A. Intellectual Property Rights in General 1.

Differences between Copyrights, Trademarks and

Patent  Pearl & Dean (Philippines), Inc. vs. Shoemart, Inc., G.R. No. 148222, August 15, 2003
PEARL & DEAN (PHIL.), INCORPORATED, PETITIONER, -VERSUS- SHOEMART, INCORPORATED,
AND NORTH EDSA MARKETING, INCORPORATED, RESPONDENTS. G.R. No. 148222, THIRD
DIVISION, August 15, 2003, CORONA, J. Petitioner P & D’s alleged that SMI infringed on its
copyright over the light boxes when SMI had the units manufactured by Metro and EYD
Rainbow Advertising for its own account. SMI denied the charges and maintained that it
independently developed its poster panels using commonly known techniques and available
technology, without notice of or reference to Pearl and Dean’s copyright. The Supreme Court
held that P & D secured its copyright under the classification class "O" work. This being so,
petitioner’s copyright protection extended only to the technical drawings and not to the light
box itself because the latter was not at all in the category of "prints, pictorial illustrations,
advertising copies, labels, tags and box wraps." Stated otherwise, even as we find that P & D
indeed owned a valid copyright, the same could have referred only to the technical drawings
within the category of "pictorial illustrations." It could not have possibly stretched out to include
the underlying light box. The strict application of the law’s enumeration in Section 2 prevents us
from giving petitioner even a little leeway, that is, even if its copyright certificate was entitled
"Advertising Display Units." What the law does not include, it excludes, and for the good reason:
the light box was not a literary or artistic piece which could be copyrighted under the copyright
law. And no less clearly, neither could the lack of statutory authority to make the light box
copyrightable be remedied by the simplistic act of entitling the copyright certificate issued by
the National Library as "Advertising Display Units." FACTS Trademark, copyright and patents are
different intellectual property rights that cannot be interchanged with one another. A trademark
is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of
an enterprise and shall include a stamped or marked container of goods. In relation thereto, a
trade name means the name or designation identifying or distinguishing an enterprise.
Meanwhile, the scope of a copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the moment of their
creation. Patentable inventions, on the other hand, refer to any technical solution of a problem
in any field of human activity which is new, involves an inventive step and is industrially
applicable. Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the
manufacture of advertising display units simply referred to as light boxes. These units utilize
specially printed posters sandwiched between plastic sheets and illuminated with back lights.
Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981
over these illuminated display units. The advertising light boxes were marketed under the
trademark "Poster Ads". The application for registration of the trademark was filed with the
Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved
only on September 12, 1988, per 7 DEAN’S CIRCLE 2019 – UST FACULTY OF CIVIL LAW
Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of
Metro Industrial Services to manufacture its advertising displays. Sometime in 1985, Pearl and
Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of
the light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that
time, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed.
However, SMI did not sign the contract for SM Cubao and rescinded the contract for SM Makati
due to non-performance of the terms thereof. Vergara protested the unilateral action of SMI,
saying it was without basis. In the same letter, he pushed for the signing of the contract for SM
Cubao. Two years later, Metro Industrial Services, the company formerly contracted by Pearl
and Dean to fabricate its display units, offered to construct light boxes for SMI’s chain of stores.
SMI approved the proposal and ten (10) light boxes were subsequently fabricated by Metro
Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the
services of EYD Rainbow Advertising Corporation to make the light boxes. Some 300 units were
fabricated in 1991. These were delivered on a staggered basis and installed at SM Megamall and
SM City. Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes
were installed at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl and
Dean found out that aside from the two (2) reported SM branches, light boxes similar to those it
manufactures were also installed in two (2) other SM stores. It further discovered that
defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots
Marketing Services, was set up primarily to sell advertising space in lighted display units located
in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI. Pearl
and Dean sent a letter to both SMI and NEMI enjoining them to cease using the subject light
boxes and to remove the same from SMI’s establishments. It also demanded the discontinued
use of the trademark "Poster Ads," and the payment to Pearl and Dean of compensatory
damages in the amount of P20, 000,000.00. Upon receipt of the demand letter, SMI suspended
the leasing of 224 light boxes and NEMI took down its advertisements for "Poster Ads" from the
lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet all its
demands, Pearl and Dean filed this instant case for infringement of trademark and copyright,
unfair competition and damages. SMI denied the charges and maintained that it independently
developed its poster panels using commonly known techniques and available technology,
without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of
the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like.
Besides, according to SMI, the word "Poster Ads" is a generic term which cannot be
appropriated as a trademark, and, as such, registration of such mark is invalid. NEMI, for its
part, denied having manufactured, installed or used any advertising display units, nor having
engaged in the business of advertising. The RTC of Makati City decided in favor of P & D and
found defendants SMI and NEMI jointly and severally liable for infringement of copyright and
was directed to pay for damages. However, the Court of Appeals reversed the trial court and
ruled that “since the light boxes cannot, by any stretch of the imagination, be considered as
either prints, pictorial illustrations, advertising 8 DEAN’S CIRCLE 2019 – UST FACULTY OF CIVIL
LAW copies, labels, tags or box wraps, to be properly classified as a copyrightable class "O"
work, we have to agree with SMI when it posited that what was copyrighted were the technical
drawings only, and not the light boxes themselves”. Dissatisfied with the above decision,
petitioner P & D filed this instant petition. ISSUES 1. Whether or not SMI and NEMI should be
held liable for copyright infringement? (NO) 2. Whether or not there was patent infringement?
(NO) RULING 1. ON THE ISSUE OF COPYRIGHT INFRINGEMENT Petitioner P & D’s complaint was
that SMI infringed on its copyright over the light boxes when SMI had the units manufactured
by Metro and EYD Rainbow Advertising for its own account. Obviously, petitioner’s position was
premised on its belief that its copyright over the engineering drawings extended ipso facto to
the light boxes depicted or illustrated in said drawings. In ruling that there was no copyright
infringement, the Court of Appeals held that the copyright was limited to the drawings alone
and not to the light box itself. We agree with the appellate court. Copyright, in the strict sense
of the term, is purely a statutory right. Being a mere statutory grant, the rights are limited to
what the statute confers. It may be obtained and enjoyed only with respect to the subjects and
by the persons, and on terms and conditions specified in the statute. Accordingly, it can cover
only the works falling within the statutory enumeration or description. P & D secured its
copyright under the classification class "O" work. This being so, petitioner’s copyright protection
extended only to the technical drawings and not to the light box itself because the latter was
not at all in the category of "prints, pictorial illustrations, advertising copies, labels, tags and box
wraps." Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same
could have referred only to the technical drawings within the category of "pictorial illustrations."
It could not have possibly stretched out to include the underlying light box. The strict
application of the law’s enumeration in Section 2 prevents us from giving petitioner even a little
leeway, that is, even if its copyright certificate was entitled "Advertising Display Units." What the
law does not include, it excludes, and for the good reason: the light box was not a literary or
artistic piece which could be copyrighted under the copyright law. And no less clearly, neither
could the lack of statutory authority to make the light box copyrightable be remedied by the
simplistic act of entitling the copyright certificate issued by the National Library as "Advertising
Display Units." In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the
public without license from P & D, then no doubt they would have been guilty of copyright
infringement. But this was not the case. SMI’s and NEMI’s acts complained of by P & D were to
have units similar or identical to the light box illustrated in the technical drawings manufactured
by Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this an
infringement of petitioner’s copyright over the technical drawings? We do not think so. 9
DEAN’S CIRCLE 2019 – UST FACULTY OF CIVIL LAW During the trial, the president of P & D
himself admitted that the light box was neither a literary not an artistic work but an
"engineering or marketing invention." Obviously, there appeared to be some confusion
regarding what ought or ought not to be the proper subjects of copyrights, patents and
trademarks. In the leading case of Kho vs. Court of Appeals, we ruled that these three legal
rights are completely distinct and separate from one another, and the protection afforded by
one cannot be used interchangeably to cover items or works that exclusively pertain to the
others: Trademark, copyright and patents are different intellectual property rights that cannot
be interchanged with one another. A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to
literary and artistic works which are original intellectual creations in the literary and artistic
domain protected from the moment of their creation. Patentable inventions, on the other hand,
refer to any technical solution of a problem in any field of human activity which is new, involves
an inventive step and is industrially applicable. 2. ON THE ISSUE OF PATENT INFRINGEMENT For
some reason or another, petitioner never secured a patent for the light boxes. It therefore
acquired no patent rights which could have protected its invention, if in fact it really was. And
because it had no patent, petitioner could not legally prevent anyone from manufacturing or
commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals, we
held that "there can be no infringement of a patent until a patent has been issued, since
whatever right one has to the invention covered by the patent arises alone from the grant of
patent. He has the right to make use of and vend his invention, but if he voluntarily discloses it,
such as by offering it for sale, the world is free to copy and use it with impunity. A patent,
however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive
right of making, selling or using the invention. On the assumption that petitioner’s advertising
units were patentable inventions, petitioner revealed them fully to the public by submitting the
engineering drawings thereof to the National Library. To be able to effectively and legally
preclude others from copying and profiting from the invention, a patent is a primordial
requirement. No patent, no protection. The ultimate goal of a patent system is to bring new
designs and technologies into the public domain through disclosure. Ideas, once disclosed to
the public without the protection of a valid patent, are subject to appropriation without
significant restraint. On one side of the coin is the public which will benefit from new ideas; on
the other are the inventors who must be protected. As held in Bauer & Cie vs. O’Donnell "The
act secured to the inventor the exclusive right to make use, and vend the thing patented, and
consequently to prevent others from exercising like privileges without the consent of the
patentee. It was passed for the purpose of encouraging useful invention and promoting new
and useful inventions by the protection and stimulation given to inventive genius, and was
intended to secure to the public, after the lapse of the exclusive privileges granted the benefit
of such inventions and improvements." The law attempts to strike an ideal balance between the
two interests: 10 DEAN’S CIRCLE 2019 – UST FACULTY OF CIVIL LAW "The patent system thus
embodies a carefully crafted bargain for encouraging the creation and disclosure of new useful
and non-obvious advances in technology and design, in return for the exclusive right to practice
the invention for a number of years. The inventor may keep his invention secret and reap its
fruits indefinitely. In consideration of its disclosure and the consequent benefit to the
community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but
upon the expiration of that period, the knowledge of the invention inures to the people, who
are thus enabled to practice it and profit by its use." The patent law has a three-fold purpose:
"first, patent law seeks to foster and reward invention; second, it promotes disclosures of
inventions to stimulate further innovation and to permit the public to practice the invention
once the patent expires; third, the stringent requirements for patent protection seek to ensure
that ideas in the public domain remain there for the free use of the public." It is only after an
exhaustive examination by the patent office that a patent is issued. Such an in-depth
investigation is required because "in rewarding a useful invention, the rights and welfare of the
community must be fairly dealt with and effectively guarded. To that end, the prerequisites to
obtaining a patent are strictly observed and when a patent is issued, the limitations on its
exercise are equally strictly enforced. To begin with, a genuine invention or discovery must be
demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid
on each slight technological advance in art."19 There is no such scrutiny in the case of
copyrights nor any notice published before its grant to the effect that a person is claiming the
creation of a work. The law confers the copyright from the moment of creation and the
copyright certificate is issued upon registration with the National Library of a sworn ex-parte
claim of creation. Therefore, not having gone through the arduous examination for patents, the
petitioner cannot exclude others from the manufacture, sale or commercial use of the light
boxes on the sole basis of its copyright certificate over the technical drawings. Stated otherwise,
what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to
scrutinize the light box’s eligibility as a patentable invention. The irony here is that, had
petitioner secured a patent instead, its exclusivity would have been for 17 years only. But
through the simplified procedure of copyright-registration with the National Library — without
undergoing the rigor of defending the patentability of its invention before the IPO and the
public — the petitioner would be protected for 50 years. This situation could not have been the
intention of the law. The difference between the two things, letters patent and copyright, may
be illustrated by reference to the subjects just enumerated. Take the case of medicines. Certain
mixtures are found to be of great value in the healing art. If the discoverer writes and publishes
a book on the subject (as regular physicians generally do), he gains no exclusive right to the
manufacture and sale of the medicine; he gives that to the public. If he desires to acquire such
exclusive right, he must obtain a patent for the mixture as a new art, manufacture or
composition of matter. He may copyright his book, if he pleases; but that only secures to him
the exclusive right of printing and publishing his book. So of all other inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it may
contain, gives no exclusive right to the modes of drawing described, though they may never
have 11 DEAN’S CIRCLE 2019 – UST FACULTY OF CIVIL LAW been known or used before. By
publishing the book without getting a patent for the art, the latter is given to the public. Now,
whilst no one has a right to print or publish his book, or any material part thereof, as a book
intended to convey instruction in the art, any person may practice and use the art itself which
he has described and illustrated therein. The use of the art is a totally different thing from a
publication of the book explaining it. The copyright of a book on bookkeeping cannot secure the
exclusive right to make, sell and use account books prepared upon the plan set forth in such
book. Whether the art might or might not have been patented, is a question, which is not
before us. It was not patented, and is open and free to the use of the public. And, of course, in
using the art, the ruled lines and headings of accounts must necessarily be used as incident to
it. The plausibility of the claim put forward by the complainant in this case arises from a
confusion of ideas produced by the peculiar nature of the art described in the books, which
have been made the subject of copyright. In describing the art, the illustrations and diagrams
employed happened to correspond more closely than usual with the actual work performed by
the operator who uses the art. The description of the art in a book, though entitled to the
benefit of copyright, lays no foundation for an exclusive claim to the art itself. The object of the
one is explanation; the object of the other is use. The former may be secured by copyright. The
latter can only be secured, if it can be secured at all, by letters patent." B. Patents 6. Patentable
Inventions  Jessie Ching vs. William Salinas, et. al., G.R. No. 161295, June 29, 2005