INTRO TO LAW CASE DIGEST 1

CASE # 20

Philip Morris, Inc. vs. Fortune Tobacco Corporation

G.R. No. 158589. June 27, 2006

Facts:

Petitioner Philip Morris, Inc. a corporation organized under the laws of the
state of Virginia, USA, is the registered owner of the trademark MARK VII for
cigarettes. Benson and Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is
the registered owner of the trademark MARK TEN for cigarettes. Another subsidiary
of Philip Morris, Inc. the Swiss Company Fabriques de Tabac Reunies, S.A., is the
assignee of the trademark LARK. All are evidenced by Trademark Certificate of
Registration. On the other hand, Fortune Tobacco Corporation, a company
organized in the Philippines, manufactures and sells cigarettes using the trademark
MARK.
Philip Morris, Inc. filed a complaint for trademark infringement and damages
against Fortune Tobacco Corporation. The complaint was dismissed by the RTC
Pasig City in its decision dated January 21, 2003.
Maintaining to have the standing to sue in the local forum and that
respondent has committed trademark infringement, petitioners went on appeal to
the CA but CA affirmed the trial court’s decision. The CA found that MARK VII,
MARK TEN and LARK do not qualify as well-known marks entitled to protection
even without the benefit of actual use in the local market and that the similarities
in the trademarks in question are insufficient as to cause deception or confusion
tantamount to infringement.
With the motion for reconsideration denied in the CA, the petitioners filed a
petition for review with the Supreme Court.

Issues:

1.) Whether or not petitioners, as Philippine registrants of trademarks, are

entitled to enforce trademark rights in the country.
2.) Whether or not respondent has committed trademark infringement against
petitioners by its use of the mark MARK for its cigarettes, hence liable for
damages.
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Ruling:
A trademark is any distinctive word, name, symbol, emblem, sign, or device,
or any combination thereof adopted and used by a manufacturer or merchant on
his goods to identify and distinguish them from those manufactured, sold, or dealt
in by others. Inarguably, trademark deserves protection. It is for this reason that
the petitioner’s recourse for their entitlement to enforce trademark rights in this
country and also the right to sue for trademark infringement in Philippine courts
and be accorded protection against unauthorized use of the Philippine-registered
trademarks is understandable. Their standing to sue in Philippine courts had been
recognized by the CA but such right to sue does not necessarily mean protection of
their trademarks in the absence of actual use in the Philippines.
But the petitioners are still foreign corporations. They may not sue on that
basis alone of their respective certificates of registration of trademarks unless their
country grants similar rights and privileges to Filipino citizens pursuant to Section
21-A of R.A. No. 166. This reciprocity requirement is a condition to file a suit by a
foreign corporation as ruled in Leviton Industries v. Salvador.
The respective home country of the petitioner, namely, the United States,
Switzerland and Canada, together with the Philippines are members of the Paris
Union. Philippines adherence to the Paris Convention obligates the country to honor
and enforce its provisions, however, this does not automatically entitle petitioners to
the protection of their trademark in our country without actual use of the marks in
local commerce and trade because any protection accorded has to be made subject
to the limitations of Philippine laws.
Significantly, registration in the Philippines of trademarks does not convey an
absolute right or exclusive ownership thereof. In Shangri-la v. Development Group of
Companies, the Court emphasized that trademark is a creation of use and,
therefore, actual use is a prerequisite to exclusive ownership; registration is only an
administrative confirmation of the existence of the right of ownership of the mark,
but does not perfect such right.
With the foregoing perspective, it may be stated right off that the registration
of a trademark unaccompanied by actual use in the country accords the registrants
only the standing to sue for infringements in Philippine Courts but entitlement to
protection of such trademark in the country is entirely different matter.
On the main issue of infringement, the court, relying on the holistic test ruled
against the likelihood of confusion resulting in infringement arising from the
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respondent’s use of the trademark MARK for its particular cigarette product. The
striking dissimilarities are significant enough to warn any purchaser that one is
different from the other. This is upon considering the entire marking as a whole
For lack of convincing proof on the part of the petitioners of actual use of
their registered trademark prior to respondents use of its mark and for petitioners
failure to demonstrate confusing similarity between said trademarks, the dismissal
of their basic complaint of infringement and the plea for damages are affirmed.
The petition is denied. The assailed decision and resolution of the Court of
Appeals are affirmed.