Coffee controversy

On March 3, 2010, the Supreme Court promulgated its decision in Coffee Partners Inc. v. San Francisco Coffee & Roastery Inc. (San Francisco), ruling that Coffee Partners’ use of the trademark ‘San Francisco Coffee’ infringed the trade name ‘San Francisco Coffee & Roastery Inc.’, even though the latter was not registered with the Intellectual Property Office (IPO) and not in actual use.

The controversy began June 2001. San Francisco discovered that Coffee Partners was about to open a coffee shop under the name San Francisco Coffee. For San Francisco, the shop’s name caused confusion in the minds of the public, because of its similarity to San Francisco Coffee & Roastery Inc., registered with the Department of Trade and Industry (DTI) in June 1995.

San Francisco demanded that Coffee Partners stop using San Francisco Coffee, and thereafter filed a complaint for infringement and/or unfair competition. Coffee Partners, which filed IPO applications for the registration of the mark ‘San Francisco Coffee & Device’ for class 42 in 1999 and for class 35 in 2000, argued that its mark could not be confused with San Francisco Coffee & Roastery Inc.

Infringement under Philippine jurisprudence

To determine infringement, the Supreme Court cited Section 165.2 (A) and (B) of Republic Act 8293 (Intellectual Property Code):

“(A) Notwithstanding any laws or regulations providing for any obligation to register trade names, such names shall be protected, even prior to or without registration, against any unlawful act committed by third parties.

(B) In particular, and subsequent use of a trade name by a third party, whether as a trade name or a mark or collective mark, or any such use of a similar trade name or mark, likely to mislead the public, shall be deemed unlawful.”

The High Court stated that Coffee Partners’ San Francisco Coffee is a clear infringement of San Francisco Coffee & Roastery Inc. The descriptive words ‘San Francisco Coffee’ are precisely the dominant features of the trade name.

In addition, Coffee Partners and San Francisco both sell coffee, which increases the likelihood of confusion among the consuming public as to the source of the coffee being sold at Coffee Partners’ coffee shops.

"The court stated that Coffee Partners' San Francisco coffee is a clear infringement of San Francisco Coffee & Roastery."

Registration with the IPO not required It is clear that under Section 165.2 of the IP Code, trade names shall be protected, even prior to or without registration with the IPO, against any unlawful act, including any subsequent use of the trade name by a third party, whether as a trade name or a trademark likely to mislead the public.

Furthermore, in Prosource International, Inc. v. Horphag Research Management SA, the Supreme Court ruled that in an infringement of a trade name, the name need not be registered, as long as it was previously used in trade or commerce in the Philippines.

Continued actual use not required

The Supreme Court took notice of the IPO’s observation of San Francisco’s continued plans and research regarding the retailing of coffee and the establishment of coffee carts, and the Court of Appeals’ finding that, while San Francisco stopped using its San Francisco Coffee & Roastery Inc. trade name in its business of selling coffee, it continued to import and sell coffee machines, and had registered its service with the DTI.

The court found that San Francisco had acquired an exclusive right to the use of the trade name San Francisco Coffee & Roastery Inc. since its registration with the DTI in 1995. Thus, San Francisco’s use of its trade name from then on must be free from any infringement by similarity, regardless of whether or not it is, at the time of any infringement, actually in use.

The court ruled that it is only the combination of the words San Francisco Coffee that is protected against infringement on matters related to the coffee business, to avoid confusing similarity.

In support of its decision, the Supreme Court cited its ratio decidendi in Philips Export B.V. v. Court of Appeals that a corporation that has acquired a right to a name, and has carried on its business thereunder, has an exclusive right to use its name and prevent another from using a similar name in such a way as to induce persons to deal with it in the belief that they are dealing with the corporation that has given a reputation to the name.

Anne Mariae Celeste V. Jumadla is an associate at Sapalo Velez Bundang & Bulilan. She can be contacted at: info@sapalovelez.com