Republic of the Philippines SUPREME COURT Manila

FIRST DIVISION

G.R. No. !"##"

$u%ust &' ())!

MCDON$*D+S CORPOR$TION an, MCGEORGE FOOD INDUSTRIES' INC.' petitione-s' .s. *.C. /IG M$0 /URGER' INC.' FR$NCIS /. D1' EDN$ $. D1' RENE /. D1' 2I**I$M /. D1' 3ESUS $1C$RDO' $R$CE*I $1C$RDO' an, GR$CE 4UERTO' -espon,ents.

DECISION

C$RPIO' 3.5

The Case

This is a petition fo- -e.ie6 of the Decision ,ate, (7 No.e8be- ### of the Cou-t of $ppeals( fin,in% -espon,ent *.C. /i% Ma9 /u-%e-' Inc. not liable fo- t-a,e8a-9 inf-in%e8ent an, unfai- co8petition an, o-,e-in% petitione-s to pa: -espon,ents P '#))'))) in ,a8a%es' an, of its Resolution ,ate, 3ul: ())) ,en:in% -econsi,e-ation. The Cou-t of $ppeals+ Decision -e.e-se, the ; Septe8be- ##! Decision" of the Re%ional T-ial Cou-t of Ma9ati' /-anch "<' fin,in% -espon,ent *.C. /i% Ma9 /u-%e-' Inc. liable fot-a,e8a-9 inf-in%e8ent an, unfai- co8petition.

The Facts

Petitione- McDonal,+s Co-po-ation =>McDonal,+s>? is a co-po-ation o-%ani@e, un,e- the la6s of Dela6a-e' Unite, States. McDonal,+s ope-ates' b: itself o- th-ou%h its f-anchisees' a %lobal chain of fastAfoo, -estau-ants. McDonal,+s! o6ns a fa8il: of 8a-9s; inclu,in% the >/i% Mac> 8a-9 fo- its >,oubleA,ec9e- ha8bu-%e- san,6ich.>7 McDonal,+s -e%iste-e, this t-a,e8a-9 6ith the Unite, States T-a,e8a-9 Re%ist-: on 7 Octobe- #<#.< /ase, on this 4o8e Re%ist-ation' McDonal,+s applie, fo- the -e%ist-ation of the sa8e 8a-9 in the P-incipal Re%iste- of the then Philippine /u-eau of Patents' T-a,e8a-9s an, Technolo%: =>P/PTT>?' no6 the Intellectual P-ope-t: Office =>IPO>?. Pen,in% app-o.al of its application' McDonal,+s int-o,uce, its >/i% Mac> ha8bu-%e- san,6iches in the Philippine 8a-9et in Septe8be- #& . On & 3ul: #&;' the P/PTT allo6e, -e%ist-ation of the >/i% Mac> 8a-9 in the P-incipal Re%iste- base, on its 4o8e Re%ist-ation in the Unite, States.

*i9e its othe- 8a-9s' McDonal,+s ,ispla:s the >/i% Mac> 8a-9 in ite8s& an, pa-aphe-nalia# in its -estau-ants' an, in its out,oo- an, in,oo- si%na%es. F-o8 #&( to ##)' McDonal,+s spent P ).; 8illion in a,.e-tise8ent fo- >/i% Mac> ha8bu-%esan,6iches alone. )

Petitione- McGeo-%e Foo, In,ust-ies =>petitione- McGeo-%e>?' a ,o8estic co-po-ation' is McDonal,+s Philippine f-anchisee.

Respon,ent *.C. /i% Ma9 /u-%e-' Inc. =>-espon,ent co-po-ation>? is a ,o8estic co-po-ation 6hich ope-ates fastAfoo, outlets an, snac9 .ans in Met-o Manila an, nea-b: p-o.inces. ( Respon,ent co-po-ation+s 8enu inclu,es ha8bu-%e- san,6iches an, othefoo, ite8s. " Respon,ents F-ancis /. D:' E,na $. D:' Rene /. D:' 2illia8 /. D:' 3esus $:ca-,o' $-aceli $:ca-,o' an, G-ace 4ue-to =>p-i.ate -espon,ents>? a-e the inco-po-ato-s' stoc9hol,e-s an, ,i-ecto-s of -espon,ent co-po-ation. !

On ( Octobe- #&&' -espon,ent co-po-ation applie, 6ith the P/PTT fo- the -e%ist-ation of the >/i% Ma9> 8a-9 fo- its ha8bu-%e- san,6iches. McDonal,+s oppose, -espon,ent co-po-ation+s application on the %-oun, that >/i% Ma9> 6as a colo-able i8itation of its -e%iste-e, >/i% Mac> 8a-9 fo- the sa8e foo, p-o,ucts. McDonal,+s also info-8e, -espon,ent F-ancis D: =>-espon,ent D:>?' the chai-8an of the /oa-, of Di-ecto-s of -espon,ent co-po-ation' of its eBclusi.e -i%ht to the >/i% Mac> 8a-9 an, -eCueste, hi8 to ,esist f-o8 usin% the >/i% Mac> 8a-9 o- an: si8ila- 8a-9.

4a.in% -ecei.e, no -epl: f-o8 -espon,ent D:' petitione-s on 7 3une ##) sue, -espon,ents in the Re%ional T-ial Cou-t of Ma9ati' /-anch "< =>RTC>?' fo- t-a,e8a-9

inf-in%e8ent an, unfai- co8petition. In its O-,e- of 3ul: ##)' the RTC issue, a te8po-a-: -est-ainin% o-,e- =>TRO>? a%ainst -espon,ents enDoinin% the8 f-o8 usin% the >/i% Ma9> 8a-9 in the ope-ation of thei- business in the National Capital Re%ion. ; On 7 $u%ust ##)' the RTC issue, a 6-it of p-eli8ina-: inDunction -eplacin% the TRO. 7

In thei- $ns6e-' -espon,ents a,8itte, that the: ha.e been usin% the na8e >/i% Ma9 /u-%e-> fo- thei- fastAfoo, business. Respon,ents clai8e,' ho6e.e-' that McDonal,+s ,oes not ha.e an eBclusi.e -i%ht to the >/i% Mac> 8a-9 o- to an: othe- si8ila- 8a-9. Respon,ents point out that the Isai:as G-oup of Co-po-ations =>Isai:as G-oup>? -e%iste-e, the sa8e 8a-9 fo- ha8bu-%e- san,6iches 6ith the P/PTT on " Ma-ch #<#. One Ro,olfo Topacio =>Topacio>? si8ila-l: -e%iste-e, the sa8e 8a-9 on (! 3une #&"' p-io- to McDonal,+s -e%ist-ation on & 3ul: #&;. $lte-nati.el:' -espon,ents clai8e, that the: a-e not liable fo- t-a,e8a-9 inf-in%e8ent o- fo- unfai- co8petition' as the >/i% Ma9> 8a-9 the: sou%ht to -e%iste- ,oes not constitute a colo-able i8itation of the >/i% Mac> 8a-9. Respon,ents asse-te, that the: ,i, not f-au,ulentl: pass off thei- ha8bu-%e- san,6iches as those of petitione-s+ /i% Mac ha8bu-%e-s. < Respon,ents sou%ht ,a8a%es in theicounte-clai8.

In thei- Repl:' petitione-s ,enie, -espon,ents+ clai8 that McDonal,+s is not the eBclusi.e o6ne- of the >/i% Mac> 8a-9. Petitione-s asse-te, that 6hile the Isai:as G-oup an, Topacio ,i, -e%iste- the >/i% Mac> 8a-9 ahea, of McDonal,+s' the Isai:as G-oup ,i, so onl: in the Supple8ental Re%iste- of the P/PTT an, such -e%ist-ation ,oes not p-o.i,e an: p-otection. McDonal,+s ,isclose, that it ha, acCui-e, Topacio+s -i%hts to his -e%ist-ation in a Dee, of $ssi%n8ent ,ate, & Ma: #& . &

The T-ial Cou-t+s Rulin%

On ; Septe8be- ##!' the RTC -en,e-e, Du,%8ent =>RTC Decision>? fin,in% -espon,ent co-po-ation liable fo- t-a,e8a-9 inf-in%e8ent an, unfai- co8petition. 4o6e.e-' the RTC ,is8isse, the co8plaint a%ainst p-i.ate -espon,ents an, the counte-clai8 a%ainst petitione-s fo- lac9 of 8e-it an, insufficienc: of e.i,ence. The RTC hel,5

Un,eniabl:' the 8a-9 >/Ei%F MEacF> is a -e%iste-e, t-a,e8a-9 fo- plaintiff McDonal,+s' an, as such' it is entitle, EtoF p-otection a%ainst inf-in%e8ent.

BBBB

The-e eBist so8e ,istinctions bet6een the na8es >/Ei%F MEacF> an, >/Ei%F MEa9F> as appea-in% in the -especti.e si%na%es' 6-appe-s an, containe-s of the foo, p-o,ucts of the pa-ties. /ut inf-in%e8ent %oes be:on, the ph:sical featu-es of the Cuestione, na8e an, the o-i%inal na8e. The-e a-e still othe- facto-s to be consi,e-e,.

BBBB

Si%nificantl:' the conten,in% pa-ties a-e both in the business of fastAfoo, chains an, -estau-ants. $n a.e-a%e pe-son 6ho is hun%-: an, 6ants to eat a ha8bu-%e- san,6ich 8a: not be ,isc-i8inatin% enou%h to loo9 fo- a McDonal,+s -estau-ant an, bu: a >/Ei%F MEacF> ha8bu-%e-. Once he sees a stall sellin% ha8bu-%e- san,6ich' in all li9elihoo,' he 6ill ,ip into his poc9et an, o-,e- a >/Ei%F MEa9F> ha8bu-%e- san,6ich. Plaintiff McDonal,+s fastAfoo, chain has attaine, 6i,e popula-it: an, acceptance b: the consu8in% public so 8uch so that its ai-Acon,itione, foo, outlets an, -estau-ants 6ill pe-haps not be 8ista9en b: 8an: to be the sa8e as ,efen,ant co-po-ation+s 8obile snac9 .ans locate, alon% bus: st-eets o- hi%h6a:s. /ut the thin% is that 6hat is bein% sol, b: both conten,in% pa-ties is a foo, ite8 G a ha8bu-%e- san,6ich 6hich is foi88e,iate consu8ption' so that a bu:e- 8a: easil: be confuse, o- ,ecei.e, into thin9in% that the >/Ei%F MEa9F> ha8bu-%e- san,6ich he bou%ht is a foo,Ap-o,uct of plaintiff McDonal,+s' o- a subsi,ia-: o- allie, outlet the-eof. Su-el:' ,efen,ant co-po-ation has its o6n sec-et in%-e,ients to 8a9e its ha8bu-%e- san,6iches as palatable an, as tast: as the othe- b-an,s in the 8a-9et' consi,e-in% the 9een co8petition a8on% 8ush-oo8in% ha8bu-%e- stan,s an, 8ultinational fastAfoo, chains an, -estau-ants. 4ence' the t-a,e8a-9 >/Ei%F MEacF> has been inf-in%e, b: ,efen,ant co-po-ation 6hen it use, the na8e >/Ei%F MEa9F> in its si%na%es' 6-appe-s' an, containe-s in connection 6ith its foo, business. BBBB

Di, the sa8e acts of ,efen,ants in usin% the na8e >/Ei%F MEa9F> as a t-a,e8a-9 ot-a,ena8e in thei- si%na%es' o- in causin% the na8e >/Ei%F MEa9F> to be p-inte, on the 6-appe-s an, containe-s of thei- foo, p-o,ucts also constitute an act of unfaico8petition un,e- Section (# of the T-a,e8a-9 *a6H

The ans6e- is in the affi-8ati.e. BBBB

The BBB p-o.ision of the la6 conce-nin% unfai- co8petition is b-oa,e- an, 8o-e inclusi.e than the la6 conce-nin% the inf-in%e8ent of t-a,e8a-9' 6hich is of 8o-e li8ite, -an%e' but 6ithin its na--o6e- -an%e -eco%ni@es a 8o-e eBclusi.e -i%ht ,e-i.e, b: the a,option an, -e%ist-ation of the t-a,e8a-9 b: the pe-son 6hose %oo,s o- se-.ices a-e fi-st associate, the-e6ith. BBB Not6ithstan,in% the ,istinction bet6een an action fo-

t-a,e8a-9 inf-in%e8ent an, an action fo- unfai- co8petition' ho6e.e-' the la6 eBten,s substantiall: the sa8e -elief to the inDu-e, pa-t: fo- both cases. =See Sections (" an, (# of Republic $ct No. 77?

$n: con,uct 8a: be sai, to constitute unfai- co8petition if the effect is to pass off on the public the %oo,s of one 8an as the %oo,s of anothe-. The choice of >/Ei%F MEa9F> as t-a,ena8e b: ,efen,ant co-po-ation is not 8e-el: fo- senti8ental -easons but 6as clea-l: 8a,e to ta9e a,.anta%e of the -eputation' popula-it: an, the establishe, %oo,6ill of plaintiff McDonal,+s. Fo-' as state, in Section (#' a pe-son is %uilt: of unfaico8petition 6ho in sellin% his %oo,s shall %i.e the8 the %ene-al appea-ance' of %oo,s of anothe- 8anufactu-e- o- ,eale-' eithe- as to the %oo,s the8sel.es o- in the 6-appin% of the pac9a%es in 6hich the: a-e containe,' o- the ,e.ices o- 6o-,s the-eon' o- in an: othe- featu-e of thei- appea-ance' 6hich 6oul, li9el: influence pu-chase-s to belie.e that the %oo,s offe-e, a-e those of a 8anufactu-e- o- ,eale- othe- than the actual 8anufactu-e- o- ,eale-. Thus' plaintiffs ha.e establishe, thei- .ali, cause of action a%ainst the ,efen,ants fo- t-a,e8a-9 inf-in%e8ent an, unfai- co8petition an, fo,a8a%es. #

The ,ispositi.e po-tion of the RTC Decision p-o.i,es5

24EREFORE' Du,%8ent is -en,e-e, in fa.o- of plaintiffs McDonal,+s Co-po-ation an, McGeo-%e Foo, In,ust-ies' Inc. an, a%ainst ,efen,ant *.C. /i% Ma9 /u-%e-' Inc.' as follo6s5

. The 6-it of p-eli8ina-: inDunction issue, in this case on E 7 $u%ust ##)F is 8a,e pe-8anentI

(. Defen,ant *.C. /i% Ma9 /u-%e-' Inc. is o-,e-e, to pa: plaintiffs actual ,a8a%es in the a8ount of P!))'))).))' eBe8pla-: ,a8a%es in the a8ount of P ))'))).))' an, atto-ne:+s fees an, eBpenses of liti%ation in the a8ount of P ))'))).))I

". The co8plaint a%ainst ,efen,ants F-ancis /. D:' E,na $. D:' Rene /. D:' 2ilia8 /. D:' 3esus $:ca-,o' $-aceli $:ca-,o an, G-ace 4ue-to' as 6ell as all counte-Aclai8s' a-e ,is8isse, fo- lac9 of 8e-it as 6ell as fo- insufficienc: of e.i,ence.()

Respon,ents appeale, to the Cou-t of $ppeals.

The Rulin% of the Cou-t of $ppeals

On (7 No.e8be- ###' the Cou-t of $ppeals -en,e-e, Du,%8ent =>Cou-t of $ppeals+ Decision>? -e.e-sin% the RTC Decision an, o-,e-in% McDonal,+s to pa: -espon,ents P '7))'))) as actual an, co8pensato-: ,a8a%es an, P"))'))) as 8o-al ,a8a%es. The Cou-t of $ppeals hel,5

PlaintiffsAappellees in the instant case 6oul, li9e to i8p-ess on this Cou-t that the use of ,efen,antsAappellants of its co-po-ate na8e G the 6hole >*.C. /Ei%F MEa9F /Eu-%e-F' IEncF.> 6hich appea-s on thei- foo, pac9a%es' si%na%es an, a,.e-tise8ents is an inf-in%e8ent of thei- t-a,e8a-9 >/Ei%F MEacF> 6hich the: use to i,entif: Ethei-F ,ouble ,ec9e- san,6ich' sol, in a St:-ofoa8 boB pac9a%in% 8ate-ial 6ith the McDonal,+s lo%o of u8b-ella >M> sta8pe, the-eon' to%ethe- 6ith the p-inte, 8a-9 in -e, blEoFc9 capital lette-s' the 6o-,s bein% sepa-ate, b: a sin%le space. Specificall:' plaintiffsAappellees a-%ue that ,efen,antsAappellants+ use of thei- co-po-ate na8e is a colo-able i8itation of theit-a,e8a-9 >/i% Mac>.

BBBB

To Ou- 8in,' ho6e.e-' this Cou-t is full: con.ince, that no colo-able i8itation eBists. $s the ,efinition ,ictates' it is not sufficient that a si8ila-it: eBists in both na8es' but that 8o-e i8po-tantl:' the o.e-Aall p-esentation' o- in thei- essential' substanti.e an, ,istincti.e pa-ts is such as 6oul, li9el: MIS*E$D o- CONFUSE pe-sons in the o-,ina-: cou-se of pu-chasin% the %enuine a-ticle. $ ca-eful co8pa-ison of the 6a: the t-a,e8a-9 >/Ei%F MEacF> is bein% use, b: plaintiffsAappellees an, co-po-ate na8e *.C. /i% Ma9 /u-%e-' Inc. b: ,efen,antsAappellants' 6oul, -ea,il: -e.eal that no confusion coul, ta9e place' o- that the o-,ina-: pu-chase-s 6oul, be 8isle, b: it. $s pointe, out b: ,efen,antsAappellants' the plaintiffsAappellees+ t-a,e8a-9 is use, to ,esi%nate onl: one p-o,uct' a ,ouble ,ec9e- san,6ich sol, in a St:-ofoa8 boB 6ith the >McDonal,s> lo%o. On the othe- han,' 6hat the ,efen,antsAappellants co-po-ation is usin% is not a t-a,e8a-9 fo- its foo, p-o,uct but a business o- co-po-ate na8e. The: use the business na8e >*.C. /i% Ma9 /u-%e-' Inc.> in thei- -estau-ant business 6hich se-.es ,i.e-sifie, foo, ite8s such as siopao' noo,les' pi@@a' an, san,6iches such as hot,o%' ha8' fish bu-%e- an, ha8bu-%e-. Secon,l:' ,efen,antsAappellants+ co-po-ate o- business na8e appea-in% in the foo, pac9a%es an, si%na%es a-e 6-itten in silhouette -e,Ao-an%e lette-s 6ith the >b> an, >8> in uppe- case lette-s. $bo.e the 6o-,s >/i% Ma9> a-e the uppe- case lette- >*.C.>. /elo6 the 6o-,s >/i% Ma9> a-e the 6o-,s >/u-%e-' Inc.> spelle, out in uppecase lette-s. Fu-the-8o-e' sai, co-po-ate o- business na8e appea-in% in such foo, pac9a%es an, si%na%es is al6a:s acco8panie, b: the co8pan: 8ascot' a :oun% chubb:

bo: na8e, Ma9: 6ho 6ea-s a -e, TAshi-t 6ith the uppe- case >8> appea-in% the-ein an, a blue lo6e- %a-8ent. Finall:' the ,efen,antsAappellants+ foo, pac9a%es a-e 8a,e of plastic 8ate-ial.

BBBB

BBB EIFt is -ea,il: appa-ent to the na9e, e:e that the-e appea-s a .ast ,iffe-ence in the appea-ance of the p-o,uct an, the 8anne- that the t-a,ena8e >/i% Ma9> is bein% use, an, p-esente, to the public. $s ea-lie- note,' the-e a-e %la-in% ,issi8ila-ities bet6een plaintiffsAappellees+ t-a,e8a-9 an, ,efen,antsAappellants+ co-po-ate na8e. PlaintiffsA appellees+ p-o,uct ca--:in% the t-a,e8a-9 >/Ei%F MEacF> is a ,ouble ,ec9e- san,6ich =,epicte, in the t-a: 8at containin% photo%-aphs of the .a-ious foo, p-o,ucts BBB sol, in a St:-ofoa8 boB 6ith the >McDonal,+s> lo%o an, t-a,e8a-9 in -e,' blEoFc9 capital lette-s p-inte, the-eon BBB at a p-ice 6hich is 8o-e eBpensi.e than the ,efen,antsAappellants+ co8pa-able foo, p-o,ucts. In o-,e- to bu: a >/i% Mac>' a custo8e- nee,s to .isit an ai-A con,itione, >McDonal,+s> -estau-ant usuall: locate, in a nea-b: co88e-cial cente-' a,.e-tise, an, i,entifie, b: its lo%o A the u8b-ella >M>' an, its 8ascot G >Ronal, McDonal,>. $ t:pical McDonal,+s -estau-ant boasts of a pla:%-oun, fo- 9i,s' a secon, floo- to acco88o,ate a,,itional custo8e-s' a ,-i.eAth-u to allo6 custo8e-s 6ith ca-s to 8a9e o-,e-s 6ithout ali%htin% f-o8 thei- .ehicles' the inte-io-s of the buil,in% a-e 6ellA li%hte,' ,istinctl: ,eco-ate, an, painte, 6ith pastel colo-s BBB. In bu:in% a >/Ei%F MEacF>' it is necessa-: to specif: it b: its t-a,e8a-9. Thus' a custo8e- nee,s to loo9 fo- a >McDonal,+s> an, ente- it fi-st befo-e he can fin, a ha8bu-%e- san,6ich 6hich ca--: the 8a-9 >/i% Mac>. On the othe- han,' ,efen,antsAappellants sell thei- %oo,s th-ou%h snac9 .ans BBBB

$nent the alle%ation that ,efen,antsAappellants a-e %uilt: of unfai- co8petition' 2e li9e6ise fin, the sa8e untenable.

Unfai- co8petition is ,efine, as >the e8plo:8ent of ,eception o- an: othe- 8eans cont-a-: to %oo, faith b: 6hich a pe-son shall pass off the %oo,s 8anufactu-e, b: hi8 oin 6hich he ,eals' o- his business' o- se-.ice' fo- those of anothe- 6ho has al-ea,: establishe, %oo, 6ill fo- his si8ila- %oo,' business o- se-.ices' o- an: acts calculate, to p-o,uce the sa8e -esult> =Sec. (#' Rep. $ct No. 77' as a8en,e,?.

To constitute unfai- co8petition the-efo-e it 8ust necessa-il: follo6 that the-e 6as 8alice an, that the entit: conce-ne, 6as in ba, faith.

In the case at ba-' 2e fin, no sufficient e.i,ence a,,uce, b: plaintiffsAappellees that ,efen,antsAappellants ,elibe-atel: t-ie, to pass off the %oo,s 8anufactu-e, b: the8 fothose of plaintiffsAappellees. The 8e-e suspecte, si8ila-it: in the soun, of the ,efen,antsAappellants+ co-po-ate na8e 6ith the plaintiffsAappellees+ t-a,e8a-9 is not sufficient e.i,ence to conclu,e unfai- co8petition. Defen,antsAappellants eBplaine, that the na8e >MEa9F> in thei- co-po-ate na8e 6as ,e-i.e, f-o8 both the fi-st na8es of the 8othe- an, fathe- of ,efen,ant F-ancis D:' 6hose na8es a-e MaBi8a an, 0i8so:. 2ith this eBplanation' it is up to the plaintiffsAappellees to p-o.e ba, faith on the pa-t of ,efen,antsAappellants. It is a settle, -ule that the la6 al6a:s p-esu8es %oo, faith such that an: pe-son 6ho see9s to be a6a-,e, ,a8a%es ,ue to acts of anothe- has the bu-,en of p-o.in% that the latte- acte, in ba, faith o- 6ith ill 8oti.e. (

Petitione-s sou%ht -econsi,e-ation of the Cou-t of $ppeals+ Decision but the appellate cou-t ,enie, thei- 8otion in its Resolution of 3ul: ())).

4ence' this petition fo- -e.ie6.

Petitione-s -aise the follo6in% %-oun,s fo- thei- petition5

I. T4E COURT OF $PPE$*S ERRED IN FINDING T4$T RESPONDENTS+ CORPOR$TE N$ME >*.C. /IG M$0 /URGER' INC.> IS NOT $ CO*OR$/*E IMIT$TION OF T4E MCDON$*D+S TR$DEM$R0 >/IG M$C>' SUC4 CO*OR$/*E IMIT$TION /EING $N E*EMENT OF TR$DEM$R0 INFRINGEMENT.

$. Respon,ents use the 6o-,s >/i% Ma9> as t-a,e8a-9 fo- thei- p-o,ucts an, not 8e-el: as thei- business o- co-po-ate na8e.

/. $s a t-a,e8a-9' -espon,ents+ >/i% Ma9> is un,eniabl: an, unCuestionabl: si8ila- to petitione-s+ >/i% Mac> t-a,e8a-9 base, on the ,o8inanc: test an, the i,e8 sonans test -esultin% ineBo-abl: in confusion on the pa-t of the consu8in% public.

II. T4E COURT OF $PPE$*S ERRED IN REFUSING TO CONSIDER T4E IN4ERENT SIMI*$RIT1 /ET2EEN T4E M$R0 >/IG M$0> $ND T4E 2ORD M$R0 >/IG M$C> $S $N INDIC$TION OF RESPONDENTS+ INTENT TO DECEIVE OR DEFR$UD FOR PURPOSES OF EST$/*IS4ING UNF$IR COMPETITION.((

Petitione-s p-a: that 6e set asi,e the Cou-t of $ppeals+ Decision an, -einstate the RTC Decision.

In thei- Co88ent to the petition' -espon,ents Cuestion the p-op-iet: of this petition as it alle%e,l: -aises onl: Cuestions of fact. On the 8e-its' -espon,ents conten, that the Cou-t of $ppeals co88itte, no -e.e-sible e--o- in fin,in% the8 not liable fo- t-a,e8a-9 inf-in%e8ent an, unfai- co8petition an, in o-,e-in% petitione-s to pa: ,a8a%es.

The Issues

The issues a-e5

. P-oce,u-all:' 6hethe- the Cuestions -aise, in this petition a-e p-ope- fo- a petition fo-e.ie6 un,e- Rule !;.

(. On the 8e-its' =a? 6hethe- -espon,ents use, the 6o-,s >/i% Ma9> not onl: as pa-t of the co-po-ate na8e >*.C. /i% Ma9 /u-%e-' Inc.> but also as a t-a,e8a-9 fo- theiha8bu-%e- p-o,ucts' an, =b? 6hethe- -espon,ent co-po-ation is liable fo- t-a,e8a-9 inf-in%e8ent an, unfai- co8petition.("

The Cou-t+s Rulin%

The petition has 8e-it.

On 2hethe- the Juestions Raise, in the Petition a-e P-ope- fo- a Petition fo- Re.ie6

$ pa-t: inten,in% to appeal f-o8 a Du,%8ent of the Cou-t of $ppeals 8a: file 6ith this Cou-t a petition fo- -e.ie6 un,e- Section of Rule !; =>Section >?(! -aisin% onl: Cuestions of la6. $ Cuestion of la6 eBists 6hen the ,oubt o- ,iffe-ence a-ises on 6hat the la6 is on a ce-tain state of facts. The-e is a Cuestion of fact 6hen the ,oubt o- ,iffe-ence a-ises on the t-uth o- falsit: of the alle%e, facts. (;

4e-e' petitione-s -aise Cuestions of fact an, la6 in assailin% the Cou-t of $ppeals+ fin,in%s on -espon,ent co-po-ation+s nonAliabilit: fo- t-a,e8a-9 inf-in%e8ent an, unfaico8petition. O-,ina-il:' the Cou-t can ,en: ,ue cou-se to such a petition. In .ie6' ho6e.e-' of the cont-a,icto-: fin,in%s of fact of the RTC an, Cou-t of $ppeals' the Cou-t opts to accept the petition' this bein% one of the -eco%ni@e, eBceptions to Section .(7 2e too9 a si8ila- cou-se of action in $sia /-e6e-:' Inc. .. Cou-t of $ppeals(< 6hich also in.ol.e, a suit fo- t-a,e8a-9 inf-in%e8ent an, unfai- co8petition in 6hich the t-ial cou-t an, the Cou-t of $ppeals a--i.e, at conflictin% fin,in%s.

On the Manne- Respon,ents Use, >/i% Ma9> in thei- /usiness

Petitione-s conten, that the Cou-t of $ppeals e--e, in -ulin% that the co-po-ate na8e >*.C. /i% Ma9 /u-%e-' Inc.> appea-s in the pac9a%in% fo- -espon,ents+ ha8bu-%ep-o,ucts an, not the 6o-,s >/i% Ma9> onl:.

The contention has 8e-it.

The e.i,ence p-esente, ,u-in% the hea-in%s on petitione-s+ 8otion fo- the issuance of a 6-it of p-eli8ina-: inDunction sho6s that the plastic 6-appin%s an, plastic ba%s use, b: -espon,ents fo- thei- ha8bu-%e- san,6iches bo-e the 6o-,s >/i% Ma9.> The othe,esc-ipti.e 6o-,s >bu-%e-> an, > ))K pu-e beef> 6e-e set in s8alle- t:pe' alon% 6ith the locations of b-anches.(& Respon,ents+ cash in.oices si8pl: -efe- to thei- ha8bu-%esan,6iches as >/i% Ma9.>(# It is -espon,ents+ snac9 .ans that ca--: the 6o-,s >*.C. /i% Ma9 /u-%e-' Inc.>")

It 6as onl: ,u-in% the t-ial that -espon,ents p-esente, in e.i,ence the plastic 6-appe-s an, ba%s fo- thei- ha8bu-%e- san,6iches -elie, on b: the Cou-t of $ppeals." Respon,ents+ plastic 6-appe-s an, ba%s 6e-e i,entical 6ith those petitione-s p-esente, ,u-in% the hea-in%s fo- the inDuncti.e 6-it eBcept that the lette-s >*.C.> an, the 6o-,s >/u-%e-' Inc.> in -espon,ents+ e.i,ence 6e-e a,,e, abo.e an, belo6 the 6o-,s >/i% Ma9'> -especti.el:. Since petitione-s+ co8plaint 6as base, on facts eBistin% befo-e an, ,u-in% the hea-in%s on the inDuncti.e 6-it' the facts establishe, ,u-in% those hea-in%s a-e the p-ope- factual bases fo- the ,isposition of the issues -aise, in this petition.

On the Issue of T-a,e8a-9 Inf-in%e8ent

Section (( =>Section ((? of Republic $ct No. 77' as a8en,e, =>R$ 77>?' the la6 applicable to this case'"( ,efines t-a,e8a-9 inf-in%e8ent as follo6s5

Inf-in%e8ent' 6hat constitutes. L $n: pe-son 6ho E F shall use' 6ithout the consent of the -e%ist-ant' an: -ep-o,uction' counte-feit' cop: o- colo-able i8itation of an: -e%iste-e, 8a-9 o- t-a,eAna8e in connection 6ith the sale' offe-in% fo- sale' o- a,.e-tisin% of an: %oo,s' business o- se-.ices on o- in connection 6ith 6hich such use is li9el: to cause confusion o- 8ista9e o- to ,ecei.e pu-chase-s o- othe-s as to the sou-ce o- o-i%in of such %oo,s o- se-.ices' o- i,entit: of such businessI o- E(F -ep-o,uce' counte-feit' cop:' ocolo-abl: i8itate an: such 8a-9 o- t-a,eAna8e an, appl: such -ep-o,uction' counte-feit' cop:' o- colo-able i8itation to labels' si%ns' p-ints' pac9a%es' 6-appe-s' -eceptacles oa,.e-tise8ents inten,e, to be use, upon o- in connection 6ith such %oo,s' business ose-.ices' shall be liable to a ci.il action b: the -e%ist-ant fo- an: o- all of the -e8e,ies he-ein p-o.i,e,.""

Petitione-s base thei- cause of action un,e- the fi-st pa-t of Section ((' i.e. -espon,ents alle%e,l: use,' 6ithout petitione-s+ consent' a colo-able i8itation of the >/i% Mac> 8a-9 in a,.e-tisin% an, sellin% -espon,ents+ ha8bu-%e- san,6iches. This li9el: cause, confusion in the 8in, of the pu-chasin% public on the sou-ce of the ha8bu-%e-s o- the i,entit: of the business.

To establish t-a,e8a-9 inf-in%e8ent' the follo6in% ele8ents 8ust be sho6n5 = ? the .ali,it: of plaintiff+s 8a-9I =(? the plaintiff+s o6ne-ship of the 8a-9I an, ="? the use of the 8a-9 o- its colo-able i8itation b: the alle%e, inf-in%e- -esults in >li9elihoo, of confusion.>"! Of these' it is the ele8ent of li9elihoo, of confusion that is the %-a.a8en of t-a,e8a-9 inf-in%e8ent.";

On the Vali,it: of the >/i% Mac>Ma-9 an, McDonal,+s O6ne-ship of such Ma-9

$ 8a-9 is .ali, if it is >,istincti.e> an, thus not ba--e, f-o8 -e%ist-ation un,e- Section !"7 of R$ 77 =>Section !>?. 4o6e.e-' once -e%iste-e,' not onl: the 8a-9+s .ali,it: but also the -e%ist-ant+s o6ne-ship of the 8a-9 is p-i8a facie p-esu8e,."<

Respon,ents conten, that of the t6o 6o-,s in the >/i% Mac> 8a-9' it is onl: the 6o-,

>Mac> that is .ali, because the 6o-, >/i%> is %ene-ic an, ,esc-ipti.e =p-osc-ibe, un,eSection !EeF?' an, thus >incapable of eBclusi.e app-op-iation.>"&

The contention has no 8e-it. The >/i% Mac> 8a-9' 6hich shoul, be t-eate, in its enti-et: an, not ,issecte, 6o-, fo- 6o-,'"# is neithe- %ene-ic no- ,esc-ipti.e. Gene-ic 8a-9s a-e co88onl: use, as the na8e o- ,esc-iption of a 9in, of %oo,s'!) such as >*ite> fobee-! o- >Chocolate Fu,%e> fo- chocolate so,a ,-in9.!( Desc-ipti.e 8a-9s' on the othehan,' con.e: the cha-acte-istics' functions' Cualities o- in%-e,ients of a p-o,uct to one 6ho has ne.e- seen it o- ,oes not 9no6 it eBists'!" such as >$-th-itica-e> fo- a-th-itis 8e,ication.!! On the cont-a-:' >/i% Mac> falls un,e- the class of fanciful o- a-bit-a-: 8a-9s as it bea-s no lo%ical -elation to the actual cha-acte-istics of the p-o,uct it -ep-esents.!; $s such' it is hi%hl: ,istincti.e an, thus .ali,. Si%nificantl:' the t-a,e8a-9 >*ittle Debbie> fo- snac9 ca9es 6as foun, a-bit-a-: o- fanciful.!7

The Cou-t also fin,s that petitione-s ha.e ,ul: establishe, McDonal,+s eBclusi.e o6ne-ship of the >/i% Mac> 8a-9. $lthou%h Topacio an, the Isai:as G-oup -e%iste-e, the >/i% Mac> 8a-9 ahea, of McDonal,+s' Topacio' as petitione-s ,isclose,' ha, al-ea,: assi%ne, his -i%hts to McDonal,+s. The Isai:as G-oup' on the othe- han,' -e%iste-e, its t-a,e8a-9 onl: in the Supple8ental Re%iste-. $ 8a-9 6hich is not -e%iste-e, in the P-incipal Re%iste-' an, thus not ,istincti.e' has no -eal p-otection.!< In,ee,' 6e ha.e hel, that -e%ist-ation in the Supple8ental Re%iste- is not e.en a p-i8a facie e.i,ence of the .ali,it: of the -e%ist-ant+s eBclusi.e -i%ht to use the 8a-9 on the %oo,s specifie, in the ce-tificate.!&

On T:pes of Confusion

Section (( co.e-s t6o t:pes of confusion a-isin% f-o8 the use of si8ila- o- colo-able i8itation 8a-9s' na8el:' confusion of %oo,s =p-o,uct confusion? an, confusion of business =sou-ce o- o-i%in confusion?. In Ste-lin% P-o,ucts Inte-national' Inco-po-ate, .. Fa-benfab-i9en /a:e- $9tien%esellschaft' et al.'!# the Cou-t ,istin%uishe, these t6o t:pes of confusion' thus5

ERu,olfF Call8an notes t6o t:pes of confusion. The fi-st is the confusion of %oo,s >in 6hich e.ent the o-,ina-il: p-u,ent pu-chase- 6oul, be in,uce, to pu-chase one p-o,uct in the belief that he 6as pu-chasin% the othe-.> BBB The othe- is the confusion of business5 >4e-e thou%h the %oo,s of the pa-ties a-e ,iffe-ent' the ,efen,ant+s p-o,uct is such as 8i%ht -easonabl: be assu8e, to o-i%inate 6ith the plaintiff' an, the public 6oul, then be ,ecei.e, eithe- into that belief o- into the belief that the-e is so8e connection bet6een the plaintiff an, ,efen,ant 6hich' in fact' ,oes not eBist.>

Un,e- $ct No. 777';) the fi-st t-a,e8a-9 la6' inf-in%e8ent 6as li8ite, to confusion of %oo,s onl:' 6hen the inf-in%in% 8a-9 is use, on >%oo,s of a si8ila- 9in,.>; Thus' no -elief 6as affo-,e, to the pa-t: 6hose -e%iste-e, 8a-9 o- its colo-able i8itation is use, on ,iffe-ent althou%h -elate, %oo,s. To -e8e,: this situation' Con%-ess enacte, R$ 77 on () 3une #!<. In ,efinin% t-a,e8a-9 inf-in%e8ent' Section (( of R$ 77 ,elete, the -eCui-e8ent in Cuestion an, eBpan,e, its scope to inclu,e such use of the 8a-9 o- its colo-able i8itation that is li9el: to -esult in confusion on >the sou-ce o- o-i%in of such %oo,s o- se-.ices' o- i,entit: of such business.>;( Thus' 6hile the-e is confusion of %oo,s 6hen the p-o,ucts a-e co8petin%' confusion of business eBists 6hen the p-o,ucts a-e nonAco8petin% but -elate, enou%h to p-o,uce confusion of affiliation.;"

On 2hethe- Confusion of Goo,s an, Confusion of /usiness a-e $pplicable

Petitione-s clai8 that -espon,ents+ use of the >/i% Ma9> 8a-9 on -espon,ents+ ha8bu-%e-s -esults in confusion of %oo,s' pa-ticula-l: 6ith -espect to petitione-s+ ha8bu-%e-s labele, >/i% Mac.> Thus' petitione-s alle%e, in thei- co8plaint5

. ;. Defen,ants ha.e un,ul: p-eDu,ice, an, clea-l: inf-in%e, upon the p-ope-t: -i%hts of plaintiffs in the McDonal,+s Ma-9s' pa-ticula-l: the 8a-9 >/Ei%F MEacF>. Defen,ants+ unautho-i@e, acts a-e li9el:' an, calculate,' to confuse' 8islea, o- ,ecei.e the public into belie.in% that the p-o,ucts an, se-.ices offe-e, b: ,efen,ant /i% Ma9 /u-%e-' an, the business it is en%a%e, in' a-e app-o.e, an, sponso-e, b:' o- affiliate, 6ith' plaintiffs.;! =E8phasis supplie,?

Since -espon,ents use, the >/i% Ma9> 8a-9 on the sa8e %oo,s' i.e. ha8bu-%esan,6iches' that petitione-s+ >/i% Mac> 8a-9 is use,' t-a,e8a-9 inf-in%e8ent th-ou%h confusion of %oo,s is a p-ope- issue in this case.

Petitione-s also clai8 that -espon,ents+ use of the >/i% Ma9> 8a-9 in the sale of ha8bu-%e-s' the sa8e business that petitione-s a-e en%a%e, in' -esults in confusion of business. Petitione-s alle%e, in thei- co8plaint5

. ). Fo- so8e pe-io, of ti8e' an, 6ithout the consent of plaintiff McDonal,+s no- its licenseeMf-anchisee' plaintiff McGeo-%e' an, in clea- .iolation of plaintiffs+ eBclusi.e -i%ht

to use an,Mo- app-op-iate the McDonal,+s 8a-9s' ,efen,ant /i% Ma9 /u-%e- actin% th-ou%h in,i.i,ual ,efen,ants' has been ope-atin% >/i% Ma9 /u-%e->' a fast foo, -estau-ant business ,ealin% in the sale of ha8bu-%e- an, cheesebu-%e- san,6iches' f-ench f-ies an, othe- foo, p-o,ucts' an, has cause, to be p-inte, on the 6-appe- of ,efen,ant+s foo, p-o,ucts an, inco-po-ate, in its si%na%es the na8e >/i% Ma9 /u-%e->' 6hich is confusin%l: si8ila- to an,Mo- is a colo-able i8itation of the plaintiff McDonal,+s 8a-9 >/Ei%F MEacF>' BBB. Defen,ant /i% Ma9 /u-%e- has thus unDustl: c-eate, the i8p-ession that its business is app-o.e, an, sponso-e, b:' o- affiliate, 6ith' plaintiffs. BBBB

(.( $s a conseCuence of the acts co88itte, b: ,efen,ants' 6hich un,ul: p-eDu,ice an, inf-in%e upon the p-ope-t: -i%hts of plaintiffs McDonal,+s an, McGeo-%e as the -eal o6nean, -i%htful p-op-ieto-' an, the licenseeMf-anchisee' -especti.el:' of the McDonal,+s 8a-9s' an, 6hich a-e li9el: to ha.e cause, confusion o- ,ecei.e, the public as to the t-ue sou-ce' sponso-ship o- affiliation of ,efen,ants+ foo, p-o,ucts an, -estau-ant business' plaintiffs ha.e suffe-e, an, continue to suffe- actual ,a8a%es in the fo-8 of inDu-: to thei- business -eputation an, %oo,6ill' an, of the ,ilution of the ,istincti.e Cualit: of the McDonal,+s 8a-9s' in pa-ticula-' the 8a-9 >/Ei%F MEacF>.;; =E8phasis supplie,?

Respon,ents a,8it that thei- business inclu,es sellin% ha8bu-%e- san,6iches' the sa8e foo, p-o,uct that petitione-s sell usin% the >/i% Mac> 8a-9. Thus' t-a,e8a-9 inf-in%e8ent th-ou%h confusion of business is also a p-ope- issue in this case.

Respon,ents asse-t that thei- >/i% Ma9> ha8bu-%e-s cate- 8ainl: to the lo6Ainco8e %-oup 6hile petitione-s+ >/i% Mac> ha8bu-%e-s cate- to the 8i,,le an, uppe- inco8e %-oups. E.en if this is t-ue' the li9elihoo, of confusion of business -e8ains' since the lo6A inco8e %-oup 8i%ht be le, to belie.e that the >/i% Ma9> ha8bu-%e-s a-e the lo6Aen, ha8bu-%e-s 8a-9ete, b: petitione-s. $fte- all' petitione-s ha.e the eBclusi.e -i%ht to use the >/i% Mac> 8a-9. On the othe- han,' -espon,ents 6oul, benefit b: associatin% theilo6Aen, ha8bu-%e-s' th-ou%h the use of the >/i% Ma9> 8a-9' 6ith petitione-s+ hi%hAen, >/i% Mac> ha8bu-%e-s' lea,in% to li9elihoo, of confusion in the i,entit: of business.

Respon,ents fu-the- clai8 that petitione-s use the >/i% Mac> 8a-9 onl: on petitione-s+ ,oubleA,ec9e- ha8bu-%e-s' 6hile -espon,ents use the >/i% Ma9> 8a-9 on ha8bu-%e-s an, othe- p-o,ucts li9e siopao' noo,les an, pi@@a. Respon,ents also point out that petitione-s sell thei- /i% Mac ,oubleA,ec9e-s in a st:-ofoa8 boB 6ith the >McDonal,+s> lo%o an, t-a,e8a-9 in -e,' bloc9 lette-s at a p-ice 8o-e eBpensi.e than the ha8bu-%e-s of -espon,ents. In cont-ast' -espon,ents sell thei- /i% Ma9 ha8bu-%e-s in plastic 6-appe-s an, plastic ba%s. Respon,ents fu-the- point out that petitione-s+ -estau-ants a-e

ai-Acon,itione, buil,in%s 6ith ,-i.eAth-u se-.ice' co8pa-e, to -espon,ents+ 8obile .ans.

These an, othe- facto-s -espon,ents cite cannot ne%ate the un,ispute, fact that -espon,ents use thei- >/i% Ma9> 8a-9 on ha8bu-%e-s' the sa8e foo, p-o,uct that petitione-s+ sell 6ith the use of thei- -e%iste-e, 8a-9 >/i% Mac.> 2hethe- a ha8bu-%e- is sin%le' ,ouble o- t-ipleA,ec9e-' an, 6hethe- 6-appe, in plastic o- st:-ofoa8' it -e8ains the sa8e ha8bu-%e- foo, p-o,uct. E.en -espon,ents+ use of the >/i% Ma9> 8a-9 on nonA ha8bu-%e- foo, p-o,ucts cannot eBcuse thei- inf-in%e8ent of petitione-s+ -e%iste-e, 8a-9' othe-6ise -e%iste-e, 8a-9s 6ill lose thei- p-otection un,e- the la6.

The -e%iste-e, t-a,e8a-9 o6ne- 8a: use his 8a-9 on the sa8e o- si8ila- p-o,ucts' in ,iffe-ent se%8ents of the 8a-9et' an, at ,iffe-ent p-ice le.els ,epen,in% on .a-iations of the p-o,ucts fo- specific se%8ents of the 8a-9et. The Cou-t has -eco%ni@e, that the -e%iste-e, t-a,e8a-9 o6ne- enDo:s p-otection in p-o,uct an, 8a-9et a-eas that a-e the no-8al potential eBpansion of his business. Thus' the Cou-t has ,ecla-e,5

Mo,e-n la6 -eco%ni@es that the p-otection to 6hich the o6ne- of a t-a,e8a-9 is entitle, is not li8ite, to %ua-,in% his %oo,s o- business f-o8 actual 8a-9et co8petition 6ith i,entical o- si8ila- p-o,ucts of the pa-ties' but eBten,s to all cases in 6hich the use b: a Dunio- app-op-iato- of a t-a,eA8a-9 o- t-a,eAna8e is li9el: to lea, to a confusion of sou-ce' as 6he-e p-ospecti.e pu-chase-s 6oul, be 8isle, into thin9in% that the co8plainin% pa-t: has eBten,e, his business into the fiel, =see !& $*R ;7 et seCI ;" $8 3u-. ;<7? o- is in an: 6a: connecte, 6ith the acti.ities of the inf-in%e-I o- 6hen it fo-estalls the no-8al potential eBpansion of his business =.. !& $*R' <<' &!I ;( $8. 3u-. ;<7' ;<<?.;7 =E8phasis supplie,?

On 2hethe- Respon,ents+ Use of the >/i% Ma9> Ma-9 Results in *i9elihoo, of Confusion

In ,ete-8inin% li9elihoo, of confusion' Du-isp-u,ence has ,e.elope, t6o tests' the ,o8inanc: test an, the holistic test.;< The ,o8inanc: test focuses on the si8ila-it: of the p-e.alent featu-es of the co8petin% t-a,e8a-9s that 8i%ht cause confusion. In cont-ast' the holistic test -eCui-es the cou-t to consi,e- the enti-et: of the 8a-9s as applie, to the p-o,ucts' inclu,in% the labels an, pac9a%in%' in ,ete-8inin% confusin% si8ila-it:.

The Cou-t of $ppeals' in fin,in% that the-e is no li9elihoo, of confusion that coul, a-ise in

the use of -espon,ents+ >/i% Ma9> 8a-9 on ha8bu-%e-s' -elie, on the holistic test. Thus' the Cou-t of $ppeals -ule, that >it is not sufficient that a si8ila-it: eBists in both na8e=s?' but that 8o-e i8po-tantl:' the o.e-all p-esentation' o- in thei- essential' substanti.e an, ,istincti.e pa-ts is such as 6oul, li9el: MIS*E$D o- CONFUSE pe-sons in the o-,ina-: cou-se of pu-chasin% the %enuine a-ticle.> The holistic test consi,e-s the t6o 8a-9s in thei- enti-et:' as the: appea- on the %oo,s 6ith thei- labels an, pac9a%in%. It is not enou%h to consi,e- thei- 6o-,s an, co8pa-e the spellin% an, p-onunciation of the 6o-,s.;&

Respon,ents no6 .i%o-ousl: a-%ue that the Cou-t of $ppeals+ application of the holistic test to this case is co--ect an, in acco-, 6ith p-e.ailin% Du-isp-u,ence.

This Cou-t' ho6e.e-' has -elie, on the ,o8inanc: test -athe- than the holistic test. The ,o8inanc: test consi,e-s the ,o8inant featu-es in the co8petin% 8a-9s in ,ete-8inin% 6hethe- the: a-e confusin%l: si8ila-. Un,e- the ,o8inanc: test' cou-ts %i.e %-eate6ei%ht to the si8ila-it: of the appea-ance of the p-o,uct a-isin% f-o8 the a,option of the ,o8inant featu-es of the -e%iste-e, 8a-9' ,is-e%a-,in% 8ino- ,iffe-ences.;# Cou-ts 6ill consi,e- 8o-e the au-al an, .isual i8p-essions c-eate, b: the 8a-9s in the public 8in,' %i.in% little 6ei%ht to facto-s li9e p-ices' Cualit:' sales outlets an, 8a-9et se%8ents.

Thus' in the #;! case of Co Tion% Sa .. Di-ecto- of Patents'7) the Cou-t -ule,5

BBB It has been consistentl: hel, that the Cuestion of inf-in%e8ent of a t-a,e8a-9 is to be ,ete-8ine, b: the test of ,o8inanc:. Si8ila-it: in si@e' fo-8 an, colo-' 6hile -ele.ant' is not conclusi.e. If the co8petin% t-a,e8a-9 contains the 8ain o- essential o- ,o8inant featu-es of anothe-' an, confusion an, ,eception is li9el: to -esult' inf-in%e8ent ta9es place. Duplication o- i8itation is not necessa-:I no- is it necessa-: that the inf-in%in% label shoul, su%%est an effo-t to i8itate. =G. 4eil8an /-e6in% Co. .s. In,epen,ent /-e6in% Co.' # F.' !&#' !#;' citin% Ea%le 2hite *ea, Co. .s. Pflu%h =CC? &) Fe,. ;<#?. The Cuestion at issue in cases of inf-in%e8ent of t-a,e8a-9s is 6hethe- the use of the 8a-9s in.ol.e, 6oul, be li9el: to cause confusion o- 8ista9es in the 8in, of the public o,ecei.e pu-chase-s. =$ubu-n Rubbe- Co-po-ation .s. 4ono.e- Rubbe- Co.' )< F. (, ;&&I BBB? =E8phasis supplie,.?

The Cou-t -eite-ate, the ,o8inanc: test in *i8 4oa .. Di-ecto- of Patents'7 Phil. Nut In,ust-:' Inc. .. Stan,a-, /-an,s Inc.'7( Con.e-se Rubbe- Co-po-ation .. Uni.e-sal Rubbe- P-o,ucts' Inc.'7" an, $sia /-e6e-:' Inc. .. Cou-t of $ppeals.7! In the ()) case of Societe Des P-o,uits NestlN' S.$. .. Cou-t of $ppeals'7; the Cou-t eBplicitl: -eDecte, the holistic test in this 6ise5

ETFhe totalit: o- holistic test is cont-a-: to the ele8enta-: postulate of the la6 on t-a,e8a-9s an, unfai- co8petition that confusin% si8ila-it: is to be ,ete-8ine, on the basis of .isual' au-al' connotati.e co8pa-isons an, o.e-all i8p-essions en%en,e-e, b: the 8a-9s in cont-o.e-s: as the: a-e encounte-e, in the -ealities of the 8a-9etplace. =E8phasis supplie,?

The test of ,o8inanc: is no6 eBplicitl: inco-po-ate, into la6 in Section ;;. of the Intellectual P-ope-t: Co,e 6hich ,efines inf-in%e8ent as the >colo-able i8itation of a -e%iste-e, 8a-9 BBB o- a ,o8inant featu-e the-eof.>

$ppl:in% the ,o8inanc: test' the Cou-t fin,s that -espon,ents+ use of the >/i% Ma9> 8a-9 -esults in li9elihoo, of confusion. Fi-st' >/i% Ma9> soun,s eBactl: the sa8e as >/i% Mac.> Secon,' the fi-st 6o-, in >/i% Ma9> is eBactl: the sa8e as the fi-st 6o-, in >/i% Mac.> Thi-,' the fi-st t6o lette-s in >Ma9> a-e the sa8e as the fi-st t6o lette-s in >Mac.> Fou-th' the last lette- in >Ma9> 6hile a >9> soun,s the sa8e as >c> 6hen the 6o-, >Ma9> is p-onounce,. Fifth' in Filipino' the lette- >9> -eplaces >c> in spellin%' thus >Caloocan> is spelle, >0aloo9an.>

In sho-t' au-all: the t6o 8a-9s a-e the sa8e' 6ith the fi-st 6o-, of both 8a-9s phoneticall: the sa8e' an, the secon, 6o-, of both 8a-9s also phoneticall: the sa8e. Visuall:' the t6o 8a-9s ha.e both t6o 6o-,s an, siB lette-s' 6ith the fi-st 6o-, of both 8a-9s ha.in% the sa8e lette-s an, the secon, 6o-, ha.in% the sa8e fi-st t6o lette-s. In spellin%' consi,e-in% the Filipino lan%ua%e' e.en the last lette-s of both 8a-9s a-e the sa8e.

Clea-l:' -espon,ents ha.e a,opte, in >/i% Ma9> not onl: the ,o8inant but also al8ost all the featu-es of >/i% Mac.> $pplie, to the sa8e foo, p-o,uct of ha8bu-%e-s' the t6o 8a-9s 6ill li9el: -esult in confusion in the public 8in,.

The Cou-t has ta9en into account the au-al effects of the 6o-,s an, lette-s containe, in the 8a-9s in ,ete-8inin% the issue of confusin% si8ila-it:. Thus' in Ma-.eB Co88e-cial Co.' Inc. .. Pet-a 4a6pia O Co.' et al.'77 the Cou-t hel,5

The follo6in% -an,o8 list of confusin%l: si8ila- soun,s in the 8atte- of t-a,e8a-9s' culle, f-o8 Ni8s' Unfai- Co8petition an, T-a,e Ma-9s' #!<' Vol. ' 6ill -einfo-ce ou.ie6 that >S$*ONP$S> an, >*IONP$S> a-e confusin%l: si8ila- in soun,5 >Gol, Dust> an,

>Gol, D-op>I >3ant@en> an, >3assASea>I >Sil.e- Flash> an, >Suppe- Flash>I >Casca-ete> an, >Celbo-ite>I >Celluloi,> an, >Cellonite>I >Cha-t-euse> an, >Cha-seu-s>I >CuteB> an, >Cuticlean>I >4ebe> an, >MeDe>I >0oteB> an, >Fe8eteB>I >Puso> an, >4oo 4oo>. *eon $8,u-' in his boo9 >T-a,eAMa-9 *a6 an, P-actice>' pp. ! #A!( ' cities' as co8in% 6ithin the pu-.ie6 of the i,e8 sonans -ule' >1usea> an, >UACA$>' >Stein6a: Pianos> an, >Steinbe-% Pianos>' an, >Se.enAUp> an, >*e8onAUp>. In Co Tion% .s. Di-ecto- of Patents' this Cou-t uneCui.ocall: sai, that >Cel,u-a> an, >Co-,u-a> a-e confusin%l: si8ila- in soun,I this Cou-t hel, in Sapolin Co. .s. /al8ace,a' 7< Phil. <#; that the na8e >*usolin> is an inf-in%e8ent of the t-a,e8a-9 >Sapolin>' as the soun, of the t6o na8es is al8ost the sa8e. =E8phasis supplie,?

Ce-tainl:' >/i% Mac> an, >/i% Ma9> fo- ha8bu-%e-s c-eate e.en %-eate- confusion' not onl: au-all: but also .isuall:.

In,ee,' a pe-son cannot ,istin%uish >/i% Mac> f-o8 >/i% Ma9> b: thei- soun,. 2hen one hea-s a >/i% Mac> o- >/i% Ma9> ha8bu-%e- a,.e-tise8ent o.e- the -a,io' one 6oul, not 9no6 6hethe- the >Mac> o- >Ma9> en,s 6ith a >c> o- a >9.>

Petitione-s+ a%%-essi.e p-o8otion of the >/i% Mac> 8a-9' as bo-ne b: thei- a,.e-tise8ent eBpenses' has built %oo,6ill an, -eputation fo- such 8a-9 8a9in% it one of the easil: -eco%ni@able 8a-9s in the 8a-9et to,a:. This inc-eases the li9elihoo, that consu8e-s 6ill 8ista9enl: associate petitione-s+ ha8bu-%e-s an, business 6ith those of -espon,ents+.

Respon,ents+ inabilit: to eBplain sufficientl: ho6 an, 6h: the: ca8e to choose >/i% Ma9> fo- thei- ha8bu-%e- san,6iches in,icates thei- intent to i8itate petitione-s+ >/i% Mac> 8a-9. Cont-a-: to the Cou-t of $ppeals+ fin,in%' -espon,ents+ clai8 that thei- >/i% Ma9> 8a-9 6as inspi-e, b: the fi-st na8es of -espon,ent D:+s 8othe- =MaBi8a? an, fathe=0i8so:? is not c-e,ible. $s petitione-s 6ell note,5

ERFespon,ents' pa-ticula-l: Respon,ent M-. F-ancis D:' coul, ha.e a--i.e, at a 8o-e c-eati.e choice fo- a co-po-ate na8e b: usin% the na8es of his pa-ents' especiall: since he 6as alle%e,l: ,-i.en b: senti8ental -easons. Fo- one' he coul, ha.e put his fathe-+s na8e ahea, of his 8othe-+s' as is usuall: ,one in this pat-ia-chal societ:' an, ,e-i.e, lette-s f-o8 sai, na8es in that o-,e-. O-' he coul, ha.e ta9en an eCual nu8be- of lette-s =i.e.' t6o? f-o8 each na8e' as is the 8o-e usual thin% ,one. Su-el:' the 8o-e plausible -eason behin, Respon,ents+ choice of the 6o-, >MEa9F>' especiall: 6hen ta9en in conDunction 6ith the 6o-, >/Ei%F>' 6as thei- intent to ta9e a,.anta%e of Petitione-s+ BBB >/Ei%F MEacF> t-a,e8a-9' 6ith thei- alle%e, senti8entAfocuse, >eBplanation> 8e-el: thou%ht of as a con.enient' albeit una.ailin%' eBcuse o- ,efense fo- such an unfai- choice

of na8e.7<

$bsent p-oof that -espon,ents+ a,option of the >/i% Ma9> 8a-9 6as ,ue to honest 8ista9e o- 6as fo-tuitous'7& the inescapable conclusion is that -espon,ents a,opte, the >/i% Ma9> 8a-9 to >-i,e on the coattails> of the 8o-e establishe, >/i% Mac> 8a-9.7# This sa.es -espon,ents 8uch of the eBpense in a,.e-tisin% to c-eate 8a-9et -eco%nition of thei- 8a-9 an, ha8bu-%e-s.<)

Thus' 6e hol, that confusion is li9el: to -esult in the public 8in,. 2e sustain petitione-s+ clai8 of t-a,e8a-9 inf-in%e8ent.

On the *ac9 of P-oof of $ctual Confusion

Petitione-s+ failu-e to p-esent p-oof of actual confusion ,oes not ne%ate thei- clai8 of t-a,e8a-9 inf-in%e8ent. $s note, in $8e-ican 2i-e O Cable Co. .. Di-ecto- of Patents'< Section (( -eCui-es the less st-in%ent stan,a-, of >li9elihoo, of confusion> onl:. 2hile p-oof of actual confusion is the best e.i,ence of inf-in%e8ent' its absence is inconseCuential.<(

On the Issue of Unfai- Co8petition

Section (# =>Section (#>?<" of R$ 77 ,efines unfai- co8petition' thus5

BBBB

$n: pe-son 6ho 6ill e8plo: ,eception o- an: othe- 8eans cont-a-: to %oo, faith b: 6hich he shall pass off the %oo,s 8anufactu-e, b: hi8 o- in 6hich he ,eals' o- his business' o- se-.ices fo- those of the one ha.in% establishe, such %oo,6ill' o- 6ho shall co88it an: acts calculate, to p-o,uce sai, -esult' shall be %uilt: of unfai- co8petition' an, shall be subDect to an action the-efo-.

In pa-ticula-' an, 6ithout in an: 6a: li8itin% the scope of unfai- co8petition' the

follo6in% shall be ,ee8e, %uilt: of unfai- co8petition5

=a? $n: pe-son' 6ho in sellin% his %oo,s shall %i.e the8 the %ene-al appea-ance of %oo,s of anothe- 8anufactu-e- o- ,eale-' eithe- as to the %oo,s the8sel.es o- in the 6-appin% of the pac9a%es in 6hich the: a-e containe,' o- the ,e.ices o- 6o-,s the-eon' o- in an: featu-e of thei- appea-ance' 6hich 6oul, be li9el: to influence pu-chase-s to belie.e that the %oo,s offe-e, a-e those of a 8anufactu-e- o- ,eale-' othe- than the actual 8anufactu-e- o- ,eale-' o- 6ho othe-6ise clothes the %oo,s 6ith such appea-ance as shall ,ecei.e the public an, ,ef-au, anothe- of his le%iti8ate t-a,e' o- an: subseCuent .en,o- of such %oo,s o- an: a%ent of an: .en,o- en%a%e, in sellin% such %oo,s 6ith a li9e pu-poseI

=b? $n: pe-son 6ho b: an: a-tifice' o- ,e.ice' o- 6ho e8plo:s an: othe- 8eans calculate, to in,uce the false belief that such pe-son is offe-in% the se-.ices of anothe6ho has i,entifie, such se-.ices in the 8in, of the publicI o-

=c? $n: pe-son 6ho shall 8a9e an: false state8ent in the cou-se of t-a,e o- 6ho shall co88it an: othe- act cont-a-: to %oo, faith of a natu-e calculate, to ,isc-e,it the %oo,s' business o- se-.ices of anothe-. =E8phasis supplie,?

The essential ele8ents of an action fo- unfai- co8petition a-e = ? confusin% si8ila-it: in the %ene-al appea-ance of the %oo,s' an, =(? intent to ,ecei.e the public an, ,ef-au, a co8petito-.<! The confusin% si8ila-it: 8a: o- 8a: not -esult f-o8 si8ila-it: in the 8a-9s' but 8a: -esult f-o8 othe- eBte-nal facto-s in the pac9a%in% o- p-esentation of the %oo,s. The intent to ,ecei.e an, ,ef-au, 8a: be infe--e, f-o8 the si8ila-it: of the appea-ance of the %oo,s as offe-e, fo- sale to the public.<; $ctual f-au,ulent intent nee, not be sho6n.<7

Unfai- co8petition is b-oa,e- than t-a,e8a-9 inf-in%e8ent an, inclu,es passin% off %oo,s 6ith o- 6ithout t-a,e8a-9 inf-in%e8ent. T-a,e8a-9 inf-in%e8ent is a fo-8 of unfaico8petition.<< T-a,e8a-9 inf-in%e8ent constitutes unfai- co8petition 6hen the-e is not 8e-el: li9elihoo, of confusion' but also actual o- p-obable ,eception on the public because of the %ene-al appea-ance of the %oo,s. The-e can be t-a,e8a-9 inf-in%e8ent 6ithout unfai- co8petition as 6hen the inf-in%e- ,iscloses on the labels containin% the 8a-9 that he 8anufactu-es the %oo,s' thus p-e.entin% the public f-o8 bein% ,ecei.e, that the %oo,s o-i%inate f-o8 the t-a,e8a-9 o6ne-.<&

To suppo-t thei- clai8 of unfai- co8petition' petitione-s alle%e that -espon,ents

f-au,ulentl: passe, off thei- ha8bu-%e-s as >/i% Mac> ha8bu-%e-s. Petitione-s a,, that -espon,ents+ f-au,ulent intent can be infe--e, f-o8 the si8ila-it: of the 8a-9s in Cuestion.<#

Passin% off =o- pal8in% off? ta9es place 6he-e the ,efen,ant' b: i8itati.e ,e.ices on the %ene-al appea-ance of the %oo,s' 8islea,s p-ospecti.e pu-chase-s into bu:in% his 8e-chan,ise un,e- the i8p-ession that the: a-e bu:in% that of his co8petito-s.&) Thus' the ,efen,ant %i.es his %oo,s the %ene-al appea-ance of the %oo,s of his co8petito- 6ith the intention of ,ecei.in% the public that the %oo,s a-e those of his co8petito-.

The RTC ,esc-ibe, the -especti.e 8a-9s an, the %oo,s of petitione-s an, -espon,ents in this 6ise5

The 8a-9 >/Ei%F MEacF> is use, b: plaintiff McDonal,+s to i,entif: its ,ouble ,ec9eha8bu-%e- san,6ich. The pac9a%in% 8ate-ial is a st:-ofoa8 boB 6ith the McDonal,+s lo%o an, t-a,e8a-9 in -e, 6ith bloc9 capital lette-s p-inte, on it. $ll lette-s of the >/Ei%F MEacF> 8a-9 a-e also in -e, an, bloc9 capital lette-s. On the othe- han,' ,efen,ants+ >/Ei%F MEa9F> sc-ipt p-int is in o-an%e 6ith onl: the lette- >/> an, >M> bein% capitali@e, an, the pac9a%in% 8ate-ial is plastic 6-appe-. BBBB Fu-the-' plaintiffs+ lo%o an, 8ascot a-e the u8b-ella >M> an, >Ronal, McDonal,+s>' -especti.el:' co8pa-e, to the 8ascot of ,efen,ant Co-po-ation 6hich is a chubb: bo: calle, >Mac9:> ,ispla:e, o- p-inte, bet6een the 6o-,s >/i%> an, >Ma9.>& =E8phasis supplie,?

Respon,ents point to these ,issi8ila-ities as p-oof that the: ,i, not %i.e theiha8bu-%e-s the %ene-al appea-ance of petitione-s+ >/i% Mac> ha8bu-%e-s.

The ,issi8ila-ities in the pac9a%in% a-e 8ino- co8pa-e, to the sta-9 si8ila-ities in the 6o-,s that %i.e -espon,ents+ >/i% Ma9> ha8bu-%e-s the %ene-al appea-ance of petitione-s+ >/i% Mac> ha8bu-%e-s. Section (#=a? eBp-essl: p-o.i,es that the si8ila-it: in the %ene-al appea-ance of the %oo,s 8a: be in the >,e.ices o- 6o-,s> use, on the 6-appin%s. Respon,ents ha.e applie, on thei- plastic 6-appe-s an, ba%s al8ost the sa8e 6o-,s that petitione-s use on thei- st:-ofoa8 boB. 2hat att-acts the attention of the bu:in% public a-e the 6o-,s >/i% Ma9> 6hich a-e al8ost the sa8e' au-all: an, .isuall:' as the 6o-,s >/i% Mac.> The ,issi8ila-ities in the 8ate-ial an, othe- ,e.ices a-e insi%nificant co8pa-e, to the %la-in% si8ila-it: in the 6o-,s use, in the 6-appin%s.

Section (#=a? also p-o.i,es that the ,efen,ant %i.es >his %oo,s the %ene-al appea-ance of %oo,s of anothe- 8anufactu-e-.> Respon,ents+ %oo,s a-e ha8bu-%e-s 6hich a-e also

the %oo,s of petitione-s. If -espon,ents sol, e%% san,6iches onl: instea, of ha8bu-%esan,6iches' thei- use of the >/i% Ma9> 8a-9 6oul, not %i.e thei- %oo,s the %ene-al appea-ance of petitione-s+ >/i% Mac> ha8bu-%e-s. In such case' the-e is onl: t-a,e8a-9 inf-in%e8ent but no unfai- co8petition. 4o6e.e-' since -espon,ents chose to appl: the >/i% Ma9> 8a-9 on ha8bu-%e-s' Dust li9e petitione-+s use of the >/i% Mac> 8a-9 on ha8bu-%e-s' -espon,ents ha.e ob.iousl: clothe, thei- %oo,s 6ith the %ene-al appea-ance of petitione-s+ %oo,s.

Mo-eo.e-' the-e is no notice to the public that the >/i% Ma9> ha8bu-%e-s a-e p-o,ucts of >*.C. /i% Ma9 /u-%e-' Inc.> Respon,ents int-o,uce, ,u-in% the t-ial plastic 6-appe-s an, ba%s 6ith the 6o-,s >*.C. /i% Ma9 /u-%e-' Inc.> to info-8 the public of the na8e of the selle- of the ha8bu-%e-s. 4o6e.e-' petitione-s int-o,uce, ,u-in% the inDuncti.e hea-in%s plastic 6-appe-s an, ba%s 6ith the >/i% Ma9> 8a-9 6ithout the na8e >*.C. /i% Ma9 /u-%e-' Inc.> Respon,ents+ belate, p-esentation of plastic 6-appe-s an, ba%s bea-in% the na8e of >*.C. /i% Ma9 /u-%e-' Inc.> as the selle- of the ha8bu-%e-s is an afte-Athou%ht ,esi%ne, to eBculpate the8 f-o8 thei- unfai- business con,uct. $s ea-lie- state,' 6e cannot consi,e- -espon,ents+ e.i,ence since petitione-s+ co8plaint 6as base, on facts eBistin% befo-e an, ,u-in% the inDuncti.e hea-in%s.

Thus' the-e is actuall: no notice to the public that the >/i% Ma9> ha8bu-%e-s a-e p-o,ucts of >*.C. /i% Ma9 /u-%e-' Inc.> an, not those of petitione-s 6ho ha.e the eBclusi.e -i%ht to the >/i% Mac> 8a-9. This clea-l: sho6s -espon,ents+ intent to ,ecei.e the public. 4a, -espon,ents+ place, a notice on thei- plastic 6-appe-s an, ba%s that the ha8bu-%e-s a-e sol, b: >*.C. /i% Ma9 /u-%e-' Inc.>' then the: coul, .ali,l: clai8 that the: ,i, not inten, to ,ecei.e the public. In such case' the-e is onl: t-a,e8a-9 inf-in%e8ent but no unfaico8petition.&( Respon,ents' ho6e.e-' ,i, not %i.e such notice. 2e hol, that as foun, b: the RTC' -espon,ent co-po-ation is liable fo- unfai- co8petition.

The Re8e,ies $.ailable to Petitione-s

Un,e- Section ("&" =>Section (">? in -elation to Section (# of R$ 77' a plaintiff 6ho successfull: 8aintains t-a,e8a-9 inf-in%e8ent an, unfai- co8petition clai8s is entitle, to inDuncti.e an, 8oneta-: -eliefs. 4e-e' the RTC ,i, not e-- in issuin% the inDuncti.e 6-it of 7 $u%ust ##) =8a,e pe-8anent in its Decision of ; Septe8be- ##!? an, in o-,e-in% the pa:8ent of P!))'))) actual ,a8a%es in fa.o- of petitione-s. The inDuncti.e 6-it is in,ispensable to p-e.ent fu-the- acts of inf-in%e8ent b: -espon,ent co-po-ation. $lso' the a8ount of actual ,a8a%es is a -easonable pe-centa%e = .#K? of -espon,ent co-po-ation+s %-oss sales fo- th-ee = #&&A #&# an, ## ? of the siB :ea-s = #&!A ##)? -espon,ents ha.e use, the >/i% Ma9> 8a-9.&!

The RTC also ,i, not e-- in a6a-,in% eBe8pla-: ,a8a%es b: 6a: of co--ection fo- the public %oo,&; in .ie6 of the fin,in% of unfai- co8petition 6he-e intent to ,ecei.e the public is essential. The a6a-, of atto-ne:+s fees an, eBpenses of liti%ation is also in o-,e-.&7

24EREFORE' 6e GR$NT the instant petition. 2e SET $SIDE the Decision ,ate, (7 No.e8be- ### of the Cou-t of $ppeals an, its Resolution ,ate, 3ul: ())) an, REINST$TE the Decision ,ate, ; Septe8be- ##! of the Re%ional T-ial Cou-t of Ma9ati' /-anch "<' fin,in% -espon,ent *.C. /i% Ma9 /u-%e-' Inc. liable fo- t-a,e8a-9 inf-in%e8ent an, unfai- co8petition.

SO ORDERED.

Da.i,e' C.3. =Chai-8an?' Juisu8bin%' 1na-esASantia%o an, $@cuna' 33.' concu-.