FACTS:

Petitioner filed an application for the issuance of search warrants against the outlet and warehouse operated by respondents for trademark infringement. Petitioner had registered the trademarks "SKECHERS" and "S" with the Intellectual Property Office (IPO). Two search warrants were issued and more than 6,000 pairs of shoes bearing the "S" logo were seized. Respondents moved to quash the search warrants, arguing that there was no confusing similarity between petitioner's "Skechers" rubber shoes and their "Strong" rubber shoes. The RTC agreed with respondents and quashed the search warrants. The CA affirmed the RTC's ruling. Petitioner filed a petition for certiorari with the Supreme Court. The Supreme Court initially dismissed the petition but reconsidered its decision after the parties filed motions for reconsideration.

ISSUES:

1. Whether the use of a similar stylized "S" in the respondent's trademark infringes on the petitioner's registered trademark.

2. Whether there is colorable imitation between the shoes manufactured by the respondent and the shoes of the petitioner.

3. Whether the difference in price can be a defense in trademark infringement.

RULING:

1. The Supreme Court held that the use of the same stylized "S" by the respondent in its goods infringes on the petitioner's registered trademark. The dominant feature of the trademark is the stylized "S", which catches the eye of the purchaser. Even if the respondent did not use the same oval design as the petitioner, the mere fact that they used the same stylized "S" constitutes infringement under the Dominancy Test. The dissimilarities between the shoes, such as the placement of the word "Strong" and the hang tags, do not outweigh the stark similarities in their general features.

2. The Supreme Court ruled that there is colorable imitation between the shoes. The dissimilarities are too trifling and frivolous that confusion is highly likely. The features and overall design of the respondent's shoes are so similar and alike that they will cause confusion and mistake in the eyes of the public.

3. The Supreme Court held that the difference in price cannot be a complete defense in trademark infringement. The protection of trademarks extends not only to guarding the goods or business from actual market competition but also to cases where the use of a trade-mark or trade-name is likely to lead to confusion of source or forestall the normal potential expansion of the business.

PRINCIPLES:

• The Dominancy Test is used to determine similarity of trademarks and focuses on the aural and visual impressions created by the marks on buyers. The use of the same dominant feature of a trademark can constitute infringement.

• The Holistic or Totality Test considers the entirety of the marks, including labels and packaging, in determining confusing similarity.

• There are two types of confusion: confusion of goods (product confusion) and confusion of business (source or origin confusion).

• Under the holistic test for colorable imitation, even if not all the details are identical, as long as the general appearance of the products is such that any ordinary purchaser would be deceived, the imitator should be held liable for unfair competition.

• The protection of trademarks extends beyond guarding goods or business from actual market competition, and also includes cases where the use of a similar mark is likely to cause confusion or connect the infringer with the activities of the owner of the registered mark.

• The difference in price is not a complete defense in trademark infringement. The registered trademark owner may use its mark on the same or similar products in different market segments and at different price levels. The likelihood of confusion is not negated by differences in price.