G.R. No. 219744 - Levi Strauss and Co. vs. Sevilla

Case Summary (G.R. No. 219744)

Key Dates and Procedural Posture

Petitioner filed the Petition for Cancellation in 1995 before the Bureau of Patents, Trademarks and Technology Transfer (now IPO). IPO-Bureau of Legal Affairs (IPO-BLA) denied the petition (Decision dated January 29, 2009); IPO Director General (IPO-DG) affirmed (Decision dated August 13, 2012). Petitioner sought judicial review via Rule 43 before the Court of Appeals, which dismissed the petition on grounds of mootness and res judicata (Decision dated September 26, 2014; reconsideration denied July 28, 2015). The Supreme Court granted the petition for review on certiorari and resolved the case on the merits.

Applicable Law and Governing Standards

Constitutional framework: the 1987 Philippine Constitution applies. Statutory and procedural sources relied upon: Republic Act No. 8293 (Intellectual Property Code), especially Section 155 (remedies for infringement and colorable imitation); the 2011 Rules for Intellectual Property Rights Cases (A.M. No. 10-3-10-SC) and the 2020 Revised Rules; Rule 43 of the Rules of Court for judicial review; and rules on transfer of interest (Rule 3, Section 19 of the 1997 Rules of Civil Procedure) as interpreted in relevant jurisprudence.

Factual Background

Petitioner owns multiple registered LEVI’S marks (word and stylized) and has licensed local use. Respondents held Registration No. 53918 for a stylized LIVE’S mark covering jeans and other apparel. Petitioner commissioned "Project Cherokee 5" (1995 consumer survey) showing high association/confusion: 86% associated LIVE’S with LEVI’S; 90% read the stylized LIVE’S as LEVI’S. Respondents argued differences in spelling, pronunciation, trade dress, price, and channels of distribution and contended established rights from prior use and registration.

Procedural History Before Administrative and Appellate Fora

IPO-BLA denied cancellation, finding no confusing similarity and citing differences in pronunciation, spelling, meaning, design, price, and trade channels; IPO-DG affirmed and invoked prior Supreme Court pronouncements (notably G.R. No. 162311). The CA dismissed the petition for review on grounds that the transfer of Registration No. 53918 to a third party rendered the case moot and that G.R. No. 162311 was res judicata.

Issues Presented to the Supreme Court

Whether the CA correctly dismissed the petition as moot and treated G.R. No. 162311 as res judicata; and
Whether, on the merits, the LIVE’S mark should be cancelled for confusing similarity / colorable imitation of petitioner’s LEVI’S marks.

Supreme Court’s Threshold Determination on Mootness

The Court held the CA erred in finding the case moot. Although IPO records showed that Registration No. 53918 had been assigned to Dale Sy on July 31, 2012, the registration remained valid and subsisting (not yet expired). The assignment occurred during the pendency of the cancellation proceeding; under the doctrine of transferee pendente lite, the transferee steps into the shoes of the transferor and is bound by the pending proceedings and judgment. Rule 3, Section 19 (Transfer of interest) permits continuation by the original party unless substitution is directed; jurisprudence confirms that transferees pendente lite are bound and need not be joined. Therefore the assignment did not render the petition moot or deprive the Court of practical relief.

Supreme Court’s Analysis on Res Judicata and G.R. No. 162311

Res judicata requires a final judgment on the merits by a court of competent jurisdiction. G.R. No. 162311 originated from preliminary investigation and certiorari review of a DOJ dismissal of a criminal complaint for unfair competition. The Court reaffirmed the settled rule that findings in preliminary investigations are not final judgments on the merits and thus do not give rise to res judicata. Preliminary investigations are inquisitorial and administrative in nature, aimed at determining probable cause, not adjudicating rights and obligations. Even where a prosecutorial dismissal is reviewed by courts, such determinations—grounded on the absence of probable cause—do not operate as conclusive determinations binding subsequent administrative or civil proceedings. Therefore G.R. No. 162311 is not a bar; it may be persuasive in some respects but does not preclude independent determination in this cancellation action.

Choice of Test for Confusing Similarity: Dominancy Test Confirmed

The Court applied the Dominancy Test as required by current statutory and jurisprudential direction. The En Banc Kolin Electronics decision abandoned the holistic (totality) test and confirmed legislative intent via Section 155 of RA 8293 to adopt the Dominancy Test, focusing on the dominant features of competing marks and the aural, visual, and connotative impressions they create in the mind of the ordinary purchaser under normal trade conditions. The Court therefore applied the Dominancy Test to the competing marks while still recognizing that the assessment considers overall marketplace impressions.

Application of Dominancy Test to LEVI’S and LIVE’S

Comparison of the dominant elements revealed both marks share the same five letters and a possessive apostrophe before the terminal S; the only difference is the transposition of the letters E and I (i.e., LIVE’S is an anagram of LEVI’S). Stylization similarities include the lowercase E with the remaining letters in uppercase in certain stylized forms. Given these dominant commonalities—the identical letters, apostrophe, similar stylization and the fact both marks appear on competing apparel goods—the Court found the dominant features likely to cause confusion in the ordinary purchaser’s mind. The transposition of letters does not sufficiently differentiate the dominant visual and aural impressions created by the marks.

Consideration of Labels, Trade Dress and Actual Confusion Evidence

While the Dominancy Test sufficed, the Court also noted that the actual product labels and trade dress exhibited further similarities (color schemes, borders, fringe banners, textual additives and the use of a number-design analogous to LEVI’S "501" vis-à-vis LIVE’S "105"), reinforcing the inference of colorable imitation. The consumer survey (Project Cherokee 5) provided evidence of actual confusion: a substantial majority associated LIVE’S with LEVI’S and read the stylized LIVE’S as LEVI’S. The Court treated these factors as corroborative of likelihood of confusion and colorable imitation.

Definition and Legal Effect of Colorable Imitation

The Court reiterated established juris

Case Syllabus (G.R. No. 219744)

Procedural History

Petition for review on certiorari filed by petitioner Levi Strauss & Co. assails: (a) the Court of Appeals (CA) Decision dated September 26, 2014 and (b) the CA Resolution dated July 28, 2015 in CA‑G.R. SP No. 126316, which dismissed petitioner’s petition for review for mootness and res judicata and affirmed the IPO decisions dismissing the petition for cancellation.
Administrative proceedings began with petitioner’s Petition for Cancellation filed on December 13, 1995 before the then‑Bureau of Patents, Trademarks and Technology Transfer (BPTTT, now the IPO) seeking cancellation of LIVE’S (Reg. No. 53918).
IPO Bureau of Legal Affairs (IPO‑BLA) issued a Decision dated January 29, 2009 denying the petition for cancellation and declaring respondents’ LIVE’S mark valid and subsisting.
IPO Director General (IPO‑DG) issued a Decision dated August 13, 2012 upholding the IPO‑BLA ruling.
Petitioner filed a petition for review under Rule 43 before the CA; the CA dismissed the petition (Decision, Sept. 26, 2014), denied reconsideration (Resolution, July 28, 2015), prompting this petition to the Supreme Court.

Facts

Petitioner: Levi Strauss & Co., a foreign corporation, owner of the word mark "LEVI’S" since 1946, extensively and continuously used for goods in Class 25 (NCL).
In 1972 petitioner granted Levi Strauss Phils., Inc. (LSPI) a non‑exclusive license to use its registered trademarks for manufacture and sale in the Philippines.
Respondent Sevilla was the original registrant of the mark LIVE’S (covering Class 25) and later assigned rights to Antonio L. Guevarra (a.k.a. Tony Lim), doing business as Vogue Traders Clothing Company.
In 1995 LSPI commissioned a consumer survey (Project Cherokee 5) to determine public confusion between petitioner’s marks and other marks (including LIVE’S). The Final Report indicated: 86% associated LIVE’S with LEVI’S; 90% read the stylized LIVE’S mark as “LEVI’S.”
Petitioner filed Petition for Cancellation of LIVE’S Registration No. 53918 on grounds of confusing similarity with petitioner’s "LEVI’S" marks.

Respondents’ Defenses (Guevarra and Sevilla)

Guevarra’s defenses: denied confusing similarity; argued negligible probability of confusion because purchasers give attention to goods; pointed to differences in price, hang tags, and other markings.
Sevilla’s defenses: (a) marks distinguishable by spelling and pronunciation and target market composed of mature, educated purchasers who scrutinize products; (b) presentation and trade dress differ and IPO approved LIVE’S registration despite petitioner’s LEVI’S; (c) LIVE’S had long been in use prior to challenge, vesting rights in respondents.

IPO‑BLA Decision (Jan. 29, 2009)

IPO‑BLA denied the petition for cancellation and declared LIVE’S valid and subsisting.
IPO‑BLA found no confusing similarity citing differences in pronunciation, spelling, meaning, designs, prices, and trade channels.
IPO‑BLA took note of Levi Strauss (Phils.) Inc. v. Lim, G.R. No. 162311 (Dec. 4, 2008) as relevant precedent in holding no likelihood of confusion despite Project Cherokee 5 results.

IPO Director General Decision (Aug. 13, 2012)

IPO‑DG upheld the IPO‑BLA ruling, reiterating inability to sustain petitioner’s contention that LEVI’S and LIVE’S are confusingly similar.
IPO‑DG relied substantially on G.R. No. 162311 in its analysis.

Court of Appeals Decision and Rationale (Sept. 26, 2014; Reconsideration denied July 28, 2015)

CA dismissed petitioner’s petition for review on grounds that the case was moot and academic because Registration No. 53918 for LIVE’S had been assigned to one Dale Sy (July 31, 2012).
CA also held that G.R. No. 162311 is res judicata and thus preclusive of petitioner’s claims.
CA’s dismissal was affirmed by the CA’s denial of reconsideration, prompting the present petition to the Supreme Court.

Issues Presented to the Supreme Court

Whether the CA correctly ruled that: (a) the case had been rendered moot and academic by assignment of the registration; and (b) G.R. No. 162311 is res judicata to bar the present cancellation action.
Whether petitioner’s Petition for Cancellation should be granted on the ground of confusing similarity between LEVI’S and LIVE’S marks.

Supreme Court Majority Holding — Disposition

The petition is GRANTED.
The CA Decision (Sept. 26, 2014) and Resolution (July 28, 2015) are REVERSED and SET ASIDE.
Trademark Registration No. 53918 for LIVE’S is CANCELLED.
Court finds CA erred in dismissing the petition on grounds of mootness and res judicata and proceeds to resolve the case on the merits.

Analysis — Mootness and Assignment pendente lite

Court explains mootness: case or issue is moot and academic when supervening events remove any justiciable controversy so adjudication would be practically useless.
IPO online database confirmed Registration No. 53918 was assigned to Dale Sy, but registration remained valid and subsisting (expiration Nov. 16, 2022).
Assignment of the registration occurred July 31, 2012 during pendency of the cancellation; as transferee pendente lite, Dale Sy is bound by the resolution of the pending case.
Court cites Sunfire Trading, Inc. v. Guy (G.R. No. 235279, Mar. 2, 2020) explaining transferee pendente lite stands in shoes of predecessor, and substitution or joinder is discretionary; transferee bound by proceedings and judgment existing at transfer moment.
Conclusion: assignment did not render case moot or academic; CA erred in dismissing for mootness.

Analysis — Res Judicata and G.R. No.