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February 3, 2015

EY Industrial vs. Shen Dar

Facts:

  • EY Industrial Sales is a domestic corporation engaged in the production, distribution and sale of air compressors.
  • Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of compressors.
  • From 1997-2004, EY Industrial imported air compressors from Shen Dar.
  • In 1997, Shen Dar filed a Trademark Application with the Intellectual Property Office (IPO) for the mark “Vespa” for the use of air compressors. It was approved in 2007.
  • In 1999, EY Industrial filed a Trademark Application also for the mark “VESPA” for the use of air compressors. It was approved in 2004.
  • Shen Dar filed a Petition for Cancellation of the Industrial’s EYES COR with the Bureau of Legal Affairs contending that: a. there was a violation of Section 123.1 (D) of the Intellectual Property Code which provides that: A mark cannot be registered if it is identical to a mark with an earlier filing or priority date. b. EY Industrial is only a distributor of the air compressors
  • On the other hand, EY Industrial alleged that it is the sole assembler and fabricator of VESPA air compressors since the early 1990s and that Shen Dar supplied them air compressors with the mark “SD” and not “VESPA”



Issues: 
1. Who between EY Industrial and Shen Dar is entitled to the trademark “VESPA”. EY INDUSTRIAL SALES
2. WON the Bureau of Legal Affairs has the power to cancel the application of Shen Dar even if it is Shen Dar who filed the case? YES

Held: 

1st: EY INDUSTRIAL has the right to the trademark.

Based on the evidence, EYIS owns the “VESPA” trademark; it has prior use, as shown by various sales invoices. 

Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade or commerce. As between actual use of a mark without registration, and registration of the mark without actual use thereof, the former prevails over the latter.

For a rule widely accepted and firmly entrenched, because it has come down through the years, is that actual use in commerce or business is a pre-requisite to the acquisition of the right of ownership. It is non sequitur to hold that porque EYIS is a distributor, it is no longer the owner.

FIRST-TO-FILE RULE

Under Section 123.1 of IPO provision, the registration of a mark is prevented with the filing of an earlier application for registration.  

This must not, however, be interpreted to mean that ownership should be based upon an earlier filing date.   While RA 8293 (IPC) removed the previous requirement of proof of actual use prior to the filing of an application for registration of a mark, proof of prior and continuous use is necessary to establish ownership of a mark.  Such ownership constitutes sufficient evidence to oppose the registration of a mark.

When we talk about trademark, we are just talking about the mark. It does not include the product. Shen Dar is the manufacturer of the product, but they did not name the product as VESPA. It was EY that named the VESPA, and used the VESPA, even though they were only the distributors. 
It was EY that actually used the trademark through the use of receipts, and other documents. 

The first to file rule – According to the SC that Shen Dar filed under the old IPC where prior use is the one applied. 


2nd: BLA has the power to cancel the application.

Shen Dar challenges the propriety of such cancellation on the ground that there was no petition for cancellation as required under Sec. 151 of RA 8293.

The IPO Director General stated that, despite the fact that the instant case was for the cancellation of the COR issued in favor of EYIS, the interests of justice dictate, and in view of its findings, that the COR of Shen Dar must be cancelled.

The above rule reflects the oft-repeated legal principle that quasi-judicial and administrative bodies are not bound by technical rules of procedure. Such principle, however, is tempered by fundamental evidentiary rules, including due process.

The fact that no petition for cancellation was filed against the COR issued to Shen Dar does not preclude the cancellation of Shen Dar’s COR.  It must be emphasized that, during the hearing for the cancellation of EYIS’ COR before the BLA, Shen Dar tried to establish that it, not EYIS, was the true owner of the mark “VESPA” and, thus, entitled to have it registered.  Shen Dar had more than sufficient opportunity to present its evidence and argue its case, and it did.  It was given its day in court and its right to due process was respected.  The IPO Director General’s disregard of the procedure for the cancellation of a registered mark was a valid exercise of his discretion.

Remember, EY’s application was the one granted, and it is Shen Dar’s application that was cancelled. 
It does not mean that even you were the one who filed, it your application cannot be cancelled. The BLA, who has jurisdiction over the case, were able to determine that it is Shen Dar’s trademark that should not have been issued with registration, even it is the plaintiff. 


Reference:
G.R. No. 184850
October 20, 2010

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