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IP Views

Insights on IP Enforcement and Prosecution


December 22, 2005

Among the major concerns or issues that an IP practitioner commonly encounters in the enforcement
and prosecution of intellectual property rights are: (1) charging the proper offense (i.e., trademark
infringement vs. unfair competition, or copyright infringement vs. patent infringement); (2) sufficiency of
the evidence during search warrant application; (3) sufficiency of the evidence during preliminary
investigation; (4) validity of an infringer's defense of good faith to an action for infringement or unfair
competition; (5) foreign corporation's capacity to sue; and (6) sufficiency of the Information.

The following discussion addresses these concerns and will hopefully give the key answers to these
issues.

I. Different Intellectual Property Rights

Trademark, copyright and patents are different intellectual property rights that cannot be interchanged
with one another.

Trademark

A trademark is any visible sign capable of distinguishing the goods (trademark) or services (service mark)
of an enterprise and shall include a stamped or marked container of goods. In relation thereto, a trade
name means the name or designation identifying or distinguishing an enterprise.

Copyrights

The scope of a copyright is confined to literary and artistic works which are original intellectual creations
in the literary and artistic domain protected from the moment of their creation.

Patents

Patentable inventions refer to any technical solution of a problem in any field of human activity which is
new, involves an inventive step and is industrially applicable.

II. Trademark Infringement

Elements of trademark infringement

The elements of trademark infringement, which is defined under Section 155 of the IP Code, are as
follows:

i.the trademark is registered in the Philippines;


ii.the trademark is used by another person in connection with the sale, offering for sale, or advertising of
any goods, business or services, or such trademark is reproduced, counterfeited, copied or colorably
imitated by another person and applied to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business or services;

iii.the trademark is used for similar or closely related goods;

iv.such act is done without the consent of the trademark registrant or assignee; and

v.such use will likely cause confusion, mistake or deception among the purchasers/consumers.

Likelihood of Confusion

In cases of trademark infringement, it is not necessary to prove actual confusion or deception of the
public. What the law merely requires is "likelihood of confusion." In Philips Export B.V., et al. vs. Court of
Appeals, et al.1 the Supreme Court held: "Respondents maintain, however, that Petitioners did not
present an iota of proof of actual confusion or deception of the public much less a single purchaser or
their product who has been deceived or confused or showed any likelihood of confusion. It is settled,
however, that proof of actual confusion need not be shown. It suffices that confusion is probably or likely
to occur."

Thus, failure to present proof of actual confusion does not negate claim of trademark infringement. As
noted in American Wire & Cable Co. v. Director of Patents,2 the Trademark Law requires the less
stringent standard of "likelihood of confusion" only. While proof of actual confusion is the best evidence
of infringement, its absence is inconsequential.3

Confusion of Goods v. Confusion of Business

There are two types of confusion in trademark infringement: confusion of goods and confusion of
business.

"Confusion of goods" is evident where the conflicting marks are actually in competition, i.e., the
products are directly competitive.

"Confusion of business" may arise between non-competing goods. Thus, there is likelihood of confusion
when, although the goods of the parties are different, they are so related that the defendant's product
can reasonably be assumed to originate from the plaintiff. "ANG TIBAY," which was used both as trade
name and trademark for slippers and shoes, was not allowed to be registered by a junior applicant for
use on shirts and pants.
Dominancy Test v. Holistic Test

In determining likelihood of confusion, jurisprudence has developed two tests, the dominancy test and
the holistic test.

The Dominancy Test

The dominancy test considers the dominant or prevalent features of the competing marks in
determining whether they are confusingly similar. Courts give greater weight to the similarity of the
appearance of the product arising from the adoption of the dominant features of the registered mark,
disregarding minor differences.4 Courts will consider more the aural and visual impressions created by
the marks in the public mind, giving little weight to factors like prices, quality, sales outlets and market
segments.

Similarity in size, form and color, while relevant, is not conclusive. If the competing trademark contains
the main or essential or dominant features of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not necessary; nor is it necessary that the infringing
label should suggest an effort to imitate.5

The test of dominancy is explicitly incorporated into law in Section 155.1 of the IP Code which defines
infringement as the "colorable imitation of a registered mark . . . or a dominant feature thereof."

The Holistic Test

The holistic test requires the court to consider the entirety of the marks as applied to the products,
including the labels and packaging, in determining confusing similarity. Factors such as age, training and
education of the usual purchaser, the nature and cost of the article, whether the article is bought for
immediate consumption and also the conditions under which it is usually purchased are considered.

III. Unfair Competition

A person who has identified in the mind of the public the goods he manufactures or deals in, his
business or services from those of others, whether or not a registered mark is employed, has a property
right in the goodwill of the said goods, business or services so identified, which will be protected in the
same manner as other property rights.

Any acts calculated to result in the passing off of other goods for those of the one having established
such goodwill is "unfair competition."

A name or phrase incapable of appropriation as a trademark or trade name 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, i.e., it has become "distinctive" or "well-known"), be entitled to
protection against unfair competition.
The essential elements of an action for unfair competition are:

a.The offender gives his goods the general appearance of the goods of another manufacturer or dealer;

b.The general appearance is shown in the (1) goods themselves, (2) wrapping of their packages, (3)
device or words therein, or in (4) any other feature of their appearance.

c.There is confusing similarity in the general appearance of the goods.

d.There is intent to deceive the public and defraud a competitor.

Passing Off

Passing off (or palming off) takes place where the defendant, by imitative devices on the general
appearance of the goods, misleads prospective purchasers into buying his merchandise under the
impression that they are buying that of his competitors.6 Thus, the defendant gives his goods the
general appearance of the goods of his competitor with the intention of deceiving the public that the
goods are those of his competitor.

Confusing Similarity

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.

Intent to Deceive or Defraud

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.7 Actual fraudulent intent need not be shown.8

IV. Trademark Infringement vs. Unfair Competition

Trademark infringement is a form of unfair competition

Unfair competition is broader than trademark infringement and includes passing off goods with or
without trademark infringement. Trademark infringement is a form of unfair competition.9 Trademark
infringement constitutes unfair competition when there is not merely likelihood of confusion, but also
actual or probable deception on the public because of the general appearance of the goods. There can
be trademark infringement without unfair competition as when the infringer discloses on the labels
containing the mark that he manufactures the goods, thus preventing the public from being deceived
that the goods originate from the trademark owner.10
Tests/Indications Whether an Act Constitutes Trademark Infringement, Unfair Competition, or Both

In McDonald's Corp., et al. v. L.C. Big Mak Burger,11 the SC laid down certain tests or indications whether
an act constitutes trademark infringement, unfair competition, or both. Thus:

Respondents' goods are hamburgers which are also the goods of petitioners. If respondents sold egg
sandwiches only instead of hamburger sandwiches, their use of the "Big Mak" mark would not give their
goods the general appearance of petitioners' "Big Mac" hamburgers. In such case, there is only
trademark infringement but no unfair competition. However, since respondents chose to apply the "Big
Mak" mark on hamburgers, just like petitioner's use of the "Big Mac" mark on hamburgers, respondents
have obviously clothed their goods with the general appearance of petitioners' goods.

Lack of notice to the public that the "Big Mak" hamburgers are products of "L.C. Big Mak Burger, Inc."
and not those of petitioners clearly shows respondents' intent to deceive the public. Had respondents
placed a notice on their plastic wrappers and bags that the hamburgers are sold by "L.C. Big Mak Burger,
Inc.," then they could validly claim that they did not intend to deceive the public. In such case, there is
only trademark infringement but no unfair competition.

Distinctions between trademark infringement and unfair competition

Infringement of trademark is the unauthorized use of a trademark; unfair competition is the passing off
of one's goods as those of another;

Registration of trademark is a prerequisite to an action for trademark infringement. Whereas, an action


for unfair competition may be brought not only by persons who have registered their trademarks but
also by those who have long been using them, although they may not have registered the same.

In infringement of trademark, fraudulent intent is unnecessary, whereas in unfair competition,


fraudulent intent is essential;

An action for unfair competition may be brought not only by persons who have registered their
trademarks but also by those who have long been using them, although they may not have registered
the same.

V. Copyright Infringement

Infringement of copyright or piracy consists in the doing by any person, without the consent of the
owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of
the copyright.

The most common modes of committing copyright infringement are (a) violation of Section 177.1 of the
IP Code (unauthorized reproduction of the work or substantial portion of the work; and (b) Section 217.3
of the IP Code (sale and distribution of infringing copies of the work). The essence of copyright
infringement in these cases is the similarity or at least substantial similarity of the purported pirated
works to the copyrighted work.

In determining the question of infringement, the amount of matter copied from the copyrighted work is
an important consideration. To constitute infringement, it is not necessary that the whole or even a large
portion of the work shall have been copied. If so much is taken that the value of the original is sensibly
diminished, or the labors of the original author are substantially and to an injurious extent appropriated
by another, that is sufficient in point of law to constitute a piracy.12

VI. Copyright vs. Patent Rights

Copyright and patent rights are completely distinct and separate from one another, and the protection
afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the
other.

Distinctions between Copyrights and Patents

The scope of a copyright is confined to literary and artistic works which are original intellectual creations
in the literary and artistic domain protected from the moment of their creation. It specifically includes
computer programs, books, pamphlets, articles, and other writings, among others.

Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of
human activity which is new, involves an inventive step and is industrially applicable. It may be a product,
or process, or an improvement of any of the foregoing.

Works are protected by the sole fact of their creation; hence, copyright subsists from the moment of
their creation. The enjoyment and the exercise of these rights are not subject to any formality.

Whereas, in patents the rule is: no patent, no protection. To be able to effectively and legally preclude
others from copying and profiting from the invention, a patent is a primordial requirement.

Copyright is strictly confined to the description or expression of the objects and not the objects
themselves. Thus, by publishing a book without getting a patent for the art contained therein, the art is
given to the public.

Useful Articles and Works of Industrial Design

Useful articles and works of industrial design are not copyrightable. A useful article may be copyrightable
only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that
can be identified separately from, and are capable of existing independently of the utilitarian aspects of
the article.
Examples

Leaf spring eye bushing for automobile made up of plastic. Although it is registered with the Copyright
Office, the Supreme Court held that the same may not be considered as a work of applied art, but a
useful article, i.e., one having an intrinsic utilitarian function that is not merely to portray the appearance
of the article or to convey information.13

Statuettes of dancing male and female figures which are used as bases for table lamps, with electrical
wirings, sockets and lampshades attached. The US Supreme Court declared that they are copyrightable
works of art or models or designs for works of art.14

Advertising display units or light boxes were registered with the Copyright Office under Class "O" works,
namely: prints, pictorial illustrations, advertising copies, labels, tags, and box wraps. The SC said that
copyright protection extended only to the technical drawings within the category of "pictorial
illustrations" and not to the light box itself. Hence, there could be copyright infringement only if there is
reprinting of the technical drawings for purposes of sale to the public without license from the copyright
owner.

Since no patent for the light boxes was obtained, no patent rights were therefore acquired to protect the
invention, if any. The copyright owner cannot therefore prevent others from manufacturing the object
depicted in the drawings.

In another case, copyright registration was obtained for a drawing showing a novel bridge approach to
unsnarl traffic congestion. It was held that protection of the drawing does not extend to the
unauthorized duplication of the object drawn because copyright extends only to the description or
expression of the object and not to the object itself. It does not prevent one from using the drawings to
construct the object portrayed in the drawing.15

Works of Architecture

Section 186 of the IP Code, however, may be considered an exception to the above. It refers to
architectural works and specifically provides that: Copyright in a work of architecture shall include the
right to control the erection of any building which reproduces the whole or a substantial part of the work
either in its original form or in any form recognizably derived from the original: Provided, That the
copyright in any such work shall not include the right to control the reconstruction or rehabilitation in
the same style as the original of a building to which that copyright relates.

VII. Probable Cause

In Search Warrant Cases


In Philippine jurisprudence, probable cause for the issuance of a search warrant has been uniformly
defined as such facts and circumstances which would lead a reasonable, discreet and prudent man to
believe that an offense has been committed, and that the objects sought in connection with the offense
are in the place sought to be searched.

"Probable cause" has been understood to mean a reasonable ground of suspicion, supported by
circumstances sufficiently strong in themselves to warrant a cautious man in the belief that the person
accused is guilty of the offense with which he is charged, or the existence of such facts and
circumstances as would excite an honest belief in a reasonable mind acting on all the facts and
circumstances within the knowledge of the magistrate that the charge made by the applicant for the
warrant is true.

Probable cause does not mean actual and positive cause, nor does it import absolute certainty. The
determination of the existence of probable cause is not concerned with the question of whether the
offense charged has been or is being committed in fact, or whether the accused is guilty or innocent, but
only whether the affiant has reasonable grounds for his belief. The requirement is less than certainty or
proof, but more than suspicion or possibility.

The facts warranting the conclusion of probable cause must be assessed at the time of such judicial
determination by necessarily using legal standards then set forth in law and jurisprudence, and not those
that have yet to be crafted thereafter.

In 20th Century Fox Film Corp. v. Court of Appeals (G.R. Nos. L-76649-51, 19 August 1988), an applicant
for search warrant is required to present to the court the copyrighted films to compare them with the
purchased evidence of the video tapes allegedly pirated to determine whether the latter is an
unauthorized reproduction of the former. This linkage of the copyrighted films to the pirated films must
be established to satisfy the requirements of probable cause. Mere allegations as to the existence of the
copyrighted films cannot serve as basis for the issuance of a search warrant.

This requirement, however, was relaxed by the Supreme Court in Columbia Pictures, Inc. v. Court of
Appeals, et al. (G.R. No. 110318, 28 August 1996). It was explained that the supposed pronunciamento in
said case regarding the necessity for the presentation of the master tapes of the copyrighted films for
the validity of search warrants should at most be understood to merely serve as a guidepost in
determining the existence of probable cause in copyright infringement cases where there is doubt as to
the true nexus between the master tape and the pirated copies. Said directive was hardly intended to be
a sweeping and inflexible requirement in all or similar copyright infringement cases.

Thus, the Supreme Court said: "It is evidently incorrect to suggest, as the ruling in 20th Century Fox may
appear to do, that in copyright infringement cases, the presentation of master tapes of the copyrighted
films is always necessary to meet the requirement of probable cause and that, in the absence thereof,
there can be no finding of probable cause for the issuance of a search warrant. It is true that such master
tapes are object evidence, with the merit that in this class of evidence the ascertainment of the
controverted fact is made through demonstrations involving the direct use of the senses of the presiding
magistrate. Such auxiliary procedure, however, does not rule out the use of testimonial or documentary
evidence, depositions, admissions or other classes of evidence tending to prove the factum probandum,
especially where the production in court of object evidence would result in delay, inconvenience or
expenses out of proportion to its evidentiary value."

In Preliminary Investigation

When a fiscal investigates a complaint in order to determine whether he should file charges with the
court against the person complained of, the scope of the investigation is far short of a trial of an accused
before the court. It is not required that all reasonable doubt of the guilt of the accused must be
removed; it is only required that the evidence be sufficient to establish probable cause that the accused
committed the crime charged.16

The preliminary investigation is not the occasion for the full and exhaustive display of the parties'
evidence. It is for the presentation of such evidence as may engender a well-grounded belief that an
offense has been committed and that the accused is probably guilty thereof.17

It is a means of discovering the persons who may be reasonably charged with a crime.18 The validity and
merits of a party's defense and accusation, as well as admissibility of testimonies and evidence, are
better ventilated during trial proper than at the preliminary investigation level.19 The accused has to
prove his allegations when his turn to present defense evidence comes because these allegations are
matters of defense to be proven in Court.20

VIII. Is Good Faith a Defense to Violations of the IP Code?

Violations of special laws such as the IP Code are deemed acts mala prohibita. In acts mala prohibita, the
only inquiry is "has the law been violated?" It is not necessary that the offender should have acted with
criminal intent. In many crimes made such by statutory enactment, the intention of the person who
commits the crime is entirely immaterial. This is necessarily so. If it were not, the statute as a deterrent
influence would be substantially worthless. It would be impossible of execution. In many cases, the act
complained of is itself that which produces the pernicious effect the statute seeks to avoid. In those
cases the pernicious effect is produced with precisely the same force and result whether the intention of
the person performing the act is good or bad.21

With the exception of unfair competition where fraudulent intent is an essential element, infringement
of intellectual property rights under the IP Code does not require criminal intent on the part of the
infringer. Hence, good faith is not a valid defense.

This is the clear import of the pronouncement made by the Supreme Court in McDonald's Corp., et al. v.
L.C. Big Mak Burger.22 In that case, it was said that: "Had respondents placed a notice on their plastic
wrappers and bags that the hamburgers are sold by "L.C. Big Mak Burger, Inc.," then they could validly
claim that they did not intend to deceive the public. In such case, there is only trademark infringement
but no unfair competition.
In Columbia Pictures, Inc. v. Court of Appeals, et al.,23 it was held that a copy of a piracy is an
infringement of the original, and it is no defense that the pirate, in such cases, did not know what works
he was indirectly copying, or did not know whether or not he was infringing any copyright; he at least
knew that what he was copying was not his, and he copied at his peril.

With respect to infringement of patents, a criminal action may only be filed upon repetition of
infringement. Evidently, the infringer may no longer raise good faith as a defense.

IX. Foreign Corporation's Capacity to Sue

A foreign corporation not doing business in the Philippines needs no license to sue before Philippine
courts for infringement of trademark and unfair competition.24

Where the purpose of a suit is to "protect its reputation, its corporate name, its goodwill, whenever that
reputation, corporate name or goodwill have, through the natural development of its trade, established
themselves," an unlicensed foreign corporation may sue in the Philippines. So interpreted by the
Supreme Court, it is clear that Section 29 of the Corporation Law does not disqualify a foreign
corporation , which does not have a branch office in any part of the Philippines and is not 'doing
business' in the Philippines, from filing and prosecuting an action for unfair competition.25

In La Chemise Lacoste, S.A. vs. Fernandez, et al. (G.R. No. 65659, 21 May 1984), the Supreme Court
stated that the foreign corporation's capacity to sue is of not much significance in the main case since a
criminal offense is essentially an act against the State. The Information shall be in the name of the
People of the Philippines and no longer the foreign corporation which is only an aggrieved party. It is the
State which is principally the injured party although there is a private right violated. In the words of the
Supreme Court: "We cannot allow a possible violator of our criminal statutes to escape prosecution upon
a far-fetched contention that the aggrieved party or victim of a crime has no standing to sue."

X. Sufficiency of the Information

Following are model Information for Copyright Infringement, Trademark Infringement and Unfair
Competition

Copyright Infringement (Section 217.3, IP Code)

That on the 5th day of October 2000 and for sometime prior thereto, in the City of Manila, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused, in violation of the above-
mentioned law, did then and there willfully and unlawfully sell, offer for sale and distribute counterfeit
copies of PlayStation computer games software of various titles, which the said accused knew and ought
to know to be infringing copies of the PlayStation computer games software whose copyrights belong to
Sony Computer Entertainment, Inc. (SCEI), in violation of SCEI's copyrights thereto.
Trademark Infringement (Section 155.1, IP Code)

That on the 5th day of October 2000 and for sometime prior thereto, in the City of Manila, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused, in violation of the above-
mentioned law, did then and there willfully and unlawfully sell, offer for sale and distribute counterfeit
copies of PlayStation computer games software bearing unauthorized reproductions of the "PlayStation"
and "PS Device" marks without the consent of Sony Computer Entertainment, Inc., the registered owner
of the marks and manufacturer of the PlayStation game products on which the said marks are used,
thereby creating a likelihood of confusion, mistake and deception among the consumers.

Unfair Competition (Section 168, IP Code)

That on the 5th day of October 2000 and for sometime prior thereto, in the City of Manila, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused, in violation of the above-
mentioned law, did then and there willfully and unlawfully sell, offer for sale and distribute counterfeit
copies of PlayStation computer games software, and pass them off as those of Sony Computer
Entertainment, Inc. (SCEI) by using SCEI's trademarks, trade name, logo and labels which are used by
SCEI on its PlayStation game products, thereby deceiving the public and defrauding the purchasers of
their legitimate trade and violating SCEI's property rights in the goodwill of the subject products.

Final Note

The effective enforcement of intellectual property rights does not end with the seizure of pirated goods,
but must result in the conviction of the counterfeiters.