PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs.

SHOEMART, INCORPORATED, and

NORTH EDSA MARKETING, INCORPORATED,respondents.

Facts:

Pearl & Dean, Inc. (P&D) is a corporation engaged in the manufacture of advertising display
units called light boxes. These units utilize specially printed posters sandwiched between
plastic sheets and illuminated with back lights. The light boxes were derived from technical
drawings, which were registered with the National Library. P&D obtained a copyright certificate
for the drawings, which were classified under category "O" of the Intellectual Property Decree
(P.D. 49). The category pertains to "prints, pictorial illustrations, advertising copies, labels, tags,
and box wraps." The light boxes were marketed under the trademark "Poster Ads" which was
duly registered before the Bureau of Patents, Trademarks and Technology Transfer (BPTTT).

P&D negotiated with Shoemart, Inc. (SM) for the lease and installation of its light boxes in two
mall branches. For some reason, SM rescinded its contract with P&D. Two years later, SM
contracted with several entities for the construction of light boxes for its chain of stores. One of
them was Metro Industrial Services, the company formerly contracted by Pearl and Dean to
fabricate its display units.

In time, P&D discovered that SM installed light boxes in several of its stores; the light boxes are
similar to those that P&D manufactures. P&D also found out that SM used the trademark
"Poster Ads" in marketing its own version of the light boxes. It further discovered that
defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime
Spots Marketing Services, was set up primarily to sell advertising space in lighted display
units located in SMIs different branches. Pearl and Dean noted that NEMI is a sister
company of SMI.

Eventually, P&D demanded SM to refrain from using the subject light boxes, to remove them
from its establishments and to refrain from using the trademark "Poster Ads". Not satisfied with
SM's response to its demands, P&D sued SM for infringement of trademark and copyright,
unfair competition and damages.

SMI maintained that it independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to Pearl and Deans
copyright. SMI noted that the registration of the mark Poster Ads was only for stationeries
such as letterheads, envelopes, and the like. Besides, according to SMI, the word Poster Ads is
a generic term which cannot be appropriated as a trademark, and, as such, registration of
such mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed
for in its complaint since its advertising display units contained no copyright notice, in
violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action
against it and that the suit was purely intended to malign SMIs good name

NEMI, for its part, denied having manufactured, installed or used any advertising display units,
nor having engaged in the business of advertising. It repleaded SMIs averments, admissions and
denials and prayed for similar reliefs and counterclaims asSMI.

The trial court ruled in favor of P&D and found SM to have infringed P&D's copyright and
trademark "Poster Ads". On appeal, however, the Court of Appeals reversed the trial court's
ruling and declared that SM did not infringe P&D's copyright.

The Supreme Court sustained the Court of Appeals decision that there was no copyright
infringement, trademark infringement and unfair competition committed against P&D.

ISSUES:
(1) Whether or not there was a copyright infringement
(2) Whether or not there was a patent infringement
(3) Whether or not there was a trademark infringement
(4) Whether or not there was unfair competition

RULING: No to all.

ON THE ISSUE OF COPYRIGHT INFRINGEMENT

Copyright is a statutory right, subject to the terms and conditions specified in the statute.
Therefore, it can only cover the works falling within the statutory enumeration or description.
Since the copyright was classified under class "O" works, which includes "prints, pictorial
illustrations, advertising copies, labels, tags and box wraps," and does not include the light box
itself. A lightbox, even admitted by the president of petitioner company, was neither a literary
nor an artistic work but an engineering or marketing invention, thus not included under a
copyright.

Petitioner P & Ds complaint was that SMI infringed on its copyright over the light boxes
when SMI had the units manufactured by Metro and EYD Rainbow Advertising for its own
account. Obviously, petitioners position was premised on its belief that its copyright over the
engineering drawings extended ipso facto to the light boxes depicted or illustrated in said
drawings. In ruling that there was no copyright infringement, the Court of Appeals held that
the copyright was limited to the drawings alone and not to the light box itself. We agree
with the appellate court.
First, petitioners application for a copyright certificate as well as Copyright Certificate No.
PD-R2588 issued by the National Library on January 20, 1981 clearly stated that it was for a
class O work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the
statute then prevailing. Said Section 2 expressly enumerated the works subject to copyright:

SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with
respect to any of the following works:

xxxxxxxxx

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;

xxxxxxxxx

Although petitioners copyright certificate was entitled Advertising Display Units

(which depicted the box-type electrical devices), its claim of copyright infringement
cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere
statutory grant, the rights are limited to what the statute confers. It may be obtained and
enjoyed only with respect to the subjects and by the persons, and on terms and conditions
specified in the statute.[7] Accordingly, it can cover only the works falling within the
statutory enumeration or description.[8]
P & D secured its copyright under the classification class O work. This being so,
petitioners copyright protection extended only to the technical drawings and not to the
light box itself because the latter was not at all in the category of prints, pictorial
illustrations, advertising copies, labels, tags and box wraps. Stated otherwise, even as we
find that P & D indeed owned a valid copyright, the same could have referred only to the
technical drawings within the category of pictorial illustrations. It could not have possibly
stretched out to include the underlying light box. The strict application[9] of the laws
enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is,
even if its copyright certificate was entitled Advertising Display Units. What the law does not
include, it excludes, and for the good reason: the light box was not a literary or artistic
piece which could be copyrighted under the copyright law. .
In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public
without license from P & D, then no doubt they would have been guilty of copyright
infringement. But this was not the case. SMIs and NEMIs acts complained of by P & D were to
have units similar or identical to the light box illustrated in the technical drawings manufactured
by Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this an
infringement of petitioners copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a
literary not an artistic work but an engineering or marketing invention.[10] Obviously, there
appeared to be some confusion regarding what ought or ought not to be the proper subjects of
copyrights, patents and trademarks. In the leading case of Kho vs. Court of Appeals,[11] we ruled
that these three legal rights are completely distinct and separate from one another, and
the protection afforded by one cannot be used interchangeably to cover items or works
that exclusively pertain to the others:

Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another.

A trademark is any visible sign capable of distinguishing the goods (trademark) or

services (service mark) of an enterprise and shall include a stamped or marked container
of goods.

In relation thereto, a trade name means the name or designation identifying or

distinguishing an enterprise.

Meanwhile, the scope of a copyright is confined to literary and artistic works which are
original intellectual creations in the literary and artistic domain protected from the
moment of their creation.

Patentable inventions, on the other hand, refer to any technical solution of a problem in
any field of human activity which is new, involves an inventive step and is industrially
applicable.

ON THE ISSUE OF PATENT INFRINGEMENT

(2) Petitioner was not able to secure a patent for its lightboxes, and cannot legally prevent
anyone from manufacturing or commercially using the same. Patent has a three-fold
purpose: a) to foster and reward invention; b) promotes disclosures of invention and permit
public to use the same upon expiration; c) stringent requirements for patent protection to
ensure in the public domain remain there for free use of the public. Since petitioner was not
able to go through such examination, it cannot exclude others from manufacturing, or selling
such lightboxes. No patent, no protection.

For some reason or another, petitioner never secured a patent for the light boxes. It
therefore acquired no patent rights which could have protected its invention, if in fact it
really was. And because it had no patent, petitioner could not legally prevent anyone from
manufacturing or commercially using the contraption. In Creser Precision Systems, Inc. vs.
Court of Appeals,[12] we held that there can be no infringement of a patent until a patent has
been issued, since whatever right one has to the invention covered by the patent arises
alone from the grant of patent. x x x (A)n inventor has no common law right to a monopoly of
his invention. He has the right to make use of and vend his invention, but if he voluntarily
discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A
patent, however, gives the inventor the right to exclude all others. As a patentee, he has
the exclusive right of making, selling or using the invention.[13] On the assumption that
petitioners advertising units were patentable inventions, petitioner revealed them fully to the
public by submitting the engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from
the invention, a patent is a primordial requirement. No patent, no protection. The
ultimate goal of a patent system is to bring new designs and technologies into the public
domain through disclosure.[14] Ideas, once disclosed to the public without the protection of
a valid patent, are subject to appropriation without significant restraint.[15]
On one side of the coin is the public which will benefit from new ideas; on the other
are the inventors who must be protected. As held in Bauer & Cie vs. ODonnel,[16] The act
secured to the inventor the exclusive right to make use, and vend the thing patented, and
consequently to prevent others from exercising like privileges without the consent of the
patentee. It was passed for the purpose of encouraging useful invention and promoting
new and useful inventions by the protection and stimulation given to inventive genius,
and was intended to secure to the public, after the lapse of the exclusive privileges
granted the benefit of such inventions and improvements.
The law attempts to strike an ideal balance between the two interests:

(The p)atent system thus embodies a carefully crafted bargain for encouraging the
creation and disclosure of new useful and non-obvious advances in technology and
design, in return for the exclusive right to practice the invention for a number of
years. The inventor may keep his invention secret and reap its fruits indefinitely. In
consideration of its disclosure and the consequent benefit to the community, the patent is
granted. An exclusive enjoyment is guaranteed him for 17 years, but upon the expiration
of that period, the knowledge of the invention inures to the people, who are thus enabled
to practice it and profit by its use.[17]

The patent law has a three-fold purpose: first, patent law seeks to foster and reward
invention; second, it promotes disclosures of inventions to stimulate further innovation
and to permit the public to practice the invention once the patent expires; third, the
stringent requirements for patent protection seek to ensure that ideas in the public
domain remain there for the free use of the public.[18]
It is only after an exhaustive examination by the patent office that a patent is
issued. Such an in-depth investigation is required because in rewarding a useful invention,
the rights and welfare of the community must be fairly dealt with and effectively
guarded. To that end, the prerequisites to obtaining a patent are strictly observed and
when a patent is issued, the limitations on its exercise are equally strictly enforced. To
begin with, a genuine invention or discovery must be demonstrated lest in the constant demand
for new appliances, the heavy hand of tribute be laid on each slight technological advance in
art.[19]
There is no such scrutiny in the case of copyrights nor any notice published before its
grant to the effect that a person is claiming the creation of a work. The law confers the
copyright from the moment of creation[20] and the copyright certificate is issued upon
registration with the National Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the
petitioner cannot exclude others from the manufacture, sale or commercial use of the
light boxes on the sole basis of its copyright certificate over the technical drawings.
.
In the oft-cited case of Baker vs. Selden[21], the United States Supreme Court held that only
the expression of an idea is protected by copyright, not the idea itself. In that case, the
plaintiff held the copyright of a book which expounded on a new accounting system he had
developed.

To give to the author of the book an exclusive property in the art described therein, when
no examination of its novelty has ever been officially made, would be a surprise and a
fraud upon the public. That is the province of letters patent, not of copyright. The claim to
an invention of discovery of an art or manufacture must be subjected to the examination
of the Patent Office before an exclusive right therein can be obtained; and a patent from
the government can only secure it.

The difference between the two things, letters patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take the case of medicines. Certain mixtures are
found to be of great value in the healing art. If the discoverer writes and publishes a book on
the subject (as regular physicians generally do), he gains no exclusive right to the
manufacture and sale of the medicine; he gives that to the public. If he desires to acquire
such exclusive right, he must obtain a patent for the mixture as a new art, manufacture or
composition of matter. He may copyright his book, if he pleases; but that only secures to
him the exclusive right of printing and publishing his book. So of all other inventions or
discoveries.

By publishing the book without getting a patent for the art, the latter is given to the
public.

xxx
Now, whilst no one has a right to print or publish his book, or any material part thereof, as
a book intended to convey instruction in the art, any person may practice and use the art
itself which he has described and illustrated therein. The use of the art is a totally different
thing from a publication of the book explaining it.

The description of the art in a book, though entitled to the benefit of copyright, lays no
foundation for an exclusive claim to the art itself. The object of the one is explanation; the
object of the other is use. The former may be secured by copyright. The latter can only be
secured, if it can be secured at all, by letters patent. (underscoring supplied)

ON THE ISSUE OF TRADEMARK INFRINGEMENT

(3) The certificate of registration issued by the Director of Patents gives exclusive right to use its
own symbol only to the description specified in the certificate. It cannot prevent others to use
the same trademark with a different description.

This issue concerns the use by respondents of the mark Poster Ads which petitioners
president said was a contraction of poster advertising. P & D was able to secure a trademark
certificate for it, but one where the goods specified were stationeries such as letterheads,
envelopes, calling cards and newsletters.[22] Petitioner admitted it did not commercially
engage in or market these goods. On the contrary, it dealt in electrically operated backlit
advertising units and the sale of advertising spaces thereon, which, however, were not at all
specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate
Appellate Court,[23] where we, invoking Section 20 of the old Trademark Law, ruled that the
certificate of registration issued by the Director of Patents can confer (upon petitioner)
the exclusive right to use its own symbol only to those goods specified in the certificate,
subject to any conditions and limitations specified in the certificate x x x. One who has
adopted and used a trademark on his goods does not prevent the adoption and use of the
same trademark by others for products which are of a different description.[24] Faberge,
Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of
Appeals.[25]
Assuming arguendo that Poster Ads could validly qualify as a trademark, the failure of P &
D to secure a trademark registration for specific use on the light boxes meant that there could
not have been any trademark infringement since registration was an essential element
thereof.
ON THE ISSUE OF UNFAIR COMPETITION

(4) "Poster Ads" is a general term that cannot be associated specifically to Pearl and Dean,
thus it cannot be considered to use such term to be unfair competition against the petitioner.

By the nature of things, there can be no unfair competition under the law on copyrights
although it is applicable to disputes over the use of trademarks.
Even a name or phrase incapable of appropriation as a trademark or tradename may,
by long and exclusive use by a business (such that the name or phrase becomes associated
with the business or product in the mind of the purchasing public), be entitled to protection
against unfair competition.[27] In this case, there was no evidence that P & Ds use of Poster
Ads was distinctive or well-known.
As noted by the Court of Appeals, petitioners expert witnesses himself had testified that
Poster Ads was too generic a name. So it was difficult to identify it with any company,
honestly speaking.[28] This crucial admission by its own expert witness that Poster Ads could
not be associated with P & D showed that, in the mind of the public, the goods and
services carrying the trademark Poster Ads could not be distinguished from the goods and
services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. Poster
Ads was generic and incapable of being used as a trademark because it was used in the
field of poster advertising, the very business engaged in by petitioner.
Secondary meaning means that a word or phrase originally incapable of exclusive
appropriation with reference to an article in the market (because it is geographically or
otherwise descriptive) might nevertheless have been used for so long and so exclusively by
one producer with reference to his article that, in the trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was his
property.[29]