Case Summary (G.R. No. 102361-62)
Key Dates
– Zuneca’s BFAD Certificate of Product Registration for “ZYNAPS”: April 15, 2003; marketing since 2004
– Natrapharm’s IPO registration of “ZYNAPSE”: September 24, 2007
– RTC decision (Quezon City, Branch 93): December 2, 2011
– CA decision (CA-G.R. CV No. 99787): October 3, 2013
– SC decision (G.R. No. 211850): September 8, 2020
Applicable Law
– 1987 Constitution: Articles II § 15; XIII § 12; XIV § 13
– IP Code (R.A. 8293): §§ 122–123.1(d), 124.2, 138, 145, 147.1, 151–159
– Prior Trademark Law (R.A. 166, as amended)
– Paris Convention; TRIPS Agreement
Facts
Zuneca began importing and selling carbamazepine under the brand “ZYNAPS” in the Philippines after securing BFAD approval in April 2003. Natrapharm later registered “ZYNAPSE” with the IPO in September 2007 for citicoline. Both parties concede the marks are confusingly similar. Natrapharm sought injunction, damages, and destruction of infringing goods. Zuneca countered as prior user, alleging Natrapharm’s bad-faith registration and fraud.
Procedural History
– RTC found Zuneca liable for infringement (IP Code § 155), awarded damages to Natrapharm, and dismissed Zuneca’s counterclaims.
– CA affirmed, holding registration (not use) determines ownership and that Natrapharm registered in good faith.
– SC granted Rule 45 certiorari, focusing on trademark ownership and infringement under the 1987 Constitution and IP Code.
Issues
- Is trademark ownership acquired exclusively by registration (§ 122)?
- Does first-to-file in good faith defeat prior use in good faith (§ 123.1(d), § 159.1)?
- Was Natrapharm’s registration made in bad faith?
- Should Zuneca be liable for infringement and subject to injunction, damages, and destruction?
- Did Zuneca’s counterclaims warrant relief?
Ruling
– Under the IP Code, trademark rights are acquired by valid registration (§ 122) and maintained by actual use (DAU, §§ 124.2, 145).
– Natrapharm, as first-to-file in good faith, owns “ZYNAPSE” and may prevent confusingly similar marks (§ 147.1).
– Zuneca, as prior user in good faith, is exempt from infringement liability under § 159.1 and may continue using “ZYNAPS.”
– Natrapharm’s registration was not shown to be in bad faith. Zuneca’s bad-faith allegations failed.
– Zuneca’s infringement liability (damages, injunction, dest
Case Syllabus (G.R. No. 102361-62)
Background and Context
- Dispute centers on two confusingly similar pharmaceutical trademarks: “ZYNAPS” (carbamazepine) and “ZYNAPSE” (citicoline).
- Both parties admit likelihood of confusion; question is who may bar the other’s use.
- Marks used and/or registered after effectivity of the Intellectual Property Code of 1998 (RA 8293).
- First –of–its–kind Philippine case on the interplay of registration, prior use, and public‐health concerns in trademark law.
Facts of the Case
- Zuneca Pharmaceutical (Zuneca), Dr. Venus Arain and Mr. Akram Arain: imported and sold carbamazepine as “ZYNAPS” since 2004 under BFAD Certificate of Product Registration dated April 15, 2003.
- Natrapharm, Inc. (Natrapharm): manufactured, marketed and distributed citicoline as “ZYNAPSE”; trademark registered September 24, 2007 (IPO Reg. No. 4-2007-005596); secured BFAD product listing thereafter.
- Both marks cover medical drugs, are confusingly similar, and used in the same industry.
- Natrapharm sued in 2007 for injunction, infringement, damages and destruction; Zuneca counterclaimed for cancellation of “ZYNAPSE,” prohibition, damages for fraudulent registration, and ancillary relief.
Procedural History
- RTC Quezon City, Branch 93 (Dec. 2, 2011): found Zuneca liable under IP Code Secs. 155–155.2; awarded Natrapharm P1 M actual and P1 M exemplary damages, P200 K attorney’s fees, costs; granted injunction and destruction of infringing goods; dismissed Zuneca’s counterclaims.
- CA (Oct. 3, 2013; recon. denied Mar. 19, 2014): affirmed RTC; held registration—not prior use—acquires ownership; Natrapharm acted in good faith; Zuneca liable; counterclaims lacked merit.
- SC (Sep. 8, 2020): GR No. 211850, partly granted petition: confirmed Natrapharm’s registration, recognized Zuneca as prior good-faith user protected under IP Code Sec. 159.1; set aside infringement ruling, damages, injunction, destruction order; denied TRO/preliminary injunction; ordered labeling directive and FDA monitoring.
Issues Presented
- Does first-to-file registrant in good faith prevail over a prior good-faith user under IP Code?
- Is ownership of a trademark acquired solely by registration, or also by prior use?
- Did Natrapharm register “ZYNAPSE” in bad faith?
- Is Zuneca liable for infringement and subject to damages, injunction and destruction of goods?
- Should Zuneca’s counterclaims for cancel