Trademarks Midterms Case Digests (Atty.
Ortiguerra)
Distelleria Washington, Inc. v. Court of Appeals
Doctrine: Trademark refers to a word, name, symbol. Emblem, sign or device
or any combination thereof adopted and used by a merchant to identify and
distinguish from others, his goods of commerce. It is basically an intellectual
creation that is susceptible to ownership and consistently therewith, gives rise
to its own elements of jus posidendi, jus utendi, jus fruendi, jus disponendi,
and jus abutendi, along with the applicable jus lex, comprising that
ownership. The incorporeal right, however, is distinct from the property in
the material object subject to it. Thus, the transfer or assignment of the
intellectual property will not necessarily constitute a conveyance of the thing
it covers, nor would a conveyance of the latter imply the transfer or
assignment of the intellectual right.
Facts:
 The initiatory suit for manual delivery with damages herein was
instituted by La Tondena (LTDI) against Distillery Washington
(Washington) under a claim of ownership. Such action sought to
seize from Washington 18,157 empty bottles bearing blown-
in marks of La Tondena and Ginebra San Miguel because,
allegedly, Washington uses it for its own Gin Sevem products
without the consent of LTDI. The court in the said action issued a
replevin to seize said bottles.
 After hearing, the trial court ordered LTDI to return the bottles seized
from Washington and in the event of failure to return said bottles,
LTDI is ordered to indemnify the defendant in the amount of
P18,157.00 on the ground that a purchaser of liquor pays only a single
price for the liquor and the bottle and is not required to return the
bottle at any time.
In view of the foregoing, LTDI appealed the decision to the Court of
Appeals. CA reversed and ordered the retention of the subject bottles
in favor of LTDI on the ground that the marks of ownership of LTDI
stamped or blown-in to the bottles are sufficient notice to the public
that the bottles are LTDI property. Thus, Washington assailed the
reversal of the trial court’s decision.
Washington is of the position that R.A. 623 should not apply to gin
since it is not among those mentioned in the law and that, in any
case, ownership of the bottles was already transferred to it
upon the sale of the gin and containers at a single price. Thus,
he is now the lawful owner of the said bottles.
Issue:
 Whether or not LTDI is now the lawful owner of the empty bottles
upon sale of the gin.
 Whether or not RA 623 affords intellectual property protection to
liquors.
Ratio:
 In its decision, the Supreme Court saw no cogent reason to depsrt from
the rule already laid down in the previous case of Cagayan Valley
Enterprises v. Court of Appeals. In the said case, it ruled that RA
623 affords protection to a qualified manufacturer who successfully
registered with the Philippine Patent Office its duly stamped or
marked bottled, etc. The mere use of the registered bottles
without the written consent of the manufacturer is
prohibited, the only exceptions being when they are used as
containers for sisi, bagoong and patis and similar native
products.
RA 623 only required that bottles, in order to be eligible for
registration, must be stamped or marked with the names of the
manufacturers or the names of their principals or products, or other
marks of ownership. No drawings of labels are required but, instead,
two photographs of the container, duly signed by the
applicant, showing clearly and legibly the names and other
marks of ownership sought to be registered and a bottle
showing the name or other mark of ownership, irremovably
stamped or marked shall be submitted.
 However, the court noted that the issue in this case is not only one for
violation of RA 623, but instead, it is one for replevin where the
claimant must be able to show convincingly that he is either the owner
or clearly entitled to the possession of the object sought to be
recovered. Replevin focuses on possession.
Evidently, RA 623 does not disallow the sale or transfer of ownership
of the marked bottles or containers. In fact, the contrary is implicit in
the law. The buyer takes the item, he is neither required to return
the bottle nor required to make a deposit to assure its return
to the seller. He could return the bottle and get a refund but it
cannot be gainsaid that ownership of the containers does pass on to
the consumer albeit subject to the statutory limitation on the use of
registered containers and to the trademark right of the registrant.
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
The court sees no other logical purpose for Washington’s insistence to
keep the bottles, except for the unauthorized use thereof. The practical
and feasible alternative herein is to merely require the payment of just
compensation to Washington for the bottles seized from it by LTDI.
Distilleria Washington v. La Tondena Distillers and the Court of
Appeals
Doctrine: Sections 2 and 3 of RA 623 apply only when the “filling up” of the
bottle or the “use” of the bottle is “without the permission” of the registered
manufacturer, bottler or seller”, who has registered the marks of ownership
of the bottles. Section 2 prohibits the person from using, selling or otherwise
disposing of registered containers without the written consent of the
registrant. Such rights belong to the registrant. Under Section 3, mere
possession of such registered containers without written consent of the
registrant is prima facie presumed unlawful.
What is proscribed is the use of the bottles in infringement of another’s
trademark or incorporeal rights.
Facts:
 Washington sought reconsideration of the decision of this Court and
advances that since the court decided that Washington has acquired
ownership over the bottles, it is improper for it to render a decision
allowing LTDI to keep the bottles (which is a denial of the very
attributes of ownership). It further contends that to hold the buyer
liable under Section 2 and 3 would grant LTDI the extraordinary right
not only of possession and use of the bottles which it has sold and no
longer owns, but also to sell said bottles ad infinitum, thus enriching
itself unjustly.
Issue:
 Whether or not LTDI transferred ownership of its marked bottles or
containers when it sold its products in the market.
Ratio:
 LTDI not only sold its gin products but also the marked
bottles or containers as well. Ownership over the bottles and
all its attributes passed to the buyer. It necessarily follows
that the transferee has the right to possession of the bottles
unless he uses them in violation of the original owner’s
registered or incorporeal rights.
Sections 2 and 3 of RA 623 apply only when the “filling up” of the
bottle or the “use” of the bottle is “without the permission” of the
registered manufacturer, bottler or seller”, who has registered the
marks of ownership of the bottles. Section 2 prohibits the person from
using, selling or otherwise disposing of registered containers without
the written consent of the registrant. Such rights belong to the
registrant. Under Section 3, mere possession of such registered
containers without written consent of the registrant is prima facie
presumed unlawful. Since the court found that the bottles have been
transferred by way of sale, then LZTDI relinquished all of its
proprietary rights over the bottles in favor od Washington who has
obtained them in due course.
 The court, however, did not rule on the violation of the
incorporeal rights of LTDI since it would be improper and
premature to rule on such point. It has not been put in issue
since this was a case for replevin, not infringement.
The court also cannot be of the position that every possession of the
bottles without the requisite written consent is illegal since then,
thousands of buyers of the Ginebra San Miguel would be exposed to
criminal prosecution by the mere fact of possession of the empty
bottles after consuming the content.
Note: Justice Vitug, the ponente to the previous decision, dissented to this MR.
Hanover Star Milling Co. v. Metcalf
Doctrine: Since it s trade and not the mark that is protected, a trademark
acknowledges no territorial boundaries of municipalities or states or nations,
but extends to every market where the trader’s goods have become known
and identified by his use of the mark. But the mark, of itself, cannot travel to
markets where there is no article to wear the badge and no trader to offer the
article. Trademark is treated merely as a protection for the goodwill and not
the subject of property except in connection with an existing business.
The exclusive right to the use of a trademark is founded on priority of
application. But where two parties are independently employing the same
mark upon goods of the same class, but in separate markets wholly remote
from one another, the question of prior appropriation is legally insignificant
unless it appears that the second adopter has selected the mark with some
design inimical to the interest of the first user, such as to take the benefit of
the reputation of his goods, to forestall the extension of his trade or the like.
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
Facts:
 Hanover Star Milling is an Illinois corporation engaged in the
manufacturing of flour. It initiated a case against Metcalf
(“Steeleville”), a merchant engaged in the selling of Flour at
Greeneville, Butler County, in that state, to restrain alleged trademark
infringement and unfair competition. Hanover averred that for 27
years, it has been engaged in the manufacturing of a superior and
popular brand of flour known as “Tea Rose” in a wrapping containing
3 roses imprinted upon labels attached to sacks and barrels and that
this flour has been marketed in the State of Alabama for the
preceding 12 years already. It further averred that, until shortly
before the commencement of this action, it has been the only company
who offered or sold the same in Butler County or elsewhere in the State
of Alabama.
Hanover adopted said “Tea Rose” brand, built it up and extended its
trade in the southeastern territory comprising of Georgia, Florida,
Alabama and Mississippi. Said mark had come to mean the Hanover
flour and nothing else.
Steeleville’s answer denied all attempts to deceive purchasers and
further denied the complainant’s right to the exclusive use of the words
“Tea Rose” and avvered that long prior to the complainant’s first
use of it, and as early as 1872, the name has been adopted,
appropriated and ued as a trademark for flour by the firm of
Allen Wheeler (AW) of Ohio. It further alleged that the
Steeleville Milling Company had used it for more than 16
years last past and as early as 1899.
In another case, Allen & Wheeler Company (AW), a corporation in the
state of Ohio averred that in or before the year 1872, the firl already
adopted as trademark the words “Tea Rose” and from thence until the
year 1904, continuously used that mark by placing it on sacks of flour
and sold throughout the US.
 2 temporary injunctions were granted by the District Court, both in
favor of Hanover against Steeleville and AW, respectively. It restrained
Steeleville or any other person, firm or corporation other than
Hanover from selling the flour named “Tea Rose” in the Middle
District of Alabama.
Issue
 Whether or not Hanover has an affirmative trademark right against
AW.
 Whether or not Hanover is entitled to relief against Steeleville upon
the ground of unfair competition in trade regardless of the trademark
right.
Ratio:
 Hanover has an affirmative trademark right against AW.
Where a party has been in the habit of labeling his goods with a
distinctive mark, so that purchasers recognize goods thus marked as
being of his production, others are debarred from applying the same
mark to goods as being of the same description, because to do so would
in effect represent their goods to be of his production and would tend
to deprive him of the profit he might make through the sale of the
goods which the purchaser intended to buy.
So far in this case, the proofs disclose that AW mark has not been
used at all, is not known at all in a market sense, within the
sovereignty of Alabama or the adjacent states where the
controversy with Hanover arose. On the other hand, the record
in the case showed that the complainant’s trade has been well known
in the place. AW left the southeastern states untouched. Even if they
did now know, and it does not appear that they did know, that the
Hanover company was doing so, they must be held to have taken the
risk that some party might, during their 40 years of
inactivity, hit upon the same mark and expend money and
effort in building up a trade in flour under it.
Here, there is no clearer evidence that there is abandonment by
nonuser of trademark rights. And since Hanover has expended money
and effort in building up its trade, AW is estopped to assert trademark
infringement as to that territory.
This case does not deal with a situation where there is junior
appropriation. The exclusive right to the use of a trademark is founded
on priority of application. But where two parties are
independently employing the same mark upon goods of the
same class, but in separate markets wholly remote from one
another, the question of prior appropriation is legally
insignificant unless it appears that the second adopter has
selected the mark with some design inimical to the interest
of the first user, such as to take the benefit of the reputation of his
goods, to forestall the extension of his trade or the like. Here,
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
Alabama’s remoteness to the territory (Cincinnati), which AW reached
was taken into consideration.
 Steeleville’s purpose to take advantage of the reputation of
Hanover is so manifest and the tendency of the similarity of
the brand and accompanying design and of the make-up of
the packages to mislead ultimate customers is so evident
that it seems to us a case of unfair competition is made out.
There is evidence that Hanover’s use of the brand antedated that of
Steeleville’s. The latter used it in trade in Illinois, Tennessee,
Mississippi, Louisiana and Arkansas. However, a short time before the
suit was commenced, Metcalf, agent of Steeleville, put large banners
advertising to the public that he had received a shipment of Tea Rose
flour and that it was Steeleville’s best quality but it was put in packages
closely resembling that of Hanover’s calculated to deceive the ordinary
and casual purchaser of flour into the belief that he is purchasing the
article of that name manufactured by the said Hanover company. It
even substituted Steeleville in place of the Hanover labels with
distinctive wrapping, both indicative of Hanover’s flour.
Champion Spark Plug Co v. Sanders
Doctrine: A trademark only gives the right to prohibit the use of it insofar as
to protect the owner’s goodwill against the sale of another’s product as his.
When the mark is used in a way that does not deceive the public, we see no
such sanctity in the word as to prevent its being used to tell the truth. It is not
taboo.
Inferiority is immaterial as long as the article is clearly and distinctively sold
as repaired or reconditioned, rather than as new.
Facts:
 Respondent Sanders in this case collect used Champion plugs, repair
and recondition them and resell them. He retains the word
“Champion” on the repaired or reconditioned plugs. However,
respondent’s company business name or address is not printed on the
cartons. On each individual plug, however, is stamped in small letters,
blue on black the work “Renewed” which at time is almost illegible.
Champion brought the instant case charging Sanders of infringement
and unfair competition. The District Court found that there is
infringement and enjoined Sanders from offering or selling the plugs
unless the trademark and type and style marks were removed, the
plugs were repainted, and the word “repaired” was stamped legibly.
The Circuit Court of Appeals upheld the infringement and also found
that there is unfair competition. However, it modified the relief in that
it eliminated the requirement that the trademark and type and style
marks be removed.
Issue:
 Whether or not the relief granted is adequate, particularly the refursal
of the Court of Appeals to require respondents to remove the word
Champion form the repaired or reconditioned plugs which they resell.
 Whether or not an accounting by Sanders should be ordered by the
court.
Ratio:
 It is adequate. The spark plugs, though used, are nevertheless
Champion plugs and not those of another make. We would not
suppose that one could be enjoined from selling a car whose valves had
been regrounded and whose piston rings had been replaced unless he
removed the name Ford or Chevrolet. A trademark only gives the right
to prohibit the use of it insofar as to protect the owner’s goodwill
against the sale of another’s product as his. When the mark is used in a
way that does not deceive the public, we see no such sanctity in the
word as to prevent its being used to tell the truth. It is not taboo.
The repair or reconditioning does not give them a new
design. It is no more a restoration of their original condition.
Although there is evidence that the reconditioned plugs are inferior
insofar as heat range and other qualities are concerned, inferiority is
expected in most second-hand articles. Inferiority is immaterial as
long as the article is clearly and distinctively sold as repaired or
reconditioned, rather than as new.
 It does not stand that an accounting will be ordered because
there has been an infringement. An accounting will be denied
when an injunction will satisfy the equities of the case. Here. Since
there is no showing of fraud or palming off, the likelihood of damage to
petitioner or profit to respondents due to any misrepresentation seems
slight. An injunction satisfies the equities of the case.
Pribhdas J. Mirpuri v. Court of Appeals
Doctrine: Trademark is defined as including “any word, name, symbol,
emblem, sign or device or any combination thereof adopted and used by a
manufacturer or merchant to identify his goods and distinguish them from
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
those manufactured, sold or dealt in by others. It is any visible sign capable of
distinguishing goods.
The function of trademark is to point out distinctly the origin or ownership of
the goods to which it is affixed; to secure to him, who has been instrumental
in brining into the market a superior article of merchandise, the fruit of his
industry and skill; to assure the public that they are procuring the genuine
article to prevent fraud and imposition, and to protect the manufacturer
against substitution and sale of an inferior different article as his product.
Trademark functions to: 1) indicate the origin or ownership of articles to
which they are attached; 2) guarantee that those articles come up to a certain
standard of quality and 3) they advertise the articles they symbolize.
Facts:
 In 1970, Lolita Escobar, the predecessor of Mirpuri filed an application
with the Bureau of Patents for the registration of the trademark
Barbizon for use in brassieres and ladies undergarments. However,
Barbizon Corporation (a foreign corporation in the US) opposed the
application claiming that it is confusingly similar to their brand.
The director of patents rendered a decision giving due course to the
application of Escobar. However, because of her failure to file the
Affidavit of Use of the trademark, the Bureau of Patents cancelled the
certificate of registration.
In 1981, she reapplied for registration and said application was again
opposed by Barbizon Corporation. In its opposition, Barbizon claims
that the trademark BARBIZON has been used in many countries
including the Philippines for at least 40 years and has enjoyed
reputation and good will for their quality. Barbizon Corporation claims
that Escobar fraudulently registered the same in violation of the
Trademark Law and the Revised Penal Code.
 The director of patents rendered a decision declaring that the
opposition of the respondent is already barred by res judicata giving
due course to the application for registration. Barbizon Corporation
questioned said decision before the Court of Appeals. The Court of
Appeals reversed the decision of the director of patents and found that
the case is not barred by res judicata.
Petitioner Miruri, predecessor of Escobar now questions the decision
of the Court of Appeals.
Issue:
 Whether or not the opposition is barred by res judicata
Ratio:
 There is no res judicata. In res judicata, the judgment in the first
action is considered conclusive to every matter offered and received
therein as to any other admissible matter which might have been
offered for that purpose. Its requisites are:
1. The former judgment or order must be final
2. The judgment or order must be on the merits
3. Must have been rendered by a court having jurisdiction over the
subject matter
4. There must be between the first and second actions, identity of
parties, of subject matter and of causes of action.
New causes of action were allegedly introduced in the second patent
case such as the prior use and registration of the trademark in the
United States and other countries, prior use in the Philippines and the
fraudulent registration of the mark in violation of Article 189 of the
Revised Penal Code. Private respondent also cited protection of the
trademark under the Paris Convention and the Memoranda issued by
Villafuerte and Ongpin.
Essentially, under the Paris Convention, the trademark is to be
protected if it is “well-known” in the country where the protection is
sought. The power to determine whether a trademark is well known
lies in the competent authority of the country of registration or use.
Pursuant to this convention, the VIllafuerte and Ongpin
Memoranda were issued. The first one enumerated the brands
that are to be protected, and the second one, laid down guidelines for
the Director of Patents to observe in determining whether a trademark
is entitled to protection as a well-known mark in the Philippines. The
PPO was ordered to refuse applications for, or cancel the registration
which would fall under these.
The issue raised in the second patent case was different from the issues
of confusing similarity and damage in the first. The issue of prior use
may have been raised in the first but this claim was limited only to
prior use in the Philippines. Also note that the oppositions in the first
and second cases are based on different laws. The first was based on
the provisions of the Trademark Law and the second was based on the
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
Paris Convention. The mere fact that the same relief is sought in the
subsequent action will not render the judgment in the prior action
operative as res judicata, such as where the two actions are based on
different statutes.
La Insular Cigar and Cigarette Factory, Inc. v. B.E. Jao OGE
Doctrine: Substantially the same remedies are conceded to the person injured
whether the wrong done in a particular case consists of infringement of
trademarks, illegal use of trade name or unfair competition in business –
which remedies consist of an award of damages or double damages, and a
perpetual injunction against the continuance of the injury.
In cases of infringement of trademarks, the law primarily takes no account of
the actual intent on the part of the infringer to mislead the public and defraud
the owner of the trademarks. On the other hand, in cases of unfair
competition actual intent to deceive the public and defraud the person injured
is declared to be essential to the maintenance of the action but it is
immediately added that such intent may be inferred from similarity of
appearance of the goods as packed or offered for sale to those of the
complaining party.
Facts:
 La Insular is a corporation engaged in the tobacco business and it is
the owner of a registered trademark which it places upon the
wrappers of its cigarettes and by which its products is
generally recognized throughout the Philippine Islands and
elsewhere.
The complainant set forth ownership of the above trademark and the
continuous use of the same for nearly 40 years. It alleges that the
defendant BE Jao (“La Ciudad” proprietor”) began to use 2
different labels on packages of its cigarettes offered for sale
which are infringing imitations of the plaintiff’s mark.
To this complaint, the defendant interposed a general demurrer on the
ground that the facts stated did not constitute a cause of action.
Such demurrer was sustained by the trial court hence, judgment was
entered dismissing the complaint.
Issue:
 Whether or not there is a case for infringement or unfair competition.
Ratio:
 The complaint is sufficient and the order sustaining the
demurrer must be dismissed. An action for infringement of a
trademark lies in favor of the injured person against any one who sells
goods of a similar kind bearing such trademark. This interpretation
would make the remedy available in very few cases since most traders
desirous of filching the trade of others in this way will use colorable
imitations or suggestive reproductions of the trademark which they
intend to appropriate rather than exact counterfeits. But if a
litigant’s right is doubtful under infringement, he only needs
to claim the benefit of the section dealing with unfair
competition which gives precisely the remedies that he
would have contained under the other provision and under
this section, it is immaterial what form the deceptive
practices of the infringer take.
In cases of infringement of trademarks, the law primarily takes no
account of the actual intent on the part of the infringer to mislead the
public and defraud the owner of the trademarks. On the other hand, in
cases of unfair competition actual intent to deceive the public and
defraud the person injured is declared to be essential to the
maintenance of the action but it is immediately added that such intent
may be inferred from similarity of appearance of the goods as packed
or offered for sale to those of the complaining party.
The elements of unfair competition are:
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
1. The person complained of shall have given to his goods the
general appearance of the goods of the complaining party
either in wrapping, devices or words;
2. That the person complained of should have clothed the goods
with such appearance for the purpose of deceiving the public
and defrauding the complaining party of his legitimate trade.
It is not always easy to point out exactly where one ends and the other
begins, but together they comprise all actionable injuries which one
person may inflict upon another as the result of the unfair use of
names, marks, and other trade devices.
 In this case, the person injured is not really required to indicate the
particular provision of law upon which he relies for relief, and if he
does so and is mistaken, this will not preclude him from obtaining
relief under a different conception of the case, provided always that the
facts stated and proved justify such relief.
In this case, the packaging used by the La Ciudad closely
imitates the label and mark of La Insular and there is a
further allegation that the defendant is giving his cigarettes
the appearance of cigarettes anufactured and offered for sale
by the plaintiff. The intent to deceive may be inferred from
similarity in the appearance of the goods as packed or offered for sale.
It is too clear from the allegations of the complaint, taken in
connection with the exhibits that there is actionable
imitation on the part of the defendant. The offending marks
submitted for purposes of actual comparison tell the story to the eye.
Facts:
 Philippine Packing Corporation (Philpack) is a domestic corporation in
the Philippines granted the right to manufacture, distribute and sell in
the Philippines various products of Del Monte. The latter authorized
Philpack to register with the PPO the Del Monte Catsup bottle
confugutation for which it was granted a Certificate of Trademark
Registration under a supplemental register.
On the other hand, Sunshine Sauce (Sunshine) was issued a certificate of
registration by the Bureau of Domestic Trade to engage in the selling of
Sunshine Fruit Catsup. This logo was registered in the supplemental register
on 1983. The product itself was contained in various kinds of bottles, including
Del Monte Bottle, which the private respondent bought from junk shops
 For this, Philpack and Del Monte filed a complaint against Sunshine
for infringement of trademark and unfair competition with a
prayer for damages and the issuance of a writ of preliminary
injunction. In its answer, Sunshine alleged that it already ceased to
use the bottles and that its logo was substantially different from
the Del Monte Logo.
 RTC dismissed the complaint for failure to establish malice or bad
faith which is an essential element to the charges and that in any case,
Sunshine already became the owner of the said bottles upon its
purchase from the junkshop.
The trial court made the following comparisons to conclude that there is no
colorable imitation of the trademark and logo:

Del Monte Corporation and Philippine Packing Corporation v. CA Del Monte Sunshine
Doctrine: To determine whether a trademark has been infringed, we must Shape of label or Semi rectangular with Regular rectangle
consider the mark as a whole and not as dissected. If the buyer is deceived, it make a crown or tomato
is attributable to the marks as a totality, not usually to any party of it. The shape on top of the
court must be guided by its first impression for a buyer acts quickly and is rectangle
governed by a casual glance, the value of which may be dissipated as soon as Brand printed Tomato catsup mark Fruit catsup
the court assumes to analyze carefully the respective features of the mark. on label
Words or Clearly indicated “made in the
The person who infringes a trademark does not normally copy out but only lettering on label words “packed by Sysu Philippines by
makes a colorable change, employing enough points of similarity to confuse International” Sunshine Sauce
the public with enough points of differences to confuse the courts. Manufacturing
Industries”
Color of logo Combination of yellow White, light green

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Trademarks Midterms Case Digests (Atty. Ortiguerra)
and dark red with and light red, with fact that usually a defendant in a case of infringement does not
words del monte words sunchine normally copy but makes only a colorable imitation.
quality in white brand in yellow
Shapre of logo Shape of a tomato Entirely different  The use of Del Monte’s bottle constitutes unfair competition,
shape hence, the respondent should be permanently enjoined from
Label below the Seal covering the cap “sunshine brand” the use of such bottles. It can be said that although Del Monte
cap down to the neck of cannot claim exclusive use to the bottles configuration because it has
the bottle with picture not been registered in the Principal Register (it was only registered in
of tomatoes with the Supplemental Register and the same is not a basis for an action for
words “made from real infringement), Sunshine still opted to use petitioner’s bottle to
tomatoes” market a product which Philpack also produces. This clearly
Color of the Darker red Lighter than Del shows bad faith and its intention to capitalize on the latter’s reputation
products Monte and goodwill and pass off its own product as that of Del Monte.

CA affirmed. Thus, this petition for certiorari.
Issue:
 Whether or not there is infringement of trademark.
 Whether or not there is unfair competition.
Ratio:
 Sunshine’s label is an infringement of the Del Monte
trademark. The two marks in their entirety as they appear in the
respective labels must be considered in relation to the goods to which
they are attached.
E. Spinner and Company v. Neuss Hesslein Corporation
Doctrine: Any conduct may be said to constitute 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. A
competitior in a business cannot be permitted to do acts which have deceived,
or are reasonably designed to deceive the public into buying his goods as
those of another.
Geographical terms can be used in an arbitrary and artificial sense and when
so used by one manufacturer the improper appropriation of the same term by
another may be enjoined as an invasion of trademark.

Side by side comparison, as was done by the trial court, is
not the final test of similarity. The average shopper is usually in a
hurry and does not inspect every product on the shelf as if he were
browsing in a library. The question is not whether the 2 articles are
distinguishable by their label when set side by side but whether the
general confusion made by the article upon the eye of the casual
purchaser who is unsuspicious and off his guard is such as to likely
result in confounding it with the original.
To determine whether a trademark has been infringed, we must
consider the mark as a whole and not as dissected. If the buyer is
deceived, it is attributable to the marks as a totality, not usually to any
party of it. The court must be guided by its first impression for a buyer
acts quickly and is governed by a casual glance, the value of which may
be dissipated as soon as the court assumes to analyze carefully the
respective features of the mark. The judge must also be aware of the
Use of only one of the words constituting a trademark may be sufficient to
constitute an infringement and it is not necessary to this end that all of the
words comprising the trademark should be appropriated.
Facts:
 E. Spinner (Spinner) is a copartnership has long been engaged in the
manufacture and sale of textile fabrics, including khaki cloth with
distributing business connection in different part of the world. On
about 1900, the plaintiff began exporting its khahi to the Philippine
Islands through local firms. It obtained a favorable impression which
resulted in lucrative trade. Among the brands enjoying such
favor was the grade indicated by the manufacturer as Wigan.
These were marketed under a common trademark which was first
registered in the Bureau of Patents in 1905.
Spinner learned, in 1924, that Neuss Hesslein (Neuss) was selling a
brand of khaki in the Philippines with the word “Wigan” stenciled on

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the bolts below the defendant’s own trademark. After discovering such
fact, it sought to have its trademark registered in the Bureau of
Commerce, to incorporate the work “Wigan” as an integral
part of the registered trademark.
 On the other hand, Neuss, at the request of Chinese customers bagan
to give orders to the New York House for the printing of the word
“wigan” conspicuously on the bolts of khaki intended for sale in the
Philippines. In the latter part of 1923 or early 1924, the
defendant’s khaki began to be marketed here with the word
“Wigan” thereon.
It alleges that the words are the names of manufacturing towns of
minor importance in England but the brand in which the defendant
associates the name “Wigan” does not appear to be manufactured in
the town of Wigan. The plaintiff also does not use the word “Wigan” in
its geographical sense or in the trade sense of a material for stiffening.
It uses the word in an arbitrary and in an artificial sense.
Issue:
 Whether or not the Spinner has the right to use the word “Wigan” o
khaki sold by it in the Philippine Islands.
Ratio:
 No. The representation that khaki sold by Spinner is of the
kind known to the trade as “Wigan” directly tends to deceive
the purchaser and therefore, constitutes unfair competition
against the plaintiff. Wigan was first stamped upon the khaki sold
by Spinner at the suggestion or request of a Chines customer,
presumably a tailor or a merchant, and the purpose behind such
suggestion was that if it was stamped, it could be represented to be the
ultimate purchaser that the khaki sold was the plaintiff’s Wigan. This
discloses the intention to mislead the consumer. It makes no
difference that the dealers are not deceived. The law
concerns itself with the casual purchaser who knows the
commodity only by its name.
The word “Wigan” as applied to quality is not an English word in
common use for describing quality. It is used here in an entirely
artificial sense and its association with quality had the origin
exclusively in the use which the plaintiff has made of it.
However, if the defendant were manufacturing khaki in the
town of Wigan, it would be entitled to use that name to
indicate the place of manufacture of its goods. But such is
not the case here.
Elidad Kho v. Court of Appeals, Summerville General Merch.
Doctrine: 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, or
services of an enterprise and shall include a stamped or marked container of
goods.
A copyright is confined to literary, and artisitic works which are original
intellectual creations in the literary and artistic domain protected from the
moment of their creation.
Patents 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.
Facts:
 Elidad Kho (Kho) filed a complaint for injunction and damages with
prayer for the issuance of a preliminary injunction against
Kho has a copyr
Summerville General Merchandising Company (Summerville) alleging
and a patent
that Summerville advertised and sold petitioner’s cream products
But, what is needed under the brand name Chin Chun Su (CCS because I’m too
is a trademark lazy), in similar containers that petitioner uses, thereby
misleading the public and resulting in the decline in the
petitioner’s business sales and income; and that the
respondents should be enjoined form allegedly infringing on
the copyrights and patents of Kho.
Kho alleges that she is doing business under the name and style of KEC
Cosmetics which is the registered owner of CCS and Oval Facial Cream
Container as shown by her certificates of copyright registration.
On the other hand, Summerville alleges that it is the exclusive and
authorized importer, repacker and distributor of CCS products
manufactured by Shun Yi Factory of Taiwan and that the latter
authorized Sumemrville to register its tradename CCS with the
PPO and other appropriate governmental agencies.
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 The RTC granted the prayer for injunction. CA set aside the injunction
on the ground that the registration of the trademark or
brandname of CSS by KEC with the supplemental register of
the Bureau of Patents cannot be equated with the
registration in the principal registration which is duly
protected by the Trademark Law.
According to the CA, the registration in the supplemental register
serves as a notice that the registrant is using the trademark. By the
very fact that the tradename cannot as yet be on guard and there are
certain defects, some obstacles which must still be overcome before he
can legally claim ownership of the mark or ask the courts to vindicate
his claims of an exclusive right to the use of the same.
Issue:
 Whether or not Kho is entitled to the preliminary injunction on the
ground that she is entitled to the use of the trademark on CCS and its
container based on her copyright and patent over the same.
Ratio:
 No. Petitioner has no right to support her claim for the
exclusive use of the subject trade name and its container. In
order to be entitled to the exclusive use of the same, the user must
sufficiently prove that she registered it or used it before
anybody else did. Kho’s 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.
A preliminary injunction 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.
Abercrombie & Fitch v. Hunting World 537 F.2d 4 (1976)
Doctrine: A generic term is one that refers, or has come to be understood as
referring to the genus of which the particular product is a species. At common
law, neither those terms which were generic nor those which were merely
descriptive could become valid trademarks. No matter how much money and
effort the user of a generic term has poured into promoting the sale of its
merchandise and what success it has achieved in securing public
identification, it cannot deprive competing manufacturers of the product of
the right to call an article by its name.
Suggestive marks are marks that were neither exactly descriptive on the
other hand nor truly fanciful on the other. A term is suggestive if it requires
imagination, thought and perception to reach a conclusion as to the nature of
goods. A term is descriptive if it forthwith conveys an immediate idea of the
ingredients, qualities or characteristics of the goods.
In case a trademark is descriptive, the law strikes the balance with respect to
registration, between the hardships to a competitor in hampering the use of
an appropriate word and those to the owner who, having invested money
and energy to endow a word with the good will adhering to his enterprise,
would be deprived of the fruits of his efforts.
Facts:
 This case stems from a case filed by Abercrombie & Fitch (AF) against
Hunting World, Incorporated (HW) for infringement on some of AF’s
registered trademarks using the word “Safari”. It is claimed that AF
spent large sums of money in advertising and promoting products
identified with its mark “Safari” and in policing its rights in the mark.
However, HW has engaged in the retailing marketing of sporting
apparel including hats and shoes, some identified by use of “Safari”
alone or by expressions such as “Minisafari” and “Safariland”. AF
claims that the continued acts of HW would confuse and
deceive the public and impair the distinct and unique quality
of the plaintiff’s trademark.
In its answer, HW claimed that the word “Safari” is an ordinary,
common, descriptive, geographic and generic word which is
commonly used and understood by the public to mean and
refer to a journey or expedition in East Africa. Such an
expedition, it claims, is not subject to exclusive appropriation as a
trademark.
 Judge Ryan, before whom the action was tried on remand, ruled
broadly in HW’s favor and found that there was frequent use of the
word “Safari” in connection with wearing apparel, that AF’s
policing efforts thus had evidently been unsuccessful and
that AF had itself used the term in a descriptive sense not
covered by its registration. The court held that the word “Safari” is
merely descriptive and does not serve to distinguish the goods of AF as
listed on the registration from anybody else’s; while such terms are
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afforded protection by the Lanham Act if they come to identify the
company merchandising the product, rather than the product itself, AF
failed to establish that this has become the situation with respect to
“Safari”. Thus, the lower court entered a judgment which
dismissed the complaint and cancelled not only the
trademarks in suit but all other AF’s “Safari” trademark.
Issue:
 Whether or not there is trademark infringement.
 Whether or not the cancellation of the marks not in contest is proper.
Ratio:
 There is no infringement. As to the use of HW of “Camel
Safari”, “Hippo Safari”, and “Chukka Safari” as names for
boots imported from Africa, the court held that there is no
evidence that “Safari” has become a generic term for boots.
Here, Lee Expeditions, the parent company of HW, has been primarily
engaged in arranging Safaris to Africa since 1959. The president of
both companies even published a book in 1959 entitled “Safari Today
The Modern Safari Handbook”. These facts suffice to establish, absent
a contrary showing, that defendant’s use of Safari with respect to boots
was made in the context of hunting and travelling expeditions
and not as an attempt to garner the goodwill of AF.
The use of Camel Safari, Hippo Safari, and Chukka Safari as names for
various boots imported from Africa constituted a purely descriptive
use to apprise the public of the type of product by referring to its origin
and use. When a plaintiff has chosen a mark with some
descriptive qualities, he cannot altogether exclude some
kinds of competing uses even when the mark is registered.
Furthermore it was significant in this case that HW did not use the
word “Safari” alone on its shoes, as it would doubtless have done if
confusion has been intended.
As to the “minisafari” hat and “safariland”, the court held
that these terms were generic terms. Hence, AF was not
entitled to an injunction against the use of such words. If HW
may advertise a hat of the kinds worn on safaris as a “Safari Hat” then
it may also advertise a similar hat with a smaller brim as a minisafari.
Likewise, the use of “Safariland” as a name of a portion of its store
developed at least in part to the sale of clothing as to which the term
“Safari” has become generic.
 Registrations which have not become incontestable should
not be cancelled. “Safari” as applied to ice chests, axes, tents
and smoking tobacco does not describe such terms. Rather, it
is a way of conveying to affluent patrons of AF’s romantic notion of
high style coupled with an attractive foreign allusion. The cancellation
should only be directed to those under contests because with respect to
the remaining registrations, the law affords registration as prima facie
evidence of the validity of such registration and of the registrant’s
exclusive right to use the mark in commerce.
Filipino Yellow Pages v. Asian Journal Publications
Doctrine: There are 5 different categories of terms with respect to trademark
protection: 1) generic, 2) descriptive, 3) suggestive, 4) fanciful or
5) arbitrary.
A generic term (otherwise known as “common descriptive terms”) is one that
refers to or has come to be understood as referring to the genus of which the
particular product or service is a species. A generic term is the name of the
product or service itself – what the product is and as such, the very antithesis
of a mark. The ultimate test of genericness is how a term is understood by the
consuming public.
A descriptive term (otherwise known as “merely descriptive terms”) can be
subject for trademark protection under appropriate circumstances. It can be
protected provided that it has acquired a secondary meaning in the minds of
the consumers.
The anti-dissection rule states that “the validity and distinctiveness of a
composite trademark is determined by viewing the trademark as a whole, as
it appears in the marketplace.”’
Facts:
 Robert Lagmay Oriel (“Oriel”) and Oscar Jornacion were partners in
Fil-Am Enterprises publishing the Filipino Directory of California ( a
telephone directory directed primarily at the Fil-Am community of
Southern California. In 1986, they terminated their business under a
“Shareholders Buy-Out Agreement” were Oriel acquired complete
ownership over the telephone directory business and Jornacion agreen
not to compete in the pages in California for 3 years.
As owner of Fil-Am, Oriel continued to publish until 1991. In 1993, Fil-
Am sold its interest in the Filipino Directory of the USA and Canada.
Thereafter, in 1994, Oriel and his wife formed a new corporate
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entity, Asian Journal Publications (AJP) which published a
telephone directory called the Filipino Consumer Directory.
In 1990, pursuant to the 3-year ban agreement, Jornacion formed the
Filipino Yellow Pages (FYP). Currently, FYP, AJP and the Filipino
Directory of USA and Canada compete in the Filipino-American
telephone directory market in California.
 FYP applied for registration of the “Filipino Yellow Pages” with the
Patent and Trademark Office. In 1996, it was denied registration on
the ground that the proposed mark merely describes the goods
and the nature and intended audience for the goods.
However, the patent office informed FYP that since it indicated in its
application the use of the mark for a significant time, FYP could amend
its application to seek registration based on acquired
distinctiveness. It further advised FYP to include in its application
the disclaimer that “No claim is made to the exclusive right to use the
term apart from “Filipino Yellow Pages”. It filed its application
accordingly, but the application still remains pending.
FYP filed a complaint against AJP alleging trademark
infringement, false designation of origin and false
description of sponsorship or application (since AJP
periodically uses the term “Filipino Consumer Yellow Pages” in print
advertisements), unfair competition and misrepresentation of
good will, misappropriation of FYP’s right to publicity,
injury to business relationships, unfair competition and
trademark dilution.
AJP moved for summary judgment and argued that FYP is a generic
and as such is incapable of trademark protection. As counter, FYP
claims that FYP is a descriptive mark with a secondary meaning within
the Filipino-American Community.
 The District Court granted the motion for summary judgment in favor
of AJP on the ground that “Filipino Yellow Pages” is a generic term
incapable of serving as a trademark.
Issue:
 Whether or not FYP is generic with respect to telephone directories
targeted at the Fil-Am Community.
Ratio:
 Filipino Yellow Pages even if descriptive rather than generic,
is not a valid and protectable trademark with respect to a
telephone directory for the Fil-Am Communicty. It is
undisputed in this case that the words “Filipino” and “Yellow Pages”
are generic. The question to be determined in this case is whether or
not “Filipino Yellow Pages”, taken as a composite term, is generic. In
the past case of Surgicenter, the court held that the term “Surgicenter”
(form the words surgical and center), is a generic term because of the
rule that a combination of 2 generic words is also generic,
unless the combination is a deviation from natural usage or
an unusual unitary combination.
The district court relied on said case in deciding that “Filipino Yellow
Pages” is a generic term. However, the disctrict court only considered 3
pieces of evidence when it evaluated the case of FYP which is not as
weighty as the 45 exhibits presented in Surgicenters. Furthermore, the
mark in Surgicenter is a federally registered mark, thus, the burden of
proving the genericness rested upon the party challenging the mark’s
validity.
On the contrary, FYP is not registered. Thus the burden of proving
non-genericness lies on FYP. It does not appear that FYP has
offered evidence of nongenericness sufficient to rebut even
the fairly modest evidence of genericness offered by AJP. In
light of the evidence presented, it would seem that under the
who-are-you/what-are-you test1, the term is generic.
Giving FYP exclusive rights to the term “FYP” might be inappropriate
since it would effectively grant FYP as the owner of the mak a
monopoly since a competitor could not describe his goods as what they
are”.
Even assuming that FYP is a descriptive term protected if
given secondary meaning, FYP presented insufficient
evidence to prove that FYP did have secondary meaning. It
only presented the declaration of its founder and president which is
self interested and is accorded little evidentiary weight.
1If a mark answers the buyer’s questions “Who Are You?” “Where are you from? “Who vouches for
you?, it is a nongeneric term. On the other hand a generic name of the product answers the
question “What Are You?”
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International Kennel Club of Chicago v. Mighty Star
Doctrine: The first step to determine whether an unregistered mark is entitled
to the protection of trademark laws is to categorize the name according to the
nature of the term itself. Trademarks that are fanciful, arbitrary or
suggestive are fully protected, while descriptive words may be trademarked
only if they have acquired secondary meaning, that is only if the consumers
have come to think of the word not as a descriptive term but as the name of
the product.
Direct competition is not the sine qua non of trademark infringements; rather
the gist of the action lies in the likelihood of confusion to the public. A plaintiff
need not demonstrate that it is in direct competition with an alleged infringer
in order to establish likelihood of confusion.
Facts:
 International Kennel Club (IKC) is an Illinois business corporation
that sponsors dog shows in Chicago. It also sponsors seminars and
contributes funds for animal and medical research. While IKC is does
not sell stuffed toys, the private vendors rent booth at plaintiff’s shows
for a certain price and they sell dog-related items, including stuffed
dogs.
On the other hand, Mighty Star (MS) is a corporation that sells stuffed
toys in the US, Canada, England, Australia and Asia. In the latter part
of 1985, they decided to add to their product line of stuffed animals, a
line of stuffed “pedigree” dogs representing different breeds which
they named “International Kennel Club”. They utilized a marketing
strategy whereby purchasers could register their gods with the
“International Kennel Club” and receive an official membership and
certificate.
 6 months after the learning of the IKC Chicago’s existence, MS placed
a fill-page advertisement for their line of stuffed gods in the April
Edition of the Good Housekeeping magazine. For this reason, IKC,
received an abundant number of phone calls inquiring about their
affiliation with the MS-IKC line of stuffed dogs.
Confronted with the inquiries, IKC filed an instant trademark
infringement case and request for preliminary injunction.
After trial, the trial court held that IKC was entitled to the preliminary
injunction prayed for. Subsequently, MS filed a motion to require the
plaintiff to post security and to modify and stay the injunction. For
this, the court indicated to IKC that they have to file a bond pending
MC was able to prove they acquired secondary meaning BUT there is actual confusion
appeal in addition to the escrow money provided for in the initial
injunction to avoid the stay of the injunction order. Not having the
means to file the bond, the court granted the motion to stay the
preliminary injunction order pending appeal.
Issue:
 Whether or not IKC is entitled to the injunction (to determine this, the
likelihood of the success on the merits should be looked at, hence IKC
has to establish that it has a protectable trademark and that there is a
likelihood of confusion as to the origin of MS’ product).
Ratio:
 The court found that the phrase “International Kennel Club” fits within
the category of descriptive words in that it specifically describes a
characteristic or ingredient of an article or service. It is entitled to
trademark protection only if the name has acquired secondary
meaning.
In evaluation whether or not there is a secondary meaning better than
negligible (which is what is required to be granted the injunction), the
court looks at the amount and manner of advertising, volume
of sales, length and manner use, direct consumer testimony
and consumer surveys. In addressing this, the IKC presented
evidence that it has acquired secondary meaning as evidence by the
amount and manner of advertising and the length and manner of its
use.
IKC has developed and maintained its reputation among canine
enthusiasts through advertising carefully targeted to reach persons
interested in the sport of showing purebred dogs. It is advertised in
publications with a continent-wide circulation. Moreover, both major
Chicago newspapers have highlighted the IKC’s dog shows and have
designed and promoted special advertising supplements around those
columns. As further evidence, IKC also introduced evidence that the
club received a number of letters and phone calls asking about the
stuffed toys of MS. The court found that this is sufficient to
show that there is secondary evidence better than negligible.
 As to the likelihood of confusion, the court held that there is
more than ample evidence to support the conclusion that
there is likelihood of confusion as evidenced by the fact that
there is a degree of similarity as to their name, that while not
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identical, their products cannot be considered as unrelated,
and that there is actual confusion.
It is proper to consider the similarities and dissimilarities between the
marks in their entireties in determining the likelihood of confusion.
They must be compared in light of what occurs in the marketplace and
not in the courtroom. In this case, the only significant difference is the
addition of a common geographic term “of Chicago” despite the use of
the defendants of the “24 Polar Puff”. These weigh in favor of the
conclusion that the alleged infringer has appropriated the dominant
portion of the mark. Consumers would necessarily believe that IKC
licensed MS to use the IKC name. While the trade dress may dispel
some point of sale confusion, the labeling does nothing to prevent
consumers from mistakenly assuming that MS is somehow
associated with IKC or has consented to the mark’s use.
In determining the likelihood of confusion as to the similarity of their
products, the question is whether the products are the kind the
public attributes to a single source. The rights of an owner of
a trademark extend to any goods related in the minds of the
consumers in the sense that a single producer is likely to put
out both goods.
Plaintiffs also introduced evidence of actual consumer confusion
through the letters, phone calls and inquiries they received. Actual
confusion is the best evidence of the likelihood of confusion.
The use of the disclaimer, especially where the infringement
in issue is a verbatim copying of the plaintiff’s name, should
not be given weight since disclaimers are often ignored by
consumers. It would be difficult to ensure the use of the disclaimer
by their distributors since the defendants has no control over their
distributors’ advertising.
 As to the extent of the injunction, the court held that since IKC can
establish no rights extending to Mexico and since there is no evidence
that the products of MS in Mexico impair the rights of IKC, the
injunction need not extend to Mexico at this time.
Philippine Nut Industry v. Standard Brands Incorporated
Doctrine: To determine whether or not a trademark causes confusion and is
likely to deceive the public is a question of fact and is to be resolved by
applying the “test of dominancy”, meaning, if the competing trademark
contains the main or essential or dominant features of another by reason of
which confusion and deception are likely to result, then infringement takes
place. Duplication or imitation is not necessary, a similarity in the dominant
features of the trademarks would be sufficient.
Where a trademark contains a dominating or distinguishing word, and
purchasing public has come to know and designate the article by such
dominating word, the use of such word by another in marking similar goods
may constitute infringement though the marks aside form such dominating
word may be dissimilar.
Facts:
 Philippine Nut (PhilNut) is a domestic corporation with a registered
trademark “Philippine Planters Cordial Peanuts” (“Planters Cordial”)
obtained from the Patent office used on its products of salted peanuts.
Standard Brands (Standard), a foreign corporation, filed a case with
the director of patents seeking the cancellation of the registered
trademark of Philippine Nut as it closely resembles its trademark
“Planters Cocktail Peanuts” (“Planters Cocktail”) which it claims to
have first used in the year 1938 (it alleges that PhilNut first used its
Planters Cordial trademark only in 1958).
 The Patent office ordered the cancellation of the trademark of PhilNut
on the ground that the dominant part is the word Planters
which is displayed in a very similar manner and is very
confusing to the consumers. He concluded that PhilNut is
not entitled to register the mark at the time of the filing of its
application with the patent office as Standard would be
damaged by such registration.
STANDARD WINS. “PLANTERS” already has secondary meaning
tska nauna si STANDARD to use the trademark.
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On appeal, the petitioners claim that PLANTERS cannot be considered
as the dominant feature of the trademarks in question because it is a
mere descriptive term, an ordinary word which is defined as “one who
or that which plants or sows”.
Issue:
 Whether or not there is infringement.
Ratio:
 Yes. While it is true that the words used such as Cordial and Cocktail
are also prominently displayed, these words are mere adjectives
describing the type of peanuts in the labeled containers and
are not sufficient to warn the unwary customer that the 2
products come from distinct sources. The word “PLANTERS”
draws the attention of the buyer.
It, likewise, cannot be ignored that in this case, the coloring scheme of
the 2 marks are similar (gold, blue and white) and it basically has the
same layout of words such as “salted peanuts” and “vacuum packed”.
As a matter of fact, even the letter C of the words “cocktail” and
“cordial” are similar. When a competitor adopts a distinctive or
dominant mark or feature of another’s trademark and with it makes
use of the same color ensemble, employs similar words written in a
style, type and size of lettering almost identical with those found in the
other, it is quite obvious that there is intent to pass to the public
his product as that of the other.
same coloring scheme
same layout of words
same letter for “CORDIAL” and “COCKTAIL”
Mr. Peanut is not the trademark of Standard Brands in this case. What
calls the attention of the buyer is the word “Planters”. It is that which
leaves a lasting impression on the buyers.
Furthermore, applying the doctrine of secondary meaning to this case,
there is evidence to show that Planters has become a distinctive mark
or symbol insofar as salted peanuts are concerned, and by priority of
appropriation dating as far back as 1938, respondent Standard has
acquired a preferential right to its adoption.
Zantarain’s Inc. v. Old Grove Smokehouse
Doctrine: Generic term is the name of a particular genus or class of which an
individual article or service is but a member. It can never attain trademark
protection. Furthermore, , if at any time a registered trademark becomes
generic as to a particular product or service, the mark’s registration is subject
to cancellation.
A descriptive term identifies a characteristic or quality of an article or service
such as its color, odor, function, dimensions or ingredients. They are not
ordinarily protectable as trademarks but they may become valid marks by
acquiring a secondary meaning in the minds of the consumers.
A suggestive term suggests rather than describes some particular
characteristic of the goods or services to which it applies and requires the
consumer to exercise the imagination in order to draw a conclusion as to the
nature of the goods or services. It is protected without the necessity for proof
of secondary meaning2.
Arbitrary or fanciful terms bear no relationship to the products or services to
which they are applied. They are protectable without proof of secondary
meaning (e.g. Kodak, Ivory – soap).
Facts:
 Zantarain is the manufacturer and distributor of a line “Fish-Fri” and
“Chick-Fri”. The term “Fish-Fri” has been used by Zatarain’s or its
predecessors since 1950 and has been registered as a trademark since
1962. Likewise, “Chick-Fri” was used in the yeat 1968 by Zantarain and
was registered as trademark in 1976.
2 One must show that the primary significance of the term in the minds of the consuming public is
not the product but the producer. The burden always rests with the plaintiff. A high degree of proof
is necessary to establish secondary meaning.
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Oak Grove Smokehouse (Oak Grove) began marketing a “fish fry” and “chicken
fry” in March 1979;
Similarly, another company, Visko’s Fish Fry entered the batter mix market in
1980 with its product, “Visko’s Fish Fry”.
 Zantarain filed its original complaint against Oak Grove in the US
District Court alleging infringement and unfair competition
under the Lanham Act. The defendants, Oak Grove and Visko
counterclaimed for cancellation of the trademarks “Fish-Fri” and
“Chick-Fri”. The case was tried and the district court found that the
term “Fish-Fri” has acquired a secondary meaning in the New Orleans
geographical area and therefore, was entitled to trademark protection,
but concluded that the defendants were entitled to fair use of the term
“fish-fry” to describe the characteristics of their goods. Accordingly,
the Court held that Oak Grove and Visko had not infringed the
trademark of Zatarain. With respect to Chick-Fri, the court held that it
had not yet acquired a secondary meaning to the minds of the
consumers, hence, it ordered the cancellation of its trademark
registration.
On appeal, Zatarain claims that Fish-Fri is a suggestive term and
therefore not subject to the “fair-use defense”3. It claims that even
assuming that the fair use defense is applicable in this case, the
appellees cannot invoke the doctrine products. It further claims that
Chick-Fri has acquired a secondary meaning for the term.
 In assessing the claim for secondary meaning, the major inquiry is the
Issue:
 Whether or not Fish-Fri is a suggestive term.
 Assuming Fish-Fri is a descriptive term, whether or not the fair-use
defense could be set up.
 Whether or not Chick-Fri is a descriptive term with a secondary
meaning afforded trademark protection.
Ratio:
 Fish-Fri is a descriptive term. There are a few tests applied by the
court in determining whether a term is descriptive or suggestive.
Whenever a word or phrase conveys an immediate idea of the
3 Even when there is a secondary meaning, others may be entitled to the use of the mark without
incurring liability for trademark infringement when used fairly and in good faith only to describe
to users the goods or services of a party, or their geographic origin. Anyone is free to use the
descriptive ark as long as such does not lead to customer confusion as to the source of goods or
services.
qualities, characteristics, effect, purpose, or ingredients of a
product or service, it is classified as descriptive (dictionary
test – consult the dictionary for the meaning of the word); if a term
requires imagination, thought and perception to reach a
conclusion as to the nature of goods, it is suggestive
(imagination test).
In this case, a mere observation compels the conclusion that a product
branded “Fish-Fri” is a prepackaged coating or batter mix applied to
fish prior to cooking. The connection between the merchandise and the
term is so close and direct that even a consumer unfamiliar with the
product will have an idea of its purpose of function.
The third test applied by the court is whether the competitors would
be likely to need the terms used in the trademark in describing their
products. The court held there is a necessity to use the words because
“even piscatorial gastronomes (nagpapaka-poetic pa yung ponente eh,
badtrip) would agree that the words “fish” and “fry” suggests that a
merchant whose batter mix is specially spiced for fishing is likely to
find “fish fry” a useful term for describing his product.”
The final test examines the extent to which a term actually has been
used by others marketing a similar service or product. As noted above,
a number of companies have already used the terms in describing their
products.
consumer’s attitude towards the mark. The mark must denote to
the consumer “a single thing coming from a single source”.
Factors such as amount and manner of advertising, volume of sales,
and length and manner of use may serve as circumstantial evidence
relevant to the issue of secondary meaning. While none of these alone
will prove it, the combination would establish the necessary link in the
minds of the consumers between a product and its source. The
measure is not the quantity of the efforts, but its effectiveness in
altering the meaning of the term.
In this case, it was found that Zatarain and its predecessor has used
the term continuously. It also acquired expenditures of over $400,000
for advertising during the period from 1976 to 1981. For this, Zatarain
sold a total of 916,385 cases of Fish-Fri. Moreover, in a survey
conducted by experts, it was found that Zatarain was the product they
would buy at the grocery store as coating. Such is considered as
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circumstantial evidence of secondary meaning to weigh
heavily in Zatarain’s favor.
 The fair-use defense can be set up. There is ample evidence to
support that the use of the words “fish fry” was fair and was made in
good faith. Oak Grove and Visko did not intend to use the term in a
trademark sense and had never attempted to register the words as a
trademark. In addition to this, they packaged their products in such a
wat as to minimize any potential confusion in the minds of consumers.
 “Chick Fri” is a secondary term without secondary meaning.
It has been used only in 1968 and was registered in 1976. Zatarain’s
expenditures over Chick-Fri were mere “chikenfeed”. In fact there was
no direct advertising campaign to publicize the product. Zatarain has
not overcome the burden of proving secondary meaning. Having
concluded that it is lacking secondary meaning, the cancellation of its
registration was proper.
Two Pesos v. Taco Cabana
Doctrine: Marks which are merely descriptive of a product are not inherently
distinctive. When used to describe a product they do not inherently identify a
particular source, and hence cannot be protected. However, descriptive
marks may acquire distinctiveness which will allow them to be protected if it
has become distinctive of the applicant’s goods in commerce (secondary
meaning).
An identifying mark is distinctive and capable of being protected if either 1) it
is inherently distinctive; 2) if it has acquired distinctiveness through
secondary meaning.
The protection of trademarks and trade dress under the law serves the same
statutory purpose of preventing deception and unfair competition. There is
no persuasive reason for applying different analysis.
Facts:
 Taco Cabana operates a chain of fast food restaurants in Texas. Its first
restaurant opened in San Antonio in September 1978. Taco Cabana
describes its Mexican Trade Dress as:
“a festive eating atmosphere having interior dining and patio areas
decorated with artifacts, bright colors, paintings and murals. The
patio includes interior and exterior areas with the interior patio
capable of being sealed off from the outside patio by overhead garage
doors. The stepped exterior of the building is a festive and vivid color
scheme using top border paint and neon stripes. Bright awnings and
umbrellas continue the theme.”
Two Pesos, Inc., on the other hand, adopted a motif very similar to the
foregoing description of Taco Cabana’s trade dress. It expanded
rapidly in Houston and other markets but did not enter San Antonio.
 In 1987, Taco Cabana filed a case for trade dress infringement
under Texas Common Law. The court held that the trade dress
was protected if it either was inherently distinctive OR had
acquired a secondary meaning. The court found that Two Pesos
intentionally and deliberately infringed Taco Cabana’s Trade Dress.
On appeal, the court ruled that Taco Cabana’s trade dress was not
descriptive but rather INHERENTLY distinctive, and that it was not
functional. It affirmed its decision in Chevron v. Voluntary Purchasing
Groups and held that Taco Cabana’s inherently distinctive trade dress
was entitled to protection despite the lack of secondary meaning.
Petitioner now argues that the fact that the court found that there is no
secondary meaning, means that the trade dress is not inherently
distinctive.
Issue:
 Whether or not the trade dress that is inherently distinctive is
protectable under the law without a showing that it has acquired a
secondary meaning.
Ratio:
 Proof of secondary meaning is not required to prevail over a
claim under the Lanham Act where trade dress at issue is
inherently distinctive. There is no persuasive reason to apply to
trade dress a general requirement of secondary meaning which is at
odds with the principles generally applicable to infringement suits
under the Lanham Act.
A general requirement of secondary meaning imposes an unfair
prospect of theft or financial loss on the developer of fanciful or
arbitrary trade dress at the outset of its use. Petitioner here suggests
that such trade dress should receive limited protection without proof
of secondary meaning. However, the court stated that if temporary
protection is available from the earliest use of the trade
dress, it must be because it is neither functional nor
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descriptive, but an inherently distinctive dress that is
capable of identifying a particular source of the product. The
termination of protection for failure to gain secondary meaning over
some unspecified time could not be based on the failure of the dress to
retain its fanciful, arbitrary or suggestive nature, but on the failure of
the user of the dress to be successful enough in the marketplace.
Upon consideration of the court of past jurisprudence (e.g. Vibrant
Sales v. New Body), it held that such is contrary to the provisions of
the Lanham Act. It held that if a verbal or symbolic mark or the
features of a product design may be registered under the
law, it is necessarily a mark by which the goods of the
applicant may be distinguished form others. Section 2 of the
law requires secondary meaning only as a condition
precedent to registration of descriptive marks. There are
marks that are registrable without secondary meaning. These marks
are inherently capable of distinguishing the goods of the users of these
marks.
Suggestive marks are capable of registration without any proof of
secondary meaning since the connection between the mark and the
source is presumed. There is no distinction in the law between
trademarks and trade dress. This serves the same intention of
preventing deception and unfair competition.
Furthermore, adding a secondary requirement could have anti-
competitive effects and would create burdens on the startup of
companies.
Concurring Opinions
 Justice Stevens: The wording of the law does not say “trademark or
trade dress” It is to be interpreted, thus, that a federal cause of action
for infringement of an unregistered trademark or trade dress and
concludes that such a mark or dress should receive essentially the
same protection as those that are registered.
The test for liability is the likelihood of confusion. Under the Lanhan
Act, the ultimate test is whether the public is likely to be deceived or
confused by the similarity of the marks whether we call the violation
infringement, unfair competition or false designation of origin.
Secondary meaning need not be established if there is a finding of
inherent distinctiveness.
 Justice Thomas: Section 43(a) of the Lanham Act made actionable
“any false description or representation including words or other
symbols tending falsely to describe or represent, when used in
connection with any goods or services.”
Trade dress, which consists of not words or symbols, but of a product’s
packaging seems at common law to have been though incapable ever of
being inherently distinctive, perhaps on the theory that the number of
ways to package a product is finite. Thus, a user of trade would always
have had to show secondary meaning in order to obtain protection.
But now, trade dress is considered as fully capable as a
particular trademark of serving as a representation or
designation of source under the law.
As a result, the first user of an arbitrary package, should be entitled to
presumption that his package represents him without having to show
that it does so in fact.
Wal-Mart Stores v. Samara Brothers
Facts:
 Samara Brothers (Samara) is a company which designs and
manufacturs children’s clothing. Its primary product line of
spring/summer clothing is sold in a number of chain stores, including
JCPenney. On the other hand, Walmart is one of the US’ most well
known retailers. It contracted with one of its suppliers, Judy
Philippines to manufacture a line of swimwear for sale in the 1996
summer season. It sent photographs of a number of garments from
Samara’s line on which Judy garments were to be based. Judy duly
copied the line with a few minor revisions.
After investigation, Samara found out that Walmart and several other
stores were selling the knock-offs of Samara’s outfits produced by
Judy-Philippine. Thus, Samara filed a case for copyright
infringement and infringement for unregistered trade dress
under the Lanham Act.
Walmart claims that there is insufficient evidence to prove that
Samara’s designs were protected as distinctive trade dress for purposes
of the Lanham Act. The trial court found for Samara and awarded the
company damages, interests, costs and fees together with injunctive
relief.
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Issue:
 Whether or not Samara’s designs are entitled to infringement
protection under the Trademark Law.
Ratio:
 There is no infringement. Product designs require secondary
meaning. An action for infringement of an unregistered
trade dress is protectable only upon showing of secondary
meaning. The breadth of definition of marks registrable under the
Lanham Act includes trade dress – a category that has been expanded
by many Court of Appeals to encompass the design of a product. For
liability for trade dress infringement to exist, there must be proof that
the alleged infringement feature is not functional and is
likely to cause confusion with the product for which
protection is sought. Distinctiveness is, moreover, an
explicit prerequisite for registration of trade dress under
and the general principles qualifying a mark for registration
under the Lanham Act are for the most part applicable in
determining whether an unregistered mark is entitled to
protection.
A mark is inherently distinctive if its intrinsic nature serves to identify
a particular source. Secondly, even if it is not inherently distinctive, if
it has developed secondary meaning, which occurs when, in the minds
of the public, the primary significance of a mark is to identify the
source of the product rather than the product itself.
There is nothing in the law, however, which requires that every
category mark necessarily includes some marks “by which the goods of
the applicant may be distinguished from the goods of others” without
secondary meaning – that in every category some marks are inherently
distinctive.
However, it was pointed out by the court that it is difficult to point out
that a mark is inherently distinctive. Consumers are aware of the
reality that almost invariably, even the most unusual of product
designs, such as cocktail shaker shaped like a penguin – is intended
not only to identify the source, but to render the product itself more
useful or appealing. Thus, in evaluating distinctiveness courts
have differentiated between marks that are inherently
distinctive and marks that have acquired distinctiveness
through secondary meaning.
Design, like color, is NOT INHERENTLY DISTINCTIVE. The
attribution of inherent distinctiveness to certain categories of word
marks and product packaging derives form the fact that the very
purpose of attaching a particular word to a product or encasing it in a
distinctive package is most often to identify the product’s source. With
product design, as with color, consumers are aware of the reality that,
almost invariably, that feature is intended not ti identify the source,
but to render the product itself more useful or more appealing.
The case of Two pesos is inapposite to the court’s ruling in this case
since the trade dress at issue at that time was the décor of the
restaurant which constitutes product packaging – which is normally
taken by the consumer as to indicate origin. Such case has no bearing
in the present case.
Shangri-La International v. Developers Group
Doctrine: The root of ownership of trademark is actual use in commerce. The
law requires that before a trademark can be registered, it must have been
actually used in commerce and service for not less than 2 months in the
Philippines. Registration, without more, does not confer upon the registrant
an absolute right to the registered mark. It is merely a prima facie proof that
the registrant is the owner of the registered mark or trade name.
Registration in the principal register gives rise to a presumption of the
validity of the registration, the registrant’s ownership of the mark and his
right to the exclusive use thereof. Registration therefor is limited to the actual
ownership of the trademark (it passes upon the issue of ownership). It may be
contested through opposition or interference proceedings or, after
registration, in a petition for cancellation.
Facts:
 The Kuok Family owns and operates a chain of hotels with interest in
hotel and hotel-related transactions since 1969. Allegedly, it adopted
the Shangila Logo as far back as 1962 and used it in all of their hotels
around the world. To centralize their operations, the Kuok Group
incorporated in Hong Kong and Singapore, among other places. Edsa-
Shangri-La Hotel and Resort and Makati Shangri-Law hotel
and Resort were incorporated in the Philippines in 1987 to
own and operate 2 hotels put up by Kuok Group.
On the other hand, complainant herein is DGCI who claims to have
used and registered the logo in October 1982 with the Bureau of
Patents from a scribbled piece of paper given to him by an unnamed
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artist for his restaurant business, the Shangri-La Finest Chinese
Cuisine.
Issue:
 Whether or not DGCI is the rightful owner of the trademark.
 Whether or not Shangri-La can claim protection under the Paris
Ratio:
 DGCI does not have the right to ownership over the
It should be noted herein that petitioners, Shangri-La International
did not operate any establishment in the Philippines albeit they
advertised their hotels abroad since 1972.
DGCI filed a complaint for infringement and damages against Shangri-
La International alleging that it has been the prior exclusive user in the
Philippines of the mark and logo in question since December 1982 and
the registered owner thereof for its restaurant and allied services. It
claims that the logo of the latter is confusingly similar with that of its
logo.
Shangri-La claims protection under the Paris Convention and sought
the cancellation of the registration of DGCI. It claims that the Paris
Convention affords them security and protection as well as the
exclusive right to the said mark and logo. They claimed that they have
used this logo since 1975, internationally known and specially designed
by on William Lee.
 The trial court found for DGCI. CA affirmed on the ground that the
evidence presented by Shangri-La international shows that they used
the tradename abroad and not in the Philippines until 1987. It cannot
claim ownership over the mark and logo. On the other hand,
respondent has a right to the mark by virtue of its prior use in the
Philippines and the issuance of the certificate of its registration.
Furthermore, the CA ruled that the Paris Convention still
requires commerce in the Philippines in order to be
protected.
Convention.
trademark. The law at force at the time of the application of the
trademark applies. In this case, R.A. No. 166 as amended applies. It
states that “The root of ownership of trademark is actual use in
commerce. The law requires that before a trademark can be registered,
it must have been actually used in commerce and service for not less
than 2 months in the Philippines. Registration, without more, does not
confer upon the registrant an absolute right to the registered mark. It
is merely a prima facie proof that the registrant is the owner of the
registered mark or trade name.”
As between actual use of the mark without registration and
registration of the mark without actual use thereof, the former prevails
over the latter. Here, it can be seen that as a condition precedent
to the registration of the trademark, the same must have
been in actual use in the Philippines before the application
for registration.
Applying such principle, DGCI cannot be the owner of the trademark
since according to his statement, the jeepney signboard artist he
commissioned submitted his designs only in December 1982. This was
2 months after the filing of the application for trademark application
on October 18, 1982. It was also only on December 1982 when the
restaurant opened for business. Hence, the registration is void.
It was also found by the court that DGCI’s president, Ramon
Syhunliong has been a guest at the petitioner’s hotel before he caused
the registration of the mark and logo, and surmised that he must have
copied the idea there. The respondent here copied not only the words
but also the exant font and lettering style and in addition, he copies
also the logo portion of the trademark. It is then apparent that the
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adoption was deliberate, malicious and in bad faith. He
cannot not bring an action for infringement against the
owner of the mark.
The requirements for ownership of a trademark are
enumerated in the law. There must be prior and actual use in
commerce in the Philippines for 2 months prior to the application for
registration and the mark must not have been already appropriated by
someone else.
 Nevertheless, Shangri-La cannot claim protection under the
Paris convention which gives them the remedy of applying
for cancellation of a trademark for unfair competition
whether or not registered because under municipal laws,
there must have been prior and actual use in the Philippines
for a period of not less than 2 months in order to be an
owner of a mark4 Under the doctrine of incorporation as applied in
most countries, rules of international law are given a standing equal to
and not superior to national legislative enactments.
EY Industrial v. Shen Dar Electricity
Facts:
 EY Industrial Sales (EYIS) is a domestic corporation engaged in the
production, distribution and sale of air compressors and other
industrial tools and equipment. On the other hand Shen Dar is a
Taiwan-based foreign corporation engaged in the manufacturing of air
compressors. Both companies in this case claimed to have the right to
register the trademark for “VESPA” air compressors.
In 1997-2004, EYIS imported compressors from Shen Dar through
sales contracts. In its Bill of Ladings, the product items were described
merely as air compressors and there is no documentary evidence to
show that such compressors were labeled or maked as “VESPA”.
On June 1997, Shen Dar filed a trademark application for “VESPA” for
use on air compressors. It was issued a registration certificate.
Likewise, on July 1999 (much later than Shen Dar), EYIS filed an
application for trademark application for the same “VESPA” air
compressors. EYIS was also issued a registration certificate for the
same.
4 But isn’t Shangri-La already doing business in the Philippines at that time?
 Shen Dar filed a petition for cancellation of the registration of EYIS on
the ground that EYIS was a mere distributor in the Philippines of
VESPA air compressors which it imported from Shen Dar. It argued
that it had prior and exclusive right to the use and registration of the
mark.
EYIS denied the allegations of Shen Dar and alleged that it was a mere
importer. The air compressors supplied to them bore the mark SD
which stood for Shen Dar and not VESPA.
 Director of the BLA ruled in favor of EYIS. Hence the petition for
cancellation of the mark was denied. Similarly, the appeal was denied
and the certificate of registration of Shen Dar was accordingly
cancelled.
Subsequently, the Court of Appeals ruled in favor of Shen Dar. It
restored its registration and ordered the cancellation of the
registration of EYIS.
Issue:
 Whether or not EYIS is the true owner of the mark “VESPA”
Ratio:
 EYIS is the true owner. The “first to file rule” 5 must not be
interpreted to mean that ownership should be based upon an earlier
filing date. While RA 8293 removed the previous application
for registration of a mark, proof of prior and continuous use
is necessary to establish ownership of a mark. Such is sufficient
evidence to oppose the registration of a mark.
Prior and continuous use of a mark may even overcome the
presumptive ownership of the registrant and be held as the owner of
the mark. EYIS, being the prior user of the mark is the true
owner of the trademark. Its prior adoption and continuous use of
the mark on air compressors is bolstered by the numerous
documentary evidence consisting of sales invoices issued in the name
of the respondent. Proof of ownership is shown by the commercial
documents, sales and invoices describing the goods as “VESPA”
compressors sold to Iloilo, Cebu, Dumaguete, Zamboanga, CDO,
Davao, etc. It used the word “VESPA” on air compressors and has
5 The registration of a mark is prevented with the filing of an earlier application for registration.
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gained business goodwill and reputation in the Philippines for which it
has validly acquired trademark rights.
On the other hand, Shen Dar failed to refute the evidence. Not one of
the Bills of Lading presented bore the word “VESPA”. Instead it
described the aircompressors as “SD”.
Kabushi Kaisha Isetan v. IAC
Doctrine: What is to be secured from unfair competition in a given territory
is the trade which one has in that particular territory. That is where his
business is carried on where the goodwill symbolized by the trademark has
immediate value; where the infringer may profit by infringement.
Adoption alone of a trademark would not give exclusive right thereto. Such
grows out of actual use. Adoption is not use. Flowing from this is the trader’s
right to protection in the trade he has built up and the goodwill he has
accumulated from the use of the trademark.
Facts:
 Kabushi Kaisa Isetan (KKI) is a foreign corporation applying for
registration of its “Isetan” and Young Leaves Design” with the
Philippine Patent Office (PPO). On the other hand, Isetann
Department Store is a domestic corporation existing under the laws of
the Philippines claims that Isetann. The latter also sought registration
of its trademark “Isetann Department Store” and the “Isetann Flower
Design”
In view of this, KKI filed a petition for cancellation of the registration
of Isetann Department Store alleging immoral intention of cashing in
the long established goodwill and popularity of KKI’s reputation. It
argued that they are both in the same channels of trade and ordinary
people will be misled to believe that the products of the private
respondent originated from KKI. It seeks refuge in the provisions of
the Paris Convention which affords protection to trademarks belonging
not only to locals but also those belonging to foreign countries.
 The Director of Patents dismissed the petition for cancellation. Form
this, KKI filed an appeal to the IAC. However, the appeal was
dismissed because it was filed out of time. Hence, this petition seeking
reversal of the decision of the IAC based on substantial justice.
Issue:
 Whether or not Isetann Department Store is the rightful owner of the
trademark.
Ratio:
 Yes. Actual use in commerce or business is the prerequisite to the
acquisition of the right of ownership over a trademark. Adoption alone
of a trademark would not give exclusive right thereto. Such grows out
of actual use. Adoption is not use. Flowing from this is the trader’s
right to protection in the trade he has built up and the goodwill he has
accumulated from the use of the trademark. A prior registrant
cannot claim exclusive use of the trademark unless it uses it
in commerce.
KKI failed to 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 which should consist of
considerable sales since its first use. The invoices presented are of no
commercial value since they were mere samples. A sample is not a sale.
It is not considered as use as contemplated in Philippine law.
1. Its company is not registered to do business in the Philippines
2. Its trademark is not registered under Philippine law
3. Its trademark is not being used on the products in trade,
manufacture or business in the Philippines.
4. It never engaged in any promotional activities in the
Philippines to popularize its trademark.
On the other hand, Isetann registered its mark on 1979 and
continuously engaged in commerce, establishing goodwill through
advertising. There is no showing of any KKI influence on the Filipinos.
Thus, the records show that among Filipinos, the name cannot claim to
be internationally well-known. What is to be secured from unfair
competition in a given territory is the trade which one has in that
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particular territory. That is where his business is carried on where the
goodwill symbolized by the trademark has immediate value; where the
infringer may profit by infringement.
The Paris Convention 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. It must be:
1. It must be internationally known or well known
2. Must be a trademark (not patent or copyright)
3. Must be for use in the same or similar kind of goods
4. Person claiming must be the owner of the mark.
Canon Kabushi Kaisha v. Court of Appeals
Facts:
 NSR Rubber corporation filed an application for registration of the
mark CANON for sandals in the Bureau of Patents. A verified notice of
opposition was filed by the petitioner Canon Kabushi Kaisha (CKK)
alleging that it will be damaged by the registration of the trademark in
the name of the respondent. For failure to answer, NSR was declared
in default and CKK was allowed to present evidence ex parte.
Notwithstanding, the Bureau of Patents ruled in favor of NSR. CA
Affirmed. Hence this petition.
Issue:
 Whether or not CKK is entitled to exclusive use of the mark CANON
because it is its trademark.
Ratio:
 No. CANON as used by CKK for its paints, chemicals, toner and
dyestuff can be used by private respondents NSR for its sandals
because the products are dissimilar. The certificates of registration of
CKK clearly showed that the registration covers goods belonging to the
class of paints, chemical, toner and dyestuff. Clearly, there is a world of
difference between the paints and sandals of private respondent.
Bare assertions of CKK that it intends to engage in the business of
sandals cannot convince the court since it failed to attach evidence that
would indicate such intention or such fact that it embarked on such
line of goods. The certificate of registration confers upon the
trademark owner only the exclusive right to use its own symbol on
those goods specified in the certificate.
The likelihood of confusion of goods is a relative concept and is
determined according to the particular and sometimes peculiar
circusmstances of each case. Goods are related when they belong to the
same class or have the same descriptive characteristics with reference
to their form, composition, texture or quality. Undoubtedly, the
products subject of this case are not related. The products are sold
through different trade channels. One is sold in chemical stores or
distributors while the other are sold in grocery stores, sari-sari stores
and department stores. Thus, the evident disparity of products in this
case renders the unfounded apprehension of petitioners that confusion
of business or origin might occur if private respondent is allowed to
use the mark CANON.
 CKK cannot seek refuge in the provisions of the Paris Convention since
it fails to meet the conditions set forth therein.
1. It must be internationally known or well known
2. Must be a trademark (not patent or copyright)
3. Must be for use in the same or similar kind of goods
4. Person claiming must be the owner of the mark.
Fredco Manufacturing Corporation v. President and Fellows of
Harvard College
Facts:
 Fredco Manufacturing is a domestic corporation which filed a petition
for cancellation of Harvard University’s certificate of registration for
its mark, “Harvard Veritas Shield Symbol.” Allegedly, the mark of
Harvard (FREDCO) for T-shirts, polo, shirts, sandos, briefs, jackets
and slacks was used in January 1982 by its predecessor. Such use
matured into a registration and a certificate of registration.
It further alleged that at the time the Harvard University was issued its
certificate of registration, New York garments already registered the
mark for goods under Class 25 (t-shirts, polos, etc.) Because it failed to
file an affidavit for use/none use on the 5th anniversary, its registration
was cancelled. But the right to the mark remained with its predecessor
and now with FREDO.
On the other hand, Harvard University herein claims that it is the
lawful owner of the name and mark “Harvard” in numerous countries
worldwide, including the Philippines. The name was adopted in 1639
as the name of the college in Cambridge, Massachusetts. The name and
mark was used in commerce as early as 1872.
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
Harvard University alleged that in 2002, it discovered through
international trademark watch program, Fredco’s website advertises
and promotes the brandname without its consent. Hence, it filed an
administratie complaint against Fredco before the IPO for trademark
infringement and/or unfair competition with damages.
 The Bureau of Patents found for FREDCO and cancelled Harvard’s
certificate of registration. On appeal, the Office of the Director general
reversed the decision on the ground that Fredco failed to explain how
its predecessor came up with the mark. There was no evidence that
Fredco or New Garments was licensed or authorized by Harvard
University to use its name in commerce or for any other use.
The Court of Appeals also ruled in favor of Harvard on the ground that
Harvard’s symbol was used way ahead of Fredco and its predecessor.
There was also a lack of explanation as to why Fredco used the name
and mark and the words “USA”, “established in 1936”, and
“Cambridge, Massachusetts” with an oblong device.
Issue:
 Whether or not Fredco committed trademark infringement.
Ratio:
 Yes. There is no dispute that Harvard used its logo in commerce in the
year 1872. It also registered its name and mark in at least 50 countries.
On the other hand, Fredco started using the mark only in 1982.
It should be noted herein that while Harvard University had actual
prior use of its marks abroad for a long time, it did not have actual use
in the Philippines before its application for trademark registration
with the Patents Office. However, where the trademark sought
to be registered has already been registered in a foreign
6 Section 239.2 of the said law.
country, as in this case, that is a member of the Paris
Convention, the requirement of proof of use in the
commerce in the Philippines for the required period is not
necessary.
Marks registered under RA 166 shall remain in force and shall be
deemed to have been granted under RA 82936 which does not require
actual prior use of the mark in the Philippines. Since the shield of
Harvard University is not deemed granted under the new law, the
defects arising from the absence of the actual prior use in the
Philippines has been cured by said law.
 It is apparent that Fredco’s design falsely suggests that Fredco or its
goods are connected with Harvard University with the uses of the
words “Harvard” and “Cambridge Massachusetts”. It should not have
been allowed because the law at that time prohibits the registration of
a mark which falsely suggests a connection with institutions. It claims
origin in Cambridge (which is also where Harvard was established)
suggests a false connection with the university. What Fredco has done
in using the mark and the words “Cambridge” to evoke a desirable aura
is precisely to exploit commercially the goodwill of Harvard.
Second, under the Paris Convention, to which the US and the
Philippines are both signatories, trade names shall be protected
without the obligation of filing or registration. Harvard is the trade
name of the world famous university and it is also a trademark of
Harvard University. It is entitled to protection even without
registration. This means that no educational entity in the
Philippines can use such name without the consent of
Harvard. Likewise, no entity can claim, expressly or
impliedly through the use of its name, that its products or
services are authorize, approved or licensed by or sourced
from Harvard University without the latter’s consent.
Under the Memorandum of Minister Villafuerte, which enumerates
the criteria to fall under the category of a “well-known” name, it states
that trademarks duly registered with the industrial property office of
another country is considered a well-known brand. To be
internationally protected, the mark need not be registered in the
Philippines, all that is required is that the mark is well-known
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
internationally and in the Philippines for identical or similar goods,
whether or not the mark is registered in the Philippines.
Now, under the Rule 102 of the Rules and Regulations on Trademarks
it is provided that “in determining whether a ark is well-known, the
following criteria or any combination thereof may be taken into
account:
1. the duration, extent and geographical area of any use of the
mark, in particular, the duration, extent and geographical area
of any promotion of the mark, including advertising or
publicity and the presentation, at fairs or exhibitions, of the
goods and/or services to which the mark applies;
2. the market share, in the Philippines and in other countries, of
the goods and/or services to which the mark applies;
3. the degree of the inherent or acquired distinction of the mark;
4. the quality-image or reputation acquired by the mark;
5. the extent to which the mark has been registered in the world;
6. the exclusivity of registration attained by the mark in the
world;
7. the extent to which the mark has been used in the world;
8. the exclusivity of use attained by the mark in the world;
9. the commercial value attributed to the mark in the world;
10. the record of successful protection of the rights in the mark;
11. the outcome of litigations dealing with the issue of whether the
mark is a well-known mark; and
12. the presence or absence of identical or similar marks validly
registered for or used on identical or similar goods or services
and owned by persons other than the person claiming that his
mark is a well-known mark.
There is no question then, and this Court so declares, that “Harvard” is
a well-known name and mark not only in the United States but also
internationally, including the Philippines. The mark “Harvard” is rated
as one of the most famous marks in the world. It has been registered in
at least 50 countries. It has been used and promoted extensively in
numerous publications worldwide. It has established a considerable
goodwill worldwide since the founding of Harvard University more
than 350 years ago. It is easily recognizable as the trade name and
mark of Harvard University of Cambridge, Massachusetts, U.S.A.,
internationally known as one of the leading educational institutions in
the world. As such, even before Harvard University applied for
registration of the mark “Harvard” in the Philippines, the mark was
already protected under Article 6bis and Article 8 of the Paris
Convention. Again, even without applying the Paris Convention,
Harvard University can invoke Section 4(a) of R.A. No. 166 which
prohibits the registration of a mark “which may disparage or falsely
suggest a connection with persons, living or dead, institutions,
beliefs
Berris Agricultural Co. Inc v. Norvy Abyadang
Doctrine: Registration and its actual use by the manufacturer of the goods
made available to the purchasing public confers ownership. A certification,
once issued, constitutes prima facie evidence of the validity of the registration
of the registrant’s ownership of the mark and of the exclusive right to use the
same.
However it is also required to file a declaration for actual use of the mark,
with evidence to that effect within 3 years from the filing of the application
for registration; otherwise, the application shall be refused or the mark shall
be removed from the register. The presumption may be challenged in an
appropriate action for nullity of the registration. Presumption may likewise
be defeated yb evidence of prior use by another person.
Facts:
 Norvy Abyadang filed with the IPO a trademark application for the
mark “NS D-10 PLUS” for use in connection with Fungicide with active
ingredient 80% Mancozeb. For this, Berris Agricultural filed a veirifed
notice of opposition allegedly because “NS D-10 PLUS” is similar and
/or confusingly similar to its registered trademark “D-10 80 WP” also
used for Fungicide.
IPO rendered a decision in granting the opposition. On appeal with the
Office of the Director general, an order was issued affirming the
previous decision. Thereafter, the Court of Appeals reversed the
decision and found that “NS D-10 PLUS” is not confusingly similar
with “D-10 80 WP”, it also found that respondents failed too establish
ownership of the mark and that registration for Berris’ trademark may
be cancelled to avoid multiplicity of suits.
Issue:
 Whether or not Berris’ is the rightful owner of the trademark.
 Whether or not the two marks are confusingly similar.
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
Ratio:
 Berris is the prior user and prior registrant and is the owner
of the mark “D-10 80 WP.” Berris was able to establish that it was
using its mark since June 20,2002 even before its registration with the
IPO on November 29, 2002. Its Declaration of Actual Use (DAU),
being a notarized document, received in due course by the IPO, is
evidence of the facts it stated and has the presumption of regularity,
entitled to full faith and credit upon its face.
On the issue of the DAU being fraudulently based on the assumption
that Barris could not have legally used the mark in the sale of the
goods since 2002 because it registered the product with FPA only on
November 12, 2004, such cannot be considered by the court since it is
beyond the jurisdiction of the IPO and is a separate and distinct
matter. Granting for argument’s sake, such fact could not negate the
fact that Berris was selling the product especially considering that it
first traded its goods in Calauan, Laguna where its business is located.
 Being the owner of the mark, Berris has exclusive right to
prevent all parties from using the same in the course of trade
identical or similar in respect to which trademark is
registered. The court finds that the marks are
CONFUSINGLY SIMILAR. In applying the Dominancy Test7, the
court found that both marks pertain to the same type of goods –
fungicide with 80% Mancozeb as an active ingredient and used for the
same group of fruits, crops, vegetables, and ornamental plants, using
the same dosage and manner of application. They also belong to the
same classification of goods under R.A. No. 8293. Both depictions of
"D-10," as found in both marks, are similar in size, such that this
portion is what catches the eye of the purchaser. Undeniably, the
likelihood of confusion is present.
Likewise, in applying the Holistic Test, taking into consideration
the packaging, for both use the same type of material (foil type) and
have identical color schemes (red, green, and white); and the marks
are both predominantly red in color, with the same phrase "BROAD
SPECTRUM FUNGICIDE" written underneath.
Considering these striking similarities, predominantly the "D-10," the
buyers of both products, mainly farmers, may be misled into thinking
7
that "NS D-10 PLUS" could be an upgraded formulation of the "D-10
80 WP.
Coffee Partners Inc. v. San Francisco Coffee & Roastery, Inc.
Doctrine: A trade name need not be registered with the Intellectual Property
Office (IPO) before an infringement suit may be filed by its owner against the
owner of an infringing trademark. All that is required is that the trade name
is previously used in trade of commerce in the Philippines.
Facts:
 Petitioner is a local corporation engaged in the business of
establishing and maintaining coffee shops around the country. It
is registered with the SEC as Coffee Partners Ltd. for a non-
exclusive right to operate coffee shops in the Philippines
using trademarks, including SAN FRANCISCO COFFEE.
Respondent, on the other hand, registered the business name
SAN FRANCISCO COFFEE & ROASTERY with the
Department of Trade and Industry which has a customer
base including Figaro Company, Tagaytay Highlands, Fat Willy’s,
among others.
Respondents later formed a joint venture company with
Boyd Coffee USA under the mother company name Boyd Coffee
Philippines (BCPPI), primarily engaged in processing, roasting
and wholesale selling of coffee. The respondent later
discovered that petitioner was about to open a coffee
shop under the name SAN FRANCISCO COFFEE, and
according to the respondent, the shop caused confusion in
the minds of the public as it a similar name and it also
engaged in the business of selling coffee. Respondent sent a
letter to the petitioner to stop using the name, as well as to the
Bureau of Legal Affairs of the IPO (BLA-IPO) for infringement,
unfair competition and claims for damages.
Arguments:
 Petitioner contends that the marks have notable distinctions in
their appearances. Furthermore, when the respondent formed a
joint venture with Boyd Coffee USA, it stopped operating under
the trade name SAN FRANCISCO COFFEE. David Puyat,
president of petitioner corporation, attested further that CPL has
franchises in Malaysia, Singapore and later on in the United States
under the same trade name. BLA-IPO ruled for the respondent
since it has registered the trade name six years earlier (1995), thus
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
it must be protected from infringement of its trade name. The
Office of Director General of IPO (ODG-IPO), however, reversed
the decision. In ruling for a subsequent user of a trade name in
good faith, ODG-IPO held that respondent has stopped using its
trade name in 1998 and the petitioner continuously used the
trademark since 2001l; therefore, it would be inequitable to rule
otherwise. This was, again, reversed on appeal.
Issue:
 Whether the petitioner’s use of the trademark constitutes an
infringement of respondent’s trade name even if it is not registered
with the IPO.
Held:
 In affirming the decision of the appellate court, the Supreme Court
held that a trade name need not be registered with the IPO
before an infringement suit may be filed by its owner
against the owner of an infringing trademark. All that is
required is that the trade name is previously used in trade of
commerce in the Philippines.
Applying either dominancy or holistic tests will yield to the
conclusion that the trademark SAN FRANCISCO COFFEE is
a clear infringement of the respondent’s SAN
FRANCISCO COFFEE & ROASTERY, INC., with the
descriptive words SAN FRANCISCO being the dominant
features of the latter’s trade name.
Petitioner should not be allowed to earn profit by the name and
reputation so far build by the respondent without running afoul of
the basic demands of fair play.
Sehwani, Incorporated v. In-n-out Burger, Inc.
Facts:
 IN-N-OUT Burger (INO) is a foreign corporation under the laws of
California and not doing business in the Philippines. It filed an
administrative complaint against Sehwani and Benita Fries for
violation of intellectual property rights. IN-N-OUT alleges that it is the
owner of the tradename “IN-N-OUT” (“INO”) and trademarks “IN-N-
OUT Burger & Arrow Design” (INO Arrow Design) and “IN-N-OUT
Burger Logo” (INO Burger logo) which are used in its business since
1948 and are registered in the US as well as in other parts of the world.
INO alleges that it discovered that Sehwani had obtained a trademark
registration for the mark “IN-N-OUT” where the inside of the letter
“O” formed like a star. Despite being demanded to cease and desist
from using the said mark, Sehwani even granted its co-petitioner
Benita Fries a license to use said mark for a period of 5 years in its
restaurant in Pasig City. Hence, INO filed a case for violation of
intellectual property rights.
 In its answer, Sehwani alleges that INO lacks capacity to sue in the
Philippines since it was not doing business in the country.
Furthermore, it alleges that there is no cause of action since the mark
is not registered or used in the Philippines.
The Bureau Director rendered a decision finding that INO has legal
capacity to sue and that it is the owner of an internationally well
known trademark however, she found that there is no unfair
competition. In view of the foregoing, she cancelled the certificate of
registration of Sehwani.
The appeal, having been filed out of time, was dismissed in the Court
of Appeals. Thus, petitioners filed the instant petition.
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
Issue:
 Whether or not INO has the legal capacity to sue for trademark
infringement.
 Whether or not INO is an internationally well known mark.
 Whether or not there is a violation of intellectual property rights.
Ratio:
First and foremost, the petition was dismissed outright for having
been filed out of time. However, the court still proceeded to discuss
the issues in the case at hand.
 INO has legal capacity to sue albeit it is not doing business in
the Philippines as provided for in Section 1608 in relation to
Section 39 of RA. 8293. Under the said law, any person who is a
national or domiciled in a country which has a convention, agreement
or reciprocal law with the Philippines regarding intellectual property
rights shall have the legal capacity to file a civil or administrative suit
against an infringer.
INO bases its causes of action, in this case, in the Paris Convention,
particularly Article 6 and Article 8, which governs the protection of
well-known trademarks. It is a self executing provision and does
not require legislative enactment to give it effect in the member
country. The essential requirement under this article is that:
1. The trademark must be well-known in the country where the
protection is sought (in this case, the Philippines);
The power to determine whether such mark is well-known is the
competent authority of the country of registration or use. This
competent authority would either be the registering authority, if it
has the power to do this, or the courts of the country in question
if the issue comes before a court. Such question is factual in nature and
8 Any foreign national or juridical person who meets the requirements of Section 3 of this Act and
does not engage in business in the Philippines may bring a civil or administrative action hereunder
for opposition, cancellation, infringement, unfair competition or false designation of origin and
false description, whether or not it is licensed to do business in the Philippines under existing laws.
9 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 relating to
intellectual property rights or the repression of unfair competition to which the Philippines is also
a prty 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.
the findings of fact of the IPO are generally accorded not only respect,
but at times, even finality if such are supported by substantial
evidence.
 INO is an internationally well-known mark as evidenced by the
documents of registration presented by INO and the trademark
registrations of the logo around the world. In fact, the findings of the
IPO in previous cases already declared INO Burger and Arrow Design
as an internationally well-known mark.
Generally, the basis for determining whether it is well-known or not is
embodied in the Ongpin Memorandum of 1983. It takes into
consideration the extent of registration of a mark. Similarly, the
Implementing Rules of the Intellectual Property Code also provides
that a criteria for determining whether it is well-known or not is the
extent to which the mark has been registered in the world. In
this case, INO also presented evidence consisting of articles where the
INO sign and trademark has appeared in magazines, newspapers, and
print outs.
The quality image and reputation acquired by INO is
unmistakable. On the basis of the evidence presented consisting of
worldwide registration of the mark, as well as the advertisements
therein by INO, there is no doubt that the mark is an internationally
well-known mark.
The fact that the marks are neither registered nor used in the
Philippines is of no moment because under the World Intellectual
Property Organization (WIPO), a member state shall not
requires as a condition precedent for determining whether a
mark is well-known that the mark has been used in or that
the mark has been registered or that an application for
registration of the mark has been filed in or in respect of, the
member state.
 Yes. The evidence on record shows that not only did the
petitioners use the INO trademark for the name of their
restaurant, but also on the identical or confusingly similar
mark for their food offerings, thereby misrepresenting the
source of the goods and services. Such warrants the cancellation
of the trademark registration of Sehwani and Benita Fries.
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
Kellogg v. National Biscuit
Facts:
 This suit was brought by National Biscuit Company (NBC) against
Kellogg Company to enjoin the latter for alleged unfair competition by
the manufacturer and sale of the breakfast food commonly known as
shredded wheat. Allegedly, the latter uses the name “shredded
wheat” and produces it in pillow-shaped form, like NBC.
Shredded Wheat is generally known for its pillow-shaped form. It
was introduced by Henry Perky in 1893. Commercial success, however,
was not attained until the Natural Food Company (later changing its
corporate name to “Shredded Wheat Company”), NBC’s predecessor,
built a factory for its manufacture.
Kellogg Company alleges that in started producing a product
somewhat similar to the shredded wheat in 1912 and ending in 1919,
the difference between the products is that the wheat was being
reduced to a dough before it was pressed into shreds. It stopped
manufacturing for a time, but resumed its manufacturing in 1927. In
1928, NBC sued for alleged unfair competition. The suit was
discontinued by stipulation until the present suit was
brought again.
 The District Court dismissed the bill and found that there is no passing
of or deception shown. It held that upon expiration of the patent
registration of Perky (the inventor), the name of the patented article
passed into public domain. On rehearing, this decision was refused
and the court enjoined Kellogg from using the name of “Shredded
Wheat” as to its tradename and from advertising or offering for sale of
its product in pillow-shaped form. Shortly thereafter, a permanent
injunction was issued by the court prohibiting Kellogg from:
1. Using the name “shredded wheat”
2. Producing the product in a pillow-shapred form, similar to
NBC’s
3. Form doing either.
On certiorari, NBC claims that the exclusive right to the trade name
“shredded wheat” and the exclusive right to make the shredded wheat
biscuit pillow-shaped. It alleges that Kellogg used the name and shapre
of NBC for the purpose of passing of the goods as its own.
On the other hand, Kellogg denies that NBC is entitled to the exclusive
right to the tradename and shape. It contends that it is only exercising
the common right to freely manufacture and sell an article of
commerce protected by patent.
Issue:
 Whether or not “Shredded Wheat” is a protected mark.
 Whether or not Kellogg is guilty of unfair competition.
Ratio:
 No. There is no exclusive right to use the term “Shredded
Wheat” as a tradename. It is the term by which the biscuit in
pillow-shaped form is generally known by public. The term is
generic. Thus, Kellogg had the right to make the article and
the right to use the term by which the public knows it.
For many years, there has been no attempt to use the term as a
trademark. Although there was an attempt before to have the term
“Shredded Whole Wheat” registered as trademark, it has been met
with opposition because the maker of the machine used for shredded
wheat. The name “shredded wheat” and the machinery
employed in making it has been dedicated to the public. Since
during the life of the patents “shredded wheat” was the general
designation of the patented product, there passed to the public upon
expiration of the patent period, not only the right to make the article as
it was made during the patent period, but also the right to apply
thereto the name by which it had become known. From the
cessation of the monopoly and the falling of the patented
device into the domain of the public there must necessarily
pass to the public the generic description of the thing which
has arisen during the monopoly.
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
Likewise, NBC has no exclusive right to sell the shredded
wheat in the form of a pillow shape in which the article
became known to the public. Where an article may be
manufactured by all, a particular manufacturer can no more asset
exclusive rights in a form in which the public has become accustomed
to see the article and which, in the minds of the public, is primarily
associated with the article rather than a particular producer than it can
in the case of a name with similar connections in the public mind.
Moreover, the pillow shape must be used for another reason. The
evidence is persuasive that this form is functional that the cost of the
biscuit would be increased and its high quality lessened if some other
form were substituted for the shape.

 There is no unfair competition. The obligation resting upon

Kellogg is not to insure that every purchaser will know it to be the
maker but to use every reasonable means to prevent confusion. In this
case, the name Kellogg is so prominent on all its cartons as to
minimize the possibility of confusion.
Issue:
 Whether or not the mark is scandalous and immoral.
Sharing in the goodwill of an article unprotected by patent or
trademark is the exercise of a right possessed by all and in the free
Ratio:
exercise of which the consuming public is deeply interested. There is
 No. The refusals for registration were reversed by the court
no evidence of passing off or deception on the part of Kellogg
on the ground that the examining attorney has failed tp
Company and it has taken every reasonable precaution to
prove that, in viewing mark by itself, the consumers would
prevent confusion or the practice of the deception in the sale
perceive the frog as flipping the bird. Even assuming that the
of its product.
consumers would view the frog as flipping the bird, the
attorney failed to establish that said gesture, when done by a
In Re: Bad Frog Brewery, Inc.
realistic looking animal and when directed to no particular
Facts:
person or group, would be perceived as scandalous and
 Bad Frog Brewery seeks the registration of the BAD FROG BEER and
immoral.
design in the form shown below, for wearing apparel and alcoholic
beverages. However, in both cases, the examining attorney refused
Obviously, examining attorneys are trained professionals who carefully
the registration pursuant to the Lanham Act on the basis
review the drawings of the applicants. They examine the drawings to a
that the marks are scandalous and immoral. It is of the
far greater degree than would ordinary customer. In addition, the
position of the examining attorney that the average customer would
examining attorney made reference to applicant’s own statements
recognize the mark as “flipping the bird” or “giving the finger” and that
contained in its advertising and promotional materials wherein
the said gesture is widely recognized to be obscene. Thus, this appeal.
applicant is clearly attempting to instruct customers that the
applicant’s frog is indeed giving the finger. The very fact that the
applicant has to educate the consuming public to view the
frog in its trademark as giving the finger is additional proof
that, simply by itself, the frog would not be perceived by
consumers as giving the finger.

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Trademarks Midterms Case Digests (Atty. Ortiguerra)
 Furthermore, the attorney failed to establish that even if the frog were
perceived to be giving the finger, that such a gesture would be
perceived as scandalous or immoral. The attorney has not proven that
the mere giving of a finger in a vacuum would begin to rise
the level of scandalous or immoral gesture. Mere appearance of
the word “idiot” (for example) in a vacuum on a shirt or a beer bottle
would not be shocking or give offense.
Even when humans give the finger to a particular individual or group,
that, depending upon the circumstances, said gesture may be
acceptable. Even attorney’s own evidence shows that numerous
newspapers, magazines and television stations have often shown
humans giving the finger to particular individuals and groups. If said
gestures were scandalous, immoral or obscene, the court
seriously doubts that the magazines, shows or newspapers
would feature this gesture with no attempt to cover it up.
Dissenting Opinion by Simms:
 No trademark by which the goods of the applicant may b distinguished
form the goods of others shall be refused registration on the principal
register on account of its nature unless it consists of or comprises
immoral deceptive or scandalous matter.
In order to prove that the mark is scandalous, the office
must demonstrate that the mark is shocking to the senses of
truth, decency or propriety; disgraceful; offensive;
disreputable giving offense to the conscience or moral
feelings or calling out for condemnation.
The majority opinion apparently agrees that the consumers will not
perceive the mark as a frog giving an obscene gesture and that the
applicant’s mark bears only a remote similarity to the obscene gesture
(because it lacks a fifth finger). But Simms, disagrees with this
because, the thumb plays no role when a person makes this
gesture y forming a fist and extending the so called finger.
Moreover, the labels submitted with the applications suggest the
obscenity by the very name “BAD FROG”; “DO IT FROGGY STYLE”;
“FLIP THE BIRD, GET A FROG” among others. It is thus, clear that
the applicant as a central figure of its promotional efforts, draws
attention to the obscene gesture given by the frog. Whether the
applicant’s mark would likely to offend must be judged not
in isolation but in the entire context of the mark’s use.
Moreover, the applicant’s website implies obscenity. While the
applicant argues that the material from the website does not affect the
public perception of the mark, Simms disagrees. The website may
indeed affect how the public perceives its mark, at least as
that mark may be used in connection with the clothing
because the site appears to be a source of ordering
applicant’s clothing.
Press accounts of record also reveal the applicant’s admissions
concerning the nature of its mark. The Vice President of the company
was even quoted saying “if anyone wants to order a Bad Frog, all they
have to do is flip off their bartender. Everyone will know that that
means they want a Bad Frog Beer”; and “there’s thousands of beers on
the market, but I’m pretty sure this is the only one you can order with
a hand symbol”.
The mere fact that this gesture has appeared in newspapers and
magazines does not prove that it is not scandalous or immoral to a
substantial number of people. The appearance of this gesture on rare
occasions is certainly not very probative of its lack of offensiveness.
The fact that profane words may be uttered more freely does
not render them any less profane. Nor does this fact amend
the statute by which we are required to determine the
registrability of such matter as marks.
Likewise, while the thrust of the examining attorney’s refusal and the
majority opinion have been devoted to the “scandalous” refusal,
Simms believes that the applicant’s mark is, at the very least, immoral
under the Lanham Act. It is defined as not moral, inconsistent
with rectitude, purity, or good morals, contrary to
conscience or moral law, wicked; vicious; licentious as an
immoral man or deed.
Looking at the applicant’s mark n the context of the marketplace, the
frog is clearly making an obscene human gesture, fully intended by the
applicant and it would immediately be recognized by the average
person. The evidence showing disapproval by state agencies in some
very populous states demonstrates to me that at least a substantial
composite of people which may have been offended by the mark or
that it is immoral.
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In Re: Old Glory Condom Corp.
Doctrine: Whether a mark is scandalous is to be determined from the
standpoint of a substantial composite of the general public. Scandalous is
shocking to the senses of propriety.
That which gives offense to the conscience or moral feelings and giving
offense to the conscience or moral feelings, exciting reprobation, calling out
condemnation, disgraceful to reputation and shocking to the senses of truth,
decency and decency.
Any doubts as to whether a mark is scandalous should be resolved in favor of
allowing the mark to be published to permit any party who believes it would
be damaged by registration of the mark to file an opposition to registration.
In deciding whether a mark is scandalous, the context of contemporary
attitudes must be considered. Consideration must be given to the moral
values and conduct fashionable at the moment rather than that of the past
decades.
Facts:
 Old Glory Condom sought to register its mark with a design nfeature
consisting of a pictorial representation of a condom decorated with
stars and stripes in a manner to suggest the American flag. The
examining attorney refused the registration under the Trademark Act
on the ground that the mark consists of immoral and scandalous
matter because it was likely to offend a substantial composite of the
general public.
Applicant herein contends that the American flag design appears as a
feature of the trademark of the applicant for condoms but the flag is
not applied to the condoms themselves. It states that the back of each
condom package further pledges that the company promotes safer sex
to help eliminate Aids. Furthermore, applicant argues that the patent
and trademark office has registered more than a thousand marks for
condoms, many of them are sexually suggestive and many that might
be considered vulgar. Applicant emphasized that its mark is
expressly designed not to offend but to redefine patriotism
to include the fight against STDs, including AIDS.
Issue:
 Whether or not the applicant’s mark is scandalous and/or immoral.
Ratio:
 No. The particular pictorial representation featured in
applicant’s composite mark was not found by the examining
attorney to be vulgar and neither does the court find it to be
so. The examining attorney’s onjection the the applicant’s
mark seems to be directed to the mark’s linking of flag
imagery and a pictorial representation of a condom, each of
which, in itself, she apparently finds, unobjectionable.
Precisely why this combination of images is scandalous the
examining attorney fails to articulate. The examining attorney
offers very little evidence to support her position that a substantial
composite of the public would be offended by the mark. The court is
not willing, bases solely on the examining attorney’s opinion, the
evidence of the reaction to the Madonna (in scantily clad and wrapped
in American flag) video, and the unsuccessful effort to amend the US
Constitution to prohibit the burning of the flag, to presume that the
flag imagery of applicant’s mark would give offense in a manner that
must be deemed scandalous under the Trademark Law.
Moreover, the mark must be judged not in isolation but in the entire
context of the mark’s use. Here, the applicant markets its condoms in
packaging which emphasizes applicant’s commitment to the sale of
high quality condoms as a means of promoting safer sex and
eliminating AIDS and its belief that the use of condoms is a patriotic
act. Although not everyone would share in the applicant’s view, the
seriousness surrounding the use of the mark- a seriousness
of purpose made manifest to purchasers on the packaging
for its goods – is a factor to be taken into account in
assessing whether the mark is offensive or shocking.
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Pro-Football v. Suzan Harjo
Facts:
 This case concerns the registration of 6 trademarks owned by Pro
Football, the corporate owner of the Washington Redskins football
team, that include the word “Redskin” which was first registered in
1974. It uses these marks in connection with goods and services related
to its football team, including merchandise and entertainment.
In 1992, 7 Native Americans petitioned for cancellation of the
registrations claiming that the marks had disparaged the Native
Americans at the times of registration and had thus been
registered in violation of the Trademark Law.
Five years after issuing a pre-trial order, the TTAb issued a
cancellation order in which it scheduled the cancellation of the
contested trademarks based on the decision that the trademarks
disparaged the Native Americans to a substantial composite
of this group of people and may bring Native Americans into
contempt or disrepute.
In view of the judgment, Pro Football sought to have a de novo review
of the case, presenting 5 causes of action. It argues that the trademarks
do not disparage the Native Americans. It further alleged that
the Lanham Act, particularly Section 2(a) violates the First
Amendment because it is vague, overbroad and content-based
restriction on speech. Moverover, it asserts that the defendants’
cancellation petition was already barred by laches.
The TTAB found that the laches is inapplicable in this case. During the
hearing, the parties presented evidence showing that the term
Redskins is offensive to the Native Americans through dictionary
meaning, book and media excerpts, surveys, opinions and newspaper
articles. Thus, TTAB found that the term disparaged the Native
Americans and this warranted the cancellation of the registration.
Issue:
 Whether or not the TTAB appropriately concluded that the marks at
issue disparage Native Americans or cause them to be brought into
contempt or disrepute.
Ratio:
 The issue of disparagement, like the likelihood of conclusion, requires
a fact-based judgment that depends heavily on their particular
circumstances of each case. The registrant in a cancellation proceeding
is entitled to the prima facie presumption that the registration and the
mark are valid, that registrant is the owner and that registrant has the
exclusive right to use the mark. Thus, cancellation of a valuable
registration around which a valuable business good will has been built,
should be granted only with "due caution and after a most careful
study of all the facts.
Trademarks may disparage if they may dishonor by comparison
with what is inferior, slight, deprecate, degrade, or affect or
injure by unjust comparison. A disparagement test is much more
circumscribed and is limited by the Lanham Act. In deciding
whether the matter may be disparaging, we look not to the
American society as a whole, but to the views of the
referenced group.
Most importantly, it is pointed out that the question of disparagement
must be considered in relation to the goods or services identified by
the mark in the context of the marketplace. To ascertain the meaning
of the matter in question, we must not only refer to dictionary
definitions, but we must also consider the relationship between the
subject matter in question and the other elements that make up the
mark in its entirety; the nature of the goods or services and the
manner in which the mark is used in the marketplace in connection
with the goods and/or services.
It is essentially a 2-step process:
1. What is the meaning of the matter in question, as it appears in
the marks and as those marks are used in connection with the
services identified in the registrations?
2. Is the meaning one that may disparage the Native Americans?
3. Note that both shall be answered as of the dates of registration
of the marks herein.
In this case, since the oldest trademark was issued in 1967, and the
newest was issued in 1990, the Board focused its determination of the
issue of disparagement on the time periods, between 1967 and 1990
when the subject registrations issued.
It is to be noted that the football club used Native American imagery
throughout its logos and team imagery. Although the records disclose
that redskins is used in media and press since 1960s and refers to the
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football club , it would be factually incomplete and disingenuous to
ignore the substantial evidence of Native American imagery used by
pro football as well as pro football fans. Indeed, the TTAB noted
that 2 of the registered marks include a portrait of the
profile of a Native American and what presumably is a native
American spear. Substantial evidence exists to support the TTAB’s
conclusion that, when considered in relation to the other matter
comprising at least two of the subject marks, and as used in connection
with Pro Football’s services, “Redskins” clearly refers to both
respondent’s football team and carries the allusion to Native
Americans inherent in the original definition of that word.
In this case, the court found that the testimony of the 7 Native
Americans who brought suit in this case clearly do not constitute a
substantial composite of Native Americans.For this reason, it was
impossible for the board to reasonably corroborate its decision to
equate the views of the American public with the views of the Native
American population. The Ross survey and the other evidence
in this case clearly demonstrates that the views of the Native
Americans do not necessarily correlate with the views of the
general population. Defendants have the burden f proof by a
preponderance of evidence.
Dictionary Evidence:
 TTAB observed that the half of the dictionaries on record contained a
usage label indicating that the word is often, offensive, informal or
offensive slang. Based from this fact, the TTAB ruled that a not
insignificant number of Americans understood redskins to be
offensive.
For this, there are no findings of fact to support the TTAB’s
conclusion, rather, it is mere speculation on the part of the
TTAB that this is the case. The dictionary only found the word to
be often offensive, which means that in certain contexts the term
redskins was not considered offensive.
Historical Evidence
 TTAB observed that it found that during the late 1800s, and early
1900s, that the vast majority of evidence which included the word
portrayed Native Americans in a derogatory manner. It concluded that
since the 1960s, the term is a pejorative term for Native Americans.
In this case, it should be remembered that the ultimate legal
inquiry is whether the term is a pejorative term for Native
Americans when used in connection with the service and
during the relevant time frame.
Survey Evidence
 TTAB concluded that the survey could be extrapolated to the Native
Americans as a whole to be unsupported by substantial evidence. The
survey measures attitudes of Native Americans about their perceptions
of the term "redskin" as used as a reference to Native Americans in
1996.
As the TTAB itself observed, "[n]either [the fact that the survey
measured the views of individuals not alive at the time of registration
of certain of the trademarks or the fact that the survey did not consider
participants' views of the word 'redskin(s)' as used in connection with
Pro-Football's entertainment services] diminishes the value of
petitioners' survey for what it is-a survey of current attitudes towards
the word "redskin(s)" as a reference to Native Americans.
As a term for disparagement
 The evidence relating to the media and fans has no bearing on
whether a substantial composite of Native Americans finds the term
"redskin(s)" to be disparaging when used in connection with Pro-
Football's marks.
The TTAB noted that the record contained the testimony of the
Defendants who stated that they were "seriously offended" by Pro-
Football's use of the term in connection with its services. Id. This
testimony, however, is a reflection of their individual viewpoints and
there is no evidence that Defendants' views are a reasonable proxy for
a substantial composite of the entire Native American population.
In addition to concluding that the TTAB's finding of disparagement
was not supported by substantial evidence, the Court, in the
alternative, determines that Pro-Football's defense of laches would
also preclude the cancellation of the six trademarks.
The net result of the delay is that there is no direct or circumstantial
evidence in the record that, at the times the trademarks were
registered, the trademarks at issue were disparaging; even though the
Native Americans contend that during this entire time period the
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trademarks were disparaging. Hence, the evidence used by the TTAB
to support its disparagement conclusion was purely inferential.
While the common law definition of laches does not cleanly apply in
light of the procedural posture of this case, it can be easily modified:
Pro-Football's laches claim is only available under the common law if
(1) the Native Americans delayed substantially before commencing
their challenge to the "redskins" trademarks; (2) the Native Americans
were aware of the trademarks during the period of delay; and (3) Pro-
Football's ongoing development of goodwill during the period of delay
engendered a reliance interest in the preservation of the trademarks.
The notion of a "continuing wrong," which is so prevalent in Lanham
Act cases, provides a strong justification for the application of the
doctrine of laches in appropriate circumstances regardless of whether
the plaintiff has brought suit within the analogous statute of
limitations. Under the notion of a continuing wrong, "only the last
infringing act need be within the statutory period.
The Court articulated a general three-prong test for laches in the
context of a trademark proceeding. Essentially, to demonstrate laches
Pro-Football must show that Defendants' delay in bringing the
cancellation proceeding was unreasonable, and that prejudice to Pro-
Football resulted from the delay. Finally, the third step of
the NAACP test, development of goodwill during the period of delay, is
the prejudice element in the Bridgestone case. As the Bridgestone
court observed, "[e]conomic prejudice arises from investment in and
development of the trademark."
The Court finds that the Defendants substantially delayed in bringing
their challenge to the marks. In the case of the first trademark,
Defendants waited over twenty-five years to bring this
case. Defendants "do not dispute that they have long known about and
objected to the name of the Washington football
franchise.
The Court finds that for all six trademarks the delay in bringing the
cancellation proceeding was substantial. The marks were registered in
1967, 1974, 1978, and 1990. In the case of the trademarks registered in
1967, 1974, an 1978, the delay was substantial on its face. However,
given the context of this case, the Court concludes the delay for all the
trademarks was substantial. The Defendants had notice of the marks
when the marks were published for comment and when the marks
were published for registration. The Court finds that Defendants were
also aware of the trademarks during the
period of delay and therefore also had actual notice. Defendants state
in their opposition that they "do not dispute that they have long known
about and objected to the name of the Washington football franchise.
Accordingly, the Court finds that Defendants were aware of the
trademarks during the period of delay under a theory of actual or
constructive notice.
In the instant case, because the delay in bringing the
cancellation proceeding was so substantial, a presumption is created
that Pro-Football was entitled to rely on the security of the trademarks
at issue. In 1967, the NFL was still a nascent industry. Had this suit
been brought at that point, Pro-Football may have acquiesced and
changed the name. The twenty-five year delay, where Pro-Football has
invested so heavily in the marks, has clearly resulted in economic
prejudice.
Gold Seal Company v. Weeks
Facts:
 Gold Seal Company seeks a decree authorizing the Commissioner of
Patents to register as a lawful trademark the words Glass Wax, used by
plaintiff in connection with its liquid composition for cleaning glass
and metal. S. C. Johnson & Son, Inc., has intervened, opposing the
application for registration of this mark on the ground that the words
Glass Wax do not constitute a lawful trade-mark because it is
deceptively misdescriptive.
Both of the Patent Office tribunals, however, denied registration of the
mark, deciding that it was either merely descriptive or deceptively
misdescriptive and refused to consider the application as one seeking
registration based on secondary significance.
Plaintiff contends that Glass Wax is a "technical" trade-mark under
Section 45 of the Lanham Act, it being a combination of words
"adopted and used by a manufacturer or merchant to identify his
goods and distinguish them from those manufactured or sold by
others"; that it is not deceptive, nor is it merely descriptive, in that
Glass Wax describes both a cleaner for glass and a cleaner for metal;
that it is not merely deceptively misdescriptive in that it does not
misdescribe a cleaner, a cleaner for glass, or a cleaner for metalware.
Plaintiff further contends that should the Court find Glass Wax not a
technical trade-mark, it should nevertheless register the mark in that it
has acquired a secondary meaning under the Lanham Act.
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On the other hand, the Patent Office contends that that the mark is in
fact deceptive and does mislead; that such deception constitutes an
absolute bar to registration regardless of what the Gold Seal Company
intended, and regardless of whether or not any purchaser was injured;
that the Government cannot and should not approve the use of any
mark which actually misrepresents the goods to which it is applied,
and since the product involved contains no wax or any border-line
substance which might be considered a wax. And further, the Patent
Office maintains that since it is not such an anomalous false label in
relation to the product that no one would be deceived by it, especially
since some glass polishes do contain wax, it is not entitled to
registration. If it is not deceptive in this way, the Patent Office asserts
that the mark is merely descriptive or deceptively misdescriptive, for if
the product does contain wax it is descriptive; if it does not, it is
deceptively misdescriptive, since Glass Wax would be generally
understood as referring to a product which, when applied to glass,
leaves a wax film, or at least contains wax
 Having found the mark not deceptive, it then becomes necessary to
Issue:
 Whether or not the mark is deceptive.
 Whether or not the mark is descriptively misdescriptive.
 Whether or not there is secondary meaning
Ratio:
 The Court is well satisfied that the mark is not deceptive
under Section 2(a). On the contrary, the conclusion seems justified
from the voluminous record presented by the applicant that the term
may be at most misdescriptive in the sense that such suggestion of
deceptiveness may be overcome by a showing of distinctiveness under
Section 2(f).
While it would be naturally expected that housewives when asked
whether Glass Wax contained wax, would answer the question in the
affirmative, there is noththing in the Roper survey or in opposer's
record which would show that anyone would have felt actually
deceived if informed that there was no wax in the product. Both
opposer's and applicant's records show, on the contrary, that
practically all those who have actually used the product are highly
pleased with its action whether it may contain wax or not.
The evidence does not establish that customers have been
misled. To the contrary, it appears that the product satisfies
the needs of the customers; that the average or ordinary
customer cares little about, and knows little about, the
scientific composition of the product. The evidence does not
show that the public has been influenced to purchase the product on
account of believing that it contained wax, or that the product was
simply a wax to be placed upon glass.
In analyzing the relationship of the mark to the product and
its impact upon the public, deception is found when an
essential and material element is misrepresented, is
distinctly false, and is the very element upon which the
customer reasonably relies in purchasing one product over
another. When, as here, the product contains an element
which can only be known exactly by rigid scientific analysis,
and such element does not appear as determinative in
leading customers to buy the product, the mark is not
deceptive.
consider whether or not it may be registered when measured against
the prohibition of Section 2(e) which prohibits registration of marks
which are "merely descriptive or deceptively misdescriptive" of the
goods to which they are applied.
The evidence establishes: that the product contains either no
wax, or wax in insufficient quantity to justify use of the
word; that customers might justifiably believe it does
contain the element wax, whether or not it was significant to
them in purchasing the product; that it is sold in association
with other wax products; that other glass and metal cleaners
do contain wax and have an appearance not basically
dissimilar to plaintiff's product. We therefore find ourselves
in accord with the holding of the Patent Office that the mark,
as employed in commerce, is deceptively misdescriptive. For
this reason it cannot be registered as a technical trade-mark.
Viewed in this way, it still remains immaterial that plaintiff has
combined two common English words in a way which is not to be
found in dictionaries and which is not precise and accepted grammar,
for this does not destroy the meanings of the words used and the
import of the total mark as it relates to the qualities and characteristics
of the product itself. This mark is comprised of general words which,
when viewed together, and regardless of whether they truly or falsely
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describe the immediate product, could as easily apply to a related class
of goods and as aptly describe them as the one before the Court. Such a
mark is not "technical".
In Re Budge Manufacturing
Facts:
 Budge Manufacturing appeals from the decision if the TTAB refusing
registration of LOVEE LAMB for automatic seat covers on the basis
that the term is deceptive matter within the meaning of the Lanham
Act as applied to Budge’s goods which are made from wholly synthetic
fibers.
Issue:
 Whether or not the term is deceptive matter within the meaning of the
Lanham Act.
Ratio:
 Yes. The proscription of the law is not against misdescriptive terms
unless they are also deceptive. Thus, a mark or part of a mark may be
inapt or misdescriptive as applied to an applicant’s goods foes not
make it deceptive. A three part test is to be applied in testing
whether or not a term is deceptive matter:
1. Whether the term is misdescriptive as applied to the goods,
2. if so, whether anyone would be likely to believe the
misrepresentation, and
3. whether the misrepresentation would materially affect a potential
purchaser’s decision to buy the goods.
In this case, Budge admits that its seat overs are not made from lamb
or sheep. Thus, it is misdescriptive; The seat covers for various vehicles
can be and mare from nature and sheepskins. Applicant itself made it
from sheepskin. Thus, the purchasers are likely to believe that the seat
covers denominated by the term LAMB or SHEEP are actually natural
sheep or lamb skins. Moreover, evidence of record shows that natural
sheepskin and lamb skin is more expensive than simulated skins and
that natural and synthetic skins have different characteristics. Thus,
misrepresentation is likely to affect the decision of the purchase.
Misdescriptiveness of a term may be negated bu its meaning in the
context of the whole mark inasmuch as the combination is seen
together and makes a unitary impression. The same is not true with
respect to explanatory statements in advertising or on labels which
purchasers may or may not note and which may or may not always be
provided.
In Re: Nantucket, Inc.
Facts:
 This is an appeal filed by Nantucket from a decision of the TTAB
affirming a refusal to register the mark “Nantucket” for men’s shirts on
the ground that it is primarily geographically deceptively
misdescriptive.”
Nantucket filed an application for registration of the name
“Nantucket” on the principal register of the PTO. However, the
examining officer found that the word “Nantucket” as defined in the
dictionary is an island in the Atlantic Ocean south of Massachusetts. It
concluded that the word is primarily geographically descriptive o
primarily geographically deceptively misdescriptive, depending upon
whether the shirts did or did not come from Nantucket Island (which it
did not).
Nantucket argues that, as applied to its shirts, the term is arbitrary and
nondescriptive because there is no association in the public mind of
men’s clothing in Nantucket.
Issue:
 Whether or not the term is primarily geographically deceptively
misdescriptive.
Ratio:
 The board erred in refusing the registration of Nantucket. In
determining whether or not a geographical term is primarily
geographically descriptive of a product the board ruled that the
primary consideration is whether or not there is an association in the
public mind of the product with the particular geographical area.
Generally, the board used a test:
1. Whether the term conveys to the consumersprimarly or
immediately a geographical connotation;
2. If so, whether the goods or services do in fact come from the
place so named (if they do, the term is primarily
geographically descriptive, if not it is primarily geographically
deceptively misdescriptive)
3. If the term conveys primarily a geographical connotation and
the goods or services do not come form the place so named,
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whether the use of the term is calculated to deceive the public
as to the geographical origin of the goods, the mark is
deceptive and falls within the absolute prohibition of the law.
However, the court ruled that the test rests mechanically on the
one question of recognizability of some large segment of the
public and ends there. Once it is found that the mark is the name of
a known place, i.e., that it has "a readily recognizable geographic
meaning," the next question, whether applicant's goods do or do not
come from that place, becomes irrelevant under the board's test, for if
they do, the mark is "primarily geographically descriptive"; if they
don't, the mark is "primarily geographically deceptively
misdescriptive." Either way, the result is the same, for the mark must
be denied registration on the principal register.
Geographically deceptive misdescriptiveness cannot be determined
without considering whether the public associates the goods with the
place which the mark names. If the goods do not come from the place
named, and the public makes no goods-place association, the public is
not deceived and the mark is accordingly not geographically
deceptively misdescriptive. The word “primarily’ should not be
overlooked for it is not the intent of the legislators to refuse
registration of the mark where the geographic meaning is
obscure. In fact, courts have consistently held that when a geographic
term is used in an arbitrary or fictitious sense, it may be subject to a
valid trademark.
As applied to this case, the only indication of record that Nantucket is
primarily geographical resides in listings referring to Nantucket Island
as a summer resort and former whaling center. There is no evidence
to support a holding that the mark, as applied to men’s shirts
is deceptively misdescriptive. bThere is no indication that
the purchasing public would expect men’s shirts to have
their origin in Nantucket when seen in the market place.
Buyers are not likely to be deceived.
Concurring Opinion (Nies):
 Affirms the decision but reached the same conclusion form a
different direction. In determining whether a geographic term is
registrable under the Lanham Act and upon what conditions, the first
question is whether the name is primarily of geographic significance
but, contrary to the board's view, that does not end the matter.
A geographic term may be used in a manner which is:
1. Inherently distinctive
2. Generic
3. Descriptive
4. Deceptively misdescriptive
5. Deceptive
We must start with the concept that a geographic name of a place of
business is a descpriptive term when used on the goods of that
business. There is a public goods/place association, in effect,
presumed. As with other terms which are descriptive when first used,
it came to be recognized that through substantially exclusive and
extensive use, a merchant might develop protectable goodwill in such a
geographically descriptive name upon proof that the name ceased
being informational to the public and came to indicate a source of
goods.
A geographic name is not unprotectible or unregistrable because it can
be labelled a geographic name, but because it tells the public
something about the product or the producer about which his
competitor also has a right to inform the public. Thus, the names of
places devoid of commercial activity are arbitrary usage.
If Nantucket were to be applied to goods, one would expect that there
are at least some goods for which the term is arbitrary, the applicant in
such case, must resort to proof of distinctiveness in accordance with
the law to secure registration.
Qualitex Co. v. Jacobson Products Co.
Facts:
 Qualitex Company has for years colored the dry cleaning press pads it
manufactures with a special shade of green gold. On the other hand,
respondent in this case, Jacobson (a Qualitex rival) began to use a
similar shade on its own press pads. Qualitex therefore, registered its
color as trademark and filed a trademark infringement case against
Jacobson for the use of the green-gold color.
Qualitex prevailed in the District Court but the 9th Circuit set aside the
judgment on the infringement claim on the ground that the law does
not permit registration of color alone as a trademark.
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Issue:
 Whether or not the law permits the registration of color alone as a
trademark.
 Whether or not the color herein can be registered as a trademark.
Ratio:
 There is no reason to disqualify absolutely the use of a color
as a trademark. A color is also capable of satisfying the more
important part of statutory definition of a trademark which requires
that a person use or intend to use the mark to identify his or her goods,
including a unique product from those manufactured or sold b others
and to indicate the source of the goods even if that source is unknown.
Neither can the courts find a principled objection to the use of color as
a mark in the important functionality doctrine of trademark law.
The functionality doctrine prevents trademark law, which seeks to
promote competition by protecting a firm's reputation, from instead
inhibiting legitimate competition by allowing a producer to control a
useful product feature. If a product's functional features could be used
as trademarks, however, a monopoly over such features could be
obtained without regard to whether they qualify as patents and could
be extended forever.
It would seem, then, that color alone, at least sometimes, can
meet the basic legal requirements for use as a trademark. It
can act as a symbol that distinguishes a firm's goods and
identifies their source, without serving any other significant
function.
 Yes. Qualitex’ green color acts as a symbol. Having attained
secondary meaning, it identifies the press pad’s source.
Accordingly, unless there is some special reason that convincingly
militates against the use of color alone as a trademark, trademark law
would protect Qualitex's use of the green-gold color on its press pads.
Jacobson presented before the court 4 reasons as to why the law
should forbid the use of color alone as trademark. But the court found
it unpersuasive for the sollowing reasons:
It will produce uncertainty and unresolvable court disputes about
what shades of a color a competitor may lawfully use
 The court has already been faced with a number of cases when it had
to decide on which among two similar terms deserve protection. We do
not see why courts could not apply those standards to a color,
replicating, if necessary, lighting conditions under which a colored
product is normally sold.
Depletion of usable colors
 The doctrine of functionality normally would seem available to
prevent the anticompetitive consequences that Jacobson herein posits.
The functionality doctrine thus protects competitors against a
disadvantage (unrelated to recognition or reputation) that trademark
protection might otherwise impose, namely, their inability reasonably
to replicate important non-reputation-related product features.
Moreover, it has been held that if a design’s aestethic value lies in its
ability to confer a significant benefit that cannot practically be
duplicated by the use of alternative designs, then the design is
functional.
Support of his position with past Supreme Court decisions
 The SC cases cited therein interpreted trademark law as it existed
before 1946 when Congress enacted the Lanham Act. The Lanham Act
significantly changed and liberalized common law to dispense
with mere technical prohibitions, most notably, by
permitting trademark registration of descriptive words
where they have acquired secondary meaning.
Indeed, in 1985, the Federal Circuit considered the significance of the
Lanham Act's changes as they related to color and held that trademark
protection for color was consistent with the "jurisprudence under the
Lanham Act developed in accordance with the statutory principle that
if a mark is capable of being or becoming distinctive of the applicant's
goods in commerce, then it is capable of serving as a trademark.
Moreover, we believe the Federal Circuit was right in 1985 when it
found that the 1946 Lanham Act embodied crucial legal changes that
liberalized the law to permit the use of color alone as a trademark
(under appropriate circumstances). At a minimum, the Lanham Act's
changes left the courts free to reevaluate the preexisting legal
precedent which had absolutely forbidden the use of color alone as a
trademark. Finally, when Congress reenacted the terms "word, name,
symbol, or device" in 1988, it did so against a legal background in
which those terms had come to include color, and its statutory revision
embraced that understanding.
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There is no need to permit color alone to function as a trademark
because a firm already may use color as part of trademark and may
rely upon trade dress protection under the Lanham Act
 Trademark law helps the holder of a mark in many ways that trade
dress protection does not. Furthermore, one can find it easy to
understand why firms would find it difficult to place a usable symbol
or word on a product instead of color as part of a design.
Having determined that a color may sometimes meet the basic legal
requirements for use as a trademark and that respondent Jacobson's
arguments do not justify a special legal rule preventing color alone
from serving as a trademark (and, in light of the District Court's here
undisputed findings that Qualitex's use of the green-gold color on its
press pads meets the basic trademark requirements), we conclude that
the Ninth Circuit erred in barring Qualitex's use of color as a
trademark.
Dallas Cowboys Cheerleaders v. Pussycat Cinema, Ltd.
Facts:
 Dallas Cowboys Cheerleaders is a wholly owned subsidiary of the
Dallas Cowboys Football club which employs 36 women who perform
dance and cheerleading routines at Dallas Cowboys football games.
Likewise, they have merchandise which enjoyed nationwide
commercial success due largely to national exposure. At football
games, the cheerleaders appear on all commercial items depicting the
cheerleaders where the women are in clad in plaintiff’s distinct
uniform.
On the other hand, Pussycat Cinema is a NY corporation which owns a
private movie theatre where it began to show Debbie Doe Dallas which
depicts a cheerleader at a fictional high school who has been selected
to become a Texas squad, the cheerleaders perform sexual services for
a fee. The movie consists largely of scenes graphically depicting the
sexual escapades of the actors. In the final scene of the movie, Debbie
dons a uniform strikingly similar to that worn by the Dallas
Cowboys Cheerleaders and for approximately 12 minutes, engages
in various sex acts while clad or partially clad in the uniform. It further
advertises the movie in posters with a caption: “Starring Ex Dallas
Cowgirl Cheerleader Bambi Woods” and “You’ll do more than cheer for
this X Dallas Cheerleader.”
 Plaintiff brought the action alleging trademark infringement under the
Lanham Act. A preliminary issue raised by the defendants in this case
is that the plaintiff has no valid trademark in the uniform as it is a
purely functional item necessary for the performance of the
cheerleader. The District Court found for the plaintiff.
Issue:
 Whether or not plaintiff has a valid trademark in its cheerleading
uniform.
 Whether or not the depiction of the uniform in the movie violates the
trademark.
Ratio:
 Although it is true that functional items can be afforded no protection
under trademark law, the court does not agree that all of the
characteristics of the uniform in the instant case serve only a
functional purpose. Plaintiff herein does not claim a trademark in
all the clothing designed and fitted to allow free movement while
performing cheerleading routines, but claims a trademark in the
particular combination of colors and collocation of
decorations that distinguish its uniform from others.
The design of an item, if nonfunctional and has acquired secondary
meaning can be subject to a trademark protection. Even the design
may become a trademark even if the item itself is functional. Thus, the
fact that the item serves or performs a function does not mean that it
may not at the same time be capable of indicating sponsorship or
origin, particularly where the decorative aspects of the item are
nonfunctional.
The combination of the white boots, shorts, blue blouse and white
starstudded vest and belt is an arbitrary design and which makes the
otherwise functional uniform trademarkable.
 Yes. In order to be confused, a consumer need not believe that the
owner of the mark actually produced the item and placed it on the
market. The public’s belief that the owner sponsore or otherwise
approved the use of the trademark satisfies the confusion requirement.
In this case, the uniform in the movie unquestionably brings to mind
the Dallas Cowboys Cheerleaders. Indeed it is hard to believe that
anyone who had seen defendant’s sexually depraved film could ever
thereafter disassociate it from the cheerleaders. Thus, there is a
likelihood of confusion within the meaning of the Lanham
Act.
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Defendant raises the defense of fair use (which is a privilege in others
than the owner of the copyright to use the copyrighted item in a
reasonable manner without his consent) however, the court found that
the defendant’s use of the uniform hardly qualifies as parody or any
form of fair use.
This is not a case of unconstitutional prior restraint as this is not a case
of government censorship, but a private plaintiff’’s attempt to
protect its property rights. Likewise, there is no prior restraint
herein since the defendant may comment on sexuality in athletics
without infringing the trademark of the plaintiff.
Traffix Devices v. Marketing Displays
Facts:
 Marketing Displays Inc (MDI) established a successful business in the
manufacture and sale of sign stands incorporating the expired
patented feature initiated by an inventor named Robert Sarkisian. Its
signs were recognizable to buyers and user because the dual spring
design was visible near the base of the sign.
After the patent expired, Traffix Devices (TD) sold sign stands with a
visible spring mechanism that looked like MDI’s. Their products were
alike because they were. MDI used the name “WindMaster” while TD
used the name “WindBuster”
 MDI fled a suit for trademark infringement, trade dress infringement
and unfair competition against TD. The District Court granted
summary judgment in his favor. However, the Circuit Court reversed
the decision on the ground that the competitor had to find some
way to hide the design or otherwise set it apart from MDI’s.
Issue:
 Whether or not the tradedress herein embodying the dual spring
design is protected by a trademark (MDI alleges that it has acquired a
secondary meaning to his favor).
Ratio:
 No. MDI’s dual spring design is a functional feature for
which there is no trade dress protection. The consumers did not
associate the look of the dual-spring design with MDI. Nevertheless,
the rationale on secondary meaning is irrelevant since there can be no
trade dress protection as the design in a functional feature.
Protection in tradedress exists to promote competition. It provides
protection to one who is injured when a person uses the mark which is
likely to cause confusion as to the origin, sponsorship or approval of
his or her goods. The person who asserts trade dress
protection has the burden of proving that the matter sought
to be protected is not functional.
In this case, a utility patent once granted and expired is a strong
evidence that the features claimed therein are functional. Herein, the
dual spring feature is the essential feature of the trade dress which
MDI now seeks to protect. The springs are necessary to the
operation of the device. It serves an important purpose of keeping
the sign up-right even in heavy wind conditions and as confirmed by
the statements in the expired patents, it does so in a unique and useful
manner. It forces the frame to tip along the longitudinal axis of the
elongated ground-engaging members. These statements in the patent
applications and in the course of procuring the patents demonstrate
the functionality of this design.
Even if there is no previous utility on the subject matter, the feature is
still functional. A product is functional and cannot serve as a
trademark if it is essential to the use or purpose of the article
or if it affects the cost or quality of the article. A functional
feature is one the exclusive use of which would put
competitors at a significant non-reputation related
disadvantage.
Functionality having been established, there can be no trade
dress infringement on such ground.
In Re Morton Norwich Products
Facts:
 Morton Norwich (MN) sought to have its container design registered
as a trademark. However, the PTO Trademark Attorney maintained
that the design sought to be registered is not distinctive and that there
is no evidence that it has acquired a secondary meaning. It further held
that the container is simply functional and essentially utilitarian and
non-arbitrary. Wherefore, it cannot function as a trademark. On
appeal, the Board likewise held that the design in unregistrable since it
is functional.
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Issue:
 Whether or not the subject matter sought to be registered –
configuration of the container – is functional.
Ratio:
 It is not purely functional hence, registrable. The label
functional has a dual significance. It has been used on the one hand, in
lay fashion to indicate the normal or characteristic action of anything
and on the other hand it has been used to denote a legal conclusion. If
the designation functional is to be utilized to denote legal consequence,
we must speak in terms of de factio functionality and de jure
functionality. The former, being the use of functional in lay sense,
indicating that although the design of a product is directed to
performance of a function, it may legally be recognized as an
indication of a source. De Jure Functionality would mean that such
a design may not be protected as a trademark.
Before, the design of a particular article would be protectable as a
trademark only where the design was useless, that is, wholly unrelated
to the function of the article. Most designs, hoever, result in the
production of articles, containers or features thereof which are indeed
utilitarian and examination into the possibility of trademark
protection is not the mere existence of utility but the degree of
design utility. Thus, we cannot say that it means that the
subject design is functional merely because a hollow body
and handhold, and pump sprayer are essential to its use.
What this phrase means is not that the generic parts of the article or
package are essential, but as noted above, the particular design of the
whole assembly of those parts must be essential. Thus, it is clear that
the courts in the past have considered the public policy involved in this
area of the law as not the right to copy articles which are not
protected by patent or copyright, but the need to copy those
articles which is more properly termed the right to compete
effectively.
A feature is found to be functional if it contributes to the utility,
durability, effectiveness, or ease of use of the product. But “contributes
to” or “affects: are both so broad as to be meaningless for, every design
affects or contributes to the utility of an article in some way. Thus, the
criteria is whether the prohibition of imitation by others
would deprive them of something which will substantially
hinder them in competition.
Keeping in mind the foregoing, the functionality is determined in light
of utility which is determined in light of superiority of design and rests
upon the foundation essential to effective competition.
In this case, of course, spray bottle is highly useful and
performs intended functions in an admirable way, but that is
not enough to render the design of the spray bottle – which
is all that matters here – functional. The bottle contains 2 major
parts, a bottle and a trigger operated spray producing pump
mechanism which also serves as a closure. The PTO has not produced
on iota of evidence to show that the shape of the bottle was required to
be as it is for any de facto functional reason, which might lead to an
affirmative determination of de jure functionality. A molded plastic
bottle can have an infinite variety of forms or designs and still function
to hold liquid. No form is necessary or appears to be superior.
As to the spray top, the evidence also shows that it too can take a
number of diverse forms, all of which are equally suitable as housings
for the pump and spray mechanisms. The evidence shows that even
the shapes of pump triggers can and do vary while performing the
same function.
Thus, the court does not see that allowing the appellants in this case to
exclude others from using the trade dress will hinder competition or
impinge upon the rights of others to compete effectively in the sale of
the goods named in the application even to the extent of marketing
them in functionality identical spray containers. The functions of
the bottle of the appellant can be performed equally well by
containers of innumerable designs and thus, no one is
injured in competition.
In Re Babies Beat
Facts:
 Babies Beat sought the registration of the configuration of their
product for baby accessories, namely baby bottles. However, the
examining attorney refused registration on the ground of de jure
functionality (not registrable since it is functional); and in the
alternative, de facto functionality without showing of a secondary
meaning, among others.
Issue:
 Whether or not the configuration is de jure functional
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 Whether or not, assuming de facto functionality, there is secondary
meaning to the design.
Ratio:
 The degree of design utility encompassed by the design is so
great such that the applicant’s design is de jure functional
and hence, not entitled to registration as a trademark. In
determining functionality, the task is not to ascertain the mere
existence of utility but rather to ascertain the degree of design utility.
In its design application, Babies Beat stated that the plastic baby bottle
is shaped for even the youngest and smallest babies hands to hold;
furthermore it contends that its grippers line the holding area to give
added assurance for safe holding. Appellant also touts its bottles as
being the “easiest to clean – no hard to reach areas” because of its
bottle configuration.
 The design is entitled to application on the basis that it is
inherently distinctive and requires no proof of secondary
meaning.
In Re Weber Stephen Products Co.
Facts:
 Four applications for registration of trademark were filed by Weber
Stephen for certain designs for barbecue grills and/or specified related
goods.
The registration was refused in all four applications on the ground that
the designs were de jure functional configurations of applicant’s
barbecue grills and hence are unregistrable as trademarks for its grills
and related goods.
Issue:
 Whether or not the designs are unregistrable for being de jure
functional.
Ratio:
 The designs are registrable and are not de jure functional. If
the design of a product or container for a product is so utilitarian as to
constitute a superior design which others in the field need to be able to
copy in order to compete effectively, it is de jure functional and as
such, is precluded from registration for reasons of public policy. The
mere fact that a product has utility does not necessarily preclude
registration of its configurations. Registrability depends on the degree
of design utility.
Evidence is useful to demonstrate that a particular design is superior
and hence de jure functional which includes:
1. Utility patent that discloses the utilitarian advantages of the
design
2. advertising materials in which the originator of the design
touts its utilitarian advantages
3. facts tending to establish unavailability to competitors of
alternative designs and
4. facts indicating that the design results from a comparatively
simple or cheap method of manufacturing the product or
container.
Applying the foregoing to the case at hand, the utility patents filed for
the said barbecue grills contained no requirement that the use of a
round bowl or a tripod leg arrangement nor does the patent reveal any
particular utilitarian advantages of such a design. In either case,
neither patent discloses any particular utilitarian advantages to the
configuration sought to be registered therein.
As to the advertising materials, the statements made in newspapers
certainly seem to suggest that there is utilitarian advantage to the
round shape of applicant’s grill bown but we cannot say that these
statements necessarily indicate that the shape involved is
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functionally superior to the other grill bowls in the market.
Moreover, there is no statements touting any utilitarian advantages of
the tripod leg arrangement.
As to the availability of alternative designs, a wide variety of
alternative barbecue grill designs, including other covered
round designs is available to the competitors and that the
covered round design of the applicant is not superior in cooking
performance to any other covered designs, be they round, square,
rectangular or whatever. The key to successful barbecue cooking is the
effective use of a cover and the correct amount of fuel and not the
particular shape of the cooking cavity, and that it is the cover and air
flow which control the heat within a barbecue grill and provide for
even distribution of heat for cooking.
As to manufacturing costs, the records fail to show that the round grill
of the applicant is cheaper or simpler to manufacture than square
designs, rectangular designs or other round designs.
Having carefully evaluated the evidence, it is insufficient to prove
that the round grill of applicant is a superior design which
other manufacturers need to be able to use in order to
compete effectively. To the contrary, it is of similar cooking
performance to any other covered grill, whether it be in any other
shape. There is absolute no evidence in record to show that it is
functionally superior to or simpler or cheaper to manufacture than
other available leg designs, such as single leg pedestals, four leg, or
equidistant three leg designs.
Bayer Co v. United Drug, Co.
Facts:
 Bayer is a New York corporation which claims to have been selling,
throughout the United States, a drug known as ‘acetyl salicylic acid’
(ASA) since 1899. It claims that its predecessor was a German
corporation engaged in the manufacturing of Chemical products,
among them is the drug in question which was its own invention. It
applied for and was granted a patent for the said drug and therefore, it
expired 17 years thereafter.
The predecessor imported the drug into the country some time in the
year 1899 and before the patent was issued. It registered the name as a
trademark on may 2, 1899 and advertised it on technical magazines
and in all its advertisements and on all its labels claimed the word
“Aspirin” as its trademark. At that time, it was sold in the form of
powder and for some years only to manufacturing chemists,
retail druggists or to physicians. However, none of the
advertisements were made to the public at large, nor did any of its
packages reach further than physicians, manufacturing chemists or
retail druggists.
In 1904, the chemists, who comprised all the large houses in the
country, sold the tablets to retailers under the name “Aspirin”
(note: not under the name ‘ASA’) and in no case did the name of Bayer
or its predecessors appear on the labels. During this period, the
predecessor continued its policy of addressing only the drug trade or
physicians and the public continued to have no greater
information than before of who was in fact manufacturing
the drug under the name ‘Aspirin.’
 On the other hand, defendant herein, United Drug (defendant) allege
that on August 1, 1898, Bayer’s predecessor has applied for a patent for
‘ASA’ which was issued on 1900 and expired after 17 years. Thus,
thereafter, the product fell into the public domain and with
the word ‘Aspirin’ which had become the name for the drug
and therefor descriptive.
 The examiner of the Patent Office declared that the trademark was no
longer valid and ordered the cancellation. From this decision, an
appeal was taken.
Issue:
 Whether or not Bayer has a right to the trademark ‘Aspirin.’
Ratio:
 In the case at bar, the evidence shows that there is a class of buyers to
whom the word ‘Aspirin’ has always signified Bayer, more specifically
indeed than was necessary for its protection, that is, the
manufacturing chemists, to physicians and probably to retail
druggists. As to these buyers, Bayer has made out a case, at
least to compel the addition of some distinguishing suffix,
even through its monopoly had been more perfect than in
fact it was.
In this case case, the court held that there are two classes of
consumers.
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1. The manufacturing chemists, retail druggists, and physicians
which have been educated to understand that ‘Aspirin’ means
the plaintiff’s manufacture (since Bayer directly deals with
them) ad has recourse to another and an intelligible name for
it, actually in use among them;
2. The consuming public which were acquainted only with the
drug by the name ‘Aspirin’ and has not succeeded in advising
that the word means the plaintiff at all.
The crux of this controversy lies not in the use of the word to the first
class but to the general consuming public composed of all sorts of
buyers from those somewhat acquainted with pharmaceutical terms to
those who knew nothing of them and it cannot be said that such
consumers read the word ‘Aspirin’ as having any other
meaning than as an ingredient in a general compound to
which faith and science might impart therapeutic virtue.
Their only acquaintance with the word was the name for a drug in
whose curative properties they had got confidence. There is no
evidence to show that these buyers knew that this drug was the same
as ‘Aspirin’ or that they ever asked for or bought ‘Aspirin.’ Nor is there
any evidence that they knew ‘Aspirin’ is identified with ‘ASA’ or
supposed that ‘Aspirin’ was that drug.
Moreover, it is to be noted herein that the bottle of the plaintiff
indicates “Bayer – Tablets of Aspirin”. Thus, it shows that Bayer itself
knew and recognized the meaning which the word had acquired
because e the phrase most properly means that these labels were of
“Bayer’s make” of the drug known as Aspirin.
If a manufacturer thinks it undesirable to advertise and sell drugs
direct, the inevitable conclusion of adhering to that standard is that no
trademark among consumers can be acquired because they can know
nothing of it. When, as among consumers, a mark does not give even
an intimation of the owner, there is no room for any protection. The
owner must show that the mark means him, else, he cannot prevent
others from using it.
Thus, the injunction was granted against the direct sales of
the drug under the name to manufacturing chemists,
physicians and retail druggists but to consumers, it is
impracticable to give any protection because among them,
the name has gone into the public domain.
The defendant will be free to sell ‘ASA’ direct to consumers under the
name ‘Aspirin’ without suffix or qualification. The defendant in sales to
retail druggists will also be free to pack tablets in bottles and boxes
labeled as ‘Aspirin provided that the bottles or boxes are wrapped or
boxed in containers marked ‘ASA’ manufactured by UD. Co. without
the word ‘Aspirin’ and tjat in making such sales, invoices, bills of
lading and the life refer to the drug so sold only as ‘ASA.’
America Online Inc. (AOL) v. AT&T Corporation
Facts:
 AOL is the world’s largest Internet service provider. It includes the
facility to transmit and receive electronic mail and a means to establish
real-time communication through instant messaging. In connection
with its chatting services, AOL uses “Buddy List” and “IM: to
describe features of the service.
The Buddy List enables the subscriber to create a list of identified
screen names employed by other users with whom the subscriber
wishes to communicate. When a “Buddy” is online, the subscriber may
click a button labeled “IM” and initiate a real-time chat session with
the subscriber so identified. AOL has used the Buddy List and IM
since at least 1997 and has promoted these terms extensively
and it asserts now that it has a proprietary interest in them.
Said mark has been registered with the Patent and Trademark office
on the Principal Register.
Also in connection with its email service, AOL advises its subscribers
that they have received email by displaying the words “You Have Mail”
by placing a recording that announces “You’ve got mail” and by
depicting an icon of a traditional mailbox with the red flag raised.
 AT&T, a competing internet service provider uses marks similar to
those claimed by AOL in connection with its service to subscribers. It
uses the terms “Buddy List”, “You Have Mail!” and “I M Here.”
 AOL commenced this action seeking preliminary injunctive
relief against AT&T to prohibit it form using the marks. It
alleged that the similar marks violated the trademark dilution
provisions of the Lanham Act and infringes AOL’s marks.
AT&T denies said claims and asserted that the marks were common
generic terms for email and instant messaging.
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District Court denied the preliminary injunction and declared that said
marks are generic terms and that words used generically cannot
become trademarks by association.
Issue:
 Whether or not the “Buddy List” is a generic term.
 Whether or not the “IM” is a generic term.
 Whether or not the AOL has trademark rights over the phrase “You
Have Mail.”
Ratio:
 The case was remanded as to the term “Buddy List.” It should
be noted that the decision to register a mark without requiring
evidence of secondary meaning is a powerful evidence that
the registered mark is suggestive and not merely descriptive.
In this case, through the certificate of registration of the terms, the
Commissioner introduces his opinion that the application of the
registrant was sufficient to demonstrate a valid mark.
Despite the foregoing, the lower court declared summary judgment in
the context of the record evidence presented in the case. The SC
decided to vacate the decision of the District Court’s ruling on the
Buddy List including the order of the Commissioner to cancel its
registration as the validity of the “Buddy List” cannot be determined
on mere summary judgment.
A presumption does not vanish upon the introduction of contradictory
evidence, instead it is merely deemed sufficient evidence of the fact
presumed to be considered by the jury or other finder of fact.
 The court did not expressly hold that IM is a generic term.
Books, dictionaries and glossaries define the term as instant
messaging. AOL has offered no evidence to support the contention that
it was one of the first companies to provide for an IM. Accordingly,
which the court does nor determine that the term is generic, it
nevertheless agrees with the decision of the District Court that the
denial of the enforcement of IM as a trademark is in order.
 “You Have Mail” is a generic phrase. AOL may not enforce
the phrase as a trademark in connection with its email
notification service. AOL has the burden to prove that it owns the
mark. However, the record establishes that the phrase “You Have
Mail” has already been used to inform users since the 1970s (a decade
before the existence of AOL) that they have electronic mail in their
electronic mailboxes. The phrase has been used for the common
ordinary purpose of informing users of the arrival of
electronic mail in their electronic mailboxes. It is significant in
this context that AOL never registered the phrase nor has it attempted
to enforce the mark prior to this action.
Furthermore, the use of the phrase is conditioned on whether there is
mail present. It does not describe the email service of AOL, but
rather simply. Informs the subscribers, employing common
words to express their commonly used meaning, of the
ordinary fact that they gave new email. This functional manner
in which AOL uses “You Have Mail” is consistent with a public
perception of the phrase as describing whether or not mail is in an
electronic mailbox, rather than as describing a service associated with
AOL. The scope of this asserted use is to give notice of mail to
subscribers.
The words might well have become marks distinguishing one
entrepreneurs’ product or service from all other electronic networks.
Yet, because of pervasive use, these terms become generic and
even when created words for new products have become
strong marks, the public’s pervasive use of these marks
sometimes creates a real risk that their distinctiveness will
disappear (GENERICIDE).
The law of trademarks intends to protect the goodwill represented by
the marks and the valid property interests of entrepreneurs in that
good will against those who would appropriate it for their own. But it
likewise, protects for public use those commonly used words and
phrases that the public has adopted, denying to anyone a right to
corner those words and phrases by expropriating them from public
linguistic commons.
AOL’s usage of the would be mark falls within the heartland of
common meaning and usage and therefore, AOL may not
exclude others from using the same in connection with their
email service. There is no evidence that it uses the phrase in a
distinctive matter.
Concurring and Dissenting Opinion (Luttig):
 I would not decide on whether AOL is entitled to protection for its
unregistered email notification feature because it is my understanding
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that AOL no longer informs its consumers through tht use of the
phrase. Rather it now informs them that they have acted with the
different message “You’ve Got Mail.” That feature is sufficiently
different from the phrase “You Have Mail” in both gramattical
dysfunctionality and likely secondary meaning and possibly in its
genericness as well.
Harley Davidson v. Grotanelli
Facts:
 Harley Davidson (HD), a corporation based in Wisconsin inititated
this case for infringement against Grotanelli for the alleged use of the
word “HOG” in reference to some of its products and services and from
using his logo modeled on HD’s bar-and-shield design mark.
Issue:
 Whether or not the use of the term “HOG” infringes the trademark of
HD.
 Whether or not the use of the mark similar to the bar-and-shield of HD
constitutes infringement.
 Grotannelli is enjoined form using the bar and shield logo.
Ratio:
 The term “HOG” has become generic as applied to large
motorcycles before HD began to make trademark use of
HOG and that HD’s attempt to withdraw this use of the word
from the public domain cannot succeed. In the late 1960s and
1970s, the word was used by motorcycle enthusiasts to refer to
motorcycles generally and to large motorcycles in particular. It is
generic as applied to motorcycles. Though not conclusive, dictionary
definitions of the word to denote a category of products are significant
evidence of its genericness because they usually reflect the public’s
perception of a word’s meaning and its contemporary usage. In this
case, one dictionary cites a generic use of HOG to mean a large
motorcycle as early as 1967, long before HD’s first use of the
word and the recent dictionary editions continuing to define
the word to mean such indicate that the word has not lost
generic meaning. The court observed that newspaper and magazine
use of a word in a generic sense is a strong indication of the general
public’s perception that the word is generic.
Further supporting the generic nature of the word HOG was HD’s
aversion to linking the word with its products in the early 1980s long
after the word was generic. HD already attempted to disassociate itself
from the term HOG.
Although in some contexts, there might be instances whereby a
trademark use can be reacquired in a generic term (e.g. SINGER and
GOODYEAR) but it is recognized that these examples are words that
were originally proper names of the manufacturer and that the cases
do not stand for proposition that a commonly used name of an article
like computer, typewriter or flashlight can be appropriated by one
seller as a trademark. Moreover, if a generic word could ever be
infused with trademark significance, the word must have
ceased to have current generic meaning.
Neither can the “Dual Usage” terms provide any help to HD
because although Dual usage (which refers to a mark that starts out
as proprietary and gradually become generic) allows the retention of
trademark significance, HD cannot avail of this because in this case,
our concern is a trademark that starts out as generic and is
sought to be given trademark significance by the
manufacturer.
The claim of Grotennelli that it is used as a parodic trademark cannot
hold in court. The hear of any parodists claim is the use of some
elements of a prior author’s work to create a new one that, at
least in part, comments on that author’s work. The comment
must have some critical bearing on the substance or style of the
original composition.
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
In this case, Grotanelli’s mark makes no comment on Harley’s mark. It
simply uses it in a humorous way to promote his own products and
services which is not permitted in a trademark parody use.
Mattel v. Francisco
Facts:
 Jimmy Uy filed a trademark application with the Bureau of Patents for
registration of the trademark BARBIE for use on confectionary
products, such as milk, chocolate, candies, milkbar and chocolate
candies in Class 30. However, Mattel opposed this registration on the
ground that it was confusingly similar to its trademark on dolls, doll
clothes and doll accessories, toys and other similar commercial
products.
IPO rendered a decision dismissing the Notice of Opposition and
giving due course to Uy’s application for the registration of the
trademark Barbie as used on confectionary products as these were
non-competing and unrelated products and that there was no proof
that Mattel had ventured into the production of chocolates and
confectionary products under the trademark BARBIE on said goods.
Thereafter, Mattel filed a Motion for New Trial on the ground of newly
discovered evidence allegedly because there was a Trademark
Application for registration of the trademark BARBIE for use on
confectionaries and this application was unopposed after publication
in the IPO Official Gazette. However, the Motion for New Trial was
denied.
Mattel argues that the products are items related to Uy’s products and
that the Director General of the IPO has the power to act on a
pending trademark application considered as withdrawn for
failure to file a Declaration of Actual Use (DAU) as required
by the Code and its implementing Rules. On the other hand, Uy
submits that the case has already become moot and academic since the
records of the IPO already show that the DAU was not filed on or
before December 1, 2001, thus he is deemed to have abandoned his
trademark application for failure to comply with the mandatory filing
of the DAU.
Issue:
 Whether or not Uy is deemed to have abandoned his application for
the trademark BARBIE by failing to file his DAU.
Ratio:
 The case has become moot and academic because Uy is
deemed to have abandoned his application for failing to file
his declaration of actual use as required by law. Section 124.2
of RA 8293 requires that the applicant or registrant shall file a
declaration of actual use of the mark with evidence to that effect as
prescribed by the Rules within 3 years from the filing date of the
application. Otherwise, the applicant shall be refused registration or
the marks shall be removed from the Register. Likewise, the rules also
provide that without any need of notice from the Office, all
applicants and registrants shall file a DAU within 3 years without
possibility of extension form the filing date of the
application. Otherwise, it shall be refused or the mark shall be
removed from the register by the Director.
However, since in this case, the mark was applied for during the
effectivity of RA 166, it is required that the applicant submit DAU
and evidence of use on or before December 1, 2001, subject to
a single 6 month extension (as stated in Memorandum Circular No. BT
2K1-3-04).
By virtue of the admission of Uy, since he has effectively withdrawn or
abandoned any rights or interest in his trademark for non-filing of the
DAU, there is no more actual controversy or no useful purpose
to pass upon the merits of the case. It is unnecessary to rule
on the trademark conflict between the parties.
Courts will not decide on matters such as this as it would constitute a
mere advisory opinion. The exercise of judicial review is limited to
actual cases and controversies. Courts will decide cases, otherwise
moot and academic, only if:
1. There is a grave violation of the constitution
2. Exceptional character of the situation and paramount public
interest
3. Constitutional issued raised requires formulation of
controlling principles to guide the bench at bar
4. Capable of repetition yet evading review
The instant case does not fall within the category of any of the
exceptional cases. The issues in this case call for a factual
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consideration which are peculiar only to the transactions and parties
involved in this controversy.
Andres Romero v. Maiden from Brassiere Co.
Facts:
 Maiden Form is a foreign corporation which filed an application for
registration of the trademark ADAGIO for the brassieres manufactured
by it. It stated the following facts in its application:
October 26, 1937 First use in the United States
August 31, 1947 First use in the Philippines
Acting on said application, after publication, the Director issued a
certificate of registration for ADAGIO. However, subsequently, Andres
Romero filed a petition for cancellation of the trademark on the
grounds that:
1. it is a common descriptive name of an article of substance
2. it was procured fraudulently contrary to the provisions of
Section 4, Chapter II of RA 166.
3. Application was not filed in accordance with Section 37 of the
same law. 10
Romero claims that the trademark has become a common descriptive
name of a particular style of brassieres and is therefore, unregistrable.
It is urged that the trademark has been used by local brassiere
manufacturers since 1948 without objection on the part of the
respondent company.
It is further alleged that even assuming that Adagio was a registrable
trademark and that the company used the same in 1932, in the
Philippines long before anyone else, it abandoned the use of the
same during the period of time that the government imposed
restrictions on importation of respondent company’s goods.
Issue:
 Whether or not the trademark is registrable.
 Whether or not there has been abandonment.
10 No registration of a mark or trade-name in the Philippines by a person described in the
preceding paragraph of this section shall be granted until such mark or trade-name has been
registered in the country of origin of the applicant, unless the applicant alleges use in commerce.
Ratio:
 Yes. It is registrable. Evidence shows that the trademark is a
musical term which means slowly or in an easy manner and was used
ad a trademark by the owners thereof because they are musically
inclined. Being a musical term, it is used in an arbitrary or fanciful
sense as a trademark for brassieres manufactured by respondent
company. The mere fact that the said mark is also used to designate a
particular style of brassiere does not affect its registrability as
trademark. Long and continuous use of the mark has not rendered it
merely descriptive of the product. Widespread dissemination does not
justify the defendants in the use of the trademark. If this argument
were sound, then every time a plaintiff obtained the result of having
the public purchase its article, that fact itself would destroy a
trademark.
 There is no abandonment. To work an abandonment, the disuse
must be permanent, and not ephemeral. It must be intentional and
voluntary and not involuntary or even compulsory. There must be
thorough-going discontinuance of any trade-mark use of the mark in
question. To establish the defense of abandonment, it is
necessary to show not only the acts indicating a practical
abandonment, but an actual intention to abandon.
Non-use because of legal restrictions is not evidence of an intent to
abandon.
 Others: The court ruled that Section 37 of the RA 166 can only be
availed of where the Philippines is a party to an international
convention or treaty relating to trademarks in which the trade-mark
sought to be registered need not be used in the Philippines. The
Philippines has not yet entered into any such treaty or convention and
until she does, actual use in the Philippines of the trademark sought to
be registered and allegation in the application of such fact will be
required in all applications for original or renewal registration
submitted to the Philippine Patent Office. It did not register under
Section 37 of RA 166, but under Section 2 of the same law.11
11Trademarks owned by persons domiciled in a foreign country may be registered provided that
said trademarks, trade-names or service marks are actually in use in commerce and services not
less than 2 months in the Philippines before the time the applications for registration are filed.
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Clark & Freeman v. Heartland
Facts:
 This case involves the competing claims of 2 companies to the
exclusive right to use the name “Heartland” in connection with their
business operations.
Defendant Has been using the mark since
July 1985 in connection with the
sales of shirts, sweaters, trousers
and jackets.
Plaintiff Commenced using the name
“Heartland” on April 26, 1986
in connection with the sale of
men’s shoes and boots.
However it is argued by the plaintiffs that because its predecessor,
SEARS, used the same even before the defendant, the period should be
tacked to theirs thereby making them the prior user. On the other
hand, this was contested to by the defendant since in the case of Sears
and the plaintiff, there was a settlement which assigned the
trademark in gross to plaintiffs. In assignments in gross, by its very
nature, the successor may not tack the period of the predecessor’s
prior use.
It is the position of the plaintiff that the assignment is not an
assignment in gross because:
1. There was an immediate cease of the manufacture and
marketing of Heartland boots when SEARS made the
assignment, thus there was an ipso facto transfer of goodwill;
2. Because the plaintiffs were applying the trademark to
substantially similar goods (in relation to SEARS), they had
acquired the goodwill as well as the mark.
Issue:
 Whether or not the assignment herein of SEARS to plaintiff was an
assignment in gross.
Ratio:
 It was an assignment in gross. Generally, an assignment of a
trademark and its accompanying goodwill will entitle the assignee to
step into the shoes of the assignor, gaining whatever priority the
assignor might have had in the mark. When a trademark has been
assigned in gross, the assignment is without the accompanying
goodwill of the predecessor. Hence, the assignee must instead rely
upon his or her own use to establish priority.
The mere fact that there was an immediate case in the manufacture
cannot operate to make a conclusion that the same is not an
assignment in gross (transferring the goodwill).
A trademark may be validly transferred without the simultaneous
transfer of any tangible assets as long as the recipient continues to
produce goods of the same quality and nature previously associated
with the mark. Many courts have ruled for substantial similarity even
though the products differed in some respects. However, in this case,
there is no substantial similarity to support the conclusion
that there was an assignment in gross since the facts of the
record show that Sears only sold women’s pixie boots under
the mark Heartland before, while plaintiff immediately
applied the same to men’s shoes, then later, to men’s hiking
boots. The market for the 2 goods are substantially distinct. The facts
tend to show that the plaintiffs sought to gain the ability to use the
name Heartland and not the goodwill associated with it.
Since the assignment is the assignment in gross, defendants have
shown priority in the use of the name Heartland and therefore,
plaintiffs may not enjoin defendants from using Heartland for the sale
of its current line of products.
Pepsi Co. v. Grapette
Facts:
 Pepsi Cola has bottled beverages duly registered under trademarks
PEPSI COLA and PEP-KOLA for many years. Grapette, on the other
hand, is a national bottler and distributor of soft drinks, concentrates
and syrups. Grapette developed a formula for a beverage and in
searching for a name for this beverage, it came across the 1926
registration of the mark PEPPY by Fox & Co. (Fox)Foxed used this in
conjunction with a cola flavored syrup which was distributed on a local
basis.
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Grapette entered into an agreement with Fox in which the trademark
PEPPY was assigned to the defendant for a consideration. Although
there was a formal assignment of goodwill, it is now being conceded
that none of Fox’s assets or plant were transferred with the trademark
(no inventory, lists, formulas, etc).
 Pepsi filed a case alleging that the assignment was null and void for
being an assignment in gross. It sought an injunction against Grapette
and its holding company based on the alleged infringement of its
trademark. Notwithstanding the finding of infringement, however, the
court denied the plaintiff injunctive relief on the ground that
there was laches.
Hence, it is not disputed in this case that Grapette must
stand in the place of Fox because, without a valid
assignment, the rights to PEPPY accrue only as of November
1965 and it could not assert the defense of laches. Pepsi
asserts that the 1965 assignment of the trademark was a
legal nullity in that the trademark was transferred totally
disconnected form any business or goodwill of the assignor.
Issue:
 Whether or not the assignment is void.
Ratio:
 It is null and void. The Lanham Act provides that “a registered mark
or mark shall be assigned with the goodwill of the business in
which the mark is used, or with that part of the goodwill of
the business connected with the use of and symbolized by the
mark, and in such assignment it shall not be necessary to include the
goodwill of the business connected with the use of and symbolize by
any other mark used in the business or by the name or style under
which the business is concluded.
Trademark could not be assigned in gross. It can only be transferred in
connection with the assignment of the particular business in
which it has been used, with its goodwill and for the
continued use upon the same articles or class of articles. This
necessity to assign more than the naked mark was premised on the
primary object of the trademark “to indicate by its meaning or
association the origin of the article to which it is affixed.” The
designation only a means identifying particular goods, services or a
business associated with a particular commercial source, whether
known or anonymous. Goodwill is property and since it is transferable,
the symbol of the property is transferable along with it.
Basic to this concept is the proposition that any assignment of a
trademark and its goodwill requires the mark itself be used
by the assignee on a product having substantially the same
characteristics. If he should make a different article, he would not
derive a right which a court of equity would enforce. The right to the
use of a trademark cannot be so enjoyed by an assignee that he shall
have the right to affix the mark to goods differing in character or
species from the article to which it was originally attached.
Grapette herein urges that it intends to use the PEPPY mark on a
product of the same general classification as Fox but this was not
sustained by the court. The word class means broadly a genus as
a species any goods upon which the use of the same mark,
when the goods are exposed side by side, would tend to
mislead the purchasing public. Thus, the mere fact that the goods
are registered in the same Class cannot mean that these are within the
same class in determining the validity of the assignment to defendant
Grapette.
Evidence shows that the products are not substantially the same.
Grappette intended to use the mark to descripe its new pepper
beverage, on the other hand, Fox used it in its cola syrup.
Thus, it is fundamental herein that either defendant did not
acquire the goodwill as required by law or it did not apply
said goodwill, even assuming it inherited it, to the same
goods. Either ground is untenable to the validity of the assignment.
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University Bookstore v. The Board of Regents of the University of
Wicsonsin System
Facts:
 Applications have been filed by the Board of Regents of the University
of Wisconsin (“University) to register the following trademarks for
various apparel (hereinafter referred to as “Bucky” and “Bagders”
respectively):
Said applications have been opposed by the University Book Store
(UBS), the Wisconsin Merchants Federation (WMF) and the Brown’s
Book Shop (BBS) on the ground that with respect to Bucky, such mark
was created in 1940 when BBS commissioned another company to
design and produce a mascot for use by BBS and that the University or
anyone associated with it used the same before 1940. On the other
hand, the “WISCONSIN BADGER” mark was also being opposed to on
the claim that the terms are created centuries ago, not by the
University.
Opposers further allege that uses of the marks in issue by non-
affiliated entities have included imprinting the marks on clothing and
other goods; manufacturing and selling such goods; using the marks in
advertising and promoting the sale of such goods; and using the marks
to promote sports exhibitions and to create customer goodwill.
Opposers also contend that during the early 1980s, the Board of
Regents indicated in response to several inquiries by non-affiliated
entities that anyone was free to use the lucky Badger figure and the
words WISCONSIN BADGERS since, as confirmed in internal
correspondence, it did not claim ownership rights therein.
To this effect, the oppositors in the claim that the University had
already abandoned its rights to the mark. They claim that the applicant
already lost by its failure for many years to control the nature and
quality of numerous third party users of the marks.
Issue:
 Whether or not there is abandonment.
Ratio:
 No. Under the law, a mark shall be deemed to be abandoned when any
course of conduct of the owner, causes the mark to become generic
name for the goods or services on or in connection with which it is
used or otherwise to lose its significance as a mark. Purchaser
motivation shall not be a test for determining abandonment
under this paragraph. Instead, so long as at least some
members of the purchasing public identify applicant with
each of the marks at issue, it cannot be said that applicant's
course of conduct has caused any of such marks to lose its
significance as a mark.
Without question, distinctiveness can be lost by failing to take action
against infringers. If there are numerous products in the marketplace
bearing the alleged mark, purchasers may learn to ignore the mark as a
source indication. When that occurs, the conduct of the former owner,
by failing to police its mark, can be said to have caused the mark to
lose its significance as a mark. However, an owner is not required to
act immediately against every possibly infringing use to avoid a
holding of abandonment. Such a requirement would unnecessarily
clutter the courts. Some infringements are short-lived and will
disappear without action by the trademark owner.
By way of background, is is clear that Bucky was created by
Mr. Evans, which was requested by BBS to produce for sale of BBC;s
sheet of decals which included mascot designed and intended to
represent applicant. Brown's has continuously sold decals depicting
Bucky since 1940 and, later on, UBS likewise sold a version of such
decals. With respect to use of the Bucky on W mark, the record reveals
that Brown's sold clothing imprinted therewith during the 1950s and
continued to do so through the 1960s. Other members of WMF, but
not UBS, have also sold T-shirts, sweatshirts and/or caps imprinted
with the Bucky on W mark.
As to the WISCONSIN BADGERS mark, it is plain from the
record that the words BADGER and BADGERS have long
been associated with applicant.
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While opposers are consequently correct that in most instances,
applicant has not been the first user of the subject marks for the goods
and services for which registration is sought, it is critical to keep in
mind that none of the opposers, or any third party, has ever used such
marks as its own mark to identify and distinguish the particular goods
and services involved in these proceedings. Opposers have admitted, in
their responses to applicant's requests for admissions, that they have
never made use of the marks applicant seeks to register as their marks.
Instead, it is manifest from the record that opposers, and third parties
alike, have merely sold and occasionally advertised items of apparel
and other merchandise which have been imprinted with the marks.
Applicant, like numerous other colleges and universities,
permitted others to sell imprinted merchandise as
expressions of community support and goodwill. Advertising
of merchandise featuring various indicia associated with
applicant, including the marks at issue herein, frequently
coincided with events sponsored by applicant, such as
athletic events and alumni gatherings.
Opposers, in stressing that such uncontrolled uses by third parties
amount to a forfeiture of any rights applicant may have had in the
subject marks, are basically contending that applicant must maintain a
right in gross in each mark. However, as noted previously, exclusivity
of rights is not required as a matter of law in order for applicant to
avoid a finding of abandonment. Even in instances where, arguably,
applicant and others are each using the Bucky Badger figure and/or
the words BADGER and BADGERS, such as the use thereof by the
Badger Conference and Niagara High School and the use of Bucky by
groups of cross-country runners, Vietnam veterans and firefighters,
the activities of these third parties are sufficiently different and distinct
in nature from the university level educational and entertainment
services rendered by applicant so as to preclude any inference of
abandonment of the subject marks by applicant. The fact that such
indicia have been diluted and are accordingly weak in terms of the
scope of protection to which they would be entitled does not mean, in
the case of both the uses thereof made by applicant, and those by its
nonexclusive, implied licensees which inured to applicant's benefit,
that the marks applicant seeks to register have lost their significance as
marks.
As mentioned earlier, the record is clear that applicant
tolerated various uses by others of the marks it seeks to
register as expressions in the business community of
goodwill and support for the educational and entertainment
services provided by applicant. The presence of the
University, with its faculty, support personnel and large
student population, provided in turn a significant source of
customers for local businesses, including the bookstores run
by UBS and Brown's as well as other firms which in large
measure have catered to the various needs of persons at the
University.
Finally, opposers urge that there has been no fundamental
change in the market for merchandise imprinted with the
marks at issue which would justify applicant's adoption of its
formal licensing program and excuse its asserted delay in
claiming enforceable rights after many years of essentially
regarding the marks as public property. The substantial growth
in the popularity of such items, and the resultant need by the colleges
and universities affected thereby for tighter control over their names
and other identifying symbols, caused applicant and other similarly
situated institutions of higher learning to recognize that the protection
and enforcement mechanisms offered by formal licensing programs
were necessary in order to avoid the problems brought about by the
fundamental change in the market for imprinted collegiate
merchandise.
In summary, not only is it the case that none of the opposers, or any
third party, has ever used the marks at issue as its own mark for the
particular goods and services set forth in the applications involved in
these proceedings, but the use thereby was tantamount to a royalty-
free, nonexclusive, implied license from applicant which inured to
applicant's benefit. Applicant tolerated uses of the marks, when their
use in advertising and on clothing and other types of imprinted
merchandise were plainly in reference to the University, as expressions
of support for its athletic and academic programs by the business
community. With but one inconsequential exception, the record is
devoid of any evidence which even raises an inference that the quality
of merchandise imprinted with the subject marks has ever been
anything less than that of at least merchantable quality. Similarly,
except for a few occasional and transitory incidents, clothing and other
items bearing the marks at issue have reflected applicant's standard
that such merchandise be in good taste, Applicant, in effect, has
maintained adequate control over the nature and quality of the goods
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Trademarks Midterms Case Digests (Atty. Ortiguerra)
and services sold under the marks, both prior to and after the
commencement of its formal licensing program with CCI/ICE, and has
policed its marks in accordance with due regard for the scope of
protection to which they are entitled.
Yocum v. Covington
Facts:
 A petition for cancellation of registration was filed by Yocum of the
service mark, PIED PIPERS issued to Warren Covington for
entertainment services (live singing) on the ground that:
1. the ownership and prior use of the PIED PIPERS mark was
originally formed in 1940;
2. fraudulent application for and procurement of the registration
based on the knowledge of the existence of the group and of
petitioner’s use andrright to use PIED PIERS mark at the time
of the application for registration in 1973.
As its defense, Covington asserts that there was abandonment on
the part of Yocum, laches and acquiescence.
Yocum is a musician who joined a group called PIED PIPERS which
originated in California. He joined the group in 1940 when it formally
became PIED PIPERS. Throughout this period tget were paid by,
booked by and appeared as a featured part of the Tommy Dorsey
organization apparently as employees of Mr. Dorsey.
As the sole survivor of the group, 100% of the title to the trademark
and the service mark was with Yocum. When he was no longer
physically capable of performing, he stopped performing.
Notwithstanding, it is clear that he continued to claim ownership of
the PIED PIPERS name to receive royalties from previous recordings
as to which he was a performer and to seek suitable employment for a
PIED PIPERS singing group in the capacity akin to owner-manager or
licensor.
 Covington is a trombonist with a number of major dance bands and
studio orchestras. In 1973, Covington 0organized his own PIED
PIPERS group to enhance the orchestra which group, presumably with
changes in vocalists, has remained intact and continues with
Covington orchestra and sometimes as a hired vocal group apart from
that orchestra. Covington applied for registration of the service mark,
which was granted. Hence, this case.
Issue:
 Whether or not there is abandonment.
 Whether or not there is fraud in the procurement of the registration.
Ratio:
 Covington has superior rights over the mark. The oath in
application which matured into registration was not in fact false. Even
if we found that petitioner had superior rights, and that the oath was
false, the evidence of record would not be sufficient to
persuade us that the oath was made with fraudulent intent.
Although he was aware of the status of the mark, petitioner’s
admittedly minimal level of commercial activity with his PIED PIPERS
group and the lack of trade visibility 6 years before the registration
made it plausible and understandable for Covington to assume, when
he sought registration that once famous, PIED PIPERS name was not
currently in trade use and was therefore subject to appropriation by
one seeking to recapture and market the nostalgia of those days and
the sweet vocal sounds that accompanied it. The reasons for the
foregoing conclusions are:
1. Yocum was not an original member of the group. He was a
mere employee of Dorsey and was only employed by Dorsey.
Hence, the title to the mark remains with Dorsey during that
time.
2. The board is unable to find evidence that use of the mark
during this period evolved into 100% ownership status
claimed by petitioner because of the striking lack of
corroboration of the agreement and several
evidentiary facts therewith.
3. It does not appear that he continued to assert rights to the
name to try to activate other performers to sing as the PIED
PIPERS after his withdrawal from the group.
He agreed to allow use of the name without adequate supervision and
quality control and which led to an interruption of the continuous use
that petitioner must show to establish priority over registrant. This is
evidence by the fact that during a recording session of an ad hoc PIED
PIPERS group, he intruded therein with threat of legal action, but this
resulted in payment to him to settle his claims of name ownership but
no more than that.
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He made no inquiry of what was being recorded, what arrangements
were being used, and made no requests to monitor the sessions.
Moreover, subsequent to this, he entered into another uncontrolled
licensing arrangement without such pressures.
In 6 years, use and registration of the mark, petitioner engaged in
inadequately controlled licensing thereby working an abandonment
that negated such priority of use as a petitioner may have
established in earlier years and divested PIED PIPERS mark
of origin.
Abandonment is defined as when any course of conduct of the
registrant, including acts of omission as well as commission causes the
mark to lose its significance as an indication of origin. Although not
dealing with a registered mark, we believe that the operative principles
of the act apply to petitioner’s situation. While lack of intent to
abandon would be relevant to voluntary relinquishment of
the mark, it is not a sufficient defense against applicant’s
naked licensing activity.
 The board finds no colorable basis for finding fraud in
respondent’s 1973 application for his PIED PIPERS
registration and his representations therein because to the
best of his knowledge, there was no other person has the right to use
said mark in commerce.
Fraud must be proven to the hilt with little or no room for speculation
or surmise, The statement of an applicant that no other person to the
best of his knowledge has the right to the use of the mark does not
require the applicant to disclose those persons whom he may have
heard are using the mark does not constitute fraud if he feels that the
rights of such others are not superior to his. An applicant who has at
least color of title to the mark is not guilty of fraud in making the
foregoing application recitals.
Yocum has not met his burden or establishing either prior and
continuing rights on his part or fraudulent application behavior on
respondent’s part that would justify cancellation the registration.
PAGASA v. Court of Appeals
Facts:
 Kaisha was issued a trademark registration for YKK for slide fasteners
and zippers in class 41. 5 and a half years after its registration,
PAGASA filed an application for registration of the same or identical
trademark which was also allowed.
Alleging that both are confusingly similar, being used on similar
products under the same classification of goods, Kaisha filed with the
Director of Patents a petition for cancellation of petitioner’s
registration of exactly the same trademark.
The Director ordered the cancellation of the registration of PAGASA
on the ground that it is non-registrable because it resembles a mark or
tradename registered in the Philippines or a mark tradename
previously used in the Philippines. CA affirmed the decision of the
Director of Patents and held that laches would not apply in this case
for it has not been shown that Kaisha abandoned the use of the mark.
PAGASA claims that Kaisha neglected to assert its rights for
more than 5 years. Hence, it should not be barred from filing the
case. It further argues that to be entitled to the defense of estoppel by
laches, it is not necessary for the petitioner either to show that
respondent has abandoned the trademark or to prove its good faith if it
is shown that respondent was aware of petitioner's use of the
trademark without the former's protest or objection thereto leading
petitioner to assume that its act did not constitute an invasion of
respondent Kaisha's trademark rights. Moreover, it is asserted that
there was never an acquisition of right on the part of Kaisha since
there was no actual proof of use in commerce. No invoices or
receipts were submitted and neither did respondent present testimony
of any buyer a=or distributor to which said samples were addressed.
Issue:
 Whether or not laches may be applied in this case.
 Whether or the first registration is valid.
Ratio:
 There is laches and it may be applied in this case. It appears
that it was only after more than seven (7) years when respondent
sought the cancellation of the trademark. An unreasonable length of
time had already passed before respondent asserted its right to the
trademark. There is a presumption of neglect already amounting to
"abandonment" of a right after a party had remained silent for quite a
long time during which petitioner had been openly using the
trademark in question. Such inaction on the part of respondent
entitles petitioner to the equitable principle of laches.
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It is most unfair if at any time, a previous registrant, even after a lapse
of more than five (5) years, can ask for the cancellation of a similar or
the same trademark, the registration of which was never opposed by
the prior registrant. Why, in the first place did respondent not file an
opposition to the application of petitioner, as it ought to have done? It
could be because by the fact that its own registration was defective for
there being no compliance with the requirement of the law such as the
two (2) months commercial use of the trademark prior to the filing of
the application, its own registration may be cancelled, specially as it
had no evidence of actual use of the trademark after its registration up
to the time of the filing of petitioner's application, a fact easily
deducible from the fact of respondent's complete silence and having
taken no action to cancel petitioner's trademark until after the lapse of
more than seven (7) years from the approval of petitioner's application
to respondent filing a petition for cancellation.
 No. The trademark law is clear that it requires actual use of
the mark prior to registration. Although Kaisha was the first
registrant, it failed to prove that it used in trade or business in the
Philippines the subject mark. There is no proof to invest it with
exclusive continuous adoption of the mark which should consist
among others, of considerable sales since its first use. The invoices
presented coveres mere samples and were not for sale. The fact of
exporting them is not considered as “use.”
PAGASA v. Court of Appeals (MR)
Ratio:
 The Director of Patents sensibly and correctly cancelled the
registration in favor of Pagasa which has not shown any semblance of
justification for usurping the trademark YKK. The registration in favor
of Pagasa was admitted by the Director to be a mistake. He said that
Pagasa's application should have been denied outright. Pagasa cannot
rely on equity because he who comes into equity must come with clean
hands. Equity refuses to lend its aid in any manner to one seeking its
active interposition who has been guilty of unlawful or inequitable
conduct in the matter with relation to which he seeks relief. In this
case, it was found by the court that PAGASA had knowledge
that Kaisha was using the YKK trademark. Hence, such
knowledge, constituting bad faith when it opted to register it,
precludes the application of equitable principles of laches, estoppel
and acquiescence. Yoshida’s prior registration is superior and must
prevail.
Philip Morris Inc. v. Court of Appeals
Facts:
 Philip Morris is a corporation organized under the laws of USA. The
two other plaintiff corporations, which are wholly owned subsidiaries
of Philip Morris are similarly not doing business in the
Philippines but are suing on an isolated transaction. As
registered owners of MARK VII, MARK TEN and LARK, they assert
that Fortune Tobacco Corporation has no right to
manufacture and sell cigarettes bearing the allegedly
identical or confusingly similar marks in contravention of the
Trademark law and should be precluded from performing said acts.
Fortune, on the other hand, asserts that it has been authorized by the
BIR to manufacture and sell cigarettes bearing the trademark MARK
and that MARK is a common word which cannot be exclusively
appropriated.
 RTC denied the prayer for preliminary injunction on the ground that
since the corporations are not doing business in the Philippines, the
MARK cigarettes cannot cause them irreparable damage within the
territorial limits of the country. Although there is no dispute that
Philip Morris registered MARK VII, MARK TEN and LARK first, the
registration of the trademark MARK is still pending with the PPO, thus
the issuance of a preliminary injunction premature. Until and unless
the Director of Patents has denied the application, the court is of the
opinion and so holds that issuance of the injunction would not lie. It
has been repeatedly held in this jurisdiction as well as in the
United States that the right or title of the applicant for
injunction remedy must be clear and free from doubt.
Apart from the foregoing reasons, what prompted the trial court to
entertain the idea of prematurity and untimeliness of petitioner’s
application for a writ of preliminary injunction was the letter from the
BIR which reads that the application for its trademark is still peinding
before said office.
In a second motion for issuance of injunctive writ (asserting that the
application of the MARK with the PPO has already been rejected and
barred), the trial court nonetheless denied the new assertions on the
grounds that:
1. They did not even bother to establish that the products
affected adversely not subject of an application for registration
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with the PPO are in actual use in the Philippines and
available for commercial purposes in the Philippines.
 In the court of appeals, the prayer for injunctive writ was granted
enjoining Fortune from manufacturing, selling and advertising MARK
cigarettes It remarked that the temporary mark granted to Fortune
and acceptance of the second application filed by Fortune in the height
of their dispute in the main case were evidently made subject to the
outcome of the main case herein. The CA believed that Philip
Morris has shown a prima facie case for the issuance of the writ.
A motion to dissolve the disputed writ of preliminary
injunction with offer to post a counterbond was submitted and
was favorably acted upon by the Court of Appeals premised on the
filing of a sufficient counterbond to answer for whatever prejudice to
Philip Morris (PM). In turn, PM filed their own motion for re-
examination gared towards the reimposition of the writ of preliminary
injunction.
Issue:
 Whether or not in order to suffer irreparable injury due to the lifting of
the injunction, petitioners should be using actually their registered
trademarks in commerce in the Philippines.
Ratio:
 Indeed it has been settles in jurisprudence that a foreign corporation is
allowed for bring an action in Philippine courts for infringement of a
mark or tradename for unfair competition or false designation of
origin and false description whether or not it has been licensed to do
business in the Philippines. It is further qualified in another case that a
foreign corporation not doing business in the Philippines may have a
right to sue before Philippine Courts but existing adjective axioms
require that qualifying circumstances necessary for the
assertion of such right should first be affirmatively pleaded.
It is not sufficient for a foreign corporation suing under sia
dlaw to imply allege its alien origin. It must additionally
allege its personality to sue. Thus, foreign corporations not
engaged in business in the Philippines may maintain a cause
of action for infringement primarily because of Section 21-A
of the Trademark Law when legal standing to sue is alleged,
which PM has done.
However, a fundamental principle of Philippine Trademark Law is that
actual use in commerce in the Philippines is a pre-requisite
to the acquisition of ownership over a trademark or a
tradename. Even if PM has the capacity to sue for infringement,
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 the Trademark Law. Such a
foreign corporation may have the personality to sue but it may
not necessarily be entitled to protection due to absence of
actual use of the emblem in the local market.
To be entitled to injunctive writ, petitioner must show that there exists
a certain right to be protected and that the facts against which
injunction is directed are violative of said right. Even if PM are
holders of certificates of registration in the Philippines of
their symbols, the fact of exclusive ownership cannot be
made to rest solely on these documents since dominion over
trademarks is not acquired by the mere fact of registration
alone and does not perfect a trademark right. What we are
simply conveying is another basic tenet in remedial law that before
injunctive relief may properly issue, complainant's right or title must
be undisputed and demonstrated on the strength of one's own title to
such a degree as to unquestionably exclude dark clouds of doubt,
rather than on the weakness of the adversary's evidence, inasmuch as
the possibility of irreparable damage, without prior proof of
transgression of an actual existing right, is no ground for injunction
being mere damnum absque injuria.
In view of the explicit representation of petitioners in the complaint
that they are not engaged in business in the Philippines, it inevitably
follows that no conceivable damage can be suffered by them not to
mention the foremost consideration heretofore discussed on the
absence of their right to be protected.
Separate Opinion (Feliciano, J):
 It is important to stress the legal effects of registration of a
trademark. A certificate of registration of a mark or a tradename
shall be prima facie evidence of the validity of the
registration, the registrant’s ownership of the mark or tradename
and of the exclusive right to use the same in connection with the goods,
business or services specified in the certificate.
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of a member country of the Paris Union is entitled to bring in
Effects of registration in the Principal Register and Supplemental Philippine courts an action for infringement of trademarks,
Register: or for unfair competition, without necessity of obtaining
registration or a license to do business in the Philippines. In
Principal Register Supplemental Register this case, it was held that actual use was necessary.
Gives rise to presumption of the No such presumption in the
validity of the registration, the supplemental register It should be noted that out of PM’s 3 marks, 2 of them – MARK and
registration’s ownership of the LARK – were registered in the Philippines on the basis of actual use in
mark and his right to exclusive the Philippines. The very fact that the PPO issued certificates
use thereof necessarily gave rise to the presumption that such pre-registration use
Limited to the actual owner of the Not subject to opposition had in fact been shown to the satisfaction of PPO. The third mark,
trademark and proceedings although it may be cancelled after MARK VII was registered on the basis of Section 37 (on the basis of
therein pass on the issue of its issuance registration in the country of origin and under the Paris Convention).
ownership, which may be In such registration, actual use need not be shown.
contested through opposition or
interference proceedings or after That petitioners are not doing business and are not licensed to do
registration, in a petition for business in the Philippines, does not by any means mean either that
cancellation petitioners have not complied with the requirements of Section 12 of
Constructive notice of the claims Merely proof of actual use of the R.A. No. 166 relating to affidavits of continued use, or that petitioners'
of ownership trademark and notice that the trademarks are not in fact used in trade and commerce in the
registrant has used or Philippines. In the Converse case, as earlier noted, the Court held
appropriated it that the circumstance that the foreign owner of a Philippine trademark
Basis for action for infringement Not a basis for action for is not licensed to do business and is not doing business in the
infringement Philippines, does not mean that petitioner's goods (that is, goods
Publication of application is Not necessary bearing petitioner's trademark) are not sold in the Philippines. For
necessary cigarettes bearing petitioners' trademarks may in fact be imported into
Proof of registration therein may No such thing for supplemental and be available for sale in the Philippines through the acts of
be filed with the BoC to exclude register importers or distributors.
foreign goods bearing infringing
marks Modern authorities on trademark law view trademarks as symbols
which perform three (3) distinct functions: first, they indicate origin or
While taken with the companion presumption of a regularity of ownership of the articles to which they are attached; second, they
performance of official duty, it will be seen that issuance of the guarantee that those articles come up to a certain standard of quality;
certificate also gives rise to the presumption that all third, they advertise the articles they symbolize. A registered
requirements of Philippine law necessary for a valid trademark has value in itself apart from the trade physically
registration were complied with and satisfied. accompanying its use. That PM did not try to put a peso
figure on their claimed damage arising from the erosion and
Feliciano, herein, is of the position that there is a prima facie case for possible eventual destruction of the symbolic value of their
holding that the mark of Fortune infringes upon PM’s registered trademark, such damage, while not necessarily easily
trademarks. quantifiable is nonetheless real and effective.

Furthermore, the net effect of the statutory and treaty

provisions applicable in this case is that a corporate national

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Samson v. Daway
Facts:
 2 informations for unfair competition were filed against Manolo
Samson (Samson), the registered owner of ITTI shoes. It is alleged that
Samson unlawfully sold and offered for sale CATERPILLAR products
such as footwear, garments, clothing, bags, accessories and
paraphernalia which are closely identical and/or colorable imitations
of the authentic CATERPILLAR products.
Samson filed a motion to suspend in view of an alleged prejudicial
question involved in another civil case for unfair competition pending
with the same branch and also in view of the pendency of a petition for
review with the Secretary of Justice assailing the findings of the
prosecutor finding probable cause.
Subsequently, he filed a motion to quash the informations and for
reconsideration of the order denying the motion to suspend, this time
challenging the jurisdiction of the trial court over the offense
charged. It is contended that since Section 170 of the IP Code
imposes imprisonment for unfair competition of not more than 6 years
the offense is cognizable by the MTC and not by the RTC. These were
all denied.
Issue:
 Whether or not the court has jurisdiction over criminal and civil cases
for violation of IP rights.
Ratio:
 Section 163 of the Code states that actions shall be brought before the
proper courts with appropriate jurisdiction under existing laws. The
existing law referred to is Section 27 of RA 166 which provides that
jurisdiction over cases for infringement of registered marks,
unfair competition, false designation of origin and false
description or representation is lodged with the CFI (now
RTC).
In the case at bar, the IP Code (RA 8293) and RA 166 are special laws
conferring jurisdiction over violations of intellectual property rights to
the Regional Trial Court. They are to prevail over RA 7691 which is a
general law. Hence, jurisdiction over the instant criminal case for
unfair competition is properly lodged with the Regional Trial Court
even if the penalty therefor is imprisonment of less than 6 years, or
from 2 to 5 years and a fine ranging from P50,000.00 to P200,000.00.
In fact, to implement and ensure the speedy disposition of cases
involving violations of intellectual property rights under R.A. No.
8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002
designating certain Regional Trial Courts as Intellectual Property
Courts. On June 17, 2003, the Court further issued a Resolution
consolidating jurisdiction to hear and decide Intellectual Property
Code and Securities and Exchange Commission cases in specific
Regional Trial Courts designated as Special Commercial Courts.
There is no prejudicial question in this case. There is no
prejudicial question if the civil and criminal action can proceed
independently of each other (e.g. Articles 32, 33, 34 and 2176 of the
Civil Code). The case at bar falls (infringement and unfair competition)
under Article 33 of the Civil Code which covers cases of fraud. Hence,
it is entirely separate from the criminal action. As such, it will not
operate as a prejudicial question.
Levi Strauss v. Vogue Traders
Facts:
 Per Trademark, Technical Data and Technical Assistance Agreement
(TTTA) Levi Strauss was granted a non-exclusive license to use Levi’s
trademark design and name in the sale of its clothing and other goods.
The licensing agreement was renewed several times, the recent one
being under a certificate of registration issued by the BPTTT. It
discovered the existence of some trademarks belonging to Vogue
which, in its view, were confusingly similar to its trademarks. Thus, it
instituted 2 cases before the BPTTT for the cancellation of
the latter’s trademark. Likewise, it applied for the issuance of a
search warrant on the premises of Vogue owned by one Tony
Lim with the RTC. The Trial Court issued the search warrant and the
goods of Vogue were seized.
 Consequently, Vogue filed a complaint with the RTC against Levi’s
which alleged there was no deceptive resemblances with the
trademarks of Levis and the seizure of the goods (unlawfully) should
entitle him to damages. In its answer, Levis claims that Vogue’s
Live’s brand infringed upon its licensed brand name LEVI’s
It sought to cancel the registration of the former and to enjoin the
former from further selling goods using such brand name.
RTC issued an order finding that the respondent intended to
appropriate and imitate the genuine appearance of authentic LEVI’s
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jeans and pass off its LIVE’s jeans as genuine LEVI’s jeans. Vogue
opposed and stated that the LEVI’s backpocket design is not
copyrightable and is neither an original work nor a novel design.
Ultimately, the court issued a preliminary injunction retraining Vogue
from using the marks.
 CA rendered a decision in favor of the respondent, enjoining the trial
court form further proceeding with the case.
Issue:
 Whether or not the doctrine of primary jurisdiction operates to
suspend any and all proceedings in a civil case.
Ratio:
 While an application for the administrative cancellation of a registered
trademark on any of the grounds enumerated under Section 17 of RA
166, an action for infringement or unfair competition, as well as the
remedy of injunction and relief for damages is explicitly and
unquestionable within the competence and jurisdiction of ordinary
courts. An application with the BPTTT for an administrative
cancellation of a registered trademark cannot per se have the effect of
restraining or preventing the courts form exercising their jurisdiction.
Notwithstanding the foregoing provisions, the court or the
administrative agency vested with jurisdiction to hear and adjudicate
any action to enforce the rights to a registered mark shall likewise
exercise jurisdiction to determine whether the registration of said
mark may be cancelled in accordance with this Act. The filing of a suit
to enforce the registered mark with the proper court or agency shall
exclude any other court or agency from assuming jurisdiction over a
subsequently filed petition to cancel the same mark. On the other
hand, the earlier filing of petition to cancel the mark with
the Bureau of Legal Affairs {formerly BPTTT] shall not
constitute a prejudicial question that must be resolved
before an action to enforce the rights to same registered
mark may be decided.
It bears stressing that an action for infringement or unfair
competition, including the available remedies of injunction and
damages, in the regular courts can proceed independently or
simultaneously with an action for the administrative cancellation of a
registered trademark in the BPTTT. As applied to the present case,
petitioner’s prior filing of two inter partes cases against the respondent
before the BPTTT for the cancellation of the latter’s trademark
registrations, namely, "LIVE’S" and "LIVE’S Label Mark," does not
preclude petitioner’s right (as a defendant) to include in its answer (to
respondent’s complaint for damages in Civil Case No. No. 96-76944) a
counterclaim for infringement with a prayer for the issuance of a writ
of preliminary injunction.
Coffee Partners Inc. v. San Francisco Coffee & Roastery, Inc.
Doctrine: A trade name need not be registered with the Intellectual Property
Office (IPO) before an infringement suit may be filed by its owner against the
owner of an infringing trademark. All that is required is that the trade name
is previously used in trade of commerce in the Philippines.
Facts:
 Petitioner is a local corporation engaged in the business of
establishing and maintaining coffee shops around the country. It
is registered with the SEC as Coffee Partners Ltd. for a non-
exclusive right to operate coffee shops in the Philippines
using trademarks, including SAN FRANCISCO COFFEE.
Respondent, on the other hand, registered the business name
SAN FRANCISCO COFFEE & ROASTERY with the
Department of Trade and Industry which has a customer
base including Figaro Company, Tagaytay Highlands, Fat Willy’s,
among others.
Respondents later formed a joint venture company with
Boyd Coffee USA under the mother company name Boyd Coffee
Philippines (BCPPI), primarily engaged in processing, roasting
and wholesale selling of coffee. The respondent later
discovered that petitioner was about to open a coffee
shop under the name SAN FRANCISCO COFFEE, and
according to the respondent, the shop caused confusion in
the minds of the public as it a similar name and it also
engaged in the business of selling coffee. Respondent sent a
letter to the petitioner to stop using the name, as well as to the
Bureau of Legal Affairs of the IPO (BLA-IPO) for infringement,
unfair competition and claims for damages.
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Arguments:
 Petitioner contends that:
1. When a tradename is not registered, a suit for infringement is
not available;
2. Respondent already abandoned its tradename (it already
expired and it was only in 2001 that petitioner opened a coffee
shop in Libis). Fialure to continue the use of the tradename to
designate its goods negates any allegation of intrngement.
3. No confusion is likely to occur between its trademark.
 On the other hand respondent maintains that:
1. The law protects tradenames from infringement even if
they are not registered with IPO. All that is required is for
the tradename to be previously used in trade or commerce
in the Philippines.
2. It likewise states that it never abandoned the use of its
tradename.
3. The mark is confusingly similar to the its tradename.
Issue:
 Whether the petitioner’s use of the trademark constitutes an
infringement of respondent’s trade name even if it is not registered
with the IPO.
Held:
 In affirming the decision of the appellate court, the Supreme Court
held that a trade name need not be registered with the IPO
before an infringement suit may be filed by its owner
against the owner of an infringing trademark. All that is
required is that the trade name is previously used in trade of
commerce in the Philippines.
Applying either dominancy or holistic tests will yield to the
conclusion that the trademark SAN FRANCISCO COFFEE is
a clear infringement of the respondent’s SAN
FRANCISCO COFFEE & ROASTERY, INC., with the
descriptive words SAN FRANCISCO being the dominant
features of the latter’s trade name.
Petitioner should not be allowed to earn profit by the name and
reputation so far build by the respondent without running afoul of
the basic demands of fair play. A corporation has an exclusive right
to the use of its name. The right proceeds from the theory that it is
a fraud on the corporation which has acquired a right to that
name and perhaps carried on its business thereunder, that another
should attempt to use the same name or the same name with a
slight variation in such a way as to induce persons to deal with it in
the belief that they are dealing with the corporation which has
given a reputation to the name.
Societes Des Produits Nestlé, S.A. v. Court of Appeals
Doctrine: A trademark has been generally defined as “any word, name,
symbol or device adopted and used by a manufacturer or merchant to
identify his goods and distinguish them from those manufactured and sold by
others.
Facts:
 CFC Corporation filed with the Bureau of Patents, Trademarks and
Technology Transfer (BPTTT) an application for the registration of
the trademark FLAVOR MASTER for instant coffee. This was
granted and subsequently published in the Official Gazette of the
BPTTT.
Petitioner filed a notice of opposition claiming that the respondent’s
trademark is confusingly similar to its trademarks for coffee
and coffee extracts, namely MASTER ROAST and MASTER
BLEND; alleging that its registration is likely to cause confusion in
the trade as well as deceive purchasers as the dominant word
present in the trademarks of Nestlé is MASTER.
Naturally, CFC argued otherwise, i.e., there is no confusion between the
companies’ trademarks, the word MATER cannot be exclusively
appropriated by any person for being a descriptive or generic
name, and the trademarks are very different from one another.
BPTTT denied the respondent’s registration but the appellate court
assailed such decision, holding that the physical discrepancies
between appellant and appellee’s respective logos are so
ostensible that the casual purchaser cannot likely mistake one
for the other.
Issue:
 Whether there trademark FLAVOR MASTER is a colorable trademarks
of MASTER ROAST and MASTER BLEND.
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Held:
 Colorable imitation denotes such a close or ingenious
imitation as to be calculated to deceive an ordinary
purchaser giving such attention as a purchaser usually gives, as to
cause him to purchase the one supposing it to be the other.
As no set of rules can be deduced in cases of infringement or
trademark, the Court ruled that the likelihood of confusion is a relative
concept; thus, each case must be decided on their merits.
A manufacturer’s trademark should be entitled to
protection. And in order to do so, jurisprudence has developed two
kinds of tests:
1. Dominancy Test – Focuses on the similarity of the
prevalent features of the competing trademarks which
might cause confusion or deception and thus constitute
infringement.
2. Holistic Test – Mandates that the entirety of the marks in question
must be considered in determining confusing similarity.
In finding for the petitioner, the dominancy test should be the one
applied in this case (in lieu of CA agreeing with the application of the
holistic test), because should ordinary purchases be
“undiscerningly rash” in buying such common and
inexpensive household products as instant coffee, then they
will be less inclined to closely examine specific details of
similarities and dissimilarities.
In rejecting the application of the totality test, the Court also held that
it is contrary to elementary postulate of law on trademarks and unfair
competition that confusingly similar is to be determined on the basis
of visual, aural, connotative comparisons which only rely on the visual
comparison between two trademarks.
With regard to the word MASTER, it is neither a generic nor
descriptive term, as it can be validated as a trademark and
may be legally protected. As in this case, Nestlé’s use of the word
MASTER is a suggestive term brought about by their
advertising scheme, subtly connoting something about the
product, are eligible for protection in the absence of
secondary meaning.
Smith v. Chanel, Inc.
Facts:
 Smith advertises a fragrance called “Ta’Ron’s Second Chance” as a
duplicate of appellee’s “Chanel No. 5” at a fraction of the latter’s
price. That being so, Chanel was granted a preliminary injunction
prohibiting any reference to Chanel No. 5 in the promotion or sale of
the product. This appeal followed.
The action herein rests upon a singe advertisement
published in “Specialty Salesmen” which offered the “Ta’Ron
Line of Perfumes” for sale. It stated that the perfume duplicates 100%
perfect the exact scent of the world’s finest and most expensive
perfumes and colognes at prices that will zoom sales to volumes you
have never before experienced. In the said advertisement, Chanel was
one of the scents mentioned that it copied.
Chanel, in this case, raises the principal question of whether
one who has copied an unpatented product sold under a
trademark may use the trademark in his advertising to
identify the product he has copied.
Issue:
 Whether or not the use of the Chanel mark in the advertisement herein
violates the Lanham Act.
 Whether or not it violates the common law of unfair competition.
Ratio:
 No. It may not be enjoined either under the Lanham Act or
the common law of unfair competition so long as it does not
contain misrepresentations or create a reasonable
likelihood that the purchasers will be confused as to the
source, identity or sponsorship of the product.
In any proceeding under the Lanham Act, the gist is a “false
description or representation or a use of the mark which is likely to
cause confusion or mistake to deceive purchasers as to the source of
origin of such goods or services” The act does not prohibit a
commercial rival’s truthfully denominating his goods as a
copy of a design in the public domain, though he uses the
name of the designer to do so. Indeed it is difficult to see any
other means that might be employed to inform the consuming public
of the true origin of the design.
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 There is no violation of the common law on unfair
competition. Unfair competition must be grounded in either
deception or appropriation of the exclusive property of the
plaintiff. In this case, it is conceded that the “pirating” of the design
is lawful and proper. The only property alleged to be invaded here is
the goodwill embodied in the trademark but the right of the
plaintiff in the mark is limited to dilution which is brought
about by confusion as to source or affiliation.
The use of another’s mark to identify the trademark owner’s product in
comparative advertising is not prohibited by either statutory or
common law, absent misrepresentation regarding the products or
confusion as to the source. The only legal relevance of a trademark is
to impart information as to the source or sponsorship of the product
for reasons grounded in the public policy favoring a free, competitive
economy.
Here, since Chanel’s perfume was unpatented, Smith had the right top
copy it. There was a strong public interest in their doing so for
imitstion is the life blood of competition. But this public benefit could
be lost if Smith could not tell potential purchasers that the products
was the equivalent of Chanel’s. His chief weapon is his ability to
represent his product as being equivalent and cheaper.
2 principal arguments are made for protection of trademark
values other than source identification:
1. Creation of the other values inherent in the trademark require
expenditure of great effort skill and ability and that the
competitor should not be permitted to take a free ride
on the trademark owner’s widespread goodwill and
reputation.
A large sum of money expenditure does not create
legally protectable rights. They are not entitled to
monopolize the desire for the unpatented product. By taking
his “free ride” the copyist albeit unintentionally, serves an
important public interest by offering comparable goods at
lower prices. On the other hand, the trademark owner perhaps
equally without design, sacrifices public to personal interests
by seeking immunity from the rigors of competition.
2. Even in the absence of confusion as to source, use of
the mark creates a serious threat to the uniqueness
and distinctiveness of the mark and if continued
would create a risk of making a generic or descriptive
term of the words.
However, this has little weight in the case at bar since the
mark is not being used as a generic term. It is used to
describe the product not to identify their own. They do
not label their product with that mark.
Thus, absent any misrepresentation or confusion as to source of
sponsorship, a seller in promoting his own goods may use the mark
of another to identify the latter’s goods.
Boston Athletic v. Sullivan
Facts:
 Boston Athletic Association (BAA) is a charitable organization whose
principal activity has been conducting the Boston Marathon since it
was first run in 1987. At the exposition, various businesses set up
booths and sell shirts, running apparel and sports items.
On the other hand, Sullivan herein retails apparel under the name
Good Life at a store in Hopkinton which imprints and distributes
merchandise including shirts to the trade.
In 1986, to defray costs, BAA entered into a licensing agreement with
Image Impact (Image) for the use of BAA’s marks on wearing apparel
including shirts. Thus, any unauthorized use on the merchandise of the
name “BOSTON MARATHON” or a similar name or a colorable
imitation thereof would violate the exclusive rights of BAA and its
licensee.
 In 1986 and early 1987, Beau Tease and Sullivan sold in the Boston
area shirts imprinted with “Hopkinton-Boston” (I’m not sure if this
was what was printed, couldn’t find a picture online eh).
For this reason, BAA brought a suit praying for preliminary injunction
which eventually reached the federal court. In their complaint, BAA
and Image alleged that the shirts with logos described above
infringed on BAA”s marks and claims confusion under the
Lanham Act and dilution. However, the court did not enjoin
Sullivan in any way but it preliminarily enjoined Beau Tease from
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selling shirts directly at the exposition or marketing to anyone who it 5. Classes of prospective purchasers
knew would sell Beau Tease’s 1987 shirts at the exposition. 6. Evidence of actual confusion
7. Intent in adopting the mark
When it came back to the district court, the plaintiffs moved to amend 8. Strength of the mark
their complaint by including the 1988 shirts and a design “BOSTON
19xx.” However, the court again dismissed the case and stated that the Similarity of o Look at the total effect of the designation and
public would not infer that the logos were sponsored by the Marks not at the individual features.
BAA. There was no confusion between the shirts. o The defendants herein introduced no evidence
 It is the position of Sullivan that BAA is not entitled to protection for showing that they took steps to turn their
the reason that “BOSTON MARATHON” has become a generic terms similar products into dissimilar ones by clearly
and is now refers to both the races and the services rendered by BAA distinguishing their products and their lack of
and that the use of the shirts by Sullivan since 1987 constitutes prior BAA sponsorship.
usage. o It was held here that the two marks are more
than similar, it is identical.
Issue: Similarity of o Same goods: shirts and other wearing
 Whether or not the mark has become generic. the Goods apparel.
 Whether or not Sullivan has prior usage right. Channels of o Sold primarily in the Boston-area retail shops,
 Whether or not there is a likelihood of confusion. trade, at the exposition and along the race courses.
advertising, o Seasonal (during race dates)
Ratio: classes of o They display it in store windows, and in booths
 No. The burden of proof is on the party seeking to have a purchasers at the exposition.
registered mark declared a generic mark to show that it has (treated o The virtual identity between the parties' sales
become so. Here, the defendants failed to meet the burden of proof. simultaneously) outlets and advertising methods, as well as the
purchasing public's lack of opportunity to
 No. The race herin was originally called the Boston AA Marathon. exercise discrimination in making such
Since 1917 the race has been called so. This use clearly undercuts the purchases, all point toward a likelihood of
prior use claims of Sullivan as to the words per se. As for the use of the confusion.
words on the apparel, BAA is entitled to enjoin the use of its marks on Evidence on o it is the general public that is the market for
such items. actual the shirts.
confusion o Plaintiffs here submit evidence that the public
 Here, the likelihood of confusion is to be seen at what is called a was continually exposed to the fact of BAA’s
“promotional goods issue” where the likelihood of confusion inquiry sponsorship of the Boston Marathon. On the
will focus on whether the purchasing public is likely to believe that the other hand, there is no evidence presented by
sponsor of the Boston Marathon produces licenses, or otherwise the defendants as to contradict these
endorses defendant’s shirts. assertions.
o People were actually confused as to who
There are 8 factors to be weight in assessing likelihood of sponsored the shirts as evidenced by testimony
confusion: of the member of the public.
Intent o The defendants chose designs that obviously
1. Similarity of the marks referred to the Marathon, put those designs on
2. Similarity of the goods the same types of clothing sold by the
3. Relationship between channels of trade plaintiffs, sold those shirts at the same time
4. Relationship between the parties’ advertising and in the same manner as the plaintiffs to the

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same general purchasing public. Defendants'
actions clearly show their intent to trade on
BAA's sponsorship and management of the
Boston Marathon.
Strength of o The Boston Marathon is one of the oldest and
the mark most prestigious marathons in this country.
BAA, as a charitable organization, does not
have the same impetus to advertise that a for-
profit company would have. Nonetheless, its
broad media exposure serves a similar
purpose; it makes known to the public the
BAA's sponsorship of the Boston Marathon.
o Broad protection of the mark is warranted.
In order to establish an infringement in a promotional goods
case, the plaintiff has the burden of showing that prospective
purchasers are in fact likely to be confused or misled into
thinking that the defendant’s product was produced,
licensed or otherwise sponsored by the plaintiff. There can be
no doubt that the language and design on defendant's shirts
intentionally calls attention to an event that has long been sponsored
and supported by the BAA--an event that is, in fact, the subject of its
registered mark. Defendants' shirts are clearly designed to take
advantage of the Boston Marathon and to benefit from the good will
associated with its promotion by plaintiffs. Defendants thus obtain a
"free ride" at plaintiffs' expense.
Given the undisputed facts in this case that:
1. Defendants intentionally referred to Boston Marathon on its
shirts
2. Purchasers were likely to buy the shirts precisely because of
that reference
It is fair to presume that there is a likelihood of confusion as
to the shirt’s source.
Park N’ Fly v. Dollar Park and Fly Inc.
Facts:
 Park N Fly (PNF) operates long term parking lots near airports in
Boston, Houston, Cleveland, Memphis and San Francisco. It was
issued a registration in 1971 for its mark and 6 years later, it filed
an affidavit with the Patent Office to establish the
incontestable status of the mark for having been in
continuous use for 5 consecutive years and no final adverse
decision to petitioner’s claim of ownership or right to
registration were pending.
On the other hand, respondent Dollar Park and Fly (Dollar) also
provides for long term parking services in Portland Oregon. For this
reason, PNF filed an action for infringement in 1978 and requested the
court to permanently enjoin the respondent from using the words Park
N Fly in connection with its business. Countering, repsondents claim
that the mark is a generic term.
 After trial, the District Court (DC) found that the mark is not generic
and observed that an incontestable mark cannot be challenged
on the ground that it is merely descriptive. Thus, DC enjoined
the Dollar from using the Park and Fly phrase or any mark similar to
Park N Fly.
CA reversed the decision and held that although incontestability
provides a defense against the cancellation of a mark, it may not be
used offensively to enjoin another’s use. Thus, respondent could
defend the infringement action by showing that the mark was merely
descriptive. Based on its own examination of the record, the Court of
Appeals then determined that petitioner's mark is in fact merely
descriptive, and therefore respondent should not be enjoined from
using the name "Park and Fly.
Issue:
 Whether or not the mark is merely descriptive.
Ratio:
 No. The mark is already considered as incontestable hence,
its descriptiveness cannot be questioned. A defendant faced
with an incontestable mark cannot defend by claiming that
the mark is invalid because it is descriptive. There is nothing in
the law which distinguishes between a registrant’s offensive and
defensive use of an incontestable mark. On the contrary, the
declaration of the law that the registrant has an exclusive right to
use the mark indicates that incontestable status may be used
to enjoin infringement by others. The language of the Lanham
Act also refutes any conclusion that an incontestable mark may be
challenged as merely descriptive. A mark that is merely descriptive of
an applicant's goods or services is not registrable unless the mark has
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secondary meaning. Before a mark achieves incontestable status,
registration provides prima facie evidence of the registrant's exclusive
right to use the mark in commerce.
The Lanham Act expressly provides that before a mark becomes
incontestable an opposing party may prove any legal or equitable
defense which might have been asserted if the mark had not been
registered. Ibid. Thus, §33(a) would have allowed respondent to
challenge petitioner's mark as merely descriptive if the mark had not
become incontestable. With respect to incontestable marks, however,
§33(b) provides that registration is conclusive evidence of the
registrant's exclusive right to use the mark, subject to the conditions of
§ 15 and the seven defenses enumerated in §33(b) itself. Mere
descriptiveness is not recognized by either §15 or §33(b) as a basis for
challenging an incontestable mark.
Indeed, a conclusion that incontestable status can provide for
the basis for enforcement of the registrant’s exclusive right
to use a trade or service mark promotes the goals of the
statute. It provides national protection of trademarks in order to
secure the owner of the mark of the goodwill of his business and to
protect the ability of consumers to distinguish between producers. The
incontestability provisions, as the proponents of the Lanham
Act emphasized, provide a means for the registrant to quiet
title in the ownership of his mark. Congress expressly provided in
§§ 33(b) and 15 that an incontestable mark could be challenged on
specified grounds, and the grounds identified by Congress do not
include mere descriptiveness.
The Lanham Act allows a mark to be challenged at any time if it
becomes generic, and, under certain circumstances, permits the non-
trademark use of descriptive terms contained in an incontestable
mark.
More generally, respondent is simply wrong to suggest that third
parties do not have an opportunity to challenge applications for
trademark registration. If the Patent Office examiner determines that
an applicant appears to be entitled to registration, the mark is
published in the Official Gazette Within 30 days of publication, any
person who believes that he would be damaged by registration of the
mark may file an opposition. Registration of a mark provides
constructive notice throughout the United States of the
registrant's claim to ownership. Within five years of registration,
any person who believes that he is or will be damaged by registration
may seek to cancel a mark. A mark may be canceled at any time for
certain specified grounds, including that it was obtained fraudulently
or has become generic.
The court concluded that the holder of a registered mark
may rely on incontestability to enjoin infringement and that
such an action may not be defended on the grounds that the
mark is merely descriptive.
Levi Strauss v. Clinton Apparelle
Facts:
 A complaint for trademark infringement was instituted by Levi Strauss
against Clinton together with Olympian Garments before the RTC
which alleged that the latter’s jeans under the brand name “Paddocks”
uses a device which is substantially, if not exactly similar to the
Dockers and Design trademark owned and registered in the
name of Levi without its consent.
The trial court issued an order granting the TRO applied for.
Subsequently, it issued another order granting the writ of preliminary
injunction on the ground that the marks “DOCKERS AND DESIGN”
and “PADDOCKS” are confusingly similar.
With the denial of their MR, petitioners are not before this court
seeking a review of the CA’s decision in disregarding the confusing
similarity between the marks and for concluding that the erosion of the
marks is not protectable by injunction.
Issue:
 Whether or not the marks are confusingly similar.
 Whether or not there is dilution.
Ratio:
 No. The registered mark of the petitioners in this case consists of 2
elements:
1. The “DOCKERS”; and
2. The winges dhaped design or logo.
Notably however, there is one registration for both the features of the
mark giving the impression that the 2 should be considered as a single
unit.
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On the other hand, Clinton’s mark uses “PADDOCKS” on top of a logo
which according to petitioners is a slavish imitation of the “DOCKERS”
design. Bit could thus be said that respondent only appropriates
petitioner’s logo and not the work mark “DOCKERS”; it uses only a
portion of the registered trademark and not the whole.
Given the single registration of the trademark “Dockers and Design”
and considering that respondent only uses the assailed device but a
different word mark, the right to prevent the latter from using the
challenged “Paddocks” device is far from clear. Stated otherwise, it is
not evident whether the single registration of the trademark “Dockers
and Design” confers on the owner the right to prevent the use of a
fraction thereof in the course of trade. It is also unclear whether the
use without the owner’s consent of a portion of a trademark registered
in its entirety constitutes material or substantial invasion of the
owner’s right.
It is likewise not settled whether the wing-shaped logo, as opposed to
the word mark, is the dominant or central feature of petitioners’
trademark—the feature that prevails or is retained in the minds of the
public—an imitation of which creates the likelihood of deceiving the
public and constitutes trademark infringement.
From the abovementioned, the right of Levi Strauss to
injunctive relief has not been clearly and unmistakably
demonstrated. The right has yet to be determined. Likewise there is
no proof that there is material and substantial invasion of their right to
warrant the issuance of the writ. Nether were there any showings
of urgent and permanent necessity for the writ to prevent
serious damage.
 There is no dilution. Trademark dilution is the lessening of the
capacity of a famous mark to identify the distinguished
goods or services regardless of the presence or absence of:
1. Competition between the owner and the other parties
2. Likelihood of confusion, mistake or deception
Subject to the principles of equity, the owner of a famous mark is
entitled to an injunction “against another person’s commercial use in
commerce of a mark or trade name, if such use begins after the mark
has become famous and causes dilution of the distinctive quality of the
mark.
For there to be dilution, there must be a finding that:
1. The trademark sought to be protected is a famous mark
2. The use of the mark began after the famous mark became
famous
3. Such subsequent use defames the famous mark.
In the case at bar, petitioners have yet to establish whether
“Dockers and Design” has acquired a strong degree of
distinctiveness and whether the other two elements are
present for their cause to fall within the ambit of the invoked
protection.
International Use Service v. Associated Press
Facts:
 Two competing US news services herein were in the business of
reporting in the US the news on the WW. Their businesses hinged on
getting fact and accurate reports published. Complainant in its bill,
defendant in its answer, have set forth in almost identical terms the
rather obvious circumstances and conditions under which their
business is conducted. The value of the service, and of the news
furnished, depends upon the promptness of transmission, as well as
upon the accuracy and impartiality of the news, it being essential that
the news be transmitted to members or subscribers as early or earlier
than similar information can be furnished to competing newspapers by
other news services, and that the news furnished by each agency shall
not be furnished to newspapers which do not contribute to the expense
of gathering it.
A bill was filed by the complainant Associated Press herein to retrain
the pirating of its news yb defendant in 3 ways:
1. by bribing employees of newspapers published by
complainant’s members to furnish Associated Press news to
defendant before publication;
2. by inducing Associated Press member to violate its bylaws and
permit defendant to obtain news before publication
3. by copying news from bulletin boards and from early editions
of complainant’s newspapers and selling this, either bodily or
after rewriting it, to defendant’s customers.
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In its decision, the DC ruled that the practice amounted to
unfair trade. Both parties appealed to the Circuit Court of Appeals
which sustained the injunction.
Issue:
 Whether or not the defendant may be lawfully restrained from
appropriating news taken from bulletins issued by complainant or any
of its members, or from newspapers published by them, for the
purpose of selling it to defendant’s clients.
Ratio:
 Generally, no since news is considered as publicijuris. The
information found in the AP news was not copyrightable as
the information is not the creation of a writer but is a report
of matters that is the history of the day. It is publici juris. But in
this case, the right to restrain is present to the extent necessary to
prevent the competitor from reaping the benefits of the complainants
efforts and expenditures.
The peculiar value of news is in the spreading of it while it is fresh, and
it is evident that a valuable property interest in the news, as news,
cannot be maintained by keeping it secret. Besides, except for matters
improperly disclosed, or published in breach of trust or confidence, or
in violation of law, none of which is involved in this branch of the case,
the news of current events may be regarded as common property.
What we are concerned with is the business of making it
known to the world, in which both parties to the present suit
are engaged. That business consists in maintaining a prompt, sure,
steady, and reliable service designed to place the daily events of the
world at the breakfast table of the millions at a price that, while of
trifling moment to each reader, is sufficient in the aggregate to afford
compensation for the cost of gathering and distributing it, with the
added profit so necessary as an incentive to effective action in the
commercial world. The service thus performed for newspaper
readers is not only innocent but extremely useful in itself,
and indubitably constitutes a legitimate business. Not only
do the acquisition and transmission of news require
elaborate organization and a large expenditure of money,
skill, and effort; not only has it an exchange value to the
gatherer, dependent chiefly upon its novelty and freshness,
the regularity of the service, its reputed reliability and
thoroughness, and its adaptability to the public needs; but
also, as is evident, the news has an exchange value to one
who can misappropriate it.
The judge in this case approached the issue from the perspective of
unfair competition and found that there is a quasi-property
right in the news as it is “stock in trade to be gathered at the
cost of the enterprise, organization, skill, labor and money
to be distributed and sold to those who will pay money for
it.” Given that the news in this case has economic value, a company
can have limited proprietary interest in it against a
competitor who would attempt to take advantage of thei
information.
Stripped of all disguises, the process amounts to an
unauthorized interference with the normal operation of
complainant's legitimate business precisely at the point
where the profit is to be reaped, in order to divert a material
portion of the profit from those who have earned it to those who have
not, with special advantage to defendant in the competition because of
the fact that it is not burdened with any part of the expense of
gathering the news. The transaction speaks for itself, and a court of
equity ought not to hesitate long in characterizing it as unfair
competition in business. In a court of equity, where the question is one
of unfair competition, if that which complainant has acquired fairly at
substantial cost may be sold fairly at substantial profit, a competitor
who is misappropriating it for the purpose of disposing of it
to his own profit and to the disadvantage of complainant
cannot be heard to say that it is too fugitive or evanescent to
be regarded as property. It has all the attributes of property
necessary for determining that a misappropriation of it by a
competitor is unfair competition because contrary to good
conscience.
In the present case, the fraud upon complainant's rights is more direct
and obvious. Regarding news matter as the mere material from which
these two competing parties are endeavoring to make money, and
treating it therefore as quasi-property for the purposes of their
business because they are both selling it as such, defendant's
conduct differs from the ordinary case of unfair competition
in trade principally in this -- that, instead of selling its own
goods as those of complainant, it substitutes
misappropriation in the place of misrepresentation, and
sells complainant's goods as its own.
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Besides the misappropriation, there are elements of imitation, of false
pretense, in defendant's practices. The device of rewriting
complainant's news articles, frequently resorted to, carries
its own comment. The habitual failure to give credit to
complainant for that which is taken is significant. Indeed, the
entire system of appropriating complainant's news and transmitting it
as a commercial product to defendant's clients and patrons amounts
to a false representation to them and to their newspaper
readers that the news transmitted is the result of defendant's
own investigation in the field. But these elements, although
accentuating the wrong, are not the essence of it. It is something more
than the advantage of celebrity of which complainant is being
deprived.
Sears Roebuck v. Stifel & Co.
Facts:
 Respondent in this case, Stiffel Company secured design and
mechanical patents on a pole lamp:
These proved to be a decided commercial success and was
soon put on the market. However, a substantially similar identical
lamp which sold more cheaply was sold by Sears subsequently. Thus,
Stiffel brought this action against Sears in the US DC for claiming
that Sears
1. copied the design and infringed on the patents of
Stiffel; and
2. caused confusion in the trade as to the source of the
lamps thereby engaging in unfair competition under
Illinois law.
The DC held that the Sears’ lamp was a substantially exact copy of
Stiffel’s and that the 2 lamps were much alike both in appearance and
function thus, confusion is likely and in fact, some confusion has
already occurred. On these findings, the DC held that Sears was guilty
of unfair competition. CA affirmed.
Issue:
 Whether or not there is unfair competition.
Ratio:
 There is no unfair competition. To promote progress of science
and useful arts, the constitution empowered the congress to enact the
first federal patent and copyright law and ever since that time, it has
fixed the condition upon which patents and copyrights shall be
granted.
The grant of a patent is a grant of statutory monopoly. These are
meant to encourage the inventor by rewarding him with the right to
exclude others from the use of his invention for a limited amount of
time. During that time, no one may make use, or sell the patented
product without the patentee’s authority.
While at the same time preserving free competition, obviously a state
could not extend the life of a patent beyond the expiration date or give
a patent on an article which lacked the level of intention required for
federal patents.
In the present case, the pole lamp sold by Stiffel has been
held to be not entitled to the protection of either a
mechanical or design patent. Being an unpatentable article, it is in
the public domain and may be made and sold by whoever chooses to
do so. Thus, Sears had every right to sell the same under the federal
patent laws. That Stiffel originated the pole lamp and made it popular
is immaterial. Sharing in the goodwill of an article unprotected
by patent or trademark is the exercise of a right possessed by
all -- and in the free exercise of which the consuming public
is deeply interested.
The mere inability of the public to tell the two identical products apart
is not enough to support an unfair competition claim. Because
of the federal patent laws, a state may not, when the article is
unpatented and uncopyrighted prohibit the copying of the article itself
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or award damages for such copying. Doubtless a State may, in
appropriate circumstances, require that goods, whether patented or
unpatented, be labeled, or that other precautionary steps be taken to
prevent customers from being misled as to the source, just as it may
protect businesses in the use of their trademarks, labels, or distinctive
dress in the packaging of goods so as to prevent others, by imitating
such markings, from misleading purchasers as to the source of the
goods.
Alhambra v. Mojica
Facts:
 Alhambra has been manufacturing cigars of a certain kind and form
for a long period of years and during that time has used upon said
cigars a paper ring or band of chocolate-brown color with
letters and lines upon it in gold (heretofore “ring”). Such ring has
become well known to the trade and was of great value in the sale of its
cigars. However, defendant Mojica likewise commenced to use a
band or ring very similar to that of Alhambra and it is upon
this use that the present action is founded.
As it appears on evidence, the rings of Mojica are of two different
colors but of the same shape and with substantially the same
markings and are about 1/5 inch wide and are, like
Alhambra’s divided into 3 parts. The cigars sold by Mojica with
the band described whether of brown or green are formed almost
exactly like the cigars sold by the plaintiff and with substantially the
same color and style of wrapper.
 In light of the foregoing, Alhambra filed a case for unfair competition
before the CFI. Said court declared that the cigars indeed constitute
unfair competition thereby prohibiting Mojca from using said bands or
rings forever.
Issue:
 Whether or not Mojica is guilty of unfair competition.
Ratio:
 It is clear that, the cigars having substantially the same
appearance and color, the same size, the same shape and the
same style and color of band, the deception is not only
possible but is very probable. Taken as a whole, the cigars
disarms and deceives the purchaser who is desirous of
purchasing cigars of Alhambra. They are so similar, packed as
they are in a box, that one would have to examine closely the reading
upon the rings in order to distinguish the difference.
Unfair competition consists in passing off or attempting to pass off
upon the public the goods or business of one person as and for the
goods or business of another. It consists essentially in the conduct of a
trade or business in such a manner that there is either an express or
implied representation to that effect. It may be stated broadly that
any conduct the end and probable effect of which is to
deceive the public or pass off the goods or business of one
person as and for that of another, constitutes actionable
unfair competition. It is a tort and a fraud. No one has a right to
dress up his goods or otherwise represent them in such a manner as to
deceive an intending purchaser and induce him to believe he is buying
the goods of another. Nothing less than conduct tending to pass
off one man's goods or business as that of another will
constitute unfair competition. Actual or probable deception
and confusion on the part of customers by reason of
defendant's practices must always appear. No one has a right to
avail himself of another's favorable reputation in order to sell his own
goods. A demand for goods created belongs to the advertiser and he
will be protected therein against unfair competition by another who
seeks in any way to take advantage of such advertisements to sell his
own goods.
In unfair competition, it is not necessary to show that any person has
been actually deceived by the defendant’s conduct and lead to
purchase his goods in the belief that they are the goods of the plaintiff.
It is sufficient to show that such deception will be the natural
and probable result of the acts of the defendant. Actual or
probable deception and confusion may be shown for if there is no
probability of deception, there is no unfair competition.
Purchasers may be deceived and misled into purchasing the goods of
one person under the belief that they are purchasing the goods of
another person whose goods they intended to buy although they do not
know who is the actual proprietor of the genuine goods. They are so
deceived when they have in mind to purchased goods coming from a
definite, although unknown, with which goods they are acquainted,
although they neither know nor care who is the actual proprietor of
such goods. the ultimate purchaser is the one in view and it is
sufficient if he is liable to be deceived.
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Unfair competition is always a question of fact and the ultimate
question to be determined is whether or not the name or mark used by
the defendant has previously come to indicate and designate the goods
of the plaintiff, to state it in another way, whether defendant as a
matter of fact, is, by his conduct, passing of the goods of the defendant
as plaintiff’s goods or his business as plaintiff’s business (ergo,
whether or not the public is likely to be deceived). However,
actual fraudulent intent is not needed where the necessary and
probable tendency of the defendant’s conduct is to deceive the public
and pass off his goods or business as and for that of another, especially
where the only preventive relief against continuance of the wrong is
sought or granted. Even if resemblance is accidental and not
intentional, plaintiff is entitled to protection against its injurious
results to his trade.
Here, as to the brown ring, there is clear unfair competition.
However the court held that the use of the green ring does not
constitute unfair competition since it is easily distinguishable form the
ring used by Alhambra.
MA Clarke v. Manila Candy Co.
Facts:
 MA Clarke (Clarke) is a corporation engaged in the manufacture of a
large line of confectionary products and since the year 1905, Clarke
has used its registered trademark rooster to designate his
various candy products and that no other manufacturer or
dealer of candy in the Philippines has used such
representation in connection with the manufacture and sale
of candy in any form until Manila Candy Co. (MCC).
Besides the use, display and advertising of the mark herein plaintiff
has used the same for public festivals held in Manila as paper mache
roosters of large size, carrying its candies. As such, the mark has been
known and are known to the trade in these Islands, both
wholesale and retail and to the consumers of cany as rooster
or Manoc brand of Clarke.
 On the other hand, MCC herein, aware of the usage of the mark of
Clarke, shortly after its incorporation, began using a similar mark
in connection with the sale of its candies.
Notwithstanding a criminal prosecution, MCC continued to use the
word Manoc as a mark and alleges that it is a generic term for
chicken and that because of the limited number of adjectives
it can use, any representation of such animal would lead to
such mark. Allegedly, MCC also sells its goods with the general
appearance of the goods of the Clarke herein in such a way that it is
likely to influence the purchasers to believe that it is that of Clarke’s.
 Clarke filed a case against MCC praying for the issuance of a TRO and
that judgment be rendered enjoining them from using the said mark or
any other imitation thereof perpetually.
In its answer however, defendant herein alleges that the exact
nature of the action is impossible to define as the complaint
of the plaintiff embraces both causes of action, although they
(infringement and unfair competition) are essentially
different and distinct. MCC herein alleges that the fact that Clarke
itself is wholly unaboe to determine the nature of the case as one for
infringement or unfair competition demonstrates quite clearly that it is
neither.
Issue:
 Whether this is a case for infringement or unfair competition.
 Whether or not there is unfair competition.
Ratio:
 It is a case of unfair competition. Cases may well arise wherein
the conduct complained of constitutes a wrong under neither theory,
or wherein the complainant may be satisfied that he can establish his
right to relief under one or the other theory, though he is in doubt as to
which theory will prove acceptable to the court, and in such cases the
plaintiff should not be forced to an election of either theory in the
introduction of evidence in support of the prayer of his complaint. He
may state in his complaint as many distinct causes of action as he may
deem proper, the only limitation therein is if the complaint states more
than one cause of action, each distinct cause of action must be set forth
in a separate paragraph containing all the facts constituting the
particular cause of action.
The infringement of a trade-mark is, in truth, a form of
unfair competition. The law, however, allows relief from the
wrong done by a trade-mark infringement under
circumstances and upon proof which would not entitle the
plaintiff to relief upon the theory of unfair competition
where it does not appear that there was a technical
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infringement of a trade-mark. It is true that under our statute, the
grant of relief under one precludes the grant of relief under the other,
but this does not mean that the plaintiff in cases of this kind
may not allege in support if his prayer of relief facts which
he believes will establish his claim that there has been either
an infringement or unfair competition and thus secure the
relief prayed for, whichever theory the court of opinion is
sustained by the proof adduced at the trial.
 There is unfair competition. In this case, an examination of the
exhibits presented before the courts leaves no room for doubt that the
dominant and striking pictorial feature of each and all of
them, is a single rooster standing in an attitude of challenge.
No reason has been suggested for the use of this particular design with
its predominant display of two roosters as the trade-mark of the
defendant corporation other than that alleged by the plaintiff; that is to
say, that the new manufacturer, well knowing that the plaintiff had
used a rooster as his trade-mark, hoped to secure an unfair advantage
by misleading the public, and inducing it to believe that its candies
bearing a representation of two roosters were made in the plaintiff's
factory, which had always marked its goods with one or more pictures
of a single rooster, and at the same time had made extensive use of this
design in connection with its advertising campaigns.
Why of all the birds in the air, and all the fishes in the sea, and all the
animals in the face of the earth, defendants had to select 2 roosters as
its trademark despite being aware of the fact that such animal has
already been used by Clarke. There is nothing in the picture of one or
more roosters which in itself is descriptive of the goods sold by the
plaintiff or by the defendant corporation, or suggestive of the quality of
these goods. A cat, a dog, a carabao, a shark or an eagle stamped upon
the container in which candies are sold would serve as well as a rooster
for purposes of identification as the product of defendant's factory.
Why did defendant select two roosters as its trade-mark? The fact that
defendant used two roosters, and that these rooster, unlike the rooster
in plaintiff's trade-mark, are highly colored, and the further fact that
the words "Manila Candy Co., Ltd." are used in connection with
defendant's trade-mark, are wholly insufficient to relieve the design
used by the defendant of the vice of an unfair and misleading use of the
predominant idea set forth in plaintiff's unregistered trade-mark, in
such manner as to be likely to cause confusion in the minds of the
ordinary purchasers as to the origin of the goods.
Certainly, under our statute, all difficulty can and should be
avoided by limiting relief prayed for on the ground of trade-
mark infringement to cases wherein there is an exact or at
least a colorable imitation of the original trade-mark, and in
other cases applying the provisions of section 7 of the statute
(Act No. 666) which defines the offense of unfair
competition. That section expressly provides that unfair competition
exists when one selling his goods "gives them the general appearance
of goofs of another manufacturer or dealer, either 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, and who clothes the goods with such appearance for the
purpose of deceiving the public and defrauding another of his
legitimate trade," and it is further provided that "this section applied
in cases where the deceitful appearance of the goods, misleading as to
origin or ownership, is effected not by means of technical trade-marks,
emblems, signs, or devices, but by the general appearance of the
package containing the goods, or by the devices or words thereon, even
though such packages, devices, or words are not by law capable of
appropriation as trade-marks.
Under the precise terms of this statute, the use under the
conditions therein specified of devices or words, which
would be likely to cause confusion as to the origin of the
goods, although they may not amount to a colorable
imitation of the form and arrangement of a trade-mark,
constitutes the offense of unfair competition.
Dy Buncio v. Tan Tiao Bok
Facts:
 Dy Buncio has been engaged in Manila as a merchant in importing
Formosan Tea and has during that time been distributing and
selling the same in the Philippine market in original packages
containing about 5 ounces. These were enveloped in a wrapper with
the following features:
1. With an image of a Chinese fruit shaped like a pear;
2. With embellished border of a conventional tracery;
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3. In the center of the main body of the design and the superior
trunk are spaces containing Chinese characters representing
the Chinese name of the exporter in Formosa.
4. On the right side of the package indicates in English “Formosa
Tea sold by Guan Leong Daitotei Formosa”
It may be stated herein that the other persons in the
Philippines besides Dy Buncio have in the past, and are now
engaged in the importation of tea from Formosa and it is
admitted herein that source comes to this market in
packages with the same form of wrapper.
 On the other hand, Tan Tiao Bok (Tiao Bok), a native from Formosa
formerly employed by Dy Bunsio began to import tea from Formosa o
n his own account with a view to selling it in the Philippines. For this,
he adopted a mark which he duly registered with the Bureau
of Commerce and Industry. In his application he stated that his
mark contains the following characteristics:
1. Contains 2 birds placed one in front of the other with tails
going up and places in such a position as to form a lyre.
2. With a flowerport with flowers in it
3. 2 chinese marks corresponding to the phrase, trademark.
4. On the right side, it was indicated that the product was
“Formosa Tea sold by Ngo Teck Co. Daitotei Formosa”.
 Dy Buncio filed a case for unfair competition against Tiao Bok.
Issue:
 Whether or not there is unfair competition.
Ratio:
 There is no unfair competition since objectionable
simulation is not made out. Some resemblance there undoubtedly
is, but in the court’s opinion, it is not such as would naturally lead
intending purchasers to believe that the goods offered are the same as
that sold by the plaintiffs. The only individual who would be likely to
take notice of these resemblances, on having his attention directed to
the packages, is the one who is unfamiliar with either.
In this case, the form of package used by both parties is the same as
that adopted by all merchants in the tea industry in the country and it
is a matter of common observation that the articles supplying the
simplest human needs are marketed in conventional containers
of the appropriate size and of a design made almost uniform
in the case of each article by immemorial custom. No one
can acquire any exclusive right in these standardized forms
and styles.
As to the marks used in the package, the general result is so different
that the court considers it unlikely that a person whose eye is
accustomed to the lines of the plaintiff’s design would for a
moment mistake the defendants mark for it. In whatever aspect
the rival marks be viewed, we are of the opinion that the resemblance
between the two designs is not sufficiently marked to afford just cause
for complaint on the part of the plaintiff; and we do not think that the
case is altered by the circumstance that the reading matter in both is in
the usual red Chinese characters, while the body of both designs is in
green, though of differing shades.
In order that there may be deception of the buying in the sense
necessary to constitute unfair competition, it is necessary to
suppose a public ACCUSTOMED TO BUY AND THEREFOR
TO SOME EXTENT FAMILIAR WITH THE GOODS IN
QUESTION. The test here is to be found in the likelihood of
deception of 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
possibility of the deception, of the person who knows nothing about
the design which has been counterfeited, and who must be indifferent
as between that and the other. We must look at the ORDINARY
INTELLIGENT BUYER and in this case, there is no such probability
or likelihood of confusion.
Ang Si Heng v. Wellington
Facts:
 Wellington is engaged in the business of manufacturing shirts, pants,
drawers and other articles of clothing for men and women with a
trademark registration “WELLINGTON”. It does not appear however,
that the mark herein was renewed after 1938 nor their trade name
after 1946.
On the other hand, Benjamin Chua herein applied for the registration
of a business name “WELLINGTON DEPARTMENT STORE” on 1946
which was approved by the Bureau of Commerce. Likewise, it does not
appear that his application has been renewed and neither does it
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appears that the business name WELLINGTON COMPANY has also
been renewed.
 Wellington filed a case for unfair competition alleging that the use of
the words “WELLINGTON DEPARTMENT STORE’” as a
business name and as a corporate name by Benjamin
deceives the public into buying Benjamin’s goods under the
mistaken belief that the names are the plaintff’s or have the
similar source.
In his defense, Benjamin states that plaintiff are engaged in different
businesses since the he is engaged in the business of selling shoes,
hats, toys perfumes, bags, apparels and the like (different from those
of Wellington’s).
 The lower court dismissed the complaint and held that the term
Wellington is either a geographical name. Even assuming that it is a
surname, it cannot also be validly registered as a tradename.
Issue:
 Whether or not there is unfair competition.
Ratio:
 There is no unfair competition. While there is a similarity in this
case, there is no confusion or deception that can arise form the
similarity because the defendant is a “department store” while the
former does not purport to be so. The name used by the defendant
indicates not the manufactured articles or any similar
merchandise but a DEPARTMENT STORE. The department
store herein does not even sell any shirt or clothing wear.
Admittedly though, it is not necessary that the articles of the paties be
exactly similar in order for there to be unfair competition. It is
sufficient that the articles fall under a general category.
It might be true that, inasmuch as appellees' department store deals on
shirts and other articles of wear while appellants produce the same
articles, some competition would arise between them. It is not,
however, competition that the law seeks to prevent, but unfair
competition, wherein a newcomer in business tries to grab or steal
away the reputation or goodwill of the business of another.
Shell v. Insular Petroleum
Facts:
 Shell is a corporation engaged in the sale of petroleum products
including lubricating oil contained in packages bearing its trademark,
labeled or stenciled thereon. On the other hand, Insular, a limited
partnership engaged in collecting used lubricant oil, refined and
marketed to the public using its miscellaneous containers which,
as described, is generally those that they have on hand with marks on
them belonging to the US army or others belonging to Caltex or the
Stanvac, or Shell. However, it was stated that before filling the empty
drums/containers, the marks are obliterated. In one transaction
however (with one Conrado Uichangco), the product was
sold in a container bearing the mark SHELL as stenciled
without being erased.
For the said transaction, Shell instituted a case in the CFI alleging
unfair competition and a criminal case under the Revised Penal
Code. In the civil case, it was alleged that:
1. In not erasing the marks, Insular intended to mislead the
buying public to the prejudice of Shell and the general public;
2. That it also attempted to persuade Shell dealers to purchase its
low-grade oil and pass the same to the public as Shell oil by
reason of which damages were suffered.
CFI rendered a decision ordering Insular to pay Shell the damages. CA
reversed on the ground that there is no actual or probable deception
and confusion caused on the part of the general public since there was
only a single transaction in this case. They did not pass off or attempt
to pass off upon the public its goods as the goods of another. There is
evidence showing that the use of the defendant of the drum or
container with the Shell brand stenciled thereon was with the
knowledge and consent of Uichangco. There is also the categorical
testimony of Uichangco that defendant's agent did not make any
representation that said agent was selling any oil other than Insoil
motor oil. The sales invoice states that Insoil Oil was sold.
Issue:
 Whether or not there is unfair competition.
Ratio:
 There is no unfair competition. Not just because a manufacturer
used a container still bearing the competitor’s marking in the sale of
the product can there be a conclusion that the buying public has been
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misled or will be misled and therefore, unfair competition is born. The
single transaction at bar will not render the act of the
defendant an unfair competition in the same way that the
appearance of one swallow does not make a season,
summer.
In this case, in all transactions except the present one , the marks
were erased or obliterated and the drum in question did not
even reach the buying public. Uichangco testified that Insular did
not all make any representation that Insular was selling any oil other
than Insoil motor oil, a fact which finds corroboration in the receipt
issued for the sale of the drum. Uichangco was apprised beforehand
that it would sell Insoil oil in a Shell drum. There was no evidence that
defendant or its agent attempted to persuade Uichangco or any Shell
dealer, for that matter, to purchase its low-grade oil and to pass the
same to the public as Shell oil.
Assuming for purposes of argument that the presence of the low-grade
oil in the market of Insular contributed to the decrease of the sale of
Shell, such does not make Insular liable for unfair
competition. There is no prohibition for Insular to sell its goods. It
should not be blamed if some of the dealers buy their oil as long as
they do not deceive the said dealers.
Mcdo v. LC Big Mak
Facts:
 Mcdo is a corporation owns a global chain of fast food restaurants with
a family of marks including “BIC MAC” for its sandwiches. On the
other hand, McGeorge Food Industries (McGeorge) is a domestic
corporation which is a franchisee of Mcdo Philippines.
The defendant in this case, LC Big Mak is a domestic corporation also
in the fastfood business which applied for the registration of “BIG
MAK”. This was opposed by Mcdo but receiving no reply therefrom,
Mcdo filed a case with the RTC for trademark infringement
and unfair competition.
In their answer, respondents herein claimed that McDo does not have
an exclusive right to the mark “BIC MAC” or to any other similar mark
since there is no colorable imitation (yeah right!). Furthermore, they
assert that they did not fraudulently pass off their sandwiches as those
of McDo’s burgers.
 The trial court ruled that there is trademark infringement and unfair
competition on the ground that the choice of mark by defendant herein
is not merely for sentimental reasons but was clearly to take advantage
of the reputation, popularity and the established goodwill of McDo.
On appeal, the CA reversed the judgment on the ground that there is
no colorable imitation as it is not sufficient that a similarity exists in
both names but more importantly, the overall presentation or in their
essential, substantive and distinctive parts. After a comparison of the
marks, the CA found that no confusion would take place or that the
ordinary purchaser would be misled by it. It found that McDo’s
product is a double decker sandwich sold in a Styrofoam box with
McDo’s logo and trademark and to order such burger, one would need
to go into a McDo chain. To buy one, one needs to look for a
Mcdonald’s chain and enter it before he can find a burger
which carry such mark. On the other hand, BIG MAK sell their
goods through snack vans.
Issue:
 Whether or not the mark “BIC MAC” is registerable.
 Whether or not there is unfair competition.
Ratio:
 The mark herein is distinctive and is not barred from
registration contrary to the position of LC BIG MAK. The
mark should be treated in its entirety and not dissected.
 There is unfair competition. There are 2 types of confusion that
could arise form the use of similar or colorable imitation marks:
1. Confusion of goods (product confusion) – where the ordinary
prudent purchaser would be induced to buy the product in the
belief that he was purchasing the other.
2. Confusion of business (source of origin) – where the purchaser
would buy the product assuming it to originate with the
plaintiff and the public would then be deceived either into that
belief or into the belief that there is some connection between
the parties (which does not exist).
Whether a hamburger is single, double or triple-decker, and whether
wrapped in plastic or styrofoam, it remains the same hamburger food
product. Even respondents' use of the "Big Mak" mark on non-
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hamburger food products cannot excuse their infringement of
petitioners' registered mark, otherwise registered marks will lose their
protection under the law. The registered trademark owner may use his
mark on the same or similar products, in different segments of the
market, and at different price levels depending on variations of the
products for specific segments of the market. The Court has recognized
that the registered trademark owner enjoys protection in product and
market areas that are the normal potential expansion of his
business.
Clearly in this case, there is a likelihood of confusion since
respondents have adopted in BIG MAK not only the
dominant but also all the features of MIC MAC. Applied to the
same food product, the marks will likely result in confusion in the
public mind. In this case, the court took into consideration the aural
and visual effect of the marks. Indeed, a person cannot
distinguish "Big Mac" from "Big Mak" by their sound. When one hears
a "Big Mac" or "Big Mak" hamburger advertisement over the radio, one
would not know whether the "Mac" or "Mak" ends with a "c" or a "k."
The essential elements of an action for unfair competition
are:
1. Confusing similarity in the general appearance of the goods
(which may result not only from the similarity in marks but
also from other external factors in the packaging or
presentation).
2. Intent to deceive the public and defraud a competitor (which
may be inferred from the similarity of the goods)
Unfair competition is broader than trademark infringement and
includes passing off goods with or without trademark infringement.
Trademark infringement is a form of unfair competition. Trademark
infringement constitutes unfair competition when there is not merely
likelihood of confusion, but also actual or probable deception on the
public because of the general appearance of the goods. There can be
trademark infringement without unfair competition as when the
infringer discloses on the labels containing the mark that he
manufactures the goods, thus preventing the public from being
deceived that the goods originate from the trademark owner.
In this case, the dissimilarities are so minor compared to the
similarities in the marks. If respondents sold egg sandwiches
only instead of hamburger sandwiches, their use of the "Big Mak"
mark would not give their goods the general appearance of petitioners'
"Big Mac" hamburgers. In such case, there is only trademark
infringement but no unfair competition. However, since respondents
chose to apply the "Big Mak" mark on hamburgers, just like
petitioner's use of the "Big Mac" mark on hamburgers, respondents
have obviously clothed their goods with the general appearance of
petitioners' goods.
Coca-Cola Bottlers v. Quintin Gomez
Facts:
 Coca-Cola (Coke) applied for a search warrant against Pepsi for
hoarding Coke empty bottles in their yard which is an act allegedly
penalized as unfair competition under the IP Code. Said warrant was
issued by the MTC and by virtue of which, they were able to seize a
number of coke bottles.
In their counter-affidavits, Galicia and Gomez claimed that the bottles
came from various Pepsi retailers and wholesalers who included them
in their return to make up for shortages of empty Pepsi bottles; they
had no way of ascertaining beforehand the return of empty Coke
bottles as they simply received what had been delivered; the presence
of the bottles in their yard was not intentional nor deliberate.
On the basis of the foregoing, Coke filed a case against Quntin Gomez
(as general manager of Pepsi herein) for violation of the provision
against unfair competition under the IP Code.
 The MTC rendered a decision in favor of Code. On MR, the MTC
denied and thereafter, upon reaching the RTC for determination of
whether or not there is unfair competition, the latter rendered a
decision declaring that:
1. The warrant issued was void for lack of probable cause
2. There is no unfair competition.
Issue:
 Whether or not there is probable cause for the issuance of the warrant.
 Whether or not there is unfair competition.
Ratio:
 There is no probable cause for 168.3 of the IP Code (Although
the court held that the situation at present is in fact covered by another
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law, it is not that law which was cited by applicants in their application
for warrant, it was the IP Code but as you will find out later, the act of
hoarding is not found to be covered by the IP Code). A search warrant
may only be issued if there is probable cause in connection with a
specific offense alleged in the application based on the personal
knowledge of the applicant and his or her witnesses. Procedurally, the
determination of probable cause is a personal task of the judge before
whom the application for search warrant is filed, as he has to examine
under oath or affirmation the applicant and his or her witnesses in the
form of "searching questions and answers" in writing and under oath.
Under this context, there must first be a determination of whether the
act charged – the alleged hoarding of empty Coke bottles –
constitutes an offense under the IP Code.
Coke is of the position that the acts under the IP Code under unfair
competition are not limited and thus, the meaning of the phrase
expands the include other acts contrary to good faith of a nature
calculated to discredit the goods, business or services of another.
Allegedly, the hoarding is one such act. But the court does not give
merit to this position. The law does not thereby cover every
unfair act committed in the course of business; it covers only
acts characterized by "deception or any other means
contrary to good faith" in the passing off of goods and
services as those of another who has established goodwill in
relation with these goods or services, or any other act
calculated to produce the same result.
registered mark.
168.2 Refers to the general definition of unfair competition.
168.3 Refers to specific instances of unfair competition
168.1 Referring to sale of goods given the appearance of the
goods of another
168.2 To the inducement of belief that his or her goods or
services are that of another who has earned goodwill
168.3 Catch all phrase whose coverage the parties not
dispute.
As applied to this case, HOARDING does not fall within the coverage
of the Code:
1. It is not an intellectual property (patent, trademark,
tradename or service mark)
2. Nor are they alleged to be fraudulently passing off their
products or services as those of petitioner.
3. They are also not alleged to be undertaking any representation
or misrepresentation that would confuse or tend to confuse
the goods of petitioner with those of respondents.

From jurisprudence, unfair competition has been defined as the

passing off (or palming off) or attempting to pass off upon the public
the goods or business of one person as the goods or business of
another with the end and probable effect of deceiving the public. It
formulated the "true test" of unfair competition: whether the acts of
defendant are such as are calculated to deceive the ordinary buyer
making his purchases under the ordinary conditions which prevail in
the particular trade to which the controversy relates.

The court holds that hoarding is not one of the acts within the
contemplation of the IP Code. As basis for interpretative analysis:

168.1 Speaks of a person who has earned a goodwill with

respect to the goods and services and who is entitled
to protection under the Code with or without a

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Superior Commercial v. Kunnan Enterprises
Facts:
 Superior filed a complaint for trademark infringement and unfair
competition with preliminary injunction against Kunnan and Sports
Concept with the RTC alleging that it was the first owner of the marks
KENNEX, KENNEX & DEVICE, PRO KENNEX and PRO-KENNEX
and that Kunnan intends to acquire ownership of the said
marks registered by Superior.
In its defense, Kunnan alleged that Superior is a mere distributor of
the marks and only fraudulently registered the marks in its name. It
alleged that it was already manufacturing and selling sportswear and
sports equipment since 1972 and that it was only in 1982, after the
expiration of its initial distributorship agreement with
another company, when Kunnan appointed Superior as the
exclusive distributor in the Philippines. When the
distributorship agreement with Superior ended, Kunnan appointed
Sports Concept as its new distributor.
 RTC ruled in favor of Superior holding Kunnan liable for infringement
on the basis that Superior was rightfully entitled to the mark as the
user and owner thereof considering that “whereasclause of the
distributorship agreement” which categorically stated that Kunnan
intends to acquire ownership of the mark registered by
Superior in the Philippines. As such, Kunnan’s express
recognition of Superior’s ownership of the Keenex marks is present.
On appeal, the CA rendered a decision reversing the decision of the
RTC dismissing the claim of Superior on the ground that Superior
failed to establish by preponderance of evidence its claim of
ownership over the trademarks. It found the “whereas clauses” of
the agreement insufficient to support its claim of ownership. It further
stressed that SUPERIOR’s possession of the aforementioned
Certificates of Principal Registration does not conclusively establish its
ownership of the disputed trademarks as dominion over trademarks is
not acquired by the fact of registration alone; at best, registration
merely raises a presumption of ownership that can be rebutted by
contrary evidence. In contrast with the failure of SUPERIOR’s
evidence, the CA found that KUNNAN presented sufficient evidence to
rebut SUPERIOR’s presumption of ownership over the trademarks.
KUNNAN established that SUPERIOR, far from being the rightful
owner of the disputed trademarks, was merely KUNNAN’s exclusive
distributor based on the following:
1. The distributor agreement positively confirmed that Superior
sought to be the Kunnan’s exclusive distributor.
2. Superior made the express undertaking in the assignment
agreement to acknowledge Kunnan is still the real
and truthful owner of the PRO KENNEX MARK and it
shall agree that it will not use the right of the abovementioned
marks to do anything which is unfafovable or harmful to
Kunnan.
3. SUPERIOR’s Letter dated November 12, 1986 addressed to
Brig. Gen. Jose Almonte, identifying itself as the "sole and
exclusive licensee and distributor in the Philippines of all its
KENNEX and PRO-KENNEX products." Attached to the letter
was an agreement with KUNNAN, identifying the latter as the
"foreign manufacturer of all KENNEX products." The CA
concluded that in this letter, SUPERIOR acknowledged its
status as a distributor in its dealings with KUNNAN, and even
in its transactions with third persons.
Issue:
 Whether or not the infringement case filed by Superior can still
prosper.
 Whether or not there is unfair competition.
Ratio:
 Kunnan is the rightful owner of the marks in question hence,
the infringement case will not prosper. IN view of the
cancellation of the marks of Superior under its name intervening the
case, the infringement aspect of the case has been rendered moot and
academic since it is a requirement that there be a registered mark in
cases of infringement. Even assuming that SUPERIOR’s case for
trademark infringement had not been rendered moot and academic,
there can be no infringement committed by KUNNAN who was
adjudged with finality to be the rightful owner of the disputed
trademarks in the Registration Cancellation Case. Even prior to the
cancellation of the registration of the disputed trademarks, SUPERIOR
– as a mere distributor and not the owner – cannot assert any
protection from trademark infringement as it had no right in the first
place to the registration of the disputed trademarks.
As a mere distributor, petitioner Superior undoubtedly had
no right to register the questioned mark in its name. Well-
entrenched in our jurisdiction is the rule that the right to
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register a trademark should be based on ownership. When
the applicant is not the owner of the trademark being
applied for, he has no right to apply for the registration of
the same.
Moreover, the case is already barred by res judicata in view of the
cancellation case already decided upon by the IPO and the CA. Because
the Registration Cancellation Case and the present case involve the
same parties, litigating with respect to and disputing the same
trademarks, we are bound to examine how one case would affect the
other. In the present case, even if the causes of action of the
Registration Cancellation Case (the cancellation of trademark
registration) differs from that of the present case (the improper or
unauthorized use of trademarks), the final judgment in the
Registration Cancellation Case is nevertheless conclusive on the
particular facts and issues that are determinative of the present case.
 There is no unfair competition. From jurisprudence, unfair
competition has been defined as the passing off (or palming off) or
attempting to pass off upon the public of the goods or business of one
person as the goods or business of another with the end and probable
effect of deceiving the public. The essential elements of unfair
competition are:
1. confusing similarity in the general appearance of the goods;
and
2. intent to deceive the public and defraud a competitor.
Jurisprudence also formulated the following "true test" of unfair
competition: whether the acts of the defendant have the intent of
deceiving or are calculated to deceive the ordinary buyer making his
purchases under the ordinary conditions of the particular trade to
which the controversy relates. One of the essential requisites in an
action to restrain unfair competition is proof of fraud; the intent to
deceive, actual or probable must be shown before the right to recover
can exist.
In the present case, no evidence exists showing that
KUNNAN ever attempted to pass off the goods it sold (i.e.
sportswear, sporting goods and equipment) as those of
SUPERIOR. In addition, there is no evidence of bad faith or
fraud imputable to KUNNAN in using the disputed
trademarks. Specifically, SUPERIOR failed to adduce any
evidence to show that KUNNAN by the above-cited acts
intended to deceive the public as to the identity of the goods
sold or of the manufacturer of the goods sold.
In this case, there is no issue of passing off the goods since the only
issue is the ownership thereof. Furthermore, the notice of Kunnan
prevents the public from being deceived that the goods originated from
Superior since the notice clearly indicated that Kunnan is the
manufacturer of the goods bearing the marks. In its place, KUNNAN
has appointed SPORTS CONCEPT AND DISTRIBUTORS, INC. as its
exclusive Philippine distributor of sportswear and sporting goods and
equipment bearing the trademarks KENNEX and PRO KENNEX. The
public is advised to buy sporting goods and equipment bearing these
trademarks only from SPORTS CONCEPT AND DISTRIBUTORS, INC.
to ensure that the products they are buying are manufactured by
Kunnan Enterprises Ltd.
Federal Mogul Bower Bearings v. Azoff
Facts:
 Federam Mogul Bower Bearing (FMBB) is a corporation in Michigan
engaged in the business of manufacturing engine bearings and
connecting rods for internal combustion engines which have been sold
and distributed in packages and containers which are distinguished by
features, the symbol, printing, background, general arrangements,
form and coloration of the company. Thereby, FMBB has acquired and
enjoys a large and valuable reputation of good will with the
trade and with the public both domestic and foreign for such
products.
On the other hand, Azoff, et. al (Azoff) herein are copartners alleged to
engage in transporting, distributing, marketing and selling engine
bearings which are so nearly resembling that of FBMM’s as
to falsely represent the engine bearings and connecting rods
as being the goods of Azoff. Likewise, the complaint filed against
Azoff also alleged that there is a likelihood of confusion in trade
and commerce, particularly with foreign commerce.
 The trial court held that any attempt to characterize the complaint as
charging false description (under the Lanham Act – which makes a
person liable for use of a false designation or origin or any false
description or representation, including symbols to false represent the
same and shall with knowledge of such falsity procure the same to be
transported or used in commerce) was without merit since the
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“origin” phrase in the Lanham Act allegedly meant a
geographical sense and not “origin by manufacturer”.
Issue:
 Whether or not the charge in the complaint constitutes a “false
description” case under the Lanham Act.
Ratio:
 Yes. It is a false description case. The charge which states that
Azoff:
1. sold connecting rods in packages or containers which imitate
and so nearly resemble the packages of FMBB as to falsely
represent them to be their goods;
2. deliberate adoption of the said packages and containers with
an intent to deceive the trade and public into confusing the
bearings;
constitutes false description.
Furthermore, the term “origin” does not only refer to geographical
origin but also to origin of source or manufacture.
The Lanham Act was passed with the intent that the primary purpose
of the Act was to eliminate deceitful practices in interstate
commerce involving the misuse of trademarks but along with
this it sought to eliminate other forms of misrepresentations
which are of the same general character even though they do
not involve any use of what can technically be called as a
trademark.
The language of the law in this case is broad enough to include
practices of this latter class. But the section should be construed
to be including only such false descriptions or representations as are of
substantially the same economic nature as those which
involve infringement or other improper use of trademarks.
It should not be interpreted so as to bring within its scope any kind of
undesirable business practice which involves deception, when such
practices are outside the field of the trademarks laws.
L’Aiglon Apparel v. Lana Lobell, Inc.
Facts:
 Plaintiff L’Aiglon Apparel alleged in a complaint that it alone created
and sold to retail trade throughout the country a certain
distinctively styled dress. To advertise said dress, it published
pictures in leading newspapers and in some 2 million individual
mailing pieces distributed through retailers. In this way, the picture
and price of this dress became associated in the minds of the readers
and identified as plaintiff’s $17.95 dress.
At about the same time, the complaint alleged that the defendant Lana
Lobell (Lana) was offering for sale through mail order and otherwise
in interstate commerce a dress which in fact was much inferior
to plaintiff’s in quality and notably different in appearance.
In this connection, it published under its name in a magazine of
national circulation a display advertisement worded and designed to
promote the mail order sale of its dress at a price of $6.95, but
showing as the most prominent feature of the advertisement
was an actual photographic reproduction of the plaintiff’s
dress, thus fraudulently represented as the article defendant
was selling for a lower price. Plaintiff alleges that as a result of
this misrepresentation, some trade was diverted from plaintiff to
defendant and caused other trade to be lost by plaintiff as a result of
the mistaken impression.
Thus, the complaint herein is trying to make out a case of a false
representation in the description of goods sold in commerce
as prohibited under Section 43(a) of the Lanham Act.
Issue:
 Whether or not the complaint herein falls under Section 43(a) of the
Lanham Act.
 Whether or not the plaintiff can recover for the kind of conduct here
charged.
 Whether or not Section 44 of the Lanham Act establishes a federal law
of unfair competition in commerce.
Ratio:
 Yes. The alleged damage as a result of the defendant’s
misrepresentation may well be demonstrable within the normal
requirements of legal proof and in such way as to entitle plaintiff to
relief authorized by the statute.
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 There is no inadequacy herein in plaintiff’s statement of
such an injury as Section 43(a) explicitly makes the proper
subject of redress. Before 1946, it is already established as a
doctrine that misrepresentations about the goods were actionable only
if they had led or were likely to lead customers through confusion of
defendant’s and plaintiff’s goods, to buy the former under the
misapprehension that they were the latter. “Palming Off” was said
to be essential to any recovery and the view that has been
expressed judicially that some such limitation is to be read
in Section 43(a) of the Lanham Act.
Congress has defined a statutory civil wrong of a false representation
of goods in commerce and has been given a broad class of suitors
injured or likely to be injured by such wrong the right to relief in the
federal courts. This statutory tort is defined in language which
differentiates it in some particulars from similar wrongs which have
developed and have become defined in the judge made law of unfair
competition. Perhaps this bears a close resemblance to the already
noted tort of false advertising to the detriment of a competitor. Here
is a provision of a federal statute which, with clarity and
precision adequate for judicial administration, creates and
defines rights and duties and provides for their vindication
in the federal courts.
No limitation in Section 43(a) and none can be properly imposed
which would make the present complaint an insufficient statement of a
cause of action under that section. Thus, the dismissal of the complaint
was erroneous.
 The court agrees with the district court and holds that there
is no intent to being all unfair competition in commerce
within the federal jurisdiction . Before anything, it is to be noted
that before the Lanham Act, federal courts only had authority to decide
claims of unfair competition if federal jurisdiction was supplied by
diversity of citizenship or if the unfair competition claim was pendent
to a substantial and related federal claim. However, since the
passage of the Lanham Act, there are two lines of authority
that have developed regarding federal jurisdiction over
ordinary claims of unfair competition, apart from wrongs in
Section 43(a).
Two views as to the jurisdiction of the federal courts:
1. Second Circuit View – diversity and pendent jurisdiction is the
only basis of federal cognizance of such claims.
It is only a design to give US citizens reciprocal rights against
foreign nationals where foreign nationals compete unfairly
with them. It does not aim to create a federal law of
unfair competition available to US citizens one
against the other nor does it grant federal courts any
new authority to hear such controversies between
citizens.
In short, federal rights conferred in Section 44, obviously
excludes the ordinary domestic controversy such as we have
here.
2. Ninth Circuit View – the statute gives federal courts
jurisdiction to hear ALL unfair competition claims regardless
of diversity or pendent jurisdiction so long as unfair
competition affects commerce.
Section 44 of the Act creates a substantive federal law of unfair
competition with remedies available between US citizens
wherever there is present the requisite involvement
of interstate commerce.
Congress declared all acts of unfair competition to be
unlawful, revealing an unwillingness to give federal courts
jurisdiction of unfair competition claims to the full extent of
its power to regulate commerce. Instead, the intent of congress
herein was to implement international agreements which were not self
executing and which varied in their coverage practices in the field of
unfair competition such that when you register your trademark in the
country, you will get this protection.
Dastar Corporation v. 20th Century Fox Film Corporation
Doctrine: “Origin of goods” in the Lanham Act, in light of the copyright and
patent laws, refers to the producer of the tangible goods that are offered for
sale, and not to the author of any idea, concept, or communication embodied
in those goods.
Facts:
 In 1948, Doubleday published a book on the Crusade in Europe and
registered it with the Copyright Office in 1948. Subsequently, it
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granted an exclusive television rights to an affiliate
respondent, 20th Century Fox (Fox) which produced a TV
series entitled “Crusade in Europe” based on the said book.
Doubleday renewed the copyright to its book. However, Fox did not
renew the copyright on the TV series which expired in 1977, leaving
the TV series in the public domain. Thereafter, however, Fox
reacquired the TV rights in the book including the exclusive
right to distribute the same on video and to sublicense
others to do so. (SFM, New Line)
 Enter petitioner Dastar herein who decided to expand its product line
from music compact discs to videos. To make his business expand, he
purchased 8 beta cam tapes of the original version of the
Crusade TV series which is in the public domain, copied
them and then edited the series. The edited series contained:
1. New opening sequence;
2. New closing for those of the Crusade TV series
3. Credits page
4. Inserted new-title sequence and
5. Narrated chapter introductions
6. Advertised it as produced and distributed by Entertainment
Distributing (owned by Dastar)
7. No reference of Fox
In sum, he created a new packaging for its Campaign series (which
included the Crusade series) and a new title thereto.
 Thus, Fox, SFM and New Line brought this action alleging that the sale
of the videos infringes on the copyright of the book and the
exclusive TV series rights in the book. It further claims that
Dastar’s action constituted “reverse passing off” (passing occurs
when a producer misrepresents his own goods or services as someone
else’s; reverse passing off is the opposite where the producer
misrepresents someone else’s goods or services as his own).
The District Court rendered judgment and awarded Dastar’s profits to
respondents and doubled them. On appeal, the CA affirmed the case
on the ground that Dastar substantially copied the entire series
created by 20th Century Fox thereby committing a bodily
appropriation of the Fox series which constitutes reverse
passing off.
Issue:
 Whether or not the Lanham Act prevents the unaccredited copying of a
work.
Ratio:
 It does not prevent the unaccredited copying of a work. The
Lanham Act creates a federal remedy against a person who used in
commerce either a “false designation of origin, or any false description
or representation” in connection with any goods or services. “Origin”
in this case does not merely refer to geographical origin but
also to source or manufacturer.
However, in this case, Dastars acts were that it took a CREATIVE
WORK IN THE PUBLIC DOMAIN AND COPIED IT and made
modifications thereto to produce its very own series of
videotapes. If origin herein merely referred to the “creator of the
underlying work”, then it would obviously be apparent that Dastar is
liable under this act. But the court if of the position that “origin”
herein refers to the manufacturer or producer of the
physical goods. The source of the wares is the producer of the
tangible products sold in the marketplace, in this case, the tapes sold
by Dastar.
The consumer who buys a branded product does not automatically
assume that the brand name company is the same entity that came up
with the idea for the product, or designed the product and typically
does not care whether it is.
It is argued that in reality, the purchaser is concerned for what might
be called a communicative product – one that is valued not primarily
for its physical qualities, such as hammer, but for the intellectual
content that it conveys such as a book or as here, a video. But this
interpretation will render the Lanham Act in conflict with
the copyright law. In general, unless an intellectual property
right such as patent or copyright protects an item, it will be
subject to copying.
Recognizing a cause of action under Section 43(a) for
misrepresentation of authorship of noncopyrighted works would
render these limitations superfluous and such statutory interpretation
should be avoided.
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Another problem with the aforementioned interpretation is
that in many cases, it is difficult to figure out who is in the
line of “origin.” In fact in this case, while Fox is claiming to being in
the line of origin, its involvement with the creation of the TV series was
limited at beast. Time Inc. was the principal and the creator albeit
under arrangement with Fox.
Another problem is that wile they are indicating credits to
the creator of the work on which the lawful copies are based,
on the other hand, they could face Lanham Act violations for
crediting the creator if that should be regarded as implying
the “sponsorship or approval of the copy”.
Allen v. National Video Inc.
Facts:
 Plaintiff Woody Allen has been a major international celebrity who
directed various shows which won several Academy Awards. Although
he has not lent his name to commercial endeavors other than his own
projects, he has been in show business for years and is known to
millions of people for his artistic integrity.
National Video (National) published an advertisement to
promote its video rental chain containing a photograph of
one Boroff which portrays a customer in a National video
Store with a high forehead, tousled hair and heavy black
glasses. In general, the physical features of this and the pose are
characteristic of the plaintiff. Moreover, on the said advertisement was
a plethora of shows in video cassettes directed by Woody Allen.
The same photo and headline was also used on contercards distributed
to National’s franchises. Although there is a disclaimer on said photo
which states in small print reading that “Celebrity double provided by
Ron Smith;s Celebrity look a like”, no such advertisement appeared on
the other versions of the advertisement.
 In view of this, Plaintiff Woody Allen (Allen) filed a case praying for
summary judgment in his favor on the ground that his right to privacy
was violated, and claiming a violation under the Lanham Act alleging
that his picture was used for commercial purposes without
his permission and that the advertisements were materially
misleading and likely to result in consumer confusion as to
his endorsement of the services of National.
In its defense, National claims that the idea of the advertisement is
that even people who are not stars are treated like stars at National
video. It claims that the person therein is a Woody Allen fan who is
adopting the star’s appearance and mannerisms. They urge that they
never misrepresented Bordoff as Allen and that they insisted
on the placing of the disclaimer in all advertisements using
the photo.
Issue:
 Whether or not the right to privacy and publicity is violated.
 Whether or not there is a violation of the Lanham Act
Ratio:
 There is no violation of the right to publicity and the right to
privacy and the more appropriate remedy of the plaintiff
herein is provided by the Lanham Act. In this issue, the court
held that there is no reasonable ground to believe that the
others would interpret the advertisement as Woody Allen
himself. As embodied in the New York Civil Rights Law, to make out
a violation of the right to privacy there must be:
1. Use of his name, portrait or picture;
2. For commercial or trade purposes;
3. Without written permission
On the other hand, in order to make out a case for violation of right to
publicity, one additional element must be shown to exist and that is:
that the plaintiff developed a property interest with a
monetary value in his or her name or face, as in this case
with Woody Allen.
As applied in this case, it is clear that 2 of the 3 prongs of the Civil
Rights Law are satisfied. There is no question that the photo is
said to be used for commercial purposes since it appeared as
an advertisement and there is no dispute that the plaintiff
herein never gave his consent to the photograph. Therefore,
the only element left to prove herein is whether or not the portrait is
the picture of the plaintiff.
Allen claims that it is since it need only be that the photograph is
identifiable to him in order for this requirement to be satisfied, to
which, the court is agreeable to. An exact duplication was
not necessary to make out a cause of action under the statute
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so long as the overall impression created clearly was that 4. Evidence of actual confusion
plaintiff had herself appeared in the advertisement. If the 5. Sophistication of the buyers
court is to permit this, then it would be sanctioning an obvious 6. Intent
loophole to evade the statute.
Strength of the o The name of the plaintiff, Woody Allen
When the look-a-like seems indistinguishable form the real mark and in this case is well-known to the public
person, and the context of the advertisement clearly implies name and has built a considerable investment
that he or she is the celebrity, then the court may hold as a in his public image.
matter of law that the look-a-like is a portrait of the plaintiff. Similarity of o While the court was unable to hold that
Thus, what further needs to be proven here is whether or not the the marks the photo, was a matter of law, a
illusion that the person is Allen is created. portrait of the plaintiff, the resemblance
in this case is strong and not disputed.
As applied, the court held that there is no reason to believe that others Proximity of o While not owning a video rental chain,
would see the photo as a portrait of Allen himself since there are the products Allen is involved in the production and
striking dissimilarities as to the hairstyle and expression, among distribution of motion pictures and he is
others. strongly identified with movies.
Actual o Not essential
 There is a violation of the Lanham Act (Section 43a). To make confusion
out a case under the act, the plaintiff must establish: Sophistication o The average reader of the magazine is
of the likely to be sophisticated about movies
1. The involvement of the goods or services consuming such that a good number of them would
2. Effect on interstate commerce public realize that plaintiff did not actually
3. False designation of the origin or false description of the goods appear in the photo.
or services. o However, since there is a CLOSE
RESEMBLANCE, evidence of likelihood
The application of the act, however, is limited to potential deception of confusion is not altogether
which threatens economic interests analogous to those of trademark eliminated.
law. Of course in this case, a celebrity has an investment in his or Intent o While not established to be acting in bad
her name and face in endorsing products and marketing a faith, they already admitted that they
career. It depends upon the good will of the public and infringement used Bordoff to evoke an association
of the rights also implicates the public’s interest in being free from with the plaintiff Allen.
deception when it relies on the celebrity in an advertisements. o They must therefore be aware that there
Furthermore, the liability herein attaches not only to literal is a risk of consumer confusion.
falseness, but also to false impressions. o They happily risked creating an
impression in a purchaser to gain
In this case, in order to consider whether or not there is a violation of commercial advantage through
such act, there should be a likelihood of confusion. For this, the court reference to plaintiff’s public image.
goes back to the factors used to determine likelihood of confusion
which are: Thus, the court concluded that there is a likelihood of confusion.
1. Strength of the mark and name Reasons why a violation under the Lanham Act is more
2. Similarity of the marks suitable for the plaintiff in this case, instead of the right to
3. Proximity of the products publicity:

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1. The likelihood of confusion standard is more broad that the
strict “portrait or picture” standard under the Civil Rights
Law.
In order to be confused, the consumer need not believe that
the owner of the mark actually produced the item and placed it
on the market. The belief that he sponsored it satisfies the
confusion requirement.
2. Likelihood of confusion is easier to satisfy on the facts of this
case since that is all that is necessary.
3. While confusing similarity is a question of fact, it is regarded
as something for the court to decide through its own analysis,
comparison and judgment.
Midler v. Ford Motors
Facts:
 Ford Motor Company (Ford) and its advertising agency, Young &
Rubicam advertised the Ford Lincoln Mercury with a series of 30 or 60
second TV commercials in what the agency called as the Yuppie
Campaign which aimed to make an emotional connection with
Yuppies, bringing back memories of when they were in college. In the
said commercial, there were different popular songs of which, Ford
attempted to get the original singers who popularized the songs to sing
them. Failing in this endeavor, the agency had the songs sung
by sound alikes. Bette Midler( Midler), the plaintiff in this case was
done by a sound alike.
Midler is a popular singer who won a Grammy as early as 1973 and was
nominated for an Academy Award for Best Female Actress in “The
Rose” in which she portrayed a pop singer. Time even hailed her as a
legend and the most dynamic and poignant actress of her time.
As the sound alike of Midler, the agency hired Ula Hedwig, who was
one of Midler’s backup singers for 10 years. For the commercial,
Hedwig imitated Midler to the best of her ability which
resulted in a lot of people thinking that it was Midler who
was sining in the commercial. Neither the name nor the picture of
Midler was used in the commercial.
 Midler filed a common law claim against Ford for using her distinctive
voice in an advertisement which she had not authorized.
Issue:
 Whether or not Midler’s voice is protected under the law.
Ratio:
 Yes. As a general rule, a mere imitation of a recorded performance
would not constitute a copyright infringement where one performer
deliberately sets out to stimulate another’s performance as exactly as
possible. Although this case falls more under the ambit of
unfair competition since a voice is not copyrightable. The
sounds are not fixed. What is put forward here is more
personal than any work of authorship. For a person whose
voice is widely known, it is unlawful to imitate that person’s
voice to sell a product if he/she has not authorized it.
Although the defendants did not use the name of Midler of
anything else whose use is prohibited under the California
Civil Code (the name, the voice, signature, or photograph) since the
voice they used was that of a different person’s not hers, the court held
that the fact that they hired someone who can imitate her voice as
much as possible meant that it was of value to them that Midler
sang the commercial in person.
A voice is more distinctive and more personal than an automobile
protected in another case. A voice is distinctive and personal as a
face. When a distinctive voice of a professional singer is
widely known and is deliberately imitated in order to sell a
product, the sellers have appropriated what is not theirs and
have committed a tort in California. Midler herein made a
showing sufficient to defeat summary judgment that the defendants
here for their own profit in selling their product did appropriate part of
her identity.
White v. Samsung Electronics
Facts:
 Samsung launched a commercial forvidep-casette recorders (VCRs)
which depicted a robot, dressed in a wig, gown and kewelry, which was
consciously selected to resemble Vanna White’s (one of the hostess
of the Wheel of Fortune) hair and dress. The robot in the
commercial was posed next to a game board which is instantly
recognizable as the Wheel of Fortune game show set in a stance for
which Vanna White is famous for.
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She did not consent to the ads nor was she paid for it hence, she filed a It is not important how the defendant appropriated the identity, what
claim alleging infringement of various intellectual property rights matters is whether the defendant has done so. As applied in this
under the California Civil Code, the California common law right of case, the female shaped robot herein is wearing a long gown, blond,
publicity and Section 43(a) of the Lanham Act. wig and large jewelry. In fact, the defendants in this case also refer to
this ad as the Vanna White ad.
Issue:
 Whether or not there is a violation of White’s common law right of  To prevail over the Lanham Act claim, White has to show that in
publicity. running the robot ad, Samsung created a likelihood of confusion over
 Whether or not there is a violation of Section 43(a) of the Lanham Act. whether White was endorsing the products of Samsung. Thus, the 8-
factor test enunciated must be resorted to:
Ratio:
 Yes. The district court erred in rejecting her claim on 1. Strength of the mark
summary judgment. The robot did not use White’s name or 2. Relatedness of the goods
likeness. However, the common law right of publicity is not 3. Similarity of the marks
so confined. In order to make out a case for right of publicity, the 4. Evidence of actual confusion
plaintiff must show that: 5. Marketing channels used
6. Likely degree of purchaser care
1. The defendant used the plaintiff’s identity; 7. Intent in selecting the mark
2. The appropriation of the name of the plaintiff or likeness to 8. Likelihood of expansion of the product lines.
the defendant’s advantage, commercial or otherwise;
3. Lack of consent “Mark” here means the celebrity persona.
4. Resulting injury
Strength of the o White’s fame is based on her TV
It should be noted, however, that the right of publicity cause of mark appearance in the Wheel of Fortune.
action “may be “ pleaded by alleging the aforementioned Similarity of the o There is a need to look at the other
appropriation of name or likeness, not that the action may marks factors for resolution since one is a
be pleaded only in those terms. Name of likeness is not an human and the other is a robot
element of the right of publicity cause of action but a description of the Evidence of o No evidence of actual confusion was
types of cases in which the cause of action had been recognized. In fact, actual confusion presented
in some cases, even though the defendant had not appropriated the Marketing o She appears in numerous ads in
plaintiff’s name or likeness, this court held that the right of publicity channels used magazines including those magazines
claim should reach the jury. which use the robot. This factor cuts
toward a conclusion for likelihood of
The common law right of publicity reaches means of confusion
appropriation other than name or likeness, but that the Degree of o Consumers are not likely to be
specific means of appropriation are relevant only for purchaser care particularly careful in determining
determining whether the defendant has in fact appropriated who endorses VCRs, making the
the plaintiff’s identity. The right of publicity has developed to confusion as to their endorsement
protect the commercial interest of the celebrities in their identities. It more likely.
is of value to them and the unauthorized use of such is an invasion of Intent o There is an intention to spoof .
his right whether or not his “name or likeness” is used. o Looking at the series of advertisements
as a whole, surface humor of the series
lay an intent to persuade consumers

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that Vanna White, was endorsing Ratio:
Samsung products.  Yes. Without making any judgment about the ultimate
Likelihood of o It does not appear apposite to a similarity of the figures to the appellants, this court
expansion celebrity endorsement case such as concludes from its own inspection that the robots ight cause
this. a reasonable jury to find them sufficiently like the
appellants’. The degree to which these robots resemble, caricature or
Although the ultimate decision was left to the jury, the court herein bear an impressionistic resemblance is material to a claim for violation
claimed that the Lanham Act claim should succeed. The robot ad of the publicity rights under the California Code.
identifies White as part of a series of ads in which other celebrities
participated and were paid for their endorsement products. White  Yes. This common law publicity rights includes protection against
made out a genuine issue of material fact concerning a likelihood of appropriation for the defendant’s advantage of the plaintiff’s name or
confusion. likeness. It may be pleaded by alleging:

Dissenting Opinion (Kozinski): 1. Defendants use of the plaintiff’s identity;

 The majority decision is erroneous in that California Civil Code Sectin 2. Appropriation of the plaintiff’s name or likeness to defendant’s
3344 appears to preclude the result reached by the majority. The advantage commercially or otherwise
section only protected name or likeness. In fact, when it was amended, 3. Lack of consent
legislature only added voice and signature to the enumeration which 4. Resulting injury
means that there is a clear implication from the fact that since they
only chose to add those, it wished to limit the cause of action to This protects more than the knowing use of the name or
the enumerated attributes (inclusion unius est exclusion alterius). likeness of the plaintiff for commercial purposes. It also
protects appropriations of the plaintiff’s identity by other
The protection of intellectual property presents the courts with the means. In this case, the appellants have raised a genuine issue of
necessity to balance competing interests. There must be a prevention material fact concerning the degree to which the figures look like them.
of the creation of a monopoly that would inhibit the creative Because they have done so, appellants have also raised triable issues of
expressions of others. fact as to whether or not appellees sought to appropriate their likeness
for their own advantage and whether or not they succeeded in doing
Wendt v. Host International so.
Facts:
 Wendt filed a claim for violations of the Lanham Act and the California  Yes. The court herein applies the 8 factor test again which required a
statutory and common law right of publicity against Host International consideration of:
(Host) alleging that there is a violation of trademark and Strength of the o Clearly well known among the target
publicity rights by creating animatronic robot figures mark consumers of Hosts’ Cheer bars.
(robots) based upon their likeness without their permission Similarity of the o Goods are obviously related even if not
and placing these robots in airport bars modeled upon the goods strictly competitive.
set from the TV show Cheers. The DC dismissed the case. o the factors weigh in favor of likelihood
of confusion since it would be
Issue: reasonable for the person to be
 Whether or not there is a violation of statutory publicity rights. confused as to the nature of the
 Whether or not there is a violation of common law publicity rights. association of Wendt to Hosts’ Cheer
 Whether or not there is a violation of the Lanham Act. bars and the goods sold there.
Similarity of the o because the appellants herein raised a
marks material issue as to the degree of

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resemblance, a reasonable jury might
find this to weigh in their favor.
Evidence of o they presented evidence of actual
actual confusion confusion such that they have been
approached by members of the public
who commented on the similarity of
the robots at the Cheers airport bars.
Marketing o the target audience here are Cheer bars
channels used customers who are fans of TV series.
Likelihood of o weight in favor of appellants since
purchaser care consumers are not likely to be
particularly careful in determining
who endorses or is affiliated with an
airport bar in which they might
purchase only a single beverage.
o There is a low degree of care.
Intent in o They intentionally designed the figures
selecting the to resemble Wendt and that it
mark recognized from the outset that the
value of the association with Wendt
themselves was a major drawing card
of the Cheers concept.
Likelihood of o This does not appear apposite to a
expansion celebrity endorsement case.
o In fact Wendt herein stated that he
would like to appear in advertisements
for bear and has declined offers from
small breweries to make way for larger
breweries.
Rogers v. Grimaldi
Facts:
 Rogers has been an international celebrity for more than 50 years.
There can be no dispute that Rogers’ name has enormous drawing
power in the entertainment world.
In 1986, appellees in this case, Grimaldi, produced and distributed in
the US and in Europe a film entitled ‘Ginger and Fred” created
and directed by Federico Fellini which tells a story of 2 fictional
cabaret performers who imitated Rogers and Astaire and became
known in Italy as Ginger and Fred.
Shortly after the release of the movie, Rogers brought this action for
permanent injunctive relief and allege that defendants violated
Section 43(a) of the Lanham Act by creating a false
impression that the film was about her or that she sponsored
it, her common right of publicity and defamed her and
violated her right to privacy by depicting her in a false light.
Issue:
 Whether or not there is a violation of the Lanham Act.
 Whether or not there is a violation of the common right of publicity.
Ratio:
 No. Although the general act was held herein to be construed to apply
to artistic works only where the public interest in avoiding consumer
confusion outweight the public interest in free expression, the court
found that there is nothing in the title of the movie which denotes
authorship, sponsorship or endorsement by the celebrity or explicitly
mislead as to content.
If herein, the title “George and Fred” misleads as to source or content
implicitly conveyed by the title, it violates the Lanham Act but as
applied in this case, the title contains no explicit indication that
Rogers endorsed the film or had a role in producing it.
Likewise, the claim that consumers would be misled into
thinking that the film is about Rogers and Astaire also fails
since here, the title is entirely truthful as to its content in
referring to the protagonists who are known to their Italian
audience as “Ginger and Fred.” Moreover, the title has an ironic
meaning tat is relevant to the content of the film in that Rogers and
Astaire are to the producer a “glamorous and care-free symbol of what
American cinema represented in the harsh times which Italy
experienced in the 30s and 40s.” therefore depicting artistic relevance
to the film.
 There is no violation of the common right of publicity. The
right of publicity does not bar the use of a celebrity’s name in a title so
long as the item was a literary work and not simply a disguised
commercial advertisement for the sale of goods or services. Here, as
explained above, the title is clearly related to the content of the movie
and is not a disguised advertisement for the sale of goods or services or
a collateral commercial product. Moreover, the film is not about
Rogers. It is about a pair of fictional characters who are LIKE Rogers
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and Astaire only in their imagination and in the sentimental eyes of
their fictional audience.
The right of publicity would not bar the use of a celebrity’s
name in a movie title unless the title was wholly unrelated to
the movie or was simply a disguised commercial
advertisement for the sale of goods or services.
Cardtoons v. Major League Baseball Players
Facts:
 Cardtoons formed a set of 130 cards which featured a caricature of
major league baseball players. A majority of the cards had a caricature
of active major league baseball players on the front humorous
commentary about their careers on the back. At the back of each of the
cards it was stated therein that: “Cardtoons baseball is a parody and is
not licensed by the Major League Baseball (MLB) or Major League
Baseball Players Association (MLBPA).
The trading cards ridicule the players using a variety of themes. Other
cards poke fun at the names of the players and onfield behavior.
 For this reason, the MLBPA filed an action with the court against
Cardtoons. MLBPA moved to dismiss the case for lack of subject
matter jurisdiction and counterclaimed for a declaratory judgment,
injunction and damages for violation of the members’ rights of
publicity under the law.
Issue:
 Whether or not there is a violation of property rights under the
Lanham Act.
 Whether or not there is a violation of publicity rights.
Ratio:
 No. The hallmark of Lanham Act is proof of likelihood of confusion
which occurs when consumers make an incorrect mental
association between the involved commercial products or
their products. It is a question of fact that we review for clear error.
Here, no one would mistake MLBPA and its members as
anything other than the targets of the parody cards.
Cardtoon’s success depends upon the humorous association
of its parody cards with traditional licensed baseball cards,
not upon public confusion as to the source of the cards. There
is no infringement upon MLBPA’s property rights under the Lanham
Act.
 There is a violation of the right to publicity. The right of
publicity is the right of a person to control the commercial use of his or
her identity. Like trademark and copyright, the right of publicity
involves a cognizable property interest. Publicity rights, are a form of
property protection that allows people to profit from the full
commercial value of their identities.
A civil suit for infringement of MLBPA’s publicity right under the law
requires proof of 3 elements:
1. Knowing use of player names or likenesses;
2. Products, merchandise, or goods;
3. Without MLBPA’s prior consent.
This is not absolute and contains 2 exceptions:
1. News exception – which exempts use of a person’s identity in
connection with any news, public affairs, or sports broadcast
or account, or any political campaign, from the dictates of the
statute.
2. Incidental use – exempts use in a commercial medium that is
not directly connected with commercial sponsorship or paid
advertising.
Applied to this case, there is little question that Cardtoons
knowingly uses the names and likenesses of major league
baseball players. Indeed the caricatures are only humorous because
they, along with parodied name, team and commentary, are accurate
enough to allow identification of the players being parodied. The cards
are clearly a product, designed to be widely marketed and sold for
profit. Furthermore, the exceptions in this case provide no haven for
cardtoons.
Others:
 Despite finding a violation of the publicity rights in this case, the court
went on to state that the trading cards are First Amendment protected
speech in that it is not considered as commercial speech. Baseball
cards have been an important means of informing the public about
baseball players for over a century. All of these cards, convey
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information about their subject and therefore constitute an important
means of expression that deserves First Amendment Protection.
Without the first amendment protection, Cardtoons’ trading cards and
their irreverent commentary on the national pastime cannot be freely
distributed to the public. The potential is even greater in the context of
publicity rights because the product involved is the celebrity’s own
persona.
At this juncture, since there is a finding that there is a violation of
publicity rights and a finding that the cards herein are first
amendment protected speech, there is a need to balance the interests
of the MLPBA’s right of publicity and the public interest’s rights. In
examining the right of publicity of a celebrity, the court herein held
that even without the right of publicity, the rate of return of
stardom in the entertainment and sports field is probably
high enough to bring forth a more than adequate supply of
creative effort and achievement. The income they generate
by licensing one’s identity does not provide a necessary
inducement to enter and achieve in the realm of sports and
entertainment. While publicity may provide some incentive
for creativity and achievement, the magnitude and
importance of that incentive has been exaggerated.
Inducements generated by publicity rights and the small incentive
effect of publicity rights is reduced or is eliminated in celebrity
parodies.
In this case, the court weighted the factors in favor of the free speech
protection since this was clearly a case of over protection. Little is to be
gained and much is to be lost by protecting publicity rights herein. The
cards, on the other hand, are an important form of entertainment and
social commentary that deserve First Amendment Protection.
Coca-Cola v. Tropicana
Facts:
 Tropicana products begain airing a new TV commercial for its
Premium Pack orange juice which shows the renowned American
Olympic athlete Bruce Jenner squeezing an orange while saying a tag
line. Soon after this ran, Coca-Cola, the maker of Minute Maid
orange juice, brought this suit for false advertising in
violation of Section 43(a) of the Lanham Act which provides
that any person who uses a false description or representation shall be
liable to a civil action to anyone who believes that he is or is likely to
be damaged by the use of such false description or representation.
Coke claims that this commercial is false because it incorrectly
represents that Premium pack contains unprocessed, fresh-
squeezed juice when in fact the juice is pasteurized and
sometimes frozen prior to packaging.
Issue:
 Whether or not there is false advertising.
Ratio:
 There is false advertising. In a case for false advertising requesting
for injunctive relief, the plaintiff must show that he is likely to be
injured as a result of the false advertising of the defendant. The
likelihood of injury and causation will not be presumed but must be
demonstrated in some manner.
In previous cases decided by the supreme court, market studies
were used as evidence that consumers were in fact mislef by
the advertising in issue. Thus, the market studies supplied the
causative link between the advertising and the plaintiff’s potential lost
sales and thereby indicated a likelihood of injury.
When an advertisement is literally or explicitly false, the
court may grant the relief without reference to the
advertisement’s impact on the buying public. But when it is
implicit rather than explicitly false, its tendency to violate the act by
misleading, confusing or deceiving should be tested by public reaction.
In view of the facts of this case, the court concludes that the ad is
false. The squeezing-pouring sequence in the Jenner
commercial is false on its face. It makes an explicit representation
that Premium Pack is produced by squeezing oranges and pouring the
freshly squeezed juice directly into the carton which is not a true
representation of how the product is prepared – it is sometimes heated
and frozen prior to packaging. Additionally, the statement in the ad
that it is “pasteurized juice as it comes from the orange” is blatantly
false since false-pasteurized juice does not come from oranges. It
entails heating. Despite the fact that the word “pasteurized” is used,
nevertheless, Tropicana represented it to be squeezed, heated and
packaged when in fact, it may be frozen.
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Pernod Ricard v. Bacardi
Facts:
 This case is a dispute between Pernod on the one hand and Bacardi on
the other over the use of the words “Havana Club” to sell rum in
the US.
In 1994, Bacardi filed a federal trademark application for the use of
Havana Club mark on rum in the United States and for a short time in
1995, Bacardi imported from the Bahamas and sold in this country a
nominal amount of rum labeled with “HAVANA CLUB”. Shortly after
Bacardi began its sales of the Havana Club rum made in Puerto Rico,
Pernod filed this false advertising suit under Section 43(a)
asserting that the labeling of Bacardi’s bottle, particularly
the use of the words “Havana Club” misleads consumers to
believe that the rum is produced un Cuba.
Issue:
 Whether or not there is false advertising.
Ratio:
 No. To establish a false advertising claim under the Lanham Act, a
plaintiff must prove that:
1. The defendant has made false or misleading statements as to
his product for another’s;
2. There is actual deception or at least a tendency to deceive a
substantial portion of the intended audience;
3. That the deception is material in that it is likely to influence
purchasing decisions;
4. That the advertised goods travelled in interstate commerce;
5. That there is a likelihood of injury to the plaintiff in terms of
declining sales, loss of food will.
The court herein drew a distinction between 43(a)(1)(a) and
43(a)(1)(b). The former forbids the false or misleading representations
that may deceive consumers about the origin of the goods or services
while the latter, forbids false or misleading representations as to
geographical origin of goods and services.
Here, the Havana Club label, taken as a whole, could not
mislead any reasonable consumer about where Bacardi’s
rum is made, which means that survey evidence has no
helpful part to play on the question to what the label
communicates regarding geographic origin. In this case, there
is a factually accurate, unambiguous statement of the geographic
origin of the rum since the label clearly states that the liquor is Puerto
Rican Rum and on the back that it is distilled and crafted in
Puerto Rico. No reasonable consumer can be misled by those
statements.
If we were dealing with the words “Havana Club” in isolation, then the
court MIGHT agree that there is false advertisement but we are not
dealing with words in isolation. This is not a trademark case and
is certainly not one addressing trademark registration no
matter how much Pernod wishes it were. This is a false
advertising case where we should look at the words in the context of
the entire accused advertisement. Viewed in that context, any thought
consumer might have that the words “HAVANA CLUB” indicate the
geographic origin of the rum must certainly be dispelled by the plain
and explicit statements of the geographic origin of the label.
However, it should be noted herein that the conclusion in this case
says nothing whether the words HAVANA CLUB are eligible for
registration. The argument is beside the issue tackled in this case and
such issue is not addressed in the circumstances dealt with here.
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SC Johnson v. Clorox Co.
Facts:
 Clorox introduced a 15 and 30 second TV commercial each depicting
an SC Johnson Zip Loc resealable storage bag side by side with a
Clorox Glad Lock bag (each were referred to in the commercial in their
brand names). It shows an animated fish talking in water inside each
of the bags. The bags were turned upside down and shows that the SC
Johnson bag leaks.
For this, SC Johnson brought an action against Clorox under Section
43(a) of the Lanham Act for false advertising in the Goldfish
commercials. During the hearing for the case, Dr. DeLassus was
presented. It was testified that he conducted a torture test wherein the
results indicated that 37% of all the bags of Johnson did not leak at all.
For this, the DC rendered a decision enjoining Clorox from showing
the commercial. The DC found that there is an exaggeration of the
circumstances and that when the bags are subjected to the same kind
of quality control test, there is some leakage in about 2/3 of the cases.
 In the year 2000, Clorox released another modified version of the
Golfish commercial as well as a related print advertisement which
shows that by a side by side comparison, the SC Johnson bags, filled
with water containing an animated talking goldfish, when rotated
leaks. On the other hand, it shows that the Glad Lock Clorox bag did
not leak at all.
After these advertisements appeared, another injunction case was filed
by SC Johnson which was, again, granted. The court, in this case,
concluded that the TVC is decidedly contrary to what was portrayed in
the actual evidence about the bags at the first trial and all in all, the
TVC is literally false. It portrayed that leakage is a everpresent
characteristic of SC Johnson bags.
Issue:
 Whether or not there is a violation of the Lanham Act.
Ratio:
 Yes. There is no prohibition on false statements generally. What is
prohibited is only false or misleading descriptions or false or
misleading representations of fact made about one’s own or
another’s goods or services. It must be established that:
1. the advertisement is literally false as a factual matter; or
2. although literally true, it is likely to deceive customers.
In addition to this, it must be shown that the falsity is as to
an inherent quality or characteristic of the product. The
advertisement must be considered in its entirety and not in isolation.
The entire mosaic should be viewed. Where it is literally false, the
court may enjoin the use of the claim without reference to the
advertisement’s impact on the buying public. Although in this case,
irreparable injury is an essential element to an inunction relief, there is
presumption of irreparable harm where the plaintiff demonstrates a
likelihood of success in showing literally false defendant’s comparative
advertisement which mentions plaintiff’s product by name.
As applied in this case, there is literal falsity since the conclusion is
supported by the fact that there was a test conducted before rendering
a decision which showed that over half of the SC Johnson bags either
did not leak at all or if it did at a rate no faster than one drop per 20
seconds. In the TVCs it is shown that the bags were always leaking and
also, it is shown that the leak is faster than the tests conducted. If
Clorox wants to portray water leakage from SC Johnson bags, it must
portray the rate of leakage accurately and indicate only a certain
percentage of bags leak, even when subjected to an extreme water
“torture” test.
P&G v. Haugen
Facts:
 This is a suit brought by P&G against Amway corporation for allegedly
spreading a rumor within Amway’s communication service between
distributors (AmVox) that P&G is a corporate agent of Satan. In
further alleged that P&G products have symbols (i.e. ram horns
forming 666) that will tell you that the company is in support of the
satanic church. Although it is not determined how many of this
message in within the AmVox reached, P&G received complaints and
inquiries about this matter.
After learning of the message, and after a demand was made to Randy
Haugen (the person who distributed the message) to retract the
message (which he did), P&G still received messages and the
aforementioned rumor still circulated despite the retraction. Thus,
P&G filed a claim of tortious interference with business
relationships and unfair competition against Haugen.
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 The DC dismissed the claim on the ground the message, although
identifying the products of P&G, did not contain false
representations about the QUALITIES AND
CHARACTERISTICS OF THOSE PRODUCTS and so did not
relate to a product within the meaning of the Lanham Act.
Issue:
 Whether or not the message is properly classified under commercial
activities for purposes of the Lanham Act.
 Whether or not the message is disparaging.
Ratio:
 Yes. Commercial activities, although not explicitly defined in the act,
means commercial transactions or all activities surrounding the
peculiar commerce of a company defined as the exchange or buying
and selling of commodities. The subject message herein linking P&G to
satan clearly concerned the nature, characteristics or qualities of
P&G’s commercial activities under the meaning of the law. A
direct affiliation with Satan would certainly undermine a corporation’s
reputation and goodwill by suggesting the corporation conducts its
commercial activities in an unethical or immoral manner. The
products here are purchased not only on the basis of inherent utility,
but also for the images they project and the values they promote.
It was the intent of the legislature to proscribe the unfair competition
and they did not intent to limit the law narrowly to “commercial
activities” but rather, they intended to encompass those
activities which do not solely involve the provision of
services or the production of goods. Properly construed, the
term “commercial activities” herein encompasses P&G’s use of the
profits from the sale of its goods.
In order for representations to constitute commercial advertising or
promotion under the act, they must be:
1. Commercial speech
2. By a defendant who is in commercial competition with the
plaintiff
3. For the purpose of influencing consumers to buy defendant’s
goods or services
4. Must be disseminated sufficiently to the relevant purchasing
public to constitute advertising or promotion within that
industry.
In the present case, we are dealing with the fact that there is a
theological component and a commercial component in the message.
However, the bare fact that there is a theological component
does not transform it to noncommercial speech.
Plus, the message herein unambiguously urges recipients to eschew
purchasing P&G products in favor of Amway products. While
economic motivation or reference to a specific brand name and
products, when viewed in isolation, might not render a message
commercial speech, we conclude that those factors taken together
with the instant message’s promotion of Amway products at
the expense of P&G products support the characterization of
the subject message as commercial speech. In the absence of
genuine issue as to the subject message’s theological content, and in
light of the message’s exhortation to eschew purchasing P&G products
in favor of Amway products, the conclusion that the subject message
constitutes commercial speech for purposes of liability under the
Lanham Act is unavoidable.
 It is not disparaging. Disparaging words, to be actionable per se
must affect the plaintiff in some way that it is peculiarly
harmful to one engaged in trade or profession. If it is of a
general character, it is not enough unless the particular quality
disparaged is of such a character that it is peculiarly valuable
in the plaintiff’s business or profession. Here, the allegations
that P&G directs a percentage of its profits to the church of Satan are
not incompatible with that business in the manner necessary to be
actionable as slander per se.
Although offensive to many, an allegation of Devil worship, is
disparagement of a general character, equally discreditable to all
persons and does not pertain to a quality that is peculiarly valuable in
plaintiff’s professional activities of manufacturing and selling
household consumer goods.
Verizon Directories v. Yellow Book
Facts:
 Yellow Book (YB) publishes a yellow pages directory (The Yellow
Book) which competes with Verizon’s yellow pages directory
(SuperPages) in a number of major markets. Verizon filed this case for
false advertising and unfair competition against YB USA’s commercials
which falsely represent that more people use the Yellow Book
that use the SuperPages.
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The following commercials were shown to be falsely representing the
foregoing:
1. The “Senior Focus Group” – 3 marketing men who work for
the “Other Book” Directory holding a focus groups session
stating that they never looked at the Other Book. The
commercial closes with an image of the Yellow Book standing
on and next to the Other Books with a voice over saying
“more people choose Yellow Book, not the Other
Book”
2. The Apartment Lobby – opens with 3 men in the apartment
lobby with 2 stacks of directories (one the yellow and one the
other book). The men watch as one by one, the residents of the
apartment come into the lobby and pick a directory. The stack
quickly disappears while all of the other books remain. The
TVC ends with a voice over saying “Today, people are
choosing the Yellow Book, not that Other Book”
3. The Wind Tunnel – shows a man carrying the directories in a
wind tunnel, and when the wind tunnel is turned on and the
wind speed is increased, the other book gets blown away by a
light wind, while the Yellow Book remains firmly in place even
as the intensity of the win increases to the point where the
other book’s marketer is blown off the screen.
Verizon moved to dismiss the claims on the ground that the TVCs
constitute nonactionable puffery as a matter of law.
Issue:
 Whether or not there is a case for Section 43(a) of the Lanham Act or
the NY General Business Law.
 Whether or not there is disparagement.
Ratio:
 No. False representations of fact are distinguished from
puffery. Puffery is somewhat an amorphous concept. It has
been defined as an exaggeration or overstatement expressed in
broad, vague and commendatory language. It is not actionable
under the Lanham Act because it cannot be proven either true or false.
Neither is it actionable under the NY General Business law for much
the same reasons that it is not illegal under the Lanham Act.
On a literal level the commercials are merely playful and absurd. No
one would believe that an adult finding two free directories at the
doorstep would leave one; both would almost certainly be taken. Even
a young child would know that a blast of air that could blow away both
a yellow pages directory and an adult would not leave another
directory of similar heft unaffected.
 No. Product disparagement refers to words or conduct which tend to
disparage or reflect negatively on the quality, condition or value of a
product or property. To state a claim for disparagement, the plaintiff
must allege:
1. the falsity of the statement
2. publication to a third person
3. malice or actual malice
4. special damages
Here, Verizon did not state in its complaint the identity of he
customers who have ceased to subscribe to SuperPages as a
result of the TVCs. Being a 4M dollar company, it would be striking
if such a large organization would be unable to identify even one
customer it had allegedly lost as a result of the TVCs.
Terry Gilliam v. American Broadcasting Companies
Facts:
 Monty Python is a groups of writers and performers who has gained
popularity through its 30minute TV programs created for BBC as part
of a comedy series entitled “Monty Python Flying Circus”. In their
contract with BBC, it was stated there that BBC retains final authority
to make changes to the script. However, there is nothing in the
agreement which entitled BBC to alter the program once it has been
recorded.
Time Lite Films acquired the right to distribute certain BBC programs
including the Monty Python series and was permitted to edit the
programs only for insertion of commercials and applicable
censorship or governmental rules and regulations
Thereafter, ABC entered into an agreement with Time Lite Films to
broadcast 2 90 minute programs each comprising of 3 episodes of
Monty Python shows that had not been previously shown in the
country. It was the understanding of BBC that ABC was going to show
the program in its entirety but it was found that 24 of the 90
minutes have been omitted. Some of the editing had been
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done in order to make time for commercials; other material
had been edited, according to ABC because the original
programs contained offensive or obscene matter.
Thus, the group filed this action to enjoin the broadcast and for
damages on the ground that the editing has caused the film or program
to lose its iconoclastic verve. The judge denied the motion on the
ground that it was unclear who owned the copyright in the programs
produced by BBC from the scripts written by Monty Python.
Issue:
 Whether or not there is copyright infringement.
Ratio:
 Yes (the way I understand it, there is copyright infringement
but there is no violation of the Lanham Act – because
copyright infringement is covered under a different law ??).
In determining whether there is infringement, one has to look at the
fact of whether the editing was substantial. In this case, the agreement
between Monty and BBC specifically permitted the latter to license the
transmission of the recordings made by BBC to distributors such as
Time Life for broadcast in overseas territories. One who obtains such
permission in the production of a derivative work may not exceed
the specific purpose for which permission has been granted.
The claim here is that the revisions in the script could only
be made after consultation with Monty and that ABC’s
broadcast of a program edited after recording and without
consideration with Monty exceeded the scope of any license
that BBC was entitled to grant.
While BBC obtained the rights to the derivative work, they did not
have any rights they did not obtain from Gilliam et. al. Since Gilliam
did not give them the right to edit the work, they couldn't sell the right
to edit the work to ABC.
If a distortion or truncation in connection with a use constitutes an
infringement of copyright, there is no need for an additional cause of
action beyond copyright infringement. An obligation to mention the
name of the author carries the implied duty, however, as a matter of
contract, not to make such changes in the work as would render the
credit line a false attribution of authorship.
So far as the Lanham Act is concerned, it is not a substitute for droit
moral which authors in Europe enjoy. If the licensee may, by contract,
distort the recorded work, the Lanham Act does not come into play. If
the licensee has no such right by contract, there will be a violation in
breach of contract. The Lanham Act can hardly apply literally when the
credit line correctly states the work to be that of the plaintiffs which,
indeed it is, so far as it goes. The vice complained of is that the
truncated version is not what the plaintiffs wrote. But the Lanham Act
does not deal with artistic integrity. It only goes to misdescription of
origin and the like.
Yu v. Court of Appeals
Facts:
 Petitioner is the exclusive distributor of House of Mayfair wallcovering
products in the Philippines and it had an exclusive sales agency
agreement with the House of Mayfair since 1987 to promote and
procure orders for Mayfair wallcovering products from customers in
the Philippines. He filed a case against private respondent Unisia
Merchandising when it purchased the merchandise from the House of
mayfair in England through FNF Trading in West Germany and sold
said merchandise in the Philippines.
In the petition at hand, petitioner anchors his plea for redress on his
perception that private respondent has distributed and continues to
sell Mayfair covering products in contravention of petitioner's
exclusive right conferred by the covenant with the House of Mayfair.
For this, a temporary restraining order was issued to last until further
notice from the Court. Notwithstanding the proscription, Unisia
persisted in the distribution.
Issue:
 Whether or not a writ may be issued against Unisia.
Ratio:
 Yes. That the exclusive sales contract which links petitioner and the
House of Mayfair is solely the concern of the privies thereto and
cannot thus extend its chain as to bind private respondent herein is,
We believe, beside the point. Verily, injunction is the appropriate
remedy to prevent a wrongful interference with contracts by strangers
to such contracts where the legal remedy is insufficient and the
resulting injury is irreparable. Unisia Merchandising Co., Inc. is not a
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party thereto but its accountability is "an independent act generative of
civil liability.
To Our mind, the right to perform an exclusive distributorship
agreement and to reap the profits resulting from such performance are
proprietary rights which a party may protect which may otherwise not
be diminished, nay, rendered illusory by the expedient act of utilizing
or interposing a person or firm to obtain goods from the supplier to
defeat the very purpose for which the exclusive distributorship was
conceptualized, at the expense of the sole authorized distributor.
Solid Triangle Sales v. Sheriff
Facts:
 Solid Triangle filed with the Office of the City Prosecutor an affidavit
for unfair competition against the members of the Board of Sanly
alleging that ERA, owned and operated by LWT is in conspiracy with
Sanly (collectively, respondents) in selling and/or distributing
Mitsubishi brand photo paper to the damage and prejudice of Solid
Triangle (who claims to be the sole and exclusive distributor thereof
pursuant to an agreement with Mitsubishi). The Judge in the said case
issued an order in favor of respondents quashing the search warrant
issued and ordering the return of the seized goods against
respondents.
In view of the quashal of the warrant and the return of he seized goods,
the fiscal was deprived of vital evidence to determine probable cause in
the case of unfair competition.
Issue:
 Whether or not the judge can quash the warrant already implemented.
 Whether or not there is unfair competition.
Ratio:
 Yes. Inherent in the court’s power to issue warrants is the
power to quash warrants already issued. In this connection, a
motion to quash should be filed in the court that issued the warrant
unless a criminal case has been instituted in another court in which
case, the motion should be filed with the latter. The proceedings for
the issuance/quashal of a search warrant before a court on the one
hand, and the preliminary investigation before an authorized officer on
the other, are proceedings entirely independent of each other. One is
not bound by the other's finding as regards the existence of a crime.
The purpose of each proceeding differs from the other. The first is to
determine whether a warrant should issue or be quashed, and the
second, whether an information should be filed in court.
When the court, in determining probable cause for issuing or quashing
a search warrant, finds that no offense has been committed, it does not
interfere with or encroach upon the proceedings in the preliminary
investigation. The court does not oblige the investigating officer not to
file an information for the court's ruling that no crime exists is only for
purposes of issuing or quashing the warrant.
The effect of the quashal of the warrant on the ground that
no offense has been committed is to render the evidence
obtained by virtue of the warrant "inadmissible for any
purpose in any proceeding," including the preliminary
investigation. It may be true that, as a result of the quashal of the
warrant, the private complainant is deprived of vital evidence to
establish his case, but such is the inevitable consequence. The
preliminary investigation and the filing of the information may still
proceed if, because of other (admissible) evidence, there exists
"sufficient ground to engender a well-founded belief that a crime has
been committed and the respondent is probably guilty thereof, and
should be held for trial.”
 There is no case for unfair competition. Sanly Corporation did
not pass off the subject goods as that of another. Indeed, it admits that
the goods are genuine Mitsubishi photographic paper, which it
purchased from a supplier in Hong Kong.
Petitioners also allege that private respondents “made it
appear that they were duly authorized to sell or distribute
Mitsubishi Photo Paper in the Philippines.” Assuming that
this act constitutes a crime, there is no proof to establish
such an allegation.
NESTLE v. Casa Helvetica
Facts:
 Nestle owns the Perugina trademark and for many years, Casa
Helvetica has been the authorized distributor of such chocolates in
Puerto Rico. However, Nestle forsook Casa Helvetica and licensed its
affiliate, Nestle Puerto Rico as the exclusive distributor in Puerto Rico.
Meanwhile, in 1990, without obtaining Netstle’s consent, Casa
Helvetica began to purchase Venezuelan made chocolates bearing the
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Perugina mark and distributed them in Puerto Rico. For this, Nestle
filed a case for infringement and the violation of the right of
exclusive distributorship under the Lanham Act claiming that
Casa Helvetica;s use of the mark was likely to confuse consumers into
the mistaken belief that the chocolates are the same as the Italian
chocolates and are authorized by Nestle for sale in Puerto Rico.
 The DC held that the differences between the chocolates did not
warrant the injunctive relief in the absence of demonstrated consumer
dissatisfaction and harm to the goodwill of plaintiffs.
Issue:
 Whether or not there is a violation of the Lanham Trademark Act.
For this reason, the threshold for materiality must be kept low
enough to take account of potentially confusing differences,
differences that are not blatant to make it obvious to the
average consumer that the origin of the product differs from
his or her expectations.
Thus, the court concludes that the existence of any difference between
the registrant’s product and the allegedly infringing gray good that
consumers would likely consider to be relevant when purchasing a
product creates a presumption of consumer confusion
sufficient to support a Lanham Act claim. Anyhigher threshold
would endanger the manufacturer. Of course, this presumption is
rebuttable.

Ratio: The differences:

 Yes. Although it has been said that trademark law generally does not
reach the sale of genuine goods bearing a true mark even though such Italian Chocolate Venezuelan
sale is without the mark owner’s consent, the maxim does not apply Chocolate
when genuine but unauthorized, imports differ materially from Quality  Leaves Italy in  Arrives in Puerto
authentic goods authorized for sale in the domestic market. Control refrigerated containers Rico via a
Unauthorized importation and sale of materially different which arrive at the commercial air
merchandise violates the law because a difference in the facitlity in Puerto Rico. freight
products bearing the same name confuses the consumers  Immediately  Transferred in a
and impinges on the local trademark holder’s goodwill. transported in central air cargo
refrigerated rooms cooler
As such, in this case, the chocolates are not “genuine” within the  Transports it into a
meaning of the law since they are: (a) not authorized for sale in the US; warehouse
and (b) materially different from the authorized version. Composition  5% more milk with  made with domestic
prolonged shelf life beans, imported
The mere licensing of production abroad does not support an inference  contain Ecuadorian hazelnuts and
of consent to import licenses products into the US. Nestle never and Africa cocoa ordinary crystal
authorized the sale of the chocolates in Puerto Rico. Therefore, the beans, fresh hazelnuts sugar
question of violation of the law boils down to whether material and cooked sugar
differences exist between the Italian made chocolates and syrup
the Venezuelan made chocolates sufficient to create a Configuration come in a variety of shapes than the Venezuelan
likelihood of confusion. pieces.
Packaging  glossy finish  Shiny finish
The probability of confusion is great when the same mark is displayed Price  Higher price  Lower price
on the goods are not identical but nonetheless bear strong similarities
in appearance or function. Gray goods often fall within this category. Thus, it is readily apparent that the material differences
Thus, when dealing with the importation of gray goods, the court must between the products are relevant. The use of the chocolates
be necessarily concerned with subtle differences for it is by manifesting such differences is presumptively likely to cause
subtle differences that consumers are most easily confused.

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confusion. Because the differences are material, there is a case for
unfair competition.
Lever Brothers v. United States (Caveat. Read Origs, confusing eh)
Facts:
 Parties in dispute herein are Lever UK and Lever US which are 2
affiliated companies which use the same words “SHIELD AND
SUNLIGHT” as trademakrs for products that differ materially in the 2
countries because they adjusted them according to the country’s
differing tastes and conditions. Consumers are apparently capable of
detecting the differences between the contents of the UK and US
products once they start using them.
 However, Lever US filed a case praying for the issuance of an
injunction alleging that there is a likelihood of confusion as between
the products of the companies. Allegedly, it had received letters from
consumers expressing their rage or disappointment with what they
believed, at the time of the purchase, to be discounted version of the
similar US product. Despite demands made, the UK company refuses
to halt importation.
Lever US contends that where affiliated domestic and foreign firms
produce goods bearing the same trademark but different in physical
content, the foreign products copy or simulate the domestic trademark
so that forbids their importation notwithstanding the fact of affiliation.
On the other hand Lever UK seeks refuge in the exception found in the
Customs Service which exempts the foreign and domestic trademark
or tradename owners who are parent and subsidiary companies or are
otherwise subject to common ownership or control.
Issue:
 Whether or not an injunction may be issued against Lever UK.
Ratio:
 Customs' central thesis, that affiliation between the foreign producer
and domestic markholder automatically defines the foreign goods as
genuine, draws on an important truth--that a trademark holder cannot
infringe its own mark. Thus, if a US markholder itself imports goods
(or licenses another to do so), the markholder's conduct of or
authorization of the importation makes the goods authentic, whether
they are better, worse, or the same as the US markholder's domestic
products. To the extent that the affiliate exception extends this
principle to goods imported into the US by companies affiliated with
the US markholder, it does nothing more than treat the two companies
as being constructively one for infringement purposes. As such it
seems unobjectionable.
Apart from its attempted reliance on authority and the impossibility of
self-infringement, the Customs Service asserts some policy arguments.
First, it contends that because of the affiliation, the dispute is better
suited for resolution "in the boardroom" than the court room. But this
solution is obviously costly. The Lever affiliates have succeeded in
attaching to products designed for their respective markets ordinary
words that have both a favorable "spin" and a natural link to those
products. Customs has offered us no shadow of a reason why it would
serve any public interest implicit in Sec. 42 to compel Lever to
abandon the resulting goodwill, or (looking ahead) to refrain in the
first place from establishing such goodwill by use of identical words.
We think the natural, virtually inevitable reading of Sec. 42
is that it bars foreign goods bearing a trademark identical to
a valid US trademark but physically different, regardless of
the trademarks' genuine character abroad or affiliation
between the producing firms. On its face the section appears
to aim at deceit and consumer confusion; when identical
trademarks have acquired different meanings in different
countries, one who imports the foreign version to sell it
under that trademark will (in the absence of some specially
differentiating feature) cause the confusion Congress sought
to avoid. The fact of affiliation between the producers in no
way reduces the probability of that confusion; it is certainly
not a constructive consent to the importation. The cases are
entirely congruent with this view. Customs' assertion of
administrative difficulties appears overdrawn, and in any
event would seem to justify no more than inaction in those
cases that are close on the factual issue of product identity.
Thus, despite the deference we owe Customs under Chevron,
we believe that the affiliate exception does not square with
Sec. 42.
Du Pont De Nemours Powder Co. v. Masland
Facts:
 A bill was filed to prevent the defendant Masland herein from using or
disclosing secret processes the knowledge of which was
acquired by defendant while in the plaintiff’s employ.
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Defendant herein admits that he intends to manufacture leather but
denies that he intends to use any inventions, trade secrets or
secret processes of the plaintiffs that he may have learned in any
confidential relation prefacing his denial. To the contrary, he claims
that many things claimed by the plaintiff are actually well known to the
trade.
Issue:
 Whether or not an injunction may be issued to prevent the use and
disclosure of trade secrets.
Ratio:
 Yes. If the disclosure is forbidden to one who denies that there is a
trade secret, the merits of his defense are adjudged against him before
he has a chance to be hear or to prove his case. The word property as
applied to trademarks and trade secrets is an unanalyzed
expression of certain secondary consequences of the
primary fact that the law makes some rudimentary
requirements of good faith.
The property may be denied but the confidence may not be. Therefore,
the starting point for the present matter is not property or due
process of law, but that the defendant stood in confidential
relations with the plaintiff during his employ. The defendant
should not fraudulently abuse the trust reposed him. If there is any
disadvantage in the fact that he knew of the secret, he must take the
burden with the good.
The injunction asked by the plaintiffs forbade only the
disclosure of processes claimed by them including the
disclosure to experts or witnesses produced during the
taking of proofs but excepting the defendant’s counsel.
Van Products Co v. Gen Welding & Fabricating
Facts:
 Van was a corporation engaged in making of air vises. It contacted
Norton (also the owner of a patent for the drier but not the desiccant)
who claimed to have invented a unique air drier that could
be used profitably in many areas of industry and
manufacturing to prevent and eliminate fouling, rusting and
shortening the life in tools and machinery operated by
compressed air (a deliquescent desiccant air drier). This
device was a substantial improvement over the expensive and
cumbersome driers then in general use, which required regeneration
and the use of alternate driers.
Rapp herein is an employee of Van who rose to the rank of a general
manager. During his stay with Van, he ran the gamut of the tasks
involved in this segment of Van’s business. Rapp therefore was
thoroughly imbued, through his industrious application,
with all the problems, processes and advantages involved in
the production, sale and maintenance of this type of drier.
He learned everything there was to learn for the trade.
In 1952, General began to engineer and design parts of Van’s drier on
behalf of Van according to the patent. Rapp supervised the
construction of these. However, subsequently, suspecting that
Rapp’s loyalty leaned more towards General, Van
terminated his employment. Rapp was them employed by
General and they produced a deliquescent desiccant air drier
on behalf of General substituting sodium chloride which
performed the same function. For this, Rapp was granted a patent
for his desiccant and the drier.
 Van instituted this action for injunctive relief and accounting which
was objected to by Rapp on the ground that the state court had no
jurisdiction since federal courts have exclusive jurisdiction over patent
rights.
Issue:
 Whether or not Rapp caused damage to Van’s business throught the
use of confidential material information misappropriated by Rapp
while he was in its employ.
Ratio:
As a preliminary, the existence of patent rights is not controlling in this case.
Infringement actions may be prosecuted in federal courts and existing patent
rights may be unchallengable in a state court. However, the rights of Van to
manufacture and sell drier involved depends upon how the knowledge in
connection therewith is obtained.
 There is no violation because said information are not trade
secrets. In this case, it is alleged that they misappropriated:
1. The idea and the original concept of the deliquescent type of
air drier;
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2. Information derived from building up, maintaining intimate
card files on customers and their peculiar problems and needs
and in servicing said customers.
3. Van’s know-how in selling
4. Results of research and development and experimentation.
5. Secret of desiccant
6. Van’s customers and receivables.
7. Advertising method and material.
The trade secret here involved is not just any of the features or any
others which constitute trade secret contended for by Van but rather
the whole picture combining the original idea or theory as
worked up mechanically by Van into a tangible and
marketable product and the know-how along the line.
A trade secret may consist of any formula, pattern, device or
compilation of information which is used in one’s business,
and which gives him an opportunity to obtain an advantage
over competitors who do not know how to use it. To be entitled
to such relief, it must be established:
1. That there was a trade secret or a secret of process of
manufacture (as in this case)
2. It was of value to the employer and important in the conduct
of his business
3. That by reason of discovery or ownership the employer had
the right to the use and enjoyment of the secret
4. The secret was communicated to the employee while he
was employed in a position of trust and confidence
For the cause of action to arise:
1. Possession by the plaintiff of knowledge or information which
is not generally known
2. Communication by the plaintiff to the defendant under an
express or implied agreement limiting its use or disclosure by
the defendant
3. Use or disclosure by the defendant to the injury of plaintiff.
Thus, ultimately, the question you need to ask is whether the
information is such here that the court must act as a judicial
eraser to blot out Rapp’s knowledge and skill once he left the
company. “Secrets” which are of general knowledge, skill and
experience are not proper subjects of mental purge. In this case, Rapp
was hired to conduct and of which he made a selling process. At most,
Van can claim co-authorship on the basis that Rapp was paid
to do this work, but much of the initiative and creative
questioning was the product of Rapp’s own ambition. Thus, it
would seem that this generalized knowledge in the field of
deliquescent desiccant air driers was a labor asset which Rapp was
privileged to carry with him to his new employer. They are not trade
secrets. A manufacturing company is merely the sum of its
producing units, including the skills of its employees.
Granted that Van had a very precise knowledge of the field of
air driers, it was mainly derived from Norton’s inventiveness
and Rapps industrious experimentation. Rapp’s know how here
is not protectable from the exploitation by Rapp.
If there is anything protectable herein, it is the composition of the
desiccant Van used in its driers, which was secret and remained so
after Rapp’s departure. In fact, Rapp had to formulate another
desiccant to use in the drier which he was privileged to construct.
Kewanee Oil Co v. Bicron Corporation
Facts:
 Harshaw Chemical (Harshaw) is a leading manufacturer of a type of
synthetic crystal which is useful in the detection of ionizing radiation.
It commenced research into the growth of this type of crystal and was
able to produce one less than 2 inches in diameter. Harshaw had
developed many processes, procedures, and manufacturing techniques
in the purification of raw materials and the growth and encapsulation
of the crystals which enabled it to accomplish this feat. Some of these
processes Harshaw considers to be trade secrets.
While employed in Harshaw, the employees executed a
condition of employment requiring them not to disclose
confidential information or trade secrets obtained as
employees of Harshaw.
 Petitioners in this case brought a complaint seeking injunctive relief
and damages for the misappropriation of the trade secrets of Harshaw
in favor of Bicron Corporation (a competitor). Allegedly, there was a
disclosure and use of trade secrets by releasing the same to
the public.
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 DC granted the relief, applying Ohio’s trade secrets law. 6th Circuit CA
reversed the decision of the DC on the ground that the trade secrets
law were in conflict with the patent laws of the US. CA
reversed said decision and held that the court cannot grant monopoly
protection to processes and manufacturing techniques that were
appropriate subjects for consideration under the law for a federal
patent but which had been in commercial use for over one year, and so
were no longer eligible for patent protection.
Issue:
 Whether or not there is a right to protection of trade secrets where
there is a patent.
Ratio:
 The court of appeals correctly erred that the trade secret law
is not preempted by the federal patent law. The protection
accorded the trade secret holder is against the disclosure or
unauthorized use of the trade secret by those to whom the
secret has been confided under the express or implied
restriction of nondisclosure or nonuse. The law also protects the
holder of a trade secret against disclosure or use when the knowledge
is gained not by the owner’s volition but by some “improper means”. A
trade secret law however does not offer protection against
discovery by fair and honest means, such as independent
invention, accidental disclosure or by so-called reverse
engineering (by starting with the known product and working
backward to divine the process which aided in its development or
manufacture) – thus it can easily be lost.
Novelty is not required for a trade secret. However some novelty will
be required if merely because that which does not possess novelty is
usually known secrecy, in the context of trade secrets, this implies at
least minimal novelty.
The patent law does not explicitly endorse or forbid the
operation of trade secret law. To determine whether the
Ohio law "clashes" with the federal law, it is helpful to
examine the objectives of both the patent and trade secret
laws.
1. Patent – requires that the application shall include a full and
clear description of invention and of the manner and process
of making and using it so that the person skilled in the art
may make and use the invention.
Federal law requires that all ideas in general
circulation be dedicated to the common good unless
they are protected by a patent.
2. Trade Secrets – maintenance of standards of commercial
ethics and the encouragement of invention
Certainly the patent policy of encouraging invention is not
disturbed by the existence of another form of incentive to
invention. In this respect, the two systems are not and never would
be in conflict. Similarly, the policy that matter once in the public
domain must remain in the public domain is not
incompatible with the existence of trade secret protection. By
definition, a trade secret has not been placed in the public
domain.
Even as the extension of trade secret protection to patentable subject
matter that the owner knows will not meet the standards of
patentability will not conflict with the patent policy of disclosure, it
will have a decidedly beneficial effect on society. Trade secret law
will encourage invention in areas where patent law does not
reach, and will prompt the independent innovator to
proceed with the discovery and exploitation of his invention.
Competition is fostered, and the public is not deprived of the use of
valuable, if not quite patentable, invention.
Trade secret law encourages the development and
exploitation of those items of lesser or different invention
than might be accorded protection under the patent laws,
but which items still have an important part to play in the
technological and scientific advancement of the Nation. Trade
secret law promotes the sharing of knowledge, and the efficient
operation of industry; it permits the individual inventor to reap the
rewards of his labor by contracting with a company large enough to
develop and exploit it.
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Computer Associates International v. Altai
Facts:
 Computer Associates (CAI) and Altai are companies engaged in the
computer software industry – designing, developing and marketing
various types of computer programs. CAI marketed programs
entitled CA Scheduler (Scheduler) which is a job scheduling
program designed for IBM mainframe computers with a primary
function of creating a schedule specifying when the computer should
run various tasks and then to control the computer as it executes the
schedule. The Scheduler contains a subprogram called the ADAPTER
which is an not independently marketed product of CAI because it is a
wholly integrated component of the Scheduler. Nevertheless, it plays
an important role in the program because it is the second common
system interface component which contains all the
interconnections between the first component (containing all
the task specific portions) and the operating system.
In 1982, Altai began marketing its own job scheduling program
entitled ZEKE (ran in conjunction with an MVS operating system).
Williams (then employee and noe president of Altai) approached his
longtime friend Arney (employee of CAI) because he wanted to recruit
Arney to assist in designing the ZEKE. At the time he approached
Arney, he was aware of both the Scheduler and the Adapter
programs of CAI but Williams was not involved in their
development and had never seen the codes of either
program. Moreover, he did not know that Adapter was a
component of the Scheduler.
On the other hand, Arney was intimately connected and familiar with
the various aspects of the Adapter. At the time he was working for the
CAI, he was permitted to take home a copy of its source code. Hence,
when he left CAI, he took with him copies of the source code
for both the VSE and MVS versions of Adapter. He did this in
knowing violation of the employee agreement he signed. In three
months, Arney successfully completed the OSCAR/VSE project. In an
additional month he developed an OSCAR/MVS version. When the
dust finally settled, Arney had copied approximately 30% of OSCAR's
code from CAI's ADAPTER program.
 After confirming suspicions, CAI secured a copyright for its versions of
the Scheduler then brought a suit for copyright and trade secret
misappropriation against Altai. It was only at this time that
Williams knew of the copying Arney did. Upon advice of the counsel,
Wiliams initiated the rewriting of OSCAR to excise those portions
which had been copied from Adapter. The goal here was to save as
much as possible of the OSCAR that can be legitimately used. The
result of this rewriting was the OSCAR 3.5. While Altai and Williams
acted responsibly to correct Arney's literal copying of the ADAPTER
program, copyright infringement had occurred.
Issue:
 Whether or not Altai is liable for trade secret misappropriation in
copying the codes of Adapter into Oscar.
Ratio:
 Yes. Trade secret laws are not preempted by copyright laws.
So long as trade secret law is employed in a manner that does not
encroach upon the exclusive domain of the Copyright Act, it is an
appropriate means by which to secure compensation for software
espionage. In copyright, the law affords a copyright owner the
exclusive right to reproduce the work, prepare derivative works,
distribute copies of the work by sale or otherwise and with respect to
certain artistic works, perform the work publicly and display the work
publicly. This provision of law thus preempts only those state law
rights that may be abridged by an act which in and of itself, would
infringe one of the exclusive rights provided by federal copyright law.
Bbut if an extra element is required instead of or in addition to the acts
of reproduction, performance, distribution or display in order to
constitute a cause of action, then the right does not lie within the
general scope of copyright and there is no preemption.
Trade secret protection, the branch of unfair competition law at issue
in this case, remains a "uniquely valuable" weapon in the defensive
arsenal of computer programmers. Precisely because trade secret
doctrine protects the discovery of ideas, processes, and systems which
are explicitly precluded from coverage under copyright law, courts and
commentators alike consider it a necessary and integral part of the
intellectual property protection extended to computer programs.
The legislative history of the law states that the evolving
common law rights of trade secrets would remain unaffected
as long as the causes of action contain elements such as a
breach of trust or confidentiality that are different in kind
from copyright infringement. Congress did not consider the term
misappropriation to be necessarily synonymous with copyright
infringement or to serve as the talisman of preemption. Trade secret
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claims often are grounded upon a defendant's breach of a duty of trust
or confidence to the plaintiff through improper disclosure of
confidential material.
It is undisputed that, when Arney stole the ADAPTER code and
incorporated it into his design of OSCAR 3.4, he breached his
confidentiality agreement with CAI. The district court noted that
while such action might constitute a valid claim
against Arney, CA is the named defendant in this lawsuit.
Additionally, the district court found, as a matter of fact, that
"[n]o one at Altai, other than Arney, knew that Arney had the
ADAPTER code.
While we agree with the district court that OSCAR 3.5 did not contain
any expression protected by copyright, it may nevertheless still have
embodied many of CA's trade secrets that Arney brought with him to
Altai. Since Altai's rewrite was conducted with full knowledge of
Arney's prior misappropriation, in breach of his duty of confidentiality,
it follows that OSCAR 3.5 was created with actual knowledge of trade
secret violations. Thus, with regard to OSCAR 3.5, CAI has a viable
trade secret claim against Altai that must be considered by the
district court on remand. This claim is grounded in Altai's alleged
use of CAI's trade secrets in the creation of OSCAR 3.5, while
on actual notice of Arney's theft of trade secrets and
incorporation of those secrets into OSCAR 3.4.
William Ollendorff v. Ira Abrahamson
Facts:
 William is and has for a long time been engaged in the manufacturing
of ladies embroidered underwear for export. He imports material from
which this underwear is made and adopts decorative designs which are
embroidered upon it by Filipino needle workers from patterns selected
and supplied by him. The workers employed by plaintiff are under
contract to work for plaintiff exclusively. Some 15,000 home
workers and 800 factory workers are engaged in this work for the
plaintiff.
William and Ira entered into a contract whereby Ira was
employed for a term of 2 years at a certain rate of salary. Ira, under the
contract, was to devote his entire time, attention, energies and
industry to the promotion of the business of William. Likewise, under
the said contract, it was stated that Ira, his heirs, successors and
assigns will not enter into or engage himself directly or
indirectly, nor permit any other person under his control to
enter in or engage in a similar or competitive business to
that of the said party of the first part anywhere within the
Philippines for a period of 5 years from the date of the
contract.
The duties performed by him were such as to make it necessary that he
should have this knowledge of plaintiff's business. Defendant had a
general knowledge of the Philippine embroidery business before his
employment by plaintiff, having been engaged in similar work for
several years. After his employ with William, he left the Philippines for
the US.
When he returned, he was already the manager of the Philippine
Underwear Company. It does not maintain a factory in the Philippines
but send material and embroidered designs from NY to its local
representative here who employs Filipino needle workers to embroider
the designs and make up the garments in their homes.
 Thus, plaintiff herein commenced this action praying for injunction on
the ground that their contract stated that he would not enter into or
engage himself directly or indirectly in a similar competitive
business to that of plaintiff anywhere within the Philippines
for a period of 5 years. The trial court granted injunction and
subsequently made it perpetual.
For this, defendant argues that the contract is void for being an
unreasonable restraint on trade.
Issue:
 Whether or not the contract is void for being an unreasonable restraint
on trade.
 Whether or not there is ground for injunction.
Ratio:
 Valid. Obligations created by contracts have the force of law between
the contracting parties and must be enforce in accordance with their
tenor. The only limitation is that it should not be contrary to law,
morals or public order. Originally the English courts adopted the view
that any agreement which imposed restrictions upon a man's right to
exercise his trade or calling was void as against public policy. In the
course of time this opinion was abandoned and the American and
English courts adopted the doctrine that where the restraint was
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unlimited as to space but unlimited as to time were valid. In recent
years there has been a tendency on the part of the courts of England
and America to discard these fixed rules and to decide each case
according to its peculiar circumstances, and make the validity of the
restraint depend upon its reasonableness. If the restraint is no greater
than is reasonably necessary for the protection of the party in whose
favor it is imposed it is upheld, but if it goes beyond this is declared
void. Following this opinion, we adopt the modern rule that
the validity of restraints upon trade or employment is to be
determined by the intrinsic reasonableness of restriction in
each case, rather than by any fixed rule, and that such
restrictions may be upheld when not contrary to afford a fair
and reasonable protection to the party in whose favor it is
imposed.
We are of the opinion, and so hold, that in the light of the established
facts the restraint imposed upon defendant by his contract is not
unreasonable. A business enterprise may and often does depend for its
success upon the owner's relations with other dealers, his skill in
establishing favorable connections, his methods of buying and selling -
- a multitude of details, none vital if considered alone, but which in the
aggregate constitute the sum total of the advantages which the result of
the experience or individual aptitude and ability of the man or men by
whom the business has been built up. Failure or success may depend
upon the possession of these intangible but all important assets, and it
is natural that their possessor should seek to keep them from falling
into the hands of his competitors. It is with this object in view that
such restrictions as that now under consideration are written into
contracts of employment. Their purpose is the protection of the
employer, and if they do not go beyond what is reasonably necessary to
effectuate this purpose they should be upheld.
 Yes. The admitted fact that plaintiff has failed to establish proof of
pecuniary damage by reason of the breach of the contract by defendant
by the acts committed prior to the issuance of the preliminary
injunction is, of course, a bar or nay money judgment for damages for
the breach of the contract, but will not justify us in permitting
defendant to continue to break his contract over plaintiff's objection.
The injury is a continuous one. The fact that the court may not be able
to give damages for that part of the breach of the contract which had
already taken place when its aid was invoked is no reason why it
should countenance a continuance of such disregard of plaintiff's
rights. The injury done the business of a merchant by illegal or unfair
competition is exceedingly difficult to measure. A diminution of the
volume of a business may be due to so many different causes that it is
often impossible to demonstrate that it has in fact been caused by the
illegal competition of the defendant. This is frequently the case in suit
for the infringement of trademark rights, in which the courts may
enjoin the continued use of the infringing mark, although unable to
assess damages for the past injury.
Air Philippines v. Pennswell
Facts:
 Air Philippines is a domestic corporation engaged in the business of air
transportation services. On the other hand, Pensswell is organized to
engage in the business of manufacturing and selling industrial
chemicals, solvents and special lubricants.
On various dates, respondent Penswell delivered and sold to Air
Philippines sundry goods in trade. However, for failure to comply
with the obligations under their contracts, Penswell filed a complaint
for sum of money with the RTC. In its Answer, petitioner contended
that its refusal to pay was not without reason. They alleged
that the previous 4 transactions covered misrepresented
items allegedly belonging to a new line but were in truth and
in fact, identical with products petitioner had previously
purchased from respondent. Allegedly, Penswell merely altered
the names and labels of such goods. Petitioner asseverated that had
respondent been forthright about the identical character of the
products, it would not have purchased the items complained of.
To conduct a comparison of the products, a motion to compel
respondent to give a detailed list of the ingredients and
chemical components of its products. This was granted by the
court. For which, respondent sought reconsideration on the ground
that it cannot be compelled to disclose the chemical
components sought because the matter is confidential. It
argued that what petitioner endeavored to inquire upon constituted
a trade secret which respondent cannot be forced to divulge.
Respondent maintained that its products are specialized lubricants,
and if their components were revealed, its business competitors may
easily imitate and market the same types of products, in violation of its
proprietary rights and to its serious damage and prejudice. RTC gave
this credence and reversed itself.
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Issue:
 Whether or not there is grave abuse discretion on the part of the RTC
judge when it granted the MR of Penswell.
Ratio:
 There is no grave abuse of discretion. The ingredients or
composition of Penswell’s lubricants are trade secrets which
it cannot be compelled to disclose. The drafters of the
Constitution also unequivocally affirmed that, aside from national
security matters and intelligence information, trade or industrial
secrets (pursuant to the Intellectual Property Code and other related
laws) as well as banking transactions (pursuant to the Secrecy of Bank
Deposits Act) re also exempt from compulsory disclosure. It is thus
clear from the foregoing that a party cannot be compelled to produce,
release or disclose documents, papers, or any object which are
considered trade secrets.
Pennswell has a proprietary or economic right over the ingredients or
components of its lubricant products. The formulation thereof is not
known to the general public and is peculiar only to [respondent]
Pennswell. Penswell has a right to guard its trade secrets. Otherwise
information can be illegally and unfairly used by business competitors
who, through their access to Penwell’s business secrets, may use the
same for their own private gain and to the irreparable prejudice of the
latter.
A trade secret is defined as a plan or process, tool,
mechanism or compound known only to its owner and those
of his employees to whom it is necessary to confide it. It also
extends to secret formula or process not patented but known only to
certain individuals using it in compounding some article of trade
having a commercial value. It may consist of any formula, pattern or
device or compilation of information that:
1. Is used in one’s business and
2. Gives the employer an opportunity to obtain an advantage
over competitors who do not possess the information.
To determine whether or not information is a trade secret, American
jurisprudence has developed the following factors:
1. Exent to which information is known outside the business of
the employer
2. Extent to which the information is known by employees and
others involved in the business
3. Extent of measures taken by the employer to guard the secrecy
of information
4. Value of the information to the employer and to competitors
5. Amount of effort or money expended by the company in
developing the information
6. Extent to which the information could be easily or readily
obtained through an independent source.
The chemical composition, formulation, and ingredients of
respondent’s special lubricants are trade secrets within the
contemplation of the law. Respondent was established to engage in the
business of general manufacturing and selling of, and to deal in,
distribute, sell or otherwise dispose of goods, wares, merchandise,
products, including but not limited to industrial chemicals, solvents,
lubricants, acids, alkalies, salts, paints, oils, varnishes, colors,
pigments and similar preparations, among others. It is unmistakable
to our minds that the manufacture and production of respondent’s
products proceed from a formulation of a secret list of ingredients. In
the creation of its lubricants, respondent expended efforts, skills,
research, and resources. What it had achieved by virtue of its
investments may not be wrested from respondent on the mere pretext
that it is necessary for petitioner’s defense against a collection for a
sum of money. By and large, the value of the information to
respondent is crystal clear. Our conclusion is that the detailed
ingredients sought to be revealed have a commercial value to
respondent. Not only do we acknowledge the fact that the
information grants it a competitive advantage; we also find
that there is clearly a glaring intent on the part of
respondent to keep the information confidential and not
available to the prying public.
Clearly, in accordance with our statutory laws, this Court has declared
that intellectual and industrial property rights cases are not simple
property cases. Jurisprudence has consistently acknowledged the
private character of trade secrets. There is a privilege not to disclose
one’s trade secrets.
In the case at bar, petitioner cannot rely on the Consumer Act of the
Philippines, in order to compel respondent to reveal the chemical
components of its products. While it is true that all consumer products
domestically sold, whether manufactured locally or imported, shall
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indicate their general make or active ingredients in their respective
labels of packaging, the law does not apply to respondent.
Respondent’s specialized lubricants are not consumer products
(limited only to food, drugs, cosmetics and devices).
Cocoland Development Corporation v. NLRC
Facts:
 Cocoland is a corporation engaged in the production of coffee, coconut,
cacao and black pepper at its plantation in Basilan. It hired private
respondent Mago, an agriculturist by profession a Field Supervisor
(his work consisted of servicing agricultural needs of respondent at its
plantation).
Sometime in 1989, it was found out by Cocoland that Mago was
engaged in extending technical services and advice to small
famers without prior clearance from management. On
account thereof, the company issued a memorandum which charged
Mago for rendering professional services to outside parties without
knowledge and consent of management in violation of the policy
against unauthorized disclosure of trade secrets which violation was a
ground for termination of his services with the company.
In his letter reply, Mago admitted that he accepted the invitations of
small farm owners and gave his consultancy services in order to uplift
his standard of living however, he denied having violated the
polict against unauthorized disclosure of trade secret
claiming that its technology on coffee propagation was
longer a secret as the same had been learned and applied by
outside parties or small farm owners since 1986 and he was
not the first one to provide outside consultancy services to
such third parties. Private respondent further contended that in
1988, a majority of the petitioner corporation's staff, including private
respondent and his men, had refused to sign a proposed memorandum
of agreement for protecting the company's "Confidentiality of
Technology", because the alleged technology was already known to
outsiders.
Mago filed a complaint for illegal dismissal with damages
with the DOLE and after hearing on the merits, the Arbiter found
that the dismissal was tainted with illegality. Charging the Labor
Arbiter with grave abuse of discretion, the petitioner comes to this
court.
Issue:
 Whether or not the coffee propagation technique herein is a trade
secret of the company.
Ratio:
 No. There is failure to demonstrate with clear and
convincing evidence that Mago violated the company policy
since the said technology is hardly a trade secret since
private respondent had established competently that the
various propagation techniques claimed by petitioner is
readily available to the public. Any determination by
management as to the confidential nature of technologies, processes,
formulae or other so-called trade secrets must have a substantial
factual basis which can pass judicial scrutiny. A fictitious or non-
existent "secret" (or a publicly known one as in the instant case) can in
no wise be the basis of a reasonable and lawful rule or company policy
regarding confidentiality. Had petitioner successfully established by
competent evidence the existence of such company policy as well as
the confidential nature of its technology, perhaps things might have
turned out differently. But inasmuch as petitioner failed utterly on
both counts, it follows that there was no basis at all for private
respondent's dismissal on the ground of either disobedience or loss of
trust and confidence. The petitioner's failure to prove violation of the
policy necessarily means that private respondent's dismissal was not
justified.
In this case, majority of the staff of the company and his men once
refused to sign the confidentiality of technology because the alleged
technology was already known to outsiders. He did not even have to
ask permission since most of the employees knew the different
techniques in the propagation and maintenance of different crops even
before they were hired by the corporation.
Capital Asset Research Corporation v. Finnegan
Facts:
 Capital, a corporation consisting primarily of purchasing tax
executions or liens and tax deeds on real properties for
which property taxes are owed. If the property owner
subsequently fails to satisfy the lien, and foreclosure proceedings take
place, CARC bids on the deed to the property itself at public auction.
Both CARC and Breen look to generate capital and profit by acquiring
properties at bargain rates.
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Capital hired Finnegan to establish Capital’s business in the State of
Georgia and to negotiate bulk contract purchases of tax liens on behalf
of Capital and to facilitate the acquisition of tax deeds. During his
employ, he facilitated the acquisition of tax deed through his own
company “TDI”. After his employment relationship with Capital, he
met with Douglas Breen to discuss the possibility of employment with
Breen. Despite, however his change of employment his company still
remained under contract with Capital. Therefore, he remained in
Capital’s operations in Georgia until present.
 Capital Asset asserts 3 claims against Finnegan in this case:
1. Breach of contract claim asserting breach of consulting
agreement
2. Breach of contract claim asserting a breach of non-
disclosure agreement
3. Claim asserting a violation of Georgia Trade Secrets Act.
After bench trial, the court ruled in favor of Finnegan but ultimately, it
concluded that Finnegan had misappropriated a computer diskette
from Capital containing information which constituted a trade secret
under the Act. Damages were awarded to Capital and enjoined
Finnegan from dealing for 1 year with the properties included in
Capital’s portfolio of tax executions.
Issue:
 Whether or not Finnegan is liable for trade secret misappropriation.
Ratio:
 No. A claim for misappropriation of trade secrets under the Georgia
Trade Secrets Act requires proof of:
1. There is a trade secret
2. Opposing party misappropriated the trade secret.
The party asserting the existence of trade secret has the burden of
proving that the information so qualifies and that the accused party
violated the Act.
A trade secret is an information without regard to form, including
but not limited to a pattern, a compilation, a program, a device, a
method, a technique, a drawing, a process, financial data, financial
plans, product plans or a list of actual or potential customers or
suppliers which is not commonly known by or available to the public
and which information derives economic value, actual or
potential from not being generally known to and not being
readily ascertainable by proper means, by other persons
who can obtain economic value from its disclosure or use and
is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy. Even if all of the
information is publicly available, a unique compilation of that
information, which adds value to the information, also may qualify as a
trade secret.
The testimony regarding the "method" or "formula" which constitutes
Capital’s alleged trade secret describes the process by which Capital
evaluates the amount to be bid on a tax deed. That process involves the
consideration of the following information:
1. The assessed value of the property
2. The valuation reports on the property produced by 3rd party
real estate information database services
3. The attributes of the property and the neighborhood based on
drive bys of the site by Capital employees
4. Prediction of the property owner’s likelihood of redeeming the
tax liens and making interest payments based on the specific
owner’s payment record
5. National averages of tax redemption behavior.
Capital claims as trade secrets its compilation of property-
specific information, its national database on tax
redemption behavior, and its final bid guidelines for tax
deeds sold at auction.
There is no question that the vast bulk of the information Capital uses
in this process is available to the public or that the method utilized by
Capital is the same basic method by which any informed buyer would
prepare to submit an intelligent bid at any auction. Almost all of the
enumerated items above are public records. A person experienced in
the trade has sufficient time to compile the information from these
public sources before the auction.
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AMP Incorporated v. James Fleischhacker
Facts:
 AMP Incorporated (AMP), the leading producer of electrical and
electronic connection device brought this action against its former
employee James and one of its competitors (Molex) and
misappropriation of trade secrets. Allegedly, in 1984, Molex hired
James who is the former Division Manager of its components division
to fill the position of Director of Marketing of Molex. He rapidly
advanced through the Molex and in 1982, he was named as Manager of
the Components and Assemblies Division, the position he held until he
resigned. As Manager, his duties includes supervision of 1200 people
who were responsible for the manufacture and sale of component
parts.
AMP has alleged that Molex's hiring of Mr. Fleischhacker is part of a
larger pattern of conduct by Molex involving the misappropriation and
threatened misappropriation of AMP's trade secrets and other
confidential information, and the solicitation and hiring of AMP
personnel. Given the nature of the competition between Molex and
AMP, the nature of the respective positions held by Mr. James at AMP
and Molex, and an alleged propensity on the part of Molex to
misappropriate AMP's internal information without regard to its
proprietary nature, AMP maintains that it is inevitable that Mr. James
and other AMP personnel hired by Molex will use and disclose AMP
trade secrets and confidential information for the benefit and unjust
enrichment of Molex.
After trial on the merits, the court ruled in favor of James denying
injunctive relief and damages against Molex for unfair competition and
denying injunctive relief against Molex and Mr. James to
prevent trade secret misappropriation. DC explained that
because of their relatively simple design and the ease with which they
could be copied, the products manufactured by AMP's Components &
Assemblies Division did not constitute protectible trade secrets.
Issue:
 Whether or not James is liable for trade secrets misappropriation
Ratio:
 No. Resolution of the issue presented herein lies in the
distinction between the protection afforded by an employer
who has bound his employee by an enforceable post
employment restrictive covenant not to compete and one
who relies exclusively upon common law restrictions against
disclosure of confidential information. While an enforceable
restrictive covenant may protect material, such as confidential
information revealed to an employee during the course of his
employment, which does not constitute a trade secret, an employer's
protection absent a restrictive covenant is narrower and extends only
to trade secrets or near-permanent customer relationships.
In this case, James was NOT BOUND by any enforceable restrictive
covenant NOT TO COMPETE. However, he signed an agreement
before he was employed by AMP that he shall keep
confidential during and subsequent to his employment all
information relating to the company’s business or trade
secrets, its sources of supply or lists of customers and its
plans or contemplated actions. The language of this
confidentiality agreement purports to prohibit Mr. Fleischhacker from
disclosing to any non-AMP personnel any information relating to AMP
and its operations forever. However, this agreement was held to be
unenforceable since it constitutes unreasonable restraints on trade
which unduly restrict the free flow of information necessary for
business competition since it contains no geographical or duration
limitation.
Because Mr. James is not subject to any enforceable
contractual restrictions, AMP was first required to establish
the existence of genuine trade secrets in order for injunctive
relief to be warranted. It is generally recognized in Illinois that at
the termination of employment, an employee may not take with him
confidential, particularized plans or processes developed by his
employer and disclosed to him while the employer-employee
relationship existed, which are unknown to others in the industry and
which give the employer an advantage over his competitors. On the
other hand, an employee is free to take with him general skills and
knowledge acquired during his tenure with his former employer. One
who has worked in a particular field cannot be compelled to erase from
his mind all of the general skills, knowledge and expertise acquired
through his experience. These skills are valuable to such employee in
the market place for his services. Restraints cannot be lightly placed
upon his right to compete in the area of his greatest worth.
The district court credited the testimony of Mr. James that after he
tendered his resignation he hurriedly packed his personal papers and
belongings under the surveillance of an AMP employee and did not
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deliberately take with him anything of a confidential nature. AMP has
offered no proof to the contrary. The record is similarly devoid of any
evidence that Mr. James ever systematically recorded, copied,
compiled, or even purposefully memorized any of AMP's confidential
business information while he was still employed at AMP for use in his
new position at Molex.
Mr. James was a high-level managerial executive who had broad
supervisory responsibility for 1200 employees and over 10,000
different products at AMP. AMP now requests that we restrain him
from in any way making use of or relying on his independent
recollections of generalized business and technical information to
which he had access while employed at AMP. Illinois law simply does
not authorize such relief. That is not to say that [a former employee]
may not have derived some benefit from his access to the collective
experience of [his employer] (experience to which [the employee]
himself doubtless contributed significantly during the course of his
employment). It is rather to say such information comprises general
skills and knowledge acquired in the course of employment. Those are
things an employee is free to take and to use in later pursuits,
especially if they do not take the form of written records, compilations
or analyses.
Dynamics Research v. Analytic Sciences Corporation
Facts:
 Dynamic Research Corporation (DRC) brought this action against
defendant Robert Bicknell (formerly employee) and the defendant
Analytic by whom Bicknell was hired after he resigned from the
plaintiff. DRC sought to enjoin the defendants from using for their
own benefit the proprietary system of plaintiff known as
TIRAS and from interfering with business relationships
between DRC and customers of DRC. Such relief prayed for was
denied and the case was referred to a master where evidentiary
hearings were held. The final report was filed on April 9, 1975. The
master concluded that "the structure and function of the TIRAS system
is a trade secret" and "that both [defendants] intentionally and
knowingly used trade secrets and other confidential information of the
plaintiff to the benefit of the defendants and the damage of the
plaintiff.
 Bicknell and Atlantic (respondents collectively) challenged this
conclusion and claimed that the structure and function of TIRAS and
specifically setting out the factual basis for the various elements legally
necessary for entitlement to protection were not addressed in the
report. This was denied and the report of the master was recommitted.
However, subsequently, the master filed an additional subsidiary
finding which purported to contain summaries of the evidence as
requested thus, the first report was vacated. Ultimately, judgment was
rendered denying both injunctive relief and damages plaintiff prayed
for. Thus, plaintiff appealed.
The information under question here is the TIRAS which involve
information in at least 4 categories:
1. How the frequency with which the instrument being followed
and its component parts break down or require repairs and the
time to make the repairs
2. Information a to the reason the instrument broke down
3. Information as to the status and location of each component
part
4. Information as to how well each instrument is meeting its
design goals.
The information in these reports is used by the customer and
others in making decisions concerning the instruments,
including, for example, decisions as to their design and as to
the requirements for spare parts. In addition, the routine
reports serve to keep all who are involved in the
development or operation of the instruments informed as to
what is being done and what their problems are. Each project
is managed by an engineer who is knowledgeable about the
instruments being followed by that project. One to four other
engineers may also work on the project each playing key roles.
Bickell’s primary responsibility in the corporation was in
marketing TIRAS. During his stay, he became dissatisfied seeing as
how the corporation was not giving enough financial support to fully
develop the TIRAS service. He was likewise unhappy with his own
salary. He resigned and looked for employment in Atlantic.
At Analytic, Bicknell familiarized himself with its
capabilities and its employees as the first step in developing
a management information service in competition with the
plaintiff. He began work on a proposal to perform such a
service with respect to certain instruments in the Short
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Range Attack Missile (SRAM), including its inertial guidance
system.
Issue:
 Whether or not plaintiff is entitled to injunctive relief and damages.
Ratio:
 No. This starting point is particularly appropriate in this case for, as
set out above Bicknell, an inertial guidance engineer, came to his job at
DRC with knowledge and skill in the plaintiff's area of operation; and,
as the master found, "was hired by DRC in part because he understood
its management system concept. In these circumstances, the employer
has a heavy burden of isolating the secret for which he claims
protection and of demonstrating that the employee is left free
(questions of good faith and reasonable contract restrictions apart) to
use the knowledge and skill he brought to the job as well as "what he
has learned during the employment.
Essentially, the plaintiff's complaint is that Bicknell has taken his
talent to Analytic and in combination with Analytic's resources and
other talents is creating a capability which threatens DRC's unique
position. But we see no impediment to Bicknell's employment of his
talents in this way. DRC is not entitled to protection of a monopoly
created by its unique capability. Uniqueness without more is not
commensurate with possession of a trade secret. Bicknell may well
have enhanced his knowledge and skill through exposure, and his own
contribution, to the development of TIRAS -- just how much is not
made clear by the master or the plaintiff whose burden it was to
specify for he came to DRC with knowledge and experience in the field
and familiarity with DRC's operation.
Not only "the nature of the information" but also "the conduct of the
parties" (Jet Spray Cooler, Inc. v. Crampton, 361 Mass. at 840) leads to
the conclusion that the plaintiff is not entitled to restrain Bicknell's use
of his knowledge gained while working on TIRAS. As we have seen
both the role of the engineers on a TIRAS project and the detailed
nature of the data collected were publicized in the Brann paper and
DRC's advertising brochure. Nor is there a finding or evidence that the
plaintiff "pursued an active course of conduct designed to" bring home
to Bicknell or any other employee that any aspect of TIRAS was to be
kept secret.
In the circumstances of this case, the nondisclosure agreement which
Bicknell signed on entering DRC's employ cannot be said to have put
Bicknell on notice, either when he signed it or at any time thereafter,
that the obvious notions with which he was working were trade secrets.
Indeed, when he openly told Anderegg and Rand that he was resigning
to compete, neither of them mentioned the nondisclosure agreement
though Anderegg did urge him not to compete.
While trade secrets will be protected where a confidential
relationship exists even in the absence of a contractual
agreement to that effect, a contractual agreement without
more does not afford such protection. It must be shown that
the processes or machinery here are in fact trade secrets and
that access to them was gained in confidence. Such an
agreement cannot make secret that which is not secret, and
it remains for the court to determine whether an alleged
trade secret is in fact such.
Religious Technology Center v. Wollersheim
Facts:
 The Church of New Civilization (New Church) is a splinter of Church
Scientology (Old Church). The latter teaches that a person’s behavious
and well-being are improved by removing “engrams” (which are
impressions recorded by the unconscious mind in times of trauma in
this life or in previous lives) from the unconscious mind. These
“engrams” are purged through auditing which uses the technology and
advanced technology of the old church. It is a set of structured
questions and drills. The responses are measured on a Hubbard E-
meter, which reflects skin voltage which enable the examiner to
identify one’s engrams.
The Old Church herein asserts that the unsupervised,
premature exposure of an adherent to these materials will
produce a spiritually harmful effect. They make the
materials for this technology available only to adherents who
agree in writing to maintain confidentiality. The assert that the
use of the New Church does not safeguard these materials from any
commercial transaction.
 Defendant in this case is one Mayo who was at one time a close
associate of the Old Church but eventually left the Church in 1983 to
establish the New Church which embraces beliefs and
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provides counseling and training to its adherents which are
essentially identical to those offered by the Old Church.
One night in 1983, materials of the Old Church were stolen by
individuals. Despite the fact that these materials were returned to the
Old Church, the Old Church maintains that copies were made and that
the New Church acquired these copies.
 A suit was thus filed by the Old Church (on the basis of California law
state claims including misappropriation of trade secrets) alleging that
in 1985, it learned that the New Church intended to
disseminate the contents of the materials stolen in 1983 in a
non-confidential setting. As counsel for the defendant in this case
that was filed, Larry Wollersheim (Wollersheim) obtained copies of the
materials during the deposition of Margaret Singer and Ofshe
(defendants). In view of the fact that there is a pending tort action
against the Old Church filed by Wollersheim (which is separate from
this action), the Old Church made a request to seal its records
including the higher level materials obtained by Wollersheim in the
deposition. This was refused. 3 days later, the Old Church filed
this claim in the federal court against the New Church for
allegedly passing the materials to Wollersheim (its counsel).
DC granted injunction in favor of the Old Church enjoining the New
Church from disclosing the confidential materials further.
Issue:
 Whether or not the religious materials constitute a protectable trade
secret.
Ratio:
 No. It is now well settled that a trade secret may consist of any
formula, pattern, devise or compilation of information
which is used in one’s business, and which gives him an
opportunity to obtain advantage over competitors who do
not know or use it.
California law defined trade secrets as: “information, including
formula, pattern, compilation, program, devise, method, technique, or
process that:
1. Derives independent economic value, actual or
potential, from not being generally known to the
public or to other persons who can obtain economic value
from its disclosure or use;
2. It is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
To be protectable, the confidential material must convey an
actual or potential commercial advantage, presumably
measurable in dollar terms. A trade secret is one which is used in
business and which gives him an opportunity to obtain an advantage
over competitors who do not know or use it.
Although there is no definition as of yet in case law which defines
“independent economic value”, the element carries with it the common
law requirement of competitive advantage. This does not mean that
the owner must be the only one in the market. If an outsider would
obtain a valuable share of the market by gaining certain information,
that information would be a trade secret if it is not known or
readily ascertainable.
Here, the Church alleged no competitive market advantage from
maintaining the secrecy of its higher level materials. Indeed,
to do so would raise grave doubts about its claim as a religion and not-
for-profit corporation. Rather, the church alleges that the
precepts require adherents to be audited in a structured
manner with exposure to higher level materials only when
the auditor considers the adherent ready. The injury inflicted
on the Church by the new church's misappropriation of its "secret" is
the "religious harm" that would be suffered by Church adherents from
premature unsupervised exposure to the materials. The value of the
confidential materials is thus spiritual not commercial, and the
materials cannot be said to have the "independent economic value"
necessary to qualify as a protectible trade secret.
Rivendell Forest Products v. Georgia-Pacitic Corporation
Facts:
 Plaintiffs and defendants in this case are both engaged in the lumber
business. Defendant Cornwell was employed originally by Rivendell
and later by GP. Rivendell was a wholesaler of lumber known as
“reload wholesaler” which provided lumber of the kind and sizes
needed by its customers. GP and Rivendell are competitors in
the lumber business.
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Rivendell brought this suit against GP for wrongful appropriation
of trade secret allegedly because a computer software, which was
developed by Rivendell over the years and which is asserted as a trade
secret under Colorado Law was misappropriated and used by GP
Cornwell and GP. This system is allegedly a system which allows
Rivendell to provide its customers with special service and to manage
its distribution centers as no competitor would do since this enabled
Rivendell to give immediate answers to queries and phone
inquiries as to price, quantities, places and delivery time as
to various lumber sizes and types without any computations
which required a delay and a call back to the customer. The
complaint was dismissed.
Issue:
 Whether or not the computer system is considered a trade secret.
 Whether or not there is a violation of the Colorado Trade Secrets Law.
Ratio:
 Yes. Trade secret means any portion or phase of any scientific or
technical information, design, process, procedure, formula,
improvement, confidential business or financial information, listing of
names, addresses, or telephone numbers, or other information relating
to any business or profession which is secret and of value. To be a
'trade secret' the owner thereof must have taken measures to prevent
the secret from becoming available to persons other than those
selected by the owner to have access thereto for limited purposes.
Although an exact definition of what a trade secret is may
not be possible, the ff. are considered in the determination:
1. The extent to which the information is known outside the
business
2. The extent to which it is known to those inside the business i.
e. by the employees
3. The precautions taken by the holder of the trade secret to
guard the secrecy of the information;
4. The savings effected and the value of the holder in having the
information as against competitors
5. The amount of effort or money expended in obtaining and
developing the information
6. The amount of time and expense it would take for others to
acquire and duplicate the information.
This computer software system in issue, Rivendell asserts, took it nine
years to develop at a cost of nearly a million dollars. Mr. Cornwell
worked for Rivendell in this development, knew it well, and had a
significant role although he was not a computer expert. While working
for Rivendell he was contacted by an executive of GP, and two months
thereafter was hired by GP. with a job description to develop a new
computer software system for GP. Rivendell's system was the only one
Cornwell had been familiar with, and was the only one then in the
industry which could provide immediate answers on all aspects of the
customers' needs. He was not a computer expert, as mentioned, but
immediately after being hired by GP he went to work on a computer
system for GP. This system was very soon developed, and it was for all
practical purposes the same as the one at Rivendell.
What constitutes a trade secret is an issue of fact. Whether
the computer system herein was a trade secret therefore,
factual.
In view of the foregoing, the record establishes the production
by Rivendell’s software system of immediate final pricing by
the integration of the many computations as to size of
lumber, type of lumber, location, size, freight charges, time
of delivery and other factors permit immediate quotation of
a total price. This was a basic factual demonstration of the
integration obtained by the software, and it was a total package for
immediate use. It was the only system in the industry which could
accomplish this. GP had nothing comparable before Cornwell
was ‘pirated’ (my words).
The law defines misappropriation of a trade secret as:
1. Aquisition of a trade secret of another by a person who know
or has reason to know that the trade secret was acquired by
improper means or
2. Disclosure or use of a trade secret of another without express
or implied consent by a person who:
a. Used improper means to acquire knowledge of the
trade secret or
b. At the time of the disclosure or use, knew or had
reason to know that his knowledge of the trade secret
was:
i. Derived from or through a person who had
utilized improper means to acquire it
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ii. Acquired under circumstances giving rise to a
duty to maintain its secrecy or limit its use or
iii. Derived from or through a person who owed a
duty to the person seeking relief to maintain
its secrecy or limit its use.
Rohm and Haas Company v. Adco Chemical Company
Facts:
 Joseph Harvey (Joseph) joined Rohm and Haas (R&H) in 1959 as a
laboratory technician. He worked under the scientists of the company
in the development of latex paints including those incorporating the
Process involved in the present case. In fact, he had handwritten notes
as to the process which he carried out pursuant to the instructions of
R&H. His duties also gave him access to the plaintiff’s commercial
process descriptions which detailed the process.
During his employment with R&H, he signed an employment
agreement in which he acknowledged that any business or trade
secrets including secret processes of manufacture of R&H are the
property of the same company and agreed not to divulge anything to
outsiders or other unauthorized persons either while being employed
by R&H or afterwards.
 Adco and Thubut & Walker (ATW) are related corporations engaged in
the manufacture of various chemicals. It initiated a program to copy
two of plaintiffs’ products which were made using the process. To
accomplish this, they hired Victor Meyer whom ATW retained as an
independent consulatant.
Dr. Meyer advised defendants that he had successfully developed a
match for plaintiff's products. Defendants, based on this report,
prepared an advertising and promotional campaign for their matching
products. At this show and during this period, defendants represented
to the trade that their matching products were available. In order to fill
orders from customers based on these representations, defendants
purchased plaintiff's products, repackaged them as their own, and sold
them without informing customers of the substitution. At the time of
the show, likewise, Harvey was contacted by ATW and after one
interview, he was hired by ATW to develop latex paint compounds.
On the job, one of his first jobs was to duplicate a product which was
using the process which had been the object of Meyer’s resesrch efforts
in R&H. Without assistance, he prepared a laboratory replication
of the product. Later in his deposition, Harvey admitted that
the process used was one he had learned and brought from
R&H (which he revealed to ATW).
 After trial, the DC issued an order rejecting the trade secret claims
stating that plaintiffs failed to show that the process used for the
production of latex in R&H was a trade secret.
Issue:
 Whether or not the process involved herein is a trade secret.
 Whether or not there is a trade secret violation.
Ratio:
 To establish a trade secret claim, the plaintiffs must establish 5 basic
elements of the claim:
1. The existence of a trade secret
2. Communicated in confidence by the plaintiff to the
employee
3. Disclosed by the employee in breach of that confidence
4. Acquired by competitor with knowledge of the breach
of confidence.
5. Use of the competitor to the detriment of the plaintiff.
In this case, the plaintiffs already proved all the elements of
his trade secret claim except as to the existence of a trade
secret which is still under question.
1. It established that the process was of great value and
importance to the company and serves as the basis of
4 highly successful products;
2. That it disclosed the process to Harvey in confidence (as
evidenced by the fact that there is an agreement to the
confidentiality)
3. Harvey revealed the same in violation of this duty to preserve
as evidenced by his own answers
4. It was acquired by ATW without the knowledge that its
revelation was wrongful.
Defendants knew that plaintiff, and only plaintiff, made a latex
paint vehicle superior to their own. They had tried for years,
unsuccessfully, to duplicate plaintiff's method of manufacture.
They hired a person who had been an employee of the plaintiff
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and immediately set him to duplicating plaintiff's product. The
employee handed them the Process for making one of
plaintiff's products almost as soon as he walked in the door.
They knew that the employee's experience with latex acrylics
could have come only from his time in plaintiff's employ. They
were acquainted with the confidential nature both of plaintiff's
business and of plaintiff's relation to its employees. These facts
left it all but impossible to avoid the conclusion that
defendants knew Harvey had revealed to them something that
plaintiff had tried very hard to keep secret.
5. There is no dispute that defendants used the Process divulged
by Harvey to compete against plaintiff by putting on the
market two products touted as duplicates of plaintiff's
products.
To prove the last and only element left to be proved,
plaintiffs demonstrated the fact that the realities of the
market place and the valuable method of producing latex
paint vehicles were unknown to its competitors. R&H is the
only manufacturer who uses “the Process” and as a result it could offer
4 superior products. Only after defendants acquired the "Harvey
process" could they field a match for the plaintiff's products. None of
these facts were seriously contested by the defendants below, and none
turned on a question of the credibility of witnesses. Under both New
Jersey and Pennsylvania law, these facts were sufficient to
establish that the alleged secret is in fact the secret of a
particular employer, and not a matter of general knowledge
within the industry.
The law of these states provides that even though each and every
element of plaintiff's Process is known to the industry, the
combination of those elements may be a trade secret if it "produces a
product superior to that of competitors. Plaintiff proved that the
Process produced a superior product. The district court's second
ground for concluding that plaintiff's Process was widely known in the
industry, based on a misreading of the applicable law, thus is
erroneous.
Barnett v. Shidler
Facts:
 Harvey Barnett and Infant Swimming Research (ISR) filed a complaint
against its former emplotees alleging violations of state law claims of
misappropriation of trade secrets. Allegedly, Judy Heuman, Add
Shidler and Alison Geerdes (collectively defendants), as former
ISR instructors who left the company in 2000, signed a
nondisclosure and confidentiality agreement and a license
agreement containing a further confidentiality information
provision as well as a covenant not to compete. However,
notwithstanding these agreements, the 3 former employees started
Infant Aquatic Survival (IAS) a new company devoted to teaching
infant children to swim.
Allegedly, the IAS is similar to the ISR program of ISR in that
it utilizes the same “swim, float, swim” method implements some of
the safety protocols and uses a Daily Health Data Sheet similar to the
BUDS sheet used by ISR.
 Upon motion for summary judgment, the complaint was dismissed.
The DC held that the ISR program was not a trade secret and that the
covenant not to compete and the confidentiality provision in the
license agreement were not enforceable.
Issue:
 Whether or not the ISR program is a trade secret.
 Whether or not the covenant not to compete is valid.
 Whether or not the confidentiality agreement is valid.
Ratio:
 Yes. Our review of the findings of the DC judgment leads us to
conclude that the DC improperly looked at the components of the ISR
in isolation rather than as a whole. A trade secret can exist in
combination of characteristics, each of which, considered
separately, is in the public domain, but taken together, may
yield a competitive advantage that results in a protectable
trade secret.
To prove its claim, ISR submitted 4 affidavits attesting to the
uniqueness of the ISR program. Furthermore, they point to the
testimony of 2 instructors in the ISR program regarding its
uniqueness. Likewise, it was elicited from one of its witnesses that the
witness knows of no other aquatic programs whose specific goal is to
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certify instructors, in a 5-week time frame, to teach infants and
toddlers aquatic survival skills.
Moreover, the precautions taken by the holder of the trade
secret to guard secrecy of the information (the franchise
agreements and the license agreements). In his affidavit, Dr.
Barnett averred that "ISR has protected the confidentiality of
all of the ISR research and materials since the 1970's by
franchise agreements with confidentiality restrictions and
later by the restrictions of the license agreements." As for the
franchise agreements, they contained a "Confidentiality of
Information" provision providing that "franchisee shall not at
any time or in any way divulge, disclose, or communicate to
any person or organization in any manner whatsoever any
information concerning any matters affecting or relating to
the business of Franchisor." Moreover, license agreements, prior
to 1996, contained a "Confidentiality of Information" provision
stating that the licensee shall not divulge the secrets without specific
written consent form from licensor.
ISR submitted evidence that its program is unique in that it instructs
individuals, in a five-week period, how to teach aquatic-survival skills
to infants as young as six-months old. ISR further submitted evidence
showing that, through franchise agreements and license agreements, it
has taken precautions to guard the secrecy of its program.
 The covenant which provides that the licensee shall not,
during the term or 2 years immediately from termination,
engage directly or indirectly in teaching infants or yong
children to swim or engage in the business of training other
individuals for the purpose of teaching infants or young
children to swim, is VALID. The validity of the covenant herein
lies in the fact that there is a trade secret since such is reasonable
provided that there is a trade secret to be protected. Since there is one
in this case, the court held that the breach of the contract claim must
go forward.
Rockwell Graphics v. Dev Industries
Facts:
 Rockwell Graphics (RG) is a manufacturer of printing presses used by
newspapers and of parts for those presses, brought this suit against
DEV Industries (Dev), a competing manufacturer and against the
president of Dev who used to be employed by Rockwell.
Rockwell sometimes does not manufacture the parts itself.
Sometimes when an owner of one of Rockwell’s presses needs a
particular part, it will subcontract the manufacturer of it to an
independent machine shop, called a vendor by the
parties.When it does this, RG gives the vendor a piece part drawing
indicating materials, dimensions, tolerances and methods of
manufacture. Without than information, the vendor could not
manufacture the part. Hence, Rockwell tries to keep the piece part
drawings secret though not from the vendors.
 Rockwell employed Fleck and Peloso which gave them access to piece
part drawings. Peloso was fired from RG when he was caught
removing piece part drawings from the RG plant. Later, they both left
and joint Dev. During pretrial, it was found that Dev has 100 of
RG’s piece part drawings which Dev claimed to have
obtained lawfully either form customers of RG or from RG
vendors contrary to their claim that Fleck or Peloso stole
them when they were employed by it or Dev obtained them
in some unlawful manner.
It should be noted herein that RG admits to having supplied a few
piece part drawings to customers but they were piece part drawings of
obsolete parts that RG has no interest in manufacturing and of a safety
device that was not part of the press as originally delivered but that its
customers were clamoring for more to the point, none of these is
among those RG claims Dev misappropriated.
 The District Court rendered a decision in favor of Dev finding that
there is no trade secret to be protected.
Issue:
 Whether or not there is a trade secret.
Ratio:
 Yes. The use of security, restricted access, confidentiality
agreements and confidentiality markings amounted to
reasonable efforts. RG keeps all its engineering drawings, including
both piece part and assembly drawings, in a vault. Access not only to
the vault, but also to the building in which it is located, is limited to
authorized employees who display identification. These are mainly
engineers, of whom RG employs 200. They are required to sign
agreements not to disseminate the drawings, or disclose their contents,
other than as authorized by the company. An authorized employee
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who needs a drawing must sign it out from the vault and return it
when he has finished with it. But he is permitted to make copies, which
he is to destroy when he no longer needs them in his work. The only
outsiders allowed to see piece part drawings are the vendors (who are
given copies, not originals). They too are required to sign
confidentiality agreements, and in addition each drawing is stamped
with a legend stating that it contains proprietary material. Vendors,
like RG's own engineers, are allowed to make copies for
internal working purposes, and although the confidentiality
agreement that they sign requires the vendor to return the
drawing when the order has been filled, Rockwell does not
enforce this requirement. The rationale for not enforcing it is that
the vendor will need the drawing if Rockwell reorders the
part. Rockwell even permits unsuccessful bidders for a piece
part contract to keep the drawings, on the theory that the
high bidder this round may be the low bidder the next.
The mere fact that there is a disclosure of its trade secret to a limited
number of outsiders for a particular purpose does not forfeit trade
secret protection. Such disclosure is often necessary to the efficient
exploitation of a trade secret. It imposes a duty of confidentiality on
the part of the person to whom the disclosure is made.
It should be apparent that the two different conceptions of trade
secret protection are better described as different emphases. The
first emphasizes the desirability of deterring efforts that
have as their sole purpose and effect the redistribution of
wealth from one firm to another. The second emphasizes the
desirability of encouraging inventive activity by protecting
its fruits from efforts at appropriation that are, indeed, sterile
wealth-redistributive--not productive--activities.
Under the first approach, the plaintiff must prove that the defendant
obtained the plaintiff's trade secret by a wrongful act, illustrated here
by the alleged acts of Fleck and Peloso in removing piece part drawings
from RG's premises without authorization, in violation of their
employment contracts and confidentiality agreements, and using them
in competition with RG. RG is unable to prove directly that the
100 piece part drawings it got from DEV in discovery were
stolen by Fleck and Peloso or obtained by other improper
means. But if it can show that the probability that DEV could have
obtained them otherwise--that is, without engaging in wrongdoing--is
slight, then it will have taken a giant step toward proving what it must
prove in order to recover under the first theory of trade secret
protection. The greater the precautions that RG took to
maintain the secrecy of the piece part drawings, the lower
the probability that DEV obtained them properly and the
higher the probability that it obtained them through a
wrongful act; the owner had taken pains to prevent them from being
obtained otherwise.
Under the second theory of trade secret protection, the owner's
precautions still have evidentiary significance, but now primarily as
evidence that the secret has real value. For the precise means by which
the defendant acquired it is less important under the second theory,
though not completely unimportant; remember that even the second
theory allows the unmasking of a trade secret by some means, such as
reverse engineering. If RG expended only paltry resources on
preventing its piece part drawings from falling into the hands of
competitors such as DEV, why should the law, whose machinery is far
from costless, bother to provide RG with a remedy? The information
contained in the drawings cannot have been worth much if RG did not
think it worthwhile to make serious efforts to keep the information
secret.
The remedial significance of such efforts lies in the fact that
if the plaintiff has allowed his trade secret to fall into the
public domain, he would enjoy a windfall if permitted to
recover damages merely because the defendant took the
secret from him, rather than from the public domain as it
could have done with impunity. If it were true, as apparently it
is not, that RG had given the piece part drawings at issue to
customers, and it had done so without requiring the customers to hold
them in confidence, DEV could have obtained the drawings from the
customers without committing any wrong. The harm to RG would have
been the same as if DEV had stolen the drawings from it, but it would
have had no remedy, having parted with its rights to the trade secret.
In the first case, a defendant is perfectly entitled to obtain
the property by lawful conduct if he can, and he can if the
property is in the hands of persons who themselves
committed no wrong to get it. In the second case the
defendant is perfectly entitled to obtain the property if the
plaintiff has abandoned it by giving it away without
restrictions. The more the owner of the trade secret spends on
preventing the secret from leaking out, the more he demonstrates that
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the secret has real value deserving of legal protection, that he really
was hurt as a result of the misappropriation of it, and that there really
was misappropriation.
Metallurgical Industries v. Fourtek
Facts:
 Metallurgical Industries (MI) has been in the business of reclaiming
carbide (a metallic compound of great value in certain industrial
processes) since 1967 using the more primitive “cold-stream process”.
In the mid 1970s it began to reconsider using zinc recovery process.
Hence, for this, it hired Irvin DIelefeldt, a representative of Therm O-
Vac to design and construct 2 zinc recovery furnaces.
Dissatisfied with its performance, Modified the delivered recovery
furnaces extensively. Later, MI provided another furnace
manufacturer all its hard won-information (from the overhaul of the
delivered furnaces) to Consarc. Consarc learned of its modofications
but because Consarc was unwilling or unable to build what MI wanted,
the agreement fell through and MI returned to Therm O Vac (TOV) for
its second furnace.
TOV went bankrupt hence Irvin and the 3 other former TOV
employees formed Fourtek Incorporated. Fourtek contracted
with Smith and provided it with furnaces. Smith has been unable to
use this furnace commercially, however, because a current shortage of
carbide scrap prevents its economically feasible operation.
In view of their supply to Smith, MI brought a diversity action against
the employees of Fourtek. It charged them of misappropriating its
trade secrets. However, the TC found that there is no trade secret to
speak of in this case. Smith argues that there is no trade secret since
the basic zing recovery process has already been publicized in the
trade.
Issue:
 Whether or not there is a trade secret to be protected.
Ratio:
 MI’s particular modification efforts can be as yet unknown
to the industry because a general description of the zinc
recovery process reveals nothing about the benefits unitary
heating elements and vacuum pump filters can provide to
that procedure. That the scientific principles are generally known
does not necessarily refute MI’s claim of trade secrets.
MI presented evidence to back up its claim. They presented Blim as to
his belief that MI’s changes were unknown to the carbide reclamation
industry. Evidence likewise shows that MI has exerted efforts
to keep secrets its modifications. Blum noted that there were
security measures taken to coneal the furnaces from all but
authorized personnel. The furnaces were hidden from public view
while signs warned all about restricted access. Security measures
cost money. A manufacturer therefore presumably would
not incur these costs if it believed that its competitors
already knew about the information involved.
Despite the fact that it revealed these secrets to Consarc, there can still
be a trade secret. The law requires secrecy but it need not be
absolute. Public revelation would dispel all secrecy but the holder
of a secret need not remain totally silent. He may, without
losing its protection communicate it to employees involved in its use.
He may likewise communicate it to others pledged to secrecy. We
conclude that a holder may divulge his information to a limited extent
without destroying its status as a trade secret. To hold otherwise
would greatly limit the holder's ability to profit from his secret. If
disclosure to others is made to further the holder's economic interests,
it should, in appropriate circumstances, be considered a limited
disclosure that does not destroy the requisite secrecy.
There are 2 reasons as to why the disclosure herein does not dispel the
trade secret protection:
1. The disclosure was not a public announcement. It was
divulged to 2 business men with whom it was dealing with
2. The disclosures were made to further MI’s economic interests.
That the cost of devising the secret and the value the secret provides
are criteria in the legal formulation of a trade secret shows the
equitable underpinnings of this area of the law. It seems only fair that
one should be able to keep and enjoy the fruits of his labor. If a
businessman has worked hard, has used his imagination, and has
taken bold steps to gain an advantage over his competitors, he should
be able to profit from his efforts. Because a commercial advantage can
vanish once the competition learns of it, the law should protect the
businessman's efforts to keep his achievements secret.
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Paramanandam v. Herrmann
Facts:
 Victoria established Dunamic Sales as a sole partnership with the
assistance of her husband who had experience in the scales marketing
business. The Hermmanns (the “spouses”) were acquainted with Ivan
who had worked in the scales business with John’s father. They hired
Ivan’s consulting firm to develop a website for Dynamic Sales’ online
retail store.
Pursuant to this, the spouses gave Ivan the password to make changes
to the website. Likewise, he contacted distributors to obtain
permission to display their information on the website. With the
spouses’ assistance, Ivan registered 400 domain names, among them
Mail88.com and developed 6000 corresponding keywords all of
which would direct potential customers to Dynamic Sales online store
via interent search.
Ivan suffered a hear attack. After he recovered, he told the spouses he
wanted to work from home for a higher salary but the spouses refused.
Upon refusal, he told the spouses that he wanted to get out of the
scale business. They terminated their relationship thus, Ivan
started his own online retail store, Scales.com. The website he
created was practically identical in content and appearance to
Dynamic’s website. They also discovered that internet searches
conducted using Dynamic Scales' name or toll-free number as search
terms would yield results that listed Dynamic Scales' company
information but were actually linked to Ivan's website at Mall88.com.
For this. Dymanic filed a case against Ivan who allegedly operated
Scorpion, Mail88 and Scaleable Scales.com in violation of the trade
secrets law. Allegedly, they misappropriated domain names developed
and created and maintained by Dynamic. The DC granted the
preliminary injunction in favor of Dynamic. Before this court thus,
Ivan claims that Dynamic failed to meet its evidentiary burden with
respect to all 4 factors.
Issue:
 Whether or not there is misappropriation of trade secrets.
Ratio:
 No. There was no effort to maintain secrecy. Misappropriation
is defined as:
1. Aquisition of a trade secret of another by a person who know
or has reason to know that the trade secret was acquired by
improper means or
2. Disclosure or use of a trade secret of another without express
or implied consent by a person who:
a. Used improper means to acquire knowledge of the
trade secret or
b. At the time of the disclosure or use, knew or had
reason to know that his knowledge of the trade secret
was:
i. Derived from or through a person who had
utilized improper means to acquire it
ii. Acquired under circumstances giving rise to a
duty to maintain its secrecy or limit its use or
iii. Derived from or through a person who owed a
duty to the person seeking relief to maintain
its secrecy or limit its use.
The alleged misappropriated trade secret in this case is the
information contained on the website and the domain names
developed, created and maintained by and for Dynamic. However, the
court decided that even assuming that these matters fall under
the trade secret protection law, Dynamic Scales failed to
establish that any efforts were made to maintain its secrecy.
In the testimony of John Herrmann he stated that “you could be very
secretive and we chose not to be secretive. We chose to show
all our cards to our competitors so that it would look odd no
one hides everything in their computer. It’s left out to the
general public to see. So we chose not to hide a bunch of
information.”
There is simply no evidence on record which indicates that they made
efforts to keep them secret. In fact, there is an indication that they
intended their domain names to be readily available to potential
customers searching the internet as a means of directing them to its
online retail store. An information is secret only if it is subject of
reasonable efforts to maintain secrecy.
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DuPont DeNemours v. Rolfe Christopher
Facts:
 Rolfe and Gary are photographers in Beaumont Texas who were hired
by an unknown third party to take aerial photos of new construction at
the Beaumont plant of EI DuPont. 16 photos were taken from the air
on 1969 and these were later developed and delivered to the third
party.
Dupont filed a suit against Chrisophers alleging that they wrongfully
obtained photos revealing the trade secrets of Dupont which they then
sold to the undisclosed third party. They contend that they developed a
highly secret but unpatented process for producing methanol, a
process which gives them competitive advantage over their
competitors. The area photographed by the Christophers was the
plant designed to produce methanol by this secret process, and
because the plant was still under construction parts of the process
were exposed to view from directly above the construction area.
Photographs of that area, DuPont alleged, would enable a skilled
person to deduce the secret process for making methanol.
The Christophers argued both at trial and before this court that they
committed no 'actionable wrong' in photographing the DuPont facility
and passing these photographs on to their client because they
conducted all of their activities in public airspace, violated no
government aviation standard, did not breach any confidential
relation, and did not engage in any fraudulent or illegal conduct. In
short, the Christophers argue that for an appropriation of trade secrets
to be wrongful there must be a trespass, other illegal conduct, or
breach of a confidential relationship.
Issue:
 Whether or not Dupont has asserted a claim upon which relief can be
granted.
Ratio:
 Yes. One who discloses another’s trade secret without a
privilege to do so is liable to the other if he discovered the
secret by improper means or his disclosure or use
constitutes a breach of confidence reposed in him by the
other in disclosing the secret to him. The use of someone else’s
idea is not automatically a violation of the law, it must be something
that has been obtained through a breach of confidence in order to
entitle the injured party to damages or injunction. If breach of
confidence were meant to encompass the entire panoply of commercial
improprieties, subsection A of the Restatement would be either
surplusage or persiflage, an interpretation abhorrent to the traditional
precision of the Restatement. We therefore find meaning in subsection
A and think that the Texas Supreme Court clearly indicated by
its adoption that there is a cause of action for the discovery
of a trade secret by any 'improper means.
One may use his competitor’s secret process if he discovers the process
by reverse engineering applied to the finished product. One may use it
if he discovers it by his own independent research but one may not
avoid these labors by taking process from the discoverer
without his permission at a time when he is taking
reasonable precautions to maintain secrecy. To obtain
knowledge of a process without spending the time and
money to discover it independently is improper unless the
holder voluntarily discloses it or fails to take reasonable
precautions to ensure its secrecy.
In this case, he deliberately flew over the plant to get pictures of a
process which Dupont attempted to keep secret. The third party has a
right to use this process only if he obtains this knowledge through his
own research efforts, but thus far all information indicates that the
third party has gained this knowledge solely by taking it from DuPont
at a time when DuPont was making reasonable efforts to preserve its
secrecy. In such a situation DuPont has a valid cause of action to
prohibit the Christophers from improperly discovering its trade secret
and to prohibit the undisclosed third party from using the improperly
obtained information.
Industrial espionage of the sort here perpetrated has become a popular
sport in some segments of our industrial community. However, our
devotion to free wheeling industrial competition must not force us into
accepting the law of the jungle as the standard of morality expected in
our commercial relations. Our tolerance of the espionage game must
cease when the protections required to prevent another's spying cost
so much that the spirit of inventiveness is dampened. Commercial
privacy must be protected from espionage which could not have been
reasonably anticipated or prevented. Perhaps ordinary fences and
roofs must be built to shut out incursive eyes, but we need not require
the discoverer of a trade secret to guard against the unanticipated, the
undetectable, or the unpreventable methods of espionage now
available.
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In the instant case DuPont was in the midst of constructing a plant. To
require DuPont to put a roof over the unfinished plant to guard its
secret would impose an enormous expense to prevent nothing more
than a school boy's trick. We should not require a person or
corporation to take unreasonable precautions to prevent another from
doing that which he ought not do in the first place. Reasonable
precautions against predatory eyes we may require, but an
impenetrable fortress is an unreasonable requirement, and we are not
disposed to burden industrial inventors with such a duty in order to
protect the fruits of their efforts.
Chicago Lock Co v. Morris
Facts:
 Chicago Lock Company (CLC) is a manufacturer of various types of
locks marketed and registered under the tradename “Ace” which
provides greater security than other lock designs. They are frequently
used on vending and bill changing machines and in other maximum
security uses such as burglar alarms. The distinctive feature of Ace
locks is the secrecy and difficulty of reproduction associated with
either keys.
On the other hand, Victor Fanberg, the son of a locksmith and a
locksmith in his own right has published a number of locksmith
manuals for conventional locks. Realizing that there is yet no
compilation on the tubular lock key codes, they published a
compilation of the serial number-key code correlations of various locks
including those of Ace locks entitled “A-Advanced Locksmith’s Tubular
Lock Codes.” This was done by requesting locksmiths to transmit to
him serial number-key code correlations in their possession in
exchange for a copy of the complete compilation. When finished. Said
manual was advertised and sold. The books contain correlations
which would allow a person equipped with a tubular key
grinding machine to make duplicate keys for any listed Ace
lock if the serial number of the lock was known.
 CLC has a fixed policy that it will only sell a duplicate key for the
registered series 'Ace' lock to the owner of record of the lock and on
request of a bona fide purchase order, letterhead or some other
identifying means of the actual recorded lock owner. In addition, the
serial number-key code correlations are maintained by the Company
indefinitely and in secrecy, the Company does not sell tubular key
"blanks" to locksmiths or others, and keys to Ace locks are stamped
"Do Not Duplicate.
Hence, upon finding out about this publication, CLC filed a complaint
against Fanberg alleging misappropriation of trade secrets. The court
found that the Company's high security policy for its Ace tubular locks,
of which the confidential key code data were a part, was a "valuable
business or trade secret-type asset" of the Company, and that the
Fanbergs' publication of their compilation of these codes so
undermined the Company's policy as to constitute "common law unfair
competition in the form of an unfair business practice.”
Issue:
 Whether or not there is a violation of the trade secrets law.
Ratio:
 No. Trade secrets are protected in a manner akin to provate property
but only when they are disclosed or used through improper
means. They do not enjoy the monopoly protection afforded patented
processes and trade secrets will lose their character as private property
when the owner divulges them or when they are discovered through
proper means. There is no protection when there is a fair and
honest means of gaining information as by independent
invention, accidental disclosure and reverse engineering.
Here, there has only been a reverse engineering. A lock purchaser's
own reverse-engineering of his own lock, and subsequent
publication of the serial number-key code correlation, is an
example of the independent invention and reverse
engineering expressly allowed by trade secret doctrine. The
concept of improper means connotes the existence of a duty to the
trade secret owner not to disclose the secret to others. Appellants may
only be held liable if they intentionally procured the locksmiths to
disclose the trade secrets in breach of the duty to the company of non-
disclosure.
We find untenable the basis upon which the District Court concluded
that the individual locksmiths owe a duty of nondisclosure to the
Company. The court predicated this implied duty upon a "chain" of
duties: first, that the locksmiths are in such a fiduciary relationship
with their customers as to give rise to a duty not to disclose their
customers' key codes without permission, and second, that the lock
owners are in turn under an "implied obligation (to the Company) to
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maintain inviolate" the serial number-key code correlations for their
own locks.
That the lockowners owe a duty to the company is contrary to law and
to the company’s own admissions. Imposing an obligation of
nondisclosure on lock owners here would frustrate the intent of
California courts to disallow protection to trade secrets discovered
through "fair and honest means. Appellants, therefore, cannot be said
to have procured the individual locksmiths to breach a duty of
nondisclosure they owed to the Company, for the locksmiths owed no
such duty. The Company's serial number-key code correlations are not
subject to protection.
Pepsico v. William Redmond
Facts:
 William Redmond worked for PepsiCo in its North Division (PCNA)
form 1984 to 1994 during which he became the General Manager and
was promoted to GM of the business unit covering all of California.
Because of his high level position at PCNA, he had access to inside
information and trade secrets. As an employee of PCNA, he signed a
confidentiality agreement which stated that he would not disclose to
any one other than officers of Pepsi or make use of confidential
information relating to the business of PepsiCo.
On the other side of the fence is Donald Uzzi who left PepsiCo to
become the head of Quaker’s Gatorade division. He began courting
Redmond for Quaker in 1994. He offered Redmond the position of VP
but Redmond did not accept the offer but continued to negotiate for
more money. These negotiations were kept secret from PCNA.
Eventually, he informed the Senior VP of PCNA and told him about the
offer to become Chief Operating Officer of Gatorade. Redmond asked
whether he should, in light of the offer, carry out his plans to make
calls upon certain PCNA customers. The Senior VP told him to make
the visits.
Redmond met with Barnes and told her that he had decided to accept
the Quaker offer and was resigning from PCNA. Barnes immediately
took Redmond to Bensyl, who told Redmond that PepsiCo was
considering legal action against him.
 Having accepted the position at Gatorade, Pepsi filed this
suit seeking TRO from disclosing trade secrets or
confidential information to his new employer. This was
granted by the DC but was dissolved 2 days later after determining that
they failed to establish that it would suffer irreparable harm.
At the hearing, PepsiCo offered evidence of a number of trade secrets
and confidential information it desired protected and to which
Redmond was privy:
1. First, it identified PCNA's "Strategic Plan," an annually revised
document that contains PCNA's plans to compete, its financial
goals, and its strategies for manufacturing, production,
marketing, packaging, and distribution for the coming three
years.
2. Second, PepsiCo pointed to PCNA's Annual Operating Plan
("AOP") as a trade secret. The AOP is a national plan for a
given year and guides PCNA's financial goals, marketing plans,
promotional event calendars, growth expectations, and
operational changes in that year. The AOP, which is
implemented by PCNA unit General Managers, including
Redmond, contains specific information regarding all PCNA
initiatives for the forthcoming year. In particular, the AOP
contains important and sensitive information about "pricing
architecture"--how PCNA prices its products in the
marketplace.
3. PepsiCo also showed that Redmond had intimate knowledge
of PCNA "attack plans" for specific markets.
4. Finally, PepsiCo offered evidence of PCNA trade secrets
regarding innovations in its selling and delivery systems.
Under this plan, PCNA is testing a new delivery system that
could give PCNA an advantage over its competitors in
negotiations with retailers over shelf space and
merchandising.
The DC issued an order enjoining Redmond from assuming
his position at Quaker though May 1995 and permanently
form using or disclosing any PCNA trade secrets or
confidential information.
Issue:
 Whether or not there is a violation of trade secret laws.
 Whether or not there is a breach of a confidentiality agreement
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Ratio:
 Yes. PepsiCo has asserted that Redmond cannot help but rely on
PCNA trade secrets as he helps plot Gatorade and Snapple's new
course, and that these secrets will enable Quaker to achieve a
substantial advantage by knowing exactly how PCNA will price,
distribute, and market its sports drinks and new age drinks and being
able to respond strategically. This type of trade secret problem may
arise less often, but it nevertheless falls within the realm of trade secret
protection under the present circumstances. The danger of
misappropriation in the present case is not that Quaker
(Gatorade) threatens to use PCNA's secrets to create
distribution systems or co-opt PCNA's advertising and
marketing ideas. Rather, PepsiCo believes that Quaker,
unfairly armed with knowledge of PCNA's plans, will be able
to anticipate its distribution, packaging, pricing, and
marketing moves. Redmond and Quaker even concede that
Redmond might be faced with a decision that could be influenced by
certain confidential information that he obtained while at PepsiCo. In
other words, PepsiCo finds itself in the position of a coach, one
of whose players has left, playbook in hand, to join the
opposing team before the big game. Quaker and Redmond's
protestations that their distribution systems and plans are
entirely different from PCNA's are thus not really
responsive.
It is not the "general skills and knowledge acquired during his tenure
with" PepsiCo that PepsiCo seeks to keep from falling into Quaker's
hands, but rather "the particularized plans or processes developed by
PCNA and disclosed to him while the employer-employee relationship
existed, which are unknown to others in the industry and which give
the employer an advantage over his competitors.
Duncan v. Glaxo
Facts:
 Pedro Tecson was hired by Glaxo Philippines (Glaxo) as a medical
representative. He signed a contract of employment which
stipulates that he agrees to study and abide by existing
company rules to disclose to management any existing or
future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies and
should management find that such relationship poses a
possible conflict of interest, to resign from the company.
Subsequently, Tecson entered into a romantic relationship with Bettsy,
an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo.
Bettsy was Astra’s Branch Coordinator in Albay. She supervised the
district managers and medical representatives of her company and
prepared marketing strategies for Astra in that area.
Despite warnings, love prevailed and Tecson married Bettsy in 1998.
Hence, in January 1999 the management informed Tecson that there is
a conflict of interest. They reminded Tecson that he and Bettsy should
decide which of them would resign from their jobs although they told
him that they wanted to retain him as much as possible because he was
performing his job well.
Instead of resigning, he applied for a transfer in the Milk Division of
Glaxo thinking that since Astra does not have a mill division, the
potential conflict of interest would be eliminated. This was denied by
management in view of the company “least-movement-possible”
policy. Subsequently, however, he was transferred to the sales area in
Agusan Del Sur. He brought the matter of his transfer to the grievance
committee of Glaxo but the transfer order was upheld. Tecson defied
the transfer order and continued acting as medical representative in
the Camarines Sur-Camarines Norte sales area.
Because the parties failed to resolve the issue at the grievance
machinery level, they submitted the matter for voluntary arbitration.
Glaxo offered Tecson a separation pay of one-half (½) month pay for
every year of service, or a total of P50,000.00 but he declined the
offer. Thus, National Conciliation and Mediation Board
(NCMB) rendered its Decision declaring as valid Glaxo’s
policy on relationships between its employees and persons
employed with competitor companies, and affirming Glaxo’s
right to transfer Tecson to another sales territory.
Issue:
 Whether or not the policy against employees marrying employees of
competitor companies violate the EPC of the Constitution because it
creates invalid distinctions among employees on account only of
marriage.
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Ratio:
 It does not violate the constitution and is a valid company
policy. This is a valid exercise of management prerogative. The
prohibition against personal or marital relationships with employees
of competitor companies is reasonable under the circumstances
because relationships of that nature might compromise the interests of
the company. Glaxo here only aimed to protect its interests against the
possibility that a competitor company will gain access to its secrets and
procedures. No less than the Constitution recognizes the right of
enterprises to adopt and enforce such a policy to protect its right to
reasonable returns on investments and to expansion and growth.
It is a legitimate business practice to guard business
confidentiality and protect a competitive porision even
handedly disqualifying from jobs male and female applicants
or employees who are married to a competitor.
The challenged company policy does not violate the equal
protection clause of the Constitution as petitioners
erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed only
to the state or those acting under color of its authority. The
EPC erects no shield against merely private conduct, however,
discriminatory or wrongful. Significantly, the company actually
enforced the policy after repeated requests to the employee to comply
with the policy. Indeed, the application of the policy was made in an
impartial and even-handed manner, with due regard for the lot of the
employee.
The Court finds no merit in petitioners’ contention that Tescon was
constructively dismissed when he was transferred from the Camarines
Norte-Camarines Sur sales area to the Butuan City-Surigao City-
Agusan del Sur sales area, and when he was excluded from attending
the company’s seminar on new products which were directly
competing with similar products manufactured by Astra. Constructive
dismissal is defined as a quitting, an involuntary resignation resorted
to when continued employment becomes impossible, unreasonable, or
unlikely; when there is a demotion in rank or diminution in pay; or
when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee. The record does not show that
Tescon was demoted or unduly discriminated upon by reason of such
transfer. As found by the appellate court, Glaxo properly exercised its
management prerogative in reassigning Tecson to the Butuan City
sales area.
In the case at bar, the record shows that Glaxo gave Tecson several
chances to eliminate the conflict of interest brought about by his
relationship with Bettsy. When their relationship was still in its initial
stage, Tecson’s supervisors at Glaxo constantly reminded him about its
effects on his employment with the company and on the company’s
interests. After Tecson married Bettsy, Glaxo gave him time to resolve
the conflict by either resigning from the company or asking his wife to
resign from Astra. Glaxo even expressed its desire to retain Tecson in
its employ because of his satisfactory performance and suggested that
he ask Bettsy to resign from her company instead. Glaxo likewise
acceded to his repeated requests for more time to resolve the conflict
of interest.
Avon Cosmetics v. Leticia Luna
Facts:
 Luna began working for Beautifont in 1972 as a franchise dealer and
then a year later as supervisor. Sometime in 1978 Avon acquired and
took over the management and operations of Beautifont thus, Luna
continued working for said successor company. Aside from her work as
a supervisor, respondent Luna also acted as a make-up artist of
petitioner Avon’s Theatrical Promotion’s Group, for which she received
a per diem for each theatrical performance.
Avon and respondent Luna entered into an agreement (Supervisor’s
Agreement) whereby it was agreed that:
1. a dealer may only sell products sold by the company.
2. Company can terminate the contract at any time, with or
without cause
Sometime in 1988, Luna was invited by a former Avon employee who
was then a sales manager of Sandre Philippines (company engaged in
selling vitamins and other food supplements). She accepted the
invitation and then became a Group Franchise Director of Sandre
Philippines concurrently with being a Group Supervisor of petitioner
Avon. As Group Franchise Director, respondent Luna began
selling and/or promoting Sandré products to other Avon
employees and friends. Because of this relationship with both
companies, she requested a law firm to render a legal opinion as to the
legal consequence of the ahreement she executed with Avon. In
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response to her query, the law firm opined that the agreement was
contrary to law and public policy.
Meanwhile, Avon notified Luna of the termination or cancellation of
her agreement with Avon on the ground that she is signed up as a
Group Franchise Director with Sandre and that she has sold and
promoted products of the other company not only to the public but
also to several employees of the Avon company.
 Luna filed for damages with the RTC of Makati. RTC rendered a
decision in favor of Luna. On appeal, the CA affirmed.
Issue:
 Whether or not the supervisors’ agreement is null and void.
 Whether or not the termination of Luna is valid.
Ratio:
 Valid. Restrictions on trade may be upheld when not contrary to
public welfare and not greater than is necessary to afford a fair and
reasonable protection to the party in whose favor it is imposed. Even
contracts which prohibit an employee fmor engaging in business in
competition with the employer are not necessarily void for being
restraint in trade. In sum, contracts requiring exclusivity are not per
se void. Each contract must be viewed vis-à-vis all the circumstances
surrounding such agreement in deciding whether a restrictive practice
should be prohibited as imposing an unreasonable restraint on
competition.
A court, in order to declare a contract void as against public
policy, must find that the contract as to the consideration or
thing to be done, has a tendency to injure the public, is
against the public good, or contravenes some established
interests of society, or is inconsistent with sound policy and
good morals, or tends clearly to undermine the security of
individual rights, whether of personal liability or of private
property. From another perspective, the main objection to exclusive
dealing is its tendency to foreclose existing competitors or new
entrants from competition in the covered portion of the relevant
market during the term of the agreement. Only those arrangements
whose probable effect is to foreclose competition in a substantial share
of the line of commerce affected can be considered as void for being
against public policy. The foreclosure effect, if any, depends on the
market share involved. The relevant market for this purpose includes
the full range of selling opportunities reasonably open to rivals,
namely, all the product and geographic sales they may readily compete
for, using easily convertible plants and marketing organizations.
There is nothing invalid or contrary to public policy either in
objectives sought to be attained in prohibiting Luna aln all
other Avon supervisors from selling products other than
those of Avon’s. The question that should be asked here is whether
the restraint imposed is such as merely regulates and perhaps thereby
promote competition or whether it is such as may suppress or even
destroy competition. The prohibition here is not directed to Sandre
nor foreclose new entrants to the market. The reason for such
exclusion is to safeguard network that it has cultivated through the
years. By direct selling, petitioner Avon and Sandre, the manufacturer,
forego the use of a middleman in selling their products, thus,
controlling the price by which they are to be sold. The limitation does
not affect the public at all. It is only a means by which petitioner Avon
is able to protect its investment.
It was not by chance that Sandré Philippines, Inc. made respondent
Luna one of its Group Franchise Directors. It doesn’t take a genius to
realize that by making her an important part of its distribution arm,
Sandré Philippines, Inc., a newly formed direct-selling business, would
be saving time, effort and money as it will no longer have to recruit,
train and motivate supervisors and dealers. Respondent Luna, who
learned the tricks of the trade from petitioner Avon, will do it for them.
This is tantamount to unjust enrichment. Worse, the goodwill
established by petitioner Avon among its loyal customers will be taken
advantaged of by Sandre Philippines, Inc.
 Yes. The contract provided that it can be terminated or cancelled for
cause, it also stated that it can be terminated without cause, both at
any time and after written notice. Thus, whether or not the
termination or cancellation of the Supervisor’s Agreement was "for
cause," is immaterial. The only requirement is that of notice to the
other party. When petitioner Avon chose to terminate the contract, for
cause, respondent Luna was duly notified thereof.
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