Title
Levi Strauss and Co. vs. Clinton Apparelle Inc.
Case
G.R. No. 138900
Decision Date
Sep 20, 2005
Levi Strauss alleged Clinton Apparelle infringed its "Dockers and Design" trademark with "Paddocks" logo. Courts ruled preliminary injunction improper; damages compensable, no clear trademark violation proven.
trademark infringement
preliminary injunction
damages

Case Summary (G.R. No. 138900)

Factual Background

The petition arose from a Complaint for Trademark Infringement, Injunction and Damages filed by Levi Strauss & Co. and Levi Strauss (Phils.), Inc. against Clinton Apparelle, Inc. and alternatively Olympian Garments, Inc. The plaintiffs averred ownership by prior adoption and use of the internationally famous "Dockers and Design" trademark, evidenced by a Certificate of Registration No. 46619 for apparel under Class 25 and by continuous manufacture and sale in the Philippines since about May 1988. The plaintiffs alleged discovery in the local market of jeans under the brand name "Paddocks" bearing a device substantially similar to the plaintiffs’ wing-shaped logo. The plaintiffs were uncertain which defendant manufactured the complained goods, thus impleaded defendants in the alternative pursuant to Section 13, Rule 3.

Trial Court Proceedings

The plaintiffs sought immediate injunctive relief. The trial court set a summary hearing for the TRO which the defendants did not attend and proceeded to hear plaintiffs’ arguments and receive evidentiary materials. The trial court issued a Temporary Restraining Order restraining the defendants from manufacturing, distributing, selling or otherwise using denims, jeans or pants with the design complained of; the TRO was to remain in force pending hearing on the preliminary injunction. On 4 June 1998, the trial court granted the writ of preliminary injunction and required an injunction bond of P2,500,000.00. The trial court cited the plaintiffs’ demonstrated prima facie entitlement and the need to maintain the status quo. The evidence the trial court considered included a certified copy of the Certificate of Registration for "Dockers and Design", a pair of DOCKERS pants, a pair of "Paddocks" pants, a Trends MBL Survey Report, and affidavits recounting prior adoption and the survey methodology.

Post-Injunction Trial Court Orders and Motions

After issuance of the writ, Clinton Apparelle filed a Motion to Dismiss and a Motion for Reconsideration. The trial court approved the bond filed by plaintiffs and, after requiring memoranda on whether the injunction could remain pending resolution of motions, denied both motions in an Omnibus Order. The trial court reiterated its issuance of the injunction and ordered its implementation unless restrained by an appellate court.

Proceedings in the Court of Appeals

Clinton Apparelle petitioned the Court of Appeals for certiorari, prohibition and mandamus, and obtained a temporary restraining order from that court. The Court of Appeals rendered a Decision dated 21 December 1998 setting aside the trial court’s orders that issued the TRO and the writ of preliminary injunction. The appellate court held that the TRO had been improperly issued because Clinton Apparelle was not duly notified of the summary hearing for the TRO. The Court of Appeals also questioned the sufficiency of plaintiffs’ proof to warrant a preliminary injunction, found the commissioned survey and ex parte affidavits of limited weight, and observed that any injury to plaintiffs might be compensable in money. The appellate court further considered that the injunction, if implemented, would effectively shut down respondent’s business.

Issues Presented

The central issue was whether the trial court properly issued the writ of preliminary injunction. Subsidiary issues included whether the TRO had been validly issued with due notice, whether plaintiffs sufficiently established a clear and positive right and irreparable injury under Section 3, Rule 58, and whether the evidence presented—particularly the Trends MBL survey and the nature of the registered mark composed of a word and a design—warranted injunctive relief pending trial.

Parties’ Contentions

The petitioners contended that the Court of Appeals exceeded the narrow scope of certiorari review under Rule 45 by reassessing sufficiency of evidence, that confusion between the marks had been established, that trademark erosion justified injunctive relief, that the trial court followed agreed procedures, and that the appellate court erred in finding the injunction would close respondent’s business. The respondent argued that in a petition under Rule 45 only questions of law may be raised, that factual determinations such as survey sufficiency and confusing similarity were not reviewable in that proceeding, and that the trial court’s injunction improperly disturbed the status quo and in effect decided the case on the merits.

The Supreme Court’s Ruling

The Supreme Court denied the petition and affirmed the Court of Appeals’ Decision dated 21 December 1998 and its Resolution dated 10 May 1999. The Supreme Court held that petitioners had not adequately proved entitlement to a preliminary injunction and that the trial court had acted with grave abuse of discretion in issuing the writ given the proofs presented at the summary proceeding. The Court awarded costs against petitioners.

Legal Basis and Reasoning

The Court reviewed the nature and requisites of injunction under Section 1, Rule 58 and the grounds for preliminary injunction under Section 3, Rule 58. It reaffirmed that injunction is an extraordinary equitable remedy to be granted cautiously and only upon clear demonstration of a right in esse and the probability of irreparable injury inadequately remediable by damages. The Court emphasized that the trial court’s discretion must be exercised according to law and that appellate review may examine whether the trial court abused that discretion.

On the evidentiary showing, the Court observed that petitioners’ registered mark comprised two elements—the word "Dockers" and the wing-shaped design—but there was a single registration combining both. The respondent used the word "Paddocks" with a device that plaintiffs alleged imitated the wing-shaped logo. The Court found it unclear from the summary record whether a single registration of a composite mark confers the right to prevent the use of a portion of the mark, whether the wing-shaped logo was the dominant feature in the public mind, and whether the respondent’s use materially and substantially invaded petitioners’ rights. The Court held that these substantive questions required full trial development.

The Court also addressed trademark dilution claims and stated that to obtain protection from dilution a plaintiff must establish that the mark is famous and distinctive, that the defendant’s use postdates the mark’s fame, and that the use causes dilution. The Court concluded that petitioners had not established these elements on the summary record. The

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