December 2018 Newsletter
Ka-IP-han sa IPOPHL
IPOPHL held last February 28, 2018 the 1st 'Ka-IP-han sa IPOPHL' where the latest developments in intellectual property were tackled . During the dialogue, there were discussion of the upcoming celebration of the National IP Rights month in April.The IPO also gathered the comments on a wide range of issues including amendments to the IP Code, and the implementation of the National Intellectual Property Strategy (NIPS).
Among those who attended include Atty. Ric Manuel and Atty. Trinidad Villareal for IPAP, Atty. Lila Quirino for Asean IPA, Atty. Somera as APAA councilor. NIPS is the government’s main action plan in creating a robust intellectual property regime, with strategies proposed for regulation, administration, and enforcement of intellectual property.
IPR Month Celebration
Since 2017, April has been celebrated as the National Intellectual Property Month by virtue of Proclamation No. 190 signed in April 4, 2017. It coincides with worldwide IP events, such as the World Book and Copyright Day on April 23 and the World Intellectual Property Day on April 26.
Observance of intellectual property rights (IPR) became a month long celebration compared to the week-long IPR celebrations in October under Proclamation No. 79, series of 1992. It allowed a longer time to hold a series of programs and activities to educate various sectors of the public and raise appreciation for the relevance of IPRs.
The IPOPhil noted that respecting intellectual property entails more than just enforcement. It involves educating, encouraging and engaging the public to believe that a culture that respects IP can create an environment, in which IP can fulfill its role to promote creativity and innovation.
“Promoting a culture that respects intellectual property, one that provides fertile ground for innovation and creativity, is a compelling competitive advantage for the country that spurs economic development. While IPOPHL is at the forefront of this advocacy, creating a conducive atmosphere that respects IP can only come about through concerted efforts of all stakeholders from public and private sector and Filipino consumers,” IPOPHL Director General Josephine R. Santiago said in one of the events.
With the theme YAMANG-ISIP: Itaguyod Tungo sa Kaunlaran, IPAP co-organized with IPOPhil and University of the Philippines Alumni Association (UPAA) the activities held at the UP Bahay ng Alumni from April 17 to 19, 2018.
The opening event was graced by UP System President Danilo L. Concepcion and Vice Chancellor for Research and Development Dr. Fidel Nemenzo.
The event featured an exhibit on Filipino indigenous, literary, and visual arts, along with an On-the-spot sketching session by Filipino Portrait Artists Guild with Elora J. Españo as model.
Performers for music and dance include UP Singing Ambassadors, UP Kontemporaryong Gamelan Pilipino, Prof. Augusto Espino (piano), Prof. Ramon Acoymo, Ph.D.,( tenor) Ma. Alexa Torte & Marveen Ely Lozano, and Radzmina Tanjili (“Igal” Dance)
Several speakers discussed the importance of protection of intellectual property rights in their respective fields: Mr. Noel Cabangon and Mr. John Lesaca for music , Atty. Louie Calvario on copyright, Atty. Andrea Pasion-Flores for books and literature.
Use of a trademark over the internet is acceptable evidence for purposes of the DAU *
The use of a trademark through a website over the internet is sufficient evidence for use for the purposes of the Declaration of Actual Use (DAU).
This is the ruling of the Supreme Court in the recent case of W Land Holdings, Inc. (W Land) v. Starwood Hotels and Resorts Worldwide, Inc. (Starwood), G.R. No. 222366, December 04, 2017) which led to the dismissal of a cancellation case.
Starwood obtained the “W” trademark for Classes 43 and 44. Subsequently, W Land applied for the registration of its own "W" mark for Class 36 but was denied for being confusingly similar with Starwood’s prior “W” mark.
W Land would later go on to file a cancellation case against Starwood for the “W” mark, alleging non-use as the latter has no hotel or establishment in the Philippines. In its defense, Starwood claimed that it had been doing business in the Philippines through its subsidiaries and franchisees. Further, Starwood claimed it had interactive websites which advertised its services and facilitated reservations, bookings, and payments for potential clients worldwide, including the Philippines.
The Supreme Court ultimately ruled in favor of Starwood, acknowledging the “advent of commerce on the internet”. With modern technological advancements, the Court found that the internet was a powerful tool for today’s merchants to advertise and transact their wares and services, for both their own and the consumer’s convenience. With the use of the internet, the owner of a trademark displays such mark over his website to attract consumers to his goods or services. The Court recognized that such display of a trademark over a website serves no different function than the display of such a trademark in the physical market, which is to distinguish one proprietor’s goods or services from that of another. As such, proof of use of a trademark over the internet is recognized as acceptable evidence of use for purposes of the DAU.
This notion has already been recognized under written law, particularly under Rule 205 of the IRR on Trademarks which provide as acceptable evidence of use, among others, "downloaded pages from the website of the applicant or registrant clearly showing that the goods are being sold or the services are being rendered in the Philippines," as well as "for online sale, receipts of sale of the goods or services rendered or other similar evidence of use, showing that the goods are placed on the market or the services are available in the Philippines or that the transaction took place in the Philippines".
The Court however cautioned that mere display of a trademark in a website, without anything further, will not constitute as genuine use to be acceptable evidence for the DAU. It must be shown that the owner of a trademark actually transacted, or at the very least, intended to transact business with a particular territorial jurisdiction, in this case the Philippines, to be considered sufficient evidence of use.
In the case of Starwood, this was readily established as it was able to show that it owns Philippine registered domain names, i.e. www.whotels.ph, www.wreservations.ph, www.whotel.ph, www.wreservation.ph which displayed the “W” trademark. Further, it was shown that the websites were accessible by Philippine residents and citizens, and through such websites, they were able to make bookings and reservations with Starwood. Even further, Starwood’s websites also provided a Philippine local number, which consumers could reach for inquiries and other concerns. And finally, such websites were in English, a language which is commonly understood in the Philippines, and the prices displayed could be converted into Philippine Peso denominations. The Court found that all these taken together was sufficient to establish a discernable doing of business by Starwood in the Philippines through the use of such websites. As such, these websites which prominently displayed the subject “W” trademark constituted sufficient evidence of use for the purposes of the DAU.
The cancellation case was thus dismissed by the Court.
ARBITRABILITY OF INTELLECTUAL PROPERTY RIGHTS DISPUTES *
Arbitration is a mode of settling disputes between two parties who have agreed to submit their dispute for resolution by a third party whose decision in the form of an award is binding on the parties. As a form of contract, an arbitration agreement follows the autonomy principle embodied in Article 1306 of the Civil Code which states that parties are free to establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. The parties to an arbitration agreement, therefore, are free to stipulate which disputes they may submit to arbitration provided it is not contrary to law, etc.
Article 2035 in relation to Article 2043 of the Civil Code enumerates the matters that may be not the proper subject of arbitration. These are (a) the civil status of persons, (b) the validity of marriage or legal separation, (c) any ground for legal separation, (d) future support, (e) the jurisdiction of courts, and (f) future legitime. Section 6 of the Alternative Dispute Resolution Act (“ADR Law”)1 added the following: (g) labor disputes, (h) criminal liability, and (i) those which by law may not be compromised. In the case of criminal liability, it is understandable that the rationale for this is that the State has reserved unto itself the sole power and authority to pass judgment on persons who stand accused of committing a criminal violation. In the case of issues affecting marriage, Article 2 of the Family Code is explicit in characterizing marriage as an inviolable social institution whose nature, consequences, and incidents are governed by law and not subject to stipulation, save those pertaining to property relations of the spouses. Interestingly, the all-encompassing clause “those which by law may not be compromised” actually refers to Article 2035 of the Civil Code. The reference of Section 6 of the ADR Law to “labor disputes” is in fact a reiteration of Section 3 of the Arbitration Law.2
1 Republic Act No. 9285 (2004).
2 Republic Act No. 876 (1953).
Intellectual property rights as erga omnis rights
The question is whether disputes involving intellectual property rights (“IP rights”) are arbitrable. There is no doubt that disputes between a licensor and a licensee, whether the issue relates to trademark, patent or copyright, such as the scope of the grant of the license, ability of the licensor to enter into licenses with other parties, renewals, definition of breach of contract and scope of exclusivity, may be submitted to arbitration. Section 88 of the Intellectual Property (“IP”) Code3 expressly allows parties to a technology transfer arrangement, which includes licensing of all forms of IP rights pursuant to Section 4.3 thereof, to submit any dispute to arbitration. What is not settled, however, is whether issues of infringement, trademark and patent cancellation and opposition to a trademark application are arbitrable.
3 Republic Act No. 8293 (1997).
The problem arises from the fact that in a patent infringement action, for example, the accused infringer may assert as a defense the invalidity of a patent such as lack of novelty, absence of inventive step and the invention not being useful. These are the same elements that are required to be present in an invention and that must be demonstrated to the Bureau of Patents at the time of application in order that a patent may be issued. If the Bureau of Patents finds that one or any of these elements are not present, it will refuse to issue a patent. Even where the Bureau of Patents has granted the patent, anyone who is adversely affected by the patent may institute a separate petition with that office to declare the patent void and cancel the same. That judgment ordering cancellation of the patent may be said to be a judgment in rem considering that under Section 66 of the IP Code, the rights conferred by the patent or any specified claim or claims cancelled shall terminate and the notice of cancellation must be published in the Intellectual Property Office (“IPOPHL”) Gazette. Thus, in an infringement action, including one before the Regional Trial Court (“RTC”), where the accused infringer asserts the invalidity of the patent, a judgment finding the patent to be invalid will necessarily result in the dismissal of the infringement action. The judgment declaring patent invalidity in the infringement action may be said to be in rem as well, considering that under Section 82 of the IP Code, the court is required to notify the IPOPHL Bureau of Legal Affairs of its decision, which shall record the same in its register and cause the same to be published in the IPO Gazette. Since the judgment is considered to be in rem, a finding of patent invalidity will redound to the benefit of any other persons who were not petitioners in the patent cancellation case or defendants in the patent infringement action but who nonetheless may be characterized to be infringers. This is similar to the concept of collateral estoppel or issue preclusion in the United States which states that “once a court has decided an issue of fact or law necessary to its judgment, that decision ... preclude[s] relitigation of the issue in a suit on a different cause of action a party to the first case.”
The same is true in the matter of registrations of trademark. For example, whether a mark is descriptive is one of the issues that a trademark examiner during examination of the application must look at in determining whether the trademark may be allowed to be registered. If the trademark examiner finds that the trademark is descriptive, he will refuse the application. Even if he were to allow the application and caused it to be published for opposition, any person who may be adversely affected by the registration of the mark may oppose the application on the same ground. The IPOPHL may, in the inter partes opposition case, declare the mark to be not registrable and disallow the application. And even if the IPOPHL allowed the mark to be registered after examination, any interested person is not precluded from filing a petition to cancel said registration on the same ground. The judgment declaring the mark to be not registrable and ordering the cancellation of the registration may likewise be considered in rem because under Section 154 of the IP Code, the judgment is required to be published in the IPOPHL Gazette. Such a finding of non-registrability will redound to the benefit of any other persons who were not petitioners in the trademark cancellation case or defendants in the trademark infringement action but who nonetheless may be characterized to be infringers. Corollarily, the judgment will be binding on the trademark registrant who is precluded from asserting any rights conferred by such registration.
Since the IP Code provides that patent cancellation petition, trademark cancellation petition and trademark inter partes opposition cases are to be filed in the IPOPHL, the latter office will make the finding and issue the decision. Where the patent infringement or trademark infringement complaint is filed with the IPOPHL and the defenses against patent invalidity and trademark non-registrability are asserted in that action, the IPOPHL must necessarily make the finding of invalidity or non-registrability. In cases where the patent infringement action is filed with the RTC, the latter will necessarily have to make the finding of invalidity and direct the IPOPHL to cancel the patent.
Regardless of whether it was the IPOPHL or the RTC that made the declaration of patent invalidity, the result would be the same. A declaration that the patent is invalid would have the effect of a judgment against the whole world such that would-be infringers would now be free from any threat of liability for patent infringement. In the same vein, a declaration that a trademark’s registration was invalid will have the effect of a judgment against the whole world such that would-be infringers would now be free from any threat of liability for trademark infringement. This is the principle of erga omnis, which is Latin for “towards all.” Erga omnis rights or obligations are owed toward all. Thus, it is the nature of the proceeding and effect of the judgment that lead us to inquire whether a patent and trademark cancellation, trademark opposition and trademark and patent infringement case may be submitted by the parties for resolution by a private individual appointed by them to adjudicate their dispute.
Reconciling the arbitrability and erga omnis character of IP rights disputes
The question now is, is it the law or even merely public policy that the determination of whether a patent is invalid or whether a trademark cannot be registered may only be left with state organs such as the IPOPHL and the RTC and that the same may not be resolved by a private individual appointed by the parties to adjudicate their dispute? If an arbitral tribunal were to declare a patent to be void in an award following an arbitration between the patent owner and the accused infringer, would the award be binding on the patent owner and preclude it from filing an IPOPHL patent infringement action against a second infringer who was not a party to the arbitration? If a tribunal, in an arbitration between an interested individual and a registered trademark owner where one of the relief demanded is the cancellation of the registration, declared a trademark to be not registrable and consequently cancels the registration, does the arbitral award inure to the benefit of third parties and preclude the registered trademark owner from subsequently filing a trademark infringement action against third party infringers who did not participate in the arbitration? Any challenge that a submission by parties to agree to resolve an infringement action to arbitration, for example, is contrary to law or public policy would necessarily lead to a finding that the entire arbitration proceeding is void from the start since the arbitration agreement itself is void for being contrary to law and to the outcome that any arbitral award thus rendered is unenforceable.
I believe that in the absence of an express prohibition in the law and in the rules, the submission of IP rights disputes, such as patent and trademark infringement, opposition to trademark application and cancellation of trademark registration and cancellation of patent, to arbitration may be the proper subject of an arbitration agreement. However, in view of the nature of arbitration as a private mode of settling disputes between the parties to it, any arbitral award rendered therein is binding only between the parties thereto and does not adversely affect persons who were not parties to the arbitration. Thus, if for example in an arbitration where the claimant alleges infringement of its patent by the respondent and the latter as a defense argues the invalidity of the patent, an arbitral award is rendered declaring the patent to be void and absolving the respondent from liability for patent infringement, that award is binding only against the parties thereto and the claimant in the arbitration would not be precluded from subsequently instituting an infringement action against third persons who were not parties to the arbitration. This view is consistent with the rule in Section 23 of the ADR Law that arbitral proceedings, including the records, evidence and the arbitral award, are considered confidential and may not be published except with the consent of the parties or for the limited purpose of disclosing to the court relevant documents in cases where resort to the court is allowed. Because such an arbitral award would be binding only on the parties to the arbitration and would not affect others who were not parties thereto, in my view, the only effect of an arbitral award that results in a declaration of invalidity of the IP right would be to grant to the winning party a royalty fee license to use the IP right.