IPLaw 2010

VI
a. What contractual stipulations are required in all technology
transfer agreements? (2%)

acquire from a specific source capital goods, intermediate

products, raw materials, and other technologies, or of
permanently employing personnel indicated by the licensor;

b. Enumerate three (3) stipulations that are prohibited in

technology transfer agreements. (3%)

2. Those pursuant to which the licensor reserves the right to fix

the sale or resale prices of the products manufactured on the
basis of the license;

c. Can an article of commerce serve as a trademark and at the

same time enjoy patent and copyright protection? Explain and
give an example. (2%)
SUGGESTED ANSWER:
A. Section 88 of Republic Act 8293 enumerates four mandatory
provisions in voluntary licensing contracts or technology transfer
arrangements, as follows:
(a) That the laws of the Philippines shall govern the
interpretation of the same and in the event of litigation, the
venue shall be the proper court in the place where the licensee
has its principal office;
(b) Continued access to improvements in techniques and
processes related to the technology shall be made available
during the period of the technology transfer arrangement;
(c) In the event the technology transfer arrangement shall
provide for arbitration, the Procedure of Arbitration of the
Arbitration Law of the Philippines or the Arbitration Rules of the
United Nations Commission on International Trade Law
(UNCITRAL) or the Rules of Conciliation and Arbitration of the
International Chamber of Commerce (ICC) shall apply and the
venue of arbitration shall be the Philippines or any neutral
country; and
(d) The Philippine taxes on all payments relating to the
technology transfer arrangement shall be borne by the licensor.
B. Section 87 of Republic Act 8293 enumerates 14 prohibited clauses,
as follows:
1. Those which impose upon the licensee the obligation to

3. Those that contain restrictions regarding the volume and

structure of production;
4. Those that prohibit the use of competitive technologies in a
non-exclusive technology transfer agreement;
5. Those that establish a full or partial purchase option in favor
of the licensor;
6. Those that obligate the licensee to transfer for free to the
licensor the inventions or improvements that may be obtained
through the use of the licensed technology;
7. Those that require payment of royalties to the owners of
patents for patents which are not used;
8. Those that prohibit the licensee to export the licensed
product unless justified for the protection of the legitimate
interest of the licensor such as exports to countries where
exclusive licenses to manufacture and/or distribute the licensed
product(s) have already been granted;
9. Those which restrict the use of the technology supplied after
the expiration of the technology transfer arrangement, except
in cases of early termination of the technology transfer
arrangement due to reason(s) attributable to the licensee;
10. Those which require payments for patents and other
industrial property rights after their expiration, termination
arrangement;
11. Those which require that the technology recipient shall not
contest the validity of any of the patents of the technology
supplier;

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12. Those which restrict the research and development
activities of the licensee designed to absorb and adapt the
transferred technology to local conditions or to initiate research
and development programs in connection with new products,
processes or equipment;
13. Those which prevent the licensee from adapting the
imported technology to local conditions, or introducing
innovation to it, as long as it does not impair the quality
standards prescribed by the licensor;
14. Those which exempt the licensor for liability for nonfulfilment of his responsibilities under the technology transfer
arrangement and/or liability arising from third party suits
brought about by the use of the licensed product or the licensed
technology; and
15. Other clauses with equivalent effects.
C. Yes. An article of commerce normally bears a trademark to
distinguish one's products from other products. The same article of
commerce may contain pictorial illustrations on its label and the article
itself may be the subject of a patent. For example, a beauty soap with
is sold bearing the mark GORGEOUS (trademark protection), has an
attractive packaging of artistic photos of a beautiful lady with
unblemished white skin (copyright protection), and the soap itself is
composed of new chemicals from an extract of a plant unheard of in
the past that washes away blemishes and whitens the skin (patent
protection).

solution to a problem and if such functional elements are new,

inventive and industrially applicable. For instance, the cap-screw
mechanism of the bottle or container may be subject of patent
protection.
The design, shape, contour or other ornamental aspects of the same
bottle or container, or of any article of manufacture for that matter,
are copyrightable subject matter pursuant to Section 172.1 (h) of the
IP Code.
XV
While vacationing in Boracay, Valentino surreptitiously took
photographs of his girlfriend Monaliza in her skimpy bikini. Two weeks
later, her photographs appeared in the Internet and in a national
celebrity magazine.
Monaliza found out that Valentino had sold the photographs to the
magazine and, adding insult to injury, uploaded them to his personal
blog on the Internet.
a. Monaliza filed a complaint against Valentino for damages based
on, among other grounds, violation of her intellectual property
rights. Does she have any cause of action? Explain. (2%)
b. Valentinos friend Francesco stole the photographs and
duplicated them and sold them to a magazine publication.
Valentino sued Francesco for infringement and damages. Does
Valentino have any cause of action? Explain. (2%)
c. Does Monaliza have any cause of action against Francesco?
Explain. (2%)

Alternative Answer:
SUGGESTED ANSWER:
Yes. A marked or stamped bottle or container is the best example of
an article of commerce which can be protected as a trademark, patent
and copyright. Section 121.1 of the IP Code includes stamped or
marked container of goods in its definition of a mark as any visible
sign capable of distinguishing goods or services of an enterprise to
include stamped or marked container of goods.

A. No. Monaliza is not the author of the photographs. As such, she

does not own the copyrights to the photographs. Instead,
copyrights to the photograph, whether surreptitiously taken or
not, belongs to the author, Valentino in this case, pursuant to
Section 172(k) of the IP Code.

The same bottle or container may at the same time be the subject of
patent protection if it has functional elements that provide a technical

B. Yes. Valentino, as the author of the photographs, owns the

copyrights thereto. Francesco violated Valentinos reproduction

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rights to the photographs pursuant to Section 177 of the IP
Code. Valentino may also recover damages pursuant to Section
216 (b) of the IP Code.
C. Yes. Violation of her right to privacy under Article 26 of the Civil
Code is one.
XVIII
For years, Y has been engaged in the parallel importation of famous
brands, including shoes carrying the foreign brand MAGIC. Exclusive
distributor X demands that Y cease importation because of his
appointment as exclusive distributor of MAGIC shoes in the Philippines.
Y counters that the trademark MAGIC is not registered with the
Intellectual Property Office as a trademark and therefore no one has
the right to prevent its parallel importation.
a. Who is correct? Why? (2%)
b. Suppose the shoes are covered by a Philippine patent issued to
the brand owner, what would your answer be? Explain. (2%)
SUGGESTED ANSWER:
A. Y is correct in claiming that no one has a right to prevent the
parallel importation of branded products. The Philippines follows
international exhaustion of rights in trademarks.
B. X is correct if the shoes are covered by a Philippine patent. Parallel
importation implies that the MAGIC shoes are purchased abroad by
Y, which is perfectly valid and regular. However, importing the
patented MAGIC shoes into the Philippines violates Section 71 of
the IP Code which prohibits importation, among other acts, of a
patented product or a product obtained directly or indirectly from
a patented process. Parallel importation of a patented product or a
product obtained directly or indirectly from a patented process is
not covered under the limitations set forth in Section 72.1 of the
IP Code which lays down the doctrine of national exhaustion in
patent law.

XIX
Dr. Nobel discovered a new method of treating Alzheimers involving a
special method of diagnosing the disease, treating it with a new
medicine that has been discovered after long experimentation and field
testing, and novel mental isometric exercises. He comes to you for
advice on how he can have his discoveries protected.
Can he legally protect his new method of diagnosis, the new medicine,
and the new method of treatment? If no, why? If yes, how? (4%)
SUGGESTED ANSWER:
Dr. Nobel cannot protect his new method of diagnosis and his new
method of treatment of Alzheimers. Both methods of diagnosis and
treatment are specifically excluded from patentable inventions under
Section 22 of Republic Act 8293.
On the other hand, Dr. Nobel can protect his new medicine for
Alzheimers, especially in light of his long experimentation and field
testing which shows that this is not a mere discovery of the medicine
as understood in patent law. Also, this new medicine does not fall
under the exception in Republic Act 9502 which exception refers to
new uses of known medicines.