Levi Strauss (Phils), Inc v Tony Lim

GR No. 162311, 4 Dec 2008

Legal Doctrine: The likelihood of confusion exists not only if there is confusing similarity. It
should also be likely to cause confusion or mistake or deceive purchasers.

FACTS:
 Petitioner is a duly-registered domestic corporation. It is a wholly-owned subsidiary of Levi
Strauss & Co (LS &Co), a Delaware, USA company. LS & Co granted a non-exclusive
license to petitioner to use its registered trademarks and trade names for the manufacture
and sale of garment products in the Philippines.
 Petitioner filed a complaint before the Inter-Agency Committee on Intellectual Property
Rights alleging that a certain establishment in Metro manila was manufacturing garments
using colorable imitations on the premises of respondent Tony Lim, doing business under
the name Vogue Traders Clothing Company. It was revealed in the investigation that
respondent was engaged in the manufacture, sale and distribution of products similar to
those of petitioner and under the brand name “LIVE’S.”
 A search warrant was served on respondent’s premises where several items were seized.
The PNP Criminal Investigation Command then filed a complaint against respondent before
DOJ for unfair competition under the old Art.189 of the RPC. PNP CIC claimed that there is
confusing similarity between the denim jeans and pants of LEVI’S and LIVE’S.
 Respondent’s Counter-Affidavit: (1) his products are not fake LEVI’S garments; (2) LIVE’S
is a registered trademark while the patch pocket design for LIVE’S pants has copyright
registration; (3) the issue on confusing similarity is a prejudicial question that cannot be
determined without denial of due process or encroachment on the jurisdiction of the
agencies concerned; and (4) his goods are not clothed with an appearance which is likely to
deceive the ordinary purchaser exercising ordinary care.
 Petitioner’s Reply-Affidavit: there is likelihood of confusion between the competing products
(1) a slavish imitation of petitioner’s “arcuate” trademark has been stitched on the
backpocket of LIVE’S jeans; (2) the appearance of the mark “105” on respondent’s product
is obviously a play on petitioner’s “501” trademark; (3) the appearance of the word/phrase
“LIVE’S” and “LIVE’S ORIGINAL JEANS” is confusingly similar to petitioner’s “LEVI’S”
trademark; (4) a red tab, made of fabric, attached at the left seam of the right backpocket of
petitioner’s standard five-pocket jeans, also appears at the same place on “LIVE’S” jeans;
(5) the patch used on “LIVE’S” jeans (depicting three men on each side attempting to pull
apart a pair of jeans) obviously thrives on petitioner’s own patch showing two horses being
whipped by two men in an attempt to tear apart a pair of jeans; and (6) “LEVI’S” jeans are
packaged and sold with carton tickets, which are slavishly copied by respondent in his own
carton ticket bearing the marks “LIVE’S,” “105,” the horse mark, and basic features of
petitioner’s ticket designs, such as two red arrows curving and pointing outward, the arcuate
stitching pattern, and a rectangular portion with intricate border orientation.
 Prosecution Attorney Dela Cruz recommended the dismissal of the complaint ruling that
respondent’s products are not clothed with an appearance which is likely to deceive the
ordinary purchaser. This was approved by the Assistant Chief State Prosecutor.
 On appeal, SOJ. Guingona affirmed the dismissal of the complaint ruling that: (1)
complainant has not shown that anyone was actually deceived by respondent; (2) the
trademark LIVE’S has entirely different spelling and meaning from LEVI’S---complainant’s
trademark comes from a Jewish name while that of respondent is merely an adjective word;
(3) Both, when read and pronounced, would resonate different sounds; (4) LIVE’S trademark
had been registered with appropriate government agencies; and (5) there was no unfair
competition since there was no evidence/proof that respondent intended to deceive the
public.
 MR filed by petitioner alleging that only a likelihood of confusion is required to sustain the
charge against respondent. It also submitted a survey involving comparison of both parties’
products. This was granted by Guingona’s successor (SOJ Bello III).
 Respondent then filed MR with the new SOJ Cuevas who granted it and dismissed the
 charges.
 CA affirmed the dismissal of the unfair competition complaint pointing out that all relevant
factors and circumstances should be taken into consideration in order to determine the
likelihood of confusion, mistake or deception. The existence of some similarities between
LIVE’S jeans and LEVI’S garments would not ipso facto equate to fraudulent intent on the
part of respondent. CA considered the spelling and pronunciation of the marks; the
difference in the designs of the back pockets; the dissimilarity between the carton tickets;
and the pricing and sale of petitioner’s products in upscale exclusive specialty shops. The
CA also disregarded the theory of post-sale confusion propounded by petitioner, relying
instead on the view that the probability of deception must be determined at the point of sale.

ISSUE: WON actual confusion is necessary to sustain a charge of unfair competition and that
there must be direct evidence or proof of intent to deceive the public. YES, in this case all the
elements of unfair competition were not proven.

RULING:
Unfair competition consists in employing deception or any other means contrary to good faith by
which any person 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 goodwill, or committing any acts
calculated to produce such result. The elements of unfair competition under Article 189(1) of the
RPC are: (a) That the offender gives his goods the general appearance of the goods of another
manufacturer or dealer; (b) That the general appearance is shown in the (1) goods themselves,
or in the (2) wrapping of their packages, or in the (3) device or words therein, or in (4) any other
feature of their appearance; (c) That the offender offers to sell or sells those goods or gives other
persons a chance or opportunity to do the same with a like purpose; and (d) That there is actual
intent to deceive the public or defraud a competitor.

All these elements must be proven. In finding that probable cause for unfair competition does not
exists, the investigating prosecutor and SOJs arrived at the same conclusion that there is
insufficient evidence to prove all the elements of the crime. For SOJ Guingona, the mark’s
registration, coupled with the stark differences between the competing marks, negate the
existence of actual intent to deceive while SOJ Cuevas failed to find the possibility of confusion
and of intent to deceive the public.

The likelihood of confusion exists not only if there is confusing similarity. It should also be likely to
cause confusion or mistake or deceive purchasers. Thus, the CA correctly ruled that the mere
fact that some resemblance can be pointed out between the marks used does not in itself prove
unfair competition. To reiterate, the resemblance must be such as is likely to deceive the ordinary
purchaser exercising ordinary care.

Moreover, the consumer survey alone does not equate to actual confusion. The survey was
made by showing the interviewees actual samples of petitioner’s and respondent’s respective
products, approximately five feet away from them. From that distance, they were asked to
identify the jeans’ brand and state the reasons for thinking so. This method discounted the
possibility that the ordinary intelligent buyer would be able to closely scrutinize, and even fit, the
jeans to determine if they were “LEVI’S” or not. It also ignored that a consumer would consider
the price of the competing goods when choosing a brand of jeans. It is undisputed that “LIVE’S”
jeans are priced much lower than “LEVI’S.”

THUS, absent GAD on the part of executive branch in determining the probable cause during the
preliminary investigation, the Court cannot nullify acts done in the exercise of the executive
officers’ discretion.

NOTES:
The Court has consistently ruled that the filing with the CA of a petition for review under Rule 43
to question the Justice Secretary’s resolution regarding the determination of probable cause is an
improper remedy. The DOJ is not one of the agencies enumerated in Section 1 of Rule 43 whose
awards, judgments, final orders, or resolutions may be appealed to the CA. Under the 1993
Revised Rules on Appeals from Resolutions in Preliminary Investigations or Reinvestigations, the
resolution of the investigating prosecutor is subject to appeal to the Justice Secretary who, under
the Revised Administrative Code, exercises the power of control and supervision over said
Investigating Prosecutor; and who may affirm, nullify, reverse, or modify the ruling of such
prosecutor. If the appeal is dismissed, and after the subsequent motion for reconsideration is
resolved, a party has no more appeal or other remedy available in the ordinary course of law.
Thus, the Resolution of the Justice Secretary affirming, modifying or reversing the resolution of
the Investigating Prosecutor is final. There being no more appeal or other remedy available in the
ordinary course of law, the remedy of the aggrieved party is to file a petition for certiorari under
Rule 65. Thus, while the CA may review the resolution of the Justice Secretary, it may do so only
in a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, solely on the
ground that the Secretary of Justice committed grave abuse of discretion amounting to excess or
lack of jurisdiction.

While the resolution of the Justice Secretary may be reviewed by the Court, it is not empowered
to substitute its judgment for that of the executive branch when there is no grave abuse of
discretion.
Courts are without power to directly decide matters over which full discretionary authority has
been delegated to the legislative or executive branch of the government. The determination of
probable cause is one such matter because that authority has been given to the executive
branch,
through the DOJ. It bears stressing that the main function of a government prosecutor is to
determine the existence of probable cause and to file the corresponding information should he
find it to be so. Thus, the decision whether or not to dismiss the criminal complaint against
respondent is necessarily dependent on the sound discretion of the investigating prosecutor and
ultimately, that of the Secretary of Justice.

A prosecutor, by the nature of his office, is under no compulsion to file a particular criminal
information where he is not convinced that he has evidence to prop up its averments, or that the
evidence at hand points to a different conclusion. This is not to discount the possibility of the
commission of abuses on the part of the prosecutor. But this Court must recognize that a
prosecutor should not be unduly compelled to work against his conviction. Although the power
and prerogative of the prosecutor to determine whether or not the evidence at hand is sufficient
to form a reasonable belief that a person committed an offense is not absolute but subject to
judicial review, it would be embarrassing for him to be compelled to prosecute a case when he is
in no position to do so, because in his opinion he does not have the necessary evidence to
secure a conviction, or he is not convinced of the merits of the case.

The court’s duty in an appropriate case is confined to a determination of whether the assailed
executive or judicial determination of probable cause was done without or in excess of
jurisdiction or with grave abuse of discretion amounting to want of jurisdiction. For grave abuse of
discretion to prosper as a ground for certiorari, it must be demonstrated that the lower court or
tribunal has exercised its power in an arbitrary and despotic manner, by reason of passion or
personal hostility, and it must be patent and gross as would amount to an evasion or to a
unilateral refusal to perform the duty enjoined or to act in contemplation of law. In the case at bar,
no grave abuse of discretion on the part of the DOJ was shown. Petitioner merely harps on the
error committed by the DOJ and the CA in arriving at their factual finding that there is no
confusing similarity between petitioner’s and respondent’s products. While it is possible that the
investigating prosecutor and Secretaries Guingona and Cuevas erroneously exercised their
discretion when they found that unfair competition was not committed, this by itself does not
render their acts amenable to correction and annulment by the extraordinary remedy of certiorari.
There must be a showing of grave abuse of discretion amounting to lack or excess of jurisdiction.