FIRST DIVISION
MCDONALD’S
CORPORATIONAND MCGEORGE
FOOD
INDUSTRIES, INC.,
Petitioners,
G.R.
No.
143993
August 18, 2004
-versus-
L. C. BIG MAK
BURGER, INC., FRANCIS B. DY,EDNA
A. DY, RENE
B. DY, WILLIAM B. DY,JESUS AYCARDO,
ARACELI
AYCARDO, AND GRACE HUERTO,
Respondents.
D E C I S I O N
CARPIO, J.:
The Case
This is a Petition for
Review[1]
of the decision dated 26 November 1999 of the Court of Appeals[2]
finding respondent L.C. Big Mak Burger, Inc. not liable for trademark
infringement
and unfair competition and ordering petitioners to pay respondents
P1,900,000
in damages, and of its resolution dated 11 July 2000 denying
reconsideration.
The Court of Appeals’ Decision reversed the 5 September 1994 Decision[3]
of the Regional Trial Court of Makati, Branch 137, finding respondent
L.C.
Big Mak Burger, Inc. liable for trademark infringement and unfair
competition.
The Facts
Petitioner McDonald’s
Corporation (“McDonald’s”) is a corporation organized under the laws of
Delaware, United States. McDonald’s operates, by itself or
through its franchisees, a global chain of fast-food restaurants.
McDonald’s[4]
owns a family of marks[5]
including the “Big Mac” mark for its “double-decker hamburger sandwich.”[6]
McDonald’s registered this trademark with the United States Trademark
Registry
on 16 October 1979.[7]
Based on this Home Registration, McDonald’s applied for the
registration
of the same mark in the Principal Register of the then Philippine
Bureau
of Patents, Trademarks and Technology (“PBPTT”), now the Intellectual
Property
Office (“IPO”). Pending approval of its application, McDonald’s
introduced
its “Big Mac” hamburger sandwiches in the Philippine market in
September
1981. On 18 July 1985, the PBPTT allowed registration of the “Big Mac”
mark in the Principal Register based on its Home Registration in the
United
States.cralaw:red
Like its other marks,
McDonald’s displays the “Big Mac” mark in items[8]
and paraphernalia[9]
in its restaurants, and in its outdoor and indoor signages. From 1982
to
1990, McDonald’s spent P10.5 million in advertisement for “Big Mac”
hamburger
sandwiches alone.[10]
Petitioner McGeorge
Food Industries (“petitioner McGeorge”), a domestic corporation, is
McDonald’s
Philippine franchisee.[11]
Respondent L.C. Big
Mak Burger, Inc. (“respondent corporation”) is a domestic corporation
which
operates fast-food outlets and snack vans in Metro Manila and nearby
provinces.[12]
Respondent corporation’s menu includes hamburger sandwiches and other
food
items.[13]
Respondents Francis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus
Aycardo, Araceli Aycardo, and Grace Huerto (“private respondents”) are
the incorporators, stockholders and directors of respondent corporation.[14]
On 21 October 1988,
respondent corporation applied with the PBPTT for the registration of
the
“Big Mak” mark for its hamburger sandwiches. McDonald’s opposed
respondent
corporation’s application on the ground that “Big Mak” was a colorable
imitation of its registered “Big Mac” mark for the same food products.
McDonald’s also informed respondent Francis Dy (“respondent Dy”), the
chairman
of the Board of Directors of respondent corporation, of its exclusive
right
to the “Big Mac” mark and requested him to desist from using the “Big
Mac”
mark or any similar mark.cralaw:red
Having received no reply
from respondent Dy, petitioners on 6 June 1990 sued respondents in the
Regional Trial Court of Makati, Branch 137 (“RTC”), for trademark
infringement
and unfair competition. In its Order of 11 July 1990, the RTC
issued
a temporary restraining order (“TRO”) against respondents enjoining
them
from using the “Big Mak” mark in the operation of their business in the
National Capital Region.[15]
On 16 August 1990, the RTC issued a writ of preliminary injunction
replacing
the TRO.[16]
In their Answer, respondents
admitted that they have been using the name “Big Mak Burger” for their
fast-food business. Respondents claimed, however, that McDonald’s does
not have an exclusive right to the “Big Mac” mark or to any other
similar
mark. Respondents point out that the Isaiyas Group of Corporations
(“Isaiyas
Group”) registered the same mark for hamburger sandwiches with the
PBPTT
on 31 March 1979. One Rodolfo Topacio (“Topacio”) similarly registered
the same mark on 24 June 1983, prior to McDonald’s registration on 18
July
1985. Alternatively, respondents claimed that they are not liable for
trademark
infringement or for unfair competition, as the “Big Mak” mark they
sought
to register does not constitute a colorable imitation of the “Big Mac”
mark. Respondents asserted that they did not fraudulently pass off
their
hamburger sandwiches as those of petitioners’ Big Mac hamburgers.[17]
Respondents sought damages in their counterclaim.cralaw:red
In their Reply, petitioners
denied respondents’ claim that McDonald’s is not the exclusive owner of
the “Big Mac” mark. Petitioners asserted that while the Isaiyas Group
and
Topacio did register the “Big Mac” mark ahead of McDonald’s, the
Isaiyas
Group did so only in the Supplemental Register of the PBPTT and such
registration
does not provide any protection. McDonald’s disclosed that it had
acquired Topacio’s rights to his registration in a Deed of Assignment
dated
18 May 1981.[18]
The Trial
Court’s
Ruling
On 5 September 1994,
the RTC rendered judgment (“RTC Decision”) finding respondent
corporation
liable for trademark infringement and unfair competition. However, the
RTC dismissed the complaint against private respondents and the
counterclaim
against petitioners for lack of merit and insufficiency of evidence.
The
RTC held:
Undeniably, the mark
“B[ig] M[ac]” is a registered trademark for plaintiff McDonald’s, and
as
such, it is entitled [to] protection against infringement.cralaw:red
x x
x
There exist some distinctions
between the names “B[ig] M[ac]” and “B[ig] M[ak]” as appearing in
the respective signages, wrappers and containers of the food products
of
the parties. But infringement goes beyond the physical
features
of the questioned name and the original name. There are
still
other factors to be considered.cralaw:red
x x
xchanrobles virtual law library
Significantly, the contending
parties are both in the business of fast-food chains and
restaurants.
An average person who is hungry and wants to eat a hamburger
sandwich
may not be discriminating enough to look for a McDonald’s
restaurant
and buy a “B[ig] M[ac]” hamburger. Once he sees a stall
selling
hamburger sandwich, in all likelihood, he will dip into his pocket and
order a “B[ig] M[ak]” hamburger sandwich. Plaintiff
McDonald’s
fast-food chain has attained wide popularity and acceptance by the
consuming
public so much so that its air-conditioned food outlets and restaurants
will perhaps not be mistaken by many to be the same as defendant
corporation’s
mobile snack vans located along busy streets or highways.
But
the thing is that what is being sold by both contending parties is a
food
item – a hamburger sandwich which is for immediate consumption, so that
a buyer may easily be confused or deceived into thinking that the
“B[ig] M[ak]” hamburger sandwich he bought is a food-product of
plaintiff
McDonald’s, or a subsidiary or allied outlet thereof. Surely,
defendant
corporation has its own secret ingredients to make its hamburger
sandwiches as palatable and as tasty as the other brands in the market,
considering the keen competition among mushrooming hamburger stands and
multinational fast-food chains and restaurants. Hence, the
trademark
“B[ig] M[ac]” has been infringed by defendant corporation when it
used the name “B[ig] M[ak]” in its signages, wrappers, and containers
in
connection with its food business. x x x
Did the same acts of
defendants in using the name “B[ig] M[ak]” as a trademark or tradename
in their signages, or in causing the name “B[ig] M[ak]” to be
printed
on the wrappers and containers of their food products also
constitute
an act of unfair competition under Section 29 of the Trademark Law?
The answer is in the
affirmative. x x x
The x x
x provision of the law concerning unfair competition is broader and
more
inclusive than the law concerning the infringement of trademark, which
is of more limited range, but within its narrower range recognizes a
more
exclusive right derived by the adoption and registration of the
trademark
by the person whose goods or services are first associated therewith.
x
x x Notwithstanding the distinction between an action
for trademark infringement and an action for unfair competition,
however,
the law extends substantially the same relief to the injured
party
for both cases. (See Sections 23 and 29 of Republic Act No. 166)
Any conduct may be said
to constitute unfair competition if the effect is to pass off on
the public the goods of one man as the goods of another.
The
choice of “B[ig] M[ak]” as tradename by defendant corporation is not
merely
for sentimental reasons but was clearly made to take advantage of
the reputation, popularity and the established goodwill of plaintiff
McDonald’s.
For, as stated in Section 29, a person is guilty of unfair competition
who in selling his goods shall give them the general
appearance,
of goods of another manufacturer or dealer, either as to the
goods
themselves or in the wrapping of the packages in which they are
contained,
or the devices or words thereon, or in any other feature of their
appearance,
which would likely influence purchasers to believe that the goods
offered
are those of a manufacturer or dealer other than the actual
manufacturer
or dealer. Thus, plaintiffs have established their valid
cause
of action against the defendants for trademark infringement and unfair
competition and for damages.[19]chanrobles virtual law library
The dispositive portion
of the RTC Decision provides:
WHEREFORE,
judgment is rendered in favor of plaintiffs McDonald’s Corporation and
McGeorge Food Industries, Inc. and against defendant L.C. Big Mak
Burger,
Inc., as follows:
1. The writ of
preliminary
injunction issued in this case on [16 August 1990] is made permanent;
2. Defendant L.C.
Big
Mak Burger, Inc. is ordered to pay plaintiffs actual damages in the
amount
of P400,000.00, exemplary damages in the amount of P100,000.00, and
attorney’s
fees and expenses of litigation in the amount of P100,000.00;chanrobles virtual law library
3. The complaint
against
defendants Francis B. Dy, Edna A. Dy, Rene B. Dy, Wiliam B. Dy, Jesus
Aycardo,
Araceli Aycardo and Grace Huerto, as well as all counter-claims, are
dismissed
for lack of merit as well as for insufficiency of evidence.[20]
Respondents appealed to
the Court of Appeals. The Ruling of the
Court of Appeals
On 26 November 1999,
the Court of Appeals rendered judgment (“Court of Appeals’ Decision”)
reversing
the RTC Decision and ordering McDonald’s to pay respondents P1,600,000
as actual and compensatory damages and P300,000 as moral damages. The
Court
of Appeals held:
Plaintiffs-appellees
in the instant case would like to impress on this Court that the use of
defendants-appellants of its corporate name – the whole “L.C. B[ig]
M[ak]
B[urger], I[nc].” which appears on their food packages, signages and
advertisements
is an infringement of their trademark “B[ig] M[ac]” which they use to
identify
[their] double decker sandwich, sold in a Styrofoam box packaging
material
with the McDonald’s logo of umbrella “M” stamped thereon, together with
the printed mark in red bl[o]ck capital letters, the words being
separated
by a single space. Specifically, plaintiffs-appellees argue that
defendants-appellants’ use of their corporate name is a colorable
imitation
of their trademark “Big Mac”.cralaw:red
x x
xchanrobles virtual law library
To Our mind, however,
this Court is fully convinced that no colorable imitation exists.
As the definition dictates, it is not sufficient that a similarity
exists
in both names, but that more importantly, the over-all presentation, or
in their essential, substantive and distinctive parts is such as would
likely MISLEAD or CONFUSE persons in the ordinary course of purchasing
the genuine article. A careful comparison of the way the
trademark
“B[ig] M[ac]” is being used by plaintiffs-appellees and corporate name
L.C. Big Mak Burger, Inc. by defendants-appellants, would readily
reveal that no confusion could take place, or that the ordinary
purchasers
would be misled by it. As pointed out by defendants-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 defendants-appellants corporation is using
is not a trademark for its food product but a business or corporate
name.
They use the business name “L.C. Big Mak Burger, Inc.” in their
restaurant
business which serves diversified food items such as siopao, noodles,
pizza,
and sandwiches such as hotdog, ham, fish burger and hamburger.
Secondly,
defendants-appellants’ corporate 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 letter “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 lower garment. Finally, the defendants-appellants’ food packages
are
made of plastic material.cralaw:red
x x
x
x x
x It is readily apparent to the naked eye that there appears a vast
difference
in the appearance of the product and the manner that 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 “B[ig] M[ac]” is a double decker
sandwich
(depicted in the tray mat containing photographs of the various food
products
xxx sold in a Styrofoam box with the “McDonald’s” logo and trademark in
red, bl[o]ck capital letters printed thereon xxx 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
“McDonald’s” restaurant usually located in a nearby commercial center,
advertised and identified by its logo - the umbrella “M”, and its
mascot – “Ronald McDonald”. A typical McDonald’s restaurant
boasts of a playground for kids, a second floor to accommodate
additional
customers, a drive-thru to allow customers with cars to make orders
without
alighting from their vehicles, the interiors of the building are
well-lighted,
distinctly decorated and painted with pastel colors xxx. In buying a
“B[ig]
M[ac]”, it is necessary to specify it by its trademark. Thus, a
customer
needs to look for a “McDonald’s” 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
x
x xchanrobles virtual law library
Anent the allegation
that defendants-appellants are guilty of unfair competition, We
likewise
find the same untenable.cralaw:red
Unfair competition is
defined as “the employment of deception or any other means contrary to
good faith by which a person shall pass off the goods manufactured by
him
or in which he deals, or his business, or service, for those of another
who has already established good will for his similar good, business or
services, or any acts calculated to produce the same result” (Sec. 29,
Rep. Act No. 166, as amended).cralaw:red
To constitute unfair
competition therefore it must necessarily follow that there was malice
and that the entity concerned was in bad faith.cralaw:red
In the case at bar,
We find no sufficient evidence adduced by plaintiffs-appellees that
defendants-appellants
deliberately tried to pass off the goods manufactured by them for those
of plaintiffs-appellees. The mere suspected similarity in the sound of
the defendants-appellants’ corporate name with the
plaintiffs-appellees’
trademark is not sufficient evidence to conclude unfair
competition.
Defendants-appellants explained that the name “M[ak]” in their
corporate
name was derived from both the first names of the mother and father of
defendant Francis Dy, whose names are Maxima and Kimsoy. With
this
explanation, it is up to the plaintiffs-appellees to prove bad faith on
the part of defendants-appellants. It is a settled rule that the
law always presumes good faith such that any person who seeks to be
awarded
damages due to acts of another has the burden of proving that the
latter
acted in bad faith or with ill motive.[21]chanrobles virtual law library
Petitioners sought reconsideration
of the Court of Appeals’ Decision but the appellate court denied their
motion in its Resolution of 11 July 2000.cralaw:red
Hence, this petition
for review.cralaw:red
Petitioners raise the
following grounds for their petition:
I. THE COURT OF
APPEALS
ERRED IN FINDING THAT RESPONDENTS’ CORPORATE NAME “L.C. BIG MAK BURGER,
INC.” IS NOT A COLORABLE IMITATION OF THE MCDONALD’S TRADEMARK “BIG
MAC”,
SUCH COLORABLE IMITATION BEING AN ELEMENT OF TRADEMARK INFRINGEMENT.
A.
Respondents use the words “Big Mak” as trademark for their products and
not merely as their business or corporate name.
B.
As a trademark, respondents’ “Big Mak” is undeniably and unquestionably
similar to petitioners’ “Big Mac” trademark based on the dominancy test
and the idem sonans test resulting inexorably in confusion on the part
of the consuming public.
II. THE COURT
OF APPEALS ERRED IN REFUSING TO CONSIDER THE INHERENT SIMILARITY
BETWEEN
THE MARK “BIG MAK” AND THE WORD MARK “BIG MAC” AS AN INDICATION OF
RESPONDENTS’
INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES OF ESTABLISHING UNFAIR
COMPETITION.[22]
Petitioners pray that
we set aside the Court of Appeals’ Decision and reinstate the RTC
Decision.
In their Comment to
the petition, respondents question the propriety of this petition as it
allegedly raises only questions of fact. On the merits, respondents
contend
that the Court of Appeals committed no reversible error in finding them
not liable for trademark infringement and unfair competition and in
ordering
petitioners to pay damages.chanrobles virtual law library
The Issues
The issues are:
1.
Procedurally,
whether the questions raised in this petition are proper for a petition
for review under Rule 45.
2.
On the merits, (a) whether respondents used the words “Big Mak” not
only
as part of the corporate name “L.C. Big Mak Burger, Inc.” but also as a
trademark for their hamburger products, and (b) whether respondent
corporation
is liable for trademark infringement and unfair competition.[23] The Court’s
Ruling
The petition has merit.cralaw:red
On Whether the
Questions Raised in the Petition are Proper for a Petition for Review
A party intending to
appeal from a judgment of the Court of Appeals may file with this Court
a petition for review under Section 1 of Rule 45 (“Section 1”)[24]
raising only questions of law. A question of law exists when the doubt
or difference arises on what the law is on a certain state of facts.
There
is a question of fact when the doubt or difference arises on the truth
or falsity of the alleged facts.[25]chanrobles virtual law library
Here, petitioners raise
questions of fact and law in assailing the Court of Appeals’ findings
on
respondent corporation’s non-liability for trademark infringement and
unfair
competition. Ordinarily, the Court can deny due course to such a
petition.
In view, however, of the contradictory findings of fact of the RTC and
Court of Appeals, the Court opts to accept the petition, this being one
of the recognized exceptions to Section 1.[26]
We took a similar course of action in Asia Brewery, Inc. v. Court of
Appeals[27]
which also involved a suit for trademark infringement and unfair
competition
in which the trial court and the Court of Appeals arrived at
conflicting
findings.cralaw:red
On the Manner
Respondents Used “Big Mak” in their Business
Petitioners contend
that the Court of Appeals erred in ruling that the corporate name “L.C.
Big Mak Burger, Inc.” appears in the packaging for respondents’
hamburger
products and not the words “Big Mak” only.cralaw:red
The contention has merit.cralaw:red
The evidence presented
during the hearings on petitioners’ motion for the issuance of a
writ of preliminary injunction shows that the plastic wrappings and
plastic
bags used by respondents for their hamburger sandwiches bore the words
“Big Mak.” The other descriptive words “burger” and “100% pure
beef”
were set in smaller type, along with the locations of branches.[28]
Respondents’ cash invoices simply refer to their hamburger sandwiches
as
“Big Mak.”[29]
It is respondents’ snack vans that carry the words “L.C. Big Mak
Burger, Inc.”[30]chanrobles virtual law library
It was only during the
trial that respondents presented in evidence the plastic wrappers and
bags
for their hamburger sandwiches relied on by the Court of Appeals.[31]
Respondents’ plastic wrappers and bags were identical with those
petitioners
presented during the hearings for the injunctive writ except that the
letters
“L.C.” and the words “Burger, Inc.” in respondents’ evidence were added
above and below the words “Big Mak,” respectively. Since petitioners’
complaint
was based on facts existing before and during the hearings on the
injunctive
writ, the facts established during those hearings are the proper
factual
bases for the disposition of the issues raised in this petition.cralaw:red
On the Issue of
Trademark Infringement
Section 22 (“Section
22) of Republic Act No. 166, as amended (“RA 166”), the law applicable
to this case,[32]
defines trademark infringement as follows:
Infringement,
what constitutes. — Any person who [1] shall use, without the consent
of
the registrant, any reproduction, counterfeit, copy or colorable
imitation
of any registered mark or trade-name in connection with the sale,
offering
for sale, or advertising of any goods, business or services on or in
connection
with which such use is likely to cause confusion or mistake or to
deceive
purchasers or others as to the source or origin of such goods or
services,
or identity of such business; or [2] reproduce, counterfeit, copy, or
colorably
imitate any such mark or trade-name and apply such reproduction,
counterfeit,
copy, or colorable imitation to labels, signs, prints, packages,
wrappers,
receptacles or advertisements intended to be used upon or in connection
with such goods, business or services, shall be liable to a civil
action
by the registrant for any or all of the remedies herein provided.[33]chanrobles virtual law library
Petitioners base their
cause of action under the first part of Section 22, i.e. respondents
allegedly
used, without petitioners’ consent, a colorable imitation of the “Big
Mac”
mark in advertising and selling respondents’ hamburger sandwiches. This
likely caused confusion in the mind of the purchasing public on the
source
of the hamburgers or the identity of the business.
To establish trademark
infringement, the following elements must be shown: (1) the validity of
plaintiff’s mark; (2) the plaintiff’s ownership of the mark; and (3)
the
use of the mark or its colorable imitation by the alleged infringer
results
in “likelihood of confusion.”[34]
Of these, it is the element of likelihood of confusion that is the
gravamen
of trademark infringement.[35]
On the Validity
of the “Big Mac”Mark and McDonald’s Ownership of such Mark
A mark is valid
if it is “distinctive” and thus not barred from registration under
Section
4[36]
of RA 166 (“Section 4”). However, once registered, not only the mark’s
validity but also the registrant’s ownership of the mark is prima facie
presumed.[37]
Respondents contend
that of the two words in the “Big Mac” mark, it is only the word “Mac”
that is valid because the word “Big” is generic and descriptive
(proscribed
under Section 4[e]), and thus “incapable of exclusive appropriation.”[38]
The contention has no
merit. The “Big Mac” mark, which should be treated in its entirety and
not dissected word for word,[39]
is neither generic nor descriptive. Generic marks are commonly used as
the name or description of a kind of goods,[40]
such as “Lite” for beer[41]
or “Chocolate Fudge” for chocolate soda drink.[42]
Descriptive marks, on the other hand, convey the characteristics,
functions,
qualities or ingredients of a product to one who has never seen it or
does
not know it exists,[43] such as “Arthriticare” for arthritis medication.[44]
On the contrary, “Big Mac” falls under the class of fanciful or
arbitrary
marks as it bears no logical relation to the actual characteristics of
the product it represents.[45]
As such, it is highly distinctive and thus valid. Significantly, the
trademark
“Little Debbie” for snack cakes was found arbitrary or fanciful.[46]chanrobles virtual law library
The Court also finds
that petitioners have duly established McDonald’s exclusive ownership
of
the “Big Mac” mark. Although Topacio and the Isaiyas Group
registered
the “Big Mac” mark ahead of McDonald’s, Topacio, as petitioners
disclosed,
had already assigned his rights to McDonald’s. The Isaiyas Group, on
the
other hand, registered its trademark only in the Supplemental Register.
A mark which is not registered in the Principal Register, and thus not
distinctive, has no real protection.[47]
Indeed, we have held that registration in the Supplemental Register is
not even a prima facie evidence of the validity of the registrant’s
exclusive
right to use the mark on the goods specified in the certificate.[48]
On Types of Confusion
Section 22 covers two
types of confusion arising from the use of similar or colorable
imitation
marks, namely, confusion of goods (product confusion) and confusion of
business (source or origin confusion). In Sterling Products
International,
Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et al.,[49]
the Court distinguished these two types of confusion, thus:
Rudolf
Callman
notes two types of confusion. The first is the confusion of goods “in
which
event the ordinarily prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other.” xxx The other
is the confusion of business: “Here though the goods of the parties are
different, the defendant’s product is such as might reasonably be
assumed
to originate with the plaintiff, and the public would then be deceived
either into that belief or into the belief that there is some
connection
between the plaintiff and defendant which, in fact, does not exist.”
Under Act No. 666,[50]
the first trademark law, infringement was limited to confusion of goods
only, when the infringing mark is used on “goods of a similar kind.”[51]
Thus, no relief was afforded to the party whose registered mark or its
colorable imitation is used on different although related goods. To
remedy
this situation, Congress enacted RA 166 on 20 June 1947. In defining
trademark
infringement, Section 22 of RA 166 deleted the requirement in question
and expanded its scope to include such use of the mark or its colorable
imitation that is likely to result in
confusion
on “the source or origin of such goods or services, or identity
of
such business.”[52]
Thus, while there is confusion of goods when the products are
competing,
confusion of business exists when the products are non-competing but
related
enough to produce confusion of affiliation.[53]chanrobles virtual law library
On Whether Confusion
of Goods and Confusion of Business are Applicable
Petitioners claim that
respondents’ use of the “Big Mak” mark on respondents’ hamburgers
results
in confusion of goods, particularly with respect to petitioners’
hamburgers
labeled “Big Mac.” Thus, petitioners alleged in their complaint:
1.15.
Defendants have unduly prejudiced and clearly infringed upon the
property
rights of plaintiffs in the McDonald’s Marks, particularly the mark
“B[ig]
M[ac]”. Defendants’ unauthorized acts are likely, and calculated,
to confuse, mislead or deceive the public into believing that the
products
and services offered by defendant Big Mak Burger, and the business it
is
engaged in, are approved and sponsored by, or affiliated with,
plaintiffs.[54]
(Emphasis supplied.)
Since respondents used
the “Big Mak” mark on the same goods, i.e. hamburger sandwiches, that
petitioners’
“Big Mac” mark is used, trademark infringement through confusion of
goods
is a proper issue in this case.
Petitioners also claim
that respondents’ use of the “Big Mak” mark in the sale of hamburgers,
the same business that petitioners are engaged in, results in confusion
of business. Petitioners alleged in their complaint:
1.10.
For some period of time, and without the consent of plaintiff
McDonald’s
nor its licensee/franchisee, plaintiff McGeorge, and in clear
violation
of plaintiffs’ exclusive right to use and/or appropriate the McDonald’s
marks, defendant Big Mak Burger acting through individual defendants,
has
been operating “Big Mak Burger”, a fast food restaurant business
dealing
in the sale of hamburger and cheeseburger sandwiches, french fries and
other food products, and has caused to be printed on the wrapper
of
defendant’s food products and incorporated in its signages the name
“Big
Mak Burger”, which is confusingly similar to and/or is a colorable
imitation
of the plaintiff McDonald’s mark “B[ig] M[ac]”, xxx. Defendant
Big
Mak Burger has thus unjustly created the impression that its business
is
approved and sponsored by, or affiliated with, plaintiffs.x
x xchanrobles virtual law library
2.2.
As a consequence of the acts committed by defendants, which unduly
prejudice
and infringe upon the property rights of plaintiffs McDonald’s and
McGeorge
as the real owner and rightful proprietor, and the licensee/franchisee,
respectively, of the McDonald’s marks, and which are likely to have
caused
confusion or deceived the public as to the true source,
sponsorship
or affiliation of defendants’ food products and restaurant business,
plaintiffs
have suffered and continue to suffer actual damages in the form
of
injury to their business reputation and goodwill, and of the
dilution
of the distinctive quality of the McDonald’s marks, in particular, the
mark “B[ig] M[ac]”.[55]
(Emphasis supplied.)
Respondents admit that
their business includes selling hamburger sandwiches, the same food
product
that petitioners sell using the “Big Mac” mark. Thus, trademark
infringement
through confusion of business is also a proper issue in this case.
Respondents assert that
their “Big Mak” hamburgers cater mainly to the low-income group while
petitioners’
“Big Mac” hamburgers cater to the middle and upper income
groups.
Even if this is true, the likelihood of confusion of business remains,
since the low-income group might be led to believe that the “Big Mak”
hamburgers
are the low-end hamburgers marketed by petitioners. After all,
petitioners
have the exclusive right to use the “Big Mac” mark.
On
the other hand, respondents would benefit by associating their low-end
hamburgers, through the use of the “Big Mak” mark, with petitioners’
high-end
“Big Mac” hamburgers, leading to likelihood of confusion in the
identity
of business.cralaw:red
Respondents further
claim that petitioners use the “Big Mac” mark only on petitioners’
double-decker
hamburgers, while respondents use the “Big Mak” mark on hamburgers and
other products like siopao, noodles and pizza. Respondents also point
out
that petitioners sell their Big Mac double-deckers in a styrofoam box
with
the “McDonald’s” logo and trademark in red, block letters at a price
more
expensive than the hamburgers of respondents. In contrast,
respondents
sell their Big Mak hamburgers in plastic wrappers and plastic bags.
Respondents
further point out that petitioners’ restaurants are air-conditioned
buildings
with drive-thru service, compared to respondents’ mobile vans.chanrobles virtual law library
These and other factors
respondents cite cannot negate the undisputed fact that respondents use
their “Big Mak” mark on hamburgers, the same food product that
petitioners’
sell with the use of their registered mark “Big Mac.”
Whether a hamburger is single, double or triple-decker, and whether
wrapped
in plastic or styrofoam, it remains the same hamburger food
product.
Even respondents’ use of the “Big Mak” mark on non-hamburger food
products
cannot excuse their infringement of petitioners’ registered mark,
otherwise
registered marks will lose their protection under the law.cralaw:red
The registered trademark
owner may use his mark on the same or similar products, in different
segments
of the market, and at different price levels depending on variations of
the products for specific segments of the market. The Court has
recognized
that the registered trademark owner enjoys protection in product and
market
areas that are the normal potential expansion of his business.
Thus,
the Court has declared:
Modern law
recognizes that the protection to which the owner of a trademark is
entitled
is not limited to guarding his goods or business from actual market
competition
with identical or similar products of the parties, but extends to all
cases
in which the use by a junior appropriator of a trade-mark or trade-name
is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining party has
extended his business into the field (see 148 ALR 56 et seq; 53 Am Jur.
576) or is in any way connected with the activities of the infringer;
or
when it forestalls the normal potential expansion of his business (v.
148
ALR, 77, 84; 52 Am. Jur. 576, 577).[56]
(Emphasis supplied.) On Whether
Respondents’
Use of the “Big Mak” Mark Results in Likelihood of Confusion
In determining likelihood
of confusion, jurisprudence has developed two tests, the dominancy test
and the holistic test.[57]
The dominancy test focuses on the similarity of the prevalent features
of the competing trademarks that might cause confusion. In
contrast,
the holistic test requires the court to consider the entirety of the
marks
as applied to the products, including the labels and packaging, in
determining
confusing similarity.cralaw:red
The Court of Appeals,
in finding that there is no likelihood of confusion that could arise in
the use of respondents’ “Big Mak” mark on hamburgers, relied on the
holistic
test. Thus, the Court of Appeals ruled that “it is not sufficient that
a similarity exists in both name(s), but that more importantly, the
overall
presentation, or in their essential, substantive and distinctive parts
is such as would likely MISLEAD or CONFUSE persons in the ordinary
course
of purchasing the genuine article.” The holistic test considers
the
two marks in their entirety, as they appear on the goods with their
labels
and packaging. It is not enough to consider their words and compare the
spelling and pronunciation of the words.[58]chanrobles virtual law library
Respondents now vigorously
argue that the Court of Appeals’ application of the holistic test to
this
case is correct and in accord with prevailing jurisprudence.cralaw:red
This Court, however,
has relied on the dominancy test rather than the holistic test. The
dominancy
test considers the dominant features in the competing marks in
determining
whether they are confusingly similar. Under the dominancy
test,
courts give greater weight to the similarity of the appearance of the
product
arising from the adoption of the dominant features of the registered
mark,
disregarding minor differences.[59]
Courts will consider more the aural and visual impressions created by
the
marks in the public mind, giving little weight to factors like prices,
quality, sales outlets and market segments.cralaw:red
Thus, in the 1954 case
of Co Tiong Sa v. Director of Patents,[60]
the Court ruled:
x x
x It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in
size,
form and color, while relevant, is not conclusive. If the competing
trademark
contains the main or essential 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. (G. Heilman Brewing Co. vs.
Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co.
vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of
infringement
of trademarks 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.
(Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588;
x
x x) (Emphasis supplied.)chanrobles virtual law library
The Court reiterated
the dominancy test in Lim Hoa v. Director of Patents,[61]
Phil. Nut Industry, Inc. v. Standard Brands Inc.,[62]
Converse Rubber Corporation v. Universal Rubber Products, Inc.,[63]
and Asia Brewery, Inc. v. Court of Appeals.[64]
In the 2001 case of Societe Des Produits Nestlé, S.A. v. Court
of
Appeals,[65]
the Court explicitly rejected the holistic test in this wise:
The
totality
or holistic test is contrary to the elementary postulate of the law on
trademarks and unfair competition that confusing similarity is to be
determined
on the basis of visual, aural, connotative comparisons and overall
impressions
engendered by the marks in controversy as they are encountered in the
realities
of the marketplace. (Emphasis supplied.)
The test of dominancy
is
now explicitly incorporated into law in Section 155.1 of the
Intellectual
Property Code which defines infringement as the “colorable imitation of
a registered mark xxx or a dominant feature thereof.”
Applying the dominancy
test, the Court finds that respondents’ use of the “Big Mak” mark
results
in likelihood of confusion. First, “Big Mak” sounds exactly
the same as “Big Mac.” Second, the first word in “Big Mak” is
exactly
the same as the first word in “Big Mac.” Third, the first two
letters
in “Mak” are the same as the first two letters in “Mac.” Fourth,
the last letter in “Mak” while a “k” sounds the same as “c” when the
word
“Mak” is pronounced. Fifth, in Filipino, the letter “k” replaces
“c” in spelling, thus “Caloocan” is spelled “Kalookan.”chanrobles virtual law library
In short, aurally the
two marks are the same, with the first word of both marks phonetically
the same, and the second word of both marks also phonetically the
same.
Visually, the two marks have both two words and six letters, with the
first
word of both marks having the same letters and the second word having
the
same first two letters. In spelling, considering the Filipino
language,
even the last letters of both marks are the same.cralaw:red
Clearly, respondents
have adopted in “Big Mak” not only the dominant but also almost all the
features of “Big Mac.” Applied to the same food product of
hamburgers,
the two marks will likely result in confusion in the public mind.cralaw:red
The Court has taken
into account the aural effects of the words and letters contained in
the
marks in determining the issue of confusing similarity. Thus, in
Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.,[66]
the Court held:
The
following
random list of confusingly similar sounds in the matter of trademarks,
culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1,
will
reinforce our view that “SALONPAS” and “LIONPAS” are confusingly
similar
in sound: “Gold Dust” and “Gold Drop”; “Jantzen” and “Jass-Sea”;
“Silver
Flash” and “Supper Flash”; “Cascarete” and “Celborite”; “Celluloid” and
“Cellonite”; “Chartreuse” and “Charseurs”; “Cutex” and “Cuticlean”;
“Hebe”
and “Meje”; “Kotex” and “Femetex”; “Zuso” and “Hoo Hoo”. Leon Amdur, in
his book “Trade-Mark Law and Practice”, pp. 419-421, cities, as coming
within the purview of the idem sonans rule, “Yusea” and “U-C-A”,
“Steinway
Pianos” and “Steinberg Pianos”, and “Seven-Up” and “Lemon-Up”. In Co
Tiong
vs. Director of Patents, this Court unequivocally said that “Celdura”
and
“Cordura” are confusingly similar in sound; this Court held in Sapolin
Co. vs. Balmaceda, 67 Phil. 795 that the name “Lusolin” is an
infringement
of the trademark “Sapolin”, as the sound of the two names is almost the
same. (Emphasis supplied.)
Certainly, “Big Mac”
and
“Big Mak” for hamburgers create even greater confusion, not only
aurally
but also visually.
Indeed, a person cannot
distinguish “Big Mac” from “Big Mak” by their sound. When one
hears
a “Big Mac” or “Big Mak” hamburger advertisement over the radio, one
would
not know whether the “Mac” or “Mak” ends with a “c” or a “k.”chanrobles virtual law library
Petitioners’ aggressive
promotion of the “Big Mac” mark, as borne by their advertisement
expenses,
has built goodwill and reputation for such mark making it one of the
easily
recognizable marks in the market today. This increases the likelihood
that
consumers will mistakenly associate petitioners’ hamburgers and
business
with those of respondents’.cralaw:red
Respondents’ inability
to explain sufficiently how and why they came to choose “Big Mak” for
their
hamburger sandwiches indicates their intent to imitate petitioners’
“Big
Mac” mark. Contrary to the Court of Appeals’ finding, respondents’
claim
that their “Big Mak” mark was inspired by the first names of respondent
Dy’s mother (Maxima) and father (Kimsoy) is not credible. As
petitioners
well noted:
Respondents, particularly
Respondent Mr. Francis Dy, could have arrived at a more creative choice
for a corporate name by using the names of his parents, especially
since
he was allegedly driven by sentimental reasons. For one, he could
have put his father’s name ahead of his mother’s, as is usually done in
this patriarchal society, and derived letters from said names in that
order.
Or, he could have taken an equal number of letters (i.e., two) from
each
name, as is the more usual thing done. Surely, the more plausible
reason
behind Respondents’ choice of the word “M[ak]”, especially when taken
in
conjunction with the word “B[ig]”, was their intent to take advantage
of
Petitioners’ xxx “B[ig] M[ac]” trademark, with their alleged
sentiment-focused
“explanation” merely thought of as a convenient, albeit unavailing,
excuse
or defense for such an unfair choice of name.[67]
Absent proof that respondents’
adoption of the “Big Mak” mark was due to honest mistake or was
fortuitous,[68]
the inescapable conclusion is that respondents adopted the “Big Mak”
mark
to “ride on the coattails” of the more established “Big Mac” mark.[69]
This saves respondents much of the expense in advertising to create
market
recognition of their mark and hamburgers.[70]
Thus, we hold that confusion
is likely to result in the public mind. We sustain petitioners’ claim
of
trademark infringement.chanrobles virtual law library
On the Lack of
Proof of Actual Confusion
Petitioners’ failure
to present proof of actual confusion does not negate their claim of
trademark
infringement. As noted in American Wire & Cable Co. v. Director of
Patents,[71]Section 22 requires the less stringent standard of “likelihood of
confusion”
only. While proof of actual confusion is the best evidence of
infringement,
its absence is inconsequential.[72]
On the Issue of
Unfair Competition
Section 29 (“Section
29”)[73]
of RA 166 defines unfair competition, thus:
x x
x
Any person who will
employ deception or any other means contrary to good faith by which he
shall pass off the goods manufactured by him or in which he deals, or
his
business, or services for those of the one having established such
goodwill,
or who shall commit any acts calculated to produce said result, shall
be
guilty of unfair competition, and shall be subject to an action
therefor.cralaw:red
In particular, and without
in any way limiting the scope of unfair competition, the following
shall
be deemed guilty of unfair competition:
(a) Any person,
who in selling his goods shall give them the general appearance of
goods
of another manufacturer or dealer, either as to the goods themselves or
in the wrapping of the packages in which they are contained, or the
devices
or words thereon, or in any feature of their appearance, which
would
be likely to influence purchasers to believe that the goods offered are
those of a manufacturer or dealer, other than the actual manufacturer
or
dealer, or who otherwise clothes the goods with such appearance as
shall
deceive the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor engaged in
selling
such goods with a like purpose;chanrobles virtual law library
(b) Any person who by
any artifice, or device, or who employs any other means calculated to
induce
the false belief that such person is offering the services of another
who
has identified such services in the mind of the public; or
(c) Any person who shall
make any false statement in the course of trade or who shall commit any
other act contrary to good faith of a nature calculated to discredit
the
goods, business or services of another. (Emphasis supplied.)
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.[74]
The confusing similarity may or may not result from similarity in the
marks,
but may result from other external factors in the packaging or
presentation
of the goods. The intent to deceive and defraud may be inferred
from
the similarity of the appearance of the goods as offered for sale to
the
public.[75]
Actual fraudulent intent need not be shown.[76]
Unfair competition is
broader than trademark infringement and includes passing off goods with
or without trademark infringement. Trademark infringement is a
form
of unfair competition.[77]
Trademark infringement constitutes unfair competition when there is not
merely likelihood of confusion, but also actual or probable deception
on
the public because of the general appearance of the goods. There can be
trademark infringement without unfair competition as when the infringer
discloses on the labels containing the mark that he manufactures the
goods,
thus preventing the public from being deceived that the goods originate
from the trademark owner.[78]
To support their claim
of unfair competition, petitioners allege that respondents fraudulently
passed off their hamburgers as “Big Mac” hamburgers. Petitioners add
that
respondents’ fraudulent intent can be inferred from the similarity of
the
marks in question.[79]chanrobles virtual law library
Passing off (or palming
off) takes place where the defendant, by imitative devices on the
general
appearance of the goods, misleads prospective purchasers into buying
his
merchandise under the impression that they are buying that of his
competitors.[80]
Thus, the defendant gives his goods the general appearance of the goods
of his competitor with the intention of deceiving the public that the
goods
are those of his competitor.cralaw:red
The RTC described the
respective marks and the goods of petitioners and respondents in this
wise:
The mark
“B[ig]
M[ac]” is used by plaintiff McDonald’s to identify its double decker
hamburger
sandwich. The packaging material is a styrofoam box with the
McDonald’s
logo and trademark in red with block capital letters printed on
it.
All letters of the “B[ig] M[ac]” mark are also in red and block capital
letters. On the other hand, defendants’ “B[ig] M[ak]” script
print
is in orange with only the letter “B” and “M” being capitalized and the
packaging material is plastic wrapper. xxxx Further, plaintiffs’ logo
and
mascot are the umbrella “M” and “Ronald McDonald’s”, respectively,
compared
to the mascot of defendant Corporation which is a chubby boy called
“Macky”
displayed or printed between the words “Big” and “Mak.”[81]
(Emphasis supplied.)
Respondents point to
these
dissimilarities as proof that they did not give their hamburgers the
general
appearance of petitioners’ “Big Mac” hamburgers.
The dissimilarities
in the packaging are minor compared to the stark similarities in the
words
that give respondents’ “Big Mak” hamburgers the general appearance of
petitioners’
“Big Mac” hamburgers. Section 29(a) expressly provides that
the similarity in the general appearance of the goods may be in the
“devices
or words” used on the wrappings. Respondents have applied
on
their plastic wrappers and bags almost the same words that petitioners
use on their styrofoam box. What attracts the attention of the buying
public
are the words “Big Mak” which are almost the same, aurally and
visually,
as the words “Big Mac.” The dissimilarities in the material
and other devices are insignificant compared to the glaring similarity
in the words used in the wrappings.chanrobles virtual law library
Section 29(a) also provides
that the defendant gives “his goods the general appearance of goods of
another manufacturer.” Respondents’ goods are hamburgers
which
are also the goods of petitioners. If respondents sold egg
sandwiches only instead of hamburger sandwiches, their use of the “Big
Mak” mark would not give their goods the general appearance of
petitioners’
“Big Mac” hamburgers. In such case, there is only trademark
infringement
but no unfair competition. However, since respondents chose
to apply the “Big Mak” mark on hamburgers, just like petitioner’s use
of
the “Big Mac” mark on hamburgers, respondents have obviously clothed
their
goods with the general appearance of petitioners’ goods.cralaw:red
Moreover, there is no
notice to the public that the “Big Mak” hamburgers are products of
“L.C.
Big Mak Burger, Inc.” Respondents introduced during the trial
plastic
wrappers and bags with the words “L.C. Big Mak Burger, Inc.” to inform
the public of the name of the seller of the hamburgers. However,
petitioners introduced during the injunctive hearings plastic wrappers
and bags with the “Big Mak” mark without the name “L.C. Big Mak Burger,
Inc.” Respondents’ belated presentation of plastic wrappers and
bags
bearing the name of “L.C. Big Mak Burger, Inc.” as the seller of the
hamburgers
is an after-thought designed to exculpate them from their unfair
business
conduct. As earlier stated, we cannot consider respondents’
evidence
since petitioners’ complaint was based on facts existing before and
during
the injunctive hearings.chanrobles virtual law library
Thus, there is actually
no notice to the public that the “Big Mak” hamburgers are products of
“L.C.
Big Mak Burger, Inc.” and not those of petitioners who have the
exclusive
right to the “Big Mac” mark. This clearly shows
respondents’
intent to deceive the public. Had respondents’ placed a notice on
their plastic wrappers and bags that the hamburgers are sold by “L.C.
Big
Mak Burger, Inc.”, then they could validly claim that they did not
intend
to deceive the public. In such case, there is only trademark
infringement
but no unfair competition.[82]
Respondents, however, did not give such notice. We hold that as
found
by the RTC, respondent corporation is liable for unfair competition.cralaw:red
The Remedies Available
to Petitioners
Under Section 23[83]
(“Section 23”) in relation to Section 29 of RA 166, a plaintiff who
successfully
maintains trademark infringement and unfair competition claims is
entitled
to injunctive and monetary reliefs. Here, the RTC did not err in
issuing
the injunctive writ of 16 August 1990 (made permanent in its Decision
of
5 September 1994) and in ordering the payment of P400,000 actual
damages
in favor of petitioners. The injunctive writ is indispensable to
prevent
further acts of infringement by respondent corporation. Also, the
amount
of actual damages is a reasonable percentage (11.9%) of respondent
corporation’s
gross sales for three (1988-1989 and 1991) of the six years (1984-1990)
respondents have used the “Big Mak” mark.[84]chanrobles virtual law library
The RTC also did not
err in awarding exemplary damages by way of correction for the public
good[85]
in view of the finding of unfair competition where intent to deceive
the
public is essential. The award of attorney’s fees and expenses of
litigation
is also in order.[86]
WHEREFORE, we GRANT
the instant petition. We SET ASIDE the Decision dated 26 November 1999
of the Court of Appeals and its Resolution dated 11 July 2000 and
REINSTATE
the Decision dated 5 September 1994 of the Regional Trial Court of
Makati,
Branch 137, finding respondent L.C. Big Mak Burger, Inc. liable for
trademark
infringement and unfair competition.cralaw:red
SO ORDERED.
Davide, C.J., (Chairman),
Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.
____________________________
Endnotes:
[1]
Under Rule 45 of the 1997 Rules of Civil Procedure.
[2]
Penned by Associate Justice Eloy R. Bello, Jr. with Presiding Justice
Jainal
D. Rasul and Associate Justice Ruben T. Reyes concurring.
[3]
Penned by Judge Santiago Ranada, Jr.chanrobles virtual law library
[4]
Itself a registered service mark.chanrobles virtual law library
[5]
Some of McDonald’s registered marks representing food items
(f) and services (s) are: McDONALD’S HAMBURGERS (s); McDONALD’S (f);
RONALD
McDONALD (s); McDONALDLAND (s); McCHEESE & DESIGN (f); EGG McMUFFIN
(s); EGG McMUFFIN (f); McDONALDLAND (f); McDONALD’S & ARCHES (s);
McFEAST
(f); McCHICKEN (f); McDONALD’S & ARCHES (f); McDONUTS (f); McPIZZA
(f); McPIZZA (s); McHAPPY DAY (s); MINI MAC (s); McDOUBLE (f);
TOGETHER-McDONALD’S
& YOU (s); CHICKEN McNUGGETS (f); McDONALD’S & YOU (s); SUPER
MAC
(f); McSNACK (s); MAC FRIES (f); McRIB (f); MAPLE McCRISP (f); LITE MAC
(f); BIG MAC (s); CHICKEN McSWISS (f); McMUFFIN (f); McD.L.T. (f).
(McDonald’s
Corporation v. McBagel’s, Inc., 649 F.Supp. 1268 [1986]).chanrobles virtual law library
[6]
Aside from Big Mac sandwiches, McDonald’s menu includes cheeseburgers,
special sandwiches, fried french potatoes, chicken nuggets, fried fish
sandwiches, shakes, hot pies, sundaes, softdrinks, and other beverages.chanrobles virtual law library
[7]
Certificate of Registration No. 1,126,102.
[8]
Table napkins, tray liners, cups and food wrappers.
[9]
Labels, promotional items and packages.
[10]
TSN (Arlene Manalo), 26 July 1990, pp. 34-35.
[11]
McDonald’s and petitioner McGeorge are referred to as petitioners.
[12]
Rizal, Laguna, Bulacan and Quezon.chanrobles virtual law library
[13]
E.g. pizzas, noodles, siopaos, hotdog
sandwiches,
ham sandwiches, fish burgers, fruit juices,
softdrinks
and other beverages.
[14]
Respondent corporation and private respondents are referred to as
respondents.
[15]
Records, p. 37.chanrobles virtual law library
[16]
Ibid., pp. 457-458.
[17]
Ibid., pp. 414-426.
[18]
Ibid., pp. 460-463.
[19]
Rollo, pp. 149-154.
[20]
Records, pp. 1431-1432.
[21]
Rollo, pp. 233-237 (Capitalization in the original).
[22]
Ibid., p. 24.chanrobles virtual law library
[23]
While petitioners seek to hold liable respondent corporation only, the
Court’s opinion will refer not only to the latter but also to all
the respondents as all of them filed the pleadings in this petition.
[24]
This provision states: “Filing of petition with Supreme Court. —
A party desiring to appeal by certiorari from a judgment or final order
or resolution of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by law, may file with
the
Supreme Court a verified petition for review on certiorari. The
petition
shall raise only questions of law which must be distinctly set forth.”
[25]
Ramos, et al. v. Pepsi-Cola Bottling Co. of the Phils., et al.,
125
Phil. 701 (1967).
[26]
Ducusin, et al. v. CA, et al., 207 Phil. 248 (1983).
[27]
G.R. No. 103543, 5 July 1993, 224 SCRA 437.
[28]
Exhibits E-1 to 2, F-1 to 2 and G-1 to 2.
[29]
Exhibits E, F and G.
[30]
Exhibits L-10, L-16 to 27.
[31]
Exhibits 34, 36-37.chanrobles virtual law library
[32]
RA 166 has been superseded by Republic Act No.
8293 (“RA 8293”), the Intellectual Property Code of the
Philippines,
which took effect on 1 January 1998. Section 22 is substantially
identical with Section 16 of the United States’ 1946 Trademark Act
(“Lanham
Act”).
[33]
Superseded by Section 155 of RA 8293 (“Section 155”).chanrobles virtual law library
[34]
See A & H Sportswear Co. v. Victoria’s Secret Stores, Inc., 167
F.Supp.2d
770 (2001).
[35]
Shaley’s Inc. v. Covalt, 704 F.2d 426 (1983). Also referred to as the
“lynchpin”
(Suncoast Tours, Inc. v. Lambert Groups, Inc. 1999 WL 1034683 [1999])
or
“touchstone” (VMG Enterprises, Inc. v. F. Quesada and Franco, Inc., 788
F. Supp. 648 [1992]) of trademark infringement.
[36]
This provision states: “Registration of trade-marks, trade-names and
service-marks
on the principal register. — There is hereby established a register of
trade-marks, trade-names and service-marks which shall be known as the
principal register. The owner of a trade-mark, trade-name or
service-mark
used to distinguish his goods, business or services from the goods,
business
or services of others shall have the right to register the
same on the principal register, unless it:chanroblesvirtuallawlibrarychanrobles virtual law library
(a)
Consists of or comprises immoral, deceptive or scandalous matter; or
matter
which may disparage or falsely suggest a connection with persons,
living
or dead, institutions, beliefs, or national symbols, or bring
them
into contempt or disrepute;chanrobles virtual law library
(b)
Consists of or comprises the flag or coat of arms or other
insignia
of the Philippines or any of its political subdivisions, or of any
foreign
nation, or any simulation thereof;
(c)
Consists of or comprises a name, portrait, or signature identifying a
particular
living individual except by his written consent, or the name,
signature,
or portrait of a deceased President of the Philippines, during the life
of his widow, if any, except by the written consent of the widow;
(d)
Consists of or comprises a mark or trade-name which so resembles a mark
or trade-name registered in the Philippines or a mark or a trade-name
previously
used in the Philippines by another and not abandoned, as to be
likely,
when applied to or used in connection with the goods, business or
services
of the applicant, to cause confusion or mistake or to deceive
purchasers;
or
(e)
Consists of a mark or trade-name which, when applied to or used in
connection
with the goods, business or services of the applicant is merely
descriptive
or deceptively misdescriptive of them, or when applied to or used in
connection
with the goods, business or services of the applicant is primarily
geographically
descriptive or deceptively misdescriptive of them, or is
primarily
merely a surname;
(f)
Except as expressly excluded in paragraphs (a), (b), (c) and (d) of
this
section nothing herein shall prevent the registration of a mark or
trade-name
used by the applicant which has become distinctive of the applicant’s
goods,
business or services. The Director may accept as prima facie
evidence
that the mark or trade-name has become distinctive, as applied to or
used
in connection with the applicant’s goods, business or services, proof
of
substantially exclusive and continuous use thereof as a mark or
trade-name
by the applicant in connection with the sale of goods, business
or
services for five years next preceding the date of the filing of
the application for its registration.” This has been superseded by
Section
123 of RA 8293.chanrobles virtual law library
[37]
Section 20, RA 166. This provision states: “Certificate of
registration prima facie evidence of validity. — A certificate of
registration of a mark or trade-name shall be 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,
subject to any conditions and limitations stated therein.” This has
been
superseded by Section 138 of RA 8293. Neither RA 166 nor
RA
8293 provides when the presumption of validity and ownership becomes
indubitable.
In contrast, under the Lanham Act, as amended, (15 United States Code
§
1065), such takes place once the trademark has become “incontestable”
i.e.
after the mark owner files affidavits stating that the mark is
registered
and has been in continuous use for five consecutive years; that there
is
no pending proceeding; and that there has been no adverse decision
concerning
the registrant’s ownership or right to registration (See Luis Vuitton
Malletier
and Oakley, Inc. v. Veit, 211 F.Supp.2d 556 [2002]). However,
both
RA 166 (Section 12) and RA 8293 (Section 145) require the
filing
of the affidavit attesting to the continuous use of the mark for five
years
and, under Section 145, failure to file such affidavit will result in
the
removal of the mark from the Register.
[38]
Rollo, pp. 525-527.chanrobles virtual law library
[39]
Societe Des Produits Nestlé, S.A. v. Court of Appeals, G.R. No.
112012, 4 April 2001, 356 SCRA 207; McKee Baking Co. v. Interstate
Brands
Corporation, 738 F. Supp. 1272 (1990).
[40]
Societe Des Produits Nestlé, S.A. v. Court of Appeals, supra
note
39; Miller Brewing Co. v. Heileman Brewing Co., 561 F.2d 75 (1977).
[41]
Miller Brewing Co. v. Heileman Brewing Co., supra note 40.chanrobles virtual law library
[42]
A. J. Canfield Co. v. Honickman, 808 F.2d 291 (1986).chanrobles virtual law library
[43]
Societe Des Produits Nestlé, S.A. v. Court of Appeals, supra
note
39 citing § 43(A) of the Lanham Act, as amended.
[44]
Bernard v. Commerce Drug Co., 964 F.2d 1338 (1992).chanrobles virtual law library
[45]
Keebler Co. v. Rovira Biscuit Corp., 624 F.2d 366 (1980).
[46]
McKee Baking Co. v. Interstate Brands Corporation, supra note 39.chanrobles virtual law library
[47]
See A. Miller and M. Davis, Intellectual Property, Patents, Trademarks
and Copyright in a Nutshell 177-178 (1983).
[48]
See Lorenzana v. Macagba, No. L-33773, 22 October 1987, 154 SCRA 723;
La
Chemise Lacoste, S.A. v. Hon. Fernandez, etc., et al. 214 Phil. 332
(1984).
RA 8293 no longer provides for a Supplemental Register and
instead
mandates a single registry system (Section 137). Under Section 239,
marks
registered in the Supplemental Register under RA 166 will remain in
force
but are no longer subject to renewal.
[49]
137 Phil. 838 (1969).
[50]
Enacted on 6 March 1903.chanrobles virtual law library
[51]
Section 3 of Act No. 666 provides: “The ownership or
possession of a trade-mark, heretofore or hereafter appropriated,
as in the foregoing section provided, shall be recognized and protected
in the same manner and to the same extent, as are other property rights
known to the law. To this end any person entitled to the
exclusive
use of a trade-mark to designate the origin or ownership of goods he
has
made or deals in may recover damages in a civil action from any
person
who has sold goods of a similar kind, bearing such trade-mark, and the
measure of the damages suffered, at the option of the complaining
party,
shall be either the reasonable profit which the complaining party would
have made had the defendant not sold the goods with the trade-mark
aforesaid,
or the profit which the defendant actually made out of the sale of the
goods with the trade-mark, and in cases where actual intent to mislead
the public or to defraud the owner of the trade-mark shall be shown, in
the discretion of the court, the damages may be doubled. The
complaining
party, upon proper showing, may have a preliminary injunction,
restraining
the defendant temporarily from use of the trade-mark pending the
hearing,
to be granted or dissolved in the manner provided in the Code of Civil
Procedure, and such injunction upon final hearing, if the complainant’s
property in the trade-mark and the defendant’s violation thereof shall
be fully established, shall be made perpetual, and this injunction
shall
be part of the judgment for damages to be rendered in the same cause as
above provided.” (Emphasis supplied)
[52]
The United States Congress had introduced the same amendment to the
Lanham
Act in 1946. In 1962, the US Congress again amended Section 16 of the
Lanham
Act (“Sec. 43(A)”) by deleting the phrase “the source or origin of such
goods or services, or identity of such business” in the
definition
of trademark infringement. This led courts in that jurisdiction to hold
that post-sale confusion by the public at large (Esercizio v. Roberts,
944 F.2d 1235 [1991]. See also Koppers Company, Inc. v. Krup-Koppers,
517
F.Supp. 836 [1981]) or “subliminal confusion,” defined as confusion on
a subliminal or subconscious level, causing the consumer to identify
the
properties and reputation of one product with those of another,
although
he can identify the particular manufacturer of each, (Ortho
Pharmaceutical
Corporation v. American Cyanamid Company, 361 F.Supp. 1032 [1973]. See
also Farberware, Inc. v. Mr. Coffee, Inc., 740 F.Supp. 291 (1990);
Dreyfus
Fund Incorporated v. Royal Bank of Canada, 525 F. Supp. 1108 [1981])
are
sufficient to sustain a trademark infringement claim. Section 155
substantially
reproduces Sec. 43(A).
[53]
Agpalo, The Law on Trademark, Infringement and Unfair Competition 45-46
(2000).
[54]
Records, p. 5.chanrobles virtual law library
[55]
Ibid., pp. 4, 6-7.chanrobles virtual law library
[56]
Sta. Ana v. Maliwat, et al., 133 Phil. 1006 (1968).chanrobles virtual law library
[57]
Societe Des Produits Nestlé, S.A. v. Court of Appeals, supra
note
39; Emerald Garment Manufacturing Corporation v. Court of Appeals, G.R.
No. 100098, 29 December 1995, 251 SCRA 600.
[58]
V. Amador, Trademarks Under The Intellectual Property Code 260 (1999).chanrobles virtual law library
[59]
Ibid., p. 263.chanrobles virtual law library
[60]
95 Phil. 1 (1954).
[61]
100 Phil. 214 (1956).
[62]
No. L-23035, 31 July 1975, 65 SCRA 575.
[63]
No. L-27906, 8 January 1987, 147 SCRA 154.
[64]
Supra note 27.chanrobles virtual law library
[65]
Supra note 39.
[66]
125 Phil. 295 (1966).
[67]
Rollo, pp. 588-589.chanrobles virtual law library
[68]
Time v. Life Television Co. of St. Paul, 123 F. Supp. 470 (1954);
[69]
Conde Nast Publications v. Vogue School
of
Fashion Modelling, 105 F. Supp. 325 (1952); Hanson v.
Triangle
Publications, 163 F.2d 74 (1947).
[70]
See Fisons Horticulture, Inc. v. Vigoro Industries, Inc., 30 F.3d 466
(1994).chanrobles virtual law library
[71]
No. L-26557, 18 February 1970, 31 SCRA 544.chanrobles virtual law library
[72]
PACCAR Inc. v. Tele Scan Technologies, L.L.C., 319 F.3d 243 (2003).
[73]
Reiterated in Section 168 of RA 8293.
[74]
V. Amador, supra note 58 at 278.chanrobles virtual law library
[75]
Shell Co. of the Philippines, Ltd. v. Ins. Petroleum
Refining Co., Ltd., 120 Phil. 434 (1964); “La Insular” v. Jao
Oge,
42 Phil. 366 (1921).
[76]
Alhambra Cigar, etc., Co. v. Mojica, 27 Phil. 266 (1914).chanrobles virtual law library
[77]
Co Tiong Sa v. Director of Patents, supra note 60; Clarke v. Manila
Candy
Co., 36 Phil. 100 (1917).
[78]
See Q-Tips, Inc. v. Johnson & Johnson, 108 F.Supp 845 (1952).chanrobles virtual law library
[79]
Rollo, pp. 40-45.chanrobles virtual law library
[80]
Suncoast Tours, Inc. v. Lambert Groups, Inc. 1999 WL 1034683 (1999).
[81]
Rollo, pp. 148-149.chanrobles virtual law library
[82]
See Q-Tips, Inc. v. Johnson & Johnson, supra note 78.chanrobles virtual law library
[83]
This provision reads: “Actions, and damages and injunction for
infringement.
— Any person entitled to the exclusive use of a registered mark or
trade-name
may recover damages in a civil action from any person who infringes his
rights, and the measure of the damages suffered shall be either the
reasonable
profit which the complaining party would have made, had the defendant
not
infringed his said rights, or the profit which the defendant actually
made
out of the infringement, or in the event such measure of damages cannot
be readily ascertained with reasonable certainty, then the court may
award
as damages a reasonable percentage based upon the amount of gross sales
of the defendant of the value of the services in connection with which
the mark or trade-name was used in the infringement of the rights of
the
complaining party. In cases where actual intent to mislead the
public
or to defraud the complaining party shall be shown, in the discretion
of
the court, the damages may be doubled.
The
complaining party, upon proper showing, may also be granted injunction.”chanrobles virtual law library
[84]
TSN, (Francis Dy), 15 March 1993, p. 32; TSN (Francis Dy), 22 March
1993,
pp. 1-2.
[85]
Article 2229, Civil Code.
[86]
Article 2208(1), Civil Code. |