Kalaw Ng Khe v. Lever Brother
REITERATIONFacts
The Antecedents: Lever Brothers Company (plaintiff-appellee) initiated an action against Teodoro Kalaw Ng Khe (defendant-appellant), trading as Hoc Chuan Ho, for infringement of industrial property and unfair competition. The plaintiff sought to have the defendant declared liable for illegally using industrial property, to cancel his registered industrial property marks, to prohibit their continued use, and to compel an accounting of sales. The Director of the Bureau of Commerce was included as a defendant to cancel the defendant's registered marks. Procedural History: The Court of First Instance dismissed the complaint. Upon appeal, the Court of Appeals reversed the decision, ordering the Director of Commerce to cancel Teodoro Kalaw Ng Khe's registered industrial property marks (Series No. 11348 and 11377) and perpetually prohibiting the defendant from using them on pomades and similar articles. The Court of Appeals later modified its decision, eliminating pronouncements declaring the plaintiff's industrial property marks (Nos. 10357 and 10363) invalid, but affirming the rest of its decision. The Petition: The defendant appealed the decision and resolution of the Court of Appeals, filing a petition for certiorari.
Issue(s)
Whether the defendant infringed the plaintiff's industrial property marks. Whether the defendant engaged in unfair competition. Whether the goods (pomade and soap) are of similar kind or possess the same descriptive properties. Whether damages can be awarded in cases involving non-competing goods.
Ruling
The petition for certiorari is denied. The Court of Appeals' decision finding the defendant guilty of infringement and unfair competition is affirmed, but no damages are awarded due to the non-competing nature of the goods.
Ratio Decidendi
On the issue of infringement of industrial property marks: The Court held that there was an infringement of the plaintiff's trade-mark (Exhibit B) by the defendant. The defendant's trade-mark (Exhibit 1) was found to be a colorable imitation of the plaintiff's trade-mark (Exhibit B). The Court reiterated that infringement occurs when a person uses a reproduction, counterfeit, copy, or spurious imitation, or a colorable imitation of a genuine registered trade-mark upon goods of a similar kind to those of the lawful owner, and sells such goods with the trade-mark. The use of only one word from a trade-mark can be sufficient to constitute infringement. The Court emphasized that similarity, not identity, is the test of infringement, and that colorable imitation is deemed sufficient. The law aims to prevent confusion and deception, and the registration of a trade-mark is a prerequisite to an action for technical infringement. On the issue of unfair competition: The Court found the defendant guilty of unfair competition for using the label consisting of the word "Lux" and a design upon jars containing pomade manufactured and sold by him. The goods of the plaintiff and the defendant were deemed related toilet articles, and an ordinary buyer would likely assume from the marks that they have a common source or are connected. The Court clarified that unfair competition does not necessarily involve unfair competition in the sale of goods, but the unfair appropriation and use of a competitor's mark with the intention to profit in the sale of goods of a related character. Even without prior registration of a trade-mark, unfair competition can be established if the trade-mark, emblem, or label was known and in use prior to the defendant's use. The plaintiff's "Lifebuoy Health Soap" (Exhibit M) was in use since 1924, predating the defendant's use and registration of "Lifebuoy Hair Pomade" (Exhibit 2) in 1933, thus constituting unfair competition. On the similarity of goods (pomade and soap): The Court affirmed the Court of Appeals' finding that pomade and soap are goods of similar kind, both being toilet articles. Goods are considered in the same class when their general and essential characteristics are the same, likely to mislead the public, or when a common trade-mark would lead purchasers to conclude they have a common origin. The phrase "same descriptive properties" is construed to prevent confusion and deception. The Court cited that pickles and condiments are goods of the same descriptive properties as canned fruits and vegetables because they are sold in the same stores and used in conjunction. Similarly, pneumatic tires for automobiles and rubber hose and belting have the same descriptive properties. The validity of a trade-mark cannot depend solely on classification by the Patent Office if the goods have the same descriptive properties and similar essential characteristics that would mislead the public. On the award of damages for non-competing goods: Despite finding infringement and unfair competition, the Court held that no damages could be awarded because the goods were non-competing. The Court noted that damage cannot result from the sale of non-competing goods, and American cases cited did not involve accounting or damages for non-competing goods. The unfair competition was based on deception as to the origin of the goods, not on competition of goods. The confusion was of origin, not of goods. Therefore, while the defendant was guilty of unfair competition, the prayer for accounting as a basis for damages was denied due to the non-competing nature of the products.
Main Doctrine
Infringement of a registered trade-mark occurs when a person uses a reproduction, counterfeit, copy, or spurious imitation, or a colorable imitation thereof, upon goods of a similar kind to those manufactured or dealt in by the lawful owner of the registered trade-mark, and sells said goods with the trade-mark. Unfair competition arises when a person gives his goods the general appearance of goods of another manufacturer or dealer, with the intent to deceive the public and defraud another of his legitimate trade, even if the trade-marks are not identical.