G.R. No. 171053 - Sehwani, Inc. vs. In-N-Out Burger, Inc.

Respondent In-N-Out Burger, Inc., a California corporation not doing business in the Philippines, owns the tradename “IN-N-OUT” and the trademarks “IN-N-OUT,” “IN-N-OUT Burger & Arrow Design,” and “IN-N-OUT Burger Logo,” used since 1948 and registered in the U.S. and abroad.
Petitioner Sehwani, Inc. obtained Philippine Trademark Registration No. 56666 for the mark “IN N OUT” (the inside of the letter “O” formed like a star) on December 17, 1993 without respondent’s authority, and licensed Benitaas Frites, Inc. to use “IN-N-OUT BURGER” in a Pasig City restaurant.

In-N-Out filed an administrative complaint with the Bureau of Legal Affairs–IPO (BLA-IPO) for trademark infringement, unfair competition, attorney’s fees, damages, and injunctive relief. Petitioners counterclaimed, challenging respondent’s capacity to sue, the absence of a Philippine registration or use, and alleging no ground for cancellation under Section 151 of the Intellectual Property Code (RA 8293).
On December 22, 2003, BLA Director Abelardo rendered Decision No. 2003-02:

Held respondent had capacity to sue and owned internationally well-known marks;
Cancelled Sehwani’s Registration No. 56666;
Ordered petitioners to cease and desist from using “IN-N-OUT,” “IN-N-OUT BURGER LOGO,” and “DOUBLE-DOUBLE.”

Petitioners’ motion for reconsideration (filed January 30, 2004) and respondent’s partial reconsideration motion were denied by Resolutions No. 2004-18 (Oct. 28, 2004) and No. 2005-05 (Apr. 25, 2005), respectively.
Petitioners appealed to the Director General of the IPO. In Appeal No. 14-2004-0004, Director General Francisco dismissed the appeal by order dated December 7, 2004 for late filing of the appeal memorandum.

Petitioners filed CA-G.R. SP No. 88004; the Court of Appeals, in a decision dated October 21, 2005, affirmed the IPO’s dismissal of the appeal for being filed out of time and denied petitioners’ motion for reconsideration (Jan. 12, 2006).
Petitioners then sought review in the Supreme Court, contending (a) the CA erred in dismissing their appeal on a technicality; (b) respondent lacked capacity to sue and failed to prove grounds for cancellation; and (c) the complaint was barred by laches or prescription.

Whether the Court of Appeals erred in upholding the dismissal of petitioners’ appeal as filed beyond the reglementary period.
Whether respondent In-N-Out Burger, Inc. has the legal capacity to sue for trademark enforcement in the Philippines despite not doing business locally.
Whether there were valid grounds under Section 151 of RA 8293 to cancel petitioners’ trademark registration and order them to cease use.
Whether petitioners’ challenge is barred by laches or prescription.