DLSU Commercial Law Review Digest G02

(2015-2016)
023 STERLING PRODUCTS INTL, INC. v. FARBEFABRIKEN BAYER AKTIENGESELLSCHAFT,
and Allied Manufacturing and Trading Co.
GR no. L-19906; April 30, 1969
Topic: Trademarks
Ponente: Sanchez, J.
DOCTRINE: Actual use in commerce or business is a prerequisite to the acquisition of the right of
ownership over a trademark. Certificate of Registration does not include goods not specified therein.
FACTS:The word BAYER was the surname of Friedrich Bayer, a German who organized in August
1868 a drug company called Friedr Bayer etc comp at Barmen Germany. It first engaged in chemical
sales and manufacturing It changed its company name to Farbenfabriken vorm. Friedr. Bayer & Co.
(FBB) by 1881 and later on at about 1888, engaged in pharmaceuticals. Its products became well
known worldwide with the 1899 discovery of Bayer Aspirin, and so the BAYER mark acquired prestige,
so it became ripe to register trademarks, but records do not clearly show when the word BAYER was
registered as trademark in Germany. The BAYER CROSS IN CIRCLE trademark was registered in
Germany on January 6, 1904 No. 65777.8 It was intended to be used on "medicines for human
beings and animals, disinfectants preservatives, tar dyestuffs and chemical preparations for dyes and
for photographic purposes. This registered trademark consists of the BAYER CROSS encircled by the
company's name. Later, when it merged with other German companies, the company name was
deleted but what remained was the present BAYER CROSS in Circle, newly registered in 1929. This
trademark
was
registered
by
FBB
and
its
subsidiaries
worldwide.
Sometime in 1895, FFB established a subsidiary in NY, US. It was named Farbenfabriken of Elberfeld
Co, for the purpose of selling FFB products in US and Canada, and the trademarks were registered
between 1907-1908. In 1913, FFB organized another subsidiary called The Bayer Co. Inc. of New
York (BAYER NY) and this was authorized by FFB to negotiate trademarks, good will, assets and
property of FFB. Bayer of New York purchased the same year the right of sale to US and Canada all
products manufactured and controlled by FFB. In 1917, WWII came about and US declared war on
Germany, and BAYER NY was seized by the Alien Property Custodian (APC) of the US as an enemy
controlled corporation, by early 1918. By January 1919, assets of BAYER NY was sold by the
Between December 1918 and January 1919, all the assets of The Bayer Co., Inc. of New York were
sold by APC to STERLING DRUG INC. for $5.3M. So, BAYER NY became a subsidiary of STERLING
DRUG. Later, WITHROP CHEMICAL CO. was organized as a new STERLING DRUG subsidiary for
manufacture and sell physicians' drugs which had been acquired" by the purchase of the BAYER NY. 1
STERLING DRUG secured registration of BAYER trademarks worldwide. In he Philippines, the
trademark BAYER for medicines was known at towards the end of 19 th century, as appears in page 88
off the Revista Farmaceutica de Filipinos Ao I, Numero 7, 3 de Julio de 1893. Before WW I, BAYER
products entering the Philippines came from Germany. In 1922, a worldwide conflict of interests
occurred between Farbenfabriken vorm. Friedrich Bayer & Co. (FFB) and BAYER NY in reference to
the trademarks BAYER and BAYER CROSS IN CIRCLE as they were applied to various products.
Agreements in England between FFB and WITHROP, and FFB and BAYER NY were entered into to
resolve this. Under the terms, with WITHROP, FFB stipulated not to contest anymore the formers right
to the BAYER and BAYER CROSS IN CIRCLE trademark, and to discontinue the use of such in US,
which is understood to include Philippines. Additionally, to disclose all secrets of other processes in
the manufacture of the pharmaceuticals
In 1959, RESPONDENT FBA applied to register the BAYER CROSS IN CIRCLE trademark with the
Phil. Patent Office for animal and plant destroying agents. PPO examiner report stated it is similar to
petitioner STERLING;s registered BAYER trademark and concluded this is proscribed by Section 4-d

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of the Statute because it would cause confusion or mistake or [to] deceive purchasers. But later, it was
FBA was issued a certificate of registration in Supplemental Register SR-304. STERLING appealed
and so the parties sought to exlude each other from use of the registered trademarks. At the Trial
Court, STERLINGs right to use the BAYER trademark for medicine was sustained, and ordered FBA
to include a distinctive word(s) in their mark to indicate the the products come from Germany. Both
parties appealed.

ISSUE: Whether STERLINGs trademark of BAYER in the Philippines extends to non-pharmaceutical

goods
RULING: NO. A rule widely accepted and firmly entrenched because it has come down through the
years is that actual use in commerce or business is a prerequisite to the acquisition of the right of
ownership over a trademark. This rule is spelled out in our. Trademark Law thus:
SEC. 2-A. Ownership of trade-marks, trademark names and service-mark; how acquired. Anyone
who lawfully produces or deals in merchandise of any kind or who engages in any lawful business, or
who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in business,
and in the service rendered, may appropriate to his, exclusive use a trademark, a trade-name, or a
service-mark not so appropriated by another, to distinguish his merchandise, business, or service from
the merchandise, business or service of others. The ownership or possession of a trademark, tradename, service mark, heretofore or hereafter appropriated, as in this section provided, shall be
recognized and protected in the same manner and to the same extent as are other property rights
known to the law. (As inserted by Section 1 of Republic Act 638).

The BAYER trademarks registered in the Philippines to which plaintiff STERLING may lay
claim, are those which cover medicines only. For, it was on said goods that the BAYER trademarks
were actually used by it in the Philippines. Therefore, the certificates of registration for medicines
issued by the Director of Patents upon which the protection is enjoyed are only for medicines.
Nothing in those certificates recited would include chemical or insecticides. But plaintiff insists
that the statement of the applicant (The Bayer Co., Inc.) in its registrations of the BAYER marks states
that "the merchandise for which the trademark is appropriated is d. Chemicals, Medicines and
Pharmaceutical Preparations." Plaintiff's position is that such statement determines the goods for
which said marks had been registered. Validity does not attach to this proposition. First, the statement
itself admits that "the particular description of the articles comprised in said class (d) on which the
trademark is used is Medicines."21 It is not used for chemicals. Then, Section 11 of the Trademark Law
requires that the certificate of registration state "the particular goods . . . for which it is registered." This
is controlling. Under Section 11 aforesaid, likewise to be entered in the certificate of registration is "the
date of the first use in commerce or business. STERLING may not claim "first use" of the
trademarks prior to the registrations thereof on any product other than medicines.
Besides, Section 7 of the same Trademark Act directs that upon the filing of the application and the
payment of the required fee, the "Director [of Patents] shall cause an examination of the application"
for registration of the trademark "to be made, and, if on such examination it shall appear that the
applicant is entitled to registration, the Director . . . shall cause the mark . . . to be published in the
Official Gazette." This examination, it would seem to us, is necessary in order that the Director of
Patents may be satisfied that the application conforms to the requirement of actual use in commerce of
the trademark in Section 2 and 2-A of the Trademark Law; and that the statement in said application
as to the "first use" thereof and "the goods . . . in connection with which the mark . . . is used" (Section 5)
is true.

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Really, if the certificate of registration were to be deemed as including goods not specified therein,
then a situation may arise whereby an applicant may be tempted to register a trademark on any and
all goods which his mind may conceive even if he had never intended to use the trademark for the
said goods. We believe that such omnibus registration is not contemplated by our Trademark Law.
Because of this and of the fact that the Bayer trademarks were never used in the Philippines by
plaintiff except for medicines Aspirin, Aspirin for Children and Cafiaspirina we find ourselves
unwilling to draw a hard and fast rule which would absolutely and under all circumstances give
unqualified protection to plaintiff against the use of said trademarks by all others on goods other than
medicines.
Neither will the 1927 registration in the United States of the BAYER trademark for insecticides serve
plaintiff any. The United States is not the Philippines. Registration in the United States is not
registration in the Philippines. At the time of the United States registration in 1927, we had our own
Trademark Law, Act No. 666 aforesaid of the Philippine Commission, which provided for registration
here of trademarks owned by persons domiciled in the United States. What is to be secured from
unfair competition in a given territory is the trade which one has in that particular territory. There is
where his business is carried on; where the goodwill symbolized by the trademark has immediate
value; where the infringer may profit by infringement.
There is nothing new in what we now say. Plaintiff itself concedes 22 that the principle of territoriality of
the Trademark Law has been recognized in the Philippines, citing Ingenohl vs. Walter E. Olsen, 71 L.
ed. 762. As Callmann puts it, the law of trademarks "rests upon the doctrine of nationality or
territoriality."23
Accordingly, the 1927 registration in the United States of the BAYER trademark would not of
itself afford plaintiff protection for the use by defendants in the Philippines of the same
trademark for the same or different products.
3. A question basic in the field of trademarks and unfair competition is the extent to which a registrant
of a trademark covering one product may invoke the right to protection against the use by other(s) of
the same trademark to identify merchandise different from those for which the trademark has been
appropriated.
Plaintiff's trenchant claim is that it should not be turned away because its case comes within the
protection of theconfusion of origin rule. Callmann notes two types of confusion. The first is
the confusion of goods "in which event the ordinarily prudent purchaser would be induced to purchase
one product in the belief that he was purchasing the other." In which case, "defendant's goods are
then bought as the plaintiff's, and the poorer quality of the former reflects adversely on the plaintiff's
reputation." The other is the confusion of business: "Here though the goods of the parties are different,
the defendant's product is such as might reasonably be assumed to originate with the plaintiff, and the
public would then be deceived either into that belief or into the belief that there is some connection
between the plaintiff and defendant which, in fact, does not exist."24
The Courts have come to realize that there can be unfair competition or unfair trading even if the goods are noncompeting, and that such unfair trading can cause injury or damage to the first user of a given trade mark, first,
by prevention of the natural expansion of his business, and second, by having his business reputation confused
with and put at the mercy of the second user. 74 Phil. 55-56; and the Court having found out that the 'first user'

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was Bayer Germany and it was this that had built up the Bayer mark and plaintiff apparently having itself
encouraged that belief even after it had acquired the Bayer mark in America, thru forced sale, of defendant's
subsidiary there in 1918, Exhs. 79, 80, 81, to apply the Ang Tibay rule in the manner advocated by Sterling
would, the Court fears, produce the reverse result and the consequence would be not equity but injustice.

It would seem to us that the fact that plaintiff rode on the German reputation in the Bayer trademark
has diluted the rationally of its exclusionary claim. Not that the free ride in the name of defendant's
German predecessor was sporadic. It is continuing. Proof of this is the label on the box used by
plaintiff (Exhibit U) in the distribution of Bayer Aspirin. This box bears prominently on the front part the
legend "Genuine" in red color and two arrows: the first pointing to BAYER CROSS IN CIRCLE, and the
second, to BAYER Aspirin. At the back thereof in big letters are the words "BAYER ASPIRIN", followed
in small letters "Used since 1900" and down below the small words "Mfd. in the Phil. by Winthrop
Stearns, Inc. for STERLING PRODUCTS INTERNATIONAL, INCORPORATED." In plaintiff's
prospectus (Exhibit 1) found in the box of Bayer Aspirin tablets, children's size, there is the significant
statement: "GENUINE BAYER Each Children's Size Bayer Aspirin tablet is stamped with the Bayer
Cross, the trademark of the genuine Bayer product. This means that your child is getting the same
gentle-to-the-system Bayer Aspirin that has been used for over 50 years by millions of normal people
without ill effect."
With the background of prior use in the Philippines of the word BAYER by FBA's German predecessor
and the prior representations that plaintiff's medicines sold in the Philippines were manufactured in
Germany, the facts just recited hammer on the mind of the public that the Aspirin. Cafiaspirina and
Aspirin for Children being marketed for plaintiff in the Philippines come from the same source the
German source and in use since 1900.
4. The Ang Tibay doctrine, we believe, is not to be read as shunting aside the time-honored teaching
that he who comes into equity must do so with clean hands. 36 Plaintiff cannot now say that the present
worth of its BAYER trademarks it owes solely to its own efforts; it is not insulated from the charge that
as it marketed its medicines it did so with an eye to the goodwill as to quality that defendants'
predecessor had established.
There is no whittling away of the identity of plaintiff's trademarks. Plaintiff STERLING is not the first
user thereof in the Philippines. The trademarks do not necessarily link plaintiff with the public. Plaintiff
must show injury; it has not. On the contrary, representations as to the place of manufacture of
plaintiff's medicines were untrue, misleading. Plaintiff could still be tagged with the same deception
"which (it) complains of in the defendant(s)."37 Appropriate it is to recall here our observation in the Ang
Tibay opinion, viz: "On our part may we add, without meaning to be harsh, that a self-respecting
person does not remain in the shelter of another but builds one of his own." 38Plaintiff, the owner in
this country of the trademarks BAYER for medicines, has thus forfeited its right to protection
from the use of the same trademarks by defendants for products different therefrom
insecticides and other chemicals.
5. But defendants ask us to delist plaintiff's BAYER trademarks for medicines from the Principal
Register, claiming right thereto for said use. Said trademarks had been registered since 1939 by
plaintiff's predecessor. The Bayer Co., Inc. Defendants' claim is stale; it suffers from the defect of nonuse.39 While it is conceded that FBA's predecessors first introduced medical products with the BAYER
trademarks in the Philippine market, it is equally true that, after World War I, no definite evidence there
is that defendants or their professors traded in the Philippines in medicines with the BAYER

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trademarks thereafter. FBA did not seasonably voice its objection. Lack of protest thereto connoted
acquiescence. And this; notwithstanding the fact that the 1923 and 1926 agreements were set aside in
the anti-trust suits. Defendants did use the marks; but it was much later, i.e., in 1958 and on
chemicals and insecticides not on medicines. FBA only bestirred itself and challenged plaintiff's
right to the trademarks on medicines when this suit was filed. Vigilantibus non dormientibus equitas
subvenit.40 The net result is that, as the trial court aptly observed, plaintiff may hold on to its BAYER
trademarks for medicines. And defendants may continue using the same trademarks for insecticides
and other chemicals, not medicines.
6. Defendants balk at the ruling below which directs them "to add a distinctive word or words in their
mark to indicate that their products come from Germany."41 We are left under no doubt as to the
reasonableness of the formula thus fashioned. It avoids the mischief of confusion of origin
defendant FBA's product would not be mistaken for those of plaintiff. It reduces friction. We perceive of
no prejudice to defendants. The order does not visit defendant FBA with reprobation or condemnation.
Rather, said defendant would be enhancing the value of and would be sponsoring its own products.
Anyway, a statement that its products come from Germany is but a statement of fact.

DISPOSITIVE PORTION: FOR THE REASONS GIVEN, the judgment under review is hereby
affirmed. No costs. So ordered.