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

G.R. No. 179127 : December 24, 2008

Facts: Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of US, which is a signatory to the Convention of
Paris on Protection of Industrial Property and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Petitioner is
engaged mainly in the restaurant business, but it has never engaged in business in the Philippines. Respondents Sehwani, Incorporated
and Benita Frites, Inc. are corporations organized in the Philippines.

On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of Trademarks (BOT) of the IPO for "IN-N-OUT"
and "IN-N-OUT Burger & Arrow Design." Petitioner later found out, through the Official Action Papers issued by the IPO on 31 May 2000,
that respondent Sehwani, Incorporated had already obtained Trademark Registration for the mark "IN N OUT (the inside of the letter "O"
formed like a star)." Petitioner eventually filed on 4 June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an administrative
complaint against respondents for unfair competition and cancellation of trademark registration. Respondents asserted therein that they
had been using the mark "IN N OUT" in the Philippines since 15 October 1982. Respondent then filed with the BPTTT an application for the
registration of the mark. BPTTT approved its application and issued the corresponding certificate of registration in favor of the respondent.

On Dec 22, 2003, IPO Director of Legal Affairs rendered a decision in favor of petitioner stating petitioner had the right to use its
tradename and mark in the Philippines to the exclusion of others. However, the decision also includes that respondent is not guilty of
unfair competition. Upon appeal by petitioner, the new IPO Director General declared that respondents were guilty of unfair competition
on December 23, 2005. On 18 July 2006, the Court of Appeals promulgated a Decision reversing the Decision dated 23 December 2005 of
the IPO Director General. The appellate court declared that Section 163 of the Intellectual Property Code specifically confers upon the
regular courts, and not the BLA-IPO, sole jurisdiction to hear and decide cases involving provisions of the Intellectual Property Code,
particularly trademarks. Hence, the present petition.

Issue: (1) Whether the IPO (administrative bodies) have jurisdiction to cases involving unfair competition

(2) Whether respondent Sehwani is liable of unfair competition

Held: (1) Yes. Sec. 160 and 170, which are found under Part III of the IP Code, recognize the concurrent jurisdiction of civil courts and the
IPO over unfair competition cases. Therefore, the IPO Director of Legal Affairs have jurisdiction to decide the petitioner's administrative
case against respondents and the IPO Director General have exclusive jurisdiction over the appeal of the judgment of the IPO Director of
Legal Affairs.

(2) Yes. The evidence on record shows that the respondents were not using their registered trademark but that of the petitioner. Further,
respondents are giving their products the general appearance that would likely influence purchasers to believe that these products are
those of the petitioner. The intention to deceive may be inferred from the similarity of the goods as packed and offered for sale, and, thus,
action will lie to restrain such unfair competition. Also, respondents use of IN-N-OUT BURGER in busineses signages reveals fraudulent
intent to deceive purchasers.

N.B.

The essential elements of an action for unfair competition are 1) confusing similarity in the general appearance of the goods and (2) intent
to deceive the public and defraud a competitor.