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Philippines – Harvard University Knocks The Pants Off Local Company

hardward_universityOne of the earliest laws in the Philippines involving trademark rights is Act No. 666 (Trademark and Trade Name Law of the Philippine Islands) which took effect on March 6, 1903. This system favoured actual use of a mark as the basis for registration. In 1946, while the Philippines was a territory of the United States, this law was repealed by Republic Act No. 166 (Trademarks Law) which followed the same first-to-use principle.

However, in 1998, when the Philippines consolidated its intellectual property rights laws to comply with its World Trade Organization obligations, it abandoned the first-to-use principle and changed its IP regime to the first-to-file principle. With bated breath, many looked forward to how the shift in trademark registration systems would impact Philippine jurisprudence; this is one such case.

Nonetheless, regardless of the system of registration being followed, one truth remains clear – that the right to register a trademark is based on ownership and when the applicant is not the owner, he has no right to register the mark.

FACTS OF THE CASE

New York Garments Manufacturing & Export Co, Inc (New York Garments) is the predecessor-in-interest of Fredco Manufacturing Corporation (Fredco). New York Garments first used the mark Harvard in the Philippines on January 2, 1982, for t-shirts, polo shirts, sandos (or tanktops), briefs, jackets and slacks. On the basis of its use in the Philippines, it filed a trademark application on July 24, 1985, for Class 25, which matured into registration on December 12, 1988. Said registration, however, was cancelled on July 30, 1988, when Fredco failed to file the 5th Year Declaration of Actual Use. Meantime, Fredco was formed and registered with the Securities and Exchange Commission in November 9, 1995, and had since handled the manufacture, promotion and marketing of Harvard clothing articles.

Harvard University, on the other hand, was issued Registration No. 56561 on November 25, 1993, for the mark Harvard Veritas Shield Symbols for decals, tote bags, serving trays, sweatshirts, t-shirts, hats and flying discs under Classes 16, 18, 21, 25 and 28.

Harvard University discovered Fredco’s website www.harvard-usa.com through its international trademark watch program, which resulted in the filing of an administrative complaint for infringement and/or unfair competition in 2002.

In 2005, Fredco instituted an administrative action to cancel Harvard University’s registration on the basis of its earlier registration for Harvard. Fredco insists that the date of actual use in the Philippines should prevail on the issue of who has a better right to register the marks.

In its defense, Harvard University alleged that it is the lawful owner of the name and mark Harvard. And in fact, the mark is registered in numerous countries worldwide, including the Philippines.

Among the countries where Harvard University has registered its name and mark Harvard are China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Singapore, Taiwan, Thailand, the United States of America and the European Community.

It further alleged that the name and mark Harvard was adopted in 1639 as the name of Harvard College of Cambridge, Massachusetts, USA. The name and mark Harvard was used as early as 1872. Harvard University is over 350 years old and is a highly regarded institution of higher learning in the United States and throughout the world. Harvard University promotes, uses and advertises its name Harvard through various publications, services and products in foreign countries, including the Philippines. Its name and mark has been rated as one of the most famous brands in the world, valued between US$750 million and US$1 billion.

Decision of the Bureau of Legal Affairs, Intellectual Property Office

Acting on the cancellation action, a decision was rendered in favour of Fredco ordering the cancellation of Registration No. 56561 insofar as it included Class 25, thereby recognizing Fredco’s prior rights to the Harvard mark over clothing articles.

Decision of the Office of the Director General, Intellectual Property Office

Aggrieved, the case was brought on appeal to the Office of the Director General of the Intellectual Property Office who reversed the Decision of the Bureau of Legal Affairs and ruled that – “… more than the use of the trademarks in the Philippines, the applicant must be the owner of the mark sought to be registered… when the applicant is not the owner, he has no right to register the mark.”

It was also noted that the mark covered by Harvard University’s Registration No. 56561 is not only the word Harvard but also the logo, emblem or symbol of Harvard University. It further ruled that Fredco failed to explain how its predecessor, New York Garments, came up with the mark Harvard. In addition, there was no evidence that Fredco or New York Garments was licensed or authorized by Harvard University to use its name in commerce for any other use.

DECISION OF THE COURT OF APPEALS

Dissatisfied with the outcome of the decision, Fredco elevated the matter with the Court of Appeals only to be disappointed when the Court of Appeals affirmed the questioned decision. It ruled that Harvard University was able to substantiate that it had appropriated and used the marks Harvard and Harvard Veritas Shield Symbol in Class 25 far earlier than Fredco and its predecessor, New York Garments. The Court of Appeals also ruled that the records failed to disclose any explanation for Fredco’s use of the name and mark “Harvard” and the words “USA,” “Established in 1936” and “Cambridge, Massachusetts” within an oblong device, “US Legend” and “Europe’s No. 1 Brand.” The Court of Appeals also reiterated the ruling in the case of Shangri-La International Hotel Management Ltd. v. Developer’s Group of Companies, Inc in March 2006, citing “One who has imitated the trademark of another cannot bring an action for infringement, particularly against the owner of a mark, because he would be coming to court with unclean hands. Priority is of no avail to the bad faith plaintiff. Good faith is required in order to ensure that the second user may not merely take advantage of the goodwill established by the true owner.”

Decision of the Supreme Court

Haunted by the looming possibility of permanently losing its trademark, Fredco brought the matter on appeal to the Supreme Court, only to be frustrated by its final verdict. The Supreme Court, upon reviewing the antecedent facts, ruled in favour of Harvard University. This is the ruling in the case of Fredco Manufacturing Corporation v. President and Fellows of Harvard College (Harvard University), issued June 1, 2011.

In its decision, the Supreme Court recognized the different bases for which Fredco and Harvard University hinged their arguments. It stated that there is no dispute that the mark “Harvard” used by Fredco is the same as the mark “Harvard” in the “Harvard Veritas Shield Symbol” of Harvard University. It is also not disputed that Harvard University was named Harvard College in 1639 and that then, as now, Harvard University is located in Cambridge, Massachusetts, USA. It is also established that Harvard University has been using the marks “Harvard” and “Harvard Veritas Shield symbol” for Class 25 goods in the United States since 1953. Further, there is no dispute that Harvard University has registered the name and mark “Harvard” in at least 50 countries. On the other hand, Fredco’s predecessor-in-interest, New York Garments, started using the mark “Harvard” in the Philippines only in 1982. New York Garments filed an application with the Philippine Patent Office in 1985 to register the mark “Harvard,” which was approved in 1988.

The Supreme Court cited two compelling reasons to support its decision:

“Firstly, Fredco’s registration of Harvard and its identification of origin as ‘Cambridge, Massachusetts’ falsely suggest that Fredco or its goods are connected with Harvard University which uses the same Harvard mark and is located at Cambridge, Massachusetts. Fredco’s registration of the mark HARVARD should not have been allowed because the Trademarks Law (Republic Act No. 166) prohibits the registration of a mark ‘which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs…’ Clearly, Fredco’s use of Harvard coupled with its claim of origin of Cambridge, Massachusetts obviously suggest a false connection with Harvard University.

It was also observed that Fredco does not have any affiliation or connection with Harvard University, or even with Cambridge, Massachusetts. Fredco, nor its predecessor-in-interest, New York Garments, was not established in 1936 nor in the USA as indicated by Fredco in its oblong logo. Fredco offered no explanation as to why it used the mark Harvard on its oblong logo with the words ‘Cambridge, Massachusetts,’ ‘Established in 1936’ and ‘USA.”’

Secondly, the Supreme Court noted in its decision that the Philippines and the United States are both signatories to the Paris Convention for the Protection of Industrial Property (Paris Convention) which obligates member countries to assure nationals of countries of the Paris Convention an effective protection against the violation of their intellectual property rights.

Sections 6bis and 8 of the Paris Convention provides:

ARTICLE 6bis

(i)The countries of the Union undertake either administratively if their legislation so permits or at the request of an interested party, to refuse or to cancel the registration of a trademark which constitutes a reproduction, imitation or translation, liable to create confusion or a mark considered by the competent authority of the countries as being already the mark of a person entitled to the benefits of the present Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith.

ARTICLE 8

A trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of a trademark.

As such, “the Philippines is obliged to assure nationals of countries of the Paris Convention that they are afforded an effective protection against violations of intellectual property rights in the Philippines in the same way that their own countries are obligated to accord similar protection to Philippine nationals.”

Moreover, a trade name of a national of a state that is a party to the Paris Convention, whether or not the trade name forms part of a trademark, is protected “without the obligation of filing or registration.” The Supreme Court went on further to state that “‘Harvard’ is the trade name of the world famous Harvard University, and it is also a trademark of Harvard University. Harvard University is entitled to protection in the Philippines of its trade name ‘Harvard’ even without registration in the Philippines. This means that no educational entity in the Philippines can use the trade name ‘Harvard’ without the consent of Harvard University. Likewise, no entity in the Philippine can claim, expressly or impliedly through the use of the name and mark ‘Harvard,’ that its products or services are authorized, approved or licensed by, or sourced from, Harvard University without the latter’s consent.

Considering that the rights and protection afforded by Section 6bis of the Paris Convention attaches to internationally well-known marks, the Supreme Court then proceeded to discuss the criteria for establishing an internationally well-known mark. It stated that “the power to determine whether a trademark is well-known lies in the competent authority of the county of registration or use… it can either be the registering authority, if it has the power to decide this, or the courts of the country in question if the issue comes before the courts.”

Article 6bis of the Paris Convention has been administratively implemented in the Philippines through two directives of the then-Ministry (now Department) of Trade, which directives were upheld by the court in several cases: Mirpuri v. Court of Appeals (1999); Puma Sportschufabriken Rudolf Dassler, KG v. IAC (1988); and, La Chemise Lacoste, SA v. Hon Fernandez et al (1984).

As stated in Section 123.1(e) of Republic Act No. 8293 (the Intellectual Property Code), Rule 102 of the Trademark Rules and Regulations and Sehwani, Incorporated v. In-N-Out Burger, Inc, an internationally well-known mark, to claim the benefits of protection, need not be registered or used in Philippines. In determining whether a mark is well-known, the following criteria or a combination thereof may be taken into account:

(a) The duration, extent and geographical area of any use of the mark, in particular, the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods and/or services to which the mark applies

(b) The market share, in the Philippines and in other countries, of the goods and/or services to which the mark applies

(c) The degree of the inherent or acquired distinction of the mark

(d) The quality-image or reputation acquired by the mark

(e) The extent to which the mark has been registered in the world

(f) The exclusivity of registration attained by the mark in the world

(g) The extent to which the mark has been used in the world

(h) The exclusivity of use attained by the mark in the world

(i) The commercial value attributed to the mark in the world

(j) The record of successful protection of the rights in the mark

(k) The outcome of litigations dealing with the issue of whether the mark is a well-known mark and

(l) The presence or absence of identical or similar marks validly registered for or used on identical or similar goods or services and owned by persons other than the person claiming that his mark is a well-known mark.

The Supreme Court declared that since “any combination” of the foregoing criteria is sufficient to determine that a mark is well-known, it is clearly not necessary that a mark be used in commerce in the Philippines. Thus, while under the territoriality principle a mark must be used in commerce in the Philippine to be entitled to protection, internationally well-known marks are the exceptions to this rule.

Finally, the Supreme Court ruled that “there is no question then that ‘Harvard’ is a well-known name and mark not only in the United States but also internationally, including the Philippines. The mark ‘Harvard’ is rated as one of the most famous marks in the world. It has been registered in at least 50 countries. It has been used and promoted extensively in numerous publications worldwide. It has established a considerable goodwill worldwide since the founding of Harvard University more than 350 years ago. It is easily recognizable as the trade name and mark of Harvard University of Cambridge, Massachusetts, USA., internationally known as one of the leading educations institutions in the world. As such even before Harvard University applied for registration of the mark ‘Harvard’ in the Philippines, the mark was already protected under the Articles 6bis and Article 8 of the Paris Convention. Again, even without applying the Paris convention, Harvard University can invoke Section 4 (a) of RA No. 66 which prohibits the registration of a mark ‘which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs…'”

Conclusion

Copycats cannot prevail. This Decision shows the Philippines’ commitment to honour its obligations under international treatises and to provide an effective system of enforcement of intellectual property rights, more particularly to internationally well-known marks. As discussed above, marks that pass the criteria in determining well-known marks, are protected in the Philippines whether or not it is registered or used in Philippine commerce.

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