THIRD DIVISION private respondent was not guilty of deceiving the public by misrepresenting
[G. R. No. 126627. August 14, 2003] that Impregon is its product.
SMITH KLINE BECKMAN CORPORATION, petitioner, vs. THE
HONORABLE COURT OF APPEALS and TRYCO PHARMA
CORPORATION, respondents.
DECISION
CARPIO-MORALES, J.:
Smith Kline Beckman Corporation (petitioner), a corporation existing
by virtue of the laws of the state of Pennsylvania, United States of America
(U.S.) and licensed to do business in the Philippines, filed on October 8,
1976, as assignee, before the Philippine Patent Office (now Bureau of
Patents, Trademarks and Technology Transfer) an application for patent
over an invention entitled “Methods and Compositions for Producing
Biphasic Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole
Carbamate.” The application bore Serial No. 18989.
On September 24, 1981, Letters Patent No. 14561[1] for the aforesaid
invention was issued to petitioner for a term of seventeen (17) years.
The letters patent provides in its claims[2] that the patented invention
consisted of a new compound named methyl 5 propylthio-2-benzimidazole
carbamate and the methods or compositions utilizing the compound as an
active ingredient in fighting infections caused by gastrointestinal parasites
and lungworms in animals such as swine, sheep, cattle, goats, horses, and
even pet animals.
Tryco Pharma Corporation (private respondent) is a domestic
corporation that manufactures, distributes and sells veterinary products
including Impregon, a drug that has Albendazole for its active ingredient
and is claimed to be effective against gastro-intestinal roundworms,
lungworms, tapeworms and fluke infestation in carabaos, cattle and goats.
Petitioner sued private respondent for infringement of patent and
unfair competition before the Caloocan City Regional Trial Court (RTC). [3] It
claimed that its patent covers or includes the substance Albendazole such
that private respondent, by manufacturing, selling, using, and causing to be
sold and used the drug Impregon without its authorization, infringed Claims
2, 3, 4, 7, 8 and 9 of Letters Patent No. 14561[4] as well as committed unfair
competition under Article 189, paragraph 1 of the Revised Penal Code and
Section 29 of Republic Act No. 166 (The Trademark Law) for advertising
and selling as its own the drug Impregon although the same contained
petitioner’s patented Albendazole.[5]
On motion of petitioner, Branch 125 of the Caloocan RTC issued a
temporary restraining order against private respondent enjoining it from
committing acts of patent infringement and unfair competition.[6] A writ of
preliminary injunction was subsequently issued.[7]
Private respondent in its Answer[8] averred that Letters Patent No.
14561 does not cover the substance Albendazole for nowhere in it does
that word appear; that even if the patent were to include Albendazole, such
substance is unpatentable; that the Bureau of Food and Drugs allowed it to
manufacture and market Impregon with Albendazole as its known
ingredient; that there is no proof that it passed off in any way its veterinary
products as those of petitioner; that Letters Patent No. 14561 is null and
void, the application for the issuance thereof having been filed beyond the
one year period from the filing of an application abroad for the same
invention covered thereby, in violation of Section 15 of Republic Act No.
165 (The Patent Law); and that petitioner is not the registered patent
holder.
Private respondent lodged a Counterclaim against petitioner for such
amount of actual damages as may be proven; P1,000,000.00 in moral
damages; P300,000.00 in exemplary damages; and P150,000.00 in
attorney’s fees.
Finding for private respondent, the trial court rendered a Decision
dated July 23, 1991,[9] the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, plaintiff’s complaint should be, as it
is hereby, DISMISSED. The Writ of injunction issued in connection with the
case is hereby ordered DISSOLVED.
The Letters Patent No. 14561 issued by the then Philippine Patents Office
is hereby declared null and void for being in violation of Sections 7, 9 and
15 of the Patents Law.
Pursuant to Sec. 46 of the Patents Law, the Director of Bureau of Patents is
hereby directed to cancel Letters Patent No. 14561 issued to the plaintiff
and to publish such cancellation in the Official Gazette.
Defendant Tryco Pharmaceutical Corporation is hereby awarded
P330,000.00 actual damages and P100,000.00 attorney’s fees as prayed
for in its counterclaim but said amount awarded to defendant is subject to
the lien on correct payment of filing fees.
SO ORDERED. (Underscoring supplied)
On appeal, the Court of Appeals, by Decision of April 21,
1995,[10] upheld the trial court’s finding that private respondent was not
liable for any infringement of the patent of petitioner in light of the latter’s
failure to show that Albendazole is the same as the compound subject of
Letters Patent No. 14561. Noting petitioner’s admission of the issuance by
the U.S. of a patent for Albendazole in the name of Smith Kline and French
Laboratories which was petitioner’s former corporate name, the appellate
court considered the U.S. patent as implying that Albendazole is different
from methyl 5 propylthio-2-benzimidazole carbamate. It likewise found that
The appellate court, however, declared that Letters Patent No. 14561
was not void as it sustained petitioner’s explanation that Patent Application
Serial No. 18989 which was filed on October 8, 1976 was a divisional
application of Patent Application Serial No. 17280 filed on June 17, 1975
with the Philippine Patent Office, well within one year from petitioner’s filing
on June 19, 1974 of its Foreign Application Priority Data No. 480,646 in the
U.S. covering the same compound subject of Patent Application Serial No.
17280.
Applying Section 17 of the Patent Law, the Court of Appeals thus
ruled that Patent Application Serial No. 18989 was deemed filed on June
17, 1995 or still within one year from the filing of a patent application abroad
in compliance with the one-year rule under Section 15 of the Patent
Law. And it rejected the submission that the compound in Letters Patent
No. 14561 was not patentable, citing the jurisprudentially established
presumption that the Patent Office’s determination of patentability is
correct. Finally, it ruled that petitioner established itself to be the one and
the same assignee of the patent notwithstanding changes in its corporate
name. Thus the appellate court disposed:
WHEREFORE, the judgment appealed
from is AFFIRMED with the
MODIFICATION that the orders for the
nullification of Letters Patent No. 14561
and for its cancellation are deleted
therefrom.
SO ORDERED.
Petitioner’s motion for reconsideration of the Court of Appeals’
decision having been denied[11] the present petition for review on
certiorari[12]was filed, assigning as errors the following:
I. THE COURT OF APPEALS GRAVELY ERRED IN NOT
FINDING THAT ALBENDAZOLE, THE ACTIVE
INGREDIENT IN TRYCO’S “IMPREGON” DRUG, IS
INCLUDED IN PETITIONER’S LETTERS PATENT NO.
14561, AND THAT CONSEQUENTLY TRYCO IS
ANSWERABLE FOR PATENT INFRINGEMENT.
II. THE COURT OF APPEALS GRAVELY ERRED IN
AWARDING TO PRIVATE RESPONDENT TRYCO
PHARMA CORPORATION P330,000.00 ACTUAL
DAMAGES AND P100,000.00 ATTORNEY’S FEES.
Petitioner argues that under the doctrine of equivalents for
determining patent infringement, Albendazole, the active ingredient it
alleges was appropriated by private respondent for its drug Impregon, is
substantially the same as methyl 5 propylthio-2-benzimidazole carbamate
covered by its patent since both of them are meant to combat worm or
parasite infestation in animals. It cites the “unrebutted” testimony of its
witness Dr. Godofredo C. Orinion (Dr. Orinion) that the chemical formula in
Letters Patent No. 14561 refers to the compound Albendazole. Petitioner
adds that the two substances substantially do the same function in
substantially the same way to achieve the same results, thereby making
them truly identical. Petitioner thus submits that the appellate court should
have gone beyond the literal wordings used in Letters Patent No. 14561,
beyond merely applying the literal infringement test, for in spite of the fact
that the word Albendazole does not appear in petitioner’s letters patent, it
has ably shown by evidence its sameness with methyl 5 propylthio-2-
benzimidazole carbamate.
Petitioner likewise points out that its application with the Philippine
Patent Office on account of which it was granted Letters Patent No. 14561
was merely a divisional application of a prior application in the U. S. which
granted a patent for Albendazole. Hence, petitioner concludes that both
methyl 5 propylthio-2-benzimidazole carbamate and the U.S.-patented
Albendazole are dependent on each other and mutually contribute to
produce a single result, thereby making Albendazole as much a part of
Letters Patent No. 14561 as the other substance is.
Petitioner concedes in its Sur-Rejoinder[13] that although methyl 5
propylthio-2-benzimidazole carbamate is not identical with Albendazole, the
former is an improvement or improved version of the latter thereby making
both substances still substantially the same.
With respect to the award of actual damages in favor of private
respondent in the amount of P330,000.00 representing lost profits,
petitioner assails the same as highly speculative and conjectural, hence,
without basis. It assails too the award of P100,000.00 in attorney’s fees as
not falling under any of the instances enumerated by law where recovery of
attorney’s fees is allowed.
In its Comment,[14] private respondent contends that application of
the doctrine of equivalents would not alter the outcome of the case,
Albendazole and methyl 5 propylthio-2-benzimidazole carbamate being two
different compounds with different chemical and physical properties. It
stresses that the existence of a separate U.S. patent for Albendazole
indicates that the same and the compound in Letters Patent No. 14561 are
different from each other; and that since it was on account of a divisional
application that the patent for methyl 5 propylthio-2-benzimidazole
carbamate was issued, then, by definition of a divisional application, such a
compound is just one of several independent inventions alongside
Albendazole under petitioner’s original patent application.
As has repeatedly been held, only questions of law may be raised in
a petition for review on certiorari before this Court. Unless the factual
findings of the appellate court are mistaken, absurd, speculative,
conjectural, conflicting, tainted with grave abuse of discretion, or contrary to
the findings culled by the court of origin,[15] this Court does not review them.
From an examination of the evidence on record, this Court finds
nothing infirm in the appellate court’s conclusions with respect to the
principal issue of whether private respondent committed patent infringement
to the prejudice of petitioner.
The burden of proof to substantiate a charge for patent infringement
rests on the plaintiff.[16] In the case at bar, petitioner’s evidence consists
primarily of its Letters Patent No. 14561, and the testimony of Dr. Orinion,
its general manager in the Philippines for its Animal Health Products
Division, by which it sought to show that its patent for the compound methyl
5 propylthio-2-benzimidazole carbamate also covers the substance
Albendazole.
From a reading of the 9 claims of Letters Patent No. 14561 in relation
to the other portions thereof, no mention is made of the compound
Albendazole. All that the claims disclose are: the covered invention, that
is, the compound methyl 5 propylthio-2-benzimidazole carbamate; the
compound’s being anthelmintic but nontoxic for animals or its ability to
destroy parasites without harming the host animals; and the patented
methods, compositions or preparations involving the compound to
maximize its efficacy against certain kinds of parasites infecting specified
animals.
When the language of its claims is clear and distinct, the patentee is
bound thereby and may not claim anything beyond them.[17] And so are the
courts bound which may not add to or detract from the claims matters not
expressed or necessarily implied, nor may they enlarge the patent beyond
the scope of that which the inventor claimed and the patent office allowed,
even if the patentee may have been entitled to something more than the
words it had chosen would include.[18]
It bears stressing that the mere absence of the word Albendazole in
Letters Patent No. 14561 is not determinative of Albendazole’s non-
inclusion in the claims of the patent. While Albendazole is admittedly a
chemical compound that exists by a name different from that covered in
petitioner’s letters patent, the language of Letter Patent No. 14561 fails to
yield anything at all regarding Albendazole. And no extrinsic evidence had
been adduced to prove that Albendazole inheres in petitioner’s patent in
spite of its omission therefrom or that the meaning of the claims of the
patent embraces the same.
While petitioner concedes that the mere literal wordings of its patent
cannot establish private respondent’s infringement, it urges this Court to
apply the doctrine of equivalents.
The doctrine of equivalents provides that an infringement also takes
place when a device appropriates a prior invention by incorporating its
innovative concept and, although with some modification and change,
performs substantially the same function in substantially the same way to
achieve substantially the same result.[19] Yet again, a scrutiny of petitioner’s
evidence fails to convince this Court of the substantial sameness of
petitioner’s patented compound and Albendazole. While both compounds
have the effect of neutralizing parasites in animals, identity of result does
not amount to infringement of patent unless Albendazole operates in
substantially the same way or by substantially the same means as the
patented compound, even though it performs the same function and
achieves the same result.[20] In other words, the principle or mode of
operation must be the same or substantially the same.[21]
The doctrine of equivalents thus requires satisfaction of the function-
means-and-result test, the patentee having the burden to show that all three
components of such equivalency test are met.[22]
As stated early on, petitioner’s evidence fails to explain how
Albendazole is in every essential detail identical to methyl 5 propylthio-2-
benzimidazole carbamate. Apart from the fact that Albendazole is an
anthelmintic agent like methyl 5 propylthio-2-benzimidazole carbamate,
nothing more is asserted and accordingly substantiated regarding the
method or means by which Albendazole weeds out parasites in animals,
thus giving no information on whether that method is substantially the same
as the manner by which petitioner’s compound works. The testimony of Dr.
Orinion lends no support to petitioner’s cause, he not having been
presented or qualified as an expert witness who has the knowledge or
expertise on the matter of chemical compounds.
As for the concept of divisional applications proffered by petitioner, it
comes into play when two or more inventions are claimed in a single
application but are of such a nature that a single patent may not be issued
for them.[23] The applicant thus is required “to divide,” that is, to limit the
claims to whichever invention he may elect, whereas those inventions not
elected may be made the subject of separate applications which are called
“divisional applications.”[24] What this only means is that petitioner’s methyl
5 propylthio-2-benzimidazole carbamate is an invention distinct from the
other inventions claimed in the original application divided out, Albendazole
being one of those other inventions. Otherwise, methyl 5 propylthio-2-
benzimidazole carbamate would not have been the subject of a divisional
application if a single patent could have been issued for it as well as
Albendazole.
The foregoing discussions notwithstanding, this Court does not
sustain the award of actual damages and attorney’s fees in favor of private
respondent. The claimed actual damages of P330,000.00 representing lost
profits or revenues incurred by private respondent as a result of the
issuance of the injunction against it, computed at the rate of 30% of its
alleged P100,000.00 monthly gross sales for eleven months, were
supported by the testimonies of private respondent’s President[25] and
Executive Vice-President that the average monthly sale of Impregon
wasP100,000.00 and that sales plummeted to zero after the issuance of the
injunction.[26] While indemnification for actual or compensatory damages
covers not only the loss suffered (damnum emergens) but also profits which
the obligee failed to obtain (lucrum cessans or ganacias frustradas), it is
necessary to prove the actual amount of damages with a reasonable
degree of certainty based on competent proof and on the best evidence
obtainable by the injured party.[27] The testimonies of private respondent’s
officers are not the competent proof or best evidence obtainable to
establish its right to actual or compensatory damages for such damages
also require presentation of documentary evidence to substantiate a claim
therefor.[28]
In the same vein, this Court does not sustain the grant by the
appellate court of attorney’s fees to private respondent anchored on Article
2208 (2) of the Civil Code, private respondent having been allegedly forced
to litigate as a result of petitioner’s suit. Even if a claimant is compelled to
litigate with third persons or to incur expenses to protect its rights, still
attorney’s fees may not be awarded where no sufficient showing of bad
faith could be reflected in a party’s persistence in a case other than an
erroneous conviction of the righteousness of his cause.[29]There exists no
evidence on record indicating that petitioner was moved by malice in suing
private respondent.
This Court, however, grants private respondent temperate or
moderate damages in the amount of P20,000.00 which it finds reasonable
under the circumstances, it having suffered some pecuniary loss the
amount of which cannot, from the nature of the case, be established with
certainty.[30]
WHEREFORE, the assailed decision of the Court of Appeals is
hereby AFFIRMED with MODIFICATION. The award of actual or
compensatory damages and attorney’s fees to private respondent, Tryco
Pharma Corporation, is DELETED; instead, it is hereby awarded the
amount of P20,000.00 as temperate or moderate damages.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Corona,
JJ., concur.
Intellectual Property Law – Law on Patents - Doctrine of Equivalents
Smith Kline is a US corporation licensed to do business in the Philippines.
In 1981, a patent was issued to it for itsinvention entitled “Methods and
Compositions for Producing Biphasic Parasiticide Activity Using Methyl 5
Propylthio-2-Benzimidazole Carbamate.” The invention is a means to fight
off gastrointestinal parasites from various cattles and pet animals.
Tryco Pharma is a local corporation engaged in the same business as
Smith Kline.
Smith Kline sued Tryco Pharma because the latter was selling a
veterinary product called Impregon which contains a drug called
Albendazole which fights off gastro-intestinal roundworms, lungworms,
tapeworms and fluke infestation in carabaos, cattle and goats.
Smith Kline is claiming that Albendazole is covered in their patent because
substantially the same as methyl 5 propylthio-2-benzimidazole carbamate
covered by its patent since both of them are meant to combat worm
or parasite infestation in animals. And that Albendazole is
actually patented under Smith Kline by the US.
Tryco Pharma averred that nowhere in Impregon’s packaging does it
mention that Albendazole is present but even if it were, the same is
“unpatentable”.
Smith Kline thus invoked the doctrine of equivalents, which implies that the
two substances substantially do the same function in substantially the same
way to achieve the same results, thereby making them truly identical for in
spite of the fact that the word Albendazole does not appear in petitioner’s
letters patent, it has ably shown by evidence its sameness with methyl 5
propylthio-2-benzimidazole carbamate.
ISSUE: Whether or not there is patent infringement in this case
HELD: No. Smith Kline failed to prove that Albendazole is a compound
inherent in the patented invention. Nowhere in thepatent does the word
Albendazole found. When the language of its claims is clear and distinct,
the patentee is bound thereby and may not claim anything beyond them.
Further, there was a separate patent for Albendazole given by the US which
implies that Albendazole is indeed separate and distinct from
the patented compound here.
A scrutiny of Smith Kline’s evidence fails to prove the substantial sameness
of the patented compound and Albendazole. While both compounds have
the effect of neutralizing parasites in animals, identity of result does not
amount to infringement of patent unless Albendazole operates in
substantially the same way or by substantially the same means as
the patentedcompound, even though it performs the same function
and achieves the same result. In other words, the principle or mode
of operation must be the same or substantially the same.
The doctrine of equivalents thus requires satisfaction of the function-means-
and-result test, the patentee having the burden to show that all three
components of such equivalency test are met.
SECOND DIVISION
[G.R. No. 161295. June 29, 2005]
JESSIE G. CHING, petitioner, vs. WILLIAM M. SALINAS, SR., WILLIAM
M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER Y.
SALINAS, ALONTO SOLAIMAN SALLE, JOHN ERIC I.
SALINAS, NOEL M. YABUT (Board of Directors and Officers
of WILAWARE PRODUCT CORPORATION), respondents.
DECISION
CALLEJO, SR., J.:
This petition for review on certiorari assails the Decision[1] and
Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 70411
affirming the January 3, 2002 and February 14, 2002 Orders[3] of the
Regional Trial Court (RTC) of Manila, Branch 1, which quashed and set
aside Search Warrant Nos. 01-2401 and 01-2402 granted in favor of
petitioner Jessie G. Ching.
Jessie G. Ching is the owner and general manager of Jeshicris
Manufacturing Co., the maker and manufacturer of a Utility Model,
described as “Leaf Spring Eye Bushing for Automobile” made up of plastic.
On September 4, 2001, Ching and Joseph Yu were issued by the
National Library Certificates of Copyright Registration and Deposit of the
said work described therein as “Leaf Spring Eye Bushing for Automobile.”[4]
On September 20, 2001, Ching requested the National Bureau of
Investigation (NBI) for police/investigative assistance for the apprehension
and prosecution of illegal manufacturers, producers and/or distributors of
the works.[5]
After due investigation, the NBI filed applications for search warrants
in the RTC of Manila against William Salinas, Sr. and the officers and
members of the Board of Directors of Wilaware Product Corporation. It was
alleged that the respondents therein reproduced and distributed the said
models penalized under Sections 177.1 and 177.3 of Republic Act (R.A.)
No. 8293. The applications sought the seizure of the following:
a.) Undetermined quantity of Leaf spring eye bushing for
automobile that are made up of plastic polypropylene;
b.) Undetermined quantity of Leaf spring eye bushing for
automobile that are made up of polyvinyl chloride
plastic;
c.) Undetermined quantity of Vehicle bearing cushion that is
made up of polyvinyl chloride plastic;
d.) Undetermined quantity of Dies and jigs, patterns and
flasks used in the manufacture/fabrication of items a to
d;
e.) Evidences of sale which include delivery receipts,
invoices and official receipts.[6]
The RTC granted the application and issued Search Warrant Nos.
01-2401 and 01-2402 for the seizure of the aforecited articles.[7] In the
inventory submitted by the NBI agent, it appears that the following
articles/items were seized based on the search warrants:
Leaf Spring eye bushing
a) Plastic Polypropylene
- C190 27 }
- C240 rear 40 }
- C240 front 41 }
BAG 1
b) Polyvinyl Chloride Plastic
- C190 13 }
c) Vehicle bearing cushion
- center bearing cushion 11 }
Budder for C190 mold 8 }
Diesel Mold
a) Mold for spring eye bushing rear 1 there be any violation?[14]
set
b) Mold for spring eye bushing front 1 suffered the same fate. The petitioner forthwith filed the present petition for
set
c) Mold for spring eye bushing for C190 1 set
d) Mold for C240 rear 1 proceeding.
piece of the
et
e) Mold for spring eye bushing for L300 2 abuse of its discretion when it declared that his works are not copyrightable
sets
f) Mold for leaf spring eye bushing C190
with metal 1 1, 1998, provides in no uncertain terms that copyright protection
set
g) Mold for vehicle bearing cushion 1
set[8]
The respondents filed a motion to quash the search warrants on the
following grounds:
2. The copyright registrations were issued in violation of the Intellectual
Property Code on the ground that:
a) the subject matter of the registrations are not
artistic or literary;
b) the subject matter of the registrations are spare
parts of automobiles meaning – there (sic) are
original parts that they are designed to replace.
Hence, they are not original.[9]
The respondents averred that the works covered by the certificates
issued by the National Library are not artistic in nature; they are considered
automotive spare parts and pertain to technology. They aver that the
models are not original, and as such are the proper subject of a patent, not
copyright.[10]
In opposing the motion, the petitioner averred that the court which
issued the search warrants was not the proper forum in which to articulate
the issue of the validity of the copyrights issued to him. Citing the ruling of
the Court in Malaloan v. Court of Appeals,[11] the petitioner stated that a
search warrant is merely a judicial process designed by the Rules of Court
in anticipation of a criminal case. Until his copyright was nullified in a
proper proceeding, he enjoys rights of a registered owner/holder thereof.
On January 3, 2002, the trial court issued an Order[12] granting the
motion, and quashed the search warrant on its finding that there was no
probable cause for its issuance. The court ruled that the work covered by
the certificates issued to the petitioner pertained to solutions to technical
problems, not literary and artistic as provided in Article 172 of the
Intellectual Property Code.
His motion for reconsideration of the order having been denied by the
trial court’s Order of February 14, 2002, the petitioner filed a petition
for certiorari in the CA, contending that the RTC had no jurisdiction to delve
into and resolve the validity of the copyright certificates issued to him by the
National Library. He insisted that his works are covered by Sections 172.1
and 172.2 of the Intellectual Property Code. The petitioner averred that the
copyright certificates are prima facie evidence of its validity, citing the ruling
of the United States Court of Appeals in Wildlife Express Corporation v.
Carol Wright Sales, Inc.[13] The petitioner asserted that the respondents
failed to adduce evidence to support their motion to quash the search
warrants. The petitioner noted that respondent William Salinas, Jr. was not
being honest, as he was able to secure a similar copyright registration of a
similar product from the National Library on January 14, 2002.
On September 26, 2003, the CA rendered judgment dismissing the
petition on its finding that the RTC did not commit any grave abuse of its
discretion in issuing the assailed order, to wit:
It is settled that preliminarily, there must be a finding that a specific offense
must have been committed to justify the issuance of a search warrant. In a
number of cases decided by the Supreme Court, the same is explicitly
provided, thus:
“The probable cause must be in connection with one specific offense, and
the judge must, before issuing the warrant, personally examine in the form
of searching questions and answers, in writing and under oath, the
complainant and any witness he may produce, on facts personally known to
them and attach to the record their sworn statements together with any
affidavit submitted.
“In the determination of probable cause, the court must necessarily resolve
whether or not an offense exists to justify the issuance or quashal of the
search warrant.”
In the instant case, the petitioner is praying for the reinstatement of the
search warrants issued, but subsequently quashed, for the offense
of Violation of Class Designation of Copyrightable Works under Section
177.1 in relation to Section 177.3 of Republic Act 8293, when the objects
subject of the same, are patently not copyrightable.
It is worthy to state that the works protected under the Law on Copyright
are: literary or artistic works (Sec. 172) and derivative works (Sec. 173).
The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither
classification. Accordingly, if, in the first place, the item subject of the
petition is not entitled to be protected by the law on copyright, how can
The petitioner’s motion for reconsideration of the said decision
review on certiorari, contending that the revocation of his copyright
certificates should be raised in a direct action and not in a search warrant
The petitioner posits that even assuming ex argumenti that the trial
courts may resolve the validity of his copyright in a proceeding to quash a
search warrant for allegedly infringing items, the RTC committed a grave
in the first place. He claims that R.A. No. 8293, otherwise known as the
Intellectual Property Code of the Philippines, which took effect on January
automatically attaches to a work by the sole fact of its creation, irrespective
of its mode or form of expression, as well as of its content, quality or
purpose.[15] The law gives a non-inclusive definition of “work” as referring to
original intellectual creations in the literary and artistic domain protected
from the moment of their creation; and includes original ornamental designs
or models for articles of manufacture, whether or not registrable as an
industrial design and other works of applied art under Section 172.1(h) of
R.A. No. 8293.
As such, the petitioner insists, notwithstanding the classification of
the works as either literary and/or artistic, the said law, likewise,
encompasses works which may have a bearing on the utility aspect to
which the petitioner’s utility designs were classified. Moreover, according to
the petitioner, what the Copyright Law protects is the author’s intellectual
creation, regardless of whether it is one with utilitarian functions or
incorporated in a useful article produced on an industrial scale.
The petitioner also maintains that the law does not provide that the
intended use or use in industry of an article eligible for patent bars or
invalidates its registration under the Law on Copyright. The test of
protection for the aesthetic is not beauty and utility, but art for the copyright
and invention of original and ornamental design for design patents.[16] In like
manner, the fact that his utility designs or models for articles of manufacture
have been expressed in the field of automotive parts, or based on
something already in the public domain does not automatically remove
them from the protection of the Law on Copyright.[17]
The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293
which gives the same presumption to an affidavit executed by an author
who claims copyright ownership of his work.
The petitioner adds that a finding of probable cause to justify the
issuance of a search warrant means merely a reasonable suspicion of the
commission of the offense. It is not equivalent to absolute certainty or a
finding of actual and positive cause.[18] He assists that the determination of
probable cause does not concern the issue of whether or not the alleged
work is copyrightable. He maintains that to justify a finding of probable
cause in the issuance of a search warrant, it is enough that there exists a
reasonable suspicion of the commission of the offense.
The petitioner contends that he has in his favor the benefit of the
presumption that his copyright is valid; hence, the burden of overturning this
presumption is on the alleged infringers, the respondents herein. But this
burden cannot be carried in a hearing on a proceeding to quash the search
warrants, as the issue therein is whether there was probable cause for the
issuance of the search warrant. The petitioner concludes that the issue of
probable cause should be resolved without invalidating his copyright.
In their comment on the petition, the respondents aver that the work
of the petitioner is essentially a technical solution to the problem of wear
and tear in automobiles, the substitution of materials, i.e., from rubber to
plastic matter of polyvinyl chloride, an oil resistant soft texture plastic
material strong enough to endure pressure brought about by the vibration of
the counter bearing and thus brings bushings. Such work, the respondents
assert, is the subject of copyright under Section 172.1 of R.A. No. 8293.
The respondents posit that a technical solution in any field of human activity
which is novel may be the subject of a patent, and not of a copyright. They
insist that the certificates issued by the National Library are only
certifications that, at a point in time, a certain work was deposited in the
said office. Furthermore, the registration of copyrights does not provide for
automatic protection. Citing Section 218.2(b) of R.A. No. 8293, the
respondents aver that no copyright is said to exist if a party categorically
questions its existence and legality. Moreover, under Section 2, Rule 7 of
the Implementing Rules of R.A. No. 8293, the registration and deposit of
work is not conclusive as to copyright outlay or the time of copyright or the
right of the copyright owner. The respondents maintain that a copyright
exists only when the work is covered by the protection of R.A. No. 8293.
The petition has no merit.
The RTC had jurisdiction to delve into and resolve the issue whether
the petitioner’s utility models are copyrightable and, if so, whether he is the
owner of a copyright over the said models. It bears stressing that upon the
filing of the application for search warrant, the RTC was duty-bound to
determine whether probable cause existed, in accordance with Section 4,
Rule 126 of the Rules of Criminal Procedure:
SEC. 4. Requisite for issuing search warrant. – A search warrant shall not
issue but upon probable cause in connection with one specific offense to be
determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and,
particularly, describing the place to be searched and the things to be
seized.
In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br.
93,[19] the Court held that in the determination of probable cause, the court
must necessarily resolve whether or not an offense exists to justify the
issuance of a search warrant or the quashal of one already issued by the
court. Indeed, probable cause is deemed to exist only where facts and
circumstances exist which could lead a reasonably cautious and prudent
man to believe that an offense has been committed or is being committed.
Besides, in Section 3, Rule 126 of the Rules of Criminal Procedure, a
search warrant may be issued for the search and seizure of personal
property (a) subject of the offense; (b) stolen or embezzled and other
proceeds or fruits of the offense; or (c) used or intended to be used as the
means of committing an offense.
The RTC is mandated under the Constitution and Rules of Criminal
Procedure to determine probable cause. The court cannot abdicate its
constitutional obligation by refusing to determine whether an offense has
been committed.[20] The absence of probable cause will cause the outright
nullification of the search warrant.[21]
For the RTC to determine whether the crime for infringement under
R.A. No. 8293 as alleged in an application is committed, the petitioner-
applicant was burdened to prove that (a) respondents Jessie Ching and
Joseph Yu were the owners of copyrighted material; and (b) the copyrighted
material was being copied and distributed by the respondents. Thus, the
ownership of a valid copyright is essential.[22]
Ownership of copyrighted material is shown by proof of originality
and copyrightability. By originality is meant that the material was not
copied, and evidences at least minimal creativity; that it was independently
created by the author and that it possesses at least same minimal degree of
creativity.[23] Copying is shown by proof of access to copyrighted material
and substantial similarity between the two works.[24] The applicant must
thus demonstrate the existence and the validity of his copyright because in
the absence of copyright protection, even original creation may be freely
copied.[25]
By requesting the NBI to investigate and, if feasible, file an
application for a search warrant for infringement under R.A. No. 8293
against the respondents, the petitioner thereby authorized the RTC (in
resolving the application), to delve into and determine the validity of the
copyright which he claimed he had over the utility models. The petitioner
cannot seek relief from the RTC based on his claim that he was the
copyright owner over the utility models and, at the same time, repudiate the
court’s jurisdiction to ascertain the validity of his claim without running afoul
to the doctrine of estoppel.
To discharge his burden, the applicant may present the certificate of
registration covering the work or, in its absence, other evidence.[26] A
copyright certificate provides prima facie evidence of originality which is one
element of copyright validity. It constitutes prima facie evidence of both
validity and ownership[27] and the validity of the facts stated in the
certificate.[28] The presumption of validity to a certificate of copyright
registration merely orders the burden of proof. The applicant should not
ordinarily be forced, in the first instance, to prove all the multiple facts that
underline the validity of the copyright unless the respondent, effectively
challenging them, shifts the burden of doing so to the applicant.[29]Indeed,
Section 218.2 of R.A. No. 8293 provides:
218.2. In an action under this Chapter:
(a) Copyright shall be presumed to subsist in the work or other subject
matter to which the action relates if the defendant does not put in issue the
question whether copyright subsists in the work or other subject matter; and
(b) Where the subsistence of the copyright is established, the plaintiff
shall be presumed to be the owner of the copyright if he claims to be the
owner of the copyright and the defendant does not put in issue the question
of his ownership.
A certificate of registration creates no rebuttable presumption of
copyright validity where other evidence in the record casts doubt on the
question. In such a case, validity will not be presumed.[30]
To discharge his burden of probable cause for the issuance of a
search warrant for violation of R.A. No. 8293, the petitioner-applicant
submitted to the RTC Certificate of Copyright Registration Nos. 2001-197
and 2001-204 dated September 3, 2001 and September 4, 2001,
respectively, issued by the National Library covering work identified as Leaf
Spring Eye Bushing for Automobile and Vehicle Bearing Cushion both
classified under Section 172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. – 172.1. Literary and artistic works,
hereinafter referred to as “works,” are original intellectual creations in the
literary and artistic domain protected from the moment of their creation and
shall include in particular:
...
(h) Original ornamental designs or models for articles of manufacture,
whether or not registrable as an industrial design, and other works of
applied art.
Related to the provision is Section 171.10, which provides that a
“work of applied art” is an artistic creation with utilitarian functions or
incorporated in a useful article, whether made by hand or produced on an
industrial scale.
But, as gleaned from the specifications appended to the application
for a copyright certificate filed by the petitioner, the said Leaf Spring Eye
Bushing for Automobile is merely a utility model described as comprising a
generally cylindrical body having a co-axial bore that is centrally located
and provided with a perpendicular flange on one of its ends and a
cylindrical metal jacket surrounding the peripheral walls of said body, with
the bushing made of plastic that is either polyvinyl chloride or
polypropylene.[31] Likewise, the Vehicle Bearing Cushion is illustrated as a
bearing cushion comprising a generally semi-circular body having a central
hole to secure a conventional bearing and a plurality of ridges provided
therefore, with said cushion bearing being made of the same plastic
materials.[32] Plainly, these are not literary or artistic works. They are not
intellectual creations in the literary and artistic domain, or works of applied
art. They are certainly not ornamental designs or one having decorative
quality or value.
It bears stressing that the focus of copyright is the usefulness of the
artistic design, and not its marketability. The central inquiry is whether the
article is a work of art.[33] Works for applied art include all original pictorials,
graphics, and sculptural works that are intended to be or have been
embodied in useful article regardless of factors such as mass production,
commercial exploitation, and the potential availability of design patent
protection.[34]
As gleaned from the description of the models and their objectives,
these articles are useful articles which are defined as one having an
intrinsic utilitarian function that is not merely to portray the appearance of
the article or to convey information. Indeed, while works of applied art,
original intellectual, literary and artistic works are copyrightable, useful
articles and works of industrial design are not.[35] A useful article may be
copyrightable only if and only to the extent that such design incorporates
pictorial, graphic, or sculptural features that can be identified separately
from, and are capable of existing independently of the utilitarian aspects of
the article.
We agree with the contention of the petitioner (citing Section 171.10
of R.A. No. 8293), that the author’s intellectual creation, regardless of
whether it is a creation with utilitarian functions or incorporated in a useful
article produced on an industrial scale, is protected by copyright law.
However, the law refers to a “work of applied art which is an artistic
creation.” It bears stressing that there is no copyright protection for works
of applied art or industrial design which have aesthetic or artistic features
that cannot be identified separately from the utilitarian aspects of the
article.[36] Functional components of useful articles, no matter how
artistically designed, have generally been denied copyright protection
unless they are separable from the useful article.[37]
In this case, the petitioner’s models are not works of applied art, nor
artistic works. They are utility models, useful articles, albeit with no artistic
design or value. Thus, the petitioner described the utility model as follows:
LEAF SPRING EYE BUSHING FOR AUTOMOBILE
Known bushings inserted to leaf-spring eye to hold leaf-springs of
automobile are made of hard rubber. These rubber bushings after a time,
upon subjecting them to so much or intermittent pressure would eventually
wore (sic) out that would cause the wobbling of the leaf spring.
The primary object of this utility model, therefore, is to provide a leaf-spring
eye bushing for automobile that is made up of plastic.
Another object of this utility model is to provide a leaf-spring eye bushing for
automobiles made of polyvinyl chloride, an oil resistant soft texture plastic
or polypropylene, a hard plastic, yet both causes cushion to the leaf spring,
yet strong enough to endure pressure brought about by the up and down
movement of said leaf spring.
Yet, an object of this utility model is to provide a leaf-spring eye bushing for
automobiles that has a much longer life span than the rubber bushings.
Still an object of this utility model is to provide a leaf-spring eye bushing for
automobiles that has a very simple construction and can be made using
simple and ordinary molding equipment.
A further object of this utility model is to provide a leaf-spring eye bushing
for automobile that is supplied with a metal jacket to reinforce the plastic
eye bushing when in engaged with the steel material of the leaf spring.
These and other objects and advantages will come to view and be
understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.
Figure 1 is an exploded perspective of a leaf-spring eye bushing according
to the present utility model;
Figure 2 is a sectional view taken along line 2-2 of Fig. 1;
Figure 3 is a longitudinal sectional view of another embodiment of this utility
model;
Figure 4 is a perspective view of a third embodiment; and
Figure 5 is a sectional view thereof.
Referring now to the several views of the drawings wherein like reference
numerals designated same parts throughout, there is shown a utility model
for a leaf-spring eye bushing for automobile generally designated as
reference numeral 10.
Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11
having a co-axial bore 12 centrally provided thereof.
As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with
a perpendicular flange 13 on one of its ends and a cylindrical metal jacket
14 surrounding the peripheral walls 15 of said body 11. When said leaf-
spring bushing 10 is installed, the metal jacket 14 acts with the leaf-spring
eye (not shown), which is also made of steel or cast steel. In effect, the
bushing 10 will not be directly in contact with steel, but rather the metal
jacket, making the life of the bushing 10 longer than those without the metal
jacket.
In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl
chloride, an oil resistant soft texture plastic or a hard polypropylene plastic,
both are capable to endure the pressure applied thereto, and, in effect,
would lengthen the life and replacement therefor.
Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of
said bushing 10 is insertably provided with a steel tube 17 to reinforce the
inner portion thereof. This steel tube 17 accommodates or engages with
the leaf-spring bolt (not shown) connecting the leaf spring and the
automobile’s chassis.
Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10
is elongated and cylindrical as to its construction. Said another
embodiment is also made of polypropylene or polyvinyl chloride plastic
material. The steel tube 17 and metal jacket 14 may also be applied to this
embodiment as an option thereof.[38]
VEHICLE BEARING CUSHION
Known bearing cushions inserted to bearing housings for vehicle propeller
shafts are made of hard rubber. These rubber bushings after a time, upon
subjecting them to so much or intermittent pressure would eventually be
worn out that would cause the wobbling of the center bearing.
The primary object of this utility model therefore is to provide a vehicle-
bearing cushion that is made up of plastic.
Another object of this utility model is to provide a vehicle bearing cushion
made of polyvinyl chloride, an oil resistant soft texture plastic material which
causes cushion to the propeller’s center bearing, yet strong enough to
endure pressure brought about by the vibration of the center bearing.
Yet, an object of this utility model is to provide a vehicle-bearing cushion
that has a much longer life span than rubber bushings.
Still an object of this utility model is to provide a vehicle bearing cushion
that has a very simple construction and can be made using simple and
ordinary molding equipment.
These and other objects and advantages will come to view and be
understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.
Figure 1 is a perspective view of the present utility model for a vehicle-
bearing cushion; and
Figure 2 is a sectional view thereof.
Referring now to the several views of the drawing, wherein like reference
numeral designate same parts throughout, there is shown a utility model for
a vehicle-bearing cushion generally designated as reference numeral 10.
Said bearing cushion 10 comprises of a generally semi-circular body 11,
having central hole 12 to house a conventional bearing (not shown). As
shown in Figure 1, said body 11 is provided with a plurality of ridges 13
which serves reinforcing means thereof.
The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture
oil and chemical resistant plastic material which is strong, durable and
capable of enduring severe pressure from the center bearing brought about
by the rotating movement of the propeller shaft of the vehicle.[39]
A utility model is a technical solution to a problem in any field of
human activity which is new and industrially applicable. It may be, or may
relate to, a product, or process, or an improvement of any of the
aforesaid.[40] Essentially, a utility model refers to an invention in the
mechanical field. This is the reason why its object is sometimes described
as a device or useful object.[41] A utility model varies from an invention, for
which a patent for invention is, likewise, available, on at least three
aspects: first, the requisite of “inventive step”[42] in a patent for invention is
not required; second, the maximum term of protection is only seven
years[43] compared to a patent which is twenty years,[44] both reckoned from
the date of the application; and third, the provisions on utility model
dispense with its substantive examination[45] and prefer for a less
complicated system.
Being plain automotive spare parts that must conform to the original
structural design of the components they seek to replace, the Leaf Spring
Eye Bushing and Vehicle Bearing Cushion are not ornamental. They lack
the decorative quality or value that must characterize authentic works of
applied art. They are not even artistic creations with incidental utilitarian
functions or works incorporated in a useful article. In actuality, the personal
properties described in the search warrants are mechanical works, the
principal function of which is utility sans any aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle
Bearing Cushion as included in the catch-all phrase “other literary,
scholarly, scientific and artistic works” in Section 172.1(a) of R.A. No. 8293.
Applying the principle of ejusdem generis which states that “where a statute
describes things of a particular class or kind accompanied by words of a
generic character, the generic word will usually be limited to things of a
similar nature with those particularly enumerated, unless there be
something in the context of the state which would repel such
inference,”[46] the Leaf Spring Eye Bushing and Vehicle Bearing Cushion
are not copyrightable, being not of the same kind and nature as the works
enumerated in Section 172 of R.A. No. 8293.
No copyright granted by law can be said to arise in favor of the
petitioner despite the issuance of the certificates of copyright registration
and the deposit of the Leaf Spring Eye Bushing and Vehicle Bearing
Cushion. Indeed, in Joaquin, Jr. v. Drilon[47] and Pearl & Dean (Phil.),
Incorporated v. Shoemart, Incorporated,[48] the Court ruled that:
Copyright, in the strict sense of the term, is purely a statutory right. It is a
new or independent right granted by the statute, and not simply a pre-
existing right regulated by it. Being a statutory grant, the rights are only
such as the statute confers, and may be obtained and enjoyed only with
respect to the subjects and by the persons, and on terms and conditions
specified in the statute. Accordingly, it can cover only the works falling
within the statutory enumeration or description.
That the works of the petitioner may be the proper subject of a patent
does not entitle him to the issuance of a search warrant for violation of
copyright laws. In Kho v. Court of Appeals[49] and Pearl & Dean (Phil.),
Incorporated v. Shoemart, Incorporated,[50] the Court ruled that “these
copyright and patent rights are completely distinct and separate from one
another, and the protection afforded by one cannot be used
interchangeably to cover items or works that exclusively pertain to the
others.” The Court expounded further, thus:
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 (trademark) or services (service
mark) of an enterprise and shall include a stamped or marked container of
goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, 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.
The petitioner cannot find solace in the ruling of the United States
Supreme Court in Mazer v. Stein[51] to buttress his petition. In that case, the
artifacts involved in that case were statuettes of dancing male and female
figures made of semi-vitreous china. The controversy therein centered on
the fact that although copyrighted as “works of art,” the statuettes were
intended for use and used as bases for table lamps, with electric wiring,
sockets and lampshades attached. The issue raised was whether the
statuettes were copyright protected in the United States, considering that
the copyright applicant intended primarily to use them as lamp bases to be
made and sold in quantity, and carried such intentions into effect. At that
time, the Copyright Office interpreted the 1909 Copyright Act to cover works
of artistic craftsmanship insofar as their form, but not the utilitarian aspects,
were concerned. After reviewing the history and intent of the US Congress
on its copyright legislation and the interpretation of the copyright office, the
US Supreme Court declared that the statuettes were held copyrightable
works of art or models or designs for works of art. The High Court ruled
that:
“Works of art (Class G) – (a) – In General. This class includes works of
artistic craftsmanship, in so far as their form but not their mechanical or
utilitarian aspects are concerned, such as artistic jewelry, enamels,
glassware, and tapestries, as well as all works belonging to the fine arts,
such as paintings, drawings and sculpture. …”
So we have a contemporaneous and long-continued construction of the
statutes by the agency charged to administer them that would allow the
registration of such a statuette as is in question here.[52]
The High Court went on to state that “[t]he dichotomy of protection for
the aesthetic is not beauty and utility but art for the copyright and the
invention of original and ornamental design for design patents.”
Significantly, the copyright office promulgated a rule to implement Mazer to
wit:
… [I]f “the sole intrinsic function of an article is its utility, the fact that the
work is unique and attractively shaped will not qualify it as a work of art.”
In this case, the bushing and cushion are not works of art. They are,
as the petitioner himself admitted, utility models which may be the subject
of a patent.
IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby
DENIED for lack of merit. The assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 70411 are AFFIRMED. Search
Warrant Nos. 01-2401 and 01-2402 issued on October 15, 2001 are
ANNULLED AND SET ASIDE. Costs against the petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario,
JJ., concur.
Ching Vs. Salinas Case Digest
Ching Vs. Salinas Case Digest
CASE TITLE: Jessie Ching v. William Salinas, Sr., William Salinas, Jr.,
Josephine Salinas, Jennifer Salinas, Alonto Solaiman Salle, John Eric
Salinas, Noel Yabut (Board of Directors and Officers of WILAWARE
PROUDCT CORPORATION) PETITIONER’S CLAIMS: Petitioner’s insisted
that his works are covered by Sections 172.1 and 172.2 of the Intellectual
Property Code and that the copyright certificates issued by the National
Library are prima facie evidence of its validity, citing the ruling of the United
States Court of Appeals in one of its cases. He claims that the IPC provides
in no uncertain terms that copyright protection automatically attaches to a
work by the sole fact of its creation, irrespective of its mode or form of
expression, as well as of its content, quality or purpose. As such, the
petitioner insists, notwithstanding the classification of the works as either
literary and/or artistic, the said law, likewise, encompasses works which
may have a bearing on the utility aspect to which
the petitioner’s utility designs were classified. Moreover, according to the
petitioner, what the Copyright Law protects is the author’s intellectual
creation, regardless of whether it is one with utilitarian functions or
incorporated in a useful article produced on n industrial scale. The petitioner
also maintains that the law does not provide that the intended use or use in
industry of an article eligible for patent bars or invalidates its registration
under the Law on Copyright. The test of protection for the aesthetic is not
beauty and utility, but art for the copyright ad invention of original and
ornamental design for design patents. In like manner, the fact that his utility
designs or models for articles of manufacture have been expressed in the
field of automotive parts, or based on something already in the public
domain does not automatically remove them from the protection of the Law
on Copyright. RESPONDENT’S CLAIMS: The respondents aver that the
work of the petitioner...
Ang vs. Teodoro
Facts:Toribio Teodoro at f irs t in part ners hip wit h J uan Kat indig
and lat er as s ole propriet or, has continuously used “
Ang Tibay
” bot h as a t radem ark and as a t rade -nam e, in t he
m anuf ac t ure and s ale of slippers, shoes and indoor baseballs sine
1910. He formally registered it as a trademark on September 29,1915 and
as a trade-name on January 3, 1933. Starting in an obscure shop in 1910
with a modest capital of 210php but wit h t ireles s indus t ry and
unlim it ed pers ev eranc e, Teodoro, t hen an unk nown young
m anmaking slippers with his own hands but now a prominent business
magnate and a manufacturer with a largef ac t ory operat ed wit h
m odern m ac hinery by a great num ber of em ployees, has
s t eadily gro wn wit h his business ton which he has dedicated the best
years of his life.The petitioner, Ana Ang registered the same trademark “
Ang Tibay
” for pants and shirts on April11, 1932 and established a factory for the
manufacture of said articles in the year 1937. The RTC ruled inf av or of
t he pet it ioner, abs olv ing Ana Ang f rom t he c om plaint on t he
ground t hat t wo t radem arks are dissimilar and are used on different
and non-competing goods; that there had been no fraud on the use of s aid
t radem arks . Ho wev er, t he CA rev ers ed t he ruling of t he RTC,
holding t hat by unint errupt ed
ande x c l u s i v e u s e s i n c e 1 9 1 0 i n t h e m a n u f a c t u r e o f s l
i p p e r s , s h o e s , T e o d o r o ’ s t r a d e m a r k h a s a c q u i r e d seco
ndary meaning; that the goods or articles on which the two trademarks are
used are similar or belong tothe same class; and that the use by Ana Ang
(petitioner) of said trademark constitutes a violation of Section3 and 7 of Act
# 666. Hence, the petition.Issue:1. Whether or not the words “
Ang Tibay
” is a descriptive term.2. Whether or not the words “
Ang Tibay
” had acquired a secondary meaning?3. Whether or not the pants and shirts
are goods similar to shoes and slippers within the meaning of Sections 3
and 7 of Act # 666?Ruling: 1. The words “Ang Tibay” is an exclamation
denoting admiration of strength or durability. It is never usedadjectively to
define or describe an object. Hence, the term is NOT a descriptive word
within the meaningof the Trade-Mark Law but rather a fanciful or coined
phrase which may properly and legally beappropriated as a trademark or
tradename.2. It is unnecessary to apply the Doctrine of Secondary Meaning
in the trademark parlance. Furthermore,this doctrine is to effect that a word
or phrase originally incapable of exclusive appropriation with referenceto an
article on the market, because geographically or otherwise descriptive,
might nevertheless have beenused so long and so exclusively by one
producer with reference to his article. The phrase “
Ang Tibay
” being neither geographic nor descriptive, was originally capable of
exclusive appropriation as a trademark.In any event, the CA’s ruling that the
Doctrine of Secondary Meaning be fully sustained isaffirmed, because
Teodoro’s long and exclusive use of said phrase with relative to its products
and his business, has acquired a propriety connotation.3. The test
employed by the courts to determine whether non-competing goods are or
are not of the sameclass is confusion as to the origin of the goods of the
second user. Although two non-competing goods may be classified under
two different classes by the Patent Office, because they are deemed not to
possess thesame descriptive properties, they would nevertheless, be held
to belong to the same class if thesimultaneous use on them of identical or
closely similar trademarks would be likely to cause confusion asto the
origin, or personal source of the second user’s goods.The judgment of the
Court of Appeals is affirmed, with costs against the petitioner in the three
instances
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-48226 December 14, 1942
ANA L. ANG, petitioner,
vs.
TORIBIO TEODORO, respondent.
Cirilo Lim for petitioner.
Marcial P. Lichauco and Manuel M. Mejia for respondent.
OZAETA, J.:
Petitioner has appealed to this Court by certiorari to reverse the judgment of
the Court of Appeals reversing that of the Court of First Instance of Manila
and directing the Director of Commerce to cancel the registration of the
trade-mark "Ang Tibay" in favor of said petitioner, and perpetually enjoining
the latter from using said trade-mark on goods manufactured and sold by
her.
Respondent Toribio Teodoro, at first in partnership with Juan Katindig and
later as sole proprietor, has continuously used "Ang Tibay," both as a trade-
mark and as a trade-name, in the manufacture and sale of slippers, shoes,
and indoor baseballs since 1910. He formally registered it as trade-mark on
September 29, 1915, and as trade-name on January 3, 1933. The growth of
his business is a thrilling epic of Filipino industry and business capacity.
Starting in an obscure shop in 1910 with a modest capital of P210 but with
tireless industry and unlimited perseverance, Toribio Teodoro, then an
unknown young man making slippers with his own hands but now a
prominent business magnate and manufacturer with a large factory
operated with modern machinery by a great number of employees, has
steadily grown with his business to which he has dedicated the best years
of his life and which he has expanded to such proportions that his gross
sales from 1918 to 1938 aggregated P8,787,025.65. His sales in 1937
amounted to P1,299,343.10 and in 1938, P1,133,165.77. His expenses for
advertisement from 1919 to 1938 aggregated P210,641.56.
Petitioner (defendant below) registered the same trade-mark "Ang Tibay"
for pants and shirts on April 11, 1932, and established a factory for the
manufacture of said articles in the year 1937. In the following year (1938)
her gross sales amounted to P422,682.09. Neither the decision of the trial
court nor that of the Court of Appeals shows how much petitioner has spent
or advertisement. But respondent in his brief says that petitioner "was
unable to prove that she had spent a single centavo advertising "Ang Tibay"
shirts and pants prior to 1938. In that year she advertised the factory which
she had just built and it was when this was brought to the attention of the
appellee that he consulted his attorneys and eventually brought the present
suit."
The trial court (Judge Quirico Abeto) presiding absolved the defendant from
the complaint, with costs against the plaintiff, on the grounds that the two
trademarks are dissimilar and are used on different and non-competing
goods; that there had been no exclusive use of the trade-mark by the
plaintiff; and that there had been no fraud in the use of the said trade-mark
by the defendant because the goods on which it is used are essentially
different from those of the plaintiff. The second division of the Court of
Appeals, composed of Justices Bengson, Padilla, Lopez Vito, Tuason, and
Alex Reyes, with Justice Padilla as ponente, reversed that judgment,
holding that by uninterrupted an exclusive use since 191 in the manufacture
of slippers and shoes, respondent's trade-mark has acquired a secondary
meaning; that the goods or articles on which the two trade-marks are used
are similar or belong to the same class; and that the use by petitioner of
said trade-mark constitutes a violation of sections 3 and 7 of Act No. 666.
The defendant Director of Commerce did not appeal from the decision of
the Court of Appeals.
First. Counsel for the petitioner, in a well-written brief, makes a frontal
sledge-hammer attack on the validity of respondent's trade-mark "Ang
Tibay." He contends that the phrase "Ang Tibay" as employed by the
respondent on the articles manufactured by him is a descriptive term
because, "freely translate in English," it means "strong, durable, lasting." He
invokes section 2 of Act No. 666, which provides that words or devices
which related only to the name, quality, or description of the merchandise
cannot be the subject of a trade-mark. He cites among others the case
of Baxter vs. Zuazua (5 Phil., 16), which involved the trade-mark "Agua de
Kananga" used on toilet water, and in which this Court held that the word
"Kananga," which is the name of a well-known Philippine tree or its flower,
could not be appropriated as a trade-mark any more than could the words
"sugar," "tobacco," or "coffee." On the other hand, counsel for the
respondent, in an equally well-prepared and exhaustive brief, contend that
the words "Ang Tibay" are not descriptive but merely suggestive and may
properly be regarded as fanciful or arbitrary in the legal sense. The cite
several cases in which similar words have been sustained as valid trade-
marks, such as "Holeproof" for hosiery, 1 "ideal for tooth brushes, 2 and
"Fashionknit" for neckties and sweaters. 3
We find it necessary to go into the etymology and meaning of the Tagalog
words "Ang Tibay" to determine whether they are a descriptive term, i.e.,
whether they relate to the quality or description of the merchandise to which
respondent has applied them as a trade-mark. The word "ang" is a definite
article meaning "the" in English. It is also used as an adverb, a contraction
of the word "anong" (what or how). For instance, instead of saying, "Anong
ganda!" ("How beautiful!"), we ordinarily say, "Ang ganda!" Tibay is a root
word from which are derived the verb magpatibay (to strenghten; the
nouns pagkamatibay (strength, durability), katibayan (proof, support,
strength), katibay-tibayan (superior strength); and the adjectives matibay
(strong, durable, lasting), napakatibay(very strong), kasintibay or
magkasintibay (as strong as, or of equal strength). The phrase "Ang Tibay"
is an exclamation denoting administration of strength or durability. For
instance, one who tries hard but fails to break an object exclaims, "Ang
tibay!" (How strong!") It may also be used in a sentence thus, "Ang tibay ng
sapatos mo!" (How durable your shoes are!") The phrase "ang tibay" is
never used adjectively to define or describe an object. One does not say,
"ang tibay sapatos" or "sapatos ang tibay" is never used adjectively to
define or describe an object. One does not say, "ang tibay sapatos" or
"sapatos ang tibay" to mean "durable shoes," but "matibay na sapatos" or
"sapatos na matibay."
From all of this we deduce that "Ang Tibay" is not a descriptive term within
the meaning of the Trade-Mark Law but rather a fanciful or coined phrase
which may properly and legally be appropriated as a trade-mark or trade-
name. In this connection we do not fail to note that when the petitioner
herself took the trouble and expense of securing the registration of these
same words as a trademark of her products she or her attorney as well as
the Director of Commerce was undoubtedly convinced that said words (Ang
Tibay) were not a descriptive term and hence could be legally used and
validly registered as a trade-mark. It seems stultifying and puerile for her
now to contend otherwise, suggestive of the story of sour grapes. Counsel
for the petitioner says that the function of a trade-mark is to point
distinctively, either by its own meaning or by association, to the origin or
ownership of the wares to which it is applied. That is correct, and we find
that "Ang Tibay," as used by the respondent to designate his wares, had
exactly performed that function for twenty-two years before the petitioner
adopted it as a trade-mark in her own business. Ang Tibay shoes and
slippers are, by association, known throughout the Philippines as products
of the Ang Tibay factory owned and operated by the respondent Toribio
Teodoro.
Second. In her second assignment of error petitioner contends that the
Court of Appeals erred in holding that the words "Ang Tibay" had acquired a
secondary meaning. In view of the conclusion we have reached upon the
first assignment of error, it is unnecessary to apply here the doctrine of
"secondary meaning" in trade-mark parlance. This doctrine is to the effect
that a word or phrase originally incapable of exclusive appropriation with
reference to an article of the market, because geographically or otherwise
descriptive, might nevertheless have been used so long and so exclusively
by one producer with reference to his article that, in that trade and to that
branch of the purchasing public, the word or phrase has come to mean that
the article was his product. (G. & C. Merriam Co. vs. Salfield, 198 F., 369,
373.) We have said that the phrase "Ang Tibay," being neither geographic
nor descriptive, was originally capable of exclusive appropriation as a trade-
mark. But were it not so, the application of the doctrine of secondary
meaning made by the Court of Appeals could nevertheless be fully
sustained because, in any event, by respondent's long and exclusive use of
said phrase with reference to his products and his business, it has acquired
a proprietary connotation. (Landers, Frary, and Clark vs. Universal Cooler
Corporation, 85 F. [2d], 46.)
Third. Petitioner's third assignment of error is, that the Court of Appeals
erred in holding that pants and shirts are goods similar to shoes and
slippers within the meaning of sections 3 and 7 of Act No. 666. She also
contends under her fourth assignment of error (which we deem convenient
to pass upon together with the third) that there can neither be infringement
of trade-mark under section 3 nor unfair competition under section 7
through her use of the words "Ang Tibay" in connection with pants and
shirts, because those articles do not belong to the same class of
merchandise as shoes and slippers.
The question raised by petitioner involve the scope and application of
sections 3,7, 11, 13, and 20 of the Trade-Mark Law (Act No. 666.) Section 3
provides that "any person entitled to the exclusive use of a trade-mark to
designate the origin or ownership of goods he has made or deals in, may
recover damages in a civil actions from any person who has sold goods of a
similar kind, bearing such trade-mark . . . The complaining party . . . may
have a preliminary injunction, . . . and such injunction upon final hearing, if
the complainant's property in the trade-mark and the defendant's violation
thereof shall be fully established, shall be made perpetual, and this
injunction shall be part of the judgment for damages to be rendered in the
same cause." Section 7 provides that any person who, in selling his goods,
shall give them the general appearance of the goods of another either in the
wrapping of the packages, or in 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 the complainant,
shall be guilty of unfair competition, and shall be liable to an action for
damages and to an injunction, as in the cases of trade-mark infringement
under section 3. Section 11 requires the applicant for registration of a trade-
mark to state, among others, "the general class of merchandise to which
the trade-mark claimed has been appropriated." Section 13 provides that no
alleged trade-mark or trade name shall be registered which is identical with
a registered or known trade-mark owned by another and appropriate to
the same class of merchandise, or which to nearly resembles another
person's lawful trade-mark or trade-name as to be likely to cause confusion
or mistake in the mind of the public, or to deceive purchasers. And section 2
authorizes the Director of Commerce to establish classes of
merchandise for the purpose of the registration of trade-marks and to
determine the particular description of articles included in each class; it also
provides that "an application for registration of a trade-mark shall be
registered only for one class of articles and only for the particular
description of articles mentioned in said application."
We have underlined the key words used in the statute: "goods of a similar
kin," "general class of merchandise," "same class of merchandise," "classes
of merchandise," and "class of articles," because it is upon their implications
that the result of the case hinges. These phrases, which refer to the same
thing, have the same meaning as the phrase "merchandise of the same
descriptive properties" used in the statutes and jurisprudence of other
jurisdictions.
The burden of petitioner's argument is that under sections 11 and 20 the
registration by respondent of the trade-mark "Ang Tibay" for shoes and
slippers is no safe-guard against its being used by petitioner for pants and
shirts because the latter do not belong to the same class of merchandise or
articles as the former; that she cannot be held guilty of infringement of
trade-mark under section 3 because respondent's mark is not a valid trade-
mark, nor has it acquired a secondary meaning; that pants and shirts do not
possess the same descriptive properties as shoes and slippers; that neither
can she be held guilty of unfair competition under section 7 because the
use by her of the trade-mark "Ang Tibay" upon pants and shirts is not likely
to mislead the general public as to their origin or ownership; and that there
is now showing that she in unfairly or fraudulently using that mark "Ang
Tibay" against the respondent. If we were interpreting the statute for the first
time and in the first decade of the twentieth century, when it was enacted,
and were to construe it strictly and literally, we might uphold petitioner's
contentions. But law and jurisprudence must keep abreast with the progress
of mankind, and the courts must breathe life into the statutes if they are to
serve their purpose. Our Trade-mark Law, enacted nearly forty years ago,
has grown in its implications and practical application, like a constitution, in
virtue of the life continually breathed into it. It is not of merely local
application; it has its counterpart in other jurisdictions of the civilized world
from whose jurisprudence it has also received vitalizing nourishment. We
have to apply this law as it has grown and not as it was born. Its growth or
development abreast with that of sister statutes and jurisprudence in other
jurisdictions is reflected in the following observation of a well-known author:
This fundamental change in attitude first manifested itself in the
year 1915-1917. Until about then, the courts had proceeded on
the theory that the same trade-mark, used on un-like goods,
could not cause confusion in trade and that, therefore, there
could be no objection to the use and registration of a well-known
mark by a third party for a different class of goods. Since 1916
however, a growing sentiment began to arise that in the selection
of a famous mark by a third party, there was generally the hidden
intention to "have a free ride" on the trade-mark owner's
reputation and good will. (Derenberg, Trade-Mark Protection &
Unfair Trading, 1936 edition, p. 409.)
In the present state of development of the law on Trade-Marks, Unfair
Competition, and Unfair Trading, the test employed by the courts to
determine whether noncompeting goods are or are not of the same class is
confusion as to the origin of the goods of the second user. Although two
noncompeting articles may be classified under two different classes by the
Patent Office because they are deemed not to possess the same
descriptive properties, they would, nevertheless, be held by the courts to
belong to the same class if the simultaneous use on them of identical or
closely similar trade-marks would be likely to cause confusion as to the
origin, or personal source, of the second user's goods. They would be
considered as not falling under the same class only if they are so dissimilar
or so foreign to each other as to make it unlikely that the purchaser would
think the first user made the second user's goods.
Such construction of the law is induced by cogent reasons of equity and fair
dealing. The courts have come to realize that there can be unfair
competition or unfair trading even if the goods are non-competing, and that
such unfair trading can cause injury or damage to the first user of a given
trade-mark, first, by prevention of the natural expansion of his business
and, second, by having his business reputation confused with and put at the
mercy of the second user. Then noncompetitive products are sold under the
same mark, the gradual whittling away or dispersion of the identity and hold
upon the public mind of the mark created by its first user, inevitably results.
The original owner is entitled to the preservation of the valuable link
between him and the public that has been created by his ingenuity and the
merit of his wares or services. Experience has demonstrated that when a
well-known trade-mark is adopted by another even for a totally different
class of goods, it is done to get the benefit of the reputation and
advertisements of the originator of said mark, to convey to the public a false
impression of some supposed connection between the manufacturer of the
article sold under the original mark and the new articles being tendered to
the public under the same or similar mark. As trade has developed and
commercial changes have come about, the law of unfair competition has
expanded to keep pace with the times and the element of strict competition
in itself has ceased to be the determining factor. The owner of a trade-mark
or trade-name has a property right in which he is entitled to protection,
since there is damage to him from confusion of reputation or goodwill in the
mind of the public as well as from confusion of goods. The modern trend is
to give emphasis to the unfairness of the acts and to classify and treat the
issue as a fraud.
A few of the numerous cases in which the foregoing doctrines have been
laid down in one form or another will now be cited: (1) In Teodoro Kalaw Ng
Khe vs. Level Brothers Company (G.R. No. 46817), decided by this Court
on April 18, 1941, the respondent company (plaintiff below) was granted
injunctive relief against the use by the petitioner of the trade-mark "Lux" and
"Lifebuoy" for hair pomade, they having been originally used by the
respondent for soap; The Court held in effect that although said articles are
noncompetitive, they are similar or belong to the same class. (2) In Lincoln
Motor Co. vs. Lincoln Automobile Co. (44 F. [2d], 812), the manufacturer of
the well-known Lincoln automobile was granted injunctive relief against the
use of the word "Lincoln" by another company as part of its firm name. (3)
The case of Aunt Jemima Mills Co. vs. Rigney & Co. (247 F., 407), involved
the trade-mark "Aunt Jemima," originally used on flour, which the defendant
attempted to use on syrup, and there the court held that the goods, though
different, are so related as to fall within the mischief which equity should
prevent. (4) In Tiffany & Co., vs. Tiffany Productions, Inc. (264 N.Y.S., 459;
23 Trade-mark Reporter, 183), the plaintiff, a jewelry concern, was granted
injunctive relief against the defendant, a manufacturer of motion pictures,
from using the name "Tiffany." Other famous cases cited on the margin,
wherein the courts granted injunctive relief, involved the following trade-
marks or trade-names: "Kodak," for cameras and photographic supplies,
against its use for bicycles. 4 "Penslar," for medicines and toilet articles,
against its use for cigars; 5 "Rolls-Royce," for automobiles. against its use
for radio tubes; 6 "Vogue," as the name of a magazine, against its use for
hats; 7"Kotex," for sanitary napkins, against the use of "Rotex" for vaginal
syringes; 8 "Sun-Maid," for raisins, against its use for flour; 9 "Yale," for locks
and keys, against its use for electric flashlights; 10 and "Waterman," for
fountain pens, against its use for razor blades. 11lawphil.net
Against this array of famous cases, the industry of counsel for the petitioner
has enabled him to cite on this point only the following cases: (1) Mohawk
Milk Products vs. General Distilleries Corporation (95 F. [2d], 334), wherein
the court held that gin and canned milk and cream do not belong to the
same class; (2) Fawcett Publications, Inc. vs. Popular Mechanics Co. (80 F.
[2d], 194), wherein the court held that the words "Popular Mechanics" used
as the title of a magazine and duly registered as a trade-mark were not
infringed by defendant's use of the words "Modern Mechanics and
Inventions" on a competitive magazine, because the word "mechanics" is
merely a descriptive name; and (3) Oxford Book Co. vs. College Entrance
Book Co. (98 F. [2d], 688), wherein the plaintiff unsuccessfully attempted to
enjoin the defendant from using the word "Visualized" in connection with
history books, the court holding that said word is merely descriptive. These
cases cites and relied upon by petitioner are obviously of no decisive
application to the case at bar.
We think reasonable men may not disagree that shoes and shirts are not as
unrelated as fountain pens and razor blades, for instance. The mere
relation or association of the articles is not controlling. As may readily be
noted from what we have heretofore said, the proprietary connotation that a
trade-mark or trade-name has acquired is of more paramount
consideration. The Court of Appeals found in this case that by uninterrupted
and exclusive use since 1910 of respondent's registered trade-mark on
slippers and shoes manufactured by him, it has come to indicate the origin
and ownership of said goods. It is certainly not farfetched to surmise that
the selection by petitioner of the same trade-mark for pants and shirts was
motivated by a desire to get a free ride on the reputation and selling power
it has acquired at the hands of the respondent. As observed in another
case, 12 the field from which a person may select a trade-mark is practically
unlimited, and hence there is no excuse for impinging upon or even closely
approaching the mark of a business rival. In the unlimited field of choice,
what could have been petitioner's purpose in selecting "Ang Tibay" if not for
its fame?
Lastly, in her fifth assignment of error petitioner seems to make a frantic
effort to retain the use of the mark "Ang Tibay." Her counsel suggests that
instead of enjoining her from using it, she may be required to state in her
labels affixed to her products the inscription: "Not manufactured by Toribio
Teodoro." We think such practice would be unethical and unworthy of a
reputable businessman. To the suggestion of petitioner, respondent may
say, not without justice though with a tinge of bitterness: "Why offer a
perpetual apology or explanation as to the origin of your products in order to
use my trade-mark instead of creating one of your own?" On our part may
we add, without meaning to be harsh, that a self-respecting person does
not remain in the shelter of another but builds one of his own.
The judgment of the Court of Appeals is affirmed, with costs against the
petitioner in the three instances. So ordered.
Yulo, C.J., Moran, Paras and Bocobo, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 143993 August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES,
INC., petitioners,
vs.
L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B.
DY, WILLIAM B. DY, JESUS AYCARDO, ARACELI AYCARDO, and
GRACE HUERTO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26 November 1999 of
the Court of Appeals2 finding respondent L.C. Big Mak Burger, Inc. not
liable for trademark infringement and unfair competition and ordering
petitioners to pay respondents P1,900,000 in damages, and of its
Resolution dated 11 July 2000 denying reconsideration. The Court of
Appeals' Decision reversed the 5 September 1994 Decision3 of the
Regional Trial Court of Makati, Branch 137, finding respondent L.C. Big
Mak Burger, Inc. liable for trademark infringement and unfair competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a corporation
organized under the laws of Delaware, United States. McDonald's operates,
by itself or through its franchisees, a global chain of fast-food restaurants.
McDonald's4 owns a family of marks5 including the "Big Mac" mark for its
"double-decker hamburger sandwich."6McDonald's registered this
trademark with the United States Trademark Registry on 16 October 1979.7
Based on this Home Registration, McDonald's applied for the registration of
the same mark in the Principal Register of the then Philippine Bureau of
Patents, Trademarks and Technology ("PBPTT"), now the Intellectual
Property Office ("IPO"). Pending approval of its application, McDonald's
introduced its "Big Mac" hamburger sandwiches in the Philippine market in
September 1981. On 18 July 1985, the PBPTT allowed registration of the
"Big Mac" mark in the Principal Register based on its Home Registration in
the United States.
Like its other marks, McDonald's displays the "Big Mac" mark in items8 and
paraphernalia9 in its restaurants, and in its outdoor and indoor signages.
From 1982 to 1990, McDonald's spent P10.5 million in advertisement for
"Big Mac" hamburger sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner McGeorge"), a domestic
corporation, is McDonald's Philippine franchisee.11
Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a
domestic corporation which operates fast-food outlets and snack vans in
Metro Manila and nearby provinces.12 Respondent corporation's menu
includes hamburger sandwiches and other food items.13 Respondents
Francis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo,
Araceli Aycardo, and Grace Huerto ("private respondents") are the
incorporators, stockholders and directors of respondent corporation.14
On 21 October 1988, respondent corporation applied with the PBPTT for
the registration of the "Big Mak" mark for its hamburger sandwiches.
McDonald's opposed respondent corporation's application on the ground
that "Big Mak" was a colorable imitation of its registered "Big Mac" mark for
the same food products. McDonald's also informed respondent Francis Dy
("respondent Dy"), the chairman of the Board of Directors of respondent
corporation, of its exclusive right to the "Big Mac" mark and requested him
to desist from using the "Big Mac" mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6 June 1990
sued respondents in the Regional Trial Court of Makati, Branch 137
("RTC"), for trademark infringement and unfair competition. In its Order of
11 July 1990, the RTC issued a temporary restraining order ("TRO") against
respondents enjoining them from using the "Big Mak" mark in the operation
of their business in the National Capital Region.15 On 16 August 1990, the
RTC issued a writ of preliminary injunction replacing the TRO.16
In their Answer, respondents admitted that they have been using the name
"Big Mak Burger" for their fast-food business. Respondents claimed,
however, that McDonald's does not have an exclusive right to the "Big Mac"
mark or to any other similar mark. Respondents point out that the Isaiyas
Group of Corporations ("Isaiyas Group") registered the same mark for
hamburger sandwiches with the PBPTT on 31 March 1979. One Rodolfo
Topacio ("Topacio") similarly registered the same mark on 24 June 1983,
prior to McDonald's registration on 18 July 1985.Alternatively, respondents
claimed that they are not liable for trademark infringement or for unfair
competition, as the "Big Mak" mark they sought to register does not
constitute a colorable imitation of the "Big Mac" mark. Respondents
asserted that they did not fraudulently pass off their hamburger sandwiches
as those of petitioners' Big Mac hamburgers.17 Respondents sought
damages in their counterclaim.
In their Reply, petitioners denied respondents' claim that McDonald's is not
the exclusive owner of the "Big Mac" mark. Petitioners asserted that while
the Isaiyas Group and Topacio did register the "Big Mac" mark ahead of
McDonald's, the Isaiyas Group did so only in the Supplemental Register of
the PBPTT and such registration does not provide any protection.
McDonald's disclosed that it had acquired Topacio's rights to his registration
in a Deed of Assignment dated 18 May 1981.18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment ("RTC Decision")
finding respondent corporation liable for trademark infringement and unfair
competition. However, the RTC dismissed the complaint against private
respondents and the counterclaim against petitioners for lack of merit and
insufficiency of evidence. The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a registered trademark for plaintiff
McDonald's, and as such, it is entitled [to] protection against infringement.
xxxx
There exist some distinctions between the names "B[ig] M[ac]" and "B[ig]
M[ak]" as appearing in the respective signages, wrappers and containers of
the food products of the parties. But infringement goes beyond the physical
features of the questioned name and the original name. There are still other
factors to be considered.
xxxx
Significantly, the contending parties are both in the business of fast-food
chains and restaurants. An average person who is hungry and wants to eat
a hamburger sandwich may not be discriminating enough to look for a
McDonald's restaurant and buy a "B[ig] M[ac]" hamburger. Once he sees a
stall selling hamburger sandwich, in all likelihood, he will dip into his pocket
and order a "B[ig] M[ak]" hamburger sandwich. Plaintiff McDonald's fast-
food chain has attained wide popularity and acceptance by the consuming
public so much so that its air-conditioned food outlets and restaurants will
perhaps not be mistaken by many to be the same as defendant
corporation's mobile snack vans located along busy streets or highways.
But the thing is that what is being sold by both contending parties is a food
item – a hamburger sandwich which is for immediate consumption, so that
a buyer may easily be confused or deceived into thinking that the "B[ig]
M[ak]" hamburger sandwich he bought is a food-product of plaintiff
McDonald's, or a subsidiary or allied outletthereof. Surely, defendant
corporation has its own secret ingredients to make its hamburger
sandwiches as palatable and as tasty as the other brands in the market,
considering the keen competition among mushrooming hamburger stands
and multinational fast-food chains and restaurants. Hence, the trademark
"B[ig] M[ac]" has been infringed by defendant corporation when it used the
name "B[ig] M[ak]" in its signages, wrappers, and containers in connection
with its food business. xxxx
Did the same acts of defendants in using the name "B[ig] M[ak]" as a
trademark or tradename in their signages, or in causing the name "B[ig]
M[ak]" to be printed on the wrappers and containers of their food products
also constitute an act of unfair competition under Section 29 of the
Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition is broader and
more inclusive than the lawconcerning the infringement of trademark, which
is of more limited range, but within its narrower range recognizes a more
exclusive right derived by the adoption and registration of the trademark by
the person whose goods or services are first associated therewith. xxx
Notwithstanding the distinction between an action for trademark
infringement and an action for unfair competition, however, the law extends
substantially the same relief to the injured party for both cases. (See
Sections 23 and 29 of Republic Act No. 166)
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. The
choice of "B[ig] M[ak]" as tradename by defendant corporation is not merely
for sentimental reasons but was clearly made to take advantage of the
reputation, popularity and the established goodwill of plaintiff McDonald's.
For, as stated in Section 29, a person is guilty of unfair competition who in
selling his goods shall give them the general appearance, of goods of
another manufacturer or dealer, either as to the goods themselves or 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
likely influence purchasers to believe that the goods offered are those of a
manufacturer or dealer other than the actual manufacturer or dealer. Thus,
plaintiffs have established their valid cause of action against the defendants
for trademark infringement and unfair competition and for damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs McDonald's
Corporation and McGeorge Food Industries, Inc. and against defendant
L.C. Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16 August 1990]
is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs actual
damages in the amount ofP400,000.00, exemplary damages in the amount
of P100,000.00, and attorney's fees and expenses of litigation in the
amount of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B.
Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace Huerto, as
well as all counter-claims, are dismissed for lack of merit as well asfor
insufficiency of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment ("Court of
Appeals' Decision") reversing the RTC Decision and ordering McDonald's to
pay respondents P1,600,000 as actual and compensatory damages and
P300,000 as moral damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this Court
that the use of defendants-appellants of its corporate name – the whole
"L.C. B[ig] M[ak] B[urger], I[nc]." which appears on their food packages,
signages and advertisements is an infringement of their trademark "B[ig]
M[ac]" which they use to identify [their] double decker sandwich, sold in a
Styrofoam box packaging material with the McDonald's logo of umbrella "M"
stamped thereon, together with the printed mark in red bl[o]ck capital
letters, the words being separated by a single space. Specifically, plaintiffs-
appellees argue that defendants-appellants' use of their corporate name is
a colorable imitation of their trademark "Big Mac".
xxxx
To Our mind, however, this Court is fully convinced that no colorable
imitation exists. As the definition dictates, it is not sufficient that a similarity
exists in both names, but that more importantly, the over-all presentation, or
in their essential, substantive and distinctive parts is such as would likely
MISLEAD or CONFUSE persons in the ordinary course of purchasing the
genuine article. A careful comparison of the way the trademark "B[ig] M[ac]"
is being used by plaintiffs-appellees and corporate name L.C. Big Mak
Burger, Inc. by defendants-appellants, would readily reveal that no
confusion could take place, or that the ordinary purchasers would be misled
by it. As pointed out by defendants-appellants, the plaintiffs-appellees'
trademark is used to designate only one product, a double decker sandwich
sold in a Styrofoam box with the "McDonalds" logo. On the other hand,
what the defendants-appellants corporation is using is not a trademark for
its food product but a business or corporate name. They use the business
name "L.C. Big Mak Burger, Inc." in their restaurant business which serves
diversified food items such as siopao, noodles, pizza, and sandwiches such
as hotdog, ham, fish burger and hamburger. Secondly, defendants-
appellants' corporate or business name appearing in the food packages
and signages are written in silhouette red-orange letters with the "b" and
"m" in upper case letters. Above the words "Big Mak" are the upper case
letter "L.C.". Below the words "Big Mak" are the words "Burger, Inc." spelled
out in upper case letters.Furthermore, said corporate or business name
appearing in such food packages and signages is always accompanied by
the company mascot, a young chubby boy named Maky who wears a red T-
shirt with the upper case "m" appearing therein and a blue lower garment.
Finally, the defendants-appellants' food packages are made of plastic
material.
xxxx
xxx [I]t is readily apparent to the naked eye that there appears a vast
difference in the appearance of the product and the manner that the
tradename "Big Mak" is being used and presented to the public. As earlier
noted, there are glaring dissimilarities between plaintiffs-appellees'
trademark and defendants-appellants' corporate name. Plaintiffs-appellees'
product carrying the trademark "B[ig] M[ac]" is a double decker sandwich
(depicted in the tray mat containing photographs of the various food
products xxx sold in a Styrofoam box with the "McDonald's" logo and
trademark in red, bl[o]ck capital letters printed thereon xxx at a price which
is more expensive than the defendants-appellants' comparable food
products. In order to buy a "Big Mac", a customer needs to visit an air-
conditioned "McDonald's" restaurant usually located in a nearby commercial
center, advertised and identified by its logo - the umbrella "M", and its
mascot – "Ronald McDonald". A typical McDonald's restaurant boasts of a
playground for kids, a second floor to accommodateadditional customers, a
drive-thru to allow customers with cars to make orders without alighting
from their vehicles, the interiors of the building are well-lighted, distinctly
decorated and painted with pastel colors xxx. In buying a "B[ig] M[ac]", it is
necessary to specify it by its trademark. Thus, a customer needs to look for
a "McDonald's" and enter it first before he can find a hamburger sandwich
which carry the mark "Big Mac". On the other hand, defendants-appellants
sell their goods through snack vans xxxx
Anent the allegation that defendants-appellants are guilty of unfair
competition, We likewise find the same untenable.
Unfair competition is defined as "the employment of deception or any other
means contrary to good faith by which a person shall pass off the goods
manufactured by him or in which he deals, or his business, or service, for
those of another who has already established good will for his similar good,
business or services, or any acts calculated to produce the same result"
(Sec. 29, Rep. Act No. 166, as amended).
To constitute unfair competition therefore it must necessarily follow that
there was malice and that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced by plaintiffs-
appellees that defendants-appellants deliberately tried to pass off the goods
manufactured by them for those of plaintiffs-appellees. The mere suspected
similarity in the sound of the defendants-appellants' corporate name with
the plaintiffs-appellees' trademark is not sufficient evidence to conclude
unfair competition. Defendants-appellants explained that the name "M[ak]"
in their corporate name was derived from both the first names of the mother
and father of defendant Francis Dy, whose names are Maxima and Kimsoy.
With this explanation, it is up to the plaintiffs-appellees to prove bad faith on
the part of defendants-appellants. It is a settled rule that the law always
presumes good faith such that any person who seeks to be awarded
damages due to acts of another has the burden of proving that the latter
acted in bad faith or with ill motive. 21
Petitioners sought reconsideration of the Court of Appeals' Decision but the
appellate court denied their motion in its Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS'
CORPORATE NAME "L.C. BIG MAK BURGER, INC." IS NOT A
COLORABLE IMITATION OF THE MCDONALD'S TRADEMARK "BIG
MAC", SUCH COLORABLE IMITATION BEING AN ELEMENT OF
TRADEMARK INFRINGEMENT.
A. Respondents use the words "Big Mak" as trademark for their products
and not merely as their business or corporate name.
B. As a trademark, respondents' "Big Mak" is undeniably and
unquestionably similar to petitioners' "Big Mac" trademark based on the
dominancy test and the idem sonans test resulting inexorably in confusion
on the part of the consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE
INHERENT SIMILARITY BETWEEN THE MARK "BIG MAK" AND THE
WORD MARK "BIG MAC" AS AN INDICATION OF RESPONDENTS'
INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES OF
ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals' Decision and
reinstate the RTC Decision.
In their Comment to the petition, respondents question the propriety of this
petition as it allegedly raises only questions of fact. On the merits,
respondents contend that the Court of Appeals committed no reversible
error in finding them not liable for trademark infringement and unfair
competition and in ordering petitioners to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition are proper for a
petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words "Big Mak" not
only as part of the corporate name "L.C. Big Mak Burger, Inc." but also as a
trademark for their hamburger products, and (b) whether respondent
corporation is liable for trademark infringement and unfair competition.23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are Proper for a Petition
for Review
A party intending to appeal from a judgment of the Court of Appeals may
file with this Court a petition for review under Section 1 of Rule 45 ("Section
1")24 raising only questions of law. A question of law exists when the doubt
or difference arises on what the law is on a certain state of facts. There is a
question of fact when the doubt or difference arises on the truth or falsity of
the alleged facts. 25
Here, petitioners raise questions of fact and law in assailing the Court of
Appeals' findings on respondent corporation's non-liability for trademark
infringement and unfair competition. Ordinarily, the Court can deny due
course to such a petition. In view, however, of the contradictory findings of
fact of the RTC and Court of Appeals, the Court opts to accept the petition,
this being one of the recognized exceptions to Section 1.26 We took a
similar course of action in Asia Brewery, Inc. v. Court of Appeals27 which
also involved a suit for trademark infringement and unfair competition in
which the trial court and the Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used
"Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling that the
corporate name "L.C. Big Mak Burger, Inc." appears in the packaging for
respondents' hamburger products and not the words "Big Mak" only.
The contention has merit.
The evidence presented during the hearings on petitioners' motion for the
issuance of a writ of preliminary injunction shows that the plastic wrappings
and plastic bags used by respondents for their hamburger sandwiches bore
the words "Big Mak." The other descriptive words "burger" and "100% pure
beef" were set in smaller type, along with the locations of branches.28
Respondents' cash invoices simply refer to their hamburger sandwiches as
"Big Mak."29 It is respondents' snack vans that carry the words "L.C. Big
Mak Burger, Inc."30
It was only during the trial that respondents presented in evidence the
plastic wrappers and bags for their hamburger sandwiches relied on by the
Court of Appeals.31 Respondents' plastic wrappers and bags were identical
with those petitioners presented during the hearings for the injunctive writ
except that the letters "L.C." and the words "Burger, Inc." in respondents'
evidence were added above and below the words "Big Mak,"respectively.
Since petitioners' complaint was based on facts existing before and during
the hearings on the injunctive writ, the facts established during those
hearings are the proper factual bases for the disposition of the issues raised
in this petition.
On the Issue of Trademark Infringement
Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA 166"),
the law applicable to this case,32defines trademark infringement as follows:
Infringement, what constitutes. — Any person who [1] shall use, without the
consent of the registrant, anyreproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection with the sale,
offering for sale, or advertising of any goods, business or services on or in
connection withwhich such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or [2] reproduce, counterfeit, copy, or
colorably imitate any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
usedupon or in connection with such goods, business or services, shall be
liable to a civil action by the registrant for any or all of the remedies herein
provided.33
Petitioners base their cause of action under the first part of Section 22, i.e.
respondents allegedly used, without petitioners' consent, a colorable
imitation of the "Big Mac" mark in advertising and selling respondents'
hamburger sandwiches. This likely caused confusion in the mind of the
purchasing public on the source of the hamburgers or the identity of the
business.
To establish trademark infringement, the following elements must be
shown: (1) the validity of plaintiff's mark; (2) the plaintiff's ownership of the
mark; and (3) the use of the mark or its colorable imitation by the alleged
infringer results in "likelihood of confusion."34 Of these, it is the element of
likelihood of confusion that is the gravamen of trademark infringement.35
On the Validity of the "Big Mac"Mark
and McDonald's Ownership of such Mark
A mark is valid if it is "distinctive" and thus not barred from registration
under Section 436 of RA 166 ("Section 4").However, once registered, not
only the mark's validity but also the registrant's ownership of the mark is
prima facie presumed.37
Respondents contend that of the two words in the "Big Mac" mark, it is only
the word "Mac" that is valid because the word "Big" is generic and
descriptive (proscribed under Section 4[e]), and thus "incapable of exclusive
appropriation."38
The contention has no merit. The "Big Mac" mark, which should be treated
in its entirety and not dissected word for word,39 is neither generic nor
descriptive. Generic marks are commonly used as the name or description
of akind of goods,40 such as "Lite" for beer41 or "Chocolate Fudge" for
chocolate soda drink.42 Descriptive marks, on the other hand, convey the
characteristics, functions, qualities or ingredients of a product to one who
has never seen it or does not know it exists,43 such as "Arthriticare" for
arthritis medication.44 On the contrary, "Big Mac" falls under the class of
fanciful or arbitrary marks as it bears no logical relation to the actual
characteristics of the product it represents.45 As such, it is highly distinctive
and thus valid. Significantly, the trademark "Little Debbie" for snack cakes
was found arbitrary or fanciful.46
The Court also finds that petitioners have duly established McDonald's
exclusive ownership of the "Big Mac" mark. Although Topacio and the
Isaiyas Group registered the "Big Mac" mark ahead of McDonald's,
Topacio, as petitioners disclosed, had already assigned his rights to
McDonald's. The Isaiyas Group, on the other hand, registered its trademark
only in the Supplemental Register. A mark which is not registered in the
PrincipalRegister, and thus not distinctive, has no real protection.47 Indeed,
we have held that registration in the Supplemental Register is not even a
prima facie evidence of the validity of the registrant's exclusive right to use
the mark on the goods specified in the certificate.48
On Types of Confusion
Section 22 covers two types of confusion arising from the use of similar or
colorable imitation marks, namely, confusion of goods (product confusion)
and confusion of business (source or origin confusion). In Sterling Products
International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et
al.,49 the Court distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is the confusion of
goods "in which event the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other." xxx
The other is the confusion of business: "Here though the goods of the
parties are different, the defendant's product is such as might reasonably be
assumed 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 plaintiff and defendant which, in fact, does not
exist."
Under Act No. 666,50 the first trademark law, infringement was limited to
confusion of goods only, when the infringing mark is used on "goods of a
similar kind."51 Thus, no relief was afforded to the party whose registered
mark or its colorable imitation is used on different although related goods.
To remedy this situation, Congress enacted RA 166 on 20 June 1947. In
defining trademark infringement, Section 22 of RA 166 deleted the
requirement in question and expanded its scope to include such use of the
mark or its colorable imitation that is likely to result in confusion on "the
source or origin of such goods or services, or identity of such
business."52Thus, while there is confusion of goods when the products are
competing, confusion of business exists when the products are non-
competing but related enough to produce confusion of affiliation.53
On Whether Confusion of Goods and
Confusion of Business are Applicable
Petitioners claim that respondents' use of the "Big Mak" mark on
respondents' hamburgers results in confusion of goods, particularly with
respect to petitioners' hamburgers labeled "Big Mac." Thus, petitioners
alleged in their complaint:
1.15. Defendants have unduly prejudiced and clearly infringed upon the
property rights of plaintiffs in the McDonald's Marks, particularly the mark
"B[ig] M[ac]". Defendants' unauthorized acts are likely, and calculated, to
confuse, mislead or deceive the public into believing that the products and
services offered by defendant Big Mak Burger, and the business it is
engaged in, are approved and sponsored by, or affiliated with, plaintiffs.54
(Emphasis supplied)
Since respondents used the "Big Mak" mark on the same goods, i.e.
hamburger sandwiches, that petitioners' "Big Mac" mark is used, trademark
infringement through confusion of goods is a proper issue in this case.
Petitioners also claim that respondents' use of the "Big Mak" mark in the
sale of hamburgers, the same business that petitioners are engaged in,
results in confusion of business. Petitioners alleged in their complaint:
1.10. For some period of time, and without the consent of plaintiff
McDonald's nor its licensee/franchisee, plaintiff McGeorge, and in clear
violation of plaintiffs' exclusive right to use and/or appropriate the
McDonald's marks, defendant Big Mak Burger acting through individual
defendants, has been operating "Big Mak Burger", a fast food restaurant
business dealing in the sale of hamburger and cheeseburger sandwiches,
french fries and other food products, and has caused to be printed on the
wrapper of defendant's food products and incorporated in its signages the
name "Big Mak Burger", which is confusingly similar to and/or is a colorable
imitation of the plaintiff McDonald's mark "B[ig] M[ac]", xxx. Defendant Big
Mak Burger has thus unjustly created the impression that its business is
approved and sponsored by, or affiliated with, plaintiffs. xxxx
2.2 As a consequence of the acts committed by defendants, which unduly
prejudice and infringe upon the property rights of plaintiffs McDonald's and
McGeorge as the real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonald's marks, and which are
likely to have caused confusion or deceived the public as to the true source,
sponsorship or affiliation of defendants' food products and restaurant
business, plaintiffs have suffered and continue to suffer actual damages in
the form of injury to their business reputation and goodwill, and of the
dilution of the distinctive quality of the McDonald's marks, in particular, the
mark "B[ig] M[ac]".55 (Emphasis supplied)
Respondents admit that their business includes selling hamburger
sandwiches, the same food product that petitioners sell using the "Big Mac"
mark. Thus, trademark infringement through confusion of business is also a
proper issue in this case.
Respondents assert that their "Big Mak" hamburgers cater mainly to the
low-income group while petitioners' "Big Mac" hamburgers cater to the
middle and upper income groups. Even if this is true, the likelihood of
confusion of business remains, since the low-income group might be led to
believe that the "Big Mak" hamburgers are the low-end hamburgers
marketed by petitioners. After all, petitioners have the exclusive right to use
the "Big Mac" mark.On the other hand, respondents would benefit by
associating their low-end hamburgers, through the use of the "Big Mak"
mark, with petitioners' high-end "Big Mac" hamburgers, leading to likelihood
of confusion in the identity of business.
Respondents further claim that petitioners use the "Big Mac" mark only on
petitioners' double-decker hamburgers, while respondents use the "Big
Mak" mark on hamburgers and other products like siopao, noodles and
pizza. Respondents also point out that petitioners sell their Big Mac double-
deckers in a styrofoam box with the "McDonald's" logo and trademark in
red, block letters at a price more expensive than the hamburgers of
respondents. In contrast, respondents sell their Big Mak hamburgers in
plastic wrappers and plastic bags. Respondents further point out that
petitioners' restaurants are air-conditioned buildings with drive-thru service,
compared to respondents' mobile vans.
These and other factors respondents cite cannot negate the undisputed fact
that respondents use their "Big Mak" mark on hamburgers, the same food
product that petitioners' sell with the use of their registered mark "Big Mac."
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 non-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. Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business from
actual market competition with identical or similar products of the parties,
but extends to all cases in which the use by a junior appropriator of a trade-
mark or trade-name is likely to lead to a confusion of source, as where
prospective purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR 56 et seq; 53
Am Jur. 576) or is in any way connected with the activities of the infringer;
or when it forestalls the normal potential expansion of his business (v. 148
ALR, 77, 84; 52 Am. Jur. 576, 577).56 (Emphasis supplied)
On Whether Respondents' Use of the "Big Mak"
Mark Results in Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has developed two
tests, the dominancy test and the holistic test.57 The dominancy test
focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion. In contrast, the holistic test requires
the court to consider the entirety of the marks as applied to the products,
including the labels and packaging, in determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of confusion that
could arise in the use of respondents' "Big Mak" mark on hamburgers,
relied on the holistic test. Thus, the Court of Appeals ruled that "it is not
sufficientthat a similarity exists in both name(s), but that more importantly,
the overall presentation, or in their essential, substantive and distinctive
parts is such as would likely MISLEAD or CONFUSE persons in the
ordinary course of purchasing the genuine article." The holistic test
considers the two marks in their entirety, as they appear on the goods with
their labels and packaging. It is not enough to consider their words and
compare the spelling and pronunciation of the words.58
Respondents now vigorously argue that the Court of Appeals' application of
the holistic test to this case is correct and in accord with prevailing
jurisprudence.
This Court, however, has relied on the dominancy test rather than the
holistic test. The dominancy test considers the dominant features in the
competing marks in determining whether they are confusingly similar.
Under the dominancy test, courts give greater weight to the similarity of the
appearance of the product arising from theadoption of the dominant
features of the registered mark, disregarding minor differences.59 Courts
will consider more the aural and visual impressions created by the marks in
the public mind, giving little weight to factors like prices, quality, sales
outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,60 the Court
ruled:
xxx It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size,
form and color, while relevant, is not conclusive. If the competing trademark
contains the main or essential or dominant features of another, and
confusion and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to imitate. (G. Heilman Brewing Co.
vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co.
vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of
infringement of trademarks is whether the use of the marks involved would
be likely to cause confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F.
2d 588; xxx) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of
Patents,61 Phil. Nut Industry, Inc. v. Standard Brands Inc.,62 Converse
Rubber Corporation v. Universal Rubber Products, Inc.,63 and Asia
Brewery, Inc. v. Court of Appeals.64 In the 2001 case of Societe Des
Produits Nestlé, S.A. v. Court of Appeals,65 the Court explicitly rejected the
holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary postulate of the
law on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in controversy as they
areencountered in the realities of the marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section
155.1 of the Intellectual Property Code which defines infringement as the
"colorable imitation of a registered mark xxx or a dominant feature thereof."
Applying the dominancy test, the Court finds that respondents' use of the
"Big Mak" mark results in likelihood of confusion. First, "Big Mak" sounds
exactly the same as "Big Mac." Second, the first word in "Big Mak" is
exactly the same as the first word in "Big Mac." Third, the first two letters in
"Mak" are the same as the first two letters in "Mac." Fourth, the last letter in
"Mak" while a "k" sounds the same as "c" when the word "Mak" is
pronounced. Fifth, in Filipino, the letter "k" replaces "c" in spelling, thus
"Caloocan" is spelled "Kalookan."
In short, aurally the two marks are the same, with the first word of both
marks phonetically the same, and the second word of both marks also
phonetically the same. Visually, the two marks have both two words and six
letters, with the first word of both marks having the same letters and the
second word having the same first two letters. In spelling, considering the
Filipino language, even the last letters of both marks are the same.
Clearly, respondents have adopted in "Big Mak" not only the dominant but
also almost all the features of "Big Mac." Applied to the same food product
of hamburgers, the two marks will likely result in confusion in the public
mind.
The Court has taken into account the aural effects of the words and letters
contained in the marks in determining the issue of confusing similarity.
Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.,66 the
Court held:
The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are
confusingly similar in sound: "Gold Dust" and "Gold Drop"; "Jantzen" and
"Jass-Sea"; "Silver Flash" and "Supper Flash"; "Cascarete" and "Celborite";
"Celluloid" and "Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo
Hoo". Leon Amdur, in his book "Trade-Mark Law and Practice", pp. 419-
421, cities, as coming within the purview of the idem sonans rule, "Yusea"
and "U-C-A", "Steinway Pianos" and "Steinberg Pianos", and "Seven-Up"
and "Lemon-Up". In Co Tiong vs. Director of Patents, this Court
unequivocally said that "Celdura" and "Cordura" are confusingly similar in
sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the
name "Lusolin" is an infringement of the trademark "Sapolin", as the sound
of the two names is almost the same. (Emphasis supplied)
Certainly, "Big Mac" and "Big Mak" for hamburgers create even greater
confusion, not only aurally but also visually.
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."
Petitioners' aggressive promotion of the "Big Mac" mark, as borne by their
advertisement expenses, has built goodwill and reputation for such mark
making it one of the easily recognizable marks in the market today.
Thisincreases the likelihood that consumers will mistakenly associate
petitioners' hamburgers and business with those of respondents'.
Respondents' inability to explain sufficiently how and why they came to
choose "Big Mak" for their hamburger sandwiches indicates their intent to
imitate petitioners' "Big Mac" mark. Contrary to the Court of Appeals'
finding, respondents' claim that their "Big Mak" mark was inspired by the
first names of respondent Dy's mother (Maxima) and father (Kimsoy) is not
credible. As petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived
at a more creative choice for a corporate name by using the names of his
parents, especially since he was allegedly driven by sentimental reasons.
For one, he could have put his father's name ahead of his mother's, as is
usually done in this patriarchal society, and derived letters from said names
in that order. Or, he could have taken an equalnumber of letters (i.e., two)
from each name, as is the more usual thing done. Surely, the more
plausible reason behind Respondents' choice of the word "M[ak]",
especially when taken in conjunction with the word "B[ig]", was their intent
to take advantage of Petitioners' xxx "B[ig] M[ac]" trademark, with their
allegedsentiment-focused "explanation" merely thought of as a convenient,
albeit unavailing, excuse or defense for such an unfair choice of name.67
Absent proof that respondents' adoption of the "Big Mak" mark was due to
honest mistake or was fortuitous,68 the inescapable conclusion is that
respondents adopted the "Big Mak" mark to "ride on the coattails" of the
more established "Big Mac" mark.69 This saves respondents much of the
expense in advertising to create market recognition of their mark and
hamburgers.70
Thus, we hold that confusion is likely to result in the public mind. We
sustain petitioners' claim of trademark infringement.
On the Lack of Proof of
Actual Confusion
Petitioners' failure to present proof of actual confusion does not negate their
claim of trademark infringement. As noted in American Wire & Cable Co. v.
Director of Patents,71 Section 22 requires the less stringent standard of
"likelihood of confusion" only. While proof of actual confusion is the best
evidence of infringement, its absence is inconsequential.72
On the Issue of Unfair Competition
Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:
xxxx
Any person who will employ deception or any other means contrary to good
faith by which he shall pass off the goods manufactured by him or in which
he deals, or his business, or services for those of the one having
established such goodwill, or who shall commit any acts calculated to
produce said result, shall be guilty of unfair competition, and shall be
subject to an action therefor.
In particular, and without in any way limiting the scope of unfair competition,
the following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any 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, or who otherwise clothes the goods with
such appearance as shall deceive the public and defraud another of his
legitimate trade, or anysubsequent vendor of such goods or any agent of
any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other
means calculated to induce the false belief that such person is offering the
services of another who has identified such services in the mind of the
public; or
(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated
to discredit the goods, business or services of another. (Emphasis supplied)
The essential elements of an action for unfair competition are (1) confusing
similarity in the general appearance of the goods, and (2) intent to deceive
the public and defraud a competitor.74 The confusing similarity may or may
not result from similarity in the marks, but may result from other external
factors in the packaging or presentation of the goods. The intent to deceive
and defraud may be inferred from the similarity of the appearance of the
goods as offered for sale to the public.75 Actual fraudulent intent need not
be shown.76
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.77 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.78
To support their claim of unfair competition, petitioners allege that
respondents fraudulently passed off their hamburgers as "Big Mac"
hamburgers. Petitioners add that respondents' fraudulent intent can be
inferred from the similarity of the marks in question.79
Passing off (or palming off) takes place where the defendant, by imitative
devices on the general appearance of the goods, misleads prospective
purchasers into buying his merchandise under the impression that they are
buying that of his competitors.80 Thus, the defendant gives his goods the
general appearance of the goods of his competitor with the intention of
deceiving the public that the goods are those of his competitor.
The RTC described the respective marks and the goods of petitioners and
respondents in this wise:
The mark "B[ig] M[ac]" is used by plaintiff McDonald's to identify its double
decker hamburger sandwich. The packaging material is a styrofoam box
with the McDonald's logo and trademark in red with block capital letters
printed on it. All letters of the "B[ig] M[ac]" mark are also in red and block
capital letters. On the other hand, defendants' "B[ig] M[ak]" script print is in
orange with only the letter "B" and "M" being capitalized and the packaging
material is plastic wrapper. xxxx Further, plaintiffs' logo and mascot are the
umbrella "M" and "Ronald McDonald's", respectively, compared to the
mascot of defendant Corporation which is a chubby boy called "Macky"
displayed or printed between the words "Big" and "Mak."81 (Emphasis
supplied)
Respondents point to these dissimilarities as proof that they did not give
their hamburgers the general appearance of petitioners' "Big Mac"
hamburgers.
The dissimilarities in the packaging are minor compared to the stark
similarities in the words that give respondents' "Big Mak" hamburgers the
general appearance of petitioners' "Big Mac" hamburgers. Section 29(a)
expressly provides that the similarity in the general appearance of the
goods may be in the "devices or words" used on the wrappings.
Respondents have applied on their plastic wrappers and bags almost the
same wordsthat petitioners use on their styrofoam box. What attracts the
attention of the buying public are the words "Big Mak" which are almost the
same, aurally and visually, as the words "Big Mac." The dissimilarities in the
material and other devices are insignificant compared to the glaring
similarity in the words used in the wrappings.
Section 29(a) also provides that the defendant gives "his goods the general
appearance of goods of another manufacturer." Respondents' goods are
hamburgers which are also the goods of petitioners. 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.
Moreover, there is no notice to the public that the "Big Mak" hamburgers
are products of "L.C. Big Mak Burger, Inc." Respondents introduced during
the trial plastic wrappers and bags with the words "L.C. Big Mak Burger,
Inc." to inform the public of the name of the seller of the hamburgers.
However, petitioners introduced during the injunctive hearings plastic
wrappers and bags with the "Big Mak" mark without the name "L.C. Big Mak
Burger, Inc." Respondents' belated presentation of plastic wrappers and
bags bearing the name of "L.C. Big Mak Burger, Inc." as the seller of the
hamburgers is an after-thought designed to exculpate them from their unfair
business conduct. As earlier stated, we cannot consider respondents'
evidence since petitioners' complaint was based on facts existing before
and during the injunctive hearings.
Thus, there is actually no notice to the public that the "Big Mak" hamburgers
are products of "L.C. Big Mak Burger, Inc." and not those of petitioners who
have the exclusive right to the "Big Mac" mark. This clearly shows
respondents' intent to deceive the public. Had respondents' placed a notice
on their plastic wrappers and bags that the hamburgers are sold by "L.C.
Big Mak Burger, Inc.", then they could validly claim that they did not intend
to deceive the public. In such case, there is only trademark infringement but
no unfair competition.82Respondents, however, did not give such notice.
We hold that as found by the RTC, respondent corporation is liable for
unfair competition.
The Remedies Available to Petitioners
Under Section 2383 ("Section 23") in relation to Section 29 of RA 166, a
plaintiff who successfully maintains trademark infringement and unfair
competition claims is entitled to injunctive and monetary reliefs. Here, the
RTC did not err in issuing the injunctive writ of 16 August 1990 (made
permanent in its Decision of 5 September 1994) and in ordering the
payment of P400,000 actual damages in favor of petitioners. The injunctive
writ is indispensable to prevent further acts of infringement by respondent
corporation. Also, the amount of actual damages is a reasonable
percentage (11.9%) of respondent corporation's gross sales for three
(1988-1989 and 1991) of the six years (1984-1990) respondents have used
the "Big Mak" mark.84
The RTC also did not err in awarding exemplary damages by way of
correction for the public good85 in view of the finding of unfair competition
where intent to deceive the public is essential. The award of attorney's fees
and expenses of litigation is also in order.86
WHEREFORE, we GRANT the instant petition. We SET ASIDE the
Decision dated 26 November 1999 of the Court of Appeals and its
Resolution dated 11 July 2000 and REINSTATE the Decision dated 5
September 1994 of the Regional Trial Court of Makati, Branch 137, finding
respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and
unfair competition.
SO ORDERED.
McDonald’s Corp. v. L. C. Big Mak Buyer, Inc.
G. R. No. 143993, August 18, 2004
Facts:
Respondent’s application for the registration of the “Big Mak” for its
hamburger sandwiches was opposed by petitioner, an American
corporation, on the ground that it was a colorable invitations of its “Big Mac”
mark for the same food products. The Regional Trial Court found the
respondent liable fortrademark infringement and unfair competition. The
Court of Appeals however reversed the decision and ordered Mc Donalds
to pay respondents damages. It ruled that no colorable imitation exists as
there appears a vast difference in the appearance of the products and the
manner that the tradename “Big Mak” is being used and presented to the
public.
Issue:
Whether or not respondent corporation is liable for trademark infringement.
Held:
Yes. Applying the dominancy test, the Court found that respondent’s use if
the “Big Mak” mark results in the likelihood of confusion. The two marks are
aurally and phonetically the same and visually they have both two words
and six letters. The respondents in effect have adopted in “Big Mak” not
only the dominant but also almost all the features of “Big Mac.” Applied to
the same food product of hamburgers, the two marks will likely result in
confusion in the public mind.
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