrounder to the enactment of the present Intellectual Property Code and cannot thus be construed as a jurisdictional pronouncement in cases for violation of intellectual property rights. The foregoing ruling is the law of the case and thus lays to rest the issue posed by petitioner. We see no reason in this case to deviate therefrom. It is a basic legal principle that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court.[13] IN VIEW WHEREOF , the petition is DISMISSED. The temporary restraining order issued by this Court on February 18, 2004 is hereby LIFTED. SO ORDERED. MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Austria-Martinez, Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur . b.
Criminal action for Patent Infringement – Sec. 84
Sec. 84. Criminal Action for Repetition of 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 therefor and, upon conviction, shall suffer imprisonment for the period of not less than six (6) months but not more than three (3) years and/or a fine of not less than One hundred thousand pesos (P100,000) but not more than Three hundred thousand pesos (P300,000), at the discretion of the court. The criminal action herein provided shall prescribed in three (3) years from date of the commission of the crime. The law is clear therefore that criminal liability only inures when the infringement is repeated. c.
Tests in Patent Infringement iii.
Literal infringement – Sec. 75.1
Sec. 75. Extent of Protection and Interpretation of Claims. – 75.1. The extent of protection conferred by the patent shall be determined by the claims, which are to be interpreted in the light of the description and drawings. iv.
Doctrine of Equivalents – Sec. 75.2
75.2. For the purpose of determining the extent of protection conferred by the patent, due account shall be taken of elements which are equivalent to the elements expressed in the claims, so that a claim shall be considered to cover not only all the elements as expressed therein, but also equivalents. d.
Defenses in Action for Infringement – Sec. 81
Sec. 81. Defenses in Action for Infringement. - In an action for infringement, the defendant, in addition to other defenses available to him, may show the invalidity of the patent, or any claim thereof, on any of the grounds on which a petition of cancellation can be brought under Section 61 hereof. e.
Contributory Patent Infringement – Sec. 75.1
Sec. 75. Extent of Protection and Interpretation of Claims. 75.1. The extent of protection conferred by the patent shall be determined by the claims, which are to be interpreted in the light of the description and drawings. 9.
Assignment and Transmission of Rights – Sec. 103107
The reason why patent is an Intellectual Property Right is because patent is a property. Even patent application is deemed to be a property. 11
1.
Sec. 103. Transmission of Rights. 103.1 Patents or applications for patents and invention to which they relate, shall be protected in the same way as the rights of other property under the Civil Code. 103.2. Inventions and any right, title or interest in and to patents and inventions covered thereby, may be assigned or transmitted by inheritance or bequest or may be the subject of a license contract. (Sec. 50, R. A. No. 165a) Sec. 104. Assignment of Inventions. - An assignment may be of the entire right, title or interest in and to the patent and the invention covered thereby, or of an undivided share of the entire patent and invention, in which event the parties become joint owners thereof. An assignment may be limited to a specified territory. (Sec. 51, R. A. No. 165) Sec. 105. Form of Assignment. - The assignment must be in writing, acknowledged before a notary public or other officer authorized to administer oath or perform notarial acts, and certified under the hand and official seal of the notary or such other officer. (Sec. 52, R. A. No. 165) Sec. 106. Recording. 106.1. The Office shall record assignments, licenses and other instruments relating to the transmission of any right, title or interest in and to inventions, and patents or application for patents or inventions to which they relate, which are presented in due form to the Office for registration, in books and records kept for the purpose. The original documents together with a signed duplicate thereof shall be filed, and the contents thereof should be kept confidential. If the original is not available, an authenticated copy thereof in duplicate may be filed. Upon recording, the Office shall retain the duplicate, return the original or the authenticated copy to the party who filed the same and notice of the recording shall be published in the IPO Gazette. 106.2. Such instruments shall be void as against any subsequent purchaser or mortgagee for valuable consideration and without notice, unless, it is so recorded in the Office, within three (3) months from the date of said instrument, or prior to the subsequent purchase or mortgage. (Sec. 53, R. A. No. 165a) Sec. 107. Rights of Joint Owners. - If two (2) or more persons jointly own a patent and the invention covered thereby, either by the issuance of the patent in their joint favor or by reason of the assignment of an undivided share in the patent and invention or by reason of the succession in title to such share, each of the joint owners shall be entitled to personally make, use, sell, or import the invention for his own profit: Provided, however, That neither of the joint owners shall be entitled to grant licenses or to assign his right, title or interest or part thereof without the consent of the other owner or owners, or without proportionally dividing the proceeds with such other owner or owners. III.
TRADEMARKS
MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Definitions of Marks, Collective Marks, Trade Names, Solgan – Sec. 121
SECTION 121. Definitions. — As used in Part III, the following terms have the following meanings: 121.1. "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; (Sec. 38, R.A. No. 166a) 121.2. "Collective mark" means any visible sign designated as such in the application for registration and capable of distinguishing the origin or any other common characteristic, including the quality of goods or services of different enterprises which use the sign under the control of the registered owner of the collective mark; (Sec. 40, R.A. No. 166a) 121.3. "Trade name" means the name or designation identifying or distinguishing an enterprise; (Sec. 38, R.A. No. 166a) 121.4. "Bureau" means the Bureau of Trademarks; 121.5. "Director" means the Director of Trademarks; 121.6. "Regulations" means the Rules of Practice in Trademarks and Service Marks formulated by the Director of Trademarks and approved by the Director General; and 121.7. "Examiner" means the trademark examiner. (Sec. 38, R.A. No. 166a) Trademark – a distinctive mark of authenticity through which the merchandise of a particular producer or manufacturer may be distinguished form that of others, and its sole function is to designate distinctively the origin of the products to which it is attached any word, name, symbol or device adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others audible signs (or other functions aside from the visual) are not considered as trademark Functions: To indicate the origin of the goods to which they are o attached; o To guarantee the standard of quality of the goods; and To advertise the goods. o Duration: 10 years subject to indefinite renewal for periods of 10 years each Mark – 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 Collective Mark – any visible sign designated as such in the application for registration and capable of distinguishing the origin or any other common characteristic, including the quality of goods or services of different enterprises which use the sign under the control of the registered owner of the collective mark 12
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an application for registration of a collective mark shall designate the mark as a collective mark and shall be accompanied by a copy of the agreement, if any, governing the use of the collective mark
Slogan – short words or phrases that capture a company’s brand, essence, personality, and positioning, and distinguishing the firm from competitors 2.
Acquisition of Ownership of Mark a.
Sec. 122
SECTION 122. How Marks are Acquired. — The rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law. (Sec. 2-A, R.A. No. 166a)
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“Let it be remembered that duly registered trademarks are protected by law as intellectual properties and cannot be appropriated by others without violating the due process clause. An infringement of intellectual rights is no less vicious and condemnable as theft of material property, whether personal or real.” b.
Birkenstock GmbH vs. Phil. Shoe Marketing (G.R. No. 194307, Nov. 29, 2013)
Assailed in this Petition for Review on Certiorar i1 are the Court of Appeals (CA) Decision 2 dated June 25, 2010 and Resolution 3 dated October 27, 2010 in CA-G.R. SP No. 112278 which reversed and set aside the Intellectual Property Office (IPO) Director General’s Decision 4 dated December 22, 2009 that allowed the registration of various trademarks in favor of petitioner Birkenstock Orthopaedie GmbH & Co. KG. The Facts Petitioner, a corporation duly organized and existing under the laws of Germany, applied for various trademark registrations before the IPO, namely: (a) "BIRKENSTOCK" under Trademark Application Serial No. (TASN) 4-1994-091508 for goods falling under Class 25 of the International Classification of Goods and Services (Nice Classification) with filing date of March 11, 1994; (b) "BIRKENSTOCK BAD HONNEF -RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEA M" under TASN 4-1994-091509 for goods falling under Class 25 of the Nice Classification with filing date of March 11, 1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under TASN 4-1994-095043 for goods falling under Class 10 of the Nice Classification with filing date of September 5, 1994 (subject applications). 5 However, registration proceedings of the subject applications were suspended in view of an existing registration of the mark "BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated October 21, 1993 (Registration No. 56334) in the name of Shoe Town International and Industrial Corporation, the predecessor-in-interest of respondent Philippine Shoe Expo Marketing Corporation.6 In this regard, on May 27, 1997 petitioner MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
filed a petition for cancellation of Registration No. 56334 on the ground that it is the lawful and rightful owner of the Birkenstock marks (Cancellation Case).7 During its pendency, however, respondent and/or its predecessor-in-interest failed to file the required 10th Year Declaration of Actual Use (10th Year DAU) for Registration No. 56334 on or before October 21, 2004, 8 thereby resulting in the cancellation of such mark . 9 Accordingly, the cancellation case was dismissed for being moot and academic. 10 The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the subject applications in the IPO eGazette on February 2, 2007. 11 In response, respondent filed three (3) separate verified notices of oppositions to the subject applications docketed as Inter Partes Case Nos. 14-2007-00108, 142007-00115, and 14-2007-00116, 12 claiming, inter alia, that: (a) it, together with its predecessor-in-interest, has been using Birkenstock marks in the Philippines for more than 16 years through the mark "BIRKENSTOCK AND DEVICE"; (b) the marks covered by the subject applications are identical to the one covered by Registration No. 56334 and thus, petitioner has no right to the registration of such marks; (c) on November 15, 1991, respondent’s predecessor-in-interest likewise obtained a Certificate of Copyright Registration No. 0-11193 for the word "BIRKENSTOCK" ; (d) while respondent and its predecessor-in-interest failed to file the 10th Yea r DAU, it continued the use of "BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to record its continued ownership and exclusive right to use the "BIRKENSTOCK" marks, it has filed TASN 4-2006-010273 as a " re-application " of its old registration, Registration No. 56334. 13 On November 13, 2007, the Bureau of Legal Affairs (BLA) of the IPO issued Order No. 20072051 consolidating the aforesaid inter partes cases (Consolidated Opposition Cases).14 The Ruling of the BLA In its Decision 15 dated May 28, 2008, the BLA of the IPO sustained respondent’s opposition, thus, ordering the rejection of the subject applications. It ruled that the competing marks of the parties are confusingly similar since they contained the word "BIRKENSTOCK" and are used on the same and related goods. It found respondent and its predecessor-in-interest as the prior user and adopter of "BIRKENSTOCK" in the Philippines, while on the other hand, petitioner failed to present evidence of actual use in the trade and business in this country. It opined that while Registration No. 56334 was cancelled, it does not follow that prior right over the mark was lost, as proof of continuous and uninterrupted use in trade and business in the Philippines was presented. The BLA likewise opined that petitioner’s marks are not well -known in the Philippines and internationally and that the various certificates of registration submitted by petitioners were all photocopies and, therefore, not admissible as evidence .16 Aggrieved, petitioner appealed to the IPO Director General. The Ruling of the IPO Director General In his Decision 17 dated December 22, 2009, the IPO Director General reversed and set aside the ruling of the BLA, thus allowing the registration of the subject applications. He held that with the cancellation of Registration No. 56334 for respondent’s failure to file the 10th Year DAU, there is no more reason to reject the subject applications on the ground of prior registration by another 13
proprietor.18 More importantly, he found that the evidence presented proved that petitioner is the true and lawful owner and prior user of "BIRKENSTOCK" marks and thus, entitled to the registration of the marks covered by the subject applications . 19 The IPO Director General further held that respondent’s copyright for the word "BIRKENSTOCK" is of no moment since copyright and trademark are different forms of intellectual property that cannot be interchanged. 20 Finding the IPO Director General’s reversal of the BLA unacceptable, respondent filed a petition for review with the CA. Ruling of the CA In its Decision 21 dated June 25, 2010, the CA reversed and set aside the ruling of the IPO Director General and reinstated that of the BLA. It disallowed the registration of the subject applications on the ground that the marks covered by such applications "are confusingly similar, if not outright identical" with respondent’s mark.22 It equally held that respondent’s failure to file the 10th Year DAU for Registration No. 56334 "did not deprive petitioner of its ownership of the ‘BIRKENSTOCK’ mark since it has submitted substantial evidence showing its continued use, promotion and advertisement thereof up to the present." 23 It opined that when respondent’s predecessor-in-interest adopted and started its actual use of "BIRKENSTOCK," there is neither an existing registration nor a pending application for the same and thus, it cannot be said that it acted in bad faith in adopting and starting the use of such mark.24 Finally, the CA agreed with respondent that petitioner’s documentary evidence, being mere photocopies, were submitted in violation of Section 8.1 of Office Order No. 79, Series of 2005 (Rules on Inter Partes Proceedings). Dissatisfied, petitioner filed a Motion for Reconsideration 25 dated July 20, 2010, which was, however, denied in a Resolution 26 dated October 27, 2010. Hence, this petition. 27 Issues Before the Court The primordial issue raised for the Court’s resolution is whether or not the subject marks should be allowed registration in the name of petitioner. The Court’s Ruling The petition is meritorious. A. Admissibility of Petitioner’s Documentary Evidence. In its Comment 28 dated April 29, 2011, respondent asserts that the documentary evidence submitted by petitioner in the Consolidated Opposition Cases, which are mere photocopies, are violative of Section 8.1 of the Rules on Inter Partes Proceedings, which requires certified true copies of documents and evidence presented by parties in lieu of originals. 29 As such, they should be deemed inadmissible.
strict and rigid application of the rules must always be eschewed when it would subvert the primary objective of the rules, that is, to enhance fair trials and expedite justice. Technicalities should never be used to defeat the substantive rights of the other party. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities."30 "Indeed, the primordial policy is a faithful observance of [procedural rules], and their relaxation or suspension should only be for persuasive reasons and only in meritorious cases, to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed."31 This is especially true with quasi-judicial and administrative bodies, such as the IPO, which are not bound by technical rules of procedure. 32 On this score, Section 5 of the Rules on Inter Partes Proceedings provides: Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. – The rules of procedure herein contained primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court may be applied suppletorily. The Bureau shall not be bound by strict technical rules of procedure and evidence but may adopt, in the absence of any applicable rule herein, such mode of proceedings which is consistent with the requirements of fair play and conducive to the just, speedy and inexpensive disposition of cases, and which will give the Bureau the greatest possibility to focus on the contentious issues before it. (Emphasis and underscoring supplied) In the case at bar, while petitioner submitted mere photocopies as documentary evidence in the Consolidated Opposition Cases, it should be noted that the IPO had already obtained the originals of such documentary evidence in the related Cancellation Case earlier filed before it. Under this circumstance and the merits of the instant case as will be subsequently discussed, the Court holds that the IPO Director General’s relaxation of procedure was a valid exercise of his discretion in the interest of substantial justice. 33 Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues. B. Registration and ownership of "BIRKENSTOCK." Republic Act No. (RA) 166, 34 the governing law for Registration No. 56334, requires the filing of a DAU on specified periods , 35 to wit: Section 12. Duration. – Each certificate of registration shall remain in force for twenty years: Provided, That registrations under the provisions of this Act shall be cancelled by the Director, unless within one year following the fifth, tenth and fifteenth anniversaries of the date of issue of the certificate of registration, the registrant shall file in the Patent Office an affidavit showing that the mark or trade-name is still in use or showing that its non-use is due to special circumstance which excuse such non-use and is not due to any intention to abandon the same, and pay the required fee.
The Court is not convinced.
The Director shall notify the registrant who files the aboveprescribed affidavits of his acceptance or refusal thereof and, if a refusal, the reasons therefor. (Emphasis and underscoring supplied)
It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather than its frustration. A
The aforementioned provision clearly reveals that failure to file the DAU within the requisite period results in the automatic
MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
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cancellation of registration of a trademark. In turn, such failure is tantamount to the abandonment or withdrawal of any right or interest the registrant has over his trademark .36 In this case, respondent admitted that it failed to file the 10th Year DAU for Registration No. 56334 within the requisite period, or on or before October 21, 2004. As a consequence, it was deemed to have abandoned or withdrawn any right or interest over the mark "BIRKENSTOCK." Neither can it invoke Section 236 37 of the IP Code which pertains to intellectual property rights obtained under previous intellectual property laws, e.g., RA 166, precisely because it already lost any right or interest over the said mark. Besides, petitioner has duly established its true and lawful ownership of the mark "BIRKENSTOCK." Under Section 2 38 of RA 166, which is also the law governing the subject applications, in order to register a trademark, one must be the owner thereof and must have actually used the mark in commerce in the Philippines for two (2) months prior to the application for registration. Section 2-A 39 of the same law sets out to define how one goes about acquiring ownership thereof. Under the same section, it is clear that actual use in commerce is also the test of ownership but the provision went further by saying that the mark must not have been so appropriated by another. Significantly, to be an owner, Section 2-A does not require that the actual use of a trademark must be within the Philippines. Thus, under RA 166, one may be an owner of a mark due to its actual use but may not yet have the right to register such ownership here due to the owner’s failure to use the same in the Philippines for two (2) months prior to registration. 40 It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring ownership. 1âwphi1 If the applicant is not the owner of the trademark, he has no right to apply for its registration. Registration merely creates a prima facie presumption of the validity of the registration, of the registrant’s ownership of the trademark, and of the exclusive right to the use thereof. Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence to the contrary .41 Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the ownership of a trademark that confers the right to register the same. A trademark is an industrial property over which its owner is entitled to property rights which cannot be appropriated by unscrupulous entities that, in one way or another, happen to register such trademark ahead of its true and lawful owner. The presumption of ownership accorded to a registrant must then necessarily yield to superior evidence of actual and real ownership of a trademark. The Court’s pronouncement in Berris Agricultural Co., Inc. v. Abyadang 42 is instructive on this point: The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or distributor of the goods made available to the purchasing public. x x x A certificate of registration of a mark, once issued, constitutes prima facie evidence of the validity of the registration, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the same in connection with the goods or services and those that are related MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
thereto specified in the certificate. x x x In other words, the prima facie presumption brought about by the registration of a mark may be challenged and overcome in an appropriate action, x x x by evidence of prior use by another person, i.e. , it will controvert a claim of legal appropriation or of ownership based on registration by a subsequent user. This is because a trademark is a creation of use and belongs to one who first used it in trade or commerce.43(Emphasis and underscoring supplied) In the instant case, petitioner was able to establish that it is the owner of the mark "BIRKENSTOCK." It submitted evidence relating to the origin and history of "BIRKENSTOCK" and its use in commerce long before respondent was able to register the same here in the Philippines. It has sufficiently proven that "BIRKENSTOCK" was first adopted in Europe in 1774 by its inventor, Johann Birkenstock, a shoemaker, on his line of quality footwear and thereafter, numerous generations of his kin continuously engaged in the manufacture and sale of shoes and sandals bearing the mark "BIRKENSTOCK" until it became the entity now known as the petitioner. Petitioner also submitted various certificates of registration of the mark "BIRKENSTOCK" in various countries and that it has used such mark in different countries worldwide, including the Philippines .44 On the other hand, aside from Registration No. 56334 which had been cancelled, respondent only presented copies of sales invoices and advertisements, which are not conclusive evidence of its claim of ownership of the mark "BIRKENSTOCK" as these merely show the transactions made by respondent involving the same. 45 In view of the foregoing circumstances, the Court finds the petitioner to be the true and lawful owner of the mark "BIRKENSTOCK" and entitled to its registration, and that respondent was in bad faith in having it registered in its name. In this regard, the Court quotes with approval the words of the IPO Director General, viz.: The facts and evidence fail to show that [respondent] was in good faith in using and in registering the mark BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary mark. It is very remote that two persons did coin the same or identical marks. To come up with a highly distinct and uncommon mark previously appropriated by another, for use in the same line of business, and without any plausible explanation, is incredible. The field from which a person may select a trademark is practically unlimited. As in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and combinations of letters and designs available, [respondent] had to come up with a mark identical or so closely similar to the [petitioner’s] if there was no intent to take advantage of the goodwill generated by the [petitioner’s] mark. Being on the same line of business, it is highly probable that the [respondent] knew of the existence of BIRKENSTOCK and its use by the [petitioner], before [respondent] appropriated the same mark and had it registered in its name.46 WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and Resolution dated October 27, 2010 of the Court of Appeals in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly, the Decision dated December 22, 2009 of the IPO Director General is hereby REINSTATED.
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SO ORDERED. 3.
Acquisition of Ownership of Trade Name – Sec. 165
SECTION 165. Trade Names or Business Names. — 165.1. A name or designation may not be used as a trade name if by its nature or the use to which such name or designation may be put, it is contrary to public order or morals and if, in particular, it is liable to deceive trade circles or the public as to the nature of the enterprise identified by that name. 165.2. a. Notwithstanding any laws or regulations providing for any obligation to register trade names, such names shall be protected, even prior to or without registration, against any unlawful act committed by third parties. b. In particular, any subsequent use of the trade name by a third party, whether as a trade name or a mark or collective mark, or any such use of a similar trade name or mark, likely to mislead the public, shall be deemed unlawful. 165.3. The remedies provided for in Sections 153 to 156 and Sections 166 and 167 shall apply mutatis mutandis. 165.4. Any change in the ownership of a trade name shall be made with the transfer of the enterprise or part thereof identified by that name. The provisions of Subsections 149.2 to 149.4 shall apply mutatis mutandis. 4.
Non-Registrable Marks
Marks may be registered as long as it does not fall under any category mentioned in Section 123. Section 123 enumerates marks that cannot be registered. Many of the cases—and the confusion—are based on some of the items in the enumeration.
l.
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; Consists of color alone, unless defined by a given form; or
SECTION 123. Registrability. —
m.
Is contrary to public order or morality.
123.1. A mark cannot be registered if it: a. Consists of immoral, deceptive or scandalous matter, or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute; b. 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, or any simulation thereof;
123.2. As regards signs or devices mentioned in paragraphs (j), (k), and (l), nothing shall prevent the registration of any such sign or device which has become distinctive in relation to the goods for which registration is requested as a result of the use that have been made of it in commerce in the Philippines. The Office may accept as prima facie evidence that the mark has become distinctive, as used in connection with the applicant's goods or services in commerce, proof of substantially exclusive and continuous use thereof by the applicant in commerce in the Philippines for five (5) years before the date on which the claim of distinctiveness is made.
a.
c.
d.
i. ii.
iii. If it nearly resembles such a mark as to be likely to deceive or cause confusion; e. Is identical with, or confusingly similar to, or constitutes a translation of a mark which is considered by the competent authority of the Philippines to be well-known internationally and in the Philippines, whether or not it is registered here, as being already the mark of a person other than the applicant for registration, and used for identical or similar goods or services: Provided, That in determining whether a mark is well-known, account shall be taken of the knowledge of the relevant sector of the public, rather than of the public at large, including knowledge in the Philippines which has been obtained as a result of the promotion of the mark; 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 interests of the owner of the registered mark are likely to be damaged by such use; g. Is likely to mislead the public, particularly as to the nature, quality, characteristics or geographical origin of the goods or services; h. Consists exclusively of signs that are generic for the goods or services that they seek to identify; i. Consists exclusively of signs or of indications that have become customary or usual to designate the goods or services in everyday language or in bona fide and established trade practice; j. Consists exclusively of signs or of indications 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; k.
Sec. 123
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, if any, except by written consent of the widow; Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date, in respect of:
The same goods or services, or Closely related goods or services, or MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
123.3. The nature of the goods to which the mark is applied will not constitute an obstacle to registration. (Sec. 4, R.A. No. 166a) b.
Secondary Meaning, Sec. 123.2
123.2. As regards signs or devices mentioned in paragraphs (j), (k), and (l), nothing shall prevent the registration of any such sign or device which has become distinctive in relation to the goods for 16
which registration is requested as a result of the use that have been made of it in commerce in the Philippines. The Office may accept as prima facie evidence that the mark has become distinctive, as used in connection with the applicant's goods or services in commerce, proof of substantially exclusive and continuous use thereof by the applicant in commerce in the Philippines for five (5) years before the date on which the claim of distinctiveness is made. The doctrine of secondary meaning cannot be applied where the evidence did not prove that the business has continued for so long a time that it has become of consequence and acquired a good will of considerable value such that its articles and produce have acquired a well-known reputation, and confusion will result by the use. ( Lyceum of the Philippines vs. CA ) c.
Fanciful, Arbitrary, Suggestive, Composite and Coined Marks
The law disallows false suggestion of connection to a person, an institution, or a belief. Actual claim of connection is unnecessary. Also, the popularity does matter for the infringers for this is the rationale of such prohibition, i.e. , that no one may unjustly ride on the goodwill of another. Fanciful Mark – It is invented for the sole purpose of functioning as a trademark and have no other meaning than acting as a mark. Arbitrary Mark – It is utilized as a device having a common meaning that has no relation to the goods or services being sold. Composite Marks – They are marks consisting of two or more elements or combination of words, phrases, designs, symbols or color schemes. Although they cannot be registered by themselves, together they may be a part of a composite mark as long as they provide a disclaimer. The person who registers them as part of a mark will not acquire ownership thereto. 5.
Prior Use of Mark as a Requirement – Sec. 122, 152
such mark is not used in such manner as to deceive the public. If use of a mark by a person is controlled by the registrant or applicant with respect to the nature and quality of the goods or services, such use shall inure to the benefit of the registrant or applicant. (n) 6.
The Supreme Court on several occasions used both tests in their decisions. Thus, the use of one does not preclude the use of another. Is there a need to prove actual confusion? “Petitioners’ failure to present proof of actual confusion does not negate their claim of trademark infringement. As noted in American Wire & Cable Co. v. Director of Patents , Section 22 requires the less stringent standard of ‘ likelihood of confusion’ only. While proof of actual confusion is the best evidence of infringement, its absence is inconsequential.” (Mcdonald’s Corporation v. L.C. Big Mak Burger, Inc.) a.
152.1. Non-use of a mark may be excused if caused by circumstances arising independently of the will of the trademark owner. Lack of funds shall not excuse non-use of a mark. 152.2. The use of the mark in a form different from the form in which it is registered, which does not alter its distinctive character, shall not be ground for cancellation or removal of the mark and shall not diminish the protection granted to the mark. 152.3. The use of a mark in connection with one or more of the goods or services belonging to the class in respect of which the mark is registered shall prevent its cancellation or removal in respect of all other goods or services of the same class. 152.4. The use of a mark by a company related with the registrant or applicant shall inure to the latter's benefit, and such use shall not affect the validity of such mark or of its registration: Provided, That MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Dominancy Test
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks which might cause confusion or deception, and thus infringement. If the competing trademark contains the main, essential or dominant features of another, and confusion or deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to imitate. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public or deceive purchasers. Neither is it required that the mark sought to be registered suggests an effort to imitate. Given more consideration are the aural and visual impressions created by the marks on the buyers of goods, giving little weight to factors like prices, quality, sales outlets, and market segments.
SECTION 122. How Marks are Acquired. — The rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law. (Sec. 2-A, R.A. No. 166a) SECTION 152. Non-use of a Mark When Excused. —
Tests to Determine Confusing Similarity Between Marks
i. Asia Brewery, Inc. vs. Court of Appeals, et al. (G.R. No. 103543) FACTS:
On September 15, 1988, San Miguel Corporation (SMC) filed a complaint against Asia Brewery Inc. (ABI) for infringement of trademark and unfair competition on account of the latter's BEER PALE PILSEN or BEER NA BEER product which has been competing with SMC's SAN MIGUEL PALE PILSEN for a share of the local beer market. On August 27, 1990, a decision was rendered by the trial Court, presided over by Judge Jesus O. Bersamira, dismissing SMC's complaint because ABI "has not committed trademark infringement or unfair competition against" SMC (p. 189, Rollo). SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On September 30, 1991, the Court of Appeals (Sixth Division composed of Justice Jose C. Campos, Jr., chairman and ponente , and Justices Venancio D. Aldecoa Jr. and Filemon H. Mendoza, as members) reversed the trial court. In due time, ABI appealed to this Court by a petition for certiorari under Rule 45 of the Rules of Court. 17
ISSUE: Whether or not ABI’s Beer Pale Pilsen infringes SMC’s San Miguel Pale Pilsen with Rectangular Malt and Hops Design.
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck.
RULING: No.
The BEER PALE PILSEN bottle has a fat, bulging neck.
1.
(2) The words "pale pilsen" on SMC's label are printed in bold and laced letters along a diagonal band, whereas the words "pale pilsen" on ABI's bottle are half the size and printed in slender block letters on a straight horizontal band. (See Exhibit "8-a".).
There is absolutely no similarity in the dominant features of both trademarks. Infringement is determined by the "test of dominancy" rather than by differences or variations in the details of one trademark and of another. The rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa vs. Director of Patents , 100 Phil. 214, 216-217 (1956), thus: It has been consistently held that the question of infringement of a trademark is to be determined by the test of dominancy . Similarity in size, form and color, while relevant, is not conclusive. If the competing trademark contains the main or essential or dominant features of another, and confusion and deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor it is necessary that the infringing label should suggest an effort to imitate. [C. Neilman Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at issue in cases of infringement of trademarks is whether the use of the marks involved would be likely to cause confusion or mistakes in the mind of the public or deceive purchasers . (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . . .) (Emphasis supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To , 40 Phil. 272, 275, the test was similarity or "resemblance between the two (trademarks) such as would be likely to cause the one mark to be mistaken for the other. . . . [But] this is not such similitude as amounts to identity."
(3) The names of the manufacturers are prominently printed on their respective bottles. SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery, Philippines," whereas BEER PALE PILSEN is "Especially brewed and bottled by Asia Brewery Incorporated, Philippines." (4) On the back of ABI's bottle is printed in big, bold letters, under a row of flower buds and leaves, its copyrighted slogan: "BEER NA BEER!" Whereas SMC's bottle carries no slogan. (5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC logo, whereas the BEER PALE PILSEN bottle has no logo. (6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of arms and the words "San Miguel Brewery Philippines" encircling the same. The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in the center, surrounded by the words "Asia Brewery Incorporated Philippines."
In Phil. Nut Industry Inc. vs. Standard Brands Inc. , 65 SCRA 575, the court was more specific: the test is "similarity in the dominant features of the trademarks."
(7) Finally, there is a substantial price difference between BEER PALE PILSEN (currently at P4.25 per bottle) and SAN MIGUEL PALE PILSEN (currently at P7.00 per bottle). One who pays only P4.25 for a bottle of beer cannot expect to receive San Miguel Pale Pilsen from the storekeeper or bartender.
What are the dominant features of the competing trademarks before us?
ii. Mcdonald’s Corporation vs. L.C. Big Mak Burgers, Inc. (G.R. No. 143993)
There is hardly any dispute that the dominant feature of SMC's trademark is the name of the product: SAN MIGUEL PALE PILSEN, written in white Gothic letters with elaborate serifs at the beginning and end of the letters "S" and "M" on an amber background across the upper portion of the rectangular design. On the other hand, the dominant feature of ABI's trademark is the name: BEER PALE PILSEN, with the word "Beer" written in large amber letters, larger than any of the letters found in the SMC label. The trial court perceptively observed that the word "BEER" does not appear in SMC's trademark, just as the words "SAN MIGUEL" do not appear in ABI's trademark. Hence, there is absolutely no similarity in the dominant features of both trademarks. 2.
Purchasers will not be deceived given the dissimilarities of the marks. Neither in sound, spelling or appearance can BEER PALE PILSEN be said to be confusingly similar to SAN MIGUEL PALE PILSEN. No one who purchases BEER PALE PILSEN can possibly be deceived that it is SAN MIGUEL PALE PILSEN. No evidence whatsoever was presented by SMC proving otherwise.
Besides the dissimilarity in their names, the following other dissimilarities in the trade dress or appearance of the competing products abound: MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
FACTS:
Petitioner McDonald's Corporation ("McDonald's") is a corporation organized under the laws of Delaware, United States. McDonald's operates, by itself or through its franchisees, a global chain of fastfood restaurants. McDonald's 4 owns a family of marks 5 including the "Big Mac" mark for its "double-decker hamburger sandwich." 6McDonald's registered this trademark with the United States Trademark Registry on 16 October 1979. 7 Based on this Home Registration, McDonald's applied for the registration of the same mark in the Principal Register of the then Philippine Bureau of Patents, Trademarks and Technology ("PBPTT"), now the Intellectual Property Office ("IPO"). Pending approval of its application, McDonald's introduced its "Big Mac" hamburger sandwiches in the Philippine market in September 1981. On 18 July 1985, the PBPTT allowed registra tion of the "Big Mac" mark in the Principal Register based on its Home Registration in the United States. Like its other marks, McDonald's displays the "Big Mac" mark in items8 and paraphernalia 9 in its restaurants, and in its outdoor and 18
indoor signages. From 1982 to 1990, McDonald's spent P 10.5 million in advertisement for "Big Mac" hamburger sandwiches alone. Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a domestic corporation which operates fast-food outlets and snack vans in Metro Manila and nearby provinces. 12 Respondent corporation's menu includes hamburger sandwiches and other food items. 13 Respondents Francis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto ("private respondents") are the incorporators, stockholders and directors of respondent corporation.14 On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the "Big Mak" mark for its hamburger sandwiches. McDonald's opposed respondent corporation's application on the ground that "Big Mak" was a colorable imitation of its registered "Big Mac" mark for the same food products. McDonald's also informed respondent Francis Dy ("respondent Dy"), the chairman of the Board of Directors of respondent corporation, of its exclusive right to the "Big Mac" mark and requested him to desist from using the "Big Mac" mark or any similar mark. Before the court, respondents admitted that they have been using the name "Big Mak Burger" for their fast-food business. Respondents claimed, however, that McDonald's does not have an exclusive right to the "Big Mac" mark or to any other similar mark. Respondents point out that the Isaiyas Group of Corporations ("Isaiyas Group") registered the same mark for hamburger sandwiches with the PBPTT on 31 March 1979. One Rodolfo Topacio ("Topacio") similarly registered the same mark on 24 June to McDonald's 1983, prior registration on 18 July 1985. Alternatively , respondents claimed that they are not liable for trademark infringement or for unfair competition, as the "Big Mak" mark they sought to register does not constitute a colorable imitation of the "Big Mac" mark. Respondents asserted that they did not fraudulently pass off their hamburger sandwiches as those of petitioners' Big Mac hamburgers.17 Respondents sought damages in their counterclaim. ISSUE: Whether or not respondent corporation is liable for trademark infringement and unfair competition. RULING: Yes.
1.
“Big Mac” mark is valid as well as Mcdonald’s ownership over it. A mark is valid if it is "distinctive" and thus not barred from registration under Section 4 36 of RA 166 ("Section 4"). However , once registered, not only the mark's validity but also the registrant's ownership of the mark is prima facie presumed.37
Respondents contend that of the two words in the "Big Mac" mark, it is only the word "Mac" that is valid because the word "Big" is generic and descriptive (proscribed under Section 4[e]), and thus "incapable of exclusive appropriation." 38 The contention has no merit. The "Big Mac" mark, which should be treated in its entirety and not dissected word for word , 39 is neither generic nor descriptive. Generic marks are commonly used as the MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
name or description of a kind of goods,40 such as "Lite" for beer 41 or "Chocolate Fudge" for chocolate soda drink. 42 Descriptive marks, on the other hand, convey the characteristics, functions , qualities or ingredients of a product to one who has never seen it or does not know it exists,43 such as "Arthriticare" for arthritis medication. 44 On the contrary, "Big Mac" falls under the class of fanciful or arbitrary marks as it bears no logical relation to the actual characteristics of the product it represents. 45 As such, it is highly distinctive and thus valid. Significantly, the trademark "Little Debbie" for snack cakes was found arbitrary or fanciful. 46 2.
Respondent’s use of “Big Mak” causes confusion. P etitioners claim that respondents' use of the "Big Mak" mark on respondents' hamburgers results in confusion of goods, particularly with respect to petitioners' hamburgers labeled "Big Mac."
Respondents assert that their "Big Mak" hamburgers cater mainly to the low-income group while petitioners' "Big Mac" hamburgers cater to the middle and upper income groups. Even if this is true, the likelihood of confusion of business remains, since the low-income group might be led to believe that the "Big Mak" hamburgers are the low-end hamburgers marketed by petitioners. After all, petitioners have the exclusive right to use the "Big Mac" mark.On the other hand, respondents would benefit by associating their low-end hamburgers, through the use of the "Big Mak" mark, with petitioners' high-end "Big Mac" hamburgers, leading to likelihood of confusion in the identity of business. Respondents further claim that petitioners use the "Big Mac" mark only on petitioners' double-decker hamburgers, while respondents use the "Big Mak" mark on hamburgers and other products like siopao, noodles and pizza. Respondents also point out that petitioners sell their Big Mac double-deckers in a styrofoam box with the "McDonald's" logo and trademark in red, block letters at a price more expensive than the hamburgers of respondents. In contrast, respondents sell their Big Mak hamburgers in plastic wrappers and plastic bags. Respondents further point out that petitioners' restaurants are air-conditioned buildings with drive-thru service, compared to respondents' mobile vans. These and other factors respondents cite cannot negate the undisputed fact that respondents use their "Big Mak" mark on hamburgers, the same food product that petitioners' sell with the use of their registered mark "Big Mac." Whether a hamburger is single, double or triple-decker, and whether wrapped in plastic or styrofoam, it remains the same hamburger food product. Even respondents' use of the "Big Mak" mark on non-hamburger food products cannot excuse their infringement of petitioners' registered mark, otherwise registered marks will lose their protection under the law. The registered trademark owner may use his mark on the same or similar products, in different segments of the market, and at different price levels depending on variations of the products for specific segments of the market. The Court has recognized that the registered trademark owner enjoys protection in product and market areas that are the normal potential expansion of his business. Thus, the Court has declared: Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his goods 19
or business from actual market competition with identical or similar products of the parties, but extends to all cases in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of source, as where prospective purchasers would be misled into thinking that the complaining party has extended his business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way connected with the activities of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR, 77, 84; 52 Am. Jur. 576, 577). 56 (Emphasis supplied) iii.
Societes Des Produits Nestle, S.A., et al. vs. Court of Appeals, et al. (G.R. No. 112012)
FACTS: 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 they’ve 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 it’s 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.
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 terms are those which, in the phraseology of one court, require “imagination, thought and perception to reach a conclusion as to the nature of the goods.” Such terms, “which subtly connote something about the product,” are eligible for protection in the absence of secondary meaning. While suggestive marks are capable of shedding “some light” upon certain characteristics of the goods or services in dispute, they nevertheless involve “an element of incongruity,” “figurativeness,” or ” imaginative effort on the part of the observer.” b.
Holistic Test
In contrast to Dominancy Test, 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. The discerning eye of the observer must focus not only on the predominant words 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. i. Emerald Garment Manufact uring Corp. vs. CA (G.R. No. 100098)
FACTS: On 18 September 1981, private respondent H.D. Lee Co., Inc. filed with the Bureau of Patents, Trademarks & Technology Transfer (BPTTT) a Petition for Cancellation of Registration No. SR 5054 for the trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs, jackets, jogging suits, dresses, shorts, shirts and lingerie under Class 25, issued on 27 October 1980 in the name of petitioner Emerald Garment Manufacturing Corporation.
Private respondent averred that petitioner's trademark "so closely resembled its own trademark, 'LEE' as previously registered and used in thePhilippines cause confusion, mistake and deception on the part of the purchasing public as to the origin of the goods. On 19 July 1988, the Director of Patents rendered a decision granting private respondent's petition for cancellation and opposition to registration. The Director of Patents, using the test of dominancy, declared that petitioner's trademark was confusingly similar to private respondent's mark because "it is the word 'Lee' which draws the attention of the buyer and leads him to conclude that the goods originated from the same manufacturer. It is undeniably the dominant feature of the mark.
Generic terms are those which constitute “the common descriptive name of an article or substance,” or comprise the “genus of which the particular product is a species,” or are “commonly used as the name or description of a kind of goods,” or “imply reference to every member of a genus and the exclusion of individuating characters,” or “refer to the basic nature of the wares or services provided rather than to the more idiosyncratic characteristics of a particular product,” and are not legally protectable.
ISSUE: Whether or not a trademark causes confusion and is likely to deceive the public is a question of fact which is to be resolved by applying the "test of dominancy", meaning, if the competing trademark contains the main or essential or dominant features of another by reason of which confusion and deception are likely to result.
On the other hand, a term is descriptive and therefore invalid as a trademark if, as understood in its normal and natural sense, it “forthwith conveys the characteristics, functions, qualities or ingredients of a product to one who has never seen it and does not know what it is,” or “if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods,” or if it
The word "LEE" is the most prominent and distinctive feature of the appellant's trademark and all of the appellee's "LEE" trademarks. It is the mark which draws the attention of the buyer and leads him to conclude that the goods originated from the same manufacturer. The alleged difference is too insubstantial to be noticeable. The likelihood of confusion is further made more
MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
HELD:
20
probable by the fact that both parties are engaged in the same line of business.
"BUFFERIN" pronunciation.
Although the Court decided in favor of the respondent, the appellee has sufficiently established its right to prior use and registration of the trademark "LEE" in the Philippines and is thus entitled to protection from any infringement upon the same. The dissenting opinion of Justice Padilla is more acceptable.
In determining whether two trademarks are confusingly similar, the test is not simply to take their words and compare the spelling and pronunciation of said words. Rather, it is to consider the two marks in their entirety, as they appear in the respective labels, in relation to the goods to which they are attached . Said rule was enunciated by this by this Court through Justice Felix Bautista Angelo in Mead Johnson & Co. vs. N.V.J Van Dorp, Ltd. , L,17501, April 27, 1963, thus:
ii. Bristol Myers Co. vs. Dir. of Patent s & United American Pharmaceuticals, Inc. (G.R. No. L21587, May 19, 1966)
A petition for registration in the Principal Register of the Patent Office of the trademark "BIOFERIN" was filed on October 21, 1957 by United American Pharmaceuticals, Inc. Said domestic corporation first used the afore-stated trademark in the Philippines on August 13, 1957. It covers "a medicinal preparation of antihistamic, analgesic, antipyritic with vitamin C and Bioflavenoid used in the treatment of common colds, influenza and other febrile diseases with capillary hemmorrhagic tendencies." The product falls under Class 6 of the official classification, that is, "Medicines and Pharmaceutical Preparations". Bristol Myers Co., a corporation of the State of Delaware, U.S.A., filed on January 6, 1959 an opposition to the application. Said oppositor is the owner in the Philippines of the trademark "BUFFERIN" under Certificate of Registration No. 4578 issued by the Philippine Patent Office on March 3, 1954. Its trademark is also registered in the United States under Certificate of Registration No. 566190 issued on November 4, 1952. It was first used in the Philippines on May 13, 1953. The product covered by "BUFFERIN" also belongs to Class 6, Medicines and Pharmaceutical Preparations. Designated as "Antacid analgesic", it is intended for relief in cases of "simple headaches, neuralgia, colds, menstrual pain and minor muscular aches." The thrust of oppositor's contention was that the registration of the applicant's trademark "BIOFERIN would violate its rights and interests in its registered trademark "BUFFERIN" as well as mislead and confuse the public as to the source and origin of the goods covered by the respective marks, in view of the allegedly practically the same spelling, pronunciation and letter-type design of the two trademarks covering goods of the same class. The parties thereafter filed on January 18, 1961 a joint petition stipulating as to the facts and submitting the case upon the issue of whether or not, considering all the factors involved, in both trademarks — as the parties would discuss in their memoranda, — there will be such confusing similarity between the two trademarks as will be likely to deceive the purchasing public. After submission of memoranda, on June 21, 1963 the Director of Patents rendered a decision granting the petition for registration and dismissing the opposition, on the ground that, all factors considered the trademarks in question are not confusingly similar, so that the damage feared by the oppositor will not result. From said decision the oppositor appealed to this Court by petition for review filed on July 24, 1963. The sole issue raised thereby is: Are the trademarks "BIOFERIN" and "BUFFERIN", as presented to the public in their respective labels, confusingly similar? Appellant contends that confusing similarity will obtain because both products are primarily used for the relief of pains such as headaches and colds; and because words "BIOFERIN and
MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
are
practically
the
same
in
spelling
and
It is true that between petitioner's trademark "ALACTA" and respondent's "ALASKA" there are similarities in spelling, appearance and sound for both are composed of six letters of three syllables each and each syllable has the same vowel, but in determining if they are confusingly similar a comparison of said words is not the only determining factor. The two marks in their entirety as they appear in the respective labels must also be considered in relation to the goods to which they are attached. The discerning eye of the observer must focus not only on the predominant words but also on the other features appearing in both labels in order that he may draw his conclusion whether one is confusingly similar to the other. ... Applying this test to the trademarks involved in this case, it is at once evident that the Director of Patents did not err in finding no confusing similarity. For though the words "BIOFERIN" and "BUFFERIN" have the same suffix and similar sounding prefixes, they appear in their respective labels with strikingly different backgrounds and surroundings, as to color , size and design. For convenience we sum up these differences, as follows: Relevant Factors
"BIOFERIN"
"BUFFERIN"
1. Shape & Size of Label
Rectangular, about 3-3/4" 2-1/4"
Rectangular, 3/4"' 1-1/4"
2. Color of Label
Predominantly Yellow
Predominantly White
3. Color background of Wordmark
Olive-green
Blue
4. Over-all Layout
At the top centerword mark "BIOFERIN" ; below it are contents of medicine, arranged horizontally; at bottom, center,
At left side of label — Wood-mark "B UFFERIN"; with "Bristol Myers Co., New York, N.Y." below at right side, contents, indications
3-
21
5. Form of product
6. Prescriptio n
"United Pharmaceuticals, Inc." in olivegreen background. At left side — dosage, printed perpendicularly; at right side,indications, als o perpendicularly printed.
dosage are grouped together, printed perpendicularly
Capsules label says: capsules"
Tablets label says: Tablets"
— "50
Label states: "To be dispensed only by or on the prescription of a physician"
b.
Wherefore, the decision of the Director of Patents appealed from is hereby affirmed without costs. So ordered. Well-Known Marks a.
e.
f.
— "36
No such statement
Accordingly, taken as they will appear to a prospective customer, the trademark in question are not apt to confuse. Furthermore, the product of the applicant is expressly stated as dispensable only upon doctor's prescription , while that of oppositor does not require the same . The chances of being confused into purchasing one for the other are therefore all the more rendered negligible. Although oppositor avers that some drugstores sell "BIOFERIN" without asking for a doctor's prescription, the same if true would be an irregularity not attributable to the applicant, who has already clearly stated the requirement of a doctor's prescription upon the face of the label of its product.
7.
or services, and the owner of the registered mark: Provided further, That the interests of the owner of the registered mark are likely to be damaged by such use;
Sec. 123 (e) (f)
Is identical with, or confusingly similar to, or constitutes a translation of a mark which is considered by the competent authority of the Philippines to be well-known internationally and in the Philippines, whether or not it is registered here, as being already the mark of a person other than the applicant for registration, and used for identical or similar goods or services: Provided, That in determining whether a mark is well-known, account shall be taken of the knowledge of the relevant sector of the public, rather than of the public at large, including knowledge in the Philippines which has been obtained as a result of the promotion of the mark; 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
MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Criteria
A mark is well-known according to Sec. 123.1(e) if it is considered by the competent authority of the Philippines to be well-known internationally and in the Philippines and that in determining whether a mark is well-known, account shall be taken of the knowledge of the relevant sector of the public, rather than of the public at large, including knowledge in the Philippines which has been obtained as a result of the promotion of the mark. Competent authority as used in this section includes the IPO and its relevant officers, the DTI and of course, the SC, as the final arbiter in this country. Rule 102 of the Rules and Regulations on Trademarks, Service Marks, Trade Names and Marked and Stamped Containers provides help in determining if a mark is well-known. In determining whether a mark is well-known, the following criteria or any combination thereof may be taken into account: (a) the duration, extent and geographical area of any use of the mark, in particular, the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods and/or services to which the mark applies; (b) the market share, in the Philippines and in other countries, of the goods and/or services to which the mark is applied; (c) the degree of the inherent or acquired distinction of the mark; (d) the quality-image or reputation acquired by the mark; (e) the extent to which the mark has been registered in the world; (f) the exclusivity of registration attained by the mark in the world; (g) the extent to which the mark has been used in the world; (h) the exclusivity of use attained by the mark in the world; (i) the commercial value attributed to the mark in the world; (j) the record of successful protection of the rights in the mark; (k) the outcome of litigations dealing with the issue of whether the mark is a well-known mark; and, (l) the presence or absence of identical or similar marks validly registered for or used on identical or similar goods or services and owned by persons other than the person claiming that his mark is a well-known mark. 8.
Rights Conferred by Registration – Sec. 147
SECTION 147. Rights Conferred. — 147.1. The owner of a registered mark shall have the exclusive right to prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs or containers for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed. 147.2. The exclusive right of the owner of a well-known mark defined in Subsection 123.1(e) which is registered in the Philippines, shall extend to goods and services which are not similar to those in respect of which the mark is registered: 22
Provided, That use of that 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 interests of the owner of the registered mark are likely to be damaged by such use. (n)
1.
2. 9.
Use by Third Parties of Names, etc. similar to Registered Mark – Sec. 148
SECTION 148. Use of Indications by Third Parties for Purposes Other than those for which the Mark is Used. — Registration of the mark shall not confer on the registered owner the right to preclude third parties from using bona fide their names, addresses, pseudonyms, a geographical name, or exact indications concerning the kind, quality, quantity, destination, value, place of origin, or time of production or of supply, of their goods or services: Provided, That such use is confined to the purposes of mere identification or information and cannot mislead the public as to the source of the goods or services. (n)
Confusion of goods – when an otherwise prudent purchaser is induced to purchase one product in the belief that he is purchasing another, in which case defendant’s goods are then bought as the plaintiff’s and its poor quality reflects badly on the plaintiff’s reputation Confusion of business – when the goods of the parties are different but the defendant’s product can reasonably (though mistakenly) be assumed to originate form the plaintiff, thus deceiving the public into believing that there is some connection between the plaintiff and defendant which, in fact, does not exist iii. b.
Parallel Importation
Damages i.
Sec. 156-157, 179
SECTION 156. Actions, and Damages and Injunction for Infringement. —
10. Infringement and Remedies a.
Trademark Infringement i.
Sec. 155
SECTION 155. Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered mark: 155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or 155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing material. (Sec. 22, R.A. No 166a) Mere unauthorized use of a container bearing a registered trademark in connection with the sale, distribution or advertising of gods or services which is likely to cause confusion, mistake or deception among the buyers/consumers can be considered as trademark infringement. ii.
Confusion of goods vs. confusion of business
156.1. The owner of a registered mark may recover damages from any person who infringes his rights, and the measure of the damages suffered shall be either the reasonable profit which the complaining party would have made, had the defendant not infringed his rights, or the profit which the defendant actually made out of the infringement, or in the event such measure of damages cannot be readily ascertained with reasonable certainty, then the court may award as damages a reasonable percentage based upon the amount of gross sales of the defendant or the value of the services in connection with which the mark or trade name was used in the infringement of the rights of the complaining party. (Sec. 23, first par., R.A. No. 166a) 156.2. On application of the complainant, the court may impound during the pendency of the action, sales invoices and other documents evidencing sales. (n) 156.3. In cases where actual intent to mislead the public or to defraud the complainant is shown, in the discretion of the court, the damages may be doubled. (Sec. 23, first par., R.A. No. 166) 156.4. The complainant, upon proper showing, may also be granted injunction. (Sec. 23, second par., R.A. No. 166a) SECTION 157. Power of Court to Order Infringing Material Destroyed. — 157.1. In any action arising under this Act, in which a violation of any right of the owner of the registered mark is established, the court may order that goods found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or destroyed; and all labels, signs, prints, packages, wrappers, receptacles and advertisements in the possession of the defendant, bearing the registered mark or trade name or any reproduction, counterfeit, copy or colorable imitation thereof, all plates, molds, matrices and other means of making the same, shall be delivered up and destroyed.
There are two types of confusion in trademark infringement: MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
23
157.2. In regard to counterfeit goods, the simple removal of the trademark affixed shall not be sufficient other than in exceptional cases which shall be determined by the Regulations, to permit the release of the goods into the channels of commerce. (Sec. 24, R.A. No. 166a) ii. c.
Civil vs. Criminal Infringement
Presiding Judge, Branch 65 RTC, Laoag City Region 2: 1)Hon. Rolando R. Velasco Presiding Judge, Branch 6 RTC, Aparri, Cagayan
Jurisdiction
Region 5: i.
A.M. No. 2-1-11 SC, Feb. 9, 2002
[A.M. No. 02-1-11-SC.February 19, 2002] RE:DESIGNATION OF AN INTELLECTUAL PROPERTY JUDGE FOR MLA. EN BANC
1)Hon. Vladimir B. Bruselas Presiding Judge, Branch 6 RTC, Legazpi City 2)Hon. Filemon B. Montenegro Presiding Judge, Branch 26
Gentlemen:
RTC, Naga City
Quoted hereunder, for your information, is a resolution of this Court dated FEB 19 2002.
Region 8:
A.M. No. 02-1-11-SC ( Re:Designation of an Intellectual Property Judge for Manila.)
Presiding Judge, Branch 34
(A) - Acting on the memorandum dated 15 January 2002 of Deputy Court Administrator Christopher O. Lock, favorably endorsed by Court Administrator Presbitero J. Velasco, Jr., the Court hereby designates Branch 24 of the Regional Trial Court of Manila, presided over by Judge ANTONIO M. EUGENIO, JR., as Special Intellectual Property Court for Manila in substitution of Branch 1 of said Court which was designated Special Intellectual Property Court, then presided over by Judge Rebecca de Guia Salvador (now Associate Justice of the Court of Appeals), pursuant to Administrative Order No. 113-95 dated 5 October 1995. As judge of the Special Intellectual Property Court, Judge Antonio M. Eugenio, Jr. shall try and decide cases involving violations of intellectual property rights under the Intellectual Property Code (R.A. No. 8293) committed within the City of Manila. The earlier designation of Branch 1 of the Regional Trial Court of Manila as a Special Intellectual Property Court is hereby REVOKED, and the cases involving violations of intellectual property rights earlier assigned to said Branch 1 pursuant to and by virtue of Administrative Order No. 113-95 are hereby re-assigned to Branch 24 of said Court. (B) - Furthermore, acting on the recommendation of Hon. Associate Justice Reynato S. Puno, Chairman of the Committee on Revision of the Rules of Court, and the Office of the Court Administrator, and in order to ensure speedy disposition of cases involving violations of intellectual property rights under the Intellectual Property Code (R.A. No. 8293), the following Regional Trial Courts (RTCs) are hereby designated Special Intellectual Property Courts:
1)Hon. Frisco T. Lilagan
RTC, Tacloban City Region 12: 1)Hon. Albert B. Abragan Presiding Judge, Branch 3 RTC, Iligan City The foregoing Special Intellectual Property Courts shall try and decide cases involving violations of intellectual property rights defined under the Intellectual Property Code committed within their respective territorial areas.Since there are only a few cases of violations of intellectual property rights now pending in other branches of the aforementioned Regional Trial Courts, such cases shall remain with and shall be decided by the branches to which they have been assigned.Only cases hereafter filed may be assigned to the above designated special courts. (C) - Finally, in order to ensure a just and equitable distribution of cases among the Judges concerned, all the aforementioned Special Intellectual Property Courts shall continue to participate in the raffles of other cases:Provided, however, that the Executive Judges concerned shall adopt a procedure whereby every intellectual property right case assigned to a Special Intellectual Property Court should be considered a case raffled to it and be duly credited to such court. This Resolution shall take effect immediately and the Office of the Court Administrator shall implement it.
ii.
A.M. No. 03-03-03 SC, July 1, 2003
Region 1: 1)Hon. Antonio M. Esteves Presiding Judge, Branch 5 RTC, Baguio City 2)Hon. Manuel L. Argel MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
RE: CONSOLIDATION OF INTELLECTUAL PROPERTY COURTS WITH COMMERCIAL COURTS
WHEREAS, to implement the provisions of Section 5.2 of Republic Act No. 8799 (The Securities Regulation Code), and in the interest of a speedy and efficient administration of justice, the 24
Supreme Court en bane, in the (a) Resolution dated 21 November 2000 (Annex 1), 4 July 2001 (Annex 1-a), 12 November 2002 (Annex 1-b), and 9 July 2002 (Annex 1-c), all issued in A.M. No. 00-11-03-SC; (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298 RTC (Annex 2); and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC (Annex 3), resolved to designate certain branches of the Regional Trial Courts to try and decide cases formerly cognizable by the Securities and Exchange Commission; WHEREAS, pursuant to the same Resolution, sixty-five (65) Regional Trial Courts, distributed in all regions (NCJR and Regions 1-12), were designated as SEC courts ("SEC Courts"), which courts have presently a total of 812 pending SEC cases (see Annex 6, Table); chan robles virtual law library WHEREAS, in A.O No. 113-95, dated 2 October 1995, as amended by A.O. No. 104-96, dated 21 October 1996, the Regional Trial Courts in the National Capital Region and Regions 3, 4, 6, 7, 9, 10 and 11, with twenty-seven (27) judges, were specially designated to try and decide cases for violations of Intellectual Property Rights (Annex 4), and to ensure the speedy disposition of cases involving violations of intellectual property rights under the Intellectual Property Code (Rep. Act No. 8293), the Supreme Court en bane, in A.M. No. 02-1-11- SC, dated February 19, 2002, designated the Regional Trial Courts in Regions 1, 2, 5, 8 and 12, with a total of seven (7) judges, and Branch 24 of the Regional Trial Court of Manila with one (1) judge, as Special Intellectual Property Courts ("Special IP Courts") (Annex 5) WHEREAS, pursuant to A.M. No. 02-1-11 SC and A.O. No. 11395, these Special IP Courts have a total caseload of 503 cases. Of this number 434 IP cases are pending in the NCJR (Annex 6, Table); chan robles virtual law library WHEREAS, since the establishment of Special IP Courts (except for the Special IP Courts in Manila), 15 designated courts, in Regions 1, 2, 3, 4, 5, 6, 7, 8, 9 and 12 have zero (0) IP cases, and do not warrant their continued designations as Intellectual Property Courts (Annex 7, Table); chan robles virtual law library WHEREAS, intellectual property cases are commercial in nature; WHEREAS, to streamline the court structure and to promote expediency and efficiency in handling such special cases, the jurisdiction to hear and decide IPC and SEC cases are best consolidated in one court; NOW, THEREFORE, the Court Resolves: 1.
2.
The Regional Courts previously designated as SEC Courts through the: (a) Resolutions of this Court dated 21 November 2000, 4 July 2001, 12 November 2002, and 9 July 2002, all issued in A.M. No. 00-11-03-SC, (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298-RTC; and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC are hereby DESIGNATED and shall be CALLED as Special Commercial Courts to try and decide cases involving violations of Intellectual Property Rights which fall within their jurisdiction and those cases formerly cognizable by the Securities and Exchange Commission; chan robles virtual law library The designation of Intellectual Property Courts under Administrative Order No. 113-95 dated 2 October 1995, as amended by Administrative Order No. 104-96 dated 21 October 1996 and Resolution dated 19 February 2002 in A.M. No. 02-1-11-SC, is hereby revoked. However, the Regional Trial Court, Branch 24, Manila is hereby designated as an additional Special Commercial Court in the City of Manila;
MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
3.
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5.
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Upon the effectivity of this Resolution, all IP cases shall be transferred to the designated Special Commercial Courts except those which have undergone the pretrial stage in civil cases or those where any of the accused has been arraigned in criminal cases which shall be retained by the court previously assigned to try them; The Special Commercial Courts shall have jurisdiction over cases arising within their respective territorial jurisdiction with respect to the National Capital Judicial Region and within the respective provinces with respect to the First to Twelfth Judicial Regions. Thus, cases shall be filed in the Office of the Clerk of Court in the official station of the designated Special Commercial Court; chan robles virtual law library In the event of inhibition of the judge of a designated Special Commercial Court, the following guidelines shall be observed: (a) where there is only one (1) Special Commercial Court, the case shall be raffled among the other judges in the station; (b) where there are two (2) Special Commercial Courts in the station, the Executive Judge shall immediately assign the case to the other Special Commercial Court; and (c) in case of inhibition of both judges of the Special Commercial Courts, the Executive Judge shall raffle the case among the judges in the station; and In order to ensure a just and equitable distribution of cases, the designated Special Commercial Courts shall continue to participate in the raffles of other cases. Provided, however, that the Executive Judge concerned shall adopt a procedure whereby every IP and SEC case assigned to a Special Commercial Court should be considered a case raffled to it and duly credited to such court. chan robles virtual law library
This Resolution shall take effect on 1 July 2003 and shall be published in two (2) newspapers of general circulation. 17 June 2003. iii.
Sec. 10.2
SECTION 10.2. a. Exercise original jurisdiction in administrative complaints for violations of laws involving intellectual property rights: Provided, That its jurisdiction is limited to complaints where the total damages claimed are not less than Two hundred thousand pesos (P200,000): Provided further, That availment of the provisional remedies may be granted in accordance with the Rules of Court. The Director of Legal Affairs shall have the power to hold and punish for contempt all those who disregard orders or writs issued in the course of the proceedings. (n) b.
i.
ii.
After formal investigation, the Director for Legal Affairs may impose one (1) or more of the following administrative penalties: The issuance of a cease and desist order which shall specify the acts that the respondent shall cease and desist from and shall require him to submit a compliance report within a reasonable time which shall be fixed in the order; The acceptance of a voluntary assurance of compliance or discontinuance as may be imposed. Such voluntary assurance may include one or more of the following: 1. An assurance to comply with the provisions of the intellectual property law violated;
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3.
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viii. ix. x.
An assurance to refrain from engaging in unlawful and unfair acts and practices subject of the formal investigation; 4. An assurance to recall, replace, repair, or refund the money value of defective goods distributed in commerce; and 5. An assurance to reimburse the complainant the expenses and costs incurred in prosecuting the case in the Bureau of Legal Affairs. The Director of Legal Affairs may also require the respondent to submit periodic compliance reports and file a bond to guarantee compliance of his undertaking; The condemnation or seizure of products which are subject of the offense. The goods seized hereunder shall be disposed of in such manner as may be deemed appropriate by the Director of Legal Affairs, such as by sale, donation to distressed local governments or to charitable or relief institutions, exportation, recycling into other goods, or any combination thereof, under such guidelines as he may provide; The forfeiture of paraphernalia and all real and personal properties which have been used in the commission of the offense; The imposition of administrative fines in such amount as deemed reasonable by the Director of Legal Affairs, which shall in no case be less than Five thousand pesos (P5,000) nor more than One hundred fifty thousand pesos (P150,000). In addition, an additional fine of not more than One thousand pesos (P1,000) shall be imposed for each day of continuing violation; The cancellation of any permit, license, authority, or registration which may have been granted by the Office, or the suspension of the validity thereof for such period of time as the Director of Legal Affairs may deem reasonable which shall not exceed one (1) year; The withholding of any permit, license, authority, or registration which is being secured by the respondent from the Office; The assessment of damages; Censure; and Other analogous penalties or sanctions. (Secs. 6, 7, 8, and 9, Executive Order No. 913 [1983]a) d.
Requirement of Notice
The owner of the registered mark shall not be entitled to recover profits or damages unless the acts have been committed with knowledge that such imitation is likely to cause confusion, or to cause mistake, or to deceive. Knowledge is presumed if: (a) mark is displayed with the words “Registered Mark” or symbol “ ®” or (b) if the defendant had otherwise actual notice of the registration.
those of others, whether or not a registered mark is employed, has a property right in the goodwill of the said goods, business or services so identified, which will be protected in the same manner as other property rights. 168.2. Any person who shall 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. 168.3. In particular, and without in any way limiting the scope of protection against unfair competition, the following shall be deemed guilty of unfair competition: a. Any person, who is selling his goods and gives 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; or c. Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature calculated to discredit the goods, business or services of another. 168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis mutandis. (Sec. 29, R.A. No. 166a) b.
Infringement vs. Unfair Competition
Infringement of Trademark Unauthorized use of a trademark Fraudulent intent is unnecessary Prior registration of the trademark is a prerequisite to the action Limited scope Same class of goods or services must be involved.
Unfair Competition Passing off of one’s goods as those of another Fraudulent intent is essential Registration is not necessary
Wider scope Different classes of goods or services may be involved.
11. Unfair Competition a.
Sec. 168
c.
Pilipinas Shell Petroleum, et al. vs. Romars Int’l (G.R. No. 189669, Feb. 16, 2015)
SECTION 168. Unfair Competition, Rights, Regulation and Remedies. —
PILIPINAS SHELL PETROLEUM CORPORATION AND PETRON CORPORATION, Petitioners ,v. ROMARS INTERNATIONAL GASES CORPORATION, Respondent .
168.1. A person who has identified in the mind of the public the goods he manufactures or deals in, his business or services from
DECISION
MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
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PERALTA, J.:
This deals with the Petition for Review on Certiorari under Rule 45 of the Rules of Court praying that the Decision 1 of the Court of Appeals (CA), dated March 13, 2009, and the Resolution 2dated September 14, 2009, denying petitioner's motion for reconsideration thereof, be reversed and set aside. The antecedent facts are as follow: Petitioners received information that respondent was selling, offering for sale, or distributing liquefied petroleum gas ( LPG) by illegally refilling the steel cylinders manufactured by and bearing the duly registered trademark and device of respondent Petron. Petron then obtained the services of a paralegal investigation team who sent their people to investigate. The investigators went to respondent's premises located in San Juan, Baao, Camarines Sur, bringing along four empty cylinders of Shellane, Gasul, Total and Superkalan and asked that the same be refilled. Respondent's employees then refilled said empty cylinders at respondent's refilling station. The refilled cylinders were brought to the Marketing Coordinator of Petron Gasul who verified that respondent was not authorized to distribute and/or sell, or otherwise deal with Petron LPG products, and/or use or imitate any Petron trademarks. Petitioners then requested the National Bureau of Investigation ( NBI ) to investigate said activities of respondent for the purpose of apprehending and prosecuting establishments conducting illegal refilling, distribution and/or sale of LPG products using the same containers of Petron and Shell, which acts constitute a violation of Section 168, 3 in relation to Section 170 4 of Republic Act (R.A.) No. 8293, otherwise known as the Intellectual Property Code of the Philippines, and/or Section 2 5 of R.A. No. 623, otherwise known as An Act To Regulate the Use of Duly Stamped or Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar Containers. The NBI proceeded with their investigation and reportedly found commercial quantities of Petron Gasul and Shellane cylinders stockpiled at respondent's warehouse. They also witnessed trucks coming from respondent's refilling facility loaded with Gasul, Shellane and Marsflame cylinders, which then deposit said cylinders in different places, one of them a store called “Edrich Enterprises” located at 272 National Highway, San Nicolas, Iriga City. The investigators then bought Shellane and Gasul cylinders from Edrich Enterprises, for which they were issued an official receipt. Thus, the NBI, in behalf of Petron and Shell, filed with the Regional Trial Court of Naga City (RTC-Naga), two separate Applications for Search Warrant for Violation of Section 155.1, 6 in relation to Section 170 7 of R.A. No. 8293 against respondent and/or its occupants. On October 23, 2002, the RTCNaga City issued an Order granting said Applications and Search Warrant Nos. 2002-27 and 2002-28 were issued. On the same day, the NBI served the warrants at the respondent's premises in an orderly and peaceful manner, and articles or items described in the warrants were seized. On November 4, 2002, respondent filed a Motion to Quash Search Warrant Nos. 2002-27 and 2002-28, where the only grounds cited were: (a) there was no probable cause; (b) there had been a lapse of four weeks from the date of the test-buy to the date of the search and seizure operations; (c) most of the cylinders seized were not owned by respondent but by a third person; and (d) Edrich Enterprises is an authorized outlet of Gasul and Marsflame. In an MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Order dated February 21, 2003, the RTC-Naga denied the Motion to Quash. However, on March 27, 2003, respondent's new counsel filed an Appearance with Motion for Reconsideration. It was only in said motion where respondent raised for the first time, the issue of the impropriety of filing the Application for Search Warrant at the RTC-Naga City when the alleged crime was committed in a place within the territorial jurisdiction of the RTC-Iriga City . Respondent pointed out that the application filed with the RTCNaga failed to state any compelling reason to justify the filing of the same in a court which does not have territorial jurisdiction over the place of the commission of the crime, as required by Section 2 (b), Rule 126 of the Revised Rules of Criminal Procedure. Petitioner opposed the Motion for Reconsideration, arguing that it was already too late for respondent to raise the issue regarding the venue of the filing of the application for search warrant, as this would be in violation of the Omnibus Motion Rule. In an Order dated July 28, 2003, the RTC-Naga issued an Order granting respondent's Motion for Reconsideration, thereby quashing Search Warrant Nos. 2002-27 and 2002-28. Petitioner then appealed to the CA, but the appellate court, in its Decision dated March 13, 2009, affirmed the RTC Order quashing the search warrants. Petitioner's motion for reconsideration of the CA Decision was denied per Resolution dated September 14, 2009. Elevating the matter to this Court via a petition for review on certiorari, petitioner presents herein the following issues: A. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT VENUE IN AN APPLICATION FOR SEARCH WARRANT IS JURISDICTIONAL. THIS IS BECAUSE A SEARCH WARRANT CASE IS NOT A CRIMINAL CASE. B. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT'S MOTION TO QUASH IS NOT SUBJECT TO THE OMNIBUS MOTION RULE AND THAT THE ISSUE OF LACK OF JURISDICTION MAY NOT BE WAIVED AND MAY EVEN BE RAISED FOR THE FIRST TIME ON APPEAL. 8 Petitioner's arguments deserve closer examination. Section 2, Rule 126 of the Revised Rules of Criminal Procedure provides thus: SEC. 2. Court where applications for search warrant shall be filed . - An application for search warrant shall be filed with the following: (a) Any court within whose territorial jurisdiction a crime was committed. (b) For compelling reasons stated in the application, any court within the judicial region where the crime was committed if the place of the commission of the crime is known, or any court within the judicial region where the warrant shall be enforced. However, if the criminal action has already been filed, the application shall only be made in the court where the criminal action is pending. (Emphasis supplied)
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The above provision is clear enough. Under paragraph (b) thereof, the application for search warrant in this case should have stated compelling reasons why the same was being filed with the RTCNaga instead of the RTC-Iriga City, considering that it is the latter court that has territorial jurisdiction over the place where the alleged crime was committed and also the place where the search warrant was enforced. The wordings of the provision is of a mandatory nature, requiring a statement of compelling reasons if the application is filed in a court which does not have territorial jurisdiction over the place of commission of the crime. Since Section 2, Article III of the 1987 Constitution guarantees the right of persons to be free from unreasonable searches and seizures, and search warrants constitute a limitation on this right, then Section 2, Rule 126 of the Revised Rules of Criminal Procedure should be construed strictly against state authorities who would be enforcing the search warrants. On this point, then, petitioner's application for a search warrant was indeed insufficient for failing to comply with the requirement to state therein the compelling reasons why they had to file the application in a court that did not have territorial jurisdiction over the place where the alleged crime was committed.
where the crime was committed determines not only the venue of the action but is an essential element of jurisdiction. It is a fundamental rule that for jurisdiction to be acquired by courts in criminal cases, the offense should have been committed or any one of its essential ingredients should have taken place within the territorial jurisdiction of the court. Territorial jurisdiction in criminal cases is the territory where the court has jurisdiction to take cognizance or to try the offense allegedly committed therein by the accused. Thus, it cannot take jurisdiction over a person charged with an offense allegedly committed outside of that limited territory.13
Notwithstanding said failure to state the compelling reasons in the application, the more pressing question that would determine the outcome of the case is, did the RTC-Naga act properly in taking into consideration the issue of said defect in resolving respondent's motion for reconsideration where the issue was raised for the very first time? The record bears out that, indeed, respondent failed to include said issue at the first instance in its motion to quash. Does the omnibus motion rule cover a motion to quash search warrants?
The basic flaw in this reasoning is in erroneously equating the application for and the obtention of a search warrant with the institution and prosecution of a criminal action in a trial court. It would thus categorize what is only a special criminal process, the power to issue which is inherent in all courts, as equivalent to a criminal action , jurisdiction over which is reposed inspecific courts of indicated competence. It ignores the fact that the requisites, procedure and purpose for the issuance of a search warrant are completely different from those for the institution of a criminal action.
The omnibus motion rule embodied in Section 8, Rule 15, in relation to Section 1, Rule 9, demands that all available objections be included in a party's motion, otherwise, said objections shall be deemed waived; and, the only grounds the court could take cognizance of, even if not pleaded in said motion are: (a) lack of jurisdiction over the subject matter; (b) existence of another action pending between the same parties for the same cause; and (c) bar by prior judgment or by statute of limitations. 9 It should be stressed here that the Court has ruled in a number of cases that the omnibus motion rule is applicable to motions to quash search warrants.10 Furthermore, the Court distinctly stated in Abuan v. People ,11 that “ the motion to quash the search warrant which the accused may file shall be governed by the omnibus motion rule, provided, however, that objections not available, existent or known during the proceedings for the quashal of the warrant may be raised in the hearing of the motion to suppress x x x.”12cralawlawlibrary In accordance with the omnibus motion rule, therefore, the trial court could only take cognizance of an issue that was not raised in the motion to quash if , (1) said issue was not available or existent when they filed the motion to quash the search warrant; or (2) the issue was one involving jurisdiction over the subject matter. Obviously, the issue of the defect in the application was available and existent at the time of filing of the motion to quash. What remains to be answered then is, if the newly raised issue of the defect in the application is an issue of jurisdiction. In resolving whether the issue raised for the first time in respondent's motion for reconsideration was an issue of jurisdiction, the CA rationcinated, thus: It is jurisprudentially settled that the concept of venue of actions in criminal cases, unlike in civil cases, is jurisdictional. The place MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Unfortunately, the foregoing reasoning of the CA, is inceptionally flawed, because as pronounced by the Court in Malaloan v. Court of Appeals,14 and reiterated in the more recent Worldwide Web Corporation v. People of the Philippines ,15 to wit: x x x as we held in Malaloan v. Court of Appeals , an application for a search warrant is a “special criminal process,” rather than a criminal action:
For, indeed, a warrant, such as a warrant of arrest or a search warrant, merely constitutes process. A search warrant is defined in our jurisdiction as an order in writing issued in the name of the People of the Philippines signed by a judge and directed to a peace officer, commanding him to search for personal property and bring it before the court. A search warrant is in the nature of a criminal process akin to a writ of discovery. It is a special and peculiar remedy, drastic in its nature, and made necessary because of a public necessity. In American jurisdictions, from which we have taken our jural concept and provisions on search warrants, such warrant is definitively considered merely as a process, generally issued by a court in the exercise of its ancillary jurisdiction, and not a criminal action to be entertained by a court pursuant to its original jurisdiction . x x x. (Emphasis supplied) Clearly then, an application for a search warrant is not a criminal action . x x x 16 (Emphasis supplied)
The foregoing explanation shows why the CA arrived at the wrong conclusion. It gravely erred in equating the proceedings for applications for search warrants with criminal actions themselves. As elucidated by the Court, proceedings for said applications are not criminal in nature and, thus, the rule that venue is jurisdictional does not apply thereto. Evidently, the issue of whether the application should have been filed in RTC-Iriga City or RTC-Naga, is notone involving jurisdiction because, as stated in the aforequoted case, the power to issue a special criminal process is inherent in all courts. Inferring from the foregoing, the Court deems it improper for the RTC-Naga to have even taken into consideration an issue which 28
respondent failed to raise in its motion to quash, as it did not involve a question of jurisdiction over the subject matter. It is quite clear that the RTC-Naga had jurisdiction to issue criminal processes such as a search warrant. Moreover, the Court must again emphasize its previous admonition in Spouses Anunciacion v. Bocanegra, 17 that: We likewise cannot approve the trial court's act of entertaining supplemental motions x x x which raise grounds that are already deemed waived. To do so would encourage lawyers and litigants to file piecemeal objections to a complaint in order to delay or frustrate the prosecution of the plaintiff's cause of action. 18 WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals, dated March 13, 2009, and the Resolution dated September 14, 2009 in CA-G.R. CV No. 80643 are REVERSED. The Order dated February 21, 2003 issued by the Regional Trial Court of Naga, Camarines Sur, Branch 24, denying respondent's motion to quash, is REINSTATED. SO ORDERED. d.
Willaware Products Corp. vs. Jesichris Mfg. Corp. (G.R. No. 195549, Sept. 3, 2014)
PERALTA, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision 1 dated November 24, 2010 and Resolution 2 dated February 10, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 86744. The facts, as found by the Regional Trial Court (RTC), are as follows: [Respondent] Jesichris Manufacturing Company ([respondent] for short) filed this present complaint for damages for unfair competition with prayer for permanent injunction to enjoin [petitioner] Willaware Products Corporation ([petitioner] for short) from manufacturing and distributing plastic-made automotive parts similar to those of [respondent]. [Respondent] alleged that it is a duly registeredpartnership engaged in the manufacture and distribution of plastic and metal products, with principal office at No. 100 Mithi Street, Sampalukan, Caloocan City. Since its registration in 1992, [respondent] has been manufacturing in its Caloocan plant and distributing throughout the Philippines plastic-made automotive parts. [Petitioner], on the other hand, which is engaged in the manufacture and distribution of kitchenware items made of plastic and metal has its office near that of [respondent]. [Respondent] further alleged that in view of the physical proximity of [petitioner’s] office to [respondent’s] office, and in view of the fact that some of the [respondent’s] employeeshad transferred to [petitioner], [petitioner] had developed familiarity with [respondent’s] products, especially its plastic-made automotive parts. That sometime in November 2000, [respondent] discovered that [petitioner] had been manufacturing and distributing the same automotive parts with exactly similar design, same material and colors but was selling these products at a lower price as MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
[respondent’s] plastic-made automotive parts and to the same customers. [Respondent] alleged that it had originated the use of plastic in place of rubber in the manufacture ofautomotive underchassis parts such as spring eye bushing, stabilizer bushing, shock absorberbushing, center bearing cushions, among others. [Petitioner’s] manufacture of the same automotive parts with plastic materialwas taken from [respondent’s] idea of using plastic for automotive parts. Also, [petitioner] deliberately copied [respondent’s] products all of which acts constitute unfair competition, is and are contrary to law, morals, good customs and public policy and have caused [respondent] damages in terms oflost and unrealizedprofits in the amount of TWO MILLION PESOS as of the date of [respondent’s] complaint. Furthermore, [petitioner’s] tortuous conduct compelled [respondent] to institute this action and thereby to incur expenses in the way of attorney’s fees and other litigation expenses in the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00). In its Answer, [petitioner] denies all the allegations of the [respondent] except for the following facts: that it is engaged in the manufacture and distribution of kitchenware items made of plastic and metal and that there’s physical proximity of [petitioner’s] office to [respondent]’s office, and that someof [respondent’s] employees had transferred to [petitioner] and that over the years [petitioner] had developed familiarity with [respondent’s] products, especially its plastic made automotive parts. As its Affirmative Defenses, [petitioner] claims that there can be no unfair competition as the plastic-made automotive parts are mere reproductions of original parts and their construction and composition merely conforms to the specificationsof the original parts of motor vehicles they intend to replace. Thus, [respondent] cannot claim that it "originated" the use of plastic for these automotive parts. Even assuming for the sake of argument that [respondent] indeed originated the use of these plastic automotive parts, it still has no exclusive right to use, manufacture and sell these as it has no patent over these products. Furthermore, [respondent] is not the only exclusive manufacturer of these plasticmade automotive parts as there are other establishments which were already openly selling them to the public. 3 After trial on the merits, the RTC ruled in favor of respondent. It ruled that petitioner clearly invaded the rights or interest of respondent by deliberately copying and performing acts amounting to unfair competition. The RTC further opined that under the circumstances, in order for respondent’s property rights to be preserved, petitioner’s acts of manufacturing similar plastic-made automotive parts such as those of respondent’s and the selling of the sameproducts to respondent’s customers, which it cultivated over the years, will have to be enjoined. The dispositive portion of the decision reads: WHEREFORE, premises considered, the court finds the defendant liable to plaintiff Two Million (P2,000,000.00) Pesos, as actual damages, One Hundred Thousand (P100,000.00) Pesos as attorney’s fees and One Hundred Thousand (P100,000.00) Pesos for exemplary damages. The court hereby permanently [enjoins] defendant from manufacturing the plastic-made automotive parts as those manufactured by plaintiffs. 29
SO ORDERED. 4 Thus, petitioner appealed to the CA. On appeal, petitioner asserts that ifthere is no intellectual property protecting a good belonging to another,the copying thereof for production and selling does not add up to unfair competition as competition is promoted by law to benefit consumers. Petitioner further contends that it did not lure away respondent’s employees to get trade secrets. It points out that the plastic spare parts sold by respondent are traded in the market and the copying of these can be done by simplybuying a sample for a mold to be made. Conversely, respondent averred that copyright and patent registrations are immaterial for an unfair competition case to prosper under Article 28 of the Civil Code. It stresses that the characteristics of unfair competition are present in the instant case as the parties are trade rivals and petitioner’s acts are contrary to good conscience for deliberately copying its products and employing its former employees. In a Decision dated November 24,2010, the CA affirmed with modification the ruling of the RTC. Relevant portions of said decision read: Despite the evidence showing thatWillaware took dishonest steps in advancing its business interest against Jesichris, however, the Court finds no basis for the award by the RTC of actual damages. One is entitled to actual damages as one has duly proven. The testimony of Quejada, who was engaged by Jesichris in 2001 to audit its business, only revealed that there was a discrepancy between the sales of Jesichris from 2001 to 2002. No amount was mentioned. As for Exhibit "Q," which is a copy of the comparative income statement of Jesichris for 1999-2002, it shows the decline of the sales in 2002 in comparison with those made in 2001 but it does not disclose if this pertains to the subject automotive parts or to the other products of Jesichris like plates. In any event, it was clearly shown that there was unfair competition on the part of Willaware that prejudiced Jesichris. It is only proper that nominal damages be awarded in the amount of Two Hundred Thousand Pesos (P200,000.00) in order to recognize and vindicate Jesichris’ rights. The RTC’s award of attorney’s fees and exemplary damages is also maintained. xxxx WHEREFORE, premises considered, the Decision dated April 15, 2003 of the Regional Trial Court of Caloocan City, Branch 131, in Civil Case No. C-19771 is hereby MODIFIED. The award of Two Million Pesos (P2,000,000.00) actual damages is deleted and in its place, Two Hundred Thousand Pesos nominal damages is awarded. SO ORDERED. 5 Dissatisfied, petitioner moved for reconsideration. However, the same was denied for lack of merit by the CA in a Resolution dated February 10, 2011. Hence, the present Petition for Review wherein petitioner raises the following issues for our resolution: MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
(1) Whether or not there is unfair competition under human relations when the parties are not competitors and there is actually no damage on the part of Jesichris? (2) Consequently, if there is no unfair competition, should there be moral damages and attorney’s fees? (3) Whether or not the addition of nominal damages is proper although no rights have been established? (4) If ever the right of Jesichris refersto its copyright on automotive parts, should it be considered in the light of the said copyrights were considered to be void by no less than this Honorable Court in SC GR No. 161295? (5) If the right involved is "goodwill" then the issue is: whether or not Jesichris has established "goodwill?" 6 In essence, the issue for our resolution is: whether or not petitioner committed acts amounting to unfair competition under Article 28 of the Civil Code. Prefatorily, we would like to stress that the instant case falls under Article 28 of the Civil Code on humanrelations, and not unfair competition under Republic Act No. 8293 ,7 as the present suit is a damage suit and the products are not covered by patent registration. A fortiori, the existence of patent registration is immaterial in the present case. The concept of "unfair competition"under Article 28 is very much broader than that covered by intellectual property laws. Under the present article, which follows the extended concept of "unfair competition" in American jurisdictions, the term coverseven cases of discovery of trade secrets of a competitor, bribery of his employees, misrepresentation of all kinds, interference with the fulfillment of a competitor’s contracts, or any malicious interference with the latter’s business. 8 With that settled, we now come to the issue of whether or not petitioner committed acts amounting tounfair competition under Article 28 of the Civil Code. We find the petition bereft of merit. Article 28 of the Civil Code provides that "unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or high-handed method shall give rise to a right of action by the person who thereby suffers damage." From the foregoing, it is clear thatwhat is being sought to be prevented is not competitionper sebut the use of unjust, oppressive or high- handed methods which may deprive others of a fair chance to engage in business or to earn a living. Plainly,what the law prohibits is unfair competition and not competition where the means usedare fair and legitimate. In order to qualify the competition as "unfair," it must have two characteristics: (1) it must involve an injury to a competitor or trade rival, and (2) it must involve acts which are characterized as "contrary to good conscience," or "shocking to judicial 30
sensibilities," or otherwise unlawful; in the language of our law, these include force, intimidation, deceit, machination or any other unjust, oppressive or high-handed method. The public injury or interest is a minor factor; the essence of the matter appears to be a private wrong perpetrated by unconscionable means .9 Here, both characteristics are present. First, both parties are competitors or trade rivals, both being engaged in the manufacture of plastic-made automotive parts. Second, the acts of the petitioner were clearly "contrary to good conscience" as petitioner admitted having employed respondent’s formeremployees, deliberately copied respondent’s products and even went to the extent of selling these products to respondent’s customers.10 To bolster this point, the CA correctly pointed out that petitioner’s hiring of the former employees of respondent and petitioner’s act of copying the subject plastic parts of respondent were tantamount to unfair competition, viz.: The testimonies of the witnesses indicate that [petitioner] was in bad faith in competing with the business of [respondent].1âwphi1 [Petitioner’s] acts can be characterized as executed with mischievous subtle calculation. To illustrate, in addition to the findings of the RTC, the Court observes that [petitioner] is engaged in the production of plastic kitchenware previous to its manufacturing of plasticautomotive spare parts, it engaged the services of the then mold setter and maintenance operator of [respondent], De Guzman, while he was employed by the latter. De Guzman was hired by [petitioner] in order to adjust its machinery since quality plastic automotive spare parts were not being made. It baffles the Court why [petitioner] cannot rely onits own mold setter and maintenance operator to remedy its problem. [Petitioner’s] engagement of De Guzman indicates that it is banking on his experience gained from working for [respondent]. Another point we observe is that Yabut, who used to be a warehouse and delivery man of [respondent], was fired because he was blamed of spying in favor of [petitioner]. Despite this accusation, he did not get angry. Later on, he applied for and was hired by [petitioner] for the same position he occupied with [respondent]. These sequence of events relating to his employment by [petitioner] is suspect too like the situation with De Guzman. 11 Thus, it is evident that petitioner isengaged in unfair competition as shown by his act of suddenly shifting his business from manufacturing kitchenware to plastic-made automotive parts; his luring the employees of the respondent to transfer to his employ and trying to discover the trade secrets of the respondent .12 Moreover, when a person starts an opposing place of business, not for the sake of profit to himself, but regardless of loss and for the sole purpose of driving his competitor out of business so that later on he can take advantage of the effects of his malevolent purpose, he is guilty of wanton wrong. 13 As aptly observed by the courta quo, the testimony of petitioner’s witnesses indicate that it acted in bad faith in competing with the business of respondent, to wit: [Petitioner], thru its General Manager, William Salinas, Jr., admitted that it was never engaged in the business of plastic-made automotive parts until recently, year 2000:
MOLAER, AIRISA D. | LAW ON INTELLECTUAL PROPERTY
Atty. Bautista: The business name of Willaware Product Corporation is kitchenware, it is (sic) not? Manufacturer of kitchenware and distributor ofkitchenware, is it not? Mr. Salinas: Yes, sir. Atty. Bautista: And you said you have known the [respondent] Jesichris Manufacturing Co., you have known it to be manufacturing plastic automotive products, is it not? Mr. Salinas: Yes, sir. Atty. Bautista: In fact, you have been (sic) physically become familiar with these products, plastic automotive products of Jesichris? Mr. Salinas: Yes, sir. How [petitioner] was able to manufacture the same products, in terms of color, size, shape and composition as those sold by Jesichris was due largely to the sudden transfer ofJesichris’ employees to Willaware. Atty. Bautista: Since when have you been familiar with Jesichris Manufacturing Company? Mr. Salinas: Since they transferred there (sic) our place. Atty. Bautista: And that was in what year? Mr. Salinas: Maybe four (4) years. I don’t know the exact date. Atty. Bautista: And some of the employees of Jesichris Manufacturing Co. have transferred to your company, is it not? Mr. Salinas: Yes, sir. Atty. Bautista: How many, more or less? Mr. Salinas: More or less, three (3). Atty. Bautista: And when, in what year or month did they transfer to you? Mr. Salinas: First, November 1. Atty. Bautista: Year 2000? Mr. Salinas: Yes sir. And then the other maybe February, this year. And the other one, just one month ago. That [petitioner] was clearly outto take [respondent] out of business was buttressed by the testimony of [petitioner’s] witness, Joel Torres: Q: Are you familiar with the [petitioner], Willaware Product Corporation? A: Yes, sir. Q: Will you kindly inform this court where is the office of this Willaware Product Corporation (sic)? A: At Mithi Street, Caloocan City, sir. Q: And Mr. Witness, sometime second Saturday of January 2001, will you kindly inform this court what unusual even (sic) transpired between you and Mr. Salinas on said date? 31
