G. R. No.

126627 – 409 SCRA 33 – Mercantile Law – Intellectual Property Law – Law on Patents
– Doctrine of Equivalents – Function-Means-and-Result Test
Smith Kline is a US corporation licensed to do business in the Philippines. In 1981, a patent was
issued to it for its invention entitled “Methods and Compositions for Producing Biphasic
Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate.” The invention is a
means to fight off gastrointestinal parasites from various cattles and pet animals.
Tryco Pharma is a local corporation engaged in the same business as Smith Kline.
Smith Kline sued Tryco Pharma because the latter was selling a veterinary product called
Impregon which contains a drug called Albendazole which fights off gastro-intestinal
roundworms, lungworms, tapeworms and fluke infestation in carabaos, cattle and goats.
Smith Kline is claiming that Albendazole is covered by their patent because it is substantially the
same as methyl 5 propylthio-2-benzimidazole carbamate since both of them are meant to
combat worm or parasite infestation in animals. And that Albendazole is actually patented
under Smith Kline in the US.
Tryco Pharma averred that nowhere in Smith Kline’s patent does it mention that Albendazole is
present but even if it were, the same is “unpatentable”.
Smith Kline thus invoked the doctrine of equivalents, which implies that the two substances
substantially do the same function in substantially the same way to achieve the same results,
thereby making them truly identical for in spite of the fact that the word Albendazole does not
appear in Tryco Pharma’s letters of patent, it has ably shown by evidence its sameness with
methyl 5 propylthio-2-benzimidazole carbamate.

ISSUE: Whether or not there is patent infringement in this case

HELD: No. Smith Kline failed to prove that Albendazole is a compound inherent in the patented
invention. Nowhere in the patent is the word Albendazole found. When the language of its
claims is clear and distinct, the patentee is bound thereby and may not claim anything beyond
them. Further, there was a separate patent for Albendazole given by the US which implies that
Albendazole is indeed separate and distinct from the patented compound here.
A scrutiny of Smith Kline’s evidence fails to prove the substantial sameness of the 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.

CRESER PRECISION SYSTEM INC. VS. CA AND FLORO INTERNATIONAL CORP.

GR No. 118708
February 2, 1998
PONENTE: MARTINEZ, J.

FACTS:
Private respondent Floro is a domestic corporation engaged in the manufacture, production,
distribution and sale of military armaments, munitions, airmunitions and other similar
materials. On Jan. 23, 1990, private respondent Floro was granted by the Bureau of Patents,
Trademarks and Technology Transfer a Letters Patent covering an aerial fuze.
However, Floro’s President, Mr. Gregory Floro discovered that petitioner Creser submitted
samples of its patented aerial fuze to the Armed Forces of the Philippines (AFP) for testing and
that petitioner is claiming the aerial fuze as its own and planning to bid and manufacture it
commercially.
Petitioner Creser contends that it is the first, true and actual inventor of an aerial fuze
denominated as which it developed as early as December 1981 under the Self-Reliance Defense
Posture Program (SRDP) of the AFP; that sometime in 1986, petitioner began supplying the AFP
with the said aerial fuze; that private respondent's aerial fuze is identical in every respect to the
petitioner's fuze; and that the only difference between the two fuzes are miniscule and merely
cosmetic in nature.
Petitioner prayed that a temporary restraining order and/or writ of preliminary injunction be
issued enjoining private respondent including any and all persons acting on its behalf from
manufacturing, marketing and/or profiting therefrom, and/or from performing any other act in
connection therewith or tending to prejudice and deprive it of any rights, privileges and
benefits to which it is duly entitled as the first, true and actual inventor of the aerial fuze.
RTC issued a TRO and later on granted the preliminary injunction filed by plaintiff against
private respondent. While CA reversed the RTC’s decision and dismissed the complaint filed by
petitioner.
ISSUE: Whether Petitioner can file an action for infringement not as a patentee but as an entity
in possession of a right, title or interest in and to the patented invention?

RULING:
NO. Section 42 of R.A. 165, otherwise known as the Patent Law, explicitly provides:
Sec. 42. Civil action for infringement. — Any patentee, or anyone possessing any right, title or
interest in and to the patented invention, whose rights have been infringed, may bring a civil
action before the proper Court of First Instance (now Regional Trial court), to recover from the
infringer damages sustained by reason of the infringement and to secure an injunction for the
protection of his right. . . .
There can be no infringement of a patent until a patent has been issued, since whatever right
one has to the invention covered by the patent arises alone from the grant of patent. In short, a
person or entity who has not been granted letters patent over an invention and has not
acquired any light or title thereto either as assignee or as licensee, has no cause of action for
infringement because the right to maintain an infringement suit depends on the existence of
the patent.
Petitioner admits it has no patent over its aerial fuze. Therefore, it has no legal basis or cause of
action to institute the petition for injunction and damages arising from the alleged infringement
by private respondent. While petitioner claims to be the first inventor of the aerial fuze, still it
has no right of property over the same upon which it can maintain a suit unless it obtains a
patent therefor.

Dupont de Nemours and Co. vs. Francisco

G.R. No. 174379
31 August 2016

Facts:
On July 10, 1987, E.I. Dupont Nemours filed Philippine Patent Application No. 35526 before the
Bureau of Patents, Trademarks, and Technology Transfer. The application was for Angiotensin II
Receptor Blocking Imidazole (losartan), an invention related to the treatment of hypertension
and congestive heart failure. The product was produced and marketed by Merck, Sharpe, and
Dohme Corporation (Merck), E.I. Dupont Nemours’ licensee, under the brand names Cozaar
and Hyzaar. The patent application was handled by Atty. Nicanor D. Mapili (Atty. Mapili), a local
resident agent who handled a majority of E.I. Dupont Nemours’ patent applications in the
Philippines from 1972 to 1996.9 On December 19, 2000, E.I. Dupont Nemours’ new counsels
the Intellectual Property Office a letter requesting that an office action be issued on Philippine
Patent Application No. 35526.
In its Petition for Revival, E.I. Dupont Nemours argued that its former counsel, Atty. Mapili, did
not inform it about the abandonment of the application, and it was not aware that Atty. Mapili
had already died.

Procedural Posture:
On April 18, 2002, the Director of Patents denied the Petition for Revival for having been filed
out of time.
E.I. Dupont Nemours appealed the denial to the Director-General of the Intellectual Property
Office on August 26, 2002. In the Decision dated October 22, 2003, Director-General Emma C.
Francisco denied the appeal and affirmed the Resolution of the Director of Patents.
On November 21, 2003, petitioner filed before the Court of Appeals a Petition for Review
seeking to set aside the Intellectual Property Office’s Decision dated October 22, 2003.
On August 31, 2004, the Court of Appeals granted the Petition for Review.

Issue: Whether a patent holder of inventions relating to food or medicine enjoys absolute
monopoly over the patent

Ruling:
The Supreme Court ruled in the negative. A patent holder of inventions relating to food or
medicine does not enjoy absolute monopoly over the patent. Both Republic Act No. 165 and
the Intellectual Property Code provide for compulsory licensing. Compulsory licensing is defined
in the Intellectual Property Code as the “grant a license to exploit a patented invention, even
without the agreement of the patent owner.” Furthermore, the patent holder’s proprietary
right over the patent only lasts for three (3) years from the grant of the patent, after which any
person may be allowed to manufacture, use, or sell the invention subject to the payment of
royalties.

Fredco Manufacturing Corporation v. President and Fellows of Harvard College (G.R. No.
185917)
Facts:
Petitioner Fredco Manufacturing filed a petition to cancel the registration of respondent’s mark
‘Harvard Veritas Shield Symbol’ used in products such as bags and t-shirts. Fredco alleges that
the mark ‘Harvard’ was first used and registered by New York Garments, a domestic
corporation and its predecessor-in-interest, used in its clothing articles. Respondent Harvard
University on the other hand, alleges that it is the lawful owner of the name and mark in
numerous countries worldwide including in the Philippines which was used in commerce as
early as 1872. Respondent further contend that it never authorized any person to use its name
or mark in connection with any goods in the Philippines. The IPO Bureau of Legal Affairs
cancelled respondent’s registration of the mark but only over the goods which are confusingly
similar with that of petitioner. IPO reversed the decision. CA affirmed.

Issue: Whether or not respondent’s trade name is infringed.

Ruling: YES.
Fredco’s use of the mark “Harvard,” coupled with its claimed origin in Cambridge,
Massachusetts, obviously suggests a false connection with Harvard University. On this ground
alone, Fredco’s registration of the mark “Harvard” should have been disallowed. Indisputably,
Fredco does not have any affiliation or connection with Harvard University, or even with
Cambridge, Massachusetts. Fredco or its predecessor New York Garments was not established
in 1936, or in the U.S.A. as indicated by Fredco in its oblong logo.
Under Philippine law, a trade name of a national of a State that is a party to the Paris
Convention, whether or not the trade name forms part of a trademark, is protected “without
the obligation of filing or registration.” “Harvard” is the trade name of the world famous
Harvard University, and it is also a trademark of Harvard University. Under Article 8 of the Paris
Convention, as well as Section 37 of R.A. No. 166, Harvard University is entitled to protection in
the Philippines of its trade name “Harvard” even without registration of such trade name in the
Philippines. This means that no educational entity in the Philippines can use the trade name
“Harvard” without the consent of Harvard University. Likewise, no entity in the Philippines can
claim, expressly or impliedly through the use of the name and mark “Harvard,” that its products
or services are authorized, approved, or licensed by, or sourced from, Harvard University
without the latter’s consent.

BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (FORMERLY BIRKENSTOCK ORTHOPAEDIE

GMBH) vs. PHILIPPINE SHOE EXPO MARKETING CORPORATION
G.R. No. 194307
Nov. 20, 2013
FACTS:
Petitioner applied for various trademark registrations before the Philippine IPO, namely: a)
“BIRKENSTOCK”; b) “BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND
COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM”; c) “BIRKENSTOCK
BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION
OF A FOOT, CROSS AND SUNBEAM”. However, the registration proceedings were suspended in
view of an existing registration of mark “BIRKENSTOCK AND DEVICE” in the name of Shoe Town
International and Industrial Corporation, the predecessor-in-interest of respondent Philippine
Shoe Expo Marketing Corporation. Here, petitioner filed a petition for cancellation of the
registration on the ground that it is the lawful and rightful owner of the Birkenstock marks.
Respondent filed an opposition, alleging that: a) it, together with its predecessor-in-interest,
has been using Birkenstock marks in the Philippines for more than 16 years through the mark
“BIRKENSTOCK AND DEVICE”; b) the marks covered by the subject applications are identical to
the one covered by the registration and thus, petitioner has no right to the registration of such
marks; d) that while respondent failed to file the 10th Year DAU, it continued the use of
“BIRKENSTOCK AND DEVICE” in lawful commerce, among others.
The BLA rejected the petitioner’s application for registration. It ruled that the competing marks
of the parties are confusingly similar since they contained the work “BIRKENSTOCK” and are
used on the same and related goods. It found respondent as the prior user and adopter of
“BIRKENSTOCK” in the Philippines.
IPO Director General reversed BLA’s ruling, and allowed the registration of petitioner’s
application. CA reversed, and reinstated BLA’s ruling.

ISSUE: Whether or not the subject marks should be allowed registration in the name of
petitioner.

HELD: Yes.
Respondent is deemed to have abandoned the mark when it failed to file the 10th Year DAU for
Registration on or before the lawful period. As a consequence, it was deemed to have
abandoned or withdrawn any right or interest over the mark “BIRKENSTOCK”.
Petitioner has duly established its true and lawful ownership of the mark “BIRKENSTOCK”.
Under Sec. 2 of RA 166, in order to register a trademark, one must be the owner thereof and
must have actually used the mark in commerce in the Philippines for 2 months prior to the
application for registration.
The registration of a trademark is not a mode of acquiring ownership. If the applicant is not the
owner of the trademark, he has no right to apply for its registration. Registration merely creates
a prima facie presumption of validity of the registration, of the registrant’s ownership of the
trademark, and of the exclusive right to the use thereof. Clearly, it is not the application or
registration of a trademark that vests ownership thereof, but it is the ownership of a trademark
that confers the right to register the same.
Here, petitioner was able to establish that it is the owner of the mark “BIRKENSTOCK”. It has
used it in commerce long before respondent was able to register the same here in the
Philippines.

GSIS FAMILY BANK — THRIFT BANK V. BPI FAMILY BANK, G.R. NO. 175278, [SEPTEMBER 23,
2015]
FACTS: Petitioner was originally organized as Royal Savings Bank and started operations in
1971. Beginning 1983 and 1984, petitioner encountered liquidity problems. On July 9, 1984, it
was placed under receivership and later temporarily closed by the Central Bank of the
Philippines. Two (2) months after its closure, petitioner reopened and was renamed Comsavings
Bank, Inc. under the management of the Commercial Bank of Manila.

In 1987, the Government Service Insurance System (GSIS) acquired petitioner from the
Commercial Bank of Manila. Petitioner’s management and control was thus transferred to GSIS.
To improve its marketability to the public, especially to the members of the GSIS, petitioner
sought Securities and Exchange Commission (SEC) approval to change its corporate name to
“GSIS Family Bank, a Thrift Bank.” Petitioner likewise applied with the Department of Trade and
Industry (DTI) and Bangko Sentral ng Pilipinas (BSP) for authority to use “GSIS Family Bank, a
Thrift Bank” as its business name. The DTI and the BSP approved the applications. Thus,
petitioner operates under the corporate name “GSIS Family Bank — a Thrift Bank,” pursuant to
the DTI Certificate of Registration No. 741375 and the Monetary Board Circular approval.

Respondent BPI Family Bank was a product of the merger between the Family Bank and Trust
Company (FBTC) and the Bank of the Philippine Islands (BPI). On June 27, 1969, the Gotianum
family registered with the SEC the corporate name “Family First Savings Bank,” which was
amended to “Family Savings Bank,” and then later to “Family Bank and Trust Company.” Since
its incorporation, the bank has been commonly known as “Family Bank.” In 1985, Family Bank
merged with BPI, and the latter acquired all the rights, privileges, properties, and interests of
Family Bank, including the right to use names, such as “Family First Savings Bank,” “Family
Bank,” and “Family Bank and Trust Company.” BPI Family Savings Bank was registered with the
SEC as a wholly-owned subsidiary of BPI. BPI Family Savings Bank then registered with the
Bureau of Domestic Trade the trade or business name “BPI Family Bank,” and acquired a
reputation and goodwill under the name.

SEC: The SEC CRMD declared that upon the merger of FBTC with the BPI in 1985, the latter
acquired the right to the use of the name of the absorbed corporation. Thus, BPI Family Bank
has a prior right to the use of the name Family Bank in the banking industry, arising from its
long and extensive nationwide use, coupled with its registration with the Intellectual Property
Office (IPO) of the name “Family Bank” as its trade name. Applying the rule of “priority in
registration” based on the legal maxim first in time, first in right, the SEC CRMD concluded that
BPI has the preferential right to the use of the name “Family Bank.” More, GSIS and Comsavings
Bank were then fully aware of the existence and use of the name “Family Bank” by FBTC prior
to the latter’s merger with BPI.
The SEC CRMD also held that there exists a confusing similarity between the corporate names
BPI Family Bank and GSIS Family Bank. It explained that although not identical, the corporate
names are indisputably similar, as to cause confusion in the public mind, even with the exercise
of reasonable care and observation, especially so since both corporations are engaged in the
banking business.
CA: The Court of Appeals ruled that the approvals by the BSP and by the DTI of petitioner’s
application to use the name “GSIS Family Bank” do not constitute authority for its lawful and
valid use. It said that the SEC has absolute jurisdiction, supervision and control over all
corporations. The Court of Appeals held that respondent was entitled to the exclusive use of
the corporate name because of its prior adoption of the name “Family Bank” since 1969. There
is confusing similarity in the corporate names because “[c]onfusion as to the possible
association with GSIS might arise if we were to allow Comsavings Bank to add its parent
company’s acronym, ‘GSIS’ to ‘Family Bank.’ This is true especially considering both companies
belong to the banking industry. Proof of actual confusion need not be shown. It suffices that
confusion is probably or likely to occur.” The Court of Appeals also ruled out forum shopping
because not all the requirements of litis pendentia are present.
ISSUE: WON THE “GSIS FAMILY BANK, A THRIFT BANK” IS REGISTRABLE.

HELD: NO. In Philips Export B.V. v. Court of Appeals, this Court ruled that to fall within the
prohibition of the law on the right to the exclusive use of a corporate name, two requisites
must be proven, namely:

(1) that the complainant corporation acquired a prior right over the use of such corporate
name; and
(2) the proposed name is either

(a) identical or

(b) deceptive or confusingly similar to that of any existing corporation or to any other name
already protected by law; or

(c) patently deceptive, confusing or contrary to existing law

These two requisites are present in this case. In this case, respondent was incorporated in 1969
as Family Savings Bank and in 1985 as BPI Family Bank. Petitioner, on the other hand, was
incorporated as GSIS Family — Thrift Bank only in 2002, or at least seventeen (17) years after
respondent started using its name. Following the precedent in the IRCP case, we rule that
respondent has the prior right over the use of the corporate name.

The second requisite in the Philips Export case likewise obtains on two points: the proposed
name is (a) identical or (b) deceptive or confusingly similar to that of any existing corporation or
to any other name already protected by law.

On the second point (b), there is a deceptive and confusing similarity between petitioner’s
proposed name and respondent’s corporate name, as found by the SEC. In determining the
existence of confusing similarity in corporate names, the test is whether the similarity is such as
to mislead a person using ordinary care and discrimination. And even without such proof of
actual confusion between the two corporate names, it suffices that confusion is probable or
likely to occur.

Petitioner’s corporate name is “GSIS Family Bank — A Thrift Bank” and respondent’s corporate
name is “BPI Family Bank.” The only words that distinguish the two are “BPI,” “GSIS,” and
“Thrift.” The first two words are merely the acronyms of the proper names by which the two
corporations identify themselves; and the third word simply describes the classification of the
bank. The overriding consideration in determining whether a person, using ordinary care and
discrimination, might be misled is the circumstance that both petitioner and respondent are
engaged in the same business of banking. “The likelihood of confusion is accentuated in cases
where the goods or business of one corporation are the same or substantially the same to that
of another corporation.”

Respondent alleged that upon seeing a Comsavings Bank branch with the signage “GSIS Family
Bank” displayed at its premises, some of the respondent’s officers and their clients began
asking questions. These include whether GSIS has acquired Family Bank; whether there is a joint
arrangement between GSIS and Family Bank; whether there is a joint arrangement between BPI
and GSIS regarding Family Bank; whether Comsavings Bank has acquired Family Bank; and
whether there is there an arrangement among Comsavings Bank, GSIS, BPI, and Family Bank
regarding BPI Family Bank and GSIS Family Bank. The SEC made a finding that “[i]t is not a
remote possibility that the public may entertain the idea that a relationship or arrangement
indeed exists between BPI and GSIS due to the use of the term ‘Family Bank’ in their corporate
names.”

Findings of fact of quasi-judicial agencies, like the SEC, are generally accorded respect and even
finality by this Court, if supported by substantial evidence, in recognition of their expertise on
the specific matters under their consideration, more so if the same has been upheld by the
appellate court, as in this case.

Petitioner cannot argue that the word “family” is a generic or descriptive name, which cannot
be appropriated exclusively by respondent. “Family,” as used in respondent’s corporate name,
is not generic. Generic marks are commonly used as the name or description of a kind of goods,
such as “Lite” for beer or “Chocolate Fudge” for chocolate soda drink. Descriptive marks, on the
other hand, convey the characteristics, function, qualities or ingredients of a product to one
who has never seen it or does not know it exists, such as “Arthriticare” for arthritis medication.

Under the facts of this case, the word “family” cannot be separated from the word “bank.” In
asserting their claims before the SEC up to the Court of Appeals, both petitioner and
respondent refer to the phrase “Family Bank” in their submissions. This coined phrase, neither
being generic nor descriptive, is merely suggestive and may properly be regarded as arbitrary.
Arbitrary marks are “words or phrases used as a mark that appear to be random in the context
of its use. They are generally considered to be easily remembered because of their
arbitrariness. They are original and unexpected in relation to the products they endorse, thus,
becoming themselves distinctive.” Suggestive marks, on the other hand, “are marks which
merely suggest some quality or ingredient of goods. . . . The strength of the suggestive marks
lies on how the public perceives the word in relation to the product or service.”
The word “family” is defined as “a group consisting of parents and children living together in a
household” or “a group of people related to one another by blood or marriage.” Bank, on the
other hand, is defined as “a financial establishment that invests money deposited by customers,
pays it out when requested, makes loans at interest, and exchanges currency.” By definition,
there can be no expected relation between the word “family” and the banking business of
respondent. Rather, the words suggest that respondent’s bank is where family savings should
be deposited. More, as in the Ang case, the phrase “family bank” cannot be used to define an
object.

UFC PHILIPPINES, INC. (NOW MERGED WITH NUTRI-ASIA, INC., WITH NUTRI-ASIA, INC. AS THE
SURVIVING ENTITY), Petitioner, v. FIESTA BARRIO MANUFACTURING CORPORATION,
Respondent.
DOCTRINE:

Under the Dominancy Test, the dominant features of the competing marks are considered in
determining whether these competing marks are confusingly similar. Greater weight is given to
the similarity of the appearance of the products arising from the adoption of the dominant
features of the registered mark, disregarding minor differences. The visual, aural, connotative,
and overall comparisons and impressions engendered by the marks in controversy as they are
encountered in the realities of the marketplace are the main considerations.

FACTS:

Petitioner Nutri-Asia, Inc. (petitioner) is a corporation duly organized and existing under
Philippine laws. It is the emergent entity in a merger with UFC Philippines, Inc. that was
completed on February 11, 2009. Respondent Barrio Fiesta Manufacturing Corporation
(respondent) is likewise a corporation organized and existing under Philippine laws.

Respondent filed an application for the trademark “PAPA BOY & DEVICE” for goods under Class
30, specifically for “lechon sauce.” Petitioner filed with the IPO-BLA a Verified Notice of
Opposition to the above-mentioned application alleging that the mark “PAPA” is for use on
banana catsup and other similar goods was first used [in] 1954 by Neri Papa, and thus, was
taken from his surname. After using the mark “PAPA” for about twenty-seven (27) years, Neri
Papa subsequently assigned the mark “PAPA” to Hernan D. Reyes who, on September 17, 1981,
filed an application to register said mark “PAPA” for use on banana catsup, chili sauce, achara,
banana chips, and instant ube powder.
On November 7, 2006, the registration was assigned to Nutri-Asia. The company has not
abandoned the use of the mark “PAPA” and the variations thereof as it has continued their use
up to the present. Petitioner further allege that the mark “PAPA BOY & DEVICE” is identical to
the mark “PAPA” owned by Opposer and duly registered in its favor, particularly the dominant
feature thereof. With the dominant feature of respondent-applicant’s mark “PAPA BOY &
DEVICE”, which is Petitioner’s “PAPA” and the variations thereof, confusion and deception is
likely to result. The consuming public, particularly the unwary customers, will be deceived,
confused, and mistaken into believing that respondent-applicants goods come from Nutri-Asia,
which is particularly true since Southeast Asia Food Inc., sister company of Nutri-Asia, have
been major manufacturers and distributors of lechon sauce since 1965 under the registered
trademark “Mang Tomas”.

The IPO-BLA rendered a Decision rejecting respondent’s application for “PAPA BOY & DEVICE.”
Respondent filed an appeal before the IPO Director General but was denied. The CA, however,
reversed the decision of the IPO-BLA and ruled to grant the application.

ISSUE: Whether or not by using the “dominant feature” of Nutri-Asia’s “PAPA” mark for “PAPA
BOY & DEVICE” would constitute trademark infringement.

HELD:
Yes. In Dermaline, Inc. v. Myra Pharmaceuticals, Inc., we defined a trademark as “any distinctive
word, name, symbol, emblem, sign, or device, or any combination thereof, adopted and used
by a manufacturer or merchant on his goods to identify and distinguish them from those
manufactured, sold, or dealt by others.” We held that a trademark is “an intellectual property
deserving protection by law.”
In this case, the findings of fact of the highly technical agency, the Intellectual Property Office,
which has the expertise in this field, should have been given great weight by the Court of
Appeals.
Again, this Court discussed the dominancy test and confusion of business in Dermaline, Inc. v.
Myra Pharmaceuticals, Inc.,48 and we quote:
The Dominancy Test focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion or deception. It is applied when the trademark sought
to be registered contains the main, essential and dominant features of the earlier registered
trademark, and confusion or deception is likely to result. Duplication or imitation is not even
required; neither is it necessary that the label of the applied mark for registration should
suggest an effort to imitate. The important issue is whether the use of the marks involved
would likely cause confusion or mistake in the mind of or deceive the ordinary purchaser, or
one who is accustomed to buy, and therefore to some extent familiar with, the goods in
question. Given greater consideration are 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. The test of dominancy is now explicitly incorporated into law in Section 155.1 of R.A.
No. 8293 which provides —
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a
registered mark or the same container or a dominant feature thereof in connection with the
sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive x x x.
A scrutiny of petitioner’s and respondent’s respective marks would show that the IPO-BLA and
the IPO Director General correctly found the word “PAPA” as the dominant feature of
petitioner’s mark “PAPA KETSARAP.” Contrary to respondent’s contention, “KETSARAP” cannot
be the dominant feature of the mark as it is merely descriptive of the product. Furthermore, it
is the “PAPA” mark that has been in commercial use for decades and has established awareness
and goodwill among consumers.
We likewise agree with the IPO-BLA that the word “PAPA” is also the dominant feature of
respondent’s “PAPA BOY & DEVICE” mark subject of the application, such that “the word ‘PAPA’
is written on top of and before the other words such that it is the first word/figure that catches
the eyes.”49 Furthermore, as the IPO Director General put it, the part of respondent’s mark
which appears prominently to the eyes and ears is the phrase “PAPA BOY” and that is what a
purchaser of respondent’s product would immediately recall, not the smiling hog.
Petition was granted.

On 08 September 2020, the Supreme Court of the Philippines (“Supreme Court”) promulgated
its decision in the case of Zuneca Pharmaceutical v. Natrapharm Inc. (“Decision”) which clarified
that ownership over a trademark may also be acquired through prior use in good faith versus
registration[1]. This ruling is of stark difference from the previous rulings of the Supreme Court
where the first person or entity to register a trademark defeats the right of the first person or
entity to use the trademark in good faith.

Facts
The case involves a dispute between the use and ownership of the confusingly similar marks
“ZYNAPS” and “ZYNAPSE”.
Zuneca Pharmaceutical (“Zuneca”) has been engaged in the sale of “ZYNAPS”, an anti-
convulsant used to control all types of seizure disorders like epilepsy[2] as early as 2004.
Natrapharm, Inc. (“Natrapharm”), on the other hand, has also been engaged in the sale of
“ZYNAPSE” for the treatment of cerebrovascular disease or stroke[3], and is the registrant of
the “ZYNAPSE” mark which was registered with the Intellectual Property Office of the
Philippines (“IPO”) on 24 September 2007.[4]
On 29 November 2007, Natrapharm filed a Trademark Infringement case against Zuneca,
alleging that “ZYNAPS” is confusingly similar to its registered trademark “ZYNAPSE”. While
Zuneca argued that as the first entity to use the mark in good faith, it was the rightful owner of
the mark “ZYNAPS”.
Ruling on How Trademark Ownership is Acquired
The Supreme Court held that the language of the Intellectual Property Code of the Philippines
(“IP Code”) clearly provides that ownership of a mark is acquired through registration.
Furthermore, the Supreme Court stated that the intention of the lawmakers was to abandon
the rule that ownership of a mark is acquired through prior use, and that the rule on ownership
used in Berris Agricultural Co., Inc. v. Abyadang (“Berris”)[5]and E. Y. Industrial Sales, Inc. et al.
v. Shen Dar Electricity and Machinery Co., Ltd. (“E. Y Industrial Sales, Inc.”)[6] is inconsistent
with the IP Code regime of acquiring ownership through registration.

Language of the IP Code

Section 122 of the IP Code provides how marks are acquired:

SECTION 122. How Marks are Acquired. -The rights in a mark shall be acquired through
registration made validly in accordance with the provisions of this law. (Sec. 2-A, R.A. No. 166a)
(Emphasis and underscoring supplied)[7]
The language of the IP Code as to the acquisition of ownership of a mark provides for a stark
contrast with that of the old Trademark Law, which provided that prior use and non-
abandonment of a mark banned future registration of an identical or confusingly similar mark
by a different proprietor. Such a change effectively connotes that prior use no longer
determines acquisition.[8]

While doubts have been expressed by Associate Justices Leonen and Lazaro-Javier over the
supposed abandonment of the requirement of actual use, the Supreme Court clarified that the
filing of the Declaration of Actual Use (“DAU”) is not a prerequisite for the acquisition of
ownership of a mark as it is only necessary to maintain ownership over the registered
Trademark. On the other hand, the prima facie nature of the Certificate of Registration (“COR”)
is only meant to recognize the instances when the COR is no longer reflective of the ownership
of the holder thereof, such as, but not limited to, cases when the first registrant subsequently
lost its ownership due to non-use or abandonment.[9]

Rule on Ownership – Berris and E. Y. Industrial Sales, Inc.

Zuneca erred in using the cases of Berris and E. Y Industrial Sales, Inc. as bases for its
arguments.

The ruling in Berris was based on the fact that Berris, Inc. was the first to file the application and
register the mark under the IP Code. The fact of prior use was only mistakenly given undue
weight.[10]

On the other hand, the earliest dates of use by both parties in E. Y Industrial Sales,
Inc.wereduring the effectivity of the old Trademark Law, as amended. E.Y. Industrial Sales, Inc.
had applied and registered the mark under the IP Code, while Shen Dar Electricity and
Machinery Co. Ltd. had applied for the mark under the old Trademark Law.

Thus, both Berris and E. Y Industrial Sales, Inc. cannot be applied in cases where the marks of
both parties are used and/or registered under the IP Code.

Bad Faith in Trademark Registration and Use

Zuneca likewise claims that Natrapharm was in bad faith when they registered its mark with the
IPO. In cases of registration of a mark by means of fraud or bad faith, a party may pray for its
cancellation at any time by filing a petition for cancellation under Section 151 (b) of the IP Code,

“SECTION 151. Cancellation. – 151.1. A petition to cancel a registration of a mark under this Act
may be filed with the Bureau of Legal Affairs by any person who believes that he is or will be
damaged by the registration of a mark under this Act as follows:xxx(b) At any time, if the
registered mark becomes the generic name for the goods or services, or a portion thereof, for
which it is registered, or has been abandoned, or its registration was obtained fraudulently or
contrary to the provisions of this Act xxx (Underscoring supplied)”
The presence of bad faith alone renders a trademark registration void because the marks
should not have been registered in the first place. Hence, even if the marks are registered
subsequently, the registration will not confer the registrant any of the rights under Section
147.1[11] of the IP Code.

As a rule, good faith is always presumed, and upon him who alleges bad faith on the part of a
possessor rests the burden of proof. In this case, not only was Natrapharm able to explain the
origin of the name, it was also able to show that it had checked the IMS-PPI[12], IPO, and
Bureau of Food and Drug Administration Philippines (“BFAD”) databases and found that there
was no brand name which was confusingly similar to “ZYNAPSE”.[13]

Since Natrapharm was not proven to have been in bad faith, it was thus considered to have
acquired all the rights of a trademark owner under the IP Code upon the registration of the
“ZYNAPSE” mark.

Prior User in Good Faith

While Natrapharm is the owner of the “ZYNAPSE” mark, this does not, however, automatically
mean that its complaint against Zuneca is with merit. Prior users in good faith are also
protected in the sense that they will not be made liable for trademark infringement even if they
are using a mark that was subsequently registered by another person. Section 159.1 of the IP
Code provides:

“Notwithstanding the provisions of Section 155 hereof, a registered mark shall have no effect
against any person who, in good faith, before the filing date or the priority date, was using the
mark for the purposes of his business or enterprise: Provided, That his right may only be
transferred or assigned together with his enterprise or business or with that part of his
enterprise or business in which the mark is used. (Underscoring supplied)”

The application of Section 159.1 of the IP Code in the case at bar results in Zuneca’s exemption
from liability for trademark infringement.
Section 159.1 of the IP Code clearly contemplates that a prior user in good faith may continue
to use its mark even after the registration of the mark by the first-to-file registrant in good faith.
In any event, the application of Section 159.1 necessarily results in the co-existence of at least
two entities – the unregistered prior user in good faith, on one hand; and the first-to-file
registrant in good faith on the other – using identical or confusingly similar marks in the market
at the same point in time, even if there exists the likelihood of confusion. [14]

Essentially, the decision indisputably pronounced that, under the IP Code, the ownership of a
trademark is acquired by its registration, with the exception created by Section 159.1 of the IP
Code.

Implications of the Decision Today

Co-Existence of Confusingly Similar Marks
The pronouncement of the Supreme Court allows clients and individuals interested in the
registration of a mark an assurance that, in the absence of bad faith, the approval of the
registration of their proposed mark will surely give rise to rights under the IP Code. Even if there
may exist another individual or entity who make use of the same or similar mark, the rights
resulting from the registered mark will not be affected.

Nonetheless, the same ruling creates a scenario where a mark, which was successfully
registered with the IPO, may have the risk of being in co-existence with a confusingly similar
mark, in the case where a prior user in good faith exists.

In the case of Zuneca and Natrapharm, both parties engage in the sale of medicine – one an
anti-convulsant, while the other, a treatment for cerebrovascular disease. In such cases, the
customers and patients go to the pharmacy with the specific medicine and its purpose in mind.
Likewise, the personnel handling the medicine are professionals who have expertise over the
matter, which may reduce the confusion that may arise from the similarity of the marks.

However, should the same condition happen in a different market where customers and clients
are not as particular, the confusion created by the co-existence of the confusingly similar marks
may defeat the very purpose of the trademark, and may negatively affect the goodwill of the
owner of the mark.
Awareness of IP rights
The Decision highlights the importance and necessity of trademark owners to be aware of their
rights and to register their marks as early as possible. While failure to register a mark may not
deprive a prior user in good faith of their trademark, the non-registration of such mark may
create the absurdity of co-existence for the same or confusingly similar mark owned by a later
registrant. Granting co-existence may be better than deprivation of rights over the mark, it is
still best and prudent for the first user to take advantage of the system of registration in the IP
Code and register the mark avoiding the absurd situation of co-existence.

[1] Zuneca Pharmaceutical v. Natrapharm, Inc., G.R. No. 211850, [September 8, 2020]

[2] Carbamazepine – Zynaps.” Food and Drug Administration Philippines,

ww2.fda.gov.ph/index.php/consumers-corner/registered-drugs-2/338000-DR-XY28546.

[3] Team, Created by MIMSOnline. “Zynapse 500/Zynapse 1000.” Zynapse 500/Zynapse 1000
Full Prescribing Information, Dosage & Side Effects | MIMS Philippines,
www.mims.com/philippines/drug/info/zynapse%20500-zynapse%201000?type=full.

[4] Zuneca Pharmaceutical v. Natrapharm, Inc., supra note 1.

[5] Berris Agricultural Co., Inc. v. Abyadang, G.R. No. 183404, [October 13, 2010], 647 PHIL 517-
534.

[6] E.Y. Industrial Sales, Inc. v. Shen Dar Electricity and Machinery Co., Ltd., G.R. No. 184850,
[October 20, 2010], 648 PHIL 572-596.

[7] Intellectual Property Code of the Philippines, Republic Act No. 8293, [June 6, 1997]

[8] Zuneca Pharmaceutical v. Natrapharm, Inc., supra note 1.

[9] Id.
[10] Zuneca Pharmaceutical v. Natrapharm, Inc., supra note 1, footnote 100 “NB. In disposing
the ownership issue, the Court stated: “Therefore, Berris, as prior user and prior registrant, is
the owner of the mark ‘D-10 80 WP.”‘ (Underscoring supplied). Id. at 530.”

[11] SECTION 147. Rights Conferred. — 147.1. The owner of a registered mark shall have the
exclusive right to prevent all third parties not having the owner’s consent from using in the
course of trade identical or similar signs or containers for goods or services which are identical
or similar to those in respect of which the trademark is registered where such use would result
in a likelihood of confusion. In case of the use of an identical sign for identical goods or services,
a likelihood of confusion shall be presumed.||| (Intellectual Property Code of the Philippines,
Republic Act No. 8293, [June 6, 1997])

[12] IMS-PPI is a research tool which lists the pharmaceutical products marketed in the
Philippines, and in this case, any other cerebroprotective products (CO4A) that [are] confusingly
similar with “ZYNAPSE”.

[13] Zuneca Pharmaceutical v. Natrapharm, Inc., supra note 1.

[14] Zuneca Pharmaceutical v. Natrapharm, Inc., supra note 1.

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