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Disclosing name does not avoid unfair competition in the Philippines

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Editha R Hechanova of Hechanova & Co analyses the latest decision in the long-running dispute over the Chin Chun Su trademark in the Philippines

Who owns the trademark Chin Chun Su? Elidad Kho dba KEC Cosmetics Laboratory and Summerville General Merchandising have been quarrelling over the ownership and use of the Chin Chun Su mark for facial cream, and have filed cases against each other, for over 30 years. 

It appears that this controversy is not about to end, since the Supreme Court has ruled that probable cause exists, and has remanded a criminal case for unfair competition back to the lower court for trial (Elidad Kho and Violeta Kho v Summerville General Merchandising & Co (GR No 213400, August 4 2021)).

A quick internet search shows that both parties (Spouses Kho and Summerville) are selling their Chin Chun Su products online (see illustrations).

 

Spouses Kho’s Chin Chun Su

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Summerville’s Chin Chun Su

 

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Background to the dispute

Elidad Kho’s right derived from a deed of agreement executed in its favour by a Quintin Cheng, the sole distributor of Chin Chun Su in the Philippines, as authorised by the trademark owner Shun Yih Chemistry Factory of Taiwan (Decision 2003-20 of Inter Partes Case 3850 of the Bureau of Legal Affairs (BLA) of the Intellectual Property Office of the Philippines (IPOPHL)). 

This decision also showed that the authority to Quintin Cheng had been terminated. Summerville submitted evidence of its authorisation to register the trademark in its name from Shun Yih Chemistry Factory. On March 19 2003, the BLA ruled that Summerville was the rightful owner of the mark Chin Chun Su and denied the Elidad Kho’s application to register the mark.

Another case was decided by the Supreme Court between the same parties on March 19 2002 (GR No 115758). This was a civil action in which Elidad Kho sought an injunction and damages, relying on its copyright registration and trademark registration in the Supplemental Register for Chin Chun Su. 

After many contentious motions were filed, the Supreme Court ruled that Elidad Kho had no right to support its claim for the exclusive use of the trade name and container, since both are proper subjects of a trademark, and not copyright which is confined to literary and artistic works that are original. Since Elidad Kho had not proven that it has a clear right over the Chin Chun Su mark and container, there was no basis for the issuance of a final injunction.

Supreme Court decision

Case 213400 can be traced to a criminal complaint for unfair competition initiated by Summerville in which the Department of Justice (DOJ) found probable cause and filed the Information (criminal complaint) before the Regional Trial Court of Makati City (RTC). After the case had gone back and forth before the DOJ, RTC, Court of Appeals, and Supreme Court, the latter finally issued a Resolution ordering the case to be remanded to the RTC to independently evaluate its merits and to determine whether or not probable cause exists to hold Spouses Kho for trial.

The RTC Manila (Branch 46) issued an order finding that there is no probable cause to hold Spouses Kho for trial on the ground of unfair competition. It held that the accused Spouses Kho never deceived the public into believing that the facial cream products contained in a pink oval-shaped containers with a trademark of Chin Chun Su were the same as those being distributed by Summerville. 

The lower court also stated that Spouses Kho acted in good faith and without intent to deceive the public. The case was elevated to the Court of Appeals, which reversed the ruling of the lower court and

found that there was probable cause to bring Spouses Kho to trial. The case was then brought before the Supreme Court.

Supreme Court’s reasoning

The Supreme Court upheld the ruling of the Court of Appeals and found that the acts complained of constituted probable cause to charge Spouses Kho with unfair competition. Citing Section 168 of the IP Code on unfair competition, the Court listed the essential elements to hold a person liable for unfair competition

  • Confusing similarity in the general appearance of the goods; and

  • Intent to deceive the public and defraud a competitor.

In its decision, the Supreme Court stated that the “confusing similarity may or may not result from the similarity in the marks, but may result from other external factors in the packaging or presentation of the goods. The likelihood of confusion of goods or business is a relative concept, to be determined only according to the peculiar circumstances of each case. The element of intent to deceive and to defraud may be inferred from the similarity of the appearance of the goods as offered for sale to the public.”

The Supreme Court noted and established that the contending products are similar in the following respects: (i) both are medicated facial creams, (ii) both are contained in pink oval-shaped containers, and (iii) both bear the trademark Chin Chun Su. 

It further held that the fact that Spouses Kho declared the manufacturer’s name in its product did not change the fact that it is confusingly similar to that of Summerville’s product in the eyes of the buying public.

The Supreme Court finally determined that the general appearance of Spouses Kho’s products is confusingly similar to that of Summerville’s, and thus: “The acts complained of against them constituted the offence of unfair competition and probable cause exists to hold them for trial.” The saga continues.

 



Editha R Hechanova

President, Hechanova & Co

E: editharh@hechanova.com.ph


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