Trademark lawyers in the Philippines, and presumably trademark authorities at the Intellectual Property Office of the Philippines (IPOPHIL), have been uneasy during the past five years about the result of a 2015 Supreme Court decision that allowed two unrelated companies to register one identical trademark for clearly related goods. However, the recent decision in Kolin Electronics (KECI) v Kolin Philippines International (2021) came as a relief.
As early as 2006, petitioner KECI was declared as the prior user and rightful owner of the Kolin trademark in connection with automatic voltage regulators, converters, rechargers and stereo boosters in class 9 of the Nice Classification, an international classification of goods and services applied for the registration of marks.
This was the ruling made in the opposition filed by Taiwan Kolin (TKC) against KECI’s application for Kolin. According to the Bureau of Legal Affairs (BLA), the director-general, and the Court of Appeals, the ownership rights acquired by KECI through its use under the old law was preserved under section 236 of the IP Code. The evidence that was presented by KECI showing that it had used Kolin since 1989 was not disputed.
Subsequently, KECI and TKC found themselves in a second opposition when TKC filed a second application for Kolin for television sets, audio or video electronic equipment and similar appliances. KECI opposed, and again, the BLA sustained the opposition, but on appeal to the director-general, the decision was reversed. KECI went to the Court of Appeals, which reversed the director-general decision, prompting TKC to file a petition for review in the Supreme Court.
The third division of the court issued a decision on 25 March 2015, holding that the goods designation in TKC’s application for the identical Kolin mark were unrelated to those covered by KECI’s registration for Kolin. According to the court, class 9 can be sub-categorised into five groups, and the goods of KECI and TKC fell into different sub-categories. Prior to the promulgation of the 2015 decision, KECI found itself fighting another opposition involving the same Kolin mark, this time against an affiliate of TKC. Kolin Philippines International (KPII) filed an application designating televisions and DVD players in class 9. In this third opposition, the BLA ruled once again in favour of KECI on the basis of its prior use of Kolin. The director-general upheld this decision, but the court of appeals reversed on appeal, prompting KECI to go up to the Supreme Court on a petition for review.
Sitting en banc, the court held that granting the registration of KPII’s application for Kolin would cause the likelihood of confusion and damage the rights of KECI. The court held: (1) that the parties’ goods were related; (2) that there was evidence of actual confusion between the two marks; (3) that the goods covered by KPII’s application fell within the normal potential business expansion of KECI; (4) that sophistication of buyers was not enough to eliminate confusion; (5) that likelihood of confusion increased because Kolin was a coined word and therefore a strong mark; and (6) that KPII filed its application in bad faith.
It is clear from this latest decision that the Supreme Court intended to move away from the 2015 decision. In prescribing the dominancy test as the proper test in assessing the resemblance of trademarks, the court made this statement: “The court hereby makes it crystal clear that the use of the holistic test in determining the resemblance of marks has been abandoned.” It went further to admonish the use of the 2015 decision as a precedent because it was based on the holistic test.
The court also categorically abandoned the use of the Nice Classification and prescribed the use of the extensive criteria laid out in the case of Mighty Corporation v E & J Gallo Winery et al when deciding the relatedness of goods.
The court’s ruling was also affirming that coined words are fanciful and strong. They enhance the possibility of likelihood of confusion. Having knowledge of the ownership of mark at the time, one that files an application constitutes bad faith.
Notwithstanding the ruling on the dominancy test, one must note that the case actually involved an identical mark. It would have been more instructive if the competing marks differed in some elements because then it would have answered the difficult and ever-present question of how to assess which element is dominant or prevalent in the protected mark.
By and large, all the rulings made in this remarkable decision may have effectively erased all the confusion engendered by the unusual decision from the third division in 2015. This recent decision will no doubt impact how trademark lawyers will handle prosecution issues where confusing similarity objection is a staple in most, if not all, registrability reports.
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