FACTS:

The case involves a legal dispute between the petitioners and the respondent regarding the use of the trademark "MARK" on cigarette products. The petitioners, who are registered owners of various trademarks, filed a complaint against the respondent for trademark infringement, claiming that the use of the similar trademark causes confusion among purchasers and the public. The petitioners argued that their trademarks have gained international fame and acceptance. The respondent denied the allegations, asserting that "MARK" is a common word that cannot specifically identify the petitioners' products.

The trial court dismissed the complaint, ruling that the petitioners failed to prove reciprocal or similar privileges granted by their respective countries to Philippine corporations to bring infringement actions without a license. The trial court also found no trademark infringement by the respondent. The petitioners appealed, but the Court of Appeals affirmed the trial court's decision and considered their contentions as questions of fact and law. The petitioners argued that their contentions should be treated as purely legal based on undisputed facts, but the Court declined to disturb the appellate court's conclusions.

In asserting their right to enforce trademark rights in the Philippines, the petitioners claimed that as corporate nationals of member-countries of the Paris Union, they can sue for trademark infringement in Philippine courts without registration or a license to do business in the Philippines. They also argued that there is actual use of their trademarks in the country, supported by certificates of registration. The petitioners maintained that the Philippines' adherence to international agreements and the Intellectual Property Code provide protection, regardless of actual use in local trade or commerce.

ISSUES:

1. Whether petitioners are entitled to protection of their trademarks in the Philippines without actual use of the marks in local commerce and trade.

2. Whether a foreign corporation that is not licensed to do business in the Philippines but files a complaint for trademark infringement is required to actually use its trademark in commerce in the Philippines.

3. Whether the registration of a trademark in the Philippines confers an absolute right or exclusive ownership of the trademark.

4. Whether there is a likelihood of confusion and infringement arising from respondent's use of the trademark "MARK" for its cigarette product.

5. Whether the dominancy test or the holistic test should be applied in determining the similarity and likelihood of confusion between the trademarks.

6. Whether the trademarks "MARK VII," "MARK TEN" and "LARK" are actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent Office.

7. Whether the use of the trademark by another person is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business.

8. Whether the trademark is used for identical or similar goods.

9. Whether the act of using the trademark is done without the consent of the trademark registrant or assignee.

10. Whether the trademarks are well-known and/or have acquired goodwill in the Philippines.

RULING:

1. No, petitioners are not entitled to protection of their trademarks in the Philippines without actual use of the marks in local commerce and trade. Although petitioners have registered their trademarks in the Philippines, being foreign corporations, they must also show proof that their country grants substantially similar rights and privileges to Filipino citizens as required by Section 21-A of R.A. No. 166. The mere allegation that the suit is being pursued under Section 21-A is not sufficient. Moreover, the Philippines' adherence to the Paris Convention does not automatically entitle petitioners to protection of their trademarks in this country. They still have to comply with the conditions imposed by Philippine law, including the requirement of actual use of the marks in local commerce and trade.

2. A foreign corporation that is not licensed to do business in the Philippines is required to actually use its trademark in commerce in the Philippines in order to be entitled to protection. The fact that a foreign corporation may have the capacity to sue for infringement does not necessarily mean it is entitled to protection if there is no actual use of the trademark in the local market. The registration of a trademark cannot be deemed conclusive as to its actual use in local commerce. (Farbenfabriken Bayer Aktiengesellschaft, Kabushi Kaisha Isetan v. Intermediate Appellate Court)

3. The registration of a trademark in the Philippines does not automatically convey an absolute right or exclusive ownership of the trademark. Actual use of the trademark is a prerequisite to exclusive ownership, and registration merely confirms the existence of the right of ownership. (Farbenfabriken Bayer Aktiengesellschaft, Kabushi Kaisha Isetan v. Intermediate Appellate Court)

4. The Court rules against the likelihood of confusion resulting in infringement arising from the respondent's use of the trademark "MARK" for its particular cigarette product. The dissimilarities between the trademarks are significant enough to warn any purchaser that one is different from the other. The holistic test was properly applied by the Court of Appeals in finding that the respondent's goods cannot be mistaken as any of the three cigarette brands of the petitioners.

5. Even if the dominancy test were to be used, the likelihood of confusion tantamount to infringement appears to be farfetched. The word "MARK," whether alone or in combination with other words, does not point to the origin or ownership of the cigarettes. Therefore, there can be no confusion or deception among the buying public regarding the origin or ownership of the cigarettes.

6. The Supreme Court denied the petition and affirmed the decision and resolution of the Court of Appeals. The dismissal of the complaint for trademark infringement and the plea for damages were upheld. The court found that the petitioners failed to prove actual use of their registered trademarks prior to respondent's use of its mark and failed to demonstrate confusing similarity between said trademarks. The court also noted that the petitioners failed to establish that their trademarks are well-known and have acquired goodwill in the Philippines.

PRINCIPLES:

• Registration of a trademark gives advantages to the registrant, such as statutory presumptions as to the validity of the registration, ownership, and exclusive right to use the registered marks. However, foreign corporations must show proof of reciprocity between their country and the Philippines in granting rights and privileges to Filipino citizens.

• The reciprocity requirement is a condition precedent to filing a suit by a foreign corporation. Mere allegation of filing under Section 21-A of R.A. No. 166 is not sufficient.

• The Paris Convention requires member countries to honor and enforce its provisions for the protection of industrial property of foreign nationals, subject to the limitations of Philippine laws. Foreign nationals must comply with the conditions imposed by Philippine law, including the requirement of actual use of the marks in local commerce and trade.

• Municipal law on trademarks regarding the requirement of actual use in the Philippines supersedes an international agreement, as decided by a municipal tribunal. The apparent clash between international law and national law is resolved by giving equal standing, not superiority, to both. (Philip Morris, Inc., et. al. vs. Court of Appeals)

• The registration of a trademark unaccompanied by actual use in the country only gives the registrant the standing to sue for infringement in Philippine courts. Entitlement to protection of the trademark in the country is a separate matter. (Philip Morris, Inc., et. al. vs. Court of Appeals)

• Likelihood of confusion is the basis for trademark infringement. Likelihood of confusion is a relative concept, taking into consideration various factors such as the particular and sometimes peculiar circumstances of each case. (Farbenfabriken Bayer Aktiengesellschaft, Kabushi Kaisha Isetan v. Intermediate Appellate Court)

• In trademark infringement cases, likelihood of confusion is a relative concept that must be evaluated in the light of each particular case.

• In determining similarity and likelihood of confusion, two tests are developed: the dominancy test and the holistic test.

• The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion and deception.

• The holistic test entails a consideration of the entirety of the marks as applied to the products, including labels and packaging, in determining confusing similarity.

• Likelihood of confusion must be determined based on the general impression of the ordinary purchaser buying under normal trade conditions and giving the attention such purchasers usually give in buying that class of goods.

• The ordinary purchaser refers to someone who is accustomed to buying and familiar with the goods in question.

• Actual use of trademarks in local commerce is not a requisite before an aggrieved trademark owner can restrain the use of his trademark upon goods manufactured or dealt in by another, as long as the trademark is registered with the Intellectual Property Office.

• In order for a trademark to be protected, it must be actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent Office.

• Trademark infringement requires the use of a trademark by another person in connection with the sale, offering for sale, or advertising of any goods, business or services where such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business.

• Trademark infringement also occurs when a trademark is reproduced, counterfeited, copied or colorably imitated by another person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services as to likely cause confusion or mistake or to deceive purchasers.

• In a trademark infringement case, the trademark must be used for identical or similar goods.

• Consent from the trademark registrant or assignee is required for the use of a trademark.

• Well-known trademarks may be protected even without actual use in a country under Article 6bis of the Paris Convention.

• Factual determinations of trademark infringement are final and binding on higher courts.