TRADEMARK A Week 9

Comparative Advertising
Smith v. Chanel Inc.
402 F.2d 562 (1968)
Facts: Smith advertises a fragrance called TaRons Second Chance
as a duplicate of appellees Chanel No. 5 at a fraction of the latters
price. That being so, Chanel was granted a preliminary injunction
prohibiting any reference to Chanel No. 5 in the promotion or sale of
the product. The action herein rests upon a single advertisement
published in Specialty Salesmen which offered the TaRon Line of
Perfumes for sale. In the said advertisement, Chanel was one of the
scents mentioned that it copied. Chanel, in this case, raises the
principal question of whether one who has copied an unpatented
product sold under a trademark may use the trademark in his
advertising to identify the product he has copied.
Held:

Use of another's trademark to identify the trademark owner's

product in comparative advertising is not prohibited by either
statutory or common law, absent misrepresentation regarding
the products or confusion as to their source or sponsorship.
The rule rests upon the traditionally accepted premise that the
only legally relevant function of a trademark is to impart
information as to the source or sponsorship of the product.

The Lanham Act does not prohibit a commercial rival's truthfully

denominating his goods a copy of a design in the public domain,
though he uses the name of the designer to do so.

Protection of trademark values other than source identification

would create serious anti-competitive consequences with little
compensating public benefit.

To prohibit use of a competitor's trademark for the sole

purpose of identifying the competitor's product would bar
effective communication of claims of equivalence.
o
The practical effect of such a rule would be to
extend the monopoly of the trademark to a
monopoly of the product.
ITC:

Since appellees' perfume was unpatented, appellants had a right

to copy it, as appellees concede. There was a strong public
interest in their doing so, 'for imitation is the life blood of
competition.

Promotional Goods
Boston Athletic v. Sullivan
867 F.2d 22 (1989)
Facts:

BAA is a charitable organization whose principal activity has been

conducting the Boston Marathon since it was first run in 1897.
The race is run annually from Hopkinton to Boston on Patriots'
Day, the third Monday in April.

At the exposition, various businesses set up booths and sell

shirts, running apparel, and sports items. The registered runners
also pick up their numbers and official materials from the BAA
booth.

Defendant Sullivan, a resident of Hopkinton, Massachusetts,

retails wearing apparel under the name "Good Life" at a store in
Hopkinton.

Defendant Beau Tease, Inc. is a Massachusetts corporation doing

business in Cambridge. It imprints and distributes merchandise,
including shirts, to the trade.

In an effort to defray the costs of the race, BAA began an active

campaign to market its name via licensing agreements. It
registered the names "Boston Marathon" and "BAA Marathon"
and its unicorn logo in Massachusetts in 1983 and "Boston
Marathon" in the United States Patent and Trademark Office in
1985.

As early as 1978, the defendants were imprinting and selling

shirts with the name "Boston Marathon" and various other terms
including the year on them.
In 1984, defendant Sullivan negotiated an agreement under which
Beau Tease sold to BAA a large quantity of shirts which BAA gave
away to the athletes and volunteers during the 1985 race.
In 1986, Image, through its President, Mickey Lawrence, entered
into an exclusive license with BAA for the use of BAA's service
marks on wearing apparel including shirts. Starting in 1986,
Image and BAA gave notice to imprinters, wholesalers, and
retailers that Image was the exclusive licensee of the BAA and
that any unauthorized use on merchandise of the name "Boston
Marathon," or a similar name or a colorable imitation thereof,
would violate the exclusive rights of BAA and its licensee.
BAA brought suit in Massachusetts Superior Court against the
current defendants, and others, alleging that Sullivan infringed the
designs.
In late 1986 and early 1987, Beau Tease began to imprint and
Sullivan began to retail shirts and other apparel. The 1987 shirts
and the 1986 shirts were of poorer quality than plaintiffs' both as
to manufacture and materials. The defendants were planning to
sell their shirts and other items at the exposition.
In 1987, BAA filed for infringement, dilution and motion for
preliminary injunction, seeking to stop the manufacture and sale
of any article bearing the name "Boston Marathon" or any similar
name.
District Court: There was no confusion.

Issue:
1) Whether there was likelihood of confusion YES
2) Whether the purchasing public is likely to believe that the
sponsor of the Boston Marathon, produces, licenses or
endorses defendants' shirts - YES
Likelihood of Confusion
(Court here discussed the 8 factors to consider likelihood of confusion)
1. Similarity of the Marks: It is evident that defendants' logos refer
specifically to the "Boston Marathon." There is but one Boston
marathon race; defendants' logos use the term "Marathon" and
depicts runners. It is run annually; defendants' logos refer to a
specific year implying an annual event. The race begins at
Hopkinton and ends in Boston; defendants' logos include these
cities. Despite this, defendants have introduced no evidence
showing that they have taken steps to turn their similarly marked
products into dissimilar ones by clearly distinguishing their
products, and their lack of BAA sponsorship, from those sold by
plaintiffs. When one uses a mark similar to one already in use,
there is generally an affirmative duty to avoid the likelihood of
confusion. Here, the meaning of the two marks is more than
similar, it is identical. This overcomes any difference in
appearance between them.
2. Similarity of the Goods: The parties offer virtually the same goods:
shirts and other wearing apparel.
3. Relationship Between the Parties' Channel of Trade
4. Relationship Between the Parties' Advertising
5. Classes of Prospective Purchasers: The parties sell their shirts
predominantly in Boston-area retail shops, at the exposition, and
along the race course. Sales are largely seasonal, centering on
the race date. The parties use the same general method of
advertising: displays in store windows, in booths at the exposition,
and along the race course. Prospective purchasers are drawn
from the public at large. The shirts involved here retailed for about
$7-10 and were sometimes sold under hectic conditions.
Inexpensive items, bought by the casual purchaser, are not likely
to be bought with great care.
6. Evidence of Actual Confusion: Mickey Lawrence, president of
Image Impact, reported in her affidavit that she had encountered
a shopper at the Filene's department store who expressed
surprise when Lawrence told her that defendants' shirt, which the
shopper was wearing, was not an "official" Boston Marathon shirt.
While not as accurate as a survey might have been, this evidence
shows that some people were actually confused as to who
sponsored defendants' shirts. This factor, then, weighs in favor of
a likelihood of confusion.
7. Defendants' Intent in Adopting Their Marks: The facts can only be
interpreted to mean that defendants sought to profit from BAA's
sponsorship of the Boston Marathon. The defendants chose

8.

designs that obviously referred to the Marathon, put those

designs on the same types of clothing sold by the plaintiffs, sold
those shirts at the same time and in the same manner as the
plaintiffs to the same general purchasing public. Defendants'
actions clearly show their intent to trade on BAA's sponsorship
and management of the Boston Marathon.
Strength of BAA's Mark: Here, although BAA has only relatively
recently registered its marks, it used them for a long period of
time before registration. The Boston Marathon is one of the oldest
and most prestigious marathons in this country. BAA, as a
charitable organization, does not have the same impetus to
advertise that a for-profit company would have.

The Promotional Goods Issue

The question here is whether the purchasing public is likely to

believe that the sponsor of the Boston Marathon, produces,
licenses or endorses defendants' shirts. Whether or not
purchasers happen to know that the sponsor of the Boston
Marathan is an organization called the "Boston Athletic
Association" is irrelevant to this "likelihood of confusion" analysis.

In order to establish infringement in a promotional goods case, it

has traditionally been the plaintiff's burden to show that
prospective purchasers are in fact likely to be confused or misled
into thinking that the defendant's product was produced, licensed,
or otherwise sponsored by the plaintiff.

There can be no doubt that the language and design on

defendant's shirts intentionally calls attention to an event that has
long been sponsored and supported by the BAA--an event that is,
in fact, the subject of its registered mark. Defendants' shirts are
clearly designed to take advantage of the Boston Marathon and to
benefit from the good will associated with its promotion by
plaintiffs. Defendants thus obtain a "free ride" at plaintiffs'
expense.

Because the Boston Marathon has achieved its renown as a

result of BAA's "expenditure of labor, skill, and money," such
unlicensed use of BAA's mark would permit defendants to "reap
where [they have] not sown." Like Rosie Ruiz, a notorious
imposter in the 1980 Boston Marathon, defendants would be
given a medal without having run the course.

Under these facts, the plaintiffs have to prove, of course, that the
defendants are trading on plaintiffs' mark and good will. We do not
think, however, that plaintiffs also have to prove that members of
the public will actually conclude that defendants' product was
officially sponsored by the Marathon's sponsor (whoever that
sponsor may be). One difficulty with presenting such proof is that
few people, other than legal specialists, could venture an
informed opinion on whether someone using the logo of the
sponsor of a sporting event is required to have the permission of
the event's sponsor. Lacking such knowledge, the question of
approval is pure guesswork. To ask a factfinder to determine
whether the public would think that defendants' shirts were
"authorized" or "official" shirts is to ask it to resolve a confusing
and, in many contexts, virtually meaningless question. Asking a
factfinder to make such a determination also raises a problem of
circularity:

If consumers think that most uses of a trademark require

authorization, then in fact they will require authorization because
the owner can enjoin consumer confusion caused by unpermitted
uses or charge for licenses. And if owners can sue to stop
unauthorized uses, then only authorized uses will be seen by
consumers, creating or reinforcing the perception that
authorization is necessary. This is a "chicken and the egg"
conundrum.

The pertinent case law recognizes the difficulty of asking

factfinders to decide whether particular uses are "authorized". The
Fifth Circuit has held that a factual showing of confusion about
source or sponsorship need not be made in order to enjoin a
manufacturer of cloth emblems from the unlicensed sale of
National Hockey League team emblems. The court held:

The confusion or deceit requirement [of 15 U.S.C. Sec. 1114] is

met by the fact that the defendant duplicated the protected
trademarks and sold them to the public knowing that the public
would identify them as being the teams' trademarks. The certain
knowledge of the buyer that the source and origin of the
trademark symbols were in plaintiffs satisfies the requirement of
the act.

In the present case, we adopt a similar presumption. Given the

undisputed facts that (1) defendants intentionally referred to the
Boston Marathon on its shirts, and (2) purchasers were likely to
buy the shirts precisely because of that reference, we think it fair
to presume that purchasers are likely to be confused about the
shirt's source or sponsorship. We presume that, at the least, a
sufficient number of purchasers would be likely to assume-mistakenly--that defendants' shirts had some connection with the
official sponsors of the Boston Marathon. In the absence of any
evidence that effectively rebuts this presumption of a "likelihood of
confusion," we hold that plaintiffs are entitled to enjoin the
manufacture and sale of defendants' shirts.
In the present case, the facts clearly show that defendants
intentionally referred to the Boston Marathon on their shirt in order
to create an identification with the event and, thus, to sell their
shirts. This evidence is itself sufficient to raise the inference of a
likelihood of confusion. Given this presumption in favor of plaintiffs
and the fact that defendants offered no evidence that would rebut
the presumption, there is no genuine issue of material fact about
the "likelihood of confusion."
We acknowledge that a trademark, unlike a copyright or patent, is
not a "right in gross" that enables a holder to enjoin all
reproductions. In Justice Holmes's words, "When the mark is
used in such a way that does not deceive the public we see no
such sanctity in the word as to prevent it being used to tell the
truth. It is not taboo. But when a manufacturer intentionally uses
another's mark as a means of establishing a link in consumers'
minds with the other's enterprise, and directly profits from that
link, there is an unmistakable aura of deception. Such a use is, by
its very nature, "likely to cause confusion, or to cause mistake, or
to deceive." Unless the defendant can show that there is in fact
no likelihood of such confusion or deception about the product's
connection to the trademark holder, such a use can be enjoined.
The defendants, Mark Sullivan d/b/a/ Good Life and Beau Tease,
Inc., and all persons and entities acting in concert or in
participation with them, are hereby enjoined from manufacturing
or selling goods displaying the name "Boston Marathon" or any
other design which is confusingly similar to or a colorable imitation
of "Boston Marathon.

CANCELLATION
Section 151, IP Code
Section 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. If the
registered mark becomes the generic name for less than all of the
goods or services for which it is registered, a petition to cancel the
registration for only those goods or services may be filed. A
registered mark shall not be deemed to be the generic name of
goods or services solely because such mark is also used as a
name of or to identify a unique product or service. The primary
significance of the registered mark to the relevant public rather
than purchaser motivation shall be the test for determining
whether the registered mark has become the generic name of
goods or services on or in connection with which it has been
used. (n)
(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. On the other
hand, the earlier filing of petition to cancel the mark with the Bureau of
Legal Affairs shall not constitute a prejudicial question that must be
resolved before an action to enforce the rights to same registered mark
may be decided.

DILUTION
Levi Strauss v. Clinton Aparelle
G.R. No, 138900, September 20, 2005
Facts:

LS & Co. is a foreign corporation duly organized and existing

under the laws of the State of Delaware, U.S.A., and engaged in
the apparel business, is the owner by prior adoption and use
since 1986 of the internationally famous Dockers and Design
trademark. This ownership is evidenced by its valid and existing
registrations in various member countries of the Paris Convention.
In the Philippines, it has a Certificate of Registration No. 46619 in
the Principal Register for use of said trademark on pants, shirts,
blouses, skirts, shorts, sweatshirts and jackets under Class 25.

The Dockers and Design trademark was first used in the

Philippines in or about May 1988, by LSPI, a domestic corporation
engaged in the manufacture, sale and distribution of various
products bearing trademarks owned by LS & Co.

LS & Co. and LSPI further alleged that they discovered the
presence in the local market of jeans under the brand name
Paddocks using a device which is substantially, if not exactly,
similar to the Dockers and Design trademark owned by and
registered in the name of LS & Co., without its consent. Based on
their information and belief, they added, Clinton Apparelle
manufactured and continues to manufacture such Paddocks
jeans and other apparel.

TRO was granted.

The evidence considered by the trial court in granting injunctive

relief were as follows: (1) a certified true copy of the certificate of
trademark registration for Dockers and Design; (2) a pair of
DOCKERS pants bearing the Dockers and Design trademark; (3)
a pair of Paddocks pants bearing respondents assailed logo; (4)
the Trends MBL Survey Report purportedly proving that there was
confusing similarity between two marks; (5) the affidavit of one
Bernabe Alajar which recounted petitioners prior adoption, use
and registration of the Dockers and Design trademark; and (6) the
affidavit of one Mercedes Abad of Trends MBL, Inc. which
detailed the methodology and procedure used in their survey and
the results thereof.

Clinton Apparelle filed with the Court of Appeals a Petition for

certiorari, prohibition and mandamus with prayer for the issuance
of a temporary restraining order and/or writ of preliminary
injunction, assailing the orders of the trial court.

Court of Appeals ruled that the TRO had been improperly issued.

LS & Co. and LSPI filed for MR, hence this case.
Issue: Whether or not the injunction was correctly issued NO

LS & Co. assert that a trademark owner does not have to wait
until the mark loses its distinctiveness to obtain injunctive relief,
and that the mere use by an infringer of a registered mark is
already actionable even if he has not yet profited thereby or has
damaged the trademark owner.
Trademark dilution is the lessening of the capacity of a
famous mark to identify and distinguish goods or services,
regardless of the presence or absence of:
o
competition between the owner of the famous mark and
other parties; or
o
likelihood of confusion, mistake or deception.
Subject to the principles of equity, the owner of a famous mark is
entitled to an injunction against another persons commercial use

in commerce of a mark or trade name, if such use begins after the

mark has become famous and causes dilution of the distinctive
quality of the mark. This is intended to protect famous marks from
subsequent uses that blur distinctiveness of the mark or tarnish or
disparage it.
Based on the foregoing, to be eligible for protection from dilution,
there has to be a finding that:
o
the trademark sought to be protected is famous and
distinctive;
o
the use by respondent of Paddocks and Design began after
the petitioners mark became famous; and
o
such subsequent use defames petitioners mark. In the case
at bar, petitioners have yet to establish whether Dockers and
Design has acquired a strong degree of distinctiveness and
whether the other two elements are present for their cause
to fall within the ambit of the invoked protection.
The Trends MBL Survey Report which petitioners presented in a
bid to establish that there was confusing similarity between two
marks is not sufficient proof of any dilution that the trial court must
enjoin.
Citing a case: A writ of injunction should never have been issued
when an action for damages would adequately compensate the
injuries caused. The very foundation of the jurisdiction to issue the
writ of injunction rests in the probability of irreparable injury,
inadequacy of pecuniary estimation and the prevention of the
multiplicity of suits, and where facts are not shown to bring the
case within these conditions, the relief of injunction should be
refuse.
We also believe that the issued injunctive writ, if allowed, would
dispose of the case on the merits as it would effectively enjoin the
use of the Paddocks device without proof that there is basis for
such action. The prevailing rule is that courts should avoid issuing
a writ of preliminary injunction that would in effect dispose of the
main case without trial. There would be a prejudgment of the main
case and a reversal of the rule on the burden of proof since it
would assume the proposition which petitioners are inceptively
bound to prove.
Parenthetically, we find no flaw in the Court of Appeals
disquisition on the consequences of the issued injunction. An
exercise of caution, we believe that such reflection is necessary to
weigh the alleged entitlement to the writ vis--vis its possible
effects. The injunction issued in the instant case is of a serious
nature as it tends to do more than to maintain the status quo. In
fact, the assailed injunction if sustained would bring about the
result desired by petitioners without a trial on the merits.
In our view, it was premature for the Court of Appeals to declare
that there is no confusion between the two devices or logos. That
matter remains to be decided on by the trial court.

TRADEMARK PROTECTION IN THE INTERNET

RA No. 10175 Cybercrime Prevention Act of 2012
Section 4. (6) Cyber-squatting. The acquisition of a domain name
over the internet in bad faith to profit, mislead, destroy reputation, and
deprive others from registering the same, if such a domain name is:
a. Similar, identical, or confusingly similar to an existing
trademark registered with the appropriate government
agency at the time of the domain name registration:
b. Identical or in any way similar with the name of a person
other than the registrant, in case of a personal name; and
c. Acquired without right or with intellectual property interests in
it.

UNFAIR COMPETITION
CONCEPT OF UNFAIR COMPETITION
Copyright, Patent, and Trademark compared with
Unfair Competition
International News Service v. Associated Press
248 US 215 (1918)

Summary:
Two competing United States news services were in the business of
reporting in the US. Their business hinged on getting fast and accurate
reports published. International News Service gained access to
Associated Press news through bribery, news bulletin boards and early
editions of newspapers. INS members would rewrite the news and
publish it as their own, without attribution. The AP brought an action
seeking to enjoin INS from copying news.
The Court held in favor of the AP. It was held that the information found
in the AP news was not copyrightable as "the information respecting
current events contained in the literary production is not the creation of
a writer but is a report of matters that ordinarily are publici juris; it is the
history of the day." But, there is unfair competition. It was found that
there was a quasi-property right in the news as it is "stock in trade to
be gathered at the cost of enterprise, organization, skill, labor and
money, and to be distributed and sold to those who will pay money for
it". Given the "economic value" of the news, a company can have
limited proprietary interest in it against a competitor (but not the public)
who would attempt to take advantage of the information. INS's
behaviour was characterized as misappropriation.

FACTS:

The parties are competitors in the gathering and distribution of

news and its publication for profit in newspapers throughout the
United States.

Associated Press gathers in all parts of the world, by means of

various instrumentalities of its own, by exchange with its
members, and by other appropriate means, news and intelligence
of current and recent events of interest to newspaper readers and
distributes it daily to its members for publication in their
newspapers. Under complainant's bylaws, each member agrees
upon assuming membership that news received through
complainant's service is received exclusively for publication in a
particular newspaper, that no other use of it shall be permitted,
and that no member shall furnish or permit anyone in his employ
or connected with his newspaper to furnish any of complainant's
news in advance of publication to any person not a member. And
each member is required to gather the local news of his district
and supply it to the Associated Press, and to no one else.

International News Service is a corporation, whose business is

the gathering and selling of news to its customers and clients,
consisting of newspapers published throughout the United States,
under contracts by which they pay certain amounts at stated
times for defendant's service.

The parties are in competition between themselves in the

distribution of news throughout the United States, and so, as a
rule, are the newspapers that they serve, in their several districts.

Complainants and defendants have set forth in almost identical

terms the circumstances and conditions under which their
business is conducted. The value of the service, and of the news
furnished, depends upon the promptness of transmission, as well
as upon the accuracy and impartiality of the news, it being
essential that the news be transmitted to members or subscribers
as early or earlier than similar information can be furnished to
competing newspapers by other news services, and that the news
furnished by each agency shall not be furnished to newspapers
which do not contribute to the expense of gathering it.

"Prompt knowledge and publication of worldwide news is

essential to the conduct of a modern newspaper, and, by reason
of the enormous expense incident to the gathering and
distribution of such news, the only practical way in which a
proprietor of a newspaper can obtain the same is either through
cooperation with a considerable number of other newspaper
proprietors in the work of collecting and distributing such news,
and the equitable division with them of the expenses thereof, or
by the purchase of such news from some existing agency
engaged in that business."

The bill was filed to restrain the pirating of complainant's

news by defendant in three ways:
o
by bribing employees of newspapers published by
complainant's members to furnish Associated Press
news to defendant before publication, for transmission
by telegraph and telephone to defendant's clients for
publication by them;
o
second, by inducing Associated Press members to
violate its bylaws and permit defendant to obtain news
before publication;
o
third, by copying news from bulletin boards and from
early editions of complainant's newspapers and selling
this, either bodily or after rewriting it, to defendant's
customers.

ISSUE/HELD
1. Whether defendant may lawfully be restrained from appropriating
news taken from bulletins issued by complainant or any of its
members, or from newspapers published by them, for the purpose
of selling it to defendant's clients.
o
Complainant asserts:
o
Defendant's admitted course of conduct in this regard both
violates complainant's property right in the news and
constitutes unfair competition in business
o
Because of complainants assertions, we have deemed it
proper to consider the underlying questions: (1) whether
there is any property in news; (2) whether, if there be
property in news collected for the purpose of being
published, it remains as such even after publication in the
first newspaper to which it is communicated by the news
gatherer, and (3) whether defendant's admitted course of
conduct in appropriating for commercial use matter taken
from bulletins or early editions of Associated Press
publications constitutes unfair competition in trade.
o
Complainant's news matter is not copyrighted. It is said that
it could not, in practice, be copyrighted, because of the large
number of dispatches that are sent daily, and, according to
complainant's contention, news is not within the operation of
the copyright act. Defendant, while apparently conceding
this, nevertheless invokes the analogies of the law of literary
property and copyright, insisting as its principal contention
that, assuming complainant has a right of property in its
news, it can be maintained only by being kept secret and
confidential, and that, upon the publication with
complainant's consent of uncopyrighted news of any of
complainant's members in a newspaper or upon a bulletin
board, the right of property is lost, and the subsequent use of
the news by the public or by defendant for any purpose
whatever becomes lawful.
o
In considering the general question of property in news
matter, it is necessary to recognize its dual character,
distinguishing between the substance of the information and
the particular form or collocation of words in which the writer
has communicated it.
o
The Copyright Act provides that the works for which
copyright may be secured shall include "all the writings of an
author," and specifically mentions "periodicals, including
newspapers." Evidently this admits to copyright a
contribution to a newspaper, notwithstanding it also may
convey news, and such is the practice of the copyright office,
as the newspapers of the day bear witness.
o
But the news element -- the information respecting
current events contained in the literary production -- is
not the creation of the writer, but is a report of matters
that ordinarily are publici juris; it is the history of the day.
It is not to be supposed that the framers of the
Constitution, when they empowered Congress: "to
promote the progress of science and useful arts, by
securing for limited times to authors and inventors the
exclusive right to their respective writings and
discoveries" (Const. Art. I, 8, par. 8), intended to confer
upon one who might happen to be the first to report a
historic event the exclusive right for any period to
spread the knowledge of it.
2. The question now is, is there unfair competition?
o
What we are concerned with is the business of making it
known to the world, in which both parties to the present suit

are engaged. That business consists in maintaining a

prompt, sure, steady, and reliable service designed to place
the daily events of the world at the breakfast table of the
millions at a price that is sufficient in the aggregate to afford
compensation for the cost of gathering and distributing it,
with the added profit necessary. The service thus
performed for newspaper readers is not only innocent
but extremely useful in itself, and indubitably
constitutes a legitimate business. The parties are
competitors in this field, and, on fundamental principles,
applicable here as elsewhere, when the rights or
privileges of the one are liable to conflict with those of
the other, each party is under a duty so to conduct its
own business as not unnecessarily or unfairly to injure
that of the other.
The question of what is unfair competition in business must
be determined with particular reference to the character and
circumstances of the business. The question here is not so
much the rights of either party as against the public, but
their rights as between themselves. And, although we
may and do assume that neither party has any
remaining property interest as against the public in
uncopyrighted news matter after the moment of its first
publication, it by no means follows that there is no
remaining property interest in it as between themselves.
For, to both of them alike, news matter, however little
susceptible of ownership or dominion in the absolute sense,
is stock in trade, to be gathered at the cost of enterprise,
organization, skill, labor, and money, and to be distributed
and sold to those who will pay money for it, as for any other
merchandise. Regarding the news therefore as but the
material out of which both parties are seeking to make
profits at the same time and in the same field, we hardly
can fail to recognize that for this purpose, and as
between them, it must be regarded as quasi-property,
irrespective of the rights of either as against the public.
In Board of Trade v. Christie Grain & Stock Co.: This Court
held that plaintiff's collection of quotations was entitled to the
protection of the law; that, like a trade secret, plaintiff might
keep to itself the work done at its expense, and did not lose
its right by communicating the result to persons, even if
many, in confidential relations to itself, under a contract not
to make it public, and that strangers should be restrained
from getting at the knowledge by inducing a breach of trust.
Not only do the acquisition and transmission of news require
elaborate organization and a large expenditure of money,
skill, and effort; not only has it an exchange value to the
gatherer, dependent chiefly upon its novelty and freshness,
the regularity of the service, its reputed reliability and
thoroughness, and its adaptability to the public needs; but
also, as is evident, the news has an exchange value to one
who can misappropriate it.
The peculiar features of the case arise from the fact that,
while novelty and freshness form so important an element in
the success of the business, the very processes of
distribution and publication necessarily occupy a good deal
of time. Complainant's service, as well as defendant's, is a
daily service to daily newspapers; most of the foreign news
reaches this country at the Atlantic seaboard, principally at
the City of New York, and because of this, and of time
differentials due to the earth's rotation, the distribution of
news matter throughout the country is principally from east
to west; and, since in speed the telegraph and telephone
easily outstrip the rotation of the earth, it is a simple matter
for defendant to take complainant's news from bulletins or
early editions of complainant's members in the eastern cities
and, at the mere cost of telegraphic transmission, cause it to
be published in western papers issued at least as early as
those served by complainant. Besides this, and irrespective
of time differentials, irregularities in telegraphic transmission
on different lines, and the normal consumption of time in
printing and distributing the newspaper, result in permitting
pirated news to be placed in the hands of defendant's
readers sometimes simultaneously with the service of
competing Associated Press papers, occasionally even
earlier.

The underlying principle is that he who has fairly paid

the price should have the beneficial use of the property .
Where the question is one of unfair competition, if that
which complainant has acquired fairly at substantial
cost may be sold fairly at substantial profit, a competitor
who is misappropriating it for the purpose of disposing
of it to his own profit and to the disadvantage of
complainant cannot be heard to say that it is too fugitive
or evanescent to be regarded as property. It has all the
attributes of property necessary for determining that a
misappropriation of it by a competitor is unfair
competition because contrary to good conscience.
The contention that the news is abandoned to the public
for all purposes when published in the first newspaper
is untenable. Abandonment is a question of intent, and
the entire organization of the Associated Press
negatives such a purpose.
It is said that the elements of unfair competition are
lacking because there is no attempt by defendant to
palm off its goods as those of the complainant. But we
cannot concede that the right to equitable relief is
confined to that class of cases. In the present case, the
fraud upon complainant's rights is more direct and
obvious. Regarding news matter as the mere material
from which these two competing parties are
endeavoring to make money, and treating it therefore as
quasi-property for the purposes of their business
because they are both selling it as such, defendant's
conduct differs from the ordinary case of unfair
competition in trade principally in this -- that, instead of
selling its own goods as those of complainant, it
substitutes
misappropriation
in
the
place
of
misrepresentation,
Besides the misappropriation, there are elements of
imitation, of false pretense, in defendant's practices. The
device of rewriting complainant's news articles, frequently
resorted to, carries its own comment. The habitual failure to
give credit to complainant for that which is taken is
significant. Indeed, the entire system of appropriating
complainant's news and transmitting it as a commercial
product to defendant's clients and patrons amounts to a false
representation to them and to their newspaper readers that
the news transmitted is the result of defendant's own
investigation in the field.
As to securing "tips" from a competing news agency, we
are inclined to think a distinction may be drawn between
the utilization of tips and the bodily appropriation of
news matter, either in its original form or after rewriting
and without independent investigation and verification;
whatever may appear at the final hearing, the proofs as they
now stand recognize such a distinction; both parties
avowedly recognize the practice of taking tips, and neither
party alleges it to be unlawful or to amount to unfair
competition in business. However, using tips must be
differentiated from misappropriation with imitation and
false pretense as International News Service is shown to
have committed as in this case.

Sears, Roebuck & Co. v. Stiffel Co.

376 U.S. 225 (1964)
SUMMARY: Stiffel secured design and mechanical patents for its pole
lamp. Sears then copied such design and put in the market a
substantially identical lamp that consumers are confused as to its
source. Stiffel then filed an action for unfair competition. District Court
ruled that patents were invalid for want of invention; it also ruled that
Sears is guilty of unfair competition and liable for damages. Issue here
is WON if an unpatented article be afforded the remedy of unfair
competition. SC held that a State may not, when the article is
unpatented and uncopyrighted, prohibit the copying of the article itself
or award damages for such copying.
Doctrine: Design and mechanical patents invalid for want of invention,
cannot, under a state unfair competition law, obtain an injunction
against copying its product or an award of damages for such copying,
as such use of state law conflicts with the exclusive power of the

Federal Government to grant patents only to true inventions, and then

only for a limited time. An unpatented article, being in the public
domain, may be freely copied, though labeling or other precautions
may be required by state law where appropriate to prevent deception
as to source.
FACTS:

Stiffel Company, secured design and mechanical patents on a

"pole lamp" -- a vertical tube having lamp fixtures along the
outside, the tube being made so that it will stand upright between
the floor and ceiling of a room.

Soon after Stiffel brought them on the market, Sears, Roebuck &
Company put on the market a substantially identical lamp, which it
sold more cheaply.

Stiffel then brought his action against Sears in the United States
District Court for the Northern District of Illinois, claiming in its first
count that, by copying its design, Sears had infringed Stiffel's
patents, and, in its second count, that, by selling copies of Stiffel's
lamp, Sears had caused confusion in the trade as to the source of
the lamps, and had thereby engaged in unfair competition under
Illinois law.
District Court

The District Court, after holding the patents, invalid for want of
invention, went on to find as a fact that Sears' lamp was "a
substantially exact copy" of Stiffel's, and that the two lamps were
so much alike, both in appearance and in functional details, "that
confusion between them is likely, and some confusion has already
occurred."

The court held Sears guilty of unfair competition and ordered an

accounting to fix profits and damages resulting from Sears' "unfair
competition."
CA

Court of Appeals upheld the trial court's findings of likelihood of

confusion and some actual confusion, findings which the
appellate court construed to mean confusion "as to the source of
the lamps."

The Court of Appeals thought this enough under Illinois law to

sustain the trial court's holding of unfair competition, and thus
held Sears liable under Illinois law for doing no more than copying
and marketing an unpatented article.
ISSUE: WON the use of States law of unfair competition is compatible
with the federal patent law.
HELD: NO. Case is Reversed
RATIO:

In the present case, the "pole lamp" sold by Stiffel has been held
not to be entitled to the protection of either a mechanical or a
design patent. An unpatentable article, like an article on which the
patent has expired, is in the public domain, and may be made and
sold by whoever chooses to do so. What Sears did was to copy
Stiffel's design and to sell lamps almost identical to those sold by
Stiffel. This it had every right to do under the federal patent laws.
That Stiffel originated the pole lamp and made it popular is
immaterial.
Kellogg Co. v. National Biscuit Co.

To allow a State by use of its law of unfair competition to prevent

the copying of an article which represents too slight an advance to
be patented would be to permit the State to block off from the
public something which federal law has said belongs to the public.

Sears has been held liable here for unfair competition because of
a finding of likelihood of confusion based only on the fact that
Sears' lamp was copied from Stiffel's unpatented lamp and that,
consequently, the two looked exactly alike.
Of course, there could be "confusion" as to who had
manufactured these nearly identical articles. Doubtless a State
may, in appropriate circumstances, require that goods, whether
patented or unpatented, be labeled, or that other precautionary
steps be taken to prevent customers from being misled as to the
source, just as it may protect businesses in the use of their

trademarks, labels, or distinctive dress in the packaging of goods

so as to prevent others, by imitating such markings, from
misleading purchasers as to the source of the goods.But because
of the federal patent laws, a State may not, when the article is
unpatented and uncopyrighted, prohibit the copying of the article
itself or award damages for such copying.

La Insular Cigar and Cigarette Factory v. B.E. Jao

Oge
G.R. No. L-16588 (1921)
Summary: Plaintiff in this case manufactures cigars and cigarettes
and is the owner of a registered trademark by which its products are
generally recognized throughout the Philippine Islands. In the suit it
filed against respondent B.E. Jao Oge, it described the trademark in
detail in its allegations, and also attached a specimen thereof. B.E. Jao
Oge is the proprietor of La Ciudad. La Insular alleged that the labels
used by La Ciudad in the latters packages of cigarettes are infringing
imitations of La Insulars mark. Plaintiff prayed that respondent be
perpetually enjoined from using the marks, that defendant render an
accounting of the profits derived from cigarettes sold with the labels
complained of and that said profits be paid to plaintiff, and that plaintiff
be granted any other appropriate remedy. No description of La
Ciudads marks were provided, but a specimen was included as an
exhibit. Due to this absence, the respondent filed a demurrer for lack of
cause of action. Trial court sided with the respondents contention. SC
held that the complaint was sufficient and contains the elements of
unfair competition. Though there was no written description of La
Ciudads marks, such was unnecessary when the actual marks were
submitted for comparison. The case was thus remanded for further
proceedings. In the ratio, the Court explained the similarities and
differences between infringement of trademark, illegal use of
tradename, and unfair competition. These three are related torts which
afford substantially the same remedies to the person injured. The
common element consist in false representation to the public. As to
what distinguishes infringment from unfair competition, there is no
clear-cut answer, but here are some of the differences pointed out by
the SC: (1) Infringement of a trademark supposes that an injured party
has a trademark, (2) it is necessary to the infringement of a trademark
that the offending party should have used such trademark in selling
goods of a similar kind of those sold by the owner of a trademark, and
(3) fraudulent intent is necessary in unfair competition, but it is
irrelevant in infringement.
FACTS

La Insular owns a tobacco factory that manufactures cigars and

cigarettes and is the owner of a registered trademark by which its
products are generally recognized throughout the Philippine
Islands.

Below is the description of their trademark:

This trade-mark consists of a decorative design printed in colors

on a strip of paper of appropriate size to envelope the packages
of cigarettes to which it is pasted.

On the first square is represented a matron seated on a raised

platform with steps leading up to it upon which there is a rug, all
on a background of palm leaves. This figure holds a smoking
torch in her right hand and in her left a streamer with the words
"La Insular" inscribed thereon. At the left hand side of this figure
are the words "Marca de Fabrica" underneath which is a five
pointed star with the initial "E" on one side of it and "D" on the
other. Further down are the words "La Insular Fabrica de Tabacos
Manila," and still further down appear a terrestrial globe, an
anchor, a post, a ship with three sails, with a mountain in the
background.

On the second square is represented a sign placed diagonally

from corner to corner of the square with the word "Hebra" written
thereon in large letters. On one side of this figure, are the words
"30 Cigarillos" and on the other side, the words "Entre Fuerte."
Between the two squares in large letters are the words "Plaza
Binondo."

The complaint alleges that in 1915, B.E. Jao Oge, proprietor of

the cigarette factory La Ciudad began to use two different labels
on its cigarettes that are infringing imitations of La Insulars
marks.

Plaintiff prayed that respondent be perpetually enjoined from

using the marks, that defendant render an accounting of the
profits derived from cigarettes sold with the labels complained of
and that said profits be paid to plaintiff (which it estimates to be
around Php20,000), and that plaintiff be granted any other
appropriate remedy.
No description of La Ciudads marks were provided, but a
specimen was included as an exhibit.
Due to this absence of description, respondents interposed a
general demurrer on the ground that the facts stated do no
constitute a cause of action.
Trial judge sustained the demurrer

ISSUE: WON the complaint was correctly dismissed for lack of cause
of action NO (Note: Our topicthe difference between infringement
and unfair competitionis relevant in establishing that there is a cause
of action)
RATIO
On why the complaint was sufficient

ARGUMENTS OF PLAINTIFF:

The complaint states sufficient cause of action for unfair

competition under Sec. 7 of Act. 666.

The essential elements of unfair competition are,

1) that the person complained of shall have given to his goods
the general appearance of the goods of the complaining
party, either in
a. the wrapping of the packages in which they are
contained, or the devices or words thereon
b. or in any other feature of their appearance which would
be likely to influence purchasers to believe that the
goods offered are those of the complaining party;
2) that the person complained of should have clothed the
goods with such appearance for the purpose of deceiving
the public and defrauding the complaining party of his
legitimate trade.

SC: the complaint before us exhibits both of those elements with

all necessary precision.

we have the allegation that the label which the defendant is using
on his packages of cigarettes closely imitates the label and mark
of the plaintiff

and the further allegation that the defendant is giving his

cigarettes the appearance of the cigarettes manufactured and
offered for sale by the plaintiff.

It is too clear for argument that the allegations of the complaint,

taken in connection with the exhibits, show actionable imitation on
the part of the defendant.

As long as there is anything about the defendant's marks

that could reasonably be considered objectionable, the
plaintiff is entitled xxx to the benefit of the inference.

A written description of the marks xxx cannot be considered

necessary where the offending marks, submitted for the
purposes of actual comparison, tell the whole story to the
eye. These exhibits are as much a part of the complaint as
the verbal allegation contained in it; and while admittedly
exhibits cannot wholly take the place of necessary allegation,
when the latter are wanting
On the difference between infringement of trademark, illegal use
of tradename, and unfair competition

Infringement of trade-mark, illegal use of trade-name, and unfair

competition are related torts and are commonly treated together
by authors of legal treatises.

The generic tort is unfair competition, of which the other two

may be considered special forms.

The most fully developed branch of the subject is of course that

which relates to the law of trademarks; for the reason that trademark right was recognized and protected by the courts long
before relief was granted against the illegitimate use of tradenames and unfair competition in general.

The common element in all of these wrongs consists of the

false representation to the public, by means of words, names,
pictures or symbols, that the goods or business of one man are
the goods or business of another.

Owing to the close affinity existing between these wrongs, it was

but natural that the Philippine Commission xxx should have
incorporated into a single complete measure the provisions
relating to the three, as was accomplished by Act No. 666.
It will be found that substantially the same remedies are
conceded to the person injured whether the wrong done in a
particular case consists of infringement of trademark, illegal use
of tradename, or unfair competition which remedies consist of:
an award of damages, or double damages,
a perpetual injunction against the continuance of the injury
prosecution of the offending party in a criminal action and its
appropriate penalty, which is somewhat heavier in the case
of infringement of a trade-mark or trade-name than in case
of unfair competition.
If the question be asked what distinguishes infringement of
trade-mark from unfair competition, no entirely satisfactory
answer can be readily given.
But, certain points are so clear as to not admit doubt.
In the first place, the infringement of a trade-mark supposes that
the injured party has a trade-mark, that is, that he is using upon
his goods a name, emblem, sign, or device xxx and that he has
complied with the conditions which are deemed essential by law
for the creation of the trade-mark right.
Continued use of a trademark, under the conditions there
mentioned in Sec. 4 of Act No. 666, is sufficient, whether the
trademark has been registered or not.
In the second place, it is necessary to the infringement of a
trademark that the offending party should have used such
trademark in selling goods of a similar kind of those sold by
the owner of the trademark.
The statute plainly says that the action for the infringement
of a trade-mark lies in favor of the injured person against any
one who sells goods of a similar kind "bearing such trademark."
This language seems to suppose that the mark thus used by
the infringer is a counterfeit, or spurious imitation of the
genuine trade-mark.
This interpretation, if adopted, would make the remedy
available in very few cases, since most traders desirous of
filching the trade of others in this way will use colorable
imitations, or suggestive reproductions of the trade-mark
which they intend to appropriate rather than exact
counterfeits.
In cases of infringement of trade-marks the law primarily takes
no account of the actual intent on the part of the infringer to
mislead the public and defraud the owner of the trade-mark
nevertheless this factor, if present, may be taken, in the
discretion of the court, as a ground for the assessment of
double damages
In cases of unfair competition proper, actual intent to deceive
the public and defraud the person injured is declared to be
essential
but xxx "such intent may be inferred from similarity of the
appearance of the goods as packed or offered for sale to
those of the complaining party.
Refinements on this point will usually be found unnecessary,
since the three wrongs recognized in the statute xxx
together comprise all actionable injuries which one person
may inflict upon another as the result of the unfair use of
names, marks, and other trade-devices.

Spinner v. Neuss Hesslein

G.R. No. 31380, January 13, 1930
SUMMARY
E. Spinner exports khaki to the Philippines, including the brand
"Wigan." the different grades of khaki are under a common trademark
registered in the Bureau of Patents, Copyrights and Trademark. In
1924, E. Spinner discovered that Neuss Hesslein (defendant) was
selling khaki in the Philippines with the word "Wigan." Neuss Hesslein
is enjoined from using Wigan as it constitutes unfair competition and
trademark infringement.
Neuss' marking of the khaki with the word "Wigan" although not able to
deceive the dealers are ultimately able to deceive the consumers and
constitutes unfair competition. If the defendant were manufacturing the

product from the town of Wigan, the name would have been indicative
of the place of manufacture of the goods and would have been
allowed.

FACTS

E. Spinner & Co. is a copartnership with head offices in

Manchester, England, and Bombay, India, being represented in
the Philippine Islands by Wise & Co., a domestic corporation with
principal office in the City of Manila.

Defendant is a corporation organized in December, 1922, under

the laws of the Philippine Islands, with its principal office in the
City of Manila. The defendant is a subsidiary of Neuss Hesslein &
Co., Inc., of New York, U. S. A., for whom it acts as selling agent
in the Philippine Islands.

E. Spinner & Co., has long been engaged in the manufacture and
sale of textile fabrics, including khaki cloth.

About 1900, plaintiff began exporting khaki to the Philippine

Islands. Among the brands of khaki was the grade indicated by
the manufacturer as "Wigan."

All of the different grades of khaki were marketed by the plaintiff

under a common trade-mark, which was first registered in the
Bureau of Patents, Copyrights, and Trade-Marks of the Philippine
Government in the year 1905.

This trade-mark consists of a large label representing the profiles

of two elephant heads placed close to each other in the upper
middle center of the label and looking in opposite directions, with
trunks extending respectively to the right and left. This device has
for its rectangular border a garland of leaves; while over the point
of union between the two heads appear several flags. Inside the
space formed by the trunks of the elephants and the garland of
leaves appears a label consisting of the following words:

LEEMANN & GATTY'S

ORIGINAL
PATENTED FAST
KHAKI DRILL
Agents: Messrs. E. SPINNER & CO.
MANCHESTER & BOMBAY
Quality:................................Yds.
REGISTERED
No. 50,275.

Plaintiff learned in 1924 that the defendant, the Neuss Hesslein

Corporation, was selling a brand of khaki in the Philippine Islands
with the word "Wigan".
As thus employed by the defendant, the word "Wigan" purports to
show the color of the defendant's khaki.
After discovering this fact, the plaintiff, in April, 1925, caused its
trade-mark, consisting of the two elephant heads, to be again
registered in the Bureau of Commerce and Industry, as per
certificate No. 4807.
In its essential features, this trade-mark is identical with the trademark registered by the plaintiff in 1905, but in the latter trade-mark
the word "Wigan" is inserted after the word "Quality." The purpose
of this registration was of course to incorporate the word "Wigan"
as an integral part of the registered trade-mark.

ISSUE: Whether defendant corporation has a right to use the word

"Wigan" on khaki sold by it in the Philippine Islands. NO (constitutes
unfair competition and trademark infringement)

RULING

It will be noted that the plaintiff uses the word "Wigan" to indicate
quality, while the defendant purports to use the term to indicate
color, though the defendant's practice in this usage is somewhat
loose.
There is some proof in the record tending to show that American
dealers are accustomed to use the word "Wigan" to indicate a
color or certain shades of color of khaki cloth.
It is evident that the plaintiff first adopted the word "Wigan" in
connection with khaki cloth, and this was done for the purpose of
indicating quality.

Unfair Competition

The law governing trade-mark rights as well as unfair competition

in this jurisdiction is found in Act No. 666 of the Philippine
Commission, which is a reduction to statutory form of the
jurisprudence developed by the courts of England and the United
States in connection with the subjects mentioned; and to the
summary of substantive law expressed in the statute are added
the provisions relative to the registration of trade-marks.

As stated in section 7 of Act No. 666, 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 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," etc.
The representation that the khaki sold by the defendant is of the
kind known to the trade as "Wigan" directly tends to deceive the
purchaser and, therefore, constitutes unfair competition as
against the plaintiff.

It is no doubt true that the adoption of the word "Wigan" by the

defendant does not deceive merchants or tailors buying from the
defendant. But the person most to be considered in this
connection is the consumer, and when the word "Wigan" is found
upon a bolt of khaki, the ultimate buyer, or consumer, would
naturally be led to suppose that the goods sold under this name is
the goods sold by the plaintiff.

Trademark Infringement

With respect to the question of infringement of trade-mark right, it

is clear that the appropriation by the defendant of the word
"Wigan" for use in the sale of its khaki did not constitute a
violation of trade-mark prior to April, 1925, when the word "Wigan"
was first incorporated in the plaintiff's registered trade-mark; but
after that date it was certainly illegal for the defendant to use the
word "Wigan" stamped upon the khaki sold by it; and this act was
an infringement of trade-mark right.

In section 2 of Act No. 666 it is declared that a designation or part

of a designation which relates only to the name, quality, or
description of the merchandise, or geographical place of its
production or origin, cannot be made the subject of a trade-mark;
and it seems to be supposed by the defendant that this provision
disables the plaintiff from complaining of the use made of the
word "Wigan" by the defendant.

Although "Wigan," being the name of a town, was an original

geographical term, it is not used upon the plaintiff's khaki to
indicate the geographical place of production of the product.

If the defendant were manufacturing its khaki in the town of

"Wigan," it would be entitled to use that name to indicate the
place of manufacture of its goods. But such is not the case here.

The plaintiff is entitled to an injunction for the purpose of

restraining the defendant from using the word "Wigan" upon the
bolts of khaki sold by it, whether the wrongful act of the defendant
be considered as an act of unfair competition or as an
infringement of the trade-mark registered by the plaintiff in April,
1925.

Del Monte Corporation v. CA

GR No. L-78325, January 25, 1990

Summary: Del Monte and Philpack filed a case against Sunshine for
Infringement of Trademark and Unfair Competition because Sunshine,
which manufactures various kinds of sauces, uses a logo similar to Del
Monte and uses Del Montes bottles bought by it from junk shops. In
this case, the SC differentiated between Infringement and Unfair
Competition stating that Unfair Competition is the passing off of ones
goods as that of another, in Unfair Competition fraudulent intent is
essential, and registration is not necessary. It held that the general
impression created by Sunshines label is the determining factor that it
is an infringement of Del Montes trademark because they are
confusingly similar. Also, the use of the bottles constituted Unfair
Competition because of their neglect to obliterate the marking of Del
Monte and the numerous transactions involving the bottles that have
taken place. Sunshines registration was cancelled, it was enjoined to
use Del Montes bottles and was ordered to pay nominal damages.
To arrive at a proper resolution of this case, it is important to bear
in mind the following distinctions between infringement of
trademark and unfair competition: (1) Infringement of trademark
is the unauthorized use of a trademark, whereas unfair
competition is the passing off of ones 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.
Facts:

Petitioners Del Monte Corporation is a foreign company organized

under the laws of the US and not engaged in business in the
Philippines while Philippine Packing Corporation (Philpack) is a
domestic corporation duly organized under the laws of the
Philippines. Del Monte granted Philpack the right to manufacture,
distribute and sell in the Philippines various agricultural products,
including catsup, under the Del Monte trademark and logo.

Philpack to registered with the Philippine Patent Office the Del

Monte catsup bottle configuration for which it was granted a
Certificate of Trademark Registration. Del Monte also obtained 2
registration certificates for its trademark DEL MONTE and its
logo. (Supplemental Register)

Respondent Sunshine Sauce Manufacturing Industries was

issued a Certificate of Registration by the Bureau of Domestic
Trade to engage in the manufacture, packing, distribution and
sale of various kinds of sauce, identified by the logo Sunshine
Fruit Catsup.
o
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 that the private respondent was using its
exclusively designed bottles and a logo confusingly similar to Del
Montes, Philpack warned it to desist from doing so on pain of
legal action. Since demand was ignored, Philpack and Del Monte
filed a complaint against the private respondent for infringement
of trademark and unfair competition.

RTC of Makati dismissed. CA affirmed.

Issue: WoN private respondent is guilty of trademark infringement and
unfair competition
Held: WHEREFORE, the petition is GRANTED. The decision of the
CA is REVERSED and SET ASIDE and a new judgment is hereby
rendered:
1. Cancelling the private respondents Certificate of Registration and
permanently enjoining the private respondent from using a label
similar to that of petitioners.
2. Prohibiting the private respondent from using the empty bottles of
the petitioners as containers for its own products
3. Ordering the private respondent to pay the petitioners nominal
damages in the amount of P1,000.00 and costs of the suit.

TRADEMARK INFRINGEMENT V. UNFAIR COMPETITION

TM INFRINGEMENT: Sec. 22 of RA 166 (Trademark Law): 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 xxx.
UNFAIR COMPETITION: Sec. 29 of the same law: Sec. 29. Unfair
competition, rights and remedies 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 mark or tradename
is employed, has a property right in the goodwill of the said goods,
business or service so identified, which will be protected in the same
manner as other property rights. xxx
Any person who shall employ deception or any other means
contrary to good faith by which he shall pass of the goods
manufactured by him or in which he deals, or his business, or services
for those of the one having established such goodwill, or who shall
commit any acts calculated to produce said result, shall be guilty of
unfair competition, and shall be subject to an action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair competition:
a. Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as
to the goods themselves or in the wrapping of the packages in
which they are contained, or the devices or words thereon, or in
any 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, 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 of any agent of
any vendor engaged in selling such goods with a like purpose;
xxx"
DISTINCTIONS BETWEEN INFRINGEMENT OF TRADEMARK AND UNFAIR
COMPETITION:
1. Infringement of trademark is the unauthorized use of a trademark,
whereas unfair competition is the passing off of ones goods as
those of another.
2. In infringement of trademark fraudulent intent is necessary
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.
Comparison of the Products
1. The lower court held that there was substantial differences
between the logos or trademarks of the parties (shape, words,
color, and label)
2. While the Court does recognize these distinctions, it does not
agree with the conclusion that there was no infringement or unfair
competition. It has been correctly held that side-by-side
comparison is not the final test of similarity. The ordinary buyer
does not usually make such scrutiny nor does he usually have the
time to do so.
3. As observed in several cases, the general impression of the
ordinary purchaser, in 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.
4. 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.
5. 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 difference
to confuse the courts. When as in this case, Sunshine chose,
without 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.
On the Use of the Bottles
1. We find that the private respondent is not guilty of infringement for
having used the Del Monte bottle. The reason is that the

2.

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 bottles 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 still opted to use the petitioners
bottle to market a product which Philpack also produces. This
clearly shows the private respondents bad faith and its intention
to capitalize on the latters reputation and goodwill and pass off its
own product as that of Del Monte.

On Unfair Competition
1. The respondent court in resolving the case in favor of Sunshine
cited the case of Shell Co. v. Insular Petroleum, where this Court
declared that selling oil in containers of another with makings
erased, without intent to deceive, was not unfair competition.
2. The Shell Case is not on all fours with the case at bar because:
a. In Shell, the absence of intent to deceive was supported by the
fact that the respondent therein, before marketing its product,
totally obliterated and erased the brands/mark of the different
companies stenciled on the containers thereof, except for a single
isolated transaction. The respondent in the present case made no
similar effort.
b. In Shell, what was involved was a single isolated transaction. Of
the many drums used, there was only 1 container where the Shell
label was not erased, while in the case at hand, the respondent
admitted that it made use of several Del Monte bottles and
without obliterating the embossed warning.
c. In Shell, the product of respondent was sold to dealers, not to
ultimate consumers. As a general rule, dealers are well
acquainted with the manufacturer from whom they make their
purchase and since they are more experienced, they cannot be
so easily deceived like the inexperienced public. There may well
be similarities and imitation which deceive all, but generally the
interests of the dealers are not regarded with the same solicitude
as are the interests of the ordinary consumer.
As Sunshines label is an infringement of the Del Montes trademark,
law and equity call for the cancellation of the private respondents
registration and withdrawal of all its products bearing the questioned
label from the market. With regard to the use of Del Montes bottle, the
same constitutes unfair competition; hence, the respondent should be
permanently enjoined from the use of such bottles. The court must
rule, however, that the damage prayed for cannot be granted because
the petitioner has not presented evidence to prove the amount thereof.

PHILIPPINE CASE LAW ON UNFAIR COMPETITION

Section 168, IP Code
Section 168. Unfair Competition, Rights, Regulation and Remedies.
168.1. 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 the said goods, business or services so
identified, which will be protected in the same manner as other
property rights.
168.2. Any person who shall 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.
168.3. In particular, and without in any way limiting the scope of
protection against unfair competition, the following shall be deemed
guilty of unfair competition:
(a) Any person, who is selling his goods and gives 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

(b)

(c)

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;
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
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.

168.4. The remedies provided by Sections 156, 157 and 161 shall
apply mutatis mutandis. (Sec. 29, R.A. No. 166a)

Alhambra Cigar v. Compaia General de Tabacos de

Filipinas
G.R. No. L-11490, October 14, 1916
SUMMARY: (this is long because of the pictures)
Petitioner accused respondent of unfair competition in the sale of
cigars. The lower court said there was no unfair competition and the
SC agreed. Petitioners contention rest on the use of the word
Especiales, the fact that the cigars are brown and of a similar shape
and that it comes in a box and that the cigars have bands around
them. The SC said that unfair competition is (1) similarity of
products/packaging so that (2) buyers will be deceived into buying the
product thinking its the others. In this case, the similarity in packaging
simply cannot be avoided because thats just how cigars are packed.
SC compared this to cases involving thread on wooden spools and
soap wrapped in tin foil. In all these cases, the similarity in packaging
does not mean unfair competition because the buyer upon perusal
would not be confused between one brand or the other.
FACTS:
The only question presented by this appeal is whether or not the
defendant is guilty of unfair competition in the manufacture and
sale of a certain cigar. The plaintiff attempted to show that the
defendant was guilty of a violation of section 7 of Act No. 666 of the
Philippine Commission, and claimed that it had been damaged in
the sum of P20,000, and prayed for a permanent injunction to
restrain the defendant from the further manufacture or sale of the
cigars alleged to have been made in imitation of a cigar
manufactured by the plaintiff, and for an accounting.
The plaintiff and defendant are corporations engaged in manufacturing
products of tobacco in the city of Manila.
The plaintiff alleged that it had engaged in manufacturing a certain
brand of cigars which it named Especiales Alhambra, since the
year 1906; that these cigars are made of superior quality of
tobacco and wrapped with perfect leaves of Sumatra tobacco; that
each cigar is encircled with a band of a brown color, on which is
imprinted in gold color the word Especiales Alhambra; that the
cigars are packed with distinguishable labels and marks; that the
cigars present a very definite appearance; that the plaintiff had
extensively advertised the said cigar as "The little brown label
cigar." The plaintiff further alleged that the cigars had acquired a
reputation for their excellence and had been a source of great
profit.
It was alleged that) the defendant, "in disregard of plaintiff's rights and
with intent to deceive the public and defraud the plaintiff," had soles
and was selling a cigar "made in similar form, size, and
appearance and in simulation of plaintiff's said cigar: that
defendant's cigar was named Especiales, and is "encircled with
a brown collared band, with the words 'Especiales Isabela,'
printed in gold letters upon it, with the intent to thereby imitate
plaintiff's said cigars; that the defendant had so packed and
ornamented the receptacles and boxes containing its cigars, in
colors and forms of devices, as to give its said cigars, when offered
for sale, the general appearance of plaintiff's said brand of cigars."
The plaintiff further alleged that all of said acts of the defendant
were done with the intent to deceive the public and to defraud the
plaintiff and that such acts did actually deceive the buyers of
plaintiff's cigars.

10

 Upon the issues presented the lower court reached the conclusion that
the defendant was not guilty of a violation of said Act and absolved
it from all liability under the complaint, with costs against the
plaintiff.
Section 7 of Act No. 666, for the alleged violation of which the present
action was instituted, provides:
Any person who in selling his goods shall give
them the general appearance of goods of another
manufacturer or dealer, either 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, and who clothes the
goods with such appearance for the purpose of
deceiving the public and defrauding 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, shall be guilty of
unfair competition, and shall be liable to an action for
damages, in which the measure shall be the same as
that provided for a violation of trade-mark rights, together
with discretionary power in the court to impose double
damages, if the circumstances call for the same. The
injured party may also have a remedy by injunction
similar to that provided for in cases of violation of trademarks. This section applies in cases where the
deceitful appearance of the goods, misleading as to
origin or ownership, is affected not by means of
technical trademarks, emblems, signs, or devices,
but by the general appearance of the package
containing the goods, or by the devices or words
thereon, even though such packages, devices or
words are not by all capable of appropriation as
trade-marks; and in order that the action shall lie under
this section, actual intent to deceive the public and
defraud a competitor shall affirmatively appear on
the part of the person sought to be made liable, but
such intent may be inferred from similarity in the
appearance of the goods as packed or offered for
sale to those of the complaining party.
In addition to the oral testimony, the plaintiff presented Exhibits A and
B. Exhibit A is a box of cigars which the plaintiff claims the
defendant was attempting to imitate. Exhibit B is a box of cigars
which the plaintiff claims is an imitation of the cigars in Exhibit A
and constitutes the infringement or unfair competition complained
of. Exhibits A and B, including the size of the box, labels, etc., are
as follows:

On the loose leaf immediately over the cigars there was the following
label:

Over the end of the box and pasted on the outside thereof, there
appeared the following label:

On each cigar was the following band:

On the immediate front of the box there appeared the following label:

Exhibit A. (FOR ALHAMBRA)

Exhibit A of the plaintiff was a box containing twenty-five cigars and
was 8 inches long, by 5 1/4 inches wide and 1 3/8 inches deep.
On the top of said box and in the center thereof there appeared the
following label:

The box contained twenty-five cigars, of which the following is one:

Exhibit B.(FOR COMPANIA)

Exhibit B of the defendant was a box containing fifty cigars and was 7
3/1 inches long, by 5 1/8 inches wide, by 2 inches deep.
On the top of the said box and in the center thereof, there appeared
the following label:

On the inside of the top cover there appeared the following label:

11

justify the inference of actual intent on defendant's part to

deceive the public and defraud a competitor, and this is an
essential element of unfair competition.
ISSUE/HELD: W/N there was unfair competition? NO

On the inside of the cover there appeared the following label:

On the loose leaf immediately over the cigars there appeared the
following label:

Over the end of the box and pasted on the outside thereof, there
appeared the following label:

On each cigar was the following band:

On the immediate front of the box there appeared the following label:

The box contained fifty cigars, of which the following is one:

The lower court, after an examination of the evidence, states in the

course of his opinion: There certainly is not sufficient similarity to

RATIO:
An action for unfair competition is based upon the proposition that
no dealer in merchandise should be allowed to dress his
goods in simulation of the goods of another dealer, so that
purchasers desiring to buy the goods of the latter would be
induced to buy the goods of the former. The policy of the law is
not to prevent competition but to prevent deceit and fraud.
A merchant is entitled to the fruits of his reputation and his ingenuity
and no other merchant will be allowed to simulate the appearance
of the goods of the former, for the purpose of taking advantage his
reputation and ingenuity in business.
The law does not, however pretend to prohibit or enjoin every
similarity. The similarity must be such that the ordinary
purchaser will be deceived into the belief that the goods are
those of another. It must be a "similarity in the general
appearance," or in the goods "taken as a whole."
However, goods of a particular class are labeled by all manufacturers
in a common manner. In cases of that sort, no manufacturer
may appropriate to himself the method of labeling or packing
his merchandise and then enjoin other merchants from using
it. (examples: spools of thread, soap, cigars, etc.)
Cigar, as a rule, have the same general shape and are usually labeled
with bands of somewhat similar color. They are generally put up in
packages or boxes of like shape, size, and form. A manufacturer of
any one of these articles may put up his particular brand of goods
in the common form, without running the risk of being enjoined by
another manufacturer.
He will, however, be enjoined if it clearly appears that there is a studied
attempt to imitate or simulate certain distinctive features, adopted
by one manufacturer, for the purpose of identifying or distinguishing
his goods from others of the same general class and appearance
Coats vs. Merrick Thread Company, the question presented to the
court was with regard to the similarity of the labels on spools of
thread. The labels of both parties were black and gold, with the
name of the manufacturer, kind of thread, and the number of the
thread stamped upon it. These labels were small and were
attached to the end of the spools. The court found that the small
black and gold labels was in common use among manufacturers of
that quality of thread. The court held, that in view of the limited
space upon the label, and in view of the common right to use such
label, the defendants were fully within their rights.
Enoch Morgan's Sons Company vs. Troxell, the question was raised
with reference to the method of packing and wrapping soap. In
discussing that question, the court said: both small cakes of soap
covered with tin-foil or tinned paper and having a blue band around
them, with gilt lettering. The cakes are not even of the same shape,
one being nearly square, and the other oblong. But we are of the
opinion that this form of package, with a blue band and gift
lettering, can not be appropriated by the plaintiff as a trade-mark.
There is nothing peculiar about it.
With reference to Exhibits A and B, upon a close examination some
points of resemblance may possibly be found. A casual
examination, however, shows clearly that there is an essential and
marked difference.
The similarity or simulation must be use as to defraud and deceive the
purchaser into the belief that he is purchasing the goods of one
person believing them to be the goods of another. The question is
whether, taking the defendant's package and label as a whole,
it so far copies or resembles the plaintiff's package and label,
that a person of ordinary intelligence would be misled into
buying the one supposing he was buying the other.
In the present case there is no proof in the record that any persons
had been deceived into purchasing the cigars of the
defendant, believing that he was purchasing the cigars of the
plaintiff.
From an examination on the band of the cigars of the plaintiff and a
comparison of it with the ring of the cigars of the defendant, it will at
once be seen that there is no similarity in the shape of the two. The
color is not exactly the same. The lettering is different; the names
are different. It is difficult to understand, as Strickler testified, how

12

any person familiar with the cigars of the plaintiff could be deceived
into accepting the cigars of the defendant. The shape of the band
is very different from the shape of the ring. There is also a marked
difference in the color of the two. A most casual examination of the
two will show a wide difference. The judgment of the eye upon the
two is more satisfactory than evidence from any other source as to
the possibility of parties being misled, so as to take one of the
cigars for the other; seeing in such cases is believing, existing
differences being at once perceived and remaining in the mind of
the careful observer. There is no evidence in the record that any
one was ever misled by the alleged resemblance between the two
cigars.
We are unable to see or to understand how a person with reasonable
or ordinary care, knowing and accustomed to use the cigar of the
plaintiff, could ever be deceived into purchasing the cigar of the
defendant.

10th day of November, 1911: MA Clarke filed and registered in the

division of archives, patents, copyrights and trade-marks for the
Philippine Islands, said trade-mark.

Ever since the registration and for a considerable time before it,
the label containing said trade-mark has been used extensively by
the plaintiff upon all packages containing the candy of plaintiff.

From 1905, MA Clarke has used as a wrapper, for individual

pieces of candy, paper bearing said rooster trade-mark.
(these were proven by several exhibits A-G)

MA Clarke V. Manila Candy

July 1911: Distributed in connection with the manufacture

and sale of his candy many hundreds of the cards.

August 1911: Used as an advertising poster upon shipping

cases and in public places generally throughout the Islands
many hundreds of the labels.

January, 1912: Used for various kinds of his candy, paper

boxes.

Prior to January 12, 1912 (the date of incorporation of the

Manila Candy): MA Clarke advertised his candy products
extensively in the local papers.

Besides the use, display, and advertising of said mark,

plaintiff has during public festivals held in the city of Manila
for several years, and within the exhibition grounds of said
festivals, used paper mache roosters of large size, carried
about said grounds during the exhibition with the words
Clarkes candies written upon said roosters.

G.R. No. L-10487, January 23, 1917

SUMMARY: MA Clarke filed a complaint against Manila Candy for

technical trademark infringement and unfair competition. MA Clarke
alleged that it has been using its trademark (a rooster) on it candy
products as early as 1905. Manila Candy, whose two directors came
from MA Clarke, has used the same mark (but used two roosters) in its
products which are candies as well. SC ruled in favor of MA Clarke
stating that the allegations of TMI and UC maybe in the same
complaint since even if the evidence to establish TMI may be lacking, it
may be sufficient for the complaint for UC. Also, SC stated that there
was unfair competition even if counsel for Manila Candy argues it used
two roosters. The SC asks why of all the birds in the sky, Manila Candy
chose to use a rooster. They could not offer an explanation, thus, MA
Clarkes argument that it was used to deceive the public and defraud
MA Clarkes trade is tenable. Manila Candy, through the directors,
knew that MA Clarke uses a rooster on its product but they still
appropriated the same. According to Act No. 666, unfair competition
may be found to exist where the deceitful appearance of the goods,
misleading as to original ownership, is affected either by the general
appearance of the package containing the goods or by the devices or
words used thereon. Case further on distinguished TMI (which refers to
a colorable imitation) and UC (which refers to giving a general
appearance)

In consequence of such use, display and advertising of said

rooster as the trade-mark for plaintiffs candies, said candies
have for several years last past been known and are now
known to the trade in PH.

January 12, 1912: Manila Company was organized as shown by a

copy of the Articles of Incorporation and made a part of this
complaint, and that two of the directors of said Manila Candy are
ex-employees of the plaintiff and were aware of the use bby MA
Clarke of the said rooster or Manoc as a trade-mark for the
manufacture and sale of plaintiffs candy.

Despite this knowledge, the directors began the use of the label
(exhibited in Exhibit H) in connection with the manufacture and
sale of the various candy products of the Manila Candy.

5th day of June, 1912: A complaint was filed against the two
directors of Manila Candy by the prosecuting attorney of Manila.
The defendants pleaded not guilty before Hon. AS Crossfield.

Despite criminal prosecution, Manila Candy continued to sell and

dispose of its candy products under the said label as rooster or
Manoc candy and that retail dealers of defendants candy are also
selling and disposing of said candy as Manoc candy.

According to plaintiff:

FACTS: (According to the statements of the plaintiff, MA Clarke)

Manila Candy is a corporation organized under the laws of the

Philippine Islands, with principal office and residence in the city of
Manila. For twelve years, it has been and still engaged in the
manufacture of a large line of confectionery products including
candy of various and numerous kinds in Manila.
Ever since the year 1905, the MA Clarke has used as a trademark to designate his various candy products the
representation of a rooster, and that until the wrongful and
unlawful acts of Manila Candy, no other manufacturer of or dealer
in candy in PH has used such representation in connection with
the manufacture and sale of candy in any form.

The word Manoc is the generic term for chicken in all the
principal native dialects of these Islands, and that because of

13

the limited number of descriptive adjectives in each of said

dialects, any representation of a chicken, or chickens, on a
label, will naturally and inevitably become known to all
persons who speak and transact business in any of said
dialects as chicken or Manoc brand; that the great majority
of persons who buy, sell or consume candy in the Philippines
speak one or more of such native dialects.
o

Manila Candy, through the use of said label by Manila Candy

in selling its goods, has given and is giving said goods the
general appearance of the goods of MA Clarke in such a
way as likely to influence purchasers to believe that the
goods offered by the defendant are those of the plaintiff,
and that such appearance has so influence, and is now
influencing purchasers.

MA Clarkes Contention:

There was a technical infringement of his trade-mark and unfair

competition.

Defendant in selling his goods, has given and is giving said

goods the general appearance of the goods of this plaintiff in such
a way as is likely to influence purchasers to believe that the goods
offered by the defendant are those of the plaintiff, and this for
the purpose of deceiving the public and defrauding the plaintiff of
his legitimate trade.

Manila Candys Contention:

The exact nature of the action is impossible to define; it is either

to restrain the alleged infringement of a trade-mark, or to restrain
unfair competition. The complaint of plaintiff embraces both
causes of action, although they are essentially different and
distinct,

The fact that appellant himself is wholly unable to determine

whether his alleged case is one of infringement or of unfair
competition demonstrates quite conclusively that it is neither.

Imitation of plaintiffs mark has been done by the defendant

for the purpose of deceiving the public and defrauding
the plaintiff of his legitimate trade, and that the public
have been and are being deceived, and this plaintiff has
been and is being defrauded thereby to his great damage.

MA Clarkes Prayer:

A temporary injunction be issued against

Manila Candy,
restraining them from any further use of the said label

Manila Candy be directed to render under oath of its proper officer

a true and complete account of profits upon all sales and other
dispositions of its candy products under the said label; and that
judgment be entered in favor of the plaintiff and against defendant
for double the amount thereof;

Judgment be entered against Manila Candy, its officers, agents,

and employees perpetually enjoining them from using the said
label

Court grant to plaintiff any other remedy that may be proper under
the law, together with the costs herein.

SCs Opinion: The allegation of technical infringement and unfair

competition may be in the same complaint.

This is under the terms of Act No. 666.

Cases may well arise wherein the conduct complained of

constitutes a wrong under neither theory, or wherein the
complainant may be satisfied that he can establish his right to
relief under one or the other theory, though he is in doubt as to
which theory will prove acceptable to the court, and in such cases
the plaintiff should not be forced to an election of either theory in
the introduction of evidence in support of the prayer of his
complaint.

Under the code system of pleadings in force in this jurisdiction,

plaintiff may set forth in his complaint as many distinct
causes of action as he may deem proper, the only limitation
upon his right to do so being the provisions of section 90 of
the Code of Civil Procedure, which prescribes that, if the
complaint contains more than one cause of action, each distinct
cause of action must be set forth in a separate paragraph
containing all the facts constituting the particular cause of action.

CFI Decision: Favored Manila Candy (that is why MA Clarke appealed

to SC)

Issue: (Nothing specific given but can be) Whether or not there was
trademark infringement and unfair competition. (GUILTY OF
UNFAIR COMPETITION)

TRADEMARK INFRINGEMENT: A form of unfair competition

Held: The judgment entered in the court below denying relied must,
therefore, be reversed, without costs in this instance, and the record
returned to the court wherein it originated, where judgment will be
entered in conformity herewith granting injunctive relief as
hereinbefore indicated and making proper provision for the accounting
prayed for in the complaint.

The infringement of a trade-mark is, in truth, a form of unfair

competition.

Plaintiff may be in doubt as to whether he can establish a

technical infringement of a trade-mark to the satisfaction of the
court, and in such a case he may desire to offer additional
evidence to support his contention that, if in the opinion of
the court a technical infringement has not been established,
the evidence is sufficient to sustain a charge of unfair

14

competition, by the use of misleading emblems or designs upon

the goods of the defendant. We know of no reason why he should
not be permitted to do so.

Compaia General de Tabacos vs. Alhambra Cigar and Cigarette

Manufacturing Co.: What was said there must not be understood
as denying the right of a plaintiff to allege as many distinct causes
of action as he may deem proper on support of his prayer for
relief. It was said in that case that a clear distinction must be
drawn under our statute between actions for infringement
and actions for unfair competition, in that under our statute,
evidence sufficient to justify relief upon one or the other
theory necessitates the grant of relief upon that theory and
precludes the grant of relief under the other;
o

MA Clarke, a candy manufacturer, had for many years made use

of a pictorial representation of a rooster upon the packages and
wrappers used in connection with his business, and in advertising
his goods and made continuous use of a rooster as his trademark..

No reason has been suggested for the use of this particular

design with its predominant display of two roosters as the
trade-mark of the Manila Candy other than that alleged by the
plaintiff: that the new manufacturer, well knowing that the plaintiff
had used a rooster as his trade-mark, hoped to secure an unfair
advantage by misleading the public, and inducing it to believe
that its candies bearing a representation of two roosters
were made in the plaintiffs factory, which had always marked
its goods with one or more pictures of a single rooster, and at the
same time had made extensive use of this design in connection
with its advertising campaigns.

This does not mean that the plaintiff, in cases of this kind,
may not allege in support of his prayer for relief facts which
he believes will establish his claim that there has been either
an infringement or unfair competition, and thus secure the
relief prayed for, whichever theory the court is of opinion is
sustained by the proof adduced at the trial.

An examination of Exhibits A, B, C, D, E, F, and G leaves no

room for doubt that the dominant and striking pictorial
feature of each and all of them, except Exhibit A, is a single
rooster standing in an attitude of challenge.
o

However, the other evidence of record is sufficient to establish

the guilt of Manila Candy for unfair competition:

Exhibit A is a representation in colors of a rural scene in the

Philippines, with a small circular insert, uncolored, containing
the figure of the rooster as shown in the other exhibits, and
the words trade-mark on the lower margin of the circle. The
original of this exhibit was registered by the defendant has
made any improper use of this rural scene taken as a whole,
or of any part of it except the picture of the rooster which is
found in the insert, either as a trade-mark, or for the purpose
of dressing his goods in imitation of those manufactured by
the plaintiff.

Plaintiffs case rests wholly upon his claim that by long-continued

use upon the wrappers and containers in which his goods are
packed, and as a prominent feature of all his advertising matter,
he has lawfully adopted and appropriated as a trade-mark, the
representation of a rooster; and these exhibits, taken together
with the evidence of record conclusively establish this claim,
which, in fact, is not seriously disputed.
Exhibit H (the one of the Manila Candys) is an oval panel which
has as its central and predominating feature, two large and
highly colored roosters in an attitude of combat, with the
words Manila Candy Co., Ltd., the corporate name of the
defendant company, in large and distinct letters running along the
upper margin, and along the lower margin the words, Trademark, Manila.

Counsel of Manila Candys Contention: They used two roosters

which discloses its innocence of any intent to deceive:

SC: Why with all the birds in the air, and all the fishes in the
sea, and all the animals on the face of the earth to choose
from, the defendant company selected two roosters as its
trade-mark, although its directors and managers must have been
well aware of the long-continued use of a rooster by the plaintiff in
connection with the sale and advertisement of his goods?

There is nothing in the picture of one or more roosters which in

itself is descriptive of the goods sold by the plaintiff or by the
defendant corporation, or suggestive of the quality of these
goods. A cat, a dog, a carabao, a shark or an eagle stamped
upon the container in which candies are sold would serve as well
as a rooster for purposes of identification as the product of
defendants factory. Why did defendant select two roosters as
its trade-mark? It was because the plaintiffs candies has
acquired a certain reputation under the trade-mark of a
rooster, and the defendant corporation hoped to profit
unjustly by that reputation.

Defendant knew that the use of a single rooster would be

prohibited as a technical infringement of plaintiffs trade-mark, but
it hoped that it could avoid that danger by the use of two rooster
and get such advantage to secure from the use of a design on the
containers of its goods, not absolutely identical with that used by
the plaintiff, but so similar in the dominant idea as to confuse or
mislead the purchasers.

Children and average purchasers of candies, might well be

expected to recall that packages containing Clarks candies,
which they had been accustomed to buy and for which they
had acquired a taste, had pictures of a rooster on the
outside, and to accept candies made by the defendant company
as candy of the same mark, although the design used displayed
two roosters in each instance instead of the single rooster used
by the plaintiff.

The fact that defendant used two roosters, and that these rooster,
unlike the rooster in plaintiffs trade-mark, are highly colored, and
the further fact that the words Manila Candy Co., Ltd. are used
in connection with defendants trade-mark, are wholly

Becoming a known trademark was not satisfactorily established

(based on what I got from the words of the court)

SC in the opinion that the evidence of record does not

affirmatively and satisfactorily sustain plaintiffs claim that
his candy has actually become known to the trade as Manoc
candy; nor does it sustain his allegations that the defendant
corporation has sold or is selling its candy as Manoc candy, or
that its candies are sold in the retail trade under that name.

15

insufficient to relieve the design used by the defendant of the

vice of an unfair and misleading use of the predominant idea
set forth in plaintiffs unregistered trade-mark, in such manner
as to be likely to cause confusion in the minds of the ordinary
purchasers as to the origin of the goods.

constitute an infringement, or to entitle the complaining party to

protection.
o

UNFAIR COMPETITION ACCORDING TO SECTION 61 of ACT NO.

666:

But in cases wherein it could hardly be said that there was any
colorable imitation of the form and arrangement of the original
trade-mark, although the presence of some predominant feature
in both designs was likely to create confusion or uncertainty, the
difficulty in applying the rules touching technical infringements of
trade-marks was notably increased.

Under our statute, all difficulty can and should be avoided by

limiting relief prayed for on the ground of trade-mark
infringement to cases wherein there is an exact or at least a
colorable imitation of the original trade-mark, and in other
cases applying the provisions of section 7 of the statute (Act
No. 666) which defines the offense of unfair competition.

Unfair competition may be found to exist where the deceitful

appearance of the goods, misleading as to original
ownership, is affected either by the general appearance of
the package containing the goods or by the devices or words
used thereon.

THE USE OF THE TWO ROOSTERS MADE MANILA CANDY

GUILTY OF UNFAIR COMPETITION: Manila Candys intent was to
deceive the public and defraud the plaintiff.
EVOLUTION OF UNFAIR COMPETITION AND ITS DIFFERENCE
FROM TRADEMARK INFRINGEMENT: (for FYI lang)

There has been a very marked change in the attitude of the public
and of the courts in recent years, in dealing with the offense
known as unfair competition, which is reflected in the progress
made by the law in developing rules and remedies relating to
dishonest and unfair commercial practices.

Act No. 666, is in itself a clear recognition of the more modern

attitude of the lawmaker with relation to these practices. Mr.
Justice Holmes said twenty-five years ago that: The law has got
to be stated over again. And I venture to say that in fifty years we
shall have it in a form of which no one could have dreamed fifty
years ago.

Harvard Law Review (1895): Unfair competition, as the

designation of a legal wrong which the law will undertake to
redress or prevent, has only of late years begun to make its
appearance in the books. To most lawyers, it is safe to say, the
title carries no very definite meaning, for as yet its use is almost
entirely confined to the Reports, and in these it is used only in the
most general way, and always with the facts of the particular case
in view, while it is quite unrecognized in digest, text book, or
dictionary.

Nims work on Unfair Business Competition: Explain in some

sort the tendency of the courts in recent years to hold to more
rigid account those charged with unfair competition.

Now we find that phrases Passing Off , in England,

Concurrence Deloyale, in France and Unfair Competition in
America, are recognized legal terms, embracing rules of law
applicable to cases of this character.

No little difficulty seems to have been encountered by the courts

in determining the degree of similarity between an alleged
infringing trade-mark and the original which should be required in
order to sustain a claim of technical infringement, though it is
generally recognized that exact similitude is not required to

Colorable imitation is deemed sufficient, and redress is

granted where the similarity is sufficient to convey a
false impression to the public mind, and is of a
character to mislead and deceive the ordinary
purchaser, in the exercise of ordinary care and caution
in such matters.

Unfair competition exists when one selling his goods gives

them the general appearance of goods of another
manufacturer or dealer, either 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, and who
clothes the goods with such appearance for the purpose of
deceiving the public and defrauding another of his legitimate
trade,

This section applied in cases where the deceitful

appearance of the goods, misleading as to origin or
ownership, is effected not by means of technical trademarks, emblems, signs, or devices, but by the general
appearance of the package containing the goods, or by
the devices or words thereon, even though such packages,
devices, or words are not by law capable of appropriation as
trade-marks.

Under the precise terms of this statute, the use under the
conditions therein specified of devices or words, which would be
likely to cause confusion as to the origin of the goods, although
they may not amount to a colorable imitation of the form and
arrangement of a trade-mark, constitutes the offense of
unfair competition, and there is no necessity, therefore (in order
to give a remedy for the wrong involved in such conduct), for the
straining of the well settled principles which have long controlled
in cases of technical infringements of trade-marks.

Dy Buncio v. Tan Tiao Bok

G.R. No. L-16397, October 3, 1921
Facts:

16

Dy Buncio, who is a tea merchant, filed an action to enjoin the

defendant, Tan Tiao Bok, from selling tea in this market in
packages and with wrappers of a design described in the
complaint, it being alleged that said packages were put up in such
manner as to resemble closely those long sold by the plaintiff.

The defendant answered, admitting that he was selling tea under

a trademark of the style complained of but insisted that no legal
wrong has been done; and by way of cross-complaint prayed that
damages be awarded to him by reason of the wrongful suing out
of the preliminary injunction which the plaintiff had obtained.

At the hearing the trial judge found that the defendant was
engaged in illegal competition with the plaintiff and made the
preliminary injunction perpetual.

Since the year 1903 the plaintiff, Dy Buncio, has been engaged in
Manila as a merchant in importing Formosan tea and has during
that time been distributing and selling the same in the Philippine
market in original packages containing about 5 ounces. These
packages are enveloped in a wrapper exhibiting the following
features: On the face is a design supposedly suggested by the
form of a Chinese fruit, having somewhat the shape of a pear.

The characters in the upper space represent the Chinese name of

the exporter in Formosa by whom the packages appear originally
to have been put up. The characters in the lower space mean "tea
from Formosa."

It may be stated here that other persons in the Philippine Islands

besides Dy Buncio have in the past, and are now, engaged in the
importation of tea from Formosa; and it is admitted that all tea
from that source comes to this market in packages with the same
form of wrapper.

In the year 1918, the defendant Tan Tiao Bok, a native of

Formosa and subject of Japan, who had formerly been employed
by Dy Buncio as a bookeeper, began to import tea from Formosa
on his own account with a view to selling it in the Philippine
market; and in order to identify his tea, he adopted a trade-mark,
which he duly registered in the Bureau of Commerce and
Industry. (There was a detailed description of the mark in the
case)

All the tea which has been imported and actually sold by the
defendant has been put up in wrappers bearing the trade-mark
just described; but in the year 1918 he made a single importation
of thirty boxes of tea which he was unable to sell because of the
injunction.

Action herein is based on Sec. 7, Act No. 666 of the Philippine

Commission.

Issue: Whether the issuance of injunction was proper - NO

Ratio:

Upon this question we have no hesitancy is saying, after a careful

comparison of the two packages, with the designs printed
thereon, that objectionable simulation is not made out. Some
resemblance there undoubtedly is, but in our opinion it is not such
as would naturally lead intending purchasers to believe that the
goods offered by the defendant are the same as are sold by the
plaintiff. The only individual who in our opinion would be likely to
take notice of these resemblances, on having his attention
directed to the packages, is the one who is unfamiliar with either.

As to this it is agreed that the form of package used by both

plaintiff and defendant is the same as that adopted by all
merchants engaged in selling tea in this country; and it is a matter
of common observation that the articles supplying the simplest
human needs, such as matches, cigarettes, and certain
foodstuffs, are marketed in conventional containers of appropriate
size and of a design made almost uniform in the case of each
article by immemorial custom. Nobody can acquire any exclusive
right in these standardized forms and styles.

No question can therefore be raised with respect to the right of

the defendant to market tea in 5-ounce packages, enveloped in
ordinary wrapping paper of conventional color and of the form
adopted by both the litigants in this case. Nor can anything be
fairly made to the detriment of the defendant out of the
circumstance that the inscription on the bottom of his package
indicating the weight of the contents erroneously appears as "502
net" instead of "5 oz. net," as on the plaintiff's package. The fact
that the defendant personally does not know the meaning of this
inscription loses all significance in view of the fact that he is a
native Formosan, unversed in English, and that the package was
put up for export in Formosa.

As the size and form of the packages sold by the defendant are
practically the same as those of the packages sold by the plaintiff,
it results, as might be expected, that the trade-mark placed on the
defendant's packages is of about the same size as the design
used by plaintiff; and this coincidence affords no ground of
legitimate criticism, being determined in a measure by the
conventional size of the package in which tea is put upon the
market.

(Comparison of the mark) Coming now to a comparison of the

plaintiff's design (Exhibit A) with the trade-mark (Exhibit C) used
by the defendant, the differences between the two, viewed either
as a whole or in detail, are very marked. It is probable that the
mind of the artist who drew the sketch for defendant's trade-mark
may have gotten suggestions from the plaintiff's design, but the
general result is so different that we consider it unlikely that a
person whose eye is accustomed to the lines of the plaintiff's
design would for a moment mistake the defendants trade-mark for
it. The superior finish, grace, and symmetry of the latter readily
distinguishes it from the other; and there is one other difference
which seems to us decisive. This is found in the fact that the welldefined lines of the double-decked jar, so conspicuous in the
plaintiff's design, are entirely wanting in the defendant's trademark. Instead the latter is formed of a combination of the figures
of two peacocks, whose ascending tails enclose at the top a pot
filled with flowers, giving the general effect of a lyre. In whatever
aspect the rival marks be viewed, we are of the opinion that the
resemblance between the two designs is not sufficiently marked
to afford just cause for complaint on the part of the plaintiff; and
we do not think that the case is altered by the circumstance that
the reading matter in both is in the usual red Chinese characters,
while the body of both designs is in green, though of differing
shades.

17

It is perhaps worth noting here, as constituting one of the

differences between the packages sold by the two respective
parties, that the plaintiff's design is on the broad side of the
package, while the defendant's trade-mark is on the narrow side
of the package, with the result that faces of the two packages are
distinctly different in size.

(Basta parang kahit daw may resemblance, the evidence

presented was not sufficient to justify relief)

This last observation leads on to another, which is, that in order

that there may be deception of the buying public in the sense
necessary to constitute unfair competition, it is necessary to
suppose a public accustomed to buy, and therefore to some
extent familiar with, the goods in question.

The test of fraudulent simulation is to be found in the likelihood of

the deception of persons in some measure acquainted with an
established design and desirous of purchasing the commodity
with which that design has been associated. The test is not found
in the deception, or possibility of the deception, of the person who
knows nothing about the design which has been counterfeited,
and who must be indifferent as between that and the other. The
simulation, in order to be objectionable, must be such as appears
likely to mislead the ordinarily intelligent buyer who has a need to
supply and is familiar with the article that he seeks to purchase. In
the case under consideration, the resemblances that have been
pointed out between the designs of the two litigants in this case
are not in our opinion sufficient to mislead such a person.

Judgment reversed. Remanded to trial court to determine the

damages in the cross-complaint.

Ang Si Heng v. Wellington

92 Phil. 448 (1953)
SUMMARY: Wellington is engaged in the business of manufacturing
articles of clothing with a trademark registration Wellington. It was not
proved however that it was renewed after 1938 nor their trade name
after 1946. In 1946, Chua was able to register his business name
Wellington Department Store. Wellington filed a case for unfair
competition alleging that public is deceived into buying Chuas goods
believing it was his. The issue is WON there is unfair competition. The
Court ruled that there was none basically because there is no
confusion or deception that can arise because they had different lines
of business. The department store does not even sell any shirt or
clothing wear. Although it is not necessary that they be exactly the
same products, the court ruled that it is not competition per se that the
law seeks to prevent but unfair competition.
FACTS

Wellington is engaged in the business of manufacturing shirts,

pants, drawers and other articles of clothing for men and women
with a trademark registration WELLINGTON.

It does not appear however, that the mark herein was renewed
after 1938 nor their trade name after 1946.

On the other hand, Benjamin Chua herein applied for the

registration of a business name WELLINGTON DEPARTMENT
STORE in 1946 which was approved by the Bureau of
Commerce. Likewise, it does not appear that his application has
been renewed and neither does it appears that the business
name WELLINGTON COMPANY has also been renewed.

Wellington filed a case for unfair competition alleging that the use
of the words WELLINGTON DEPARTMENT STORE as a
business name and as a corporate name by Benjamin
deceives the public into buying Benjamins goods under the
mistaken belief that the names are the plaintiffs or have the

similar source.
In his defense, Benjamin states that plaintiff are engaged in
different businesses since the he is engaged in the business of
selling shoes, hats, toys perfumes, bags, apparels and the like
(different from those of Wellingtons).
The lower court dismissed the complaint and held that the term
Wellington is either a geographical name. Even assuming that it is
a surname, it cannot also be validly registered as a tradename.

ISSUE: Whether or not there is unfair competition NO

RATIO

While there is a similarity in this case, there is no confusion or

deception that can arise form the similarity because the defendant
is a department store while the former does not purport to be so.

The name used by the defendant indicates not the

manufactured articles or any similar merchandise but a
DEPARTMENT STORE. The department store herein does not
even sell any shirt or clothing wear.

Admittedly though, it is not necessary that the articles of the

parties be exactly similar in order for there to be unfair
competition. It is sufficient that the articles fall under a general
category.

It might be true that, inasmuch as appellees' department store

deals on shirts and other articles of wear while appellants produce
the same articles, some competition would arise between them.

It is not, however, competition that the law seeks to prevent, but

unfair competition, wherein a newcomer in business tries to grab
or steal away the reputation or goodwill of the business of
another.

Shell Company v. Insular Petroleum

G.R. No. L-19441, June 30, 1964
SUMMARY: Shell is an oil corporation. Insular processes lubricating oil
and sells low-grade oil. In selling, Insural uses containers of other oil
companies. In normal transactions, the name of the original company
(origin of container) is erased. In this isolated transaction, the name of
Shell was not removed. The issue is whether there is unfair
competition. The Court ruled that there was no unfair competition. 1) It
was just an isolated transaction. 2) The public is not deceived (In this
case, the buyer was an agent of Shell who was buying from Insular to
gather evidence of unfair competition. The buyer is not the public.).
FACTS

Shell is a corporation engaged in the sale of petroleum products,

including lubricating oil. The packages and containers of its goods
bear its trademark, labeled or stenciled thereon.

Insular is a registered limited partnership, whose principal

business is collecting used lubricating oil which, thru a scientific
process, is refined and marketed to the public at a price much
lower than that of new lubricating oil. From the used oil,
respondent produces two types of lubricating oil one, a straight
mineral oil classified as second grade or low-grade oil; and
another, a first grade or high-grade oil.

In one transaction, which was consummated with Conrado

Uichangco a dealer of petitioner's gasoline and lubricating
oil, the low-grade oil that was sold to said operator was
contained in a drum with the petitioner's mark or brand
"Shell" still stenciled without having been erased.

Take note that the usual transaction is that Insular really uses
containers of other companies, not just Shell, but they erase the
marks of other companies.

In the civil case, petitioner herein invoked two causes of action:

(1) that respondent in selling its low-grade oil in Shell
containers, without erasing the marks or brands labeled or
stencilled thereon, intended to mislead the buying public to the
prejudice of petitioner and the general public; and (2) defendant
had attempted to persuade Shell dealers to purchase its lowgrade oil and to pass the same to the public as Shell oil, by
reason of which petitioner bad suffered damages in the form of
decrease in sales.

After trial, the CFI found for Shell and ordered respondent to pay
P20,000.00 for actual damages, P5,000.00 for attorney's fees,

18

P1,000.00 for legal expenses and P10,000.00 by way of

exemplary damages and the costs.
Court of Appeals: Encompassing the facts of the case to the
foregoing ruling in the Alhambra case, it clearly appears that
defendant's practices in marketing its low-grade oil did not cause
actual or probable deception and confusion on the part of
the general public, because, as shown from the established
facts, with the exception of that single transaction regarding the
one drum of oil sold by the defendant's agent to the plaintiff's
dealer, as aforesaid, before marketing to the public its low-grade
oil in containers the brands or marks of the different companies
stenciled on the containers are totally obliterated and erased.
The defendant did not pass off or attempt to pass off upon
the public its goods as the goods of another. There is neither
express nor implied representation to that effect. The
practices do not show a conduct to the end and probable effect to
which is to deceive the public, or pass off its goods as those of
another.
Regarding the transaction between defendant's agent and
plaintiff's dealer, Uichangco to determine whether or not, as a
matter of fact, the defendant is guilty of unfair competition. There
is evidence showing that the use of the defendant of the
drum or container with the Shell brand stenciled thereon was
with the knowledge and consent of Uichangco. There is also
the categorical testimony of Uichangco that defendant's agent did
not make any representation that said agent was selling any oil
other than Insoil motor oil. The sales invoice states that Insoil Oil
was sold.

ISSUE: Whether Insular was guilty of unfair competition - NO

RULING

The complaint was predicated on section 29 of Rep. Act No. 166,

defining unfair competition, to wit:

Any person who shall 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, ... for those of the one
having established such goodwill, or who shall commit any act
calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.

From the above definition and authorities interpretative of the

same, it is seen that to hold a defendant guilty of unfair
competition, no less than satisfactory and convincing evidence
is essential, showing that the defendant has passed of or
attempted to pass off his own goods as those of another and
that the customer was deceived with respect to the origin of
the goods. In other words, the inherent element of unfair
competition is fraud or deceit.

As no inflexible rule can be laid down as to what will constitute

unfair competition; as each case is, in a measure, a law unto itself
and as unfair competition is always a question of fact, the
determination of whether unfair competition was committed in the
case at bar, must have to depend upon the fact as found by the
Court of Appeals, to the definitiveness of which We are bound.
The Supreme Court can not examine the question of whether or
not the Court of Appeals was right when that tribunal concluded
from the uncontroverted evidence that there had been no deceit.

Not just because a manufacturer used a container still bearing a

competitor's marking in the sale of one's products, irrespective of
to whom and how the sale is made, can there be a conclusion
that the buying public has been misled or will be misled, and,
therefore, unfair competition is born. The single transaction at bar
will not render defendant's act an unfair competition, much in the
same way that the appearance of one swallow does not make a
season, summer.

It was found by the Court of Appeals that in all transactions of

the low-grade Insoil, except the present one, all the marks
and brands on the containers used were erased or
obliterated. The drum in question did not reach the buying
public. It was merely a shell dealer or an operator of a Shell
Station who purchased the drum not to be resold to the
public, but to be sold to the petitioner company, with a view
of obtaining evidence against someone who might have been
committing unfair business practices, for the dealer had found
that his income was dwindling in his gasoline station.

There was no evidence that defendant or its agent attempted to

persuade Uichangco or any Shell dealer, for that matter, to

purchase its low-grade oil and to pass the same to the public as
Shell oil.
The point we would like to drive home is that if a SHELL dealer
wants to fool the public by passing off INSOIL as SHELL oil he
could do this by the simple expedient of placing the INSOIL oil or
any other oil for that matter in the "tall boys" and dispense it to the
public as SHELL oil. Whatever container INSOIL uses would be
of no moment. ... absence of a clear showing, that INSOIL and
the SHELL dealer connived or conspired, we respectfully maintain
that the responsibility of INSOIL ceases from the moment its oil, if
ever it has ever been done, is transferred by a SHELL dealer to a
SHELL "tall boy".

Republic Gas v. Petron Corporation

G.R. No. 194062, June17, 2013
Facts:

Petitioners Petron Corporation and Pilipinas Shell Petroleum

Corporation are two of the largest bulk suppliers and producers of
LPG in the Philippines. Petron is the registered owner in the
Philippines of the trademarks GASUL and GASUL cylinders used
for its LGP products. It is the sole entity in the Philippines
authorized to allow refillers and distributors to refill, use, sell, and
distribute GASUL LPG containers, products and its trademarks.

Pilipinas Shell, on the other hand, is the authorized user in the

Philippines of the tradename, trademarks, symbols or designs of
its principal, Shell International Petroleum Company Limited,
including the marks SHELLANE and SHELL device in connection
with the production, sale and distribution of SHELLANE LPGs. It
is the only corporation in the Philippines authorized to allow
refillers and distributors to refill, use, sell and distribute
SHELLANE LGP containers and products.

Private respondents, on the other hand, are the directors and

officers of Republic Gas Corporation (REGASCO), an entity duly
licensed to engage in, conduct and carry on, the business of
refilling, buying, selling, distributing and marketing at wholesale
and retail of LPG.

LPG Dealers Associations, such as the Shellane Dealers

Association, Inc., Petron Gasul Dealers Association, Inc. and
Totalgaz Dealers Association, received reports that certain entities
were engaged in the unauthorized refilling, sale and distribution of
LPG cylinders bearing the registered tradenames and trademarks
of the petitioners.

As a consequence, on February 5, 2004, Genesis Adarlo on

behalf of the aforementioned dealers associations, filed a lettercomplaint in the NBI regarding the alleged illegal trading of
petroleum products and/or underdelivery or underfilling in the sale
of LPG products.

Acting on the said letter-complaint, NBI conducted surveillance

and test-buy operation where the operatives brought empty LPG
cylinders to the REGASCO refilling station. The LPG cylinders
were refilled.

Eventually search warrants were issued and then a complaint was

filed before the DOJ against the private respondents for alleged
violations of Sections 155 and 168 of Republic Act (RA) No. 8293,
otherwise known as the Intellectual Property Code of the
Philippines.

19

Asst. City Prosecutor recommended the dismissal of the

complaint. The prosecutor found that there was no proof
introduced by the petitioners that would show that private
respondent REGASCO was engaged in selling petitioners
products or that it imitated and reproduced the registered
trademarks of the petitioners.

In the present case, respondents pertinently observed that by

refilling and selling LPG cylinders bearing their registered marks,
petitioners are selling goods by giving them the general
appearance of goods of another manufacturer.

What's more, the CA correctly pointed out that there is a showing

that the consumers may be misled into believing that the LPGs
contained in the cylinders bearing the marks "GASUL" and
"SHELLANE" are those goods or products of the petitioners
when, in fact, they are not. Obviously, the mere use of those LPG
cylinders bearing the trademarks "GASUL" and "SHELLANE" will
give the LPGs sold by REGASCO the general appearance of the
products of the petitioners.

In sum, this Court finds that there is sufficient evidence to warrant

the prosecution of petitioners for trademark infringement and
unfair competition, considering that petitioner Republic Gas
Corporation, being a corporation, possesses a personality
separate and distinct from the person of its officers, directors and
stockholders.Petitioners, being corporate officers and/or directors,
through whose act, default or omission the corporation commits a
crime, may themselves be individually held answerable for the
crime.

It explained that the empty Shellane and Gasul LPG cylinders

were brought by the NBI agent specifically for refilling. Refilling
the same empty cylinders is by no means an offense in itself it
being the legitimate business of Regasco to engage in the refilling
and marketing of liquefied petroleum gas.

Issue: Whether sufficient evidence was presented to prove that the

crimes of Trademark Infringement and Unfair Competition as defined
and penalized in Section 155 and Section 168 in relation to Section
170 of the IP Code YES

Ratio:
As to Trademark Infringement

Based on Sec. 155 of the IP Code, the Court in a very similar

case, made it categorically clear that the mere unauthorized use
of a container bearing a registered trademark in connection with
the sale, distribution or advertising of goods or services which is
likely to cause confusion, mistake or deception among the buyers
or consumers can be considered as trademark infringement.
Here, petitioners have actually committed trademark infringement
when they refilled, without the respondents consent, the LPG
containers bearing the registered marks of the respondents. As
noted by respondents, petitioners acts will inevitably confuse the
consuming public, since they have no way of knowing that the gas
contained in the LPG tanks bearing respondents marks is in
reality not the latters LPG product after the same had been
illegally refilled. The public will then be led to believe that
petitioners are authorized refillers and distributors of respondents
LPG products, considering that they are accepting empty
containers of respondents and refilling them for resale.

As to the charge of unfair competition

From jurisprudence, unfair competition has been defined as the

passing off (or palming off) or attempting to pass off upon the
public of the goods or business of one person as the goods or
business of another with the end and probable effect of deceiving
the public.
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.

McDo and McGeorge Food Industries v. L.C. Big Mak

Burger
480 Phil. 2012, August 18, 2004
Summary: Mcdo is a corporation owns a family of marks including
BIC MAC for its sandwiches. LC Big Mak is a domestic corporation
also in the fastfood business which applied for the registration of BIG
MAK. This was opposed by Mcdo but receiving no reply therefrom,
Mcdo filed a case with the RTC for trademark infringement and unfair
competition. The trial court ruled that there is trademark infringement
and unfair competition on the ground that the choice of mark by
defendant herein is not merely for sentimental reasons but was clearly
to take advantage of the reputation, popularity and the established
goodwill of McDo. CA reversed the judgment on the ground that there
is no colorable imitation as it is not sufficient that a similarity exists in
both names but more importantly, the overall presentation or in their
essential, substantive and distinctive parts. SC held that the mark
herein is distinctive and is not barred from registration contrary to the
position of LC BIG MAK. More importantly, there is unfair competition.
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. In this case, the
dissimilarities are so minor compared to the similarities in the marks. If
respondents sold egg sandwiches only instead of hamburger
sandwiches, their use of the "Big Mak" mark would not give their goods
the general appearance of petitioners' "Big Mac" hamburgers. In such
case, there is only trademark infringement but no unfair competition.
However, since respondents chose to apply the "Big Mak" mark on
hamburgers, just like petitioner's use of the "Big Mac" mark on
hamburgers, respondents have obviously clothed their goods with the
general appearance of petitioners' goods.
DISCLAIMER: Super haba ng case. If youre in a hurry, read facts and
the ratio part on UC na lang.
Facts:
1. McDonalds Corporation (McDo) is a corporation organized under
the laws of Delaware, US. It operates, by itself or through its
franchisees, a global chain of fast-food restaurants. It owns a
family of marks including the Big Mac mark for its doubledecker hamburger sandwich. McDo registered this trademark
with the US Trademark Registry in1979.
2. Based on this Home Registration, McDo applied for the
registration of the same mark in the Principal Register of the then
Philippine Bureau of Patents, Trademarks and Technology
(PBPTT), now the Intellectual Property Office (IPO) allowed.

20

3.

4.

5.

6.
7.

8.

Like its other marks, Mcdo displays the Big Mac mark in items
and paraphernalia in its restaurants, and in its outdoor and indoor
signages. From 1982 to 1990, McDo spent P10.5M in
advertisement for Big Mac alone. McGeorge Food Insustries
(McGeorge), a domestic corporation, is McDos Philippine
franchisee.
L.C. Big Mak Burger, Inc. (LC) is a domestic corporation which
operates fast-food outlets and snack vans in Metro Manila and
nearby provinces. Its menu includes hamburger sandwiches and
other food items. Respondents are the incorporators,
stockholders and directors.
In 1988, LC applied with the PBPTT for the registration of the Big
Mak mark for its hamburger sandwiches. McDo opposed on the
ground that Big Mak was a colorable imitation of its registered Bic
Mac mark for the same food products. McDo also informed Dy,
the chairman of the BoD of LC of its exclusive right to the Big Mac
mark and requested him to desist from using it or any similar
mark.
Having received no reply from Dy, petitioners sued respondents in
the RTC of Makati for trademark infringement and unfair
competition.
RTC rendered judgment finding LC liable for trademark
infringement and unfair competition: The choice of Big Mak as
tradename by LC is not merely for sentimental reasons but was
clearly made to take advantage of the reputation, popularity and
the established goodwill of McDo. For as stated in Sec. 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.
The CA rendered judgment reversing the RTC and ordering McDo
to pay respondents actual and compensatory damages: We find
no sufficient evidence adduced by McDo that LC deliberately tried
to pass off the goods manufactured by them for those of McDo.
The mere suspected similarity in the sound of the LCs corporate
name with the McDos trademark is not sufficient evidence to
conclude unfair competition.

Issue:
1. WoN respondents used the words Big Mak not only as part of
the corporate name LC Big Mak Burger, Inc. but also as a
trademark of their hamburger products
2. WoN respondent corporation is liable for trademark infringement
and unfair competition
Held: WHEREFORE, we GRANT the instant petition. We SET ASIDE
the Decision of the CA and REINSTATE the Decision of the RTC,
finding respondent LC Big Mak Burger, Inc. liable for trademark
infringement and unfair competition.

ON WHETHER CONFUSION OF GOODS AND CONFUSION OF

BUSINESS ARE APPLICABLE
1. Respondents assert that their Big Mak hamburgers cater mainly
to the low-income group while petitioners Big Mac hamburgers
cater to the middle and upper income groups. Even if this is true,
the likelihood of confusion of business remains, since the lowincome group might be led to believe that the Big Mak
hamburgers are the low-end hamburgers marketed by petitioners.
After all, petitioners have the exclusive right to use the Big Mac
mark. On the other hand, respondents would benefit by
associating their low-end hamburgers, through the use of the Big
Mak mark, with petitioners high-end Big Mac hamburgers,
leading to likelihood of confusion in the identity of business.
2. The registered trademark owner may use his mark on the same
or similar products, in different segments of the market, and at
different price levels depending on variations of the products for
specific segments of the market. The Court has recognized that
the registered trademark owner enjoys protection in product and
market areas that are normal potential expansion of his business.
REPSONDENTS USE OF THE BIG MAK MARK RESULTS IN
LIKELIHOOD OF CONFUSION
1. Applying the dominancy test, the Court finds that 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
letter, 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.
2. Absent proof that LCs adoption of the Big Mak mark was due to
honest mistake or was fortuitous, the inescapable conclusion is
that LC adopted the Big Mak mark to reide on the coattails of the
more established Big Mac mark. This saves respondents much of
the expense in advertising to create market recognition of their
mark and hamburgers. Thus, we hold that confusion is likely to
result in the public mind. We sustain McDos claim of trademark
infringement.
ON THE UNFAIR COMPETITION (MAIN PART)
1. Sec. 29 of RA 166 defines unfair competition, thus:
xxx
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, xxx
2.

ON THE MANNER RESPONDENTS USED BIG MAK IN THEIR

BUSINESS
1. The evidence presented shows that the plastic wrappings and
plastic bags used by LC for their hamburger sandwiches bore the
words Big Mak. The other descriptive words burger and 100%
pure beef were set in smaller type, along with the location of
branches. LCs cash invoices simply refer to their hamburger
sandwiches as Big Mak. It is LCs snack vans that carry the words
LC Big Mak Burger, Inc.
ON THE VALIDITY OF THE BIG MAC MARK AND MCDOS
OWNERSHIP OF SUCH
1. 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 and description
of a kind of gods, such as Lite for beer or Chocolate Fudge for
chocolate soda drink. 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,
such as Arthriticare for arthritis medication.
a. 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.

3.

4.

The essential elements of an action for unfair competition are:

a. Confusing similarity in the general appearance of
the goods
i. May or may not result from the similarity
in the marks, but may result from other
external factors in the packaging or
presentation of the goods
b. Intent to deceive the public and defraud a
competitor
i. 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 our 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 probably 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.
Passing off (or palming off) takes place where the defendant, by
imitative devices on the general appearance of the goods,

21

5.

6.

7.

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 LCs Big Mak hamburgers
the general appearance of McDos Big Mac hamburgers. Section
29(a) expressly provides that the similarity in the general
appearance of the goods may be in the devices or words used
on the wrappings. Respondents have applied on their plastic
wrappers and bags almost the same words that petitioners use
on their styrofoam box. What attracts the attention of the buying
public are the words Big Mak which are almost the same, aurally
and visually, as the words Big Mac. The dissimilarities in the
material and other devices are insignificant compared to the
glaring similarity in the words used in the wrappings.
Section 29(a) also provides that the defendant gives his goods
the general appearance of goods of another manufacturer.
Respondents goods are hamburgers which are also the goods of
petitioners. If respondents sold egg sandwiches only instead of
hamburger sandwiches, their use of the Big Mak mark would not
give their goods the general appearance of petitioners Big Mac
hamburgers. In such case, there is only trademark infringement
but no unfair competition. However, since respondents chose to
apply the Big Mak mark on hamburgers, just like petitioners use
of the Big Mac mark on hamburgers, respondents have
obviously clothed their goods with the general appearance of
petitioners goods.
Moreover, there is no notice to the public that the Big Mak
hamburgers are products of L.C. Big Mak Burger, Inc.
Respondents introduced during the trial plastic wrappers and
bags with the words L.C. Big Mak Burger, Inc. to inform the
public of the name of the seller of the hamburgers. However,
petitioners introduced during the injunctive hearings plastic
wrappers and bags with the Big Mak mark without the name
L.C. Big Mak Burger, Inc. Respondents belated presentation of
plastic wrappers and bags bearing the name of L.C. Big Mak
Burger, Inc. as the seller of the hamburgers is an after-thought
designed to exculpate them from their unfair business conduct.
As earlier stated, we cannot consider respondents evidence
since petitioners complaint was based on facts existing before
and during the injunctive hearings.
a. Had respondents placed a notice on their plastic wrappers
and bags that the hamburgers are sold by L.C. Big Mak
Burger, Inc., then they could validly claim that they did not
intend to deceive the public. In such case, there is only
trademark infringement but no unfair competition.

SC cited a law (RA No. 623) which Coca-Cola should have used since
it somehow covers the alleged act. Unfortunately, Coca-cola did not
consider such law. Hence, the search warrant is defective for Cocacolas failure to show that acts imputed violate the said offense
[Sec. 168.3(c)]. So instead na IP Code ung i-cite ni Coke, dapat yung
RA No. 623 kasi mas related (or swak) yun.
Facts:

Coca-Cola applied for a search warrant against Pepsi for

hoarding empty Coke bottles in Pepsi's yard in Concepcion
Grande, Naga City, an act allegedly penalized as unfair
competition under the IP Code.

Coca-Cola claimed that the bottles must be confiscated to

preclude their illegal use, destruction or concealment by the
respondents.

In support of the application, Coca-Cola submitted the sworn

statements of three witnesses:
o
Naga plant representative Arnel John Ponce said he was
informed that one of their plant security guards had gained
access into the Pepsi compound and had seen empty Coke
bottles
o
Acting plant security officer Ylano A. Regaspi he
investigated reports that Pepsi was hoarding large quantities
of Coke bottles; he was informed by the security guard that
Pepsi hoarded several Coke bottles
o
Security guard Edwin Lirio he entered Pepsi's yard on July
2, 2001 at 4 p.m. and saw empty Coke bottles inside Pepsi
shells or cases

Coca-Cola v. Gomez
G.R. No. 154491, November 14, 2008
Summary: (medyo mahaba and complicated na case) this is
how I understood the case
Coca-cola applied for a search warrant against Pepsi for hoarding
empty Coke bottles. Coca-cola cited Section 168.3 (c) as the specific
offense imputed against the respondents. MTC granted the
application and subsequently issued a search warrant. Local police
then confiscated and seized the items. Respondents filed a motion for
the return of Pepsis confiscated shells, and (more importantly) a
motion to quash the search warrant. RTC held that the search
warrant is void for lack of probable cause and the noncommission of the crime of unfair competition. The issue in this
case is whether or not the issuance of the search warrant is valid,
taking into consideration that its application effectively charged an
offense for violation of Sec. 168.3(c) of the IP Code (simply put, is
hoarding empty bottles considered an offense under the IP Code?).
SC affirmed RTCs decision in nullifying the search warrant. Why?
(recall the requisites of a valid search warrant, dapat may probable
cause in connection with a specific offense) Coca-cola incorrectly cited
the IP Code provision as the specific offense charged against the
respondents. An analysis of the IP Code (which covers specific IP
rights) and also the concept of unfair competition (see ratio) shows
that they DO NOT COVER hoarding of bottles. On the other hand,

MTC Naga City Executive Judge: Issued Search Warrant to

seize 2,500 Litro and 3,000 eight and 12 ounces empty Coke
bottles at Pepsi's Naga yard for violation of Section 168.3 (c) of
the IP Code
The local police seized empty Coke bottles, as well as Pepsi
shells, and brought to the MTC's custody
They later filed with the Office of the City Prosecutor a complaint
against two Pepsi officers for violation of Section 168.3 (c) in
relation to Section 170 of the IP Code
In the respondents counter-affidavits, Galicia and Gomez stated
the ff:
o
Claimed that the bottles came from various Pepsi retailers
and wholesalers who included them in their return to make
up for shortages of empty Pepsi bottles
o
They had no way of ascertaining beforehand the return of
empty Coke bottles as they simply received what had been
delivered
o
The presence of the bottles in their yard was not intentional
nor deliberate;
o
Ponce and Regaspi's statements are hearsay as they had no
personal knowledge of the alleged crime
o
There is no mention in the IP Code of the crime of
possession of empty bottles
Twin Motions: Respondents filed motions for the return of
their shells and to quash the search warrant since no probable
cause existed to justify the issuance of the search warrant
Coca-Cola opposed the motions as the shells were part of the
evidence of the crime, arguing that Pepsi used the shells in
hoarding the bottles.
Coca-Cola insisted that the issuance of warrant was based on
probable cause for unfair competition under the IP Code, and that
the respondents violated R.A. 623, the law regulating the use of
stamped or marked bottles, boxes, and other similar containers.
MTC: Denied the twin motions. It explained there was an
exhaustive examination of the applicant and its witnesses through
searching questions and that the Pepsi shells are prima facie
evidence that the bottles were placed there by the respondents.
RTC:
o
Voided the warrant for lack of probable cause and the
non-commission of the crime of unfair competition
o
The City Prosecutor and local police are directed to return
the properties seized

22

Issue: Whether or not the MTC was correct in issuing Search for
the seizure of the empty Coke bottles from Pepsi's yard for
probable violation of Section 168.3 (c) of the IP Code - NO
Sub-Issues:

Whether or not the application for search warrant effectively

charged an offense (violation of Section 168.3 (c) of the IP Code)
- NO

Whether or not the MTC observed the procedures required by the

Rules of Court in the issuance of search warrants NO,
substantive aspect is wanting as correctly determined by the
RTC
Held: Petition DENIED. RTC Decision AFFIRMED. Search warrant
NULL and VOID

RTCs decision is correct in nullifying the search warrant because

it was issued on an invalid substantive basis - the acts imputed on
the respondents do not violate Section 168.3 (c) of the IP Code.
For this reason, we deny the present petition.
Ratio:
Procedural Issue: (slightly relevant, connected sa substantive
issue)

Sections 4-6, Rule 126 of ROC governed the issuance of search

warrant

A search warrant may be issued only if there is probable cause

in connection with a specific offense alleged in an
application based on the personal knowledge of the
applicant and his or her witnesses. (Substantive this is
lacking in this case, as you can see in the next issue connection
with a specific offense is not satisfied)

Determination of probable cause is a personal task of the judge

before whom the application for search warrant is filed
(Procedural)

The warrant, if issued, must particularly describe the place to be

searched and the things to be seized.
Substantive Issue:
WHETHER OR NOT THE HOARDING OF EMPTY COKE BOTTLES
CONSTITUTES AN OFFENSE UNDER SECTION 168.3 (C) OF THE
IP CODE
SECTION 168. Unfair Competition, Rights, Regulation
and Remedies. 168.1. 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 the
said goods, business or services so identified, which will be
protected in the same manner as other property rights.
168.2. Any person who shall 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.
168.3. In particular, and without in any way limiting the scope
of protection against unfair competition, the following shall
be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives 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.
168.4. The remedies provided by Sections 156, 157 and 161
shall apply mutatis mutandis.
Coca-Colas theory

The above provision/section does not limit the scope of protection

on the particular acts enumerated as it expands the meaning of
unfair competition to include "other acts contrary to good faith of a
nature calculated to discredit the goods, business or services of
another."

Allegedly, the respondents' hoarding of Coca Cola empty bottles

is one such act.
SC does NOT agree with the Coca-Colas expansive interpretation
of Section 168.3 (c)

"Unfair
competition,"
previously
defined
in
Philippine
jurisprudence in relation with R.A. No. 166 and Articles 188 and
189 of the Revised Penal Code, is now covered by Section 168 of
the IP Code as this Code has expressly repealed R.A. No. 165
and R.A. No. 166, and Articles 188 and 189 of the Revised Penal
Code.

Articles 168.1 and 168.2, as quoted above, provide the concept

and general rule on the definition of unfair competition.

The law does NOT cover every unfair act committed in the
course of business; it covers only acts characterized by
"deception or any other means contrary to good faith" in the
passing off of goods and services as those of another who has
established goodwill in relation with these goods or services, or
any other act calculated to produce the same result.

Jurisprudential definition of unfair competition

o
Passing off (or palming off) or attempting to pass off upon
the public the goods or business of one person as the goods
or business of another with the end and probable effect of
deceiving the public.
o
"True Test" of unfair competition: whether the acts of
defendant are such as are calculated to deceive the ordinary
buyer making his purchases under the ordinary conditions
which prevail in the particular trade to which the controversy
relates
o
Hence, proof of FRAUD (intent to deceive) is one of the
essential requisites in an action to restrain unfair
competition
o
In short, deception, passing off and fraud upon the public are
still the key elements that must be present for unfair
competition to exist.

HOARDING COCA-COLA BOTTLES

Purpose: To withdraw from circulation and thus impede the

circulation of the Coca-Colas bottled products.

Coca-Cola: Such act contrary to good faith, an unfair act on the

part of the respondents. They also cited as basis a provision of
the IP Code (a set of rules that refer to a very specific subject
intellectual property) and also the coverage and intent of the IP
Code as expressly reflected in its "Declaration of State Policy"

SC:
o
Critical question is not the intrinsic unfairness of the act of
hoarding BUT if the hoarding, as charged, "is of a nature
calculated to discredit the goods, business or services" of
Coca-Cola
o
Hoarding as defined by Coca-cola is NOT even an act within
the contemplation of the IP Code.
Note: "Intellectual property rights" have been defined to consist of:
a) Copyright and Related Rights; b) Trademarks and Service Marks; c)
Geographic Indications; d) Industrial Designs; e) Patents; f) LayoutDesigns (Topographies) of Integrated Circuits; and g) Protection of
Undisclosed Information (as you can see, very specific!)
TESTS WHETHER OR NOT A MATTER IS COVERED BY THE IP
CODE
1. WON refers to an intellectual property as defined in the Code. If it
does not, then coverage by the Code may be negated
2. WON it falls under the general "unfair competition" concept and
definition under Sections 168.1 and 168.2 of the Code. (whether
there is "deception" or any other similar act in "passing off" of

23

goods or services to be those of another who enjoys established

goodwill)
3.

Using the principles of statutory construction as to the terms of

Section 168 Under the principle of "noscitur a sociis," when a
particular word or phrase is ambiguous in itself or is equally
susceptible of various meanings, its correct construction may be
made clear and specific by considering the company of words in
which it is found or with which it is associated

ANALYSIS OF THE DIFFERENT SECTIONS INVOLVING UNFAIR

COMPETITION
Section 168.1 speaks of a person who has earned goodwill with
respect to his goods and services and who is entitled to protection
under the Code, with or without a registered mark
Section 168.2 refers to the general definition of unfair competition
Section 168.3 refers to the specific instances of unfair competition,
with Section 168.1 referring to the sale of goods given the appearance
of the goods of another
Section 168.2 refers to the inducement of belief that his or her goods
or services are that of another who has earned goodwill
Section 168.3 being a "catch all" clause whose coverage the parties
now dispute
HOARDING DOES NOT FALL WITHIN THE COVERAGE OF THE IP
CODE AND OF SEC. 168

It does not relate to any patent, trademark, trade name or

service mark that the respondents have invaded, intruded into or
used without proper authority from the Coca-Cola.

The respondents are not fraudulently "passing off" their

products or services as those of the Coca-Cola.

The respondents are not also alleged to be undertaking any

representation or misrepresentation that would confuse or
tend to confuse the goods of the petitioner with those of the
respondents, or vice versa.

Coca-Cola, in fact, alleges an act foreign to the Code, to the

concepts it embodies and to the acts it regulates

Hoarding inflicts unfairness by seeking to limit the opposition's

sales by depriving it of the bottles it can use for these sales.
HOARDING FOR PURPOSES OF DESTRUCTION IS CLOSER TO
WHAT R.A. NO. 623 (AN ACT TO REGULATE THE USE OF DULY
STAMPED OR MARKED BOTTLES, BOXES, CASKS, KEGS,
BARRELS AND OTHER SIMILAR CONTAINERS) COVERS
SECTION 1. Persons engaged or licensed to engage in the
manufacture, bottling or selling of soda water, mineral or
aerated waters, cider, milk, cream, or other lawful beverages
in bottles, boxes, casks, kegs, or barrels, and other similar
containers, with their names or the names of their principals
or products, or other marks of ownership stamped or marked
thereon, may register with the Philippine Patent Office a
description of the names or are used by them, under the
same conditions, rules, and regulations, made applicable by
law or regulation to the issuance of trademarks.
SECTION 2. It shall be unlawful for any person, without the
written consent of the manufacturer, bottler or seller who has
successfully registered the marks of ownership in
accordance with the provisions of the next preceding
section, to fill such bottles, boxes, kegs, barrels, or other
similar containers so marked or stamped, for the
purpose of sale, or to sell, dispose of, buy, or traffic in,
or wantonly destroy the same, whether filled or not, or
to use the same for drinking vessels or glasses or for
any other purpose than that registered by the
manufacturer, bottler or seller. Any violation of this section
shall be punished by a fine or not more than one hundred
pesos or imprisonment of not more than thirty days or both.

RA No. 623 appears to be a measure that may overlap or be

affected by the provisions of Part II of the IP Code on "The Law
on Trademarks, Service Marks and Trade Names."
However, IP Code has not expressly repealed RA No. 623 (so in
force pa rin sya)
RA No. 623 appears to have specific reference to a special type
of registrants who are given special protection with respect to the
containers they use.
RA No. 623 is of specific coverage and application, compared

with the general terms and application of the IP Code.

Thus, under its Section 2, it speaks specifically of unlawful use
of containers and even of the unlawfulness of their wanton
destruction - a matter that escapes the IP Code's generalities
unless linked with the concepts of "deception" and "passing off"

PARTIES DID NOT CONSIDER THE ABOVE LAW IN THE SEARCH

WARRANT APPLICATION (tsk tsk)
o
Instead, Coca-Cola cited Section 168.3 (c) in its search warrant
application as the specific offense" imputed to the respondents

Lack of probable cause to support the disputed search warrant at

once becomes apparent.

In the issuance of search warrants, the Rules of Court requires

a finding of probable cause in connection with one specific
offense to be determined personally by the judge after
examination of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and
the things to be seized.

Hence, since there is no crime to speak of, the search

warrant does not even begin to fulfill these stringent
requirements and is therefore defective on its face.
CONCLUSION:
Based on the foregoing, SC concluded that the RTC correctly ruled
that Coca-Colas search warrant should properly be quashed for the
latters failure to show that the acts imputed to the respondents
violate the cited offense. There could not have been any probable
cause to support the issuance of a search warrant because no crime in
the first place was effectively charged

Superior Commercial Enterprises, Inc. v. Kunnan

Enterprises Ltd. And Sports Concept & Distributor,
Inc.
G.R. No. 169974, April 20, 2010
SUMMARY:
Superior sued Kunnan for trademark infringement and unfair
competition on the trademark KENNEX, KENNEX & DEVICE, PRO
KENNEX and PRO-KENNEX. Superior is the registered owner of the
trademarks but Kunnan disputed the ownership due to fraud by
Superior. Kunnan was deceived that it was not qualified to hold the
trademarks. The two parties entered into a distributorship agreement
wherein Superior will be the exclusive distributor of Kunnan products. It
was stipulated that Superior will assign the trademark Kennex in
favor of Kunnan. Superior did not comply and Kunnan appointed
Sports Concept as distributor. During the pendency of the case,
Kunnan sought for the cancellation of the disputed trademarks
registered under Superior in the Bureau of Legal Affairs which was
granted and became final and executory. The RTC decided in favor of
Superior but it was reversed by the CA. SC affirmed the decision of the
CA. Superior cannot have ownership of the disputed trademarks
because it is merely a distributor which has no proprietary rights over
the trademark of Kunnan. Hence, Kunnan could not be liable for
trademark infringement. On unfair competition, Kunnan is also not
liable because Superior failed to adduce any evidence.
FACTS:

Kunnan alleged that it was incorporated in 1972, under the name

KENNEX Sports Corporation for the purpose of manufacturing
and selling sportswear and sports equipment; it commercially
marketed its products in different countries, including the
Philippines since 1972. It created and first used PRO KENNEX,
derived from its original corporate name, as a distinctive
trademark for its products in 1976. Kunnan also alleged that it
registered the PRO KENNEX trademark not only in the
Philippines but also in 31 other countries and widely promoted the
KENNEX and PRO KENNEX trademarks through worldwide
advertisements in print media and sponsorships of known tennis
players. Kunnan maintained that Superior is merely its distributor
which has no right to its trademarks.

Superior claimed to be the owners of the trademarks, trading

styles, company names and business names KENNEX,
KENNEX & DEVICE, PRO KENNEX and PRO-KENNEX. It
also asserted its prior use of these trademarks and presented
evidence connected therewith. Superior also claimed ownership

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of the trademark through the Distributorship Agreement (DA)

which states that Kunnan intends to acquire the ownership of
KENNEX trademark registered by the Superior in the Philippines.
In the DA, it was stipulated that Superior will assign KENNEX
trademark in favor of Kunnan. However, Superior did not comply
and deceived Kunnan that the latter is not qualified to hold the
trademark because of the many requirements of the Philippine
Patent Office that Kunnan could not meet.
An Assignment Agreement was also entered by the two parties
which assigned the pending applications of Kunnan in favor of
Superior. Kunnan alleged that it was also deceived in the
Assignment Agreement.
Prior to and during the pendency of the case in the RTC, Kunnan
filed petitions for cancellation of registered trademarks of
Superior. (Registration Cancellation Case).
On 31 Mar 1998, the RTC decided in favor of Superior due to the
clause in the DA which stated that Kunnan intends to acquire
ownership of the Kennex trademark registered by Superior
Philippines."
The Bureau of Legal Affairs decided in favor of Kunnana in 30 Oct
2003. The decision became final and executory. Thus, the
registration of the trademarks of Superior were cancelled.
(Registration Cancellation Case).
In the appeal before the CA, it ruled in favor of Kunnan in 22 Jun
2005. The CA based its decision on the following:
o
The DA showed that Superior is merely a distributor.
o
The Assignment Agreement stated that Superior
acknowledge that Kunnan is still the real and truthful owner
of the trademarks.
o
Superiors letter to a third party which acknowledge its status
as a distributor.

ISSUE:
(1) WON Kunnan is liable for unfair competition NO.
(2) WON Kunnan is liable for trademark infringement NO. (irrelevant
to the topic)
HELDO/RATIO:

On unfair competition, the RTC and CA did not make any factual
findings. Unfair competition has been defined as the passing off
(or palming off) or attempting to pass off upon the public of the
goods or business of one person as the goods or business of one
person as the goods or business of another with the end and
probable effect of deceiving the public. The essential elements of
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 true test unfair competition: whether the acts of the

defendant have the intent of deceiving or are calculated to
deceived the ordinary buyer making his purchases under the
ordinary conditions of the particular trade to which the controversy
relates. One of the essential requisites in an action to restrain
unfair competition is proof of fraud; the intent to deceive, actual or
probable must be shown before the right to recover can exist.

In the present case, no evidence showing that Kunnan ever

attempted to pass off the goods it sold as those of Superior. In
addition, there is no evidence of bad faith or fraud imputable to
Kunnan in using the disputed trademarks.
In the case of McDonalds Corporation v. L.C. Big Mak Burger,
Inc., SC held that there can be trademark infringement without
unfair competition such 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. In this case, no issue of confusion
arises because the same manufactured products are sold; only
the ownership of the trademarks is at issue. Furthermore,
Kunnans 29 Jan 1993 Notice by its terms prevents the public
from being deceived that the goods originated from Superior since
the notice clearly indicated that Kunnan is the manufacturer of the
goods bearing the trademarks KENNEX and PRO Kennex.
With the CAs final ruling in the Registration Cancellation Case
(Superior has no right in the marks because of the effect of the
cancellation), Superiors case no longer presents a valid cause of
action. For this reason, the unfair competition aspect of Superiors
case falls.
On trademark infringement, the SC held that Kunnan is not liable
because of the effect of cancellation of the registration with the
Bureau of Legal Affairs. It was held in that case that Superior
claimed ownership of the subject marks and failed to disclose in
its application with the IPO that it was merely a distributor of
KENNEX and PROKENNEX products in the Philippines. Under
Sec. 22 of RA 166, only a registrant of a mark can file a case for
infringement and under Sec. 19 of RA 166, any right conferred
upon the registrant under the provisions of RA 166 terminates
when the judgment or order of cancellation has become final.
Thus, cancellation of registration of a trademark has the effect of
depriving the registrant protection from infringement from the
moment judgment or order of cancellation has become final.
Hence, the trademark infringement aspect of Superiors case has
been rendered moot and academic in view of the finality of the
decision in the Registration Cancellation Case. Moreover, as a
mere distributor, Superior had no right to register the questioned
mark in its name because an exclusive distributor who employs
the trademark of the manufacturer does not acquire proprietary
rights of the manufacturer, and a registration of the trademark by
the distributor as such belongs to the manufacturer, provided the
fiduciary relationship does not terminate before application for
registration is filed. Further, res judicata is applicable under the
concept of conclusiveness of judgment.

Shang Properties vs. St. Francis Development Corp.

G.R. No. 190706, July 21, 2014
(See previous chapters)

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