G.R. No. 162311 - Levi Strauss , Inc. vs. Lim

Case Summary (G.R. No. 162311)

Factual Background

Levi Strauss (Phils.), Inc. is a duly registered domestic corporation and licensee of Levi Strauss & Co. It held exclusive authority in the Philippines to manufacture, distribute, and sell goods bearing the LEVI’S trademarks, which have long-standing registrations and use in the Philippines. In 1995 petitioner complained to the Inter-Agency Committee on Intellectual Property Rights that garments bearing colorable imitations of LEVI’S marks were being manufactured. Surveillance identified respondent’s premises as producing and selling jeans under the mark “LIVE’S.” Search warrants were executed on respondent’s premises and numerous garments, accessories, and manufacturing paraphernalia were seized.

Preliminary Investigation and Seizures

Operatives of the Philippine National Police implemented two search warrants and seized finished and unfinished pants, hangtags, buttons, patches, rivets, and sewing equipment. The PNP Criminal Investigation Command filed a complaint with the DOJ alleging unfair competition under Article 189. Respondent filed a counter-affidavit asserting that LIVE’S was a registered trademark, that a patch-pocket design had copyright registration, and that his goods were not likely to deceive the ordinary purchaser. Petitioner replied, alleging numerous points of similarity between LIVE’S and LEVI’S, including arcuate backpocket stitching, the use of a red tab, similar patch designs, the use of “105” as a play on “501,” and copied carton tickets.

Department of Justice Rulings

The investigating prosecutor recommended dismissal on October 8, 1996, finding the goods were not clothed with an appearance likely to deceive the ordinary purchaser. Assistant Chief State Prosecutor approved the recommendation. Secretary Guingona affirmed the dismissal on January 9, 1998, emphasizing differences in spelling, meaning, and pronunciation between LIVE’S and LEVI’S, and noting respondent’s registration of his mark as indicative of good faith. Petitioner moved for reconsideration and submitted a consumer survey. Secretary Bello granted the motion on June 5, 1998, directed the filing of an information, and found that respondent had given his products the general appearance of petitioner’s goods and intended to deceive the buying public. Respondent then moved for reconsideration, and Secretary Cuevas granted the motion on May 7, 1999, ordering the dismissal of charges.

Court of Appeals Proceedings and Disposition

Petitioner sought judicial review with the Court of Appeals by filing a petition for review under Rule 43 of the 1997 Rules of Civil Procedure. The CA affirmed the dismissal of the unfair competition complaint on October 17, 2003. The CA applied the relevant factors for likelihood of confusion, including circumstances of sale, class of purchasers, and actual occurrence or absence of confusion. The appellate court found affirmative distinguishing features in respondent’s products, considered differences in spelling and pronunciation, backpocket design details, packaging and pricing, and rejected petitioner’s theory of post-sale confusion, holding that the probability of deception must be tested at the point of sale.

Issues Presented

Petitioner advanced multiple assignments of error, contending that the CA erred by: requiring actual confusion or direct proof of intent to deceive; holding that LIVE’S did not unfairly compete with LEVI’S despite alleged copying of six trademarks; disregarding the consumer survey and expert affidavit; limiting the determination of confusion to the point of sale; and failing to direct the Secretary of Justice to file an information against respondent.

The Supreme Court’s Ruling

The Supreme Court denied the petition and affirmed the Court of Appeals. The Court first held that the proper remedy to challenge a Justice Secretary’s resolution is a petition for certiorari under Rule 65, not an appeal under Rule 43. It explained that the Secretary’s resolution on the investigation is final in the ordinary course and that the aggrieved party’s recourse is by certiorari to demonstrate grave abuse of discretion amounting to excess or lack of jurisdiction. The Court concluded that petitioner did not show grave abuse of discretion and that the DOJ’s determinations were within the exercise of prosecutorial discretion.

Legal Basis and Reasoning

The Court emphasized that the prosecutor and the Justice Secretary possess discretion to determine whether probable cause exists to file an information, and that courts may not substitute their judgment absent grave abuse of discretion. The Court reiterated that a prosecutor need not file charges when unconvinced that evidence supports a reasonable belief of guilt. The elements of unfair competition under Article 189 were recited: (a) giving goods the general appearance of another’s goods; (b) the general appearance manifested in goods, packaging, devices, or other features; (c) offering or selling those goods with like purpose; and (d) actual intent to deceive the public or defraud a competitor. The Court held that all elements must be proved and that the DOJ properly found insufficient evidence to establish each element, particularly the element of intent to deceive.

Application of Precedent and Evidentiary Assessment

The Court applied prior jurisprudence, including Emerald Garment Manufacturing Corporation v. Court of Appeals, Del Monte Corporat

Case Syllabus (G.R. No. 162311)

Parties and Posture

Levi Strauss (Phils.), Inc. is the petitioner and a duly registered domestic corporation and licensee of LS & Co. for use of LEVI’S trademarks in the Philippines.
Tony Lim is the respondent doing business as Vogue Traders Clothing Company and was investigated for manufacturing and selling garments bearing the mark "LIVE’S."
The case reached the Supreme Court by a petition for review on certiorari under Rule 45 from a Decision and Resolution of the Court of Appeals.
Petitioner originally sought review in the Court of Appeals by filing a petition for review under Rule 43, which the Supreme Court characterized as the wrong mode of appeal from DOJ resolutions.
The primary legal contest is whether there was probable cause to charge respondent with Article 189 unfair competition of the Revised Penal Code prior to its repeal by Section 239 of RA No. 8293.

Key Facts

Levi Strauss (Phils.), Inc. received a non-exclusive license in 1972 to use LS & Co.’s registered trademarks and trade names for manufacture and sale of garments in the Philippines.
Petitioner asserted exclusive authority to manufacture, distribute, and sell products bearing the LEVI’S trademarks in the Philippines and alleged first commercial use there in 1946.
In 1995 petitioner lodged a complaint alleging that respondent produced garments using colorable imitations of petitioner’s trademarks and that respondent marketed garments under the mark LIVE’S.
Police operatives executed search warrants on December 13, 1995 at respondent’s premises and seized finished and unfinished pants, hangtags, buttons, rivets, patches, sewing machines, and other items.
The PNP Criminal Investigation Command filed a complaint with the DOJ alleging confusing similarity between LEVI’S and LIVE’S products.
Respondent produced a counter-affidavit asserting that LIVE’S was a registered trademark and that a patch pocket design was registered for copyright, and that the issue of confusing similarity belonged to trademark cancellation proceedings.
Petitioner’s reply detailed six asserted similarities including a copied arcuate pocket design, a "105" play on "501," similar wordmarks, placement of a red tab, a patch resembling petitioner’s two-horse patch, and allegedly slavish copying of carton tickets.
Petitioner submitted the results of a consumer survey purportedly showing confusion between the marks.

DOJ Proceedings

A prosecution attorney recommended dismissal of the complaint on October 8, 1996, a recommendation approved by the Assistant Chief State Prosecutor.
Then Secretary of Justice Teofisto Guingona affirmed the dismissal on January 9, 1998, finding no proof that anyone was actually deceived and noting differences in spelling, meaning, and pronunciation between LIVE’S and LEVI’S.
Petitioner filed a motion for reconsideration and submitted a consumer survey, after which Secretary Silvestre Bello III reversed Guingona on June 5, 1998 and directed the filing of an information for unfair competition.
Secretary Bello found that respondent appropriated the general appearance of petitioner’s product through the arcuate design, the 105 mark, the patch, the red tab, similar wordings, and similar packaging and concluded there was intent to deceive.
Respondent moved for reconsideration and Secretary Serafin Cuevas granted the motion on May 7, 1999, reinstating dismissal for lack of probable cause.

CA Proceedings

Petitioner filed a petition for review to the Court of Appeals under Rule 43, which the CA entertained and on October 17, 2003 affirmed the dismissal of the unfair competition complaint.
The Court of Appeals evaluated all relevant factors affecting likelihood of confusion, including circumstances of sale, class of purchasers, and the actual occurrence or absence of confusion.
The CA found distinguishing features in respondent’s products, including differences in spelling and pronunciation, back