Case Summary (G.R. No. 148222)
Factual Background
– PD secured a copyright certificate for its light‐box technical drawings (Class “O” work) on January 20, 1981 and applied for the “Poster Ads” trademark on June 20, 1983, registered on September 12, 1988 for stationery items.
– In 1985 PD negotiated with SMI to install light boxes in SM City branches; only the Makati contract was signed. SMI later rescinded that contract unilaterally.
– In 1989–1991 SMI commissioned Metro Industrial Services and then EYD Rainbow Advertising to fabricate some 300 units similar to PD’s light boxes, which were installed in various SM malls.
– Upon discovering these installations, PD sent a December 11, 1991 demand letter to SMI and NEMI to cease use of the light boxes and the “Poster Ads” mark and to pay ₱20 million in damages.
Trial Court Findings and Ruling
The Makati RTC (Oct. 31, 1996) found SMI and NEMI jointly liable for:
– Copyright infringement under P.D. 49, as amended;
– Trademark infringement under R.A. 166, as amended;
– Unfair competition.
It awarded PD ₱16.6 million actual damages, ₱1 million each in moral and exemplary damages, ₱1 million attorney’s fees, costs, and issued injunctions compelling delivery and destruction of infringing units and posters.
Court of Appeals Reversal
On May 22, 2001, the CA held:
- The copyright on PD’s technical drawings did not extend to the functional light‐box product (citing Baker v. Selden and related U.S. precedent).
- The “Poster Ads” trademark registration covered only stationery, not advertising display units, per Section 20 of R.A. 166 and Supreme Court jurisprudence (Fabergé v. IAC).
- The mark “Poster Ads” was generic and lacked secondary meaning.
It dismissed PD’s complaint and SMI/NEMI’s counterclaims.
Issues Presented to the Supreme Court
- Whether PD’s copyright in its drawings ipso facto protected the light‐box product.
- Whether absence of a patent precluded protection of the light‐box invention.
- Whether PD could prevent others from using a generic abbreviation—“Poster Ads.”
- Whether SMI and NEMI were liable for unfair competition or bad‐faith negotiation.
Supreme Court Analysis on Copyright
– Copyright under P.D. 49, Sec. 2(O) protects “prints, pictorial illustrations, advertising copies, labels, tags and box wraps”—i.e., the drawings—but not functional objects.
– PD’s certificate covered pictorial illustrations (the technical drawings) only.
– The functional light box, properly the subject of patent protection, was not protected by copyright; reproducing the product did not infringe the drawing’s copyright.
Supreme Court Analysis on Patent
– PD never obtained a patent; hence it acquired no exclusive rights to the light‐box invention.
– Disclosure of the design via copyright registration without patent meant the invention entered the public domain for free use.
– The exclusive right to exclude arises solely from a patent grant.
Supreme Court Analysis on Trademark
– PD’s “Poster Ads” mark was registered only for stationery items and cannot be e
Case Syllabus (G.R. No. 148222)
Factual Background
- Pearl Dean (Phil.), Inc. (“PD”) manufactures illuminated advertising display units known as light boxes, protected by a Certificate of Copyright Registration (Jan. 20, 1981) and the trademark “Poster Ads” (Registration No. 41165, Sept. 12, 1988).
- From 1981 to 1988, PD subcontracted Metro Industrial Services to fabricate its light boxes.
- In 1985, PD negotiated with Shoemart, Inc. (“SMI”) to install light boxes in SM City North Edsa; agreements eventually covered SM Makati and SM Cubao.
- SMI refused to sign the Cubao contract and unilaterally rescinded the Makati contract in January 1986 for alleged nonperformance; PD protested in February 1986.
- In 1987–1991, SMI engaged Metro Industrial and then EYD Rainbow Advertising to fabricate over 300 light boxes for various SM branches.
- In 1989, PD discovered identical light boxes installed in multiple SM outlets and that North Edsa Marketing, Inc. (“NEMI”) marketed advertising space in those units.
- PD sent a demand letter (Dec. 11, 1991) to SMI and NEMI to cease using the light boxes, remove the “Poster Ads” mark, and pay ₱20 million in damages.
- SMI suspended leasing of 224 light boxes; NEMI removed “Poster Ads” ads, but PD filed suit alleging trademark and copyright infringement, unfair competition, and damages.
Trial Court Decision (RTC, Makati, Oct. 31, 1996)
- Held SMI and NEMI jointly and severally liable for:
- Copyright infringement under Section 2 of PD 49
- Trademark infringement under Section 22 of RA 166
- Unfair competition
- Awarded PD:
- Actual damages: ₱16,600,000
- Moral damages: ₱1,000,000
- Exemplary damages: ₱1,000,000
- Attorney’s fees: ₱1,000,000
- Costs of suit
- Ordered delivery and impounding or destruction of infringing light boxes and posters; permanent injunction
- Dismissed defendants’ counterclaims
Court of Appeals Decision (May 22, 2001)
- Reversed RTC and dismissed the complaint and counterclaims for lack of merit
- Held:
- Copyright