Case Summary (G.R. No. 148222)
Factual background and P D’s claims
P D manufactured illuminated advertising display units (“light boxes”) and obtained a copyright certificate in 1981 covering what was characterized as “Advertising Display Units” under class “O” (prints, pictorial illustrations, advertising copies, labels, tags and box wraps). P D later registered the mark “Poster Ads” in 1988, but the registration covered stationeries (letterheads, envelopes, calling cards, newsletters). Beginning in the mid‑1980s, P D negotiated with SMI for lease and installation of its light boxes in SM branches; only the SM Makati contract was signed, and SMI later purportedly rescinded for nonperformance. Sometime thereafter, companies (Metro Industrial, EYD Rainbow) manufactured for SMI light boxes that P D contended were exact copies of its units; NEMI acted as marketing arm selling advertising space on such illuminated units. P D demanded cessation, removal, discontinuance of the “Poster Ads” mark and payment of P20,000,000, and when respondents did not satisfy all demands it sued for copyright and trademark infringement, unfair competition and damages. SMI and NEMI denied liability, asserted independent development or generic character of the mark, and counterclaimed for cancellation of P D’s registrations and damages.
RTC disposition and remedies awarded
The RTC of Makati found SMI and NEMI jointly and severally liable for copyright infringement under Section 2 of P.D. No. 49 (as amended), trademark infringement under Section 22 of R.A. No. 166 (as amended), and penalized them under applicable provisions (Section 28 PD 49; Sections 23–24 RA 166). The trial court awarded actual damages (P16,600,000.00), moral damages (P1,000,000.00), exemplary damages (P1,000,000.00), attorney’s fees (P1,000,000.00) plus costs; it ordered delivery and impounding/destruction of infringing units and materials and permanently enjoined respondents from further infringing P D’s copyright and trademark. The trial court dismissed respondents’ counterclaims.
Court of Appeals reasoning and reversal
The Court of Appeals reversed. It held that (a) the copyright registered by P D related to technical drawings and not to the utilitarian light boxes themselves — applying the Baker v. Selden principle that copyright protects expression (descriptive drawings) but not the underlying art/manufacture, and citing related authorities to the effect that copyright of technical drawings does not extend to constructed objects; (b) P D’s trademark registration for “Poster Ads” was limited by Section 20 of the Trademark Law to the goods specified in the certificate (stationeries), and therefore could not support exclusive rights against respondents’ use of the same words in advertising display units; and (c) “Poster Ads” was a generic contraction of “poster advertising” lacking secondary meaning, which further precluded trademark protection against respondents. Because the appellate court found no copyright or trademark infringement, it vacated the monetary awards and dismissed the complaint and counterclaims.
Issues the Supreme Court identified for resolution
The Supreme Court framed the central legal questions as: (1) whether copyright protection granted to engineering/technical drawings of an advertising display unit extends ipso facto to the light box depicted; (2) whether the light box required separate protection by patent in addition to copyright of drawings; (3) whether the owner of a registered trademark may prevent others from using the mark when it is an abbreviation of a descriptive term; and (4) relatedly, whether unfair competition or other remedies were available under the circumstances.
Copyright analysis and holding
The Court affirmed the Court of Appeals: P D’s copyright certificate was issued under class “O” of P.D. No. 49 (prints, pictorial illustrations, advertising copies, labels, tags, box wraps), and the statutory scope of copyright is limited to the categories enumerated by the law. The copyright therefore covered the technical drawings (pictorial illustrations) but did not extend to the light box as a utilitarian object. The ruling emphasized the established distinction that copyright protects the expression (the drawings) and not the underlying idea, art or manufacture, and relied on Baker v. Selden and subsequent jurisprudence holding that copyright in technical drawings does not bar others from constructing the object depicted. The Court noted admissions in the record that the light box was an engineering/marketing invention rather than a literary or artistic work and rejected the notion that titling the registration “Advertising Display Units” could expand statutory protection beyond the classes authorized by law. Accordingly, reproducing or constructing light boxes similar to those depicted in P D’s drawings did not constitute copyright infringement absent an unauthorized copying of the drawings themselves.
Patent considerations and exclusivity
The Court explained that patent law and copyright law protect distinct interests. P D had not secured a patent for the light boxes, and absent a patent there was no patent infringement cause of action: exclusive patent rights arise only upon grant of a patent after substantive examination, and an inventor acquires no common‑law monopoly in the invention merely by disclosure. The Court reiterated the policy reasons for the patent regime — rigorous examination, limited duration (noted as 17 years in the authorities cited), and the public interest in keeping unpatented inventions free for public use — and observed the inequity that would result if an inventor could obtain de facto perpetual exclusivity over a utilitarian invention by means of a copyright registration that avoids the patent office’s scrutiny. Therefore, because P D never obtained a patent, it could not enjoin others from manufacturing or marketing the light boxes on the basis of patent rights.
Trademark analysis and holding
Regarding “Poster Ads,” the Court upheld the Court of Appeals’ analysis that P D’s trademark registration was limited by its certificate to specific goods (stationeries). Under Section 20 of the Trademark Law, registration gives prima facie validity and exclusive right only as to the goods specified; it cannot be stretched to cover unrelated goods not listed. The Court noted that P D had not registered “Poster Ads” for use on advertising display units; it
...continue readingCase Syllabus (G.R. No. 148222)
Case Caption, Court and Decision
- Decision penned by Justice Corona, Third Division of the Supreme Court of the Philippines; petition for review on certiorari under Rule 45.
- G.R. No. 148222; Decision dated August 15, 2003.
- Petition by Pearl Dean (Phil.), Inc. (P D) seeking review of the Court of Appeals’ May 22, 2001 decision which reversed the Regional Trial Court (RTC) of Makati, Branch 133, October 31, 1996 decision in Civil Case No. 92-516.
- Supreme Court disposition: petition DENIED; decision of the Court of Appeals dated May 22, 2001 AFFIRMED in toto.
- Concurrence: Puno (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.
Parties and Nature of the Action
- Petitioner: Pearl Dean (Phil.), Inc. (P D) — a corporation engaged in manufacture of advertising display units called “light boxes”; marketed under the trademark “Poster Ads.”
- Respondents: Shoemart, Inc. (SMI) and North Edsa Marketing, Inc. (NEMI) — NEMI described as a sister company of SMI; NEMI’s marketing arm cited as Prime Spots Marketing Services, set up primarily to sell advertising space in lighted display units located in SMI’s different branches.
- Causes of action brought by P D: infringement of trademark and copyright, unfair competition, and damages. Respondents denied liability and counterclaimed for damages and cancellation of petitioner’s copyrights/trademark registrations.
Factual Antecedents (as summarized by the Court of Appeals and trial records)
- P D manufactured “light boxes” — advertising display units using specially printed posters sandwiched between plastic sheets and illuminated with back lights.
- Copyright and trademark filings by P D:
- Certificate of Copyright Registration dated January 20, 1981 (registrations in records referred to variously as PD-R-2558 / PD-R2588); described in the record as covering the illuminated display units or the technical drawings.
- Application for registration of trademark “Poster Ads” filed June 20, 1983; registered September 12, 1988 per Registration No. 41165 (certificate in the record covering “stationeries such as letterheads, envelopes and calling cards and newsletters”).
- Business relations and negotiations:
- From 1981 to about 1988, P D engaged Metro Industrial Services to manufacture its advertising displays.
- In 1985 P D negotiated with SMI for lease and installation of light boxes in SM City North Edsa; because SM City North Edsa was under construction, SMI offered SM Makati and SM Cubao as alternatives; only SM Makati contract was returned signed; SMI later purportedly rescinded the SM Makati contract in a January 14, 1986 letter alleging non-performance.
- P D protested the unilateral rescission and sought signing of SM Cubao contract; SMI did not reply substantively.
- Manufacturing by third parties for SMI:
- Metro Industrial Services later offered to construct light boxes for SMI; SMI commissioned ten (10) units from Metro Industrial.
- After Metro Industrial contract was terminated, SMI engaged EYD Rainbow Advertising Corporation to fabricate some 300 units in 1991, delivered and installed at SM Megamall and SM City on a staggered basis.
- Discovery of similar units and P D’s demands:
- Circa 1989 P D received reports that exact copies of its light boxes were installed at SM City and the fastfood section of SM Cubao; investigation revealed similar light boxes in two additional SM stores.
- P D discovered that NEMI sold advertising space in lighted display units in SMI stores.
- P D sent a December 11, 1991 demand letter to SMI and NEMI to cease use and remove the light boxes, discontinue use of the trademark “Poster Ads,” and pay compensatory damages of Twenty Million Pesos (P20,000,000.00).
- SMI suspended leasing of 224 light boxes; NEMI removed its “Poster Ads” advertisements from the lighted display units in SMI stores.
- Litigation:
- P D filed suit for copyright and trademark infringement, unfair competition and damages.
- SMI’s defenses: independently developed poster panels using commonly known techniques and available technology; asserted that “Poster Ads” was a generic term; argued trademark registration only covered stationeries; alleged P D’s advertising display units lacked copyright notice in violation of Section 27 of P.D. 49 and denied cause of action; counterclaimed for moral, actual and exemplary damages and for cancellation of P D’s Copyright Certificate No. PD-R-2558 (Jan. 20, 1981) and Certificate of Trademark Registration No. 4165 (Sept. 12, 1988).
- NEMI denied manufacturing, installing or using advertising display units and pleaded similar defenses and counterclaims.
Trial Court (RTC) Findings and Reliefs (October 31, 1996)
- RTC of Makati City found SMI and NEMI jointly and severally liable for:
- Infringement of copyright under Section 2 of P.D. 49, as amended.
- Infringement of trademark under Section 22 of R.A. No. 166, as amended.
- Penalized under Section 28 of P.D. 49, as amended, and Sections 23 and 24 of R.A. 166, as amended.
- Remedies and orders awarded by the RTC:
- Monetary damages: actual damages P16,600,000.00 (representing profits from 1991–1992), moral damages P1,000,000.00, exemplary damages P1,000,000.00, attorney’s fees P1,000,000.00, plus costs of suit.
- Deliver under oath for impounding in the National Library all SMI light boxes fabricated by Metro Industrial Services and EYD Rainbow Advertising Corporation.
- Deliver under oath to the National Library all filler-posters using the trademark “Poster Ads” for destruction.
- Permanently refrain from infringing P D’s copyright on the light boxes and its trademark “Poster Ads.”
- Dismissal of defendants’ counterclaims for lack of merit.
Court of Appeals Ruling (May 22, 2001) — Reversal of RTC
- Core holdings summarized:
- Copyright:
- The CA held the copyright covered only the technical drawings (class “O” work) and did not extend to the actual light boxes.
- Relied on precedent (noting Baker v. Selden and other authorities) that protection of drawings does not extend to the unauthorized duplication of the object drawn: “copyright extends only to the description or expression of the object and not to the object itself.”
- Concluded P D’s copyright certificate protected technical drawings, not the manufactured light boxes; hence no copyright infringement by SMI and NEMI for manufacturing similar light boxes.
- Trademark:
- Referred to Section 20 of the Trademark Law (R.A. 166, as amended): certificate of registration is prima facie evidence of validity and exclusive right to use the mark only “in connection with the goods, business or services specified in the certificate, subject to any conditions and limitations stated therein.”
- Observed P D’s trademark “Poster Ads” was registered for stationeries (letterheads, envelopes, calling cards, newsletters) under Registration No. 41165; respondents used the words on advertising display units — goods not specified in the registration.
- Cited Faberge, Inc. v. Intermediate Appellate Court (and other jurisprudence) to hold that registration confers exclusive right only as to goods specified; thus no trademark infringement for use on light boxes.
- Also found “Poster Ads” to be a simple contraction of “poster advertising,” a generic term; no convincing proof of secondary meaning that would extend exclusivity beyond the specification in the certificate.
- Consequences:
- Because there was no finding of either copyright or trademark infringement, the RTC’s monetary award had no legal basis.
- The CA reversed and set asi
- Copyright: