Inchausti v. Song Fo
REITERATIONFacts
1. The Antecedents: This case concerns a dispute over the use of trade-marks for alcoholic liquors manufactured and sold in Manila. The plaintiff, Inchausti & Company, operates the 'Destileria de Tanduay,' while the defendants, Song Fo & Company, operate the 'Destileria La Tondeña.' Both companies are engaged in the extensive manufacture and sale of alcoholic beverages. 2. Procedural History: The plaintiffs initiated this suit under Act No. 666 of the Philippine Commission, seeking an injunction against the defendants' alleged illegal use of a trade-mark and claiming damages. The plaintiffs had registered their trade-mark for 'anisados y alcoholes' on October 6, 1903. The defendants began using a substantially similar circular label on their product corks around 1906. The lower court ruled in favor of the plaintiffs, finding that the defendants' trade-mark infringed upon the plaintiffs' registered mark and ordering an accounting of profits. 3. The Petition: The defendants appealed the lower court's decision. Their primary arguments centered on the assertion that the plaintiffs were not entitled to exclusive use of their trade-mark, contending that the demijohn symbol, a common element in the distilling trade, was universally used and thus not subject to exclusive appropriation. The defendants also challenged the accuracy of the trade-mark description in the registration proceedings. The Supreme Court, however, found that while individual elements might not be exclusive, the combination of elements in the plaintiffs' design constituted a valid trade-mark. The Court ultimately affirmed the judgment, reclassifying the case under unfair competition (Section 7 of Act No. 666) due to the striking similarity of the labels, which was deemed likely to deceive ordinary purchasers, and modified the damages award based on an agreement between the parties.
Issue(s)
Whether a design incorporating a universal symbol, such as a demijohn, can be the subject of an exclusive trade-mark. Whether the defendants are liable for unfair competition under Section 7 of Act No. 666 notwithstanding differences in wording.
Ruling
The Supreme Court affirmed the judgment of the lower court, modifying the award of damages based on an agreement between the parties. The Court found the defendants liable for unfair competition and ordered them to pay P1,000 to the plaintiffs.
Ratio Decidendi
On Issue 1: The Court ruled that the combination of elements, rather than the individual symbols, determines trademarkability. While it acknowledged the rule that a symbol representing something in universal use (like a demijohn in the liquor trade) is generally not subject to an exclusive trade-mark, the Court emphasized that the combination of that symbol with other distinguishing elements—such as concentric circles and specific horizontal lines—creates a unique design that is protectable. The component elements of a design are not to be considered separate and apart; the focus must be on the design as a whole. Consequently, the plaintiffs held an exclusive right to the specific combination shown in their registered trade-mark. This right was secured both by legal registration and by long-standing use in the sale of their products. On Issue 2: The Court found the defendants liable for unfair competition because the labels were 'strikingly similar' in their general design and appearance. Although there were variations in the wording (e.g., 'FACT' vs 'TANDUAY') and the length of the horizontal lines, these differences were only detectable upon 'most careful examination.' Applying the 'ordinary purchaser' test from U.S. v. Manuel, the Court held that the law does not require the public to exercise specialized scrutiny to avoid being misled. The striking similarity in the appearance of the goods as packed and offered for sale was sufficient to influence an ordinary purchaser to believe the defendants' goods were those of the plaintiffs. Under Section 7 of Act No. 666, the intent to deceive and defraud a competitor is affirmatively required, but such intent may be legally inferred from the similarity in the appearance of the goods. Therefore, even if the marks were not identical enough for Section 3, the defendants' act of clothing their goods in the appearance of the plaintiffs' products constituted actionable unfair competition.
Main Doctrine
The Supreme Court affirmed the judgment of the lower court, holding that while a single element like a demijohn might not be subject to exclusive trademark, its use in combination with other distinguishing elements in a design can be the subject of an exclusive trademark. The Court found that the defendants' trademark, though not identical, was so similar in design and appearance to the plaintiffs' registered trademark that it constituted unfair competition under Section 7 of Act No. 666, as it was likely to deceive the ordinary purchaser.