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SUPERIOR COMMERCIAL ENTERPRISES v. KUNNAN ENTERPRISES LTD.

FACTS:

The case involves a dispute between Superior Commercial Enterprises, Inc. (SUPERIOR) and Kunnan Enterprises Ltd. (KUNNAN) over the ownership of the trademarks "KENNEX," "KENNEX & DEVICE," "PRO KENNEX," and "PRO-KENNEX." SUPERIOR claimed ownership of the trademarks based on trademark registrations and a Distributorship Agreement executed with KUNNAN. KUNNAN disputed SUPERIOR's claim and alleged fraudulent registration. KUNNAN claimed to have created and used the "PRO KENNEX" trademark since 1976 and registered it in several countries. SUPERIOR alleged trademark infringement and unfair competition by KUNNAN and Sports Concept and Distributor, Inc. (SPORTS CONCEPT) for unlawfully using its trademarks. The parties disagreed on ownership and validity of the registrations.

The Court of Appeals (CA) denied KUNNAN's motion to admit the IPO-BLA decision but granted SUPERIOR's motion to deny due course to appeal. The CA affirmed the Regional Trial Court (RTC) decision with modifications, declaring SUPERIOR as the exclusive and original owner of the trademarks. The CA found KUNNAN guilty of trademark infringement and unfair competition and awarded damages to SUPERIOR.

KUNNAN's motion for reconsideration was denied by the CA, leading KUNNAN to appeal to the Supreme Court. The issues raised include ownership of the trademarks, the nature of SUPERIOR's relationship with KUNNAN, and the dismissal of the complaint.

ISSUES:

  1. Whether SUPERIOR's case for trademark infringement had been rendered moot and academic due to the cancellation of the disputed trademarks.

  2. Whether KUNNAN can be held liable for trademark infringement when they were adjudged to be the rightful owner of the disputed trademarks.

  3. Whether the doctrine of res judicata bars SUPERIOR's present case for trademark infringement.

  4. Whether the issue of unfair competition was properly addressed by the lower courts.

  5. Whether there is unfair competition between Kunnan Enterprises and Superior Commercial Enterprises.

  6. Whether the acts of Kunnan Enterprises were intended to deceive the public.

RULING:

  1. Yes, SUPERIOR's case for trademark infringement had been rendered moot and academic due to the cancellation of the disputed trademarks.

  2. No, KUNNAN cannot be held liable for trademark infringement as they were adjudged to be the rightful owner of the disputed trademarks.

  3. Yes, the doctrine of res judicata bars SUPERIOR's present case for trademark infringement.

  4. The issue of unfair competition was not properly addressed by the lower courts.

  5. There is no unfair competition between Kunnan Enterprises and Superior Commercial Enterprises. There is no evidence showing that Kunnan attempted to pass off its goods as those of Superior, nor is there any evidence of bad faith or fraud imputable to Kunnan in using the disputed trademarks.

  6. The acts of Kunnan Enterprises were not intended to deceive the public. The notice issued by Kunnan clearly indicated that it is the manufacturer of the goods bearing the trademarks "KENNEX" and "PRO KENNEX," thus preventing the public from being deceived that the goods originated from Superior.

PRINCIPLES:

  • The cancellation of a trademark registration deprives the registrant of protection from infringement from the moment the judgment or order of cancellation becomes final. (Section 19 of RA 166)

  • Only the registrant of a mark can file a case for infringement. (Section 22 of RA 166)

  • Only the owner of the trademark, trade name, or service mark used to distinguish goods, business, or service is entitled to register the same.

  • An exclusive distributor does not acquire any proprietary interest in the principal's trademark and cannot register it in their own name unless it has been validly assigned to them.

  • The doctrine of res judicata, specifically the concept of conclusiveness of judgment, bars the re-litigation of particular facts or issues in another litigation between the same parties on a different claim or cause of action.

  • To establish trademark infringement, the elements of validity of the mark, ownership of the mark, and likelihood of confusion must be proven.

  • The cancellation of trademark registration effectively cancels any claim of trademark infringement based on the registration.

  • Factual findings on the issue of unfair competition were not made by the lower courts and need further examination.

  • Unfair competition involves the passing off or attempting to pass off the goods or business of one person as the goods or business of another, with the intent to deceive the public and defraud a competitor.

  • The true test of unfair competition is whether the acts of the defendant have the intent to deceive or are calculated to deceive the ordinary buyer under the ordinary conditions of the trade involved.

  • Proof of fraud, including the intent to deceive, is an essential requirement in an action to restrain unfair competition.

  • Trademark infringement can exist without unfair competition, such as when the infringer discloses on the labels containing the mark that he manufactures the goods, preventing the public from being deceived as to the origin of the goods.

  • The rightful owner of a trademark has the exclusive right to use and control the trademark, and any claim made by another party, based on the ownership of the trademark, becomes invalid if it is established that the rightful owner is using the trademark.