McDonald’s & McGeorge Corp. vs LC Big Mak Corporation, et. al.

GR 143993 Aug. 18, 2004

The Case:
A petition for review of the decision of the CA on November 26, 1999, finding LC Big Mak not liable for
copyright infringement and unfair competition; a petition of the resolution of the CA denying
reconsideration.

FACTS:
McDonald’s Corporation is a US Corporation operating a global of fastfood restaurants and is franchised
by petitioner McGeorge Corporation in the Philippines.

McDonald’s owns and has registered the mark “Big Mac” for its double decker hamburger sandwich
with the US Trademark Registry in 1979. The corporation also registered said mark in the Philippines
with the Principal Register of the then Philippine Bureau of Patents, Trademarks and Technology
("PBPTT") (now IPO), and was allowed registration on 1985.

LC Big Mak is a domestic corporation operating fast-food outlets in snack vans across the country
offering a variety of food items including hamburger sandwiches.

LC Big Mak applied for registration of “Big Mak” mark for its hamburger sandwich with the PBPTT on
1988. This application was opposed by petitioner on the grounds that LC Big Mak was a colorable
imitation of its registered Big Mac mark for the same food product. Petitioner informed respondent’s
chairman of their exclusive right to the Big Mac mark and requested him to desist from using the mark
or any similar mark. Subsequently, McDonald’s sued Big Mak for trademark infringement and unfair
competition before the Regional Trial Court (RTC) of Makati City. The RTC found respondent guilty of
trademark infringement and unfair competition, issued a Temporary Restraining Order (TRO) and, later
on, a preliminary injunction enjoining Big Mak from using the said mark in the operation of their
business in the NCR. The CA reversed the RTC’s decision on appeal, hence, this petition.

ISSUES:
1. Whether Big Mak is liable for trademark infringement
2. Whether Big Mak is liable for unfair competition.

RULING:
1. YES, Big Mak is liable for trademark infringement.

To establish trademark infringement, the following elements must be shown:

(1) the validity of plaintiff’s mark;

(2) the plaintiff’s ownership of the mark; and
(3) the use of the mark or its colorable imitation by the alleged infringer results in “likelihood of
confusion.”

Of these, it is the element of likelihood of confusion that is the gravamen of trademark

infringement.

In this case, all the elements for trademark infringement are present. First, McDonald’s
ownership of the mark “Big Mac” is neither generic nor descriptive. On the contrary, it falls
under the class of fanciful or arbitrary marks as it bears no logical relation to the actual
McDonald’s & McGeorge Corp. vs LC Big Mak Corporation, et. al.
GR 143993 Aug. 18, 2004

characteristics of the product it represents; that being the case, the mark is highly distinctive
and, therefore, valid.

Second, McDonald’s duly established is ownership of the aforementioned mark, as may be

gleaned from the registrations it acquired.

Finally, as to the element of likelihood of confusion, it must be noted that Section 22 covers two
types of confusion arising from the use of similar or colorable imitation marks, namely,
confusion of goods (product confusion) and confusion of business (source or origin confusion).
In this case, there is confusion of goods since the company’s use of the “Big Mak” mark on the
same goods – i.e., hamburger sandwiches. Likewise, there is a confusion of business due to the
company’s use of the "Big Mak" mark in the sale of hamburgers, the same business that
McDonald’s are engaged in, also results in confusion of business.

Furthermore, in determining likelihood of confusion, the Court has relied on the dominancy test
(similarity of the prevalent features of the competing trademarks that might cause confusion)
over the holistic test (consideration of the entirety of the marks as applied to the products,
including the labels and packaging). Applying the dominancy test, the company’s use of the "Big
Mak" mark results in likelihood of confusion. Aurally the two marks are the same, with the first
word of both marks phonetically the same, and the second word of both marks also phonetically
the same. Visually, the two marks have both two words and six letters, with the first word of
both marks having the same letters and the second word having the same first two letters.
Therefore, it is liable for trademark infringement.

2. YES , Big Mak is liable for unfair competition.

Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:

Any person who will employ deception or any other means contrary to good faith by which he
shall pass off the goods manufactured by him or in which he deals, or his business, or services
for those of the one having established such goodwill, or who shall commit any acts calculated
to produce said result, shall be guilty of unfair competition, and shall be subject to an action
therefor.

The elements of unfair competition under Section 29 are as follows:

(1) confusing similarity in the general appearance of the goods, and

(2) intent to deceive the public and defraud a competitor.

In this case, Big Mak applied on their plastic wrappers and bags almost the exact same words
used by McDonald’s on their Styrofoam box. Moreover, there is similarity in the goods being
sold by both companies – i.e., hamburger sandwiches. Lastly, there is no notice to the public
that the “Big Mak” hamburgers are products of “L.C. Big Mak Burger, Inc.”. This clearly shows
the company’s intent to deceive the public. As such, Big Mak is liable for unfair competition.