G.R. No.
108946 January 28, 1999
FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., petitioners,
vs.
HONORABLE FRANKLIN DRILON, GABRIEL ZOSA, WILLIAM ESPOSO,
FELIPE MEDINA, JR., and CASEY FRANCISCO, respondents.
MENDOZA, J.:
This is a petition for certiorari. Petitioners seek to annul the resolution of the
Department of Justice, dated August 12, 1992, in Criminal Case No. Q-92-
27854, entitled "Gabriel Zosa, et al. v. City Prosecutor of Quezon City and
Francisco Joaquin, Jr.," and its resolution, dated December 3, 1992, denying
petitioner Joaquin's motion for reconsideration.
Petitioner BJ Productions, Inc. (BJPI) is the holder/grantee of Certificate of
Copyright No. M922, dated January 28, 1971, of Rhoda and Me, a dating game
show aired from 1970 to 1977.
On June 28, 1973, petitioner BJPI submitted to the National Library an
addendum to its certificate of copyright specifying the show's format and style
of presentation.
On July 14, 1991, while watching television, petitioner Francisco Joaquin, Jr.,
president of BJPI, saw on RPN Channel 9 an episode of It's a Date, which was
produced by IXL Productions, Inc. (IXL). On July 18, 1991, he wrote a letter to
private respondent Gabriel M. Zosa, president and general manager of IXL,
informing Zosa that BJPI had a copyright to Rhoda and Me and demanding that
IXL discontinue airing It's a Date.
In a letter, dated July 19, 1991, private respondent Zosa apologized to petitioner
Joaquin and requested a meeting to discuss a possible settlement. IXL,
however, continued airing It's a Date, prompting petitioner Joaquin to send a
second letter on July 25, 1991 in which he reiterated his demand and warned
that, if IXL did not comply, he would endorse the matter to his attorneys for
proper legal action.
Meanwhile, private respondent Zosa sought to register IXL's copyright to the
first episode of It's a Date for which it was issued by the National Library a
certificate of copyright August 14, 1991.
Upon complaint of petitioners, an information for violation of P.D. No. 49 was
filed against private respondent Zosa together with certain officers of RPN
Channel 9, namely, William Esposo, Felipe Medina, and Casey Francisco, in
the Regional Trial Court of Quezon City where it was docketed as Criminal Case
No. 92-27854 and assigned to Branch 104 thereof. However, private
respondent Zosa sought a review of the resolution of the Assistant City
Prosecutor before the Department of Justice.
On August 12, 1992, respondent Secretary of Justice Franklin M. Drilon
reversed the Assistant City Prosecutor's findings and directed him to move for
the dismissal of the case against private respondents. 1
Petitioner Joaquin filed a motion for reconsideration, but his motion denied by
respondent Secretary of Justice on December 3, 1992. Hence, this petition.
Petitioners contend that:
1. The public respondent gravely
abused his discretion amounting to
lack of jurisdiction — when he
invoked non-presentation of the
master tape as being fatal to the
existence of probable cause to
prove infringement, despite the fact
that private respondents never
raised the same as a controverted
issue.
2. The public respondent gravely
abused his discretion amounting to
lack of jurisdiction when he
arrogated unto himself the
determination of what is
copyrightable — an issue which is
exclusively within the jurisdiction of
the regional trial court to assess in
a proper proceeding.
Both public and private respondents maintain that petitioners failed to establish
the existence of probable cause due to their failure to present the copyrighted
master videotape of Rhoda and Me. They contend that petitioner BJPI's
copyright covers only a specific episode of Rhoda and Me and that the formats
or concepts of dating game shows are not covered by copyright protection under
P.D. No. 49.
Non-Assignment of Error.
Petitioners claim that their failure to submit the copyrighted master videotape of
the television show Rhoda and Me was not raised in issue by private
respondents during the preliminary investigation and, therefore, it was error for
the Secretary of Justice to reverse the investigating prosecutor's finding of
probable cause on this ground.
A preliminary investigation falls under the authority of the state prosecutor who
is given by law the power to direct and control criminal
actions. 2 He is, however, subject to the control of the Secretary of Justice.
Thus, Rule 112, §4 of the Revised Rules of Criminal Procedure, provides:
Sec. 4. Duty of investigating fiscal. — If the investigating
fiscal finds cause to hold the respondent for trial, he shall
prepare the resolution and corresponding information. He
shall certify under oath that he, or as shown by the record,
an authorized officer, has personally examined the
complainant and his witnesses, that there is reasonable
ground to believe that a crime has been committed and
that the accused is probably guilty thereof, that the
accused was informed of the complaint and of the
evidence submitted against him and that he was given an
opportunity to submit controverting evidence. Otherwise,
he shall recommend dismissal of the complaint.
In either case, he shall forward the records of the case to
the provincial or city fiscal or chief state prosecutor within
five (5) days from his resolution. The latter shall take
appropriate action thereon ten (10) days from receipt
thereof, immediately informing the parties of said action.
No complaint or information may be filed or dismissed by
an investigating fiscal without the prior written authority or
approval of the provincial or city fiscal or chief state
prosecutor.
Where the investigating assistant fiscal recommends the
dismissal of the case but his findings are reversed by the
provincial or city fiscal or chief state prosecutor on the
ground that a probable cause exists, the latter may, by
himself, file the corresponding information against the
respondent or direct any other assistant fiscal or state
prosecutor to do so, without conducting another
preliminary investigation.
If upon petition by a proper party, the Secretary of Justice
reverses the resolution of the provincial or city fiscal or
 chief state prosecutor, he shall direct the fiscal concerned The application for search warrants was directed against
to file the corresponding information without conducting video tape outlets which allegedly were engaged in the
another preliminary investigation or to dismiss or move for unauthorized sale and renting out of copyrighted films
dismissal of the complaint or information. belonging to the petitioner pursuant to P.D. 49.

In reviewing resolutions of prosecutors, the Secretary of Justice is not precluded The essence of a copyright infringement is the similarity
from considering errors, although unassigned, for the purpose of determining or at least substantial similarity of the purported pirated
whether there is probable cause for filing cases in court. He must make his own works to the copyrighted work. Hence, the applicant must
finding, of probable cause and is not confined to the issues raised by the parties present to the court the copyrighted films to compare
during preliminary investigation. Moreover, his findings are not subject to review them with the purchased evidence of the video tapes
unless shown to have been made with grave abuse. allegedly pirated to determine whether the latter is an
unauthorized reproduction of the former. This linkage of
the copyrighted films to the pirated films must be
Opinion of the Secretary of Justice
established to satisfy the requirements of probable cause.
Mere allegations as to the existence of the copyrighted
Petitioners contend, however, that the determination of the question whether films cannot serve as basis for the issuance of a search
the format or mechanics of a show is entitled to copyright protection is for the warrant.
court, and not the Secretary of Justice, to make. They assail the following
portion of the resolution of the respondent Secretary of Justice:
This ruling was qualified in the later case of Columbia Pictures, Inc.
v. Court of Appeals 7 in which it was held:
[T]he essence of copyright infringement is the copying, in
whole or in part, of copyrightable materials as defined and
In fine, the supposed pronunciamento in said case
enumerated in Section 2 of PD. No. 49. Apart from the
regarding the necessity for the presentation of the master
manner in which it is actually expressed, however, the
tapes of the copyrighted films for the validity of search
idea of a dating game show is, in the opinion of this Office,
warrants should at most be understood to merely serve
a non-copyrightable material. Ideas, concepts, formats, or
as a guidepost in determining the existence of probable
schemes in their abstract form clearly do not fall within the
cause in copyright infringement cases where there is
class of works or materials susceptible of copyright
doubt as to the true nexus between the master tape and
registration as provided in PD. No. 49. 3(Emphasis
the printed copies. An objective and careful reading of the
added.)
decision in said case could lead to no other conclusion
than that said directive was hardly intended to be a
It is indeed true that the question whether the format or mechanics of petitioners sweeping and inflexible requirement in all or similar
television show is entitled to copyright protection is a legal question for the court copyright infringement cases. . . 8
to make. This does not, however, preclude respondent Secretary of Justice from
making a preliminary determination of this question in resolving whether there
In the case at bar during the preliminary investigation, petitioners and private
is probable cause for filing the case in court. In doing so in this case, he did not
respondents presented written descriptions of the formats of their respective
commit any grave error.
televisions shows, on the basis of which the investigating prosecutor ruled:

Presentation of Master Tape

As may [be] gleaned from the evidence on record, the
substance of the television productions complainant's
Petitioners claim that respondent Secretary of Justice gravely abused his "RHODA AND ME" and Zosa's "IT'S A DATE" is that two
discretion in ruling that the master videotape should have been predented in matches are made between a male and a female, both
order to determine whether there was probable cause for copyright single, and the two couples are treated to a night or two
infringement. They contend that 20th Century Fox Film Corporation v. Court of of dining and/or dancing at the expense of the show. The
Appeals, 4 on which respondent Secretary of Justice relied in reversing the major concepts of both shows is the same. Any difference
resolution of the investigating prosecutor, is inapplicable to the case at bar appear mere variations of the major concepts.
because in the present case, the parties presented sufficient evidence which
clearly establish "linkage between the copyright show "Rhoda and Me" and the
That there is an infringement on the copyright of the show
infringing TV show "It's a Date." 5
"RHODA AND ME" both in content and in the execution
of the video presentation are established because
The case of 20th Century Fox Film Corporation involved raids conducted on respondent's "IT'S A DATE" is practically an exact copy
various videotape outlets allegedlly selling or renting out "pirated" videotapes. of complainant's "RHODA AND ME" because of
The trial court found that the affidavits of NBI agents, given in support of the substantial similarities as follows, to wit:
application for the search warrant, were insufficient without the master tape.
Accordingly, the trial court lifted the search warrants it had previously issued
against the defendants. On petition for review, this Court sustained the action
of the trial court and ruled: 6

The presentation of the master tapes of the copyrighted

films from which the pirated films were allegedly copied,
was necessary for the validity of search warrants against
those who have in their possession the pirated films. The
petitioner's argument to the effect that the presentation of
the master tapes at the time of application may not be
necessary as these would be merely evidentiary in nature
and not determinative of whether or not a probable cause
exists to justify the issuance of the search warrants is not
meritorious. The court cannot presume that duplicate or
copied tapes were necessarily reproduced from master Petitioners assert that the format of Rhoda and Me is a product of ingenuity and
tapes that it owns. skill and is thus entitled to copyright protection. It is their position that the
presentation of a point-by-point comparison of the formats of the two shows
clearly demonstrates the nexus between the shows and hence establishes the
existence of probable cause for copyright infringement. Such being the case,
they did not have to produce the master tape.
To begin with the format of a show is not copyrightable. Section 2 of P.D. No.
49, 10 otherwise known as the DECREE ON INTELLECTUAL PROPERTY,
enumerates the classes of work entitled to copyright protection, to wit:
Sec. 2. The rights granted by this Decree shall, from the
moment of creation, subsist with respect to any of the
following classes of works:
(A) Books, including composite and cyclopedic works,
manuscripts, directories, and gazetteers:
(B) Periodicals, including pamphlets and newspapers;
(C) Lectures, sermons, addresses, dissertations prepared
for oral delivery;
(D) Letters;
(E) Dramatic or dramatico-musical compositions;
choreographic works and entertainments in dumb shows,
the acting form of which is fixed in writing or otherwise;
(F) Musical compositions, with or without words;
(G) Works of drawing, painting, architecture, sculpture,
engraving, lithography, and other works of art; models or
designs for works of art;
(H) Reproductions of a work of art;
(I) Original ornamental designs or models for articles of
manufacture, whether or not patentable, and other works
of applied art;
(J) Maps, plans, sketches, and charts;
(K) Drawings or plastic works of a scientific or technical
character;
(I) Photographic works and works produced by a process
analogous to photography lantern slides;
(M) Cinematographic works and works produced by a
process analogous to cinematography or any process for
making audio-visual recordings;
(N) Computer programs;
(O) Prints, pictorial illustrations advertising copies, labels
tags, and box wraps;
(P) Dramatizations, translations, adaptations,
abridgements, arrangements and other alterations of
literary, musical or artistic works or of works of the
Philippine government as herein defined, which shall be
protected as provided in Section 8 of this Decree.
(Q) Collections of literary, scholarly, or artistic works or of
works referred to in Section 9 of this Decree which by
reason of the selection and arrangement of their contents
constitute intellectual creations, the same to be protected
as such in accordance with Section 8 of this Decree.
(R) Other literary, scholarly, scientific and artistic works.
This provision is substantially the same as §172 of the INTELLECTUAL
PROPERTY CODE OF PHILIPPINES (R.A. No. 8293). 11 The format or
mechanics of a television show is not included in the list of protected works in
§2 of P.D. No. 49. For this reason, the protection afforded by the law cannot be
extended to cover them.
Copyright, in the strict sense of the term, is purely a
statutory right. It is a new or independent right granted by
the statute, and not simply a pre-existing right regulated
by the statute. Being a statutory grant, the rights are only
such as the statute confers, and may be obtained and
enjoyed only with respect to the subjects and by the
persons and on terms and conditions specified in the
statute. 12
Since . . . copyright in published works is purely a statutory
creation, a copyright may be obtained only for a work
falling within the statutory enumeration or description. 13
Regardless of the historical viewpoint, it is authoritatively
settled in the United States that there is no copyright
except that which is both created and secured by act of
Congress . . . . . 14
P.D. No. 49, §2, in enumerating what are subject to copyright, refers to finished
works and not to concepts. The copyright does not extend to an idea, procedure,
process, system, method of operation, concept, principle, or discovery,
regardless of the form in which it is described, explained, illustrated, or
embodied in such work. 15 Thus, the new INTELLECTUAL PROPERTY CODE
OF THE PHILIPPINES provides:
Sec. 175. Unprotected Subject Matter. —
Notwithstanding the provisions of Sections 172 and 173,
no protection shall extend, under this law, to any idea,
procedure, system, method or operation, concept,
principle, discovery or mere data as such, even if they are
expressed, explained, illustrated or embodied in a work;
news of the day and other miscellaneous facts having the
character of mere items of press information; or any
official text of a legislative, administrative or legal nature,
as well as any official translation thereof.
What then is the subject matter of petitioners' copyright? This Court is of the
opinion that petitioner BJPI's copyright covers audio-visual recordings of each
episode of Rhoda and Me, as falling within the class of works mentioned in P.D.
49, §2(M), to wit:
Cinematographic works and works produced by a process
analogous to cinematography or any process for making
audio-visual recordings;
The copyright does not extend to the general concept or format of its
dating game show. Accordingly, by the very nature of the subject of
petitioner BJPI's copyright, the investigating prosecutor should have
the opportunity to compare the videotapes of the two shows.
Mere description by words of the general format of the two dating game shows
is insufficient; the presentation of the master videotape in evidence was
indispensable to the determination of the existence of probable cause. As aptly
observed by respondent Secretary of Justice:
 A television show includes more than mere words can
describe because it involves a whole spectrum of visuals
and effects, video and audio, such that no similarity or
dissimilarity may be found by merely describing the
general copyright/format of both dating game shows.
WHEREFORE, the petition is hereby DISMISSED
SO ORDERED.1âwphi1.nêt
Francisco Joaquin, Jr. vs Franklin Drilon
302 SCRA 225 – Mercantile Law – Intellectual Property – Law on Copyright –
Game Show – Ideas and Concepts Not Covered by Copyright – Presentation of
the Master Tape
Ruling:
The Supreme Court held that the format of a show is not copyrightable as
provided by Section 2 of PD no. 49 otherwise known as the Decree on
Intellectual Property which enumerates the classes of work that are covered by
the copyright protection. Similarly, RA 8293, the Intellectual Property Code of
the Philippines provides that format or mechanics of a television show is not
included in the list of the protected work by the copyright law of the Philippines.
PD 49 enumerates the works subject to copyright protection which refers to
finished works and not on concepts. It does not extend to an idea, procedure,
process, system, method or operation, concept, principles or discovery
regardless of the form to which it is described, explained, and illustrated or
embodied in the work.

BJ Productions Inc. (BJPI) was the holder of copyright over the show Rhoda
and Me.It holds rights over the show’s format and style of presentation. In 1991,
BJPI’s president Francisco Joaquin saw on TV – RPN 9’s show It’s a Date, a
show which is basically the same as Rhoda and Me. He eventually sued Gabriel
Zosa, the manager of the show It’s a Date. The investigating prosecutor found
probable cause against Zosa. Zosa later sought a review of the prosecutor’s
resolution before the Secretary of Justice (Franklin Drilon). Drilon reversed the
findings of the fiscal and directed him to dismiss the case against Zosa.

ISSUE: Whether or not the order of Drilon finding no probable cause is valid.

HELD: Yes. The essence of copyright infringement is the copying, in whole or

in part, of copyrightable materials as defined and enumerated in Section 2 of
PD. No. 49 (Copyright Law). Apart from the manner in which it is actually
expressed, however, the idea of a dating game show is a non-copyrightable
material. Ideas, concepts, formats, or schemes in their abstract form
clearly do not fall within the class of works or materials susceptible of
copyright registration as provided in PD. No. 49. What is covered by BJPI’s
copyright is the specific episodes of the show Rhoda and Me.

Further, BJPI should have presented the master videotape of the show in order
to show the linkage between the copyright show (Rhoda and Me) and the
infringing show (It’s a Date). This is based on the ruling in 20th Century Fox vs
CA (though this has been qualified by Columbia Pictures vs CA, this is still good
law). Though BJPI did provide a lot of written evidence and description to show
the linkage between the shows, the same were not enough. A television show
includes more than mere words can describe because it involves a whole
spectrum of visuals and effects, video and audio, such that no similarity or
dissimilarity may be found by merely describing the general copyright/format of
both dating game shows.

Facts:

BJ Productions, Inc (BJPI) is a holder of a Certificate of Copyright no. M922

issued on January 28, 1971 of “Rhoda and Me” which is a dating show aired
from 1970 to 1977. It submitted to the National Library an addendum its
certificate of copyright specifying the show’s format and style of presentation.
While watching the television, its President, Francisco Joaquin saw on RPN
Channel 9 the episode on “It’s a Date” produced by IXL Productions. He wrote
a letter to IXL’s president Gabriel Zosa informing him that BJPI has a copyright
of the same format as shown on their “It’s a Date” show in their “Rhoda and Me”
show. Zosa sought to register IXL’s copyright to their first episode of “It’s a Date”
to the National Library. Petitioner filed a complaint in violation of PD No. 49
against the respondent before the RTC of Quezon City. Respondent sought a
review of the resolution from the Asst. City Prosecutor before the Department
of Justice.

Sec. of Justice Franklin Drilon directed to move for dismissal of the case against
the respondents and denied the petitioner’s motion for reconsideration hence
this petition before the Supreme Court.

Issue:

Whether or not the format or mechanics of the petitioner’s television show is

entitled to a copyright protection.
G.R. No. 148222 August 15, 2003
PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,
vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING,
INCORPORATED, Respondents.
DECISION
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision1 of
the Court of Appeals reversing the October 31, 1996 decision2 of the Regional
Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared
private respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI)
liable for infringement of trademark and copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of
this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the
manufacture of advertising display units simply referred to as light boxes. These
units utilize specially printed posters sandwiched between plastic sheets and
illuminated with back lights. Pearl and Dean was able to secure a Certificate of
Copyright Registration dated January 20, 1981 over these illuminated display
units. The advertising light boxes were marketed under the trademark "Poster
Ads". The application for registration of the trademark was filed with the Bureau
of Patents, Trademarks and Technology Transfer on June 20, 1983, but was
approved only on September 12, 1988, per Registration No. 41165. From 1981
to about 1988, Pearl and Dean employed the services of Metro Industrial
Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant
Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM City
North Edsa. Since SM City North Edsa was under construction at that time, SMI
offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean
agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo
Vergara, submitted for signature the contracts covering SM Cubao and SM
Makati to SMI’s Advertising Promotions and Publicity Division Manager,
Ramonlito Abano. Only the contract for SM Makati, however, was returned
signed. On October 4, 1985, Vergara wrote Abano inquiring about the other
contract and reminding him that their agreement for installation of light boxes
was not only for its SM Makati branch, but also for SM Cubao. SMI did not bother
to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl
and Dean that it was rescinding the contract for SM Makati due to non-
performance of the terms thereof. In his reply dated February 17, 1986, Vergara
protested the unilateral action of SMI, saying it was without basis. In the same
letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by
Pearl and Dean to fabricate its display units, offered to construct light boxes for
Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes
were subsequently fabricated by Metro Industrial for SMI. After its contract with
Metro Industrial was terminated, SMI engaged the services of EYD Rainbow
Advertising Corporation to make the light boxes. Some 300 units were
fabricated in 1991. These were delivered on a staggered basis and installed at
SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its
light boxes were installed at SM City and in the fastfood section of SM Cubao.
Upon investigation, Pearl and Dean found out that aside from the two (2)
reported SM branches, light boxes similar to those it manufactures were also
installed in two (2) other SM stores. It further discovered that defendant-
appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime
Spots Marketing Services, was set up primarily to sell advertising space in
lighted display units located in SMI’s different branches. Pearl and Dean noted
that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11,
1991 to both SMI and NEMI enjoining them to cease using the subject light
boxes and to remove the same from SMI’s establishments. It also demanded
the discontinued use of the trademark "Poster Ads," and the payment to Pearl
and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred
twenty-four (224) light boxes and NEMI took down its advertisements for "Poster
Ads" from the lighted display units in SMI’s stores. Claiming that both SMI and
NEMI failed to meet all its demands, Pearl and Dean filed this instant case for
infringement of trademark and copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently
developed its poster panels using commonly known techniques and available
technology, without notice of or reference to Pearl and Dean’s copyright. SMI
noted that the registration of the mark "Poster Ads" was only for stationeries
such as letterheads, envelopes, and the like. Besides, according to SMI, the
word "Poster Ads" is a generic term which cannot be appropriated as a
trademark, and, as such, registration of such mark is invalid. It also stressed
that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since
its advertising display units contained no copyright notice, in violation of Section
27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against
it and that the suit was purely intended to malign SMI’s good name. On this
basis, SMI, aside from praying for the dismissal of the case, also counterclaimed
for moral, actual and exemplary damages and for the cancellation of Pearl and
Dean’s Certification of Copyright Registration No. PD-R-2558 dated January 20,
1981 and Certificate of Trademark Registration No. 4165 dated September 12,
1988.
NEMI, for its part, denied having manufactured, installed or used any advertising
display units, nor having engaged in the business of advertising. It repleaded
SMI’s averments, admissions and denials and prayed for similar reliefs and
counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for
infringement of copyright under Section 2 of PD 49, as amended, and
infringement of trademark under Section 22 of RA No. 166, as amended, and
are hereby penalized under Section 28 of PD 49, as amended, and Sections 23
and 24 of RA 166, as amended. Accordingly, defendants are hereby directed:
(1) to pay plaintiff the following damages:
(a) actual damages - ₱16,600,000.00,
representing profits
derived by defendants
as a result of infringe-
ment of plaintiff’s copyright
from 1991 to 1992
(b) moral damages - ₱1,000.000.00
(c) exemplary damages - ₱1,000,000.00
(d) attorney’s fees - ₱1,000,000.00
plus
(e) costs of suit;
 (2) to deliver, under oath, for impounding in the National Library, all
light boxes of SMI which were fabricated by Metro Industrial Services
and EYD Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters
using the trademark "Poster Ads", for destruction; and
(4) to permanently refrain from infringing the copyright on plaintiff’s
light boxes and its trademark "Poster Ads".
Defendants’ counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.4
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered
as either prints, pictorial illustrations, advertising copies, labels, tags or box
wraps, to be properly classified as a copyrightable class "O" work, we have to
agree with SMI when it posited that what was copyrighted were the technical
drawings only, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over
the drawings like plaintiff-appellant’s will not extend to the actual object. It has
so been held under jurisprudence, of which the leading case is Baker vs.
Selden (101 U.S. 841 (1879). In that case, Selden had obtained a copyright
protection for a book entitled "Selden’s Condensed Ledger or Bookkeeping
Simplified" which purported to explain a new system of bookkeeping. Included
as part of the book were blank forms and illustrations consisting of ruled lines
and headings, specially designed for use in connection with the system
explained in the work. These forms showed the entire operation of a day or a
week or a month on a single page, or on two pages following each other. The
defendant Baker then produced forms which were similar to the forms illustrated
in Selden’s copyrighted books. The Court held that exclusivity to the actual
forms is not extended by a copyright. The reason was that "to grant a monopoly
in the underlying art when no examination of its novelty has ever been made
would be a surprise and a fraud upon the public; that is the province of letters
patent, not of copyright." And that is precisely the point. No doubt aware that its
alleged original design would never pass the rigorous examination of a patent
application, plaintiff-appellant fought to foist a fraudulent monopoly on the public
by conveniently resorting to a copyright registration which merely employs a
recordal system without the benefit of an in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough
Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had
obtained a copyright over an unpublished drawing entitled "Bridge Approach –
the drawing showed a novel bridge approach to unsnarl traffic congestion". The
defendant constructed a bridge approach which was alleged to be an
infringement of the new design illustrated in plaintiff’s drawings. In this case it
was held that protection of the drawing does not extend to the unauthorized
duplication of the object drawn because copyright extends only to the
description or expression of the object and not to the object itself. It does not
prevent one from using the drawings to construct the object portrayed in the
drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz
Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no copyright
infringement when one who, without being authorized, uses a copyrighted
architectural plan to construct a structure. This is because the copyright does
not extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over
the technical drawings of the latter’s advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate
Appellate Court that the protective mantle of the Trademark Law extends only
to the goods used by the first user as specified in the certificate of registration,
following the clear mandate conveyed by Section 20 of Republic Act 166, as
amended, otherwise known as the Trademark Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A
certificate of registration of a mark or trade-name shall be prima facie evidence
of the validity of the registration, the registrant’s ownership of the mark or trade-
name, and of the registrant’s exclusive right to use the same in connection with
the goods, business or services specified in the certificate, subject to any
conditions and limitations stated therein." (underscoring supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the
registration of the trademark "Poster Ads" with the Bureau of Patents,
Trademarks, and Technology Transfer. Said trademark was recorded in the
Principal Register on September 12, 1988 under Registration No. 41165
covering the following products: stationeries such as letterheads, envelopes and
calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on
the part of the defendants-appellants for their use of the words "Poster Ads", in
the advertising display units in suit. Jurisprudence has interpreted Section 20 of
the Trademark Law as "an implicit permission to a manufacturer to venture into
the production of goods and allow that producer to appropriate the brand name
of the senior registrant on goods other than those stated in the certificate of
registration." The Supreme Court further emphasized the restrictive meaning of
Section 20 when it stated, through Justice Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including goods
not specified therein, then a situation may arise whereby an applicant may be
tempted to register a trademark on any and all goods which his mind may
conceive even if he had never intended to use the trademark for the said goods.
We believe that such omnibus registration is not contemplated by our
Trademark Law.
While we do not discount the striking similarity between Pearl and Dean’s
registered trademark and defendants-appellants’ "Poster Ads" design, as well
as the parallel use by which said words were used in the parties’ respective
advertising copies, we cannot find defendants-appellants liable for infringement
of trademark. "Poster Ads" was registered by Pearl and Dean for specific use in
its stationeries, in contrast to defendants-appellants who used the same words
in their advertising display units. Why Pearl and Dean limited the use of its
trademark to stationeries is simply beyond us. But, having already done so, it
must stand by the consequence of the registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words
"Poster Ads" are a simple contraction of the generic term poster advertising. In
the absence of any convincing proof that "Poster Ads" has acquired a secondary
meaning in this jurisdiction, we find that Pearl and Dean’s exclusive right to the
use of "Poster Ads" is limited to what is written in its certificate of registration,
namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the
trademark "Poster Ads".
There being no finding of either copyright or trademark infringement on the part
of SMI and NEMI, the monetary award granted by the lower court to Pearl and
Dean has no leg to stand on.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is REVERSED and
SET ASIDE, and another is rendered DISMISSING the complaint and
counterclaims in the above-entitled case for lack of merit.5
Dissatisfied with the above decision, petitioner P & D filed the instant petition
assigning the following errors for the Court’s consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT NO COPYRIGHT INFRINGEMENT WAS COMMITTED BY
RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT NO INFRINGEMENT OF PEARL & DEAN’S TRADEMARK
"POSTER ADS" WAS COMMITTED BY RESPONDENTS SM AND
NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN
DISMISSING THE AWARD OF THE TRIAL COURT, DESPITE THE
LATTER’S FINDING, NOT DISPUTED BY THE HONORABLE
COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN
ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL
& DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT
HOLDING RESPONDENTS SM AND NEMI LIABLE TO PEARL &
DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES,
ATTORNEY’S FEES AND COSTS OF SUIT.6
ISSUES
In resolving this very interesting case, we are challenged once again to put into
proper perspective four main concerns of intellectual property law — patents,
copyrights, trademarks and unfair competition arising from infringement of any
of the first three. We shall focus then on the following issues:
(1) if the engineering or technical drawings of an advertising display
unit (light box) are granted copyright protection (copyright certificate
of registration) by the National Library, is the light box depicted in
such engineering drawings ipso facto also protected by such
copyright?
(2) or should the light box be registered separately and protected by
a patent issued by the Bureau of Patents Trademarks and
Technology Transfer (now Intellectual Property Office) — in addition
to the copyright of the engineering drawings?
(3) can the owner of a registered trademark legally prevent others
from using such trademark if it is a mere abbreviation of a term
descriptive of his goods, services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & D’s complaint was that SMI infringed on its copyright over the
light boxes when SMI had the units manufactured by Metro and EYD Rainbow
Advertising for its own account. Obviously, petitioner’s position was premised
on its belief that its copyright over the engineering drawings extended ipso
facto to the light boxes depicted or illustrated in said drawings. In ruling that
there was no copyright infringement, the Court of Appeals held that the copyright
was limited to the drawings alone and not to the light box itself. We agree with
the appellate court.
First, petitioner’s application for a copyright certificate — as well as Copyright
Certificate No. PD-R2588 issued by the National Library on January 20, 1981
— clearly stated that it was for a class "O" work under Section 2 (O) of PD 49
(The Intellectual Property Decree) which was the statute then prevailing. Said
Section 2 expressly enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation,
subsist with respect to any of the following works:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxx xxx xxx
Although petitioner’s copyright certificate was entitled "Advertising Display
Units" (which depicted the box-type electrical devices), its claim of copyright
infringement cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere
statutory grant, the rights are limited to what the statute confers. It may be
obtained and enjoyed only with respect to the subjects and by the persons, and
on terms and conditions specified in the statute.7 Accordingly, it can cover only
the works falling within the statutory enumeration or description.8
P & D secured its copyright under the classification class "O" work. This being
so, petitioner’s copyright protection extended only to the technical drawings and
not to the light box itself because the latter was not at all in the category of
"prints, pictorial illustrations, advertising copies, labels, tags and box wraps."
Stated otherwise, even as we find that P & D indeed owned a valid copyright,
the same could have referred only to the technical drawings within the category
of "pictorial illustrations." It could not have possibly stretched out to include the
underlying light box. The strict application9 of the law’s enumeration in Section
2 prevents us from giving petitioner even a little leeway, that is, even if its
copyright certificate was entitled "Advertising Display Units." What the law does
not include, it excludes, and for the good reason: the light box was not a literary
or artistic piece which could be copyrighted under the copyright law. And no less
clearly, neither could the lack of statutory authority to make the light box
copyrightable be remedied by the simplistic act of entitling the copyright
certificate issued by the National Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the
public without license from P & D, then no doubt they would have been guilty of
copyright infringement. But this was not the case. SMI’s and NEMI’s acts
complained of by P & D were to have units similar or identical to the light box
illustrated in the technical drawings manufactured by Metro and EYD Rainbow
Advertising, for leasing out to different advertisers. Was this an infringement of
petitioner’s copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was
neither a literary not an artistic work but an "engineering or marketing
invention."10 Obviously, there appeared to be some confusion regarding what
ought or ought not to be the proper subjects of copyrights, patents and
trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled that
these three legal rights are completely distinct and separate from one another,
and the protection afforded by one cannot be used interchangeably to cover
items or works that exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that
cannot be interchanged with one another. A trademark is any visible sign
capable of distinguishing the goods (trademark) or services (service mark) of an
enterprise and shall include a stamped or marked container of goods. In relation
thereto, a trade name means the name or designation identifying or
distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to
literary and artistic works which are original intellectual creations in the literary
and artistic domain protected from the moment of their creation. Patentable
inventions, on the other hand, refer to any technical solution of a problem in any
field of human activity which is new, involves an inventive step and is industrially
applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use
of the light boxes without license from petitioner, private respondents cannot be
held legally liable for infringement of P & D’s copyright over its technical
drawings of the said light boxes, should they be liable instead for infringement
of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light Therefore, not having gone through the arduous examination for patents, the
boxes. It therefore acquired no patent rights which could have protected its petitioner cannot exclude others from the manufacture, sale or commercial use
invention, if in fact it really was. And because it had no patent, petitioner could of the light boxes on the sole basis of its copyright certificate over the technical
not legally prevent anyone from manufacturing or commercially using the drawings.
contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we held
that "there can be no infringement of a patent until a patent has been issued,
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for
since whatever right one has to the invention covered by the patent arises alone
the patent office (IPO) to scrutinize the light box’s eligibility as a patentable
from the grant of patent. x x x (A)n inventor has no common law right to a
invention. The irony here is that, had petitioner secured a patent instead, its
monopoly of his invention. He has the right to make use of and vend his
exclusivity would have been for 17 years only. But through the simplified
invention, but if he voluntarily discloses it, such as by offering it for sale, the
procedure of copyright-registration with the National Library — without
world is free to copy and use it with impunity. A patent, however, gives the
undergoing the rigor of defending the patentability of its invention before the IPO
inventor the right to exclude all others. As a patentee, he has the exclusive right
and the public — the petitioner would be protected for 50 years. This situation
of making, selling or using the invention.13 On the assumption that petitioner’s
could not have been the intention of the law.
advertising units were patentable inventions, petitioner revealed them fully to
the public by submitting the engineering drawings thereof to the National
Library. In the oft-cited case of Baker vs. Selden21 , the United States Supreme Court
held that only the expression of an idea is protected by copyright, not the idea
itself. In that case, the plaintiff held the copyright of a book which expounded on
To be able to effectively and legally preclude others from copying and profiting
a new accounting system he had developed. The publication illustrated blank
from the invention, a patent is a primordial requirement. No patent, no
forms of ledgers utilized in such a system. The defendant reproduced forms
protection. The ultimate goal of a patent system is to bring new designs and
similar to those illustrated in the plaintiff’s copyrighted book. The US Supreme
technologies into the public domain through disclosure.14 Ideas, once disclosed
Court ruled that:
to the public without the protection of a valid patent, are subject to appropriation
without significant restraint.15
"There is no doubt that a work on the subject of book-keeping, though only
explanatory of well known systems, may be the subject of a copyright; but, then,
On one side of the coin is the public which will benefit from new ideas; on the
it is claimed only as a book. x x x. But there is a clear distinction between the
other are the inventors who must be protected. As held in Bauer & Cie vs.
books, as such, and the art, which it is, intended to illustrate. The mere
O’Donnel,16 "The act secured to the inventor the exclusive right to make use,
statement of the proposition is so evident that it requires hardly any argument
and vend the thing patented, and consequently to prevent others from
to support it. The same distinction may be predicated of every other art as well
exercising like privileges without the consent of the patentee. It was passed for
as that of bookkeeping. A treatise on the composition and use of medicines, be
the purpose of encouraging useful invention and promoting new and useful
they old or new; on the construction and use of ploughs or watches or churns;
inventions by the protection and stimulation given to inventive genius, and was
or on the mixture and application of colors for painting or dyeing; or on the mode
intended to secure to the public, after the lapse of the exclusive privileges
of drawing lines to produce the effect of perspective, would be the subject of
granted the benefit of such inventions and improvements."
copyright; but no one would contend that the copyright of the treatise would give
the exclusive right to the art or manufacture described therein. The copyright of
The law attempts to strike an ideal balance between the two interests: the book, if not pirated from other works, would be valid without regard to the
novelty or want of novelty of its subject matter. The novelty of the art or thing
described or explained has nothing to do with the validity of the copyright. To
"(The p)atent system thus embodies a carefully crafted bargain for encouraging
give to the author of the book an exclusive property in the art described
the creation and disclosure of new useful and non-obvious advances in
therein, when no examination of its novelty has ever been officially made,
technology and design, in return for the exclusive right to practice the invention
would be a surprise and a fraud upon the public. That is the province of
for a number of years. The inventor may keep his invention secret and reap its
letters patent, not of copyright. The claim to an invention of discovery of
fruits indefinitely. In consideration of its disclosure and the consequent benefit
an art or manufacture must be subjected to the examination of the Patent
to the community, the patent is granted. An exclusive enjoyment is guaranteed
Office before an exclusive right therein can be obtained; and a patent from
him for 17 years, but upon the expiration of that period, the knowledge of the
the government can only secure it.
invention inures to the people, who are thus enabled to practice it and profit by
its use."17
The difference between the two things, letters patent and copyright, may be
illustrated by reference to the subjects just enumerated. Take the case of
The patent law has a three-fold purpose: "first, patent law seeks to foster and
medicines. Certain mixtures are found to be of great value in the healing art. If
reward invention; second, it promotes disclosures of inventions to stimulate
the discoverer writes and publishes a book on the subject (as regular
further innovation and to permit the public to practice the invention once the
physicians generally do), he gains no exclusive right to the manufacture
patent expires; third, the stringent requirements for patent protection seek to
and sale of the medicine; he gives that to the public. If he desires to
ensure that ideas in the public domain remain there for the free use of the
acquire such exclusive right, he must obtain a patent for the mixture as a
public."18
new art, manufacture or composition of matter. He may copyright his
book, if he pleases; but that only secures to him the exclusive right of
It is only after an exhaustive examination by the patent office that a patent is printing and publishing his book. So of all other inventions or discoveries.
issued. Such an in-depth investigation is required because "in rewarding a
useful invention, the rights and welfare of the community must be fairly dealt
The copyright of a book on perspective, no matter how many drawings and
with and effectively guarded. To that end, the prerequisites to obtaining a patent
illustrations it may contain, gives no exclusive right to the modes of drawing
are strictly observed and when a patent is issued, the limitations on its exercise
described, though they may never have been known or used before. By
are equally strictly enforced. To begin with, a genuine invention or discovery
publishing the book without getting a patent for the art, the latter is given to the
must be demonstrated lest in the constant demand for new appliances, the
public.
heavy hand of tribute be laid on each slight technological advance in art."19

There is no such scrutiny in the case of copyrights nor any notice published
before its grant to the effect that a person is claiming the creation of a work. The
law confers the copyright from the moment of creation20 and the copyright
certificate is issued upon registration with the National Library of a sworn ex-
parte claim of creation.
xxx
Now, whilst no one has a right to print or publish his book, or any material part
thereof, as a book intended to convey instruction in the art, any person may
practice and use the art itself which he has described and illustrated
therein. The use of the art is a totally different thing from a publication of
the book explaining it. The copyright of a book on bookkeeping cannot secure
the exclusive right to make, sell and use account books prepared upon the plan
set forth in such book. Whether the art might or might not have been patented,
is a question, which is not before us. It was not patented, and is open and free
to the use of the public. And, of course, in using the art, the ruled lines and
headings of accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises
from a confusion of ideas produced by the peculiar nature of the art described
in the books, which have been made the subject of copyright. In describing the
art, the illustrations and diagrams employed happened to correspond more
closely than usual with the actual work performed by the operator who uses the
art. x x x The description of the art in a book, though entitled to the benefit
of copyright, lays no foundation for an exclusive claim to the art itself. The
object of the one is explanation; the object of the other is use. The former
may be secured by copyright. The latter can only be secured, if it can be
secured at all, by letters patent." (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which
petitioner’s president said was a contraction of "poster advertising." P & D was
able to secure a trademark certificate for it, but one where the goods specified
were "stationeries such as letterheads, envelopes, calling cards and
newsletters."22 Petitioner admitted it did not commercially engage in or market
these goods. On the contrary, it dealt in electrically operated backlit advertising
units and the sale of advertising spaces thereon, which, however, were not at
all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs.
Intermediate Appellate Court,23where we, invoking Section 20 of the old
Trademark Law, ruled that "the certificate of registration issued by the Director
of Patents can confer (upon petitioner) the exclusive right to use its own
symbol only to those goods specified in the certificate, subject to any conditions
and limitations specified in the certificate x x x. One who has adopted and used
a trademark on his goods does not prevent the adoption and use of the same
trademark by others for products which are of a may be contracted to install light boxes in the ad spaces of SM. Eventually, SM
different description."24 Faberge, Inc. was correct and was in fact recently
reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.25
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the
failure of P & D to secure a trademark registration for specific use on the light
boxes meant that there could not have been any trademark infringement since
registration was an essential element thereof.1âwphi1
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation
which was possible even if P & D had no registration. 26 However, while the
petitioner’s complaint in the RTC also cited unfair competition, the trial court did
not find private respondents liable therefor. Petitioner did not appeal this
particular point; hence, it cannot now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold
respondents guilty of unfair competition.
By the nature of things, there can be no unfair competition under the law on
copyrights although it is applicable to disputes over the use of trademarks. Even
a name or phrase incapable of appropriation as a trademark or tradename may,
by long and exclusive use by a business (such that the name or phrase
becomes associated with the business or product in the mind of the purchasing
public), be entitled to protection against unfair competition.27 In this case, there
was no evidence that P & D’s use of "Poster Ads" was distinctive or well-known.
As noted by the Court of Appeals, petitioner’s expert witnesses himself had
testified that " ‘Poster Ads’ was too generic a name. So it was difficult to identify
it with any company, honestly speaking."28 This crucial admission by its own
expert witness that "Poster Ads" could not be associated with P & D showed
that, in the mind of the public, the goods and services carrying the trademark
"Poster Ads" could not be distinguished from the goods and services of other
entities.
This fact also prevented the application of the doctrine of secondary meaning.
"Poster Ads" was generic and incapable of being used as a trademark because
it was used in the field of poster advertising, the very business engaged in by
petitioner. "Secondary meaning" means that a word or phrase originally
incapable of exclusive appropriation with reference to an article in the market
(because it is geographically or otherwise descriptive) might nevertheless have
been used for so long and so exclusively by one producer with reference to his
article that, in the trade and to that branch of the purchasing public, the word or
phrase has come to mean that the article was his property.29 The admission by
petitioner’s own expert witness that he himself could not associate "Poster Ads"
with petitioner P & D because it was "too generic" definitely precluded the
application of this exception.
Having discussed the most important and critical issues, we see no need to
belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals
when it reversed the Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of
Appeals dated May 22, 2001 is AFFIRMED in toto.
SO ORDERED.
Pearl & Dean (Phil), Inc. vs Shoemart, Inc.
409 SCRA 231 – Mercantile Law – Intellectual Property – Law on Copyright –
Copyrightable Subject
Pearl & Dean (Phil), Inc. is a corporation engaged in the manufacture of
advertising display units called light boxes. In January 1981, Pearl & Dean was
able to acquire copyrights over the designs of the display units. In 1988, their
trademark application for “Poster Ads” was approved; they used the same
trademark to advertise their light boxes.
In 1985, Pearl & Dean negotiated with Shoemart, Inc. (SM) so that the former
rejected Pearl & Dean’s proposal.
Two years later, Pearl & Dean received report that light boxes, exactly the same
as theirs, were being used by SM in their ad spaces. They demanded SM to
stop using the light boxes and at the same time asked for damages amounting
to P20 M. SM refused to pay damages though they removed the light boxes.
Pearl & Dean eventually sued SM. SM argued that it did not infringe on Pearl
& Dean’s trademark because Pearl & Dean’s trademark is only applicable to
envelopes and stationeries and not to the type of ad spaces owned by SM. SM
also averred that “Poster Ads” is a generic term hence it is not subject to
trademark registration. SM also averred that the actual light boxes are not
copyrightable. The RTC ruled in favor of Pearl & Dean. But the Court of Appeals
ruled in favor of SM.
ISSUE: Whether or not the Court of Appeals is correct.
HELD: Yes. The light boxes cannot, by any stretch of the imagination, be
considered as either prints, pictorial illustrations, advertising copies, labels, tags
or box wraps, to be properly classified as a copyrightable; what was copyrighted
were the technical drawings only, and not the light boxes themselves. In other
cases, it was held that there is no copyright infringement when one who, without
being authorized, uses a copyrighted architectural plan to construct a
structure. This is because the copyright does not extend to the structures
themselves.
On the trademark infringement allegation, the words “Poster Ads” are a simple
contraction of the generic term poster advertising. In the absence of any
convincing proof that “Poster Ads” has acquired a secondary meaning in this
jurisdiction, Pearl & Dean’s exclusive right to the use of “Poster Ads” is limited
to what is written in its certificate of registration, namely, stationeries.
Facts:
Plaintiff P and D is engaged in manufacturing advertising display units called as
light boxes. These are specialty printed posters with plastic sheets and
illuminated back lights that are mainly used as stationeries. They secure
copyright registration over these advertising light boxes and marketed using the
trademark “poster ads.” They applied for the registration of trademark before
the Bureau of Patents, Trademark and Technology Transfer which was
approved on September 12, 1988. P and D negotiated with the defendant
Shoemart for the lease and installation of the light boxes in SM City North Edsa
but was given an alternative to have them leased to SM Makati and SM Cubao
while the said branch was under construction. Only the contract with SM Makati
was returned with signature. In 1986 the counsel of Shoemart informed P and
D that it is rescinding its contract for SM Makati due to non-performance of the
terms thereof. Two years later, the Metro Industrial Services, the same company
contracted by the plaintiff to fabricate their display units offered to construct light
boxes for the Shoemart chain of stores wherein 10 light boxes were created for
them. Upon the termination of contract with Metro Industrial Service, SM hired
EYD Rainbow Advertising Co. to make light boxes. When P and D knew about
the exact copies of its light boxes installed at SM City branches in 1989, it
investigated and found out that North Edsa Marketing Inc (NEMI), sister
company of SM was primarily selling ad space in lighted display units. P and
D sent letter to both NEMI and SM enjoining them to cease from using the
subject light boxes and remove them from SM establishments. It also demanded
to discontinue the use of its trademark “poster ads” with compensatory damages
of 20M. SM suspended the lease of light boxes in its branches while NEMI took
down its advertisement for poster ads. Claiming both failed to meet its demand
P and D filed a case for infringement of trademark, copyright, unfair competition
and damages.
SM denied the charges against it and noted that the registration of mark “poster
ads” is limited to stationeries like letterhead and envelope. It further stresses
that it independently develop its own poster panels using techniques and
available technology without notice to P and D copyright. It further contends that
“poster ads” is a generic name that cannot be appropriated for a trademark and
that P and D’s advertising display units contained no copyright notice in violation
of Section 27 of P.D. 49. NEMI likewise repleaded the averments of SM and
denied to have manufactured, installed or advertised the display units. The RTC
decided in favor of P and D but on appeal the Court of Appeals reversed its
decision. In its judgment its stand is that the copyright of the plaintiff is limited to
its technical drawings only and not the light boxes itself. When a drawing is
technical, the copyright over the drawing does not extend to actual object. Thus
the CA is constrained to adopt the view of the respondents that the “poster ads”
is a generic poster term ads and in the absence of convincing proof that such
wording acquired secondary meaning, the P and D’s exclusive right to use
“poster ads” is limited to what is written on its certificate of registration which
is stationaries.
Issue:
Whether or not there is patent infringement
Ruling:
It held that the petitioner never secured patent for the light boxes. Without any
acquired rights to protect its invention it cannot legally prevent anyone from
manufacturing the same. There can be no infringement of a patent until a patent
has been issued, since whatever right one has to the invention covered by the
patent arises alone from the grant of patent. Inventors have no common law
right to monopoly of his work. He has the right to invent but once he voluntarily
discloses it the world is free to copy and use it. A patent gives the inventor the
exclusive right to make, sell, use and exclude others from using his invention.
Assuming the petitioner’s ad units were patentable, he made them public by
submitting its engineering drawings to the National Library. To legally preclude
others from copying and profiting from one’s invention, patent is a primary
requirement. The ultimate goal of a patent system is to bring new designs and
technologies into the public domain through disclosure. Ideas, once disclosed
to the public without the protection of a valid patent, are subject to appropriation
without significant restraint. Therefore, without any patent secured to protect
one’s work, there is no protection against its use by the public. Petitioner mainly
secured copyright in which its design is classified as class “O” limited to box
wraps, pictorial illustration, labels and tags. Thus its copyright is covered only
the works falling within this category. Moreover, the term “poster ads” is generic
and incapable to be used as trademark thus the respondents are not held guilty
of the charges against them.
P&D was granted a copyright on the technical drawings of light boxes as
"advertising display units". SMI, however, manufactured similar or
identical to the light box illustrated in the technical drawings copyrighted
by P&D for leasing out to different advertisers. Was this an infringement
of P&D’s copyright over the technical drawings?
No, P&D’s copyright protection extended only to the technical drawings and not
to the light box itself. The light box was not a literary or artistic piece which could
be copyrighted under the copyright law. If SMI reprinted P&D’s technical
drawings for sale to the public without license from P&D, then no doubt they
would have been guilty of copyright infringement. Only the expression of an idea
is protected by copyright, not the idea itself. If what P&D sought was exclusivity
over the light boxes, it should have instead procured a patent over the light
boxes itself. (Pearl and Dean Inc. v. Shoe Mart Inc., GR No. 148222, Aug. 15,
2003)
FACTS:
Pearl and Dean is a corporation engaged in the manufacture of
advertising display units referred to as light boxes and these light boxes were
marketed under the trademark Poster Ads. Pearl and Dean entered into a
contract with Shoemart, Inc. for the lease and installation of the light boxes in
SM North Edsa. However, due to construction constraints, Shoemart, Inc
offered as an alternative SM Makati and SM Cubao.
After Pearl and Dean’s contract was rescinded, exact copies of its light
boxes were installed in various SM malls, fabricated by Metro Industrial
Services and later by EYD Rainbow Advertising Corporation. Pearl and Dean
sent a letter to Shoemart and its sister company, North Edsa Marketing to cease
using the light boxes and to remove them from the malls, and demanded the
discontinued used of the trademark “Poster Ads”.
Unsatisfied with the compliance of its demands, Pearl and Dean sued
Shoemart which was ruled by the trial court in their favor. On appeal, however,
the Court of Appeals reversed the trial court’s decision.
ISSUE:
Whether Pearl and Dean’s copyright registration for its light boxes and
the trademark registration of “Poster Ads” preclude Shoemart and North Edsa
Marketing from using the same.
HELD:
No, Pearl and Dean secured its copyright under the classification class
“o” work. This being so, its protection extended only to the technical drawings
and not to the light box itself. Pearl and Dean cannot exclude others from the
manufacture, sale and commercial use over the light boxes on the sole basis of
its copyright, certificated over the technical drawings. It cannot be the intention
of the law that the right of exclusivity would be granted for a longer time through
the simplified procedure of copyright registration with the National Library,
without the rigor of defending the patentability of its “invention” before the IPO
and the public.
On the other hand, there has been no evidence that Pearl and Dean’s
use of “Poster Ads” was distinctive or well known. “Poster Ads” was too generic
a name to identify it to a specific company or entity. “Poster Ads” was generic
and incapable of being used as a trademark because it was used in the field of
poster advertising, the very business engaged by Pearl and Dean. Furthermore,
Pearl and Dean’s exclusive right to the use of “Poster Ads” is limited to what is
written in its certificate of registration. Shoemart cannot be held liable for the
infringement of the trademark.
Sony Corporation of America v. Universal City Studios, Inc

Brief Fact Summary. Movie studios (Plaintiff) that owned copyrights in movies
and other television programming argued that Sony (Defendant) contributed to
copyright infringement of their copyrighted works by marketing videocassette
recorders (VCRs or VTRs) that enabled users to record the programs.

Synopsis of Rule of Law. One who supplies the way to accomplish an

infringing activity and encourages that activity through advertisement is not
liable for copyright infringement.

Facts. Sony Corp. (Sony) (Defendant) marketed Betamax videocassette

recorders (VCRs or VTRs), which allowed home recording of televised
programs. Several movie studios (Plaintiff), holders of copyrights on televised
movies and other televised programs, brought an action for contributory
copyright infringement on the theory that Defendant was contributorily liable for
infringement by consumers of VTRs of the studios’ (Plaintiff) copyrighted works
on the basis of Sony’s (Defendant) marketing and distribution of the VTRs. The
district court, finding, inter alia, that no Sony (Defendant) employee had either
direct involvement with the allegedly infringing activity or direct contact with
purchasers of Betamax who recorded copyrighted works off-the-air, and that
there was no evidence that any of the copies made by individuals were
influenced or encouraged by Defendant’s advertisements, held that Defendant
was not liable for direct or contributory copyright infringement. The court of
appeals reversed. The United States Supreme Court granted certeriori.

Issue. Is one who supplies the way to accomplish an infringing activity and
encourages that activity through advertisement liable for copyright
infringement?

Held.(Stevens, J.) No. One who supplies the way to accomplish an infringing
activity and encourages that activity through advertisement is not liable for
copyright infringement. The protection given to copyrights is wholly statutory,
and, in a case like this, in which Congress has not plainly marked the course to
be followed by the judiciary, the Court must be circumspect in construing the
scope of rights created by a statute that never contemplated such a calculus of
interests based on technological advances. In proceeding, the Court must
balance the encouraging and rewarding of authors to create new works with the
public good. This case does not fall in the category of those in which it is
manifestly just to impose vicarious liability because the “contributory” infringer
was in a position to control the use of copyrighted works by others and had
authorized the use without permission from the copyright owner. In this case,
the only contact between Defendant and the users of the VTR’s occurred at the
moment of sale. However, there is no precedent for imposing vicarious liability
on the theory that Sony (Defendant) sold the VTR’s with constructive knowledge
that its customers might use the equipment to make unauthorized copies of
copyrighted material. The sale of copying equipment, like the sale of other
articles of commerce, does not constitute contributory infringement if the
product is widely used for legitimate, unobjectionable purposes, or actually, is
merely capable of substantial noninfringing uses. In this case, a large portion
of the public’s use of VTRs does not implicate copyright at all, and also time-
shifting, the most common use for the Betama, constitutes a fair use. Reversed.

Discussion. Justice Blackmun, in a dissent, faulted the majority for deferring to

congressional action in the face of major technological advancements, saying
that the Court was thereby “evad[ing] the hard issues when they arise in the
area of copyright law.” He proposed instead a test for indirect liability for
copyright infringement based on whether the primary use of technology is
infringing. Even under this test, however, Sony (Defendant) would have
prevailed given the determination of the majority that the predominant use of
VTRs (time-shifting) constituted fair use.
Metro-Goldwyn-Mayer Studios Inc. (MGM) v. Grokster, LTD Discussion. When a distributor takes affirmative steps to foster infringement
through the use of its product, the distributor will be liable for that infringement.
Brief Fact Summary. The defendant’s distributed free software that allowed
private individuals to share copyrighted electronic files without authorization.
Some of those files shared are movies and songs that MGM hold copyrights to.

Synopsis of Rule of Law. When a distributor takes affirmative steps to foster

infringement through the use of its product, the distributor will be liable for that
infringement conducted by 3rd parties.

Facts.

Grokster, LTD and StreamCast Network distributed fee software that allowed
the sharing of files in a peer to peer network. This avoided the need for central
servers and costly server storage and works faster. Since files can go from
computer to computer and not through the server it is safer and cost efficient.
This program was used by universities, government agencies, corporations,
libraries and then private users. Private users began sharing copyrighted music
and video files without authorization. Grokster used technology called FastTrack
and Stream Cast used Gnutella. The files shared do not go to a central location
so Grokster and StreamCast did not know when the files were being copied but
if they had searched there software they would see the type of files being
shared. It was shown that StreamCast gave software called OpenNap labeled
the best alternative to Napster in the hopes to take all the Napster users that
had to stop using that software after Napster was sued. Grokster had a program
called OpenNap that allowed users to search for Napster files. Grokster and
StreamCast received revenues from posting advertising all over its program
software. MGM was able to show that some 90 percent of the files being shared
where copyrighted files. Also there is no evidence that either company tried to
filter or stop copyright infringement. The district court granted summary
judgment in favor of Grokster and Stream Case because although users of the
software did infringe MGM’s property there was no proof there the distributors
had actual knowledge of specific acts of infringement. MGM appealed.

Issue. Whether a distributor of a product that is capable of lawful and unlawful

use is liable for copyright infringement by a 3rd party using that product.

Held. Yes. The appeals court stated that since these distributors did not have
actual knowledge, did not partake in, or monitor the file sharing they are not
directly liable for the infringement. However the court erred in finding they were
not secondarily liable for the actions of the users of its products. There is a
balance between growing technologies and copyright protection, but to not
make distributors liable will make copyright protections meaningless. The lower
court looked to the commerce doctrine now codified which states that a product
must be capable of commercially significant noninfridging uses and if so, no
secondary liability would follow. This court finds that interpretation too narrow.
Here this court considers the doctrine of inducement to also be relevant. When
a distributor promotes using its device to infringe copyright material, shown by
affirmative steps to foster infringement this is inducement and the distributor will
be liable for 3rd party infringement. All the actions of the companies is enough
to show a genuine issue of material fact, thus the court reversed the summary
judgment ruling and remanded the case upon those findings.

Dissent. Justice Breyer states this case is no different from Sony where time-
shifting was the main purpose of users copying shows by VCRS (so they could
watch later). The court did not find Sony responsible there. Also there is such a
major market for non-infringement uses for this software that they shouldn’t be
stopped from distributing the software. The standard in Sony should not be
adapted as we did it here to add inducement.