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246 CORPORATION v. REYNALDO B. DAWAY

FACTS:

Respondents Montres Rolex S.A. and Rolex Centre Phil., Limited filed a lawsuit against petitioner 246 Corporation for trademark infringement and damages. They alleged that the petitioner has been using the mark "Rolex" without authorization in its business name and advertisements. In its defenses, the petitioner argued that there was no trademark infringement as their entertainment business is unrelated to the items sold by respondents. The petitioner also claimed that the verification and certification in the complaint were not proper since the counsel who signed it was not authorized to represent respondents. The trial court later issued an order quashing the subpoena and denying petitioner's motion for preliminary hearing on affirmative defenses with a motion to dismiss. The petitioner filed a petition for certiorari with the Court of Appeals, which was subsequently dismissed.

ISSUES:

  1. Whether the trial court erred in denying the motion for preliminary hearing and motion to dismiss.

  2. Whether the trial court gravely abused its discretion in quashing the subpoena ad testificandum issued against Atty. Ancheta.

  3. Whether or not the requisites for the application of Section 123.1(f) of the Intellectual Property Code (IPC) have been met.

  4. Whether or not Atty. Alonzo Ancheta was properly authorized to sign the verification and certification against forum shopping in behalf of respondents.

RULING:

  1. The trial court did not err in denying the motion for preliminary hearing and motion to dismiss. The trial court ruled on the merits of the motion to dismiss and found the arguments of the plaintiffs to be meritorious as they traversed the affirmative defenses raised by the petitioner. The trial court's denial of the motion to dismiss is within its discretion.

  2. The trial court did not gravely abuse its discretion in quashing the subpoena ad testificandum issued against Atty. Ancheta.

  3. The Court cannot yet resolve the merits of the case since the requisites for the application of Section 123.1(f) of the IPC, which constitutes the main issue, require determination of facts that need to be resolved at the trial court. The existence or absence of these requisites should be addressed in a full-blown hearing and not on a mere preliminary hearing. Thus, the respondent must be given ample opportunity to prove its claim, and the petitioner to debunk the same.

  4. The issue of whether Atty. Alonzo Ancheta was properly authorized to sign the verification and certification against forum shopping is best resolved during the trial together with the substantive issues raised by the petitioner.

PRINCIPLES:

  • A preliminary hearing on affirmative defenses is not mandatory and rests on the sound discretion of the trial court.

  • Under the Intellectual Property Code, a junior user of a well-known mark on unrelated goods or services is precluded from using the same mark, subject to certain requisites.

  • In determining whether a mark is well-known, various criteria such as the duration, extent, and geographical area of use, market share, distinction of the mark, reputation, and registration in the world may be taken into account.

  • In determining whether a mark is well-known, the following factors may be considered: (a) the duration, extent, and geographical area of use; (b) the duration, extent, and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods and services to which the mark applies; (c) the duration, extent, and geographical area of any registration of or any application to register the mark under this Act, to the extent that they reflect use or recognition of the mark; (d) the record of successful enforcement of rights in the mark, in particular the extent to which the mark has been recognized as a well-known mark by any court or Registrar under this Act or in any country or by the relevant public; (e) the value associated with the mark; (f) the degree of inherent or acquired distinction of the mark; (g) the quality or reputation acquired by the goods or services identified with the mark; and (h) the extent to which the mark has been registered in the world and is also recognized as a well-known mark by the relevant sector of the public.

  • The use of a well-known mark on entirely unrelated goods or services may indicate a connection between such unrelated goods or services and those goods or services specified in the certificate of registration. This requirement refers to the likelihood of confusion of origin or business or some business connection or relationship between the registrant and the user of the mark.

  • Grave abuse of discretion implies such capricious and whimsical exercise of judgment as equivalent to lack of jurisdiction, or, where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility.

  • The trial court should deny a motion for preliminary hearing and instead address the substantive issues raised during the trial. The trial court should provide an ample opportunity for the parties to present evidence to prove or debunk their respective claims.