224 SCRA 437 Mercatile Law Intellectual Property Law Law on Trademarks, ServiceMarks and Trade Names

Unfair Competition
FACTS:
In September 1988, San Miguel Corporation (SMC) sued Asia Brewery Inc. for allegedly infringing upon their trademark
on their beer product popularly known as San Miguel Pale Pilsen; that Asia Brewerys Beer na Beer product, by
infringing upon SMCs trademark has committed unfair competition as Beer na Beer creates confusion between the two
products. The RTC ruled in favor of Asia Brewery but the Court of Appeals reversed the RTC.
ISSUE: Whether or not Asia Brewery infringed upon the trademark of SMC.
HELD: No. Both products are manufactured using amber colored steinie bottles of 320 ml. Both were labeled in a
rectangular fashion using white color paint. But other than these similarities, there are salient differences between the two.
As found by the Supreme Court, among others they are the following:
1. The dominant feature of SMCs trademark are the words San Miguel Pale Pilsen while that of Asia Brewerys
trademark is the word Beer. Nowhere in SMCs product can be seen the word Beer nor in Asia Brewerys product can
be seen the words San Miguel Pale Pilsen. Surely, someone buying Beer na Beer cannot mistake it as San Miguel
Pale Pilsen beer.
2. The bottle designs are different. SMCs bottles have slender tapered neck while that of Beer na Beer are fat. Though
both beer products use steinie bottles, SMC cannot claim that Asia Brewery copied the idea from SMC. SMC did not
invent but merely borrowed the steinie bottle from abroad and SMC does not have any patent or trademark to protect the
steinie bottle shape and design.
3. In SMC bottles, the words pale pilsen are written diagonally while in Beer na Beer, the words pale pilsen are
written horizontally. Further, the words pale pilsen cannot be said to be copied from SMC for pale pilsen are generic
words which originated from Pilsen, Czechoslovakia. Pilsen is a geographically descriptive word and is non-registrable.
4. SMC bottles have no slogans written on them while Asia Brewerys bottles have a copyrighted slogan written on them
that is Beer na Beer.
5. In SMC bottles, it is expressly labeled as manufactured by SMC. In Asia Brewery beer products, it is likewise expressly
labeled as manufactured by Asia Brewery. Surely, there is no intention on the part of Asia Brewery to confuse the public
and make it appear that Beer na Beer is a product of SMC, a long-established and more popular brand.

Justice Cruz Dissenting:

A number of courts have held that to determine whether a trademark has been infringed, we must consider the mark as a
whole and not as dissected. If the buyer is deceived, it is attributable to the marks as a totality, not usually to any part of it.
The court therefore should be guided by its first impression, for a buyer acts quickly and is governed by a casual glance,
the value of which may be dissipated as soon as the court assumes to analyze carefully the respective features of the mark.
(Del Monte vs CA & Sunshine Sauce)

Philippine Jurisprudence: The Skechers Trademark Case (2011)

Skechers, USA, Inc. v. Inter Pacific Industrial Trading Corp.
G.R. No. 164321 (2011)
Skechers, USA Inc. is the owner of the registered trademarks Skechers and S within an oval logo.

Skechers filed a criminal case for trademark infringement against several store-owners that were selling shoes branded as
Strong and bearing a similar S logo. The Regional Trial Court (RTC) issued search warrants, allowing the National
Bureau of Investigation (NBI) to raid the stores and confiscate 6,000 pairs of shoes.
The accused moved to quash the warrants, saying that there was no confusing similarity between the Skechers and the
Strong brands.
The RTC granted the motion to quash and ordered the NBI to return the seized goods. The court said that the two brands
had glaring differences and that an ordinary prudent consumer would not mistake one for the other.
On certiorari, the Court of Appeals (CA) affirmed the RTC ruling.
The matter was elevated to the Supreme Court (SC).

Issue: Did the accused commit trademark infringement?

Yes, the accused is guilty of trademark infringement.
Under the IP Code (RA No. 8293), trademark infringement is committed when:
Remedies; Infringement. Any person who shall, without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any
goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with whichsuch use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection are
committed regardless of whether there is actual sale of goods or services using the infringing material. (emphasis
supplied)
There is trademark infringement when the second mark used is likely to cause confusion. There are two tests to determine
this:
1. Dominancy Test the court focuses on the similarity of the dominant features of the marks that might cause confusion
in the mind of the consumer. Duplication or imitation is not necessary. Even accidental confusion may be cause for
trademark infringement. More consideration is given to the aural and visual impressions created by the marks on the
buyers and less weight is given to factors like price, quality, sales outlets and market segments.
Applied to this case: The SC found that the use of the S symbol by Strong rubber shoes infringes on the
registered Skechers trademark. It is the most dominant feature of the mark -- one that catches the buyers eye first. Even if
the accused claims that there was a difference because the S used by Skechers is found inside an oval, the fact that the
accused used the dominant S symbol already constitutes trademark infringement.
The SC disagreed with the CA reasoning that the S symbol is already used for many things, including the Superman
symbol. Even if this is true, the fact that Strong used same stylized S symbol as that of theSkechers brand makes this a
case of trademark infringement. The same font and style was used in this case. The Superman S symbol is clearly
different from the S in this case.
2. Holistic or Totality Test the court looks at the entirety of the marks as applied to the products, including the labels
and packaging. You must not only look at the dominant features but all other features appearing on both marks.
Applied to this case: Both RTC and CA used the Holistic Test to rule that there was no infringement. Both courts argued
the following differences:

The mark S found in Strong Shoes is not enclosed in an oval design.

The word Strong is conspicuously placed at the backside and insoles.

The hang tags and labels attached to the shoes bears the word Strong for respondent and Skechers U.S.A. for
private complainant;

Strong shoes are modestly priced compared to the costs of Skechers Shoes.
Also using the Holistic Test, the SC corrected the lower courts and ruled that the striking similarities between the products
outweigh the differences argued by the respondents:

Same color scheme of blue, white and gray;

Same wave-like pattern on the midsole and the outer sole;

Same elongated designs at the side of the midsole near the heel;

Same number of ridges on the outer soles (five at the back and six in front);

Same location of the stylized S symbol;

The words "Skechers Sport Trail" at the back of the Skechers shoes and "Strong Sport Trail" at the back of
the Strong shoes, using the same font, color, size, direction and orientation;

Same two grayish-white semi-transparent circles on top of the heel collars.

The features and overall design of the two products are so similar that there is a high likelihood of confusion.
Two products do not need to be identical, they just need to be similar enough to confuse the ordinary buyer in order to
constitute trademark infringement (Converse Rubber Corporation v. Jacinto Rubber & Plastic Co., 186 Phil. 85 [1980]).
Also, the difference in price cannot be a defense in a case for trademark infringement (McDonalds Corporation v. L.C.
Big Mak Burger, Inc., 480 Phil. 402, 434 [2004]).
There are two types of confusion:
1.
Product Confusion where the ordinary prudent purchaser would be induced to purchase on product in the
belief that he was buying another.
2.
Source or Origin Confusion although the goods are different, the use of the mark causes the consumer to
assume that both products originate from the same source.
Trademark law protects the owner not only from product confusion but also from source confusion. Protection is not
limited to the same or similar products but extends to all cases where:

The consumer is misled into thinking that the trademark owner extended his business into a new field;

The consumer is misled into thinking that the trademark owner is in any way connected to the infringers
activities; or

The infringement forestalls the normal potential expansion of the trademark owners business.
Trademark law does not only protect the owners reputation and goodwill, it also protects the consumers from fraud and
confusion.
In this case, it is clear that there was an attempt to copy the trademark owners mark and product design. In trademark
infringement cases, you do not need to copy another's mark or product exactly. Colorable imitation is enough.

Fredco Manufacturing Corporation v. President and Fellows of Harvard College

G.R. No. 185917, 1 June 2011
By: Erwin V. Zamora
Fredco Manufacturing Corporation (Fredco) filed before the Bureau of Legal Affairs of the Philippine Intellectual
Property Office a Petition for Cancellation of Registration No. 56561 issued to President and Fellows of Harvard College
(Harvard University) for the mark Harvard Veritas Shield Symbol under classes 16, 18, 21, 25 and 28.
Fredco claimed that Harvard University had no right to register the mark in class 25, since its Philippine registration was
based on a foreign registration. Thus, Harvard University could not have been considered as a prior adopter and user of
the mark in the Philippines.
Fredco explained that the mark was first used in the Philippines by its predecessor-in-interest New York Garments as early
as 1982, and a certificate of registration was issued in 1988 for goods under class 25. Although the registration was
cancelled for the non-filing of an affidavit of use, the fact remained that the registration preceded Harvard Universitys use
of the subject mark in the Philippines.
Harvard University, on the other hand claimed that the name and mark Harvard was adopted in 1639 as the name of
Harvard College of Cambridge, Massachusetts, USA. The marks Harvard and Harvard Veritas Shield Symbol, had
been used in commerce since 1872, and was registered in more than 50 countries.
The Bureau of Legal Affairs ruled in favor of Fredco and ordered the cancellation of Registration No. 56561. It found
Fredco to be the prior user and adopter of the mark Harvard in the Philippines. On appeal, the Office of the Director
General of the Intellectual Property Office reversed the BLA ruling on the ground that more than the use of the trademark
in the Philippines, the applicant must be the owner of the mark sought to be registered. Fredco, not being the owner of the
mark, had no right to register it.

The Court Appeals affirmed the decision of the Office of the Director General. Fredco appealed the decision with the
Supreme Court. In its appeal, Fredco insisted that the date of actual use in the Philippines should prevail on the issue of
who had a better right to the mark.
The Supreme Court ruled:
The petition has no merit.
Under Section 2 of Republic Act No. 166, as amended (R.A. No. 166), before a trademark can be registered, it must have
been actually used in commerce for not less than two months in the Philippines prior to the filing of an application for its
registration. While Harvard University had actual prior use of its marks abroad for a long time, it did not have actual prior
use in the Philippines of the mark "Harvard Veritas Shield Symbol" before its application for registration of the mark
"Harvard" with the then Philippine Patents Office. However, Harvard University's registration of the name "Harvard" is
based on home registration which is allowed under Section 37 of R.A. No. 166. As pointed out by Harvard University in
its Comment:
Although Section 2 of the Trademark law (R.A. 166) requires for the registration of trademark that the applicant thereof
must prove that the same has been actually in use in commerce or services for not less than two (2) months in the
Philippines before the application for registration is filed, where the trademark sought to be registered has already been
registered in a foreign country that is a member of the Paris Convention, the requirement of proof of use in the commerce
in the Philippines for the said period is not necessary. An applicant for registration based on home certificate of
registration need not even have used the mark or trade name in this country.
In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. 8293), "[m]arks registered under Republic Act
No. 166 shall remain in force but shall be deemed to have been granted under this Act x x x," which does not require
actual prior use of the mark in the Philippines. Since the mark "Harvard Veritas Shield Symbol" is now deemed granted
under R.A. No. 8293, any alleged defect arising from the absence of actual prior use in the Philippines has been cured by
Section 239.2.
The Supreme Court further ruled that Harvard University is entitled to protection in the Philippines of its trade name
Harvard even without registration of such trade name in the Philippines. It explained:
There is no question then, and this Court so declares, that "Harvard" is a well-known name and mark not only in the
United States but also internationally, including the Philippines. The mark "Harvard" is rated as one of the most famous
marks in the world. It has been registered in at least 50 countries. It has been used and promoted extensively in numerous
publications worldwide. It has established a considerable goodwill worldwide since the founding of Harvard University
more than 350 years ago. It is easily recognizable as the trade name and mark of Harvard University of Cambridge,
Massachusetts, U.S.A., internationally known as one of the leading educational institutions in the world. As such, even
before Harvard University applied for registration of the mark "Harvard" in the Philippines, the mark was already
protected under Article 6bis and Article 8 of the Paris Convention.

Mc Donalds Corp vs LC Big Mak Burger Inc.

(GR No 143993, Aug 18, 2004)
The SC held that the respondent is liable for infringement because it violated Sec 155.1 of the IPC which stated that any
person who shall, without the consent of the owner of the registered mark use in commerce any reproduction, counterfeit,
copy or colorable imitation of a registered mark or the same container or a dominant feature thereof in connection with the
sale, offering for sale, distribution, advertising of any goods or services on or in connection with which such use is likely
to cause confusion, or to cause mistake, or to deceive.
Addendum:
TEST OF TRADEMARK INFRINGEMENT
1) Dominancy Test consists in seeking out the main, essential or dominant features of a mark.
2) Holistic Test takes stock of the other features of a mark, taking into consideration the entirety of the marks.
DIFFERENTIATED FROM UNFAIR COMPETITION
1) Cause of action: in infringement, the cause of action is the unauthorized use of a registered trademark; in unfair
competition, it is the passing off of ones goods as those of another merchant.
2) Fraudulent intent is not necessary in infringement, but necessary in UC.
3) Registration of trademarks: in infringement, it is a pre-requisite; in UC, it is not required.
4) Class of goods involved: in infringement, the goods must be of similar class; in UC, the goods need not be of the same

class.
v infringement is a form of unfair competition

REMEDIES AVAILABLE IN CASE OF INFRINGEMENT OF A REGISTERED MARK

a) Sue for damages (Sec. 156.1);
b) Have the infringing goods impounded (Sec. 156.2);
c) Ask for double damages (Sec. 156.3)
d) Ask for injunction (156.4)
e) Have the infringing goods disposed of outside the channels of commerce (Sec. 157.1)
f) Have the infringing goods destroyed (Sec. 157.1)
g) File criminal action (Sec. 170);
h) Administrative Sanctions
G.R. No. 158589 June 27, 2006
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC REUNIES, S.A.,
(now known as PHILIP MORRIS PRODUCTS S.A.), Petitioners,
vs.
FORTUNE TOBACCO CORPORATION, Respondent.
FACTS: Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States of America, is
the registered owner of the trademark MARK VII for cigarettes. Benson & Hedges (Canada), Inc., a subsidiary of Philip
Morris, Inc., is the registered owner of the trademark MARK TEN for cigarettes. and another subsidiary of Philip
Morris, Inc., the Swiss company Fabriques de Tabac Reunies, S.A., is the assignee of the trademark LARK, which was
originally registered in 1964 by Ligget and Myers Tobacco Company.
On the other hand, respondent Fortune Tobacco Corporation, a company organized in the Philippines, manufactures and
sells cigarettes using the trademark MARK.
Petitioners would insist on their thesis of infringement since respondents mark MARK for cigarettes is confusingly or
deceptively similar with their duly registered MARK VII, MARK TEN and LARK marks likewise for
cigarettes. To them, the word MARK would likely cause confusion in the trade, or deceive purchasers, particularly as to
the source or origin of respondents cigarettes.
The likelihood of confusion is the gravamen of trademark infringement. But likelihood of confusion is a relative
concept, the particular, and sometimes peculiar, circumstances of each case being determinative of its existence. Thus, in
trademark infringement cases, more than in other kinds of litigation, precedents must be evaluated in the light of each
particular case.
Fortune Maintains, the registration of trademark cannot be deemed conclusive as to the actual use of such trademark in
local commerce. As it were, registration does not confer upon the registrant an absolute right to the registered mark. The
certificate of registration merely constitutes prima facie evidence that the registrant is the owner of the registered mark.
Evidence of non-usage of the mark rebuts the presumption of trademark ownership, as what happened here when
petitioners no less admitted not doing business in this country.
ISSUE: (1) whether or not petitioners, as Philippine registrants of trademarks, are entitled to enforce trademark rights in
this country (YES)
(2) whether or not respondent has committed trademark infringement against petitioners by its use of the mark MARK
for its cigarettes, hence liable for damages. (NO)
HELD: As a condition, their trademarks in this country must show proof, that their country grants substantially similar
rights and privileges to Filipino Citizens. The actual use of the marks in local commerce and trade before they may be
registered, as to ownership is required. Mere selling are the allegations of petitioners in their complaint as well as in every
petition filed in the Supreme Court indicating that they are not doing business in the Philis. Such allegations are not
constituted as breach of such right. Thus, there is no infringement.
Note: In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the dominancy
test and the holistic test.
The dominancy test, sets sight on the similarity of the prevalent features of the competing trademarks that might cause
confusion and deception, thus constitutes infringement. Under this norm, the question at issue turns on whether the use of
the marks involved would be likely to cause confusion or mistake in the mind of the public or deceive purchasers.
In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the products, including the
labels and packaging, in determining confusing similarity.

SOCIETE DES PRODUITS NESTLE, S.A., Petitioner, vs. MARTIN T. DY, JR., Respondent.

G.R. No. 172276 - August 8, 2010 - CARPIO, J.:

Facts

Martin Dy Jr., imports and repackages Sunny Powdered Milk from Australia and sells them under the name
NANNY. NANNY retails primarily in parts of Visayas and Mindanao.

Nestle, is a foreign corporation organized under the laws of Switzerland and owns the trademark NAN for its
line of infant formula. Nestle allocates a substantial amount of resources for the production and promotion of the
NAN product line.

Nestle wrote a letter to Dy Jr. asking him to stop using the name NANNY, they allege that it infringes upon the
trademark ownership of Nestle over the trademark NAN. He refused to recognize Nestles request and
continued using the name NANNY.

Nestle filed a case with the RTC of Dumaguete City. The case was dismissed and elevated to the CA, the appellate
court remanded the case to the trial court fo adjudication. It was assigned to the RTC-Cebu Special Commercial
Court.

The Commercial Court found Dy Jr., liable for trademark infringement on the grounds that even though it is not
apparent in the packaging of NANNY, the name itself relates to a childs nurse, which is closely related to the
product line of NAN catering to infants.

The case was then raised to the CA, which reversed the RTCs ruling. It stated that even though there is similarity
in the products, the lower price range of NANNY cautions and reminds the purchaser that it is different from
NAN, which is more expensive. This does not create confusion as to the consumers because the apparent
difference in price shows that they are two different products.

Issue
W/N the product name NANNY infringes upon the trademark of Nestles NAN.
Held
Yes, the decision of the RTC is reinstated. There is no question that the product will cause confusion within the
consuming public. The primary test that should be used in determining trademark infringement in this case is the
dominancy test. It is apparent that upon first glance or even at close inspection that there is confusing similarity between
NAN and NANNY. This is sufficient to establish trademark infringement.
The dominancy test states:
-- xx -This Court x x x has relied on the dominancy test rather than the holistic test. 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. Courts will consider more the aural and visual impressions created by the marks in the public
mind, giving little weight to factors like prices, quality, sales outlets and market segments.
-- xx -It has been consistently held that the question of infringement of a trademark is to be determined by the
test of dominancy. Similarity in size, form and color, while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant features of another, and confusion and deception is
likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary that
the infringing label should suggest an effort to imitate.
It is incorrect to consider the prices, which the CA utilized in its determination. It is enough that if both products
were placed in front of the consumer, confusion will most likely arise. From this either similarities or differences in the
logo or design are immaterial to the fact that co-relation and subsequently confusion, has been created in the minds of the
consumer.

-- xx -The Court agrees with the lower courts that there are differences between NAN and NANNY: (1) NAN is
intended for infants while NANNY is intended for children past their infancy and for adults; and (2) NAN
is more expensive than NANNY. However, as the registered owner of the "NAN" mark, Nestle should be
free to use its mark on similar products, in different segments of the market, and at different price levels.