LEVIS STRAUSS V. VOGUE TRADING G.R. No. 132993 June 29, 2005 Petitioner: LEVI STRAUSS (PHILS.

), INC Respondent: VOGUE TRADERS CLOTHING COMPANY Topic: Jurisdiction, Infringement and Remedies SUMMARY: Levis sought the cancellation of the certificates of registration of Vogue for being too confusingly similar with their trademark (LEVIs V. LIVES). It also filed an application for search warrant for items which the RTC approved thus, they goods bearing the imitations of the trademark were seized. Vogue meanwhile filed a complaint for damages in the RTC against Levis stating that they already have registration for their trade marks which did not have any semblance with Levis products. RTC however granted a writ of preliminary injunction and enjoined the respondent from manufacturing, producing, selling, etc its goods. RTC also denied respondents MR stating that the preliminary injunction was not a prejudgment on the case. On appe al to CA however, it reversed the decisions of the RTC. There were four issues here: Primary Jurisdiction: While an administrative cancellation of a registered trademark, on any of the grounds under Section 17 of R.A. No. 166, is within the ambit of the BPTTT, an action for infringement or any other incidental remedy sought is within the jurisdiction of the ordinary courts. An action for infringement or unfair competition, including the available remedies of injunction and damages, in the regular courts can proceed independently or simultaneously with an action for the administrative cancellation of a registered trademark in the BPTTT. AS applied here, just because an interpartes case was filed beforehand in the BPTTT does not preclude Levis from filing a counterclaim of copyright infringement in the case for damages with the RTC filed by Vogue. Defective CNFS with CA: It was indeed defective since the lawyer of Vogue did not have authority to execute the same. Waiver of right to present evidence: The argument that the respondents lawyer thought that the hearing was on another day is not sufficient reason. Effect of Preliminary Injunction: The writ did not have the effect of prejudging or disposing of the merits of the case, but merely enjoined the respondents acts of manufacturing, distributing, selling, or offering for sale the jeans which had allegedly incorporated exact or colorable imitation s of the products of Levis. It was merely an interlocutory order to preserve status quo. FACTS: 1972: Per "Trademark, Technical Data, and Technical Assistance Agreement," Levi Strauss & Co., the principal based in Delaware, United States of America, granted petitioner Levi Strauss (Phils.) a non-exclusive license to use LEVIS trademark, design, and name in the manufacturing, marketing, distribution, and sale of its clothing and other goods. Licensing agreement was renewed several times, Levi Strauss & Co. obtained certificates of registration from the BPTTT for the following trademarks: "LEVIS"; "501"; "Two Horse Design"; "Two Horse Label"; "Two Horse Patch"; "Two Horse Label with Patterned Arcuate Design"; "Arcuate Design"; and the composite trademarks, namely, "Arcuate," "Tab," and "Two Horse Patch." Petitioner discovered the existence of some trademark registrations belonging to respondent (Vogue Traders) which, in its view, were confusingly similar to its trademarks. Leviss instituted two cases before the BPTTT for the cancellation of respondents trademark registrations. o Inter Partes Case No. 4216: a petition for cancellation of Certificate of Registration No. 53918 (for "LIVES") o Inter Partes Case No. 4217, a petition for cancellation of Certificate of Registration No. 8868 (for "LIVES" Label Mark). Petitioner then applied for the issuance of a search warrant on the premises of respondent Vogue Traders Clothing Company, owned by one Tony Lim, with the RTC of Manila. RTC issued the search warrants based on its finding of probable cause that the respondent had violated Article 189 of the Revised Penal Code in manufacturing, selling, and incorporating designs or marks in its jeans which were confusingly similar to petitioners "LEVIs jeans." Search warrants commanded the seizure of certain goods bearing copies or imitations of the trademarks which belonged to petitioner. December 13, 1995: Search warrants were enforced and several goods belonging to respondent were seized. Meanwhile, the criminal case against Tony Lim were dismissed. February 1, 1996: Vogue filed a complaint for damages in the RTC Manila (Branch 50) against petitioner. o Complaint alleged that since January 1, 1988, respondent, through Antonio Sevilla, (located in Tondo Manila) had been a lawful assignee and authorized user of both the the trademark "LIVES" and "LIVES LABEL MARK" and of their have Certificate of Registrations. It also held the copyright registrations of "LIVES ORIGINAL JEANS," its pocket design, and hand tag. o That the goods, articles, and effects seized from respondents establishment were manufactured and used in its legitimate business of manufacturing and selling of the duly registered trademark "LIVES" and "LIVES ORIGINAL JEANS. o Trademarks of respondent did not have any deceptive resemblance with the trademarks of petitioner. Respondent sought to recover the seized assorted sewing materials, equipment, and finished products or the value thereof, in case the same had been destroyed or impaired as a result of the seizure. It also prayed that for compensatory damages (320K + 11,000/day until items were restored), exemplary damages and attorneys fees. Levis meanwhile answered that respondents brand LIVEs infringed upon its licensed brand name LEVIs. It sought to cancel respondents Copyright Registration No. I-3838 and enjoin the respondent from further manufacturing, selling, offering for sale, and advertising the denim jeans or slacks by using a design substantially, if not exactly similar to, or a colorable imitation of the trademarks of petitioner. RTC MANILAS (Branch 23) DECISION: Forwarded the case to the Executive Judge (RTC of Manila, Branch 23) for re-raffle among the courts designated as Special Courts to try and decide cases involving violations of Intellectual Property Rights. Case was eventually raffled to Branch 1 . RTC MANILAS (Branch 1) DECISION: Vogue failed to appear and declared their right to present evidence has been waived. Trial court found that the respondent intended to appropriate, copy, and slavishly imitate the genuine appearance of authentic LEVIs jeans and pass off its LIVEs jeans as genuine LEVIs jeans. o Vogue did not present any evidence that obtained Certificates of Registration for the trademarks "LIVES," "LIVES LABEL MARK," "LIVES ORIGINAL JEANS" as well as for the patch pocket design and hand tag. o Vogues backpocket design is not copyrightable, as it is neither an original work nor a novel design. It is a copy of LS & Co./LSPIs Arcuate trademark (first used by LS & Co. worldwide in 1873) and the Philippines Registration of which is based on LS & Co.s US Certificate of Registration registered in 1943. Thus, no rights attendant to a copyright can ever attach to plaintiffs infringing backpocket design. o It could not have been coincidence that Vogues LIVES jeans use a trademark, symbol or design which is substantially, if not exactly similar to, or a colorable imitation of LS & CO./LSPI trademarks, since there is a practically limitless array of other marks, words, numbers, devices, symbols and designs which plaintiff could have used on its products to identify and distinguish them from those of defendant and other manufacturers. o Through more than a centurys use and continuous substantial promotions and advertising of the LEVIs TRADEMARKS on its produc ts on jeans and trousers in particular LS & Co. has cultivated, gained and established an invaluable goodwill in its name "LEVI s STRAUSS & COMPANY" and in the products which carry such name and the LEVIs TRADEMARKS.

If Vogue continues to manufacture and use the trademark or a colorable imitation of it, it will continue to have a free ride on, and erode such invaluable goodwill and reputation by the mere effortless expedient of imitating the overall visual impression of genuine LEVIs JEANS on its own design. o In consonance with Section 3 (a), (b) and (c), Rule 58 of the Rules, Levis is thus entitled to the ancillary relief (preliminary injunction to restrain Vogue from manufacturing, distributing, selling etc.) demanded either for a limited period or perpetually. Vogue is directed to execute a bond (500,000) to the party enjoined to the effect that defendant will pay to plaintiff all damages it may sustain by reason of the injunction if the court should finally decide that defendant is not entitled thereto. RTC denied the motion for reconsideration considering that the injunctive order sought to be reconsidered is merely provisional and does not dispose of the case on the merits. It would not amount to a prejudgment considering that the defendant still has the burden of proving during trial on the merits that it is entitled to protection and that confusion does, in fact, or likely to exist. CA Decision: Reversed RTC. Levis MR also denied. o

ISSUES: 1. Whether or not CA erred in holding that the doctrine of primary jurisdiction operates to suspend any and all proceedings in the civil case, particularly the ability of the RTC to issue preliminary injunctive relief and whether judge committed abuse of discretion in granting such relief. 2. Whether or not CA erred in failing to hold that the Ceritificate against forum shopping filed by Vogue to its petition for certiotari is defective. 3. Whether or not there was GADALEJ when the trial court held that respondent waived its right to adduce evidence in support of the preliminary injunctive relief. 4. Whether or not the preliminary injunctive order prejudges the case HELD: WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals dated August 13, 1997 and its Resolution dated March 5, 1998 are REVERSED and SET ASIDE. The Regional Trial Court of Manila, Branch 1 is ORDERED to proceed with the hearing of Civil Case No. 96-76944 with dispatch. No costs. First Issue: Primary Jurisdiction (most important) Petitioners Contention: It erred in applying the "doctrine of primary jurisdiction." The appeals court declared that the trial court never had the authority to hear and grant petitioners prayer for injunctive relief nor to proceed with the hearing of the case in view of the pendency of the two inter partes cases. Petitioner is a holder of Certificate of Registration No. 1379-A for its Levis trademarks. The registration gives rise to a presumption of its validity and the right to the exclusive use of the same. As set forth in Section 17 of Republic Act (R.A.) No. 166 or "The Trademark Law," an entity having a duly registered trademark can file a suit against another entity for the protection of its right. Sec. 17 enumerates the grounds for cancellation which include the tradename being already a common descriptive name, abandonment, registration was fraudulently obtained, misrepresentation of the source of goods, and cancellation was provided in the Act. Section 27 thereof states that the proper Regional Trial Court shall have jurisdiction over the damage suits. Conrad and Company, Inc. v. Court of Appeals, (as reiterated in the case of Shangri-La International Hotel Management Ltd. v. Court of Appeals): the Court clarified that while an administrative cancellation of a registered trademark, on any of the grounds under Section 17 of R.A. No. 166, is within the ambit of the BPTTT, an action for infringement or any other incidental remedy sought is within the jurisdiction of the ordinary courts. o An application with BPTTT for an administrative cancellation of a registered trade mark cannot per se have the effect of restraining or preventing the courts from the exercise of their lawfully conferred jurisdiction. A contrary rule would unduly expand the doctrine of primary jurisdiction which, simply expressed, would merely behoove regular courts, in controversies involving specialized disputes, to defer to the findings or resolutions of administrative tribunals on certain technical matters. The passage of Republic Act No. 8293, otherwise known as the "Intellectual Property Code of the Philippines," expanded the rights accorded to an owner of a registered trademark. Sections 151 (2), 156, and 161 (did not include the excerpt since it is included in our readings) Finally, Rule 8, Section 7 of the Regulations on Inter Partes Proceedings, provides that the filing of a suit to enforce the registered mark with the proper court or Bureau shall exclude any other court or agency from assuming jurisdiction over a subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to cancel the mark with the Bureau shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to same registered mark may be decided. (Emphasis supplied) An action for infringement or unfair competition, including the available remedies of injunction and damages, in the regular courts can proceed independently or simultaneously with an action for the administrative cancellation of a registered trademark in the BPTTT. As applied to the present case, petitioners prior filing of two inter partes cases against the respondent before the BPTTT for the cancellation of the latters trademark registrations, namely, "LIVES" and "LIVES Label Mark," does not preclude petitioners right (as a defend ant) to include in its answer (to respondents complaint for damages in RTC Case in Branch 50) a counterclaim for infringement with a prayer for the issuance of a writ of preliminary injunction. Second: CFNS (CrimPro issue so short only) Note every initiatory pleading must be accompanied by a CNFS executed by a duly authorized person. Failure to comply with the requirements in ROC shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice. The requirement of certification against forum shopping under the Rules is to be executed by the petitioner, or in the case of a corporation, its duly authorized director or officer, but not petitioners counsel whose professional services have been engage d to handle the subject case. The reason is that it is the petitioner who has personal knowledge whether there are cases of similar nature pending with the other courts, tribunals, or agencies. Thus, in the present case, CA should have outrightly dismissed the petition for certiorari filed by the respondent (as therein petitioner in the appeals court) due to the defective certification of non-forum shopping. The certification made by Atty. Soriano, counsel for the respondent, who is not one of its duly authorized directors or officers, is defective. Even if Atty. Soriano was the "in-house counsel," the fact remains that no board resolution, or even a Secretarys Certificate containing the board resolution, was submitted to show that he was indeed authorized to file the said petition in the Court of Appeals. Third Issue: Waiver of right

The records show that respondent, through its former counsel, Atty. Alfonso R. Yatco, was present during the hearing on November 6, 1996. The counsels for both parties had been duly notified in open court. However, on December 4, 1996, Atty. Yatco failed to appear without proferring any valid reason which prompted the trial court to issue an order that respondent was deemed to have waived its right to present evidence. Respondent explained to the trial court that its former counsel, Atty. Yatco, had honestly thought that the December 4, 1996 hearing had been rescheduled to December 11, 1996 per agreement with the petitioners counsel. This is not a sufficient ground. It was correct for the trial court, upon motion of petitioner, to consider the matter submitted for resolution on the basis of petitioners evidence . Respondent cannot find solace in its lame excuse of honest mistake which was, in fact, negligence and lack of vigilance.

Fourth: Pre-judgment of the case Petitioner claims that the assailed orders of the trial court did not prejudge the case. On the other hand, respondent counters that the trial courts order dated December 10, 1996 amounted to a prejudgment of the case, to wit: that its LIVEs backpocket design was not copyrightable because it was neither an original work nor a novel design; that it was a copy or slavish imitation of petitioners LEVIs Arcuate trade mark; and that no rights attendant to a copyright can ever attach to respondents backpocket design The trial court granted petitioners prayer for the issuance of a writ of preliminary injunction in its answer with counterclaim (to respondents complaint for damages). The writ did not have the effect of prejudging or disposing of the merits of the case, but merely enjoined the respondents acts of manufacturing, distributing, selling, or offering for sale the jeans which had allegedly incorporated ex act or colorable imitations of the products belonging to petitioner. The Order denying the respondents motion for reconsideration categorically stated that the said Order did not amount to a prejudgment of the case. Petitioner has yet to establish during the trial that it is entitled to a permanent injuncti on by reason of respondents confusingly similar LIVES products. Otherwise, the trial court could declare that the LIVES trademark belonging to respondent was not confusingly similar with the LEVIs trademark of petitioner. A writ of preliminary injunction is generally based solely on initial and incomplete evidence adduced by the applicant (herein petitioner). The evidence submitted during the hearing of the incident is not conclusive, for only a "sampling" is needed to give the trial court an idea of the justification for its issuance pending the decision of the case on the merits. As such, the findings of fact and opinion of a court when issuing the writ of preliminary injunction are interlocutory in nature. Moreover, the sole object of a preliminary injunction is to preserve the status quo until the merits of the case can be heard. Section 4 of Rule 58 of the Rules of Civil Procedure gives the trial courts sufficient discretion to evaluate the conflicting claims in an application for a provisional writ which often involves a factual determination, the appellate courts generally will not interfere in the absence of manifest abuse of such discretion. A writ of preliminary injunction would become a prejudgment of a case only when it grants the main prayer in the complaint or responsive pleading, so much so that there is nothing left for the trial court to try except merely incidental matters. Such fact does not obtain in the present case.