SC junks trademark suit filed by Philip Morris vs Fortune Tobacco

Business tycoon Lucio Tan won yesterday another victory before the Supreme Court after the High Court
junked the infringement of trademark case filed by Philip Morris, Inc. and its subsidiaries against Tan’s Fortune
Tobacco Corp.

In a 23-page decision penned by Associate Justice Cancio Garcia, the High Court’s second division affirmed
the Court of Appeals ruling which declared that the similarities in Philip Morris and Fortune’s trademarks are
insufficient to cause confusion and deception tantamount to infringement.

"While petitioners (Philip Morris) have registered the trademarks Mark VII, Mark Ten Lark, for cigarettes in the
Philippines, prior actual commercial use thereof had not been proven. In fact, petitioner’s judicial admission of
not doing business in this country effectively belies any pretension to the contrary" the High Court said.

The High Court said the public will not be confused since there was no actual commercial use of Fortune
Tobacco of Philip Morris, its subsidiaries Benson and Hedges (Canada), Inc., and Fabriques de Tabac
Reunies, S.A, now known as Philip Morris Products S.A, trademarks in the country.

"Contrary to what petitioners (Philip Morris) suggest, the registration of trademark cannot be deemed
conclusive as to the actual use of such trademark in local commerce. As it were, registration does not confer
upon the registrant an absolute right to the registered mark" the High Court said. In its petition for review, Philip
Morris insisted that Fortune Tobacco’s Mark trademark is confusingly or deceptively similar with their duly
registered trademarks.

Philip Morris said they can file a complaint before a Philippine court for infringement of trademarks or unfair
competition, without need of obtaining registration or a license to do business in the country and without
necessity of actually doing business in the country.

Philip Morris cited that this right and mechanism are accorded by Section 21-A of Republic Act 166, as
amended, or the Trademark Law and by Article 2 of the Paris Convention for the protection of industrial
property also known as the Paris Convention.

In ruling in favor of Fortune Tobacco, the Tribunal said that although Philip Morris’ home countries and the
Philippines are members of the Paris Union, this does not automatically entitle Philip Morris to the protection of
their trademarks in the Philippines absent the actual use of the marks in local commerce and trade.

"True, the Philippines’ adherence to the Paris Convention effectively obligates the country to honor and
enforce its provisions as regards the protection of industrial property of foreign nationals in this country.
However, any protection accorded has to be made subject to the limitations of Philippine laws" the High Court
said.

The High Court said the jurisprudence has developed two tests, such as the dominancy test and the holistic
test, to determine the similarity and likelihood of confusion.

The High Court said that using the holistic test, the CA was correct in ruling that Fortune Tobacco’s products
cannot be mistaken as any of the three cigarette brands of Philip Morris.

"But even if the dominancy test were to be used, as urged by the petitioners (Philip Morris), but bearing in mind
that a trademark serves as a tool to point out distinctly the origin or ownership of the goods to which it is
affixed, the likelihood of confusion tantamount to infringement appears to be farfetched" the High Court said.

The High Court said since the word Mark, be it alone or in combination with the word Ten and Roman numeral
VII, does not point to the origin or ownership of the cigarettes to which they apply, "the local buying public
could not possibly be confused to or deceived that respondent’s Mark is the product of petitioners and/or
originated from the USA, Canada or Switzerland."

Court records showed that on Aug. 18, 1982, Philip Morris and its subsidiaries filed the complaint for
infringement and damages against Fortune Tobacco before the Pasig Regional Trial Court (RTC) for
manufacturing and selling cigarettes bearing the trademark "Mark" which is identical and confusingly similar to
Philip Morri’s trademarks.

The Pasig RTC dismissed Philip Morris’ complaint on Nov. 3, 1999.

The Pasig RTC said that the trademarks of Philip Morris "do not themselves or by association point distinctly to
the origin or ownership of the cigarettes to which they refer, such that the buying public could not be deceived
into believing that Mark cigarettes originated either from the US, Canada or Switzerland."

The Court of Appeals upheld the ruling of the Pasig RTC on Jan. 21, 2003.