Trademark Rights and Protection-Some Queasy Issues

on Enforcement

MARY JUDE V. CANTORIAS∗

Considered as a “non-human right” because it is not

enshrined in the Universal Declaration of the Rights of Man, IPR
is a concept borne of exigency, evolving as it did from the
increased commercial interaction among nations and spurred by
the need to place a premium on man’s ingenuity. The TRIPS
Agreement, on the other hand, sets the dimensions within which
these commercial rights can be demanded and preserved in
accordance with a pre-determined universal consensus. At the
core lies the enforcement of IPR, which is all that really
matters as far as a holder of an IPR is concerned.

- Hon. Hilario G. Davide, Jr.,

Chief Justice, Philippine Supreme Court
Introduction

The Philippine government formally welcomed freer trade when in 1980

it became a contracting party to the GATT1. Since then and until this present
time, the Philippines has made consistent efforts to adopt a more liberal and open
policy structure aimed at honoring its trade commitments under its membership
in the WTO, when in 1995 the Philippines acceded to the Agreement establishing
the WTO.

∗
The author is an Arellano University School of Law alumna. She worked in the Supreme Court
and the Philippine Senate earlier in her career. At present, she is engaged in private practice.
1
The GATT was established in 1947 to promote a multilateral trading system among countries
through non-discriminatory trade liberalization, and through fair and effective rules and
disciplines. The GATT was composed of 120 contracting parties and observers that account for
about 90% of the world trade. It, however, dealt with trade in tangible goods alone. As successor
of the GATT, the WTO (created at the Uruguay Round of multilateral trade negotiations
sponsored by the General Agreement on Tariffs and Trade (GATT) in 1994) also covers trade in
services, intellectual property rights and provides for an effective mechanism for dispute
settlement — Growth Opportunities Into the 21st Century, A Question and Answer Primer
Prepared by the Bureau of International Trade Relations, Department of Trade and Industry, pp.
1, 37 [1994].
52 Arellano Law and Policy Review Vol. 6 No. 1

Currently, the Philippines faces the challenge of continuing to accelerate

liberalization through economic reforms and of sustaining economic growth
through trade liberalization. It has achieved certain impetus in terms of
diminishing if not totally eliminating trade barriers as part of its internal
measures to accelerate liberalization. [I]t may even be said that the Philippines is
quite an open economy.2

To a certain extent, some sectors doubt that expanding and sustaining

trade liberalization will provide continued economic growth, but [m]any studies
on the impact of the WTO on the Philippine economy provide a general
conclusion that the impact has been, on the whole, positive for the Philippines.3

Specifically recognized is the close relationship between trade and

competition policy. The WTO Working Group on the Interaction between Trade
and Competition Policy (WGTCP) was established at the Singapore Ministerial
Conference in December 1996 to consider issues raised by Members relating to
the interaction of these two policy fields. Since its initial meeting in July 1997,
the Group has examined a wide range of such issues.

Meanwhile, the Philippines has undertaken major reforms in what would

be considered as the first layer of competition policy: trade reforms.4 The
government in the area of intellectual property rights has upped its efforts to
honor its international commitments to foster an environment of competition in
terms of protecting intellectual property rights, which presumably would
encourage fair trading thereby contributing to economic and social development.

In recognition of its WTO commitments, the Philippine legislature

passed into law Republic Act 8293 or the Intellectual Property Code of the
Philippines5 which effectively superseded, among others, Republic Act 166 or
the old Trademark Law. In essence, RA 8293 codified the country’s existing
amalgam of intellectual property laws pertaining to Patents, Trademarks, Service
Marks and Tradenames, and Copyright.

Amidst a backdrop of continued skepticism to liberalization or

globalization by some sectors, particularly in the area of intellectual property
rights, there is a need to facilitate public debate on this issue.

2
The Philippines in the World Trade Organization, Jose Antonio S. Buencamino, Arellano Law
and Policy Review, Vol. 2 Number 1, pp. 15, May 2002.
3
Ibid.
4
Overview and Integrative Report, Erlinda M. Medalla, Toward a National Competition Policy for
the Philippines, PASCN, p.2.
5
Signed into law on 06 June 1997 by President Fidel V. Ramos and took effect on 01 January
1998.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 53
This paper will not attempt to present an in-depth analysis of all fields of
intellectual property rights and protection. The discussion in this paper will be
limited to the field of trademark rights, specifically on the issue of infringement
and unfair competition and how Philippine law and jurisprudence and our
competition policy, in general, have responded to the needs of the trademark
owner to be protected in his economic rights vis-à-vis his creations on one hand
and the right of the public to have access, through lawful channels, to these
creations on the other. Specifically, how has the government balanced the
interest of the country with respect to the enforcement rights of foreign trademark
owners to their “intellectual creations”?

The prevalence of “piracy” is of course a source of major irritation

particularly to our local entertainment industry as the public’s lessening buying
capacity has constrained them to patronize “pirated” goods. Counterfeiting of
well-known branded goods is another perennial problem which developing
countries like the Philippines have been stepping up efforts to control, if not
totally eradicate.

This writer endeavours to present the tableau where the Philippines finds
itself in the specific arena of trademark rights and protection, the advances thus
far covered, and those gray areas where compromise may be the only panacea for
a developing country like ours that hope to participate and manifest an impact in
the global market.

Competition Policy and Trademark Rights and Protection- Symmetry

Over the last few decades there has been a rapid increase in the
movement of capital, as well as goods and services, across international borders.
These two trends together make up what is commonly referred to as
"globalization”.6 Broadly speaking, globalization refers to the increasing
economic integration and interdependence of countries. Economic globalization
in this century has proceeded along two main lines: trade liberalization (the
increased circulation of goods) and financial liberalization (the expanded
circulation of capital.7

On the other hand, competition law refers to the framework of rules and
regulations designed to foster the competitive environment in a national
economy. It consists of measures intended to promote a more competitive

6
A concise guide to the Multilateral Agreement on Investment- Supporters’ and Opponents’
Views, Michael Sforza-Roderick, Scott Nova and Mark Weisbrot, The Preamble Center for
Public Policy, www.globalpolicy.org/index.htm.
7
www.currencytax.org/glossary.php
54 Arellano Law and Policy Review Vol. 6 No. 1

environment as well as enactments designed to prevent a reduction in

competition. Competition policy broadly refers to all laws, government policies
and regulations aimed at establishing competition and maintaining the same. It
includes measures intended to promote, advance and ensure competitive market
conditions by the removal of control, as well as to redress anti-competitive
results of public and private restrictive practices.8

An effective competition policy must at least include a policy towards

consumer protection – includes all laws and regulations that ensure truthful
advertising about products, truthful advertising about the cost of credit, the risks
of injury associated with consumer products and the workplace, and about
protection of the environment in general.9

On the whole, when the market is competitive, there is a strong incentive

for achieving economic efficiency. Market forces ensure that goods consumers
want are produced in the quantities they want, using the most efficient production
methods and are marketed and distributed to consumers who wish to purchase
them in the most efficient means possible. In addition, competitive market forces
provide incentives for efficient levels of investment in discovering new
production technologies, new production processes and new products.10

With these concepts in mind, it is easy to conceive where trademark

rights and protection come in, considering that the increase in circulation of
goods (and services) offer a variety to consumers and some goods (or services for
that matter) will be more equal than others, taking captive most of the market.
When certain goods (and services) have already established for themselves a
name that by and of itself readily sells the product, these trademarks/service
marks or trade names may fall prey to enterprising individuals who may decide
to appropriate for themselves the benefits of the goodwill of such well-known
brands. Riding on the popularity of these established brands, the infringers are
able to obtain the profits without having to pay the cost.

Thus, the policies of consumer protection, property rights, and the free
exchange of business ideas underlie the law of trademarks. These policies are
sometimes conflicting and must be weighed and sifted by the court.11 Some
authors project fears that trademark rights partake of some of the “evils” of
monopoly considering that it tends to allow the trademark owner some “control”

8
Tariff Commission Information Division Primer (Update) August 2002,
http://www.tariffcommission.gov.ph/competit.html.
9
Ibid.
10
Supra, note 6.
11
Trademarks and Unfair Competition, J. Thomas McCarthy, Vol. 1, p. 44, The Lawyer’s Co-
operative Publishing Co., 1973 Ed.; citing National Color Laboratories Inc. vs. Philip’s Foto Co.
(1967, DC NY) 273 F Supp 1002.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 55
over a segment of the market. But these fears have been rebutted in this wise: In
truth, a trademark confers no monopoly whatever in a proper sense, but it is
merely a convenient means for facilitating the protection of one’s goodwill in
trade by placing a distinguishing mark or symbol – a commercial signature –
upon the merchandise or the package in which it is sold.12

More succinctly, another writer rebutted the monopoly argument by

saying that: There is no monopoly involved at all. A trademark precludes the
idea of monopoly. It is a means of distinguishing one product from another; it
follows therefore that there must be others to distinguish from. If there are others
there is no monopoly, and if there is a monopoly there is no need for any
distinguishing.13

Today, the trademark is not merely a symbol of origin and goodwill; it is

often the most effective agent for the actual creation and protection of goodwill.
It imprints upon the public mind an anonymous and impersonal guaranty of
satisfaction, creating a desire for further satisfaction. In other words, the mark
actually sells the goods. The mark has become the "silent salesman," the conduit
through which direct contact between the trademark owner and the consumer is
assured. It has invaded popular culture in ways never anticipated that it has
become a more convincing selling point than even the quality of the article to
which it refers.14

Thus, matters that involve both IP and antitrust15, or competition policies

as it were, can be exceedingly complex, both legally and factually. In important
respects, the issues involve concepts of property rights. It is now well understood
that an effective legal regime defining and protecting property rights is essential
to a well-functioning competitive economy. IP law plays an important role in this
overall property rights regime.16 As can other holders of property rights, a
registered trademark owner can attempt, and does have the existing right, to
preclude misappropriation of his IP rights, particularly in terms of infringement
and unfair competition.

12
Id at 51; citing United Drug Co. vs. Theodore Rectanus Co. (1918) 248 US 90, 63 L Ed. 141, 39
S Ct. 48.
13
Id at 52; citing Rogers, Goodwill, Trademarks and Unfair Trading 50-52.
14
Pribhdas J. Mirpuri vs. Court of Appeals, et.al., GR No. 114508, November 19, 1999; citing
Kozinski, supra, at 965-966; Callmann, supra, vol. 2, at 881-812 [1945], citing Schechter, The
Historical Foundations of the Law Relating to Trademarks [1925], Note 15, p. 64.
15
Antitrust or competition laws legislate against trade practices which undermine competitiveness
or are considered to be unfair. The term antitrust derives from the US law which was originally
formulated to combat business trusts - now commonly known as cartels;
http://www.answers.com/antitrust&r=67.
16
Competition and Intellectual Property Policy: The Way Ahead, Prepared Remarks of Timothy J.
Muris, Chairman of the Federal Trade Commission,
http://www.ftc.gov/speeches/muris/intellectual.htm
56 Arellano Law and Policy Review Vol. 6 No. 1

In essence, the owner of a registered mark shall have the exclusive right
to prevent all third parties not having the owner’s consent from using in the
course of trade identical or similar signs or containers for goods or services
which are identical or similar to those in respect of which the trademark is
registered where such use would result in a likelihood of confusion. In case of
the use of an identical sign for identical goods or services, a likelihood of
confusion shall be presumed.17

In other words, trademark laws prohibit anti-competitive behavior that

creates confusion, whether actual or mere likelihood of confusion, among
consumers with respect to the source or origin of goods or services. In a general
sense, trademark violations cover two aspects: infringement and unfair
competition.

Republic Act 8293 – In Keeping with Treaty Obligations

RA 8293 or the Intellectual Property Code of the Philippines (IPC) was

enacted in 1997 to enhance, among other purposes, the intellectual property
regime in the country. The law has adopted certain changes aimed at
streamlining administrative procedures of registering patents, trademarks and
copyrights, at liberalizing the registration of transfer of technology, and at
enhancing the enforcement of intellectual property rights in the country.18

The IPC lays down the remedies available to the trademark owner in case
of a violation of his trademark rights. The law provides administrative, civil and
criminal sanctions against violators of the IP law. These remedies will be
discussed at length in other parts of this paper.

The advent of RA 8293 has allowed for innovative changes in the old
law. For instance, under the present law prior use or actual use of a mark in
Philippine commerce is no longer a requirement for trademark application, as the
IPO will not require any proof of use in commerce in the processing of a
trademark application.19 As the law now stands, rights to a mark shall be
acquired through registration made validly in accordance with the provisions of
the IP Code.20 However, although those with an earlier filing or priority date has
an advantage, nonetheless, the applicant must still file a declaration of actual use
of the mark, with evidence to that effect, within three (3) years from the filing

17
Sec. 147, Part II, RA 8293.
18
Sec. 2. Declaration of State Policy, RA 8293.
19
Rule 204, Part 2, Implementing Rules and Regulations of RA 8293, which took effect 15 days
after its publication in the Manila Times on September 30, 1998.
20
Sec. 122, RA 8293.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 57
date of the application. Otherwise, the application shall be refused or the mark
shall be removed from the Register by the Director of Trademarks.21

The foregoing provision may well be consistent with TRIPS Article 15.3,
which provides:
"Members may make registrability depend on use. However, actual use
of a trademark shall not be a condition for filing an application for registration.
An application shall not be refused solely on the ground that intended use has not
taken place before the expiry of a period of three years from the date of
application."
The TRIPS Agreement or the Agreement on Trade Related Aspects of
Intellectual Property Rights is annex 1-C of the Marrakesh Agreement
Establishing the World Trade Organization. It is the first successful attempt to
treat protection of intellectual property as an item of trade negotiations among
nations. This may have resulted from the concerns expressed by intellectual
property rights holders in industrialized countries that ineffective protection of
intellectual property rights is a disincentive to the entry of foreign investments in
the countries with lax enforcement mechanisms.22

Before its (TRIPS Agreement) advent, IPR was already being protected
and enforced in many countries through several international conventions, some
of which date back over a century. This would include the 1883 Paris Convention
for the Protection of Industrial Property, the 1886 Berne Convention for the
Protection of Literary and Artistic Works, and the 1961 Rome Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting
Organizations. Trade dynamics called for periodic revisions of these cluttered
treaties; for the Paris Convention, the latest changes occurred via the Lisbon Act
of 1958 and the Stockholm Act of 1967. In the last 50 years, the Berne
Convention has undergone three revisions: the Brussels Act of 1948, the
Stockholm Act of 1967, and the Paris Act of 1971. The loose provisions of these
conventions were consolidated and a uniform set of remedies was devised to give
rise to the TRIPS Agreement.23

Consistent with our TRIPS commitment, an innovation in the IP Code is

the provision on International Conventions and Reciprocity, under section 3
thereof, which provides that any person who is a national or who is domiciled or

21
Sec. 124.2, RA 8293.
22
Significant Developments in Intellectual Property Law: Treaties, Statutes and Jurisprudence,
Vicente B. Amador, http://www.ibp.org.ph/mainframe/pdf_file/journalxx.
23
Keynote address delivered by Chief Justice Hilario G. Davide, Jr. at the ASEAN Colloquium for
Judges and Prosecutors on Enforcement of Intellectual Property Rights in the Context of the
TRIPS Agreement, Ballroom, Manila Diamond Hotel, 9:00 a.m., 27 October 1999;
http://www.supremecourt.gov.ph.
58 Arellano Law and Policy Review Vol. 6 No. 1

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 party or
extends reciprocal rights to nationals of the Philippines by law, shall be entitled
to benefits to the extent necessary to give effect to any provision of such
convention, treaty or reciprocal law, in addition to the rights to which any owner
of an intellectual right is otherwise entitled under RA 8293.

In other words, the IPC espouses a principle of reciprocity whereby, any

person meeting the requirements above set forth shall be entitled to the benefits
under such convention, treaty, or reciprocal law, to the extent that any Philippine
national shall also be entitled, in addition to the rights set forth in the IPC.

By implication, the IPC also provides for reverse reciprocity.24 This

principle states that any condition, restriction, or limitation imposed by a foreign
country’s law on a Philippine national seeking protection of intellectual property
rights in that foreign country shall reciprocally be enforceable upon nationals of
said country within the Philippine jurisdiction.

This rule on reciprocity appears to be one of the more vital points of the
new law insofar as enforcement of IP rights are concerned considering that quite
a number of foreign trademark owners do attempt to have their trademark rights
enforced in this jurisdiction notwithstanding the fact that they “are not doing
business” in the Philippines. The synergy of these principles shall be discussed
at greater length in later parts of this paper.

However, it is also noted that even under the old Trademark Law,
particularly Sec. 21-A of RA 166, the rights of foreign corporation were
recognized, under certain conditions, to wit: “Any foreign corporation or juristic
person to which a mark or trade-name has been registered or assigned under this
act may bring an action hereunder for infringement, for unfair competition, or
false designation of origin and false description, whether or not it has been
licensed to do business in the Philippines under Act Numbered Fourteen hundred
and fifty-nine, as amended, otherwise known as the Corporation Law, at the time
it brings complaint: Provided, That the country of which the said foreign
corporation or juristic person is a citizen or in which it is domiciled, by treaty,
convention or law, grants a similar privilege to corporate or juristic persons of the
Philippines.”

Now Section 160 of the IPC provides that 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

24
http://www.disini.ph/res_phil_investment_III.htm
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 59
designation of origin and false description, whether or not it is licensed to do
business in the Philippines under existing laws.

To further protect a right holder who meets the requirements set forth in
Section 3 of the IPC, a priority right may be claimed by a person referred to in
said Section 3, whereby his application for registration of a mark in this
jurisdiction shall be considered as having been filed as of the day the application
was first filed in the foreign country25

It would seem that a limitation to the principle on reciprocity is placed by

the provision that protection is limited to the time when registration of the
foreign mark is secured here, with priority date as to the date of filing in the
foreign country being considered as the date of filing here in the Philippines. No
right accrues in favor of the foreign mark registered outside this jurisdiction until
and unless registration is secured here as well, such that acts committed prior to
the date on which the mark is registered here are not actionable.

The rule on “well-known” marks, however, is not as stringent.

Notwithstanding the foregoing, the owner of a well-known mark that is not
registered in the Philippines, may, against an identical or confusingly similar
mark, oppose its registration, or petition the cancellation of its registration or sue
for unfair competition, without prejudice to availing himself of other remedies
provided for under the law.26

The foregoing appears to be consistent with the Paris Convention and

with the TRIPS Agreement. Article 4D of the Paris Convention provides:

"(1) Any person desiring to take advantage of the priority of a

previous filing shall be required to make a declaration
indicating the date of such filing and the country in which it
was made. Each country shall determine the latest date on
which such declaration must be made.

(2) These particulars shall be mentioned in the publications

issued by the competent authority, and in particular in the
patents and the specifications relating thereto.

(3) The countries of the Union may require any person making a
declaration of priority to produce a copy of the application
(description, drawings, etc.) previously filed. The copy,
certified as correct by the authority which received such
application, shall not require any authentication, and may in

25
Sec. 131, RA 8293.
26
Sec. 131.3, RA 8293.
60 Arellano Law and Policy Review Vol. 6 No. 1

any case be filed, without fee, at any time within three

months of the filing of the subsequent application. They may
require it to be accompanied by a certificate from the same
authority showing the date of filing, and by a translation.

(4) No other formalities may be required for the declaration of

priority at the time of filing the application. Each country of
the Union shall determine the consequences of failure to
comply with the formalities prescribed by this Article, but
such consequences shall in no case go beyond the loss of the
right of priority.

(5) Subsequently, further proof may be required. Any person

who avails himself of the priority of a previous application
shall be required to specify the number of that application;
this number shall be published as provided for by paragraph
(2), above."

Scope of Protection

A “mark” means any visible sign capable of distinguishing the goods

(trademark) or services (service mark) of an enterprise.27 Modern authorities on
trademark law view trademarks as performing three distinct functions: (1) they
indicate origin or ownership of the articles to which they are attached; (2) they
guarantee that those articles come up to a certain standard of quality; and (3) they
advertise the articles they symbolize.28

Generally, marks that do not fall under the exclusions/exceptions in

Section 12329, paragraphs (a) to (m) of the IP Code are registrable.

27
Sec. 121.1, RA 8293.
28
Pribhdas J. Mirpuri vs. Court of Appeals, et.al., GR No. 114508, November 19, 1999.
29
Sec. 123. Registrability. – 123.1. A mark cannot be registered if it:
(a) Consists of immoral, deceptive or scandalous matter, or matter which may disparage or
falsely suggest a connection with persons, living or dead, institutions, beliefs, or national
symbols, or bring them into contempt or disrepute;
(b) Consists of the flag or coat of arms or other insignia of the Philippines or any of its
political subdivisions, or of any foreign nation, or any simulation thereof;
(c) Consists of a name, portrait or signature identifying a particular living individual except by
his written consent, or the name, signature, or portrait of a deceased President of the
Philippines during the life of his widow, if any, except by written consent of the widow, if
any, except by written consent of the widow;
(d) Is identical with a registered mark belonging to a different proprietor or a mark with an
earlier filing or priority date (as above stated)
(e) Is identical with, or confusingly similar to, or constitutes the translation of a mark which is
considered by the competent authority of the Philippines to be well-known internationaly
and in the Philippines, weather or not it is registered here, as being already the mark of a
person other than the applicant for registration, and use for identical or similar goods or
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 61
30 31
Interestingly, opposition and cancellation cases for trademarks mostly cover
instances that fall under letters (d), (e) and (f), which provide, as follows: “A
mark cannot be registered if it:

(d) Is identical with a registered mark belonging to a different proprietor

or a mark with an earlier filing or priority date, in respect of:

(i) The same goods or services, or

(ii) Closely related goods or services, or

(iii) If it nearly resembles such a mark as to be likely to deceive or

cause confusion;

(e) Is identical with, or confusingly similar to or constitutes a translation

of a mark which is considered by the competent authority of the
Philippines to be well-known internationally and in the Philippines,

services: Provided, that in detrermining weather a mark is well-known, account shall be

taken of the knowledge of the relevant sector of the public, rather than of the public at
large, including knowledge in the Philippines which has been obtained as a result of the
promotion of the mark;
(f) Is identical with, or confusingly similar to, or constitutes a translation of a mark considered
well-known in accordance with the preceding paragraph, which is registered in the
Philippines with respect to goods or services which are not similar to those with respect to
which registration is applied for: Provided, That use of the mark in relation to those goods
or services would indicate a connection between those goods or services, and the owner of
the registrered mark: Provided further, That the interests of the owner of the registered
mark are likely to be damaged by such use;
(g) Is likely to mislead the public, particularly as to the nature, quality, characterisrtics or
geographical origin of the goods or services;
(h) Consists exclusively of signs that are generic for the goods or services that they seek to
identify;
(i) Consists exclusively of signs or of indication that have become customary or usual to
designate the good or services in everday language or in bona fide and established trade
practice;
(j) Consist exclusively of signs or of indications that may serve in trade to designate the kind,
quality, quantity, intended purpose, value, geographical origin, time or production of the
goods or rendering of the services, or other characteristics of the goods or services;
(k) Consists of shapes that maybe necessitated by technical factors or by the nature of the
goods themselves or factor that affect their intrinsic value;
(l) Consists of color alone, unless defined by a given form; or
(m) Is contrary to public order or morality.
30
Any person who believes that he will be damaged by the registration of a mark may, upon
payment of the required fee and within 30 days after the publication xxx file with the Office
(Intellectual Property Office) an opposition to the application. xxx (Sec. 134, RA 8293; Sec. 1
(a), Rule 7, IRR of RA 8293 )
31
Any person who believes that he is or will be damaged by the registration of a mark may file
with the Bureau (Bureau of Legal Affairs of the Intellectual Property Office) a petition to cancel
such registration. (Sec. 1, Rule 8, IRR of RA 8293)
62 Arellano Law and Policy Review Vol. 6 No. 1

whether or not it is registered here, as being already the mark of a

person other than the applicant for registration, and used for identical
or similar goods or services xxx;

(f) Is identical with, or confusingly similar to or constitutes a translation

of a mark considered well-known in accordance with (e), which is
registered in the Philippines with respect to goods or services which
are not similar to those with respect to which registration is applied
for: Provided, That the use of the mark in relation to those goods or
services, and the interest of the owner the registered mark are likely
to be damaged by such use.”

In other words, registration of any mark that falls under the foregoing
categories is relatively proscribed under the IP Code. In effect, these provisions,
more particularly (e) and (f), in relation to Section 3 on international conventions
and reciprocity, give life to the country’s accession to the WTO Agreement and
the Convention of Paris for the Protection of Industrial Property, otherwise
known as the Paris Convention, a multilateral treaty that seeks to protect
industrial property consisting of patents, utility models, industrial designs,
trademarks, service marks, trade names and indications of source or appellations
of origin, and at the same time aims to repress unfair competition, among other
international treaties.

As earlier stated, among those annexed to the WTO is the TRIPS

Agreement. Members to this Agreement "desire to reduce distortions and
impediments to international trade, taking into account the need to promote
effective and adequate protection of intellectual property rights, and to ensure
that measures and procedures to enforce intellectual property rights do not
themselves become barriers to legitimate trade." To fulfill these objectives, the
members have agreed to adhere to minimum standards of protection set by
several Conventions.32

By the adherence of the government to the foregoing, some provisions of

the WTO TRIPS Agreement were incorporated by our lawmakers in RA 8293.

Certificate of Registration vis-à-vis Well-known Marks

Whereas in the old law a Supplemental Register was maintained,

whereby registration therein merely served as notice to the public of the use of
such mark, without conferring any exclusive right to use such mark, RA 8293
provides for only one Registry in which shall be registered marks, numbered in

32
Pribhdas J. Mirpuri vs. Court of Appeals, et.al., GR No. 114508, November 19, 1999; citations
omitted.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 63
the order of their registration, and all transactions in respect of each mark,
required to be recorded by virtue of said law.33

Nonetheless, the issuance of a Certificate of Registration does not confer

such right upon the holder thereof as to cover any and all goods not specified
therein. The registrant of a mark shall have the exclusive right to use the same in
connection with the goods or services and those that are related thereto specified
in the certificate,34 barring non-registrants from using an identical or similar mark
to identical goods or services, which use would result in a likelihood of
confusion. Where a party, other than the registered owner, uses the registered
mark for identical goods or services, a likelihood of confusion shall be
presumed.35 In other words, when a trademark is used by a party for a product in
which the other party does not deal, the use of the same trademark on the latter's
product cannot be validly objected to.36

The words “related thereto” were not found in the old law, and may
therefore, provide some lee-way in terms of interpreting what goods/services
may be considered as “related thereto”.

In cases of confusion of business or origin, the question that usually

arises is whether the respective goods or services of the senior user and the junior
user are so related as to likely cause confusion of business or origin, and thereby
render the trademark or tradenames confusingly similar. Goods are related when
they belong to the same class or have the same descriptive properties; when they
possess the same physical attributes or essential characteristics with reference to
their form, composition, texture or quality. They may also be related because
they serve the same purpose or are sold in grocery stores, or that they flow
through the same channels in commerce.37

In case of a well-known mark as set forth in (e) and (f) above, the
exclusive right to use the mark inuring to the registered owner shall extend to
goods and services which are not similar to those in respect of which the mark is
registered; provided that such use by someone other than the registered owner of
the mark to goods or services other than for which it was registered would
indicate a connection between those goods or services and the owner of the
registered mark, whose interest is likely to be damaged by such use.38 These are
new provisions to the IPC and an implementation of the provisions of the TRIPS
Agreement, particularly Article 16 (3).

33
Sec. 137, RA 8293.
34
Sec. 138, RA 8293.
35
Sec. 147, RA 8293.
36
Canon Kabushiki Kaisha vs. Court of Appeals, CA GR No. 120900, 20 July 2000.
37
Ibid.
38
Sec. 147.2, RA 8293.
64 Arellano Law and Policy Review Vol. 6 No. 1

Otherwise stated, the protection above mentioned may be invoked by the

owner of an internationally well-known mark even for goods or services that are
of a different nature from the goods or services of the junior applicant only if said
well-known mark is also registered with the Intellectual Property Office (IPO).
If it is not so registered, the protection will only be for the same goods or services
for which the internationally well-known mark is used.

Further on the issue of “well-knownness”, the Paris Convention protects

such well-known marks in this wise:

Article 6bis

(1) The countries of the Union undertake, either administratively if their

legislation so permits, or at the request of an interested party, to
refuse or to cancel the registration and to prohibit the use, of a
trademark which constitutes a reproduction, an imitation, or a
translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be well-
known in that country as being already the mark of a person entitled
to the benefits of this Convention and used for identical or similar
goods. These provisions shall also apply when the essential part of
the mark constitutes a reproduction of any such well-known mark or
an imitation liable to create confusion therewith.

(2) A period of at least five years from the date of registration shall be
allowed for seeking the cancellation of such a mark. The countries of
the Union may provide for a period within which the prohibition of
use must be sought.

(3) No time limit shall be fixed for seeking the cancellation or the
prohibition of the use of marks registered or used in bad faith.

Art. 6bis was first introduced at The Hague in 1925 and amended in
Lisbon in 1952. It is a self-executing provision and does not require legislative
enactment to give it effect in the member country. It may be applied directly by
the tribunals and officials of each member country by the mere publication or
proclamation of the Convention, after its ratification according to the public law
of each state and the order for its execution. The essential requirement under
Article 6bis is that the trademark to be protected must be "well-known" in the
country where 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." This competent authority would be either the registering authority if it has
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 65
the power to decide this, or the courts of the country in question if the issue
comes before a court.39

In this jurisdiction, the protection of well-known marks finds further

meaning in Rule 10240 of the Implementing Rules and Regulations of the IP Code
which lays down the criteria for determining whether or not a mark is well-
known. To this extent, the Philippine government has laid down the ground
work for easier access to protective remedies by foreign marks.

Infringement and Unfair Competition- When is there a Likelihood of

Confusion?

The law of unfair competition covers a greater scope than the law of
trademark infringement. The emphasis and thrust of trademark protection and
registration is in the direction of deciding whether an alleged symbol in fact
functions to identify and distinguish the goods or services of one seller. For
registration purposes, this is the basic issue. In trademark infringement litigation
(and in registration proceedings where an applicant’s mark is alleged to be
similar to a mark already in use) the next step is to compare what has been
determined to be a mark with that usage by another which is alleged to cause a
likelihood of confusion. On the other hand, unfair competition law is not so
limited in scope. Liability for unfair competition can result from the buyer’s
likely confusion between two products or services based upon the total impact of
all aspects of the parties’ selling efforts —from the symbols, letters, pictures,
colors, shapes and sizes connected with the products to the advertising

39
Supra, note 32, citations omitted.
40
In determining whether a mark is well-known, the following criteria or nay combination thereof
may be taken into account:
(a) 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;
(b) the market share, in the Philippines and in other counties, of the goods and/or services to
which the mark applies;
(c) the degree of the inherent or acquired distinction of the mark;
(d) the quality-image or reputation acquired by the mark;
(e) the extent to which the mark has been registered in the world;
(f) the exclusivity of registration attained by the mark in the world;
(g) the extent to which the mark has been used in the world;
(h) the exclusivity of use attained by the mark in the world;
(i) the commercial value attributed to the mark in the world;
(j) the record of successful protection of the rights in the mark;
(k) the outcome of litigations dealing with the issue of whether the mark is a well-known
mark; and,
(l) 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.
66 Arellano Law and Policy Review Vol. 6 No. 1

representations made. In unfair competition, everything that is likely to have an

impact upon the purchaser is relevant to the ultimate determination of whether
there is probable “unfairness” or confusion by those purchasers.41

Under Section 155 of RA 8293, infringement has been defined as the use
in commerce of any reproduction, counterfeit, copy or colorable imitation of a
registered mark or the same container or a dominant feature thereof in
connection with the sale, offering for sale, distribution, advertising of any goods
or services including other preparatory steps necessary to carry out the sale of
any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or reproduce, counterfeit, copy or
colorably imitate a registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs prints,
packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive. Infringement is committed
regardless of whether there is actual sale of goods or services using the infringing
material.

On the other hand, any person who shall employ deception or any other
means contrary to good faith by which he shall pass off the goods manufactured
by him or in which he deals, or his business, or services for those of the one
having established such goodwill, or who shall commit any acts calculated to
produce said result, shall be guilty of unfair competition, under Section 168.2 of
RA 8293. The law further states that a person who has identified in the mind of
the public the goods he manufactures or deals in, his business or services from
those of others, whether or not a registered mark is employed, has a property
right in the goodwill of the said goods, business or services so identified, which
will be protected in the same manner as other property rights.42

The thin line that divides infringement and unfair competition is the fact
that in the former, there must be a registered mark involved whereas in the latter,
registration of the mark is not a prerequisite. Indeed, it can be said that any
behaviour or conduct that is unethical or unfair in terms of appropriating for
himself the goodwill and profits which otherwise should have inured to the one
who has identified in the mind of the public his goods or services but instead
resulted in a loss on account of said conduct or behaviour, may be denominated
as unfair competition. It is in this sense that unfair competition runs along a
wider spectrum as opposed to infringement.

41
Supra, note 11, at 45; citing Corning Glass Works vs. Jeanette Glass Co. (1970, DC NY) 308 F
Supp 1321, affd per curiam (CA2) 432 F2d 784.
42
Sec. 168, RA 8293.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 67
In many factual situations, the same result is reached whether the legal
wrong is called trademark infringement or unfair competition. The keystone of
that portion of unfair competition law which relates to trademarks is the
avoidance of a likelihood of confusion in the minds of the buying public.
Whatever route one travels, whether by trademark infringement or unfair
competition, the signs give direction to the same enquiry – whether defendant’s
acts are likely to cause confusion.43

The Supreme Court has made the distinctions between unfair

competition and infringement in this wise: (1) Infringement of trademark is the
unauthorized use of a trademark, whereas unfair competition is the passing off of
one's goods as those of another; (2) In infringement of trademark fraudulent
intent is unnecessary whereas in unfair competition fraudulent intent is essential;
(3) In infringement of trademark the prior registration of the trademark is a
prerequisite to the action, whereas in unfair competition registration is not
necessary.44

43
Supra, note 11, at 46; citations omitted.
44
Del Monte Corporation vs. Court of Appeals, GR No. L-78325, 25 January 1990.
68 Arellano Law and Policy Review Vol. 6 No. 1

Remedies

The owner of a registered mark can avail of civil and criminal45 remedies
from regular courts, as well as administrative remedies from the Bureau of Legal
Affairs of the IPO.

All actions for infringement and unfair competition, false designations or

origin and false description or representation shall be brought before the
appropriate courts.46 To implement and ensure the speedy disposition of cases
involving violations of intellectual property rights under RA No. 8293, the
Supreme Court issued A.M. No. 02-1-11-SC, dated 19 February 2002,
designating certain Regional Trial Courts (RTCs) as Intellectual Property Courts.
On 17 June 2003, the Court further issued a Resolution consolidating jurisdiction
to hear and decide Intellectual Property Code and Securities and Exchange
Commission cases in specific RTCs designated as Special Commercial Courts.47
Meanwhile, actions for opposition under Section 134 and cancellation under
Section 151 of the IPC may be filed with the Bureau of Legal Affairs of the IPO.
The Bureau shall likewise have original jurisdiction in administrative actions for
violations of laws involving intellectual property rights where the total damages
claimed are not less than two hundred thousand pesos (P200,000), which actions
are considered independent and without prejudice to the filing of any action with
the regular courts.

Upon filing of a civil action in court, the owner of a registered mark may
avail of such provisional remedies as a Temporary Restraining Order (TRO) or a
preliminary injunction48 so as to prevent further damage on his business while the
case is on-going. An injunction is also provided as a remedy under Article 44 of
the TRIPS Agreement. This, however, can be quite tricky as the one seeking the
remedy must meet certain standards to be entitled to the relief.

In the case of Philip Morris, Inc., et.al. vs. CA and Fortune Tobacco
Corporation49, petitioners are foreign corporation not doing business in the
Philippines but are suing on an isolated transaction. As registered owners of
"MARK VII", "MARK TEN", and "LARK" per certificates of registration issued
by the Philippine Patent Office on April 26, 1973, May 28, 1964, and March 25,
1964, respectively, petitioners asserted that respondent Fortune Tobacco
Corporation has no right to manufacture and sell cigarettes bearing the allegedly

45
Section 239 of RA 8293 expressly repealed Articles 188 and 189 of the Revised Penal Code,
relating to Frauds in Commerce and Industry.
46
Sec. 163, RA 8293.
47
As cited in Manolo P. Samson vs. Hon. Reynaldo B. Daway, et.al., GR No. 160054-55, 21 July
2004.
48
Sec. 156, RA 8293.
49
GR No. 91332, 16 July 1993.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 69
identical or confusingly similar trademark "MARK" in contravention of Section
22 of the then Trademark Law, and should, therefore, be precluded during the
pendency of the case from performing the acts complained of via a preliminary
injunction. The Supreme Court affirmed the Court of Appeals’ lifting of the writ
of preliminary injunction it had earlier issued against Fortune Tobacco,
ratiocinating thus,:

Petitioners may have the capacity to sue for infringement irrespective of

lack of business activity in the Philippines on account of Section 21-A of the
Trademark Law but the question whether they have an exclusive right over their
symbol as to justify issuance of the controversial writ will depend on actual use
of their trademarks in the Philippines in line with Sections 2 and 2-A of the same
law. xxx Such a foreign corporation may have the personality to file a suit for
infringement but it may not necessarily be entitled to protection due to absence of
actual use of the emblem in the local market.

xxx It is virtually needless to stress the obvious reality that critical facts
in an infringement case are not before us more so when even Justice Feliciano's
opinion observes that "the evidence is scanty" and that petitioners "have yet to
submit copies or photographs of their registered marks as used in cigarettes"
while private respondent has not, for its part, "submitted the actual labels or
packaging materials used in selling its "Mark" cigarettes." Petitioners therefore,
may not be permitted to presume a given state of facts on their so called right to
the trademarks which could be subjected to irreparable injury and in the process,
suggest the fact of infringement. Such a ploy would practically place the cart
ahead of the horse.”

It would seem that petitioners failed to present factual evidence sufficient

to convince the Court that by the lifting of the writ, it will be prejudiced or that it
stands to suffer irreparable injury on account of lack of actual use of the mark in
Philippine commerce, and that in any event, the counterbond posted by
respondent corporation would amply cover for such damage, should it be later
found that petitioners are entitled to the relief sought. It must be remembered
that at the time the case was decided, Philippine trademark law required prior use
of the mark before registration may be allowed.50

However, it must be noted that this case was decided prior to the passage
of RA 8293 which, as earlier stated, now provides that actual use in commerce
prior to registration is not a requirement in an application to register a mark,
without prejudice to the requirement that a declaration of actual use must be filed

50
Sec. 2 of the old Trademark Law provides that “said trademarks, tradenames, or service marks
are actually in use in commerce and services not less than two months in the Philippines before
the time the applications for registration are filed.”
70 Arellano Law and Policy Review Vol. 6 No. 1

within three (3) years from the filing date of the application. Otherwise, the
application shall be refused or removed.

Another issue that pertains to enforcement of a trademark right is

whether or not a pending cancellation case before the BLA bars a subsequent
action for infringement with the regular courts in connection with the same
registered mark? The Supreme Court ruled that a cancellation case is not a
prejudicial question over an action to enforce the rights to the same registered
mark considering that while the certificate subsists (as the cancellation has yet to
be resolved), the owner of the registered mark may still enforce his ownership by
filing an action for infringement and recover damages against any person who
commits any act of infringement.51 However, the filing of a suit to enforce the
registered mark with the proper court or agency shall exclude any other court or
agency form assuming jurisdiction over a subsequently filed petition to cancel
the same mark.52

Whether a case is yet to be filed or has already been brought to court, a

search warrant may also be issued, in case of a criminal action for infringement,
where the applicant must present sufficient evidence to convince the court that
there is probable cause that a crime has been committed and that the goods object
of the crime will likely be found in the place sought to be searched.

An issue may be raised as to whether an RTC in Manila may properly

issue a search warrant for contraband goods to be seized in a provincial area, say
Cebu. There may be instances where the infringing goods are being sold in the
province and the urgency of the situation would call for the application of a
warrant in Manila but to be implemented and enforced elsewhere.

The Supreme Court ruled in Malaloan vs. Court of Appeals53 that when
necessitated and justified by compelling considerations of urgency, subject, time
and place, a court whose territorial jurisdiction does not embrace the place to be
searched may issue a search warrant therefor, provided that as a matter of policy,
where a criminal case is already pending, i.e. an information has already been
filed, the application shall only be made in the court where the criminal action is
pending. This is now expressly recognized in Section 2, Rule 126 of the Rules of
Court.

Care must be given, though, in alleging the compelling reasons in the

application for the search warrant to obviate any collateral actions that may be
taken to assail the validity of the warrant. In Malaloan, the Supreme Court

51
Shangri-La International Hotel Management LTD., et.al. vs. CA, et.al., GR No. 111580, 21 June
2001; Developers Group of Companies, Inc. vs. CA, et.al., GR No. 114802, 21 June 2001.
52
Sec. 151.2, RA 8293; See also Section 7, Rule 8 of the Regulations on Inter Partes Proceedings.
53
232 SCRA 249.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 71
considered such grounds as possible leakage of information in the locale where
the warrant is to be served, transporting of applicant’s witnesses to and their
examination in the place where the warrant is to be served, as compelling
reasons for the issuance of a search warrant by a court outside of its territorial
jurisdiction.

In both civil and criminal actions, the case against the infringer must be
proven beyond a reasonable doubt, except that in addition, in the criminal action,
the infringer must be proven to have committed the act with deliberate intent. A
criminal penalty of imprisonment from 2 years to 5 years and a fine ranging from
50,000 pesos to 200,000 pesos shall be imposed on any person found guilty of
infringement or unfair competition.54

Necessarily, the court has the power to order the goods found to be
infringing to be disposed of outside of the channels of commerce in such a
manner as to avoid any harm caused to the right holder, or destroyed.55 This is in
keeping with Article 46 of the WTO-TRIPS Agreement, which was a
substantially reproduced in our law.

The IPC also provides for border measures as specified in Sec. 166
thereof, which prohibits the entry of infringing goods into any customhouse in
the Philippines. This is a self-executing measure that does not require any
request from the right holder, however, to aid the officers of the customs service
in enforcing this prohibition, the right holder may require that his name and a
copy of the certificate of registration of his mark be recorded with the Bureau of
Customs.

The foregoing provision is more than substantial compliance with Article

51 of the TRIPS Agreement which allows Members to lodge an application in
writing with competent authorities (under such regulations as the Collector of
Customs with the approval of the Secretary of Finance, shall prescribe), for the
suspension of the customs authorities of the release into free circulation of such
infringing goods. However, as a substantial requirement, Article 52 of the
TRIPS further requires that the right holder initiating the application as above
stated must provide adequate evidence to satisfy the competent authorities that,
under the laws of the country of importation, there is prima facie an infringement
of the right holder’s intellectual property right.

In any suit for infringement, the owner of the registered mark shall not be
entitled to recover profits or damages unless the acts have been committed with
knowledge that such imitation is likely to cause confusion, or to cause mistake or
to deceive. Such knowledge is presumed if the registrant gives notice that his

54
Sec. 170, RA 8293.
55
Sec. 157, RA 8293.
72 Arellano Law and Policy Review Vol. 6 No. 1

mark is registered by displaying with the mark the words “Registered Mark” or
the letter R within a circle or if the defendant had otherwise actual notice of the
registration.56

Capacity to Sue- When Is Enforcement Available?

In Columbia Pictures, Inc. et.al. vs. Court of Appeals57, the Supreme

Court held that any foreign corporation not doing business in the Philippines may
maintain an action in our courts upon any cause of action, provided that the
subject matter and the defendant are within the jurisdiction of the court. It is not
the absence of the prescribed license but “doing business” in the Philippines
without such license which debars the foreign corporation from access to our
courts.

Therefore, a license is necessary only if the foreign corporation is

"transacting or doing business” in the country. What then is meant by
"transacting or doing business”? In a case58 the Supreme Court discoursed on
the test to determine whether a foreign company is “doing business” in the
Philippines, thus: “The true test, however, seems to be whether the foreign
corporation is continuing the body or substance of the business or enterprise for
which it was organized or whether it has substantially retired from it and turned it
over to another. The term implies a continuity of commercial dealings and
arrangements, and contemplates, to that extent, the performance of acts or works
or the exercise of some of the functions normally incident to, and in progressive
prosecution of, the purpose and object of its organization. The accepted rule in
jurisprudence is that each case must be judged in the light of its own
environmental circumstances.

Single or isolated acts, contracts, or transactions of foreign corporations

are not regarded as a doing or carrying on of business. Typical examples of these
are the making of a single contract, sale, and sale with the taking of a note and
mortgage in the state to secure payment therefor, purchase, or note, or the mere
commission of a tort. In these instances, there is no purpose to do any other
business within the country.59

Concrete and specific solicitations by a foreign firm, or by an agent of

such foreign firm, not acting independently of the foreign firm amounting to
negotiations or fixing of the terms and conditions of sales or service contracts,
regardless of where the contracts are actually reduced to writing, shall constitute
56
Sec. 158, RA 8293.
57
GR. No. 110318, 28 August 1996.
58
Eriks PTE LTD. vs. Court of Appeals, GR No. 118843, 06 February 1997; citing The
Mentholatum Co. vs. Mangaliman, 72 Phil 524, 528-529 (1941), citations omitted.
59
MR Holdings LTD. vs. Sheriff Carlos P. Bajar, et.al., GR No. 138104, 11 April 2002.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 73
doing business even if the enterprise has no office or fixed place of business in
the Philippines, as well as appointing a representative or distributor who is
domiciled in the Philippines.60

However, if said representative or distributor has an independent status,

i.e., it transacts business in its name and for its own account, and not in the name
or for the account of a principal, then the principal or the foreign corporation will
not be considered as “doing or transacting business” here. Thus, it may be said
that where a foreign firm is represented in the Philippines by a person or local
company, which acts in its own name and not in the name of the foreign firm, the
latter is not doing business in the Philippines.

This may be crucial in cases where a foreign corporation sells its goods
in the Philippines through independent distributors which act in their own names
and not in the name of the foreign principals. Indeed, it is possible that the
foreign corporation may have to protect its trademark rights against enterprising
individuals who may themselves seek the registration in their own names of the
foreign mark here, in violation of the rights of the principal, or protect itself from
unfair competition where other entities may try to pass off their goods as that of
the foreign corporation’s.
In cases of trademark rights enforcement, where the foreign corporation
seeks redress for infringement of its registered mark or for unfair competition,
such foreign corporation which meets the requirements of Section 3 of IPC and
does not engage in business in the Philippines, may bring a civil or administrative
action as provided under Section 160 of RA 8293, whether or not it is licensed to
do business in the Philippines.

Indeed, it is not sufficient for a foreign corporation enforcing its

trademark rights to simply allege its alien origin. Rather, it must additionally
allege its personality to sue.

What then must be pleaded to vest such foreign corporation with the
requisite capacity to sue? Section 4, Rule 8 of the Revised Rules of Court in part
states that “facts showing capacity of a party to sue or be sued or the authority of
a party to sue or be sued in a representative capacity or the legal existence of an
organized association of persons that is made a party, must be averred.”

Generally, the holder of the right must not only allege that it is a foreign
corporation, but further that it is not doing business in the Philippines and that its
country of domicile is a signatory to a Treaty which grants reciprocal rights to

60
Section 1(g) of the Implementing Rules and Regulations of the Omnibus Investments Code of the
Philippines.
74 Arellano Law and Policy Review Vol. 6 No. 1

Philippine nationals or enforces reciprocal laws. Owing to the tendency of some

practitioners to nitpick on technicalities, it is prudent to be careful on allegations
of capacity to sue.

However, the holder of the right is not without recourse to jurisprudence,

as in LA Chemise Lacoste vs. Hon Oscar Fernandez 61, where the petitioner is a
foreign corporation not doing business in the Philippines. The marketing of its
products in the Philippines is done through an exclusive distributor, Rustan
Commercial Corporation, the latter being an independent entity which buys and
then markets not only products of the petitioner but also many other products
bearing equally well-known and established trademarks and tradenames. In other
words, Rustan is not a mere agent or conduit of the petitioner.

The Supreme Court said that even assuming the truth of private
respondent’s allegation that petitioner failed to allege material facts in its petition
relative to capacity to sue, the petitioner may still maintain the present suit. The
Court further ratiocinated that: “What preceded this petition for certiorari was a
letter complaint filed before the NBI charging Hemandas with a criminal offense,
i.e., violation of Article 189 of the Revised Penal Code. If prosecution follows
after the completion of the preliminary investigation being conducted by the
Special Prosecutor the information shall be in the name of the People of the
Philippines and no longer the petitioner which is only an aggrieved party since a
criminal offense is essentially an act against the State. It is the latter which is
principally the injured party although there is a private right violated. Petitioner's
capacity to sue would become, therefore, of not much significance in the main
case. We cannot snow a possible violator of our criminal statutes to escape
prosecution upon a far-fetched contention that the aggrieved party or victim of a
crime has no standing to sue”.

This ruling, it appears, is in recognition of the country’s trade

commitments under international agreements relating to intellectual property
rights to which we have adhered.

Should the existence then of these international conventions and treaties

be specifically alleged in the complaint to coat a foreign corporation not doing
business in the Philippines with the requisite capacity to sue?

Apparently, the answer is in the negative. In the case of Puma

Sportschuhfabriken Rudolf Dassler, K.G. vs. The Intermediate Appellate Court,
et.al.62, the Supreme Court declared that the reciprocity arrangement between the
Philippines and (in this case, specifically) the Federal Republic of Germany is
embodied in and supplied by the Paris Convention, to which both are signatories,

61
GR No. L-63796-97, 2 May 1984.
62
GR No. 75067, 26 February 1988.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 75
and need not necessarily be pleaded. The Paris Convention, pursuant to the
Constitution, forms part of the laws of the land, and our courts are bound to take
judicial notice of such treaty, and consequently, this fact need not be averred in
the complaint.

In essence, the seeming liberality of the Courts with respect to cases of

trademark infringement and unfair competition is recognition of the rampant
proliferation of goods that subvert our trademark and other intellectual property
laws. The Court went on to say in La Chemise, thus: “Judges all over the country
are well advised to remember that court processes should not be used as
instruments to, unwittingly or otherwise, aid counterfeiters and intellectual
pirates, tie the hands of the law as it seeks to protect the Filipino consuming
public and frustrate executive and administrative implementation of solemn
commitments pursuant to international conventions and treaties.”

Conclusion

Based on the divergence of jurisprudence that abounds on the matter of

“confusing similarity”, and granting that a case for unfair competition may cover
a wider spectrum, so it is likely that the Court’s appreciation of what may be
“confusingly similar” at one time may not be so in another. Section 168.3 of RA
8293 gives particular instances of what may be considered as “unfairly
competitive behavior”, although the law is emphatic that such enumeration does
not in any way limit the scope of protection under the said provision. It must be
noted, however, that a likelihood of confusion is only presumed where an
identical sign is used for identical goods or services by the junior applicant.

In a very real sense, this milieu may be considered as a limitation in

enforcing trademark rights in this jurisdiction. Take for example the case of
Faberge, Inc. vs. The IAC, et.al.63, where the Court ruled that the general
appearance of each mark as a whole would unlikely create a possibility of any
confusion, in considering the marks “BRUT”, “BRUT 33” and “BRUTE”. The
Court said that comparing the labels of the samples of the goods shows a great
many differences which would include the different classes of goods they belong
to, the marked logo on each label, Further, it concluded that a purchaser who is
out in the market for the purpose of buying respondent’s BRUTE brief would
definitely be not mistaken or misled into buying BRUT after shave lotion or
deodorant of petitioner.

But in Del Monte Corporation vs. CA64, the court using the holistic test,
found that the Sunshine label used on catsup, is a colorable imitation of and
confusingly similar to the logo of Del Monte. In this case, Sunshine buys from

63
GR No. 71189, 04 November 1992.
64
GR No. 78325, 25 February 1990.
76 Arellano Law and Policy Review Vol. 6 No. 1

junk shops the bottles used by Del Monte. It is noted that the logo and not the
mark of Del Monte that is alleged to be imitated by Sunshine. Here, the Court
said that the question is not whether the two 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 his confounding it with the original.

On the other hand, utilising the test of dominancy, the Court found no
infringement of trademark and unfair competition in Asia Brewery vs. CA et.al.65.
The Court ruled that infringement is determined not by the differences or
variations in the details of two trademarks allege to be confusingly similar but
whether the main or essential or dominant feature of one is also found in the
other, and confusion and deception is likely to result.
It must be remembered, though, that these cases were all decided prior to
the advent of the IP Code. In the more recent case of MCDonald’s Corporation
and MCGeorge Food Industries, Inc. vs. L.C. Big Mak Burger, Inc., et.al, GR No.
143993, 18 August 2004, the Court ruled that since respondent used the “Big
Mak” mark on the same goods, i.e. hamburger sandwiches, that petitioners’ “Big
Mac” mark is used, trademark infringement through confusion of goods was
committed.

Likewise respondent committed trademark infringement though

confusion of business. The court ratiocinated that even if “Big Mak” caters
mainly to the low-income group while petitioner’s “Big Mac” hamburgers cater
to the middle and upper income groups, the likelihood of confusion of business
remains, since the low-income group might be led to believe that the “Big Mak”
hamburgers are the low-end hamburgers marketed by petitioners.

Factors like difference in prices of their burgers, in packaging, in the fact

that “Big Mac” is used only for double-decker burgers while “Big Mak” is used
for other goods like siopao, noodles, pizza, that petitioner’s restaurants are air
conditioned buildings compared to respondents’ mobile vans, do not negate the
undisputed fact that respondents use their “Big Mak” mark on hamburgers, the
same food product that petitioner’s sell with the use of their registered mark “Big
Mac”. Even respondent’s use of the “Big Mak” mark on non-hamburger
products cannot excuse their infringement of petitioners’ registered mark,
otherwise registered marks will lose their protection under the law.

Applying the dominancy test, the Court found respondent’s use of the
“Big Mak” results in likelihood of confusion. Aurally, the two marks are the
same, with the first word of both marks phonetically the same, and the second
word of both marks also phonetically the same. Visually, the two marks have
65
GR No. 103543. 05 July 1993.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 77
both two words and six letters, with the first word of both marks having the same
letters and the second word having the same first two letters.

Clearly, respondents have adopted in “Big Mak” not only the dominant
but also almost all the features of “Big Mac”. Applied to the same food product
of hamburgers, the two marks will likely result in confusion in the public mind.

The Court has taken into account the aural effects of the words and
letters contained in the marks in determining the issue of confusing similarity.
Certainly, “Big Mac” and “Big Mak” for hamburgers create even greater
confusion, not only aurally but also visually.

Absent proof that respondent’s adoption of the “Big Mak” mark was due
to honest mistake or was fortuitous, the inescapable conclusion is that
respondents adopted the “Big Mak” mark to “ride on the coattails” of the more
established “Big Mac” mark. This saves respondents much of the expense in
advertising to create market recognition of their mark and hamburgers.

Section 22 of RA 166 requires the less stringent standard of “likelihood

of confusion” only. While proof of actual confusion is the best evidence of
infringement, its absence is inconsequential.

The dissimilarities in the packaging are minor compared to the stark

similarities in the words that give respondents’ “Big Mak” hamburgers the
general appearance of petitioners’ “Big Mac” hamburgers.

Section 29 (a) expressly provides that the similarity in the general

appearance of the goods may be in the “devices or words” used on the
wrappings. Respondents have applied on their plastic wrappers and bags almost
the same words that petitioners use on their Styrofoam box. What attract the
attention of the buying public are the words “Big Mak” which are almost the
same, aurally and visually, as the words “Big Mac”. The dissimilarities in the
material and other devices are insignificant compared to the glaring similarity in
the words used in the wrappings.

There is actually no notice to the public that the “Big Mak” hamburgers
are products of “LC Big Mak Burger Inc.” and not those of petitioners who have
the exclusive right to the “Big Mac” mark. This clearly shows respondents intent
to deceive the public.

Had respondents placed a notice on their plastic wrappers and bags that
the hamburgers are sold by “LC Big Mak Burger, Inc.” then they could validly
claim that they did not intend to deceive the public. In such case, there is only
78 Arellano Law and Policy Review Vol. 6 No. 1

trademark infringement but no unfair competition. Respondents, however, did

not give such notice, and is therefore liable as well for unfair competition.

This very recent case law would seem to give more teeth to the
protection of well-known marks, whether foreign or local owned, as well as to
redefine what may be considered as “confusingly similar”. Particularly in light
of the pronouncement of the Court that “even respondent’s use of the “Big Mak”
mark on non-hamburger products cannot excuse their infringement of petitioners’
registered mark, otherwise registered marks will lose their protection under the
law”, which appears to be a recognition of the principle of dilution.

Interestingly, and setting our eyes on more distant shores, on January 16,
1996, then U.S. President Bill Clinton signed into law the 1996 Federal Anti-
Dilution Act. Trademark dilution under the new federal law can occur even when
a famous trademark is used by another on noncompeting goods or can occur
when there is no likelihood of confusion between the two uses of the mark.
For example, if a company that makes motorcycles started using the
mark Kodak to identify its motorcycles, consumers would probably not be
confused into believing that the Kodak film people are now in the motorcycle
business. Thus, trademark dilution under the new law is a powerful weapon
where there is noncompeting goods or services or no likelihood of confusion
between the uses of the marks.

As can be imagined, the use of someone else's mark on noncompetitive

goods can cause injury to the original owner of the mark. Dilution of the
trademark is that injury. Broadly speaking, dilution is a weakening or reduction
in the ability of a mark to clearly and unmistakably distinguish one source of a
product/service from another. There is dilution by blurring. Consumers will see
the original mark being used by others to identify other sources of
noncompetitive goods and services; thus, the unique and distinctive significance
of the mark to identify the original owner's product may be diluted and
weakened. The Kodak motorcycles example is a classic case of blurring. Should
the Kodak mark be allowed to be used on several different noncompeting
products, the distinctive character of the mark will be reduced and weakened. 66

Under the said US Federal law, one of the requirements for proving
dilution under the new federal act is that the mark must be famous. In
determining if the mark is famous, several factors are considered. These factors
include the duration and extent of use of the mark; the duration and extent of
advertising and publicity of the mark; the geographical extent of the trading area

66
Federal Trademark Anti-Dilution Law- A powerful New Tool for Ownersof Famous
Trademarks, David V. Radack, JOM, 51 (4) 1999), p.
48;http://www.tms.org/pubs/journals/JOM/matters-9904.html.
 April 2005 Trademark Rights and Protection-Some Queasy Issues … 79
in which the mark is used; and whether the mark is federally registered or not. It
is clear that well-known marks such as Coca-Cola, Kodak, and McDonald's are
famous. What is not so clear is whether well-known marks in narrow fields of
use, which are known only to a small amount of people, are famous, too. This
determination must be made on a case-by-case basis, and there are no hard and
fast rules to apply, just statutory guidelines.67

This writer submits that the Philippines must at least take a closer look
into this trend of protecting well-known marks, local or foreign, from dilution.
Our law as it now stands provides protection for registered marks for goods or
service specified in the Certificate of Registration and those that are related
thereto. As discussed earlier in this paper, the Supreme Court has laid down
certain parameters in determining when goods are considered “related”.

Nonetheless, the glaring example of the Canon case has shown that the
words “related thereto” may still be insufficient to give protection to the holder
of a well-known mark. In this case it was ruled that the certificates of registration
of petitioner cover goods belonging to class 2 (paints, chemical products, toner,
dyestuff). On this basis, the BPTTT (now the IPO) ruled, and upheld by the
highest magistrate, that since the certificate of registration of petitioner for the
trademark CANON covers class 2 (paints, chemical products, toner, dyestuff),
private respondent can use the trademark CANON for its goods classified as
class 25 (sandals). Clearly, there is a world of difference between the paints,
chemical products, toner, and dyestuff of petitioner and the sandals of private
respondent.
The main issue that should be looked at is not merely that there may be
created a likelihood of confusion in the minds of the consuming public, but
whether there is a possibility of diluting the distinctive quality of a mark.
Globalization has made the world seem so diminutive, trite as it may sound, and
the mark more than being a “silent salesman”, has actually become the symbol of
one’s creativity and hard work. Let him, who wishes to make a dent in the
market, put forth his creative juices and come up with a new idea, and not ride on
the good will of another’s creation.

Our trademark laws ought to ensure that traders offer choices to the
consumers by competing for their fair share of the market without resorting to
anti-competitive behavior that is characterize by deception and unfair
competition. In the end, it is not only the trader that is benefited by the continued
patronage of his goods/services but also the consuming public by getting the best
that the market can offer.

67
Ibid.
80 Arellano Law and Policy Review Vol. 6 No. 1