Trademarks Digests (U - 11may2013)

Trademarks Midterms Case Digests (Atty.
Ortiguerra)
Distelleria Washington, Inc. v. Court of Appeals Doctrine: Trademark refers to a word, name, symbol. Emblem, sign or device or any combination thereof adopted and used by a merchant to identify and distinguish from others, his goods of commerce. It is basically an intellectual creation that is susceptible to ownership and consistently therewith, gives rise to its own elements of jus posidendi, jus utendi, jus fruendi, jus disponendi, and jus abutendi, along with the applicable jus lex, comprising that ownership. The incorporeal right, however, is distinct from the property in the material object subject to it. Thus, the transfer or assignment of the intellectual property will not necessarily constitute a conveyance of the thing it covers, nor would a conveyance of the latter imply the transfer or assignment of the intellectual right. Facts: ! The initiatory suit for manual delivery with damages herein was instituted by La Tondena (LTDI) against Distillery Washington (Washington) under a claim of ownership. Such action sought to seize from Washington 18,157 empty bottles bearing blownin marks of La Tondena and Ginebra San Miguel because, allegedly, Washington uses it for its own Gin Sevem products without the consent of LTDI. The court in the said action issued a replevin to seize said bottles. ! After hearing, the trial court ordered LTDI to return the bottles seized from Washington and in the event of failure to return said bottles, LTDI is ordered to indemnify the defendant in the amount of P18,157.00 on the ground that a purchaser of liquor pays only a single price for the liquor and the bottle and is not required to return the bottle at any time. In view of the foregoing, LTDI appealed the decision to the Court of Appeals. CA reversed and ordered the retention of the subject bottles in favor of LTDI on the ground that the marks of ownership of LTDI stamped or blown-in to the bottles are sufficient notice to the public that the bottles are LTDI property. Thus, Washington assailed the reversal of the trial courts decision. Washington is of the position that R.A. 623 should not apply to gin since it is not among those mentioned in the law and that, in any case, ownership of the bottles was already transferred to it upon the sale of the gin and containers at a single price. Thus, he is now the lawful owner of the said bottles. Issue: ! Whether or not LTDI is now the lawful owner of the empty bottles upon sale of the gin. ! Whether or not RA 623 affords intellectual property protection to liquors. Ratio: ! In its decision, the Supreme Court saw no cogent reason to depsrt from the rule already laid down in the previous case of Cagayan Valley Enterprises v. Court of Appeals. In the said case, it ruled that RA 623 affords protection to a qualified manufacturer who successfully registered with the Philippine Patent Office its duly stamped or marked bottled, etc. The mere use of the registered bottles without the written consent of the manufacturer is prohibited, the only exceptions being when they are used as containers for sisi, bagoong and patis and similar native products. RA 623 only required that bottles, in order to be eligible for registration, must be stamped or marked with the names of the manufacturers or the names of their principals or products, or other marks of ownership. No drawings of labels are required but, instead, two photographs of the container, duly signed by the applicant, showing clearly and legibly the names and other marks of ownership sought to be registered and a bottle showing the name or other mark of ownership, irremovably stamped or marked shall be submitted. ! However, the court noted that the issue in this case is not only one for violation of RA 623, but instead, it is one for replevin where the claimant must be able to show convincingly that he is either the owner or clearly entitled to the possession of the object sought to be recovered. Replevin focuses on possession. Evidently, RA 623 does not disallow the sale or transfer of ownership of the marked bottles or containers. In fact, the contrary is implicit in the law. The buyer takes the item, he is neither required to return the bottle nor required to make a deposit to assure its return to the seller. He could return the bottle and get a refund but it cannot be gainsaid that ownership of the containers does pass on to the consumer albeit subject to the statutory limitation on the use of registered containers and to the trademark right of the registrant.
Erandio, Athena Louise 3A | Batch 2014 | 1
Trademarks Midterms Case Digests (Atty. Ortiguerra)

The court sees no other logical purpose for Washingtons insistence to keep the bottles, except for the unauthorized use thereof. The practical and feasible alternative herein is to merely require the payment of just compensation to Washington for the bottles seized from it by LTDI. Distilleria Washington v. La Tondena Distillers and the Court of Appeals Doctrine: Sections 2 and 3 of RA 623 apply only when the filling up of the bottle or the use of the bottle is without the permission of the registered manufacturer, bottler or seller, who has registered the marks of ownership of the bottles. Section 2 prohibits the person from using, selling or otherwise disposing of registered containers without the written consent of the registrant. Such rights belong to the registrant. Under Section 3, mere possession of such registered containers without written consent of the registrant is prima facie presumed unlawful. What is proscribed is the use of the bottles in infringement of anothers trademark or incorporeal rights. Facts: ! Washington sought reconsideration of the decision of this Court and advances that since the court decided that Washington has acquired ownership over the bottles, it is improper for it to render a decision allowing LTDI to keep the bottles (which is a denial of the very attributes of ownership). It further contends that to hold the buyer liable under Section 2 and 3 would grant LTDI the extraordinary right not only of possession and use of the bottles which it has sold and no longer owns, but also to sell said bottles ad infinitum, thus enriching itself unjustly. Issue: ! Whether or not LTDI transferred ownership of its marked bottles or containers when it sold its products in the market. Ratio: ! LTDI not only sold its gin products but also the marked bottles or containers as well. Ownership over the bottles and all its attributes passed to the buyer. It necessarily follows that the transferee has the right to possession of the bottles unless he uses them in violation of the original owners registered or incorporeal rights. Sections 2 and 3 of RA 623 apply only when the filling up of the bottle or the use of the bottle is without the permission of the registered manufacturer, bottler or seller, who has registered the marks of ownership of the bottles. Section 2 prohibits the person from using, selling or otherwise disposing of registered containers without the written consent of the registrant. Such rights belong to the registrant. Under Section 3, mere possession of such registered containers without written consent of the registrant is prima facie presumed unlawful. Since the court found that the bottles have been transferred by way of sale, then LZTDI relinquished all of its proprietary rights over the bottles in favor od Washington who has obtained them in due course. ! The court, however, did not rule on the violation of the incorporeal rights of LTDI since it would be improper and premature to rule on such point. It has not been put in issue since this was a case for replevin, not infringement. The court also cannot be of the position that every possession of the bottles without the requisite written consent is illegal since then, thousands of buyers of the Ginebra San Miguel would be exposed to criminal prosecution by the mere fact of possession of the empty bottles after consuming the content. Note: Justice Vitug, the ponente to the previous decision, dissented to this MR. Hanover Star Milling Co. v. Metcalf Doctrine: Since it s trade and not the mark that is protected, a trademark acknowledges no territorial boundaries of municipalities or states or nations, but extends to every market where the traders goods have become known and identified by his use of the mark. But the mark, of itself, cannot travel to markets where there is no article to wear the badge and no trader to offer the article. Trademark is treated merely as a protection for the goodwill and not the subject of property except in connection with an existing business. The exclusive right to the use of a trademark is founded on priority of application. But where two parties are independently employing the same mark upon goods of the same class, but in separate markets wholly remote from one another, the question of prior appropriation is legally insignificant unless it appears that the second adopter has selected the mark with some design inimical to the interest of the first user, such as to take the benefit of the reputation of his goods, to forestall the extension of his trade or the like.

Facts: ! Hanover Star Milling is an Illinois corporation engaged in the manufacturing of flour. It initiated a case against Metcalf (Steeleville), a merchant engaged in the selling of Flour at Greeneville, Butler County, in that state, to restrain alleged trademark infringement and unfair competition. Hanover averred that for 27 years, it has been engaged in the manufacturing of a superior and popular brand of flour known as Tea Rose in a wrapping containing 3 roses imprinted upon labels attached to sacks and barrels and that this flour has been marketed in the State of Alabama for the preceding 12 years already. It further averred that, until shortly before the commencement of this action, it has been the only company who offered or sold the same in Butler County or elsewhere in the State of Alabama. Hanover adopted said Tea Rose brand, built it up and extended its trade in the southeastern territory comprising of Georgia, Florida, Alabama and Mississippi. Said mark had come to mean the Hanover flour and nothing else. Steelevilles answer denied all attempts to deceive purchasers and further denied the complainants right to the exclusive use of the words Tea Rose and avvered that long prior to the complainants first use of it, and as early as 1872, the name has been adopted, appropriated and ued as a trademark for flour by the firm of Allen Wheeler (AW) of Ohio. It further alleged that the Steeleville Milling Company had used it for more than 16 years last past and as early as 1899. In another case, Allen & Wheeler Company (AW), a corporation in the state of Ohio averred that in or before the year 1872, the firl already adopted as trademark the words Tea Rose and from thence until the year 1904, continuously used that mark by placing it on sacks of flour and sold throughout the US. ! 2 temporary injunctions were granted by the District Court, both in favor of Hanover against Steeleville and AW, respectively. It restrained Steeleville or any other person, firm or corporation other than Hanover from selling the flour named Tea Rose in the Middle District of Alabama. Issue ! Whether or not Hanover has an affirmative trademark right against AW. ! Whether or not Hanover is entitled to relief against Steeleville upon the ground of unfair competition in trade regardless of the trademark right. Ratio: ! Hanover has an affirmative trademark right against AW. Where a party has been in the habit of labeling his goods with a distinctive mark, so that purchasers recognize goods thus marked as being of his production, others are debarred from applying the same mark to goods as being of the same description, because to do so would in effect represent their goods to be of his production and would tend to deprive him of the profit he might make through the sale of the goods which the purchaser intended to buy. So far in this case, the proofs disclose that AW mark has not been used at all, is not known at all in a market sense, within the sovereignty of Alabama or the adjacent states where the controversy with Hanover arose. On the other hand, the record in the case showed that the complainants trade has been well known in the place. AW left the southeastern states untouched. Even if they did now know, and it does not appear that they did know, that the Hanover company was doing so, they must be held to have taken the risk that some party might, during their 40 years of inactivity, hit upon the same mark and expend money and effort in building up a trade in flour under it. Here, there is no clearer evidence that there is abandonment by nonuser of trademark rights. And since Hanover has expended money and effort in building up its trade, AW is estopped to assert trademark infringement as to that territory. This case does not deal with a situation where there is junior appropriation. The exclusive right to the use of a trademark is founded on priority of application. But where two parties are independently employing the same mark upon goods of the same class, but in separate markets wholly remote from one another, the question of prior appropriation is legally insignificant unless it appears that the second adopter has selected the mark with some design inimical to the interest of the first user, such as to take the benefit of the reputation of his goods, to forestall the extension of his trade or the like. Here,

Alabamas remoteness to the territory (Cincinnati), which AW reached was taken into consideration. ! Steelevilles purpose to take advantage of the reputation of Hanover is so manifest and the tendency of the similarity of the brand and accompanying design and of the make-up of the packages to mislead ultimate customers is so evident that it seems to us a case of unfair competition is made out. There is evidence that Hanovers use of the brand antedated that of Steelevilles. The latter used it in trade in Illinois, Tennessee, Mississippi, Louisiana and Arkansas. However, a short time before the suit was commenced, Metcalf, agent of Steeleville, put large banners advertising to the public that he had received a shipment of Tea Rose flour and that it was Steelevilles best quality but it was put in packages closely resembling that of Hanovers calculated to deceive the ordinary and casual purchaser of flour into the belief that he is purchasing the article of that name manufactured by the said Hanover company. It even substituted Steeleville in place of the Hanover labels with distinctive wrapping, both indicative of Hanovers flour. Champion Spark Plug Co v. Sanders Doctrine: A trademark only gives the right to prohibit the use of it insofar as to protect the owners goodwill against the sale of anothers product as his. When the mark is used in a way that does not deceive the public, we see no such sanctity in the word as to prevent its being used to tell the truth. It is not taboo. Inferiority is immaterial as long as the article is clearly and distinctively sold as repaired or reconditioned, rather than as new. Facts: ! Respondent Sanders in this case collect used Champion plugs, repair and recondition them and resell them. He retains the word Champion on the repaired or reconditioned plugs. However, respondents company business name or address is not printed on the cartons. On each individual plug, however, is stamped in small letters, blue on black the work Renewed which at time is almost illegible. Champion brought the instant case charging Sanders of infringement and unfair competition. The District Court found that there is infringement and enjoined Sanders from offering or selling the plugs unless the trademark and type and style marks were removed, the plugs were repainted, and the word repaired was stamped legibly. The Circuit Court of Appeals upheld the infringement and also found that there is unfair competition. However, it modified the relief in that it eliminated the requirement that the trademark and type and style marks be removed. Issue: ! Whether or not the relief granted is adequate, particularly the refursal of the Court of Appeals to require respondents to remove the word Champion form the repaired or reconditioned plugs which they resell. ! Whether or not an accounting by Sanders should be ordered by the court. Ratio: ! It is adequate. The spark plugs, though used, are nevertheless Champion plugs and not those of another make. We would not suppose that one could be enjoined from selling a car whose valves had been regrounded and whose piston rings had been replaced unless he removed the name Ford or Chevrolet. A trademark only gives the right to prohibit the use of it insofar as to protect the owners goodwill against the sale of anothers product as his. When the mark is used in a way that does not deceive the public, we see no such sanctity in the word as to prevent its being used to tell the truth. It is not taboo. The repair or reconditioning does not give them a new design. It is no more a restoration of their original condition. Although there is evidence that the reconditioned plugs are inferior insofar as heat range and other qualities are concerned, inferiority is expected in most second-hand articles. Inferiority is immaterial as long as the article is clearly and distinctively sold as repaired or reconditioned, rather than as new. ! It does not stand that an accounting will be ordered because there has been an infringement. An accounting will be denied when an injunction will satisfy the equities of the case. Here. Since there is no showing of fraud or palming off, the likelihood of damage to petitioner or profit to respondents due to any misrepresentation seems slight. An injunction satisfies the equities of the case. Pribhdas J. Mirpuri v. Court of Appeals Doctrine: Trademark is defined as including any word, name, symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from

those manufactured, sold or dealt in by others. It is any visible sign capable of distinguishing goods. The function of trademark is to point out distinctly the origin or ownership of the goods to which it is affixed; to secure to him, who has been instrumental in brining into the market a superior article of merchandise, the fruit of his industry and skill; to assure the public that they are procuring the genuine article to prevent fraud and imposition, and to protect the manufacturer against substitution and sale of an inferior different article as his product. Trademark functions to: 1) indicate the origin or ownership of articles to which they are attached; 2) guarantee that those articles come up to a certain standard of quality and 3) they advertise the articles they symbolize. Facts: ! In 1970, Lolita Escobar, the predecessor of Mirpuri filed an application with the Bureau of Patents for the registration of the trademark Barbizon for use in brassieres and ladies undergarments. However, Barbizon Corporation (a foreign corporation in the US) opposed the application claiming that it is confusingly similar to their brand. The director of patents rendered a decision giving due course to the application of Escobar. However, because of her failure to file the Affidavit of Use of the trademark, the Bureau of Patents cancelled the certificate of registration. In 1981, she reapplied for registration and said application was again opposed by Barbizon Corporation. In its opposition, Barbizon claims that the trademark BARBIZON has been used in many countries including the Philippines for at least 40 years and has enjoyed reputation and good will for their quality. Barbizon Corporation claims that Escobar fraudulently registered the same in violation of the Trademark Law and the Revised Penal Code. ! The director of patents rendered a decision declaring that the opposition of the respondent is already barred by res judicata giving due course to the application for registration. Barbizon Corporation questioned said decision before the Court of Appeals. The Court of Appeals reversed the decision of the director of patents and found that the case is not barred by res judicata. Petitioner Miruri, predecessor of Escobar now questions the decision of the Court of Appeals. Issue: ! Whether or not the opposition is barred by res judicata Ratio: ! There is no res judicata. In res judicata, the judgment in the first action is considered conclusive to every matter offered and received therein as to any other admissible matter which might have been offered for that purpose. Its requisites are: 1. The former judgment or order must be final 2. The judgment or order must be on the merits 3. Must have been rendered by a court having jurisdiction over the subject matter 4. There must be between the first and second actions, identity of parties, of subject matter and of causes of action. New causes of action were allegedly introduced in the second patent case such as the prior use and registration of the trademark in the United States and other countries, prior use in the Philippines and the fraudulent registration of the mark in violation of Article 189 of the Revised Penal Code. Private respondent also cited protection of the trademark under the Paris Convention and the Memoranda issued by Villafuerte and Ongpin. Essentially, under the Paris Convention, the trademark is to be protected if it is well-known in the country where the protection is sought. The power to determine whether a trademark is well known lies in the competent authority of the country of registration or use. Pursuant to this convention, the VIllafuerte and Ongpin Memoranda were issued. The first one enumerated the brands that are to be protected, and the second one, laid down guidelines for the Director of Patents to observe in determining whether a trademark is entitled to protection as a well-known mark in the Philippines. The PPO was ordered to refuse applications for, or cancel the registration which would fall under these. The issue raised in the second patent case was different from the issues of confusing similarity and damage in the first. The issue of prior use may have been raised in the first but this claim was limited only to prior use in the Philippines. Also note that the oppositions in the first and second cases are based on different laws. The first was based on the provisions of the Trademark Law and the second was based on the

Paris Convention. The mere fact that the same relief is sought in the subsequent action will not render the judgment in the prior action operative as res judicata, such as where the two actions are based on different statutes. La Insular Cigar and Cigarette Factory, Inc. v. B.E. Jao OGE Doctrine: Substantially the same remedies are conceded to the person injured whether the wrong done in a particular case consists of infringement of trademarks, illegal use of trade name or unfair competition in business which remedies consist of an award of damages or double damages, and a perpetual injunction against the continuance of the injury. In cases of infringement of trademarks, the law primarily takes no account of the actual intent on the part of the infringer to mislead the public and defraud the owner of the trademarks. On the other hand, in cases of unfair competition actual intent to deceive the public and defraud the person injured is declared to be essential to the maintenance of the action but it is immediately added that such intent may be inferred from similarity of appearance of the goods as packed or offered for sale to those of the complaining party. Facts: ! La Insular is a corporation engaged in the tobacco business and it is the owner of a registered trademark which it places upon the wrappers of its cigarettes and by which its products is generally recognized throughout the Philippine Islands and elsewhere. The complainant set forth ownership of the above trademark and the continuous use of the same for nearly 40 years. It alleges that the defendant BE Jao (La Ciudad proprietor) began to use 2 different labels on packages of its cigarettes offered for sale which are infringing imitations of the plaintiffs mark. To this complaint, the defendant interposed a general demurrer on the ground that the facts stated did not constitute a cause of action. Such demurrer was sustained by the trial court hence, judgment was entered dismissing the complaint. Issue: ! Whether or not there is a case for infringement or unfair competition. Ratio: ! The complaint is sufficient and the order sustaining the demurrer must be dismissed. An action for infringement of a trademark lies in favor of the injured person against any one who sells goods of a similar kind bearing such trademark. This interpretation would make the remedy available in very few cases since most traders desirous of filching the trade of others in this way will use colorable imitations or suggestive reproductions of the trademark which they intend to appropriate rather than exact counterfeits. But if a litigants right is doubtful under infringement, he only needs to claim the benefit of the section dealing with unfair competition which gives precisely the remedies that he would have contained under the other provision and under this section, it is immaterial what form the deceptive practices of the infringer take. In cases of infringement of trademarks, the law primarily takes no account of the actual intent on the part of the infringer to mislead the public and defraud the owner of the trademarks. On the other hand, in cases of unfair competition actual intent to deceive the public and defraud the person injured is declared to be essential to the maintenance of the action but it is immediately added that such intent may be inferred from similarity of appearance of the goods as packed or offered for sale to those of the complaining party. The elements of unfair competition are:

1. The person complained of shall have given to his goods the general appearance of the goods of the complaining party either in wrapping, devices or words; 2. That the person complained of should have clothed the goods with such appearance for the purpose of deceiving the public and defrauding the complaining party of his legitimate trade. It is not always easy to point out exactly where one ends and the other begins, but together they comprise all actionable injuries which one person may inflict upon another as the result of the unfair use of names, marks, and other trade devices. ! In this case, the person injured is not really required to indicate the particular provision of law upon which he relies for relief, and if he does so and is mistaken, this will not preclude him from obtaining relief under a different conception of the case, provided always that the facts stated and proved justify such relief. In this case, the packaging used by the La Ciudad closely imitates the label and mark of La Insular and there is a further allegation that the defendant is giving his cigarettes the appearance of cigarettes anufactured and offered for sale by the plaintiff. The intent to deceive may be inferred from similarity in the appearance of the goods as packed or offered for sale. It is too clear from the allegations of the complaint, taken in connection with the exhibits that there is actionable imitation on the part of the defendant. The offending marks submitted for purposes of actual comparison tell the story to the eye. Del Monte Corporation and Philippine Packing Corporation v. CA Doctrine: To determine whether a trademark has been infringed, we must consider the mark as a whole and not as dissected. If the buyer is deceived, it is attributable to the marks as a totality, not usually to any party of it. The court must be guided by its first impression for a buyer acts quickly and is governed by a casual glance, the value of which may be dissipated as soon as the court assumes to analyze carefully the respective features of the mark. The person who infringes a trademark does not normally copy out but only makes a colorable change, employing enough points of similarity to confuse the public with enough points of differences to confuse the courts. Facts: ! Philippine Packing Corporation (Philpack) is a domestic corporation in the Philippines granted the right to manufacture, distribute and sell in the Philippines various products of Del Monte. The latter authorized Philpack to register with the PPO the Del Monte Catsup bottle confugutation for which it was granted a Certificate of Trademark Registration under a supplemental register. On the other hand, Sunshine Sauce (Sunshine) was issued a certificate of registration by the Bureau of Domestic Trade to engage in the selling of Sunshine Fruit Catsup. This logo was registered in the supplemental register on 1983. The product itself was contained in various kinds of bottles, including Del Monte Bottle, which the private respondent bought from junk shops ! For this, Philpack and Del Monte filed a complaint against Sunshine for infringement of trademark and unfair competition with a prayer for damages and the issuance of a writ of preliminary injunction. In its answer, Sunshine alleged that it already ceased to use the bottles and that its logo was substantially different from the Del Monte Logo. ! RTC dismissed the complaint for failure to establish malice or bad faith which is an essential element to the charges and that in any case, Sunshine already became the owner of the said bottles upon its purchase from the junkshop. The trial court made the following comparisons to conclude that there is no colorable imitation of the trademark and logo: Del Monte Semi rectangular with a crown or tomato shape on top of the rectangle Tomato catsup mark Clearly indicated words packed by Sysu International Combination of yellow Sunshine Regular rectangle
Shape of label or make Brand printed on label Words or lettering on label
Fruit catsup made in the Philippines by Sunshine Sauce Manufacturing Industries White, light green
Color of logo

and dark red with words del monte quality in white Shape of a tomato Seal covering the cap down to the neck of the bottle with picture of tomatoes with words made from real tomatoes Darker red and light red, with words sunchine brand in yellow Entirely different shape sunshine brand fact that usually a defendant in a case of infringement does not normally copy but makes only a colorable imitation. ! The use of Del Montes bottle constitutes unfair competition, hence, the respondent should be permanently enjoined from the use of such bottles. It can be said that although Del Monte cannot claim exclusive use to the bottles configuration because it has not been registered in the Principal Register (it was only registered in the Supplemental Register and the same is not a basis for an action for infringement), Sunshine still opted to use petitioners bottle to market a product which Philpack also produces. This clearly shows bad faith and its intention to capitalize on the latters reputation and goodwill and pass off its own product as that of Del Monte. E. Spinner and Company v. Neuss Hesslein Corporation Doctrine: Any conduct may be said to constitute unfair competition if the effect is to pass off on the public the goods of one man as the goods of another. It is not necessary that any particular means should be used to this end. A competitior in a business cannot be permitted to do acts which have deceived, or are reasonably designed to deceive the public into buying his goods as those of another. Geographical terms can be used in an arbitrary and artificial sense and when so used by one manufacturer the improper appropriation of the same term by another may be enjoined as an invasion of trademark. Use of only one of the words constituting a trademark may be sufficient to constitute an infringement and it is not necessary to this end that all of the words comprising the trademark should be appropriated. Facts: ! E. Spinner (Spinner) is a copartnership has long been engaged in the manufacture and sale of textile fabrics, including khaki cloth with distributing business connection in different part of the world. On about 1900, the plaintiff began exporting its khahi to the Philippine Islands through local firms. It obtained a favorable impression which resulted in lucrative trade. Among the brands enjoying such favor was the grade indicated by the manufacturer as Wigan. These were marketed under a common trademark which was first registered in the Bureau of Patents in 1905. Spinner learned, in 1924, that Neuss Hesslein (Neuss) was selling a brand of khaki in the Philippines with the word Wigan stenciled on
Shapre of logo Label below the cap
Color of products
the
Lighter Monte
than
Del
CA affirmed. Thus, this petition for certiorari. Issue: ! Whether or not there is infringement of trademark. ! Whether or not there is unfair competition. Ratio: ! Sunshines label is an infringement of the Del Monte trademark. The two marks in their entirety as they appear in the respective labels must be considered in relation to the goods to which they are attached. Side by side comparison, as was done by the trial court, is not the final test of similarity. The average shopper is usually in a hurry and does not inspect every product on the shelf as if he were browsing in a library. The question is not whether the 2 articles are distinguishable by their label when set side by side but whether the general confusion made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard is such as to likely result in confounding it with the original. To determine whether a trademark has been infringed, we must consider the mark as a whole and not as dissected. If the buyer is deceived, it is attributable to the marks as a totality, not usually to any party of it. The court must be guided by its first impression for a buyer acts quickly and is governed by a casual glance, the value of which may be dissipated as soon as the court assumes to analyze carefully the respective features of the mark. The judge must also be aware of the

the bolts below the defendants own trademark. After discovering such fact, it sought to have its trademark registered in the Bureau of Commerce, to incorporate the work Wigan as an integral part of the registered trademark. ! On the other hand, Neuss, at the request of Chinese customers bagan to give orders to the New York House for the printing of the word wigan conspicuously on the bolts of khaki intended for sale in the Philippines. In the latter part of 1923 or early 1924, the defendants khaki began to be marketed here with the word Wigan thereon. It alleges that the words are the names of manufacturing towns of minor importance in England but the brand in which the defendant associates the name Wigan does not appear to be manufactured in the town of Wigan. The plaintiff also does not use the word Wigan in its geographical sense or in the trade sense of a material for stiffening. It uses the word in an arbitrary and in an artificial sense. Issue: ! Whether or not the Spinner has the right to use the word Wigan o khaki sold by it in the Philippine Islands. Ratio: ! No. The representation that khaki sold by Spinner is of the kind known to the trade as Wigan directly tends to deceive the purchaser and therefore, constitutes unfair competition against the plaintiff. Wigan was first stamped upon the khaki sold by Spinner at the suggestion or request of a Chines customer, presumably a tailor or a merchant, and the purpose behind such suggestion was that if it was stamped, it could be represented to be the ultimate purchaser that the khaki sold was the plaintiffs Wigan. This discloses the intention to mislead the consumer. It makes no difference that the dealers are not deceived. The law concerns itself with the casual purchaser who knows the commodity only by its name. The word Wigan as applied to quality is not an English word in common use for describing quality. It is used here in an entirely artificial sense and its association with quality had the origin exclusively in the use which the plaintiff has made of it. However, if the defendant were manufacturing khaki in the town of Wigan, it would be entitled to use that name to indicate the place of manufacture of its goods. But such is not the case here. Elidad Kho v. Court of Appeals, Summerville General Merch. Doctrine: Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any visible sign capable of distinguishing the goods, or services of an enterprise and shall include a stamped or marked container of goods. A copyright is confined to literary, and artisitic works which are original intellectual creations in the literary and artistic domain protected from the moment of their creation. Patents refer to any technical solution of a problem in any field of human activity which is new, involves an inventive step and is industrially applicable. Facts: ! Elidad Kho (Kho) filed a complaint for injunction and damages with prayer for the issuance of a preliminary injunction against Summerville General Merchandising Company (Summerville) alleging that Summerville advertised and sold petitioners cream products under the brand name Chin Chun Su (CCS because Im too lazy" ), in similar containers that petitioner uses, thereby misleading the public and resulting in the decline in the petitioners business sales and income; and that the respondents should be enjoined form allegedly infringing on the copyrights and patents of Kho. Kho alleges that she is doing business under the name and style of KEC Cosmetics which is the registered owner of CCS and Oval Facial Cream Container as shown by her certificates of copyright registration. On the other hand, Summerville alleges that it is the exclusive and authorized importer, repacker and distributor of CCS products manufactured by Shun Yi Factory of Taiwan and that the latter authorized Sumemrville to register its tradename CCS with the PPO and other appropriate governmental agencies.

! The RTC granted the prayer for injunction. CA set aside the injunction on the ground that the registration of the trademark or brandname of CSS by KEC with the supplemental register of the Bureau of Patents cannot be equated with the registration in the principal registration which is duly protected by the Trademark Law. According to the CA, the registration in the supplemental register serves as a notice that the registrant is using the trademark. By the very fact that the tradename cannot as yet be on guard and there are certain defects, some obstacles which must still be overcome before he can legally claim ownership of the mark or ask the courts to vindicate his claims of an exclusive right to the use of the same. Issue: ! Whether or not Kho is entitled to the preliminary injunction on the ground that she is entitled to the use of the trademark on CCS and its container based on her copyright and patent over the same. Ratio: ! No. Petitioner has no right to support her claim for the exclusive use of the subject trade name and its container. In order to be entitled to the exclusive use of the same, the user must sufficiently prove that she registered it or used it before anybody else did. Khos copyright and patent registration of the name and container would not guarantee her the right to the exclusive use of the same for the reason that they are not appropriate subjects of the said intellectual rights. A preliminary injunction cannot be issued for the reason that the petitioner has not proven that she has a clear right over the said name and container to the exclusion of others, not having proven that she has registered a trademark thereto or used the same before anyone did. Abercrombie & Fitch v. Hunting World 537 F.2d 4 (1976) Doctrine: A generic term is one that refers, or has come to be understood as referring to the genus of which the particular product is a species. At common law, neither those terms which were generic nor those which were merely descriptive could become valid trademarks. No matter how much money and effort the user of a generic term has poured into promoting the sale of its merchandise and what success it has achieved in securing public identification, it cannot deprive competing manufacturers of the product of the right to call an article by its name. Suggestive marks are marks that were neither exactly descriptive on the other hand nor truly fanciful on the other. A term is suggestive if it requires imagination, thought and perception to reach a conclusion as to the nature of goods. A term is descriptive if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods. In case a trademark is descriptive, the law strikes the balance with respect to registration, between the hardships to a competitor in hampering the use of an appropriate word and those to the owner who, having invested money and energy to endow a word with the good will adhering to his enterprise, would be deprived of the fruits of his efforts. Facts: ! This case stems from a case filed by Abercrombie & Fitch (AF) against Hunting World, Incorporated (HW) for infringement on some of AFs registered trademarks using the word Safari. It is claimed that AF spent large sums of money in advertising and promoting products identified with its mark Safari and in policing its rights in the mark. However, HW has engaged in the retailing marketing of sporting apparel including hats and shoes, some identified by use of Safari alone or by expressions such as Minisafari and Safariland. AF claims that the continued acts of HW would confuse and deceive the public and impair the distinct and unique quality of the plaintiffs trademark. In its answer, HW claimed that the word Safari is an ordinary, common, descriptive, geographic and generic word which is commonly used and understood by the public to mean and refer to a journey or expedition in East Africa. Such an expedition, it claims, is not subject to exclusive appropriation as a trademark. ! Judge Ryan, before whom the action was tried on remand, ruled broadly in HWs favor and found that there was frequent use of the word Safari in connection with wearing apparel, that AFs policing efforts thus had evidently been unsuccessful and that AF had itself used the term in a descriptive sense not covered by its registration. The court held that the word Safari is merely descriptive and does not serve to distinguish the goods of AF as listed on the registration from anybody elses; while such terms are

afforded protection by the Lanham Act if they come to identify the company merchandising the product, rather than the product itself, AF failed to establish that this has become the situation with respect to Safari. Thus, the lower court entered a judgment which dismissed the complaint and cancelled not only the trademarks in suit but all other AFs Safari trademark. Issue: ! Whether or not there is trademark infringement. ! Whether or not the cancellation of the marks not in contest is proper. Ratio: ! There is no infringement. As to the use of HW of Camel Safari, Hippo Safari, and Chukka Safari as names for boots imported from Africa, the court held that there is no evidence that Safari has become a generic term for boots. Here, Lee Expeditions, the parent company of HW, has been primarily engaged in arranging Safaris to Africa since 1959. The president of both companies even published a book in 1959 entitled Safari Today The Modern Safari Handbook. These facts suffice to establish, absent a contrary showing, that defendants use of Safari with respect to boots was made in the context of hunting and travelling expeditions and not as an attempt to garner the goodwill of AF. The use of Camel Safari, Hippo Safari, and Chukka Safari as names for various boots imported from Africa constituted a purely descriptive use to apprise the public of the type of product by referring to its origin and use. When a plaintiff has chosen a mark with some descriptive qualities, he cannot altogether exclude some kinds of competing uses even when the mark is registered. Furthermore it was significant in this case that HW did not use the word Safari alone on its shoes, as it would doubtless have done if confusion has been intended. As to the minisafari hat and safariland, the court held that these terms were generic terms. Hence, AF was not entitled to an injunction against the use of such words. If HW may advertise a hat of the kinds worn on safaris as a Safari Hat then it may also advertise a similar hat with a smaller brim as a minisafari. Likewise, the use of Safariland as a name of a portion of its store developed at least in part to the sale of clothing as to which the term Safari has become generic. ! Registrations which have not become incontestable should not be cancelled. Safari as applied to ice chests, axes, tents and smoking tobacco does not describe such terms. Rather, it is a way of conveying to affluent patrons of AFs romantic notion of high style coupled with an attractive foreign allusion. The cancellation should only be directed to those under contests because with respect to the remaining registrations, the law affords registration as prima facie evidence of the validity of such registration and of the registrants exclusive right to use the mark in commerce. Filipino Yellow Pages v. Asian Journal Publications Doctrine: There are 5 different categories of terms with respect to trademark protection: 1) generic, 2) descriptive, 3) suggestive, 4) fanciful or 5) arbitrary. A generic term (otherwise known as common descriptive terms) is one that refers to or has come to be understood as referring to the genus of which the particular product or service is a species. A generic term is the name of the product or service itself what the product is and as such, the very antithesis of a mark. The ultimate test of genericness is how a term is understood by the consuming public. A descriptive term (otherwise known as merely descriptive terms) can be subject for trademark protection under appropriate circumstances. It can be protected provided that it has acquired a secondary meaning in the minds of the consumers. The anti-dissection rule states that the validity and distinctiveness of a composite trademark is determined by viewing the trademark as a whole, as it appears in the marketplace. Facts: ! Robert Lagmay Oriel (Oriel) and Oscar Jornacion were partners in Fil-Am Enterprises publishing the Filipino Directory of California ( a telephone directory directed primarily at the Fil-Am community of Southern California. In 1986, they terminated their business under a Shareholders Buy-Out Agreement were Oriel acquired complete ownership over the telephone directory business and Jornacion agreen not to compete in the pages in California for 3 years. As owner of Fil-Am, Oriel continued to publish until 1991. In 1993, FilAm sold its interest in the Filipino Directory of the USA and Canada. Thereafter, in 1994, Oriel and his wife formed a new corporate

entity, Asian Journal Publications (AJP) which published a telephone directory called the Filipino Consumer Directory. In 1990, pursuant to the 3-year ban agreement, Jornacion formed the Filipino Yellow Pages (FYP). Currently, FYP, AJP and the Filipino Directory of USA and Canada compete in the Filipino-American telephone directory market in California. ! FYP applied for registration of the Filipino Yellow Pages with the Patent and Trademark Office. In 1996, it was denied registration on the ground that the proposed mark merely describes the goods and the nature and intended audience for the goods. However, the patent office informed FYP that since it indicated in its application the use of the mark for a significant time, FYP could amend its application to seek registration based on acquired distinctiveness. It further advised FYP to include in its application the disclaimer that No claim is made to the exclusive right to use the term apart from Filipino Yellow Pages. It filed its application accordingly, but the application still remains pending. FYP filed a complaint against AJP alleging trademark infringement, false designation of origin and false description of sponsorship or application (since AJP periodically uses the term Filipino Consumer Yellow Pages in print advertisements), unfair competition and misrepresentation of good will, misappropriation of FYPs right to publicity, injury to business relationships, unfair competition and trademark dilution. AJP moved for summary judgment and argued that FYP is a generic and as such is incapable of trademark protection. As counter, FYP claims that FYP is a descriptive mark with a secondary meaning within the Filipino-American Community. ! The District Court granted the motion for summary judgment in favor of AJP on the ground that Filipino Yellow Pages is a generic term incapable of serving as a trademark. Issue: ! Whether or not FYP is generic with respect to telephone directories targeted at the Fil-Am Community.
1
Ratio: ! Filipino Yellow Pages even if descriptive rather than generic, is not a valid and protectable trademark with respect to a telephone directory for the Fil-Am Communicty. It is undisputed in this case that the words Filipino and Yellow Pages are generic. The question to be determined in this case is whether or not Filipino Yellow Pages, taken as a composite term, is generic. In the past case of Surgicenter, the court held that the term Surgicenter (form the words surgical and center), is a generic term because of the rule that a combination of 2 generic words is also generic, unless the combination is a deviation from natural usage or an unusual unitary combination. The district court relied on said case in deciding that Filipino Yellow Pages is a generic term. However, the disctrict court only considered 3 pieces of evidence when it evaluated the case of FYP which is not as weighty as the 45 exhibits presented in Surgicenters. Furthermore, the mark in Surgicenter is a federally registered mark, thus, the burden of proving the genericness rested upon the party challenging the marks validity. On the contrary, FYP is not registered. Thus the burden of proving non-genericness lies on FYP. It does not appear that FYP has offered evidence of nongenericness sufficient to rebut even the fairly modest evidence of genericness offered by AJP. In light of the evidence presented, it would seem that under the who-are-you/what-are-you test1, the term is generic. Giving FYP exclusive rights to the term FYP might be inappropriate since it would effectively grant FYP as the owner of the mak a monopoly since a competitor could not describe his goods as what they are. Even assuming that FYP is a descriptive term protected if given secondary meaning, FYP presented insufficient evidence to prove that FYP did have secondary meaning. It only presented the declaration of its founder and president which is self interested and is accorded little evidentiary weight.
If a mark answers the buyers questions Who Are You? Where are you from? Who vouches for you?, it is a nongeneric term. On the other hand a generic name of the product answers the question What Are You?

International Kennel Club of Chicago v. Mighty Star Doctrine: The first step to determine whether an unregistered mark is entitled to the protection of trademark laws is to categorize the name according to the nature of the term itself. Trademarks that are fanciful, arbitrary or suggestive are fully protected, while descriptive words may be trademarked only if they have acquired secondary meaning, that is only if the consumers have come to think of the word not as a descriptive term but as the name of the product. Direct competition is not the sine qua non of trademark infringements; rather the gist of the action lies in the likelihood of confusion to the public. A plaintiff need not demonstrate that it is in direct competition with an alleged infringer in order to establish likelihood of confusion. Facts: ! International Kennel Club (IKC) is an Illinois business corporation that sponsors dog shows in Chicago. It also sponsors seminars and contributes funds for animal and medical research. While IKC is does not sell stuffed toys, the private vendors rent booth at plaintiffs shows for a certain price and they sell dog-related items, including stuffed dogs. On the other hand, Mighty Star (MS) is a corporation that sells stuffed toys in the US, Canada, England, Australia and Asia. In the latter part of 1985, they decided to add to their product line of stuffed animals, a line of stuffed pedigree dogs representing different breeds which they named International Kennel Club. They utilized a marketing strategy whereby purchasers could register their gods with the International Kennel Club and receive an official membership and certificate. ! 6 months after the learning of the IKC Chicagos existence, MS placed a fill-page advertisement for their line of stuffed gods in the April Edition of the Good Housekeeping magazine. For this reason, IKC, received an abundant number of phone calls inquiring about their affiliation with the MS-IKC line of stuffed dogs. Confronted with the inquiries, IKC filed an instant trademark infringement case and request for preliminary injunction. After trial, the trial court held that IKC was entitled to the preliminary injunction prayed for. Subsequently, MS filed a motion to require the plaintiff to post security and to modify and stay the injunction. For this, the court indicated to IKC that they have to file a bond pending appeal in addition to the escrow money provided for in the initial injunction to avoid the stay of the injunction order. Not having the means to file the bond, the court granted the motion to stay the preliminary injunction order pending appeal. Issue: ! Whether or not IKC is entitled to the injunction (to determine this, the likelihood of the success on the merits should be looked at, hence IKC has to establish that it has a protectable trademark and that there is a likelihood of confusion as to the origin of MS product). Ratio: ! The court found that the phrase International Kennel Club fits within the category of descriptive words in that it specifically describes a characteristic or ingredient of an article or service. It is entitled to trademark protection only if the name has acquired secondary meaning. In evaluation whether or not there is a secondary meaning better than negligible (which is what is required to be granted the injunction), the court looks at the amount and manner of advertising, volume of sales, length and manner use, direct consumer testimony and consumer surveys. In addressing this, the IKC presented evidence that it has acquired secondary meaning as evidence by the amount and manner of advertising and the length and manner of its use. IKC has developed and maintained its reputation among canine enthusiasts through advertising carefully targeted to reach persons interested in the sport of showing purebred dogs. It is advertised in publications with a continent-wide circulation. Moreover, both major Chicago newspapers have highlighted the IKCs dog shows and have designed and promoted special advertising supplements around those columns. As further evidence, IKC also introduced evidence that the club received a number of letters and phone calls asking about the stuffed toys of MS. The court found that this is sufficient to show that there is secondary evidence better than negligible. ! As to the likelihood of confusion, the court held that there is more than ample evidence to support the conclusion that there is likelihood of confusion as evidenced by the fact that there is a degree of similarity as to their name, that while not

identical, their products cannot be considered as unrelated, and that there is actual confusion. It is proper to consider the similarities and dissimilarities between the marks in their entireties in determining the likelihood of confusion. They must be compared in light of what occurs in the marketplace and not in the courtroom. In this case, the only significant difference is the addition of a common geographic term of Chicago despite the use of the defendants of the 24 Polar Puff. These weigh in favor of the conclusion that the alleged infringer has appropriated the dominant portion of the mark. Consumers would necessarily believe that IKC licensed MS to use the IKC name. While the trade dress may dispel some point of sale confusion, the labeling does nothing to prevent consumers from mistakenly assuming that MS is somehow associated with IKC or has consented to the marks use. In determining the likelihood of confusion as to the similarity of their products, the question is whether the products are the kind the public attributes to a single source. The rights of an owner of a trademark extend to any goods related in the minds of the consumers in the sense that a single producer is likely to put out both goods. Plaintiffs also introduced evidence of actual consumer confusion through the letters, phone calls and inquiries they received. Actual confusion is the best evidence of the likelihood of confusion. The use of the disclaimer, especially where the infringement in issue is a verbatim copying of the plaintiffs name, should not be given weight since disclaimers are often ignored by consumers. It would be difficult to ensure the use of the disclaimer by their distributors since the defendants has no control over their distributors advertising. ! As to the extent of the injunction, the court held that since IKC can establish no rights extending to Mexico and since there is no evidence that the products of MS in Mexico impair the rights of IKC, the injunction need not extend to Mexico at this time. Philippine Nut Industry v. Standard Brands Incorporated Doctrine: To determine whether or not a trademark causes confusion and is likely to deceive the public is a question of fact and is to be resolved by applying the test of dominancy, meaning, if the competing trademark
contains the main or essential or dominant features of another by reason of which confusion and deception are likely to result, then infringement takes place. Duplication or imitation is not necessary, a similarity in the dominant features of the trademarks would be sufficient. Where a trademark contains a dominating or distinguishing word, and purchasing public has come to know and designate the article by such dominating word, the use of such word by another in marking similar goods may constitute infringement though the marks aside form such dominating word may be dissimilar. Facts: ! Philippine Nut (PhilNut) is a domestic corporation with a registered trademark Philippine Planters Cordial Peanuts (Planters Cordial) obtained from the Patent office used on its products of salted peanuts. Standard Brands (Standard), a foreign corporation, filed a case with the director of patents seeking the cancellation of the registered trademark of Philippine Nut as it closely resembles its trademark Planters Cocktail Peanuts (Planters Cocktail) which it claims to have first used in the year 1938 (it alleges that PhilNut first used its Planters Cordial trademark only in 1958). ! The Patent office ordered the cancellation of the trademark of PhilNut on the ground that the dominant part is the word Planters which is displayed in a very similar manner and is very confusing to the consumers. He concluded that PhilNut is not entitled to register the mark at the time of the filing of its application with the patent office as Standard would be damaged by such registration.

Mr. Peanut is not the trademark of Standard Brands in this case. What calls the attention of the buyer is the word Planters. It is that which leaves a lasting impression on the buyers. Furthermore, applying the doctrine of secondary meaning to this case, there is evidence to show that Planters has become a distinctive mark or symbol insofar as salted peanuts are concerned, and by priority of appropriation dating as far back as 1938, respondent Standard has acquired a preferential right to its adoption. Zantarains Inc. v. Old Grove Smokehouse Doctrine: Generic term is the name of a particular genus or class of which an individual article or service is but a member. It can never attain trademark protection. Furthermore, , if at any time a registered trademark becomes generic as to a particular product or service, the marks registration is subject to cancellation. On appeal, the petitioners claim that PLANTERS cannot be considered as the dominant feature of the trademarks in question because it is a mere descriptive term, an ordinary word which is defined as one who or that which plants or sows. Issue: ! Whether or not there is infringement. Ratio: ! Yes. While it is true that the words used such as Cordial and Cocktail are also prominently displayed, these words are mere adjectives describing the type of peanuts in the labeled containers and are not sufficient to warn the unwary customer that the 2 products come from distinct sources. The word PLANTERS draws the attention of the buyer. It, likewise, cannot be ignored that in this case, the coloring scheme of the 2 marks are similar (gold, blue and white) and it basically has the same layout of words such as salted peanuts and vacuum packed. As a matter of fact, even the letter C of the words cocktail and cordial are similar. When a competitor adopts a distinctive or dominant mark or feature of anothers trademark and with it makes use of the same color ensemble, employs similar words written in a style, type and size of lettering almost identical with those found in the other, it is quite obvious that there is intent to pass to the public his product as that of the other. A descriptive term identifies a characteristic or quality of an article or service such as its color, odor, function, dimensions or ingredients. They are not ordinarily protectable as trademarks but they may become valid marks by acquiring a secondary meaning in the minds of the consumers. A suggestive term suggests rather than describes some particular characteristic of the goods or services to which it applies and requires the consumer to exercise the imagination in order to draw a conclusion as to the nature of the goods or services. It is protected without the necessity for proof of secondary meaning2. Arbitrary or fanciful terms bear no relationship to the products or services to which they are applied. They are protectable without proof of secondary meaning (e.g. Kodak, Ivory soap). Facts: ! Zantarain is the manufacturer and distributor of a line Fish-Fri and Chick-Fri. The term Fish-Fri has been used by Zatarains or its predecessors since 1950 and has been registered as a trademark since 1962. Likewise, Chick-Fri was used in the yeat 1968 by Zantarain and was registered as trademark in 1976.
One must show that the primary significance of the term in the minds of the consuming public is not the product but the producer. The burden always rests with the plaintiff. A high degree of proof is necessary to establish secondary meaning.

Oak Grove Smokehouse (Oak Grove) began marketing a fish fry and chicken fry in March 1979; Similarly, another company, Viskos Fish Fry entered the batter mix market in 1980 with its product, Viskos Fish Fry. ! Zantarain filed its original complaint against Oak Grove in the US District Court alleging infringement and unfair competition under the Lanham Act. The defendants, Oak Grove and Visko counterclaimed for cancellation of the trademarks Fish-Fri and Chick-Fri. The case was tried and the district court found that the term Fish-Fri has acquired a secondary meaning in the New Orleans geographical area and therefore, was entitled to trademark protection, but concluded that the defendants were entitled to fair use of the term fish-fry to describe the characteristics of their goods. Accordingly, the Court held that Oak Grove and Visko had not infringed the trademark of Zatarain. With respect to Chick-Fri, the court held that it had not yet acquired a secondary meaning to the minds of the consumers, hence, it ordered the cancellation of its trademark registration. On appeal, Zatarain claims that Fish-Fri is a suggestive term and therefore not subject to the fair-use defense3. It claims that even assuming that the fair use defense is applicable in this case, the appellees cannot invoke the doctrine products. It further claims that Chick-Fri has acquired a secondary meaning for the term. Issue: ! Whether or not Fish-Fri is a suggestive term. ! Assuming Fish-Fri is a descriptive term, whether or not the fair-use defense could be set up. ! Whether or not Chick-Fri is a descriptive term with a secondary meaning afforded trademark protection. Ratio: ! Fish-Fri is a descriptive term. There are a few tests applied by the court in determining whether a term is descriptive or suggestive. Whenever a word or phrase conveys an immediate idea of the
3 Even when there is a secondary meaning, others may be entitled to the use of the mark without incurring liability for trademark infringement when used fairly and in good faith only to describe to users the goods or services of a party, or their geographic origin. Anyone is free to use the descriptive ark as long as such does not lead to customer confusion as to the source of goods or services.
qualities, characteristics, effect, purpose, or ingredients of a product or service, it is classified as descriptive (dictionary test consult the dictionary for the meaning of the word); if a term requires imagination, thought and perception to reach a conclusion as to the nature of goods, it is suggestive (imagination test). In this case, a mere observation compels the conclusion that a product branded Fish-Fri is a prepackaged coating or batter mix applied to fish prior to cooking. The connection between the merchandise and the term is so close and direct that even a consumer unfamiliar with the product will have an idea of its purpose of function. The third test applied by the court is whether the competitors would be likely to need the terms used in the trademark in describing their products. The court held there is a necessity to use the words because even piscatorial gastronomes (nagpapaka-poetic pa yung ponente eh, badtrip) would agree that the words fish and fry suggests that a merchant whose batter mix is specially spiced for fishing is likely to find fish fry a useful term for describing his product. The final test examines the extent to which a term actually has been used by others marketing a similar service or product. As noted above, a number of companies have already used the terms in describing their products. ! In assessing the claim for secondary meaning, the major inquiry is the consumers attitude towards the mark. The mark must denote to the consumer a single thing coming from a single source. Factors such as amount and manner of advertising, volume of sales, and length and manner of use may serve as circumstantial evidence relevant to the issue of secondary meaning. While none of these alone will prove it, the combination would establish the necessary link in the minds of the consumers between a product and its source. The measure is not the quantity of the efforts, but its effectiveness in altering the meaning of the term. In this case, it was found that Zatarain and its predecessor has used the term continuously. It also acquired expenditures of over $400,000 for advertising during the period from 1976 to 1981. For this, Zatarain sold a total of 916,385 cases of Fish-Fri. Moreover, in a survey conducted by experts, it was found that Zatarain was the product they would buy at the grocery store as coating. Such is considered as

circumstantial evidence of secondary meaning to weigh heavily in Zatarains favor. ! The fair-use defense can be set up. There is ample evidence to support that the use of the words fish fry was fair and was made in good faith. Oak Grove and Visko did not intend to use the term in a trademark sense and had never attempted to register the words as a trademark. In addition to this, they packaged their products in such a wat as to minimize any potential confusion in the minds of consumers. ! Chick Fri is a secondary term without secondary meaning. It has been used only in 1968 and was registered in 1976. Zatarains expenditures over Chick-Fri were mere chikenfeed. In fact there was no direct advertising campaign to publicize the product. Zatarain has not overcome the burden of proving secondary meaning. Having concluded that it is lacking secondary meaning, the cancellation of its registration was proper. Two Pesos v. Taco Cabana Doctrine: Marks which are merely descriptive of a product are not inherently distinctive. When used to describe a product they do not inherently identify a particular source, and hence cannot be protected. However, descriptive marks may acquire distinctiveness which will allow them to be protected if it has become distinctive of the applicants goods in commerce (secondary meaning). An identifying mark is distinctive and capable of being protected if either 1) it is inherently distinctive; 2) if it has acquired distinctiveness through secondary meaning. The protection of trademarks and trade dress under the law serves the same statutory purpose of preventing deception and unfair competition. There is no persuasive reason for applying different analysis. Facts: ! Taco Cabana operates a chain of fast food restaurants in Texas. Its first restaurant opened in San Antonio in September 1978. Taco Cabana describes its Mexican Trade Dress as: a festive eating atmosphere having interior dining and patio areas decorated with artifacts, bright colors, paintings and murals. The patio includes interior and exterior areas with the interior patio capable of being sealed off from the outside patio by overhead garage doors. The stepped exterior of the building is a festive and vivid color scheme using top border paint and neon stripes. Bright awnings and umbrellas continue the theme. Two Pesos, Inc., on the other hand, adopted a motif very similar to the foregoing description of Taco Cabanas trade dress. It expanded rapidly in Houston and other markets but did not enter San Antonio. ! In 1987, Taco Cabana filed a case for trade dress infringement under Texas Common Law. The court held that the trade dress was protected if it either was inherently distinctive OR had acquired a secondary meaning. The court found that Two Pesos intentionally and deliberately infringed Taco Cabanas Trade Dress. On appeal, the court ruled that Taco Cabanas trade dress was not descriptive but rather INHERENTLY distinctive, and that it was not functional. It affirmed its decision in Chevron v. Voluntary Purchasing Groups and held that Taco Cabanas inherently distinctive trade dress was entitled to protection despite the lack of secondary meaning. Petitioner now argues that the fact that the court found that there is no secondary meaning, means that the trade dress is not inherently distinctive. Issue: ! Whether or not the trade dress that is inherently distinctive is protectable under the law without a showing that it has acquired a secondary meaning. Ratio: ! Proof of secondary meaning is not required to prevail over a claim under the Lanham Act where trade dress at issue is inherently distinctive. There is no persuasive reason to apply to trade dress a general requirement of secondary meaning which is at odds with the principles generally applicable to infringement suits under the Lanham Act. A general requirement of secondary meaning imposes an unfair prospect of theft or financial loss on the developer of fanciful or arbitrary trade dress at the outset of its use. Petitioner here suggests that such trade dress should receive limited protection without proof of secondary meaning. However, the court stated that if temporary protection is available from the earliest use of the trade dress, it must be because it is neither functional nor

descriptive, but an inherently distinctive dress that is capable of identifying a particular source of the product. The termination of protection for failure to gain secondary meaning over some unspecified time could not be based on the failure of the dress to retain its fanciful, arbitrary or suggestive nature, but on the failure of the user of the dress to be successful enough in the marketplace. Upon consideration of the court of past jurisprudence (e.g. Vibrant Sales v. New Body), it held that such is contrary to the provisions of the Lanham Act. It held that if a verbal or symbolic mark or the features of a product design may be registered under the law, it is necessarily a mark by which the goods of the applicant may be distinguished form others. Section 2 of the law requires secondary meaning only as a condition precedent to registration of descriptive marks. There are marks that are registrable without secondary meaning. These marks are inherently capable of distinguishing the goods of the users of these marks. Suggestive marks are capable of registration without any proof of secondary meaning since the connection between the mark and the source is presumed. There is no distinction in the law between trademarks and trade dress. This serves the same intention of preventing deception and unfair competition. Furthermore, adding a secondary requirement could have anticompetitive effects and would create burdens on the startup of companies. Concurring Opinions ! Justice Stevens: The wording of the law does not say trademark or trade dress It is to be interpreted, thus, that a federal cause of action for infringement of an unregistered trademark or trade dress and concludes that such a mark or dress should receive essentially the same protection as those that are registered. The test for liability is the likelihood of confusion. Under the Lanhan Act, the ultimate test is whether the public is likely to be deceived or confused by the similarity of the marks whether we call the violation infringement, unfair competition or false designation of origin. Secondary meaning need not be established if there is a finding of inherent distinctiveness. ! Justice Thomas: Section 43(a) of the Lanham Act made actionable any false description or representation including words or other symbols tending falsely to describe or represent, when used in connection with any goods or services. Trade dress, which consists of not words or symbols, but of a products packaging seems at common law to have been though incapable ever of being inherently distinctive, perhaps on the theory that the number of ways to package a product is finite. Thus, a user of trade would always have had to show secondary meaning in order to obtain protection. But now, trade dress is considered as fully capable as a particular trademark of serving as a representation or designation of source under the law. As a result, the first user of an arbitrary package, should be entitled to presumption that his package represents him without having to show that it does so in fact. Wal-Mart Stores v. Samara Brothers Facts: ! Samara Brothers (Samara) is a company which designs and manufacturs childrens clothing. Its primary product line of spring/summer clothing is sold in a number of chain stores, including JCPenney. On the other hand, Walmart is one of the US most well known retailers. It contracted with one of its suppliers, Judy Philippines to manufacture a line of swimwear for sale in the 1996 summer season. It sent photographs of a number of garments from Samaras line on which Judy garments were to be based. Judy duly copied the line with a few minor revisions. After investigation, Samara found out that Walmart and several other stores were selling the knock-offs of Samaras outfits produced by Judy-Philippine. Thus, Samara filed a case for copyright infringement and infringement for unregistered trade dress under the Lanham Act. Walmart claims that there is insufficient evidence to prove that Samaras designs were protected as distinctive trade dress for purposes of the Lanham Act. The trial court found for Samara and awarded the company damages, interests, costs and fees together with injunctive relief.

Issue: ! Whether or not Samaras designs are entitled to infringement protection under the Trademark Law. Ratio: ! There is no infringement. Product designs require secondary meaning. An action for infringement of an unregistered trade dress is protectable only upon showing of secondary meaning. The breadth of definition of marks registrable under the Lanham Act includes trade dress a category that has been expanded by many Court of Appeals to encompass the design of a product. For liability for trade dress infringement to exist, there must be proof that the alleged infringement feature is not functional and is likely to cause confusion with the product for which protection is sought. Distinctiveness is, moreover, an explicit prerequisite for registration of trade dress under and the general principles qualifying a mark for registration under the Lanham Act are for the most part applicable in determining whether an unregistered mark is entitled to protection. A mark is inherently distinctive if its intrinsic nature serves to identify a particular source. Secondly, even if it is not inherently distinctive, if it has developed secondary meaning, which occurs when, in the minds of the public, the primary significance of a mark is to identify the source of the product rather than the product itself. There is nothing in the law, however, which requires that every category mark necessarily includes some marks by which the goods of the applicant may be distinguished from the goods of others without secondary meaning that in every category some marks are inherently distinctive. However, it was pointed out by the court that it is difficult to point out that a mark is inherently distinctive. Consumers are aware of the reality that almost invariably, even the most unusual of product designs, such as cocktail shaker shaped like a penguin is intended not only to identify the source, but to render the product itself more useful or appealing. Thus, in evaluating distinctiveness courts have differentiated between marks that are inherently distinctive and marks that have acquired distinctiveness through secondary meaning. Design, like color, is NOT INHERENTLY DISTINCTIVE. The attribution of inherent distinctiveness to certain categories of word marks and product packaging derives form the fact that the very purpose of attaching a particular word to a product or encasing it in a distinctive package is most often to identify the products source. With product design, as with color, consumers are aware of the reality that, almost invariably, that feature is intended not ti identify the source, but to render the product itself more useful or more appealing. The case of Two pesos is inapposite to the courts ruling in this case since the trade dress at issue at that time was the dcor of the restaurant which constitutes product packaging which is normally taken by the consumer as to indicate origin. Such case has no bearing in the present case. Shangri-La International v. Developers Group Doctrine: The root of ownership of trademark is actual use in commerce. The law requires that before a trademark can be registered, it must have been actually used in commerce and service for not less than 2 months in the Philippines. Registration, without more, does not confer upon the registrant an absolute right to the registered mark. It is merely a prima facie proof that the registrant is the owner of the registered mark or trade name. Registration in the principal register gives rise to a presumption of the validity of the registration, the registrants ownership of the mark and his right to the exclusive use thereof. Registration therefor is limited to the actual ownership of the trademark (it passes upon the issue of ownership). It may be contested through opposition or interference proceedings or, after registration, in a petition for cancellation. Facts: ! The Kuok Family owns and operates a chain of hotels with interest in hotel and hotel-related transactions since 1969. Allegedly, it adopted the Shangila Logo as far back as 1962 and used it in all of their hotels around the world. To centralize their operations, the Kuok Group incorporated in Hong Kong and Singapore, among other places. EdsaShangri-La Hotel and Resort and Makati Shangri-Law hotel and Resort were incorporated in the Philippines in 1987 to own and operate 2 hotels put up by Kuok Group. On the other hand, complainant herein is DGCI who claims to have used and registered the logo in October 1982 with the Bureau of Patents from a scribbled piece of paper given to him by an unnamed

artist for his restaurant business, the Shangri-La Finest Chinese Cuisine. respondent has a right to the mark by virtue of Philippines and the issuance of the certificate Furthermore, the CA ruled that the Paris requires commerce in the Philippines protected. its prior use in the of its registration. Convention still in order to be
Issue: ! Whether or not DGCI is the rightful owner of the trademark. ! Whether or not Shangri-La can claim protection under the Paris Convention. Ratio: ! DGCI does not have the right to ownership over the trademark. The law at force at the time of the application of the trademark applies. In this case, R.A. No. 166 as amended applies. It states that The root of ownership of trademark is actual use in commerce. The law requires that before a trademark can be registered, it must have been actually used in commerce and service for not less than 2 months in the Philippines. Registration, without more, does not confer upon the registrant an absolute right to the registered mark. It is merely a prima facie proof that the registrant is the owner of the registered mark or trade name. As between actual use of the mark without registration and registration of the mark without actual use thereof, the former prevails over the latter. Here, it can be seen that as a condition precedent to the registration of the trademark, the same must have been in actual use in the Philippines before the application for registration. Applying such principle, DGCI cannot be the owner of the trademark since according to his statement, the jeepney signboard artist he commissioned submitted his designs only in December 1982. This was 2 months after the filing of the application for trademark application on October 18, 1982. It was also only on December 1982 when the restaurant opened for business. Hence, the registration is void. It was also found by the court that DGCIs president, Ramon Syhunliong has been a guest at the petitioners hotel before he caused the registration of the mark and logo, and surmised that he must have copied the idea there. The respondent here copied not only the words but also the exant font and lettering style and in addition, he copies also the logo portion of the trademark. It is then apparent that the
It should be noted herein that petitioners, Shangri-La International did not operate any establishment in the Philippines albeit they advertised their hotels abroad since 1972. DGCI filed a complaint for infringement and damages against ShangriLa International alleging that it has been the prior exclusive user in the Philippines of the mark and logo in question since December 1982 and the registered owner thereof for its restaurant and allied services. It claims that the logo of the latter is confusingly similar with that of its logo. Shangri-La claims protection under the Paris Convention and sought the cancellation of the registration of DGCI. It claims that the Paris Convention affords them security and protection as well as the exclusive right to the said mark and logo. They claimed that they have used this logo since 1975, internationally known and specially designed by on William Lee. ! The trial court found for DGCI. CA affirmed on the ground that the evidence presented by Shangri-La international shows that they used the tradename abroad and not in the Philippines until 1987. It cannot claim ownership over the mark and logo. On the other hand,

adoption was deliberate, malicious and in bad faith. He cannot not bring an action for infringement against the owner of the mark. The requirements for ownership of a trademark are enumerated in the law. There must be prior and actual use in commerce in the Philippines for 2 months prior to the application for registration and the mark must not have been already appropriated by someone else. ! Nevertheless, Shangri-La cannot claim protection under the Paris convention which gives them the remedy of applying for cancellation of a trademark for unfair competition whether or not registered because under municipal laws, there must have been prior and actual use in the Philippines for a period of not less than 2 months in order to be an owner of a mark4 Under the doctrine of incorporation as applied in most countries, rules of international law are given a standing equal to and not superior to national legislative enactments. EY Industrial v. Shen Dar Electricity Facts: ! EY Industrial Sales (EYIS) is a domestic corporation engaged in the production, distribution and sale of air compressors and other industrial tools and equipment. On the other hand Shen Dar is a Taiwan-based foreign corporation engaged in the manufacturing of air compressors. Both companies in this case claimed to have the right to register the trademark for VESPA air compressors. In 1997-2004, EYIS imported compressors from Shen Dar through sales contracts. In its Bill of Ladings, the product items were described merely as air compressors and there is no documentary evidence to show that such compressors were labeled or maked as VESPA. On June 1997, Shen Dar filed a trademark application for VESPA for use on air compressors. It was issued a registration certificate. Likewise, on July 1999 (much later than Shen Dar), EYIS filed an application for trademark application for the same VESPA air compressors. EYIS was also issued a registration certificate for the same. ! Shen Dar filed a petition for cancellation of the registration of EYIS on the ground that EYIS was a mere distributor in the Philippines of VESPA air compressors which it imported from Shen Dar. It argued that it had prior and exclusive right to the use and registration of the mark. EYIS denied the allegations of Shen Dar and alleged that it was a mere importer. The air compressors supplied to them bore the mark SD which stood for Shen Dar and not VESPA. ! Director of the BLA ruled in favor of EYIS. Hence the petition for cancellation of the mark was denied. Similarly, the appeal was denied and the certificate of registration of Shen Dar was accordingly cancelled. Subsequently, the Court of Appeals ruled in favor of Shen Dar. It restored its registration and ordered the cancellation of the registration of EYIS. Issue: ! Whether or not EYIS is the true owner of the mark VESPA Ratio: ! EYIS is the true owner. The first to file rule 5 must not be interpreted to mean that ownership should be based upon an earlier filing date. While RA 8293 removed the previous application for registration of a mark, proof of prior and continuous use is necessary to establish ownership of a mark. Such is sufficient evidence to oppose the registration of a mark. Prior and continuous use of a mark may even overcome the presumptive ownership of the registrant and be held as the owner of the mark. EYIS, being the prior user of the mark is the true owner of the trademark. Its prior adoption and continuous use of the mark on air compressors is bolstered by the numerous documentary evidence consisting of sales invoices issued in the name of the respondent. Proof of ownership is shown by the commercial documents, sales and invoices describing the goods as VESPA compressors sold to Iloilo, Cebu, Dumaguete, Zamboanga, CDO, Davao, etc. It used the word VESPA on air compressors and has
But isnt Shangri-La already doing business in the Philippines at that time?
The registration of a mark is prevented with the filing of an earlier application for registration.

gained business goodwill and reputation in the Philippines for which it has validly acquired trademark rights. On the other hand, Shen Dar failed to refute the evidence. Not one of the Bills of Lading presented bore the word VESPA. Instead it described the aircompressors as SD. Kabushi Kaisha Isetan v. IAC Doctrine: What is to be secured from unfair competition in a given territory is the trade which one has in that particular territory. That is where his business is carried on where the goodwill symbolized by the trademark has immediate value; where the infringer may profit by infringement. Adoption alone of a trademark would not give exclusive right thereto. Such grows out of actual use. Adoption is not use. Flowing from this is the traders right to protection in the trade he has built up and the goodwill he has accumulated from the use of the trademark. Facts: ! Kabushi Kaisa Isetan (KKI) is a foreign corporation applying for registration of its Isetan and Young Leaves Design with the Philippine Patent Office (PPO). On the other hand, Isetann Department Store is a domestic corporation existing under the laws of the Philippines claims that Isetann. The latter also sought registration of its trademark Isetann Department Store and the Isetann Flower Design the Paris Convention which affords protection to trademarks belonging not only to locals but also those belonging to foreign countries. ! The Director of Patents dismissed the petition for cancellation. Form this, KKI filed an appeal to the IAC. However, the appeal was dismissed because it was filed out of time. Hence, this petition seeking reversal of the decision of the IAC based on substantial justice. Issue: ! Whether or not Isetann Department Store is the rightful owner of the trademark. Ratio: ! Yes. Actual use in commerce or business is the prerequisite to the acquisition of the right of ownership over a trademark. Adoption alone of a trademark would not give exclusive right thereto. Such grows out of actual use. Adoption is not use. Flowing from this is the traders right to protection in the trade he has built up and the goodwill he has accumulated from the use of the trademark. A prior registrant cannot claim exclusive use of the trademark unless it uses it in commerce. KKI failed to substantiate its claim that it used in trade or business in the Philippines the subject mark. It did not present proof to invest it with exclusive, continuous adoption which should consist of considerable sales since its first use. The invoices presented are of no commercial value since they were mere samples. A sample is not a sale. It is not considered as use as contemplated in Philippine law. 1. Its company is not registered to do business in the Philippines 2. Its trademark is not registered under Philippine law 3. Its trademark is not being used on the products in trade, manufacture or business in the Philippines. 4. It never engaged in any promotional activities in the Philippines to popularize its trademark. In view of this, KKI filed a petition for cancellation of the registration of Isetann Department Store alleging immoral intention of cashing in the long established goodwill and popularity of KKIs reputation. It argued that they are both in the same channels of trade and ordinary people will be misled to believe that the products of the private respondent originated from KKI. It seeks refuge in the provisions of On the other hand, Isetann registered its mark on 1979 and continuously engaged in commerce, establishing goodwill through advertising. There is no showing of any KKI influence on the Filipinos. Thus, the records show that among Filipinos, the name cannot claim to be internationally well-known. What is to be secured from unfair competition in a given territory is the trade which one has in that

particular territory. That is where his business is carried on where the goodwill symbolized by the trademark has immediate value; where the infringer may profit by infringement. The Paris Convention does not automatically exclude all countries of the world which have signed it from using a tradename which happens to be used in one country. It must be: 1. 2. 3. 4. It must be internationally known or well known Must be a trademark (not patent or copyright) Must be for use in the same or similar kind of goods Person claiming must be the owner of the mark. The likelihood of confusion of goods is a relative concept and is determined according to the particular and sometimes peculiar circusmstances of each case. Goods are related when they belong to the same class or have the same descriptive characteristics with reference to their form, composition, texture or quality. Undoubtedly, the products subject of this case are not related. The products are sold through different trade channels. One is sold in chemical stores or distributors while the other are sold in grocery stores, sari-sari stores and department stores. Thus, the evident disparity of products in this case renders the unfounded apprehension of petitioners that confusion of business or origin might occur if private respondent is allowed to use the mark CANON. ! CKK cannot seek refuge in the provisions of the Paris Convention since it fails to meet the conditions set forth therein. 1. 2. 3. 4. It must be internationally known or well known Must be a trademark (not patent or copyright) Must be for use in the same or similar kind of goods Person claiming must be the owner of the mark.
Canon Kabushi Kaisha v. Court of Appeals Facts: ! NSR Rubber corporation filed an application for registration of the mark CANON for sandals in the Bureau of Patents. A verified notice of opposition was filed by the petitioner Canon Kabushi Kaisha (CKK) alleging that it will be damaged by the registration of the trademark in the name of the respondent. For failure to answer, NSR was declared in default and CKK was allowed to present evidence ex parte. Notwithstanding, the Bureau of Patents ruled in favor of NSR. CA Affirmed. Hence this petition. Issue: ! Whether or not CKK is entitled to exclusive use of the mark CANON because it is its trademark. Ratio: ! No. CANON as used by CKK for its paints, chemicals, toner and dyestuff can be used by private respondents NSR for its sandals because the products are dissimilar. The certificates of registration of CKK clearly showed that the registration covers goods belonging to the class of paints, chemical, toner and dyestuff. Clearly, there is a world of difference between the paints and sandals of private respondent. Bare assertions of CKK that it intends to engage in the business of sandals cannot convince the court since it failed to attach evidence that would indicate such intention or such fact that it embarked on such line of goods. The certificate of registration confers upon the trademark owner only the exclusive right to use its own symbol on those goods specified in the certificate.
Fredco Manufacturing Corporation v. President and Fellows of Harvard College Facts: ! Fredco Manufacturing is a domestic corporation which filed a petition for cancellation of Harvard Universitys certificate of registration for its mark, Harvard Veritas Shield Symbol. Allegedly, the mark of Harvard (FREDCO) for T-shirts, polo, shirts, sandos, briefs, jackets and slacks was used in January 1982 by its predecessor. Such use matured into a registration and a certificate of registration. It further alleged that at the time the Harvard University was issued its certificate of registration, New York garments already registered the mark for goods under Class 25 (t-shirts, polos, etc.) Because it failed to file an affidavit for use/none use on the 5th anniversary, its registration was cancelled. But the right to the mark remained with its predecessor and now with FREDO. On the other hand, Harvard University herein claims that it is the lawful owner of the name and mark Harvard in numerous countries worldwide, including the Philippines. The name was adopted in 1639 as the name of the college in Cambridge, Massachusetts. The name and mark was used in commerce as early as 1872.

country, as in this case, that is a member of the Paris Convention, the requirement of proof of use in the commerce in the Philippines for the required period is not necessary. Marks registered under RA 166 shall remain in force and shall be deemed to have been granted under RA 82936 which does not require actual prior use of the mark in the Philippines. Since the shield of Harvard University is not deemed granted under the new law, the defects arising from the absence of the actual prior use in the Philippines has been cured by said law. ! It is apparent that Fredcos design falsely suggests that Fredco or its goods are connected with Harvard University with the uses of the words Harvard and Cambridge Massachusetts. It should not have been allowed because the law at that time prohibits the registration of a mark which falsely suggests a connection with institutions. It claims origin in Cambridge (which is also where Harvard was established) suggests a false connection with the university. What Fredco has done in using the mark and the words Cambridge to evoke a desirable aura is precisely to exploit commercially the goodwill of Harvard. Second, under the Paris Convention, to which the US and the Philippines are both signatories, trade names shall be protected without the obligation of filing or registration. Harvard is the trade name of the world famous university and it is also a trademark of Harvard University. It is entitled to protection even without registration. This means that no educational entity in the Philippines can use such name without the consent of Harvard. Likewise, no entity can claim, expressly or impliedly through the use of its name, that its products or services are authorize, approved or licensed by or sourced from Harvard University without the latters consent. Under the Memorandum of Minister Villafuerte, which enumerates the criteria to fall under the category of a well-known name, it states that trademarks duly registered with the industrial property office of another country is considered a well-known brand. To be internationally protected, the mark need not be registered in the Philippines, all that is required is that the mark is well-known
Harvard University alleged that in 2002, it discovered through international trademark watch program, Fredcos website advertises and promotes the brandname without its consent. Hence, it filed an administratie complaint against Fredco before the IPO for trademark infringement and/or unfair competition with damages. ! The Bureau of Patents found for FREDCO and cancelled Harvards certificate of registration. On appeal, the Office of the Director general reversed the decision on the ground that Fredco failed to explain how its predecessor came up with the mark. There was no evidence that Fredco or New Garments was licensed or authorized by Harvard University to use its name in commerce or for any other use. The Court of Appeals also ruled in favor of Harvard on the ground that Harvards symbol was used way ahead of Fredco and its predecessor. There was also a lack of explanation as to why Fredco used the name and mark and the words USA, established in 1936, and Cambridge, Massachusetts with an oblong device. Issue: ! Whether or not Fredco committed trademark infringement. Ratio: ! Yes. There is no dispute that Harvard used its logo in commerce in the year 1872. It also registered its name and mark in at least 50 countries. On the other hand, Fredco started using the mark only in 1982. It should be noted herein that while Harvard University had actual prior use of its marks abroad for a long time, it did not have actual use in the Philippines before its application for trademark registration with the Patents Office. However, where the trademark sought to be registered has already been registered in a foreign
6
Section 239.2 of the said law.

internationally and in the Philippines for identical or similar goods, whether or not the mark is registered in the Philippines. Now, under the Rule 102 of the Rules and Regulations on Trademarks it is provided that in determining whether a ark is well-known, the following criteria or any combination thereof may be taken into account: 1. the duration, extent and geographical area of any use of the mark, in particular, the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods and/or services to which the mark applies; the market share, in the Philippines and in other countries, of the goods and/or services to which the mark applies; the degree of the inherent or acquired distinction of the mark; the quality-image or reputation acquired by the mark; the extent to which the mark has been registered in the world; the exclusivity of registration attained by the mark in the world; the extent to which the mark has been used in the world; the exclusivity of use attained by the mark in the world; the commercial value attributed to the mark in the world; the record of successful protection of the rights in the mark; the outcome of litigations dealing with the issue of whether the mark is a well-known mark; and 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. already protected under Article 6bis and Article 8 of the Paris Convention. Again, even without applying the Paris Convention, Harvard University can invoke Section 4(a) of R.A. No. 166 which prohibits the registration of a mark which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs Berris Agricultural Co. Inc v. Norvy Abyadang Doctrine: Registration and its actual use by the manufacturer of the goods made available to the purchasing public confers ownership. A certification, once issued, constitutes prima facie evidence of the validity of the registration of the registrants ownership of the mark and of the exclusive right to use the same. However it is also required to file a declaration for actual use of the mark, with evidence to that effect within 3 years from the filing of the application for registration; otherwise, the application shall be refused or the mark shall be removed from the register. The presumption may be challenged in an appropriate action for nullity of the registration. Presumption may likewise be defeated yb evidence of prior use by another person. Facts: ! Norvy Abyadang filed with the IPO a trademark application for the mark NS D-10 PLUS for use in connection with Fungicide with active ingredient 80% Mancozeb. For this, Berris Agricultural filed a veirifed notice of opposition allegedly because NS D-10 PLUS is similar and /or confusingly similar to its registered trademark D-10 80 WP also used for Fungicide. IPO rendered a decision in granting the opposition. On appeal with the Office of the Director general, an order was issued affirming the previous decision. Thereafter, the Court of Appeals reversed the decision and found that NS D-10 PLUS is not confusingly similar with D-10 80 WP, it also found that respondents failed too establish ownership of the mark and that registration for Berris trademark may be cancelled to avoid multiplicity of suits. Issue: ! Whether or not Berris is the rightful owner of the trademark. ! Whether or not the two marks are confusingly similar.
2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
There is no question then, and this Court so declares, that Harvard is a well-known name and mark not only in the United States but also internationally, including the Philippines. The mark Harvard is rated as one of the most famous marks in the world. It has been registered in at least 50 countries. It has been used and promoted extensively in numerous publications worldwide. It has established a considerable goodwill worldwide since the founding of Harvard University more than 350 years ago. It is easily recognizable as the trade name and mark of Harvard University of Cambridge, Massachusetts, U.S.A., internationally known as one of the leading educational institutions in the world. As such, even before Harvard University applied for registration of the mark Harvard in the Philippines, the mark was

Ratio: ! Berris is the prior user and prior registrant and is the owner of the mark D-10 80 WP. Berris was able to establish that it was using its mark since June 20,2002 even before its registration with the IPO on November 29, 2002. Its Declaration of Actual Use (DAU), being a notarized document, received in due course by the IPO, is evidence of the facts it stated and has the presumption of regularity, entitled to full faith and credit upon its face. On the issue of the DAU being fraudulently based on the assumption that Barris could not have legally used the mark in the sale of the goods since 2002 because it registered the product with FPA only on November 12, 2004, such cannot be considered by the court since it is beyond the jurisdiction of the IPO and is a separate and distinct matter. Granting for arguments sake, such fact could not negate the fact that Berris was selling the product especially considering that it first traded its goods in Calauan, Laguna where its business is located. ! Being the owner of the mark, Berris has exclusive right to prevent all parties from using the same in the course of trade identical or similar in respect to which trademark is registered. The court finds that the marks are CONFUSINGLY SIMILAR. In applying the Dominancy Test7, the court found that both marks pertain to the same type of goods fungicide with 80% Mancozeb as an active ingredient and used for the same group of fruits, crops, vegetables, and ornamental plants, using the same dosage and manner of application. They also belong to the same classification of goods under R.A. No. 8293. Both depictions of "D-10," as found in both marks, are similar in size, such that this portion is what catches the eye of the purchaser. Undeniably, the likelihood of confusion is present. Likewise, in applying the Holistic Test, taking into consideration the packaging, for both use the same type of material (foil type) and have identical color schemes (red, green, and white); and the marks are both predominantly red in color, with the same phrase "BROAD SPECTRUM FUNGICIDE" written underneath. Considering these striking similarities, predominantly the "D-10," the buyers of both products, mainly farmers, may be misled into thinking that "NS D-10 PLUS" could be an upgraded formulation of the "D-10 80 WP. Coffee Partners Inc. v. San Francisco Coffee & Roastery, Inc. Doctrine: A trade name need not be registered with the Intellectual Property Office (IPO) before an infringement suit may be filed by its owner against the owner of an infringing trademark. All that is required is that the trade name is previously used in trade of commerce in the Philippines. Facts: ! Petitioner is a local corporation engaged in the business of establishing and maintaining coffee shops around the country. It is registered with the SEC as Coffee Partners Ltd. for a nonexclusive right to operate coffee shops in the Philippines using trademarks, including SAN FRANCISCO COFFEE. Respondent, on the other hand, registered the business name SAN FRANCISCO COFFEE & ROASTERY with the Department of Trade and Industry which has a customer base including Figaro Company, Tagaytay Highlands, Fat Willys, among others. Respondents later formed a joint venture company with Boyd Coffee USA under the mother company name Boyd Coffee Philippines (BCPPI), primarily engaged in processing, roasting and wholesale selling of coffee. The respondent later discovered that petitioner was about to open a coffee shop under the name SAN FRANCISCO COFFEE, and according to the respondent, the shop caused confusion in the minds of the public as it a similar name and it also engaged in the business of selling coffee. Respondent sent a letter to the petitioner to stop using the name, as well as to the Bureau of Legal Affairs of the IPO (BLA-IPO) for infringement, unfair competition and claims for damages. Arguments: ! Petitioner contends that the marks have notable distinctions in their appearances. Furthermore, when the respondent formed a joint venture with Boyd Coffee USA, it stopped operating under the trade name SAN FRANCISCO COFFEE. David Puyat, president of petitioner corporation, attested further that CPL has franchises in Malaysia, Singapore and later on in the United States under the same trade name. BLA-IPO ruled for the respondent since it has registered the trade name six years earlier (1995), thus

it must be protected from infringement of its trade name. The Office of Director General of IPO (ODG-IPO), however, reversed the decision. In ruling for a subsequent user of a trade name in good faith, ODG-IPO held that respondent has stopped using its trade name in 1998 and the petitioner continuously used the trademark since 2001l; therefore, it would be inequitable to rule otherwise. This was, again, reversed on appeal. Issue: ! Whether the petitioners use of the trademark constitutes an infringement of respondents trade name even if it is not registered with the IPO. Held: ! In affirming the decision of the appellate court, the Supreme Court held that a trade name need not be registered with the IPO before an infringement suit may be filed by its owner against the owner of an infringing trademark. All that is required is that the trade name is previously used in trade of commerce in the Philippines. Applying either dominancy or holistic tests will yield to the conclusion that the trademark SAN FRANCISCO COFFEE is a clear infringement of the respondents SAN FRANCISCO COFFEE & ROASTERY, INC., with the descriptive words SAN FRANCISCO being the dominant features of the latters trade name. Petitioner should not be allowed to earn profit by the name and reputation so far build by the respondent without running afoul of the basic demands of fair play. Sehwani, Incorporated v. In-n-out Burger, Inc. Facts: ! IN-N-OUT Burger (INO) is a foreign corporation under the laws of California and not doing business in the Philippines. It filed an administrative complaint against Sehwani and Benita Fries for violation of intellectual property rights. IN-N-OUT alleges that it is the owner of the tradename IN-N-OUT (INO) and trademarks IN-NOUT Burger & Arrow Design (INO Arrow Design) and IN-N-OUT Burger Logo (INO Burger logo) which are used in its business since 1948 and are registered in the US as well as in other parts of the world.
INO alleges that it discovered that Sehwani had obtained a trademark registration for the mark IN-N-OUT where the inside of the letter O formed like a star. Despite being demanded to cease and desist from using the said mark, Sehwani even granted its co-petitioner Benita Fries a license to use said mark for a period of 5 years in its restaurant in Pasig City. Hence, INO filed a case for violation of intellectual property rights. ! In its answer, Sehwani alleges that INO lacks capacity to sue in the Philippines since it was not doing business in the country. Furthermore, it alleges that there is no cause of action since the mark is not registered or used in the Philippines. The Bureau Director rendered a decision finding that INO has legal capacity to sue and that it is the owner of an internationally well known trademark however, she found that there is no unfair competition. In view of the foregoing, she cancelled the certificate of registration of Sehwani. The appeal, having been filed out of time, was dismissed in the Court of Appeals. Thus, petitioners filed the instant petition.

Issue: ! Whether or not INO has the legal capacity to sue for trademark infringement. ! Whether or not INO is an internationally well known mark. ! Whether or not there is a violation of intellectual property rights. Ratio: First and foremost, the petition was dismissed outright for having been filed out of time. However, the court still proceeded to discuss the issues in the case at hand. ! INO has legal capacity to sue albeit it is not doing business in the Philippines as provided for in Section 1608 in relation to Section 39 of RA. 8293. Under the said law, any person who is a national or domiciled in a country which has a convention, agreement or reciprocal law with the Philippines regarding intellectual property rights shall have the legal capacity to file a civil or administrative suit against an infringer. INO bases its causes of action, in this case, in the Paris Convention, particularly Article 6 and Article 8, which governs the protection of well-known trademarks. It is a self executing provision and does not require legislative enactment to give it effect in the member country. The essential requirement under this article is that: 1. The trademark must be well-known in the country where the protection is sought (in this case, the Philippines); the findings of fact of the IPO are generally accorded not only respect, but at times, even finality if such are supported by substantial evidence. ! INO is an internationally well-known mark as evidenced by the documents of registration presented by INO and the trademark registrations of the logo around the world. In fact, the findings of the IPO in previous cases already declared INO Burger and Arrow Design as an internationally well-known mark. Generally, the basis for determining whether it is well-known or not is embodied in the Ongpin Memorandum of 1983. It takes into consideration the extent of registration of a mark. Similarly, the Implementing Rules of the Intellectual Property Code also provides that a criteria for determining whether it is well-known or not is the extent to which the mark has been registered in the world. In this case, INO also presented evidence consisting of articles where the INO sign and trademark has appeared in magazines, newspapers, and print outs. The quality image and reputation acquired by INO is unmistakable. On the basis of the evidence presented consisting of worldwide registration of the mark, as well as the advertisements therein by INO, there is no doubt that the mark is an internationally well-known mark. The fact that the marks are neither registered nor used in the Philippines is of no moment because under the World Intellectual Property Organization (WIPO), a member state shall not requires as a condition precedent for determining whether a mark is well-known that the mark has been used in or that the mark has been registered or that an application for registration of the mark has been filed in or in respect of, the member state. ! Yes. The evidence on record shows that not only did the petitioners use the INO trademark for the name of their restaurant, but also on the identical or confusingly similar mark for their food offerings, thereby misrepresenting the source of the goods and services. Such warrants the cancellation of the trademark registration of Sehwani and Benita Fries.
The power to determine whether such mark is well-known is the competent authority of the country of registration or use. This competent authority would either be the registering authority, if it has the power to do this, or the courts of the country in question if the issue comes before a court. Such question is factual in nature and
8 Any foreign national or juridical person who meets the requirements of Section 3 of this Act and does not engage in business in the Philippines may bring a civil or administrative action hereunder for opposition, cancellation, infringement, unfair competition or false designation of origin and false description, whether or not it is licensed to do business in the Philippines under existing laws. 9 Any person who is a national or who is domiciled or has a real and effective industrial establishment in a country which is a party to any convention, treaty or agreement relating to intellectual property rights or the repression of unfair competition to which the Philippines is also a prty or extends reciprocal rights to nationals of the Philippines by law, shall be entitled to benefits to the extent necessary to give effect to any provision of such convention, treaty or reciprocal law, in addition to the rights to which any owner of an intellectual property right is otherwise entitled by this Act.

Kellogg v. National Biscuit Facts: ! This suit was brought by National Biscuit Company (NBC) against Kellogg Company to enjoin the latter for alleged unfair competition by the manufacturer and sale of the breakfast food commonly known as shredded wheat. Allegedly, the latter uses the name shredded wheat and produces it in pillow-shaped form, like NBC. 1. Using the name shredded wheat 2. Producing the product in a pillow-shapred form, similar to NBCs 3. Form doing either. On certiorari, NBC claims that the exclusive right to the trade name shredded wheat and the exclusive right to make the shredded wheat biscuit pillow-shaped. It alleges that Kellogg used the name and shapre of NBC for the purpose of passing of the goods as its own. On the other hand, Kellogg denies that NBC is entitled to the exclusive right to the tradename and shape. It contends that it is only exercising the common right to freely manufacture and sell an article of commerce protected by patent. Issue: ! Whether or not Shredded Wheat is a protected mark. ! Whether or not Kellogg is guilty of unfair competition. Shredded Wheat is generally known for its pillow-shaped form. It was introduced by Henry Perky in 1893. Commercial success, however, was not attained until the Natural Food Company (later changing its corporate name to Shredded Wheat Company), NBCs predecessor, built a factory for its manufacture. Kellogg Company alleges that in started producing a product somewhat similar to the shredded wheat in 1912 and ending in 1919, the difference between the products is that the wheat was being reduced to a dough before it was pressed into shreds. It stopped manufacturing for a time, but resumed its manufacturing in 1927. In 1928, NBC sued for alleged unfair competition. The suit was discontinued by stipulation until the present suit was brought again. ! The District Court dismissed the bill and found that there is no passing of or deception shown. It held that upon expiration of the patent registration of Perky (the inventor), the name of the patented article passed into public domain. On rehearing, this decision was refused and the court enjoined Kellogg from using the name of Shredded Wheat as to its tradename and from advertising or offering for sale of its product in pillow-shaped form. Shortly thereafter, a permanent injunction was issued by the court prohibiting Kellogg from: Ratio: ! No. There is no exclusive right to use the term Shredded Wheat as a tradename. It is the term by which the biscuit in pillow-shaped form is generally known by public. The term is generic. Thus, Kellogg had the right to make the article and the right to use the term by which the public knows it. For many years, there has been no attempt to use the term as a trademark. Although there was an attempt before to have the term Shredded Whole Wheat registered as trademark, it has been met with opposition because the maker of the machine used for shredded wheat. The name shredded wheat and the machinery employed in making it has been dedicated to the public. Since during the life of the patents shredded wheat was the general designation of the patented product, there passed to the public upon expiration of the patent period, not only the right to make the article as it was made during the patent period, but also the right to apply thereto the name by which it had become known. From the cessation of the monopoly and the falling of the patented device into the domain of the public there must necessarily pass to the public the generic description of the thing which has arisen during the monopoly.

Likewise, NBC has no exclusive right to sell the shredded wheat in the form of a pillow shape in which the article became known to the public. Where an article may be manufactured by all, a particular manufacturer can no more asset exclusive rights in a form in which the public has become accustomed to see the article and which, in the minds of the public, is primarily associated with the article rather than a particular producer than it can in the case of a name with similar connections in the public mind. Moreover, the pillow shape must be used for another reason. The evidence is persuasive that this form is functional that the cost of the biscuit would be increased and its high quality lessened if some other form were substituted for the shape. ! There is no unfair competition. The obligation resting upon Kellogg is not to insure that every purchaser will know it to be the maker but to use every reasonable means to prevent confusion. In this case, the name Kellogg is so prominent on all its cartons as to minimize the possibility of confusion. Sharing in the goodwill of an article unprotected by patent or trademark is the exercise of a right possessed by all and in the free exercise of which the consuming public is deeply interested. There is no evidence of passing off or deception on the part of Kellogg Company and it has taken every reasonable precaution to prevent confusion or the practice of the deception in the sale of its product. In Re: Bad Frog Brewery, Inc. Facts: ! Bad Frog Brewery seeks the registration of the BAD FROG BEER and design in the form shown below, for wearing apparel and alcoholic beverages. However, in both cases, the examining attorney refused the registration pursuant to the Lanham Act on the basis that the marks are scandalous and immoral. It is of the position of the examining attorney that the average customer would recognize the mark as flipping the bird or giving the finger and that the said gesture is widely recognized to be obscene. Thus, this appeal.
Issue: ! Whether or not the mark is scandalous and immoral. Ratio: ! No. The refusals for registration were reversed by the court on the ground that the examining attorney has failed tp prove that, in viewing mark by itself, the consumers would perceive the frog as flipping the bird. Even assuming that the consumers would view the frog as flipping the bird, the attorney failed to establish that said gesture, when done by a realistic looking animal and when directed to no particular person or group, would be perceived as scandalous and immoral. Obviously, examining attorneys are trained professionals who carefully review the drawings of the applicants. They examine the drawings to a far greater degree than would ordinary customer. In addition, the examining attorney made reference to applicants own statements contained in its advertising and promotional materials wherein applicant is clearly attempting to instruct customers that the applicants frog is indeed giving the finger. The very fact that the applicant has to educate the consuming public to view the frog in its trademark as giving the finger is additional proof that, simply by itself, the frog would not be perceived by consumers as giving the finger.

! Furthermore, the attorney failed to establish that even if the frog were perceived to be giving the finger, that such a gesture would be perceived as scandalous or immoral. The attorney has not proven that the mere giving of a finger in a vacuum would begin to rise the level of scandalous or immoral gesture. Mere appearance of the word idiot (for example) in a vacuum on a shirt or a beer bottle would not be shocking or give offense. Even when humans give the finger to a particular individual or group, that, depending upon the circumstances, said gesture may be acceptable. Even attorneys own evidence shows that numerous newspapers, magazines and television stations have often shown humans giving the finger to particular individuals and groups. If said gestures were scandalous, immoral or obscene, the court seriously doubts that the magazines, shows or newspapers would feature this gesture with no attempt to cover it up. Dissenting Opinion by Simms: ! No trademark by which the goods of the applicant may b distinguished form the goods of others shall be refused registration on the principal register on account of its nature unless it consists of or comprises immoral deceptive or scandalous matter. In order to prove that the mark is scandalous, the office must demonstrate that the mark is shocking to the senses of truth, decency or propriety; disgraceful; offensive; disreputable giving offense to the conscience or moral feelings or calling out for condemnation. The majority opinion apparently agrees that the consumers will not perceive the mark as a frog giving an obscene gesture and that the applicants mark bears only a remote similarity to the obscene gesture (because it lacks a fifth finger). But Simms, disagrees with this because, the thumb plays no role when a person makes this gesture y forming a fist and extending the so called finger. Moreover, the labels submitted with the applications suggest the obscenity by the very name BAD FROG; DO IT FROGGY STYLE; FLIP THE BIRD, GET A FROG among others. It is thus, clear that the applicant as a central figure of its promotional efforts, draws attention to the obscene gesture given by the frog. Whether the applicants mark would likely to offend must be judged not in isolation but in the entire context of the marks use. Moreover, the applicants website implies obscenity. While the applicant argues that the material from the website does not affect the public perception of the mark, Simms disagrees. The website may indeed affect how the public perceives its mark, at least as that mark may be used in connection with the clothing because the site appears to be a source of ordering applicants clothing. Press accounts of record also reveal the applicants admissions concerning the nature of its mark. The Vice President of the company was even quoted saying if anyone wants to order a Bad Frog, all they have to do is flip off their bartender. Everyone will know that that means they want a Bad Frog Beer; and theres thousands of beers on the market, but Im pretty sure this is the only one you can order with a hand symbol. The mere fact that this gesture has appeared in newspapers and magazines does not prove that it is not scandalous or immoral to a substantial number of people. The appearance of this gesture on rare occasions is certainly not very probative of its lack of offensiveness. The fact that profane words may be uttered more freely does not render them any less profane. Nor does this fact amend the statute by which we are required to determine the registrability of such matter as marks. Likewise, while the thrust of the examining attorneys refusal and the majority opinion have been devoted to the scandalous refusal, Simms believes that the applicants mark is, at the very least, immoral under the Lanham Act. It is defined as not moral, inconsistent with rectitude, purity, or good morals, contrary to conscience or moral law, wicked; vicious; licentious as an immoral man or deed. Looking at the applicants mark n the context of the marketplace, the frog is clearly making an obscene human gesture, fully intended by the applicant and it would immediately be recognized by the average person. The evidence showing disapproval by state agencies in some very populous states demonstrates to me that at least a substantial composite of people which may have been offended by the mark or that it is immoral.

In Re: Old Glory Condom Corp. Doctrine: Whether a mark is scandalous is to be determined from the standpoint of a substantial composite of the general public. Scandalous is shocking to the senses of propriety. That which gives offense to the conscience or moral feelings and giving offense to the conscience or moral feelings, exciting reprobation, calling out condemnation, disgraceful to reputation and shocking to the senses of truth, decency and decency. Any doubts as to whether a mark is scandalous should be resolved in favor of allowing the mark to be published to permit any party who believes it would be damaged by registration of the mark to file an opposition to registration. In deciding whether a mark is scandalous, the context of contemporary attitudes must be considered. Consideration must be given to the moral values and conduct fashionable at the moment rather than that of the past decades. Facts: ! Old Glory Condom sought to register its mark with a design nfeature consisting of a pictorial representation of a condom decorated with stars and stripes in a manner to suggest the American flag. The examining attorney refused the registration under the Trademark Act on the ground that the mark consists of immoral and scandalous matter because it was likely to offend a substantial composite of the general public. Applicant herein contends that the American flag design appears as a feature of the trademark of the applicant for condoms but the flag is not applied to the condoms themselves. It states that the back of each condom package further pledges that the company promotes safer sex to help eliminate Aids. Furthermore, applicant argues that the patent and trademark office has registered more than a thousand marks for condoms, many of them are sexually suggestive and many that might be considered vulgar. Applicant emphasized that its mark is expressly designed not to offend but to redefine patriotism to include the fight against STDs, including AIDS. Issue: ! Whether or not the applicants mark is scandalous and/or immoral. Ratio: ! No. The particular pictorial representation featured in applicants composite mark was not found by the examining attorney to be vulgar and neither does the court find it to be so. The examining attorneys onjection the the applicants mark seems to be directed to the marks linking of flag imagery and a pictorial representation of a condom, each of which, in itself, she apparently finds, unobjectionable. Precisely why this combination of images is scandalous the examining attorney fails to articulate. The examining attorney offers very little evidence to support her position that a substantial composite of the public would be offended by the mark. The court is not willing, bases solely on the examining attorneys opinion, the evidence of the reaction to the Madonna (in scantily clad and wrapped in American flag) video, and the unsuccessful effort to amend the US Constitution to prohibit the burning of the flag, to presume that the flag imagery of applicants mark would give offense in a manner that must be deemed scandalous under the Trademark Law. Moreover, the mark must be judged not in isolation but in the entire context of the marks use. Here, the applicant markets its condoms in packaging which emphasizes applicants commitment to the sale of high quality condoms as a means of promoting safer sex and eliminating AIDS and its belief that the use of condoms is a patriotic act. Although not everyone would share in the applicants view, the seriousness surrounding the use of the mark- a seriousness of purpose made manifest to purchasers on the packaging for its goods is a factor to be taken into account in assessing whether the mark is offensive or shocking.

Pro-Football v. Suzan Harjo Facts: ! This case concerns the registration of 6 trademarks owned by Pro Football, the corporate owner of the Washington Redskins football team, that include the word Redskin which was first registered in 1974. It uses these marks in connection with goods and services related to its football team, including merchandise and entertainment. In 1992, 7 Native Americans petitioned for cancellation of the registrations claiming that the marks had disparaged the Native Americans at the times of registration and had thus been registered in violation of the Trademark Law. Five years after issuing a pre-trial order, the TTAb issued a cancellation order in which it scheduled the cancellation of the contested trademarks based on the decision that the trademarks disparaged the Native Americans to a substantial composite of this group of people and may bring Native Americans into contempt or disrepute. In view of the judgment, Pro Football sought to have a de novo review of the case, presenting 5 causes of action. It argues that the trademarks do not disparage the Native Americans. It further alleged that the Lanham Act, particularly Section 2(a) violates the First Amendment because it is vague, overbroad and content-based restriction on speech. Moverover, it asserts that the defendants cancellation petition was already barred by laches. The TTAB found that the laches is inapplicable in this case. During the hearing, the parties presented evidence showing that the term Redskins is offensive to the Native Americans through dictionary meaning, book and media excerpts, surveys, opinions and newspaper articles. Thus, TTAB found that the term disparaged the Native Americans and this warranted the cancellation of the registration. Issue: ! Whether or not the TTAB appropriately concluded that the marks at issue disparage Native Americans or cause them to be brought into contempt or disrepute. Ratio: ! The issue of disparagement, like the likelihood of conclusion, requires a fact-based judgment that depends heavily on their particular circumstances of each case. The registrant in a cancellation proceeding is entitled to the prima facie presumption that the registration and the mark are valid, that registrant is the owner and that registrant has the exclusive right to use the mark. Thus, cancellation of a valuable registration around which a valuable business good will has been built, should be granted only with "due caution and after a most careful study of all the facts. Trademarks may disparage if they may dishonor by comparison with what is inferior, slight, deprecate, degrade, or affect or injure by unjust comparison. A disparagement test is much more circumscribed and is limited by the Lanham Act. In deciding whether the matter may be disparaging, we look not to the American society as a whole, but to the views of the referenced group. Most importantly, it is pointed out that the question of disparagement must be considered in relation to the goods or services identified by the mark in the context of the marketplace. To ascertain the meaning of the matter in question, we must not only refer to dictionary definitions, but we must also consider the relationship between the subject matter in question and the other elements that make up the mark in its entirety; the nature of the goods or services and the manner in which the mark is used in the marketplace in connection with the goods and/or services. It is essentially a 2-step process: 1. What is the meaning of the matter in question, as it appears in the marks and as those marks are used in connection with the services identified in the registrations? 2. Is the meaning one that may disparage the Native Americans? 3. Note that both shall be answered as of the dates of registration of the marks herein. In this case, since the oldest trademark was issued in 1967, and the newest was issued in 1990, the Board focused its determination of the issue of disparagement on the time periods, between 1967 and 1990 when the subject registrations issued. It is to be noted that the football club used Native American imagery throughout its logos and team imagery. Although the records disclose that redskins is used in media and press since 1960s and refers to the

football club , it would be factually incomplete and disingenuous to ignore the substantial evidence of Native American imagery used by pro football as well as pro football fans. Indeed, the TTAB noted that 2 of the registered marks include a portrait of the profile of a Native American and what presumably is a native American spear. Substantial evidence exists to support the TTABs conclusion that, when considered in relation to the other matter comprising at least two of the subject marks, and as used in connection with Pro Footballs services, Redskins clearly refers to both respondents football team and carries the allusion to Native Americans inherent in the original definition of that word. In this case, the court found that the testimony of the 7 Native Americans who brought suit in this case clearly do not constitute a substantial composite of Native Americans.For this reason, it was impossible for the board to reasonably corroborate its decision to equate the views of the American public with the views of the Native American population. The Ross survey and the other evidence in this case clearly demonstrates that the views of the Native Americans do not necessarily correlate with the views of the general population. Defendants have the burden f proof by a preponderance of evidence. Dictionary Evidence: ! TTAB observed that the half of the dictionaries on record contained a usage label indicating that the word is often, offensive, informal or offensive slang. Based from this fact, the TTAB ruled that a not insignificant number of Americans understood redskins to be offensive. For this, there are no findings of fact to support the TTABs conclusion, rather, it is mere speculation on the part of the TTAB that this is the case. The dictionary only found the word to be often offensive, which means that in certain contexts the term redskins was not considered offensive. Historical Evidence ! TTAB observed that it found that during the late 1800s, and early 1900s, that the vast majority of evidence which included the word portrayed Native Americans in a derogatory manner. It concluded that since the 1960s, the term is a pejorative term for Native Americans. In this case, it should be remembered that the ultimate legal inquiry is whether the term is a pejorative term for Native Americans when used in connection with the service and during the relevant time frame. Survey Evidence ! TTAB concluded that the survey could be extrapolated to the Native Americans as a whole to be unsupported by substantial evidence. The survey measures attitudes of Native Americans about their perceptions of the term "redskin" as used as a reference to Native Americans in 1996. As the TTAB itself observed, "[n]either [the fact that the survey measured the views of individuals not alive at the time of registration of certain of the trademarks or the fact that the survey did not consider participants' views of the word 'redskin(s)' as used in connection with Pro-Football's entertainment services] diminishes the value of petitioners' survey for what it is-a survey of current attitudes towards the word "redskin(s)" as a reference to Native Americans. As a term for disparagement ! The evidence relating to the media and fans has no bearing on whether a substantial composite of Native Americans finds the term "redskin(s)" to be disparaging when used in connection with ProFootball's marks. The TTAB noted that the record contained the testimony of the Defendants who stated that they were "seriously offended" by ProFootball's use of the term in connection with its services. Id. This testimony, however, is a reflection of their individual viewpoints and there is no evidence that Defendants' views are a reasonable proxy for a substantial composite of the entire Native American population. In addition to concluding that the TTAB's finding of disparagement was not supported by substantial evidence, the Court, in the alternative, determines that Pro-Football's defense of laches would also preclude the cancellation of the six trademarks. The net result of the delay is that there is no direct or circumstantial evidence in the record that, at the times the trademarks were registered, the trademarks at issue were disparaging; even though the Native Americans contend that during this entire time period the

trademarks were disparaging. Hence, the evidence used by the TTAB to support its disparagement conclusion was purely inferential. While the common law definition of laches does not cleanly apply in light of the procedural posture of this case, it can be easily modified: Pro-Football's laches claim is only available under the common law if (1) the Native Americans delayed substantially before commencing their challenge to the "redskins" trademarks; (2) the Native Americans were aware of the trademarks during the period of delay; and (3) ProFootball's ongoing development of goodwill during the period of delay engendered a reliance interest in the preservation of the trademarks. The notion of a "continuing wrong," which is so prevalent in Lanham Act cases, provides a strong justification for the application of the doctrine of laches in appropriate circumstances regardless of whether the plaintiff has brought suit within the analogous statute of limitations. Under the notion of a continuing wrong, "only the last infringing act need be within the statutory period. The Court articulated a general three-prong test for laches in the context of a trademark proceeding. Essentially, to demonstrate laches Pro-Football must show that Defendants' delay in bringing the cancellation proceeding was unreasonable, and that prejudice to ProFootball resulted from the delay. Finally, the third step of the NAACP test, development of goodwill during the period of delay, is the prejudice element in the Bridgestone case. As the Bridgestone court observed, "[e]conomic prejudice arises from investment in and development of the trademark." The Court finds that the Defendants substantially delayed in bringing their challenge to the marks. In the case of the first trademark, Defendants waited over twenty-five years to bring this case. Defendants "do not dispute that they have long known about and objected to the name of the Washington football franchise. The Court finds that for all six trademarks the delay in bringing the cancellation proceeding was substantial. The marks were registered in 1967, 1974, 1978, and 1990. In the case of the trademarks registered in 1967, 1974, an 1978, the delay was substantial on its face. However, given the context of this case, the Court concludes the delay for all the trademarks was substantial. The Defendants had notice of the marks when the marks were published for comment and when the marks were published for registration. The Court finds that Defendants were also aware of the trademarks during the period of delay and therefore also had actual notice. Defendants state in their opposition that they "do not dispute that they have long known about and objected to the name of the Washington football franchise. Accordingly, the Court finds that Defendants were aware of the trademarks during the period of delay under a theory of actual or constructive notice. In the instant case, because the delay in bringing the cancellation proceeding was so substantial, a presumption is created that Pro-Football was entitled to rely on the security of the trademarks at issue. In 1967, the NFL was still a nascent industry. Had this suit been brought at that point, Pro-Football may have acquiesced and changed the name. The twenty-five year delay, where Pro-Football has invested so heavily in the marks, has clearly resulted in economic prejudice. Gold Seal Company v. Weeks Facts: ! Gold Seal Company seeks a decree authorizing the Commissioner of Patents to register as a lawful trademark the words Glass Wax, used by plaintiff in connection with its liquid composition for cleaning glass and metal. S. C. Johnson & Son, Inc., has intervened, opposing the application for registration of this mark on the ground that the words Glass Wax do not constitute a lawful trade-mark because it is deceptively misdescriptive. Both of the Patent Office tribunals, however, denied registration of the mark, deciding that it was either merely descriptive or deceptively misdescriptive and refused to consider the application as one seeking registration based on secondary significance. Plaintiff contends that Glass Wax is a "technical" trade-mark under Section 45 of the Lanham Act, it being a combination of words "adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others"; that it is not deceptive, nor is it merely descriptive, in that Glass Wax describes both a cleaner for glass and a cleaner for metal; that it is not merely deceptively misdescriptive in that it does not misdescribe a cleaner, a cleaner for glass, or a cleaner for metalware. Plaintiff further contends that should the Court find Glass Wax not a technical trade-mark, it should nevertheless register the mark in that it has acquired a secondary meaning under the Lanham Act.

On the other hand, the Patent Office contends that that the mark is in fact deceptive and does mislead; that such deception constitutes an absolute bar to registration regardless of what the Gold Seal Company intended, and regardless of whether or not any purchaser was injured; that the Government cannot and should not approve the use of any mark which actually misrepresents the goods to which it is applied, and since the product involved contains no wax or any border-line substance which might be considered a wax. And further, the Patent Office maintains that since it is not such an anomalous false label in relation to the product that no one would be deceived by it, especially since some glass polishes do contain wax, it is not entitled to registration. If it is not deceptive in this way, the Patent Office asserts that the mark is merely descriptive or deceptively misdescriptive, for if the product does contain wax it is descriptive; if it does not, it is deceptively misdescriptive, since Glass Wax would be generally understood as referring to a product which, when applied to glass, leaves a wax film, or at least contains wax Issue: ! Whether or not the mark is deceptive. ! Whether or not the mark is descriptively misdescriptive. ! Whether or not there is secondary meaning Ratio: ! The Court is well satisfied that the mark is not deceptive under Section 2(a). On the contrary, the conclusion seems justified from the voluminous record presented by the applicant that the term may be at most misdescriptive in the sense that such suggestion of deceptiveness may be overcome by a showing of distinctiveness under Section 2(f). While it would be naturally expected that housewives when asked whether Glass Wax contained wax, would answer the question in the affirmative, there is noththing in the Roper survey or in opposer's record which would show that anyone would have felt actually deceived if informed that there was no wax in the product. Both opposer's and applicant's records show, on the contrary, that practically all those who have actually used the product are highly pleased with its action whether it may contain wax or not. The evidence does not establish that customers have been misled. To the contrary, it appears that the product satisfies the needs of the customers; that the average or ordinary customer cares little about, and knows little about, the scientific composition of the product. The evidence does not show that the public has been influenced to purchase the product on account of believing that it contained wax, or that the product was simply a wax to be placed upon glass. In analyzing the relationship of the mark to the product and its impact upon the public, deception is found when an essential and material element is misrepresented, is distinctly false, and is the very element upon which the customer reasonably relies in purchasing one product over another. When, as here, the product contains an element which can only be known exactly by rigid scientific analysis, and such element does not appear as determinative in leading customers to buy the product, the mark is not deceptive. ! Having found the mark not deceptive, it then becomes necessary to consider whether or not it may be registered when measured against the prohibition of Section 2(e) which prohibits registration of marks which are "merely descriptive or deceptively misdescriptive" of the goods to which they are applied. The evidence establishes: that the product contains either no wax, or wax in insufficient quantity to justify use of the word; that customers might justifiably believe it does contain the element wax, whether or not it was significant to them in purchasing the product; that it is sold in association with other wax products; that other glass and metal cleaners do contain wax and have an appearance not basically dissimilar to plaintiff's product. We therefore find ourselves in accord with the holding of the Patent Office that the mark, as employed in commerce, is deceptively misdescriptive. For this reason it cannot be registered as a technical trade-mark. Viewed in this way, it still remains immaterial that plaintiff has combined two common English words in a way which is not to be found in dictionaries and which is not precise and accepted grammar, for this does not destroy the meanings of the words used and the import of the total mark as it relates to the qualities and characteristics of the product itself. This mark is comprised of general words which, when viewed together, and regardless of whether they truly or falsely

describe the immediate product, could as easily apply to a related class of goods and as aptly describe them as the one before the Court. Such a mark is not "technical". In Re Budge Manufacturing Facts: ! Budge Manufacturing appeals from the decision if the TTAB refusing registration of LOVEE LAMB for automatic seat covers on the basis that the term is deceptive matter within the meaning of the Lanham Act as applied to Budges goods which are made from wholly synthetic fibers. Issue: ! Whether or not the term is deceptive matter within the meaning of the Lanham Act. Ratio: ! Yes. The proscription of the law is not against misdescriptive terms unless they are also deceptive. Thus, a mark or part of a mark may be inapt or misdescriptive as applied to an applicants goods foes not make it deceptive. A three part test is to be applied in testing whether or not a term is deceptive matter: 1. Whether the term is misdescriptive as applied to the goods, 2. if so, whether anyone would be likely to believe the misrepresentation, and 3. whether the misrepresentation would materially affect a potential purchasers decision to buy the goods. In this case, Budge admits that its seat overs are not made from lamb or sheep. Thus, it is misdescriptive; The seat covers for various vehicles can be and mare from nature and sheepskins. Applicant itself made it from sheepskin. Thus, the purchasers are likely to believe that the seat covers denominated by the term LAMB or SHEEP are actually natural sheep or lamb skins. Moreover, evidence of record shows that natural sheepskin and lamb skin is more expensive than simulated skins and that natural and synthetic skins have different characteristics. Thus, misrepresentation is likely to affect the decision of the purchase. Misdescriptiveness of a term may be negated bu its meaning in the context of the whole mark inasmuch as the combination is seen together and makes a unitary impression. The same is not true with respect to explanatory statements in advertising or on labels which purchasers may or may not note and which may or may not always be provided. In Re: Nantucket, Inc. Facts: ! This is an appeal filed by Nantucket from a decision of the TTAB affirming a refusal to register the mark Nantucket for mens shirts on the ground that it is primarily geographically deceptively misdescriptive. Nantucket filed an application for registration of the name Nantucket on the principal register of the PTO. However, the examining officer found that the word Nantucket as defined in the dictionary is an island in the Atlantic Ocean south of Massachusetts. It concluded that the word is primarily geographically descriptive o primarily geographically deceptively misdescriptive, depending upon whether the shirts did or did not come from Nantucket Island (which it did not). Nantucket argues that, as applied to its shirts, the term is arbitrary and nondescriptive because there is no association in the public mind of mens clothing in Nantucket. Issue: ! Whether or not the term is primarily geographically deceptively misdescriptive. Ratio: ! The board erred in refusing the registration of Nantucket. In determining whether or not a geographical term is primarily geographically descriptive of a product the board ruled that the primary consideration is whether or not there is an association in the public mind of the product with the particular geographical area. Generally, the board used a test: 1. Whether the term conveys to the consumersprimarly or immediately a geographical connotation; 2. If so, whether the goods or services do in fact come from the place so named (if they do, the term is primarily geographically descriptive, if not it is primarily geographically deceptively misdescriptive) 3. If the term conveys primarily a geographical connotation and the goods or services do not come form the place so named,

whether the use of the term is calculated to deceive the public as to the geographical origin of the goods, the mark is deceptive and falls within the absolute prohibition of the law. However, the court ruled that the test rests mechanically on the one question of recognizability of some large segment of the public and ends there. Once it is found that the mark is the name of a known place, i.e., that it has "a readily recognizable geographic meaning," the next question, whether applicant's goods do or do not come from that place, becomes irrelevant under the board's test, for if they do, the mark is "primarily geographically descriptive"; if they don't, the mark is "primarily geographically deceptively misdescriptive." Either way, the result is the same, for the mark must be denied registration on the principal register. Geographically deceptive misdescriptiveness cannot be determined without considering whether the public associates the goods with the place which the mark names. If the goods do not come from the place named, and the public makes no goods-place association, the public is not deceived and the mark is accordingly not geographically deceptively misdescriptive. The word primarily should not be overlooked for it is not the intent of the legislators to refuse registration of the mark where the geographic meaning is obscure. In fact, courts have consistently held that when a geographic term is used in an arbitrary or fictitious sense, it may be subject to a valid trademark. As applied to this case, the only indication of record that Nantucket is primarily geographical resides in listings referring to Nantucket Island as a summer resort and former whaling center. There is no evidence to support a holding that the mark, as applied to mens shirts is deceptively misdescriptive. bThere is no indication that the purchasing public would expect mens shirts to have their origin in Nantucket when seen in the market place. Buyers are not likely to be deceived. Concurring Opinion (Nies): ! Affirms the decision but reached the same conclusion form a different direction. In determining whether a geographic term is registrable under the Lanham Act and upon what conditions, the first question is whether the name is primarily of geographic significance but, contrary to the board's view, that does not end the matter. A geographic term may be used in a manner which is: 1. 2. 3. 4. 5. Inherently distinctive Generic Descriptive Deceptively misdescriptive Deceptive
We must start with the concept that a geographic name of a place of business is a descpriptive term when used on the goods of that business. There is a public goods/place association, in effect, presumed. As with other terms which are descriptive when first used, it came to be recognized that through substantially exclusive and extensive use, a merchant might develop protectable goodwill in such a geographically descriptive name upon proof that the name ceased being informational to the public and came to indicate a source of goods. A geographic name is not unprotectible or unregistrable because it can be labelled a geographic name, but because it tells the public something about the product or the producer about which his competitor also has a right to inform the public. Thus, the names of places devoid of commercial activity are arbitrary usage. If Nantucket were to be applied to goods, one would expect that there are at least some goods for which the term is arbitrary, the applicant in such case, must resort to proof of distinctiveness in accordance with the law to secure registration. Qualitex Co. v. Jacobson Products Co. Facts: ! Qualitex Company has for years colored the dry cleaning press pads it manufactures with a special shade of green gold. On the other hand, respondent in this case, Jacobson (a Qualitex rival) began to use a similar shade on its own press pads. Qualitex therefore, registered its color as trademark and filed a trademark infringement case against Jacobson for the use of the green-gold color. Qualitex prevailed in the District Court but the 9th Circuit set aside the judgment on the infringement claim on the ground that the law does not permit registration of color alone as a trademark.

Issue: ! Whether or not the law permits the registration of color alone as a trademark. ! Whether or not the color herein can be registered as a trademark. Ratio: ! There is no reason to disqualify absolutely the use of a color as a trademark. A color is also capable of satisfying the more important part of statutory definition of a trademark which requires that a person use or intend to use the mark to identify his or her goods, including a unique product from those manufactured or sold b others and to indicate the source of the goods even if that source is unknown. Neither can the courts find a principled objection to the use of color as a mark in the important functionality doctrine of trademark law. The functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm's reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature. If a product's functional features could be used as trademarks, however, a monopoly over such features could be obtained without regard to whether they qualify as patents and could be extended forever. It would seem, then, that color alone, at least sometimes, can meet the basic legal requirements for use as a trademark. It can act as a symbol that distinguishes a firm's goods and identifies their source, without serving any other significant function. ! Yes. Qualitex green color acts as a symbol. Having attained secondary meaning, it identifies the press pads source. Accordingly, unless there is some special reason that convincingly militates against the use of color alone as a trademark, trademark law would protect Qualitex's use of the green-gold color on its press pads. Jacobson presented before the court 4 reasons as to why the law should forbid the use of color alone as trademark. But the court found it unpersuasive for the sollowing reasons: It will produce uncertainty and unresolvable court disputes about what shades of a color a competitor may lawfully use ! The court has already been faced with a number of cases when it had to decide on which among two similar terms deserve protection. We do not see why courts could not apply those standards to a color, replicating, if necessary, lighting conditions under which a colored product is normally sold. Depletion of usable colors ! The doctrine of functionality normally would seem available to prevent the anticompetitive consequences that Jacobson herein posits. The functionality doctrine thus protects competitors against a disadvantage (unrelated to recognition or reputation) that trademark protection might otherwise impose, namely, their inability reasonably to replicate important non-reputation-related product features. Moreover, it has been held that if a designs aestethic value lies in its ability to confer a significant benefit that cannot practically be duplicated by the use of alternative designs, then the design is functional. Support of his position with past Supreme Court decisions ! The SC cases cited therein interpreted trademark law as it existed before 1946 when Congress enacted the Lanham Act. The Lanham Act significantly changed and liberalized common law to dispense with mere technical prohibitions, most notably, by permitting trademark registration of descriptive words where they have acquired secondary meaning. Indeed, in 1985, the Federal Circuit considered the significance of the Lanham Act's changes as they related to color and held that trademark protection for color was consistent with the "jurisprudence under the Lanham Act developed in accordance with the statutory principle that if a mark is capable of being or becoming distinctive of the applicant's goods in commerce, then it is capable of serving as a trademark. Moreover, we believe the Federal Circuit was right in 1985 when it found that the 1946 Lanham Act embodied crucial legal changes that liberalized the law to permit the use of color alone as a trademark (under appropriate circumstances). At a minimum, the Lanham Act's changes left the courts free to reevaluate the preexisting legal precedent which had absolutely forbidden the use of color alone as a trademark. Finally, when Congress reenacted the terms "word, name, symbol, or device" in 1988, it did so against a legal background in which those terms had come to include color, and its statutory revision embraced that understanding.

There is no need to permit color alone to function as a trademark because a firm already may use color as part of trademark and may rely upon trade dress protection under the Lanham Act ! Trademark law helps the holder of a mark in many ways that trade dress protection does not. Furthermore, one can find it easy to understand why firms would find it difficult to place a usable symbol or word on a product instead of color as part of a design. Having determined that a color may sometimes meet the basic legal requirements for use as a trademark and that respondent Jacobson's arguments do not justify a special legal rule preventing color alone from serving as a trademark (and, in light of the District Court's here undisputed findings that Qualitex's use of the green-gold color on its press pads meets the basic trademark requirements), we conclude that the Ninth Circuit erred in barring Qualitex's use of color as a trademark. Dallas Cowboys Cheerleaders v. Pussycat Cinema, Ltd. Facts: ! Dallas Cowboys Cheerleaders is a wholly owned subsidiary of the Dallas Cowboys Football club which employs 36 women who perform dance and cheerleading routines at Dallas Cowboys football games. Likewise, they have merchandise which enjoyed nationwide commercial success due largely to national exposure. At football games, the cheerleaders appear on all commercial items depicting the cheerleaders where the women are in clad in plaintiffs distinct uniform. On the other hand, Pussycat Cinema is a NY corporation which owns a private movie theatre where it began to show Debbie Doe Dallas which depicts a cheerleader at a fictional high school who has been selected to become a Texas squad, the cheerleaders perform sexual services for a fee. The movie consists largely of scenes graphically depicting the sexual escapades of the actors. In the final scene of the movie, Debbie dons a uniform strikingly similar to that worn by the Dallas Cowboys Cheerleaders and for approximately 12 minutes, engages in various sex acts while clad or partially clad in the uniform. It further advertises the movie in posters with a caption: Starring Ex Dallas Cowgirl Cheerleader Bambi Woods and Youll do more than cheer for this X Dallas Cheerleader. ! Plaintiff brought the action alleging trademark infringement under the Lanham Act. A preliminary issue raised by the defendants in this case is that the plaintiff has no valid trademark in the uniform as it is a purely functional item necessary for the performance of the cheerleader. The District Court found for the plaintiff. Issue: ! Whether or not plaintiff has a valid trademark in its cheerleading uniform. ! Whether or not the depiction of the uniform in the movie violates the trademark. Ratio: ! Although it is true that functional items can be afforded no protection under trademark law, the court does not agree that all of the characteristics of the uniform in the instant case serve only a functional purpose. Plaintiff herein does not claim a trademark in all the clothing designed and fitted to allow free movement while performing cheerleading routines, but claims a trademark in the particular combination of colors and collocation of decorations that distinguish its uniform from others. The design of an item, if nonfunctional and has acquired secondary meaning can be subject to a trademark protection. Even the design may become a trademark even if the item itself is functional. Thus, the fact that the item serves or performs a function does not mean that it may not at the same time be capable of indicating sponsorship or origin, particularly where the decorative aspects of the item are nonfunctional. The combination of the white boots, shorts, blue blouse and white starstudded vest and belt is an arbitrary design and which makes the otherwise functional uniform trademarkable. ! Yes. In order to be confused, a consumer need not believe that the owner of the mark actually produced the item and placed it on the market. The publics belief that the owner sponsore or otherwise approved the use of the trademark satisfies the confusion requirement. In this case, the uniform in the movie unquestionably brings to mind the Dallas Cowboys Cheerleaders. Indeed it is hard to believe that anyone who had seen defendants sexually depraved film could ever thereafter disassociate it from the cheerleaders. Thus, there is a likelihood of confusion within the meaning of the Lanham Act.

Defendant raises the defense of fair use (which is a privilege in others than the owner of the copyright to use the copyrighted item in a reasonable manner without his consent) however, the court found that the defendants use of the uniform hardly qualifies as parody or any form of fair use. This is not a case of unconstitutional prior restraint as this is not a case of government censorship, but a private plaintiffs attempt to protect its property rights. Likewise, there is no prior restraint herein since the defendant may comment on sexuality in athletics without infringing the trademark of the plaintiff. Traffix Devices v. Marketing Displays Facts: ! Marketing Displays Inc (MDI) established a successful business in the manufacture and sale of sign stands incorporating the expired patented feature initiated by an inventor named Robert Sarkisian. Its signs were recognizable to buyers and user because the dual spring design was visible near the base of the sign. After the patent expired, Traffix Devices (TD) sold sign stands with a visible spring mechanism that looked like MDIs. Their products were alike because they were. MDI used the name WindMaster while TD used the name WindBuster ! MDI fled a suit for trademark infringement, trade dress infringement and unfair competition against TD. The District Court granted summary judgment in his favor. However, the Circuit Court reversed the decision on the ground that the competitor had to find some way to hide the design or otherwise set it apart from MDIs. Issue: ! Whether or not the tradedress herein embodying the dual spring design is protected by a trademark (MDI alleges that it has acquired a secondary meaning to his favor). Ratio: ! No. MDIs dual spring design is a functional feature for which there is no trade dress protection. The consumers did not associate the look of the dual-spring design with MDI. Nevertheless, the rationale on secondary meaning is irrelevant since there can be no trade dress protection as the design in a functional feature. Protection in tradedress exists to promote competition. It provides protection to one who is injured when a person uses the mark which is likely to cause confusion as to the origin, sponsorship or approval of his or her goods. The person who asserts trade dress protection has the burden of proving that the matter sought to be protected is not functional. In this case, a utility patent once granted and expired is a strong evidence that the features claimed therein are functional. Herein, the dual spring feature is the essential feature of the trade dress which MDI now seeks to protect. The springs are necessary to the operation of the device. It serves an important purpose of keeping the sign up-right even in heavy wind conditions and as confirmed by the statements in the expired patents, it does so in a unique and useful manner. It forces the frame to tip along the longitudinal axis of the elongated ground-engaging members. These statements in the patent applications and in the course of procuring the patents demonstrate the functionality of this design. Even if there is no previous utility on the subject matter, the feature is still functional. A product is functional and cannot serve as a trademark if it is essential to the use or purpose of the article or if it affects the cost or quality of the article. A functional feature is one the exclusive use of which would put competitors at a significant non-reputation related disadvantage. Functionality having been established, there can be no trade dress infringement on such ground. In Re Morton Norwich Products Facts: ! Morton Norwich (MN) sought to have its container design registered as a trademark. However, the PTO Trademark Attorney maintained that the design sought to be registered is not distinctive and that there is no evidence that it has acquired a secondary meaning. It further held that the container is simply functional and essentially utilitarian and non-arbitrary. Wherefore, it cannot function as a trademark. On appeal, the Board likewise held that the design in unregistrable since it is functional.

Issue: ! Whether or not the subject matter sought to be registered configuration of the container is functional. Ratio: ! It is not purely functional hence, registrable. The label functional has a dual significance. It has been used on the one hand, in lay fashion to indicate the normal or characteristic action of anything and on the other hand it has been used to denote a legal conclusion. If the designation functional is to be utilized to denote legal consequence, we must speak in terms of de factio functionality and de jure functionality. The former, being the use of functional in lay sense, indicating that although the design of a product is directed to performance of a function, it may legally be recognized as an indication of a source. De Jure Functionality would mean that such a design may not be protected as a trademark. Before, the design of a particular article would be protectable as a trademark only where the design was useless, that is, wholly unrelated to the function of the article. Most designs, hoever, result in the production of articles, containers or features thereof which are indeed utilitarian and examination into the possibility of trademark protection is not the mere existence of utility but the degree of design utility. Thus, we cannot say that it means that the subject design is functional merely because a hollow body and handhold, and pump sprayer are essential to its use. What this phrase means is not that the generic parts of the article or package are essential, but as noted above, the particular design of the whole assembly of those parts must be essential. Thus, it is clear that the courts in the past have considered the public policy involved in this area of the law as not the right to copy articles which are not protected by patent or copyright, but the need to copy those articles which is more properly termed the right to compete effectively. A feature is found to be functional if it contributes to the utility, durability, effectiveness, or ease of use of the product. But contributes to or affects: are both so broad as to be meaningless for, every design affects or contributes to the utility of an article in some way. Thus, the criteria is whether the prohibition of imitation by others would deprive them of something which will substantially hinder them in competition. Keeping in mind the foregoing, the functionality is determined in light of utility which is determined in light of superiority of design and rests upon the foundation essential to effective competition. In this case, of course, spray bottle is highly useful and performs intended functions in an admirable way, but that is not enough to render the design of the spray bottle which is all that matters here functional. The bottle contains 2 major parts, a bottle and a trigger operated spray producing pump mechanism which also serves as a closure. The PTO has not produced on iota of evidence to show that the shape of the bottle was required to be as it is for any de facto functional reason, which might lead to an affirmative determination of de jure functionality. A molded plastic bottle can have an infinite variety of forms or designs and still function to hold liquid. No form is necessary or appears to be superior. As to the spray top, the evidence also shows that it too can take a number of diverse forms, all of which are equally suitable as housings for the pump and spray mechanisms. The evidence shows that even the shapes of pump triggers can and do vary while performing the same function. Thus, the court does not see that allowing the appellants in this case to exclude others from using the trade dress will hinder competition or impinge upon the rights of others to compete effectively in the sale of the goods named in the application even to the extent of marketing them in functionality identical spray containers. The functions of the bottle of the appellant can be performed equally well by containers of innumerable designs and thus, no one is injured in competition. In Re Babies Beat Facts: ! Babies Beat sought the registration of the configuration of their product for baby accessories, namely baby bottles. However, the examining attorney refused registration on the ground of de jure functionality (not registrable since it is functional); and in the alternative, de facto functionality without showing of a secondary meaning, among others. Issue: ! Whether or not the configuration is de jure functional

! Whether or not, assuming de facto functionality, there is secondary meaning to the design. Ratio: ! The degree of design utility encompassed by the design is so great such that the applicants design is de jure functional and hence, not entitled to registration as a trademark. In determining functionality, the task is not to ascertain the mere existence of utility but rather to ascertain the degree of design utility. In its design application, Babies Beat stated that the plastic baby bottle is shaped for even the youngest and smallest babies hands to hold; furthermore it contends that its grippers line the holding area to give added assurance for safe holding. Appellant also touts its bottles as being the easiest to clean no hard to reach areas because of its bottle configuration. ! The design is entitled to application on the basis that it is inherently distinctive and requires no proof of secondary meaning. In Re Weber Stephen Products Co. Facts: ! Four applications for registration of trademark were filed by Weber Stephen for certain designs for barbecue grills and/or specified related goods. The registration was refused in all four applications on the ground that the designs were de jure functional configurations of applicants barbecue grills and hence are unregistrable as trademarks for its grills and related goods. Issue: ! Whether or not the designs are unregistrable for being de jure functional. Ratio: ! The designs are registrable and are not de jure functional. If the design of a product or container for a product is so utilitarian as to constitute a superior design which others in the field need to be able to copy in order to compete effectively, it is de jure functional and as such, is precluded from registration for reasons of public policy. The mere fact that a product has utility does not necessarily preclude registration of its configurations. Registrability depends on the degree of design utility. Evidence is useful to demonstrate that a particular design is superior and hence de jure functional which includes: 1. Utility patent that discloses the utilitarian advantages of the design 2. advertising materials in which the originator of the design touts its utilitarian advantages 3. facts tending to establish unavailability to competitors of alternative designs and 4. facts indicating that the design results from a comparatively simple or cheap method of manufacturing the product or container. Applying the foregoing to the case at hand, the utility patents filed for the said barbecue grills contained no requirement that the use of a round bowl or a tripod leg arrangement nor does the patent reveal any particular utilitarian advantages of such a design. In either case, neither patent discloses any particular utilitarian advantages to the configuration sought to be registered therein. As to the advertising materials, the statements made in newspapers certainly seem to suggest that there is utilitarian advantage to the round shape of applicants grill bown but we cannot say that these statements necessarily indicate that the shape involved is

functionally superior to the other grill bowls in the market. Moreover, there is no statements touting any utilitarian advantages of the tripod leg arrangement. As to the availability of alternative designs, a wide variety of alternative barbecue grill designs, including other covered round designs is available to the competitors and that the covered round design of the applicant is not superior in cooking performance to any other covered designs, be they round, square, rectangular or whatever. The key to successful barbecue cooking is the effective use of a cover and the correct amount of fuel and not the particular shape of the cooking cavity, and that it is the cover and air flow which control the heat within a barbecue grill and provide for even distribution of heat for cooking. As to manufacturing costs, the records fail to show that the round grill of the applicant is cheaper or simpler to manufacture than square designs, rectangular designs or other round designs. Having carefully evaluated the evidence, it is insufficient to prove that the round grill of applicant is a superior design which other manufacturers need to be able to use in order to compete effectively. To the contrary, it is of similar cooking performance to any other covered grill, whether it be in any other shape. There is absolute no evidence in record to show that it is functionally superior to or simpler or cheaper to manufacture than other available leg designs, such as single leg pedestals, four leg, or equidistant three leg designs. Bayer Co v. United Drug, Co. Facts: ! Bayer is a New York corporation which claims to have been selling, throughout the United States, a drug known as acetyl salicylic acid (ASA) since 1899. It claims that its predecessor was a German corporation engaged in the manufacturing of Chemical products, among them is the drug in question which was its own invention. It applied for and was granted a patent for the said drug and therefore, it expired 17 years thereafter. The predecessor imported the drug into the country some time in the year 1899 and before the patent was issued. It registered the name as a trademark on may 2, 1899 and advertised it on technical magazines and in all its advertisements and on all its labels claimed the word Aspirin as its trademark. At that time, it was sold in the form of powder and for some years only to manufacturing chemists, retail druggists or to physicians. However, none of the advertisements were made to the public at large, nor did any of its packages reach further than physicians, manufacturing chemists or retail druggists. In 1904, the chemists, who comprised all the large houses in the country, sold the tablets to retailers under the name Aspirin (note: not under the name ASA) and in no case did the name of Bayer or its predecessors appear on the labels. During this period, the predecessor continued its policy of addressing only the drug trade or physicians and the public continued to have no greater information than before of who was in fact manufacturing the drug under the name Aspirin. ! On the other hand, defendant herein, United Drug (defendant) allege that on August 1, 1898, Bayers predecessor has applied for a patent for ASA which was issued on 1900 and expired after 17 years. Thus, thereafter, the product fell into the public domain and with the word Aspirin which had become the name for the drug and therefor descriptive. ! The examiner of the Patent Office declared that the trademark was no longer valid and ordered the cancellation. From this decision, an appeal was taken. Issue: ! Whether or not Bayer has a right to the trademark Aspirin. Ratio: ! In the case at bar, the evidence shows that there is a class of buyers to whom the word Aspirin has always signified Bayer, more specifically indeed than was necessary for its protection, that is, the manufacturing chemists, to physicians and probably to retail druggists. As to these buyers, Bayer has made out a case, at least to compel the addition of some distinguishing suffix, even through its monopoly had been more perfect than in fact it was. In this case case, the court held that there are two classes of consumers.

1. The manufacturing chemists, retail druggists, and physicians which have been educated to understand that Aspirin means the plaintiffs manufacture (since Bayer directly deals with them) ad has recourse to another and an intelligible name for it, actually in use among them; 2. The consuming public which were acquainted only with the drug by the name Aspirin and has not succeeded in advising that the word means the plaintiff at all. The crux of this controversy lies not in the use of the word to the first class but to the general consuming public composed of all sorts of buyers from those somewhat acquainted with pharmaceutical terms to those who knew nothing of them and it cannot be said that such consumers read the word Aspirin as having any other meaning than as an ingredient in a general compound to which faith and science might impart therapeutic virtue. Their only acquaintance with the word was the name for a drug in whose curative properties they had got confidence. There is no evidence to show that these buyers knew that this drug was the same as Aspirin or that they ever asked for or bought Aspirin. Nor is there any evidence that they knew Aspirin is identified with ASA or supposed that Aspirin was that drug. Moreover, it is to be noted herein that the bottle of the plaintiff indicates Bayer Tablets of Aspirin. Thus, it shows that Bayer itself knew and recognized the meaning which the word had acquired because e the phrase most properly means that these labels were of Bayers make of the drug known as Aspirin. If a manufacturer thinks it undesirable to advertise and sell drugs direct, the inevitable conclusion of adhering to that standard is that no trademark among consumers can be acquired because they can know nothing of it. When, as among consumers, a mark does not give even an intimation of the owner, there is no room for any protection. The owner must show that the mark means him, else, he cannot prevent others from using it. Thus, the injunction was granted against the direct sales of the drug under the name to manufacturing chemists, physicians and retail druggists but to consumers, it is impracticable to give any protection because among them, the name has gone into the public domain. The defendant will be free to sell ASA direct to consumers under the name Aspirin without suffix or qualification. The defendant in sales to retail druggists will also be free to pack tablets in bottles and boxes labeled as Aspirin provided that the bottles or boxes are wrapped or boxed in containers marked ASA manufactured by UD. Co. without the word Aspirin and tjat in making such sales, invoices, bills of lading and the life refer to the drug so sold only as ASA. America Online Inc. (AOL) v. AT&T Corporation Facts: ! AOL is the worlds largest Internet service provider. It includes the facility to transmit and receive electronic mail and a means to establish real-time communication through instant messaging. In connection with its chatting services, AOL uses Buddy List and IM: to describe features of the service. The Buddy List enables the subscriber to create a list of identified screen names employed by other users with whom the subscriber wishes to communicate. When a Buddy is online, the subscriber may click a button labeled IM and initiate a real-time chat session with the subscriber so identified. AOL has used the Buddy List and IM since at least 1997 and has promoted these terms extensively and it asserts now that it has a proprietary interest in them. Said mark has been registered with the Patent and Trademark office on the Principal Register. Also in connection with its email service, AOL advises its subscribers that they have received email by displaying the words You Have Mail by placing a recording that announces Youve got mail and by depicting an icon of a traditional mailbox with the red flag raised. ! AT&T, a competing internet service provider uses marks similar to those claimed by AOL in connection with its service to subscribers. It uses the terms Buddy List, You Have Mail! and I M Here. ! AOL commenced this action seeking preliminary injunctive relief against AT&T to prohibit it form using the marks. It alleged that the similar marks violated the trademark dilution provisions of the Lanham Act and infringes AOLs marks. AT&T denies said claims and asserted that the marks were common generic terms for email and instant messaging.

District Court denied the preliminary injunction and declared that said marks are generic terms and that words used generically cannot become trademarks by association. Issue: ! Whether or not the Buddy List is a generic term. ! Whether or not the IM is a generic term. ! Whether or not the AOL has trademark rights over the phrase You Have Mail. Ratio: ! The case was remanded as to the term Buddy List. It should be noted that the decision to register a mark without requiring evidence of secondary meaning is a powerful evidence that the registered mark is suggestive and not merely descriptive. In this case, through the certificate of registration of the terms, the Commissioner introduces his opinion that the application of the registrant was sufficient to demonstrate a valid mark. Despite the foregoing, the lower court declared summary judgment in the context of the record evidence presented in the case. The SC decided to vacate the decision of the District Courts ruling on the Buddy List including the order of the Commissioner to cancel its registration as the validity of the Buddy List cannot be determined on mere summary judgment. A presumption does not vanish upon the introduction of contradictory evidence, instead it is merely deemed sufficient evidence of the fact presumed to be considered by the jury or other finder of fact. ! The court did not expressly hold that IM is a generic term. Books, dictionaries and glossaries define the term as instant messaging. AOL has offered no evidence to support the contention that it was one of the first companies to provide for an IM. Accordingly, which the court does nor determine that the term is generic, it nevertheless agrees with the decision of the District Court that the denial of the enforcement of IM as a trademark is in order. ! You Have Mail is a generic phrase. AOL may not enforce the phrase as a trademark in connection with its email notification service. AOL has the burden to prove that it owns the mark. However, the record establishes that the phrase You Have Mail has already been used to inform users since the 1970s (a decade before the existence of AOL) that they have electronic mail in their electronic mailboxes. The phrase has been used for the common ordinary purpose of informing users of the arrival of electronic mail in their electronic mailboxes. It is significant in this context that AOL never registered the phrase nor has it attempted to enforce the mark prior to this action. Furthermore, the use of the phrase is conditioned on whether there is mail present. It does not describe the email service of AOL, but rather simply. Informs the subscribers, employing common words to express their commonly used meaning, of the ordinary fact that they gave new email. This functional manner in which AOL uses You Have Mail is consistent with a public perception of the phrase as describing whether or not mail is in an electronic mailbox, rather than as describing a service associated with AOL. The scope of this asserted use is to give notice of mail to subscribers. The words might well have become marks distinguishing one entrepreneurs product or service from all other electronic networks. Yet, because of pervasive use, these terms become generic and even when created words for new products have become strong marks, the publics pervasive use of these marks sometimes creates a real risk that their distinctiveness will disappear (GENERICIDE). The law of trademarks intends to protect the goodwill represented by the marks and the valid property interests of entrepreneurs in that good will against those who would appropriate it for their own. But it likewise, protects for public use those commonly used words and phrases that the public has adopted, denying to anyone a right to corner those words and phrases by expropriating them from public linguistic commons. AOLs usage of the would be mark falls within the heartland of common meaning and usage and therefore, AOL may not exclude others from using the same in connection with their email service. There is no evidence that it uses the phrase in a distinctive matter. Concurring and Dissenting Opinion (Luttig): ! I would not decide on whether AOL is entitled to protection for its unregistered email notification feature because it is my understanding

that AOL no longer informs its consumers through tht use of the phrase. Rather it now informs them that they have acted with the different message Youve Got Mail. That feature is sufficiently different from the phrase You Have Mail in both gramattical dysfunctionality and likely secondary meaning and possibly in its genericness as well. Harley Davidson v. Grotanelli Facts: ! Harley Davidson (HD), a corporation based in Wisconsin inititated this case for infringement against Grotanelli for the alleged use of the word HOG in reference to some of its products and services and from using his logo modeled on HDs bar-and-shield design mark. generic as applied to motorcycles. Though not conclusive, dictionary definitions of the word to denote a category of products are significant evidence of its genericness because they usually reflect the publics perception of a words meaning and its contemporary usage. In this case, one dictionary cites a generic use of HOG to mean a large motorcycle as early as 1967, long before HDs first use of the word and the recent dictionary editions continuing to define the word to mean such indicate that the word has not lost generic meaning. The court observed that newspaper and magazine use of a word in a generic sense is a strong indication of the general publics perception that the word is generic. Further supporting the generic nature of the word HOG was HDs aversion to linking the word with its products in the early 1980s long after the word was generic. HD already attempted to disassociate itself from the term HOG. Although in some contexts, there might be instances whereby a trademark use can be reacquired in a generic term (e.g. SINGER and GOODYEAR) but it is recognized that these examples are words that were originally proper names of the manufacturer and that the cases do not stand for proposition that a commonly used name of an article like computer, typewriter or flashlight can be appropriated by one seller as a trademark. Moreover, if a generic word could ever be infused with trademark significance, the word must have ceased to have current generic meaning. Issue: ! Whether or not the use of the term HOG infringes the trademark of HD. ! Whether or not the use of the mark similar to the bar-and-shield of HD constitutes infringement. Neither can the Dual Usage terms provide any help to HD because although Dual usage (which refers to a mark that starts out as proprietary and gradually become generic) allows the retention of trademark significance, HD cannot avail of this because in this case, our concern is a trademark that starts out as generic and is sought to be given trademark significance by the manufacturer. ! Grotannelli is enjoined form using the bar and shield logo. The claim of Grotennelli that it is used as a parodic trademark cannot hold in court. The hear of any parodists claim is the use of some elements of a prior authors work to create a new one that, at least in part, comments on that authors work. The comment must have some critical bearing on the substance or style of the original composition.
Ratio: ! The term HOG has become generic as applied to large motorcycles before HD began to make trademark use of HOG and that HDs attempt to withdraw this use of the word from the public domain cannot succeed. In the late 1960s and 1970s, the word was used by motorcycle enthusiasts to refer to motorcycles generally and to large motorcycles in particular. It is

In this case, Grotanellis mark makes no comment on Harleys mark. It simply uses it in a humorous way to promote his own products and services which is not permitted in a trademark parody use. Mattel v. Francisco Facts: ! Jimmy Uy filed a trademark application with the Bureau of Patents for registration of the trademark BARBIE for use on confectionary products, such as milk, chocolate, candies, milkbar and chocolate candies in Class 30. However, Mattel opposed this registration on the ground that it was confusingly similar to its trademark on dolls, doll clothes and doll accessories, toys and other similar commercial products. IPO rendered a decision dismissing the Notice of Opposition and giving due course to Uys application for the registration of the trademark Barbie as used on confectionary products as these were non-competing and unrelated products and that there was no proof that Mattel had ventured into the production of chocolates and confectionary products under the trademark BARBIE on said goods. Thereafter, Mattel filed a Motion for New Trial on the ground of newly discovered evidence allegedly because there was a Trademark Application for registration of the trademark BARBIE for use on confectionaries and this application was unopposed after publication in the IPO Official Gazette. However, the Motion for New Trial was denied. Mattel argues that the products are items related to Uys products and that the Director General of the IPO has the power to act on a pending trademark application considered as withdrawn for failure to file a Declaration of Actual Use (DAU) as required by the Code and its implementing Rules. On the other hand, Uy submits that the case has already become moot and academic since the records of the IPO already show that the DAU was not filed on or before December 1, 2001, thus he is deemed to have abandoned his trademark application for failure to comply with the mandatory filing of the DAU. Issue: ! Whether or not Uy is deemed to have abandoned his application for the trademark BARBIE by failing to file his DAU. Ratio: ! The case has become moot and academic because Uy is deemed to have abandoned his application for failing to file his declaration of actual use as required by law. Section 124.2 of RA 8293 requires that the applicant or registrant shall file a declaration of actual use of the mark with evidence to that effect as prescribed by the Rules within 3 years from the filing date of the application. Otherwise, the applicant shall be refused registration or the marks shall be removed from the Register. Likewise, the rules also provide that without any need of notice from the Office, all applicants and registrants shall file a DAU within 3 years without possibility of extension form the filing date of the application. Otherwise, it shall be refused or the mark shall be removed from the register by the Director. However, since in this case, the mark was applied for during the effectivity of RA 166, it is required that the applicant submit DAU and evidence of use on or before December 1, 2001, subject to a single 6 month extension (as stated in Memorandum Circular No. BT 2K1-3-04). By virtue of the admission of Uy, since he has effectively withdrawn or abandoned any rights or interest in his trademark for non-filing of the DAU, there is no more actual controversy or no useful purpose to pass upon the merits of the case. It is unnecessary to rule on the trademark conflict between the parties. Courts will not decide on matters such as this as it would constitute a mere advisory opinion. The exercise of judicial review is limited to actual cases and controversies. Courts will decide cases, otherwise moot and academic, only if: 1. There is a grave violation of the constitution 2. Exceptional character of the situation and paramount public interest 3. Constitutional issued raised requires formulation of controlling principles to guide the bench at bar 4. Capable of repetition yet evading review The instant case does not fall within the category of any of the exceptional cases. The issues in this case call for a factual

consideration which are peculiar only to the transactions and parties involved in this controversy. Andres Romero v. Maiden from Brassiere Co. Facts: ! Maiden Form is a foreign corporation which filed an application for registration of the trademark ADAGIO for the brassieres manufactured by it. It stated the following facts in its application: October 26, 1937 August 31, 1947 First use in the United States First use in the Philippines Ratio: ! Yes. It is registrable. Evidence shows that the trademark is a musical term which means slowly or in an easy manner and was used ad a trademark by the owners thereof because they are musically inclined. Being a musical term, it is used in an arbitrary or fanciful sense as a trademark for brassieres manufactured by respondent company. The mere fact that the said mark is also used to designate a particular style of brassiere does not affect its registrability as trademark. Long and continuous use of the mark has not rendered it merely descriptive of the product. Widespread dissemination does not justify the defendants in the use of the trademark. If this argument were sound, then every time a plaintiff obtained the result of having the public purchase its article, that fact itself would destroy a trademark. ! There is no abandonment. To work an abandonment, the disuse must be permanent, and not ephemeral. It must be intentional and voluntary and not involuntary or even compulsory. There must be thorough-going discontinuance of any trade-mark use of the mark in question. To establish the defense of abandonment, it is necessary to show not only the acts indicating a practical abandonment, but an actual intention to abandon. Non-use because of legal restrictions is not evidence of an intent to abandon. ! Others: The court ruled that Section 37 of the RA 166 can only be availed of where the Philippines is a party to an international convention or treaty relating to trademarks in which the trade-mark sought to be registered need not be used in the Philippines. The Philippines has not yet entered into any such treaty or convention and until she does, actual use in the Philippines of the trademark sought to be registered and allegation in the application of such fact will be required in all applications for original or renewal registration submitted to the Philippine Patent Office. It did not register under Section 37 of RA 166, but under Section 2 of the same law.11
Acting on said application, after publication, the Director issued a certificate of registration for ADAGIO. However, subsequently, Andres Romero filed a petition for cancellation of the trademark on the grounds that: 1. it is a common descriptive name of an article of substance 2. it was procured fraudulently contrary to the provisions of Section 4, Chapter II of RA 166. 3. Application was not filed in accordance with Section 37 of the same law. 10 Romero claims that the trademark has become a common descriptive name of a particular style of brassieres and is therefore, unregistrable. It is urged that the trademark has been used by local brassiere manufacturers since 1948 without objection on the part of the respondent company. It is further alleged that even assuming that Adagio was a registrable trademark and that the company used the same in 1932, in the Philippines long before anyone else, it abandoned the use of the same during the period of time that the government imposed restrictions on importation of respondent companys goods. Issue: ! Whether or not the trademark is registrable. ! Whether or not there has been abandonment.
10 No registration of a mark or trade-name in the Philippines by a person described in the preceding paragraph of this section shall be granted until such mark or trade-name has been registered in the country of origin of the applicant, unless the applicant alleges use in commerce.
11
Trademarks owned by persons domiciled in a foreign country may be registered provided that said trademarks, trade-names or service marks are actually in use in commerce and services not less than 2 months in the Philippines before the time the applications for registration are filed.

Ratio: ! It was an assignment in gross. Generally, an assignment of a trademark and its accompanying goodwill will entitle the assignee to step into the shoes of the assignor, gaining whatever priority the assignor might have had in the mark. When a trademark has been assigned in gross, the assignment is without the accompanying goodwill of the predecessor. Hence, the assignee must instead rely upon his or her own use to establish priority. The mere fact that there was an immediate case in the manufacture cannot operate to make a conclusion that the same is not an assignment in gross (transferring the goodwill). A trademark may be validly transferred without the simultaneous transfer of any tangible assets as long as the recipient continues to produce goods of the same quality and nature previously associated with the mark. Many courts have ruled for substantial similarity even though the products differed in some respects. However, in this case, there is no substantial similarity to support the conclusion that there was an assignment in gross since the facts of the record show that Sears only sold womens pixie boots under the mark Heartland before, while plaintiff immediately applied the same to mens shoes, then later, to mens hiking boots. The market for the 2 goods are substantially distinct. The facts tend to show that the plaintiffs sought to gain the ability to use the name Heartland and not the goodwill associated with it. Since the assignment is the assignment in gross, defendants have shown priority in the use of the name Heartland and therefore, plaintiffs may not enjoin defendants from using Heartland for the sale of its current line of products. Pepsi Co. v. Grapette Facts: ! Pepsi Cola has bottled beverages duly registered under trademarks PEPSI COLA and PEP-KOLA for many years. Grapette, on the other hand, is a national bottler and distributor of soft drinks, concentrates and syrups. Grapette developed a formula for a beverage and in searching for a name for this beverage, it came across the 1926 registration of the mark PEPPY by Fox & Co. (Fox)Foxed used this in conjunction with a cola flavored syrup which was distributed on a local basis.
Clark & Freeman v. Heartland Facts: ! This case involves the competing claims of 2 companies to the exclusive right to use the name Heartland in connection with their business operations. Defendant Has been using the mark since July 1985 in connection with the sales of shirts, sweaters, trousers and jackets. Commenced using the name Heartland on April 26, 1986 in connection with the sale of mens shoes and boots.
Plaintiff
However it is argued by the plaintiffs that because its predecessor, SEARS, used the same even before the defendant, the period should be tacked to theirs thereby making them the prior user. On the other hand, this was contested to by the defendant since in the case of Sears and the plaintiff, there was a settlement which assigned the trademark in gross to plaintiffs. In assignments in gross, by its very nature, the successor may not tack the period of the predecessors prior use. It is the position of the plaintiff that the assignment is not an assignment in gross because: 1. There was an immediate cease of the manufacture and marketing of Heartland boots when SEARS made the assignment, thus there was an ipso facto transfer of goodwill; 2. Because the plaintiffs were applying the trademark to substantially similar goods (in relation to SEARS), they had acquired the goodwill as well as the mark. Issue: ! Whether or not the assignment herein of SEARS to plaintiff was an assignment in gross.

Grapette entered into an agreement with Fox in which the trademark PEPPY was assigned to the defendant for a consideration. Although there was a formal assignment of goodwill, it is now being conceded that none of Foxs assets or plant were transferred with the trademark (no inventory, lists, formulas, etc). ! Pepsi filed a case alleging that the assignment was null and void for being an assignment in gross. It sought an injunction against Grapette and its holding company based on the alleged infringement of its trademark. Notwithstanding the finding of infringement, however, the court denied the plaintiff injunctive relief on the ground that there was laches. Hence, it is not disputed in this case that Grapette must stand in the place of Fox because, without a valid assignment, the rights to PEPPY accrue only as of November 1965 and it could not assert the defense of laches. Pepsi asserts that the 1965 assignment of the trademark was a legal nullity in that the trademark was transferred totally disconnected form any business or goodwill of the assignor. Issue: ! Whether or not the assignment is void. Ratio: ! It is null and void. The Lanham Act provides that a registered mark or mark shall be assigned with the goodwill of the business in which the mark is used, or with that part of the goodwill of the business connected with the use of and symbolized by the mark, and in such assignment it shall not be necessary to include the goodwill of the business connected with the use of and symbolize by any other mark used in the business or by the name or style under which the business is concluded. Trademark could not be assigned in gross. It can only be transferred in connection with the assignment of the particular business in which it has been used, with its goodwill and for the continued use upon the same articles or class of articles. This necessity to assign more than the naked mark was premised on the primary object of the trademark to indicate by its meaning or association the origin of the article to which it is affixed. The designation only a means identifying particular goods, services or a business associated with a particular commercial source, whether
known or anonymous. Goodwill is property and since it is transferable, the symbol of the property is transferable along with it. Basic to this concept is the proposition that any assignment of a trademark and its goodwill requires the mark itself be used by the assignee on a product having substantially the same characteristics. If he should make a different article, he would not derive a right which a court of equity would enforce. The right to the use of a trademark cannot be so enjoyed by an assignee that he shall have the right to affix the mark to goods differing in character or species from the article to which it was originally attached. Grapette herein urges that it intends to use the PEPPY mark on a product of the same general classification as Fox but this was not sustained by the court. The word class means broadly a genus as a species any goods upon which the use of the same mark, when the goods are exposed side by side, would tend to mislead the purchasing public. Thus, the mere fact that the goods are registered in the same Class cannot mean that these are within the same class in determining the validity of the assignment to defendant Grapette. Evidence shows that the products are not substantially the same. Grappette intended to use the mark to descripe its new pepper beverage, on the other hand, Fox used it in its cola syrup. Thus, it is fundamental herein that either defendant did not acquire the goodwill as required by law or it did not apply said goodwill, even assuming it inherited it, to the same goods. Either ground is untenable to the validity of the assignment.

University Bookstore v. The Board of Regents of the University of Wicsonsin System Facts: ! Applications have been filed by the Board of Regents of the University of Wisconsin (University) to register the following trademarks for various apparel (hereinafter referred to as Bucky and Bagders respectively): already lost by its failure for many years to control the nature and quality of numerous third party users of the marks. Issue: ! Whether or not there is abandonment. Ratio: ! No. Under the law, a mark shall be deemed to be abandoned when any course of conduct of the owner, causes the mark to become generic name for the goods or services on or in connection with which it is used or otherwise to lose its significance as a mark. Purchaser motivation shall not be a test for determining abandonment under this paragraph. Instead, so long as at least some members of the purchasing public identify applicant with each of the marks at issue, it cannot be said that applicant's course of conduct has caused any of such marks to lose its significance as a mark. Without question, distinctiveness can be lost by failing to take action against infringers. If there are numerous products in the marketplace bearing the alleged mark, purchasers may learn to ignore the mark as a source indication. When that occurs, the conduct of the former owner, by failing to police its mark, can be said to have caused the mark to lose its significance as a mark. However, an owner is not required to act immediately against every possibly infringing use to avoid a holding of abandonment. Such a requirement would unnecessarily clutter the courts. Some infringements are short-lived and will disappear without action by the trademark owner. By way of background, is is clear that Bucky was created by Mr. Evans, which was requested by BBS to produce for sale of BBC;s sheet of decals which included mascot designed and intended to represent applicant. Brown's has continuously sold decals depicting Bucky since 1940 and, later on, UBS likewise sold a version of such decals. With respect to use of the Bucky on W mark, the record reveals that Brown's sold clothing imprinted therewith during the 1950s and continued to do so through the 1960s. Other members of WMF, but not UBS, have also sold T-shirts, sweatshirts and/or caps imprinted with the Bucky on W mark. As to the WISCONSIN BADGERS mark, it is plain from the record that the words BADGER and BADGERS have long been associated with applicant.
Said applications have been opposed by the University Book Store (UBS), the Wisconsin Merchants Federation (WMF) and the Browns Book Shop (BBS) on the ground that with respect to Bucky, such mark was created in 1940 when BBS commissioned another company to design and produce a mascot for use by BBS and that the University or anyone associated with it used the same before 1940. On the other hand, the WISCONSIN BADGER mark was also being opposed to on the claim that the terms are created centuries ago, not by the University. Opposers further allege that uses of the marks in issue by nonaffiliated entities have included imprinting the marks on clothing and other goods; manufacturing and selling such goods; using the marks in advertising and promoting the sale of such goods; and using the marks to promote sports exhibitions and to create customer goodwill. Opposers also contend that during the early 1980s, the Board of Regents indicated in response to several inquiries by non-affiliated entities that anyone was free to use the lucky Badger figure and the words WISCONSIN BADGERS since, as confirmed in internal correspondence, it did not claim ownership rights therein. To this effect, the oppositors in the claim that the University had already abandoned its rights to the mark. They claim that the applicant

While opposers are consequently correct that in most instances, applicant has not been the first user of the subject marks for the goods and services for which registration is sought, it is critical to keep in mind that none of the opposers, or any third party, has ever used such marks as its own mark to identify and distinguish the particular goods and services involved in these proceedings. Opposers have admitted, in their responses to applicant's requests for admissions, that they have never made use of the marks applicant seeks to register as their marks. Instead, it is manifest from the record that opposers, and third parties alike, have merely sold and occasionally advertised items of apparel and other merchandise which have been imprinted with the marks. Applicant, like numerous other colleges and universities, permitted others to sell imprinted merchandise as expressions of community support and goodwill. Advertising of merchandise featuring various indicia associated with applicant, including the marks at issue herein, frequently coincided with events sponsored by applicant, such as athletic events and alumni gatherings. Opposers, in stressing that such uncontrolled uses by third parties amount to a forfeiture of any rights applicant may have had in the subject marks, are basically contending that applicant must maintain a right in gross in each mark. However, as noted previously, exclusivity of rights is not required as a matter of law in order for applicant to avoid a finding of abandonment. Even in instances where, arguably, applicant and others are each using the Bucky Badger figure and/or the words BADGER and BADGERS, such as the use thereof by the Badger Conference and Niagara High School and the use of Bucky by groups of cross-country runners, Vietnam veterans and firefighters, the activities of these third parties are sufficiently different and distinct in nature from the university level educational and entertainment services rendered by applicant so as to preclude any inference of abandonment of the subject marks by applicant. The fact that such indicia have been diluted and are accordingly weak in terms of the scope of protection to which they would be entitled does not mean, in the case of both the uses thereof made by applicant, and those by its nonexclusive, implied licensees which inured to applicant's benefit, that the marks applicant seeks to register have lost their significance as marks. As mentioned earlier, the record is clear that applicant tolerated various uses by others of the marks it seeks to register as expressions in the business community of goodwill and support for the educational and entertainment services provided by applicant. The presence of the University, with its faculty, support personnel and large student population, provided in turn a significant source of customers for local businesses, including the bookstores run by UBS and Brown's as well as other firms which in large measure have catered to the various needs of persons at the University. Finally, opposers urge that there has been no fundamental change in the market for merchandise imprinted with the marks at issue which would justify applicant's adoption of its formal licensing program and excuse its asserted delay in claiming enforceable rights after many years of essentially regarding the marks as public property. The substantial growth in the popularity of such items, and the resultant need by the colleges and universities affected thereby for tighter control over their names and other identifying symbols, caused applicant and other similarly situated institutions of higher learning to recognize that the protection and enforcement mechanisms offered by formal licensing programs were necessary in order to avoid the problems brought about by the fundamental change in the market for imprinted collegiate merchandise. In summary, not only is it the case that none of the opposers, or any third party, has ever used the marks at issue as its own mark for the particular goods and services set forth in the applications involved in these proceedings, but the use thereby was tantamount to a royaltyfree, nonexclusive, implied license from applicant which inured to applicant's benefit. Applicant tolerated uses of the marks, when their use in advertising and on clothing and other types of imprinted merchandise were plainly in reference to the University, as expressions of support for its athletic and academic programs by the business community. With but one inconsequential exception, the record is devoid of any evidence which even raises an inference that the quality of merchandise imprinted with the subject marks has ever been anything less than that of at least merchantable quality. Similarly, except for a few occasional and transitory incidents, clothing and other items bearing the marks at issue have reflected applicant's standard that such merchandise be in good taste, Applicant, in effect, has maintained adequate control over the nature and quality of the goods

and services sold under the marks, both prior to and after the commencement of its formal licensing program with CCI/ICE, and has policed its marks in accordance with due regard for the scope of protection to which they are entitled. Yocum v. Covington Facts: ! A petition for cancellation of registration was filed by Yocum of the service mark, PIED PIPERS issued to Warren Covington for entertainment services (live singing) on the ground that: 1. the ownership and prior use of the PIED PIPERS mark was originally formed in 1940; 2. fraudulent application for and procurement of the registration based on the knowledge of the existence of the group and of petitioners use andrright to use PIED PIERS mark at the time of the application for registration in 1973. As its defense, Covington asserts that there was abandonment on the part of Yocum, laches and acquiescence. Yocum is a musician who joined a group called PIED PIPERS which originated in California. He joined the group in 1940 when it formally became PIED PIPERS. Throughout this period tget were paid by, booked by and appeared as a featured part of the Tommy Dorsey organization apparently as employees of Mr. Dorsey. As the sole survivor of the group, 100% of the title to the trademark and the service mark was with Yocum. When he was no longer physically capable of performing, he stopped performing. Notwithstanding, it is clear that he continued to claim ownership of the PIED PIPERS name to receive royalties from previous recordings as to which he was a performer and to seek suitable employment for a PIED PIPERS singing group in the capacity akin to owner-manager or licensor. ! Covington is a trombonist with a number of major dance bands and studio orchestras. In 1973, Covington 0organized his own PIED PIPERS group to enhance the orchestra which group, presumably with changes in vocalists, has remained intact and continues with Covington orchestra and sometimes as a hired vocal group apart from that orchestra. Covington applied for registration of the service mark, which was granted. Hence, this case. Issue: ! Whether or not there is abandonment. ! Whether or not there is fraud in the procurement of the registration. Ratio: ! Covington has superior rights over the mark. The oath in application which matured into registration was not in fact false. Even if we found that petitioner had superior rights, and that the oath was false, the evidence of record would not be sufficient to persuade us that the oath was made with fraudulent intent. Although he was aware of the status of the mark, petitioners admittedly minimal level of commercial activity with his PIED PIPERS group and the lack of trade visibility 6 years before the registration made it plausible and understandable for Covington to assume, when he sought registration that once famous, PIED PIPERS name was not currently in trade use and was therefore subject to appropriation by one seeking to recapture and market the nostalgia of those days and the sweet vocal sounds that accompanied it. The reasons for the foregoing conclusions are: 1. Yocum was not an original member of the group. He was a mere employee of Dorsey and was only employed by Dorsey. Hence, the title to the mark remains with Dorsey during that time. 2. The board is unable to find evidence that use of the mark during this period evolved into 100% ownership status claimed by petitioner because of the striking lack of corroboration of the agreement and several evidentiary facts therewith. 3. It does not appear that he continued to assert rights to the name to try to activate other performers to sing as the PIED PIPERS after his withdrawal from the group. He agreed to allow use of the name without adequate supervision and quality control and which led to an interruption of the continuous use that petitioner must show to establish priority over registrant. This is evidence by the fact that during a recording session of an ad hoc PIED PIPERS group, he intruded therein with threat of legal action, but this resulted in payment to him to settle his claims of name ownership but no more than that.

He made no inquiry of what was being recorded, what arrangements were being used, and made no requests to monitor the sessions. Moreover, subsequent to this, he entered into another uncontrolled licensing arrangement without such pressures. In 6 years, use and registration of the mark, petitioner engaged in inadequately controlled licensing thereby working an abandonment that negated such priority of use as a petitioner may have established in earlier years and divested PIED PIPERS mark of origin. Abandonment is defined as when any course of conduct of the registrant, including acts of omission as well as commission causes the mark to lose its significance as an indication of origin. Although not dealing with a registered mark, we believe that the operative principles of the act apply to petitioners situation. While lack of intent to abandon would be relevant to voluntary relinquishment of the mark, it is not a sufficient defense against applicants naked licensing activity. ! The board finds no colorable basis for finding fraud in respondents 1973 application for his PIED PIPERS registration and his representations therein because to the best of his knowledge, there was no other person has the right to use said mark in commerce. Fraud must be proven to the hilt with little or no room for speculation or surmise, The statement of an applicant that no other person to the best of his knowledge has the right to the use of the mark does not require the applicant to disclose those persons whom he may have heard are using the mark does not constitute fraud if he feels that the rights of such others are not superior to his. An applicant who has at least color of title to the mark is not guilty of fraud in making the foregoing application recitals. Yocum has not met his burden or establishing either prior and continuing rights on his part or fraudulent application behavior on respondents part that would justify cancellation the registration. PAGASA v. Court of Appeals Facts: ! Kaisha was issued a trademark registration for YKK for slide fasteners and zippers in class 41. 5 and a half years after its registration, PAGASA filed an application for registration of the same or identical trademark which was also allowed. Alleging that both are confusingly similar, being used on similar products under the same classification of goods, Kaisha filed with the Director of Patents a petition for cancellation of petitioners registration of exactly the same trademark. The Director ordered the cancellation of the registration of PAGASA on the ground that it is non-registrable because it resembles a mark or tradename registered in the Philippines or a mark tradename previously used in the Philippines. CA affirmed the decision of the Director of Patents and held that laches would not apply in this case for it has not been shown that Kaisha abandoned the use of the mark. PAGASA claims that Kaisha neglected to assert its rights for more than 5 years. Hence, it should not be barred from filing the case. It further argues that to be entitled to the defense of estoppel by laches, it is not necessary for the petitioner either to show that respondent has abandoned the trademark or to prove its good faith if it is shown that respondent was aware of petitioner's use of the trademark without the former's protest or objection thereto leading petitioner to assume that its act did not constitute an invasion of respondent Kaisha's trademark rights. Moreover, it is asserted that there was never an acquisition of right on the part of Kaisha since there was no actual proof of use in commerce. No invoices or receipts were submitted and neither did respondent present testimony of any buyer a=or distributor to which said samples were addressed. Issue: ! Whether or not laches may be applied in this case. ! Whether or the first registration is valid. Ratio: ! There is laches and it may be applied in this case. It appears that it was only after more than seven (7) years when respondent sought the cancellation of the trademark. An unreasonable length of time had already passed before respondent asserted its right to the trademark. There is a presumption of neglect already amounting to "abandonment" of a right after a party had remained silent for quite a long time during which petitioner had been openly using the trademark in question. Such inaction on the part of respondent entitles petitioner to the equitable principle of laches.

It is most unfair if at any time, a previous registrant, even after a lapse of more than five (5) years, can ask for the cancellation of a similar or the same trademark, the registration of which was never opposed by the prior registrant. Why, in the first place did respondent not file an opposition to the application of petitioner, as it ought to have done? It could be because by the fact that its own registration was defective for there being no compliance with the requirement of the law such as the two (2) months commercial use of the trademark prior to the filing of the application, its own registration may be cancelled, specially as it had no evidence of actual use of the trademark after its registration up to the time of the filing of petitioner's application, a fact easily deducible from the fact of respondent's complete silence and having taken no action to cancel petitioner's trademark until after the lapse of more than seven (7) years from the approval of petitioner's application to respondent filing a petition for cancellation. ! No. The trademark law is clear that it requires actual use of the mark prior to registration. Although Kaisha was the first registrant, it failed to prove that it used in trade or business in the Philippines the subject mark. There is no proof to invest it with exclusive continuous adoption of the mark which should consist among others, of considerable sales since its first use. The invoices presented coveres mere samples and were not for sale. The fact of exporting them is not considered as use. PAGASA v. Court of Appeals (MR) Ratio: ! The Director of Patents sensibly and correctly cancelled the registration in favor of Pagasa which has not shown any semblance of justification for usurping the trademark YKK. The registration in favor of Pagasa was admitted by the Director to be a mistake. He said that Pagasa's application should have been denied outright. Pagasa cannot rely on equity because he who comes into equity must come with clean hands. Equity refuses to lend its aid in any manner to one seeking its active interposition who has been guilty of unlawful or inequitable conduct in the matter with relation to which he seeks relief. In this case, it was found by the court that PAGASA had knowledge that Kaisha was using the YKK trademark. Hence, such knowledge, constituting bad faith when it opted to register it, precludes the application of equitable principles of laches, estoppel and acquiescence. Yoshidas prior registration is superior and must prevail. Philip Morris Inc. v. Court of Appeals Facts: ! Philip Morris is a corporation organized under the laws of USA. The two other plaintiff corporations, which are wholly owned subsidiaries of Philip Morris are similarly not doing business in the Philippines but are suing on an isolated transaction. As registered owners of MARK VII, MARK TEN and LARK, they assert that Fortune Tobacco Corporation has no right to manufacture and sell cigarettes bearing the allegedly identical or confusingly similar marks in contravention of the Trademark law and should be precluded from performing said acts. Fortune, on the other hand, asserts that it has been authorized by the BIR to manufacture and sell cigarettes bearing the trademark MARK and that MARK is a common word which cannot be exclusively appropriated. ! RTC denied the prayer for preliminary injunction on the ground that since the corporations are not doing business in the Philippines, the MARK cigarettes cannot cause them irreparable damage within the territorial limits of the country. Although there is no dispute that Philip Morris registered MARK VII, MARK TEN and LARK first, the registration of the trademark MARK is still pending with the PPO, thus the issuance of a preliminary injunction premature. Until and unless the Director of Patents has denied the application, the court is of the opinion and so holds that issuance of the injunction would not lie. It has been repeatedly held in this jurisdiction as well as in the United States that the right or title of the applicant for injunction remedy must be clear and free from doubt. Apart from the foregoing reasons, what prompted the trial court to entertain the idea of prematurity and untimeliness of petitioners application for a writ of preliminary injunction was the letter from the BIR which reads that the application for its trademark is still peinding before said office. In a second motion for issuance of injunctive writ (asserting that the application of the MARK with the PPO has already been rejected and barred), the trial court nonetheless denied the new assertions on the grounds that: 1. They did not even bother to establish that the products affected adversely not subject of an application for registration

with the PPO are in actual use in the Philippines and available for commercial purposes in the Philippines. ! In the court of appeals, the prayer for injunctive writ was granted enjoining Fortune from manufacturing, selling and advertising MARK cigarettes It remarked that the temporary mark granted to Fortune and acceptance of the second application filed by Fortune in the height of their dispute in the main case were evidently made subject to the outcome of the main case herein. The CA believed that Philip Morris has shown a prima facie case for the issuance of the writ. A motion to dissolve the disputed writ of preliminary injunction with offer to post a counterbond was submitted and was favorably acted upon by the Court of Appeals premised on the filing of a sufficient counterbond to answer for whatever prejudice to Philip Morris (PM). In turn, PM filed their own motion for reexamination gared towards the reimposition of the writ of preliminary injunction. Issue: ! Whether or not in order to suffer irreparable injury due to the lifting of the injunction, petitioners should be using actually their registered trademarks in commerce in the Philippines. Ratio: ! Indeed it has been settles in jurisprudence that a foreign corporation is allowed for bring an action in Philippine courts for infringement of a mark or tradename for unfair competition or false designation of origin and false description whether or not it has been licensed to do business in the Philippines. It is further qualified in another case that a foreign corporation not doing business in the Philippines may have a right to sue before Philippine Courts but existing adjective axioms require that qualifying circumstances necessary for the assertion of such right should first be affirmatively pleaded. It is not sufficient for a foreign corporation suing under sia dlaw to imply allege its alien origin. It must additionally allege its personality to sue. Thus, foreign corporations not engaged in business in the Philippines may maintain a cause of action for infringement primarily because of Section 21-A of the Trademark Law when legal standing to sue is alleged, which PM has done. However, a fundamental principle of Philippine Trademark Law is that actual use in commerce in the Philippines is a pre-requisite to the acquisition of ownership over a trademark or a tradename. Even if PM has the capacity to sue for infringement, whether they have an exclusive right over their symbol as to justify issuance of the controversial writ will depend on actual use of their trademarks in the Philippines in line with the Trademark Law. Such a foreign corporation may have the personality to sue but it may not necessarily be entitled to protection due to absence of actual use of the emblem in the local market. To be entitled to injunctive writ, petitioner must show that there exists a certain right to be protected and that the facts against which injunction is directed are violative of said right. Even if PM are holders of certificates of registration in the Philippines of their symbols, the fact of exclusive ownership cannot be made to rest solely on these documents since dominion over trademarks is not acquired by the mere fact of registration alone and does not perfect a trademark right. What we are simply conveying is another basic tenet in remedial law that before injunctive relief may properly issue, complainant's right or title must be undisputed and demonstrated on the strength of one's own title to such a degree as to unquestionably exclude dark clouds of doubt, rather than on the weakness of the adversary's evidence, inasmuch as the possibility of irreparable damage, without prior proof of transgression of an actual existing right, is no ground for injunction being mere damnum absque injuria. In view of the explicit representation of petitioners in the complaint that they are not engaged in business in the Philippines, it inevitably follows that no conceivable damage can be suffered by them not to mention the foremost consideration heretofore discussed on the absence of their right to be protected. Separate Opinion (Feliciano, J): ! It is important to stress the legal effects of registration of a trademark. A certificate of registration of a mark or a tradename shall be prima facie evidence of the validity of the registration, the registrants ownership of the mark or tradename and of the exclusive right to use the same in connection with the goods, business or services specified in the certificate.

Effects of registration in the Principal Register and Supplemental Register: Principal Register Gives rise to presumption of the validity of the registration, the registrations ownership of the mark and his right to exclusive use thereof Limited to the actual owner of the trademark and proceedings therein pass on the issue of ownership, which may be contested through opposition or interference proceedings or after registration, in a petition for cancellation Constructive notice of the claims of ownership Basis for action for infringement Publication of application is necessary Proof of registration therein may be filed with the BoC to exclude foreign goods bearing infringing marks Supplemental Register No such presumption in the supplemental register of a member country of the Paris Union is entitled to bring in Philippine courts an action for infringement of trademarks, or for unfair competition, without necessity of obtaining registration or a license to do business in the Philippines. In this case, it was held that actual use was necessary. It should be noted that out of PMs 3 marks, 2 of them MARK and LARK were registered in the Philippines on the basis of actual use in the Philippines. The very fact that the PPO issued certificates necessarily gave rise to the presumption that such pre-registration use had in fact been shown to the satisfaction of PPO. The third mark, MARK VII was registered on the basis of Section 37 (on the basis of registration in the country of origin and under the Paris Convention). In such registration, actual use need not be shown. That petitioners are not doing business and are not licensed to do business in the Philippines, does not by any means mean either that petitioners have not complied with the requirements of Section 12 of R.A. No. 166 relating to affidavits of continued use, or that petitioners' trademarks are not in fact used in trade and commerce in the Philippines. In the Converse case, as earlier noted, the Court held that the circumstance that the foreign owner of a Philippine trademark is not licensed to do business and is not doing business in the Philippines, does not mean that petitioner's goods (that is, goods bearing petitioner's trademark) are not sold in the Philippines. For cigarettes bearing petitioners' trademarks may in fact be imported into and be available for sale in the Philippines through the acts of importers or distributors. Modern authorities on trademark law view trademarks as symbols which perform three (3) distinct functions: first, they indicate origin or ownership of the articles to which they are attached; second, they guarantee that those articles come up to a certain standard of quality; third, they advertise the articles they symbolize. A registered trademark has value in itself apart from the trade physically accompanying its use. That PM did not try to put a peso figure on their claimed damage arising from the erosion and possible eventual destruction of the symbolic value of their trademark, such damage, while not necessarily easily quantifiable is nonetheless real and effective.
Not subject to opposition although it may be cancelled after its issuance
Merely proof of actual use of trademark and notice that registrant has used appropriated it Not a basis for action infringement Not necessary
the the or for
No such thing for supplemental register
While taken with the companion presumption of a regularity of performance of official duty, it will be seen that issuance of the certificate also gives rise to the presumption that all requirements of Philippine law necessary for a valid registration were complied with and satisfied. Feliciano, herein, is of the position that there is a prima facie case for holding that the mark of Fortune infringes upon PMs registered trademarks. Furthermore, the net effect of the statutory and treaty provisions applicable in this case is that a corporate national

Samson v. Daway Facts: ! 2 informations for unfair competition were filed against Manolo Samson (Samson), the registered owner of ITTI shoes. It is alleged that Samson unlawfully sold and offered for sale CATERPILLAR products such as footwear, garments, clothing, bags, accessories and paraphernalia which are closely identical and/or colorable imitations of the authentic CATERPILLAR products. Samson filed a motion to suspend in view of an alleged prejudicial question involved in another civil case for unfair competition pending with the same branch and also in view of the pendency of a petition for review with the Secretary of Justice assailing the findings of the prosecutor finding probable cause. Subsequently, he filed a motion to quash the informations and for reconsideration of the order denying the motion to suspend, this time challenging the jurisdiction of the trial court over the offense charged. It is contended that since Section 170 of the IP Code imposes imprisonment for unfair competition of not more than 6 years the offense is cognizable by the MTC and not by the RTC. These were all denied. Issue: ! Whether or not the court has jurisdiction over criminal and civil cases for violation of IP rights. Ratio: ! Section 163 of the Code states that actions shall be brought before the proper courts with appropriate jurisdiction under existing laws. The existing law referred to is Section 27 of RA 166 which provides that jurisdiction over cases for infringement of registered marks, unfair competition, false designation of origin and false description or representation is lodged with the CFI (now RTC). In the case at bar, the IP Code (RA 8293) and RA 166 are special laws conferring jurisdiction over violations of intellectual property rights to the Regional Trial Court. They are to prevail over RA 7691 which is a general law. Hence, jurisdiction over the instant criminal case for unfair competition is properly lodged with the Regional Trial Court even if the penalty therefor is imprisonment of less than 6 years, or from 2 to 5 years and a fine ranging from P50,000.00 to P200,000.00. In fact, to implement and ensure the speedy disposition of cases involving violations of intellectual property rights under R.A. No. 8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002 designating certain Regional Trial Courts as Intellectual Property Courts. On June 17, 2003, the Court further issued a Resolution consolidating jurisdiction to hear and decide Intellectual Property Code and Securities and Exchange Commission cases in specific Regional Trial Courts designated as Special Commercial Courts. There is no prejudicial question in this case. There is no prejudicial question if the civil and criminal action can proceed independently of each other (e.g. Articles 32, 33, 34 and 2176 of the Civil Code). The case at bar falls (infringement and unfair competition) under Article 33 of the Civil Code which covers cases of fraud. Hence, it is entirely separate from the criminal action. As such, it will not operate as a prejudicial question. Levi Strauss v. Vogue Traders Facts: ! Per Trademark, Technical Data and Technical Assistance Agreement (TTTA) Levi Strauss was granted a non-exclusive license to use Levis trademark design and name in the sale of its clothing and other goods. The licensing agreement was renewed several times, the recent one being under a certificate of registration issued by the BPTTT. It discovered the existence of some trademarks belonging to Vogue which, in its view, were confusingly similar to its trademarks. Thus, it instituted 2 cases before the BPTTT for the cancellation of the latters trademark. Likewise, it applied for the issuance of a search warrant on the premises of Vogue owned by one Tony Lim with the RTC. The Trial Court issued the search warrant and the goods of Vogue were seized. ! Consequently, Vogue filed a complaint with the RTC against Levis which alleged there was no deceptive resemblances with the trademarks of Levis and the seizure of the goods (unlawfully) should entitle him to damages. In its answer, Levis claims that Vogues Lives brand infringed upon its licensed brand name LEVIs It sought to cancel the registration of the former and to enjoin the former from further selling goods using such brand name. RTC issued an order finding that the respondent intended to appropriate and imitate the genuine appearance of authentic LEVIs

jeans and pass off its LIVEs jeans as genuine LEVIs jeans. Vogue opposed and stated that the LEVIs backpocket design is not copyrightable and is neither an original work nor a novel design. Ultimately, the court issued a preliminary injunction retraining Vogue from using the marks. ! CA rendered a decision in favor of the respondent, enjoining the trial court form further proceeding with the case. Issue: ! Whether or not the doctrine of primary jurisdiction operates to suspend any and all proceedings in a civil case. Ratio: ! While an application for the administrative cancellation of a registered trademark on any of the grounds enumerated under Section 17 of RA 166, an action for infringement or unfair competition, as well as the remedy of injunction and relief for damages is explicitly and unquestionable within the competence and jurisdiction of ordinary courts. An application with the BPTTT for an administrative cancellation of a registered trademark cannot per se have the effect of restraining or preventing the courts form exercising their jurisdiction. Notwithstanding the foregoing provisions, the court or the administrative agency vested with jurisdiction to hear and adjudicate any action to enforce the rights to a registered mark shall likewise exercise jurisdiction to determine whether the registration of said mark may be cancelled in accordance with this Act. The filing of a suit to enforce the registered mark with the proper court or agency shall exclude any other court or agency from assuming jurisdiction over a subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to cancel the mark with the Bureau of Legal Affairs {formerly BPTTT] shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to same registered mark may be decided. It bears stressing that an action for infringement or unfair competition, including the available remedies of injunction and damages, in the regular courts can proceed independently or simultaneously with an action for the administrative cancellation of a registered trademark in the BPTTT. As applied to the present case, petitioners prior filing of two inter partes cases against the respondent before the BPTTT for the cancellation of the latters trademark registrations, namely, "LIVES" and "LIVES Label Mark," does not preclude petitioners right (as a defendant) to include in its answer (to respondents complaint for damages in Civil Case No. No. 96-76944) a counterclaim for infringement with a prayer for the issuance of a writ of preliminary injunction.
Coffee Partners Inc. v. San Francisco Coffee & Roastery, Inc. Doctrine: A trade name need not be registered with the Intellectual Property Office (IPO) before an infringement suit may be filed by its owner against the owner of an infringing trademark. All that is required is that the trade name is previously used in trade of commerce in the Philippines. Facts: ! Petitioner is a local corporation engaged in the business of establishing and maintaining coffee shops around the country. It is registered with the SEC as Coffee Partners Ltd. for a nonexclusive right to operate coffee shops in the Philippines using trademarks, including SAN FRANCISCO COFFEE. Respondent, on the other hand, registered the business name SAN FRANCISCO COFFEE & ROASTERY with the Department of Trade and Industry which has a customer base including Figaro Company, Tagaytay Highlands, Fat Willys, among others. Respondents later formed a joint venture company with Boyd Coffee USA under the mother company name Boyd Coffee Philippines (BCPPI), primarily engaged in processing, roasting and wholesale selling of coffee. The respondent later discovered that petitioner was about to open a coffee shop under the name SAN FRANCISCO COFFEE, and according to the respondent, the shop caused confusion in the minds of the public as it a similar name and it also engaged in the business of selling coffee. Respondent sent a letter to the petitioner to stop using the name, as well as to the Bureau of Legal Affairs of the IPO (BLA-IPO) for infringement, unfair competition and claims for damages.

Arguments: ! Petitioner contends that: 1. When a tradename is not registered, a suit for infringement is not available; 2. Respondent already abandoned its tradename (it already expired and it was only in 2001 that petitioner opened a coffee shop in Libis). Fialure to continue the use of the tradename to designate its goods negates any allegation of intrngement. 3. No confusion is likely to occur between its trademark. ! On the other hand respondent maintains that: 1. The law protects tradenames from infringement even if they are not registered with IPO. All that is required is for the tradename to be previously used in trade or commerce in the Philippines. 2. It likewise states that it never abandoned the use of its tradename. 3. The mark is confusingly similar to the its tradename. Issue: ! Whether the petitioners use of the trademark constitutes an infringement of respondents trade name even if it is not registered with the IPO. Held: ! In affirming the decision of the appellate court, the Supreme Court held that a trade name need not be registered with the IPO before an infringement suit may be filed by its owner against the owner of an infringing trademark. All that is required is that the trade name is previously used in trade of commerce in the Philippines. Applying either dominancy or holistic tests will yield to the conclusion that the trademark SAN FRANCISCO COFFEE is a clear infringement of the respondents SAN FRANCISCO COFFEE & ROASTERY, INC., with the descriptive words SAN FRANCISCO being the dominant features of the latters trade name. Petitioner should not be allowed to earn profit by the name and reputation so far build by the respondent without running afoul of Petitioner filed a notice of opposition claiming that the respondents trademark is confusingly similar to its trademarks for coffee and coffee extracts, namely MASTER ROAST and MASTER BLEND; alleging that its registration is likely to cause confusion in the trade as well as deceive purchasers as the dominant word present in the trademarks of Nestl is MASTER. Naturally, CFC argued otherwise, i.e., there is no confusion between the companies trademarks, the word MATER cannot be exclusively appropriated by any person for being a descriptive or generic name, and the trademarks are very different from one another. BPTTT denied the respondents registration but the appellate court assailed such decision, holding that the physical discrepancies between appellant and appellees respective logos are so ostensible that the casual purchaser cannot likely mistake one for the other. Issue: ! Whether there trademark FLAVOR MASTER is a colorable trademarks of MASTER ROAST and MASTER BLEND.
the basic demands of fair play. A corporation has an exclusive right to the use of its name. The right proceeds from the theory that it is a fraud on the corporation which has acquired a right to that name and perhaps carried on its business thereunder, that another should attempt to use the same name or the same name with a slight variation in such a way as to induce persons to deal with it in the belief that they are dealing with the corporation which has given a reputation to the name. Societes Des Produits Nestl, S.A. v. Court of Appeals Doctrine: A trademark has been generally defined as any word, name, symbol or device adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured and sold by others. Facts: ! CFC Corporation filed with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) an application for the registration of the trademark FLAVOR MASTER for instant coffee. This was granted and subsequently published in the Official Gazette of the BPTTT.

Held: ! Colorable imitation denotes such a close or ingenious imitation as to be calculated to deceive an ordinary purchaser giving such attention as a purchaser usually gives, as to cause him to purchase the one supposing it to be the other. As no set of rules can be deduced in cases of infringement or trademark, the Court ruled that the likelihood of confusion is a relative concept; thus, each case must be decided on their merits. A manufacturers trademark should be entitled to protection. And in order to do so, jurisprudence has developed two kinds of tests: 1. Dominancy Test Focuses on the similarity of the prevalent features of the competing trademarks which might cause confusion or deception and thus constitute infringement. 2. Holistic Test Mandates that the entirety of the marks in question must be considered in determining confusing similarity. In finding for the petitioner, the dominancy test should be the one applied in this case (in lieu of CA agreeing with the application of the holistic test), because should ordinary purchases be undiscerningly rash in buying such common and inexpensive household products as instant coffee, then they will be less inclined to closely examine specific details of similarities and dissimilarities. In rejecting the application of the totality test, the Court also held that it is contrary to elementary postulate of law on trademarks and unfair competition that confusingly similar is to be determined on the basis of visual, aural, connotative comparisons which only rely on the visual comparison between two trademarks. With regard to the word MASTER, it is neither a generic nor descriptive term, as it can be validated as a trademark and may be legally protected. As in this case, Nestls use of the word MASTER is a suggestive term brought about by their advertising scheme, subtly connoting something about the product, are eligible for protection in the absence of secondary meaning. Smith v. Chanel, Inc. Facts: ! Smith advertises a fragrance called TaRons Second Chance as a duplicate of appellees Chanel No. 5 at a fraction of the latters price. That being so, Chanel was granted a preliminary injunction prohibiting any reference to Chanel No. 5 in the promotion or sale of the product. This appeal followed. The action herein rests upon a singe advertisement published in Specialty Salesmen which offered the TaRon Line of Perfumes for sale. It stated that the perfume duplicates 100% perfect the exact scent of the worlds finest and most expensive perfumes and colognes at prices that will zoom sales to volumes you have never before experienced. In the said advertisement, Chanel was one of the scents mentioned that it copied. Chanel, in this case, raises the principal question of whether one who has copied an unpatented product sold under a trademark may use the trademark in his advertising to identify the product he has copied. Issue: ! Whether or not the use of the Chanel mark in the advertisement herein violates the Lanham Act. ! Whether or not it violates the common law of unfair competition. Ratio: ! No. It may not be enjoined either under the Lanham Act or the common law of unfair competition so long as it does not contain misrepresentations or create a reasonable likelihood that the purchasers will be confused as to the source, identity or sponsorship of the product. In any proceeding under the Lanham Act, the gist is a false description or representation or a use of the mark which is likely to cause confusion or mistake to deceive purchasers as to the source of origin of such goods or services The act does not prohibit a commercial rivals truthfully denominating his goods as a copy of a design in the public domain, though he uses the name of the designer to do so. Indeed it is difficult to see any other means that might be employed to inform the consuming public of the true origin of the design.

! There is no violation of the common law on unfair competition. Unfair competition must be grounded in either deception or appropriation of the exclusive property of the plaintiff. In this case, it is conceded that the pirating of the design is lawful and proper. The only property alleged to be invaded here is the goodwill embodied in the trademark but the right of the plaintiff in the mark is limited to dilution which is brought about by confusion as to source or affiliation. The use of anothers mark to identify the trademark owners product in comparative advertising is not prohibited by either statutory or common law, absent misrepresentation regarding the products or confusion as to the source. The only legal relevance of a trademark is to impart information as to the source or sponsorship of the product for reasons grounded in the public policy favoring a free, competitive economy. Here, since Chanels perfume was unpatented, Smith had the right top copy it. There was a strong public interest in their doing so for imitstion is the life blood of competition. But this public benefit could be lost if Smith could not tell potential purchasers that the products was the equivalent of Chanels. His chief weapon is his ability to represent his product as being equivalent and cheaper. 2 principal arguments are made for protection of trademark values other than source identification: 1. Creation of the other values inherent in the trademark require expenditure of great effort skill and ability and that the competitor should not be permitted to take a free ride on the trademark owners widespread goodwill and reputation. A large sum of money expenditure does not create legally protectable rights. They are not entitled to monopolize the desire for the unpatented product. By taking his free ride the copyist albeit unintentionally, serves an important public interest by offering comparable goods at lower prices. On the other hand, the trademark owner perhaps equally without design, sacrifices public to personal interests by seeking immunity from the rigors of competition. 2. Even in the absence of confusion as to source, use of the mark creates a serious threat to the uniqueness and distinctiveness of the mark and if continued would create a risk of making a generic or descriptive term of the words. However, this has little weight in the case at bar since the mark is not being used as a generic term. It is used to describe the product not to identify their own. They do not label their product with that mark. Thus, absent any misrepresentation or confusion as to source of sponsorship, a seller in promoting his own goods may use the mark of another to identify the latters goods. Boston Athletic v. Sullivan Facts: ! Boston Athletic Association (BAA) is a charitable organization whose principal activity has been conducting the Boston Marathon since it was first run in 1987. At the exposition, various businesses set up booths and sell shirts, running apparel and sports items. On the other hand, Sullivan herein retails apparel under the name Good Life at a store in Hopkinton which imprints and distributes merchandise including shirts to the trade. In 1986, to defray costs, BAA entered into a licensing agreement with Image Impact (Image) for the use of BAAs marks on wearing apparel including shirts. Thus, any unauthorized use on the merchandise of the name BOSTON MARATHON or a similar name or a colorable imitation thereof would violate the exclusive rights of BAA and its licensee. ! In 1986 and early 1987, Beau Tease and Sullivan sold in the Boston area shirts imprinted with Hopkinton-Boston (Im not sure if this was what was printed, couldnt find a picture online eh). For this reason, BAA brought a suit praying for preliminary injunction which eventually reached the federal court. In their complaint, BAA and Image alleged that the shirts with logos described above infringed on BAAs marks and claims confusion under the Lanham Act and dilution. However, the court did not enjoin Sullivan in any way but it preliminarily enjoined Beau Tease from

selling shirts directly at the exposition or marketing to anyone who it knew would sell Beau Teases 1987 shirts at the exposition. When it came back to the district court, the plaintiffs moved to amend their complaint by including the 1988 shirts and a design BOSTON 19xx. However, the court again dismissed the case and stated that the public would not infer that the logos were sponsored by BAA. There was no confusion between the shirts. ! It is the position of Sullivan that BAA is not entitled to protection for the reason that BOSTON MARATHON has become a generic terms and is now refers to both the races and the services rendered by BAA and that the use of the shirts by Sullivan since 1987 constitutes prior usage. Issue: ! Whether or not the mark has become generic. ! Whether or not Sullivan has prior usage right. ! Whether or not there is a likelihood of confusion. Ratio: ! No. The burden of proof is on the party seeking to have a registered mark declared a generic mark to show that it has become so. Here, the defendants failed to meet the burden of proof. ! No. The race herin was originally called the Boston AA Marathon. Since 1917 the race has been called so. This use clearly undercuts the prior use claims of Sullivan as to the words per se. As for the use of the words on the apparel, BAA is entitled to enjoin the use of its marks on such items. ! Here, the likelihood of confusion is to be seen at what is called a promotional goods issue where the likelihood of confusion inquiry will focus on whether the purchasing public is likely to believe that the sponsor of the Boston Marathon produces licenses, or otherwise endorses defendants shirts. There are 8 factors to be weight in assessing likelihood of confusion: 1. 2. 3. 4. Similarity of the marks Similarity of the goods Relationship between channels of trade Relationship between the parties advertising Intent 5. 6. 7. 8. Classes of prospective purchasers Evidence of actual confusion Intent in adopting the mark Strength of the mark o Look at the total effect of the designation and not at the individual features. o The defendants herein introduced no evidence showing that they took steps to turn their similar products into dissimilar ones by clearly distinguishing their products and their lack of BAA sponsorship. o It was held here that the two marks are more than similar, it is identical. o Same goods: shirts and other wearing apparel. o Sold primarily in the Boston-area retail shops, at the exposition and along the race courses. o Seasonal (during race dates) o They display it in store windows, and in booths at the exposition. o The virtual identity between the parties' sales outlets and advertising methods, as well as the purchasing public's lack of opportunity to exercise discrimination in making such purchases, all point toward a likelihood of confusion. o it is the general public that is the market for the shirts. o Plaintiffs here submit evidence that the public was continually exposed to the fact of BAAs sponsorship of the Boston Marathon. On the other hand, there is no evidence presented by the defendants as to contradict these assertions. o People were actually confused as to who sponsored the shirts as evidenced by testimony of the member of the public. o The defendants chose designs that obviously referred to the Marathon, put those designs on the same types of clothing sold by the plaintiffs, sold those shirts at the same time and in the same manner as the plaintiffs to the
Similarity of the Marks
Similarity of the Goods Channels of trade, advertising, classes of purchasers (treated simultaneously)
Evidence on actual confusion

same general purchasing public. Defendants' actions clearly show their intent to trade on BAA's sponsorship and management of the Boston Marathon. o The Boston Marathon is one of the oldest and most prestigious marathons in this country. BAA, as a charitable organization, does not have the same impetus to advertise that a forprofit company would have. Nonetheless, its broad media exposure serves a similar purpose; it makes known to the public the BAA's sponsorship of the Boston Marathon. o Broad protection of the mark is warranted. incontestable status of the mark for having been in continuous use for 5 consecutive years and no final adverse decision to petitioners claim of ownership or right to registration were pending. On the other hand, respondent Dollar Park and Fly (Dollar) also provides for long term parking services in Portland Oregon. For this reason, PNF filed an action for infringement in 1978 and requested the court to permanently enjoin the respondent from using the words Park N Fly in connection with its business. Countering, repsondents claim that the mark is a generic term. ! After trial, the District Court (DC) found that the mark is not generic and observed that an incontestable mark cannot be challenged on the ground that it is merely descriptive. Thus, DC enjoined the Dollar from using the Park and Fly phrase or any mark similar to Park N Fly. CA reversed the decision and held that although incontestability provides a defense against the cancellation of a mark, it may not be used offensively to enjoin anothers use. Thus, respondent could defend the infringement action by showing that the mark was merely descriptive. Based on its own examination of the record, the Court of Appeals then determined that petitioner's mark is in fact merely descriptive, and therefore respondent should not be enjoined from using the name "Park and Fly. Issue: ! Whether or not the mark is merely descriptive. Ratio: ! No. The mark is already considered as incontestable hence, its descriptiveness cannot be questioned. A defendant faced with an incontestable mark cannot defend by claiming that the mark is invalid because it is descriptive. There is nothing in the law which distinguishes between a registrants offensive and defensive use of an incontestable mark. On the contrary, the declaration of the law that the registrant has an exclusive right to use the mark indicates that incontestable status may be used to enjoin infringement by others. The language of the Lanham Act also refutes any conclusion that an incontestable mark may be challenged as merely descriptive. A mark that is merely descriptive of an applicant's goods or services is not registrable unless the mark has
Strength of the mark
In order to establish an infringement in a promotional goods case, the plaintiff has the burden of showing that prospective purchasers are in fact likely to be confused or misled into thinking that the defendants product was produced, licensed or otherwise sponsored by the plaintiff. There can be no doubt that the language and design on defendant's shirts intentionally calls attention to an event that has long been sponsored and supported by the BAA--an event that is, in fact, the subject of its registered mark. Defendants' shirts are clearly designed to take advantage of the Boston Marathon and to benefit from the good will associated with its promotion by plaintiffs. Defendants thus obtain a "free ride" at plaintiffs' expense. Given the undisputed facts in this case that: 1. Defendants intentionally referred to Boston Marathon on its shirts 2. Purchasers were likely to buy the shirts precisely because of that reference It is fair to presume that there is a likelihood of confusion as to the shirts source. Park N Fly v. Dollar Park and Fly Inc. Facts: ! Park N Fly (PNF) operates long term parking lots near airports in Boston, Houston, Cleveland, Memphis and San Francisco. It was issued a registration in 1971 for its mark and 6 years later, it filed an affidavit with the Patent Office to establish the

secondary meaning. Before a mark achieves incontestable status, registration provides prima facie evidence of the registrant's exclusive right to use the mark in commerce. The Lanham Act expressly provides that before a mark becomes incontestable an opposing party may prove any legal or equitable defense which might have been asserted if the mark had not been registered. Ibid. Thus, 33(a) would have allowed respondent to challenge petitioner's mark as merely descriptive if the mark had not become incontestable. With respect to incontestable marks, however, 33(b) provides that registration is conclusive evidence of the registrant's exclusive right to use the mark, subject to the conditions of 15 and the seven defenses enumerated in 33(b) itself. Mere descriptiveness is not recognized by either 15 or 33(b) as a basis for challenging an incontestable mark. Indeed, a conclusion that incontestable status can provide for the basis for enforcement of the registrants exclusive right to use a trade or service mark promotes the goals of the statute. It provides national protection of trademarks in order to secure the owner of the mark of the goodwill of his business and to protect the ability of consumers to distinguish between producers. The incontestability provisions, as the proponents of the Lanham Act emphasized, provide a means for the registrant to quiet title in the ownership of his mark. Congress expressly provided in 33(b) and 15 that an incontestable mark could be challenged on specified grounds, and the grounds identified by Congress do not include mere descriptiveness. The Lanham Act allows a mark to be challenged at any time if it becomes generic, and, under certain circumstances, permits the nontrademark use of descriptive terms contained in an incontestable mark. More generally, respondent is simply wrong to suggest that third parties do not have an opportunity to challenge applications for trademark registration. If the Patent Office examiner determines that an applicant appears to be entitled to registration, the mark is published in the Official Gazette Within 30 days of publication, any person who believes that he would be damaged by registration of the mark may file an opposition. Registration of a mark provides constructive notice throughout the United States of the registrant's claim to ownership. Within five years of registration, any person who believes that he is or will be damaged by registration may seek to cancel a mark. A mark may be canceled at any time for certain specified grounds, including that it was obtained fraudulently or has become generic. The court concluded that the holder of a registered mark may rely on incontestability to enjoin infringement and that such an action may not be defended on the grounds that the mark is merely descriptive. Levi Strauss v. Clinton Apparelle Facts: ! A complaint for trademark infringement was instituted by Levi Strauss against Clinton together with Olympian Garments before the RTC which alleged that the latters jeans under the brand name Paddocks uses a device which is substantially, if not exactly similar to the Dockers and Design trademark owned and registered in the name of Levi without its consent. The trial court issued an order granting the TRO applied for. Subsequently, it issued another order granting the writ of preliminary injunction on the ground that the marks DOCKERS AND DESIGN and PADDOCKS are confusingly similar. With the denial of their MR, petitioners are not before this court seeking a review of the CAs decision in disregarding the confusing similarity between the marks and for concluding that the erosion of the marks is not protectable by injunction. Issue: ! Whether or not the marks are confusingly similar. ! Whether or not there is dilution. Ratio: ! No. The registered mark of the petitioners in this case consists of 2 elements: 1. The DOCKERS; and 2. The winges dhaped design or logo. Notably however, there is one registration for both the features of the mark giving the impression that the 2 should be considered as a single unit.

On the other hand, Clintons mark uses PADDOCKS on top of a logo which according to petitioners is a slavish imitation of the DOCKERS design. Bit could thus be said that respondent only appropriates petitioners logo and not the work mark DOCKERS; it uses only a portion of the registered trademark and not the whole. Given the single registration of the trademark Dockers and Design and considering that respondent only uses the assailed device but a different word mark, the right to prevent the latter from using the challenged Paddocks device is far from clear. Stated otherwise, it is not evident whether the single registration of the trademark Dockers and Design confers on the owner the right to prevent the use of a fraction thereof in the course of trade. It is also unclear whether the use without the owners consent of a portion of a trademark registered in its entirety constitutes material or substantial invasion of the owners right. It is likewise not settled whether the wing-shaped logo, as opposed to the word mark, is the dominant or central feature of petitioners trademarkthe feature that prevails or is retained in the minds of the publican imitation of which creates the likelihood of deceiving the public and constitutes trademark infringement. From the abovementioned, the right of Levi Strauss to injunctive relief has not been clearly and unmistakably demonstrated. The right has yet to be determined. Likewise there is no proof that there is material and substantial invasion of their right to warrant the issuance of the writ. Nether were there any showings of urgent and permanent necessity for the writ to prevent serious damage. ! There is no dilution. Trademark dilution is the lessening of the capacity of a famous mark to identify the distinguished goods or services regardless of the presence or absence of: 1. Competition between the owner and the other parties 2. Likelihood of confusion, mistake or deception Subject to the principles of equity, the owner of a famous mark is entitled to an injunction against another persons commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark. For there to be dilution, there must be a finding that: 1. The trademark sought to be protected is a famous mark 2. The use of the mark began after the famous mark became famous 3. Such subsequent use defames the famous mark. In the case at bar, petitioners have yet to establish whether Dockers and Design has acquired a strong degree of distinctiveness and whether the other two elements are present for their cause to fall within the ambit of the invoked protection. International Use Service v. Associated Press Facts: ! Two competing US news services herein were in the business of reporting in the US the news on the WW. Their businesses hinged on getting fact and accurate reports published. Complainant in its bill, defendant in its answer, have set forth in almost identical terms the rather obvious circumstances and conditions under which their business is conducted. The value of the service, and of the news furnished, depends upon the promptness of transmission, as well as upon the accuracy and impartiality of the news, it being essential that the news be transmitted to members or subscribers as early or earlier than similar information can be furnished to competing newspapers by other news services, and that the news furnished by each agency shall not be furnished to newspapers which do not contribute to the expense of gathering it. A bill was filed by the complainant Associated Press herein to retrain the pirating of its news yb defendant in 3 ways: 1. by bribing employees of newspapers published by complainants members to furnish Associated Press news to defendant before publication; 2. by inducing Associated Press member to violate its bylaws and permit defendant to obtain news before publication 3. by copying news from bulletin boards and from early editions of complainants newspapers and selling this, either bodily or after rewriting it, to defendants customers.

In its decision, the DC ruled that the practice amounted to unfair trade. Both parties appealed to the Circuit Court of Appeals which sustained the injunction. Issue: ! Whether or not the defendant may be lawfully restrained from appropriating news taken from bulletins issued by complainant or any of its members, or from newspapers published by them, for the purpose of selling it to defendants clients. Ratio: ! Generally, no since news is considered as publicijuris. The information found in the AP news was not copyrightable as the information is not the creation of a writer but is a report of matters that is the history of the day. It is publici juris. But in this case, the right to restrain is present to the extent necessary to prevent the competitor from reaping the benefits of the complainants efforts and expenditures. The peculiar value of news is in the spreading of it while it is fresh, and it is evident that a valuable property interest in the news, as news, cannot be maintained by keeping it secret. Besides, except for matters improperly disclosed, or published in breach of trust or confidence, or in violation of law, none of which is involved in this branch of the case, the news of current events may be regarded as common property. What we are concerned with is the business of making it known to the world, in which both parties to the present suit are engaged. That business consists in maintaining a prompt, sure, steady, and reliable service designed to place the daily events of the world at the breakfast table of the millions at a price that, while of trifling moment to each reader, is sufficient in the aggregate to afford compensation for the cost of gathering and distributing it, with the added profit so necessary as an incentive to effective action in the commercial world. The service thus performed for newspaper readers is not only innocent but extremely useful in itself, and indubitably constitutes a legitimate business. Not only do the acquisition and transmission of news require elaborate organization and a large expenditure of money, skill, and effort; not only has it an exchange value to the gatherer, dependent chiefly upon its novelty and freshness, the regularity of the service, its reputed reliability and thoroughness, and its adaptability to the public needs; but also, as is evident, the news has an exchange value to one who can misappropriate it. The judge in this case approached the issue from the perspective of unfair competition and found that there is a quasi-property right in the news as it is stock in trade to be gathered at the cost of the enterprise, organization, skill, labor and money to be distributed and sold to those who will pay money for it. Given that the news in this case has economic value, a company can have limited proprietary interest in it against a competitor who would attempt to take advantage of thei information. Stripped of all disguises, the process amounts to an unauthorized interference with the normal operation of complainant's legitimate business precisely at the point where the profit is to be reaped, in order to divert a material portion of the profit from those who have earned it to those who have not, with special advantage to defendant in the competition because of the fact that it is not burdened with any part of the expense of gathering the news. The transaction speaks for itself, and a court of equity ought not to hesitate long in characterizing it as unfair competition in business. In a court of equity, where the question is one of unfair competition, if that which complainant has acquired fairly at substantial cost may be sold fairly at substantial profit, a competitor who is misappropriating it for the purpose of disposing of it to his own profit and to the disadvantage of complainant cannot be heard to say that it is too fugitive or evanescent to be regarded as property. It has all the attributes of property necessary for determining that a misappropriation of it by a competitor is unfair competition because contrary to good conscience. In the present case, the fraud upon complainant's rights is more direct and obvious. Regarding news matter as the mere material from which these two competing parties are endeavoring to make money, and treating it therefore as quasi-property for the purposes of their business because they are both selling it as such, defendant's conduct differs from the ordinary case of unfair competition in trade principally in this -- that, instead of selling its own goods as those of complainant, it substitutes misappropriation in the place of misrepresentation, and sells complainant's goods as its own.

Besides the misappropriation, there are elements of imitation, of false pretense, in defendant's practices. The device of rewriting complainant's news articles, frequently resorted to, carries its own comment. The habitual failure to give credit to complainant for that which is taken is significant. Indeed, the entire system of appropriating complainant's news and transmitting it as a commercial product to defendant's clients and patrons amounts to a false representation to them and to their newspaper readers that the news transmitted is the result of defendant's own investigation in the field. But these elements, although accentuating the wrong, are not the essence of it. It is something more than the advantage of celebrity of which complainant is being deprived. Sears Roebuck v. Stifel & Co. Facts: ! Respondent in this case, Stiffel Company secured design and mechanical patents on a pole lamp: The DC held that the Sears lamp was a substantially exact copy of Stiffels and that the 2 lamps were much alike both in appearance and function thus, confusion is likely and in fact, some confusion has already occurred. On these findings, the DC held that Sears was guilty of unfair competition. CA affirmed. Issue: ! Whether or not there is unfair competition. Ratio: ! There is no unfair competition. To promote progress of science and useful arts, the constitution empowered the congress to enact the first federal patent and copyright law and ever since that time, it has fixed the condition upon which patents and copyrights shall be granted. The grant of a patent is a grant of statutory monopoly. These are meant to encourage the inventor by rewarding him with the right to exclude others from the use of his invention for a limited amount of time. During that time, no one may make use, or sell the patented product without the patentees authority. While at the same time preserving free competition, obviously a state could not extend the life of a patent beyond the expiration date or give a patent on an article which lacked the level of intention required for federal patents. In the present case, the pole lamp sold by Stiffel has been held to be not entitled to the protection of either a mechanical or design patent. Being an unpatentable article, it is in the public domain and may be made and sold by whoever chooses to do so. Thus, Sears had every right to sell the same under the federal patent laws. That Stiffel originated the pole lamp and made it popular is immaterial. Sharing in the goodwill of an article unprotected by patent or trademark is the exercise of a right possessed by all -- and in the free exercise of which the consuming public is deeply interested. The mere inability of the public to tell the two identical products apart is not enough to support an unfair competition claim. Because of the federal patent laws, a state may not, when the article is unpatented and uncopyrighted prohibit the copying of the article itself
These proved to be a decided commercial success and was soon put on the market. However, a substantially similar identical lamp which sold more cheaply was sold by Sears subsequently. Thus, Stiffel brought this action against Sears in the US DC for claiming that Sears 1. copied the design and infringed on the patents of Stiffel; and 2. caused confusion in the trade as to the source of the lamps thereby engaging in unfair competition under Illinois law.

or award damages for such copying. Doubtless a State may, in appropriate circumstances, require that goods, whether patented or unpatented, be labeled, or that other precautionary steps be taken to prevent customers from being misled as to the source, just as it may protect businesses in the use of their trademarks, labels, or distinctive dress in the packaging of goods so as to prevent others, by imitating such markings, from misleading purchasers as to the source of the goods. Alhambra v. Mojica Facts: ! Alhambra has been manufacturing cigars of a certain kind and form for a long period of years and during that time has used upon said cigars a paper ring or band of chocolate-brown color with letters and lines upon it in gold (heretofore ring). Such ring has become well known to the trade and was of great value in the sale of its cigars. However, defendant Mojica likewise commenced to use a band or ring very similar to that of Alhambra and it is upon this use that the present action is founded. As it appears on evidence, the rings of Mojica are of two different colors but of the same shape and with substantially the same markings and are about 1/5 inch wide and are, like Alhambras divided into 3 parts. The cigars sold by Mojica with the band described whether of brown or green are formed almost exactly like the cigars sold by the plaintiff and with substantially the same color and style of wrapper. ! In light of the foregoing, Alhambra filed a case for unfair competition before the CFI. Said court declared that the cigars indeed constitute unfair competition thereby prohibiting Mojca from using said bands or rings forever. Issue: ! Whether or not Mojica is guilty of unfair competition. Ratio: ! It is clear that, the cigars having substantially the same appearance and color, the same size, the same shape and the same style and color of band, the deception is not only possible but is very probable. Taken as a whole, the cigars disarms and deceives the purchaser who is desirous of purchasing cigars of Alhambra. They are so similar, packed as they are in a box, that one would have to examine closely the reading upon the rings in order to distinguish the difference. Unfair competition consists in passing off or attempting to pass off upon the public the goods or business of one person as and for the goods or business of another. It consists essentially in the conduct of a trade or business in such a manner that there is either an express or implied representation to that effect. It may be stated broadly that any conduct the end and probable effect of which is to deceive the public or pass off the goods or business of one person as and for that of another, constitutes actionable unfair competition. It is a tort and a fraud. No one has a right to dress up his goods or otherwise represent them in such a manner as to deceive an intending purchaser and induce him to believe he is buying the goods of another. Nothing less than conduct tending to pass off one man's goods or business as that of another will constitute unfair competition. Actual or probable deception and confusion on the part of customers by reason of defendant's practices must always appear. No one has a right to avail himself of another's favorable reputation in order to sell his own goods. A demand for goods created belongs to the advertiser and he will be protected therein against unfair competition by another who seeks in any way to take advantage of such advertisements to sell his own goods. In unfair competition, it is not necessary to show that any person has been actually deceived by the defendants conduct and lead to purchase his goods in the belief that they are the goods of the plaintiff. It is sufficient to show that such deception will be the natural and probable result of the acts of the defendant. Actual or probable deception and confusion may be shown for if there is no probability of deception, there is no unfair competition. Purchasers may be deceived and misled into purchasing the goods of one person under the belief that they are purchasing the goods of another person whose goods they intended to buy although they do not know who is the actual proprietor of the genuine goods. They are so deceived when they have in mind to purchased goods coming from a definite, although unknown, with which goods they are acquainted, although they neither know nor care who is the actual proprietor of such goods. the ultimate purchaser is the one in view and it is sufficient if he is liable to be deceived.

Unfair competition is always a question of fact and the ultimate question to be determined is whether or not the name or mark used by the defendant has previously come to indicate and designate the goods of the plaintiff, to state it in another way, whether defendant as a matter of fact, is, by his conduct, passing of the goods of the defendant as plaintiffs goods or his business as plaintiffs business (ergo, whether or not the public is likely to be deceived). However, actual fraudulent intent is not needed where the necessary and probable tendency of the defendants conduct is to deceive the public and pass off his goods or business as and for that of another, especially where the only preventive relief against continuance of the wrong is sought or granted. Even if resemblance is accidental and not intentional, plaintiff is entitled to protection against its injurious results to his trade. Here, as to the brown ring, there is clear unfair competition. However the court held that the use of the green ring does not constitute unfair competition since it is easily distinguishable form the ring used by Alhambra. MA Clarke v. Manila Candy Co. Facts: ! MA Clarke (Clarke) is a corporation engaged in the manufacture of a large line of confectionary products and since the year 1905, Clarke has used its registered trademark rooster to designate his various candy products and that no other manufacturer or dealer of candy in the Philippines has used such representation in connection with the manufacture and sale of candy in any form until Manila Candy Co. (MCC). Besides the use, display and advertising of the mark herein plaintiff has used the same for public festivals held in Manila as paper mache roosters of large size, carrying its candies. As such, the mark has been known and are known to the trade in these Islands, both wholesale and retail and to the consumers of cany as rooster or Manoc brand of Clarke. ! On the other hand, MCC herein, aware of the usage of the mark of Clarke, shortly after its incorporation, began using a similar mark in connection with the sale of its candies. Notwithstanding a criminal prosecution, MCC continued to use the word Manoc as a mark and alleges that it is a generic term for chicken and that because of the limited number of adjectives it can use, any representation of such animal would lead to such mark. Allegedly, MCC also sells its goods with the general appearance of the goods of the Clarke herein in such a way that it is likely to influence the purchasers to believe that it is that of Clarkes. ! Clarke filed a case against MCC praying for the issuance of a TRO and that judgment be rendered enjoining them from using the said mark or any other imitation thereof perpetually. In its answer however, defendant herein alleges that the exact nature of the action is impossible to define as the complaint of the plaintiff embraces both causes of action, although they (infringement and unfair competition) are essentially different and distinct. MCC herein alleges that the fact that Clarke itself is wholly unaboe to determine the nature of the case as one for infringement or unfair competition demonstrates quite clearly that it is neither. Issue: ! Whether this is a case for infringement or unfair competition. ! Whether or not there is unfair competition. Ratio: ! It is a case of unfair competition. Cases may well arise wherein the conduct complained of constitutes a wrong under neither theory, or wherein the complainant may be satisfied that he can establish his right to relief under one or the other theory, though he is in doubt as to which theory will prove acceptable to the court, and in such cases the plaintiff should not be forced to an election of either theory in the introduction of evidence in support of the prayer of his complaint. He may state in his complaint as many distinct causes of action as he may deem proper, the only limitation therein is if the complaint states more than one cause of action, each distinct cause of action must be set forth in a separate paragraph containing all the facts constituting the particular cause of action. The infringement of a trade-mark is, in truth, a form of unfair competition. The law, however, allows relief from the wrong done by a trade-mark infringement under circumstances and upon proof which would not entitle the plaintiff to relief upon the theory of unfair competition where it does not appear that there was a technical

infringement of a trade-mark. It is true that under our statute, the grant of relief under one precludes the grant of relief under the other, but this does not mean that the plaintiff in cases of this kind may not allege in support if his prayer of relief facts which he believes will establish his claim that there has been either an infringement or unfair competition and thus secure the relief prayed for, whichever theory the court of opinion is sustained by the proof adduced at the trial. ! There is unfair competition. In this case, an examination of the exhibits presented before the courts leaves no room for doubt that the dominant and striking pictorial feature of each and all of them, is a single rooster standing in an attitude of challenge. No reason has been suggested for the use of this particular design with its predominant display of two roosters as the trade-mark of the defendant corporation other than that alleged by the plaintiff; that is to say, that the new manufacturer, well knowing that the plaintiff had used a rooster as his trade-mark, hoped to secure an unfair advantage by misleading the public, and inducing it to believe that its candies bearing a representation of two roosters were made in the plaintiff's factory, which had always marked its goods with one or more pictures of a single rooster, and at the same time had made extensive use of this design in connection with its advertising campaigns. Why of all the birds in the air, and all the fishes in the sea, and all the animals in the face of the earth, defendants had to select 2 roosters as its trademark despite being aware of the fact that such animal has already been used by Clarke. There is nothing in the picture of one or more roosters which in itself is descriptive of the goods sold by the plaintiff or by the defendant corporation, or suggestive of the quality of these goods. A cat, a dog, a carabao, a shark or an eagle stamped upon the container in which candies are sold would serve as well as a rooster for purposes of identification as the product of defendant's factory. Why did defendant select two roosters as its trade-mark? The fact that defendant used two roosters, and that these rooster, unlike the rooster in plaintiff's trade-mark, are highly colored, and the further fact that the words "Manila Candy Co., Ltd." are used in connection with defendant's trade-mark, are wholly insufficient to relieve the design used by the defendant of the vice of an unfair and misleading use of the predominant idea set forth in plaintiff's unregistered trade-mark, in such manner as to be likely to cause confusion in the minds of the ordinary purchasers as to the origin of the goods. Certainly, under our statute, all difficulty can and should be avoided by limiting relief prayed for on the ground of trademark infringement to cases wherein there is an exact or at least a colorable imitation of the original trade-mark, and in other cases applying the provisions of section 7 of the statute (Act No. 666) which defines the offense of unfair competition. That section expressly provides that unfair competition exists when one selling his goods "gives them the general appearance of goofs of another manufacturer or dealer, either in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer, and who clothes the goods with such appearance for the purpose of deceiving the public and defrauding another of his legitimate trade," and it is further provided that "this section applied in cases where the deceitful appearance of the goods, misleading as to origin or ownership, is effected not by means of technical trade-marks, emblems, signs, or devices, but by the general appearance of the package containing the goods, or by the devices or words thereon, even though such packages, devices, or words are not by law capable of appropriation as trade-marks. Under the precise terms of this statute, the use under the conditions therein specified of devices or words, which would be likely to cause confusion as to the origin of the goods, although they may not amount to a colorable imitation of the form and arrangement of a trade-mark, constitutes the offense of unfair competition. Dy Buncio v. Tan Tiao Bok Facts: ! Dy Buncio has been engaged in Manila as a merchant in importing Formosan Tea and has during that time been distributing and selling the same in the Philippine market in original packages containing about 5 ounces. These were enveloped in a wrapper with the following features: 1. With an image of a Chinese fruit shaped like a pear; 2. With embellished border of a conventional tracery;

3. In the center of the main body of the design and the superior trunk are spaces containing Chinese characters representing the Chinese name of the exporter in Formosa. 4. On the right side of the package indicates in English Formosa Tea sold by Guan Leong Daitotei Formosa It may be stated herein that the other persons in the Philippines besides Dy Buncio have in the past, and are now engaged in the importation of tea from Formosa and it is admitted herein that source comes to this market in packages with the same form of wrapper. ! On the other hand, Tan Tiao Bok (Tiao Bok), a native from Formosa formerly employed by Dy Bunsio began to import tea from Formosa o n his own account with a view to selling it in the Philippines. For this, he adopted a mark which he duly registered with the Bureau of Commerce and Industry. In his application he stated that his mark contains the following characteristics: 1. Contains 2 birds placed one in front of the other with tails going up and places in such a position as to form a lyre. 2. With a flowerport with flowers in it 3. 2 chinese marks corresponding to the phrase, trademark. 4. On the right side, it was indicated that the product was Formosa Tea sold by Ngo Teck Co. Daitotei Formosa. ! Dy Buncio filed a case for unfair competition against Tiao Bok. Issue: ! Whether or not there is unfair competition. Ratio: ! There is no unfair competition since objectionable simulation is not made out. Some resemblance there undoubtedly is, but in the courts opinion, it is not such as would naturally lead intending purchasers to believe that the goods offered are the same as that sold by the plaintiffs. The only individual who would be likely to take notice of these resemblances, on having his attention directed to the packages, is the one who is unfamiliar with either. In this case, the form of package used by both parties is the same as that adopted by all merchants in the tea industry in the country and it is a matter of common observation that the articles supplying the simplest human needs are marketed in conventional containers of the appropriate size and of a design made almost uniform in the case of each article by immemorial custom. No one can acquire any exclusive right in these standardized forms and styles. As to the marks used in the package, the general result is so different that the court considers it unlikely that a person whose eye is accustomed to the lines of the plaintiffs design would for a moment mistake the defendants mark for it. In whatever aspect the rival marks be viewed, we are of the opinion that the resemblance between the two designs is not sufficiently marked to afford just cause for complaint on the part of the plaintiff; and we do not think that the case is altered by the circumstance that the reading matter in both is in the usual red Chinese characters, while the body of both designs is in green, though of differing shades. In order that there may be deception of the buying in the sense necessary to constitute unfair competition, it is necessary to suppose a public ACCUSTOMED TO BUY AND THEREFOR TO SOME EXTENT FAMILIAR WITH THE GOODS IN QUESTION. The test here is to be found in the likelihood of deception of persons in some measure acquainted with an established design and desirous of purchasing the commodity with which that design has been associated. The test is not found in the deception, or possibility of the deception, of the person who knows nothing about the design which has been counterfeited, and who must be indifferent as between that and the other. We must look at the ORDINARY INTELLIGENT BUYER and in this case, there is no such probability or likelihood of confusion. Ang Si Heng v. Wellington Facts: ! Wellington is engaged in the business of manufacturing shirts, pants, drawers and other articles of clothing for men and women with a trademark registration WELLINGTON. It does not appear however, that the mark herein was renewed after 1938 nor their trade name after 1946. On the other hand, Benjamin Chua herein applied for the registration of a business name WELLINGTON DEPARTMENT STORE on 1946 which was approved by the Bureau of Commerce. Likewise, it does not appear that his application has been renewed and neither does it

appears that the business name WELLINGTON COMPANY has also been renewed. ! Wellington filed a case for unfair competition alleging that the use of the words WELLINGTON DEPARTMENT STORE as a business name and as a corporate name by Benjamin deceives the public into buying Benjamins goods under the mistaken belief that the names are the plaintffs or have the similar source. In his defense, Benjamin states that plaintiff are engaged in different businesses since the he is engaged in the business of selling shoes, hats, toys perfumes, bags, apparels and the like (different from those of Wellingtons). ! The lower court dismissed the complaint and held that the term Wellington is either a geographical name. Even assuming that it is a surname, it cannot also be validly registered as a tradename. Issue: ! Whether or not there is unfair competition. Ratio: ! There is no unfair competition. While there is a similarity in this case, there is no confusion or deception that can arise form the similarity because the defendant is a department store while the former does not purport to be so. The name used by the defendant indicates not the manufactured articles or any similar merchandise but a DEPARTMENT STORE. The department store herein does not even sell any shirt or clothing wear. Admittedly though, it is not necessary that the articles of the paties be exactly similar in order for there to be unfair competition. It is sufficient that the articles fall under a general category. It might be true that, inasmuch as appellees' department store deals on shirts and other articles of wear while appellants produce the same articles, some competition would arise between them. It is not, however, competition that the law seeks to prevent, but unfair competition, wherein a newcomer in business tries to grab or steal away the reputation or goodwill of the business of another. Shell v. Insular Petroleum Facts: ! Shell is a corporation engaged in the sale of petroleum products including lubricating oil contained in packages bearing its trademark, labeled or stenciled thereon. On the other hand, Insular, a limited partnership engaged in collecting used lubricant oil, refined and marketed to the public using its miscellaneous containers which, as described, is generally those that they have on hand with marks on them belonging to the US army or others belonging to Caltex or the Stanvac, or Shell. However, it was stated that before filling the empty drums/containers, the marks are obliterated. In one transaction however (with one Conrado Uichangco), the product was sold in a container bearing the mark SHELL as stenciled without being erased. For the said transaction, Shell instituted a case in the CFI alleging unfair competition and a criminal case under the Revised Penal Code. In the civil case, it was alleged that: 1. In not erasing the marks, Insular intended to mislead the buying public to the prejudice of Shell and the general public; 2. That it also attempted to persuade Shell dealers to purchase its low-grade oil and pass the same to the public as Shell oil by reason of which damages were suffered. CFI rendered a decision ordering Insular to pay Shell the damages. CA reversed on the ground that there is no actual or probable deception and confusion caused on the part of the general public since there was only a single transaction in this case. They did not pass off or attempt to pass off upon the public its goods as the goods of another. There is evidence showing that the use of the defendant of the drum or container with the Shell brand stenciled thereon was with the knowledge and consent of Uichangco. There is also the categorical testimony of Uichangco that defendant's agent did not make any representation that said agent was selling any oil other than Insoil motor oil. The sales invoice states that Insoil Oil was sold. Issue: ! Whether or not there is unfair competition. Ratio: ! There is no unfair competition. Not just because a manufacturer used a container still bearing the competitors marking in the sale of the product can there be a conclusion that the buying public has been

misled or will be misled and therefore, unfair competition is born. The single transaction at bar will not render the act of the defendant an unfair competition in the same way that the appearance of one swallow does not make a season, summer. In this case, in all transactions except the present one , the marks were erased or obliterated and the drum in question did not even reach the buying public. Uichangco testified that Insular did not all make any representation that Insular was selling any oil other than Insoil motor oil, a fact which finds corroboration in the receipt issued for the sale of the drum. Uichangco was apprised beforehand that it would sell Insoil oil in a Shell drum. There was no evidence that defendant or its agent attempted to persuade Uichangco or any Shell dealer, for that matter, to purchase its low-grade oil and to pass the same to the public as Shell oil. Assuming for purposes of argument that the presence of the low-grade oil in the market of Insular contributed to the decrease of the sale of Shell, such does not make Insular liable for unfair competition. There is no prohibition for Insular to sell its goods. It should not be blamed if some of the dealers buy their oil as long as they do not deceive the said dealers. Mcdo v. LC Big Mak Facts: ! Mcdo is a corporation owns a global chain of fast food restaurants with a family of marks including BIC MAC for its sandwiches. On the other hand, McGeorge Food Industries (McGeorge) is a domestic corporation which is a franchisee of Mcdo Philippines. The defendant in this case, LC Big Mak is a domestic corporation also in the fastfood business which applied for the registration of BIG MAK. This was opposed by Mcdo but receiving no reply therefrom, Mcdo filed a case with the RTC for trademark infringement and unfair competition. In their answer, respondents herein claimed that McDo does not have an exclusive right to the mark BIC MAC or to any other similar mark since there is no colorable imitation (yeah right!). Furthermore, they assert that they did not fraudulently pass off their sandwiches as those of McDos burgers. ! The trial court ruled that there is trademark infringement and unfair competition on the ground that the choice of mark by defendant herein is not merely for sentimental reasons but was clearly to take advantage of the reputation, popularity and the established goodwill of McDo. On appeal, the CA reversed the judgment on the ground that there is no colorable imitation as it is not sufficient that a similarity exists in both names but more importantly, the overall presentation or in their essential, substantive and distinctive parts. After a comparison of the marks, the CA found that no confusion would take place or that the ordinary purchaser would be misled by it. It found that McDos product is a double decker sandwich sold in a Styrofoam box with McDos logo and trademark and to order such burger, one would need to go into a McDo chain. To buy one, one needs to look for a Mcdonalds chain and enter it before he can find a burger which carry such mark. On the other hand, BIG MAK sell their goods through snack vans. Issue: ! Whether or not the mark BIC MAC is registerable. ! Whether or not there is unfair competition. Ratio: ! The mark herein is distinctive and is not barred from registration contrary to the position of LC BIG MAK. The mark should be treated in its entirety and not dissected. ! There is unfair competition. There are 2 types of confusion that could arise form the use of similar or colorable imitation marks: 1. Confusion of goods (product confusion) where the ordinary prudent purchaser would be induced to buy the product in the belief that he was purchasing the other. 2. Confusion of business (source of origin) where the purchaser would buy the product assuming it to originate with the plaintiff and the public would then be deceived either into that belief or into the belief that there is some connection between the parties (which does not exist). Whether a hamburger is single, double or triple-decker, and whether wrapped in plastic or styrofoam, it remains the same hamburger food product. Even respondents' use of the "Big Mak" mark on nonErandio, Athena Louise 3A | Batch 2014 | 75

hamburger food products cannot excuse their infringement of petitioners' registered mark, otherwise registered marks will lose their protection under the law. The registered trademark owner may use his mark on the same or similar products, in different segments of the market, and at different price levels depending on variations of the products for specific segments of the market. The Court has recognized that the registered trademark owner enjoys protection in product and market areas that are the normal potential expansion of his business. Clearly in this case, there is a likelihood of confusion since respondents have adopted in BIG MAK not only the dominant but also all the features of MIC MAC. Applied to the same food product, the marks will likely result in confusion in the public mind. In this case, the court took into consideration the aural and visual effect of the marks. Indeed, a person cannot distinguish "Big Mac" from "Big Mak" by their sound. When one hears a "Big Mac" or "Big Mak" hamburger advertisement over the radio, one would not know whether the "Mac" or "Mak" ends with a "c" or a "k." The essential elements of an action for unfair competition are: 1. Confusing similarity in the general appearance of the goods (which may result not only from the similarity in marks but also from other external factors in the packaging or presentation). 2. Intent to deceive the public and defraud a competitor (which may be inferred from the similarity of the goods) Unfair competition is broader than trademark infringement and includes passing off goods with or without trademark infringement. Trademark infringement is a form of unfair competition. Trademark infringement constitutes unfair competition when there is not merely likelihood of confusion, but also actual or probable deception on the public because of the general appearance of the goods. There can be trademark infringement without unfair competition as when the infringer discloses on the labels containing the mark that he manufactures the goods, thus preventing the public from being deceived that the goods originate from the trademark owner. In this case, the dissimilarities are so minor compared to the similarities in the marks. If respondents sold egg sandwiches only instead of hamburger sandwiches, their use of the "Big Mak" mark would not give their goods the general appearance of petitioners' "Big Mac" hamburgers. In such case, there is only trademark infringement but no unfair competition. However, since respondents chose to apply the "Big Mak" mark on hamburgers, just like petitioner's use of the "Big Mac" mark on hamburgers, respondents have obviously clothed their goods with the general appearance of petitioners' goods. Coca-Cola Bottlers v. Quintin Gomez Facts: ! Coca-Cola (Coke) applied for a search warrant against Pepsi for hoarding Coke empty bottles in their yard which is an act allegedly penalized as unfair competition under the IP Code. Said warrant was issued by the MTC and by virtue of which, they were able to seize a number of coke bottles. In their counter-affidavits, Galicia and Gomez claimed that the bottles came from various Pepsi retailers and wholesalers who included them in their return to make up for shortages of empty Pepsi bottles; they had no way of ascertaining beforehand the return of empty Coke bottles as they simply received what had been delivered; the presence of the bottles in their yard was not intentional nor deliberate. On the basis of the foregoing, Coke filed a case against Quntin Gomez (as general manager of Pepsi herein) for violation of the provision against unfair competition under the IP Code. ! The MTC rendered a decision in favor of Code. On MR, the MTC denied and thereafter, upon reaching the RTC for determination of whether or not there is unfair competition, the latter rendered a decision declaring that: 1. The warrant issued was void for lack of probable cause 2. There is no unfair competition. Issue: ! Whether or not there is probable cause for the issuance of the warrant. ! Whether or not there is unfair competition. Ratio: ! There is no probable cause for 168.3 of the IP Code (Although the court held that the situation at present is in fact covered by another

law, it is not that law which was cited by applicants in their application for warrant, it was the IP Code but as you will find out later, the act of hoarding is not found to be covered by the IP Code). A search warrant may only be issued if there is probable cause in connection with a specific offense alleged in the application based on the personal knowledge of the applicant and his or her witnesses. Procedurally, the determination of probable cause is a personal task of the judge before whom the application for search warrant is filed, as he has to examine under oath or affirmation the applicant and his or her witnesses in the form of "searching questions and answers" in writing and under oath. Under this context, there must first be a determination of whether the act charged the alleged hoarding of empty Coke bottles constitutes an offense under the IP Code. Coke is of the position that the acts under the IP Code under unfair competition are not limited and thus, the meaning of the phrase expands the include other acts contrary to good faith of a nature calculated to discredit the goods, business or services of another. Allegedly, the hoarding is one such act. But the court does not give merit to this position. The law does not thereby cover every unfair act committed in the course of business; it covers only acts characterized by "deception or any other means contrary to good faith" in the passing off of goods and services as those of another who has established goodwill in relation with these goods or services, or any other act calculated to produce the same result. From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon the public the goods or business of one person as the goods or business of another with the end and probable effect of deceiving the public. It formulated the "true test" of unfair competition: whether the acts of defendant are such as are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions which prevail in the particular trade to which the controversy relates. The court holds that hoarding is not one of the acts within the contemplation of the IP Code. As basis for interpretative analysis: 168.1 Speaks of a person who has earned a goodwill with respect to the goods and services and who is entitled to protection under the Code with or without a
168.2 168.3 168.1 168.2 168.3
registered mark. Refers to the general definition of unfair competition. Refers to specific instances of unfair competition Referring to sale of goods given the appearance of the goods of another To the inducement of belief that his or her goods or services are that of another who has earned goodwill Catch all phrase whose coverage the parties not dispute.
As applied to this case, HOARDING does not fall within the coverage of the Code: 1. It is not an intellectual property (patent, trademark, tradename or service mark) 2. Nor are they alleged to be fraudulently passing off their products or services as those of petitioner. 3. They are also not alleged to be undertaking any representation or misrepresentation that would confuse or tend to confuse the goods of petitioner with those of respondents.

Superior Commercial v. Kunnan Enterprises Facts: ! Superior filed a complaint for trademark infringement and unfair competition with preliminary injunction against Kunnan and Sports Concept with the RTC alleging that it was the first owner of the marks KENNEX, KENNEX & DEVICE, PRO KENNEX and PRO-KENNEX and that Kunnan intends to acquire ownership of the said marks registered by Superior. In its defense, Kunnan alleged that Superior is a mere distributor of the marks and only fraudulently registered the marks in its name. It alleged that it was already manufacturing and selling sportswear and sports equipment since 1972 and that it was only in 1982, after the expiration of its initial distributorship agreement with another company, when Kunnan appointed Superior as the exclusive distributor in the Philippines. When the distributorship agreement with Superior ended, Kunnan appointed Sports Concept as its new distributor. ! RTC ruled in favor of Superior holding Kunnan liable for infringement on the basis that Superior was rightfully entitled to the mark as the user and owner thereof considering that whereasclause of the distributorship agreement which categorically stated that Kunnan intends to acquire ownership of the mark registered by Superior in the Philippines. As such, Kunnans express recognition of Superiors ownership of the Keenex marks is present. On appeal, the CA rendered a decision reversing the decision of the RTC dismissing the claim of Superior on the ground that Superior failed to establish by preponderance of evidence its claim of ownership over the trademarks. It found the whereas clauses of the agreement insufficient to support its claim of ownership. It further stressed that SUPERIORs possession of the aforementioned Certificates of Principal Registration does not conclusively establish its ownership of the disputed trademarks as dominion over trademarks is not acquired by the fact of registration alone; at best, registration merely raises a presumption of ownership that can be rebutted by contrary evidence. In contrast with the failure of SUPERIORs evidence, the CA found that KUNNAN presented sufficient evidence to rebut SUPERIORs presumption of ownership over the trademarks. KUNNAN established that SUPERIOR, far from being the rightful owner of the disputed trademarks, was merely KUNNANs exclusive distributor based on the following: 1. The distributor agreement positively confirmed that Superior sought to be the Kunnans exclusive distributor. 2. Superior made the express undertaking in the assignment agreement to acknowledge Kunnan is still the real and truthful owner of the PRO KENNEX MARK and it shall agree that it will not use the right of the abovementioned marks to do anything which is unfafovable or harmful to Kunnan. 3. SUPERIORs Letter dated November 12, 1986 addressed to Brig. Gen. Jose Almonte, identifying itself as the "sole and exclusive licensee and distributor in the Philippines of all its KENNEX and PRO-KENNEX products." Attached to the letter was an agreement with KUNNAN, identifying the latter as the "foreign manufacturer of all KENNEX products." The CA concluded that in this letter, SUPERIOR acknowledged its status as a distributor in its dealings with KUNNAN, and even in its transactions with third persons. Issue: ! Whether or not the infringement case filed by Superior can still prosper. ! Whether or not there is unfair competition. Ratio: ! Kunnan is the rightful owner of the marks in question hence, the infringement case will not prosper. IN view of the cancellation of the marks of Superior under its name intervening the case, the infringement aspect of the case has been rendered moot and academic since it is a requirement that there be a registered mark in cases of infringement. Even assuming that SUPERIORs case for trademark infringement had not been rendered moot and academic, there can be no infringement committed by KUNNAN who was adjudged with finality to be the rightful owner of the disputed trademarks in the Registration Cancellation Case. Even prior to the cancellation of the registration of the disputed trademarks, SUPERIOR as a mere distributor and not the owner cannot assert any protection from trademark infringement as it had no right in the first place to the registration of the disputed trademarks. As a mere distributor, petitioner Superior undoubtedly had no right to register the questioned mark in its name. Wellentrenched in our jurisdiction is the rule that the right to

register a trademark should be based on ownership. When the applicant is not the owner of the trademark being applied for, he has no right to apply for the registration of the same. Moreover, the case is already barred by res judicata in view of the cancellation case already decided upon by the IPO and the CA. Because the Registration Cancellation Case and the present case involve the same parties, litigating with respect to and disputing the same trademarks, we are bound to examine how one case would affect the other. In the present case, even if the causes of action of the Registration Cancellation Case (the cancellation of trademark registration) differs from that of the present case (the improper or unauthorized use of trademarks), the final judgment in the Registration Cancellation Case is nevertheless conclusive on the particular facts and issues that are determinative of the present case. ! There is no unfair competition. From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon the public of the goods or business of one person as the goods or business of another with the end and probable effect of deceiving the public. The essential elements of unfair competition are: 1. confusing similarity in the general appearance of the goods; and 2. intent to deceive the public and defraud a competitor. Jurisprudence also formulated the following "true test" of unfair competition: whether the acts of the defendant have the intent of deceiving or are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions of the particular trade to which the controversy relates. One of the essential requisites in an action to restrain unfair competition is proof of fraud; the intent to deceive, actual or probable must be shown before the right to recover can exist. In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold (i.e. sportswear, sporting goods and equipment) as those of SUPERIOR. In addition, there is no evidence of bad faith or fraud imputable to KUNNAN in using the disputed trademarks. Specifically, SUPERIOR failed to adduce any evidence to show that KUNNAN by the above-cited acts intended to deceive the public as to the identity of the goods sold or of the manufacturer of the goods sold. In this case, there is no issue of passing off the goods since the only issue is the ownership thereof. Furthermore, the notice of Kunnan prevents the public from being deceived that the goods originated from Superior since the notice clearly indicated that Kunnan is the manufacturer of the goods bearing the marks. In its place, KUNNAN has appointed SPORTS CONCEPT AND DISTRIBUTORS, INC. as its exclusive Philippine distributor of sportswear and sporting goods and equipment bearing the trademarks KENNEX and PRO KENNEX. The public is advised to buy sporting goods and equipment bearing these trademarks only from SPORTS CONCEPT AND DISTRIBUTORS, INC. to ensure that the products they are buying are manufactured by Kunnan Enterprises Ltd. Federal Mogul Bower Bearings v. Azoff Facts: ! Federam Mogul Bower Bearing (FMBB) is a corporation in Michigan engaged in the business of manufacturing engine bearings and connecting rods for internal combustion engines which have been sold and distributed in packages and containers which are distinguished by features, the symbol, printing, background, general arrangements, form and coloration of the company. Thereby, FMBB has acquired and enjoys a large and valuable reputation of good will with the trade and with the public both domestic and foreign for such products. On the other hand, Azoff, et. al (Azoff) herein are copartners alleged to engage in transporting, distributing, marketing and selling engine bearings which are so nearly resembling that of FBMMs as to falsely represent the engine bearings and connecting rods as being the goods of Azoff. Likewise, the complaint filed against Azoff also alleged that there is a likelihood of confusion in trade and commerce, particularly with foreign commerce. ! The trial court held that any attempt to characterize the complaint as charging false description (under the Lanham Act which makes a person liable for use of a false designation or origin or any false description or representation, including symbols to false represent the same and shall with knowledge of such falsity procure the same to be transported or used in commerce) was without merit since the

origin phrase in the Lanham Act allegedly meant a geographical sense and not origin by manufacturer. Issue: ! Whether or not the charge in the complaint constitutes a false description case under the Lanham Act. Ratio: ! Yes. It is a false description case. The charge which states that Azoff: 1. sold connecting rods in packages or containers which imitate and so nearly resemble the packages of FMBB as to falsely represent them to be their goods; 2. deliberate adoption of the said packages and containers with an intent to deceive the trade and public into confusing the bearings; constitutes false description. Furthermore, the term origin does not only refer to geographical origin but also to origin of source or manufacture. The Lanham Act was passed with the intent that the primary purpose of the Act was to eliminate deceitful practices in interstate commerce involving the misuse of trademarks but along with this it sought to eliminate other forms of misrepresentations which are of the same general character even though they do not involve any use of what can technically be called as a trademark. The language of the law in this case is broad enough to include practices of this latter class. But the section should be construed to be including only such false descriptions or representations as are of substantially the same economic nature as those which involve infringement or other improper use of trademarks. It should not be interpreted so as to bring within its scope any kind of undesirable business practice which involves deception, when such practices are outside the field of the trademarks laws. LAiglon Apparel v. Lana Lobell, Inc. Facts: ! Plaintiff LAiglon Apparel alleged in a complaint that it alone created and sold to retail trade throughout the country a certain distinctively styled dress. To advertise said dress, it published pictures in leading newspapers and in some 2 million individual mailing pieces distributed through retailers. In this way, the picture and price of this dress became associated in the minds of the readers and identified as plaintiffs $17.95 dress. At about the same time, the complaint alleged that the defendant Lana Lobell (Lana) was offering for sale through mail order and otherwise in interstate commerce a dress which in fact was much inferior to plaintiffs in quality and notably different in appearance. In this connection, it published under its name in a magazine of national circulation a display advertisement worded and designed to promote the mail order sale of its dress at a price of $6.95, but showing as the most prominent feature of the advertisement was an actual photographic reproduction of the plaintiffs dress, thus fraudulently represented as the article defendant was selling for a lower price. Plaintiff alleges that as a result of this misrepresentation, some trade was diverted from plaintiff to defendant and caused other trade to be lost by plaintiff as a result of the mistaken impression. Thus, the complaint herein is trying to make out a case of a false representation in the description of goods sold in commerce as prohibited under Section 43(a) of the Lanham Act. Issue: ! Whether or not the complaint herein falls under Section 43(a) of the Lanham Act. ! Whether or not the plaintiff can recover for the kind of conduct here charged. ! Whether or not Section 44 of the Lanham Act establishes a federal law of unfair competition in commerce. Ratio: ! Yes. The alleged damage as a result of the defendants misrepresentation may well be demonstrable within the normal requirements of legal proof and in such way as to entitle plaintiff to relief authorized by the statute.

! There is no inadequacy herein in plaintiffs statement of such an injury as Section 43(a) explicitly makes the proper subject of redress. Before 1946, it is already established as a doctrine that misrepresentations about the goods were actionable only if they had led or were likely to lead customers through confusion of defendants and plaintiffs goods, to buy the former under the misapprehension that they were the latter. Palming Off was said to be essential to any recovery and the view that has been expressed judicially that some such limitation is to be read in Section 43(a) of the Lanham Act. Congress has defined a statutory civil wrong of a false representation of goods in commerce and has been given a broad class of suitors injured or likely to be injured by such wrong the right to relief in the federal courts. This statutory tort is defined in language which differentiates it in some particulars from similar wrongs which have developed and have become defined in the judge made law of unfair competition. Perhaps this bears a close resemblance to the already noted tort of false advertising to the detriment of a competitor. Here is a provision of a federal statute which, with clarity and precision adequate for judicial administration, creates and defines rights and duties and provides for their vindication in the federal courts. No limitation in Section 43(a) and none can be properly imposed which would make the present complaint an insufficient statement of a cause of action under that section. Thus, the dismissal of the complaint was erroneous. ! The court agrees with the district court and holds that there is no intent to being all unfair competition in commerce within the federal jurisdiction . Before anything, it is to be noted that before the Lanham Act, federal courts only had authority to decide claims of unfair competition if federal jurisdiction was supplied by diversity of citizenship or if the unfair competition claim was pendent to a substantial and related federal claim. However, since the passage of the Lanham Act, there are two lines of authority that have developed regarding federal jurisdiction over ordinary claims of unfair competition, apart from wrongs in Section 43(a). Two views as to the jurisdiction of the federal courts: 1. Second Circuit View diversity and pendent jurisdiction is the only basis of federal cognizance of such claims. It is only a design to give US citizens reciprocal rights against foreign nationals where foreign nationals compete unfairly with them. It does not aim to create a federal law of unfair competition available to US citizens one against the other nor does it grant federal courts any new authority to hear such controversies between citizens. In short, federal rights conferred in Section 44, obviously excludes the ordinary domestic controversy such as we have here. 2. Ninth Circuit View the statute gives federal courts jurisdiction to hear ALL unfair competition claims regardless of diversity or pendent jurisdiction so long as unfair competition affects commerce. Section 44 of the Act creates a substantive federal law of unfair competition with remedies available between US citizens wherever there is present the requisite involvement of interstate commerce. Congress declared all acts of unfair competition to be unlawful, revealing an unwillingness to give federal courts jurisdiction of unfair competition claims to the full extent of its power to regulate commerce. Instead, the intent of congress herein was to implement international agreements which were not self executing and which varied in their coverage practices in the field of unfair competition such that when you register your trademark in the country, you will get this protection. Dastar Corporation v. 20th Century Fox Film Corporation Doctrine: Origin of goods in the Lanham Act, in light of the copyright and patent laws, refers to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods. Facts: ! In 1948, Doubleday published a book on the Crusade in Europe and registered it with the Copyright Office in 1948. Subsequently, it

granted an exclusive television rights to an affiliate respondent, 20th Century Fox (Fox) which produced a TV series entitled Crusade in Europe based on the said book. Doubleday renewed the copyright to its book. However, Fox did not renew the copyright on the TV series which expired in 1977, leaving the TV series in the public domain. Thereafter, however, Fox reacquired the TV rights in the book including the exclusive right to distribute the same on video and to sublicense others to do so. (SFM, New Line) ! Enter petitioner Dastar herein who decided to expand its product line from music compact discs to videos. To make his business expand, he purchased 8 beta cam tapes of the original version of the Crusade TV series which is in the public domain, copied them and then edited the series. The edited series contained: 1. 2. 3. 4. 5. 6. 7. New opening sequence; New closing for those of the Crusade TV series Credits page Inserted new-title sequence and Narrated chapter introductions Advertised it as produced and distributed by Entertainment Distributing (owned by Dastar) No reference of Fox Issue: ! Whether or not the Lanham Act prevents the unaccredited copying of a work. Ratio: ! It does not prevent the unaccredited copying of a work. The Lanham Act creates a federal remedy against a person who used in commerce either a false designation of origin, or any false description or representation in connection with any goods or services. Origin in this case does not merely refer to geographical origin but also to source or manufacturer. However, in this case, Dastars acts were that it took a CREATIVE WORK IN THE PUBLIC DOMAIN AND COPIED IT and made modifications thereto to produce its very own series of videotapes. If origin herein merely referred to the creator of the underlying work, then it would obviously be apparent that Dastar is liable under this act. But the court if of the position that origin herein refers to the manufacturer or producer of the physical goods. The source of the wares is the producer of the tangible products sold in the marketplace, in this case, the tapes sold by Dastar. The consumer who buys a branded product does not automatically assume that the brand name company is the same entity that came up with the idea for the product, or designed the product and typically does not care whether it is. It is argued that in reality, the purchaser is concerned for what might be called a communicative product one that is valued not primarily for its physical qualities, such as hammer, but for the intellectual content that it conveys such as a book or as here, a video. But this interpretation will render the Lanham Act in conflict with the copyright law. In general, unless an intellectual property right such as patent or copyright protects an item, it will be subject to copying. Recognizing a cause of action under Section 43(a) for misrepresentation of authorship of noncopyrighted works would render these limitations superfluous and such statutory interpretation should be avoided.
In sum, he created a new packaging for its Campaign series (which included the Crusade series) and a new title thereto. ! Thus, Fox, SFM and New Line brought this action alleging that the sale of the videos infringes on the copyright of the book and the exclusive TV series rights in the book. It further claims that Dastars action constituted reverse passing off (passing occurs when a producer misrepresents his own goods or services as someone elses; reverse passing off is the opposite where the producer misrepresents someone elses goods or services as his own). The District Court rendered judgment and awarded Dastars profits to respondents and doubled them. On appeal, the CA affirmed the case on the ground that Dastar substantially copied the entire series created by 20th Century Fox thereby committing a bodily appropriation of the Fox series which constitutes reverse passing off.

Another problem with the aforementioned interpretation is that in many cases, it is difficult to figure out who is in the line of origin. In fact in this case, while Fox is claiming to being in the line of origin, its involvement with the creation of the TV series was limited at beast. Time Inc. was the principal and the creator albeit under arrangement with Fox. Another problem is that wile they are indicating credits to the creator of the work on which the lawful copies are based, on the other hand, they could face Lanham Act violations for crediting the creator if that should be regarded as implying the sponsorship or approval of the copy. Allen v. National Video Inc. Facts: ! Plaintiff Woody Allen has been a major international celebrity who directed various shows which won several Academy Awards. Although he has not lent his name to commercial endeavors other than his own projects, he has been in show business for years and is known to millions of people for his artistic integrity. National Video (National) published an advertisement to promote its video rental chain containing a photograph of one Boroff which portrays a customer in a National video Store with a high forehead, tousled hair and heavy black glasses. In general, the physical features of this and the pose are characteristic of the plaintiff. Moreover, on the said advertisement was a plethora of shows in video cassettes directed by Woody Allen. The same photo and headline was also used on contercards distributed to Nationals franchises. Although there is a disclaimer on said photo which states in small print reading that Celebrity double provided by Ron Smith;s Celebrity look a like, no such advertisement appeared on the other versions of the advertisement. ! In view of this, Plaintiff Woody Allen (Allen) filed a case praying for summary judgment in his favor on the ground that his right to privacy was violated, and claiming a violation under the Lanham Act alleging that his picture was used for commercial purposes without his permission and that the advertisements were materially misleading and likely to result in consumer confusion as to his endorsement of the services of National. In its defense, National claims that the idea of the advertisement is that even people who are not stars are treated like stars at National video. It claims that the person therein is a Woody Allen fan who is adopting the stars appearance and mannerisms. They urge that they never misrepresented Bordoff as Allen and that they insisted on the placing of the disclaimer in all advertisements using the photo. Issue: ! Whether or not the right to privacy and publicity is violated. ! Whether or not there is a violation of the Lanham Act Ratio: ! There is no violation of the right to publicity and the right to privacy and the more appropriate remedy of the plaintiff herein is provided by the Lanham Act. In this issue, the court held that there is no reasonable ground to believe that the others would interpret the advertisement as Woody Allen himself. As embodied in the New York Civil Rights Law, to make out a violation of the right to privacy there must be: 1. Use of his name, portrait or picture; 2. For commercial or trade purposes; 3. Without written permission On the other hand, in order to make out a case for violation of right to publicity, one additional element must be shown to exist and that is: that the plaintiff developed a property interest with a monetary value in his or her name or face, as in this case with Woody Allen. As applied in this case, it is clear that 2 of the 3 prongs of the Civil Rights Law are satisfied. There is no question that the photo is said to be used for commercial purposes since it appeared as an advertisement and there is no dispute that the plaintiff herein never gave his consent to the photograph. Therefore, the only element left to prove herein is whether or not the portrait is the picture of the plaintiff. Allen claims that it is since it need only be that the photograph is identifiable to him in order for this requirement to be satisfied, to which, the court is agreeable to. An exact duplication was not necessary to make out a cause of action under the statute

so long as the overall impression created clearly was that plaintiff had herself appeared in the advertisement. If the court is to permit this, then it would be sanctioning an obvious loophole to evade the statute. When the look-a-like seems indistinguishable form the real person, and the context of the advertisement clearly implies that he or she is the celebrity, then the court may hold as a matter of law that the look-a-like is a portrait of the plaintiff. Thus, what further needs to be proven here is whether or not the illusion that the person is Allen is created. As applied, the court held that there is no reason to believe that others would see the photo as a portrait of Allen himself since there are striking dissimilarities as to the hairstyle and expression, among others. ! There is a violation of the Lanham Act (Section 43a). To make out a case under the act, the plaintiff must establish: 1. The involvement of the goods or services 2. Effect on interstate commerce 3. False designation of the origin or false description of the goods or services. The application of the act, however, is limited to potential deception which threatens economic interests analogous to those of trademark law. Of course in this case, a celebrity has an investment in his or her name and face in endorsing products and marketing a career. It depends upon the good will of the public and infringement of the rights also implicates the publics interest in being free from deception when it relies on the celebrity in an advertisements. Furthermore, the liability herein attaches not only to literal falseness, but also to false impressions. In this case, in order to consider whether or not there is a violation of such act, there should be a likelihood of confusion. For this, the court goes back to the factors used to determine likelihood of confusion which are: 1. Strength of the mark and name 2. Similarity of the marks 3. Proximity of the products 4. Evidence of actual confusion 5. Sophistication of the buyers 6. Intent Strength of the mark and name Similarity of the marks Proximity of the products Actual confusion Sophistication of the consuming public o The name of the plaintiff, Woody Allen in this case is well-known to the public and has built a considerable investment in his public image. While the court was unable to hold that the photo, was a matter of law, a portrait of the plaintiff, the resemblance in this case is strong and not disputed. While not owning a video rental chain, Allen is involved in the production and distribution of motion pictures and he is strongly identified with movies. Not essential The average reader of the magazine is likely to be sophisticated about movies such that a good number of them would realize that plaintiff did not actually appear in the photo. However, since there is a CLOSE RESEMBLANCE, evidence of likelihood of confusion is not altogether eliminated. While not established to be acting in bad faith, they already admitted that they used Bordoff to evoke an association with the plaintiff Allen. They must therefore be aware that there is a risk of consumer confusion. They happily risked creating an impression in a purchaser to gain commercial advantage through reference to plaintiffs public image.
o o
Intent
o o
Thus, the court concluded that there is a likelihood of confusion. Reasons why a violation under the Lanham Act is more suitable for the plaintiff in this case, instead of the right to publicity:

1. The likelihood of confusion standard is more broad that the strict portrait or picture standard under the Civil Rights Law. In order to be confused, the consumer need not believe that the owner of the mark actually produced the item and placed it on the market. The belief that he sponsored it satisfies the confusion requirement. 2. Likelihood of confusion is easier to satisfy on the facts of this case since that is all that is necessary. 3. While confusing similarity is a question of fact, it is regarded as something for the court to decide through its own analysis, comparison and judgment. Midler v. Ford Motors Facts: ! Ford Motor Company (Ford) and its advertising agency, Young & Rubicam advertised the Ford Lincoln Mercury with a series of 30 or 60 second TV commercials in what the agency called as the Yuppie Campaign which aimed to make an emotional connection with Yuppies, bringing back memories of when they were in college. In the said commercial, there were different popular songs of which, Ford attempted to get the original singers who popularized the songs to sing them. Failing in this endeavor, the agency had the songs sung by sound alikes. Bette Midler( Midler), the plaintiff in this case was done by a sound alike. Midler is a popular singer who won a Grammy as early as 1973 and was nominated for an Academy Award for Best Female Actress in The Rose in which she portrayed a pop singer. Time even hailed her as a legend and the most dynamic and poignant actress of her time. As the sound alike of Midler, the agency hired Ula Hedwig, who was one of Midlers backup singers for 10 years. For the commercial, Hedwig imitated Midler to the best of her ability which resulted in a lot of people thinking that it was Midler who was sining in the commercial. Neither the name nor the picture of Midler was used in the commercial. ! Midler filed a common law claim against Ford for using her distinctive voice in an advertisement which she had not authorized.
Issue: ! Whether or not Midlers voice is protected under the law. Ratio: ! Yes. As a general rule, a mere imitation of a recorded performance would not constitute a copyright infringement where one performer deliberately sets out to stimulate anothers performance as exactly as possible. Although this case falls more under the ambit of unfair competition since a voice is not copyrightable. The sounds are not fixed. What is put forward here is more personal than any work of authorship. For a person whose voice is widely known, it is unlawful to imitate that persons voice to sell a product if he/she has not authorized it. Although the defendants did not use the name of Midler of anything else whose use is prohibited under the California Civil Code (the name, the voice, signature, or photograph) since the voice they used was that of a different persons not hers, the court held that the fact that they hired someone who can imitate her voice as much as possible meant that it was of value to them that Midler sang the commercial in person. A voice is more distinctive and more personal than an automobile protected in another case. A voice is distinctive and personal as a face. When a distinctive voice of a professional singer is widely known and is deliberately imitated in order to sell a product, the sellers have appropriated what is not theirs and have committed a tort in California. Midler herein made a showing sufficient to defeat summary judgment that the defendants here for their own profit in selling their product did appropriate part of her identity. White v. Samsung Electronics Facts: ! Samsung launched a commercial forvidep-casette recorders (VCRs) which depicted a robot, dressed in a wig, gown and kewelry, which was consciously selected to resemble Vanna Whites (one of the hostess of the Wheel of Fortune) hair and dress. The robot in the commercial was posed next to a game board which is instantly recognizable as the Wheel of Fortune game show set in a stance for which Vanna White is famous for.

She did not consent to the ads nor was she paid for it hence, she filed a claim alleging infringement of various intellectual property rights under the California Civil Code, the California common law right of publicity and Section 43(a) of the Lanham Act. Issue: ! Whether or not there is a violation of Whites common law right of publicity. ! Whether or not there is a violation of Section 43(a) of the Lanham Act. Ratio: ! Yes. The district court erred in rejecting her claim on summary judgment. The robot did not use Whites name or likeness. However, the common law right of publicity is not so confined. In order to make out a case for right of publicity, the plaintiff must show that: 1. The defendant used the plaintiffs identity; 2. The appropriation of the name of the plaintiff or likeness to the defendants advantage, commercial or otherwise; 3. Lack of consent 4. Resulting injury It should be noted, however, that the right of publicity cause of action may be pleaded by alleging the aforementioned appropriation of name or likeness, not that the action may be pleaded only in those terms. Name of likeness is not an element of the right of publicity cause of action but a description of the types of cases in which the cause of action had been recognized. In fact, in some cases, even though the defendant had not appropriated the plaintiffs name or likeness, this court held that the right of publicity claim should reach the jury. The common law right of publicity reaches means of appropriation other than name or likeness, but that the specific means of appropriation are relevant only for determining whether the defendant has in fact appropriated the plaintiffs identity. The right of publicity has developed to protect the commercial interest of the celebrities in their identities. It is of value to them and the unauthorized use of such is an invasion of his right whether or not his name or likeness is used. It is not important how the defendant appropriated the identity, what matters is whether the defendant has done so. As applied in this case, the female shaped robot herein is wearing a long gown, blond, wig and large jewelry. In fact, the defendants in this case also refer to this ad as the Vanna White ad. ! To prevail over the Lanham Act claim, White has to show that in running the robot ad, Samsung created a likelihood of confusion over whether White was endorsing the products of Samsung. Thus, the 8factor test enunciated must be resorted to: 1. 2. 3. 4. 5. 6. 7. 8. Strength of the mark Relatedness of the goods Similarity of the marks Evidence of actual confusion Marketing channels used Likely degree of purchaser care Intent in selecting the mark Likelihood of expansion of the product lines.
Mark here means the celebrity persona. Strength of the mark Similarity of the marks Evidence of actual confusion Marketing channels used o o o o Whites fame is based on her TV appearance in the Wheel of Fortune. There is a need to look at the other factors for resolution since one is a human and the other is a robot No evidence of actual confusion was presented She appears in numerous ads in magazines including those magazines which use the robot. This factor cuts toward a conclusion for likelihood of confusion Consumers are not likely to be particularly careful in determining who endorses VCRs, making the confusion as to their endorsement more likely. There is an intention to spoof . Looking at the series of advertisements as a whole, surface humor of the series lay an intent to persuade consumers
Degree of purchaser care
Intent
o o

that Vanna White, was endorsing Samsung products. It does not appear apposite to a celebrity endorsement case such as this. Ratio: ! Yes. Without making any judgment about the ultimate similarity of the figures to the appellants, this court concludes from its own inspection that the robots ight cause a reasonable jury to find them sufficiently like the appellants. The degree to which these robots resemble, caricature or bear an impressionistic resemblance is material to a claim for violation of the publicity rights under the California Code. ! Yes. This common law publicity rights includes protection against appropriation for the defendants advantage of the plaintiffs name or likeness. It may be pleaded by alleging: 1. Defendants use of the plaintiffs identity; 2. Appropriation of the plaintiffs name or likeness to defendants advantage commercially or otherwise 3. Lack of consent 4. Resulting injury This protects more than the knowing use of the name or likeness of the plaintiff for commercial purposes. It also protects appropriations of the plaintiffs identity by other means. In this case, the appellants have raised a genuine issue of material fact concerning the degree to which the figures look like them. Because they have done so, appellants have also raised triable issues of fact as to whether or not appellees sought to appropriate their likeness for their own advantage and whether or not they succeeded in doing so. ! Yes. The court herein applies the 8 factor test again which required a consideration of: Strength of the o Clearly well known among the target mark consumers of Hosts Cheer bars. Similarity of the o Goods are obviously related even if not goods strictly competitive. o the factors weigh in favor of likelihood of confusion since it would be reasonable for the person to be confused as to the nature of the association of Wendt to Hosts Cheer bars and the goods sold there. Similarity of the o because the appellants herein raised a marks material issue as to the degree of
Likelihood of expansion
Although the ultimate decision was left to the jury, the court herein claimed that the Lanham Act claim should succeed. The robot ad identifies White as part of a series of ads in which other celebrities participated and were paid for their endorsement products. White made out a genuine issue of material fact concerning a likelihood of confusion. Dissenting Opinion (Kozinski): ! The majority decision is erroneous in that California Civil Code Sectin 3344 appears to preclude the result reached by the majority. The section only protected name or likeness. In fact, when it was amended, legislature only added voice and signature to the enumeration which means that there is a clear implication from the fact that since they only chose to add those, it wished to limit the cause of action to the enumerated attributes (inclusion unius est exclusion alterius). The protection of intellectual property presents the courts with the necessity to balance competing interests. There must be a prevention of the creation of a monopoly that would inhibit the creative expressions of others. Wendt v. Host International Facts: ! Wendt filed a claim for violations of the Lanham Act and the California statutory and common law right of publicity against Host International (Host) alleging that there is a violation of trademark and publicity rights by creating animatronic robot figures (robots) based upon their likeness without their permission and placing these robots in airport bars modeled upon the set from the TV show Cheers. The DC dismissed the case. Issue: ! Whether or not there is a violation of statutory publicity rights. ! Whether or not there is a violation of common law publicity rights. ! Whether or not there is a violation of the Lanham Act.

resemblance, a reasonable jury might find this to weigh in their favor. they presented evidence of actual confusion such that they have been approached by members of the public who commented on the similarity of the robots at the Cheers airport bars. the target audience here are Cheer bars customers who are fans of TV series. weight in favor of appellants since consumers are not likely to be particularly careful in determining who endorses or is affiliated with an airport bar in which they might purchase only a single beverage. There is a low degree of care. They intentionally designed the figures to resemble Wendt and that it recognized from the outset that the value of the association with Wendt themselves was a major drawing card of the Cheers concept. This does not appear apposite to a celebrity endorsement case. In fact Wendt herein stated that he would like to appear in advertisements for bear and has declined offers from small breweries to make way for larger breweries. Shortly after the release of the movie, Rogers brought this action for permanent injunctive relief and allege that defendants violated Section 43(a) of the Lanham Act by creating a false impression that the film was about her or that she sponsored it, her common right of publicity and defamed her and violated her right to privacy by depicting her in a false light. Issue: ! Whether or not there is a violation of the Lanham Act. ! Whether or not there is a violation of the common right of publicity. Ratio: ! No. Although the general act was held herein to be construed to apply to artistic works only where the public interest in avoiding consumer confusion outweight the public interest in free expression, the court found that there is nothing in the title of the movie which denotes authorship, sponsorship or endorsement by the celebrity or explicitly mislead as to content. If herein, the title George and Fred misleads as to source or content implicitly conveyed by the title, it violates the Lanham Act but as applied in this case, the title contains no explicit indication that Rogers endorsed the film or had a role in producing it. Likewise, the claim that consumers would be misled into thinking that the film is about Rogers and Astaire also fails since here, the title is entirely truthful as to its content in referring to the protagonists who are known to their Italian audience as Ginger and Fred. Moreover, the title has an ironic meaning tat is relevant to the content of the film in that Rogers and Astaire are to the producer a glamorous and care-free symbol of what American cinema represented in the harsh times which Italy experienced in the 30s and 40s. therefore depicting artistic relevance to the film. ! There is no violation of the common right of publicity. The right of publicity does not bar the use of a celebritys name in a title so long as the item was a literary work and not simply a disguised commercial advertisement for the sale of goods or services. Here, as explained above, the title is clearly related to the content of the movie and is not a disguised advertisement for the sale of goods or services or a collateral commercial product. Moreover, the film is not about Rogers. It is about a pair of fictional characters who are LIKE Rogers
Evidence of actual confusion
Marketing channels used Likelihood of purchaser care
o o
Intent in selecting the mark
o o
Likelihood of expansion
o o
Rogers v. Grimaldi Facts: ! Rogers has been an international celebrity for more than 50 years. There can be no dispute that Rogers name has enormous drawing power in the entertainment world. In 1986, appellees in this case, Grimaldi, produced and distributed in the US and in Europe a film entitled Ginger and Fred created and directed by Federico Fellini which tells a story of 2 fictional cabaret performers who imitated Rogers and Astaire and became known in Italy as Ginger and Fred.

and Astaire only in their imagination and in the sentimental eyes of their fictional audience. The right of publicity would not bar the use of a celebritys name in a movie title unless the title was wholly unrelated to the movie or was simply a disguised commercial advertisement for the sale of goods or services. Cardtoons v. Major League Baseball Players Facts: ! Cardtoons formed a set of 130 cards which featured a caricature of major league baseball players. A majority of the cards had a caricature of active major league baseball players on the front humorous commentary about their careers on the back. At the back of each of the cards it was stated therein that: Cardtoons baseball is a parody and is not licensed by the Major League Baseball (MLB) or Major League Baseball Players Association (MLBPA). The trading cards ridicule the players using a variety of themes. Other cards poke fun at the names of the players and onfield behavior. ! For this reason, the MLBPA filed an action with the court against Cardtoons. MLBPA moved to dismiss the case for lack of subject matter jurisdiction and counterclaimed for a declaratory judgment, injunction and damages for violation of the members rights of publicity under the law. Issue: ! Whether or not there is a violation of property rights under the Lanham Act. ! Whether or not there is a violation of publicity rights. Ratio: ! No. The hallmark of Lanham Act is proof of likelihood of confusion which occurs when consumers make an incorrect mental association between the involved commercial products or their products. It is a question of fact that we review for clear error. Here, no one would mistake MLBPA and its members as anything other than the targets of the parody cards. Cardtoons success depends upon the humorous association of its parody cards with traditional licensed baseball cards, not upon public confusion as to the source of the cards. There is no infringement upon MLBPAs property rights under the Lanham Act. ! There is a violation of the right to publicity. The right of publicity is the right of a person to control the commercial use of his or her identity. Like trademark and copyright, the right of publicity involves a cognizable property interest. Publicity rights, are a form of property protection that allows people to profit from the full commercial value of their identities. A civil suit for infringement of MLBPAs publicity right under the law requires proof of 3 elements: 1. Knowing use of player names or likenesses; 2. Products, merchandise, or goods; 3. Without MLBPAs prior consent. This is not absolute and contains 2 exceptions: 1. News exception which exempts use of a persons identity in connection with any news, public affairs, or sports broadcast or account, or any political campaign, from the dictates of the statute. 2. Incidental use exempts use in a commercial medium that is not directly connected with commercial sponsorship or paid advertising. Applied to this case, there is little question that Cardtoons knowingly uses the names and likenesses of major league baseball players. Indeed the caricatures are only humorous because they, along with parodied name, team and commentary, are accurate enough to allow identification of the players being parodied. The cards are clearly a product, designed to be widely marketed and sold for profit. Furthermore, the exceptions in this case provide no haven for cardtoons. Others: ! Despite finding a violation of the publicity rights in this case, the court went on to state that the trading cards are First Amendment protected speech in that it is not considered as commercial speech. Baseball cards have been an important means of informing the public about baseball players for over a century. All of these cards, convey

information about their subject and therefore constitute an important means of expression that deserves First Amendment Protection. Without the first amendment protection, Cardtoons trading cards and their irreverent commentary on the national pastime cannot be freely distributed to the public. The potential is even greater in the context of publicity rights because the product involved is the celebritys own persona. At this juncture, since there is a finding that there is a violation of publicity rights and a finding that the cards herein are first amendment protected speech, there is a need to balance the interests of the MLPBAs right of publicity and the public interests rights. In examining the right of publicity of a celebrity, the court herein held that even without the right of publicity, the rate of return of stardom in the entertainment and sports field is probably high enough to bring forth a more than adequate supply of creative effort and achievement. The income they generate by licensing ones identity does not provide a necessary inducement to enter and achieve in the realm of sports and entertainment. While publicity may provide some incentive for creativity and achievement, the magnitude and importance of that incentive has been exaggerated. Inducements generated by publicity rights and the small incentive effect of publicity rights is reduced or is eliminated in celebrity parodies. In this case, the court weighted the factors in favor of the free speech protection since this was clearly a case of over protection. Little is to be gained and much is to be lost by protecting publicity rights herein. The cards, on the other hand, are an important form of entertainment and social commentary that deserve First Amendment Protection. Coca-Cola v. Tropicana Facts: ! Tropicana products begain airing a new TV commercial for its Premium Pack orange juice which shows the renowned American Olympic athlete Bruce Jenner squeezing an orange while saying a tag line. Soon after this ran, Coca-Cola, the maker of Minute Maid orange juice, brought this suit for false advertising in violation of Section 43(a) of the Lanham Act which provides that any person who uses a false description or representation shall be liable to a civil action to anyone who believes that he is or is likely to be damaged by the use of such false description or representation. Coke claims that this commercial is false because it incorrectly represents that Premium pack contains unprocessed, freshsqueezed juice when in fact the juice is pasteurized and sometimes frozen prior to packaging. Issue: ! Whether or not there is false advertising. Ratio: ! There is false advertising. In a case for false advertising requesting for injunctive relief, the plaintiff must show that he is likely to be injured as a result of the false advertising of the defendant. The likelihood of injury and causation will not be presumed but must be demonstrated in some manner. In previous cases decided by the supreme court, market studies were used as evidence that consumers were in fact mislef by the advertising in issue. Thus, the market studies supplied the causative link between the advertising and the plaintiffs potential lost sales and thereby indicated a likelihood of injury. When an advertisement is literally or explicitly false, the court may grant the relief without reference to the advertisements impact on the buying public. But when it is implicit rather than explicitly false, its tendency to violate the act by misleading, confusing or deceiving should be tested by public reaction. In view of the facts of this case, the court concludes that the ad is false. The squeezing-pouring sequence in the Jenner commercial is false on its face. It makes an explicit representation that Premium Pack is produced by squeezing oranges and pouring the freshly squeezed juice directly into the carton which is not a true representation of how the product is prepared it is sometimes heated and frozen prior to packaging. Additionally, the statement in the ad that it is pasteurized juice as it comes from the orange is blatantly false since false-pasteurized juice does not come from oranges. It entails heating. Despite the fact that the word pasteurized is used, nevertheless, Tropicana represented it to be squeezed, heated and packaged when in fact, it may be frozen.

Pernod Ricard v. Bacardi Facts: ! This case is a dispute between Pernod on the one hand and Bacardi on the other over the use of the words Havana Club to sell rum in the US. In 1994, Bacardi filed a federal trademark application for the use of Havana Club mark on rum in the United States and for a short time in 1995, Bacardi imported from the Bahamas and sold in this country a nominal amount of rum labeled with HAVANA CLUB. Shortly after Bacardi began its sales of the Havana Club rum made in Puerto Rico, Pernod filed this false advertising suit under Section 43(a) asserting that the labeling of Bacardis bottle, particularly the use of the words Havana Club misleads consumers to believe that the rum is produced un Cuba. 2. There is actual deception or at least a tendency to deceive a substantial portion of the intended audience; 3. That the deception is material in that it is likely to influence purchasing decisions; 4. That the advertised goods travelled in interstate commerce; 5. That there is a likelihood of injury to the plaintiff in terms of declining sales, loss of food will. The court herein drew a distinction between 43(a)(1)(a) and 43(a)(1)(b). The former forbids the false or misleading representations that may deceive consumers about the origin of the goods or services while the latter, forbids false or misleading representations as to geographical origin of goods and services. Here, the Havana Club label, taken as a whole, could not mislead any reasonable consumer about where Bacardis rum is made, which means that survey evidence has no helpful part to play on the question to what the label communicates regarding geographic origin. In this case, there is a factually accurate, unambiguous statement of the geographic origin of the rum since the label clearly states that the liquor is Puerto Rican Rum and on the back that it is distilled and crafted in Puerto Rico. No reasonable consumer can be misled by those statements. If we were dealing with the words Havana Club in isolation, then the court MIGHT agree that there is false advertisement but we are not dealing with words in isolation. This is not a trademark case and is certainly not one addressing trademark registration no matter how much Pernod wishes it were. This is a false advertising case where we should look at the words in the context of the entire accused advertisement. Viewed in that context, any thought consumer might have that the words HAVANA CLUB indicate the geographic origin of the rum must certainly be dispelled by the plain and explicit statements of the geographic origin of the label. However, it should be noted herein that the conclusion in this case says nothing whether the words HAVANA CLUB are eligible for registration. The argument is beside the issue tackled in this case and such issue is not addressed in the circumstances dealt with here.
Issue: ! Whether or not there is false advertising. Ratio: ! No. To establish a false advertising claim under the Lanham Act, a plaintiff must prove that: 1. The defendant has made false or misleading statements as to his product for anothers;

SC Johnson v. Clorox Co. Facts: ! Clorox introduced a 15 and 30 second TV commercial each depicting an SC Johnson Zip Loc resealable storage bag side by side with a Clorox Glad Lock bag (each were referred to in the commercial in their brand names). It shows an animated fish talking in water inside each of the bags. The bags were turned upside down and shows that the SC Johnson bag leaks. For this, SC Johnson brought an action against Clorox under Section 43(a) of the Lanham Act for false advertising in the Goldfish commercials. During the hearing for the case, Dr. DeLassus was presented. It was testified that he conducted a torture test wherein the results indicated that 37% of all the bags of Johnson did not leak at all. For this, the DC rendered a decision enjoining Clorox from showing the commercial. The DC found that there is an exaggeration of the circumstances and that when the bags are subjected to the same kind of quality control test, there is some leakage in about 2/3 of the cases. ! In the year 2000, Clorox released another modified version of the Golfish commercial as well as a related print advertisement which shows that by a side by side comparison, the SC Johnson bags, filled with water containing an animated talking goldfish, when rotated leaks. On the other hand, it shows that the Glad Lock Clorox bag did not leak at all. After these advertisements appeared, another injunction case was filed by SC Johnson which was, again, granted. The court, in this case, concluded that the TVC is decidedly contrary to what was portrayed in the actual evidence about the bags at the first trial and all in all, the TVC is literally false. It portrayed that leakage is a everpresent characteristic of SC Johnson bags. Issue: ! Whether or not there is a violation of the Lanham Act. Ratio: ! Yes. There is no prohibition on false statements generally. What is prohibited is only false or misleading descriptions or false or misleading representations of fact made about ones own or anothers goods or services. It must be established that: 1. the advertisement is literally false as a factual matter; or
2. although literally true, it is likely to deceive customers. In addition to this, it must be shown that the falsity is as to an inherent quality or characteristic of the product. The advertisement must be considered in its entirety and not in isolation. The entire mosaic should be viewed. Where it is literally false, the court may enjoin the use of the claim without reference to the advertisements impact on the buying public. Although in this case, irreparable injury is an essential element to an inunction relief, there is presumption of irreparable harm where the plaintiff demonstrates a likelihood of success in showing literally false defendants comparative advertisement which mentions plaintiffs product by name. As applied in this case, there is literal falsity since the conclusion is supported by the fact that there was a test conducted before rendering a decision which showed that over half of the SC Johnson bags either did not leak at all or if it did at a rate no faster than one drop per 20 seconds. In the TVCs it is shown that the bags were always leaking and also, it is shown that the leak is faster than the tests conducted. If Clorox wants to portray water leakage from SC Johnson bags, it must portray the rate of leakage accurately and indicate only a certain percentage of bags leak, even when subjected to an extreme water torture test. P&G v. Haugen Facts: ! This is a suit brought by P&G against Amway corporation for allegedly spreading a rumor within Amways communication service between distributors (AmVox) that P&G is a corporate agent of Satan. In further alleged that P&G products have symbols (i.e. ram horns forming 666) that will tell you that the company is in support of the satanic church. Although it is not determined how many of this message in within the AmVox reached, P&G received complaints and inquiries about this matter. After learning of the message, and after a demand was made to Randy Haugen (the person who distributed the message) to retract the message (which he did), P&G still received messages and the aforementioned rumor still circulated despite the retraction. Thus, P&G filed a claim of tortious interference with business relationships and unfair competition against Haugen.

! The DC dismissed the claim on the ground the message, although identifying the products of P&G, did not contain false representations about the QUALITIES AND CHARACTERISTICS OF THOSE PRODUCTS and so did not relate to a product within the meaning of the Lanham Act. Issue: ! Whether or not the message is properly classified under commercial activities for purposes of the Lanham Act. ! Whether or not the message is disparaging. Ratio: ! Yes. Commercial activities, although not explicitly defined in the act, means commercial transactions or all activities surrounding the peculiar commerce of a company defined as the exchange or buying and selling of commodities. The subject message herein linking P&G to satan clearly concerned the nature, characteristics or qualities of P&Gs commercial activities under the meaning of the law. A direct affiliation with Satan would certainly undermine a corporations reputation and goodwill by suggesting the corporation conducts its commercial activities in an unethical or immoral manner. The products here are purchased not only on the basis of inherent utility, but also for the images they project and the values they promote. It was the intent of the legislature to proscribe the unfair competition and they did not intent to limit the law narrowly to commercial activities but rather, they intended to encompass those activities which do not solely involve the provision of services or the production of goods. Properly construed, the term commercial activities herein encompasses P&Gs use of the profits from the sale of its goods. In order for representations to constitute commercial advertising or promotion under the act, they must be: 1. Commercial speech 2. By a defendant who is in commercial competition with the plaintiff 3. For the purpose of influencing consumers to buy defendants goods or services 4. Must be disseminated sufficiently to the relevant purchasing public to constitute advertising or promotion within that industry. In the present case, we are dealing with the fact that there is a theological component and a commercial component in the message. However, the bare fact that there is a theological component does not transform it to noncommercial speech. Plus, the message herein unambiguously urges recipients to eschew purchasing P&G products in favor of Amway products. While economic motivation or reference to a specific brand name and products, when viewed in isolation, might not render a message commercial speech, we conclude that those factors taken together with the instant messages promotion of Amway products at the expense of P&G products support the characterization of the subject message as commercial speech. In the absence of genuine issue as to the subject messages theological content, and in light of the messages exhortation to eschew purchasing P&G products in favor of Amway products, the conclusion that the subject message constitutes commercial speech for purposes of liability under the Lanham Act is unavoidable. ! It is not disparaging. Disparaging words, to be actionable per se must affect the plaintiff in some way that it is peculiarly harmful to one engaged in trade or profession. If it is of a general character, it is not enough unless the particular quality disparaged is of such a character that it is peculiarly valuable in the plaintiffs business or profession. Here, the allegations that P&G directs a percentage of its profits to the church of Satan are not incompatible with that business in the manner necessary to be actionable as slander per se. Although offensive to many, an allegation of Devil worship, is disparagement of a general character, equally discreditable to all persons and does not pertain to a quality that is peculiarly valuable in plaintiffs professional activities of manufacturing and selling household consumer goods. Verizon Directories v. Yellow Book Facts: ! Yellow Book (YB) publishes a yellow pages directory (The Yellow Book) which competes with Verizons yellow pages directory (SuperPages) in a number of major markets. Verizon filed this case for false advertising and unfair competition against YB USAs commercials which falsely represent that more people use the Yellow Book that use the SuperPages.

The following commercials were shown to be falsely representing the foregoing: 1. The Senior Focus Group 3 marketing men who work for the Other Book Directory holding a focus groups session stating that they never looked at the Other Book. The commercial closes with an image of the Yellow Book standing on and next to the Other Books with a voice over saying more people choose Yellow Book, not the Other Book 2. The Apartment Lobby opens with 3 men in the apartment lobby with 2 stacks of directories (one the yellow and one the other book). The men watch as one by one, the residents of the apartment come into the lobby and pick a directory. The stack quickly disappears while all of the other books remain. The TVC ends with a voice over saying Today, people are choosing the Yellow Book, not that Other Book 3. The Wind Tunnel shows a man carrying the directories in a wind tunnel, and when the wind tunnel is turned on and the wind speed is increased, the other book gets blown away by a light wind, while the Yellow Book remains firmly in place even as the intensity of the win increases to the point where the other books marketer is blown off the screen. Verizon moved to dismiss the claims on the ground that the TVCs constitute nonactionable puffery as a matter of law. Issue: ! Whether or not there is a case for Section 43(a) of the Lanham Act or the NY General Business Law. ! Whether or not there is disparagement. Ratio: ! No. False representations of fact are distinguished from puffery. Puffery is somewhat an amorphous concept. It has been defined as an exaggeration or overstatement expressed in broad, vague and commendatory language. It is not actionable under the Lanham Act because it cannot be proven either true or false. Neither is it actionable under the NY General Business law for much the same reasons that it is not illegal under the Lanham Act. On a literal level the commercials are merely playful and absurd. No one would believe that an adult finding two free directories at the doorstep would leave one; both would almost certainly be taken. Even a young child would know that a blast of air that could blow away both a yellow pages directory and an adult would not leave another directory of similar heft unaffected. ! No. Product disparagement refers to words or conduct which tend to disparage or reflect negatively on the quality, condition or value of a product or property. To state a claim for disparagement, the plaintiff must allege: 1. 2. 3. 4. the falsity of the statement publication to a third person malice or actual malice special damages
Here, Verizon did not state in its complaint the identity of he customers who have ceased to subscribe to SuperPages as a result of the TVCs. Being a 4M dollar company, it would be striking if such a large organization would be unable to identify even one customer it had allegedly lost as a result of the TVCs. Terry Gilliam v. American Broadcasting Companies Facts: ! Monty Python is a groups of writers and performers who has gained popularity through its 30minute TV programs created for BBC as part of a comedy series entitled Monty Python Flying Circus. In their contract with BBC, it was stated there that BBC retains final authority to make changes to the script. However, there is nothing in the agreement which entitled BBC to alter the program once it has been recorded. Time Lite Films acquired the right to distribute certain BBC programs including the Monty Python series and was permitted to edit the programs only for insertion of commercials and applicable censorship or governmental rules and regulations Thereafter, ABC entered into an agreement with Time Lite Films to broadcast 2 90 minute programs each comprising of 3 episodes of Monty Python shows that had not been previously shown in the country. It was the understanding of BBC that ABC was going to show the program in its entirety but it was found that 24 of the 90 minutes have been omitted. Some of the editing had been

done in order to make time for commercials; other material had been edited, according to ABC because the original programs contained offensive or obscene matter. Thus, the group filed this action to enjoin the broadcast and for damages on the ground that the editing has caused the film or program to lose its iconoclastic verve. The judge denied the motion on the ground that it was unclear who owned the copyright in the programs produced by BBC from the scripts written by Monty Python. Issue: ! Whether or not there is copyright infringement. Ratio: ! Yes (the way I understand it, there is copyright infringement but there is no violation of the Lanham Act because copyright infringement is covered under a different law ??). In determining whether there is infringement, one has to look at the fact of whether the editing was substantial. In this case, the agreement between Monty and BBC specifically permitted the latter to license the transmission of the recordings made by BBC to distributors such as Time Life for broadcast in overseas territories. One who obtains such permission in the production of a derivative work may not exceed the specific purpose for which permission has been granted. The claim here is that the revisions in the script could only be made after consultation with Monty and that ABCs broadcast of a program edited after recording and without consideration with Monty exceeded the scope of any license that BBC was entitled to grant. While BBC obtained the rights to the derivative work, they did not have any rights they did not obtain from Gilliam et. al. Since Gilliam did not give them the right to edit the work, they couldn't sell the right to edit the work to ABC. If a distortion or truncation in connection with a use constitutes an infringement of copyright, there is no need for an additional cause of action beyond copyright infringement. An obligation to mention the name of the author carries the implied duty, however, as a matter of contract, not to make such changes in the work as would render the credit line a false attribution of authorship. So far as the Lanham Act is concerned, it is not a substitute for droit moral which authors in Europe enjoy. If the licensee may, by contract, distort the recorded work, the Lanham Act does not come into play. If the licensee has no such right by contract, there will be a violation in breach of contract. The Lanham Act can hardly apply literally when the credit line correctly states the work to be that of the plaintiffs which, indeed it is, so far as it goes. The vice complained of is that the truncated version is not what the plaintiffs wrote. But the Lanham Act does not deal with artistic integrity. It only goes to misdescription of origin and the like. Yu v. Court of Appeals Facts: ! Petitioner is the exclusive distributor of House of Mayfair wallcovering products in the Philippines and it had an exclusive sales agency agreement with the House of Mayfair since 1987 to promote and procure orders for Mayfair wallcovering products from customers in the Philippines. He filed a case against private respondent Unisia Merchandising when it purchased the merchandise from the House of mayfair in England through FNF Trading in West Germany and sold said merchandise in the Philippines. In the petition at hand, petitioner anchors his plea for redress on his perception that private respondent has distributed and continues to sell Mayfair covering products in contravention of petitioner's exclusive right conferred by the covenant with the House of Mayfair. For this, a temporary restraining order was issued to last until further notice from the Court. Notwithstanding the proscription, Unisia persisted in the distribution. Issue: ! Whether or not a writ may be issued against Unisia. Ratio: ! Yes. That the exclusive sales contract which links petitioner and the House of Mayfair is solely the concern of the privies thereto and cannot thus extend its chain as to bind private respondent herein is, We believe, beside the point. Verily, injunction is the appropriate remedy to prevent a wrongful interference with contracts by strangers to such contracts where the legal remedy is insufficient and the resulting injury is irreparable. Unisia Merchandising Co., Inc. is not a

party thereto but its accountability is "an independent act generative of civil liability. To Our mind, the right to perform an exclusive distributorship agreement and to reap the profits resulting from such performance are proprietary rights which a party may protect which may otherwise not be diminished, nay, rendered illusory by the expedient act of utilizing or interposing a person or firm to obtain goods from the supplier to defeat the very purpose for which the exclusive distributorship was conceptualized, at the expense of the sole authorized distributor. Solid Triangle Sales v. Sheriff Facts: ! Solid Triangle filed with the Office of the City Prosecutor an affidavit for unfair competition against the members of the Board of Sanly alleging that ERA, owned and operated by LWT is in conspiracy with Sanly (collectively, respondents) in selling and/or distributing Mitsubishi brand photo paper to the damage and prejudice of Solid Triangle (who claims to be the sole and exclusive distributor thereof pursuant to an agreement with Mitsubishi). The Judge in the said case issued an order in favor of respondents quashing the search warrant issued and ordering the return of the seized goods against respondents. In view of the quashal of the warrant and the return of he seized goods, the fiscal was deprived of vital evidence to determine probable cause in the case of unfair competition. Issue: ! Whether or not the judge can quash the warrant already implemented. ! Whether or not there is unfair competition. Ratio: ! Yes. Inherent in the courts power to issue warrants is the power to quash warrants already issued. In this connection, a motion to quash should be filed in the court that issued the warrant unless a criminal case has been instituted in another court in which case, the motion should be filed with the latter. The proceedings for the issuance/quashal of a search warrant before a court on the one hand, and the preliminary investigation before an authorized officer on the other, are proceedings entirely independent of each other. One is not bound by the other's finding as regards the existence of a crime. The purpose of each proceeding differs from the other. The first is to determine whether a warrant should issue or be quashed, and the second, whether an information should be filed in court. When the court, in determining probable cause for issuing or quashing a search warrant, finds that no offense has been committed, it does not interfere with or encroach upon the proceedings in the preliminary investigation. The court does not oblige the investigating officer not to file an information for the court's ruling that no crime exists is only for purposes of issuing or quashing the warrant. The effect of the quashal of the warrant on the ground that no offense has been committed is to render the evidence obtained by virtue of the warrant "inadmissible for any purpose in any proceeding," including the preliminary investigation. It may be true that, as a result of the quashal of the warrant, the private complainant is deprived of vital evidence to establish his case, but such is the inevitable consequence. The preliminary investigation and the filing of the information may still proceed if, because of other (admissible) evidence, there exists "sufficient ground to engender a well-founded belief that a crime has been committed and the respondent is probably guilty thereof, and should be held for trial. ! There is no case for unfair competition. Sanly Corporation did not pass off the subject goods as that of another. Indeed, it admits that the goods are genuine Mitsubishi photographic paper, which it purchased from a supplier in Hong Kong. Petitioners also allege that private respondents made it appear that they were duly authorized to sell or distribute Mitsubishi Photo Paper in the Philippines. Assuming that this act constitutes a crime, there is no proof to establish such an allegation. NESTLE v. Casa Helvetica Facts: ! Nestle owns the Perugina trademark and for many years, Casa Helvetica has been the authorized distributor of such chocolates in Puerto Rico. However, Nestle forsook Casa Helvetica and licensed its affiliate, Nestle Puerto Rico as the exclusive distributor in Puerto Rico. Meanwhile, in 1990, without obtaining Netstles consent, Casa Helvetica began to purchase Venezuelan made chocolates bearing the

Perugina mark and distributed them in Puerto Rico. For this, Nestle filed a case for infringement and the violation of the right of exclusive distributorship under the Lanham Act claiming that Casa Helvetica;s use of the mark was likely to confuse consumers into the mistaken belief that the chocolates are the same as the Italian chocolates and are authorized by Nestle for sale in Puerto Rico. ! The DC held that the differences between the chocolates did not warrant the injunctive relief in the absence of demonstrated consumer dissatisfaction and harm to the goodwill of plaintiffs. Issue: ! Whether or not there is a violation of the Lanham Trademark Act. Ratio: ! Yes. Although it has been said that trademark law generally does not reach the sale of genuine goods bearing a true mark even though such sale is without the mark owners consent, the maxim does not apply when genuine but unauthorized, imports differ materially from authentic goods authorized for sale in the domestic market. Unauthorized importation and sale of materially different merchandise violates the law because a difference in the products bearing the same name confuses the consumers and impinges on the local trademark holders goodwill. As such, in this case, the chocolates are not genuine within the meaning of the law since they are: (a) not authorized for sale in the US; and (b) materially different from the authorized version. The mere licensing of production abroad does not support an inference of consent to import licenses products into the US. Nestle never authorized the sale of the chocolates in Puerto Rico. Therefore, the question of violation of the law boils down to whether material differences exist between the Italian made chocolates and the Venezuelan made chocolates sufficient to create a likelihood of confusion. The probability of confusion is great when the same mark is displayed on the goods are not identical but nonetheless bear strong similarities in appearance or function. Gray goods often fall within this category. Thus, when dealing with the importation of gray goods, the court must be necessarily concerned with subtle differences for it is by subtle differences that consumers are most easily confused. For this reason, the threshold for materiality must be kept low enough to take account of potentially confusing differences, differences that are not blatant to make it obvious to the average consumer that the origin of the product differs from his or her expectations. Thus, the court concludes that the existence of any difference between the registrants product and the allegedly infringing gray good that consumers would likely consider to be relevant when purchasing a product creates a presumption of consumer confusion sufficient to support a Lanham Act claim. Anyhigher threshold would endanger the manufacturer. Of course, this presumption is rebuttable. The differences: Italian Chocolate Quality Control # Leaves Italy in # refrigerated containers which arrive at the facitlity in Puerto Rico. # Immediately # transported in refrigerated rooms # Venezuelan Chocolate Arrives in Puerto Rico via a commercial air freight Transferred in a central air cargo cooler Transports it into a warehouse made with domestic beans, imported hazelnuts and ordinary crystal sugar
# 5% more milk with # prolonged shelf life # contain Ecuadorian and Africa cocoa beans, fresh hazelnuts and cooked sugar syrup Configuration come in a variety of shapes than the Venezuelan pieces. Packaging # glossy finish # Shiny finish Price # Higher price # Lower price
Composition
Thus, it is readily apparent that the material differences between the products are relevant. The use of the chocolates manifesting such differences is presumptively likely to cause

confusion. Because the differences are material, there is a case for unfair competition. Lever Brothers v. United States (Caveat. Read Origs, confusing eh) Facts: ! Parties in dispute herein are Lever UK and Lever US which are 2 affiliated companies which use the same words SHIELD AND SUNLIGHT as trademakrs for products that differ materially in the 2 countries because they adjusted them according to the countrys differing tastes and conditions. Consumers are apparently capable of detecting the differences between the contents of the UK and US products once they start using them. ! However, Lever US filed a case praying for the issuance of an injunction alleging that there is a likelihood of confusion as between the products of the companies. Allegedly, it had received letters from consumers expressing their rage or disappointment with what they believed, at the time of the purchase, to be discounted version of the similar US product. Despite demands made, the UK company refuses to halt importation. Lever US contends that where affiliated domestic and foreign firms produce goods bearing the same trademark but different in physical content, the foreign products copy or simulate the domestic trademark so that forbids their importation notwithstanding the fact of affiliation. On the other hand Lever UK seeks refuge in the exception found in the Customs Service which exempts the foreign and domestic trademark or tradename owners who are parent and subsidiary companies or are otherwise subject to common ownership or control. Issue: ! Whether or not an injunction may be issued against Lever UK. Ratio: ! Customs' central thesis, that affiliation between the foreign producer and domestic markholder automatically defines the foreign goods as genuine, draws on an important truth--that a trademark holder cannot infringe its own mark. Thus, if a US markholder itself imports goods (or licenses another to do so), the markholder's conduct of or authorization of the importation makes the goods authentic, whether they are better, worse, or the same as the US markholder's domestic products. To the extent that the affiliate exception extends this principle to goods imported into the US by companies affiliated with the US markholder, it does nothing more than treat the two companies as being constructively one for infringement purposes. As such it seems unobjectionable. Apart from its attempted reliance on authority and the impossibility of self-infringement, the Customs Service asserts some policy arguments. First, it contends that because of the affiliation, the dispute is better suited for resolution "in the boardroom" than the court room. But this solution is obviously costly. The Lever affiliates have succeeded in attaching to products designed for their respective markets ordinary words that have both a favorable "spin" and a natural link to those products. Customs has offered us no shadow of a reason why it would serve any public interest implicit in Sec. 42 to compel Lever to abandon the resulting goodwill, or (looking ahead) to refrain in the first place from establishing such goodwill by use of identical words. We think the natural, virtually inevitable reading of Sec. 42 is that it bars foreign goods bearing a trademark identical to a valid US trademark but physically different, regardless of the trademarks' genuine character abroad or affiliation between the producing firms. On its face the section appears to aim at deceit and consumer confusion; when identical trademarks have acquired different meanings in different countries, one who imports the foreign version to sell it under that trademark will (in the absence of some specially differentiating feature) cause the confusion Congress sought to avoid. The fact of affiliation between the producers in no way reduces the probability of that confusion; it is certainly not a constructive consent to the importation. The cases are entirely congruent with this view. Customs' assertion of administrative difficulties appears overdrawn, and in any event would seem to justify no more than inaction in those cases that are close on the factual issue of product identity. Thus, despite the deference we owe Customs under Chevron, we believe that the affiliate exception does not square with Sec. 42. Du Pont De Nemours Powder Co. v. Masland Facts: ! A bill was filed to prevent the defendant Masland herein from using or disclosing secret processes the knowledge of which was acquired by defendant while in the plaintiffs employ.

Defendant herein admits that he intends to manufacture leather but denies that he intends to use any inventions, trade secrets or secret processes of the plaintiffs that he may have learned in any confidential relation prefacing his denial. To the contrary, he claims that many things claimed by the plaintiff are actually well known to the trade. Issue: ! Whether or not an injunction may be issued to prevent the use and disclosure of trade secrets. Ratio: ! Yes. If the disclosure is forbidden to one who denies that there is a trade secret, the merits of his defense are adjudged against him before he has a chance to be hear or to prove his case. The word property as applied to trademarks and trade secrets is an unanalyzed expression of certain secondary consequences of the primary fact that the law makes some rudimentary requirements of good faith. The property may be denied but the confidence may not be. Therefore, the starting point for the present matter is not property or due process of law, but that the defendant stood in confidential relations with the plaintiff during his employ. The defendant should not fraudulently abuse the trust reposed him. If there is any disadvantage in the fact that he knew of the secret, he must take the burden with the good. The injunction asked by the plaintiffs forbade only the disclosure of processes claimed by them including the disclosure to experts or witnesses produced during the taking of proofs but excepting the defendants counsel. Van Products Co v. Gen Welding & Fabricating Facts: ! Van was a corporation engaged in making of air vises. It contacted Norton (also the owner of a patent for the drier but not the desiccant) who claimed to have invented a unique air drier that could be used profitably in many areas of industry and manufacturing to prevent and eliminate fouling, rusting and shortening the life in tools and machinery operated by compressed air (a deliquescent desiccant air drier). This device was a substantial improvement over the expensive and cumbersome driers then in general use, which required regeneration and the use of alternate driers. Rapp herein is an employee of Van who rose to the rank of a general manager. During his stay with Van, he ran the gamut of the tasks involved in this segment of Vans business. Rapp therefore was thoroughly imbued, through his industrious application, with all the problems, processes and advantages involved in the production, sale and maintenance of this type of drier. He learned everything there was to learn for the trade. In 1952, General began to engineer and design parts of Vans drier on behalf of Van according to the patent. Rapp supervised the construction of these. However, subsequently, suspecting that Rapps loyalty leaned more towards General, Van terminated his employment. Rapp was them employed by General and they produced a deliquescent desiccant air drier on behalf of General substituting sodium chloride which performed the same function. For this, Rapp was granted a patent for his desiccant and the drier. ! Van instituted this action for injunctive relief and accounting which was objected to by Rapp on the ground that the state court had no jurisdiction since federal courts have exclusive jurisdiction over patent rights. Issue: ! Whether or not Rapp caused damage to Vans business throught the use of confidential material information misappropriated by Rapp while he was in its employ. Ratio: As a preliminary, the existence of patent rights is not controlling in this case. Infringement actions may be prosecuted in federal courts and existing patent rights may be unchallengable in a state court. However, the rights of Van to manufacture and sell drier involved depends upon how the knowledge in connection therewith is obtained. ! There is no violation because said information are not trade secrets. In this case, it is alleged that they misappropriated: 1. The idea and the original concept of the deliquescent type of air drier;

2. Information derived from building up, maintaining intimate card files on customers and their peculiar problems and needs and in servicing said customers. 3. Vans know-how in selling 4. Results of research and development and experimentation. 5. Secret of desiccant 6. Vans customers and receivables. 7. Advertising method and material. The trade secret here involved is not just any of the features or any others which constitute trade secret contended for by Van but rather the whole picture combining the original idea or theory as worked up mechanically by Van into a tangible and marketable product and the know-how along the line. A trade secret may consist of any formula, pattern, device or compilation of information which is used in ones business, and which gives him an opportunity to obtain an advantage over competitors who do not know how to use it. To be entitled to such relief, it must be established: 1. That there was a trade secret or a secret of process of manufacture (as in this case) 2. It was of value to the employer and important in the conduct of his business 3. That by reason of discovery or ownership the employer had the right to the use and enjoyment of the secret 4. The secret was communicated to the employee while he was employed in a position of trust and confidence For the cause of action to arise: 1. Possession by the plaintiff of knowledge or information which is not generally known 2. Communication by the plaintiff to the defendant under an express or implied agreement limiting its use or disclosure by the defendant 3. Use or disclosure by the defendant to the injury of plaintiff. Thus, ultimately, the question you need to ask is whether the information is such here that the court must act as a judicial eraser to blot out Rapps knowledge and skill once he left the company. Secrets which are of general knowledge, skill and While employed in Harshaw, the employees executed a condition of employment requiring them not to disclose confidential information or trade secrets obtained as employees of Harshaw. ! Petitioners in this case brought a complaint seeking injunctive relief and damages for the misappropriation of the trade secrets of Harshaw in favor of Bicron Corporation (a competitor). Allegedly, there was a disclosure and use of trade secrets by releasing the same to the public. experience are not proper subjects of mental purge. In this case, Rapp was hired to conduct and of which he made a selling process. At most, Van can claim co-authorship on the basis that Rapp was paid to do this work, but much of the initiative and creative questioning was the product of Rapps own ambition. Thus, it would seem that this generalized knowledge in the field of deliquescent desiccant air driers was a labor asset which Rapp was privileged to carry with him to his new employer. They are not trade secrets. A manufacturing company is merely the sum of its producing units, including the skills of its employees. Granted that Van had a very precise knowledge of the field of air driers, it was mainly derived from Nortons inventiveness and Rapps industrious experimentation. Rapps know how here is not protectable from the exploitation by Rapp. If there is anything protectable herein, it is the composition of the desiccant Van used in its driers, which was secret and remained so after Rapps departure. In fact, Rapp had to formulate another desiccant to use in the drier which he was privileged to construct. Kewanee Oil Co v. Bicron Corporation Facts: ! Harshaw Chemical (Harshaw) is a leading manufacturer of a type of synthetic crystal which is useful in the detection of ionizing radiation. It commenced research into the growth of this type of crystal and was able to produce one less than 2 inches in diameter. Harshaw had developed many processes, procedures, and manufacturing techniques in the purification of raw materials and the growth and encapsulation of the crystals which enabled it to accomplish this feat. Some of these processes Harshaw considers to be trade secrets.

! DC granted the relief, applying Ohios trade secrets law. 6th Circuit CA reversed the decision of the DC on the ground that the trade secrets law were in conflict with the patent laws of the US. CA reversed said decision and held that the court cannot grant monopoly protection to processes and manufacturing techniques that were appropriate subjects for consideration under the law for a federal patent but which had been in commercial use for over one year, and so were no longer eligible for patent protection. Issue: ! Whether or not there is a right to protection of trade secrets where there is a patent. Ratio: ! The court of appeals correctly erred that the trade secret law is not preempted by the federal patent law. The protection accorded the trade secret holder is against the disclosure or unauthorized use of the trade secret by those to whom the secret has been confided under the express or implied restriction of nondisclosure or nonuse. The law also protects the holder of a trade secret against disclosure or use when the knowledge is gained not by the owners volition but by some improper means. A trade secret law however does not offer protection against discovery by fair and honest means, such as independent invention, accidental disclosure or by so-called reverse engineering (by starting with the known product and working backward to divine the process which aided in its development or manufacture) thus it can easily be lost. Novelty is not required for a trade secret. However some novelty will be required if merely because that which does not possess novelty is usually known secrecy, in the context of trade secrets, this implies at least minimal novelty. The patent law does not explicitly endorse or forbid the operation of trade secret law. To determine whether the Ohio law "clashes" with the federal law, it is helpful to examine the objectives of both the patent and trade secret laws. 1. Patent requires that the application shall include a full and clear description of invention and of the manner and process of making and using it so that the person skilled in the art may make and use the invention. Federal law requires that all ideas in general circulation be dedicated to the common good unless they are protected by a patent. 2. Trade Secrets maintenance of standards of commercial ethics and the encouragement of invention Certainly the patent policy of encouraging invention is not disturbed by the existence of another form of incentive to invention. In this respect, the two systems are not and never would be in conflict. Similarly, the policy that matter once in the public domain must remain in the public domain is not incompatible with the existence of trade secret protection. By definition, a trade secret has not been placed in the public domain. Even as the extension of trade secret protection to patentable subject matter that the owner knows will not meet the standards of patentability will not conflict with the patent policy of disclosure, it will have a decidedly beneficial effect on society. Trade secret law will encourage invention in areas where patent law does not reach, and will prompt the independent innovator to proceed with the discovery and exploitation of his invention. Competition is fostered, and the public is not deprived of the use of valuable, if not quite patentable, invention. Trade secret law encourages the development and exploitation of those items of lesser or different invention than might be accorded protection under the patent laws, but which items still have an important part to play in the technological and scientific advancement of the Nation. Trade secret law promotes the sharing of knowledge, and the efficient operation of industry; it permits the individual inventor to reap the rewards of his labor by contracting with a company large enough to develop and exploit it.

Computer Associates International v. Altai Facts: ! Computer Associates (CAI) and Altai are companies engaged in the computer software industry designing, developing and marketing various types of computer programs. CAI marketed programs entitled CA Scheduler (Scheduler) which is a job scheduling program designed for IBM mainframe computers with a primary function of creating a schedule specifying when the computer should run various tasks and then to control the computer as it executes the schedule. The Scheduler contains a subprogram called the ADAPTER which is an not independently marketed product of CAI because it is a wholly integrated component of the Scheduler. Nevertheless, it plays an important role in the program because it is the second common system interface component which contains all the interconnections between the first component (containing all the task specific portions) and the operating system. In 1982, Altai began marketing its own job scheduling program entitled ZEKE (ran in conjunction with an MVS operating system). Williams (then employee and noe president of Altai) approached his longtime friend Arney (employee of CAI) because he wanted to recruit Arney to assist in designing the ZEKE. At the time he approached Arney, he was aware of both the Scheduler and the Adapter programs of CAI but Williams was not involved in their development and had never seen the codes of either program. Moreover, he did not know that Adapter was a component of the Scheduler. On the other hand, Arney was intimately connected and familiar with the various aspects of the Adapter. At the time he was working for the CAI, he was permitted to take home a copy of its source code. Hence, when he left CAI, he took with him copies of the source code for both the VSE and MVS versions of Adapter. He did this in knowing violation of the employee agreement he signed. In three months, Arney successfully completed the OSCAR/VSE project. In an additional month he developed an OSCAR/MVS version. When the dust finally settled, Arney had copied approximately 30% of OSCAR's code from CAI's ADAPTER program. ! After confirming suspicions, CAI secured a copyright for its versions of the Scheduler then brought a suit for copyright and trade secret misappropriation against Altai. It was only at this time that Williams knew of the copying Arney did. Upon advice of the counsel, Wiliams initiated the rewriting of OSCAR to excise those portions which had been copied from Adapter. The goal here was to save as much as possible of the OSCAR that can be legitimately used. The result of this rewriting was the OSCAR 3.5. While Altai and Williams acted responsibly to correct Arney's literal copying of the ADAPTER program, copyright infringement had occurred. Issue: ! Whether or not Altai is liable for trade secret misappropriation in copying the codes of Adapter into Oscar. Ratio: ! Yes. Trade secret laws are not preempted by copyright laws. So long as trade secret law is employed in a manner that does not encroach upon the exclusive domain of the Copyright Act, it is an appropriate means by which to secure compensation for software espionage. In copyright, the law affords a copyright owner the exclusive right to reproduce the work, prepare derivative works, distribute copies of the work by sale or otherwise and with respect to certain artistic works, perform the work publicly and display the work publicly. This provision of law thus preempts only those state law rights that may be abridged by an act which in and of itself, would infringe one of the exclusive rights provided by federal copyright law. Bbut if an extra element is required instead of or in addition to the acts of reproduction, performance, distribution or display in order to constitute a cause of action, then the right does not lie within the general scope of copyright and there is no preemption. Trade secret protection, the branch of unfair competition law at issue in this case, remains a "uniquely valuable" weapon in the defensive arsenal of computer programmers. Precisely because trade secret doctrine protects the discovery of ideas, processes, and systems which are explicitly precluded from coverage under copyright law, courts and commentators alike consider it a necessary and integral part of the intellectual property protection extended to computer programs. The legislative history of the law states that the evolving common law rights of trade secrets would remain unaffected as long as the causes of action contain elements such as a breach of trust or confidentiality that are different in kind from copyright infringement. Congress did not consider the term misappropriation to be necessarily synonymous with copyright infringement or to serve as the talisman of preemption. Trade secret

claims often are grounded upon a defendant's breach of a duty of trust or confidence to the plaintiff through improper disclosure of confidential material. It is undisputed that, when Arney stole the ADAPTER code and incorporated it into his design of OSCAR 3.4, he breached his confidentiality agreement with CAI. The district court noted that while such action might constitute a valid claim against Arney, CA is the named defendant in this lawsuit. Additionally, the district court found, as a matter of fact, that "[n]o one at Altai, other than Arney, knew that Arney had the ADAPTER code. While we agree with the district court that OSCAR 3.5 did not contain any expression protected by copyright, it may nevertheless still have embodied many of CA's trade secrets that Arney brought with him to Altai. Since Altai's rewrite was conducted with full knowledge of Arney's prior misappropriation, in breach of his duty of confidentiality, it follows that OSCAR 3.5 was created with actual knowledge of trade secret violations. Thus, with regard to OSCAR 3.5, CAI has a viable trade secret claim against Altai that must be considered by the district court on remand. This claim is grounded in Altai's alleged use of CAI's trade secrets in the creation of OSCAR 3.5, while on actual notice of Arney's theft of trade secrets and incorporation of those secrets into OSCAR 3.4. William Ollendorff v. Ira Abrahamson Facts: ! William is and has for a long time been engaged in the manufacturing of ladies embroidered underwear for export. He imports material from which this underwear is made and adopts decorative designs which are embroidered upon it by Filipino needle workers from patterns selected and supplied by him. The workers employed by plaintiff are under contract to work for plaintiff exclusively. Some 15,000 home workers and 800 factory workers are engaged in this work for the plaintiff. William and Ira entered into a contract whereby Ira was employed for a term of 2 years at a certain rate of salary. Ira, under the contract, was to devote his entire time, attention, energies and industry to the promotion of the business of William. Likewise, under the said contract, it was stated that Ira, his heirs, successors and assigns will not enter into or engage himself directly or indirectly, nor permit any other person under his control to enter in or engage in a similar or competitive business to that of the said party of the first part anywhere within the Philippines for a period of 5 years from the date of the contract. The duties performed by him were such as to make it necessary that he should have this knowledge of plaintiff's business. Defendant had a general knowledge of the Philippine embroidery business before his employment by plaintiff, having been engaged in similar work for several years. After his employ with William, he left the Philippines for the US. When he returned, he was already the manager of the Philippine Underwear Company. It does not maintain a factory in the Philippines but send material and embroidered designs from NY to its local representative here who employs Filipino needle workers to embroider the designs and make up the garments in their homes. ! Thus, plaintiff herein commenced this action praying for injunction on the ground that their contract stated that he would not enter into or engage himself directly or indirectly in a similar competitive business to that of plaintiff anywhere within the Philippines for a period of 5 years. The trial court granted injunction and subsequently made it perpetual. For this, defendant argues that the contract is void for being an unreasonable restraint on trade. Issue: ! Whether or not the contract is void for being an unreasonable restraint on trade. ! Whether or not there is ground for injunction. Ratio: ! Valid. Obligations created by contracts have the force of law between the contracting parties and must be enforce in accordance with their tenor. The only limitation is that it should not be contrary to law, morals or public order. Originally the English courts adopted the view that any agreement which imposed restrictions upon a man's right to exercise his trade or calling was void as against public policy. In the course of time this opinion was abandoned and the American and English courts adopted the doctrine that where the restraint was

unlimited as to space but unlimited as to time were valid. In recent years there has been a tendency on the part of the courts of England and America to discard these fixed rules and to decide each case according to its peculiar circumstances, and make the validity of the restraint depend upon its reasonableness. If the restraint is no greater than is reasonably necessary for the protection of the party in whose favor it is imposed it is upheld, but if it goes beyond this is declared void. Following this opinion, we adopt the modern rule that the validity of restraints upon trade or employment is to be determined by the intrinsic reasonableness of restriction in each case, rather than by any fixed rule, and that such restrictions may be upheld when not contrary to afford a fair and reasonable protection to the party in whose favor it is imposed. We are of the opinion, and so hold, that in the light of the established facts the restraint imposed upon defendant by his contract is not unreasonable. A business enterprise may and often does depend for its success upon the owner's relations with other dealers, his skill in establishing favorable connections, his methods of buying and selling - a multitude of details, none vital if considered alone, but which in the aggregate constitute the sum total of the advantages which the result of the experience or individual aptitude and ability of the man or men by whom the business has been built up. Failure or success may depend upon the possession of these intangible but all important assets, and it is natural that their possessor should seek to keep them from falling into the hands of his competitors. It is with this object in view that such restrictions as that now under consideration are written into contracts of employment. Their purpose is the protection of the employer, and if they do not go beyond what is reasonably necessary to effectuate this purpose they should be upheld. ! Yes. The admitted fact that plaintiff has failed to establish proof of pecuniary damage by reason of the breach of the contract by defendant by the acts committed prior to the issuance of the preliminary injunction is, of course, a bar or nay money judgment for damages for the breach of the contract, but will not justify us in permitting defendant to continue to break his contract over plaintiff's objection. The injury is a continuous one. The fact that the court may not be able to give damages for that part of the breach of the contract which had already taken place when its aid was invoked is no reason why it should countenance a continuance of such disregard of plaintiff's rights. The injury done the business of a merchant by illegal or unfair competition is exceedingly difficult to measure. A diminution of the volume of a business may be due to so many different causes that it is often impossible to demonstrate that it has in fact been caused by the illegal competition of the defendant. This is frequently the case in suit for the infringement of trademark rights, in which the courts may enjoin the continued use of the infringing mark, although unable to assess damages for the past injury. Air Philippines v. Pennswell Facts: ! Air Philippines is a domestic corporation engaged in the business of air transportation services. On the other hand, Pensswell is organized to engage in the business of manufacturing and selling industrial chemicals, solvents and special lubricants. On various dates, respondent Penswell delivered and sold to Air Philippines sundry goods in trade. However, for failure to comply with the obligations under their contracts, Penswell filed a complaint for sum of money with the RTC. In its Answer, petitioner contended that its refusal to pay was not without reason. They alleged that the previous 4 transactions covered misrepresented items allegedly belonging to a new line but were in truth and in fact, identical with products petitioner had previously purchased from respondent. Allegedly, Penswell merely altered the names and labels of such goods. Petitioner asseverated that had respondent been forthright about the identical character of the products, it would not have purchased the items complained of. To conduct a comparison of the products, a motion to compel respondent to give a detailed list of the ingredients and chemical components of its products. This was granted by the court. For which, respondent sought reconsideration on the ground that it cannot be compelled to disclose the chemical components sought because the matter is confidential. It argued that what petitioner endeavored to inquire upon constituted a trade secret which respondent cannot be forced to divulge. Respondent maintained that its products are specialized lubricants, and if their components were revealed, its business competitors may easily imitate and market the same types of products, in violation of its proprietary rights and to its serious damage and prejudice. RTC gave this credence and reversed itself.

Issue: ! Whether or not there is grave abuse discretion on the part of the RTC judge when it granted the MR of Penswell. Ratio: ! There is no grave abuse of discretion. The ingredients or composition of Penswells lubricants are trade secrets which it cannot be compelled to disclose. The drafters of the Constitution also unequivocally affirmed that, aside from national security matters and intelligence information, trade or industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well as banking transactions (pursuant to the Secrecy of Bank Deposits Act) re also exempt from compulsory disclosure. It is thus clear from the foregoing that a party cannot be compelled to produce, release or disclose documents, papers, or any object which are considered trade secrets. Pennswell has a proprietary or economic right over the ingredients or components of its lubricant products. The formulation thereof is not known to the general public and is peculiar only to [respondent] Pennswell. Penswell has a right to guard its trade secrets. Otherwise information can be illegally and unfairly used by business competitors who, through their access to Penwells business secrets, may use the same for their own private gain and to the irreparable prejudice of the latter. A trade secret is defined as a plan or process, tool, mechanism or compound known only to its owner and those of his employees to whom it is necessary to confide it. It also extends to secret formula or process not patented but known only to certain individuals using it in compounding some article of trade having a commercial value. It may consist of any formula, pattern or device or compilation of information that: 1. Is used in ones business and 2. Gives the employer an opportunity to obtain an advantage over competitors who do not possess the information. To determine whether or not information is a trade secret, American jurisprudence has developed the following factors: 1. Exent to which information is known outside the business of the employer 2. Extent to which the information is known by employees and others involved in the business 3. Extent of measures taken by the employer to guard the secrecy of information 4. Value of the information to the employer and to competitors 5. Amount of effort or money expended by the company in developing the information 6. Extent to which the information could be easily or readily obtained through an independent source. The chemical composition, formulation, and ingredients of respondents special lubricants are trade secrets within the contemplation of the law. Respondent was established to engage in the business of general manufacturing and selling of, and to deal in, distribute, sell or otherwise dispose of goods, wares, merchandise, products, including but not limited to industrial chemicals, solvents, lubricants, acids, alkalies, salts, paints, oils, varnishes, colors, pigments and similar preparations, among others. It is unmistakable to our minds that the manufacture and production of respondents products proceed from a formulation of a secret list of ingredients. In the creation of its lubricants, respondent expended efforts, skills, research, and resources. What it had achieved by virtue of its investments may not be wrested from respondent on the mere pretext that it is necessary for petitioners defense against a collection for a sum of money. By and large, the value of the information to respondent is crystal clear. Our conclusion is that the detailed ingredients sought to be revealed have a commercial value to respondent. Not only do we acknowledge the fact that the information grants it a competitive advantage; we also find that there is clearly a glaring intent on the part of respondent to keep the information confidential and not available to the prying public. Clearly, in accordance with our statutory laws, this Court has declared that intellectual and industrial property rights cases are not simple property cases. Jurisprudence has consistently acknowledged the private character of trade secrets. There is a privilege not to disclose ones trade secrets. In the case at bar, petitioner cannot rely on the Consumer Act of the Philippines, in order to compel respondent to reveal the chemical components of its products. While it is true that all consumer products domestically sold, whether manufactured locally or imported, shall

indicate their general make or active ingredients in their respective labels of packaging, the law does not apply to respondent. Respondents specialized lubricants are not consumer products (limited only to food, drugs, cosmetics and devices). Cocoland Development Corporation v. NLRC Facts: ! Cocoland is a corporation engaged in the production of coffee, coconut, cacao and black pepper at its plantation in Basilan. It hired private respondent Mago, an agriculturist by profession a Field Supervisor (his work consisted of servicing agricultural needs of respondent at its plantation). Sometime in 1989, it was found out by Cocoland that Mago was engaged in extending technical services and advice to small famers without prior clearance from management. On account thereof, the company issued a memorandum which charged Mago for rendering professional services to outside parties without knowledge and consent of management in violation of the policy against unauthorized disclosure of trade secrets which violation was a ground for termination of his services with the company. In his letter reply, Mago admitted that he accepted the invitations of small farm owners and gave his consultancy services in order to uplift his standard of living however, he denied having violated the polict against unauthorized disclosure of trade secret claiming that its technology on coffee propagation was longer a secret as the same had been learned and applied by outside parties or small farm owners since 1986 and he was not the first one to provide outside consultancy services to such third parties. Private respondent further contended that in 1988, a majority of the petitioner corporation's staff, including private respondent and his men, had refused to sign a proposed memorandum of agreement for protecting the company's "Confidentiality of Technology", because the alleged technology was already known to outsiders. Mago filed a complaint for illegal dismissal with damages with the DOLE and after hearing on the merits, the Arbiter found that the dismissal was tainted with illegality. Charging the Labor Arbiter with grave abuse of discretion, the petitioner comes to this court. Issue: ! Whether or not the coffee propagation technique herein is a trade secret of the company. Ratio: ! No. There is failure to demonstrate with clear and convincing evidence that Mago violated the company policy since the said technology is hardly a trade secret since private respondent had established competently that the various propagation techniques claimed by petitioner is readily available to the public. Any determination by management as to the confidential nature of technologies, processes, formulae or other so-called trade secrets must have a substantial factual basis which can pass judicial scrutiny. A fictitious or nonexistent "secret" (or a publicly known one as in the instant case) can in no wise be the basis of a reasonable and lawful rule or company policy regarding confidentiality. Had petitioner successfully established by competent evidence the existence of such company policy as well as the confidential nature of its technology, perhaps things might have turned out differently. But inasmuch as petitioner failed utterly on both counts, it follows that there was no basis at all for private respondent's dismissal on the ground of either disobedience or loss of trust and confidence. The petitioner's failure to prove violation of the policy necessarily means that private respondent's dismissal was not justified. In this case, majority of the staff of the company and his men once refused to sign the confidentiality of technology because the alleged technology was already known to outsiders. He did not even have to ask permission since most of the employees knew the different techniques in the propagation and maintenance of different crops even before they were hired by the corporation. Capital Asset Research Corporation v. Finnegan Facts: ! Capital, a corporation consisting primarily of purchasing tax executions or liens and tax deeds on real properties for which property taxes are owed. If the property owner subsequently fails to satisfy the lien, and foreclosure proceedings take place, CARC bids on the deed to the property itself at public auction. Both CARC and Breen look to generate capital and profit by acquiring properties at bargain rates.

Capital hired Finnegan to establish Capitals business in the State of Georgia and to negotiate bulk contract purchases of tax liens on behalf of Capital and to facilitate the acquisition of tax deeds. During his employ, he facilitated the acquisition of tax deed through his own company TDI. After his employment relationship with Capital, he met with Douglas Breen to discuss the possibility of employment with Breen. Despite, however his change of employment his company still remained under contract with Capital. Therefore, he remained in Capitals operations in Georgia until present. ! Capital Asset asserts 3 claims against Finnegan in this case: 1. Breach of contract claim asserting breach of consulting agreement 2. Breach of contract claim asserting a breach of nondisclosure agreement 3. Claim asserting a violation of Georgia Trade Secrets Act. After bench trial, the court ruled in favor of Finnegan but ultimately, it concluded that Finnegan had misappropriated a computer diskette from Capital containing information which constituted a trade secret under the Act. Damages were awarded to Capital and enjoined Finnegan from dealing for 1 year with the properties included in Capitals portfolio of tax executions. Issue: ! Whether or not Finnegan is liable for trade secret misappropriation. Ratio: ! No. A claim for misappropriation of trade secrets under the Georgia Trade Secrets Act requires proof of: 1. There is a trade secret 2. Opposing party misappropriated the trade secret. The party asserting the existence of trade secret has the burden of proving that the information so qualifies and that the accused party violated the Act. A trade secret is an information without regard to form, including but not limited to a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans or a list of actual or potential customers or
suppliers which is not commonly known by or available to the public and which information derives economic value, actual or potential from not being generally known to and not being readily ascertainable by proper means, by other persons who can obtain economic value from its disclosure or use and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Even if all of the information is publicly available, a unique compilation of that information, which adds value to the information, also may qualify as a trade secret. The testimony regarding the "method" or "formula" which constitutes Capitals alleged trade secret describes the process by which Capital evaluates the amount to be bid on a tax deed. That process involves the consideration of the following information: 1. The assessed value of the property 2. The valuation reports on the property produced by 3rd party real estate information database services 3. The attributes of the property and the neighborhood based on drive bys of the site by Capital employees 4. Prediction of the property owners likelihood of redeeming the tax liens and making interest payments based on the specific owners payment record 5. National averages of tax redemption behavior. Capital claims as trade secrets its compilation of propertyspecific information, its national database on tax redemption behavior, and its final bid guidelines for tax deeds sold at auction. There is no question that the vast bulk of the information Capital uses in this process is available to the public or that the method utilized by Capital is the same basic method by which any informed buyer would prepare to submit an intelligent bid at any auction. Almost all of the enumerated items above are public records. A person experienced in the trade has sufficient time to compile the information from these public sources before the auction.

AMP Incorporated v. James Fleischhacker Facts: ! AMP Incorporated (AMP), the leading producer of electrical and electronic connection device brought this action against its former employee James and one of its competitors (Molex) and misappropriation of trade secrets. Allegedly, in 1984, Molex hired James who is the former Division Manager of its components division to fill the position of Director of Marketing of Molex. He rapidly advanced through the Molex and in 1982, he was named as Manager of the Components and Assemblies Division, the position he held until he resigned. As Manager, his duties includes supervision of 1200 people who were responsible for the manufacture and sale of component parts. AMP has alleged that Molex's hiring of Mr. Fleischhacker is part of a larger pattern of conduct by Molex involving the misappropriation and threatened misappropriation of AMP's trade secrets and other confidential information, and the solicitation and hiring of AMP personnel. Given the nature of the competition between Molex and AMP, the nature of the respective positions held by Mr. James at AMP and Molex, and an alleged propensity on the part of Molex to misappropriate AMP's internal information without regard to its proprietary nature, AMP maintains that it is inevitable that Mr. James and other AMP personnel hired by Molex will use and disclose AMP trade secrets and confidential information for the benefit and unjust enrichment of Molex. After trial on the merits, the court ruled in favor of James denying injunctive relief and damages against Molex for unfair competition and denying injunctive relief against Molex and Mr. James to prevent trade secret misappropriation. DC explained that because of their relatively simple design and the ease with which they could be copied, the products manufactured by AMP's Components & Assemblies Division did not constitute protectible trade secrets. Issue: ! Whether or not James is liable for trade secrets misappropriation Ratio: ! No. Resolution of the issue presented herein lies in the distinction between the protection afforded by an employer who has bound his employee by an enforceable post employment restrictive covenant not to compete and one who relies exclusively upon common law restrictions against disclosure of confidential information. While an enforceable restrictive covenant may protect material, such as confidential information revealed to an employee during the course of his employment, which does not constitute a trade secret, an employer's protection absent a restrictive covenant is narrower and extends only to trade secrets or near-permanent customer relationships. In this case, James was NOT BOUND by any enforceable restrictive covenant NOT TO COMPETE. However, he signed an agreement before he was employed by AMP that he shall keep confidential during and subsequent to his employment all information relating to the companys business or trade secrets, its sources of supply or lists of customers and its plans or contemplated actions. The language of this confidentiality agreement purports to prohibit Mr. Fleischhacker from disclosing to any non-AMP personnel any information relating to AMP and its operations forever. However, this agreement was held to be unenforceable since it constitutes unreasonable restraints on trade which unduly restrict the free flow of information necessary for business competition since it contains no geographical or duration limitation. Because Mr. James is not subject to any enforceable contractual restrictions, AMP was first required to establish the existence of genuine trade secrets in order for injunctive relief to be warranted. It is generally recognized in Illinois that at the termination of employment, an employee may not take with him confidential, particularized plans or processes developed by his employer and disclosed to him while the employer-employee relationship existed, which are unknown to others in the industry and which give the employer an advantage over his competitors. On the other hand, an employee is free to take with him general skills and knowledge acquired during his tenure with his former employer. One who has worked in a particular field cannot be compelled to erase from his mind all of the general skills, knowledge and expertise acquired through his experience. These skills are valuable to such employee in the market place for his services. Restraints cannot be lightly placed upon his right to compete in the area of his greatest worth. The district court credited the testimony of Mr. James that after he tendered his resignation he hurriedly packed his personal papers and belongings under the surveillance of an AMP employee and did not

deliberately take with him anything of a confidential nature. AMP has offered no proof to the contrary. The record is similarly devoid of any evidence that Mr. James ever systematically recorded, copied, compiled, or even purposefully memorized any of AMP's confidential business information while he was still employed at AMP for use in his new position at Molex. Mr. James was a high-level managerial executive who had broad supervisory responsibility for 1200 employees and over 10,000 different products at AMP. AMP now requests that we restrain him from in any way making use of or relying on his independent recollections of generalized business and technical information to which he had access while employed at AMP. Illinois law simply does not authorize such relief. That is not to say that [a former employee] may not have derived some benefit from his access to the collective experience of [his employer] (experience to which [the employee] himself doubtless contributed significantly during the course of his employment). It is rather to say such information comprises general skills and knowledge acquired in the course of employment. Those are things an employee is free to take and to use in later pursuits, especially if they do not take the form of written records, compilations or analyses. Dynamics Research v. Analytic Sciences Corporation Facts: ! Dynamic Research Corporation (DRC) brought this action against defendant Robert Bicknell (formerly employee) and the defendant Analytic by whom Bicknell was hired after he resigned from the plaintiff. DRC sought to enjoin the defendants from using for their own benefit the proprietary system of plaintiff known as TIRAS and from interfering with business relationships between DRC and customers of DRC. Such relief prayed for was denied and the case was referred to a master where evidentiary hearings were held. The final report was filed on April 9, 1975. The master concluded that "the structure and function of the TIRAS system is a trade secret" and "that both [defendants] intentionally and knowingly used trade secrets and other confidential information of the plaintiff to the benefit of the defendants and the damage of the plaintiff. ! Bicknell and Atlantic (respondents collectively) challenged this conclusion and claimed that the structure and function of TIRAS and specifically setting out the factual basis for the various elements legally necessary for entitlement to protection were not addressed in the report. This was denied and the report of the master was recommitted. However, subsequently, the master filed an additional subsidiary finding which purported to contain summaries of the evidence as requested thus, the first report was vacated. Ultimately, judgment was rendered denying both injunctive relief and damages plaintiff prayed for. Thus, plaintiff appealed. The information under question here is the TIRAS which involve information in at least 4 categories: 1. How the frequency with which the instrument being followed and its component parts break down or require repairs and the time to make the repairs 2. Information a to the reason the instrument broke down 3. Information as to the status and location of each component part 4. Information as to how well each instrument is meeting its design goals. The information in these reports is used by the customer and others in making decisions concerning the instruments, including, for example, decisions as to their design and as to the requirements for spare parts. In addition, the routine reports serve to keep all who are involved in the development or operation of the instruments informed as to what is being done and what their problems are. Each project is managed by an engineer who is knowledgeable about the instruments being followed by that project. One to four other engineers may also work on the project each playing key roles. Bickells primary responsibility in the corporation was in marketing TIRAS. During his stay, he became dissatisfied seeing as how the corporation was not giving enough financial support to fully develop the TIRAS service. He was likewise unhappy with his own salary. He resigned and looked for employment in Atlantic. At Analytic, Bicknell familiarized himself with its capabilities and its employees as the first step in developing a management information service in competition with the plaintiff. He began work on a proposal to perform such a service with respect to certain instruments in the Short

Range Attack Missile (SRAM), including its inertial guidance system. Issue: ! Whether or not plaintiff is entitled to injunctive relief and damages. Ratio: ! No. This starting point is particularly appropriate in this case for, as set out above Bicknell, an inertial guidance engineer, came to his job at DRC with knowledge and skill in the plaintiff's area of operation; and, as the master found, "was hired by DRC in part because he understood its management system concept. In these circumstances, the employer has a heavy burden of isolating the secret for which he claims protection and of demonstrating that the employee is left free (questions of good faith and reasonable contract restrictions apart) to use the knowledge and skill he brought to the job as well as "what he has learned during the employment. Essentially, the plaintiff's complaint is that Bicknell has taken his talent to Analytic and in combination with Analytic's resources and other talents is creating a capability which threatens DRC's unique position. But we see no impediment to Bicknell's employment of his talents in this way. DRC is not entitled to protection of a monopoly created by its unique capability. Uniqueness without more is not commensurate with possession of a trade secret. Bicknell may well have enhanced his knowledge and skill through exposure, and his own contribution, to the development of TIRAS -- just how much is not made clear by the master or the plaintiff whose burden it was to specify for he came to DRC with knowledge and experience in the field and familiarity with DRC's operation. Not only "the nature of the information" but also "the conduct of the parties" (Jet Spray Cooler, Inc. v. Crampton, 361 Mass. at 840) leads to the conclusion that the plaintiff is not entitled to restrain Bicknell's use of his knowledge gained while working on TIRAS. As we have seen both the role of the engineers on a TIRAS project and the detailed nature of the data collected were publicized in the Brann paper and DRC's advertising brochure. Nor is there a finding or evidence that the plaintiff "pursued an active course of conduct designed to" bring home to Bicknell or any other employee that any aspect of TIRAS was to be kept secret. In the circumstances of this case, the nondisclosure agreement which Bicknell signed on entering DRC's employ cannot be said to have put Bicknell on notice, either when he signed it or at any time thereafter, that the obvious notions with which he was working were trade secrets. Indeed, when he openly told Anderegg and Rand that he was resigning to compete, neither of them mentioned the nondisclosure agreement though Anderegg did urge him not to compete. While trade secrets will be protected where a confidential relationship exists even in the absence of a contractual agreement to that effect, a contractual agreement without more does not afford such protection. It must be shown that the processes or machinery here are in fact trade secrets and that access to them was gained in confidence. Such an agreement cannot make secret that which is not secret, and it remains for the court to determine whether an alleged trade secret is in fact such. Religious Technology Center v. Wollersheim Facts: ! The Church of New Civilization (New Church) is a splinter of Church Scientology (Old Church). The latter teaches that a persons behavious and well-being are improved by removing engrams (which are impressions recorded by the unconscious mind in times of trauma in this life or in previous lives) from the unconscious mind. These engrams are purged through auditing which uses the technology and advanced technology of the old church. It is a set of structured questions and drills. The responses are measured on a Hubbard Emeter, which reflects skin voltage which enable the examiner to identify ones engrams. The Old Church herein asserts that the unsupervised, premature exposure of an adherent to these materials will produce a spiritually harmful effect. They make the materials for this technology available only to adherents who agree in writing to maintain confidentiality. The assert that the use of the New Church does not safeguard these materials from any commercial transaction. ! Defendant in this case is one Mayo who was at one time a close associate of the Old Church but eventually left the Church in 1983 to establish the New Church which embraces beliefs and

provides counseling and training to its adherents which are essentially identical to those offered by the Old Church. One night in 1983, materials of the Old Church were stolen by individuals. Despite the fact that these materials were returned to the Old Church, the Old Church maintains that copies were made and that the New Church acquired these copies. ! A suit was thus filed by the Old Church (on the basis of California law state claims including misappropriation of trade secrets) alleging that in 1985, it learned that the New Church intended to disseminate the contents of the materials stolen in 1983 in a non-confidential setting. As counsel for the defendant in this case that was filed, Larry Wollersheim (Wollersheim) obtained copies of the materials during the deposition of Margaret Singer and Ofshe (defendants). In view of the fact that there is a pending tort action against the Old Church filed by Wollersheim (which is separate from this action), the Old Church made a request to seal its records including the higher level materials obtained by Wollersheim in the deposition. This was refused. 3 days later, the Old Church filed this claim in the federal court against the New Church for allegedly passing the materials to Wollersheim (its counsel). DC granted injunction in favor of the Old Church enjoining the New Church from disclosing the confidential materials further. Issue: ! Whether or not the religious materials constitute a protectable trade secret. Ratio: ! No. It is now well settled that a trade secret may consist of any formula, pattern, devise or compilation of information which is used in ones business, and which gives him an opportunity to obtain advantage over competitors who do not know or use it. California law defined trade secrets as: information, including formula, pattern, compilation, program, devise, method, technique, or process that: 1. Derives independent economic value, actual or potential, from not being generally known to the
public or to other persons who can obtain economic value from its disclosure or use; 2. It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. To be protectable, the confidential material must convey an actual or potential commercial advantage, presumably measurable in dollar terms. A trade secret is one which is used in business and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. Although there is no definition as of yet in case law which defines independent economic value, the element carries with it the common law requirement of competitive advantage. This does not mean that the owner must be the only one in the market. If an outsider would obtain a valuable share of the market by gaining certain information, that information would be a trade secret if it is not known or readily ascertainable. Here, the Church alleged no competitive market advantage from maintaining the secrecy of its higher level materials. Indeed, to do so would raise grave doubts about its claim as a religion and notfor-profit corporation. Rather, the church alleges that the precepts require adherents to be audited in a structured manner with exposure to higher level materials only when the auditor considers the adherent ready. The injury inflicted on the Church by the new church's misappropriation of its "secret" is the "religious harm" that would be suffered by Church adherents from premature unsupervised exposure to the materials. The value of the confidential materials is thus spiritual not commercial, and the materials cannot be said to have the "independent economic value" necessary to qualify as a protectible trade secret. Rivendell Forest Products v. Georgia-Pacitic Corporation Facts: ! Plaintiffs and defendants in this case are both engaged in the lumber business. Defendant Cornwell was employed originally by Rivendell and later by GP. Rivendell was a wholesaler of lumber known as reload wholesaler which provided lumber of the kind and sizes needed by its customers. GP and Rivendell are competitors in the lumber business.

Rivendell brought this suit against GP for wrongful appropriation of trade secret allegedly because a computer software, which was developed by Rivendell over the years and which is asserted as a trade secret under Colorado Law was misappropriated and used by GP Cornwell and GP. This system is allegedly a system which allows Rivendell to provide its customers with special service and to manage its distribution centers as no competitor would do since this enabled Rivendell to give immediate answers to queries and phone inquiries as to price, quantities, places and delivery time as to various lumber sizes and types without any computations which required a delay and a call back to the customer. The complaint was dismissed. Issue: ! Whether or not the computer system is considered a trade secret. ! Whether or not there is a violation of the Colorado Trade Secrets Law. Ratio: ! Yes. Trade secret means any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value. To be a 'trade secret' the owner thereof must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes. Although an exact definition of what a trade secret is may not be possible, the ff. are considered in the determination: 1. 2. 3. 4. 5. 6. The extent to which the information is known outside the business The extent to which it is known to those inside the business i. e. by the employees The precautions taken by the holder of the trade secret to guard the secrecy of the information; The savings effected and the value of the holder in having the information as against competitors The amount of effort or money expended in obtaining and developing the information The amount of time and expense it would take for others to acquire and duplicate the information. This computer software system in issue, Rivendell asserts, took it nine years to develop at a cost of nearly a million dollars. Mr. Cornwell worked for Rivendell in this development, knew it well, and had a significant role although he was not a computer expert. While working for Rivendell he was contacted by an executive of GP, and two months thereafter was hired by GP. with a job description to develop a new computer software system for GP. Rivendell's system was the only one Cornwell had been familiar with, and was the only one then in the industry which could provide immediate answers on all aspects of the customers' needs. He was not a computer expert, as mentioned, but immediately after being hired by GP he went to work on a computer system for GP. This system was very soon developed, and it was for all practical purposes the same as the one at Rivendell. What constitutes a trade secret is an issue of fact. Whether the computer system herein was a trade secret therefore, factual. In view of the foregoing, the record establishes the production by Rivendells software system of immediate final pricing by the integration of the many computations as to size of lumber, type of lumber, location, size, freight charges, time of delivery and other factors permit immediate quotation of a total price. This was a basic factual demonstration of the integration obtained by the software, and it was a total package for immediate use. It was the only system in the industry which could accomplish this. GP had nothing comparable before Cornwell was pirated (my words). The law defines misappropriation of a trade secret as: 1. Aquisition of a trade secret of another by a person who know or has reason to know that the trade secret was acquired by improper means or 2. Disclosure or use of a trade secret of another without express or implied consent by a person who: a. Used improper means to acquire knowledge of the trade secret or b. At the time of the disclosure or use, knew or had reason to know that his knowledge of the trade secret was: i. Derived from or through a person who had utilized improper means to acquire it

ii. Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use or iii. Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use. Rohm and Haas Company v. Adco Chemical Company Facts: ! Joseph Harvey (Joseph) joined Rohm and Haas (R&H) in 1959 as a laboratory technician. He worked under the scientists of the company in the development of latex paints including those incorporating the Process involved in the present case. In fact, he had handwritten notes as to the process which he carried out pursuant to the instructions of R&H. His duties also gave him access to the plaintiffs commercial process descriptions which detailed the process. During his employment with R&H, he signed an employment agreement in which he acknowledged that any business or trade secrets including secret processes of manufacture of R&H are the property of the same company and agreed not to divulge anything to outsiders or other unauthorized persons either while being employed by R&H or afterwards. ! Adco and Thubut & Walker (ATW) are related corporations engaged in the manufacture of various chemicals. It initiated a program to copy two of plaintiffs products which were made using the process. To accomplish this, they hired Victor Meyer whom ATW retained as an independent consulatant. Dr. Meyer advised defendants that he had successfully developed a match for plaintiff's products. Defendants, based on this report, prepared an advertising and promotional campaign for their matching products. At this show and during this period, defendants represented to the trade that their matching products were available. In order to fill orders from customers based on these representations, defendants purchased plaintiff's products, repackaged them as their own, and sold them without informing customers of the substitution. At the time of the show, likewise, Harvey was contacted by ATW and after one interview, he was hired by ATW to develop latex paint compounds. On the job, one of his first jobs was to duplicate a product which was using the process which had been the object of Meyers resesrch efforts in R&H. Without assistance, he prepared a laboratory replication of the product. Later in his deposition, Harvey admitted that the process used was one he had learned and brought from R&H (which he revealed to ATW). ! After trial, the DC issued an order rejecting the trade secret claims stating that plaintiffs failed to show that the process used for the production of latex in R&H was a trade secret. Issue: ! Whether or not the process involved herein is a trade secret. ! Whether or not there is a trade secret violation. Ratio: ! To establish a trade secret claim, the plaintiffs must establish 5 basic elements of the claim: 1. The existence of a trade secret 2. Communicated in confidence by the plaintiff to the employee 3. Disclosed by the employee in breach of that confidence 4. Acquired by competitor with knowledge of the breach of confidence. 5. Use of the competitor to the detriment of the plaintiff. In this case, the plaintiffs already proved all the elements of his trade secret claim except as to the existence of a trade secret which is still under question. 1. It established that the process was of great value and importance to the company and serves as the basis of 4 highly successful products; 2. That it disclosed the process to Harvey in confidence (as evidenced by the fact that there is an agreement to the confidentiality) 3. Harvey revealed the same in violation of this duty to preserve as evidenced by his own answers 4. It was acquired by ATW without the knowledge that its revelation was wrongful. Defendants knew that plaintiff, and only plaintiff, made a latex paint vehicle superior to their own. They had tried for years, unsuccessfully, to duplicate plaintiff's method of manufacture. They hired a person who had been an employee of the plaintiff

and immediately set him to duplicating plaintiff's product. The employee handed them the Process for making one of plaintiff's products almost as soon as he walked in the door. They knew that the employee's experience with latex acrylics could have come only from his time in plaintiff's employ. They were acquainted with the confidential nature both of plaintiff's business and of plaintiff's relation to its employees. These facts left it all but impossible to avoid the conclusion that defendants knew Harvey had revealed to them something that plaintiff had tried very hard to keep secret. 5. There is no dispute that defendants used the Process divulged by Harvey to compete against plaintiff by putting on the market two products touted as duplicates of plaintiff's products. Barnett v. Shidler Facts: ! Harvey Barnett and Infant Swimming Research (ISR) filed a complaint against its former emplotees alleging violations of state law claims of misappropriation of trade secrets. Allegedly, Judy Heuman, Add Shidler and Alison Geerdes (collectively defendants), as former ISR instructors who left the company in 2000, signed a nondisclosure and confidentiality agreement and a license agreement containing a further confidentiality information provision as well as a covenant not to compete. However, notwithstanding these agreements, the 3 former employees started Infant Aquatic Survival (IAS) a new company devoted to teaching infant children to swim. Allegedly, the IAS is similar to the ISR program of ISR in that it utilizes the same swim, float, swim method implements some of the safety protocols and uses a Daily Health Data Sheet similar to the BUDS sheet used by ISR. ! Upon motion for summary judgment, the complaint was dismissed. The DC held that the ISR program was not a trade secret and that the covenant not to compete and the confidentiality provision in the license agreement were not enforceable. Issue: ! Whether or not the ISR program is a trade secret. ! Whether or not the covenant not to compete is valid. ! Whether or not the confidentiality agreement is valid. Ratio: ! Yes. Our review of the findings of the DC judgment leads us to conclude that the DC improperly looked at the components of the ISR in isolation rather than as a whole. A trade secret can exist in combination of characteristics, each of which, considered separately, is in the public domain, but taken together, may yield a competitive advantage that results in a protectable trade secret. To prove its claim, ISR submitted 4 affidavits attesting to the uniqueness of the ISR program. Furthermore, they point to the testimony of 2 instructors in the ISR program regarding its uniqueness. Likewise, it was elicited from one of its witnesses that the witness knows of no other aquatic programs whose specific goal is to
To prove the last and only element left to be proved, plaintiffs demonstrated the fact that the realities of the market place and the valuable method of producing latex paint vehicles were unknown to its competitors. R&H is the only manufacturer who uses the Process and as a result it could offer 4 superior products. Only after defendants acquired the "Harvey process" could they field a match for the plaintiff's products. None of these facts were seriously contested by the defendants below, and none turned on a question of the credibility of witnesses. Under both New Jersey and Pennsylvania law, these facts were sufficient to establish that the alleged secret is in fact the secret of a particular employer, and not a matter of general knowledge within the industry. The law of these states provides that even though each and every element of plaintiff's Process is known to the industry, the combination of those elements may be a trade secret if it "produces a product superior to that of competitors. Plaintiff proved that the Process produced a superior product. The district court's second ground for concluding that plaintiff's Process was widely known in the industry, based on a misreading of the applicable law, thus is erroneous.

certify instructors, in a 5-week time frame, to teach infants and toddlers aquatic survival skills. Moreover, the precautions taken by the holder of the trade secret to guard secrecy of the information (the franchise agreements and the license agreements). In his affidavit, Dr. Barnett averred that "ISR has protected the confidentiality of all of the ISR research and materials since the 1970's by franchise agreements with confidentiality restrictions and later by the restrictions of the license agreements." As for the franchise agreements, they contained a "Confidentiality of Information" provision providing that "franchisee shall not at any time or in any way divulge, disclose, or communicate to any person or organization in any manner whatsoever any information concerning any matters affecting or relating to the business of Franchisor." Moreover, license agreements, prior to 1996, contained a "Confidentiality of Information" provision stating that the licensee shall not divulge the secrets without specific written consent form from licensor. ISR submitted evidence that its program is unique in that it instructs individuals, in a five-week period, how to teach aquatic-survival skills to infants as young as six-months old. ISR further submitted evidence showing that, through franchise agreements and license agreements, it has taken precautions to guard the secrecy of its program. ! The covenant which provides that the licensee shall not, during the term or 2 years immediately from termination, engage directly or indirectly in teaching infants or yong children to swim or engage in the business of training other individuals for the purpose of teaching infants or young children to swim, is VALID. The validity of the covenant herein lies in the fact that there is a trade secret since such is reasonable provided that there is a trade secret to be protected. Since there is one in this case, the court held that the breach of the contract claim must go forward. Rockwell Graphics v. Dev Industries Facts: ! Rockwell Graphics (RG) is a manufacturer of printing presses used by newspapers and of parts for those presses, brought this suit against DEV Industries (Dev), a competing manufacturer and against the president of Dev who used to be employed by Rockwell. Rockwell sometimes does not manufacture the parts itself. Sometimes when an owner of one of Rockwells presses needs a particular part, it will subcontract the manufacturer of it to an independent machine shop, called a vendor by the parties.When it does this, RG gives the vendor a piece part drawing indicating materials, dimensions, tolerances and methods of manufacture. Without than information, the vendor could not manufacture the part. Hence, Rockwell tries to keep the piece part drawings secret though not from the vendors. ! Rockwell employed Fleck and Peloso which gave them access to piece part drawings. Peloso was fired from RG when he was caught removing piece part drawings from the RG plant. Later, they both left and joint Dev. During pretrial, it was found that Dev has 100 of RGs piece part drawings which Dev claimed to have obtained lawfully either form customers of RG or from RG vendors contrary to their claim that Fleck or Peloso stole them when they were employed by it or Dev obtained them in some unlawful manner. It should be noted herein that RG admits to having supplied a few piece part drawings to customers but they were piece part drawings of obsolete parts that RG has no interest in manufacturing and of a safety device that was not part of the press as originally delivered but that its customers were clamoring for more to the point, none of these is among those RG claims Dev misappropriated. ! The District Court rendered a decision in favor of Dev finding that there is no trade secret to be protected. Issue: ! Whether or not there is a trade secret. Ratio: ! Yes. The use of security, restricted access, confidentiality agreements and confidentiality markings amounted to reasonable efforts. RG keeps all its engineering drawings, including both piece part and assembly drawings, in a vault. Access not only to the vault, but also to the building in which it is located, is limited to authorized employees who display identification. These are mainly engineers, of whom RG employs 200. They are required to sign agreements not to disseminate the drawings, or disclose their contents, other than as authorized by the company. An authorized employee

who needs a drawing must sign it out from the vault and return it when he has finished with it. But he is permitted to make copies, which he is to destroy when he no longer needs them in his work. The only outsiders allowed to see piece part drawings are the vendors (who are given copies, not originals). They too are required to sign confidentiality agreements, and in addition each drawing is stamped with a legend stating that it contains proprietary material. Vendors, like RG's own engineers, are allowed to make copies for internal working purposes, and although the confidentiality agreement that they sign requires the vendor to return the drawing when the order has been filled, Rockwell does not enforce this requirement. The rationale for not enforcing it is that the vendor will need the drawing if Rockwell reorders the part. Rockwell even permits unsuccessful bidders for a piece part contract to keep the drawings, on the theory that the high bidder this round may be the low bidder the next. The mere fact that there is a disclosure of its trade secret to a limited number of outsiders for a particular purpose does not forfeit trade secret protection. Such disclosure is often necessary to the efficient exploitation of a trade secret. It imposes a duty of confidentiality on the part of the person to whom the disclosure is made. It should be apparent that the two different conceptions of trade secret protection are better described as different emphases. The first emphasizes the desirability of deterring efforts that have as their sole purpose and effect the redistribution of wealth from one firm to another. The second emphasizes the desirability of encouraging inventive activity by protecting its fruits from efforts at appropriation that are, indeed, sterile wealth-redistributive--not productive--activities. Under the first approach, the plaintiff must prove that the defendant obtained the plaintiff's trade secret by a wrongful act, illustrated here by the alleged acts of Fleck and Peloso in removing piece part drawings from RG's premises without authorization, in violation of their employment contracts and confidentiality agreements, and using them in competition with RG. RG is unable to prove directly that the 100 piece part drawings it got from DEV in discovery were stolen by Fleck and Peloso or obtained by other improper means. But if it can show that the probability that DEV could have obtained them otherwise--that is, without engaging in wrongdoing--is slight, then it will have taken a giant step toward proving what it must prove in order to recover under the first theory of trade secret protection. The greater the precautions that RG took to maintain the secrecy of the piece part drawings, the lower the probability that DEV obtained them properly and the higher the probability that it obtained them through a wrongful act; the owner had taken pains to prevent them from being obtained otherwise. Under the second theory of trade secret protection, the owner's precautions still have evidentiary significance, but now primarily as evidence that the secret has real value. For the precise means by which the defendant acquired it is less important under the second theory, though not completely unimportant; remember that even the second theory allows the unmasking of a trade secret by some means, such as reverse engineering. If RG expended only paltry resources on preventing its piece part drawings from falling into the hands of competitors such as DEV, why should the law, whose machinery is far from costless, bother to provide RG with a remedy? The information contained in the drawings cannot have been worth much if RG did not think it worthwhile to make serious efforts to keep the information secret. The remedial significance of such efforts lies in the fact that if the plaintiff has allowed his trade secret to fall into the public domain, he would enjoy a windfall if permitted to recover damages merely because the defendant took the secret from him, rather than from the public domain as it could have done with impunity. If it were true, as apparently it is not, that RG had given the piece part drawings at issue to customers, and it had done so without requiring the customers to hold them in confidence, DEV could have obtained the drawings from the customers without committing any wrong. The harm to RG would have been the same as if DEV had stolen the drawings from it, but it would have had no remedy, having parted with its rights to the trade secret. In the first case, a defendant is perfectly entitled to obtain the property by lawful conduct if he can, and he can if the property is in the hands of persons who themselves committed no wrong to get it. In the second case the defendant is perfectly entitled to obtain the property if the plaintiff has abandoned it by giving it away without restrictions. The more the owner of the trade secret spends on preventing the secret from leaking out, the more he demonstrates that

the secret has real value deserving of legal protection, that he really was hurt as a result of the misappropriation of it, and that there really was misappropriation. Metallurgical Industries v. Fourtek Facts: ! Metallurgical Industries (MI) has been in the business of reclaiming carbide (a metallic compound of great value in certain industrial processes) since 1967 using the more primitive cold-stream process. In the mid 1970s it began to reconsider using zinc recovery process. Hence, for this, it hired Irvin DIelefeldt, a representative of Therm OVac to design and construct 2 zinc recovery furnaces. Dissatisfied with its performance, Modified the delivered recovery furnaces extensively. Later, MI provided another furnace manufacturer all its hard won-information (from the overhaul of the delivered furnaces) to Consarc. Consarc learned of its modofications but because Consarc was unwilling or unable to build what MI wanted, the agreement fell through and MI returned to Therm O Vac (TOV) for its second furnace. TOV went bankrupt hence Irvin and the 3 other former TOV employees formed Fourtek Incorporated. Fourtek contracted with Smith and provided it with furnaces. Smith has been unable to use this furnace commercially, however, because a current shortage of carbide scrap prevents its economically feasible operation. In view of their supply to Smith, MI brought a diversity action against the employees of Fourtek. It charged them of misappropriating its trade secrets. However, the TC found that there is no trade secret to speak of in this case. Smith argues that there is no trade secret since the basic zing recovery process has already been publicized in the trade. Issue: ! Whether or not there is a trade secret to be protected. Ratio: ! MIs particular modification efforts can be as yet unknown to the industry because a general description of the zinc recovery process reveals nothing about the benefits unitary heating elements and vacuum pump filters can provide to that procedure. That the scientific principles are generally known does not necessarily refute MIs claim of trade secrets. MI presented evidence to back up its claim. They presented Blim as to his belief that MIs changes were unknown to the carbide reclamation industry. Evidence likewise shows that MI has exerted efforts to keep secrets its modifications. Blum noted that there were security measures taken to coneal the furnaces from all but authorized personnel. The furnaces were hidden from public view while signs warned all about restricted access. Security measures cost money. A manufacturer therefore presumably would not incur these costs if it believed that its competitors already knew about the information involved. Despite the fact that it revealed these secrets to Consarc, there can still be a trade secret. The law requires secrecy but it need not be absolute. Public revelation would dispel all secrecy but the holder of a secret need not remain totally silent. He may, without losing its protection communicate it to employees involved in its use. He may likewise communicate it to others pledged to secrecy. We conclude that a holder may divulge his information to a limited extent without destroying its status as a trade secret. To hold otherwise would greatly limit the holder's ability to profit from his secret. If disclosure to others is made to further the holder's economic interests, it should, in appropriate circumstances, be considered a limited disclosure that does not destroy the requisite secrecy. There are 2 reasons as to why the disclosure herein does not dispel the trade secret protection: 1. The disclosure was not a public announcement. It was divulged to 2 business men with whom it was dealing with 2. The disclosures were made to further MIs economic interests. That the cost of devising the secret and the value the secret provides are criteria in the legal formulation of a trade secret shows the equitable underpinnings of this area of the law. It seems only fair that one should be able to keep and enjoy the fruits of his labor. If a businessman has worked hard, has used his imagination, and has taken bold steps to gain an advantage over his competitors, he should be able to profit from his efforts. Because a commercial advantage can vanish once the competition learns of it, the law should protect the businessman's efforts to keep his achievements secret.

Paramanandam v. Herrmann Facts: ! Victoria established Dunamic Sales as a sole partnership with the assistance of her husband who had experience in the scales marketing business. The Hermmanns (the spouses) were acquainted with Ivan who had worked in the scales business with Johns father. They hired Ivans consulting firm to develop a website for Dynamic Sales online retail store. Pursuant to this, the spouses gave Ivan the password to make changes to the website. Likewise, he contacted distributors to obtain permission to display their information on the website. With the spouses assistance, Ivan registered 400 domain names, among them Mail88.com and developed 6000 corresponding keywords all of which would direct potential customers to Dynamic Sales online store via interent search. Ivan suffered a hear attack. After he recovered, he told the spouses he wanted to work from home for a higher salary but the spouses refused. Upon refusal, he told the spouses that he wanted to get out of the scale business. They terminated their relationship thus, Ivan started his own online retail store, Scales.com. The website he created was practically identical in content and appearance to Dynamics website. They also discovered that internet searches conducted using Dynamic Scales' name or toll-free number as search terms would yield results that listed Dynamic Scales' company information but were actually linked to Ivan's website at Mall88.com. For this. Dymanic filed a case against Ivan who allegedly operated Scorpion, Mail88 and Scaleable Scales.com in violation of the trade secrets law. Allegedly, they misappropriated domain names developed and created and maintained by Dynamic. The DC granted the preliminary injunction in favor of Dynamic. Before this court thus, Ivan claims that Dynamic failed to meet its evidentiary burden with respect to all 4 factors. Issue: ! Whether or not there is misappropriation of trade secrets. Ratio: ! No. There was no effort to maintain secrecy. Misappropriation is defined as:
1.
Aquisition of a trade secret of another by a person who know or has reason to know that the trade secret was acquired by improper means or 2. Disclosure or use of a trade secret of another without express or implied consent by a person who: a. Used improper means to acquire knowledge of the trade secret or b. At the time of the disclosure or use, knew or had reason to know that his knowledge of the trade secret was: i. Derived from or through a person who had utilized improper means to acquire it ii. Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use or iii. Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use. The alleged misappropriated trade secret in this case is the information contained on the website and the domain names developed, created and maintained by and for Dynamic. However, the court decided that even assuming that these matters fall under the trade secret protection law, Dynamic Scales failed to establish that any efforts were made to maintain its secrecy. In the testimony of John Herrmann he stated that you could be very secretive and we chose not to be secretive. We chose to show all our cards to our competitors so that it would look odd no one hides everything in their computer. Its left out to the general public to see. So we chose not to hide a bunch of information. There is simply no evidence on record which indicates that they made efforts to keep them secret. In fact, there is an indication that they intended their domain names to be readily available to potential customers searching the internet as a means of directing them to its online retail store. An information is secret only if it is subject of reasonable efforts to maintain secrecy.

DuPont DeNemours v. Rolfe Christopher Facts: ! Rolfe and Gary are photographers in Beaumont Texas who were hired by an unknown third party to take aerial photos of new construction at the Beaumont plant of EI DuPont. 16 photos were taken from the air on 1969 and these were later developed and delivered to the third party. Dupont filed a suit against Chrisophers alleging that they wrongfully obtained photos revealing the trade secrets of Dupont which they then sold to the undisclosed third party. They contend that they developed a highly secret but unpatented process for producing methanol, a process which gives them competitive advantage over their competitors. The area photographed by the Christophers was the plant designed to produce methanol by this secret process, and because the plant was still under construction parts of the process were exposed to view from directly above the construction area. Photographs of that area, DuPont alleged, would enable a skilled person to deduce the secret process for making methanol. The Christophers argued both at trial and before this court that they committed no 'actionable wrong' in photographing the DuPont facility and passing these photographs on to their client because they conducted all of their activities in public airspace, violated no government aviation standard, did not breach any confidential relation, and did not engage in any fraudulent or illegal conduct. In short, the Christophers argue that for an appropriation of trade secrets to be wrongful there must be a trespass, other illegal conduct, or breach of a confidential relationship. Issue: ! Whether or not Dupont has asserted a claim upon which relief can be granted. Ratio: ! Yes. One who discloses anothers trade secret without a privilege to do so is liable to the other if he discovered the secret by improper means or his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him. The use of someone elses idea is not automatically a violation of the law, it must be something that has been obtained through a breach of confidence in order to entitle the injured party to damages or injunction. If breach of confidence were meant to encompass the entire panoply of commercial improprieties, subsection A of the Restatement would be either surplusage or persiflage, an interpretation abhorrent to the traditional precision of the Restatement. We therefore find meaning in subsection A and think that the Texas Supreme Court clearly indicated by its adoption that there is a cause of action for the discovery of a trade secret by any 'improper means. One may use his competitors secret process if he discovers the process by reverse engineering applied to the finished product. One may use it if he discovers it by his own independent research but one may not avoid these labors by taking process from the discoverer without his permission at a time when he is taking reasonable precautions to maintain secrecy. To obtain knowledge of a process without spending the time and money to discover it independently is improper unless the holder voluntarily discloses it or fails to take reasonable precautions to ensure its secrecy. In this case, he deliberately flew over the plant to get pictures of a process which Dupont attempted to keep secret. The third party has a right to use this process only if he obtains this knowledge through his own research efforts, but thus far all information indicates that the third party has gained this knowledge solely by taking it from DuPont at a time when DuPont was making reasonable efforts to preserve its secrecy. In such a situation DuPont has a valid cause of action to prohibit the Christophers from improperly discovering its trade secret and to prohibit the undisclosed third party from using the improperly obtained information. Industrial espionage of the sort here perpetrated has become a popular sport in some segments of our industrial community. However, our devotion to free wheeling industrial competition must not force us into accepting the law of the jungle as the standard of morality expected in our commercial relations. Our tolerance of the espionage game must cease when the protections required to prevent another's spying cost so much that the spirit of inventiveness is dampened. Commercial privacy must be protected from espionage which could not have been reasonably anticipated or prevented. Perhaps ordinary fences and roofs must be built to shut out incursive eyes, but we need not require the discoverer of a trade secret to guard against the unanticipated, the undetectable, or the unpreventable methods of espionage now available.

In the instant case DuPont was in the midst of constructing a plant. To require DuPont to put a roof over the unfinished plant to guard its secret would impose an enormous expense to prevent nothing more than a school boy's trick. We should not require a person or corporation to take unreasonable precautions to prevent another from doing that which he ought not do in the first place. Reasonable precautions against predatory eyes we may require, but an impenetrable fortress is an unreasonable requirement, and we are not disposed to burden industrial inventors with such a duty in order to protect the fruits of their efforts. Chicago Lock Co v. Morris Facts: ! Chicago Lock Company (CLC) is a manufacturer of various types of locks marketed and registered under the tradename Ace which provides greater security than other lock designs. They are frequently used on vending and bill changing machines and in other maximum security uses such as burglar alarms. The distinctive feature of Ace locks is the secrecy and difficulty of reproduction associated with either keys. On the other hand, Victor Fanberg, the son of a locksmith and a locksmith in his own right has published a number of locksmith manuals for conventional locks. Realizing that there is yet no compilation on the tubular lock key codes, they published a compilation of the serial number-key code correlations of various locks including those of Ace locks entitled A-Advanced Locksmiths Tubular Lock Codes. This was done by requesting locksmiths to transmit to him serial number-key code correlations in their possession in exchange for a copy of the complete compilation. When finished. Said manual was advertised and sold. The books contain correlations which would allow a person equipped with a tubular key grinding machine to make duplicate keys for any listed Ace lock if the serial number of the lock was known. ! CLC has a fixed policy that it will only sell a duplicate key for the registered series 'Ace' lock to the owner of record of the lock and on request of a bona fide purchase order, letterhead or some other identifying means of the actual recorded lock owner. In addition, the serial number-key code correlations are maintained by the Company indefinitely and in secrecy, the Company does not sell tubular key "blanks" to locksmiths or others, and keys to Ace locks are stamped "Do Not Duplicate. Hence, upon finding out about this publication, CLC filed a complaint against Fanberg alleging misappropriation of trade secrets. The court found that the Company's high security policy for its Ace tubular locks, of which the confidential key code data were a part, was a "valuable business or trade secret-type asset" of the Company, and that the Fanbergs' publication of their compilation of these codes so undermined the Company's policy as to constitute "common law unfair competition in the form of an unfair business practice. Issue: ! Whether or not there is a violation of the trade secrets law. Ratio: ! No. Trade secrets are protected in a manner akin to provate property but only when they are disclosed or used through improper means. They do not enjoy the monopoly protection afforded patented processes and trade secrets will lose their character as private property when the owner divulges them or when they are discovered through proper means. There is no protection when there is a fair and honest means of gaining information as by independent invention, accidental disclosure and reverse engineering. Here, there has only been a reverse engineering. A lock purchaser's own reverse-engineering of his own lock, and subsequent publication of the serial number-key code correlation, is an example of the independent invention and reverse engineering expressly allowed by trade secret doctrine. The concept of improper means connotes the existence of a duty to the trade secret owner not to disclose the secret to others. Appellants may only be held liable if they intentionally procured the locksmiths to disclose the trade secrets in breach of the duty to the company of nondisclosure. We find untenable the basis upon which the District Court concluded that the individual locksmiths owe a duty of nondisclosure to the Company. The court predicated this implied duty upon a "chain" of duties: first, that the locksmiths are in such a fiduciary relationship with their customers as to give rise to a duty not to disclose their customers' key codes without permission, and second, that the lock owners are in turn under an "implied obligation (to the Company) to

maintain inviolate" the serial number-key code correlations for their own locks. That the lockowners owe a duty to the company is contrary to law and to the companys own admissions. Imposing an obligation of nondisclosure on lock owners here would frustrate the intent of California courts to disallow protection to trade secrets discovered through "fair and honest means. Appellants, therefore, cannot be said to have procured the individual locksmiths to breach a duty of nondisclosure they owed to the Company, for the locksmiths owed no such duty. The Company's serial number-key code correlations are not subject to protection. Pepsico v. William Redmond Facts: ! William Redmond worked for PepsiCo in its North Division (PCNA) form 1984 to 1994 during which he became the General Manager and was promoted to GM of the business unit covering all of California. Because of his high level position at PCNA, he had access to inside information and trade secrets. As an employee of PCNA, he signed a confidentiality agreement which stated that he would not disclose to any one other than officers of Pepsi or make use of confidential information relating to the business of PepsiCo. On the other side of the fence is Donald Uzzi who left PepsiCo to become the head of Quakers Gatorade division. He began courting Redmond for Quaker in 1994. He offered Redmond the position of VP but Redmond did not accept the offer but continued to negotiate for more money. These negotiations were kept secret from PCNA. Eventually, he informed the Senior VP of PCNA and told him about the offer to become Chief Operating Officer of Gatorade. Redmond asked whether he should, in light of the offer, carry out his plans to make calls upon certain PCNA customers. The Senior VP told him to make the visits. Redmond met with Barnes and told her that he had decided to accept the Quaker offer and was resigning from PCNA. Barnes immediately took Redmond to Bensyl, who told Redmond that PepsiCo was considering legal action against him. ! Having accepted the position at Gatorade, Pepsi filed this suit seeking TRO from disclosing trade secrets or
confidential information to his new employer. This was granted by the DC but was dissolved 2 days later after determining that they failed to establish that it would suffer irreparable harm. At the hearing, PepsiCo offered evidence of a number of trade secrets and confidential information it desired protected and to which Redmond was privy: 1. First, it identified PCNA's "Strategic Plan," an annually revised document that contains PCNA's plans to compete, its financial goals, and its strategies for manufacturing, production, marketing, packaging, and distribution for the coming three years. 2. Second, PepsiCo pointed to PCNA's Annual Operating Plan ("AOP") as a trade secret. The AOP is a national plan for a given year and guides PCNA's financial goals, marketing plans, promotional event calendars, growth expectations, and operational changes in that year. The AOP, which is implemented by PCNA unit General Managers, including Redmond, contains specific information regarding all PCNA initiatives for the forthcoming year. In particular, the AOP contains important and sensitive information about "pricing architecture"--how PCNA prices its products in the marketplace. 3. PepsiCo also showed that Redmond had intimate knowledge of PCNA "attack plans" for specific markets. 4. Finally, PepsiCo offered evidence of PCNA trade secrets regarding innovations in its selling and delivery systems. Under this plan, PCNA is testing a new delivery system that could give PCNA an advantage over its competitors in negotiations with retailers over shelf space and merchandising. The DC issued an order enjoining Redmond from assuming his position at Quaker though May 1995 and permanently form using or disclosing any PCNA trade secrets or confidential information. Issue: ! Whether or not there is a violation of trade secret laws. ! Whether or not there is a breach of a confidentiality agreement

Ratio: ! Yes. PepsiCo has asserted that Redmond cannot help but rely on PCNA trade secrets as he helps plot Gatorade and Snapple's new course, and that these secrets will enable Quaker to achieve a substantial advantage by knowing exactly how PCNA will price, distribute, and market its sports drinks and new age drinks and being able to respond strategically. This type of trade secret problem may arise less often, but it nevertheless falls within the realm of trade secret protection under the present circumstances. The danger of misappropriation in the present case is not that Quaker (Gatorade) threatens to use PCNA's secrets to create distribution systems or co-opt PCNA's advertising and marketing ideas. Rather, PepsiCo believes that Quaker, unfairly armed with knowledge of PCNA's plans, will be able to anticipate its distribution, packaging, pricing, and marketing moves. Redmond and Quaker even concede that Redmond might be faced with a decision that could be influenced by certain confidential information that he obtained while at PepsiCo. In other words, PepsiCo finds itself in the position of a coach, one of whose players has left, playbook in hand, to join the opposing team before the big game. Quaker and Redmond's protestations that their distribution systems and plans are entirely different from PCNA's are thus not really responsive. It is not the "general skills and knowledge acquired during his tenure with" PepsiCo that PepsiCo seeks to keep from falling into Quaker's hands, but rather "the particularized plans or processes developed by PCNA and disclosed to him while the employer-employee relationship existed, which are unknown to others in the industry and which give the employer an advantage over his competitors. Duncan v. Glaxo Facts: ! Pedro Tecson was hired by Glaxo Philippines (Glaxo) as a medical representative. He signed a contract of employment which stipulates that he agrees to study and abide by existing company rules to disclose to management any existing or future relationship by consanguinity or affinity with coemployees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in Albay. She supervised the district managers and medical representatives of her company and prepared marketing strategies for Astra in that area. Despite warnings, love prevailed and Tecson married Bettsy in 1998. Hence, in January 1999 the management informed Tecson that there is a conflict of interest. They reminded Tecson that he and Bettsy should decide which of them would resign from their jobs although they told him that they wanted to retain him as much as possible because he was performing his job well. Instead of resigning, he applied for a transfer in the Milk Division of Glaxo thinking that since Astra does not have a mill division, the potential conflict of interest would be eliminated. This was denied by management in view of the company least-movement-possible policy. Subsequently, however, he was transferred to the sales area in Agusan Del Sur. He brought the matter of his transfer to the grievance committee of Glaxo but the transfer order was upheld. Tecson defied the transfer order and continued acting as medical representative in the Camarines Sur-Camarines Norte sales area. Because the parties failed to resolve the issue at the grievance machinery level, they submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-half (!) month pay for every year of service, or a total of P50,000.00 but he declined the offer. Thus, National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxos policy on relationships between its employees and persons employed with competitor companies, and affirming Glaxos right to transfer Tecson to another sales territory. Issue: ! Whether or not the policy against employees marrying employees of competitor companies violate the EPC of the Constitution because it creates invalid distinctions among employees on account only of marriage.

Ratio: ! It does not violate the constitution and is a valid company policy. This is a valid exercise of management prerogative. The prohibition against personal or marital relationships with employees of competitor companies is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. Glaxo here only aimed to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. It is a legitimate business practice to guard business confidentiality and protect a competitive porision even handedly disqualifying from jobs male and female applicants or employees who are married to a competitor. The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erroneously suggest. It is a settled principle that the commands of the equal protection clause are addressed only to the state or those acting under color of its authority. The EPC erects no shield against merely private conduct, however, discriminatory or wrongful. Significantly, the company actually enforced the policy after repeated requests to the employee to comply with the policy. Indeed, the application of the policy was made in an impartial and even-handed manner, with due regard for the lot of the employee. The Court finds no merit in petitioners contention that Tescon was constructively dismissed when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao CityAgusan del Sur sales area, and when he was excluded from attending the companys seminar on new products which were directly competing with similar products manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. The record does not show that Tescon was demoted or unduly discriminated upon by reason of such transfer. As found by the appellate court, Glaxo properly exercised its management prerogative in reassigning Tecson to the Butuan City sales area. In the case at bar, the record shows that Glaxo gave Tecson several chances to eliminate the conflict of interest brought about by his relationship with Bettsy. When their relationship was still in its initial stage, Tecsons supervisors at Glaxo constantly reminded him about its effects on his employment with the company and on the companys interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by either resigning from the company or asking his wife to resign from Astra. Glaxo even expressed its desire to retain Tecson in its employ because of his satisfactory performance and suggested that he ask Bettsy to resign from her company instead. Glaxo likewise acceded to his repeated requests for more time to resolve the conflict of interest. Avon Cosmetics v. Leticia Luna Facts: ! Luna began working for Beautifont in 1972 as a franchise dealer and then a year later as supervisor. Sometime in 1978 Avon acquired and took over the management and operations of Beautifont thus, Luna continued working for said successor company. Aside from her work as a supervisor, respondent Luna also acted as a make-up artist of petitioner Avons Theatrical Promotions Group, for which she received a per diem for each theatrical performance. Avon and respondent Luna entered into an agreement (Supervisors Agreement) whereby it was agreed that: 1. a dealer may only sell products sold by the company. 2. Company can terminate the contract at any time, with or without cause Sometime in 1988, Luna was invited by a former Avon employee who was then a sales manager of Sandre Philippines (company engaged in selling vitamins and other food supplements). She accepted the invitation and then became a Group Franchise Director of Sandre Philippines concurrently with being a Group Supervisor of petitioner Avon. As Group Franchise Director, respondent Luna began selling and/or promoting Sandr products to other Avon employees and friends. Because of this relationship with both companies, she requested a law firm to render a legal opinion as to the legal consequence of the ahreement she executed with Avon. In

response to her query, the law firm opined that the agreement was contrary to law and public policy. Meanwhile, Avon notified Luna of the termination or cancellation of her agreement with Avon on the ground that she is signed up as a Group Franchise Director with Sandre and that she has sold and promoted products of the other company not only to the public but also to several employees of the Avon company. ! Luna filed for damages with the RTC of Makati. RTC rendered a decision in favor of Luna. On appeal, the CA affirmed. Issue: ! Whether or not the supervisors agreement is null and void. ! Whether or not the termination of Luna is valid. Ratio: ! Valid. Restrictions on trade may be upheld when not contrary to public welfare and not greater than is necessary to afford a fair and reasonable protection to the party in whose favor it is imposed. Even contracts which prohibit an employee fmor engaging in business in competition with the employer are not necessarily void for being restraint in trade. In sum, contracts requiring exclusivity are not per se void. Each contract must be viewed vis--vis all the circumstances surrounding such agreement in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition. A court, in order to declare a contract void as against public policy, must find that the contract as to the consideration or thing to be done, has a tendency to injure the public, is against the public good, or contravenes some established interests of society, or is inconsistent with sound policy and good morals, or tends clearly to undermine the security of individual rights, whether of personal liability or of private property. From another perspective, the main objection to exclusive dealing is its tendency to foreclose existing competitors or new entrants from competition in the covered portion of the relevant market during the term of the agreement. Only those arrangements whose probable effect is to foreclose competition in a substantial share of the line of commerce affected can be considered as void for being against public policy. The foreclosure effect, if any, depends on the market share involved. The relevant market for this purpose includes the full range of selling opportunities reasonably open to rivals, namely, all the product and geographic sales they may readily compete for, using easily convertible plants and marketing organizations. There is nothing invalid or contrary to public policy either in objectives sought to be attained in prohibiting Luna aln all other Avon supervisors from selling products other than those of Avons. The question that should be asked here is whether the restraint imposed is such as merely regulates and perhaps thereby promote competition or whether it is such as may suppress or even destroy competition. The prohibition here is not directed to Sandre nor foreclose new entrants to the market. The reason for such exclusion is to safeguard network that it has cultivated through the years. By direct selling, petitioner Avon and Sandre, the manufacturer, forego the use of a middleman in selling their products, thus, controlling the price by which they are to be sold. The limitation does not affect the public at all. It is only a means by which petitioner Avon is able to protect its investment. It was not by chance that Sandr Philippines, Inc. made respondent Luna one of its Group Franchise Directors. It doesnt take a genius to realize that by making her an important part of its distribution arm, Sandr Philippines, Inc., a newly formed direct-selling business, would be saving time, effort and money as it will no longer have to recruit, train and motivate supervisors and dealers. Respondent Luna, who learned the tricks of the trade from petitioner Avon, will do it for them. This is tantamount to unjust enrichment. Worse, the goodwill established by petitioner Avon among its loyal customers will be taken advantaged of by Sandre Philippines, Inc. ! Yes. The contract provided that it can be terminated or cancelled for cause, it also stated that it can be terminated without cause, both at any time and after written notice. Thus, whether or not the termination or cancellation of the Supervisors Agreement was "for cause," is immaterial. The only requirement is that of notice to the other party. When petitioner Avon chose to terminate the contract, for cause, respondent Luna was duly notified thereof.

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