PHILIPPINES OFFICE OF THE DIRECTOR GENERAL …onlineservices.ipophil.gov.ph/ipcaselibrary/ipcasepdf/IPC140809.pdf · estrellita beltran-abelardo ... robert nereo b. samson ... intellectual

" ~iPINTELLECTUAL PROPERTY PHILIPPINES

OFFICE OF THE DIRECTOR GENERAL

WILLY Y. TIENG, APPEAL NO. 14-08-09 Respondent-Appellant, IPC No. 14-2007-00147

Opposition to:

-versus- Appln. Serial No. 4-2003-006975 Date Filed: 05 August 2003 Trademark: "BEST BUY &

BEST BUY ENTERPRISES DEVICE" SERVICES, INC.,

Opposer-Appellee.

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NOTICE OF DECISION

YU ESGUERRA & GULOY-PAR rOq J1) DIRECTOR LENY B. RAZ'/1 LAW OFFICES ,\' ~ Bureau of Trademarks I. Counsel Em Appellant ~ fW'.~ Intellectual Property Office I/JI/h1 6th Floor, Unit 6C, Vernida I Condominium, , Makati City q' 120 Amorsolo St., Legaspi Village, Makati City

FEDERIS AND ASSOCIATES g-il- ~o~~:;;~;':::~~OfJmtiai 9/(( ;'1Counsel for Appellee Suite 2005, 88 Corporate Center and Technology Transfer Bureau Makati City Makati City

ESTRELLITA BELTRAN-ABELARDO Director, Bureau of Legal Affairs ~ Intellectual Property Office Makati City

GREETINGS:

Please be informed that on 06 August 2009, the Office of the Director General rendered a Decision in the above-titled case (copy attached).

Makati City, 06 August 2009.

Very truly yours,

~/ ROBERT NEREO B. SAMSON

. '1 Attorney IV ~"'''1' <,' . ~ ../ c.• • • I ':.1\.) •

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Republic of the Philippines

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CASE SUMMARY

WILLYY. TIENG VS. BEST BUY ENTERPRISES SERVICES, INC. Appeal No. 14-08-09 IPC No. 14-2007-00147 Application Serial No. 4-2003-006975 Date Filed: 05 August 2003 Trademark: BEST BUY & DEVICE

J CASE: This is an appeal filed by Willy Y. Tieng (Appellant) praying that the Decision No. 07-173 dated 28 November 2007 issued by the Director of the Bureau of Legal Affairs (Director) be reversed and set aside.

PARTIES: Appellant is Willy Y. Tieng is of legal age, Filipino and with office address at Delbros Avenue, Sto. Nino, Parafiaque City while the Appellee is a foreign corporation organized and existing under the laws of the State of Minnesota, United States of America with principal office address at 7601 Penn Avenue Sout, Richfield Minnesota 55423, USA.

SUMMARY OF FACTS/ANTECEDENTS:

1. On 25 May 2007, the Appellee filed an opposition against the Appellant's mark BEST BUY & DEVICE which was published in official gazette on 26 January 2007.

2. The Appellant failed to file its Answer. 3. On 28 November 2007, the Director issued a Decision denying the Appellant's opposition against the

Appellee's mark.

APPEAL PROCEEDINGS/STATUS:

1. On 07 February 2008, the Appellant filed a "MEMORANDUM ON APPEAL" to the Office of the Director General.

2. On 13 February 2008, this Office issued an Order giving the Appellee and the Director thirty (30) days from receipt within which to file comment to the appeal and to forward the records of the case in this

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.~ which to file their respective memorandum with draft decision, if so desired. 5. On 04 April 2008, the Appellee filed a motion for ~xtension to file memorandum. , ,. Ql 08,,~( ')o()f/~ft.O "W;\NO'O(t:V\I\.,LuV"", ~t, ~ 1'(,1. W\e.~O ...OI...,~~

APPELLANT'S ARGUMENTS: (")\ tr Ar--'( ~'

1. Whether or not the Director committed a reversible error when she declared that respondent appellant is guilty of laches due to his failure to file an Answer.

2. Whether or not the Director committed a palpable error when she declared that respondent-app -llant 'ias abandoned the prosecution of the application of his mark by his failure to file an Answer to the r

IOffice, respectively.

3. On 13 March 2008, the Director forwarded the records of the case while the Appellee filed an Opposition to the Memorandum on Appeal on 14 March 2008.

J 4. On 19 March 2008, this Office issued an Order giving the parties fifteen (15) days from receipt within

Opposition. 3. Whether or not the application for registration of the mark BEST BUY & DEVICE filed by the Appellant

should be rejected.

APPELLEE'S ARGUMENTS:1 [ I.

1. The Director did not commit any reversible error in ruling that due to Appellant's failure to file any answer in the proceedings a quo, Appellant is deemed to have abandoned his trademark application being opposed by Appellee.

2. The Director did not commit any reversible error in not issuing a certificate of registration after she ruled to deny the opposition.

MAIN ISSUE:

Whether or not the Appellee is entitled to the registration of the mark "BEST BUY & DEVICE".

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I ~IPINTELLECTUAL PROPERTY PHILIPPINES

OFFICE OF THE DIRECTOR GENERAL

WILLYY. TIENG, APPEAL NO. 14-08-09 Respondent-Appellant, IPC No. 14-2007-00147

Opposition to:

-versus- Appln. Serial No. 4-2003-006975 Date Filed: 05 August 2003 Trademark: "BEST BUY &

BEST BUY ENTERPRISES DEVICE" SERVICES, INC.,

Opposer-Appellee.

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I NOTICE OF DECISION

j YU ESGUERRA & GULOY-PAR DIRECTOR LENY B. RAZ

I LAW OFFICES Bureau of Trademarks Counsel for Appellant Intellectual Property Office 6th Floor, Unit 6C, Vernida I Condominium, Makati City 120 Amorsolo St., Legaspi Village, Makati City

FEDERIS AND ASSOCIATES IP PHILIPPINES Counsel for Appellee Documentation, Information Suite 2005, 88 Corporate Center and Technology Transfer Bureau Makati City Makati City

ESTRELLITA BELTRAN-ABELARDO Director, Bureau of Legal Affairs Intellectual Property Office Makati City

GREETINGS:

Please be informed that on 06 August 2009, the Office of the Director General rendered a Decision in the above-titled case (copy attached).

Makati City, 06 August 2009.

Very truly yours,

~ 1 ROBERT NEREO B. SAMSON Attorney IV

1 J Republic of the Philippines 1

I

~iPINTELLECTUAL PROPERTY PHILIPPINES

OFFICE OF THE DIRECTOR GENERAL

WILLY Y. TIENG, Appeal No. 14-08-09 Appellant, Inter Partes Case No. 14-2007-00147

Application No. 4-2003-006975 -versus- Date Filed: 05 August 2003

Trademark: BEST BUY & DEVICE BESTBUY ENTERPRISES SERVICES, INC.,

Appellee.

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DECISION

WILLIE Y. TIENG ("Appellant") appeals Decision No. 07-173 ofthe Director ofthe Bureau of Legal Affairs ("Director"), dated 28 November 2007.

Records show that on 03 August 2003, the Appellant filed an application for the registration of the mark BEST BUY & DEVICE for use on retail outlet under Class 35 of the Nice Classification'. The application was published in the Intellectual Property Office "E-Gazette for Trademarks" on 26 January 2007. On 25 May 2007, BEST BUY ENTERPRISES SERVICES, INC. ("Appellee") filed its opposition to the trademark application alleging the following:

1. It is an affiliate ofthe U.S. company Best Buy Co., Inc., a Fortune lOOcompany and the largest specialty retailer of consumer electronics in the U.S. and Canada, accounting for 17% ofthe market and operating 832 stores in the U.S., 47 stores in Canada, and 1 store in China;

2. The mark Best Buy comes from the name of Best Buy Co., Inc. which started in

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J 1966 as the "Sound ofMusic Store" in the U.S., and in 1979 was the first supplier of video and laser discs equipment such as Panasonic, Magnavox, Sony and Sharp;

3. In 1977, Best Buy Co., Inc. changed its brand logo to the familiar yellow tag that many know today;

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4. In 1983, Best Buy Co., Inc. changed its name to Best Buy Co. and engaged in discounted brand name goods, central service, and warehouse distribution and selling appliances, and VCRs and other products including consumer electronics,

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1 The Nice Classification is a classification of goods and services for the purpose of registering trademarks and service marks, based on a multilateral treaty administered by the World Intellectual Property Organization. This treaty is called the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks concluded in 1957.

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computers, software, video games, music, DVDs, cellular phones, digital and video cameras as well as home appliances in a non-commissioner sales environment;

5. It is the title holder/true owner of the marks that are used on retail stores owned by it and other products manufactured and distributed by Best Buy Co., Inc and it can trace its ownership and its right to use and license said mark several years prior to the filing by the Appellant of its trademark application;

6. It was the first to register a design in many countries the representation of the words BEST BUY contained in gift tag device as well as the mark BEST BUY in connection with retail stores services in the field of major household appliances, photographic equipment, etc.;

7. It owns BEST BUY family of trademarks built around the word mark BEST BUY, namely, BEST BUT, BESTBUY.COM, BESTBUYBIZ, WWW.BESTBUY.COM. BEST BUY SUPERSTORES and other variations; having 8 registrations in the U.S. in Class 35, and enjoy exclusive use in many parts of the world achieved by protecting and defending its rights in many countries;

8. In the Philippines, it filed an application on 30 November 20062 for the registration of its mark for retail stores services, featuring consumer electronic products, computers, and computer peripherals, and household appliances under Class 35;

9. BEST BUY is not only known in the U.S. but also in other parts of the world including Canada and China because of aggressive worldwide sales, promotions and advertising, invested substantially in promoting the mark;

10. Its fame and popularity was achieved through extensive advertising and promotion that uses famous artists and personalities as brand endorsers, including primary sponsorship for the NASCAR team Haas CNC Racing and its driver Jeff Green, and teaming in October 2006 with RealNetworks' Rhapsody and Sandisk to launch the Best Buy Digital Music Store which is a new service that will give customers an easy way to enjoy, manage and discover music; t

11. It is prominently and consistently advertised in numerous magazines including but not limited to Time, Newsweek, Forbes, Fortune, Money, The New Yorker, and Sports Illustrated which are sold worldwide including the Philippines;

12. It was recognized in 2004 by ForbesMagazine as Company of the Year and in 2001 by Discount Store News as Specialty Retailer of the Decade, ranked by Forbes Magazine in the Top Ten of America's Most Generous Corporations and made Fortune Magazine's List of Most Admired Companies in 2006;

2 Application Serial No. 4-2006-012942.

13. Its main website is www.bestbuy.com wherein order/purchases for BEST BUY products can be placed with more than 350,000 visits with email addresses in the Philippines, and the main website products are also available through a number of known websites for on-line shopping as of 2006;

14. Its website serves as powerful advertising medium for the mark BEST BUY as it is accessible at all times to all customers;

15. The mark has been held by various competent authorities to be well known internationally: In Best Buy Concepts, Inc. v. Hyuklmahn Ahn, Case No. 112514, The National Arbitration Forum has declared that Best Buy Concepts Inc., has an established right over the BEST BUY mark through the registration with the USPTO and its continuous use in commerce;

16. The fame and well known status of BEST BUY are likewise thus, attributed to the legal protection obtained by the Appellee there for in many countries as well as its efforts at obtaining and maintaining exclusive right to use and ownership thereof;

17. It shall be damaged by the registration of BEST BUY & DEVICE in favor of the Appellant, and thus filed the opposition based on Sec. 123.1pars. (e) and (f), and Sections 168.1, 165.1 and 165.2 of the IP Code;

18. Because the Appellant's mark is identical to the Appellee's with respect to the words, design and usage, its registration is proscribed by the IP Code as it will cause confusion, mistake, and deception on the public and mislead them as to the origin, nature, quality, and characteristic of the goods or services on which it is affixed;

19. The Appellant's application was filed in bad faith, fraudulent and a misrepresentation as BEST BUY was already famous and known in the relevant industry, not only in other countries but also in the Philippines, as being owned and used by the Appellee and its affiliated companies; and

20. The approval of the Appellant's application will violate and damage the Appellee's proprietary rights and interests, business reputation and goodwill and will enable the Appellant to unfairly profit commercially therefrom.

On 13 June 2007, the Bureau of Legal Affairs issued a Notice to Answer serving a copy thereof upon the Appellant. The Appellant, however, did not file an answer to the opposition. Consequently, the bureau issued Order No. 2007-1950 declaring that the Appellant had waived his right to file/submit Answer and as such the case was submitted for decision.

While the Director finds the competing marks not confusingly similar, she denied the opposition on the ground that the Appellee's mark is not well-known. However, she also held:

However, in view of respondent-applicant's actuation of not filing an Answer despite notice from this Office, he is guilty of laches. As such, he is deemed to have abandoned his interest to prosecute subject application. Consequently, Application Serial No. 4-2003-006975 for the mark "BEST BUY & DEVICE" filed by respondent-applicant Willy Y. Tieng for goods under Class 35, namely, label, stamped container, tags, and stickers is as it is hereby, REJECfED.

Dissatisfied, the Appellant filed on 07 February 2008 the instant appeal alleging that the Director erred in rejecting his application by the sole reason of non-filing an answer to the opposition. He argues that laches does not apply in this case and the Director's pronouncement is contrary to its basic principles. He contends that he is not deemed to have abandoned the prosecution of his mark, his failure to file answer being the result of his reliance to a mistaken advice. According to the Appellant, upon his receipt of the order to file answer, he consulted a person supposedly knowledgeable about the matter and was advised that an answer is no longer necessary as his application was published already. Thus, he did not further refer the matter to his counsel. In spite of this, the Appellant says, there is no unreasonable and unexplained lapse of time between the non-filing of an answer and his assertion of his right over his application through the appeal. Even if there was no answer on record, there is no provision of law or even jurisprudence stating that the circumstance is an indication of lack of interest to prosecute the application.

The Appellant further argues and prays that pursuant to Sec. 136 of the IP Code, it is now the ministerial duty of the Director to issue to him the certificate of registration. Since the Appellee was not able to prove that its mark is well known, there is no ground to support the rejection of his application, an act which was beyond the powers ofthe Director.

On 13 February 2008, this Office issued an Order requmng, among other things, the Appellee to file its comment to the appeal within thirty (30) days from receipt thereof. On 14 March 2008, the Appellee filed an "OPPOSITION TO THE MEMORANDUM ON APPEAL" alleging that the Director did not err in ruling that the Appellant was deemed to have abandoned his trademark application and in not issuing a certificate of registration even if she denied the opposition as there was already a finding that the competing marks are confusingly similar.

The issues to be resolved in this case are:

1. Whether the Director was correct in declaring the Appellant's trademark application abandoned in view of the said party's non-filing of an answer to the opposition, and

2. Whether the Director was correct in dismissing the Appellant's opposition.

On the first issue, it must be stressed that an opposition proceeding is governed by established rules of procedure, specifically, the Regulations on Inter Partes Proceedings as amended by Office Order No. 79, s. 2005 ("Inter Partes Regulations"). There is nothing in the Inter Partes Regulations which says that the failure to file an answer to the opposition shall result in the abandonment of the trademark application. What the regulations provide is Sec. 11, to wit:

Section 11. Effect of failure to file Answer - In case the respondent fails to file an answer, or if the answer is filed out of time, the case shall be decided on the basis of the petition or

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opposition, the affidavits of the witnesses and the documentary evidence submitted by the petitioner or opposer.

Succinctly, Sec. 11 of the Inter Partes Regulations is akin to a judgment by default under the Rules of Court, wherein the case is not dismissed nor declared abandoned by the simple reason of the defendant not filing an answer to the complaint.

But in spite of the clear import of Sec. 11 of the Inter Partes Regulations, the Director declared the trademark application abandoned by applying, rather erroneously, the equitable principle of laches. In this regard, the Director should have been guided by the Supreme Court's pronouncement in Chavez v. Bonta-Perez', thus:

Laches is a doctrine in equity ... Our courts are basically courts of law and not courts of equity. Thus, laches cannot be invoked to resist the enforcement of an existing legal right. We have ruled in Arsenal v. Intermediate Appellate Court . . . that it is a long standing principle that equity follows the law. Courts exercising equity jurisdiction are bound by rules of law and have no arbitrary discretion to disregard them. In Zabat, Jr. v. Court ofAppeals . . ., this Court was more emphatic in upholding the rules of procedure. We said therein:

As for equity, which has been aptly described as "justice outside legality," this is applied only in the absence of, and never against, statutory law or, as in this case, judicial rules of procedure. Aequetas nunquam contravenit legis. This pertinent positive rules being present here, they should preempt and prevail over all abstract arguments based only on equity.

The Director should not have declared the Appellant's trademark application abandoned merely because of the said party's non-filing of an answer to the Appellee's opposition. Her ruling did not conform to the Inter Partes Regulations and which leads into an absurd situation. Aptly, if declaring the applicant's trademark application abandoned is a correct action, then there would be no more need for the Director to decide the case, there being no more reason to proceed therewith as the cassus bellum, the Appellant's trademark application, had already been declared abandoned, thus, consequently, rendering Sec. 11 of the Inter Partes Regulations a superfluity.

Moreover, this Office finds that the Director misapplied the equitable principle of laches in this case. She held, in effect, that the Appellant's failure to file answer to the opposition is "an unreasonable delay" in asserting his right over the mark. In a simplistic but flawed reasoning, the Director equated laches with the mere failure or refusal of one to do an act.

In Desamparados M Soliva, Substituted by Sole Heir Perlita Soliva Galdo v. The Instestate Estate of Marcelo M Villalba and Valenta Balicua vnun«. the Supreme Court reiterated the definition and elements of the equitable principle of laches, thus:

3 242 SCRA81, supra; quoting Imperial Valley Shipping Agency v. NLRC, 200 SCRA178, 05 Aug. 1991. 4 G.R. No. 154017, 08 Dec. 2003, citing Phi/green Trading Construction Corporation v. Court ofAppeals, 8 Phil. 433, 18 Apr. 1997; Brillo Handicrafts, Inc. v. Court ofAppeals, 329 Phil. 161, 07 Aug. 1996; Chavez v. Bonto-Perez, 242 SCRA73, 01 Mar. 1995; Eduarte v. Court ofAppeals, 311 SCRA 18, 22 Jul. 1999; Ochagabia v. Court ofAppeals, 364 Phil. 233, 11March 1999; Catholic Bishop of Balanga v. Court of Appeals, 332 Phil. 206, 14 Nov. 1996. R.S. Vasan (ed.), Latin Words & Phrases for Lawyers (1980), p. 248; and Eduarte v. Court ofAppeals, supra, p. 28; Jison v. Court of Appeals, 350 Phil. 138, 183, 24 Feb. 1998.

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In general, laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which - by the exercise of due diligence - could or should have been done earlier. It is the negligence or omission to assert a right within a reasonable period, warranting the presumption that the party entitled to assert it has either abandoned or declined to assert it. I

Under this time-honored doctrine, relief has been denied to litigants who, by sleeping on their rights for an unreasonable length of time - either by negligence, folly or inattention ­ I have allowed their claims to become stale. Vigilantibus, sed non dormientibus, jura subveniunt. The laws aid the vigilant, not those who slumber on their rights.

The following are the essential elements of laches: II

(1) Conduct on the part of the defendant that gave rise to the situation complained I of; or the conduct of another which the defendant claims gave rise to the same;

(2) Delay by the complainant in asserting his right after he has had knowledge of the defendant's conduct and after he has had an opportunity to sue;

(3) Lack of knowledge by or notice to the defendant that the complainant will assert the right on which he bases his suit; and

(4) Injury or prejudice to the defendant in the event relief is accorded to the complainant.

For laches to apply, the right or claim which is said to have become stale due to the claimant's unreasonable delay must arise from a conduct of another party against whom the right or claim is asserted. Laches is a form of equitable defense and usually bars only the equitable enforcement of a right but not the right itself. It is an affirmative defense and the burden of proving it rests on the defendant.'

In this instance, the elements of laches do not exist. The Appellant's "right" or "claim" which the Director held to have succumbed to laches is his application for the registration of his mark. This "right" or "claim", however, did not arise from the conduct of the opposer nor by any other party. The Appellant's "right" to trademark registration is provided by law and emanates from his appropriation, ownership and use thereof. In fact, it was his assertion of this "right", specifically his filing of a trademark application and the allowance thereof by the Bureau of Trademarks that prompted the Appellee to file an opposition.

Also, because it is an equitable remedy or defense, laches is applied only upon showing of clear evidence that the party against whom laches is invoked had indeed "slept on his rights" and in the absence of a provision of law or rules that addresses the situation. In this case, there is no evidence of the Appellant's "unreasonable delay" and "lack of interest" in prosecuting his right to trademark registration. The Appellant's mere non-filing of an answer to the opposition is not an "unreasonable delay" nor a sufficient basis to conclude that the Appellant now "lacks interest" to prosecute his trademark application. As discussed above, there is an explicit provision of the IPC Rules which deals with the effect of the non-filing of an answer to an opposition.

5Philippine Bank ofCommunications v. Court ofAppeals, et al., G.R. No. 109803. 20 April 1998.

Going now to the second issue, it must be emphasized that an opposition proceeding is basically a review of the trademark application in question, succinctly, whether the requirements for registration under the law are met. Sec. 131.36 of the IP Code, Sec. 134 states:

Any person who believes that he would be damaged by the registration of a mark may, upon payment of the required fee and within thirty (30) days after the publication referred to in Subsection 133.2, file with the Office an opposition to the application. Such opposition shall be in writing and verified by the oppositor or by any person on his behalf who knows the facts, and shall specify the grounds on which it is based and include a statement of the facts relied upon. Copies of certificates of registration of marks registered in other countries or other supporting documents mentioned in the opposition shall be filed therewith, together with the translation in English, if not in the English language. For good cause shown and upon payment of the required surcharge, the time for filing an opposition may be extended by the Director of Legal Affairs, who shall notify the applicant of such extension. The Regulations shall fix the maximum period

of time within which to file the opposition. (Sec. 8, RA. No. 165a) (Emphasis supplied)

In this instance, the Appellee opposes the Appellant's trademark application claiming that:

1. it was the first to use BEST BUY both as a company or business name and as a trademark in retail store business or services;

2. the name and mark BEST BUY and its variations are well-known marks internationally and thus protected; and

3. to allow the Appellant to register BEST BUY will damage its interest and will preclude it from engaging in the retail store business in the Philippines using the name/mark.

To prove that a mark is well-known requires submission of evidence. This Office agrees with the Director that insofar as the evidence submitted by the Appellee is concerned, the same is insufficient to establish that the Appellee's mark meet the criteria, or a combination thereof, in order to declare it well-known under Rule 102 of the Trademark Regulations.

However, this Office finds that the Director erred in dismissing the opposition. While the Appellee may have failed to substantiate its claim that its mark is well-known, this does not mean that its right to the name and mark BEST BUY is inferior to the Appellant's. In filing the opposition, the Appellee imputes bad faith on the part of the Appellant.

Accordingly, what the Appellee raised is the issue of ownership of the name and mark BEST BUY. If the Appellant's application is allowed, he would gain exclusive rights to use the mark BEST BUY in the Philippines to the prejudice of the Appellee and its interest, as the latter would

6 131.3. Nothing in this section shall entitle the owner of a registration granted under this section to sue for acts committed prior to the date on which his mark was registered in this country: Provided, That, notwithstanding the foregoing, the owner of a well­known mark as defined in Section 123.1(e) of this Act, that is not registered in the Philippines, may, against an identical or confusingly similar mark, oppose its registration, or petition the cancellation of its registration or sue for unfair competition, without prejudice to availing himself of other remedies provided for under the law.

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be, in effect, stripped of its ownership and rights over the name or mark as it will now be barred from investing and establishing business in the Philippines using its own name and trademark.

The Philippines implemented the TRIPS Agreement when the IP Code took into force and effect on 01 January 1998. Articles 15 and 16 of the TRIPS Agreement read:

Section 2: Trademarks Article 15

Protectable Subject Matter

1. Any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark. Such signs, in particular words including personal names, letters, numerals, figurative elements and combinations of colours as well as any combination of such signs, shall be eligible for registration as trademarks. Where signs are not inherently capable of distinguishing the relevant goods or services, Members may make registrability depend on distinctiveness acquired through use. Members may require, as a condition of registration, that signs be visually perceptible.

2. Paragraph 1 shall not be understood to prevent a Member from denying registration of a trademark on other grounds, provided that they do not derogate from the provisions of the Paris Convention (1967).

3. Members may make registrability depend on use. However, actual use of a trademark shall not be a condition for filing an application for registration. An application shall not be refused solely on the ground that intended use has not taken place before the expiry of a period of three years from the date of application.

4. The nature of the goods or services to which a trademark is to be applied shall in no case form an obstacle to registration of the trademark.

5. Members shall publish each trademark either before it is registered or promptly after it is registered and shall afford a reasonable opportunity for petitions to cancel the registration. In addition, Members may afford an opportunity for the registration of a trademark to be opposed.

Article 16 Rights Conferred

1. The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed. The rights described above shall not prejudice any existing prior rights, nor shall they affect the possibility of Members making rights available on the basis of use.

Significantly, the IP Code adopted the definition of the mark under RA. 166, as amended, which is the old Law on Trademarks, to wit:

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121.1. "Mark" means any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods; (Sec. 38, RA. No. 166a).

Sec. 122 of the IP Code states:

Sec. 122. How Marks are Acquired.- The rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law. (Sec. 2-A, RA. No. 166a)

Sec. 122 does not say that registration confers ownership of the mark. What the provision speaks of is that the rights in a mark shall be acquired through registration, which must be made validly in accordance with the provisions of the law. Significantly, Sec. 122 makes reference to Sec. 2-A ofR.A. 166, which provides:

Sec. 2-A. Ownership of trademarks, tradenames and service marks; how acquired. ­Anyone who lawfully produces or deals in merchandise of any kind or who engages in any lawful business, or who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in business, and in the service rendered, may appropriate to his exclusive use a trade-mark, a trade-name, or a service-mark not so appropriated by another, to distinguish his merchandise, business or service from the merchandise, business or services of others. The ownership or possession of a trade-mark, trade-name, service-mark, heretofore or hereafter appropriated, as in this section provided, shall be recognized and protected in the same manner and to the same extent as are other property rights known to the law."

In Shangri-La International Hotel Management, Ltd., et. al v. Developers Group of Companies, Inc} the Supreme Court defined the import and scope of Sec. 2-A ofRA 166, thus:

... For, while Section 2 provides for what is registrable, Section 2-A, on the other hand, sets out how ownership is acquired. These are two distinct concepts.

Under Section 2, in order to register a trademark, one must be the owner thereof and must have actually used the mark in commerce in the Philippines for 2 months prior to the application for registration. Since "ownership" of the trademark is required for registration, Section 2-A of the same law sets out to define how one goes about acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce is also the test of ownership but the provision went further by saying that the mark must not have been so appropriated by another. Additionally, it is significant to note that Section 2-A does not require that the actual use of a trademark must be within the Philippines. Hence, under RA. No. 166, as amended, one may be an owner of a mark due to actual use thereof but not yet have the right to register such ownership here due to failure to use it within the Philippines

for two months. (Underscoring supplied)

Further, Sec. 138 of the IP Code, provides:

SEC. 138. Certificates of Registration.-A certificate of registration of a mark shall be prima facie evidence of the validity of the registration, the registrant's ownership of the mark, and

7 G.R. No. 159938,31 Mar. 2006.

of the registrant's exclusive right to use the same in connection with the goods or services

and those that are related thereto specified in the certificate. (Emphasis supplied)

From this legal backdrop it is plain that it is not the registration per se that confers ownership of a mark; instead, it is the ownership of a mark that gives rise to the right to cause its registration, and if registered, to enjoy exclusive use thereof for the goods or services associated with it. Thus, even the filing of an application ahead of another is not a guarantee that the mark will be registered. The application is subject to examination to determine whether the requirements under the law are complied with.

Corollarily, if another person apply for the registration of the mark ahead of the real owner thereof, for use on identical goods or services, and it is determined that the first-filer is not in fact the owner of the trademark, or merely a distributor or agent of the owner, or is not authorized by the owner to procure registration of the trademark in his, her, or its favor; or that the adoption and/or use by the first-filer of the trademark, even in good faith, is preceded by an actual use by another, also in good faith, prior to the taking into force and effect of the IP Code, that application should not be allowed.

In the event, therefore, that two or more persons or entities claim ownership and use of identical marks for use on identical or similar goods or services, each party's claim must be in good faith, that is, the basis of ownership must be independent from or is not derived from the other and absolutely, there was no copying. In this ideal situation, whoever files the application first will benefit under Sec. 123.1(d) of the IP Code. The claim of ownership if contested must be able to stand ground.

In this regard, the Appellee submitted evidence that it has used and continues to use BEST BUYboth as a business name and a trademark for retail store services since the mid-1960s, and that it has obtained and continues to obtain registrations for the mark in several countries already, including the Philippines.

, This Office noted that even in the instant appeal, the Appellant does not dispute the fact that his mark is confusingly similar to the Appellee's and that the latter had prior use of BEST BUY as a company name and trademark for its retail store services business. In his affidavit executed on 30 April 2007 8, Keith Nielsen, Vice President, Operations and International General Counsel of the Appellee, stated that the Appellee first used BEST BUY in commerce the U.S. for retail store services in 1989, while Ma. Cristina P. Salvatierra, in her affidavit dated 25 May 20079

, said that the Appellee used the mark as early as 1966. These statements find support in the copies of trademark registrations in the U.S. showing that the mark BEST BUY and variations were used in commerce in U.S. for retail store services since 1986.10 These U.S. registrations, along with some of those in other countries, were issued even before the Appellant's filing of the subject trademark application and alleged use thereof. 11

8 Annex"A" to the Appellee's Verified Notice of Opposition. 9 Annex "B" to the Appellee's Verified Notice of Opposition. 10 Annex "14" to "17", attached to Keith Nielsen's affidavit. 11See Annexes "I" to "47" to Nielsen's Affidavit.

By comparing the competing marks, as reproduced below:

o BESTBuy

Appellant'smark as appliedfor registration Appellee's mark

bad faith on the part of the Appellant is revealed. The competing marks are not only similar, they are identical. That the Appellant by accident coined a mark that is identical to that of the Appellee and uses it on the same services which the latter deals in is very unlikely or remote. That it was mere coincidence that the parties, business competitors at that, came up with identical marks for use on identical services is a story too good to be true, especially when the Appellee had used BEST BUY both as a company or business name and as trademark way ahead of the Appellant who, in turn, has not offered any plausible explanation on how he was able to come up with an identical mark. The fair inference that can be drawn, hence, is that the Appellant merely copied the mark from the Appellee. Thus, the Appellant cannot claim ownership of the mark and consequently, has not right to register it.

It must be stressed that a trademark is an industrial property and the owner thereof has property rights over it. The privilege of trademark registration is based on the concept of ownership. The IP Code implements the TRIPS Agreement and therefore, the idea of "registered owner" does not mean that ownership is established by mere registration but that registration establishes merely a presumptive right of ownership. That presumption of ownership yields to superior proof of actual and real ownership of the mark and to the TRIPS Agreement requirement that no existing prior rights shall be prejudiced. Relevant is Sec. 236 of the IP Code, thus:

Sec. 236. Preservation of Existing Rights.-Nothing herein shall adversely affect the rights on the enforcement of rights in patents. utility models, industrial designs, marks and works. acquired in good faith prior to the effective date of this Act.

Sec. 236 of the IP Code guarantees that the change in the legal system shall not prejudice existing rights acquired before the IP Code took effect on 01 January 1998. To this Office's view, Sec. 236 is not only intended as a defense against suits for infringement nor its application pertains to enforcing existing trademark registrations issued under the RA 166, otherwise, it would not resolve the issue as to who has the superior right over the mark. Sec. 236 manifests due process and the observance of justice, fairness or equity. The change in the legal system has necessitated the adoption thereof to protect the rights of those who, in good faith, have already invested into and established goodwill on their trademarks. To give meaning to Sec. 236, a conclusion is drawn that the rights referred thereto include those exercised or may be exercised by owners and prior users of unregistered trademarks that were acquired in good faith before the IP Code took effect. Among these rights is the protection against its undue registration and use by another person.

Moreover, Sec. 165.2 ofthe IP Code provides:

ttI

165.2(a) Notwithstanding any laws or regulations providing for any obligation to . register trade names, such names shall be protected, even prior to or without registration, against any unlawful act committed by third parties.

(b) In particular, any subsequent use of the trade name by a third party, whether as trade name or a mark or collective mark, or any such use of a similar trade name or mark, likely to mislead the public shall be deemed unlawful.

Under Sec. 165 of the IP Code. the Appellant's appropriation and use of BEST BUY as a trademark for retail store services is deemed unlawful because it has already been used and owned by the Appellee both as a company or business name and as a trademark for the said services long before the Appellant did. Because it is unlawful, the Appellant cannot be in good faith in claiming ownership ofthe mark.

To conclude, the Appellant should be reminded that the intellectual property system was established to recognize creativity and give incentives to innovations. The essence of trademark registration is to give protection to the owners of trademarks. The function of a trademark is to identify distinctly the origin or ownership of the goods to which it is affixed: to secure to him, who has been instrumental in bringing into the market a superior article of merchandise. the fruit of his industry and skill; to assure the public that they are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against substitution and sale of an inferior and different article as his product." The trademark registration system seeks to reward entrepreneurs and individuals who through their own innovations were able to distinguish their goods or services by a visible sign that distinctly points out the origin and ownership of such goods or services. The intellectual property system should not serve as a haven for people or entities who would take advantage of the intellectual creation of others. whether a local resident or a foreigner.

WHEREFORE, premises considered. the appeal is hereby partly GRANTED insofar as the Director's erroneous ruling that the Appellant's trademark application is deemed abandoned on the ground of laches is concerned. The Appellant's prayer for the issuance of a certificate of registration in its favor however. is DENIED for the reasons stated above. Let a copy of this Decision as well as the records be furnished and returned to the Director of Bureau of Legal Affairs for appropriate action. Further. let also the Director of the Bureau of Trademarks and the library of the Documentation. Information and Technology Transfer Bureau be furnished a copy of this Decision for information. guidance. and records purposes.

SO ORDERED. Makati City. AUG 86 lB09

12 Pribhdas J. Mirpuri v. Court ofAppeals, G.R. No. 114508, 19 Nov. 1999, citing Etepha v. Director ofPatents, 16 SCRA 495 (1966), Gabriel v. Perez, 55 SCRA 406 (1974).