G.R. No. 132604 - Sambar vs. Levi Strauss and Co.

Case Summary (G.R. No. 132604)

Procedural History

Respondents first sent a cease-and-desist demand in September 1987. They filed suit against Sambar (CVSGE) and later amended to include CVSGIC and impleaded the Director of the National Library. The Regional Trial Court (Branch 66, Makati) issued a preliminary injunction which it later made permanent, awarded damages and attorney’s fees, and ordered the cancellation of Copyright Registration No. 1-1998 issued in Sambar’s name. The Court of Appeals affirmed. The Supreme Court reviewed the matter on certiorari, affirmed the lower courts’ holdings generally, but modified the damages award by deleting nominal damages and confirming temperate damages of P50,000, exemplary damages, attorneys’ fees, and cancellation of the copyright registration.

Factual Findings Relevant to Relief

Key factual findings by the lower courts, which the Supreme Court accepted as binding: LS&Co. owns a registered arcuate mark (U.S. and Philippine registrations); LS&Co. licensed LSPI to use and protect the mark in the Philippines; CVSGIC manufactured, advertised and sold “Europress” jeans bearing a double-arc back-pocket design similar in appearance to Levias’ arcuate mark; Sambar obtained Copyright Registration No. 1-1998 for an arcuate design and consented to CVSGIC’s use of that design; petitioners failed to present evidence at designated hearings and thus were held to have waived that opportunity.

Contentions of the Parties

Petitioner argued there was no colorable imitation and thus no infringement because differences were observable and the marketplace context (distinct store displays, other branding elements) prevented consumer confusion; he further claimed non-involvement with CVSGIC and denied authorizing use of any copyrighted design, arguing burden rested on respondents to prove these connections. Respondents argued the Europress back-pocket double-arc was a colorable imitation of their registered arcuate mark likely to cause confusion, relied on market research indicating confusion, and invoked their trademark registrations and licensing relationship to assert infringement, entitlement to damages, injunction, and cancellation of Sambar’s copyright registration because a copied design lacks originality.

Issues Presented on Review

The Supreme Court framed the primary legal questions as: (1) whether petitioner infringed respondents’ arcuate design; (2) whether petitioner is jointly and solidarily liable with CVSGIC for infringement; and (3) whether respondents are entitled to nominal, temperate and exemplary damages and cancellation of petitioner’s copyright registration.

Standard of Review and Deference to Factual Findings

The Court emphasized the settled rule that factual determinations made by the trial court, and concurred in by the Court of Appeals, are generally binding on the Supreme Court unless tainted by arbitrariness or palpable error. The Court identified the matter of whether the Europress design infringed Levias’ arcuate mark as primarily factual, concluding that the lower courts’ factual findings were not shown to be arbitrary or manifestly erroneous and thus warrant deference.

Analysis on Trademark Infringement

Applying Section 22 of R.A. No. 166 and established principles, the Court affirmed that trademark infringement does not require exact duplication; a “colorable imitation” that is likely to cause confusion, mistake or deception suffices. Given the concurrence of the trial court and the Court of Appeals that the Europress double-arc was sufficiently similar to the Levias arcuate and that market circumstances could produce confusion (supported by respondents’ evidence), the Supreme Court found no basis to disturb the infringement finding.

Analysis on Joint and Solidary Liability of Petitioner

The Court treated petitioner's claims of non-involvement with CVSGIC and denial of authorization as affirmative defenses. Under Rule 131, the burden to prove such affirmative defenses lies with the party asserting them. Because petitioner did not adequately prove lack of connection or lack of authorization and because the lower courts found that petitioner owned the copyright and consented to CVSGIC’s use, the Court sustained the finding of petitioner’s liability, emphasizing that ownership of the copyright plus consent to CVSGIC’s use rendered petitioner answerable even if corporate relationships were contested.

Analysis on Burden of Proof and Procedural Position

The Court reiterated that petitioner’s answer admitted key facts (ownership of the copyright, existence of Europress products bearing a similar design) while asserting avoidance defenses (no authorization, non-connection with CVSGIC). Such avoidance defenses required proof by petitioner. The Court found petitioner failed to discharge that burden; additionally, petitioners’ failure to present evidence at scheduled hearings led to the trial court’s conclusion that they waived that opportunity, further supporting the lower courts’ factual conclusions.

Damages: Nominal, Temperate and Exemplary; Measure and Rationale

The Court examined entitlement to damages under Section 23 of R.A. No. 166 (damages or an award based on reasonable percentage of gross sales where exact damages cannot be ascertained; doubling where bad faith is shown). The courts below awarded P50,000 as “temperate and nominal” damages, P10,000 exemplary damages, and P25,000 attorneys’ fees. The Supreme Court found awarding both nominal and temperate damages erroneous because nominal damages are symbolic while temperate damages presuppose some pecuniary loss that cannot be precisely proven. Given the finding of infringement and respondents’ reputational/global reach, the Court concluded te

Case Syllabus (G.R. No. 132604)

Facts

On September 28, 1987, respondents (Levi Strauss & Co. and Levi Strauss (Phil.), Inc.) through their legal officer demanded that CVS Garment Enterprises (CVSGE) desist from using a stitched arcuate design on Europress jeans advertised in the Manila Bulletin.
Atty. Benjamin Gruba, counsel for CVSGE, replied that the arcuate design on Europress back pockets was different from the design on Levi’s back pockets and asserted that his client had a copyright on the design it was using.
Respondents filed a complaint against Venancio Sambar, doing business as CVSGE, and impleaded the Director of the National Library.
Summons to Sambar was sent to his business address at 161-B Iriga corner Retiro, La Loma, Quezon City. Atty. Gruba mistakenly received the original summons, returned it, and manifested in court that CVSGE had ceased operations at the premises and that CVS Garment and Industrial Company (CVSGIC) had taken over occupation. He also claimed ignorance of Sambar’s whereabouts.
Respondents amended the complaint to include CVSGIC. When respondents learned the whereabouts of Sambar and CVSGE, the case was revived.
Respondents alleged that Levi Strauss & Co. owns the arcuate design trademark registered in the U.S. (U.S. Trademark Registration No. 404,248, Nov. 16, 1943) and registered in the Philippines (Certificate of Registration No. 20240, Oct. 8, 1973); that LS&Co. granted LSPI a non‑exclusive license (Trademark Technical Data and Technical Assistance Agreement, 1972) and later in 1983 appointed LSPI as agent and attorney‑in‑fact to protect the trademark in the Philippines; and that in 1987 CVSGIC and Sambar, without consent, manufactured, advertised and sold Europress denim pants bearing a back pocket design similar to the arcuate trademark, causing public confusion and prejudice to respondents’ goodwill and property rights.
CVSGIC admitted manufacturing, selling and advertising Europress jeans bearing a back pocket design of two double arcs meeting in the middle, but denied infringement and unfair competition, asserting segregation of display rooms in department stores and claiming its own original arcuate design evidenced by Copyright Registration No. 1‑1998; CVSGIC counterclaimed for actual, moral and exemplary damages.
Petitioner Venancio Sambar filed a separate answer denying connection with CVSGIC, admitting that Copyright Registration No. 1‑1998 was issued in his name but denying he used or authorized use of the copyrighted design; he counterclaimed for moral and exemplary damages and attorney’s fees.

Procedural History

The trial court issued a writ of preliminary injunction enjoining CVSGIC and petitioner from manufacturing, advertising and selling pants with the arcuate design on back pockets.
CVSGIC and petitioner failed to appear at the October 13 and 27, 1993 hearings to present evidence and the trial court ruled they waived their right to present evidence.
On May 3, 1995, the trial court rendered judgment: (a) making the writ permanent; (b) ordering defendants CVSGIC and Venancio Sambar to pay plaintiffs jointly and solidarily P50,000 as temperate and nominal damages, P10,000 as exemplary damages, P25,000 as attorney’s fees and litigation expenses, and costs.
On reconsideration (July 14, 1995), the trial court affirmed the foregoing and additionally ordered the Director of the National Library to cancel Copyright Registration No. 1‑1998 issued in the name of Venancio Sambar.
Petitioner appealed to the Court of Appeals (CA‑G.R. CV No. 51553). On January 30, 1998 the Court of Appeals affirmed the trial court’s judgment in toto.
Petitioner filed a petition for review on certiorari to the Supreme Court (G.R. No. 132604). The Supreme Court rendered its decision reported at 428 Phil. 425 (March 6, 2002), modifying the CA judgment by deleting nominal damages and awarding P50,000 solely as temperate damages, and otherwise affirming the judgment (per Quisumbing, J.; Bellosillo (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concurring).

Issues Presented

Whether petitioner infringed respondents’ arcuate design trademark.
Whether petitioner is jointly and solidarily liable with CVS Garment and Industrial Company for trademark infringement.
Whether respondents are entitled to nominal, temperate and exemplary damages and whether Copyright Registration No. 1‑1998 issued in petitioner’s name should be cancelled.

Petitioner's Contentions

There was no infringement because there was no colorable imitation that deceived or confused the public; differences in designs and other identifying marks on Levi’s products prevented confusion; cited Emerald Garment Manufacturing Corporation v. Court of Appeals as authority.
The long history and popularity of Levi’s trademark made it readily identifiable, reducing likelihood of confusion.
Petitioner was not connected with CVSGIC and respondents did not prove his specific acts of infringement to make him liable for damages.
The burden to prove petitioner’s connection with CVSGIC and authorization to use the design rests with respondents.
The trial court erred in awarding both nominal and temperate damages (invoking Ventanilla v. Centeno); nominal damages preclude temperate damages.
Exemplary damages were inconsistent with the trial court’s finding that the Europress design was not similar to Levi’s and that no pecuniary loss was shown.