Philippine Group Report

1

Philippine Group Report (to the APAA Trademark Committee)

By: Pablo M. Gancayco

Philippine Group Report

(to the APAA Trademark Committee)

By: Pablo M. Gancayco

From the middle of the year 2006 up to September 2007, there has been no significant change or development in the laws, rules and regulations on Trademarks, Tradename and Service Name in the Philippines, and in the legal practice related thereto.

However, in the area of jurisprudence, there are five (5) noteworthy cases which are accordingly summarized hereunder for your guidance:

(1) McDonald’s Corporation vs. MacJoy Fastfood Corporation

G.R. No. 1661152 February 2007

Facts:

Respondent filed with the then Bureau of Patents Trademarks and Technology Transfer, now the Intellectual Property Office (IPO), an application for the registration of the trademark “Macjoy & Device” for fried chicken, chicken barbecue burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks under classes 29 and 30 of the International Classification of Goods.

Petitioner opposed said application, claiming that the trademark “Macjoy & Device” so resembles its corporate logo, otherwise known as the Golden Arches or “M” design and its marks “McDonalds,” “McChicken,” “MacFries,” “BigMac,” “McDo,” “McSpaghetti,” “McSnack,” and “Mc,” such that when used on identical or related goods, the trademark applied for would confuse or deceive purchasers into believing that the goods originate from the same source or origin. Petitioner also alleged that the respondent’s use and adoption in bad faith of the “Macjoy & Device” mark would falsely tend to suggest a connection or affiliation with petitioner’s restaurant services and food products, thus, constituting a fraud upon the general public and further cause the dilution of the distinctiveness of petitioner’s registered and internationally recognized McDonald’s marks to its prejudice and irreparable damage.

The IPO, ratiocinating that the predominance of the letter “M,” and the prefixes “Mac/Mc” in both the “MacJoy” and the “McDonalds” marks lead to the conclusion that there is confusing similarity between them especially since both are used on almost the same products falling under classes 29 and 30, i.e., food and ingredients of food, sustained the petitioner’s opposition and rejected the respondent’s application.

Issue:

Whether or not there is confusing similarity between the contending marks.

Held:

1. In determining the similarity and likelihood of confusion, jurisprudence has developed two tests – the dominancy test and the holistic test; The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion or deception; The holistic test requires the court to consider the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity. Under the latter test, a comparison of the words is not the only determinant factor.

2. In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set of rules can be deduced because each case must be decided on its merits – in such cases, even more than in any other litigation, precedent must be studied in the light of the facts of the particular case. That is the reason why in trademark cases, jurisprudential precedents should be applied only to a case if they are specifically in point.

3. While the Supreme Court agreed with the Court of Appeal’s detailed enumeration of differences between the two (2) competing trademarks herein involved, it ruled that the holistic test is not the one applicable in this case, the dominancy test being the one more suitable.

4. Applying the dominancy test, the Supreme Court found that petitioner’s and respondent’s marks are confusingly similar with each other such that an ordinary purchaser can conclude an association or relation between the marks. Both marks use the “M” design logo and the prefixes “Mc” and /or “Mac” as dominant features. The first letter “M” in both marks puts emphasis on the prefixes “Mc” and/or “Mac” by the similar way in which they are depicted. It is the prefix “Mc,” an abbreviation of “Mac,” which visually and aurally catches the attention of the consuming public. The word “Mcjoy” attracts attention the same way as “McDonald’s,” “MacFries,” “McSpaghetti,” “McDo,” “Big Mac” and the rest of the McDonalds’s marks which all use the prefixes Mc and/or Mac. Most importantly, both trademarks are used in the sale of fastfood products.

5. A mark is valid if it is distinctive and hence not barred from registration under the Trademark Law; However, once registered, not only the mark’s validity but also the registrant’s ownership thereof is prima facie presumed. Pursuant to Trademark Law, as well as the provision regarding the protection of industrial property of foreign nationals in this country as embodied in the Paris Convention under which the Philippines and the petitioner’s domicile, the United States, are adherent members, the petitioner was able to register its McDonald’s markssuccessively since 1971.

6. The Respondent’s contention that it was the first user of the mark in the Philippines having used “Macjoy & Device” on its restaurant business and food products since December, 1987 at Cebu City while the first McDonald’s outlet of the petitioner thereat was opened only in 1992, is downright unmeritorious. For the requirement of “actual use in commerce in the Philippines” before one may register a trademark, trade name and service mark under the Trademark Law pertains to the territorial jurisdiction of the Philippines and is not only confined to a certain region, province, city or barangay.

(2) Skechers U.S.A. vs. Inter Pacific Industrial Trading Corp. et al.

G.R. No. 164321 30 November 2006

Facts:

Petitioner engaged the services of a private investigation firm to check if respondents are indeed engaged in the importation, distribution and sale of unauthorized products bearing counterfeit or unauthorized trademarks owned by petitioner. An investigator went to respondents’ warehouse and saw different kinds and models of rubber shoes including shoes bearing the “S” logo. He found that the shoes bearing the “Strong” name with the “S” logo have the same style as petitioner’s shoes.

Petitioner filed a complaint with the National Bureau of Investigation (NBI) requesting assistance in stopping the illegal importation, manufacture and sale of counterfeit products bearing the trademarks it owns and in prosecuting the owners of the establishments engaged therein. NBI representatives bought 24 pairs of rubber shoes bearing the “Strong” name and the “S” logo. They then applied for search warrants with the court, which eventually issued the same.

After seizure of their goods, respondents sought to quash the search warrants on the ground that there is no confusing similarity between the petitioner’s Skechers’ rubber shoes and respondent’s Strong rubber shoes. The court eventually issued an order quashing the search warrants.

Issue:

Whether or not the court erred in concluding that the respondent is not liable for trademark infringement where the sole issue is the existence of probable cause for the issuance of a search warrant.

Held:

1. The power to issue search warrants is exclusively vested with the trial judges in the exercise of their judicial function. And inherent in the court’s power to issue search warrants is the power to quash warrants already issued. After the judge has issued a warrant, he is not precluded to subsequently quash the same, if he finds upon re-evaluation of the evidence that no probable cause exists. Though there is no fixed rule for the determination of the existence of probable cause since the existence depends to a large degree upon the finding or opinion of the judge conducting the examination, however, the findings of the judge should not disregard the facts before him nor run counter to the clear dictates of reason.

2. The court was acting reasonably when it went into a discussion of whether or not there was trademark infringement, this is so because in the determination of the existence of probable cause for the issuance or quashal of a warrant, it is inevitable that the court may touch on issues properly threshed out in a regular proceeding. This finding that there was no colorable imitation of petitioner’s trademark is merely preliminary and did not finally determine the merits of the possible criminal proceedings that may be instituted by petitioner. When the court, in determining probable cause for issuing or quashing a search warrant, finds that no offense has been committed, it does not interfere with or encroach upon the proceedings in the preliminary investigation being or to be conducted by the investigating officer. The court does not oblige the investigating officer not to file an information, for the court’s ruling that no crime exists is only for the purposes of issuing or quashing the warrant.

(3)Sony Computer Entertainment, Inc. vs. Supergreen, Inc.

G.R. No. 16182322 March 2007

Facts:

The petitioner filed a complaint against respondent with the National Bureau of Investigation (NBI) for engaging in the reproduction and distribution of counterfeit “Playstation” game software, consoles and accessories. The NBI applied for, and was granted, search warrants by the court in Manila to search respondent’s premises in Parañaque City and Cavite. The NBI simultaneously served the search warrants and seized a replicating machine and several units of counterfeit “Playstation” consoles, joy pads, housing, labels, and game software.

The respondents filed a motion to quash the search warrants, questioning the propriety of the venue. The court granted the motion and quashed the warrants.

Issue:

Whether or not the quashal of the search warrants was valid.

Held:

The Supreme Court agreed with petitioner that this case involves a transitory or continuing offense of unfair competition. Pertinent too is the Penal Code provision that enumerates the elements of unfair competition, to wit: (a) That the offender gives his goods the general appearance of the goods of another manufacturer or dealer; (b) That the general appearance is shown in the (1) goods themselves, or in the (2) wrapping of their packages, or in the (3) device or words therein, or in (4) any other feature of their appearance; (c) That the offender offers to sell or sells those goods or gives other persons a chance or opportunity to do the same with a like purpose; and (d) That there is actual intent to deceive the public or defraud a competitor.

Respondent’s imitation of the general appearance of petitioner’s goods was done allegedly in Cavite. It sold the goods allegedly in Mandaluyong City, Metro Manila. The alleged acts would constitute a transitory or continuing offense. Thus, clearly, under the IP Code and Penal Code, petitioner may apply for a search warrant in any court where any element of the alleged offense was committed, including any of the courts within the National Capital Region (Metro Manila).

(4) Manolo P. Samson vs. Caterpillar, Inc.

G.R. 16988212 September 2007

Facts:

Petitioner is the owner of retail outlets within the Philippines, which sell, among other things, footwear, clothing, bags and other similar items, bearing the mark “Caterpillar” and “Cat.” Petitioner registered the aforementioned marks for shoes, slippers, sandals and boots with the Bureau of Patents, Trademarks and Technology Transfer, now the Intellectual Property Office (IPO) in 1997.

Respondent is a foreign corporation, primarily in the business of manufacturing equipment used in construction, mining, road building and agricultural industries. Since the 1960’s, however, respondent had expanded its product line to clothing and, since 1988, to footwear. Respondent alleges that it is a widely known brand name and that its products are being internationally distributed.

The court issued search warrants against the establishments owned by petitioner. This led to the seizure of various retail items such as footwear, clothing, accessories, and leatherware for unfair competition. Respondent filed the corresponding criminal complaints before the Department of Justice (DOJ). In addition, respondent filed a separate civil action for unfair competition, etc.

Since petitioner allegedly continued to sell and distribute merchandise which bore the disputed marks, respondent later filed more criminal complaints against petitioner before the DOJ for unfair competition. But, before the issuance of a resolution by the DOJ, the court issued an order quashing the search warrants. The DOJ subsequently issued a resolution recommending the filing of criminal charges against petitioner. On appeal with the Secretary of Justice, however, said resolution was reversed, and the criminal informations filed against petitioner were withdrawn.

Issue:Whether or not it was proper for the DOJ to recommend the withdrawal of the informations filed due to the quashal of the search warrants.

Held:In its decision, the Court of Appeals held that the withdrawal of the informations against petitioner, predicated on the quashal of the search warrants, was a manifest error. The appellate court ruled that the earlier finding of probable cause against petitioner was not affected by the quashal of the warrants since independent evidence gathered by the NBI from the test-buy operations it conducted in 1999 is sufficient to support such finding.

By sustaining the decision of the Court of Appeals in said case, the Supreme Court, ruled that probable cause exists for the re-filing of a criminal case against petitioner for unfair competition under the IP Code. The repeated confirmation of the finding of probable cause against petitioner, which the Supreme Court cannot now overturn, effectively and decisively determines the issues in this petition.

(5)Summerville General Merchandising Co. vs. Hon. Court of

Appeals , Hon. Judge Antonio Eugenio, Vhang Yu Shui and Juliet Lopez G.R. No. 158767 26 June 2007

Facts:

Petitioner is a holder of a Deed of Assignment executed in its favor by the owner/holder of several copyrights and patents over the Royal playing cards, Royal brand playing cards case, design for the case and packaging of a deck of Royal playing cards.

Petitioner filed a complaint against several persons or establishments engaged in the unauthorized manufacturing, distribution and sale of Royal brand playing cards, the design and mark of which are claimed to have been duly patented/copyrighted and registered. Among those establishments identified to be manufacturing and selling playing cards using petitioner’s patented Joker design and plastic container was that owned by the private respondents. A search warrant was issued in favor of petitioner, by virtue of which the police seized the subject goods. On motion by the private respondents, the court ordered that the seized Crown brand playing cards and three printing machines be released and returned to private respondents; hence only the containers of the playing cards were left in the custody of the petitioner.

Issue:

Whether the seized playing cards inside the infringing plastic container cases may be considered subject of the offense for infringement and unfair competition, and hence, subject to siezure.

Held:

Petitioner’s assertion that the Crown brand playing cards are “subject of the offense” is erroneous, bearing in mind the distinctive circumstances of this case, i.e., that private respondents are the owners of the registered Crown brand playing cards. The articles seized had little, if any, evidentiary value for the criminal action of trademark infringement relating to the use of the plastic containers, which petitioner filed before the court; or even one for unfair competition also respecting the use of such plastic containers.

Petitioner does not dispute that the design and/or mark of such Crown brand playing cards is owned by private respondents. In fact, there is no allegation that the design and/or mark of such Crown brand playing cards is a reproduction, counterfeit, copy, or colorable imitation of another registered mark legally owned by another; hence, no crime of trademark infringement appears to have been committed or perpetrated to warrant the inference that the Crown brand playing cards are “subject of the offense” as contemplated by the Rules of Court. All the more telling is the contention of petitioner that it is the plastic container/case and its marking that bear the reproduction, counterfeit, copy, or colorable imitation of its registered mark. In other words, it is the design of the plastic container/case that is alleged to have been utilized by private respondents to deceive the public into believing that their Crown brand playing cards are the same as those manufactured by petitioner.

“Trademark Usage – Infringement versus Non-Use

- How Do They Compare?”

Country: Philippines

Under Philippine law, there is infringement when a person, without the consent of the owner of the registered mark, use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark, or reproduce, counterfeit , copy or colorably imitate a registered mark and apply the same to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce, in connection with the sale, distribution, advertising of goods, or in connection with which such use is likely to cause confusion or mistake.