BNU lawyers prepared suggested answers to the IP questions in Mercantile Law given last Sunday.

Three of BNUs
partners teach IP law in different universities. Here are the suggested answers:

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

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

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

C. Yes. An article of commerce normally bears a trademark to distinguish one's products from other products. The
same article of commerce may contain pictorial illustrations on its label and the article itself may be the subject of a
patent. For example, a beauty soap with is sold bearing the mark GORGEOUS (trademark protection), has an
attractive packaging of artistic photos of a beautiful lady with unblemished white skin (copyright protection), and the
soap itself is composed of new chemicals from an extract of a plant unheard of in the past that washes away
blemishes and whitens the skin (patent protection).

Alternative Answer:
Yes. A marked or stamped bottle or container is the best example of an article of commerce which can be protected
as a trademark, patent and copyright. Section 121.1 of the IP Code includes stamped or marked container of goods
in its definition of a mark as any visible sign capable of distinguishing goods or services of an enterprise to include
stamped or marked container of goods.
The same bottle or container may at the same time be the subject of patent protection if it has functional elements
that provide a technical solution to a problem and if such functional elements are new, inventive and industrially
applicable. For instance, the cap-screw mechanism of the bottle or container may be subject of patent protection.
The design, shape, contour or other ornamental aspects of the same bottle or container, or of any article of
manufacture for that matter, are copyrightable subject matter pursuant to Section 172.1 (h) of the IP Code.

XV.
A. No. Monaliza is not the author of the photographs. As such, she does not own the copyrights to the photographs.
Instead, copyrights to the photograph, whether surreptitiously taken or not, belongs to the author, Valentino in this
case, pursuant to Section 172(k) of the IP Code.

B. Yes. Valentino, as the author of the photographs, owns the copyrights thereto. Francesco violated Valentinos
reproduction rights to the photographs pursuant to Section 177 of the IP Code. Valentino may also recover damages
pursuant to Section 216 (b) of the IP Code.

C. Yes. Violation of her right to privacy under Article 26 of the Civil Code is one.

XVIII
A. Y is correct in claiming that no one has a right to prevent the parallel importation of branded products. The
Philippines follows international exhaustion of rights in trademarks.

B. X is correct if the shoes are covered by a Philippine patent. Parallel importation implies that the MAGIC shoes are
purchased abroad by Y, which is perfectly valid and regular. However, importing the patented MAGIC shoes into the
Philippines violates Section 71 of the IP Code which prohibits importation, among other acts, of a patented product or
a product obtained directly or indirectly from a patented process. Parallel importation of a patented product or a
product obtained directly or indirectly from a patented process is not covered under the limitations set forth in Section
72.1 of the IP Code which lays down the doctrine of national exhaustion in patent law.

XIX
Dr. Nobel cannot protect his new method of diagnosis and his new method of treatment of Alzheimers. Both methods
of diagnosis and treatment are specifically excluded from patentable inventions under Section 22 of Republic Act
8293.
On the other hand, Dr. Nobel can protect his new medicine for Alzheimers, especially in light of his long
experimentation and field testing which shows that this is not a mere discovery of the medicine as understood in
patent law. Also, this new medicine does not fall under the exception in Republic Act 9502 which exception refers to
new uses of known medicines.