Friday, December 16, 2011

Soceite Des Produits Nestle, S.A. Vs. Martin T. Dy, Jr., GR No. 172276, August 8, 2010

FACTS: Petitioner is a foreign corporation organized under the laws of Switzerland and manufactures food products and beverages. A Certificate of Registration was issued on April 7, 1969 by the BPTTT which as a result Nestle owns the “NAN” trademark for its line of infant powdered milk (PRE-NAN, NAN-H.A., NAN-1, and NAN-2). It is classified under Class-6, “diactetic preparations for infant feeding”. Nestle sells its NAN products throughout the Philippines and invested substantial amount of resources for its marketing.

Respondent owns 5M Enterprises which imports Sunny Boy powdered milk from Australia, and repacks the milk into plastic bags bearing the name NANNY, and is also classified as Class-6 “full cream milk for adults”. Respondent sells the milk in parts of Mindanao.

In 1985, petitioner requested respondent to refrain from using NANNY and to stop infringing the NAN trademark. Respondent did not act which forced Nestle to file in March 1, 1990 in the RTC of Dumaguete, a complaint against respondent. The case was transferred to the RTC of Cebu (special court for intellectual property rights). The RTC held that respondent was guilty of infringement. The trial court stated that if determination of infringement shall only be limited on whether or not the mark used would likely cause confusion, it would highly unlikely to happen in the instant case, as a comparison of the plaintiffs NAN and defendant’s NANNY products are different. Thus the dominancy test cannot be used because the deceptive tendency of the mark NANNY is not apparent from the essential features of the registered trademark NAN. The RTC invoked however the case of Esso Standard Eastern vs. CA where the SC said that as to whether trademark infringement exists depends upon for the most part upon whether or not the goods are so related that the public may be, or is actually, deceived and misled that they came from the same maker or manufacturer. For non-competing goods may be those which, though they are not in actual competition, are so related to each other that it might reasonably be assumed that they originate from one manufacturer, or from a common source. The trial court justified that goods may become related for purposes of infringement when they belong to the same class, or have same descriptive properties; when they possess the same physical attributes or essential characteristics with reference to their form, composition, texture or quality. They also be related because they serve the same purpose or are sold in grocery stores.

The RTC stated that considering that NANNY belongs to the same class as that of NAN because both are food products, the defendant’s unregistered trade mark NANNY should be held an infringement to plaintiff’s registered trademark NAN because defendant’s use of NANNY would imply that it came from the manufacturer of NAN.

The Court of Appeals reversed the TC’s decision and found respondent not liable for infringement, stating that the TC’s application of the doctrine laid down by the SC in the Esso Standard case is misplaced as the goods of the two contending parties bear similar marks or labels. In the instant case, two dissimilar marks are involved. The CA stated that while it is true that both NAN and NANNY are milk products and that the word NAN is contained in the word NANNY, there are more glaring dissimilarities in the entirety of their trademarks as they appear in their respective labels and also in relation to the goods to which they are attached. The discerning eye of the observer must focus not only on the predominant words but also on the other features appearing in both labels. NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are all infant preparations, while NANNY is a full cream milk for adults in [sic] all ages. NAN milk products are sold in tin cans and hence, far expensive than the full cream milk NANNY sold in three (3) plastic packs containing 80, 180 and 450 grams and worth P8.90, P17.50 and P39.90 per milk pack. The labels of NAN products are of the colours blue and white and have at the bottom portion an elliptical shaped figure containing inside it a drawing of nestling birds, which is overlapped by the trade-name "Nestle." On the other hand, the plastic packs NANNY have a drawing of milking cows lazing on a vast green field, back-dropped with snow-capped mountains and using the predominant colours of blue and green. The word NAN are all in large, formal and conservative-like block letters, while the word NANNY are all in small and irregular style of letters with curved ends. With these material differences apparent in the packaging of both milk products, NANNY full cream milk cannot possibly be an infringement of NAN infant milk.

ISSUE: Whether or not respondent is liable for infringement

HELD Yes. In Prosource International, Inc. vs. Horphag Research Management SA, the SC laid down the elements of infringement under R.A. No. 166, and 8293:

For Section 22 of R.A. No. 166, the following constitute the elements of TM infringement:

A TM actually used in commerce and registered in the principal register of the PPO

Used by another person in connection with the sale of goods or services or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business

TM is used for identical or similar goods

Such act is done without the consent of the TM registrant.

The elements of infringement under R.A. No. 8293 are:

The TM infringed is registered in the IPO, in trade name, the same need not be registered

The TM or Trade name is not reproduced, counterfeited, copied, or colorably imitated by the infringer

The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods; or the infringing mark or trade name is applied to labels, signs, prints, intended to be used upon or in connection with such goods, business, or services;

The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers or others as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such business

Without the consent of the trademark or trade name owner or assignee

Among the elements, the element of likelihood of confusion is the gravamen of trademark infringement, and there are to types, confusion of goods which in the event the ordinarily prudent purchaser would be induced to purchase one product in the belief that he was purchasing the other. And the other is confusion of business which though the goods of the parties are different, the defendant’s product is such as might reasonably be assumed to originate with the plaintiff, and the public would then be deceived either into that belief or into the belief that there is some connection between the plaintiff and defendant which, in fact does not exist.

There are two tests to determine the likelihood of confusion: the dominancy test and holistic test. In light of the facts of the present case, the Court holds that the dominancy test is applicable.

The test of dominancy is in fact explicitly incorporated into law in Section 155.1 of the IPC which defines infringement as the “colourable imitation of a registered mark...or a dominant feature thereof”. While the SC agrees with the CA’s enumeration of differences between the respective trademarks, the SC does not agree that the holistic test is not the one applicable in the case as it is contrary to the elementary postulate of the law on trademarks and unfair competition that 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. The totality or holistic test only relies on visual comparison whereas the dominancy test relies also on the aural and connotative comparisons and overall impressions between the two trademarks.

Applying such test in the present case the SC finds that NANNY is confusingly similar to NAN as it is the prevalent feature of petitioner’s infant powdered milk (PRE-NAN, NAN-H.A.., NAN-1 and NAN-2). NANNY contains the prevalent feature NAN, and the first three letters of NANNY are exactly the same as the letters of NAN. The aural effect is confusingly similar.

The decision of the RTC is reinstated.

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