BERRIS AGRICULTURAL CO. v.
ABYADANG After an exchange of pleadings, on April 28, 2006, Director Estrellita
NACHURA, J.:
This petition for review[1] on certiorari under Rule 45 of the Rules of
Court seeks the reversal of the Decision dated April 14, 2008[2] and the
Resolution dated June 18, 2008[3] of the Court of Appeals (CA) in CA-
G.R. SP No. 99928.
The antecedents
On January 16, 2004, respondent Norvy A. Abyadang (Abyadang),
proprietor of NS Northern Organic Fertilizer, with address at No. 43
Lower QM, Baguio City, filed with the Intellectual Property Office (IPO)
a trademark application for the mark NS D-10 PLUS for use in
connection with Fungicide (Class 5) with active ingredient 80%
Mancozeb. The application, under Application Serial No. 4-2004-
00450, was given due course and was published in the IPO e-Gazette
for opposition on July 28, 2005.
On August 17, 2005, petitioner Berris Agricultural Co., Inc. (Berris), with
business address in Barangay Masiit, Calauan, Laguna, filed with the
IPO Bureau of Legal Affairs (IPO-BLA) a Verified Notice of
Opposition[4] against the mark under application allegedly because NS
D-10 PLUS is similar and/or confusingly similar to its registered
trademark D-10 80 WP, also used for Fungicide (Class 5) with active
ingredient 80% Mancozeb. The opposition was docketed as IPC No.
14-2005-00099.
Beltran-Abelardo (Director Abelardo) of the IPO-BLA issued Decision
No. 2006-24[5] (BLA decision), the dispositive portion of which reads
WHEREFORE, viewed in the light of all the
foregoing, this Bureau finds and so holds that
Respondent-Applicants mark NS D-10 PLUS is
confusingly similar to the Opposers mark and as such,
the opposition is hereby SUSTAINED. Consequently,
trademark application bearing Serial No. 4-2004-00450
for the mark NS D-10 PLUS filed on January 16, 2004
by Norvy A. Ab[yada]ng covering the goods fungicide
under Class 5 of the International Classification of goods
is, as it is hereby, REJECTED.
Let the filewrapper of the trademark NS D-10
PLUS subject matter under consideration be forwarded
to the Administrative, Financial and Human Resources
Development Services Bureau (AFHRDSB) for
appropriate action in accordance with this Order with a
copy to be furnished the Bureau of Trademark (BOT) for
information and to update its records.
SO ORDERED.[6]
Abyadang filed a motion for reconsideration, and Berris, in turn, filed its
opposition to the motion.
On August 2, 2006, Director Abelardo issued Resolution No. 2006-
09(D)[7] (BLA resolution), denying the motion for reconsideration and
disposing as follows
IN VIEW OF THE FOREGOING, the Motion for
Reconsideration filed by the Respondent-Applicant is
hereby DENIED FOR LACK OF MERIT. Consequently,
Decision No. 2006-24 dated April 28, 2006 STANDS.
 Let the filewrapper of the trademark NS D-10
PLUS subject matter under consideration be forwarded
to the Bureau of Trademarks for appropriate action in
accordance with this Resolution.
SO ORDERED.[8]
Aggrieved, Abyadang filed an appeal on August 22, 2006 with the
Office of the Director General, Intellectual Property Philippines
(IPPDG), docketed as Appeal No. 14-06-13.
With the filing of the parties respective memoranda, Director General
Adrian S. Cristobal, Jr. of the IPPDG rendered a decision dated July
20, 2007,[9] ruling as follows
Wherefore, premises considered[,] the appeal is
hereby DENIED. Accordingly, the appealed Decision of
the Director is hereby AFFIRMED.
Let a copy of this Decision as well as the
trademark application and records be furnished and
returned to the Director of Bureau of Legal Affairs for
appropriate action. Further, let also the Directors of the
Bureau of Trademarks, the Administrative, Financial and
Human Resources Development Services Bureau, and
the library of the Documentation, Information and
Technology Transfer Bureau be furnished a copy of this
Decision for information, guidance, and records
purposes.
SO ORDERED. [10]
Undeterred, Abyadang filed a petition for review[11] before the CA.
In its Decision dated April 14, 2008, the CA reversed the IPPDG
decision. It held
In sum, the petition should be granted due to the
following reasons: 1) petitioners mark NS D-10 PLUS is
not confusingly similar with respondents trademark D-10
80 WP; 2) respondent failed to establish its ownership
of the mark D-10 80 WP and 3) respondents trademark
registration for D-10 80 WP may be cancelled in the
present case to avoid multiplicity of suits.
WHEREFORE, the petition is GRANTED. The
decision dated July 20, 2007 of the IPO Director General
in Appeal No. 14-06-13 (IPC No. 14-2005-00099)
is REVERSED and SET ASIDE, and a new one is
entered giving due course to petitioners application for
registration of the mark NS D-10 PLUS, and canceling
respondents trademark registration for D-10 80 WP.
SO ORDERED.[12]
Berris filed a Motion for Reconsideration, but in its June 18, 2008
Resolution, the CA denied the motion for lack of merit. Hence, this
petition anchored on the following arguments
I. The Honorable Court of Appeals finding
that there exists no confusing similarity between
Petitioners and respondents marks is based on
misapprehension of facts, surmise and
conjecture and not in accord with the Intellectual
Property Code and applicable Decisions of this
Honorable Court [Supreme Court].
II. The Honorable Court of Appeals Decision
reversing and setting aside the technical findings
of the Intellectual Property Office even without a
finding or, at the very least, an allegation of grave
abuse of discretion on the part of said agency is
not in accord with law and earlier
pronouncements of this Honorable Court
[Supreme Court].
 III. The Honorable Court of Appeals Decision On the other hand, R.A. No. 166 defines a trademark as any
ordering the cancellation of herein Petitioners
duly registered and validly existing trademark in distinctive word, name, symbol, emblem, sign, or device, or any
the absence of a properly filed Petition for combination thereof, adopted and used by a manufacturer or merchant
Cancellation before the Intellectual Property
Office is not in accord with the Intellectual on his goods to identify and distinguish them from those manufactured,
Property Code and applicable Decisions of this sold, or dealt by another.[19] A trademark, being a special property, is
Honorable Court [Supreme Court].[13]
afforded protection by law. But for one to enjoy this legal protection,
legal protection ownership of the trademark should rightly be
established.
The basic law on trademark, infringement, and unfair
competition is Republic Act (R.A.) No. 8293[14] (Intellectual Property
The ownership of a trademark is acquired by its registration and
Code of the Philippines), specifically Sections 121 to 170 thereof. It
its actual use by the manufacturer or distributor of the goods made
took effect on January 1, 1998. Prior to its effectivity, the applicable law
available to the purchasing public. Section 122[20] of R.A. No. 8293
was R.A. No. 166,[15] as amended.
provides that the rights in a mark shall be acquired by means of its valid
registration with the IPO. A certificate of registration of a mark, once
Interestingly, R.A. No. 8293 did not expressly repeal in its
issued, constitutes prima facie evidence of the validity of the
entirety R.A. No. 166, but merely provided in Section 239.1[16]that Acts
registration, of the registrants ownership of the mark, and of the
and parts of Acts inconsistent with it were repealed. In other words, only
registrants exclusive right to use the same in connection with the goods
in the instances where a substantial and irreconcilable conflict is found
or services and those that are related thereto specified in the
between the provisions of R.A. No. 8293 and of R.A. No. 166 would the
certificate.[21] R.A. No. 8293, however, requires the applicant for
provisions of the latter be deemed repealed.
registration or the registrant to file a declaration of actual use (DAU) of
the mark, with evidence to that effect, within three (3) years from the
R.A. No. 8293 defines a mark as any visible sign capable of
filing of the application for registration; otherwise, the application shall
distinguishing the goods (trademark) or services (service mark) of an
be refused or the mark shall be removed from the register. [22] In other
enterprise and shall include a stamped or marked container of
words, the prima facie presumption brought about by the registration of
goods.[17] It also defines a collective mark as any visible sign
a mark may be challenged and overcome, in an appropriate action, by
designated as such in the application for registration and capable of
proof of the nullity of the registration or of non-use of the mark, except
distinguishing the origin or any other common characteristic, including
when excused.[23] Moreover, the presumption may likewise be defeated
the quality of goods or services of different enterprises which use the
by evidence of prior use by another person, i.e., it will controvert a claim
sign under the control of the registered owner of the collective mark.[18]
of legal appropriation or of ownership based on registration by a
subsequent user. This is because a trademark is a creation of use and
belongs to one who first used it in trade or commerce.[24]
The determination of priority of use of a mark is a question of
fact. Adoption of the mark alone does not suffice. One may make
advertisements, issue circulars, distribute price lists on certain goods,
but these alone will not inure to the claim of ownership of the mark until
the goods bearing the mark are sold to the public in the
market. Accordingly, receipts, sales invoices, and testimonies of
witnesses as customers, or orders of buyers, best prove the actual use
[25]
of a mark in trade and commerce during a certain period of time.
In the instant case, both parties have submitted proof to support
their claim of ownership of their respective trademarks.
Culled from the records, Berris, as oppositor to Abyadangs
application for registration of his trademark, presented the following
evidence: (1) its trademark application dated November 29,
2002[26] with Application No. 4-2002-0010272; (2) its IPO certificate of
[27]
registration dated October 25, 2004, with Registration No. 4-2002-
010272 and July 8, 2004 as the date of registration; (3) a photocopy of
[28]
its packaging bearing the mark D-10 80 WP; (4) photocopies of its
sales invoices and official receipts;[29] and (5) its notarized DAU dated
[30]
April 23, 2003, stating that the mark was first used on June 20, 2002,
and indicating that, as proof of actual use, copies of official receipts or
sales invoices of goods using the mark were attached as Annex B.
On the other hand, Abyadangs proofs consisted of the following:
(1) a photocopy of the packaging[31] for his marketed fungicide bearing
mark NS D-10 PLUS; (2) Abyadangs Affidavit dated February 14,
2006,[32] stating among others that the mark NS D-10 PLUS was his
own creation derived from: N for Norvy, his name; S for Soledad, his
wifes name; D the first letter for December, his birth month; 10 for
October, the 10th month of the year, the month of his business name
registration; and PLUS to connote superior quality; that when he
applied for registration, there was nobody applying for a mark similar to
NS D-10 PLUS; that he did not know of the existence of Berris or any
of its products; that D-10 could not have been associated with Berris
because the latter never engaged in any commercial activity to sell D-
10 80 WP fungicide in the local market; and that he could not have
copied Berris mark because he registered his packaging with the
Fertilizer and Pesticide Authority (FPA) ahead of Berris; (3) Certification
dated December 19, 2005[33] issued by the FPA, stating that NS D-10
PLUS is owned and distributed by NS Northern Organic Fertilizer,
registered with the FPA since May 26, 2003, and had been in the
market since July 30, 2003; (4) Certification dated October 11,
2005[34] issued by the FPA, stating that, per monitoring among dealers
in Region I and in the Cordillera Administrative Region registered with
its office, the Regional Officer neither encountered the fungicide with
mark D-10 80 WP nor did the FPA provincial officers from the same
area receive any report as to the presence or sale of Berris product; (5)
Certification dated March 14, 2006[35] issued by the FPA, certifying that
all pesticides must be registered with the said office pursuant to Section
9[36] of Presidential Decree (P.D.) No. 1144[37] and Section 1, Article II
of FPA Rules and Regulations No. 1, Series of 1977; (6) Certification
dated March 16, 2006[38] issued by the FPA, certifying that the pesticide
D-10 80 WP was registered by Berris on November 12, 2004; and (7)
receipts from Sunrise Farm Supply[39] in La Trinidad, Benguet of the
sale of Abyadangs goods referred to as D-10 and D-10+.
 Based on their proffered pieces of evidence, both Berris and
Abyadang claim to be the prior user of their respective marks.
We rule in favor of Berris.
Berris was able to establish that it was using its mark D-10 80
WP since June 20, 2002, even before it filed for its registration with the
IPO on November 29, 2002, as shown by its DAU which was under
oath and notarized, bearing the stamp of the Bureau of Trademarks of
[40]
the IPO on April 25, 2003, and which stated that it had an attachment
as Annex B sales invoices and official receipts of goods bearing the
mark. Indeed, the DAU, being a notarized document, especially when
received in due course by the IPO, is evidence of the facts it stated and
has the presumption of regularity, entitled to full faith and credit upon
its face. Thus, the burden of proof to overcome the presumption of
authenticity and due execution lies on the party contesting it, and the
rebutting evidence should be clear, strong, and convincing as to
preclude all controversy as to the falsity of the certificate.[41] What is
more, the DAU is buttressed by the Certification dated April 21,
2006[42] issued by the Bureau of Trademarks that Berris mark is still
valid and existing.
Hence, we cannot subscribe to the contention of Abyadang that
Berris DAU is fraudulent based only on his assumption that Berris could
not have legally used the mark in the sale of its goods way back in June
2002 because it registered the product with the FPA only on November
12, 2004. As correctly held by the IPPDG in its decision on Abyadangs
appeal, the question of whether or not Berris violated P.D. No. 1144,
because it sold its product without prior registration with the FPA, is a
distinct and separate matter from the jurisdiction and concern of the
IPO. Thus, even a determination of violation by Berris of P.D. No. 1144
would not controvert the fact that it did submit evidence that it had used
the mark D-10 80 WP earlier than its FPA registration in 2004.
Furthermore, even the FPA Certification dated October 11,
2005, stating that the office had neither encountered nor received
reports about the sale of the fungicide D-10 80 WP within Region I and
the Cordillera Administrative Region, could not negate the fact that
Berris was selling its product using that mark in 2002, especially
considering that it first traded its goods in Calauan, Laguna, where its
business office is located, as stated in the DAU.
Therefore, Berris, as prior user and prior registrant, is the owner
of the mark D-10 80 WP. As such, Berris has in its favor the rights
conferred by Section 147 of R.A. No. 8293, which provides
Sec. 147. Rights Conferred.
147.1. The owner of a registered mark shall have
the exclusive right to prevent all third parties not having
the owners consent from using in the course of trade
identical or similar signs or containers for goods or
services which are identical or similar to those in respect
of which the trademark is registered where such use
would result in a likelihood of confusion. In case of the
use of an identical sign for identical goods or services, a
likelihood of confusion shall be presumed.
147.2. The exclusive right of the owner of a well-
known mark defined in Subsection 123.1(e) which is
registered in the Philippines, shall extend to goods and
services which are not similar to those in respect of
which the mark is registered: Provided, That use of that
mark in relation to those goods or services would
 indicate a connection between those goods or services including the labels and packaging, in determining confusing
and the owner of the registered mark: Provided,
further, That the interests of the owner of the registered similarity. The discerning eye of the observer must focus not only on
mark are likely to be damaged by such use. the predominant words but also on the other features appearing on both
labels so that the observer may draw conclusion on whether one is
confusingly similar to the other.[44]
Now, we confront the question, Is Abyadangs mark NS D-10
PLUS confusingly similar to that of Berris D-10 80 WP such that the
Comparing Berris mark D-10 80 WP with Abyadangs mark NS
latter can rightfully prevent the IPO registration of the former?
D-10 PLUS, as appearing on their respective packages, one cannot but
We answer in the affirmative.
notice that both have a common component which is D-10. On Berris
package, the D-10 is written with a bigger font than the 80
According to Section 123.1(d) of R.A. No. 8293, a mark cannot
WP. Admittedly, the D-10 is the dominant feature of the mark. The D-
be registered if it is identical with a registered mark belonging to a
10, being at the beginning of the mark, is what is most remembered of
different proprietor with an earlier filing or priority date, with respect to:
it. Although, it appears in Berris certificate of registration in the same
(1) the same goods or services; (2) closely related goods or services;
font size as the 80 WP, its dominancy in the D-10 80 WP mark stands
or (3) near resemblance of such mark as to likely deceive or cause
since the difference in the form does not alter its distinctive character.[45]
confusion.

Applying the Dominancy Test, it cannot be gainsaid that

In determining similarity and likelihood of confusion,
Abyadangs NS D-10 PLUS is similar to Berris D-10 80 WP, that
jurisprudence has developed teststhe Dominancy Test and the Holistic
confusion or mistake is more likely to occur. Undeniably, both marks
or Totality Test. The Dominancy Test focuses on the similarity of the
pertain to the same type of goods fungicide with 80% Mancozeb as an
prevalent or dominant features of the competing trademarks that might
active ingredient and used for the same group of fruits, crops,
cause confusion, mistake, and deception in the mind of the purchasing
vegetables, and ornamental plants, using the same dosage and
public. Duplication or imitation is not necessary; neither is it required
manner of application. They also belong to the same classification of
that the mark sought to be registered suggests an effort to
goods under R.A. No. 8293. Both depictions of D-10, as found in both
imitate. Given more consideration are the aural and visual impressions
marks, are similar in size, such that this portion is what catches the eye
created by the marks on the buyers of goods, giving little weight to
of the purchaser. Undeniably, the likelihood of confusion is present.
factors like prices, quality, sales outlets, and market segments.[43]

This likelihood of confusion and mistake is made more manifest

In contrast, the Holistic or Totality Test necessitates a
when the Holistic Test is applied, taking into consideration the
consideration of the entirety of the marks as applied to the products,
packaging, for both use the same type of material (foil type) and have
identical color schemes (red, green, and white); and the marks are both their findings of fact in that regard are generally accorded great respect,
predominantly red in color, with the same phrase BROAD SPECTRUM if not finality by the courts, as long as they are supported by substantial
FUNGICIDE written underneath. evidence, even if such evidence might not be overwhelming or even
preponderant. It is not the task of the appellate court to weigh once
Considering these striking similarities, predominantly the D-10, more the evidence submitted before the administrative body and to
the buyers of both products, mainly farmers, may be misled into thinking substitute its own judgment for that of the administrative agency in
that NS D-10 PLUS could be an upgraded formulation of the D-10 80 respect to sufficiency of evidence.[48]
WP.
Inasmuch as the ownership of the mark D-10 80 WP fittingly
Moreover, notwithstanding the finding of the IPPDG that the D- belongs to Berris, and because the same should not have been
10 is a fanciful component of the trademark, created for the sole cancelled by the CA, we consider it proper not to belabor anymore the
purpose of functioning as a trademark, and does not give the name, issue of whether cancellation of a registered mark may be done absent
quality, or description of the product for which it is used, nor does it a petition for cancellation.
describe the place of origin, such that the degree of exclusiveness
given to the mark is closely restricted,[46] and considering its challenge WHEREFORE, the petition is GRANTED. The assailed
by Abyadang with respect to the meaning he has given to it, what Decision dated April 14, 2008 and Resolution dated June 18, 2008 of
remains is the fact that Berris is the owner of the mark D-10 80 WP, the Court of Appeals in CA-G.R. SP No. 99928
inclusive of its dominant feature D-10, as established by its prior use, are REVERSED and SET ASIDE. Accordingly, the Decision No. 2006-
and prior registration with the IPO. Therefore, Berris properly opposed 24 dated April 28, 2006 and the Resolution No. 2006-09(D) dated
and the IPO correctly rejected Abyadangs application for registration of August 2, 2006 in IPC No. 14-2005-00099, and the Decision dated July
the mark NS D-10 PLUS. 20, 2007 in Appeal No. 14-06-13 are REINSTATED. Costs against
respondent.
Verily, the protection of trademarks as intellectual property is
intended not only to preserve the goodwill and reputation of the SO ORDERED.
business established on the goods bearing the mark through actual use
over a period of time, but also to safeguard the public as consumers
against confusion on these goods.[47] On this matter of particular
concern, administrative agencies, such as the IPO, by reason of their
special knowledge and expertise over matters falling under their
jurisdiction, are in a better position to pass judgment thereon. Thus,
SHANGRILA INTL v. DEVELOPERS GROUP
In this petition for review under Rule 45 of the Rules of Court, petitioners
Shangri-La International Hotel Management, Ltd. (SLIHM), et al. assail
and seek to set aside the Decision dated May 15, 20031 of the Court of
Appeals (CA) in CA-G.R. CV No. 53351 and its Resolution2 of
September 15, 2003 which effectively affirmed with modification an
earlier decision of the Regional Trial Court (RTC) of Quezon City in Civil
Case No. Q-91-8476, an action for infringement and damages, thereat
commenced by respondent Developers Group of Companies, Inc.
(DGCI) against the herein petitioners.
The facts:
At the core of the controversy are the "Shangri-La" mark and "S" logo.
Respondent DGCI claims ownership of said mark and logo in the
Philippines on the strength of its prior use thereof within the country. As
DGCI stresses at every turn, it filed on October 18, 1982 with the
Bureau of Patents, Trademarks and Technology Transfer (BPTTT)
pursuant to Sections 2 and 4 of Republic Act (RA) No. 166,3 as
amended, an application for registration covering the subject mark and
logo. On May 31, 1983, the BPTTT issued in favor of DGCI the
corresponding certificate of registration therefor, i.e., Registration No.
31904. Since then, DGCI started using the "Shangri-La" mark and "S"
logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels
with interest in hotels and hotel-related transactions since 1969. As far
back as 1962, it adopted the name "Shangri-La" as part of the corporate
names of all companies organized under the aegis of the Kuok Group
of Companies (the Kuok Group). The Kuok Group has used the name
"Shangri-La" in all Shangri-La hotels and hotel-related establishments
around the world which the Kuok Family owned.
To centralize the operations of all Shangri-la hotels and the ownership
of the "Shangri-La" mark and "S" logo, the Kuok Group had
incorporated in Hong Kong and Singapore, among other places,
several companies that form part of the Shangri-La International Hotel
Management Ltd. Group of Companies. EDSA Shangri-La Hotel and
Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc. were
incorporated in the Philippines beginning 1987 to own and operate the
two (2) hotels put up by the Kuok Group in Mandaluyong and Makati,
Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM
Group of Companies adopted and used the distinctive lettering of the
name "Shangri-La" as part of their trade names.
From the records, it appears that Shangri-La Hotel Singapore
commissioned a Singaporean design artist, a certain Mr. William Lee,
to conceptualize and design the logo of the Shangri-La hotels.
During the launching of the stylized "S" Logo in February 1975, Mr. Lee
gave the following explanation for the logo, to wit:
The logo which is shaped like a "S" represents the uniquely Asean
architectural structures as well as keep to the legendary Shangri-la
theme with the mountains on top being reflected on waters below and
the connecting centre [sic] line serving as the horizon. This logo, which
is a bold, striking definitive design, embodies both modernity and
sophistication in balance and thought.
Since 1975 and up to the present, the "Shangri-La" mark and "S" logo
have been used consistently and continuously by all Shangri-La hotels
and companies in their paraphernalia, such as stationeries, envelopes,
business forms, menus, displays and receipts.
The Kuok Group and/or petitioner SLIHM caused the registration of,
and in fact registered, the "Shangri-La" mark and "S" logo in the patent
offices in different countries around the world.
On June 21, 1988, the petitioners filed with the BPTTT a petition,
docketed as Inter Partes Case No. 3145, praying for the cancellation of
the registration of the "Shangri-La" mark and "S" logo issued to
respondent DGCI on the ground that the same were illegally and
fraudulently obtained and appropriated for the latter's restaurant
business. They also filed in the same office Inter Partes Case No. 3529,
praying for the registration of the same mark and logo in their own
names.
Until 1987 or 1988, the petitioners did not operate any establishment in
the Philippines, albeit they advertised their hotels abroad since 1972 in
numerous business, news, and/or travel magazines widely circulated
around the world, all readily available in Philippine magazines and
newsstands. They, too, maintained reservations and booking agents in
airline companies, hotel organizations, tour operators, tour promotion
organizations, and in other allied fields in the Philippines.
It is principally upon the foregoing factual backdrop that respondent
DGCI filed a complaint for Infringement and Damages with the RTC of
Quezon City against the herein petitioners SLIHM, Shangri-La
Properties, Inc., Makati Shangri-La Hotel & Resort, Inc., and Kuok
Philippine Properties, Inc., docketed as Civil Case No. Q-91-8476 and
eventually raffled to Branch 99 of said court. The complaint with prayer
for injunctive relief and damages alleged that DGCI has, for the last
eight (8) years, been the prior exclusive user in the Philippines of the
mark and logo in question and the registered owner thereof for its
restaurant and allied services. As DGCI alleged in its complaint,
SLIHM, et al., in promoting and advertising their hotel and other allied
projects then under construction in the country, had been using a mark
and logo confusingly similar, if not identical, with its mark and "S" logo.
Accordingly, DGCI sought to prohibit the petitioners, as defendants a
quo, from using the "Shangri-La" mark and "S" logo in their hotels in the
Philippines.
In their Answer with Counterclaim, the petitioners accused DGCI of
appropriating and illegally using the "Shangri-La" mark and "S" logo,
adding that the legal and beneficial ownership thereof pertained to
SLIHM and that the Kuok Group and its related companies had been
using this mark and logo since March 1962 for all their corporate names
and affairs. In this regard, they point to the Paris Convention for the
Protection of Industrial Property as affording security and protection to
SLIHM's exclusive right to said mark and logo. They further claimed
having used, since late 1975, the internationally-known and specially-
designed "Shangri-La" mark and "S" logo for all the hotels in their hotel
chain.
Pending trial on the merits of Civil Case No. Q-91-8476, the trial court
issued a Writ of Preliminary Injunction enjoining the petitioners from
using the subject mark and logo. The preliminary injunction issue
ultimately reached the Court in G.R. No. 104583 entitled Developers
Group of Companies, Inc. vs. Court of Appeals, et al. In a
decision4 dated March 8, 1993, the Court nullified the writ of preliminary
injunction issued by the trial court and directed it to proceed with the
main case and decide it with deliberate dispatch.
While trial was in progress, the petitioners filed with the court a motion
to suspend proceedings on account of the pendency before the BPTTT
of Inter Partes Case No. 3145 for the cancellation of DGCI's certificate
of registration. For its part, respondent DGCI filed a similar motion in
that case, invoking in this respect the pendency of its infringement case
before the trial court. The parties' respective motions to suspend
proceedings also reached the Court via their respective petitions in
G.R. No. 114802, entitled Developers Group of Companies, Inc. vs.
Court of Appeals, et al. and G.R. No. 111580, entitled Shangri-La
International Hotel Management LTD., et al. vs. Court of Appeals, et
al., which were accordingly consolidated.
In a consolidated decision5 dated June 21, 2001, the Court, limiting
itself to the core issue of whether, despite the petitioners' institution of
Inter Partes Case No. 3145 before the BPTTT, herein respondent DGCI
"can file a subsequent action for infringement with the regular courts of
justice in connection with the same registered mark," ruled in the
affirmative, but nonetheless ordered the BPTTT to suspend further
proceedings in said inter partes case and to await the final outcome of
the main case.
Meanwhile, trial on the merits of the infringement case proceeded.
Presented as DGCI's lone witness was Ramon Syhunliong, President
and Chairman of DGCI's Board of Directors. Among other things, this
witness testified that:
1. He is a businessman, with interest in lumber, hotel, hospital,
trading and restaurant businesses but only the restaurant
business bears the name "Shangri-La" and uses the same and
the "S-logo" as service marks. The restaurant now known as
"Shangri-La Finest Chinese Cuisine" was formerly known as the
"Carvajal Restaurant" until December 1982, when respondent
took over said restaurant business.
2. He had traveled widely around Asia prior to 1982, and
admitted knowing the Shangri-La Hotel in Hong Kong as early
as August 1982.
 3. The "S-logo" was one of two (2) designs given to him in
December 1982, scribbled on a piece of paper by a jeepney
signboard artist with an office somewhere in Balintawak. The
unnamed artist supposedly produced the two designs after
about two or three days from the time he (Syhunliong) gave the
idea of the design he had in mind.
4. On October 15, 1982, or before the unknown signboard artist
supposedly created the "Shangri-La" and "S" designs, DGCI
was incorporated with the primary purpose of "owning or
operating, or both, of hotels and restaurants".
5. On October 18, 1982, again prior to the alleged creation date
of the mark and logo, DGCI filed an application for trademark
registration of the mark "SHANGRI-LA FINEST CHINESE
CUISINE & S. Logo" with the BPTTT. On said date, respondent
DGCI amended its Articles of Incorporation to reflect the name
of its restaurant, known and operating under the style and name
of "SHANGRI-LA FINEST CHINESE CUISINE." Respondent
DGCI obtained Certificate of Registration No. 31904 for the
"Shangri-La" mark and "S" logo.
Eventually, the trial court, on the postulate that petitioners', more
particularly petitioner SLIHM's, use of the mark and logo in dispute
constitutes an infringement of DGCI's right thereto, came out with its
decision6 on March 8, 1996 rendering judgment for DGCI, as follows:
WHEREFORE, judgment is hereby rendered in favor of [respondent
DGCI] and against [SLIHM, et al.] -
a) Upholding the validity of the registration of the service mark
"Shangri-la" and "S-Logo" in the name of [respondent];
b) Declaring [petitioners'] use of said mark and logo as
infringement of [respondent's] right thereto;
c) Ordering [petitioners], their representatives, agents,
licensees, assignees and other persons acting under their
authority and with their permission, to permanently cease and
desist from using and/or continuing to use said mark and logo,
or any copy, reproduction or colorable imitation
thereof, in the promotion, advertisement, rendition of their hotel
and allied projects and services or in any other manner
whatsoever;
d) Ordering [petitioners] to remove said mark and logo from any
premises, objects, materials and paraphernalia used by them
and/or destroy any and all prints, signs, advertisements or other
materials bearing said mark and logo in their possession and/or
under their control; and
e) Ordering [petitioners], jointly and severally, to indemnify
[respondent] in the amounts of P2,000,000.00 as actual and
compensatory damages, P500,000.00 as attorney's fee and
expenses of litigation.
Let a copy of this Decision be certified to the Director, Bureau of
Patents, Trademarks and Technology Transfer for his information and
appropriate action in accordance with the provisions of Section 25,
Republic Act No. 166
Costs against [petitioners].
SO ORDERED. [Words in brackets added.]
Therefrom, the petitioners went on appeal to the CA whereat their
recourse was docketed as CA G.R. SP No. 53351.
As stated at the threshold hereof, the CA, in its assailed Decision of
May 15, 2003,7 affirmed that of the lower court with the modification of
deleting the award of attorney's fees. The appellate court predicated its
affirmatory action on the strength or interplay of the following premises:
1. Albeit the Kuok Group used the mark and logo since 1962,
the evidence presented shows that the bulk use of the
tradename was abroad and not in the Philippines (until 1987).
Since the Kuok Group does not have proof of actual use in
commerce in the Philippines (in accordance with Section 2 of
R.A. No. 166), it cannot claim ownership of the mark and logo
in accordance with the holding in Kabushi Kaisha Isetan v. IAC8,
as reiterated in Philip Morris, Inc. v. Court of Appeals.9
 2. On the other hand, respondent has a right to the mark and
logo by virtue of its prior use in the Philippines and the issuance
of Certificate of Registration No. 31904.
3. The use of the mark or logo in commerce through the
bookings made by travel agencies is unavailing since the Kuok
Group did not establish any branch or regional office in the
Philippines. As it were, the Kuok Group was not engaged in
commerce in the Philippines inasmuch as the bookings were
made through travel agents not owned, controlled or managed
by the Kuok Group.
4. While the Paris Convention protects internationally known
marks, R.A. No. 166 still requires use in commerce in the
Philippines. Accordingly, and on the premise that international
agreements, such as Paris Convention, must yield to a
municipal law, the question on the exclusive right over the mark
and logo would still depend on actual use in commerce in the
Philippines.
Petitioners then moved for a reconsideration, which motion was denied
by the CA in its equally assailed Resolution of September 15, 2003.10
As formulated by the petitioners, the issues upon which this case
hinges are:
1. Whether the CA erred in finding that respondent had the right
to file an application for registration of the "Shangri-La" mark
and "S" logo although respondent never had any prior actual
commercial use thereof;
2. Whether the CA erred in finding that respondent's supposed
use of the identical "Shangri-La" mark and "S" logo of the
petitioners was not evident bad faith and can actually ripen into
ownership, much less registration;
3. Whether the CA erred in overlooking petitioners' widespread
prior use of the "Shangri-La" mark and "S" logo in their
operations;
4. Whether the CA erred in refusing to consider that petitioners
are entitled to protection under both R.A. No. 166, the old
trademark law, and the Paris Convention for the Protection of
Industrial Property;
5. Whether the CA erred in holding that SLIHM did not have the
right to legally own the "Shangri-La" mark and "S" logo by virtue
of and despite their ownership by the Kuok Group;
6. Whether the CA erred in ruling that petitioners' use of the
mark and logo constitutes actionable infringement;
7. Whether the CA erred in awarding damages in favor of
respondent despite the absence of any evidence to support the
same, and in failing to award relief in favor of the petitioners;
and
8. Whether petitioners should be prohibited from continuing
their use of the mark and logo in question.
There are two preliminary issues, however, that respondent DGCI calls
our attention to, namely:
1. Whether the certification against forum-shopping submitted
on behalf of the petitioners is sufficient;
2. Whether the issues posed by petitioners are purely factual in
nature hence improper for resolution in the instant petition for
review on certiorari.
DGCI claims that the present petition for review should be dismissed
outright for certain procedural defects, to wit: an insufficient certification
against forum shopping and raising pure questions of fact. On both
counts, we find the instant petition formally and substantially sound.
In its Comment, respondent alleged that the certification against forum
shopping signed by Atty. Lee Benjamin Z. Lerma on behalf and as
counsel of the petitioners was insufficient, and that he was not duly
authorized to execute such document. Respondent further alleged that
since petitioner SLIHM is a foreign entity based in Hong Kong, the
Director's Certificate executed by Mr. Madhu Rama Chandra Rao,
embodying the board resolution which authorizes Atty. Lerma to act for
SLIHM and execute the certification against forum shopping, should
contain the authentication by a consular officer of the Philippines in
Hong Kong.
In National Steel Corporation v. CA,11 the Court has ruled that the
certification on non-forum shopping may be signed, for and in behalf of
a corporation, by a specifically authorized lawyer who has personal
knowledge of the facts required to be disclosed in such document. The
reason for this is that a corporation can only exercise its powers through
its board of directors and/or its duly authorized officers and agents.
Physical acts, like the signing of documents, can be performed only by
natural persons duly authorized for the purpose.12
Moreover, Rule 7, Section 5 of the Rules of Court concerning the
certification against forum shopping does not require any consular
certification if the petitioner is a foreign entity. Nonetheless, to banish
any lingering doubt, petitioner SLIHM furnished this Court with a
consular certification dated October 29, 2003 authenticating the
Director's Certificate authorizing Atty. Lerma to execute the certification
against forum shopping, together with petitioners' manifestation of
February 9, 2004.
Respondent also attacks the present petition as one that raises pure
questions of fact. It points out that in a petition for review under Rule 45
of the Rules of Court, the questions that may properly be inquired into
are strictly circumscribed by the express limitation that "the petition
shall raise only questions of law which must be distinctly set forth."13 We
do not, however, find that the issues involved in this petition consist
purely of questions of fact. These issues will be dealt with as we go
through the questions raised by the petitioners one by one.
Petitioners' first argument is that the respondent had no right to file an
application for registration of the "Shangri-La" mark and "S" logo
because it did not have prior actual commercial use thereof. To
respondent, such an argument raises a question of fact that was
already resolved by the RTC and concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user
and registrant of the subject mark and logo in the Philippines. Taken in
proper context, the trial court's finding on "prior use" can only be
interpreted to mean that respondent used the subject mark and logo in
the country before the petitioners did. It cannot be construed as being
a factual finding that there was prior use of the mark and logo before
registration.
Secondly, the question raised is not purely factual in nature. In the
context of this case, it involves resolving whether a certificate of
registration of a mark, and the presumption of regularity in the
performance of official functions in the issuance thereof, are sufficient
to establish prior actual use by the registrant. It further entails
answering the question of whether prior actual use is required before
there may be a valid registration of a mark.
Under the provisions of the former trademark law, R.A. No. 166, as
amended, which was in effect up to December 31, 1997, hence, the law
in force at the time of respondent's application for registration of
trademark, the root of ownership of a trademark is actual use in
commerce. Section 2 of said law requires that before a trademark can
be registered, it must have been actually used in commerce and service
for not less than two months in the Philippines prior to the filing of an
application for its registration.
Registration, without more, does not confer upon the registrant an
absolute right to the registered mark. The certificate of registration is
merely a prima facie proof that the registrant is the owner of the
registered mark or trade name. Evidence of prior and continuous use
of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be
declared owner in an appropriate case.14
Among the effects of registration of a mark, as catalogued by the Court
in Lorenzana v. Macagba,15 are:
1. Registration in the Principal Register gives rise to
a presumption of the validity of the registration, the registrant's
ownership of the mark, and his right to the exclusive use thereof.
xxx
2. Registration in the Principal Register is limited to the actual
owner of the trademark and proceedings therein pass on the
issue of ownership, which may be contested through
opposition or interference proceedings, or, after
registration, in a petition for cancellation. xxx
 [Emphasis supplied]1avvphil.ñet
Ownership of a mark or trade name may be acquired not necessarily
by registration but by adoption and use in trade or commerce. As
between actual use of a mark without registration, and registration of
the mark without actual use thereof, the former prevails over the latter.
For a rule widely accepted and firmly entrenched, because it has come
down through the years, is that actual use in commerce or business is
a pre-requisite to the acquisition of the right of ownership.16
While the present law on trademarks17 has dispensed with the
requirement of prior actual use at the time of registration, the law in
force at the time of registration must be applied, and thereunder it was
held that as a condition precedent to registration of trademark, trade
name or service mark, the same must have been in actual use in the
Philippines before the filing of the application for
registration.18 Trademark is a creation of use and therefore actual use
is a pre-requisite to exclusive ownership and its registration with the
Philippine Patent Office is a mere administrative confirmation of the
existence of such right.19
By itself, registration is not a mode of acquiring ownership. When the
applicant is not the owner of the trademark being applied for, he has no
right to apply for registration of the same. Registration merely creates
a prima facie presumption of the validity of the registration, of the
registrant's ownership of the trademark and of the exclusive right to the
use thereof.20 Such presumption, just like the presumptive regularity in
the performance of official functions, is rebuttable and must give way to
evidence to the contrary.
Here, respondent's own witness, Ramon Syhunliong, testified that a
jeepney signboard artist allegedly commissioned to create the mark
and logo submitted his designs only in December 1982.21 This was two-
and-a-half months after the filing of the respondent's trademark
application on October 18, 1982 with the BPTTT. It was also only in
December 1982 when the respondent's restaurant was opened for
business.22 Respondent cannot now claim before the Court that the
certificate of registration itself is proof that the two-month prior use
requirement was complied with, what with the fact that its very own
witness testified otherwise in the trial court. And because at the time
(October 18, 1982) the respondent filed its application for trademark
registration of the "Shangri-La" mark and "S" logo, respondent was not
using these in the Philippines commercially, the registration is void.
Petitioners also argue that the respondent's use of the "Shangri-La"
mark and "S" logo was in evident bad faith and cannot therefore ripen
into ownership, much less registration. While the respondent is correct
in saying that a finding of bad faith is factual, not legal,23 hence beyond
the scope of a petition for review, there are, however, noted exceptions
thereto. Among these exceptions are:
1. When the inference made is manifestly mistaken, absurd or
impossible;24
2. When there is grave abuse of discretion;25
3. When the judgment is based on a misapprehension of facts;26
4. When the findings of fact are conflicting;27 and
5. When the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondent.28
And these are naming but a few of the recognized exceptions to the
rule.
The CA itself, in its Decision of May 15, 2003, found that the
respondent's president and chairman of the board, Ramon Syhunliong,
had been a guest at the petitioners' hotel before he caused the
registration of the mark and logo, and surmised that he must have
copied the idea there:
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark
and devise from one of [petitioners'] hotel (Kowloon Shangri-la)
abroad? The mere fact that he was a visitor of [petitioners'] hotel abroad
at one time (September 27, 1982) establishes [petitioners'] allegation
that he got the idea there.29
Yet, in the very next paragraph, despite the preceding admission that
the mark and logo must have been copied, the CA tries to make it
appear that the adoption of the same mark and logo could have been
coincidental:
The word or name "Shangri-la" and the S-logo, are not uncommon. The
word "Shangri-la" refers to a (a) remote beautiful imaginary place where
life approaches perfection or (b) imaginary mountain land depicted as
a utopia in the novel Lost Horizon by James Hilton. The Lost Horizon
was a well-read and popular novel written in 1976. It is not impossible
that the parties, inspired by the novel, both adopted the mark for their
business to conjure [a] place of beauty and pleasure.
The S-logo is, likewise, not unusual. The devise looks like a modified
Old English print.30
To jump from a recognition of the fact that the mark and logo must have
been copied to a rationalization for the possibility that both the
petitioners and the respondent coincidentally chose the same name
and logo is not only contradictory, but also manifestly mistaken or
absurd. Furthermore, the "S" logo appears nothing like the "Old
English" print that the CA makes it out to be, but is obviously a symbol
with oriental or Asian overtones. At any rate, it is ludicrous to believe
that the parties would come up with the exact same lettering for the
word "Shangri-La" and the exact same logo to boot. As correctly
observed by the petitioners, to which we are in full accord:
x x x When a trademark copycat adopts the word portion of another's
trademark as his own, there may still be some doubt that the adoption
is intentional. But if he copies not only the word but also the word's
exact font and lettering style and in addition, he copies also the logo
portion of the trademark, the slightest doubt vanishes. It is then
replaced by the certainty that the adoption was deliberate, malicious
and in bad faith.31
It is truly difficult to understand why, of the millions of terms and
combination of letters and designs available, the respondent had to
choose exactly the same mark and logo as that of the petitioners, if
there was no intent to take advantage of the goodwill of petitioners'
mark and logo.32
One who has imitated the trademark of another cannot bring an action
for infringement, particularly against the true owner of the mark,
because he would be coming to court with unclean hands.33 Priority is
of no avail to the bad faith plaintiff. Good faith is required in order to
ensure that a second user may not merely take advantage of the
goodwill established by the true owner.
This point is further bolstered by the fact that under either Section 17 of
R.A. No. 166, or Section 151 of R.A. No. 8293, or Article 6bis(3) of the
Paris Convention, no time limit is fixed for the cancellation of marks
registered or used in bad faith.34 This is precisely why petitioners had
filed an inter partes case before the BPTTT for the cancellation of
respondent's registration, the proceedings on which were suspended
pending resolution of the instant case.
Respondent DGCI also rebukes the next issue raised by the petitioners
as being purely factual in nature, namely, whether the CA erred in
overlooking petitioners' widespread prior use of the "Shangri-La" mark
and "S" logo in their operations. The question, however, is not whether
there had been widespread prior use, which would have been factual,
but whether that prior use entitles the petitioners to use the mark and
logo in the Philippines. This is clearly a question which is legal in nature.
It has already been established in the two courts below, and admitted
by the respondent's president himself, that petitioners had prior
widespread use of the mark and logo abroad:
There is, to be sure, an impressive mass of proof that petitioner
SLIHM and its related companies abroad used the name and logo for
one purpose or another x x x.35 [Emphasis supplied]
In respondent's own words, "[T]he Court of Appeals did note petitioners'
use of the mark and logo but held that such use did not confer to them
ownership or exclusive right to use them in the Philippines."36 To
petitioners' mind, it was error for the CA to rule that their worldwide use
of the mark and logo in dispute could not have conferred upon them
any right thereto. Again, this is a legal question which is well worth
delving into.
R.A. No. 166, as amended, under which this case was heard and
decided provides:
Section 2. What are registrable. - Trademarks, trade names and
service marks owned by persons, corporations, partnerships or
associations domiciled in the Philippines and by persons, corporations,
partnerships or associations domiciled in any foreign country may be
registered in accordance with the provisions of this Act: Provided, That
said trademarks trade names, or service marks are actually in use in
commerce and services not less than two months in the
Philippines before the time the applications for registration are filed:
And provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges to
citizens of the Philippines, and such fact is officially certified, with a
certified true copy of the foreign law translated into the English
language, by the government of the foreign country to the Government
of the Republic of the Philippines.
Section 2-A. Ownership of trademarks, trade names and service
marks; how acquired. - Anyone who lawfully produces or deals in
merchandise of any kind or who engages in any lawful business, or who
renders any lawful service in commerce, by actual use thereof in
manufacture or trade, in business, and in the service rendered, may
appropriate to his exclusive use a trademark, a trade name, or a
servicemark not so appropriated by another, to distinguish his
merchandise, business or service from the merchandise, business or
services of others. The ownership or possession of a trademark, trade
name, service mark, heretofore or hereafter appropriated, as in this
section provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights known to
this law. [Emphasis supplied]
Admittedly, the CA was not amiss in saying that the law requires the
actual use in commerce of the said trade name and "S" logo in the
Philippines. Hence, consistent with its finding that the bulk of the
petitioners' evidence shows that the alleged use of the Shangri-La trade
name was done abroad and not in the Philippines, it is understandable
for that court to rule in respondent's favor. Unfortunately, however, what
the CA failed to perceive is that there is a crucial difference between
the aforequoted Section 2 and Section 2-A of R.A. No. 166. For, while
Section 2 provides for what is registrable, Section 2-A, on the other
hand, sets out how ownership is acquired. These are two distinct
concepts.
Under Section 2, in order to register a trademark, one must be the
owner thereof and must have actually used the mark in commerce in
the Philippines for 2 months prior to the application for registration.
Since "ownership" of the trademark is required for registration, Section
2-A of the same law sets out to define how one goes about acquiring
ownership thereof. Under Section 2-A, it is clear that actual use in
commerce is also the test of ownership but the provision went further
by saying that the mark must not have been so appropriated by another.
Additionally, it is significant to note that Section 2-A does not require
that the actual use of a trademark must be within the Philippines.
Hence, under R.A. No. 166, as amended, one may be an owner of a
mark due to actual use thereof but not yet have the right to register such
ownership here due to failure to use it within the Philippines for two
months.
While the petitioners may not have qualified under Section 2 of R.A.
No. 166 as a registrant, neither did respondent DGCI, since the latter
also failed to fulfill the 2-month actual use requirement. What is worse,
DGCI was not even the owner of the mark. For it to have been the
owner, the mark must not have been already appropriated (i.e., used)
by someone else. At the time of respondent DGCI's registration of the
mark, the same was already being used by the petitioners, albeit
abroad, of which DGCI's president was fully aware.
It is respondent's contention that since the petitioners adopted the
"Shangri-La" mark and "S" logo as a mere corporate name or as the
name of their hotels, instead of using them as a trademark or service
mark, then such name and logo are not trademarks. The two concepts
of corporate name or business name and trademark or service mark,
are not mutually exclusive. It is common, indeed likely, that the name
of a corporation or business is also a trade name, trademark or service
mark. Section 38 of R.A. No. 166 defines the terms as follows:
Sec. 38. Words and terms defined and construed - In the construction
of this Act, unless the contrary is plainly apparent from the context - The
term "trade name" includes individual names and surnames, firm
names, trade names, devices or words used by manufacturers,
industrialists, merchants, agriculturists, and others to identify their
business, vocations or occupations; the names or titles lawfully
adopted and used by natural or juridical persons, unions, and any
manufacturing, industrial, commercial, agricultural or other
organizations engaged in trade or commerce.
The term "trade mark" includes any word, name, symbol, emblem, sign
or device or any combination thereof adopted and used by a
manufacturer or merchant to identify his goods and distinguish them
from those manufactured, sold or dealt in by others.
The term "service mark" means a mark used in the sale or advertising
of services to identify the services of one person and distinguish
them from the services of others and includes without limitation
the marks, names, symbols, titles, designations, slogans,
character names, and distinctive features of radio or other
advertising. [Emphasis supplied]
Clearly, from the broad definitions quoted above, the petitioners can be
considered as having used the "Shangri-La" name and "S" logo as a
tradename and service mark.
The new Intellectual Property Code (IPC), Republic Act No. 8293,
undoubtedly shows the firm resolve of the Philippines to observe and
follow the Paris Convention by incorporating the relevant portions of the
Convention such that persons who may question a mark (that is,
oppose registration, petition for the cancellation thereof, sue for unfair
competition) include persons whose internationally well-known
mark, whether or not registered, is
identical with or confusingly similar to or constitutes a translation of a
mark that is sought to be registered or is actually registered. 37
However, while the Philippines was already a signatory to the Paris
Convention, the IPC only took effect on January 1, 1988, and in the
absence of a retroactivity clause, R.A. No. 166 still applies.38 Under the
prevailing law and jurisprudence at the time, the CA had not erred in
ruling that:
The Paris Convention mandates that protection should be afforded to
internationally known marks as signatory to the Paris Convention,
without regard as to whether the foreign corporation is registered,
licensed or doing business in the Philippines. It goes without saying that
the same runs afoul to Republic Act No. 166, which requires the actual
use in commerce in the Philippines of the subject mark or devise. The
apparent conflict between the two (2) was settled by the Supreme Court
in this wise -
"Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the
Philippines must subordinate an international
agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortensen vs. Peters, Great Britain, High Court of
Judiciary of Scotland, 1906, 8 Sessions 93; Paras, International Law
and World Organization, 1971 Ed., p. 20). Withal, the fact that
international law has been made part of the law of the land does not by
any means imply the primacy of international law over national law in
the municipal sphere. Under the doctrine of incorporation as applied in
most countries, rules of international law are given a standing equal,
not superior, to national legislative enactments (Salonga and Yap,
Public International Law, Fourth ed., 1974, p. 16)."39 [Emphasis
supplied]
Consequently, the petitioners cannot claim protection under the Paris
Convention. Nevertheless, with the double infirmity of lack of two-month
prior use, as well as bad faith in the respondent's registration of the
mark, it is evident that the petitioners cannot be guilty of infringement.
It would be a great injustice to adjudge the petitioners guilty of infringing
a mark when they are actually the originator and creator thereof.
Nor can the petitioners' separate personalities from their mother
corporation be an obstacle in the enforcement of their rights as part of
the Kuok Group of Companies and as official repository, manager and
operator of the subject mark and logo. Besides, R.A. No. 166 did not
require the party seeking relief to be the owner of the mark but "any
person who believes that he is or will be damaged by the registration of
a mark or trade name."40
WHEREFORE, the instant petition is GRANTED. The assailed
Decision and Resolution of the Court of Appeals dated May 15, 2003
and September 15, 2003, respectively, and the Decision of the
Regional Trial Court of Quezon City dated March 8, 1996 are hereby
SET ASIDE. Accordingly, the complaint for infringement in Civil Case
No. Q-91-8476 is ordered DISMISSED.
SO ORDERED.
ECOLE DE CUISINE MANILE v. LE CORDON BLEU INTL.
Assailed in this petition for review on certiorari1 is the December 23,
2008 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 104672
which affirmed in toto the Intellectual Property Office (IPO) Director
General’s April 21, 2008 Decision3 that declared respondent Renaud
Cointreau & Cie (Cointreau) as the true and lawful owner of the mark
"LE CORDON BLEU & DEVICE" and thus, is entitled to register the
same under its name.
The Facts
On June 21, 1990, Cointreau, a partnership registered under the laws
of France, filed before the (now defunct) Bureau of Patents,
Trademarks, and Technology Transfer (BPTTT) of the Department of
Trade and Industry a trademark application for the mark "LE CORDON
BLEU & DEVICE" for goods falling under classes 8, 9, 16, 21, 24, 25,
29, and 30 of the International Classification of Goods and Services for
the Purposes of Registrations of Marks ("Nice Classification") (subject
mark). The application was filed pursuant to Section 37 of Republic Act
No. 166, as amended (R.A. No. 166), on the basis of Home Registration
No. 1,390,912, issued on November 25, 1986 in France. Bearing Serial
No. 72264, such application was published for opposition in the March-
April 1993 issue of the BPTTT Gazette and released for circulation on
May 31, 1993.4
On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc. (Ecole) filed
an opposition to the subject application, averring that: (a) it is the owner
of the mark "LE CORDON BLEU, ECOLE DE CUISINE MANILLE,"
which it has been using since 1948 in cooking and other culinary
activities, including in its restaurant business; and (b) it has earned
immense and invaluable goodwill such that Cointreau’s use of the
subject mark will actually create confusion, mistake, and deception to
the buying public as to the origin and sponsorship of the goods, and
cause great and irreparable injury and damage to Ecole’s business
reputation and goodwill as a senior user of the same.5
On October 7, 1993, Cointreau filed its answer claiming to be the true
and lawful owner of the subject mark. It averred that: (a) it has filed
applications for the subject mark’s registration in various jurisdictions,
including the Philippines; (b) Le Cordon Bleu is a culinary school of
worldwide acclaim which was established in Paris, France in 1895; (c)
Le Cordon Bleu was the first cooking school to have set the standard
for the teaching of classical French cuisine and pastry making; and (d)
it has trained students from more than eighty (80) nationalities,
including Ecole’s directress, Ms. Lourdes L. Dayrit. Thus, Cointreau
concluded that Ecole’s claim of being the exclusive owner of the subject
mark is a fraudulent misrepresentation.6
During the pendency of the proceedings, Cointreau was issued
Certificates of Registration Nos. 60631 and 54352 for the marks
"CORDON BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895 &
DEVICE" for goods and services under classes 21 and 41 of the Nice
Classification, respectively.7
The Ruling of the Bureau of Legal Affairs
In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs (BLA)
of the IPO sustained Ecole’s opposition to the subject mark, necessarily
resulting in the rejection of Cointreau’s application.9 While noting the
certificates of registration obtained from other countries and other
pertinent materials showing the use of the subject mark outside the
Philippines, the BLA did not find such evidence sufficient to
establishCointreau’s claim of prior use of the same in the Philippines. It
emphasized that the adoption and use of trademark must be in
commerce in the Philippines and not abroad. It then concluded that
Cointreau has not established any proprietary right entitled to protection
in the Philippine jurisdiction because the law on trademarks rests upon
the doctrine of nationality or territoriality.10
On the other hand, the BLA found that the subject mark, which was the
predecessor of the mark "LE CORDON BLEU MANILLE" has been
known and used in the Philippines since 1948 and registered under the
name "ECOLE DE CUISINE MANILLE (THE CORDON BLEU OF THE
PHILIPPINES), INC." on May 9, 1980.11
Aggrieved, Cointreau filed an appeal with the IPO Director General.
The Ruling of the IPO Director General
In his Decision dated April 21, 2008, the IPO Director General reversed
and set aside the BLA’s decision, thus, granting Cointreau’s appeal and
allowing the registration of the subject mark.12 He held that while
Section 2 of R.A. No. 166 requires actual use of the subject mark in
commerce in the Philippines for at least two (2) months before the filing
date of the application, only the owner thereof has the right to register
the same, explaining that the user of a mark in the Philippines is not
ipso facto its owner. Moreover, Section 2-A of the same law does not
require actual use in the Philippines to be able to acquire ownership of
a mark.13
In resolving the issue of ownership and right to register the subject mark
in favor of Cointreau, he considered Cointreau’s undisputed use of such
mark since 1895 for its culinary school in Paris, France (in which
petitioner’s own directress, Ms. Lourdes L. Dayrit, had trained in 1977).
Contrarily, he found that while Ecole may have prior use of the subject
mark in the Philippines since 1948, it failed to explain how it came up
with such name and mark. The IPO Director General therefore
concluded that Ecole has unjustly appropriated the subject mark,
rendering it beyond the mantle of protection of Section 4(d)14 of R.A.
No. 166.15
Finding the IPO Director General’s reversal of the BLA’s Decision
unacceptable, Ecole filed a Petition for Review16dated June 7, 2008
with the CA.
Ruling of the CA
In its Decision dated December 23, 2008, the CA affirmed the IPO
Director General’s Decision in toto.17 It declared Cointreau as the true
and actual owner of the subject mark with a right to register the same
in the Philippines under Section 37 of R.A. No. 166, having registered
such mark in its country of origin on November 25, 1986.18
The CA likewise held that Cointreau’s right to register the subject mark
cannot be barred by Ecole’s prior use thereof as early as 1948 for its
culinary school "LE CORDON BLEU MANILLE" in the Philippines
because its appropriation of the mark was done in bad faith. Further,
Ecole had no certificate of registration that would put Cointreau on
notice that the former had appropriated or has been using the subject
mark. In fact, its application for trademark registration for the same
which was just filed on February 24, 1992 is still pending with the IPO.19
Hence, this petition.
Issues Before the Court
The sole issue raised for the Court’s resolution is whether the CA was
correct in upholding the IPO Director General’s ruling that Cointreau is
the true and lawful owner of the subject mark and thus, entitled to have
the same registered under its name.
At this point, it should be noted that the instant case shall be resolved
under the provisions of the old Trademark Law, R.A. No. 166, which
was the law in force at the time of Cointreau’s application for registration
of the subject mark.
The Court’s Ruling
The petition is without merit.
In the petition, Ecole argues that it is the rightful owner of the subject
mark, considering that it was the first entity that used the same in the
Philippines. Hence, it is the one entitled to its registration and not
Cointreau.
Petitioner’s argument is untenable.
Under Section 220 of R.A. No. 166, in order to register a trademark, one
must be the owner thereof and must have actually used the mark in
commerce in the Philippines for two (2) months prior to the application
for registration. Section 2-A21 of the same law sets out to define how
one goes about acquiring ownership thereof. Under Section 2-A, it is
clear that actual use in commerce is also the test of ownership but the
provision went further by saying that the mark must not have been so
appropriated by another. Additionally, it is significant to note that
Section 2-A does not require that the actual use of a trademark must
be within the Philippines. Thus, as correctly mentioned by the CA,
under R.A. No. 166, one may be an owner of a mark due to its actual
use but may not yet have the right to register such ownership here due
to the owner’s failure to use the same in the Philippines for two (2)
months prior to registration.22
Nevertheless, foreign marks which are not registered are still accorded
protection against infringement and/or unfair competition. At this point,
it is worthy to emphasize that the Philippines and France, Cointreau’s
country of origin, are both signatories to the Paris Convention for the
Protection of Industrial Property (Paris Convention).23 Articles 6bis and
8 of the Paris Convention state:
ARTICLE 6bis
(1) The countries of the Union undertake, ex officio if their legislation so
permits, or at the request of an interested party, to refuse or to cancel
the registration, and to prohibit the use, of a trademark which
constitutes a reproduction, an imitation, or a translation, liable to create
confusion, of a mark considered by the competent authority of the
country of registration or use to be well known in that country as being
already the mark of a person entitled to the benefits of this Convention
and used for identical or similar goods.1âwphi1 These provisions shall
also apply when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation liable to
create confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the Union without
the obligation of filing or registration, whether or not it forms part of a
trademark. (Emphasis and underscoring supplied)
In this regard, Section 37 of R.A. No. 166 incorporated Article 8 of the
Paris Convention, to wit:
Section 37. Rights of foreign registrants. - Persons who are nationals
of, domiciled in, or have a bona fide or effective business or commercial
establishment in any foreign country, which is a party to any
international convention or treaty relating to marks or trade-names, or
the repression of unfair competition to which the Philippines may be a
party, shall be entitled to the benefits and subject to the provisions of
this Act to the extent and under the conditions essential to give effect
to any such convention and treaties so long as the Philippines shall
continue to be a party thereto, except as provided in the following
paragraphs of this section.
xxxx
Trade-names of persons described in the first paragraph of this section
shall be protected without the obligation of filing or registration whether
or not they form parts of marks.
xxxx
In view of the foregoing obligations under the Paris Convention, the
Philippines is obligated to assure nationals of the signatory-countries
that they are afforded an effective protection against violation of their
intellectual property rights in the Philippines in the same way that their
own countries are obligated to accord similar protection to Philippine
nationals.24 "Thus, under Philippine law, a trade name of a national of
a State that is a party to the Paris Convention, whether or not the trade
name forms part of a trademark, is protected "without the obligation of
filing or registration.’"25
In the instant case, it is undisputed that Cointreau has been using the
subject mark in France since 1895, prior to Ecole’s averred first use of
the same in the Philippines in 1948, of which the latter was fully aware
thereof. In fact, Ecole’s present directress, Ms. Lourdes L. Dayrit (and
even its foundress, Pat Limjuco Dayrit), had trained in Cointreau’s Le
Cordon Bleu culinary school in Paris, France. Cointreau was likewise
the first registrant of the said mark under various classes, both abroad
and in the Philippines, having secured Home Registration No.
1,390,912 dated November 25, 1986 from its country of origin, as well
as several trademark registrations in the Philippines.26
On the other hand, Ecole has no certificate of registration over the
subject mark but only a pending application covering services limited to
Class 41 of the Nice Classification, referring to the operation of a
culinary school. Its application was filed only on February 24, 1992, or
after Cointreau filed its trademark application for goods and services
falling under different classes in 1990. Under the foregoing
circumstances, even if Ecole was the first to use the mark in the
Philippines, it cannot be said to have validly appropriated the same.
It is thus clear that at the time Ecole started using the subject mark, the
same was already being used by Cointreau, albeit abroad, of which
Ecole’s directress was fully aware, being an alumna of the latter’s
culinary school in Paris, France. Hence, Ecole cannot claim any tinge
of ownership whatsoever over the subject mark as Cointreau is the true
and lawful owner thereof. As such, the IPO Director General and the
CA were correct in declaring Cointreau as the true and lawful owner of
the subject mark and as such, is entitled to have the same registered
under its name.

In any case, the present law on trademarks, Republic Act No. 8293,
otherwise known as the Intellectual Property Code of the Philippines,
as amended, has already dispensed with the requirement of prior actual
use at the time of registration.27 Thus, there is more reason to allow the
registration of the subject mark under the name of Cointreau as its true
and lawful owner.

As a final note, "the function of a trademark is to point out distinctly the

origin or ownership of the goods (or services) to which it is affixed; to
secure to him, who has been instrumental in bringing into the market a
superior article of merchandise, the fruit of his industry and skill; to
assure the public that they are procuring the genuine article; to prevent
fraud and imposition; and to protect the manufacturer against
substitution and sale of an inferior and different article as his
product."28 As such, courts will protect trade names or marks, although
not registered or properly selected as trademarks, on the broad ground
of enforcing justice and protecting one in the fruits of his toil.29

WHEREFORE, the petition is DENIED. Accordingly, the December 23,

2008 Decision of the Court of Appeals in CA-G.R. SP No. 104672 is
hereby AFFIRMED in toto.

SO ORDERED.
MATAL, INTERIM DIRECTOR, US PTO v. TAM
The rock group “The Slants,” chose that name to dilute the term’s
denigrating force as a derogatory term for Asians. The Patent and
Trademark Office (PTO) denied an application for registration of the
name under 15 U.S.C. 1052(a), which prohibits the registration of
trademarks that may “disparage . . . or bring . . . into contemp[t] or
disrepute” any “persons, living or dead.” The Supreme Court affirmed
the Federal Circuit in finding the clause unconstitutional. The Court first
rejected an argument that the clause applies only to natural or juristic
persons. The Court then held that the clause is subject to the Free
Speech Clause, which does not regulate government speech.
Trademarks are private, not government speech. "If trademarks
become government speech when they are registered, the Federal
Government is babbling prodigiously and incoherently.” The
disparagement clause denies registration to any mark that is offensive
to a substantial percentage of the members of any group. That is
viewpoint discrimination. The “public expression of ideas may not be
prohibited merely because the ideas are themselves offensive to some
of their hearers.” The disparagement clause cannot withstand even
“relaxed” review. It does not serve a “substantial interest,” nor is it
“narrowly drawn.”
Primary Holding
The registration of a name as a trademark may not be denied on the
basis that the trademark disparages or brings into contempt any living
or dead people or groups, since this violates the free speech
protections of the First Amendment.
Simon Tam, lead singer of the rock group “The Slants,” chose this
moniker in order to “reclaim” the term and drain its denigrating force as
a derogatory term for Asian persons. Tam sought federal registration of
the mark “THE SLANTS.” The Patent and Trademark Office (PTO)
denied the application under a Lanham Act provision prohibiting the
registration of trademarks that may “disparage . . . or bring . . . into
contemp[t] or disrepute” any “persons, living or dead.”15 U. S. C.
§1052(a). Tam contested the denial of registration through the
administrative appeals process, to no avail. He then took the case to
federal court, where the en banc Federal Circuit ultimately found the
disparagement clause facially unconstitutional under the First
Amendment’s Free Speech Clause.
Held: The judgment is affirmed.
808 F. 3d 1321, affirmed.
Justice Alito delivered the opinion of the Court with respect to Parts I,
II, and III–A, concluding:
1. The disparagement clause applies to marks that disparage the
members of a racial or ethnic group. Tam’s view, that the clause applies
only to natural or juristic persons, is refuted by the plain terms of the
clause, which uses the word “persons.” A mark that disparages a
“substantial” percentage of the members of a racial or ethnic group
necessarily disparages many “persons,” namely, members of that
group. Tam’s narrow reading also clashes with the breadth of the
disparagement clause, which by its terms applies not just to “persons,”
but also to “institutions” and “beliefs.” §1052(a). Had Congress wanted
to confine the reach of the clause, it could have used the phrase
“particular living individual,” which it used in neighboring §1052(c). Tam
contends that his interpretation is supported by legislative history and
by the PTO’s practice for many years of registering marks that plainly
denigrated certain groups. But an inquiry into the meaning of the
statute’s text ceases when, as here, “the statutory language is
unambiguous and the statutory scheme is coherent and
consistent.”Barnhart v. Sigmon Coal Co., 534 U. S. 438, 450 (internal
quotation marks omitted). Even if resort to legislative history and early
enforcement practice were appropriate, Tam has presented nothing
showing a congressional intent to adopt his interpretation, and the
PTO’s practice in the years following the disparagement clause’s
enactment is unenlightening. Pp. 8–12.
2. The disparagement clause violates the First Amendment’s Free
Speech Clause. Contrary to the Government’s contention, trademarks
are private, not government speech. Because the “Free Speech Clause
. . . does not regulate government speech,” Pleasant Grove
City v. Summum, 555 U. S. 460, 467, the government is not required to
maintain viewpoint neutrality on its own speech. This Court exercises
great caution in extending its government-speech precedents, for if
private speech could be passed off as government speech by simply
affixing a government seal of approval, government could silence or
muffle the expression of disfavored viewpoints.
The Federal Government does not dream up the trademarks registered
by the PTO. Except as required by §1052(a), an examiner may not
reject a mark based on the viewpoint that it appears to express. If the
mark meets the Lanham Act’s viewpoint-neutral requirements,
registration is mandatory. And once a mark is registered, the PTO is
not authorized to remove it from the register unless a party moves for
cancellation, the registration expires, or the Federal Trade Commission
initiates proceedings based on certain grounds. It is thus far-fetched to
suggest that the content of a registered mark is government speech,
especially given the fact that if trademarks become government speech
when they are registered, the Federal Government is babbling
prodigiously and incoherently. And none of this Court’s government-
speech cases supports the idea that registered trademarks are
government speech. Johanns v. Livestock Marketing Assn., 544 U. S.
550; Pleasant Grove City v. Summum, 555 U. S. 460;
and Walker v. Texas Div., Sons of Confederate Veterans, Inc., 576
U. S. ___, distinguished. Holding that the registration of a trademark
converts the mark into government speech would constitute a huge and
dangerous extension of the government-speech doctrine, for other
systems of government registration (such as copyright) could easily be
characterized in the same way. Pp. 12–18.
Justice Alito, joined by The Chief Justice, Justice Thomas, and Justice
Breyer, concluded in Parts III–B, III–C, and IV:
(a) The Government’s argument that this case is governed by the
Court’s subsidized-speech cases is unpersuasive. Those cases all
involved cash subsidies or their equivalent, e.g., funds to private parties
for family planning services in Rust v. Sullivan, 500 U. S. 173, and cash
grants to artists in National Endowment for Arts v. Finley, 524 U. S.
569. The federal registration of a trademark is nothing like these
programs. The PTO does not pay money to parties seeking registration
of a mark; it requires the payment of fees to file an application and to
maintain the registration once it is granted. The Government responds
that registration provides valuable non-monetary benefits traceable to
the Government’s resources devoted to registering the marks, but
nearly every government service requires the expenditure of
government funds. This is true of services that benefit everyone, like
police and fire protection, as well as services that are utilized by only
some, e.g., the adjudication of private lawsuits and the use of public
parks and highways. Pp. 18–20.
(b) Also unpersuasive is the Government’s claim that the
disparagement clause is constitutional under a “government-program”
doctrine, an argument which is based on a merger of this Court’s
government-speech cases and subsidy cases. It points to two cases
involving a public employer’s collection of union dues from its
employees, Davenport v. Washington Ed. Assn., 551 U. S. 177,
and Ysursa v. Pocatello Ed. Assn., 555 U. S. 353, but these cases
occupy a special area of First Amendment case law that is far removed
from the registration of trademarks. Cases in which government creates
a limited public forum for private speech, thus allowing for some
content- and speaker-based restrictions, see, e.g., Good News
Club v. Milford Central School, 533 U. S. 98, 106–
107; Rosenberger v. Rector and Visitors of Univ. of Va., 515 U. S. 819,
831, are potentially more analogous. But even in those cases,
viewpoint discrimination is forbidden. The disparagement clause denies
registration to any mark that is offensive to a substantial percentage of
the members of any group. That is viewpoint discrimination in the sense
relevant here: Giving offense is a viewpoint. The “public expression of
ideas may not be prohibited merely because the ideas are themselves
offensive to some of their hearers.” Street v. New York, 394 U. S. 576,
592. Pp. 20–23.
(c) The dispute between the parties over whether trademarks are
commercial speech subject to the relaxed scrutiny outlined in Central
Hudson Gas & Elect. v. Public Serv. Comm’n of N. Y., 447 U. S. 557,
need not be resolved here because the disparagement clause cannot
withstand even Central Hudson review. Under Central Hudson, a
restriction of speech must serve “a substantial interest” and be
“narrowly drawn.” Id., at 564–565 (internal quotation marks omitted).
One purported interest is in preventing speech expressing ideas that
offend, but that idea strikes at the heart of the First Amendment. The
second interest asserted is protecting the orderly flow of commerce
from disruption caused by trademarks that support invidious
discrimination; but the clause, which reaches any trademark that
disparages any person, group, or institution, is not narrowly drawn.
Pp. 23–26.
Justice Kennedy, joined by Justice Ginsburg, Justice
Sotomayor, and Justice Kagan, agreed that 15 U. S. C.
§1052(a) constitutes viewpoint discrimination, concluding:
(a) With few narrow exceptions, a fundamental principle of the First
Amendment is that the government may not punish or suppress speech
based on disapproval of the ideas or perspectives the speech conveys.
See Rosenberger v. Rector and Visitors of Univ. of Va., 515 U. S. 819,
828–829. The test for viewpoint discrimination is whether—within the
relevant subject category—the government has singled out a subset of
messages for disfavor based on the views expressed. Here, the
disparagement clause identifies the relevant subject as “persons, living
or dead, institutions, beliefs, or national symbols,” §1052(a); and within
that category, an applicant may register a positive or benign mark but
not a derogatory one. The law thus reflects the Government’s
disapproval of a subset of messages it finds offensive, the essence of
viewpoint discrimination. The Government’s arguments in defense of
the statute are unpersuasive. Pp. 2–5.
(b) Regardless of whether trademarks are commercial speech, the
viewpoint based discrimination here necessarily invokes heightened
scrutiny. See Sorrell v. IMS Health Inc., 564 U. S. 552, 566. To the
extent trademarks qualify as commercial speech, they are an example
of why that category does not serve as a blanket exemption from
theFirst Amendment’s requirement of viewpoint neutrality. In the realm
of trademarks, the metaphorical marketplace of ideas becomes a
tangible, powerful reality. To permit viewpoint discrimination in this
context is to permit Government censorship. Pp. 5–7.
Alito, J., announced the judgment of the Court and delivered the opinion
of the Court with respect to Parts I, II, and III–A, in which Roberts, C. J.,
and Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan, JJ., joined,
and in which Thomas, J., joined except for Part II, and an opinion with
respect to Parts III–B, III–C, and IV, in which Roberts, C. J.,
and Thomas and Breyer, JJ., joined. Kennedy, J., filed an opinion
concurring in part and concurring in the judgment, in
which Ginsburg, Sotomayor, and Kagan, JJ., joined. Thomas, J., filed
an opinion concurring in part and concurring in the judgment. Gorsuch,
J., took no part in the consideration or decision of the case
The Supreme Court recently reviewed Matal, Interim Director, United
States Patent and Trademark Office v. Tam (Matal v. Tam), which
deals with trademark laws and what can be trademarked. In fact,
before the case reached the Supreme Court, we have previously
discussed how much is unsettled in this area of trademark law. With
this new decision, much of the law should be clearer with regards to
what can be officially trademarked.
What are the case facts?
A rock group chose the band name “The Slants” because they wanted
to “dilute the term’s denigrating force as a derogatory term for Asians.”
When the band tried to trademark this name with the United States
Patent and Trademark Office the application for registration was
denied. The government agency denied the application because it was
against 15 U.S.C. § 1052(a), also known as the Lanham Act, which
prohibits the registration of any trademark that may disparage or bring
into contempt any persons living or dead. The lead singer of the rock
group, Simon Tam, challenged this denial initially through the
administrative appeal process, which did not bring him any result. Then,
Simon Tang brought his case to federal court. The federal court decided
that the disparagement clause in the Lanham Act was unconstitutional
because it violated the First Amendment’s Free Speech Clause. This
decision was then appealed to the United States Supreme Court.
What was the Supreme Court’s decision?
The Supreme Court affirmed the decision by the federal circuit and also
found that the disparagement clause was unconstitutional. The high
court found that trademarks are protected by the Free Speech Clause
because they are private speech and not speech by the government.
Denying a trademark registration because it might be offensive to
members of any group is not allowed because it is viewpoint
discrimination. The Supreme Court stated that the “public expression
of ideas may not be prohibited merely because the ideas are
themselves offensive to some of their hearers.” The high court found
that the Lanham Act, also known as the disparagement clause, was just
too broad because it protected every single person who is both alive
and dead. This would get rid of a lot of free speech if it was allowed.
What is the decision’s impact?
This Supreme Court decision has had a major impact of what types of
things can be trademarked. Now, there cannot be restrictions on things
being trademarked just because they might be offensive to any
particular group. This decision will have a major impact on
the Washington Redskins case. The Washington Redskins are
currently involved in a legal battle because the same law that was at
issue in this case was used to prevent the Washington Redskins from
registering any trademarks relating to the word “Redskins” and from
protecting the logos that are used by the team. This decision is
basically a win for the Washington Redskins because they have a very
similar issue that is now pending. Due to the success in this case the
Washington Redskins would will most likely obtain a similar result.
ABERCROMBIE & FITCH v. HUNTING WORLD
Abercrombie & Fitch Co. (plaintiff) sued Hunting World, Inc. (defendant)
in the district court, seeking an injunction against defendant's uses of
the word "Safari", which plaintiff had registered as a trademark for
various classes of goods.1 Defendant moved for summary judgment
under Rule 56(b), F.R.Civ.P., on the ground that it had not infringed
plaintiff's trademark rights in the word "Safari". After considering the
pleadings, several affidavits and many exhibits filed by the respective
parties, and after hearing argument, the district judge filed an opinion,
327 F. Supp. 657 (S.D.N.Y. 1971), and entered an order which included
the following provisions: (1) "that the defendant's motion for summary
judgment is granted to the extent of holding that defendant's use of the
word 'Safari' to describe its safari hat, 'Minisafari' to describe its smaller
safari hat, and the further use by the defendant of the coined word
'Safariland' to describe a part of its shop, as a corporate name, and as
the name of a newsletter, do not infringe such rights as plaintiff may
have in the use of the word 'Safari', and to the further extent of holding
that defendant is entitled to use the word 'Safari' to describe those of
its products which relate to the practice or cult of safari"; (2) "that
summary judgment be awarded to each of the parties against the other
in relation to the respective claims of misrepresentation made by each
of them"; and (3) "that in all other respects" defendant's motion for
summary judgment be denied.
Plaintiff sought and was denied a certification by the district court under
28 U.S.C. § 1292(b) and Rule 54(b), F.R.Civ.P. It then appealed to this
court, relying on Sec. 1292(a) (1), which reads in pertinent part:
"(a) The courts of appeals shall have jurisdiction of appeals from:
"(1) Interlocutory orders of the district courts of the United States * *
granting, continuing, modifying, refusing or dissolving injunctions * *."
For the purposes of this appeal the facts are adequately stated in the
opinion of the district court. 327 F. Supp. at 659 et seq.
* In granting in part defendant's motion for summary judgment, the
district court's order in effect constituted a final denial on the merits of
the injunctive relief prayed for by plaintiff as to those uses by defendant
of the word "safari" which the district court found not to violate any
trademark rights plaintiff may have in the word "safari". In these
respects the order is appealable as an interlocutory order refusing an
injunction under Sec. 1292(a) (1).
Defendant argues that the order is not appealable, relying on
Switzerland Cheese Association, Inc. v. E. Horne's Market, Inc., 385
U.S. 23, 87 S. Ct. 193, 17 L. Ed. 2d 23 (1966), and Western
Geophysical Co. of America v. Bolt Associates, Inc., 440 F.2d 765 (2
Cir. 1971). Those cases, however, are distinguishable.
In Switzerland Cheese the Court held that the denial of a plaintiff's
motion for summary judgment seeking injunctive relief was not a denial
or refusal of an injunction within Sec. 1292(a) (1) because it did not
"settle or even tentatively decide anything about the merits of the claim.
It is strictly a pretrial order that decides only one thing-that the case
should go to trial." 383 U.S. at 25, 87 S. Ct. at 195.2 The present appeal
deals with a grant in part of defendant's motion for summary judgment,
which was, in effect, a final denial on the merits of plaintiff's request for
an injunction as to certain uses of the word "safari" by defendant.
In Western Geophysical this court declined to take appellate jurisdiction
under Sec. 1292(a) (1) where the district court had granted in part
motions by a plaintiff and a third-party defendant for summary judgment
with respect to portions of several defenses and counterclaims raised
by the defendant, which portions sought injunctive relief against the
movants. The rationale of the decision was that no single counterclaim
had been dismissed in its entirety and that the full extent of injunctive
relief prayed for by the defendant could still be secured in each of its
counterclaims. 440 F.2d at 771. In the present case, however, there are
no remaining claims for injunctive relief which would encompass those
uses of the word "safari" as to which the district court granted summary
judgment in favor of defendant. Even if plaintiff should prevail on the
remaining issues, the summary judgment in favor of defendant with
respect to certain uses of the word "safari" by defendant would remain
in effect.
Although a part of the district court's order is therefore appealable under
Sec. 1292(a) (1), the scope of appellate review is limited to that part of
the order which resulted in a final denial of a major portion of plaintiff's
requested injunction. The comments, findings and conclusions of the
district court with respect to the issues on which an injunction was not
refused are outside the scope of a Sec. 1292(a) (1) appeal.
II
At the conclusion of his discussion of the issue-"May the word 'Safari'
alone be validly registered as a trademark?"-the district judge stated:
"Although 'safari' is a generic word, a genuine issue of fact exists as to
whether the plaintiff has created a secondary meaning in its use of the
word 'identifying the source' and showing that 'purchasers are moved
to buy it because of its source,' Blisscraft of Hollywood v. United
Plastics Co., 294 F.2d 694, 697 (2d Cir. 1961); see also American Lead
Pencil Co. v. L. Gottlieb & Sons, 181 F. 178, 181 (2d Cir. 1910, Judge
Learned Hand). Plaintiff is entitled to establish in the discovery process
or on trial its contention that a secondary meaning has been created.
Accordingly, summary judgment cannot be granted on this issue." 327
F. Supp. at 662.
Then, in proceeding to discuss the other issue-"May summary
judgment be granted on any of defendant's uses of 'Safari'?"- the judge
continued:
"Even though plaintiff has registered 'Safari' as a mark for the products
in issue here and the question of secondary meaning remains
undecided, ' [t]he registering of a proper noun as a trademark does not
withdraw it from the language, nor reduce it to the exclusive possession
of the registrant which may be jealously guarding it against any and all
use by others.' Societe Comptoir De L'Indus., etc. v. Alexander's
Department Stores, Inc., 299 F.2d 33, 36 (2d Cir. 1962). * *" Id.
The judge then discussed several of defendant's uses of the word
"Safari", alone or in compound words. He found that in certain instances
defendant uses the word descriptively rather than as a trademark,
despite evidence to the contrary, e. g., the letters "TM" after the words
"Mini-safari" and "Safariland". He concluded that some of the uses of
the word were not infringements, but that a genuine issue of fact exists
as to whether plaintiff may be entitled to an injunction with respect to
other items, specifically shoes, and granted defendant's motion for
summary judgment only in part.
We intimate no opinion as to the ultimate merits of the case. But viewing
the inferences to be drawn from the underlying facts in the light most
favorable to the party opposing the motion for summary judgment,3 we
conclude that genuine issues of fact exist which made it improper to
enter a summary judgment finally denying even in part the injunctive
relief sought by plaintiff.
Reversed and remanded.
In United States trademark law, Abercrombie & Fitch Co. v. Hunting
World, 537 F.2d 4 (2nd Cir. 1976)[1]established the spectrum of
trademark distinctiveness in the US, breaking trademarks into classes
which are accorded differing degrees of protection. Courts often speak
of marks falling along the following "spectrum of distinctiveness," also
known within the US as the "Abercrombie classification" or
"Abercrombie factors".[1][2][3]The lawsuit was brought by Abercrombie &
Fitch Co. against Hunting World, Inc. regarding Abercrombie's
trademark on the word "Safari", and resulting in Abercrombie's loss of
the trademark.
The spectrum of distinctiveness
The Abercrombie court determined that descriptive words can
get trademarkprotection if they develop a secondary meaning. The
protection only exists for source-designating uses of the word, not
descriptive or generic uses of the word.
For many years plaintiff used the mark "Safari" on articles of clothing
sold by it in its sporting goods stores. Plaintiff complained that
defendant had engaged in the retail marketing of sporting apparel,
some identified by use of "Safari" alone or by expressions such as
"Minisafari" and "Safariland." The court held that: (1) "Safari" had
become a generic term and "Minisafari" could be used for a smaller
brim hat; (2) "Safari" had not, however, become a generic term for boots
or shoes; it was either suggestive or merely descriptive and was a valid
trademark even if merely descriptive because it had become
incontestable under the Lanham Act; but (3) in light of the justified
finding that "Camel Safari," "Hippo Safari" and "Safari Chukka" were
devoted by defendant to a purely descriptive use on its boots,
defendant had a defense against a charge of infringement on the basis
of fair use.
ZATARAINS v. OAK GROVE
Brief Fact Summary. Zatarain’s (Plaintiff) claimed that its trademark
was a “suggestive”� term and that Oak Grove Smokehouse, Inc.
(Defendant) should be liable for infringing it, but Oak Grove (Defendant)
claimed it was a “descriptive”� term subject to a fair use exception.
Synopsis of Rule of Law. Descriptive terms are not protected by
trademark without a showing of secondary meaning in the minds of the
public.
Facts. Zatarain’s (Plaintiff) manufactured and distributed food
products. It registered the terms “Fish-Fri”� and “Chick-Fri”� as
trademarks for its batter mixes used to fry foods. Oak Grove
Smokehouse, Inc. (Defendant) began marketing a “fish fry”� and a
“chicken fry”� in packages similar to those used by Plaintiff. Plaintiff
brought suit for trademark infringement and unfair competition under
the Lanham Act. The district court held that Zatarain’s (Plaintiff)
trademark “Fish-Fri”� was a descriptive term with an established
secondary meaning, but held that the alleged infringers had a fair use
defense to any asserted infringement of the term and that the
registration of the term “Chick-Fri”� should be canceled because it was
a descriptive term that lacked any secondary meaning. Plaintiff
appealed, claiming that its trademark “Fish-Fri”� was a suggestive
term that was automatically protected upon registration and therefore
not subject to the “fair use”� defense.
Issue. Are descriptive terms protected by trademark without a showing
of secondary meaning in the minds of the public?
Held. (Goldberg, J.) No. Descriptive terms are not protected by
trademark without a showing of secondary meaning in the minds of the
public. The district court was correct in applying the four prevailing tests
of descriptiveness: 1) the dictionary definition, 2) the imagination test;
usefulness of the term to competitors, and 4) actual use of the term by
other merchants, in finding that “Fish-Fri”� was a descriptive term
identifying a function of the product being sold. Proof of secondary
meaning is an issue only with respect to descriptive marks, and the
burden of proof rests at all times with the plaintiff to establish such a
meaning. The district court found that Plaintiff’s evidence established a
secondary meaning for the term in the New Orleans area. However,
Plaintiff has no legal claim to an exclusive right in the original,
descriptive sense of the term. Therefore, Defendant is still free to use
the words “fish fry”� in the ordinary, descriptive sense, so long as such
use will not tend to confuse customers as to the source of the goods.
The record contains plenty of evidence to support the district court’s
determination that Oak grove’s (Defendant) use of the term was fair
and in good faith. Affirmed.
Discussion. The trademark “fair use”� defense is different from the
copyright law fair use doctrine. In the trademark law, a junior user is not
liable of infringement of a senior user’s established trademark meaning
if the mark is being used in its descriptive sense. This defense is only
available to infringers of “descriptive”� marks.
This appeal of a trademark dispute presents us with a menu of edible
delights sure to tempt connoisseurs of fish and fowl alike. At issue is
the alleged infringement of two trademarks, "Fish-Fri" and "Chick-Fri,"
held by appellant Zatarain's, Inc. ("Zatarain's"). The district court held
that the alleged infringers had a "fair use" defense to any asserted
infringement of the term "Fish-Fri" and that the registration of the term
"Chick-Fri" should be cancelled. We affirm.
I. FACTS AND PROCEEDINGS BELOW
A. THE TALE OF THE TOWN FRIER
Zatarain's is the manufacturer and distributor of a line of over one
hundred food products. Two of these products, "Fish-Fri" and "Chick-
Fri," are coatings or batter mixes used to fry foods. These marks serve
as the entree in the present litigation.
Zatarain's "Fish-Fri" consists of 100% corn flour and is used to fry fish
and other seafood. "Fish-Fri" is packaged in rectangular cardboard
boxes containing twelve or twenty-four ounces of coating mix. The
legend "Wonderful FISH-FRI (R) " is displayed prominently on the front
panel, along with the block Z used to identify all Zatarain's products.
The term "Fish-Fri" has been used by Zatarain's or its predecessor
since 1950 and has been registered as a trademark since 1962.
Zatarain's "Chick-Fri" is a seasoned corn flour batter mix used for frying
chicken and other foods. The "Chick-Fri" package, which is very similar
to that used for "Fish-Fri," is a rectangular cardboard container labelled
"Wonderful CHICK-FRI." Zatarain's began to use the term "Chick-Fri"
in 1968 and registered the term as a trademark in 1976.
Zatarain's products are not alone in the marketplace. At least four other
companies market coatings for fried foods that are denominated "fish
fry" or "chicken fry." Two of these competing companies are the
appellees here, and therein hangs this fish tale.
Appellee Oak Grove Smokehouse, Inc. ("Oak Grove") began marketing
a "fish fry" and a "chicken fry" in March 1979. Both products are
packaged in clear glassine packets that contain a quantity of coating
mix sufficient to fry enough food for one meal. The packets are labelled
with Oak Grove's name and emblem, along with the words "FISH FRY"
OR "CHICKEN FRY." Oak Grove's "FISH FRY" has a corn flour base
seasoned with various spices; Oak Grove's "CHICKEN FRY" is a
seasoned coating with a wheat flour base.
Appellee Visko's Fish Fry, Inc. ("Visko's") entered the batter mix market
in March 1980 with its "fish fry." Visko's product is packed in a cylindrical
eighteen-ounce container with a resealable plastic lid. The words
"Visko's FISH FRY" appear on the label along with a photograph of a
platter of fried fish. Visko's coating mix contains corn flour and added
spices.
Other food manufacturing concerns also market coating mixes.
Boochelle's Spice Co. ("Boochelle's"), originally a defendant in this
lawsuit, at one time manufactured a seasoned "FISH FRY" packaged
in twelve-ounce vinyl plastic packets. Pursuant to a settlement between
Boochelle's and Zatarain's, Boochelle's product is now labelled "FISH
AND VEGETABLE FRY." Another batter mix, "YOGI Brand (R)
OYSTER SHRIMP and FISH FRY," is also available. Arnaud Coffee
Corporation ("Arnaud") has manufactured and marketed "YOGI Brand"
for ten to twenty years, but was never made a party to this
litigation. [FN1] A product called "Golden Dipt Old South Fish Fry" has
recently entered the market as well.
B. OUT OF THE FRYING PAN, INTO THE FIRE
Zatarain's first claimed foul play in its original complaint filed against
Oak Grove on June 19, 1979, in the United States District Court for the
Eastern District of Louisiana. The complaint alleged trademark
infringement and unfair competition under the Lanham Act §§ 32(1),
43(a), 15 U.S.C. §§ 1114(1), 1125(a) (1976), and La.Rev.Stat.Ann. §
51:1405(A) (West Supp.1982). Zatarain's later amended its complaint
to add Boochelle's and Visko's as defendants. Boochelle's and
Zatarain's ultimately resolved their dispute, and Boochelle's was
dismissed from the suit. The remaining defendants, Oak Grove and
Visko's, filed counterclaims against Zatarain's under the Sherman Act
§ 2, 15 U.S.C. § 2 (1976); the Clayton Act § 4, 15 U.S.C. § 15 (1976);
La.Rev.Stat.Ann. § 51:1401 (West Supp.1982); the Fair Packaging and
Labeling Act, 15 U.S.C. §§ 1451-1461 (1976); and the Food, Drug, and
Cosmetic Act § 403, 21 U.S.C. § 343 (1976). The defendants also
counterclaimed for cancellation of the trademarks "Fish-Fri" and "Chick-
Fri" under section 37 of the Lanham Act, 15 U.S.C. § 1119 (1976), and
for damages under section 38 of the Lanham Act, 15 U.S.C. § 1120
(1976).
The case was tried to the court without a jury. Treating the trademark
claims first, the district court classified the term "Fish-Fri" as a
descriptive term identifying a function of the product being sold. The
court found further that the term "Fish-Fri" had acquired a secondary
meaning in the New Orleans geographical area and therefore was
entitled to trademark protection, but concluded that the defendants
were entitled to fair use of the term "fish fry" to describe characteristics
of their goods. Accordingly, the court held that Oak Grove and Visko's
had not infringed Zatarain's trademark "Fish-Fri."
With respect to the alleged infringement of the term "Chick-Fri," the
court found that "Chick-Fri" was a descriptive term that had not acquired
a secondary meaning in the minds of consumers. Consequently, the
court held that Zatarain's claim for infringement of its trademark "Chick-
Fri" failed and ordered that the trademark registration of "Chick-Fri"
should be cancelled.
Turning to Zatarain's unfair competition claims, the court observed that
the evidence showed no likelihood of or actual confusion on the part of
the buying public. Additionally, the court noted that the dissimilarities in
trade dress of Zatarain's, Oak Grove's, and Visko's products diminished
any possibility of buyer confusion. For these reasons, the court found
no violations of federal or state unfair competition laws.
Finally, the court addressed the counterclaims asserted by Oak Grove
and Visko's. Because no evidence was introduced to support the
defendants' allegations of monopolistic behavior, fraud, and bad faith
on the part of Zatarain's, the court dismissed the federal and state
antitrust and unfair trade practices counterclaims. The court also
dismissed the counterclaim based on Zatarain's allegedly improper
product identity labelling. Both sides now appeal to this court.
II. ISSUES ON APPEAL
The district court found that Zatarain's trademark "Fish-Fri" was a
descriptive term with an established secondary meaning, but held that
Oak Grove and Visko's had a "fair use" defense to their asserted
infringement of the mark. The court further found that Zatarain's
trademark "Chick-Fri" was a descriptive term that lacked secondary
meaning, and accordingly ordered the trademark registration cancelled.
Additionally, the court concluded that Zatarain's had produced no
evidence in support of its claims of unfair competition on the part of Oak
Grove and Visko's. Finally, the court dismissed Oak Grove's and
Visko's counterclaims for antitrust violations, unfair trade practices,
misbranding of food products, and miscellaneous damages.
Battered, but not fried, Zatarain's appeals from the adverse judgment
on several grounds. First, Zatarain's argues that its trademark "Fish-
Fri" is a suggestive term and therefore not subject to the "fair use"
defense. Second, Zatarain's asserts that even if the "fair use" defense
is applicable in this case, appellees cannot invoke the doctrine because
their use of Zatarain's trademarks is not a good faith attempt to describe
their products. Third, Zatarain's urges that the district court erred in
cancelling the trademark registration for the term "Chick-Fri" because
Zatarain's presented sufficient evidence to establish a secondary
meaning for the term. For these reasons, Zatarain's argues that the
district court should be reversed.
Oak Grove and Visko's also present an appeal to this court, contending
that the district court erred in dismissing their counterclaims against
Zatarain's. In particular, Oak Grove and Visko's again urge that
Zatarain's conduct has violated the Sherman Act, the Lanham Act, the
federal regulations governing product identity labelling, and Louisiana
law prohibiting restraint of trade; Oak Grove and Visko's also pray for
an award of attorneys' fees. We now turn to an appraisal of these
issues.
III. THE TRADEMARK CLAIMS
A. BASIC PRINCIPLES [FN2]
1. Classifications of Marks
The threshold issue in any action for trademark infringement is whether
the word or phrase is initially registerable or protectable. Vision Center
v. Opticks, Inc., 596 F.2d 111, 115 (5th Cir.1980); American Heritage
Life Insurance Co. v. Heritage Life Insurance Co., 494 F.2d 3, 10 (5th
Cir.1974). Courts and commentators have traditionally divided potential
trademarks into four categories. A potential trademark may be
classified as (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary
or fanciful. These categories, like the tones in a spectrum, tend to blur
at the edges and merge together. The labels are more advisory than
definitional, more like guidelines than pigeonholes. Not surprisingly,
they are somewhat difficult to articulate and to apply. Soweco, Inc. v.
Shell Oil Co., 617 F.2d 1178, 1183 (5th Cir.1980); Vision Center, 596
F.2d at 115.
A generic term is "the name of a particular genus or class of which an
individual article or service is but a member." Vision Center, 596 F.2d
at 115; Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9
(2d Cir.1976). A generic term connotes the "basic nature of articles or
services" rather than the more individualized characteristics of a
particular product. American Heritage, 494 F.2d at 11. Generic terms
can never attain trademark protection. William R. Warner & Co. v. Eli
Lilly & Co., 265 U.S. 526, 528, 44 S.Ct. 615, 616, 68 L.Ed. 1161 (1924);
Soweco, 617 F.2d at 1183; Vision Center, 596 F.2d at 115.
Furthermore, if at any time a registered trademark becomes generic as
to a particular product or service, the mark's registration is subject to
cancellation. Lanham Act § 14, 15 U.S.C. § 1064(c) (1976). Such terms
as aspirin and cellophane have been held generic and therefore
unprotectable as trademarks. See Bayer Co. v. United Drug Co., 272
F. 505 (S.D.N.Y.1921) (aspirin); DuPont Cellophane Co. v. Waxed
Products Co., 85 F.2d 75 (2d Cir.1936) (cellophane).
A descriptive term "identifies a characteristic or quality of an article or
service," Vision Center, 596 F.2d at 115, such as its color, odor,
function, dimensions, or ingredients. American Heritage, 494 F.2d at
11. Descriptive terms ordinarily are not protectable as trademarks,
Lanham Act § 2(e)(1), 15 U.S.C. § 1052(e)(1) (1976); they may become
valid marks, however, by acquiring a secondary meaning in the minds
of the consuming public. See id. § 2(f), 15 U.S.C. § 1052(f). Examples
of descriptive marks would include "Alo" with reference to products
containing gel of the aloe vera plant, Aloe Creme Laboratories, Inc. v.
Milsan, Inc., 423 F.2d 845 (5th Cir.1970), and "Vision Center" in
reference to a business offering optical goods and services, Vision
Center, 596 F.2d at 117. As this court has often noted, the distinction
between descriptive and generic terms is one of degree. Soweco, 617
F.2d at 1184; Vision Center, 596 F.2d at 115 n. 11 (citing 3 R. Callman,
The Law of Unfair Competition, Trademarks and Monopolies § 70.4 (3d
ed. 1969)); American Heritage, 494 F.2d at 11. The distinction has
important practical consequences, however; while a descriptive term
may be elevated to trademark status with proof of secondary meaning,
a generic term may never achieve trademark protection. Vision Center,
596 F.2d at 115 n.11.
A suggestive term suggests, rather than describes, some particular
characteristic of the goods or services to which it applies and requires
the consumer to exercise the imagination in order to draw a conclusion
as to the nature of the goods and services. Soweco, 617 F.2d at 1184;
Vision Center, 596 F.2d at 115-16. A suggestive mark is protected
without the necessity for proof of secondary meaning. The term
"Coppertone" has been held suggestive in regard to sun tanning
products. See Douglas Laboratories, Inc. v. Copper Tan, Inc., 210 F.2d
453 (2d Cir.1954).
Arbitrary or fanciful terms bear no relationship to the products or
services to which they are applied. Like suggestive terms, arbitrary and
fanciful marks are protectable without proof of secondary meaning. The
term "Kodak" is properly classified as a fanciful term for photographic
supplies, see Eastman Kodak Co. v. Weil, 137 Misc. 506, 243 N.Y.S.
319 (1930) ( "Kodak"); "Ivory" is an arbitrary term as applied to soap.
Abercrombie & Fitch, 537 F.2d at 9 n.6.
2. Secondary Meaning
As noted earlier, descriptive terms are ordinarily not protectable as
trademarks. They may be protected, however, if they have acquired a
secondary meaning for the consuming public. The concept of
secondary meaning recognizes that words with an ordinary and primary
meaning of their own "may by long use with a particular product, come
to be known by the public as specifically designating that product."
Volkswagenwerk Aktiengesellschaft v. Rickard, 492 F.2d 474, 477 (5th
Cir.1974). In order to establish a secondary meaning for a term, a
plaintiff "must show that the primary significance of the term in the
minds of the consuming public is not the product but the producer."
Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 118, 59 S.Ct. 109,
113, 83 L.Ed. 73 (1938). The burden of proof to establish secondary
meaning rests at all times with the plaintiff; this burden is not an easy
one to satisfy, for " '[a] high degree of proof is necessary to establish
secondary meaning for a descriptive term.' " Vision Center, 596 F.2d at
118 (quoting 3 R. Callman, supra, § 77.3, at 359). Proof of secondary
meaning is an issue only with respect to descriptive marks; suggestive
and arbitrary or fanciful marks are automatically protected upon
registration, and generic terms are unprotectible even if they have
acquired secondary meaning. See Soweco, 617 F.2d at 1185 n.20.
3. The "Fair Use" Defense
Even when a descriptive term has acquired a secondary meaning
sufficient to warrant trademark protection, others may be entitled to use
the mark without incurring liability for trademark infringement. When the
allegedly infringing term is "used fairly and in good faith only to describe
to users the goods or services of [a] party, or their geographic origin,"
Lanham Act § 33(b)(4), 15 U.S.C. § 1115(b)(4) (1976), a defendant in
a trademark infringement action may assert the "fair use" defense. The
defense is available only in actions involving descriptive terms and only
when the term is used in its descriptive sense rather than its trademark
sense. Soweco, 617 F.2d at 1185; see Venetianaire Corp. v. A & P
Import Co., 429 F.2d 1079, 1081-82 (2d Cir.1970). In essence, the fair
use defense prevents a trademark registrant from appropriating a
descriptive term for its own use to the exclusion of others, who may be
prevented thereby from accurately describing their own goods.
Soweco, 617 F.2d at 1185. The holder of a protectable descriptive mark
has no legal claim to an exclusive right in the primary, descriptive
meaning of the term; consequently, anyone is free to use the term in its
primary, descriptive sense so long as such use does not lead to
customer confusion as to the source of the goods or services. See 1 J.
McCarthy, Trademarks and Unfair Competition § 11.17, at 379 (1973).
4. Cancellation of Trademarks
Section 37 of the Lanham Act, 15 U.S.C. § 1119 (1976), provides as
follows:
In any action involving a registered mark the court may determine the
right to registration, order the cancelation of registrations, in whole or in
part, restore canceled registrations, and otherwise rectify the register
with respect to the registrations of any party to the action. Decrees and
orders shall be certified by the court to the Commissioner, who shall
make appropriate entry upon the records of the Patent Office, and shall
be controlled thereby.
This circuit has held that when a court determines that a mark is either
a generic term or a descriptive term lacking secondary meaning, the
purposes of the Lanham Act are well served by an order cancelling the
mark's registration. American Heritage, 494 F.2d at 14.
We now turn to the facts of the instant case.
B. "FISH-FRI" [FN3]
1. Classification
Throughout this litigation, Zatarain's has maintained that the term "Fish-
Fri" is a suggestive mark automatically protected from infringing uses
by virtue of its registration in 1962. Oak Grove and Visko's assert that
"fish fry" is a generic term identifying a class of foodstuffs used to fry
fish; alternatively, Oak Grove and Visko's argue that "fish fry" is merely
descriptive of the characteristics of the product. The district court found
that "Fish-Fri" was a descriptive term identifying a function of the
product being sold. Having reviewed this finding under the appropriate
"clearly erroneous" standard, we affirm. See Vision Center, 596 F.2d at
113.
We are mindful that "[t]he concept of descriptiveness must be
construed rather broadly." 3 R. Callman, supra, § 70.2. Whenever a
word or phrase conveys an immediate idea of the qualities,
characteristics, effect, purpose, or ingredients of a product or service,
it is classified as descriptive and cannot be claimed as an exclusive
trademark. Id. § 71.1; see Stix Products, Inc. v. United Merchants &
Manufacturers, Inc., 295 F.Supp. 479, 488 (S.D.N.Y.1968). Courts and
commentators have formulated a number of tests to be used in
classifying a mark as descriptive.
A suitable starting place is the dictionary, for "[t]he dictionary definition
of the word is an appropriate and relevant indication 'of the ordinary
significance and meaning of words' to the public." American Heritage,
494 F.2d at 11 n.5; see also Vision Center, 596 F.2d at 116. Webster's
Third New International Dictionary 858 (1966) lists the following
definitions for the term "fish fry": "1. a picnic at which fish are caught,
fried, and eaten; .... 2. fried fish." Thus, the basic dictionary definitions
of the term refer to the preparation and consumption of fried fish. This
is at least preliminary evidence that the term "Fish-Fri" is descriptive of
Zatarain's product in the sense that the words naturally direct attention
to the purpose or function of the product.
The "imagination test" is a second standard used by the courts to
identify descriptive terms. This test seeks to measure the relationship
between the actual words of the mark and the product to which they are
applied. If a term "requires imagination, thought and perception to reach
a conclusion as to the nature of goods," Stix Products, 295 F.Supp. at
488, it is considered a suggestive term. Alternatively, a term is
descriptive if standing alone it conveys information as to the
characteristics of the product. In this case, mere observation compels
the conclusion that a product branded "Fish-Fri" is a prepackaged
coating or batter mix applied to fish prior to cooking. The connection
between this merchandise and its identifying terminology is so close
and direct that even a consumer unfamiliar with the product would
doubtless have an idea of its purpose or function. It simply does not
require an exercise of the imagination to deduce that "Fish-Fri" is used
to fry fish. See Vision Center, 596 F.2d at 116-17; Stix Products, 295
F.Supp. at 487-88. Accordingly, the term "Fish-Fri" must be considered
descriptive when examined under the "imagination test."
A third test used by courts and commentators to classify descriptive
marks is "whether competitors would be likely to need the terms used
in the trademark in describing their products." Union Carbide Corp. v.
Ever-Ready, Inc., 531 F.2d 366, 379 (7th Cir.1976). A descriptive term
generally relates so closely and directly to a product or service that
other merchants marketing similar goods would find the term useful in
identifying their own goods. Vision Center, 596 F.2d at 116-17; Stix
Products, 295 F.Supp. at 488. Common sense indicates that in this
case merchants other than Zatarain's might find the term "fish fry"
useful in describing their own particular batter mixes. While Zatarain's
has argued strenuously that Visko's and Oak Grove could have chosen
from dozens of other possible terms in naming their coating mix, we
find this position to be without merit. As this court has held, the fact that
a term is not the only or even the most common name for a product is
not determinative, for there is no legal foundation that a product can be
described in only one fashion. Vision Center, 596 F.2d at 117 n.17.
There are many edible fish in the sea, and as many ways to prepare
them as there are varieties to be prepared. Even piscatorial
gastronomes would agree, however, that frying is a form of preparation
accepted virtually around the world, at restaurants starred and
unstarred. The paucity of synonyms for the words "fish" and "fry"
suggests that a merchant whose batter mix is specially spiced for frying
fish is likely to find "fish fry" a useful term for describing his product.
A final barometer of the descriptiveness of a particular term examines
the extent to which a term actually has been used by others marketing
a similar service or product. Vision Center, 596 F.2d at 117; Shoe Corp.
of America v. Juvenile Shoe Corp., 266 F.2d 793, 796 (C.C.P.A.1959).
This final test is closely related to the question whether competitors are
likely to find a mark useful in describing their products. As noted above,
a number of companies other than Zatarain's have chosen the word
combination "fish fry" to identify their batter mixes. Arnaud's product,
"Oyster Shrimp and Fish Fry," has been in competition with Zatarain's
"Fish-Fri" for some ten to twenty years. When companies from A to Z,
from Arnaud to Zatarain's, select the same term to describe their similar
products, the term in question is most likely a descriptive one.
The correct categorization of a given term is a factual issue, Soweco,
617 F.2d at 1183 n.12; consequently, we review the district court's
findings under the "clearly erroneous" standard of Fed.R.Civ.P. 52. See
Vision Center, 596 F.2d at 113; Volkswagenwerk, 492 F.2d at 478. The
district court in this case found that Zatarain's trademark "Fish-Fri" was
descriptive of the function of the product being sold. Having applied the
four prevailing tests of descriptiveness to the term "Fish-Fri," we are
convinced that the district court's judgment in this matter is not only not
clearly erroneous, but clearly correct. [FN4]
2. Secondary Meaning
Descriptive terms are not protectable by trademark absent a showing
of secondary meaning in the minds of the consuming public. [FN5] To
prevail in its trademark infringement action, therefore, Zatarain's must
prove that its mark "Fish-Fri" has acquired a secondary meaning and
thus warrants trademark protection. The district court found that
Zatarain's evidence established a secondary meaning for the term
"Fish-Fri" in the New Orleans area. We affirm.
The existence of secondary meaning presents a question for the trier
of fact, and a district court's finding on the issue will not be disturbed
unless clearly erroneous. American Heritage, 494 F.2d at 13;
Volkswagenwerk, 492 F.2d at 477. The burden of proof rests with the
party seeking to establish legal protection for the mark--the plaintiff in
an infringement suit. Vision Center, 596 F.2d at 118. The evidentiary
burden necessary to establish secondary meaning for a descriptive
term is substantial. Id.; American Heritage, 494 F.2d at 12; 3 R.
Callman, supra, § 77.3, at 359.
In assessing a claim of secondary meaning, the major inquiry is the
consumer's attitude toward the mark. The mark must denote to the
consumer "a single thing coming from a single source," Coca-Cola Co.
v. Koke Co., 254 U.S. 143, 146, 41 S.Ct. 113, 114, 65 L.Ed. 189 (1920);
Aloe Creme Laboratories, 423 F.2d at 849, to support a finding of
secondary meaning. Both direct and circumstantial evidence may be
relevant and persuasive on the issue.
Factors such as amount and manner of advertising, volume of sales,
and length and manner of use may serve as circumstantial evidence
relevant to the issue of secondary meaning. See, e.g., Vision Center,
596 F.2d at 119; Union Carbide Corp., 531 F.2d at 380; Aloe Creme
Laboratories, 423 F.2d at 849-50. While none of these factors alone will
prove secondary meaning, in combination they may establish the
necessary link in the minds of consumers between a product and its
source. It must be remembered, however, that "the question is not the
extent of the promotional efforts, but their effectiveness in altering the
meaning of [the term] to the consuming public." Aloe Creme
Laboratories, 423 F.2d at 850.
Since 1950, Zatarain's and its predecessor have continuously used the
term "Fish-Fri" to identify this particular batter mix. Through the
expenditure of over $400,000 for advertising during the period from
1976 through 1981, Zatarain's has promoted its name and its product
to the buying public. Sales of twelve-ounce boxes of "Fish-Fri"
increased from 37,265 cases in 1969 to 59,439 cases in 1979. From
1964 through 1979, Zatarain's sold a total of 916,385 cases of "Fish-
Fri." [FN6] The district court considered this circumstantial evidence of
secondary meaning to weigh heavily in Zatarain's favor. Record on
Appeal, Vol. I at 273.
In addition to these circumstantial factors, Zatarain's introduced at trial
two surveys conducted by its expert witness, Allen
Rosenzweig. [FN7] In one survey, telephone interviewers questioned
100 women in the New Orleans area who fry fish or other seafood three
or more times per month. Of the women surveyed, twenty-three percent
specified Zatarain's "Fish-Fri" as a product they "would buy at the
grocery to use as a coating" or a "product on the market that is
especially made for frying fish." In a similar survey conducted in person
at a New Orleans area mall, twenty-eight of the 100 respondents
answered "Zatarain's 'Fish-Fri' " to the same questions. [FN8]
The authorities are in agreement that survey evidence is the most direct
and persuasive way of establishing secondary meaning. Vision Center,
596 F.2d at 119; Aloe Creme Laboratories, 423 F.2d at 849; 1 J.
McCarthy, supra, § 15.12(D). The district court believed that the survey
evidence produced by Zatarain's, when coupled with the circumstantial
evidence of advertising and usage, tipped the scales in favor of a
finding of secondary meaning. Were we considering the question of
secondary meaning de novo, we might reach a different conclusion
than did the district court, for the issue is close. Mindful, however, that
there is evidence in the record to support the finding below, we cannot
say that the district court's conclusion was clearly erroneous.
Accordingly, the finding of secondary meaning in the New Orleans area
for Zatarain's descriptive term "Fish-Fri" must be affirmed.
3. The "Fair Use" Defense
Although Zatarain's term "Fish-Fri" has acquired a secondary meaning
in the New Orleans geographical area, Zatarain's does not now prevail
automatically on its trademark infringement claim, for it cannot prevent
the fair use of the term by Oak Grove and Visko's. The "fair use"
defense applies only to descriptive terms and requires that the term be
"used fairly and in good faith only to describe to users the goods or
services of such party, or their geographic origin." Lanham Act § 33(b),
15 U.S.C. § 1115(b)(4) (1976). The district court determined that Oak
Grove and Visko's were entitled to fair use of the term "fish fry" to
describe a characteristic of their goods; we affirm that conclusion.
Zatarain's term "Fish-Fri" is a descriptive term that has acquired a
secondary meaning in the New Orleans area. Although the trademark
is valid by virtue of having acquired a secondary meaning, only that
penumbra or fringe of secondary meaning is given legal protection.
Zatarain's has no legal claim to an exclusive right in the original,
descriptive sense of the term; therefore, Oak Grove and Visko's are still
free to use the words "fish fry" in their ordinary, descriptive sense, so
long as such use will not tend to confuse customers as to the source of
the goods. See 1 J. McCarthy, supra, § 11.17.
The record contains ample evidence to support the district court's
determination that Oak Grove's and Visko's use of the words "fish fry"
was fair and in good faith. Testimony at trial indicated that the appellees
did not intend to use the term in a trademark sense and had never
attempted to register the words as a trademark. Record on Appeal, Vol.
II at 28, 33, 226-30, 243- 47. Oak Grove and Visko's apparently
believed "fish fry" was a generic name for the type of coating mix they
manufactured. Id. at 28, 226, 244. In addition, Oak Grove and Visko's
consciously packaged and labelled their products in such a way as to
minimize any potential confusion in the minds of consumers. Id. at 244-
45, 251-52. The dissimilar trade dress of these products prompted the
district court to observe that confusion at the point of purchase--the
grocery shelves--would be virtually impossible. Our review of the record
convinces us that the district court's determinations are correct. We
hold, therefore, that Oak Grove and Visko's are entitled to fair use of
the term "fish fry" to describe their products; accordingly, Zatarain's
claim of trademark infringement must fail. [FN9]
C. "CHICK-FRI"
1. Classification
Most of what has been said about "Fish-Fri" applies with equal force to
Zatarain's other culinary concoction, "Chick-Fri." "Chick-Fri" is at least
as descriptive of the act of frying chicken as "Fish-Fri" is descriptive of
frying fish. It takes no effort of the imagination to associate the term
"Chick-Fri" with Southern fried chicken. Other merchants are likely to
want to use the words "chicken fry" to describe similar products, and
others have in fact done so. Sufficient evidence exists to support the
district court's finding that "Chick-Fri" is a descriptive term; accordingly,
we affirm.
2. Secondary Meaning
The district court concluded that Zatarain's had failed to establish a
secondary meaning for the term "Chick-Fri." We affirm this finding. The
mark "Chick-Fri" has been in use only since 1968; it was registered
even more recently, in 1976. In sharp contrast to its promotions with
regard to "Fish- Fri," Zatarain's advertising expenditures for "Chick-Fri"
were mere chickenfeed; in fact, Zatarain's conducted no direct
advertising campaign to publicize the product. Thus the circumstantial
evidence presented in support of a secondary meaning for the term
"Chick-Fri" was paltry.
Allen Rosenzweig's survey evidence regarding a secondary meaning
for "Chick- Fri" also "lays an egg." The initial survey question was a
"qualifier:" "Approximately how many times in an average month do
you, yourself, fry fish or other seafood?" Only if respondents replied
"three or more times a month" were they asked to continue the survey.
This qualifier, which may have been perfectly adequate for purposes of
the "Fish-Fri" questions, seems highly unlikely to provide an adequate
sample of potential consumers of "Chick-Fri." This survey provides us
with nothing more than some data regarding fish friers' perceptions
about products used for frying chicken. As such, it is entitled to little
evidentiary weight. [FN10]
It is well settled that Zatarain's, the original plaintiff in this trademark
infringement action, has the burden of proof to establish secondary
meaning for its term. Vision Center, 596 F.2d at 118; American
Heritage, 494 F.2d at 12. This it has failed to do. The district court's
finding that the term "Chick-Fri" lacks secondary meaning is affirmed.
3. Cancellation
Having concluded that the district court was correct in its determination
that Zatarain's mark "Chick-Fri" is a descriptive term lacking in
secondary meaning, we turn to the issue of cancellation. The district
court, invoking the courts' power over trademark registration as
provided by section 37 of the Lanham Act, 15 U.S.C. § 1119 (1976),
ordered that the registration of the term "Chick- Fri" should be
cancelled. The district court's action was perfectly appropriate in light
of its findings that "Chick-Fri" is a descriptive term without secondary
meaning. We affirm. See American Heritage, 494 F.2d at 13-14.
IV. THE COUNTERCLAIMS
The last morsels on our plate are the counterclaims filed against
Zatarain's by Oak Grove and Visko's. One group of counterclaims
alleges violations of federal antitrust statutes and Louisiana law
prohibiting the restraint of trade. In addition, the counterclaims pray for
awards of attorneys' fees under the Lanham Act § 35, 15 U.S.C. § 1117
(1976), due to Zatarain's alleged bad faith in instituting this infringement
action. The district court found these allegations to be clearly without
merit, noting that Oak Grove and Visko's had introduced absolutely no
evidence at trial to support the counterclaims. Our review of the record
fully supports the district court's judgment in this regard, and it is hereby
affirmed.
Finally, Oak Grove and Visko's assert a counterclaim based on the
federal regulations governing the identity labelling of packaged foods,
21 C.F.R. § 101.3 (1982). [FN11] The counterclaim alleges that
Zatarain'ssale of 100% corn flour under the name "Fish-Fri" is
deceptive and misleading to the public. In particular, Oak Grove and
Visko's maintain that the size of the product identification "corn flour"
on the "Fish-Fri" box is not reasonably related to the most predominate
words on the box as required by the regulations. After examining the
"Fish-Fri" package, the district court found this counterclaim to be
without merit. The court initially noted that the size of the words "corn
flour" complies with the specifications of 21 C.F.R. § 101.2(c) (1982),
which sets a minimum requirement for information appearing on the
principal display panel of packaged foods. The court then found that
the identification of Zatarain's "Fish-Fri" as a corn flour product was
reasonably related in size to the words "Fish-Fri." This finding is not
clearly erroneous and therefore is affirmed.
We agree with the district court that this smorgasbord of counterclaims
by Oak Grove and Visko's is without merit, and we affirm their dismissal
by the district court. Sadly, for Oak Grove and Visko's at least, these
are "the ones that got away."
V. CONCLUSION
And so our tale of fish and fowl draws to a close. We need not tarry
long, for our taster's choice yields but one result, and we have other
fish to fry. Accordingly, the judgment of the district court is hereby and
in all things
AFFIRMED.
SHANG REALTY v. ST FRANCIS DEVELOPMENT
Assailed in this petition for review on certiorari1 is the Decision2 dated
December 18, 2009 of the Court of Appeals (CA) in CA-G.R. SP No.
105425 which affirmed with modification the Decision3 dated
September 3, 2008 of the Intellectual Property Office (IPO) Director-
General. The CA: (a) affirmed the denial of the application for
registration of the mark "ST. FRANCIS TOWERS" filed by petitioners
Shang Properties Realty Corporation and Shang Properties, Inc.
(petitioners); ( b) found petitioners to have committed unfair competition
for using the marks "THE ST. FRANCIS TOWERS" and "THE ST.
FRANCIS SHANGRI-LA PLACE"; (c) ordered petitioners to cease and
desist from using "ST. FRANCIS" singly or as part of a composite mark;
and (d) ordered petitioners to jointly and severally pay respondent St.
Francis Square Development Corporation (respondent) a fine in the
amount of ₱200,000.00.
The Facts
Respondent – a domestic corporation engaged in the real estate
business and the developer of the St. Francis Square Commercial
Center, built sometime in 1992, located at Ortigas Center,
Mandaluyong City, Metro Manila (Ortigas Center)4 – filed separate
complaints against petitioners before the IPO - Bureau of Legal Affairs
(BLA), namely: (a) an intellectual property violation case for unfair
competition, false or fraudulent declaration, and damages arising from
petitioners’ use and filing of applications for the registration of the marks
"THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA
PLACE," docketed as IPV Case No. 10-2005-00030 (IPV Case); and
(b) an inter partes case opposing the petitioners’ application for
registration of the mark "THE ST. FRANCIS TOWERS" for use relative
to the latter’s business, particularly the construction of permanent
buildings or structures for residential and office purposes, docketed as
Inter PartesCase No. 14-2006-00098 (St. Francis Towers IP Case);
and (c) an inter partes case opposing the petitioners’ application for
registration of the mark "THE ST. FRANCIS SHANGRI-LA PLACE,"
docketed as IPC No. 14-2007-00218 (St. Francis Shangri-La IP Case).5
In its complaints, respondent alleged that it has used the mark "ST.
FRANCIS" to identify its numerous property development projects
located at Ortigas Center, such as the aforementioned St. Francis
Square Commercial Center, a shopping mall called the "St. Francis
Square," and a mixed-use realty project plan thatincludes the St.
Francis Towers. Respondent added that as a result of its continuous
use of the mark "ST. FRANCIS" in its real estate business,it has gained
substantial goodwill with the public that consumers and traders closely
identify the said mark with its property development projects.
Accordingly, respondent claimed that petitioners could not have the
mark "THE ST. FRANCIS TOWERS" registered in their names, and
that petitioners’ use of the marks "THE ST. FRANCIS TOWERS" and
"THE ST. FRANCIS SHANGRI-LA PLACE" in their own real estate
development projects constitutes unfair competition as well as false or
fraudulent declaration.6
Petitioners denied committing unfair competition and false or fraudulent
declaration, maintaining that they could register the mark "THE ST.
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE"
under their names. They contended that respondent is barred from
claiming ownership and exclusive use ofthe mark "ST. FRANCIS"
because the same is geographically descriptive ofthe goods or services
for which it is intended to be used.7 This is because respondent’s as
well as petitioners’ real estate development projects are locatedalong
the streets bearing the name "St. Francis," particularly, St.
FrancisAvenue and St. Francis Street (now known as Bank
Drive),8 both within the vicinity of the Ortigas Center.
The BLA Rulings
On December 19, 2006, the BLA rendered a Decision9 in the IPV Case,
and found that petitioners committed acts of unfair competition against
respondent by its use of the mark "THE ST. FRANCIS TOWERS" but
not with its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE."
It, however, refused to award damages in the latter’s favor, considering
that there was no evidence presented to substantiate the amount of
damages it suffered due to the former’s acts. The BLA found that "ST.
FRANCIS," being a name of a Catholic saint, may be considered as an
arbitrary mark capable of registration when used in real estate
development projects as the name has no direct connection or
significance when used in association with real estate. The BLA neither
deemed "ST. FRANCIS" as a geographically descriptive mark,
opiningthat there is no specific lifestyle, aura, quality or characteristic
that the real estate projects possess except for the fact that they are
located along St. Francis Avenueand St. Francis Street (now known as
Bank Drive), Ortigas Center. In this light, the BLA found that while
respondent’s use of the mark "ST. FRANCIS" has not attained
exclusivity considering that there are other real estate development
projects bearing the name "St. Francis" in other areas, 10 it must
nevertheless be pointed out that respondent has been known to be the
only real estate firm to transact business using such name within the
Ortigas Center vicinity. Accordingly, the BLA considered respondent to
have gained goodwill and reputation for its mark, which therefore
entitles it to protection against the use by other persons, at least, to
those doing business within the Ortigas Center.11
Meanwhile, on March 28, 2007, the BLA rendered a Decision12 in the
St. Francis Towers IP Case, denying petitioners’ application for
registration of the mark "THE ST. FRANCIS TOWERS." Excluding the
word "TOWERS" in view of petitioners’ disclaimer thereof, the BLA
ruled that petitioners cannot register the mark "THE ST. FRANCIS"
since it is confusingly similar to respondent’s"ST. FRANCIS" marks
which are registered with the Department of Trade and Industry(DTI).
It held that respondent had a better right over the use of the mark "ST.
FRANCIS" because of the latter’s appropriation and continuous usage
thereof for a long period of time.13 A little over a year after, or on March
31, 2008, the BLA then rendered a Decision14 in the St. Francis
Shangri-La IP Case, allowing petitioners’ application for registration of
the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It found that
respondent cannot preclude petitioners from using the mark "ST.
FRANCIS" as the records show that the former’s use thereof had not
been attended with exclusivity. More importantly, it found that
petitioners had adequately appended the word "Shangri-La" to its
composite mark to distinguish it from that of respondent, in which case,
the former had removed any likelihood of confusion that may arise from
the contemporaneous use by both parties of the mark "ST. FRANCIS."
Both parties appealed the decision in the IPV Case, while petitioners
appealed the decision in the St. Francis Towers IP Case. Due to the
identity of the parties and issues involved, the IPO Director-General
ordered the consolidation of the separate appeals.15 Records are,
however, bereft of any showing that the decision in the St. Francis
Shangri-La IP Casewas appealed by either party and, thus, is deemed
to have lapsed into finality.
The IPO Director-General Ruling
In a Decision16 dated September 3, 2008, then IPO Director-General
Adrian S. Cristobal, Jr. affirmedthe rulings of the BLA that: (a)
petitioners cannot register the mark "THEST. FRANCIS TOWERS";
and (b) petitioners are not guilty of unfair competition in its use of the
mark "THE ST. FRANCIS SHANGRI-LA PLACE." However, the IPO
DirectorGeneral reversed the BLA’s findingthat petitioners committed
unfair competition through their use of the mark "THE ST. FRANCIS
TOWERS," thus dismissing such charge. He foundthat respondent
could not be entitled to the exclusive use of the mark "ST. FRANCIS,"
even at least to the locality where it conducts its business, because it
is a geographically descriptive mark, considering that it was petitioners’
as well as respondent’s intention to use the mark "ST. FRANCIS"in
order to identify, or at least associate, their real estate development
projects/businesses with the place or location where they are
situated/conducted, particularly, St. Francis Avenue and St. Francis
Street (now known as Bank Drive), Ortigas Center. He further opined
that respondent’s registration of the name "ST. FRANCIS" with the DTI
is irrelevant since what should be controlling are the trademark
registrations with the IPO itself.17 Also, the IPO Director-General held
that since the parties are both engaged in the real estate business, it
would be "hard to imagine that a prospective buyer will be enticed to
buy, rent or purchase [petitioners’] goods or servicesbelieving that this
is owned by [respondent] simply because of the name ‘ST. FRANCIS.’
The prospective buyer would necessarily discuss things with the
representatives of [petitioners] and would readily know that this does
not belong to [respondent]."18
Disagreeing solely with the IPO Director-General’s ruling on the issue
of unfair competition (the bone of contention in the IPV Case),
respondent elevated the sameto the CA.
In contrast, records do not show that either party appealed the IPO
Director-General’s ruling on the issue ofthe registrability of the mark
"THE ST. FRANCIS TOWERS" (the bone of contention in the St.
Francis Towers IP Case). As such, said pronouncement isalso deemed
to have lapsed into finality.
The CA Ruling
In a Decision19 dated December 18, 2009, the CA found petitioners
guilty of unfair competition not only withrespect to their use of the mark
"THE ST. FRANCIS TOWERS" but alsoof the mark "THE ST.
FRANCIS SHANGRI-LA PLACE." Accordingly, itordered petitioners to
cease and desist from using "ST. FRANCIS" singly or as part of a
composite mark, as well as to jointly and severally pay respondent a
fine in the amount of ₱200,000.00.
The CA did not adhere to the IPO Director-General’s finding that the
mark "ST. FRANCIS" is geographically descriptive, and ruled that
respondent – which has exclusively and continuously used the mark
"ST. FRANCIS" for more than a decade, and,hence, gained substantial
goodwill and reputation thereby – is very muchentitled to be protected
against the indiscriminate usage by other companies of the
trademark/name it has so painstakingly tried to establish and maintain.
Further, the CA stated that even on the assumption that "ST. FRANCIS"
was indeed a geographically descriptive mark, adequateprotection
must still begiven to respondent pursuant to the Doctrine of Secondary
Meaning.20
Dissatisfied, petitioners filed the present petition.
The Issue Before the Court
With the decisions in both Inter PartesCases having lapsed into finality,
the sole issue thus left for the Court’s resolution is whether or not
petitioners are guilty of unfair competition in using the marks "THE ST.
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE."
The Court’s Ruling
The petition is meritorious.
21
Section 168 of Republic Act No. 8293, otherwise known as the
"Intellectual Property Code of the Philippines" (IP Code), provides for
the rules and regulations on unfair competition.
To begin, Section 168.1 qualifies who is entitled to protection against
unfair competition. It states that "[a]person who has identified in the
mind of the public the goods he manufacturesor 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 inthe same
manner as other property rights."
Section 168.2proceeds to the core of the provision, describing forthwith
who may be found guilty of and subject to an action of unfair
competition – that is, "[a]ny 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 x x x."
Without limiting its generality, Section 168.3goes on to specify
examples of acts which are considered as constitutive of unfair
competition, viz.:
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 ofsuch 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 service 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.
Finally, Section 168.4 dwells on a matter of procedure by stating that
the "[t]he remedies provided by Sections 156,22157,23 and 16124 shall
apply mutatis mutandis."
The statutory attribution of the unfair competition concept is
wellsupplemented by jurisprudential pronouncements. In the recent
case of Republic Gas Corporation v. Petron Corporation,25 the Court
has echoed the classic definition of the term which is "‘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. [In other words], the defendant gives his goods
the general appearance of the goods of his competitor with the intention
of deceiving the publicthat the goods are those of his competitor."26The
"true test" of unfair competition has thus been "whether the acts of the
defendant have the intent of deceiving or are calculated to deceive the
ordinary buyer making his purchases under the ordinary conditions of
theparticular trade to which the controversy relates." Based on the
foregoing, it is therefore essential to prove the existence of fraud, or the
intent to deceive, actual or probable,27 determined through a judicious
scrutiny of the factual circumstances attendant to a particular case.28
Here, the Court finds the element of fraud to be wanting; hence, there
can be no unfair competition. The CA’scontrary conclusion was faultily
premised on its impression that respondenthad the right to the
exclusive use of the mark "ST. FRANCIS," for which the latter had
purportedly established considerable goodwill. What the CA appears to
have disregarded or been mistaken in its disquisition, however, is the
geographicallydescriptive nature of the mark "ST. FRANCIS" which
thus bars its exclusive appropriability, unless a secondary meaning is
acquired. As deftly explained in the U.S. case of Great Southern Bank
v. First Southern Bank:29 "[d]escriptive geographical terms are inthe
‘public domain’ in the sense that every seller should have the right to
inform customers of the geographical origin of his goods. A
‘geographically descriptive term’ is any noun or adjective that
designates geographical location and would tend to be regarded by
buyers as descriptive of the geographic location of origin of the goods
or services. A geographically descriptive term can indicate any
geographic location on earth, such as continents, nations, regions,
states, cities, streets and addresses, areas of cities, rivers, and any
other location referred to by a recognized name. In order to determine
whether or not the geographic term in question is descriptively used,
the following question is relevant: (1) Is the mark the name of the place
or region from which the goods actually come? If the answer is yes,
then the geographic term is probably used in a descriptive sense, and
secondary meaning is required for protection."30
In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes,
Inc.,31 it was held that secondary meaningis established when a
descriptive mark no longer causes the public to associate the goods
with a particular place, but to associate the goods with a particular
source.In other words, it is not enough that a geographically-descriptive
mark partakes of the name of a place known generally to the public to
be denied registration as it is also necessary to show that the public
would make a goods/place association – that is, to believe that the
goods for which the mark is sought to be registered originatein that
place.1âwphi1 To hold sucha belief, it is necessary, of course, that the
purchasers perceive the mark as a place name, from which the
question of obscurity or remoteness then comes to the fore.32The more
a geographical area is obscure and remote, it becomes less likely that
the public shall have a goods/place association with such area and
thus, the mark may not be deemed as geographically descriptive.
However, where there is no genuine issue that the geographical
significance of a term is its primary significanceand where the
geographical place is neither obscure nor remote, a public association
of the goods with the place may ordinarily be presumed from the fact
that the applicant’s own goods come from the geographical place
named in the mark.33
Under Section 123.234 of the IP Code, specific requirements have to be
met in order to conclude that a geographically-descriptive mark has
acquired secondary meaning, to wit: (a) the secondary meaning must
have arisen as a result of substantial commercial use of a mark in the
Philippines; (b) such use must result in the distinctiveness of the mark
insofar as the goods or theproducts are concerned; and (c) proof of
substantially exclusive and continuous commercial use in the
Philippines for five (5) years beforethe date on which the claim of
distinctiveness is made. Unless secondary meaning has been
established, a geographically-descriptive mark, dueto its general public
domain classification, is perceptibly disqualified from trademark
registration. Section 123.1(j) of the IP Code states this rule as follows:
SEC. 123. Registrability. –
123.1 A mark cannot be registered if it:
xxxx
(j) Consists exclusively of signs orof indications that may serve in trade
to designate the kind, quality, quantity, intended purpose, value,
geographical origin, time or production of the goods or rendering of the
services, or other characteristics of the goods or services; (Emphasis
supplied) x x x x
Cognizant of the foregoing, the Court disagrees with the CA that
petitioners committed unfair competition due to the mistaken notion that
petitioner had established goodwill for the mark "ST. FRANCIS"
precisely because said circumstance, by and of itself, does not
equateto fraud under the parameters of Section 168 of the IP Code as
above-cited. In fact, the records are bereft of any showing
thatpetitioners gave their goods/services the general appearance that
it was respondent which was offering the same to the public. Neither
did petitioners employ any means to induce the public towards a false
belief that it was offering respondent’s goods/services. Nor did
petitioners make any false statement or commit acts tending to discredit
the goods/services offered by respondent. Accordingly, the element of
fraud which is the core of unfair competition had not been established.
Besides, respondent was not able toprove its compliance with the
requirements stated in Section 123.2 of the IP Code to be able to
conclude that it acquired a secondary meaning – and, thereby, an
exclusive right – to the "ST. FRANCIS" mark, which is, as the IPO
Director-General correctly pointed out, geographically-descriptive of
the location in which its realty developments have been built, i.e., St.
Francis Avenue and St. Francis Street (now known as "Bank Drive").
Verily, records would reveal that while it is true that respondent had
been using the mark "ST. FRANCIS" since 1992, its use thereof has
been merely confined to its realty projects within the Ortigas Center, as
specifically mentioned.As its use of the mark is clearly limited to a
certain locality, it cannot be said thatthere was substantial commercial
use of the same recognizedall throughout the country. Neither is there
any showing of a mental recognition in buyers’ and potential buyers’
minds that products connected with the mark "ST. FRANCIS" are
associated with the same source35 – that is, the enterprise of
respondent. Thus, absent any showing that there exists a clear
goods/service-association between the realty projects located in the
aforesaid area and herein respondent as the developer thereof, the
latter cannot besaid to have acquired a secondary meaning as to its
use of the "ST. FRANCIS" mark.
In fact, even on the assumption that secondary meaning had been
acquired, said finding only accords respondents protectional
qualification under Section 168.1 of the IP Code as above quoted.
Again, this does not automatically trigger the concurrence of the fraud
element required under Section 168.2 of the IP Code, as exemplified
by the acts mentioned in Section 168.3 of the same. Ultimately, as
earlier stated, there can be no unfair competition without this element.
In this respect, considering too the notoriety of the Shangri-La brand in
the real estate industry which dilutes petitioners' propensity to merely
ride on respondent's goodwill, the more reasonable conclusion is that
the former's use of the marks "THE ST. FRANCIS TOWERS" and "THE
ST. FRANCIS SHANGRI-LA PLACE" was meant only to identify, or at
least associate, their real estate project/s with its geographical location.
As aptly observed by the IPO DirectorGeneral:36
In the case at hand, the parties are business competitors engaged in
real estate or property development, providing goods and services
directly connected thereto. The "goods" or "products" or "services" are
real estate and the goods and the services attached to it or directly
related to it, like sale or lease of condominium units, offices, and
commercial spaces, such as restaurants, and other businesses. For
these kinds of goods or services there can be no description of its
geographical origin as precise and accurate as that of the name of the
place where they are situated. (Emphasis and underscoring supplied)
Hence, for all the reasons above-discussed, the Court hereby grants
the instant petition, and, thus, exonerates petitioners from the charge
of unfair competition in the IPV Case. As the decisions in the Inter
Partes Cases were not appealed, the registrability issues resolved
therein are hereby deemed to have attained finality and, therefore, are
now executory.
WHEREFORE, the petition is GRANTED. The Decision dated
December 18, 2009 of the Court of Appeals in CA-G.R. SP No. 105425
is hereby REVERSED and SET ASIDE. Accordingly, the Decision
dated September 3, 2008 of the Intellectual Property Office-Director
General is REINSTATED.
SO ORDERED.
EY INDUSTRIAL v. SHENDAR
This Petition for Review on Certiorari under Rule 45 seeks to nullify and
reverse the February 21, 2008 Decision[1] and the October 6, 2008
Resolution[2] rendered by the Court of Appeals (CA) in CA-G.R. SP No.
99356 entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y.
Industrial Sales, Inc. and Engracio Yap.
The assailed decision reversed the Decision dated May 25,
2007[3] issued by the Director General of the Intellectual Property Office
(IPO) in Inter Partes Case No. 14-2004-00084. The IPO Director
General upheld Certificate of Registration (COR) No. 4-1999-
005393 issued by the IPO for the trademark VESPA in favor of
petitioner E.Y. Industrial Sales, Inc. (EYIS), but ordered the cancellation
of COR No. 4-1997-121492, also for the trademark VESPA, issued in
favor of respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen
Dar). The Decision of the IPO Director General, in effect, affirmed the
Decision dated May 29, 2006[4]issued by the Director of the Bureau of
Legal Affairs (BLA) of the IPO.
The Facts
EYIS is a domestic corporation engaged in the production,
distribution and sale of air compressors and other industrial tools and
equipment.[5] Petitioner Engracio Yap is the Chairman of the Board of
Directors of EYIS.[6]
Respondent Shen Dar is a Taiwan-based foreign corporation
engaged in the manufacture of air compressors.[7]
Both companies claimed to have the right to register the
trademark VESPA for air compressors.
From 1997 to 2004, EYIS imported air compressors from Shen
Dar through sales contracts. In the Sales Contract dated April 20,
2002,[8] for example, Shen Dar would supply EYIS in one (1) year with
24 to 30 units of 40-ft. containers worth of air compressors identified in
the Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-
39, SD-67 and SD-68. In the corresponding Bill of Ladings, the items
were described merely as air compressors.[9] There is no documentary
evidence to show that such air compressors were marked VESPA.
On June 9, 1997, Shen Dar filed Trademark Application Serial
No. 4-1997-121492 with the IPO for the mark VESPA, Chinese
Characters and Device for use on air compressors and welding
machines.[10]
On July 28, 1999, EYIS filed Trademark Application Serial No.
4-1999-005393, also for the mark VESPA, for use on air
compressors.[11] On January 18, 2004, the IPO issued COR No. 4-
1999-005393 in favor of EYIS.[12] Thereafter, on February 8, 2007,
Shen Dar was also issued COR No. 4-1997-121492.[13]
In the meantime, on June 21, 2004, Shen Dar filed a Petition for
Cancellation of EYIS COR with the BLA.[14] In the Petition, Shen Dar
primarily argued that the issuance of the COR in favor of EYIS violated
Section 123.1 paragraphs (d), (e) and (f) of Republic Act No. (RA) 8293,
otherwise known as the Intellectual Property Code (IP Code), having
first filed an application for the mark. Shen Dar further alleged that EYIS
was a mere distributor of air compressors bearing the mark VESPA
which it imported from Shen Dar. Shen Dar also argued that it had prior
and exclusive right to the use and registration of the mark VESPA in
[15]
the Philippines under the provisions of the Paris Convention.
In its Answer, EYIS and Yap denied the claim of Shen Dar to be
the true owners of the mark VESPA being the sole assembler and
fabricator of air compressors since the early 1990s. They further
alleged that the air compressors that Shen Dar allegedly supplied them
bore the mark SD for Shen Dar and not VESPA. Moreover, EYIS
argued that Shen Dar, not being the owner of the mark, could not seek
protection from the provisions of the Paris Convention or the IP
Code.[16]
Thereafter, the Director of the BLA issued its Decision dated
May 29, 2006 in favor of EYIS and against Shen Dar, the dispositive
portion of which reads:
WHEREFORE, premises considered, the
Petition for Cancellation is, as it is hereby, DENIED.
Consequently, Certificate of Registration No. 4-1999-
[005393] for the mark VESPA granted in the name of
E.Y. Industrial Sales, Inc. on 9 January 2007 is hereby
upheld.
Let the filewrapper of VESPA subject matter of
this case be forwarded to the Administrative, Financial
and Human Resource Development Services Bureau for
issuance and appropriate action in accordance with this
DECISION and a copy thereof furnished to the Bureau
of Trademarks for information and update of its records.
SO ORDERED.[17]
Shen Dar appealed the decision of the BLA Director to the
Director General of the IPO. In the appeal, Shen Dar raised the
following issues:
1. Whether the BLA Director erred in ruling that Shen Dar
failed to present evidence;
2. Whether the registration of EYIS application was
proper considering that Shen Dar was the first to file an
application for the mark; and
3. Whether the BLA Director correctly ruled that EYIS is
the true owner of the mark.[18]
Later, the IPO Director General issued a Decision dated May
25, 2007 upholding the COR issued in favor of EYIS while cancelling
the COR of Shen Dar, the dispositive portion of which reads:
WHEREFORE, premises considered, the appeal
is DENIED. Certificate of Registration No. 4-1999-
005393 for the mark VESPA for air compressor issued
in favor of Appellee is hereby upheld. Consequently,
Certificate of Registration No. 4-1997-121492 for the
mark VESPA, Chinese Characters & Device for goods
air compressor and spot welding machine issued in
favor of Appellant is hereby ordered cancelled.
Let a copy of this Decision as well as the records
of this case be furnished and returned to the Director of
Bureau of Legal Affairs for appropriate action. Further,
let also the Directors of the Bureau of Trademarks, the
Administrative, Financial and Human Resources
Development Services Bureau, and the Documentation,
Information and Technology Transfer Bureau be
furnished a copy of this Decision for information,
guidance, and records purposes.[19]

Shen Dar appealed the above decision of the IPO Director
General to the CA where Shen Dar raised the following issues:
1. Whether Shen Dar is guilty of forum shopping;
2. Whether the first-to-file rule applies to the instant case;
3. Whether Shen Dar presented evidence of actual use;
4. Whether EYIS is the true owner of the mark VESPA;
5. Whether the IPO Director General erred in cancelling Shen
Dars COR No. 4-1997-121492 without a petition for
cancellation; and
[20]
6. Whether Shen Dar sustained damages.
In the assailed decision, the CA reversed the IPO Director
General and ruled in favor of Shen Dar. The dispositive portion states:
WHEREFORE, premises considered, the
petition is GRANTED. Consequently, the assailed
decision of the Director General of the Intellectual
Property Office dated May 25, 2007 is hereby
REVERSED and SET ASIDE. In lieu thereof, a new one
is entered: a) ordering the cancellation of Certificate of
Registration No. 4-1999-005393 issued on January 19,
2004 for the trademark VESPA in favor of E.Y. Industrial
Sales, Inc.; b) ordering the restoration of the validity of
Certificate of Registration No. 4-1997-121492 for the
trademark VESPA in favor of Shen Dar Electricity and
Machinery Co., Ltd. No pronouncement as to costs.
SO ORDERED.[21]
In ruling for Shen Dar, the CA ruled that, despite the fact that
Shen Dar did not formally offer its evidence before the BLA, such
evidence was properly attached to the Petition for Cancellation. As
such, Shen Dars evidence may be properly considered. The CA also
enunciated that the IPO failed to properly apply the provisions of Sec.
123.1(d) of RA 8293, which prohibits the registration of a trademark in
favor of a party when there is an earlier filed application for the same
mark. The CA further ruled that Shen Dar should be considered to have
prior use of the mark based on the statements made by the parties in
their respective Declarations of Actual Use. The CA added that EYIS is
a mere importer of the air compressors with the mark VESPA as may
be gleaned from its receipts which indicated that EYIS is an importer,
wholesaler and retailer, and therefore, cannot be considered an owner
of the mark.[22]
EYIS filed a motion for reconsideration of the assailed decision
which the CA denied in the assailed resolution.
Hence, the instant appeal.
Issues
EYIS and Yap raise the following issues in their petition:
A. Whether the Director General of the IPO
correctly upheld the rights of Petitioners over the
trademark VESPA.
B. Whether the Director General of the IPO
can, under the circumstances, order the
cancellation of Respondents certificate of
registration for VESPA, which has been
fraudulently obtained and erroneously issued.
 C. Whether the Honorable Court of Appeals
was justified in reversing the findings of fact of
the IPO, which affirm the rights of Petitioner
EYIS over the trademark VESPA and when such
findings are supported by the evidence on
record.
D. Whether this Honorable Court may review
questions of fact considering that the findings of
the Court of Appeals and the IPO are in conflict
and the conclusions of the appellee court are
contradicted by the evidence on record.[23]
The Ruling of the Court
The appeal is meritorious.
First Issue:
Whether this Court may review the questions of fact presented
Petitioners raise the factual issue of who the true owner of the
mark is. As a general rule, this Court is not a trier of facts. However,
such rule is subject to exceptions.
In New City Builders, Inc. v. National Labor Relations
Commission,[24] the Court ruled that:
We are very much aware that the rule to the
effect that this Court is not a trier of facts admits of
exceptions. As we have stated in Insular Life Assurance
Company, Ltd. vs. CA:
[i]t is a settled rule that in the exercise of the
Supreme Courts power of review, the Court is
not a trier of facts and does not normally
undertake the re-examination of the evidence
presented by the contending parties during the
trial of the case considering that the findings of
facts of the CA are conclusive and binding on the
Court. However, the Court had recognized
several exceptions to this rule, to wit: (1) when
the findings are grounded entirely on
speculation, surmises or conjectures; (2) when
the inference made is manifestly mistaken,
absurd or impossible; (3) when there is grave
abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when
the findings of facts are conflicting; (6) when in
making its findings the Court of Appeals went
beyond the issues of the case, or its findings are
contrary to the admissions of both the appellant
and the appellee; (7) when the findings are
contrary to the trial court; (8) when the findings
are conclusions without citation of specific
evidence on which they are based; (9) when the
facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed
by the respondent; (10) when the findings of fact
are premised on the supposed absence of
evidence and contradicted by the evidence on
record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts not
disputed by the parties, which, if properly
considered, would justify a different conclusion.
(Emphasis supplied.)
In the instant case, the records will show that the IPO and the
CA made differing conclusions on the issue of ownership based on the
evidence presented by the parties. Hence, this issue may be the
subject of this Courts review.
Second Issue:
Whether evidence presented before the BLA must be formally
offered
 Preliminarily, it must be noted that the BLA ruled that Shen Dar
failed to adduce evidence in support of its allegations as required under
Office Order No. 79, Series of 2005, Amendments to the Regulations
on Inter Partes Proceedings, having failed to formally offer its evidence
during the proceedings before it. The BLA ruled:
At the outset, we note petitioners failure to
adduce any evidence in support of its allegations in the
Petition for Cancellation. Petitioner did not file nor
submit its marked evidence as required in this Bureaus
Order No. 2006-157 dated 25 January 2006 in
compliance with Office Order No. 79, Series of 2005,
Amendments to the Regulations on Inter
Partes Proceedings.[25] x x x
In reversing such finding, the CA cited Sec. 2.4 of BLA
Memorandum Circular No. 03, Series of 2005, which states:
Section 2.4. In all cases, failure to file the
documentary evidences in accordance with Sections 7
and 8 of the rules on summary proceedings shall be
construed as a waiver on the part of the parties. In such
a case, the original petition, opposition, answer and the
supporting documents therein shall constitute the entire
evidence for the parties subject to applicable rules.
The CA concluded that Shen Dar needed not formally offer its
evidence but merely needed to attach its evidence to its position paper
with the proper markings,[26] which it did in this case.
The IP Code provides under its Sec. 10.3 that the Director
General of the IPO shall establish the procedure for the application for
the registration of a trademark, as well as the opposition to it:
Section 10. The Bureau of Legal Affairs.The
Bureau of Legal Affairs shall have the following
functions:
xxxx
10.3. The Director General may by Regulations
establish the procedure to govern the implementation of
this Section.
Thus, the Director General issued Office Order No. 79, Series
of 2005 amending the regulations on Inter Partes Proceedings, Sec.
12.1 of which provides:
Section 12. Evidence for the Parties
12.1. The verified petition or opposition, reply if
any, duly marked affidavits of the witnesses, and the
documents submitted, shall constitute the entire
evidence for the petitioner or opposer. The verified
answer, rejoinder if any, and the duly marked affidavits
and documents submitted shall constitute the evidence
for the respondent. Affidavits, documents and other
evidence not submitted and duly marked in accordance
with the preceding sections shall not be admitted as
evidence.
The preceding sections referred to in the above provision refer
to Secs. 7.1, 8.1 and 9 which, in turn, provide:
Section 7. Filing of Petition or Opposition
7.1. The petition or opposition, together with the
affidavits of witnesses and originals of the documents
and other requirements, shall be filed with the Bureau,
provided, that in case of public documents, certified
 copies shall be allowed in lieu of the originals. The
Bureau shall check if the petition or opposition is in due
form as provided in the Regulations particularly Rule 3, In any case, as a quasi-judicial agency and as stated in Rule 2,
Section 3; Rule 4, Section 2; Rule 5, Section 3; Rule 6, Sec. 5 of the Regulations on Inter Partes Proceedings, the BLA is not
Section 9; Rule 7, Sections 3 and 5; Rule 8, Sections 3
and 4. For petition for cancellation of layout design bound by technical rules of procedure. The evidence attached to the
(topography) of integrated circuits, Rule 3, Section 3 petition may, therefore, be properly considered in the resolution of the
applies as to the form and requirements. The affidavits,
case.
documents and other evidence shall be marked
consecutively as Exhibits beginning with the letter A.

Section 8. Answer
8.1. Within three (3) working days from receipt of
the petition or opposition, the Bureau shall issue an
order for the respondent to file an answer together with
the affidavits of witnesses and originals of documents,
and at the same time shall notify all parties required to
be notified in the IP Code and these Regulations,
provided, that in case of public documents, certified true
copies may be submitted in lieu of the originals. The
affidavits and documents shall be marked consecutively
as Exhibits beginning with the number 1.
Section 9. Petition or Opposition and Answer
must be verified Subject to Rules 7 and 8 of these
regulations, the petition or opposition and the answer
must be verified. Otherwise, the same shall not be
considered as having been filed.
In other words, as long as the petition is verified and the pieces
of evidence consisting of the affidavits of the witnesses and the original
of other documentary evidence are attached to the petition and properly
marked in accordance with Secs. 7.1 and 8.1 abovementioned, these
shall be considered as the evidence of the petitioner. There is no
requirement under the abovementioned rules that the evidence of the
parties must be formally offered to the BLA.
Third Issue:
Whether the IPO Director General can
validly cancel Shen Dars Certificate of Registration
In his Decision, the IPO Director General stated that, despite
the fact that the instant case was for the cancellation of the COR issued
in favor of EYIS, the interests of justice dictate, and in view of its
findings, that the COR of Shen Dar must be cancelled. The Director
General explained:
Accordingly, while the instant case involves a
petition to cancel the registration of the Appellees
trademark VESPA, the interest of justice requires that
Certificate of Registration No. 4-1997-121492 be
cancelled. While the normal course of proceedings
should have been the filing of a petition for cancellation
of Certificate of Registration No. 4-1997-121492, that
would involve critical facts and issues that have already
been resolved in this case. To allow the Applicant to still
maintain in the Trademark Registry Certificate of
Registration No. 4-1997-121492 would nullify the
exclusive rights of Appellee as the true and registered
owner of the mark VESPA and defeat the purpose of the
trademark registration system.[27]
 Shen Dar challenges the propriety of such cancellation on the
ground that there was no petition for cancellation as required under
Sec. 151 of RA 8293.
Office Order No. 79, Series of 2005, provides under its Sec. 5
that:
Section 5. Rules of Procedure to be followed in
the conduct of hearing of Inter Partes cases.The rules of
procedure herein contained primarily apply in the
conduct of hearing of Inter Partes cases. The Rules of
Court may be applied suppletorily. The Bureau shall
not be bound by strict technical rules of procedure
and evidence but may adopt, in the absence of any
applicable rule herein, such mode of proceedings
which is consistent with the requirements of fair
play and conducive to the just, speedy and
inexpensive disposition of cases, and which will
give the Bureau the greatest possibility to focus on
the contentious issues before it. (Emphasis
supplied.)
The above rule reflects the oft-repeated legal principle that
quasi-judicial and administrative bodies are not bound by technical
rules of procedure. Such principle, however, is tempered by
fundamental evidentiary rules, including due process. Thus, we ruled
in Aya-ay, Sr. v. Arpaphil Shipping Corp.:[28]
That administrative quasi-judicial bodies like the
NLRC are not bound by technical rules of procedure in
the adjudication of cases does not mean that the basic
rules on proving allegations should be entirely
dispensed with. A party alleging a critical fact must still
support his allegation with substantial evidence. Any
decision based on unsubstantiated allegation cannot
stand as it will offend due process.
x x x The liberality of procedure in administrative
actions is subject to limitations imposed by basic
requirements of due process. As this Court said in Ang
Tibay v. CIR, the provision for flexibility in administrative
procedure does not go so far as to justify orders without
a basis in evidence having rational probative
value. More specifically, as held in Uichico v. NLRC:
It is true that administrative and quasi-judicial
bodies like the NLRC are not bound by the
technical rules of procedure in the adjudication
of cases. However, this procedural rule should
not be construed as a license to disregard
certain fundamental evidentiary rules.
This was later reiterated in Lepanto Consolidated Mining
Company v. Dumapis:[29]
While it is true that administrative or quasi-
judicial bodies like the NLRC are not bound by the
technical rules of procedure in the adjudication of cases,
this procedural rule should not be construed as a license
to disregard certain fundamental evidentiary rules. The
evidence presented must at least have a modicum of
admissibility for it to have probative value. Not only must
there be some evidence to support a finding or
conclusion, but the evidence must be
substantial. Substantial evidence is more than a mere
scintilla. It means such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion. Thus, even though technical rules of
evidence are not strictly complied with before the LA and
the NLRC, their decision must be based on evidence
that must, at the very least, be substantial.
 The fact that no petition for cancellation was filed against the
COR issued to Shen Dar does not preclude the cancellation of Shen
Dars COR. It must be emphasized that, during the hearing for the
cancellation of EYIS COR before the BLA, Shen Dar tried to establish
that it, not EYIS, was the true owner of the mark VESPA and, thus,
entitled to have it registered. Shen Dar had more than sufficient
opportunity to present its evidence and argue its case, and it did. It was
given its day in court and its right to due process was respected. The
IPO Director Generals disregard of the procedure for the cancellation
of a registered mark was a valid exercise of his discretion.
Fourth Issue:
Whether the factual findings of the IPO are binding on the CA
Next, petitioners challenge the CAs reversal of the factual
findings of the BLA that Shen Dar and not EYIS is the prior user and,
therefore, true owner of the mark. In arguing its position, petitioners cite
numerous rulings of this Court where it was enunciated that the factual
findings of administrative bodies are given great weight if not conclusive
upon the courts when supported by substantial evidence.
We agree with petitioners that the general rule in this jurisdiction
is that the factual findings of administrative bodies deserve utmost
respect when supported by evidence. However, such general rule is
subject to exceptions.
In Fuentes v. Court of Appeals, [30]
the Court established the rule
of conclusiveness of factual findings of the CA as follows:
Jurisprudence teaches us that (a)s a rule, the
jurisdiction of this Court in cases brought to it from the
Court of Appeals x x x is limited to the review and
revision of errors of law allegedly committed by the
appellate court, as its findings of fact are deemed
conclusive.As such this Court is not duty-bound to
analyze and weigh all over again the evidence already
considered in the proceedings below. This rule,
however, is not without exceptions. The findings of fact
of the Court of Appeals, which are as a general rule
deemed conclusive, may admit of review by this Court:
(1) when the factual findings of the Court of
Appeals and the trial court are contradictory;
(2) when the findings are grounded entirely on
speculation, surmises, or conjectures;
(3) when the inference made by the Court of
Appeals from its findings of fact is manifestly mistaken,
absurd, or impossible;
(4) when there is grave abuse of discretion in the
appreciation of facts;
(5) when the appellate court, in making its
findings, goes beyond the issues of the case, and such
findings are contrary to the admissions of both appellant
and appellee;
(6) when the judgment of the Court of Appeals is
premised on a misapprehension of facts;
(7) when the Court of Appeals fails to notice
certain relevant facts which, if properly considered,
will justify a different conclusion;
(8) when the findings of fact are themselves
conflicting;
(9) when the findings of fact are conclusions
without citation of the specific evidence on which they
are based; and
 (10) when the findings of fact of the Court of
Appeals are premised on the absence of evidence but
such findings are contradicted by the evidence on
record. (Emphasis supplied.)
Thereafter, in Villaflor v. Court of Appeals,[31] this Court applied
the above principle to factual findings of quasi-judicial bodies, to wit:
Proceeding by analogy, the exceptions to the
rule on conclusiveness of factual findings of the Court of
Appeals, enumerated inFuentes vs. Court of
Appeals, can also be applied to those of quasi-
judicial bodies x x x. (Emphasis supplied.)
Here, the CA identified certain material facts that were allegedly
overlooked by the BLA and the IPO Director General which it opined,
when correctly appreciated, would alter the result of the case. An
examination of the IPO Decisions, however, would show that no such
evidence was overlooked.
First, as to the date of first use of the mark by the parties, the
CA stated:
To begin with, when respondents-appellees filed
its application for registration of the VESPA trademark
on July 28, 1999, they stated under oath, as found in
their DECLARATION OF ACTUAL USE, that their first
use of the mark was on December 22, 1998. On the
other hand, [Shen Dar] in its application dated June 09,
1997 stated, likewise under oath in their DECLARATION
OF ACTUAL USE, that its first use of the mark was in
June 1996. This cannot be made any clearer. [Shen Dar]
was not only the first to file an application for registration
but likewise first to use said registrable mark.[32]
Evidently, the CA anchors its finding that Shen Dar was the first
to use the mark on the statements of the parties in their respective
Declarations of Actual Use. Such conclusion is premature at
best. While a Declaration of Actual Use is a notarized document,
hence, a public document, it is not conclusive as to the fact of first use
of a mark. The declaration must be accompanied by proof of actual use
as of the date claimed. In a declaration of actual use, the applicant
must, therefore, present evidence of such actual use.
The BLA ruled on the same issue, as follows:
More importantly, the private respondents prior
adoption and continuous use of the mark VESPA on air
compressors is bolstered by numerous documentary
evidence consisting of sales invoices issued in the name
of E.Y. Industrial and Bill of Lading (Exhibits 4 to 375).
Sales Invoice No. 12075 dated March 27, 1995
antedates petitioners date of first use on January 1,
1997 indicated in its trademark application filed on June
9, 1997 as well as the date of first use in June of 1996
as indicated in the Declaration of Actual Use submitted
on December 3, 2001 (Exhibit 385). The use by
respondent registrant in the concept of owner is shown
by commercial documents, sales invoices
unambiguously describing the goods as VESPA air
compressors. Private respondents have sold the air
compressors bearing the VESPA to various locations in
the Philippines, as far as Mindanao and the Visayas
since the early 1990s. We carefully inspected the
evidence consisting of three hundred seventy-one (371)
invoices and shipment documents which show that
VESPA air compressors were sold not only in Manila,
but to locations such as Iloilo City, Cebu City,
Dumaguete City, Zamboanga City, Cagayan de Oro
City, Davao City, to name a few. There is no doubt that
it is through private respondents efforts that the mark
 VESPA used on air compressors has gained business
goodwill and reputation in the Philippines for which it has
validly acquired trademark rights. Respondent E.Y.
Industrials right has been preserved until the passage of
RA 8293 which entitles it to register the same.[33]
Comparatively, the BLAs findings were founded upon the
evidence presented by the parties. An example of such evidence is
Invoice No. 12075 dated March 29, 1995[34] where EYIS sold four units
of VESPA air compressors to Veteran Paint Trade Center.Shen Dar
failed to rebut such evidence. The truth, as supported by the evidence
on record, is that EYIS was first to use the mark.
Moreover, the discrepancy in the date provided in the
Declaration of Actual Use filed by EYIS and the proof submitted was
appropriately considered by the BLA, ruling as follows:
On the contrary, respondent EY Industrial was
able to prove the use of the mark VESPA on the concept
of an owner as early as 1991. Although Respondent
E.Y. indicated in its trademark application that its first
use was in December 22, 1998, it was able to prove by
clear and positive evidence of use prior to such date.
In Chuang Te v. Ng Kian-Guiab and Director of
Patents, L-23791, 23 November 1966, the High Court
clarified: Where an applicant for registration of a
trademark states under oath the date of his earliest use,
and later on he wishes to carry back his first date of use
to an earlier date, he then takes on the greater burden
of presenting clear and convincing evidence of adoption
and use as of that earlier date. (B.R. Baker Co. vs.
Lebrow Bros., 150 F. 2d 580.)[35]
The CA further found that EYIS is not a manufacturer of air
compressors but merely imports and sells them as a wholesaler and
retailer. The CA reasoned:
Conversely, a careful perusal of appellees
own submitted receipts shows that it is not
manufacturer but an importer, wholesaler and
retailer. This fact is corroborated by the testimony
of a former employee of appellees. Admittedly too,
appellees are importing air compressors from [Shen
Dar] from 1997 to 2004. These matters, lend credence
to [Shen Dars] claim that the letters SD followed by a
number inscribed in the air compressor is only to
describe its type, manufacturer business name and
capacity. The VESPA mark is in the sticker which is
attached to the air compressors. The ruling of the
Supreme Court, in the case of UNNO Commercial
Enterprises, Inc. vs. General Milling Corporation et al.,
is quite enlightening, thus We quote:
The term owner does not include the
importer of the goods bearing the trademark,
trade name, service mark, or other mark of
ownership, unless such importer is actually the
owner thereof in the country from which the
goods are imported. Thus, this Court, has on
several occasions ruled that where the
applicants alleged ownership is not shown in any
notarial document and the applicant appears to
be merely an importer or distributor of the
merchandise covered by said trademark, its
application cannot be granted.[36]
This is a non sequitur. It does not follow. The fact that EYIS
described itself in its sales invoice as an importer, wholesaler and
retailer does not preclude its being a manufacturer. Sec. 237 of the
National Internal Revenue Code states:

Section 237. Issuance of Receipts or Sales or
Commercial Invoices.All persons subject to an internal
revenue tax shall, for each sale and transfer of
merchandise or for services rendered valued at Twenty-
five pesos (P25.00) or more, issue duly registered
receipts or sale or commercial invoices, prepared at
least in duplicate, showing the date of transaction,
quantity, unit cost and description of merchandise
or nature of service: Provided, however, That where
the receipt is issued to cover payment made as rentals,
commissions, compensation or fees, receipts or
invoices shall be issued which shall show the name,
business style, if any, and address of the purchaser,
customer or client.
The original of each receipt or invoice shall be
issued to the purchaser, customer or client at the time
the transaction is effected, who, if engaged in business
or in the exercise of profession, shall keep and preserve
the same in his place of business for a period of three
(3) years from the close of the taxable year in which such
invoice or receipt was issued, while the duplicate shall
be kept and preserved by the issuer, also in his place of
business, for a like period.
The Commissioner may, in meritorious cases,
exempt any person subject to an internal revenue tax
from compliance with the provisions of this
Section. (Emphasis supplied.)
Correlatively, in Revenue Memorandum No. 16-2003 dated
May 20, 2003, the Bureau of Internal Revenue defined a Sales Invoice
and identified its required information as follows:
Sales Invoices (SI)/Cash Invoice (CI) is written
account of goods sold or services rendered and the
prices charged therefor used in the ordinary course of
business evidencing sale and transfer or agreement to
sell or transfer of goods and services. It contains the
same information found in the Official Receipt.
Official Receipt (OR) is a receipt issued for the
payment of services rendered or goods sold. It contains
the following information:
a. Business name and address;
b. Taxpayer Identification Number;
c. Name of printer (BIR Permit No.) with
inclusive serial number of booklets and date
of issuance of receipts.
There is no requirement that a sales invoice should accurately
state the nature of all the businesses of the seller. There is no legal
ground to state that EYIS declaration in its sales invoices that it is an
importer, wholesaler and retailer is restrictive and would preclude its
being a manufacturer.
From the above findings, there was no justifiable reason for the
CA to disregard the factual findings of the IPO. The rulings of the IPO
Director General and the BLA Director were supported by clear and
convincing evidence. The facts cited by the CA and Shen Dar do not
justify a different conclusion from that of the IPO. Hence, the findings
of the BLA Director and the IPO Director General must be deemed as
conclusive on the CA.
Fifth Issue:
Whether EYIS is the true owner of the mark VESPA
In any event, given the length of time already invested by the
parties in the instant case, this Court must write finis to the instant
controversy by determining, once and for all, the true owner of the mark
VESPA based on the evidence presented.
RA 8293 espouses the first-to-file rule as stated under Sec.
123.1(d) which states:
Section 123. Registrability. - 123.1. A mark
cannot be registered if it:
xxxx
(d) Is identical with a registered mark belonging
to a different proprietor or a mark with an earlier filing
or priority date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services,
or
(iii) If it nearly resembles such a mark
as to be likely to deceive or cause
confusion. (Emphasis supplied.)
Under this provision, the registration of a mark is prevented with
the filing of an earlier application for registration. This must not,
however, be interpreted to mean that ownership should be based upon
an earlier filing date. While RA 8293 removed the previous requirement
of proof of actual use prior to the filing of an application for registration
of a mark, proof of prior and continuous use is necessary to establish
ownership of a mark. Such ownership constitutes sufficient evidence to
oppose the registration of a mark.
Sec. 134 of the IP Code provides that any person who believes
that he would be damaged by the registration of a mark x x x may file
an opposition to the application. The term any person encompasses the
true owner of the markthe prior and continuous user.
Notably, the Court has ruled that the prior and continuous use
of a mark may even overcome the presumptive ownership of the
registrant and be held as the owner of the mark. As aptly stated by the
Court in Shangri-la International Hotel Management, Ltd. v. Developers
Group of Companies, Inc.:[37]
Registration, without more, does not confer upon
the registrant an absolute right to the registered mark.
The certificate of registration is merely a prima
facie proof that the registrant is the owner of the
registered mark or trade name. Evidence of prior and
continuous use of the mark or trade name by
another can overcome the presumptive ownership
of the registrant and may very well entitle the former
to be declared owner in an appropriate case.
xxxx
Ownership of a mark or trade name may be
acquired not necessarily by registration but by adoption
and use in trade or commerce. As between actual use
of a mark without registration, and registration of the
mark without actual use thereof, the former prevails over
the latter. For a rule widely accepted and firmly
entrenched, because it has come down through the
years, is that actual use in commerce or business is
a pre-requisite to the acquisition of the right of
ownership.
xxxx
By itself, registration is not a mode of acquiring
ownership. When the applicant is not the owner of
the trademark being applied for, he has no right to
apply for registration of the same. Registration
 merely creates a prima facie presumption of the validity
of the registration, of the registrants ownership of the
trademark and of the exclusive right to the use thereof.
Such presumption, just like the presumptive regularity in
the performance of official functions, is rebuttable and
must give way to evidence to the contrary.
Here, the incontrovertible truth, as established by the evidence
submitted by the parties, is that EYIS is the prior user of the mark. The
exhaustive discussion on the matter made by the BLA sufficiently
addresses the issue:
Based on the evidence, Respondent E.Y.
Industrial is a legitimate corporation engaged in buying,
importing, selling, industrial machineries and tools,
manufacturing, among others since its incorporation in
1988. (Exhibit 1). Indeed private respondents have
submitted photographs (Exhibit 376, 377, 378, 379)
showing an assembly line of its manufacturing or
assembly process.
More importantly, the private respondents prior
adoption and continuous use of the mark VESPA on air
compressors is bolstered by numerous documentary
evidence consisting of sales invoices issued in the name
of respondent EY Industrial and Bills of Lading. (Exhibits
4 to 375). Sales Invoice No. 12075 dated March 27,
1995 antedates petitioners date of first use in January 1,
1997 indicated in its trademark application filed in June
9, 1997 as well as the date of first use in June of 1996
as indicated in the Declaration of Actual Use submitted
on December 3, 2001 (Exhibit 385). The use by
respondent-registrant in the concept of owner is shown
by commercial documents, sales invoices
unambiguously describing the goods as VESPA air
compressors. Private respondents have sold the air
compressors bearing the VESPA to various locations in
the Philippines, as far as Mindanao and the Visayas
since the early 1990s. We carefully inspected the
evidence consisting of three hundred seventy one (371)
invoices and shipment documents which show that
VESPA air compressors were sold not only in Manila,
but to locations such as Iloilo City, Cebu City,
Dumaguete City, Zamboanga City, Cagayan de Oro
City, Davao City to name a few. There is no doubt that it
is through private respondents efforts that the mark
VESPA used on air compressors has gained business
goodwill and reputation in the Philippines for which it has
validly acquired trademark rights. Respondent EY
Industrials right has been preserved until the passage of
RA 8293 which entitles it to register the same. x x x[38]
On the other hand, Shen Dar failed to refute the evidence cited
by the BLA in its decision. More importantly, Shen Dar failed to present
sufficient evidence to prove its own prior use of the mark VESPA. We
cite with approval the ruling of the BLA:
[Shen Dar] avers that it is the true and rightful
owner of the trademark VESPA used on air
compressors. The thrust of [Shen Dars] argument is that
respondent E.Y. Industrial Sales, Inc. is a mere
distributor of the VESPA air compressors. We disagree.
This conclusion is belied by the evidence. We
have gone over each and every document attached as
Annexes A, A 1-48 which consist of Bill of Lading and
Packing Weight List. Not one of these documents
referred to a VESPA air compressor. Instead, it simply
describes the goods plainly as air compressors which is
type SD and not VESPA. More importantly, the earliest
date reflected on the Bill of Lading was on May 5, 1997.
(Annex A-1). [Shen Dar] also attached as Annex B a
purported Sales Contract with respondent EY Industrial
Sales dated April 20, 2002. Surprisingly, nowhere in the
document does it state that respondent EY Industrial
agreed to sell VESPA air compressors. The document
only mentions air compressors which if genuine merely
bolsters respondent Engracio Yaps contention that
 [Shen Dar] approached them if it could sell the Shen Dar
or SD air compressor. (Exhibit 386) In its position paper,
[Shen Dar] merely mentions of Bill of Lading constituting
respondent as consignee in 1993 but never submitted
the same for consideration of this Bureau. The
document is also not signed by [Shen Dar]. The
agreement was not even drafted in the letterhead of
either [Shen Dar] nor [sic] respondent registrant. Our
only conclusion is that [Shen Dar] was not able to prove
to be the owner of the VESPA mark by appropriation.
Neither was it able to prove actual commercial use in
the Philippines of the mark VESPA prior to its filing of a
trademark application in 9 June 1997.[39]
As such, EYIS must be considered as the prior and continuous
user of the mark VESPA and its true owner. Hence, EYIS is entitled to
the registration of the mark in its name.
WHEREFORE, the petition is hereby GRANTED. The CAs February
21, 2008 Decision and October 6, 2008 Resolution in CA-G.R. SP No.
99356 are hereby REVERSED and SET ASIDE. The Decision dated
May 25, 2007 issued by the IPO Director General in Inter Partes Case
No. 14-2004-00084 and the Decision dated May 29, 2006 of the BLA
Director of the IPO are hereby REINSTATED.
Facts:
 EY Industrial Sales is a domestic corporation engaged in the
production, distribution and sale of air compressors.
 Shen Dar is a Taiwan-based foreign corporation engaged in the
manufacture of compressors.
 From 1997-2004, EY Industrial imported air compressors from
Shen Dar.
 In 1997, Shen Dar filed a Trademark Application with the
Intellectual Property Office (IPO) for the mark “Vespa” for the use
of air compressors. It was approved in 2007.
 In 1999, EY Industrial filed a Trademark Application also for the
mark “VESPA” for the use of air compressors. It was approved in
2004.
 Shen Dar filed a Petition for Cancellation of the Industrial’s EYES
COR with the Bureau of Legal Affairs contending that: a. there
was a violation of Section 123.1 (D) of the Intellectual Property
Code which provides that: A mark cannot be registered if it is
identical to a mark with an earlier filing or priority date. b. EY
Industrial is only a distributor of the air compressors
 On the other hand, EY Industrial alleged that it is the sole
assembler and fabricator of VESPA air compressors since the
early 1990s and that Shen Dar supplied them air compressors
with the mark “SD” and not “VESPA”
Issues:
1. Who between EY Industrial and Shen Dar is entitled to the trademark
“VESPA”. EY INDUSTRIAL SALES
2. WON the Bureau of Legal Affairs has the power to cancel the
application of Shen Dar even if it is Shen Dar who filed the case? YES
Held:
1st: EY INDUSTRIAL has the right to the trademark.
Based on the evidence, EYIS owns the “VESPA” trademark; it has prior
use, as shown by various sales invoices.
Ownership of a mark or trade name may be acquired not necessarily
by registration but by adoption and use in trade or commerce. As
between actual use of a mark without registration, and registration of
the mark without actual use thereof, the former prevails over the latter.
For a rule widely accepted and firmly entrenched, because it has come
down through the years, is that actual use in commerce or business is
a pre-requisite to the acquisition of the right of ownership. It is non
sequitur to hold that porque EYIS is a distributor, it is no longer the
owner.
FIRST-TO-FILE RULE
Under Section 123.1 of IPO provision, the registration of a mark is
prevented with the filing of an earlier application for registration.
This must not, however, be interpreted to mean that ownership should
be based upon an earlier filing date. While RA 8293 (IPC) removed
the previous requirement of proof of actual use prior to the filing of an
application for registration of a mark, proof of prior and continuous use
is necessary to establish ownership of a mark. Such ownership
constitutes sufficient evidence to oppose the registration of a mark.
When we talk about trademark, we are just talking about the mark. It
does not include the product. Shen Dar is the manufacturer of the
product, but they did not name the product as VESPA. It was EY that
named the VESPA, and used the VESPA, even though they were only
the distributors. 
It was EY that actually used the trademark through the
use of receipts, and other documents.
opportunity to present its evidence and argue its case, and it did. It was
given its day in court and its right to due process was respected. The
IPO Director General’s disregard of the procedure for the cancellation
of a registered mark was a valid exercise of his discretion.
Remember, EY’s application was the one granted, and it is Shen Dar’s
application that was cancelled. 
It does not mean that even you were
the one who filed, it your application cannot be cancelled. The BLA,
who has jurisdiction over the case, were able to determine that it is
Shen Dar’s trademark that should not have been issued with
registration, even it is the plaintiff.

The first to file rule – According to the SC that Shen Dar filed under the
old IPC where prior use is the one applied. 


2nd: BLA has the power to cancel the application.

Shen Dar challenges the propriety of such cancellation on the ground

that there was no petition for cancellation as required under Sec. 151
of RA 8293.

The IPO Director General stated that, despite the fact that the instant
case was for the cancellation of the COR issued in favor of EYIS, the
interests of justice dictate, and in view of its findings, that the COR of
Shen Dar must be cancelled.

The above rule reflects the oft-repeated legal principle that quasi-
judicial and administrative bodies are not bound by technical rules of
procedure. Such principle, however, is tempered by fundamental
evidentiary rules, including due process.

The fact that no petition for cancellation was filed against the COR
issued to Shen Dar does not preclude the cancellation of Shen Dar’s
COR. It must be emphasized that, during the hearing for the
cancellation of EYIS’ COR before the BLA, Shen Dar tried to establish
that it, not EYIS, was the true owner of the mark “VESPA” and, thus,
entitled to have it registered. Shen Dar had more than sufficient