Law on Intellectual Property

LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 G.R. No. 159938 March 31, 2006 SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-LA PROPERTIES, INC., MAKATI SHANGRILA HOTEL & RESORT, INC., AND KUOK PHILIPPINES PROPERTIES, INC., Petitioners, vs. DEVELOPERS GROUP OF COMPANIES, INC., Respondent. FACTS: Respondent Developers Group of Companies, Inc. (DGCI) caused the registration of the trademark Shangri-La" mark and "S" logo on October 18, 1982. Petitioner Shangri-la International Hotel Management, Ltd. (SIHM) et.al. contested the said registration in view of its apparent widespread use of the Shangri-La mark and “s” logo on its hotels around the world. SIHM started the use of the mark and the logo since 1969. As far back as 1962, it adopted the name "Shangri-La" as part of the corporate names of all companies organized under the aegis of the Kuok Group of Companies (the Kuok Group). The logo was first used by the Shangri-La Hotel Singapore when it commissioned a Singaporean design artist, a certain Mr. William Lee, to conceptualize and design the logo of the Shangri-La hotels. SIHM begins its hotel business operations in the Philippines only on 1987. On the other hand, DGCI thru its President and Chairman, Ramon Syhunliong reiterated the conception of the mark and the logo as follows: “The ‘S-logo’ was one of two (2) designs given to him in December 1982, scribbled on a piece of paper by a jeepney signboard artist with an office somewhere in Balintawak. The unnamed artist supposedly produced the two designs after about two or three days from the time he (Syhunliong) gave the idea of the design he had in mind.” He also said that he visited one of the SIHM hotels as early as August 1982. In this case, the RTC of Quezon City and the CA upheld the registration of the DGCI before the Bureau of Patents, Trademarks and Technology Transfer (BPTTT). It solely based its decision on the “prior use” and registration of the mark and logo in the Philippines in contrast with the use of the SIHM which is widespread but not in the Philippines not until 1987. ISSUE: Whether or not the “prior use” and registration should be the sole basis in determining the proper recipient of a trademark. NO. HELD: Under the provisions of the former trademark law, R.A. No. 166, as amended, which was in effect up to December 31, 1997, hence, the law in force at the time of respondent's application for registration of trademark, the root of ownership of a trademark is actual use in commerce. Section 2 of said law requires that before a trademark can be registered, it must have been actually used in commerce and service for not less than two months in the Philippines prior to the filing of an application for its registration.

Registration, without more, does not confer upon the registrant an absolute right to the registered mark. The certificate of registration is merely a prima facie proof that the registrant is the owner of the registered mark or trade name. Evidence of prior and continuous use of the mark or trade name by another can overcome the presumptive ownership of the registrant and may very well entitle the former to be declared owner in an appropriate case. Among the effects of registration of a mark, as catalogued by the Court in Lorenzana v. Macagba, are: 1. Registration in the Principal Register gives rise to a presumption of the validity of the registration, the registrant's ownership of the mark, and his right to the exclusive use thereof. x x x 2. Registration in the Principal Register is limited to the actual owner of the trademark and proceedings therein pass on the issue of ownership, which may be contested through opposition or interference proceedings, or, after registration, in a petition for cancellation. xxx Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade or commerce. As between actual use of a mark without registration, and registration of the mark without actual use thereof, the former prevails over the latter. For a rule widely accepted and firmly entrenched, because it has come down through the years, is that actual use in commerce or business is a pre-requisite to the acquisition of the right of ownership. By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the trademark being applied for, he has no right to apply for registration of the same. Registration merely creates a prima facie presumption of the validity of the registration, of the registrant's ownership of the trademark and of the exclusive right to the use thereof.20 Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence to the contrary. Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard artist allegedly commissioned to create the mark and logo submitted his designs only in December 1982. This was two-and-a-half months after the filing of the respondent's trademark application on October 18, 1982 with the BPTTT. It was also only in December 1982 when the respondent's restaurant was opened for business. Respondent cannot now claim before the Court that the certificate of registration itself is proof that the two-month prior use requirement was complied with, what with the fact that its very own witness testified otherwise in the trial court. And because at the time (October 18, 1982) the respondent filed its application for trademark registration of the "Shangri-La" mark and "S" logo, respondent was not using

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 these in the Philippines commercially, the registration is void. G.R. No. 158589 June 27, 2006 PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC REUNIES, S.A., (now known as PHILIP MORRIS PRODUCTS S.A.), Petitioners, vs. FORTUNE TOBACCO CORPORATION, Respondent. FACTS: Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States of America, is the registered owner of the trademark “MARK VII” for cigarettes. Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered owner of the trademark “MARK TEN” for cigarettes. and another subsidiary of Philip Morris, Inc., the Swiss company Fabriques de Tabac Reunies, S.A., is the assignee of the trademark “LARK,” which was originally registered in 1964 by Ligget and Myers Tobacco Company. On the other hand, respondent Fortune Tobacco Corporation, a company organized in the Philippines, manufactures and sells cigarettes using the trademark “MARK.” Petitioners would insist on their thesis of infringement since respondent’s mark “MARK” for cigarettes is confusingly or deceptively similar with their duly registered “MARK VII,” “MARK TEN” and “LARK” marks likewise for cigarettes. To them, the word “MARK” would likely cause confusion in the trade, or deceive purchasers, particularly as to the source or origin of respondent’s cigarettes. The “likelihood of confusion” is the gravamen of trademark infringement. But likelihood of confusion is a relative concept, the particular, and sometimes peculiar, circumstances of each case being determinative of its existence. Thus, in trademark infringement cases, more than in other kinds of litigation, precedents must be evaluated in the light of each particular case. Fortune Maintains, the registration of trademark cannot be deemed conclusive as to the actual use of such trademark in local commerce. As it were, registration does not confer upon the registrant an absolute right to the registered mark. The certificate of registration merely constitutes prima facie evidence that the registrant is the owner of the registered mark. Evidence of non-usage of the mark rebuts the presumption of trademark ownership, as what happened here when petitioners no less admitted not doing business in this country. ISSUE: (1) whether or not petitioners, as Philippine registrants of trademarks, are entitled to enforce trademark rights in this country (YES) (2) whether or not respondent has committed trademark infringement against petitioners by its use of the mark “MARK” for its cigarettes, hence liable for damages. (NO) HELD: As a condition, their trademarks in this country must

show proof, that their country grants substantially similar rights and privileges to Filipino Citizens. The actual use of the marks in local commerce and trade before they may be registered, as to ownership is required. Mere selling are the allegations of petitioners in their complaint as well as in every petition filed in the Supreme Court indicating that they are not doing business in the Philis. Such allegations are not constituted as breach of such right. Thus, there is no infringement. Note: In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the dominancy test and the holistic test. The dominancy test, sets sight on the similarity of the prevalent features of the competing trademarks that might cause confusion and deception, thus constitutes infringement. Under this norm, the question at issue turns on whether the use of the marks involved would be likely to cause confusion or mistake in the mind of the public or deceive purchasers. In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity. G.R. No. 76193 November 9, 1989 UNITED FEATURE SYNDICATE, INC., petitioner, vs. MUNSINGWEAR CREATION MANUFACTURING COMPANY, respondent. FACTS: Petitioner filed a petition to cancel the registration of respondent Munsingwear. The Patent Office ruled in favor of Munsingwear in holding that a copyright registration like that of the name and likeness of CHARLIE BROWN may not provide a cause of action for the cancellation of a trademark registration. United filed an appeal of the above decision but it was dismissed for being filed out of time. The case was then raised to the CA which upheld the Patent Office’s decision that the appeal was filed late. It was further elevated to the SC on a petition for review on certiorari. ISSUE: WON petitioner has a cause of action against respondent in the latter’s use of its comic character in its ready to wear products. (YES) RULING: PREMISES CONSIDERED, the Resolutions of the Court of Appeals dated September 16, 1985 and October 14, 1986 dismissing petitioner's appeal are hereby SET ASIDE and Certificate of Registration no. SR424 issued to private respondent dated September 12, 1979 is hereby CANCELLED.

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 HELD: Pertinently, Section 2 of Presidential Decree No. 49, otherwise known as the "Decree on Intellectual Property", provides: Section 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following classes of works: xxx xxx xxx (O) Prints, pictorial illustrations, advertising copies, labels, tags and box wraps. ... Therefore, since the name "CHARLIE BROWN" and its pictorial representation were covered by a copyright registration way back in 1950 the same are entitled to protection under PD No. 49. Aside from its copyright registration, petitioner is also the owner of several trademark registrations and application for the name and likeness of "CHARLIE BROWN" which is the duly registered trademark and copyright of petitioner United Feature Syndicate Inc. as early as 1957 and additionally also as TV SPECIALS featuring the "PEANUTS" characters "CHARLIE BROWN" It is undeniable from the records that petitioner is the actual owner of said trademark due to its prior registration with the Patent's Office. Finally, in La Chemise Lacoste S.A. v. Hon. Oscar Fernandez & Gobindram Hemandas Sujanani v. Hon. Roberto V. Ongpin, et al. 129 SCRA 373 [1984]), the Court declared. In upholding the right of the petitioner to maintain the present suit before our courts for unfair competition or infringement of trademarks of a foreign corporation, we are moreover recognizing our duties and the rights of foregoing states under the Paris Convention for the Protection of Industrial Property to which the Philippines and (France) U.S. are parties. We are simply interpreting a solemn international commitment of the Philippines embodied in a multilateral treaty to which we are a party and which we entered into because it is in our national interest to do so. G.R. No. L-63796-97 May 2, 1984 LA CHEMISE LACOSTE, S.A., petitioner, vs. HON. OSCAR C. FERNANDEZ, respondent. FACTS: The petitioner is a foreign corporation, organized and existing under the laws of France and not doing business in the Philippines, It is undeniable from the records that it is the actual owner of the abovementioned trademarks used on clothings and other goods specifically sporting apparels sold in many parts of the world and which have been marketed in the Philippines since 1964, The main basis of the private respondent's case is its claim of alleged prior registration. In 1975, Hemandas & Co., a duly licensed domestic firm

applied for and was issued Reg. No. SR-2225 (SR stands for Supplemental Register) for the trademark "CHEMISE LACOSTE & CROCODILE DEVICE" by the Philippine Patent Office for use on T-shirts, sportswear and other garment products of the company. Two years later, it applied for the registration of the same trademark under the Principal Register. The Patent Office eventually issued an order dated March 3, 1977 which states that: ... Considering that the mark was already registered in the Supplemental Register in favor of herein applicant, the Office has no other recourse but to allow the application, however, Reg. No. SR-2225 is now being contested in a Petition for Cancellation docketed as IPC No. 1046, still registrant is presumed to be the owner of the mark until after the registration is declared cancelled. Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas all rights, title, and interest in the trademark "CHEMISE LACOSTE & DEVICE". On November 21, 1980, the petitioner filed its application for registration of the trademark "Crocodile Device" (Application Serial No. 43242) and "Lacoste" (Application Serial No. 43241).The former was approved for publication while the latter was opposed by Games and Garments. On March 21, 1983, the petitioner filed with the National Bureau of Investigation (NBI) a letter-complaint alleging therein the acts of unfair competition being committed by Hemandas and requesting their assistance in his apprehension and prosecution. The NBI conducted an investigation and subsequently filed with the respondent court two applications for the issuance of search warrants which would authorize the search of the premises used and occupied by the Lacoste Sports Center and Games and Garments both owned and operated by Hemandas. The respondent court issued Search Warrant. Hemandas filed a motion to quash the search warrants alleging that the trademark used by him was different from petitioner's trademark and that pending the resolution of IPC No. 1658 before the Patent Office, any criminal or civil action on the same subject matter and between the same parties would be premature. The respondent court was, however, convinced that there was no probable cause to justify the issuance of the search warrants. ISSUE: WON Hemandas may allow to continue using the trademark Lacoste for the simple reason that he was the first registrant in the Supplemental Register of a trademark. (NO) HELD: A certificate of registration in the Supplemental Register is not prima facie evidence of the validity of registration, of the registrant's exclusive right to use the

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 same in connection with the goods, business, or services specified in the certificate. Such a certificate of registration cannot be filed, with effect, with the Bureau of Customs in order to exclude from the Philippines, foreign goods bearing infringement marks or trade names Section 19-A of Republic Act 166 as amended not only provides for the keeping of the supplemental register in addition to the principal register but specifically directs that: The certificates of registration for marks and trade names registered on the supplemental register shall be conspicuously different from certificates issued for marks and trade names on the principal register. Registration in the Supplemental Register, therefore, serves as notice that the registrant is using or has appropriated the trademark. By the very fact that the trademark cannot as yet be entered in the Principal Register, all who deal with it should be on guard that there are certain defects, some obstacles which the user must Still overcome before he can claim legal ownership of the mark or ask the courts to vindicate his claims of an exclusive right to the use of the same. It would be deceptive for a party with nothing more than a registration in the Supplemental Register to posture before courts of justice as if the registration is in the Principal Register. The reliance of the private respondent on the last sentence of the Patent office action on application Serial No. 30954 that "registrant is presumed to be the owner of the mark until after the registration is declared cancelled" is, therefore, misplaced and grounded on shaky foundation, The supposed presumption not only runs counter to the precept embodied in Rule 124 of the Revised Rules of Practice before the Philippine Patent Office in Trademark Cases but considering all the facts ventilated before us in the four interrelated petitions involving the petitioner and the respondent, it is devoid of factual basis. And even in cases where presumption and precept may factually be reconciled, we have held that the presumption is rebuttable, not conclusive, We have carefully gone over the records of all the cases filed in this Court and find more than enough evidence to sustain a finding that the petitioner is the owner of the trademarks "LACOSTE", "CHEMISE LACOSTE", the crocodile or alligator device, and the composite mark of LACOSTE and the representation of the crocodile or alligator. Any pretensions of the private respondent that he is the owner are absolutely without basis. Any further ventilation of the issue of ownership before the Patent Office will be a superfluity and a dilatory tactic. The purpose of the law protecting a trademark cannot be overemphasized. They are to point out distinctly the origin or ownership of the article to which it is affixed, to secure to him, who has been instrumental in bringing into market a superior article of merchandise, the fruit of his industry and skill, and to prevent fraud and imposition (Etepha v. Director of Patents, 16 SCRA 495).

The law on trademarks and tradenames is based on the principle of business integrity and common justice' This law, both in letter and spirit, is laid upon the premise that, while it encourages fair trade in every way and aims to foster, and not to hamper, competition, no one, especially a trader, is justified in damaging or jeopardizing another's business by fraud, deceipt, trickery or unfair methods of any sort. This necessarily precludes the trading by one dealer upon the good name and reputation built up by another (Baltimore v. Moses, 182 Md 229, 34 A (2d) 338). The records show that the goodwill and reputation of the petitioner's products bearing the trademark LACOSTE date back even before 1964 when LACOSTE clothing apparels were first marketed in the Philippines. To allow Hemandas to continue using the trademark Lacoste for the simple reason that he was the first registrant in the Supplemental Register of a trademark used in international commerce and not belonging to him is to render nugatory the very essence of the law on trademarks and tradenames. G.R. No. L-26966 October 30, 1970 DE LA RAMA STEAMSHIP CO., plaintiff-appellee, vs. NATIONAL DEVELOPMENT CO., defendant-appellant. FACTS: De la Rama Steamship Co. Inc. and NDC entered into an agreement whereby De la Rama undertook the management of the three vessels known as "Doña Aurora," "Doña Nati" and "Doña Alicia" which had been purchased by the Philippine Government from Japan. However, NDC filed a case to cancel upon the general agency granted Dela Rama which the SC granted. (G.R. No. L-8784) The right of NDC to cancel the management contract having been upheld by the SC, De la Rama then filed a case against NDC demanded the latter to refrain from using the names "Doña Aurora," "Doña Nati" and "Doña Alicia" on the three vessels subject of the original action, claiming that it had acquired exclusive property right to the use of said names of the three vessels as trade names. In its answer, NDC denied De la Rama's exclusive right to use the names "Doña Aurora," "Doña Nati" and "Doña Alicia" on the vessels upon the ground that said names represented names of wives of former Presidents of the Philippines and could not be approriated by a private individual. De la Rama, on the other hand alleged that the names "Doña Aurora," "Doña Nati" and "Doña Alicia" were its property, having used the name "Doña" on its vessels in its shipping business even before the last war and had acquired a vested right on that trade name.

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 The trial court issued an order Enjoining and restraining NDC perpetually from using the 'Doña' name or title on any of its vessels. Hence this petition. ISSUES: (1) W/N De la Rama has no exclusive right to use the names "Doña Aurora," "Doña Nati" and "Doña Alicia" on the vessels upon the ground that said names represented names of wives of former Presidents of the Philippines and could not be approriated by a private individual. (It has exclusive right) (2) W/N Delarama having used the name "Doña" on its vessels in its shipping business even before the last war and had acquired a vested right on that trade name. RULING: (1) Under Section 4(c) of Rep. Act No. 166 as amended, which apparently is the basis of the contention of NDC, what is prohibited from being appropriated and being registered are trade-names consisting of, or comprising, a name identifying a particular living individual, or the name of a deceased President of the Philippines. The names of deceased wives of Presidents are not included in the prohibition. Moreover, Section 4(f) of said Act does not prohibit the registration, and hence appropriation, of a tradename that has become distinctive and the substantial and exclusive use of a trade-name for five years accepted as prima facie proof that the trade-name has become distinctive. And this Court has said, in Ang vs. Teodoro, that even a name or phrase not capable of appropriation as a trade name may, by long and exclusive use by a business with reference thereto of to its products, acquire a proprietary connotation, such that, to the purchasing public, the name or phrase becomes associated with the service or the products of the business, and so it is entitled to protection against unfair competition. (2) NDC does not dispute the fact that the "Doña" names had been originally used by De la Rama, and according to the lower court De la Rama had been using the "Doña" names even before the war, and that said names have acquired goodwill and reputation. Goodwill is protected by the law on unfair competition. Goodwill is easily damaged, and is easily vulnerable to assault, through the brand which symbolizes it. When a person has established a trade or business in which he has used a name or device to designate his goods, he will be protected in the use of the name or device. "Such person has a right to complain when another adopts this symbol or manner of making of his goods so as to mislead the public into purchasing the same as and for the goods of the complainant." The goodwill in business is a valuable asset, and in modern commercial life it is frequently built upon a trade-name. Any trade-mark or name ... which has become of a pecuniary value or a business advantage, becomes a property right, and, as such, is entitled to the protection afforded by the courts (American

Agricultural Chemical Co. v. Moore, 17 F (2d) 196, 199.) In Ang v. Teodoro this Court said:. 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 confusion of goods. The modern trend is to give emphasis to the unfairness of the acts and to treat the issue as a fraud. To permit NDC to continue using the "Doña" names would be to countenance the unlawful appropriation of the benefit of a goodwill which De la Rama has acquired as a result of continued usage and large expense; it would be tantamount to permitting NDC to grab the reputation or goodwill of the business of another. We find that the decision of the trial court on this matter is in accordance with the law on unfair competition. G.R. No. 112012 April 4, 2001 SOCIETE DES PRODUITS NESTLE, S.A. and NESTLE PHILIPPINES, INC., petitioners, vs. COURT OF APPEALS and CFC CORPORATION., respondents. FACTS: Private respondent CFC Corporation filed with the BPTTT an application for the registration of the trademark "FLAVOR MASTER" for instant coffee. Petitioner Societe Des Produits Nestle, S.A., a Swiss company registered under Swiss laws and domiciled in Switzerland, filed an unverified Notice of Opposition, claiming that the trademark of private respondent’s product is "confusingly similar to its trademarks for coffee and coffee extracts, to wit: MASTER ROAST and MASTER BLEND." Likewise, a verified Notice of Opposition was filed by Nestle Philippines, Inc., a Philippine corporation and a licensee of Societe Des Produits Nestle S.A., against CFC’s application for registration of the trademark FLAVOR MASTER. Nestle claimed that the use, if any, by CFC of the trademark FLAVOR MASTER and its registration would likely cause confusion in the trade; or deceive purchasers and would falsely suggest to the purchasing public a connection in the business of Nestle, as the dominant word present in the three (3) trademarks is "MASTER"; or that the goods of CFC might be mistaken as having originated from the latter. CFC argued that its trademark, FLAVOR MASTER, is not confusingly similar with the former’s trademarks, MASTER ROAST and MASTER BLEND, alleging that, "except for the word MASTER (which cannot be exclusively appropriated by any person for being a descriptive or

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 generic name), the other words that are used respectively with said word in the three trademarks are very different from each other – in meaning, spelling, pronunciation, and sound". CFC further argued that its trademark, FLAVOR MASTER, "is clearly very different from any of Nestlé’s alleged trademarks MASTER ROAST and MASTER BLEND, especially when the marks are viewed in their entirety, by considering their pictorial representations, color schemes and the letters of their respective labels." The BPTTT denied CFC’s application for registration. CFC elevated the matter to the Court of Appeals. ISSUE: "Does appellant CFC’s trade dress bear a striking resemblance with appellee’s trademarks as to create in the purchasing public’s mind the mistaken impression that both coffee products come from one and the same source?" RULING: Yes. A trademark has been generally defined as "any word, name, symbol or device adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured and sold by others." A manufacturer’s trademark is entitled to protection. As Mr. Justice Frankfurter observed in the case of Mishawaka Mfg. Co. v. Kresge Co.: The protection of trade-marks is the law’s recognition of the psychological function of symbols. If it is true that we live by symbols, it is no less true that we purchase goods by them. A trade-mark is a merchandising shortcut which induces a purchaser to select what he wants, or what he has been led to believe he wants. The owner of a mark exploits this human propensity by making every effort to impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever the means employed, the aim is the same --- to convey through the mark, in the minds of potential customers, the desirability of the commodity upon which it appears. Once this is attained, the trademark owner has something of value. If another poaches upon the commercial magnetism of the symbol he has created, the owner can obtain legal redress. The law prescribes a more stringent standard in that there should not only be confusing similarity but that it should not likely cause confusion or mistake or deceive purchasers. Hence, the question in this case is whether there is a likelihood that the trademark FLAVOR MASTER may cause confusion or mistake or may deceive purchasers that said product is the same or is manufactured by the same company. In other words, the issue is whether the trademark FLAVOR MASTER is a colorable imitation of the trademarks MASTER ROAST and MASTER BLEND. Colorable imitation denotes such a close or ingenious imitation as to be calculated to deceive ordinary persons, or such a

resemblance to the original as to deceive an ordinary purchaser giving such attention as a purchaser usually gives, as to cause him to purchase the one supposing it to be the other. In determining if colorable imitation exists, jurisprudence has developed two kinds of tests - the Dominancy Test and the Holistic Test. The test of dominancy focuses on the similarity of the prevalent features of the competing trademarks which might cause confusion or deception and thus constitute infringement. On the other side of the spectrum, the holistic test mandates that the entirety of the marks in question must be considered in determining confusing similarity. Nestle points out that the dominancy test should have been applied to determine whether there is a confusing similarity between CFC’s FLAVOR MASTER and Nestle’s MASTER ROAST and MASTER BLEND. We agree. As the Court of Appeals itself has stated, "[t]he determination of whether two trademarks are indeed confusingly similar must be taken from the viewpoint of the ordinary purchasers who are, in general, undiscerningly rash in buying the more common and less expensive household products like coffee, and are therefore less inclined to closely examine specific details of similarities and dissimilarities between competing products."21 The basis for the Court of Appeals’ application of the totality or holistic test is the "ordinary purchaser" buying the product under "normally prevalent conditions in trade" and the attention such products normally elicit from said ordinary purchaser. An ordinary purchaser or buyer does not usually make such scrutiny nor does he usually have the time to do so. The average shopper is usually in a hurry and does not inspect every product on the shelf as if he were browsing in a library.22 The Court of Appeals held that the test to be applied should be the totality or holistic test reasoning, since what is of paramount consideration is the ordinary purchaser who is, in general, undiscerningly rash in buying the more common and less expensive household products like coffee, and is therefore less inclined to closely examine specific details of similarities and dissimilarities between competing products. This Court cannot agree with the above reasoning. If the ordinary purchaser is "undiscerningly rash" in buying such common and inexpensive household products as instant coffee, and would therefore be "less inclined to closely examine specific details of similarities and dissimilarities" between the two competing products, then it would be less likely for the ordinary purchaser to notice that CFC’s trademark FLAVOR MASTER carries the colors orange and mocha while that of Nestle’s uses red and brown. The application of the totality or holistic test is improper since the ordinary purchaser would not be inclined to notice the specific features, similarities or dissimilarities, considering

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 that the product is an inexpensive and common household item. It must be emphasized that the products bearing the trademarks in question are "inexpensive and common" household items bought off the shelf by "undiscerningly rash" purchasers. As such, if the ordinary purchaser is "undiscerningly rash", then he would not have the time nor the inclination to make a keen and perceptive examination of the physical discrepancies in the trademarks of the products in order to exercise his choice. WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE. G.R. No. 120900 July 20, 2000 CANON KABUSHIKI KAISHA, petitioner, vs. COURT OF APPEALS and NSR RUBBER CORPORATION, respondents. GONZAGA-REYES, J.: FACTS: On January 15, 1985, private respondent NSR Rubber Corporation (private respondent) filed an application for registration of the mark CANON for sandals in the Bureau of Patents, Trademarks, and Technology Transfer (BPTTT). A Verified Notice of Opposition was filed by petitioner, a foreign corporation duly organized and existing under the laws of Japan, alleging that it will be damaged by the registration of the trademark CANON in the name of private respondent. On November 10, 1992, the BPTTT issued its decision dismissing the opposition of petitioner and giving due course to private respondent's application for the registration of the trademark CANON. On February 16, 1993, petitioner appealed the decision of the BPTTT with public respondent Court of Appeals that eventually affirmed the decision of BPTTT. Hence, this petition for review. ISSUE: Whether the trademark Canon filed by the Private Respondents could be registered? (YES, the company’s goods are different from the products of the petitioner) RULING: The BPTTT and the Court of Appeals share the opinion that the trademark "CANON" as used by petitioner for its paints, chemical products, toner, and dyestuff, can be used by private respondent for its sandals because the products of these two parties are dissimilar. Petitioner protests the appropriation of the mark CANON by private respondent on the ground that petitioner has used and continues to use the trademark CANON on its wide range of goods worldwide. Allegedly, the corporate name or tradename of petitioner is also used as its trademark on diverse goods including footwear and other related products like shoe polisher and polishing agents. To lend credence to its claim, petitioner points out that it has branched out in its business based on the various goods

carrying its trademark CANON3, including footwear which petitioner contends covers sandals, the goods for which private respondent sought to register the mark CANON. For petitioner, the fact alone that its trademark CANON is carried by its other products like footwear, shoe polisher and polishing agents should have precluded the BPTTT from giving due course to the application of private respondent. We find the arguments of petitioner to be unmeritorious. Ordinarily, the ownership of a trademark or tradename is a property right that the owner is entitled to protect4 as mandated by the Trademark Law.5 However, when a trademark is used by a party for a product in which the other party does not deal, the use of the same trademark on the latter's product cannot be validly objected to.6 The BPTTT correctly ruled that since the certificate of registration of petitioner for the trademark CANON covers class 2 (paints, chemical products, toner, dyestuff), private respondent can use the trademark CANON for its goods classified as class 25 (sandals). Clearly, there is a world of difference between the paints, chemical products, toner, and dyestuff of petitioner and the sandals of private respondent. Petitioner counters that notwithstanding the dissimilarity of the products of the parties, the trademark owner is entitled to protection when the use of by the junior user "forestalls the normal expansion of his business".7 Petitioner's opposition to the registration of its trademark CANON by private respondent rests upon petitioner's insistence that it would be precluded from using the mark CANON for various kinds of footwear, when in fact it has earlier used said mark for said goods. We do not agree. Even in this instant petition, except for its bare assertions, petitioner failed to attach evidence that would convince this Court that petitioner has also embarked in the production of footwear products. We reiterated the principle that the certificate of registration confers upon the trademark owner the exclusive right to use its own symbol only to those goods specified in the certificate, subject to the conditions and limitations stated therein.11 Thus, the exclusive right of petitioner in this case to use the trademark CANON is limited to the products covered by its certificate of registration. Petitioner further argues that the alleged diversity of its products all over the world makes it plausible that the public might be misled into thinking that there is some supposed connection between private respondent's goods and petitioner. Petitioner is apprehensive that there could be confusion as to the origin of the goods, as well as

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 confusion of business, if private respondent is allowed to register the mark CANON. In such a case, petitioner would allegedly be immensely prejudiced if private respondent would be permitted to take "a free ride on, and reap the advantages of, the goodwill and reputation of petitioner Canon".12 In support of the foregoing arguments, petitioner invokes the rulings in Sta. Ana vs. Maliwat13 , Ang vs. Teodoro14 and Converse Rubber Corporation vs. Universal Rubber Products, Inc.15. The likelihood of confusion of goods or business is a relative concept, to be determined only according to the particular, and sometimes peculiar, circumstances of each case.16 Indeed, in trademark law cases, even more than in other litigation, precedent must be studied in the light of the facts of the particular case.17 Contrary to petitioner's supposition, the facts of this case will show that the cases of Sta. Ana vs. Maliwat,, Ang vs. Teodoro and Converse Rubber Corporation vs. Universal Rubber Products, Inc. are hardly in point. The just cited cases involved goods that were confusingly similar, if not identical, as in the case of Converse Rubber Corporation vs. Universal Rubber Products, Inc. Here, the products involved are so unrelated that the public will not be misled that there is the slightest nexus between petitioner and the goods of private respondent. In cases of confusion of business or origin, the question that usually arises is whether the respective goods or services of the senior user and the junior user are so related as to likely cause confusion of business or origin, and thereby render the trademark or tradenames confusingly similar.18 Goods are related when they belong to the same class or have the same descriptive properties; when they possess the same physical attributes or essential characteristics with reference to their form, composition, texture or quality.19 They may also be related because they serve the same purpose or are sold in grocery stores.20 Thus, in Esso Standard Eastern, Inc. vs. Court of Appeals, this Court ruled that the petroleum products on which the petitioner therein used the trademark ESSO, and the product of respondent, cigarettes are "so foreign to each other as to make it unlikely that purchasers would think that petitioner is the manufacturer of respondent's goods"21. Moreover, the fact that the goods involved therein flow through different channels of trade highlighted their dissimilarity. Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner that carry the trademark CANON are unrelated to sandals, the product of private respondent. We agree with the BPTTT, following the Esso doctrine, when it noted that the two classes of products in this case flow through different trade channels. Other Doctrine: The term "trademark" is defined by RA 166, the Trademark

Law, as including "any word, name, symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them for those manufactured, sold or dealt in by others."26 Tradename is defined by the same law as including "individual names and surnames, firm names, tradenames, devices or words used by manufacturers, industrialists, merchants, agriculturists, and others to identify their business, vocations, or occupations; the names or titles lawfully adopted and used by natural or juridical persons, unions, and any manufacturing, industrial, commercial, agricultural or other organizations engaged in trade or commerce."27 Simply put, a trade name refers to the business and its goodwill; a trademark refers to the goods.28 The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris Convention, of which both the Philippines and Japan, the country of petitioner, are signatories29, is a multilateral treaty that seeks to protect industrial property consisting of patents, utility models, industrial designs, trademarks, service marks, trade names and indications of source or appellations of origin, and at the same time aims to repress unfair competition.30 We agree with public respondents that the controlling doctrine with respect to the applicability of Article 8 of the Paris Convention is that established in Kabushi Kaisha Isetan vs. Intermediate Appellate Court.31 As pointed out by the BPTTT: "Regarding the applicability of Article 8 of the Paris Convention, this Office believes that there is no automatic protection afforded an entity whose tradename is alleged to have been infringed through the use of that name as a trademark by a local entity. In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No. 75420, 15 November 1991, the Honorable Supreme Court held that: 'The Paris Convention for the Protection of Industrial Property does not automatically exclude all countries of the world which have signed it from using a tradename which happens to be used in one country. To illustrate – if a taxicab or bus company in a town in the United Kingdom or India happens to use the tradename "Rapid Transportation", it does not necessarily follow that "Rapid" can no longer be registered in Uganda, Fiji, or the Philippines. This office is not unmindful that in the Treaty of Paris for the Protection of Intellectual Property

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 regarding well-known marks and possible application thereof in this case. Petitioner, as this office sees it, is trying to seek refuge under its protective mantle, claiming that the subject mark is well known in this country at the time the then application of NSR Rubber was filed. However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin, issued a memorandum dated 25 October 1983 to the Director of Patents, a set of guidelines in the implementation of Article 6bis (sic) of the Treaty of Paris. These conditions are: a) the mark must be internationally known; b) the subject of the right must be a trademark, not a patent or copyright or anything else; c) the mark must be for use in the same or similar kinds of goods; and d) the person claiming must be the owner of the mark (The Parties Convention Commentary on the Paris Convention. Article by Dr. Bogsch, Director General of the World Intellectual Property Organization, Geneva, Switzerland, 1985)' From the set of facts found in the records, it is ruled that the Petitioner failed to comply with the third requirement of the said memorandum that is the mark must be for use in the same or similar kinds of goods. The Petitioner is using the mark "CANON" for products belonging to class 2 (paints, chemical products) while the Respondent is using the same mark for sandals (class 25). Hence, Petitioner's contention that its mark is well-known at the time the Respondent filed its application for the same mark should fail. "32 WHEREFORE, in view of the foregoing, the instant petition for review on certiorari is DENIED for lack of merit. SO ORDERED. G.R. No. 101897. March 5, 1993. LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF APPEALS, LYCEUM OF APARRI, LYCEUM OF CABAGAN, LYCEUM OF CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM OF TUAO, INC., BUHI LYCEUM, CENTRAL LYCEUM OF CATANDUANES, LYCEUM OF SOUTHERN PHILIPPINES, LYCEUM OF EASTERN MINDANAO, INC. and WESTERN PANGASINAN LYCEUM, INC., respondents. FACTS: The Lyceum of the Philippines, Inc. is an educational institution duly registered with the Securities and Exchange Commission, using said corporate name since its first registration with the latter. LPI commenced in the SEC a proceeding against Lyceum of Baguio, Inc. to require it to change its corporate name and to

adopt another name “not similar to or identical with” that of LPI. Associate Commissioner Julio Sulit held that the corporate name of LPI and LBI were substantially identical because of the presence of a "dominant" word (Lyceum), the name of the geographical location of the campus being the only word which distinguished one from the other. The SEC also noted that LPI had registered as a corporation ahead of LBI and ordered the latter to change its name to another name "not similar or identical with" the names of previously registered entities. LBI assailed the SEC’s order before the Supreme Court, which denied the same. Armed with said SC resolution, LPI wrote to all the educational institutions it could find using the word "Lyceum" as part of their corporate name, advising them to discontinue such use of "Lyceum". LPI claimed proprietary right over the word “Lyceum” and instituted proceedings before the SEC to compel Lyceum of Aparri, Lyceum of Cabagan, Lyceum of Camalanuigan, Inc., Lyceum of Lallo, Inc., Lyceum of Tuao, Inc., Buhi Lyceum, Central Lyceum of Catanduanes, Lyceum of Southern Philippines, Lyceum of Eastern Mindanao, Inc., and Western Pangasinan Lyceum, Inc., also educational institutions, to delete the word "Lyceum" from their corporate names and to permanently enjoin them from using "Lyceum" as part of their respective names. The SEC hearing officer ruled in favor of LPI, relying upon the SEC’s ruling in the LBI case and holding that the word "Lyceum" was capable of appropriation, LPI having acquired an enforceable exclusive right to the use of that word. On appeal, the SEC En Banc reversed and set aside the hearing officer’s decision, not considering the word "Lyceum" to have become so identified with LPI as to render use thereof by other institutions as productive of confusion about the identity of the schools concerned in the mind of the general public and holding that the attaching of geographical names to the word "Lyceum" served sufficiently to distinguish the schools from one another. The Court of Appeals affirmed the SEC En Banc’s ruling ISSUE: WON the word “Lyceum” (1) can be appropriated by LPI to the exclusion of others and (2) acquired a secondary meaning in relation to LPI. HELD: (1) NO. The Articles of Incorporation of a corporation must set out the name of the corporation. Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate names are concerned: "SECTION 18. Corporate name. — No corporate name may be allowed by the Securities and

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name." The policy underlying the prohibition in Section 18 against the registration of a corporate name which is "identical or deceptively or confusingly similar" to that of any existing corporation or which is "patently deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud upon the public which would have occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration and supervision over corporations. The corporate names of LA, et. al. not are "identical with, or deceptively or confusingly similar" to that of LPI. The corporate names of LA, et. al. all carry the word "Lyceum", but confusion and deception are effectively precluded by the appending of geographic names to the word "Lyceum". Etymologically, the word "Lyceum" is the Latin word for the Greek lykeion, which refers to a locality on the river Ilissius in ancient Athens "comprising an enclosure dedicated to Apollo and adorned with fountains and buildings erected by Pisistratus, Pericles and Lycurgus frequented by the youth for exercise and by the philosopher Aristotle and his followers for teaching." In time, the word "Lyceum" became associated with schools and other institutions providing public lectures and concerts and public discussions. Today, the word "Lyceum" generally refers to a school or an institution of learning. "Lyceum" is in fact as generic in character as the word "university." In the name of LPI, "Lyceum" appears to be a substitute for "university". In other places, "Lyceum", or "Liceo", or "Lycee", denotes a secondary school or a college. It may be that the use of the word "Lyceum" may not yet be as widespread as the use of "university," but it is clear that a not inconsiderable number of educational institutions have adopted "Lyceum" or "Liceo" as part of their corporate names. Since "Lyceum" or "Liceo" denotes a school or institution of learning, it is not unnatural to use this word to designate an entity which is organized and operating as an educational institution. (2) NO. LPI claimed that the word "Lyceum" has acquired a secondary meaning in relation to it, hence, appropriable by it to the exclusion of other institutions. The doctrine of secondary meaning originated in the field of trademark law. Its application has been extended to corporate names, since the right to use a corporate name to the exclusion of others is based upon the same principle which underlies the right to use a particular trademark or tradename. In Philippine Nut Industry, Inc. v. Standard Brands, Inc., the doctrine of secondary meaning was elaborated thus:

" . . . a word or phrase originally incapable of exclusive appropriation with reference to an article on 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." No evidence was ever presented in the hearing before the Commission which sufficiently proved that the word 'Lyceum' has indeed acquired secondary meaning in favor of LPI. If there was any of this kind, the same tend to prove only that LPI had been using the disputed word for a long period of time. Nevertheless, LPI’s exclusive use of the word “Lyceum” was never established or proven, as in fact the WPLI was already using the word “Lyceum” seventeen (17) years prior to the date LPI started using the same word in its corporate name. Furthermore, educational institutions of the Roman Catholic Church had been using the same or similar word ('Liceo de Manila,' 'Liceo de Baleno', 'Liceo de Masbate,' 'Liceo de Albay') long before LPI started using the word 'Lyceum'. LPI also failed to prove that the word “Lyceum” has become so identified with its educational institution that confusion will surely arise in the minds of the public if the same word were to be used by other educational institutions. While LPI may have proved that it had been using the word “Lyceum” for a long period of time, this fact alone did not amount to mean that the said word had acquired secondary meaning in its favor because LPI failed to prove that it had been using the same word all by itself to the exclusion of others. More so, there was no evidence presented to prove that confusion will surely arise if the same word were to be used by other educational institutions. THUS: LPI is not entitled to a legally enforceable exclusive right to use the word "Lyceum" in its corporate name and other institutions may use "Lyceum" as part of their corporate names. To determine whether a given corporate name is "identical" or "confusingly or deceptively similar" with another entity's corporate name, it is not enough to ascertain the presence of "Lyceum" or "Liceo" in both names. One must evaluate corporate names in their entirety and when the name of petitioner is juxtaposed with the names of LA, et. al., they are not reasonably regarded as "identical" or "confusingly or deceptively similar" with each other.

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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. FACTS: McDonald's Corporation, a corporation organized APODERADO• DAYO• JACELA • MARTINEZ • MASONGSONG • SUPNET• VALLEJO • VELOSO

LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 under the laws of Delaware, United States, operates, by itself or through its franchisees, a global chain of fast-food restaurants. McGeorge Food Industries, a domestic corporation, is MC's Philippine franchisee. L.C. Big Mak Burger, Inc., a domestic corporation, operates fast-food outlets and snack vans in Metro Manila and nearby provinces, which menu includes hamburger sandwiches and other food items. Francis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto are the incorporators, stockholders and directors of LCBMBI. MC owns a family of marks, including the "Big Mac" mark for its "double-decker hamburger sandwich," which it registered with the U.S. Trademark Registry (October 16, 1979). MC applied for the registration of said mark in the Principal Register of the then Philippine Bureau of Patents, Trademarks and Technology (now the Intellectual Property Office). Pending approval of its application, MC introduced its "Big Mac" hamburger sandwiches in the Philippine market (September 1981). The PBPTT allowed registration of the "Big Mac" mark in the Principal Register (July 18, 1985). MC displayed the "Big Mac" mark in the items and paraphernalia in its restaurants and in its outdoor and indoor signages. MC spent P10.5 million in advertisement (1982 to 1990) for "Big Mac" hamburger sandwiches alone. LCBMBI applied with the PBPTT for the registration of the "Big Mak" mark for its hamburger sandwiches. MC opposed LCBMBI's application on the ground that "Big Mak" was a colorable imitation of its registered "Big Mac" mark for the same food products. MC also informed LCBMBI of its exclusive right to the "Big Mac" mark and requested it to desist from using the "Big Mak" mark or any similar mark. LCBMBI having made no reply, MC sued (June 6, 1990) the former in the Regional Trial Court for trademark infringement and unfair competition. The RTC issued a temporary restraining order (July 11, 1990) against LCBMBI, enjoining it from using the "Big Mak" mark in the operation of their business in the National Capital Region. Subsequently, the RTC issued a writ of preliminary injunction (August 16, 1990) replacing the TRO. LCBMBI: (1) It has been using the name "Big Mak Burger" for their fast-food business. (2) MC does not have an exclusive right to the "Big Mac" mark or to any other similar mark. (3) The Isaiyas Group of Corporations had already registered (March 13, 1979) the same mark for hamburger sandwiches with the PBPTT. (4) Rodolfo Topacio had similarly registered (June 24, 1983) the same mark. (5) It is 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. (6) It did not fraudulently pass off their hamburger sandwiches as those of MC's “Big Mac” hamburgers. MC: (1) It denied LCBMBI's claim that it is not the exclusive owner of the "Big Mac" mark. (2) While IGC and Topacio registered the "Big Mac" mark ahead of it, the IGC did so only in the Supplemental Register of the PBPTT, which registration does not provide any protection, and it had acquired Topacio's rights to his registration in a Deed of Assignment (May 18, 1981). RTC (September 5, 1994): LCBMBI is liable for trademark infringement and unfair competition. Trademark Infringement – The mark "Big Mac" is a registered trademark for MC and, as such, is entitled to protection against infringement. There exist some distinctions between the names "Big Mac" and "Big Mak" 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. The parties are both in the business of fastfood 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 MC restaurant and buy a "Big Mac" hamburger. Once he sees a stall selling hamburger sandwiches, in all likelihood, he will dip into his pocket and order a "Big Mak" hamburger sandwich. MC'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 LCBMBI's mobile snack vans located along busy streets or highways. But the thing is that what is being sold by both 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 "Big Mak" hamburger sandwich he bought is a food-product of MC, or a subsidiary or allied outlet thereof. Surely, LCBMBI 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 fastfood chains and restaurants. Hence, the trademark "Big Mac" has been infringed by LCBMBI when it used the name "Big Mak" in its signages, wrappers, and containers in connection with its food business. Unfair Competition – 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 "Big Mak" as tradename by LCBMBI is not merely for sentimental reasons but was clearly made to take advantage of the reputation, popularity and the established goodwill of MC.

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 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. CA (November 26, 1990): The RTC’s decision is reversed. Trademark infringement – No colorable imitation exists. It is not sufficient that a similarity exists in both names, but, more importantly, the over-all presentation, or their essential, substantive and distinctive parts, is such as would likely MISLEAD or CONFUSE persons in the ordinary course of purchasing the genuine article. (1) MC’s trademark is used to designate only one product, a double decker sandwich, while LCBMBI’s trademark is used not as a trademark for its food product but a business or corporate name. (2) LCBMBI’s corporate or business name, appearing in the food packages and signages, are (a) written in silhouette red-orange letters with the "b" and "m" in upper case letters, (b) above the words "Big Mak" are the upper case letter "L.C.," (c) below the words "Big Mak" are the words "Burger, Inc." spelled out in upper case letters, and (d) 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" and a blue lower garment. (3) MC’s product is sold in a styrofoam box with the "McDonalds" logo, while LCBMBI’s food packages are made of plastic material. (4) MC’s price is more expensive than LCBMBI’s comparable food products. (5) In order to buy a "Big Mac", a customer needs to visit an airconditioned "McDonald's" restaurant usually located in a nearby commercial center, advertised and identified by its logo - the umbrella "M", and its mascot – "Ronald McDonald," while LCBMBI sells their goods through snack vans. Unfair competition – 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 goods, business or services, or any acts calculated to produce the same result." To constitute unfair competition, there must be malice and bad faith. The mere suspected similarity in the sound of LCBMBI's corporate name with MC’s trademark is not sufficient evidence to conclude unfair competition. LCBMBI explained that the name "Mak" in their corporate name was derived from both the first names of the mother and father of Francis Dy, whose names are Maxima and Kimsoy. With this explanation, it is up to MC to prove bad faith on the part of LCBMBI. 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. ISSUE: WON (1) there is trademark infringement [MC claimed that (1) LCBMBI use the words "Big Mak" as trademark for their products and not merely as their business or corporate name, and (2) as a trademark, LCBMBI’s' "Big Mak" is undeniably and unquestionably similar to MC’s "Big Mac" trademark based on the dominancy test and the idem sonans test, resulting inexorably in confusion on the part of the consuming public.] and (2) there is unfair competition. [BOTH YES.] HELD: TRADEMARK INFRINGEMENT [YES.]: Section 22 of R.A. No. 166, as amended, defines trademark infringement as follows: Infringement, what constitutes. — Any person who [1] shall use, without the consent of the registrant, any reproduction, 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 with which 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 used upon 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. 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." Of these, it is the element of likelihood of confusion that is the gravamen of trademark infringement. On the validity of the "Big Mac"mark and MC’s ownership of such mark: A mark is valid if it is "distinctive" and thus not barred from registration under Section 4 of R.A. No. 166. However, once registered, not only the mark's validity but also the registrant's ownership of the mark is prima facie presumed.1 1

Section 20, R.A. No. 166. Certificate of registration prima facie evidence of validity. — A certificate of registration of a mark or tradename shall be prima facie evidence of the validity of the registration, the registrant's ownership of the mark or trade-name, and of the registrant's exclusive right to use the same in connection with the goods, business or services specified in the certificate, subject to any conditions and limitations stated therein.This has been superseded by Section 138, R.A. No. 8293. Neither R.A. No.166 nor R.A. No. 8293 provides when the presumption of validity and ownership becomes indubitable. Under the Lanham Act, as amended, such takes place once the trademark has

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 LCBMBI: 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, which is proscribed and, thus, "incapable of exclusive appropriation." [NO MERIT.] SC: The "Big Mac" mark, which should be treated in its entirety and not dissected word for word, is neither generic nor descriptive. Generic marks are commonly used as the name or description of a kind of goods. 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. "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. As such, it is highly distinctive and thus valid. MC has duly established its exclusive ownership of the "Big Mac" mark. Although Topacio and IGC registered the "Big Mac" mark ahead of MC, Topacio had already assigned his rights to MC. IGC, on the other hand, registered its trademark only in the Supplemental Register. A mark which is not registered in the Principal Register, and thus not distinctive, has no real protection. 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. 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.: x x x 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." x x x confusion of business, "where, 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." 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: LCBMBI used the "Big Mak" mark on the same goods, i.e. hamburger sandwiches, that MC’s "Big Mac" mark is used, hence, trademark infringement through confusion of become "incontestable" i.e. after the mark owner files affidavits stating that the mark is registered and has been in continuous use for five consecutive years; that there is no pending proceeding; and that there has been no adverse decision concerning the registrant's ownership or right to registration. Both R.A. No 166 (Section 12) and R.A. No. 8293 (Section 145) require the filing of the affidavit attesting to the continuous use of the mark for five years and, under Section 145, failure to file such affidavit will result in the removal of the mark from the Register.

goods is a proper issue herein. LCBMBI admitted that their business includes selling hamburger sandwiches, the same food product that MC sells using the "Big Mac" mark, thus, trademark infringement through confusion of business is also a proper issue herein. LCBMBI: (1) Their "Big Mak" hamburgers cater mainly to the low-income group, while MC’s "Big Mac" hamburgers cater to the middle and upper income groups. (2) MC uses the "Big Mac" mark only on its double-decker hamburgers, while LCBMBI use the "Big Mak" mark on hamburgers and other products, i.e. siopao, noodles and pizza. (3) MC sells 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 LCBMBI, while the latter sells their Big Mak hamburgers in plastic wrappers and plastic bags. (4) MC’s restaurants are air-conditioned buildings with drive-thru service, while LCBMBI uses mobile vans. [NO MERIT.] SC: (1) 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 MC. MC has the exclusive right to use the "Big Mac" mark. LCBMBI would benefit by associating their low-end hamburgers, through the use of the "Big Mak" mark, with MC’s high-end "Big Mac" hamburgers, leading to likelihood of confusion in the identity of business. (2, 3, and 4) These and other factors cannot negate the undisputed fact that LCBMBI use their "Big Mak" mark on hamburgers, the same food product that MC sells 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 LCBMBI’s use of the "Big Mak" mark on non-hamburger food products cannot excuse their infringement of MC’s 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 registered trademark owner enjoys protection in product and market areas that are the “normal potential expansion of his business.” On whether LCBMBI’s 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. The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion, while 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.

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 LCBMBI: The CA’s application of the holistic test is correct and in accord with prevailing jurisprudence. [NO MERIT.] SC: 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 the adoption of the dominant features of the registered mark, disregarding minor differences. 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. In Co Tiong Sa v. Director of Patents: x x x 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. 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. In Societe Des Produits Nestlé, S.A. v. Court of Appeals: The 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 are encountered in the realities of the marketplace. LCBMBI’s use of the "Big Mak" mark results in likelihood of confusion: (1) "Big Mak" sounds exactly the same as "Big Mac," (2) the first word in "Big Mak" is exactly the same as the first word in "Big Mac," (3) the first two letters in "Mak" are the same as the first two letters in "Mac," (4) the last letter in "Mak" while a "k" sounds the same as "c" when the word "Mak" is pronounced, and (5) in Filipino, the letter "k" replaces "c" in spelling. 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. LCBMBI has 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. 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." MC’s 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. This increases the likelihood that consumers will mistakenly associate MC’s hamburgers and business with those of LCBMBI’s. LCBMBI’s claim that its "Big Mak" mark was inspired by the first names of Dy's mother (Maxima) and father (Kimsoy) is not credible – 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 equal number of letters from each name, as is the more usual thing done. Absent proof that LCBMBI’s adoption of the "Big Mak" mark was due to honest mistake or was fortuitous, the inescapable conclusion is that LCBMBI adopted the "Big Mak" mark to "ride on the coattails" of the more established "Big Mac" mark. This saves LCBMBI much of the expense in advertising to create market recognition of their mark and hamburgers. UNFAIR COMPETITION [YES.]: Section 29, R.A. No. 166 defines unfair competition, thus: x x x 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. 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 any subsequent 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

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 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. 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. 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. Actual fraudulent intent need not be shown. Unfair competition is broader than trademark infringement and includes passing off goods with or without trademark infringement. Trademark infringement is a form of unfair competition. Trademark infringement constitutes unfair competition when there is not merely likelihood of confusion, but also actual or probable deception on the public because of the general appearance of the goods. There can be trademark infringement without unfair competition as when the infringer discloses on the labels containing the mark that he manufactures the goods, thus preventing the public from being deceived that the goods originate from the trademark owner. MC: (1) LCBMBI fraudulently passed off their hamburgers as "Big Mac" hamburgers. (2) LCBMBI’s fraudulent intent can be inferred from the similarity of the marks in question. [MERITORIOUS.] LCBMBI: (1) The mark "Big Mac" is used by MC to identify its double decker hamburger sandwich. (2) MC’s packaging material is a styrofoam box with the McDonald's logo and trademark and “Big Mac” mark in red block capital letters, while LCBMBI’s packaging material is a plastic wrapper with the “Big Mak” script print in orange with only the letters "B" and "M" being capitalized. (3) MC’s logo and mascot are the umbrella "M" and "Ronald McDonald's", respectively, while LCBMBI’s mascot is a chubby boy called "Macky", displayed or printed between the words "Big" and "Mak." [NO MERIT.] SC: 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. 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 dissimilarities in the packaging are minor compared to the stark similarities in the words that give LCBMBI’s "Big Mak" hamburgers the general appearance of MC’s "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. LCBMBI has applied on their plastic wrappers and bags almost the same words that MC uses 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." LCBMBI’s goods are hamburgers which are also the goods of MC. If LCBMBI sold egg sandwiches only instead of hamburger sandwiches, their use of the "Big Mak" mark would not give their goods the general appearance of MC’s "Big Mac" hamburgers. In such case, there is only trademark infringement but no unfair competition. However, since LCBMBI chose to apply the "Big Mak" mark on hamburgers, just like MC’s use of the "Big Mac" mark on hamburgers, the former has obviously clothed their goods with the general appearance of MC’s goods. Moreover, there is no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big Mak Burger, Inc." LCBMBI 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, MC introduced during the injunctive hearings plastic wrappers and bags with the "Big Mak" mark without the name "L.C. Big Mak Burger, Inc." LCBMBI’s 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. 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 MC who have the exclusive right to the "Big Mac" mark. This clearly shows LCBMBI’s intent to deceive the public. Had LCBMBI 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. LCBMBI, however, did not give such notice. REMEDIES: Under Section 232, in relation to Section 29, 2

Actions, and damages and injunction for infringement. — Any person entitled to the exclusive use of a registered mark or trade-name may recover damages in a civil action from any person who infringes his rights, and the measure of the damages suffered shall be either the reasonable profit which the complaining party would have made, had the defendant not infringed his said rights, or the profit which the defendant actually made out of the infringement, or in the event such measure of damages cannot be readily ascertained with reasonable certainty, then the court may award as damages a reasonable percentage based upon the amount of gross sales of the defendant of the value of the services in

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 R.A. No. 166, a plaintiff who successfully maintains trademark infringement and unfair competition claims is entitled to injunctive and monetary reliefs. The injunctive writ is indispensable to prevent further acts of infringement. Monetary reliefs include actual damages, exemplary damages, attorney’s fees and litigation expenses. G.R. No. 103543 July 5, 1993 ASIA BREWERY, INC., petitioner, vs. THE HON. COURT OF APPEALS and SAN MIGUEL CORPORATION, respondents. FACTS: San Miguel Corporation (SMC) filed a complaint against Asia Brewery Inc. (ABI) for infringement of trademark and unfair competition on account of the latter's BEER PALE PILSEN or BEER NA BEER product which has been competing with SMC's SAN MIGUEL PALE PILSEN for a share of the local beer market. A decision was rendered by the trial Court dismissing SMC's complaint because ABI "has not committed trademark infringement or unfair competition against" SMC. SMC appealed to the CA which reversed the ruling of the trial court and ordered Asia Brewery Inc. to recall all its products bearing the mark Beer Pale Pilsen from its retailers and deliver these as well as all labels, signs, prints, packages, wrappers, receptacles and advertisements bearing the infringing mark and all plates, molds, materials and other means of making the same to the CA. Hence, this petition. ISSUE: Does ABI's BEER PALE PILSEN label infringe upon SMC's SAN MIGUEL PALE PILSEN? (NO.) HELD: The fact that the words pale pilsen are part of ABI's trademark does not constitute an infringement of SMC's trademark: SAN MIGUEL PALE PILSEN, for "pale pilsen" are generic words descriptive of the color ("pale"), of a type of beer ("pilsen"), which is a light bohemian beer with a strong hops flavor that originated in the City of Pilsen in Czechoslovakia and became famous in the Middle Ages. (Webster's Third New International Dictionary of the English Language, Unabridged. Edited by Philip Babcock Gove. Springfield, Mass.: G & C Merriam Co., [c] 1976, page 1716.) "Pilsen" is a "primarily geographically descriptive word," (Sec. 4, subpar. [e] Republic Act No. 166, as inserted by Sec. 2 of R.A. No. 638) hence, non-registerable and not appropriable by any beer manufacturer. The Trademark Law provides: Sec. 4. . . .. The owner of trade-mark, trade-name or service-mark used to distinguish his goods, business connection with which the mark or trade-name was used in the infringement of the rights of the complaining party. In cases where actual intent to mislead the public or to defraud the complaining party shall be shown, in the discretion of the court, the damages may be doubled. The complaining party, upon proper showing, may also be granted injunction.

or services from the goods, business or services of others shall have the right to register the same [on the principal register], unless it: xxx xxx xxx (e) Consists of a mark or trade-name which, when applied to or used in connection with the goods, business or services of the applicant is merely descriptive or deceptively misdescriptive of them, or when applied to or used in connection with the goods, business or services of the applicant isprimarily geographically descriptive or deceptively misdescriptive of them, or is primarily merely a surname." (Emphasis supplied.) The words "pale pilsen" may not be appropriated by SMC for its exclusive use even if they are part of its registered trademark: SAN MIGUEL PALE PILSEN, any more than such descriptive words as "evaporated milk," "tomato ketchup," "cheddar cheese," "corn flakes" and "cooking oil" may be appropriated by any single manufacturer of these food products, for no other reason than that he was the first to use them in his registered trademark. In Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139 (1953), it was held that a dealer in shoes cannot register "Leather Shoes" as his trademark because that would be merely descriptive and it would be unjust to deprive other dealers in leather shoes of the right to use the same words with reference to their merchandise. No one may appropriate generic or descriptive words. They belong to the public domain (Ong Ai Gui vs. Director of Patents, 96 Phil. 673, 676 [1955]): A word or a combination of words which is merely descriptive of an article of trade, or of its composition, characteristics, or qualities, cannot be appropriated and protected as a trademark to the exclusion of its use by others. . . . inasmuch as all persons have an equal right to produce and vend similar articles, they also have the right to describe them properly and to use any appropriate language or words for that purpose, and no person can appropriate to himself exclusively any word or expression, properly descriptive of the article, its qualities, ingredients or characteristics, and thus limit other persons in the use of language appropriate to the description of their manufactures, the right to the use of such language being common to all. This rule excluding descriptive terms has also been held to apply to trade-names. As to whether words employed fall within this prohibition, it is said that the true test is not whether they are exhaustively descriptive of the article designated, but whether in themselves, and as they are commonly used by those who

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 understand their meaning, they are reasonably indicative and descriptive of the thing intended. If they are thus descriptive, and not arbitrary, they cannot be appropriated from general use and become the exclusive property of anyone. (52 Am. Jur. 542-543.) . . . . Others may use the same or similar descriptive word in connection with their own wares, provided they take proper steps to prevent the public being deceived. (Richmond Remedies Co. vs. Dr. Miles Medical Co., 16 E. [2d] 598.) . . . . A descriptive word may be admittedly distinctive, especially if the user is the first creator of the article. It will, however, be denied protection, not because it lacks distinctiveness, but rather because others are equally entitled to its use. (2 Callman. Unfair Competition and Trademarks, pp. 869-870.)" (Emphasis supplied.) The circumstance that the manufacturer of BEER PALE PILSEN, Asia Brewery Incorporated, has printed its name all over the bottle of its beer product: on the label, on the back of the bottle, as well as on the bottle cap, disproves SMC's charge that ABI dishonestly and fraudulently intends to palm off its BEER PALE PILSEN as SMC's product. In view of the visible differences between the two products, the Court believes it is quite unlikely that a customer of average intelligence would mistake a bottle of BEER PALE PILSEN for SAN MIGUEL PALE PILSEN. The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled in amber-colored steinie bottles of 320 ml. capacity and is also advertised in print, broadcast, and television media, does not necessarily constitute unfair competition. ADDITIONAL: TRADEMARK INFRINGEMENT Infringement of trademark is a form of unfair competition (Clarke vs. Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise known as the Trademark Law, defines what constitutes infringement: Sec. 22. Infringement, what constitutes. — Any person who shall use, without the consent of the registrant, any reproduction, 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 with which 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 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 used upon 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. (Emphasis supplied.) This definition implies that only registered trade marks, trade names and service marks are protected against infringement or unauthorized use by another or others. The use of someone else's registered trademark, trade name or service mark is unauthorized, hence, actionable, if it is done "without the consent of the registrant." (Ibid.) TEST OF DOMINANCY Infringement is determined by the "test of dominancy" rather than by differences or variations in the details of one trademark and of another. The rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa vs. Director of Patents, 100 Phil. 214, 216-217 (1956), thus: 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 it is necessary that the infringing label should suggest an effort to imitate. [C. Neilman 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; . . . .) What are the dominant features of the competing trademarks before us? There is hardly any dispute that the dominant feature of SMC's trademark is the name of the product: SAN MIGUEL PALE PILSEN, written in white Gothic letters with elaborate serifs at the beginning and end of the letters "S" and "M" on an amber background across the upper portion of the rectangular design. On the other hand, the dominant feature of ABI's trademark is the name: BEER PALE PILSEN, with the word "Beer" written in large amber letters, larger than any of the letters found in the SMC label. The trial court perceptively observed that the word "BEER" does not appear in SMC's trademark, just as the words "SAN MIGUEL" do not appear in ABI's trademark.

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 Hence, there is absolutely no similarity in the dominant features of both trademarks. Neither in sound, spelling or appearance can BEER PALE PILSEN be said to be confusingly similar to SAN MIGUEL PALE PILSEN. No one who purchases BEER PALE PILSEN can possibly be deceived that it is SAN MIGUEL PALE PILSEN. No evidence whatsoever was presented by SMC proving otherwise. UNFAIR COMPETITION The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled in amber-colored steinie bottles of 320 ml. capacity and is also advertised in print, broadcast, and television media, does not necessarily constitute unfair competition. Unfair competition is 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 services, for those of another who has already established goodwill for his similar goods, business or services, or any acts calculated to produce the same result. (Sec. 29, Republic Act No. 166, as amended.) The law further enumerates the more common ways of committing unfair competition, thus: Sec. 29. . . . 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 other feature of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent 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. The main thrust of SMC's complaint if not infringement of its trademark, but unfair competition arising form the

allegedly "confusing similarity" in the general appearance or trade dress of ABI's BEER PALE PILSEN beside SMC's SAN MIGUEL PALE PILSEN (p. 209, Rollo) SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly similar" to its SAN MIGUEL PALE PILSEN because both are bottled in 320 ml. steinie type, amber-colored bottles with white rectangular labels. However, when as in this case, the names of the competing products are clearly different and their respective sources are prominently printed on the label and on other parts of the bottle, mere similarity in the shape and size of the container and label, does not constitute unfair competition. The steinie bottle is a standard bottle for beer and is universally used. SMC did not invent it nor patent it. Petitioner ABI has neither infringed SMC's trademark nor committed unfair competition with the latter's SAN MIGUEL PALE PILSEN product. While its BEER PALE PILSEN admittedly competes with the latter in the open market, that competition is neither unfair nor fraudulent. Hence, we must deny SMC's prayer to suppress it. G.R. No. L-78325 January 25, 1990 DEL MONTE CORPORATION and PHILIPPINE PACKING CORPORATION, petitioners, vs. COURT OF APPEALS and SUNSHINE SAUCE MANUFACTURING INDUSTRIES, respondents. FACTS: Del Monte Corporation is an entity doing business in the United States and not registered in the Philippines. In order to do business here, it authorized Philippine Packing Corporation (PPC) to manufacture, distribute and sell in the Philippines various agricultural products, including catsup, under the Del Monte trademark and logo. It further authorized PPC to register before the Patent Office its Del Monte catsup bottle configuration. Respondent Sunshine Sause Manufacturing Industries (SSMI) on the other hand, was a registered entity in the Philippines engaged in the manufacture, packing, distribution and sale of various kinds of sauce, identified by the logo Sunshine Fruit Catsup. This logo was registered in the Supplemental Register on September 20, 1983. The product itself was contained in various kinds of bottles, including the Del Monte bottle, which the private respondent bought from the junk shops for recycling. Having received reports of such unauthorized usages of Del Monte catsup bottles for its own products, PPC warned SSMI to desist from using the same. Based on the claim by PPC of its continued use, it filed a case against SSMI for trademark infringement. SSMI on the

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 other hand claimed that it had long ceased from using the same, and its own trademark, was substantially different from the Del Monte logo and would not confuse the buying public to the detriment of the petitioners. The Trial Court held that no infringement was committed, because there were substantial differences between the logos or trademarks of the parties. Also, defendant became the owner of the said bottles upon its purchase thereof from the junk yards. Furthermore, the complainants had failed to establish the defendant's malice or bad faith, which was an essential element of infringement of trademark or unfair competition. The CA affirmed the decision of the Trial Court, and hence, this present appeal. ISSUE: (1) What are the differences between trademark infringement and unfair competition? (2) Whether or not SSMI infringed PPC’s trademark. HELD: (1) The differences are as follows: (1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair competition is the passing off of one's goods as those of another. (2) In infringement of trademark fraudulent intent is unnecessary whereas in unfair competition fraudulent intent is essential. (3) In infringement of trademark the prior registration of the trademark is a prerequisite to the action, whereas in unfair competition registration is not necessary. In the challenged decision, the respondent court cited the following test laid down by this Court in a number of cases: In determining whether two trademarks are confusingly similar, the two marks in their entirety as they appear in the respective labels must be considered in relation to the goods to which they are attached; the discerning eye of the observer must focus not only on the predorninant words but also on the other features appearing on both labels. And, in applying the same, Trial Court held that there was no colorable imitation of the petitioners' trademark and logo by the private respondent. THERE IS A CASE OF INFRINGMENT It has been correctly held that side-by-side comparison is not the final test of similarity. Such comparison requires a careful scrutiny to determine in what points the labels of the products differ, as was done by the trial judge. The ordinary buyer does not usually make such scrutiny nor does he usually have the time to do so. The average shopper is usually in a hurry and does not inspect every product on the shelf as if he were browsing in a library. Where the housewife has to return home as soon as possible to her baby or the working woman has to make quick purchases during her off hours, she is apt to be confused by similar labels even if they do have minute differences. The male shopper is worse as he usually does not bother about such distinctions.

The question is not whether the two articles are distinguishable by their label when set side by side but whether the general confusion made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely result in his confounding it with the original. 11 As observed in several cases, the general impression of the ordinary purchaser, buying under the normally prevalent conditions in trade and giving the attention such purchasers usually give in buying that class of goods is the touchstone. It has been held that in making purchases, the consumer must depend upon his recollection of the appearance of the product which he intends to purchase. 13 The buyer having in mind the mark/label of the respondent must rely upon his memory of the petitioner's mark. 14 Unlike the judge who has ample time to minutely examine the labels in question in the comfort of his sala, the ordinary shopper does not enjoy the same opportunity. A number of courts have held that to determine whether a trademark has been infringed, we must consider the mark as a whole and not as dissected. If the buyer is deceived, it is attributable to the marks as a totality, not usually to any part of it. 15 The court therefore should be guided by its first impression, 16 for a buyer acts quickly and is governed by a casual glance, the value of which may be dissipated as soon as the court assumes to analyze carefully the respective features of the mark. 17 It has also been held that it is not the function of the court in cases of infringement and unfair competition to educate purchasers but rather to take their carelessness for granted, and to be ever conscious of the fact that marks need not be identical. A confusing similarity will justify the intervention of equity. 18 The judge must also be aware of the fact that usually a defendant in cases of infringement does not normally copy but makes only colorable changes. 19 Well has it been said that the most successful form of copying is to employ enough points of similarity to confuse the public with enough points of difference to confuse the courts. 20 THERE IS A COLORABLE IMITATION. At that, even if the labels were analyzed together it is not difficult to see that the Sunshine label is a colorable imitation of the Del Monte trademark. The predominant colors used in the Del Monte label are green and red-orange, the same with Sunshine. The word "catsup" in both bottles is printed in white and the style of the print/letter is the same. Although the logo of Sunshine is not a tomato, the figure nevertheless approximates that of a tomato. As previously stated, the person who infringes a trade mark does not normally copy out but only makes colorable changes, employing enough points of similarity to confuse the public with enough points of differences to

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 confuse the courts. What is undeniable is the fact that when a manufacturer prepares to package his product, he has before him a boundless choice of words, phrases, colors and symbols sufficient to distinguish his product from the others. When as in this case, Sunshine chose, without a reasonable explanation, to use the same colors and letters as those used by Del Monte though the field of its selection was so broad, the inevitable conclusion is that it was done deliberately to deceive. RATIO FOR THE RULING: It has been aptly observed that the ultimate ratio in cases of grave doubt is the rule that as between a newcomer who by the confusion has nothing to lose and everything to gain and one who by honest dealing has already achieved favor with the public, any doubt should be resolved against the newcomer inasmuch as the field from which he can select a desirable trademark to indicate the origin of his product is obviously a large one. SSMI NOT GUILTY OF INFRINGEMENT AS TO ITS USE OF DEL MONTE’S CATSUP BOTTLE The reason is that the configuration of the said bottle was merely registered in the Supplemental Register. It can be inferred from the foregoing that although Del Monte has actual use of the bottle's configuration, the petitioners cannot claim exclusive use thereof because it has not been registered in the Principal Register. However, we find that Sunshine, despite the many choices available to it and notwithstanding that the caution "Del Monte Corporation, Not to be Refilled" was embossed on the bottle, still opted to use the petitioners' bottle to market a product which Philpack also produces. This clearly shows the private respondent's bad faith and its intention to capitalize on the latter's reputation and goodwill and pass off its own product as that of Del Monte. Anent the assumption that the Bureau of Patent had considered other existing patents, it is reiterated that since registration was only in the Supplemental Register, this did not vest the registrant with the exclusive right to use the label nor did it give rise to the presumption of the validity of the registration. SUNSHINE FRUIT CATSUP LOGO INFRINGED DEL MONTE CATSUP LOGO. As Sunshine's label is an infringement of the Del Monte's trademark, law and equity call for the cancellation of the private respondent's registration and withdrawal of all its products bearing the questioned label from the market. With regard to the use of Del Monte's bottle, the same constitutes unfair competition; hence, the respondent should be permanently enjoined from the use of such bottles. G.R. No. L-29971 August 31, 1982 ESSO STANDARD EASTERN, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS ** and UNITED CIGARETTE CORPORATION, respondents.

FACTS: Petitioner, Esso Standard Eastern, Inc. is an international company engaged in the manufacturing of fossil fuels, oils, lubricants and its by-products. Respondent, United Cigarette Corp. on the other hand is a domestic corporation engaged in the manufacturing of cigarettes. It uses as its trademark the mark “ESSO”, which is the same as the corporate name of petitioner. Petitioner filed a trade infringement case against respondent. The CFI ruled in favor of petitioner. Respondent won at the CA on appeal. The case was then raised to the SC. PETITIONER’S ARGUMENT: Petitioner alleged that it had been for many years engaged in the sale of petroleum products and its trademark ESSO had acquired a considerable goodwill to such an extent that the buying public had always taken the trademark ESSO as equivalent to high quality petroleum products. Petitioner asserted that the continued use by private respondent of the same trademark ESSO on its cigarettes was being carried out for the purpose of deceiving the public as to its quality and origin to the detriment and disadvantage of its own products. ISSUE: WON there was an infringement of trademark. (NO.) RULING: ACCORDINGLY, the petition is dismissed and the decision of respondent Court of Appeals is hereby affirmed. HELD: It is undisputed that the goods on which petitioner uses the trademark ESSO, petroleum products, and the product of respondent, cigarettes, are non-competing. But as to whether trademark infringement exists depends for the most part upon whether or not the goods are so related that the public may be, or is actually, deceived and misled that they came from the same maker or manufacturer. For non-competing goods may be those which, though they are not in actual competition, are so related to each other that it might reasonably be assumed that they originate from one manufacturer. Non-competing goods may also be those which, being entirely unrelated, could not reasonably be assumed to have a common source. In the former case of related goods, confusion of business could arise out of the use of similar marks; in the latter case of non-related goods, it could not. The vast majority of courts today follow the modern theory or concept of "related goods" which the Court has likewise adopted and uniformly recognized and applied. Goods are related when they belong to the same

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 class or have the same descriptive properties; when they possess the same physical attributes or essential characteristics with reference to their form, composition, texture or quality. They may also be related because they serve the same purpose or are sold in grocery stores. 11 Thus, biscuits were held related to milk because they are both food products. Soap and perfume, lipstick and nail polish are similarly related because they are common household items nowadays. The trademark "Ang Tibay" for shoes and slippers was disallowed to be used for shirts and pants because they belong to the same general class of goods. Soap and pomade although noncompetitive, were held to be similar or to belong to the same class, since both are toilet articles. But no confusion or deception can possibly result or arise when the name "Wellington" which is the trademark for shirts, pants, drawers and other articles of wear for men, women and children is used as a name of a department store. In the situation before us, the goods are obviously different from each other with "absolutely no iota of similitude" as stressed in respondent court's judgment. They are so foreign to each other as to make it unlikely that purchasers would think that petitioner is the manufacturer of respondent's goods. The mere fact that one person has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others on unrelated articles of a different kind. Petitioner uses the trademark ESSO and holds certificate of registration of the trademark for petroleum products, including aviation gasoline, grease, cigarette lighter fluid and other various products such as plastics, chemicals, synthetics, gasoline solvents, kerosene, automotive and industrial fuel, bunker fuel, lubricating oil, fertilizers, gas, alcohol, insecticides and the ESSO Gasul" burner, while respondent's business is solely for the manufacture and sale of the unrelated product of cigarettes. The public knows too well that petitioner deals solely with petroleum products that there is no possibility that cigarettes with ESSO brand will be associated with whatever good name petitioner's ESSO trademark may have generated. Although petitioner's products are numerous, they are of the same class or line of merchandise which are non-competing with respondent's product of cigarettes, which as pointed out in the appealed judgment is beyond petitioner's "zone of potential or natural and logical expansion". When a trademark is used by a party for a product in which the other party does not deal, the use of the same trademark on the latter's product cannot be validly objected to. Another factor that shows that the goods involved are non-competitive and non-related is the appellate court's finding that they flow through different channels of trade, thus: "The products of each party move along and are disposed through different channels of distribution. The (petitioner's) products are distributed principally through gasoline service and lubrication

stations, automotive shops and hardware stores. On the other hand, the (respondent's) cigarettes are sold in sarisari stores, grocery stores, and other small distributor outlets. (Respondent's) cigarettes are even peddled in the streets while (petitioner's) 'gasul' burners are not. Finally, there is a marked distinction between oil and tobacco, as well as between petroleum and cigarettes. Evidently, in kind and nature the products of (respondent) and of (petitioner) are poles apart." Respondent court correctly ruled that considering the general appearances of each mark as a whole, the possibility of any confusion is unlikely. A comparison of the labels of the samples of the goods submitted by the parties shows a great many differences on the trademarks used. As pointed out by respondent court in its appealed decision, "(A) witness for the plaintiff, Mr. Buhay, admitted that the color of the "ESSO" used by the plaintiff for the oval design where the blue word ESSO is contained is the distinct and unique kind of blue. In his answer to the trial court's question, Mr. Buhay informed the court that the plaintiff never used its trademark on any product where the combination of colors is similar to the label of the Esso cigarettes," and "Another witness for the plaintiff, Mr. Tengco, testified that generally, the plaintiff's trademark comes all in either red, white, blue or any combination of the three colors. It is to be pointed out that not even a shade of these colors appears on the trademark of the appellant's cigarette. The only color that the appellant uses in its trademark is green."

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G.R. No. 108946 January 28, 1999 FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., petitioners, vs. HONORABLE FRANKLIN DRILON, GABRIEL ZOSA, WILLIAM ESPOSO, FELIPE MEDINA, JR., and CASEY FRANCISCO, respondents. FACTS: BJ Productions, Inc. is the holder/grantee of the certificate of copyright of Rhoda and Me, a dating game show. BJPI submitted to the National Library an addendum to its certificate of copyright specifying the show's format and style of presentation. Francisco Joaquin, Jr., President of BJPI, saw on RPN Channel 9 an episode of It's a Date, produced by IXL Productions, Inc. Joaquin, Jr. wrote a letter to Gabriel M. Zosa, President and General manager of IXLPI, informing Zosa that BJPI had a copyright to Rhoda and Me and demanding that IXLPI discontinue airing It's a Date. Zosa, in a letter, apologized to Joaquin, Jr. and requested a meeting to discuss a possible settlement. IXLPI, however, continued airing It's a Date, prompting Joaquin, Jr. to send a second letter reiterating his demand and warned that, if IXLPI does not comply, he would endorse the matter to his attorneys for proper legal action. Zosa sought to register IXLPI's copyright to It's a Date for which it was issued by the National Library a certificate of copyright. Joaquin, Jr., et. al. filed an information for violation of P.D. No. 49 against Zosa and certain officers of RPN Channel APODERADO• DAYO• JACELA • MARTINEZ • MASONGSONG • SUPNET• VALLEJO • VELOSO

LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 9, namely William Esposo, Felipe Medina, and Casey Francisco, before the Regional Trial Court. Zosa sought a review of the resolution of the Assistant City Prosecutor before the Department of Justice. Secretary of Justice Franklin M. Drilon reversed the ACP's findings and directed him to move for the dismissal of the case against Zosa, et. al. ISSUE: WON there was copyright infringement. HELD: NO. The format of a show is not copyrightable. Under Section 172 of R.A. No. 8293 (Intellectual Property Code of the Philippines), the following are the classes of work entitled to copyright protection: Sec. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following classes of works: (A) Books, including composite and cyclopedic works, manuscripts, directories, and gazetteers: (B) Periodicals, including pamphlets and newspapers; (C) Lectures, sermons, addresses, dissertations prepared for oral delivery; (D) Letters; (E) Dramatic or dramatico-musical compositions; choreographic works and entertainments in dumb shows, the acting form of which is fixed in writing or otherwise; (F) Musical compositions, with or without words; (G) Works of drawing, painting, architecture, sculpture, engraving, lithography, and other works of art; models or designs for works of art; (H) Reproductions of a work of art; (I) Original ornamental designs or models for articles of manufacture, whether or not patentable, and other works of applied art; (J) Maps, plans, sketches, and charts; (K) Drawings or plastic works of a scientific or technical character; (I) Photographic works and works produced by a process analogous to photography lantern slides; (M) Cinematographic works and works produced by a process analogous to cinematography or any process for making audio-visual recordings; (N) Computer programs; (O) Prints, pictorial illustrations advertising copies, labels tags, and box wraps; (P) Dramatizations, translations, adaptations, abridgements, arrangements and other alterations of literary, musical or artistic works or of works of the Philippine government as herein defined, which shall be protected as provided in Section 8 of this Decree. (Q) Collections of literary, scholarly, or artistic works or of works referred to in Section 9 of this Decree which

by reason of the selection and arrangement of their contents constitute intellectual creations, the same to be protected as such in accordance with Section 8 of this Decree. (R) Other literary, scholarly, scientific and artistic works. The format or mechanics of a television show is not included in the list of protected works. For this reason, the protection afforded by the law cannot be extended to cover them. The enumeration refers to finished works and not to concepts. The copyright does not extend to an idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work. Section 175 of R.A. No. 8293 provides: Sec. 175. Unprotected Subject Matter. — Notwithstanding the provisions of Sections 172 and 173, no protection shall extend, under this law, to any idea, procedure, system, method or operation, concept, principle, discovery or mere data as such, even if they are expressed, explained, illustrated or embodied in a work; news of the day and other miscellaneous facts having the character of mere items of press information; or any official text of a legislative, administrative or legal nature, as well as any official translation thereof. BJPI's copyright covers audio-visual recordings of each episode of Rhoda and Me, the same falling within: Cinematographic works and works produced by a process analogous to cinematography or any process for making audio-visual recordings; The copyright does not extend to the general concept or format of its dating game show. There should be the opportunity to compare the videotapes of the two shows. Mere description by words of the general format of the two dating game shows is insufficient; the presentation of the master videotape in evidence is indispensable to the determination of the existence of probable cause. ADDITIONAL (For recitation purposes): As to the opinion of the Secretary of Justice: SECRETARY OF JUSTICE’s OPINION: The essence of copyright infringement is the copying, in whole or in part, of copyrightable materials. Apart from the manner in which it is actually expressed, however, the idea of a dating game show is a non-copyrightable material. Ideas, concepts, formats, or schemes in their abstract form clearly do not fall within the class of works or materials susceptible of copyright registration. PETITIONERS’ STAND: The determination of the

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 question whether the format or mechanics of a show is entitled to copyright protection is for the court, and not the Secretary of Justice, to make. SC’s STAND: It is indeed true that the question whether the format or mechanics of petitioners television show is entitled to copyright protection is a legal question for the court to make. This does not, however, preclude the Secretary of Justice from making a preliminary determination of this question in resolving whether there is probable cause for filing the case in court. As to the presentation of the master tape: RESPONDENTS’ STAND: Petitioners failed to establish the existence of probable cause due to their failure to present the copyrighted master videotape of Rhoda and Me. BJPI's copyright covers only a specific episode of Rhoda and Me. Formats or concepts of dating game shows are not covered by copyright protection. PETITIONERS’ STAND: The parties presented sufficient evidence which clearly establish "linkage between the copyright show "Rhoda and Me" and the infringing TV show "It's a Date." The format of Rhoda and Me is a product of ingenuity and skill and is thus entitled to copyright protection. The presentation of a point-by-point comparison of the formats of the two shows clearly demonstrates the nexus between the shows and hence establishes the existence of probable cause for copyright infringement. They did not have to produce the master tape. ACP’s STAND: The substance of the television productions is that two matches are made between a male and a female, both single, and the two couples are treated to a night or two of dining and/or dancing at the expense of the show. The major concepts of both shows is the same. Any difference appear mere variations of the major concepts. That there is an infringement on the copyright of the show "RHODA AND ME" both in content and in the execution of the video presentation are established because respondent's "IT'S A DATE" is practically an exact copy of complainant's "RHODA AND ME" because of substantial similarities as follows, to wit: RHODA AND ME Set 1 a. Unmarried participant of one gender (searcher) appears on one side of a divider, while three (3) unmarried participants of the other gender are on the other side of the divider. This arrangement is done to ensure that the searcher does not see the searchees. b. Searcher asks a question to be answered by each of the searchees. The purpose is to determine who among the searchees is the most

"IT'S A DATE" Set 1 a. same

b. same

compatible with the searcher. c. Searcher speculates on the c. same match to the searchee. d. Selection is made by the use d. Selection is based on of compute (sic) methods, or by the the way questions are answered, answer of the or similar methods. Searchees. Set 2 Set 2 Same as above with the genders Same of the searcher and searchees interchanged. SECRETARY OF JUSTICE’s OPINION: A television show includes more than mere words can describe because it involves a whole spectrum of visuals and effects, video and audio, such that no similarity or dissimilarity may be found by merely describing the general copyright/format of both dating game shows. SC’s STAND: Refer to the HELD portion. G.R. No. 131522 July 19, 1999 PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners, vs. FELICIDAD C. ROBLES and GOODWILL TRADING CO., INC., respondents. FACTS: Petitioners are authors and copyright owners of duly issued certificates of copyright registration covering their published works, produced through their combined resources and efforts, entitled COLLEGE ENGLISH FOR TODAY (CET), Books 1 and 2, and WORKBOOK FOR COLLEGE FRESHMAN ENGLISH, Series 1. Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and distributor/seller of another published work entitled "DEVELOPING ENGLISH PROFICIENCY" (DEP), Books 1 and 2 (1985 edition) which book was covered by copyrights issued to them. In the course of revising their published works, petitioners scouted and looked around various bookstores to check on other textbooks dealing with the same subject matter. By chance they came upon the book of respondent Robles and upon perusal of said book they were surprised to see that the book was strikingly similar to the contents, scheme of presentation, illustrations and illustrative examples in their own book, CET. Petitioners also found that several pages of the respondent's book are similar, if not all together a copy of petitioners' book, which is a case of plagiarism and copyright infringement. Thus, they made demands for damages against respondents and also demanded that they cease and desist from further selling and distributing

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 to the general public the infringed copies of respondent Robles' works. However, respondents ignored the demands, hence, petitioners filed a complaint for "Infringement and/or unfair competition with damages" against private respondents. PETITIONER'S CONTENTION: The plagiarism, incorporation and reproduction of particular portions of the book CET in the book DEP, without the authority or consent of petitioners, and the misrepresentations of respondent Robles that the same was her original work and concept adversely affected and substantially diminished the sale of the petitioners' book and caused them actual damages by way of unrealized income. RESPONDENT'S CONTENTION: Respondent stressed that (1) the book DEP is the product of her independent researches, studies and experiences, and was not a copy of any existing valid copyrighted book; (2) DEP followed the scope and sequence or syllabus which are common to all English grammar writers as recommended by the Association of Philippine Colleges of Arts and Sciences (APCAS), so any similarity between the respondents book and that of the petitioners was due to the orientation of the authors to both works and standards and syllabus; and (3) the similarities may be due to the authors' exercise of the "right to fair use of copyrigthed materials, as guides." RTC and CA RULING: Both the trial court and CA dismissed the complaint stating that the similarity of the allegedly infringed work to the author's or proprietor's copyrighted work does not of itself establish copyright infringement, especially if the similarity results from the fact that both works deal with the same subject or have the same common source, as in this case. ISSUE: Whether or not, despite the apparent textual, thematic and sequential similarity between DEP and CET, respondents committed no copyright infringement. (RESPONDENTS COMMITTED COPYRIGHT INFRINGEMENT) HELD: WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals in CA-G. R. CV No. 44053 are SET ASIDE. The case is ordered remanded to the trial court for further proceedings to receive evidence of the parties to ascertain the damages caused and sustained by petitioners and to render decision in accordance with the evidence submitted to it. RATIO: The complaint for copyright infringement was filed at the time that Presidential Decree No. 49 was in force. At present, all laws dealing with the protection of intellectual property rights have been consolidated and as the law now stands, the protection of copyrights is governed by Republic Act No. 8293. Notwithstanding the change in the law, the same principles are reiterated in the new law under Section 177. It

provides for the copy or economic rights of an owner of a copyright as follows: Sec. 177. Copy or Economic rights. — Subject to the provisions of chapter VIII, copyright or economic rights shall consist of the exclusive right to carry out, authorize or prevent the following acts: 177.1 Reproduction of the work or substanlial portion of the work; 177.2 Dramatization, translation, adaptation, abridgement, arrangement or other transformation of the work; 177.3 The first public distribution of the original and each copy of the work by sale or other forms of transfer of ownership; 177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a sound recording, a computer program, a compilation of data and other materials or a musical work in graphic form, irrespective of the ownership of the original or the copy which is the subject of the rental; (n) 177.5 Public display of the original or copy of the work; 177.6 Public performance of the work; and 177.7 Other communication to the public of the work 19 The law also provided for the limitations on copyright, thus: Sec. 184.1 Limitations on copyright. — Notwithstanding the provisions of Chapter V, the following acts shall not constitute infringement of copyright: (a) the recitation or performance of a work, once it has been lawfully made accessible to the public, if done privately and free of charge or if made strictly for a charitable or religious institution or society; [Sec. 10(1), P.D. No. 49] (b) The making of quotations from a published work if they are compatible with fair use and only to the extent justified for the purpose, including quotations from newspaper articles and

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 periodicals in the form of press summaries; Provided, that the source and the name of the author, if appearing on the work are mentioned; (Sec. 11 third par. P.D. 49) xxx xxx xxx (e) The inclusion of a work in a publication, broadcast, or other communication to the public, sound recording of film, if such inclusion is made by way of illustration for teaching purposes and is compatible with fair use:Provided, That the source and the name of the author, if appearing in the work is mentioned; 20 In the above quoted provisions, "work" has reference to literary and artistic creations and this includes books and other literary, scholarly and scientific works. 21 A perusal of the records yields several pages of the book DEP that are similar if not identical with the text of CET. On page 404 of petitioners' Book 1 of College English for Today, the authors wrote: Items in dates and addresses: He died on Monday, April 15, 1975. Miss Reyes lives in 214 Taft Avenue, Manila 22 On page 73 of respondents Book 1 Developing English Today, they wrote: He died on Monday, April 25, 1975. Miss Reyes address is 214 Taft Avenue Manila 23 On Page 250 of CET, there is this example on parallelism or repetition of sentence structures, thus: The proposition is peace. Not peace through the medium of war; not peace to be hunted through the labyrinth of intricate and endless negotiations; not peace to arise out of universal discord, fomented from principle, in all parts of the empire; not peace to depend on the juridical determination of perplexing questions, or the precise marking of the boundary of a complex government. It is simple peace; sought in its natural course, and in its ordinary haunts. It is peace sought in the spirit of peace, and laid in principles purely pacific. — Edmund Burke, "Speech on Criticism." 24 On page 100 of the book DEP 25, also in the topic of parallel structure and repetition, the same example is foundin toto. The only difference is that petitioners acknowledged the author Edmund Burke, and respondents did not. In several other pages 26 the treatment and manner of presentation of the topics of DEP are similar if not a rehash of that contained in CET.

We believe that respondent Robles' act of lifting from the book of petitioners substantial portions of discussions and examples, and her failure to acknowledge the same in her book is an infringement of petitioners' copyrights. When is there a substantial reproduction of a book? It does not necessarily require that the entire copyrighted work, or even a large portion of it, be copied. If so much is taken that the value of the original work is substantially diminished, there is an infringement of copyright and to an injurious extent, the work is appropriated. 27 In determining the question of infringement, the amount of matter copied from the copyrighted work is an important consideration. To constitute infringement, it is not necessary that the whole or even a large portion of the work shall have been copied. If so much is taken that the value of the original is sensibly diminished, or the labors of the original author are substantially and to an injurious extent appropriated by another, that is sufficient in point of law to constitute piracy. 28 The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its gravity by an appropriate understanding thereof. Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the doing by any person, without the consent of the owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright.29 The respondents' claim that the copied portions of the book CET are also found in foreign books and other grammar books, and that the similarity between her style and that of petitioners can not be avoided since they come from the same background and orientation may be true. However, in this jurisdiction under Sec 184 of Republic Act 8293 it is provided that: Limitations on Copyright. Notwithstanding the provisions of Chapter V, the following shall not constitute infringement of copyright: xxx xxx xxx (c) The making of quotations from a published work if they are compatible with fair use and only to the extent justified for the purpose, including quotations from newspaper articles and periodicals in the form of press summaries: Provided, That the source and the name of the author, if appearing on the work, are mentioned. A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases, did not know whether or not he was infringing any copyright; he at least

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 knew that what he was copying was not his, and he copied at his peril. 30 The next question to resolve is to what extent can copying be injurious to the author of the book being copied. Is it enough that there are similarities in some sections of the books or large segments of the books are the same? In the case at bar, there is no question that petitioners presented several pages of the books CET and DEP that more or less had the same contents. It may be correct that the books being grammar books may contain materials similar as to some technical contents with other grammar books, such as the segment about the "Author Card". However, the numerous pages that the petitioners presented showing similarity in the style and the manner the books were presented and the identical examples can not pass as similarities merely because of technical consideration. The respondents claim that their similarity in style can be attributed to the fact that both of them were exposed to the APCAS syllabus and their respective academic experience, teaching approach and methodology are almost identical because they were of the same background. However, we believe that even if petitioners and respondent Robles were of the same background in terms of teaching experience and orientation, it is not an excuse for them to be identical even in examples contained in their books. The similarities in examples and material contents are so obviously present in this case. How can similar/identical examples not be considered as a mark of copying? We consider as an indicia of guilt or wrongdoing the act of respondent Robles of pulling out from Goodwill bookstores the book DEP upon learning of petitioners' complaint while pharisaically denying petitioners' demand. It was further noted that when the book DEP was re-issued as a revised version, all the pages cited by petitioners to contain portion of their book College English for Today were eliminated. In cases of infringement, copying alone is not what is prohibited. The copying must produce an "injurious effect". Here, the injury consists in that respondent Robles lifted from petitioners' book materials that were the result of the latter's research work and compilation and misrepresented them as her own. She circulated the book DEP for commercial use did not acknowledged petitioners as her source. Hence, there is a clear case of appropriation of copyrighted work for her benefit that respondent Robles committed. Petitioners' work as authors is the product of their long and assiduous research and for another to represent it as her own is injury enough. In copyrighting books the purpose is to give protection to the intellectual product of an author. This is precisely what the law on copyright protected, under Section 184.1 (b). Quotations from a published work if they are compatible with fair use and only to the extent justified by the purpose, including quotations from newspaper articles and periodicals in the form of press summaries are allowed

provided that the source and the name of the author, if appearing on the work, are mentioned. In the case at bar, the least that respondent Robles could have done was to acknowledge petitioners Habana et.al. as the source of the portions of DEP. The final product of an author's toil is her book. To allow another to copy the book without appropriate acknowledgment is injury enough. G.R. No. 148222 August 15, 2003 PEARL & DEAN (PHIL.), INCORPORATED, Petitioner, vs. SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, Respondents. FACTS: Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back lights. PD obtained a copyright ever these illuminated display units. On account of the advertising trademark “Poster Ads” it obtained a Trademark Registration. PD contracted with Shoemart Inc. (SMI) for the lease and installation of these light boxes. The first agreement was that the latter shall be installed in SM North Edsa, but because the latter was still under construction, SMI offered SM Makati and SM Cubao as alternative. When the contracts were submitted towards SMI, only the contract of SM Makati was returned signed. Later on, SMI unilaterally rescinded its contract with PD as regards the installation and lease of the light boxes over its SM Makati for an alleged non-performance of its terms. Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a staggered basis and installed at SM Megamall and SM City. Upon learning that similar light boxes were also installed in SM Cubao, and the same products were also being sold by the respondent in this case, the North Edsa Marketing Inc. (NEMI) it demanded that the two companies to cease using the subject light boxes and discontinue the use of the trademark “poster Ads.” It asked for a 20 million pesos compensatory damages in effect. SMI suspended the leasing of the light bulb and NEMI took down the advertisement “Poster Ads.” However, in their failure to

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 fulfill all the demands, PD brought up a case for copyright, trademark infringement and unfair competition. PD contention- it infringed its trademark “Poster Ads” and violated its copyright over the light bulbs. SMI defense - it independently developed its poster panels using commonly known techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word "Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It alleged that Pearl and Dean had no cause of action against it and that the suit was purely intended to malign SMI’s good name. NEMI’s contention – it denied having manufactured, installed or used any advertising display units, nor having engaged in the business of advertising. RTC decision: Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49, as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as amended. Court of Appeals – REVERSED THE DECISION Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable class "O" work, we have to agree with SMI when it posited that what was copyrighted were the technical drawings only, and not the light boxes themselves, ISSUE: 1. Whether or not there is a copyright, trademark, patent infringement, or unfair competition (NONE ALL). 2. If the engineering or technical drawings of an advertising display unit (light box) are granted copyright protection (copyright certificate of registration) by the National Library, is the light box depicted in such engineering drawings ipso facto also protected by such copyright (SC Issue)? 3. or should the light box be registered separately and protected by a patent issued by the Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office) — in addition to the copyright of the engineering drawings (SC Issue)? NOTE: THE MAIN ISSUE IS: Whether or not the right over the technical drawing of the light bulb made by the PD to which it has copyright is extendible to the ACTUAL PRODUCT when the drawing was fabricated or manufactured. NO! HELD: COPYRIGHT INFRINGEMENT: Obviously, petitioner’s position was premised on its belief that its copyright over the engineering drawings extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there was

no copyright infringement, the Court of Appeals held that the copyright was limited to the drawings alone and not to the light box itself. We agree with the appellate court. First, petitioner’s application for a copyright certificate — as well as Copyright Certificate No. PD-R2588 issued by the National Library on January 20, 1981 — clearly stated that it was for a class "O" work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then prevailing. Said Section 2 expressly enumerated the works subject to copyright: SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following works: (O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps; Although petitioner’s copyright certificate was entitled "Advertising Display Units" (which depicted the box-type electrical devices), its claim of copyright infringement cannot be sustained. Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to the subjects and by the persons, and on terms and conditions specified in the statute.7 Accordingly, it can cover only the works falling within the statutory enumeration or description. P & D secured its copyright under the classification class "O" work. This being so, petitioner’s copyright protection extended only to the technical drawings and not to the light box itself because the latter was not at all in the category of "prints, pictorial illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same could have referred only to the technical drawings within the category of "pictorial illustrations." It could not have possibly stretched out to include the underlying light box. The strict application9 of the law’s enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its copyright certificate was entitled "Advertising Display Units." What the law does not include, it excludes, and for the good reason: the light box was not a literary or artistic piece which could be copyrighted under the copyright law. And no less clearly, neither could the lack of statutory authority to make the light box copyrightable be remedied by the simplistic act of entitling the copyright certificate issued by the National Library as "Advertising Display Units." In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without license from P & D, then no doubt they would have been guilty of copyright infringement. But this was not the case. SMI’s and NEMI’s acts complained of by P & D were to have units similar or identical to the light box illustrated in the technical

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 drawings manufactured by Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this an infringement of petitioner’s copyright over the technical drawings? We do not think so. PATENT INFRINGMENT: This brings us to the next point: if, despite its manufacture and commercial use of the light boxes without license from petitioner, private respondents cannot be held legally liable for infringement of P & D’s copyright over its technical drawings of the said light boxes, should they be liable instead for infringement of patent? We do not think so either. For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could have protected its invention, if in fact it really was. And because it had no patent, petitioner could not legally prevent anyone from manufacturing or commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we held that "there can be no infringement of a patent until a patent has been issued, since whatever right one has to the invention covered by the patent arises alone from the grant of patent. x x x (A)n inventor has no common law right to a monopoly of his invention. He has the right to make use of and vend his invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of making, selling or using the invention.13 On the assumption that petitioner’s advertising units were patentable inventions, petitioner revealed them fully to the public by submitting the engineering drawings thereof to the National Library. To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies into the public domain through disclosure.14 Ideas, once disclosed to the public without the protection of a valid patent, are subject to appropriation without significant restraint. On one side of the coin is the public which will benefit from new ideas; on the other are the inventors who must be protected. As held in Bauer & Cie vs. O’Donnel,16 "The act secured to the inventor the exclusive right to make use, and vend the thing patented, and consequently to prevent others from exercising like privileges without the consent of the patentee. It was passed for the purpose of encouraging useful invention and promoting new and useful inventions by the protection and stimulation given to inventive genius, and was intended to secure to the public, after the lapse of the exclusive privileges granted the benefit of such inventions and improvements." TRADEMARK INFRINGEMENT: Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court,23 where we, invoking Section 20 of the old Trademark Law, ruled that "the certificate of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to use its own symbol only to those goods

specified in the certificate, subject to any conditions and limitations specified in the certificate x x x. One who has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of a different description."24 Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals. UNFAIR COMPETITION: By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or tradename may, by long and exclusive use by a business (such that the name or phrase becomes associated with the business or product in the mind of the purchasing public), be entitled to protection against unfair competition.27 In this case, there was no evidence that P & D’s use of "Poster Ads" was distinctive or well-known. As noted by the Court of Appeals, petitioner’s expert witnesses himself had testified that " ‘Poster Ads’ was too generic a name. So it was difficult to identify it with any company, honestly speaking."28 This crucial admission by its own expert witness that "Poster Ads" could not be associated with P & D showed that, in the mind of the public, the goods and services carrying the trademark "Poster Ads" could not be distinguished from the goods and services of other entities. This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic and incapable of being used as a trademark because it was used in the field of poster advertising, the very business engaged in by petitioner. "Secondary meaning" means that a word or phrase originally incapable of exclusive appropriation with reference to an article in the market (because it is geographically or otherwise descriptive) might nevertheless have been used for so long and so exclusively by one producer with reference to his article that, in the trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his property.29 The admission by petitioner’s own expert witness that he himself could not associate "Poster Ads" with petitioner P & D because it was "too generic" definitely precluded the application of this exception. COPYRIGHT, TRADEMARK and PATENT differentiated: 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

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 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. WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is AFFIRMED in toto. 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. FACTS: Jessie G. Ching is 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." Petitioner Ching requested the NBI for assistance for the apprehension and prosecution of illegal manufacturers, producers and/or distributors of the works. After due investigation, the NBI filed applications for search warrants in the RTC of Manila against William Salinas, Sr., et al., herein respondents. It was alleged that the respondents reproduced and distributed the said models penalized under Sections 177.1 and 177.3 of Republic Act (R.A.) No. 8293. Respondents filed a motion to quash the search warrants. RESPONDENT’S AVERMENTS: 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. The models are not original, and as such are the proper subject of a patent, not copyright. The lower court quashed and set aside the warrant which the appellate court affirmed, hence, this petition for review on certiorari. PETITIONER’S ARGUMENT: The RTC committed a grave abuse of its discretion when it declared that his works are not copyrightable in the first place. He claims that R.A. No. 8293, otherwise known as the Intellectual Property Code of the Philippines, 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. 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. 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. 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. ISSUE: WON the Leaf Spring Eye Bushing for automobile use is considered a “work of art”, and is therefore registrable under the copyright law? (NO!) RULING: Petition DENIED for lack of merit. Assailed Decision and Resolution of the Court of Appeals are AFFIRMED. Search Warrant Nos. 01-2401 and 01-2402 issued on October 15, 2001 are ANNULLED AND SET ASIDE. Costs against the petitioner. HELD: The bushing and cushion are not works of art. They are utility models which may be the subject of a patent. The focus of copyright is the usefulness of the artistic design and not its marketability.—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. 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. While works of applied art, original intellectual, literary and

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 artistic works are copyrightable, useful articles and works of industrial design are not.—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. 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. 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.—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 and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated, 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.” G.R. No. 147043 June 21, 2005 NBI - MICROSOFT CORPORATION & LOTUS DEVELOPMENT CORP., petitioners, vs. JUDY C. HWANG, BENITO KEH & YVONNE K. CHUA/BELTRON COMPUTER PHILIPPINES INC., JONATHAN K. CHUA, EMILY K. CHUA, BENITO T. SANCHEZ, NANCY I. VELASCO, ALFONSO CHUA, ALBERTO CHUA, SOPHIA ONG, DEANNA CHUA/TAIWAN MACHINERY DISPLAY & TRADE CENTER, INC., and THE SECRETARY OF JUSTICE, respondents. FACTS: Petitioner Microsoft Corporation (“Microsoft”), a Delaware, United States corporation, owns the copyright and trademark to several computer software.[3] Respondents Benito Keh and Yvonne Keh are the President/Managing Director and General Manager, respectively, of respondent Beltron Computer Philippines, Inc. (“Beltron”), a domestic corporation. Microsoft and Beltron entered into a Licensing Agreement (“Agreement”). Under Section 2(a) of the Agreement, Microsoft authorized Beltron, for a fee, to: (i) xxx reproduce and install no more than one (1) copy of [Microsoft] software on each Customer System hard disk or Read Only Memory (“ROM”); [and] (ii) xxx distribute directly or indirectly and license copies of the Product (reproduced as per Section 2(a)(i) and/or acquired from Authorized Replicator or Authorized Distributor) in object code form to end users[.] xxxx[5]

The Agreement also authorized Microsoft and Beltron to terminate the contract if the other fails to comply with any of the Agreement’s provisions. Microsoft terminated the Agreement for Beltron’s non-payment of royalties.[6] Afterwards, Microsoft learned that respondents were illegally copying and selling Microsoft software. Consequently, Microsoft, through its Philippine agent,[7] hired the services of Pinkerton Consulting Services (“PCS”), a private investigative firm. Microsoft also sought the assistance of the National Bureau of Investigation (“NBI”).PCS employee John Benedic[8] Sacriz (“Sacriz”) and NBI agent Dominador Samiano, Jr. (“Samiano”), posing as representatives of a computer shop,[9] bought computer hardware (central processing unit (“CPU”) and computer monitor) and software (12 computer disks (“CDs”) in read-only memory (“ROM”) format) from respondents. The CPU contained pre-installed[10] Microsoft Windows 3.1 and MS-DOS software. The 12 CD-ROMs, encased in plastic containers with Microsoft packaging, also contained Microsoft software.[11] At least two of the CD-ROMs were “installers,” socalled because they contain several software (Microsoft only or both Microsoft and non-Microsoft).[12] Sacriz and Samiano were not given the Microsoft end-user license agreements, user’s manuals, registration cards or certificates of authenticity for the articles they purchased. The receipt issued to Sacriz and Samiano for the CPU and monitor bore the heading “T.M.T.C. (PHILS.) INC. BELTRON COMPUTER.”[13] The receipt for the 12 CD-ROMs did not indicate its source although the name “Gerlie” appears below the entry “delivered by.”[14] Based on the articles obtained from respondents, Microsoft and a certain Lotus Development Corporation (“Lotus Corporation”) charged respondents before the Department of Justice (“DOJ”) with copyright infringement under Section 5(A) in relation to Section 29 of Presidential Decree No. 49, as amended, (“PD 49”)[18] and with unfair competition under Article 189(1)[19] of the Revised Penal Code. In its Complaint (“I.S. No. 96-193”), which the NBI indorsed, Microsoft alleged that respondents illegally copied and sold Microsoft software.[20] Respondents denied the charges. Respondents Keh and Chua alleged that: (1) Microsoft’s real intention in filing the complaint was to pressure Beltron to pay its alleged unpaid royalties, thus Microsoft should have filed a collection suit instead of a criminal complaint; (2) TMTC bought the confiscated 59 boxes of MS-DOS CDs from a Microsoft dealer in Singapore; (3) respondents are not the “source” of the Microsoft Windows 3.1 software pre-installed in the CPU bought by Sacriz and Samiano, but only of the MSDOS software; (4) Microsoft’s alleged proof of purchase (receipt) for the 12 CD-ROMs is inconclusive because the receipt does not indicate its source; and (5) respondents Benito Keh, Jonathan K. Chua, Alfonso Chua, Alberto

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 Chua, Judy K. Chua Hwang, Sophia Ong, and Deanna Chua are stockholders of Beltron and TMTC in name only and thus cannot be held criminally liable.[21] In the Resolution of DOJ recommended the dismissal of Microsoft’s complaint for lack of merit and insufficiency of evidence. ISSUE: Whether the DOJ acted with grave abuse of discretion in not finding probable cause to charge respondents with copyright infringement and unfair competition. HELD: The DOJ Acted with Grave Abuse of Discretion in not Finding Probable Cause to Charge Respondents with Copyright Infringement and Unfair Competition PD 49 and Article 189(1) Section 5[39] of PD 49 (“Section 5”) enumerates the rights vested exclusively on the copyright owner. Contrary to the DOJ’s ruling, the gravamen of copyright infringement is not merely the unauthorized “manufacturing” of intellectual works but rather the unauthorized performance of any of the acts covered by Section 5. Hence, any person who performs any of the acts under Section 5 without obtaining the copyright owner’s prior consent renders himself civilly[40] and criminally[41] liable for copyright infringement. We held in Columbia Pictures, Inc. v. Court of Appeals:[42] Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the doing by any person, without the consent of the owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright. (Emphasis supplied) Significantly, under Section 5(A), a copyright owner is vested with the exclusive right to “copy, distribute, multiply, [and] sell” his intellectual works. On the other hand, the elements of unfair competition under Article 189(1)[43] of the Revised Penal Code are: (a) That the offender gives his goods the general appearance of the goods of another manufacturer or dealer; (b) That the general appearance is shown in the (1) goods themselves, or in the (2) wrapping of their packages, or in the (3) device or words therein, or in (4) any other feature of their appearance[;] (c) That the offender offers to sell or sells those goods or gives other persons a chance or opportunity to do the same with a like purpose[; and] (d) That there is actual intent to deceive the public or defraud a competitor.[44] The element of intent to deceive may be inferred from the similarity of the goods or their appearance.[45]

On the Sufficiency of Evidence to Support a Finding of Probable Cause Against Respondents First. Being the copyright and trademark owner of Microsoft software, Microsoft acted well within its rights in filing the complaint based on the incriminating evidence obtained from respondents. Hence, it was highly irregular for the DOJ to hold, based on the RTC Order of 19 July 1996, that Microsoft sought the issuance of Search Warrant Nos. 95-684 and 95-685, and by inference, the filing of the complaint under I.S. No. 96-193, merely to pressure Beltron to pay its overdue royalties to Microsoft. Significantly, in its Decision in CA-G.R. CV No. 54600 dated 29 November 2001, the Court of Appeals set aside the RTC Order of 19 July 1996. Respondents no longer contested that ruling which became final on 27 December 2001. Second. There is no basis for the DOJ to rule that Microsoft must await a prior “resolution from the proper court of (sic) whether or not the [Agreement] is still binding between the parties.” Beltron has not filed any suit to question Microsoft’s termination of the Agreement. Microsoft can neither be expected nor compelled to wait until Beltron decides to sue before Microsoft can seek remedies for violation of its intellectual property rights. Furthermore, some of the counterfeit CD-ROMs bought from respondents were “installer” CD-ROMs containing Microsoft software only or both Microsoft and non-Microsoft software. These articles are counterfeit per se because Microsoft does not (and could not have authorized anyone to) produce such CD-ROMs. The copying of the genuine Microsoft software to produce these fake CDROMs and their distribution are illegal even if the copier or distributor is a Microsoft licensee. As far as these installer CD-ROMs are concerned, the Agreement (and the alleged question on the validity of its termination) is immaterial to the determination of respondents’ liability for copyright infringement and unfair competition. Lastly, Section 10(b)[48] of the Agreement provides that Microsoft’s “rights and remedies” under the contract are “not xxx exclusive and are in addition to any other rights and remedies provided by law or [the] Agreement.” Thus, even if the Agreement still subsists, Microsoft is not precluded from seeking remedies under PD 49 and Article 189(1) of the Revised Penal Code to vindicate its rights. Third. The Court finds that the 12 CD-ROMs (“installer” and “non-installer”) and the CPU with pre-installed Microsoft software Sacriz and Samiano bought from respondents and the 2,831 Microsoft CD-ROMs seized from respondents suffice to support a finding of probable cause to indict respondents for copyright infringement under Section 5(A) in relation to Section 29 of PD 49 for unauthorized copying and selling of protected intellectual works. The installer CD-ROMs with Microsoft software, to repeat,

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 are counterfeit per se. On the other hand, the illegality of the “non-installer” CD-ROMs purchased from respondents and of the Microsoft software pre-installed in the CPU is shown by the absence of the standard features accompanying authentic Microsoft products, namely, the Microsoft end-user license agreements, user’s manuals, registration cards or certificates of authenticity. On the 2,831 Microsoft CD-ROMs[49] seized from respondents, respondent Beltron, the only respondent who was party to the Agreement, could not have reproduced them under the Agreement as the Solicitor General[50] and respondents contend. Beltron’s rights[51] under the Agreement were limited to: (1) the “reproduc[tion] and install[ation of] no more than one copy of [Microsoft] software on each Customer System hard disk or Read Only Memory (“ROM”)”; and (2) the “distribut[ion] xxx and licens[ing of] copies of the [Microsoft] Product [as reproduced above] and/or acquired from Authorized Replicator or Authorized Distributor) in object code form to end users.” The Agreement defines an authorized replicator as “a third party approved by [Microsoft] which may reproduce and manufacture [Microsoft] Product[s] for [Beltron] xxx.”[52] An authorized distributor, on the other hand, is a “third party approved by [Microsoft] from which [Beltron] may purchase MED[53] Product.”[54] Being a mere reproducer/installer of one Microsoft software copy on each customer’s hard disk or ROM, Beltron could only have acquired the hundreds of Microsoft CDROMs found in respondents’ possession from Microsoft distributors or replicators. However, respondents makes no such claim. What respondents contend is that these CD-ROMs were left to them for safekeeping. But neither is this claim tenable for lack of substantiation. Indeed, respondents Keh and Chua, the only respondents who filed counter-affidavits, did not make this claim in the DOJ. These circumstances give rise to the reasonable inference that respondents mass-produced the CD-ROMs in question without securing Microsoft’s prior authorization. The counterfeit “non-installer” CD-ROMs Sacriz and Samiano bought from respondents also suffice to support a finding of probable cause to indict respondents for unfair competition under Article 189(1) of the Revised Penal Code for passing off Microsoft products. From the pictures of the CD-ROMs’ packaging,[55] one cannot distinguish them from the packaging of CDROMs containing genuine Microsoft software. Such replication, coupled with the similarity of content of these fake CD-ROMs and the CD-ROMs with genuine Microsoft software, implies intent to deceive. Respondents’ contention that the 12 CD-ROMs Sacriz and Samiano purchased cannot be traced to them because the receipt for these articles does not indicate its source is unavailing. The receipt in question should be taken together with Microsoft’s claim that Sacriz and Samiano bought the CD-ROMs from respondents.[56] Together, these considerations point to re-

spondents as the vendor of the counterfeit CD-ROMs. Respondents do not give any reason why the Court should not give credence to Microsoft’s claim. For the same reason, the fact that the receipt for the CPU does not indicate “[s]oftware hard disk” does not mean that the CPU had no pre-installed Microsoft software. Respondents Keh and Chua admit in their counter-affidavit that respondents are the “source” of the pre-installed MS-DOS software. G.R. No. 132604 March 6, 2002 VENANCIO SAMBAR, doing business under the name and style of CVS Garment Enterprises, petitioner, vs. LEVI STRAUSS & CO., and LEVI STRAUSS (PHIL.), INC., respondents. FACTS: Private respondents demanded that CVS Garment Enterprises (CVSGE) desist from using their stitched arcuate design on the Europress jeans which CVSGE advertised in the Manila Bulletin. Counsel of CVSGE, replied that the arcuate design on the back pockets of Europress jeans was different from the design on the back pockets of Levi’s jeans. He further asserted that his client had a copyright on the design it was using. Private respondents filed a complaint against Sambar, doing business under the name and style of CVSGE. Private respondents amended their complaint to include CVSGIC. When private respondents learned the whereabouts of Sambar and CVSGE, the case was revived. Private respondents alleged in their complaint that Levi Strauss and Co. (LS&Co.), an internationally known clothing manufacturer, owns the arcuate design trademark which was registered under U.S. Trademark Registration, and in the Principal Register of trademarks with the Philippine Patent Office; that through a Trademark Technical Data and Technical Assistance Agreement with Levi Strauss (Phil.) Inc. (LSPI), LS&Co. granted LSPI a non-exclusive license to use the arcuate trademark in its manufacture and sale of Levi’s pants, jackets and shirts in the Philippines; that, LS&Co. also appointed LSPI as its agent and attorney-in-fact to protect its trademark in the Philippines; and that sometime, CVSGIC and Venancio Sambar, without the consent and authority of private respondents and in infringement and unfair competition, sold and advertised, and despite demands to cease and desist, continued to manufacture, sell and advertise denim pants under the brand name “Europress” with back pockets bearing a design similar to the arcuate trademark of private respondents, thereby causing confusion on the buying public, prejudicial to private respondents’ goodwill and property right. CVSGIC admitted it manufactured, sold and advertised and was still manufacturing and selling denim pants under

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 the brand name of “Europress”, bearing a back pocket design of two double arcs meeting in the middle. However, it denied that there was infringement or unfair competition because the display rooms of department stores where Levi’s and Europress jeans were sold, were distinctively segregated by billboards and other modes of advertisement. CVSGIC avers that the public would not be confused on the ownership of such known trademark as Levi’s, Jag, Europress, etc.. Also, CVSGIC claimed that it had its own original arcuate design, as evidenced by Copyright Registration, which was very different and distinct from Levi’s design. Petitioner Venancio Sambar denied he was connected with CVSGIC. He admitted that Copyright Registration was issued to him, but he denied using it. He also said he did not authorize anyone to use the copyrighted design Trial court rendered its decision ordering the Director of the National Library to cancel the Copyright Registration issued in the name of Venancio Sambar. CA decided in favor of private respondents. ISSUE: 1. Did petitioner infringe on private respondents’ arcuate design? (Yes) 2. Must we hold petitioner solidarily liable with CVS Garments Industrial Corporation? (Yes) 3. Are private respondents entitled to nominal, temperate and exemplary damages and cancellation of petitioner’s copyright? (Yes, except nominal) RULING: (1) On the first issue, petitioner claims that he did not infringe on private respondents’ arcuate design because there was no colorable imitation which deceived or confused the public. He cites Emerald Garment Manufacturing Corporation vs. Court of Appeals, G.R. No. 100098, 251 SCRA 600 (1995), as authority. He disagreed with the Court of Appeals that there were confusing similarities between Levi’s and Europress’ arcuate designs, despite the trial court’s observation of differences in them. Petitioner maintains that although the backpocket designs had similarities, the public was not confused because Levi’s jeans had other marks not found in Europress jeans. Further, he says Levi’s long history and popularity made its trademark easily identifiable by the public. In its comment, private respondents aver that the Court of Appeals did not err in ruling that there was infringement in this case. The backpocket design of Europress jeans, a double arc intersecting in the middle was the same as Levi’s’ mark, also a double arc intersecting at the center. Although the trial court found differences in the two designs, these differences were not noticeable. Further, private respondents said, infringement of trademark did not require exact similarity. Colorable imitation enough to cause confusion among the public, was sufficient for a trademark to be infringed. Private respondents explained that in a market research they conducted with 600 respondents, the result showed that the public was confused by

Europress trademark vis the Levi’s trademark. We find that the first issue raised by petitioner is factual. The basic rule is that factual questions are beyond the province of this Court in a petition for review. Although there are exceptions to this rule, this case is not one of them. Hence, we find no reason to disturb the findings of the Court of Appeals that Europress’ use of the arcuate design was an infringement of the Levi’s design. (2) On the second issue, petitioner claims that private respondents did not show that he was connected with CVSGIC, nor did they prove his specific acts of infringement to make him liable for damages. Again, this is a factual matter and factual findings of the trial court, concurred in by the Court of Appeals, are final and binding on this Court. Both the courts below found that petitioner had a copyright over Europress’ arcuate design and that he consented to the use of said design by CVSGIC. We are bound by this finding, especially in the absence of a showing that it was tainted with arbitrariness or palpable error. It must be stressed that it was immaterial whether or not petitioner was connected with CVSGIC. What is relevant is that petitioner had a copyright over the design and that he allowed the use of the same by CVSGIC. Petitioner also contends that the Court of Appeals erred when it said that he had the burden to prove that he was not connected with CVSGIC and that he did not authorize anyone to use his copyrighted design. According to petitioner, these are important elements of private respondents’ cause of action against him, hence, private respondents had the ultimate burden of proof. Pertinent is Section 1, Rule 131 of the Rules of Court which provides that the burden of proof is the duty of a party to prove the truth of his claim or defense, or any fact in issue by the amount of evidence required by law. In civil cases, the burden of proof may be on either the plaintiff or the defendant. It is on the latter, if in his answer he alleges an affirmative defense, which is not a denial of an essential ingredient in the plaintiff’s cause of action, but is one which, if established, will be a good defense – i.e., an “avoidance” of the claim, which prima facie, the plaintiff already has because of the defendant’s own admissions in the pleadings. Petitioner’s defense in this case was an affirmative defense. He did not deny that private respondents owned the arcuate trademark nor that CVSGIC used on its products a similar arcuate design. What he averred was that although he owned the copyright on the Europress arcuate design, he did not allow CVSGIC to use it. He also said he was not connected with CVSGIC. These were not alleged by private respondents in their pleadings, and petitioner therefore had the burden to prove these. (3) Petitioner insists that he had not infringed on the arcuate trademark, hence, there was no basis for nominal

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 and temperate damages. Also, an award of nominal damages precludes an award of temperate damages. He cites Ventanilla vs. Centeno, G.R. No. L-14333, 1 SCRA 215 (1961) on this. Thus, he contends, assuming arguendo that there was infringement, the Court of Appeals still erred in awarding both nominal and temperate damages. Petitioner likewise said that the grant of exemplary damages was inconsistent with the trial court’s finding that the design of Europress jeans was not similar to Levi’s design and that no pecuniary loss was suffered by respondents to entitle them to such damages. Lastly, petitioner maintains that as Europress’ arcuate design is not a copy of that of Levi’s, citing the trial court’s findings that although there are similarities, there are also differences in the two designs, cancellation of his copyright was not justified. On this matter, private respondents assert that the lower courts found that there was infringement and Levi’s was entitled to damages based on Sections 22 and 23 of RA No. 166 otherwise known as the Trade Mark Law, as amended, which was the law then governing. Said sections define infringement and prescribe the remedies therefor. Further, private respondents aver it was misleading for petitioner to claim that the trial court ruled that private respondents did not suffer pecuniary loss, suggesting that the award of damages was improper. According to the private respondents, the trial court did not make any such ruling. It simply stated that there was no evidence that Levi’s had suffered decline in its sales because of the use of the arcuate design by Europress jeans. They offer that while there may be no direct proof that they suffered a decline in sales, damages may still be measured based on a reasonable percentage of the gross sales of the respondents, pursuant to Section 23 of the Trademark law. Finally, regarding the cancellation of petitioner’s copyright, private respondents deny that the trial court ruled that the arcuate design of Europress jeans was not the same as Levi’s arcuate design jeans. On the contrary, the trial court expressly ruled that there was similarity. The cancellation of petitioner’s copyright was justified because petitioner’s copyright cannot prevail over respondents’ registration in the Principal Register of Bureau of Patents, Trademarks, and Technology Transfer. According to private respondents, the essence of copyright registration is originality and a copied design is inherently noncopyrightable. They insist that registration does not confer originality upon a copycat version of a prior design. From the foregoing discussion, it is clear that the matters raised by petitioner in relation to the last issue are purely factual, except the matter of nominal and temperate damages. Petitioner claims that damages are not due private respondents and his copyright should not be cancelled because he had not infringed on Levi’s trademark. Both the trial court and the Court of Appeals found there was infringement. Thus, the award of damages and cancellation of petitioner’s copyright are appropriate. Award of damages is clearly provided in Section

23, while cancellation of petitioner’s copyright finds basis on the fact that the design was a mere copy of that of private respondents’ trademark. To be entitled to copyright, the thing being copyrighted must be original, created by the author through his own skill, labor and judgment, without directly copying or evasively imitating the work of another. However, we agree with petitioner that it was error for the Court of Appeals to affirm the award of nominal damages combined with temperate damages by the Regional Trial Court of Makati. What respondents are entitled to is an award for temperate damages, not nominal damages. For although the exact amount of damage or loss cannot be determined with reasonable certainty, the fact that there was infringement means they suffered losses for which they are entitled to moderate damages. We find that the award of P50,000.00 as temperate damages fair and reasonable, considering the circumstances herein as well as the global coverage and reputation of private respondents Levi Strauss & Company and Levi Strauss (Phil.), Inc. G.R. No. L-36402 March 16, 1987 FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC., plaintiff-appellant, vs. BENJAMIN TAN, defendant-appellee. FACTS: Petitioner Filipino Society of Composers, Authors and Pubishers, Inc. (FSCAP) s the owner of certain musical compositions among which are the songs entitled: "Dahil Sa Iyo", "Sapagkat Ikaw Ay Akin," "Sapagkat Kami Ay Tao Lamang" and "The Nearness Of You." On the other hand, defendant-appellee is the operator of a restaurant known as "Alex Soda Foundation and Restaurant" where a combo with professional singers, hired to play and sing musical compositions to entertain and amuse customers therein, were playing and singing the above-mentioned compositions without any license or permission from the appellant to play or sing the same. Accordingly, appellant demanded from the appellee payment of the necessary license fee for the playing and singing of aforesaid compositions but the demand was ignored. Hence, a complaint for copyright infringement. ISSUE: Whether or not the playing and signing of musical compositions which have been copyrighted under the provisions of the Copyright Law (Act 3134) inside the establishment of the defendant-appellee constitute a public performance for profit within the meaning and contemplation of the Copyright Law of the Philippines. HELD: Appellant anchors its claim on Section 3(c) of the

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 Copyright Law which provides: SEC. 3. The proprietor of a copyright or his heirs or assigns shall have the exclusive right: xxx xxx xxx (c) To exhibit, perform, represent, produce, or reproduce the copyrighted work in any manner or by any method whatever for profit or otherwise; if not reproduced in copies for sale, to sell any manuscripts or any record whatsoever thereof; xxx xxx xxx The word "perform" as used in the Act has been applied to "One who plays a musical composition on a piano, thereby producing in the air sound waves which are heard as music ... and if the instrument he plays on is a piano plus a broadcasting apparatus, so that waves are thrown out, not only upon the air, but upon the other, then also he is performing the musical composition." (Buck, et al. v. Duncan, et al.; Same Jewell La Salle Realty Co., 32F. 2d. Series 367). In relation thereto, it has been held that "The playing of music in dine and dance establishment which was paid for by the public in purchases of food and drink constituted "performance for profit" within a Copyright Law." (Buck, et al. v. Russon No. 4489 25 F. Supp. 317). Thus, it has been explained that while it is possible in such establishments for the patrons to purchase their food and drinks and at the same time dance to the music of the orchestra, the music is furnished and used by the orchestra for the purpose of inducing the public to patronize the establishment and pay for the entertainment in the purchase of food and drinks. The defendant conducts his place of business for profit, and it is public; and the music is performed for profit (Ibid, p. 319). In a similar case, the Court ruled that "The Performance in a restaurant or hotel dining room, by persons employed by the proprietor, of a copyrighted musical composition, for the entertainment of patrons, without charge for admission to hear it, infringes the exclusive right of the owner of the copyright." (Herbert v. Shanley Co.; John Church Co. v. Hillard Hotel Co., et al., 242 U.S. 590-591). In delivering the opinion of the Court in said two cases, Justice Holmes elaborated thus: If the rights under the copyright are infringed only by a performance where money is taken at the door, they are very imperfectly protected. Performances not different in kind from those of the defendants could be given that might compete with and even destroy the success of the monopoly that the law intends the plaintiffs to have. It is enough to say that there is no need to construe the statute so narrowly. The defendants' performances are not eleemosynary. They are part of a total for which the public pays, and the fact that the price of the whole is attributed to a particular item which those present are expected to order is not important. It is true that the music is not the sole object, but neither is the food, which probably

could be got cheaper elsewhere. The object is a repast in surroundings that to people having limited power of conversation or disliking the rival noise, give a luxurious pleasure not to be had from eating a silent meal. If music did not pay, it would be given up. If it pays, it pays out of the public's pocket. Whether it pays or not, the purpose of employing it is profit, and that is enough. (Ibid., p. 594). In the case at bar, it is admitted that the patrons of the restaurant in question pay only for the food and drinks and apparently not for listening to the music. As found by the trial court, the music provided is for the purpose of entertaining and amusing the customers in order to make the establishment more attractive and desirable (Record on Appeal, p. 21). It will be noted that for the playing and singing the musical compositions involved, the combo was paid as independent contractors by the appellant (Record on Appeal, p. 24). It is therefore obvious that the expenses entailed thereby are added to the overhead of the restaurant which are either eventually charged in the price of the food and drinks or to the overall total of additional income produced by the bigger volume of business which the entertainment was programmed to attract. Consequently, it is beyond question that the playing and singing of the combo in defendant-appellee's restaurant constituted performance for profit contemplated by the Copyright Law. (Act 3134 amended by P.D. No. 49, as amended). Nevertheless, appellee cannot be said to have infringed upon the Copyright Law. Appellee's allegation that the composers of the contested musical compositions waived their right in favor of the general public when they allowed their intellectual creations to become property of the public domain before applying for the corresponding copyrights for the same (Brief for Defendant-Appellee, pp. 14-15) is correct. The Supreme Court has ruled that "Paragraph 33 of Patent Office Administrative Order No. 3 (as amended, dated September 18, 1947) entitled 'Rules of Practice in the Philippines Patent Office relating to the Registration of Copyright Claims' promulgated pursuant to Republic Act 165, provides among other things that an intellectual creation should be copyrighted thirty (30) days after its publication, if made in Manila, or within the (60) days if made elsewhere, failure of which renders such creation public property." (Santos v. McCullough Printing Company, 12 SCRA 324-325 [1964]. Indeed, if the general public has made use of the object sought to be copyrighted for thirty (30) days prior to the copyright application the law deems the object to have been donated to the public domain and the same can no longer be copyrighted. A careful study of the records reveals that the song "Dahil

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LAW IN INTELLECTUAL PROPERTY: CASE DIGESTS MON 7:30- 9:30 Sa Iyo" which was registered on April 20, 1956 (Brief for Appellant, p. 10) became popular in radios, juke boxes, etc. long before registration (TSN, May 28, 1968, pp. 3-5; 25) while the song "The Nearness Of You" registered on January 14, 1955 (Brief for Appellant, p. 10) had become popular twenty five (25) years prior to 1968, (the year of the hearing) or from 1943 (TSN, May 28, 1968, p. 27) and the songs "Sapagkat Ikaw Ay Akin" and "Sapagkat Kami Ay Tao Lamang" both registered on July 10, 1966, appear to have been known and sang by the witnesses as early as 1965 or three years before the hearing in 1968. The testimonies of the witnesses at the hearing of this case on this subject were unrebutted by the appellant. (Ibid, pp. 28; 29 and 30). Under the circumstances, it is clear that the musical compositions in question had long become public property, and are therefore beyond the protection of the Copyright Law.

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