DISTILLERIA WASHINGTON, INC. V.

CA
OCTOBER 17, 1996
PETITIONER: DISTILLERIA WASHINTON, INC OR WASHINTON DISTILLERY, INC.
RESPONDENT: COURT OF APPEALS, LA TONDEÑA DISTILLERS, INC.
VITUG, J.:

FACTS:

 La Tondeña Distillers, Inc. (LTDI, for short) filed before the Regional Trial Court for the recovery, under its claim of ownership,
of possession or replevin against Distilleria Washington, Inc. or Washington Distillery, Inc. (Washington) of 18,157 empty "350
c.c. white flint bottles" bearing the blown-in marks of "La Tondeña Inc." and "Ginebra San Miguel," averring that Washington
was using the bottles for its own "Gin Seven" products without the consent of LDTI in violation of Republic Act 623.
o Court issued order of Replevin on November 5, 1987 for the seizure of said bottles.
o LTDI’s Argument: Being the owner and registrant of the bottles, it is entitled to the protection extended by RA 623
(more on this below).
o Washington’s Counter: RA 623 does not apply to gin because it is an alcoholic beverage which is unlike that of “soda
water, mineral or aerated water, ciders, milks, cream, or other lawful beverages” mentioned in the law.
 The trial court in its decision dismissed the complaint, upholding Distilleria Washington's contention that a purchaser of liquor
pays only a single price for the liquor and the bottle and is not required to return the bottle at any time.
 The Court of Appeals reversed the trial court's decision, ruling that under Republic Act 623, the use of marked bottles by any
person other than the manufacturer, bottler or seller, without the latter's written consent, is unlawful. It emphasized that the
marks of La Tondeña's ownership stamped or blown-in to the bottles are sufficient notice to the public that the bottles are La
Tondeña's property; hence, Distilleria Washington cannot be considered a purchaser in good faith.
o It is a fact that R.A. No. 623 extends trademark protection in the use of containers duly registered with the Philippine
Patent Office. The pertinent provisions of R.A. 623, as amended, so reads:
 Sec. 1. Persons engaged or licensed to engage in the manufacture, bottling, or selling of soda water, mineral
or aerated waters, cider, milk, cream or other lawful beverages in bottles, boxes, casks, kegs, or barrels, and
other similar containers, or in the manufacture, compressing or selling of gases such as oxygen, acetylene,
nitrogen, carbon dioxide, ammonia, hydrogen, chloride, helium, sulphur dioxide, butane, propane, freon,
methyl chloride or similar gases contained in steel cylinders, tanks, flasks, accumulators or similar containers,
with their names or the names of their principals or products, or other marks of ownership stamped or marked
thereon, may register with the Philippine Patent Office a description of the names or marks, and the purpose
for which the containers so marked are used by them, under the same conditions, rules, and regulations,
made applicable by law or regulation to the issuance of trademarks.
 Sec. 2. It shall be unlawful for any person, without the written consent of the manufacturer, bottler, or seller,
who has successfully registered the marks of ownership in accordance with the provisions of the next
preceding section, to fill such bottles, boxes, kegs, barrels, steel cylinders, tanks, flasks, accumulators, or
other similar containers so marked or stamped, for the purpose of sale, or to sell, dispose of, buy or traffic in,
or wantonly destroy the same, whether filled or not to use the same for drinking vessels or glasses or drain
pipes, foundation pipes, for any other purpose than that registered by the manufacturer, bottler or seller. Any
violation of this section shall be punished by a fine of not more than one thousand pesos or imprisonment of
not more than one year or both.
 Sec. 3. The use by any person other than the registered manufacturer, bottler or seller, without written
permission of the latter of any such bottle, cask, barrel, keg, box, steel cylinders, tanks, flask, accumulators,
or other similar containers, or the possession thereof without written permission of the manufacturer, by any
junk dealer or dealer in casks, barrels, kegs, boxes, steel cylinders, tanks, flasks, accumulators or other similar
containers, the same being duly marked or stamped and registered as herein provided, shall give rise to
a prima facie presumption that such use or possession is unlawful.
 TAKE NOTE OF THESE SECTIONS FOR THE MR CASE BELOW

ISSUE: WON LTDI has the right to retain possession of the bottles (Main Issue)?

HELD: YES, but they must pay for them. (See dispositive portion and Ratio below)

RATIO:

1. PRELIMINARY ISSUE: WON RA 623 covers Gin.

  YES. The title of the law itself, which reads "An Act to Regulate the Use of Duly Stamped or Marked Bottles, Boxes,
Casks, Kegs, Barrels and Other Similar Containers" clearly shows the legislative intent to give protection to all marked
bottles and containers of all lawful beverages regardless of the nature of their contents. The words "other lawful
beverages" is used in its general sense, referring to all beverages not prohibited by law. Beverage is defined as a liquor
or liquid for drinking. Hard liquor, although regulated, is not prohibited by law, hence it is within the purview and
coverage of Republic Act No. 623, as amended.
2. The case before us, however, goes beyond just seeking to have such use stopped but it so takes on even the ownership issue
as well.
 The instant suit is one for replevin (manual delivery) where the claimant must be able to show convincingly that he is
either the owner or clearly entitled to the possession of the object sought to be recovered.
 Replevin is a possessory action the gist of which focuses on the right of possession that, in turn, is dependent on a
legal basis that, not infrequently, looks to the ownership of the object sought to be replevied.
3. It is to be pointed out that a trademark refers to a word, name, symbol, emblem, sign or device or any combination thereof
adopted and used by a merchant to identify, and distinguish from others, his goods of commerce. It is basically an intellectual
creation that is susceptible to ownership (Article 721, Civil Code) and, consistently therewith, gives rise to its own elements
of jus posidendi, jus utendi, jus fruendi, jus disponendi, and jus abutendi, along with the applicable jus lex, comprising that
ownership.
 The incorporeal right, however, is distinct from the property in the material object subject to it. Ownership in one does
not necessarily vest ownership in the other.
 Thus, the transfer or assignment of the intellectual property will not necessarily constitute a conveyance
of the thing it covers, nor would a conveyance of the latter imply the transfer or assignment of the
intellectual right.

4. R.A. No. 623 evidently does not disallow the sale or transfer of ownership of the marked bottles or containers. In fact, the
contrary is implicit in the law; thus —
 Sec. 5. No action shall be brought under this Act against any person to whom the registered manufacturer, bottler or
seller, has transferred by way of sale, any of the containers herein referred to, but the sale of the beverage contained
in the said containers shall not include the sale of the containers unless specifically so provided.
 Sec. 6. The provisions of this Act shall not be interpreted as prohibiting the use of bottles as containers for "sisi,"
"bagoong," "patis," and similar native products.
 TAKE NOTE OF THESE PROVISIONS FOR THE MR CASE BELOW
5. Scarcely disputed are certain and specific industry practices in the sale of gin:
 The manufacturer sells the product in marked containers, through dealers, to the public in supermarkets, grocery
shops, retail stores and other sales outlets.
 The buyer takes the item; he is neither required to return the bottle nor required to make a deposit to assure its return
to the seller. He could return the bottle and get a refund.
 A number of bottles at times find their way to commercial users.
 Ownership of the containers does pass on to the consumer albeit subject to the statutory limitation on the use of the
registered containers and to the trademark right of the registrant.
i. The statement in Section 5 of R.A. 623 to the effect that the "sale of beverage contained in the said containers
shall not include the sale of the containers unless specifically so provided" is not a rule of proscription. It is a
rule of construction that, in keeping with the spirit and intent of the law, establishes at best a presumption
(of non-conveyance of the container) and which by no means can be taken to be either interdictive or
conclusive in character.
ii. Upon the other hand, LTDI's sales invoice, stipulating that the "sale does not include the bottles with the
blown-in marks of ownership of La Tondeña Distillers," cannot affect those who are not privies thereto.
6. While it may be unwarranted then for LTDI to simply seize the empty containers, this Court finds it to be legally absurd, however,
to still allow petitioner to recover the possession thereof.
 The fact of the matter is that R.A. 623, as amended, in affording trademark protection to the registrant, has additionally
expressed a prima facie presumption of illegal use by a possessor whenever such use or possession is without the
written permission of the registered manufacturer, a provision that is neither arbitrary nor without appropriate rationale.
 Indeed, the appellate court itself has made a finding of such unauthorized use by petitioner. The Court sees no other
logical purpose for petitioner's insistence to keep the bottles, except for such continued use. The practical and feasible
alternative is to merely require the payment of just compensation to petitioner for the bottles seized from it by LTDI.
Conventional wisdom, along with equity and justice to both parties, dictates it.
WHEREFORE, the decision of the appellate court is MODIFIED by ordering LTDI to pay petitioner just compensation for the seized bottles.
Instead, however, of remanding the case to the Court of Appeals to receive evidence on, and thereafter resolve, the assessment thereof,
this Court accepts and accordingly adopts the quantification of P18,157.00 made by the trial court. No costs.

DISTILLERIA WASHINGTON, INC. V. CA (MR)

OCTOBER 2, 1997
PETITIONER: DISTILLERIA WASHINTON, INC OR WASHINTON DISTILLERY, INC.
RESPONDENT: COURT OF APPEALS, LA TONDENA DISTILLERS, INC.
VITUG, J.:

FACTS:

 This is a continuation of the first case. An MR was first filed but was denied. This is the second MR.
 Summary of the confusing case above: “It held that ownership of the bottles had passed to the consumer, ultimately, to
Washington Distillery, Inc., thereby upholding the finding of the Regional Trial Court and reversing the ruling of the Court of
Appeals; nonetheless, while ruling that the ownership over the bottles had passed to Washington Distillery, Inc., it held that
Washington Distillery, Inc. may not use the bottles because of the "trademark protection to the registrant" (La Tondeña Distillers,
Inc.). Instead of directing the return of the bottles to Washington Distillery, Inc., the Court ordered La Tondeña Distillers, Inc.
to pay Washington Distillery, Inc. the amount of P18,157.00.”
 The above decision of the Supreme Court itself therefore raises new issues.
o As owner of the bottles, should not Washington Distillery, Inc. be given possession of the bottles?
o Would its use of the bottles violate the "trademark protection of the registrant," La Tondeña Distillers, Inc. afforded by
R.A. No. 623, as amended?
 While the decision of October 17, 1996 affirmed with modification the Court of Appeals' decision, the SC at least implicitly
acknowledged that there was a valid transfer of the bottles to Distilleria Washington, except that its possession of the bottles
without the written consent of La Tondeña gives rise to a prima facie presumption of illegal use under R.A. 623.

 In seeking reconsideration of the decision of this Court, petitioner advances, among others, the following arguments:
o (1) If, as the Court found in its decision of October 17, 1996, Distilleria Washington had acquired ownership of the
bottles, La Tondeña's suit for replevin, where the sole issue is possession, should be denied.
o (2) Since the right of ownership over the bottles gives rise, according to the Court's own language, to its own elements
of jus posidendi, jus utendi, jus fruendi, jus disponendi, and jus abutendi, along with the applicable jus lex, to allow La
Tondeña to keep the bottles is to deny Distilleria Washington, the very attributes or elements of its ownership.
o (3) There is no showing — and it cannot be assumed — that if Distilleria Washington would have possession of the
bottles, it will exercise the other attributes of ownership, along with the applicable jus lex over the "marks of ownership
stamped or marked" on the bottles.
o (4) The provision in Sec. 3 of Republic Act 623 to the effect that the use by any person other than the registered
manufacturer, bottler or seller without the written permission of the latter of any such bottle, etc. shall give rise to
a prima facie presumption that such use or possession is unlawful, does not arise in the instant case because the Court
has itself found Section 5 of the same law applicable.
o (5) It is absurd to hold the buyer such as Distilleria Washington, liable for the possession and use of its own bottles
without the written consent of La Tondeña who is no longer the owner thereof and for which it has received payment
in full.
o (6) To hold the buyer liable under Sections 2 and 3 would grant La Tondeña the extraordinary right not only of
possession and use of the bottles which it has sold and no longer owns, but also to sell said bottles ad infinitum, thus
enriching itself unjustly.
o (7) It is manifestly unjust and unconscionable that millions of buyers of Ginebra San Miguel, who pay not only for the
gin but also for the bottles containing it should run the risk of criminal prosecution by the mere fact of possession of
the empty bottles after consuming the liquor.
 Distilleria Washington's motion raises the novel issue that if, as we ruled in our decision of October 17, 1996, petitioner became
the owner over the bottles seized from it by replevin, then it has the right to their possession and use as attributes of ownership,
unless their use violates the trademark or incorporeal rights accorded private respondent by R.A. 623 which has not really been
established in this case.

ISSUE: (1) Did La Tondeña Distillers, Inc. transfer ownership of its marked bottles or containers when it sold its products in the market?
YES (2) Were the marked bottles or containers part of the products sold to the public? YES
HELD: The Court RESOLVED to RECONSIDER its Decision promulgated on October 17, 1996 and render another judgment
REVERSING in toto the Decision of the Court of Appeals promulgated on January 11, 1995 and its Resolution of June 23, 1995. The
decision of the Regional Trial Court of December 3, 1991 is REINSTATED.

RATIO

1. YES. In plain terms, therefore, La Tondeña not only sold its gin products but also the marked bottles or containers, as well. And
when these products were transferred by way of sale, then ownership over the bottles and all its attributes (jus utendi, jus
abutendi, just fruendi, jus disponendi) passed to the buyer. It necessarily follows that the transferee has the right to possession
of the bottles unless he uses them in violation of the original owner's registered or incorporeal rights. .
2. After practically saying that La Tondeña has surrendered ownership and consequently, possession of the marked bottles or
container, it is incongruous and, certainly, it does not seem fair and just to still allow La Tondeña, citing the prima
facie presumption of illegal use under Sec. 3 of R.A. 623., to retain possession of the seized bottles by simply requiring payment
of just compensation to petitioner.
3. A careful reading of Sections 2, 3 and 5 of R.A. 623 (Quoted at the first part of the digest) would lead to the conclusion
that they contemplate situations separate and distinct from each other. Section 2 prohibits any person from using, selling or
otherwise disposing of registered containers without the written consent of the registrant. Such rights belong exclusively to the
registrant. Under Section 3, mere possession of such registered containers without the written consent of the registrant is prima
facie presumed unlawful.

MAIN POINT COMING UP:

4. It appears — and this is the critical point — that Sections 2 and 3 apply only when the "filling" up of the bottle or the "use" of
the bottle is "without the written permission" of the "registered manufacturer, bottler, or seller," who has registered the marks
of "ownership" of the bottles. It is thus implicit that Sections 2 and 3 apply only when the "registered manufacturer, bottler, or
seller" retain ownership of the bottles. Upon the other hand, when the bottles have been "transferred by way of sale," Section
5 applies, thereby precluding the institution of any action "under this Act," meaning to say, any action under Sections 2 and 3.
a. Since the Court has found that the bottles have been transferred by way of sale, then La Tondeña has relinquished all
its proprietary rights over the bottles in favor of Distilleria Washington who has obtained them in due course. Now as
owner, it can exercise all attributes of ownership over the bottles.
b. This is the import of the decision that La Tondeña had transferred ownership over its marked bottles or containers
when it sold its gin products to the public.
c. While others may argue that Section 5 is applicable only to the immediate transferee of the marked bottles or container,
this matter is best discussed where the applicability of Sec. 5, R.A. 623 is squarely raised. It must be recalled, however,
that this is a case of replevin, not a violation of the "trademark protection of the registrant" under R.A. 623 or of the
Trademark Law.

NOTE: You may skip text in grey.

HANOVER STAR MILLING CO. v. METCALF (240 U.S. 403 (1916))

Summary: Hanover Star Milling is engaged in the manufacture of flour and has been selling "Tea Rose" flour. Hanover filed a case
against Metcalf as agent for Steelville Milling Co. because the latter has been selling "Tea Rose" flour as well with substantially similar
markings. However, Hanover is also being sued by another flour manufacturer, Allen & Wheeler Company for the use of "Tea Rose"
flour since the latter had been using such brand since 1904. The US SC then said that trademark cases are based upon the party's right
to be protected in the good will of a trade or business, it is not a property per se.It is the right of the party to the exclusive use of
marks adopted to indicate goods of his manufacture. The right grows out of use, not mere adoption. Trademarks fall into the broader
law of unfair competition. A trademark is treated as merely a protection for the good will, and not the subject property except in
connection with an existing business.

Facts:
- Hanover Star Milling is an Illinois corporation engaged in the manufacture of flour. One of its popular products is "Tea Rose" flour. It
has distinctive markings which include the name "Tea Rose" and a design containing 3 roses imprinted upon labels attached to sacks
and barrels. It has been selling this product for 12 years in the states of Georgia, Florida and Alabama.
- Metcalf is the agent of Steelville Milling Company of Illinois. Hanover alleges that the former has been selling a flour product also
called "Tea Rose" with a label also containing 3 roses. They have been marketing this product in Butler, Alabama in a manner
calculated to deceive and in fact deceptive to purchasers. Metcalf denies all accusations and questions Hanover's right to the exclusive
use of the words "Tea Rose" or a picture of a rose as a trademark. Further pointing out that it has been using such for the past 16
years in the state of Alabama and that Allen & Wheeler Company has been using the same since 1872.
- In another case, Allen & Wheeler company, an Ohio based company, filed a case against Hanover. Allen & Wheeler averred that they
have been using the "Tea Rose" brand on its flour products since 1872.

Issue: (Only one discussed in the copy Sir gave)

What is the nature of a Trademark?

Held:
- A trademark is based upon the party's right to be protected in the good will of a trade of business. It's primary function is to identify
the origin or ownership of the article to which it is affixed.
- Once, the trademark has been adopted and is being used to distinctly mark its products, others are debarred from applying the same
mark to goods of the same description, because to do so would in effect represent their goods to be of his production and would tend
to deprive him of the profit he might make through the sale of the goods which the purchaser intended to buy. This puts trademarks
within the ambit of the broader law of unfair competition.
- Common-law trademarks, and the right to their exclusive use are to be classed among property rights but only in the sense that a
man's right to the continued enjoyment of his trade reputation and the good will that flows from it, free from unwarranted interference
by others, is a property right for which trademarks are essential. The right of the party to the exclusive use of marks adopted to
indicate goods of his manufacture is based upon the ground that 'a man is not to sell his own goods under the pretense that they are
the goods of another man'.
- This right grows out of use and not mere adoption. It is plain that in denying the right of property in a trademark it was intended only
to deny such property right except as appurtenant to an established business or trade in connection with which the mark is used. In
short, the trademark is treated as merely a protection for the good will, and not the subject of property except in connection with an
existing business.

Champion Spark Plug Co. v. Sanders

331 U.S. 125 (1947)
April 28, 1947

SUMMARY:
Respondents are engaged in the business of repairing used spark plugs and reselling them without removing the original trademarks of
Champion. Champion filed a suit against them and the trial court found that respondents had infringed the trademark but that there had
been no fraud or palming off. There was a conflict in the decision of the trial court and the appellate court as the latter held that the
provision requiring that the trademark be removed from the reconditioned plugs be eliminated. Issue now lies whether or not adequate
remedy was given by the appellate court. SC held that equities of this case are satisfied by a decree requiring that the word "repaired"
or "used" be plainly and durably stamped on each plug and that the containers and printed matter used in connection with the sales
clearly show that the plugs are used and reconditioned by respondents, giving their names and address -- even though the decree does
not require that the trademarks be removed. The court stated that full disclosure will give the manufacturer the protection that is needed.

FACTS:
 Petitioner is a manufacturer of spark plugs which it sells under the trademark "Champion."
 Respondents (Sanders) collect the used plugs, repair and recondition them, and resell them. Respondents retain the word
“Champion” on the reconditioned plugs and use a box or carton that has the word "Champion," stamped on it, the plugs are
packed together with the letter and figure denoting the particular style or type.
 They also have printed on them "Perfect Process Spark Plugs Guaranteed Dependable" and "Perfect Process Renewed Spark
Plugs." Each carton contains smaller boxes in which the plugs are individually packed. These inside boxes also carry legends
indicating that the plug has been renewed.
 Respondent company's business name or address is not printed on the cartons. It supplies customers with petitioner's charts
containing recommendations for the use of Champion plugs. On each individual plug is stamped in small letters, blue on black,
the word "Renewed," which at time is almost illegible.
 Petitioner brought this suit in the District Court, charging infringement of its trademark and unfair competition.
 DISTRICT COURT DECISION: The District Court found that respondents had infringed the trademark. It enjoined them from
offering or selling any of petitioner's plugs which had been reconditioned unless:
o (a) the trademark and type and style marks were removed (MOST IMPT)
o (b) the plugs were repainted with a durable grey, brown, orange, or green paint
o (c) the word "Repaired" was stamped into the plug in letters in white
o (d) the cartons in which the plugs were packed contain a legend that it was used spark plugs originally made by
petitioner and repaired and made fit for use up to 10,000 miles by respondent company.
 The District Court denied an accounting.
 CIRCUIT COURT OF APPEALS DECISION: Held that respondents not only had infringed petitioner's trademark, but also
were guilty of unfair competition. It likewise denied an accounting, but modified the decree in the following respects:
o (a) it eliminated the provision requiring the trademark and type and style marks to be removed from the repaired or
reconditioned plugs
o (b) it substituted for the requirement that the word "Repaired" be stamped into the plug, etc., a provision that the
word "Repaired" or "Used" be stamped and baked in a contrasting color
o (c) it eliminated the provision specifying the precise legend to be printed on the cartons, and substituted for a more
general one.
  The case reached the US Supreme Court because of the apparent conflict between the decision below and Champion Spark Plug
Co. v. Reich decided by the Circuit Court of Appeals for the Eighth Circuit.

ISSUE: Whether or not there was adequate relief granted, particularly the refusal of the Circuit Court to require
respondents to remove the word “Champion” from the repaired or reconditioned plugs?

HELD: The word "repaired" or "used" be plainly and durably stamped on each plug, and that the containers and printed matter used in
connection with the sales clearly show that the plugs are used and reconditioned by respondents, giving their names and address -- even
though the decree does not require that the trademarks be removed.

RATIO:
 There is no doubt that there has been infringement and unfair competition. The question is the relief granted.
 We put to one side the case of a manufacturer or distributor who markets new or used spark plugs of one make under the
trademark of another. Equity then steps in to prohibit defendant's use of the mark which symbolizes plaintiff's
goodwill and "stakes the reputation of the plaintiff upon the character of the goods.”
 These are second-hand goods. The spark plugs, though used, are nevertheless Champion plugs and not those of another make.
There is evidence to support what one would suspect -- that a used spark plug which has been repaired or reconditioned does
not measure up to the specifications of a new one. But the same would be true of a second-hand Ford or Chevrolet car. SC does
not suppose that one could be enjoined from selling a car whose valves had been reground and whose piston rings had been
replaced unless he removed the name Ford or Chevrolet.
 Prestonettes, Inc. v. Coty, was a case where toilet powders had as one of their ingredients a powder covered by a trademark
and where perfumes which were trademarked were rebottled and sold in smaller bottles.
 The Court sustained a decree denying an injunction where the prescribed labels told the truth. Mr. Justice Holmes stated, "A
trademark only gives the right to prohibit the use of it so far as to protect the owner's goodwill against the sale
of another's product as his. . . . When the mark is used in a way that does not deceive the public, we see no such
sanctity in the word as to prevent its being used to tell the truth. It is not taboo”
 Cases may be imagined where the reconditioning or repair would be so extensive or so basic that it would be a misnomer to
call the article by its original name, even though the words "used" or "repaired" were added. But no such practice is involved
here. The repair or reconditioning of the plugs does not give them a new design. It is no more than a restoration, so far as
possible, of their original condition. (Case goes on to say that there is similarity of the thread size, cylinder hole and heat range
to the original one)
 Inferiority is expected in most second-hand articles and generally cost the customer less. Inferiority is immaterial, so long as
the article is clearly and distinctively sold as repaired or reconditioned, rather than as new. The result is that the second-hand
dealer gets some advantage from the trademark. But, under the rule of Prestonettes, Inc. v. Coty, supra, that is wholly
permissible so long as the manufacturer is not identified with the inferior qualities of the product resulting from wear and tear
or the reconditioning by the dealer. Full disclosure gives the manufacturer all the protection to which he is entitled.
 The decree by the Circuit Court of Appeals is fashioned to serve the requirements of full disclosure. But unlike the
Prestonettes case, this involves unfair competition as well as trademark infringement, and that, where unfair competition is
established, any doubts as to the adequacy of the relief are generally resolved against the transgressor.
 But here there was no showing of fraud or palming off. Their absence, of course, does not undermine the finding of unfair
competition. But the character of the conduct giving rise to the unfair competition is relevant to the remedy which should be
afforded. SC cannot say that the conduct of respondents in this case, or the nature of the article involved and the characteristics
of the merchandising methods used to sell it, called for more stringent controls than the Circuit Court of Appeals provided.
ADDITIONAL ON ACCOUNTING (FYI lang, no accounting if injunction will satisfy equity)
 Mishawaka Rubber & Woolen Mfg. Co. Kresge Co states the rule governing an accounting of profits where a trademark has been
infringed and where there is a basis for finding damage to the plaintiff and profit to the infringer. But it does not stand for the
proposition that an accounting will be ordered merely because there has been an infringement.
 Under the Trade Mark Act of 1905, an accounting has been denied where an injunction will satisfy the equities of the case. The
same is true in case of unfair competition. Here there has been no showing of fraud or palming off. For several years,
respondents apparently endeavored to comply with a cease and desist order of the Federal Trade Commission requiring them
to place on the plugs and on the cartons a label revealing that the plugs were used or second-hand.
 Moreover, as stated by the Circuit Court of Appeals, the likelihood of damage to petitioner or profit to respondents due to any
misrepresentation seems slight.

MIRPURI v. CA

Summary:

Escobar applied for registration of the trademark “Barbizon”. This was opposed by Barbizon Corporation, which cited the Trademark Law
and claimed that such mark is confusingly similar to the trademark that it owns. The Bureau of Patents issued a certificate of registration
in favor of Escobar, but it was cancelled. Now, Mirpuri, as the assignee of Escobar’s rights and interests over the trademark, reapplied
for its registration, which Barbizon Corporation again opposed by citing the Paris Convention and invoking Article 189 of the RPC. The
Director of Patents declared private respondent’s opposition barred by res judicata and gave due course to Mirpuri’s application for
registration. The CA reversed the decision of the Director of Patents. The SC held that res judicata does not apply in this case, since the
oppositions in the first and second cases are based on different laws. Also, the cancellation of petitioner's certificate of registration for
failure to file the affidavit of use arose only after the first case, and this gave respondent another cause to oppose the second application.

Facts:

 On June 15, 1970, Lolita Escobar filed an application with the Bureau of Patents for the registration of the trademark "Barbizon"
docketed as Inter Partes No. 686.
 Private respondent Barbizon Corporation, a corporation organized and doing business under the laws of New York, U.S.A. filed
an opposition thereto based on Sections 4 (d) and 8 of the Trademark law by claiming that the mark BARBIZON of the applicant
is confusingly similar to the trademark BARBIZON which opposer owns and has not abandoned.
 On June 18, 1978, the Director of Patents rendered judgment dismissing the opposition and giving due course to Escobar's
application. The decision became final, and Escobar was issued a certificate of registration.
 Later, Escobar assigned all her rights and interests over the trademark to petitioner Pribhdas J. Mirpuri.
 In 1979, the Bureau of Patents cancelled Escobar's certificate of registration for failure to file with the Bureau of Patents the
Affidavit of Use of the Trademark as required under Section 12 of the Philippine Trademark Law.
 Mirpuri reapplied for the registration of the cancelled trademark of Barbizon docketed as Inter Partes No. 2049.
 Again, private respondent filed an opposition by citing mainly the protection of trademark under Article 6BIS is of the Convention
of Paris and stating that opposer's goods bearing the trademark BARBIZON have been used in many countries including the
Philippines for at least 40 years and has enjoyed international reputation and good will for their quality and to allow such
registration will also violate Article 189 of the Revised Penal Code.
 Subsequently, the Director of Patents rendered a decision declaring private respondent's opposition barred by res judicata and
giving due course to petitioner's reapplication for registration.
 On appeal, the Court of Appeals reversed the decision of the Director of Patents. Hence, this petition.

Issues:

 Whether or not the Director of Patents correctly applied the principle of res judicata in dismissing private respondent Barbizon's
opposition to petitioner's application for registration for the trademark Barbizon - NO

 Whether or not the treaty, Convention of Paris for the Protection of Industrial Property, affords protection to a foreign corporation
against a Philippine applicant for the registration of a similar trademark - YES

Held:

Petition was DENIED.

I. Non-Applicability of Res Judicata

In this petition, it is noted that the oppositions in the first and second cases are based on different laws. The opposition in IPC
No. 686 was based on specific provisions of the Trademark Law, i.e., Section 4 (d) on confusing similarity of trademarks and Section
8 on the requisite damage to file an opposition to a petition for registration. On the other hand, the opposition in IPC No. 2049 invoked
the Paris Convention, particularly Article 6bis thereof, E.O. No. 913 and the two Memoranda of the Minister of Trade and Industry.
This opposition also invoked Article 189 of the Revised Penal Code which is a statute totally different from the Trademark Law. Causes
of action which are distinct and independent from each other, although arising out of the same contract, transaction, or state of facts,
may be sued on separately, recovery on one being no bar to subsequent actions on others. The mere fact that the same relief is sought
in the subsequent action will not render the judgment in the prior action operative as res judicata, such as where the two actions are
based on different statutes. Res judicata, therefore, does not apply to the instant case and respondent Court of Appeals did not err in so
ruling.

To reiterate, the second case, IPC No. 2049 raised the issue of ownership of the trademark, the first registration and
use of the trademark in the United States and other countries, and the international recognition and reputation of the trademark
established by extensive use and advertisement of private respondent's products for over forty years here and abroad. These are different
from the issues of confusing similarity and damage in the first case, IPC No. 686. Indeed, these are substantial allegations that
raised new issues and necessarily gave private respondent a new cause of action. Res judicata does not apply to rights, claims or
demands, although growing out of the same subject matter, which constitute separate or distinct causes of action and were not put in
issue in the former action.
 Respondent corporation also introduced in the second case a fact that did not exist at the time the first case was filed and
terminated. The cancellation of petitioner's certificate of registration for failure to file the affidavit of use arose only after IPC No. 686. It
did not and could not have occurred in the first case, and this gave respondent another cause to oppose the second application. Res
judicata extends only to facts and conditions as they existed at the time judgment was rendered and to the legal rights and relations of
the parties fixed by the facts so determined. When new facts or conditions intervene before the second suit, furnishing a new basis for
the claims and defenses of the parties, the issues are no longer the same, and the former judgment cannot be pleaded as a bar to the
subsequent action.

II. Paris Convention

The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris Convention, is multilateral treaty
that seeks to protect industrial property consisting of patents, utility models, industrial designs, trademarks, service marks, trade names
and indications of source or appellations of origin; and at the same time aims to repress unfair competition. Foreign nationals are to be
given the same treatment in each of the member countries as that country makes available to its own citizens. Nationals of the various
member nations are thus assured of a certain minimum of international protection of their industrial property. The Philippines' adhesion
became effective on September 27, 1965, and from this date, the country obligated itself to honor and enforce the provisions of the
Convention.

Article 6bis of the Treaty governs protection of well-known trademarks. Under the first paragraph, each country of the Union
bound itself to undertake to refuse or cancel the registration, and prohibit the use of a trademark which is a reproduction, imitation or
translation, or any essential part of which trademark constitutes a reproduction, liable to create confusion, of a mark considered by the
competent authority of the country where protection is sought, to be well-known in the country as being already the mark of a person
entitled to the benefits of the Convention, and used for identical or similar goods.

In support of the Treaty, two Memoranda were issued, the Villafuerte Memorandum and the Ongpin Memorandum. In the
Villafuerte Memorandum, the Minister of Trade instructed the Director of Patents to reject all pending applications for Philippine
registration of signature and other world-famous trademarks by applicants other than their original owners or users. The Minister
enumerated several internationally-known trademarks and ordered the Director of Patents to require Philippine registrants of such marks
to surrender their certificates of registration. In the Ongpin Memorandum, the Minister of Trade and Industry laid down guidelines for
the Director of Patents to observe in determining whether a trademark is entitled to protection as a well-known mark in the Philippines
under Article 6bis of the Paris Convention. This was to be established through Philippine Patent Office procedures in inter partes and ex
parte cases pursuant to the criteria enumerated therein. The Philippine Patent Office was ordered to refuse applications for, or cancel
the registration of, trademarks which constitute a reproduction, translation or imitation of a trademark owned by a person who is a citizen
of a member of the Union. All pending applications for registration of world-famous trademarks by persons other than their original
owners were to be rejected forthwith. The Ongpin Memorandum was issued pursuant to Executive Order No. 913 dated October 7, 1983
of then President Marcos which strengthened the rule-making and adjudicatory powers of the Minister of Trade and Industry for the
effective protection of consumers and the application of swift solutions to problems in trade and industry.

III. Trademarks

The simplified definition of a “trademark” based on R.A. No. 8293, the Intellectual Property Code of the Philippines, is "any
visible sign capable of distinguishing goods." Trademarks perform three distinct functions: (1) they indicate origin or ownership of the
articles to which they are attached; (2) they guarantee that those articles come up to a certain standard of quality; and (3) they advertise
the articles they symbolize.

Trademarks deal with the psychological function of symbols and the effect of these symbols on the public at large. Trademarks
play a significant role in communication, commerce and trade, and serve valuable and interrelated business functions, both nationally
and internationally. For this reason, all agreements concerning industrial property, like those on trademarks and tradenames, are
intimately connected with economic development.