EY Industries V Shendar

Facts:

 EY Industrial Sales is a domestic corporation engaged in the production, distribution

and sale of air compressors.
 Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of
compressors.
 From 1997-2004, EY Industrial imported air compressors from Shen Dar.
 In 1997, Shen Dar filed a Trademark Application with the Intellectual Property Office
(IPO) for the mark “Vespa” for the use of air compressors. It was approved in 2007.
 In 1999, EY Industrial filed a Trademark Application also for the mark “VESPA” for
the use of air compressors. It was approved in 2004.
 Shen Dar filed a Petition for Cancellation of the Industrial’s EYES COR with the
Bureau of Legal Affairs contending that: a. there was a violation of Section 123.1 (D)
of the Intellectual Property Code which provides that: A mark cannot be registered if
it is identical to a mark with an earlier filing or priority date. b. EY Industrial is only a
distributor of the air compressors
 On the other hand, EY Industrial alleged that it is the sole assembler and fabricator
of VESPA air compressors since the early 1990s and that Shen Dar supplied them
air compressors with the mark “SD” and not “VESPA”

Issues:
1. Who between EY Industrial and Shen Dar is entitled to the trademark “VESPA”. EY
INDUSTRIAL SALES
2. WON the Bureau of Legal Affairs has the power to cancel the application of Shen Dar
even if it is Shen Dar who filed the case? YES

Held:

1st: EY INDUSTRIAL has the right to the trademark.

Based on the evidence, EYIS owns the “VESPA” trademark; it has prior use, as shown
by various sales invoices.

Ownership of a mark or trade name may be acquired not necessarily by registration but
by adoption and use in trade or commerce. As between actual use of a mark without
registration, and registration of the mark without actual use thereof, the former prevails
over the latter.

For a rule widely accepted and firmly entrenched, because it has come down through the
years, is that actual use in commerce or business is a pre-requisite to the acquisition of
the right of ownership. It is non sequitur to hold that porque EYIS is a distributor, it is no
longer the owner.

FIRST-TO-FILE RULE
Under Section 123.1 of IPO provision, the registration of a mark is prevented with the
filing of an earlier application for registration.

This must not, however, be interpreted to mean that ownership should be based upon an
earlier filing date. While RA 8293 (IPC) removed the previous requirement of proof of
actual use prior to the filing of an application for registration of a mark, proof of prior and
continuous use is necessary to establish ownership of a mark. Such ownership
constitutes sufficient evidence to oppose the registration of a mark.

When we talk about trademark, we are just talking about the mark. It does not include the
product. Shen Dar is the manufacturer of the product, but they did not name the product
as VESPA. It was EY that named the VESPA, and used the VESPA, even though they
were only the distributors.
It was EY that actually used the trademark through the use of
receipts, and other documents.

The first to file rule – According to the SC that Shen Dar filed under the old IPC where
prior use is the one applied.


2nd: BLA has the power to cancel the application.

Shen Dar challenges the propriety of such cancellation on the ground that there was no
petition for cancellation as required under Sec. 151 of RA 8293.

The IPO Director General stated that, despite the fact that the instant case was for the
cancellation of the COR issued in favor of EYIS, the interests of justice dictate, and in
view of its findings, that the COR of Shen Dar must be cancelled.

The above rule reflects the oft-repeated legal principle that quasi-judicial and
administrative bodies are not bound by technical rules of procedure. Such principle,
however, is tempered by fundamental evidentiary rules, including due process.

The fact that no petition for cancellation was filed against the COR issued to Shen Dar
does not preclude the cancellation of Shen Dar’s COR. It must be emphasized that,
during the hearing for the cancellation of EYIS’ COR before the BLA, Shen Dar tried to
establish that it, not EYIS, was the true owner of the mark “VESPA” and, thus, entitled to
have it registered. Shen Dar had more than sufficient opportunity to present its evidence
and argue its case, and it did. It was given its day in court and its right to due process
was respected. The IPO Director General’s disregard of the procedure for the
cancellation of a registered mark was a valid exercise of his discretion.

Remember, EY’s application was the one granted, and it is Shen Dar’s application that
was cancelled.
It does not mean that even you were the one who filed, it your application
cannot be cancelled. The BLA, who has jurisdiction over the case, were able to determine
that it is Shen Dar’s trademark that should not have been issued with registration, even it
is the plaintiff.
SAMSON V. DAWAY AND CATERPILLAR, INC.

G.R. NO. 160054-55

DATE: July 21, 2004

PONENTE: YNARES-SANTIAGO

FACTS: Two informations for unfair competition were filed against Samson, the registered owner
of ITTI shoes. The infomations state that Samson did then and there willfully, unlawfully and
feloniously distribute, sell and/or offer for sale CATERPILLAR products such as footwear,
garments, clothing, bags, accessories and paraphernalia which are closely identical to and/or
colorable imitations of the authentic Caterpillar products and likewise using trademarks, symbols
and/or designs as would cause confusion, mistake or deception on the part of the buying public
to the damage and prejudice of CATERPILLAR, INC., the prior adopter, user and owner of the
following internationally: “CATERPILLAR,” “CAT,” “CATERPILLAR & DESIGN,” “CAT AND
DESIGN,” “WALKING MACHINES” and “TRACK-TYPE TRACTOR & DESIGN.”

Samson filed a motion to suspend the arraignment and other proceedings in view of the existence
of an alleged prejudicial question involving a civil case for unfair competition pending with the
same branch, and also in view of the pendency of a petition for review filed with the Secretary of
Justice assailing the Chief State Prosecutor’s resolution finding probable cause to charge
petitioner with unfair competition.

The TC judge denied the motion and arraignment ensued. Thereafter, Samson filed a motion to
quash the informations contending that since under Section 170 of R.A. No. 8293, the penalty of
imprisonment for unfair competition does not exceed six years, the offense is cognizable by the
Municipal Trial Courts and not by the Regional Trial Court, per R.A. No. 7691. The TC judge
denied the motion. Hence, this petition for certiorari.

ISSUE/S:

1. Which court has jurisdiction over criminal and civil cases for violation of intellectual property
rights?

2. Did the TC judge commit grave abuse of discretion when he refused to suspend the
proceedings on the ground of existence of prejudicial question and a pending petition for review
before the Sec. of Justice on the finding of probable cause for unfair competition?
RULING:

1. RTC. Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal
penalty for infringement of registered marks, unfair competition, false designation of origin and
false description or representation, is imprisonment from 2 to 5 years and a fine ranging from Fifty
Thousand Pesos to Two Hundred Thousand Pesos. Corollarily, Section 163 of the same Code
states that actions (including criminal and civil) under Sections 150, 155, 164, 166, 167, 168 and
169 shall be brought before the proper courts with appropriate jurisdiction under existing laws.

The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The
Trademark Law) 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). We find no merit in the claim of Samson that R.A. No. 166 was expressly
repealed by R.A. No. 8293. The use of the phrases “parts of Acts” and “inconsistent herewith”
only means that the repeal pertains only to provisions which are repugnant or not susceptible of
harmonization with R.A. No. 8293.7 Section 27 of R.A. No. 166, however, is consistent and in
harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest jurisdiction over
violations of intellectual property rights with the Metropolitan Trial Courts, it would have expressly
stated so under Section 163 thereof.

Moreover, the settled rule in statutory construction is that in case of conflict between a general
law and a special law, the latter must prevail. Jurisdiction conferred by a special law to Regional
Trial Courts must prevail over that granted by a general law to Municipal Trial Courts. In the case
at bar, R.A. No. 8293 and R.A. No. 166 are special laws conferring jurisdiction over violations of
intellectual property rights to the Regional Trial Court. They should therefore prevail over R.A.
No. 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.
2. NO. Samson failed to substantiate his claim that there was a prejudicial question. He made no
discussion in support of said prayer in his petition and reply to comment. Neither did he attach a
copy of the complaint in Civil Case nor quote the pertinent portion thereof to prove the existence
of a prejudicial question. At any rate, there is no prejudicial question if the civil and the criminal
action can, according to law, proceed independently of each other.

In the case at bar, the common element in the acts constituting unfair competition under Section
168 of R.A. No. 8293 is fraud. Pursuant to Article 33 of the Civil Code, in cases of defamation,
fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured party. Hence, Civil Case No. Q-00-41446, which
as admitted by Caterpilar also relate to unfair competition, is an independent civil action under
Article 33 of the Civil Code. As such, it will not operate as a prejudicial question that will justify
the suspension of the criminal cases at bar.

While the pendency of a petition for review is a ground for suspension of the arraignment, the
aforecited provision limits the deferment of the arraignment to a period of 60 days reckoned from
the filing of the petition with the reviewing office. It follows, therefore, that after the expiration of
said period, the trial court is bound to arraign the accused or to deny the motion to defer
arraignment.

In the instant case, Samson failed to establish that respondent Judge abused his discretion in
denying his motion to suspend. His pleadings and annexes submitted before the Court do not
show the date of filing of the petition for review with the Secretary of Justice.15Moreover, the
Order dated August 9, 2002 denying his motion to suspend was not appended to the petition. He
thus failed to discharge the burden of proving that he was entitled to a suspension of his
arraignment and that the questioned orders are contrary to Section 11 (c), Rule 116 of the Revised
Rules on Criminal Procedure. Indeed, the age-old but familiar rule is that he who alleges must
prove his allegations.