Philippine trademark law

R.A. 8293, otherwise known as the Intellectual Property Code, defines a trademark as “any visible sign capable of distinguishing goods”. Early jurisprudence has taken it to mean “a sign, device or mark by which the articles produced or dealt in by a particular person or organization are distinguished or distinguishable from those produced or dealt in by others, and must be affixed to goods or articles”.

Defining concepts in trademark law

International sources

On September 27, 1965, the Philippines adopted pertinent provisions of the Lisbon Act of the Paris Convention for the Protection of Industrial Property by reference as part of the Intellectual Property Code. As a multilateral treaty, the Paris Convention seeks to “protect industrial property … and at the same time repress unfair competition”. It also “provides for the protection of internationally well-known marks” and “applications claiming the priority date of an earlier-filed application in Member Countries”.

Another treaty pertinent to intellectual property rights, particularly trademarks, is the Agreement Establishing the World Trade Organization (WTO), which the Philippines ratified on December 16, 1994, and which treaty took effect only on January 1, 1995. Annexed to this is the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which aims to “reduce distortions … in international trade … promote effective and adequate protection of intellectual property rights…. [and] adhere to minimum standards of protection set by several conventions.... 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 multilateral trading system to bring about economic, cultural, and technological independence.”

Statutory bases

The first trademark law in place in the Philippines was that which Queen Maria Cristina of Spain promulgated on October 26, 1888. This law accorded trademark rights to the person who registered first.

This law was replaced on March 6, 1903 by Act No. 666 or the Trademark and Trade Name Law of the Philippine Islands, which abandoned prior registration in favor of actual use of the mark as the basis for trademark rights. The Philippines, being then a territory of the United States, incorporated into Act 666 principles upon which the U.S. trademark law was founded on.

R. A.166 repealed Act 666 in 1946, and was itself expressly repealed on January 1, 1998 when Republic Act No. 8293 was enacted in compliance with the WTO TRIPS Agreement.

Trademark infringement and unfair competition

Trademark infringement is an invasion of the property rights of another and is committed against the registered mark. The property rights pertain to another person who, by virtue of being a registered trademark or tradename owner, is entitled to the exclusive use of the mark.

On the other hand, unfair competition is a violation of another’s goodwill. Registered trademarks or names are entitled to protection against unfair competition under the laws on intellectual property. The wide range of practices which constitute unfair competition includes trademark infringement. In the Philippine setting, 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. Thus, there can be trademark infringement without unfair competition when there exists confusing similarity minus the intent to deceive the public or defraud a competitor.

Establishing trademark infringement requires three elements. The trademark owner must prove that the (1) mark is valid and legally protectable; (2) plaintiff owns the mark; and (3) defendant's use of the mark to identify goods or services results in a likelihood of confusion concerning origins of goods or services. The gravamen of trademark infringement is likelihood of confusion. Thus, malice or intent to deceive is not required.

Unfair competition, on the other hand, only has two elements as previously stated, namely 1) confusing similarity in the general appearance of the goods, and 2) intent to deceive the public and defraud a competitor. While trademark infringement is a trespass on property right, unfair competition is a violation of another’s goodwill. The test of unfair competition is whether the acts of the defendant are such as are calculated to deceive the ordinary buyer in making his purchases under the ordinary conditions which prevail in the particular trade to which the controversy relates. The scope of unfair competition is broader than that of trademark infringement. “An unfair competitor need not copy the entire mark to accomplish his fraudulent purpose. It is enough if he takes the one feature which the average buyer is likely to remember.”

Likelihood of confusion and confusing similarity

While likelihood of confusion is the gravamen of trademark infringement, confusing similarity pertains to unfair competition when coupled with malice or intent to deceive. There is infringement when a trademark is used without authorization; there is unfair competition when one’s goods are passed off as that of another’s.

There are two types of confusing similarity namely, confusion of goods and confusion of business or origin. Determination of onfusion of goods necessitates the application of either the dominancy or the holistic test. The tests involved in determining likelihood of confusion of origin are separate and distinct from the tests in determining confusion of goods.

Infringement cases do not require actual imitation; only a colorable one, likely to confuse the public. Thus, it has been ruled that “duplication or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to imitate. The question at issue … is whether the use of the marks involved would be likely to cause confusion or mistake in the mind of the public or to deceive purchasers.” It should also be noted that the law does not use the term “actual confusion”. Instead it uses “confusingly similar”, “likely to be damaged”, and “likely to cause confusion, or to cause mistake or to deceive”.

A perusal of Philippine jurisprudence will also reveal that confusing similarity takes into consideration the purchasers, the nature of the goods, and whether or not the goods are related to each other. There are two kinds of purchasers, namely, the casual purchaser and the careful purchaser. Although the Intellectual Property Code does not define who are the purchasers likely to be confused, such purchasers have been referred to as the ordinary average purchasers, and not the experts, the dealers, or other persons especially familiar with the trademark or goods involved. The Supreme Court puts it thus: The test is not found in the deception, or the possibility of deception, of the person who knows nothing about the design which has been counterfeited, and who must be indifferent between that and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who has a need to supply and is familiar with the article that he seeks to purchase.

Arguably, the purchaser likely to be deceived is not the person who knows nothing about the trademark which has been counterfeited but the person who is in some measure acquainted with an established design, despite the fact that he is too hungry to discriminate between burgers, as in the McDonald’s case. Also, the ordinary purchaser must be thought of as having, and credited with, at least a modicum of intelligence. In Co Tiong Sa, the Supreme Court aptly observed that “the ordinary customer does not scrutinize the details of the label; he forgets or overlooks these, but retains a general impression, or a central figure, or a dominant characteristic”. This rule is based on experience. This significant observation accurately points to the difficulty in abandoning either one of, as well as the necessity of keeping both, the dominancy and holistic tests.

Tracing trademark history in ascertaining confusing similarity

Confusing similarity or the likelihood of confusion stems from colorable imitation, which has been defined as “such a close or ingenious imitation as to be calculated to deceive ordinary purchasers, or such resemblance of the infringing mark to the original as to deceive an ordinary purchaser giving such attention as a purchaser usually gives, and to cause him to purchase the one supposing it to be the other”. The universal test has been said to be whether the public is likely to be deceived. As a form of unfair competition, trademark infringement is always a question of fact. The person who infringes a trademark does not normally copy out but only makes colorable changes, employing enough points of similarity to confuse the public with enough points of difference to confuse the courts. Case law has evolved two kinds of tests in determining whether or not colorable imitation exists – the dominancy test and the holistic test.

The dominancy test

This test has been applied as early as 1917, when the Court decided the case of Clarke v. Manila Candy Co. and has since been applied in over ten cases, the latest case being McDonald’s. This test focuses on the “similarity of the prevalent features of the competing trademarks which might cause confusion or deception and thus constitute infringement”. Determining dominance therefore includes dissecting the infringing trademark and subjecting it to a detailed comparison with the infringed mark, taking into consideration the point of view of the consumers.

The application of this test has usually resulted in detecting infringement, finding such marks as one rooster on one candy brand and two roosters on another, “Freedom” and “Freeman” on shirts, a hen in one food seasoning label and a rooster on the competing mark, “Pu Li To” and “Pai Li To” on tonic medicine, an illustration of a carp as compared to a bangus on the other, “Ambisco” and “Nabisco” on candy products, “Duraflex and Dynaflex” on different electric wires, and “Philippine Planters Cordial Peanuts” brand as opposed to “Planters Cocktail Peanuts”, confusingly similar with respect to their dominant words or symbols.

The Holistic Test

This test been applied since 1909 when the Court decided Song Fo & Co. v. Tiu Co Siong under the old trademark law. It mandates that the entirety of the marks in question be considered in determining confusing similarity.

The discerning eyes of the observer must focus not only on the predominant words but also on the other features appearing in both labels in order that he may draw his conclusion whether one is confusingly similar to the other.

The rationale behind studying the marks as a whole is stated in Del Monte Corporation v. Court of Appeals: [S]ide-by side comparison is not the final test of similarity. Such comparison requires a careful scrutiny to determine in what points the labels of the products differ…. The ordinary buyer does not usually make such scrutiny nor does he usually have the time to do so….

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.

It has been held that this test relies only on a visual comparison between the contending trademarks. On the other hand, the dominancy test relies not only on the visual but also on the aural (idem sonans or similarity in sound) and connotative comparisons and overall impressions between the two trademarks.

Conflicting application of the tests in jurisprudence

In 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. Furthermore, the question at issue in cases of trademark infringement is “whether the use of the marks involved would be likely to cause confusion or mistakes in the mind of the public or deceive purchasers”, regardless of whether the dominancy or the holistic test is applied. The universal test has been said to be whether the public is likely to be deceived.

In the case of Converse Rubber v. Universal Rubber Products, the Supreme Court had occasion to preempt the trademark registration applied for the trademark “Universal Converse and Device” by the respondent. The Court held that there is confusing similarity between respondent’s mark and petitioner’s “Converse Chuck Taylor” and “All Star Device” due to the same dominant word, “Converse”. In this case, the Director of Patents dismissed petitioner’s opposition to respondent’s application for registration, because of his negative finding of confusing similarity in the “partial” appropriation of petitioner’s trademark. Indeed, to allow respondent’s registration will lead not only to confusion of goods but also of origin since petitioner has already established its goodwill and reputation here despite its lack of license to engage in business locally.

In stark contrast to the Converse Rubber case is the ruling in Emerald Garment Manufacturing Corp. v. Court of Appeals. The trademarks in opposition are Emerald Garment’s “Stylistic Mr. Lee” and respondent’s “LEE”. The Director of Patents denied petitioner’s application for registration due to confusing similarity as determined by the test of dominancy. The Court of Appeals affirmed the decision of the Director of Patents not only on the ground of confusing similarity among the dominant features, but also on the ground of prior use by respondent. The Supreme Court decided the case using the holistic test, “taking into account the factual circumstances”, and thereby concluded that there is no confusing similarity between the marks. First, since the products involved are jeans which are not “your ordinary [inexpensive] household item like catsup”, buyers are “predisposed to be more cautious and discriminatory”. Second, jeans are bought by brand, and its buyers are not merely the ordinary purchaser but the “intelligent buyer”. Such buyers are presumed to less likely be confused or deceived. Also, private respondent failed to establish prior actual commercial use of its ‘LEE’ trademark in the Philippines. Prior actual use is essential for the acquisition of ownership over a trademark pursuant to R.A. 166.

It seems that in both the Converse Rubber and Emerald Garments ruling, the decisive factor is not so much confusing similarity, but prior use. Both cases involved merchandise from foreign corporations. Both shoes and jeans were not inexpensive items purchased by persons who are more scrupulous and, thus, less likely to be deceived. In the former case, the test used was the one of dominancy, and it was found that trademark infringement exists. In the latter, the test used was holistic, and resulted in the absence of infringement. However, in Converse, prior commercial use of the trademark was established whereas in Emerald, it was not.

Three years after the Converse Rubber ruling, the High Court promulgated its decision in the case of Del Monte v. Court of Appeals wherein the Del Monte and Sunshine ketchup labels were holistically considered. The Court held that Sunshine infringed on Del Monte’s label by copying it. Respondents were also enjoined permanently from recycling Del Monte’s ketchup bottles since it has the effect of passing off its ketchup product as Del Monte’s, an act of unfair of competition. What is peculiar to this case is that the appellate court applied the holistic test so meticulously and found no infringement, much less confusing similarity, whereas the High Court applied the same test and cried infringement.

The 2001 case of Societe Des Produits Nestlé S.A. v. Court of Appeals yet involved another household commodity, coffee. Admitting that no set rules can be deduced in deciding trademark cases in the Philippines, the Supreme Court chose to apply the dominancy test in determining whether or not CFC Corporation’s trademark “Flavor Master” is a colorable imitation of Nestlé’s “Master Roast” and “Master Blend”. It was. On the other hand, the appellate court, applying the holistic test, previously ruled in the negative. The rulings both considered the “undiscerningly rash consumer” and the fact that what is involved is a common household product. Anent the classification of the purchaser, the Supreme Court held that if the consumer is rash, he or she will neither have the time nor inclination to examine the discrepancies in order to exercise his choice.

In 1993, the Asia Brewery case was decided. It involved San Miguel Corporation’s “San Miguel Pale Pilsen” trademark and the newcomer’s “Beer Pale Pilsen” and “Beer na Beer” products. The appellate court held that Asia Brewery Inc. was guilty of infringement and unfair competition due to its product’s similarity as a whole in both bottle and design of San Miguel’s product. The Supreme Court nevertheless reversed and found that there is no infringement pursuant to the dominancy test. The dominant features were “San Miguel Pale Pilsen” and “Beer Pale Pilsen”. The Court held that “pale pilsen” are generic words which cannot be appropriated pursuant to R.A. 166. As to the bottles, the use of Asia Brewery of the steinie bottle similar to that of San Miguel is merely similar, not identical, and therefore, unlawful. Thus, both the appellate and the High court were in agreement as to what factors to be examined, but not as to the test to be applied and especially not as to the results thereof. What the Court of Appeals perceived as confusing similarity of the marks as a whole the Supreme Court held as merely similar as to the dominant features. Furthermore, the Asia Brewery court held that since San Miguel has virtually monopolized the beer market, those who have been drinking their beer will not be deceived by the newcomer in the market. As a caveat, the Court stated that its decision did not “diminish [the] ruling in [the] Del Monte [case] …” The Court cautioned that the ruling in Del Monte should not be made to apply to all kinds of products, particularly, in this case, to beer, because purchasers of ketchup are “housewives and house help” unlike beer which is purchased by “the beer drinker himself”.