Pearl & Dean (Phil), Inc. vs Shoemart, Inc.

February 9, 2012

409 SCRA 231 – Mercantile Law – Intellectual Property – Law on Copyright – Copyrightable Subject

Pearl & Dean (Phil), Inc. is a corporation engaged in the manufacture of advertising display units
called light boxes. In January 1981, Pearl & Dean was able to acquire copyrights over the designs of
the display units. In 1988, their trademark application for “Poster Ads” was approved; they used the
same trademark to advertise their light boxes.

In 1985, Pearl & Dean negotiated with Shoemart, Inc. (SM) so that the former may be contracted to
install light boxes in the ad spaces of SM. Eventually, SM rejected Pearl & Dean’s proposal.

Two years later, Pearl & Dean received report that light boxes, exactly the same as theirs, were being
used by SM in their ad spaces. They demanded SM to stop using the light boxes and at the same time
asked for damages amounting to P20 M. SM refused to pay damages though they removed the light
boxes. Pearl & Dean eventually sued SM. SM argued that it did not infringe on Pearl & Dean’s
trademark because Pearl & Dean’s trademark is only applicable to envelopes and stationeries and not
to the type of ad spaces owned by SM. SM also averred that “Poster Ads” is a generic term hence it is
not subject to trademark registration. SM also averred that the actual light boxes are not
copyrightable. The RTC ruled in favor of Pearl & Dean. But the Court of Appeals ruled in favor of SM.

ISSUE: Whether or not the Court of Appeals is correct.

HELD: Yes. The light boxes cannot, by any stretch of the imagination, be considered as either prints,
pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a
copyrightable; what was copyrighted were the technical drawings only, and not the light boxes
themselves. In other cases, it was held that there is no copyright infringement when one who,
without being authorized, uses a copyrighted architectural plan to construct a structure. This is
because the copyright does not extend to the structures themselves.

On the trademark infringement allegation, the words “Poster Ads” are a simple contraction of the
generic term poster advertising. In the absence of any convincing proof that “Poster Ads” has
acquired a secondary meaning in this jurisdiction, Pearl & Dean’s exclusive right to the use of “Poster
Ads” is limited to what is written in its certificate of registration, namely, stationeries.

Smith Kline & French Laboratories, Ltd. vs Court of Appeals (2001)

March 13, 2012

368 SCRA 9 – Mercantile Law – Law on Intellectual Property – Law on Patents – Compulsory License

In August 1989, Danlex Research Laboratories petitioned before Bureau of Patents, Trademarks and
Technology Transfer (BPTTT) that it may be granted a compulsory license for the use and manufacture
of the pharmaceutical product Cimetidine. Cimetidine is useful as an antihistamine and in the
treatment of ulcers. Cimetidine is originally patented to Smith Kline and French Laboratories, Ltd. in
1978, and the said patent is still in force at the time of application by Danlex Research.

The BPTTT granted the application of Danlex Research together with a provision that Danlex Research
should be paying 2.5% of the net wholesale price as royalty payment to Smith Kline. This was affirmed
by the Court of Appeals.

Smith Kline assailed the grant as it argued, among others, that the same is an invalid exercise of police
power because there is no overwhelming public necessity for such grant considering that Smith Kline
is able to provide an adequate supply of it to satisfy the needs of the Philippine market; that a
provision in the Philippine Patent Laws is violative of the Paris Convention to which the Philippines is a
signatory.

To explain the second contention, Smith Kline states that the Paris Convention only allows
compulsory licensing if the original licensee (patent holder) has failed to work on the patent; that
therefore, the provision in the Philippine Patent Laws which adds other grounds for the granting of
compulsory license i.e. monopoly, is invalid and contrary to the Paris Convention.

ISSUE: Whether or not Smith Kline is correct.

HELD: No. The granting is a valid exercise of police power. Cimetidine is medicinal in nature, and
therefore necessary for the promotion of public health and safety.

On the second contention, Section A(2) of Article 5 [of the Paris Convention] unequivocally and
explicitly respects the right of member countries to adopt legislative measures to provide for the
grant of compulsory licenses to prevent abuses which might result from the exercise of the exclusive
rights conferred by the patent. An example provided of possible abuses is “failure to work;” however,
as such, is merely supplied by way of an example, it is plain that the treaty does not preclude the
inclusion of other forms of categories of abuses. The legislative intent in the grant of a compulsory
license was not only to afford others an opportunity to provide the public with the quantity of the
patented product, but also to prevent the growth of monopolies. Certainly, the growth of monopolies
was among the abuses which Section A, Article 5 of the Convention foresaw, and which our Congress
likewise wished to prevent in enacting.

Smith Kline Beckman Corporation vs Court of Appeals

November 8, 2011

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409 SCRA 33 – Intellectual Property Law – Law on Patents – Doctrine of Equivalents

Smith Kline is a US corporation licensed to do business in the Philippines. In 1981, a patent was issued
to it for its invention entitled “Methods and Compositions for Producing Biphasic Parasiticide Activity
Using Methyl 5 Propylthio-2-Benzimidazole Carbamate.” The invention is a means to fight off
gastrointestinal parasites from various cattles and pet animals.

Tryco Pharma is a local corporation engaged in the same business as Smith Kline.

Smith Kline sued Tryco Pharma because the latter was selling a veterinary product called Impregon
which contains a drug called Albendazole which fights off gastro-intestinal roundworms, lungworms,
tapeworms and fluke infestation in carabaos, cattle and goats.

Smith Kline is claiming that Albendazole is covered in their patent because it is substantially the same
as methyl 5 propylthio-2-benzimidazole carbamate covered by its patent since both of them are
meant to combat worm or parasite infestation in animals. And that Albendazole is actually patented
under Smith Kline in the US.
Tryco Pharma averred that nowhere in Smith Kline’s patent does it mention that Albendazole is
present but even if it were, the same is “unpatentable”.

Smith Kline thus invoked the doctrine of equivalents, which implies that the two substances
substantially do the same function in substantially the same way to achieve the same results, thereby
making them truly identical for in spite of the fact that the word Albendazole does not appear in
Tryco Paharma’s letters of patent, it has ably shown by evidence its sameness with methyl 5
propylthio-2-benzimidazole carbamate.

ISSUE: Whether or not there is patent infringement in this case

HELD: No. Smith Kline failed to prove that Albendazole is a compound inherent in the patented
invention. Nowhere in the patent is the word Albendazole found. When the language of its claims is
clear and distinct, the patentee is bound thereby and may not claim anything beyond them. Further,
there was a separate patent for Albendazole given by the US which implies that Albendazole is indeed
separate and distinct from the patented compound here.

A scrutiny of Smith Kline’s evidence fails to prove the substantial sameness of the patented
compound and Albendazole. While both compounds have the effect of neutralizing parasites in
animals, identity of result does not amount to infringement of patent unless Albendazole operates in
substantially the same way or by substantially the same means as the patented compound, even
though it performs the same function and achieves the same result. In other words, the principle or
mode of operation must be the same or substantially the same.

The doctrine of equivalents thus requires satisfaction of the function-means-and-result test, the
patentee having the burden to show that all three components of such equivalency test are met.