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SOCIETE DES PRODUITS NESTLE v. MARTIN T. DY

FACTS:

The case involves a trademark infringement dispute between Nestle Philippines, Inc. (Nestle) and Dy-Teck Yin Ching Jr. (Dy), who is the proprietor of the "NANNY" mark for full cream milk. Nestle alleged that Dy's use of the "NANNY" mark was confusingly similar to their registered "NAN" mark for infant milk, thus constituting trademark infringement.

Dy argued that the "NAN" and "NANNY" marks are visually and aurally distinct from each other, and their products, NAN infant milk and NANNY full cream milk, are distinctly different and target different markets.

The Intellectual Property Office (IPO) ruled in favor of Dy, stating that the marks were not confusingly similar. The IPO noted that the products had different packaging and catered to different consumers. They also found that the "NANNY" mark was not likely to deceive or cause confusion among consumers.

Nestle appealed the IPO's ruling to the Court of Appeals, which affirmed the decision. The Court of Appeals held that the "NAN" and "NANNY" marks were not confusingly similar when taken as a whole. They noted that an ordinary purchaser would be able to distinguish between the two products, and the lower cost of NANNY milk would serve as a warning to consumers.

Nestle filed a motion for reconsideration, but the Court of Appeals denied it. Consequently, Nestle filed a petition for review before the Supreme Court.

ISSUES:

  1. What are the elements of trademark infringement under Republic Act Nos. 166 and 8293?

  2. What is the gravamen of trademark infringement?

  3. What are the two types of confusion in trademark infringement?

  4. Whether the dominancy test or the holistic test should be applied in determining the likelihood of confusion between competing trademarks.

  5. Whether the marks "PYCNOGENOL" and "PCO-GENOL" are confusingly similar.

  6. Whether the marks "MCDONALD'S" and "MACJOY" are confusingly similar.

  7. Is the use of the "Big Mak" mark likely to cause confusion or mistake in the mind of the public or deceive purchasers?

  8. Is "Big Mak" confusingly similar to "Big Mac"?

  9. Whether there was a valid and enforceable contract of sale between the parties.

  10. Whether the buyer violated their contractual obligations.

  11. Whether the seller is entitled to the payment of damages.

RULING:

  1. The elements of trademark infringement under Republic Act Nos. 166 and 8293 are as follows:

    • The trademark being infringed is registered in the Intellectual Property Office (for R.A. No. 8293) or registered in the principal register of the Philippine Patent Office (for R.A. No. 166).
    • The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer.
    • The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods, business, or services, or 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.
    • The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers or others as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such business.
    • The use or application of the infringing mark or trade name is done without the consent of the trademark or trade name owner or the assignee thereof.

  7. The gravamen of trademark infringement is the likelihood of confusion.

  8. The two types of confusion in trademark infringement are confusion of goods and confusion of business. Confusion of goods occurs when an ordinarily prudent purchaser is induced to purchase one product in the belief that he/she is purchasing another, and the poorer quality of the purchased product reflects adversely on the reputation of the original product. Confusion of business, on the other hand, occurs when the defendant's product is such as might reasonably be assumed to originate with the plaintiff, and the public is deceived into believing there is a connection between the plaintiff and the defendant that does not actually exist.

  9. The Court held that the dominancy test is applicable in determining the likelihood of confusion between competing trademarks.

  10. The Court found that the marks "PYCNOGENOL" and "PCO-GENOL" are confusingly similar.

  11. The Court found that the marks "MCDONALD'S" and "MACJOY" are confusingly similar.

  12. Yes, the use of the "Big Mak" mark is likely to cause confusion or mistake in the mind of the public or deceive purchasers.

  13. Yes, "Big Mak" is confusingly similar to "Big Mac".

  14. The Supreme Court finds that there was a valid and enforceable contract of sale between the parties. The elements of a contract of sale were present, such as consent, object, and price. The buyer's payment of the downpayment and the seller's acceptance of it manifest their intention to enter into a contract of sale.

  15. The buyer violated their contractual obligations by failing to pay the full purchase price within the specified period. The buyer's claim that they could not secure financing is not a valid excuse for their non-payment since they were already in default when they made such claim. Further, the buyer's request for an extension of the payment period was not agreed upon by the seller.

  16. The seller is entitled to the payment of damages due to the buyer's breach of contract. The seller suffered actual damages as a result of the buyer's failure to pay the purchase price on time. The seller is also entitled to interest and attorney's fees as provided under the Civil Code.

PRINCIPLES:

  • Trademark infringement under Republic Act Nos. 166 and 8293 require specific elements.

  • The gravamen of trademark infringement is the likelihood of confusion.

  • There are two types of confusion in trademark infringement: confusion of goods and confusion of business.

  • Likelihood of confusion in trademark infringement cases can be determined using either the dominancy test or the holistic test. The dominancy test focuses on the similarity of the main, prevalent, or essential features of the competing trademarks that might cause confusion, while the holistic test considers the entirety of the marks including labels and packaging. (McDonald's Corporation v. MacJoy Fastfood Corporation)

  • Each trademark infringement case must be decided on its own merits, and jurisprudential precedents should be applied only if they are specifically in point. (McDonald's Corporation v. MacJoy Fastfood Corporation)

  • The aural effects of the words and letters contained in the marks may be taken into account in determining the issue of confusing similarity. (Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.)

  • The dominancy test is used to determine similarity and likelihood of confusion in trademark infringement cases. It considers the dominant features of the marks and gives weight to the aural and visual impressions created in the public mind. Minor differences, such as size, form, and color, are disregarded. (McDonald's Corporation v. L.C. Big Mak Burger, Inc.)

  • Infringement of a trademark occurs when the competing mark contains the main or essential or dominant features of another mark and confusion or deception is likely to result. Duplication or imitation is not necessary, nor is it necessary for the infringing mark to suggest an effort to imitate. The test is whether the use of the marks involved would be likely to cause confusion or mistakes in the mind of the public or deceive purchasers. (Co Tiong Sa v. Director of Patents)

  • The test of dominancy, which considers the aural, visual, and connotative comparisons and overall impressions engendered by the marks in controversy, is used in determining confusing similarity. The totality or holistic test, which relies on visual comparison alone, is not suitable. (Societe Des Produits Nestle, S.A v. Court of Appeals)

  • In determining confusing similarity, the Court considers the aural effect of the letters contained in the marks.

  • The scope of protection afforded to registered trademark owners extends to protection from infringers with related goods and market areas that are the normal expansion of business of the registered trademark owners.

  • Non-competing goods may be considered related if they are so related to each other that it can reasonably be assumed that they originate from one manufacturer.

  • The registered trademark owner may use his mark on the same or similar products, in different segments of the market, and at different price levels depending on variations of the products for specific segments of the market.

  • A valid and enforceable contract of sale requires the presence of consent, object, and price.

  • A buyer's failure to pay the full purchase price within the specified period constitutes a breach of contractual obligations.

  • A party in breach of contract is liable for damages suffered by the innocent party.

  • Interest and attorney's fees may be awarded to the innocent party in cases of breach of contract, as provided under the Civil Code.