SHANG PROPERTIES REALTY CORPORATION V. ST.

FRANCIS DEVELOPMENT
CORPORATION, G.R. NO. 190706, 21 JULY 2014.
https://lawphil.net/judjuris/juri2014/jul2014/gr_190706_2014.html

FACTS:

Respondent St. Francis Development Corporation, a corporation engaged in the real estate business and the
developer of the St. Francis Square Commercial Center located in Ortigas, filed separate complaints against
petitioners before the IPO - Bureau of Legal Affairs (BLA) namely:
a) an intellectual property violation case for unfair competition, false or fraudulent declaration, and
damages arising from petitioners’ use and filing of applications for the registration of the marks
"THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE"; and
b) an inter partes case opposing the petitioners’ application for registration of the mark "THE ST.
FRANCISTOWERS"; and
c) an inter partes case opposing the petitioners’ application for registration of the mark "THE ST.
FRANCIS SHANGRI-LA PLACE,"

Respondent alleges that, (1) it has gained substantial goodwill with the public that consumers and traders closely
identify the said mark with its property development projects, thus, petitioners could not have the mark "THE
ST. FRANCIS TOWERS" registered in their names and (2) that petitioners’ use of the aforementioned marks in
their own real estate development projects constitutes unfair competition as well as false or fraudulent
declaration.

The real estate development projects of the aforementioned companies are located along the streets bearing the
name “St. Francis,” particularly, St. Francis Avenue and St. Francis, both within the vicinity of the Ortigas Center.

BLA found that petitioners committed acts of unfair competition against respondent by its use of the mark "THE
ST. FRANCIS TOWERS" but not with its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It,
however, refused to award damages in the respondent’s favor, considering that there was no evidence presented
to substantiate the amount of damages it suffered due to the former’s acts. The BLA found that "ST. FRANCIS,"
being a name of a Catholic saint, may be considered as an arbitrary mark capable of registration. The BLA neither
deemed the mark as a geographically descriptive mark.

IPO Director General reversed the BLA’s finding that petitioners committed unfair competition through their
use of the mark "THE ST. FRANCIS TOWERS," thus dismissing such charge. He found that respondent could
not be entitled to the exclusive use of the mark "ST. FRANCIS," even at least to the locality where it conducts
its business, because it is a geographically descriptive mark.

CA found petitioners guilty of unfair competition not only with respect to their use of the mark "THE ST.
FRANCIS TOWERS" but also of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It ordered petitioners
to cease and desist from using "ST. FRANCIS" singly or as part of a composite mark, as well as to jointly and
severally pay respondent a fine in the amount of ₱200,000.00.

The CA ruled that respondent, which has exclusively and continuously used the mark "ST. FRANCIS" for more
than a decade, and, hence, gained substantial goodwill and reputation thereby, is very much entitled to be
protected against the indiscriminate usage by other companies of the trademark/name it has so painstakingly
tried to establish and maintain. Further, the CA stated that even on the assumption that the trademark was
indeed a geographically descriptive mark, adequate protection must still be given to respondent pursuant
to the Doctrine of Secondary Meaning.

ISSUE:

whether or not petitioners are guilty of unfair competition in using the marks "THE ST. FRANCISTOWERS"
and "THE ST. FRANCIS SHANGRI-LA PLACE."

HELD:

NO. The CA’s contrary conclusion was faultily premised on its impression that respondent had the right to the
exclusive use of the mark "ST. FRANCIS," for which the latter had purportedly established considerable
goodwill. What the CA appears to have disregarded or been mistaken in its disquisition, however, is the
geographically descriptive nature of the mark "ST. FRANCIS" which thus bars its exclusive appropriability,
unless a secondary meaning is acquired.

In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc., it was held that secondary meaning is
established when a descriptive mark no longer causes the public to associate the goods with a particular
place, but to associate the goods with a particular source. In other words, it is not enough that a
geographically-descriptive mark partakes of the name of a place known generally to the public to be denied
registration as it is also necessary to show that the public would make a goods/place association – that is, to
believe that the goods for which the mark is sought to be registered originate in that place. To hold such a belief,
it is necessary, of course, that the purchasers perceive the mark as a place name, from which the question of
obscurity or remoteness then comes to the fore.

Under Section 123.2 34 of the IP Code, specific requirements have to be met in order to conclude that a
geographically-descriptive mark has acquired secondary meaning, to wit:
a) the secondary meaning must have arisen as a result of substantial commercial use of a mark in the
Philippines;
b) such use must result in the distinctiveness of the mark insofar as the goods or the products are concerned;
and
c) proof of substantially exclusive and continuous commercial use in the Philippines for five (5) years before
the date on which the claim of distinctiveness is made.

Unless secondary meaning has been established, a geographically-descriptive mark, due to its general
public domain classification, is perceptibly disqualified from trademark registration.

The Court disagrees with the CA that petitioners committed unfair competition due to the mistaken notion that
petitioner had established goodwill for the mark "ST. FRANCIS" precisely because said circumstance, by and
of itself, does not equate to fraud under the parameters of Section 168 of the IP Code.

Besides, respondent was not able to prove its compliance with the requirements stated in Section 123.2 of the
IP Code to be able to conclude that it acquired a secondary meaning – and, thereby, an exclusive right – to the
"ST.FRANCIS" mark.

Even on the assumption that secondary meaning had been acquired, said finding only accords respondents
protectional qualification under Section 168.1 of the IP Code. Again, this does not automatically trigger the
concurrence of the fraud element required under Section 168.2 of the IP Code, as exemplified by the acts
mentioned in Section 168.3 of the same. Ultimately, as earlier stated, there can be no unfair competition without
this element.
COFFEE PARTNERS, INC. V. SAN FRANCISCO COFFEE & ROASTERY, INC. G.R. NO. 169504, 03
MARCH 2010.
https://lawphil.net/judjuris/juri2010/mar2010/gr_169504_2010.html

FACTS:

Petitioner Coffee Partners, Inc. is a local corporation engaged in the business of establishing and maintaining
coffeeshops in the country.
§ It registered with the Securities and Exchange Commission (SEC) in January 2001.
§ It has a franchise agreement with Coffee Partners Ltd. (CPL), a business entity organized and existing
under the laws of British Virgin Islands, for a non-exclusive right to operate coffee shops in the Philippines
using trademarks designed by CPL such as "SAN FRANCISCO COFFEE."

Respondent is a local corporation engaged in the wholesale and retail sale of coffee.
§ In May 1995, it registered with the SEC.
§ In June 1995, it registered the business name "SAN FRANCISCO COFFEE & ROASTERY, INC." with
the Department of Trade and Industry (DTI).
§ Respondent had since built a customer base that included Figaro Company, Tagaytay Highlands, Fat
Willy’s, and other coffee companies.
§ In 1998, respondent formed a joint venture company with Boyd Coffee USA under the company name
Boyd Coffee Company Philippines, Inc. (BCCPI).

In June 2001, respondent discovered that petitioner was about to open a coffee shop under the name “SAN
FRANCISCO COFFEE” in Libis, Quezon City. They (1) sent a letter to petitioner demanding that the latter stop
using the name “SAN FRANCISCO COFFEE.” They also (2) filed a complaint with the Bureau of Legal Affairs-
Intellectual Property Office (BLA-IPO) for infringement and/or unfair competition with claims for damages.

BLA-IPO held that petitioner’s trademark infringed on the respondent’s trade name. It ruled that the right to the
exclusive use of a trade name with freedom from infringement by similarity is determined from priority of
adoption. Respondent must be protected from infringement of its trade name since respondent registered its
business/trade name with the DTI in 1995 and the petitioner registered its trademark with the IPO in 2001 in the
Philippines and in 1997 in other countries.

BLA-IPO also held that respondent did not abandon the use of its trade name when it formed a joint venture with
Boyd Coffee USA as argued by petitioner; substantial evidence indicated respondent continuously used its trade
name in connection with the purpose for which it was organized.

They also held that petitioner’s use of the trademark "SAN FRANCISCO COFFEE" will likely cause confusion
because of the exact similarity in sound, spelling, pronunciation, and commercial impression of the words "SAN
FRANCISCO" which is the dominant portion of respondent’s trade name and petitioner’s trademark.

On the issue of unfair competition, the BLA-IPO absolved petitioner from liability; there was no evidence of
intent to defraud on the part of petitioner.

In its 2003 decision, the BLA-IPO with the Office of the Director General – Intellectual Property Office (ODG-
IPO) ruled that petitioner's use of the trademark "SAN FRANCISCO COFFEE" did not infringe on respondent's
trade name. It ruled that between a subsequent user of a trade name in good faith and a prior user who had
stopped using such trade name, it would be inequitable to rule in favor of the latter.

In its 2005 decision, CA reversed the ODG-IPO decision and reinstated the decision of the BLA-IPO finding
infringement. Petitioner’s motion for reconsideration and respondent's motion for partial reconsideration.

ISSUE:
Whether or not the petitioner’s use of the trademark "SAN FRANCISCO COFFEE" constitutes infringement of
respondent’s trade name "SAN FRANCISCO COFFEE & ROASTERY, INC.," even if the trade name is not
registered with the Intellectual Property Office (IPO).

HELD:

YES. 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 or commerce in the Philippines.

Section 22 of R.A. No. 166 (Trademark Law which took effect on June 20, 1947), as amended, required
registration of a trade name as a condition for the institution of an infringement suit.

However, Section 165.2 (a) of R.A. No. 8293 (Intellectual Property Code of the Philippines), which took effect
on January 1, 1998, has dispensed with the registration requirement. It categorically states that the trade names
shall be protected even prior to or without registration with the IPO, against any unlawful act including any
subsequent use of the trade name by a third party, whether as a trade name or trademark likely to mislead the
public.

The Court also clarified that it is the likelihood of confusion that is the gravamen of trade name infringement. In
determining similarity and likelihood of confusion, our jurisprudence has developed two tests: the dominancy
test and the holistic test.

Applying either the dominancy test or the holistic test, petitioner’s "SAN FRANCISCO COFFEE" trademark is
a clear infringement of respondent’s "SAN FRANCISCO COFFEE & ROASTERY, INC." trade name.

Respondent has acquired an exclusive right to the use of the trade name "SAN FRANCISCO COFFEE &
ROASTERY, INC." since the registration of the business name with the DTI in 1995. Thus, respondent’s use of
its trade name from then on must be free from any infringement by similarity.

Of course, this does not mean that respondent has exclusive use of the geographic word "San Francisco" or the
generic word "coffee." Geographic or generic words are not, per se, subject to exclusive appropriation. It is only
the combination of the words "SAN FRANCISCO COFFEE," which is respondent’s trade name in its coffee
business, that is protected against infringement on matters related to the coffee business to avoid confusing or
deceiving the public.