IP Views

No confusion arises from the use of similar marks on wines and cigarettes
September 20, 2007

E. & J. Gallo Winery, producer of wines and brandy products which is based in California, U.S.A., registered its GALLO wine trademark in the Philippines in 1971. On the other hand, Mighty Corporation and La Campana Fabrica de Tabaco, Inc., together with their affiliate, Tobacco Industries of the Philippines, were engaged in the manufacture and distribution of tobacco products for which they have been using the GALLO cigarette trademark since 1973.

On 14 July 2004, the Supreme Court¹ ruled that Mighty Corporation, et al. are not liable for trademark infringement or unfair competition and reaffirmed the doctrine that the use of an identical mark does not, by itself, lead to a legal conclusion that there is trademark infringement. A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or deceit as to the identity, source or origin of the goods, or identity of the business as a consequence of using a certain mark.

According to the High Court, there are two types of confusion in trademark infringement, namely, "confusion of goods" and "confusion of business." Confusion of goods is evident where the litigants are actually in competition; but confusion of business may arise between non-competing interests as well. Thus, there is likelihood of confusion when, although the goods of the parties are different, they are so related that the defendant's product can reasonably be assumed to originate from the plaintiff.

The GALLO trademark registration certificates in the Philippines and in other countries expressly state that they cover wines only, without any evidence or indication that registrant Gallo Winery expanded or intended to expand its business to cigarettes.

In determining likelihood of confusion, the Supreme Court considered the following factors: [a] the resemblance between the trademarks; [b] the similarity of the goods to which the trademarks are attached; [c] the likely effect on the purchaser; and [d] the registrant's express or implied consent and other fair and equitable considerations.

In comparing the resemblance or colorable imitation of marks, various elements were considered, such as the dominant color, style, size, form, meaning of letters, words, designs and emblems used, the likelihood of deception of the mark or name's tendency to confuse, and the commercial impression likely to be conveyed by the trademarks if used in conjunction with the respective goods of the parties.

The Supreme Court found that the similarity between the parties' GALLO trademarks, i.e., the use of the word "GALLO" - a family surname for Gallo Winery's wines and a Spanish word for "rooster" for Mighty Corporation, et al.'s cigarettes, was overridden by their different features like color schemes, art works and other markings of both products.

In determining whether goods are related the following factors apply:

1. the business (and its location) to which the goods belong;
    
2. the class of product to which the goods belong;
    
3. the product's quality, quantity, or size, including the nature of the package, wrapper or container;
    
4. the nature and cost of the articles;
    
5. the descriptive properties, physical attributes or essential characteristics with reference to their form, composition, texture or quality;
    
6. the purpose of the goods;
    
7. whether the article is bought for immediate consumption, that is, day-to-day household items;
    
8. the fields of manufacture;
    
9. the conditions under which the article is usually purchased and
    
10. the channels of trade through which the goods flow, how they are distributed, marketed, displayed and sold.
     

As each trademark infringement case presents its own unique set of facts, no single factor is preeminent. A very important circumstance is whether there exists likelihood that an appreciable number of "ordinarily prudent purchasers" will be misled, or simply confused, as to the source of the goods in question. The "purchaser" is not the "completely unwary consumer" but is the "ordinarily intelligent buyer" who is accustomed to buy, and therefore to some extent familiar with, the goods in question.

The Supreme Court distinguished between GALLO wines and GALLO cigarettes as follows: (1) wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages and smoked; (2) there is a whale of a difference between their descriptive properties, physical attributes or essential characteristics like form, composition, texture and quality; (3) GALLO cigarettes are inexpensive items that appeal only to simple folks like farmers, fishermen, laborers and other low-income workers while GALLO wines are patronized by middle-to-high-income earners; and (4) GALLO cigarettes are distributed through sidewalk vendors, sari-sari stores and grocery stores in rural areas, mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu, whereas GALLO wines are imported and exclusively distributed by a local entity and sold in hotels, expensive bars and restaurants, and high-end grocery stores and supermarkets.

Based on these distinctions, the High Tribunal declared that wines and cigarettes are non-competing and totally unrelated products which are not likely to cause confusion vis-à-vis the goods or business of Gallo Winery and Mighty Corporation, et al. Thus, even though similar marks are used, there is no trademark infringement if the public does not expect the plaintiff to make or sell the same class of goods as those made or sold by the defendant.
 

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