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2010 APAA TRADEMARK COMMITTEE

Special Topic: Trademark Protection Against


Third Parties Bad Faith Trademark Filing,
Registration & Importation
Philippines: Country Report
By: Enrique Manuel & Eduardo C. Escao

A. Principles in Trademark Ownership


Under Republic Act No. 166 or the Old Trademark Law which was patterned
after the American Trademark Law, marks were created in two (2) ways: by use and by
registration. Upon the enactment of Republic Act No. 8293 or the Intellectual Property
Code of the Philippines, Section 122 provided that:
The rights in a mark shall be acquired through registration
made validly in accordance with the provisions of this law. (Emphasis
provided)
This is not to say however that where there is no registration, there is no protection.
Philippine law has afforded protection to marks, which were proven to have had prior
use, prior to the enactment of the IP Code. Thus, Section 168.1 on Unfair Competition
specifically provides that
A person who has identified in the mind of the public the
goods he manufactures or deals in, his business or services from those of
others, whether or not a registered mark is employed, has a property
right in the goodwill of said goods, business or services so identified,
which will be protected in the same manner as other property rights.
While the prior aggrieved user of the mark may not sue for infringement, not having
secured a trademark registration, said party is nevertheless protected by this provision of
law by granting him a cause of action for Unfair Competition. This principle has been
upheld in a number of cases by the Philippine Supreme Court. One such case (Converse
Rubber Corp. vs. Jacinto Rubber & Plastics Co., Inc., G.R. No. L-27425 and L-30505,
April 28, 1980) involved a local shoe manufacturer (Jacinto Rubber) who, having failed
to secure a licensing agreement with the foreign company (Converse) manufactured and
marketed identical designed rubber shoes and used his own trademark. When the
Plaintiff American company sued for unfair competition, Defendant claimed prior local
registration of its brand, the Supreme Court rejected the argument and held that in cases
of unfair competition, no registration was required and that the Defendants bad faith in
manufacturing and marketing the identically-designed shoes was evident.

B. Statutory Provisions on Acquisition of Trademark Rights


In determining what is considered as bad-faith trademark filing, the provisions of
the Trademark Law on what marks are registrable must be given attention. The

trademark law in defining registrability of marks enumerates what are NOT capable of
appropriation. Pertinent provisions involving well-known marks include:
Sec. 123. Registrability. 123.1.
A mark cannot be registered if it:
(d) Is identical with a registered mark belonging to a different proprietor
or a mark with an earlier filing or priority date, in respect of:
(i)
(ii)
(iii)

The same goods or services, or


Closely related goods or services, or
If it nearly resembles such a mark as to be likely to
deceive or cause confusion;

(e) Is identical with, or confusingly similar to, or constitutes a


translation of a mark which is considered by the competent authority in
the Philippines to be well-known internationally and in the Philippines,
whether or not it is registered here, as being already the mark of a
person other than the application for registration and used for identical
or similar goods or services;
(f) Is identical with, or confusingly similar to, or constitutes a translation
of a mark considered well-known in accordance with the preceding
paragraph, which is registered in the Philippines with respect to goods
or services which are not similar to those with respect to which
registration is applied for: Provided, That use of the mark in relation to
those goods or services would indicate a connection between those
goods or services, and the owner of the registered mark: Provided
further, That the interests of the owner of the registered mark are likely
to be damaged by such use.
(Emphasis supplied)
Particular focus is on provisions (e) and (f) which deals with registration of
marks which may be well-known internationally. Philippine trademark law protects the
registration of international well-known marks against third party registration but requires
that the mark must not only be well known internationally but likewise well known in the
Philippines. Criteria in determination of a well-knownness of a mark include: (1)
registrations in different jurisdictions of the mark; (2) publication, advertisements; (3)
Sale in various jurisdictions; (4) notoriety in the relevant sector.
In cases involving fraudulent or bad faith registration of trademarks, the
Trademark Law provides several remedies, such as Opposition and Cancellation
proceedings, unfair competition cases, as earlier mentioned and civil case for damages.
Sec. 134. Opposition.
Any person who believes that he would be damaged by the registration
of a mark, may upon payment of the required fee and within thirty (30)

days after the publication referred to in Subsection 133.2, file with the
Office an opposition to the application.
Sec. 151. Cancellation.
151.1 A petition to cancel a registration of a mark under this Act may be
filed with the Bureau of Legal Affairs by any person who believes that
he is or will be damaged by the registration of a mark under this Act as
follows:
(a) Within five (5) years from the date of the registration of the mark
under this Act.
(b) At any time, if the registered mark becomes the generic name for the
goods or services, or a portion thereof, for which it is registered, or has
been abandoned, or its registration was obtained fraudulently or
contrary to the provisions of this Act, or if the registered mark is being
used by, or with the permission of, the registrant so as to misrepresent
the source of the goods or services on or in connection with which the
mark is used. x
x
x
(c) At any time, if the registered owner of the mark without legitimate
reason fails to use the mark within the Philippines, or to cause it to be
used in the Philippines by virtue of a license during an uninterrupted
period of three (3) years or longer.
151.2 Notwithstanding the foregoing provisions, the court or the
administrative agency vested with jurisdiction to hear and adjudicate any
action to enforce the rights to a registered mark shall likewise exercise
jurisdiction to determine whether the registration of said mark may be
cancelled in accordance with this Act. The filing of a suit to enforce the
registered mark with the proper court or agency shall exclude any other
court or agency from assuming jurisdiction over a subsequently filed
petition to cancel the same mark.
Sec. 162. Action for False or Fraudulent Declaration.
Any person who shall procure registration in the Office of a mark by a
false or fraudulent declaration or representation, whether oral or in
writing, or by any false means, shall be liable in a civil action by any
person injured thereby for any damages sustained in consequence
thereof.
(Emphasis supplied)
C. Decisions Defining Trademark Rights Against Fraudulent Registrations
1. IPO Decisions
Registered Well-known mark Bars Registration of an identical mark in a
Different Class.

Parfums Guy Laroche vs. Chander Chandnani (IPC No. 14-2006-00177)


Zino Davidoff S.A. vs. Chander Chandnani (IPC No. 14-2006-00157)

2. Supreme Court Decisions


Shangri-La International Hotel Management Ltd. et. al. vs. Developers Group of
Companies, Inc. (G.R. No. 159938. March 31, 2006)
McDonalds Corporation vs. MacJoy Fastfood Corporation (G.R. No. 166115,
February 2, 2007)
Sehwani, Incorporated and/or Benitas Frites, Inc. vs. IN-N-OUT Burger, Inc.
(G.R. No. 171053, October 15, 2007)

CASE 1
Is it possible to prohibit registration of a mark which is identical or similar to a third
partys trademark which is not well-known in your country but is well-known in a foreign
country with respect to the goods or services which are in conflict with the third partys
goods or services?
No. To be able to effectively bar the local registration of a mark that is identical or similar to a
mark which is well-known in a foreign country, such mark which is well known in a foreign
country must also be well-known internationally and in the Philippines, in respect of identical
goods if the said mark is not registered here, or if it is registered here, in respect of goods or
services which are not similar to those with respect to which local registration is applied for, as
long use of the local mark in relation to covered goods or services would indicate a connection
between those goods or services and the owner of the registered well-known mark.
In this regard, the Intellectual Property Code of the Philippines (the IP Code) expressly
provides that a mark cannot be registered if it is identical to, or confusingly similar with a mark,
which is considered to be well-known internationally and in the Philippines:
Section 123.1 A mark cannot be registered if it:
xxx
(e) Is identical with, or confusingly similar to, or constitutes a translation of
a mark which is considered by the competent authority of the Philippines
to be well-known internationally and in the Philippines, whether or not it
is registered here, as being already the mark of a person other than the
applicant for registration, and used for identical or similar goods or services:
Provided, That in determining whether a mark is well-known, account shall
be taken of the knowledge of the relevant sector of the public, rather than of
the public at large, including knowledge in the Philippines which has been
obtained as a result of the promotion of the mark;

(f) Is identical with, or confusingly similar to, or constitutes a translation of a


mark considered well-known in accordance with the preceding
paragraph, which is registered in the Philippines with respect to goods or
services which are not similar to those with respect to which registration is
applied for: Provided, That use of the mark in relation to those goods or
services would indicate a connection between those goods or services, and
the owner of the registered mark: Provided further, That the interests of the
owner of the registered mark are likely to be damaged by such use.1
The foregoing provisions conform to the relevant portions of the Convention of Paris for the
Protection of Industrial Property, otherwise known as the Paris Convention, as well as the
Agreement on Trade Related Aspects of Intellectual Property Rights2, to which the Philippines is
a signatory.
We note that in its Decision No. 149 dated December 22, 2006, the IPO categorically declared
that under the law, to be considered well-known, a mark must not only be well-known
internationally but also in the Philippines.
The Rules and Regulations on Trademarks issued by the Intellectual Property Office (IPO) to
implement the IP Code provisions on trademarks set out the criteria for determining whether a
mark is well-known internationally and in the Philippines, as follows:
Rule 102. Criteria for determining whether a mark is well-known. In
determining whether a mark is well-known, the following criteria or any
combination thereof may be taken into account:
(a) the duration, extent and geographical area of any use of the mark, in
particular, the duration, extent and geographical area of any promotion of the
mark, including advertising or publicity and presentation, at fairs or
exhibitions, of the goods and/or services to which the mark applies;
(b) the market share in the Philippines and in other countries, of the goods
and/or services to which the mark applies;
(c) the degree of the inherent or acquired distinction of the mark;
(d) the quality-image or reputation acquired by the mark;
(e) the extent to which the mark has been registered in the world;
(f) the exclusivity of the registration attained by the mark in the world;
(g) the extent to which the mark has been used in the world;
(h) the exclusivity of use attained by the mark in the world;
(i) the commercial value attributed to the mark in the world;
(j) the record of successful protection of the rights in the mark;
(k) the outcome of litigations dealing with the issue of whether the mark is a
well-known mark; and
(l) the presence of absence of identical or similar marks validly registered
for or used on identical or similar goods or services and owned by persons
other than the person claiming that his mark is a well-known mark.

Section 123 (e) and (f), Republic Act No. 8293, otherwise known as the Intellectual Property Code of the
Philippines dated January 1, 1998 (IP Code)
2
Otherwise known as the TRIPS Agreement dated April 15, 1994

These rules are consistent the Joint Recommendation Concerning Provisions on the Protection of
Well-Known Marks issued by the World Intellectual Property Organization (the WIPO) in
September 1999.
CASE 2
Regarding CASE 1 above, does the Trademark Law of your country consider the
applicants bad faith in rejecting a trademark application for being similar to a mark (well)known in a foreign country?
No. While bad faith or fraud may be the basis for opposing the registration of a mark after its
publication or for invalidating the registration of mark in a cancellation action, we note that
generally, during the examination process, a trademark examiner does not consider the bad faith
of an applicant in rejecting an application for a mark that may be similar to another mark that is
well-known in a foreign country. Rather, the examiner is usually confined to a determination of
confusing similarity of the applicants mark with other marks in the registry that have earlier
filing or registration dates.
Sec. 123.1 of the IP Code sets out the various legal bases on which a trademark examiner may
refuse to register a mark:
123.1. A mark cannot be registered if it:
(a) Consists of immoral, deceptive or scandalous matter, or matter
which may disparage or falsely suggest a connection with persons, living
or dead, institutions, beliefs, or national symbols, or bring them into
contempt or disrepute;
(b) Consists of the flag or coat of arms or other insignia of the
Philippines or any of its political subdivisions, or of any foreign nation,
or any simulation thereof;
(c) Consists of a name, portrait or signature identifying a particular
living individual except by his written consent, or the name, signature,
or portrait of a deceased President of the Philippines, during the life of
his widow, if any, except by written consent of the widow;
(d) Is identical with a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date, in respect of:
i.
The same goods or services, or
ii.
Closely related goods or services, or
iii.
If it nearly resembles such a mark as to be likely to deceive
or cause confusion;
(e) Is identical with, or confusingly similar to, or constitutes a
translation of a mark which is considered by the competent authority of
the Philippines to be well-known internationally and in the Philippines,
whether or not it is registered here, as being already the mark of a person
other than the applicant for registration, and used for identical or similar
goods or services: Provided, That in determining whether a mark is wellknown, account shall be taken of the knowledge of the relevant sector of
the public, rather than of the public at large, including knowledge in the
Philippines which has been obtained as a result of the promotion of the
mark;
(f) Is identical with, or confusingly similar to, or constitutes a
translation of a mark considered well-known in accordance with the

preceding paragraph, which is registered in the Philippines with respect


to goods or services which are not similar to those with respect to which
registration is applied for: Provided, That use of the mark in relation to
those goods or services would indicate a connection between those
goods or services, and the owner of the registered mark: Provided
further, That the interests of the owner of the registered mark are likely
to be damaged by such use;
(g) Is likely to mislead the public, particularly as to the nature, quality,
characteristics or geographical origin of the goods or services;
(h) Consists exclusively of signs that are generic for the goods or
services that they seek to identify;
(i) Consists exclusively of signs or of indications that have become
customary or usual to designate the goods or services in everyday
language or in bona fide and established trade practice;
(j) Consists exclusively of signs or of indications that may serve in
trade to designate the kind, quality, quantity, intended purpose, value,
geographical origin, time or production of the goods or rendering of the
services, or other characteristics of the goods or services;
(k) Consists of shapes that may be necessitated by technical factors or
by the nature of the goods themselves or factors that affect their intrinsic
value;
(l) Consists of color alone, unless defined by a given form; or
(m)
Is contrary to public order or morality.
However, as earlier stated, the issue of bad faith may be relevant in a trademark opposition or
cancellation proceeding. Under the IP Code, an interested third party who believes he/she will be
damaged by the registration of the mark may oppose a trademark application or, if registration
has issued, file a petition to cancel its registration. In either proceeding, said interested party may
allege and prove that the application was filed or the registration was obtained fraudulently or in
bad faith.3
Thus in several decisions, the Philippine Supreme Court took note that the very close similarity
of a mark to the prior mark of another person may be taken as a badge of the subsequent users
bad faith in appropriating the earlier mark and provide basis for sustaining an opposition to, or
invalidating, a registered mark. In the case of Shangri-La International Hotel Management Ltd.
et. al. vs. Developers Group of Companies, Inc. (G.R. No. 159938. March 31, 2006), the court
reiterated the doctrine laid down in a 1983 opposition-related action:
When a trademark copycat adopts the word portion of anothers trademark
as his own, there may still be some doubt that the adoption is intentional.
But if he copies not only the word but also the words exact font and
lettering style and in addition, he copies also the logo portion of the
trademark, the slightest doubt vanishes. It is then replaced by the certainty
that the adoption was deliberate, malicious and in bad faith.
In a more recent case involving the internationally well known mark MCDONALDS (G.R. No.
166115, February 2, 2007), the High Court held that:

IP Code, Section 151.1(b)

By reason of respondents implausible and insufficient explanation as to


how and why out of the many choices of words it could have used for its
trade-name and/or trademark, it chose the word MACJOY, the only
logical conclusion deducible therefrom is that the respondent would want to
ride high on the established reputation and goodwill of the MCDONALDs
marks, which, as applied to petitioners restaurant business and food
products, is undoubtedly beyond question.
Thus, the IPO was correct in rejecting and denying the respondents
application for registration of the trademark MACJOY & DEVICE.
Finally, in the most recent case involving the mark IN-N-OUT (G.R. No. 171053, October 15,
2007), the Supreme Court upheld the findings of the IPO in denying the registration of the local
applicants IN N OUT trademark, declaring that fraud was employed in applying for registration
of said mark and that the same may not be registered.
The evidence on record shows that not only did the petitioners use the IN-NOUT Burger trademark for the name of their restaurant, but they also used
identical or confusingly similar mark for their hamburger wrappers and
french-fries receptacles, thereby effectively misrepresenting the source of
the goods and services.

CASE 3
Is it possible for you to cancel or invalidate a registration of a trademark which is registered
in your country by your foreign licensee or distributor without your consent?
Yes. Under the given circumstances, an action for the cancellation of the local licensees or
distributors unauthorized registration may be brought before the Bureau of Legal Affairs of the
IPO.
As stated, under Section 151.1(b) of the IP Code, a petition to cancel the registration of a mark
may be filed by any person who believes that he is or will be damaged by the registration of a
mark at any time, if, among other grounds, the registration of the mark was obtained fraudulently
or contrary to the provisions of the IP Code. The licensee or distributors knowledge that the
mark is owned by another person and its unauthorized appropriation thereof constitute fraudulent
registration.
In its decision in Appeal No. 14-06-11 (Lo vs. Wu Wefan, May 25, 2007), the Bureau of Legal
Affairs of the IPO cited the decision of the Supreme Court in UNNO Commercial Enterprises,
Inc. vs. General Milling Corporation where it was held that the term owner does not include the
importer of the goods bearing the trademark, tradename, service mark or other mark of
ownership, unless such importer is actually the owner thereof in the country from which the
goods are imported. A local importer, however, may make application for the registration of a
foreign trademark, tradename or service mark if he is duly authorized by the actual owner of the
name or other mark of ownership.

CASE 4
Will the following trademark A be registered in view of the prior Trademark B with respect
to the goods, T-shirts, caps?
No, trademark A may not be registered because it is confusingly similar to prior trademark B. We
presume that prior trademark B is covered by a local registration or prior application.
As mentioned, Section 123.1 (d) of the IP Code provides that a mark cannot be registered if it
nearly resembles a mark with an earlier filing or priority date as to be likely to deceive or cause
confusion.
The expanded protection of the rights granted to owners of registered marks under the IP Code
has been acknowledged in Philippine jurisprudence to include the adoption of the dominant
element or dominant feature test for determining whether rival marks are confusingly similar.
In certain instances, the Philippine Supreme Court4 declared that it relies upon the Dominancy
Test in determining whether rival marks are confusingly similar with each other and rejected the
holistic test as contrary to the elementary postulate of the law on trademarks. In one case, the
court declared that the Dominancy Test is now explicitly incorporated into law in Section 155.1
of the IP Code which defines infringement as the colorable imitation of a registered mark or a
dominant feature thereof.
The Dominancy Test focuses on the similarity of the prevalent features of the competing
trademarks which might cause confusion or deception. If the rival trademark contains the main,
essential or dominant features of another, there is said to be confusing similarity between the two
marks. Duplication or imitation is not necessary.
Applying the foregoing test, a comparison of trademark A and trademark B discloses that the
most dominant or prevalent features of trademark A are the word element SHI-SA and the
representation of a leaping shi-sa dog located at the upper right portion of the mark, which are
substantially similar to the most dominant and prevalent features of trademark B, which are the
word element PUMA (in substantially the same font style as that used for SHI-SA in
trademark A) and a representation of a leaping puma (in substantially the same appearance as the
representation of a shi-sa dog used in trademark A) also located at the upper right portion of the
mark.
Thus, we have reason to believe that the prior trademark B may serve as bar to the registration of
trademark A on the basis of confusing similarity with the prior mark. In this connection, it has
been repeatedly held by the Philippine Supreme Court5 that 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 confuse the courts.
Although there are points of difference between trademark A and trademark B, there are enough
points of similarity between the two marks that are likely to confuse the public.

CASE 5
4

McDonalds Corporation v. L.C. Big Mak Burger Inc., et al., G.R. No. 143993, August 18, 2004.
Converse Rubber Corporation v. Universal Rubber Product Inc., G.R. No. 103543. July 5, 1993 and Del
Monte Corporation et al. v. Court of Appeals et al., G.R. No. 78325, January 25, 1990.
5

Does your countrys trademark practice reward a famous or well-known mark with a
larger cloak of protection than in the case of lesser known marks, in terms of determining
similarity with other conflicting marks?
No. There is no provision in the IP Code nor basis in jurisprudence for granting additional or
special protection to internationally well known marks in terms of determining confusing
similarity with rival marks. The same standards for determining the existence of confusing
similarity between marks are applied whether or not one of the competing marks is a well-known
mark. Thus, in determining likelihood of confusion, our courts rely on either the dominancy test
and the holistic test. The dominancy test focuses on the similarity of the prevalent features of the
competing marks that might cause confusion and deception. 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.
Nevertheless, we wish to clarify the advantage enjoyed by well-known marks as defined under
our laws over lesser known marks. Unlike lesser known marks which are protected here only if
they are registered or enjoy application priority, well known marks are protected by Philippine
law even if they are not locally registered, but only in respect of identical or similar goods. Wellknown marks that are registered in the Philippines enjoy broader protection in the sense that the
prohibition on using marks that are identical with, confusingly similar to, or constitute
translations of, the well-known registered mark extends even to dissimilar goods and services.
Under the IP Code, a proposed mark cannot be registered if it is identical with, or confusingly
similar to, or constitutes a translation of a mark which is considered to be well-known
internationally and in the Philippines, whether or not it is registered in the Philippines, if used for
identical or similar goods or services.6 However, if the such well-known mark is registered, the
prohibition extends even to goods or services which are not similar to those with respect to which
the proposed mark is applied for, provided that use of the proposed mark in relation to those
goods or services would indicate a connection between those goods or services and the owner of
the well-known registered mark, and provided further that the interests of the owner of the wellknown registered mark are likely to be damaged by such use.7

CASE 6
Q1:
In your practice, is it absolutely necessary to record trademarks before the customs
office to enjoy border enforcement?
No. While Bureau of Customs (BOC) Customs Administrative Order (CAO) No. 006-02
provides for the recordation of intellectual property rights with its Intellectual Property Unit
(IPU), such recordation is not mandatory. The BOC conducts random examination of all
imports pursuant to its mandate to regulate the entry of goods8, and in the course of its
6

Sec. 123(e), IP Code.


Sec. 123(f), IP Code.
8
Under BOC Customs Administrative Order No. 9-2008, the Bureau reserves the right to conduct, on its
own initiative, random inspection of goods/shipments under existing regulations on the issuance of alert or
hold orders, in connection with the discharge of its police functions over imports and exports .
7

examinations, have identified possibly counterfeit products bearing infringing trademarks that are
not recorded with its IPU.
Recordation is intended to provide the BOC with sufficient description and, where available,
samples of the products covered by the trademarks, primarily for the purpose of facilitating the
identification of infringing merchandise being imported into the Philippines.
Moreover, recordation facilitates the procedure for seizure and forfeiture proceedings before the
BOC. On the basis of the recordation, the BOC on its own initiative monitors and inspects
imports bearing the recorded trademarks to determine whether these are counterfeit and subject to
seizure and forfeiture. Thus, owners of trademarks already recorded with the IPU need not
request the BOC for individual alerts or hold orders each time they become aware of suspicious
importations that require an inspection for possible infringing imports. On the other hand, owners
of marks that are not registered with the IPU would need to alert the BOC or request for hold
orders each time they become aware of suspicious imports.
In this connection, it must be further clarified that the recordation of a mark with the BOC IPU is
not a requirement for IP holders to be able to institute any enforcement action available against an
importer of counterfeit or infringing goods under our laws. These actions against the importer
include seizure or forfeiture proceedings before the BOC; administrative, civil or criminal
proceedings that may include preliminary and permanent injunction, recovery of damages and
seizure and destruction of counterfeit goods, before the IPO, the Department of Trade and
Industry or the regular courts for trademark infringement under the IP Code as well as violations
of the Consumer Code or other special laws relating to specific products (e.g. food, medicines,
etc.). The IP Code also grants any person who believes that he or she has been or will be damaged
by the entry into commerce of goods or services bearing false designation of origin or false
description the right to obtain compensation for damages and injunction against a knowing
perpetrator.

Q2:
Will the customs clearance procedure be suspended if the customs office detects
counterfeit products bearing a famous mark which is registered before the trademark office
but not before the customs?
Yes. Preliminarily, we advise that our jurisdiction does not have a registry of famous marks and
the BOC IPU relies merely on its working knowledge and the recorded marks in identifying
counterfeit products.
From experience, we note that in cases where the BOC is able to identify possibly counterfeit
products bearing a mark that is not registered with the IPU, it withholds the release of the goods
and contacts the Intellectual Property Office (IPO) to determine if said mark is registered here
or covered by an application, and to obtain the name of the counsel or resident agent of the
trademark owner. If the trademark owner has a counsel or agent, the BOC IPU contacts said
counsel or agent to request confirmation that the withheld products are infringing goods. If so, the
BOC will give the trademark owner sufficient time to file a complaint against the importer for the
seizure and forfeiture of the infringing goods which, in the meantime, will remain impounded.