The Right to Import Copyrighted Materials under R.A. 8293 vis-a-vis R.A. 10372

When Republic Act (R.A.) No. 8293 was amended by R.A. 10372, deleting, among others, Sections 190.1 and 190.2 which expressly allows Filipinos to import limited copies of copyrighted books, music, and movies under certain conditions enumerated in Sections 190.1 and 190.2, different sectors reacted and criticized the said amendment, interpreting such deletion as a clear intent to disallow importation. Meaning, if you are a Filipino or Foreigner entering the Philippines, and you brought with you a book which you have bought from another country, the airport or harbour security/officials may disallow entrance of such book, unless consent from the Intellectual Property (IP) owner has been sought. Concerns were also raised regarding the possibility of bribery and corruption in the Bureau of Customs.

However, the Malacanang Office had issued a clarificatory statement on the issue, a contrary interpretation, that is. It held that “the amendments to the Intellectual Property Code have removed the original limitation of three copies when bringing legitimately acquired copies of copyrighted material into the country. Only the importation of pirated or infringed material is illegal. As long as they were legally purchased, you can bring as many copies you want, subject to Customs regulations.” Said interpretation is said to be in consonance with the State Policy of R.A. 8293 in promoting the diffusion of knowledge and information for the promotion of national development and progress and the common good. Further, the IP office assured that they have a good working relationship with the Bureau of Customs to prevent misinterpretation of the real intention of the amendment of the law.

Notwithstanding the differences in interpretation, The World Intellectual Property Organization (WIPO), which the Philippines is a signatory, administered a treaty, among others, with the subject: The Agreement on the Importation of Educational, Scientific and Cultural Materials, which was adopted on November 22, 1950. The said treaty gives the contracting parties a right to import different materials to facilitate “free flow of ideas by word and image”. The following are some of the more important provisions in the treaty relative to importation:
1. The contracting States undertake not to apply customs duties or other charges on, or in connection with, the importation of Books, publications and documents, Educational, scientific and cultural materials;
2. The contracting States undertake to grant the necessary licences and/or foreign exchange for the importation;
3. The contracting States which at any time apply quantitative restrictions and exchange control measures undertake to grant, as far as possible, foreign exchange and licences necessary for the importation of other educational, scientific or cultural materials;
4. This Agreement shall not modify or affect the laws and regulations of any contracting State or any of its international treaties, conventions, agreements or proclamations, with respect to copyright, trademarks or patents.

Ratified in the Philippines on August 30, 1952, the same has been in existence way before the passage of R.A. 8293
on June 6, 1997.

On a similar note, in an interview by Ms. Raissa Robles, journalist, with Director General Ricardo Blancaflor of the IP Office, she asked “why they felt the need to remove this particular section (Sections 190.1)” and DG Blancaflor replied “Our approach has always been ‘international exhaustion of economic rights’. It’s not as if we took it out of the air. We have treaty obligations in effect.”

First, let us define what “Exhaustion” is. Exhaustion occurs at the moment when the intellectual property rights (IPR) holder’s control over the use and disposition of goods and services embodying IPR ceases in order to permit the free transfer of goods and services within and across national borders. International exhaustion is the one with the largest scope. If a good or service is first sold or placed on the market of any country, then the IPRs as embodied in the good or service is deemed exhausted with regard to all the other countries in the world. The good or service first sold or placed can thereafter be more or less freely transferred and traded within and across the national borders of all countries worldwide.

The Philippines became a member of the World Intellectual Property Organization in 1980. It was a signatory to a number of significant multilateral international agreements and treaties for the protection and promotion of intellectual property rights. The Philippines, therefore, bound itself to honor and enforce these treaties in this country.

The Philippines enacted the IP Code in order to meet its treaty obligations under the Agreement on Trade Related Aspects of Intellectual Property (TRIPs). It requires member countries to provide minimum standards of intellectual property protection. WTO members must establish mechanisms for the protection of intellectual property. Under TRIPs, members must implement measures that prohibit the importation of infringing products. Hence, the Philippines in enacting the IP Code initially allowed limited importation but then later on withdrew such right. In statutory construction, when Congress removes a statutory right in the amended law, it is deemed to be intentional.

However, a law always presumes goodfaith. It is a product of earnest studies by Congress to ensure that no constitutional prescription or concept is infringed. Pursuant to the State Policy enshrined in our 1987 Constitution which explicitly mandates that the State shall protect intellectual property, it is the opinion of the author of this paper that although Sections 190.1 and 190.2 were deleted by R.A. 10372, Filipinos and Foreigners entering our country can still import books, movies and music, as long as they were legally obtained by the buyer. The rights of the buyer, who now owns the mentioned products are exercisable wherever he may be, including bringing them into Philippine territory or even disposing them if he wants to. It is a property right of an owner. What the law prohibits is the importation of infringed goods and not those which were legally obtained to begin with. The right to import therefore, remains even under the amended R.A. 8293.

_______________________
References:
http://www.gov.ph/2013/03/11/infographic-faqs-on-the-amendments-to-the-intellectual-property-code-of-the-philippines/

Doctrine of exhaustion of intellectual property rights

http://www.chanrobles.com/legal7history.htm#.VWxd-dKeDGe
THE BATTLE AGAINST SOFTWARE PIRACY: SOFTWARE COPYRIGHT PROTECTION IN THE PHILIPPINES, Grace P. Nerona, 2000
Cawalig v. COMELEC, G.R. Nos. 146319 & 146342, October 26, 2001, 368 SCRA 453.

LIABILITIES OF THE AUTHOR, ADMINISTRATOR, AND SERVICE PROVIDER OF THE ARELLANO LAW SECRET FILES

The liability, or lack thereof, of the person contributing, person maintaining, and the service provider of a libelous post in the Arellano Law Secret Files (ALSF) may be culled from the case of Disini vs. Secretary of Justice and from the Cybercrime Act. The person or persons contributing in the said page will be liable for any defamatory statements made against another person with the knowledge that it is false’ or if made with ‘reckless disregard of whether it was false or not’. Likewise, the person or persons maintaining the ALSF, or otherwise known as administrators, will be liable as if he is the original author of the potential libelous statement, if he consented with the publishing thereof. However, the service provider, i.e. Facebook, is not liable for any of the abovementioned acts of the author and the administrator.

Let me begin by discussing the process with which the ALSF operates. The ALSF page is a Facebook account created by an anonymous person or group of persons with the goal of creating a forum for law students in the Arellano School of Law. To announce its existence, the administrator “invited” different Arellano law students to “Like” the page and submit their “secrets” by clicking the link provided therein. The said link will lead the contributor to another page sponsored by docs.google.com where two boxes are available for the contributor to type in his ‘secrets’ in the first box and his ‘alias’ in another. The purpose of using docs.google.com is to encourage submission of posts by hiding the identity of the contributor from the administrator and the reading public. The final act is done by clicking the ‘Submit’ button in order to send the now anonymous message to the administrator of the ALSF. The anonymous post will then be published in the ALSF page after the administrator has done “editing” the real names of teacher/s or student/s contained in the submitted post, if any, and replace them with asterisks, supposedly to protect the identity of those mentioned therein. However, in cases where there is no person named in the post, then the administrator publishes the “secret” as is. These so-called ‘secrets’, as we may all know by now, are random thoughts in a person’s mind, which ofcourse must at least relate to the common interest of the group, that is, lawschool. Eighty percent of the time, one will read nothing much really, but a few post about their crushes in the campus, or how their recitations went in so far as terror professors are concerned. However, one could also read rants from students on various matters, including but not limited to, the difficulty of their subjects, the complexity of their professors and ofcourse, the lives of their unsuspecting classmates. Sometimes, one will also notice a statement libelous in character, attracting curiosity from its readers. This legal paper will deal with the legal implications of the writings made in the ALSF. The terms “posts” and “secrets” are interchangeably used in this paper to mean the submitted writings of the author in the AFLS page.

There are three parties that are involved in this paper. The contributor or author of the submitted assailed statement (hereinafter referred as author); the administrator of the ALSF, or the person who controls the publishing of the submitted posts in the ALSF page; and the service provider, in this case, Facebook.

Section 4(c)(4) of the Cybercrime Prevention Act punishes cyber libel or libel committed through a computer system. As reiterated in the Disini case, “cyberlibel is actually not a new crime since Article 353, in relation to Article 355 of the penal code, already punishes it.” Anyone who anonymously post in the ALSF a statement tarnishing a person’s reputation, character, or status, is liable for the crime of libel, subject to the defense of absence of “actual malice”. However, a distinction must be made to those defamatory statements made to a private person and a public officer. As pointed out in the Disini case and summarized by Aris Rufo of rappler.com, for libel to hold water in the case of public officials or public figures, the Court said the “higher standard of actual malice” must be satisfied to attain conviction. Actual malice or malice in fact is committed “when the offender makes the defamatory statement with the knowledge that it is false or with reckless disregard of whether it is false or not.” In proving actual malice, the burden of proof lies with the offended party or the prosecution and not the accused. On the other hand, when the offended party is a private individual, malice is presumed in the offending article, with the burden of proof of showing otherwise being on the accused. Citing its previous ruling in Borjal vs. Court of Appeals, the SC said “the law explicitly presumes its existence (malice in law) from the defamatory character of the assailed statement. For his defense, the accused must show that he has justifiable reason for the defamatory statement even if it was in fact true.”

Further, in the case of Corpus vs. Cuaderno, Sr., the Supreme Court ruled that “in order to maintain a libel suit, it is essential that the victim be identifiable, although it is not necessary that he be named.” Libel can prosper if it can easily be identified who is being alluded to.

Let us apply the above discussion to a real case. I asked a friend who had a chance to read some of the posts in the ALSF to share the most unforgettable post which she had read. She answered, “the post which says that a certain individual (whose Facebook “profile” was captured and attached to the post) is a prostitute.” Obviously, my friend clicked the attachment to see an enlarged picture of the alleged prostitute. Thankfully, she did not recognize the girl but reckoned she was in her mid-twenties. Thereafter, my friend immediately “unliked” the page after reading the libelous post so that she would no longer be receiving updates from the said page. Immediately after I knew of such post, I tried back-reading the numerous posts published in this controversial page but to no avail. I can no longer find this libelous post as it may have been deleted already or it may have been posted in the “blocked” ALFS page. Further investigation shows that the ALSF page that is active today is not the first ALSF page that was created. The original ALSF page has allegedly been “blocked” by Facebook for being inappropriate. I could only surmise that the libelous prostitution post, which could no longer be found was posted in the original “blocked” ALSF. Notwithstanding, the crime of libel has already been consummated. Deleting the libelous post does not extinguish the criminal liability of the person or persons responsible. For liability to be extinguished, the same must fall under the circumstances mentioned in Article xxx of the Revised Penal Code. One cannot take back the cyberbullying that one person has to go through just because of one stupid post, regardless of the truth of the said imputation.

Given this very unfortunate event, it is about time to look into cyberlibel seriously. The author of this libelous post is, without doubt, as mentioned, liable for libel under Article 353 of the Revised Penal Code (RPC) aggravated by the use of a computer as provided for in the Cybercrime Act. The elements of libel, to wit: (a) the allegation of a discreditable act or condition concerning another; (b) publication of the charge; (c) identity of the person defamed; and (d) existence of malice – were all present in this case. A post about a girl whom the author called a prostitute, a clear discreditable condition, has been published in the ALSF, a “public” group in Facebook. Settled is the rule that communication to a third person is considered sufficient publication. Verily, the victim defamed was duly recognized, not only by her Facebook name, but by her physical appearance as well. Most importantly, malice is presumed since the victim is a private person. For his defense, the author must show that there is a justifying reason for the defamatory statement even if it was in fact true.

Noteworthy is the distinction pointed out by the Solicitor General in the Disini case regarding “crimes committed through the use of information and communications technology and similar crimes committed using other means. In using the technology in question, the offender often evades identification and is able to reach far more victims or cause greater harm. The distinction, therefore, creates a basis for higher penalties for cybercrimes.” The internet seems to be a very effective tool in destroying a person nowadays. Once something is posted, it is there to remain forever and it will haunt the victim until the end. Videos taken without the consent of unsuspecting women, who are having sexual intercourse with their respective partners, are proof of this. In a matter of seconds, the videos have already been downloaded from and uploaded to numerous porn sites. And even if their distribution is subsequently controlled by the authorities, the damage has already been so great that there is really not much one can do to at least ease the pain but punish the perpetrator.

Now, applying the above aggravating circumstance, the penalty for libel by means of writing is prision correccional in its minimum and medium period would be increased by one degree, that is, prision correccional in its medium and maximum period. This is in addition to the civil liability which may be brought by the offended party. The victim may file with the Regional Trial Courts an action for libel pursuant to Article 360 of the RPC. However, the victim must be wary of the prescriptive period of this crime, as Article 90 of the RPC provides that the same prescribes within a year from publication of the alleged libelous article. As for this case, the libelous post was posted in the ALSF in 2013, therefore, the case can no longer be filed. It has already prescribed.

Next we go to the liability of the administrator of ALSF, if any. As the publisher of a defamatory post, his liability will depend on whether or not there is a filtering process before the post is published in the page. Say for example, a person sends his “secret” anonymously to the ALSF page using the link provided therein. When his post is published at the instance the author of the post clicked “submit”, and the same was published the same way it was written by the author, then there is no filtering process being done by the administrator. However, if the original post was edited to replace real names of people to the asterisk symbol (****), or if the original post sent by the author was not published at all, then the administrator is said to have a say in the publishing of the submitted “secrets” in ALSF page, libelous or otherwise. He is reviewing the posts according to the standards set by him, which in this case, is not clearly established nor made known to the public.

Applying the abovementioned theories, the first instance excludes the administrator from any malicious and libelous posts published in his page. He cannot be punished for something that is beyond his control save for cases where he already was notified of a possible libelous post and yet, did not remove such. But for the ALSF, the second instance applies. It is clear that the administrator of the AFLS page filters all submitted posts, such that, before they are published in the page, the same undergoes the process of review and selection. Hence, when a libelous post is admitted in the AFLS page, it is presumed that the same was done with the consent of the administrator, and he becomes liable regardless of intent or inadvertence in his part, with respect to the defamatory materials posted by others on his page. While aiding or abetting in the crime of libel in the cyberworld has been held by the Supreme Court as unconstitutional for curtailing freedom of speech, the same only refers to the people who “Like”, “Comment” and “Share” in Facebook or “Retweet” in Twitter, libelous posts. The Supreme Court went further and said that “it is not clear if aiding or abetting libel in the physical world is a crime.” However, Administrators on the other hand, by failing to systematically review the contents of a possible libelous post submitted in his page, opens himself to risk of liabilities although it may not be that of aiding or abetting libel. Conveniently, since docs.google.com hides the true identity of the author, the administrator can always claim that the post was only submitted thru the said website but for all we know, the administrator and the author of the libelous post are one and the same person. The administrator cannot hide under the theory that only the original author of the a libelous post is liable, as this will become an easy way out in libeling a person online due to the inherent difficulty in proving the identity of the author, which although possible with technology, costs money and time.

Article 360 of the RPC also enumerated the persons who can be held liable for libel. Administrators in this case can be likened to that of an editor of a book or pamphlet, a daily newspaper, or magazine, such that he shall be also responsible for defamatory statements made in the AFLS page as if he was the original authors thereof. Like editors, administrators have the final call of what is published and what is not, in his newspaper. It is a balancing act of attracting readers in his paper and protecting another person’s rights to a private reputation. With a greater responsibility at hand, the administrator is expected to act with due care.

Moreover, the Revised Penal Code also punishes crimes committed through reckless imprudence. Gross negligence in Mobile vs. Aschcraft was defined as the absence or want of even slight care and diligence. Under Article 19 of the Civil Code of the Philippines, everyone person must, xxx in the performance of his duties, act with justice xxx and good faith. As an administrator, he has the ultimate duty of reviewing all posts before he admits them for publication. The ALSF is a “public” page which means that anyone, who is also a Facebook user can, see all posts in its “wall”, send a private message, or submit thru doc.google.com their “secrets”, although he is not a bonafide member of the Arellano University School of Law. Meaning to say, these posts, libelous or not, may come from any person who wants to share something even if they may not be law school related. With this kind of loose setting, it is but necessary that the administrator provides for clear guidelines and a strict review process to protect the interest of everyone. To relieve him from any liability is to open a venue of irresponsible exercise of freedom of speech. Because freedom of speech, like any other protected constitutional right, is not absolute.

Finally, we now try to discuss the liability of Facebook as a service provider. According to en.wikipedia.org, Facebook is a social networking service launched by Mark Zuckerberg and his college roommates, all of whom are students of the Harvard University. To use the site, one must register using a valid email address. After registering, users can now create a user profile, add other users as “friends”, exchange messages, post status updates and photos, share videos and receive notifications when others update their profiles. Additionally, users may join common-interest user groups, organized by workplace, school or college, or other characteristics, and categorize their friends into such as “People From Work” or “Close Friends”. As of June 2014, Facebook had over 1.3 billion active users.

AFLS can be classified as a group page where its common interest is law school, specifically Arellano Law. It cannot be argued that Facebook is one, if not the most, popular social media of this generation. According to rappler.com in its article dated 20 June 2012, the latest data from SocialBakers shows that almost one out of every 4 Filipinos has a Facebook account. There are 27,720,300 Facebook users in the Philippines. That’s about 27.75% of the population and 93.33% of the online population. In fact, cellular phone providers have given free Facebook access 24/7, for a certain amount and duration, to all of its subscribers. It has expanded to include mobile application, tablets, and computers, such that users can now log in any devise where the Facebook application is available, anywhere in the country. Volume wise, it becomes impossible for Facebook to monitor each and every posts in a single account. In this regard, the Supreme Court ruled in the Disini case that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider and cannot be held civilly liable for any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene…whether or not such material is constitutionally protected.” It may be culled from the said decision that information freely provided by the users of Facebook, such as personal circumstances of the user, messages to and from another user, posts made by a user to his or to another’s “wall” and other types of information, will not make Facebook liable as they are not the original author of the said information. It only holds information for its users. As a service provider, Facebook is a passive party in this story, such that, it will not initiate any action unless prompted by a report from another user or from the authorities. The same may be compared to our Judicial system, such that the courts will need the parties to initiate the action, i.e., filing of the appropriate case before their sala so the court with jurisdiction may act upon it. Otherwise, any issue between parties not raised in the proper court will not be decided upon.

However, it would be a different story altogether when a report has been sent to Facebook regarding an alleged inappropriate page which contains libelous post and Facebook does not act upon such report. To report an incident, any user can click “I don’t like this photo” option and further options are provided by Facebook, to wit: a) It’s annoying or not interesting b) I’m in this photo and I don’t like it; c) I think it shouldn’t be on Facebook; and d) It’s spam. Further clicking any of the mentioned options will bring the user to more options that will accurately describe the incident report. Whichever the user chooses, his option notifies Facebook of an issue and is expected to respond accordingly. In this instance, knowledge should be taken against the service provider as they are ultimately responsible to provide for corrective and preventive measures for any violations committed within their control. A prompt action is expected from the service provider following notification of a problem or issue, failure to do so will make Facebook liable.

As for docs.google.com, it will not also be liable for it only provided the means by which posts shall be submitted anonymously to the administrator. It is not the original author of the libelous page nor is it part of the administration of the ALFS page as discussed above.

Victorias Milling Company v. Ong Su

[G.R. No. L-28499. September 30, 1977.]

FACTS: The petitioner, Victorias Milling Company, Inc., a domestic corporation and engaged in the manufacture and sale of refined granulated sugar, is the owner of the trademark “VICTORIAS” and diamond design registered in the Philippines Patent Office on November 9, 1961.
The respondent ONG Su is engaged in the repacking and sale of refined sugar and is the owner of the trademark “VALENTINE” and design registered in the Philippines Patent Office on June 20, 1961.
On October 4, 1963, Victorias Milling Company, Inc. filed with the Philippines Patent Office a petition to cancel the registration of the ONG Su trademark “Valentine.”

The petitioner alleged that its trademark “Victorias” and diamond design has become distinctive of its sugar long before the respondent used its trademark; that the registration of “Valentine” and design has caused and will cause great damage to petitioner by reason of mistake, confusion, or deception among the purchasers because it is similar to its “Victorias” trademark; that registration was fraudulently obtained by respondent ONG Su; and that “Valentine” falsely suggests a connection with Saint Valentine or with an institution or belief connected therewith.
In his answer to the petition the respondent averred that he is doing business under the name and style “Valentine Packaging” and has registered the trademark “Valentine” with a design for sugar and was issued Certificate of Registration No. 8891 dated June 20, 1961; that the trademark “Victorias” with diamond design and the trademark “Valentine” with a design are two different marks; and that there is absolutely no likelihood of confusion, mistake or deception to purchasers through the concurrent use of the petitioner’s mark “Victorias” with a diamond design and the respondents’ mark “Valentine” with a design in connection with sugar.

The Director of Patents denied the petition to cancel the certificate of registration of the respondent ONG Su covering the trademark “Valentine” and design. “Herein that the petitioner failed to establish that diamond design component of its mark has acquired a secondary meaning and that the literal portion of the marks have no similarity, there is no reasonable likelihood of purchaser confusion resulting from registrant’s use of VALENTINE within a diamond and petitioner’s use of VICTORIAS within a diamond.”

ISSUE: WON RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING PETITIONER’S DIAMOND DESIGN HAS NOT ACQUIRED A SECONDARY MEANING.

HELD: NO. The DOP is correct. Peitioner has not acquired secondary meaning.

The contention of petitioner that the diamond design in its trademark is an index of origin has no merit. The petitioner has not shown that the design portion of the mark has been so used that purchasers recognize the design, standing alone, as indicating goods coming from the registrant. As correctly stated by the Director of Patents, common geometric shapes such as diamonds ordinarily are not regarded as indicia of origin for goods to which the marks are applied unless they have acquired a secondary meaning. And there is no evidence that the diamond design in the trademark of the petitioner has acquired a secondary meaning with respect to its sugar business. The word “Victorias” is what identifies the sugar contained in the bag as the product of the petitioner. Indeed, the petitioner has advertised its sugar in bags marked “Victorias” with oval, hexagon and other designs.

The evidence is that ONG Su has been using his trademark since prior to the last World War and he obtained the registration thereof on June 20, 1961. Vijandre declared that the petitioner started to use its trademark only in 1947. Said trademark was registered on November 9, 1961. It cannot be said, therefore, that the respondent ONG Su imitated the trademark of the petitioner.

It seems clear that the words “Valentine” and “Victorias” and the names and places of business of Victorias Milling Company, Inc. and ONG Su are the dominant features of the trademarks in question. The petitioner has not established such a substantial similarity between the two trademarks in question as to warrant the cancellation of the trademark ‘Valentine’ of the respondent ONG Su.

Lyceum of the Phils. v. CA

(219 SCRA 610)

FACTS: Petitioner is an educational institution duly registered with the Securities and Exchange Commission (“SEC”). When it first registered with the SEC on 21 September 1950, it used the corporate name Lyceum of the Philippines, Inc. and has used that name ever since
On 24 February 1984, petitioner instituted proceedings before the SEC to compel the private respondents, which are also educational institutions, to delete the word “Lyceum” from their corporate names and permanently to enjoin them from using “Lyceum” as part of their respective names.

HELD: 1.CORPORATION LAW; CORPORATE NAMES; REGISTRATION OF PROPOSED NAME WHICH IS IDENTICAL OR CONFUSINGLY SIMILAR TO THAT OF ANY EXISTING CORPORATION, PROHIBITED; CONFUSION AND DECEPTION EFFECTIVELY PRECLUDED BY THE APPENDING OF GEOGRAPHIC NAMES TO THE WORD “LYCEUM”. — The Articles of Incorporation of a corporation must, among other things, set out the name of the corporation. Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate names are concerned: “Section 18. Corporate name. — No corporate name may be allowed by the Securities an Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name.” The policy underlying the prohibition in Section 18 against the registration of a corporate name which is “identical or deceptively or confusingly similar” to that of any existing corporation or which is “patently deceptive” or “patently confusing” or “contrary to existing laws,” is the avoidance of fraud upon the public which would have occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration and supervision over corporations. We do not consider that the corporate names of private respondent institutions are “identical with, or deceptively or confusingly similar” to that of the petitioner institution. True enough, the corporate names of private respondent entities all carry the word “Lyceum” but confusion and deception are effectively precluded by the appending of geographic names to the word “Lyceum.” Thus, we do not believe that the “Lyceum of Aparri” can be mistaken by the general public for the Lyceum of the Philippines, or that the “Lyceum of Camalaniugan” would be confused with the Lyceum of the Philippines.

2.ID.; ID.; DOCTRINE OF SECONDARY MEANING; USE OF WORD “LYCEUM,” NOT ATTENDED WITH EXCLUSIVITY. — It is claimed, however, by petitioner that the word “Lyceum” has acquired a secondary meaning in relation to petitioner with the result that word, although originally a generic, has become appropriable by petitioner to the exclusion of other institutions like private respondents herein. The doctrine of secondary meaning originated in the field of trademark law. Its application has, however, been extended to corporate names sine the right to use a corporate name to the exclusion of others is based upon the same principle which underlies the right to use a particular trademark or tradename. In Philippine Nut Industry, Inc. v. Standard Brands, Inc., the doctrine of secondary meaning was elaborated in the following terms: ” . . . a word or phrase originally incapable of exclusive appropriation with reference to an article on the market, because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively by one producer with reference to his article that, in that trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his product.” The question which arises, therefore, is whether or not the use by petitioner of “Lyceum” in its corporate name has been for such length of time and with such exclusivity as to have become associated or identified with the petitioner institution in the mind of the general public (or at least that portion of the general public which has to do with schools). The Court of Appeals recognized this issue and answered it in the negative: “Under the doctrine of secondary meaning, a word or phrase originally incapable of exclusive appropriation with reference to an article in the market, because geographical or otherwise descriptive might nevertheless have been used so long and so exclusively by one producer with reference to this article that, in that trade and to that group of the purchasing public, the word or phrase has come to mean that the article was his produce (Ana Ang vs. Toribio Teodoro, 74 Phil. 56). This circumstance has been referred to as the distinctiveness into which the name or phrase has evolved through the substantial and exclusive use of the same for a considerable period of time. . . . No evidence was ever presented in the hearing before the Commission which sufficiently proved that the word ‘Lyceum’ has indeed acquired secondary meaning in favor of the appellant. If there was any of this kind, the same tend to prove only that the appellant had been using the disputed word for a long period of time. . . . In other words, while the appellant may have proved that it had been using the word ‘Lyceum’ for a long period of time, this fact alone did not amount to mean that the said word had acquired secondary meaning in its favor because the appellant failed to prove that it had been using the same word all by itself to the exclusion of others. More so, there was no evidence presented to prove that confusion will surely arise if the same word were to be used by other educational institutions. Consequently, the allegations of the appellant in its first two assigned errors must necessarily fail.” We agree with the Court of Appeals. The number alone of the private respondents in the case at bar suggests strongly that petitioner’s use of the word “Lyceum” has not been attended with the exclusivity essential for applicability of the doctrine of secondary meaning. Petitioner’s use of the word “Lyceum” was not exclusive but was in truth shared with the Western Pangasinan Lyceum and a little later with other private respondent institutions which registered with the SEC using “Lyceum” as part of their corporation names. There may well be other schools using Lyceum or Liceo in their names, but not registered with the SEC because they have not adopted the corporate form of organization.

3.ID.; ID.; MUST BE EVALUATED IN THEIR ENTIRETY TO DETERMINE WHETHER THEY ARE CONFUSINGLY OR DECEPTIVELY SIMILAR TO ANOTHER CORPORATE ENTITY’S NAME. — petitioner institution is not entitled to a legally enforceable exclusive right to use the word “Lyceum” in its corporate name and that other institutions may use “Lyceum” as part of their corporate names. To determine whether a given corporate name is “identical” or “confusingly or deceptively similar” with another entity’s corporate name, it is not enough to ascertain the presence of “Lyceum” or “Liceo” in both names. One must evaluate corporate names in their entirety and when the name of petitioner is juxtaposed with the names of private respondents, they are not reasonably regarded as “identical” or “confusingly or deceptively similar” with each other

Societe des Produits Nestle v. CA

GR 112012, April 4, 2001

FACTS:
On January 18, 1984, private respondent CFC Corporation filed with the BPTTT an application for the registration of the trademark “FLAVOR MASTER” for instant coffee, under Serial No. 52994. The application, as a matter of due course, was published in the July 18, 1988 issue of the BPTTT’s Official Gazette.

Petitioner Societe Des Produits Nestle, S.A., a Swiss company registered under Swiss laws and domiciled in Switzerland, filed an unverified Notice of Opposition, 3 claiming that the trademark of private respondent’s product is “confusingly similar to its trademarks for coffee and coffee extracts, to wit: MASTER ROAST and MASTER BLEND.”

Likewise, a verified Notice of Opposition was filed by Nestle Philippines, Inc., a Philippine corporation and a licensee of Societe Des Produits Nestle S.A., against CFC’s application for registration of the trademark FLAVOR MASTER. Nestle claimed that the use, if any, by CFC of the trademark FLAVOR MASTER and its registration would likely cause confusion in the trade; or deceive purchasers and would falsely suggest to the purchasing public a connection in the business of Nestle, as the dominant word present in the three (3) trademarks is “MASTER”; or that the goods of CFC might be mistaken as having originated from the latter.

CFC argued that its trademark, FLAVOR MASTER, is not confusingly similar with the former’s trademarks, MASTER ROAST and MASTER BLEND, alleging that, “except for the word MASTER (which cannot be exclusively appropriated by any person for being a descriptive or generic name), the other words that are used respectively with said word in the three trademarks are very different from each other — in meaning, spelling, pronunciation, and sound”. CFC further argued that its trademark, FLAVOR MASTER, “is clearly very different from any of Nestle’s alleged trademarks MASTER ROAST and MASTER-BLEND, especially when the marks are viewed in their entirety, by considering their pictorial representations, color schemes and the letters of their respective labels.”

The BPTTT denied CFC’s application for registration. 5 CFC elevated the matter to the Court of Appeals. The CA ordered the Director of Patents to approve CFC’s application.

The basis for the Court of Appeals’ application of the totality or holistic test is the “ordinary purchaser” buying the product under “normally prevalent conditions in trade” and the attention such products normally elicit from said ordinary purchaser. An ordinary purchaser or buyer does not usually make such scrutiny nor does he usually have the time to do so. The average shopper is usually in a hurry and does not inspect every product on the shelf as if he were browsing in a library.

ISSUE: whether the trademark FLAVOR MASTER is a colorable imitation of the trademarks MASTER ROAST and MASTER BLEND.

HELD: YES.

A trademark has been generally defined as “any word, name, symbol or device adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured and sold by others.”
A manufacturer’s trademark is entitled to protection.
Section 4 (d) of Republic Act No. 166 or the Trademark Law, as amended, which was in force at the time, provides thus:

Registration of trade-marks, trade-names and service-marks on the principal register. — There is hereby established a register of trade-marks, trade-names and service marks which shall be known as the principal register. The owner of a trade-mark, trade-name or service-mark used to distinguish his goods, business or services from the goods, business or services of others shall have the right to register the same on the principal register, unless it:
(d)Consists of or comprises a mark or trade-name which so resembles a mark or trade-name registered in the Philippines or a mark or trade-name previously used in the Philippines by another and not abandoned, as to be likely, when applied to or used in connection with the goods, business or services of the applicant, to cause confusion or mistake or to deceive purchasers;

The law prescribes a more stringent standard in that there should not only be confusing similarity but that it should not likely cause confusion or mistake or deceive purchasers.

Colorable imitation denotes such a close or ingenious imitation as to be calculated to deceive ordinary persons, or such a resemblance to the original as to deceive an ordinary purchaser giving such attention as a purchaser usually gives, as to cause him to purchase the one supposing it to be the other. 9 In determining if colorable imitation exists, jurisprudence has developed two kinds of tests — the Dominancy Test and the Holistic Test. 10 The test of dominancy focuses on the similarity of the prevalent features of the competing trademarks which might cause confusion or deception and thus constitute infringement. On the other side of the spectrum, the holistic test mandates that the entirety of the marks in question must be considered in determining confusing similarity.
each case must be studied according to the peculiar circumstances of each case. That is the reason why in trademark cases, jurisprudential precedents should be applied only to a case if they are specifically in point.

In the above cases cited by the Court of Appeals to justify the application of the totality or holistic test to this instant case, the factual circumstances are substantially different. In the Bristol Myers case, this Court held that although both BIOFERIN and BUFFERIN are primarily used for the relief of pains such as headaches and colds, and their names are practically the same in spelling and pronunciation, both labels have strikingly different backgrounds and surroundings. In addition, one is dispensable only upon doctor’s prescription, while the other may be purchased over-the-counter.

In the Mead Johnson case, the differences between ALACTA and ALASKA are glaring and striking to the eye. Also, ALACTA refers to “Pharmaceutical Preparations which Supply Nutritional Needs,” falling under Class 6 of the official classification of Medicines and Pharmaceutical Preparations to be used as prescribed by physicians. On the other hand, ALASKA refers to “Foods and Ingredients of Foods” falling under Class 47, and does not require medical prescription.

In the American Cyanamid case, the word SULMET is distinguishable from the word SULMETINE, as the former is derived from a combination of the syllables “SUL” which is derived from sulfa and “MET” from methyl, both of which are chemical compounds present in the article manufactured by the contending parties. This Court held that the addition of the syllable “INE” in respondent’s label is sufficient to distinguish respondent’s product or trademark from that of petitioner. Also, both products are for medicinal veterinary use and the buyer will be more wary of the nature of the product he is buying. In any case, both products are not identical as SULMET’s label indicates that it is used in a drinking water solution while that of SULMETINE indicates that they are tablets.

It cannot also be said that the products in the above cases can be bought off the shelf except, perhaps, for ALASKA. The said products are not the usual “common and inexpensive” household items which an “undiscerningly rash” buyer would unthinkingly buy.

In the case at bar, other than the fact that both Nestle’s and CFC’s products are inexpensive and common household items, the similarity ends there. What is being questioned here is the use by CFC of the trademark MASTER. In view of the difficulty of applying jurisprudential precedents to trademark cases due to the peculiarity of each case, judicial fora should not readily apply a certain test or standard just because of seeming similarities. As this Court has pointed above, there could be more telling differences than similarities as to make a jurisprudential precedent inapplicable.

Nestle points out that the dominancy test should have been applied to determine whether there is a confusing similarity between CFC’s FLAVOR MASTER and Nestle’s MASTER ROAST and MASTER BLEND.

We agree.

If the ordinary purchaser is “undiscerningly rash” in buying such common and inexpensive household products as instant coffee, and would therefore be “less inclined to closely examine specific details of similarities and dissimilarities” between the two competing products, then it would be less likely for the ordinary purchaser to notice that CFC’s trademark FLAVOR MASTER carries the colors orange and mocha while that of Nestle’s uses red and brown. The application of the totality or holistic test is improper since the ordinary purchaser would not be inclined to notice the specific features, similarities or dissimilarities, considering that the product is an inexpensive and common household item.

this Court cannot agree that totality test is the one applicable in this case. Rather, this Court believes that the dominancy test is more suitable to this case in light of its peculiar factual milieu.

Moreover, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair competition that confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and overall impressions engendered by the marks in controversy as they are encountered in the realities of the marketplace. 23 The totality or holistic test only relies on visual comparison between two trademarks whereas the dominancy test relies not only on the visual but also on the aural and connotative comparisons and overall impressions between the two trademarks.
In addition, the word “MASTER” is neither a generic nor a descriptive term. As such, said term can not be invalidated as a trademark and, therefore, may be legally protected. Generic terms 25 are those which constitute “the common descriptive name of an article or substance,” or comprise the “genus of which the particular product is a species,” or are “commonly used as the name or description of a kind of goods,” or “imply reference to every member of a genus and the exclusion of individuating characters,” or “refer to the basic nature of the wares or services provided rather than to the more idiosyncratic characteristics of a particular product,” and are not legally protectable. On the other hand, a term is descriptive 26 and therefore invalid as a trademark if, as understood in its normal and natural sense, it “forthwith conveys the characteristics, functions, qualities or ingredients of a product to one who has never seen it and does not know what it is,” or “if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods,” or if it clearly denotes what goods or services are provided in such a way that the consumer does not have to exercise powers of perception or imagination.

Rather, the term “MASTER” is a suggestive term brought about by the advertising scheme of Nestle. Suggestive terms 27 are those which, in the phraseology of one court, require “imagination, thought and perception to reach a conclusion as to the nature of the goods.” Such terms, “which subtly connote something about the product,” are eligible for protection in the absence of secondary meaning. While suggestive marks are capable of shedding “some light” upon certain characteristics of the goods or services in dispute, they nevertheless involve “an element of incongruity,” “figurativeness,” or ” imaginative effort on the part of the observer.” D

This is evident from the advertising scheme adopted by Nestle in promoting its coffee products. In this case, Nestle has, over time, promoted its products as “coffee perfection worthy of masters like Robert Jaworski and Ric Puno Jr.”

In associating its coffee products with the term “MASTER” and thereby impressing them with the attributes of said term.
The term “MASTER”, therefore, has acquired a certain connotation to mean the coffee products MASTER ROAST and MASTER BLEND produced by Nestle. As such, the use by CFC of the term “MASTER” in the trademark for its coffee product FLAVOR MASTER is likely to cause confusion or mistake or even to deceive the ordinary purchasers.

Etepha v. Director of Patents

FACTS: On April 23, 1959, respondent Westmont Pharmaceuticals, Inc., a New York corporation, sought registration of trademark “Atussin” placed on its “medicinal preparation of expectorant antihistaminic, bronchodilator sedative, ascorbic acid (Vitamin C) used in the treatment of cough”. The trademark is used exclusively in the Philippines since January 21, 1959.1

Petitioner, Etepha, A.G., a Liechtenstein (principality) corporation, objected. Petitioner claims that it will be damaged because Atussin is so confusedly similar to its Pertussin (Registration No. 6089, issued on September 25, 1957) used on a preparation for the treatment of coughs, that the buying public will be misled into believing that Westmont’s product is that of petitioner’s which allegedly enjoys goodwill.

ISSUE: May trademark ATUSSIN be registered, given the fact that PERTUSSIN, another trademark, had been previously registered in the Patent Office?

HELD: YES. We concede the possibility that buyers might be able to obtain Pertussin or Atussin without prescription. When this happens, then the buyer must be one thoroughly familiar with what he intends to get, else he would not have the temerity to ask for a medicine — specifically needed to cure a given ailment. In which case, the more improbable it will be to palm off one for the other. For a person who purchases with open eyes is hardly the man to be deceived.

For the reasons given below, the appealed decision of respondent Director of Patents, — giving due course to the application for the registration of trademark ATUSSIN, is hereby affirmed.

1.TRADEMARKS; OBJECTS OF. — The objects of a trademark are to point out distinctly the origin or ownership of the article to which it is affixed, to secure to him who has been instrumental in bringing into market a superior article of merchandise the fruit of his industry and skill, and to prevent fraud and imposition.

2.ID.; INFRINGEMENT OF TRADEMARKS; “COLORABLE IMITATION” EXPLAINED. — The validity of a cause for infringement is predicated upon colorable imitation. The phrase “colorable imitation” denotes such a “close or ingenious imitation as to be calculated to deceive ordinary persons, or such a resemblance to the original as to deceive an ordinary purchaser giving such attention as a purchaser usually gives, and to cause him to purchase the one supposing it to be the other.” (87 C.J.S., p. 287.)

3.ID.; ID.; MARK BARRED FROM REGISTRATION; WORD “TUSSIN”, HOW MAY IT BECOME SUBJECT OF TRADEMARK. — “TUSSIN” is merely descriptive; it is generic; it furnishes to the buyer no indication of the origin of the goods; it is open for appropriation by anyone. It is accordingly barred from registration as trademark. But while “tussin” by itself cannot thus be used exclusively to identify one’s goods, it may properly become the subject of a trademark “by combination with another word or phrase”. (Annotations, Lawyers’ Reports, Annotated, 1918 A, p. 966.)

4.ID.; ID.; SIMILARITY AND DISSIMILARITY OF TRADEMARKS. HOW DETERMINED. — A practical approach to the problem of similarity or dissimilarity is to go into the whole of the two trademarks pictured in their manner of display. Inspection should be undertaken from the viewpoint of prospective buyer. The trademark complained of should be compared and contrasted with the purchaser’s memory (not in juxtaposition) of the trade mark said to be infringed. (87 C.J.S., pp. 288-291) Some such factors as `sound; appearance; form, style, shape, size or format; color; ideas connoted by marks; the meaning, spelling, and pronunciation of words used; and the setting in which the words appear” may be considered, (87 C.J.S., pp. 291-292.) For, indeed, trademark infringement is a form of unfair competition. (Clarke vs. Manila Candy Co., 36 Phil. 100, 106; Co Tiong Sa vs. Director of Patents, 95 Phil., 1, 4,)

5.ID.; ID.; WHEN THERE IS CONFUSION BETWEEN TRADEMARK. — Confusion is likely between trademarks only if their over-all presentations in any of the particulars of sound, appearance, or meaning are such as would lead the purchasing public into believing that the products to which the marks are applied emanated from the same source.

6.ID.; ID.; “PERTUSSIN” AND “ATUSSIN” COMPARED. — Considering the two labels in question — Pertussin and Atussin — as they appear on the respective labels, these words are presented to the public in different styles of writing and methods of design. The horizontal plain, block letters of Atussin and the diagonally and artistically upward writing of Pertussin leave distinct visual impressions. One look is enough to denude the mind of that illuminating similarity so essential for a trademark infringement case to prosper. Moreover, the two words do not sound alike — when pronounced. There is not as much as phonetic similarity between the two. In Pertussin the pronunciation of the prefix “Per”, whether correct or incorrect, includes a combination of three letters P, e and r; whereas, in Atussin the whole word starts with the single letter A added to the suffix “tussin”. Appeals to the ear are dissimilar. And this, because in a word- combination, the part that comes first is the most pronounced.

7.ID.; ID.; SOLUTION OF TRADEMARK INFRINGEMENT; CLASS OF PERSONS WHO BUY SHOULD BE CONSIDERED. — In the solution of a trademark infringement problem, regard too should be given to the class of persons who buy the particular product and the circumstances ordinarily attendant to its acquisition. (87 C.J.S., p. 295). The medicinal preparations, clothed with the trade marks in question, are unlike articles of everyday use such as candies, ice cream, milk, soft drinks and the like which may be freely obtained by anyone, anytime, anywhere. Petitioner’s and respondent’s products are to be dispensed upon medical prescription. An intending buyer must have to go first to a licensed doctor of medicine; he receives instructions as to what to purchase; he examines the product sold to him; he checks to find out whether it conforms to the medical prescription. Similarly, the pharmacist or druggist verifies the medicine sold. The margin of error in the acquisition of one for the other is quite remote. It is possible that buyers might be able to obtain Pertussin or Atussin without prescription. When this happens, then the buyer must be one thoroughly familiar with what he intends to get, else he would not have the temerity to ask for a medicine — specifically needed to cure a given ailment. For a person who purchases with open eyes is hardly the man to be deceived.

PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs. SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, respondents.

G.R. No. 148222. August 15, 2003.

FACTS: Petitioner Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply referred to as light boxes. Pearl and Dean was able to secure a Certificate of Copyright Registration over the illuminated display units. Sometime in 1985, Pearl and Dean negotiated with respondent 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. Only the contract for SM Makati, however, was returned signed. However, in 1986, SMI rescinded the contract for SM Makati due to non-performance of the terms thereof.

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. It further discovered that respondent North Edsa Marketing Inc. (NEMI) is a sister company of SMI and was set up primarily to sell advertising space in lighted display units located in SMI’s different branches.
In the light of its discoveries, Pearl and Dean, sent a letter to both SMI and NEMI enjoining them to cease using the subject light boxes and to remove the same from SMI’s establishments and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).
Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed a case for infringement of trademark and copyright, unfair competition and damages.

The Regional Trial Court of Makati ruled in favor of Pearl and Dean. On appeal, however, the Court of Appeals reversed the trial court. The appellate court upheld SMI when it posited that what was copyrighted were the technical drawings only, and not the light boxes themselves, and 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 copyrightable under the law.

Hence, the present petition.

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?

HELD:

The Supreme Court affirmed the decision of the Court of Appeals and denied the petition. According to the Court, petitioner Pearl & Dean secured its copyright under the classification class “O” work or under Section 2 (O) of P.D. 49. As such, 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.”

MERCANTILE LAW; INTELLECTUAL PROPERTY LAW (P.D. 49); 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, PICTORIALS ILLUSTRATIONS, ADVERTISING COPIES, LABELS, TAGS AND BOX WRAPS” UNDER SECTION 2, (O) OF THE LAW. — 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: . . . (O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps; . . . 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. Accordingly, it can cover only the works falling within the statutory enumeration or description. 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 application 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.”

While 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 application of the law’s enumeration in Section 2 of PD 49 prevented the Court 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. The Court also ruled that petitioner could not legally prevent anyone from manufacturing or commercially using its invention for the main reason that it never secured a patent for it. The Court emphasized that to be able to effectively and legally preclude others from copying and profiting from an 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. Ideas, once disclosed to the public without the protection of a valid patent, are subject to appropriation without significant restraint.

ON THE ISSUE OF PATENT INFRINGEMENT:
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.

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.

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.”

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.”

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.

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. . . . . 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.”

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.

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.
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.
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.

FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC., plaintiff-appellant,

G.R. No. L-36402 March 16, 1987

FACTS: Plaintiff-appellant is a non-profit association of authors, composers and publishers duly organized under the Corporation Law of the Philippines and registered with the Securities and Exchange Commission. Said association is the owner of certain musical compositions among which are the songs entitled: “Dahil Sa Iyo”, “Sapagkat Ikaw Ay Akin,” “Sapagkat Kami Ay Tao Lamang” and “The Nearness Of You.”

On the other hand, defendant-appellee is the operator of a restaurant known as “Alex Soda Foundation and Restaurant” where a combo with professional singers, hired to play and sing musical compositions to entertain and amuse customers therein, were playing and singing the above-mentioned compositions without any license or permission from the appellant to play or sing the same. Accordingly, appellant demanded from the appellee payment of the necessary license fee for the playing and singing of aforesaid compositions but the demand was ignored.

Hence, appellant filed a complaint with the lower court for infringement of copyright against defendant-appellee for allowing the playing in defendant-appellee’s restaurant of said songs copyrighted in the name of the former.
Defendant-appellee, in his answer, countered that the mere singing and playing of songs and popular tunes even if they are copyrighted do not constitute an infringement.
The lower court, finding for the defendant, dismissed the complaint

ISSUE: whether or not the playing and signing of musical compositions which have been copyrighted under the provisions of the Copyright Law (Act 3134) inside the establishment of the defendant-appellee constitute a public performance for profit within the meaning and contemplation of the Copyright Law of the Philippines;
ISSUE 2: Assuming that there were indeed public performances for profit, whether or not appellee can be held liable therefor.

HELD on ISSUE 1: YES.
Appellant anchors its claim on Section 3(c) of the Copyright Law which provides:

SEC. 3. The proprietor of a copyright or his heirs or assigns shall have the exclusive right:

xxx xxx xxx

(c) To exhibit, perform, represent, produce, or reproduce the copyrighted work in any manner or by any method whatever for profit or otherwise; if not reproduced in copies for sale, to sell any manuscripts or any record whatsoever thereof;

xxx xxx xxx

It maintains that playing or singing a musical composition is universally accepted as performing the musical composition and that playing and singing of copyrighted music in the soda fountain and restaurant of the appellee for the entertainment of the customers although the latter do not pay for the music but only for the food and drink constitute performance for profit under the Copyright Law (Brief for the Appellant, pp. 19-25).

We concede that indeed there were “public performances for profit. ”

The word “perform” as used in the Act has been applied to “One who plays a musical composition on a piano, thereby producing in the air sound waves which are heard as music … and if the instrument he plays on is a piano plus a broadcasting apparatus, so that waves are thrown out, not only upon the air, but upon the other, then also he is performing the musical composition.”

In relation thereto, it has been held that “The playing of music in dine and dance establishment which was paid for by the public in purchases of food and drink constituted “performance for profit” within a Copyright Law.”

Thus, it has been explained that while it is possible in such establishments for the patrons to purchase their food and drinks and at the same time dance to the music of the orchestra, the music is furnished and used by the orchestra for the purpose of inducing the public to patronize the establishment and pay for the entertainment in the purchase of food and drinks. The defendant conducts his place of business for profit, and it is public; and the music is performed for profit (Ibid, p. 319). In a similar case, the Court ruled that “The Performance in a restaurant or hotel dining room, by persons employed by the proprietor, of a copyrighted musical composition, for the entertainment of patrons, without charge for admission to hear it, infringes the exclusive right of the owner of the copyright.”
The defendants’ performances are not eleemosynary. They are part of a total for which the public pays, and the fact that the price of the whole is attributed to a particular item which those present are expected to order is not important. It is true that the music is not the sole object, but neither is the food, which probably could be got cheaper elsewhere.
In the case at bar, It will be noted that for the playing and singing the musical compositions involved, the combo was paid as independent contractors by the appellant (Record on Appeal, p. 24). It is therefore obvious that the expenses entailed thereby are added to the overhead of the restaurant which are either eventually charged in the price of the food and drinks or to the overall total of additional income produced by the bigger volume of business which the entertainment was programmed to attract. Consequently, it is beyond question that the playing and singing of the combo in defendant-appellee’s restaurant constituted performance for profit contemplated by the Copyright Law. (

HELD on ISSUE 2: Nevertheless, appellee cannot be said to have infringed upon the Copyright Law. The Supreme Court has ruled that “Paragraph 33 of Patent Office Administrative Order No. 3 provides among other things that an intellectual creation should be copyrighted thirty (30) days after its publication, if made in Manila, or within the (60) days if made elsewhere, failure of which renders such creation public property.”

A careful study of the records reveals that the song “Dahil Sa Iyo” which was registered on April 20, 1956 (Brief for Appellant, p. 10) became popular in radios, juke boxes, etc. long before registration (TSN, May 28, 1968, pp. 3-5; 25) while the song “The Nearness Of You” registered on January 14, 1955 (Brief for Appellant, p. 10) had become popular twenty five (25) years prior to 1968, (the year of the hearing) or from 1943 (TSN, May 28, 1968, p. 27) and the songs “Sapagkat Ikaw Ay Akin” and “Sapagkat Kami Ay Tao Lamang” both registered on July 10, 1966, appear to have been known and sang by the witnesses as early as 1965 or three years before the hearing in 1968. The testimonies of the witnesses at the hearing of this case on this subject were unrebutted by the appellant.

Under the circumstances, it is clear that the musical compositions in question had long become public property, and are therefore beyond the protection of the Copyright Law.

MANLY SPORTSWEAR MANUFACTURING, INC., petitioner, vs. DADODETTE ENTERPRISES AND/OR HERMES SPORTS CENTER, respondents.

G.R. No. 165306. September 20, 2005.

FACTS: Special Investigator Eliezer P. Salcedo of the National Bureau of Investigation (NBI) applied for a search warrant before the Regional Trial Court (RTC) of Quezon City, based on the information that Dadodette Enterprises and/or Hermes Sports Center were in possession of goods, the copyright of which belonged to Manly Sportswear Mfg., Inc. (MANLY). After finding reasonable grounds that a violation of Sections 172 and 217 of Republic Act (RA) No. 8293 6 has been committed, Judge issues a search warrant.

Respondents thereafter moved to quash and annul the search warrant contending that the same is invalid since the requisites for its issuance have not been complied with. They insisted that the sporting goods manufactured by and/or registered in the name of MANLY are ordinary and common hence, not among the classes of work protected under Section 172 of RA 8293.

The trial court granted the motion to quash and declared Search Warrant No. 4044(03) null and void based on its finding that the copyrighted products of MANLY do not appear to be original creations and were being manufactured and distributed by different companies locally and abroad under various brands, and therefore unqualified for protection under Section 172 of RA 8293. Moreover, MANLY’s certificates of registrations were issued only in 2002, whereas there were certificates of registrations for the same sports articles which were issued earlier than MANLY’s, thus further negating the claim that its copyrighted products were original creations.

Trial court denied MANLY’s motion for reconsideration. Hence it filed a petition for certiorari 10 before the Court of Appeals which was denied for lack of merit.

ISSUE: WON the products of MANLY are considered original creations and therefore protected under Sec 172 of RA 8293.

HELD: NO.
In the instant case, we find that the trial court did not abuse its discretion when it entertained the motion to quash considering that no criminal action has yet been instituted when it was filed. The trial court also properly quashed the search warrant it earlier issued after finding upon reevaluation of the evidence that no probable cause exists to justify its issuance in the first place. As ruled by the trial court, the copyrighted products do not appear to be original creations of MANLY and are not among the classes of work enumerated under Section 172 of RA 8293.

Further, the copyright certificates issued in favor of MANLY constitute merely prima facie evidence of validity and ownership. However, no presumption of validity is created where other evidence exist that may cast doubt on the copyright validity. Hence, where there is sufficient proof that the copyrighted products are not original creations but are readily available in the market under various brands, as in this case, validity and originality will not be presumed and the trial court may properly quash the issued warrant for lack of probable cause.

COPYRIGHTS SAFEGUARDS AND REGULATIONS; CERTIFICATES OF REGISTRATION AND DEPOSIT SERVE MERELY AS A NOTICE OF RECORDING AND REGISTRATION OF THE WORK AND NOT A CONCLUSIVE PROOF OF COPYRIGHT OWNERSHIP; CASE AT BAR. — [N]o copyright accrues in favor of MANLY despite issuance of the certificates of registration and deposit pursuant to Section 2, Rule 7 of the Copyrights Safeguards and Regulations which states:

Sec. 2: Effects of Registration and Deposit of Work. — The registration and deposit of the work is purely for recording the date of registration and deposit of the work and shall not be conclusive as to copyright ownership or the term of the copyrights or the rights of the copyright owner, including neighboring rights.

At most, the certificates of registration and deposit issued by the National Library and the Supreme Court Library serve merely as a notice of recording and registration of the work but do not confer any right or title upon the registered copyright owner or automatically put his work under the protective mantle of the copyright law. It is not a conclusive proof of copyright ownership. As it is, non-registration and deposit of the work within the prescribed period only makes the copyright owner liable to pay a fine.

SUBIC BAY METROPOLITAN AUTHORITY vs. COMMISSION ON ELECTIONS, ENRIQUE T. GARCIA and CATALINO A. CALIMBAS

[G.R. No. 125416. September 26, 1996.]

FACTS:
Congress enacted Republic Act No. 7227 (The Bases Conversion and Development Act of 1992), which among others, provided for the creation of the Subic Special Economic Zone
R.A. No. 7227 likewise created petitioner to implement the declared national policy of converting the Subic military reservation into alternative productive uses. 2Petitioner was organized with an authorized capital stock of P20 billion which was fully subscribed and fully paid up by the Republic of the Philippines with, among other assets, “(a)ll lands embraced, covered and defined in Section 12 hereof, as well as permanent improvements and fixtures upon proper inventory not otherwise alienated, conveyed, or transferred to another government agency.” 3

On November 24, 1992, the American navy turned over the Subic military reservation to the Philippine government. Immediately, petitioner commenced the implementation of its task, particularly the preservation of the seaports, airports buildings, houses and other installations left by the American navy.
The Sangguniang Bayan of Morong, Bataan passed Pambayang Kapasyahan Bilang 10, Serye 1993, expressing therein its absolute concurrence, as required by said Sec. 12 of R.A. No. 7227, to join the Subic Special Economic Zone. On September 5, 1993, the Sangguniang Bayan of Morong submitted Pambayang Kapasyahan Bilang 10, Serye 1993 to the Office of the President. respondents Garcia, Calimbas and their companions filed a petition with the Sangguniang Bayan of Morong to annul Pambayang Kapasyahan Blg. 10, Serye 1993.
The Sangguniang Bayan of Morong acted upon the petition of respondents Garcia, Not satisfied, and within 30 days from submission of their petition, herein respondents resorted to their power of initiative under the Local Government Code of 1991. Respondent Comelec issued Resolution No. 2845, adopting therein a “Calendar of Activities for local referendum on certain municipal ordinance passed by the Sangguniang Bayan of Morong, Bataan,” and which indicated, among others, the scheduled Referendum Day (July 27, 1996, Saturday). On June 27, 1996, the Comelec promulgated the assailed Resolution No. 2848 providing for “the rules and guidelines to govern the conduct of the referendum proposing to annul or repeal Kapasyahan Blg. 10, Serye 1993 of the Sangguniang Bayan of Morong, Bataan.”

ISSUE: whether the Comelec acted properly and juridically in promulgating and implementing Resolution No. 2848.

HELD: NO. To begin with, the process started by private respondents was an INITIATIVE but respondent Comelec made preparations for a REFERENDUM only. In fact, in the body of the Resolution 11 as reproduced in the footnote below, the word “referendum” is repeated at least 27 times, “initiative” is not mentioned at all.
The Comelec labeled the exercise as a “Referendum”; the counting of votes was entrusted to a “Referendum Committee”; the documents were called “referendum returns”; the canvassers, “Referendum Board of Canvassers” and the ballots themselves bore the description “referendum.” To repeat, not once was the word “initiative” used in said body of Resolution No. 2848. And yet, this exercise is unquestionably an INITIATIVE.
There are statutory and conceptual demarcations between a referendum and an initiative. In enacting the “Initiative and Referendum Act”, Congress differentiated one term from the other, thus:
(a)”Initiative” is the power of the people to propose amendments to the Constitution or to propose and enact legislations through an election called for the purpose.
There are three (3) systems of initiative, namely:
a.1.Initiative on the Constitution which refers to a petition proposing amendments to the Constitution;
a.2.Initiative on statutes which refers to a petition proposing to enact a national legislation; and
a.3.Initiative on local legislation which refers to a petition proposing to enact a regional, provincial, city, municipal, or barangay law, resolution or ordinance.
(b)”Indirect initiative” is exercise of initiative by the people through a proposition sent to Congress or the local legislative body for action.
(c)”Referendum” is the power of the electorate to approve or reject a legislation through an election called for the purpose. It may be of two classes, namely:
c.1Referendum on statutes which refers to a petition to approve or reject an act or law, or part thereof, passed by Congress; and
c.2Referendum on local law which refers to a petition to approve or reject a law, resolution or ordinance enacted by regional assemblies and local legislative bodies.

DIFFERENTIATED. — There are statutory and conceptual demarcations between a referendum and an initiative. In enacting the “Initiative and Referendum Act”, Congress differentiated one term from the other. Along these statutory definitions, Justice Isagani A. Cruz defines initiative as the “power of the people to propose bills and laws, and to enact or reject them at the polls independent of the legislative assembly.” On the other hand, he explains that referendum “is the right reserved to the people to adopt or reject any act or measure which has been passed by a legislative body and which in most cases would without action on the part of electors become a law.” The foregoing definitions, which are based on Black’s and other leading American authorities, are echoed in the Local Government Code (R.A. 7160).
“SEC. 120. Local Initiative Defined. — Local initiative is the legal process whereby the registered voters of a local government unit may directly propose, enact, or amend any ordinance.
“SEC. 126.Local Referendum Defined. — Local referendum is the legal process whereby the registered voters of the local government units may approve, amend or reject any ordinance enacted by the sanggunian.
The local referendum shall be held under the control and direction of the Comelec within sixty (60) days in case of provinces and cities, forty-five (45) days in case of municipalities and thirty (30) days in case of barangays.
The Comelec shall certify and proclaim the results of the said referendum.”

Prescinding from these definitions, we gather that initiative is resorted to (or initiated) by the people directly either because the law-making body fails or refuses to enact the law, ordinance, resolution or act that they desire or because they want to amend or modify one already existing. Under Sec. 13 of R.A. 6735, the local legislative body is given the opportunity to enact the proposal. If it refuses/neglects to do so within thirty (30) days from its presentation, the proponents through their duly-authorized and registered representatives may invoke their power of initiative, giving notice thereof to the local legislative body concerned. Should the proponents be able to collect the number of signed conformities within the period granted by said statute, the Commission on Elections “shall then set a date for the initiative (not referendum) at which the proposition shall be submitted to the registered voters in the local government unit concerned . . ..” On the other hand, in a local referendum, the law-making body submits to the registered voters of its territorial jurisdiction, for approval or rejection, any ordinance or resolution which is duly enacted or approved by such law-making authority. Said referendum shall be conducted also under the control and direction of the Commission on Elections. In other words, while initiative is entirely the work of the electorate, referendum is begun and consented to by the law-making body. Initiative is a process of law-making by the people themselves without the participation and against the wishes of their elected representatives, while referendum consists merely of the electorate approving or rejecting what has been drawn up or enacted by a legislative body. Hence, the process and the voting in an initiative are understandably more complex than in a referendum where expectedly the voters will simply write either “Yes” or “No” in the ballot.

COMELEC EXERCISES ADMINISTRATION AND SUPERVISION ON THE CONDUCT THEREOF. — From the above differentiation, it follows that there is need for the Comelec to supervise an initiative more closely, its authority thereon extending not only to the counting and canvassing of votes but also to seeing to it that the matter or act submitted to the people is in the proper form and language so it may be easily understood and voted upon by the electorate. This is especially true where the proposed legislation is lengthy and complicated, and should thus be broken down into several autonomous parts, each such part to be voted upon separately. Care must also be exercised that “(n)o petition embracing more than one subject shall be submitted to the electorate,” although “two or more propositions may be submitted in an initiative.” It should be noted that under Sec. 13 (c) of R.A. 6735, the “Secretary of Local Government or his designated representative shall extend assistance in the formulation of the proposition.” In initiative and referendum, the Comelec exercises administration and supervision of the process itself, akin to its powers over the conduct of elections. These law-making powers belong to the people, hence the respondent Commission cannot control or change the substance or the content of legislation. In the exercise of its authority, it may (in fact it should have done so already) issue relevant and adequate guidelines and rules for the orderly exercise of these “people-power” features of our Constitution.

ID.; ID.; ID.; THE COURT CANNOT PASS UPON A PROPOSED INITIATIVE UNTIL THE PEOPLE HAVE VOTED FOR IT AND IT HAS BECOME AN APPROVED ORDINANCE OR RESOLUTION. — Deliberating on this issue, the Court agrees with private respondent Garcia that indeed, the municipal resolution is still in the proposal stage. It is not yet an approved law. Should the people reject it, then there would be nothing to contest and to adjudicate. It is only when the people have voted for it and it has become an approved ordinance or resolution that rights and obligations can be enforced or implemented thereunder. At this point, it is merely a proposal and the writ of prohibition cannot issue upon a mere conjecture or possibility. Constitutionally speaking, courts may decide only actual controversies, not hypothetical questions or cases. We also note that the Initiative and Referendum Act itself provides that “(n)othing in this Act shall prevent or preclude the proper courts from declaring null and void any proposition approved pursuant to this Act . . ..” So too, the Supreme Court is basically a review court. It passes upon errors of law (and sometimes of fact, as in the case of mandatory appeals of capital offenses) of lower courts as well as determines whether there had been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any “branch or instrumentality” of government. In the present case, it is quite clear that the Court has authority to review Comelec Resolution No. 2848 to determine the commission of grave abuse of discretion. However, it does not have the same authority in regard to the proposed initiative since it has not been promulgated or approved, or passed upon by any “branch or instrumentality” or lower court, for that matter. The Commission on Elections itself has made no reviewable pronouncement about the issues brought by the pleadings. The Comelec simply included verbatim the proposal in its questioned Resolution No. 2848. Hence, there is really no decision or action made by a branch, instrumentality or court which this Court could take cognizance of and acquire jurisdiction over, in the exercise of its review powers.

ID.; ID.; ID.; THE COMELEC MAY PASS UPON SUCH PROPOSAL INSOFAR AS TO ITS FORM AND LANGUAGE ARE CONCERNED AND WHETHER THE SAME IS PATENTLY AND CLEARLY OUTSIDE THE CAPACITY OF THE LOCAL LEGISLATIVE BODY TO ENACT. — Having said that, we are in no wise suggesting that the Comelec itself has no power to pass upon proposed resolutions in an initiative. Quite the contrary, we are ruling that these matters are in fact within the initiatory jurisdiction of the Commission — to which then the herein basic questions ought to have been addressed, and by which the same should have been decided in the first instance. In other words, while regular courts may take jurisdiction over “approved propositions” per said Sec. 18 of R.A. 6735, the Comelec in the exercise of its quasi-judicial and administrative powers may adjudicate and pass upon such proposals insofar as their form and language are concerned, as discussed earlier; and it may be added, even as to content, where the proposals or parts thereof are patently and clearly outside the “capacity of the local legislative body to enact.” Accordingly, the question of whether the subject of this initiative is within the capacity of the Municipal Council of Morong to enact may be ruled upon by the Comelec upon remand and after hearing the parties thereon.