In a dispute over the “BIRKENSTOCK” trademark, the Supreme Court sided with Birkenstock Orthopaedie GmbH & Co. KG, emphasizing that prior use and actual ownership of a trademark outweigh mere registration. The Court held that failure to file a Declaration of Actual Use (DAU) results in the loss of trademark rights, and registration does not automatically confer ownership. This decision reinforces the principle that true and lawful owners of trademarks are protected, even if another party registers the mark first.

BIRKENSTOCK Battle: Who Truly Owns a Brand?

This case revolves around the rightful ownership and registration of the “BIRKENSTOCK” trademark in the Philippines. Birkenstock Orthopaedie GmbH & Co. KG, a German corporation, sought to register several trademarks containing the name “BIRKENSTOCK.” However, their efforts were challenged by Philippine Shoe Expo Marketing Corporation, who claimed prior use and registration of the mark “BIRKENSTOCK AND DEVICE” through its predecessor-in-interest. The core legal question is whether the Philippine Shoe Expo Marketing Corporation, through prior registration of the “BIRKENSTOCK” mark, could prevent Birkenstock Orthopaedie GmbH & Co. KG, who claimed to be the original owner, from registering their trademarks. This issue underscores the tension between trademark registration and the actual use of a mark in commerce.

The controversy began when Birkenstock applied for trademark registrations with the Intellectual Property Office (IPO). These applications were initially suspended due to Philippine Shoe Expo Marketing Corporation’s existing registration. Birkenstock then filed a petition for cancellation of this registration, but the case was dismissed when Philippine Shoe Expo Marketing Corporation failed to submit the required 10th Year Declaration of Actual Use (DAU). Despite this failure, Philippine Shoe Expo Marketing Corporation opposed Birkenstock’s subsequent applications, leading to a series of conflicting rulings from the IPO’s Bureau of Legal Affairs (BLA), the IPO Director General, and the Court of Appeals (CA).

The BLA initially sided with Philippine Shoe Expo Marketing Corporation, emphasizing their prior use of the mark in the Philippines. However, the IPO Director General reversed this decision, asserting that the failure to file the 10th Year DAU nullified Philippine Shoe Expo Marketing Corporation’s rights. On appeal, the CA reinstated the BLA’s ruling, which disallowed Birkenstock’s registration. The CA argued that Philippine Shoe Expo Marketing Corporation’s failure to file the 10th Year DAU did not negate their ownership due to continuous use and promotion of the trademark.

The Supreme Court, however, disagreed with the CA’s position, and ultimately sided with Birkenstock. A critical point in the Supreme Court’s analysis was the admissibility of Birkenstock’s documentary evidence. The Court acknowledged that the petitioner submitted photocopies of its evidence, violating Section 8.1 of the Rules on Inter Partes Proceedings, which generally requires certified true copies. However, the Court also recognized the IPO’s discretion in relaxing procedural rules in the interest of substantial justice. The IPO had already obtained the originals of these documents in a related cancellation case.

The Court emphasized that procedural rules are tools for achieving justice and should not be strictly applied to frustrate it. The Court cited Section 5 of the Rules on Inter Partes Proceedings, stating:

Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. – The rules of procedure herein contained primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court may be applied suppletorily. The Bureau shall not be bound by strict technical rules of procedure and evidence but may adopt, in the absence of any applicable rule herein, such mode of proceedings which is consistent with the requirements of fair play and conducive to the just, speedy and inexpensive disposition of cases, and which will give the Bureau the greatest possibility to focus on the contentious issues before it.

The legal basis for the Supreme Court’s decision rested on Republic Act No. (RA) 166, which governs trademark registration. Section 12 of RA 166 states:

Section 12. Duration. – Each certificate of registration shall remain in force for twenty years: Provided, That registrations under the provisions of this Act shall be cancelled by the Director, unless within one year following the fifth, tenth and fifteenth anniversaries of the date of issue of the certificate of registration, the registrant shall file in the Patent Office an affidavit showing that the mark or trade-name is still in use or showing that its non-use is due to special circumstance which excuse such non-use and is not due to any intention to abandon the same, and pay the required fee.

The Court interpreted this provision as requiring the filing of a DAU within specified periods, failure of which results in automatic cancellation of the trademark registration. This failure is deemed equivalent to abandoning the trademark rights. Since the respondent admitted failing to file the 10th Year DAU, they were considered to have lost their rights to the “BIRKENSTOCK” mark. Furthermore, the Court emphasized that ownership of a trademark is not acquired through registration alone. Ownership is established through actual use in commerce.

The Court cited Section 2-A of RA 166, stating that:

Sec. 2-A. Ownership of trademarks, trade names and service marks; how acquired. – Anyone who lawfully produces or deals in merchandise of any kind or who engages in any lawful business, or who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in business, and in the service rendered, may appropriate to his exclusive use a trademark, a trade name , or a service mark not so appropriated by another, to distinguish his merchandise, business or service from the merchandise, business or services of others. The ownership or possession of a trademark, trade name, service mark, heretofore or hereafter appropriated, as in this section provided, shall be recognized and protected in the same manner and to the same extent as are other property rights known to this law.

The Court further clarified that registration merely creates a prima facie presumption of ownership. This presumption can be challenged and overcome by evidence of prior use by another party. In this case, Birkenstock presented substantial evidence of its prior and continuous use of the “BIRKENSTOCK” mark in commerce, tracing its origins back to 1774. They submitted evidence of registrations in various countries, proving their long-standing claim to the mark.

The Court found that the Philippine Shoe Expo Marketing Corporation’s evidence, consisting mainly of sales invoices and advertisements, was insufficient to prove ownership. The Court quoted the IPO Director General:

The facts and evidence fail to show that [respondent] was in good faith in using and in registering the mark BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary mark. It is very remote that two persons did coin the same or identical marks. To come up with a highly distinct and uncommon mark previously appropriated by another, for use in the same line of business, and without any plausible explanation, is incredible. The field from which a person may select a trademark is practically unlimited. As in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and combinations of letters and designs available, [respondent] had to come up with a mark identical or so closely similar tQ the [petitioner’s] if there was no intent to take advantage of the goodwill generated by the [petitioner’s] mark. Being on the same line of business, it is highly probable that the [respondent] knew of the existence of BIRKENSTOCK and its use by the [petitioner], before [respondent] appropriated the same mark and had it registered in its name.

FAQs

What was the key issue in this case?	The key issue was determining the rightful owner of the “BIRKENSTOCK” trademark in the Philippines, focusing on whether prior registration or actual use in commerce holds more weight.
What is a Declaration of Actual Use (DAU)?	A DAU is an affidavit required by Philippine law to be filed periodically by trademark registrants to prove that the mark is still in use. Failure to file a DAU can result in the cancellation of the trademark registration.
Does trademark registration automatically confer ownership?	No, trademark registration creates a prima facie presumption of ownership, but this presumption can be challenged by evidence of prior use by another party.
What evidence did Birkenstock present to prove ownership?	Birkenstock presented evidence of its long-standing use of the mark in commerce, tracing its origins back to 1774, and registrations in various countries.
Why did the Supreme Court allow Birkenstock’s photocopied documents?	The Court allowed the photocopies because the IPO had already obtained the original documents in a related cancellation case, and the Court prioritized substantial justice over strict procedural rules.
What is the significance of prior use in trademark law?	Prior use is a critical factor in determining trademark ownership. It establishes that the party has been using the mark in commerce to identify their goods or services before another party’s registration.
What was the basis for the IPO Director General’s decision?	The IPO Director General based its decision on the cancellation of the respondent’s trademark registration due to failure to file the 10th Year DAU and on evidence proving that Birkenstock was the true and lawful owner and prior user of the trademark.
How does this decision affect trademark law in the Philippines?	This decision reinforces the principle that actual use and continuous commercial activity are essential for maintaining trademark rights, and registration alone is not sufficient.

This case emphasizes the importance of not only registering a trademark but also actively using and maintaining it in commerce. It serves as a reminder that trademark rights are not absolute and can be lost through inaction or failure to comply with legal requirements. This ruling provides clarity on the weight given to prior use versus registration in trademark disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG vs. PHILIPPINE SHOE EXPO MARKETING CORPORATION, G.R. No. 194307, November 20, 2013