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In-N-Out Burger, Inc. vs. Sehwani Inc., et.

al

Facts:

Petitioner IN-N-OUT BURGER, INC., is a business entity incorporated under the laws of California.
It is a signatory to the Convention of Paris on Protection of Industrial Property and the TRIPS
Agreement. It is engaged mainly in the restaurant business, but it has never engaged in business
in the Philippines.

Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the
Philippines. Sometime in 1991, Sehwani filed with the BPTTT an application for the registration
of the mark IN N OUT (the inside of the letter O formed like a star). Its application was
approved and a certificate of registration was issued in its name on 1993. In 2000, Sehwani,
Incorporated and Benita Frites, Inc. entered into a Licensing Agreement, wherein the former
entitled the latter to use its registered mark, IN N OUT.

Sometime in 1997, In-N-Out Burger filed trademark and service mark applications with the
Bureau of Trademarks for the IN-N-OUT and IN-N-OUT Burger & Arrow Design. In 2000, In-N-
Out Burger found out that Sehwani, Incorporated had already obtained Trademark Registration
for the mark IN N OUT (the inside of the letter O formed like a star). Also in 2000, In-N-Out
Burger sent a demand letter directing Sehwani, Inc. to cease and desist from claiming ownership
of the mark IN-N-OUT and to voluntarily cancel its trademark registration. Sehwani Inc. did not
accede to In-N-Out Burgers demand but it expressed its willingness to surrender its registration
for a consideration.

In 2001 In-N-Out Burger filed before the Bureau of Legal Affairs an administrative complaint
against the Sehwani, Inc. and Benita Frites, Inc. for unfair competition and cancellation of
trademark registration.

Issues: 1. Whether or not the Intellectual Property Office (an administrative body) have
jurisdiction of cases involving provisions of the IPC (e.g. unfair competition).[1]

2. Whether or not there was unfair competition.

Held: FIRST ISSUE: Yes, the IPO (an administrative body) has jurisdiction in cases involving
provisions of the IPC (e.g. unfair competition) due to the following reasons:

Section 10 of the Intellectual Property Code specifically identifies the functions of the Bureau of
Legal Affairs, thus:

Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the following
functions:

10.1 Hear and decide opposition to the application for registration of marks; cancellation of
trademarks; subject to the provisions of Section 64, cancellation of patents and utility models,
and industrial designs; and petitions for compulsory licensing of patents;

10.2 (a) Exercise original jurisdiction in administrative complaints for violations of laws involving
intellectual property rights; Provided, That its jurisdiction is limited to complaints where the total
damages claimed are not less than Two hundred thousand pesos (P200,000): Provided, futher,
That availment of the provisional remedies may be granted in accordance with the Rules of
Court. Xxx

Xxx

(vi) The cancellation of any permit, license, authority, or registration which may have been
granted by the Office, or the suspension of the validity thereof for such period of time as the
Director of Legal Affairs may deem reasonable which shall not exceed one (1) year;

Xxx

(viii) The assessment of damages;

Unquestionably, petitioners complaint, which seeks the cancellation of the disputed mark in the
name of respondent Sehwani, Incorporated, and damages for violation of petitioners
intellectual property rights, falls within the jurisdiction of the IPO Director of Legal Affairs.

While Section 163 thereof vests in civil courts jurisdiction over cases of unfair competition,
nothing in the said section states that the regular courts have sole jurisdiction over unfair
competition cases, to the exclusion of administrative bodies.

Sections 160 and 170, which are also found under Part III of the Intellectual Property Code,
recognize the concurrent jurisdiction of civil courts and the IPO over unfair competition cases.

These two provisions read:

Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark Enforcement
Action. Any foreign national or juridical person who meets the requirements of Section 3 of this
Act and does not engage in business in the Philippines may bring a civil or administrative action
hereunder for opposition, cancellation, infringement, unfair competition, or false designation of
origin and false description, whether or not it is licensed to do business in the Philippines under
existing laws.

Section 170. Penalties. Independent of the civil and administrative sanctions imposed by law, a
criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from
Fifty thousand pesos (P50,000) to Two hundred thousand pesos (P200,000), shall be imposed on
any person who is found guilty of committing any of the acts mentioned in Section 155,
Section168, and Subsection169.1.

Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to decide the
petitioners administrative case against respondents and the IPO Director General had exclusive
jurisdiction over the appeal of the judgment of the IPO Director of Legal Affairs.

SECOND ISSUE: Yes. The evidence on record shows that Sehwani Inc. and Benita Frites were not
using their registered trademark but that of In-n-Out Burger. Sehwani and Benita Frites are also
giving their products the general appearance that would likely influence the purchasers to
believe that their products are that of In-N-Out Burger. The intention to deceive may be inferred
from the similarity of the goods as packed and offered for sale, and, thus, an action will lie to
restrain unfair competition. The respondents frauduulent intention to deceive purchasers is also
apparent in their use of the In-N-Out Burger in business signages.

The essential elements of an action for unfair competition are (1) confusing similarity in the
general appearance of the goods and (2) intent to deceive the public and defraud a competitor.
The confusing similarity may or may not result from similarity in the marks, but may result from
other external factors in the packaging or presentation of the goods. The intent to deceive and
defraud may be inferred from the similarity of the appearance of the goods as offered for sale to
the public. Actual fraudulent intent need not be shown.

Phil. Pharmawealth, Inc. v. Pfizer, Inc. & Pfizer (Phil.), Inc. G.R. No. 167715, 17 November 2010

Facts: Pfizer is the registered owner of a patent pertaining to Sulbactam Ampicillin. It is marketed
under the brand name Unasyn. Sometime in January and February 2003, Pfizer discovered that
Pharmawealth submitted bids for the supply of Sulbactam Ampicillin to several hospitals without
the Pfizers consent. Pfizer then demanded that the hospitals cease and desist from accepting
such bids. Pfizer also demanded that Pharmawealth immediately withdraw its bids to supply
Sulbactam Ampicillin. Pharmawealth and the hospitals ignored the demands.

Pfizer then filed a complaint for patent infringement with a prayer for permanent injunction and
forfeiture of the infringing products. A preliminary injunction effective for 90 days was granted
by the IPOs Bureau of Legal Affairs (IPO-BLA). Upon expiration, a motion for extension filed by
Pfizer was denied. Pfizer filed a Special Civil Action for Certiorari in the Court of Appeals (CA)
assailing the denial.

While the case was pending in the CA, Pfizer filed with the Regional Trial Court of Makati (RTC) a
complaint for infringement and unfair competition, with a prayer for injunction. The RTC issued a
temporary restraining order, and then a preliminary injunction.

Pharmawealth filed a motion to dismiss the case in the CA, on the ground of forum shopping.
Nevertheless, the CA issued a temporary restraining order. Pharmawealth again filed a motion to
dismiss, alleging that the patent, the main basis of the case, had already lapsed, thus making the
case moot, and that the CA had no jurisdiction to review the order of the IPO-BLA because this
was granted to the Director General. The CA denied all the motions. Pharmawealth filed a
petition for review on Certiorari with the Supreme Court.

Issues:a) Can an injunctive relief be issued based on an action of patent infringement when the
patent allegedly infringed has already lapsed?

b) What tribunal has jurisdiction to review the decisions of the Director of Legal Affairs of the
Intellectual Property Office?

c) Is there forum shopping when a party files two actions with two seemingly different causes of
action and yet pray for the same relief?

Held: a) No. The provision of R.A. 165, from which the Pfizers patent was based, clearly states
that "[the] patentee shall have the exclusive right to make, use and sell the patented machine,
article or product, and to use the patented process for the purpose of industry or commerce,
throughout the territory of the Philippines for the term of the patent; and such making, using, or
selling by any person without the authorization of the patentee constitutes infringement of the
patent."

Clearly, the patentees exclusive rights exist only during the term of the patent. Since the patent
was registered on 16 July 1987, it expired, in accordance with the provisions of R.A. 165, after 17
years, or 16 July 2004. Thus, after 16 July 2004, Pfizer no longer possessed the exclusive right to
make, use, and sell the products covered by their patent. The CA was wrong in issuing a
temporary restraining order after the cut-off date.

b) According to IP Code, the Director General of the IPO exercises exclusive jurisdiction over
decisions of the IPO-BLA. The question in the CA concerns an interlocutory order, and not a
decision. Since the IP Code and the Rules and Regulations are bereft of any remedy regarding
interlocutory orders of the IPO-BLA, the only remedy available to Pfizer is to apply the Rules and
Regulations suppletorily. Under the Rules, a petition for certiorari to the CA is the proper
remedy. This is consistent with the Rules of Court. Thus, the CA had jurisdiction.

c) Yes. Forum shopping is defined as the act of a party against whom an adverse judgment has
been rendered in one forum, of seeking another (and possibly favorable) opinion in another
forum (other than by appeal or the special civil action of certiorari), or the institution of two (2)
or more actions or proceedings grounded on the same cause on the supposition that one or the
other court would make a favorable disposition.

The elements of forum shopping are: (a) identity of parties, or at least such parties that
represent the same interests in both actions; (b) identity of rights asserted and reliefs prayed for,
the reliefs being founded on the same facts; (c) identity of the two preceding particulars, such
that any judgment rendered in the other action will, regardless of which party is successful,
amount to res judicata in the action under consideration. This instance meets these elements.

The parties are clearly identical. In both the complaints in the BLA-IPO and RTC, the rights
allegedly violated and the acts allegedly violative of such rights are identical, regardless of
whether the patents on which the complaints were based are different. In both cases, the
ultimate objective of Pfizer was to ask for damages and to permanently prevent Pharmawealth
from selling the contested products. Relevantly, the Supreme Court has decided that the filing of
two actions with the same objective, as in this instance, constitutes forum shopping.

Owing to the substantial identity of parties, reliefs and issues in the IPO and RTC cases, a
decision in one case will necessarily amount to res judicata in the other action.

ROMA DRUG v. RTC. G.R. No. 149907. April 16, 2009

FACTS: Roma Drug was raided by the NBI and BFAD and seized several important medicines. It
appears that Roma Drug is one of six drug stores which were raided on or around the same time
upon the request of SmithKline which was the duly registered corporation to distribute such
medicines. The medicines of Roma Drug was purchased directly from abroad and not through
SmithKline.

During preliminary investigation, Rodriguez challenged the constitutionality of the law on


Special Law on Counterfeit Drugs (SLCD) regarding the distribution of their medicine that were
considered counterfeit although they only bought it directly and not from SmithKline.

ISSUE: Whether the contention of Roma Drug is correct.

RULING: Yes. Section 7 of Rep. Act No. 9502 unequivocally grants third persons the right to
import drugs or medicines whose patent were registered in the Philippines by the owner of the
product. The unqualified right of private third parties such as petitioner to import or possess
unregistered imported drugs in the Philippines is further confirmed by the Implementing
Rules to Republic Act No. 9502 promulgated on November 4, 2008.

It may be that Rep. Act No. 9502 did not expressly repeal any provision of the SLCD. However, it
is clear that the SLCOs classification of unregistered imported drugs as counterfeit drugs,
and of corresponding criminal penalties therefore are irreconcilably in the imposition conflict
with Rep. Act No. 9502 since the latter indubitably grants private third persons the unqualified
right to import or otherwise use such drugs. Where a statute of later date, such as Rep. Act No.
9502, clearly reveals an intention on the part of the legislature to abrogate a prior act on the
subject that intention must be given effect.

The prosecution of petitioner is no longer warranted.

ANA ANG VS TEODORO

Respondent Toribio Teodoro has continuously used "Ang Tibay," both as a trade-mark
and as a trade-name, in the manufacture and sale of slippers, shoes, and indoor baseballs
since 1910. On September 29, 1915, he formally registered it as trade-mark and as trade-
name on January 3, 1933.

Petitioner Ana Ang registered the same trade-mark "Ang Tibay" for pants and shirts on
April 11, 1932, and established a factory for the manufacture of said articles in the year
1937.

The Court of First Instance of Manila absolved the defendant (Ms. Ang) on the grounds
that the two trademarks are dissimilar and are used on different and non-competing
goods; that there had been no exclusive use of the trade-mark by the plaintiff; and that
there had been no fraud in the use of the said trade-mark by the defendant because the
goods on which it is used are essentially different from those of the plaintiff.

The Court of Appeals reversed said judgment, directing the Director of Commerce to
cancel the registration of the trade-mark "Ang Tibay" in favor of petitioner, and
perpetually enjoining the latter from using said trade-mark on goods manufactured and
sold by her.

Thus, this case, a petition for certiorari.

Issue: Are the goods or articles or which the two trademarks are used similar or belong to
the same class of merchandise?
Ruling: Yes, pants and shirts are goods closely similar to shoes and slippers. They belong
to the same class of merchandise as shoes and slippers. They are closely related goods.
The Supreme Court affirmed the judgment of the Court of Appeals and added that
although two non-competing articles may be classified under to different classes by the
Patent Office because they are deemed not to possess the same descriptive properties,
they would, nevertheless, be held by the courts to belong to the same class if the
simultaneous use on them of identical or closely similar trademarks would be likely to
cause confusion as to the origin, or personal source, of the second users goods. They
would be considered as not falling under the same class only if they are so dissimilar or
so foreign to each other as to make it unlikely that the purchaser would think that the first
user made the second users goods.

Skechers, U.S.A. vs. Inter Pacific Industrial Trading Corporation, et.al. [GR No. 164321, March 23,
2011]

Post under case digests, Commercial Law at Friday, January 15, 2016 Posted by Schizophrenic
Mind

FACTS: Petitioner Skechers USA has registered the trademark "Skechers" and the trademark "S"
(with an oval design) with the IPO. Pursuant to a search warrant, more than 6,000 pairs of shoes
bearing the "S" logo were seized. Respondents moved to quash the search warrant arguing that
there was no confusing similarity between petitioner's "Skechers" rubber shoes and its "Strong"
rubber shoes. RTC applying the Holistic Test ordered the quashing of the warrant which was
affirmed by the CA. RTC noted the following differences: 1) the mark "S" is not enclosed in an
oval design; 2) the hang tags and labels bear the word "Strong" for respondent and "Skechers
USA" for petitioner; 3) Strong shoes are modestly priced compared to Skechers shoes.

ISSUE: Whether or not respondents are guilty of Infringement

RULING: Yes. Applying the Dominancy Test, even if respondents did not use the oval design, the
mere fact that it used the same stylized "S" (same font and size of the lettering) the same being
the dominant feature of petitioner's trademark constitutes infringement. Applying the Holistic
Test, the dissimilarities between the shoes are too trifling and frivolous that it is indubitable that
respondent's products will cause confusion and mistakes in the eyes of the public. Respondent's
shoes may not be an exact replica of the petitioner's shoes, but the features and overall design
are so similar and alike that confusion is higly likely. Registered trademark owner may use its
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
purchasing public might be mistaken in thinking that petitioner had ventured into a lower
market segment which scenario is plausible especially since both petitioner and respondent
manufacture rubber shoes.

BERRIS AGRICULTURAL CO., INC. vs. NORVY ABYADANG. G.R. No. 183404. October 13, 2010

FACTS: Abyadang filed a trademark application with the IPO for the mark "NS D-10 PLUS" for use
in connection with Fungicide. Berris Agricultural Co., Inc. filed an opposition against the
trademark citing that it is confusingly similar with their trademark, "D-10 80 WP" which is also
used for Fungicide also with the same active ingredient.

The IPO ruled in favor of Berries but on appeal with the CA, the CA ruled in favor of Abyadang.

ISSUE: Whether there is confusing similarity between the trademarks.

RULING: Yes. The SC found that both products have the component D-10 as their ingredient and
that it is the dominant feature in both their marks. Applying the Dominancy Test, Abyadang's
product is similar to Berris' and that confusion may likely to occur especially that both in the
same type of goods. Also using the Holistic Test, it was more obvious that there is likelihood of
confusion in their packaging and color schemes of the marks. The SC states that buyers would
think that Abyadang's product is an upgrade of Berris'.

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