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26 August 2019
The Supreme Court has repeatedly stated that there are no set rules to determine whether one trademark is confusingly similar to, or a colourable imitation of, another and that each case must be decided on its own merits. Nonetheless, over the years, the court has fashioned two tests (ie, the dominancy and holistic tests) to determine whether one mark infringes another.(1) However, case law suggests that the court has applied these tests inconsistently and in contravention of the Intellectual Property Code.
In Nestlé's MASTER and HD Lee Co's STYLISTIC MR. LEE trademark infringement cases,(2) the Supreme Court set out the circumstances in which the dominancy test and holistic test apply.
Common and inexpensive household items that are generally bought off the shelf are subject to the dominancy test. Ordinary consumers are "undiscerningly rash" when buying such items and do not notice a mark's non-dominant features. However, ordinary consumers are more discriminating when buying expensive items and typically notice such features. Further, as expensive products are often bought based on brands, consumers have high brand awareness and are not fooled by imitations. The holistic test therefore applies in such instances.
Historically, however, the Supreme Court has applied these tests inconsistently. For example, in a trademark dispute between Philip Morris, Inc's MARK VII and MARK TEN and Fortune Tobacco's MARK for cigarettes (an inexpensive product), the Supreme Court applied the holistic test.(3) Arguably, smokers buy cigarettes based on brand and thus the holistic test was appropriate; however, the Supreme Court did not discuss why the circumstances of the dispute called for this test and herein lies the problem.
Similarly, the Supreme Court did not disclose the predicate circumstances for using a particular test in a case involving the mark SKECHERS and rubber shoes – which allegedly had a confusingly similar stylised 'S' – sold by Inter Pacific Industrial Trading Corporation.(4) The court applied both tests and found infringement. However, had the abovementioned rule been followed, only the holistic test should have been applied, as rubber shoes are expensive items and bought based on brand.
The Supreme Court's ruling in Great White Shark Enterprises, Inc's inter partes case against Danilo Caralde was also unusual. Here, the former alleged that the latter's shark logo – which it used on slippers, shoes and sandals – infringed its similar world-famous Greg Norman shark logo. The Supreme Court found no confusing similarity "[i]rrespective of both tests".(5)
In a decision that had arisen from an inter partes case involving Converse shoes and Universal Rubber Products, Inc's local mark UNIVERSAL CONVERSE AND DEVICE, the Supreme Court did not even discuss the two tests, but rather studied the marks immediately.(6) The court seems to have applied the dominancy test because it considered:
The application of the dominancy test to rubber shoes is inconsistent with the rule that the holistic test applies to expensive items bought with brand awareness.
In a decision concerning a clash between the DOCKERS and PADDOCKS marks, the Supreme Court once again failed to discuss the applicability of either test and suggested that the dominancy test applied, even though the subject marks were used on jeans.
Levi Strauss & Co, which owns the DOCKERS mark, filed for trademark infringement against Clinton Apparelle, Inc for the latter's use of the word 'Paddocks' – which was allegedly similar to the word 'Dockers' – and the wing-shaped design of the Dockers logo. The trial court issued a writ of preliminary injunction, as prayed for by the complaint. However, the Supreme Court held that the trial court had improperly issued the same. The Supreme Court found that the PADDOCKS mark had imitated only the wing-shaped logo design. One of the reasons the court gave was that it was not settled whether the wing-shaped logo design – as opposed to the word mark – was the dominant feature of the DOCKERS mark, such that its imitation alone would cause a likelihood of confusion.
Another source of inconsistency is the Supreme Court's statement in the Nestlé MASTER case that the holistic test is:
contrary to the elementary postulate of the law on trademarks and unfair competition that confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and overall impressions engendered by the marks in controversy as they are encountered in the realities of the marketplace.(7)
The Supreme Court cited Charles E McKenney and George F Long III's Federal Unfair Competition: Lanham Act § 43A as the source of this statement, which it quotes repeatedly (eg, in the two McDonald's cases and the Nestlé NAN case). Even though the holistic test is "contrary to the elementary postulate" of trademark law, the Supreme Court still applies it, as discussed above.
The Supreme Court has also stated that the dominancy test is "now explicitly incorporated into law in Section 155.1 of the Intellectual Property Code which defines infringement as the 'colorable imitation of a registered mark... or a dominant feature thereof'". The court has made this statement in numerous cases.(8)
If Section 155.1 of the Intellectual Property Code has codified the dominancy test, by applying the holistic test, the Supreme Court is in contravention of the statute.
For further information on this topic please contact Benjamin Z Lerma at Romulo Mabanta Buenaventura Sayoc & De Los Angeles by telephone (+63 2 848 0114) or email (email@example.com). The Romulo Mabanta Buenaventura Sayoc & De Los Angeles website can be accessed at www.romulo.com.
(8) See McDonald's Corp v LC Big Mak Burger, Inc, GR 143993, 18 August 2004; LC Big Mak Burger, Inc v McDonald's Corp, GR 233073, 14 February 2018; and Societe Des Produits Nestlé, SA v Dy, GR 172276, 8 August 2010.
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Benjamin Z Lerma