KHO vs. C.A.

379 SCRA 410 Mercantile Law Intellectual Property Law on Copyright Proper
Subjects of Copyright

FACTS:
Elidad Kho is the owner of KEC Cosmetics Laboratory and she was also the holder of
copyrights over Chin Chun Su and its Oval Facial Cream Container/Case. She also
bought the patent rights over the Chin Chun Su & Device and Chin Chun Su for
medicated cream from one Quintin Cheng, who was the assignee of Shun Yi Factory
a Taiwanese factory actually manufacturing Chin Chun Su products.
Kho filed a petition for injunction against Summerville General Merchandising and
Company to enjoin the latter from advertising and selling Chin Chun Su products, in
similar containers as that of Kho, for this is misleading the public and causing Kho to
lose income; the petition is also to enjoin Summerville from infringing upon Khos
copyrights.
Summerville in their defense alleged that they are the exclusive and authorized
importer, re-packer and distributor of Chin Chun Su products; that Shun Yi even
authorized Summerville to register its trade name Chin Chun Su Medicated Cream with
the Philippine Patent Office; that Quintin Cheng, from whom Kho acquired her patent
rights, had been terminated (her services) by Shun Yi.

ISSUE:
Whether or not Kho has the exclusive right to use the trade name and its container.

HELD:
No. Kho has no right to support her claim for the exclusive use of the subject trade
name and its container. The name and container of a beauty cream product are proper
subjects of a trademark (not copyright like what she registered for) inasmuch as the
same falls squarely within its definition. In order to be entitled to exclusively use the
same in the sale of the beauty cream product, the user must sufficiently prove that she
registered or used it before anybody else did. Khos copyright and patent registration of
the name and container would not guarantee her the right to the exclusive use of the
same for the reason that they are not appropriate subjects of the said intellectual rights.
Consequently, a preliminary injunction order cannot be issued for the reason that the
petitioner has not proven that she has a clear right over the said name and container to
the exclusion of others, not having proven that she has registered a trademark thereto
or used the same before anyone did.
PEARL AND DEAN vs. SHOEMART INC.

FACTS:
Pearl and Dean is a corporation in the manufacture of advertising display units also
known as light boxes, which were manufactured by Metro Industrial Services. A
copyright Registration was obtained in 1981. These were marketed in the name of
"Poster Ads". They also applied for a registration of trademark with the Bureau of
Patents in 1983, but was only approved in 19988. In 1985, petitioner had n agreement
with respondent Shoemart Inc (SMI) to install these light boxes in their Makati and
Cubao branch, Only the Makati branch was able to sigh the agreement. In 1986, the
contract was rescinded unilaterally by SMI, and instead contracted with Metro Industrial
Services. They installed these lightboxes in different SM city branches, including Cubao
and Makati, with association with North Edsa Marketing Inc (NEMI), SMI's sister
company. Petitioner requested SMI and NEMI to put down their installations of the light
boxes, and payment of compensatory damages worth P20M. Claiming that respondents
failed to comply, they filed a case for infringement of trademark and copyright, unfair
competition and damages. RTC ruled in favor of petitioner, but CA reversed.

ISSUES:
Whether there was a copyright infringement
Whether there was a patent infringement
Whether there was a trademark infringement
Whether there was unfair competition

RULING:
No to all.

(1) Copyright is a statutory right, subject to the terms and conditions specified in the
statute. Therefore, it can only cover the works falling within the statutory enumeration or
description. Since the copyright was classified under class "O" works, which includes
"prints, pictorial illustrations, advertising copies, labels, tags and box wraps," and does
not include the light box itself. A lightbox, even admitted by the president of petitioner
company, was neither a literary nor an artistic work but an engineering or marketing
invention, thus not included under a copyright.

(2) Petitioner was not able to secure a patent for its lightboxes, and cannot legally
prevent anyone from manufacturing or commercially using the same. Patent has a
three-fold purpose: a) to foster and reward invention; b) promotes disclosures of
invention and permit public to use the same upon expiration; c) stringent requirements
for patent protection to ensure in the public domain remain there for free use of the
public. Since petitioner was not able to go through such examination, it cannot exclude
others from manufacturing, or selling such lightboxes. No patent, no protection.

(3) The certificate of registration issued by the Director of Patents gives exclusive right
to use its own symbol only to the description specified in the certificate. It cannot
prevent others to use the same trademark with a different description.

(4) "Poster Ads" is a general term that cannot be associated specifically to Pearl and
Dean, thus it cannot be considered to use such term to be unfair competition against the
petitioner.

PMAP vs. FPA

FACTS:

On November 5, 2002, the RTC dismissed the petition for declaratory relief for lack of
merit. The RTC held that the FPA did not exceed the limits of its delegated authority in
issuing the aforecited Section 3.12 of the Guidelines granting protection to proprietary
data x x x because the issuance of the aforecited Section was a valid exercise of its
power to regulate, control and develop the pesticide industry under P.D. 1144 and the
assailed provision does not encroach on one of the functions of the Intellectual Properly
Office (IPO).
Respondents, on the other hand, maintain that the provision on the protection of
proprietary data in the FPA's Pesticide Regulatory Policies and Implementing
Guidelines is valid and legal as it does not violate the objectives of P.D. No. 1144; the
proprietary data are a substantial asset which must be protected; the protection for a
limited number of years does not constitute unlawful restraint of free trade; and such
provision does not encroach upon the jurisdiction of the Intellectual Property Office.

Respondents expound that since under P.D. No. 1144, the FPA is mandated to
regulate, control and develop the pesticide industry, it was necessary to provide for
such protection of proprietary data, otherwise, pesticide handlers will proliferate to
the the detriment of the industry and the public since the inherent toxicity of pesticides
are hazardous and are potential environmental contaminants.

They also pointed out that the protection under the assailed Pesticide Regulatory
Policies and Implementing Guidelines is warranted, considering that the development of
proprietary data involves an investment of many years and large sums of money, thus,
the data generated by an applicant in support of his application for registration are
owned and proprietary to him. Moreover, since the protection accorded to the
proprietary data is limited in time, then such protection is reasonable and does not
constitute unlawful restraint of trade.

Lastly, respondents emphasize that the provision on protection of proprietary data does
not usurp the functions of the Intellectual Property Office (IPO) since a patent and data
protection are two different matters. A patent prohibits all unlicensed making, using and
selling of a particular product, while data protection accorded by the FPA merely
prevents copying or unauthorized use of an applicant's data, but any other party may
independently generate and use his own data. It is further argued that under Republic
Act No. 8293 (R.A. No. 8293), the grant of power to the IPO to administer and
implement State policies on intellectual property is not exclusionary as the IPO is even
allowed to coordinate with other government agencies to formulate and implement plans
and policies to strengthen the protection of intellectual property rights.

ISSUE

WHETHER OR NOT RESPONDENT FPA HAS ACTED BEYOND THE SCOPE OF ITS
DELEGATED POWER WHEN IT GRANTED A SEVEN-YEAR PROPRIETARY
PROTECTION TO DATA SUBMITTED TO SUPPORT THE FIRST FULL OR
CONDITIONAL REGISTRATION OF A PESTICIDE INGREDIENT IN THE
PHILIPPINES;

WHETHER OR NOT RESPONDENT FPA IS ENCROACHING ON THE EXCLUSIVE

JURISDICTION OF THE INTELLECTUAL PROPERTY OFFICE (IPO) WHEN IT
INCLUDED IN ITS PESTICIDE REGULATORY POLICIES AND IMPLEMENTING
GUIDELINES THE SUBJECT SEVEN-YEAR PROPRIETARY DATA PROTECTION;

WHETHER OR NOT SAID PROPRIETARY DATA PROTECTION IS AN UNLAWFUL

RESTRAINT OF FREE TRADE;

WHETHER OR NOT SAID PROPRIETARY DATA PROTECTION RUNS COUNTER

TO THE OBJECTIVES OF P.D. NO. 1144;

WHETHER OR NOT THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH

90, COMMITTED A REVERSIBLE ERROR WHEN IT UPHELD THE VALIDITY OF
SECTION 3.12 OF THE PESTICIDE REGULATORY POLICIES AND IMPLEMENTING
GUIDELINES ISSUED BY RESPONDENT FPA.

HELD:
The petition is devoid of merit.
The law being implemented by the assailed Pesticide Regulatory Policies and
Implementing Guidelines is P.D. No. 1144, entitled Creating the Fertilizer and Pesticide
Authority and Abolishing the Fertilizer Industry Authority. As stated in the Preamble of
said decree, there is an urgent need to create a technically-oriented government
authority equipped with the required expertise to regulate, control and develop both the
fertilizer and the pesticide industries. (Underscoring supplied) The decree further
provided as follows:

Section 6. Powers and Functions. The FPA shall have jurisdiction, over all existing
handlers of pesticides, fertilizers and other agricultural chemical inputs. The FPA shall
have the following powers and functions:
I. Common to Fertilizers, Pesticides and other Agricultural Chemicals

xxx

4. To promulgate rules and regulations for the registration and licensing of handlers of
these products, collect fees pertaining thereto, as well as the renewal, suspension,
revocation, or cancellation of such registration or licenses and such other rules and
regulations as may be necessary to implement this Decree;

xxx

Section 7. Power to Issue Rules and Regulations to Implement Decree. The FPA is
hereby authorized to issue or promulgate rules and regulations to implement, and carry
out the purposes and provisions of this Decree.

Did the FPA go beyond its delegated power and undermine the objectives of P.D. No.
1144 by issuing regulations that provide for protection of proprietary data? The answer
is in the negative.

Under P.D. No. 1144, the FPA is given the broad power to issue rules and regulations
to implement and carry out the purposes and provisions of said decree, i.e., to regulate,
control and develop the pesticide industry. In furtherance of such ends, the FPA sees
the protection of proprietary data as one way of fulfilling its mandate. In Republic
v. Sandiganbayan, the Court emphasized that:

x x x [t]he interpretation of an administrative government agency, which is tasked to

implement a statute is generally accorded great respect and ordinarily controls the
construction of the courts. The reason behind this rule was explained in Nestle
Philippines, Inc. vs. Court of Appeals in this wise:

The rationale for this rule relates not only to the emergence of the multifarious needs of
a modern or modernizing society and the establishment of diverse administrative
agencies for addressing and satisfying those needs; it also relates to the accumulation
of experience and growth of specialized capabilities by the administrative agency
charged with implementing a particular statute. In Asturias Sugar Central, Inc. vs.
Commissioner of Customs, the Court stressed that executive officials are presumed to
have familiarized themselves with all the considerations pertinent to the meaning and
purpose of the law, and to have formed an independent, conscientious and competent
expert opinion thereon. The courts give much weight to the government agency officials
charged with the implementation of the law, their competence, expertness, experience
and informed judgment, and the fact that they frequently are the drafters of the law they
interpret. Verily, in this case, the Court acknowledges the experience and expertise of
FPA officials who are best qualified to formulate ways and means of ensuring the quality
and quantity of pesticides and handlers thereof that should enter the Philippine market,
such as giving limited protection to proprietary data submitted by applicants for
registration. The Court ascribes great value and will not disturb the FPA's determination
that one way of attaining the purposes of its charter is by granting such protection,
specially where there is nothing on record which shows that said administrative agency
went beyond its delegated powers.
Moreover, petitioner has not succeeded in convincing the Court that the provision in
question has legal infirmities.
There is no encroachment upon the powers of the IPO granted under R.A. No. 8293,
otherwise known as the Intellectual Property Code of the Philippines. Section 5 thereof
enumerates the functions of the IPO. Nowhere in said provision does it state nor can it
be inferred that the law intended the IPO to have the exclusive authority to protect or
promote intellectual property rights in the Philippines. On the contrary, paragraph (g) of
said Section even provides that the IPO shall coordinate with other government
agencies and the private sector efforts to formulate and implement plans and policies to
strengthen the protection of intellectual property rights in the country. Clearly, R.A. No.
8293 recognizes that efforts to fully protect intellectual property rights cannot be
undertaken by the IPO alone. Other agencies dealing with intellectual property rights
are, therefore, not precluded from issuing policies, guidelines and regulations to give
protection to such rights.
There is also no evidence whatsoever to support petitioner's allegation that the grant of
protection to proprietary data would result in restraining free trade. Petitioner did not
adduce any reliable data to prove its bare allegation that the protection of proprietary
data would unduly restrict trade on pesticides. Furthermore, as held in Association of
Philippine Coconut Desiccators v. Philippine Coconut Authority, despite the fact that our
present Constitution enshrines free enterprise as a policy, it nonetheless reserves to the
government the power to intervene whenever necessary to promote the general
welfare. There can be no question that the unregulated use or proliferation of pesticides
would be hazardous to our environment. Thus, in the aforecited case, the Court
declared that free enterprise does not call for removal of protective regulations. More
recently, in Coconut Oil Refiners Association, Inc. v. Torres, the Court held that [t]he
mere fact that incentives and privileges are granted to certain enterprises to the
exclusion of others does not render the issuance unconstitutional for espousing unfair
competition. It must be clearly explained and proven by competent evidence just exactly
how such protective regulation would result in the restraint of trade.

In sum, the assailed provision in the 1987 Pesticide Regulatory Policies and
Implementing Guidelines granting protection to proprietary data is well within the
authority of the FPA to issue so as to carry out its purpose of controlling, regulating and
developing the pesticide industry.
WHEREFORE, the petition is DENIED. The Decision of the Regional Trial Court
of Quezon City, Branch 90, in SP. Civil Case No. Q-01-42790 is AFFIRMED.
SO ORDERED.

In-N-Out Burger, Inc. vs. Sehwani Inc., et. Al

Facts:
Petitioner 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.
Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized
in the Philippines. Sometime in 1991, 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 on
1993. In 2000, Sehwani, Incorporated and Benita Frites, Inc. entered into a Licensing
Agreement, wherein the former entitled the latter to use its registered mark, IN N OUT.
Sometime in 1997, 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 2000, 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). Also in 2000, 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.
In 2001 In-N-Out Burger filed before the Bureau of Legal Affairs an administrative
complaint against the Sehwani, Inc. and Benita Frites, Inc. for unfair competition and
cancellation of trademark registration.

Issues:
Whether or not the Intellectual Property Office (an administrative body) have jurisdiction
of cases involving provisions of the IPC (e.g. unfair competition).
Whether or not there was unfair competition.

Held:
FIRST ISSUE: Yes, the IPO (an administrative body) has jurisdiction in cases involving
provisions of the IPC (e.g. unfair competition) due to the following reasons:
Section 10 of the Intellectual Property Code specifically identifies the functions of the
Bureau of Legal Affairs, thus:
Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the
following functions:
10.1 Hear and decide opposition to the application for registration of marks; cancellation
of trademarks; subject to the provisions of Section 64, cancellation of patents and utility
models, and industrial designs; and petitions for compulsory licensing of patents;
10.2 (a) Exercise original jurisdiction in administrative complaints for violations of laws
involving intellectual property rights;Provided, That its jurisdiction is limited to complaints
where the total damages claimed are not less than Two hundred thousand pesos
(P200,000): Provided, futher, That availment of the provisional remedies may be
granted in accordance with the Rules of Court. Xxx
Xxx
(vi) The cancellation of any permit, license, authority, or registration which may have
been granted by the Office, or the suspension of the validity thereof for such period of
time as the Director of Legal Affairs may deem reasonable which shall not exceed one
(1) year;
Xxx
(viii) The assessment of damages;
Unquestionably, petitioners complaint, which seeks the cancellation of the disputed
mark in the name of respondent Sehwani, Incorporated, and damages for violation of
petitioners intellectual property rights, falls within the jurisdiction of the IPO Director of
Legal Affairs.

While Section 163 thereof vests in civil courts jurisdiction over cases of unfair
competition, nothing in the said section states that the regular courts have sole
jurisdiction over unfair competition cases, to the exclusion of administrative bodies.
Sections 160 and 170, which are also found under Part III of the Intellectual Property
Code, recognize the concurrent jurisdiction of civil courts and the IPO over unfair
competition cases.
These two provisions read:
Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark
Enforcement Action.Any foreign national or juridical person who meets the requirements
of Section 3 of this Act and does not engage in business in the Philippines may bring a
civil or administrative action hereunder for opposition, cancellation, infringement, unfair
competition, or false designation of origin and false description, whether or not it is
licensed to do business in the Philippines under existing laws.
Section 170. Penalties. Independent of the civil and administrative sanctions imposed
by law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine
ranging from Fifty thousand pesos (P50,000) to Two hundred thousand pesos
(P200,000), shall be imposed on any person who is found guilty of committing any of
the acts mentioned in Section 155, Section168, and Subsection169.1.
Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to
decide the petitioners administrative case against respondents and the IPO Director
General had exclusive jurisdiction over the appeal of the judgment of the IPO Director of
Legal Affairs.

SECOND ISSUE: 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.

Phil. Pharmahealth Inc. vs. Pfizer (Phil.) Inc.

Facts:
Pfizer is the registered owner of a patent pertaining to Sulbactam Ampicillin. It is
marketed under the brand name Unasyn. Sometime in January and February 2003,
Pfizer discovered that Pharmawealth submitted bids for the supply of Sulbactam
Ampicillin to several hospitals without the Pfizers consent. Pfizer then demanded that
the hospitals cease and desist from accepting such bids. Pfizer also demanded that
Pharmawealth immediately withdraw its bids to supply Sulbactam Ampicillin.
Pharmawealth and the hospitals ignored the demands.

Pfizer then filed a complaint for patent infringement with a prayer for permanent
injunction and forfeiture of the infringing products. A preliminary injunction effective for
90 days was granted by the IPOs Bureau of Legal Affairs (IPO-BLA). Upon expiration, a
motion for extension filed by Pfizer was denied. Pfizer filed a Special Civil Action for
Certiorari in the Court of Appeals (CA) assailing the denial.

While the case was pending in the CA, Pfizer filed with the Regional Trial Court of
Makati (RTC) a complaint for infringement and unfair competition, with a prayer for
injunction. The RTC issued a temporary restraining order, and then a preliminary
injunction.

Pharmawealth filed a motion to dismiss the case in the CA, on the ground of forum
shopping. Nevertheless, the CA issued a temporary restraining order. Pharmawealth
again filed a motion to dismiss, alleging that the patent, the main basis of the case, had
already lapsed, thus making the case moot, and that the CA had no jurisdiction to
review the order of the IPO-BLA because this was granted to the Director General. The
CA denied all the motions. Pharmawealth filed a petition for review on Certiorari with the
Supreme Court.
Issues:

a) Can an injunctive relief be issued based on an action of patent infringement when the
patent allegedly infringed has already lapsed?
b) What tribunal has jurisdiction to review the decisions of the Director of Legal Affairs of
the Intellectual Property Office?
c) Is there forum shopping when a party files two actions with two seemingly different
causes of action and yet pray for the same relief?

Held:

a) No. The provision of R.A. 165, from which the Pfizers patent was based, clearly
states that "[the] patentee shall have the exclusive right to make, use and sell the
patented machine, article or product, and to use the patented process for the purpose of
industry or commerce, throughout the territory of the Philippines for the term of the
patent; and such making, using, or selling by any person without the authorization of the
patentee constitutes infringement of the patent."

Clearly, the patentees exclusive rights exist only during the term of the patent. Since
the patent was registered on 16 July 1987, it expired, in accordance with the provisions
of R.A. 165, after 17 years, or 16 July 2004. Thus, after 16 July 2004, Pfizer no longer
possessed the exclusive right to make, use, and sell the products covered by their
patent. The CA was wrong in issuing a temporary restraining order after the cut-off date.

b) According to IP Code, the Director General of the IPO exercises exclusive jurisdiction
over decisions of the IPO-BLA. The question in the CA concerns an interlocutory order,
and not a decision. Since the IP Code and the Rules and Regulations are bereft of any
remedy regarding interlocutory orders of the IPO-BLA, the only remedy available to
Pfizer is to apply the Rules and Regulations suppletorily. Under the Rules, a petition for
certiorari to the CA is the proper remedy. This is consistent with the Rules of Court.
Thus, the CA had jurisdiction.

c) Yes. Forum shopping is defined as the act of a party against whom an adverse
judgment has been rendered in one forum, of seeking another (and possibly favorable)
opinion in another forum (other than by appeal or the special civil action of certiorari), or
the institution of two (2) or more actions or proceedings grounded on the same cause
on the supposition that one or the other court would make a favorable disposition.

The elements of forum shopping are: (a) identity of parties, or at least such parties that
represent the same interests in both actions; (b) identity of rights asserted and reliefs
prayed for, the reliefs being founded on the same facts; (c) identity of the two preceding
particulars, such that any judgment rendered in the other action will, regardless of which
party is successful, amount to res judicata in the action under consideration. This
instance meets these elements.

The parties are clearly identical. In both the complaints in the BLA-IPO and RTC, the
rights allegedly violated and the acts allegedly violative of such rights are identical,
regardless of whether the patents on which the complaints were based are different. In
both cases, the ultimate objective of Pfizer was to ask for damages and to permanently
prevent Pharmawealth from selling the contested products. Relevantly, the Supreme
Court has decided that the filing of two actions with the same objective, as in this
instance, constitutes forum shopping.

Owing to the substantial identity of parties, reliefs and issues in the IPO and RTC cases,
a decision in one case will necessarily amount to res judicata in the other action.