PRO LINE SPORTS CENTER, INC.

, and
Q U E S T O R CORPORATION, petitioners, vs. COURT OF
APPEALS,UNIVERSAL ATHLETICS INDUSTRIAL PRODUCTS, INC.,and
MONICO SEHWANI, respondents., 281 SCRA 162

Facts:
Proline is the exclusive distributor of Spalding sports products in the Philippines, while Questor,
a US-based corporation became the owner of the trademark “Spalding”. They filed a
petition against respondent Universal, a domestic corporation which manufactures and
sell sports goods including fake “spalding balls”. By virtue of valid search warrant,
Universal’s factory was searched resulting to the seizure of fake “spalding balls” and the
instruments used in the manufacture thereof. Civil and criminal cases were filed against
Universal. The civil case was dropped for it was doubtful whether Questor had indeed
acquired the registration rights over the mark “spalding”. The criminal case was also
dismissed due to insufficiency of evidence through ademurrer. The CA affirmed the lower
court’s decision. Universal thereafter, filed for damages against Proline and Questor which was
granted by the lower court and affirmed by the CA.

Issue:
Are Proline and Questor liable for damages to Universal for the wrongful recourse to court
proceedings?

Ruling:
Proline and Questor cannot be adjudged liable for damages for the alleged unfounded suit.
Universal failed to show that the filing of criminal charges of petitioner herein was
bereft of probable cause. Petitioners could not have been moved by legal malice in instituting
the criminal complaint for unfair competition. We are disposed, under circumstances, to
hold that Proline as the authorized agent of Questor, exercised sound judgment in
taking the necessary legal steps to safeguard the interest of its principal with respect to the
trademark in question.
AMERICAN WIRE & CABLE COMPANY, petitioner vs. DIRECTOR OF PATENTS and
CENTRAL BANAHAW INDUSTRIES, respondents., 31 SCRA 544

Principle:
"xxx The similarity between the two competing trademarks, DURAFLEX and DYNAFLEX is
apparent . Not only are the initial letters and the last half of the appellations identical but the
difference exists in only two out of the eight literal elements of the designations . Coupled with
the fact that both marks cover insulated flexible wires under Class 20; xxx no difficulty is
experienced in reaching the conclusion that there is a deceptive similarity that would lead the
purchaser to confuse one product with the other ."

Facts:
Petitioner American Wire and Cable Company (American) is the owner of the registered
trademark DURAFLEX and Device for electric wires.

On June 1962, private respondent/applicant Central Banahaw (Central) sought to register the
label DYNAFLEX for electric wires.

Petitioner opposed on the ground that Central’s use of the trademark DYNAFLEX would
confuse purchasers looking for DURAFLEX. The mark sought to beregistered allegedly having
practically the same spelling, pronunciation and sound, and covering the same good, but had not
been in use continuously, unlike DURAFLEX which was in use since 1958.

Director of Patents held that DYNAFLEX was not similar to DURAFLEX, since the logo design
was dissimilar, the DURAFLEX logo being in all caps while DYNAFLEX was in miniscule, and
thus gave Central’s application to trademark DYNAFLEX due course.

Issue:
Whether or not the mark DYNAFLEX and Device is registrable as label for electric wires, class
20, considering that the trademark DURAFLEX and Globe representation also for electric wires,
machines and supplies under class 20, has been registered more than 4 years earlier.

Ruling:
NO, the mark sought to be registered failed to “dominancy test”

The pertinent law, Republic Act 166, as amended, on registrability of trademarks, prescribes:

SEC. 4. — The owner of a trademark, trade name or service-mark used to distinguish his goods,
business or services from the goods, business or services of others shall have the right to register
the same, unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or trade name which so resembles a mark or trade-name
registered in the Philippines by another and not abandoned, as to be likely, when applied to or
used in connection with the goods, business or services of the applicant, to cause confusion or
mistake or to deceive purchasers. (Emphasis supplied)

It is clear from the above-quoted provision that the determinative factor in a contest involving
the registration of trademark is whether the use of such mark would likely cause confusion or
mistake on the part of the buying public. The test of “likelihood” is the “dominancy test” or the
assessment of the essential ordominant features in the competing labels to determine whether
they are confusingly similar. In fact, even their similarity in sound is taken into consideration,
where the marks refer to merchandise of the same descriptive properties, for the reason that
trade idem sonans constitutes a violation of trade mark patents.

The court found:

The similarity between the competing trademarks, DURAFLEX and DYNAFLEX, is apparent.
Not only are the initial letters and the last half of the appellations identical, but the difference
exists only in two out of the eight literal elements of the designations. Coupled with the fact that
both marks cover insulated flexible wires under class 20; that both products are contained in
boxes of the same material, color, shape and size; that the dominant elements of the front designs
are a red circle and a diagonal zigzag commonly related to a spark or flash of electricity; that the
back of both boxes show similar circles of broken lines with arrows at the center pointing
outward, with the identical legend "Cut Out Ring" "Draw From Inside Circle", no difficulty is
experienced in reaching the conclusion that there is a deceptive similarity that would lead the
purchaser to confuse one product with the other.

The Director of Patents has predicated his decision mostly on the semantic difference and
connotation of the prefixes "Dura" and "Dyna" of the competing trademarks, unfortunately
forgetting that the buyers are less concerned with the etymology of the words as with their sound
and the dominant features of the design.

The court further explained that "unlike the pharmacists or druggists, the dispensers of hardware
or electrical supplies are not generally known to pay as much concern to the brand of articles
asked for by the customer and of a person who knows the name of the brand but is not
acquainted with it is appearance, the likelihood of the DYNAFLEX product being mistaken for
DURAFLEX is not remote."

Thus the request to register this trademark must be denied.

IN-N-OUT BURGER INC., petitioner. vs. SEHWANI, INC and/or BENITAS FRITES,
INC., respondents. G.R. No. 179127, December 24, 2008.

Principle:

Facts:
Petitioner IN-N-OUT BURGER, INC., is a business entity incorporated under the laws of
California. It is a signatory to the Convention of Paris on Protection of Industrial Property and
the TRIPS Agreement. It is engaged mainly in the restaurant business, but it has never engaged
in business in the Philippines.

Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the
Philippines. Sometime in 1991, Sehwani filed with the BPTTT an application for the registration
of the mark “IN N OUT (the inside of the letter “O” formed like a star). Its application was
approved and a certificate of registration was issued in its name on 1993. In 2000, Sehwani,
Incorporated and Benita Frites, Inc. entered into a Licensing Agreement, wherein the former
entitled the latter to use its registered mark, “IN N OUT.”
Sometime in 1997, In-N-Out Burger filed trademark and service mark applications with the
Bureau of Trademarks for the “IN-N-OUT” and “IN-N-OUT Burger & Arrow Design. In 2000,
In-N-Out Burger found out that Sehwani, Incorporated had already obtained Trademark
Registration for the mark “IN N OUT (the inside of the letter “O” formed like a star).” Also in
2000, In-N-Out Burger sent a demand letter directing Sehwani, Inc. to cease and desist from
claiming ownership of the mark “IN-N-OUT” and to voluntarily cancel its trademark
registration. Sehwani Inc. did not accede to In-N-Out Burger’s demand but it expressed its
willingness to surrender its registration for a consideration.
In 2001 In-N-Out Burger filed before the Bureau of Legal Affairs an administrative complaint
against the Sehwani, Inc. and Benita Frites, Inc. for unfair competition and cancellation of
trademark registration.

Issues:
1. Whether or not the Intellectual Property Office (an administrative body) have jurisdiction
of cases involving provisions of the IPC (e.g. unfair competition).
2. Whether or not there was unfair competition.

Ruling:
First Issue: Yes, the IPO (an administrative body) has jurisdiction in cases involving provisions
of the IPC (e.g. unfair competition) due to the following reasons:
 Section 10 of the Intellectual Property Code specifically identifies the functions of
the Bureau of Legal Affairs, thus:

Section 10. The Bureau of Legal Affairs.“The Bureau of Legal Affairs shall have the following
functions:

10.1 Hear and decide opposition to the application for registration of marks; cancellation of
trademarks; subject to the provisions of Section 64, cancellation of patents and utility models,
and industrial designs; and petitions for compulsory licensing of patents;
10.2 (a) Exercise original jurisdiction in administrative complaints for violations of laws
involving intellectual property rights; Provided, That its jurisdiction is limited to
complaints where the total damages claimed are not less than Two hundred thousand pesos
(P200,000): Provided, futher, That availment of the provisional remedies may be granted in
accordance with the Rules of Court. Xxx

xxx

(vi) The cancellation of any permit, license, authority, or registration which may have been
granted by the Office, or the suspension of the validity thereof for such period of time as the
Director of Legal Affairs may deem reasonable which shall not exceed one (1) year;

xxx

(viii) The assessment of damages;

Unquestionably, petitioner’s complaint, which seeks the cancellation of the disputed mark
in the name of respondent Sehwani, Incorporated, and damages for violation of petitioner’s
intellectual property rights, falls within the jurisdiction of the IPO Director of Legal
Affairs.

 While Section 163 thereof vests in civil courts jurisdiction over cases of unfair
competition, nothing in the said section states that the regular courts have sole
jurisdiction over unfair competition cases, to the exclusion of administrative bodies.
 Sections 160 and 170, which are also found under Part III of the Intellectual
Property Code, recognize the concurrent jurisdiction of civil courts and the IPO
over unfair competition cases.

These two provisions read:

Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark Enforcement
Action. 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.

Section 170. Penalties. Independent of the civil and administrative sanctions imposed by law,
a criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from
Fifty thousand pesos (P50,000) to Two hundred thousand pesos (P200,000), shall be imposed on
any person who is found guilty of committing any of the acts mentioned in Section 155,
Section168, and Subsection169.1.

Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to
decide the petitioner’s administrative case against respondents and the IPO Director
General had exclusive jurisdiction over the appeal of the judgment of the IPO Director of
Legal Affairs.
Second Issue: Yes. The evidence on record shows that Sehwani Inc. and Benita Frites were not
using their registered trademark but that of In-n-Out Burger. Sehwani and Benita Frites are also
giving their products the general appearance that would likely influence the purchasers to believe
that their products are that of In-N-Out Burger. The intention to deceive may be inferred from
the similarity of the goods as packed and offered for sale, and, thus, an action will lie to restrain
unfair competition. The respondents’ fraudulent intention to deceive purchasers is also apparent
in their use of the In-N-Out Burger in business signages.
The essential elements of an action for unfair competition are (1) confusing similarity in the
general appearance of the goods and (2) intent to deceive the public and defraud a competitor.
The confusing similarity may or may not result from similarity in the marks, but may result from
other external factors in the packaging or presentation of the goods. The intent to deceive and
defraud may be inferred from the similarity of the appearance of the goods as offered for sale to
the public. Actual fraudulent intent need not be shown.