Philippines: No unfair competition in patent infringement

This is an action (IPV 10-2009-00007) for design patent infringement and unfair competition filed by Kawasaki Heavy Industries and Kawasaki Motors (Phils) Corp against Eastworld Motor Industries Corp. In April 2008, Kawasaki released its Fury 125 motorcycle, which bore its registered industrial designs (ID 3-2008-00715 and 3-2008-00718). Kawasaki later learned that Eastworld had manufactured and was selling motorcycles branded as Sapphire 125, which Kawasaki claimed bore and incorporated nearly all of Kawasaki's registered patent elements. Eastworld, on its part, alleged that contrary to Kawasaki's claims, the industrial design for Sapphire 125 is covered by the certificate of registration number 3-2009-000062 under its name, and that Kawasaki failed to file an adverse information to its design application when it was published. Thus, there can be no infringement for using and selling its own patented products.

The Bureau of Legal Affairs (BLA) of the IPOPHL issued decision number 2015-09 on June 15 2015, ruling that there is no patent infringement and finding in favour of Eastworld. The IP Code defines patent infringement as "the making, using, offering for sale, selling or importing a patented product or a product obtained directly or indirectly from a patented process or the use of a patented process without the authorization of the patentee constitutes patent infringement". According to the BLA, a crucial element of infringement is that the use of the design is without the authorisation of the registrant. Considering that Eastworld's Sapphire 125 is based on its own registered industrial design, it does not need authorisation from Kawasaki to produce and sell Sapphire 125. The BLA also noted that Kawasaki did not file a petition to cancel Eastworld's registration number 3-2009-000062. The invalidity of Eastworld's design registration should have been brought as a direct action for cancellation as provided under Article 120 of the IP Code.

Going into the substantive issue of whether Eastworld's design is the same as that of Kawasaki, the BLA noted that using the ordinary observer's test, the overall design of Sapphire 125 is not identical nor substantially similar to Kawasaki's Fury design: "the locations of the muffler, signal light and daylight lamp may be similar, but this aspect is generic. The ornamental designs of the gear indicator, speed meter design, location of the fuel cock, headlight, brake disk are not the same. The 'engine stop switch' is even absent in Sapphire 125. The design of the side cover bears the mark 'Motorstar' which distinguishes it instantly from the other motorcycles. The products in the instant case are motorcycles which consumers meticulously assess and compare with each other while keeping in mind that it has features or parts which although it appears to be similar are necessarily present because they serve or are necessitated by a technical function. As such, taking into consideration the contour, shape and holistic design, there is no identity of design." The comparison is shown in the photos.

On the issue of unfair competition, the BLA held that unfair competition cannot be applied in the case of patent infringement. Citing the Supreme Court's ruling in the case of Kenneth Roy Savage/K Angeline Export Trading v Judge Aproniano Taypin, which held: "There is evidently no mention of any crime of unfair competition involving design patents in the controlling provisions on Unfair Competition. It is therefore unclear whether the crime exists at all, for the enactment of RA 8293 did not result in the reenactment of Act 189 of the Revised Penal Code." Moreover, there was no bad faith on Eastworld's part and, as shown above, consumers can easily distinguish one product from the other.

Editha R Hechanova

Hechanova & Co., Inc.Chemphil Bldg.851 Antonio Arnaiz AvenueMakati City 1223, PhilippinesTel: (63) 2 812-6561Fax: (63) 2 888-4290editharh@hechanova.com.ph  www.hechanova.com.ph