G.R. No. 211850 - Dissenting Opinion

G.R. No. 211850, September 8, 2020,
♦ Decision, Caguioa, [J]
♦ Concurring Opinion, Perlas-Bernabe, [J]
♦ Dissenting Opinion, Leonen, [J]
♦ Separate Concurring Opinion, Gesmundo, [J]
♦ Dissenting Opinion, Perlas-BernabeLAzaro-Javier, [J]

ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D., AND STYLE OF ZUNECA PHARMACEUTICAL, PETITIONERS, VS. NATRAPHARM, INC., RESPONDENT.

Foremost, the ponencia holds that registration exclusively vests trademark ownership. Hence, the element of actual use as a mode of acquiring ownership rights should be totally dismissed.

Registration and actual use together perfect ownership of a trademark. Registration and prior actual use individually creates imperfect ownership of a trademark. Thus, only registration with actual use made in good faith gives the registrant the full rights of ownership attributable to such registration.

I agree with Justice Leonen that our trademark laws are aimed to "protect the owner's right to the mark's value, which is generated by its actual use in commerce."5 Too, the factual backdrop of this case and its effects are not limited to the fictions of civil and commercial law, but the reality of public health and safety.

The ponencia cites Section 122 of RA 8293 and interprets that this provision commands registration as an exclusive mode of acquiring trademark ownership, thus:

SECTION 122. How Marks are Acquired. - The rights in a mark shall be acquired through registration made validly in accordance with the provisions of this law. (Sec. 2-A, R.A. No. 166a)

Section 122, however, is silent on and does not repudiate property in trademark recognized by common law. Thus, "[t] he right of property in a trade mark is recognized by the common law, and does not in any manner depend for its inceptive existence or support upon statutory law, although its exercise may be limited or controlled by statute."6 As further held in this opinion:

Does not the Act of 1863, instead of constituting a "complete scheme" for the acquisition and protection of property in trade marks, rather proceed on the theory that this species of property did exist, and might thereafter be acquired, under the rules of the common law, and provide that those securing such right according to the provisions of the act, might have a further or more efficient protection than those who failed to avail themselves of the statute, and relied upon the common law remedies?

At common law, the remedies for invasions of trade mark property were an action at law for the recovery of damages, and an injunction, in which case pecuniary compensation might be incidentally awarded. Several of the States have, by statute, added a criminal prosecution as a further remedy or protection. The remedies at common law are still left by our statute in those cases where the trade mark has not been registered according to the act, for not only is the right of property recognized and affirmed as it existed at common law, and the common law remedies are not taken away, but the protection afforded by suits at law and bills for injunctions is expressly conceded. Those provisions add nothing to the rights previously possessed by the owner of the trade mark, and are only in affirmance of the common law. But he does not have the aid of a criminal prosecution for his protection.

On the other hand, those owning trademarks, who have filed their claims and affidavits, and paid the fees, have the protection accorded to the other class of cases, and have also that arising from the criminal prosecutions, with penalties, upon conviction, of more than usual severity.

We do not fully agree with counsel for either party in his construction of the act in respect to its relation to and effect upon the common law remedies. The remedies provided by the act, at least those applicable to registered trademarks, are not cumulative to those possessed at common law, but in that respect provision is made by the act for a new case; nor do we think the act forms a "complete scheme" of itself, in the sense that counsel regards it, as requiring all trademarks to be registered under the act, to entitle them to protection; though it may be regarded as a "complete scheme" in the respect that it grants certain remedies in cases of registered trademarks, and expressly reserves to the owners in other cases the usual remedies enjoyed at common law.7

I concur with Justice Leonen that in the absence of an express repeal or a clear and categorical incompatibility between RA 8293 and our jurisprudence echoing common law and the provisions of RA 166, there is no reason to interpret Section 122 as an exclusive mode or a complete scheme of acquiring trademark ownership and to jettison prior actual use as a means to obtain trademark ownership.

I also posit that while Section 122 mentions that registration acquires trademark ownership, besides not stating that registration is the only mode, it does not declare that conclusive and full ownership is vested in the registrant. Further, since registration is indeed a convenient means of establishing trademark imperfect ownership, ultimately its function is a mechanism "to allocate the burden in the trial of an action for infringement."8

Surely, actual use remains to be a complementing scheme for perfecting ownership under RA 8293. If actual use is crucial in maintaining trademark ownership, I cannot justify dismissing prior actual use as another mode of attaining trademark ownership.

Too, Section 124.2 of the IP Code requires that a declaration of actual use with evidence to that effect must be filed within three (3) years from the filing date of the application, viz:9

The applicant or the registrant shall file a declaration of actual use of the mark with evidence to that effect, as prescribed by the Regulations within three (3) years from the filing date of the application. Otherwise, the application shall be refused or the mark shall be removed from the Register by the Director.

After the declaration of actual use is filed, the Intellectual Property Office shall issue the registration certificate covering only the particular goods on which the mark is in actual use in the Philippines as disclosed in the declaration.

More, Section 145,10 provides that the declaration of actual use is an essential requisite in maintaining trademark rights, thus:

SECTION 145. Duration. - A certificate of registration shall remain in force for ten (10) years: Provided, That the registrant shall file a declaration of actual use and evidence to that effect, or shall show valid reasons based on the existence of obstacles to such use, as prescribed by the Regulations, within one (1) year from the fifth anniversary of the date of the registration of the mark. Otherwise, the mark shall be removed from the Register by the Office. (Sec. 12, R.A. No. 166a)

Meanwhile, the Intellectual Property Office issued Office Order No. 056-1311 amending Rule 20512 of the Trademark Regulations for the purpose of streamlining administrative procedures in registering trademarks and also to address the need to clarify what will be accepted as proof of use,13 viz.:

The Intellectual Property Office propounded the significance of requiring actual use to perfect trademark ownership which bolsters the fact that registration is not the sole mode of acquiring trademark rights, thus:

Imagine trademark protection as a similar process to how the human brain works in adopting new skills or knowledge.

The more a person uses and practices a skill or knowledge, the likelier it will be retained in his brain's functions over time, especially as a person ages.

Protection for a registered trademark works in the same vein; A trademark gives its owner particular rights but to keep enjoying those rights, the trademark has to keep being used.

use of his mark, and prevent others from using the same or similar marks, on identical or related goods or services.

If he fails to maintain his trademark, that is, file a Declaration of Actual Use, he loses those rights, and his trademark is removed from the Intellectual Property Office of the Philippines (IPOPHU Register.

In requiring DAU, the IPOPHL is filtering trademark-owners who just stockpile marks without genuinely using them, and may just be cutting in the financial gain from owners of identical/confusingly similar trademarks.

The DAU requirement, then works as tool to deter the 'trademark squatting' - when a party registers a trademark in bad faith.Ꮮαwρhi৷ This occurs when a party registers another's trademark as his own in a jurisdiction where the original trademark owner has yet to register.

In countries where the trademark system is 'first-to-file', this is problematic as the the 'squatter' essentially blocks the registration of the original brand-owner, and may extract benefits from him just so he can register.

Additionally, in the name of competition, removal of marks because of non-compliance with DAU will free up the same marks to other potential trademark registrants.

A trademark registration is in force for 10 years but, to maintain it, the DECLARATION OF ACTUAL USE of the mark, with accompanying evidence of its use, must be filed with the Intellectual Property Office of the Philippines according to the following schedule:

A single extension of six months can be requested to file for the 3rd Year DAU, provided the request was made before the three-year period expired, and upon payment of the necessary fees.

But, if a registrant has valid reasons which prohibit him from using the mark, a Declaration of Non-Use may be filed instead of the DAUs. However, the non-use of a mark may only be excused in the following circumstances:

Evidently, the affidavit of actual use or declaration of continued use presupposes that the owner of the registered mark continues the bona fide use of its mark on the goods or services in the course of trade. Failing to satisfy the scrutiny of the respective trademark officers, a registered mark may be cancelled on account of non-use amounting to abandonment. Clearly, the Intellectual Property Law does not reject the fact that prior registration, as indicated under Section 122, actually relies on a claimant's actual use of the mark in commerce.

Section 159.115 also recognizes rights to prior actual users of a trademark later on registered, thus:

Notwithstanding the provisions of Section 155 hereof, a registered mark shall have no effect against any person who, in good faith, before the filing date or the priority date, was using the mark for the purposes of his business or enterprise: Provided, That his right may only be transferred or assigned together with his enterprise or business or with that part of his enterprise or business in which the mark is used. (Emphasis supplied)

RA 8293, therefore, does not eliminate prior actual use as a foundation for trademark ownership. Just as Section 122 is not a complete scheme for trademark ownership, Section 159.1 cannot also be interpreted as the only right given to prior actual users.

While Section 13816 provides that a certificate of registration is a prima facie evidence of the registrant's ownership of the mark, jurisprudence dictates that registration does not confer upon the registrant an absolute right to the registered mark.17

The Court in UFC Philippines, Inc. v. Barrio Fiesta Manufacturing Corporation18 clarified that prima facie presumption brought about by the registration of a mark may be challenged and overcome, in an appropriate action, by proof of the nullity of the registration or of non-use of the mark, except when excused.

Corollary thereto, W Land Holdings, Inc. v. Starwood Hotels and Resorts Worldwide, Inc.19 ordained that the actual use of the mark representing the goods or services introduced and transacted in commerce over a period of time creates that goodwill which the law seeks to protect.

Both UFC and W Land Holdings, Inc. (among other jurisprudence) cited Berris which emphasized the important factor of prior actual use in one's claim of trademark ownership which the ponencia wishes to overturn.

Indubitably, actual use cannot be downplayed as an essential element in protecting trademark laws. To be sure, the real value of a trademark lies in its actual use. Trademark is important to commerce, and commerce is about execution and not about abstract and academic steps or procedures.

The trademark dispute here involves not just any other commercial good. The products here relate to the general population's health and safety. Thus, our concern should focus how trademark laws can be better harmonized in the context of determining the rights accorded in the sale and distribution of these medical products bearing specific trademarks. For the protection of trademarks as intellectual property is intended not only to preserve the goodwill and reputation of the business established on the goods bearing the mark through actual use over a period of time, but more importantly, to safeguard the public as consumers.20

We have to consider the long history articulating the ownership rights of prior actual users. This shall subsist in the absence of its express repudiation and express good commercial reasons for discarding it.

A final word. The sale and distribution of medicine are not merely commercial in nature even if pharmaceutical giants make handsome profits from these endeavors. Rather, our lens should be widened to equally view medicine trademarks also as a matter of public health and safety.

In its closing statements, the ponencia admits that the issue on likelihood of confusion on medicines may pose a significant threat to public health, and adds that there is a need to improve our intellectual property laws and the government's manner of regulation of drug names to prevent the concurrent use in the market of confusingly similar names for medicines.21 But why wait when we can already reconcile the existing legal precepts to address this? The 1987 Constitution itself guides us, thus:

Article XII, Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.

As Justice Leonen aptly points out in his Dissenting Opinion, this is the very foundation of regulations behind both the IP Code and the Food and Drug Administration Act.22 Verily, even with the safeguards of intellectual rights protection and policy in place, and no matter the effectiveness of their enforcement, the truth is that it is human to err. It is not a question of if but when a person will mistake ZYNAPSE for ZYNAPS and suffer its consequences, if only to strictly interpret a legal provision. This myopic reading of IP laws is inconsistent with the demand of the Constitution23 for a holistic approach on national economic policies in consideration of their social function and the common good.