Title
Levi Strauss Inc. vs. Vogue Traders Clothing Co.
Case
G.R. No. 132993
Decision Date
Jun 29, 2005
Levi Strauss alleged Vogue Traders’ "LIVE’S" jeans infringed its "LEVI’S" trademarks. Search warrants were issued, goods seized, and a civil case filed. The trial court granted a preliminary injunction, upheld by the Supreme Court, rejecting claims of due process violations and prejudgment.
trademark infringement case
writ of preliminary injunction
trial court

Case Summary (G.R. No. 132993)

Factual Background

In 1972, Levi Strauss & Co., the principal in Delaware, United States of America, granted petitioner a non-exclusive license to use LEVIS trademark, design, and name in the manufacture, marketing, distribution, and sale of clothing and other goods. The licensing arrangement was renewed several times, with the recent renewal covered by Certificate of Registration No. 1379-A.

Petitioner obtained BPTTT certificates of registration for multiple trademarks and composite marks, including LEVIS, 501, Two Horse Design, Two Horse Label, Two Horse Patch, Two Horse Label with Patterned Arcuate Design, Arcuate Design, and composite trademarks composed of Arcuate, Tab, and Two Horse Patch, among others.

Petitioner discovered trademarks registered to respondent that it claimed were confusingly similar to its marks. It then filed two BPTTT cancellation petitions: Inter Partes Case No. 4216 (for cancellation of Certificate of Registration No. 53918 covering LIVES) and Inter Partes Case No. 4217 (for cancellation of Certificate of Registration No. 8868 covering LIVES Label Mark).

Meanwhile, petitioner sought search warrants before the RTC of Manila, Branch 3, targeting respondent’s premises, which it associated with violation of Article 189 of the Revised Penal Code. On December 12, 1995, the trial court issued Search Warrant Nos. 95-757 and 95-758, based on probable cause that respondent manufactured, sold, and incorporated designs or marks in its jeans that were confusingly similar to petitioner’s LEVIs jeans. The warrants were enforced on December 13, 1995, resulting in the seizure of various goods bearing allegedly infringing markings.

Criminal charges followed against Tony Lim of respondent, but the case was eventually dismissed. The search warrants were later quashed.

The Civil Suit for Damages and Petitioner’s Counterclaim

On February 1, 1996, respondent filed a complaint for damages before the RTC of Manila, Branch 50, docketed as Civil Case No. 96-76944, naming petitioner as defendant. Respondent alleged that since January 1, 1988, it had been the lawful assignee and authorized user of the trademarks LIVES (under Certificate of Registration No. 53918) and LIVES Label Mark (under Certificate of Registration No. SR 8868), as well as copyright registrations for LIVES ORIGINAL JEANS, its pocket design, and hand tag. It claimed that seized goods were manufactured and used in its legitimate business and that respondent’s trademarks were not deceptively similar to petitioner’s. It sought recovery of seized items or their value, compensatory damages, additional damages for each day until restoration, exemplary damages, attorneys’ fees, and litigation costs.

Petitioner filed an amended answer with counterclaim. It denied infringement and alleged that respondent’s LIVES brand infringed petitioner’s licensed LEVIS brand. Petitioner also sought the cancellation of respondent’s copyright registration (Copyright Registration No. I-3838) and an injunction against further manufacture, sale, offering for sale, and advertising of denim jeans or slacks using a design allegedly substantially similar or a colorable imitation of petitioner’s trademarks.

Re-raffling to a Special Court and the Preliminary Injunction Incident

Following petitioner’s motion, the RTC issued orders to re-raffle the case among special courts designated under Administrative Order No. 113-95. The case was first forwarded to the Executive Judge (RTC Manila, Branch 23) and then to RTC Manila, Branch 1, the designated special court.

On December 4, 1996, respondent failed to appear at the scheduled hearing in Branch 1. Petitioner moved for the consequence of such non-appearance. The trial court declared respondent to have waived its right to present evidence to controvert petitioner’s application for a writ of preliminary injunction.

On December 10, 1996, the trial court granted petitioner’s application for a writ of preliminary injunction. It found that respondent intended to appropriate, copy, and slavishly imitate the genuine appearance of authentic LEVI’s jeans and to pass off its LIVES jeans as genuine LEVI’s jeans. The trial court reasoned that petitioner had cultivated substantial goodwill and that without immediate injunctive relief, respondent would continue to erode that goodwill by employing minute points of distinction that could mislead the public and muddle overall impression. It invoked Rule 58 and ordered petitioner to post a bond of P500,000.00. The trial court also set the main case hearing on February 5 and 12, 1997.

On respondent’s motion for reconsideration, the trial court denied relief on April 11, 1997. It emphasized that the injunction application was properly directed against the real property interest and the party who would be benefited or injured; that the acts enjoined fell within the requested ancillary relief; that respondent’s counterclaim for infringement did not amount to forum-shopping because the strict elements for such charge were not present; that an interlocutory injunction order did not amount to prejudgment; and that the evidence justified injunctive relief.

Court of Appeals Review and Delay of Trial Proceedings

Respondent elevated the matter to the Court of Appeals via certiorari. On August 13, 1997, the Court of Appeals annulled and set aside the RTC orders dated December 10, 1996 and April 11, 1997. It held that the trial court acted with grave abuse of discretion and in excess of jurisdiction. It ordered the trial court to desist from proceeding with Civil Case No. 96-76944 until the BPTTT finally resolved Inter Partes Cases Nos. 4216 and 4217.

Petitioner moved for reconsideration, but the Court of Appeals denied the motion on March 5, 1998.

Issues Raised by Petitioner

Petitioner then sought Supreme Court review, assigning errors that essentially challenged four rulings of the Court of Appeals: first, that the doctrine of primary jurisdiction barred the trial court from proceeding, including the issuance of preliminary injunctive relief; second, that the Court of Appeals should have dismissed respondent’s certiorari because the certification against forum-shopping was defective; third, that respondent was denied due process because it was deemed to have waived evidence due to non-appearance; and fourth, that the trial court’s injunction order prejudged the case’s merits.

The Parties’ Contentions Before the Supreme Court

Petitioner argued that the Court of Appeals misapplied the doctrine of primary jurisdiction. It maintained that even if cancellation petitions were pending before the BPTTT, the ordinary courts retained competence to hear infringement actions and provide provisional relief such as injunction and damages. Petitioner pointed to statutory provisions of the Trademark Law, as well as later jurisdictional clarifications under R.A. No. 8293, and to jurisprudence such as Conrad and Company, Inc. v. Court of Appeals and Shangri-La International Hotel Management Ltd. v. Court of Appeals. It further argued that the Court of Appeals erred in allowing the certiorari petition notwithstanding a defective certification against forum-shopping executed by counsel who was not shown to be a duly authorized corporate officer.

Petitioner also argued that respondent was not denied due process, because respondent’s counsel had been notified, and respondent failed to appear without valid justification at the hearing where the case was treated as submitted on petitioner’s evidence. Lastly, petitioner contended that the preliminary injunction did not prejudge the case because the court had not decided the main prayer and had merely preserved the status quo pending trial.

Respondent, for its part, defended the Court of Appeals’ conclusions. It supported the notion that the trial court should have been barred from proceeding until resolution of the BPTTT cancellation cases. It also relied on its claim that it was denied due process due to the trial court’s waiver ruling. On the injunction issue, it contended that the trial court’s determinations were tantamount to a prejudgment of the merits.

Legal Basis and Reasoning of the Supreme Court

The Supreme Court held that the petition had merit and reversed the Court of Appeals. It focused on jurisdiction and procedural compliance, then addressed due process and prejudgment.

On primary jurisdiction and the effect of pending BPTTT cancellation cases, the Court explained that while BPTTT had exclusive cognizance over administrative cancellation actions under Section 17 grounds, an action for infringement and incidental remedies, including injunction and damages, belonged to ordinary courts. It relied on doctrine articulated in Conrad and Company, Inc. v. Court of Appeals, reiterated in Shangri-La International Hotel Management Ltd. v. Court of Appeals. Under that doctrine, an administrative cancellation petition could not, by itself, operate to restrain courts from exercising jurisdiction already conferred upon them for infringement and related remedies.

The Court further treated R.A. No. 8293 as expanding and clarifying the jurisdictional rules. It cited Section 151.2, which provided that the court or administrative agency vested with jurisdiction to enforce rights in a registered mark could also determine whether the registration could be cancelled under the Act. It underscored that a suit to enforce a registered mark with the proper court or agency excluded other courts or agencies from assuming jurisdiction over a subsequently filed petition to cancel the same mark, while earlier filing of a cancellation petition before BPTTT did not constitute a prejudicial question requiring resolution prior to enforcing rights. The Court also cited Sections 156 and 161—on damages and injunction for infringement and on the court’s authority in actions involving registered marks to determine rights, order cancellation, and rectify the register.

The Co

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