G.R. No. L-19906. April 30, 1969
STERLING PRODUCTS INTERNATIONAL, INCORPORATED, PLAINTIFF-APPELLANT, VS. FARBENFABRIKEN BAYER AKTIENGESELLSCHAFT AND ALLIED MANUFACTURING & TRADING CO., INC., DEFENDANTS-APPELLANTS.
SANCHEZ, J.:
In this, a case for trademark infringement and unfair
competition, each of the principal suitors, namely, plaintiff Sterling Products
International, Inc.,[1]
and defendant Farbenfabriken Bayer Aktienegesellschaft,[2]
seeks to exclude the other from use in the.
Philippines
of the trademarks BAYER and BAYER CROSS IN CIRCLE.
SPI asks this Court to strike down FBA’s registration
of BAYER CROSS IN CIRCLE
covering industrial and agricultural products – insecticides and other
chemicals, not medicines – from the supplemental register. FBA, for its part, prays for the cancellation
from the principal register of SPI ‘s certificates of registration of the
trademarks aforesaid for medicines.
Contending parties are doing business in the Philippines. SPI markets Bayer Aspirin, Aspirin for
Children and Cafiaspirina. The BAYER and BAYER
CROSS IN CIRCLE are being used by SPI
in the Philippines
only for said products – Bayer Aspirin, Cafiaspirina
and Bayer Aspirin for Children. On the
containers (bottles or printed cellophane strips, which, in turn, are placed in
cardboard boxes) of Bayer Aspirin, Aspirin for Children and Cafiaspirina,
SPI features the trademarks BAYER and BAYER CROSS IN
CIRCLE. FBA
thru Allied Manufacturing & Trading Co., Inc.[3]
distributes “Folidol” and other industrial and
agricultural chemicals. FBA’s ‘Folidol‘ (in steel or
fiber drums or aluminum containers) displays a replica of SPI’s
trademark BAYER CROSS IN CIRCLE
on the tin cap and label of the container.
The conflict apparent, suit followed.
The trial court declared itself “in favor of the solution that
favors division of the market rather than monopoly.” But to avoid confusion, it
directed defendants “to add a distinctive word or words in their mark to indicate
that their products come from Germany.”
The judgment below reads:
“IN VIEW WHEREOF, both complaint and counter claim are dismissed
without costs; the Court sustains plaintiff’s right to use the Bayer trademark
for its medicines, and defendants’ right to use it for chemicals, insecticides,
and other products not medicines, but the Court orders defendants to add a
distinctive word or words in their mark to indicate that their products come
from Germany.”[4]
Both parties appealed:
Plaintiff, insofar as the judgment “dismisses plaintiff’s complaint and
sustains defendants’ right to use the BAYER trademark for their chemicals
insecticides, and other products not medicines”;[5]
and defendants, from the portions of the aforementioned decision particularly
those which dismiss the counterclaim of the defendants for the cancellation of
the registrations by the plaintiff of the trademarks BAYER and Bayer Cross and
which allow the plaintiff to continue using the Bayer trademarks for
medicines.”[6]
And now to the facts.
The word BAYER was the surname of Friedrich Bayer, a German, who,
on August 1, 1863, organized
a drug company bearing his name – Friedr. Bayer et
comp. – at Barmen Germany. The company was at first engaged in the
manufacture and sale of chemicals. At
about the year 1888 it started to manufacture pharmaceutical preparations
also. A change of name from Friedr. Bayer. To Farbenfabriken vorm. Friedr. Bayer 8 Co. (FFB, for short) effective July 1, 1881
was followed in 1912 by a change of principal place of business from Elberfeld to Leverkusen,
Germany.[7]
Its products came to be known outside Germany. With the discovery in 1899 of the Bayer Aspirin, the mark BAYER
acquired prestige. The time was ripe to
register the trademarks. The record,
however, does not clearly show when the word BAYER was registered as
a trademark in Germany. The BAYER CROSS IN
CIRCLE trademark was registered in Germany
on January 6, 1904 – No.
65777.[8]
It was intended to be used on “medicines for human being and animals, disinfectants,
preservatives, tar dyestuffs and chemical preparation for dyes and for
photographic purposes.”[9]This
registered trademark consists of the BAYER CROSS encircled by the company’s
name Farbenfabriken vorm Friedr. Bayer. & Co. Elberfeld.
When the company was merged with other German companies in 1925
to form the I.G. Farbenindustrie, the name of the
former company was deleted from the trademark and what remained was the present
BAYER CROSS IN CIRCLE. A new registration was effected on June 17, 1929 in Germany
and for which it was issued a certificate with serial no. 404341. The trademark BAYER CROSS IN CIRCLE was
registered by FFB and its subsidiaries
in other parts of the world, viz, in or Norway
England, Denmark, and Argentina in 1904; in Japan and the United States in
1908; in Spain in 1911; in Peru in 1913.
Sometime in 1895, FFB established a subsidiary in New
York, United States. It was named Farbenfabriken
of Elberfeld Co.
Its purpose was to sell FFB’s products in the United
States and Canada. It was this subsidiary that registration the
trademarks BAYER and BAYER CROSS IN CIRCLE
in the United States
between the years 1907-1908.
Sometime in 1913, FFB origanized
another subsidiary – The Bayer Co., Inc. of New York. This new subsidiary was authorized by FFB to
negotiate for and acquire the trademarks, goodwill, assets and property of Farbenfabriken of Elberfeld
Co. By an agreement dated June 12, 1913
(Exh. 106) Bayer of New York purchased for the sum of
US $750, 000.00 Farbenfabriken of Elberfeld
Co.’s “right for the sale in the United States and Canada of the drugs, chemicals,
pharmaceuticals and any and all other Products and articles manufactured
and(or) controlled by Leverkusen” (FFB) and its
“trademarks, good will and other assets and property.”
On April 6, 1917,[10]
the United States
declared war on Germany. Pursuant to the provisions of the Trading
with the Enemy Act, the Alien Property Custodian classified The Bayer Co., Inc.
of New York as an
enemy-controlled corporation. Hence, the
Alien Property Custodian seized its assets about the early part of 1918. Between December 1918 and January 1919, all
the assets of The Bayer Co., Inc. of New York
were sold by the Alien Property Custodian to Sterling Drug, Inc. for the sum of
US $5,310,000.00. The Bayer C., Inc. of
New York then became a subsidiary of Sterling Drug, Inc. Winthrop Chemical Co.,
Inc. was later organized as a new subsidiary of Sterling Drug, Inc. “to
manufacture and sell the physicians’ drugs which had been acquired” by the
purchase of the Bayer Co., Inc. Winthrop’s operation was evidently hampered
because ‘the Germans had kept manufacturing processes secret, so that the
manufacture of physicians’ drugs on a commercial scale became an almost
insoluble problem.[11]
Sterling Drug Inc. secured registration of the BAYER trademarks
in different countries of the world.[12]
It would appear that the trademark BAYER for medicines was known
in the Philippines
about the close of the 19th century.
This appears on page 88 of the Revista Parmaceutica de Filipinas Año I, Numero
7, 3 de Julio de 1893. Before World War I, BAYER product entering Philippines
came from Germany.
In 1922, a worldwide conflict of interests occurred between Farbenfabriken vorm. Friedrich Bayer & Co. and The Bayer Co.,
Inc. of New York, in reference to the trademarks BAYER and BAYER CROSS IN
CIRCLE as they were applied to various products.
Two agreements resolved this conflict, both executed on April 9, 1923 in London,
England: one, between FFB and Winthrop Chemical Co.,
Inc. (Exh. 66), and the other between FFB and Bayer New
York (Exh. WWW) Under the terms of the agreement with
Winthrop Chemical Co. , Inc., FFB stipulated, amongst others: (1) not to contest anymore Winthrop’s right
over the trademarks BAYER and BAYER CROSS IN CIRCLE; (2) to discontinue the use
of said trademarks in the United States which was understood to include the
Philippines under par. 16 of said agreement; and (3) to disclose all secrets of
other processes relating to the manufacture of pharmaceuticals.
Paragraph 26 of the FFB – Bayer New York agreement reads –
“26. NEW YORK (The Bayer Company, Inc. of New York) agree that they
will not sell or offer for sale any goods other than hereunder or those they
may market for Winthrop as hereinbefore provided and other than Aspirin
and compounds of Aspirin which New York shall continue to market for their own
account in the United States of America, Porto Rico, the Philippines and
Hawaiian Islands and the Panama Zone.”[13]
In 1925, Farbenfabriken vorm. Friedrich Bayer & Co. became I.G. Farbenindustrie, AG.
This necessitated a new agreement incorporating Exh.
66 with modifications. Said new
agreement was signed on November 15,
1926 between I.G. Farbenindustrie and
Winthrop.
On September 5, 1941,
in the anti-trust suits against Sterling Drug, Inc., Winthrop Chemicals Co. and
The Bayer Co., Inc. of New York,
two consent decrees [Exh. 68 (No. 15-363) and Exh. 69 (No. 15-364)] were promulgated by the U.S. District
Court for Southern New York. Said consent decrees declared the April 9, 1923 cartel agreements violative of the U.S.
anti-trust laws. One reason given is
that the German company, FFB (later I.G. Farbenindustrie)
– FBA’s predecessor – was excluded from the U.S.
pharmaceutical market. The sentence,
however, contains a saving clause, thus –
“The Bayer contract of 1923, the Bayer contract of 1926, and any
and all amendments or supplements thereto are declared, and adjudged to be
unlawful under the Anti-Trust Laws of the United States, and the defendants
Bayer and Sterling, and their respective successors and subsidiaries, or any of
them, be and they are hereby enjoined and restrained from carrying out or enforcing
any of the aforesaid contracts, on any supplements, amendments or modifications
thereof, or from paying to I.G. Farben, its
subsidiaries, successors or assigns, any royalties or share of profits pursuant
to said contracts with respect to sales following the effective date of this
decree.
Provided, however, that nothing herein contained in this Sec. III
shall:
… … …
Affect in any way the rights or title of the defendant Bayer, its
successors, subsidiaries or assigns, in or to the name Bayer and the ‘Bayer
Cross’ mark or registrations thereof, or
Affect or diminish any right, title or interest of said defendants,
their successors, subsidiaries or assigns, in or to or under any heretofore
acquired and presently existing patents, patent applications, patent licenses,
trade-marks, trade-names (such as the name ‘Bayer’ and the ‘Bayer Cross mark
and registrations thereof), processes or formulae relating to the
manufacturing, processing, use or sale of aspirin, aspirin compounds,
pharmaceutical or other drug or chemical products, or impair any rights or remedies
of said defendants, their successors, subsidiaries or assigns, provided by
statute or convention, and by suits for damages, injunction or other remedy
with respect to any such patents, patent applications, patent licenses or
trademarks…”[14]
Meanwhile, in 1935, plaintiff Sterling Products International,
Inc. (SPI), a Delaware
corporation, a subsidiary of Sterling Drug, Inc. of New
York, was issued a license to do business in the Philippines.[15]
The trademarks BAYER and BAYER CROSS IN CIRCLE were then registered in the
Philippines under the old Trademark Law (Act 666) by The Bayer Co., Inc.: the BAYER CROSS IN CIRCLE trademark on April
18, 1939 for which it was issued Certificate of Registration No. 13081; the
BAYER trademark on April 22, 1939 for which it was issued Registration
Certificate No. 13089. These trademark
rights were assigned to SPI on December
30, 1942 and the assignment was recorded in the Philippines Patent
Office on March 5, 1947. With the passage of Republic Act 166
repealing the old Trademark Law (Act 666), SPI was issued by the Philippines
Patent Office on June 18, 1948
two new certificates of registration:
No. 1260-S for BAYER CROSS IN CIRCLE;
No. 1262-S for BAYER. The registration
of these trademarks was only for “Medicines”.
Came World War II. I.G. Farbenindustrie,
AG, was seized by the allied powers. In
1945, after World War II, I.G. Farbenindustrie, AG.
was decartelized by the Allied High Commission.
The unit known as Farbenfabriken Bayer
was transferred in 1953 to Farbenfabriken Bayer Aktienesellschaft (FBA), one of the defendants in this
case, which was organized in 1951.
Sometime in 1958, defendant Allied Manufacturing & Trading
Co., Inc. (AMATCO) started selling FBA’s products
especially “Folidol”, a chemical insecticide which
bears the BAYER CROSS IN CIRCLE trademark.[16]
On November 18, 1959,
FBA applied for the registration of the BAYER CROSS
IN CIRCLE trademark with the Philippines Patent
Office for animal and plant destroying agents.
The examiner’s report dated December
17, 1959 stated that the subject mark appears to be similar to SPI’s registered BAYER trademarks as covered by Certificates
of Registration Nos.1260-S and 1262-S.
He concluded that “[r]egistration of
applicant’s mark is proscribed by Section 4-d of the Statute because it would
cause confusion or mistake am [to] deceive purchasers.”[17]
This action of the Philippines Patent Office drew a reply from FBA. In its letter dated. February
1, 1960 applicant FBA, thru counsel, said that it “offers no
question or objection to the assertion of the Examiner that the registrant’s
mark and that of the applicant are similar to each other. It emphasized the fact that it was seek in
registration in the Supplemental register.
Its concluding statement runs thus:
“Being aware of the duties and obligations of a trademark user
in the Philippines and the penalties provided for in the pertinent law on
trademarks and being aware also that Supplemental Registration is not a prima
facie evidence of ownership of mark but merely a recordation of the use as in fact
the mark is actually being used by the applicant in the Philippines, it is
respectfully urged that this [application] be given due course.”[18]
On February 25, 1960,
FBA was issued a certificate of registration in the Supplemental Register,
SR-304.
We now grapple with the problems raised in the separate appeals.
1. A rule widely accepted
and firmly entrenched because it has come down through the years is that actual
use in commerce or business is a prerequisite to the acquisition of the right
of ownership over a trademark. This rule
is spelled out in our Trademark Law, thus:
“SEC.2-A. Ownership of trade–marks, trade–names
and service–marks; how acquired. – Anyone who
lawfully produces or deals in merchandise of any kind or who engages in any
lawful business, or who renders any lawful service in commerce, by actual use
thereof in manufacture or trade, in business, and in the service rendered, may
appropriate to his exclusive use a trade-mark, a trade-name, or a service-mark
not so appropriated by another, to distinguish his merchandise, business or
service from the merchandise, business or service of others. The ownership or possession of a trade-mark,
trade-name, service-mark, heretofore or hereafter approriated,
as in this section provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights known to the
law.” (As inserted by Section 1 of Republic Act 638).
It would seen quite clear that adoption alone of a trademark
would not give exclusive right thereto.
Such right “grows out of their actual use.”[19]
Adoption is not use. One may make
advertisements, issue circulars, give out price lists on certain goods; but
these alone would not give exclusive right of use. For trademark is a creation of use. The underlying reason for all these is that
purchasers have come to understand the mark as indicating the origin of the
wares.[20]
Flowing from this is the trader’s right to protection in the trade he has built
up and the goodwill he has accumulate from use of the trademark. Registration of a trademark of course, has
value: it is an administrative act
declaratory of a pre-existingright. Registration does not, however, perfect a
trademark right.
The BAYER trademarks registered in the Philippines
to which plaintiff SPI may lay claim, as correctly stated in the decision
below, are those which cover medicines only. For, it was on said goods that the BAYER
trademarks were actually used by it in the Philippines. Therefore, the certificates of registration
for medicines issued the Director of Patents upon which the protection is
enjoyed only for medicines. Nothing in
those certificates recited would include chemicals or insecticides.
But plaintiff insists that the statement of the applicant (The
Bayer Co., Inc.) in its registrations of the BAYER marks states that “the merchandise
for which the trademark is appropriated is d. – Chemicals Medicines and
Pharmaceutical Preparations”.
Plaintiff’s position is that such statement determines the goods for
which said marks had been registered.
Validity does not attach to this proposition. First, the statement itself admits
that the particular description of the articles comprised in said class (d) on
which the trademark is used is Medicines.[21]
It is not used for chemicals.
Then, Section 11 of the Trademark Law requires that the
certificate of registration state “the particular goods x x x for which it
is registered.” This is
controlling. Under Section 11 aforesaid,
likewise to be entered in the certificate of registration is “the date
of the first use in commerce or business.” SPI may
not claim “first use” of the trademarks prior to the registrations thereof on
any product other than medicines.
Besides, Section 7 of the same Trademark Act directs that
upon the filling of the application and the payment of the required fee, the
Director [of Patents] shall cause an examination of the application” – for
registration of the trademark – “to be made, and, if on such examination it
shall appear that the applicant is entitled to registration,
the Director x x x shall
cause the mark x x x to be
published in the Official Gazette.” This
examination, it would seem to us, is necessary in order that the Director of
Patents may be satisfied that the application conforms to the requirement of actual
use in commerce of the trademark in Sections 2 and 2-A of the Trademark
Law; and that the statement in said application – as to the “first use” thereof
and “the goods x x x
in connection with which the mark x x x is used” (Section 5) – is true.
Really, if the certificate of registration were to be deemed as including
goods not specified therein, than a situation may arise whereby an
applicant may be tempted to register a trademark on any and all goods which his
mind may conceive even if he had never intended to use the trademark for the
said goods. We believe that such
omnibus registration is not contemplated by our Trademark Law.
Because of this and of the fact that the BAYER trademarks were
never used in the Philippines by plaintiff except for medicines – Asprin, Aspirin for Children and Cafiaspirina
– we find ourselves unwilling to draw a hard and fast rule which would
absolutely and under all circumstances give unqualified protection to plaintiff
against the use of said trademarks by all others on goods other than medicines.
2. Neither will the 1827
registration in the United States
of the BAYER trademark for insecticides serve plaintiff any The United States
is not the Philippines
registration in the United States
is not registration in the Philippines. At the time of the United
States registration in 1927, we had our own
Trademark Law, Act No. 666 aforesaid of the Philippine Commission, which
provided for registration here of trademarks owned by persons domiciled in the United
States.
What is to be secured from unfair competition in a given
territory is the trade which one has in that particular territory. There is where his business is carried on;
where the goodwill symbolized by the trademark has immediate value; where the
infringer may profit by infringement.
There is nothing new in what we now say. Plaintiff itself concedes[22]
that the principle of territoriality of the Trademark Law has been recognized in
the Philippines,
citing Ingenohl vs. Walter E. Olsen, 71 L. ed.
762. As Callmann
puts it, the law of trademarks “rests upon the doctrine of nationality or
territoriality.”[23]
Accordingly, the 1927 registration in the United
States of the BAYER trademark would not of
itself afford plaintiff protection for the use by defendants in the Philippines
of the same trademark for the same or different products.
3. A question basic in the
field of trademarks and unfair competition is the extent to which a registrant
of a trademark covering one product may invoke the right to protection against
the use ‘by other(s) of the same trademark to identify merchandise different
from those for which the trademark has been appropriated.
Plaintiff’s trenchant claim is that it should not he turned away
because its case comes within the protection of the confusion of origin
rule. Callmann
notes two types of confusion. The first
is the confusion of goods “in which event the ordinarily
prudent purchaser would be induced to purchase one product in the belief that
he was purchasing the other.” In which case, “defendant’s goods are then bought
as the plaintiff’s, and the poorer quality of the former reflects adversely on
the plaintiff’s reputation.” The other is the confusion of business: “Here though the goods of the parties are
different, the defendant’s product is such as might reasonably be assumed to
originate with the plaintiff, and the public would then be deceived either into
that belief or into the belief that there is some connection between the
plaintiff and defendant which, in fact, does not exist.”[24]
A judicial test giving the scope of the rule of confusion of
origin is Ang vs. Teodoro
(December 14, 1942), 74 Phil. 50.
Briefly, the facts of the just cited case are as follows: Toribio Teodoro, at first in partnership with Juan Katindig and later as sole proprietor, had continuously
used “Ang Tibay”
both as trademark and as tradename in the manufacture
and sale of slippers, shoes and indoor baseballs since 1910 be formally
registered it as a trademark on September 29, 1915 and as a tradename
on January 3, 1933. Ana L. Ang registered the same trademark “Ang
Tibay” for pants and shirts on April 11, 1932 and established a factory for the
manufacture of said articles in 1937. Suit was lodged by Teodoro
against Ang to cancel the latter’s registration of
the trademark “Ang Tibay”
and to perpetually enjoin her from using the said trademark on goods
manufactured and sold by her. The
judgment of the trial court absolved defendant (Ana L. Ang)
from the complaint with costs against the plaintiff. The Court of Appeals reversed. On appeal by certiorari, we affirmed the judgment of the Court of Appeals. We there said:
“In the present state of development of the law on Trade-Marks, Unfair
Competition, and Unfair Trading, the test employed by the courts to determine
whether noncompeting goods are or are not of the same
class is confusion as to the origin of the
goods of the second user. Although
two noncompeting articles may be
classified under two different classes by the Patent Office because they are
deemed not to possess the same descriptive properties, they would
nevertheless, be held by the courts to belong to
the same class if the simultaneous use on them of
identical or closely similar trademarks would be likely to
cause confusion as to the origin or personal source, of the second user’s
goods. They would be considered as not
falling under the same class only if they are so only dissimilar or so
foreign to each other as to make it unlikely
that the purchaser would think the first user made the second user’s
goods.
Such construction of the law is induced by cogent reasons of equity
and fair dealing. The courts have come
to realize that there can be unfair competition or unfair trading even if the
goods are non competing, and that such unfair trading can cause injury
or damage to the first user of a given trade-mark, first, by prevention
of the natural expansion of his business and, second, by having his business
reputation confused with and put at the mercy of the second user. When noncompetitive products are sold under
the same mark, the gradual whittling away or dispersion
of the identity and hold of upon the public mind of the mark created by its first
user, inevitably results. The original
owner is entitled to the preservation the valuable link
between him and the public that has been created by his ingenuity
and the merit of his wares or services. Experience has demonstrated that when a
well-known trademark is adopted by another even for a totally different class
of goods, it is done to get the benefit of the
reputation, and advertisements of the originator of
said mark, to convey to the public a false impression of some supposed
connection between the manufacturer of the article sold under the
original mark and the new articles being tendered to the public under the same
or similar mark. As trade has developed
and commercial changes have come about, the law of unfair competition has
expanded to keep pace with the times and the element of strict competition in
itself has ceased to be the determining factor.
The owner of a trade-mark or trade-name has a property right in which he
is entitled to protection, since there is damage to him from confusion
of reputation or goodwill in the mind of the public as well as from confusion
of goods. The modern trend is to give
emphasis to the unfairness often acts and to classify and treat the
issue as a fraud.”[25]
The thoughts expressed in Ang Tibay command respect. Conduct of business should conform to ethical
business, standards. Unfairness is
proscribed. The invocation of equity is
bottomed upon the injunction that no one should “reap where he has not sown.”[26]
Nonetheless “[i]t has been emphasized
that each case presents a unique problem which must
be answered by weighing the conflicting interests of the litigants.”[27]
With this in mind, we are convinced that the case before us is not to be
analogized with Ang Tibay. The factual setting is different. His Honor, Judge Magno
S. Gatmaitan (now Associate Justice of the Court of
Appeals), the trial judge, so found. He
reached a conclusion likewise different.
And the reasons, so well stated, by His Honor, are these:
“1st). – It was not plaintiff’s predecessor but defendant’s
namely Farbenfabriken or Bayer Germany that first
introduced the Medical products into the Philippine market and household with
the Bayer mark half a century ago; this is what the Court gathers from the
testimony of Frederick Umbreit and this is the
implication even of Exh. 48, 49, 66 and WWW as
already shown a few pages back;[28]
2nd). – There is thus reason plausible enough for defendants’ plea
that as Sterling was not the ‘originator’ of the Bayer mark, the rule in Ang vs. Teodoro, supra, is not
applicable; and this is correct notwithstanding Exh.
106 and 63 and even giving unto these documents full force and virtue, because
purchase of the assets of Elberfeld, defendants’
previous affiliate in New York, by Bayer of New York, even if that were to be
held to include purchase of the Bayer mark, did not Make the purchaser Bayer of
New York the originator of the mark; especially since Bayer of New York was
only another subsidiary of Bayer Germany or Farbenfabriken
which was the real originator;
3rd). – The Court is also
impelled to believe that the evidence establishes that among the common people
of the Philippines the ‘Bayer’ medicines come from Germany; this the Court
deduces from the testimony of witness Florisa Pestaño who only reproduced the belief of her grandmother;
the Court might as well say that
plaintiff itself has not discouraged that belief because the drug and its
literature that came from the plaintiff and its affiliate would show that it represented
its medicines to have come from defendant[29]
and were manufactured in Germany with that Bayer mark; thus Exh.
70[30]
which is the price list of 1928 of Botica de Sta.
Cruz on page 6 indicates that Winthrop Chemical Company of New York, –
plaintiff’s subsidiary – was a distributor of I.G. Farbenindustrie,
A.G. Leverkusen, Germany; Exh.
80[31]
which is a medical diary published by Winthrop for 1934 on page 148 manifested
that the journal, ‘Practical Therapeutics’ was published by I.G. Farbenindustrie Aktiengesellschaft
for Winthrop Chemical Company Inc.; ‘with particular reference to the
pharmacological products, sera and vaccines originated and prepared in the
laboratories of I.G. Farbenindustrie, A.G.’; and Exh. 79 a, b, c, d and e which are prospectuses for the
medicines, Mitigal, Afridol,
Aspirina, Novalgina and Myo-Salvarsan[32]
showed that these products were manufactured for Winthrop by I.G. Farbenindustrie; and then Exh. 81
the Revista Boie of 1928 would
show that Winthrop represented itself as the distributor of the products of
Bayer of Germany otherwise known as I.G. Farbenindustrie,
“segun la alta calidad de la marca original’;[33]
the Court being also impelled to add in this connection that it has to take judicial
notice of a belief of long standing common among the people in the Philippines
that German products are of very high quality and it is only natural for a
distributor or a retailer to take advantage of that; and as it is not debated
that ‘Bayer’ is a German surname, (see plaintiff’s rebuttal Exh.
QQQQ, see also p. 7 plaintiff’s reply memorandum wherein it is said that this
surname is a ‘pretty common one among members of the German race’) it is all so
very easy to associate the Bayer trademark with products that come from Germany
and to believe that they are of high quality;
4th). – The rationale of the doctrine in Ang
vs. Teodoro, supra being that:
‘The Courts have come
to realize that there can be unfair competition or unfair trading even if the goods
are non-competing, and that such unfair trading can cause injury or damage to
the first user of a given trade mark, first, by prevention of the natural
expansion of his business, and second, by having his business reputation
confused with and put at the mercy of the second user.’ 74 Phil. 55-56;
and the Court having found out that the
‘first user’ was Bayer Germany and it was this that had built up the Bayer mark
and plaintiff apparently having itself encouraged that belief even after it had
acquired the Bayer mark in America, thru forced sale, of defendant’s subsidiary
there in 1918, Exh. 79, 80, 81, to apply the Ang Tibay rule in the manner
advocated by Sterling would, the
Court fears, produce the reverse result and the consequence would be not equity
but injustice.”[34]
It would seem to us that the fact that plaintiff rode on the
German reputation in the Bayer trademark has diluted the rationality of its
exclusionary claim. Not that the free
ride in the name of defendant’s German predecessor was sporadic. It is continuing. Proof of this is the label on the box used by
plaintiff (Exhibit U) in the distribution of Bayer Aspirin. This box bears prominently on the front part
the legend “Genuine” in red color and two arrows: the first pointing to BAYER
CROSS IN CIRCLE, and the Second, to BAYER
Aspirin. At the back thereof in big
letters are the words “BAYER ASPIRIN”, followed in small letters “Used since
1900” and down below the small words “Mfd. in the
Phil. by Winthrop-Stearns, Inc. for STERLING PRODUCTS INTERNATIONAL,
INCORPORATED.” In plaintiff’s prospectus (Exhibit 1) found in the box of Bayer
Aspirin tablets, children’s size, there is the significant statement:
“GENUINE BAYER – Each Children’s Size Bayer Apirin
tablet is stamped, with the Bayer Cross, the trademark of the genuine Bayer
product. This means that your child is
getting the same gentle-to-the-System Bayer Aspirin that has been used for over
50 years by millions of normal people without ill effect.”
With the background of prior use in the Philippines of the word
BAYER by FBA ‘s German predecessor and the prior representations that plaintiff’s
medicines sold in the Philippines were manufactured in Germany, the facts just
recited hammer on the mind of the public that the Aspirin, Cafiaspirina
and Aspirin for Children being marketed for plaintiff in the Philippines come
from the same source – the German source – and in use since 1900. That this view is far from far-fetched, is
illustrated by the testimony of plaintiff’s own witness Dr. Antonio Vasquez, viz:
“Q. Have you ever heard of a pharmaceutical company of Bayer
of Germany, or a company in Germany
named Bayer?
A. Yes, sir.
Q. Since when have you heard of this pharmaceutical company in Germany
with the name Bayer, since when have you heard of that?
A. I have always taken the name
Bayer as associated with Winthrop &
Stearns.
Q. But, you said a while ago…
Witness…
…Yes…
x x x
Q. …that you have heard of a pharmaceutical company with the name
of Bayer in Germany?
A. Yes, sir.
Q. Do you know if this Winthrop & Stearns you mentioned has
ever been, connected with this Bayer Company of Germany?
A. I have always understood that
they were distributing drugs of Bayer
& Company.”[35]
4. Ang
Tibay doctrine, we believe, is not to be read
as shunting aside the time-honored teaching that he who comes into equity must
do so with clean hands.[36]
Plaintiff cannot now say that the present worth of its BAYER trademarks it owes
solely to its own efforts; it is not insulated from the charge that as it
marketed its medicines it did so with an eye to the goodwill as to quality that
defendants’ predecessor had established.
There is no whittling away of the identity of plaintiff’s
trademarks. Plaintiff is not the first
user thereof in the Philippines. The trademarks do not necessarily link
plaintiff with the public. Plaintiff
must show injury; it has not. ‘On the
contrary, representations as to the place of manufacture of plaintiff’s
medicines were untrue, misleading.
Plaintiff could still be tagged with the same deception “which (it)
complains of in the defendant(s).”[37]
Appropriate it is to recall here our observation in the Ang
Tibay opinion, viz:
“On our part may we add, without meaning to be harsh, that a
self-respecting person does not remain in the shelter of another but builds one
of his own.”[38]
Plaintiff, the owner in this country of the trademarks BAYER for
medicines, has thus forfeited its right to protection from the use of the same
trademarks by defendants for products different therefrom
– insecticides and other chemicals.
5. But defendants ask us to
delist plaintiff’s BAYER – trademarks for medicines
from the Principal Register claiming right thereto for said use. Said trademarks had been registered since
1939 by plaintiff’s predecessor, The Bayer Co., Inc.
Defendants’ claim is stale; it suffers from the defect of
non-use.[39]
While it is conceded that FBA’s predecessors first
introduced medical products with the BAYER trademarks in the Philippine market,
it is equally true that, after World War I no definite evidence there is that
defendants or their predecessors traded in the Philippines
in medicines with the BAYER trademarks thereafter. FBA did not seasonably voice its
objection. Lack of protest thereto
connoted acquiescence. And this, notwithstanding
the fact that the 1923 and 1926 agreements were set aside in the anti-trust
suits. Defendants did use the marks; but
it was much later, i.e., in 1958 – and on chemicals and
insecticides – not on medicines. FBA
only bestirred itself and challenged plaintiff’s right to the trademarks on
medicines when this suit filed Vigilantibus non
dormientibus equitas
subvenit.[40]
The net result is that, as the trial court aptly observed,
plaintiff may hold on to its BAYER trademarks for medicines. And defendants may continue using the same
trademarks for insecticides and other chemicals, not medicines.
6. Defendants balk at the
ruling below which directs them “to ad a distinctive word or words in
their mark to indicate that their products come from Germany.”[41]
We are left under no doubt as to the reasonableness of the
formula thus fashioned. It avoids the
mischief of confusion of origin – defendant FBA’s
products would not be mistaken for those of plaintiff. It reduces friction. We perceive of no prejudice to defendants. The order does not visit defendant FBA with
reprobation or condemnation. Rather,
said defendant would be enhancing the value of and would be sponsoring its own
products. Anyway, a statement that its
products come from Germany
is but a statement of fact.
FOR THE REASONS GIVEN, the judgment under review is hereby
affirmed. No costs.
SO ORDERED.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Capistrano, Teehankee,
and Barredo,
JJ., concur.
Castro, J, on official leave of
absence.
[1]
Hereinafter referred to as SPI.
[2]
Hereinafter referred to as FBA.
[3]
Hereinafter referred to as AMATCO.
[4] Record on Appeal, p. 93.
[5]
Record on Appeal, p. 94.
[6]
Record on Appeal, pp. 95-96.
[7]
The former places of Elberfeld and Barmen and other
places together now form the town of Wuppertal.
[8]
No longer valid in the Federal Republic of Germany as its protection expired on
January 5, 1933.
[9] Exhs. 26 and 26-A.
[10]
Encyclopedia of American History, ed. by Richard B. Morris (1953), p. 309.
[11]
Exhibit 63-A, p. 99.
[12] See: Exhibits DDDD to YYYYYY-3.
[13]
Emphasis supplied.
[14]
Exhibit 69.
[15]
Exhibit A-2.
[16] FBA’s predecessors have been using elsewhere this mark for
chemicals since 1910 (Exhibits 99 to 99-C) and plant destroying agents since
1924 (Exhibits 100 and 100-A).
[17]
Exhibit II-1.
[18]
Exhibit JJ-1.
[19] Esso, Inc. vs. Standard Oil Co., 98 F. 2d 1, 6, citing
Hanover Star Filling Co. vs. Metcalf, 240 U.S. 403, 36 S. Ct. 357, 60 L.
ed. 713; United Drug Co. vs. Theodore Rectanus
Co., 248 U.S. 90, 39 S. Ct. 48, 63 L. ed. 141. See also: Oakford Company vs. Kroger Company, 157 F. Supp.
453, 458-460; Mason, Au & Magenheimer
Confectionery Co. vs. Loose-Wiles Biscuit Co., 1 F. Supp. 755, 756; Pry vs. Layne-Western Company, 282 F. 2d 97,
104; J.A Dougherty’s Sons, Inc. vs. Kasko Distillers Products Co., 35 F. Supp. 561, 564; Compañia Gral. De Tabacos vs.
Alhambra Cigar & Cigarrette Mfg. Co., 33 Phil.,
485, where we held that in order that a name may be considered n tradename with exclusive rights which attach to the use
thereof, it is necessary that used with the intent of appropriating it as a tradename.
[20]
I Tolentino, Commentaries and Jurisprudence on the
Commercial Law of the Philippines, 8th ed., p. 531, citing United Drug
Co. vs. Theodore Mectanus Co., 248 U.S. 90, 63
L. ed. 141.
[21]
Medicines (class d) in the 1939 registrations; medicines (class 6) in the 1949
registrations.
[22]
Brief for Plaintiff-Appellant, p. 88.
[23]
2 Callmann, Unfair Competition and Trademarks, 1945
ed., p. 1006.
[24]
2 Callmann, op cit., pp. 1323-1324.
[25] Ang vs. Teodoro, supra, at pp. 54-55; emphasis
supplied. See also: Sta.
Ana vs. Maliwat (August 31, 1968) 24 SCRA
1018, 1025-1026. Cf.: The George
W. Luft Co., Inc. vs.
Ngo Guan (December 17, 1966), 18 SCRA 944, 946.
[26]
52 Am. Jur., p. 581.
[27] Id.,
p. 577; emphasis supplied.
[28]
The lower court, in its decision (Rec. on Appeal, p.65), said that there are
indications that Bayer Germany’s manufactures came to be known outside Germany
even before the turn of the century, viz,
according to Exh. 12, Catalogue of Exhibits at the
Glasgow Exhibition, 1888; according to Exh. 47, thru
drug literature in the Philippines
in 1893. Dr. Agerico
Sison, plaintiff’s witness, testified:
“Q. When you were still in college, still a student you
studied inventions – famous medicines such as acetyl salicylic acid, is that
right?
x x x
A. Yes, sir.
Q. And you remember that acetyl salicylic acid was invented
by chemist in the employ of the Bayer Company of Germany?
A. Yes, sir.
Q. And that this discovery was made about the end of the
nineteenth century?
A. Yes, sir.
Q. And that you came to know afterwards when you were
already practicing medicine that one of the renowned manufacturers of
pharmaceutical products is that Bayer Company of Germany?
x x x
A. Yes, sir.
Q. And before World War II, in your practice of medicine you
had come across pharmaceutical products manufactured by that Bayer Company of Germany
being used here in the Philippines?
x x x
Yes sir. “(t.s.n., pp. 15-18, March 3, 1961).”
(See: Brief of
Defendants-Appellants, pp. 32-34)
[29] “Defendant”
should read “defendant’s predecessor”.
[30]
On pages 2 and 3 of price list of Botica de Sta. Cruz
del Dr. Carlos Jaehrling (Exh.
70) printed by Benipayo Press & Photo Engraving,
Manila, there are some photographs with the heading “Works of I.G. Farbenindustrie A.G., Germany, Pharmaceutical Department,
‘Bayer-Meister Lucius’, Leverkusen
and Hoechst A. M.” At bottom of page 3, particularly, are the words:
“The I.G. Farbenindustrie
A.G., Germany,
is the largest chemical manufacturing concern in the world combining the most
reputable German manufacturers of chemicals, dyes and pharmaceutical
products. The principal works in
different parts of Germany
are shown here.”
Page 5 thereof bears the heading “The BAYER COMPANY, INC. New
York” followed by a specification of its “Aspirin
Preparations” namely: ASPIRIN,
BAYASPIRIN, CAFIASPIRIN and FENASPIRIN, and the corresponding prices thereof.
On page 6 is the heading “Winthrop Chemical Co., Inc. New.
York E.A. Ketz Laboratories, Inc., New
York, Distributors of the I.G. Farbenindustrie
A.G., Leverkusen, Germany,
in the Philippine Islands.
[31] On pages 7 and 8 of this diary, reference is made to the
late Dr. Eliodoro Mercado, formerly of the San Lazaro Hospital. Particularly on page 8 thereof, we find
the following statement: “In
collaboration with the Bayer Company of Leverkusen,
Germany – now part of the I.G. Farbenindustrie A.G. –
he improved his original formula and experiments x x x in the successful treatment of a number of lepers. x x x.” On the opposite side a
photographic picture of “The Works at Leverkusen” is shown (Exhs. 80-a, 80-b, and
80-c).
[32] Exh. 79-a, a MITIGAL prospectus showing the photoraph of a bottle and a package with the Bayer Cross.
The words “Fabricado Por: I.G. Farbenindustrie
Aktiengesellschaft Leverkusen b. Koln para: Winthrop Chemical Company Inc, New
York, N.Y.” appear on the
lower left part of the prospectus.
Exh. 79-b an AFRIDOL prospectus
showing the photograph of a package with the Bayer Cross and the same words
“Fabricado por: I.G. Farbenindustrie
Aktiengesellschaft Leverkusen
b. Koln para: Winthrop Chemical Company Inc., New
York, N.Y.” appearing also
on the lower left part of the prospectus.
Exh. 79-c, an ASPIRINA prospectus
in which reference is made to the discovery, of aspirin in 1899 by “la gigantesca fabrica de Elberfeld de la razon social Farbenfabriken vorm. Friedrich
Bayer & Co.”
Exh. 79-d, a prospectus on
NOVALGINA, which displays clearly the Bayer Cross beheath
the word NOVALGINA; as manufacturer is indicated “I.G. FARBENINDUSTRIE
AKTIENGESELLSCHAFT, Seccion Farmaceutica,
Bayer-Meister Lucius“. On top of this particular
prospectus is a rubber stamp, “Dr. G. SCHWAB P.O.B. 1162, MANILA.”
Exh. 79-e, a prospectus on
MYO-SALVARSAN, which mentions as manufacturer of this product “I.G.
FARBENINDUSTRIE AKTIENGESELLSCHAFT, Pharmaceutical Dept. Bayer-Meister Lucius.”
[33]
At the foot of page 38 of the Revista Boie, May 1928, Exh. 81-c, the
following appears: Winthrop Chemical Co.
Inc., New York, Distributor of
the ‘BAYER’ products in the Philippines.
Manila Office: Dr. G. Schwab, P.O.
Box 1162, Escolta 619.”
[34]
Record on Appeal, pp. 87-91; emphasis supplied.
[35] Tr., February 28,
1961, pp. 61-62; underscoring ours.
[36]
87 C.J.S., p. 310, citing cases at footnote 53;
52 Am. Jur., p. 626, citing cases at
footnote 18.
[37]
52 Am. Jur., p. 631, citing cases at
footnote 20.
[38]
At p. 56.
[39] See: Section 9-A, Trademark Law (R.A. 166, as
amended by R.A. 638).
[40] Buenaventura
vs. David, 37 Phil. 435, 441.
[41]
Record on Appeal, p. 93.