Case Summary (G.R. No. 202900)
Factual Background
SPASA is the owner and manufacturer of the footwear brand “Havaianas” and holds registered word marks and pattern logos for that brand in the Philippines. Kentex and Ong manufacture slippers bearing the brand name “Havana” and operate warehouses in Caloocan and Valenzuela. SPASA’s counsel filed a letter-complaint with the National Bureau of Investigation (NBI) on 12 August 2010 alleging sale and distribution of fake “Havaianas” products and requesting investigation and prosecution.
Investigation and Search Warrants
An NBI investigation team, led by Agent Terrence Agustin with market researchers, inspected several establishments and alleged the discovery of footwear marked “Havana” or “Havaianas” that closely resembled SPASA’s products and bore SPASA’s “Havaianas Rice Pattern Logo” and “Havaianas Greek Pattern Logo.” Agent Agustin filed applications for search warrants on 06 September 2010 for alleged violations of Republic Act No. 8293. The RTC, after an ex parte hearing at which the NBI presented samples and affidavits, issued Search Warrant Nos. 10-16378 to 10-16381 covering Kentex’s premises.
Motion to Quash and Evidence Presented
Following implementation of the warrants and seizure of respondents’ products, Kentex and Ong filed a Motion to Quash and to Return the Seized Goods. They submitted a Certificate of Copyright Registration dated 16 June 1995 for “Havana Footwear,” trademark and industrial design applications filed in October 2009, and the issued industrial design registrations. SPASA opposed the motion and lodged administrative proceedings with the Intellectual Property Office (IPO), including petitions for cancellation of respondents’ industrial design registrations and a complaint for trademark infringement and unfair competition. The IPO granted a writ of preliminary injunction in favor of SPASA on 01 June 2012.
Ruling of the Regional Trial Court
In its 16 December 2010 Order, the RTC denied the Motion to Quash. The trial court found probable cause for the issuance of the search warrants, concluding that respondents’ products bore confusing similarity to SPASA’s registered Havaianas Rice Pattern Logo and Havaianas Greek Pattern Logo, and that the “Havana” word mark used a font and style amounting to a colorable imitation of Havaianas. The RTC rejected arguments about market segment differences as irrelevant to the likelihood of confusion. The RTC denied reconsideration on 28 February 2011.
Ruling of the Court of Appeals
The CA granted respondents’ petition for certiorari and, in its 10 February 2012 Decision, reversed and set aside the RTC Orders and ordered the return of the seized properties. The appellate court reasoned that the RTC, in denying the Motion to Quash, should have reevaluated the facts to determine whether probable cause existed. The CA gave weight to respondents’ issued industrial design registrations and to the exclusive rights such registrations confer. The CA further held that permitting a search warrant to confiscate property that arguably embodies a legitimate right to pursue livelihood would be improper and that seized property should not remain in custodia legis pending inter partes administrative proceedings. The CA remarked that industrial design registrations are presumed valid pending cancellation proceedings before the IPO.
Issues Presented to the Supreme Court
SPASA brought the case to the Supreme Court by Petition for Review on Certiorari, contending that the CA misapplied the law and disregarded SPASA’s prior user and registrant rights in the Havaianas trademarks. SPASA raised, among other points, that the CA erred in treating the respondents’ industrial design registrations as dispositive of probable cause, failed to apply the “First-to-File” rule and the dominancy and confusion tests under the IP Code, and wrongly concluded that pending inter partes cancellation proceedings render search warrant applications premature. Respondents maintained that they lawfully manufactured “Havana” footwear, relied on their copyright and industrial design registrations, and that the CA correctly found absence of probable cause.
Subsequent Administrative Determinations by the IPO
During the pendency of litigation before the Supreme Court, the IPO issued Decisions dated 20 December 2013 cancelling respondents’ industrial design registrations for “Slipper” and “Sole.” The IPO applied Section 24.1 and concluded that SPASA’s earlier-disclosed trademarks constituted prior art. The IPO found that the respondents’ designs were practically identical to SPASA’s previously disclosed pattern logos and that SPASA’s applications predated respondents’ industrial design filings.
Settlement Between the Parties
On 28 March 2019 the parties executed a Settlement Agreement. Under its terms, the respondents admitted that only SPASA and its authorized channels were entitled to deal in products bearing the “HAVAIANAS” trademark in the Philippines. The respondents undertook not to sell or distribute counterfeit or colorable imitations of SPASA’s marks, warranted absence of infringing inventory, consented to condemnation and destruction of items seized pursuant to the subject search warrants and tendered payment of P146,000 for destruction costs, and agreed to execute further undertakings. The settlement also provided that SPASA would desist from pursuing certain criminal, civil, or administrative cases upon fulfillment of conditions, and both parties agreed to move for dismissal of listed cases. The respondents executed an Undertaking reiterating that they no longer manufactured or had inventories of infringing products.
Supreme Court Ruling
The Court dismissed the Petition as moot and academic in view of the executed Settlement Agreement and the Undertaking by respondents. The Court held that the settlement terminated the justiciable controversy between the parties and rendered any ad
...continue readingCase Syllabus (G.R. No. 202900)
Parties and Procedural Posture
- SAO PAULO ALPARGATAS S.A. was the owner and manufacturer of the footwear brand "Havaianas" and the registrant of several Havaianas marks in the Philippines.
- KENTEX MANUFACTURING CORPORATION and ONG KING GUAN owned and manufactured slippers branded "Havana" and operated warehouses in Caloocan and Valenzuela.
- The case originated from applications for Search Warrant Nos. 10-16378 to 81 filed after an NBI inquiry into alleged trademark infringement and unfair competition.
- The Regional Trial Court of Manila, Branch 7, denied the respondents' Motion to Quash and to return seized goods in Orders dated December 16, 2010 and February 28, 2011.
- The Court of Appeals reversed the RTC in a February 10, 2012 Decision and ordered the return of seized properties, prompting this Petition for Review on Certiorari to the Supreme Court.
Key Factual Allegations
- SPASA's counsel filed a letter-complaint with the NBI alleging sale and distribution of fake "Havaianas" products bearing confusingly similar marks and logos.
- NBI Agent Terrence Agustin and market researchers Lea Carmona and Winda San Andres Legaspi conducted an investigation and averred that they found footwear marked "Havana" or "Havaianas" that closely resembled SPASA's products.
- The investigation team observed delivery trucks loading and unloading the questioned products at Kentex's Caloocan warehouse, which led to the search-warrant applications.
- The execution of the search warrants resulted in the seizure of respondents' footwear inventory and related items.
Statutory Framework
- The principal statutory provisions invoked were Republic Act No. 8293 (RA 8293), otherwise known as The Intellectual Property Code, and specifically provisions concerning prior art and registrability.
- The IPO applied Section 24.1 of the IP Code in subsequent administrative rulings to define prior art as "everything which has been made available to the public anywhere in the world."
- SPASA relied on Section 147 of the IP Code to assert the exclusive right to prevent confusingly similar use of its registered trademarks.
Applications and Search Warrants
- On September 6, 2010, Agent Agustin filed ex parte applications for search warrants based on affidavits and specimen products of both "Havana" and "Havaianas."
- The RTC issued Search Warrant Nos. 10-16378 to 81, which covered Kentex's premises in Valenzuela and Caloocan, authorizing seizure of allegedly infringing goods.
- Respondents moved to quash the warrants and to return the seized goods, submitting a Certificate of Copyright Registration and IPO filings for industrial design and trademark applications.
Trial Court Ruling
- The RTC denied the Motion to Quash on December 16, 2010 and denied reconsideration on February 28, 2011.
- The RTC found probable cause for the warrants based on confusing similarity between respondents' products and SPASA's registered "Havaianas Rice Pattern Logo" and "Havaianas Greek Pattern Logo."
- The RTC concluded that the style and font of "Havana" constituted a colorable imitation of "Havaianas" such that the issuance of the search warrants was justified.
Court of Appeals Ruling
- The Court of Appeals reversed the RTC and ordered immediate return of the seized properties on the ground that respondents held registered industrial design rights.
- The CA emphasized that the cover pages of respondents' industrial design registrations vested e