Copyright and Intellectual Property Law

Case Digests with Opinions

By: Salazar, Arnold Judd P.

Llb-2
Western Leyte College of Ormoc City, Inc.
 Emerald Garment Manufactuiring Corporation
Vs
CA, Bureau of Patents, Trademarks and Technology Transfer and H.D. LEE
Company, Inc.
FACTS: On 18 September 1981, private respondent H.D. Lee Co., Inc. filed with the
Bureau of Patents, Trademarks & Technology Transfer (BPTTT) a Petition for Cancellation of
Registration No. SR 5054 for the trademark "STYLISTIC MR. LEE" used on skirts, jeans,
blouses, socks, briefs, jackets, jogging suits, dresses, shorts, shirts and lingerie under Class
25, issued on 27 October 1980 in the name of petitioner Emerald Garment Manufacturing
Corporation.

Private respondent averred that petitioner's trademark "so closely resembled its own
trademark, 'LEE' as previously registered and used in the Philippines cause confusion,
mistake and deception on the part of the purchasing public as to the origin of the goods.

On 19 July 1988, the Director of Patents rendered a decision granting private respondent's
petition for cancellation and opposition to registration. The latter found to be the prior
registrant of the trademark in the Philippines and that it had been using the said mark in
the Philippines. The Director of Patents, using the test of dominancy, declared that
petitioner's trademark was confusingly similar to private respondent's mark because "it is
the word 'Lee' which draws the attention of the buyer and leads him to conclude that the
goods originated from the same manufacturer. It is undeniably the dominant feature of the
mark.

Petitioner appealed to the CA and filed with the BPTTT a motion to stay execution. The latter
was granted with some conditions.

Later, the Court of Appeals promulgated its decision affirming the decision of the Director of
Patents in all respects. A motion subsequently filed by the petitioner was denied by the CA
on the ground that a defense not raised in the trial court cannot be raised on appeal for the
first time. An issue raised for the first time on appeal and not raised timely in the
proceedings in the lower court is barred by estoppel.

Twice rebuffed, petitioner presented its case before the Supreme Court.
Here, the petitioner contends that private respondent is estopped from instituting an action
for infringement before the BPTTT under the equitable principles of laches pursuant to Sec.
9-A of R.A. No. 9166. Second, that its trademark is not confusingly similar to that of private
respondent, and thus, does not constitute infringement.

ISSUES: 1. Whether or not private respondent is estopped from instituting an action for
infringement by reason of laches?
2. Whether or not the petitioners trademark is confusingly similar to that of the
private respondent and can be confused as the latters variation line of jeans, shirts, etc.

HELD: 1. The private respondent is not barred by reason of laches.

It was only on the date of publication and issuance of the registration certificate that
private respondent may be considered officially put on notice that petitioner has
appropriated or is using the said mark, which, after all, is the function and purpose of
registration in the supplemental register. From the time of publication to the time of filing
the opposition on July 27, 1984 barely fivemonths had elapsed. To be barred from bringing
suit on grounds of estoppels and laches, the delay must be lengthy.

2. No. The Supreme Court considered that the trademarks involved as a whole and
ruled that Emerald Garments STYLISTIC MR. LEE is not confusingly similar to H.D. Lees
LEE trademark. The trademark Stylistic Mr. Lee, although on its label the word LEE is
prominent, the trademark should be considered as a whole and not piecemeal. The
dissimilarities between the two marks become conspicuous, noticeable and substantial
enough to matter especially in the light of the following variables that must be factored in.

First, the products involved in the case at bar are, in the main, various kinds of jeans.
Maong pants or jeans are not inexpensive. Accordingly, the casual buyer is predisposed to
be more cautious and discriminating in and would prefer to mull over his purchase.
Confusion and deception, then, is less likely.

The average Filipino consumer generally buys his jeans by brand. He does not ask the sales
clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is,
therefore, more or less knowledgeable and familiar with his preference and will not easily be
distracted.

Finally, in line with the foregoing discussions, more credit should be given to the ordinary
purchaser. Cast in this particular controversy, the ordinary purchaser is not the completely
unwary consumer but is the ordinarily intelligent buyer considering the type of product
involved.

There is no cause for the Court of Appeals apprehension that Emerald Garments products
might be mistaken as another variation or line of garments under H.D. Lees LEE
trademark. As one would readily observe, H.D. Lees variation follows a standard format
LEERIDERS, LEESURES and LEELEENS. It is, therefore, improbable that the public
would immediately and naturally conclude that petitioners STYLISTIC MR. LEE is but
another variation under H.D. Lees LEE mark.
The issue of confusing similarity between trademarks is resolved by considering the distinct
characteristics of each case. In the present controversy, taking into account these unique
factors, we conclude that the similarities in the trademarks in question are not sufficient as
to likely cause deception and confusion tantamount to infringement.

Further, H.D. Lee failed to prove in court that it had prior actual commercial use of its LEE
trademark in the Philippines. H.D. Lee did show certificates of registrations for its brand but
registration is not sufficient. Actual use in commerce in the Philippines is an essential
prerequisite for the acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of
the Philippine Trademark Law (R.A. No. 166).

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 prerequisite in the acquisition of the right of
ownership over a trademark.

It would seem quite clear that adoption alone of a trademark would not give exclusive right
thereto. Such right grows out of their actual use. Adoption is not use. One may make
advertisements, issue circulars, give out price lists on certain goods; but these alone would
not give exclusive right of use. For trademark is a creation of use. The underlying reason for
all these is that purchasers have come to understand the mark as indicating the origin of
the wares. Flowing from this is the traders right to protection in the trade he has built up
and the goodwill he has accumulated from use of the trademark. Registration of a
trademark, of course, has value: it is an administrative act declaratory of a pre-existing
right. Registration does not, however, perfect a trademark right.

OPINION: I dissent to the honorable Supreme Court Justice Kapunan. I agree with BPTTT and
the CA that petitioner's trademark "STYLISTIC MR. LEE" is confusingly similar to private
respondent's earlier registered trademarks "LEE" or "LEE RIDER, LEE-LEENS and LEE-SURES"
such that the trademark "STYLISTIC MR. LEE" is an infringement of the earlier registered
trademarks.
Personally, I for one, also thought that the STYLISTIC MR. LEE is a variation of the
private respondents line of business. I agree that it is the word LEE which draws the attention
of the buyer and leads him to conclude that the goods originated from the same manufacturer.
It is undeniably the dominant feature of the mark.
While it is true that there are other words such as "STYLISTIC", printed in the
appellant's label, such word is printed in such small letters over the word "LEE" that it is not
conspicuous enough to draw the attention of ordinary buyers whereas the word "LEE" is
printed across the label in big, bold letters and of the same color, style, type and size of
lettering as that of the trademark of the appellee. The alleged difference is too insubstantial
to be noticeable. Even granting arguendo that the word "STYLISTIC" is conspicuous enough
to draw attention, the goods may easily be mistaken for just another variation or line of
garments under the appellee's "LEE" trademarks in view of the fact that the appellee has
registered trademarks which use other words in addition to the principal mark "LEE" such as
"LEE RIDERS", "LEESURES" and "LEE LEENS". The likelihood of confusion is further made
more probable by the fact that both parties are engaged in the same line of business. It is
well to reiterate that the determinative factor in ascertaining whether or not the marks are
confusingly similar to each other is not whether the challenged mark would actually cause
confusion or deception of the purchasers but whether the use of such mark would likely
cause confusion or mistake on the part of the buying public.
Lastly, the Director of Patents and the CA already found and declared that the
private respondent is the prior registrant and was already using the trademark in the
Philippines. Hence, the reopening of this fact in the Supreme Court is prohibited, save in
certain circumstances which are not present in this case.

Puma Sportschuhfabriken Rudolf Dassler, K.G.

Vs
IAC and Mil-Oro Manufacturing Corporation

FACTS: On July 25, 1985, the petitioner, a foreign corporation duly organized and
existing under the laws of the Federal Republic of Germany and the manufacturer and
producer of "PUMA PRODUCTS," filed a complaint for infringement of patent or
trademark with a prayer for the issuance of a writ of preliminary injunction against the
private respondent before the Regional Trial Court of Makati.

Prior to the filing of the said civil suit, three cases were pending before the Philippine
Patent Office.

On August 9, 1985, the private respondent filed a motion to dismiss on the grounds
that the petitioners' complaint states no cause of action, petitioner has no legal
personality to sue, and litis pendentia.

On August 19, 1985, the trial court denied the motion to dismiss and at the same time
granted the petitioner's application for a writ of injunction. The private respondents
appealed to the Court of Appeals.

On June 23, 1986, the Court of Appeals reversed the order of the trial court and
ordered the respondent judge to dismiss the civil case filed by the petitioner.

In reversing the order of the trial court, the Court of Appeals ruled that the requisites of
lis pendens as ground for the motion to dismiss have been met. First, the parties are
identical. They are the same protagonists. Second, there are identity of the rights and
reliefs prayed for. And lastly, that the decisions and orders of administrative agencies
rendered pursuant to their quasi-judicial authority have upon their finality the character
of res judicata.

The record reveals that on March 31, 1986, the Philippine Patent Office rendered a
decision in Inter Partes Cases Nos. 1259 and 1675 whereby it concluded that petitioner
is the prior and actual adaptor of the trademark 'PUMA and DEVICE used on sports
socks and belts, and that MIL-ORO CORPORATION is the rightful owner thereof.

Moreover, the CA likewise held that the petitioner has no legal capacity to sue because
of its failure to allege reciprocity in its complaint it being an essential fact under the
trademark law regarding its capacity to sue before the Philippine courts, and declared
that such failure is fatal to the foreign corporations cause.
Lastly, the Court of Appeals further ruled that in issuing the writ of preliminary
injunction, the trial court committed grave abuse of discretion because it deprived the
private respondent of its day in court as the latter was not given the chance to present
its counter-evidence.

Petitioner maintains that it has substantially complied with the requirements of Section
21-A of Republic Act R.A. No. 166, as amended. According to the petitioner, its
complaint specifically alleged that it is not doing business in the Philippines and is suing
under the said Repulbic Act; that Section 21-A thereof provides that "the country of
which the said corporation or juristic person is a citizen, or in which it is domiciled, by
treaty, convention or law, grants a similar privilege to corporate or juristic persons of
the Philippines" but does not mandatorily require that such reciprocity between the
Federal Republic of Germany and the Philippines be pleaded; that such reciprocity
arrangement is embodied in and supplied by the Union Convention for the Protection of
Industrial Property Paris Convention) to which both the Philippines and Federal Republic
of Germany are signatories and that since the Paris 'Convention is a treaty which,
pursuant to our Constitution, forms part of the law of the land, our courts are bound to
take judicial notice of such treaty, and, consequently, this fact need not be averred in
the complaint.

ISSUES: 1. Whether or not the petitioner has legal capacity to sue.

2. Whether or not the doctrine of lis pendens is applicable as a ground for
dismissing the case.
3. Whether or not the writ of injunction was properly issued.

HELD: 1.The Court declared that foreign corporation not doing business in the
Philippines needs no license to sue before Philippine courts for infringement of
trademark and unfair competition. It held that a foreign corporation which has never
done any business in the Philippines and which is unlicensed and unregistered to do
business here, but is widely and favorably known in the Philippines through the use
therein of its products bearing its corporate and tradename, has a legal right to
maintain an action in the Philippines to restrain the residents and inhabitants thereof
from organizing a corporation therein bearing the same name as the foreign
corporation, when it appears that they have personal knowledge of the existence of
such a foreign corporation, and it is apparent that the purpose of the proposed
domestic corporation is to deal and trade in the same goods as those of the foreign
corporation.

Also the Paris Convention (Union of Paris for the Protection of Industrial Property) to
which the Philippines is a party states in Art. 8 thereof that a tradename (corporation
name) shall be protected in all the countries of the union without obligation of filing or
registration, whether or not it forms part of the trademark. Therefore, petitioner had
legal capacity to sue.

2. Under section 1(d), Rule 16 (formerly Rule 8) of the Rules of Court, one of the
grounds for the dismissal of an action is that "there is another action pending between
the same parties for the same cause." Note that the Rule uses the phrase another
action. This phrase should be construed in line with Section 1 of Rule 2, which defines
the word action, thus-- Action means an ordinary suit in a court of justice by which one
party prosecutes another for the enforcement or protection of alright, or the prevention
or redress of a wrong. Every other remedy is a special proceeding. It is,therefore,very
clear that the Bureau of Patents is not covered under the aforementioned provisions of
the Rules of Court. Thus, the Court of Appeals likewise erred in holding that the
requisites of lis pendens were present so as to justify the dismissal of the case below.

3. As regards the propriety of the issuance of the writ of preliminary injunction,

the records show that herein private respondent was given the opportunity to present
its counter-evidence against the issuance thereof but it intentionally refused to do so to
be consistent with its theory that the civil case should be dismissed in the first place.

OPINION: The decision of the Supreme Court was fair and just.

The rationale behind the Union of Paris for the Protection of Industrial
Property is to accord a national of a member nation extensive protection 'against
infringement and other types of unfair competition. It even found its implementation in
Sec. 37 of RA No. 166 or the trademark law. 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 an international
convention or treaty relating to marks or tradenames on the repression of unfair
competition to which the Philippines may be party, shall be entitled to the benefits and
subject to the provisions of this Act ...

Tradenames 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 part of
marks.

To require the filing or registration of foreign corporation here in the Philippines to be

able to institute an action would be absurd and defeat the purpose of the convention
which the Philippines is a signatory. Furthermore, it would be too burdensome not only
on the part of the parties but also on the part of the courts and administrative agencies
enforcing such rights and actions. Moreover, technicalities and court processes should
not be used as instruments to, unwittingly or otherwise, aid counterfeiters and
intellectual pirates, tie the hands of the law as it seeks to protect the Filipino consuming
public and frustrate executive and administrative implementation of solemn
commitments pursuant to international conventions and treaties.

Therefore, restraining the private respondent from using the trademark PUMA or
any reproduction, counterfeit copy or colourable imitation thereof, and to withdraw
from the market all products bearing the same trademark is just a fulfilment of an
obligation to stem the tide of fake and counterfeit consumer items flooding in the
Philippine market or exported and imported abroad. As being said by the Court,
the greater victim is not so much the manufacturer whose product is being faked
but the Filipino consuming public and in the case of exportations, our image abroad.