Mighty Corporation vs ENJ Gallo Winers

(GR No 154342, July 14, 2004, Corona)

Facts:
Respondent manufacture wines and uses the trademark Gallo for its
product. On the other hand, the petitioner is a manufacturer of cigarette and
also uses Gallo in its products.
Issue:
Is there infringement?
Held:
At the time the cause of action accrued in this case, the IPC was not yet
enacted so the relevant laws used were the Trademark Law and the Paris
Convention.
The SC held that there was no infringement. The use of the respondent of
the mark Gallo for its wine products was exclusive in nature. The court
mentioned two types of confusion in Trademark Infringement:
Confusion of Goods when an otherwise prudent purchaser is induced to
purchase one product in the belief that he is purchasing another, in which
case defendants goods are then brought as the plaintiffs and its poor quality
reflects badly on the plaintiffs reputation.
Confusion of Business wherein the goods of the parties are different but the
defendants product can reasonably (though mistakenly) be assumed to
originate from the plaintiff, thus deceiving the public into believing that there
is some connection between the plaintiff and defendant which, in fact, does
not exist.
In determining the likelihood of confusion, the Court must consider:
(a) the resemblance between the trademarks;
(b) the similarity of the goods to which the trademark is attached;
(c) the likely effect on the purchaser; and
(d) the registrants express or implied consent and other fair and equitable
considerations.
In this case, the SC employing the dominancy test, concluded that there is
no likelihood of confusion. They materially differ in color scheme, art works
and markings. Further, the two goods are not closely related because he
products belong to different classifications, form, composition and they have
different intended markets or consumers.
In Del Monte Corporation vs. Court of Appeals,45 we distinguished trademark infringement
from unfair competition:
(1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair
competition is the passing off of one's goods as those of another.

(2) In infringement of trademark fraudulent intent is unnecessary, whereas in unfair

competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a
prerequisite to the action, whereas in unfair competition registration is not necessary.
under Article 6bis of the Paris Convention, the following are the elements of trademark
infringement:
(a) registration or use by another person of a trademark which is a reproduction,
imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of registration or
use48 to be well-known in that country and is already the mark of a person entitled to
the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable for infringement
when, among others, he "uses without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or tradename in connection
with the sale, offering for sale, or advertising of any goods, business or services or in
connection with which such use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy or colorably imitate any such mark or tradename
and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services." 49 Trademark registration and actual use
are material to the complaining partys cause of action.
Corollary to this, Section 20 of the Trademark Law50 considers the trademark registration
certificate as prima facieevidence of the validity of the registration, the registrants ownership
and exclusive right to use the trademark in connection with the goods, business or services
as classified by the Director of Patents51 and as specified in the certificate, subject to the
conditions and limitations stated therein. Sections 2 and 2-A52 of the Trademark Law
emphasize the importance of the trademarks actual use in commerce in the Philippines prior
to its registration. In the adjudication of trademark rights between contending parties,
equitable principles of laches, estoppel, and acquiescence may be considered and applied. 53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the following
constitute the elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and registered in
the principal register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which such use
is likely to cause confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of such business; or such
trademark is reproduced, counterfeited, copied or colorably imitated by another
person and such reproduction, counterfeit, copy or colorable imitation is applied to

labels, signs, prints, packages, wrappers, receptacles or advertisements intended to

be used upon or in connection with such goods, business or services as to likely
cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.
In summary, the Paris Convention protects well-known trademarks only (to be determined by
domestic authorities), while the Trademark Law protects all trademarks, whether well-known
or not, provided that they have been registered and are in actual commercial use in the
Philippines. Following universal acquiescence and comity, in case of domestic legal
disputes on any conflicting provisions between the Paris Convention (which is an
international agreement) and the Trademark law (which is a municipal law) the latter will
prevail.54
Under both the Paris Convention and the Trademark Law, the protection of a
registered trademark is limited only to goods identical or similar to those in respect of
which such trademark is registered and only when there is likelihood of confusion.
Under both laws, the time element in commencing infringement cases is material in
ascertaining the registrants express or implied consent to anothers use of its trademark or a
colorable imitation thereof. This is why acquiescence, estoppel or laches may defeat the
registrants otherwise valid cause of action.
In view of the foregoing jurisprudence and respondents judicial admission that the actual
commercial use of the GALLO wine trademark was subsequent to its registration in 1971 and
to Tobacco Industries commercial use of the GALLO cigarette trademark in 1973, we rule
that, on this account, respondents never enjoyed the exclusive right to use the GALLO wine
trademark to the prejudice of Tobacco Industries and its successors-in-interest, herein
petitioners, either under the Trademark Law or the Paris Convention.
We also note that the GALLO trademark registration certificates in the Philippines and in
other countries expressly state that they cover wines only, without any evidence or indication
that registrant Gallo Winery expanded or intended to expand its business to cigarettes. 63
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winerys exclusive right
to use the GALLO trademark should be limited to wines, the only product indicated in its
registration certificates. This strict statutory limitation on the exclusive right to use trademarks
There are two types of confusion in trademark infringement. The first is "confusion of goods"
when an otherwise prudent purchaser is induced to purchase one product in the belief that
he is purchasing another, in which case defendants goods are then bought as the plaintiffs
and its poor quality reflects badly on the plaintiffs reputation. The other is "confusion of
business" wherein the goods of the parties are different but the defendants product can
reasonably (though mistakenly) be assumed to originate from the plaintiff, thus deceiving the
public into believing that there is some connection between the plaintiff and defendant which,
in fact, does not exist.
In determining the likelihood of confusion, the Court must consider:
[a] the resemblance between the trademarks;
[b] the similarity of the goods to which the trademarks are attached;

[c] the likely effect on the purchaser and

[d] the registrants express or implied consent and other fair and equitable considerations.
Whether a trademark causes confusion and is likely to deceive the public hinges on
"colorable imitation"73 which has been defined as "such similarity in form, content, words,
sound, meaning, special arrangement or general appearance of the trademark or tradename
in their overall presentation or in their essential and substantive and distinctive parts as
would likely mislead or confuse persons in the ordinary course of purchasing the genuine
article."