Conrad and Company, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Private respondents Fitrite, Inc. and Victoria Biscuits Co., Inc. (Fitrite and Victoria) were engaged in manufacturing, selling, and distributing biscuits and cookies under the trademark "SUNSHINE." Fitrite had exclusively used this trademark since March 31, 1981, and obtained Certificates of Registration from the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) in the Supplemental Register (SR-6217) on May 20, 1983, and in the Principal Register (No. 47590) on March 22, 1990. Fitrite authorized Victoria to use the trademark, and later assigned its rights to Victoria. Petitioner Conrad and Company, Inc. (Conrad) was engaged in importing, selling, and distributing biscuits and cookies. Sometime in June 1990, Fitrite and Victoria discovered that Conrad had been importing, selling, and distributing products bearing the "Sunshine" trademark in the Philippines without their consent, commencing on April 21, 1988, after Conrad was designated exclusive importer and dealer of products from "Sunshine Biscuits, Inc." of the USA. Fitrite and Victoria alleged that Conrad's acts were calculated to mislead purchasers and caused damage and prejudice to them and the public. A demand letter to cease and desist was ignored. Procedural History: Fitrite and Victoria filed a complaint for "Injunction with Damages with Prayer for Preliminary Injunction" against Conrad. Conrad filed a motion to dismiss, invoking grounds including litis pendentia, primary jurisdiction, and failure to state a cause of action. The Regional Trial Court (RTC) granted the motion and dismissed the complaint, finding that the resolution of the ownership of the "Sunshine" trademark was lodged with the BPTTT and that litis pendentia and the doctrine of primary jurisdiction applied. The Court of Appeals (CA) reversed the RTC's order, reinstating the complaint and ordering Conrad to file an answer. The CA held that the RTC erred in dismissing the case on a motion to dismiss without reception of evidence, that the issue of infringement was within the competence of the courts, and that the pendency of cancellation proceedings before the BPTTT did not divest the courts of jurisdiction. The CA also issued an injunction against Conrad. The Petition: Conrad filed a petition for review with the Supreme Court, arguing that the CA erred in issuing the injunction, in failing to apply the Paris Convention and a Ministry of Trade memorandum, in holding that the doctrine of primary jurisdiction was not applicable, and in holding that litis pendentia did not apply due to different causes of action.
Issue(s)
Whether the Court of Appeals erred in reversing the RTC's dismissal of the complaint for injunction with damages, and the applicability of primary jurisdiction. Whether the pendency of cancellation proceedings before the BPTTT divested the RTC of its jurisdiction over the action for trademark infringement and unfair competition, and the applicability of litis pendentia. Whether the CA erred in issuing a writ of preliminary injunction against the petitioner.
Ruling
The Supreme Court denied the petition for review for lack of merit and affirmed the amended decision of the Court of Appeals. The Court reinstated the complaint filed by private respondents and ordered petitioner Conrad and Company, Inc. to file its answer. The Court also affirmed the injunction issued by the CA against Conrad, restraining it from importing, manufacturing, selling, and distributing goods bearing the "Sunshine & Device Label" trademark registered in Fitrite's name, pending final decision in the action.
Ratio Decidendi
On the issue of jurisdiction and the applicability of primary jurisdiction: The Court held that the RTC erred in dismissing the case based on the doctrine of primary jurisdiction. While the BPTTT has exclusive cognizance over administrative cancellation of registered trademarks, actions for infringement or unfair competition, including the remedy of injunction and damages, are explicitly within the competence and jurisdiction of ordinary courts. The Court clarified that the issue in the action a quo was not the registerability or cancellability of the trademark, which was pending before the BPTTT, but rather whether Conrad's acts of importing and selling goods bearing the registered "SUNSHINE" trademark without Fitrite's consent constituted infringement. This factual question does not require specialized skills for resolution. Even if the issue were technical, the doctrine of primary jurisdiction does not authorize outright dismissal but suspension of judicial process pending referral to the administrative body. The Court emphasized that an application for administrative cancellation cannot per se restrain the courts from exercising their lawfully conferred jurisdiction. On the issue of litis pendentia: The Court agreed with the CA that there was no identity of causes of action between the infringement case filed by Fitrite and Victoria and the cancellation proceedings filed by Sunshine Biscuits, Inc. before the BPTTT. The cause before the BPTTT was the cancellability of Fitrite's registration, while the cause in the case a quo was the alleged infringement by Conrad of Fitrite's registered trademark. Therefore, the ground of litis pendentia was not applicable. On the propriety of the injunction: The Court found no error in the CA's issuance of the writ of preliminary injunction. The Court reiterated that registration in the Principal Register gives rise to a presumption of validity and the registrant's exclusive right to use the mark, which can serve as a basis for an infringement action. An invasion of this right entitles the registrant to court protection. The CA's finding of urgent necessity to prevent serious damage to Fitrite's business interests, goodwill, and profit justified the issuance of the injunction to maintain the status quo pending trial. The Court noted that petitioner's motion to dismiss was premature and that the allegations in the complaint, hypothetically admitted, justified the injunction.
Main Doctrine
An action for trademark infringement and unfair competition falls within the jurisdiction of ordinary courts, and the pendency of an administrative cancellation proceeding before the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) does not automatically divest the courts of their jurisdiction, although the court may, for good cause shown, suspend proceedings pending the outcome of the administrative case.