G.R. No. 223270 - Lacoste S.A. vs. Crocodile International Pte Ltd.

Case Summary (G.R. No. 223270)

Factual Background: Competing Marks and the Opposition

Lacoste claimed exclusive rights over its registered “CROCODILE DEVICE” mark and alleged that Crocodile’s proposed “CROCODILE AND DEVICE” mark was confusingly similar or identical, such that registration would greatly damage Lacoste. In response, Crocodile asserted that the marks were visually and commercially distinct: Lacoste’s mark allegedly consisted only of a crocodile device facing to the right, while Crocodile’s composite mark paired a stylized word “Crocodile” above a crocodile device facing to the left. Crocodile maintained that such differences precluded consumer confusion as to origin or affiliation.

Crocodile also emphasized that its mark had been concurrently registered in multiple jurisdictions, which it argued undermined Lacoste’s claim of confusing similarity in the Philippines. It further relied on: (a) a February 24, 1971 judgment of the Osaka District Court in Japan finding no confusing similarity between the marks; (b) a similar judgment by a Divisional Court in Yangon, Myanmar; (c) letters allegedly dated July 30, 1980, June 1, 1982, and January 21, 1983 in which Lacoste allegedly admitted that the marks were not confusingly similar and could coexist; and (d) a Mutual Co-Existence Agreement dated June 17, 1983, under which the parties allegedly agreed to end their disputes and recognize each other’s marks as validly co-existing.

Lacoste, in its Reply, insisted that confusing similarity existed and argued that the direction the crocodile device faces was too minute to be noticed by ordinary consumers from afar, and that Crocodile’s mark was effectively a mirror image of its own. Lacoste denied that any peaceful co-existence applied in the Philippines and argued that the letters and admissions were premised on “long concurrent use” in other jurisdictions, which Lacoste asserted did not exist in the Philippines.

Later, Lacoste filed a Supplemental Opposition dated November 30, 2005, invoking the principle of trademark dilution as discussed in Levi Strauss & Co. v. Clinton Apparelle, Inc. and arguing that use of Crocodile’s mark in the Philippines would likely dilute the distinctive quality of Lacoste’s mark. During trial, Lacoste presented an expert witness, Shalimar Sunshine Salvino-Feldia of Consumer Vibe Asia, Inc., who delivered a presentation on “Project Copy Cat,” a logo test intended to assess confusion between the marks.

IPO-BLA Proceedings and Denial of the Opposition

In a decision dated December 21, 2009, the IPO-BLA denied Lacoste’s opposition and gave due course to Crocodile’s application. Applying both the Dominancy Test and the Holistic or Totality Test, the IPO-BLA found no confusing similarity. It reasoned that Crocodile’s mark was a composite mark, and that the stylized word “Crocodile” placed prominently atop the crocodile figure created striking differences when compared to Lacoste’s mark.

The IPO-BLA discounted Lacoste’s Project Copy Cat evidence, finding it lacked credibility because it was privately commissioned by Lacoste. It also held that the Mutual Co-Existence Agreement, judicial decisions in other jurisdictions, and Lacoste’s letters to Crocodile supported the conclusion that there was no confusing similarity. Finally, the IPO-BLA ruled that the doctrine of trademark dilution invoked by Lacoste did not apply because Lacoste allegedly failed to adduce evidence that Crocodile obtained its mark in bad faith or by fraud. The IPO-BLA considered Crocodile’s mark as derived from its firm name, and concluded Crocodile had demonstrated a legitimate business identity that gave rise to protectable rights in its goodwill and reputation.

Motion for Reconsideration and the Arbitration Award

Lacoste moved for reconsideration. During the pendency of that motion, Lacoste informed the IPO-BLA of an award in an Ad Hoc Arbitration Proceeding between Lacoste and Crocodile regarding interpretation of the geographical scope of the 1983 Mutual Co-Existence Agreement. The arbitration award declared that the agreement was limited to Taiwan, Singapore, Indonesia, Malaysia, and Brunei, and that the parties were not bound outside those jurisdictions.

In a resolution dated June 21, 2013, the IPO-BLA denied the motion for reconsideration. It reaffirmed its view that the prominent stylized word “Crocodile” atop the “saurian” figure made Crocodile’s mark distinguishable. It explained that when a mark consists of a word and device both prominently represented, consumers do not decide based solely on the device; rather, they read the word element as well. It therefore concluded that Lacoste failed to show that Crocodile merely counterfeited Lacoste’s mark or acted with intent to do so, and it reiterated that the marks were concurrently registered in other jurisdictions.

IPO-DG Affirmance

On appeal to the IPO-DG, the latter, in a decision dated October 7, 2014, affirmed the IPO-BLA. The IPO-DG held that there was no confusing similarity that would prevent registration. It emphasized that both parties had used their respective marks for a long time and that they had been allowed to coexist in various jurisdictions. It reasoned that goods bearing Lacoste’s mark would be associated with Lacoste, while goods bearing Crocodile’s mark would be associated with Crocodile. It concluded it was farfetched that the purchasing public, presumed to possess at least a modicum of intelligence, would be confused regarding origin given the distinctive marks. Accordingly, it ruled there was no reason to deny Crocodile’s trademark application.

CA Proceedings: Application of Dominancy and Holistic Considerations

Lacoste filed a Rule 43 Petition for Review before the CA dated November 3, 2014, alleging grave errors by the IPO-BLA and IPO-DG. The CA, in a decision dated September 8, 2015, affirmed. It applied the Dominancy Test and Holistic Test and recognized that both marks used a “saurian” figure. However, it ruled that this fact alone did not establish confusing similarity, because the marks needed to be compared as they appeared on the actual labels and hang tags of the goods.

The CA pointed out that Lacoste’s goods carried the word “Lacoste” below the “saurian” figure, whereas Crocodile’s goods carried the word “Crocodile” above the figure. It held that the appearances of the “saurian” figure and the fonts, styles, and sizes of the accompanying words, as described, showed no confusing similarity. The CA also considered that the products were expensive and not ordinary household items of minimal cost, so the ordinary intelligent buyer would scrutinize the purchase.

Lacoste’s motion for reconsideration was denied by resolution dated February 29, 2016, prompting the present petition.

Issue

The issue for resolution was whether the CA correctly affirmed the IPO-BLA and IPO-DG rulings that there was no confusing similarity between Lacoste’s and Crocodile’s marks, thereby justifying denial of the opposition and allowance of Crocodile’s trademark application.

Ruling and Reasoning of the Supreme Court

The Court denied the petition. It first clarified the applicable law. It noted Crocodile filed its trademark application before the enactment of Republic Act No. 8293 and expressly requested that prosecution be evaluated under the old trademark law, Republic Act No. 166, as amended. Under Section 4(d) of Republic Act No. 166, registration had to be denied when the mark sought to be registered resembled a mark registered in the Philippines, or one previously used and not abandoned, so as to likely cause confusion, mistake, or deception.

The Court then addressed the testing framework. It noted that the Philippines had previously used both the Dominancy Test and the Holistic or Totality Test. However, it cited Kolin Electronics Co. Inc. v. Kolin Philippines International, Inc. for the En Banc abandonment of the Holistic or Totality Test in favor of the Dominancy Test. It thus declared it would use the Dominancy Test to determine whether confusing similarity existed.

Applying the Dominancy Test, the Court observed that Lacoste’s mark had the “saurian” figure as its dominant feature because it was the sole component forming Lacoste’s “CROCODILE DEVICE” mark. By contrast, Crocodile’s mark was a composite mark containing a word element (“Crocodile” in stylized format) and a design element (the “saurian” figure). Under the Dominancy Test, the Court reasoned that only the dominant design element—the “saurian” figure—should be considered for confusing similarity in this case.

The Court nevertheless held that pronounced differences existed between the “saurian” figures and their overall presentation. It described Lacoste’s “saurian” figure as facing right (head on the right, tail on the left) and aligned horizontally. It described Crocodile’s figure as facing left (head on the left, tail on the right). It also noted that both the figure and the stylized “Crocodile” word in Crocodile’s mark were tilted, with the right side higher than the left side. More materially, it found distinct visual characteristics in the figures: Lacoste’s “saurian” was solid, with crocodile scutes depicted as white inverted triangles on the body and base of the tail, and with scutes protruding from the tail. Crocodile’s figure, in contrast, was not solid and resembled a drawing, with scale patterns from the base of the head to the tail. The Court found that Crocodile’s figure lacked the crocodile scutes depicted in Lacoste’s mark and that these differences created distinct visual appearance and overall commercial impression. It concluded that the propensity to mistake one for the other was very low and that likelihood of confusion was nil.

The Court supported this conclusion by referencing the parties’ actual coexistence in other jurisdictions and the existence of other jurisdictional rulings, including those in Japan and Myanmar, declaring no confusing similarity between the marks.

Lacoste’s Arguments:

Case Syllabus (G.R. No. 223270)

The case arose from Lacoste S.A. (Lacoste) filing a Petition for Review on Certiorari under Rule 45 challenging adverse rulings of the Court of Appeals (CA), the Intellectual Property Office-Director General (IPO-DG), and the Intellectual Property Office-Bureau of Legal Affairs (IPO-BLA).
The CA affirmed the IPO-DG and the IPO-BLA, which denied Lacoste’s trademark opposition and gave due course to Crocodile International Pte Ltd.’s (Crocodile) trademark application.
The Supreme Court held that the petition lacked merit and affirmed the CA decisions and resolutions.

Parties and Procedural Posture

Petitioner Lacoste was a limited liability company organized under the laws of the Republic of France, and it owned the registered mark “CROCODILE DEVICE.”
Respondent Crocodile was a corporation organized under the laws of Singapore, and it applied to register the mark “CROCODILE AND DEVICE.”
The IPO-BLA denied Lacoste’s opposition in a decision dated December 21, 2009, and gave due course to Crocodile’s application.
The IPO-BLA later denied Lacoste’s motion for reconsideration in a resolution dated June 21, 2013.
The IPO-DG affirmed the IPO-BLA in a decision dated October 7, 2014.
The CA affirmed the IPO-DG on September 8, 2015, and denied Lacoste’s motion for reconsideration in a resolution dated February 29, 2016.
Lacoste then filed the present Rule 45 petition before the Supreme Court.

Key Factual Background

Lacoste was the registered owner in the Philippines of the mark “CROCODILE DEVICE” under Trademark Registration No. 64239 for goods and services under Classes 1 to 42 of the Nice Classification (NCL).
Lacoste commenced using “CROCODILE DEVICE” in the Philippines as early as 1963, when its clothing apparel was first marketed in the country.
Crocodile was engaged in substantially the same line of business as Lacoste, and it started exporting to the Philippines in 2002.
Crocodile first registered its mark in Singapore in 1949, and its trademark application in the Philippines was filed on December 27, 1996.
On December 27, 1996, Crocodile filed Trademark Application No. 4-1996-116672 for “CROCODILE AND DEVICE” for goods covered by Class 25 of the NCL.
On August 18, 2004, Lacoste filed a verified Notice of Opposition against Crocodile’s application.
Lacoste alleged that Crocodile’s mark was confusingly similar or identical to Lacoste’s “CROCODILE DEVICE,” and that registration would greatly damage Lacoste due to confusion regarding origin or affiliation.
Crocodile defended that its mark and Lacoste’s have substantial differences in appearance and overall commercial impression, including differences in the stylized word element and the direction in which the crocodile device faces.
Crocodile also pointed out that its mark and Lacoste’s mark were concurrently registered in multiple jurisdictions, and it presented evidence of foreign judicial rulings and letters allegedly containing admissions by Lacoste.
Crocodile further relied on a Mutual Co-Existence Agreement executed on June 17, 1983, which, according to Crocodile, evidenced peaceful coexistence and the recognition of each other’s marks.
During the opposition proceedings, Lacoste filed a Supplemental Opposition invoking trademark dilution based on Levi Strauss & Co. v. Clinton Apparelle, Inc.
Lacoste presented a consumer survey project called “Project Copy Cat” through an expert witness, Salvino-Feldia of Consumer Vibe Asia, Inc.
During the pendency of Lacoste’s motion for reconsideration, Lacoste manifested an award from an Ad Hoc Arbitration Proceeding between Lacoste and Crocodile regarding interpretation of the territorial scope of the 1983 Mutual Co-Existence Agreement, which allegedly limited the agreement to Taiwan, Singapore, Indonesia, Malaysia, and Brunei.

Claims and Defense Theories

Lacoste anchored its opposition on the allegation that Crocodile’s “CROCODILE AND DEVICE” mark was confusingly similar or identical to Lacoste’s “CROCODILE DEVICE” mark and would mislead purchasers.
Lacoste asserted that, as the registered owner, it possessed an exclusive right to use its mark to the exclusion of others.
Crocodile argued that the marks have substantial differences in overall impression because Crocodile’s composite mark includes the stylized word “Crocodile” above a device of a crocodile facing the opposite direction.
Crocodile maintained that the visual and commercial impression differences precluded consumer confusion.
Crocodile contended that concurrent registrations in other jurisdictions, together with foreign rulings and bilateral documents, undermined Lacoste’s claim of confusing similarity.
Lacoste responded that the direction the crocodile device faces was too minute to be noticed by ordinary consumers from afar, and it argued that Crocodile’s mark was a mirror image of Lacoste’s mark.
Lacoste denied that any peaceful co-existence evidence outside the Philippines applied in the Philippines, including by arguing that the Mutual Co-Existence Agreement did not apply in the Philippines.
Lacoste further reframed foreign letters allegedly admitting no confusing similarity as conditioned on “long concurrent use” in other jurisdictions, which Lacoste claimed did not obtain in the Philippine setting.
Lacoste invoked trademark dilution, arguing that Crocodile’s use would lessen the capacity of Lacoste’s famous mark to identify or distinguish its products.
Crocodile countered that it had no intent to defame, tarnish, or exploit Lacoste’s goodwill and emphasized that it acquired rights through legitimate use and promotion in different countries.

Proceedings Before the IPO-BLA and IPO-DG

The IPO-BLA applied both the Dominancy Test and what it treated as a holistic comparison framework before concluding that there was no confusing similarity.
The IPO-BLA characterized Crocodile’s mark as composite, consisting of a word element and a device element, and it found striking differences when compared with Lacoste’s mark.
The IPO-BLA declined to give weight to “Project Copy Cat” because it found questionable credibility, given that it was privately commissioned by Lacoste to determine the existence of confusion.
The IPO-BLA relied on the Mutual Co-Existence Agreement, foreign judicial decisions, and Lacoste’s alleged letters to Crocodile as additional support for the finding of no confusing similarity.
The IPO-BLA held that trademark dilution had no application because Lacoste failed to adduce evidence that Crocodile obtained its mark in bad faith or by means of fraud.
In the IPO-BLA resolution denying reconsideration, the IPO-BLA reiterated that the prominent stylized word “Crocodile” atop the device made Crocodile’s mark easily distinguishable from Lacoste’s mark.
The IPO-BLA explained that when a mark consists of both word and device prominently represented, consumers are expected to read the word component, and thus purchasers would not likely be confused.
The IPO-BLA emphasized that Lacoste failed to establish that Crocodile merely counterfeited Lacoste’s mark or that Crocodile intended to do so.
The IPO-DG affirmed the IPO-BLA, stressing that both parties had used their respective marks for a long time with noticeable differences, and that coexistence in other jurisdictions supported non-confusion.
The IPO-DG concluded that it was farfetched that the purchasing public, credited with at least a modicum of intelligence, would confuse the source of goods bearing the respective marks.
The IPO-DG therefore held that Crocodile’s trademark application should be given due course.

Appellate Review by the CA

The CA affirmed the IPO-DG and held that applying the Dominancy Test and the Holistic Test did not support a finding of confusing similarity.
The CA held that although both marks used the “saurian” figure, that fact alone did not suffice; the marks needed comparison as they appeared in their actual labels and hang tags.
The CA described that Lacost