G.R. No. L-19906 - Sterling Products International, Inc. vs. Farbenfabriken Bayer Aktiengesellschaft

Plaintiff-Appellant: Sterling Products International, Inc. (SPI), a subsidiary of Sterling Drug, Inc. of New York, engaged in the manufacture and sale of Bayer-branded medicines in the Philippines.
Defendants-Appellants: Farbenfabriken Bayer Aktiengesellschaft (FBA) and Allied Manufacturing & Trading Co., Inc. (AMATCO), involved in the distribution of industrial and agricultural chemicals including insecticides under the Bayer trademark.
The dispute concerns the use of the trademarks “BAYER” and “BAYER CROSS IN CIRCLE” where both parties seek to exclude the other from using these marks for their respective product lines in the Philippines.

The Bayer marks originated from Bayer, a German company founded by Friedrich Bayer in 1863, initially involved in chemical manufacture and later in pharmaceuticals with the discovery of Bayer Aspirin in 1899.
The trademark “BAYER CROSS IN CIRCLE” was registered in Germany in 1904; subsequent re-registrations occurred with modifications, particularly following corporate mergers in Germany (leading to I.G. Farbenindustrie, AG).
SPI’s predecessor, The Bayer Co., Inc. of New York, registered the Bayer trademarks in various jurisdictions, including the United States and the Philippines.
In the Philippines, the marks were first registered under the old Trademark Law (Act 666) in 1939 for medicines. Later, under Republic Act 166 and its amendments (RA 638), SPI was issued new certificates of registration in 1948 that confined the trademark rights to “Medicines.”

SPI uses the Bayer trademarks exclusively for its medicinal products such as Bayer Aspirin, Aspirin for Children, and Cafiaspirina.
Defendants, through FBA and AMATCO, use the mark (or its replica) on products such as insecticides and industrial chemicals, not extending to medicines.
Evidence, including packaging and labels, reveals that the public in the Philippines associates the Bayer mark with products having a German origin and high quality.

In the early 20th century, agreements were made among FFB (the original Bayer company), Winthrop Chemical Co., Inc., and Bayer New York regarding the use of the marks and territorial limitations, particularly for use in the United States and by extension the Philippines.
Subsequent historical events such as World War I, the seizure under the Trading with the Enemy Act, and later asset purchases changed the ownership structures but did not alter the public use and recognition of the mark in the Philippines.

The trial court resolved the conflict by dividing the market between the parties: SPI retained the exclusive right for medicines and defendants for chemicals and insecticides, with a directive to add a distinctive indicator that the chemical products come from Germany.
Both parties appealed portions of the trial court’s decision: SPI on the part dismissing its broader infringement claim; defendants on the parts that upheld SPI’s continued registration for medicines and rejected cancellation of their registrations.

Whether the exclusive ownership of a trademark arises only from its actual use in commerce, regardless of mere adoption or registration.
Determination of the limitation of protection to the goods for which the mark is actually used (i.e., medicines for SPI).

Whether the United States registration of the Bayer trademark for insecticides has any bearing on protection in the Philippine territory.
How the territorial nature of trademark law affects claims of infringement when the marks are used in different product categories.

Whether the public is likely to be confused as to the origin of the products when the same or similar marks are used by different parties on non-competing goods.
The extent to which a well-known trademark can be protected against use by others on different kinds of products, including the risk of dilution of brand identity.

Whether SPI’s long-standing marketing of medicines under the Bayer mark, which has a strong association with German manufacture, affects its exclusionary rights.
Whether defendants’ usage of the mark for chemicals invalidates SPI’s claim of exclusivity, given the prior prominence of Bayer as established by FBA.

Whether the court’s order that defendants must add a distinctive word or words indicating their products come from Germany is appropriate to eliminate consumer confusion.
Whether the defendants’ late objection to the use of the mark for medicines (due to non-use by them in that category) should preclude their challenge to SPI’s registration.