3.
GALLO cigarettes and GALLO wines were sold through
Mighty Corporation and La Campana Fabrica De Tabaco, Inc. vs. E.
& J. Gallo Winery and The Andresons Group, Inc. [G.R. No. 154342.
July 14, 2004]
FACTS: E. & J. Gallo Winery and The Andresons Group, Inc. sued
Mighty Corporation and La Campana Fabrica De Tabaco, Inc. in the
Makati RTC for trademark and tradename infringement and unfair
competition, with a prayer for damages and preliminary injunction.
Respondents charged petitioners with violating Article 6bis of the
Paris Convention for the Protection of Industrial Property (Paris
Convention) and RA 166 (Trademark Law), specifically, Sections 22
and 23 (for trademark infringement), 29 and 30 (for unfair
competition and false designation of origin) and 37 (for tradename
infringement). They claimed that petitioners adopted the GALLO
trademark to ride on Gallo Winerys GALLO and ERNEST & JULIO
GALLO trademarks established reputation and popularity, thus
causing confusion, deception and mistake on the part of the
purchasing public who had always associated GALLO and ERNEST &
JULIO GALLO trademarks with Gallo Winerys wines. Respondents
prayed for the issuance of a writ of preliminary injunction and ex
parte restraining order, plus P2 million as actual and compensatory
damages, at least P500,000 as exemplary and moral damages, and at
least P500,000 as attorney’s fees and litigation expenses.
In their answer, petitioners alleged, among other affirmative
defenses, that:
1. GALLO cigarettes and Gallo Winerys wines were totally
unrelated products;
2. Gallo Winerys GALLO trademark registration certificate
covered wines only, not cigarettes;
different channels of trade;
4. GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for
GALLO menthols, were low-cost items compared to Gallo
Winerys high-priced luxury wines which cost between P98 to
P242.50;
5. the target market of Gallo Winerys wines was the middle or
high-income bracket with at least P10,000 monthly income
while GALLO cigarette buyers were farmers, fishermen,
laborers and other low-income workers;
6. the dominant feature of the GALLO cigarette mark was the
rooster device with the manufacturers name clearly
indicated as MIGHTY CORPORATION while, in the case of
Gallo Winerys wines, it was the full names of the founders-
owners ERNEST & JULIO GALLO or just their surname GALLO;
7. by their inaction and conduct, respondents were guilty of
laches and estoppel; and petitioners acted with honesty,
justice and good faith in the exercise of their right to
manufacture and sell GALLO cigarettes.
The Makati RTC held petitioners liable for, and permanently enjoined
them from, committing trademark infringement and unfair
competition with respect to the GALLO trademark. Makati RTC
granted respondents motion for partial reconsideration and
increased the award of actual and compensatory damages. On
appeal, the CA affirmed the Makati RTC decision and subsequently
denied petitioners motion for reconsideration.
ISSUE/S:
1. Whether or not CA did not follow prevailing laws and
jurisprudence when it held that [a] RA 8293
 (Intellectual Property Code of the Philippines [IP
Code]) was applicable in this case;
2. Whether or not GALLO cigarettes and GALLO wines
were identical, similar or related goods for the
reason alone that they were purportedly forms of
vice;and
HELD:
1. Yes. Respondents sued petitioners on March 12, 1993 for
trademark infringement and unfair competition committed during
the effectivity of the Paris Convention and the Trademark Law. Yet,
in the Makati RTC decision of November 26, 1998, petitioners were
held liable not only under the aforesaid governing laws but also under
the IP Code which took effect only on January 1, 1998, or about five
years after the filing of the complaint It is a fundamental principle
that the validity and obligatory force of a law proceed from the fact
that it has first been promulgated. A law that is not yet effective
cannot be considered as conclusively known by the populace. To
make a law binding even before it takes effect may lead to the
arbitrary exercise of the legislative power. Nova constitutio futuris
formam imponere debet non praeteritis. A new state of the law
ought to affect the future, not the past. Any doubt must generally be
resolved against the retroactive operation of laws, whether these are
original enactments, amendments or repeals. There are only a few
instances when laws may be given retroactive effect, none of which
is present in this case. The IP Code, repealing the Trademark Law, was
approved on June 6, 1997. Section 241 thereof expressly decreed
that it was to take effect only on January 1, 1998, without any
provision for retroactive application. Thus, the Makati RTC and the
CA should have limited the consideration of the present case within
the parameters of the Trademark Law and the Paris Convention, the
laws in force at the time of the filing of the complaint.
2. Wines and cigarettes are not identical, similar, competing or
related goods.
In resolving whether goods are related, several factors come into
play:
 the business (and its location) to which the goods belong
 the class of product to which the good belong
 the product’s quality, quantity, or size, including the nature
of the package, wrapper or container
 the nature and cost of the articles
 the descriptive properties, physical attributes or essential
characteristics with reference to their form, composition,
texture or quality
 the purpose of the goods
 whether the article is bought for immediate consumption,
that is, day-to-day household items
 the field of manufacture
 the conditions under which the article is usually purchased
and
 the articles of the trade through which the goods flow, how
they are distributed, marketed, displayed and sold.
The test of fraudulent simulation is to the likelihood of the deception
of some persons in some measure acquainted with an established
design and desirous of purchasing the commodity with which that
design has been associated. The simulation, in order to be
objectionable, must be as appears likely to mislead the ordinary
intelligent buyer who has a need to supply and is familiar with the
article that he seeks to purchase.
The petitioners are not liable for trademark infringement, unfair
competition or damages.
Trademark Infringement
Each trademark infringement case presents a unique problem which
must be answered by weighing the conflicting interests of the
litigants.
Respondents claim that GALLO wines and GALLO cigarettes flow
through the same channels of trade, that is, retail trade. If
respondent’s assertion is true, then both goods co-existed peacefully
for a considerable period of time. It took respondents almost 20 years
to know about the existence of GALLO cigarettes and sue petitioners
for trademark infringement. Given, on one hand, the long period of
time that petitioners were engaged in the manufacture, marketing,
distribution and sale of GALLO cigarettes and, on the other,
respondents delay in enforcing their rights (not to mention implied
consent, acquiescence or negligence) we hold that equity, justice and
fairness require us to rule in favor of petitioners. The scales of
conscience and reason tip far more readily in favor of petitioners than
respondents.
Moreover, there exists no evidence that petitioners employed
malice, bad faith or fraud, or that they intended to capitalize on
respondent’s goodwill in adopting the GALLO mark for their
cigarettes which are totally unrelated to respondents GALLO wines.
Thus, we rule out trademark infringement on the part of petitioners.
Unfair Competition
Under Section 29 of the Trademark Law, any person who employs
deception or any other means contrary to good faith by which he
passes 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 commits any acts calculated to produce said result,
is guilty of unfair competition. It includes the following acts:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a
manufacturer or dealer other than the actual manufacturer or dealer,
or who otherwise clothes the goods with such appearance as shall
deceive the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any
other means calculated to induce the false belief that such person is
offering the services of another who has identified such services in
the mind of the public;
(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another.
The universal test question is whether the public is likely to be
deceived. Nothing less than conduct tending to pass off one man’s
goods or business as that of another constitutes unfair competition.
Actual or probable deception and confusion on the part of customers
by reason of defendant’s practices must always appear. On this score,
we find that petitioners never attempted to pass off their cigarettes
as those of respondents. There is no evidence of bad faith or fraud
imputable to petitioners in using their GALLO cigarette mark.
McDonald's Corporation v. L.C. Big Mak Burger, Inc. (2004)
FACTS: Petitioner McDonald’s, an American corporation operating a
global chain of fast-food restaurants, is the owner of the ‘Big Mac’
mark for its double-decker hamburger sandwich here and in the US.
McDonald’s registered this trademark with the United States
Trademark Registry on 16 October 1979. Based on this Home
Registration, McDonald’s applied for the registration of the same
mark in the Principal Register of then then Philippine Bureau of
Patents, Trademarks and Technology (PBPTT) – now the Intellectual
Property Office (IPO).
Pending approval of its application, McDonald’s introduced its “Big
Mac” hamburger sandwiches in the Philippine market in September
1981. On 18 July 1985, the PBPTT allowed registration of the “Big
Mac” mark in the Philippine Register based on its Home Registration
in the United States. From 1982 to 1990, McDonald’s spent P10.5
million in advertisement for “Big Mac” hamburger sandwiches alone.
Meanwhile, respondent L.C., a domestic corporation which operates
fast-food outlets and snack vans applied for the registration of the
‘Big Mak’ mark for its hamburger sandwiches.
Respondent L.C. Big Mak Burger, Inc. is a domestic corporation which
operates fast-food outlets and snack vans in Metro Manila and
nearby provinces. Its menu includes hamburger sandwiches and
other food items. On 21 October 1988, respondent corporation
applied with the PBPTT for the registration of the “Big Mak” mark for
its hamburger sandwiches.
Petitioner opposed on the ground that ‘Big Mak’ was a colorable
imitation of its registered ‘Big Mac’ mark for the same food products.
Respondents denied there is colorable imitation and argued that
petitioner cannot exclusively appropriate the mark ‘Big Mac’ because
the word ‘Big’ is a generic and descriptive term. Petitioner filed a
complaint for trademark infringement and unfair competition. The
trial court found for petitioners. CA held otherwise.
ISSUE: 1) Whether or not the word ‘Big Mac’ can be exclusively
appropriated by petitioner;
2) Whether or not there is colorable imitation resulting in likelihood
of confusion;
3) Is the respondent guilty of trademark infringement and unfair
competition?
HELD: 1) YES. A mark is valid if it is “distinctive” and thus not barred
from registration under Section 4 of RA 166. However, once
registered, not only the mark’s validity but also the registrant’s
ownership of the mark is prima facie presumed. The “Big Mac” mark,
which should be treated in its entirety and not dissected word for
word, is neither generic nor descriptive. Generic marks are commonly
used as the name or description of a kind of goods, such as “Lite” for
beer or “Chocolate Fudge” for chocolate soda drink. Descriptive
marks, on the other hand, convey the characteristics, functions,
qualities or ingredients of a product to one who has never seen it or
does not know it exists, such as “Arthriticare” for arthritis medication.
On the contrary, “Big Mac” falls under the class of fanciful or arbitrary
marks as it bears no logical relation to the actual characteristics of
the product it represents. As such, it is highly distinctive and thus
valid. Significantly, the trademark “Little Debbie” for snack cakes was
found arbitrary or fanciful.
2) YES. In determining likelihood of confusion, jurisprudence has
developed two tests, the dominancy test and the holistic test. The
dominancy test focuses on the similarity of the prevalent features of
the competing trademarks that might cause confusion. In contrast,
the holistic test requires the court to consider the entirety of the
marks as applied to the products, including the labels and packaging,
in determining confusing similarity. This Court, however, has relied
on the dominancy test rather than the holistic test. The test of
dominancy is now explicitly incorporated into law in Section 155.1 of
the Intellectual Property Code which defines infringement as the
“colorable imitation of a registered mark xxx or a dominant feature
thereof.”
Applying the dominancy test, the Court finds that respondents’ 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. In
spelling, considering the Filipino language, even the last letters of
both marks are the same. Clearly, respondents have adopted in “Big
Mak” not only the dominant but also almost all the features of “Big
Mac.” Applied to the same food product of hamburgers, the two
marks will likely result in confusion in the public mind. Certainly, “Big
Mac” and “Big Mak” for hamburgers create even greater confusion,
not only aurally but also visually. Indeed, a person cannot distinguish
“Big Mac” from “Big Mak” by their sound. When one hears a “Big
Mac” or “Big Mak” hamburger advertisement over the radio, one
would not know whether the “Mac” or “Mak” ends with a “c” or a
“k.”
3) YES.
Trademark Infringement
RA 166 defines trademark infringement as “any person who (1) shall
use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection
with which use is likely to CAUSE CONFUSION or otherwise mistake
or to deceive purchasers or others as to the source or origin of such
goods or services or identity of such business; or (2) reproduce,
counterfeit, copy, or colorably imitate any such mark or trade-name
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.”
Clearly, there is cause for confusion in the case at bar. By using the
“Big Mak” mark on the same goods, i.e. hamburger sandwiches, that
petitioners’ “Big Mac” mark is used, they have unjustly created the
impression that its business is approved and sponsored by, or
affiliated with plaintiffs.
Furthermore, using the dominancy test (rather than the holistic test),
wherein the dominant features in the competing marks are
considered, Big Mak failed to show that there could be no confusion.
The Court found that respondents’ use of the “Big Mak” mark results
in likelihood of confusion. First, “Big Mak” sounds exactly the same
as “Big Mac.” Second, the first word in “Big Mak” is exactly the same
as the first word in “Big Mac.” Third, the first two letters in “Mak” are
the same as the first two letters in “Mac.” Fourth, the last letter in
“Mak” while a “k” sounds the same as “c” when the word “Mak” is
pronounced. Fifth, in Filipino, the letter “k” replaces “c” in spelling,
thus “Caloocan” is spelled “Kalookan.” In short, aurally, the two
marks are the same.
Unfair Competition
YES. 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.
Unfair competition is broader than trademark infringement and
includes passing off goods with or without trademark infringement.
Trademark infringement is a form of unfair competition. Trademark
infringement constitutes unfair competition when there is not
merely likelihood of confusion, but also actual or probable deception
on the public because of the general appearance of the goods. There
can be trademark infringement without unfair competition as when
the infringer discloses on the labels containing the mark that he
manufactures the goods, thus preventing the public from being
deceived that the goods originate from the trademark owner.
Respondents’ goods are hamburgers which are also the goods of
petitioners. Since respondents chose to apply the “Big Mak” mark on
hamburgers, just like petitioner’s use of the “Big Mac” mark on
hamburgers, respondents have obviously clothed their goods with
the general appearance of petitioners’ goods. There is actually no
notice to the public that the “Big Mak” hamburgers are products of
“L.C. Big Mak Burger, Inc.” and not those of petitioners who have the
exclusive right to the “Big Mac” mark. This clearly shows
respondents’ intent to deceive the public. We hold that as found by
the RTC, respondent corporation is liable for unfair competition.
McDONALD’S CORPORATION v. MACJOY FASTFOOD
CORPORATION. G.R. No. 166115. February 2, 2007
FACTS: Macjoy Fastfood Corporation (Macjoy), a corporation selling
fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok,
tacos, sandwiches, halo-halo and steaks (fastfood products) in Cebu
City filed with the BPTT-IPO an application for the registration of the
trademark “MACJOY & DEVICE”.
McDonald’s Corporation, a corporation organized under the laws of
Delaware, USA opposed against the respondent’s application
claiming that such trademark so resembles its corporate logo (Golden
Arches) design and its McDONALD’s marks such that when used on
identical or related goods, the trademark applied for would confuse
or deceive purchasers into believing that the goods originated from
the same source or origin.
Macjoy on the other hand averred that the it has used the mark
“MACJOY” for tha past many years in good faith and has spent
considerable sums of money for extensive promotions x x x.
The IPO ratiocinated that the predominance of the letter “M” and the
prefixes “Mac/Mc” in both the Macjoy and McDonald’s marks lead to
the conclusion that there is confusing similarity between them x x x.
Therefore, Macjoy’s application was denied.
Upon appeal to the CA it favored with MacJoy and against
McDonald’s. The Court of Appeals, in ruling over the case, actually
used the holistic test (which is a test commonly used in infringement
cases). The holistic test looks upon the visual comparisons between
the two trademarks. The justifications are the following:
 1. The word “MacJoy” is written in round script while the word
“McDonald’s is written in single stroke gothic;
2. The word “MacJoy” comes with the picture of a chicken head
with cap and bowtie and wings sprouting on both sides, while
the word “McDonald’s” comes with an arches “M” in gold
colors, and absolutely without any picture of a chicken;
3. The word “MacJoy” is set in deep pink and white color
scheme while the word “McDonald’s” is written in red,
yellow, and black color combination;
4. The facade of the respective stores of the parties, are entirely
different.
ISSUE: Whether there is a confusing similarity between the
McDonald’s marks of the petitioner and the respondent’s “MACJOY
& DEVICE” trademark when it applied to classes 29 ad 30 of the
International Classification of Goods.
HELD: YES.
The Supreme Court ruled that the proper test to be used is the
dominancy test. The dominancy test not only looks at the visual
comparisons between two trademarks but also the aural impressions
created by the marks in the public mind as well as connotative
comparisons, giving little weight to factors like prices, quality, sales
outlets and market segments.
In the case at bar, the Supreme Court ruled that “McDonald’s” and
“MacJoy” marks are confusingly similar with each other such that an
ordinary purchaser can conclude an association or relation between
the marks. To begin with, both marks use the corporate “M” design
logo and the prefixes “Mc” and/or “Mac” as dominant features. The
first letter “M” in both marks puts emphasis on the prefixes “Mc”
and/or “Mac” by the similar way in which they are depicted i.e. in an
arch-like, capitalized and stylized manner. For sure, it is the prefix
“Mc,” an abbreviation of “Mac,” which visually and aurally catches
the attention of the consuming public. Verily, the word “MACJOY”
attracts attention the same way as did “McDonalds,” “MacFries,”
“McSpaghetti,” “McDo,” “Big Mac” and the rest of the MCDONALD’S
marks which all use the prefixes Mc and/or Mac. Besides and most
importantly, both trademarks are used in the sale of fastfood
products.
Further, the owner of MacJoy provided little explanation why in all
the available names for a restaurant he chose the prefix “Mac” to be
the dominant feature of the trademark. The prefix “Mac” and
“Macjoy” has no relation or similarity whatsoever to the name
Scarlett Yu Carcel, which is the name of the niece of MacJoy’s
president whom he said was the basis of the trademark MacJoy. By
reason of the MacJoy’s implausible and insufficient explanation as to
how and why out of the many choices of words it could have used for
its trade-name and/or trademark, it chose the word “Macjoy,” the
only logical conclusion deducible therefrom is that the MacJoy would
want to ride high on the established reputation and goodwill of the
McDonald’s marks, which, as applied to its restaurant business and
food products, is undoubtedly beyond question.