Confusing similarity

Is a trade name protected against infringement even if it is not registered with the Intellectual Property Office (IPO)? This is the issue raised in this case between Coffee Partners, Inc. (CPI) and San Francisco Coffee and Roastery, Inc. (SFCRI).

SFCRI is a local corporation engaged in the wholesale and retail sale of coffee which was incorporated in accordance with Philippine laws and registered with the SEC in May 1995. It registered the business name “San Francisco Coffee & Roastery, Inc” with the Department of Trade and Industry (DTI) in June 1995 and had since built a customer base that included Figaro Company, Tagaytay Highlands, Fat Willy’s and other coffee companies. In 1998 it formed a joint venture company with Boyd Coffee USA under the company name Boyd Coffee Company Philippines Inc (BCCPI) to engage in the processing, roasting and wholesale selling of coffee. Later on it embarked on a project of setting up coffee carts in malls and other commercial establishments in Metro Manila.

CPI on the other hand is also a local corporation engaged in the business of establishing and maintaining coffee shops in the country which was registered with the SEC in January 2001. It has a franchise agreement with Coffee Partners Ltd. (CPL) of British Virgin Islands for a non-exclusive right to operate coffee shops in the Philippines using the trademark designed by CPL such as “San Francisco Coffee” which was registered with the Intellectual Property Office (IPO) in 2001.

In June 2001, when CPI was about to open a coffee shop in Libis, Quezon City under the trade name “San Francisco Coffee”, SFCRI sent a letter to CPI demanding that the latter stop using the name “San Francisco Coffee” in its shop as it could cause confusion in the minds of the public because of similarity to its trade name “San Francisco Coffee & Roastery Inc.” SFCRI also filed a complaint with the Bureau of Legal Affairs (BLA)-IPO for infringement and/or unfair competition with claims for damages.

On August 14, 2002, the BLA-IPO held that CPI’s trademark infringed on SFCRI’s trade name. It ruled that the right to the exclusive use of a trade name with freedom from infringement because of similarity is determined by its priority of adoption. Since SFCRI registered its business or trade name with the DTI in 1995 and CPI registered its trademark with the IPO in 2001 in the Philippines and in 1997 in other countries, then SFCRI must be protected from infringement.

CPI questioned this ruling. It contended that when a trade name is not registered with the IPO, a suit for infringement is not available. It also averred that the proper noun “San Francisco” and the generic word “coffee” are not capable of exclusive appropriation. Was CPI correct?

No. A trade name need not be registered with the IPO before an infringement suit may be filed by its owner against the owner of an infringing trade mark. All that is required is that the trade name be previously used in trade or commerce in the Philippines. Section 165.2 of RA 8293 which took effect on January 1, 1998 categorically states that trade names shall be protected even prior to or without registration with the IPO, against any unlawful act including any subsequent use of the trade name by a third party, whether as a trade name or trademark if it is likely to mislead the public. It is the likelihood of confusion that is the gravamen of the infringement.

There are two tests in determining the likelihood of confusion: the dominancy and the holistic test. The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion or deception. Exact duplication or imitation is not required.

In contrast the holistic test entails a consideration of the entirety of the marks as applied to the products, including the labels and packaging. Focus is made not only on the predominant words but also on the other features appearing on both marks that are confusingly similar to the other.

Applying either the dominancy or holistic test CPI’s “San Francisco Coffee” trademark is a clear infringement of SFCRI’s “San Francisco Coffee & Roastery Inc.” trade name. The descriptive words “San Francisco Coffee are precisely the dominant features of SFCRIs trade name. Both of them are engaged in the same business of selling coffee whether wholesale or retail so the likelihood of confusion is higher. The consuming public will likely be confused as to the source of the coffee being sold in CPI’s coffee shops. SFCRI has acquired the exclusive right to use the trade name “San Francisco Coffee and Roastery Inc since its registration in 1995. Thus the use of its trade name from then on must be free from any infringement. This does not mean that SFCRI has exclusive use of the geographic word “San Francisco or the generic word “coffee”. Geographic or generic words are not per se subject to exclusive appropriation. It is only the combination of the words “San Francisco Coffee” which is SFCRI’s trade name in its coffee business that is protected on matters related to coffee business to avoid confusing or deceiving the public (Coffee Partners Inc. vs. San Francisco Coffee and Roastery Inc. G.R. 169504, March 3, 2010).

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call Tel. 7249445.

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