Trademark Disputes: When Prior Use Trumps First Filing in the Philippines

G.R. No. 205699, January 23, 2023

Imagine investing years building a brand, only to find someone else trying to register your trademark. In the Philippines, the “first-to-file” rule generally governs trademark ownership. However, this case highlights a crucial exception: bad faith. Even if you’re the first to file, prior use by another party, especially if known to you, can invalidate your application. The Supreme Court case of Manuel T. Zulueta vs. Cyma Greek Taverna Co. clarifies how bad faith, stemming from knowledge of prior use, can defeat a trademark application, even under the first-to-file system. This case revolves around a dispute over the “CYMA & LOGO” trademark, highlighting the importance of good faith in trademark registration.

Understanding Trademark Law in the Philippines

The Intellectual Property Code of the Philippines (IPC), specifically Republic Act No. 8293, governs trademark registration. A trademark, as defined by the IPC, is a “visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise.” Trademarks serve to identify the source of goods or services, guarantee quality, and act as a form of advertising.

The First-to-File Rule: The Philippines generally adheres to the “first-to-file” rule. This means that the first person or entity to file a trademark application has priority. However, this rule isn’t absolute.

Bad Faith and Fraud: The Supreme Court has consistently held that registrations obtained in bad faith are void ab initio (from the beginning). Bad faith, in this context, means that the applicant knew of prior creation, use, or registration of an identical or similar trademark by another party. Fraud involves making false claims regarding the origin, ownership, or use of the trademark.

Key Provisions: Section 123(d) of the IPC states that a mark cannot be registered if it “[i]s identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date, in respect of the same goods or services, or closely related goods or services, or if it so nearly resembles such a mark as to be likely to deceive or cause confusion.”

Section 138 of the IPC states that a certificate of registration shall be “prima facie evidence of the validity of the registration, the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the same in connection with the goods or services and those that are related thereto specified in the certificate.”

The Cyma Greek Taverna Case: A Detailed Look

Manuel Zulueta, claiming to have conceptualized the Greek restaurant “Cyma,” filed a trademark application for “CYMA & LOGO.” However, the Cyma Greek Taverna Company, a partnership he formed with Raoul Goco, opposed the application. The partnership argued that Zulueta falsely claimed to be the originator of the trademark, which was actually created by Goco. Here’s a breakdown of the case’s progression:

• 2005: Cyma Boracay restaurant launched.
• 2006: Zulueta files a trademark application for “CYMA & LOGO” in his own name.
• 2007: Cyma Partnership files its own trademark application for “CYMA GREEK TAVERNA AND LOGO.”
• IPOPHL-BLA Decision: The Intellectual Property Office of the Philippines – Bureau of Legal Affairs (IPOPHL-BLA) rejects Zulueta’s application, citing the partnership’s prior registration.
• IPOPHL-ODG Decision: The IPOPHL-Office of the Director General (IPOPHL-ODG) affirms the BLA’s ruling, emphasizing the partnership’s prior use and Zulueta’s failure to demonstrate personal use of the trademark.
• Court of Appeals (CA) Decision: The CA upholds the IPOPHL-ODG’s decision, noting the partnership’s consistent use of the trademark since 2005.

The Supreme Court ultimately denied Zulueta’s petition. The Court emphasized that while Zulueta was the first to file, his application was tainted by bad faith. As the Court stated, “As a partner, Zulueta, was without a doubt aware of the prior use of the trademark by the partnership, and that it had been Raoul Goco who conceptualized the mark for the partnership while on vacation in Greece.”

The Court further reasoned that “Despite the fact that Zulueta was the first to file a trademark application, his knowledge of the prior use by Cyma Partnership of the trademark meant that Zulueta’s trademark application was filed in bad faith. As a consequence, his trademark application cannot be granted and he did not obtain any priority rights under Section 123(d) of the IPC.”

Practical Implications for Businesses

This case underscores that being the first to file a trademark application doesn’t guarantee ownership. Businesses must act in good faith and respect existing trademarks, even if they haven’t been formally registered. Due diligence is crucial before filing a trademark application. Conduct thorough searches to identify any existing trademarks or prior uses that could conflict with your application.

Key Lessons:

• Good Faith is Paramount: Act honestly and transparently in all trademark-related activities.
• Prior Use Matters: Be aware of existing trademarks and prior uses, even if unregistered.
• Due Diligence is Essential: Conduct thorough trademark searches before filing an application.
• Partnership Considerations: When forming a partnership, clearly define ownership and usage rights of intellectual property.

Hypothetical Example: Suppose a small bakery develops a unique logo and uses it for several years, but doesn’t register it. Later, a larger company in another region files a trademark application for a similar logo, unaware of the bakery’s prior use. If the bakery can prove its prior use and the larger company’s knowledge (or potential knowledge through reasonable due diligence), the bakery could potentially challenge the larger company’s trademark application based on bad faith.

Frequently Asked Questions (FAQs)

Q: What is the “first-to-file” rule?

A: It means that generally, the first person or entity to file a trademark application has priority in obtaining trademark rights.

Q: What constitutes “bad faith” in trademark registration?

A: It means that the applicant knew of prior creation, use, or registration of an identical or similar trademark by another party.

Q: How can I prove prior use of a trademark?

A: Evidence of prior use can include sales invoices, advertising materials, website content, and other documents demonstrating consistent use of the trademark in commerce.

Q: What should I do before filing a trademark application?

A: Conduct a thorough trademark search to identify any existing trademarks or prior uses that could conflict with your application. Consult with a trademark attorney to assess the registrability of your mark.

Q: Can a partnership own a trademark?

A: Yes, a partnership has a separate juridical personality and can own trademarks.

Q: What happens if someone uses my trademark without my permission?

A: You can take legal action against them for trademark infringement.

Q: How long does a trademark registration last?

A: A trademark registration is valid for ten (10) years and can be renewed for subsequent ten-year periods.

ASG Law specializes in Intellectual Property Law, Trademark Law, and Corporate Law. Contact us or email hello@asglawpartners.com to schedule a consultation.