Title
Birkenstock Orthopaedie GmbH and Co. KG vs. Phil. Shoe Expo Marketing Corp.
Case
G.R. No. 194307
Decision Date
Nov 20, 2013
Petitioner Birkenstock sought trademark registration in the Philippines, contested by respondent claiming prior use. Supreme Court ruled for petitioner, affirming ownership due to respondent’s registration lapse and insufficient evidence of prior use.
trademark
registration
abandonment

Case Summary (G.R. No. 194307)

Factual Background

Petitioner, a German corporation, filed three trademark applications for marks incorporating the word BIRKENSTOCK for goods in Class 25 and Class 10 with filing dates of March 11, 1994 and September 5, 1994. Registration No. 56334 for the mark BIRKENSTOCK AND DEVICE had been registered on October 21, 1993 in the name of Shoe Town International and Industrial Corporation, predecessor-in-interest of respondent. Petitioner filed a petition for cancellation of Registration No. 56334 on May 27, 1997, alleging that it was the lawful owner of the Birkenstock marks. Meanwhile, Registration No. 56334 was cancelled for failure to file the tenth Year Declaration of Actual Use on or before October 21, 2004. The cancellation rendered the earlier cancellation case moot and allowed the publication of petitioner’s subject applications on February 2, 2007.

Consolidated Opposition Proceedings

Respondent filed three verified notices of opposition to the subject applications asserting prior use and registration through Registration No. 56334, claiming continuous use of BIRKENSTOCK AND DEVICE in the Philippines for more than sixteen years, possession of a copyright certificate for the word BIRKENSTOCK, and alleged continued use despite failure to file the tenth Year DAU. The Bureau of Legal Affairs consolidated the inter partes cases and, in Decision No. 2008-102 dated May 28, 2008, sustained respondent’s oppositions and ordered rejection of petitioner’s applications. The BLA found confusing similarity between the marks, held respondent and its predecessor as prior users in the Philippines, found petitioner’s marks not well-known locally, and discredited petitioner’s documentary registrations as inadmissible photocopies.

Ruling of the IPO Director General

On administrative appeal, the IPO Director General reversed the BLA in his December 22, 2009 Decision and allowed petitioner’s registration. He reasoned that cancellation of Registration No. 56334 for failure to file the tenth Year DAU removed the basis for rejecting petitioner’s applications on the ground of prior registration. He further found that petitioner established true and lawful ownership of the BIRKENSTOCK marks and that respondent’s certificate of copyright did not affect trademark rights.

Court of Appeals Proceedings and Ruling

Respondent petitioned to the Court of Appeals. In its Decision dated June 25, 2010, the CA reversed the IPO Director General and reinstated the BLA. The CA held that the marks were confusingly similar or identical and that respondent retained prior rights through continued use despite the failure to file the tenth Year DAU. The CA found that petitioner’s documentary evidence, being photocopies, violated Section 8.1 of the Rules on Inter Partes Proceedings and were inadmissible. Petitioner’s motion for reconsideration was denied in the CA Resolution dated October 27, 2010.

Issues Presented

The principal issue before the Supreme Court was whether the subject marks should be allowed registration in the name of BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG. Subsidiary issues included the admissibility of petitioner’s documentary evidence submitted as photocopies and whether respondent’s failure to file the tenth Year Declaration of Actual Use extinguished respondent’s prior rights in the mark.

Admissibility of Petitioner’s Documentary Evidence

The Court held that strict application of procedural technicalities must yield to substantial justice and fair trial. It observed that quasi-judicial bodies like the IPO were not bound by strict technical rules of procedure, citing Section 5 of the Rules on Inter Partes Proceedings. The Court found that the IPO already possessed the originals of petitioner’s documentary evidence from the earlier cancellation case. Under those circumstances and in the interest of substantial justice, the IPO Director General validly relaxed procedural formalities and admitted the photocopies submitted by petitioner. The Court therefore rejected respondent’s contention that Section 8.1 rendered petitioner’s documentary evidence inadmissible.

Ownership and Registration of BIRKENSTOCK

The Court reaffirmed that ownership of a trademark may be acquired by actual use in commerce and that registration alone creates a prima facie presumption of ownership that is rebuttable by prior use. Citing Section 2 and Section 2-A of RA 166, the Court explained that RA 166 required actual use in the Philippines for two months prior to filing to obtain registration, but that ownership under Section 2-A could be based on actual use generally. The Court emphasized that registration is not the mode of acquiring ownership; rather, ownership entitles one to seek registration. The Court relied on precedent, including Berris Agricultural Co., Inc. v. Abyadang, to underscore that prior use in trade confers ownership that may defeat a registrant’s prima facie presumption.

Legal Basis for Cancellation for Failure to File DAU

The Court analyzed Section 12 of RA 166, which required filing of declarations of actual use at fifth, tenth, and fifteenth anniversaries and provided for cancellation for failure to file. The Court held that failure to file the tenth Year DAU resulted in automatic cancellation of Registration No. 56334 and was tantamount to abandonment or withdrawal of any right or interest the registrant had over the mark. Consequently, respondent could not rely on Section 236 of the IP Code to preserve rights that had already been lost through abandonment.

Comparative Evidence and Priority of Use

On the merits, the Court found that petitioner established prior and continuous use of the BIRKENSTOCK mark internationally and

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