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Republic Act No.

8293

AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND


ESTABLISHING THE INTELLECTUAL PROPERTY OFFICE, PROVIDING FOR
ITS POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the


Philippines in Congress assembled::

PART I THE INTELLECTUAL PROPERTY OFFICE


Section 1. Title. - This Act shall be known as the
"Intellectual Property Code of the Philippines."
Section 2. Declaration of State Policy. - The
State recognizes that an effective intellectual
and industrial property system is vital to the
development of domestic and creative activity,
facilitates transfer of technology, attracts
foreign investments, and ensures market access for
our products. It shall protect and secure the
exclusive rights of scientists, inventors,
artists and other gifted citizens to their
intellectual property and creations, particularly
when beneficial to the people, for such periods
as provided in this Act.
The use of intellectual property bears a social
function. To this end, the State shall promote the
diffusion of knowledge and information for the
promotion of national development and progress and
the common good.
It is also the policy of the State to streamline
administrative procedures of registering patents,
trademarks and copyright, to liberalize the
registration on the transfer of technology, and
to enhance the enforcement of intellectual
property rights in the Philippines. (n)
Section 3. International Conventions and
Reciprocity. - Any person who is a national or who
is domiciled or has a real and effective
industrial establishment in a country which is a
party to any convention, treaty or agreement
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relating to intellectual property rights or the
repression of unfair competition, to which the
Philippines is also a party, or extends reciprocal
rights to nationals of the Philippines by law,
shall be entitled to benefits to the extent
necessary to give effect to any provision of such
convention, treaty or reciprocal law, in addition
to the rights to which any owner of an
intellectual property right is otherwise entitled
by this Act. (n)
A. Intellectual Property Rights
Section 4. Definitions. - 4.1. The term
"intellectual property rights" consists of:
a) Copyright and Related Rights;
b) Trademarks and Service Marks;
c) Geographic Indications;
d) Industrial Designs;
e) Patents;
f) Layout-Designs (Topographies) of Integrated
Circuits; and
g) Protection of Undisclosed Information (n,
TRIPS).
4.2. The term "technology transfer arrangements"
refers to contracts or agreements involving the
transfer of systematic knowledge for the
manufacture of a product, the application of a
process, or rendering of a service including
management contracts; and the transfer,
assignment or licensing of all forms of
intellectual property rights, including licensing
of computer software except computer software
developed for mass market.
4.3. The term "Office" refers to the Intellectual
Property Office created by this Act.

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4.4. The term "IPO Gazette" refers to the gazette
published by the Office under this Act. (n)
MIGHTY CORPORATION and LA CAMPANA FABRICA DE
TABACO, INC. vs. E. & J. GALLO
WINERY and THE ANDRESONS GROUP, INC.

In this petition for review on certiorari under


Rule 45, petitioners Mighty Corporation and La
Campana Fabrica de Tabaco, Inc. (La Campana) seek
to annul, reverse and set aside: (a) the November
15, 2001 decision1[1] of the Court of Appeals (CA)
in CA-G.R. CV No. 65175 affirming the November 26,
1998 decision,2[2] as modified by the June 24,
1999 order,3[3] of the Regional Trial Court of
Makati City, Branch 57 (Makati RTC) in Civil Case
No. 93-850, which held petitioners liable for, and
permanently enjoined them from, committing
trademark infringement and unfair competition,
and which ordered them to pay damages to
respondents E. & J. Gallo Winery (Gallo Winery)
and The Andresons Group, Inc. (Andresons); (b) the
July 11, 2002 CA resolution denying their motion
for reconsideration4[4] and (c) the aforesaid
Makati RTC decision itself.
I.
The Factual Background

Respondent Gallo Winery is a foreign corporation


not doing business in the Philippines but
organized and existing under the laws of the State
of California, United States of America (U.S.),
where all its wineries are located. Gallo Winery
produces different kinds of wines and brandy
products and sells them in many countries under
different registered trademarks, including the
GALLO and ERNEST & JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has
been Gallo Winerys exclusive wine importer and

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distributor in the Philippines since 1991, selling
these products in its own name and for its own
account.5[5]
Gallo Winerys GALLO wine trademark was registered
in the principal register of the Philippine Patent
Office (now Intellectual Property Office) on
November 16, 1971 under Certificate of
Registration No. 17021 which was renewed on
November 16, 1991 for another 20 years.6[6] Gallo
Winery also applied for registration of its ERNEST
& JULIO GALLO wine trademark on October 11, 1990
under Application Serial No. 901011-00073599-PN
but the records do not disclose if it was ever
approved by the Director of Patents.7[7]
On the other hand, petitioners Mighty Corporation
and La Campana and their sister company, Tobacco
Industries of the Philippines (Tobacco
Industries), are engaged in the cultivation,
manufacture, distribution and sale of tobacco
products for which they have been using the GALLO
cigarette trademark since 1973. 8[8]

The Bureau of Internal Revenue (BIR) approved


Tobacco Industries use of GALLO 100s cigarette
mark on September 14, 1973 and GALLO filter
cigarette mark on March 26, 1976, both for the
manufacture and sale of its cigarette products.
In 1976, Tobacco Industries filed its
manufacturers sworn statement as basis for BIRs
collection of specific tax on GALLO
cigarettes.9[9]
On February 5, 1974, Tobacco Industries applied
for, but eventually did not pursue, the
registration of the GALLO cigarette trademark in

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the principal register of the then Philippine
Patent Office.10[10]
In May 1984, Tobacco Industries assigned the GALLO
cigarette trademark to La Campana which, on July
16, 1985, applied for trademark registration in
the Philippine Patent Office.11[11] On July 17,
1985, the National Library issued Certificate of
Copyright Registration No. 5834 for La Campanas
lifetime copyright claim over GALLO cigarette
labels.12[12]

Subsequently, La Campana authorized Mighty


Corporation to manufacture and sell cigarettes
bearing the GALLO trademark.13[13] BIR approved
Mighty Corporations use of GALLO 100s cigarette
brand, under licensing agreement with Tobacco
Industries, on May 18, 1988, and GALLO SPECIAL
MENTHOL 100s cigarette brand on April 3,
1989.14[14]
Petitioners claim that GALLO cigarettes have been
sold in the Philippines since 1973, initially by
Tobacco Industries, then by La Campana and finally
by Mighty Corporation.15[15]

On the other hand, although the GALLO wine


trademark was registered in the Philippines in
1971, respondents claim that they first introduced
and sold the GALLO and ERNEST & JULIO GALLO wines
in the Philippines circa 1974 within the then U.S.
military facilities only. By 1979, they had
expanded their Philippine market through
authorized distributors and independent
outlets.16[16]

Respondents claim that they first learned about


the existence of GALLO cigarettes in the latter

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part of 1992 when an Andresons employee saw such
cigarettes on display with GALLO wines in a Davao
supermarket wine cellar section.17[17] Forthwith,
respondents sent a demand letter to petitioners
asking them to stop using the GALLO trademark, to
no avail.
II.
The Legal Dispute

On March 12, 1993, respondents sued petitioners


in the Makati RTC for trademark and tradename
infringement and unfair competition, with a prayer
for damages and preliminary injunction.
Respondents charged petitioners with violating
Article 6bis of the Paris Convention for the
Protection of Industrial Property (Paris
Convention)18[18] and RA 166 (Trademark
Law),19[19] specifically, Sections 22 and 23 (for
trademark infringement),20[20] 29 and 3021[21]
(for unfair competition and false designation of
origin) and 37 (for tradename
infringement).22[22] They claimed that
petitioners adopted the GALLO trademark to ride
on Gallo Winerys GALLO and ERNEST & JULIO GALLO
trademarks established reputation and popularity,
thus causing confusion, deception and mistake on
the part of the purchasing public who had always
associated GALLO and ERNEST & JULIO GALLO
trademarks with Gallo Winerys wines. Respondents
prayed for the issuance of a writ of preliminary
injunction and ex parte restraining order, plus
P2 million as actual and compensatory damages, at
least P500,000 as exemplary and moral damages, and

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at least P500,000 as attorneys fees and litigation
expenses.23[23]
In their answer, petitioners alleged, among other
affirmative defenses, that: petitioners GALLO
cigarettes and Gallo Winerys wines were totally
unrelated products; Gallo Winerys GALLO trademark
registration certificate covered wines only, not
cigarettes; GALLO cigarettes and GALLO wines were
sold through different channels of trade; GALLO
cigarettes, sold at P4.60 for GALLO filters and
P3 for GALLO menthols, were low-cost items
compared to Gallo Winerys high-priced luxury wines
which cost between P98 to P242.50; the target
market of Gallo Winerys wines was the middle or
high-income bracket with at least P10,000 monthly
income while GALLO cigarette buyers were farmers,
fishermen, laborers and other low-income workers;
the dominant feature of the GALLO cigarette mark
was the rooster device with the manufacturers name
clearly indicated as MIGHTY CORPORATION while, in
the case of Gallo Winerys wines, it was the full
names of the founders-owners ERNEST & JULIO GALLO
or just their surname GALLO; by their inaction and
conduct, respondents were guilty of laches and
estoppel; and petitioners acted with honesty,
justice and good faith in the exercise of their
right to manufacture and sell GALLO cigarettes.

In an order dated April 21, 1993,24[24] the Makati


RTC denied, for lack of merit, respondents prayer
for the issuance of a writ of preliminary
injunction,25[25] holding that respondents GALLO
trademark registration certificate covered wines
only, that respondents wines and petitioners
cigarettes were not related goods and respondents
failed to prove material damage or great
irreparable injury as required by Section 5, Rule
58 of the Rules of Court.26[26]

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On August 19, 1993, the Makati RTC denied, for
lack of merit, respondents motion for
reconsideration. The court reiterated that
respondents wines and petitioners cigarettes were
not related goods since the likelihood of
deception and confusion on the part of the
consuming public was very remote. The trial court
emphasized that it could not rely on foreign
rulings cited by respondents because the[se] cases
were decided by foreign courts on the basis of
unknown facts peculiar to each case or upon
factual surroundings which may exist only within
their jurisdiction. Moreover, there [was] no
showing that [these cases had] been tested or
found applicable in our jurisdiction.27[27]

On February 20, 1995, the CA likewise dismissed


respondents petition for review on certiorari,
docketed as CA-G.R. No. 32626, thereby affirming
the Makati RTCs denial of the application for
issuance of a writ of preliminary injunction
against petitioners.28[28]

After trial on the merits, however, the Makati


RTC, on November 26, 1998, held petitioners liable
for, and permanently enjoined them from,
committing trademark infringement and unfair
competition with respect to the GALLO trademark:

WHEREFORE, judgment is rendered in favor of the


plaintiff (sic) and against the defendant (sic),
to wit:
a. permanently restraining and enjoining
defendants, their distributors, trade outlets,
and all persons acting for them or under their
instructions, from (i) using E & Js registered
trademark GALLO or any other reproduction,
counterfeit, copy or colorable imitation of said
trademark, either singly or in conjunction with
other words, designs or emblems and other acts of
similar nature, and (ii) committing other acts of
unfair competition against plaintiffs by
manufacturing and selling their cigarettes in the

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domestic or export markets under the GALLO
trademark.
b. ordering defendants to pay plaintiffs

(i) actual and compensatory damages for the injury


and prejudice and impairment of plaintiffs
business and goodwill as a result of the acts and
conduct pleaded as basis for this suit, in an
amount equal to 10% of FOURTEEN MILLION TWO
HUNDRED THIRTY FIVE THOUSAND PESOS
(PHP14,235,000.00) from the filing of the
complaint until fully paid;

(ii) exemplary damages in the amount of


PHP100,000.00;

(iii) attorneys fees and expenses of litigation


in the amount of PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED.29[29]

On June 24, 1999, the Makati RTC granted


respondents motion for partial reconsideration
and increased the award of actual and compensatory
damages to 10% of P199,290,000 or
P19,929,000.30[30]

On appeal, the CA affirmed the Makati RTC decision


and subsequently denied petitioners motion for
reconsideration.

III.

The Issues
Petitioners now seek relief from this Court
contending that the CA did not follow prevailing
laws and jurisprudence when it held that: [a] RA
8293 (Intellectual Property Code of the
Philippines [IP Code]) was applicable in this
case; [b] GALLO cigarettes and GALLO wines were
identical, similar or related goods for the reason
alone that they were purportedly forms of vice;

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[c] both goods passed through the same channels
of trade and [d] petitioners were liable for
trademark infringement, unfair competition and
damages.31[31]
Respondents, on the other hand, assert that this
petition which invokes Rule 45 does not involve
pure questions of law, and hence, must be
dismissed outright.
IV.

Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CAS FACTUAL FINDINGS
As a general rule, a petition for review on
certiorari under Rule 45 must raise only questions
of law32[32] (that is, the doubt pertains to the
application and interpretation of law to a certain
set of facts) and not questions of fact (where the
doubt concerns the truth or falsehood of alleged
facts),33[33] otherwise, the petition will be
denied. We are not a trier of facts and the Court
of Appeals factual findings are generally
conclusive upon us.34[34]

This case involves questions of fact which are


directly related and intertwined with questions
of law. The resolution of the factual issues
concerning the goods similarity, identity,
relation, channels of trade, and acts of trademark
infringement and unfair competition is greatly
dependent on the interpretation of applicable
laws. The controversy here is not simply the
identity or similarity of both parties trademarks
but whether or not infringement or unfair
competition was committed, a conclusion based on
statutory interpretation. Furthermore, one or

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more of the following exceptional circumstances
oblige us to review the evidence on record:35[35]
(1) the conclusion is grounded entirely on
speculation, surmises, and conjectures;
(2) the inference of the Court of Appeals from
its findings of fact is manifestly mistaken,
absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a
misapprehension of facts;
(5) the appellate court, in making its
findings, went beyond the issues of the
case, and the same are contrary to the
admissions of both the appellant and the
appellee;
(6) the findings are without citation of
specific evidence on which they are based;
(7) the facts set forth in the petition as
well as in the petitioner's main and reply
briefs are not disputed by the respondents;
and
(8) the findings of fact of the Court of
Appeals are premised on the absence of
evidence and are contradicted [by the
evidence] on record.36[36]
In this light, after thoroughly examining the
evidence on record, weighing, analyzing and
balancing all factors to determine whether
trademark infringement and/or unfair competition
has been committed, we conclude that both the
Court of Appeals and the trial court veered away
from the law and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE

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We note that respondents sued petitioners on March
12, 1993 for trademark infringement and unfair
competition committed during the effectivity of
the Paris Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26,
1998, petitioners were held liable not only under
the aforesaid governing laws but also under the
IP Code which took effect only on January 1,
1998,37[37] or about five years after the filing
of the complaint:

Defendants unauthorized use of the GALLO trademark


constitutes trademark infringement pursuant to
Section 22 of Republic Act No. 166, Section 155
of the IP Code, Article 6bis of the Paris
Convention, and Article 16 (1) of the TRIPS
Agreement as it causes confusion, deception and
mistake on the part of the purchasing
public.38[38] (Emphasis and underscoring
supplied)

The CA apparently did not notice the error and


affirmed the Makati RTC decision:
In the light of its finding that appellants use
of the GALLO trademark on its cigarettes is likely
to create confusion with the GALLO trademark on
wines previously registered and used in the
Philippines by appellee E & J Gallo Winery, the
trial court thus did not err in holding that
appellants acts not only violated the provisions
of the our trademark laws (R.A. No. 166 and R.A.
Nos. (sic) 8293) but also Article 6bis of the Paris
Convention.39[39] (Emphasis and underscoring
supplied)
We therefore hold that the courts a quo erred in
retroactively applying the IP Code in this case.
It is a fundamental principle that the validity
and obligatory force of a law proceed from the
fact that it has first been promulgated. A law
that is not yet effective cannot be considered as

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conclusively known by the populace. To make a law
binding even before it takes effect may lead to
the arbitrary exercise of the legislative
power.40[40] Nova constitutio futuris formam
imponere debet non praeteritis. A new state of the
law ought to affect the future, not the past. Any
doubt must generally be resolved against the
retroactive operation of laws, whether these are
original enactments, amendments or repeals.41[41]
There are only a few instances when laws may be
given retroactive effect,42[42] none of which is
present in this case.
The IP Code, repealing the Trademark Law,43[43]
was approved on June 6, 1997. Section 241 thereof
expressly decreed that it was to take effect only
on January 1, 1998, without any provision for
retroactive application. Thus, the Makati RTC and
the CA should have limited the consideration of
the present case within the parameters of the
Trademark Law and the Paris Convention, the laws
in force at the time of the filing of the
complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION

Although the laws on trademark infringement and


unfair competition have a common conception at
their root, that is, a person shall not be
permitted to misrepresent his goods or his
business as the goods or business of another, the
law on unfair competition is broader and more
inclusive than the law on trademark infringement.
The latter is more limited but it recognizes a
more exclusive right derived from the trademark
adoption and registration by the person whose
goods or business is first associated with it. The
law on trademarks is thus a specialized subject
distinct from the law on unfair competition,

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although the two subjects are entwined with each
other and are dealt with together in the Trademark
Law (now, both are covered by the IP Code). Hence,
even if one fails to establish his exclusive
property right to a trademark, he may still obtain
relief on the ground of his competitors unfairness
or fraud. Conduct constitutes unfair competition
if the effect is to pass off on the public the
goods of one man as the goods of another. It is
not necessary that any particular means should be
used to this end.44[44]
In Del Monte Corporation vs. Court of
Appeals,45[45] we distinguished trademark
infringement from unfair competition:
(1) Infringement of trademark is the
unauthorized use of a trademark, whereas
unfair competition is the passing off of
one's goods as those of another.
(2) In infringement of trademark fraudulent
intent is unnecessary, whereas in unfair
competition fraudulent intent is
essential.
(3) In infringement of trademark the prior
registration of the trademark is a
prerequisite to the action, whereas in
unfair competition registration is not
necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,46[46] an
international agreement binding on the
Philippines and the United States (Gallo Winerys
country of domicile and origin) prohibits the
[registration] or use of a trademark which
constitutes a reproduction, imitation or
translation, liable to create confusion, of a mark
considered by the competent authority of the
country of registration or use to be well-known

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in that country as being already the mark of a
person entitled to the benefits of the [Paris]
Convention and used for identical or similar
goods. [This rule also applies] when the essential
part of the mark constitutes a reproduction of any
such well-known mark or an imitation liable to
create confusion therewith. There is no time limit
for seeking the prohibition of the use of marks
used in bad faith.47[47]
Thus, under Article 6bis of the Paris Convention,
the following are the elements of trademark
infringement:
(a) registration or use by another person of
a trademark which is a reproduction,
imitation or translation liable to create
confusion,

(b) of a mark considered by the competent


authority of the country of registration or
use48[48] to be well-known in that country
and is already the mark of a person entitled
to the benefits of the Paris Convention, and
(c) such trademark is used for identical or
similar goods.

On the other hand, Section 22 of the Trademark Law


holds a person liable for infringement when, among
others, he uses without the consent of the
registrant, any reproduction, counterfeit, copy
or colorable imitation of any registered mark or
tradename in connection with the sale, offering
for sale, or advertising of any goods, business
or services or in connection with which such use
is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or
origin of such goods or services, or identity of
such business; or reproduce, counterfeit, copy or
colorably imitate any such mark or tradename and
apply such reproduction, counterfeit, copy or
colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with

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such goods, business or services.49[49] Trademark
registration and actual use are material to the
complaining partys cause of action.
Corollary to this, Section 20 of the Trademark
Law50[50] considers the trademark registration
certificate as prima facie evidence of the
validity of the registration, the registrants
ownership and exclusive right to use the trademark
in connection with the goods, business or services
as classified by the Director of Patents51[51] and
as specified in the certificate, subject to the
conditions and limitations stated therein.
Sections 2 and 2-A52[52] of the Trademark Law
emphasize the importance of the trademarks actual
use in commerce in the Philippines prior to its
registration. In the adjudication of trademark
rights between contending parties, equitable
principles of laches, estoppel, and acquiescence
may be considered and applied.53[53]
Under Sections 2, 2-A, 9-A, 20 and 22 of the
Trademark Law therefore, the following constitute
the elements of trademark infringement:
(a) a trademark actually used in commerce in
the Philippines and registered in the
principal register of the Philippine Patent
Office

(b) is used by another person in connection


with the sale, offering for sale, or
advertising of any goods, business or services
or in connection with which such use is likely
to cause confusion or mistake or to deceive
purchasers or others as to the source or
origin of such goods or services, or identity
of such business; or such trademark is
reproduced, counterfeited, copied or
colorably imitated by another person and such

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reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints,
packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or
services as to likely cause confusion or
mistake or to deceive purchasers,
(c) the trademark is used for identical or similar
goods, and
(d) such act is done without the consent of
the trademark registrant or assignee.

In summary, the Paris Convention protects well-


known trademarks only (to be determined by
domestic authorities), while the Trademark Law
protects all trademarks, whether well-known or
not, provided that they have been registered and
are in actual commercial use in the Philippines.
Following universal acquiescence and comity, in
case of domestic legal disputes on any conflicting
provisions between the Paris Convention (which is
an international agreement) and the Trademark law
(which is a municipal law) the latter will
prevail.54[54]
Under both the Paris Convention and the Trademark
Law, the protection of a registered trademark is
limited only to goods identical or similar to
those in respect of which such trademark is
registered and only when there is likelihood of
confusion. Under both laws, the time element in
commencing infringement cases is material in
ascertaining the registrants express or implied
consent to anothers use of its trademark or a
colorable imitation thereof. This is why
acquiescence, estoppel or laches may defeat the
registrants otherwise valid cause of action.
Hence, proof of all the elements of trademark
infringement is a condition precedent to any
finding of liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE

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TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents own judicial admission, the GALLO
wine trademark was registered in the Philippines
in November 1971 but the wine itself was first
marketed and sold in the country only in 1974 and
only within the former U.S. military facilities,
and outside thereof, only in 1979. To prove
commercial use of the GALLO wine trademark in the
Philippines, respondents presented sales invoice
no. 29991 dated July 9, 1981 addressed to Conrad
Company Inc., Makati, Philippines and sales
invoice no. 85926 dated March 22, 1996 addressed
to Andresons Global, Inc., Quezon City,
Philippines. Both invoices were for the sale and
shipment of GALLO wines to the Philippines during
that period.55[55] Nothing at all, however, was
presented to evidence the alleged sales of GALLO
wines in the Philippines in 1974 or, for that
matter, prior to July 9, 1981.
On the other hand, by testimonial evidence
supported by the BIR authorization letters, forms
and manufacturers sworn statement, it appears that
petitioners and its predecessor-in-interest,
Tobacco Industries, have indeed been using and
selling GALLO cigarettes in the Philippines since
1973 or before July 9, 1981.56[56]
In Emerald Garment Manufacturing Corporation vs.
Court of Appeals,57[57] we reiterated our rulings
in Pagasa Industrial Corporation vs. Court of
Appeals,58[58] Converse Rubber Corporation vs.
Universal Rubber Products, Inc.,59[59] Sterling
Products International, Inc. vs. Farbenfabriken
Bayer Aktiengesellschaft,60[60] Kabushi Kaisha

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Isetan vs. Intermediate Appellate Court,61[61]
and Philip Morris vs. Court of Appeals,62[62]
giving utmost importance to the actual commercial
use of a trademark in the Philippines prior to its
registration, notwithstanding the provisions of
the Paris Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained
to agree with petitioner's contention that private
respondent failed to prove prior actual commercial
use of its LEE trademark in the Philippines before
filing its application for registration with the
BPTTT and hence, has not acquired ownership over
said mark.

Actual use in commerce in the Philippines is an


essential prerequisite for the acquisition of
ownership over a trademark pursuant to Sec. 2 and
2-A of the Philippine Trademark Law (R.A. No. 166)
x x x

xxx xxx xxx


The provisions of the 1965 Paris Convention for
the Protection of Industrial Property relied upon
by private respondent and Sec. 21-A of the
Trademark Law (R.A. No. 166) were sufficiently
expounded upon and qualified in the recent case
of Philip Morris, Inc. v. Court of Appeals (224
SCRA 576 [1993]):

xxx xxx xxx


Following universal acquiescence and comity, our
municipal law on trademarks regarding the
requirement of actual use in the Philippines must
subordinate an international agreement inasmuch
as the apparent clash is being decided by a
municipal tribunal (Mortisen vs. Peters, Great
Britain, High Court of Judiciary of Scotland,
1906, 8 Sessions, 93; Paras, International Law and
World Organization, 1971 Ed., p. 20). Withal, the
fact that international law has been made part of

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the law of the land does not by any means imply
the primacy of international law over national law
in the municipal sphere. Under the doctrine of
incorporation as applied in most countries, rules
of international law are given a standing equal,
not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have
the capacity to sue for infringement irrespective
of lack of business activity in the Philippines
on account of Section 21-A of the Trademark Law
but the question of whether they have an exclusive
right over their symbol as to justify issuance of
the controversial writ will depend on actual use
of their trademarks in the Philippines in line
with Sections 2 and 2-A of the same law. It is
thus incongruous for petitioners to claim that
when a foreign corporation not licensed to do
business in the Philippines files a complaint for
infringement, the entity need not be actually
using the trademark in commerce in the
Philippines. Such a foreign corporation may have
the personality to file a suit for infringement
but it may not necessarily be entitled to
protection due to absence of actual use of the
emblem in the local market.

xxx xxx xxx


Undisputably, private respondent is the senior
registrant, having obtained several registration
certificates for its various trademarks LEE, LEE
RIDERS, and LEESURES in both the supplemental and
principal registers, as early as 1969 to 1973.
However, registration alone will not suffice. In
Sterling Products International, Inc. v.
Farbenfabriken Bayer Aktiengesellschaft (27 SCRA
1214 [1969]; Reiterated in Kabushi Isetan vs.
Intermediate Appellate Court (203 SCRA 583 [1991])
we declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched
because it has come down through the years is that
actual use in commerce or business is a

20 | P a g e
prerequisite in the acquisition of the right of
ownership over a trademark.

xxx xxx xxx

The credibility placed on a certificate of


registration of one's trademark, or its weight as
evidence of validity, ownership and exclusive use,
is qualified. A registration certificate serves
merely as prima facie evidence. It is not
conclusive but can and may be rebutted by
controverting evidence.

xxx xxx xxx


In the case at bench, however, we reverse the
findings of the Director of Patents and the Court
of Appeals. After a meticulous study of the
records, we observe that the Director of Patents
and the Court of Appeals relied mainly on the
registration certificates as proof of use by
private respondent of the trademark LEE which, as
we have previously discussed are not sufficient.
We cannot give credence to private respondent's
claim that its LEE mark first reached the
Philippines in the 1960's through local sales by
the Post Exchanges of the U.S. Military Bases in
the Philippines (Rollo, p. 177) based as it was
solely on the self-serving statements of Mr.
Edward Poste, General Manager of Lee (Phils.),
Inc., a wholly owned subsidiary of the H.D. Lee,
Co., Inc., U.S.A., herein private respondent.
(Original Records, p. 52) Similarly, we give
little weight to the numerous vouchers
representing various advertising expenses in the
Philippines for LEE products. It is well to note
that these expenses were incurred only in 1981 and
1982 by LEE (Phils.), Inc. after it entered into
a licensing agreement with private respondent on
11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently
shown that it has been in the business of selling
jeans and other garments adopting its STYLISTIC
MR. LEE trademark since 1975 as evidenced by
appropriate sales invoices to various stores and
retailers. (Exhibit 1-e to 1-o)

21 | P a g e
Our rulings in Pagasa Industrial Corp. v. Court
of Appeals (118 SCRA 526 [1982]) and Converse
Rubber Corp. v. Universal Rubber Products, Inc.,
(147 SCRA 154 [1987]), respectively, are
instructive:

The Trademark Law is very clear. It requires


actual commercial use of the mark prior to its
registration. There is no dispute that respondent
corporation was the first registrant, yet it
failed to fully substantiate its claim that it
used in trade or business in the Philippines the
subject mark; it did not present proof to invest
it with exclusive, continuous adoption of the
trademark which should consist among others, of
considerable sales since its first use. The
invoices submitted by respondent which were dated
way back in 1957 show that the zippers sent to the
Philippines were to be used as samples and of no
commercial value. The evidence for respondent must
be clear, definite and free from inconsistencies.
Samples are not for sale and therefore, the fact
of exporting them to the Philippines cannot be
considered to be equivalent to the use
contemplated by law. Respondent did not expect
income from such samples. There were no receipts
to establish sale, and no proof were presented to
show that they were subsequently sold in the
Philippines.
xxx xxx xxx
For lack of adequate proof of actual use of its
trademark in the Philippines prior to petitioner's
use of its own mark and for failure to establish
confusing similarity between said trademarks,
private respondent's action for infringement must
necessarily fail. (Emphasis supplied.)

In view of the foregoing jurisprudence and


respondents judicial admission that the actual
commercial use of the GALLO wine trademark was
subsequent to its registration in 1971 and to
Tobacco Industries commercial use of the GALLO
cigarette trademark in 1973, we rule that, on this
account, respondents never enjoyed the exclusive
right to use the GALLO wine trademark to the
prejudice of Tobacco Industries and its

22 | P a g e
successors-in-interest, herein petitioners,
either under the Trademark Law or the Paris
Convention.
Respondents GALLO trademark
registration is limited to
wines only
We also note that the GALLO trademark registration
certificates in the Philippines and in other
countries expressly state that they cover wines
only, without any evidence or indication that
registrant Gallo Winery expanded or intended to
expand its business to cigarettes.63[63]

Thus, by strict application of Section 20 of the


Trademark Law, Gallo Winerys exclusive right to
use the GALLO trademark should be limited to
wines, the only product indicated in its
registration certificates. This strict statutory
limitation on the exclusive right to use
trademarks was amply clarified in our ruling in
Faberge, Inc. vs. Intermediate Appellate
Court:64[64]

Having thus reviewed the laws applicable to the


case before Us, it is not difficult to discern
from the foregoing statutory enactments that
private respondent may be permitted to register
the trademark BRUTE for briefs produced by it
notwithstanding petitioner's vehement
protestations of unfair dealings in marketing its
own set of items which are limited to: after-shave
lotion, shaving cream, deodorant, talcum powder
and toilet soap. Inasmuch as petitioner has not
ventured in the production of briefs, an item
which is not listed in its certificate of
registration, petitioner cannot and should not be
allowed to feign that private respondent had
invaded petitioner's exclusive domain. To be sure,
it is significant that petitioner failed to annex
in its Brief the so-called eloquent proof that
petitioner indeed intended to expand its mark BRUT
to other goods (Page 27, Brief for the Petitioner;
page 202, Rollo). Even then, a mere application

23 | P a g e
by petitioner in this aspect does not suffice and
may not vest an exclusive right in its favor that
can ordinarily be protected by the Trademark Law.
In short, paraphrasing Section 20 of the Trademark
Law as applied to the documentary evidence adduced
by petitioner, the certificate of registration
issued by the Director of Patents can confer upon
petitioner the exclusive right to use its own
symbol only to those goods specified in the
certificate, subject to any conditions and
limitations stated therein. This basic point is
perhaps the unwritten rationale of Justice Escolin
in Philippine Refining Co., Inc. vs. Ng Sam (115
SCRA 472 [1982]), when he stressed the principle
enunciated by the United States Supreme Court in
American Foundries vs. Robertson (269 U.S. 372,
381, 70 L ed 317, 46 Sct. 160) that one who has
adopted and used a trademark on his goods does not
prevent the adoption and use of the same trademark
by others for products which are of a different
description. Verily, this Court had the occasion
to observe in the 1966 case of George W. Luft Co.,
Inc. vs. Ngo Guan (18 SCRA 944 [1966]) that no
serious objection was posed by the petitioner
therein since the applicant utilized the emblem
Tango for no other product than hair pomade in
which petitioner does not deal.
This brings Us back to the incidental issue raised
by petitioner which private respondent sought to
belie as regards petitioner's alleged expansion
of its business. It may be recalled that
petitioner claimed that it has a pending
application for registration of the emblem BRUT
33 for briefs (page 25, Brief for the Petitioner;
page 202, Rollo) to impress upon Us the Solomonic
wisdom imparted by Justice JBL Reyes in Sta. Ana
vs. Maliwat (24 SCRA 1018 [1968]), to the effect
that dissimilarity of goods will not preclude
relief if the junior user's goods are not remote
from any other product which the first user would
be likely to make or sell (vide, at page 1025).
Commenting on the former provision of the
Trademark Law now embodied substantially under
Section 4(d) of Republic Act No. 166, as amended,
the erudite jurist opined that the law in point
does not require that the articles of manufacture

24 | P a g e
of the previous user and late user of the mark
should possess the same descriptive properties or
should fall into the same categories as to bar the
latter from registering his mark in the principal
register. (supra at page 1026).
Yet, it is equally true that as aforesaid, the
protective mantle of the Trademark Law extends
only to the goods used by the first user as
specified in the certificate of registration
following the clear message conveyed by Section
20.
How do We now reconcile the apparent conflict
between Section 4(d) which was relied upon by
Justice JBL Reyes in the Sta. Ana case and Section
20? It would seem that Section 4(d) does not
require that the goods manufactured by the second
user be related to the goods produced by the
senior user while Section 20 limits the exclusive
right of the senior user only to those goods
specified in the certificate of registration. But
the rule has been laid down that the clause which
comes later shall be given paramount significance
over an anterior proviso upon the presumption that
it expresses the latest and dominant purpose.
(Graham Paper Co. vs. National Newspapers Asso.
(Mo. App.) 193 S.W. 1003; Barnett vs. Merchant's
L. Ins. Co., 87 Okl. 42; State ex nel Atty. Gen.
vs. Toledo, 26 N.E., p. 1061; cited by Martin,
Statutory Construction Sixth ed., 1980 Reprinted,
p. 144). It ineluctably follows that Section 20
is controlling and, therefore, private respondent
can appropriate its symbol for the briefs it
manufactures because as aptly remarked by Justice
Sanchez in Sterling Products International Inc.
vs. Farbenfabriken Bayer (27 SCRA 1214 [1969]):

Really, if the certificate of registration were


to be deemed as including goods not specified
therein, then a situation may arise whereby an
applicant may be tempted to register a trademark
on any and all goods which his mind may conceive
even if he had never intended to use the trademark
for the said goods. We believe that such omnibus
registration is not contemplated by our Trademark
Law. (1226).

25 | P a g e
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS AND RESPONDENTS
GOODS OR BUSINESS
A crucial issue in any trademark infringement case
is the likelihood of confusion, mistake or deceit
as to the identity, source or origin of the goods
or identity of the business as a consequence of
using a certain mark. Likelihood of confusion is
admittedly a relative term, to be determined
rigidly according to the particular (and sometimes
peculiar) circumstances of each case. Thus, in
trademark cases, more than in other kinds of
litigation, precedents must be studied in the
light of each particular case. 65[65]
There are two types of confusion in trademark
infringement. The first is confusion of goods when
an otherwise prudent purchaser is induced to
purchase one product in the belief that he is
purchasing another, in which case defendants goods
are then bought as the plaintiffs and its poor
quality reflects badly on the plaintiffs
reputation. The other is confusion of business
wherein the goods of the parties are different but
the defendants product can reasonably (though
mistakenly) be assumed to originate from the
plaintiff, thus deceiving the public into
believing that there is some connection between
the plaintiff and defendant which, in fact, does
not exist.66[66]
In determining the likelihood of confusion, the
Court must consider: [a] the resemblance between
the trademarks; [b] the similarity of the goods
to which the trademarks are attached; [c] the
likely effect on the purchaser and [d] the
registrants express or implied consent and other
fair and equitable considerations.

Petitioners and respondents both use GALLO in the


labels of their respective cigarette and wine
products. But, as held in the following cases, the
use of an identical mark does not, by itself, lead

26 | P a g e
to a legal conclusion that there is trademark
infringement:
(a) in Acoje Mining Co., Inc. vs. Director of
Patent,67[67] we ordered the approval of
Acoje Minings application for registration
of the trademark LOTUS for its soy sauce
even though Philippine Refining Company had
prior registration and use of such identical
mark for its edible oil which, like soy
sauce, also belonged to Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam
and Director of Patents,68[68] we upheld the
Patent Directors registration of the same
trademark CAMIA for Ng Sams ham under Class
47, despite Philippine Refining Companys
prior trademark registration and actual use
of such mark on its lard, butter, cooking
oil (all of which belonged to Class 47),
abrasive detergents, polishing materials and
soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court
of Appeals and Santos Lim Bun Liong,69[69]
we dismissed Hickoks petition to cancel
private respondents HICKOK trademark
registration for its Marikina shoes as
against petitioners earlier registration of
the same trademark for handkerchiefs,
briefs, belts and wallets;
(d) in Shell Company of the Philippines vs.
Court of Appeals,70[70] in a minute
resolution, we dismissed the petition for
review for lack of merit and affirmed the
Patent Offices registration of the trademark
SHELL used in the cigarettes manufactured by
respondent Fortune Tobacco Corporation,
notwithstanding Shell Companys opposition as
the prior registrant of the same trademark

27 | P a g e
for its gasoline and other petroleum
products;
(e) in Esso Standard Eastern, Inc. vs. Court of
Appeals,71[71] we dismissed ESSOs complaint
for trademark infringement against United
Cigarette Corporation and allowed the latter
to use the trademark ESSO for its
cigarettes, the same trademark used by ESSO
for its petroleum products, and
(f) in Canon Kabushiki Kaisha vs. Court of
Appeals and NSR Rubber Corporation,72[72] we
affirmed the rulings of the Patent Office
and the CA that NSR Rubber Corporation could
use the trademark CANON for its sandals
(Class 25) despite Canon Kabushiki Kaishas
prior registration and use of the same
trademark for its paints, chemical products,
toner and dyestuff (Class 2).
Whether a trademark causes confusion and is likely
to deceive the public hinges on colorable
imitation73[73] which has been defined as such
similarity in form, content, words, sound,
meaning, special arrangement or general
appearance of the trademark or tradename in their
overall presentation or in their essential and
substantive and distinctive parts as would likely
mislead or confuse persons in the ordinary course
of purchasing the genuine article.74[74]
Jurisprudence has developed two tests in
determining similarity and likelihood of
confusion in trademark resemblance:75[75]

28 | P a g e
(a) the Dominancy Test applied in Asia
Brewery, Inc. vs. Court of Appeals76[76] and
other cases,77[77] and
(b) the Holistic or Totality Test used in Del
Monte Corporation vs. Court of Appeals78[78]
and its preceding cases.79[79]
The Dominancy Test focuses on the similarity of
the prevalent features of the competing trademarks
which might cause confusion or deception, and thus
infringement. If the competing trademark contains
the main, essential or dominant features of
another, and confusion or deception is likely to
result, infringement takes place. Duplication or
imitation is not necessary; nor is it necessary
that the infringing label should suggest an effort
to imitate. The question is whether the use of the
marks involved is likely to cause confusion or
mistake in the mind of the public or deceive
purchasers.80[80]

On the other hand, the Holistic Test requires that


the entirety of the marks in question be
considered in resolving confusing similarity.
Comparison of words is not the only determining
factor. The trademarks in their entirety as they
appear in their respective labels or hang tags
must also be considered in relation to the goods
to which they are attached. The discerning eye of
the observer must focus not only on the
predominant words but also on the other features
appearing in both labels in order that he may draw
his conclusion whether one is confusingly similar
to the other.81[81]

In comparing the resemblance or colorable


imitation of marks, various factors have been
considered, such as the dominant color, style,

29 | P a g e
size, form, meaning of letters, words, designs and
emblems used, the likelihood of deception of the
mark or name's tendency to confuse82[82] and the
commercial impression likely to be conveyed by the
trademarks if used in conjunction with the
respective goods of the parties.83[83]
Applying the Dominancy and Holistic Tests, we find
that the dominant feature of the GALLO cigarette
trademark is the device of a large rooster facing
left, outlined in black against a gold background.
The roosters color is either green or red green
for GALLO menthols and red for GALLO filters.
Directly below the large rooster device is the
word GALLO. The rooster device is given prominence
in the GALLO cigarette packs in terms of size and
location on the labels.84[84]

The GALLO mark appears to be a fanciful and


arbitrary mark for the cigarettes as it has no
relation at all to the product but was chosen
merely as a trademark due to the fondness for
fighting cocks of the son of petitioners
president. Furthermore, petitioners adopted
GALLO, the Spanish word for rooster, as a
cigarette trademark to appeal to one of their
target markets, the sabungeros (cockfight
aficionados).85[85]

Also, as admitted by respondents


themselves,86[86] on the side of the GALLO
cigarette packs are the words MADE BY MIGHTY
CORPORATION, thus clearly informing the public as
to the identity of the manufacturer of the
cigarettes.

On the other hand, GALLO Winerys wine and brandy


labels are diverse. In many of them, the labels
are embellished with sketches of buildings and
trees, vineyards or a bunch of grapes while in a

30 | P a g e
few, one or two small roosters facing right or
facing each other (atop the EJG crest, surrounded
by leaves or ribbons), with additional designs in
green, red and yellow colors, appear as minor
features thereof.87[87] Directly below or above
these sketches is the entire printed name of the
founder-owners, ERNEST & JULIO GALLO or just their
surname GALLO,88[88] which appears in different
fonts, sizes, styles and labels, unlike
petitioners uniform casque-font bold-lettered
GALLO mark.
Moreover, on the labels of Gallo Winerys wines are
printed the words VINTED AND BOTTLED BY ERNEST &
JULIO GALLO, MODESTO, CALIFORNIA.89[89]
The many different features like color schemes,
art works and other markings of both products
drown out the similarity between them the use of
the word GALLO ― a family surname for the Gallo
Winerys wines and a Spanish word for rooster for
petitioners cigarettes.

WINES AND CIGARETTES ARE NOT


IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants
are actually in competition; but confusion of
business may arise between non-competing
interests as well.90[90]
Thus, apart from the strict application of Section
20 of the Trademark Law and Article 6bis of the
Paris Convention which proscribe trademark
infringement not only of goods specified in the
certificate of registration but also of identical
or similar goods, we have also uniformly
recognized and applied the modern concept of
related goods.91[91] Simply stated, when goods are
so related that the public may be, or is actually,

31 | P a g e
deceived and misled that they come from the same
maker or manufacturer, trademark infringement
occurs.92[92]
Non-competing goods may be those which, though
they are not in actual competition, are so related
to each other that it can reasonably be assumed
that they originate from one manufacturer, in
which case, confusion of business can arise out
of the use of similar marks.93[93] They may also
be those which, being entirely unrelated, cannot
be assumed to have a common source; hence, there
is no confusion of business, even though similar
marks are used.94[94] Thus, there is no trademark
infringement if the public does not expect the
plaintiff to make or sell the same class of goods
as those made or sold by the defendant.95[95]

In resolving whether goods are related,96[96]


several factors come into play:
(a) the business (and its location) to which the
goods belong

(b) the class of product to which the goods


belong

(c) the product's quality, quantity, or size,


including the nature of the package, wrapper
or container 97[97]

(d) the nature and cost of the articles98[98]


(e) the descriptive properties, physical
attributes or essential characteristics with
reference to their form, composition,
texture or quality

32 | P a g e
(f) the purpose of the goods99[99]
(g) whether the article is bought for immediate
consumption,100[100] that is, day-to-day
household items101[101]

(h) the fields of manufacture102[102]

(i) the conditions under which the article is


usually purchased103[103] and

(j) the channels of trade through which the


goods flow,104[104] how they are
distributed, marketed, displayed and
sold.105[105]
The wisdom of this approach is its recognition
that each trademark infringement case presents its
own unique set of facts. No single factor is
preeminent, nor can the presence or absence of one
determine, without analysis of the others, the
outcome of an infringement suit. Rather, the court
is required to sift the evidence relevant to each
of the criteria. This requires that the entire
panoply of elements constituting the relevant
factual landscape be comprehensively
examined.106[106] It is a weighing and balancing
process. With reference to this ultimate question,
and from a balancing of the determinations reached
on all of the factors, a conclusion is reached
whether the parties have a right to the relief
sought.107[107]

A very important circumstance though is whether


there exists a likelihood that an appreciable

33 | P a g e
number of ordinarily prudent purchasers will be
misled, or simply confused, as to the source of
the goods in question.108[108] The purchaser is
not the completely unwary consumer but is the
ordinarily intelligent buyer considering the type
of product involved.109[109] He is accustomed to
buy, and therefore to some extent familiar with,
the goods in question. The test of fraudulent
simulation is to be found in the likelihood of the
deception of some persons in some measure
acquainted with an established design and desirous
of purchasing the commodity with which that design
has been associated. The test is not found in the
deception, or the possibility of deception, of the
person who knows nothing about the design which
has been counterfeited, and who must be
indifferent between that and the other. The
simulation, in order to be objectionable, must be
such as appears likely to mislead the ordinary
intelligent buyer who has a need to supply and is
familiar with the article that he seeks to
purchase.110[110]

Hence, in the adjudication of trademark


infringement, we give due regard to the goods
usual purchasers character, attitude, habits,
age, training and education. 111[111]

Applying these legal precepts to the present case,


petitioners use of the GALLO cigarette trademark
is not likely to cause confusion or mistake, or
to deceive the ordinarily intelligent buyer of
either wines or cigarettes or both as to the
identity of the goods, their source and origin,
or identity of the business of petitioners and
respondents.

Obviously, wines and cigarettes are not identical


or competing products. Neither do they belong to
the same class of goods. Respondents GALLO wines
belong to Class 33 under Rule 84[a] Chapter III,

34 | P a g e
Part II of the Rules of Practice in Trademark
Cases while petitioners GALLO cigarettes fall
under Class 34.
We are mindful that product classification alone
cannot serve as the decisive factor in the
resolution of whether or not wines and cigarettes
are related goods. Emphasis should be on the
similarity of the products involved and not on the
arbitrary classification or general description
of their properties or characteristics. But the
mere fact that one person has adopted and used a
particular trademark for his goods does not
prevent the adoption and use of the same trademark
by others on articles of a different description.
112[112]
Both the Makati RTC and the CA held that wines and
cigarettes are related products because: (1) they
are related forms of vice, harmful when taken in
excess, and used for pleasure and relaxation and
(2) they are grouped or classified in the same
section of supermarkets and groceries.

We find these premises patently insufficient and


too arbitrary to support the legal conclusion that
wines and cigarettes are related products within
the contemplation of the Trademark Law and the
Paris Convention.

First, anything - not only wines and cigarettes ―


can be used for pleasure and relaxation and can
be harmful when taken in excess. Indeed, it would
be a grave abuse of discretion to treat wines and
cigarettes as similar or related products likely
to cause confusion just because they are pleasure-
giving, relaxing or potentially harmful. Such
reasoning makes no sense.
Second, it is common knowledge that supermarkets
sell an infinite variety of wholly unrelated
products and the goods here involved, wines and
cigarettes, have nothing whatsoever in common with
respect to their essential characteristics,

35 | P a g e
quality, quantity, size, including the nature of
their packages, wrappers or containers.113[113]
Accordingly, the U.S. patent office and courts
have consistently held that the mere fact that
goods are sold in one store under the same roof
does not automatically mean that buyers are likely
to be confused as to the goods respective sources,
connections or sponsorships. The fact that
different products are available in the same store
is an insufficient standard, in and of itself, to
warrant a finding of likelihood of
confusion.114[114]
In this regard, we adopted the Director of Patents
finding in Philippine Refining Co., Inc. vs. Ng
Sam and the Director of Patents:115[115]

In his decision, the Director of Patents


enumerated the factors that set respondents
products apart from the goods of petitioner. He
opined and we quote:

I have taken into account such factors as probable


purchaser attitude and habits, marketing
activities, retail outlets, and commercial
impression likely to be conveyed by the trademarks
if used in conjunction with the respective goods
of the parties, I believe that ham on one hand,
and lard, butter, oil, and soap on the other are
products that would not move in the same manner
through the same channels of trade. They pertain
to unrelated fields of manufacture, might be
distributed and marketed under dissimilar
conditions, and are displayed separately even
though they frequently may be sold through the
same retail food establishments. Opposers
products are ordinary day-to-day household items
whereas ham is not necessarily so. Thus, the goods
of the parties are not of a character which
purchasers would likely attribute to a common
origin.

36 | P a g e
The observations and conclusion of the Director
of Patents are correct. The particular goods of
the parties are so unrelated that consumers, would
not, in any probability mistake one as the source
of origin of the product of the other. (Emphasis
supplied).
The same is true in the present case. Wines and
cigarettes are non-competing and are totally
unrelated products not likely to cause confusion
vis--vis the goods or the business of the
petitioners and respondents.
Wines are bottled and consumed by drinking while
cigarettes are packed in cartons or packages and
smoked. There is a whale of a difference between
their descriptive properties, physical attributes
or essential characteristics like form,
composition, texture and quality.

GALLO cigarettes are inexpensive items while GALLO


wines are not. GALLO wines are patronized by
middle-to-high-income earners while GALLO
cigarettes appeal only to simple folks like
farmers, fishermen, laborers and other low-income
workers.116[116] Indeed, the big price difference
of these two products is an important factor in
proving that they are in fact unrelated and that
they travel in different channels of trade. There
is a distinct price segmentation based on vastly
different social classes of purchasers.117[117]
GALLO cigarettes and GALLO wines are not sold
through the same channels of trade. GALLO
cigarettes are Philippine-made and petitioners
neither claim nor pass off their goods as imported
or emanating from Gallo Winery. GALLO cigarettes
are distributed, marketed and sold through
ambulant and sidewalk vendors, small local sari-
sari stores and grocery stores in Philippine rural
areas, mainly in Misamis Oriental, Pangasinan,
Bohol, and Cebu.118[118] On the other hand, GALLO
wines are imported, distributed and sold in the

37 | P a g e
Philippines through Gallo Winerys exclusive
contracts with a domestic entity, which is
currently Andresons. By respondents own
testimonial evidence, GALLO wines are sold in
hotels, expensive bars and restaurants, and high-
end grocery stores and supermarkets, not through
sari-sari stores or ambulant vendors.119[119]

Furthermore, the Makati RTC and the CA erred in


relying on Carling Brewing Company vs. Philip
Morris, Inc.120[120] to support its finding that
GALLO wines and GALLO cigarettes are related
goods. The courts a quo should have taken into
consideration the subsequent case of IDV North
America, Inc. and R & A Bailey Co. Limited vs. S
& M Brands, Inc.:121[121]

IDV correctly acknowledges, however, that there


is no per se rule that the use of the same mark
on alcohol and tobacco products always will result
in a likelihood of confusion. Nonetheless, IDV
relies heavily on the decision in John Walker &
Sons, Ltd. vs. Tampa Cigar Co., 124 F. Supp. 254,
256 (S.D. Fla. 1954), affd, 222 F. 2d 460 (5th Cir.
1955), wherein the court enjoined the use of the
mark JOHNNIE WALKER on cigars because the fame of
the plaintiffs mark for scotch whiskey and because
the plaintiff advertised its scotch whiskey on,
or in connection with tobacco products. The court,
in John Walker & Sons, placed great significance
on the finding that the infringers use was a
deliberate attempt to capitalize on the senior
marks fame. Id. At 256. IDV also relies on Carling
Brewing Co. v. Philip Morris, Inc., 297 F. Supp.
1330, 1338 (N.D. Ga. 1968), in which the court
enjoined the defendants use of the mark BLACK
LABEL for cigarettes because it was likely to
cause confusion with the plaintiffs well-known
mark BLACK LABEL for beer.

xxx xxx xxx

38 | P a g e
Those decisions, however, must be considered in
perspective of the principle that tobacco products
and alcohol products should be considered related
only in cases involving special circumstances.
Schenley Distillers, Inc. v. General Cigar Co.,
57C.C.P.A. 1213, 427 F. 2d 783, 785 (1970). The
presence of special circumstances has been found
to exist where there is a finding of unfair
competition or where a famous or well-known mark
is involved and there is a demonstrated intent to
capitalize on that mark. For example, in John
Walker & Sons, the court was persuaded to find a
relationship between products, and hence a
likelihood of confusion, because of the plaintiffs
long use and extensive advertising of its mark and
placed great emphasis on the fact that the
defendant used the trademark Johnnie Walker with
full knowledge of its fame and reputation and with
the intention of taking advantage thereof. John
Walker & Sons, 124 F. Supp. At 256; see Mckesson
& Robbins, Inc. v. P. Lorillard Co., 1959 WL 5894,
120 U.S.P.Q. 306, 307 (1959) (holding that the
decision in John Walker & Sons was merely the law
on the particular case based upon its own peculiar
facts); see also Alfred Dunhill, 350 F. Supp. At
1363 (defendants adoption of Dunhill mark was not
innocent). However, in Schenley, the court noted
that the relation between tobacco and whiskey
products is significant where a widely known
arbitrary mark has long been used for diversified
products emanating from a single source and a
newcomer seeks to use the same mark on unrelated
goods. Schenley, 427 F.2d. at 785. Significantly,
in Schenley, the court looked at the industry
practice and the facts of the case in order to
determine the nature and extent of the
relationship between the mark on the tobacco
product and the mark on the alcohol product.
The record here establishes conclusively that IDV
has never advertised BAILEYS liqueurs in
conjunction with tobacco or tobacco accessory
products and that IDV has no intent to do so. And,
unlike the defendant in Dunhill, S & M Brands does
not market bar accessories, or liqueur related
products, with its cigarettes. The advertising and
promotional materials presented a trial in this

39 | P a g e
action demonstrate a complete lack of affiliation
between the tobacco and liqueur products bearing
the marks here at issue.
xxx xxx xxx

Of equal significance, it is undisputed that S &


M Brands had no intent, by adopting the family
name Baileys as the mark for its cigarettes, to
capitalize upon the fame of the BAILEYS mark for
liqueurs. See Schenley, 427 F. 2d at 785.
Moreover, as will be discussed below, and as found
in Mckesson & Robbins, the survey evidence refutes
the contention that cigarettes and alcoholic
beverages are so intimately associated in the
public mind that they cannot under any
circumstances be sold under the same mark without
causing confusion. See Mckesson & Robbins, 120
U.S.P.Q. at 308.

Taken as a whole, the evidence here demonstrates


the absence of the special circumstances in which
courts have found a relationship between tobacco
and alcohol products sufficient to tip the
similarity of goods analysis in favor of the
protected mark and against the allegedly
infringing mark. It is true that BAILEYS liqueur,
the worlds best selling liqueur and the second
best selling in the United States, is a well-known
product. That fact alone, however, is insufficient
to invoke the special circumstances connection
here where so much other evidence and so many
other factors disprove a likelihood of confusion.
The similarity of products analysis, therefore,
augers against finding that there is a likelihood
of confusion. (Emphasis supplied).

In short, tobacco and alcohol products may be


considered related only in cases involving special
circumstances which exist only if a famous mark
is involved and there is a demonstrated intent to
capitalize on it. Both of these are absent in the
present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT

40 | P a g e
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the
trademark registrations took place in the late
1980s and the 1990s, that is, after Tobacco
Industries use of the GALLO cigarette trademark
in 1973 and petitioners use of the same mark in
1984.
GALLO wines and GALLO cigarettes are neither the
same, identical, similar nor related goods, a
requisite element under both the Trademark Law and
the Paris Convention.

Second, the GALLO trademark cannot be considered


a strong and distinct mark in the Philippines.
Respondents do not dispute the documentary
evidence that aside from Gallo Winerys GALLO
trademark registration, the Bureau of Patents,
Trademarks and Technology Transfer also issued on
September 4, 1992 Certificate of Registration No.
53356 under the Principal Register approving
Productos Alimenticios Gallo, S.As April 19, 1990
application for GALLO trademark registration and
use for its noodles, prepared food or canned
noodles, ready or canned sauces for noodles,
semolina, wheat flour and bread crumbs, pastry,
confectionery, ice cream, honey, molasses syrup,
yeast, baking powder, salt, mustard, vinegar,
species and ice.122[122]
Third and most important, pursuant to our ruling
in Canon Kabushiki Kaisha vs. Court of Appeals and
NSR Rubber Corporation,123[123] GALLO cannot be
considered a well-known mark within the
contemplation and protection of the Paris
Convention in this case since wines and cigarettes
are not identical or similar goods:

We agree with public respondents that the


controlling doctrine with respect to the
applicability of Article 8 of the Paris Convention
is that established in Kabushi Kaisha Isetan vs.

41 | P a g e
Intermediate Appellate Court (203 SCRA 59 [1991]).
As pointed out by the BPTTT:
Regarding the applicability of Article 8 of the
Paris Convention, this Office believes that there
is no automatic protection afforded an entity
whose tradename is alleged to have been infringed
through the use of that name as a trademark by a
local entity.

In Kabushiki Kaisha Isetan vs. The Intermediate


Appellate Court, et. al., G.R. No. 75420, 15
November 1991, the Honorable Supreme Court held
that:
The Paris Convention for the Protection of
Industrial Property does not automatically
exclude all countries of the world which have
signed it from using a tradename which happens to
be used in one country. To illustrate if a taxicab
or bus company in a town in the United Kingdom or
India happens to use the tradename Rapid
Transportation, it does not necessarily follow
that Rapid can no longer be registered in Uganda,
Fiji, or the Philippines.

This office is not unmindful that in (sic) the


Treaty of Paris for the Protection of Intellectual
Property regarding well-known marks and possible
application thereof in this case. Petitioner, as
this office sees it, is trying to seek refuge
under its protective mantle, claiming that the
subject mark is well known in this country at the
time the then application of NSR Rubber was filed.

However, the then Minister of Trade and Industry,


the Hon. Roberto V. Ongpin, issued a memorandum
dated 25 October 1983 to the Director of Patents,
a set of guidelines in the implementation of
Article 6bis of the Treaty of Paris. These
conditions are:

a) the mark must be internationally


known;
b) the subject of the right must be a
trademark, not a patent or copyright
or anything else;
c) the mark must be for use in the same
42 | P a g e
or similar kinds of goods; and
d) the person claiming must be the
owner of the mark (The Parties
Convention Commentary on the Paris
Convention. Article by Dr. Bogsch,
Director General of the World
Intellectual Property Organization,
Geneva, Switzerland, 1985)
From the set of facts found in the records, it is
ruled that the Petitioner failed to comply with
the third requirement of the said memorandum that
is the mark must be for use in the same or similar
kinds of goods. The Petitioner is using the mark
CANON for products belonging to class 2 (paints,
chemical products) while the Respondent is using
the same mark for sandals (class 25).
Hence, Petitioner's contention that its mark is
well-known at the time the Respondent filed its
application for the same mark should fail.
(Emphasis supplied.)
Consent of the Registrant and
Other air, Just and Equitable
Considerations
Each trademark infringement case presents a unique
problem which must be answered by weighing the
conflicting interests of the litigants.124[124]

Respondents claim that GALLO wines and GALLO


cigarettes flow through the same channels of
trade, that is, retail trade. If respondents
assertion is true, then both goods co-existed
peacefully for a considerable period of time. It
took respondents almost 20 years to know about the
existence of GALLO cigarettes and sue petitioners
for trademark infringement. Given, on one hand,
the long period of time that petitioners were
engaged in the manufacture, marketing,
distribution and sale of GALLO cigarettes and, on
the other, respondents delay in enforcing their
rights (not to mention implied consent,
acquiescence or negligence) we hold that equity,
justice and fairness require us to rule in favor

43 | P a g e
of petitioners. The scales of conscience and
reason tip far more readily in favor of
petitioners than respondents.
Moreover, there exists no evidence that
petitioners employed malice, bad faith or fraud,
or that they intended to capitalize on respondents
goodwill in adopting the GALLO mark for their
cigarettes which are totally unrelated to
respondents GALLO wines. Thus, we rule out
trademark infringement on the part of petitioners.

PETITIONERS ARE ALSO NOT LIABLE


FOR UNFAIR COMPETITION

Under Section 29 of the Trademark Law, any person


who employs deception or any other means contrary
to good faith by which he passes off the goods
manufactured by him or in which he deals, or his
business, or services for those of the one having
established such goodwill, or who commits any acts
calculated to produce said result, is guilty of
unfair competition. It includes the following
acts:
(a) Any person, who in selling his goods shall
give them the general appearance of goods of
another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the
packages in which they are contained, or the
devices or words thereon, or in any other feature
of their appearance, which would be likely to
influence purchasers to believe that the goods
offered are those of a manufacturer or dealer
other than the actual manufacturer or dealer, or
who otherwise clothes the goods with such
appearance as shall deceive the public and defraud
another of his legitimate trade, or any subsequent
vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or
who employs any other means calculated to induce
the false belief that such person is offering the
services of another who has identified such
services in the mind of the public;
(c) Any person who shall make any false statement
in the course of trade or who shall commit any
44 | P a g e
other act contrary to good faith of a nature
calculated to discredit the goods, business or
services of another.
The universal test question is whether the public
is likely to be deceived. Nothing less than
conduct tending to pass off one mans goods or
business as that of another constitutes unfair
competition. Actual or probable deception and
confusion on the part of customers by reason of
defendants practices must always appear.125[125]
On this score, we find that petitioners never
attempted to pass off their cigarettes as those
of respondents. There is no evidence of bad faith
or fraud imputable to petitioners in using their
GALLO cigarette mark.
All told, after applying all the tests provided
by the governing laws as well as those recognized
by jurisprudence, we conclude that petitioners are
not liable for trademark infringement, unfair
competition or damages.
WHEREFORE, finding the petition for review
meritorious, the same is hereby GRANTED. The
questioned decision and resolution of the Court
of Appeals in CA-G.R. CV No. 65175 and the
November 26, 1998 decision and the June 24, 1999
order of the Regional Trial Court of Makati,
Branch 57 in Civil Case No. 93-850 are hereby
REVERSED and SET ASIDE and the complaint against
petitioners DISMISSED.
B. Differences between Copyrights, Trademarks and
Patent

1. PEARL & DEAN (PHIL.), INCORPORATED vs.


SHOEMART, INCORPORATED, and NORTH EDSA MARKETING,
INCORPORATED.

In the instant petition for review on certiorari


under Rule 45 of the Rules of Court, petitioner
Pearl & Dean (Phil.) Inc. (P & D) assails the May
22, 2001 decision126[1] of the Court of Appeals

45 | P a g e
reversing the October 31, 1996 decision127[2] of
the Regional Trial Court of Makati, Branch 133,
in Civil Case No. 92-516 which declared private
respondents Shoemart Inc. (SMI) and North Edsa
Marketing Inc. (NEMI) liable for infringement of
trademark and copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of
Appeals128[3] contained a summary of this dispute:

Plaintiff-appellant Pearl and Dean (Phil.), Inc.


is a corporation engaged in the manufacture of
advertising display units simply referred to as
light boxes. These units utilize specially printed
posters sandwiched between plastic sheets and
illuminated with back lights. Pearl and Dean was
able to secure a Certificate of Copyright
Registration dated January 20, 1981 over these
illuminated display units. The advertising light
boxes were marketed under the trademark Poster
Ads. The application for registration of the
trademark was filed with the Bureau of Patents,
Trademarks and Technology Transfer on June 20,
1983, but was approved only on September 12, 1988,
per Registration No. 41165. From 1981 to about
1988, Pearl and Dean employed the services of
Metro Industrial Services to manufacture its
advertising displays.
Sometime in 1985, Pearl and Dean negotiated with
defendant-appellant Shoemart, Inc. (SMI) for the
lease and installation of the light boxes in SM
City North Edsa. Since SM City North Edsa was
under construction at that time, SMI offered as
an alternative, SM Makati and SM Cubao, to which
Pearl and Dean agreed. On September 11, 1985,
Pearl and Deans General Manager, Rodolfo Vergara,
submitted for signature the contracts covering SM
Cubao and SM Makati to SMIs Advertising Promotions
and Publicity Division Manager, Ramonlito Abano.
Only the contract for SM Makati, however, was
returned signed. On October 4, 1985, Vergara wrote
Abano inquiring about the other contract and

46 | P a g e
reminding him that their agreement for
installation of light boxes was not only for its
SM Makati branch, but also for SM Cubao. SMI did
not bother to reply.
Instead, in a letter dated January 14, 1986, SMIs
house counsel informed Pearl and Dean that it was
rescinding the contract for SM Makati due to non-
performance of the terms thereof. In his reply
dated February 17, 1986, Vergara protested the
unilateral action of SMI, saying it was without
basis. In the same letter, he pushed for the
signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the
company formerly contracted by Pearl and Dean to
fabricate its display units, offered to construct
light boxes for Shoemarts chain of stores. SMI
approved the proposal and ten (10) light boxes
were subsequently fabricated by Metro Industrial
for SMI. After its contract with Metro Industrial
was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light
boxes. Some 300 units were fabricated in 1991.
These were delivered on a staggered basis and
installed at SM Megamall and SM City.

Sometime in 1989, Pearl and Dean, received reports


that exact copies of its light boxes were
installed at SM City and in the fastfood section
of SM Cubao. Upon investigation, Pearl and Dean
found out that aside from the two (2) reported SM
branches, light boxes similar to those it
manufactures were also installed in two (2) other
SM stores. It further discovered that defendant-
appellant North Edsa Marketing Inc. (NEMI),
through its marketing arm, Prime Spots Marketing
Services, was set up primarily to sell advertising
space in lighted display units located in SMIs
different branches. Pearl and Dean noted that NEMI
is a sister company of SMI.

In the light of its discoveries, Pearl and Dean


sent a letter dated December 11, 1991 to both SMI
and NEMI enjoining them to cease using the subject
light boxes and to remove the same from SMIs
establishments. It also demanded the discontinued
use of the trademark Poster Ads, and the payment

47 | P a g e
to Pearl and Dean of compensatory damages in the
amount of Twenty Million Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended
the leasing of two hundred twenty-four (224) light
boxes and NEMI took down its advertisements for
Poster Ads from the lighted display units in SMIs
stores. Claiming that both SMI and NEMI failed to
meet all its demands, Pearl and Dean filed this
instant case for infringement of trademark and
copyright, unfair competition and damages.

In denying the charges hurled against it, SMI


maintained that it independently developed its
poster panels using commonly known techniques and
available technology, without notice of or
reference to Pearl and Deans copyright. SMI noted
that the registration of the mark Poster Ads was
only for stationeries such as letterheads,
envelopes, and the like. Besides, according to
SMI, the word Poster Ads is a generic term which
cannot be appropriated as a trademark, and, as
such, registration of such mark is invalid. It
also stressed that Pearl and Dean is not entitled
to the reliefs prayed for in its complaint since
its advertising display units contained no
copyright notice, in violation of Section 27 of
P.D. 49. SMI alleged that Pearl and Dean had no
cause of action against it and that the suit was
purely intended to malign SMIs good name. On this
basis, SMI, aside from praying for the dismissal
of the case, also counterclaimed for moral, actual
and exemplary damages and for the cancellation of
Pearl and Deans Certification of Copyright
Registration No. PD-R-2558 dated January 20, 1981
and Certificate of Trademark Registration No. 4165
dated September 12, 1988.
NEMI, for its part, denied having manufactured,
installed or used any advertising display units,
nor having engaged in the business of advertising.
It repleaded SMIs averments, admissions and
denials and prayed for similar reliefs and
counterclaims as SMI.
The RTC of Makati City decided in favor of P & D:

48 | P a g e
Wherefore, defendants SMI and NEMI are found
jointly and severally liable for infringement of
copyright under Section 2 of PD 49, as amended,
and infringement of trademark under Section 22 of
RA No. 166, as amended, and are hereby penalized
under Section 28 of PD 49, as amended, and
Sections 23 and 24 of RA 166, as amended.
Accordingly, defendants are hereby directed:
(1) to pay plaintiff the following damages:
(a) actual damages - P16,600,000.00,
representing profits
derived by defendants
as a result of infringe-
ment of plaintiffs copyright
from 1991 to 1992

(b) moral damages - P1,000.000.00


(c) exemplary damages - P1,000,000.00
(d) attorneys fees - P1,000,000.00
plus
(e) costs of suit;
(2) to deliver, under oath, for impounding
in the National Library, all light boxes
of SMI which were fabricated by Metro
Industrial Services and EYD Rainbow
Advertising Corporation;

(3) to deliver, under oath, to the


National Library, all filler-posters using
the trademark Poster Ads, for destruction;
and

(4) to permanently refrain from infringing


the copyright on plaintiffs light boxes
and its trademark Poster Ads.

Defendants counterclaims are hereby ordered


dismissed for lack of merit.
SO ORDERED.129[4]

49 | P a g e
On appeal, however, the Court of Appeals reversed
the trial court:
Since the light boxes cannot, by any stretch of
the imagination, be considered as either prints,
pictorial illustrations, advertising copies,
labels, tags or box wraps, to be properly
classified as a copyrightable class O work, we
have to agree with SMI when it posited that what
was copyrighted were the technical drawings only,
and not the light boxes themselves, thus:

42. When a drawing is technical and depicts a


utilitarian object, a copyright over the drawings
like plaintiff-appellants will not extend to the
actual object. It has so been held under
jurisprudence, of which the leading case is Baker
vs. Selden (101 U.S. 841 (1879). In that case,
Selden had obtained a copyright protection for a
book entitled Seldens Condensed Ledger or
Bookkeeping Simplified which purported to explain
a new system of bookkeeping. Included as part of
the book were blank forms and illustrations
consisting of ruled lines and headings, specially
designed for use in connection with the system
explained in the work. These forms showed the
entire operation of a day or a week or a month on
a single page, or on two pages following each
other. The defendant Baker then produced forms
which were similar to the forms illustrated in
Seldens copyrighted books. The Court held that
exclusivity to the actual forms is not extended
by a copyright. The reason was that to grant a
monopoly in the underlying art when no examination
of its novelty has ever been made would be a
surprise and a fraud upon the public; that is the
province of letters patent, not of copyright. And
that is precisely the point. No doubt aware that
its alleged original design would never pass the
rigorous examination of a patent application,
plaintiff-appellant fought to foist a fraudulent
monopoly on the public by conveniently resorting
to a copyright registration which merely employs
a recordal system without the benefit of an in-
depth examination of novelty.
The principle in Baker vs. Selden was likewise
applied in Muller vs. Triborough Bridge Authority
50 | P a g e
[43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case,
Muller had obtained a copyright over an
unpublished drawing entitled Bridge Approach the
drawing showed a novel bridge approach to unsnarl
traffic congestion. The defendant constructed a
bridge approach which was alleged to be an
infringement of the new design illustrated in
plaintiffs drawings. In this case it was held that
protection of the drawing does not extend to the
unauthorized duplication of the object drawn
because copyright extends only to the description
or expression of the object and not to the object
itself. It does not prevent one from using the
drawings to construct the object portrayed in the
drawing.
In two other cases, Imperial Homes Corp. v.
Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v.
Maddox, 379 F. 2d 84, it was held that there is
no copyright infringement when one who, without
being authorized, uses a copyrighted
architectural plan to construct a structure. This
is because the copyright does not extend to the
structures themselves.
In fine, we cannot find SMI liable for infringing
Pearl and Deans copyright over the technical
drawings of the latters advertising display units.

xxx xxx xxx


The Supreme Court trenchantly held in Faberge,
Incorporated vs. Intermediate Appellate Court
that the protective mantle of the Trademark Law
extends only to the goods used by the first user
as specified in the certificate of registration,
following the clear mandate conveyed by Section
20 of Republic Act 166, as amended, otherwise
known as the Trademark Law, which reads:
SEC. 20. Certification of registration prima facie
evidence of validity.- A certificate of
registration of a mark or trade-name shall be
prima facie evidence of the validity of the
registration, the registrants ownership of the
mark or trade-name, and of the registrants
exclusive right to use the same in connection with
the goods, business or services specified in the

51 | P a g e
certificate, subject to any conditions and
limitations stated therein. (underscoring
supplied)

The records show that on June 20, 1983, Pearl and


Dean applied for the registration of the trademark
Poster Ads with the Bureau of Patents, Trademarks,
and Technology Transfer. Said trademark was
recorded in the Principal Register on September
12, 1988 under Registration No. 41165 covering the
following products: stationeries such as
letterheads, envelopes and calling cards and
newsletters.
With this as factual backdrop, we see no legal
basis to the finding of liability on the part of
the defendants-appellants for their use of the
words Poster Ads, in the advertising display units
in suit. Jurisprudence has interpreted Section 20
of the Trademark Law as an implicit permission to
a manufacturer to venture into the production of
goods and allow that producer to appropriate the
brand name of the senior registrant on goods other
than those stated in the certificate of
registration. The Supreme Court further
emphasized the restrictive meaning of Section 20
when it stated, through Justice Conrado V.
Sanchez, that:

Really, if the certificate of registration were


to be deemed as including goods not specified
therein, then a situation may arise whereby an
applicant may be tempted to register a trademark
on any and all goods which his mind may conceive
even if he had never intended to use the trademark
for the said goods. We believe that such omnibus
registration is not contemplated by our Trademark
Law.
While we do not discount the striking similarity
between Pearl and Deans registered trademark and
defendants-appellants Poster Ads design, as well
as the parallel use by which said words were used
in the parties respective advertising copies, we
cannot find defendants-appellants liable for
infringement of trademark. Poster Ads was
registered by Pearl and Dean for specific use in
its stationeries, in contrast to defendants-

52 | P a g e
appellants who used the same words in their
advertising display units. Why Pearl and Dean
limited the use of its trademark to stationeries
is simply beyond us. But, having already done so,
it must stand by the consequence of the
registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of
defendants-appellants that the words Poster Ads
are a simple contraction of the generic term
poster advertising. In the absence of any
convincing proof that Poster Ads has acquired a
secondary meaning in this jurisdiction, we find
that Pearl and Deans exclusive right to the use
of Poster Ads is limited to what is written in its
certificate of registration, namely,
stationeries.

Defendants-appellants cannot thus be held liable


for infringement of the trademark Poster Ads.

There being no finding of either copyright or


trademark infringement on the part of SMI and
NEMI, the monetary award granted by the lower
court to Pearl and Dean has no leg to stand on.
xxx xxx xxx

WHEREFORE, premises considered, the assailed


decision is REVERSED and SET ASIDE, and another
is rendered DISMISSING the complaint and
counterclaims in the above-entitled case for lack
of merit.130[5]
Dissatisfied with the above decision, petitioner
P & D filed the instant petition assigning the
following errors for the Courts consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT NO COPYRIGHT INFRINGEMENT WAS
COMMITTED BY RESPONDENTS SM AND NEMI;

B. THE HONORABLE COURT OF APPEALS ERRED IN


RULING THAT NO INFRINGEMENT OF PEARL &

53 | P a g e
DEANS TRADEMARK POSTER ADS WAS COMMITTED
BY RESPONDENTS SM AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN
DISMISSING THE AWARD OF THE TRIAL COURT,
DESPITE THE LATTERS FINDING, NOT DISPUTED
BY THE HONORABLE COURT OF APPEALS, THAT SM
WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION
OF ADVERTISING CONTRACTS WITH PEARL &
DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN
NOT HOLDING RESPONDENTS SM AND NEMI LIABLE
TO PEARL & DEAN FOR ACTUAL, MORAL &
EXEMPLARY DAMAGES, ATTORNEYS FEES AND
COSTS OF SUIT.131[6]

ISSUES
In resolving this very interesting case, we are
challenged once again to put into proper
perspective four main concerns of intellectual
property law patents, copyrights, trademarks and
unfair competition arising from infringement of
any of the first three. We shall focus then on the
following issues:

(1) if the engineering or technical drawings


of an advertising display unit (light box)
are granted copyright protection (copyright
certificate of registration) by the National
Library, is the light box depicted in such
engineering drawings ipso facto also
protected by such copyright?

(2) or should the light box be registered


separately and protected by a patent issued
by the Bureau of Patents Trademarks and
Technology Transfer (now Intellectual
Property Office) in addition to the copyright
of the engineering drawings?

(3) can the owner of a registered trademark


legally prevent others from using such
trademark if it is a mere abbreviation of a

54 | P a g e
term descriptive of his goods, services or
business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT

Petitioner P & Ds complaint was that SMI infringed


on its copyright over the light boxes when SMI had
the units manufactured by Metro and EYD Rainbow
Advertising for its own account. Obviously,
petitioners position was premised on its belief
that its copyright over the engineering drawings
extended ipso facto to the light boxes depicted
or illustrated in said drawings. In ruling that
there was no copyright infringement, the Court of
Appeals held that the copyright was limited to the
drawings alone and not to the light box itself.
We agree with the appellate court.

First, petitioners application for a copyright


certificate as well as Copyright Certificate No.
PD-R2588 issued by the National Library on January
20, 1981 clearly stated that it was for a class O
work under Section 2 (O) of PD 49 (The
Intellectual Property Decree) which was the
statute then prevailing. Said Section 2 expressly
enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall,
from the moment of creation, subsist with respect
to any of the following works:

x x x x x x x x x

(O) Prints, pictorial illustrations, advertising


copies, labels, tags, and box wraps;
x x x x x x x x x
Although petitioners copyright certificate was
entitled Advertising Display Units (which
depicted the box-type electrical devices), its
claim of copyright infringement cannot be
sustained.

Copyright, in the strict sense of the term, is


purely a statutory right. Being a mere statutory
grant, the rights are limited to what the statute
confers. It may be obtained and enjoyed only with
respect to the subjects and by the persons, and

55 | P a g e
on terms and conditions specified in the
statute.132[7] Accordingly, it can cover only the
works falling within the statutory enumeration or
description.133[8]

P & D secured its copyright under the


classification class O work. This being so,
petitioners copyright protection extended only to
the technical drawings and not to the light box
itself because the latter was not at all in the
category of prints, pictorial illustrations,
advertising copies, labels, tags and box wraps.
Stated otherwise, even as we find that P & D indeed
owned a valid copyright, the same could have
referred only to the technical drawings within the
category of pictorial illustrations. It could not
have possibly stretched out to include the
underlying light box. The strict
application134[9] of the laws enumeration in
Section 2 prevents us from giving petitioner even
a little leeway, that is, even if its copyright
certificate was entitled Advertising Display
Units. What the law does not include, it excludes,
and for the good reason: the light box was not a
literary or artistic piece which could be
copyrighted under the copyright law. And no less
clearly, neither could the lack of statutory
authority to make the light box copyrightable be
remedied by the simplistic act of entitling the
copyright certificate issued by the National
Library as Advertising Display Units.

In fine, if SMI and NEMI reprinted P & Ds technical


drawings for sale to the public without license
from P & D, then no doubt they would have been
guilty of copyright infringement. But this was not
the case. SMIs and NEMIs acts complained of by P
& D were to have units similar or identical to the
light box illustrated in the technical drawings
manufactured by Metro and EYD Rainbow Advertising,
for leasing out to different advertisers. Was this

56 | P a g e
an infringement of petitioners copyright over the
technical drawings? We do not think so.
During the trial, the president of P & D himself
admitted that the light box was neither a literary
not an artistic work but an engineering or
marketing invention.135[10] Obviously, there
appeared to be some confusion regarding what ought
or ought not to be the proper subjects of
copyrights, patents and trademarks. In the leading
case of Kho vs. Court of Appeals,136[11] we ruled
that these three legal rights are completely
distinct and separate from one another, and the
protection afforded by one cannot be used
interchangeably to cover items or works that
exclusively pertain to the others:
Trademark, copyright and patents are different
intellectual property rights that cannot be
interchanged with one another. A trademark is any
visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an
enterprise and shall include a stamped or marked
container of goods. In relation thereto, a trade
name means the name or designation identifying or
distinguishing an enterprise. Meanwhile, the
scope of a copyright is confined to literary and
artistic works which are original intellectual
creations in the literary and artistic domain
protected from the moment of their creation.
Patentable inventions, on the other hand, refer
to any technical solution of a problem in any
field of human activity which is new, involves an
inventive step and is industrially applicable.

ON THE ISSUE OF PATENT INFRINGEMENT


This brings us to the next point: if, despite its
manufacture and commercial use of the light boxes
without license from petitioner, private
respondents cannot be held legally liable for
infringement of P & Ds copyright over its
technical drawings of the said light boxes, should

57 | P a g e
they be liable instead for infringement of patent?
We do not think so either.
For some reason or another, petitioner never
secured a patent for the light boxes. It therefore
acquired no patent rights which could have
protected its invention, if in fact it really was.
And because it had no patent, petitioner could not
legally prevent anyone from manufacturing or
commercially using the contraption. In Creser
Precision Systems, Inc. vs. Court of
Appeals,137[12] we held that there can be no
infringement of a patent until a patent has been
issued, since whatever right one has to the
invention covered by the patent arises alone from
the grant of patent. x x x (A)n inventor has no
common law right to a monopoly of his invention.
He has the right to make use of and vend his
invention, but if he voluntarily discloses it,
such as by offering it for sale, the world is free
to copy and use it with impunity. A patent,
however, gives the inventor the right to exclude
all others. As a patentee, he has the exclusive
right of making, selling or using the
invention.138[13] On the assumption that
petitioners advertising units were patentable
inventions, petitioner revealed them fully to the
public by submitting the engineering drawings
thereof to the National Library.
To be able to effectively and legally preclude
others from copying and profiting from the
invention, a patent is a primordial requirement.
No patent, no protection. The ultimate goal of a
patent system is to bring new designs and
technologies into the public domain through
disclosure.139[14] Ideas, once disclosed to the
public without the protection of a valid patent,
are subject to appropriation without significant
restraint.140[15]

58 | P a g e
On one side of the coin is the public which will
benefit from new ideas; on the other are the
inventors who must be protected. As held in Bauer
& Cie vs. ODonnel,141[16] The act secured to the
inventor the exclusive right to make use, and vend
the thing patented, and consequently to prevent
others from exercising like privileges without the
consent of the patentee. It was passed for the
purpose of encouraging useful invention and
promoting new and useful inventions by the
protection and stimulation given to inventive
genius, and was intended to secure to the public,
after the lapse of the exclusive privileges
granted the benefit of such inventions and
improvements.

The law attempts to strike an ideal balance


between the two interests:
(The p)atent system thus embodies a carefully
crafted bargain for encouraging the creation and
disclosure of new useful and non-obvious advances
in technology and design, in return for the
exclusive right to practice the invention for a
number of years. The inventor may keep his
invention secret and reap its fruits indefinitely.
In consideration of its disclosure and the
consequent benefit to the community, the patent
is granted. An exclusive enjoyment is guaranteed
him for 17 years, but upon the expiration of that
period, the knowledge of the invention inures to
the people, who are thus enabled to practice it
and profit by its use.142[17]
The patent law has a three-fold purpose: first,
patent law seeks to foster and reward invention;
second, it promotes disclosures of inventions to
stimulate further innovation and to permit the
public to practice the invention once the patent
expires; third, the stringent requirements for
patent protection seek to ensure that ideas in the

59 | P a g e
public domain remain there for the free use of the
public.143[18]
It is only after an exhaustive examination by the
patent office that a patent is issued. Such an in-
depth investigation is required because in
rewarding a useful invention, the rights and
welfare of the community must be fairly dealt with
and effectively guarded. To that end, the
prerequisites to obtaining a patent are strictly
observed and when a patent is issued, the
limitations on its exercise are equally strictly
enforced. To begin with, a genuine invention or
discovery must be demonstrated lest in the
constant demand for new appliances, the heavy hand
of tribute be laid on each slight technological
advance in art.144[19]

There is no such scrutiny in the case of


copyrights nor any notice published before its
grant to the effect that a person is claiming the
creation of a work. The law confers the copyright
from the moment of creation145[20] and the
copyright certificate is issued upon registration
with the National Library of a sworn ex-parte
claim of creation.

Therefore, not having gone through the arduous


examination for patents, the petitioner cannot
exclude others from the manufacture, sale or
commercial use of the light boxes on the sole
basis of its copyright certificate over the
technical drawings.
Stated otherwise, what petitioner seeks is
exclusivity without any opportunity for the patent
office (IPO) to scrutinize the light boxs
eligibility as a patentable invention. The irony
here is that, had petitioner secured a patent
instead, its exclusivity would have been for 17
years only. But through the simplified procedure
of copyright-registration with the National
Library without undergoing the rigor of defending

60 | P a g e
the patentability of its invention before the IPO
and the public the petitioner would be protected
for 50 years. This situation could not have been
the intention of the law.
In the oft-cited case of Baker vs. Selden146[21],
the United States Supreme Court held that only the
expression of an idea is protected by copyright,
not the idea itself. In that case, the plaintiff
held the copyright of a book which expounded on a
new accounting system he had developed. The
publication illustrated blank forms of ledgers
utilized in such a system. The defendant
reproduced forms similar to those illustrated in
the plaintiffs copyrighted book. The US Supreme
Court ruled that:
There is no doubt that a work on the subject of
book-keeping, though only explanatory of well
known systems, may be the subject of a copyright;
but, then, it is claimed only as a book. x x x.
But there is a clear distinction between the
books, as such, and the art, which it is, intended
to illustrate. The mere statement of the
proposition is so evident that it requires hardly
any argument to support it. The same distinction
may be predicated of every other art as well as
that of bookkeeping. A treatise on the composition
and use of medicines, be they old or new; on the
construction and use of ploughs or watches or
churns; or on the mixture and application of
colors for painting or dyeing; or on the mode of
drawing lines to produce the effect of
perspective, would be the subject of copyright;
but no one would contend that the copyright of the
treatise would give the exclusive right to the art
or manufacture described therein. The copyright
of the book, if not pirated from other works,
would be valid without regard to the novelty or
want of novelty of its subject matter. The novelty
of the art or thing described or explained has
nothing to do with the validity of the copyright.
To give to the author of the book an exclusive
property in the art described therein, when no
examination of its novelty has ever been

61 | P a g e
officially made, would be a surprise and a fraud
upon the public. That is the province of letters
patent, not of copyright. The claim to an
invention of discovery of an art or manufacture
must be subjected to the examination of the Patent
Office before an exclusive right therein can be
obtained; and a patent from the government can
only secure it.

The difference between the two things, letters


patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take
the case of medicines. Certain mixtures are found
to be of great value in the healing art. If the
discoverer writes and publishes a book on the
subject (as regular physicians generally do), he
gains no exclusive right to the manufacture and
sale of the medicine; he gives that to the public.
If he desires to acquire such exclusive right, he
must obtain a patent for the mixture as a new art,
manufacture or composition of matter. He may
copyright his book, if he pleases; but that only
secures to him the exclusive right of printing and
publishing his book. So of all other inventions
or discoveries.

The copyright of a book on perspective, no matter


how many drawings and illustrations it may
contain, gives no exclusive right to the modes of
drawing described, though they may never have been
known or used before. By publishing the book
without getting a patent for the art, the latter
is given to the public.
x x x

Now, whilst no one has a right to print or publish


his book, or any material part thereof, as a book
intended to convey instruction in the art, any
person may practice and use the art itself which
he has described and illustrated therein. The use
of the art is a totally different thing from a
publication of the book explaining it. The
copyright of a book on bookkeeping cannot secure
the exclusive right to make, sell and use account
books prepared upon the plan set forth in such
book. Whether the art might or might not have been
patented, is a question, which is not before us.

62 | P a g e
It was not patented, and is open and free to the
use of the public. And, of course, in using the
art, the ruled lines and headings of accounts must
necessarily be used as incident to it.
The plausibility of the claim put forward by the
complainant in this case arises from a confusion
of ideas produced by the peculiar nature of the
art described in the books, which have been made
the subject of copyright. In describing the art,
the illustrations and diagrams employed happened
to correspond more closely than usual with the
actual work performed by the operator who uses the
art. x x x The description of the art in a book,
though entitled to the benefit of copyright, lays
no foundation for an exclusive claim to the art
itself. The object of the one is explanation; the
object of the other is use. The former may be
secured by copyright. The latter can only be
secured, if it can be secured at all, by letters
patent. (underscoring supplied)

ON THE ISSUE OF TRADEMARK INFRINGEMENT

This issue concerns the use by respondents of the


mark Poster Ads which petitioners president said
was a contraction of poster advertising. P & D was
able to secure a trademark certificate for it, but
one where the goods specified were stationeries
such as letterheads, envelopes, calling cards and
newsletters.147[22] Petitioner admitted it did
not commercially engage in or market these goods.
On the contrary, it dealt in electrically operated
backlit advertising units and the sale of
advertising spaces thereon, which, however, were
not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals
correctly cited Faberge Inc. vs. Intermediate
Appellate Court,148[23] where we, invoking
Section 20 of the old Trademark Law, ruled that
the certificate of registration issued by the
Director of Patents can confer (upon petitioner)
the exclusive right to use its own symbol only to
those goods specified in the certificate, subject

63 | P a g e
to any conditions and limitations specified in the
certificate x x x. One who has adopted and used a
trademark on his goods does not prevent the
adoption and use of the same trademark by others
for products which are of a different
description.149[24] Faberge, Inc. was correct and
was in fact recently reiterated in Canon Kabushiki
Kaisha vs. Court of Appeals.150[25]
Assuming arguendo that Poster Ads could validly
qualify as a trademark, the failure of P & D to
secure a trademark registration for specific use
on the light boxes meant that there could not have
been any trademark infringement since
registration was an essential element thereof.
ON THE ISSUE OF UNFAIR COMPETITION

If at all, the cause of action should have been


for unfair competition, a situation which was
possible even if P & D had no registration.151[26]
However, while the petitioners complaint in the
RTC also cited unfair competition, the trial court
did not find private respondents liable therefor.
Petitioner did not appeal this particular point;
hence, it cannot now revive its claim of unfair
competition.
But even disregarding procedural issues, we
nevertheless cannot hold respondents guilty of
unfair competition.
By the nature of things, there can be no unfair
competition under the law on copyrights although
it is applicable to disputes over the use of
trademarks. Even a name or phrase incapable of
appropriation as a trademark or tradename may, by
long and exclusive use by a business (such that
the name or phrase becomes associated with the
business or product in the mind of the purchasing
public), be entitled to protection against unfair
competition.152[27] In this case, there was no

64 | P a g e
evidence that P & Ds use of Poster Ads was
distinctive or well-known. As noted by the Court
of Appeals, petitioners expert witnesses himself
had testified that Poster Ads was too generic a
name. So it was difficult to identify it with any
company, honestly speaking.153[28] This crucial
admission by its own expert witness that Poster
Ads could not be associated with P & D showed
that, in the mind of the public, the goods and
services carrying the trademark Poster Ads could
not be distinguished from the goods and services
of other entities.
This fact also prevented the application of the
doctrine of secondary meaning. Poster Ads was
generic and incapable of being used as a trademark
because it was used in the field of poster
advertising, the very business engaged in by
petitioner. Secondary meaning means that a word
or phrase originally incapable of exclusive
appropriation with reference to an article in the
market (because it is geographically or otherwise
descriptive) might nevertheless have been used for
so long and so exclusively by one producer with
reference to his article that, in the trade and
to that branch of the purchasing public, the word
or phrase has come to mean that the article was
his property.154[29] The admission by petitioners
own expert witness that he himself could not
associate Poster Ads with petitioner P & D because
it was too generic definitely precluded the
application of this exception.
Having discussed the most important and critical
issues, we see no need to belabor the rest.

All told, the Court finds no reversible error


committed by the Court of Appeals when it reversed
the Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the
decision of the Court of Appeals dated May 22,
2001 is AFFIRMED in toto.

65 | P a g e
2. ELIDAD C. KHO, doing business under the name
and style of KEC COSMETICS LABORATORY vs. HON.
COURT OF APPEALS, SUMMERVILLE GENERAL
MERCHANDISING and COMPANY, and ANG TIAM CHAY.

Before us is a petition for review on certiorari


of the Decisioni[1] dated May 24, 1993 of the
Court of Appeals setting aside and declaring as
null and void the Ordersii[2] dated February 10,
1992 and March 19, 1992 of the Regional Trial
Court, Branch 90, of Quezon City granting the
issuance of a writ of preliminary injunction.
The facts of the case are as follows:

On December 20, 1991, petitioner Elidad C. Kho


filed a complaint for injunction and damages with
a prayer for the issuance of a writ of preliminary
injunction, docketed as Civil Case No. Q-91-10926,
against the respondents Summerville General
Merchandising and Company (Summerville, for
brevity) and Ang Tiam Chay.

The petitioners complaint alleges that


petitioner, doing business under the name and
style of KEC Cosmetics Laboratory, is the
registered owner of the copyrights Chin Chun Su
and Oval Facial Cream Container/Case, as shown by
Certificates of Copyright Registration No. 0-1358
and No. 0-3678; that she also has patent rights
on Chin Chun Su & Device and Chin Chun Su for
medicated cream after purchasing the same from
Quintin Cheng, the registered owner thereof in the
Supplemental Register of the Philippine Patent
Office on February 7, 1980 under Registration
Certificate No. 4529; that respondent Summerville
advertised and sold petitioners cream products
under the brand name Chin Chun Su, in similar
containers that petitioner uses, thereby
misleading the public, and resulting in the
decline in the petitioners business sales and
income; and, that the respondents should be
enjoined from allegedly infringing on the
copyrights and patents of the petitioner.
The respondents, on the other hand, alleged as
their defense that Summerville is the exclusive
and authorized importer, re-packer and

66 | P a g e
distributor of Chin Chun Su products manufactured
by Shun Yi Factory of Taiwan; that the said
Taiwanese manufacturing company authorized
Summerville to register its trade name Chin Chun
Su Medicated Cream with the Philippine Patent
Office and other appropriate governmental
agencies; that KEC Cosmetics Laboratory of the
petitioner obtained the copyrights through
misrepresentation and falsification; and, that
the authority of Quintin Cheng, assignee of the
patent registration certificate, to distribute
and market Chin Chun Su products in the
Philippines had already been terminated by the
said Taiwanese Manufacturing Company.

After due hearing on the application for


preliminary injunction, the trial court granted
the same in an Order dated February 10, 1992, the
dispositive portion of which reads:
ACCORDINGLY, the application of plaintiff Elidad
C. Kho, doing business under the style of KEC
Cosmetic Laboratory, for preliminary injunction,
is hereby granted. Consequentially, plaintiff is
required to file with the Court a bond executed
to defendants in the amount of five hundred
thousand pesos (P500,000.00) to the effect that
plaintiff will pay to defendants all damages which
defendants may sustain by reason of the injunction
if the Court should finally decide that plaintiff
is not entitled thereto.

SO ORDERED.iii[3]
The respondents moved for reconsideration but
their motion for reconsideration was denied by the
trial court in an Order dated March 19, 1992.iv[4]

On April 24, 1992, the respondents filed a


petition for certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 27803, praying for the
nullification of the said writ of preliminary
injunction issued by the trial court. After the
respondents filed their reply and almost a month
after petitioner submitted her comment, or on
August 14 1992, the latter moved to dismiss the
petition for violation of Supreme Court Circular
No. 28-91, a circular prohibiting forum shopping.

67 | P a g e
According to the petitioner, the respondents did
not state the docket number of the civil case in
the caption of their petition and, more
significantly, they did not include therein a
certificate of non-forum shopping. The
respondents opposed the petition and submitted to
the appellate court a certificate of non-forum
shopping for their petition.
On May 24, 1993, the appellate court rendered a
Decision in CA-G.R. SP No. 27803 ruling in favor
of the respondents, the dispositive portion of
which reads:
WHEREFORE, the petition is hereby given due course
and the orders of respondent court dated February
10, 1992 and March 19, 1992 granting the writ of
preliminary injunction and denying petitioners
motion for reconsideration are hereby set aside
and declared null and void. Respondent court is
directed to forthwith proceed with the trial of
Civil Case No. Q-91-10926 and resolve the issue
raised by the parties on the merits.

SO ORDERED.v[5]

In granting the petition, the appellate court


ruled that:

The registration of the trademark or brandname


Chin Chun Su by KEC with the supplemental register
of the Bureau of Patents, Trademarks and
Technology Transfer cannot be equated with
registration in the principal register, which is
duly protected by the Trademark Law.

xxx xxx xxx


As ratiocinated in La Chemise Lacoste, S.S. vs.
Fernandez, 129 SCRA 373, 393:
Registration in the Supplemental Register,
therefore, serves as notice that the registrant
is using or has appropriated the trademark. By the
very fact that the trademark cannot as yet be on
guard and there are certain defects, some
obstacles which the use must still overcome before
he can claim legal ownership of the mark or ask
the courts to vindicate his claims of an exclusive

68 | P a g e
right to the use of the same. It would be deceptive
for a party with nothing more than a registration
in the Supplemental Register to posture before
courts of justice as if the registration is in the
Principal Register.

The reliance of the private respondent on the last


sentence of the Patent office action on
application Serial No. 30954 that registrants is
presumed to be the owner of the mark until after
the registration is declared cancelled is,
therefore, misplaced and grounded on shaky
foundation. The supposed presumption not only runs
counter to the precept embodied in Rule 124 of the
Revised Rules of Practice before the Philippine
Patent Office in Trademark Cases but considering
all the facts ventilated before us in the four
interrelated petitions involving the petitioner
and the respondent, it is devoid of factual basis.
As even in cases where presumption and precept may
factually be reconciled, we have held that the
presumption is rebuttable, not conclusive,
(People v. Lim Hoa, G.R. No. L-10612, May 30,
1958, Unreported). One may be declared an unfair
competitor even if his competing trademark is
registered (Parke, Davis & Co. v. Kiu Foo & Co.,
et al., 60 Phil 928; La Yebana Co. v. chua Seco &
Co., 14 Phil 534).

The petitioner filed a motion for reconsideration.


This she followed with several motions to declare
respondents in contempt of court for publishing
advertisements notifying the public of the
promulgation of the assailed decision of the
appellate court and stating that genuine Chin Chun
Su products could be obtained only from
Summerville General Merchandising and Co.
In the meantime, the trial court went on to hear
petitioners complaint for final injunction and
damages. On October 22, 1993, the trial court
rendered a Decision barring the petitioner from
using the trademark Chin Chun Su and upholding the
right of the respondents to use the same, but
recognizing the copyright of the petitioner over
the oval shaped container of her beauty cream. The
trial court did not award damages and costs to any
of the parties but to their respective counsels
69 | P a g e
were awarded Seventy-Five Thousand Pesos
(P75,000.00) each as attorneys fees. The
petitioner duly appealed the said decision to the
Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated
a Resolution denying the petitioners motions for
reconsideration and for contempt of court in CA-
G.R. SP No. 27803.
Hence, this petition anchored on the following
assignment of errors:

I
RESPONDENT HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION IN FAILING TO RULE ON
PETITIONERS MOTION TO DISMISS.
II
RESPONDENT HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION IN REFUSING TO
PROMPTLY RESOLVE PETITIONERS MOTION FOR
RECONSIDERATION.
III

IN DELAYING THE RESOLUTION OF PETITIONERS


MOTION FOR RECONSIDERATION, THE HONORABLE
COURT OF APPEALS DENIED PETITIONERS RIGHT TO
SEEK TIMELY APPELLATE RELIEF AND VIOLATED
PETITIONERS RIGHT TO DUE PROCESS.

IV
RESPONDENT HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION IN FAILING TO CITE
THE PRIVATE RESPONDENTS IN CONTEMPT.

The petitioner faults the appellate court for not


dismissing the petition on the ground of violation
of Supreme Court Circular No. 28-91. Also, the
petitioner contends that the appellate court
violated Section 6, Rule 9 of the Revised Internal
Rules of the Court of Appeals when it failed to
rule on her motion for reconsideration within
70 | P a g e
ninety (90) days from the time it is submitted for
resolution. The appellate court ruled only after
the lapse of three hundred fifty-four (354) days,
or on June 3, 1994. In delaying the resolution
thereof, the appellate court denied the
petitioners right to seek the timely appellate
relief. Finally, petitioner describes as
arbitrary the denial of her motions for contempt
of court against the respondents.
We rule in favor of the respondents.

Pursuant to Section 1, Rule 58 of the Revised


Rules of Civil Procedure, one of the grounds for
the issuance of a writ of preliminary injunction
is a proof that the applicant is entitled to the
relief demanded, and the whole or part of such
relief consists in restraining the commission or
continuance of the act or acts complained of,
either for a limited period or perpetually. Thus,
a preliminary injunction order may be granted only
when the application for the issuance of the same
shows facts entitling the applicant to the relief
demanded. This is the reason why we have ruled
that it must be shown that the invasion of the
right sought to be protected is material and
substantial, that the right of complainant is
clear and unmistakable, and, that there is an
urgent and paramount necessity for the writ to
prevent serious damage.

In the case at bar, the petitioner applied for the


issuance of a preliminary injunctive order on the
ground that she is entitled to the use of the
trademark on Chin Chun Su and its container based
on her copyright and patent over the same. We
first find it appropriate to rule on whether the
copyright and patent over the name and container
of a beauty cream product would entitle the
registrant to the use and ownership over the same
to the exclusion of others.

Trademark, copyright and patents are different


intellectual property rights that cannot be
interchanged with one another. A trademark is any
visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an
enterprise and shall include a stamped or marked

71 | P a g e
container of goods. In relation thereto, a trade
name means the name or designation identifying or
distinguishing an enterprise. Meanwhile, the
scope of a copyright is confined to literary and
artistic works which are original intellectual
creations in the literary and artistic domain
protected from the moment of their creation.
Patentable inventions, on the other hand, refer
to any technical solution of a problem in any
field of human activity which is new, involves an
inventive step and is industrially applicable.
Petitioner has no right to support her claim for
the exclusive use of the subject trade name and
its container. The name and container of a beauty
cream product are proper subjects of a trademark
inasmuch as the same falls squarely within its
definition. In order to be entitled to exclusively
use the same in the sale of the beauty cream
product, the user must sufficiently prove that she
registered or used it before anybody else did. The
petitioners copyright and patent registration of
the name and container would not guarantee her the
right to the exclusive use of the same for the
reason that they are not appropriate subjects of
the said intellectual rights. Consequently, a
preliminary injunction order cannot be issued for
the reason that the petitioner has not proven that
she has a clear right over the said name and
container to the exclusion of others, not having
proven that she has registered a trademark thereto
or used the same before anyone did.
We cannot likewise overlook the decision of the
trial court in the case for final injunction and
damages. The dispositive portion of said decision
held that the petitioner does not have trademark
rights on the name and container of the beauty
cream product. The said decision on the merits of
the trial court rendered the issuance of the writ
of a preliminary injunction moot and academic
notwithstanding the fact that the same has been
appealed in the Court of Appeals. This is
supported by our ruling in La Vista Association,
Inc. v. Court of Appeals, to wit:

Considering that preliminary injunction is a


provisional remedy which may be granted at any
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time after the commencement of the action and
before judgment when it is established that the
plaintiff is entitled to the relief demanded and
only when his complaint shows facts entitling such
reliefs xxx and it appearing that the trial court
had already granted the issuance of a final
injunction in favor of petitioner in its decision
rendered after trial on the merits xxx the Court
resolved to Dismiss the instant petition having
been rendered moot and academic. An injunction
issued by the trial court after it has already
made a clear pronouncement as to the plaintiffs
right thereto, that is, after the same issue has
been decided on the merits, the trial court having
appreciated the evidence presented, is proper,
notwithstanding the fact that the decision
rendered is not yet final xxx. Being an ancillary
remedy, the proceedings for preliminary
injunction cannot stand separately or proceed
independently of the decision rendered on the
merit of the main case for injunction. The merit
of the main case having been already determined
in favor of the applicant, the preliminary
determination of its non-existence ceases to have
any force and effect. (italics supplied)
La Vista categorically pronounced that the
issuance of a final injunction renders any
question on the preliminary injunctive order moot
and academic despite the fact that the decision
granting a final injunction is pending appeal.
Conversely, a decision denying the applicant-
plaintiffs right to a final injunction, although
appealed, renders moot and academic any objection
to the prior dissolution of a writ of preliminary
injunction.
The petitioner argues that the appellate court
erred in not dismissing the petition for
certiorari for non-compliance with the rule on
forum shopping. We disagree. First, the petitioner
improperly raised the technical objection of non-
compliance with Supreme Court Circular No. 28-91
by filing a motion to dismiss the petition for
certiorari filed in the appellate court. This is
prohibited by Section 6, Rule 66 of the Revised
Rules of Civil Procedure which provides that (I)n
petitions for certiorari before the Supreme Court
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and the Court of Appeals, the provisions of
Section 2, Rule 56, shall be observed. Before
giving due course thereto, the court may require
the respondents to file their comment to, and not
a motion to dismiss, the petition xxx (italics
supplied). Secondly, the issue was raised one
month after petitioner had filed her
answer/comment and after private respondent had
replied thereto. Under Section 1, Rule 16 of the
Revised Rules of Civil Procedure, a motion to
dismiss shall be filed within the time for but
before filing the answer to the complaint or
pleading asserting a claim. She therefore could
no longer submit a motion to dismiss nor raise
defenses and objections not included in the
answer/comment she had earlier tendered. Thirdly,
substantial justice and equity require this Court
not to revive a dissolved writ of injunction in
favor of a party without any legal right thereto
merely on a technical infirmity. The granting of
an injunctive writ based on a technical ground
rather than compliance with the requisites for the
issuance of the same is contrary to the primary
objective of legal procedure which is to serve as
a means to dispense justice to the deserving
party.
The petitioner likewise contends that the
appellate court unduly delayed the resolution of
her motion for reconsideration. But we find that
petitioner contributed to this delay when she
filed successive contentious motions in the same
proceeding, the last of which was on October 27,
1993, necessitating counter-manifestations from
private respondents with the last one being filed
on November 9, 1993. Nonetheless, it is well-
settled that non-observance of the period for
deciding cases or their incidents does not render
such judgments ineffective or void. With respect
to the purported damages she suffered due to the
alleged delay in resolving her motion for
reconsideration, we find that the said issue has
likewise been rendered moot and academic by our
ruling that she has no right over the trademark
and, consequently, to the issuance of a writ of
preliminary injunction.

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Finally, we rule that the Court of Appeals
correctly denied the petitioners several motions
for contempt of court. There is nothing
contemptuous about the advertisements complained
of which, as regards the proceedings in CA-G.R.
SP No. 27803 merely announced in plain and
straightforward language the promulgation of the
assailed Decision of the appellate court.
Moreover, pursuant to Section 4 of Rule 39 of the
Revised Rules of Civil Procedure, the said
decision nullifying the injunctive writ was
immediately executory.
WHEREFORE, the petition is DENIED. The Decision
and Resolution of the Court of Appeals dated May
24, 1993 and June 3, 1994, respectively, are
hereby AFFIRMED. With costs against the
petitioner.
CHAPTER IV
PATENT APPLICATION
Section 32. The Application. - 32.1. The patent
application shall be in Filipino or English and
shall contain the following:

(a) A request for the grant of a patent;


(b) A description of the invention;

(c) Drawings necessary for the understanding


of the invention;
(d) One or more claims; and
(e) An abstract.

32.2. No patent may be granted unless the


application identifies the inventor. If the
applicant is not the inventor, the Office may
require him to submit said authority. (Sec. 13,
R.A. No. 165a)
Section 33. Appointment of Agent or
Representative. - An applicant who is not a
resident of the Philippines must appoint and
maintain a resident agent or representative in the
Philippines upon whom notice or process for
judicial or administrative procedure relating to

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the application for patent or the patent may be
served. (Sec. 11, R.A. No. 165a)
Section 34. The Request. - The request shall
contain a petition for the grant of the patent,
the name and other data of the applicant, the
inventor and the agent and the title of the
invention. (n)
Section 35. Disclosure and Description of the
Invention. - 35.1. Disclosure. - The application
shall disclose the invention in a manner
sufficiently clear and complete for it to be
carried out by a person skilled in the art. Where
the application concerns a microbiological
process or the product thereof and involves the
use of a micro-organism which cannot be
sufficiently disclosed in the application in such
a way as to enable the invention to be carried out
by a person skilled in the art, and such material
is not available to the public, the application
shall be supplemented by a deposit of such
material with an international depository
institution.
35.2. Description. - The Regulations shall
prescribe the contents of the description and the
order of presentation. (Sec. 14, R.A. No. 165a)
Section 36. The Claims. - 36.1. The application
shall contain one (1) or more claims which shall
define the matter for which protection is sought.
Each claim shall be clear and concise, and shall
be supported by the description.

36.2. The Regulations shall prescribe the manner


of the presentation of claims. (n)
Section 37. The Abstract. - The abstract shall
consist of a concise summary of the disclosure of
the invention as contained in the description,
claims and drawings in preferably not more than
one hundred fifty (150) words. It must be drafted
in a way which allows the clear understanding of
the technical problem, the gist of the solution
of that problem through the invention, and the
principal use or uses of the invention. The
abstract shall merely serve for technical
information. (n)
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Section 38. Unity of Invention. - 38.1. The
application shall relate to one invention only or
to a group of inventions forming a single general
inventive concept.
38.2. If several independent inventions which do
not form a single general inventive concept are
claimed in one application, the Director may
require that the application be restricted to a
single invention. A later application filed for
an invention divided out shall be considered as
having been filed on the same day as the first
application: Provided, That the later application
is filed within four (4) months after the
requirement to divide becomes final or within such
additional time, not exceeding four (4) months,
as may be granted: Provided further, That each
divisional application shall not go beyond the
disclosure in the initial application.
38.3. The fact that a patent has been granted on
an application that did not comply with the
requirement of unity of invention shall not be a
ground to cancel the patent. (Sec. 17, R.A. No.
165a)
Section 39. Information Concerning Corresponding
Foreign Application for Patents. - The applicant
shall, at the request of the Director, furnish him
with the date and number of any application for a
patent filed by him abroad, hereafter referred to
as the "foreign application," relating to the same
or essentially the same invention as that claimed
in the application filed with the Office and other
documents relating to the foreign application. (n)
CHAPTER V
PROCEDURE FOR GRANT OF PATENT
Section 40. Filing Date Requirements. - 40.1. The
filing date of a patent application shall be the
date of receipt by the Office of at least the
following elements:
(a) An express or implicit indication that a
Philippine patent is sought;

(b) Information identifying the applicant; and

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(c) Description of the invention and one (1)
or more claims in Filipino or English.
40.2. If any of these elements is not submitted
within the period set by the Regulations, the
application shall be considered withdrawn. (n)
Section 41. According a Filing Date. - The Office
shall examine whether the patent application
satisfies the requirements for the grant of date
of filing as provided in Section 40 hereof. If the
date of filing cannot be accorded, the applicant
shall be given an opportunity to correct the
deficiencies in accordance with the implementing
Regulations. If the application does not contain
all the elements indicated in Section 40, the
filing date should be that date when all the
elements are received. If the deficiencies are not
remedied within the prescribed time limit, the
application shall be considered withdrawn. (n)
Section 42. Formality Examination. - 42.1. After
the patent application has been accorded a filing
date and the required fees have been paid on time
in accordance with the Regulations, the applicant
shall comply with the formal requirements
specified by Section 32 and the Regulations within
the prescribed period, otherwise the application
shall be considered withdrawn.

42.2. The Regulations shall determine the


procedure for the re-examination and revival of
an application as well as the appeal to the
Director of Patents from any final action by the
examiner. (Sec. 16, R.A. No. 165a)
Section 43. Classification and Search. - An
application that has complied with the formal
requirements shall be classified and a search
conducted to determine the prior art. (n)
Section 44. Publication of Patent Application. -
44.1. The patent application shall be published
in the IPO Gazette together with a search document
established by or on behalf of the Office citing
any documents that reflect prior art, after the
expiration of eighteen ( 18) months from the
filing date or priority date.

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44.2. After publication of a patent application,
any interested party may inspect the application
documents filed with the Office.
44.3. The Director General subject to the approval
of the Secretary of Trade and Industry, may
prohibit or restrict the publication of an
application, if in his opinion, to do so would be
prejudicial to the national security and interests
of the Republic of the Philippines. (n)
Section 45. Confidentiality Before Publication. -
A patent application, which has not yet been
published, and all related documents, shall not
be made available for inspection without the
consent of the applicant. (n)
Section 46. Rights Conferred by a Patent
Application After Publication. - The applicant
shall have all the rights of a patentee under
Section 76 against any person who, without his
authorization, exercised any of the rights
conferred under Section 71 of this Act in relation
to the invention claimed in the published patent
application, as if a patent had been granted for
that invention: Provided, That the said person
had:
46.1. Actual knowledge that the invention that he
was using was the subject matter of a published
application; or
46.2. Received written notice that the invention
that he was using was the subject matter of a
published application being identified in the said
notice by its serial number: Provided, That the
action may not be filed until after the grant of
a patent on the published application and within
four (4) years from the commission of the acts
complained of. (n)
Section 47. Observation by Third Parties. -
Following the publication of the patent
application, any person may present observations
in writing concerning the patentability of the
invention. Such observations shall be
communicated to the applicant who may comment on
them. The Office shall acknowledge and put such

79 | P a g e
observations and comment in the file of the
application to which it relates. (n)
Section 48. Request for Substantive Examination.
- 48.1. The application shall be deemed withdrawn
unless within six (6) months from the date of
publication under Section 41, a written request
to determine whether a patent application meets
the requirements of Sections 21 to 27 and Sections
32 to 39 and the fees have been paid on time.
48.2. Withdrawal of the request for examination
shall be irrevocable and shall not authorize the
refund of any fee. (n)
Section 49. Amendment of Application. - An
applicant may amend the patent application during
examination: Provided, That such amendment shall
not include new matter outside the scope of the
disclosure contained in the application as filed.
(n)
Section 50. Grant of Patent. - 50.1. If the
application meets the requirements of this Act,
the Office shall grant the patent: Provided, That
all the fees are paid on time.

50.2. If the required fees for grant and printing


are not paid in due time, the application shall
be deemed to be withdrawn.

50.3. A patent shall take effect on the date of


the publication of the grant of the patent in the
IPO Gazette. (Sec. 18, R.A. No. 165a)
Section 51. Refusal of the Application. - 51.1.
The final order of refusal of the examiner to
grant the patent shall be appealable to the
Director in accordance with this Act.
51.2. The Regulations shall provide for the
procedure by which an appeal from the order of
refusal from the Director shall be undertaken. (n)
Section 52. Publication Upon Grant of Patent. -
52.1. The grant of the patent together with other
related information shall be published in the IPO
Gazette within the time prescribed by the
Regulations.

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52.2. Any interested party may inspect the
complete description, claims, and drawings of the
patent on file with the Office. (Sec. 18, R.A. No.
165a)
Section 53. Contents of Patent. - The patent shall
be issued in the name of the Republic of the
Philippines under the seal of the Office and shall
be signed by the Director, and registered together
with the description, claims, and drawings, if
any, in books and records of the Office. (Secs.
19 and 20, R.A. No. 165a)
Section 54. Term of Patent. - The term of a patent
shall be twenty (20) years from the filing date
of the application. (Sec. 21, R.A. No. 165a)
Section 55. Annual Fees. - 55.1. To maintain the
patent application or patent, an annual fee shall
be paid upon the expiration of four (4) years from
the date the application was published pursuant
to Section 44 hereof, and on each subsequent
anniversary of such date. Payment may be made
within three (3) months before the due date. The
obligation to pay the annual fees shall terminate
should the application be withdrawn, refused, or
cancelled.
55.2. If the annual fee is not paid, the patent
application shall be deemed withdrawn or the
patent considered as lapsed from the day following
the expiration of the period within which the
annual fees were due. A notice that the
application is deemed withdrawn or the lapse of a
patent for non-payment of any annual fee shall be
published in the IPO Gazette and the lapse shall
be recorded in the Register of the Office.

55.3. A grace period of six (6) months shall be


granted for the payment of the annual fee, upon
payment of the prescribed surcharge for delayed
payment. (Sec. 22, R.A. No. 165a)
Section 56. Surrender of Patent. - 56.1. The owner
of the patent, with the consent of all persons
having grants or licenses or other right, title
or interest in and to the patent and the invention
covered thereby, which have been recorded in the
Office, may surrender his patent or any claim or
81 | P a g e
claims forming part thereof to the Office for
cancellation.
56.2. A person may give notice to the Office of
his opposition to the surrender of a patent under
this section, and if he does so, the Bureau shall
notify the proprietor of the patent and determine
the question.
56.3. If the Office is satisfied that the patent
may properly be surrendered, he may accept the
offer and, as from the day when notice of his
acceptance is published in the IPO Gazette, the
patent shall cease to have effect, but no action
for infringement shall lie and no right
compensation shall accrue for any use of the
patented invention before that day for the
services of the government. (Sec. 24, R.A. No.
165a)
Section 57. Correction of Mistakes of the Office.
- The Director shall have the power to correct,
without fee, any mistake in a patent incurred
through the fault of the Office when clearly
disclosed in the records thereof, to make the
patent conform to the records. (Sec. 25, R.A. No.
165)
Section 58. Correction of Mistake in the
Application. - On request of any interested person
and payment of the prescribed fee, the Director
is authorized to correct any mistake in a patent
of a formal and clerical nature, not incurred
through the fault of the Office. (Sec. 26, R.A.
No. 165a)
Section 59. Changes in Patents. - 59.1. The owner
of a patent shall have the right to request the
Bureau to make the changes in the patent in order
to:

(a) Limit the extent of the protection


conferred by it;
(b) Correct obvious mistakes or to correct
clerical errors; and
(c) Correct mistakes or errors, other than
those referred to in letter (b), made in good

82 | P a g e
faith: Provided, That where the change would
result in a broadening of the extent of
protection conferred by the patent, no request
may be made after the expiration of two (2)
years from the grant of a patent and the change
shall not affect the rights of any third party
which has relied on the patent, as published.
59.2. No change in the patent shall be permitted
under this section, where the change would result
in the disclosure contained in the patent going
beyond the disclosure contained in the application
filed.
59.3. If, and to the extent to which the Office
changes the patent according to this section, it
shall publish the same. (n)
Section 60. Form and Publication of Amendment. -
An amendment or correction of a patent shall be
accomplished by a certificate of such amendment
or correction, authenticated by the seal of the
Office and signed by the Director, which
certificate shall be attached to the patent.
Notice of such amendment or correction shall be
published in the IPO Gazette and copies of the
patent kept or furnished by the Office shall
include a copy of the certificate of amendment or
correction. (Sec. 27, R.A. No. 165)

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85 | P a g e
Invention Patent Application Procedures

1. Application for Invention Patent

The application for a grant of Philippine


Patent (for Invention) must be filed with the
Bureau of Patents (BOP) of the Intellectual
Property Office (IPO) through the Receiving
Section/Counter of the Administrative, Financial
and Human Resource Development Services Bureau
(AFHRDSB) located at the ground floor of the IPO
Building. To obtain a filing date, the following
has to be submitted:

(a) Properly filled-out Request Form


for a Grant of Philippine Patent;

(b) Name, address and signature of


applicant(s); for non-resident applicant, the
name and address of his/her/their resident agent;
and

(c) Description of the invention and


one or more claims.
NOTE: It is advised that any drawing/s necessary
to understand the subject invention should be
submitted at the time of filing so that there
would not be a possible change in filing date due
to late submission/filing of said drawing/s .
(Rule 602 of the IRR)The other formal
requirements, which are not needed to obtain a
filing date, but maybe included at the time of
filing are:
(a) A filing fee (for big or small
entities) which maybe paid during application
filing or within one month from the date of
filing. The application shall be deemed
automatically cancelled/withdrawn in case of non-
payment of such fees;
(b) Drawing(s) necessary to understand
the invention;

(c) An abstract; and

86 | P a g e
(d) If the priority of an earlier filed
application is being claimed, the details of the
claim, i.e. filing date, file number and country
of origin.
2. Formality Examination

Upon receipt of the application, the


examiner checks if the application satisfies the
formal requirements needed for the grant of a
filing date. The date of filing is very important
under the present “first-to-file” system because
it serves to determine, in case of a dispute with
another applicant for the same invention, who has
the right to the patent.
3. Publication of Unexamined Application

After the formality examination, search


and the classification of the field of technology
to which the invention is
assigned, the application together with the
results of the search (which contains a list of
published patent applications or issued patents
for inventions, which are identical or equivalent
to those claimed by the application), will be
published in the IPO Gazette (after the expiration
of 18 months from the filing date or priority
date). After the publication of the application,
any person may present observations in writing
concerning the patentability of the invention.
Such observation shall be communicated to the
applicant who may comment on them.
4. Request for Substantive Examination
Substantive examination is conducted upon request

The request for substantive examination


of the application must be filed within six (6)
months from the date of the publication. The
application is considered withdrawn if no request
is made within that period. If the examiner finds
reason to refuse the registration of the
application, i.e. the application is not new,
inventive or industrially applicable, the Bureau
shall notify the applicant of the reason for
refusal/rejection giving the applicant the chance
to defend or amend the application.

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5. Decision to Grant Patent Registration or
Decision of Refusal

If the examiner finds no reason for


refusal of the application, or if the notice of
reason for refusal is satisfactorily complied with
by amendment or correction, the examiner issues a
decision to grant the patent registration.
Otherwise, the examiner refuses the application.
6. Inspection of Records

The grant of a patent together with


other information shall be published in the IPO
Gazette within six (6) months. Any interested
party may inspect the complete description,
claims, and drawings of the patent on file with
the Office.
7. Appeal

(a) Every applicant may appeal to the


Director of Patents the final refusal of the
examiner to grant the patent within two (2) months
from the mailing date of the final refusal. The
decision or order of the Director shall become
final and executory fifteen (15) days after
receipt of a copy by the appellant unless within
the same period, a motion for reconsideration is
filed with the Director or an appeal to the
Director General is filed together with the
payment of the required fee. (b) The decision of
the Director General may be appealed to the Court
of Appeals. If the applicant is still not
satisfied with the decision of the Court of
Appeals, he may appeal to the Supreme Court.

CHAPTER VI
CANCELLATION OF PATENTS AND SUBSTITUTION OF
PATENTEE
Section 61. Cancellation of Patents. - 61.1. Any
interested person may, upon payment of the

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required fee, petition to cancel the patent or any
claim thereof, or parts of the claim, on any of
the following GROUNDS:

(a) That what is claimed as the invention is


not new or Patentable;
(b) That the patent does not disclose the
invention in a manner sufficiently clear and
complete for it to be carried out by any person
skilled in the art; or

(c) That the patent is contrary to public


order or morality.
61.2. Where the grounds for cancellation relate
to some of the claims or parts of the claim,
cancellation may be effected to such extent only.
(Secs. 28 and 29, R.A. No. 165a)
Section 62. Requirement of the Petition. - The
petition for cancellation shall be in writing,
verified by the petitioner or by any person in his
behalf who knows the facts, specify the grounds
upon which it is based, include a statement of the
facts to be relied upon, and filed with the
Office. Copies of printed publications or of
patents of other countries, and other supporting
documents mentioned in the petition shall be
attached thereto, together with the translation
thereof in English, if not in the English
language. (Sec. 30, R.A. No. 165)
Section 63. Notice of Hearing. - Upon filing of a
petition for cancellation, the Director of Legal
Affairs shall forthwith serve notice of the filing
thereof upon the patentee and all persons having
grants or licenses, or any other right, title or
interest in and to the patent and the invention
covered thereby, as appears of record in the
Office, and of notice of the date of hearing
thereon on such persons and the petitioner. Notice
of the filing of the petition shall be published
in the IPO Gazette. (Sec. 31, R.A. No. 165a)
Section 64. Committee of Three. - In cases
involving highly technical issues, on motion of
any party, the Director of Legal Affairs may order
that the petition be heard and decided by a
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committee composed of the Director of Legal
Affairs as chairman and two (2) members who have
the experience or expertise in the field of
technology to which the patent sought to be
cancelled relates. The decision of the committee
shall be appealable to the Director General. (n)
Section 65. Cancellation of the Patent. - 65.1.
If the Committee finds that a case for
cancellation has been proved, it shall order the
patent or any specified claim or claims thereof
cancelled.
65.2. If the Committee finds that, taking into
consideration the amendment made by the patentee
during the cancellation proceedings, the patent
and the invention to which it relates meet the
requirement of this Act, it may decide to maintain
the patent as amended: Provided, That the fee for
printing of a new patent is paid within the time
limit prescribed in the Regulations.

65.3. If the fee for the printing of a new patent


is not paid in due time, the patent should be
revoked.

65.4. If the patent is amended under Subsection


65.2 hereof, the Bureau shall, at the same time
as it publishes the mention of the cancellation
decision, publish the abstract, representative
claims and drawings indicating clearly what the
amendments consist of. (n)
Section 66. Effect of Cancellation of Patent or
Claim. - The rights conferred by the patent or any
specified claim or claims cancelled shall
terminate. Notice of the cancellation shall be
published in the IPO Gazette. Unless restrained
by the Director General, the decision or order to
cancel by Director of Legal Affairs shall be
immediately executory even pending appeal. (Sec.
32, R.A. No. 165a)
CHAPTER VII
REMEDIES OF A PERSON WITH A RIGHT TO A PATENT
Section 67. Patent Application by Persons Not
Having the Right to a Patent. . - 67.1. If a person
referred to in Section 29 other than the
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applicant, is declared by final court order or
decision as having the right to the patent, such
person may, within three (3) months after the
decision has become final:
(a) Prosecute the application as his own
application in place of the applicant;
(b) File a new patent application in respect
of the same invention;

(c) Request that the application be refused;


or
(d) Seek cancellation of the patent, if one
has already been issued.
67.2. The provisions of Subsection 38.2 shall
apply mutatis mutandis to a new application filed
under Subsection 67. 1(b). (n)
Section 68. Remedies of the True and Actual
Inventor. - If a person, who was deprived of the
patent without his consent or through fraud is
declared by final court order or decision to be
the true and actual inventor, the court shall
order for his substitution as patentee, or at the
option of the true inventor, cancel the patent,
and award actual and other damages in his favor
if warranted by the circumstances. (Sec. 33, R.A.
No. 165a)
Section 69. Publication of the Court Order. - The
court shall furnish the Office a copy of the order
or decision referred to in Sections 67 and 68,
which shall be published in the IPO Gazette within
three (3) months from the date such order or
decision became final and executory, and shall be
recorded in the register of the Office. (n)
Section 70. Time to File Action in Court. - The
actions indicated in Sections 67 and 68 shall be
filed within one (1) year from the date of
publication made in accordance with Sections 44
and 51, respectively. (n)
CHAPTER VIII
RIGHTS OF PATENTEES AND INFRINGEMENT OF PATENTS

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Section 71. Rights Conferred by Patent. - 71.1. A
patent shall confer on its owner the following
exclusive rights:
(a) Where the subject matter of a patent is a
product, to restrain, prohibit and prevent any
unauthorized person or entity from making,
using, offering for sale, selling or importing
that product;
(b) Where the subject matter of a patent is a
process, to restrain, prevent or prohibit any
unauthorized person or entity from using the
process, and from manufacturing, dealing in,
using, selling or offering for sale, or
importing any product obtained directly or
indirectly from such process.

71.2. Patent owners shall also have the right to


assign, or transfer by succession the patent, and
to conclude licensing contracts for the same.
(Sec. 37, R.A. No. 165a)
Section 72. Limitations of Patent Rights. - The
owner of a patent has no right to prevent third
parties from performing, without his
authorization, the acts referred to in Section 71
hereof in the following circumstances:

72.1. Using a patented product which has been put


on the market in the Philippines by the owner of
the product, or with his express consent, insofar
as such use is performed after that product has
been so put on the said market;

72.2. Where the act is done privately and on a


non-commercial scale or for a non-commercial
purpose: Provided, That it does not significantly
prejudice the economic interests of the owner of
the patent;

72.3. Where the act consists of making or using


exclusively for the purpose of experiments that
relate to the subject matter of the patented
invention;
72.4. Where the act consists of the preparation
for individual cases, in a pharmacy or by a
medical professional, of a medicine in accordance

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with a medical prescription or acts concerning the
medicine so prepared;
72.5. Where the invention is used in any ship,
vessel, aircraft, or land vehicle of any other
country entering the territory of the Philippines
temporarily or accidentally: Provided, That such
invention is used exclusively for the needs of the
ship, vessel, aircraft, or land vehicle and not
used for the manufacturing of anything to be sold
within the Philippines. (Secs. 38 and 39, R.A. No.
165a)
Section 73. Prior User. - 73.1. Notwithstanding
Section 72 hereof, any prior user, who, in good
faith was using the invention or has undertaken
serious preparations to use the invention in his
enterprise or business, before the filing date or
priority date of the application on which a patent
is granted, shall have the right to continue the
use thereof as envisaged in such preparations
within the territory where the patent produces its
effect.

73.2. The right of the prior user may only be


transferred or assigned together with his
enterprise or business, or with that part of his
enterprise or business in which the use or
preparations for use have been made. (Sec. 40,
R.A. No. 165a)
Section 74. Use of Invention by Government. -
74.1. A Government agency or third person
authorized by the Government may exploit the
invention even without agreement of the patent
owner where:
(a) The public interest, in particular,
national security, nutrition, health or the
development of other sectors, as determined by
the appropriate agency of the government, so
requires; or

(b) A judicial or administrative body has


determined that the manner of exploitation, by
the owner of the patent or his licensee is
anti-competitive.

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74.2. The use by the Government, or third person
authorized by the Government shall be subject,
mutatis mutandis, to the conditions set forth in
Sections 95 to 97 and 100 to 102. (Sec. 41, R.A.
No. 165a)
Section 75. Extent of Protection and
Interpretation of Claims. - 75.1. The extent of
protection conferred by the patent shall be
determined by the claims, which are to be
interpreted in the light of the description and
drawings.
75.2. For the purpose of determining the extent
of protection conferred by the patent, due account
shall be taken of elements which are equivalent
to the elements expressed in the claims, so that
a claim shall be considered to cover not only all
the elements as expressed therein, but also
equivalents. (n)

Patent Infringement

1. Tests in patent infringement

a. Literal Infringement - In using literal


infringement as a test, ". . . resort must be had,
in the first instance, to the words of the claim.
If accused matter clearly falls within the claim,
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infringement is made out and that is the end of
it." To determine whether the particular item
falls within the literal meaning of the patent
claims, the court must juxtapose the claims of the
patent and the accused product within the overall
context of the claims and specifications, to
determine whether there is exact identity of all
material elements.
Literal infringement exists when every
limitation recited in a patent claim is found in
the infringing device (or process).
b. Infringement by equivalents happens when a
device (or process) appropriates a prior invention
by incorporating its innovative concept and,
although with some modification and change,
performs substantially the same function in
substantially the same way to achieve
substantially the same result. This "function-
way-result" equation lies at the heart of the
doctrine of equivalents.
SMITH KLINE BECKMAN CORPORATION vs.CA

Smith Kline Beckman Corporation (petitioner), a


corporation existing by virtue of the laws of the
state of Pennsylvania, United States of America
(U.S.) and licensed to do business in the
Philippines, filed on October 8, 1976, as
assignee, before the Philippine Patent Office (now
Bureau of Patents, Trademarks and Technology
Transfer) an application for patent over an
invention entitled "Methods and Compositions for
Producing Biphasic Parasiticide Activity Using
Methyl 5 Propylthio-2-Benzimidazole Carbamate."
The application bore Serial No. 18989.

On September 24, 1981, Letters Patent No. 145611


for the aforesaid invention was issued to
petitioner for a term of seventeen (17) years.

The letters patent provides in its claims2 that


the patented invention consisted of a new compound
named methyl 5 propylthio-2-benzimidazole
carbamate and the methods or compositions
utilizing the compound as an active ingredient in
fighting infections caused by gastrointestinal
parasites and lungworms in animals such as swine,
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sheep, cattle, goats, horses, and even pet
animals.
Tryco Pharma Corporation (private respondent) is
a domestic corporation that manufactures,
distributes and sells veterinary products
including Impregon, a drug that has Albendazole
for its active ingredient and is claimed to be
effective against gastro-intestinal roundworms,
lungworms, tapeworms and fluke infestation in
carabaos, cattle and goats.

Petitioner sued private respondent for


infringement of patent and unfair competition
before the Caloocan City Regional Trial Court
(RTC).3 It claimed that its patent covers or
includes the substance Albendazole such that
private respondent, by manufacturing, selling,
using, and causing to be sold and used the drug
Impregon without its authorization, infringed
Claims 2, 3, 4, 7, 8 and 9 of Letters Patent No.
145614 as well as committed unfair competition
under Article 189, paragraph 1 of the Revised
Penal Code and Section 29 of Republic Act No. 166
(The Trademark Law) for advertising and selling
as its own the drug Impregon although the same
contained petitioner’s patented Albendazole.5

On motion of petitioner, Branch 125 of the


Caloocan RTC issued a temporary restraining order
against private respondent enjoining it from
committing acts of patent infringement and unfair
competition.6 A writ of preliminary injunction was
subsequently issued.7
Private respondent in its Answer8 averred that
Letters Patent No. 14561 does not cover the
substance Albendazole for nowhere in it does that
word appear; that even if the patent were to
include Albendazole, such substance is
unpatentable; that the Bureau of Food and Drugs
allowed it to manufacture and market Impregon with
Albendazole as its known ingredient; that there
is no proof that it passed off in any way its
veterinary products as those of petitioner; that
Letters Patent No. 14561 is null and void, the
application for the issuance thereof having been
filed beyond the one year period from the filing

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of an application abroad for the same invention
covered thereby, in violation of Section 15 of
Republic Act No. 165 (The Patent Law); and that
petitioner is not the registered patent holder.
Private respondent lodged a Counterclaim against
petitioner for such amount of actual damages as
may be proven; P1,000,000.00 in moral damages;
P300,000.00 in exemplary damages; and P150,000.00
in attorney’s fees.
Finding for private respondent, the trial court
rendered a Decision dated July 23, 1991,9 the
dispositive portion of which reads:

WHEREFORE, in view of the foregoing, plaintiff’s


complaint should be, as it is hereby, DISMISSED.
The Writ of injunction issued in connection with
the case is hereby ordered DISSOLVED.
The Letters Patent No. 14561 issued by the then
Philippine Patents Office is hereby declared null
and void for being in violation of Sections 7, 9
and 15 of the Patents Law.
Pursuant to Sec. 46 of the Patents Law, the
Director of Bureau of Patents is hereby directed
to cancel Letters Patent No. 14561 issued to the
plaintiff and to publish such cancellation in the
Official Gazette.

Defendant Tryco Pharmaceutical Corporation is


hereby awarded P330,000.00 actual damages and
P100,000.00 attorney’s fees as prayed for in its
counterclaim but said amount awarded to defendant
is subject to the lien on correct payment of
filing fees.
SO ORDERED. (Underscoring supplied)
On appeal, the Court of Appeals, by Decision of
April 21, 1995,10 upheld the trial court’s finding
that private respondent was not liable for any
infringement of the patent of petitioner in light
of the latter’s failure to show that Albendazole
is the same as the compound subject of Letters
Patent No. 14561. Noting petitioner’s admission
of the issuance by the U.S. of a patent for
Albendazole in the name of Smith Kline and French

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Laboratories which was petitioner’s former
corporate name, the appellate court considered the
U.S. patent as implying that Albendazole is
different from methyl 5 propylthio-2-
benzimidazole carbamate. It likewise found that
private respondent was not guilty of deceiving the
public by misrepresenting that Impregon is its
product.
The appellate court, however, declared that
Letters Patent No. 14561 was not void as it
sustained petitioner’s explanation that Patent
Application Serial No. 18989 which was filed on
October 8, 1976 was a divisional application of
Patent Application Serial No. 17280 filed on June
17, 1975 with the Philippine Patent Office, well
within one year from petitioner’s filing on June
19, 1974 of its Foreign Application Priority Data
No. 480,646 in the U.S. covering the same compound
subject of Patent Application Serial No. 17280.
Applying Section 17 of the Patent Law, the Court
of Appeals thus ruled that Patent Application
Serial No. 18989 was deemed filed on June 17, 1995
or still within one year from the filing of a
patent application abroad in compliance with the
one-year rule under Section 15 of the Patent Law.
And it rejected the submission that the compound
in Letters Patent No. 14561 was not patentable,
citing the jurisprudentially established
presumption that the Patent Office’s
determination of patentability is correct.
Finally, it ruled that petitioner established
itself to be the one and the same assignee of the
patent notwithstanding changes in its corporate
name. Thus the appellate court disposed:

WHEREFORE, the judgment appealed from is AFFIRMED


with the MODIFICATION that the orders for the
nullification of Letters Patent No. 14561 and for
its cancellation are deleted therefrom.

SO ORDERED.
Petitioner’s motion for reconsideration of the
Court of Appeals’ decision having been denied11
the present petition for review on certiorari12
was filed, assigning as errors the following:

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I. THE COURT OF APPEALS GRAVELY ERRED IN NOT
FINDING THAT ALBENDAZOLE, THE ACTIVE
INGREDIENT IN TRYCO’S "IMPREGON" DRUG, IS
INCLUDED IN PETITIONER’S LETTERS PATENT NO.
14561, AND THAT CONSEQUENTLY TRYCO IS
ANSWERABLE FOR PATENT INFRINGEMENT.
II. THE COURT OF APPEALS GRAVELY ERRED IN
AWARDING TO PRIVATE RESPONDENT TRYCO PHARMA
CORPORATION P330,000.00 ACTUAL DAMAGES AND
P100,000.00 ATTORNEY’S FEES.

Petitioner argues that under the doctrine of


equivalents for determining patent infringement,
Albendazole, the active ingredient it alleges was
appropriated by private respondent for its drug
Impregon, is substantially the same as methyl 5
propylthio-2-benzimidazole carbamate covered by
its patent since both of them are meant to combat
worm or parasite infestation in animals. It cites
the "unrebutted" testimony of its witness Dr.
Godofredo C. Orinion (Dr. Orinion) that the
chemical formula in Letters Patent No. 14561
refers to the compound Albendazole. Petitioner
adds that the two substances substantially do the
same function in substantially the same way to
achieve the same results, thereby making them
truly identical. Petitioner thus submits that the
appellate court should have gone beyond the
literal wordings used in Letters Patent No. 14561,
beyond merely applying the literal infringement
test, for in spite of the fact that the word
Albendazole does not appear in petitioner’s
letters patent, it has ably shown by evidence its
sameness with methyl 5 propylthio-2-benzimidazole
carbamate.

Petitioner likewise points out that its


application with the Philippine Patent Office on
account of which it was granted Letters Patent No.
14561 was merely a divisional application of a
prior application in the U. S. which granted a
patent for Albendazole. Hence, petitioner
concludes that both methyl 5 propylthio-2-
benzimidazole carbamate and the U.S.-patented
Albendazole are dependent on each other and
mutually contribute to produce a single result,
thereby making Albendazole as much a part of
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Letters Patent No. 14561 as the other substance
is.
Petitioner concedes in its Sur-Rejoinder13 that
although methyl 5 propylthio-2-benzimidazole
carbamate is not identical with Albendazole, the
former is an improvement or improved version of
the latter thereby making both substances still
substantially the same.
With respect to the award of actual damages in
favor of private respondent in the amount of
P330,000.00 representing lost profits, petitioner
assails the same as highly speculative and
conjectural, hence, without basis. It assails too
the award of P100,000.00 in attorney’s fees as not
falling under any of the instances enumerated by
law where recovery of attorney’s fees is allowed.
In its Comment,14 private respondent contends that
application of the doctrine of equivalents would
not alter the outcome of the case, Albendazole and
methyl 5 propylthio-2-benzimidazole carbamate
being two different compounds with different
chemical and physical properties. It stresses that
the existence of a separate U.S. patent for
Albendazole indicates that the same and the
compound in Letters Patent No. 14561 are different
from each other; and that since it was on account
of a divisional application that the patent for
methyl 5 propylthio-2-benzimidazole carbamate was
issued, then, by definition of a divisional
application, such a compound is just one of
several independent inventions alongside
Albendazole under petitioner’s original patent
application.
As has repeatedly been held, only questions of law
may be raised in a petition for review on
certiorari before this Court. Unless the factual
findings of the appellate court are mistaken,
absurd, speculative, conjectural, conflicting,
tainted with grave abuse of discretion, or
contrary to the findings culled by the court of
origin,15 this Court does not review them.
From an examination of the evidence on record,
this Court finds nothing infirm in the appellate

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court’s conclusions with respect to the principal
issue of whether private respondent committed
patent infringement to the prejudice of
petitioner.
The burden of proof to substantiate a charge for
patent infringement rests on the plaintiff.16 In
the case at bar, petitioner’s evidence consists
primarily of its Letters Patent No. 14561, and the
testimony of Dr. Orinion, its general manager in
the Philippines for its Animal Health Products
Division, by which it sought to show that its
patent for the compound methyl 5 propylthio-2-
benzimidazole carbamate also covers the substance
Albendazole.
From a reading of the 9 claims of Letters Patent
No. 14561 in relation to the other portions
thereof, no mention is made of the compound
Albendazole. All that the claims disclose are: the
covered invention, that is, the compound methyl 5
propylthio-2-benzimidazole carbamate; the
compound’s being anthelmintic but nontoxic for
animals or its ability to destroy parasites
without harming the host animals; and the patented
methods, compositions or preparations involving
the compound to maximize its efficacy against
certain kinds of parasites infecting specified
animals.

When the language of its claims is clear and


distinct, the patentee is bound thereby and may
not claim anything beyond them.17 And so are the
courts bound which may not add to or detract from
the claims matters not expressed or necessarily
implied, nor may they enlarge the patent beyond
the scope of that which the inventor claimed and
the patent office allowed, even if the patentee
may have been entitled to something more than the
words it had chosen would include.18

It bears stressing that the mere absence of the


word Albendazole in Letters Patent No. 14561 is
not determinative of Albendazole’s non-inclusion
in the claims of the patent. While Albendazole is
admittedly a chemical compound that exists by a
name different from that covered in petitioner’s
letters patent, the language of Letter Patent No.

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14561 fails to yield anything at all regarding
Albendazole. And no extrinsic evidence had been
adduced to prove that Albendazole inheres in
petitioner’s patent in spite of its omission
therefrom or that the meaning of the claims of the
patent embraces the same.
While petitioner concedes that the mere literal
wordings of its patent cannot establish private
respondent’s infringement, it urges this Court to
apply the doctrine of equivalents.

The doctrine of equivalents provides that an


infringement also takes place when a device
appropriates a prior invention by incorporating
its innovative concept and, although with some
modification and change, performs substantially
the same function in substantially the same way
to achieve substantially the same result.19 Yet
again, a scrutiny of petitioner’s evidence fails
to convince this Court of the substantial sameness
of petitioner’s patented compound and
Albendazole. While both compounds have the effect
of neutralizing parasites in animals, identity of
result does not amount to infringement of patent
unless Albendazole operates in substantially the
same way or by substantially the same means as the
patented compound, even though it performs the
same function and achieves the same result.20 In
other words, the principle or mode of operation
must be the same or substantially the same.21

The doctrine of equivalents thus requires


satisfaction of the function-means-and-result
test, the patentee having the burden to show that
all three components of such equivalency test are
met.22
As stated early on, petitioner’s evidence fails
to explain how Albendazole is in every essential
detail identical to methyl 5 propylthio-2-
benzimidazole carbamate. Apart from the fact that
Albendazole is an anthelmintic agent like methyl
5 propylthio-2-benzimidazole carbamate, nothing
more is asserted and accordingly substantiated
regarding the method or means by which Albendazole
weeds out parasites in animals, thus giving no
information on whether that method is

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substantially the same as the manner by which
petitioner’s compound works. The testimony of Dr.
Orinion lends no support to petitioner’s cause,
he not having been presented or qualified as an
expert witness who has the knowledge or expertise
on the matter of chemical compounds.
As for the concept of divisional applications
proffered by petitioner, it comes into play when
two or more inventions are claimed in a single
application but are of such a nature that a single
patent may not be issued for them.23 The applicant
thus is required "to divide," that is, to limit
the claims to whichever invention he may elect,
whereas those inventions not elected may be made
the subject of separate applications which are
called "divisional applications."24 What this only
means is that petitioner’s methyl 5 propylthio-2-
benzimidazole carbamate is an invention distinct
from the other inventions claimed in the original
application divided out, Albendazole being one of
those other inventions. Otherwise, methyl 5
propylthio-2-benzimidazole carbamate would not
have been the subject of a divisional application
if a single patent could have been issued for it
as well as Albendazole.1âwphi1

The foregoing discussions notwithstanding, this


Court does not sustain the award of actual damages
and attorney’s fees in favor of private
respondent. The claimed actual damages of
P330,000.00 representing lost profits or revenues
incurred by private respondent as a result of the
issuance of the injunction against it, computed
at the rate of 30% of its alleged P100,000.00
monthly gross sales for eleven months, were
supported by the testimonies of private
respondent’s President25 and Executive Vice-
President that the average monthly sale of
Impregon was P100,000.00 and that sales plummeted
to zero after the issuance of the injunction.26
While indemnification for actual or compensatory
damages covers not only the loss suffered (damnum
emergens) but also profits which the obligee
failed to obtain (lucrum cessans or ganacias
frustradas), it is necessary to prove the actual
amount of damages with a reasonable degree of
certainty based on competent proof and on the best
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evidence obtainable by the injured party.27 The
testimonies of private respondent’s officers are
not the competent proof or best evidence
obtainable to establish its right to actual or
compensatory damages for such damages also require
presentation of documentary evidence to
substantiate a claim therefor. 28

In the same vein, this Court does not sustain the


grant by the appellate court of attorney’s fees
to private respondent anchored on Article 2208 (2)
of the Civil Code, private respondent having been
allegedly forced to litigate as a result of
petitioner’s suit. Even if a claimant is compelled
to litigate with third persons or to incur
expenses to protect its rights, still attorney’s
fees may not be awarded where no sufficient
showing of bad faith could be reflected in a
party’s persistence in a case other than an
erroneous conviction of the righteousness of his
cause.29 There exists no evidence on record
indicating that petitioner was moved by malice in
suing private respondent.
This Court, however, grants private respondent
temperate or moderate damages in the amount of
P20,000.00 which it finds reasonable under the
circumstances, it having suffered some pecuniary
loss the amount of which cannot, from the nature
of the case, be established with certainty.30
WHEREFORE, the assailed decision of the Court of
Appeals is hereby AFFIRMED with MODIFICATION. The
award of actual or compensatory damages and
attorney’s fees to private respondent, Tryco
Pharma Corporation, is DELETED; instead, it is
hereby awarded the amount of P20,000.00 as
temperate or moderate damages.

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Section 76. Civil Action for Infringement. - 76.1.
The making, using, offering for sale, selling, or
importing a patented product or a product obtained
directly or indirectly from a patented process,
or the use of a patented process without the
authorization of the patentee constitutes patent
infringement.

76.2. Any patentee, or anyone possessing any


right, title or interest in and to the patented
invention, whose rights have been infringed, may
bring a civil action before a court of competent
jurisdiction, to recover from the infringer such
damages sustained thereby, plus attorney's fees
and other expenses of litigation, and to secure
an injunction for the protection of his rights.
76.3. If the damages are inadequate or cannot be
readily ascertained with reasonable certainty,
the court may award by way of damages a sum
equivalent to reasonable royalty.

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76.4. The court may, according to the
circumstances of the case, award damages in a sum
above the amount found as actual damages
sustained: Provided, That the award does not
exceed three (3) times the amount of such actual
damages.
76.5. The court may, in its discretion, order that
the infringing goods, materials and implements
predominantly used in the infringement be disposed
of outside the channels of commerce or destroyed,
without compensation.
76.6. Anyone who actively induces the infringement
of a patent or provides the infringer with a
component of a patented product or of a product
produced because of a patented process knowing it
to be especially adopted for infringing the
patented invention and not suitable for
substantial non-infringing use shall be liable as
a contributory infringer and shall be jointly and
severally liable with the infringer. (Sec. 42,
R.A. No. 165a)
Section 77. Infringement Action by a Foreign
National. - Any foreign national or juridical
entity who meets the requirements of Section 3 and
not engaged in business in the Philippines, to
which a patent has been granted or assigned under
this Act, may bring an action for infringement of
patent, whether or not it is licensed to do
business in the Philippines under existing law.
(Sec. 41-A, R.A. No. 165a)
Section 78. Process Patents; Burden of Proof . -
If the subject matter of a patent is a process for
obtaining a product, any identical product shall
be presumed to have been obtained through the use
of the patented process if the product is new or
there is substantial likelihood that the identical
product was made by the process and the owner of
the patent has been unable despite reasonable
efforts, to determine the process actually used.
In ordering the defendant to prove that the
process to obtain the identical product is
different from the patented process, the court
shall adopt measures to protect, as far as

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practicable, his manufacturing and business
secrets. (n)
Section 79. Limitation of Action for Damages. -
No damages can be recovered for acts of
infringement committed more than four (4) years
before the institution of the action for
infringement. (Sec. 43, R.A. No. 165)
Section 80. Damages, Requirement of Notice. -
Damages cannot be recovered for acts of
infringement committed before the infringer had
known, or had reasonable grounds to know of the
patent. It is presumed that the infringer had
known of the patent if on the patented product,
or on the container or package in which the
article is supplied to the public, or on the
advertising material relating to the patented
product or process, are placed the words
"Philippine Patent" with the number of the patent.
(Sec. 44, R.A. No. 165a)
Section 81. Defenses in Action for Infringement.
- In an action for infringement, the defendant,
in addition to other defenses available to him,
may show the invalidity of the patent, or any
claim thereof, on any of the grounds on which a
petition of cancellation can be brought under
Section 61 hereof. (Sec. 45, R.A. No. 165)
Section 82. Patent Found Invalid May be Cancelled.
- In an action for infringement, if the court
shall find the patent or any claim to be invalid,
it shall cancel the same, and the Director of
Legal Affairs upon receipt of the final judgment
of cancellation by the court, shall record that
fact in the register of the Office and shall
publish a notice to that effect in the IPO
Gazette. (Sec. 46, R.A. No. 165a)
Section 83. Assessor in Infringement Action. -
83.1. Two (2) or more assessors may be appointed
by the court. The assessors shall be possessed of
the necessary scientific and technical knowledge
required by the subject matter in litigation.
Either party may challenge the fitness of any
assessor proposed for appointment.

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83.2. Each assessor shall receive a compensation
in an amount to be fixed by the court and advanced
by the complaining party, which shall be awarded
as part of his costs should he prevail in the
action. (Sec. 47, R.A. No. 165a)
Section 84. Criminal Action for Repetition of
Infringement. - If infringement is repeated by the
infringer or by anyone in connivance with him
after finality of the judgment of the court
against the infringer, the offenders shall,
without prejudice to the institution of a civil
action for damages, be criminally liable therefor
and, upon conviction, shall suffer imprisonment
for the period of not less than six (6) months but
not more than three (3) years and/or a fine of not
less than One hundred thousand pesos (P100,000)
but not more than Three hundred thousand pesos
(P300,000), at the discretion of the court. The
criminal action herein provided shall prescribe
in three (3) years from date of the commission of
the crime. (Sec. 48, R.A. No. 165a)

CHAPTER IX
VOLUNTARY LICENSING

Section 85. Voluntary License Contract. - To


encourage the transfer and dissemination of
technology, prevent or control practices and
conditions that may in particular cases constitute
an abuse of intellectual property rights having
an adverse effect on competition and trade, all
technology transfer arrangements shall comply
with the provisions of this Chapter. (n)
Section 86. Jurisdiction to Settle Disputes on
Royalties. - The Director of the Documentation,
Information and Technology Transfer Bureau shall
exercise quasi-judicial jurisdiction in the
settlement of disputes between parties to a
technology transfer arrangement arising from
technology transfer payments, including the
fixing of appropriate amount or rate of royalty.
(n)

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Section 87. Prohibited Clauses. - Except in cases
under Section 91, the following provisions shall
be deemed prima facie to have an adverse effect
on competition and trade:
87.1. Those which impose upon the licensee the
obligation to acquire from a specific source
capital goods, intermediate products, raw
materials, and other technologies, or of
permanently employing personnel indicated by the
licensor;

87.2. Those pursuant to which the licensor


reserves the right to fix the sale or resale
prices of the products manufactured on the basis
of the license;

87.3. Those that contain restrictions regarding


the volume and structure of production;
87.4. Those that prohibit the use of competitive
technologies in a non-exclusive technology
transfer agreement;

87.5. Those that establish a full or partial


purchase option in favor of the licensor;

87.6. Those that obligate the licensee to transfer


for free to the licensor the inventions or
improvements that may be obtained through the use
of the licensed technology;
87.7. Those that require payment of royalties to
the owners of patents for patents which are not
used;

87.8. Those that prohibit the licensee to export


the licensed product unless justified for the
protection of the legitimate interest of the
licensor such as exports to countries where
exclusive licenses to manufacture and/or
distribute the licensed product(s) have already
been granted;

87.9. Those which restrict the use of the


technology supplied after the expiration of the
technology transfer arrangement, except in cases
of early termination of the technology transfer

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arrangement due to reason(s) attributable to the
licensee;
87.10. Those which require payments for patents
and other industrial property rights after their
expiration, termination arrangement;
87.11. Those which require that the technology
recipient shall not contest the validity of any
of the patents of the technology supplier;

87.12. Those which restrict the research and


development activities of the licensee designed
to absorb and adapt the transferred technology to
local conditions or to initiate research and
development programs in connection with new
products, processes or equipment;

87.13. Those which prevent the licensee from


adapting the imported technology to local
conditions, or introducing innovation to it, as
long as it does not impair the quality standards
prescribed by the licensor;

87.14. Those which exempt the licensor for


liability for non-fulfilment of his
responsibilities under the technology transfer
arrangement and/or liability arising from third
party suits brought about by the use of the
licensed product or the licensed technology; and

87.15. Other clauses with equivalent effects.


(Sec. 33-C (2), R.A 165a)
Section 88. Mandatory Provisions. - The following
provisions shall be included in voluntary license
contracts:
88.1. That the laws of the Philippines shall
govern the interpretation of the same and in the
event of litigation, the venue shall be the proper
court in the place where the licensee has its
principal office;

88.2. Continued access to improvements in


techniques and processes related to the technology
shall be made available during the period of the
technology transfer arrangement;

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88.3. In the event the technology transfer
arrangement shall provide for arbitration, the
Procedure of Arbitration of the Arbitration Law
of the Philippines or the Arbitration Rules of the
United Nations Commission on International Trade
Law (UNCITRAL) or the Rules of Conciliation and
Arbitration of the International Chamber of
Commerce (ICC) shall apply and the venue of
arbitration shall be the Philippines or any
neutral country; and

88.4. The Philippine taxes on all payments


relating to the technology transfer arrangement
shall be borne by the licensor. (n)

CHAPTER X
COMPULSORY LICENSING
Section 93. Grounds for Compulsory Licensing. -
The Director of Legal Affairs may grant a license
to exploit a patented invention, even without the
agreement of the patent owner, in favor of any
person who has shown his capability to exploit the
invention, under any of the following
circumstances:
93.1. National emergency or other circumstances
of extreme urgency;

93.2. Where the public interest, in particular,


national security, nutrition, health or the
development of other vital sectors of the national
economy as determined by the appropriate agency
of the Government, so requires; or

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93.3. Where a judicial or administrative body has
determined that the manner of exploitation by the
owner of the patent or his licensee is anti-
competitive; or
93.4. In case of public non-commercial use of the
patent by the patentee, without satisfactory
reason;
93.5. If the patented invention is not being
worked in the Philippines on a commercial scale,
although capable of being worked, without
satisfactory reason: Provided, That the
importation of the patented article shall
constitute working or using the patent. (Secs. 34,
34-A, 34-B, R.A. No. 165a)
Section 94. Period for Filing a Petition for a
Compulsory License. - 94.1. A compulsory license
may not be applied for on the ground stated in
Subsection 93.5 before the expiration of a period
of four (4) years from the date of filing of the
application or three (3) years from the date of
the patent whichever period expires last.
94.2. A compulsory license which is applied for
on any of the grounds stated in Subsections 93.2,
93.3, and 93.4 and Section 97 may be applied for
at any time after the grant of the patent. (Sec.
34(1), R.A. No. 165)
Section 95. Requirement to Obtain a License on
Reasonable Commercial Terms. - 95.1. The license
will only be granted after the petitioner has made
efforts to obtain authorization from the patent
owner on reasonable commercial terms and
conditions but such efforts have not been
successful within a reasonable period of time.

95.2. The requirement under Subsection 95.1 shall


not apply in the following cases:

(a) Where the petition for compulsory license


seeks to remedy a practice determined after
judicial or administrative process to be anti-
competitive;
(b) In situations of national emergency or
other circumstances of extreme urgency;

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(c) In cases of public non-commercial use.
95.3. In situations of national emergency or other
circumstances of extreme urgency, the right holder
shall be notified as soon as reasonably
practicable.
95.4. In the case of public non-commercial use,
where the government or contractor, without making
a patent search, knows or has demonstrable grounds
to know that a valid patent is or will be used by
or for the government, the right holder shall be
informed promptly. (n)
Section 96. Compulsory Licensing of Patents
Involving Semi-Conductor Technology. - In the case
of compulsory licensing of patents involving semi-
conductor technology, the license may only be
granted in case of public non-commercial use or
to remedy a practice determined after judicial or
administrative process to be anti-competitive.
(n)
Section 97. Compulsory License Based on
Interdependence of Patents. - If the invention
protected by a patent, hereafter referred to as
the "second patent," within the country cannot be
worked without infringing another patent,
hereafter referred to as the "first patent,"
granted on a prior application or benefiting from
an earlier priority, a compulsory license may be
granted to the owner of the second patent to the
extent necessary for the working of his invention,
subject to the following conditions:

97.1. The invention claimed in the second patent


involves an important technical advance of
considerable economic significance in relation to
the first patent;
97.2. The owner of the first patent shall be
entitled to a cross-license on reasonable terms
to use the invention claimed in the second patent;
97.3. The use authorized in respect of the first
patent shall be non-assignable except with the
assignment of the second patent; and

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97.4. The terms and conditions of Sections 95, 96
and 98 to 100 of this Act. (Sec. 34-C, R.A. No.
165a)
Section 98. Form and Contents of Petition. - The
petition for compulsory licensing must be in
writing, verified by the petitioner and
accompanied by payment of the required filing fee.
It shall contain the name and address of the
petitioner as well as those of the respondents,
the number and date of issue of the patent in
connection with which compulsory license is
sought, the name of the patentee, the title of the
invention, the statutory grounds upon which
compulsory license is sought, the ultimate facts
constituting the petitioner's cause of action, and
the relief prayed for. (Sec. 34-D, R.A. No. 165)
Section 99. Notice of Hearing. - 99.1. Upon filing
of a petition, the Director of Legal Affairs shall
forthwith serve notice of the filing thereof upon
the patent owner and all persons having grants or
licenses, or any other right, title or interest
in and to the patent and invention covered thereby
as appears of record in the Office, and of notice
of the date of hearing thereon, on such persons
and petitioner. The resident agent or
representative appointed in accordance with
Section 33 hereof, shall be bound to accept
service of notice of the filing of the petition
within the meaning of this Section.

99.2. In every case, the notice shall be published


by the said Office in a newspaper of general
circulation, once a week for three (3) consecutive
weeks and once in the IPO Gazette at applicant's
expense. (Sec. 34-E, R.A. No. 165)
Section 100. Terms and Conditions of Compulsory
License. - The basic terms and conditions
including the rate of royalties of a compulsory
license shall be fixed by the Director of Legal
Affairs subject to the following conditions:
100.1. The scope and duration of such license
shall be limited to the purpose for which it was
authorized;

100.2. The license shall be non-exclusive;


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100.3. The license shall be non-assignable, except
with that part of the enterprise or business with
which the invention is being exploited;
100.4. Use of the subject matter of the license
shall be devoted predominantly for the supply of
the Philippine market: Provided, That this
limitation shall not apply where the grant of the
license is based on the ground that the patentee's
manner of exploiting the patent is determined by
judicial or administrative process, to be anti-
competitive.
100.5. The license may be terminated upon proper
showing that circumstances which led to its grant
have ceased to exist and are unlikely to recur:
Provided, That adequate protection shall be
afforded to the legitimate interest of the
licensee; and

100.6. The patentee shall be paid adequate


remuneration taking into account the economic
value of the grant or authorization, except that
in cases where the license was granted to remedy
a practice which was determined after judicial or
administrative process, to be anti-competitive,
the need to correct the anti-competitive practice
may be taken into account in fixing the amount of
remuneration. (Sec. 35-B, R.A. No. 165a)
Section 101. Amendment, Cancellation, Surrender
of Compulsory License. - 101.1. Upon the request
of the patentee or the licensee, the Director of
Legal Affairs may amend the decision granting the
compulsory license, upon proper showing of new
facts or circumstances justifying such amendment.
101.2. Upon the request of the patentee, the said
Director may cancel the compulsory license:
(a) If the ground for the grant of the
compulsory license no longer exists and is
unlikely to recur;
(b) If the licensee has neither begun to
supply the domestic market nor made serious
preparation therefor;

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(c) If the licensee has not complied with the
prescribed terms of the license;
101.3. The licensee may surrender the license by
a written declaration submitted to the Office.

101.4. The said Director shall cause the


amendment, surrender, or cancellation in the
Register, notify the patentee, and/or the
licensee, and cause notice thereof to be published
in the IPO Gazette. (Sec. 35-D, R.A. No. 165a)
Section 102. Licensee's Exemption from Liability.
- Any person who works a patented product,
substance and/or process under a license granted
under this Chapter, shall be free from any
liability for infringement: Provided however,
That in the case of voluntary licensing, no
collusion with the licensor is proven. This is
without prejudice to the right of the rightful
owner of the patent to recover from the licensor
whatever he may have received as royalties under
the license. (Sec. 35-E, R.A. No. 165a)

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