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IP Views Trademark Law in a Knotshell: From Caves to Cyberspace Modern authorities on trademark law view trademarks as performing three distinct functions: (1) they indicate origin or ownership of the articles to which they are attached; (2) they guarantee that those articles come up to a certain standard of quality; and (3) they advertise the articles they symbolize.6 Today, the trademark is not merely a symbol of origin and goodwill; it is often the most effective agent for the actual creation and protection of goodwill. It imprints upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfaction. In other words, the mark actually sells the goods. The mark has become the "silent salesman," the conduit through which direct contact between the trademark owner and the consumer is assured. It has invaded popular culture in ways never anticipated that it has become a more convincing selling point than even the quality of the article to which it refers. In the last half century, the unparalleled growth of industry and the rapid development of communications technology have enabled trademarks, tradenames and other distinctive signs of a product to penetrate regions where the owner does not actually manufacture or sell the product itself. Goodwill is no longer confined to the territory of actual market penetration; it extends to zones where the marked article has been fixed in the public mind through advertising. Whether in the print, broadcast or electronic communications medium, particularly on the Internet, advertising has paved the way for growth and expansion of the product by creating and earning a reputation that crosses over borders, virtually turning the whole world into one vast marketplace.7 Brief History Symbols have been used to identify the ownership or origin of articles for several centuries. As early as 5,000 B.C., markings on pottery have been found by archaeologists. Cave drawings in southwestern Europe show bison with symbols on their flanks. Archaeological discoveries of ancient Greek and Roman inscriptions on sculptural works, paintings, vases, precious stones, glassworks, bricks, etc. reveal some features which are thought to be marks or symbols. These marks were affixed by the creator or maker of the article, or by public authorities as indicators for the payment of tax, for disclosing state monopoly, or devices for the settlement of accounts between an entrepreneur and his workmen.8 In the Middle Ages, the use of many kinds of marks on a variety of goods was commonplace. Fifteenth century England saw the compulsory use of identifying marks in certain trades. There were the baker's mark on bread, bottlemaker's marks, smith's marks, tanner's marks, watermarks on paper, etc. Every guild had its own mark and every master belonging to it had a special mark of his own. The marks were not trademarks but police marks compulsorily imposed by the sovereign to let the public know that the goods were not "foreign" goods smuggled into an area where the guild had a monopoly, as well as to aid in tracing defective work or poor craftsmanship to the artisan. For a similar reason, merchants also used merchants' marks. Merchants dealt in goods acquired from many sources and the marks enabled them to identify and reclaim their goods upon recovery after shipwreck or piracy.9 With constant use, the mark acquired popularity and became voluntarily adopted. It was not intended to create or continue monopoly but to give the customer an index or guarantee of quality. It was in the late 18th century when the industrial revolution gave rise to mass production and distribution of consumer goods that the mark became an important instrumentality of trade and commerce. By this time, trademarks did not merely identify the goods; they also indicated the goods to be of satisfactory quality, and thereby stimulated further purchases by the consuming public. Eventually, they came to symbolize the goodwill and business reputation of the owner of the product and became a property right protected by law. The common law developed the doctrine of trademarks and tradenames "to prevent a person from palming off his goods as another's, from getting another's business or injuring his reputation by unfair means, and, from defrauding the public." Subsequently, England and the United States enacted national legislation on trademarks as part of the law regulating unfair trade. It became the right of the trademark owner to exclude others from the use of his mark, or of a confusingly similar mark where confusion resulted in diversion of trade or financial injury. At the same time, the trademark served as a warning against the imitation or faking of products to prevent the imposition of fraud upon the public.10 The Philippine Experience In the Philippines, trademark law has undergone four (4) major
stages. The earliest law that recognized trademark rights was that of
Queen Ma. Cristina of Spain who promulgated on 26 October 1888 a
trademark law for the Philippines. This first law was based on
registration. Thus, trademarks rights belong to the person who was to
register it first. Upon accession of the Philippines to the United
States, the Philippine Commission passed on 6 March 1903 Act No. 666 or
the Trademark and Trade Name Law of the Philippine Islands. Act 666
abandoned the registration system under the 1888 trademark law. Instead,
Act 666 provided actual use of the mark as the basis of acquiring
ownership and exclusive rights to the mark. The Philippines being a
territory of the United States, adopted principles under Act 666 that
were basically the same as the U.S. trademark law. Philippine courts
relied heavily on U.S. jurisprudence. After the Philippines gained its
independence in 1946, Republic Act 166 took effect, repealing Act 666.
R.A. 166 retained the first-to-use system of trademark ownership. While
developing its own peculiar course of jurisprudence, the Philippine
courts continued, and will continue, to rely on U.S. jurisprudence. International Treaties Meanwhile, on 27 September 1965, the Philippines adhered to the Lisbon Act of the Paris Convention for the Protection of Industrial Property ("Paris Convention"). The Paris Convention is a multilateral treaty that seeks to protect industrial property consisting, among others of trademarks, service marks, trade names and indications of source or appellations of origin, and at the same time repress unfair competition. It is essentially a compact among various countries which, as members of the Union, have pledged to accord citizens of the other member countries trademark and other rights comparable to those accorded their own citizens by their domestic laws for an effective protection against unfair competition. Foreign nationals are to be given the same treatment in each of the member countries as that country makes available to its own citizens. Thus, nationals of each of the member countries are assured of certain minimum international protection of their industrial property. For example, the Paris Convention provides for the protection of internationally well-known marks. It also provides for applications claiming the priority date of an earlier filed application in member countries. In 1995, the Philippines adhered to the Agreement establishing the World Trade Organization ("WTO"). The WTO is a common institutional framework for the conduct of trade relations among its members in matters related to the multilateral and plurilateral trade agreements annexed to the WTO Agreement. The WTO framework ensures a "single undertaking approach" to the administration and operation of all agreements and arrangements attached to the WTO Agreement. Among those annexed is the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPs"). Members to this Agreement "desire to reduce distortions and impediments to international trade, taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade." To fulfill these objectives, the members have agreed to adhere to minimum standards of protection set by several Conventions, including the Paris Convention (1967), as revised in Stockholm on July 14, 1967. The TRIPs Agreement seeks to grant adequate protection of
intellectual property rights by creating a favorable economic
environment to encourage the inflow of foreign investments, and
strengthening the multi-lateral trading system to bring about economic,
cultural and technological independence. I. LEGISLATION Trademark Law Under Republic Act 8293 On 1 January 1998, Republic Act 8293, known as the Intellectual
Property Code of the Philippines, took effect, repealing, among others,
the old Trademark Law, R.A. 166. To comply with the minimum requirements
of the WTO, the Intellectual Property Code adopted several provisions of
the WTO TRIPs Agreement. System of Registration Under R.A. 166, ownership of a mark is acquired through actual use of the mark in commerce in the Philippines. This is the "first-to-use" system of trademark ownership similar to the system in the U.S. Under R.A. 8293, the Intellectual Property Code abandoned the first-to-use system of trademark ownership and adopts the "first-to-file" system. The rights to a mark11 are acquired by registration. Priority is given to the first to apply for registration. Intent-to-Use Applications The first-to-file system of ownership paved the way to the so-called "intent-to-use" applications adopted in all other jurisdictions.12 However, the applicants in intent-to-use applications are required to file a declaration of actual use13 of the mark in Philippine commerce within 3 years from filing of the application. This requirement is meant to avoid protecting deadwood or paper registrations, and preventing the applicant from keeping the mark forever, depriving other legitimate businesses from the opportunity to use the mark. The Register The Intellectual Property Code provides for only one register. A second, or Supplemental Register, is no longer maintained. Under the R.A. 166, there was a Principal Register and a Supplemental Register. Generally, marks that were not registrable on the Principal Register for being merely descriptive of the goods were allowed registration on the Supplemental Register.14 What are Registrable Marks As stated above, a mark is defined as any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise. Types of marks. Marks fall within four categories along a spectrum, from the most protectable to the unprotectable:
Arbitrary marks consist of common words which, when applied to certain goods or services, neither suggest nor describe any characteristic of those goods or services. Good examples of arbitrary marks are APPLE for computers and CAMEL for cigarettes. Fanciful marks are "coined" words invented solely for the purpose of functioning as a mark. Archaic or obsolete terms may also function as fanciful marks. Examples of fanciful marks include KODAK for photographic supplies, EXXON for petroleum products and CLOROX for bleaching products. Arbitrary and fanciful marks are considered "inherently distinctive" and are eligible for registration and protection. They are commonly considered "strong" marks. Suggestive marks are those that suggest some quality of ingredient of the goods or services to which the marks are applied. Suggestive marks may best be described as "subtly descriptive" and are entitled to protection without proof of distinctiveness. Examples of suggestive marks are MR. CLEAN for laundry soap, CLOSE-UP for toothpaste and GREYHOUND for bus lines. Descriptive Marks. Descriptive marks describe some characteristic or alleged merit of a product or service. Because descriptive terms may be truthfully applied to the goods and services and of many sellers, they are not entitled to protection unless they have acquired "secondary meaning" in the marketplace. A descriptive mark acquires secondary meaning when in addition to its literal or dictionary meaning, it connotes to the public a product from a unique source. Examples of descriptive marks are MATIBAY for shoes, PURE for purified drinking water and YELLOW PAGES for the classified telephone directory. Generic Marks. A generic term tells what a product or service is,
rather than indicating the source of a product; thus, it must remain in
the public domain and can never function as a trademark. Examples of
generic terms include ORANGE for oranges and APPLE for apples. Abandonment of a Mark Care must be taken to ensure that a distinctive mark capable of
protection does not become the common name by which the whole product
category is known and thereby fall into generic use. Sellers of new and
unfamiliar products should keep a watchful eye on the public's usage to
see that a given trademark is not used as the generic name of the new
product itself. If the product is new, the seller should give the public
a generic name to apply to the product so that the seller's mark will
not be adopted as the generic name. (e.g. FRISBEE "flying dish" and
XEROX15 for photocopying machine)
Other ways to protect against generic use of a mark include: (1)
registration coupled with use of the trademark notice symbol ®; (2) use
of the work "brand" between the mark and the generic name (e.g. "Scotch
brand tape"); (3) use of the mark only as an adjective, never as a verb
or noun; and (4) positive education advertising. Valuable marks which
have been lost through generic slippage include: "shredded wheat,"
"yo-yo" and "escalator." Selection and Preclearance of a Mark Selection. Companies are encouraged to work with their trademark attorneys when selecting and developing a mark. Input by an attorney during the initial selection process can avoid potential problems and lead to the selection of the strongest possible mark consistent with the business considerations. As discussed above, the strongest marks are those which are arbitrary or fanciful. However, businessmen frequently prefer marks which describe the particular business or product in question. This natural tension must be recognized and dealt with in the selection process. Certain marks are not entitled to registration. These are:
Preclearance. After selecting a potential mark, the company should ascertain whether the mark is available for adoption. The objective is to avoid the adoption and use of a mark that is confusingly similar to a prior registered, allowed or applied-for mark, or one that has been previously used by but not registered with the Intellectual Property Office16. Even if a company is already using a mark, a search may still be in order to assess the rights and risks associated with its continued use. To determine whether a mark is available, a search of the records of the Intellectual Property Office should be conducted at the earliest possible date. The search will take into account phonetically similar marks for similar goods and services. Usually, in addition to the Intellectual Property Office files, a formal search will include a review of general directories, trade directories and other sources. For a highly visible, nationwide mark adoption, the preclearance may include telephone directory searches, private investigators and other, often expensive, techniques. When a search yields potential problems, several courses of action
are available. One may choose not to go forward with a proposed mark, to
discontinue a mark presently in use, to obtain a third party's consent
to the use of the mark or to purchase rights to the mark. The counsel
can conduct investigations, obtain catalogues, advertising and product
samples, or contact the owners of problem marks to assist the client in
selecting the best course of action. Term of Registration and Maintenance of Marks Trademark registration is valid for 10 years from date of issue, provided, the registrant files with the Intellectual Property Office an affidavit of use/non-use within 1 year following the 5th anniversary of the effective date of the registration or renewal registration. The registration is renewable at the end of each 10th year so long as the mark is still in commercial use. The registrant must also use the mark for an uninterrupted period of
three years. Otherwise, the mark is presumed abandoned and the
registration will be cancelled. Domain name or .com Trademarks The Intellectual Property Office now accepts applications for the
registration of domain names as service marks. In fact, domain name
applications are accorded some degree of importance as "priority
applications" so that the registration process can be expedited.17
The same rules on registrability of marks apply in domain name
applications considered as service marks. II. JURISPRUDENCE A. Confusing decisions on "Confusing Similarity" Wholistic Test versus Dominancy Test. Under the Wholistic18 Test, trademarks must be considered in their entirety as they appear in their respective labels. On the other hand, in the dominant feature test, courts compare the dominant features of the contending marks to find infringement. Del Monte Corp. v. CA, GR No. 78325, 25 January 1990 Facts: Petitioners Del Monte Corporation, et. al. question the decision of the Court of Appeals upholding the dismissal by the trial court of their complaint against Sunshine Sauce Manufacturing Industries for trademark infringement and unfair competition. Del Monte is the registrant of the Del Monte bottle configuration in the supplemental register. Del Monte also has two registration certificates in the principal register for its trademark "DEL MONTE" and its logo. Sunshine uses Del Monte's bottle, which it buys from junk shops, for its catsup and uses a logo, which is registered in the supplemental register, allegedly confusingly similar to the Del Monte logo. Ruling: The Court ruled that a side-by-side comparison is not the final test of similarity. The question is not whether the two articles are distinguishable by their label when set side by side but whether the general confusion made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely result in his confounding it with the original. The marks must be considered as a whole, not dissected. If the buyer is deceived, it is attributable to the marks as a totality. Factors such as age, training and education of the usual purchaser, the nature and cost of the article, whether the article is bought for immediate consumption and also the conditions under which it is usually purchased are considered. The Court found the Sunshine label to be a colorable imitation of the
Del Monte label and that infringement exists. Asia Brewery v. CA and San Miguel GR No. , 5 July 1993 Facts: San Miguel Corporation ("SMC") filed a complaint against Asia Brewery Inc. ("ABI") for trademark infringement and unfair competition for ABI's BEER PALE PILSEN or BEER NA BEER product which competed with SMC's PALE PILSEN. The trial court dismissed the complaint. The Court of Appeals reversed the trial court's ruling and ruled that there was infringement of trademark and unfair competition. Issue: Whether ABI infringes SMC's trademark: San Miguel Pale Pilsen with Rectangular Hops and Malt Design and thereby commits unfair competition against the latter. Ruling: The Court ruled that infringement is determined by the "test of dominancy" rather than by differences or variations in the details of one trademark and of another. "It has been consistently held that the question of infringement of a trademark is determined by the test of dominancy. Similarity in size, form and color, while relevant is not conclusive. If the competing mark contains the main or essential feature or dominant features of another, and confusion and deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to imitate. The question at issue in cases of infringement of trademark is whether the use of the marks involved would be likely to cause confusion or mistake in the mind of the public or deceive purchasers." There is hardly any dispute that the dominant feature of SMC's trademark is the name of the product, San Miguel Pale Pilsen, written in Gothic letters with elaborate serifs at the beginning and end of the letters "S" and "M" on an amber background across the upper portion of the rectangular design. On the other hand, the dominant feature of ABI's trademark is the
name: Beer Pale Pilsen, with the word Beer written in large letters,
larger than any of the letters found in the SMC label. The Supreme Court gave the following reasons:
The Court also ruled that the ABI decision did not diminish the Del Monte decision (181 SCRA 410) since catsup is a more common household item, and the rules are applied more strictly. Dissent: The present ponencia stresses the specific similarities and differences of the two products to support the conclusion that there is no infringement of trademarks or unfair competition. That [dominancy] test was rejected in the ponencia in Del Monte Corporation vs. Court of Appeals, 181 SCRA 410. Comment: In the Del Monte case, the Supreme Court applied the Holistic Test approach while in the San Miguel case, the Supreme Court applied the dominancy test and the Court arrived at different conclusions. Do the two tests result in different results? The ultimate issue in determining trademark infringement is whether, from his point of view, the relevant consumer would likely be confused by the similarity between the marks or labels under actual market conditions. This is the "likelihood of confusion" test that requires a balancing of factors along a spectrum. Thus, on one end of the spectrum, the use of an identical sign for identical goods or services, a likelihood of confusion is presumed.19 On the other end of the spectrum, the use of a slightly similar mark for unrelated goods or services should not result in finding likelihood of confusion. Along the spectrum, courts should balance other factors, such as: (1) the strength of the plaintiff's mark, (2) the degree of similarity between the 2 contending marks as they are encountered in the market place, (3) the proximity of the products or services, (4) the likelihood that plaintiff will bridge the gap, (5) evidence of actual confusion, (6) defendant's good faith in adopting the mark, (7) the quality of defendant's products, and (8) the sophistication of buyers. 20 From another perspective, it may also be proper to distinguish
between a case for opposition or cancellation filed with the
Intellectual Property Office where only the registrability of a mark is
at issue and therefore only the marks are to be considered, and a case
pending before the trial court for trademark infringement where all
circumstances surrounding the actual use of the marks should be
considered. The distinction becomes important in cases of intent-to-use
applications and the applicants have yet to start using the mark on its
labels or goods. A further distinction may also be made between a
trademark infringement case where only the use of the particular marks
are at issue, and a case for unfair competition case where the general
appearance of the products are at issue. Converse Rubber Corp. v. Universal Rubber Products Industries, 147 SCRA 154 (8 January 1987) Facts: Universal Rubber Products filed an application with the Bureau of Patents, Trademarks and Technology Transfer for registration of the trademark "UNIVERSAL CONVERSE & DEVICE" for rubber shoes and rubber slippers. Converse Rubber filed its opposition on grounds that:
Petitioner's lone witness testified that she had been selling CONVERSE rubber shoes in the local market since 1956 and that sales in her stores averaged twelve to twenty pairs a month. The BPTTT denied the opposition. Ruling: It is evident that the word "CONVERSE" is the dominant word in the corporate name "CONVERSE RUBBER CORPORATION". A foreign corporation has a right to maintain an action in the Philippines even if it is not licensed to do business and is not actually doing business on its own. This is in consonance with the Paris Convention. Furthermore, sales of 12 to 20 pairs a month of rubber shoes cannot
be considered insignificant, considering that they appear to be of
expensive quality, which not too many basketball players can afford to
buy. Any sale made by a legitimate trader in his store is a commercial
act establishing trademark rights since such sales are made in due
course of business to the general public and not limited to a special
class of customers. Emerald Garment Manufacturing Corp. v. Court of Appeals Facts: The petitioner, Emerald Garment Manufacturing Corporation, is seeking to reverse the decision of the Court of Appeals in which the court found that the petitioner's trademark "STYLISTIC MR. LEE" to be confusingly similar to that of the private respondent, H.D. Lee. H.D. Lees' trademarks include "LEE," "LEE RIDERS," "LEESURES," and "LEE LEENS." Issue: Whether the petitioner's trademark "STYLISTIC MR. LEE" is confusingly similar to private respondent's earlier registered trademarks "LEE," "LEE RIDERS," "LEESURES," and "LEE LEENS" such that the trademark "STYLISTIC MR. LEE" is an infringement of the earlier registered trademarks? Held: The court ruled that infringement of a trademark occurs where the mark involved will likely confuse the public or deceive ordinary purchasers into thinking it is another mark. The Supreme Court found that the petitioner's trademark is not similar to that of the respondent's because of several factors.
Comment: The Supreme Court, in the case of Emerald Garment v. Court of Appeals, et. al. ("Lee case"), correctly observed that "[i]n the history of trademark cases in the Philippines, particularly in ascertaining whether one trademark is confusingly similar to or is a colorable imitation of another, no set rules can be deduced. Each case must be decided on its own merits." However, the Supreme Court arrived at different, if not opposing, conclusions in the Converse and Lee cases. In the Lee case, it is clear that LEE is the dominant feature of the mark. But the Supreme Court, applying the holistic test, said: "Petitioner's trademark is the whole "STYLISTIC MR. LEE." The Supreme Court said: "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. These are not your ordinary household items like catsup, soy sauce or soap which are of minimal cost. 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." But the same factors may very well be applied in the Converse case, yet the Court arrived at a different conclusion. The Lee case originated from the Trademark Office on the issue of registrability of STYLISTIC MR. LEE. Are the factors relied upon by the Court relevant in a registrability issue under the first-to-file system of trademark ownership? Are beer (in the SMC case) and jeans (in the Lee case) on one hand
and shoes (in the Converse case) and catsup (in the Del Monte case) on
the other hand different such that the sophistication of the relevant
buyers or consumers are also different? Interesting Pending Case: McDonalds Corporation v. Big Mak Burger, C.A. G.R. No. ) Is the service mark BIG MAK for fastfood restaurant offering foods including burgers confusingly similar to the trademark "BIG MAC" for burgers? Branch 137 of the Regional Trial Court of Makati said yes. According to the trial court, a person who is hungry and wants to eat a hamburger sandwich may not be discriminating enough to look for a McDonalds restaurant and buy a "Big Mac hamburger." Once he sees a stall selling hamburger sandwich, in all likelihood, he will dip into his pocket and order a Big Mak hamburger sandwich. On appeal, the Court of Appeals reversed the decision of the trial court, ruling that no colorable imitation exists. The CA ruled: A careful comparison of the way the trademark BIG MAC is being used
by plaintiffs-appellee and the corporate name L.C. Big Mak Burger, Inc.
by defendant-appellants, would readily reveal that no confusion could
take place, or that the ordinary purchasers would be misled by it. As
pointed out by defendant-appellants, the plaintiffs-appellees trademark
is used to designate only one product, a double decker sandwich sold in
a styrofoam box with the "McDonalds" logo. On the other hand, what the
defendant-appellant corporation is using is not a trademark for its food
product but a business or corporate name. They use the L.C. Big Mak
Burger Inc. in their restaurant business which serves diversified food
items such as hotdog, ham, fish burger, and hamburger. Secondly,
defendants-appellants' corporate name or business name appearing in the
food packages and signages are written in silhouette red-orange letters
with the "b" and "m" in upper case letters. Above the words "Big Mak"
are the upper case letters "L.C." Below the words "Big Mak" are the
words "Burger, Inc." spelled out in upper case letters. Furthermore,
said corporate or business name appearing in such food packages and
signages is always accompanied by the company mascot, a young chubby boy
named Maky who wears a red T-shirt with the upper case "m" appearing
therein and a blue garment. Finally, the defendants-appellants food
packages are made of plastic material. x x x In the case at bar, it is readily apparent to the naked eye that there appears a vast difference in the appearance of the product and the manner the tradename "Big Mak" is being used and presented to the public. As earlier noted, there are glaring dissimilarities between plaintiffs-appellees' trademark and defendants-appellants' corporate name. Plaintiffs-appellees' product carrying the trademark "BIG MAC" is a double-decker sandwich (depicted in the tray mat containing photographs of the various food products) sold in a styrofoam box with the "McDonalds" logo and trademark in red, black capital letters printed thereon, at a price which is more expensive than the defendants-appellants comparable food products. In order to buy a "BIG MAC," a customer needs to visit an air-conditioned "McDonalds" restaurant usually located in a nearby commercial center, advertised and identified by its logo - the umbrella "M", and its mascot - "Ronald McDonald". A typical McDonalds restaurant boasts of a playground for kids, a second floor to accommodate additional customer, a drive-thru to allow customers with cars to make orders without alighting from their vehicles, the interiors of the buildings are well lighted, distinctly decorated and painted with pastel colors. In buying a "BIG MAC" it is necessary to specify its trademark. Thus, a customer needs to look for a "McDonalds" and enter it first before he can find a hamburger sandwich which carry the mark "Big Mac". On the other hand, defendants-appellants sell their goods through snack vans in strategic locations and caters to class "C & D" customers. Comment: The case is now on appeal at the Supreme Court. It
would be interesting to know how the Supreme Court will rule in the
McDonalds case in view of the seeming inconsistencies in the rulings of
the Court in the Del Monte and San Miguel cases and in the Converse and
Lee cases. Will burgers be a class of its own? B. On Related Goods Doctrine Faberge Incorporated v. IAC and Co Beng Kay, GR No. 71189, 4 November 1992 Facts: The Director of Patents allowed Co Beng Kay to register the trademark "BRUTE" for briefs despite petitioner's opposition grounded on similarity of said trademark with petitioner's own symbol "BRUT" which it previously registered for after-shave lotion, shaving cream, deodorant, talcum powder, and toilet soap. Both marks are similar in appearance, sound and style of presentation. Issue: Are briefs on one hand and aftershave lotion, shaving cream, deodorant, talcum powder and toilet soap on the other hand, related goods? Ruling: The Court ruled that the private respondent may be permitted to register the trademark "BRUTE" for briefs. Petitioner has not ventured into the production of briefs, an item not listed in its certificate of registration. One who has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of a different description. Comment: As a result of this decision, Article 138 of R.A. 8293 now provides that a "certificate of registration of a mark shall be prima facie evidence of…the registrant's exclusive right to use the same in connection with the goods or service and those that are related thereto specified in the certificate." Under the old trademark law, the phrase "and those that are related thereto" is not found. C. On Preliminary Injunction Developers Group of Companies, Inc. v. CA, GR No. , 8 March 1993 Facts: Petitioner, the trademark registrant for "Shangri-la" and "S-logo", filed a case for infringement and damages. The marks were registered in the principal register on 31 May 1983. On the hand, Shangri-La International Hotel and Management Ltd. claimed that is was the legal and beneficial owner of the mark and first used it in 1962. It also alleged that before the complaint was filed, it had filed a cancellation action against Developers trademark registrations. The lower court granted the injunction which was reversed by the Court of Appeals. Issue: Whether petitioner was entitled to the writ of preliminary injunction issued by the trial court pending trial on the merits, of the charge of infringement against private respondent. Held: The Supreme Court ruled that the right claimed by the plaintiff as its basis for asking for injunctive relief is far from clear. The prima facie validity of its registration has been put in serious question by the cancellation cases filed by Shangri-La with the Bureau of Patents, Trademarks and Technology Transfer 3 years ahead of the complaint. Furthermore, Developers has not adduced any evidence of injury, either actual or imminent, resulting from the acts complained of against Shangri-La. Hence, preliminary injunction denied. Comment: It is difficult to secure a writ of preliminary
injunction in trademark cases. The showing of irreparable harm has
always been the problem. In one case,21
the Supreme Court refused to grant the writ of preliminary injunction
because the petitioners failed to prove actual use of the mark in the
Philippines. According to the Court, petitioner's right or title cannot
be made to rest solely on the certificate of trademark registration in
the Philippines. Is this still a good law in light of the shift from
first-to-use system to the first-to-file system of trademark ownership?
How about the recent pronouncement of Justice Panganiban in Mirpuri v.
Court of Appeals22 that new technology
may affect the goodwill and market penetration of goods not available
locally? D. On Jurisdiction & Prejudicial Question Shangri-La International Hotel vs. Court of Appeals, G.R. No. , June 21, 2001 and G.R. No. , June 21, 2001. Facts: On June 21, 1988, the Shangri-La International Hotel et. al. ("Shangri-La Group"), filed with the Bureau of Patents, Trademarks and Technology Transfer ("BPTTT") a petition praying for the cancellation of the registration of the "Shangri-La" mark and "S" device/logo issued to the Developers Group of Companies, Inc., on the ground that the same was illegally and fraudulently obtained and appropriated for the latter's restaurant business. The Shangri-La Group alleged that it is the legal and beneficial owners of the subject mark and logo; that it has been using the said mark and logo for its corporate affairs and business since March 1962 and caused the same to be specially designed for their international hotels in 1975, much earlier than the alleged first use thereof by the Developers Group in 1982. Likewise, the Shangri-La Group filed with the BPTTT its own application for registration of the subject mark and logo. The Developers Group filed an opposition to the application. Almost three (3) years later, or on April 15, 1991, the Developers Group instituted with the Regional Trial Court of Quezon City, Branch 99, a complaint for infringement and damages with prayer for injunction against the Shangri-La Group. On January 8, 1992, the Shangri-La Group moved for the suspension of the proceedings in the infringement case on account of the pendency of the administrative proceedings before the BPTTT. The trial court denied the motion to suspend. The Shangri-La Group then filed a petition for certiorari before the Court of Appeals. On February 15, 1993, the Court of Appeals rendered its decision dismissing the petition for certiorari. Issue: The core issue in this case is simply whether, despite the institution of an Inter Partes case for cancellation of a mark with the BPTTT (now the Bureau of Legal Affairs, Intellectual Property Office) by one party, the adverse party can file a subsequent action for infringement with the regular courts of justice in connection with the same registered mark. Ruling: Section 151.2 of Republic Act No. 8293, otherwise known as the Intellectual Property Code, provides, as follows - SECTION 151.2. Notwithstanding the foregoing provisions, the court or the administrative agency vested with jurisdiction to hear and adjudicate any action to enforce the rights to a registered mark shall likewise exercise jurisdiction to determine whether the registration of said mark may be cancelled in accordance with this Act. The filing of a suit to enforce the registered mark with the proper court or agency shall exclude any other court or agency from assuming jurisdiction over a subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to cancel the mark with the Bureau of Legal Affairs shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to same registered mark may be decided. Similarly, Rule 8, Section 7, of the Regulations on Inter Partes Proceedings, provides to wit: SECTION 7. Effect of filing of a suit before the Bureau or with the proper court. - The filing of a suit to enforce the registered mark with the proper court or Bureau shall exclude any other court or agency from assuming jurisdiction over a subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to cancel the mark with the Bureau shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to same registered mark may be decided. Hence, as applied in the case at bar, the earlier institution of an Inter Partes Case by the Shangri-La Group for the cancellation of the "Shangri-La" mark and "S" device/logo with the BPTTT cannot effectively bar the subsequent filing of an infringement case by registrant Developers Group. The law and the rules are explicit. The rationale is plain: Certificate of Registration No. 31904, upon which the infringement case is based, remains valid and subsisting for as long as it has not been cancelled by the Bureau or by an infringement court. As such, Developers Group's Certificate of Registration in the principal register continues as "prima facie evidence of the validity of the registration, the registrant's ownership of the mark or trade-name, and of the registrant's exclusive right to use the same in connection with the goods, business or services specified in the certificate." Since the certificate still subsists, Developers Group may thus file a corresponding infringement suit and recover damages from any person who infringes upon the former's rights. Furthermore, the issue raised before the BPTTT is quite different
from that raised in the trial court, said the Court. The issue raised
before the BPTTT was whether the mark registered by Developers Group is
subject to cancellation, as the Shangri-La Group claims prior ownership
of the disputed mark. On the other hand, the issue raised before the
trial court was whether the Shangri-La Group infringed upon the rights
of Developers Group within the contemplation of Section 22 of Republic
Act 166. Comment: (1) It is interesting to note that the petition for cancellation was filed three years ahead of the infringement suit. In the earlier Shangri-La case involving the same parties on the matter of injunction, the Supreme Court ruled, "[t]he prima facie validity of its registration has been put in serious question by the cancellation cases filed by Shangri-La with the BPTTT 3 years ahead of the complaint." Then the Court apparently reversed itself saying that the prima facie validity of the registration remains in effect "for as long as it has not been cancelled." Has the meaning of the term prima facie got lost somewhere? (2) The Shangri-La case appears to be a dangerous precedent. If the courts find Shangri-La guilty of trademark infringement, can the Intellectual Property Office still cancel the registration of Developers Group on the basis of evidence presented before it? The Supreme Court was quick to avoid this situation by ordering the then Bureau of Patents to suspend, but not to stop, the cancellation proceedings.23 (3) Whatever happened to the rule on primary jurisdiction and the
rule on agency expertise? This ruling appears to be inconsistent with
the ruling in Amigo Manufacturing v. Cluett Peabody24
where the Court said that administrative agencies' (IPO in this case)
findings of fact in matters falling under their jurisdiction are
generally accorded great respect, it not finality. That's consistency
and predictability for us. The Internet What is known as the Internet, or the Net, was set up in 1969 to
connect computers for defense purposes. Later, it was expanded to
include, under the supervision of the National Science Foundation
("NSF"), the research community. NSF was first authorized to permit
commercial activities in 1992. Soon thereafter, the Internet became the
world's largest computer network, containing millions of "host"
computers. Some economic groups predict that business to business
e-commerce (or B2B), which accounted for $145 billion in 1999, will
account for $7.29 trillion worldwide by 2004. Traffic on the Internet
doubles every 100 days, with 1 billion people expected to be connected
to the Internet by 2005. The Internet is here to stay.25
Domain Names 26 Alphanumeric addresses or "domain names" serve two functions. First, a domain name represents the address of a computer on the Internet, so that every computer connected to this "network of networks" can communicate with every other computer. Each computer connected to the Internet is assigned a unique numeric address or Internet Protocol ("IP") number consisting of a string of numbers, such as 189.45.231.67. Because these numeric addresses are difficult for people to remember, Internet engineers created an alphanumeric system called the Domain Name System, which relates these difficult-to-remember IP numbers to easy-to-remember domain names chosen by the registrant user. Thus, each domain name actually represents a unique Internet numeric address. Domain names consist of at least two parts, which are called "domain
levels." Each domain level is separated by a period, called "dot."
Top-level domains or TLDs are referenced by their Internet zone
designation, such as .com, org., .net. (the generic TLDs registered by
Network Solutions, Inc.("NSI")), or country code TLDs, such as .ph
(Philippines), .us (United States), .ca (Canada), and so forth. Zone
designations or TLDs are located immediately to the right of the dot.
Second level domains (SLDs) are located to the immediate left of the
dot. NSI only registers SLDs, although a domain name may consist of
tertiary or additional levels. Domain names may be used as addresses for
a variety of Internet communications, although e-mail and website
operation are probably the most common commercial uses. An example of a
domain name would be bnlaw.com, with .com as the TLD, and "bnlaw" as the
SLD; a full e-mail address also contains one or more preceding
designations that identify the specific person, function or department
within that organization, such as antonbengzon@bnlaw.com; and a website
address or URL (Uniform Resource Locator) would be, e.g.,
http://www.bnlaw.com. Domain Name as a Trademark With the emergence of electronic commerce in the mid-1990s, the domain name acquired, at times, a second function in addition to its Internet addressing function. It, on occasion, came to serve the same function in electronic commerce as the trademark in more traditional modes of business. Consumers have come to depend on domain names much as they depend on trademarks in the physical world, i.e., as the means by which they can identify the desired source of a product or service in obtaining information and making purchasing decisions. "[A] domain name is more than a mere Internet address. It also identifies the Internet site to those who reach it much like… a company's name identifies a specific company."27 In short, consumers frequently expect that a website or e-mail address consisting of or encompassing a trademark used in the physical world is sponsored by or associated with the owner of that trademark. However, there is a perceived tension between these functions. Some members of the Internet community believe that for many, perhaps all, purposes, the domain name continues to be "merely an address" which is to be accorded no trademark significance. Others recognize that a domain name can have trademark significance, in at least some, perhaps many instances, although some uses of a trademark in a domain name must be regarded as protected free speech or descriptive fair use. Trademark owners fall into the latter camp, although many differ as to the extent to which free speech use can be accorded to use of their trademarks in domain names. But if a domain name is regarded as serving the same function as a trademark, a further tension must be recognized between the geographically-based trademark and the global Internet. Notwithstanding the traditional territorial limitations of a
trademark, consumers have imported their "real-world expectations" about
trademarks and their function as source indicators into the Internet,
where they use domain names as the same shorthand means of finding
desired goods and services. "A website's domain name signifies its
source of origin, and is therefore an important signal to Internet users
who are seeking to locate web resources." "Because of the importance of
a domain name in identifying the source of a website, many U.S. courts
have held that the use of a trademark within the domain name of a URL
can constitute a trademark violation." 28 How domain names are obtained Domain names usually are obtained by working through an Internet
service provider (ISPs) that submits the electronic application for a
domain name to one or more of the approximately 240 registries
worldwide. Upon obtaining the registration in any particular registry's
database, subsequent registrations of the same name will be precluded,
because each domain name represents a unique address on the Internet.
Internet domain names cannot exceed 26 characters, including the four
characters used to identify the TLD (including the "dot"). Restated, an
SLD in a domain name cannot exceed 22 characters consisting only of
letters, numbers or hyphens. Domain names cannot contain spaces. Although not originally envisioned as a global TLD, .com has become the "domain of choice" for many companies, providing an alternative to the country code TLDs. As of March 9, 1999, NSI registered its 4,000,000 domain name in the .com, net and .org TLDs combined, with the .com TLD representing the overwhelming majority of names on the Internet. NSI, like most registries, assigns domain names on a "first-come, first-served" basis. The current availability of a domain name can be ascertained through NSI's WHOIS database. Just as trademark owners register their trademarks worldwide, it also is possible to register domain names in over 240 national and quasi-national registries.4 In some of these, there are subdomains, e.g., .com.ph for a Philippine commercial company, so there are over 400 distinct domain registration possibilities. There is substantial variation in structure in the country code TLDs. For example, in some country domains, the second levels are generic categories (such as .ac, .co, .go and .re), while in others they are based on political geography, and in still others, organization names are listed directly under the country code. The reasons for registering domains in foreign markets are similar to
the reasons for registering trademarks abroad. First, domain names may
be registered in conjunction with an actual or planned export to and/or
promotional activity in the local market. In the absence of the
foregoing, domain name registration may be sought in an attempt to stop
third parties from registering the mark/domain. Numerous trademark
owners utilize the local domains in their local marketing, with
locally-oriented websites in the local language, ostensibly in an effort
to give the impression that "We're local!" and, at the same time, to
spare the local user several time-consuming mouse-clicks that would be
necessary if the user clicked into the company's site through .com. The Philippine [In]Experience In the Philippines, local and foreign companies were not spared of
legal and practical issues concerning domain names registration. Some
well-known companies have experienced problems in their attempt to
register their own name as domain name. For example, Jollibee
Corporation had problems registering jollibee.com and jollibee.com.ph
because other parties were able to register these names ahead of
Jollibee. Bank of Philippine Islands encountered similar problems. It is easy to obtain domain name registration in the Philippines. The
country-code top level domain registry, DotPHone, Inc.29
has introduced changes to its domain name registration procedure and
dispute resolution policy. Under the new registration policy, a domain
name applicant is no longer required to have local presence or to have
its name registered with the Securities and Exchange Commission or the
Department of Trade and Industry. Previously, certain conditions had to
be met, such as corporate presence in the Philippines and registration
with the Philippines Securities and Exchange Commission in order that
one may apply for the registration of a .ph domain. Registration may be
done on-line on a "first-come, first-served" basis. As regards, .ph domain name disputes, DotPHone's Uniform Domain Name Dispute Resolution Policy gives a detailed indication of the procedures to be followed in the resolution of such disputes. Under this policy, DotPHone will not decide domain name contests. Accordingly, a .ph domain will be cancelled, transferred or changed only under the following circumstances: (a) upon the registrant's instruction; (b) upon order of a court or arbitral tribunal of competent jurisdiction, requiring such action; and/or (c) upon a decision of a DotPHone-accredited administrative-dispute-resolution service provider in any administrative proceeding in which the affected domain name registrant is a party. At present, the following are the administrative-dispute-resolution
service providers approved by DotPHone: (CPR Institute for Dispute
Resolution [CPR]; (b) Disputes.org/eResolution Consortium [DeC]; (c) The
National Arbitration Forum [NAF]; (d) World Intellectual Property
Organisation Arbitration and Mediation Centre [WIPO]. Among these
providers, it appears that the WIPO is the most reliable as it is the
most sought after provider in most jurisdictions. All the providers
follow the Uniform Dispute Resolution Policy ("UDRP") by the Internet
Council for Assigned Names and Numbers ("ICANN"). Under the UDRP, the
Complainant must establish each of the following to prevail: (1) the
registrant's domain name is identical, or confusingly similar, to a
trademark or service mark of the Complainant; (2) the registrant has no
rights or legitimate interest in the domain name; and (3) the domain
name has been registered and used in bad faith. Case Law: The PLDT case There is a trademark infringement and unfair competition case pending before the intellectual property court of Quezon City filed by the Philippine Long Distance Telephone Company ("PLDT") against Philippine League for Democratic Telecommunications, Inc., the registrant of the domain name pldt.com. Among the reliefs sought by PLDT in its complaint is a preliminary injunction against the continued operation of the web site which, notably, is hosted by Network Solutions, Inc. ("NSI"), a service provider based in the United States. NSI was not impleaded in the action. PLDT's causes of action include the protection of tradenames without need of registration, unfair competition under R.A. 8293, and violation of the provisions on fair dealings under Article 19-21 of the Civil Code. Notably, the name "PLDT" is not registered with the Intellectual Property Office. However, the PLDT's application for registration was filed on 19 November 1997 with the IPO whereas defendant's first registration with NSI was on 16 February 1996 and renewed on 21 July 1998. PLDT's domain registration for pldt.com.ph was made on 15 March 1996. Defendant's defense is that its use of the mark is not commercial or for profit. It claims that the website is dedicated to free speech in the form of personal commentary, parody and satire on current events, issues, free e-mail service and an active public discussion board. Defendant claims protection under the Constitutional right to free expression. The case is expected to be ultimately decided by the Supreme Court as
it raises novel issues, including jurisdiction. Among the defenses
raised against the grant of an injunction is the lack of jurisdiction
over the web site host, which will ultimately be responsible for
removing the site from the World Wide Web in case an injunction is
issued. CONCLUSION The Philippines is years behind in terms of technology, even as it has acceded to the WTO Agreement. This Agreement has revolutionized international business and economic relations among states, and has propelled the world towards trade liberalization and economic globalization. Protectionism and isolationism belong to the past. Trade is no longer confined to a bilateral system. There is now "a new era of global economic cooperation, reflecting the widespread desire to operate in a fairer and more open multilateral trading system." Conformably
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