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SKECHERS v. INTER PACIFIC INDUSTRIAL TRADING CORP.

FACTS:

The petitioner, a foreign corporation engaged in the manufacture of footwear, registered the trademark "SKECHERS" with the Intellectual Property Office (IPO) and also has a pending application for another trademark. The petitioner engaged the services of a private investigative firm to investigate Inter Pacific Industrial Trading Corporation (Inter Pacific) for the distribution and sale of unauthorized products bearing counterfeit trademarks owned by the petitioner.

The investigators visited Inter Pacific's warehouse and outlet store and purchased rubber shoes bearing the "Strong" mark with the "S" logo. A letter complaint was filed with the NBI requesting assistance in stopping the illegal activities. The NBI, together with the investigators, visited the warehouse and outlet store again and purchased more rubber shoes. Search warrants were then issued and executed, resulting in the seizure of thousands of pairs of rubber shoes bearing the "S" logo.

The lower court issued an order quashing the search warrant and directing the return of the seized items to respondent. The court noted that there were glaring differences between respondent's Strong rubber shoes and petitioner's Skechers shoes, such as the absence of an "oval design" enclosing the mark "S" in Strong Shoes, the conspicuous placement of the word "Strong" on the backside and insoles, and the different hang tags and labels attached to each shoe. It also considered that the two brands were priced differently and that the average consumer generally purchases rubber shoes by brand, making confusion and deception less likely.

Petitioner's motion for reconsideration was denied, and it filed a petition for certiorari before the Court of Appeals, which upheld the ruling of the lower court, stating that respondent's appropriation and use of the letter "S" did not constitute trademark infringement. The court also emphasized that the cost of the goods influences the buyer's inclination to be cautious during purchase.

ISSUES:

  1. Whether the private respondents' appropriation and use of the letter "S" on their rubber shoes constituted an infringement of the petitioner's trademark.

  2. Whether the act of the private respondent in selling and distributing rubber shoes which contain the trademarks and designs owned by the petitioner constitutes trademark infringement.

  3. Whether the Court of Appeals committed grave abuse of discretion in considering matters of defense in a criminal trial for trademark infringement in passing upon the validity of the search warrant and in concluding that respondents are not guilty of trademark infringement in the case where the sole triable issue is the existence of probable cause to issue a search warrant.

  4. Whether or not the trial court can reverse its initial finding of probable cause after reevaluating the evidence.

  5. Whether or not the court's discussion on trademark infringement was within its jurisdiction and authority.

RULING:

  1. The appellate court held that the private respondents' appropriation and use of the letter "S" on their rubber shoes did not constitute an infringement of the petitioner's trademark. The court applied the holistic test and found that the letter "S" alone would not likely cause confusion, deception, or mistake on the part of the ordinary buying public. It further emphasized that an ordinary purchaser of a product like a pair of rubber shoes is an intelligent buyer who is familiar with the goods. The court also distinguished the case from a previous case involving the trademark "UNIVERSAL CONVERSE AND DEVICE" and held that the ruling in that case does not apply on all fours in the present case.

  2. The act of the private respondent in selling and distributing rubber shoes which contain the trademarks and designs owned by the petitioner does not constitute trademark infringement. The trial court concluded that there was no colorable imitation of petitioner's trademark based on its appreciation of the parties' arguments and evidence. The Court of Appeals affirmed the trial court's ruling and held that the private respondent did not commit trademark infringement.

  3. The Court of Appeals did not commit grave abuse of discretion in considering matters of defense in a criminal trial for trademark infringement and in concluding that respondents are not guilty of trademark infringement. The trial court has the power to issue and quash search warrants and may reverse its initial finding of probable cause after reevaluating the evidence presented before it.

  4. Yes, the trial court can reverse its initial finding of probable cause after reevaluating the evidence.

  5. Yes, the court's discussion on trademark infringement was within its jurisdiction and authority.

PRINCIPLES:

  • The cost of the goods and the nature of the product influence the level of caution exercised by purchasers in examining specific details and making a purchase.

  • The likelihood of confusion among the purchasing public is determined by the general appearance of the trademarks and the origins of the goods.

  • The dominancy test, which focuses on the dominant feature of a trademark, may not apply if the dominant feature is not extremely and profoundly identifiable to the products of the trademark owner alone or does not have a certain connotation to mean the products produced by the trademark owner.

  • Distinctive and conspicuous markings on a product may help avoid confusion and deception among consumers.

  • The power to issue search warrants is exclusively vested with trial judges in the exercise of their judicial function.

  • Inherent in the courts' power to issue search warrants is the power to quash warrants already issued if no probable cause exists.

  • The determination of probable cause depends on the findings or opinion of the judge conducting the examination, but the findings should not disregard the facts before the judge nor run counter to the clear dictates of reason.

  • The trial court may reverse its initial finding of probable cause after reevaluating the evidence, provided the opportunity to correct itself of an error inadvertently committed.

  • The trial court has the discretion to reverse its initial finding of probable cause in order to conform to the facts prevailing in the case.

  • In determining probable cause for the issuance or quashal of a warrant, the court may touch on issues properly threshed out in a regular proceeding.

  • The finding of no colorable imitation of a trademark in the determination of probable cause is preliminary and does not finally determine the merits of possible criminal proceedings.

  • The court's ruling that no offense has been committed in the determination of probable cause does not interfere with or encroach upon the proceedings in the preliminary investigation. The investigating officer is not obliged to refrain from filing an information based on the court's ruling.