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.