Z. Trademark-Digest-Complete PDF

Trademarks Midterms Case Digests (Atty.
Ortiguerra)
Distelleria Washington, Inc. v. Court of Appeals Issue:
Doctrine: Trademark refers to a word, name, symbol. Emblem, sign or device  Whether or not LTDI is now the lawful owner of the empty bottles
or any combination thereof adopted and used by a merchant to identify and upon sale of the gin.
distinguish from others, his goods of commerce. It is basically an intellectual  Whether or not RA 623 affords intellectual property protection to
creation that is susceptible to ownership and consistently therewith, gives rise liquors.
to its own elements of jus posidendi, jus utendi, jus fruendi, jus disponendi,
and jus abutendi, along with the applicable jus lex, comprising that Ratio:
ownership. The incorporeal right, however, is distinct from the property in  In its decision, the Supreme Court saw no cogent reason to depsrt from
the material object subject to it. Thus, the transfer or assignment of the the rule already laid down in the previous case of Cagayan Valley
intellectual property will not necessarily constitute a conveyance of the thing Enterprises v. Court of Appeals. In the said case, it ruled that RA
it covers, nor would a conveyance of the latter imply the transfer or 623 affords protection to a qualified manufacturer who successfully
assignment of the intellectual right. registered with the Philippine Patent Office its duly stamped or
marked bottled, etc. The mere use of the registered bottles
Facts: without the written consent of the manufacturer is
 The initiatory suit for manual delivery with damages herein was prohibited, the only exceptions being when they are used as
instituted by La Tondena (LTDI) against Distillery Washington containers for sisi, bagoong and patis and similar native
(Washington) under a claim of ownership. Such action sought to products.
seize from Washington 18,157 empty bottles bearing blown-
in marks of La Tondena and Ginebra San Miguel because, RA 623 only required that bottles, in order to be eligible for
allegedly, Washington uses it for its own Gin Sevem products registration, must be stamped or marked with the names of the
without the consent of LTDI. The court in the said action issued a manufacturers or the names of their principals or products, or other
replevin to seize said bottles. marks of ownership. No drawings of labels are required but, instead,
two photographs of the container, duly signed by the
 After hearing, the trial court ordered LTDI to return the bottles seized applicant, showing clearly and legibly the names and other
from Washington and in the event of failure to return said bottles, marks of ownership sought to be registered and a bottle
LTDI is ordered to indemnify the defendant in the amount of showing the name or other mark of ownership, irremovably
P18,157.00 on the ground that a purchaser of liquor pays only a single stamped or marked shall be submitted.
price for the liquor and the bottle and is not required to return the
bottle at any time.  However, the court noted that the issue in this case is not only one for
violation of RA 623, but instead, it is one for replevin where the
In view of the foregoing, LTDI appealed the decision to the Court of claimant must be able to show convincingly that he is either the owner
Appeals. CA reversed and ordered the retention of the subject bottles or clearly entitled to the possession of the object sought to be
in favor of LTDI on the ground that the marks of ownership of LTDI recovered. Replevin focuses on possession.
stamped or blown-in to the bottles are sufficient notice to the public
that the bottles are LTDI property. Thus, Washington assailed the Evidently, RA 623 does not disallow the sale or transfer of ownership
reversal of the trial court’s decision. of the marked bottles or containers. In fact, the contrary is implicit in
the law. The buyer takes the item, he is neither required to return
Washington is of the position that R.A. 623 should not apply to gin the bottle nor required to make a deposit to assure its return
since it is not among those mentioned in the law and that, in any to the seller. He could return the bottle and get a refund but it
case, ownership of the bottles was already transferred to it cannot be gainsaid that ownership of the containers does pass on to
upon the sale of the gin and containers at a single price. Thus, the consumer albeit subject to the statutory limitation on the use of
he is now the lawful owner of the said bottles. registered containers and to the trademark right of the registrant.
Erandio, Athena Louise

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Trademarks Midterms Case Digests (Atty. Ortiguerra)
The court sees no other logical purpose for Washington’s insistence to Sections 2 and 3 of RA 623 apply only when the “filling up” of the
keep the bottles, except for the unauthorized use thereof. The practical bottle or the “use” of the bottle is “without the permission” of the
and feasible alternative herein is to merely require the payment of just registered manufacturer, bottler or seller”, who has registered the
compensation to Washington for the bottles seized from it by LTDI. marks of ownership of the bottles. Section 2 prohibits the person from
using, selling or otherwise disposing of registered containers without
Distilleria Washington v. La Tondena Distillers and the Court of the written consent of the registrant. Such rights belong to the
Appeals registrant. Under Section 3, mere possession of such registered
Doctrine: Sections 2 and 3 of RA 623 apply only when the “filling up” of the containers without written consent of the registrant is prima facie
bottle or the “use” of the bottle is “without the permission” of the registered presumed unlawful. Since the court found that the bottles have been
manufacturer, bottler or seller”, who has registered the marks of ownership transferred by way of sale, then LZTDI relinquished all of its
of the bottles. Section 2 prohibits the person from using, selling or otherwise proprietary rights over the bottles in favor od Washington who has
disposing of registered containers without the written consent of the obtained them in due course.
registrant. Such rights belong to the registrant. Under Section 3, mere
possession of such registered containers without written consent of the  The court, however, did not rule on the violation of the
registrant is prima facie presumed unlawful. incorporeal rights of LTDI since it would be improper and
premature to rule on such point. It has not been put in issue
What is proscribed is the use of the bottles in infringement of another’s since this was a case for replevin, not infringement.
trademark or incorporeal rights.
The court also cannot be of the position that every possession of the
Facts: bottles without the requisite written consent is illegal since then,
 Washington sought reconsideration of the decision of this Court and thousands of buyers of the Ginebra San Miguel would be exposed to
advances that since the court decided that Washington has acquired criminal prosecution by the mere fact of possession of the empty
ownership over the bottles, it is improper for it to render a decision bottles after consuming the content.
allowing LTDI to keep the bottles (which is a denial of the very
attributes of ownership). It further contends that to hold the buyer Note: Justice Vitug, the ponente to the previous decision, dissented to this MR.
liable under Section 2 and 3 would grant LTDI the extraordinary right
not only of possession and use of the bottles which it has sold and no Hanover Star Milling Co. v. Metcalf
longer owns, but also to sell said bottles ad infinitum, thus enriching Doctrine: Since it s trade and not the mark that is protected, a trademark
itself unjustly. acknowledges no territorial boundaries of municipalities or states or nations,
but extends to every market where the trader’s goods have become known
Issue: and identified by his use of the mark. But the mark, of itself, cannot travel to
 Whether or not LTDI transferred ownership of its marked bottles or markets where there is no article to wear the badge and no trader to offer the
containers when it sold its products in the market. article. Trademark is treated merely as a protection for the goodwill and not
the subject of property except in connection with an existing business.
Ratio:
 LTDI not only sold its gin products but also the marked The exclusive right to the use of a trademark is founded on priority of
bottles or containers as well. Ownership over the bottles and application. But where two parties are independently employing the same
all its attributes passed to the buyer. It necessarily follows mark upon goods of the same class, but in separate markets wholly remote
that the transferee has the right to possession of the bottles from one another, the question of prior appropriation is legally insignificant
unless he uses them in violation of the original owner’s unless it appears that the second adopter has selected the mark with some
registered or incorporeal rights. design inimical to the interest of the first user, such as to take the benefit of
the reputation of his goods, to forestall the extension of his trade or the like.

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Facts:  Whether or not Hanover has an affirmative trademark right against
 Hanover Star Milling is an Illinois corporation engaged in the AW.
manufacturing of flour. It initiated a case against Metcalf  Whether or not Hanover is entitled to relief against Steeleville upon
(“Steeleville”), a merchant engaged in the selling of Flour at the ground of unfair competition in trade regardless of the trademark
Greeneville, Butler County, in that state, to restrain alleged trademark right.
infringement and unfair competition. Hanover averred that for 27
years, it has been engaged in the manufacturing of a superior and Ratio:
popular brand of flour known as “Tea Rose” in a wrapping containing  Hanover has an affirmative trademark right against AW.
3 roses imprinted upon labels attached to sacks and barrels and that Where a party has been in the habit of labeling his goods with a
this flour has been marketed in the State of Alabama for the distinctive mark, so that purchasers recognize goods thus marked as
preceding 12 years already. It further averred that, until shortly being of his production, others are debarred from applying the same
before the commencement of this action, it has been the only company mark to goods as being of the same description, because to do so would
who offered or sold the same in Butler County or elsewhere in the State in effect represent their goods to be of his production and would tend
of Alabama. to deprive him of the profit he might make through the sale of the
goods which the purchaser intended to buy.
Hanover adopted said “Tea Rose” brand, built it up and extended its
trade in the southeastern territory comprising of Georgia, Florida, So far in this case, the proofs disclose that AW mark has not been
Alabama and Mississippi. Said mark had come to mean the Hanover used at all, is not known at all in a market sense, within the
flour and nothing else. sovereignty of Alabama or the adjacent states where the
controversy with Hanover arose. On the other hand, the record
Steeleville’s answer denied all attempts to deceive purchasers and in the case showed that the complainant’s trade has been well known
further denied the complainant’s right to the exclusive use of the words in the place. AW left the southeastern states untouched. Even if they
“Tea Rose” and avvered that long prior to the complainant’s first did now know, and it does not appear that they did know, that the
use of it, and as early as 1872, the name has been adopted, Hanover company was doing so, they must be held to have taken the
appropriated and ued as a trademark for flour by the firm of risk that some party might, during their 40 years of
Allen Wheeler (AW) of Ohio. It further alleged that the inactivity, hit upon the same mark and expend money and
Steeleville Milling Company had used it for more than 16 effort in building up a trade in flour under it.
years last past and as early as 1899.
Here, there is no clearer evidence that there is abandonment by
In another case, Allen & Wheeler Company (AW), a corporation in the nonuser of trademark rights. And since Hanover has expended money
state of Ohio averred that in or before the year 1872, the firl already and effort in building up its trade, AW is estopped to assert trademark
adopted as trademark the words “Tea Rose” and from thence until the infringement as to that territory.
year 1904, continuously used that mark by placing it on sacks of flour
and sold throughout the US. This case does not deal with a situation where there is junior
appropriation. The exclusive right to the use of a trademark is founded
 2 temporary injunctions were granted by the District Court, both in on priority of application. But where two parties are
favor of Hanover against Steeleville and AW, respectively. It restrained independently employing the same mark upon goods of the
Steeleville or any other person, firm or corporation other than same class, but in separate markets wholly remote from one
Hanover from selling the flour named “Tea Rose” in the Middle another, the question of prior appropriation is legally
District of Alabama. insignificant unless it appears that the second adopter has
selected the mark with some design inimical to the interest
Issue of the first user, such as to take the benefit of the reputation of his
goods, to forestall the extension of his trade or the like. Here,

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Alabama’s remoteness to the territory (Cincinnati), which AW reached The Circuit Court of Appeals upheld the infringement and also found
was taken into consideration. that there is unfair competition. However, it modified the relief in that
it eliminated the requirement that the trademark and type and style
 Steeleville’s purpose to take advantage of the reputation of marks be removed.
Hanover is so manifest and the tendency of the similarity of
the brand and accompanying design and of the make-up of Issue:
the packages to mislead ultimate customers is so evident  Whether or not the relief granted is adequate, particularly the refursal
that it seems to us a case of unfair competition is made out. of the Court of Appeals to require respondents to remove the word
There is evidence that Hanover’s use of the brand antedated that of Champion form the repaired or reconditioned plugs which they resell.
Steeleville’s. The latter used it in trade in Illinois, Tennessee,  Whether or not an accounting by Sanders should be ordered by the
Mississippi, Louisiana and Arkansas. However, a short time before the court.
suit was commenced, Metcalf, agent of Steeleville, put large banners
advertising to the public that he had received a shipment of Tea Rose Ratio:
flour and that it was Steeleville’s best quality but it was put in packages  It is adequate. The spark plugs, though used, are nevertheless
closely resembling that of Hanover’s calculated to deceive the ordinary Champion plugs and not those of another make. We would not
and casual purchaser of flour into the belief that he is purchasing the suppose that one could be enjoined from selling a car whose valves had
article of that name manufactured by the said Hanover company. It been regrounded and whose piston rings had been replaced unless he
even substituted Steeleville in place of the Hanover labels with removed the name Ford or Chevrolet. A trademark only gives the right
distinctive wrapping, both indicative of Hanover’s flour. to prohibit the use of it insofar as to protect the owner’s goodwill
against the sale of another’s product as his. When the mark is used in a
Champion Spark Plug Co v. Sanders way that does not deceive the public, we see no such sanctity in the
Doctrine: A trademark only gives the right to prohibit the use of it insofar as word as to prevent its being used to tell the truth. It is not taboo.
to protect the owner’s goodwill against the sale of another’s product as his.
When the mark is used in a way that does not deceive the public, we see no The repair or reconditioning does not give them a new
such sanctity in the word as to prevent its being used to tell the truth. It is not design. It is no more a restoration of their original condition.
taboo. Although there is evidence that the reconditioned plugs are inferior
insofar as heat range and other qualities are concerned, inferiority is
Inferiority is immaterial as long as the article is clearly and distinctively sold expected in most second-hand articles. Inferiority is immaterial as
as repaired or reconditioned, rather than as new. long as the article is clearly and distinctively sold as repaired or
reconditioned, rather than as new.
Facts:
 Respondent Sanders in this case collect used Champion plugs, repair  It does not stand that an accounting will be ordered because
and recondition them and resell them. He retains the word there has been an infringement. An accounting will be denied
“Champion” on the repaired or reconditioned plugs. However, when an injunction will satisfy the equities of the case. Here. Since
respondent’s company business name or address is not printed on the there is no showing of fraud or palming off, the likelihood of damage to
cartons. On each individual plug, however, is stamped in small letters, petitioner or profit to respondents due to any misrepresentation seems
blue on black the work “Renewed” which at time is almost illegible. slight. An injunction satisfies the equities of the case.
Champion brought the instant case charging Sanders of infringement Pribhdas J. Mirpuri v. Court of Appeals
and unfair competition. The District Court found that there is Doctrine: Trademark is defined as including “any word, name, symbol,
infringement and enjoined Sanders from offering or selling the plugs emblem, sign or device or any combination thereof adopted and used by a
unless the trademark and type and style marks were removed, the manufacturer or merchant to identify his goods and distinguish them from
plugs were repainted, and the word “repaired” was stamped legibly.

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those manufactured, sold or dealt in by others. It is any visible sign capable of Issue:
distinguishing goods.  Whether or not the opposition is barred by res judicata
The function of trademark is to point out distinctly the origin or ownership of Ratio:
the goods to which it is affixed; to secure to him, who has been instrumental  There is no res judicata. In res judicata, the judgment in the first
in brining into the market a superior article of merchandise, the fruit of his action is considered conclusive to every matter offered and received
industry and skill; to assure the public that they are procuring the genuine therein as to any other admissible matter which might have been
article to prevent fraud and imposition, and to protect the manufacturer offered for that purpose. Its requisites are:
against substitution and sale of an inferior different article as his product.
1. The former judgment or order must be final
Trademark functions to: 1) indicate the origin or ownership of articles to 2. The judgment or order must be on the merits
which they are attached; 2) guarantee that those articles come up to a certain 3. Must have been rendered by a court having jurisdiction over the
standard of quality and 3) they advertise the articles they symbolize. subject matter
4. There must be between the first and second actions, identity of
Facts: parties, of subject matter and of causes of action.
 In 1970, Lolita Escobar, the predecessor of Mirpuri filed an application
with the Bureau of Patents for the registration of the trademark New causes of action were allegedly introduced in the second patent
Barbizon for use in brassieres and ladies undergarments. However, case such as the prior use and registration of the trademark in the
Barbizon Corporation (a foreign corporation in the US) opposed the United States and other countries, prior use in the Philippines and the
application claiming that it is confusingly similar to their brand. fraudulent registration of the mark in violation of Article 189 of the
Revised Penal Code. Private respondent also cited protection of the
The director of patents rendered a decision giving due course to the trademark under the Paris Convention and the Memoranda issued by
application of Escobar. However, because of her failure to file the Villafuerte and Ongpin.
Affidavit of Use of the trademark, the Bureau of Patents cancelled the
certificate of registration. Essentially, under the Paris Convention, the trademark is to be
protected if it is “well-known” in the country where the protection is
In 1981, she reapplied for registration and said application was again sought. The power to determine whether a trademark is well known
opposed by Barbizon Corporation. In its opposition, Barbizon claims lies in the competent authority of the country of registration or use.
that the trademark BARBIZON has been used in many countries Pursuant to this convention, the VIllafuerte and Ongpin
including the Philippines for at least 40 years and has enjoyed Memoranda were issued. The first one enumerated the brands
reputation and good will for their quality. Barbizon Corporation claims that are to be protected, and the second one, laid down guidelines for
that Escobar fraudulently registered the same in violation of the the Director of Patents to observe in determining whether a trademark
Trademark Law and the Revised Penal Code. is entitled to protection as a well-known mark in the Philippines. The
PPO was ordered to refuse applications for, or cancel the registration
 The director of patents rendered a decision declaring that the which would fall under these.
opposition of the respondent is already barred by res judicata giving
due course to the application for registration. Barbizon Corporation
questioned said decision before the Court of Appeals. The Court of The issue raised in the second patent case was different from the issues
Appeals reversed the decision of the director of patents and found that of confusing similarity and damage in the first. The issue of prior use
the case is not barred by res judicata. may have been raised in the first but this claim was limited only to
prior use in the Philippines. Also note that the oppositions in the first
Petitioner Miruri, predecessor of Escobar now questions the decision and second cases are based on different laws. The first was based on
of the Court of Appeals. the provisions of the Trademark Law and the second was based on the

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Paris Convention. The mere fact that the same relief is sought in the
subsequent action will not render the judgment in the prior action The complainant set forth ownership of the above trademark and the
operative as res judicata, such as where the two actions are based on continuous use of the same for nearly 40 years. It alleges that the
different statutes. defendant BE Jao (“La Ciudad” proprietor”) began to use 2
different labels on packages of its cigarettes offered for sale
La Insular Cigar and Cigarette Factory, Inc. v. B.E. Jao OGE which are infringing imitations of the plaintiff’s mark.
Doctrine: Substantially the same remedies are conceded to the person injured
whether the wrong done in a particular case consists of infringement of To this complaint, the defendant interposed a general demurrer on the
trademarks, illegal use of trade name or unfair competition in business – ground that the facts stated did not constitute a cause of action.
which remedies consist of an award of damages or double damages, and a Such demurrer was sustained by the trial court hence, judgment was
perpetual injunction against the continuance of the injury. entered dismissing the complaint.
In cases of infringement of trademarks, the law primarily takes no account of Issue:

the actual intent on the part of the infringer to mislead the public and defraud  Whether or not there is a case for infringement or unfair competition.
the owner of the trademarks. On the other hand, in cases of unfair
competition actual intent to deceive the public and defraud the person injured Ratio:
is declared to be essential to the maintenance of the action but it is  The complaint is sufficient and the order sustaining the
immediately added that such intent may be inferred from similarity of demurrer must be dismissed. An action for infringement of a
appearance of the goods as packed or offered for sale to those of the trademark lies in favor of the injured person against any one who sells
complaining party. goods of a similar kind bearing such trademark. This interpretation
would make the remedy available in very few cases since most traders
Facts: desirous of filching the trade of others in this way will use colorable
 La Insular is a corporation engaged in the tobacco business and it is imitations or suggestive reproductions of the trademark which they
the owner of a registered trademark which it places upon the intend to appropriate rather than exact counterfeits. But if a
wrappers of its cigarettes and by which its products is litigant’s right is doubtful under infringement, he only needs
generally recognized throughout the Philippine Islands and to claim the benefit of the section dealing with unfair
elsewhere. competition which gives precisely the remedies that he
would have contained under the other provision and under
this section, it is immaterial what form the deceptive
practices of the infringer take.
In cases of infringement of trademarks, the law primarily takes no

account of the actual intent on the part of the infringer to mislead the
public and defraud the owner of the trademarks. On the other hand, in
cases of unfair competition actual intent to deceive the public and
defraud the person injured is declared to be essential to the
maintenance of the action but it is immediately added that such intent
may be inferred from similarity of appearance of the goods as packed
or offered for sale to those of the complaining party.
The elements of unfair competition are:

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1. The person complained of shall have given to his goods the Facts:
general appearance of the goods of the complaining party  Philippine Packing Corporation (Philpack) is a domestic corporation in
either in wrapping, devices or words; the Philippines granted the right to manufacture, distribute and sell in
2. That the person complained of should have clothed the goods the Philippines various products of Del Monte. The latter authorized
with such appearance for the purpose of deceiving the public Philpack to register with the PPO the Del Monte Catsup bottle
and defrauding the complaining party of his legitimate trade. confugutation for which it was granted a Certificate of Trademark
Registration under a supplemental register.
It is not always easy to point out exactly where one ends and the other
begins, but together they comprise all actionable injuries which one On the other hand, Sunshine Sauce (Sunshine) was issued a certificate of
person may inflict upon another as the result of the unfair use of registration by the Bureau of Domestic Trade to engage in the selling of
names, marks, and other trade devices. Sunshine Fruit Catsup. This logo was registered in the supplemental register
on 1983. The product itself was contained in various kinds of bottles, including
 In this case, the person injured is not really required to indicate the Del Monte Bottle, which the private respondent bought from junk shops
particular provision of law upon which he relies for relief, and if he
does so and is mistaken, this will not preclude him from obtaining  For this, Philpack and Del Monte filed a complaint against Sunshine
relief under a different conception of the case, provided always that the for infringement of trademark and unfair competition with a
facts stated and proved justify such relief. prayer for damages and the issuance of a writ of preliminary
injunction. In its answer, Sunshine alleged that it already ceased to
In this case, the packaging used by the La Ciudad closely use the bottles and that its logo was substantially different from
imitates the label and mark of La Insular and there is a the Del Monte Logo.
further allegation that the defendant is giving his cigarettes
the appearance of cigarettes anufactured and offered for sale  RTC dismissed the complaint for failure to establish malice or bad
by the plaintiff. The intent to deceive may be inferred from faith which is an essential element to the charges and that in any case,
similarity in the appearance of the goods as packed or offered for sale. Sunshine already became the owner of the said bottles upon its
purchase from the junkshop.
It is too clear from the allegations of the complaint, taken in
connection with the exhibits that there is actionable The trial court made the following comparisons to conclude that there is no
imitation on the part of the defendant. The offending marks colorable imitation of the trademark and logo:
submitted for purposes of actual comparison tell the story to the eye.
Del Monte Corporation and Philippine Packing Corporation v. CA Del Monte Sunshine
Doctrine: To determine whether a trademark has been infringed, we must Shape of label or Semi rectangular with Regular rectangle
consider the mark as a whole and not as dissected. If the buyer is deceived, it make a crown or tomato
is attributable to the marks as a totality, not usually to any party of it. The shape on top of the
court must be guided by its first impression for a buyer acts quickly and is rectangle
governed by a casual glance, the value of which may be dissipated as soon as Brand printed Tomato catsup mark Fruit catsup
the court assumes to analyze carefully the respective features of the mark. on label
Words or Clearly indicated “made in the
The person who infringes a trademark does not normally copy out but only lettering on label words “packed by Sysu Philippines by
makes a colorable change, employing enough points of similarity to confuse International” Sunshine Sauce
the public with enough points of differences to confuse the courts. Manufacturing
Industries”
Color of logo Combination of yellow White, light green

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and dark red with and light red, with fact that usually a defendant in a case of infringement does not
words del monte words sunchine normally copy but makes only a colorable imitation.
quality in white brand in yellow
Shapre of logo Shape of a tomato Entirely different  The use of Del Monte’s bottle constitutes unfair competition,
shape hence, the respondent should be permanently enjoined from
Label below the Seal covering the cap “sunshine brand” the use of such bottles. It can be said that although Del Monte
cap down to the neck of cannot claim exclusive use to the bottles configuration because it has
the bottle with picture not been registered in the Principal Register (it was only registered in
of tomatoes with the Supplemental Register and the same is not a basis for an action for
words “made from real infringement), Sunshine still opted to use petitioner’s bottle to
tomatoes” market a product which Philpack also produces. This clearly
Color of the Darker red Lighter than Del shows bad faith and its intention to capitalize on the latter’s reputation
products Monte and goodwill and pass off its own product as that of Del Monte.
CA affirmed. Thus, this petition for certiorari. E. Spinner and Company v. Neuss Hesslein Corporation
Doctrine: Any conduct may be said to constitute unfair competition if the
Issue: effect is to pass off on the public the goods of one man as the goods of another.
 Whether or not there is infringement of trademark. It is not necessary that any particular means should be used to this end. A
 Whether or not there is unfair competition. competitior in a business cannot be permitted to do acts which have deceived,
or are reasonably designed to deceive the public into buying his goods as
Ratio: those of another.
 Sunshine’s label is an infringement of the Del Monte
trademark. The two marks in their entirety as they appear in the Geographical terms can be used in an arbitrary and artificial sense and when
respective labels must be considered in relation to the goods to which so used by one manufacturer the improper appropriation of the same term by
they are attached. another may be enjoined as an invasion of trademark.
Side by side comparison, as was done by the trial court, is Use of only one of the words constituting a trademark may be sufficient to
not the final test of similarity. The average shopper is usually in a constitute an infringement and it is not necessary to this end that all of the
hurry and does not inspect every product on the shelf as if he were words comprising the trademark should be appropriated.
browsing in a library. The question is not whether the 2 articles are
distinguishable by their label when set side by side but whether the Facts:
general confusion made by the article upon the eye of the casual  E. Spinner (Spinner) is a copartnership has long been engaged in the
purchaser who is unsuspicious and off his guard is such as to likely manufacture and sale of textile fabrics, including khaki cloth with
result in confounding it with the original. distributing business connection in different part of the world. On
about 1900, the plaintiff began exporting its khahi to the Philippine
To determine whether a trademark has been infringed, we must Islands through local firms. It obtained a favorable impression which
consider the mark as a whole and not as dissected. If the buyer is resulted in lucrative trade. Among the brands enjoying such
deceived, it is attributable to the marks as a totality, not usually to any favor was the grade indicated by the manufacturer as Wigan.
party of it. The court must be guided by its first impression for a buyer These were marketed under a common trademark which was first
acts quickly and is governed by a casual glance, the value of which may registered in the Bureau of Patents in 1905.
be dissipated as soon as the court assumes to analyze carefully the
respective features of the mark. The judge must also be aware of the Spinner learned, in 1924, that Neuss Hesslein (Neuss) was selling a
brand of khaki in the Philippines with the word “Wigan” stenciled on

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the bolts below the defendant’s own trademark. After discovering such However, if the defendant were manufacturing khaki in the
fact, it sought to have its trademark registered in the Bureau of town of Wigan, it would be entitled to use that name to
Commerce, to incorporate the work “Wigan” as an integral indicate the place of manufacture of its goods. But such is
part of the registered trademark. not the case here.
 On the other hand, Neuss, at the request of Chinese customers bagan Elidad Kho v. Court of Appeals, Summerville General Merch.
to give orders to the New York House for the printing of the word Doctrine: Trademark, copyright and patents are different intellectual
“wigan” conspicuously on the bolts of khaki intended for sale in the property rights that cannot be interchanged with one another.
Philippines. In the latter part of 1923 or early 1924, the
defendant’s khaki began to be marketed here with the word A trademark is any visible sign capable of distinguishing the goods, or
“Wigan” thereon. services of an enterprise and shall include a stamped or marked container of
goods.
It alleges that the words are the names of manufacturing towns of
minor importance in England but the brand in which the defendant A copyright is confined to literary, and artisitic works which are original
associates the name “Wigan” does not appear to be manufactured in intellectual creations in the literary and artistic domain protected from the
the town of Wigan. The plaintiff also does not use the word “Wigan” in moment of their creation.
its geographical sense or in the trade sense of a material for stiffening.
It uses the word in an arbitrary and in an artificial sense. Patents refer to any technical solution of a problem in any field of human
activity which is new, involves an inventive step and is industrially
Issue: applicable.
 Whether or not the Spinner has the right to use the word “Wigan” o
khaki sold by it in the Philippine Islands. Facts:
 Elidad Kho (Kho) filed a complaint for injunction and damages with
Ratio: prayer for the issuance of a preliminary injunction against
Kho has a copyr
 No. The representation that khaki sold by Spinner is of the Summerville General Merchandising Company (Summerville) alleging
and a patent
kind known to the trade as “Wigan” directly tends to deceive that Summerville advertised and sold petitioner’s cream products
the purchaser and therefore, constitutes unfair competition But, what is needed under the brand name Chin Chun Su (CCS because I’m too
against the plaintiff. Wigan was first stamped upon the khaki sold is a trademark lazy), in similar containers that petitioner uses, thereby
by Spinner at the suggestion or request of a Chines customer, misleading the public and resulting in the decline in the
presumably a tailor or a merchant, and the purpose behind such petitioner’s business sales and income; and that the
suggestion was that if it was stamped, it could be represented to be the respondents should be enjoined form allegedly infringing on
ultimate purchaser that the khaki sold was the plaintiff’s Wigan. This the copyrights and patents of Kho.
discloses the intention to mislead the consumer. It makes no
difference that the dealers are not deceived. The law Kho alleges that she is doing business under the name and style of KEC
concerns itself with the casual purchaser who knows the Cosmetics which is the registered owner of CCS and Oval Facial Cream
commodity only by its name. Container as shown by her certificates of copyright registration.
The word “Wigan” as applied to quality is not an English word in On the other hand, Summerville alleges that it is the exclusive and
common use for describing quality. It is used here in an entirely authorized importer, repacker and distributor of CCS products
artificial sense and its association with quality had the origin manufactured by Shun Yi Factory of Taiwan and that the latter
exclusively in the use which the plaintiff has made of it. authorized Sumemrville to register its tradename CCS with the
PPO and other appropriate governmental agencies.

3A | Batch 2014 | 9
 The RTC granted the prayer for injunction. CA set aside the injunction identification, it cannot deprive competing manufacturers of the product of
on the ground that the registration of the trademark or the right to call an article by its name.
brandname of CSS by KEC with the supplemental register of
the Bureau of Patents cannot be equated with the Suggestive marks are marks that were neither exactly descriptive on the
registration in the principal registration which is duly other hand nor truly fanciful on the other. A term is suggestive if it requires
protected by the Trademark Law. imagination, thought and perception to reach a conclusion as to the nature of
goods. A term is descriptive if it forthwith conveys an immediate idea of the
According to the CA, the registration in the supplemental register ingredients, qualities or characteristics of the goods.
serves as a notice that the registrant is using the trademark. By the
very fact that the tradename cannot as yet be on guard and there are In case a trademark is descriptive, the law strikes the balance with respect to
certain defects, some obstacles which must still be overcome before he registration, between the hardships to a competitor in hampering the use of
can legally claim ownership of the mark or ask the courts to vindicate an appropriate word and those to the owner who, having invested money
his claims of an exclusive right to the use of the same. and energy to endow a word with the good will adhering to his enterprise,
would be deprived of the fruits of his efforts.
Issue:
 Whether or not Kho is entitled to the preliminary injunction on the Facts:
ground that she is entitled to the use of the trademark on CCS and its  This case stems from a case filed by Abercrombie & Fitch (AF) against
container based on her copyright and patent over the same. Hunting World, Incorporated (HW) for infringement on some of AF’s
registered trademarks using the word “Safari”. It is claimed that AF
Ratio: spent large sums of money in advertising and promoting products
 No. Petitioner has no right to support her claim for the identified with its mark “Safari” and in policing its rights in the mark.
exclusive use of the subject trade name and its container. In However, HW has engaged in the retailing marketing of sporting
order to be entitled to the exclusive use of the same, the user must apparel including hats and shoes, some identified by use of “Safari”
sufficiently prove that she registered it or used it before alone or by expressions such as “Minisafari” and “Safariland”. AF
anybody else did. Kho’s copyright and patent registration of the claims that the continued acts of HW would confuse and
name and container would not guarantee her the right to the exclusive deceive the public and impair the distinct and unique quality
use of the same for the reason that they are not appropriate subjects of of the plaintiff’s trademark.
the said intellectual rights.
In its answer, HW claimed that the word “Safari” is an ordinary,
A preliminary injunction cannot be issued for the reason that the common, descriptive, geographic and generic word which is
petitioner has not proven that she has a clear right over the said name commonly used and understood by the public to mean and
and container to the exclusion of others, not having proven that she refer to a journey or expedition in East Africa. Such an
has registered a trademark thereto or used the same before anyone expedition, it claims, is not subject to exclusive appropriation as a
did. trademark.
Abercrombie & Fitch v. Hunting World 537 F.2d 4 (1976)  Judge Ryan, before whom the action was tried on remand, ruled
Doctrine: A generic term is one that refers, or has come to be understood as broadly in HW’s favor and found that there was frequent use of the
referring to the genus of which the particular product is a species. At common word “Safari” in connection with wearing apparel, that AF’s
law, neither those terms which were generic nor those which were merely policing efforts thus had evidently been unsuccessful and
descriptive could become valid trademarks. No matter how much money and that AF had itself used the term in a descriptive sense not
effort the user of a generic term has poured into promoting the sale of its covered by its registration. The court held that the word “Safari” is
merchandise and what success it has achieved in securing public merely descriptive and does not serve to distinguish the goods of AF as
listed on the registration from anybody else’s; while such terms are

3A | Batch 2014 | 10
afforded protection by the Lanham Act if they come to identify the  Registrations which have not become incontestable should
company merchandising the product, rather than the product itself, AF not be cancelled. “Safari” as applied to ice chests, axes, tents
failed to establish that this has become the situation with respect to and smoking tobacco does not describe such terms. Rather, it
“Safari”. Thus, the lower court entered a judgment which is a way of conveying to affluent patrons of AF’s romantic notion of
dismissed the complaint and cancelled not only the high style coupled with an attractive foreign allusion. The cancellation
trademarks in suit but all other AF’s “Safari” trademark. should only be directed to those under contests because with respect to
the remaining registrations, the law affords registration as prima facie
Issue: evidence of the validity of such registration and of the registrant’s
 Whether or not there is trademark infringement. exclusive right to use the mark in commerce.
 Whether or not the cancellation of the marks not in contest is proper.
Filipino Yellow Pages v. Asian Journal Publications
Ratio: Doctrine: There are 5 different categories of terms with respect to trademark
 There is no infringement. As to the use of HW of “Camel protection: 1) generic, 2) descriptive, 3) suggestive, 4) fanciful or
Safari”, “Hippo Safari”, and “Chukka Safari” as names for 5) arbitrary.
boots imported from Africa, the court held that there is no
evidence that “Safari” has become a generic term for boots. A generic term (otherwise known as “common descriptive terms”) is one that
Here, Lee Expeditions, the parent company of HW, has been primarily refers to or has come to be understood as referring to the genus of which the
engaged in arranging Safaris to Africa since 1959. The president of particular product or service is a species. A generic term is the name of the
both companies even published a book in 1959 entitled “Safari Today product or service itself – what the product is and as such, the very antithesis
The Modern Safari Handbook”. These facts suffice to establish, absent of a mark. The ultimate test of genericness is how a term is understood by the
a contrary showing, that defendant’s use of Safari with respect to boots consuming public.
was made in the context of hunting and travelling expeditions
and not as an attempt to garner the goodwill of AF. A descriptive term (otherwise known as “merely descriptive terms”) can be
subject for trademark protection under appropriate circumstances. It can be
The use of Camel Safari, Hippo Safari, and Chukka Safari as names for protected provided that it has acquired a secondary meaning in the minds of
various boots imported from Africa constituted a purely descriptive the consumers.
use to apprise the public of the type of product by referring to its origin
and use. When a plaintiff has chosen a mark with some The anti-dissection rule states that “the validity and distinctiveness of a
descriptive qualities, he cannot altogether exclude some composite trademark is determined by viewing the trademark as a whole, as
kinds of competing uses even when the mark is registered. it appears in the marketplace.”’
Furthermore it was significant in this case that HW did not use the
word “Safari” alone on its shoes, as it would doubtless have done if Facts:
confusion has been intended.  Robert Lagmay Oriel (“Oriel”) and Oscar Jornacion were partners in
Fil-Am Enterprises publishing the Filipino Directory of California ( a
As to the “minisafari” hat and “safariland”, the court held telephone directory directed primarily at the Fil-Am community of
that these terms were generic terms. Hence, AF was not Southern California. In 1986, they terminated their business under a
entitled to an injunction against the use of such words. If HW “Shareholders Buy-Out Agreement” were Oriel acquired complete
may advertise a hat of the kinds worn on safaris as a “Safari Hat” then ownership over the telephone directory business and Jornacion agreen
it may also advertise a similar hat with a smaller brim as a minisafari. not to compete in the pages in California for 3 years.
Likewise, the use of “Safariland” as a name of a portion of its store
developed at least in part to the sale of clothing as to which the term As owner of Fil-Am, Oriel continued to publish until 1991. In 1993, Fil-
“Safari” has become generic. Am sold its interest in the Filipino Directory of the USA and Canada.
Thereafter, in 1994, Oriel and his wife formed a new corporate

3A | Batch 2014 | 11
entity, Asian Journal Publications (AJP) which published a
telephone directory called the Filipino Consumer Directory. Ratio:
 Filipino Yellow Pages even if descriptive rather than generic,
In 1990, pursuant to the 3-year ban agreement, Jornacion formed the is not a valid and protectable trademark with respect to a
Filipino Yellow Pages (FYP). Currently, FYP, AJP and the Filipino telephone directory for the Fil-Am Communicty. It is
Directory of USA and Canada compete in the Filipino-American undisputed in this case that the words “Filipino” and “Yellow Pages”
telephone directory market in California. are generic. The question to be determined in this case is whether or
not “Filipino Yellow Pages”, taken as a composite term, is generic. In
 FYP applied for registration of the “Filipino Yellow Pages” with the the past case of Surgicenter, the court held that the term “Surgicenter”
Patent and Trademark Office. In 1996, it was denied registration on (form the words surgical and center), is a generic term because of the
the ground that the proposed mark merely describes the goods rule that a combination of 2 generic words is also generic,
and the nature and intended audience for the goods. unless the combination is a deviation from natural usage or
However, the patent office informed FYP that since it indicated in its an unusual unitary combination.
application the use of the mark for a significant time, FYP could amend
its application to seek registration based on acquired The district court relied on said case in deciding that “Filipino Yellow
distinctiveness. It further advised FYP to include in its application Pages” is a generic term. However, the disctrict court only considered 3
the disclaimer that “No claim is made to the exclusive right to use the pieces of evidence when it evaluated the case of FYP which is not as
term apart from “Filipino Yellow Pages”. It filed its application weighty as the 45 exhibits presented in Surgicenters. Furthermore, the
accordingly, but the application still remains pending. mark in Surgicenter is a federally registered mark, thus, the burden of
proving the genericness rested upon the party challenging the mark’s
FYP filed a complaint against AJP alleging trademark validity.
infringement, false designation of origin and false
description of sponsorship or application (since AJP On the contrary, FYP is not registered. Thus the burden of proving
periodically uses the term “Filipino Consumer Yellow Pages” in print non-genericness lies on FYP. It does not appear that FYP has
advertisements), unfair competition and misrepresentation of offered evidence of nongenericness sufficient to rebut even
good will, misappropriation of FYP’s right to publicity, the fairly modest evidence of genericness offered by AJP. In
injury to business relationships, unfair competition and light of the evidence presented, it would seem that under the
trademark dilution. who-are-you/what-are-you test1, the term is generic.
AJP moved for summary judgment and argued that FYP is a generic Giving FYP exclusive rights to the term “FYP” might be inappropriate
and as such is incapable of trademark protection. As counter, FYP since it would effectively grant FYP as the owner of the mak a
claims that FYP is a descriptive mark with a secondary meaning within monopoly since a competitor could not describe his goods as what they
the Filipino-American Community. are”.
 The District Court granted the motion for summary judgment in favor Even assuming that FYP is a descriptive term protected if
of AJP on the ground that “Filipino Yellow Pages” is a generic term given secondary meaning, FYP presented insufficient
incapable of serving as a trademark. evidence to prove that FYP did have secondary meaning. It
only presented the declaration of its founder and president which is
Issue: self interested and is accorded little evidentiary weight.
 Whether or not FYP is generic with respect to telephone directories
targeted at the Fil-Am Community.
1If a mark answers the buyer’s questions “Who Are You?” “Where are you from? “Who vouches for
you?, it is a nongeneric term. On the other hand a generic name of the product answers the
question “What Are You?”

3A | Batch 2014 | 12
Trademarks Midterms Case Digests (Atty. Ortiguerra) MC was able to prove they acquired secondary meaning BUT there is actual confusion
International Kennel Club of Chicago v. Mighty Star appeal in addition to the escrow money provided for in the initial
Doctrine: The first step to determine whether an unregistered mark is entitled injunction to avoid the stay of the injunction order. Not having the
to the protection of trademark laws is to categorize the name according to the means to file the bond, the court granted the motion to stay the
nature of the term itself. Trademarks that are fanciful, arbitrary or preliminary injunction order pending appeal.
suggestive are fully protected, while descriptive words may be trademarked
only if they have acquired secondary meaning, that is only if the consumers Issue:
have come to think of the word not as a descriptive term but as the name of  Whether or not IKC is entitled to the injunction (to determine this, the
the product. likelihood of the success on the merits should be looked at, hence IKC
has to establish that it has a protectable trademark and that there is a
Direct competition is not the sine qua non of trademark infringements; rather likelihood of confusion as to the origin of MS’ product).
the gist of the action lies in the likelihood of confusion to the public. A plaintiff
need not demonstrate that it is in direct competition with an alleged infringer Ratio:
in order to establish likelihood of confusion.  The court found that the phrase “International Kennel Club” fits within
the category of descriptive words in that it specifically describes a
Facts: characteristic or ingredient of an article or service. It is entitled to
 International Kennel Club (IKC) is an Illinois business corporation trademark protection only if the name has acquired secondary
that sponsors dog shows in Chicago. It also sponsors seminars and meaning.
contributes funds for animal and medical research. While IKC is does
not sell stuffed toys, the private vendors rent booth at plaintiff’s shows In evaluation whether or not there is a secondary meaning better than
for a certain price and they sell dog-related items, including stuffed negligible (which is what is required to be granted the injunction), the
dogs. court looks at the amount and manner of advertising, volume
of sales, length and manner use, direct consumer testimony
On the other hand, Mighty Star (MS) is a corporation that sells stuffed and consumer surveys. In addressing this, the IKC presented
toys in the US, Canada, England, Australia and Asia. In the latter part evidence that it has acquired secondary meaning as evidence by the
of 1985, they decided to add to their product line of stuffed animals, a amount and manner of advertising and the length and manner of its
line of stuffed “pedigree” dogs representing different breeds which use.
they named “International Kennel Club”. They utilized a marketing
strategy whereby purchasers could register their gods with the IKC has developed and maintained its reputation among canine
“International Kennel Club” and receive an official membership and enthusiasts through advertising carefully targeted to reach persons
certificate. interested in the sport of showing purebred dogs. It is advertised in
publications with a continent-wide circulation. Moreover, both major
 6 months after the learning of the IKC Chicago’s existence, MS placed Chicago newspapers have highlighted the IKC’s dog shows and have
a fill-page advertisement for their line of stuffed gods in the April designed and promoted special advertising supplements around those
Edition of the Good Housekeeping magazine. For this reason, IKC, columns. As further evidence, IKC also introduced evidence that the
received an abundant number of phone calls inquiring about their club received a number of letters and phone calls asking about the
affiliation with the MS-IKC line of stuffed dogs. stuffed toys of MS. The court found that this is sufficient to
show that there is secondary evidence better than negligible.
Confronted with the inquiries, IKC filed an instant trademark
infringement case and request for preliminary injunction.  As to the likelihood of confusion, the court held that there is
After trial, the trial court held that IKC was entitled to the preliminary more than ample evidence to support the conclusion that
injunction prayed for. Subsequently, MS filed a motion to require the there is likelihood of confusion as evidenced by the fact that
plaintiff to post security and to modify and stay the injunction. For there is a degree of similarity as to their name, that while not
this, the court indicated to IKC that they have to file a bond pending

3A | Batch 2014 | 13
identical, their products cannot be considered as unrelated, contains the main or essential or dominant features of another by reason of
and that there is actual confusion. which confusion and deception are likely to result, then infringement takes
place. Duplication or imitation is not necessary, a similarity in the dominant
It is proper to consider the similarities and dissimilarities between the features of the trademarks would be sufficient.
marks in their entireties in determining the likelihood of confusion.
They must be compared in light of what occurs in the marketplace and Where a trademark contains a dominating or distinguishing word, and
not in the courtroom. In this case, the only significant difference is the purchasing public has come to know and designate the article by such
addition of a common geographic term “of Chicago” despite the use of dominating word, the use of such word by another in marking similar goods
the defendants of the “24 Polar Puff”. These weigh in favor of the may constitute infringement though the marks aside form such dominating
conclusion that the alleged infringer has appropriated the dominant word may be dissimilar.
portion of the mark. Consumers would necessarily believe that IKC
licensed MS to use the IKC name. While the trade dress may dispel Facts:
some point of sale confusion, the labeling does nothing to prevent  Philippine Nut (PhilNut) is a domestic corporation with a registered
consumers from mistakenly assuming that MS is somehow trademark “Philippine Planters Cordial Peanuts” (“Planters Cordial”)
associated with IKC or has consented to the mark’s use. obtained from the Patent office used on its products of salted peanuts.
In determining the likelihood of confusion as to the similarity of their Standard Brands (Standard), a foreign corporation, filed a case with
products, the question is whether the products are the kind the the director of patents seeking the cancellation of the registered
public attributes to a single source. The rights of an owner of trademark of Philippine Nut as it closely resembles its trademark
a trademark extend to any goods related in the minds of the “Planters Cocktail Peanuts” (“Planters Cocktail”) which it claims to
consumers in the sense that a single producer is likely to put have first used in the year 1938 (it alleges that PhilNut first used its
out both goods. Planters Cordial trademark only in 1958).
Plaintiffs also introduced evidence of actual consumer confusion  The Patent office ordered the cancellation of the trademark of PhilNut
through the letters, phone calls and inquiries they received. Actual on the ground that the dominant part is the word Planters
confusion is the best evidence of the likelihood of confusion. which is displayed in a very similar manner and is very
confusing to the consumers. He concluded that PhilNut is
The use of the disclaimer, especially where the infringement not entitled to register the mark at the time of the filing of its
in issue is a verbatim copying of the plaintiff’s name, should application with the patent office as Standard would be
not be given weight since disclaimers are often ignored by damaged by such registration.
consumers. It would be difficult to ensure the use of the disclaimer
by their distributors since the defendants has no control over their
distributors’ advertising.
 As to the extent of the injunction, the court held that since IKC can
establish no rights extending to Mexico and since there is no evidence
that the products of MS in Mexico impair the rights of IKC, the
injunction need not extend to Mexico at this time.
STANDARD WINS. “PLANTERS” already has secondary meaning
Philippine Nut Industry v. Standard Brands Incorporated tska nauna si STANDARD to use the trademark.
Doctrine: To determine whether or not a trademark causes confusion and is
likely to deceive the public is a question of fact and is to be resolved by
applying the “test of dominancy”, meaning, if the competing trademark

3A | Batch 2014 | 14
Mr. Peanut is not the trademark of Standard Brands in this case. What
calls the attention of the buyer is the word “Planters”. It is that which
leaves a lasting impression on the buyers.
Furthermore, applying the doctrine of secondary meaning to this case,

there is evidence to show that Planters has become a distinctive mark
or symbol insofar as salted peanuts are concerned, and by priority of
appropriation dating as far back as 1938, respondent Standard has
acquired a preferential right to its adoption.
Zantarain’s Inc. v. Old Grove Smokehouse

Doctrine: Generic term is the name of a particular genus or class of which an
individual article or service is but a member. It can never attain trademark
protection. Furthermore, , if at any time a registered trademark becomes
generic as to a particular product or service, the mark’s registration is subject
to cancellation.
On appeal, the petitioners claim that PLANTERS cannot be considered
as the dominant feature of the trademarks in question because it is a A descriptive term identifies a characteristic or quality of an article or service
mere descriptive term, an ordinary word which is defined as “one who such as its color, odor, function, dimensions or ingredients. They are not
or that which plants or sows”. ordinarily protectable as trademarks but they may become valid marks by
acquiring a secondary meaning in the minds of the consumers.
Issue:
 Whether or not there is infringement. A suggestive term suggests rather than describes some particular
characteristic of the goods or services to which it applies and requires the
Ratio: consumer to exercise the imagination in order to draw a conclusion as to the
 Yes. While it is true that the words used such as Cordial and Cocktail nature of the goods or services. It is protected without the necessity for proof
are also prominently displayed, these words are mere adjectives of secondary meaning2.
describing the type of peanuts in the labeled containers and
are not sufficient to warn the unwary customer that the 2 Arbitrary or fanciful terms bear no relationship to the products or services to
products come from distinct sources. The word “PLANTERS” which they are applied. They are protectable without proof of secondary
draws the attention of the buyer. meaning (e.g. Kodak, Ivory – soap).
It, likewise, cannot be ignored that in this case, the coloring scheme of Facts:
the 2 marks are similar (gold, blue and white) and it basically has the  Zantarain is the manufacturer and distributor of a line “Fish-Fri” and
same layout of words such as “salted peanuts” and “vacuum packed”. “Chick-Fri”. The term “Fish-Fri” has been used by Zatarain’s or its
As a matter of fact, even the letter C of the words “cocktail” and predecessors since 1950 and has been registered as a trademark since
“cordial” are similar. When a competitor adopts a distinctive or 1962. Likewise, “Chick-Fri” was used in the yeat 1968 by Zantarain and
dominant mark or feature of another’s trademark and with it makes was registered as trademark in 1976.
use of the same color ensemble, employs similar words written in a
style, type and size of lettering almost identical with those found in the
other, it is quite obvious that there is intent to pass to the public
his product as that of the other. 2 One must show that the primary significance of the term in the minds of the consuming public is
not the product but the producer. The burden always rests with the plaintiff. A high degree of proof
same coloring scheme
is necessary to establish secondary meaning.
same layout of words
same letter for “CORDIAL” and “COCKTAIL”
3A | Batch 2014 | 15
Oak Grove Smokehouse (Oak Grove) began marketing a “fish fry” and “chicken qualities, characteristics, effect, purpose, or ingredients of a
fry” in March 1979; product or service, it is classified as descriptive (dictionary
test – consult the dictionary for the meaning of the word); if a term
Similarly, another company, Visko’s Fish Fry entered the batter mix market in requires imagination, thought and perception to reach a
1980 with its product, “Visko’s Fish Fry”. conclusion as to the nature of goods, it is suggestive
(imagination test).
 Zantarain filed its original complaint against Oak Grove in the US
District Court alleging infringement and unfair competition In this case, a mere observation compels the conclusion that a product
under the Lanham Act. The defendants, Oak Grove and Visko branded “Fish-Fri” is a prepackaged coating or batter mix applied to
counterclaimed for cancellation of the trademarks “Fish-Fri” and fish prior to cooking. The connection between the merchandise and the
“Chick-Fri”. The case was tried and the district court found that the term is so close and direct that even a consumer unfamiliar with the
term “Fish-Fri” has acquired a secondary meaning in the New Orleans product will have an idea of its purpose of function.
geographical area and therefore, was entitled to trademark protection,
but concluded that the defendants were entitled to fair use of the term The third test applied by the court is whether the competitors would
“fish-fry” to describe the characteristics of their goods. Accordingly, be likely to need the terms used in the trademark in describing their
the Court held that Oak Grove and Visko had not infringed the products. The court held there is a necessity to use the words because
trademark of Zatarain. With respect to Chick-Fri, the court held that it “even piscatorial gastronomes (nagpapaka-poetic pa yung ponente eh,
had not yet acquired a secondary meaning to the minds of the badtrip) would agree that the words “fish” and “fry” suggests that a
consumers, hence, it ordered the cancellation of its trademark merchant whose batter mix is specially spiced for fishing is likely to
registration. find “fish fry” a useful term for describing his product.”
On appeal, Zatarain claims that Fish-Fri is a suggestive term and The final test examines the extent to which a term actually has been
therefore not subject to the “fair-use defense”3. It claims that even used by others marketing a similar service or product. As noted above,
assuming that the fair use defense is applicable in this case, the a number of companies have already used the terms in describing their
appellees cannot invoke the doctrine products. It further claims that products.
Chick-Fri has acquired a secondary meaning for the term.
 In assessing the claim for secondary meaning, the major inquiry is the
Issue: consumer’s attitude towards the mark. The mark must denote to
 Whether or not Fish-Fri is a suggestive term. the consumer “a single thing coming from a single source”.
 Assuming Fish-Fri is a descriptive term, whether or not the fair-use Factors such as amount and manner of advertising, volume of sales,
defense could be set up. and length and manner of use may serve as circumstantial evidence
 Whether or not Chick-Fri is a descriptive term with a secondary relevant to the issue of secondary meaning. While none of these alone
meaning afforded trademark protection. will prove it, the combination would establish the necessary link in the
minds of the consumers between a product and its source. The
Ratio: measure is not the quantity of the efforts, but its effectiveness in
 Fish-Fri is a descriptive term. There are a few tests applied by the altering the meaning of the term.
court in determining whether a term is descriptive or suggestive.
Whenever a word or phrase conveys an immediate idea of the In this case, it was found that Zatarain and its predecessor has used
the term continuously. It also acquired expenditures of over $400,000
3 Even when there is a secondary meaning, others may be entitled to the use of the mark without
for advertising during the period from 1976 to 1981. For this, Zatarain
incurring liability for trademark infringement when used fairly and in good faith only to describe sold a total of 916,385 cases of Fish-Fri. Moreover, in a survey
to users the goods or services of a party, or their geographic origin. Anyone is free to use the conducted by experts, it was found that Zatarain was the product they
descriptive ark as long as such does not lead to customer confusion as to the source of goods or would buy at the grocery store as coating. Such is considered as
services.

3A | Batch 2014 | 16
circumstantial evidence of secondary meaning to weigh doors. The stepped exterior of the building is a festive and vivid color
heavily in Zatarain’s favor. scheme using top border paint and neon stripes. Bright awnings and
umbrellas continue the theme.”
 The fair-use defense can be set up. There is ample evidence to Two Pesos, Inc., on the other hand, adopted a motif very similar to the
support that the use of the words “fish fry” was fair and was made in foregoing description of Taco Cabana’s trade dress. It expanded
good faith. Oak Grove and Visko did not intend to use the term in a rapidly in Houston and other markets but did not enter San Antonio.
trademark sense and had never attempted to register the words as a
trademark. In addition to this, they packaged their products in such a  In 1987, Taco Cabana filed a case for trade dress infringement
wat as to minimize any potential confusion in the minds of consumers. under Texas Common Law. The court held that the trade dress
was protected if it either was inherently distinctive OR had
 “Chick Fri” is a secondary term without secondary meaning. acquired a secondary meaning. The court found that Two Pesos
It has been used only in 1968 and was registered in 1976. Zatarain’s intentionally and deliberately infringed Taco Cabana’s Trade Dress.
expenditures over Chick-Fri were mere “chikenfeed”. In fact there was
no direct advertising campaign to publicize the product. Zatarain has On appeal, the court ruled that Taco Cabana’s trade dress was not
not overcome the burden of proving secondary meaning. Having descriptive but rather INHERENTLY distinctive, and that it was not
concluded that it is lacking secondary meaning, the cancellation of its functional. It affirmed its decision in Chevron v. Voluntary Purchasing
registration was proper. Groups and held that Taco Cabana’s inherently distinctive trade dress
was entitled to protection despite the lack of secondary meaning.
Two Pesos v. Taco Cabana
Doctrine: Marks which are merely descriptive of a product are not inherently Petitioner now argues that the fact that the court found that there is no
distinctive. When used to describe a product they do not inherently identify a secondary meaning, means that the trade dress is not inherently
particular source, and hence cannot be protected. However, descriptive distinctive.
marks may acquire distinctiveness which will allow them to be protected if it
has become distinctive of the applicant’s goods in commerce (secondary Issue:
meaning).  Whether or not the trade dress that is inherently distinctive is
protectable under the law without a showing that it has acquired a
An identifying mark is distinctive and capable of being protected if either 1) it secondary meaning.
is inherently distinctive; 2) if it has acquired distinctiveness through
secondary meaning. Ratio:
 Proof of secondary meaning is not required to prevail over a
The protection of trademarks and trade dress under the law serves the same claim under the Lanham Act where trade dress at issue is
statutory purpose of preventing deception and unfair competition. There is inherently distinctive. There is no persuasive reason to apply to
no persuasive reason for applying different analysis. trade dress a general requirement of secondary meaning which is at
odds with the principles generally applicable to infringement suits
Facts: under the Lanham Act.
 Taco Cabana operates a chain of fast food restaurants in Texas. Its first
restaurant opened in San Antonio in September 1978. Taco Cabana A general requirement of secondary meaning imposes an unfair
describes its Mexican Trade Dress as: prospect of theft or financial loss on the developer of fanciful or
arbitrary trade dress at the outset of its use. Petitioner here suggests
“a festive eating atmosphere having interior dining and patio areas that such trade dress should receive limited protection without proof
decorated with artifacts, bright colors, paintings and murals. The of secondary meaning. However, the court stated that if temporary
patio includes interior and exterior areas with the interior patio protection is available from the earliest use of the trade
capable of being sealed off from the outside patio by overhead garage dress, it must be because it is neither functional nor

3A | Batch 2014 | 17
descriptive, but an inherently distinctive dress that is  Justice Thomas: Section 43(a) of the Lanham Act made actionable
capable of identifying a particular source of the product. The “any false description or representation including words or other
termination of protection for failure to gain secondary meaning over symbols tending falsely to describe or represent, when used in
some unspecified time could not be based on the failure of the dress to connection with any goods or services.”
retain its fanciful, arbitrary or suggestive nature, but on the failure of
the user of the dress to be successful enough in the marketplace. Trade dress, which consists of not words or symbols, but of a product’s
packaging seems at common law to have been though incapable ever of
Upon consideration of the court of past jurisprudence (e.g. Vibrant being inherently distinctive, perhaps on the theory that the number of
Sales v. New Body), it held that such is contrary to the provisions of ways to package a product is finite. Thus, a user of trade would always
the Lanham Act. It held that if a verbal or symbolic mark or the have had to show secondary meaning in order to obtain protection.
features of a product design may be registered under the But now, trade dress is considered as fully capable as a
law, it is necessarily a mark by which the goods of the particular trademark of serving as a representation or
applicant may be distinguished form others. Section 2 of the designation of source under the law.
law requires secondary meaning only as a condition
precedent to registration of descriptive marks. There are As a result, the first user of an arbitrary package, should be entitled to
marks that are registrable without secondary meaning. These marks presumption that his package represents him without having to show
are inherently capable of distinguishing the goods of the users of these that it does so in fact.
marks.
Wal-Mart Stores v. Samara Brothers
Suggestive marks are capable of registration without any proof of Facts:
secondary meaning since the connection between the mark and the  Samara Brothers (Samara) is a company which designs and
source is presumed. There is no distinction in the law between manufacturs children’s clothing. Its primary product line of
trademarks and trade dress. This serves the same intention of spring/summer clothing is sold in a number of chain stores, including
preventing deception and unfair competition. JCPenney. On the other hand, Walmart is one of the US’ most well
known retailers. It contracted with one of its suppliers, Judy
Furthermore, adding a secondary requirement could have anti- Philippines to manufacture a line of swimwear for sale in the 1996
competitive effects and would create burdens on the startup of summer season. It sent photographs of a number of garments from
companies. Samara’s line on which Judy garments were to be based. Judy duly
copied the line with a few minor revisions.
Concurring Opinions
 Justice Stevens: The wording of the law does not say “trademark or After investigation, Samara found out that Walmart and several other
trade dress” It is to be interpreted, thus, that a federal cause of action stores were selling the knock-offs of Samara’s outfits produced by
for infringement of an unregistered trademark or trade dress and Judy-Philippine. Thus, Samara filed a case for copyright
concludes that such a mark or dress should receive essentially the infringement and infringement for unregistered trade dress
same protection as those that are registered. under the Lanham Act.
The test for liability is the likelihood of confusion. Under the Lanhan Walmart claims that there is insufficient evidence to prove that
Act, the ultimate test is whether the public is likely to be deceived or Samara’s designs were protected as distinctive trade dress for purposes
confused by the similarity of the marks whether we call the violation of the Lanham Act. The trial court found for Samara and awarded the
infringement, unfair competition or false designation of origin. company damages, interests, costs and fees together with injunctive
Secondary meaning need not be established if there is a finding of relief.
inherent distinctiveness.

3A | Batch 2014 | 18
Issue: Design, like color, is NOT INHERENTLY DISTINCTIVE. The
 Whether or not Samara’s designs are entitled to infringement attribution of inherent distinctiveness to certain categories of word
protection under the Trademark Law. marks and product packaging derives form the fact that the very
purpose of attaching a particular word to a product or encasing it in a
Ratio: distinctive package is most often to identify the product’s source. With
 There is no infringement. Product designs require secondary product design, as with color, consumers are aware of the reality that,
meaning. An action for infringement of an unregistered almost invariably, that feature is intended not ti identify the source,
trade dress is protectable only upon showing of secondary but to render the product itself more useful or more appealing.
meaning. The breadth of definition of marks registrable under the
Lanham Act includes trade dress – a category that has been expanded The case of Two pesos is inapposite to the court’s ruling in this case
by many Court of Appeals to encompass the design of a product. For since the trade dress at issue at that time was the décor of the
liability for trade dress infringement to exist, there must be proof that restaurant which constitutes product packaging – which is normally
the alleged infringement feature is not functional and is taken by the consumer as to indicate origin. Such case has no bearing
likely to cause confusion with the product for which in the present case.
protection is sought. Distinctiveness is, moreover, an
explicit prerequisite for registration of trade dress under Shangri-La International v. Developers Group
and the general principles qualifying a mark for registration Doctrine: The root of ownership of trademark is actual use in commerce. The
under the Lanham Act are for the most part applicable in law requires that before a trademark can be registered, it must have been
determining whether an unregistered mark is entitled to actually used in commerce and service for not less than 2 months in the
protection. Philippines. Registration, without more, does not confer upon the registrant
an absolute right to the registered mark. It is merely a prima facie proof that
A mark is inherently distinctive if its intrinsic nature serves to identify the registrant is the owner of the registered mark or trade name.
a particular source. Secondly, even if it is not inherently distinctive, if
it has developed secondary meaning, which occurs when, in the minds Registration in the principal register gives rise to a presumption of the
of the public, the primary significance of a mark is to identify the validity of the registration, the registrant’s ownership of the mark and his
source of the product rather than the product itself. right to the exclusive use thereof. Registration therefor is limited to the actual
ownership of the trademark (it passes upon the issue of ownership). It may be
There is nothing in the law, however, which requires that every contested through opposition or interference proceedings or, after
category mark necessarily includes some marks “by which the goods of registration, in a petition for cancellation.
the applicant may be distinguished from the goods of others” without
secondary meaning – that in every category some marks are inherently Facts:
distinctive.  The Kuok Family owns and operates a chain of hotels with interest in
hotel and hotel-related transactions since 1969. Allegedly, it adopted
However, it was pointed out by the court that it is difficult to point out the Shangila Logo as far back as 1962 and used it in all of their hotels
that a mark is inherently distinctive. Consumers are aware of the around the world. To centralize their operations, the Kuok Group
reality that almost invariably, even the most unusual of product incorporated in Hong Kong and Singapore, among other places. Edsa-
designs, such as cocktail shaker shaped like a penguin – is intended Shangri-La Hotel and Resort and Makati Shangri-Law hotel
not only to identify the source, but to render the product itself more and Resort were incorporated in the Philippines in 1987 to
useful or appealing. Thus, in evaluating distinctiveness courts own and operate 2 hotels put up by Kuok Group.
have differentiated between marks that are inherently
distinctive and marks that have acquired distinctiveness On the other hand, complainant herein is DGCI who claims to have
through secondary meaning. used and registered the logo in October 1982 with the Bureau of
Patents from a scribbled piece of paper given to him by an unnamed

3A | Batch 2014 | 19
artist for his restaurant business, the Shangri-La Finest Chinese respondent has a right to the mark by virtue of its prior use in the
Cuisine. Philippines and the issuance of the certificate of its registration.
Furthermore, the CA ruled that the Paris Convention still
requires commerce in the Philippines in order to be
protected.
Issue:
 Whether or not DGCI is the rightful owner of the trademark.
 Whether or not Shangri-La can claim protection under the Paris
Convention.
Ratio:
 DGCI does not have the right to ownership over the
trademark. The law at force at the time of the application of the
trademark applies. In this case, R.A. No. 166 as amended applies. It
states that “The root of ownership of trademark is actual use in
commerce. The law requires that before a trademark can be registered,
it must have been actually used in commerce and service for not less
than 2 months in the Philippines. Registration, without more, does not
confer upon the registrant an absolute right to the registered mark. It
is merely a prima facie proof that the registrant is the owner of the
It should be noted herein that petitioners, Shangri-La International registered mark or trade name.”
did not operate any establishment in the Philippines albeit they
advertised their hotels abroad since 1972. As between actual use of the mark without registration and
registration of the mark without actual use thereof, the former prevails
DGCI filed a complaint for infringement and damages against Shangri- over the latter. Here, it can be seen that as a condition precedent
La International alleging that it has been the prior exclusive user in the to the registration of the trademark, the same must have
Philippines of the mark and logo in question since December 1982 and been in actual use in the Philippines before the application
the registered owner thereof for its restaurant and allied services. It for registration.
claims that the logo of the latter is confusingly similar with that of its
logo. Applying such principle, DGCI cannot be the owner of the trademark
since according to his statement, the jeepney signboard artist he
Shangri-La claims protection under the Paris Convention and sought commissioned submitted his designs only in December 1982. This was
the cancellation of the registration of DGCI. It claims that the Paris 2 months after the filing of the application for trademark application
Convention affords them security and protection as well as the on October 18, 1982. It was also only on December 1982 when the
exclusive right to the said mark and logo. They claimed that they have restaurant opened for business. Hence, the registration is void.
used this logo since 1975, internationally known and specially designed
by on William Lee. It was also found by the court that DGCI’s president, Ramon
Syhunliong has been a guest at the petitioner’s hotel before he caused
 The trial court found for DGCI. CA affirmed on the ground that the the registration of the mark and logo, and surmised that he must have
evidence presented by Shangri-La international shows that they used copied the idea there. The respondent here copied not only the words
the tradename abroad and not in the Philippines until 1987. It cannot but also the exant font and lettering style and in addition, he copies
claim ownership over the mark and logo. On the other hand, also the logo portion of the trademark. It is then apparent that the

3A | Batch 2014 | 20
adoption was deliberate, malicious and in bad faith. He  Shen Dar filed a petition for cancellation of the registration of EYIS on
cannot not bring an action for infringement against the the ground that EYIS was a mere distributor in the Philippines of
owner of the mark. VESPA air compressors which it imported from Shen Dar. It argued
that it had prior and exclusive right to the use and registration of the
The requirements for ownership of a trademark are mark.
enumerated in the law. There must be prior and actual use in
commerce in the Philippines for 2 months prior to the application for EYIS denied the allegations of Shen Dar and alleged that it was a mere
registration and the mark must not have been already appropriated by importer. The air compressors supplied to them bore the mark SD
someone else. which stood for Shen Dar and not VESPA.
 Nevertheless, Shangri-La cannot claim protection under the  Director of the BLA ruled in favor of EYIS. Hence the petition for
Paris convention which gives them the remedy of applying cancellation of the mark was denied. Similarly, the appeal was denied
for cancellation of a trademark for unfair competition and the certificate of registration of Shen Dar was accordingly
whether or not registered because under municipal laws, cancelled.
there must have been prior and actual use in the Philippines
for a period of not less than 2 months in order to be an Subsequently, the Court of Appeals ruled in favor of Shen Dar. It
owner of a mark4 Under the doctrine of incorporation as applied in restored its registration and ordered the cancellation of the
most countries, rules of international law are given a standing equal to registration of EYIS.
and not superior to national legislative enactments.
Issue:
EY Industrial v. Shen Dar Electricity  Whether or not EYIS is the true owner of the mark “VESPA”
Facts:
 EY Industrial Sales (EYIS) is a domestic corporation engaged in the Ratio:
production, distribution and sale of air compressors and other  EYIS is the true owner. The “first to file rule” 5 must not be
industrial tools and equipment. On the other hand Shen Dar is a interpreted to mean that ownership should be based upon an earlier
Taiwan-based foreign corporation engaged in the manufacturing of air filing date. While RA 8293 removed the previous application
compressors. Both companies in this case claimed to have the right to for registration of a mark, proof of prior and continuous use
register the trademark for “VESPA” air compressors. is necessary to establish ownership of a mark. Such is sufficient
evidence to oppose the registration of a mark.
In 1997-2004, EYIS imported compressors from Shen Dar through
sales contracts. In its Bill of Ladings, the product items were described Prior and continuous use of a mark may even overcome the
merely as air compressors and there is no documentary evidence to presumptive ownership of the registrant and be held as the owner of
show that such compressors were labeled or maked as “VESPA”. the mark. EYIS, being the prior user of the mark is the true
owner of the trademark. Its prior adoption and continuous use of
On June 1997, Shen Dar filed a trademark application for “VESPA” for the mark on air compressors is bolstered by the numerous
use on air compressors. It was issued a registration certificate. documentary evidence consisting of sales invoices issued in the name
Likewise, on July 1999 (much later than Shen Dar), EYIS filed an of the respondent. Proof of ownership is shown by the commercial
application for trademark application for the same “VESPA” air documents, sales and invoices describing the goods as “VESPA”
compressors. EYIS was also issued a registration certificate for the compressors sold to Iloilo, Cebu, Dumaguete, Zamboanga, CDO,
same. Davao, etc. It used the word “VESPA” on air compressors and has
4 But isn’t Shangri-La already doing business in the Philippines at that time? 5 The registration of a mark is prevented with the filing of an earlier application for registration.

3A | Batch 2014 | 21
gained business goodwill and reputation in the Philippines for which it the Paris Convention which affords protection to trademarks belonging
has validly acquired trademark rights. not only to locals but also those belonging to foreign countries.
On the other hand, Shen Dar failed to refute the evidence. Not one of  The Director of Patents dismissed the petition for cancellation. Form
the Bills of Lading presented bore the word “VESPA”. Instead it this, KKI filed an appeal to the IAC. However, the appeal was
described the aircompressors as “SD”. dismissed because it was filed out of time. Hence, this petition seeking
reversal of the decision of the IAC based on substantial justice.
Kabushi Kaisha Isetan v. IAC
Doctrine: What is to be secured from unfair competition in a given territory Issue:
is the trade which one has in that particular territory. That is where his  Whether or not Isetann Department Store is the rightful owner of the
business is carried on where the goodwill symbolized by the trademark has trademark.
immediate value; where the infringer may profit by infringement.
Ratio:
Adoption alone of a trademark would not give exclusive right thereto. Such  Yes. Actual use in commerce or business is the prerequisite to the
grows out of actual use. Adoption is not use. Flowing from this is the trader’s acquisition of the right of ownership over a trademark. Adoption alone
right to protection in the trade he has built up and the goodwill he has of a trademark would not give exclusive right thereto. Such grows out
accumulated from the use of the trademark. of actual use. Adoption is not use. Flowing from this is the trader’s
right to protection in the trade he has built up and the goodwill he has
Facts: accumulated from the use of the trademark. A prior registrant
 Kabushi Kaisa Isetan (KKI) is a foreign corporation applying for cannot claim exclusive use of the trademark unless it uses it
registration of its “Isetan” and Young Leaves Design” with the in commerce.
Philippine Patent Office (PPO). On the other hand, Isetann
Department Store is a domestic corporation existing under the laws of KKI failed to substantiate its claim that it used in trade or business in
the Philippines claims that Isetann. The latter also sought registration the Philippines the subject mark. It did not present proof to invest it
of its trademark “Isetann Department Store” and the “Isetann Flower with exclusive, continuous adoption which should consist of
Design” considerable sales since its first use. The invoices presented are of no
commercial value since they were mere samples. A sample is not a sale.
It is not considered as use as contemplated in Philippine law.
1. Its company is not registered to do business in the Philippines

2. Its trademark is not registered under Philippine law
3. Its trademark is not being used on the products in trade,
manufacture or business in the Philippines.
4. It never engaged in any promotional activities in the
Philippines to popularize its trademark.
On the other hand, Isetann registered its mark on 1979 and

In view of this, KKI filed a petition for cancellation of the registration continuously engaged in commerce, establishing goodwill through
of Isetann Department Store alleging immoral intention of cashing in advertising. There is no showing of any KKI influence on the Filipinos.
the long established goodwill and popularity of KKI’s reputation. It
argued that they are both in the same channels of trade and ordinary Thus, the records show that among Filipinos, the name cannot claim to
people will be misled to believe that the products of the private be internationally well-known. What is to be secured from unfair
respondent originated from KKI. It seeks refuge in the provisions of competition in a given territory is the trade which one has in that

3A | Batch 2014 | 22
particular territory. That is where his business is carried on where the The likelihood of confusion of goods is a relative concept and is
goodwill symbolized by the trademark has immediate value; where the determined according to the particular and sometimes peculiar
infringer may profit by infringement. circusmstances of each case. Goods are related when they belong to the
same class or have the same descriptive characteristics with reference
The Paris Convention does not automatically exclude all countries of to their form, composition, texture or quality. Undoubtedly, the
the world which have signed it from using a tradename which happens products subject of this case are not related. The products are sold
to be used in one country. It must be: through different trade channels. One is sold in chemical stores or
distributors while the other are sold in grocery stores, sari-sari stores
1. It must be internationally known or well known and department stores. Thus, the evident disparity of products in this
2. Must be a trademark (not patent or copyright) case renders the unfounded apprehension of petitioners that confusion
3. Must be for use in the same or similar kind of goods of business or origin might occur if private respondent is allowed to
4. Person claiming must be the owner of the mark. use the mark CANON.
Canon Kabushi Kaisha v. Court of Appeals  CKK cannot seek refuge in the provisions of the Paris Convention since
Facts: it fails to meet the conditions set forth therein.
 NSR Rubber corporation filed an application for registration of the
mark CANON for sandals in the Bureau of Patents. A verified notice of 1. It must be internationally known or well known
opposition was filed by the petitioner Canon Kabushi Kaisha (CKK) 2. Must be a trademark (not patent or copyright)
alleging that it will be damaged by the registration of the trademark in 3. Must be for use in the same or similar kind of goods
the name of the respondent. For failure to answer, NSR was declared 4. Person claiming must be the owner of the mark.
in default and CKK was allowed to present evidence ex parte.
Notwithstanding, the Bureau of Patents ruled in favor of NSR. CA Fredco Manufacturing Corporation v. President and Fellows of
Affirmed. Hence this petition. Harvard College
Facts:
Issue:  Fredco Manufacturing is a domestic corporation which filed a petition
 Whether or not CKK is entitled to exclusive use of the mark CANON for cancellation of Harvard University’s certificate of registration for
because it is its trademark. its mark, “Harvard Veritas Shield Symbol.” Allegedly, the mark of
Harvard (FREDCO) for T-shirts, polo, shirts, sandos, briefs, jackets
Ratio: and slacks was used in January 1982 by its predecessor. Such use
 No. CANON as used by CKK for its paints, chemicals, toner and matured into a registration and a certificate of registration.
dyestuff can be used by private respondents NSR for its sandals
because the products are dissimilar. The certificates of registration of It further alleged that at the time the Harvard University was issued its
CKK clearly showed that the registration covers goods belonging to the certificate of registration, New York garments already registered the
class of paints, chemical, toner and dyestuff. Clearly, there is a world of mark for goods under Class 25 (t-shirts, polos, etc.) Because it failed to
difference between the paints and sandals of private respondent. file an affidavit for use/none use on the 5th anniversary, its registration
was cancelled. But the right to the mark remained with its predecessor
Bare assertions of CKK that it intends to engage in the business of and now with FREDO.
sandals cannot convince the court since it failed to attach evidence that
would indicate such intention or such fact that it embarked on such On the other hand, Harvard University herein claims that it is the
line of goods. The certificate of registration confers upon the lawful owner of the name and mark “Harvard” in numerous countries
trademark owner only the exclusive right to use its own symbol on worldwide, including the Philippines. The name was adopted in 1639
those goods specified in the certificate. as the name of the college in Cambridge, Massachusetts. The name and
mark was used in commerce as early as 1872.

3A | Batch 2014 | 23
country, as in this case, that is a member of the Paris
Convention, the requirement of proof of use in the
commerce in the Philippines for the required period is not
necessary.
Marks registered under RA 166 shall remain in force and shall be

deemed to have been granted under RA 82936 which does not require
actual prior use of the mark in the Philippines. Since the shield of
Harvard University is not deemed granted under the new law, the
defects arising from the absence of the actual prior use in the
Philippines has been cured by said law.
Harvard University alleged that in 2002, it discovered through
international trademark watch program, Fredco’s website advertises  It is apparent that Fredco’s design falsely suggests that Fredco or its
and promotes the brandname without its consent. Hence, it filed an goods are connected with Harvard University with the uses of the
administratie complaint against Fredco before the IPO for trademark words “Harvard” and “Cambridge Massachusetts”. It should not have
infringement and/or unfair competition with damages. been allowed because the law at that time prohibits the registration of
a mark which falsely suggests a connection with institutions. It claims
 The Bureau of Patents found for FREDCO and cancelled Harvard’s origin in Cambridge (which is also where Harvard was established)
certificate of registration. On appeal, the Office of the Director general suggests a false connection with the university. What Fredco has done
reversed the decision on the ground that Fredco failed to explain how in using the mark and the words “Cambridge” to evoke a desirable aura
its predecessor came up with the mark. There was no evidence that is precisely to exploit commercially the goodwill of Harvard.
Fredco or New Garments was licensed or authorized by Harvard
University to use its name in commerce or for any other use. Second, under the Paris Convention, to which the US and the
Philippines are both signatories, trade names shall be protected
The Court of Appeals also ruled in favor of Harvard on the ground that without the obligation of filing or registration. Harvard is the trade
Harvard’s symbol was used way ahead of Fredco and its predecessor. name of the world famous university and it is also a trademark of
There was also a lack of explanation as to why Fredco used the name Harvard University. It is entitled to protection even without
and mark and the words “USA”, “established in 1936”, and registration. This means that no educational entity in the
“Cambridge, Massachusetts” with an oblong device. Philippines can use such name without the consent of
Harvard. Likewise, no entity can claim, expressly or
Issue: impliedly through the use of its name, that its products or
 Whether or not Fredco committed trademark infringement. services are authorize, approved or licensed by or sourced
from Harvard University without the latter’s consent.
Ratio:
 Yes. There is no dispute that Harvard used its logo in commerce in the Under the Memorandum of Minister Villafuerte, which enumerates
year 1872. It also registered its name and mark in at least 50 countries. the criteria to fall under the category of a “well-known” name, it states
On the other hand, Fredco started using the mark only in 1982. that trademarks duly registered with the industrial property office of
another country is considered a well-known brand. To be
It should be noted herein that while Harvard University had actual internationally protected, the mark need not be registered in the
prior use of its marks abroad for a long time, it did not have actual use Philippines, all that is required is that the mark is well-known
in the Philippines before its application for trademark registration
with the Patents Office. However, where the trademark sought
to be registered has already been registered in a foreign
6 Section 239.2 of the said law.

3A | Batch 2014 | 24
internationally and in the Philippines for identical or similar goods, already protected under Article 6bis and Article 8 of the Paris
whether or not the mark is registered in the Philippines. Convention. Again, even without applying the Paris Convention,
Harvard University can invoke Section 4(a) of R.A. No. 166 which
Now, under the Rule 102 of the Rules and Regulations on Trademarks prohibits the registration of a mark “which may disparage or falsely
it is provided that “in determining whether a ark is well-known, the suggest a connection with persons, living or dead, institutions,
following criteria or any combination thereof may be taken into beliefs
account:
Berris Agricultural Co. Inc v. Norvy Abyadang
1. the duration, extent and geographical area of any use of the Doctrine: Registration and its actual use by the manufacturer of the goods
mark, in particular, the duration, extent and geographical area made available to the purchasing public confers ownership. A certification,
of any promotion of the mark, including advertising or once issued, constitutes prima facie evidence of the validity of the registration
publicity and the presentation, at fairs or exhibitions, of the of the registrant’s ownership of the mark and of the exclusive right to use the
goods and/or services to which the mark applies; same.
2. the market share, in the Philippines and in other countries, of
the goods and/or services to which the mark applies; However it is also required to file a declaration for actual use of the mark,
3. the degree of the inherent or acquired distinction of the mark; with evidence to that effect within 3 years from the filing of the application
4. the quality-image or reputation acquired by the mark; for registration; otherwise, the application shall be refused or the mark shall
5. the extent to which the mark has been registered in the world; be removed from the register. The presumption may be challenged in an
6. the exclusivity of registration attained by the mark in the appropriate action for nullity of the registration. Presumption may likewise
world; be defeated yb evidence of prior use by another person.
7. the extent to which the mark has been used in the world;
8. the exclusivity of use attained by the mark in the world; Facts:
9. the commercial value attributed to the mark in the world;  Norvy Abyadang filed with the IPO a trademark application for the
10. the record of successful protection of the rights in the mark; mark “NS D-10 PLUS” for use in connection with Fungicide with active
11. the outcome of litigations dealing with the issue of whether the ingredient 80% Mancozeb. For this, Berris Agricultural filed a veirifed
mark is a well-known mark; and notice of opposition allegedly because “NS D-10 PLUS” is similar and
12. the presence or absence of identical or similar marks validly /or confusingly similar to its registered trademark “D-10 80 WP” also
registered for or used on identical or similar goods or services used for Fungicide.
and owned by persons other than the person claiming that his
mark is a well-known mark. IPO rendered a decision in granting the opposition. On appeal with the
Office of the Director general, an order was issued affirming the
There is no question then, and this Court so declares, that “Harvard” is previous decision. Thereafter, the Court of Appeals reversed the
a well-known name and mark not only in the United States but also decision and found that “NS D-10 PLUS” is not confusingly similar
internationally, including the Philippines. The mark “Harvard” is rated with “D-10 80 WP”, it also found that respondents failed too establish
as one of the most famous marks in the world. It has been registered in ownership of the mark and that registration for Berris’ trademark may
at least 50 countries. It has been used and promoted extensively in be cancelled to avoid multiplicity of suits.
numerous publications worldwide. It has established a considerable
goodwill worldwide since the founding of Harvard University more Issue:
than 350 years ago. It is easily recognizable as the trade name and  Whether or not Berris’ is the rightful owner of the trademark.
mark of Harvard University of Cambridge, Massachusetts, U.S.A.,  Whether or not the two marks are confusingly similar.
internationally known as one of the leading educational institutions in
the world. As such, even before Harvard University applied for
registration of the mark “Harvard” in the Philippines, the mark was

3A | Batch 2014 | 25
Ratio: that "NS D-10 PLUS" could be an upgraded formulation of the "D-10
 Berris is the prior user and prior registrant and is the owner 80 WP.
of the mark “D-10 80 WP.” Berris was able to establish that it was
using its mark since June 20,2002 even before its registration with the Coffee Partners Inc. v. San Francisco Coffee & Roastery, Inc.
IPO on November 29, 2002. Its Declaration of Actual Use (DAU), Doctrine: A trade name need not be registered with the Intellectual Property
being a notarized document, received in due course by the IPO, is Office (IPO) before an infringement suit may be filed by its owner against the
evidence of the facts it stated and has the presumption of regularity, owner of an infringing trademark. All that is required is that the trade name
entitled to full faith and credit upon its face. is previously used in trade of commerce in the Philippines.
On the issue of the DAU being fraudulently based on the assumption Facts:
that Barris could not have legally used the mark in the sale of the  Petitioner is a local corporation engaged in the business of
goods since 2002 because it registered the product with FPA only on establishing and maintaining coffee shops around the country. It
November 12, 2004, such cannot be considered by the court since it is is registered with the SEC as Coffee Partners Ltd. for a non-
beyond the jurisdiction of the IPO and is a separate and distinct exclusive right to operate coffee shops in the Philippines
matter. Granting for argument’s sake, such fact could not negate the using trademarks, including SAN FRANCISCO COFFEE.
fact that Berris was selling the product especially considering that it Respondent, on the other hand, registered the business name
first traded its goods in Calauan, Laguna where its business is located. SAN FRANCISCO COFFEE & ROASTERY with the
Department of Trade and Industry which has a customer
 Being the owner of the mark, Berris has exclusive right to base including Figaro Company, Tagaytay Highlands, Fat Willy’s,
prevent all parties from using the same in the course of trade among others.
identical or similar in respect to which trademark is
registered. The court finds that the marks are Respondents later formed a joint venture company with
CONFUSINGLY SIMILAR. In applying the Dominancy Test7, the Boyd Coffee USA under the mother company name Boyd Coffee
court found that both marks pertain to the same type of goods – Philippines (BCPPI), primarily engaged in processing, roasting
fungicide with 80% Mancozeb as an active ingredient and used for the and wholesale selling of coffee. The respondent later
same group of fruits, crops, vegetables, and ornamental plants, using discovered that petitioner was about to open a coffee
the same dosage and manner of application. They also belong to the shop under the name SAN FRANCISCO COFFEE, and
same classification of goods under R.A. No. 8293. Both depictions of according to the respondent, the shop caused confusion in
"D-10," as found in both marks, are similar in size, such that this the minds of the public as it a similar name and it also
portion is what catches the eye of the purchaser. Undeniably, the engaged in the business of selling coffee. Respondent sent a
likelihood of confusion is present. letter to the petitioner to stop using the name, as well as to the
Bureau of Legal Affairs of the IPO (BLA-IPO) for infringement,
Likewise, in applying the Holistic Test, taking into consideration unfair competition and claims for damages.
the packaging, for both use the same type of material (foil type) and
have identical color schemes (red, green, and white); and the marks Arguments:
are both predominantly red in color, with the same phrase "BROAD  Petitioner contends that the marks have notable distinctions in
SPECTRUM FUNGICIDE" written underneath. their appearances. Furthermore, when the respondent formed a
joint venture with Boyd Coffee USA, it stopped operating under
Considering these striking similarities, predominantly the "D-10," the the trade name SAN FRANCISCO COFFEE. David Puyat,
buyers of both products, mainly farmers, may be misled into thinking president of petitioner corporation, attested further that CPL has
franchises in Malaysia, Singapore and later on in the United States
under the same trade name. BLA-IPO ruled for the respondent
since it has registered the trade name six years earlier (1995), thus
7

3A | Batch 2014 | 26
it must be protected from infringement of its trade name. The Sehwani, Incorporated v. In-n-out Burger, Inc.
Office of Director General of IPO (ODG-IPO), however, reversed Facts:
the decision. In ruling for a subsequent user of a trade name in  IN-N-OUT Burger (INO) is a foreign corporation under the laws of
good faith, ODG-IPO held that respondent has stopped using its California and not doing business in the Philippines. It filed an
trade name in 1998 and the petitioner continuously used the administrative complaint against Sehwani and Benita Fries for
trademark since 2001l; therefore, it would be inequitable to rule violation of intellectual property rights. IN-N-OUT alleges that it is the
otherwise. This was, again, reversed on appeal. owner of the tradename “IN-N-OUT” (“INO”) and trademarks “IN-N-
OUT Burger & Arrow Design” (INO Arrow Design) and “IN-N-OUT
Issue: Burger Logo” (INO Burger logo) which are used in its business since
 Whether the petitioner’s use of the trademark constitutes an 1948 and are registered in the US as well as in other parts of the world.
infringement of respondent’s trade name even if it is not registered
with the IPO.
Held:
 In affirming the decision of the appellate court, the Supreme Court
held that a trade name need not be registered with the IPO
before an infringement suit may be filed by its owner
against the owner of an infringing trademark. All that is
required is that the trade name is previously used in trade of
commerce in the Philippines. INO alleges that it discovered that Sehwani had obtained a trademark
registration for the mark “IN-N-OUT” where the inside of the letter
Applying either dominancy or holistic tests will yield to the “O” formed like a star. Despite being demanded to cease and desist
conclusion that the trademark SAN FRANCISCO COFFEE is from using the said mark, Sehwani even granted its co-petitioner
a clear infringement of the respondent’s SAN Benita Fries a license to use said mark for a period of 5 years in its
FRANCISCO COFFEE & ROASTERY, INC., with the restaurant in Pasig City. Hence, INO filed a case for violation of
descriptive words SAN FRANCISCO being the dominant intellectual property rights.
features of the latter’s trade name.
 In its answer, Sehwani alleges that INO lacks capacity to sue in the
Petitioner should not be allowed to earn profit by the name and Philippines since it was not doing business in the country.
reputation so far build by the respondent without running afoul of Furthermore, it alleges that there is no cause of action since the mark
the basic demands of fair play. is not registered or used in the Philippines.
The Bureau Director rendered a decision finding that INO has legal
capacity to sue and that it is the owner of an internationally well
known trademark however, she found that there is no unfair
competition. In view of the foregoing, she cancelled the certificate of
registration of Sehwani.
The appeal, having been filed out of time, was dismissed in the Court
of Appeals. Thus, petitioners filed the instant petition.

3A | Batch 2014 | 27
Issue: the findings of fact of the IPO are generally accorded not only respect,
 Whether or not INO has the legal capacity to sue for trademark but at times, even finality if such are supported by substantial
infringement. evidence.
 Whether or not INO is an internationally well known mark.
 Whether or not there is a violation of intellectual property rights.  INO is an internationally well-known mark as evidenced by the
documents of registration presented by INO and the trademark
Ratio: registrations of the logo around the world. In fact, the findings of the
First and foremost, the petition was dismissed outright for having IPO in previous cases already declared INO Burger and Arrow Design
been filed out of time. However, the court still proceeded to discuss as an internationally well-known mark.
the issues in the case at hand.
Generally, the basis for determining whether it is well-known or not is
 INO has legal capacity to sue albeit it is not doing business in embodied in the Ongpin Memorandum of 1983. It takes into
the Philippines as provided for in Section 1608 in relation to consideration the extent of registration of a mark. Similarly, the
Section 39 of RA. 8293. Under the said law, any person who is a Implementing Rules of the Intellectual Property Code also provides
national or domiciled in a country which has a convention, agreement that a criteria for determining whether it is well-known or not is the
or reciprocal law with the Philippines regarding intellectual property extent to which the mark has been registered in the world. In
rights shall have the legal capacity to file a civil or administrative suit this case, INO also presented evidence consisting of articles where the
against an infringer. INO sign and trademark has appeared in magazines, newspapers, and
print outs.
INO bases its causes of action, in this case, in the Paris Convention,
particularly Article 6 and Article 8, which governs the protection of The quality image and reputation acquired by INO is
well-known trademarks. It is a self executing provision and does unmistakable. On the basis of the evidence presented consisting of
not require legislative enactment to give it effect in the member worldwide registration of the mark, as well as the advertisements
country. The essential requirement under this article is that: therein by INO, there is no doubt that the mark is an internationally
well-known mark.
1. The trademark must be well-known in the country where the
protection is sought (in this case, the Philippines); The fact that the marks are neither registered nor used in the
Philippines is of no moment because under the World Intellectual
The power to determine whether such mark is well-known is the Property Organization (WIPO), a member state shall not
competent authority of the country of registration or use. This requires as a condition precedent for determining whether a
competent authority would either be the registering authority, if it mark is well-known that the mark has been used in or that
has the power to do this, or the courts of the country in question the mark has been registered or that an application for
if the issue comes before a court. Such question is factual in nature and registration of the mark has been filed in or in respect of, the
member state.
8 Any foreign national or juridical person who meets the requirements of Section 3 of this Act and
 Yes. The evidence on record shows that not only did the
does not engage in business in the Philippines may bring a civil or administrative action hereunder
for opposition, cancellation, infringement, unfair competition or false designation of origin and petitioners use the INO trademark for the name of their
false description, whether or not it is licensed to do business in the Philippines under existing laws. restaurant, but also on the identical or confusingly similar
9 Any person who is a national or who is domiciled or has a real and effective industrial
mark for their food offerings, thereby misrepresenting the
establishment in a country which is a party to any convention, treaty or agreement relating to source of the goods and services. Such warrants the cancellation
intellectual property rights or the repression of unfair competition to which the Philippines is also
a prty or extends reciprocal rights to nationals of the Philippines by law, shall be entitled to of the trademark registration of Sehwani and Benita Fries.
benefits to the extent necessary to give effect to any provision of such convention, treaty or
reciprocal law, in addition to the rights to which any owner of an intellectual property right is
otherwise entitled by this Act.

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Kellogg v. National Biscuit 1. Using the name “shredded wheat”
Facts: 2. Producing the product in a pillow-shapred form, similar to
 This suit was brought by National Biscuit Company (NBC) against NBC’s
Kellogg Company to enjoin the latter for alleged unfair competition by 3. Form doing either.
the manufacturer and sale of the breakfast food commonly known as
shredded wheat. Allegedly, the latter uses the name “shredded On certiorari, NBC claims that the exclusive right to the trade name
wheat” and produces it in pillow-shaped form, like NBC. “shredded wheat” and the exclusive right to make the shredded wheat
biscuit pillow-shaped. It alleges that Kellogg used the name and shapre
of NBC for the purpose of passing of the goods as its own.
On the other hand, Kellogg denies that NBC is entitled to the exclusive
right to the tradename and shape. It contends that it is only exercising
the common right to freely manufacture and sell an article of
commerce protected by patent.
Issue:
 Whether or not “Shredded Wheat” is a protected mark.
 Whether or not Kellogg is guilty of unfair competition.
Shredded Wheat is generally known for its pillow-shaped form. It Ratio:
was introduced by Henry Perky in 1893. Commercial success, however,  No. There is no exclusive right to use the term “Shredded
was not attained until the Natural Food Company (later changing its Wheat” as a tradename. It is the term by which the biscuit in
corporate name to “Shredded Wheat Company”), NBC’s predecessor, pillow-shaped form is generally known by public. The term is
built a factory for its manufacture. generic. Thus, Kellogg had the right to make the article and
the right to use the term by which the public knows it.
Kellogg Company alleges that in started producing a product
somewhat similar to the shredded wheat in 1912 and ending in 1919, For many years, there has been no attempt to use the term as a
the difference between the products is that the wheat was being trademark. Although there was an attempt before to have the term
reduced to a dough before it was pressed into shreds. It stopped “Shredded Whole Wheat” registered as trademark, it has been met
manufacturing for a time, but resumed its manufacturing in 1927. In with opposition because the maker of the machine used for shredded
1928, NBC sued for alleged unfair competition. The suit was wheat. The name “shredded wheat” and the machinery
discontinued by stipulation until the present suit was employed in making it has been dedicated to the public. Since
brought again. during the life of the patents “shredded wheat” was the general
designation of the patented product, there passed to the public upon
 The District Court dismissed the bill and found that there is no passing expiration of the patent period, not only the right to make the article as
of or deception shown. It held that upon expiration of the patent it was made during the patent period, but also the right to apply
registration of Perky (the inventor), the name of the patented article thereto the name by which it had become known. From the
passed into public domain. On rehearing, this decision was refused cessation of the monopoly and the falling of the patented
and the court enjoined Kellogg from using the name of “Shredded device into the domain of the public there must necessarily
Wheat” as to its tradename and from advertising or offering for sale of pass to the public the generic description of the thing which
its product in pillow-shaped form. Shortly thereafter, a permanent has arisen during the monopoly.
injunction was issued by the court prohibiting Kellogg from:

3A | Batch 2014 | 29
Likewise, NBC has no exclusive right to sell the shredded
wheat in the form of a pillow shape in which the article
became known to the public. Where an article may be
manufactured by all, a particular manufacturer can no more asset
exclusive rights in a form in which the public has become accustomed
to see the article and which, in the minds of the public, is primarily
associated with the article rather than a particular producer than it can
in the case of a name with similar connections in the public mind.
Moreover, the pillow shape must be used for another reason. The
evidence is persuasive that this form is functional that the cost of the
biscuit would be increased and its high quality lessened if some other
form were substituted for the shape.
 There is no unfair competition. The obligation resting upon

Kellogg is not to insure that every purchaser will know it to be the
maker but to use every reasonable means to prevent confusion. In this
case, the name Kellogg is so prominent on all its cartons as to
minimize the possibility of confusion.
Issue:
 Whether or not the mark is scandalous and immoral.
Sharing in the goodwill of an article unprotected by patent or
trademark is the exercise of a right possessed by all and in the free
Ratio:
exercise of which the consuming public is deeply interested. There is
 No. The refusals for registration were reversed by the court
no evidence of passing off or deception on the part of Kellogg
on the ground that the examining attorney has failed tp
Company and it has taken every reasonable precaution to
prove that, in viewing mark by itself, the consumers would
prevent confusion or the practice of the deception in the sale
perceive the frog as flipping the bird. Even assuming that the
of its product.
consumers would view the frog as flipping the bird, the
attorney failed to establish that said gesture, when done by a
In Re: Bad Frog Brewery, Inc.
realistic looking animal and when directed to no particular
Facts:
person or group, would be perceived as scandalous and
 Bad Frog Brewery seeks the registration of the BAD FROG BEER and
immoral.
design in the form shown below, for wearing apparel and alcoholic
beverages. However, in both cases, the examining attorney refused
Obviously, examining attorneys are trained professionals who carefully
the registration pursuant to the Lanham Act on the basis
review the drawings of the applicants. They examine the drawings to a
that the marks are scandalous and immoral. It is of the
far greater degree than would ordinary customer. In addition, the
position of the examining attorney that the average customer would
examining attorney made reference to applicant’s own statements
recognize the mark as “flipping the bird” or “giving the finger” and that
contained in its advertising and promotional materials wherein
the said gesture is widely recognized to be obscene. Thus, this appeal.
applicant is clearly attempting to instruct customers that the
applicant’s frog is indeed giving the finger. The very fact that the
applicant has to educate the consuming public to view the
frog in its trademark as giving the finger is additional proof
that, simply by itself, the frog would not be perceived by
consumers as giving the finger.

3A | Batch 2014 | 30
 Furthermore, the attorney failed to establish that even if the frog were Moreover, the applicant’s website implies obscenity. While the
perceived to be giving the finger, that such a gesture would be applicant argues that the material from the website does not affect the
perceived as scandalous or immoral. The attorney has not proven that public perception of the mark, Simms disagrees. The website may
the mere giving of a finger in a vacuum would begin to rise indeed affect how the public perceives its mark, at least as
the level of scandalous or immoral gesture. Mere appearance of that mark may be used in connection with the clothing
the word “idiot” (for example) in a vacuum on a shirt or a beer bottle because the site appears to be a source of ordering
would not be shocking or give offense. applicant’s clothing.
Even when humans give the finger to a particular individual or group, Press accounts of record also reveal the applicant’s admissions
that, depending upon the circumstances, said gesture may be concerning the nature of its mark. The Vice President of the company
acceptable. Even attorney’s own evidence shows that numerous was even quoted saying “if anyone wants to order a Bad Frog, all they
newspapers, magazines and television stations have often shown have to do is flip off their bartender. Everyone will know that that
humans giving the finger to particular individuals and groups. If said means they want a Bad Frog Beer”; and “there’s thousands of beers on
gestures were scandalous, immoral or obscene, the court the market, but I’m pretty sure this is the only one you can order with
seriously doubts that the magazines, shows or newspapers a hand symbol”.
would feature this gesture with no attempt to cover it up.
The mere fact that this gesture has appeared in newspapers and
Dissenting Opinion by Simms: magazines does not prove that it is not scandalous or immoral to a
 No trademark by which the goods of the applicant may b distinguished substantial number of people. The appearance of this gesture on rare
form the goods of others shall be refused registration on the principal occasions is certainly not very probative of its lack of offensiveness.
register on account of its nature unless it consists of or comprises The fact that profane words may be uttered more freely does
immoral deceptive or scandalous matter. not render them any less profane. Nor does this fact amend
the statute by which we are required to determine the
In order to prove that the mark is scandalous, the office registrability of such matter as marks.
must demonstrate that the mark is shocking to the senses of
truth, decency or propriety; disgraceful; offensive; Likewise, while the thrust of the examining attorney’s refusal and the
disreputable giving offense to the conscience or moral majority opinion have been devoted to the “scandalous” refusal,
feelings or calling out for condemnation. Simms believes that the applicant’s mark is, at the very least, immoral
under the Lanham Act. It is defined as not moral, inconsistent
The majority opinion apparently agrees that the consumers will not with rectitude, purity, or good morals, contrary to
perceive the mark as a frog giving an obscene gesture and that the conscience or moral law, wicked; vicious; licentious as an
applicant’s mark bears only a remote similarity to the obscene gesture immoral man or deed.
(because it lacks a fifth finger). But Simms, disagrees with this
because, the thumb plays no role when a person makes this Looking at the applicant’s mark n the context of the marketplace, the
gesture y forming a fist and extending the so called finger. frog is clearly making an obscene human gesture, fully intended by the
Moreover, the labels submitted with the applications suggest the applicant and it would immediately be recognized by the average
obscenity by the very name “BAD FROG”; “DO IT FROGGY STYLE”; person. The evidence showing disapproval by state agencies in some
“FLIP THE BIRD, GET A FROG” among others. It is thus, clear that very populous states demonstrates to me that at least a substantial
the applicant as a central figure of its promotional efforts, draws composite of people which may have been offended by the mark or
attention to the obscene gesture given by the frog. Whether the that it is immoral.
applicant’s mark would likely to offend must be judged not
in isolation but in the entire context of the mark’s use.

3A | Batch 2014 | 31
In Re: Old Glory Condom Corp. Applicant herein contends that the American flag design appears as a
Doctrine: Whether a mark is scandalous is to be determined from the feature of the trademark of the applicant for condoms but the flag is
standpoint of a substantial composite of the general public. Scandalous is not applied to the condoms themselves. It states that the back of each
shocking to the senses of propriety. condom package further pledges that the company promotes safer sex
to help eliminate Aids. Furthermore, applicant argues that the patent
That which gives offense to the conscience or moral feelings and giving and trademark office has registered more than a thousand marks for
offense to the conscience or moral feelings, exciting reprobation, calling out condoms, many of them are sexually suggestive and many that might
condemnation, disgraceful to reputation and shocking to the senses of truth, be considered vulgar. Applicant emphasized that its mark is
decency and decency. expressly designed not to offend but to redefine patriotism
to include the fight against STDs, including AIDS.
Any doubts as to whether a mark is scandalous should be resolved in favor of
allowing the mark to be published to permit any party who believes it would Issue:
be damaged by registration of the mark to file an opposition to registration.  Whether or not the applicant’s mark is scandalous and/or immoral.
In deciding whether a mark is scandalous, the context of contemporary Ratio:

attitudes must be considered. Consideration must be given to the moral  No. The particular pictorial representation featured in
values and conduct fashionable at the moment rather than that of the past applicant’s composite mark was not found by the examining
decades. attorney to be vulgar and neither does the court find it to be
so. The examining attorney’s onjection the the applicant’s
Facts: mark seems to be directed to the mark’s linking of flag
 Old Glory Condom sought to register its mark with a design nfeature imagery and a pictorial representation of a condom, each of
consisting of a pictorial representation of a condom decorated with which, in itself, she apparently finds, unobjectionable.
stars and stripes in a manner to suggest the American flag. The Precisely why this combination of images is scandalous the
examining attorney refused the registration under the Trademark Act examining attorney fails to articulate. The examining attorney
on the ground that the mark consists of immoral and scandalous offers very little evidence to support her position that a substantial
matter because it was likely to offend a substantial composite of the composite of the public would be offended by the mark. The court is
general public. not willing, bases solely on the examining attorney’s opinion, the
evidence of the reaction to the Madonna (in scantily clad and wrapped
in American flag) video, and the unsuccessful effort to amend the US
Constitution to prohibit the burning of the flag, to presume that the
flag imagery of applicant’s mark would give offense in a manner that
must be deemed scandalous under the Trademark Law.
Moreover, the mark must be judged not in isolation but in the entire
context of the mark’s use. Here, the applicant markets its condoms in
packaging which emphasizes applicant’s commitment to the sale of
high quality condoms as a means of promoting safer sex and
eliminating AIDS and its belief that the use of condoms is a patriotic
act. Although not everyone would share in the applicant’s view, the
seriousness surrounding the use of the mark- a seriousness
of purpose made manifest to purchasers on the packaging
for its goods – is a factor to be taken into account in
assessing whether the mark is offensive or shocking.

3A | Batch 2014 | 32
Pro-Football v. Suzan Harjo circumstances of each case. The registrant in a cancellation proceeding
Facts: is entitled to the prima facie presumption that the registration and the
 This case concerns the registration of 6 trademarks owned by Pro mark are valid, that registrant is the owner and that registrant has the
Football, the corporate owner of the Washington Redskins football exclusive right to use the mark. Thus, cancellation of a valuable
team, that include the word “Redskin” which was first registered in registration around which a valuable business good will has been built,
1974. It uses these marks in connection with goods and services related should be granted only with "due caution and after a most careful
to its football team, including merchandise and entertainment. study of all the facts.
In 1992, 7 Native Americans petitioned for cancellation of the Trademarks may disparage if they may dishonor by comparison
registrations claiming that the marks had disparaged the Native with what is inferior, slight, deprecate, degrade, or affect or
Americans at the times of registration and had thus been injure by unjust comparison. A disparagement test is much more
registered in violation of the Trademark Law. circumscribed and is limited by the Lanham Act. In deciding
whether the matter may be disparaging, we look not to the
Five years after issuing a pre-trial order, the TTAb issued a American society as a whole, but to the views of the
cancellation order in which it scheduled the cancellation of the referenced group.
contested trademarks based on the decision that the trademarks
disparaged the Native Americans to a substantial composite Most importantly, it is pointed out that the question of disparagement
of this group of people and may bring Native Americans into must be considered in relation to the goods or services identified by
contempt or disrepute. the mark in the context of the marketplace. To ascertain the meaning
of the matter in question, we must not only refer to dictionary
In view of the judgment, Pro Football sought to have a de novo review definitions, but we must also consider the relationship between the
of the case, presenting 5 causes of action. It argues that the trademarks subject matter in question and the other elements that make up the
do not disparage the Native Americans. It further alleged that mark in its entirety; the nature of the goods or services and the
the Lanham Act, particularly Section 2(a) violates the First manner in which the mark is used in the marketplace in connection
Amendment because it is vague, overbroad and content-based with the goods and/or services.
restriction on speech. Moverover, it asserts that the defendants’
cancellation petition was already barred by laches. It is essentially a 2-step process:
The TTAB found that the laches is inapplicable in this case. During the 1. What is the meaning of the matter in question, as it appears in
hearing, the parties presented evidence showing that the term the marks and as those marks are used in connection with the
Redskins is offensive to the Native Americans through dictionary services identified in the registrations?
meaning, book and media excerpts, surveys, opinions and newspaper 2. Is the meaning one that may disparage the Native Americans?
articles. Thus, TTAB found that the term disparaged the Native 3. Note that both shall be answered as of the dates of registration
Americans and this warranted the cancellation of the registration. of the marks herein.
Issue: In this case, since the oldest trademark was issued in 1967, and the
 Whether or not the TTAB appropriately concluded that the marks at newest was issued in 1990, the Board focused its determination of the
issue disparage Native Americans or cause them to be brought into issue of disparagement on the time periods, between 1967 and 1990
contempt or disrepute. when the subject registrations issued.
Ratio: It is to be noted that the football club used Native American imagery
 The issue of disparagement, like the likelihood of conclusion, requires throughout its logos and team imagery. Although the records disclose
a fact-based judgment that depends heavily on their particular that redskins is used in media and press since 1960s and refers to the

3A | Batch 2014 | 33
football club , it would be factually incomplete and disingenuous to In this case, it should be remembered that the ultimate legal
ignore the substantial evidence of Native American imagery used by inquiry is whether the term is a pejorative term for Native
pro football as well as pro football fans. Indeed, the TTAB noted Americans when used in connection with the service and
that 2 of the registered marks include a portrait of the during the relevant time frame.
profile of a Native American and what presumably is a native
American spear. Substantial evidence exists to support the TTAB’s Survey Evidence
conclusion that, when considered in relation to the other matter  TTAB concluded that the survey could be extrapolated to the Native
comprising at least two of the subject marks, and as used in connection Americans as a whole to be unsupported by substantial evidence. The
with Pro Football’s services, “Redskins” clearly refers to both survey measures attitudes of Native Americans about their perceptions
respondent’s football team and carries the allusion to Native of the term "redskin" as used as a reference to Native Americans in
Americans inherent in the original definition of that word. 1996.
In this case, the court found that the testimony of the 7 Native As the TTAB itself observed, "[n]either [the fact that the survey
Americans who brought suit in this case clearly do not constitute a measured the views of individuals not alive at the time of registration
substantial composite of Native Americans.For this reason, it was of certain of the trademarks or the fact that the survey did not consider
impossible for the board to reasonably corroborate its decision to participants' views of the word 'redskin(s)' as used in connection with
equate the views of the American public with the views of the Native Pro-Football's entertainment services] diminishes the value of
American population. The Ross survey and the other evidence petitioners' survey for what it is-a survey of current attitudes towards
in this case clearly demonstrates that the views of the Native the word "redskin(s)" as a reference to Native Americans.
Americans do not necessarily correlate with the views of the
general population. Defendants have the burden f proof by a As a term for disparagement
preponderance of evidence.  The evidence relating to the media and fans has no bearing on
whether a substantial composite of Native Americans finds the term
Dictionary Evidence: "redskin(s)" to be disparaging when used in connection with Pro-
 TTAB observed that the half of the dictionaries on record contained a Football's marks.
usage label indicating that the word is often, offensive, informal or
offensive slang. Based from this fact, the TTAB ruled that a not The TTAB noted that the record contained the testimony of the
insignificant number of Americans understood redskins to be Defendants who stated that they were "seriously offended" by Pro-
offensive. Football's use of the term in connection with its services. Id. This
testimony, however, is a reflection of their individual viewpoints and
For this, there are no findings of fact to support the TTAB’s there is no evidence that Defendants' views are a reasonable proxy for
conclusion, rather, it is mere speculation on the part of the a substantial composite of the entire Native American population.
TTAB that this is the case. The dictionary only found the word to
be often offensive, which means that in certain contexts the term In addition to concluding that the TTAB's finding of disparagement
redskins was not considered offensive. was not supported by substantial evidence, the Court, in the
alternative, determines that Pro-Football's defense of laches would
Historical Evidence also preclude the cancellation of the six trademarks.
 TTAB observed that it found that during the late 1800s, and early
1900s, that the vast majority of evidence which included the word The net result of the delay is that there is no direct or circumstantial
portrayed Native Americans in a derogatory manner. It concluded that evidence in the record that, at the times the trademarks were
since the 1960s, the term is a pejorative term for Native Americans. registered, the trademarks at issue were disparaging; even though the
Native Americans contend that during this entire time period the

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trademarks were disparaging. Hence, the evidence used by the TTAB were published for registration. The Court finds that Defendants were
to support its disparagement conclusion was purely inferential. also aware of the trademarks during the
period of delay and therefore also had actual notice. Defendants state
While the common law definition of laches does not cleanly apply in in their opposition that they "do not dispute that they have long known
light of the procedural posture of this case, it can be easily modified: about and objected to the name of the Washington football franchise.
Pro-Football's laches claim is only available under the common law if Accordingly, the Court finds that Defendants were aware of the
(1) the Native Americans delayed substantially before commencing trademarks during the period of delay under a theory of actual or
their challenge to the "redskins" trademarks; (2) the Native Americans constructive notice.
were aware of the trademarks during the period of delay; and (3) Pro- In the instant case, because the delay in bringing the
Football's ongoing development of goodwill during the period of delay cancellation proceeding was so substantial, a presumption is created
engendered a reliance interest in the preservation of the trademarks. that Pro-Football was entitled to rely on the security of the trademarks
at issue. In 1967, the NFL was still a nascent industry. Had this suit
The notion of a "continuing wrong," which is so prevalent in Lanham been brought at that point, Pro-Football may have acquiesced and
Act cases, provides a strong justification for the application of the changed the name. The twenty-five year delay, where Pro-Football has
doctrine of laches in appropriate circumstances regardless of whether invested so heavily in the marks, has clearly resulted in economic
the plaintiff has brought suit within the analogous statute of prejudice.
limitations. Under the notion of a continuing wrong, "only the last
infringing act need be within the statutory period. Gold Seal Company v. Weeks
Facts:
The Court articulated a general three-prong test for laches in the  Gold Seal Company seeks a decree authorizing the Commissioner of
context of a trademark proceeding. Essentially, to demonstrate laches Patents to register as a lawful trademark the words Glass Wax, used by
Pro-Football must show that Defendants' delay in bringing the plaintiff in connection with its liquid composition for cleaning glass
cancellation proceeding was unreasonable, and that prejudice to Pro- and metal. S. C. Johnson & Son, Inc., has intervened, opposing the
Football resulted from the delay. Finally, the third step of application for registration of this mark on the ground that the words
the NAACP test, development of goodwill during the period of delay, is Glass Wax do not constitute a lawful trade-mark because it is
the prejudice element in the Bridgestone case. As the Bridgestone deceptively misdescriptive.
court observed, "[e]conomic prejudice arises from investment in and
development of the trademark." Both of the Patent Office tribunals, however, denied registration of the
mark, deciding that it was either merely descriptive or deceptively
The Court finds that the Defendants substantially delayed in bringing misdescriptive and refused to consider the application as one seeking
their challenge to the marks. In the case of the first trademark, registration based on secondary significance.
Defendants waited over twenty-five years to bring this
case. Defendants "do not dispute that they have long known about and Plaintiff contends that Glass Wax is a "technical" trade-mark under
objected to the name of the Washington football Section 45 of the Lanham Act, it being a combination of words
franchise. "adopted and used by a manufacturer or merchant to identify his
goods and distinguish them from those manufactured or sold by
The Court finds that for all six trademarks the delay in bringing the others"; that it is not deceptive, nor is it merely descriptive, in that
cancellation proceeding was substantial. The marks were registered in Glass Wax describes both a cleaner for glass and a cleaner for metal;
1967, 1974, 1978, and 1990. In the case of the trademarks registered in that it is not merely deceptively misdescriptive in that it does not
1967, 1974, an 1978, the delay was substantial on its face. However, misdescribe a cleaner, a cleaner for glass, or a cleaner for metalware.
given the context of this case, the Court concludes the delay for all the Plaintiff further contends that should the Court find Glass Wax not a
trademarks was substantial. The Defendants had notice of the marks technical trade-mark, it should nevertheless register the mark in that it
when the marks were published for comment and when the marks has acquired a secondary meaning under the Lanham Act.

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the needs of the customers; that the average or ordinary
On the other hand, the Patent Office contends that that the mark is in customer cares little about, and knows little about, the
fact deceptive and does mislead; that such deception constitutes an scientific composition of the product. The evidence does not
absolute bar to registration regardless of what the Gold Seal Company show that the public has been influenced to purchase the product on
intended, and regardless of whether or not any purchaser was injured; account of believing that it contained wax, or that the product was
that the Government cannot and should not approve the use of any simply a wax to be placed upon glass.
mark which actually misrepresents the goods to which it is applied,
and since the product involved contains no wax or any border-line In analyzing the relationship of the mark to the product and
substance which might be considered a wax. And further, the Patent its impact upon the public, deception is found when an
Office maintains that since it is not such an anomalous false label in essential and material element is misrepresented, is
relation to the product that no one would be deceived by it, especially distinctly false, and is the very element upon which the
since some glass polishes do contain wax, it is not entitled to customer reasonably relies in purchasing one product over
registration. If it is not deceptive in this way, the Patent Office asserts another. When, as here, the product contains an element
that the mark is merely descriptive or deceptively misdescriptive, for if which can only be known exactly by rigid scientific analysis,
the product does contain wax it is descriptive; if it does not, it is and such element does not appear as determinative in
deceptively misdescriptive, since Glass Wax would be generally leading customers to buy the product, the mark is not
understood as referring to a product which, when applied to glass, deceptive.
leaves a wax film, or at least contains wax
 Having found the mark not deceptive, it then becomes necessary to
Issue: consider whether or not it may be registered when measured against
 Whether or not the mark is deceptive. the prohibition of Section 2(e) which prohibits registration of marks
 Whether or not the mark is descriptively misdescriptive. which are "merely descriptive or deceptively misdescriptive" of the
 Whether or not there is secondary meaning goods to which they are applied.
Ratio: The evidence establishes: that the product contains either no

 The Court is well satisfied that the mark is not deceptive wax, or wax in insufficient quantity to justify use of the
under Section 2(a). On the contrary, the conclusion seems justified word; that customers might justifiably believe it does
from the voluminous record presented by the applicant that the term contain the element wax, whether or not it was significant to
may be at most misdescriptive in the sense that such suggestion of them in purchasing the product; that it is sold in association
deceptiveness may be overcome by a showing of distinctiveness under with other wax products; that other glass and metal cleaners
Section 2(f). do contain wax and have an appearance not basically
dissimilar to plaintiff's product. We therefore find ourselves
While it would be naturally expected that housewives when asked in accord with the holding of the Patent Office that the mark,
whether Glass Wax contained wax, would answer the question in the as employed in commerce, is deceptively misdescriptive. For
affirmative, there is noththing in the Roper survey or in opposer's this reason it cannot be registered as a technical trade-mark.
record which would show that anyone would have felt actually
deceived if informed that there was no wax in the product. Both Viewed in this way, it still remains immaterial that plaintiff has
opposer's and applicant's records show, on the contrary, that combined two common English words in a way which is not to be
practically all those who have actually used the product are highly found in dictionaries and which is not precise and accepted grammar,
pleased with its action whether it may contain wax or not. for this does not destroy the meanings of the words used and the
import of the total mark as it relates to the qualities and characteristics
The evidence does not establish that customers have been of the product itself. This mark is comprised of general words which,
misled. To the contrary, it appears that the product satisfies when viewed together, and regardless of whether they truly or falsely

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describe the immediate product, could as easily apply to a related class purchasers may or may not note and which may or may not always be
of goods and as aptly describe them as the one before the Court. Such a provided.
mark is not "technical".
In Re: Nantucket, Inc.
In Re Budge Manufacturing Facts:
Facts:  This is an appeal filed by Nantucket from a decision of the TTAB
 Budge Manufacturing appeals from the decision if the TTAB refusing affirming a refusal to register the mark “Nantucket” for men’s shirts on
registration of LOVEE LAMB for automatic seat covers on the basis the ground that it is primarily geographically deceptively
that the term is deceptive matter within the meaning of the Lanham misdescriptive.”
Act as applied to Budge’s goods which are made from wholly synthetic
fibers. Nantucket filed an application for registration of the name
Issue: “Nantucket” on the principal register of the PTO. However, the
 Whether or not the term is deceptive matter within the meaning of the examining officer found that the word “Nantucket” as defined in the
Lanham Act. dictionary is an island in the Atlantic Ocean south of Massachusetts. It
concluded that the word is primarily geographically descriptive o
Ratio: primarily geographically deceptively misdescriptive, depending upon
 Yes. The proscription of the law is not against misdescriptive terms whether the shirts did or did not come from Nantucket Island (which it
unless they are also deceptive. Thus, a mark or part of a mark may be did not).
inapt or misdescriptive as applied to an applicant’s goods foes not
make it deceptive. A three part test is to be applied in testing Nantucket argues that, as applied to its shirts, the term is arbitrary and
whether or not a term is deceptive matter: nondescriptive because there is no association in the public mind of
men’s clothing in Nantucket.
1. Whether the term is misdescriptive as applied to the goods,
2. if so, whether anyone would be likely to believe the Issue:
misrepresentation, and  Whether or not the term is primarily geographically deceptively
3. whether the misrepresentation would materially affect a potential misdescriptive.
purchaser’s decision to buy the goods.
Ratio:
In this case, Budge admits that its seat overs are not made from lamb  The board erred in refusing the registration of Nantucket. In
or sheep. Thus, it is misdescriptive; The seat covers for various vehicles determining whether or not a geographical term is primarily
can be and mare from nature and sheepskins. Applicant itself made it geographically descriptive of a product the board ruled that the
from sheepskin. Thus, the purchasers are likely to believe that the seat primary consideration is whether or not there is an association in the
covers denominated by the term LAMB or SHEEP are actually natural public mind of the product with the particular geographical area.
sheep or lamb skins. Moreover, evidence of record shows that natural Generally, the board used a test:
sheepskin and lamb skin is more expensive than simulated skins and
that natural and synthetic skins have different characteristics. Thus, 1. Whether the term conveys to the consumersprimarly or
misrepresentation is likely to affect the decision of the purchase. immediately a geographical connotation;
2. If so, whether the goods or services do in fact come from the
Misdescriptiveness of a term may be negated bu its meaning in the place so named (if they do, the term is primarily
context of the whole mark inasmuch as the combination is seen geographically descriptive, if not it is primarily geographically
together and makes a unitary impression. The same is not true with deceptively misdescriptive)
respect to explanatory statements in advertising or on labels which 3. If the term conveys primarily a geographical connotation and
the goods or services do not come form the place so named,

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whether the use of the term is calculated to deceive the public A geographic term may be used in a manner which is:
as to the geographical origin of the goods, the mark is
deceptive and falls within the absolute prohibition of the law. 1. Inherently distinctive
2. Generic
However, the court ruled that the test rests mechanically on the 3. Descriptive
one question of recognizability of some large segment of the 4. Deceptively misdescriptive
public and ends there. Once it is found that the mark is the name of 5. Deceptive
a known place, i.e., that it has "a readily recognizable geographic
meaning," the next question, whether applicant's goods do or do not We must start with the concept that a geographic name of a place of
come from that place, becomes irrelevant under the board's test, for if business is a descpriptive term when used on the goods of that
they do, the mark is "primarily geographically descriptive"; if they business. There is a public goods/place association, in effect,
don't, the mark is "primarily geographically deceptively presumed. As with other terms which are descriptive when first used,
misdescriptive." Either way, the result is the same, for the mark must it came to be recognized that through substantially exclusive and
be denied registration on the principal register. extensive use, a merchant might develop protectable goodwill in such a
geographically descriptive name upon proof that the name ceased
Geographically deceptive misdescriptiveness cannot be determined being informational to the public and came to indicate a source of
without considering whether the public associates the goods with the goods.
place which the mark names. If the goods do not come from the place
named, and the public makes no goods-place association, the public is A geographic name is not unprotectible or unregistrable because it can
not deceived and the mark is accordingly not geographically be labelled a geographic name, but because it tells the public
deceptively misdescriptive. The word “primarily’ should not be something about the product or the producer about which his
overlooked for it is not the intent of the legislators to refuse competitor also has a right to inform the public. Thus, the names of
registration of the mark where the geographic meaning is places devoid of commercial activity are arbitrary usage.
obscure. In fact, courts have consistently held that when a geographic
term is used in an arbitrary or fictitious sense, it may be subject to a If Nantucket were to be applied to goods, one would expect that there
valid trademark. are at least some goods for which the term is arbitrary, the applicant in
such case, must resort to proof of distinctiveness in accordance with
As applied to this case, the only indication of record that Nantucket is the law to secure registration.
primarily geographical resides in listings referring to Nantucket Island
as a summer resort and former whaling center. There is no evidence Qualitex Co. v. Jacobson Products Co.
to support a holding that the mark, as applied to men’s shirts Facts:
is deceptively misdescriptive. bThere is no indication that  Qualitex Company has for years colored the dry cleaning press pads it
the purchasing public would expect men’s shirts to have manufactures with a special shade of green gold. On the other hand,
their origin in Nantucket when seen in the market place. respondent in this case, Jacobson (a Qualitex rival) began to use a
Buyers are not likely to be deceived. similar shade on its own press pads. Qualitex therefore, registered its
color as trademark and filed a trademark infringement case against
Concurring Opinion (Nies): Jacobson for the use of the green-gold color.
 Affirms the decision but reached the same conclusion form a
different direction. In determining whether a geographic term is Qualitex prevailed in the District Court but the 9th Circuit set aside the
registrable under the Lanham Act and upon what conditions, the first judgment on the infringement claim on the ground that the law does
question is whether the name is primarily of geographic significance not permit registration of color alone as a trademark.
but, contrary to the board's view, that does not end the matter.

3A | Batch 2014 | 38
Issue: not see why courts could not apply those standards to a color,
 Whether or not the law permits the registration of color alone as a replicating, if necessary, lighting conditions under which a colored
trademark. product is normally sold.
 Whether or not the color herein can be registered as a trademark.
Depletion of usable colors
Ratio:  The doctrine of functionality normally would seem available to
 There is no reason to disqualify absolutely the use of a color prevent the anticompetitive consequences that Jacobson herein posits.
as a trademark. A color is also capable of satisfying the more The functionality doctrine thus protects competitors against a
important part of statutory definition of a trademark which requires disadvantage (unrelated to recognition or reputation) that trademark
that a person use or intend to use the mark to identify his or her goods, protection might otherwise impose, namely, their inability reasonably
including a unique product from those manufactured or sold b others to replicate important non-reputation-related product features.
and to indicate the source of the goods even if that source is unknown.
Neither can the courts find a principled objection to the use of color as Moreover, it has been held that if a design’s aestethic value lies in its
a mark in the important functionality doctrine of trademark law. ability to confer a significant benefit that cannot practically be
duplicated by the use of alternative designs, then the design is
The functionality doctrine prevents trademark law, which seeks to functional.
promote competition by protecting a firm's reputation, from instead
inhibiting legitimate competition by allowing a producer to control a Support of his position with past Supreme Court decisions
useful product feature. If a product's functional features could be used  The SC cases cited therein interpreted trademark law as it existed
as trademarks, however, a monopoly over such features could be before 1946 when Congress enacted the Lanham Act. The Lanham Act
obtained without regard to whether they qualify as patents and could significantly changed and liberalized common law to dispense
be extended forever. with mere technical prohibitions, most notably, by
permitting trademark registration of descriptive words
It would seem, then, that color alone, at least sometimes, can where they have acquired secondary meaning.
meet the basic legal requirements for use as a trademark. It
can act as a symbol that distinguishes a firm's goods and Indeed, in 1985, the Federal Circuit considered the significance of the
identifies their source, without serving any other significant Lanham Act's changes as they related to color and held that trademark
function. protection for color was consistent with the "jurisprudence under the
Lanham Act developed in accordance with the statutory principle that
 Yes. Qualitex’ green color acts as a symbol. Having attained if a mark is capable of being or becoming distinctive of the applicant's
secondary meaning, it identifies the press pad’s source. goods in commerce, then it is capable of serving as a trademark.
Accordingly, unless there is some special reason that convincingly
militates against the use of color alone as a trademark, trademark law Moreover, we believe the Federal Circuit was right in 1985 when it
would protect Qualitex's use of the green-gold color on its press pads. found that the 1946 Lanham Act embodied crucial legal changes that
liberalized the law to permit the use of color alone as a trademark
Jacobson presented before the court 4 reasons as to why the law (under appropriate circumstances). At a minimum, the Lanham Act's
should forbid the use of color alone as trademark. But the court found changes left the courts free to reevaluate the preexisting legal
it unpersuasive for the sollowing reasons: precedent which had absolutely forbidden the use of color alone as a
trademark. Finally, when Congress reenacted the terms "word, name,
It will produce uncertainty and unresolvable court disputes about symbol, or device" in 1988, it did so against a legal background in
what shades of a color a competitor may lawfully use which those terms had come to include color, and its statutory revision
 The court has already been faced with a number of cases when it had embraced that understanding.
to decide on which among two similar terms deserve protection. We do

3A | Batch 2014 | 39
There is no need to permit color alone to function as a trademark is that the plaintiff has no valid trademark in the uniform as it is a
because a firm already may use color as part of trademark and may purely functional item necessary for the performance of the
rely upon trade dress protection under the Lanham Act cheerleader. The District Court found for the plaintiff.
 Trademark law helps the holder of a mark in many ways that trade
dress protection does not. Furthermore, one can find it easy to Issue:
understand why firms would find it difficult to place a usable symbol  Whether or not plaintiff has a valid trademark in its cheerleading
or word on a product instead of color as part of a design. uniform.
 Whether or not the depiction of the uniform in the movie violates the
Having determined that a color may sometimes meet the basic legal trademark.
requirements for use as a trademark and that respondent Jacobson's
arguments do not justify a special legal rule preventing color alone Ratio:
from serving as a trademark (and, in light of the District Court's here  Although it is true that functional items can be afforded no protection
undisputed findings that Qualitex's use of the green-gold color on its under trademark law, the court does not agree that all of the
press pads meets the basic trademark requirements), we conclude that characteristics of the uniform in the instant case serve only a
the Ninth Circuit erred in barring Qualitex's use of color as a functional purpose. Plaintiff herein does not claim a trademark in
trademark. all the clothing designed and fitted to allow free movement while
performing cheerleading routines, but claims a trademark in the
Dallas Cowboys Cheerleaders v. Pussycat Cinema, Ltd. particular combination of colors and collocation of
Facts: decorations that distinguish its uniform from others.
 Dallas Cowboys Cheerleaders is a wholly owned subsidiary of the
Dallas Cowboys Football club which employs 36 women who perform The design of an item, if nonfunctional and has acquired secondary
dance and cheerleading routines at Dallas Cowboys football games. meaning can be subject to a trademark protection. Even the design
Likewise, they have merchandise which enjoyed nationwide may become a trademark even if the item itself is functional. Thus, the
commercial success due largely to national exposure. At football fact that the item serves or performs a function does not mean that it
games, the cheerleaders appear on all commercial items depicting the may not at the same time be capable of indicating sponsorship or
cheerleaders where the women are in clad in plaintiff’s distinct origin, particularly where the decorative aspects of the item are
uniform. nonfunctional.
On the other hand, Pussycat Cinema is a NY corporation which owns a The combination of the white boots, shorts, blue blouse and white
private movie theatre where it began to show Debbie Doe Dallas which starstudded vest and belt is an arbitrary design and which makes the
depicts a cheerleader at a fictional high school who has been selected otherwise functional uniform trademarkable.
to become a Texas squad, the cheerleaders perform sexual services for
a fee. The movie consists largely of scenes graphically depicting the  Yes. In order to be confused, a consumer need not believe that the
sexual escapades of the actors. In the final scene of the movie, Debbie owner of the mark actually produced the item and placed it on the
dons a uniform strikingly similar to that worn by the Dallas market. The public’s belief that the owner sponsore or otherwise
Cowboys Cheerleaders and for approximately 12 minutes, engages approved the use of the trademark satisfies the confusion requirement.
in various sex acts while clad or partially clad in the uniform. It further In this case, the uniform in the movie unquestionably brings to mind
advertises the movie in posters with a caption: “Starring Ex Dallas the Dallas Cowboys Cheerleaders. Indeed it is hard to believe that
Cowgirl Cheerleader Bambi Woods” and “You’ll do more than cheer for anyone who had seen defendant’s sexually depraved film could ever
this X Dallas Cheerleader.” thereafter disassociate it from the cheerleaders. Thus, there is a
likelihood of confusion within the meaning of the Lanham
 Plaintiff brought the action alleging trademark infringement under the Act.
Lanham Act. A preliminary issue raised by the defendants in this case

3A | Batch 2014 | 40
Defendant raises the defense of fair use (which is a privilege in others Protection in tradedress exists to promote competition. It provides
than the owner of the copyright to use the copyrighted item in a protection to one who is injured when a person uses the mark which is
reasonable manner without his consent) however, the court found that likely to cause confusion as to the origin, sponsorship or approval of
the defendant’s use of the uniform hardly qualifies as parody or any his or her goods. The person who asserts trade dress
form of fair use. protection has the burden of proving that the matter sought
to be protected is not functional.
This is not a case of unconstitutional prior restraint as this is not a case
of government censorship, but a private plaintiff’’s attempt to In this case, a utility patent once granted and expired is a strong
protect its property rights. Likewise, there is no prior restraint evidence that the features claimed therein are functional. Herein, the
herein since the defendant may comment on sexuality in athletics dual spring feature is the essential feature of the trade dress which
without infringing the trademark of the plaintiff. MDI now seeks to protect. The springs are necessary to the
operation of the device. It serves an important purpose of keeping
Traffix Devices v. Marketing Displays the sign up-right even in heavy wind conditions and as confirmed by
Facts: the statements in the expired patents, it does so in a unique and useful
 Marketing Displays Inc (MDI) established a successful business in the manner. It forces the frame to tip along the longitudinal axis of the
manufacture and sale of sign stands incorporating the expired elongated ground-engaging members. These statements in the patent
patented feature initiated by an inventor named Robert Sarkisian. Its applications and in the course of procuring the patents demonstrate
signs were recognizable to buyers and user because the dual spring the functionality of this design.
design was visible near the base of the sign.
Even if there is no previous utility on the subject matter, the feature is
After the patent expired, Traffix Devices (TD) sold sign stands with a still functional. A product is functional and cannot serve as a
visible spring mechanism that looked like MDI’s. Their products were trademark if it is essential to the use or purpose of the article
alike because they were. MDI used the name “WindMaster” while TD or if it affects the cost or quality of the article. A functional
used the name “WindBuster” feature is one the exclusive use of which would put
competitors at a significant non-reputation related
 MDI fled a suit for trademark infringement, trade dress infringement disadvantage.
and unfair competition against TD. The District Court granted
summary judgment in his favor. However, the Circuit Court reversed Functionality having been established, there can be no trade
the decision on the ground that the competitor had to find some dress infringement on such ground.
way to hide the design or otherwise set it apart from MDI’s.
In Re Morton Norwich Products
Issue: Facts:
 Whether or not the tradedress herein embodying the dual spring  Morton Norwich (MN) sought to have its container design registered
design is protected by a trademark (MDI alleges that it has acquired a as a trademark. However, the PTO Trademark Attorney maintained
secondary meaning to his favor). that the design sought to be registered is not distinctive and that there
is no evidence that it has acquired a secondary meaning. It further held
Ratio: that the container is simply functional and essentially utilitarian and
 No. MDI’s dual spring design is a functional feature for non-arbitrary. Wherefore, it cannot function as a trademark. On
which there is no trade dress protection. The consumers did not appeal, the Board likewise held that the design in unregistrable since it
associate the look of the dual-spring design with MDI. Nevertheless, is functional.
the rationale on secondary meaning is irrelevant since there can be no
trade dress protection as the design in a functional feature.

3A | Batch 2014 | 41
Issue: Keeping in mind the foregoing, the functionality is determined in light
 Whether or not the subject matter sought to be registered – of utility which is determined in light of superiority of design and rests
configuration of the container – is functional. upon the foundation essential to effective competition.
Ratio: In this case, of course, spray bottle is highly useful and

 It is not purely functional hence, registrable. The label performs intended functions in an admirable way, but that is
functional has a dual significance. It has been used on the one hand, in not enough to render the design of the spray bottle – which
lay fashion to indicate the normal or characteristic action of anything is all that matters here – functional. The bottle contains 2 major
and on the other hand it has been used to denote a legal conclusion. If parts, a bottle and a trigger operated spray producing pump
the designation functional is to be utilized to denote legal consequence, mechanism which also serves as a closure. The PTO has not produced
we must speak in terms of de factio functionality and de jure on iota of evidence to show that the shape of the bottle was required to
functionality. The former, being the use of functional in lay sense, be as it is for any de facto functional reason, which might lead to an
indicating that although the design of a product is directed to affirmative determination of de jure functionality. A molded plastic
performance of a function, it may legally be recognized as an bottle can have an infinite variety of forms or designs and still function
indication of a source. De Jure Functionality would mean that such to hold liquid. No form is necessary or appears to be superior.
a design may not be protected as a trademark.
As to the spray top, the evidence also shows that it too can take a
Before, the design of a particular article would be protectable as a number of diverse forms, all of which are equally suitable as housings
trademark only where the design was useless, that is, wholly unrelated for the pump and spray mechanisms. The evidence shows that even
to the function of the article. Most designs, hoever, result in the the shapes of pump triggers can and do vary while performing the
production of articles, containers or features thereof which are indeed same function.
utilitarian and examination into the possibility of trademark
protection is not the mere existence of utility but the degree of Thus, the court does not see that allowing the appellants in this case to
design utility. Thus, we cannot say that it means that the exclude others from using the trade dress will hinder competition or
subject design is functional merely because a hollow body impinge upon the rights of others to compete effectively in the sale of
and handhold, and pump sprayer are essential to its use. the goods named in the application even to the extent of marketing
What this phrase means is not that the generic parts of the article or them in functionality identical spray containers. The functions of
package are essential, but as noted above, the particular design of the the bottle of the appellant can be performed equally well by
whole assembly of those parts must be essential. Thus, it is clear that containers of innumerable designs and thus, no one is
the courts in the past have considered the public policy involved in this injured in competition.
area of the law as not the right to copy articles which are not
protected by patent or copyright, but the need to copy those In Re Babies Beat
articles which is more properly termed the right to compete Facts:
effectively.  Babies Beat sought the registration of the configuration of their
product for baby accessories, namely baby bottles. However, the
A feature is found to be functional if it contributes to the utility, examining attorney refused registration on the ground of de jure
durability, effectiveness, or ease of use of the product. But “contributes functionality (not registrable since it is functional); and in the
to” or “affects: are both so broad as to be meaningless for, every design alternative, de facto functionality without showing of a secondary
affects or contributes to the utility of an article in some way. Thus, the meaning, among others.
criteria is whether the prohibition of imitation by others
would deprive them of something which will substantially Issue:
hinder them in competition.  Whether or not the configuration is de jure functional

3A | Batch 2014 | 42
 Whether or not, assuming de facto functionality, there is secondary The registration was refused in all four applications on the ground that
meaning to the design. the designs were de jure functional configurations of applicant’s
barbecue grills and hence are unregistrable as trademarks for its grills
Ratio: and related goods.
 The degree of design utility encompassed by the design is so
great such that the applicant’s design is de jure functional Issue:
and hence, not entitled to registration as a trademark. In  Whether or not the designs are unregistrable for being de jure
determining functionality, the task is not to ascertain the mere functional.
existence of utility but rather to ascertain the degree of design utility.
In its design application, Babies Beat stated that the plastic baby bottle Ratio:
is shaped for even the youngest and smallest babies hands to hold;  The designs are registrable and are not de jure functional. If
furthermore it contends that its grippers line the holding area to give the design of a product or container for a product is so utilitarian as to
added assurance for safe holding. Appellant also touts its bottles as constitute a superior design which others in the field need to be able to
being the “easiest to clean – no hard to reach areas” because of its copy in order to compete effectively, it is de jure functional and as
bottle configuration. such, is precluded from registration for reasons of public policy. The
mere fact that a product has utility does not necessarily preclude
 The design is entitled to application on the basis that it is registration of its configurations. Registrability depends on the degree
inherently distinctive and requires no proof of secondary of design utility.
meaning.
Evidence is useful to demonstrate that a particular design is superior
In Re Weber Stephen Products Co. and hence de jure functional which includes:
Facts:
 Four applications for registration of trademark were filed by Weber 1. Utility patent that discloses the utilitarian advantages of the
Stephen for certain designs for barbecue grills and/or specified related design
goods. 2. advertising materials in which the originator of the design
touts its utilitarian advantages
3. facts tending to establish unavailability to competitors of
alternative designs and
4. facts indicating that the design results from a comparatively
simple or cheap method of manufacturing the product or
container.
Applying the foregoing to the case at hand, the utility patents filed for
the said barbecue grills contained no requirement that the use of a
round bowl or a tripod leg arrangement nor does the patent reveal any
particular utilitarian advantages of such a design. In either case,
neither patent discloses any particular utilitarian advantages to the
configuration sought to be registered therein.
As to the advertising materials, the statements made in newspapers

certainly seem to suggest that there is utilitarian advantage to the
round shape of applicant’s grill bown but we cannot say that these
statements necessarily indicate that the shape involved is

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functionally superior to the other grill bowls in the market. “Aspirin” as its trademark. At that time, it was sold in the form of
Moreover, there is no statements touting any utilitarian advantages of powder and for some years only to manufacturing chemists,
the tripod leg arrangement. retail druggists or to physicians. However, none of the
advertisements were made to the public at large, nor did any of its
As to the availability of alternative designs, a wide variety of packages reach further than physicians, manufacturing chemists or
alternative barbecue grill designs, including other covered retail druggists.
round designs is available to the competitors and that the
covered round design of the applicant is not superior in cooking In 1904, the chemists, who comprised all the large houses in the
performance to any other covered designs, be they round, square, country, sold the tablets to retailers under the name “Aspirin”
rectangular or whatever. The key to successful barbecue cooking is the (note: not under the name ‘ASA’) and in no case did the name of Bayer
effective use of a cover and the correct amount of fuel and not the or its predecessors appear on the labels. During this period, the
particular shape of the cooking cavity, and that it is the cover and air predecessor continued its policy of addressing only the drug trade or
flow which control the heat within a barbecue grill and provide for physicians and the public continued to have no greater
even distribution of heat for cooking. information than before of who was in fact manufacturing
the drug under the name ‘Aspirin.’
As to manufacturing costs, the records fail to show that the round grill
of the applicant is cheaper or simpler to manufacture than square  On the other hand, defendant herein, United Drug (defendant) allege
designs, rectangular designs or other round designs. that on August 1, 1898, Bayer’s predecessor has applied for a patent for
‘ASA’ which was issued on 1900 and expired after 17 years. Thus,
Having carefully evaluated the evidence, it is insufficient to prove thereafter, the product fell into the public domain and with
that the round grill of applicant is a superior design which the word ‘Aspirin’ which had become the name for the drug
other manufacturers need to be able to use in order to and therefor descriptive.
compete effectively. To the contrary, it is of similar cooking
performance to any other covered grill, whether it be in any other  The examiner of the Patent Office declared that the trademark was no
shape. There is absolute no evidence in record to show that it is longer valid and ordered the cancellation. From this decision, an
functionally superior to or simpler or cheaper to manufacture than appeal was taken.
other available leg designs, such as single leg pedestals, four leg, or
equidistant three leg designs. Issue:
 Whether or not Bayer has a right to the trademark ‘Aspirin.’
Bayer Co v. United Drug, Co.
Facts: Ratio:
 Bayer is a New York corporation which claims to have been selling,  In the case at bar, the evidence shows that there is a class of buyers to
throughout the United States, a drug known as ‘acetyl salicylic acid’ whom the word ‘Aspirin’ has always signified Bayer, more specifically
(ASA) since 1899. It claims that its predecessor was a German indeed than was necessary for its protection, that is, the
corporation engaged in the manufacturing of Chemical products, manufacturing chemists, to physicians and probably to retail
among them is the drug in question which was its own invention. It druggists. As to these buyers, Bayer has made out a case, at
applied for and was granted a patent for the said drug and therefore, it least to compel the addition of some distinguishing suffix,
expired 17 years thereafter. even through its monopoly had been more perfect than in
fact it was.
The predecessor imported the drug into the country some time in the
year 1899 and before the patent was issued. It registered the name as a In this case case, the court held that there are two classes of
trademark on may 2, 1899 and advertised it on technical magazines consumers.
and in all its advertisements and on all its labels claimed the word

3A | Batch 2014 | 44
1. The manufacturing chemists, retail druggists, and physicians The defendant will be free to sell ‘ASA’ direct to consumers under the
which have been educated to understand that ‘Aspirin’ means name ‘Aspirin’ without suffix or qualification. The defendant in sales to
the plaintiff’s manufacture (since Bayer directly deals with retail druggists will also be free to pack tablets in bottles and boxes
them) ad has recourse to another and an intelligible name for labeled as ‘Aspirin provided that the bottles or boxes are wrapped or
it, actually in use among them; boxed in containers marked ‘ASA’ manufactured by UD. Co. without
2. The consuming public which were acquainted only with the the word ‘Aspirin’ and tjat in making such sales, invoices, bills of
drug by the name ‘Aspirin’ and has not succeeded in advising lading and the life refer to the drug so sold only as ‘ASA.’
that the word means the plaintiff at all.
America Online Inc. (AOL) v. AT&T Corporation
The crux of this controversy lies not in the use of the word to the first Facts:
class but to the general consuming public composed of all sorts of  AOL is the world’s largest Internet service provider. It includes the
buyers from those somewhat acquainted with pharmaceutical terms to facility to transmit and receive electronic mail and a means to establish
those who knew nothing of them and it cannot be said that such real-time communication through instant messaging. In connection
consumers read the word ‘Aspirin’ as having any other with its chatting services, AOL uses “Buddy List” and “IM: to
meaning than as an ingredient in a general compound to describe features of the service.
which faith and science might impart therapeutic virtue.
Their only acquaintance with the word was the name for a drug in The Buddy List enables the subscriber to create a list of identified
whose curative properties they had got confidence. There is no screen names employed by other users with whom the subscriber
evidence to show that these buyers knew that this drug was the same wishes to communicate. When a “Buddy” is online, the subscriber may
as ‘Aspirin’ or that they ever asked for or bought ‘Aspirin.’ Nor is there click a button labeled “IM” and initiate a real-time chat session with
any evidence that they knew ‘Aspirin’ is identified with ‘ASA’ or the subscriber so identified. AOL has used the Buddy List and IM
supposed that ‘Aspirin’ was that drug. since at least 1997 and has promoted these terms extensively
and it asserts now that it has a proprietary interest in them.
Moreover, it is to be noted herein that the bottle of the plaintiff Said mark has been registered with the Patent and Trademark office
indicates “Bayer – Tablets of Aspirin”. Thus, it shows that Bayer itself on the Principal Register.
knew and recognized the meaning which the word had acquired
because e the phrase most properly means that these labels were of Also in connection with its email service, AOL advises its subscribers
“Bayer’s make” of the drug known as Aspirin. that they have received email by displaying the words “You Have Mail”
by placing a recording that announces “You’ve got mail” and by
If a manufacturer thinks it undesirable to advertise and sell drugs depicting an icon of a traditional mailbox with the red flag raised.
direct, the inevitable conclusion of adhering to that standard is that no
trademark among consumers can be acquired because they can know  AT&T, a competing internet service provider uses marks similar to
nothing of it. When, as among consumers, a mark does not give even those claimed by AOL in connection with its service to subscribers. It
an intimation of the owner, there is no room for any protection. The uses the terms “Buddy List”, “You Have Mail!” and “I M Here.”
owner must show that the mark means him, else, he cannot prevent
others from using it.  AOL commenced this action seeking preliminary injunctive
relief against AT&T to prohibit it form using the marks. It
Thus, the injunction was granted against the direct sales of alleged that the similar marks violated the trademark dilution
the drug under the name to manufacturing chemists, provisions of the Lanham Act and infringes AOL’s marks.
physicians and retail druggists but to consumers, it is AT&T denies said claims and asserted that the marks were common
impracticable to give any protection because among them, generic terms for email and instant messaging.
the name has gone into the public domain.

3A | Batch 2014 | 45
District Court denied the preliminary injunction and declared that said before the existence of AOL) that they have electronic mail in their
marks are generic terms and that words used generically cannot electronic mailboxes. The phrase has been used for the common
become trademarks by association. ordinary purpose of informing users of the arrival of
electronic mail in their electronic mailboxes. It is significant in
Issue: this context that AOL never registered the phrase nor has it attempted
 Whether or not the “Buddy List” is a generic term. to enforce the mark prior to this action.
 Whether or not the “IM” is a generic term.
 Whether or not the AOL has trademark rights over the phrase “You Furthermore, the use of the phrase is conditioned on whether there is
Have Mail.” mail present. It does not describe the email service of AOL, but
rather simply. Informs the subscribers, employing common
Ratio: words to express their commonly used meaning, of the
 The case was remanded as to the term “Buddy List.” It should ordinary fact that they gave new email. This functional manner
be noted that the decision to register a mark without requiring in which AOL uses “You Have Mail” is consistent with a public
evidence of secondary meaning is a powerful evidence that perception of the phrase as describing whether or not mail is in an
the registered mark is suggestive and not merely descriptive. electronic mailbox, rather than as describing a service associated with
In this case, through the certificate of registration of the terms, the AOL. The scope of this asserted use is to give notice of mail to
Commissioner introduces his opinion that the application of the subscribers.
registrant was sufficient to demonstrate a valid mark.
The words might well have become marks distinguishing one
Despite the foregoing, the lower court declared summary judgment in entrepreneurs’ product or service from all other electronic networks.
the context of the record evidence presented in the case. The SC Yet, because of pervasive use, these terms become generic and
decided to vacate the decision of the District Court’s ruling on the even when created words for new products have become
Buddy List including the order of the Commissioner to cancel its strong marks, the public’s pervasive use of these marks
registration as the validity of the “Buddy List” cannot be determined sometimes creates a real risk that their distinctiveness will
on mere summary judgment. disappear (GENERICIDE).
A presumption does not vanish upon the introduction of contradictory The law of trademarks intends to protect the goodwill represented by
evidence, instead it is merely deemed sufficient evidence of the fact the marks and the valid property interests of entrepreneurs in that
presumed to be considered by the jury or other finder of fact. good will against those who would appropriate it for their own. But it
likewise, protects for public use those commonly used words and
 The court did not expressly hold that IM is a generic term. phrases that the public has adopted, denying to anyone a right to
Books, dictionaries and glossaries define the term as instant corner those words and phrases by expropriating them from public
messaging. AOL has offered no evidence to support the contention that linguistic commons.
it was one of the first companies to provide for an IM. Accordingly,
which the court does nor determine that the term is generic, it AOL’s usage of the would be mark falls within the heartland of
nevertheless agrees with the decision of the District Court that the common meaning and usage and therefore, AOL may not
denial of the enforcement of IM as a trademark is in order. exclude others from using the same in connection with their
email service. There is no evidence that it uses the phrase in a
 “You Have Mail” is a generic phrase. AOL may not enforce distinctive matter.
the phrase as a trademark in connection with its email
notification service. AOL has the burden to prove that it owns the Concurring and Dissenting Opinion (Luttig):
mark. However, the record establishes that the phrase “You Have  I would not decide on whether AOL is entitled to protection for its
Mail” has already been used to inform users since the 1970s (a decade unregistered email notification feature because it is my understanding

3A | Batch 2014 | 46
that AOL no longer informs its consumers through tht use of the generic as applied to motorcycles. Though not conclusive, dictionary
phrase. Rather it now informs them that they have acted with the definitions of the word to denote a category of products are significant
different message “You’ve Got Mail.” That feature is sufficiently evidence of its genericness because they usually reflect the public’s
different from the phrase “You Have Mail” in both gramattical perception of a word’s meaning and its contemporary usage. In this
dysfunctionality and likely secondary meaning and possibly in its case, one dictionary cites a generic use of HOG to mean a large
genericness as well. motorcycle as early as 1967, long before HD’s first use of the
word and the recent dictionary editions continuing to define
Harley Davidson v. Grotanelli the word to mean such indicate that the word has not lost
Facts: generic meaning. The court observed that newspaper and magazine
 Harley Davidson (HD), a corporation based in Wisconsin inititated use of a word in a generic sense is a strong indication of the general
this case for infringement against Grotanelli for the alleged use of the public’s perception that the word is generic.
word “HOG” in reference to some of its products and services and from
using his logo modeled on HD’s bar-and-shield design mark. Further supporting the generic nature of the word HOG was HD’s
aversion to linking the word with its products in the early 1980s long
after the word was generic. HD already attempted to disassociate itself
from the term HOG.
Although in some contexts, there might be instances whereby a

trademark use can be reacquired in a generic term (e.g. SINGER and
GOODYEAR) but it is recognized that these examples are words that
were originally proper names of the manufacturer and that the cases
do not stand for proposition that a commonly used name of an article
like computer, typewriter or flashlight can be appropriated by one
seller as a trademark. Moreover, if a generic word could ever be
infused with trademark significance, the word must have
ceased to have current generic meaning.
Neither can the “Dual Usage” terms provide any help to HD

Issue: because although Dual usage (which refers to a mark that starts out
 Whether or not the use of the term “HOG” infringes the trademark of as proprietary and gradually become generic) allows the retention of
HD. trademark significance, HD cannot avail of this because in this case,
 Whether or not the use of the mark similar to the bar-and-shield of HD our concern is a trademark that starts out as generic and is
constitutes infringement. sought to be given trademark significance by the
manufacturer.
 Grotannelli is enjoined form using the bar and shield logo.

Ratio: The claim of Grotennelli that it is used as a parodic trademark cannot
 The term “HOG” has become generic as applied to large hold in court. The hear of any parodists claim is the use of some
motorcycles before HD began to make trademark use of elements of a prior author’s work to create a new one that, at
HOG and that HD’s attempt to withdraw this use of the word least in part, comments on that author’s work. The comment
from the public domain cannot succeed. In the late 1960s and must have some critical bearing on the substance or style of the
1970s, the word was used by motorcycle enthusiasts to refer to original composition.
motorcycles generally and to large motorcycles in particular. It is

3A | Batch 2014 | 47
In this case, Grotanelli’s mark makes no comment on Harley’s mark. It
simply uses it in a humorous way to promote his own products and Ratio:
services which is not permitted in a trademark parody use.  The case has become moot and academic because Uy is
deemed to have abandoned his application for failing to file
Mattel v. Francisco his declaration of actual use as required by law. Section 124.2
Facts: of RA 8293 requires that the applicant or registrant shall file a
 Jimmy Uy filed a trademark application with the Bureau of Patents for declaration of actual use of the mark with evidence to that effect as
registration of the trademark BARBIE for use on confectionary prescribed by the Rules within 3 years from the filing date of the
products, such as milk, chocolate, candies, milkbar and chocolate application. Otherwise, the applicant shall be refused registration or
candies in Class 30. However, Mattel opposed this registration on the the marks shall be removed from the Register. Likewise, the rules also
ground that it was confusingly similar to its trademark on dolls, doll provide that without any need of notice from the Office, all
clothes and doll accessories, toys and other similar commercial applicants and registrants shall file a DAU within 3 years without
products. possibility of extension form the filing date of the
application. Otherwise, it shall be refused or the mark shall be
IPO rendered a decision dismissing the Notice of Opposition and removed from the register by the Director.
giving due course to Uy’s application for the registration of the
trademark Barbie as used on confectionary products as these were However, since in this case, the mark was applied for during the
non-competing and unrelated products and that there was no proof effectivity of RA 166, it is required that the applicant submit DAU
that Mattel had ventured into the production of chocolates and and evidence of use on or before December 1, 2001, subject to
confectionary products under the trademark BARBIE on said goods. a single 6 month extension (as stated in Memorandum Circular No. BT
2K1-3-04).
Thereafter, Mattel filed a Motion for New Trial on the ground of newly
discovered evidence allegedly because there was a Trademark By virtue of the admission of Uy, since he has effectively withdrawn or
Application for registration of the trademark BARBIE for use on abandoned any rights or interest in his trademark for non-filing of the
confectionaries and this application was unopposed after publication DAU, there is no more actual controversy or no useful purpose
in the IPO Official Gazette. However, the Motion for New Trial was to pass upon the merits of the case. It is unnecessary to rule
denied. on the trademark conflict between the parties.
Mattel argues that the products are items related to Uy’s products and Courts will not decide on matters such as this as it would constitute a
that the Director General of the IPO has the power to act on a mere advisory opinion. The exercise of judicial review is limited to
pending trademark application considered as withdrawn for actual cases and controversies. Courts will decide cases, otherwise
failure to file a Declaration of Actual Use (DAU) as required moot and academic, only if:
by the Code and its implementing Rules. On the other hand, Uy
submits that the case has already become moot and academic since the 1. There is a grave violation of the constitution
records of the IPO already show that the DAU was not filed on or 2. Exceptional character of the situation and paramount public
before December 1, 2001, thus he is deemed to have abandoned his interest
trademark application for failure to comply with the mandatory filing 3. Constitutional issued raised requires formulation of
of the DAU. controlling principles to guide the bench at bar
4. Capable of repetition yet evading review
Issue: The instant case does not fall within the category of any of the
 Whether or not Uy is deemed to have abandoned his application for exceptional cases. The issues in this case call for a factual
the trademark BARBIE by failing to file his DAU.

3A | Batch 2014 | 48
consideration which are peculiar only to the transactions and parties
involved in this controversy. Ratio:
 Yes. It is registrable. Evidence shows that the trademark is a
Andres Romero v. Maiden from Brassiere Co. musical term which means slowly or in an easy manner and was used
Facts: ad a trademark by the owners thereof because they are musically
 Maiden Form is a foreign corporation which filed an application for inclined. Being a musical term, it is used in an arbitrary or fanciful
registration of the trademark ADAGIO for the brassieres manufactured sense as a trademark for brassieres manufactured by respondent
by it. It stated the following facts in its application: company. The mere fact that the said mark is also used to designate a
particular style of brassiere does not affect its registrability as
October 26, 1937 First use in the United States trademark. Long and continuous use of the mark has not rendered it
August 31, 1947 First use in the Philippines merely descriptive of the product. Widespread dissemination does not
justify the defendants in the use of the trademark. If this argument
Acting on said application, after publication, the Director issued a were sound, then every time a plaintiff obtained the result of having
certificate of registration for ADAGIO. However, subsequently, Andres the public purchase its article, that fact itself would destroy a
Romero filed a petition for cancellation of the trademark on the trademark.
grounds that:
 There is no abandonment. To work an abandonment, the disuse
1. it is a common descriptive name of an article of substance must be permanent, and not ephemeral. It must be intentional and
2. it was procured fraudulently contrary to the provisions of voluntary and not involuntary or even compulsory. There must be
Section 4, Chapter II of RA 166. thorough-going discontinuance of any trade-mark use of the mark in
3. Application was not filed in accordance with Section 37 of the question. To establish the defense of abandonment, it is
same law. 10 necessary to show not only the acts indicating a practical
abandonment, but an actual intention to abandon.
Romero claims that the trademark has become a common descriptive
name of a particular style of brassieres and is therefore, unregistrable. Non-use because of legal restrictions is not evidence of an intent to
It is urged that the trademark has been used by local brassiere abandon.
manufacturers since 1948 without objection on the part of the
respondent company.  Others: The court ruled that Section 37 of the RA 166 can only be
availed of where the Philippines is a party to an international
It is further alleged that even assuming that Adagio was a registrable convention or treaty relating to trademarks in which the trade-mark
trademark and that the company used the same in 1932, in the sought to be registered need not be used in the Philippines. The
Philippines long before anyone else, it abandoned the use of the Philippines has not yet entered into any such treaty or convention and
same during the period of time that the government imposed until she does, actual use in the Philippines of the trademark sought to
restrictions on importation of respondent company’s goods. be registered and allegation in the application of such fact will be
required in all applications for original or renewal registration
Issue: submitted to the Philippine Patent Office. It did not register under
 Whether or not the trademark is registrable. Section 37 of RA 166, but under Section 2 of the same law.11
 Whether or not there has been abandonment.
10 No registration of a mark or trade-name in the Philippines by a person described in the
preceding paragraph of this section shall be granted until such mark or trade-name has been 11Trademarks owned by persons domiciled in a foreign country may be registered provided that
registered in the country of origin of the applicant, unless the applicant alleges use in commerce. said trademarks, trade-names or service marks are actually in use in commerce and services not
less than 2 months in the Philippines before the time the applications for registration are filed.

3A | Batch 2014 | 49
Ratio:
 It was an assignment in gross. Generally, an assignment of a
Clark & Freeman v. Heartland trademark and its accompanying goodwill will entitle the assignee to
Facts: step into the shoes of the assignor, gaining whatever priority the
 This case involves the competing claims of 2 companies to the assignor might have had in the mark. When a trademark has been
exclusive right to use the name “Heartland” in connection with their assigned in gross, the assignment is without the accompanying
business operations. goodwill of the predecessor. Hence, the assignee must instead rely
upon his or her own use to establish priority.
Defendant Has been using the mark since
July 1985 in connection with the The mere fact that there was an immediate case in the manufacture
sales of shirts, sweaters, trousers cannot operate to make a conclusion that the same is not an
and jackets. assignment in gross (transferring the goodwill).
Plaintiff Commenced using the name
“Heartland” on April 26, 1986 A trademark may be validly transferred without the simultaneous
in connection with the sale of transfer of any tangible assets as long as the recipient continues to
men’s shoes and boots. produce goods of the same quality and nature previously associated
with the mark. Many courts have ruled for substantial similarity even
though the products differed in some respects. However, in this case,
However it is argued by the plaintiffs that because its predecessor, there is no substantial similarity to support the conclusion
SEARS, used the same even before the defendant, the period should be that there was an assignment in gross since the facts of the
tacked to theirs thereby making them the prior user. On the other record show that Sears only sold women’s pixie boots under
hand, this was contested to by the defendant since in the case of Sears the mark Heartland before, while plaintiff immediately
and the plaintiff, there was a settlement which assigned the applied the same to men’s shoes, then later, to men’s hiking
trademark in gross to plaintiffs. In assignments in gross, by its very boots. The market for the 2 goods are substantially distinct. The facts
nature, the successor may not tack the period of the predecessor’s tend to show that the plaintiffs sought to gain the ability to use the
prior use. name Heartland and not the goodwill associated with it.
It is the position of the plaintiff that the assignment is not an Since the assignment is the assignment in gross, defendants have
assignment in gross because: shown priority in the use of the name Heartland and therefore,
plaintiffs may not enjoin defendants from using Heartland for the sale
1. There was an immediate cease of the manufacture and of its current line of products.
marketing of Heartland boots when SEARS made the
assignment, thus there was an ipso facto transfer of goodwill; Pepsi Co. v. Grapette
2. Because the plaintiffs were applying the trademark to Facts:
substantially similar goods (in relation to SEARS), they had  Pepsi Cola has bottled beverages duly registered under trademarks
acquired the goodwill as well as the mark. PEPSI COLA and PEP-KOLA for many years. Grapette, on the other
hand, is a national bottler and distributor of soft drinks, concentrates
Issue: and syrups. Grapette developed a formula for a beverage and in
 Whether or not the assignment herein of SEARS to plaintiff was an searching for a name for this beverage, it came across the 1926
assignment in gross. registration of the mark PEPPY by Fox & Co. (Fox)Foxed used this in
conjunction with a cola flavored syrup which was distributed on a local
basis.

3A | Batch 2014 | 50
Grapette entered into an agreement with Fox in which the trademark known or anonymous. Goodwill is property and since it is transferable,
PEPPY was assigned to the defendant for a consideration. Although the symbol of the property is transferable along with it.
there was a formal assignment of goodwill, it is now being conceded
that none of Fox’s assets or plant were transferred with the trademark Basic to this concept is the proposition that any assignment of a
(no inventory, lists, formulas, etc). trademark and its goodwill requires the mark itself be used
by the assignee on a product having substantially the same
 Pepsi filed a case alleging that the assignment was null and void for characteristics. If he should make a different article, he would not
being an assignment in gross. It sought an injunction against Grapette derive a right which a court of equity would enforce. The right to the
and its holding company based on the alleged infringement of its use of a trademark cannot be so enjoyed by an assignee that he shall
trademark. Notwithstanding the finding of infringement, however, the have the right to affix the mark to goods differing in character or
court denied the plaintiff injunctive relief on the ground that species from the article to which it was originally attached.
there was laches.
Grapette herein urges that it intends to use the PEPPY mark on a
Hence, it is not disputed in this case that Grapette must product of the same general classification as Fox but this was not
stand in the place of Fox because, without a valid sustained by the court. The word class means broadly a genus as
assignment, the rights to PEPPY accrue only as of November a species any goods upon which the use of the same mark,
1965 and it could not assert the defense of laches. Pepsi when the goods are exposed side by side, would tend to
asserts that the 1965 assignment of the trademark was a mislead the purchasing public. Thus, the mere fact that the goods
legal nullity in that the trademark was transferred totally are registered in the same Class cannot mean that these are within the
disconnected form any business or goodwill of the assignor. same class in determining the validity of the assignment to defendant
Grapette.
Issue:
 Whether or not the assignment is void. Evidence shows that the products are not substantially the same.
Grappette intended to use the mark to descripe its new pepper
Ratio: beverage, on the other hand, Fox used it in its cola syrup.
 It is null and void. The Lanham Act provides that “a registered mark
or mark shall be assigned with the goodwill of the business in Thus, it is fundamental herein that either defendant did not
which the mark is used, or with that part of the goodwill of acquire the goodwill as required by law or it did not apply
the business connected with the use of and symbolized by the said goodwill, even assuming it inherited it, to the same
mark, and in such assignment it shall not be necessary to include the goods. Either ground is untenable to the validity of the assignment.
goodwill of the business connected with the use of and symbolize by
any other mark used in the business or by the name or style under
which the business is concluded.
Trademark could not be assigned in gross. It can only be transferred in

connection with the assignment of the particular business in
which it has been used, with its goodwill and for the
continued use upon the same articles or class of articles. This
necessity to assign more than the naked mark was premised on the
primary object of the trademark “to indicate by its meaning or
association the origin of the article to which it is affixed.” The
designation only a means identifying particular goods, services or a
business associated with a particular commercial source, whether

3A | Batch 2014 | 51
University Bookstore v. The Board of Regents of the University of already lost by its failure for many years to control the nature and
Wicsonsin System quality of numerous third party users of the marks.
Facts:
 Applications have been filed by the Board of Regents of the University Issue:
of Wisconsin (“University) to register the following trademarks for  Whether or not there is abandonment.
various apparel (hereinafter referred to as “Bucky” and “Bagders”
respectively): Ratio:
 No. Under the law, a mark shall be deemed to be abandoned when any
course of conduct of the owner, causes the mark to become generic
name for the goods or services on or in connection with which it is
used or otherwise to lose its significance as a mark. Purchaser
motivation shall not be a test for determining abandonment
under this paragraph. Instead, so long as at least some
members of the purchasing public identify applicant with
each of the marks at issue, it cannot be said that applicant's
course of conduct has caused any of such marks to lose its
significance as a mark.
Without question, distinctiveness can be lost by failing to take action

Said applications have been opposed by the University Book Store against infringers. If there are numerous products in the marketplace
(UBS), the Wisconsin Merchants Federation (WMF) and the Brown’s bearing the alleged mark, purchasers may learn to ignore the mark as a
Book Shop (BBS) on the ground that with respect to Bucky, such mark source indication. When that occurs, the conduct of the former owner,
was created in 1940 when BBS commissioned another company to by failing to police its mark, can be said to have caused the mark to
design and produce a mascot for use by BBS and that the University or lose its significance as a mark. However, an owner is not required to
anyone associated with it used the same before 1940. On the other act immediately against every possibly infringing use to avoid a
hand, the “WISCONSIN BADGER” mark was also being opposed to on holding of abandonment. Such a requirement would unnecessarily
the claim that the terms are created centuries ago, not by the clutter the courts. Some infringements are short-lived and will
University. disappear without action by the trademark owner.
Opposers further allege that uses of the marks in issue by non- By way of background, is is clear that Bucky was created by
affiliated entities have included imprinting the marks on clothing and Mr. Evans, which was requested by BBS to produce for sale of BBC;s
other goods; manufacturing and selling such goods; using the marks in sheet of decals which included mascot designed and intended to
advertising and promoting the sale of such goods; and using the marks represent applicant. Brown's has continuously sold decals depicting
to promote sports exhibitions and to create customer goodwill. Bucky since 1940 and, later on, UBS likewise sold a version of such
Opposers also contend that during the early 1980s, the Board of decals. With respect to use of the Bucky on W mark, the record reveals
Regents indicated in response to several inquiries by non-affiliated that Brown's sold clothing imprinted therewith during the 1950s and
entities that anyone was free to use the lucky Badger figure and the continued to do so through the 1960s. Other members of WMF, but
words WISCONSIN BADGERS since, as confirmed in internal not UBS, have also sold T-shirts, sweatshirts and/or caps imprinted
correspondence, it did not claim ownership rights therein. with the Bucky on W mark.
To this effect, the oppositors in the claim that the University had As to the WISCONSIN BADGERS mark, it is plain from the
already abandoned its rights to the mark. They claim that the applicant record that the words BADGER and BADGERS have long
been associated with applicant.

3A | Batch 2014 | 52
register as expressions in the business community of
While opposers are consequently correct that in most instances, goodwill and support for the educational and entertainment
applicant has not been the first user of the subject marks for the goods services provided by applicant. The presence of the
and services for which registration is sought, it is critical to keep in University, with its faculty, support personnel and large
mind that none of the opposers, or any third party, has ever used such student population, provided in turn a significant source of
marks as its own mark to identify and distinguish the particular goods customers for local businesses, including the bookstores run
and services involved in these proceedings. Opposers have admitted, in by UBS and Brown's as well as other firms which in large
their responses to applicant's requests for admissions, that they have measure have catered to the various needs of persons at the
never made use of the marks applicant seeks to register as their marks. University.
Instead, it is manifest from the record that opposers, and third parties
alike, have merely sold and occasionally advertised items of apparel Finally, opposers urge that there has been no fundamental
and other merchandise which have been imprinted with the marks. change in the market for merchandise imprinted with the
Applicant, like numerous other colleges and universities, marks at issue which would justify applicant's adoption of its
permitted others to sell imprinted merchandise as formal licensing program and excuse its asserted delay in
expressions of community support and goodwill. Advertising claiming enforceable rights after many years of essentially
of merchandise featuring various indicia associated with regarding the marks as public property. The substantial growth
applicant, including the marks at issue herein, frequently in the popularity of such items, and the resultant need by the colleges
coincided with events sponsored by applicant, such as and universities affected thereby for tighter control over their names
athletic events and alumni gatherings. and other identifying symbols, caused applicant and other similarly
situated institutions of higher learning to recognize that the protection
Opposers, in stressing that such uncontrolled uses by third parties and enforcement mechanisms offered by formal licensing programs
amount to a forfeiture of any rights applicant may have had in the were necessary in order to avoid the problems brought about by the
subject marks, are basically contending that applicant must maintain a fundamental change in the market for imprinted collegiate
right in gross in each mark. However, as noted previously, exclusivity merchandise.
of rights is not required as a matter of law in order for applicant to
avoid a finding of abandonment. Even in instances where, arguably,
applicant and others are each using the Bucky Badger figure and/or In summary, not only is it the case that none of the opposers, or any
the words BADGER and BADGERS, such as the use thereof by the third party, has ever used the marks at issue as its own mark for the
Badger Conference and Niagara High School and the use of Bucky by particular goods and services set forth in the applications involved in
groups of cross-country runners, Vietnam veterans and firefighters, these proceedings, but the use thereby was tantamount to a royalty-
the activities of these third parties are sufficiently different and distinct free, nonexclusive, implied license from applicant which inured to
in nature from the university level educational and entertainment applicant's benefit. Applicant tolerated uses of the marks, when their
services rendered by applicant so as to preclude any inference of use in advertising and on clothing and other types of imprinted
abandonment of the subject marks by applicant. The fact that such merchandise were plainly in reference to the University, as expressions
indicia have been diluted and are accordingly weak in terms of the of support for its athletic and academic programs by the business
scope of protection to which they would be entitled does not mean, in community. With but one inconsequential exception, the record is
the case of both the uses thereof made by applicant, and those by its devoid of any evidence which even raises an inference that the quality
nonexclusive, implied licensees which inured to applicant's benefit, of merchandise imprinted with the subject marks has ever been
that the marks applicant seeks to register have lost their significance as anything less than that of at least merchantable quality. Similarly,
marks. except for a few occasional and transitory incidents, clothing and other
items bearing the marks at issue have reflected applicant's standard
As mentioned earlier, the record is clear that applicant that such merchandise be in good taste, Applicant, in effect, has
tolerated various uses by others of the marks it seeks to maintained adequate control over the nature and quality of the goods

3A | Batch 2014 | 53
and services sold under the marks, both prior to and after the
commencement of its formal licensing program with CCI/ICE, and has Issue:
policed its marks in accordance with due regard for the scope of  Whether or not there is abandonment.
protection to which they are entitled.  Whether or not there is fraud in the procurement of the registration.
Yocum v. Covington Ratio:

Facts:  Covington has superior rights over the mark. The oath in
 A petition for cancellation of registration was filed by Yocum of the application which matured into registration was not in fact false. Even
service mark, PIED PIPERS issued to Warren Covington for if we found that petitioner had superior rights, and that the oath was
entertainment services (live singing) on the ground that: false, the evidence of record would not be sufficient to
persuade us that the oath was made with fraudulent intent.
1. the ownership and prior use of the PIED PIPERS mark was Although he was aware of the status of the mark, petitioner’s
originally formed in 1940; admittedly minimal level of commercial activity with his PIED PIPERS
2. fraudulent application for and procurement of the registration group and the lack of trade visibility 6 years before the registration
based on the knowledge of the existence of the group and of made it plausible and understandable for Covington to assume, when
petitioner’s use andrright to use PIED PIERS mark at the time he sought registration that once famous, PIED PIPERS name was not
of the application for registration in 1973. currently in trade use and was therefore subject to appropriation by
one seeking to recapture and market the nostalgia of those days and
As its defense, Covington asserts that there was abandonment on the sweet vocal sounds that accompanied it. The reasons for the
the part of Yocum, laches and acquiescence. foregoing conclusions are:
Yocum is a musician who joined a group called PIED PIPERS which 1. Yocum was not an original member of the group. He was a
originated in California. He joined the group in 1940 when it formally mere employee of Dorsey and was only employed by Dorsey.
became PIED PIPERS. Throughout this period tget were paid by, Hence, the title to the mark remains with Dorsey during that
booked by and appeared as a featured part of the Tommy Dorsey time.
organization apparently as employees of Mr. Dorsey. 2. The board is unable to find evidence that use of the mark
during this period evolved into 100% ownership status
As the sole survivor of the group, 100% of the title to the trademark claimed by petitioner because of the striking lack of
and the service mark was with Yocum. When he was no longer corroboration of the agreement and several
physically capable of performing, he stopped performing. evidentiary facts therewith.
Notwithstanding, it is clear that he continued to claim ownership of 3. It does not appear that he continued to assert rights to the
the PIED PIPERS name to receive royalties from previous recordings name to try to activate other performers to sing as the PIED
as to which he was a performer and to seek suitable employment for a PIPERS after his withdrawal from the group.
PIED PIPERS singing group in the capacity akin to owner-manager or
licensor. He agreed to allow use of the name without adequate supervision and
quality control and which led to an interruption of the continuous use
 Covington is a trombonist with a number of major dance bands and that petitioner must show to establish priority over registrant. This is
studio orchestras. In 1973, Covington 0organized his own PIED evidence by the fact that during a recording session of an ad hoc PIED
PIPERS group to enhance the orchestra which group, presumably with PIPERS group, he intruded therein with threat of legal action, but this
changes in vocalists, has remained intact and continues with resulted in payment to him to settle his claims of name ownership but
Covington orchestra and sometimes as a hired vocal group apart from no more than that.
that orchestra. Covington applied for registration of the service mark,
which was granted. Hence, this case.

3A | Batch 2014 | 54
He made no inquiry of what was being recorded, what arrangements PAGASA filed an application for registration of the same or identical
were being used, and made no requests to monitor the sessions. trademark which was also allowed.
Moreover, subsequent to this, he entered into another uncontrolled
licensing arrangement without such pressures. Alleging that both are confusingly similar, being used on similar
products under the same classification of goods, Kaisha filed with the
In 6 years, use and registration of the mark, petitioner engaged in Director of Patents a petition for cancellation of petitioner’s
inadequately controlled licensing thereby working an abandonment registration of exactly the same trademark.
that negated such priority of use as a petitioner may have
established in earlier years and divested PIED PIPERS mark The Director ordered the cancellation of the registration of PAGASA
of origin. on the ground that it is non-registrable because it resembles a mark or
tradename registered in the Philippines or a mark tradename
Abandonment is defined as when any course of conduct of the previously used in the Philippines. CA affirmed the decision of the
registrant, including acts of omission as well as commission causes the Director of Patents and held that laches would not apply in this case
mark to lose its significance as an indication of origin. Although not for it has not been shown that Kaisha abandoned the use of the mark.
dealing with a registered mark, we believe that the operative principles
of the act apply to petitioner’s situation. While lack of intent to PAGASA claims that Kaisha neglected to assert its rights for
abandon would be relevant to voluntary relinquishment of more than 5 years. Hence, it should not be barred from filing the
the mark, it is not a sufficient defense against applicant’s case. It further argues that to be entitled to the defense of estoppel by
naked licensing activity. laches, it is not necessary for the petitioner either to show that
respondent has abandoned the trademark or to prove its good faith if it
 The board finds no colorable basis for finding fraud in is shown that respondent was aware of petitioner's use of the
respondent’s 1973 application for his PIED PIPERS trademark without the former's protest or objection thereto leading
registration and his representations therein because to the petitioner to assume that its act did not constitute an invasion of
best of his knowledge, there was no other person has the right to use respondent Kaisha's trademark rights. Moreover, it is asserted that
said mark in commerce. there was never an acquisition of right on the part of Kaisha since
there was no actual proof of use in commerce. No invoices or
Fraud must be proven to the hilt with little or no room for speculation receipts were submitted and neither did respondent present testimony
or surmise, The statement of an applicant that no other person to the of any buyer a=or distributor to which said samples were addressed.
best of his knowledge has the right to the use of the mark does not
require the applicant to disclose those persons whom he may have Issue:
heard are using the mark does not constitute fraud if he feels that the  Whether or not laches may be applied in this case.
rights of such others are not superior to his. An applicant who has at  Whether or the first registration is valid.
least color of title to the mark is not guilty of fraud in making the
foregoing application recitals. Ratio:
 There is laches and it may be applied in this case. It appears
Yocum has not met his burden or establishing either prior and that it was only after more than seven (7) years when respondent
continuing rights on his part or fraudulent application behavior on sought the cancellation of the trademark. An unreasonable length of
respondent’s part that would justify cancellation the registration. time had already passed before respondent asserted its right to the
trademark. There is a presumption of neglect already amounting to
PAGASA v. Court of Appeals "abandonment" of a right after a party had remained silent for quite a
Facts: long time during which petitioner had been openly using the
 Kaisha was issued a trademark registration for YKK for slide fasteners trademark in question. Such inaction on the part of respondent
and zippers in class 41. 5 and a half years after its registration, entitles petitioner to the equitable principle of laches.

3A | Batch 2014 | 55
It is most unfair if at any time, a previous registrant, even after a lapse Philip Morris Inc. v. Court of Appeals
of more than five (5) years, can ask for the cancellation of a similar or Facts:
the same trademark, the registration of which was never opposed by  Philip Morris is a corporation organized under the laws of USA. The
the prior registrant. Why, in the first place did respondent not file an two other plaintiff corporations, which are wholly owned subsidiaries
opposition to the application of petitioner, as it ought to have done? It of Philip Morris are similarly not doing business in the
could be because by the fact that its own registration was defective for Philippines but are suing on an isolated transaction. As
there being no compliance with the requirement of the law such as the registered owners of MARK VII, MARK TEN and LARK, they assert
two (2) months commercial use of the trademark prior to the filing of that Fortune Tobacco Corporation has no right to
the application, its own registration may be cancelled, specially as it manufacture and sell cigarettes bearing the allegedly
had no evidence of actual use of the trademark after its registration up identical or confusingly similar marks in contravention of the
to the time of the filing of petitioner's application, a fact easily Trademark law and should be precluded from performing said acts.
deducible from the fact of respondent's complete silence and having Fortune, on the other hand, asserts that it has been authorized by the
taken no action to cancel petitioner's trademark until after the lapse of BIR to manufacture and sell cigarettes bearing the trademark MARK
more than seven (7) years from the approval of petitioner's application and that MARK is a common word which cannot be exclusively
to respondent filing a petition for cancellation. appropriated.
 No. The trademark law is clear that it requires actual use of  RTC denied the prayer for preliminary injunction on the ground that
the mark prior to registration. Although Kaisha was the first since the corporations are not doing business in the Philippines, the
registrant, it failed to prove that it used in trade or business in the MARK cigarettes cannot cause them irreparable damage within the
Philippines the subject mark. There is no proof to invest it with territorial limits of the country. Although there is no dispute that
exclusive continuous adoption of the mark which should consist Philip Morris registered MARK VII, MARK TEN and LARK first, the
among others, of considerable sales since its first use. The invoices registration of the trademark MARK is still pending with the PPO, thus
presented coveres mere samples and were not for sale. The fact of the issuance of a preliminary injunction premature. Until and unless
exporting them is not considered as “use.” the Director of Patents has denied the application, the court is of the
opinion and so holds that issuance of the injunction would not lie. It
PAGASA v. Court of Appeals (MR) has been repeatedly held in this jurisdiction as well as in the
Ratio: United States that the right or title of the applicant for
 The Director of Patents sensibly and correctly cancelled the injunction remedy must be clear and free from doubt.
registration in favor of Pagasa which has not shown any semblance of
justification for usurping the trademark YKK. The registration in favor Apart from the foregoing reasons, what prompted the trial court to
of Pagasa was admitted by the Director to be a mistake. He said that entertain the idea of prematurity and untimeliness of petitioner’s
Pagasa's application should have been denied outright. Pagasa cannot application for a writ of preliminary injunction was the letter from the
rely on equity because he who comes into equity must come with clean BIR which reads that the application for its trademark is still peinding
hands. Equity refuses to lend its aid in any manner to one seeking its before said office.
active interposition who has been guilty of unlawful or inequitable
conduct in the matter with relation to which he seeks relief. In this In a second motion for issuance of injunctive writ (asserting that the
case, it was found by the court that PAGASA had knowledge application of the MARK with the PPO has already been rejected and
that Kaisha was using the YKK trademark. Hence, such barred), the trial court nonetheless denied the new assertions on the
knowledge, constituting bad faith when it opted to register it, grounds that:
precludes the application of equitable principles of laches, estoppel
and acquiescence. Yoshida’s prior registration is superior and must 1. They did not even bother to establish that the products
prevail. affected adversely not subject of an application for registration

3A | Batch 2014 | 56
with the PPO are in actual use in the Philippines and However, a fundamental principle of Philippine Trademark Law is that
available for commercial purposes in the Philippines. actual use in commerce in the Philippines is a pre-requisite
to the acquisition of ownership over a trademark or a
 In the court of appeals, the prayer for injunctive writ was granted tradename. Even if PM has the capacity to sue for infringement,
enjoining Fortune from manufacturing, selling and advertising MARK whether they have an exclusive right over their symbol as to justify
cigarettes It remarked that the temporary mark granted to Fortune issuance of the controversial writ will depend on actual use of their
and acceptance of the second application filed by Fortune in the height trademarks in the Philippines in line with the Trademark Law. Such a
of their dispute in the main case were evidently made subject to the foreign corporation may have the personality to sue but it may
outcome of the main case herein. The CA believed that Philip not necessarily be entitled to protection due to absence of
Morris has shown a prima facie case for the issuance of the writ. actual use of the emblem in the local market.
A motion to dissolve the disputed writ of preliminary To be entitled to injunctive writ, petitioner must show that there exists
injunction with offer to post a counterbond was submitted and a certain right to be protected and that the facts against which
was favorably acted upon by the Court of Appeals premised on the injunction is directed are violative of said right. Even if PM are
filing of a sufficient counterbond to answer for whatever prejudice to holders of certificates of registration in the Philippines of
Philip Morris (PM). In turn, PM filed their own motion for re- their symbols, the fact of exclusive ownership cannot be
examination gared towards the reimposition of the writ of preliminary made to rest solely on these documents since dominion over
injunction. trademarks is not acquired by the mere fact of registration
alone and does not perfect a trademark right. What we are
Issue: simply conveying is another basic tenet in remedial law that before
 Whether or not in order to suffer irreparable injury due to the lifting of injunctive relief may properly issue, complainant's right or title must
the injunction, petitioners should be using actually their registered be undisputed and demonstrated on the strength of one's own title to
trademarks in commerce in the Philippines. such a degree as to unquestionably exclude dark clouds of doubt,
rather than on the weakness of the adversary's evidence, inasmuch as
Ratio: the possibility of irreparable damage, without prior proof of
 Indeed it has been settles in jurisprudence that a foreign corporation is transgression of an actual existing right, is no ground for injunction
allowed for bring an action in Philippine courts for infringement of a being mere damnum absque injuria.
mark or tradename for unfair competition or false designation of
origin and false description whether or not it has been licensed to do In view of the explicit representation of petitioners in the complaint
business in the Philippines. It is further qualified in another case that a that they are not engaged in business in the Philippines, it inevitably
foreign corporation not doing business in the Philippines may have a follows that no conceivable damage can be suffered by them not to
right to sue before Philippine Courts but existing adjective axioms mention the foremost consideration heretofore discussed on the
require that qualifying circumstances necessary for the absence of their right to be protected.
assertion of such right should first be affirmatively pleaded.
It is not sufficient for a foreign corporation suing under sia Separate Opinion (Feliciano, J):
dlaw to imply allege its alien origin. It must additionally  It is important to stress the legal effects of registration of a
allege its personality to sue. Thus, foreign corporations not trademark. A certificate of registration of a mark or a tradename
engaged in business in the Philippines may maintain a cause shall be prima facie evidence of the validity of the
of action for infringement primarily because of Section 21-A registration, the registrant’s ownership of the mark or tradename
of the Trademark Law when legal standing to sue is alleged, and of the exclusive right to use the same in connection with the goods,
which PM has done. business or services specified in the certificate.

3A | Batch 2014 | 57
of a member country of the Paris Union is entitled to bring in
Effects of registration in the Principal Register and Supplemental Philippine courts an action for infringement of trademarks,
Register: or for unfair competition, without necessity of obtaining
registration or a license to do business in the Philippines. In
Principal Register Supplemental Register this case, it was held that actual use was necessary.
Gives rise to presumption of the No such presumption in the
validity of the registration, the supplemental register It should be noted that out of PM’s 3 marks, 2 of them – MARK and
registration’s ownership of the LARK – were registered in the Philippines on the basis of actual use in
mark and his right to exclusive the Philippines. The very fact that the PPO issued certificates
use thereof necessarily gave rise to the presumption that such pre-registration use
Limited to the actual owner of the Not subject to opposition had in fact been shown to the satisfaction of PPO. The third mark,
trademark and proceedings although it may be cancelled after MARK VII was registered on the basis of Section 37 (on the basis of
therein pass on the issue of its issuance registration in the country of origin and under the Paris Convention).
ownership, which may be In such registration, actual use need not be shown.
contested through opposition or
interference proceedings or after That petitioners are not doing business and are not licensed to do
registration, in a petition for business in the Philippines, does not by any means mean either that
cancellation petitioners have not complied with the requirements of Section 12 of
Constructive notice of the claims Merely proof of actual use of the R.A. No. 166 relating to affidavits of continued use, or that petitioners'
of ownership trademark and notice that the trademarks are not in fact used in trade and commerce in the
registrant has used or Philippines. In the Converse case, as earlier noted, the Court held
appropriated it that the circumstance that the foreign owner of a Philippine trademark
Basis for action for infringement Not a basis for action for is not licensed to do business and is not doing business in the
infringement Philippines, does not mean that petitioner's goods (that is, goods
Publication of application is Not necessary bearing petitioner's trademark) are not sold in the Philippines. For
necessary cigarettes bearing petitioners' trademarks may in fact be imported into
Proof of registration therein may No such thing for supplemental and be available for sale in the Philippines through the acts of
be filed with the BoC to exclude register importers or distributors.
foreign goods bearing infringing
marks Modern authorities on trademark law view trademarks as symbols
which perform three (3) distinct functions: first, they indicate origin or
While taken with the companion presumption of a regularity of ownership of the articles to which they are attached; second, they
performance of official duty, it will be seen that issuance of the guarantee that those articles come up to a certain standard of quality;
certificate also gives rise to the presumption that all third, they advertise the articles they symbolize. A registered
requirements of Philippine law necessary for a valid trademark has value in itself apart from the trade physically
registration were complied with and satisfied. accompanying its use. That PM did not try to put a peso
figure on their claimed damage arising from the erosion and
Feliciano, herein, is of the position that there is a prima facie case for possible eventual destruction of the symbolic value of their
holding that the mark of Fortune infringes upon PM’s registered trademark, such damage, while not necessarily easily
trademarks. quantifiable is nonetheless real and effective.
Furthermore, the net effect of the statutory and treaty

provisions applicable in this case is that a corporate national

3A | Batch 2014 | 58
Samson v. Daway
Facts: In fact, to implement and ensure the speedy disposition of cases
 2 informations for unfair competition were filed against Manolo involving violations of intellectual property rights under R.A. No.
Samson (Samson), the registered owner of ITTI shoes. It is alleged that 8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002
Samson unlawfully sold and offered for sale CATERPILLAR products designating certain Regional Trial Courts as Intellectual Property
such as footwear, garments, clothing, bags, accessories and Courts. On June 17, 2003, the Court further issued a Resolution
paraphernalia which are closely identical and/or colorable imitations consolidating jurisdiction to hear and decide Intellectual Property
of the authentic CATERPILLAR products. Code and Securities and Exchange Commission cases in specific
Regional Trial Courts designated as Special Commercial Courts.
Samson filed a motion to suspend in view of an alleged prejudicial
question involved in another civil case for unfair competition pending There is no prejudicial question in this case. There is no
with the same branch and also in view of the pendency of a petition for prejudicial question if the civil and criminal action can proceed
review with the Secretary of Justice assailing the findings of the independently of each other (e.g. Articles 32, 33, 34 and 2176 of the
prosecutor finding probable cause. Civil Code). The case at bar falls (infringement and unfair competition)
under Article 33 of the Civil Code which covers cases of fraud. Hence,
Subsequently, he filed a motion to quash the informations and for it is entirely separate from the criminal action. As such, it will not
reconsideration of the order denying the motion to suspend, this time operate as a prejudicial question.
challenging the jurisdiction of the trial court over the offense
charged. It is contended that since Section 170 of the IP Code Levi Strauss v. Vogue Traders
imposes imprisonment for unfair competition of not more than 6 years Facts:
the offense is cognizable by the MTC and not by the RTC. These were  Per Trademark, Technical Data and Technical Assistance Agreement
all denied. (TTTA) Levi Strauss was granted a non-exclusive license to use Levi’s
trademark design and name in the sale of its clothing and other goods.
Issue: The licensing agreement was renewed several times, the recent one
 Whether or not the court has jurisdiction over criminal and civil cases being under a certificate of registration issued by the BPTTT. It
for violation of IP rights. discovered the existence of some trademarks belonging to Vogue
which, in its view, were confusingly similar to its trademarks. Thus, it
Ratio: instituted 2 cases before the BPTTT for the cancellation of
 Section 163 of the Code states that actions shall be brought before the the latter’s trademark. Likewise, it applied for the issuance of a
proper courts with appropriate jurisdiction under existing laws. The search warrant on the premises of Vogue owned by one Tony
existing law referred to is Section 27 of RA 166 which provides that Lim with the RTC. The Trial Court issued the search warrant and the
jurisdiction over cases for infringement of registered marks, goods of Vogue were seized.
unfair competition, false designation of origin and false
description or representation is lodged with the CFI (now  Consequently, Vogue filed a complaint with the RTC against Levi’s
RTC). which alleged there was no deceptive resemblances with the
trademarks of Levis and the seizure of the goods (unlawfully) should
In the case at bar, the IP Code (RA 8293) and RA 166 are special laws entitle him to damages. In its answer, Levis claims that Vogue’s
conferring jurisdiction over violations of intellectual property rights to Live’s brand infringed upon its licensed brand name LEVI’s
the Regional Trial Court. They are to prevail over RA 7691 which is a It sought to cancel the registration of the former and to enjoin the
general law. Hence, jurisdiction over the instant criminal case for former from further selling goods using such brand name.
unfair competition is properly lodged with the Regional Trial Court
even if the penalty therefor is imprisonment of less than 6 years, or RTC issued an order finding that the respondent intended to
from 2 to 5 years and a fine ranging from P50,000.00 to P200,000.00. appropriate and imitate the genuine appearance of authentic LEVI’s

3A | Batch 2014 | 59
jeans and pass off its LIVE’s jeans as genuine LEVI’s jeans. Vogue before the BPTTT for the cancellation of the latter’s trademark
opposed and stated that the LEVI’s backpocket design is not registrations, namely, "LIVE’S" and "LIVE’S Label Mark," does not
copyrightable and is neither an original work nor a novel design. preclude petitioner’s right (as a defendant) to include in its answer (to
Ultimately, the court issued a preliminary injunction retraining Vogue respondent’s complaint for damages in Civil Case No. No. 96-76944) a
from using the marks. counterclaim for infringement with a prayer for the issuance of a writ
of preliminary injunction.
 CA rendered a decision in favor of the respondent, enjoining the trial
court form further proceeding with the case.
Issue:
 Whether or not the doctrine of primary jurisdiction operates to
suspend any and all proceedings in a civil case. Coffee Partners Inc. v. San Francisco Coffee & Roastery, Inc.
Doctrine: A trade name need not be registered with the Intellectual Property
Ratio: Office (IPO) before an infringement suit may be filed by its owner against the
 While an application for the administrative cancellation of a registered owner of an infringing trademark. All that is required is that the trade name
trademark on any of the grounds enumerated under Section 17 of RA is previously used in trade of commerce in the Philippines.
166, an action for infringement or unfair competition, as well as the
remedy of injunction and relief for damages is explicitly and Facts:
unquestionable within the competence and jurisdiction of ordinary  Petitioner is a local corporation engaged in the business of
courts. An application with the BPTTT for an administrative establishing and maintaining coffee shops around the country. It
cancellation of a registered trademark cannot per se have the effect of is registered with the SEC as Coffee Partners Ltd. for a non-
restraining or preventing the courts form exercising their jurisdiction. exclusive right to operate coffee shops in the Philippines
using trademarks, including SAN FRANCISCO COFFEE.
Notwithstanding the foregoing provisions, the court or the Respondent, on the other hand, registered the business name
administrative agency vested with jurisdiction to hear and adjudicate SAN FRANCISCO COFFEE & ROASTERY with the
any action to enforce the rights to a registered mark shall likewise Department of Trade and Industry which has a customer
exercise jurisdiction to determine whether the registration of said base including Figaro Company, Tagaytay Highlands, Fat Willy’s,
mark may be cancelled in accordance with this Act. The filing of a suit among others.
to enforce the registered mark with the proper court or agency shall
exclude any other court or agency from assuming jurisdiction over a Respondents later formed a joint venture company with
subsequently filed petition to cancel the same mark. On the other Boyd Coffee USA under the mother company name Boyd Coffee
hand, the earlier filing of petition to cancel the mark with Philippines (BCPPI), primarily engaged in processing, roasting
the Bureau of Legal Affairs {formerly BPTTT] shall not and wholesale selling of coffee. The respondent later
constitute a prejudicial question that must be resolved discovered that petitioner was about to open a coffee
before an action to enforce the rights to same registered shop under the name SAN FRANCISCO COFFEE, and
mark may be decided. according to the respondent, the shop caused confusion in
the minds of the public as it a similar name and it also
It bears stressing that an action for infringement or unfair engaged in the business of selling coffee. Respondent sent a
competition, including the available remedies of injunction and letter to the petitioner to stop using the name, as well as to the
damages, in the regular courts can proceed independently or Bureau of Legal Affairs of the IPO (BLA-IPO) for infringement,
simultaneously with an action for the administrative cancellation of a unfair competition and claims for damages.
registered trademark in the BPTTT. As applied to the present case,
petitioner’s prior filing of two inter partes cases against the respondent

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Arguments: the basic demands of fair play. A corporation has an exclusive right
 Petitioner contends that: to the use of its name. The right proceeds from the theory that it is
a fraud on the corporation which has acquired a right to that
1. When a tradename is not registered, a suit for infringement is name and perhaps carried on its business thereunder, that another
not available; should attempt to use the same name or the same name with a
2. Respondent already abandoned its tradename (it already slight variation in such a way as to induce persons to deal with it in
expired and it was only in 2001 that petitioner opened a coffee the belief that they are dealing with the corporation which has
shop in Libis). Fialure to continue the use of the tradename to given a reputation to the name.
designate its goods negates any allegation of intrngement.
3. No confusion is likely to occur between its trademark. Societes Des Produits Nestlé, S.A. v. Court of Appeals
Doctrine: A trademark has been generally defined as “any word, name,
 On the other hand respondent maintains that: symbol or device adopted and used by a manufacturer or merchant to
identify his goods and distinguish them from those manufactured and sold by
1. The law protects tradenames from infringement even if others.
they are not registered with IPO. All that is required is for
the tradename to be previously used in trade or commerce Facts:
in the Philippines.  CFC Corporation filed with the Bureau of Patents, Trademarks and
2. It likewise states that it never abandoned the use of its Technology Transfer (BPTTT) an application for the registration of
tradename. the trademark FLAVOR MASTER for instant coffee. This was
3. The mark is confusingly similar to the its tradename. granted and subsequently published in the Official Gazette of the
BPTTT.
Issue:
 Whether the petitioner’s use of the trademark constitutes an Petitioner filed a notice of opposition claiming that the respondent’s
infringement of respondent’s trade name even if it is not registered trademark is confusingly similar to its trademarks for coffee
with the IPO. and coffee extracts, namely MASTER ROAST and MASTER
BLEND; alleging that its registration is likely to cause confusion in
Held: the trade as well as deceive purchasers as the dominant word
 In affirming the decision of the appellate court, the Supreme Court present in the trademarks of Nestlé is MASTER.
held that a trade name need not be registered with the IPO
before an infringement suit may be filed by its owner Naturally, CFC argued otherwise, i.e., there is no confusion between the
against the owner of an infringing trademark. All that is companies’ trademarks, the word MATER cannot be exclusively
required is that the trade name is previously used in trade of appropriated by any person for being a descriptive or generic
commerce in the Philippines. name, and the trademarks are very different from one another.
Applying either dominancy or holistic tests will yield to the BPTTT denied the respondent’s registration but the appellate court
conclusion that the trademark SAN FRANCISCO COFFEE is assailed such decision, holding that the physical discrepancies
a clear infringement of the respondent’s SAN between appellant and appellee’s respective logos are so
FRANCISCO COFFEE & ROASTERY, INC., with the ostensible that the casual purchaser cannot likely mistake one
descriptive words SAN FRANCISCO being the dominant for the other.
features of the latter’s trade name.
Issue:
Petitioner should not be allowed to earn profit by the name and  Whether there trademark FLAVOR MASTER is a colorable trademarks
reputation so far build by the respondent without running afoul of of MASTER ROAST and MASTER BLEND.

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Held: Smith v. Chanel, Inc.

 Colorable imitation denotes such a close or ingenious Facts:
imitation as to be calculated to deceive an ordinary  Smith advertises a fragrance called “Ta’Ron’s Second Chance” as a
purchaser giving such attention as a purchaser usually gives, as to duplicate of appellee’s “Chanel No. 5” at a fraction of the latter’s
cause him to purchase the one supposing it to be the other. price. That being so, Chanel was granted a preliminary injunction
prohibiting any reference to Chanel No. 5 in the promotion or sale of
As no set of rules can be deduced in cases of infringement or the product. This appeal followed.
trademark, the Court ruled that the likelihood of confusion is a relative
concept; thus, each case must be decided on their merits. The action herein rests upon a singe advertisement
published in “Specialty Salesmen” which offered the “Ta’Ron
A manufacturer’s trademark should be entitled to Line of Perfumes” for sale. It stated that the perfume duplicates 100%
protection. And in order to do so, jurisprudence has developed two perfect the exact scent of the world’s finest and most expensive
kinds of tests: perfumes and colognes at prices that will zoom sales to volumes you
have never before experienced. In the said advertisement, Chanel was
1. Dominancy Test – Focuses on the similarity of the one of the scents mentioned that it copied.
prevalent features of the competing trademarks which
might cause confusion or deception and thus constitute Chanel, in this case, raises the principal question of whether
infringement. one who has copied an unpatented product sold under a
2. Holistic Test – Mandates that the entirety of the marks in question trademark may use the trademark in his advertising to
must be considered in determining confusing similarity. identify the product he has copied.
In finding for the petitioner, the dominancy test should be the one Issue:
applied in this case (in lieu of CA agreeing with the application of the  Whether or not the use of the Chanel mark in the advertisement herein
holistic test), because should ordinary purchases be violates the Lanham Act.
“undiscerningly rash” in buying such common and  Whether or not it violates the common law of unfair competition.
inexpensive household products as instant coffee, then they
will be less inclined to closely examine specific details of Ratio:
similarities and dissimilarities.  No. It may not be enjoined either under the Lanham Act or
the common law of unfair competition so long as it does not
In rejecting the application of the totality test, the Court also held that contain misrepresentations or create a reasonable
it is contrary to elementary postulate of law on trademarks and unfair likelihood that the purchasers will be confused as to the
competition that confusingly similar is to be determined on the basis source, identity or sponsorship of the product.
of visual, aural, connotative comparisons which only rely on the visual
comparison between two trademarks. In any proceeding under the Lanham Act, the gist is a “false
description or representation or a use of the mark which is likely to
With regard to the word MASTER, it is neither a generic nor cause confusion or mistake to deceive purchasers as to the source of
descriptive term, as it can be validated as a trademark and origin of such goods or services” The act does not prohibit a
may be legally protected. As in this case, Nestlé’s use of the word commercial rival’s truthfully denominating his goods as a
MASTER is a suggestive term brought about by their copy of a design in the public domain, though he uses the
advertising scheme, subtly connoting something about the name of the designer to do so. Indeed it is difficult to see any
product, are eligible for protection in the absence of other means that might be employed to inform the consuming public
secondary meaning. of the true origin of the design.

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2. Even in the absence of confusion as to source, use of
 There is no violation of the common law on unfair the mark creates a serious threat to the uniqueness
competition. Unfair competition must be grounded in either and distinctiveness of the mark and if continued
deception or appropriation of the exclusive property of the would create a risk of making a generic or descriptive
plaintiff. In this case, it is conceded that the “pirating” of the design term of the words.
is lawful and proper. The only property alleged to be invaded here is
the goodwill embodied in the trademark but the right of the However, this has little weight in the case at bar since the
plaintiff in the mark is limited to dilution which is brought mark is not being used as a generic term. It is used to
about by confusion as to source or affiliation. describe the product not to identify their own. They do
not label their product with that mark.
The use of another’s mark to identify the trademark owner’s product in
comparative advertising is not prohibited by either statutory or Thus, absent any misrepresentation or confusion as to source of
common law, absent misrepresentation regarding the products or sponsorship, a seller in promoting his own goods may use the mark
confusion as to the source. The only legal relevance of a trademark is of another to identify the latter’s goods.
to impart information as to the source or sponsorship of the product
for reasons grounded in the public policy favoring a free, competitive Boston Athletic v. Sullivan
economy. Facts:
 Boston Athletic Association (BAA) is a charitable organization whose
Here, since Chanel’s perfume was unpatented, Smith had the right top principal activity has been conducting the Boston Marathon since it
copy it. There was a strong public interest in their doing so for was first run in 1987. At the exposition, various businesses set up
imitstion is the life blood of competition. But this public benefit could booths and sell shirts, running apparel and sports items.
be lost if Smith could not tell potential purchasers that the products
was the equivalent of Chanel’s. His chief weapon is his ability to On the other hand, Sullivan herein retails apparel under the name
represent his product as being equivalent and cheaper. Good Life at a store in Hopkinton which imprints and distributes
merchandise including shirts to the trade.
2 principal arguments are made for protection of trademark
values other than source identification: In 1986, to defray costs, BAA entered into a licensing agreement with
Image Impact (Image) for the use of BAA’s marks on wearing apparel
1. Creation of the other values inherent in the trademark require including shirts. Thus, any unauthorized use on the merchandise of the
expenditure of great effort skill and ability and that the name “BOSTON MARATHON” or a similar name or a colorable
competitor should not be permitted to take a free ride imitation thereof would violate the exclusive rights of BAA and its
on the trademark owner’s widespread goodwill and licensee.
reputation.
 In 1986 and early 1987, Beau Tease and Sullivan sold in the Boston
A large sum of money expenditure does not create area shirts imprinted with “Hopkinton-Boston” (I’m not sure if this
legally protectable rights. They are not entitled to was what was printed, couldn’t find a picture online eh).
monopolize the desire for the unpatented product. By taking
his “free ride” the copyist albeit unintentionally, serves an For this reason, BAA brought a suit praying for preliminary injunction
important public interest by offering comparable goods at which eventually reached the federal court. In their complaint, BAA
lower prices. On the other hand, the trademark owner perhaps and Image alleged that the shirts with logos described above
equally without design, sacrifices public to personal interests infringed on BAA”s marks and claims confusion under the
by seeking immunity from the rigors of competition. Lanham Act and dilution. However, the court did not enjoin
Sullivan in any way but it preliminarily enjoined Beau Tease from

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selling shirts directly at the exposition or marketing to anyone who it 5. Classes of prospective purchasers
knew would sell Beau Tease’s 1987 shirts at the exposition. 6. Evidence of actual confusion
7. Intent in adopting the mark
When it came back to the district court, the plaintiffs moved to amend 8. Strength of the mark
their complaint by including the 1988 shirts and a design “BOSTON
19xx.” However, the court again dismissed the case and stated that the Similarity of o Look at the total effect of the designation and
public would not infer that the logos were sponsored by the Marks not at the individual features.
BAA. There was no confusion between the shirts. o The defendants herein introduced no evidence
 It is the position of Sullivan that BAA is not entitled to protection for showing that they took steps to turn their
the reason that “BOSTON MARATHON” has become a generic terms similar products into dissimilar ones by clearly
and is now refers to both the races and the services rendered by BAA distinguishing their products and their lack of
and that the use of the shirts by Sullivan since 1987 constitutes prior BAA sponsorship.
usage. o It was held here that the two marks are more
than similar, it is identical.
Issue: Similarity of o Same goods: shirts and other wearing
 Whether or not the mark has become generic. the Goods apparel.
 Whether or not Sullivan has prior usage right. Channels of o Sold primarily in the Boston-area retail shops,
 Whether or not there is a likelihood of confusion. trade, at the exposition and along the race courses.
advertising, o Seasonal (during race dates)
Ratio: classes of o They display it in store windows, and in booths
 No. The burden of proof is on the party seeking to have a purchasers at the exposition.
registered mark declared a generic mark to show that it has (treated o The virtual identity between the parties' sales
become so. Here, the defendants failed to meet the burden of proof. simultaneously) outlets and advertising methods, as well as the
purchasing public's lack of opportunity to
 No. The race herin was originally called the Boston AA Marathon. exercise discrimination in making such
Since 1917 the race has been called so. This use clearly undercuts the purchases, all point toward a likelihood of
prior use claims of Sullivan as to the words per se. As for the use of the confusion.
words on the apparel, BAA is entitled to enjoin the use of its marks on Evidence on o it is the general public that is the market for
such items. actual the shirts.
confusion o Plaintiffs here submit evidence that the public
 Here, the likelihood of confusion is to be seen at what is called a was continually exposed to the fact of BAA’s
“promotional goods issue” where the likelihood of confusion inquiry sponsorship of the Boston Marathon. On the
will focus on whether the purchasing public is likely to believe that the other hand, there is no evidence presented by
sponsor of the Boston Marathon produces licenses, or otherwise the defendants as to contradict these
endorses defendant’s shirts. assertions.
o People were actually confused as to who
There are 8 factors to be weight in assessing likelihood of sponsored the shirts as evidenced by testimony
confusion: of the member of the public.
Intent o The defendants chose designs that obviously
1. Similarity of the marks referred to the Marathon, put those designs on
2. Similarity of the goods the same types of clothing sold by the
3. Relationship between channels of trade plaintiffs, sold those shirts at the same time
4. Relationship between the parties’ advertising and in the same manner as the plaintiffs to the

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same general purchasing public. Defendants' incontestable status of the mark for having been in
actions clearly show their intent to trade on continuous use for 5 consecutive years and no final adverse
BAA's sponsorship and management of the decision to petitioner’s claim of ownership or right to
Boston Marathon. registration were pending.
Strength of o The Boston Marathon is one of the oldest and
the mark most prestigious marathons in this country. On the other hand, respondent Dollar Park and Fly (Dollar) also
BAA, as a charitable organization, does not provides for long term parking services in Portland Oregon. For this
have the same impetus to advertise that a for- reason, PNF filed an action for infringement in 1978 and requested the
profit company would have. Nonetheless, its court to permanently enjoin the respondent from using the words Park
broad media exposure serves a similar N Fly in connection with its business. Countering, repsondents claim
purpose; it makes known to the public the that the mark is a generic term.
BAA's sponsorship of the Boston Marathon.
o Broad protection of the mark is warranted.  After trial, the District Court (DC) found that the mark is not generic
and observed that an incontestable mark cannot be challenged
In order to establish an infringement in a promotional goods on the ground that it is merely descriptive. Thus, DC enjoined
case, the plaintiff has the burden of showing that prospective the Dollar from using the Park and Fly phrase or any mark similar to
purchasers are in fact likely to be confused or misled into Park N Fly.
thinking that the defendant’s product was produced,
licensed or otherwise sponsored by the plaintiff. There can be CA reversed the decision and held that although incontestability
no doubt that the language and design on defendant's shirts provides a defense against the cancellation of a mark, it may not be
intentionally calls attention to an event that has long been sponsored used offensively to enjoin another’s use. Thus, respondent could
and supported by the BAA--an event that is, in fact, the subject of its defend the infringement action by showing that the mark was merely
registered mark. Defendants' shirts are clearly designed to take descriptive. Based on its own examination of the record, the Court of
advantage of the Boston Marathon and to benefit from the good will Appeals then determined that petitioner's mark is in fact merely
associated with its promotion by plaintiffs. Defendants thus obtain a descriptive, and therefore respondent should not be enjoined from
"free ride" at plaintiffs' expense. using the name "Park and Fly.
Given the undisputed facts in this case that: Issue:

 Whether or not the mark is merely descriptive.
1. Defendants intentionally referred to Boston Marathon on its
shirts Ratio:
2. Purchasers were likely to buy the shirts precisely because of  No. The mark is already considered as incontestable hence,
that reference its descriptiveness cannot be questioned. A defendant faced
with an incontestable mark cannot defend by claiming that
It is fair to presume that there is a likelihood of confusion as the mark is invalid because it is descriptive. There is nothing in
to the shirt’s source. the law which distinguishes between a registrant’s offensive and
defensive use of an incontestable mark. On the contrary, the
Park N’ Fly v. Dollar Park and Fly Inc. declaration of the law that the registrant has an exclusive right to
Facts: use the mark indicates that incontestable status may be used
 Park N Fly (PNF) operates long term parking lots near airports in to enjoin infringement by others. The language of the Lanham
Boston, Houston, Cleveland, Memphis and San Francisco. It was Act also refutes any conclusion that an incontestable mark may be
issued a registration in 1971 for its mark and 6 years later, it filed challenged as merely descriptive. A mark that is merely descriptive of
an affidavit with the Patent Office to establish the an applicant's goods or services is not registrable unless the mark has

3A | Batch 2014 | 65
secondary meaning. Before a mark achieves incontestable status, any person who believes that he is or will be damaged by registration
registration provides prima facie evidence of the registrant's exclusive may seek to cancel a mark. A mark may be canceled at any time for
right to use the mark in commerce. certain specified grounds, including that it was obtained fraudulently
or has become generic.
The Lanham Act expressly provides that before a mark becomes
incontestable an opposing party may prove any legal or equitable The court concluded that the holder of a registered mark
defense which might have been asserted if the mark had not been may rely on incontestability to enjoin infringement and that
registered. Ibid. Thus, §33(a) would have allowed respondent to such an action may not be defended on the grounds that the
challenge petitioner's mark as merely descriptive if the mark had not mark is merely descriptive.
become incontestable. With respect to incontestable marks, however,
§33(b) provides that registration is conclusive evidence of the Levi Strauss v. Clinton Apparelle
registrant's exclusive right to use the mark, subject to the conditions of Facts:
§ 15 and the seven defenses enumerated in §33(b) itself. Mere  A complaint for trademark infringement was instituted by Levi Strauss
descriptiveness is not recognized by either §15 or §33(b) as a basis for against Clinton together with Olympian Garments before the RTC
challenging an incontestable mark. which alleged that the latter’s jeans under the brand name “Paddocks”
uses a device which is substantially, if not exactly similar to the
Indeed, a conclusion that incontestable status can provide for Dockers and Design trademark owned and registered in the
the basis for enforcement of the registrant’s exclusive right name of Levi without its consent.
to use a trade or service mark promotes the goals of the
statute. It provides national protection of trademarks in order to The trial court issued an order granting the TRO applied for.
secure the owner of the mark of the goodwill of his business and to Subsequently, it issued another order granting the writ of preliminary
protect the ability of consumers to distinguish between producers. The injunction on the ground that the marks “DOCKERS AND DESIGN”
incontestability provisions, as the proponents of the Lanham and “PADDOCKS” are confusingly similar.
Act emphasized, provide a means for the registrant to quiet
title in the ownership of his mark. Congress expressly provided in With the denial of their MR, petitioners are not before this court
§§ 33(b) and 15 that an incontestable mark could be challenged on seeking a review of the CA’s decision in disregarding the confusing
specified grounds, and the grounds identified by Congress do not similarity between the marks and for concluding that the erosion of the
include mere descriptiveness. marks is not protectable by injunction.
Issue:
The Lanham Act allows a mark to be challenged at any time if it  Whether or not the marks are confusingly similar.
becomes generic, and, under certain circumstances, permits the non-  Whether or not there is dilution.
trademark use of descriptive terms contained in an incontestable
mark. Ratio:
 No. The registered mark of the petitioners in this case consists of 2
More generally, respondent is simply wrong to suggest that third elements:
parties do not have an opportunity to challenge applications for
trademark registration. If the Patent Office examiner determines that 1. The “DOCKERS”; and
an applicant appears to be entitled to registration, the mark is 2. The winges dhaped design or logo.
published in the Official Gazette Within 30 days of publication, any
person who believes that he would be damaged by registration of the Notably however, there is one registration for both the features of the
mark may file an opposition. Registration of a mark provides mark giving the impression that the 2 should be considered as a single
constructive notice throughout the United States of the unit.
registrant's claim to ownership. Within five years of registration,

3A | Batch 2014 | 66
On the other hand, Clinton’s mark uses “PADDOCKS” on top of a logo
which according to petitioners is a slavish imitation of the “DOCKERS” For there to be dilution, there must be a finding that:
design. Bit could thus be said that respondent only appropriates
petitioner’s logo and not the work mark “DOCKERS”; it uses only a 1. The trademark sought to be protected is a famous mark
portion of the registered trademark and not the whole. 2. The use of the mark began after the famous mark became
famous
Given the single registration of the trademark “Dockers and Design” 3. Such subsequent use defames the famous mark.
and considering that respondent only uses the assailed device but a
different word mark, the right to prevent the latter from using the In the case at bar, petitioners have yet to establish whether
challenged “Paddocks” device is far from clear. Stated otherwise, it is “Dockers and Design” has acquired a strong degree of
not evident whether the single registration of the trademark “Dockers distinctiveness and whether the other two elements are
and Design” confers on the owner the right to prevent the use of a present for their cause to fall within the ambit of the invoked
fraction thereof in the course of trade. It is also unclear whether the protection.
use without the owner’s consent of a portion of a trademark registered
in its entirety constitutes material or substantial invasion of the International Use Service v. Associated Press
owner’s right. Facts:
 Two competing US news services herein were in the business of
It is likewise not settled whether the wing-shaped logo, as opposed to reporting in the US the news on the WW. Their businesses hinged on
the word mark, is the dominant or central feature of petitioners’ getting fact and accurate reports published. Complainant in its bill,
trademark—the feature that prevails or is retained in the minds of the defendant in its answer, have set forth in almost identical terms the
public—an imitation of which creates the likelihood of deceiving the rather obvious circumstances and conditions under which their
public and constitutes trademark infringement. business is conducted. The value of the service, and of the news
furnished, depends upon the promptness of transmission, as well as
From the abovementioned, the right of Levi Strauss to upon the accuracy and impartiality of the news, it being essential that
injunctive relief has not been clearly and unmistakably the news be transmitted to members or subscribers as early or earlier
demonstrated. The right has yet to be determined. Likewise there is than similar information can be furnished to competing newspapers by
no proof that there is material and substantial invasion of their right to other news services, and that the news furnished by each agency shall
warrant the issuance of the writ. Nether were there any showings not be furnished to newspapers which do not contribute to the expense
of urgent and permanent necessity for the writ to prevent of gathering it.
serious damage.
A bill was filed by the complainant Associated Press herein to retrain
 There is no dilution. Trademark dilution is the lessening of the the pirating of its news yb defendant in 3 ways:
capacity of a famous mark to identify the distinguished
goods or services regardless of the presence or absence of: 1. by bribing employees of newspapers published by
complainant’s members to furnish Associated Press news to
1. Competition between the owner and the other parties defendant before publication;
2. Likelihood of confusion, mistake or deception 2. by inducing Associated Press member to violate its bylaws and
permit defendant to obtain news before publication
Subject to the principles of equity, the owner of a famous mark is 3. by copying news from bulletin boards and from early editions
entitled to an injunction “against another person’s commercial use in of complainant’s newspapers and selling this, either bodily or
commerce of a mark or trade name, if such use begins after the mark after rewriting it, to defendant’s customers.
has become famous and causes dilution of the distinctive quality of the
mark.

3A | Batch 2014 | 67
In its decision, the DC ruled that the practice amounted to also, as is evident, the news has an exchange value to one
unfair trade. Both parties appealed to the Circuit Court of Appeals who can misappropriate it.
which sustained the injunction.
The judge in this case approached the issue from the perspective of
Issue: unfair competition and found that there is a quasi-property
 Whether or not the defendant may be lawfully restrained from right in the news as it is “stock in trade to be gathered at the
appropriating news taken from bulletins issued by complainant or any cost of the enterprise, organization, skill, labor and money
of its members, or from newspapers published by them, for the to be distributed and sold to those who will pay money for
purpose of selling it to defendant’s clients. it.” Given that the news in this case has economic value, a company
can have limited proprietary interest in it against a
Ratio: competitor who would attempt to take advantage of thei
 Generally, no since news is considered as publicijuris. The information.
information found in the AP news was not copyrightable as
the information is not the creation of a writer but is a report Stripped of all disguises, the process amounts to an
of matters that is the history of the day. It is publici juris. But in unauthorized interference with the normal operation of
this case, the right to restrain is present to the extent necessary to complainant's legitimate business precisely at the point
prevent the competitor from reaping the benefits of the complainants where the profit is to be reaped, in order to divert a material
efforts and expenditures. portion of the profit from those who have earned it to those who have
not, with special advantage to defendant in the competition because of
The peculiar value of news is in the spreading of it while it is fresh, and the fact that it is not burdened with any part of the expense of
it is evident that a valuable property interest in the news, as news, gathering the news. The transaction speaks for itself, and a court of
cannot be maintained by keeping it secret. Besides, except for matters equity ought not to hesitate long in characterizing it as unfair
improperly disclosed, or published in breach of trust or confidence, or competition in business. In a court of equity, where the question is one
in violation of law, none of which is involved in this branch of the case, of unfair competition, if that which complainant has acquired fairly at
the news of current events may be regarded as common property. substantial cost may be sold fairly at substantial profit, a competitor
What we are concerned with is the business of making it who is misappropriating it for the purpose of disposing of it
known to the world, in which both parties to the present suit to his own profit and to the disadvantage of complainant
are engaged. That business consists in maintaining a prompt, sure, cannot be heard to say that it is too fugitive or evanescent to
steady, and reliable service designed to place the daily events of the be regarded as property. It has all the attributes of property
world at the breakfast table of the millions at a price that, while of necessary for determining that a misappropriation of it by a
trifling moment to each reader, is sufficient in the aggregate to afford competitor is unfair competition because contrary to good
compensation for the cost of gathering and distributing it, with the conscience.
added profit so necessary as an incentive to effective action in the
commercial world. The service thus performed for newspaper In the present case, the fraud upon complainant's rights is more direct
readers is not only innocent but extremely useful in itself, and obvious. Regarding news matter as the mere material from which
and indubitably constitutes a legitimate business. Not only these two competing parties are endeavoring to make money, and
do the acquisition and transmission of news require treating it therefore as quasi-property for the purposes of their
elaborate organization and a large expenditure of money, business because they are both selling it as such, defendant's
skill, and effort; not only has it an exchange value to the conduct differs from the ordinary case of unfair competition
gatherer, dependent chiefly upon its novelty and freshness, in trade principally in this -- that, instead of selling its own
the regularity of the service, its reputed reliability and goods as those of complainant, it substitutes
thoroughness, and its adaptability to the public needs; but misappropriation in the place of misrepresentation, and
sells complainant's goods as its own.

3A | Batch 2014 | 68
Besides the misappropriation, there are elements of imitation, of false The DC held that the Sears’ lamp was a substantially exact copy of
pretense, in defendant's practices. The device of rewriting Stiffel’s and that the 2 lamps were much alike both in appearance and
complainant's news articles, frequently resorted to, carries function thus, confusion is likely and in fact, some confusion has
its own comment. The habitual failure to give credit to already occurred. On these findings, the DC held that Sears was guilty
complainant for that which is taken is significant. Indeed, the of unfair competition. CA affirmed.
entire system of appropriating complainant's news and transmitting it
as a commercial product to defendant's clients and patrons amounts Issue:
to a false representation to them and to their newspaper  Whether or not there is unfair competition.
readers that the news transmitted is the result of defendant's
own investigation in the field. But these elements, although Ratio:
accentuating the wrong, are not the essence of it. It is something more  There is no unfair competition. To promote progress of science
than the advantage of celebrity of which complainant is being and useful arts, the constitution empowered the congress to enact the
deprived. first federal patent and copyright law and ever since that time, it has
fixed the condition upon which patents and copyrights shall be
Sears Roebuck v. Stifel & Co. granted.
Facts:
 Respondent in this case, Stiffel Company secured design and The grant of a patent is a grant of statutory monopoly. These are
mechanical patents on a pole lamp: meant to encourage the inventor by rewarding him with the right to
exclude others from the use of his invention for a limited amount of
time. During that time, no one may make use, or sell the patented
product without the patentee’s authority.
While at the same time preserving free competition, obviously a state

could not extend the life of a patent beyond the expiration date or give
a patent on an article which lacked the level of intention required for
federal patents.
In the present case, the pole lamp sold by Stiffel has been
held to be not entitled to the protection of either a
mechanical or design patent. Being an unpatentable article, it is in
the public domain and may be made and sold by whoever chooses to
do so. Thus, Sears had every right to sell the same under the federal
These proved to be a decided commercial success and was patent laws. That Stiffel originated the pole lamp and made it popular
soon put on the market. However, a substantially similar identical is immaterial. Sharing in the goodwill of an article unprotected
lamp which sold more cheaply was sold by Sears subsequently. Thus, by patent or trademark is the exercise of a right possessed by
Stiffel brought this action against Sears in the US DC for claiming all -- and in the free exercise of which the consuming public
that Sears is deeply interested.
1. copied the design and infringed on the patents of The mere inability of the public to tell the two identical products apart
Stiffel; and is not enough to support an unfair competition claim. Because
2. caused confusion in the trade as to the source of the of the federal patent laws, a state may not, when the article is
lamps thereby engaging in unfair competition under unpatented and uncopyrighted prohibit the copying of the article itself
Illinois law.

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or award damages for such copying. Doubtless a State may, in they are in a box, that one would have to examine closely the reading
appropriate circumstances, require that goods, whether patented or upon the rings in order to distinguish the difference.
unpatented, be labeled, or that other precautionary steps be taken to
prevent customers from being misled as to the source, just as it may Unfair competition consists in passing off or attempting to pass off
protect businesses in the use of their trademarks, labels, or distinctive upon the public the goods or business of one person as and for the
dress in the packaging of goods so as to prevent others, by imitating goods or business of another. It consists essentially in the conduct of a
such markings, from misleading purchasers as to the source of the trade or business in such a manner that there is either an express or
goods. implied representation to that effect. It may be stated broadly that
any conduct the end and probable effect of which is to
Alhambra v. Mojica deceive the public or pass off the goods or business of one
Facts: person as and for that of another, constitutes actionable
 Alhambra has been manufacturing cigars of a certain kind and form unfair competition. It is a tort and a fraud. No one has a right to
for a long period of years and during that time has used upon said dress up his goods or otherwise represent them in such a manner as to
cigars a paper ring or band of chocolate-brown color with deceive an intending purchaser and induce him to believe he is buying
letters and lines upon it in gold (heretofore “ring”). Such ring has the goods of another. Nothing less than conduct tending to pass
become well known to the trade and was of great value in the sale of its off one man's goods or business as that of another will
cigars. However, defendant Mojica likewise commenced to use a constitute unfair competition. Actual or probable deception
band or ring very similar to that of Alhambra and it is upon and confusion on the part of customers by reason of
this use that the present action is founded. defendant's practices must always appear. No one has a right to
avail himself of another's favorable reputation in order to sell his own
As it appears on evidence, the rings of Mojica are of two different goods. A demand for goods created belongs to the advertiser and he
colors but of the same shape and with substantially the same will be protected therein against unfair competition by another who
markings and are about 1/5 inch wide and are, like seeks in any way to take advantage of such advertisements to sell his
Alhambra’s divided into 3 parts. The cigars sold by Mojica with own goods.
the band described whether of brown or green are formed almost
exactly like the cigars sold by the plaintiff and with substantially the In unfair competition, it is not necessary to show that any person has
same color and style of wrapper. been actually deceived by the defendant’s conduct and lead to
purchase his goods in the belief that they are the goods of the plaintiff.
 In light of the foregoing, Alhambra filed a case for unfair competition It is sufficient to show that such deception will be the natural
before the CFI. Said court declared that the cigars indeed constitute and probable result of the acts of the defendant. Actual or
unfair competition thereby prohibiting Mojca from using said bands or probable deception and confusion may be shown for if there is no
rings forever. probability of deception, there is no unfair competition.
Issue: Purchasers may be deceived and misled into purchasing the goods of
 Whether or not Mojica is guilty of unfair competition. one person under the belief that they are purchasing the goods of
another person whose goods they intended to buy although they do not
Ratio: know who is the actual proprietor of the genuine goods. They are so
 It is clear that, the cigars having substantially the same deceived when they have in mind to purchased goods coming from a
appearance and color, the same size, the same shape and the definite, although unknown, with which goods they are acquainted,
same style and color of band, the deception is not only although they neither know nor care who is the actual proprietor of
possible but is very probable. Taken as a whole, the cigars such goods. the ultimate purchaser is the one in view and it is
disarms and deceives the purchaser who is desirous of sufficient if he is liable to be deceived.
purchasing cigars of Alhambra. They are so similar, packed as

3A | Batch 2014 | 70
Unfair competition is always a question of fact and the ultimate chicken and that because of the limited number of adjectives
question to be determined is whether or not the name or mark used by it can use, any representation of such animal would lead to
the defendant has previously come to indicate and designate the goods such mark. Allegedly, MCC also sells its goods with the general
of the plaintiff, to state it in another way, whether defendant as a appearance of the goods of the Clarke herein in such a way that it is
matter of fact, is, by his conduct, passing of the goods of the defendant likely to influence the purchasers to believe that it is that of Clarke’s.
as plaintiff’s goods or his business as plaintiff’s business (ergo,
whether or not the public is likely to be deceived). However,  Clarke filed a case against MCC praying for the issuance of a TRO and
actual fraudulent intent is not needed where the necessary and that judgment be rendered enjoining them from using the said mark or
probable tendency of the defendant’s conduct is to deceive the public any other imitation thereof perpetually.
and pass off his goods or business as and for that of another, especially
where the only preventive relief against continuance of the wrong is In its answer however, defendant herein alleges that the exact
sought or granted. Even if resemblance is accidental and not nature of the action is impossible to define as the complaint
intentional, plaintiff is entitled to protection against its injurious of the plaintiff embraces both causes of action, although they
results to his trade. (infringement and unfair competition) are essentially
different and distinct. MCC herein alleges that the fact that Clarke
Here, as to the brown ring, there is clear unfair competition. itself is wholly unaboe to determine the nature of the case as one for
However the court held that the use of the green ring does not infringement or unfair competition demonstrates quite clearly that it is
constitute unfair competition since it is easily distinguishable form the neither.
ring used by Alhambra.
Issue:
MA Clarke v. Manila Candy Co.  Whether this is a case for infringement or unfair competition.
Facts:  Whether or not there is unfair competition.
 MA Clarke (Clarke) is a corporation engaged in the manufacture of a
large line of confectionary products and since the year 1905, Clarke Ratio:
has used its registered trademark rooster to designate his  It is a case of unfair competition. Cases may well arise wherein
various candy products and that no other manufacturer or the conduct complained of constitutes a wrong under neither theory,
dealer of candy in the Philippines has used such or wherein the complainant may be satisfied that he can establish his
representation in connection with the manufacture and sale right to relief under one or the other theory, though he is in doubt as to
of candy in any form until Manila Candy Co. (MCC). which theory will prove acceptable to the court, and in such cases the
plaintiff should not be forced to an election of either theory in the
Besides the use, display and advertising of the mark herein plaintiff introduction of evidence in support of the prayer of his complaint. He
has used the same for public festivals held in Manila as paper mache may state in his complaint as many distinct causes of action as he may
roosters of large size, carrying its candies. As such, the mark has been deem proper, the only limitation therein is if the complaint states more
known and are known to the trade in these Islands, both than one cause of action, each distinct cause of action must be set forth
wholesale and retail and to the consumers of cany as rooster in a separate paragraph containing all the facts constituting the
or Manoc brand of Clarke. particular cause of action.
 On the other hand, MCC herein, aware of the usage of the mark of The infringement of a trade-mark is, in truth, a form of
Clarke, shortly after its incorporation, began using a similar mark unfair competition. The law, however, allows relief from the
in connection with the sale of its candies. wrong done by a trade-mark infringement under
circumstances and upon proof which would not entitle the
Notwithstanding a criminal prosecution, MCC continued to use the plaintiff to relief upon the theory of unfair competition
word Manoc as a mark and alleges that it is a generic term for where it does not appear that there was a technical

3A | Batch 2014 | 71
infringement of a trade-mark. It is true that under our statute, the
grant of relief under one precludes the grant of relief under the other, Certainly, under our statute, all difficulty can and should be
but this does not mean that the plaintiff in cases of this kind avoided by limiting relief prayed for on the ground of trade-
may not allege in support if his prayer of relief facts which mark infringement to cases wherein there is an exact or at
he believes will establish his claim that there has been either least a colorable imitation of the original trade-mark, and in
an infringement or unfair competition and thus secure the other cases applying the provisions of section 7 of the statute
relief prayed for, whichever theory the court of opinion is (Act No. 666) which defines the offense of unfair
sustained by the proof adduced at the trial. competition. That section expressly provides that unfair competition
exists when one selling his goods "gives them the general appearance
of goofs of another manufacturer or dealer, either in the wrapping of
 There is unfair competition. In this case, an examination of the the packages in which they are contained, or the devices or words
exhibits presented before the courts leaves no room for doubt that the thereon, or in any other feature of their appearance, which would be
dominant and striking pictorial feature of each and all of likely to influence purchasers to believe that the goods offered are
them, is a single rooster standing in an attitude of challenge. those of a manufacturer or dealer other than the actual manufacturer
No reason has been suggested for the use of this particular design with or dealer, and who clothes the goods with such appearance for the
its predominant display of two roosters as the trade-mark of the purpose of deceiving the public and defrauding another of his
defendant corporation other than that alleged by the plaintiff; that is to legitimate trade," and it is further provided that "this section applied
say, that the new manufacturer, well knowing that the plaintiff had in cases where the deceitful appearance of the goods, misleading as to
used a rooster as his trade-mark, hoped to secure an unfair advantage origin or ownership, is effected not by means of technical trade-marks,
by misleading the public, and inducing it to believe that its candies emblems, signs, or devices, but by the general appearance of the
bearing a representation of two roosters were made in the plaintiff's package containing the goods, or by the devices or words thereon, even
factory, which had always marked its goods with one or more pictures though such packages, devices, or words are not by law capable of
of a single rooster, and at the same time had made extensive use of this appropriation as trade-marks.
design in connection with its advertising campaigns.
Under the precise terms of this statute, the use under the
Why of all the birds in the air, and all the fishes in the sea, and all the conditions therein specified of devices or words, which
animals in the face of the earth, defendants had to select 2 roosters as would be likely to cause confusion as to the origin of the
its trademark despite being aware of the fact that such animal has goods, although they may not amount to a colorable
already been used by Clarke. There is nothing in the picture of one or imitation of the form and arrangement of a trade-mark,
more roosters which in itself is descriptive of the goods sold by the constitutes the offense of unfair competition.
plaintiff or by the defendant corporation, or suggestive of the quality of
these goods. A cat, a dog, a carabao, a shark or an eagle stamped upon Dy Buncio v. Tan Tiao Bok
the container in which candies are sold would serve as well as a rooster Facts:
for purposes of identification as the product of defendant's factory.  Dy Buncio has been engaged in Manila as a merchant in importing
Why did defendant select two roosters as its trade-mark? The fact that Formosan Tea and has during that time been distributing and
defendant used two roosters, and that these rooster, unlike the rooster selling the same in the Philippine market in original packages
in plaintiff's trade-mark, are highly colored, and the further fact that containing about 5 ounces. These were enveloped in a wrapper with
the words "Manila Candy Co., Ltd." are used in connection with the following features:
defendant's trade-mark, are wholly insufficient to relieve the design
used by the defendant of the vice of an unfair and misleading use of the 1. With an image of a Chinese fruit shaped like a pear;
predominant idea set forth in plaintiff's unregistered trade-mark, in 2. With embellished border of a conventional tracery;
such manner as to be likely to cause confusion in the minds of the
ordinary purchasers as to the origin of the goods.

3A | Batch 2014 | 72
3. In the center of the main body of the design and the superior simplest human needs are marketed in conventional containers
trunk are spaces containing Chinese characters representing of the appropriate size and of a design made almost uniform
the Chinese name of the exporter in Formosa. in the case of each article by immemorial custom. No one
4. On the right side of the package indicates in English “Formosa can acquire any exclusive right in these standardized forms
Tea sold by Guan Leong Daitotei Formosa” and styles.
It may be stated herein that the other persons in the As to the marks used in the package, the general result is so different
Philippines besides Dy Buncio have in the past, and are now that the court considers it unlikely that a person whose eye is
engaged in the importation of tea from Formosa and it is accustomed to the lines of the plaintiff’s design would for a
admitted herein that source comes to this market in moment mistake the defendants mark for it. In whatever aspect
packages with the same form of wrapper. the rival marks be viewed, we are of the opinion that the resemblance
between the two designs is not sufficiently marked to afford just cause
 On the other hand, Tan Tiao Bok (Tiao Bok), a native from Formosa for complaint on the part of the plaintiff; and we do not think that the
formerly employed by Dy Bunsio began to import tea from Formosa o case is altered by the circumstance that the reading matter in both is in
n his own account with a view to selling it in the Philippines. For this, the usual red Chinese characters, while the body of both designs is in
he adopted a mark which he duly registered with the Bureau green, though of differing shades.
of Commerce and Industry. In his application he stated that his
mark contains the following characteristics: In order that there may be deception of the buying in the sense
necessary to constitute unfair competition, it is necessary to
1. Contains 2 birds placed one in front of the other with tails suppose a public ACCUSTOMED TO BUY AND THEREFOR
going up and places in such a position as to form a lyre. TO SOME EXTENT FAMILIAR WITH THE GOODS IN
2. With a flowerport with flowers in it QUESTION. The test here is to be found in the likelihood of
3. 2 chinese marks corresponding to the phrase, trademark. deception of persons in some measure acquainted with an established
4. On the right side, it was indicated that the product was design and desirous of purchasing the commodity with which that
“Formosa Tea sold by Ngo Teck Co. Daitotei Formosa”. design has been associated. The test is not found in the deception, or
possibility of the deception, of the person who knows nothing about
 Dy Buncio filed a case for unfair competition against Tiao Bok. the design which has been counterfeited, and who must be indifferent
as between that and the other. We must look at the ORDINARY
Issue: INTELLIGENT BUYER and in this case, there is no such probability
 Whether or not there is unfair competition. or likelihood of confusion.
Ratio: Ang Si Heng v. Wellington

 There is no unfair competition since objectionable Facts:
simulation is not made out. Some resemblance there undoubtedly  Wellington is engaged in the business of manufacturing shirts, pants,
is, but in the court’s opinion, it is not such as would naturally lead drawers and other articles of clothing for men and women with a
intending purchasers to believe that the goods offered are the same as trademark registration “WELLINGTON”. It does not appear however,
that sold by the plaintiffs. The only individual who would be likely to that the mark herein was renewed after 1938 nor their trade name
take notice of these resemblances, on having his attention directed to after 1946.
the packages, is the one who is unfamiliar with either.
On the other hand, Benjamin Chua herein applied for the registration
In this case, the form of package used by both parties is the same as of a business name “WELLINGTON DEPARTMENT STORE” on 1946
that adopted by all merchants in the tea industry in the country and it which was approved by the Bureau of Commerce. Likewise, it does not
is a matter of common observation that the articles supplying the appear that his application has been renewed and neither does it

3A | Batch 2014 | 73
appears that the business name WELLINGTON COMPANY has also Shell v. Insular Petroleum
been renewed. Facts:
 Shell is a corporation engaged in the sale of petroleum products
 Wellington filed a case for unfair competition alleging that the use of including lubricating oil contained in packages bearing its trademark,
the words “WELLINGTON DEPARTMENT STORE’” as a labeled or stenciled thereon. On the other hand, Insular, a limited
business name and as a corporate name by Benjamin partnership engaged in collecting used lubricant oil, refined and
deceives the public into buying Benjamin’s goods under the marketed to the public using its miscellaneous containers which,
mistaken belief that the names are the plaintff’s or have the as described, is generally those that they have on hand with marks on
similar source. them belonging to the US army or others belonging to Caltex or the
Stanvac, or Shell. However, it was stated that before filling the empty
In his defense, Benjamin states that plaintiff are engaged in different drums/containers, the marks are obliterated. In one transaction
businesses since the he is engaged in the business of selling shoes, however (with one Conrado Uichangco), the product was
hats, toys perfumes, bags, apparels and the like (different from those sold in a container bearing the mark SHELL as stenciled
of Wellington’s). without being erased.
 The lower court dismissed the complaint and held that the term For the said transaction, Shell instituted a case in the CFI alleging
Wellington is either a geographical name. Even assuming that it is a unfair competition and a criminal case under the Revised Penal
surname, it cannot also be validly registered as a tradename. Code. In the civil case, it was alleged that:
Issue: 1. In not erasing the marks, Insular intended to mislead the

 Whether or not there is unfair competition. buying public to the prejudice of Shell and the general public;
2. That it also attempted to persuade Shell dealers to purchase its
Ratio: low-grade oil and pass the same to the public as Shell oil by
 There is no unfair competition. While there is a similarity in this reason of which damages were suffered.
case, there is no confusion or deception that can arise form the
similarity because the defendant is a “department store” while the CFI rendered a decision ordering Insular to pay Shell the damages. CA
former does not purport to be so. The name used by the defendant reversed on the ground that there is no actual or probable deception
indicates not the manufactured articles or any similar and confusion caused on the part of the general public since there was
merchandise but a DEPARTMENT STORE. The department only a single transaction in this case. They did not pass off or attempt
store herein does not even sell any shirt or clothing wear. to pass off upon the public its goods as the goods of another. There is
evidence showing that the use of the defendant of the drum or
Admittedly though, it is not necessary that the articles of the paties be container with the Shell brand stenciled thereon was with the
exactly similar in order for there to be unfair competition. It is knowledge and consent of Uichangco. There is also the categorical
sufficient that the articles fall under a general category. testimony of Uichangco that defendant's agent did not make any
representation that said agent was selling any oil other than Insoil
It might be true that, inasmuch as appellees' department store deals on motor oil. The sales invoice states that Insoil Oil was sold.
shirts and other articles of wear while appellants produce the same
articles, some competition would arise between them. It is not, Issue:
however, competition that the law seeks to prevent, but unfair  Whether or not there is unfair competition.
competition, wherein a newcomer in business tries to grab or steal Ratio:
away the reputation or goodwill of the business of another.  There is no unfair competition. Not just because a manufacturer
used a container still bearing the competitor’s marking in the sale of
the product can there be a conclusion that the buying public has been

3A | Batch 2014 | 74
misled or will be misled and therefore, unfair competition is born. The  The trial court ruled that there is trademark infringement and unfair
single transaction at bar will not render the act of the competition on the ground that the choice of mark by defendant herein
defendant an unfair competition in the same way that the is not merely for sentimental reasons but was clearly to take advantage
appearance of one swallow does not make a season, of the reputation, popularity and the established goodwill of McDo.
summer.
On appeal, the CA reversed the judgment on the ground that there is
In this case, in all transactions except the present one , the marks no colorable imitation as it is not sufficient that a similarity exists in
were erased or obliterated and the drum in question did not both names but more importantly, the overall presentation or in their
even reach the buying public. Uichangco testified that Insular did essential, substantive and distinctive parts. After a comparison of the
not all make any representation that Insular was selling any oil other marks, the CA found that no confusion would take place or that the
than Insoil motor oil, a fact which finds corroboration in the receipt ordinary purchaser would be misled by it. It found that McDo’s
issued for the sale of the drum. Uichangco was apprised beforehand product is a double decker sandwich sold in a Styrofoam box with
that it would sell Insoil oil in a Shell drum. There was no evidence that McDo’s logo and trademark and to order such burger, one would need
defendant or its agent attempted to persuade Uichangco or any Shell to go into a McDo chain. To buy one, one needs to look for a
dealer, for that matter, to purchase its low-grade oil and to pass the Mcdonald’s chain and enter it before he can find a burger
same to the public as Shell oil. which carry such mark. On the other hand, BIG MAK sell their
goods through snack vans.
Assuming for purposes of argument that the presence of the low-grade
oil in the market of Insular contributed to the decrease of the sale of
Shell, such does not make Insular liable for unfair Issue:
competition. There is no prohibition for Insular to sell its goods. It  Whether or not the mark “BIC MAC” is registerable.
should not be blamed if some of the dealers buy their oil as long as  Whether or not there is unfair competition.
they do not deceive the said dealers.
Ratio:
Mcdo v. LC Big Mak  The mark herein is distinctive and is not barred from
Facts: registration contrary to the position of LC BIG MAK. The
 Mcdo is a corporation owns a global chain of fast food restaurants with mark should be treated in its entirety and not dissected.
a family of marks including “BIC MAC” for its sandwiches. On the
other hand, McGeorge Food Industries (McGeorge) is a domestic  There is unfair competition. There are 2 types of confusion that
corporation which is a franchisee of Mcdo Philippines. could arise form the use of similar or colorable imitation marks:
The defendant in this case, LC Big Mak is a domestic corporation also 1. Confusion of goods (product confusion) – where the ordinary
in the fastfood business which applied for the registration of “BIG prudent purchaser would be induced to buy the product in the
MAK”. This was opposed by Mcdo but receiving no reply therefrom, belief that he was purchasing the other.
Mcdo filed a case with the RTC for trademark infringement 2. Confusion of business (source of origin) – where the purchaser
and unfair competition. would buy the product assuming it to originate with the
plaintiff and the public would then be deceived either into that
In their answer, respondents herein claimed that McDo does not have belief or into the belief that there is some connection between
an exclusive right to the mark “BIC MAC” or to any other similar mark the parties (which does not exist).
since there is no colorable imitation (yeah right!). Furthermore, they
assert that they did not fraudulently pass off their sandwiches as those Whether a hamburger is single, double or triple-decker, and whether
of McDo’s burgers. wrapped in plastic or styrofoam, it remains the same hamburger food
product. Even respondents' use of the "Big Mak" mark on non-

3A | Batch 2014 | 75
hamburger food products cannot excuse their infringement of only instead of hamburger sandwiches, their use of the "Big Mak"
petitioners' registered mark, otherwise registered marks will lose their mark would not give their goods the general appearance of petitioners'
protection under the law. The registered trademark owner may use his "Big Mac" hamburgers. In such case, there is only trademark
mark on the same or similar products, in different segments of the infringement but no unfair competition. However, since respondents
market, and at different price levels depending on variations of the chose to apply the "Big Mak" mark on hamburgers, just like
products for specific segments of the market. The Court has recognized petitioner's use of the "Big Mac" mark on hamburgers, respondents
that the registered trademark owner enjoys protection in product and have obviously clothed their goods with the general appearance of
market areas that are the normal potential expansion of his petitioners' goods.
business.
Coca-Cola Bottlers v. Quintin Gomez
Clearly in this case, there is a likelihood of confusion since Facts:
respondents have adopted in BIG MAK not only the  Coca-Cola (Coke) applied for a search warrant against Pepsi for
dominant but also all the features of MIC MAC. Applied to the hoarding Coke empty bottles in their yard which is an act allegedly
same food product, the marks will likely result in confusion in the penalized as unfair competition under the IP Code. Said warrant was
public mind. In this case, the court took into consideration the aural issued by the MTC and by virtue of which, they were able to seize a
and visual effect of the marks. Indeed, a person cannot number of coke bottles.
distinguish "Big Mac" from "Big Mak" by their sound. When one hears
a "Big Mac" or "Big Mak" hamburger advertisement over the radio, one In their counter-affidavits, Galicia and Gomez claimed that the bottles
would not know whether the "Mac" or "Mak" ends with a "c" or a "k." came from various Pepsi retailers and wholesalers who included them
in their return to make up for shortages of empty Pepsi bottles; they
The essential elements of an action for unfair competition had no way of ascertaining beforehand the return of empty Coke
are: bottles as they simply received what had been delivered; the presence
of the bottles in their yard was not intentional nor deliberate.
1. Confusing similarity in the general appearance of the goods
(which may result not only from the similarity in marks but On the basis of the foregoing, Coke filed a case against Quntin Gomez
also from other external factors in the packaging or (as general manager of Pepsi herein) for violation of the provision
presentation). against unfair competition under the IP Code.
2. Intent to deceive the public and defraud a competitor (which
may be inferred from the similarity of the goods)  The MTC rendered a decision in favor of Code. On MR, the MTC
denied and thereafter, upon reaching the RTC for determination of
Unfair competition is broader than trademark infringement and whether or not there is unfair competition, the latter rendered a
includes passing off goods with or without trademark infringement. decision declaring that:
Trademark infringement is a form of unfair competition. Trademark
infringement constitutes unfair competition when there is not merely 1. The warrant issued was void for lack of probable cause
likelihood of confusion, but also actual or probable deception on the 2. There is no unfair competition.
public because of the general appearance of the goods. There can be
trademark infringement without unfair competition as when the Issue:
infringer discloses on the labels containing the mark that he  Whether or not there is probable cause for the issuance of the warrant.
manufactures the goods, thus preventing the public from being  Whether or not there is unfair competition.
deceived that the goods originate from the trademark owner.
Ratio:
In this case, the dissimilarities are so minor compared to the  There is no probable cause for 168.3 of the IP Code (Although
similarities in the marks. If respondents sold egg sandwiches the court held that the situation at present is in fact covered by another

3A | Batch 2014 | 76
law, it is not that law which was cited by applicants in their application registered mark.
for warrant, it was the IP Code but as you will find out later, the act of 168.2 Refers to the general definition of unfair competition.
hoarding is not found to be covered by the IP Code). A search warrant 168.3 Refers to specific instances of unfair competition
may only be issued if there is probable cause in connection with a 168.1 Referring to sale of goods given the appearance of the
specific offense alleged in the application based on the personal goods of another
knowledge of the applicant and his or her witnesses. Procedurally, the 168.2 To the inducement of belief that his or her goods or
determination of probable cause is a personal task of the judge before services are that of another who has earned goodwill
whom the application for search warrant is filed, as he has to examine 168.3 Catch all phrase whose coverage the parties not
under oath or affirmation the applicant and his or her witnesses in the dispute.
form of "searching questions and answers" in writing and under oath.
As applied to this case, HOARDING does not fall within the coverage
Under this context, there must first be a determination of whether the of the Code:
act charged – the alleged hoarding of empty Coke bottles –
constitutes an offense under the IP Code. 1. It is not an intellectual property (patent, trademark,
tradename or service mark)
Coke is of the position that the acts under the IP Code under unfair 2. Nor are they alleged to be fraudulently passing off their
competition are not limited and thus, the meaning of the phrase products or services as those of petitioner.
expands the include other acts contrary to good faith of a nature 3. They are also not alleged to be undertaking any representation
calculated to discredit the goods, business or services of another. or misrepresentation that would confuse or tend to confuse
Allegedly, the hoarding is one such act. But the court does not give the goods of petitioner with those of respondents.
merit to this position. The law does not thereby cover every
unfair act committed in the course of business; it covers only
acts characterized by "deception or any other means
contrary to good faith" in the passing off of goods and
services as those of another who has established goodwill in
relation with these goods or services, or any other act
calculated to produce the same result.
From jurisprudence, unfair competition has been defined as the

passing off (or palming off) or attempting to pass off upon the public
the goods or business of one person as the goods or business of
another with the end and probable effect of deceiving the public. It
formulated the "true test" of unfair competition: whether the acts of
defendant are such as are calculated to deceive the ordinary buyer
making his purchases under the ordinary conditions which prevail in
the particular trade to which the controversy relates.
The court holds that hoarding is not one of the acts within the
contemplation of the IP Code. As basis for interpretative analysis:
168.1 Speaks of a person who has earned a goodwill with

respect to the goods and services and who is entitled
to protection under the Code with or without a

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Superior Commercial v. Kunnan Enterprises
Facts: 1. The distributor agreement positively confirmed that Superior
 Superior filed a complaint for trademark infringement and unfair sought to be the Kunnan’s exclusive distributor.
competition with preliminary injunction against Kunnan and Sports 2. Superior made the express undertaking in the assignment
Concept with the RTC alleging that it was the first owner of the marks agreement to acknowledge Kunnan is still the real
KENNEX, KENNEX & DEVICE, PRO KENNEX and PRO-KENNEX and truthful owner of the PRO KENNEX MARK and it
and that Kunnan intends to acquire ownership of the said shall agree that it will not use the right of the abovementioned
marks registered by Superior. marks to do anything which is unfafovable or harmful to
Kunnan.
In its defense, Kunnan alleged that Superior is a mere distributor of 3. SUPERIOR’s Letter dated November 12, 1986 addressed to
the marks and only fraudulently registered the marks in its name. It Brig. Gen. Jose Almonte, identifying itself as the "sole and
alleged that it was already manufacturing and selling sportswear and exclusive licensee and distributor in the Philippines of all its
sports equipment since 1972 and that it was only in 1982, after the KENNEX and PRO-KENNEX products." Attached to the letter
expiration of its initial distributorship agreement with was an agreement with KUNNAN, identifying the latter as the
another company, when Kunnan appointed Superior as the "foreign manufacturer of all KENNEX products." The CA
exclusive distributor in the Philippines. When the concluded that in this letter, SUPERIOR acknowledged its
distributorship agreement with Superior ended, Kunnan appointed status as a distributor in its dealings with KUNNAN, and even
Sports Concept as its new distributor. in its transactions with third persons.
 RTC ruled in favor of Superior holding Kunnan liable for infringement Issue:
on the basis that Superior was rightfully entitled to the mark as the  Whether or not the infringement case filed by Superior can still
user and owner thereof considering that “whereasclause of the prosper.
distributorship agreement” which categorically stated that Kunnan  Whether or not there is unfair competition.
intends to acquire ownership of the mark registered by
Superior in the Philippines. As such, Kunnan’s express Ratio:
recognition of Superior’s ownership of the Keenex marks is present.  Kunnan is the rightful owner of the marks in question hence,
the infringement case will not prosper. IN view of the
On appeal, the CA rendered a decision reversing the decision of the cancellation of the marks of Superior under its name intervening the
RTC dismissing the claim of Superior on the ground that Superior case, the infringement aspect of the case has been rendered moot and
failed to establish by preponderance of evidence its claim of academic since it is a requirement that there be a registered mark in
ownership over the trademarks. It found the “whereas clauses” of cases of infringement. Even assuming that SUPERIOR’s case for
the agreement insufficient to support its claim of ownership. It further trademark infringement had not been rendered moot and academic,
stressed that SUPERIOR’s possession of the aforementioned there can be no infringement committed by KUNNAN who was
Certificates of Principal Registration does not conclusively establish its adjudged with finality to be the rightful owner of the disputed
ownership of the disputed trademarks as dominion over trademarks is trademarks in the Registration Cancellation Case. Even prior to the
not acquired by the fact of registration alone; at best, registration cancellation of the registration of the disputed trademarks, SUPERIOR
merely raises a presumption of ownership that can be rebutted by – as a mere distributor and not the owner – cannot assert any
contrary evidence. In contrast with the failure of SUPERIOR’s protection from trademark infringement as it had no right in the first
evidence, the CA found that KUNNAN presented sufficient evidence to place to the registration of the disputed trademarks.
rebut SUPERIOR’s presumption of ownership over the trademarks.
KUNNAN established that SUPERIOR, far from being the rightful As a mere distributor, petitioner Superior undoubtedly had
owner of the disputed trademarks, was merely KUNNAN’s exclusive no right to register the questioned mark in its name. Well-
distributor based on the following: entrenched in our jurisdiction is the rule that the right to

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register a trademark should be based on ownership. When evidence to show that KUNNAN by the above-cited acts
the applicant is not the owner of the trademark being intended to deceive the public as to the identity of the goods
applied for, he has no right to apply for the registration of sold or of the manufacturer of the goods sold.
the same.
In this case, there is no issue of passing off the goods since the only
Moreover, the case is already barred by res judicata in view of the issue is the ownership thereof. Furthermore, the notice of Kunnan
cancellation case already decided upon by the IPO and the CA. Because prevents the public from being deceived that the goods originated from
the Registration Cancellation Case and the present case involve the Superior since the notice clearly indicated that Kunnan is the
same parties, litigating with respect to and disputing the same manufacturer of the goods bearing the marks. In its place, KUNNAN
trademarks, we are bound to examine how one case would affect the has appointed SPORTS CONCEPT AND DISTRIBUTORS, INC. as its
other. In the present case, even if the causes of action of the exclusive Philippine distributor of sportswear and sporting goods and
Registration Cancellation Case (the cancellation of trademark equipment bearing the trademarks KENNEX and PRO KENNEX. The
registration) differs from that of the present case (the improper or public is advised to buy sporting goods and equipment bearing these
unauthorized use of trademarks), the final judgment in the trademarks only from SPORTS CONCEPT AND DISTRIBUTORS, INC.
Registration Cancellation Case is nevertheless conclusive on the to ensure that the products they are buying are manufactured by
particular facts and issues that are determinative of the present case. Kunnan Enterprises Ltd.
 There is no unfair competition. From jurisprudence, unfair Federal Mogul Bower Bearings v. Azoff
competition has been defined as the passing off (or palming off) or Facts:
attempting to pass off upon the public of the goods or business of one  Federam Mogul Bower Bearing (FMBB) is a corporation in Michigan
person as the goods or business of another with the end and probable engaged in the business of manufacturing engine bearings and
effect of deceiving the public. The essential elements of unfair connecting rods for internal combustion engines which have been sold
competition are: and distributed in packages and containers which are distinguished by
features, the symbol, printing, background, general arrangements,
1. confusing similarity in the general appearance of the goods; form and coloration of the company. Thereby, FMBB has acquired and
and enjoys a large and valuable reputation of good will with the
2. intent to deceive the public and defraud a competitor. trade and with the public both domestic and foreign for such
products.
Jurisprudence also formulated the following "true test" of unfair
competition: whether the acts of the defendant have the intent of On the other hand, Azoff, et. al (Azoff) herein are copartners alleged to
deceiving or are calculated to deceive the ordinary buyer making his engage in transporting, distributing, marketing and selling engine
purchases under the ordinary conditions of the particular trade to bearings which are so nearly resembling that of FBMM’s as
which the controversy relates. One of the essential requisites in an to falsely represent the engine bearings and connecting rods
action to restrain unfair competition is proof of fraud; the intent to as being the goods of Azoff. Likewise, the complaint filed against
deceive, actual or probable must be shown before the right to recover Azoff also alleged that there is a likelihood of confusion in trade
can exist. and commerce, particularly with foreign commerce.
In the present case, no evidence exists showing that  The trial court held that any attempt to characterize the complaint as
KUNNAN ever attempted to pass off the goods it sold (i.e. charging false description (under the Lanham Act – which makes a
sportswear, sporting goods and equipment) as those of person liable for use of a false designation or origin or any false
SUPERIOR. In addition, there is no evidence of bad faith or description or representation, including symbols to false represent the
fraud imputable to KUNNAN in using the disputed same and shall with knowledge of such falsity procure the same to be
trademarks. Specifically, SUPERIOR failed to adduce any transported or used in commerce) was without merit since the

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“origin” phrase in the Lanham Act allegedly meant a L’Aiglon Apparel v. Lana Lobell, Inc.
geographical sense and not “origin by manufacturer”. Facts:
 Plaintiff L’Aiglon Apparel alleged in a complaint that it alone created
Issue: and sold to retail trade throughout the country a certain
 Whether or not the charge in the complaint constitutes a “false distinctively styled dress. To advertise said dress, it published
description” case under the Lanham Act. pictures in leading newspapers and in some 2 million individual
mailing pieces distributed through retailers. In this way, the picture
Ratio: and price of this dress became associated in the minds of the readers
 Yes. It is a false description case. The charge which states that and identified as plaintiff’s $17.95 dress.
Azoff:
At about the same time, the complaint alleged that the defendant Lana
1. sold connecting rods in packages or containers which imitate Lobell (Lana) was offering for sale through mail order and otherwise
and so nearly resemble the packages of FMBB as to falsely in interstate commerce a dress which in fact was much inferior
represent them to be their goods; to plaintiff’s in quality and notably different in appearance.
2. deliberate adoption of the said packages and containers with In this connection, it published under its name in a magazine of
an intent to deceive the trade and public into confusing the national circulation a display advertisement worded and designed to
bearings; promote the mail order sale of its dress at a price of $6.95, but
showing as the most prominent feature of the advertisement
constitutes false description. was an actual photographic reproduction of the plaintiff’s
dress, thus fraudulently represented as the article defendant
Furthermore, the term “origin” does not only refer to geographical was selling for a lower price. Plaintiff alleges that as a result of
origin but also to origin of source or manufacture. this misrepresentation, some trade was diverted from plaintiff to
defendant and caused other trade to be lost by plaintiff as a result of
The Lanham Act was passed with the intent that the primary purpose the mistaken impression.
of the Act was to eliminate deceitful practices in interstate
commerce involving the misuse of trademarks but along with Thus, the complaint herein is trying to make out a case of a false
this it sought to eliminate other forms of misrepresentations representation in the description of goods sold in commerce
which are of the same general character even though they do as prohibited under Section 43(a) of the Lanham Act.
not involve any use of what can technically be called as a
trademark. Issue:
 Whether or not the complaint herein falls under Section 43(a) of the
The language of the law in this case is broad enough to include Lanham Act.
practices of this latter class. But the section should be construed  Whether or not the plaintiff can recover for the kind of conduct here
to be including only such false descriptions or representations as are of charged.
substantially the same economic nature as those which  Whether or not Section 44 of the Lanham Act establishes a federal law
involve infringement or other improper use of trademarks. of unfair competition in commerce.
It should not be interpreted so as to bring within its scope any kind of
undesirable business practice which involves deception, when such Ratio:
practices are outside the field of the trademarks laws.  Yes. The alleged damage as a result of the defendant’s
misrepresentation may well be demonstrable within the normal
requirements of legal proof and in such way as to entitle plaintiff to
relief authorized by the statute.

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 There is no inadequacy herein in plaintiff’s statement of 1. Second Circuit View – diversity and pendent jurisdiction is the
such an injury as Section 43(a) explicitly makes the proper only basis of federal cognizance of such claims.
subject of redress. Before 1946, it is already established as a
doctrine that misrepresentations about the goods were actionable only It is only a design to give US citizens reciprocal rights against
if they had led or were likely to lead customers through confusion of foreign nationals where foreign nationals compete unfairly
defendant’s and plaintiff’s goods, to buy the former under the with them. It does not aim to create a federal law of
misapprehension that they were the latter. “Palming Off” was said unfair competition available to US citizens one
to be essential to any recovery and the view that has been against the other nor does it grant federal courts any
expressed judicially that some such limitation is to be read new authority to hear such controversies between
in Section 43(a) of the Lanham Act. citizens.
Congress has defined a statutory civil wrong of a false representation In short, federal rights conferred in Section 44, obviously
of goods in commerce and has been given a broad class of suitors excludes the ordinary domestic controversy such as we have
injured or likely to be injured by such wrong the right to relief in the here.
federal courts. This statutory tort is defined in language which
differentiates it in some particulars from similar wrongs which have 2. Ninth Circuit View – the statute gives federal courts
developed and have become defined in the judge made law of unfair jurisdiction to hear ALL unfair competition claims regardless
competition. Perhaps this bears a close resemblance to the already of diversity or pendent jurisdiction so long as unfair
noted tort of false advertising to the detriment of a competitor. Here competition affects commerce.
is a provision of a federal statute which, with clarity and
precision adequate for judicial administration, creates and Section 44 of the Act creates a substantive federal law of unfair
defines rights and duties and provides for their vindication competition with remedies available between US citizens
in the federal courts. wherever there is present the requisite involvement
of interstate commerce.
No limitation in Section 43(a) and none can be properly imposed
which would make the present complaint an insufficient statement of a Congress declared all acts of unfair competition to be
cause of action under that section. Thus, the dismissal of the complaint unlawful, revealing an unwillingness to give federal courts
was erroneous. jurisdiction of unfair competition claims to the full extent of
its power to regulate commerce. Instead, the intent of congress
 The court agrees with the district court and holds that there herein was to implement international agreements which were not self
is no intent to being all unfair competition in commerce executing and which varied in their coverage practices in the field of
within the federal jurisdiction . Before anything, it is to be noted unfair competition such that when you register your trademark in the
that before the Lanham Act, federal courts only had authority to decide country, you will get this protection.
claims of unfair competition if federal jurisdiction was supplied by
diversity of citizenship or if the unfair competition claim was pendent Dastar Corporation v. 20th Century Fox Film Corporation
to a substantial and related federal claim. However, since the Doctrine: “Origin of goods” in the Lanham Act, in light of the copyright and
passage of the Lanham Act, there are two lines of authority patent laws, refers to the producer of the tangible goods that are offered for
that have developed regarding federal jurisdiction over sale, and not to the author of any idea, concept, or communication embodied
ordinary claims of unfair competition, apart from wrongs in in those goods.
Section 43(a).
Facts:
Two views as to the jurisdiction of the federal courts:  In 1948, Doubleday published a book on the Crusade in Europe and
registered it with the Copyright Office in 1948. Subsequently, it

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granted an exclusive television rights to an affiliate
respondent, 20th Century Fox (Fox) which produced a TV Issue:
series entitled “Crusade in Europe” based on the said book.  Whether or not the Lanham Act prevents the unaccredited copying of a
work.
Doubleday renewed the copyright to its book. However, Fox did not
renew the copyright on the TV series which expired in 1977, leaving Ratio:
the TV series in the public domain. Thereafter, however, Fox  It does not prevent the unaccredited copying of a work. The
reacquired the TV rights in the book including the exclusive Lanham Act creates a federal remedy against a person who used in
right to distribute the same on video and to sublicense commerce either a “false designation of origin, or any false description
others to do so. (SFM, New Line) or representation” in connection with any goods or services. “Origin”
in this case does not merely refer to geographical origin but
 Enter petitioner Dastar herein who decided to expand its product line also to source or manufacturer.
from music compact discs to videos. To make his business expand, he
purchased 8 beta cam tapes of the original version of the However, in this case, Dastars acts were that it took a CREATIVE
Crusade TV series which is in the public domain, copied WORK IN THE PUBLIC DOMAIN AND COPIED IT and made
them and then edited the series. The edited series contained: modifications thereto to produce its very own series of
videotapes. If origin herein merely referred to the “creator of the
1. New opening sequence; underlying work”, then it would obviously be apparent that Dastar is
2. New closing for those of the Crusade TV series liable under this act. But the court if of the position that “origin”
3. Credits page herein refers to the manufacturer or producer of the
4. Inserted new-title sequence and physical goods. The source of the wares is the producer of the
5. Narrated chapter introductions tangible products sold in the marketplace, in this case, the tapes sold
6. Advertised it as produced and distributed by Entertainment by Dastar.
Distributing (owned by Dastar)
7. No reference of Fox The consumer who buys a branded product does not automatically
assume that the brand name company is the same entity that came up
In sum, he created a new packaging for its Campaign series (which with the idea for the product, or designed the product and typically
included the Crusade series) and a new title thereto. does not care whether it is.
 Thus, Fox, SFM and New Line brought this action alleging that the sale It is argued that in reality, the purchaser is concerned for what might
of the videos infringes on the copyright of the book and the be called a communicative product – one that is valued not primarily
exclusive TV series rights in the book. It further claims that for its physical qualities, such as hammer, but for the intellectual
Dastar’s action constituted “reverse passing off” (passing occurs content that it conveys such as a book or as here, a video. But this
when a producer misrepresents his own goods or services as someone interpretation will render the Lanham Act in conflict with
else’s; reverse passing off is the opposite where the producer the copyright law. In general, unless an intellectual property
misrepresents someone else’s goods or services as his own). right such as patent or copyright protects an item, it will be
subject to copying.
The District Court rendered judgment and awarded Dastar’s profits to
respondents and doubled them. On appeal, the CA affirmed the case Recognizing a cause of action under Section 43(a) for
on the ground that Dastar substantially copied the entire series misrepresentation of authorship of noncopyrighted works would
created by 20th Century Fox thereby committing a bodily render these limitations superfluous and such statutory interpretation
appropriation of the Fox series which constitutes reverse should be avoided.
passing off.

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Another problem with the aforementioned interpretation is In its defense, National claims that the idea of the advertisement is
that in many cases, it is difficult to figure out who is in the that even people who are not stars are treated like stars at National
line of “origin.” In fact in this case, while Fox is claiming to being in video. It claims that the person therein is a Woody Allen fan who is
the line of origin, its involvement with the creation of the TV series was adopting the star’s appearance and mannerisms. They urge that they
limited at beast. Time Inc. was the principal and the creator albeit never misrepresented Bordoff as Allen and that they insisted
under arrangement with Fox. on the placing of the disclaimer in all advertisements using
the photo.
Another problem is that wile they are indicating credits to
the creator of the work on which the lawful copies are based, Issue:
on the other hand, they could face Lanham Act violations for  Whether or not the right to privacy and publicity is violated.
crediting the creator if that should be regarded as implying  Whether or not there is a violation of the Lanham Act
the “sponsorship or approval of the copy”.
Ratio:
Allen v. National Video Inc.  There is no violation of the right to publicity and the right to
Facts: privacy and the more appropriate remedy of the plaintiff
 Plaintiff Woody Allen has been a major international celebrity who herein is provided by the Lanham Act. In this issue, the court
directed various shows which won several Academy Awards. Although held that there is no reasonable ground to believe that the
he has not lent his name to commercial endeavors other than his own others would interpret the advertisement as Woody Allen
projects, he has been in show business for years and is known to himself. As embodied in the New York Civil Rights Law, to make out
millions of people for his artistic integrity. a violation of the right to privacy there must be:
National Video (National) published an advertisement to 1. Use of his name, portrait or picture;
promote its video rental chain containing a photograph of 2. For commercial or trade purposes;
one Boroff which portrays a customer in a National video 3. Without written permission
Store with a high forehead, tousled hair and heavy black
glasses. In general, the physical features of this and the pose are On the other hand, in order to make out a case for violation of right to
characteristic of the plaintiff. Moreover, on the said advertisement was publicity, one additional element must be shown to exist and that is:
a plethora of shows in video cassettes directed by Woody Allen. that the plaintiff developed a property interest with a
monetary value in his or her name or face, as in this case
The same photo and headline was also used on contercards distributed with Woody Allen.
to National’s franchises. Although there is a disclaimer on said photo
which states in small print reading that “Celebrity double provided by As applied in this case, it is clear that 2 of the 3 prongs of the Civil
Ron Smith;s Celebrity look a like”, no such advertisement appeared on Rights Law are satisfied. There is no question that the photo is
the other versions of the advertisement. said to be used for commercial purposes since it appeared as
an advertisement and there is no dispute that the plaintiff
 In view of this, Plaintiff Woody Allen (Allen) filed a case praying for herein never gave his consent to the photograph. Therefore,
summary judgment in his favor on the ground that his right to privacy the only element left to prove herein is whether or not the portrait is
was violated, and claiming a violation under the Lanham Act alleging the picture of the plaintiff.
that his picture was used for commercial purposes without
his permission and that the advertisements were materially Allen claims that it is since it need only be that the photograph is
misleading and likely to result in consumer confusion as to identifiable to him in order for this requirement to be satisfied, to
his endorsement of the services of National. which, the court is agreeable to. An exact duplication was
not necessary to make out a cause of action under the statute

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so long as the overall impression created clearly was that 4. Evidence of actual confusion
plaintiff had herself appeared in the advertisement. If the 5. Sophistication of the buyers
court is to permit this, then it would be sanctioning an obvious 6. Intent
loophole to evade the statute.
Strength of the o The name of the plaintiff, Woody Allen
When the look-a-like seems indistinguishable form the real mark and in this case is well-known to the public
person, and the context of the advertisement clearly implies name and has built a considerable investment
that he or she is the celebrity, then the court may hold as a in his public image.
matter of law that the look-a-like is a portrait of the plaintiff. Similarity of o While the court was unable to hold that
Thus, what further needs to be proven here is whether or not the the marks the photo, was a matter of law, a
illusion that the person is Allen is created. portrait of the plaintiff, the resemblance
in this case is strong and not disputed.
As applied, the court held that there is no reason to believe that others Proximity of o While not owning a video rental chain,
would see the photo as a portrait of Allen himself since there are the products Allen is involved in the production and
striking dissimilarities as to the hairstyle and expression, among distribution of motion pictures and he is
others. strongly identified with movies.
Actual o Not essential
 There is a violation of the Lanham Act (Section 43a). To make confusion
out a case under the act, the plaintiff must establish: Sophistication o The average reader of the magazine is
of the likely to be sophisticated about movies
1. The involvement of the goods or services consuming such that a good number of them would
2. Effect on interstate commerce public realize that plaintiff did not actually
3. False designation of the origin or false description of the goods appear in the photo.
or services. o However, since there is a CLOSE
RESEMBLANCE, evidence of likelihood
The application of the act, however, is limited to potential deception of confusion is not altogether
which threatens economic interests analogous to those of trademark eliminated.
law. Of course in this case, a celebrity has an investment in his or Intent o While not established to be acting in bad
her name and face in endorsing products and marketing a faith, they already admitted that they
career. It depends upon the good will of the public and infringement used Bordoff to evoke an association
of the rights also implicates the public’s interest in being free from with the plaintiff Allen.
deception when it relies on the celebrity in an advertisements. o They must therefore be aware that there
Furthermore, the liability herein attaches not only to literal is a risk of consumer confusion.
falseness, but also to false impressions. o They happily risked creating an
impression in a purchaser to gain
In this case, in order to consider whether or not there is a violation of commercial advantage through
such act, there should be a likelihood of confusion. For this, the court reference to plaintiff’s public image.
goes back to the factors used to determine likelihood of confusion
which are: Thus, the court concluded that there is a likelihood of confusion.
1. Strength of the mark and name Reasons why a violation under the Lanham Act is more
2. Similarity of the marks suitable for the plaintiff in this case, instead of the right to
3. Proximity of the products publicity:

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1. The likelihood of confusion standard is more broad that the Issue:

strict “portrait or picture” standard under the Civil Rights  Whether or not Midler’s voice is protected under the law.
Law.
Ratio:
In order to be confused, the consumer need not believe that  Yes. As a general rule, a mere imitation of a recorded performance
the owner of the mark actually produced the item and placed it would not constitute a copyright infringement where one performer
on the market. The belief that he sponsored it satisfies the deliberately sets out to stimulate another’s performance as exactly as
confusion requirement. possible. Although this case falls more under the ambit of
unfair competition since a voice is not copyrightable. The
2. Likelihood of confusion is easier to satisfy on the facts of this sounds are not fixed. What is put forward here is more
case since that is all that is necessary. personal than any work of authorship. For a person whose
3. While confusing similarity is a question of fact, it is regarded voice is widely known, it is unlawful to imitate that person’s
as something for the court to decide through its own analysis, voice to sell a product if he/she has not authorized it.
comparison and judgment. Although the defendants did not use the name of Midler of
anything else whose use is prohibited under the California
Midler v. Ford Motors Civil Code (the name, the voice, signature, or photograph) since the
Facts: voice they used was that of a different person’s not hers, the court held
 Ford Motor Company (Ford) and its advertising agency, Young & that the fact that they hired someone who can imitate her voice as
Rubicam advertised the Ford Lincoln Mercury with a series of 30 or 60 much as possible meant that it was of value to them that Midler
second TV commercials in what the agency called as the Yuppie sang the commercial in person.
Campaign which aimed to make an emotional connection with
Yuppies, bringing back memories of when they were in college. In the A voice is more distinctive and more personal than an automobile
said commercial, there were different popular songs of which, Ford protected in another case. A voice is distinctive and personal as a
attempted to get the original singers who popularized the songs to sing face. When a distinctive voice of a professional singer is
them. Failing in this endeavor, the agency had the songs sung widely known and is deliberately imitated in order to sell a
by sound alikes. Bette Midler( Midler), the plaintiff in this case was product, the sellers have appropriated what is not theirs and
done by a sound alike. have committed a tort in California. Midler herein made a
showing sufficient to defeat summary judgment that the defendants
Midler is a popular singer who won a Grammy as early as 1973 and was here for their own profit in selling their product did appropriate part of
nominated for an Academy Award for Best Female Actress in “The her identity.
Rose” in which she portrayed a pop singer. Time even hailed her as a
legend and the most dynamic and poignant actress of her time. White v. Samsung Electronics
Facts:
As the sound alike of Midler, the agency hired Ula Hedwig, who was  Samsung launched a commercial forvidep-casette recorders (VCRs)
one of Midler’s backup singers for 10 years. For the commercial, which depicted a robot, dressed in a wig, gown and kewelry, which was
Hedwig imitated Midler to the best of her ability which consciously selected to resemble Vanna White’s (one of the hostess
resulted in a lot of people thinking that it was Midler who of the Wheel of Fortune) hair and dress. The robot in the
was sining in the commercial. Neither the name nor the picture of commercial was posed next to a game board which is instantly
Midler was used in the commercial. recognizable as the Wheel of Fortune game show set in a stance for
which Vanna White is famous for.
 Midler filed a common law claim against Ford for using her distinctive
voice in an advertisement which she had not authorized.

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She did not consent to the ads nor was she paid for it hence, she filed a It is not important how the defendant appropriated the identity, what
claim alleging infringement of various intellectual property rights matters is whether the defendant has done so. As applied in this
under the California Civil Code, the California common law right of case, the female shaped robot herein is wearing a long gown, blond,
publicity and Section 43(a) of the Lanham Act. wig and large jewelry. In fact, the defendants in this case also refer to
this ad as the Vanna White ad.
Issue:
 Whether or not there is a violation of White’s common law right of  To prevail over the Lanham Act claim, White has to show that in
publicity. running the robot ad, Samsung created a likelihood of confusion over
 Whether or not there is a violation of Section 43(a) of the Lanham Act. whether White was endorsing the products of Samsung. Thus, the 8-
factor test enunciated must be resorted to:
Ratio:
 Yes. The district court erred in rejecting her claim on 1. Strength of the mark
summary judgment. The robot did not use White’s name or 2. Relatedness of the goods
likeness. However, the common law right of publicity is not 3. Similarity of the marks
so confined. In order to make out a case for right of publicity, the 4. Evidence of actual confusion
plaintiff must show that: 5. Marketing channels used
6. Likely degree of purchaser care
1. The defendant used the plaintiff’s identity; 7. Intent in selecting the mark
2. The appropriation of the name of the plaintiff or likeness to 8. Likelihood of expansion of the product lines.
the defendant’s advantage, commercial or otherwise;
3. Lack of consent “Mark” here means the celebrity persona.
4. Resulting injury
Strength of the o White’s fame is based on her TV
It should be noted, however, that the right of publicity cause of mark appearance in the Wheel of Fortune.
action “may be “ pleaded by alleging the aforementioned Similarity of the o There is a need to look at the other
appropriation of name or likeness, not that the action may marks factors for resolution since one is a
be pleaded only in those terms. Name of likeness is not an human and the other is a robot
element of the right of publicity cause of action but a description of the Evidence of o No evidence of actual confusion was
types of cases in which the cause of action had been recognized. In fact, actual confusion presented
in some cases, even though the defendant had not appropriated the Marketing o She appears in numerous ads in
plaintiff’s name or likeness, this court held that the right of publicity channels used magazines including those magazines
claim should reach the jury. which use the robot. This factor cuts
toward a conclusion for likelihood of
The common law right of publicity reaches means of confusion
appropriation other than name or likeness, but that the Degree of o Consumers are not likely to be
specific means of appropriation are relevant only for purchaser care particularly careful in determining
determining whether the defendant has in fact appropriated who endorses VCRs, making the
the plaintiff’s identity. The right of publicity has developed to confusion as to their endorsement
protect the commercial interest of the celebrities in their identities. It more likely.
is of value to them and the unauthorized use of such is an invasion of Intent o There is an intention to spoof .
his right whether or not his “name or likeness” is used. o Looking at the series of advertisements
as a whole, surface humor of the series
lay an intent to persuade consumers

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that Vanna White, was endorsing Ratio:
Samsung products.  Yes. Without making any judgment about the ultimate
Likelihood of o It does not appear apposite to a similarity of the figures to the appellants, this court
expansion celebrity endorsement case such as concludes from its own inspection that the robots ight cause
this. a reasonable jury to find them sufficiently like the
appellants’. The degree to which these robots resemble, caricature or
Although the ultimate decision was left to the jury, the court herein bear an impressionistic resemblance is material to a claim for violation
claimed that the Lanham Act claim should succeed. The robot ad of the publicity rights under the California Code.
identifies White as part of a series of ads in which other celebrities
participated and were paid for their endorsement products. White  Yes. This common law publicity rights includes protection against
made out a genuine issue of material fact concerning a likelihood of appropriation for the defendant’s advantage of the plaintiff’s name or
confusion. likeness. It may be pleaded by alleging:
Dissenting Opinion (Kozinski): 1. Defendants use of the plaintiff’s identity;

 The majority decision is erroneous in that California Civil Code Sectin 2. Appropriation of the plaintiff’s name or likeness to defendant’s
3344 appears to preclude the result reached by the majority. The advantage commercially or otherwise
section only protected name or likeness. In fact, when it was amended, 3. Lack of consent
legislature only added voice and signature to the enumeration which 4. Resulting injury
means that there is a clear implication from the fact that since they
only chose to add those, it wished to limit the cause of action to This protects more than the knowing use of the name or
the enumerated attributes (inclusion unius est exclusion alterius). likeness of the plaintiff for commercial purposes. It also
protects appropriations of the plaintiff’s identity by other
The protection of intellectual property presents the courts with the means. In this case, the appellants have raised a genuine issue of
necessity to balance competing interests. There must be a prevention material fact concerning the degree to which the figures look like them.
of the creation of a monopoly that would inhibit the creative Because they have done so, appellants have also raised triable issues of
expressions of others. fact as to whether or not appellees sought to appropriate their likeness
for their own advantage and whether or not they succeeded in doing
Wendt v. Host International so.
Facts:
 Wendt filed a claim for violations of the Lanham Act and the California  Yes. The court herein applies the 8 factor test again which required a
statutory and common law right of publicity against Host International consideration of:
(Host) alleging that there is a violation of trademark and Strength of the o Clearly well known among the target
publicity rights by creating animatronic robot figures mark consumers of Hosts’ Cheer bars.
(robots) based upon their likeness without their permission Similarity of the o Goods are obviously related even if not
and placing these robots in airport bars modeled upon the goods strictly competitive.
set from the TV show Cheers. The DC dismissed the case. o the factors weigh in favor of likelihood
of confusion since it would be
Issue: reasonable for the person to be
 Whether or not there is a violation of statutory publicity rights. confused as to the nature of the
 Whether or not there is a violation of common law publicity rights. association of Wendt to Hosts’ Cheer
 Whether or not there is a violation of the Lanham Act. bars and the goods sold there.
Similarity of the o because the appellants herein raised a
marks material issue as to the degree of

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resemblance, a reasonable jury might Shortly after the release of the movie, Rogers brought this action for
find this to weigh in their favor. permanent injunctive relief and allege that defendants violated
Evidence of o they presented evidence of actual Section 43(a) of the Lanham Act by creating a false
actual confusion confusion such that they have been impression that the film was about her or that she sponsored
approached by members of the public it, her common right of publicity and defamed her and
who commented on the similarity of violated her right to privacy by depicting her in a false light.
the robots at the Cheers airport bars.
Marketing o the target audience here are Cheer bars Issue:
channels used customers who are fans of TV series.  Whether or not there is a violation of the Lanham Act.
Likelihood of o weight in favor of appellants since  Whether or not there is a violation of the common right of publicity.
purchaser care consumers are not likely to be
particularly careful in determining Ratio:
who endorses or is affiliated with an  No. Although the general act was held herein to be construed to apply
airport bar in which they might to artistic works only where the public interest in avoiding consumer
purchase only a single beverage. confusion outweight the public interest in free expression, the court
o There is a low degree of care. found that there is nothing in the title of the movie which denotes
Intent in o They intentionally designed the figures authorship, sponsorship or endorsement by the celebrity or explicitly
selecting the to resemble Wendt and that it mislead as to content.
mark recognized from the outset that the
value of the association with Wendt If herein, the title “George and Fred” misleads as to source or content
themselves was a major drawing card implicitly conveyed by the title, it violates the Lanham Act but as
of the Cheers concept. applied in this case, the title contains no explicit indication that
Likelihood of o This does not appear apposite to a Rogers endorsed the film or had a role in producing it.
expansion celebrity endorsement case. Likewise, the claim that consumers would be misled into
o In fact Wendt herein stated that he thinking that the film is about Rogers and Astaire also fails
would like to appear in advertisements since here, the title is entirely truthful as to its content in
for bear and has declined offers from referring to the protagonists who are known to their Italian
small breweries to make way for larger audience as “Ginger and Fred.” Moreover, the title has an ironic
breweries. meaning tat is relevant to the content of the film in that Rogers and
Astaire are to the producer a “glamorous and care-free symbol of what
Rogers v. Grimaldi American cinema represented in the harsh times which Italy
Facts: experienced in the 30s and 40s.” therefore depicting artistic relevance
 Rogers has been an international celebrity for more than 50 years. to the film.
There can be no dispute that Rogers’ name has enormous drawing
power in the entertainment world.  There is no violation of the common right of publicity. The
right of publicity does not bar the use of a celebrity’s name in a title so
In 1986, appellees in this case, Grimaldi, produced and distributed in long as the item was a literary work and not simply a disguised
the US and in Europe a film entitled ‘Ginger and Fred” created commercial advertisement for the sale of goods or services. Here, as
and directed by Federico Fellini which tells a story of 2 fictional explained above, the title is clearly related to the content of the movie
cabaret performers who imitated Rogers and Astaire and became and is not a disguised advertisement for the sale of goods or services or
known in Italy as Ginger and Fred. a collateral commercial product. Moreover, the film is not about
Rogers. It is about a pair of fictional characters who are LIKE Rogers

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and Astaire only in their imagination and in the sentimental eyes of is no infringement upon MLBPA’s property rights under the Lanham
their fictional audience. Act.
The right of publicity would not bar the use of a celebrity’s  There is a violation of the right to publicity. The right of
name in a movie title unless the title was wholly unrelated to publicity is the right of a person to control the commercial use of his or
the movie or was simply a disguised commercial her identity. Like trademark and copyright, the right of publicity
advertisement for the sale of goods or services. involves a cognizable property interest. Publicity rights, are a form of
property protection that allows people to profit from the full
Cardtoons v. Major League Baseball Players commercial value of their identities.
Facts:
 Cardtoons formed a set of 130 cards which featured a caricature of A civil suit for infringement of MLBPA’s publicity right under the law
major league baseball players. A majority of the cards had a caricature requires proof of 3 elements:
of active major league baseball players on the front humorous
commentary about their careers on the back. At the back of each of the 1. Knowing use of player names or likenesses;
cards it was stated therein that: “Cardtoons baseball is a parody and is 2. Products, merchandise, or goods;
not licensed by the Major League Baseball (MLB) or Major League 3. Without MLBPA’s prior consent.
Baseball Players Association (MLBPA).
This is not absolute and contains 2 exceptions:
The trading cards ridicule the players using a variety of themes. Other
cards poke fun at the names of the players and onfield behavior. 1. News exception – which exempts use of a person’s identity in
connection with any news, public affairs, or sports broadcast
 For this reason, the MLBPA filed an action with the court against or account, or any political campaign, from the dictates of the
Cardtoons. MLBPA moved to dismiss the case for lack of subject statute.
matter jurisdiction and counterclaimed for a declaratory judgment, 2. Incidental use – exempts use in a commercial medium that is
injunction and damages for violation of the members’ rights of not directly connected with commercial sponsorship or paid
publicity under the law. advertising.
Issue: Applied to this case, there is little question that Cardtoons

 Whether or not there is a violation of property rights under the knowingly uses the names and likenesses of major league
Lanham Act. baseball players. Indeed the caricatures are only humorous because
 Whether or not there is a violation of publicity rights. they, along with parodied name, team and commentary, are accurate
enough to allow identification of the players being parodied. The cards
Ratio: are clearly a product, designed to be widely marketed and sold for
 No. The hallmark of Lanham Act is proof of likelihood of confusion profit. Furthermore, the exceptions in this case provide no haven for
which occurs when consumers make an incorrect mental cardtoons.
association between the involved commercial products or
their products. It is a question of fact that we review for clear error. Others:
Here, no one would mistake MLBPA and its members as  Despite finding a violation of the publicity rights in this case, the court
anything other than the targets of the parody cards. went on to state that the trading cards are First Amendment protected
Cardtoon’s success depends upon the humorous association speech in that it is not considered as commercial speech. Baseball
of its parody cards with traditional licensed baseball cards, cards have been an important means of informing the public about
not upon public confusion as to the source of the cards. There baseball players for over a century. All of these cards, convey

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information about their subject and therefore constitute an important liable to a civil action to anyone who believes that he is or is likely to
means of expression that deserves First Amendment Protection. be damaged by the use of such false description or representation.
Without the first amendment protection, Cardtoons’ trading cards and Coke claims that this commercial is false because it incorrectly
their irreverent commentary on the national pastime cannot be freely represents that Premium pack contains unprocessed, fresh-
distributed to the public. The potential is even greater in the context of squeezed juice when in fact the juice is pasteurized and
publicity rights because the product involved is the celebrity’s own sometimes frozen prior to packaging.
persona.
Issue:
At this juncture, since there is a finding that there is a violation of  Whether or not there is false advertising.
publicity rights and a finding that the cards herein are first
amendment protected speech, there is a need to balance the interests Ratio:
of the MLPBA’s right of publicity and the public interest’s rights. In  There is false advertising. In a case for false advertising requesting
examining the right of publicity of a celebrity, the court herein held for injunctive relief, the plaintiff must show that he is likely to be
that even without the right of publicity, the rate of return of injured as a result of the false advertising of the defendant. The
stardom in the entertainment and sports field is probably likelihood of injury and causation will not be presumed but must be
high enough to bring forth a more than adequate supply of demonstrated in some manner.
creative effort and achievement. The income they generate
by licensing one’s identity does not provide a necessary In previous cases decided by the supreme court, market studies
inducement to enter and achieve in the realm of sports and were used as evidence that consumers were in fact mislef by
entertainment. While publicity may provide some incentive the advertising in issue. Thus, the market studies supplied the
for creativity and achievement, the magnitude and causative link between the advertising and the plaintiff’s potential lost
importance of that incentive has been exaggerated. sales and thereby indicated a likelihood of injury.
Inducements generated by publicity rights and the small incentive
effect of publicity rights is reduced or is eliminated in celebrity When an advertisement is literally or explicitly false, the
parodies. court may grant the relief without reference to the
advertisement’s impact on the buying public. But when it is
In this case, the court weighted the factors in favor of the free speech implicit rather than explicitly false, its tendency to violate the act by
protection since this was clearly a case of over protection. Little is to be misleading, confusing or deceiving should be tested by public reaction.
gained and much is to be lost by protecting publicity rights herein. The
cards, on the other hand, are an important form of entertainment and In view of the facts of this case, the court concludes that the ad is
social commentary that deserve First Amendment Protection. false. The squeezing-pouring sequence in the Jenner
commercial is false on its face. It makes an explicit representation
Coca-Cola v. Tropicana that Premium Pack is produced by squeezing oranges and pouring the
Facts: freshly squeezed juice directly into the carton which is not a true
 Tropicana products begain airing a new TV commercial for its representation of how the product is prepared – it is sometimes heated
Premium Pack orange juice which shows the renowned American and frozen prior to packaging. Additionally, the statement in the ad
Olympic athlete Bruce Jenner squeezing an orange while saying a tag that it is “pasteurized juice as it comes from the orange” is blatantly
line. Soon after this ran, Coca-Cola, the maker of Minute Maid false since false-pasteurized juice does not come from oranges. It
orange juice, brought this suit for false advertising in entails heating. Despite the fact that the word “pasteurized” is used,
violation of Section 43(a) of the Lanham Act which provides nevertheless, Tropicana represented it to be squeezed, heated and
that any person who uses a false description or representation shall be packaged when in fact, it may be frozen.

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Pernod Ricard v. Bacardi 2. There is actual deception or at least a tendency to deceive a
Facts: substantial portion of the intended audience;
 This case is a dispute between Pernod on the one hand and Bacardi on 3. That the deception is material in that it is likely to influence
the other over the use of the words “Havana Club” to sell rum in purchasing decisions;
the US. 4. That the advertised goods travelled in interstate commerce;
5. That there is a likelihood of injury to the plaintiff in terms of
In 1994, Bacardi filed a federal trademark application for the use of declining sales, loss of food will.
Havana Club mark on rum in the United States and for a short time in
1995, Bacardi imported from the Bahamas and sold in this country a The court herein drew a distinction between 43(a)(1)(a) and
nominal amount of rum labeled with “HAVANA CLUB”. Shortly after 43(a)(1)(b). The former forbids the false or misleading representations
Bacardi began its sales of the Havana Club rum made in Puerto Rico, that may deceive consumers about the origin of the goods or services
Pernod filed this false advertising suit under Section 43(a) while the latter, forbids false or misleading representations as to
asserting that the labeling of Bacardi’s bottle, particularly geographical origin of goods and services.
the use of the words “Havana Club” misleads consumers to
believe that the rum is produced un Cuba. Here, the Havana Club label, taken as a whole, could not
mislead any reasonable consumer about where Bacardi’s
rum is made, which means that survey evidence has no
helpful part to play on the question to what the label
communicates regarding geographic origin. In this case, there
is a factually accurate, unambiguous statement of the geographic
origin of the rum since the label clearly states that the liquor is Puerto
Rican Rum and on the back that it is distilled and crafted in
Puerto Rico. No reasonable consumer can be misled by those
statements.
If we were dealing with the words “Havana Club” in isolation, then the
court MIGHT agree that there is false advertisement but we are not
dealing with words in isolation. This is not a trademark case and
is certainly not one addressing trademark registration no
matter how much Pernod wishes it were. This is a false
advertising case where we should look at the words in the context of
the entire accused advertisement. Viewed in that context, any thought
consumer might have that the words “HAVANA CLUB” indicate the
geographic origin of the rum must certainly be dispelled by the plain
Issue: and explicit statements of the geographic origin of the label.
 Whether or not there is false advertising.
However, it should be noted herein that the conclusion in this case
Ratio: says nothing whether the words HAVANA CLUB are eligible for
 No. To establish a false advertising claim under the Lanham Act, a registration. The argument is beside the issue tackled in this case and
plaintiff must prove that: such issue is not addressed in the circumstances dealt with here.
1. The defendant has made false or misleading statements as to

his product for another’s;

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SC Johnson v. Clorox Co. 2. although literally true, it is likely to deceive customers.
Facts:
 Clorox introduced a 15 and 30 second TV commercial each depicting In addition to this, it must be shown that the falsity is as to
an SC Johnson Zip Loc resealable storage bag side by side with a an inherent quality or characteristic of the product. The
Clorox Glad Lock bag (each were referred to in the commercial in their advertisement must be considered in its entirety and not in isolation.
brand names). It shows an animated fish talking in water inside each The entire mosaic should be viewed. Where it is literally false, the
of the bags. The bags were turned upside down and shows that the SC court may enjoin the use of the claim without reference to the
Johnson bag leaks. advertisement’s impact on the buying public. Although in this case,
irreparable injury is an essential element to an inunction relief, there is
For this, SC Johnson brought an action against Clorox under Section presumption of irreparable harm where the plaintiff demonstrates a
43(a) of the Lanham Act for false advertising in the Goldfish likelihood of success in showing literally false defendant’s comparative
commercials. During the hearing for the case, Dr. DeLassus was advertisement which mentions plaintiff’s product by name.
presented. It was testified that he conducted a torture test wherein the
results indicated that 37% of all the bags of Johnson did not leak at all. As applied in this case, there is literal falsity since the conclusion is
For this, the DC rendered a decision enjoining Clorox from showing supported by the fact that there was a test conducted before rendering
the commercial. The DC found that there is an exaggeration of the a decision which showed that over half of the SC Johnson bags either
circumstances and that when the bags are subjected to the same kind did not leak at all or if it did at a rate no faster than one drop per 20
of quality control test, there is some leakage in about 2/3 of the cases. seconds. In the TVCs it is shown that the bags were always leaking and
also, it is shown that the leak is faster than the tests conducted. If
 In the year 2000, Clorox released another modified version of the Clorox wants to portray water leakage from SC Johnson bags, it must
Golfish commercial as well as a related print advertisement which portray the rate of leakage accurately and indicate only a certain
shows that by a side by side comparison, the SC Johnson bags, filled percentage of bags leak, even when subjected to an extreme water
with water containing an animated talking goldfish, when rotated “torture” test.
leaks. On the other hand, it shows that the Glad Lock Clorox bag did
not leak at all. P&G v. Haugen
Facts:
After these advertisements appeared, another injunction case was filed  This is a suit brought by P&G against Amway corporation for allegedly
by SC Johnson which was, again, granted. The court, in this case, spreading a rumor within Amway’s communication service between
concluded that the TVC is decidedly contrary to what was portrayed in distributors (AmVox) that P&G is a corporate agent of Satan. In
the actual evidence about the bags at the first trial and all in all, the further alleged that P&G products have symbols (i.e. ram horns
TVC is literally false. It portrayed that leakage is a everpresent forming 666) that will tell you that the company is in support of the
characteristic of SC Johnson bags. satanic church. Although it is not determined how many of this
message in within the AmVox reached, P&G received complaints and
Issue: inquiries about this matter.
 Whether or not there is a violation of the Lanham Act.
After learning of the message, and after a demand was made to Randy
Ratio: Haugen (the person who distributed the message) to retract the
 Yes. There is no prohibition on false statements generally. What is message (which he did), P&G still received messages and the
prohibited is only false or misleading descriptions or false or aforementioned rumor still circulated despite the retraction. Thus,
misleading representations of fact made about one’s own or P&G filed a claim of tortious interference with business
another’s goods or services. It must be established that: relationships and unfair competition against Haugen.
1. the advertisement is literally false as a factual matter; or

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 The DC dismissed the claim on the ground the message, although In the present case, we are dealing with the fact that there is a
identifying the products of P&G, did not contain false theological component and a commercial component in the message.
representations about the QUALITIES AND However, the bare fact that there is a theological component
CHARACTERISTICS OF THOSE PRODUCTS and so did not does not transform it to noncommercial speech.
relate to a product within the meaning of the Lanham Act.
Plus, the message herein unambiguously urges recipients to eschew
Issue: purchasing P&G products in favor of Amway products. While
 Whether or not the message is properly classified under commercial economic motivation or reference to a specific brand name and
activities for purposes of the Lanham Act. products, when viewed in isolation, might not render a message
 Whether or not the message is disparaging. commercial speech, we conclude that those factors taken together
with the instant message’s promotion of Amway products at
Ratio: the expense of P&G products support the characterization of
 Yes. Commercial activities, although not explicitly defined in the act, the subject message as commercial speech. In the absence of
means commercial transactions or all activities surrounding the genuine issue as to the subject message’s theological content, and in
peculiar commerce of a company defined as the exchange or buying light of the message’s exhortation to eschew purchasing P&G products
and selling of commodities. The subject message herein linking P&G to in favor of Amway products, the conclusion that the subject message
satan clearly concerned the nature, characteristics or qualities of constitutes commercial speech for purposes of liability under the
P&G’s commercial activities under the meaning of the law. A Lanham Act is unavoidable.
direct affiliation with Satan would certainly undermine a corporation’s
reputation and goodwill by suggesting the corporation conducts its  It is not disparaging. Disparaging words, to be actionable per se
commercial activities in an unethical or immoral manner. The must affect the plaintiff in some way that it is peculiarly
products here are purchased not only on the basis of inherent utility, harmful to one engaged in trade or profession. If it is of a
but also for the images they project and the values they promote. general character, it is not enough unless the particular quality
It was the intent of the legislature to proscribe the unfair competition disparaged is of such a character that it is peculiarly valuable
and they did not intent to limit the law narrowly to “commercial in the plaintiff’s business or profession. Here, the allegations
activities” but rather, they intended to encompass those that P&G directs a percentage of its profits to the church of Satan are
activities which do not solely involve the provision of not incompatible with that business in the manner necessary to be
services or the production of goods. Properly construed, the actionable as slander per se.
term “commercial activities” herein encompasses P&G’s use of the
profits from the sale of its goods. Although offensive to many, an allegation of Devil worship, is
disparagement of a general character, equally discreditable to all
In order for representations to constitute commercial advertising or persons and does not pertain to a quality that is peculiarly valuable in
promotion under the act, they must be: plaintiff’s professional activities of manufacturing and selling
household consumer goods.
1. Commercial speech
2. By a defendant who is in commercial competition with the Verizon Directories v. Yellow Book
plaintiff Facts:
3. For the purpose of influencing consumers to buy defendant’s  Yellow Book (YB) publishes a yellow pages directory (The Yellow
goods or services Book) which competes with Verizon’s yellow pages directory
4. Must be disseminated sufficiently to the relevant purchasing (SuperPages) in a number of major markets. Verizon filed this case for
public to constitute advertising or promotion within that false advertising and unfair competition against YB USA’s commercials
industry. which falsely represent that more people use the Yellow Book
that use the SuperPages.

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On a literal level the commercials are merely playful and absurd. No
The following commercials were shown to be falsely representing the one would believe that an adult finding two free directories at the
foregoing: doorstep would leave one; both would almost certainly be taken. Even
a young child would know that a blast of air that could blow away both
1. The “Senior Focus Group” – 3 marketing men who work for a yellow pages directory and an adult would not leave another
the “Other Book” Directory holding a focus groups session directory of similar heft unaffected.
stating that they never looked at the Other Book. The
commercial closes with an image of the Yellow Book standing  No. Product disparagement refers to words or conduct which tend to
on and next to the Other Books with a voice over saying disparage or reflect negatively on the quality, condition or value of a
“more people choose Yellow Book, not the Other product or property. To state a claim for disparagement, the plaintiff
Book” must allege:
2. The Apartment Lobby – opens with 3 men in the apartment
lobby with 2 stacks of directories (one the yellow and one the 1. the falsity of the statement
other book). The men watch as one by one, the residents of the 2. publication to a third person
apartment come into the lobby and pick a directory. The stack 3. malice or actual malice
quickly disappears while all of the other books remain. The 4. special damages
TVC ends with a voice over saying “Today, people are
choosing the Yellow Book, not that Other Book” Here, Verizon did not state in its complaint the identity of he
3. The Wind Tunnel – shows a man carrying the directories in a customers who have ceased to subscribe to SuperPages as a
wind tunnel, and when the wind tunnel is turned on and the result of the TVCs. Being a 4M dollar company, it would be striking
wind speed is increased, the other book gets blown away by a if such a large organization would be unable to identify even one
light wind, while the Yellow Book remains firmly in place even customer it had allegedly lost as a result of the TVCs.
as the intensity of the win increases to the point where the
other book’s marketer is blown off the screen. Terry Gilliam v. American Broadcasting Companies
Facts:
Verizon moved to dismiss the claims on the ground that the TVCs  Monty Python is a groups of writers and performers who has gained
constitute nonactionable puffery as a matter of law. popularity through its 30minute TV programs created for BBC as part
of a comedy series entitled “Monty Python Flying Circus”. In their
Issue: contract with BBC, it was stated there that BBC retains final authority
 Whether or not there is a case for Section 43(a) of the Lanham Act or to make changes to the script. However, there is nothing in the
the NY General Business Law. agreement which entitled BBC to alter the program once it has been
 Whether or not there is disparagement. recorded.
Time Lite Films acquired the right to distribute certain BBC programs
Ratio: including the Monty Python series and was permitted to edit the
 No. False representations of fact are distinguished from programs only for insertion of commercials and applicable
puffery. Puffery is somewhat an amorphous concept. It has censorship or governmental rules and regulations
been defined as an exaggeration or overstatement expressed in
broad, vague and commendatory language. It is not actionable Thereafter, ABC entered into an agreement with Time Lite Films to
under the Lanham Act because it cannot be proven either true or false. broadcast 2 90 minute programs each comprising of 3 episodes of
Neither is it actionable under the NY General Business law for much Monty Python shows that had not been previously shown in the
the same reasons that it is not illegal under the Lanham Act. country. It was the understanding of BBC that ABC was going to show
the program in its entirety but it was found that 24 of the 90
minutes have been omitted. Some of the editing had been

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done in order to make time for commercials; other material So far as the Lanham Act is concerned, it is not a substitute for droit
had been edited, according to ABC because the original moral which authors in Europe enjoy. If the licensee may, by contract,
programs contained offensive or obscene matter. distort the recorded work, the Lanham Act does not come into play. If
the licensee has no such right by contract, there will be a violation in
Thus, the group filed this action to enjoin the broadcast and for breach of contract. The Lanham Act can hardly apply literally when the
damages on the ground that the editing has caused the film or program credit line correctly states the work to be that of the plaintiffs which,
to lose its iconoclastic verve. The judge denied the motion on the indeed it is, so far as it goes. The vice complained of is that the
ground that it was unclear who owned the copyright in the programs truncated version is not what the plaintiffs wrote. But the Lanham Act
produced by BBC from the scripts written by Monty Python. does not deal with artistic integrity. It only goes to misdescription of
origin and the like.
Issue:
 Whether or not there is copyright infringement. Yu v. Court of Appeals
Facts:
Ratio:  Petitioner is the exclusive distributor of House of Mayfair wallcovering
 Yes (the way I understand it, there is copyright infringement products in the Philippines and it had an exclusive sales agency
but there is no violation of the Lanham Act – because agreement with the House of Mayfair since 1987 to promote and
copyright infringement is covered under a different law ??). procure orders for Mayfair wallcovering products from customers in
In determining whether there is infringement, one has to look at the the Philippines. He filed a case against private respondent Unisia
fact of whether the editing was substantial. In this case, the agreement Merchandising when it purchased the merchandise from the House of
between Monty and BBC specifically permitted the latter to license the mayfair in England through FNF Trading in West Germany and sold
transmission of the recordings made by BBC to distributors such as said merchandise in the Philippines.
Time Life for broadcast in overseas territories. One who obtains such
permission in the production of a derivative work may not exceed In the petition at hand, petitioner anchors his plea for redress on his
the specific purpose for which permission has been granted. perception that private respondent has distributed and continues to
The claim here is that the revisions in the script could only sell Mayfair covering products in contravention of petitioner's
be made after consultation with Monty and that ABC’s exclusive right conferred by the covenant with the House of Mayfair.
broadcast of a program edited after recording and without
consideration with Monty exceeded the scope of any license For this, a temporary restraining order was issued to last until further
that BBC was entitled to grant. notice from the Court. Notwithstanding the proscription, Unisia
persisted in the distribution.
While BBC obtained the rights to the derivative work, they did not
have any rights they did not obtain from Gilliam et. al. Since Gilliam Issue:
did not give them the right to edit the work, they couldn't sell the right  Whether or not a writ may be issued against Unisia.
to edit the work to ABC.
Ratio:
If a distortion or truncation in connection with a use constitutes an  Yes. That the exclusive sales contract which links petitioner and the
infringement of copyright, there is no need for an additional cause of House of Mayfair is solely the concern of the privies thereto and
action beyond copyright infringement. An obligation to mention the cannot thus extend its chain as to bind private respondent herein is,
name of the author carries the implied duty, however, as a matter of We believe, beside the point. Verily, injunction is the appropriate
contract, not to make such changes in the work as would render the remedy to prevent a wrongful interference with contracts by strangers
credit line a false attribution of authorship. to such contracts where the legal remedy is insufficient and the
resulting injury is irreparable. Unisia Merchandising Co., Inc. is not a

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party thereto but its accountability is "an independent act generative of determine whether a warrant should issue or be quashed, and the
civil liability. second, whether an information should be filed in court.
To Our mind, the right to perform an exclusive distributorship When the court, in determining probable cause for issuing or quashing
agreement and to reap the profits resulting from such performance are a search warrant, finds that no offense has been committed, it does not
proprietary rights which a party may protect which may otherwise not interfere with or encroach upon the proceedings in the preliminary
be diminished, nay, rendered illusory by the expedient act of utilizing investigation. The court does not oblige the investigating officer not to
or interposing a person or firm to obtain goods from the supplier to file an information for the court's ruling that no crime exists is only for
defeat the very purpose for which the exclusive distributorship was purposes of issuing or quashing the warrant.
conceptualized, at the expense of the sole authorized distributor.
The effect of the quashal of the warrant on the ground that
Solid Triangle Sales v. Sheriff no offense has been committed is to render the evidence
Facts: obtained by virtue of the warrant "inadmissible for any
 Solid Triangle filed with the Office of the City Prosecutor an affidavit purpose in any proceeding," including the preliminary
for unfair competition against the members of the Board of Sanly investigation. It may be true that, as a result of the quashal of the
alleging that ERA, owned and operated by LWT is in conspiracy with warrant, the private complainant is deprived of vital evidence to
Sanly (collectively, respondents) in selling and/or distributing establish his case, but such is the inevitable consequence. The
Mitsubishi brand photo paper to the damage and prejudice of Solid preliminary investigation and the filing of the information may still
Triangle (who claims to be the sole and exclusive distributor thereof proceed if, because of other (admissible) evidence, there exists
pursuant to an agreement with Mitsubishi). The Judge in the said case "sufficient ground to engender a well-founded belief that a crime has
issued an order in favor of respondents quashing the search warrant been committed and the respondent is probably guilty thereof, and
issued and ordering the return of the seized goods against should be held for trial.”
respondents.
 There is no case for unfair competition. Sanly Corporation did
In view of the quashal of the warrant and the return of he seized goods, not pass off the subject goods as that of another. Indeed, it admits that
the fiscal was deprived of vital evidence to determine probable cause in the goods are genuine Mitsubishi photographic paper, which it
the case of unfair competition. purchased from a supplier in Hong Kong.
Issue: Petitioners also allege that private respondents “made it

 Whether or not the judge can quash the warrant already implemented. appear that they were duly authorized to sell or distribute
 Whether or not there is unfair competition. Mitsubishi Photo Paper in the Philippines.” Assuming that
this act constitutes a crime, there is no proof to establish
Ratio: such an allegation.
 Yes. Inherent in the court’s power to issue warrants is the
power to quash warrants already issued. In this connection, a NESTLE v. Casa Helvetica
motion to quash should be filed in the court that issued the warrant Facts:
unless a criminal case has been instituted in another court in which  Nestle owns the Perugina trademark and for many years, Casa
case, the motion should be filed with the latter. The proceedings for Helvetica has been the authorized distributor of such chocolates in
the issuance/quashal of a search warrant before a court on the one Puerto Rico. However, Nestle forsook Casa Helvetica and licensed its
hand, and the preliminary investigation before an authorized officer on affiliate, Nestle Puerto Rico as the exclusive distributor in Puerto Rico.
the other, are proceedings entirely independent of each other. One is
not bound by the other's finding as regards the existence of a crime. Meanwhile, in 1990, without obtaining Netstle’s consent, Casa
The purpose of each proceeding differs from the other. The first is to Helvetica began to purchase Venezuelan made chocolates bearing the

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Perugina mark and distributed them in Puerto Rico. For this, Nestle For this reason, the threshold for materiality must be kept low
filed a case for infringement and the violation of the right of enough to take account of potentially confusing differences,
exclusive distributorship under the Lanham Act claiming that differences that are not blatant to make it obvious to the
Casa Helvetica;s use of the mark was likely to confuse consumers into average consumer that the origin of the product differs from
the mistaken belief that the chocolates are the same as the Italian his or her expectations.
chocolates and are authorized by Nestle for sale in Puerto Rico.
Thus, the court concludes that the existence of any difference between
 The DC held that the differences between the chocolates did not the registrant’s product and the allegedly infringing gray good that
warrant the injunctive relief in the absence of demonstrated consumer consumers would likely consider to be relevant when purchasing a
dissatisfaction and harm to the goodwill of plaintiffs. product creates a presumption of consumer confusion
sufficient to support a Lanham Act claim. Anyhigher threshold
Issue: would endanger the manufacturer. Of course, this presumption is
 Whether or not there is a violation of the Lanham Trademark Act. rebuttable.
Ratio: The differences:

 Yes. Although it has been said that trademark law generally does not
reach the sale of genuine goods bearing a true mark even though such Italian Chocolate Venezuelan
sale is without the mark owner’s consent, the maxim does not apply Chocolate
when genuine but unauthorized, imports differ materially from Quality  Leaves Italy in  Arrives in Puerto
authentic goods authorized for sale in the domestic market. Control refrigerated containers Rico via a
Unauthorized importation and sale of materially different which arrive at the commercial air
merchandise violates the law because a difference in the facitlity in Puerto Rico. freight
products bearing the same name confuses the consumers  Immediately  Transferred in a
and impinges on the local trademark holder’s goodwill. transported in central air cargo
refrigerated rooms cooler
As such, in this case, the chocolates are not “genuine” within the  Transports it into a
meaning of the law since they are: (a) not authorized for sale in the US; warehouse
and (b) materially different from the authorized version. Composition  5% more milk with  made with domestic
prolonged shelf life beans, imported
The mere licensing of production abroad does not support an inference  contain Ecuadorian hazelnuts and
of consent to import licenses products into the US. Nestle never and Africa cocoa ordinary crystal
authorized the sale of the chocolates in Puerto Rico. Therefore, the beans, fresh hazelnuts sugar
question of violation of the law boils down to whether material and cooked sugar
differences exist between the Italian made chocolates and syrup
the Venezuelan made chocolates sufficient to create a Configuration come in a variety of shapes than the Venezuelan
likelihood of confusion. pieces.
Packaging  glossy finish  Shiny finish
The probability of confusion is great when the same mark is displayed Price  Higher price  Lower price
on the goods are not identical but nonetheless bear strong similarities
in appearance or function. Gray goods often fall within this category. Thus, it is readily apparent that the material differences
Thus, when dealing with the importation of gray goods, the court must between the products are relevant. The use of the chocolates
be necessarily concerned with subtle differences for it is by manifesting such differences is presumptively likely to cause
subtle differences that consumers are most easily confused.

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confusion. Because the differences are material, there is a case for the US markholder, it does nothing more than treat the two companies
unfair competition. as being constructively one for infringement purposes. As such it
seems unobjectionable.
Lever Brothers v. United States (Caveat. Read Origs, confusing eh)
Facts: Apart from its attempted reliance on authority and the impossibility of
 Parties in dispute herein are Lever UK and Lever US which are 2 self-infringement, the Customs Service asserts some policy arguments.
affiliated companies which use the same words “SHIELD AND First, it contends that because of the affiliation, the dispute is better
SUNLIGHT” as trademakrs for products that differ materially in the 2 suited for resolution "in the boardroom" than the court room. But this
countries because they adjusted them according to the country’s solution is obviously costly. The Lever affiliates have succeeded in
differing tastes and conditions. Consumers are apparently capable of attaching to products designed for their respective markets ordinary
detecting the differences between the contents of the UK and US words that have both a favorable "spin" and a natural link to those
products once they start using them. products. Customs has offered us no shadow of a reason why it would
serve any public interest implicit in Sec. 42 to compel Lever to
 However, Lever US filed a case praying for the issuance of an abandon the resulting goodwill, or (looking ahead) to refrain in the
injunction alleging that there is a likelihood of confusion as between first place from establishing such goodwill by use of identical words.
the products of the companies. Allegedly, it had received letters from
consumers expressing their rage or disappointment with what they We think the natural, virtually inevitable reading of Sec. 42
believed, at the time of the purchase, to be discounted version of the is that it bars foreign goods bearing a trademark identical to
similar US product. Despite demands made, the UK company refuses a valid US trademark but physically different, regardless of
to halt importation. the trademarks' genuine character abroad or affiliation
between the producing firms. On its face the section appears
Lever US contends that where affiliated domestic and foreign firms to aim at deceit and consumer confusion; when identical
produce goods bearing the same trademark but different in physical trademarks have acquired different meanings in different
content, the foreign products copy or simulate the domestic trademark countries, one who imports the foreign version to sell it
so that forbids their importation notwithstanding the fact of affiliation. under that trademark will (in the absence of some specially
On the other hand Lever UK seeks refuge in the exception found in the differentiating feature) cause the confusion Congress sought
Customs Service which exempts the foreign and domestic trademark to avoid. The fact of affiliation between the producers in no
or tradename owners who are parent and subsidiary companies or are way reduces the probability of that confusion; it is certainly
otherwise subject to common ownership or control. not a constructive consent to the importation. The cases are
entirely congruent with this view. Customs' assertion of
Issue: administrative difficulties appears overdrawn, and in any
 Whether or not an injunction may be issued against Lever UK. event would seem to justify no more than inaction in those
cases that are close on the factual issue of product identity.
Ratio: Thus, despite the deference we owe Customs under Chevron,
 Customs' central thesis, that affiliation between the foreign producer we believe that the affiliate exception does not square with
and domestic markholder automatically defines the foreign goods as Sec. 42.
genuine, draws on an important truth--that a trademark holder cannot
infringe its own mark. Thus, if a US markholder itself imports goods Du Pont De Nemours Powder Co. v. Masland
(or licenses another to do so), the markholder's conduct of or Facts:
authorization of the importation makes the goods authentic, whether  A bill was filed to prevent the defendant Masland herein from using or
they are better, worse, or the same as the US markholder's domestic disclosing secret processes the knowledge of which was
products. To the extent that the affiliate exception extends this acquired by defendant while in the plaintiff’s employ.
principle to goods imported into the US by companies affiliated with

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Defendant herein admits that he intends to manufacture leather but cumbersome driers then in general use, which required regeneration
denies that he intends to use any inventions, trade secrets or and the use of alternate driers.
secret processes of the plaintiffs that he may have learned in any
confidential relation prefacing his denial. To the contrary, he claims Rapp herein is an employee of Van who rose to the rank of a general
that many things claimed by the plaintiff are actually well known to the manager. During his stay with Van, he ran the gamut of the tasks
trade. involved in this segment of Van’s business. Rapp therefore was
thoroughly imbued, through his industrious application,
Issue: with all the problems, processes and advantages involved in
 Whether or not an injunction may be issued to prevent the use and the production, sale and maintenance of this type of drier.
disclosure of trade secrets. He learned everything there was to learn for the trade.
Ratio: In 1952, General began to engineer and design parts of Van’s drier on
 Yes. If the disclosure is forbidden to one who denies that there is a behalf of Van according to the patent. Rapp supervised the
trade secret, the merits of his defense are adjudged against him before construction of these. However, subsequently, suspecting that
he has a chance to be hear or to prove his case. The word property as Rapp’s loyalty leaned more towards General, Van
applied to trademarks and trade secrets is an unanalyzed terminated his employment. Rapp was them employed by
expression of certain secondary consequences of the General and they produced a deliquescent desiccant air drier
primary fact that the law makes some rudimentary on behalf of General substituting sodium chloride which
requirements of good faith. performed the same function. For this, Rapp was granted a patent
for his desiccant and the drier.
The property may be denied but the confidence may not be. Therefore,
the starting point for the present matter is not property or due  Van instituted this action for injunctive relief and accounting which
process of law, but that the defendant stood in confidential was objected to by Rapp on the ground that the state court had no
relations with the plaintiff during his employ. The defendant jurisdiction since federal courts have exclusive jurisdiction over patent
should not fraudulently abuse the trust reposed him. If there is any rights.
disadvantage in the fact that he knew of the secret, he must take the
burden with the good. Issue:
 Whether or not Rapp caused damage to Van’s business throught the
The injunction asked by the plaintiffs forbade only the use of confidential material information misappropriated by Rapp
disclosure of processes claimed by them including the while he was in its employ.
disclosure to experts or witnesses produced during the
taking of proofs but excepting the defendant’s counsel. Ratio:
As a preliminary, the existence of patent rights is not controlling in this case.
Van Products Co v. Gen Welding & Fabricating Infringement actions may be prosecuted in federal courts and existing patent
Facts: rights may be unchallengable in a state court. However, the rights of Van to
 Van was a corporation engaged in making of air vises. It contacted manufacture and sell drier involved depends upon how the knowledge in
Norton (also the owner of a patent for the drier but not the desiccant) connection therewith is obtained.
who claimed to have invented a unique air drier that could
be used profitably in many areas of industry and  There is no violation because said information are not trade
manufacturing to prevent and eliminate fouling, rusting and secrets. In this case, it is alleged that they misappropriated:
shortening the life in tools and machinery operated by
compressed air (a deliquescent desiccant air drier). This 1. The idea and the original concept of the deliquescent type of
device was a substantial improvement over the expensive and air drier;

3A | Batch 2014 | 99
2. Information derived from building up, maintaining intimate experience are not proper subjects of mental purge. In this case, Rapp
card files on customers and their peculiar problems and needs was hired to conduct and of which he made a selling process. At most,
and in servicing said customers. Van can claim co-authorship on the basis that Rapp was paid
3. Van’s know-how in selling to do this work, but much of the initiative and creative
4. Results of research and development and experimentation. questioning was the product of Rapp’s own ambition. Thus, it
5. Secret of desiccant would seem that this generalized knowledge in the field of
6. Van’s customers and receivables. deliquescent desiccant air driers was a labor asset which Rapp was
7. Advertising method and material. privileged to carry with him to his new employer. They are not trade
secrets. A manufacturing company is merely the sum of its
The trade secret here involved is not just any of the features or any producing units, including the skills of its employees.
others which constitute trade secret contended for by Van but rather Granted that Van had a very precise knowledge of the field of
the whole picture combining the original idea or theory as air driers, it was mainly derived from Norton’s inventiveness
worked up mechanically by Van into a tangible and and Rapps industrious experimentation. Rapp’s know how here
marketable product and the know-how along the line. is not protectable from the exploitation by Rapp.
A trade secret may consist of any formula, pattern, device or If there is anything protectable herein, it is the composition of the
compilation of information which is used in one’s business, desiccant Van used in its driers, which was secret and remained so
and which gives him an opportunity to obtain an advantage after Rapp’s departure. In fact, Rapp had to formulate another
over competitors who do not know how to use it. To be entitled desiccant to use in the drier which he was privileged to construct.
to such relief, it must be established:
Kewanee Oil Co v. Bicron Corporation
1. That there was a trade secret or a secret of process of Facts:
manufacture (as in this case)  Harshaw Chemical (Harshaw) is a leading manufacturer of a type of
2. It was of value to the employer and important in the conduct synthetic crystal which is useful in the detection of ionizing radiation.
of his business It commenced research into the growth of this type of crystal and was
3. That by reason of discovery or ownership the employer had able to produce one less than 2 inches in diameter. Harshaw had
the right to the use and enjoyment of the secret developed many processes, procedures, and manufacturing techniques
4. The secret was communicated to the employee while he in the purification of raw materials and the growth and encapsulation
was employed in a position of trust and confidence of the crystals which enabled it to accomplish this feat. Some of these
processes Harshaw considers to be trade secrets.
For the cause of action to arise:
While employed in Harshaw, the employees executed a
1. Possession by the plaintiff of knowledge or information which condition of employment requiring them not to disclose
is not generally known confidential information or trade secrets obtained as
2. Communication by the plaintiff to the defendant under an employees of Harshaw.
express or implied agreement limiting its use or disclosure by
the defendant  Petitioners in this case brought a complaint seeking injunctive relief
3. Use or disclosure by the defendant to the injury of plaintiff. and damages for the misappropriation of the trade secrets of Harshaw
in favor of Bicron Corporation (a competitor). Allegedly, there was a
Thus, ultimately, the question you need to ask is whether the disclosure and use of trade secrets by releasing the same to
information is such here that the court must act as a judicial the public.
eraser to blot out Rapp’s knowledge and skill once he left the
company. “Secrets” which are of general knowledge, skill and

3A | Batch 2014 | 100
 DC granted the relief, applying Ohio’s trade secrets law. 6th Circuit CA of making and using it so that the person skilled in the art
reversed the decision of the DC on the ground that the trade secrets may make and use the invention.
law were in conflict with the patent laws of the US. CA
reversed said decision and held that the court cannot grant monopoly Federal law requires that all ideas in general
protection to processes and manufacturing techniques that were circulation be dedicated to the common good unless
appropriate subjects for consideration under the law for a federal they are protected by a patent.
patent but which had been in commercial use for over one year, and so
were no longer eligible for patent protection. 2. Trade Secrets – maintenance of standards of commercial
ethics and the encouragement of invention
Issue:
 Whether or not there is a right to protection of trade secrets where Certainly the patent policy of encouraging invention is not
there is a patent. disturbed by the existence of another form of incentive to
invention. In this respect, the two systems are not and never would
Ratio: be in conflict. Similarly, the policy that matter once in the public
 The court of appeals correctly erred that the trade secret law domain must remain in the public domain is not
is not preempted by the federal patent law. The protection incompatible with the existence of trade secret protection. By
accorded the trade secret holder is against the disclosure or definition, a trade secret has not been placed in the public
unauthorized use of the trade secret by those to whom the domain.
secret has been confided under the express or implied
restriction of nondisclosure or nonuse. The law also protects the Even as the extension of trade secret protection to patentable subject
holder of a trade secret against disclosure or use when the knowledge matter that the owner knows will not meet the standards of
is gained not by the owner’s volition but by some “improper means”. A patentability will not conflict with the patent policy of disclosure, it
trade secret law however does not offer protection against will have a decidedly beneficial effect on society. Trade secret law
discovery by fair and honest means, such as independent will encourage invention in areas where patent law does not
invention, accidental disclosure or by so-called reverse reach, and will prompt the independent innovator to
engineering (by starting with the known product and working proceed with the discovery and exploitation of his invention.
backward to divine the process which aided in its development or Competition is fostered, and the public is not deprived of the use of
manufacture) – thus it can easily be lost. valuable, if not quite patentable, invention.
Novelty is not required for a trade secret. However some novelty will Trade secret law encourages the development and
be required if merely because that which does not possess novelty is exploitation of those items of lesser or different invention
usually known secrecy, in the context of trade secrets, this implies at than might be accorded protection under the patent laws,
least minimal novelty. but which items still have an important part to play in the
technological and scientific advancement of the Nation. Trade
The patent law does not explicitly endorse or forbid the secret law promotes the sharing of knowledge, and the efficient
operation of trade secret law. To determine whether the operation of industry; it permits the individual inventor to reap the
Ohio law "clashes" with the federal law, it is helpful to rewards of his labor by contracting with a company large enough to
examine the objectives of both the patent and trade secret develop and exploit it.
laws.
1. Patent – requires that the application shall include a full and

clear description of invention and of the manner and process

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Computer Associates International v. Altai Wiliams initiated the rewriting of OSCAR to excise those portions
Facts: which had been copied from Adapter. The goal here was to save as
 Computer Associates (CAI) and Altai are companies engaged in the much as possible of the OSCAR that can be legitimately used. The
computer software industry – designing, developing and marketing result of this rewriting was the OSCAR 3.5. While Altai and Williams
various types of computer programs. CAI marketed programs acted responsibly to correct Arney's literal copying of the ADAPTER
entitled CA Scheduler (Scheduler) which is a job scheduling program, copyright infringement had occurred.
program designed for IBM mainframe computers with a primary
function of creating a schedule specifying when the computer should Issue:
run various tasks and then to control the computer as it executes the  Whether or not Altai is liable for trade secret misappropriation in
schedule. The Scheduler contains a subprogram called the ADAPTER copying the codes of Adapter into Oscar.
which is an not independently marketed product of CAI because it is a
wholly integrated component of the Scheduler. Nevertheless, it plays Ratio:
an important role in the program because it is the second common  Yes. Trade secret laws are not preempted by copyright laws.
system interface component which contains all the So long as trade secret law is employed in a manner that does not
interconnections between the first component (containing all encroach upon the exclusive domain of the Copyright Act, it is an
the task specific portions) and the operating system. appropriate means by which to secure compensation for software
espionage. In copyright, the law affords a copyright owner the
In 1982, Altai began marketing its own job scheduling program exclusive right to reproduce the work, prepare derivative works,
entitled ZEKE (ran in conjunction with an MVS operating system). distribute copies of the work by sale or otherwise and with respect to
Williams (then employee and noe president of Altai) approached his certain artistic works, perform the work publicly and display the work
longtime friend Arney (employee of CAI) because he wanted to recruit publicly. This provision of law thus preempts only those state law
Arney to assist in designing the ZEKE. At the time he approached rights that may be abridged by an act which in and of itself, would
Arney, he was aware of both the Scheduler and the Adapter infringe one of the exclusive rights provided by federal copyright law.
programs of CAI but Williams was not involved in their Bbut if an extra element is required instead of or in addition to the acts
development and had never seen the codes of either of reproduction, performance, distribution or display in order to
program. Moreover, he did not know that Adapter was a constitute a cause of action, then the right does not lie within the
component of the Scheduler. general scope of copyright and there is no preemption.
On the other hand, Arney was intimately connected and familiar with Trade secret protection, the branch of unfair competition law at issue
the various aspects of the Adapter. At the time he was working for the in this case, remains a "uniquely valuable" weapon in the defensive
CAI, he was permitted to take home a copy of its source code. Hence, arsenal of computer programmers. Precisely because trade secret
when he left CAI, he took with him copies of the source code doctrine protects the discovery of ideas, processes, and systems which
for both the VSE and MVS versions of Adapter. He did this in are explicitly precluded from coverage under copyright law, courts and
knowing violation of the employee agreement he signed. In three commentators alike consider it a necessary and integral part of the
months, Arney successfully completed the OSCAR/VSE project. In an intellectual property protection extended to computer programs.
additional month he developed an OSCAR/MVS version. When the
dust finally settled, Arney had copied approximately 30% of OSCAR's The legislative history of the law states that the evolving
code from CAI's ADAPTER program. common law rights of trade secrets would remain unaffected
as long as the causes of action contain elements such as a
 After confirming suspicions, CAI secured a copyright for its versions of breach of trust or confidentiality that are different in kind
the Scheduler then brought a suit for copyright and trade secret from copyright infringement. Congress did not consider the term
misappropriation against Altai. It was only at this time that misappropriation to be necessarily synonymous with copyright
Williams knew of the copying Arney did. Upon advice of the counsel, infringement or to serve as the talisman of preemption. Trade secret

3A | Batch 2014 | 102
claims often are grounded upon a defendant's breach of a duty of trust indirectly, nor permit any other person under his control to
or confidence to the plaintiff through improper disclosure of enter in or engage in a similar or competitive business to
confidential material. that of the said party of the first part anywhere within the
Philippines for a period of 5 years from the date of the
It is undisputed that, when Arney stole the ADAPTER code and contract.
incorporated it into his design of OSCAR 3.4, he breached his
confidentiality agreement with CAI. The district court noted that The duties performed by him were such as to make it necessary that he
while such action might constitute a valid claim should have this knowledge of plaintiff's business. Defendant had a
against Arney, CA is the named defendant in this lawsuit. general knowledge of the Philippine embroidery business before his
Additionally, the district court found, as a matter of fact, that employment by plaintiff, having been engaged in similar work for
"[n]o one at Altai, other than Arney, knew that Arney had the several years. After his employ with William, he left the Philippines for
ADAPTER code. the US.
While we agree with the district court that OSCAR 3.5 did not contain When he returned, he was already the manager of the Philippine
any expression protected by copyright, it may nevertheless still have Underwear Company. It does not maintain a factory in the Philippines
embodied many of CA's trade secrets that Arney brought with him to but send material and embroidered designs from NY to its local
Altai. Since Altai's rewrite was conducted with full knowledge of representative here who employs Filipino needle workers to embroider
Arney's prior misappropriation, in breach of his duty of confidentiality, the designs and make up the garments in their homes.
it follows that OSCAR 3.5 was created with actual knowledge of trade
secret violations. Thus, with regard to OSCAR 3.5, CAI has a viable  Thus, plaintiff herein commenced this action praying for injunction on
trade secret claim against Altai that must be considered by the the ground that their contract stated that he would not enter into or
district court on remand. This claim is grounded in Altai's alleged engage himself directly or indirectly in a similar competitive
use of CAI's trade secrets in the creation of OSCAR 3.5, while business to that of plaintiff anywhere within the Philippines
on actual notice of Arney's theft of trade secrets and for a period of 5 years. The trial court granted injunction and
incorporation of those secrets into OSCAR 3.4. subsequently made it perpetual.
William Ollendorff v. Ira Abrahamson For this, defendant argues that the contract is void for being an
Facts: unreasonable restraint on trade.
 William is and has for a long time been engaged in the manufacturing
of ladies embroidered underwear for export. He imports material from Issue:
which this underwear is made and adopts decorative designs which are  Whether or not the contract is void for being an unreasonable restraint
embroidered upon it by Filipino needle workers from patterns selected on trade.
and supplied by him. The workers employed by plaintiff are under  Whether or not there is ground for injunction.
contract to work for plaintiff exclusively. Some 15,000 home
workers and 800 factory workers are engaged in this work for the Ratio:
plaintiff.  Valid. Obligations created by contracts have the force of law between
the contracting parties and must be enforce in accordance with their
William and Ira entered into a contract whereby Ira was tenor. The only limitation is that it should not be contrary to law,
employed for a term of 2 years at a certain rate of salary. Ira, under the morals or public order. Originally the English courts adopted the view
contract, was to devote his entire time, attention, energies and that any agreement which imposed restrictions upon a man's right to
industry to the promotion of the business of William. Likewise, under exercise his trade or calling was void as against public policy. In the
the said contract, it was stated that Ira, his heirs, successors and course of time this opinion was abandoned and the American and
assigns will not enter into or engage himself directly or English courts adopted the doctrine that where the restraint was

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unlimited as to space but unlimited as to time were valid. In recent competition is exceedingly difficult to measure. A diminution of the
years there has been a tendency on the part of the courts of England volume of a business may be due to so many different causes that it is
and America to discard these fixed rules and to decide each case often impossible to demonstrate that it has in fact been caused by the
according to its peculiar circumstances, and make the validity of the illegal competition of the defendant. This is frequently the case in suit
restraint depend upon its reasonableness. If the restraint is no greater for the infringement of trademark rights, in which the courts may
than is reasonably necessary for the protection of the party in whose enjoin the continued use of the infringing mark, although unable to
favor it is imposed it is upheld, but if it goes beyond this is declared assess damages for the past injury.
void. Following this opinion, we adopt the modern rule that
the validity of restraints upon trade or employment is to be Air Philippines v. Pennswell
determined by the intrinsic reasonableness of restriction in Facts:
each case, rather than by any fixed rule, and that such  Air Philippines is a domestic corporation engaged in the business of air
restrictions may be upheld when not contrary to afford a fair transportation services. On the other hand, Pensswell is organized to
and reasonable protection to the party in whose favor it is engage in the business of manufacturing and selling industrial
imposed. chemicals, solvents and special lubricants.
We are of the opinion, and so hold, that in the light of the established On various dates, respondent Penswell delivered and sold to Air
facts the restraint imposed upon defendant by his contract is not Philippines sundry goods in trade. However, for failure to comply
unreasonable. A business enterprise may and often does depend for its with the obligations under their contracts, Penswell filed a complaint
success upon the owner's relations with other dealers, his skill in for sum of money with the RTC. In its Answer, petitioner contended
establishing favorable connections, his methods of buying and selling - that its refusal to pay was not without reason. They alleged
- a multitude of details, none vital if considered alone, but which in the that the previous 4 transactions covered misrepresented
aggregate constitute the sum total of the advantages which the result of items allegedly belonging to a new line but were in truth and
the experience or individual aptitude and ability of the man or men by in fact, identical with products petitioner had previously
whom the business has been built up. Failure or success may depend purchased from respondent. Allegedly, Penswell merely altered
upon the possession of these intangible but all important assets, and it the names and labels of such goods. Petitioner asseverated that had
is natural that their possessor should seek to keep them from falling respondent been forthright about the identical character of the
into the hands of his competitors. It is with this object in view that products, it would not have purchased the items complained of.
such restrictions as that now under consideration are written into
contracts of employment. Their purpose is the protection of the To conduct a comparison of the products, a motion to compel
employer, and if they do not go beyond what is reasonably necessary to respondent to give a detailed list of the ingredients and
effectuate this purpose they should be upheld. chemical components of its products. This was granted by the
court. For which, respondent sought reconsideration on the ground
 Yes. The admitted fact that plaintiff has failed to establish proof of that it cannot be compelled to disclose the chemical
pecuniary damage by reason of the breach of the contract by defendant components sought because the matter is confidential. It
by the acts committed prior to the issuance of the preliminary argued that what petitioner endeavored to inquire upon constituted
injunction is, of course, a bar or nay money judgment for damages for a trade secret which respondent cannot be forced to divulge.
the breach of the contract, but will not justify us in permitting Respondent maintained that its products are specialized lubricants,
defendant to continue to break his contract over plaintiff's objection. and if their components were revealed, its business competitors may
The injury is a continuous one. The fact that the court may not be able easily imitate and market the same types of products, in violation of its
to give damages for that part of the breach of the contract which had proprietary rights and to its serious damage and prejudice. RTC gave
already taken place when its aid was invoked is no reason why it this credence and reversed itself.
should countenance a continuance of such disregard of plaintiff's
rights. The injury done the business of a merchant by illegal or unfair

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Issue: 2. Extent to which the information is known by employees and
 Whether or not there is grave abuse discretion on the part of the RTC others involved in the business
judge when it granted the MR of Penswell. 3. Extent of measures taken by the employer to guard the secrecy
of information
Ratio: 4. Value of the information to the employer and to competitors
 There is no grave abuse of discretion. The ingredients or 5. Amount of effort or money expended by the company in
composition of Penswell’s lubricants are trade secrets which developing the information
it cannot be compelled to disclose. The drafters of the 6. Extent to which the information could be easily or readily
Constitution also unequivocally affirmed that, aside from national obtained through an independent source.
security matters and intelligence information, trade or industrial
secrets (pursuant to the Intellectual Property Code and other related The chemical composition, formulation, and ingredients of
laws) as well as banking transactions (pursuant to the Secrecy of Bank respondent’s special lubricants are trade secrets within the
Deposits Act) re also exempt from compulsory disclosure. It is thus contemplation of the law. Respondent was established to engage in the
clear from the foregoing that a party cannot be compelled to produce, business of general manufacturing and selling of, and to deal in,
release or disclose documents, papers, or any object which are distribute, sell or otherwise dispose of goods, wares, merchandise,
considered trade secrets. products, including but not limited to industrial chemicals, solvents,
lubricants, acids, alkalies, salts, paints, oils, varnishes, colors,
Pennswell has a proprietary or economic right over the ingredients or pigments and similar preparations, among others. It is unmistakable
components of its lubricant products. The formulation thereof is not to our minds that the manufacture and production of respondent’s
known to the general public and is peculiar only to [respondent] products proceed from a formulation of a secret list of ingredients. In
Pennswell. Penswell has a right to guard its trade secrets. Otherwise the creation of its lubricants, respondent expended efforts, skills,
information can be illegally and unfairly used by business competitors research, and resources. What it had achieved by virtue of its
who, through their access to Penwell’s business secrets, may use the investments may not be wrested from respondent on the mere pretext
same for their own private gain and to the irreparable prejudice of the that it is necessary for petitioner’s defense against a collection for a
latter. sum of money. By and large, the value of the information to
respondent is crystal clear. Our conclusion is that the detailed
A trade secret is defined as a plan or process, tool, ingredients sought to be revealed have a commercial value to
mechanism or compound known only to its owner and those respondent. Not only do we acknowledge the fact that the
of his employees to whom it is necessary to confide it. It also information grants it a competitive advantage; we also find
extends to secret formula or process not patented but known only to that there is clearly a glaring intent on the part of
certain individuals using it in compounding some article of trade respondent to keep the information confidential and not
having a commercial value. It may consist of any formula, pattern or available to the prying public.
device or compilation of information that:
Clearly, in accordance with our statutory laws, this Court has declared
1. Is used in one’s business and that intellectual and industrial property rights cases are not simple
2. Gives the employer an opportunity to obtain an advantage property cases. Jurisprudence has consistently acknowledged the
over competitors who do not possess the information. private character of trade secrets. There is a privilege not to disclose
one’s trade secrets.
To determine whether or not information is a trade secret, American
jurisprudence has developed the following factors: In the case at bar, petitioner cannot rely on the Consumer Act of the
Philippines, in order to compel respondent to reveal the chemical
1. Exent to which information is known outside the business of components of its products. While it is true that all consumer products
the employer domestically sold, whether manufactured locally or imported, shall

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indicate their general make or active ingredients in their respective Issue:
labels of packaging, the law does not apply to respondent.  Whether or not the coffee propagation technique herein is a trade
Respondent’s specialized lubricants are not consumer products secret of the company.
(limited only to food, drugs, cosmetics and devices).
Ratio:
Cocoland Development Corporation v. NLRC  No. There is failure to demonstrate with clear and
Facts: convincing evidence that Mago violated the company policy
 Cocoland is a corporation engaged in the production of coffee, coconut, since the said technology is hardly a trade secret since
cacao and black pepper at its plantation in Basilan. It hired private private respondent had established competently that the
respondent Mago, an agriculturist by profession a Field Supervisor various propagation techniques claimed by petitioner is
(his work consisted of servicing agricultural needs of respondent at its readily available to the public. Any determination by
plantation). management as to the confidential nature of technologies, processes,
formulae or other so-called trade secrets must have a substantial
Sometime in 1989, it was found out by Cocoland that Mago was factual basis which can pass judicial scrutiny. A fictitious or non-
engaged in extending technical services and advice to small existent "secret" (or a publicly known one as in the instant case) can in
famers without prior clearance from management. On no wise be the basis of a reasonable and lawful rule or company policy
account thereof, the company issued a memorandum which charged regarding confidentiality. Had petitioner successfully established by
Mago for rendering professional services to outside parties without competent evidence the existence of such company policy as well as
knowledge and consent of management in violation of the policy the confidential nature of its technology, perhaps things might have
against unauthorized disclosure of trade secrets which violation was a turned out differently. But inasmuch as petitioner failed utterly on
ground for termination of his services with the company. both counts, it follows that there was no basis at all for private
respondent's dismissal on the ground of either disobedience or loss of
In his letter reply, Mago admitted that he accepted the invitations of trust and confidence. The petitioner's failure to prove violation of the
small farm owners and gave his consultancy services in order to uplift policy necessarily means that private respondent's dismissal was not
his standard of living however, he denied having violated the justified.
polict against unauthorized disclosure of trade secret
claiming that its technology on coffee propagation was In this case, majority of the staff of the company and his men once
longer a secret as the same had been learned and applied by refused to sign the confidentiality of technology because the alleged
outside parties or small farm owners since 1986 and he was technology was already known to outsiders. He did not even have to
not the first one to provide outside consultancy services to ask permission since most of the employees knew the different
such third parties. Private respondent further contended that in techniques in the propagation and maintenance of different crops even
1988, a majority of the petitioner corporation's staff, including private before they were hired by the corporation.
respondent and his men, had refused to sign a proposed memorandum
of agreement for protecting the company's "Confidentiality of Capital Asset Research Corporation v. Finnegan
Technology", because the alleged technology was already known to Facts:
outsiders.  Capital, a corporation consisting primarily of purchasing tax
executions or liens and tax deeds on real properties for
Mago filed a complaint for illegal dismissal with damages which property taxes are owed. If the property owner
with the DOLE and after hearing on the merits, the Arbiter found subsequently fails to satisfy the lien, and foreclosure proceedings take
that the dismissal was tainted with illegality. Charging the Labor place, CARC bids on the deed to the property itself at public auction.
Arbiter with grave abuse of discretion, the petitioner comes to this Both CARC and Breen look to generate capital and profit by acquiring
court. properties at bargain rates.

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Capital hired Finnegan to establish Capital’s business in the State of suppliers which is not commonly known by or available to the public
Georgia and to negotiate bulk contract purchases of tax liens on behalf and which information derives economic value, actual or
of Capital and to facilitate the acquisition of tax deeds. During his potential from not being generally known to and not being
employ, he facilitated the acquisition of tax deed through his own readily ascertainable by proper means, by other persons
company “TDI”. After his employment relationship with Capital, he who can obtain economic value from its disclosure or use and
met with Douglas Breen to discuss the possibility of employment with is the subject of efforts that are reasonable under the
Breen. Despite, however his change of employment his company still circumstances to maintain its secrecy. Even if all of the
remained under contract with Capital. Therefore, he remained in information is publicly available, a unique compilation of that
Capital’s operations in Georgia until present. information, which adds value to the information, also may qualify as a
trade secret.
 Capital Asset asserts 3 claims against Finnegan in this case:
The testimony regarding the "method" or "formula" which constitutes
1. Breach of contract claim asserting breach of consulting Capital’s alleged trade secret describes the process by which Capital
agreement evaluates the amount to be bid on a tax deed. That process involves the
2. Breach of contract claim asserting a breach of non- consideration of the following information:
disclosure agreement
3. Claim asserting a violation of Georgia Trade Secrets Act. 1. The assessed value of the property
2. The valuation reports on the property produced by 3rd party
After bench trial, the court ruled in favor of Finnegan but ultimately, it real estate information database services
concluded that Finnegan had misappropriated a computer diskette 3. The attributes of the property and the neighborhood based on
from Capital containing information which constituted a trade secret drive bys of the site by Capital employees
under the Act. Damages were awarded to Capital and enjoined 4. Prediction of the property owner’s likelihood of redeeming the
Finnegan from dealing for 1 year with the properties included in tax liens and making interest payments based on the specific
Capital’s portfolio of tax executions. owner’s payment record
5. National averages of tax redemption behavior.
Issue:
 Whether or not Finnegan is liable for trade secret misappropriation. Capital claims as trade secrets its compilation of property-
specific information, its national database on tax
Ratio: redemption behavior, and its final bid guidelines for tax
 No. A claim for misappropriation of trade secrets under the Georgia deeds sold at auction.
Trade Secrets Act requires proof of:
There is no question that the vast bulk of the information Capital uses
1. There is a trade secret in this process is available to the public or that the method utilized by
2. Opposing party misappropriated the trade secret. Capital is the same basic method by which any informed buyer would
prepare to submit an intelligent bid at any auction. Almost all of the
The party asserting the existence of trade secret has the burden of enumerated items above are public records. A person experienced in
proving that the information so qualifies and that the accused party the trade has sufficient time to compile the information from these
violated the Act. public sources before the auction.
A trade secret is an information without regard to form, including

but not limited to a pattern, a compilation, a program, a device, a
method, a technique, a drawing, a process, financial data, financial
plans, product plans or a list of actual or potential customers or

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AMP Incorporated v. James Fleischhacker who relies exclusively upon common law restrictions against
Facts: disclosure of confidential information. While an enforceable
 AMP Incorporated (AMP), the leading producer of electrical and restrictive covenant may protect material, such as confidential
electronic connection device brought this action against its former information revealed to an employee during the course of his
employee James and one of its competitors (Molex) and employment, which does not constitute a trade secret, an employer's
misappropriation of trade secrets. Allegedly, in 1984, Molex hired protection absent a restrictive covenant is narrower and extends only
James who is the former Division Manager of its components division to trade secrets or near-permanent customer relationships.
to fill the position of Director of Marketing of Molex. He rapidly
advanced through the Molex and in 1982, he was named as Manager of In this case, James was NOT BOUND by any enforceable restrictive
the Components and Assemblies Division, the position he held until he covenant NOT TO COMPETE. However, he signed an agreement
resigned. As Manager, his duties includes supervision of 1200 people before he was employed by AMP that he shall keep
who were responsible for the manufacture and sale of component confidential during and subsequent to his employment all
parts. information relating to the company’s business or trade
secrets, its sources of supply or lists of customers and its
AMP has alleged that Molex's hiring of Mr. Fleischhacker is part of a plans or contemplated actions. The language of this
larger pattern of conduct by Molex involving the misappropriation and confidentiality agreement purports to prohibit Mr. Fleischhacker from
threatened misappropriation of AMP's trade secrets and other disclosing to any non-AMP personnel any information relating to AMP
confidential information, and the solicitation and hiring of AMP and its operations forever. However, this agreement was held to be
personnel. Given the nature of the competition between Molex and unenforceable since it constitutes unreasonable restraints on trade
AMP, the nature of the respective positions held by Mr. James at AMP which unduly restrict the free flow of information necessary for
and Molex, and an alleged propensity on the part of Molex to business competition since it contains no geographical or duration
misappropriate AMP's internal information without regard to its limitation.
proprietary nature, AMP maintains that it is inevitable that Mr. James
and other AMP personnel hired by Molex will use and disclose AMP Because Mr. James is not subject to any enforceable
trade secrets and confidential information for the benefit and unjust contractual restrictions, AMP was first required to establish
enrichment of Molex. the existence of genuine trade secrets in order for injunctive
relief to be warranted. It is generally recognized in Illinois that at
After trial on the merits, the court ruled in favor of James denying the termination of employment, an employee may not take with him
injunctive relief and damages against Molex for unfair competition and confidential, particularized plans or processes developed by his
denying injunctive relief against Molex and Mr. James to employer and disclosed to him while the employer-employee
prevent trade secret misappropriation. DC explained that relationship existed, which are unknown to others in the industry and
because of their relatively simple design and the ease with which they which give the employer an advantage over his competitors. On the
could be copied, the products manufactured by AMP's Components & other hand, an employee is free to take with him general skills and
Assemblies Division did not constitute protectible trade secrets. knowledge acquired during his tenure with his former employer. One
who has worked in a particular field cannot be compelled to erase from
Issue: his mind all of the general skills, knowledge and expertise acquired
 Whether or not James is liable for trade secrets misappropriation through his experience. These skills are valuable to such employee in
the market place for his services. Restraints cannot be lightly placed
Ratio: upon his right to compete in the area of his greatest worth.
 No. Resolution of the issue presented herein lies in the
distinction between the protection afforded by an employer The district court credited the testimony of Mr. James that after he
who has bound his employee by an enforceable post tendered his resignation he hurriedly packed his personal papers and
employment restrictive covenant not to compete and one belongings under the surveillance of an AMP employee and did not

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deliberately take with him anything of a confidential nature. AMP has necessary for entitlement to protection were not addressed in the
offered no proof to the contrary. The record is similarly devoid of any report. This was denied and the report of the master was recommitted.
evidence that Mr. James ever systematically recorded, copied, However, subsequently, the master filed an additional subsidiary
compiled, or even purposefully memorized any of AMP's confidential finding which purported to contain summaries of the evidence as
business information while he was still employed at AMP for use in his requested thus, the first report was vacated. Ultimately, judgment was
new position at Molex. rendered denying both injunctive relief and damages plaintiff prayed
for. Thus, plaintiff appealed.
Mr. James was a high-level managerial executive who had broad
supervisory responsibility for 1200 employees and over 10,000 The information under question here is the TIRAS which involve
different products at AMP. AMP now requests that we restrain him information in at least 4 categories:
from in any way making use of or relying on his independent
recollections of generalized business and technical information to 1. How the frequency with which the instrument being followed
which he had access while employed at AMP. Illinois law simply does and its component parts break down or require repairs and the
not authorize such relief. That is not to say that [a former employee] time to make the repairs
may not have derived some benefit from his access to the collective 2. Information a to the reason the instrument broke down
experience of [his employer] (experience to which [the employee] 3. Information as to the status and location of each component
himself doubtless contributed significantly during the course of his part
employment). It is rather to say such information comprises general 4. Information as to how well each instrument is meeting its
skills and knowledge acquired in the course of employment. Those are design goals.
things an employee is free to take and to use in later pursuits,
especially if they do not take the form of written records, compilations The information in these reports is used by the customer and
or analyses. others in making decisions concerning the instruments,
including, for example, decisions as to their design and as to
Dynamics Research v. Analytic Sciences Corporation the requirements for spare parts. In addition, the routine
Facts: reports serve to keep all who are involved in the
 Dynamic Research Corporation (DRC) brought this action against development or operation of the instruments informed as to
defendant Robert Bicknell (formerly employee) and the defendant what is being done and what their problems are. Each project
Analytic by whom Bicknell was hired after he resigned from the is managed by an engineer who is knowledgeable about the
plaintiff. DRC sought to enjoin the defendants from using for their instruments being followed by that project. One to four other
own benefit the proprietary system of plaintiff known as engineers may also work on the project each playing key roles.
TIRAS and from interfering with business relationships
between DRC and customers of DRC. Such relief prayed for was Bickell’s primary responsibility in the corporation was in
denied and the case was referred to a master where evidentiary marketing TIRAS. During his stay, he became dissatisfied seeing as
hearings were held. The final report was filed on April 9, 1975. The how the corporation was not giving enough financial support to fully
master concluded that "the structure and function of the TIRAS system develop the TIRAS service. He was likewise unhappy with his own
is a trade secret" and "that both [defendants] intentionally and salary. He resigned and looked for employment in Atlantic.
knowingly used trade secrets and other confidential information of the
plaintiff to the benefit of the defendants and the damage of the At Analytic, Bicknell familiarized himself with its
plaintiff. capabilities and its employees as the first step in developing
a management information service in competition with the
 Bicknell and Atlantic (respondents collectively) challenged this plaintiff. He began work on a proposal to perform such a
conclusion and claimed that the structure and function of TIRAS and service with respect to certain instruments in the Short
specifically setting out the factual basis for the various elements legally

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Range Attack Missile (SRAM), including its inertial guidance In the circumstances of this case, the nondisclosure agreement which
system. Bicknell signed on entering DRC's employ cannot be said to have put
Bicknell on notice, either when he signed it or at any time thereafter,
Issue: that the obvious notions with which he was working were trade secrets.
 Whether or not plaintiff is entitled to injunctive relief and damages. Indeed, when he openly told Anderegg and Rand that he was resigning
to compete, neither of them mentioned the nondisclosure agreement
Ratio: though Anderegg did urge him not to compete.
 No. This starting point is particularly appropriate in this case for, as
set out above Bicknell, an inertial guidance engineer, came to his job at While trade secrets will be protected where a confidential
DRC with knowledge and skill in the plaintiff's area of operation; and, relationship exists even in the absence of a contractual
as the master found, "was hired by DRC in part because he understood agreement to that effect, a contractual agreement without
its management system concept. In these circumstances, the employer more does not afford such protection. It must be shown that
has a heavy burden of isolating the secret for which he claims the processes or machinery here are in fact trade secrets and
protection and of demonstrating that the employee is left free that access to them was gained in confidence. Such an
(questions of good faith and reasonable contract restrictions apart) to agreement cannot make secret that which is not secret, and
use the knowledge and skill he brought to the job as well as "what he it remains for the court to determine whether an alleged
has learned during the employment. trade secret is in fact such.
Essentially, the plaintiff's complaint is that Bicknell has taken his Religious Technology Center v. Wollersheim
talent to Analytic and in combination with Analytic's resources and Facts:
other talents is creating a capability which threatens DRC's unique  The Church of New Civilization (New Church) is a splinter of Church
position. But we see no impediment to Bicknell's employment of his Scientology (Old Church). The latter teaches that a person’s behavious
talents in this way. DRC is not entitled to protection of a monopoly and well-being are improved by removing “engrams” (which are
created by its unique capability. Uniqueness without more is not impressions recorded by the unconscious mind in times of trauma in
commensurate with possession of a trade secret. Bicknell may well this life or in previous lives) from the unconscious mind. These
have enhanced his knowledge and skill through exposure, and his own “engrams” are purged through auditing which uses the technology and
contribution, to the development of TIRAS -- just how much is not advanced technology of the old church. It is a set of structured
made clear by the master or the plaintiff whose burden it was to questions and drills. The responses are measured on a Hubbard E-
specify for he came to DRC with knowledge and experience in the field meter, which reflects skin voltage which enable the examiner to
and familiarity with DRC's operation. identify one’s engrams.
Not only "the nature of the information" but also "the conduct of the The Old Church herein asserts that the unsupervised,
parties" (Jet Spray Cooler, Inc. v. Crampton, 361 Mass. at 840) leads to premature exposure of an adherent to these materials will
the conclusion that the plaintiff is not entitled to restrain Bicknell's use produce a spiritually harmful effect. They make the
of his knowledge gained while working on TIRAS. As we have seen materials for this technology available only to adherents who
both the role of the engineers on a TIRAS project and the detailed agree in writing to maintain confidentiality. The assert that the
nature of the data collected were publicized in the Brann paper and use of the New Church does not safeguard these materials from any
DRC's advertising brochure. Nor is there a finding or evidence that the commercial transaction.
plaintiff "pursued an active course of conduct designed to" bring home
to Bicknell or any other employee that any aspect of TIRAS was to be  Defendant in this case is one Mayo who was at one time a close
kept secret. associate of the Old Church but eventually left the Church in 1983 to
establish the New Church which embraces beliefs and

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provides counseling and training to its adherents which are public or to other persons who can obtain economic value
essentially identical to those offered by the Old Church. from its disclosure or use;
2. It is the subject of efforts that are reasonable under the
One night in 1983, materials of the Old Church were stolen by circumstances to maintain its secrecy.
individuals. Despite the fact that these materials were returned to the
Old Church, the Old Church maintains that copies were made and that To be protectable, the confidential material must convey an
the New Church acquired these copies. actual or potential commercial advantage, presumably
measurable in dollar terms. A trade secret is one which is used in
 A suit was thus filed by the Old Church (on the basis of California law business and which gives him an opportunity to obtain an advantage
state claims including misappropriation of trade secrets) alleging that over competitors who do not know or use it.
in 1985, it learned that the New Church intended to
disseminate the contents of the materials stolen in 1983 in a Although there is no definition as of yet in case law which defines
non-confidential setting. As counsel for the defendant in this case “independent economic value”, the element carries with it the common
that was filed, Larry Wollersheim (Wollersheim) obtained copies of the law requirement of competitive advantage. This does not mean that
materials during the deposition of Margaret Singer and Ofshe the owner must be the only one in the market. If an outsider would
(defendants). In view of the fact that there is a pending tort action obtain a valuable share of the market by gaining certain information,
against the Old Church filed by Wollersheim (which is separate from that information would be a trade secret if it is not known or
this action), the Old Church made a request to seal its records readily ascertainable.
including the higher level materials obtained by Wollersheim in the
deposition. This was refused. 3 days later, the Old Church filed Here, the Church alleged no competitive market advantage from
this claim in the federal court against the New Church for maintaining the secrecy of its higher level materials. Indeed,
allegedly passing the materials to Wollersheim (its counsel). to do so would raise grave doubts about its claim as a religion and not-
for-profit corporation. Rather, the church alleges that the
DC granted injunction in favor of the Old Church enjoining the New precepts require adherents to be audited in a structured
Church from disclosing the confidential materials further. manner with exposure to higher level materials only when
the auditor considers the adherent ready. The injury inflicted
Issue: on the Church by the new church's misappropriation of its "secret" is
 Whether or not the religious materials constitute a protectable trade the "religious harm" that would be suffered by Church adherents from
secret. premature unsupervised exposure to the materials. The value of the
confidential materials is thus spiritual not commercial, and the
Ratio: materials cannot be said to have the "independent economic value"
 No. It is now well settled that a trade secret may consist of any necessary to qualify as a protectible trade secret.
formula, pattern, devise or compilation of information
which is used in one’s business, and which gives him an Rivendell Forest Products v. Georgia-Pacitic Corporation
opportunity to obtain advantage over competitors who do Facts:
not know or use it.  Plaintiffs and defendants in this case are both engaged in the lumber
business. Defendant Cornwell was employed originally by Rivendell
California law defined trade secrets as: “information, including and later by GP. Rivendell was a wholesaler of lumber known as
formula, pattern, compilation, program, devise, method, technique, or “reload wholesaler” which provided lumber of the kind and sizes
process that: needed by its customers. GP and Rivendell are competitors in
the lumber business.
1. Derives independent economic value, actual or
potential, from not being generally known to the

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Rivendell brought this suit against GP for wrongful appropriation This computer software system in issue, Rivendell asserts, took it nine
of trade secret allegedly because a computer software, which was years to develop at a cost of nearly a million dollars. Mr. Cornwell
developed by Rivendell over the years and which is asserted as a trade worked for Rivendell in this development, knew it well, and had a
secret under Colorado Law was misappropriated and used by GP significant role although he was not a computer expert. While working
Cornwell and GP. This system is allegedly a system which allows for Rivendell he was contacted by an executive of GP, and two months
Rivendell to provide its customers with special service and to manage thereafter was hired by GP. with a job description to develop a new
its distribution centers as no competitor would do since this enabled computer software system for GP. Rivendell's system was the only one
Rivendell to give immediate answers to queries and phone Cornwell had been familiar with, and was the only one then in the
inquiries as to price, quantities, places and delivery time as industry which could provide immediate answers on all aspects of the
to various lumber sizes and types without any computations customers' needs. He was not a computer expert, as mentioned, but
which required a delay and a call back to the customer. The immediately after being hired by GP he went to work on a computer
complaint was dismissed. system for GP. This system was very soon developed, and it was for all
practical purposes the same as the one at Rivendell.
Issue:
 Whether or not the computer system is considered a trade secret. What constitutes a trade secret is an issue of fact. Whether
 Whether or not there is a violation of the Colorado Trade Secrets Law. the computer system herein was a trade secret therefore,
factual.
Ratio:
 Yes. Trade secret means any portion or phase of any scientific or In view of the foregoing, the record establishes the production
technical information, design, process, procedure, formula, by Rivendell’s software system of immediate final pricing by
improvement, confidential business or financial information, listing of the integration of the many computations as to size of
names, addresses, or telephone numbers, or other information relating lumber, type of lumber, location, size, freight charges, time
to any business or profession which is secret and of value. To be a of delivery and other factors permit immediate quotation of
'trade secret' the owner thereof must have taken measures to prevent a total price. This was a basic factual demonstration of the
the secret from becoming available to persons other than those integration obtained by the software, and it was a total package for
selected by the owner to have access thereto for limited purposes. immediate use. It was the only system in the industry which could
accomplish this. GP had nothing comparable before Cornwell
Although an exact definition of what a trade secret is may was ‘pirated’ (my words).
not be possible, the ff. are considered in the determination:
The law defines misappropriation of a trade secret as:
1. The extent to which the information is known outside the
business 1. Aquisition of a trade secret of another by a person who know
2. The extent to which it is known to those inside the business i. or has reason to know that the trade secret was acquired by
e. by the employees improper means or
3. The precautions taken by the holder of the trade secret to 2. Disclosure or use of a trade secret of another without express
guard the secrecy of the information; or implied consent by a person who:
4. The savings effected and the value of the holder in having the a. Used improper means to acquire knowledge of the
information as against competitors trade secret or
5. The amount of effort or money expended in obtaining and b. At the time of the disclosure or use, knew or had
developing the information reason to know that his knowledge of the trade secret
6. The amount of time and expense it would take for others to was:
acquire and duplicate the information. i. Derived from or through a person who had
utilized improper means to acquire it

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ii. Acquired under circumstances giving rise to a of the product. Later in his deposition, Harvey admitted that
duty to maintain its secrecy or limit its use or the process used was one he had learned and brought from
iii. Derived from or through a person who owed a R&H (which he revealed to ATW).
duty to the person seeking relief to maintain
its secrecy or limit its use.  After trial, the DC issued an order rejecting the trade secret claims
stating that plaintiffs failed to show that the process used for the
Rohm and Haas Company v. Adco Chemical Company production of latex in R&H was a trade secret.
Facts:
 Joseph Harvey (Joseph) joined Rohm and Haas (R&H) in 1959 as a Issue:
laboratory technician. He worked under the scientists of the company  Whether or not the process involved herein is a trade secret.
in the development of latex paints including those incorporating the  Whether or not there is a trade secret violation.
Process involved in the present case. In fact, he had handwritten notes
as to the process which he carried out pursuant to the instructions of Ratio:
R&H. His duties also gave him access to the plaintiff’s commercial  To establish a trade secret claim, the plaintiffs must establish 5 basic
process descriptions which detailed the process. elements of the claim:
During his employment with R&H, he signed an employment 1. The existence of a trade secret
agreement in which he acknowledged that any business or trade 2. Communicated in confidence by the plaintiff to the
secrets including secret processes of manufacture of R&H are the employee
property of the same company and agreed not to divulge anything to 3. Disclosed by the employee in breach of that confidence
outsiders or other unauthorized persons either while being employed 4. Acquired by competitor with knowledge of the breach
by R&H or afterwards. of confidence.
5. Use of the competitor to the detriment of the plaintiff.
 Adco and Thubut & Walker (ATW) are related corporations engaged in
the manufacture of various chemicals. It initiated a program to copy In this case, the plaintiffs already proved all the elements of
two of plaintiffs’ products which were made using the process. To his trade secret claim except as to the existence of a trade
accomplish this, they hired Victor Meyer whom ATW retained as an secret which is still under question.
independent consulatant.
1. It established that the process was of great value and
Dr. Meyer advised defendants that he had successfully developed a importance to the company and serves as the basis of
match for plaintiff's products. Defendants, based on this report, 4 highly successful products;
prepared an advertising and promotional campaign for their matching 2. That it disclosed the process to Harvey in confidence (as
products. At this show and during this period, defendants represented evidenced by the fact that there is an agreement to the
to the trade that their matching products were available. In order to fill confidentiality)
orders from customers based on these representations, defendants 3. Harvey revealed the same in violation of this duty to preserve
purchased plaintiff's products, repackaged them as their own, and sold as evidenced by his own answers
them without informing customers of the substitution. At the time of 4. It was acquired by ATW without the knowledge that its
the show, likewise, Harvey was contacted by ATW and after one revelation was wrongful.
interview, he was hired by ATW to develop latex paint compounds.
Defendants knew that plaintiff, and only plaintiff, made a latex
On the job, one of his first jobs was to duplicate a product which was paint vehicle superior to their own. They had tried for years,
using the process which had been the object of Meyer’s resesrch efforts unsuccessfully, to duplicate plaintiff's method of manufacture.
in R&H. Without assistance, he prepared a laboratory replication They hired a person who had been an employee of the plaintiff

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and immediately set him to duplicating plaintiff's product. The Barnett v. Shidler
employee handed them the Process for making one of Facts:
plaintiff's products almost as soon as he walked in the door.  Harvey Barnett and Infant Swimming Research (ISR) filed a complaint
They knew that the employee's experience with latex acrylics against its former emplotees alleging violations of state law claims of
could have come only from his time in plaintiff's employ. They misappropriation of trade secrets. Allegedly, Judy Heuman, Add
were acquainted with the confidential nature both of plaintiff's Shidler and Alison Geerdes (collectively defendants), as former
business and of plaintiff's relation to its employees. These facts ISR instructors who left the company in 2000, signed a
left it all but impossible to avoid the conclusion that nondisclosure and confidentiality agreement and a license
defendants knew Harvey had revealed to them something that agreement containing a further confidentiality information
plaintiff had tried very hard to keep secret. provision as well as a covenant not to compete. However,
notwithstanding these agreements, the 3 former employees started
5. There is no dispute that defendants used the Process divulged Infant Aquatic Survival (IAS) a new company devoted to teaching
by Harvey to compete against plaintiff by putting on the infant children to swim.
market two products touted as duplicates of plaintiff's
products. Allegedly, the IAS is similar to the ISR program of ISR in that
it utilizes the same “swim, float, swim” method implements some of
To prove the last and only element left to be proved, the safety protocols and uses a Daily Health Data Sheet similar to the
plaintiffs demonstrated the fact that the realities of the BUDS sheet used by ISR.
market place and the valuable method of producing latex
paint vehicles were unknown to its competitors. R&H is the  Upon motion for summary judgment, the complaint was dismissed.
only manufacturer who uses “the Process” and as a result it could offer The DC held that the ISR program was not a trade secret and that the
4 superior products. Only after defendants acquired the "Harvey covenant not to compete and the confidentiality provision in the
process" could they field a match for the plaintiff's products. None of license agreement were not enforceable.
these facts were seriously contested by the defendants below, and none
turned on a question of the credibility of witnesses. Under both New Issue:
Jersey and Pennsylvania law, these facts were sufficient to  Whether or not the ISR program is a trade secret.
establish that the alleged secret is in fact the secret of a  Whether or not the covenant not to compete is valid.
particular employer, and not a matter of general knowledge  Whether or not the confidentiality agreement is valid.
within the industry.
Ratio:
The law of these states provides that even though each and every  Yes. Our review of the findings of the DC judgment leads us to
element of plaintiff's Process is known to the industry, the conclude that the DC improperly looked at the components of the ISR
combination of those elements may be a trade secret if it "produces a in isolation rather than as a whole. A trade secret can exist in
product superior to that of competitors. Plaintiff proved that the combination of characteristics, each of which, considered
Process produced a superior product. The district court's second separately, is in the public domain, but taken together, may
ground for concluding that plaintiff's Process was widely known in the yield a competitive advantage that results in a protectable
industry, based on a misreading of the applicable law, thus is trade secret.
erroneous.
To prove its claim, ISR submitted 4 affidavits attesting to the
uniqueness of the ISR program. Furthermore, they point to the
testimony of 2 instructors in the ISR program regarding its
uniqueness. Likewise, it was elicited from one of its witnesses that the
witness knows of no other aquatic programs whose specific goal is to

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certify instructors, in a 5-week time frame, to teach infants and Rockwell sometimes does not manufacture the parts itself.
toddlers aquatic survival skills. Sometimes when an owner of one of Rockwell’s presses needs a
particular part, it will subcontract the manufacturer of it to an
Moreover, the precautions taken by the holder of the trade independent machine shop, called a vendor by the
secret to guard secrecy of the information (the franchise parties.When it does this, RG gives the vendor a piece part drawing
agreements and the license agreements). In his affidavit, Dr. indicating materials, dimensions, tolerances and methods of
Barnett averred that "ISR has protected the confidentiality of manufacture. Without than information, the vendor could not
all of the ISR research and materials since the 1970's by manufacture the part. Hence, Rockwell tries to keep the piece part
franchise agreements with confidentiality restrictions and drawings secret though not from the vendors.
later by the restrictions of the license agreements." As for the
franchise agreements, they contained a "Confidentiality of  Rockwell employed Fleck and Peloso which gave them access to piece
Information" provision providing that "franchisee shall not at part drawings. Peloso was fired from RG when he was caught
any time or in any way divulge, disclose, or communicate to removing piece part drawings from the RG plant. Later, they both left
any person or organization in any manner whatsoever any and joint Dev. During pretrial, it was found that Dev has 100 of
information concerning any matters affecting or relating to RG’s piece part drawings which Dev claimed to have
the business of Franchisor." Moreover, license agreements, prior obtained lawfully either form customers of RG or from RG
to 1996, contained a "Confidentiality of Information" provision vendors contrary to their claim that Fleck or Peloso stole
stating that the licensee shall not divulge the secrets without specific them when they were employed by it or Dev obtained them
written consent form from licensor. in some unlawful manner.
ISR submitted evidence that its program is unique in that it instructs It should be noted herein that RG admits to having supplied a few
individuals, in a five-week period, how to teach aquatic-survival skills piece part drawings to customers but they were piece part drawings of
to infants as young as six-months old. ISR further submitted evidence obsolete parts that RG has no interest in manufacturing and of a safety
showing that, through franchise agreements and license agreements, it device that was not part of the press as originally delivered but that its
has taken precautions to guard the secrecy of its program. customers were clamoring for more to the point, none of these is
among those RG claims Dev misappropriated.
 The covenant which provides that the licensee shall not,
during the term or 2 years immediately from termination,  The District Court rendered a decision in favor of Dev finding that
engage directly or indirectly in teaching infants or yong there is no trade secret to be protected.
children to swim or engage in the business of training other
individuals for the purpose of teaching infants or young Issue:
children to swim, is VALID. The validity of the covenant herein  Whether or not there is a trade secret.
lies in the fact that there is a trade secret since such is reasonable
provided that there is a trade secret to be protected. Since there is one Ratio:
in this case, the court held that the breach of the contract claim must  Yes. The use of security, restricted access, confidentiality
go forward. agreements and confidentiality markings amounted to
reasonable efforts. RG keeps all its engineering drawings, including
Rockwell Graphics v. Dev Industries both piece part and assembly drawings, in a vault. Access not only to
Facts: the vault, but also to the building in which it is located, is limited to
 Rockwell Graphics (RG) is a manufacturer of printing presses used by authorized employees who display identification. These are mainly
newspapers and of parts for those presses, brought this suit against engineers, of whom RG employs 200. They are required to sign
DEV Industries (Dev), a competing manufacturer and against the agreements not to disseminate the drawings, or disclose their contents,
president of Dev who used to be employed by Rockwell. other than as authorized by the company. An authorized employee

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who needs a drawing must sign it out from the vault and return it prove in order to recover under the first theory of trade secret
when he has finished with it. But he is permitted to make copies, which protection. The greater the precautions that RG took to
he is to destroy when he no longer needs them in his work. The only maintain the secrecy of the piece part drawings, the lower
outsiders allowed to see piece part drawings are the vendors (who are the probability that DEV obtained them properly and the
given copies, not originals). They too are required to sign higher the probability that it obtained them through a
confidentiality agreements, and in addition each drawing is stamped wrongful act; the owner had taken pains to prevent them from being
with a legend stating that it contains proprietary material. Vendors, obtained otherwise.
like RG's own engineers, are allowed to make copies for
internal working purposes, and although the confidentiality Under the second theory of trade secret protection, the owner's
agreement that they sign requires the vendor to return the precautions still have evidentiary significance, but now primarily as
drawing when the order has been filled, Rockwell does not evidence that the secret has real value. For the precise means by which
enforce this requirement. The rationale for not enforcing it is that the defendant acquired it is less important under the second theory,
the vendor will need the drawing if Rockwell reorders the though not completely unimportant; remember that even the second
part. Rockwell even permits unsuccessful bidders for a piece theory allows the unmasking of a trade secret by some means, such as
part contract to keep the drawings, on the theory that the reverse engineering. If RG expended only paltry resources on
high bidder this round may be the low bidder the next. preventing its piece part drawings from falling into the hands of
competitors such as DEV, why should the law, whose machinery is far
The mere fact that there is a disclosure of its trade secret to a limited from costless, bother to provide RG with a remedy? The information
number of outsiders for a particular purpose does not forfeit trade contained in the drawings cannot have been worth much if RG did not
secret protection. Such disclosure is often necessary to the efficient think it worthwhile to make serious efforts to keep the information
exploitation of a trade secret. It imposes a duty of confidentiality on secret.
the part of the person to whom the disclosure is made.
The remedial significance of such efforts lies in the fact that
It should be apparent that the two different conceptions of trade if the plaintiff has allowed his trade secret to fall into the
secret protection are better described as different emphases. The public domain, he would enjoy a windfall if permitted to
first emphasizes the desirability of deterring efforts that recover damages merely because the defendant took the
have as their sole purpose and effect the redistribution of secret from him, rather than from the public domain as it
wealth from one firm to another. The second emphasizes the could have done with impunity. If it were true, as apparently it
desirability of encouraging inventive activity by protecting is not, that RG had given the piece part drawings at issue to
its fruits from efforts at appropriation that are, indeed, sterile customers, and it had done so without requiring the customers to hold
wealth-redistributive--not productive--activities. them in confidence, DEV could have obtained the drawings from the
customers without committing any wrong. The harm to RG would have
Under the first approach, the plaintiff must prove that the defendant been the same as if DEV had stolen the drawings from it, but it would
obtained the plaintiff's trade secret by a wrongful act, illustrated here have had no remedy, having parted with its rights to the trade secret.
by the alleged acts of Fleck and Peloso in removing piece part drawings
from RG's premises without authorization, in violation of their In the first case, a defendant is perfectly entitled to obtain
employment contracts and confidentiality agreements, and using them the property by lawful conduct if he can, and he can if the
in competition with RG. RG is unable to prove directly that the property is in the hands of persons who themselves
100 piece part drawings it got from DEV in discovery were committed no wrong to get it. In the second case the
stolen by Fleck and Peloso or obtained by other improper defendant is perfectly entitled to obtain the property if the
means. But if it can show that the probability that DEV could have plaintiff has abandoned it by giving it away without
obtained them otherwise--that is, without engaging in wrongdoing--is restrictions. The more the owner of the trade secret spends on
slight, then it will have taken a giant step toward proving what it must preventing the secret from leaking out, the more he demonstrates that

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the secret has real value deserving of legal protection, that he really that procedure. That the scientific principles are generally known
was hurt as a result of the misappropriation of it, and that there really does not necessarily refute MI’s claim of trade secrets.
was misappropriation.
MI presented evidence to back up its claim. They presented Blim as to
Metallurgical Industries v. Fourtek his belief that MI’s changes were unknown to the carbide reclamation
Facts: industry. Evidence likewise shows that MI has exerted efforts
 Metallurgical Industries (MI) has been in the business of reclaiming to keep secrets its modifications. Blum noted that there were
carbide (a metallic compound of great value in certain industrial security measures taken to coneal the furnaces from all but
processes) since 1967 using the more primitive “cold-stream process”. authorized personnel. The furnaces were hidden from public view
In the mid 1970s it began to reconsider using zinc recovery process. while signs warned all about restricted access. Security measures
Hence, for this, it hired Irvin DIelefeldt, a representative of Therm O- cost money. A manufacturer therefore presumably would
Vac to design and construct 2 zinc recovery furnaces. not incur these costs if it believed that its competitors
already knew about the information involved.
Dissatisfied with its performance, Modified the delivered recovery
furnaces extensively. Later, MI provided another furnace Despite the fact that it revealed these secrets to Consarc, there can still
manufacturer all its hard won-information (from the overhaul of the be a trade secret. The law requires secrecy but it need not be
delivered furnaces) to Consarc. Consarc learned of its modofications absolute. Public revelation would dispel all secrecy but the holder
but because Consarc was unwilling or unable to build what MI wanted, of a secret need not remain totally silent. He may, without
the agreement fell through and MI returned to Therm O Vac (TOV) for losing its protection communicate it to employees involved in its use.
its second furnace. He may likewise communicate it to others pledged to secrecy. We
conclude that a holder may divulge his information to a limited extent
TOV went bankrupt hence Irvin and the 3 other former TOV without destroying its status as a trade secret. To hold otherwise
employees formed Fourtek Incorporated. Fourtek contracted would greatly limit the holder's ability to profit from his secret. If
with Smith and provided it with furnaces. Smith has been unable to disclosure to others is made to further the holder's economic interests,
use this furnace commercially, however, because a current shortage of it should, in appropriate circumstances, be considered a limited
carbide scrap prevents its economically feasible operation. disclosure that does not destroy the requisite secrecy.
In view of their supply to Smith, MI brought a diversity action against There are 2 reasons as to why the disclosure herein does not dispel the
the employees of Fourtek. It charged them of misappropriating its trade secret protection:
trade secrets. However, the TC found that there is no trade secret to
speak of in this case. Smith argues that there is no trade secret since 1. The disclosure was not a public announcement. It was
the basic zing recovery process has already been publicized in the divulged to 2 business men with whom it was dealing with
trade. 2. The disclosures were made to further MI’s economic interests.
Issue: That the cost of devising the secret and the value the secret provides
 Whether or not there is a trade secret to be protected. are criteria in the legal formulation of a trade secret shows the
equitable underpinnings of this area of the law. It seems only fair that
Ratio: one should be able to keep and enjoy the fruits of his labor. If a
 MI’s particular modification efforts can be as yet unknown businessman has worked hard, has used his imagination, and has
to the industry because a general description of the zinc taken bold steps to gain an advantage over his competitors, he should
recovery process reveals nothing about the benefits unitary be able to profit from his efforts. Because a commercial advantage can
heating elements and vacuum pump filters can provide to vanish once the competition learns of it, the law should protect the
businessman's efforts to keep his achievements secret.

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Paramanandam v. Herrmann 1. Aquisition of a trade secret of another by a person who know

Facts: or has reason to know that the trade secret was acquired by
 Victoria established Dunamic Sales as a sole partnership with the improper means or
assistance of her husband who had experience in the scales marketing 2. Disclosure or use of a trade secret of another without express
business. The Hermmanns (the “spouses”) were acquainted with Ivan or implied consent by a person who:
who had worked in the scales business with John’s father. They hired a. Used improper means to acquire knowledge of the
Ivan’s consulting firm to develop a website for Dynamic Sales’ online trade secret or
retail store. b. At the time of the disclosure or use, knew or had
reason to know that his knowledge of the trade secret
Pursuant to this, the spouses gave Ivan the password to make changes was:
to the website. Likewise, he contacted distributors to obtain i. Derived from or through a person who had
permission to display their information on the website. With the utilized improper means to acquire it
spouses’ assistance, Ivan registered 400 domain names, among them ii. Acquired under circumstances giving rise to a
Mail88.com and developed 6000 corresponding keywords all of duty to maintain its secrecy or limit its use or
which would direct potential customers to Dynamic Sales online store iii. Derived from or through a person who owed a
via interent search. duty to the person seeking relief to maintain
its secrecy or limit its use.
Ivan suffered a hear attack. After he recovered, he told the spouses he
wanted to work from home for a higher salary but the spouses refused. The alleged misappropriated trade secret in this case is the
Upon refusal, he told the spouses that he wanted to get out of the information contained on the website and the domain names
scale business. They terminated their relationship thus, Ivan developed, created and maintained by and for Dynamic. However, the
started his own online retail store, Scales.com. The website he court decided that even assuming that these matters fall under
created was practically identical in content and appearance to the trade secret protection law, Dynamic Scales failed to
Dynamic’s website. They also discovered that internet searches establish that any efforts were made to maintain its secrecy.
conducted using Dynamic Scales' name or toll-free number as search In the testimony of John Herrmann he stated that “you could be very
terms would yield results that listed Dynamic Scales' company secretive and we chose not to be secretive. We chose to show
information but were actually linked to Ivan's website at Mall88.com. all our cards to our competitors so that it would look odd no
one hides everything in their computer. It’s left out to the
For this. Dymanic filed a case against Ivan who allegedly operated general public to see. So we chose not to hide a bunch of
Scorpion, Mail88 and Scaleable Scales.com in violation of the trade information.”
secrets law. Allegedly, they misappropriated domain names developed
and created and maintained by Dynamic. The DC granted the There is simply no evidence on record which indicates that they made
preliminary injunction in favor of Dynamic. Before this court thus, efforts to keep them secret. In fact, there is an indication that they
Ivan claims that Dynamic failed to meet its evidentiary burden with intended their domain names to be readily available to potential
respect to all 4 factors. customers searching the internet as a means of directing them to its
online retail store. An information is secret only if it is subject of
Issue: reasonable efforts to maintain secrecy.
 Whether or not there is misappropriation of trade secrets.
Ratio:
 No. There was no effort to maintain secrecy. Misappropriation
is defined as:

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DuPont DeNemours v. Rolfe Christopher confidence were meant to encompass the entire panoply of commercial
Facts: improprieties, subsection A of the Restatement would be either
 Rolfe and Gary are photographers in Beaumont Texas who were hired surplusage or persiflage, an interpretation abhorrent to the traditional
by an unknown third party to take aerial photos of new construction at precision of the Restatement. We therefore find meaning in subsection
the Beaumont plant of EI DuPont. 16 photos were taken from the air A and think that the Texas Supreme Court clearly indicated by
on 1969 and these were later developed and delivered to the third its adoption that there is a cause of action for the discovery
party. of a trade secret by any 'improper means.
Dupont filed a suit against Chrisophers alleging that they wrongfully One may use his competitor’s secret process if he discovers the process
obtained photos revealing the trade secrets of Dupont which they then by reverse engineering applied to the finished product. One may use it
sold to the undisclosed third party. They contend that they developed a if he discovers it by his own independent research but one may not
highly secret but unpatented process for producing methanol, a avoid these labors by taking process from the discoverer
process which gives them competitive advantage over their without his permission at a time when he is taking
competitors. The area photographed by the Christophers was the reasonable precautions to maintain secrecy. To obtain
plant designed to produce methanol by this secret process, and knowledge of a process without spending the time and
because the plant was still under construction parts of the process money to discover it independently is improper unless the
were exposed to view from directly above the construction area. holder voluntarily discloses it or fails to take reasonable
Photographs of that area, DuPont alleged, would enable a skilled precautions to ensure its secrecy.
person to deduce the secret process for making methanol.
In this case, he deliberately flew over the plant to get pictures of a
The Christophers argued both at trial and before this court that they process which Dupont attempted to keep secret. The third party has a
committed no 'actionable wrong' in photographing the DuPont facility right to use this process only if he obtains this knowledge through his
and passing these photographs on to their client because they own research efforts, but thus far all information indicates that the
conducted all of their activities in public airspace, violated no third party has gained this knowledge solely by taking it from DuPont
government aviation standard, did not breach any confidential at a time when DuPont was making reasonable efforts to preserve its
relation, and did not engage in any fraudulent or illegal conduct. In secrecy. In such a situation DuPont has a valid cause of action to
short, the Christophers argue that for an appropriation of trade secrets prohibit the Christophers from improperly discovering its trade secret
to be wrongful there must be a trespass, other illegal conduct, or and to prohibit the undisclosed third party from using the improperly
breach of a confidential relationship. obtained information.
Issue: Industrial espionage of the sort here perpetrated has become a popular
 Whether or not Dupont has asserted a claim upon which relief can be sport in some segments of our industrial community. However, our
granted. devotion to free wheeling industrial competition must not force us into
accepting the law of the jungle as the standard of morality expected in
Ratio: our commercial relations. Our tolerance of the espionage game must
 Yes. One who discloses another’s trade secret without a cease when the protections required to prevent another's spying cost
privilege to do so is liable to the other if he discovered the so much that the spirit of inventiveness is dampened. Commercial
secret by improper means or his disclosure or use privacy must be protected from espionage which could not have been
constitutes a breach of confidence reposed in him by the reasonably anticipated or prevented. Perhaps ordinary fences and
other in disclosing the secret to him. The use of someone else’s roofs must be built to shut out incursive eyes, but we need not require
idea is not automatically a violation of the law, it must be something the discoverer of a trade secret to guard against the unanticipated, the
that has been obtained through a breach of confidence in order to undetectable, or the unpreventable methods of espionage now
entitle the injured party to damages or injunction. If breach of available.

3A | Batch 2014 | 119
"blanks" to locksmiths or others, and keys to Ace locks are stamped
In the instant case DuPont was in the midst of constructing a plant. To "Do Not Duplicate.
require DuPont to put a roof over the unfinished plant to guard its
secret would impose an enormous expense to prevent nothing more Hence, upon finding out about this publication, CLC filed a complaint
than a school boy's trick. We should not require a person or against Fanberg alleging misappropriation of trade secrets. The court
corporation to take unreasonable precautions to prevent another from found that the Company's high security policy for its Ace tubular locks,
doing that which he ought not do in the first place. Reasonable of which the confidential key code data were a part, was a "valuable
precautions against predatory eyes we may require, but an business or trade secret-type asset" of the Company, and that the
impenetrable fortress is an unreasonable requirement, and we are not Fanbergs' publication of their compilation of these codes so
disposed to burden industrial inventors with such a duty in order to undermined the Company's policy as to constitute "common law unfair
protect the fruits of their efforts. competition in the form of an unfair business practice.”
Chicago Lock Co v. Morris Issue:

Facts:  Whether or not there is a violation of the trade secrets law.
 Chicago Lock Company (CLC) is a manufacturer of various types of
locks marketed and registered under the tradename “Ace” which Ratio:
provides greater security than other lock designs. They are frequently  No. Trade secrets are protected in a manner akin to provate property
used on vending and bill changing machines and in other maximum but only when they are disclosed or used through improper
security uses such as burglar alarms. The distinctive feature of Ace means. They do not enjoy the monopoly protection afforded patented
locks is the secrecy and difficulty of reproduction associated with processes and trade secrets will lose their character as private property
either keys. when the owner divulges them or when they are discovered through
proper means. There is no protection when there is a fair and
On the other hand, Victor Fanberg, the son of a locksmith and a honest means of gaining information as by independent
locksmith in his own right has published a number of locksmith invention, accidental disclosure and reverse engineering.
manuals for conventional locks. Realizing that there is yet no
compilation on the tubular lock key codes, they published a Here, there has only been a reverse engineering. A lock purchaser's
compilation of the serial number-key code correlations of various locks own reverse-engineering of his own lock, and subsequent
including those of Ace locks entitled “A-Advanced Locksmith’s Tubular publication of the serial number-key code correlation, is an
Lock Codes.” This was done by requesting locksmiths to transmit to example of the independent invention and reverse
him serial number-key code correlations in their possession in engineering expressly allowed by trade secret doctrine. The
exchange for a copy of the complete compilation. When finished. Said concept of improper means connotes the existence of a duty to the
manual was advertised and sold. The books contain correlations trade secret owner not to disclose the secret to others. Appellants may
which would allow a person equipped with a tubular key only be held liable if they intentionally procured the locksmiths to
grinding machine to make duplicate keys for any listed Ace disclose the trade secrets in breach of the duty to the company of non-
lock if the serial number of the lock was known. disclosure.
 CLC has a fixed policy that it will only sell a duplicate key for the We find untenable the basis upon which the District Court concluded
registered series 'Ace' lock to the owner of record of the lock and on that the individual locksmiths owe a duty of nondisclosure to the
request of a bona fide purchase order, letterhead or some other Company. The court predicated this implied duty upon a "chain" of
identifying means of the actual recorded lock owner. In addition, the duties: first, that the locksmiths are in such a fiduciary relationship
serial number-key code correlations are maintained by the Company with their customers as to give rise to a duty not to disclose their
indefinitely and in secrecy, the Company does not sell tubular key customers' key codes without permission, and second, that the lock
owners are in turn under an "implied obligation (to the Company) to

3A | Batch 2014 | 120
maintain inviolate" the serial number-key code correlations for their confidential information to his new employer. This was
own locks. granted by the DC but was dissolved 2 days later after determining that
they failed to establish that it would suffer irreparable harm.
That the lockowners owe a duty to the company is contrary to law and
to the company’s own admissions. Imposing an obligation of At the hearing, PepsiCo offered evidence of a number of trade secrets
nondisclosure on lock owners here would frustrate the intent of and confidential information it desired protected and to which
California courts to disallow protection to trade secrets discovered Redmond was privy:
through "fair and honest means. Appellants, therefore, cannot be said
to have procured the individual locksmiths to breach a duty of 1. First, it identified PCNA's "Strategic Plan," an annually revised
nondisclosure they owed to the Company, for the locksmiths owed no document that contains PCNA's plans to compete, its financial
such duty. The Company's serial number-key code correlations are not goals, and its strategies for manufacturing, production,
subject to protection. marketing, packaging, and distribution for the coming three
years.
Pepsico v. William Redmond 2. Second, PepsiCo pointed to PCNA's Annual Operating Plan
Facts: ("AOP") as a trade secret. The AOP is a national plan for a
 William Redmond worked for PepsiCo in its North Division (PCNA) given year and guides PCNA's financial goals, marketing plans,
form 1984 to 1994 during which he became the General Manager and promotional event calendars, growth expectations, and
was promoted to GM of the business unit covering all of California. operational changes in that year. The AOP, which is
Because of his high level position at PCNA, he had access to inside implemented by PCNA unit General Managers, including
information and trade secrets. As an employee of PCNA, he signed a Redmond, contains specific information regarding all PCNA
confidentiality agreement which stated that he would not disclose to initiatives for the forthcoming year. In particular, the AOP
any one other than officers of Pepsi or make use of confidential contains important and sensitive information about "pricing
information relating to the business of PepsiCo. architecture"--how PCNA prices its products in the
marketplace.
On the other side of the fence is Donald Uzzi who left PepsiCo to 3. PepsiCo also showed that Redmond had intimate knowledge
become the head of Quaker’s Gatorade division. He began courting of PCNA "attack plans" for specific markets.
Redmond for Quaker in 1994. He offered Redmond the position of VP 4. Finally, PepsiCo offered evidence of PCNA trade secrets
but Redmond did not accept the offer but continued to negotiate for regarding innovations in its selling and delivery systems.
more money. These negotiations were kept secret from PCNA. Under this plan, PCNA is testing a new delivery system that
could give PCNA an advantage over its competitors in
Eventually, he informed the Senior VP of PCNA and told him about the negotiations with retailers over shelf space and
offer to become Chief Operating Officer of Gatorade. Redmond asked merchandising.
whether he should, in light of the offer, carry out his plans to make
calls upon certain PCNA customers. The Senior VP told him to make The DC issued an order enjoining Redmond from assuming
the visits. his position at Quaker though May 1995 and permanently
form using or disclosing any PCNA trade secrets or
Redmond met with Barnes and told her that he had decided to accept confidential information.
the Quaker offer and was resigning from PCNA. Barnes immediately
took Redmond to Bensyl, who told Redmond that PepsiCo was Issue:
considering legal action against him.  Whether or not there is a violation of trade secret laws.
 Whether or not there is a breach of a confidentiality agreement
 Having accepted the position at Gatorade, Pepsi filed this
suit seeking TRO from disclosing trade secrets or

3A | Batch 2014 | 121
Ratio: Subsequently, Tecson entered into a romantic relationship with Bettsy,
 Yes. PepsiCo has asserted that Redmond cannot help but rely on an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo.
PCNA trade secrets as he helps plot Gatorade and Snapple's new Bettsy was Astra’s Branch Coordinator in Albay. She supervised the
course, and that these secrets will enable Quaker to achieve a district managers and medical representatives of her company and
substantial advantage by knowing exactly how PCNA will price, prepared marketing strategies for Astra in that area.
distribute, and market its sports drinks and new age drinks and being
able to respond strategically. This type of trade secret problem may Despite warnings, love prevailed and Tecson married Bettsy in 1998.
arise less often, but it nevertheless falls within the realm of trade secret Hence, in January 1999 the management informed Tecson that there is
protection under the present circumstances. The danger of a conflict of interest. They reminded Tecson that he and Bettsy should
misappropriation in the present case is not that Quaker decide which of them would resign from their jobs although they told
(Gatorade) threatens to use PCNA's secrets to create him that they wanted to retain him as much as possible because he was
distribution systems or co-opt PCNA's advertising and performing his job well.
marketing ideas. Rather, PepsiCo believes that Quaker,
unfairly armed with knowledge of PCNA's plans, will be able Instead of resigning, he applied for a transfer in the Milk Division of
to anticipate its distribution, packaging, pricing, and Glaxo thinking that since Astra does not have a mill division, the
marketing moves. Redmond and Quaker even concede that potential conflict of interest would be eliminated. This was denied by
Redmond might be faced with a decision that could be influenced by management in view of the company “least-movement-possible”
certain confidential information that he obtained while at PepsiCo. In policy. Subsequently, however, he was transferred to the sales area in
other words, PepsiCo finds itself in the position of a coach, one Agusan Del Sur. He brought the matter of his transfer to the grievance
of whose players has left, playbook in hand, to join the committee of Glaxo but the transfer order was upheld. Tecson defied
opposing team before the big game. Quaker and Redmond's the transfer order and continued acting as medical representative in
protestations that their distribution systems and plans are the Camarines Sur-Camarines Norte sales area.
entirely different from PCNA's are thus not really
responsive. Because the parties failed to resolve the issue at the grievance
machinery level, they submitted the matter for voluntary arbitration.
It is not the "general skills and knowledge acquired during his tenure Glaxo offered Tecson a separation pay of one-half (½) month pay for
with" PepsiCo that PepsiCo seeks to keep from falling into Quaker's every year of service, or a total of P50,000.00 but he declined the
hands, but rather "the particularized plans or processes developed by offer. Thus, National Conciliation and Mediation Board
PCNA and disclosed to him while the employer-employee relationship (NCMB) rendered its Decision declaring as valid Glaxo’s
existed, which are unknown to others in the industry and which give policy on relationships between its employees and persons
the employer an advantage over his competitors. employed with competitor companies, and affirming Glaxo’s
right to transfer Tecson to another sales territory.
Duncan v. Glaxo
Facts:
 Pedro Tecson was hired by Glaxo Philippines (Glaxo) as a medical Issue:
representative. He signed a contract of employment which  Whether or not the policy against employees marrying employees of
stipulates that he agrees to study and abide by existing competitor companies violate the EPC of the Constitution because it
company rules to disclose to management any existing or creates invalid distinctions among employees on account only of
future relationship by consanguinity or affinity with co- marriage.
employees or employees of competing drug companies and
should management find that such relationship poses a
possible conflict of interest, to resign from the company.

3A | Batch 2014 | 122
Ratio: management prerogative in reassigning Tecson to the Butuan City
 It does not violate the constitution and is a valid company sales area.
policy. This is a valid exercise of management prerogative. The
prohibition against personal or marital relationships with employees In the case at bar, the record shows that Glaxo gave Tecson several
of competitor companies is reasonable under the circumstances chances to eliminate the conflict of interest brought about by his
because relationships of that nature might compromise the interests of relationship with Bettsy. When their relationship was still in its initial
the company. Glaxo here only aimed to protect its interests against the stage, Tecson’s supervisors at Glaxo constantly reminded him about its
possibility that a competitor company will gain access to its secrets and effects on his employment with the company and on the company’s
procedures. No less than the Constitution recognizes the right of interests. After Tecson married Bettsy, Glaxo gave him time to resolve
enterprises to adopt and enforce such a policy to protect its right to the conflict by either resigning from the company or asking his wife to
reasonable returns on investments and to expansion and growth. resign from Astra. Glaxo even expressed its desire to retain Tecson in
its employ because of his satisfactory performance and suggested that
It is a legitimate business practice to guard business he ask Bettsy to resign from her company instead. Glaxo likewise
confidentiality and protect a competitive porision even acceded to his repeated requests for more time to resolve the conflict
handedly disqualifying from jobs male and female applicants of interest.
or employees who are married to a competitor.
Avon Cosmetics v. Leticia Luna
The challenged company policy does not violate the equal Facts:
protection clause of the Constitution as petitioners  Luna began working for Beautifont in 1972 as a franchise dealer and
erroneously suggest. It is a settled principle that the then a year later as supervisor. Sometime in 1978 Avon acquired and
commands of the equal protection clause are addressed only took over the management and operations of Beautifont thus, Luna
to the state or those acting under color of its authority. The continued working for said successor company. Aside from her work as
EPC erects no shield against merely private conduct, however, a supervisor, respondent Luna also acted as a make-up artist of
discriminatory or wrongful. Significantly, the company actually petitioner Avon’s Theatrical Promotion’s Group, for which she received
enforced the policy after repeated requests to the employee to comply a per diem for each theatrical performance.
with the policy. Indeed, the application of the policy was made in an
impartial and even-handed manner, with due regard for the lot of the Avon and respondent Luna entered into an agreement (Supervisor’s
employee. Agreement) whereby it was agreed that:
The Court finds no merit in petitioners’ contention that Tescon was 1. a dealer may only sell products sold by the company.
constructively dismissed when he was transferred from the Camarines 2. Company can terminate the contract at any time, with or
Norte-Camarines Sur sales area to the Butuan City-Surigao City- without cause
Agusan del Sur sales area, and when he was excluded from attending
the company’s seminar on new products which were directly Sometime in 1988, Luna was invited by a former Avon employee who
competing with similar products manufactured by Astra. Constructive was then a sales manager of Sandre Philippines (company engaged in
dismissal is defined as a quitting, an involuntary resignation resorted selling vitamins and other food supplements). She accepted the
to when continued employment becomes impossible, unreasonable, or invitation and then became a Group Franchise Director of Sandre
unlikely; when there is a demotion in rank or diminution in pay; or Philippines concurrently with being a Group Supervisor of petitioner
when a clear discrimination, insensibility or disdain by an employer Avon. As Group Franchise Director, respondent Luna began
becomes unbearable to the employee. The record does not show that selling and/or promoting Sandré products to other Avon
Tescon was demoted or unduly discriminated upon by reason of such employees and friends. Because of this relationship with both
transfer. As found by the appellate court, Glaxo properly exercised its companies, she requested a law firm to render a legal opinion as to the
legal consequence of the ahreement she executed with Avon. In

3A | Batch 2014 | 123
response to her query, the law firm opined that the agreement was the full range of selling opportunities reasonably open to rivals,
contrary to law and public policy. namely, all the product and geographic sales they may readily compete
for, using easily convertible plants and marketing organizations.
Meanwhile, Avon notified Luna of the termination or cancellation of
her agreement with Avon on the ground that she is signed up as a There is nothing invalid or contrary to public policy either in
Group Franchise Director with Sandre and that she has sold and objectives sought to be attained in prohibiting Luna aln all
promoted products of the other company not only to the public but other Avon supervisors from selling products other than
also to several employees of the Avon company. those of Avon’s. The question that should be asked here is whether
the restraint imposed is such as merely regulates and perhaps thereby
 Luna filed for damages with the RTC of Makati. RTC rendered a promote competition or whether it is such as may suppress or even
decision in favor of Luna. On appeal, the CA affirmed. destroy competition. The prohibition here is not directed to Sandre
nor foreclose new entrants to the market. The reason for such
Issue: exclusion is to safeguard network that it has cultivated through the
 Whether or not the supervisors’ agreement is null and void. years. By direct selling, petitioner Avon and Sandre, the manufacturer,
 Whether or not the termination of Luna is valid. forego the use of a middleman in selling their products, thus,
controlling the price by which they are to be sold. The limitation does
Ratio: not affect the public at all. It is only a means by which petitioner Avon
 Valid. Restrictions on trade may be upheld when not contrary to is able to protect its investment.
public welfare and not greater than is necessary to afford a fair and
reasonable protection to the party in whose favor it is imposed. Even It was not by chance that Sandré Philippines, Inc. made respondent
contracts which prohibit an employee fmor engaging in business in Luna one of its Group Franchise Directors. It doesn’t take a genius to
competition with the employer are not necessarily void for being realize that by making her an important part of its distribution arm,
restraint in trade. In sum, contracts requiring exclusivity are not per Sandré Philippines, Inc., a newly formed direct-selling business, would
se void. Each contract must be viewed vis-à-vis all the circumstances be saving time, effort and money as it will no longer have to recruit,
surrounding such agreement in deciding whether a restrictive practice train and motivate supervisors and dealers. Respondent Luna, who
should be prohibited as imposing an unreasonable restraint on learned the tricks of the trade from petitioner Avon, will do it for them.
competition. This is tantamount to unjust enrichment. Worse, the goodwill
established by petitioner Avon among its loyal customers will be taken
A court, in order to declare a contract void as against public advantaged of by Sandre Philippines, Inc.
policy, must find that the contract as to the consideration or
thing to be done, has a tendency to injure the public, is  Yes. The contract provided that it can be terminated or cancelled for
against the public good, or contravenes some established cause, it also stated that it can be terminated without cause, both at
interests of society, or is inconsistent with sound policy and any time and after written notice. Thus, whether or not the
good morals, or tends clearly to undermine the security of termination or cancellation of the Supervisor’s Agreement was "for
individual rights, whether of personal liability or of private cause," is immaterial. The only requirement is that of notice to the
property. From another perspective, the main objection to exclusive other party. When petitioner Avon chose to terminate the contract, for
dealing is its tendency to foreclose existing competitors or new cause, respondent Luna was duly notified thereof.
entrants from competition in the covered portion of the relevant
market during the term of the agreement. Only those arrangements
whose probable effect is to foreclose competition in a substantial share
of the line of commerce affected can be considered as void for being
against public policy. The foreclosure effect, if any, depends on the
market share involved. The relevant market for this purpose includes

3A | Batch 2014 | 124

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Trademarks Midterms Case Digests (Atty.

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

In cases of infringement of trademarks, the law primarily takes no account of Issue:

In cases of infringement of trademarks, the law primarily takes no

The elements of unfair competition are:

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Furthermore, applying the doctrine of secondary meaning to this case,

Zantarain’s Inc. v. Old Grove Smokehouse

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

1. Its company is not registered to do business in the Philippines

On the other hand, Isetann registered its mark on 1979 and

Erandio, Athena Louise

Erandio, Athena Louise

Marks registered under RA 166 shall remain in force and shall be

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

 There is no unfair competition. The obligation resting upon

Erandio, Athena Louise

Erandio, Athena Louise

In deciding whether a mark is scandalous, the context of contemporary Ratio:

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Ratio: The evidence establishes: that the product contains either no

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Ratio: In this case, of course, spray bottle is highly useful and

Erandio, Athena Louise

As to the advertising materials, the statements made in newspapers

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise

Erandio, Athena Louise