IP Views

Suggested Answers to the IP Questions in the 2010 Bar Examinations

September 26, 2010

VI

1. What contractual stipulations are required in all technology transfer agreements? (2%)

2. Enumerate three (3) stipulations that are prohibited in technology transfer agreements. (3%)

3. Can an article of commerce serve as a trademark and at the same time enjoy patent and
copyright protection? Explain and give an example. (2%)

VI.
A. Section 88 of Republic Act 8293 enumerates four mandatory provisions in voluntary licensing
contracts or technology transfer arrangements, as follows:
(a) That the laws of the Philippines shall govern the interpretation of the same and in the event of
litigation, the venue shall be the proper court in the place where the licensee has its principal
office;
(b) Continued access to improvements in techniques and processes related to the technology shall
be made available during the period of the technology transfer arrangement;
(c) In the event the technology transfer arrangement shall provide for arbitration, the Procedure of
Arbitration of the Arbitration Law of the Philippines or the Arbitration Rules of the United Nations
Commission on International Trade Law (UNCITRAL) or the Rules of Conciliation and Arbitration of
the International Chamber of Commerce (ICC) shall apply and the venue of arbitration shall be the
Philippines or any neutral country; and
(d) The Philippine taxes on all payments relating to the technology transfer arrangement shall be
borne by the licensor.

B. Section 87 of Republic Act 8293 enumerates 14 prohibited clauses, as follows:

1. Those which impose upon the licensee the obligation to acquire from a specific source capital
goods, intermediate products, raw materials, and other technologies, or of permanently employing
personnel indicated by the licensor;
2. Those pursuant to which the licensor reserves the right to fix the sale or resale prices of the
products manufactured on the basis of the license;
3. Those that contain restrictions regarding the volume and structure of production;
4. Those that prohibit the use of competitive technologies in a non-exclusive technology transfer
agreement;
5. Those that establish a full or partial purchase option in favor of the licensor;
6. Those that obligate the licensee to transfer for free to the licensor the inventions or
improvements that may be obtained through the use of the licensed technology;
7. Those that require payment of royalties to the owners of patents for patents which are not
used;
8. Those that prohibit the licensee to export the licensed product unless justified for the protection
of the legitimate interest of the licensor such as exports to countries where exclusive licenses to
manufacture and/or distribute the licensed product(s) have already been granted;
9. Those which restrict the use of the technology supplied after the expiration of the technology
transfer arrangement, except in cases of early termination of the technology transfer arrangement
due to reason(s) attributable to the licensee;
10. Those which require payments for patents and other industrial property rights after their
expiration, termination arrangement;
11. Those which require that the technology recipient shall not contest the validity of any of the
patents of the technology supplier;
12. Those which restrict the research and development activities of the licensee designed to
absorb and adapt the transferred technology to local conditions or to initiate research and
development programs in connection with new products, processes or equipment;
13. Those which prevent the licensee from adapting the imported technology to local conditions, or
introducing innovation to it, as long as it does not impair the quality standards prescribed by the
licensor;
14. Those which exempt the licensor for liability for non-fulfilment of his responsibilities under the
technology transfer arrangement and/or liability arising from third party suits brought about by the
use of the licensed product or the licensed technology; and
15. Other clauses with equivalent effects.

C. Yes. An article of commerce normally bears a trademark to distinguish one's products from
other products. The same article of commerce may contain pictorial illustrations on its label and
the article itself may be the subject of a patent. For example, a beauty soap with is sold bearing
the mark GORGEOUS (trademark protection), has an attractive packaging of artistic photos of a
beautiful lady with unblemished white skin (copyright protection), and the soap itself is composed
of new chemicals from an extract of a plant unheard of in the past that washes away blemishes
2007 Mercantile Law for the Protection of Intellectual Property to which the
Philippines is a member.
Diana and Piolo are famous personalities in
showbusiness who kept their love affair secret. They use Trademark; Test of Dominancy (1996)
a special instant messaging service which allows them to
see one another's typing on their own screen as each N Corporation manufactures rubber shoes under the
letter key is pressed. When Greg, the controller of the trademark “Jordann” which hit the Phil market in 1985,
service facility, found out their identities, he kept a copy and registered its trademark with the Bureau of Patents,
of all the messages Diana and Piolo sent each other and Trademarks and Technology (BPTTT) in 1990. PK
published them. Is Greg liable for copyright Company also manufactures rubber shoes with the
infringement? Reason briefly. trademark “Javorski” which it registered with BPTTT in
1978.
Yes, Greg is guilty of copyright infringement. The instant In 1992, PK Co adopted and copied the design of N
messages of Diana and Piolo are deemed to constitute Corporation’s “Jordann” rubber shoes, both as to shape
“letters” (Section 172.1[d], Intellectual Property Code) and color, but retained the trademark “Javorski” on its
which are “protected by the sole fact of their creation products. May PK Company be held liable to N Co?
irrespective of their mode or form of expression, as well Explain.
as their content, quality, and purpose.” (Section
172.2[d], Intellectual Property Code). For copyright to SUGGESTED ANSWER:
exist, it must be found in a tangible medium, usually in
written form, which is fulfilled by theinstant messages. PK Co may be liable for unfairly competing against N Co.
Under the Electronic Commerce Act, whenever the law By copying the design, shape and color of N
requires certain contracts or acts to be in writing to be Corporation’s “Jordann” rubber shoes and using the
valid and enforceable, then such requirement is deemed same in its rubber shoes trademarked “Javorski,” PK is
fulfilled when they are in the form of an electronic obviously trying to pass off its shoes for those of N. It is
document. The instant messages are deemed to be in of no moment that he trademark “Javorski” was
writing under the Electronic Commerce Act for they are registered ahead of the trademark “Jordann.” Priority in
in digital form or constitute electronic documents. registration is not material in an action for unfair
competition as distinguished from an action for
infringement of trademark. The basis of an action for
Tradename: International Affiliation (2005)
unfair competition is confusing and misleading similarity
S Development Corporation sued Shangrila Corporation
in general appearance, not similarity of trademarks
for using the “S” logo and the tradename “Shangrila”.
(Converse Rubber Co v Jacinto Rubber & Plastics Co GR
The former claims that it was the first to register the
27425 and 30505, Apr28,80 97s158)
logo and the tradename in the Philippines and that it had
been using the same in its restaurant business.
Trademark; Infringement (1991)
Shangrila Corporation counters that it is an affiliate of an
international organization which has been using such
Sony is a registered trademark for TV, stereo, radio,
logo and tradename “Shangrila” for over 20 years.
cameras, betamax and other electronic products. A local
However, Shangrila Corporation registered the
company, Best Manufacturing Inc produced electric fans
tradename and logo in the Philippines only after the suit
which it sold under the trademark Sony without the
was filed.
consent of Sony. Sony sued Best Manufacturing for
Which of the two corporations has a better right to use
infringement. Decide the case.
the logo and the tradename? Explain.
SUGGESTED ANSWER:
SUGGESTED ANSWER:
There is no infringement. In order that a case for
S Development Corporation has a better right to use the
infringement of trademark can prosper, the products on
logo and the tradename, since the protective benefits of
which the trademark is used must be of the same kind.
the law are conferred by the fact of registration and not
The electric fans produced by Best Manufacturing cannot
by use. Although Shangrila Corporation’s parent had
be said to be similar to such products as TV, stereo and
used the tradename and logo long before, the protection
radio sets or cameras or betamax products of Sony.
of the laws will be for S Development Corporation
because it was the first entity to register the intellectual
ALTERNATIVE ANSWER:
properties.
How does the international affiliation of Shangrila
There is infringement. If the owner of a trademark which
Corporation affect the outcome of the dispute? Explain.
manufactures certain types of goods could reasonably
(5%)
be expected to engage in the manufacture of another
product using the same trademark, another party who
SUGGESTED ANSWER:
uses the trademark for that product can be held liable
for using that trademark. Using this standard,
The international affiliation of Shangrila Corporation may
infringement exists because Sony can be reasonably
be critical in the event that its affiliates or parent
expected to use such trademark on electric fans.
company abroad had registered in a foreign jurisdiction
the tradename and the logo. A well-known mark and
Trademark, Test of Dominancy (1996)
tradename is subject to protection under Treaty of Paris
What is the “test of dominancy?” be said that physicians can be so easily deceived by
such trademark as “Axilon,” it may be hard to expect an
SUGGESTED ANSWER: opposition thereto to succeed.

The test of dominancy requires that if the competing ANOTHER ANSWER:

trademark contains the main or essential features of
another and confusion and deception is likely to result, The application for registration of Turbo Corporation may
infringement takes place. Duplication or imitation is not be contested. The factual settings do not indicate that
necessary; not is it necessary that the infringing label there had been prior use for at least 2 months of the
should suggest an effort to imitate. Similarity in size, trademark “Axilon.”
form and color, while relevant, is not conclusive. (Asia
Brewery v CA GR 103543 Jul5,93 224s437) Patents; Rights Over the Invention (1990)

Trademark (1994) Cheche invented a device that can convert rainwater

into automobile fuel. She asked Macon, a lawyer, to
Laberge, Inc., manufactures and markets after-shave assist in getting her invention patented. Macon
lotion, shaving cream, deodorant, talcum powder and suggested that they form a corporation with other
toilet soap, using the trademark “PRUT”, which is friends and have the corporation apply for the patent,
registered with the Phil Patent Office. Laberge does not 80% of the shares of stock thereof to be subscribed by
manufacture briefs and underwear and these items are Cheche and 5% by Macon. The corporation was formed
not specified in the certificate of registration. and the patent application was filed. However, Cheche
JG who manufactures briefs and underwear, wants to died 3 months later of a heart attack.
know whether, under our laws, he can use and register Franco, the estranged husband of Cheche, contested the
the trademark “PRUTE” for his merchandise. What is application of the corporation and filed his own patent
your advice? application as the sole surviving heir of Cheche. Decide
the issue with reasons.
SUGGESTED ANSWER:
SUGGESTED ANSWER:
Yes. The trademark registered in the name of Laberge
Inc covers only after-shave lotion, shaving cream, The estranged husband of Checke cannot successfully
deodorant, talcum powder and toilet soap. It does not contest the application. The right over inventions accrue
cover briefs and underwear. from the moment of creation and as a right it can
The limit of the trademark is stated in the certificate lawfully be assigned. Once the title thereto is vested in
issued to Laberge Inc. It does not include briefs and the transferee, the latter has the right to apply for its
underwear which are different products protected by registration. The estranged husband of Cheche, if not
Larberge’s trademark. disqualified to inherit, merely would succeed to the
JG can register the trademark “PRUTE” to cover its briefs interest of Cheche.
and underwear (Faberge Inc v IAC 215 s 316) Note: An examinee who answers on the basis of the
issue of validity of the transfer of patent as a valid
Trademark (1990) consideration for subscription of the shares of stocks
should be given due credit.
In 1988, the Food and Drug Administration approved the
labels submitted by Turbo Corporation for its new drug Patents; Infringement (1992)
brand name, “Axilon.” Turbo is now applying with the
Bureau of Patents, Trademarks and Technology Transfer In an action for infringement of patent, the alleged
for the registration of said brand name. It was infringer defended himself by stating
subsequently confirmed that “Accilonne” is a generic 1) that the patent issued by the Patent Office was not
term for a class of anti-fungal drugs and is used as such really an invention which was patentable;
by the medical profession and the pharmaceutical 2) that he had no intent to infringe so that there was no
industry, and that it is used as a generic chemical name actionable case for infringement; and
in various scientific and professional publications. A 3) that there was no exact duplication of the patentee’s
competing drug manufacturer asks you to contest the existing patent but only a minor improvement. With
registration of the brand name “Axilon” by Turbo. What those defenses, would you exempt the alleged violator
will you advice be? from liability? Why?

SUGGESTED ANSWER: SUGGESTED ANSWER:

The application for registration by Turbo Corporation I would not exempt the alleged violator from liability for
may be contested. The Trademark Law would not allow the following reasons: 1) A patent once issued by the
the registration of a trademark which, when applied to or Patent Office raises a presumption that the article is
used in connection with his products, is merely patentable; it can, however be shown otherwise (Sec 45
descriptive or deceptively misdescriptive of them. RA 165). A mere statement or allegation is not enough to
Confusion can result from the use of “Axilon” as the destroy that presumption. (Aquas v de Leon 30 Jan 82 L-
generic product itself. 32160)
2) An intention to infringe is not necessary nor an
ALTERNATIVE ANSWER: element in a case for infringement of a patent.
Medical drugs may be procured only upon prescription 3) There is no need of exact duplication of the
made by a duly licensed physician. The possibility of patentee’s existing patent such as when the
deception could be rather remote. Since it cannot really improvement made by another is merely minor (Frank v
Benito, 51p713). To be independently patentable, an however, has within three months from the decision, to
improvement of an existing patented invention must be have it cancelled as the rightful inventor; or within one
a major improvement (Aquas v de Leon L-32160 year from publication, to file an action to prove his
30Jan82) priority to the invention, which has been taken from him
and fraudulently registered by Francis.
Patents: Infringement; Remedies & Defenses 3) Supposing Joab got wind of the inventions of his
(1993) employees and also laid claim to the patents, asserting
that Cezar and Francis were using his materials and
Ferdie is a patent owner of a certain invention. He company time in making the devices, will his claim
discovered that his invention is being infringed by prevail over those of his employees? Explain.
Johann.
1) What are the remedies available to Ferdie against SUGGESTED ANSWER:
Johann?
2) If you were the lawyer of Johann in the infringement No, Joab’s claim cannot prevail over those of his
suit, what are the defenses that your client can assert? employees. In the first place, Joab did not commission
any of the two employees to invent the device, and its
SUGGESTED ANSWER: invention did not fall within their regular duties. What
prevails is the provision of the Intellectual Property Code
1) The following remedies are available to Ferdie against that holds that the invention belongs to the employee, if
2) These are the defenses that can be asserted in an the inventive activity is not a part of his regular duties,
infringement suit: even if he uses the time, facilities and materials of the
Patent is invalid (Sec 45 RA 165, as amended) employer.
Patent is not new or patentable
Specification of the invention does not comply with Sec Infringement vs. Unfair Competition (1996)
14
Patent was issued not to the true and actual inventor, What is the distinction between infringement and unfair
designer or author of the utility model or the plaintiff did competition?
not derive his rights from the true and actual inventor,
designer or author of the utility model (Sec 28 RA 165 as SUGGESTED ANSWER:
amended)
The distinction between infringement (presumably
Patents: Gas-Saving Device: First to File Rule trademark) and unfair competition are as follows:
(2005) 1) Infringement of trademark is the unauthorized use of
a trademark, whereas unfair competition is the passing
Cezar works in a car manufacturing company owned by off of one’s goods as those of another;
Joab. Cezar is quite innovative and loves to tinker with 2) Fraudulent intent is unnecessary in infringement of
things. With the materials and parts of the car, he was trademark, whereas fraudulent intent is essential in
able to invent a gas-saving device that will enable cars unfair competition;
to consume less gas. Francis, a co-worker, saw how 3) The prior registration of the trademark is a
Cezar created the device and likewise, came up with a prerequisite to an action for infringement of trademark,
similar gadget, also using scrap materials and spare whereas registration of the trademark is not necessary
parts of the company. Thereafter, Francis filed an in unfair competition. (Del Monte Corp v CA 78325 Jan
application for registration of his device with the Bureau 25,90 181s410)
of Patents. Eighteen months later, Cezar filed his
application for the registration of his device with the Infringement; Jurisdiction (2003)
Bureau of Patents.
1) Is the gas-saving device patentable? Explain. K-9 Corporation, a foreign corporation alleging itself to
be the registered owner of trademark “K-9” and logo
SUGGESTED ANSWER: “K”, filed an Inter Partes case with the Intellectual
Property Office against Kanin Corporation for the
Yes, the gas-saving device is patentable because it cancellation of the latter’s mark “K-9” and logo “K.”
provides a technical solution to a problem in a field of During the pendency of the case before the IPO, Kanin
human activity. It is new and involves an inventive step, Corporation brought suit against K-9 Corporation before
and certainly industrially applicable. It therefore fulfills the RTC for infringement and damages. Could the action
the requisites mandated by the intellectual Property before the RTC prosper? Why?
Code for what is patentable.
2) Assuming that it is patentable, who is entitled to SUGGESTED ANSWER:
the patent? What, if any, is the remedy of the losing
party? Infringement vs. Unfair Competition (2003)
In what way is an infringement of a trademark similar to
SUGGESTED ANSWER: that which pertains to unfair competition?

Cezar is entitled to the patent because he was the real --------

inventor. Francis, copying from the work of Cezar,
cannot claim the essential criteria of an inventor, who Patent; Non-Patentable Inventions (2006)
must possess essential elements of novelty, originality
and precedence to be entitled to protection. Supposing Albert Einstein were alive today and he filed
Nevertheless, under the “first to file rule,” Francis with the Intellectual Property Office (IPO) an application
application would have to be given priority. Cezar, for patent for his theory of relativity expressed in the
formula E=mc2. The IPO disapproved Einstein’s
application on the ground that his theory of relativity is SUGGESTED ANSWER:
not patentable. Is the IPO’s action correct? (5%)
No. An intention to pirate is not an element of
SUGGESTED ANSWER: infringement. Hence, an honest intention is no defense
to an action for infringement.
Yes, the IPO is correct because under the Intellectual
Property Code, discoveries, scientific theories and ALTERNATIVE ANSWER:
mathematical methods, are classified to be as “non-
patentable inventions.” Eintein’s theory of relativity falls Yes. The owner of the copyright must make others aware
within the category of being a non-patentable “scientific that the material in question is under or covered by a
theory.” copyright. This is done by the giving of such notice at a
prominent portion of the copyright material. When the
Copyright; Photocopy; when allowed (1998) alleged pirate is thus made aware thereof, his act of
pirating the copy material will constitute infringement.
May a person have photocopies of some pages of the
book of Professor Rosario made without violating the Copyright; Infringement (1994)
copyright law? (3%) The Victoria Hotel chain reproduces videotapes,
distributes the copies thereof to its hotels and makes
SUGGESTED ANSWER: them available to hotel guests for viewing in the hotel
guest rooms. It charges a separate nominal fee for the
Yes. The private reproduction of a published work in a use of the videotape player.
single copy, where the reproduction is made by a natural 1) Can the Victoria Hotel be enjoined for infringing
person exclusively for research and private study, is copyrights and held liable for damages?
permitted, without the authorization of the owner of the 2) Would it make any difference if Victoria Hotel does
copyright in the work. not charge any fee for the use of the videotape?

Copyright; Infringement (2006) SUGGESTED ANSWER:

In a written legal opinion for a client on the difference
between apprenticeship and learnership, Liza quoted 1) Yes. Victoria Hotel has no right to use such video
without permission a labor law expert’s comment tapes in its hotel business without the consent of the
appearing in his book entitled “Annotations on the Labor creator/ owner of the copyright.
Code.” Can the labor law expert hold Liza liable for 2) No. The use of the videotapes is for business and not
infringement of copyright for quoting a portion of his merely for home consumption. (Filipino Society of
book without his permission? (5%) Composers, Authors Publishers v Tan 148 s 461; pd
1988)
SUGGESTED ANSWER:
Copyright; Commissioned Artist (2004)
Liza cannot be held liable for infringement of copyright BR and CT are noted artists whose paintings are highly
since under the Intellectual Property Code, one of the prized by collectors. Dr. DL commissioned them to paint
limitations to the copyright is the making of quotations a mural at the main lobby of his new hospital for
from a published work for purpose of any judicial children. Both agreed to collaborate on the project for a
proceedings or for giving of professorial advice by legal total fee of two million pesos to be equally divided
practitioner, provided that the source and name of the between them. It was also agreed that Dr. DL had to
author are identified (See Section 184.1[k] of the provide all the materials for the painting and pay for the
Intellectual Property Code of the Philippines). wages of technicians and laborers needed for the work
on the project.
Copyright; Infringement (1998) Assume that the project is completed and both BR and
Juan Xavier wrote and published a story similar to an CT are fully paid the amount of P2M as artists’ fee by DL.
unpublished copyrighted story of Manoling Santiago. It Under the law on intellectual property, who will own the
was, however, conclusively proven that Juan Xavier was mural? Who will own the copyright in the mural? Why?
not aware that the story of Manoling Santiago was Explain. (5%)
protected by copyright. Manoling Santiago sued Juan
Xavier for infringement of copyright. Is Juan Xavier SUGGESTED ANSWER:
liable? (2%)
SUGGESTED ANSWER: Under Section 178.4 of the Intellectual Property Code, in
case of commissioned work, the creator (in the absence
Yes. Juan Xavier is liable for infringement of copyright. It of a written stipulation to the contrary) owns the
is not necessary that Juan Xavier is aware that the story copyright, but the work itself belongs to the person who
of Manoling Santiago was protected by copyright. The commissioned its creation. Accordingly, the mural
work of Manoling Santiago is protected at the time of its belongs to DL. However, BR and CT own the copyright,
creation. since there is no stipulation to the contrary.

Copyright; Infringement (1997) Copyright; Commissioned Artist (1995)

In an action for damages on account of an infringement Solid Investment House commissioned Mon Blanco and
of a copyright, the defendant (the alleged pirate) raised his son Steve, both noted artists, to paint a mural for the
the defense that he was unaware that what he had Main Lobby of the new building of Solid for a contract
copied was a copyright material. Would this defense be price of P2m.
valid? a) who owns the mural? Explain
b) Who owns the copyright of the mural? Explain.

SUGGESTED ANSWER:

a) Solid owns the mural. Solid was the one who

commissioned the artists to do the work and paid for the
work in the sum of P2m
b) Unless there is a stipulation to the contrary in the
contract, the copyright shall belong in joint ownership to
Solid and Mon and Steve.

Copyright (1995)
What intellectual property rights are protected by
copyright? SUGGESTED ANSWER: Sec 5 of PD 49
provides that Copyright shall consist in the exclusive
right: