Rules for filing actions for violation of intellectual property

       On October 18, 2011, the Supreme Court approved A.M. 10-3-10-SC prescribing Rules of Procedure for Intellectual Property Rights Cases.

        The Rules shall be observed by the Regional Trial Courts designated by the Supreme Court as Special Commercial Courts.      When the court determines that the civil or criminal action involves complex issues, it shall issue a special order that the regular procedure prescribed in the Rules of Court shall apply, stating the reason therefor.

Under said Rules, the Special Commercial Courts designated by the Supreme Court are those Special Commercial Courts in Quezon City, Manila, Makati and Pasig.

These Special Commercial Courts shall also have authority to act on applications for the issuance of search warrants involving violations of the Intellectual Property Code (IP Code), which search warrants shall be enforceable nationwide.   Within their respective territorial jurisdictions, the Special Commercial Courts in the judicial regions where the violation of intellectual property rights occurred shall have concurrent jurisdiction to issue search warrants.  Accordingly, the Executive Judges are hereby relieved of the duty to issue search warrants involving violations of the Intellectual Property Code in criminal cases as stated in Sec. 12, Chapter V of A.M. No. 03-8-02-SC (Guidelines on the Selection and Appointment of Executive Judges and Defining their Powers, Prerogatives and Duties).

        Orders issued by the courts under these Rules are immediately executory unless restrained by a superior court.

        Any pleading, motion, opposition, defense or claim filed by any interested party shall be supported by verified statements that the affiant has read the same and that the factual allegations therein are true and correct of his personal knowledge or based on authentic records, and shall contain as annexes such documents as may be deemed by the party submitting the same as supportive of the allegations in the affidavits.  (Section 5)

        Actions which can be filed under the Rules are:

1)          all civil actions for violations of intellectual property rights provided for in Republic Act 8293 or the Intellectual Property Code, as amended, including civil actions for Infringement of Patent (Section 76), Utility Model (Section 108) and Industrial Design (Section 119), Trademark Infringement (Section 155 in relation to Section 163), Unfair Competition (Section 168 in relation to Section 163), actions concerning trademark license contracts (Section 150 in relation to Section 163), actions concerning imported merchandise or goods bearing infringing marks or trade names (Section 166 in relation to Section 163), actions for cancellation of the registration of a collective mark (Section 167 in relation to Section 163), False Designations of Origin; False Description or Representation (Section 169 in relation to Section 163), Breach of Contract (Section 194), civil actions for infringement of copyright, moral rights, performers’ rights, producers’ rights, and broadcasting rights (Sections 177, 193, 203, 208, 211, and 216), and other violations of intellectual property rights as may be defined by law.

2)          All criminal actions for violations of intellectual property rights provided for in Republic Act 8293 or the Intellectual Property Code, as amended, including Repetition of Infringement of Patent (Section 84), Utility Model (Section 108) and Industrial Design (Section 119), Trademark Infringement (Section 155 in relation to Section 170), Unfair Competition (Section 168 in relation to Section 170), False Designations of Origin; False Description or Representation (Section 169.1 in relation to Section 170), infringement of copyright, moral rights, performers’ rights, producers’ rights, and broadcasting rights (Section 177, 193, 203, 208 and 211 in relation to Section 217), and other violations of intellectual property rights as may be defined by law.

On the other hand, the Intellectual Property Code (IP Code) provides an alternative venue for redress for aggrieved parties in IP violation cases by filing administrative complaints before the Bureau of Legal Affairs (BLA) of the Intellectual Property Office, Philippines.  The BLA has original jurisdiction and power to hear and decide the case at the first instance (i.e., from the inception of the case) if the total damages claimed are two hundred thousand pesos (P200,000) and above. The commencement of an action under the Bureau’s Rules is independent and without prejudice to the filing of an action with the regular courts.

The Rules of Court have suppletory effect to IPOs Rules and Regulations on Administrative Complaints for Violations of Laws involving Intellectual Property Rights.

Infringement of Copyright

Statutory copyright is conferred by the statute when the work is made under the Intellectual Property Code.  In other words, publication is not required.  Copyright subsists from the moment of creation.  Acquisition of copyright is not contingent or dependent on any formality or registration.  [Unilever Phils. Inc. v. Court of Appeals et al. 498 SCRA 334 (2006)].    

Under Section 185.1 of the Intellectual Property Code, fair use is not an infringement of copyright.  The law lists a number of uses that may be considered as fair use.  They include:  criticism, comment, news reporting, and teaching, including multiple copies for classroom use, scholarship, research, limited copying for educational purposes, public interest.  Parody as a fair use is a fair criticism or commentary although one in a humorous vein.   The list is not exclusive as it is qualified by the phrase “and similar purposes” Accordingly, these enumerated uses may be raised as a valid defense.    

In Columbia Pictures  Inc. vs. Court of Appeals (261 SCRA 144, 1996), infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy which is synonymous term in this connection, consists in the doing by an person, without the consent of the owner of the copyright, of anything sole right to do which is conferred by statute on the owner of the copyright.    Piracy is defined as the “unauthorized copying of copyright materials for commercial purposes and the unauthorized commercial dealing in copied materials.”  The essential part of piracy is that the unauthorized activity is carried on for commercial gain.  This element of commercial gain will often be carried out on an organized basis.  (Denis Funa, Intellectual Property Law, 2012 edition)

Concept of Unfair Competition

Under Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the independent civil action may be brought by the offended party.  It shall proceed independently of the criminal action and shall require only a preponderance of evidence.    The common element in the acts constituting unfair competition under Section 168 of R.A. 8293 is fraud.  Pursuant to Article 33 of the Civil Code, in cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action may be brought by the injured party. (Samson v. Daway, 434 SCRA 612, 2004).

The distinction between trademark infringement and unfair competition is emphasized in the Mighty Corporation et al. v. E & J. J. Gallo Winery et al.  (434 SCRA 473) as follows:

“x x x,  the law on unfair competition is broader and more inclusive than the law on trademark infringement. The latter is more limited but it recognizes a more exclusive right derived from the trademark adoption and registration by the person whose goods or business is first associated with it.  The law on trademarks is thus a specialized subject distinct from the law on unfair competition, although the two subjects are entwined with each other and are dealt with together in the Trademark Law (now, both are covered by the IP Code).  Hence, even if one fails to establish his exclusive property rights to a trademark, he may still obtain relief on the group of his competitor’s unfairness or fraud.  Conduct constitutes unfair competition if the effect is to pass of on the public the goods of one man as the goods of another.  It is not necessary that any particular means should be used in the end.”

In Del Monte Corporation vs. Court of Appeals (181 SCRA 410, 415) trademark infringement and unfair competition is also distinguished.  Thus:

a)  Infringement of trademark is the unauthorized use of a trademark, whereas unfair competition is the passing off of one’s goods as those of another;

b)  In infringement of trademark, fraudulent intent is unnecessary, whereas in unfair competition, fraudulent intent is essential.

c)  In infringement of trademark, the prior registration of the trademark is a prerequisite to the action, whereas in unfair competition registration is not necessary.

Infringement of Trademark and Tradename

Infringement of trademark or tradename is defined in Section 155.1 and 155.2.    As held in the case of Prosource International, Inc. v. Horphag Research Management SA (605 SCRA 523, 2009), the Court identified the elements of infringement under the Intellectual Property Code:

(1)        The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade name, the same need not be registered.

(2)        The trademark or tradename is reproduced, counterfeited, copied or colorably imitated by the infringer;

(3)        The infringing mark or tradename is used in connection with the sale, offering for sale, or advertising of any goods, business or services; or the infringing mark or tradename is applied to labels,  signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services.

(4)        The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers or others as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such business; and

(5)        It is without the consent of the trademark or trade name owner or the assignee thereof.  (as cited in Intellectual Property Law, 2012 Edition by Denis B.  Funa).

In other words, only a registrant of a mark can file a case for infringement.   In infringement of a trademark, fraudulent intent is unnecessary (Del Monte Corp. et al v. Court of Appeals et al. 181 SCRA 410, 1990).

However, as held in the case of Coffee Partners Inc. vs. San Francisco Coffee and Roastery Inc. G.R. No. 169504, March 3, 2010 Second Division,   a trade name need not be registered with the Intellectual Property Office before an infringement suit may be filed by its owner against the owner of an infringing trademark. All that is required is that the trade name is previously used in trade or commerce in the Philippines.  Republic Act 8293, which took effect on 1 January 1998, has dispensed with the registration requirement. Section 165.2 of R.A. 8293 categorically states that trade names shall be protected, even prior to or without registration with the Intellectual Property Office, against any unlawful act including any subsequent use of the trade name by a third party, whether as a trade name or a trademark likely to mislead the public. Thus:

        Sec. 165.2 (a) notwithstanding any laws or regulations providing for any obligation to register trade names, such names shall be protected, even prior to or without registration, against any unlawful act committed by third parties.

In McDonald’s Corporation et al. v. L.C. Big Mak Burger, Inc. et al (437 SCRA 10, 2004, Citing A& H Sportswear Co. v. Victoria’s Secret Stores, Inc. 167 F. Supp. 2d. 770 (2001), the Court gave a more concise enumeration of the elements of infringement:  (1) the validity of plaintiff’s mark; (2) the plaintiff’s ownership of the mark, and (3) the use of the mark or its colorable imitation by the alleged infringer results in “likelihood of confusion.”