REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS

AEC 12 FINALS POINTERS

What is the name of the Philippine law on

intellectual property? How is infringement of patent committed? Sec. 76.1 IPL Is there a
penalty of imprisonment? Sec. 84
 INTELLECTUAL PROPERTY CODE OF THE
PHILIPPINES Sec. 76. Civil Action for Infringement.
[Republic Act No. 8293, as amended up to R.A. 76.1. The making, using, offering for sale, selling, or
10372] importing a patented product or a product obtained
directly or indirectly from a patented process, or the
Article II Sec. 2 of the Constitution provides in part: “The use of a patented process without the authorization
Philippines xxx, adopts the generally accepted principles of of the patentee constitutes patent infringement;
international law as part of the law of the land and adheres to the Provided, That, this shall not apply to instances
policy of peace, equality, justice, freedom, cooperation and amity
covered by Sections 72.1 and 72.4 (Limitations of
with all nations.” eSec. 3 IPL
Patent Rights); Section 74 (Use of Invention by
Sec. 3. International Conventions and Reciprocity. Government); Section 93.6 (Compulsory Licensing);
Any person who is a national or who is domiciled and Section 93-A (Procedures on Issuance of a
or has a real and effective industrial establishment in Special Compulsory License under the TRIPS
a country which is a party to any convention, treaty Agreement) of this Code.
or agreement relating to intellectual property rights
or the repression of unfair competition, to which the Sec. 84. Criminal Action for Repetition of
Philippines is also a party, or extends reciprocal Infringement
rights to nationals of the Philippines by law, shall be If infringement is repeated by the infringer or by
entitled to benefits to the extent necessary to give anyone in connivance with him after finality of the
effect to any provision of such convention, treaty or judgment of the court against the infringer, the
reciprocal law, in addition to the rights to which any offenders shall, without prejudice to the institution of
owner of an intellectual property right is otherwise a civil action for damages, be criminally liable
entitled by this Act. (n) therefor and, upon conviction, shall suffer
imprisonment for the period of not less than six 6)
months but not more than three (3) years and/or a
Three-fold purposes of the patent law? Page 463 textbook
fine of not less than One hundred thousand pesos
The patent law has a three-fold purpose: (P100,000) but not more than Three hundred
1. first, patent law seeks to foster and reward thousand pesos (P300,000), at the discretion of the
invention; court. The criminal action herein provided shall
2. second, it promotes disclosures of inventions to prescribed in three (3) years from date of the
stimulate further innovation and to permit the commission of the crime. (Sec. 48, R. A. No. 165a)
public to practice the invention once the patent
expires;
3. third, the stringent requirements for patent Sec. 123.1(a)
protection seek to ensure that ideas in the public
domain remain there for the free use of the 123.1. A mark cannot be registered if it:
public." (a) Consists of immoral, deceptive or scandalous
matter, or matter which may disparage or falsely
suggest a connection with persons, living or dead,
Rights conferred by a Patent to its owner? Sec. 71.1 and .2, IPL institutions, beliefs, or national symbols, or bring
them into contempt or disrepute;
Sec. 71. Rights Conferred by Patent.
71.1. A patent shall confer on its owner the following (b) Consists of the flag or coat of arms or other insignia of
exclusive rights: the Philippines or any of its political subdivisions, or of
(a) Where the subject matter of a patent is a product) any foreign nation, or any simulation thereof;
to restrain, prohibit and prevent any (c) Consists of a name, portrait or signature identifying a
unauthorized person or entity from making, particular living individual except by his written
consent, or the name, signature, or portrait of a
using, offering for sale, selling or importing that
deceased President of the Philippines, during the life
product; of his widow, if any, except by written consent of the
(b) Where the subject matter of a patent is a process, widow;
to restrain, prevent or prohibit any unauthorized
person or entity from using the process, and from
manufacturing, dealing in, using, selling or
offering for sale, or importing any product
obtained directly or indirectly from such process.
71.2. Patent owners shall also have the right to
assign, or transfer by succession the patent, and to
conclude licensing contracts for the same. (Sec. 37, R.
A. No. 165a)

AEC 12 REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS JEM/BSMA-B

Dominancy test works to determine a likelihood of confusion In determining whether the use made of a work
between two trademarks subject of an infringement case. P. 629, in any particular case is fair use, the factors to be
681
considered shall include:
P. 629 (a) The purpose and character of the use, including
In determining similarity and likelihood of whether such use is of a commercial nature or is
confusion, jurisprudence has developed two tests: the for non-profit education purposes;
dominancy test, and the holistic or totality test. (b) The nature of the copyrighted work;
(c) The amount and substantiality of the portion
On one hand, the dominancy test focuses on used in relation to the copyrighted work as a
"the similarity of the prevalent or dominant features whole; and
of the competing trademarks that might cause (d) The effect of the use upon the potential market
confusion, mistake, and deception in the mind of the for or value of the copyrighted work.
purchasing public. Duplication or imitation is not
necessary; neither is it required that the mark sought Sec. 216. Infringement
to be registered suggests an effort to imitate. Given A person infringes a right protected under this Act
more consideration are the aural and visual when one:
impressions created by the marks on the buyers of (a) Directly commits an infringement;
goods, giving little weight to factors like prices, (b) Benefits from the infringing activity of another
quality, sales outlets, and market segments. " person who commits an infringement if the
person benefitting has been given notice of the
On the other hand, the holistic or totality test infringing activity and has the right and ability to
necessitates a "consideration of the entirety of the marks control the activities of the other person;
as applied to the products, including the labels and (c) With knowledge of infringing activity, induces,
packaging, in determining confusing similarity. The causes or materially contributes to the infringing
discerning eye of the observer must focus not only on the conduct of another. (As amended by R.A. No.
predominant words, but also on the other features 10372)
appearing on both labels so that the observer may draw
conclusion on whether one is confusingly similar to the
other."
Liability of persons guilty of Infringement of trademark Sec. 155

Sec. 155. Remedies; Infringement,

Pg. 681 Any person who shall, without the consent of the
The Dominancy Test focuses on the similarity of owner of the registered mark:
the prevalent features of the competing trademarks
which might cause confusion or deception, and thus 155.1. Use in commerce any reproduction,
infringement. If the competing trademark contains counterfeit, copy, or colorable imitation of a
the main, essential or dominant features of another, registered mark or the same container or a dominant
and confusion or deception is likely to result, feature thereof in connection with the sale, offering
infringement takes place. Duplication or imitation is for sale, distribution, advertising of any goods or
not necessary; nor is it necessary that the infringing services including other preparatory steps necessary
label should suggest an effort to imitate. The question to carry out the sale of any goods or services on or in
is whether the use of the marks involved is likely to connection with which such use is likely to cause
cause confusion or mistake in the mind of the public confusion, or to cause mistake, or to deceive; or
or deceive purchasers.
155.2. Reproduce, counterfeit, copy or colorably
imitate a registered mark or a dominant feature
Sec. 185. Fair Use Sec. 216, thereof and apply such reproduction, counterfeit,
copy or colorable imitation to labels, signs, prints,
Sec. 185. Fair Use of a Copyrighted Work.
packages, wrappers, receptacles or advertisements
185.1. The fair use of a copyrighted work for
intended to be used in commerce upon or in
criticism, comment, news reporting, teaching
connection with the sale, offering for sale,
including limited copies for classroom use,
distribution, or advertising of goods or services on or
scholarship, research, and similar purposes is not an
in connection with which such use is likely to cause
infringement of copyright. Decompilation, which is
confusion, or to cause mistake, or to deceive, shall be
understood here to be the reproduction of the code
liable in a civil action for infringement by the
and translation of the forms of the computer program
registrant for the remedies hereinafter set forth:
to achieve the inter-operability of an independently
Provided, That the infringement takes place at the
created computer program with other programs may
moment any of the acts stated in Subsection 155.1 or
also constitute fair use under the criteria established
this subsection are committed regardless of whether
by this section, to the extent that such decompilation
there is actual sale of goods or services using the
is done for the purpose of obtaining the information
infringing material. (Sec. 22, R. A. No 166a)
necessary to achieve such interoperability.

AEC 12 REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS JEM/BSMA-B

 Trademark dilution p. 605
Provided, further, That the aggregate of the
WHAT IS TRADEMARK DILUTION?
interest of each co-owner over several joint accounts,
Trademark dilution is the lessening of the
whether owned by the same or different
capacity of a famous mark to identify and distinguish
combinations of individuals, juridical persons or
goods or services, regardless of the presence or
entities, shall likewise be subject to the maximum
absence of:
insured deposit:
1) competition between the owner of the
Provided, furthermore, That the provisions of any
famousmark and other parties; or
law to the contrary notwithstanding, no
2) likelihood of confusion, mistake or deception.
owner/holder of any passbook, certificate of deposit
Subject to the principles of equity, the owner of a
or other evidence of deposit shall be recognized as a
famous mark is entitled to an injunction "against
depositor entitled to the rights provided in this Act
another person's commercial use in commerce of a
unless the passbook, certificate of deposit or other
mark or trade name, if such use begins after the mark
evidence of deposit is determined by the Corporation
has become famous and causes dilution of the
to be an authentic document or record of the issuing
distinctive quality of the mark." This is intended to
bank.
protect famous marks from subsequent uses that blur
distinctiveness of the mark or tarnish or disparage it.
In case a condition occurs that threatens the
monetary and financial stability of the banking
Unfair Competition committed by way of passing off or palming system that may have systemic consequences, as
off his goods as that of another? Sec. 168 defined in Section 22 hereof, and as determined by
the Monetary Board, the maximum deposit insurance
WHAT IS PASSING OFF (PALMING OFF)? cover may be adjusted in such amount, for such a
Passing off (or palming off) takes place where the period, and/or for such deposit products, as may be
defendant, by imitative devices on the general determined by a unanimous vote of the Board of
appearance of the goods, misleads prospective Directors in a meeting called for the purpose and
purchasers into buying his merchandise under the chaired by the Governor of the Bangko Sentral ng
impression that they are buying that of his Pilipinas or the designated alternate, subject to the
competitors. Thus, the defendant gives his goods the approval of the President of the Philippines.
general appearance of the goods of his competitor
with the intention of deceiving the public that the The Board of Directors may increase the amount
goods are those of his competitor. of the maximum deposit insurance coverage to an
amount indexed to inflation or in consideration of
other economic indicators as may be deemed
Joint Accounts of Individuals with Juridical Entities Sec 5(k) R.A
appropriate by the Board. The Board of Directors
3951 (PDIC) Ai Copy Shop
shall review the amount of the maximum deposit
Sec 5. (k) insurance coverage every three (3) years and
The term insured deposit means the amount due increase the maximum deposit insurance coverage as
to any bona fide depositor for legitimate deposits in may be warranted. In the exercise of this authority,
an insured bank as of the date of closure but not to the Board may consider economic indicators other
exceed Five Hundred Thousand Pesos (P500,000.00). than inflation. For this purpose, the Board may hire
Such amount shall be determined according to such the services of independent actuarial consultants and
regulations as the Board of Directors may prescribe. other experts to determine the feasibility and
In determining such amount due to any depositor, advisability of increasing the maximum deposit
there shall be added together all deposits in the bank insurance coverage.
maintained in the same right and capacity for his or
her benefit either in his or her own name or in the
name of others. A joint account regardless of whether Confusion of goods/products vs. confusion of business/origin thp.
the conjunction "and," "or," "and/or" is used, shall be P.p. 620
insured separately from any individually-owned
Confusion of goods/products vs. confusion of
deposit account:
business/origin
Provided, That
(1) if the account is held jointly by two or more The concept of confusion, which is at the heart of
natural persons, or by two or more juridical the proscription, could either refer to confusion of
persons or entities, the maximum insured deposit goods or confusion business.
shall be divided into as many equal shares as
there are individuals, juridical persons or entities, Relative to the question on confusion of marks
unless a different sharing is stipulated in the and trade names, jurisprudence has noted two (2)
document of deposit, and types of confusion, viz.:
(2) if the account is held by a juridical person or
entity jointly with one or more natural persons, (1) confusion of goods (product confusion)
the maximum insured deposit shall be presumed where the ordinarily prudent purchaser would be
to belong entirely to such juridical person or induced to purchase one product in the belief that
entity: he was purchasing the other; and
AEC 12 REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS JEM/BSMA-B
(2) confusion of business (source or origin any given case. However, recent case law on trademark
confusion) seems to indicate an overwhelming judicial preference
where, although the goods of the parties are towards applying the dominancy test.
different, the product, the mark of which The SECOND CONDITION of the proscription requires
registration is applied for by one party, is such as that the prospective mark pertains to goods or services
might reasonably be assumed to originate with that are either identical, similar or related to the goods or
the registrant of an earlier product, and the services represented by the earlier mark. Related goods
public would then be deceived either into that and services are those that, though non-identical or non-
belief or into the belief that there is some similar, are so logically connected to each other that they
connection between the two parties, though may reasonably be assumed to originate from one
manufacturer or from economically-linked manufacturers.
inexistent.
In determining whether goods or services are related,
Confusion, in either of its forms, is, thus, only possible several factors may be considered. Some of those factors
when the goods or services covered by allegedly similar recognized in our jurisprudence are:
marks are identical, similar or related in some manner.
1. the business (and its location) to which the goods
Verily, to fall under the ambit of Sec. 123. I(d)(iii) and belong;
be regarded as likely to deceive or cause confusion upon 2. the class of product to which the goods belong;
the purchasing public, a prospective mark must be shown 3. the product's quality, quantity, or size, including the
to meet two (2) minimum conditions: nature of the package, wrapper or container;
4. the nature and cost of the articles;
1. The prospective mark must nearly resemble or be 5. the descriptive properties, physical attributes or
similar to an earlier mark; and essential characteristics with reference to their form,
composition, texture or quality;
2. The prospective mark must pertain to goods or
6. the purpose of the goods;
services that are either identical, similar or related
7. whether the article is bought for immediate
to the goods or services represented by the earlier
consumption, that is, day-to-day household items;
mark.
8. the fields of manufacture;
The FIRST CONDITION of the proscription requires 9. the conditions under which the article is usually
resemblance or similarity between a prospective mark and purchased, and
an earlier mark. Similarity does not mean absolute identity 10. the channels of trade through which the goods flow,
of marks. To be regarded as similar to an earlier mark, it is how they are distributed, marketed, displayed and
enough that a prospective mark be a colorable imitation of sold.
the former. Colorable imitation denotes such likeness in
form, content, words, sound, meaning, special
arrangement or general appearance of one mark with Maximum amount of insured deposit.. Sec 5(k) R.A 3951 (PDIC)
respect to another as would likely mislead an average
buyer in the ordinary course of purchase. Sec 5. (k)
The term insured deposit means the amount due to
In determining whether there is similarity or any bona fide depositor for legitimate deposits in an
colorable imitation between two marks, authorities insured bank as of the date of closure but not to
employ either the dominancy test or the holistic test.
exceed Five Hundred Thousand Pesos
The Dominancy Test focuses on the similarity of the (P500,000.00). Such amount shall be determined
prevalent features of the competing trademarks which according to such regulations as the Board of
might cause confusion or deception, and thus Directors may prescribe. In determining such amount
infringement. If the competing trademark contains the due to any depositor, there shall be added together all
main, essential or dominant features of another, and deposits in the bank maintained in the same right and
confusion or deception is likely to result, infringement
capacity for his or her benefit either in his or her own
takes place. Duplication or imitation is not necessary; nor
is it necessary that the infringing label should suggest an
name or in the name of others.
effort to imitate. The question is whether the use of the
marks involved is likely to cause confusion or mistake in
the mind of the public or deceive purchasers.
Laban!
On the other hand, the Holistic Test requires that the
entirety of the marks in question be considered in
resolving confusing similarity, Comparison of words is not
the only determining factor. The trademarks in their
entirety as they appear in their respective labels or hang
tags must also be considered in relation to the goods to
which they are attached. The discerning eye of the
observer must focus not only on the predominant words
but also on the other features appearing in both labels in
order that he may draw his conclusion whether one is
confusingly similar to the other. There are currently no
fixed rules as to which of the two tests can be applied in
AEC 12 REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS JEM/BSMA-B