Is the hoarding of a competitor's product containers an act of unfair competition under the Intellectual Property Code of the Philippines? This is the issue addressed in the case of Coca Cola Bottlers Phils Inc vs Quintin Gomez, et al in case no GR 154491 involving two rival multinational soft drink giants; petitioner Coca-Cola Bottlers, Phils, Inc accused Pepsi Cola Products Phils, represented by the respondents, of hoarding empty Coke bottles in bad faith to discredit its business and to sabotage its operation in the Bicol region.
The facts are as follows. Some time in July 2001, based on search warrant no 2001-01, the local police seized from the Pepsi compound 2,464 litre and 4,036 eight and 12 ounce empty Coke bottles, 205 Pepsi shells for litre, and 168 Pepsi shells for smaller (eight and 12 ounce) empty Coke bottles, and later filed a complaint against two Pepsi officers for unfair competition, particularly Section 168.3 (c) of the IP Code. Pepsi moved to quash the search warrant contending that no probable cause existed to justify the issuance of the search warrant because the facts charged do not constitute unfair competition.
The Supreme Court in its decision of November 14 2008 held that search warrant no 2001-01 is null and void because it was issued on an invalid substantive basis: the hoarding of empty Coke bottles does not violate Section 168.3 (c) of the IP Code. The Supreme Court used two tests. First, whether the matter refers to an intellectual property violation as defined by the IP Code. If it does not, then the coverage of the Code may be negated. Second, if the disputed matter does not expressly refer to an intellectual property right, the court looked at whether it falls under the general concept of unfair competition and the question then is whether there is deception or any other similar act in passing off of goods or services to be those of another who enjoys established goodwill.
Under these tests, the Supreme Court concluded that the hoarding – as defined and charged by Coke – does not fall within the coverage of the IP Code since it does not relate to any patent, trade mark, trade name or service mark that Pepsi has used without proper authority from Coke. Nor is Pepsi alleged to be fraudulently passing off their products or services as those of Coke. Furthermore, Coke did not allege that Pepsi was making any representation or misrepresentation that would confuse or tend to confuse Coke's goods with those of Pepsi or vice versa.
What Coke in fact alleged is an act foreign to the IP Code, to the concepts it embodies and to the acts it regulates; as alleged, hoarding inflicts unfairness by seeking to limit the opposition's sales by depriving it of the bottles it can use for these sales. The Supreme Court further stated that hoarding for purposes of destruction is closer to what another law covers – RA no 623 relating to stamped or marked bottles, but unfortunately, the Act is not the law in issue and one that Coke did not consider at all in the search warrant application, and could not have done so since the one specific offence that the law allows and which Coke used was Section 168.3 (c) of the IP Code. Given this analysis, the lack of probable cause to support the disputed search warrant becomes immediately clear.
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| Editha R Hechanova |
Hechanova Bugay & Vilchez
GF Chemphil Building Antonio Arnaiz Ave
Makati City 1223
Philippines
Tel: +63 2 888 4293
Fax: +63 2 888 4290
editharh@info.com.ph
