Alexander & Co. v. Ang
REITERATIONFacts
1. The Antecedents: R. F. & J. Alexander & Co., Ltd., and Ker & Co., Ltd. (petitioners) sued Jose Ang and Sy Bok (respondents) for selling sewing thread under the names "Aurora," "Mayflower," and "Agatonica." The petitioners alleged that the labels and packaging of these threads closely resembled those of their own "Alexander" brand, which has been manufactured in Scotland and distributed in the Philippines for 50 years. The respondents, who operated stores in Bacolod City, denied the similarity and claimed they were merely sellers, not manufacturers, and that their trade names were duly registered. 2. Procedural History: The two cases, filed separately in Negros Occidental, were tried jointly. A partial stipulation of facts was entered into by the parties. The trial court dismissed the complaints. This dismissal was subsequently affirmed by the Court of Appeals, which relied on three main propositions: that the test for unfair competition focuses on the possibility of deception of an intelligent buyer, that such actions should be directed against the manufacturer rather than the seller, and that there is no unfair competition when a product is sold under a registered trademark. 3. The Petition: The petitioners sought review of the Court of Appeals' decision, arguing that it erred in its interpretation of the law regarding unfair competition. Specifically, they contended that the appellate court incorrectly applied the test of deception, focusing on the intelligent buyer rather than the ordinary purchaser. They also challenged the court's assertion that actions for unfair competition must be against the manufacturer and not the seller, and that registered trademarks preclude claims of unfair competition. The petitioners asserted that the similarity in appearance between their "Alexander" thread packaging and the respondents' "Aurora," "Mayflower," and "Agatonica" threads was likely to mislead ordinary purchasers, constituting unfair competition despite the different product names and the respondents' status as sellers and the registration of their trademarks.
Issue(s)
Whether the test of unfair competition lies in the possibility of deception of the intelligent buyer or the ordinary purchaser. Whether an action for unfair competition should be directed against the manufacturer and not against the seller. Whether there is unfair competition when a product is sold under a registered trademark.
Ruling
The Supreme Court reversed the decision of the Court of Appeals, declaring that the respondents' goods competed unfairly with the petitioners'. The respondents were enjoined from selling the goods and ordered to pay costs.
Ratio Decidendi
On the test for deception in unfair competition: The Court held that the statute, in defining unfair competition, refers to "purchasers" and the "public" likely to be deceived, which generally means the "ordinary purchaser" or "ordinary buyer." While a previous case mentioned the "ordinarily intelligent buyer," the Court clarified that the generally accepted doctrine, as reiterated in E. Spinner & Co. vs. Neuss Hesslein, speaks of "casual purchasers" who know the goods only by name. The required similarity need only be such as is likely to mislead purchasers of ordinary caution and prudence, not necessarily experts or those who can critically compare the products side-by-side. The Court found that the labels and boxes of "Aurora," "Mayflower," and "Agatonica" had a general appearance so similar to "Alexander" that they were likely to induce ordinary purchasers to believe they were buying the "Alexander" brand, especially given the similar color, type, size, and placement of names and descriptive words, as well as the decorative designs and packaging. The Court noted that the respondents' thread was shorter in length per ball and sold at a lower price, further contributing to the deceptive appearance and the likelihood of ordinary buyers mistaking them for the "Alexander" brand. On the liability of the seller: The Court rejected the contention that the action should be directed only against the manufacturer. It cited Section 29 of Republic Act No. 166, which explicitly makes liable for the imitation of goods not only the manufacturer but also the vendor or any agent engaged in selling such goods with a like purpose. The Court emphasized that the law makes liable "any person, who is selling goods" and gives them the general appearance of goods of another manufacturer or dealer. On the effect of trademark registration: The Court affirmed that registration of a trademark does not preclude actions for unfair competition. It has been held in several decisions that one can be declared an unfair competitor even if their competing trademark is registered. While registration might minimize damages by showing good faith prima facie, it does not grant immunity from unfair competitive actions. The Court found that the features and appearance of the respondents' labels and boxes were so similar to the petitioners' as to cause the confusion that the rules of unfair competition seek to avoid, irrespective of the registration of the names "Aurora," "Agatonica," and "Mayflower."
Main Doctrine
Unfair competition exists when a seller gives their goods the general appearance of goods of another manufacturer or dealer, likely to influence ordinary purchasers to believe they are buying the goods of the other, even if the competing trademark is registered. The test for deception lies in the possibility of deceiving the ordinary, not the ignorant, buyer.