Levi Strauss v. Lim
REITERATIONFacts
The Antecedents: Petitioner Levi Strauss (Phils.), Inc. is the exclusive licensee in the Philippines for the LEVI'S trademarks, which are globally registered and widely used for garments. In 1995, Levi Strauss (Phils.), Inc. filed a complaint alleging that respondent Tony Lim, doing business as Vogue Traders Clothing Company, was manufacturing and selling garments, specifically denim jeans and pants, under the brand name "LIVE'S" and using designs that were colorable imitations of Levi's trademarks. These alleged imitations included the "arcuate" stitching design, the "501" mark (imitated as "105"), the "LIVE'S" brand name, a red tab on the seam, a "two-horse" patch design, and the packaging and carton tickets. The Philippine National Police conducted surveillance and seized numerous items from respondent's premises. Procedural History: Following the seizure of goods, the PNP Criminal Investigation Command filed a complaint against respondent Tony Lim before the Department of Justice (DOJ) for unfair competition under Article 189 of the Revised Penal Code. The prosecutor initially recommended dismissal, finding insufficient evidence of probable cause. This recommendation was approved by the Assistant Chief State Prosecutor. However, then-DOJ Secretary Teofisto Guingona affirmed the dismissal. Upon reconsideration, new DOJ Secretary Silvestre Bello III reversed the dismissal and directed the filing of an information. Subsequently, respondent filed a motion for reconsideration, which was granted by DOJ Secretary Serafin Cuevas, who then ordered the dismissal of the charges. Dissatisfied, Levi Strauss (Phils.), Inc. filed a petition for review under Rule 43 of the Rules of Civil Procedure with the Court of Appeals (CA). The CA affirmed the dismissal of the complaint. The Petition: The petitioner seeks review of the Court of Appeals' decision, arguing that the CA erred in requiring actual confusion and direct evidence of intent to deceive, in disregarding evidence of confusing similarity and a consumer survey, and in limiting the determination of confusion to the point of sale. The petitioner contends that the respondent's "LIVE'S" jeans blatantly copied six of Levi's trademarks, creating a likelihood of confusion. The petitioner is asking the Supreme Court to determine if probable cause exists to charge the respondent with unfair competition. However, the Supreme Court notes that the petitioner's chosen procedural vehicle, a petition for review under Rule 43, was improper for appealing the DOJ's resolution; a petition for certiorari under Rule 65, alleging grave abuse of discretion, would have been the correct remedy. Even if treated as a Rule 65 petition, the Court finds no grave abuse of discretion by the DOJ, as the determination of probable cause is within the executive branch's discretion and the findings of no probable cause were supported by evidence and jurisprudence, particularly regarding the differences in marks and the nature of the product purchase.
Issue(s)
Whether the Court of Appeals committed a grave error in ruling that actual confusion is necessary to sustain a charge of unfair competition and that there must be direct evidence or proof of intent to deceive. Whether the Court of Appeals erred in ruling that respondent's LIVE'S jeans do not unfairly compete with LEVI'S jeans and that there is no possibility of confusion, despite alleged blatant copying of six trademarks. This includes the consideration of intent to deceive and likelihood of confusion. Whether the Court of Appeals erred in disregarding evidence on record, including a consumer survey and expert witness affidavit, showing actual confusion. This also includes the application of Emerald Garment and purchaser's attitude. Whether the Court of Appeals erred in ruling that the issue of confusion should only be determined at the point of sale. Whether the Court of Appeals erred in failing to direct the Secretary of Justice to cause the filing of an information against the respondent, including the procedural propriety of the petition for review and the absence of grave abuse of discretion.
Ruling
The petition is DENIED and the appealed Decision of the Court of Appeals is AFFIRMED.
Ratio Decidendi
On the Elements of Unfair Competition: The Court reiterated the elements of unfair competition under Article 189(1) of the Revised Penal Code: (a) the offender gives his goods the general appearance of the goods of another; (b) this appearance is shown in the goods themselves, wrapping, device, or words, or any other feature; (c) the offender offers to sell or sells such goods with a like purpose; and (d) there is actual intent to deceive the public or defraud a competitor. All elements must be proven. The investigating prosecutor and DOJ Secretaries concluded that there was insufficient evidence to prove all elements, particularly the intent to deceive. On Intent to Deceive and Likelihood of Confusion: Secretary Guingona discounted intent to deceive, considering the differences in spelling, meaning, and phonetics between "LIVE’S" and "LEVI’S," and the fact that respondent had registered his mark. While registration does not negate unfair competition, it may show prima facie good faith. Secretary Bello's finding of general appearance was deemed insufficient as it only addressed one element. The Court stressed that likelihood of confusion requires more than just some resemblance; the resemblance must be such as is likely to deceive the ordinary purchaser exercising ordinary care. The Court found that the differences in spelling, pronunciation, and the specific designs of the patches and carton tickets, coupled with the registration of the "LIVE’S" mark, negated the existence of actual intent to deceive. On the Application of Emerald Garment and Purchaser's Attitude: The Court found the rationale in Emerald Garment Manufacturing Corporation v. Court of Appeals and Del Monte Corporation v. Court of Appeals applicable. These cases highlight that for products not inexpensive, like jeans, the casual buyer is more cautious and discriminating, making confusion and deception less likely. The Court noted that "LIVE’S" jeans were priced much lower than "LEVI’S," supporting the idea that purchasers would exercise greater care. On the Application of Emerald Garment and Purchaser's Attitude (Point of Sale): The Court also found no reason to go beyond the point of sale to determine probable cause, agreeing with the CA that the probability of deception must be tested at the point of sale where the ordinary purchaser makes their decision. On the Procedural Impropriety of the Petition for Review and Absence of Grave Abuse of Discretion: The Court held that the remedy of a party desiring to elevate to the appellate court an adverse resolution of the Secretary of Justice is a petition for certiorari under Rule 65, not a petition for review under Rule 43. The DOJ is not among the quasi-judicial agencies enumerated in Section 1 of Rule 43 whose resolutions are appealable to the CA. The CA should have dismissed the petition outright for being the wrong mode of appeal. The Court has consistently ruled that a Rule 43 petition to question a Justice Secretary's resolution on probable cause is an improper remedy. The proper remedy, when no other appeal or remedy is available in the ordinary course of law, is a petition for certiorari under Rule 65, solely on the ground of grave abuse of discretion amounting to excess or lack of jurisdiction. Even if the petition were treated as one for certiorari under Rule 65, it would still fail. The Court emphasized that it is not empowered to substitute its judgment for that of the executive branch when there is no grave abuse of discretion. The determination of probable cause is a matter of discretion delegated to the executive branch through the DOJ. A prosecutor is not compelled to file an information if not convinced of the evidence. While this discretion is subject to judicial review, it must be for grave abuse of discretion, which must be patent and gross, amounting to an evasion or unilateral refusal to perform a duty. In this case, no grave abuse of discretion was shown; the finding of no probable cause was supported by evidence, law, and jurisprudence.
Main Doctrine
The remedy to assail a resolution of the Secretary of Justice regarding probable cause is a petition for certiorari under Rule 65, not a petition for review under Rule 43, unless grave abuse of discretion amounting to excess or lack of jurisdiction is shown. Courts cannot substitute their judgment for that of the executive branch in determining probable cause absent such grave abuse.