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by Atty. Gabriel Ablola 🇵🇭

Tag: Trademark Infringement

  • Distinct Crocs Don’t Confuse: Dominancy Test in Philippine Trademark Law

    TL;DR

    The Supreme Court of the Philippines affirmed that Lacoste S.A.’s “CROCODILE DEVICE” trademark is not confusingly similar to Crocodile International Pte Ltd.’s “CROCODILE AND DEVICE” mark. This means Crocodile International can register its trademark in the Philippines, despite Lacoste’s opposition. The Court applied the Dominancy Test, focusing on the distinct visual features of each mark, such as the direction the crocodile faces and the presence of a wordmark in Crocodile’s design. This ruling underscores that minor differences in trademarks, particularly when dominant features are distinguishable, can prevent consumer confusion and allow for brand coexistence in the Philippine market. Businesses can take away that not every similar mark will be considered infringing if key elements are sufficiently distinct to avoid misleading consumers.

    Crocodile Clash: Can Two Crocodiles Coexist in the Trademark Jungle?

    In a trademark dispute that has spanned decades, the Supreme Court of the Philippines has finally decided whether two crocodile logos can peacefully swim in the same commercial waters. This case pits French apparel giant Lacoste S.A., owner of the iconic “CROCODILE DEVICE” mark, against Singapore-based Crocodile International Pte Ltd., which sought to register its “CROCODILE AND DEVICE” mark in the Philippines. Lacoste opposed Crocodile’s application, arguing that the marks were confusingly similar, potentially harming its established brand. The central legal question before the Court was whether the Court of Appeals erred in affirming the Intellectual Property Office (IPO) rulings, which found no confusing similarity between the two crocodile emblems.

    The legal battleground was defined by the application of Philippine trademark law, specifically Republic Act No. 166, the governing law at the time Crocodile filed its application. This law prohibits the registration of marks that are confusingly similar to previously registered marks. Philippine jurisprudence traditionally employed two tests to determine confusing similarity: the Dominancy Test and the Holistic Test. However, the Supreme Court has since clarified its stance, favoring the Dominancy Test, which focuses on the “similarity of the prevalent or dominant features of the competing trademarks that might cause confusion.” This test emphasizes the aural and visual impressions created by the marks on consumers, rather than a detailed side-by-side comparison.

    Applying the Dominancy Test, the Court meticulously compared the two crocodile marks. While acknowledging that both marks feature a “saurian” figure, the Court highlighted significant visual distinctions. Lacoste’s crocodile faces right and is a solid figure, whereas Crocodile’s faces left, is more of a line drawing, and is accompanied by the word “Crocodile” in a stylized font above the device. The Court emphasized that these differences, particularly the direction the crocodile faces and the presence of the wordmark in Crocodile’s logo, are sufficient to distinguish the marks in the eyes of the ordinary consumer. The decision underscored that while the “saurian” figure is dominant in both, the overall presentation and specific features create distinct commercial impressions.

    “Here, the entirety of Crocodile’s mark contains both a word element (the word ‘Crocodile’ in stylized format) and a design element (the ‘saurian’ figure). However, following the Dominancy Test, only the design element or the ‘saurian’ figure, which comprise Crocodile’s CROCODILE AND DEVICE mark, should be considered in determining the existence of confusing similarity in this case.”

    Furthermore, the Court addressed the survey evidence presented by Lacoste, dubbed “Project Copy Cat,” which aimed to demonstrate consumer confusion. Referencing the recent case of Ginebra v. Tanduay, the Court acknowledged the potential value of consumer surveys in trademark disputes. However, it emphasized that such evidence must meet stringent standards of trustworthiness, including proper universe definition, representative sampling, clear and non-leading questions, sound interview procedures, accurate data reporting, accepted statistical analysis, and overall objectivity. In this case, the Court found “Project Copy Cat” lacking in several of these criteria, particularly in defining the relevant consumer universe and ensuring a representative sample. Consequently, the survey was deemed inadmissible and given no probative weight.

    The Court also noted the long history of co-existence between Lacoste and Crocodile in numerous international markets, supported by a Mutual Co-Existence Agreement (though limited geographically). While not directly binding in the Philippines, this international context lent further credence to the argument that the marks could co-exist without causing undue confusion. Ultimately, the Supreme Court concluded that the IPO and Court of Appeals were correct in finding no confusing similarity. The decision reinforces the principle that trademark law aims to protect against genuine consumer confusion and prevent unfair competition, but it should not stifle fair market competition by granting overly broad protection to trademarks. The Court echoed Justice Leonen’s concurring opinion in Asia Pacific Resources International Holdings, Ltd. v. Paperone, Inc., cautioning against interfering in a free market and fostering monopolistic practices unless there is clear evidence of fraud or misrepresentation.

    In essence, the Supreme Court’s decision in Lacoste v. Crocodile provides valuable guidance on the application of the Dominancy Test in Philippine trademark law. It clarifies that while trademarks need not be entirely dissimilar, key dominant features must be sufficiently distinct to prevent consumer confusion. The case also highlights the importance of rigorous standards for survey evidence in trademark disputes and underscores the judiciary’s role in balancing trademark protection with the principles of free and fair competition.

    FAQs

    What was the central legal issue in this case? The core issue was whether Crocodile International’s “CROCODILE AND DEVICE” trademark was confusingly similar to Lacoste’s “CROCODILE DEVICE” trademark, preventing its registration in the Philippines.
    What is the Dominancy Test? The Dominancy Test is used in Philippine trademark law to assess confusing similarity by focusing on the dominant features of competing marks and the overall impression they create on consumers.
    How did the Court apply the Dominancy Test in this case? The Court focused on the visual differences in the crocodile devices, such as the direction each crocodile faces, the style of depiction, and the presence of a wordmark in Crocodile’s logo, concluding they were sufficiently distinct.
    Why was Lacoste’s consumer survey (“Project Copy Cat”) rejected? The survey was deemed inadmissible because it failed to meet the trustworthiness standards for survey evidence, particularly in defining the consumer universe and ensuring a representative sample.
    What was the Supreme Court’s ruling? The Supreme Court ruled in favor of Crocodile International, affirming the lower courts’ decisions that there was no confusing similarity and allowing Crocodile to register its trademark.
    What is the practical implication of this ruling for businesses? The ruling clarifies that trademarks with similar elements can coexist if their dominant features are sufficiently distinct to avoid consumer confusion, promoting fair competition in the Philippine market.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Lacoste S.A. v. Crocodile International Pte Ltd., G.R. No. 223270, November 06, 2023

  • Trademark Anagrams and Consumer Confusion: Supreme Court Clarifies Dominancy Test in Levi Strauss vs. LIVE’S Case

    TL;DR

    The Supreme Court sided with Levi Strauss, ordering the cancellation of the trademark “LIVE’S” due to its confusing similarity to “LEVI’S.” The Court emphasized the Dominancy Test, focusing on the overall impression of the marks rather than minor differences. This ruling reinforces trademark protection against imitations that, even if cleverly disguised, are likely to mislead consumers, especially in closely related product categories like apparel. Companies must ensure their trademarks are distinct enough to avoid infringing on existing brands, particularly in sight and sound.

    Anagrams in Apparel: Can ‘LIVE’S’ Confuse ‘LEVI’S’ Shoppers?

    This case, Levi Strauss & Co. v. Antonio Sevilla and Antonio L. Guevarra, revolves around a trademark dispute between the iconic “LEVI’S” brand and the similarly named “LIVE’S.” Levi Strauss, owner of the “LEVI’S” mark since 1946, sought to cancel the registration of “LIVE’S,” arguing that it was confusingly similar and infringed on their established trademark. The Intellectual Property Office (IPO) initially dismissed Levi Strauss’s petition, a decision upheld by the Court of Appeals, citing mootness and res judicata. However, the Supreme Court took a different view, directly addressing the core issue of trademark similarity and consumer confusion.

    At the heart of the matter was whether the “LIVE’S” trademark, used for similar clothing products, created a likelihood of confusion among consumers. Levi Strauss presented survey evidence indicating that a significant majority of consumers associated “LIVE’S” with “LEVI’S.” Respondents, on the other hand, argued that differences in spelling, pronunciation, price, and product presentation were sufficient to distinguish the brands. The Supreme Court had to determine if these differences were enough to prevent consumer confusion in the marketplace. Crucially, the Court clarified the appropriate legal test for assessing trademark similarity, firmly establishing the Dominancy Test as the prevailing standard in Philippine jurisprudence.

    The Supreme Court overturned the Court of Appeals’ decision, rejecting the grounds of mootness and res judicata. The Court clarified that the assignment of the “LIVE’S” trademark to a third party during the legal proceedings did not render the case moot, as the registration remained valid and the new owner was bound by the outcome. Furthermore, the Court explicitly stated that a previous case (G.R. No. 162311) involving unfair competition charges related to the same trademarks did not constitute res judicata. The earlier case, stemming from a preliminary investigation, was not a judgment on the merits by a competent court and thus had no preclusive effect on the trademark cancellation case.

    Turning to the central issue of trademark infringement, the Supreme Court applied the Dominancy Test. This test focuses on the dominant features of the competing marks and assesses whether these similarities are likely to cause confusion among ordinary purchasers. The Court emphasized that the Holistic Test, which considers all aspects of the marks and packaging, has been abandoned in favor of the Dominancy Test, especially after its incorporation into the Intellectual Property Code. Analyzing the “LEVI’S” and “LIVE’S” marks, the Court noted the striking similarity in appearance and sound. Both marks consist of five letters, start with “L,” end with “S,” and are possessive. The Court pointed out that “LIVE’S” is essentially an anagram of “LEVI’S,” a clever but insufficient attempt to differentiate the brand.

    “Visual, aural, connotative comparisons and overall impressions engendered by the marks in controversy as they are encountered in the realities of the marketplace must be taken into account. Where there are both similarities and differences in the marks, these must be weighed against one another to determine which predominates.”

    The Court underscored that even if marks are not identical, confusing similarity can arise from overall impression. The slight rearrangement of letters in “LIVE’S” was deemed insufficient to overcome the dominant similarity to “LEVI’S.” The Court also referenced the consumer survey, which demonstrated a high degree of association and confusion between the two marks. Even considering the now-abandoned Holistic Test, the Court found further evidence of likely confusion in the similar trade dress, color schemes, and even numerical identifiers used on product labels, reinforcing the impression of imitation. The Court concluded that “LIVE’S” was indeed a colorable imitation of “LEVI’S,” likely to deceive ordinary purchasers.

    The Supreme Court’s decision in Levi Strauss v. LIVE’S serves as a significant reminder of the importance of trademark distinctiveness and the application of the Dominancy Test in infringement cases. It clarifies that mere minor variations, especially anagrammatic similarities, are not enough to avoid trademark infringement if the dominant features of marks create a likelihood of consumer confusion. This ruling strengthens the protection afforded to established trademarks and provides clearer guidance for businesses in developing and registering their own brands, particularly in closely related markets where visual and phonetic similarity can easily lead to consumer misdirection. The case highlights that intellectual property protection extends beyond exact copies and encompasses imitations that, while not identical, are still likely to cause confusion in the minds of ordinary purchasers.

    FAQs

    What was the key issue in this case? The central issue was whether the trademark “LIVE’S” was confusingly similar to “LEVI’S,” warranting cancellation of the “LIVE’S” trademark registration.
    What is the Dominancy Test? The Dominancy Test focuses on the dominant features of trademarks and assesses whether these similarities are likely to cause consumer confusion, regardless of minor differences.
    Why did the Court reject the res judicata argument? The previous case cited was a criminal preliminary investigation, not a final judgment on the merits by a competent court, so it could not bar the trademark cancellation case under res judicata.
    What evidence did Levi Strauss present to show confusion? Levi Strauss presented a consumer survey indicating that a large percentage of respondents associated “LIVE’S” with “LEVI’S,” demonstrating a likelihood of confusion.
    What is a colorable imitation in trademark law? A colorable imitation is a mark that, while not identical to another, bears such a resemblance as to be likely to mislead ordinary purchasers into believing they are the same product.
    What was the Supreme Court’s ruling? The Supreme Court ruled in favor of Levi Strauss, ordering the cancellation of the “LIVE’S” trademark registration due to its confusing similarity to “LEVI’S.”

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Levi Strauss & Co. v. Antonio Sevilla and Antonio L. Guevarra, G.R. No. 219744, March 01, 2021

  • Reconsidering Precedent: Likelihood of Trademark Confusion and Stare Decisis in the Philippines

    TL;DR

    The Supreme Court ruled that Kolin Philippines International, Inc.’s (KPII) application to register the trademark “KOLIN” for business services in Class 35 should be rejected because it would likely cause confusion with Kolin Electronics Co., Inc.’s (KECI) registered “KOLIN” trademarks for goods in Class 9 and services in Class 35. The Court clarified that the principle of stare decisis, or adherence to precedent, from a previous similar case (Taiwan Kolin case) did not apply here due to different factual circumstances and evolving legal standards for determining trademark confusion. This decision emphasizes a comprehensive, case-specific approach to trademark disputes, prioritizing the protection of existing trademark rights and preventing consumer confusion over strict adherence to potentially outdated precedents. Ultimately, the ruling protects KECI’s established brand and prevents KPII from registering a mark that could mislead consumers.

    Beyond Brand Names: When ‘KOLIN’ Causes Confusion Anew

    Can a previous court decision about trademark similarity dictate the outcome of every similar case, regardless of new evidence or evolving legal standards? This question lies at the heart of the Kolin Electronics Co., Inc. v. Kolin Philippines International, Inc. case. Petitioner Kolin Electronics Co., Inc. (KECI), owner of the registered trademark “KOLIN” for electronics, opposed the application of respondent Kolin Philippines International, Inc. (KPII) to register the same mark for business services. KECI argued that KPII’s registration would cause confusion and damage its existing trademark rights. KPII, however, relied on a prior Supreme Court decision, the Taiwan Kolin case, which had allowed a similar “KOLIN” trademark registration, invoking the principle of stare decisis.

    The Intellectual Property Office (IPO) initially sided with KECI, but the Court of Appeals (CA), citing stare decisis and the Taiwan Kolin precedent, reversed this decision. The Supreme Court, in this case, reassessed the application of stare decisis and the likelihood of confusion. Justice Caguioa, writing for the First Division, emphasized that while stare decisis promotes stability in legal decisions, it is not a rigid doctrine that blindly applies precedents without considering the nuances of each case. The Court underscored that stare decisis is not applicable when the factual circumstances differ significantly or when the precedent conflicts with current law or jurisprudence.

    The Court meticulously examined the doctrine of stare decisis, defining it as adhering to precedents in cases with substantially similar facts. However, it stressed that this principle should not be applied blindly, especially when precedents conflict with the law. Quoting Tan Chong v. Secretary of Labor, the Court stated,

    “The principle of stare decisis does not mean blind adherence to precedents. The doctrine or rule laid down, which has been followed for years, no matter how sound it may be, if found to be contrary to law, must be abandoned. The principle of stare decisis does not and should not apply when there is conflict between the precedent and the law. The duty of this Court is to forsake and abandon any doctrine or rule found to be in violation of the law in force.”

    This was crucial because the Court found that the Taiwan Kolin case, relied upon by KPII and the CA, used the Holistic Test for trademark resemblance, which has been superseded by the Dominancy Test, the legally prescribed method for determining trademark similarity.

    Moving beyond stare decisis, the Court delved into the core issue of likelihood of confusion, employing the multifactor test established in jurisprudence and the Rules of Procedure for Intellectual Property Rights Cases. This test considers various factors, including the resemblance of marks, relatedness of goods/services, strength of the prior mark, buyer sophistication, and evidence of actual confusion. Applying the Dominancy Test, the Court found the marks “KOLIN” and “KOLIN” to be virtually identical in appearance, sound, and connotation. The stylized lettering of KPII’s mark was deemed insufficient to distinguish it from KECI’s word mark.

    Crucially, the Court determined that KECI’s Class 9 goods (electronic components) and KPII’s Class 35 services (selling electronic goods, including televisions) were related. Drawing on the Mang Inasal Philippines, Inc. v. IFP Manufacturing Corporation case, the Court reasoned that the relatedness hinges on whether there is a logical connection suggesting a common source or potential confusion about product origin. The Court noted the complementarity of KECI’s electronic components and the types of electronic goods KPII intended to sell, reinforcing the likelihood of confusion of business. Furthermore, KPII itself admitted that its goods and KECI’s products “complement each other,” further solidifying the relatedness.

    The Court also addressed the sophistication of buyers, acknowledging that while consumers of electronics might be somewhat discerning, the potential for confusion remained high due to the similarity of marks and relatedness of products. The Court highlighted that KECI’s “KOLIN” mark was considered a strong, fanciful mark, further increasing the likelihood of confusion. Finally, the Court considered KPII’s bad faith in filing its application, noting its affiliation with Taiwan Kolin Corp. and the timing of the application shortly after KECI was declared the owner of the “KOLIN” mark in a prior case.

    Beyond likelihood of confusion with KECI’s Class 9 goods, the Court also found a presumption of confusion with KECI’s own Class 35 registration for similar business services. Since both marks and services were virtually identical in this comparison, the presumption of likelihood of confusion under the Rules of Procedure for Intellectual Property Rights Cases was triggered. The Court further recognized KECI’s prior use and established trade name rights, protected under the Intellectual Property Code even without formal registration of the trade name itself. Finally, the Court emphasized that allowing KPII’s registration would adversely affect KECI’s existing rights under the Trademark Law, contravening Section 236 of the IP Code which protects rights acquired in good faith prior to the IP Code’s enactment.

    Ultimately, the Supreme Court reversed the CA decision, reinstating the IPO Director General’s rejection of KPII’s trademark application. The ruling underscores that stare decisis is not absolute and must yield to factual distinctions and evolving legal standards. It reaffirms a comprehensive, multifactor approach to assessing trademark confusion, prioritizing the protection of established trademark rights and the prevention of consumer deception.

    FAQs

    What was the key issue in this case? The central issue was whether KPII’s trademark application for “KOLIN” in Class 35 should be rejected due to likelihood of confusion with KECI’s existing “KOLIN” trademarks and trade name, and whether the principle of stare decisis from a previous case should apply.
    What is ‘stare decisis’? Stare decisis is a legal doctrine that obligates courts to follow precedents set in prior similar cases to ensure consistency and stability in judicial decisions.
    What is the ‘Dominancy Test’ and how does it differ from the ‘Holistic Test’? The Dominancy Test focuses on the dominant features of trademarks to determine similarity, while the Holistic Test considers the marks in their entirety, including minor differences. The Dominancy Test is the currently prescribed method in the Philippines.
    What is the ‘multifactor test’ for likelihood of confusion? It’s a set of criteria used to assess whether trademarks are confusingly similar, considering factors like mark similarity, product relatedness, buyer sophistication, and evidence of actual confusion.
    What was the Court’s ruling on stare decisis in this case? The Court ruled that stare decisis did not apply because the factual circumstances and legal standards differed from the Taiwan Kolin case, and blindly applying precedent would contradict current law and the specific facts of this case.
    Why was KPII’s trademark application rejected? KPII’s application was rejected because the Court found a likelihood of confusion with KECI’s existing trademarks and trade name, considering the similarity of the marks, the relatedness of goods and services, and other factors under the multifactor test.
    What is the practical implication of this ruling? This ruling reinforces the importance of case-specific analysis in trademark disputes and clarifies that stare decisis is not absolute, especially when new evidence or evolving legal standards are present. It protects established trademark owners from potentially confusing new registrations.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Kolin Electronics Co. vs. Kolin Philippines International, G.R No. 226444, July 06, 2021

  • Trademark Protection for Well-Known Marks: Likelihood of Confusion and Dilution in Unrelated Goods

    TL;DR

    The Supreme Court affirmed the denial of Suyen Corporation’s trademark application for “AGENT BOND” for hair products, finding it confusingly similar to Danjaq LLC’s internationally recognized “JAMES BOND” trademark. Even though the products are different (hair products vs. entertainment/films), the Court ruled that “AGENT BOND” could mislead consumers into believing a connection with the James Bond franchise, thus infringing on Danjaq’s trademark rights. This decision highlights that trademark protection extends beyond identical goods to prevent the dilution of well-known marks, ensuring that famous brands retain their distinctiveness and goodwill even in unrelated markets. Businesses must exercise caution when choosing marks that may evoke famous brands, even for dissimilar products, to avoid trademark disputes and protect brand integrity.

    License to Confuse? Supreme Court Refuses “AGENT BOND” Trademark, Protecting “JAMES BOND” Legacy

    Can a hair product named “AGENT BOND” coexist with the legendary “JAMES BOND” film franchise? This was the central question before the Philippine Supreme Court in the case of Suyen Corporation v. Danjaq LLC. Suyen Corporation, owner of the BENCH clothing brand, sought to register “AGENT BOND” for hair styling products. Danjaq LLC, the company behind the James Bond films, opposed, arguing trademark infringement and the potential for consumer confusion. The Intellectual Property Office (IPO) and the Court of Appeals (CA) sided with Danjaq, denying Suyen’s application. Suyen elevated the case to the Supreme Court, seeking to overturn these rulings and secure registration for its “AGENT BOND” mark.

    At the heart of the dispute lies Section 123.1(d)(iii) of the Intellectual Property Code, which prohibits the registration of a mark that “nearly resembles” a registered mark such that it is “likely to deceive or cause confusion.” The Court had to determine if “AGENT BOND” created a likelihood of confusion with “JAMES BOND,” even though they were used for different goods. Furthermore, the Court considered Section 123.1(f) of the IP Code, which protects well-known marks even for dissimilar goods, provided that the use of the new mark suggests a connection to the well-known mark and damages the interests of its owner. Danjaq argued that “JAMES BOND” is a well-known mark and that “AGENT BOND” unfairly capitalizes on its fame.

    Suyen countered by asserting that “AGENT BOND” was a suggestive mark, describing the product’s function to “bond” hair, and that consumers would not confuse it with the “JAMES BOND” franchise, especially since Suyen’s products prominently featured the BENCH and FIX trademarks. Suyen employed both the dominancy and holistic tests, arguing that “BOND” was a common word and neither “AGENT” nor “JAMES” were dominant. They also claimed the word “BOND” was diluted by numerous other trademarks. However, the Supreme Court disagreed, emphasizing the importance of “connotative comparisons and overall impressions” in trademark disputes, as highlighted in Societe Des Produits Nestle, S.A. v. Court of Appeals. The Court applied the multifactor test, derived from the Rules of Procedure for Intellectual Property Rights Cases and reinforced in Kolin Electronics, Inc. v. Kolin Philippines International, Inc., to assess the likelihood of confusion.

    The Court found that the “JAMES BOND” mark was indeed strong and well-known, citing its extensive international registration, longevity, and global recognition, including its commercial value and parodies. The degree of similarity between “AGENT BOND” and “JAMES BOND” was deemed high, not just visually, but also aurally and conceptually. The Court reasoned that the combination of “agent” and “bond,” in that specific order, inevitably evokes the iconic spy, Agent 007, also known as James Bond. Suyen’s explanation for using “AGENT BOND”—to suggest the product’s hair-binding function—was considered weak and unconvincing, especially given the common association of “bond” with adhesives, as shown in various registered trademarks like MIGHTY BOND and SURE-BOND.

    Crucially, the Court addressed the concept of ‘confusion of business,’ stating that it occurs when “products are non-competing but related enough to produce confusion of affiliation.” The Court determined that consumers might reasonably assume a connection between “AGENT BOND” hair products and the “JAMES BOND” franchise, leading to the belief that Danjaq endorsed or was affiliated with Suyen’s products. This potential “confusion of business,” as explained in UFC Philippines, Inc. v. Barrio Fiesta Mfg. Corp., was sufficient to deny registration. Furthermore, the Court addressed trademark dilution, defining it as the “lessening of the capacity of a famous mark to identify and distinguish goods or services.” Referencing Levi Strauss & Co. v. Clinton Apparelle, Inc., the Court recognized dilution by blurring, where the distinctiveness of a famous mark is impaired through association with a similar mark. The Court found that allowing “AGENT BOND” would dilute the distinctiveness of the well-known “JAMES BOND” mark, thus damaging Danjaq’s interests under Section 123.1(f) of the IP Code.

    Ultimately, the Supreme Court upheld the CA and IPO decisions, denying Suyen Corporation’s petition and reinforcing the robust protection afforded to well-known trademarks in the Philippines. The decision underscores that trademark law aims to protect the goodwill and reputation of established brands, preventing others from unfairly benefiting from their fame, even in seemingly unrelated markets.

    FAQs

    What was the main legal issue in this case? The central issue was whether Suyen Corporation’s trademark application for “AGENT BOND” for hair products should be denied due to its confusing similarity to Danjaq LLC’s well-known “JAMES BOND” trademark, primarily focusing on likelihood of confusion and trademark dilution.
    What is the Dominancy Test in trademark law? The Dominancy Test focuses on the similarity of the dominant features of competing trademarks that could cause confusion. It considers visual, aural, and connotative comparisons, and overall impressions, rather than just visual similarity.
    What is ‘confusion of business’? ‘Confusion of business’ occurs when products, even if not directly competing, are related enough that consumers might mistakenly believe they originate from the same source or are affiliated, leading to confusion about brand affiliation.
    What is trademark dilution? Trademark dilution is the weakening of a famous mark’s ability to uniquely identify goods or services, regardless of direct competition or likelihood of confusion, often through blurring (impairing distinctiveness) or tarnishment (harming reputation).
    Why was “AGENT BOND” considered confusingly similar to “JAMES BOND”? The Court found “AGENT BOND” confusingly similar due to the strong conceptual link to the well-known “JAMES BOND” character, Agent 007. The combination of “agent” and “bond” in that order strongly evokes the famous spy, creating a likelihood of confusion of business.
    What is the practical implication of this ruling for businesses? Businesses must be cautious when choosing trademarks, especially for products in different categories from well-known brands. Even if products are unrelated, a mark that evokes a famous brand can be denied registration if it risks confusion of business or trademark dilution.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Suyen Corporation v. Danjaq LLC, G.R. No. 250800, July 06, 2021

  • Settlement Prevails: When Private Agreements Render Court Decisions Moot in Intellectual Property Disputes

    TL;DR

    In a trademark dispute between footwear companies Sao Paulo Alpargatas (Havaianas) and Kentex (Havana), the Supreme Court dismissed the case as moot because the parties reached a settlement agreement after the Court of Appeals (CA) ruling but before the Supreme Court could issue its decision. The CA had previously ordered the return of seized goods, reversing the Regional Trial Court (RTC). However, with the settlement, the Supreme Court found no justiciable controversy to resolve, as the parties had privately agreed to terms ending their dispute. This decision underscores that private settlements can supersede judicial rulings, especially when parties resolve their issues outside of court, rendering further legal intervention unnecessary.

    Ceasefire in the Trademark War: How a Settlement Agreement Sidestepped a Supreme Court Showdown on ‘Havana’ vs. ‘Havaianas’

    This case, Sao Paulo Alpargatas S.A. v. Kentex Manufacturing Corporation, revolves around a trademark infringement dispute between Sao Paulo Alpargatas S.A. (SPASA), the maker of the globally recognized “Havaianas” brand, and Kentex Manufacturing Corporation, which produced “Havana” slippers. SPASA accused Kentex of trademark infringement and unfair competition, leading to search warrants being issued against Kentex’s warehouses. The Regional Trial Court (RTC) initially denied Kentex’s motion to quash these warrants, finding probable cause for trademark infringement. However, the Court of Appeals (CA) reversed the RTC, ordering the return of seized goods, arguing that Kentex possessed industrial design registrations for their “Havana” products, suggesting a legitimate business operation. SPASA then elevated the case to the Supreme Court.

    The core legal issue centered on the validity of the search warrants issued against Kentex. SPASA argued that Kentex’s “Havana” mark and designs were confusingly similar to their registered “Havaianas” trademarks, thus justifying the search warrants. They invoked the Intellectual Property (IP) Code, emphasizing their prior use and registration of the “Havaianas” trademarks and the principles of the “First-to-File” rule and the Dominancy Test in trademark law. SPASA contended that the CA erred in prioritizing Kentex’s industrial design registrations over SPASA’s established trademark rights. Kentex, on the other hand, maintained that their “Havana” brand was distinct, targeted a different market segment, and was protected by their copyright registration and industrial design registrations. They argued that the search warrants were improperly issued and infringed upon their right to conduct legitimate business.

    However, a significant event occurred after the petition reached the Supreme Court. SPASA and Kentex entered into an amicable settlement agreement. This agreement included Kentex’s admission that only SPASA had the right to sell “Havaianas” products in the Philippines, an undertaking by Kentex to respect SPASA’s intellectual property rights, and an agreement for the destruction of the seized “Havana” products. Crucially, SPASA committed to desisting from pursuing criminal, civil, and administrative cases against Kentex related to the trademark dispute. The Supreme Court highlighted the legal principle of mootness. A case becomes moot when it no longer presents a justiciable controversy due to supervening events, rendering a court decision without practical value or effect. In this instance, the settlement agreement acted as such a supervening event.

    The Court cited established jurisprudence stating that courts generally decline jurisdiction over moot cases because any judgment would lack useful purpose or practical legal effect. The settlement agreement effectively resolved the dispute between SPASA and Kentex, as both parties voluntarily agreed to terms that addressed the trademark concerns. The Supreme Court also invoked the parol evidence rule, which dictates that when an agreement is reduced to writing, the written terms are considered to contain all agreed upon terms, and no other evidence is admissible to vary its terms. Therefore, the settlement agreement, as a written contract, bound both parties and superseded the need for judicial intervention in the ongoing trademark dispute.

    Ultimately, the Supreme Court, recognizing the settlement agreement and SPASA’s manifestation that the case had become moot, dismissed the petition. The Court explicitly refrained from ruling on the substantive issues of trademark infringement, the validity of the search warrants, or the merits of the CA’s decision. The dismissal was solely based on the mootness principle arising from the parties’ private resolution. This outcome emphasizes that the judiciary’s role is to resolve actual controversies. When parties privately settle their disputes, particularly in commercial matters like intellectual property, the courts will generally respect such agreements and abstain from further adjudication if no live controversy remains.

    FAQs

    What was the central issue in this case? The main issue was whether the search warrants issued against Kentex for alleged trademark infringement were valid, and whether the Court of Appeals correctly ordered the return of seized goods.
    Who were the parties involved? The petitioner was Sao Paulo Alpargatas S.A. (SPASA), manufacturer of “Havaianas” footwear. The respondents were Kentex Manufacturing Corporation and its president, Ong King Guan, manufacturers of “Havana” footwear.
    What was the ruling of the Supreme Court? The Supreme Court dismissed the petition filed by SPASA as moot and academic.
    Why was the case dismissed as moot? The case became moot because SPASA and Kentex entered into a settlement agreement, resolving their dispute outside of court after the Court of Appeals decision but before the Supreme Court could rule on the merits.
    Did the Supreme Court decide on the trademark infringement issue? No, the Supreme Court did not rule on whether Kentex infringed on SPASA’s trademarks. The dismissal was based solely on the mootness of the case due to the settlement agreement.
    What is the practical implication of this decision? This case highlights that private settlements can effectively resolve legal disputes and render court decisions unnecessary. When parties reach a mutual agreement, courts will generally respect their autonomy and may dismiss cases as moot.
    What is the parol evidence rule mentioned in the decision? The parol evidence rule states that when parties put their agreement in writing, that written agreement is considered complete, and outside evidence cannot be used to change its terms. This rule reinforced the binding nature of the settlement agreement.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Sao Paulo Alpargatas S.A. v. Kentex Manufacturing Corporation, G.R. No. 202900, February 17, 2021

  • Trademark Registration as Key to Brand Ownership: Protecting Business Identity in the Philippines

    TL;DR

    The Supreme Court affirmed that trademark registration, not prior use alone, establishes brand ownership in the Philippines. Elarfoods, Inc., by registering its trademarks “ELARS LECHON,” “PIG DEVICE,” and “ON A BAMBOO TRAY,” rightfully owns these marks and can prevent others, like Emzee Foods, Inc., from using similar marks. This decision underscores that businesses must register their trademarks to secure exclusive rights and protect their brand identity against unfair competition and infringement. Registration provides legal certainty and safeguards a company’s goodwill and reputation in the marketplace.

    Brand Battle: Who Owns the Legacy of “Elar’s Lechon”?

    In a flavorful clash over roasted pig supremacy, Emzee Foods, Inc. and Elarfoods, Inc. locked horns in a legal dispute that reached the highest court of the land. At the heart of the contention was the ownership of the trademarks associated with the renowned “ELAR’S LECHON” brand, including “ELARS LECHON,” “PIG DEVICE,” and “ON A BAMBOO TRAY.” Elarfoods, claiming rightful ownership through registration and continuous use, accused Emzee Foods of trademark infringement and unfair competition for using similar marks like “ELARZ LECHON” and “ELAR LECHON.” Emzee Foods countered, arguing that the trademarks belonged to the Estate of the original founders, the spouses Lontoc, and not exclusively to Elarfoods. The central legal question before the Supreme Court was clear: who truly owned the “ELAR’S LECHON” legacy and had the right to protect its brand identity?

    The Supreme Court’s decision hinged on the principle of trademark registration as the primary means of acquiring ownership under the Intellectual Property Code (IP Code). The Court emphasized that since the enactment of the IP Code, the Philippines adopted the rule that rights in a mark are acquired through valid registration, shifting away from the prior emphasis on actual prior use. Section 122 of the IP Code explicitly states, “The rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law.” Elarfoods had successfully registered the subject trademarks with the Intellectual Property Office (IPO), obtaining Certificates of Registration for “ON A BAMBOO TRAY,” “ELARS LECHON,” and “ROASTED PIG DEVICE.” These registrations, the Court affirmed, created a presumption of ownership and the exclusive right to use these marks.

    Emzee Foods’ argument that the trademarks belonged to the Estate of the spouses Lontoc, the original creators of the “ELAR’S LECHON” business, was given short shrift. The Court reasoned that when the spouses Lontoc incorporated Elarfoods in 1989, they effectively transferred the business, including its goodwill and trademarks, to the newly formed corporation. The active management of Elarfoods by the spouses Lontoc and their consistent use of the trademarks in promoting the corporation’s products further solidified this implied transfer. Even without a formal written assignment of the trademarks, the Court found that the conduct of the spouses Lontoc demonstrated a clear intention to vest ownership in Elarfoods. This is consistent with Article 1624 and Article 1475 of the Civil Code, which provide that the assignment of incorporeal rights, such as unregistered trademarks, can be perfected by mere consent.

    Having established Elarfoods’ ownership, the Court then addressed the issue of unfair competition and trademark infringement. The Court applied the dominancy test to assess the likelihood of confusion between Elarfoods’ registered marks and Emzee Foods’ marks, “ELARZ LECHON” and “ELAR LECHON.” The dominancy test focuses on the dominant features of the competing marks and considers whether these similarities are likely to cause confusion among consumers. As the Supreme Court articulated in McDonald’s Corp. v. L.C. Big Mak Burger, Inc., “The dominancy test considers the dominant features in the competing marks in determining whether they are confusingly similar. Under the dominancy test, courts give greater weight to the similarity of the appearance of the product arising from the adoption of the dominant features of the registered mark, disregarding minor differences.”

    The Court found that the dominant element in both sets of marks was “ELAR.” The slight variations, such as “ELARZ” and “ELAR” versus “ELARS,” were deemed insufficient to distinguish the marks, especially considering the phonetic similarity. Both businesses were also selling the same product – lechon. This created a high likelihood of confusion of goods, where consumers might mistakenly believe Emzee Foods’ lechon was associated with or originated from Elarfoods. The Court also noted elements of unfair competition, as Emzee Foods’ packaging and signage created a general appearance similar to Elarfoods’ products, further deceiving the public. As Section 168.2 of the IP Code defines unfair competition: “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…shall be guilty of unfair competition…”

    Consequently, the Supreme Court upheld the lower courts’ rulings, finding Emzee Foods liable for both unfair competition and trademark infringement. The Court affirmed the award of exemplary damages and attorney’s fees, emphasizing the bad faith of Emzee Foods, whose officers were former employees of Elarfoods and were aware of Elarfoods’ trademarks. Crucially, the Supreme Court modified the Court of Appeals’ decision to include an injunction, ordering Emzee Foods to cease and desist from using the infringing marks. This injunction provides Elarfoods with concrete protection, preventing further unauthorized use of its trademarks and reinforcing the exclusive rights conferred by trademark registration. This case serves as a potent reminder to businesses in the Philippines: secure your brand identity through trademark registration to safeguard your market position and legacy.

    FAQs

    What was the central issue in the Emzee Foods v. Elarfoods case? The core issue was determining the rightful owner of the “ELARS LECHON” trademarks and whether Emzee Foods infringed upon these trademarks through unfair competition.
    How does one acquire trademark ownership in the Philippines according to this case? Under the Intellectual Property Code, trademark ownership is primarily acquired through registration, not merely through prior use.
    What is the dominancy test, and how was it applied in this case? The dominancy test assesses trademark similarity by focusing on the dominant features of competing marks to determine the likelihood of consumer confusion. In this case, the dominant feature “ELAR” in both marks led to a finding of similarity.
    What is the difference between trademark infringement and unfair competition? Trademark infringement involves the unauthorized use of a registered trademark, while unfair competition involves passing off one’s goods as those of another, regardless of trademark registration.
    Why was Emzee Foods found liable for unfair competition and trademark infringement? Emzee Foods used marks confusingly similar to Elarfoods’ registered trademarks for the same product (lechon), creating a likelihood of consumer confusion and unfairly competing with Elarfoods’ established brand.
    What remedies did the Supreme Court grant to Elarfoods? The Supreme Court affirmed exemplary damages and attorney’s fees and added an injunction ordering Emzee Foods to stop using the infringing marks.
    What is the key takeaway for businesses from this Supreme Court decision? Businesses must prioritize trademark registration to legally establish and protect their brand ownership and prevent others from unfairly profiting from their goodwill and reputation.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Emzee Foods, Inc. v. Elarfoods, Inc., G.R No. 220558, February 17, 2021

  • Trademark Registration as Key to Brand Protection: Elarfoods, Inc. Prevails Against Unfair Competition

    TL;DR

    The Supreme Court ruled in favor of Elarfoods, Inc., affirming that trademark rights in the Philippines are primarily acquired through registration under the Intellectual Property Code. Emzee Foods, Inc. was found liable for trademark infringement and unfair competition for using marks confusingly similar to Elarfoods’ registered “ELARS LECHON” trademarks. This decision underscores the importance of trademark registration to secure exclusive rights and prevent others from unfairly capitalizing on a brand’s goodwill. The Court upheld the injunction against Emzee Foods and the award of damages, reinforcing that businesses must respect registered trademarks and avoid practices that deceive consumers about the origin of products.

    Lechon Wars: Battling for Brand Supremacy in the Roasted Pig Market

    In a culinary clash over roasted pig supremacy, Emzee Foods, Inc. and Elarfoods, Inc. locked horns in a legal battle concerning trademark rights. The heart of the dispute lay in the marks “ELARS LECHON,” “PIG DEVICE,” and “ON A BAMBOO TRAY,” all associated with the beloved Filipino dish, lechon. Elarfoods, claiming ownership and prior registration of these marks, accused Emzee Foods of unfair competition and trademark infringement. Emzee Foods countered, arguing that the trademarks rightfully belonged to the Estate of the original creators, the spouses Lontoc, and that Elarfoods had no legitimate claim. The central legal question before the Supreme Court was clear: who rightfully owned the trademarks and was Emzee Foods infringing on those rights?

    The narrative began in 1970 when the spouses Lontoc established “ELARS Lechon.” In 1989, they incorporated Elarfoods, Inc. and continued marketing their lechon under the “ELAR’S LECHON ON A BAMBOO TRAY” brand. Elarfoods subsequently registered the trademarks with the Intellectual Property Office (IPO) in the early 2000s. Emzee Foods, without permission, began selling lechon using similar marks like “ELARZ LECHON” and “ELAR LECHON,” prompting Elarfoods to file complaints. The Bureau of Legal Affairs (BLA) of the IPO initially dismissed Elarfoods’ complaint, siding with Emzee Foods’ argument that the trademarks belonged to the Lontoc estate due to prior use. However, the IPO Director General reversed this decision, finding Emzee Foods liable. The Court of Appeals affirmed the Director General’s ruling, leading to the Supreme Court appeal by Emzee Foods.

    The Supreme Court’s analysis centered on the evolution of trademark law in the Philippines, particularly the shift brought about by the Intellectual Property Code (IP Code). Justice Gaerlan, writing for the First Division, highlighted that under the IP Code, registration is the primary means of acquiring trademark rights, departing from the previous emphasis on prior use. The Court cited the landmark case of Zuneca Pharmaceutical, et al. v. Natrapharm, Inc., which clarified this transition. Section 122 of the IP Code explicitly states, “The rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law.” This principle became the cornerstone of the Court’s decision.

    Elarfoods possessed Certificates of Registration for the subject trademarks, which, according to established jurisprudence, create a presumption of ownership and the exclusive right to use the marks. Emzee Foods failed to overcome this presumption. The Court noted that even prior to registration, Elarfoods had consistently used the trademarks since its incorporation in 1989, further solidifying their claim even under the previous legal regime that considered prior use. The Court dismissed Emzee Foods’ argument that the Lontoc Estate owned the trademarks, emphasizing that the spouses Lontoc themselves incorporated Elarfoods to carry on their business and effectively transferred the brand and associated trademarks to the corporation. The Court pointed to Jose Lontoc’s own letterhead as President of Elarfoods, promoting “ELAR LECHON on a BAMBOO TRAY” as the corporation’s brand, as compelling evidence of this transfer.

    Having established Elarfoods’ ownership, the Court then addressed the issue of unfair competition and trademark infringement. Section 168.2 of the IP Code defines unfair competition as employing deception to “pass off” goods or services as those of another with established goodwill. The Court agreed with the Court of Appeals that Emzee Foods’ use of “ELARZ LECHON” and “ELAR LECHON” on similar products constituted unfair competition. Applying the dominancy test, the Court found the marks to be confusingly similar in sight and sound to “ELARS LECHON.” The dominancy test, as explained in UFC Philippines, Inc. v. Barrio Fiesta Manufacturing Corporation, focuses on the “similarity of the prevalent or dominant features of the competing trademarks that might cause confusion…in the mind of the purchasing public.” The Court emphasized that the dominant element “ELAR” was present in both marks, and the slight variations were insufficient to distinguish them, especially in the context of lechon products.

    The Court highlighted the likelihood of both confusion of goods (consumers buying Emzee’s lechon thinking it’s Elarfoods’) and confusion of business (consumers believing a connection exists between the two companies). The visual and phonetic similarities, coupled with the identical product (lechon), created a high probability of consumer deception. As a remedy, the Court affirmed the award of exemplary damages and attorney’s fees, finding Emzee Foods’ actions to be in bad faith, particularly given the prior employment of Emzee’s officers at Elarfoods. Crucially, the Supreme Court modified the Court of Appeals’ decision to include a direct order for Emzee Foods to cease and desist from using the infringing marks, providing Elarfoods with comprehensive protection of its intellectual property rights.

    FAQs

    What was the central legal issue in this case? The core issue was determining the rightful owner of the “ELARS LECHON” trademarks and whether Emzee Foods infringed on those rights through unfair competition and trademark infringement.
    What is the dominancy test in trademark infringement cases? The dominancy test focuses on the similarity of the dominant features of competing trademarks to determine if there is a likelihood of confusion among consumers. It prioritizes visual and aural impressions over minor differences.
    What is the difference between trademark infringement and unfair competition? Trademark infringement involves the unauthorized use of a registered trademark on goods or services that is likely to cause confusion. Unfair competition is broader and includes deceptive practices to pass off one’s goods or services as those of another, regardless of trademark registration.
    How are trademark rights acquired in the Philippines under the IP Code? Under the IP Code, trademark rights are primarily acquired through registration with the Intellectual Property Office (IPO). Prior use is no longer the determining factor for ownership.
    What remedies did the Court grant to Elarfoods? The Court upheld the award of exemplary damages and attorney’s fees and issued an injunction ordering Emzee Foods to cease and desist from using the infringing marks.
    Why was Emzee Foods found liable for unfair competition? Emzee Foods was found liable because it used marks confusingly similar to Elarfoods’ registered trademarks on the same product (lechon), creating a likelihood of consumer confusion and unfairly capitalizing on Elarfoods’ established brand reputation.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Emzee Foods, Inc. v. Elarfoods, Inc., G.R. No. 220558, February 17, 2021

  • Protecting Brand Identity: Likelihood of Confusion in Trademark Infringement Cases

    TL;DR

    The Supreme Court affirmed the Court of Appeals’ decision, finding Prosel Pharmaceuticals’ brand ‘CEEGEEFER’ to be a colorable imitation of Tynor Drug House’s registered trademark ‘CHERIFER + Logo’. This means Prosel is legally prohibited from using the CEEGEEFER brand name and similar packaging due to trademark infringement. For businesses, this ruling underscores the importance of conducting thorough trademark clearance searches and creating distinctly different brand names and packaging to avoid consumer confusion and legal repercussions, especially in closely related product markets like over-the-counter vitamins.

    When Brand Names Sound Alike: Navigating the Fine Line of Trademark Infringement

    Can a brand name too similar in sound and appearance to an existing one constitute trademark infringement? This was the central question in the case of Prosel Pharmaceuticals & Distributors, Inc. v. Tynor Drug House, Inc., where the Supreme Court delved into the intricacies of trademark law. Tynor Drug House, the maker of ‘CHERIFER’ multivitamins, sued Prosel Pharmaceuticals for trademark infringement, claiming that Prosel’s ‘CEEGEEFER’ product, a children’s vitamin supplement, was confusingly similar to their registered ‘CHERIFER + Logo’ trademark. The dispute highlights the constant challenge businesses face in creating unique brand identities while operating in competitive markets, particularly in industries like pharmaceuticals where brand recognition is crucial.

    Tynor Drug House had registered its ‘CHERIFER + Logo’ trademark in 2004, featuring the word ‘CHERIFER’ along with a logo of a boy playing basketball and the slogan ‘HEIGHT IS MIGHT’. Prosel Pharmaceuticals, on the other hand, introduced ‘CEEGEEFER’, a multivitamin product, claiming its name was derived from ‘Chlorella Growth Factor’ (CGF), an ingredient in the supplement. Tynor argued that CEEGEEFER’s name, logo, and packaging were so similar to CHERIFER’s that it constituted trademark infringement and unfair competition. They pointed to phonetic similarities between ‘CHERIFER’ and ‘CEEGEEFER’, and striking visual resemblances in packaging, including a basketball-playing boy, similar color schemes, and slogan arcs.

    The legal framework for trademark infringement in the Philippines is primarily governed by the Intellectual Property Code (Republic Act No. 8293). Section 155.1 of this code specifies that trademark infringement occurs when someone uses “any reproduction, counterfeit, copy, or colorable imitation of a registered mark” in commerce, which is “likely to cause confusion, or to cause mistake, or to deceive.” The key element is the likelihood of confusion among consumers. To determine this, Philippine courts often employ two tests: the dominancy test, focusing on the dominant features of the marks, and the holistic or totality test, considering the overall impression of the marks.

    In this case, the Supreme Court leaned heavily on the dominancy test, agreeing with the Court of Appeals that both ‘CHERIFER’ and ‘CEEGEEFER’ were phonetically similar, applying the principle of idem sonans (sounding alike). The Court cited previous cases where seemingly less similar-sounding names were deemed confusingly similar. Furthermore, the Court observed the striking visual similarities between the logos and packaging. Both featured a boy in a basketball jersey and cap, performing a dunk, with slogans in an arc above, and used orange and yellow color schemes. The Supreme Court stated:

    As regards the logos used by the parties, the same are strikingly similar. A side by side comparison of the pictures in CHERIFER and CEEGEEFER show the right profile/side of a boy wearing a basketball jersey and a baseball cap shooting a basketball on a hoop with their knees slightly bent and with the words that start with the letters “H” and “M” on top in an arc that both have a different colored line in the middle. Note, too, that both packages use orange and yellow.

    Prosel Pharmaceuticals argued minor differences in the logos and product composition, emphasizing that CEEGEEFER contained Vitamin C and CGF, while CHERIFER was just a multivitamin. They also claimed their target market (mothers purchasing for children) would not be confused. However, the Court dismissed these arguments, stressing that the crucial factor is the likelihood of confusion, not actual confusion, and that even over-the-counter products sold side-by-side in drugstores could lead to consumer mistake. The Court underscored Prosel’s prior admission of resemblance between the packaging in an earlier letter as further evidence of colorable imitation.

    The dissenting opinion by Justice Leonen raised a critical point, arguing that the majority improperly dissected Tynor’s registered composite mark (‘CHERIFER + Logo’) by separately comparing ‘CEEGEEFER’ to ‘CHERIFER’ (word mark) and Prosel’s logo to the ‘HEIGHT IS MIGHT’ device, instead of assessing the overall similarity between the composite marks. The dissent also highlighted the lack of concrete evidence of actual consumer confusion or adverse impact on CHERIFER’s sales due to CEEGEEFER. Justice Leonen emphasized the importance of evidence-based standards for determining likelihood of confusion to avoid subjective judgments and undue restrictions on free trade. He argued that the ruling, in effect, granted Tynor a monopoly over elements of its composite mark beyond what was registered, potentially hindering fair competition.

    Despite the dissent, the majority ruling prevailed, reinforcing the principle that trademark infringement can be found even without identical copying, especially when there is a colorable imitation that is likely to cause confusion in the minds of ordinary purchasers. This case serves as a potent reminder for businesses to exercise caution when developing brand names and packaging, especially in product categories where similar goods are sold to the same consumer base. Thorough trademark searches and creative differentiation are not merely best practices but legal necessities to protect brand identity and avoid costly legal battles.

    FAQs

    What is trademark infringement? Trademark infringement is the unauthorized use of a registered trademark or a confusingly similar mark in a way that is likely to cause consumer confusion about the source or origin of goods or services.
    What is ‘colorable imitation’? Colorable imitation refers to a close or ingenious imitation that is calculated to deceive ordinary persons, leading them to purchase one product believing it to be another due to resemblance to the original mark.
    What are the ‘dominancy test’ and ‘holistic test’? These are tests used by Philippine courts to assess likelihood of confusion. The dominancy test focuses on the similarity of dominant features of marks, while the holistic test considers the overall impression of the marks.
    Why was ‘CEEGEEFER’ considered a colorable imitation of ‘CHERIFER’? The court found ‘CEEGEEFER’ to be phonetically similar to ‘CHERIFER’ (idem sonans) and noted striking visual similarities in packaging, logos, color schemes, and slogans, leading to a likelihood of confusion.
    What was the Supreme Court’s ruling? The Supreme Court denied Prosel Pharmaceuticals’ petition, affirming the Court of Appeals’ decision that found Prosel liable for trademark infringement and enjoined them from using the ‘CEEGEEFER’ brand. Nominal damages were reduced to P100,000.
    What is the practical implication of this case for businesses? Businesses must conduct thorough trademark searches and ensure their brand names and packaging are distinctly different from existing registered marks, especially in related product categories, to avoid legal action for trademark infringement.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Prosel Pharmaceuticals & Distributors, Inc. v. Tynor Drug House, Inc., G.R. No. 248021, September 30, 2020

  • Trademark Ownership in the Philippines: Registration vs. Prior Use Under the IP Code

    TL;DR

    In a trademark dispute between two pharmaceutical companies, the Supreme Court affirmed that under the Intellectual Property Code of the Philippines, trademark ownership is acquired through registration, not prior use. Natrapharm, Inc., as the first to register the trademark “ZYNAPSE”, rightfully prevented Zuneca Pharmaceutical from using the confusingly similar mark “ZYNAPS” even though Zuneca had used its mark earlier. However, because Zuneca was deemed a ‘prior user in good faith,’ the Court limited Natrapharm’s remedies, allowing Zuneca to continue using “ZYNAPS” but mandated both companies to clearly differentiate their products’ uses on packaging to avoid potentially dangerous medication errors among consumers.

    First to File, First in Right? Unpacking Trademark Ownership in the Philippine Pharmaceutical Market

    In the bustling marketplace of pharmaceuticals, brand recognition is critical. This case between Zuneca Pharmaceutical and Natrapharm, Inc. highlights a pivotal question: In the Philippines, who truly owns a trademark – the first to use it, or the first to register it? Both companies marketed medicines with strikingly similar names, “ZYNAPS” and “ZYNAPSE”, leading to a legal battle over trademark infringement. The heart of the dispute lies in understanding how Philippine law defines and protects trademark ownership, especially when public health is at stake.

    The Supreme Court, in its decision, firmly grounded trademark ownership in the principle of registration under the Intellectual Property Code (IP Code). Justice Caguioa, writing for the Court, meticulously traced the evolution of trademark law in the Philippines, starting from the Spanish Royal Decree of 1888, through Act No. 666 and Republic Act No. 166, culminating in the IP Code. The analysis underscored a significant shift: from a system where ownership was rooted in prior use to one where registration is the cornerstone of trademark rights. Section 122 of the IP Code is unequivocal: “Rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law.”

    The Court acknowledged Zuneca’s argument as the prior user of “ZYNAPS” since 2004, predating Natrapharm’s “ZYNAPSE” registration in 2007. Zuneca invoked precedents like Berris Agricultural Co., Inc. v. Abyadang and E.Y. Industrial Sales, Inc. v. Shen Dar Electricity and Machinery Co., Ltd., arguing that prior use established their ownership. However, the Supreme Court distinguished these cases, clarifying that while these earlier decisions considered prior use, they were inconsistent with the prevailing IP Code regime that prioritizes registration. The Court explicitly rectified statements in Berris that suggested ownership is acquired through registration and actual use, clarifying that under the IP Code, ownership is acquired solely by registration.

    However, the Court recognized a crucial caveat: the concept of a ‘prior user in good faith’ as outlined in Section 159.1 of the IP Code. This provision states that a registered mark has no effect against a person who, in good faith, was using a similar mark before the filing or priority date of the registered mark. While Natrapharm, as the registered owner of “ZYNAPSE”, generally holds the exclusive right to prevent others from using confusingly similar marks, Zuneca, as a prior user in good faith of “ZYNAPS”, was deemed exempt from trademark infringement liability. This exemption, however, is not without limitations; Zuneca’s right to use “ZYNAPS” is tied to its existing business and cannot be transferred independently.

    Despite finding Zuneca not liable for infringement due to its status as a prior user in good faith, the Court recognized the significant public health risk posed by the confusingly similar drug names. To mitigate potential medication errors, the Court mandated both Zuneca and Natrapharm to include prominent, plain-language statements on their product packaging clearly differentiating the medical conditions each drug treats and explicitly stating what each drug is not intended to treat. This measure underscores the Court’s balancing act: upholding the registration-based trademark system while safeguarding public health.

    The ruling in Zuneca Pharmaceutical v. Natrapharm, Inc. reinforces the Philippines’ adherence to the first-to-file rule in trademark ownership. It clarifies that while prior use is no longer the determinant of ownership, the IP Code acknowledges and protects ‘prior users in good faith’ to a limited extent. The case also serves as a stark reminder of the critical importance of trademark registration for businesses, especially in sensitive sectors like pharmaceuticals, and highlights the judiciary’s role in balancing intellectual property rights with broader public interest concerns.

    What was the key issue in this case? The central issue was determining trademark ownership between two pharmaceutical companies using confusingly similar marks for different medicines: Zuneca (prior user of “ZYNAPS”) and Natrapharm (registered owner of “ZYNAPSE”).
    What did the Supreme Court decide? The Supreme Court ruled in favor of Natrapharm, affirming that trademark ownership in the Philippines is acquired through registration under the Intellectual Property Code, not merely by prior use.
    Was Zuneca found liable for trademark infringement? No, Zuneca was not found liable for trademark infringement because it was considered a ‘prior user in good faith,’ allowing it to continue using its mark despite Natrapharm’s registration.
    What is the ‘first-to-file’ rule? The ‘first-to-file’ rule means that in the Philippines, the first entity to register a trademark generally obtains ownership and exclusive rights to that mark, regardless of who used it first.
    What is the ‘prior user in good faith’ exception? Section 159.1 of the IP Code provides a limited exception, protecting those who were already using a mark in good faith before someone else registered a confusingly similar mark. This protection allows continued use but does not confer full ownership.
    Why was this case significant for public health? Because the case involved medicines with similar names but different uses, the potential for medication errors and harm to public health was a major concern, leading the Court to mandate clear labeling for both products.
    What is the practical takeaway for businesses? Businesses in the Philippines should prioritize trademark registration to secure ownership rights. While prior use offers limited protection, registration is the definitive path to exclusive trademark rights.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D., AND STYLE OF ZUNECA PHARMACEUTICAL VS. NATRAPHARM, INC., G.R. No. 211850, September 08, 2020

  • Corporate Name Protection: Prior Use Prevails in Trademark Disputes Among Educational Institutions

    TL;DR

    The Supreme Court upheld the Securities and Exchange Commission’s (SEC) decision ordering De La Salle Montessori International of Malolos, Inc. to change its corporate name. The Court ruled that using “De La Salle” was confusingly similar to the names of established De La Salle schools, violating corporate name protection laws. This case reinforces that prior registration and use of a corporate name, especially a distinctive phrase like “De La Salle” in the education sector, grants protection against confusingly similar names, even if other elements are added.

    When Similarity Confuses: Protecting Brand Identity in Education

    Can a school adopt a corporate name that includes a phrase already strongly associated with another group of educational institutions? This is the central question in the case of De La Salle Montessori International of Malolos, Inc. versus the established De La Salle Brothers schools. Petitioner, De La Salle Montessori, argued that its name, while including “De La Salle,” was distinct due to the addition of “Montessori International of Malolos, Inc.” and that the term “De La Salle” was generic, akin to “Lyceum.” However, the Supreme Court disagreed, siding with the SEC and the Court of Appeals in finding that the name was indeed confusingly similar and infringed upon the prior rights of the De La Salle Brothers group.

    The legal framework for this decision rests on Section 18 of the Corporation Code, which prohibits corporate names that are “identical or deceptively or confusingly similar” to existing corporations or protected names. This provision aims to prevent public confusion, protect corporate identities, and ensure fair business practices. As the Supreme Court reiterated, citing Western Equipment and Supply Co. v. Reyes, a corporate name is a property right, protected against infringement just like tangible assets. The Court in Philips Export B.V. v. Court of Appeals further emphasized the importance of a corporate name as an essential element of a corporation’s identity and franchise.

    Sec. 18. Corporate name. – No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name.

    To determine if a corporate name violates Section 18, the Supreme Court applied a two-pronged test from Philips Export B.V.: (1) prior right of the complainant over the corporate name, and (2) the proposed name is either identical or confusingly similar. In this case, the De La Salle Brothers and associated schools clearly established prior right, having registered their corporate names decades before De La Salle Montessori. Registration dates presented by the respondents underscored their seniority, some dating back to the 1960s, while the petitioner was registered in 2007.

    The crucial issue then became whether “De La Salle Montessori International of Malolos, Inc.” was confusingly similar. The Court considered the dominant phrase, “De La Salle,” and the nature of the businesses – both operating educational institutions. Petitioner’s arguments that “Montessori International of Malolos, Inc.” differentiated its name and that “De La Salle” was derived from the French word for “classroom” were rejected. The Court affirmed the SEC’s finding that these additions were insufficient to dispel confusion, especially in the education sector where consumers might reasonably assume affiliation or branch status.

    The Court distinguished this case from Lyceum of the Philippines, Inc. v. Court of Appeals, where “Lyceum” was deemed a generic term for educational institutions, not entitled to exclusive use. In contrast, “De La Salle” was not considered generic or merely descriptive of educational services. Instead, the Court agreed with the SEC that “De La Salle” is suggestive, even arbitrary, and has acquired distinctiveness through the respondents’ long-standing use and reputation. The Court highlighted that unlike “Lyceum,” the phrase “De La Salle” is strongly linked to a specific educational tradition and group of schools in the Philippines.

    Ultimately, the Supreme Court deferred to the expertise of the SEC, the agency mandated to regulate corporate names and prevent confusion. The Court emphasized the SEC’s authority and the respect accorded to its factual findings, especially when affirmed by the Court of Appeals. This decision underscores the importance of conducting thorough trademark searches before registering a corporate name, particularly in sectors where brand recognition and reputation are paramount. It also clarifies that adding descriptive or geographic terms to a dominant, protected phrase may not be sufficient to avoid infringement if confusion is likely, especially in related industries.

    FAQs

    What was the main legal issue? Whether the corporate name “De La Salle Montessori International of Malolos, Inc.” was confusingly similar to the names of existing “De La Salle” educational institutions, violating Section 18 of the Corporation Code.
    What did the SEC and the courts decide? The SEC and the courts ruled that the name was indeed confusingly similar and ordered De La Salle Montessori to change its corporate name.
    Why was “De La Salle” considered protectable and not generic? Unlike “Lyceum,” which is generic for schools, “De La Salle” is not a generic term for education. It is suggestive and has acquired distinctiveness through long use by the De La Salle Brothers group.
    What test did the court use to determine confusing similarity? The court used the test from Philips Export B.V., requiring prior right over the name and a finding of identical or confusingly similar names.
    What is the practical implication of this case? Businesses, especially educational institutions, must conduct thorough trademark searches and avoid using names confusingly similar to existing, established brands, even with added descriptive terms. Prior registration and use are key to corporate name protection.
    Does this case mean no new school can use “Montessori” and be named De La Salle? Not necessarily. The ruling is specific to the entire name and the likelihood of confusion. A different name structure or field of operation might yield a different result, but using the dominant “De La Salle” in education remains highly risky without consent from the established De La Salle schools.

    For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: De La Salle Montessori International of Malolos, Inc. v. De La Salle Brothers, Inc., G.R. No. 205548, February 07, 2018