Litigation procedures and strategies: Philippines
Any person who believes that he or she would be damaged by the registration of a mark may file an opposition to the trademark application within 30 days of its publication. Opposition proceedings are summary in nature; thus, there is no trial and the parties must submit the necessary evidence to prove their positions.
Legislative framework and causes of action
The laws applicable to trademarks are:
- Republic Act 8293 (the IP Code), as amended by Republic Acts 9150, 9502 and 10372;
- Republic Act 623 (on the use of duly stamped and marked containers), as amended by Republic Act 5700;
- the Intellectual Property Office of the Philippines (IPOPHL) Rules and Regulations on Trademarks and Service Marks and Marked or Stamped Containers 2017 (IPOPHL Memorandum Circular 17-010, effective August 1 2017);
- the Regulations Implementing the Madrid Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (2017);
- the IPOPHL Rules on Inter Partes Proceedings (1998), as amended;
- the IPOPHL Rules and Regulations on Administrative Complaints for Violations of Law Involving IP Rights, as amended by Memorandum Circulars 17-012 and 17-015;
- the IPOPHL Rules of Procedure on Mediation (2010), as amended;
- the IPOPHL Rules of Procedure on Arbitration Processing (2011);
- the Rules of Procedure of IP Rights Cases issued by the Supreme Court (AM 10-3-10-SC);
- the Rules of Search and Seizures in Civil Actions for Infringement of Rights; and
- the Rules of Court, supplementarily applied.
Causes of action
Opposition: Any person who believes that he or she would be damaged by the registration of a mark may file an opposition to the trademark application within 30 days of its publication. Opposition proceedings are summary in nature; thus, there is no trial and the parties must submit the necessary evidence to prove their positions. Documents executed outside the Philippines must be authenticated by the Philippine consulate office nearest to the place of execution. The local attorney must be properly authorised to represent the foreign entity, as embodied in a special power of attorney or a resolution of the board of directors in the corporate secretary certificate. Failure to comply with this formality may be fatal for the party concerned, as seen in the Supreme Court’s decision in Société des Produits, Nestlé SA v Puregold Price Club Inc (September 6 2017; GR 217194). Nestlé claimed that Puregold’s mark COFFEE MATCH was confusingly similar to its COFFEE MATE mark. In this case, the director of the IPOPHL Bureau of Legal Affairs and the Office of the Director General held that the lack of proof of authority to represent Nestlé by the named officer was sufficient to dismiss the opposition. The Supreme Court in this case ruled that the marks are not confusingly similar.
Cancellation: A cancellation action, similar to an opposition, is an inter partes proceeding and has the same evidence requirements. The action can be filed by any person who believes that he or she is or would be damaged by the registration, and can be filed:
- within five years of the date of registration of the mark;
- at any time if the registered mark has become generic or been abandoned, or if the registration was obtained fraudulently; or
- where the mark has not been used or licensed for no legitimate reason during an uninterrupted period of three years.
Referral to mediation is mandatory where amicable settlement of the case is possible.
IP rights violation actions: The following actions are available to trademark owners whose trademark rights have been violated:
- unfair competition; and
- false designation of origin or false description.
These actions may be availed of as administrative, civil or criminal actions.
Administrative actions: The Bureau of Legal Affairs, as the adjudication bureau of the IPOPHL, has jurisdiction over IP rights violation cases with damages claims of no less than P200,000 (about $4,000) and which concern violations committed within the Philippine territory. For claims below this amount, the administrative action can be filed before the Department of Trade and Industry.
Civil actions: The regional trial courts designated as special commercial courts have jurisdiction over civil actions involving IP rights violations with damages claims of any amount. The plaintiff has the choice of the regional trial court venue, but actions brought by foreign entities that are not doing business in the Philippines can select only the place where the defendant IP rights violator resides or has its place of business.
Criminal actions: The regional trial courts designated as special commercial courts have jurisdiction over criminal actions involving IP rights violations. The action is initiated by filing a complaint before the Department of Justice in the territory where the criminal acts or any elements thereof were committed, for the purpose of determining probable cause. Should there be a finding of probable cause, the information is filed with the regional trial court which has jurisdiction over the action. The civil action is deemed instituted with the filing of the criminal action, and a private prosecutor representing the rights holder can conduct the trial of the case with the authorisation of the public prosecutor. Damages claims of any amount are accepted.
Infringement: The elements of trademark infringement are as follows:
- The trademark being infringed is registered with the IPOPHL;
- The trademark or trade name is reproduced, counterfeited, copied or colourably imitated by the infringer;
- The infringing mark is used in connection with the sale, offer for sale or advertising of any goods or services, or is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used on or in connection with such goods, business or service;
- The use or application of the infringing mark or trade name is likely to cause confusion or mistake or deceive purchasers or others as to the goods or services themselves, their source or origin or the identity of the business; and
- The relevant acts were undertaken without the consent of the owner of the trademark or trade name or its assignee.
The element of ‘likelihood of confusion’ is the gravamen of trademark infringement. Two tests are used in the determination of confusing similarity: the ‘dominancy’ test and the ‘holistic’ test. The dominancy test focuses on the similarities of the prevalent features of the competing trademarks which might cause confusion or deception. The holistic (or ‘totality’) test necessitates a consideration of the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity. While the dominancy test is expressly incorporated into the IP Code, the courts still apply the holistic test.
Unfair competition: ‘Unfair competition’ has been generally defined as wrongful or fraudulent business methods used to gain an unfair advantage over competitors, including:
- untrue or misleading advertising;
- misleading customers with imitative trademarks, names or packaging; and
- falsely disparaging another’s product.
In the Philippines, the prohibition against unfair competition can be found in the Civil Code and the IP Code.
Under Article 28 of the Civil Code, acts amounting to unfair competition in agricultural, commercial or industrial enterprises or in labour through the use of force, intimidation, deceit, machination or any other unjust, oppressive or high-handed method shall give rise to the right to file an action for damages. The concept of unfair competition under the Civil Code extends to discovery of a competitor’s trade secrets or bribery of its employees, misrepresentation of all kinds, interference with the fulfilment of a competitor’s contracts or any malicious interference with the latter’s business. The decision in Willaware Products Corporation v JesiChris Manufacturing Corporation clarified that in order for competition to be categorised as unfair, it must involve an injury to a competitor or trade rival and involve acts which are ‘contrary to good conscience’, ‘shocking to judicial sensibilities’ or otherwise unlawful. According to the law, these include force, intimidation, deceit, machination or any other unjust, oppressive or high-handed method.
Section 168.1 of the IP Code provides that any person that has distinguished in the mind of the public its goods, business or services from those of others – regardless of whether a registered mark is employed – has a property right to the goodwill of such goods, business or services, which will be protected in the same manner as other property rights. The elements of unfair competition are as follows:
- The offender gives its goods the general appearance of the goods of another manufacturer or dealer;
- The general appearance is shown on the goods themselves, their packaging or in the device or words thereon, or in any other feature of their appearance;
- The offender offers to sell or sells such goods or gives other persons an opportunity to do the same and for the same purpose; and
- There is actual intent to deceive the public or defraud a competitor. The intent to deceive (actual or probable) must be shown before the right to recover can arise.
False designations of origin, descriptions or representations: Section 169 of the IP Code states that a person will be subject to liability for damages or an injunction for using in commerce and in connection with any goods or services (or any container for goods) any word, term, name, symbol or device or combination thereof, or any false designation of origin or false or misleading description or representation of facts which:
- is likely to cause confusion or mistake, or to deceive as to the affiliation, connection or association of such person as to the origin, sponsorship or approval of its goods or services, or commercial activities by another person; or
- through commercial advertising or promotion misrepresents the nature, characteristics, qualities or geographic origin of its goods or another person’s goods, services or commercial activities.
Alternative dispute resolution
Both mediation and arbitration are available in administrative and civil actions. For administrative actions, there is a mandatory referral to mediation where the parties can explore the possibility of settling their dispute amicably. The IPOPHL and the World Intellectual Property Organisation have established a joint dispute resolution procedure to facilitate the mediation of IP disputes pending before the IPOPHL which involve one or more parties domiciled outside the Philippines. The Alternative Dispute Resolution Act 2004 also provides for arbitration, but this method of dispute settlement is seldom used in IP cases.
Litigation venue and formats
All courts in the Philippines are courts of law and equity. The formal system of trials and appeals is similar to that of the United States. The Philippines has an independent judiciary with the Supreme Court as highest court for appeal. Courts are classified as follows:
- courts of general jurisdiction, which have competence over all kinds of case, with certain exceptions (eg, regional trial courts);
- courts of special or limited jurisdiction, which have no power to decide their own jurisdiction and can try cases only as provided by statute; and
- courts of appellate jurisdiction, which are empowered to review on appeal the decisions or orders of a lower court.
The main distinctions between jurisdiction and venue are as follows:
- Jurisdiction is the authority to hear and decide cases, while venue is the place where a case is to be heard or tried.
- Jurisdiction is a matter of substantive law, while venue is a matter of procedural law.
- Jurisdiction is fixed by law and cannot be conferred by the parties, while venue may be conferred by the act or agreement of the parties (except in criminal cases, which are heard by the court with territorial jurisdiction over the place where the crime was committed).
IP rights violation cases may be heard by regional trial courts as civil or criminal actions. Regional trial court decisions are appealable to the Court of Appeals and then to the Supreme Court.
The IPOPHL is a quasi-judicial government entity which, according to the IP Code, is empowered to administratively adjudicate contested proceedings affecting IP rights. The Bureau of Legal Affairs is the IPOPHL’s adjudication bureau and hears opposition, cancellation and IP rights violation cases. The bureau has nearly the same powers as regional trial courts, except that it cannot order seizure of infringing goods while the case is pending. However, it may issue writs of preliminary injunction and other provisional remedies. The IPOPHL has national jurisdiction and administrative actions are heard and tried at its office. The decision of the bureau’s adjudication officer is appealable to the bureau’s director, whose decision is in turn appealable to the Office of the Director General, decisions of which are appealable to the Court of Appeals and ultimately to the Supreme Court.
Forum shopping is prohibited by law for the purpose of discouraging multiplicity of suits. For all complaints or initiatory pleadings filed (in any type of action), the complaining party must issue a certification under oath that it has not commenced any other action or proceeding involving the same issues before the Supreme court, Court of Appeals or any tribunal or agency, and must notify the court of any similar action so filed within five days of becoming aware of it. Failure to do so shall be a cause for the summary dismissal of the complaint, and any wilful and deliberate forum shopping by any party or its lawyer shall constitute direct contempt of court.
The Philippines has no jury system; the courts and the Bureau of Legal Affairs are presided over by individual judges. Appellate courts such as the Court of Appeals and the Supreme Court have several divisions with at least three justices per division.
Damages and remedies
For administrative and civil actions relating to IP rights violations, the following remedies are available:
- preliminary injunction and attachment;
- permanent injunction;
- award of damages;
- forfeiture of paraphernalia and all real and personal properties used in the commission of the offence; and
- other penalties.
For criminal actions, a prison term of two to five years and a fine ranging from P50,000 to P200,000 (approximately $1,000 to $4,000) shall be imposed.
The owner of a registered mark may recover damages from the offending party, and the measure of such damages suffered shall be either the reasonable profit which the complainant would have made had the defendant not infringed its rights or the profit which the defendant actually made from the infringement. If the measure of damages cannot be ascertained with reasonable certainty, the courts may award as damages a reasonable percentage based on gross sales or the value of the services on which the mark or trade name was used in the infringing acts. Where there is actual intent to mislead the public or defraud the complainant, the amount of damages may be doubled at the court’s discretion. This rule also applies to unfair competition and other IP rights violations. No damages can be recovered for acts of infringement committed more than four years before the institution of the infringement action.
Evidencing the case
Investigation and first steps
The law on evidence is essentially a procedural law and is governed by the Rules of Court. However, in quasi-judicial proceedings such as those before the IPOPHL, the Rules of Court are supplementarily applied. Therefore, it is important that the rules governing object, documentary and testimonial evidence are complied with. During the investigation phase, a key requisite for evidence to be admissible in court is that the investigator be trained or briefed on how to distinguish fake from genuine goods, and that such training be documented or training certification be issued to the investigator by the trademark owner. A usual defence of infringers in criminal proceedings is that the investigator is not the trademark owner and is unable to distinguish fake from genuine goods. It is also important that all original documents gathered during the investigation be preserved. In Société Des Produits Nestlé SA v APCEI Logistics, Inc the Bureau of Legal Affairs did not declare the mark NESCAFE to be well known because the submitted evidence comprised mere machine copies, which had insufficient evidentiary weight.
Survey evidence is treated like any other evidence: it must be proven. In Levi Strauss (Phils), Inc v Tony Lim, involving the marks LEVIS and LIVES, the Supreme Court held that a consumer survey alone did not equate to actual confusion. The survey was made by showing the interviewees samples of the petitioner’s and respondent’s products, which were placed approximately five feet away from them. From that distance, they were asked to identify the jeans brand and state their reasons for thinking so. This method discounted the ordinary intelligent buyer’s ability to closely scrutinise and try on the jeans to determine whether they were the LEVIS brand. It also ignored that a consumer would consider the price of the competing goods when choosing a brand of jeans (it was undisputed that LIVES jeans were priced much lower than LEVIS jeans). In another case, San Miguel Purefoods v Foodsphere, Inc, the IPOPHL director did not give credence to the surveys presented, opining that without the presentation of the respondents in the survey, the responses were mere hearsay.
Expert witnesses are usually availed of in patent and construction cases, but there have been no trademark cases involving issues which require an expert witness.
Section 159.1 of the IP Code lists the limitations to actions for infringement, unfair competition and false designation of origin:
- use in good faith before the filing date;
- where a party innocently infringes a mark – such as a person engaged solely in the business of printing the infringing mark – only an injunction against future printing will be available; and
- where a publisher has published infringing material, it will only be enjoined against future publication of the infringing material.
The respondent can also raise:
- the equitable defences of laches and acquiescence;
- the complainant’s lack of capacity to sue; and
- defects in the power of attorney and other procedural infirmities.
For oppositions, cancellations and IP rights violations, the first-instance decision is issued by the Bureau of Legal Affairs adjudicating officer. This decision can be appealed to the bureau director within 10 days of receipt of the adjudicating officer’s decision. While not stipulated in the rules, in practice the bureau director may grant the petitioner a 10-day extension to this period. However, the respondent is allowed only 10 days (with no extension) from the date that it received the director’s order to file its response. The bureau director’s decision is appealable to the Office of the Director General, the decision of which may in turn be appealed to the Court of Appeals and ultimately to the Supreme Court.
Civil and criminal actions
Decisions of the commercial regional trial courts are appealable to the Court of Appeals and ultimately to the Supreme Court.
Editha R Hechanova is the managing partner of Hechanova Bugay Vilchez & Andaya-Racadio law offices, which specialises in corporate, IP, employment and immigration law, as well as taxation. She is also the president and CEO of Hechanova & Co, Inc, an IP consulting company handling trademark and patent prosecution, copyright and domain name registrations, trademark valuation, searches and other non-contentious IP matters. She has been cited as a leading IP lawyer in the Philippines by AsiaLaw magazine from 2002 to 2017 and by Who’s Who Legal Trademarks from 2012 to 2017, and as an IP Star by MIP. She has written numerous articles on intellectual property in various international publications, and has been invited to speak on intellectual property in various forums.
Maria Leah R Lara is a senior associate at Hechanova Bugay Vilchez & Andaya-Racadio with over seven years of experience in handling contentious IP law matters. She has successfully led various enforcement actions against trademark infringers covering luxury, consumer and industrial goods, and has actively prosecuted actions against such infringers. Her experience also covers close coordination with the Bureau of Customs on implementing border control measures on behalf of clients and acting as a frequent resource person in product identification workshops. Working under the umbrella of the Hechanova Group, she is concurrently trademark manager and handles trademark prosecution and searches, and provides opinions on how to better protect trademarks.