GALAMAY, JAIME

A. Smith Kline Beckman, Corp. vs. Court of Appeals and Tryco Pharma Corp., G.R.
No. 126627, August 14, 2003

DOCTRINE:
When the language of its claims is clear and distinct, the patentee is bound thereby and
may not claim anything beyond them.
FACTS:
Petitioner Smith Kline Beckman Corporation (SKBC) was granted by the Philippine
Patent Office Letters Patent No. 14561 over an invented compound entitled “Methods
and Compositions for Producing Biphasic Parasiticide Activity Using Methyl 5
Propylthio-2-Benzimidazole Carbamate.” Such compound is claimed to be an active
ingredient in fighting various parasites in certain types of domestic and livestock
animals.
Respondent Tryco Pharma (Tryco) sells veterinary products including a drug Impregon
which contains Albendazole as an active ingredient which fights against parasites in
animals.
Petitioner SKBC then filed an action against respondent Tryco for patent infringement
claiming that the patent granted to them includes said Albendazole.
In their defense respondent Tryco alleges that Letters Patent No. 14561 granted to
petitioner SKBC does not include Albendazole for nowhere is such word found in the
patent.
The Trial Court rendered its decision in favor of respondent Tryco which was affirmed
by the Court of Appeals.

ISSUE:
Whether or not the Court of Appeals erred in not finding that Albendazole is included in
petitioners Letter Pattent No. 14561?
RULING:
From an examination of the evidence on record, the Court finds nothing infirm in the
appellate court’s conclusions with respect to the principal issue of whether Tycho
Pharma committed patent infringement to the prejudice of SKBC. The burden of proof to
substantiate a charge for patent infringement rests on the plaintiff. In the case at bar,
petitioner’s evidence consists primarily of its Letters Patent No. 14561, and the
testimony of Dr. Orinion, its general manager in the Philippines for its Animal Health
Products Division, by which it sought to show that its patent for the compound methyl 5
propylthio-2- benzimidazole carbamate also covers the substance Albendazole. From a
reading of the 9 claims of Letters Patent No. 14561 in relation to the other portions
thereof, no mention is made of the compound Albendazole.

When the language of its claims is clear and distinct, the patentee is bound thereby and
may not claim anything beyond them. And so are the courts bound which may not add
to or detract from the claims matters not expressed or necessarily implied, nor may
they enlarge the patent beyond the scope of that which the inventor claimed and the
patent office allowed, even if the patentee may have been entitled to something more
than the words it had chosen would include. It bears stressing that the mere absence of
the word Albendazole in Letters Patent No. 14561 is not determinative of Albendazole’s
non-inclusion in the claims of the patent. While Albendazole is admittedly a chemical
compound that exists by a name different from that covered in SKBC’s letters patent, the
language of Letter Patent No. 14561 fails to yield anything at all regarding Albendazole.
And no extrinsic evidence had been adduced to prove that Albendazole inheres in
SKBC’s patent in spite of its omission therefrom or that the meaning of the claims of the
patent embraces the same. While SKBC concedes that the mere literal wordings of its
patent cannot establish Tyco Pharma’s infringement, it urges the Court to apply the
doctrine of equivalents.
The doctrine of equivalents provides that an infringement also takes place when a
device appropriates a prior invention by incorporating its innovative concept and,
although with some modification and change, performs substantially the same function
in substantially the same way to achieve substantially the same result. Yet again, a
scrutiny of SKBC’s evidence fails to convince the Court of the substantial sameness of
SKBC’s patented compound and Albendazole. While both compounds have the effect of
neutralizing parasites in animals, identity of result does not amount to infringement of
patent unless Albendazole operates in substantially the same way or by substantially
the same means as the patented compound, even though it performs the same function
and achieves the same result.
In other words, the principle or mode of operation must be the same or substantially
the same. The doctrine of equivalents thus requires satisfaction of the function-means-
and-result test, the patentee having the burden to show that all three components of
such equivalency test are met.
B. La Chemise Lacoste vs. Fernandez, G.R. No. L-63796, May 21, 1984
DOCTRINE:
A Foreign Corporation not doing business in the Philippines needs no license to
sue in the Philippines for trademark violations.
Right of the owner of the trademark cannot be preempted by fact that another
first secures its registration in the Supplemental Register.

FACTS:
La Chemise Lacoste is a French corporation and the actual owner of the trademarks
“Lacoste,” “Chemise Lacoste,” “Crocodile Device” and a composite mark consisting of the
word “Lacoste” and a representation of a crocodile/alligator, used on clothings and
other goods sold in many parts of the world and which has been marketed in the
Philippines since 1964.
In 1975, Hemandas & Co., a duly licensed domestic firm applied for and was issued Reg.
No. SR-2225 (SR stands for Supplemental Register) for the trademark "CHEMISE
LACOSTE & CROCODILE DEVICE" by the Philippine Patent Office for use on T-shirts,
sportswear and other garment products of the company. Two years later, it applied for
the registration of the same trademark under the Principal Register.
Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas all rights,
title, and interest in the trademark "CHEMISE LACOSTE & DEVICE".
In 1980, La Chemise Lacoste filed for the registration of the “Crocodile device” and
“Lacoste”. Games and Garments opposed the registration of “Lacoste.” In 1983, La
Chemise Lacoste filed with the NBI a letter-complaint alleging acts of unfair competition
committed by Hemandas and requesting the agency’s assistance. A search warrant was
issued by the trial court. Various goods and articles were seized upon the execution of
the warrants. Hemandas filed motion to quash the warrants, which the court granted.
The search warrants were recalled, and the goods ordered to be returned. La Chemise
Lacoste filed a petition for certiorari.
ISSUE:
Whether or not petitioner has the right to maintain the present suit before our courts
for unfair competition or infringement of trademarks of a foreign corporation?
RULING:
Yes. The petitioner has the right to maintain the present suit before our courts for unfair
competition or infringement of trademarks of a foreign corporation. As early as 1927,
this Court was, and it still is, of the view that a foreign corporation not doing business in
the Philippines needs no license to sue before Philippine courts for infringement of
trademark and unfair competition. Thus, in Western Equipment and Supply Co. v. Reyes
(51 Phil. 115), this Court held that a foreign corporation which has never done any
business in the Philippines and which is unlicensed and unregistered to do business
here, but is widely and favorably known in the Philippines through the use therein of its
products bearing its corporate and tradename, has a legal right to maintain an action in
the Philippines to restrain the residents and inhabitants thereof from organizing a
corporation therein bearing the same name as the foreign corporation, when it appears
that they have personal knowledge of the existence of such a foreign corporation, and it
is apparent that the purpose of the proposed domestic corporation is to deal and trade
in the same goods as those of the foreign corporation.
Moreover, we are recognizing our duties and the rights of foreign states under the Paris
Convention for the Protection of Industrial Property to which the Philippines and
France are parties. Pursuant to this obligation, the Ministry of Trade issued a
memorandum addressed to the Director of the Patents Office directing the latter to
reject all pending applications for Philippine registration of signature and other world-
famous trademarks by applicants other than its original owners or use.
C. Del Monte Corporation et al. vs. CA et al., G.R. No. L-78325, Jan. 25, 1990
DOCTRINE
In assessing the two trademarks, side-by-side comparison is not the final test of
similarity.

FACTS:
Del Monte Corporation, a US company not otherwise engaged in business in the
Philippines, granted Philippine Packing Corporation (Philpack) the right to
manufacture, distribute and sell in the Philippines various agricultural products,
including catsup, under the Del Monte trademark and logo.
In 1965, Del Monte authorized Philpack to register with the Philippine Patent Office the
Del Monte catsup bottle configuration, which was granted. In 1972, Del Monte also
obtained two registration certificates for its trademark "DEL MONTE" and its logo.
In 1980, Sunshine Sauce Manufacturing Industries (Sunshine) was registered to engage
in the manufacture, packing, distribution and sale of various kinds of sauce, identified
by the logo Sunshine Fruit Catsup. This logo was registered in the Supplemental
Register. The product itself was contained in various kinds of bottles, including the Del
Monte bottle, which the private respondent bought from the junk shops for recycling.
Having received reports that Sunshine was using its exclusively designed bottles and a
logo confusingly similar to Del Monte's, Philpack warned Sunshine to desist or the
former will sue. Ignored, Philpack and Del Monte filed a complaint against Sunshine for
infringement of trademark and unfair competition.
The RTC of Makati dismissed the complaint holding that there were substantial
differences in the logos and trademarks and that malice or bad faith was not established
to support the allegation of infringement of trademark and unfair competition. The CA
affirmed the decision.
The CA used the usual test In determining whether two trademarks are confusingly
similar, viz. the two marks in their entirety as they appear in the respective labels must
be considered in relation to the goods to which they are attached; the discerning eye of
the observer must focus not only on the predominant words but also on the other
features appearing on both labels, and applying the same, held that there was no
colorable imitation of trademark and logo by one party with another’s.

ISSUE
Whether or not there was infringement or unfair competition?
RULING:
YES. Side-by-side comparison is not the final test of similarity. The ordinary buyer does
not usually make such scrutiny, nor does he usually have the time to do so. The question
is not whether the two articles are distinguishable by their label when set side by side
but whether the general confusion made by the article upon the eye of the casual
purchaser who is unsuspicious and off his guard, is such as to likely result in his
confounding it with the original.
In making purchases, the consumer must depend upon his recollection of the
appearance of the product which he intends to purchase, by relying on his recollection
of the mark/label. To determine whether a trademark has been infringed, we must
consider the mark as a whole and not as dissected. If the buyer is deceived, it is
attributable to the marks as a totality, not usually to any part of it.
It is not the function of the court in cases of infringement and unfair competition to
educate purchasers but rather to take their carelessness for granted, and to be ever
conscious of the fact that marks need not be identical. A confusing similarity will justify
the intervention of equity. Usually, a defendant in cases of infringement does not
normally copy but makes only colorable changes. The most successful form of copying is
to employ enough points of similarity to confuse the public with enough points of
difference to confuse the courts.
Furthermore, in low priced products like catsup, matters of everyday purchase
requiring frequent replacement are bought by the casual consumer without great care.
However, Sunshine is not guilty of infringement for having used the Del Monte bottle.
The reason is that the configuration of the said bottle was merely registered in the
Supplemental Register. Philpacking and Del Monte cannot claim exclusive use thereof
because it has not been registered in the Principal Register. Registration in the
Supplemental Register did not vest the registrant with the exclusive right to use the
label nor did it give rise to the presumption of the validity of the registration.
HOWEVER, Sunshine, despite the many choices available to it and notwithstanding that
the caution "Del Monte Corporation, not to be Refilled" was embossed on the bottle, still
opted to use the said bottle to market a product which Philpack also produces. This
clearly shows the Sunshine's bad faith and its intention to capitalize on the latter's
reputation and goodwill and pass off its own product as that of Del Monte.
Sunshine's label is an infringement of the Del Monte's trademark. Law and equity call
for the cancellation of Sunshine's registration and withdrawal of all its products bearing
the questioned label from the market. With regard to the use of Del Monte's bottle, the
same constitutes unfair competition; hence, the respondent should be permanently
enjoined from the use of such bottles.
D. Coca Cola Bottlers, Phils., Inc. vs. Gomez et al., G.R. No. 154491, Nov. 14, 2008
DOCTRINE:
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. 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 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. Actual fraudulent intent need not be shown.
FACTS:
Petitioner Coca-Cola applied for a search warrant against Pepsi for hoarding empty
Coke bottles in Pepsi’s yard in Naga City, an act allegedly penalized as unfair
competition under the Intellectual Property (IP) Code. The MTC issued a search warrant
to seize the empty Coke bottles. The local police seized the empty Coke bottles and filed
with the Office of the City Prosecutor a complaint against the respondents – Gomez
(Pepsi’s general manager in Naga) and Galicia (Pepsi’s regional sales manager).
In their counter-affidavits, the respondents claimed that the bottles came from Pepsi
retailers and wholesalers who included them in their return to make up for shortages of
empty Pepsi bottles; the presence of the bottles in their yard was not intentional; and
there is no mention in the IP Code of the crime of possession of empty bottles. They filed
a motion to quash the search warrant contending that no probable cause existed to
justify the issuance of the search warrant because the facts charged do not constitute an
offense.
The MTC denied the motion and also denied the respondents’ motion for
reconsideration. The respondents filed a petition for certiorari under Rule 65 of the ROC
before the RTC on the ground that the subject search warrant was issued without
probable cause.
The RTC voided the warrant for lack of probable cause and the non-commission of the
crime of unfair competition.
Bypassing the CA, the petitioner asks the SC through a petition for review on certiorari
under Rule 45 of the ROC to reverse the decision of the RTC.
ISSUE:
Whether or not hoarding is an act of unfair competition under the IP Code?
RULING: NO
A first test that should be made when a question arises on whether a matter is covered
by the IP Code is to ask if it refers to an intellectual property as defined in the Code. If it
does not, then coverage by the Code may be negated.
"Intellectual property rights" have been defined under Section 4 of the Code to consist
of: a) Copyright and Related Rights; b) Trademarks and Service Marks; c) Geographic
Indications; d) Industrial Designs; e) Patents; f) Layout-Designs (Topographies) of
Integrated Circuits; and g) Protection of Undisclosed Information.
A second test, if a disputed matter does not expressly refer to an intellectual property
right as defined above, is whether it falls under the general "unfair competition" concept
and definition under Sections 168.1 and 168.2 of the Code. The question then is
whether there is "deception" or any other similar act in "passing off" of goods or
services to be those of another who enjoys established goodwill.
SECTION 168. Unfair Competition, Rights, Regulation and Remedies. —
168.1. A person who has identified in the mind of the public the goods he manufactures
or deals in, his business or services from those of others, whether or not a registered
mark is employed, has a property right in the goodwill of the said goods, business or
services so identified, which will be protected in the same manner as other property
rights.
168.2. Any person who shall 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.
168.3. In particular, and without in any way limiting the scope of protection against
unfair competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives 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 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;
(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.
Hoarding does not fall within the coverage of the IP Code. It does not relate to any
patent, trademark, trade name or service mark that the respondents have invaded,
intruded into or used without proper authority from the petitioner. Nor are the
respondents alleged to be fraudulently “passing off” their products or services as those
of the petitioner. The respondents are not also alleged to be undertaking any
representation or misrepresentation that would confuse or tend to confuse the goods of
the petitioner with those of the respondents or vice versa. What in fact the petitioner
alleges is an act foreign to the Code, to the concept it embodies and to the acts it
regulates; as alleged, hoarding inflicts unfairness by seeking to limit the opposition’s
sales by depriving it of the bottles it can use for these sales. Hoarding, for purposes of
destruction, is closer to what another law – RA No. 623 – covers.
E. Superior Commercial Enterprises, Inc. vs. Kunan Enterprises Ltd. et al., G.R. No.
169974, April 20, 2010

DOCTRINE: To establish trademark infringement, the following elements must be

proven:
1. The validity of the 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 confusion exist.

FACTS:

SUPERIOR filed a complaint for trademark infringement and unfair competition with
preliminary injunction against KUNNAN and SPORTS CONCEPT with the RTC.

SUPERIOR claimed to be the owner of the trademarks, trading styles, company names
and business names KENNEX, KENNEX & DEVICE, PRO KENNE and PRO-KENNEX
(disputed trademarks).
In its defense, Kunnan maintained that SUPERIOR was a mere distributor from
fraudulently registered the trademarks in its name.

Kunnan appointed Superior as its exclusive distributor in the Philippines under a

Distributorship Agreement which states that: “Kunnan intends to acquire ownership
of the Kennex Trademark registered by Superior Commercial in the Philippines.
Superior Commercial is desirious of being appointed as the sole distributor of Kunnan
products in the Philippines.”

Upon termination of distributorship agreement with Superior, Kunnan appointed

Sports Concept as its new distributor. Kunnan caused the publication of a Notice and
Warning in the Manila Bulletin’s issue. This notice prompted Superior to file its
Complaint for Infringement of Trademark and Unfair Competition against Kunnan.

Prior to and during the pendency of the infringement and unfair competition case
before the RTC, Kunnan filed with the Bureau of Patents, Trademarks and Technology
Transfer separate Petitions for the Cancellation of Registration Trademarks involving
the Kennex and Pro Kennex trademarks.

Kunnan filed the petition on the ground that Superior fraudulently registered and
appropriated the disputed trademarks as mere distributor and not as lawful owner.
RTC: issued its decision holding KUNNAN liable for trademark infringement and
unfair competition.

CA: ruled that SUPERIOR was a mere distributor and had no right to the registration of
the disputed trademarks since the right to register a trademark is based on
ownership.

ISSUE:

Whether or not the CA erred in holding Superior is not the TRUE AND RIGHTFUL
OWNER of the trademarks KENNEX and PRO-KENNEX in the Philippines?

RULING:

No. An exclusive distributor does not acquire any proprietary interest in the
principal’s trademark and cannot register it, unless the owner has assigned the right.

On the issue of Trademark Infringement

To establish trademark infringement, the following elements must be proven:
1. The validity of the 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 confusion.

In no uncertain terms, the appellate court in the Registration Cancellation Case ruled
that SUPERIOR was a mere distributor and could not have been the owner, and was
thus an invalid registrant of the disputed trademarks. The right to register a
trademark is based on ownership, and therefore only the owner can register it.
“a mere distributor of a product bearing a trademark,even if permitted to use said
trademark has no right to and cannot register the said trademark.” (Gabriel vs. Perez,
50 SCRA 406)

On the issue of unfair competition

Unfair competition has been defined as the passing off (or palming off) or attempting
to pass off upon the public ofthe goods or business of one person as the goods or
business of another with the end and probable effect of deceiving the public. The
essential elements of unfair competition are (1) confusing similarity in the general
appearance of the goods; and (2) intent to deceive the public and defraud a
competitor.

Jurisprudence also formulated the following “true test” of unfair competition:

whether the acts of the defendant have the intent of deceiving or are calculated
conditions of the particular trade to which the controversy relates. One of the
essential requisites in an action to restrain unfair competition is proof of fraud; the
intent to deceive, actual or probable must be shown before the right to recover can
exist.
 In the present case, no evidence exists showing that KUNNAN ever attempted to pass
off the goods it as those of SUPERIOR. No evidence of bad faith or fraud imputable to
KUNNAN in using the disputed trademarks. SUPERIOR failed to adduce any evidence
to show that KUNNAN by the above-cited acts intended to deceive the public as to the
identity of the goods sold or of the manufacturer of the goods sold.

F. Shell Company, Ltd. Vs. Insular Petroleum Refining Co. et al., G.R. No. L-19441
G.R. No. L-19441 June 30, 1964

DOCTRINE:
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. 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 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. Actual fraudulent intent need not be shown.

FACTS:
Petitioner, Shell Co. of the Phil., Ltd. (Shell for short), is a corporation engaged in the
sale of petroleum products, including lubricating oil. The packages and containers of
its goods bear its trademark, labeled or stenciled thereon.

Defendant Insular Petroleum Refining Co., Ltd. (Insular for short), is a registered
limited partnership, whose principal business is collecting used lubricating oil which,
thru a scientific process, is refined and marketed to the public at a price much lower
than that of new lubricating oil.

This single transaction between plaintiff and defendant was effected, according to
Conrado Uichangco an operator of a Shell service station at the corner of San Andres
and Tuason Privado Streets, Manila, and who has been losing during the first eight and
ten months of operation of his station, although he had money to back up his losses,
when a certain F. Pecson Lozano, in agent of the defendant, repaired at his station and
"tried to convince me that Insoil is a good oil".

The incident between petitioner's operator and respondent's agent, brought about the
presentation with the Manila CFI, a case for damages on the allegation of unfair
competition and a Criminal Case No. 42020 under the Revised Penal Code (Art. 189)
against Donald Mead, Manager, Pedro Kayanan and F. Tecson Lozano. In the criminal
case, the accused therein were acquitted, the Court having found that the element of
deceit was absent.

In the civil case, petitioner herein invoked two causes of action: (1) that respondent in
selling its low-grade oil in Shell containers, without erasing the marks or brands
labeled or stencilled thereon, intended to mislead the buying public to the prejudice of
petitioner and the general public; and (2) defendant had attempted to persuade Shell
dealers to purchase its low-grade oil and to pass the same to the public as Shell oil, by
reason of which petitioner bad suffered damages in the form of decrease in sales,
estimated at least P10,000.00.

After trial, the CFI found for Shell and ordered respondent to pay P20,000.00 for
actual damages, P5,000.00 for attorney's fees, P1,000.00 for legal expenses and
P10,000.00 by way of exemplary damages and the costs.

The Court of Appeals reversed the above judgment.

Hence, this Petition.

ISSUE:

Whether or not, as a matter of fact, the defendant is guilty of unfair competition?

RULING:
NO, the defendant is guilty of unfair competition.
The complaint was predicated on section 29 of Rep. Act No. 166, defining unfair
competition, to wit:
Any person who shall 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, ... for those of the one having established such goodwill, or who shall
commit any act calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.

From the above definition and authorities interpretative of the same, it is seen that to
hold a defendant guilty of unfair competition, no less than satisfactory and convincing
evidence is essential, showing that the defendant has passed of or attempted to pass
off his own goods as those of another and that the customer was deceived with
respect to the origin of the goods. In other words, the inherent element of unfair
competition is fraud or deceit.

Not just because a manufacturer used a container still bearing a competitor's marking
in the sale of one's products, irrespective of to whom and how the sale is made, can
there be a conclusion that the buying public has been misled or will be misled, and,
therefore, unfair competition is born. The single transaction at bar will not render
defendant's act an unfair competition, much in the same way that the appearance of
one swallow does not make a season, summer.

It was found by the Court of Appeals that in all transactions of the low-grade Insoil,
except the present one, all the marks and brands on the containers used were erased
or obliterated. The drum in question did not reach the buying public. It was merely a
shell dealer or an operator of a Shell Station who purchased the drum not to be resold
to the public, but to be sold to the petitioner company, with a view of obtaining
evidence against someone who might have been committing unfair business practices,
for the dealer had found that his income was dwindling in his gasoline station.