View full case

E.Y. INDUSTRIAL SALES v. SHEN DAR ELECTRICITY

FACTS:

The case involves a dispute over the trademark "VESPA" for air compressors. Petitioner E.Y. Industrial Sales, Inc. (EYIS) and respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen Dar) both claimed the right to register the said trademark. EYIS is a domestic corporation engaged in the production and sale of air compressors, while Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of air compressors. From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts. Both companies filed trademark applications for the mark "VESPA" with the Intellectual Property Office (IPO). The IPO issued Certificate of Registration (COR) No. 4-1999-005393 in favor of EYIS and COR No. 4-1997-121492 in favor of Shen Dar. Shen Dar then filed a petition for the cancellation of EYIS' COR, arguing that its application violated the Intellectual Property Code. The Director of the Bureau of Legal Affairs (BLA) ruled in favor of EYIS. Shen Dar appealed to the Director General of the IPO, who upheld EYIS' COR and ordered the cancellation of Shen Dar's COR. Shen Dar appealed the decision of the IPO Director General.

Shen Dar claimed that it had been using the mark "VESPA" since 1995 in relation to air compressors and engines. On the other hand, EYIS claimed that it had been using the mark "VESPA" since 1999 in relation to air compressors and engines.

The IPO Director General favored EYIS and ordered the cancellation of Shen Dar's Certificate of Registration (COR) for the mark "VESPA". The IPO Director General held that Shen Dar failed to prove actual use of the mark and that EYIS was the true owner of the mark based on its earlier filing of the application.

Shen Dar appealed to the Court of Appeals (CA), arguing that it had evidence of actual use which was attached to the Petition for Cancellation. The CA reversed the IPO Director General and ruled in favor of Shen Dar. The CA held that Shen Dar's evidence may be properly considered and that the IPO failed to properly apply the provisions of Sec. 123.1(d) of RA 8293, which prohibits the registration of a trademark in favor of a party when there is an earlier filed application for the same mark. The CA also ruled that Shen Dar should be considered to have prior use of the mark based on the parties' Declarations of Actual Use.

EYIS filed a motion for reconsideration which the CA denied. EYIS then appealed to the Supreme Court.

Shen Dar entered into an Agreement with EYIS, granting the latter the right to use its trademark "VESPA" in the Philippines. However, EYIS registered the same trademark without Shen Dar's consent, leading Shen Dar to file a Petition for Cancellation with the Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO). During the proceedings, Shen Dar failed to formally offer its evidence as required by the BLA. The BLA ruled that the failure of Shen Dar to file its marked evidence constituted a waiver. On appeal, the Court of Appeals (CA) reversed the BLA's ruling, citing a provision in the BLA Memorandum Circular which stated that the attachments to the position paper shall constitute the entire evidence for the parties. The CA held that Shen Dar only needed to attach its evidence with proper markings to its position paper. The Director General of the IPO issued an order establishing the procedure for the registration and opposition of trademarks, which required the marked affidavits and documents to constitute the evidence for the parties. The CA also held that the BLA is not bound by technical rules of procedure. The Director General of the IPO, in his decision, ordered the cancellation of Shen Dar's Certificate of Registration for the trademark "VESPA," stating that the interests of justice required it. Shen Dar challenged the cancellation, arguing that there was no petition for cancellation of its Certificate of Registration.

The petitioner, Shen Dar, is challenging the cancellation of his trademark registration. He argues that there was no petition for cancellation as required by Section 151 of Republic Act (RA) 8293. The case involves Office Order No. 79, Series of 2005, which provides rules of procedure for the conduct of Inter Partes cases. Section 5 of the order states that the Bureau is not bound by strict technical rules of procedure and evidence but may adopt a mode of proceedings consistent with fair play, speedy disposition, and focusing on the contentious issues. The petitioner asserts that while administrative bodies are not bound by technical rules, they should still adhere to fundamental evidentiary rules and due process.

ISSUES:

  1. Whether the Supreme Court may review the questions of fact presented.

  2. Whether evidence presented before the Bureau of Legal Affairs (BLA) must be formally offered.

  3. Whether the Director General of the Intellectual Property Office (IPO) can validly cancel the respondent's Certificate of Registration (COR) for VESPA.

  4. Whether the factual findings of the IPO are binding on the Court of Appeals (CA).

  5. Whether EYIS is the true owner of the mark "VESPA."

RULING:

  1. Whether this Court may review the questions of fact presented

    The Supreme Court held that it may review the factual issues presented because the findings of the IPO and the CA are conflicting.

  2. Whether evidence presented before the BLA must be formally offered

    The Court ruled that there is no requirement under the applicable rules that the evidence of the parties must be formally offered to the BLA. The evidence attached to the petition may be properly considered in the resolution of the case.

  3. Whether the IPO Director General can validly cancel Shen Dar's Certificate of Registration

    The Supreme Court held that the IPO Director General's cancellation of Shen Dar's COR was valid, as it was a proper exercise of his discretion to ensure that the exclusive rights of the true owner were preserved.

  4. Whether the factual findings of the IPO are binding on the CA

    The Court ruled that the findings of the BLA Director and the IPO Director General are conclusive upon the CA, as they were supported by clear and convincing evidence.

  5. Whether EYIS is the true owner of the mark "VESPA"

    The Supreme Court declared that EYIS is the prior and continuous user of the mark "VESPA" and thus the true owner, entitling them to the registration of the mark in their name.

WHEREFORE, the petition is hereby GRANTED. The CA's February 21, 2008 Decision and October 6, 2008 Resolution in CA-G.R. SP No. 99356 are hereby REVERSED and SET ASIDE. The Decision dated May 25, 2007 issued by the IPO Director General in Inter Partes Case No. 14-2004-00084 and the Decision dated May 29, 2006 of the BLA Director of the IPO are hereby REINSTATED. No costs.

PRINCIPLES:

  • The Supreme Court rule on reviewing factual issues when lower court findings are conflicting.

  • Quasi-judicial bodies are not bound by strict technical rules of procedure and evidence.

  • Evidence attached to a petition may be considered without formal offer in administrative proceedings.

  • Prior and continuous use of a trademark establishes ownership over mere registration.

  • Factual findings of administrative bodies, when supported by substantial evidence, are given great weight and are binding on higher courts.