Philippines: No unfair competition in patent infringement

04 December 2015

This is an action (IPV 10-2009-00007) for design patent infringement and unfair competition filed
by Kawasaki Heavy Industries and Kawasaki Motors (Phils) Corp against Eastworld Motor
Industries Corp. In April 2008, Kawasaki released its Fury 125 motorcycle, which bore its
registered industrial designs (ID 3-2008-00715 and 3-2008-00718). Kawasaki later learned that
Eastworld had manufactured and was selling motorcycles branded as Sapphire 125, which
Kawasaki claimed bore and incorporated nearly all of Kawasaki's registered patent elements.
Eastworld, on its part, alleged that contrary to Kawasaki's claims, the industrial design for
Sapphire 125 is covered by the certificate of registration number 3-2009-000062 under its name,
and that Kawasaki failed to file an adverse information to its design application when it was
published. Thus, there can be no infringement for using and selling its own patented products.

The Bureau of Legal Affairs (BLA) of the IPOPHL issued decision number 2015-09 on June 15
2015, ruling that there is no patent infringement and finding in favour of Eastworld. The IP Code
defines patent infringement as "the making, using, offering for sale, selling or importing a patented
product or a product obtained directly or indirectly from a patented process or the use of a
patented process without the authorization of the patentee constitutes patent infringement".
According to the BLA, a crucial element of infringement is that the use of the design is without
the authorisation of the registrant. Considering that Eastworld's Sapphire 125 is based on its own
registered industrial design, it does not need authorisation from Kawasaki to produce and sell
Sapphire 125. The BLA also noted that Kawasaki did not file a petition to cancel Eastworld's
registration number 3-2009-000062. The invalidity of Eastworld's design registration should have
been brought as a direct action for cancellation as provided under Article 120 of the IP Code.

Going into the substantive issue of whether Eastworld's design is the same as that of Kawasaki, the
BLA noted that using the ordinary observer's test, the overall design of Sapphire 125 is not
identical nor substantially similar to Kawasaki's Fury design: "the locations of the muffler, signal
light and daylight lamp may be similar, but this aspect is generic. The ornamental designs of the
gear indicator, speed meter design, location of the fuel cock, headlight, brake disk are not the
same. The 'engine stop switch' is even absent in Sapphire 125. The design of the side cover bears
the mark 'Motorstar' which distinguishes it instantly from the other motorcycles. The products in
the instant case are motorcycles which consumers meticulously assess and compare with each
other while keeping in mind that it has features or parts which although it appears to be similar are
necessarily present because they serve or are necessitated by a technical function. As such, taking
into consideration the contour, shape and holistic design, there is no identity of design." The
comparison is shown in the photos.

On the issue of unfair competition, the BLA held that unfair competition cannot be applied in the
case of patent infringement. Citing the Supreme Court's ruling in the case of Kenneth Roy
Savage/K Angeline Export Trading v Judge Aproniano Taypin, which held: "There is evidently no
mention of any crime of unfair competition involving design patents in the controlling provisions
on Unfair Competition. It is therefore unclear whether the crime exists at all, for the enactment of
RA 8293 did not result in the reenactment of Act 189 of the Revised Penal Code." Moreover, there
was no bad faith on Eastworld's part and, as shown above, consumers can easily distinguish one
product from the other.