—Carlo E. Abarquez, Partner
—Aidyl Pearl U. Perez & Gio Raymond P. Ceniza, Associates

Widespread brand recognition plays a big part in determining the success of a business. Goodwill, on the other hand, works hand in hand with brand recognition as it is the favor or advantage that a business acquires through the years by reason of its brand/s and good reputation. With consumer acknowledgment and recognition comes the pitfall of an increased likelihood for unscrupulous people to try and capitalize on a business’ established brand/s and goodwill in their target markets.

In our previous intellectual property newsletter, we discussed the importance of building brand/s and enhancing the goodwill of a business. We now discuss in more detail how to protect your brand and goodwill when for one reason or another third persons use your brand and ride on your goodwill without your consent.

Trademark Infringement

The easiest and most effective way to build a brand is for businesses to create and register their brands as trademarks, which their target consumers can heavily associate with. As stated before, registration gives the owner certain exclusive rights and remedies. One of the main advantages of the owner of a registered trademark is that he/she has recourse whenever there is a violation of these exclusive rights – one of which is trademark infringement.

The Intellectual Property Code of the Philippines,[1] as enhanced by judicial decisions, defines the acts constituting trademark infringement. There is trademark infringement when[2]: (1) a registered trademark; (2) is reproduced, counterfeited or copied; (3) without the consent of the owner; (4) in connection with the sale, offering for sale, or advertising of any goods, business or services; and (5) the unauthorized use is likely to cause confusion or mistake or to deceive purchasers or others as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such business.

There are a lot of trademark infringement violators at large. These violators mostly resort to infringement by using the logos, names or photos of brands in their offerings for sale of goods or services in advertisements. In traditional forms, this is done through advertisements in billboards, signages, posters, newspapers or magazines. Digitally, this is done through online listings, social media posts, info-graphics, email advertisements / spam mail, postings in digital marketplaces and digital platforms. The violators associate themselves with certain brands in order to confuse or deceive the general public that the goods or services they are offering are sourced from these brands.

Another type of trademark infringement happens when the packaging and/or the product themselves contain the registered trademarks of another essentially defrauding the general public to believe that the goods are coming from a certain manufacturer or licensed by a certain brand when in truth they come from another – this why a common question of consumers when purchasing goods is whether a product is “original” or “genuine”.

Although they say that “imitation is a form of flattery”, it is no longer flattering when those who imitate, eat on your market share, destroy your hard earned reputation, or profit from your own brands and goodwill.

Unfair Competition

What happens then when a business forgoes the registration of its brand? Or when a colorable imitation[3] of your registered trademark is used by another? Fortunately, Section 168 of the IP Code provides for the remedy of unfair competition. Unfair competition takes place when[4] (1) a good or a service has established goodwill; (2) another party passes-off its goods or services to be those of another; and (3) with intent to deceive the public and defraud a competitor by taking advantage of the latter’s goodwill.

Recourse to unfair competition is not only available as against those who make identical copies of your unregistered brands, but this remedy is also available to those who make colorable imitations of registered or unregistered brands.  The remedy of unfair competition somehow levels the playing field as against those infringers who are smart enough to alter certain features of a brand so as to avoid the penalties under trademark infringement.  In one Supreme Court case[5], the court in penalizing a party committing unfair competition said that “the most successful form of copying is to employ enough points of similarity to confuse the public, with enough points of difference to confuse the courts”.

Proper Forum

In case of either trademark infringement or unfair competition, the person whose rights were violated have the option of filing civil, criminal, or administrative cases against the infringer. If successful, the infringer will be ordered to pay damages to the injured party, pay fines to the government, and/or be imprisoned.

---

[1] Intellectual Property Code of the Philippines, Republic Act No. 8293, June 6, 1997.

[2] Diaz v. People, G.R. No. 180677, February 18, 2013.

[3] The fact of one thing resembling another so closely that it may cause confusion, or ambiguity.

[4] Asia Pacific Resources International Holdings, Ltd. v. Paperone, Inc., G.R. Nos. 213365-66, December 10, 2018.

[5] Skechers, U.S.A., Inc. vs. Inter Pacific Industrial Trading Corp., et. al. G.R. No. 164321, March 23, 2011.