[G.R. No. 114508.

November 19, 1999]

PRIBHDAS J. MIRPURI, Petitioner, v. COURT OF APPEALS, DIRECTOR OF

PATENTS and the BARBIZON CORPORATION, Respondents.

DECISION

PUNO, J.:

The Convention of Paris for the Protection of Industrial Property is a multi-lateral treaty
which the Philippines bound itself to honor and enforce in this country. As to whether or
not the treaty affords protection to a foreign corporation against a Philippine applicant
for the registration of a similar trademark is the principal issue in this case.

On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of petitioner Pribhdas
J. Mirpuri, filed an application with the Bureau of Patents for the registration of the
trademark "Barbizon" for use in brassieres and ladies undergarments. Escobar alleged
that she had been manufacturing and selling these products under the firm name "L &
BM Commercial" since March 3, 1970.

Private respondent Barbizon Corporation, a corporation organized and doing business

under the laws of New York, U.S.A., opposed the application. It claimed that:

"The mark BARBIZON of respondent-applicant is confusingly similar to the trademark

BARBIZON which opposer owns and has not abandoned.

That opposer will be damaged by the registration of the mark BARBIZON and its
business reputation and goodwill will suffer great and irreparable injury.

That the respondent-applicant's use of the said mark BARBIZON which resembles the
trademark used and owned by opposer, constitutes an unlawful appropriation of a mark
previously used in the Philippines and not abandoned and therefore a statutory violation
of Section 4 (d) of Republic Act No. 166, as amended."1

This was docketed as Inter Partes Case No. 686 (IPC No. 686). After filing of the
pleadings, the parties submitted the case for decision.

On June 18, 1974, the Director of Patents rendered judgment dismissing the opposition
and giving due course to Escobar's application, thus:

"WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,

Application Serial No. 19010 for the registration of the trademark BARBIZON, of
respondent Lolita R. Escobar, is given due course.

IT IS SO ORDERED."2

This decision became final and on September 11, 1974, Lolita Escobar was issued a
certificate of registration for the trademark "Barbizon." The trademark was "for use in
"brassieres and lady's underwear garments like panties."3

Escobar later assigned all her rights and interest over the trademark to petitioner
Pribhdas J. Mirpuri who, under his firm name then, the "Bonito Enterprises," was the
sole and exclusive distributor of Escobar's "Barbizon" products.

In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of Use
of the trademark required under Section 12 of Republic Act (R.A.) No. 166, the
Philippine Trademark Law. Due to this failure, the Bureau of Patents cancelled
Escobar's certificate of registration.

On May 27, 1981, Escobar reapplied for registration of the cancelled trademark. Mirpuri
filed his own application for registration of Escobar's trademark. Escobar later assigned
her application to herein petitioner and this application was opposed by private
respondent. The case was docketed as Inter Partes Case No. 2049 (IPC No. 2049).

In its opposition, private respondent alleged that:

"(a) The Opposer has adopted the trademark BARBIZON (word), sometime in June
1933 and has then used it on various kinds of wearing apparel. On August 14, 1934,
Opposer obtained from the United States Patent Office a more recent registration of the
said mark under Certificate of Registration No. 316,161. On March 1, 1949, Opposer
obtained from the United States Patent Office a more recent registration for the said
trademark under Certificate of Registration No. 507,214, a copy of which is herewith
attached as Annex `A.' Said Certificate of Registration covers the following goods--
wearing apparel: robes, pajamas, lingerie, nightgowns and slips;

(b) Sometime in March 1976, Opposer further adopted the trademark BARBIZON and
Bee design and used the said mark in various kinds of wearing apparel. On March 15,
1977, Opposer secured from the United States Patent Office a registration of the said
mark under Certificate of Registration No. 1,061,277, a copy of which is herein enclosed
as Annex `B.' The said Certificate of Registration covers the following goods: robes,
pajamas, lingerie, nightgowns and slips;

(c) Still further, sometime in 1961, Opposer adopted the trademark BARBIZON and a
Representation of a Woman and thereafter used the said trademark on various kinds of
wearing apparel. Opposer obtained from the United States Patent Office registration of
the said mark on April 5, 1983 under Certificate of Registration No. 1,233,666 for the
following goods: wearing apparel: robes, pajamas, nightgowns and lingerie. A copy of
the said certificate of registration is herewith enclosed as Annex `C.'

(d) All the above registrations are subsisting and in force and Opposer has not
abandoned the use of the said trademarks. In fact, Opposer, through a wholly-owned
Philippine subsidiary, the Philippine Lingerie Corporation, has been manufacturing the
goods covered by said registrations and selling them to various countries, thereby
earning valuable foreign exchange for the country. As a result of respondent-applicant's
misappropriation of Opposer's BARBIZON trademark, Philippine Lingerie Corporation is
prevented from selling its goods in the local market, to the damage and prejudice of
Opposer and its wholly-owned subsidiary.

(e) The Opposer's goods bearing the trademark BARBIZON have been used in many
countries, including the Philippines, for at least 40 years and has enjoyed international
reputation and good will for their quality. To protect its registrations in countries where
the goods covered by the registrations are being sold, Opposer has procured the
registration of the trademark BARBIZON in the following countries: Australia, Austria,
Abu Dhabi, Argentina, Belgium, Bolivia, Bahrain, Canada, Chile, Colombia, Denmark,
Ecuador, France, West Germany, Greece, Guatemala, Hongkong, Honduras, Italy,
Japan, Jordan, Lebanon, Mexico, Morocco, Panama, New Zealand, Norway, Sweden,
Switzerland, Syria, El Salvador, South Africa, Zambia, Egypt, and Iran, among others;

(f) To enhance its international reputation for quality goods and to further promote
goodwill over its name, marks and products, Opposer has extensively advertised its
products, trademarks and name in various publications which are circulated in the
United States and many countries around the world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in the Philippines by one
Lolita R. Escobar under Registration No. 21920, issued on September 11, 1974, in
violation of Article 189 (3) of the Revised Penal Code and Section 4 (d) of the
Trademark Law. Herein respondent applicant acquired by assignment the `rights' to the
said mark previously registered by Lolita Escobar, hence respondent-applicant's title is
vitiated by the same fraud and criminal act. Besides, Certificate of Registration No.
21920 has been cancelled for failure of either Lolita Escobar or herein respondent-
applicant, to seasonably file the statutory affidavit of use. By applying for a re-
registration of the mark BARBIZON subject of this opposition, respondent-applicant
seeks to perpetuate the fraud and criminal act committed by Lolita Escobar.

(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and BARBIZON
and Representation of a Woman trademarks qualify as well-known trademarks entitled
to protection under Article 6bis of the Convention of Paris for the Protection of Industrial
Property and further amplified by the Memorandum of the Minister of Trade to the
Honorable Director of Patents dated October 25, 1983 [sic],4 Executive Order No. 913
dated October 7, 1963 and the Memorandum of the Minister of Trade and Industry to
the Honorable Director of Patents dated October 25, 1983.

(i) The trademark applied for by respondent applicant is identical to Opposer's

BARBIZON trademark and constitutes the dominant part of Opposer's two other marks
namely, BARBIZON and Bee design and BARBIZON and a Representation of a
Woman. The continued use by respondent-applicant of Opposer's trademark
BARBIZON on goods belonging to Class 25 constitutes a clear case of commercial and
criminal piracy and if allowed registration will violate not only the Trademark Law but
also Article 189 of the Revised Penal Code and the commitment of the Philippines to an
international treaty."5

Replying to private respondent's opposition, petitioner raised the defense of res

judicata.

On March 2, 1982, Escobar assigned to petitioner the use of the business name
"Barbizon International." Petitioner registered the name with the Department of Trade
and Industry (DTI) for which a certificate of registration was issued in 1987.

Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition
for cancellation of petitioner's business name.

On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's certificate
of registration, and declared private respondent the owner and prior user of the
business name "Barbizon International." Thus:

"WHEREFORE, the petition is hereby GRANTED and petitioner is declared the owner
and prior user of the business name "BARBIZON INTERNATIONAL" under Certificate
of Registration No. 87-09000 dated March 10, 1987 and issued in the name of
respondent, is [sic] hereby ordered revoked and cancelled. x x x."6

Meanwhile, in IPC No. 2049, the evidence of both parties were received by the Director
of Patents. On June 18, 1992, the Director rendered a decision declaring private
respondent's opposition barred by res judicata and giving due course to petitioner's
application for registration, to wit:

"WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is hereby
DECLARED BARRED by res judicata and is hereby DISMISSED. Accordingly,
Application Serial No. 45011 for trademark BARBIZON filed by Pribhdas J. Mirpuri is
GIVEN DUE COURSE.
SO ORDERED."7

Private respondent questioned this decision before the Court of Appeals in CA-G.R. SP
No. 28415. On April 30, 1993, the Court of Appeals reversed the Director of Patents
finding that IPC No. 686 was not barred by judgment in IPC No. 2049 and ordered that
the case be remanded to the Bureau of Patents for further proceedings, viz:

"WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the Director
of Patents in Inter Partes Case No. 2049 is hereby SET ASIDE; and the case is hereby
remanded to the Bureau of Patents for further proceedings, in accordance with this
pronouncement. No costs."8

In a Resolution dated March 16, 1994, the Court of Appeals denied reconsideration of
its decision.9 Hence, this recourse.

Before us, petitioner raises the following issues:

"1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN INTER

PARTES CASE NO. 686 RENDERED ON JUNE 18, 1974, ANNEX C HEREOF,
CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE BEFORE THE DIRECTOR
OF PATENTS IS CONCERNED;

2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED THE

PRINCIPLE OF RES JUDICATA IN DISMISSING PRIVATE RESPONDENT
BARBIZON'S OPPOSITION TO PETITIONER'S APPLICATION FOR REGISTRATION
FOR THE TRADEMARK BARBIZON, WHICH HAS SINCE RIPENED TO
CERTIFICATE OF REGISTRATION NO. 53920 ON NOVEMBER 16, 1992;

3. WHETHER OR NOT THE REQUISITE THAT A 'JUDGMENT ON THE MERITS'

REQUIRED A 'HEARING WHERE BOTH PARTIES ARE SUPPOSED TO ADDUCE
EVIDENCE' AND WHETHER THE JOINT SUBMISSION OF THE PARTIES TO A
CASE ON THE BASIS OF THEIR RESPECTIVE PLEADINGS WITHOUT
PRESENTING TESTIMONIAL OR DOCUMENTARY EVIDENCE FALLS WITHIN THE
MEANING OF 'JUDGMENT ON THE MERITS' AS ONE OF THE REQUISITES TO
CONSTITUTE RES JUDICATA;

4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND INDUSTRY

CANCELLING PETITIONER'S FIRM NAME 'BARBIZON INTERNATIONAL' AND
WHICH DECISION IS STILL PENDING RECONSIDERATION NEVER OFFERED IN
EVIDENCE BEFORE THE DIRECTOR OF PATENTS IN INTER PARTES CASE NO.
2049 HAS THE RIGHT TO DECIDE SUCH CANCELLATION NOT ON THE BASIS OF
THE BUSINESS NAME LAW (AS IMPLEMENTED BY THE BUREAU OF DOMESTIC
TRADE) BUT ON THE BASIS OF THE PARIS CONVENTION AND THE TRADEMARK
LAW (R.A. 166) WHICH IS WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION
OF THE DIRECTOR OF PATENTS."10

Before ruling on the issues of the case, there is need for a brief background on the
function and historical development of trademarks and trademark law.

A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word,
name, symbol, emblem, sign or device or any combination thereof adopted and used by
a manufacturer or merchant to identify his goods and distinguish them from those
manufactured, sold or dealt in by others."11 This definition has been simplified in R.A.
No. 8293, the Intellectual Property Code of the Philippines, which defines a "trademark"
as "any visible sign capable of distinguishing goods."12 In Philippine jurisprudence, the
function of a trademark is to point out distinctly the origin or ownership of the goods to
which it is affixed; to secure to him, who has been instrumental in bringing into the
market a superior article of merchandise, the fruit of his industry and skill; to assure the
public that they are procuring the genuine article; to prevent fraud and imposition; and to
protect the manufacturer against substitution and sale of an inferior and different article
as his product.13

Modern authorities on trademark law view trademarks as performing three distinct

functions: (1) they indicate origin or ownership of the articles to which they are attached;
(2) they guarantee that those articles come up to a certain standard of quality; and (3)
they advertise the articles they symbolize.14

Symbols have been used to identify the ownership or origin of articles for several
centuries.15 As early as 5,000 B.C., markings on pottery have been found by
archaeologists. Cave drawings in southwestern Europe show bison with symbols on
their flanks.16 Archaeological discoveries of ancient Greek and Roman inscriptions on
sculptural works, paintings, vases, precious stones, glassworks, bricks, etc. reveal
some features which are thought to be marks or symbols. These marks were affixed by
the creator or maker of the article, or by public authorities as indicators for the payment
of tax, for disclosing state monopoly, or devices for the settlement of accounts between
an entrepreneur and his workmen.17

In the Middle Ages, the use of many kinds of marks on a variety of goods was
commonplace. Fifteenth century England saw the compulsory use of identifying marks
in certain trades. There were the baker's mark on bread, bottlemaker's marks, smith's
marks, tanner's marks, watermarks on paper, etc.18 Every guild had its own mark and
every master belonging to it had a special mark of his own. The marks were not
trademarks but police marks compulsorily imposed by the sovereign to let the public
know that the goods were not "foreign" goods smuggled into an area where the guild
had a monopoly, as well as to aid in tracing defective work or poor craftsmanship to the
artisan.19 For a similar reason, merchants also used merchants' marks. Merchants dealt
in goods acquired from many sources and the marks enabled them to identify and
reclaim their goods upon recovery after shipwreck or piracy.20

With constant use, the mark acquired popularity and became voluntarily adopted. It was
not intended to create or continue monopoly but to give the customer an index or
guarantee of quality.21 It was in the late 18th century when the industrial revolution gave
rise to mass production and distribution of consumer goods that the mark became an
important instrumentality of trade and commerce.22 By this time, trademarks did not
merely identify the goods; they also indicated the goods to be of satisfactory quality, and
thereby stimulated further purchases by the consuming public.23 Eventually, they came
to symbolize the goodwill and business reputation of the owner of the product and
became a property right protected by law.24 The common law developed the doctrine of
trademarks and tradenames "to prevent a person from palming off his goods as
another's, from getting another's business or injuring his reputation by unfair means,
and, from defrauding the public."25 Subsequently, England and the United States
enacted national legislation on trademarks as part of the law regulating unfair trade.26 It
became the right of the trademark owner to exclude others from the use of his mark, or
of a confusingly similar mark where confusion resulted in diversion of trade or financial
injury. At the same time, the trademark served as a warning against the imitation or
faking of products to prevent the imposition of fraud upon the public.27

Today, the trademark is not merely a symbol of origin and goodwill; it is often the most
effective agent for the actual creation and protection of goodwill. It imprints upon the
public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for
further satisfaction. In other words, the mark actually sells the goods.28 The mark has
become the "silent salesman," the conduit through which direct contact between the
trademark owner and the consumer is assured. It has invaded popular culture in ways
never anticipated that it has become a more convincing selling point than even the
quality of the article to which it refers.29 In the last half century, the unparalleled growth
of industry and the rapid development of communications technology have enabled
trademarks, tradenames and other distinctive signs of a product to penetrate regions
where the owner does not actually manufacture or sell the product itself. Goodwill is no
longer confined to the territory of actual market penetration; it extends to zones where
the marked article has been fixed in the public mind through advertising.30 Whether in
the print, broadcast or electronic communications medium, particularly on the
Internet,31 advertising has paved the way for growth and expansion of the product by
creating and earning a reputation that crosses over borders, virtually turning the whole
world into one vast marketplace.

This is the mise-en-scene of the present controversy. Petitioner brings this action

claiming that "Barbizon" products have been sold in the Philippines since 1970.
Petitioner developed this market by working long hours and spending considerable
sums of money on advertisements and promotion of the trademark and its products.
Now, almost thirty years later, private respondent, a foreign corporation, "swaggers into
the country like a conquering hero," usurps the trademark and invades petitioner's
market.32 Justice and fairness dictate that private respondent be prevented from
appropriating what is not its own. Legally, at the same time, private respondent is barred
from questioning petitioner's ownership of the trademark because of res judicata.33

Literally, res judicata means a matter adjudged, a thing judicially acted upon or decided;

a thing or matter settled by judgment.34 In res judicata, the judgment in the first action is
considered conclusive as to every matter offered and received therein, as to any other
admissible matter which might have been offered for that purpose, and all other matters
that could have been adjudged therein.35 Res judicata is an absolute bar to a
subsequent action for the same cause; and its requisites are: (a) the former judgment or
order must be final; (b) the judgment or order must be one on the merits; (c) it must
have been rendered by a court having jurisdiction over the subject matter and parties;
(d) there must be between the first and second actions, identity of parties, of subject
matter and of causes of action.36

The Solicitor General, on behalf of respondent Director of Patents, has joined cause
with petitioner. Both claim that all the four elements of res judicata have been complied
with: that the judgment in IPC No. 686 was final and was rendered by the Director of
Patents who had jurisdiction over the subject matter and parties; that the judgment in
IPC No. 686 was on the merits; and that the lack of a hearing was immaterial because
substantial issues were raised by the parties and passed upon by the Director of
Patents.37

The decision in IPC No. 686 reads as follows:

"x x x.

Neither party took testimony nor adduced documentary evidence. They submitted the
case for decision based on the pleadings which, together with the pertinent records,
have all been carefully considered.

Accordingly, the only issue for my disposition is whether or not the herein opposer
would probably be damaged by the registration of the trademark BARBIZON sought by
the respondent-applicant on the ground that it so resembles the trademark BARBIZON
allegedly used and owned by the former to be `likely to cause confusion, mistake or to
deceive purchasers.'

On record, there can be no doubt that respondent-applicant's sought-to-be-registered

trademark BARBIZON is similar, in fact obviously identical, to opposer's alleged
trademark BARBIZON, in spelling and pronunciation. The only appreciable but very
negligible difference lies in their respective appearances or manner of presentation.
Respondent-applicant's trademark is in bold letters (set against a black background),
while that of the opposer is offered in stylish script letters.

It is opposer's assertion that its trademark BARBIZON has been used in trade or
commerce in the Philippines prior to the date of application for the registration of the
identical mark BARBIZON by the respondent-applicant. However, the allegation of facts
in opposer's verified notice of opposition is devoid of such material information. In fact, a
reading of the text of said verified opposition reveals an apparent, if not deliberate,
omission of the date (or year) when opposer's alleged trademark BARBIZON was first
used in trade in the Philippines (see par. No. 1, p. 2, Verified Notice of Opposition,
Rec.). Thus, it cannot here and now be ascertained whether opposer's alleged use of
the trademark BARBIZON could be prior to the use of the identical mark by the herein
respondent-applicant, since the opposer attempted neither to substantiate its claim of
use in local commerce with any proof or evidence. Instead, the opposer submitted the
case for decision based merely on the pleadings.

On the other hand, respondent-applicant asserted in her amended application for

registration that she first used the trademark BARBIZON for brassiere (or 'brasseire')
and ladies underwear garments and panties as early as March 3, 1970. Be that as it
may, there being no testimony taken as to said date of first use, respondent-applicant
will be limited to the filing date, June 15, 1970, of her application as the date of first use
(Rule 173, Rules of Practice in Trademark Cases).

From the foregoing, I conclude that the opposer has not made out a case of probable
damage by the registration of the respondent-applicant's mark BARBIZON.

WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,

Application Serial No. 19010, for the registration of the trademark BARBIZON of
respondent Lolita R. Escobar, is given due course."38

The decision in IPC No. 686 was a judgment on the merits and it was error for the Court
of Appeals to rule that it was not. A judgment is on the merits when it determines the
rights and liabilities of the parties based on the disclosed facts, irrespective of formal,
technical or dilatory objections.39 It is not necessary that a trial should have been
conducted. If the court's judgment is general, and not based on any technical defect or
objection, and the parties had a full legal opportunity to be heard on their respective
claims and contentions, it is on the merits although there was no actual hearing or
arguments on the facts of the case.40 In the case at bar, the Director of Patents did not
dismiss private respondent's opposition on a sheer technicality. Although no hearing
was conducted, both parties filed their respective pleadings and were given opportunity
to present evidence. They, however, waived their right to do so and submitted the case
for decision based on their pleadings. The lack of evidence did not deter the Director of
Patents from ruling on the case, particularly on the issue of prior use, which goes into
the very substance of the relief sought by the parties. Since private respondent failed to
prove prior use of its trademark, Escobar's claim of first use was upheld.

The judgment in IPC No. 686 being on the merits, petitioner and the Solicitor General
allege that IPC No. 686 and IPC No. 2049 also comply with the fourth requisite of res
judicata, i.e., they involve the same parties and the same subject matter, and have
identical causes of action.

Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties and the same
subject matter. Petitioner herein is the assignee of Escobar while private respondent is
the same American corporation in the first case. The subject matter of both cases is the
trademark "Barbizon." Private respondent counter-argues, however, that the two cases
do not have identical causes of action. New causes of action were allegedly introduced
in IPC No. 2049, such as the prior use and registration of the trademark in the United
States and other countries worldwide, prior use in the Philippines, and the fraudulent
registration of the mark in violation of Article 189 of the Revised Penal Code. Private
respondent also cited protection of the trademark under the Convention of Paris for the
Protection of Industrial Property, specifically Article 6bis thereof, and the implementation
of Article 6bis by two Memoranda dated November 20, 1980 and October 25, 1983 of
the Minister of Trade and Industry to the Director of Patents, as well as Executive Order
(E.O.) No. 913.

The Convention of Paris for the Protection of Industrial Property, otherwise known as
the Paris Convention, is a multilateral treaty that seeks to protect industrial property
consisting of patents, utility models, industrial designs, trademarks, service marks, trade
names and indications of source or appellations of origin, and at the same time aims to
repress unfair competition.41 The Convention is essentially a compact among various
countries which, as members of the Union, have pledged to accord to citizens of the
other member countries trademark and other rights comparable to those accorded their
own citizens by their domestic laws for an effective protection against unfair
competition.42 In short, foreign nationals are to be given the same treatment in each of
the member countries as that country makes available to its own citizens.43 Nationals of
the various member nations are thus assured of a certain minimum of international
protection of their industrial property.44

The Convention was first signed by eleven countries in Paris on March 20, 1883.45 It
underwent several revisions-- at Brussels in 1900, at Washington in 1911, at The Hague
in 1925, at London in 1934, at Lisbon in 1958,46 and at Stockholm in 1967. Both the
Philippines and the United States of America, herein private respondent's country, are
signatories to the Convention. The United States acceded on May 30, 1887 while the
Philippines, through its Senate, concurred on May 10, 1965.47 The Philippines' adhesion
became effective on September 27, 1965,48 and from this date, the country obligated
itself to honor and enforce the provisions of the Convention.49

In the case at bar, private respondent anchors its cause of action on the first paragraph
of Article 6bis of the Paris Convention which reads as follows:

"Article 6bis

(1) The countries of the Union undertake, either administratively if their legislation
so permits, or at the request of an interested party, to refuse or to cancel the
registration and to prohibit the use, of a trademark which constitutes a
reproduction, an imitation, or a translation, liable to create confusion, of a mark
considered by the competent authority of the country of registration or use to be
well-known in that country as being already the mark of a person entitled to the
benefits of this Convention and used for identical or similar goods. These
provisions shall also apply when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation liable to create
confusion therewith.

(2) A period of at least five years from the date of registration shall be allowed for
seeking the cancellation of such a mark. The countries of the Union may provide for a
period within which the prohibition of use must be sought.

(3) No time limit shall be fixed for seeking the cancellation or the prohibition of the use
of marks registered or used in bad faith."50

This Article governs protection of well-known trademarks. Under the first paragraph,

each country of the Union bound itself to undertake to refuse or cancel the registration,
and prohibit the use of a trademark which is a reproduction, imitation or translation, or
any essential part of which trademark constitutes a reproduction, liable to create
confusion, of a mark considered by the competent authority of the country where
protection is sought, to be well-known in the country as being already the mark of a
person entitled to the benefits of the Convention, and used for identical or similar goods.

Article 6bis was first introduced at The Hague in 1925 and amended in Lisbon in
1952.51 It is a self-executing provision and does not require legislative enactment to give
it effect in the member country.52 It may be applied directly by the tribunals and officials
of each member country by the mere publication or proclamation of the Convention,
after its ratification according to the public law of each state and the order for its
execution.53

The essential requirement under Article 6bis is that the trademark to be protected must
be "well-known" in the country where protection is sought. The power to determine
whether a trademark is well-known lies in the "competent authority of the country of
registration or use." This competent authority would be either the registering authority if
it has the power to decide this, or the courts of the country in question if the issue
comes before a court.54

Pursuant to Article 6bis, on November 20, 1980, then Minister Luis Villafuerte of the
Ministry of Trade issued a Memorandum to the Director of Patents. The Minister
ordered the Director that:

"Pursuant to the Paris Convention for the Protection of Industrial Property to which the
Philippines is a signatory, you are hereby directed to reject all pending applications for
Philippine registration of signature and other world-famous trademarks by applicants
other than its original owners or users.

The conflicting claims over internationally known trademarks involve such name brands
as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior,
Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and
Ted Lapidus.

It is further directed that, in cases where warranted, Philippine registrants of such

trademarks should be asked to surrender their certificates of registration, if any, to avoid
suits for damages and other legal action by the trademarks' foreign or local owners or
original users.

You are also required to submit to the undersigned a progress report on the matter.

For immediate compliance."55

Three years later, on October 25, 1983, then Minister Roberto Ongpin issued another
Memorandum to the Director of Patents, viz:

"Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the rule-
making and adjudicatory powers of the Minister of Trade and Industry and provides inter
alia, that `such rule-making and adjudicatory powers should be revitalized in order that
the Minister of Trade and Industry can x x x apply more swift and effective solutions and
remedies to old and new problems x x x such as infringement of internationally-known
tradenames and trademarks x x x' and in view of the decision of the Intermediate
Appellate Court in the case of LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI
[AC-G.R. SP NO. 13359 (17) June 1983]56 which affirms the validity of the
MEMORANDUM of then Minister Luis R. Villafuerte dated 20 November 1980
confirming our obligations under the PARIS CONVENTION FOR THE PROTECTION
OF INDUSTRIAL PROPERTY to which the Republic of the Philippines is a signatory,
you are hereby directed to implement measures necessary to effect compliance with our
obligations under said Convention in general, and, more specifically, to honor our
commitment under Section 6bis57 thereof, as follows:

1. Whether the trademark under consideration is well-known in the Philippines or is a

mark already belonging to a person entitled to the benefits of the CONVENTION, this
should be established, pursuant to Philippine Patent Office procedures in inter partes
and ex parte cases, according to any of the following criteria or any combination thereof:

(a) a declaration by the Minister of Trade and Industry that the trademark being
considered is already well-known in the Philippines such that permission for its use by
other than its original owner will constitute a reproduction, imitation, translation or other
infringement;

(b) that the trademark is used in commerce internationally, supported by proof that
goods bearing the trademark are sold on an international scale, advertisements, the
establishment of factories, sales offices, distributorships, and the like, in different
countries, including volume or other measure of international trade and commerce;

(c) that the trademark is duly registered in the industrial property office(s) of another
country or countries, taking into consideration the date of such registration;

(d) that the trademark has long been established and obtained goodwill and
international consumer recognition as belonging to one owner or source;

(e) that the trademark actually belongs to a party claiming ownership and has the right
to registration under the provisions of the aforestated PARIS CONVENTION.

2. The word trademark, as used in this MEMORANDUM, shall include tradenames,

service marks, logos, signs, emblems, insignia or other similar devices used for
identification and recognition by consumers.

3. The Philippine Patent Office shall refuse all applications for, or cancel the registration
of, trademarks which constitute a reproduction, translation or imitation of a trademark
owned by a person, natural or corporate, who is a citizen of a country signatory to the
PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY.

4. The Philippine Patent Office shall give due course to the Opposition in cases already
or hereafter filed against the registration of trademarks entitled to protection of Section
6 bis of said PARIS CONVENTION as outlined above, by remanding applications filed
by one not entitled to such protection for final disallowance by the Examination Division.

5. All pending applications for Philippine registration of signature and other world-
famous trademarks filed by applicants other than their original owners or users shall be
rejected forthwith. Where such applicants have already obtained registration contrary to
the abovementioned PARIS CONVENTION and/or Philippine Law, they shall be
directed to surrender their Certificates of Registration to the Philippine Patent Office for
immediate cancellation proceedings.

x x x."58

In the Villafuerte Memorandum, the Minister of Trade instructed the Director of Patents
to reject all pending applications for Philippine registration of signature and other world-
famous trademarks by applicants other than their original owners or users. The Minister
enumerated several internationally-known trademarks and ordered the Director of
Patents to require Philippine registrants of such marks to surrender their certificates of
registration.
In the Ongpin Memorandum, the Minister of Trade and Industry did not enumerate well-
known trademarks but laid down guidelines for the Director of Patents to observe in
determining whether a trademark is entitled to protection as a well-known mark in the
Philippines under Article 6bis of the Paris Convention. This was to be established
through Philippine Patent Office procedures in inter partes and ex parte cases pursuant
to the criteria enumerated therein. The Philippine Patent Office was ordered to refuse
applications for, or cancel the registration of, trademarks which constitute a
reproduction, translation or imitation of a trademark owned by a person who is a citizen
of a member of the Union. All pending applications for registration of world-famous
trademarks by persons other than their original owners were to be rejected forthwith.
The Ongpin Memorandum was issued pursuant to Executive Order No. 913 dated
October 7, 1983 of then President Marcos which strengthened the rule-making and
adjudicatory powers of the Minister of Trade and Industry for the effective protection of
consumers and the application of swift solutions to problems in trade and industry.59

Both the Villafuerte and Ongpin Memoranda were sustained by the Supreme Court in
the 1984 landmark case of La Chemise Lacoste, S.A. v. Fernandez.60 This court ruled
therein that under the provisions of Article 6bis of the Paris Convention, the Minister of
Trade and Industry was the "competent authority" to determine whether a trademark is
well-known in this country.61

The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years after the
adoption of the Paris Convention in 1965. In the case at bar, the first inter partes case,
IPC No. 686, was filed in 1970, before the Villafuerte Memorandum but five (5)
years after the effectivity of the Paris Convention. Article 6bis was already in effect five
years before the first case was instituted. Private respondent, however, did not cite the
protection of Article 6bis, neither did it mention the Paris Convention at all. It was only in
1981 when IPC No. 2049 was instituted that the Paris Convention and the Villafuerte
Memorandum, and, during the pendency of the case, the 1983 Ongpin Memorandum
were invoked by private respondent.

The Solicitor General argues that the issue of whether the protection of Article 6bis of
the Convention and the two Memoranda is barred by res judicata has already been
answered in Wolverine Worldwide, Inc. v. Court of Appeals.62 In this case, petitioner
Wolverine, a foreign corporation, filed with the Philippine Patent Office a petition for
cancellation of the registration certificate of private respondent, a Filipino citizen, for the
trademark "Hush Puppies" and "Dog Device." Petitioner alleged that it was the registrant
of the internationally-known trademark in the United States and other countries, and
cited protection under the Paris Convention and the Ongpin Memorandum. The petition
was dismissed by the Patent Office on the ground of res judicata. It was found that in
1973 petitioner's predecessor-in-interest filed two petitions for cancellation of the same
trademark against respondent's predecessor-in-interest. The Patent Office dismissed
the petitions, ordered the cancellation of registration of petitioner's trademark, and gave
due course to respondent's application for registration. This decision was sustained by
the Court of Appeals, which decision was not elevated to us and became final and
executory.63

Wolverine claimed that while its previous petitions were filed under R.A. No. 166, the
Trademark Law, its subsequent petition was based on a new cause of action, i.e., the
Ongpin Memorandum and E.O. No. 913 issued in 1983, after finality of the previous
decision. We held that the said Memorandum and E.O. did not grant a new cause of
action because it did "not amend the Trademark Law," x x x "nor did it indicate a new
policy with respect to the registration in the Philippines of world-famous
trademarks."64 This conclusion was based on the finding that Wolverine's two previous
petitions and subsequent petition dealt with the same issue of ownership of the
trademark.65 In other words, since the first and second cases involved the same issue of
ownership, then the first case was a bar to the second case.
In the instant case, the issue of ownership of the trademark "Barbizon" was not raised in
IPC No. 686. Private respondent's opposition therein was merely anchored on:

(a) "confusing similarity" of its trademark with that of Escobar's;

(b) that the registration of Escobar's similar trademark will cause damage to private
respondent's business reputation and goodwill; and

(c) that Escobar's use of the trademark amounts to an unlawful appropriation of a mark
previously used in the Philippines which act is penalized under Section 4 (d) of the
Trademark Law.

In IPC No. 2049, private respondent's opposition set forth several issues summarized
as follows:

(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its products
such as robes, pajamas, lingerie, nightgowns and slips;

(b) that the trademark "BARBIZON" was registered with the United States Patent Office
in 1934 and 1949; and that variations of the same trademark, i.e., "BARBIZON" with
Bee design and "BARBIZON" with the representation of a woman were also registered
with the U.S. Patent Office in 1961 and 1976;

(c) that these marks have been in use in the Philippines and in many countries all over
the world for over forty years. "Barbizon" products have been advertised in international
publications and the marks registered in 36 countries worldwide;

(d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was based on
fraud; and this fraudulent registration was cancelled in 1979, stripping Escobar of
whatsoever right she had to the said mark;

(e) Private respondent's trademark is entitled to protection as a well-known mark under

Article 6bis of the Paris Convention, Executive Order No. 913, and the two Memoranda
dated November 20, 1980 and October 25, 1983 of the Minister of Trade and Industry to
the Director of Patents;

(f) Escobar's trademark is identical to private respondent's and its use on the same
class of goods as the latter's amounts to a violation of the Trademark Law and Article
189 of the Revised Penal Code.

IPC No. 2049 raised the issue of ownership of the trademark, the first registration and
use of the trademark in the United States and other countries, and the international
recognition and reputation of the trademark established by extensive use and
advertisement of private respondent's products for over forty years here and abroad.
These are different from the issues of confusing similarity and damage in IPC No. 686.
The issue of prior use may have been raised in IPC No. 686 but this claim was limited
to prior use in the Philippines only. Prior use in IPC No. 2049 stems from private
respondent's claim as originator of the word and symbol "Barbizon,"66 as the first and
registered user of the mark attached to its products which have been sold and
advertised worldwide for a considerable number of years prior to petitioner's first
application for registration of her trademark in the Philippines. Indeed, these are
substantial allegations that raised new issues and necessarily gave private respondent
a new cause of action. Res judicata does not apply to rights, claims or demands,
although growing out of the same subject matter, which constitute separate or distinct
causes of action and were not put in issue in the former action.67
Respondent corporation also introduced in the second case a fact that did not exist at
the time the first case was filed and terminated. The cancellation of petitioner's
certificate of registration for failure to file the affidavit of use arose only after IPC No.
686. It did not and could not have occurred in the first case, and this gave respondent
another cause to oppose the second application. Res judicata extends only to facts and
conditions as they existed at the time judgment was rendered and to the legal rights and
relations of the parties fixed by the facts so determined.68 When new facts or conditions
intervene before the second suit, furnishing a new basis for the claims and defenses of
the parties, the issues are no longer the same, and the former judgment cannot be
pleaded as a bar to the subsequent action.69

It is also noted that the oppositions in the first and second cases are based on different
laws. The opposition in IPC No. 686 was based on specific provisions of the Trademark
Law, i.e., Section 4 (d)70 on confusing similarity of trademarks and Section 871 on the
requisite damage to file an opposition to a petition for registration. The opposition in IPC
No. 2049 invoked the Paris Convention, particularly Article 6bis thereof, E.O. No. 913
and the two Memoranda of the Minister of Trade and Industry. This opposition also
invoked Article 189 of the Revised Penal Code which is a statute totally different from
the Trademark Law.72 Causes of action which are distinct and independent from each
other, although arising out of the same contract, transaction, or state of facts, may be
sued on separately, recovery on one being no bar to subsequent actions on
others.73 The mere fact that the same relief is sought in the subsequent action will not
render the judgment in the prior action operative as res judicata, such as where the two
actions are based on different statutes.74 Res judicata therefore does not apply to the
instant case and respondent Court of Appeals did not err in so ruling.

Intellectual and industrial property rights cases are not simple property cases.
Trademarks deal with the psychological function of symbols and the effect of these
symbols on the public at large.75 Trademarks play a significant role in communication,
commerce and trade, and serve valuable and interrelated business functions, both
nationally and internationally. For this reason, all agreements concerning industrial
property, like those on trademarks and tradenames, are intimately connected with
economic development.76 Industrial property encourages investments in new ideas and
inventions and stimulates creative efforts for the satisfaction of human needs. They
speed up transfer of technology and industrialization, and thereby bring about social
and economic progress.77 These advantages have been acknowledged by the
Philippine government itself. The Intellectual Property Code of the Philippines declares
that "an effective intellectual and industrial property system is vital to the development of
domestic and creative activity, facilitates transfer of technology, it attracts foreign
investments, and ensures market access for our products."78 The Intellectual Property
Code took effect on January 1, 1998 and by its express provision,79 repealed the
Trademark Law,80 the Patent Law,81 Articles 188 and 189 of the Revised Penal Code,
the Decree on Intellectual Property,82 and the Decree on Compulsory Reprinting of
Foreign Textbooks.83 The Code was enacted to strengthen the intellectual and industrial
property system in the Philippines as mandated by the country's accession to the
Agreement Establishing the World Trade Organization (WTO).84

The WTO is a common institutional framework for the conduct of trade relations among
its members in matters related to the multilateral and plurilateral trade agreements
annexed to the WTO Agreement.85 The WTO framework ensures a "single undertaking
approach" to the administration and operation of all agreements and arrangements
attached to the WTO Agreement. Among those annexed is the Agreement on Trade-
Related Aspects of Intellectual Property Rights or TRIPs.86 Members to this Agreement
"desire to reduce distortions and impediments to international trade, taking into account
the need to promote effective and adequate protection of intellectual property rights,
and to ensure that measures and procedures to enforce intellectual property rights do
not themselves become barriers to legitimate trade." To fulfill these objectives, the
members have agreed to adhere to minimum standards of protection set by several
Conventions.87 These Conventions are: the Berne Convention for the Protection of
Literary and Artistic Works (1971), the Rome Convention or the International
Convention for the Protection of Performers, Producers of Phonograms and
Broadcasting Organisations, the Treaty on Intellectual Property in Respect of Integrated
Circuits, and the Paris Convention (1967), as revised in Stockholm on July 14, 1967.88

A major proportion of international trade depends on the protection of intellectual

property rights.89 Since the late 1970's, the unauthorized counterfeiting of industrial
property and trademarked products has had a considerable adverse impact on domestic
and international trade revenues.90 The TRIPs Agreement seeks to grant adequate
protection of intellectual property rights by creating a favorable economic environment
to encourage the inflow of foreign investments, and strengthening the multi-lateral
trading system to bring about economic, cultural and technological independence.91 The
Philippines and the United States of America have acceded to the WTO Agreement.
This Agreement has revolutionized international business and economic relations
among states, and has propelled the world towards trade liberalization and economic
globalization.92 Protectionism and isolationism belong to the past. Trade is no longer
confined to a bilateral system. There is now "a new era of global economic cooperation,
reflecting the widespread desire to operate in a fairer and more open multilateral trading
system."93 Conformably, the State must reaffirm its commitment to the global community
and take part in evolving a new international economic order at the dawn of the new
millenium.

IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 28415 are affirmed.

SO ORDERED.
G.R. No. 115758      March 19, 2002

ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS
LABORATORY, petitioner,
vs.
HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and
COMPANY, and ANG TIAM CHAY, respondents.

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 dated May 24, 1993 of the
Court of Appeals setting aside and declaring as null and void the Orders2 dated
February 10, 1992 and March 19, 1992 of the Regional Trial Court, Branch 90, of
Quezon City granting the issuance of a writ of preliminary injunction.

The facts of the case are as follows:

On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and
damages with a prayer for the issuance of a writ of preliminary injunction, docketed as
Civil Case No. Q-91-10926, against the respondents Summerville General
Merchandising and Company (Summerville, for brevity) and Ang Tiam Chay.

The petitioner's complaint alleges that petitioner, doing business under the name and
style of KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun
Su and Oval Facial Cream Container/Case, as shown by Certificates of Copyright
Registration No. 0-1358 and No. 0-3678; that she also has patent rights on Chin Chun
Su & Device and Chin Chun Su for medicated cream after purchasing the same from
Quintin Cheng, the registered owner thereof in the Supplemental Register of the
Philippine Patent Office on February 7, 1980 under Registration Certificate No. 4529;
that respondent Summerville advertised and sold petitioner's cream products under the
brand name Chin Chun Su, in similar containers that petitioner uses, thereby misleading
the public, and resulting in the decline in the petitioner's business sales and income;
and, that the respondents should be enjoined from allegedly infringing on the copyrights
and patents of the petitioner.

The respondents, on the other hand, alleged as their defense that Summerville is the
exclusive and authorized importer, re-packer and distributor of Chin Chun Su products
manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese manufacturing
company authorized Summerville to register its trade name Chin Chun Su Medicated
Cream with the Philippine Patent Office and other appropriate governmental agencies;
that KEC Cosmetics Laboratory of the petitioner obtained the copyrights through
misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of
the patent registration certificate, to distribute and market Chin Chun Su products in the
Philippines had already been terminated by the said Taiwanese Manufacturing
Company.

After due hearing on the application for preliminary injunction, the trial court granted the
same in an Order dated February 10, 1992, the dispositive portion of which reads:

ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under

the style of KEC Cosmetic Laboratory, for preliminary injunction, is hereby
granted. Consequentially, plaintiff is required to file with the Court a bond
executed to defendants in the amount of five hundred thousand pesos
(P500,000.00) to the effect that plaintiff will pay to defendants all damages which
defendants may sustain by reason of the injunction if the Court should finally
decide that plaintiff is not entitled thereto.
 SO ORDERED.3

The respondents moved for reconsideration but their motion for reconsideration was
denied by the trial court in an Order dated March 19, 1992.4

On April 24, 1992, the respondents filed a petition for certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 27803, praying for the nullification of the said
writ of preliminary injunction issued by the trial court. After the respondents filed their
reply and almost a month after petitioner submitted her comment, or on August 14
1992, the latter moved to dismiss the petition for violation of Supreme Court Circular No.
28-91, a circular prohibiting forum shopping. According to the petitioner, the
respondents did not state the docket number of the civil case in the caption of their
petition and, more significantly, they did not include therein a certificate of non-forum
shopping. The respondents opposed the petition and submitted to the appellate court a
certificate of non-forum shopping for their petition.

On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803
ruling in favor of the respondents, the dispositive portion of which reads:

WHEREFORE, the petition is hereby given due course and the orders of
respondent court dated February 10, 1992 and March 19, 1992 granting the writ
of preliminary injunction and denying petitioners' motion for reconsideration are
hereby set aside and declared null and void. Respondent court is directed to
forthwith proceed with the trial of Civil Case No. Q-91-10926 and resolve the
issue raised by the parties on the merits.

SO ORDERED.5

In granting the petition, the appellate court ruled that:

The registration of the trademark or brandname "Chin Chun Su" by KEC with the
supplemental register of the Bureau of Patents, Trademarks and Technology
Transfer cannot be equated with registration in the principal register, which is
duly protected by the Trademark Law.1âwphi1.nêt

xxx      xxx      xxx

As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:

"Registration in the Supplemental Register, therefore, serves as notice

that the registrant is using or has appropriated the trademark. By the very
fact that the trademark cannot as yet be on guard and there are certain
defects, some obstacles which the use must still overcome before he can
claim legal ownership of the mark or ask the courts to vindicate his claims
of an exclusive right to the use of the same. It would be deceptive for a
party with nothing more than a registration in the Supplemental Register to
posture before courts of justice as if the registration is in the Principal
Register.

The reliance of the private respondent on the last sentence of the Patent
office action on application Serial No. 30954 that 'registrants is presumed
to be the owner of the mark until after the registration is declared
cancelled' is, therefore, misplaced and grounded on shaky foundation. The
supposed presumption not only runs counter to the precept embodied in
Rule 124 of the Revised Rules of Practice before the Philippine Patent
Office in Trademark Cases but considering all the facts ventilated before
us in the four interrelated petitions involving the petitioner and the
 respondent, it is devoid of factual basis. As even in cases where
presumption and precept may factually be reconciled, we have held that
the presumption is rebuttable, not conclusive, (People v. Lim Hoa, G.R.
No. L-10612, May 30, 1958, Unreported). One may be declared an unfair
competitor even if his competing trademark is registered (Parke, Davis &
Co. v. Kiu Foo & Co., et al., 60 Phil 928; La Yebana Co. v. chua Seco &
Co., 14 Phil 534)."6

The petitioner filed a motion for reconsideration. This she followed with several motions
to declare respondents in contempt of court for publishing advertisements notifying the
public of the promulgation of the assailed decision of the appellate court and stating that
genuine Chin Chun Su products could be obtained only from Summerville General
Merchandising and Co.

In the meantime, the trial court went on to hear petitioner's complaint for final injunction
and damages. On October 22, 1993, the trial court rendered a Decision7 barring the
petitioner from using the trademark Chin Chun Su and upholding the right of the
respondents to use the same, but recognizing the copyright of the petitioner over the
oval shaped container of her beauty cream. The trial court did not award damages and
costs to any of the parties but to their respective counsels were awarded Seventy-Five
Thousand Pesos (P75,000.00) each as attorney's fees. The petitioner duly appealed the
said decision to the Court of Appeals.

On June 3, 1994, the Court of Appeals promulgated a Resolution8 denying the

petitioner's motions for reconsideration and for contempt of court in CA-G.R. SP No.
27803.

Hence, this petition anchored on the following assignment of errors:

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
FAILING TO RULE ON PETITIONER'S MOTION TO DISMISS.

II

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
REFUSING TO PROMPTLY RESOLVE PETITIONER'S MOTION FOR
RECONSIDERATION.

III

IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR

RECONSIDERATION, THE HONORABLE COURT OF APPEALS DENIED
PETITIONER'S RIGHT TO SEEK TIMELY APPELLATE RELIEF AND
VIOLATED PETITIONER'S RIGHT TO DUE PROCESS.

IV

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
FAILING TO CITE THE PRIVATE RESPONDENTS IN CONTEMPT.9

The petitioner faults the appellate court for not dismissing the petition on the ground of
violation of Supreme Court Circular No. 28-91. Also, the petitioner contends that the
appellate court violated Section 6, Rule 9 of the Revised Internal Rules of the Court of
Appeals when it failed to rule on her motion for reconsideration within ninety (90) days
from the time it is submitted for resolution. The appellate court ruled only after the lapse
of three hundred fifty-four (354) days, or on June 3, 1994. In delaying the resolution
thereof, the appellate court denied the petitioner's right to seek the timely appellate
relief. Finally, petitioner describes as arbitrary the denial of her motions for contempt of
court against the respondents.

We rule in favor of the respondents.

Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the
grounds for the issuance of a writ of preliminary injunction is a proof that the applicant is
entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, either for a
limited period or perpetually. Thus, a preliminary injunction order may be granted only
when the application for the issuance of the same shows facts entitling the applicant to
the relief demanded.10 This is the reason why we have ruled that it must be shown that
the invasion of the right sought to be protected is material and substantial, that the right
of complainant is clear and unmistakable, and, that there is an urgent and paramount
necessity for the writ to prevent serious damage.11

In the case at bar, the petitioner applied for the issuance of a preliminary injunctive
order on the ground that she is entitled to the use of the trademark on Chin Chun
Su and its container based on her copyright and patent over the same. We first find it
appropriate to rule on whether the copyright and patent over the name and container of
a beauty cream product would entitle the registrant to the use and ownership over the
same to the exclusion of others.

Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing
the goods (trademark) or services (service mark) of an enterprise and shall include a
stamped or marked container of goods.12 In relation thereto, a trade name means the
name or designation identifying or distinguishing an enterprise.13 Meanwhile, the scope
of a copyright is confined to literary and artistic works which are original intellectual
creations in the literary and artistic domain protected from the moment of their
creation.14 Patentable inventions, on the other hand, refer to any technical solution of a
problem in any field of human activity which is new, involves an inventive step and is
industrially applicable.15

Petitioner has no right to support her claim for the exclusive use of the subject trade
name and its container. The name and container of a beauty cream product are proper
subjects of a trademark inasmuch as the same falls squarely within its definition. In
order to be entitled to exclusively use the same in the sale of the beauty cream product,
the user must sufficiently prove that she registered or used it before anybody else did.
The petitioner's copyright and patent registration of the name and container would not
guarantee her the right to the exclusive use of the same for the reason that they are not
appropriate subjects of the said intellectual rights. Consequently, a preliminary
injunction order cannot be issued for the reason that the petitioner has not proven that
she has a clear right over the said name and container to the exclusion of others, not
having proven that she has registered a trademark thereto or used the same before
anyone did.

We cannot likewise overlook the decision of the trial court in the case for final injunction
and damages. The dispositive portion of said decision held that the petitioner does not
have trademark rights on the name and container of the beauty cream product. The said
decision on the merits of the trial court rendered the issuance of the writ of a preliminary
injunction moot and academic notwithstanding the fact that the same has been
appealed in the Court of Appeals. This is supported by our ruling in La Vista
Association, Inc. v. Court of Appeals16, to wit:

Considering that preliminary injunction is a provisional remedy which may be

granted at any time after the commencement of the action and before judgment
when it is established that the plaintiff is entitled to the relief demanded and only
when his complaint shows facts entitling such reliefs xxx and it appearing that
the trial court had already granted the issuance of a final injunction in favor of
petitioner in its decision rendered after trial on the merits xxx the Court resolved
to Dismiss the instant petition having been rendered moot and academic. An
injunction issued by the trial court after it has already made a clear
pronouncement as to the plaintiff's right thereto, that is, after the same issue has
been decided on the merits, the trial court having appreciated the evidence
presented, is proper, notwithstanding the fact that the decision rendered is not
yet final xxx. Being an ancillary remedy, the proceedings for preliminary
injunction cannot stand separately or proceed independently of the decision
rendered on the merit of the main case for injunction. The merit of the main case
having been already determined in favor of the applicant, the preliminary
determination of its non-existence ceases to have any force and effect. (italics
supplied)

La Vista categorically pronounced that the issuance of a final injunction renders any

question on the preliminary injunctive order moot and academic despite the fact that the
decision granting a final injunction is pending appeal. Conversely, a decision denying
the applicant-plaintiff's right to a final injunction, although appealed, renders moot and
academic any objection to the prior dissolution of a writ of preliminary injunction.

The petitioner argues that the appellate court erred in not dismissing the petition for
certiorari for non-compliance with the rule on forum shopping. We disagree. First, the
petitioner improperly raised the technical objection of non-compliance with Supreme
Court Circular No. 28-91 by filing a motion to dismiss the petition for certiorari filed in the
appellate court. This is prohibited by Section 6, Rule 66 of the Revised Rules of Civil
Procedure which provides that "(I)n petitions for certiorari before the Supreme Court and
the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed. Before
giving due course thereto, the court may require the respondents to file their comment
to, and not a motion to dismiss, the petition xxx (italics supplied)". Secondly, the issue
was raised one month after petitioner had filed her answer/comment and after private
respondent had replied thereto. Under Section 1, Rule 16 of the Revised Rules of Civil
Procedure, a motion to dismiss shall be filed within the time for but before filing the
answer to the complaint or pleading asserting a claim. She therefore could no longer
submit a motion to dismiss nor raise defenses and objections not included in the
answer/comment she had earlier tendered. Thirdly, substantial justice and equity
require this Court not to revive a dissolved writ of injunction in favor of a party without
any legal right thereto merely on a technical infirmity. The granting of an injunctive writ
based on a technical ground rather than compliance with the requisites for the issuance
of the same is contrary to the primary objective of legal procedure which is to serve as a
means to dispense justice to the deserving party.

The petitioner likewise contends that the appellate court unduly delayed the resolution
of her motion for reconsideration. But we find that petitioner contributed to this delay
when she filed successive contentious motions in the same proceeding, the last of
which was on October 27, 1993, necessitating counter-manifestations from private
respondents with the last one being filed on November 9, 1993. Nonetheless, it is well-
settled that non-observance of the period for deciding cases or their incidents does not
render such judgments ineffective or void.17 With respect to the purported damages she
suffered due to the alleged delay in resolving her motion for reconsideration, we find
that the said issue has likewise been rendered moot and academic by our ruling that
she has no right over the trademark and, consequently, to the issuance of a writ of
preliminary injunction.1âwphi1.nêt

Finally, we rule that the Court of Appeals correctly denied the petitioner's several
motions for contempt of court. There is nothing contemptuous about the advertisements
complained of which, as regards the proceedings in CA-G.R. SP No. 27803 merely
announced in plain and straightforward language the promulgation of the assailed
Decision of the appellate court. Moreover, pursuant to Section 4 of Rule 39 of the
Revised Rules of Civil Procedure, the said decision nullifying the injunctive writ was
immediately executory.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals dated May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED.
With costs against the petitioner.

SO ORDERED.

Bellosillo, Mendoza, Quisumbing, and Buena, JJ., concur.

G.R. No. 148222               August 15, 2003

PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,

vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING,
INCORPORATED, Respondents.

DECISION

CORONA, J.:

In the instant petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision1 of the
Court of Appeals reversing the October 31, 1996 decision2 of the Regional Trial Court of
Makati, Branch 133, in Civil Case No. 92-516 which declared private respondents
Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of
trademark and copyright, and unfair competition.

FACTUAL ANTECEDENTS

The May 22, 2001 decision of the Court of Appeals3 contained a summary of this
dispute:

"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the

manufacture of advertising display units simply referred to as light boxes. These units
utilize specially printed posters sandwiched between plastic sheets and illuminated with
back lights. Pearl and Dean was able to secure a Certificate of Copyright Registration
dated January 20, 1981 over these illuminated display units. The advertising light boxes
were marketed under the trademark "Poster Ads". The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer
on June 20, 1983, but was approved only on September 12, 1988, per Registration No.
41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.

Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc.
(SMI) for the lease and installation of the light boxes in SM City North Edsa. Since SM
City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl
and Dean’s General Manager, Rodolfo Vergara, submitted for signature the contracts
covering SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity
Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was
returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other
contract and reminding him that their agreement for installation of light boxes was not
only for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.

Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and
Dean that it was rescinding the contract for SM Makati due to non-performance of the
terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral
action of SMI, saying it was without basis. In the same letter, he pushed for the signing
of the contract for SM Cubao.

Two years later, Metro Industrial Services, the company formerly contracted by Pearl
and Dean to fabricate its display units, offered to construct light boxes for Shoemart’s
chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently
fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was
terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to
make the light boxes. Some 300 units were fabricated in 1991. These were delivered on
a staggered basis and installed at SM Megamall and SM City.

Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes
were installed at SM City and in the fastfood section of SM Cubao. Upon investigation,
Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes
similar to those it manufactures were also installed in two (2) other SM stores. It further
discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its
marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMI’s different branches. Pearl and Dean noted
that NEMI is a sister company of SMI.

In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to
both SMI and NEMI enjoining them to cease using the subject light boxes and to
remove the same from SMI’s establishments. It also demanded the discontinued use of
the trademark "Poster Ads," and the payment to Pearl and Dean of compensatory
damages in the amount of Twenty Million Pesos (P20,000,000.00).

Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-
four (224) light boxes and NEMI took down its advertisements for "Poster Ads" from the
lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet all
its demands, Pearl and Dean filed this instant case for infringement of trademark and
copyright, unfair competition and damages.

In denying the charges hurled against it, SMI maintained that it independently
developed its poster panels using commonly known techniques and available
technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that
the registration of the mark "Poster Ads" was only for stationeries such as letterheads,
envelopes, and the like. Besides, according to SMI, the word "Poster Ads" is a generic
term which cannot be appropriated as a trademark, and, as such, registration of such
mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed
for in its complaint since its advertising display units contained no copyright notice, in
violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of
action against it and that the suit was purely intended to malign SMI’s good name. On
this basis, SMI, aside from praying for the dismissal of the case, also counterclaimed for
moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s
Certification of Copyright Registration No. PD-R-2558 dated January 20, 1981 and
Certificate of Trademark Registration No. 4165 dated September 12, 1988.

NEMI, for its part, denied having manufactured, installed or used any advertising display
units, nor having engaged in the business of advertising. It repleaded SMI’s averments,
admissions and denials and prayed for similar reliefs and counterclaims as SMI."

The RTC of Makati City decided in favor of P & D:

Wherefore, defendants SMI and NEMI are found jointly and severally liable for
infringement of copyright under Section 2 of PD 49, as amended, and infringement of
trademark under Section 22 of RA No. 166, as amended, and are hereby penalized
under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as
amended. Accordingly, defendants are hereby directed:

(1) to pay plaintiff the following damages:

(a) actual damages - ₱16,600,000.00,

representing profits
derived by defendants
as a result of infringe-
 ment of plaintiff’s copyright
from 1991 to 1992

(b) moral damages - ₱1,000.000.00

(c) exemplary damages - ₱1,000,000.00

(d) attorney’s fees - ₱1,000,000.00

plus

(e) costs of suit;

(2) to deliver, under oath, for impounding in the National Library, all light boxes of
SMI which were fabricated by Metro Industrial Services and EYD Rainbow
Advertising Corporation;

(3) to deliver, under oath, to the National Library, all filler-posters using the
trademark "Poster Ads", for destruction; and

(4) to permanently refrain from infringing the copyright on plaintiff’s light boxes
and its trademark "Poster Ads".

Defendants’ counterclaims are hereby ordered dismissed for lack of merit.

SO ORDERED.4

On appeal, however, the Court of Appeals reversed the trial court:

Since the light boxes cannot, by any stretch of the imagination, be considered as either
prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly
classified as a copyrightable class "O" work, we have to agree with SMI when it posited
that what was copyrighted were the technical drawings only, and not the light boxes
themselves, thus:

42. When a drawing is technical and depicts a utilitarian object, a copyright over the
drawings like plaintiff-appellant’s will not extend to the actual object. It has so been held
under jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841
(1879). In that case, Selden had obtained a copyright protection for a book entitled
"Selden’s Condensed Ledger or Bookkeeping Simplified" which purported to explain a
new system of bookkeeping. Included as part of the book were blank forms and
illustrations consisting of ruled lines and headings, specially designed for use in
connection with the system explained in the work. These forms showed the entire
operation of a day or a week or a month on a single page, or on two pages following
each other. The defendant Baker then produced forms which were similar to the forms
illustrated in Selden’s copyrighted books. The Court held that exclusivity to the actual
forms is not extended by a copyright. The reason was that "to grant a monopoly in the
underlying art when no examination of its novelty has ever been made would be a
surprise and a fraud upon the public; that is the province of letters patent, not of
copyright." And that is precisely the point. No doubt aware that its alleged original
design would never pass the rigorous examination of a patent application, plaintiff-
appellant fought to foist a fraudulent monopoly on the public by conveniently resorting to
a copyright registration which merely employs a recordal system without the benefit of
an in-depth examination of novelty.

The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge
Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a
copyright over an unpublished drawing entitled "Bridge Approach – the drawing showed
a novel bridge approach to unsnarl traffic congestion". The defendant constructed a
bridge approach which was alleged to be an infringement of the new design illustrated
in plaintiff’s drawings. In this case it was held that protection of the drawing does not
extend to the unauthorized duplication of the object drawn because copyright extends
only to the description or expression of the object and not to the object itself. It does not
prevent one from using the drawings to construct the object portrayed in the drawing.

In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz

Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no copyright infringement
when one who, without being authorized, uses a copyrighted architectural plan to
construct a structure. This is because the copyright does not extend to the structures
themselves.

In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the
technical drawings of the latter’s advertising display units.

xxx xxx xxx

The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate

Appellate Court that the protective mantle of the Trademark Law extends only to the
goods used by the first user as specified in the certificate of registration, following the
clear mandate conveyed by Section 20 of Republic Act 166, as amended, otherwise
known as the Trademark Law, which reads:

SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of

registration of a mark or trade-name shall be prima facie evidence of the validity of the
registration, the registrant’s ownership of the mark or trade-name, and of the registrant’s
exclusive right to use the same in connection with the goods, business or
services specified in the certificate, subject to any conditions and limitations stated
therein." (underscoring supplied)

The records show that on June 20, 1983, Pearl and Dean applied for the registration of
the trademark "Poster Ads" with the Bureau of Patents, Trademarks, and Technology
Transfer. Said trademark was recorded in the Principal Register on September 12, 1988
under Registration No. 41165 covering the following products: stationeries such as
letterheads, envelopes and calling cards and newsletters.

With this as factual backdrop, we see no legal basis to the finding of liability on the part
of the defendants-appellants for their use of the words "Poster Ads", in the advertising
display units in suit. Jurisprudence has interpreted Section 20 of the Trademark Law as
"an implicit permission to a manufacturer to venture into the production of goods and
allow that producer to appropriate the brand name of the senior registrant on goods
other than those stated in the certificate of registration." The Supreme Court further
emphasized the restrictive meaning of Section 20 when it stated, through Justice
Conrado V. Sanchez, that:

Really, if the certificate of registration were to be deemed as including goods not

specified therein, then a situation may arise whereby an applicant may be tempted to
register a trademark on any and all goods which his mind may conceive even if he had
never intended to use the trademark for the said goods. We believe that such omnibus
registration is not contemplated by our Trademark Law.

While we do not discount the striking similarity between Pearl and Dean’s registered
trademark and defendants-appellants’ "Poster Ads" design, as well as the parallel use
by which said words were used in the parties’ respective advertising copies, we cannot
find defendants-appellants liable for infringement of trademark. "Poster Ads" was
registered by Pearl and Dean for specific use in its stationeries, in contrast to
defendants-appellants who used the same words in their advertising display units. Why
Pearl and Dean limited the use of its trademark to stationeries is simply beyond us. But,
having already done so, it must stand by the consequence of the registration which it
had caused.

xxx xxx xxx

We are constrained to adopt the view of defendants-appellants that the words "Poster
Ads" are a simple contraction of the generic term poster advertising. In the absence of
any convincing proof that "Poster Ads" has acquired a secondary meaning in this
jurisdiction, we find that Pearl and Dean’s exclusive right to the use of "Poster Ads" is
limited to what is written in its certificate of registration, namely, stationeries.

Defendants-appellants cannot thus be held liable for infringement of the trademark

"Poster Ads".

There being no finding of either copyright or trademark infringement on the part of SMI
and NEMI, the monetary award granted by the lower court to Pearl and Dean has no leg
to stand on.

xxx xxx xxx

WHEREFORE, premises considered, the assailed decision is REVERSED and SET

ASIDE, and another is rendered DISMISSING the complaint and counterclaims in the
above-entitled case for lack of merit.5

Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning
the following errors for the Court’s consideration:

A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO

COPYRIGHT INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM
AND NEMI;

B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO

INFRINGEMENT OF PEARL & DEAN’S TRADEMARK "POSTER ADS" WAS
COMMITTED BY RESPONDENTS SM AND NEMI;

C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE

AWARD OF THE TRIAL COURT, DESPITE THE LATTER’S FINDING, NOT
DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT SM WAS
GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING
CONTRACTS WITH PEARL & DEAN.

D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING

RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL,
MORAL & EXEMPLARY DAMAGES, ATTORNEY’S FEES AND COSTS OF
SUIT.6

ISSUES

In resolving this very interesting case, we are challenged once again to put into proper
perspective four main concerns of intellectual property law — patents, copyrights,
trademarks and unfair competition arising from infringement of any of the first three. We
shall focus then on the following issues:
 (1) if the engineering or technical drawings of an advertising display unit (light
box) are granted copyright protection (copyright certificate of registration) by the
National Library, is the light box depicted in such engineering drawings ipso facto
also protected by such copyright?

(2) or should the light box be registered separately and protected by a patent
issued by the Bureau of Patents Trademarks and Technology Transfer (now
Intellectual Property Office) — in addition to the copyright of the engineering
drawings?

(3) can the owner of a registered trademark legally prevent others from using
such trademark if it is a mere abbreviation of a term descriptive of his goods,
services or business?

ON THE ISSUE OF COPYRIGHT INFRINGEMENT

Petitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes
when SMI had the units manufactured by Metro and EYD Rainbow Advertising for its
own account. Obviously, petitioner’s position was premised on its belief that its
copyright over the engineering drawings extended ipso facto to the light boxes depicted
or illustrated in said drawings. In ruling that there was no copyright infringement, the
Court of Appeals held that the copyright was limited to the drawings alone and not to the
light box itself. We agree with the appellate court.

First, petitioner’s application for a copyright certificate — as well as Copyright Certificate

No. PD-R2588 issued by the National Library on January 20, 1981 — clearly stated that
it was for a class "O" work under Section 2 (O) of PD 49 (The Intellectual Property
Decree) which was the statute then prevailing. Said Section 2 expressly enumerated the
works subject to copyright:

SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist
with respect to any of the following works:

x x x           x x x          x x x

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;

x x x           x x x          x x x

Although petitioner’s copyright certificate was entitled "Advertising Display Units" (which
depicted the box-type electrical devices), its claim of copyright infringement cannot be
sustained.

Copyright, in the strict sense of the term, is purely a statutory right. Being a mere
statutory grant, the rights are limited to what the statute confers. It may be obtained and
enjoyed only with respect to the subjects and by the persons, and on terms and
conditions specified in the statute.7 Accordingly, it can cover only the works falling within
the statutory enumeration or description.8

P & D secured its copyright under the classification class "O" work. This being so,
petitioner’s copyright protection extended only to the technical drawings and not to the
light box itself because the latter was not at all in the category of "prints, pictorial
illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as
we find that P & D indeed owned a valid copyright, the same could have referred only to
the technical drawings within the category of "pictorial illustrations." It could not have
possibly stretched out to include the underlying light box. The strict application9 of the
law’s enumeration in Section 2 prevents us from giving petitioner even a little leeway,
that is, even if its copyright certificate was entitled "Advertising Display Units." What the
law does not include, it excludes, and for the good reason: the light box was not a
literary or artistic piece which could be copyrighted under the copyright law. And no less
clearly, neither could the lack of statutory authority to make the light box copyrightable
be remedied by the simplistic act of entitling the copyright certificate issued by the
National Library as "Advertising Display Units."

In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public
without license from P & D, then no doubt they would have been guilty of copyright
infringement. But this was not the case. SMI’s and NEMI’s acts complained of by P & D
were to have units similar or identical to the light box illustrated in the technical drawings
manufactured by Metro and EYD Rainbow Advertising, for leasing out to different
advertisers. Was this an infringement of petitioner’s copyright over the technical
drawings? We do not think so.

During the trial, the president of P & D himself admitted that the light box was neither a
literary not an artistic work but an "engineering or marketing invention."10 Obviously,
there appeared to be some confusion regarding what ought or ought not to be the
proper subjects of copyrights, patents and trademarks. In the leading case of Kho vs.
Court of Appeals,11 we ruled that these three legal rights are completely distinct and
separate from one another, and the protection afforded by one cannot be used
interchangeably to cover items or works that exclusively pertain to the others:

Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing
the goods (trademark) or services (service mark) of an enterprise and shall include a
stamped or marked container of goods. In relation thereto, a trade name means the
name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of
a copyright is confined to literary and artistic works which are original intellectual
creations in the literary and artistic domain protected from the moment of their
creation. Patentable inventions, on the other hand, refer to any technical solution of a
problem in any field of human activity which is new, involves an inventive step and is
industrially applicable.

ON THE ISSUE OF PATENT INFRINGEMENT

This brings us to the next point: if, despite its manufacture and commercial use of
the light boxes without license from petitioner, private respondents cannot be held
legally liable for infringement of P & D’s copyright over its technical drawings of the said
light boxes, should they be liable instead for infringement of patent? We do not think so
either.

For some reason or another, petitioner never secured a patent for the light boxes. It
therefore acquired no patent rights which could have protected its invention, if in fact it
really was. And because it had no patent, petitioner could not legally prevent anyone
from manufacturing or commercially using the contraption. In Creser Precision Systems,
Inc. vs. Court of Appeals,12 we held that "there can be no infringement of a patent until a
patent has been issued, since whatever right one has to the invention covered by the
patent arises alone from the grant of patent. x x x (A)n inventor has no common law
right to a monopoly of his invention. He has the right to make use of and vend his
invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free
to copy and use it with impunity. A patent, however, gives the inventor the right to
exclude all others. As a patentee, he has the exclusive right of making, selling or using
the invention.13 On the assumption that petitioner’s advertising units were patentable
inventions, petitioner revealed them fully to the public by submitting the engineering
drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the
invention, a patent is a primordial requirement. No patent, no protection. The ultimate
goal of a patent system is to bring new designs and technologies into the public domain
through disclosure.14 Ideas, once disclosed to the public without the protection of a valid
patent, are subject to appropriation without significant restraint.15

On one side of the coin is the public which will benefit from new ideas; on the other are
the inventors who must be protected. As held in Bauer & Cie vs. O’Donnel,16 "The act
secured to the inventor the exclusive right to make use, and vend the thing patented,
and consequently to prevent others from exercising like privileges without the consent of
the patentee. It was passed for the purpose of encouraging useful invention and
promoting new and useful inventions by the protection and stimulation given to inventive
genius, and was intended to secure to the public, after the lapse of the exclusive
privileges granted the benefit of such inventions and improvements."

The law attempts to strike an ideal balance between the two interests:

"(The p)atent system thus embodies a carefully crafted bargain for encouraging the
creation and disclosure of new useful and non-obvious advances in technology and
design, in return for the exclusive right to practice the invention for a number of years.
The inventor may keep his invention secret and reap its fruits indefinitely. In
consideration of its disclosure and the consequent benefit to the community, the patent
is granted. An exclusive enjoyment is guaranteed him for 17 years, but upon the
expiration of that period, the knowledge of the invention inures to the people, who are
thus enabled to practice it and profit by its use."17

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward
invention; second, it promotes disclosures of inventions to stimulate further innovation
and to permit the public to practice the invention once the patent expires; third, the
stringent requirements for patent protection seek to ensure that ideas in the public
domain remain there for the free use of the public."18

It is only after an exhaustive examination by the patent office that a patent is issued.
Such an in-depth investigation is required because "in rewarding a useful invention, the
rights and welfare of the community must be fairly dealt with and effectively guarded. To
that end, the prerequisites to obtaining a patent are strictly observed and when a patent
is issued, the limitations on its exercise are equally strictly enforced. To begin with, a
genuine invention or discovery must be demonstrated lest in the constant demand for
new appliances, the heavy hand of tribute be laid on each slight technological advance
in art."19

There is no such scrutiny in the case of copyrights nor any notice published before its
grant to the effect that a person is claiming the creation of a work. The law confers the
copyright from the moment of creation20 and the copyright certificate is issued upon
registration with the National Library of a sworn ex-parte claim of creation.

Therefore, not having gone through the arduous examination for patents, the petitioner
cannot exclude others from the manufacture, sale or commercial use of the light boxes
on the sole basis of its copyright certificate over the technical drawings.

Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the
patent office (IPO) to scrutinize the light box’s eligibility as a patentable invention. The
irony here is that, had petitioner secured a patent instead, its exclusivity would have
been for 17 years only. But through the simplified procedure of copyright-registration
with the National Library — without undergoing the rigor of defending the patentability of
its invention before the IPO and the public — the petitioner would be protected for 50
years. This situation could not have been the intention of the law.
In the oft-cited case of Baker vs. Selden21 , the United States Supreme Court held
that only the expression of an idea is protected by copyright, not the idea itself. In that
case, the plaintiff held the copyright of a book which expounded on a new accounting
system he had developed. The publication illustrated blank forms of ledgers utilized in
such a system. The defendant reproduced forms similar to those illustrated in the
plaintiff’s copyrighted book. The US Supreme Court ruled that:

"There is no doubt that a work on the subject of book-keeping, though only explanatory
of well known systems, may be the subject of a copyright; but, then, it is claimed only as
a book. x x x. But there is a clear distinction between the books, as such, and the art,
which it is, intended to illustrate. The mere statement of the proposition is so evident
that it requires hardly any argument to support it. The same distinction may be
predicated of every other art as well as that of bookkeeping. A treatise on the
composition and use of medicines, be they old or new; on the construction and use of
ploughs or watches or churns; or on the mixture and application of colors for painting or
dyeing; or on the mode of drawing lines to produce the effect of perspective, would be
the subject of copyright; but no one would contend that the copyright of the treatise
would give the exclusive right to the art or manufacture described therein. The copyright
of the book, if not pirated from other works, would be valid without regard to the novelty
or want of novelty of its subject matter. The novelty of the art or thing described or
explained has nothing to do with the validity of the copyright. To give to the author of
the book an exclusive property in the art described therein, when no examination
of its novelty has ever been officially made, would be a surprise and a fraud upon
the public. That is the province of letters patent, not of copyright. The claim to an
invention of discovery of an art or manufacture must be subjected to the
examination of the Patent Office before an exclusive right therein can be
obtained; and a patent from the government can only secure it.

The difference between the two things, letters patent and copyright, may be illustrated
by reference to the subjects just enumerated. Take the case of medicines. Certain
mixtures are found to be of great value in the healing art. If the discoverer writes and
publishes a book on the subject (as regular physicians generally do), he gains no
exclusive right to the manufacture and sale of the medicine; he gives that to the
public. If he desires to acquire such exclusive right, he must obtain a patent for
the mixture as a new art, manufacture or composition of matter. He may copyright
his book, if he pleases; but that only secures to him the exclusive right of printing
and publishing his book. So of all other inventions or discoveries.

The copyright of a book on perspective, no matter how many drawings and illustrations
it may contain, gives no exclusive right to the modes of drawing described, though they
may never have been known or used before. By publishing the book without getting a
patent for the art, the latter is given to the public.

xxx

Now, whilst no one has a right to print or publish his book, or any material part thereof,
as a book intended to convey instruction in the art, any person may practice and use the
art itself which he has described and illustrated therein. The use of the art is a totally
different thing from a publication of the book explaining it. The copyright of a book
on bookkeeping cannot secure the exclusive right to make, sell and use account books
prepared upon the plan set forth in such book. Whether the art might or might not have
been patented, is a question, which is not before us. It was not patented, and is open
and free to the use of the public. And, of course, in using the art, the ruled lines and
headings of accounts must necessarily be used as incident to it.

The plausibility of the claim put forward by the complainant in this case arises from a
confusion of ideas produced by the peculiar nature of the art described in the books,
which have been made the subject of copyright. In describing the art, the illustrations
and diagrams employed happened to correspond more closely than usual with the
actual work performed by the operator who uses the art. x x x The description of the
art in a book, though entitled to the benefit of copyright, lays no foundation for an
exclusive claim to the art itself. The object of the one is explanation; the object of
the other is use. The former may be secured by copyright. The latter can only be
secured, if it can be secured at all, by letters patent." (underscoring supplied)

ON THE ISSUE OF TRADEMARK INFRINGEMENT

This issue concerns the use by respondents of the mark "Poster Ads" which petitioner’s
president said was a contraction of "poster advertising." P & D was able to secure a
trademark certificate for it, but one where the goods specified were "stationeries such as
letterheads, envelopes, calling cards and newsletters."22 Petitioner admitted it did not
commercially engage in or market these goods. On the contrary, it dealt in electrically
operated backlit advertising units and the sale of advertising spaces thereon, which,
however, were not at all specified in the trademark certificate.

Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs.
Intermediate Appellate Court,23 where we, invoking Section 20 of the old Trademark
Law, ruled that "the certificate of registration issued by the Director of Patents can
confer (upon petitioner) the exclusive right to use its own symbol only to those goods
specified in the certificate, subject to any conditions and limitations specified in the
certificate x x x. One who has adopted and used a trademark on his goods does not
prevent the adoption and use of the same trademark by others for products which are of
a different description."24 Faberge, Inc. was correct and was in fact recently reiterated
in Canon Kabushiki Kaisha vs. Court of Appeals.25

Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of

P & D to secure a trademark registration for specific use on the light boxes meant that
there could not have been any trademark infringement since registration was an
essential element thereof.1âwphi1

ON THE ISSUE OF UNFAIR COMPETITION

If at all, the cause of action should have been for unfair competition, a situation which
was possible even if P & D had no registration.26 However, while the petitioner’s
complaint in the RTC also cited unfair competition, the trial court did not find private
respondents liable therefor. Petitioner did not appeal this particular point; hence, it
cannot now revive its claim of unfair competition.

But even disregarding procedural issues, we nevertheless cannot hold respondents

guilty of unfair competition.

By the nature of things, there can be no unfair competition under the law on copyrights
although it is applicable to disputes over the use of trademarks. Even a name or phrase
incapable of appropriation as a trademark or tradename may, by long and exclusive use
by a business (such that the name or phrase becomes associated with the business or
product in the mind of the purchasing public), be entitled to protection against unfair
competition.27 In this case, there was no evidence that P & D’s use of "Poster Ads" was
distinctive or well-known. As noted by the Court of Appeals, petitioner’s expert
witnesses himself had testified that " ‘Poster Ads’ was too generic a name. So it was
difficult to identify it with any company, honestly speaking."28 This crucial admission by
its own expert witness that "Poster Ads" could not be associated with P & D showed
that, in the mind of the public, the goods and services carrying the trademark "Poster
Ads" could not be distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster
Ads" was generic and incapable of being used as a trademark because it was used in
the field of poster advertising, the very business engaged in by petitioner. "Secondary
meaning" means that a word or phrase originally incapable of exclusive appropriation
with reference to an article in the market (because it is geographically or otherwise
descriptive) might nevertheless have been used for so long and so exclusively by one
producer with reference to his article that, in the trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was his
property.29 The admission by petitioner’s own expert witness that he himself could not
associate "Poster Ads" with petitioner P & D because it was "too generic" definitely
precluded the application of this exception.

Having discussed the most important and critical issues, we see no need to belabor the
rest.

All told, the Court finds no reversible error committed by the Court of Appeals when it
reversed the Regional Trial Court of Makati City.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals
dated May 22, 2001 is AFFIRMED in toto.

SO ORDERED.

Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.