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EHWANI, INCORPORATED and/or BENITAS FRITES, INC.

VS

IN-N-OUT BURGER, INC.,

FACTS

IN-N-OUT BURGER, INC., is a business entity incorporated under the laws of California.
It is a signatory to the Convention of Paris on Protection of Industrial Property and the
TRIPS Agreement. It is engaged mainly in the restaurant business, but it has never
engaged in business in the Philippines.

Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the
Philippines

Sehwani filed with the BPTTT an application for the registration of the mark IN N OUT
(the inside of the letter O formed like a star). Its application was approved and a
certificate of registration was issued in its name and entered into a Licensing Agreement,
wherein the former entitled the latter to use its registered mark, IN N OUT.

In-N-Out Burger filed trademark and service mark applications with the Bureau of
Trademarks for the IN-N-OUT and IN-N-OUT Burger & Arrow Design. In-N-Out Burger
found out that Sehwani, Incorporated had already obtained Trademark Registration for
the mark IN N OUT (the inside of the letter O formed like a star). In-N-Out Burger sent
a demand letter directing Sehwani, Inc. to cease and desist from claiming ownership of
the mark IN-N-OUT and to voluntarily cancel its trademark registration. Sehwani Inc.
did not accede to In-N-Out Burgers demand but it expressed its willingness to surrender
its registration for a consideration.

respondent filed a complaint for violation of intellectual property rights. In their answer
with counterclaim, petitioners alleged that respondent lack the legal capacity to sue
because it was not doing business in the Philippines and that it has no cause of action
because its mark is not registered or used in the Philippines. Petitioner Sehwani, Inc.
also claimed that as the registered owner of the IN-N-OUT mark, it enjoys the
presumption that the same was validly acquired and that it has the exclusive right to use
the mark.

Bureau Director Estrellita Beltran-Abelardo rendered Decision

finding that respondent has the legal capacity to sue and that it is the owner of the
internationally well-known trademarks; however, she held that petitioners are not guilty of
unfair competition

CA

dismissed for lack of merit. It held that the right to appeal is not a natural right or a part of
due process, but a procedural remedy of statutory origin, hence, its requirements must
be strictly complied with.

Issue

won there was unfair competition.

Yes. The evidence on record shows that Sehwani Inc. and Benita Frites were not using
their registered trademark but that of In-n-Out Burger. Sehwani and Benita Frites are
also giving their products the general appearance that would likely influence the
purchasers to believe that their products are that of In-N-Out Burger. The intention to
deceive may be inferred from the similarity of the goods as packed and offered for sale,
and, thus, an action will lie to restrain unfair competition. The respondents frauduulent
intention to deceive purchasers is also apparent in their use of the In-N-Out Burger in
business signages.

The essential elements of an action for unfair competition are (1) confusing similarity in
the general appearance of the goods and (2) intent to deceive the public and defraud a
competitor. The confusing similarity may or may not result from similarity in the marks,
but may result from other external factors in the packaging or presentation of the goods.
The intent to deceive and defraud may be inferred from the similarity of the appearance
of the goods as offered for sale to the public. Actual fraudulent intent need not be shown.

bis
article 6 which governs the protection of well-known trademarks, is a self-executing
provision and does not require legislative enactment to give it effect in the member
country. It may be applied directly by the tribunals and officials of each member country
by the mere publication or proclamation of the Convention, after its ratification according
to the public law of each state and the order for its execution. The essential requirement
under this Article is that the trademark to be protected must be "well-known" in the
country where protection is sought. The power to determine whether a trademark is well-
known lies in the competent authority of the country of registration or use. This
competent authority would be either the registering authority if it has the power to decide
this, or the courts of the country in question if the issue comes before a court.

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