Watch out for trademark copycats - ALBURO ALBURO AND ASSOCIATES LAW OFFICES

This article was originally published on June 22, 2017 and has been updated to reflect recent legal developments.

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

AT A GLANCE:

In the case of Kolin Electronics Co., Inc. v. Kolin Philippines International, Inc., G.R. No. 226444, July 06, 2021, the Supreme Court abandoned the Holistic test. Therefore, the prevailing test for determining trademark resemblance is the Dominancy Test, which focuses on the prevalent features of competing marks. The Dominancy Test considers the appearance, sound, meaning, and overall impressions of the competing marks.

In today’s time, where competition is too stiff in the market, established businesses continue to thrive because of their reputation, among others, which they have established over the years. When customers purchase their products or engage in their services, part of what they are paying for is the confidence that a certain product or service meets their expectations.

The trademark of a business is a valuable business asset, evoking an image and a set of desired qualities associated with the mark, leading customers to purchase their product. Surely, a company’s reputation was not built overnight. It involves a long and meticulous process crafted through the years, carefully establishing the product’s or service’s relevance and superiority over others.

That is why it is depressing, to say the least, when newcomers, instead of making their own mark, take the short and easy route by copying a mark. With the advent of technology and the Internet, trademark infringement has become commonplace, which is resorted to by some enterprising businesses (pun intended) to cash in on the goodwill, reputation and/or prestige established by a registered trademark. There is infringement when an unauthorized copy, counterfeit, or colorable imitation of a registered mark is used in connection with the selling or advertising of goods, when such use is likely to cause confusion.

Building on this, the Supreme Court has clarified how confusion between marks should be assessed. In the case of Kolin Electronics Co., Inc. v. Kolin Philippines International, Inc., G.R. No. 226444, July 06, 2021, the Supreme Court abandoned the Holistic test. Therefore, the prevailing test for determining trademark resemblance is the Dominancy Test, which focuses on the prevalent features of competing marks. The Dominancy Test considers the appearance, sound, meaning, and overall impressions of the competing marks.

Further strengthening this framework, the Supreme Court, in the same case, also reinforced the use of this standard method, referred to these criteria as the multifactor test. Thus, in determining likelihood of confusion — which can manifest in the form of “confusion of goods” and/or “confusion of business” — several factors may be taken into account, such as:

the strength of plaintiff’s mark;
the degree of similarity between the plaintiff’s and the defendant’s marks;
the proximity of the products or services;
the likelihood that the plaintiff will bridge the gap;
evidence of actual confusion;
the defendant’s good faith in adopting the mark;
the quality of defendant’s product or service; and/or
the sophistication of the buyers.

These criteria may be collectively referred to as the multifactor test. Out of these criteria, there are two which are uniformly deemed significant under the Trademark Law and the IP Code: the resemblance of marks (the degree of similarity between the plaintiff’s and the defendant’s marks) and the relatedness of goods or services (the proximity of products or services).

The jurisprudential factors in determining relatedness of goods/services are as follows:

the business (and its location) to which the goods belong;
the class of product to which the goods 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 fields of manufacture;
the conditions under which the article is usually purchased; and
the channels of trade through which the goods flow, how they are distributed, marketed, displayed and sold.

From an examination of the factors above, it can be gleaned that the essential question sought to be answered in analyzing relatedness is whether there is any logical connection between the goods/services involved such that it can reasonably be assumed by consumers to originate from a common source (confusion of business) or that consumers might mistake one for the other (confusion of goods/services), especially if identical/similar marks are used in relation to the goods and services.

Another crucial consideration is the perspective of buyers themselves, in the same case of Kolin Electronics Co., Inc., the Supreme Court held that being a factor concerned with the consumer’s attitudes and impressions while purchasing goods or availing services, the sophistication of buyers would depend on the normally prevalent conditions in trade and the attention that purchasers usually give in buying/availing that class of goods/services.

The Supreme Court in the said case also discussed the intent behind the adoption of a mark. Bad faith or fraud is intentionally making false claims to take advantage of another’s goodwill thereby causing damage or prejudice to another. As explained by the court, one can have a registration in bad faith only if he applied for the registration of the mark despite knowing that someone else has created, used, or registered that mark.

Unlike trademarks or service marks which require registration in good faith to acquire ownership under the IP Code, trade names need not be registered to be protected.

In the said case of Kolin Electronics, the Supreme Court considered that the owner of the registered mark (covering “Television and DVD player”) has allowed KPII to use the mark, does it automatically mean that the registration of covering a different set of goods/services by KPII should be allowed regardless of the effect of registration on other entities? The Court answers in the negative. While it is true that KPII possesses the authorization of the owner of “Television and DVD player,” this does not mean that KPII can claim exclusivity over the mark for all other goods/services, regardless of damage to other entities. Thus, the Court still has to determine whether KECI’s allegations of damage are meritorious because the authorization given to KPII does not negate these aspects of damage.

Furthermore, Section 155 of the Intellectual Property Code provides for the Remedies in cases of Trademark infringement, that:

SECTION 155. Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing material. (Sec. 22, R.A. No. 166a)

Further, Section 158 of the Intellectual Property Code provides the rule on damages for Trademark Infringement. It states that in any suit for infringement, the owner of the registered mark shall not be entitled to recover profits or damages unless the acts have been committed with knowledge that such imitation is likely to cause confusion, or to cause mistake, or to deceive. Such knowledge is presumed if the registrant gives notice that his mark is registered by displaying with the mark the words ‘”Registered Mark” or the letter R within a circle or if the defendant had otherwise actual notice of the registration. (Sec. 21, R.A. No. 166a)

As for the penalties for Trademark Infringement under the Intellectual Property Code, Section 170 provides that 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, Section 168 and Subsection 169.1. (Arts. 188 and 189, Revised Penal Code)

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

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