Title
Philip Morris, Inc. vs. Fortune Tobacco Corp.
Case
G.R. No. 158589
Decision Date
Jun 27, 2006
Philip Morris et al. sued Fortune Tobacco for trademark infringement over "MARK" cigarettes. Courts ruled no infringement, citing lack of proof of trademark fame, confusion, or reciprocity rights.
foreign tobacco companies
trademark infringement
trial court decision

Case Summary (G.R. No. 158589)

Factual Background

Petitioners are foreign corporations and holding companies owning Philippine certificates of registration for cigarette trademarks: "MARK VII" (PPO Certificate No. 18723), "MARK TEN" (PPO Certificate No. 11147), and "LARK" (PPO Certificate No. 19053, as assignee). Respondent is a Philippine corporation manufacturing and selling cigarettes under the mark "MARK". Petitioners alleged that respondent, without consent, manufactured and sold cigarettes bearing the identical or confusingly similar trademark "MARK", thereby causing likely confusion and deception among purchasers and violating their exclusive rights. Petitioners sought injunctive relief and damages for trademark infringement and relied on their Philippine registrations, Section 21-A of R.A. No. 166, and provisions of the Paris Convention.

Trial Court Proceedings

The Regional Trial Court dismissed the complaint in a Decision dated November 3, 1999. The trial court first held that petitioners failed to prove that their countries of domicile conferred reciprocal privileges to Philippine corporations under Section 21-A of R.A. No. 166, and therefore questioned petitioners’ capacity to sue absent compliance with the Corporation Code licensing requirements, invoking Section 133 thereof. The court further found that petitioners had not established actual use of their marks in local commerce nor acquired secondary meaning or well-known status in the Philippines. Applying the likelihood-of-confusion standard, the trial court concluded that the words and devices “MARK”, “TEN”, “LARK” and the Roman numerals did not point distinctly to origin or ownership and that petitioners failed to show deception of purchasers. The trial court accordingly dismissed the complaint and declined to award damages.

Interlocutory and Appellate History

The trial court denied petitioners’ prayer for a preliminary injunction in an earlier order dated March 28, 1973, an interlocutory ruling later addressed ultimately in another Supreme Court decision (G.R. No. 91332). Petitioners appealed the dismissal to the Court of Appeals. The Court of Appeals in CA-G.R. CV No. 66619 reversed the trial court only on the narrow point of petitioners’ legal capacity to sue, holding that petitioners could maintain the action, but it affirmed the trial court’s rejection of infringement and damages claims in a Decision dated January 21, 2003. The Court of Appeals denied petitioners’ motion for reconsideration on May 30, 2003.

Issues Presented to the Supreme Court

The petition presented two principal questions: (1) whether petitioners, as registrants of trademarks in the Philippines and nationals of Paris Convention countries, are entitled to enforce trademark rights and sue for infringement in Philippine courts without doing business in the Philippines or obtaining a license to do business, and (2) whether respondent’s use of the mark "MARK" for cigarettes constituted trademark infringement of petitioners’ registered marks and thus rendered respondent liable for damages.

Petitioners’ Contentions on Appeal

Petitioners argued that, as nationals of member countries of the Paris Convention, they possessed the right to sue in Philippine courts for trademark infringement without local licensing or actual business operations in the Philippines. They maintained that their Philippine registrations alone conferred the right to enforce their marks and that the marks had acquired reputation or were being used in the Philippines through importers and distributors, citing Converse Rubber Corporation v. Universal Rubber Products, Inc. Petitioners also invoked the TRIPS Agreement and the IP Code (R.A. No. 8293) to support protection based on fame and promotion absent actual local use.

Respondent’s Position

Respondent contested liability and argued that petitioners’ claims presented primarily factual issues unsuited for review under Rule 45. Respondent emphasized that "MARK" is a common word that does not by itself identify a source and that petitioners failed to prove actual use, secondary meaning, or that their marks were well-known in the Philippines. Respondent maintained the correctness of the Court of Appeals’ factual findings denying infringement and damages.

Threshold Legal Standards on Standing and Use

The Court reviewed governing principles. It acknowledged that registration gives prima facie evidentiary advantages under Section 20 of R.A. No. 166, but reiterated established doctrine that a foreign registrant must still satisfy the reciprocity requirement of Section 21-A unless the claim is sustained by the Paris Convention supply of reciprocal rights in limited circumstances. The Court held that membership in the Paris Union does not absolve foreign registrants from the statutory requirement of actual use in the Philippines for entitlement to exclusive protection, citing prior decisions including Philip Morris, Inc. v. Court of Appeals and Fortune Tobacco Corporation and Emerald Garment Mfg. Corporation v. Court of Appeals. Registration alone, the Court emphasized, does not perfect exclusive ownership; actual use is the perfecting ingredient.

Trademark Infringement Standard and Tests for Confusion

The Court reiterated that infringement under Sec. 22, R.A. No. 166 depends on a likelihood of confusion as to source or origin. It outlined two judicial tests: the dominancy test, which focuses on the dominant features likely to confuse; and the holistic test, which considers the mark as a whole including labels and packaging. The Court instructed that the ordinary purchaser test must be viewed in light of the product at issue; for cigarettes, purchasers a

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