In a landmark decision, the Supreme Court of the Philippines has affirmed that the use of a registered trademark on an interactive website can constitute sufficient proof of actual commercial use to maintain its registration, even without a physical establishment in the country. This ruling recognizes the evolving nature of commerce in the digital age, where online presence and transactions significantly impact brand recognition and consumer engagement. The decision reinforces the importance of protecting intellectual property rights in the online sphere and sets a precedent for evaluating trademark usage in the context of e-commerce.

Brand ‘W’ Goes Global: Can a Website Prove Trademark Use in the Philippines?

The case of W Land Holdings, Inc. v. Starwood Hotels and Resorts Worldwide, Inc. centered on W Land’s petition to cancel Starwood’s registration of the trademark “W” in the Philippines, arguing that Starwood had not used the mark within the country. Starwood countered that its interactive website, which allowed Philippine residents to make reservations and bookings at its hotels worldwide, constituted sufficient use of the mark. The Intellectual Property Office (IPO) Director General (DG) sided with Starwood, a decision upheld by the Court of Appeals (CA). W Land then elevated the case to the Supreme Court, questioning whether the CA correctly affirmed the IPO DG’s dismissal of its petition.

At the heart of the dispute was Section 151.1(c) of the Intellectual Property Code of the Philippines (IP Code), which allows for the cancellation of a registered mark if the owner fails to use it within the Philippines for an uninterrupted period of three years or longer. The IP Code defines a mark as “any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise.” The Supreme Court emphasized that trademarks serve to indicate origin, guarantee quality, and advertise products, thus protecting both the business’s goodwill and the public from confusion. Central to the Court’s analysis was interpreting what constitutes “use” of a trademark within the Philippines, particularly in the context of online commerce.

The Supreme Court turned to the concept of “genuine use,” explaining that the use required to maintain a trademark registration must be bona fide and result in a commercial interaction in the ordinary course of trade. The Court referenced Rule 205 of the Trademark Regulations, as amended by IPO Office Order No. 056-13, which specifies acceptable proof of actual use. This amendment acknowledges the significance of the internet in modern commerce.

Office Order No. 056-13 explicitly includes “downloaded pages from the website of the applicant or registrant clearly showing that the goods are being sold or the services are being rendered in the Philippines” and “receipts of sale of the goods or services rendered or other similar evidence of use, showing that the goods are placed on the market or the services are available in the Philippines or that the transaction took place in the Philippines” as acceptable proof of actual use. The Court emphasized that these amendments reflect the realities of modern commerce, where advertising and acquisition have permeated virtual zones over cyberspace.

The Supreme Court quoted Mirpuri v. CA, stating that, “Advertising on the Net and cybershopping are turning the Internet into a commercial marketplace.”

The decision recognized that the concept of commercial goodwill has evolved, extending to regions where the owner does not physically manufacture or sell the product. Goodwill now extends to zones where the marked article has been fixed in the public mind through advertising, particularly on the internet. This reflects the understanding that the internet has transformed the world into one vast marketplace.

However, the Court clarified that mere exhibition of goods or services on the internet is insufficient to constitute actual use. To be considered genuine use, it must be shown that the owner has actually transacted with or intentionally targeted customers within a particular jurisdiction.

The Court underscored the importance of establishing a commercial link to the country, stating that, “it must be shown that the owner has actually transacted, or at the very least, intentionally targeted customers of a particular jurisdiction in order to be considered as having used the trade mark in the ordinary course of his trade in that country. A showing of an actual commercial link to the country is therefore imperative.”

Specifically, the Court noted that the use of a mark on an interactive website may target local customers when it contains specific details pertaining to the target state, such as a local contact phone number, references available to local customers, a local webpage, the use of domestic language and currency, and the acceptance of domestic payment methods. The court also pointed out that it is a practice that has been adopted by a lot of jurisdictions like the European Union, Hong Kong, Singapore, Malaysia, Japan, Australia, Germany, France, Russia, and the United Kingdom.

In Starwood’s case, the Court found sufficient evidence to demonstrate its intent to target Philippine customers. Starwood owned Philippine registered domain names (www.whotels.ph, www.wreservations.ph, www.whotel.ph, www.wreservation.ph), its website was readily accessible to Philippine citizens, and it provided a phone number specifically for Philippine consumers. The website used the English language, considered an official language in the Philippines, and prices for accommodations could be converted into Philippine pesos. The Court also noted the growing number of internet users in the Philippines visiting Starwood’s website.

Considering these factors, the Court concluded that Starwood’s use of its “W” mark through its interactive website was intended to produce a discernable commercial effect within the Philippines, establishing commercial interaction with local consumers. The Court also emphasized that Starwood’s “W” mark is registered for hotel reservation services, and under Section 152.3 of the IP Code, the use of a mark in connection with one or more of the goods or services belonging to the class in respect of which the mark is registered shall prevent its cancellation or removal in respect of all other goods or services of the same class.

The Court also noted that the IPO had previously accepted Starwood’s Declaration of Actual Use (DAU) with evidence of use, and the Court found no reason to disturb this recognition. This underscored the deference given to administrative agencies like the IPO, which are in a better position to judge matters within their expertise.

FAQs

What was the key issue in this case?	The key issue was whether Starwood’s use of its “W” trademark on its interactive website constituted sufficient use within the Philippines to maintain its trademark registration, despite not having a physical hotel establishment in the country. The court had to determine if online activities qualified as legitimate commercial use.
What is the significance of Section 151.1(c) of the IP Code?	Section 151.1(c) of the IP Code allows for the cancellation of a registered trademark if the owner fails to use it within the Philippines for an uninterrupted period of three years or longer, absent any legitimate reason. This provision aims to ensure that trademarks are actively used in commerce and not merely registered for speculative purposes.
What constitutes “genuine use” of a trademark?	“Genuine use” of a trademark refers to a bona fide use that results in a commercial interaction in the ordinary course of trade, not merely token use to reserve the mark. This means there must be actual commercial activity or a clear intent to target customers within the specific jurisdiction.
How did the IPO Office Order No. 056-13 affect the case?	IPO Office Order No. 056-13, which amended the Trademark Regulations, recognized that downloaded pages from the website of the applicant or registrant clearly showing that the goods are being sold or the services are being rendered in the Philippines can be an acceptable proof of actual use. This acknowledgement of the role of digital activity allowed the court to consider Starwood’s website as evidence of commercial activity within the Philippines.
What evidence did Starwood present to prove its use of the mark in the Philippines?	Starwood presented evidence of its Philippine registered domain names, the accessibility of its website to Philippine citizens, a phone number for Philippine consumers, the use of the English language on its website, the ability to convert prices into Philippine pesos, and the growing number of internet users in the Philippines visiting its website.
What is the significance of Starwood owning Philippine registered domain names?	Owning Philippine registered domain names such as www.whotels.ph, www.wreservations.ph, www.whotel.ph, www.wreservation.ph demonstrated Starwood’s intention to target Philippine customers specifically. It also indicated the intent for the brand to connect with its consumers in the Philippines.
Why was the use of English on Starwood’s website relevant?	The use of the English language on Starwood’s website was relevant because English is considered an official language in the Philippines and is widely understood and used in daily affairs. This allowed Starwood to reach a broad segment of the Philippine market and demonstrate its intent to communicate with local consumers.
What is the impact of this decision on businesses with online presence?	This decision affirms that businesses with online presences can establish trademark use within a jurisdiction even without a physical establishment, if they can demonstrate commercial activity or a clear intent to target customers within that jurisdiction. This is especially relevant for businesses engaging in e-commerce and online services.
How does this ruling align with international trends in trademark law?	This ruling aligns with international trends in trademark law that recognize the evolving nature of commerce in the digital age and the importance of protecting intellectual property rights in the online sphere. Jurisdictions such as the European Union, Hong Kong, Singapore, Malaysia, Japan, Australia, Germany, France, Russia, and the United Kingdom have all adopted similar paradigms.
What is the effect of use of a trademark on one or more of the goods or services in a particular class?	Under Section 152.3 of the IP Code, the use of a mark in connection with one or more of the goods or services belonging to the class in respect of which the mark is registered shall prevent its cancellation or removal in respect of all other goods or services of the same class. Thus, Starwood’s use of the “W” mark for reservation services through its website constitutes use of the mark which is already sufficient to protect its registration under the entire subject classification from non-use cancellation.

The Supreme Court’s decision in W Land Holdings, Inc. v. Starwood Hotels and Resorts Worldwide, Inc. signifies a crucial adaptation of trademark law to the realities of the digital age. By recognizing website activity as valid proof of commercial use, the Court has provided businesses with greater clarity and protection for their trademarks in the online sphere. The decision highlights the importance of establishing a clear commercial link to the Philippines through targeted marketing and commercial transactions, ensuring that trademark rights are actively used and protected.

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: W LAND HOLDINGS, INC. V. STARWOOD HOTELS AND RESORTS WORLDWIDE, INC., G.R. No. 222366, December 04, 2017