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SEHWANI v. IN-N-OUT BURGER

FACTS:

This case involves a petition for review filed by the petitioners, Sehwani, Inc. and Benita's Frites, Inc., against the Decision of the Court of Appeals affirming the order of the Director General of the Intellectual Property Office (IPO) finding that the petitioners' appeal was filed out of time. The respondent, IN-N-OUT Burger, Inc., a foreign corporation, filed an administrative complaint against the petitioners for violation of intellectual property rights. The respondent alleged that it is the owner of the trademark "IN-N-OUT" and applied for its registration with the IPO. However, the petitioner, Sehwani, Inc., had obtained a trademark registration for a similar mark without authorization. The respondent demanded that the petitioner cancel its trademark registration, but it refused. The petitioners argued that the respondent lacked legal capacity to sue, that the trademark was not registered or used in the country, and that they have the exclusive right to use it. The Bureau Director canceled the petitioner's trademark registration, and their subsequent motion for reconsideration was denied. Their appeal to the Director General was dismissed for being filed out of time. The Court of Appeals affirmed the dismissal, stating that the requirements for appeal must be strictly complied with. The petitioners filed a motion for reconsideration, which was denied. Hence, this petition for review was filed before the Supreme Court, assailing the dismissal of their appeal by the IPO Director General.

ISSUES:

  1. Whether the belated filing of the appeal rendered the decision and order final and executory.

  2. Whether respondent, a foreign corporation not doing business in the Philippines, has the legal capacity to sue for the protection of its trademarks.

  3. Whether the mark "IN-N-OUT Burger and Arrow Design" is an internationally well-known mark.

  4. Whether the mark "IN-N-OUT BURGER LOGO" is entitled to protection in the Philippines even if it is neither registered nor used in the country.

  5. Whether there are grounds for the cancellation of the respondent's registration.

  6. Whether or not the petitioner's use of the mark "IN-N-OUT Burger" for their restaurant, hamburger wrappers, and french-fries receptacles misrepresents the source of the goods and services.

  7. Whether or not the defense of laches or prescription can be invoked by the petitioner.

RULING:

  1. The belated filing of the appeal memorandum rendered the decision and order final and executory. The court held that lawyers have the responsibility to monitor and keep track of the period of time left to file pleadings and ensure that said pleadings are filed before the lapse of the period. Failure to do so will bind the client. The belated filing of the appeal was inexcusable and the resolution denying the appeal was upheld.

  2. Respondent, a foreign corporation not doing business in the Philippines, has the legal capacity to sue for the protection of its trademarks. Section 160 in relation to Section 3 of R.A. No. 8293 provides that any foreign national or juridical person who meets the requirements of Section 3 and does not engage in business in the Philippines may bring a civil or administrative action for opposition, cancellation, infringement, unfair competition, or false designation of origin and false description, regardless of whether it is licensed to do business in the Philippines. Respondent's causes of action were anchored under the Convention of Paris for the Protection of Industrial Property, to which both the United States and the Philippines are signatories. The court found that respondent's trademarks were well-known and thus protected under the Paris Convention.

  3. The mark "IN-N-OUT Burger and Arrow Design" is declared an internationally well-known mark based on its worldwide registrations, comprehensive advertisements, and evidence of its quality image and reputation.

  4. The mark "IN-N-OUT BURGER LOGO" is entitled to protection in the Philippines despite not being registered or used in the country. The 1999 Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, which was adopted by the World Intellectual Property Organization (WIPO) General Assembly and the Paris Union, recommends that a well-known mark should be protected in a country even if it is not registered or used there.

  5. There are no grounds for the cancellation of the respondent's registration.

  6. Yes, the petitioner's use of the mark "IN-N-OUT Burger" for their restaurant, hamburger wrappers, and french-fries receptacles effectively misrepresents the source of the goods and services. This is in violation of Section 151(b) of Republic Act No. 8293, which allows the cancellation of a registered mark used to misrepresent the source of the goods or services. Furthermore, the use of an identical or confusingly similar mark constitutes a violation.

  7. No, the defense of laches cannot be invoked in this case. Section 151(b) of Republic Act No. 8293 specifically provides that a petition to cancel the registration of a mark used to misrepresent the source of goods or services can be filed at any time. Laches may not prevail against a specific provision of law, as equity is applied in the absence of statutory law or rules of procedure.

PRINCIPLES:

  • Lawyers have the responsibility to monitor and keep track of the period of time left to file pleadings, and failure to do so will bind the client.

  • Well-known trademarks are protected under the Convention of Paris for the Protection of Industrial Property, and Article 6bis of the Convention is a self-executing provision that does not require legislative enactment. The determination of whether a trademark is well-known lies with the competent authority of the country of registration or use. Factual findings of quasi-judicial agencies, such as the IPO, are accorded respect and finality.

  • The extent of registration of a mark is a criterion for determining whether a mark is well known.

  • The quality image or reputation acquired by a mark is also considered in determining whether a mark is well known.

  • A well-known mark is entitled to protection in a country even if it is neither registered nor used there.

  • The use of a registered mark to misrepresent the source of goods or services is a ground for cancellation of the mark.

  • The defense of laches cannot prevail against a specific provision of law.