CONVERSE RUBBER CORPORATION, PETITIONER, VS. UNIVERSAL RUBBER PRODUCTS, INC. AND TIBURCIO S. EVALLE, DIRECTOR OF PATENTS, RESPONDENTS.

The undisputed facts of the case are as follows:

Respondent Universal Rubber Products, Inc. filed an application
with the Philippine Patent office for registration of the trademark “UNIVERSAL
CONVERSE AND DEVICE” used on rubber shoes and rubber slippers.

Petitioner Converse Rubber Corporation filed its opposition
to the application for registration on grounds that:

a) The trademark sought to be registered is
confusingly similar to the word
“CONVERSE” which is part of petitioner’s corporate name “CONVERSE
RUBBER CORPORATION” as to likely deceive purchasers
of products on which it is to be
used to an extent that said products may
be mistaken by the unwary
public to be manufactured by the petitioner;
and,

b) The registration of respondent’s trademark
will cause great and irreparable injury
to the business reputation and goodwill of petitioner in the
Philippines and would cause damage to said petitioner
within the meaning of Section 8, R.A. No. 166, as
amended.

Thereafter, respondent filed its answer and at the
pre-trial, the parties submitted the following partial stipulation of
facts:

“1)  The petitioner’s corporate name is
‘CONVERSE RUBBER CORPORATION’ and has been in existence
since July 31, 1946; it is duly organized under
the laws of Massachusetts, USA and
doing business at 392 Pearl St., Malden,
County of Middlesex, Massachusetts;

2)   Petitioner is not 
licensed to do business in the
Philippines
and it is not doing business on its own in the
Philippines;
and,

3)   Petitioner manufactures rubber shoes and uses
thereon the trademarks ‘CHUCK TAYLOR’ and ‘ALL
STAR AND DEVICE’.^[1]

At the trial, petitioner’s lone witness, Mrs. Carmen B.
Pacquing, a duly licensed private merchant with stores
at the Sta. Mesa Market and in Davao
City, testified that she had been selling CONVERSE
rubber shoes in the local market since 1956 and that sales of petitioner’s
rubber shoes in her stores averaged twelve to twenty pairs a month purchased
mostly by basketball players of local private educational institutions like
Ateneo, La Salle and San Beda.

Mrs. Pacquing, further stated that
she knew petitioner’s rubber shoes came from the
United
States “because it says there in
the trademark Converse Chuck Taylor with star red or blue and is a round figure
and made in
U.S.A.“^[2] In the invoices issued by her store, the
rubber shoes were described as “Converse Chuck Taylor”^[3], “Converse All Star”^[4], “All Star Converse Chuck Taylor”^[5], or “Converse Shoes Chuck Taylor”^[6].  She also affirmed that she
had no business connection with the petitioner.

Respondent, on the other hand, presented as its lone witness
the secretary of said corporation who testified that respondent has been selling
on wholesale basis “Universal Converse” sandals since 1962 and
“Universal Converse” rubber shoes since 1963.  Invoices were
submitted as evidence of such sales.  The witness also testified
that she had no idea why respondent chose “Universal Converse” as a
trademark and that she was unaware of the name “Converse” prior to her
corporation’s sale of “Universal Converse” rubber shoes and rubber
sandals.

Eventually, the Director of Patents
dismissed the opposition of the petitioner and gave due course to
respondent’s application.  His decision reads in
part:

“xxx the only question for determination is whether
or not the applicant’s partial appropriation of the
Opposer’s
[petitioner’s] corporate name is of such character
that in this particular case, it
is calculated to
deceive or confuse the public to the injury of the
corporation to which the name belongs…

….I cannot find anything that will prevent
registration of the word ‘UNIVERSAL CONVERSE’
in favor, of the
respondent.  In
arriving at this conclusion, I
am guided by the fact that the opposer failed to
present proof that the single word “CONVERSE’
in its corporate name has become so
identified with the corporation that
whenever used, it designates to
the mind of the public that particular
corporation.

The proofs herein are sales made by a single witness who had
never dealt with the petitioner . . .  the entry of
Opposer’s [petitioner’s]
goods in the Philippines
were not only effected in a very
insignificant quantity but without the opposer [petitioner] having a direct
or indirect hand in the transaction so as to
be made the basis for
trademark pre-emption.

Opposer’s proof of
its corporate personality cannot establish the use of the word ‘CONVERSE’
in any sense, as it is already stipulated that
it is not licensed to do business
in the Philippines, and is not doing business of its own in
the Philippines.  If so, it will be futile for
it to establish that ‘CONVERSE’ as part of its corporate name
identifies its rubber shoes.  Besides, it was also stipulated that
opposer [petitioner], in manufacturing rubber shoes
uses thereon the trademark ‘CHUCK
TAYLOR‘ and ‘ALL STAR
and DEVICE’ and none other.

Furthermore, inasmuch as the Opposer
never presented any label herein, or specimen of its shoes, whereon the
label may be seen, notwithstanding its
witness’ testimony touching upon her identification of the rubber shoes
sold in her stores, no determination can be made as to whether the word
‘CONVERSE’ appears thereon.

… the record is wanting in proof to
establish likelihood of confusion so as to cause probable damage to the Opposer
.” ^[7]

Its motion for reconsideration having been denied by the
respondent Director of Patents, petitioner instituted the instant petition for
review.

As correctly phrased by public respondent Director of
Patents, the basic issue presented for our consideration is whether or not the
respondent’s partial appropriation of petitioner’s corporate name is of such
character that it is calculated to deceive or confuse the public to the injury
of the petitioner to which the name belongs.

“A trade name is any individual name or surname, firm
name, device or word used by manufacturers, industrialists, merchants and
others to identify their businesses, vocations or occupations”.^[8] “As the trade name refers to the business
and its goodwill x x x the
trademark refers to the goods”.^[9] The
ownership of a trademark or tradename is a property
right which the owner is entitled to protect “since there is damage to him from
confusion or 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 of the acts and to classify and treat the issue as fraud”.^[10]

From a cursory appreciation of the petitioner’s corporate
name “CONVERSE RUBBER CORPORATION’, it is evident that the word “CONVERSE” is
the dominant word which identifies petitioner from other
corporations engaged in similar business. 
Respondent, in the stipulation of facts, admitted petitioner’s existence
since 1946 as a duly organized foreign corporation engaged in the manufacture of
rubber shoes.  This admission necessarily betrays its knowledge of
the reputation and business of petitioner even before it applied for
registration of the trademark in question.  Knowing, therefore,
that the word “CONVERSE” belongs to and is being used by petitioner, and is in
fact the dominant word in petitioner’s corporate name, respondent has no right
to appropriate the same for use on its products which are similar to those being
produced by petitioner.

“A corporation is entitled to the cancellation of a mark that is
confusingly similar to its corporate name”.^[11] “Appropriation by another of the dominant
part of a corporate name is an infringement”.^[12]

Respondent’s witness had no idea why respondent chose
“UNIVERSAL CONVERSE” as trademark and the record discloses no reasonable
explanation for respondent’s use of the word “CONVERSE” in its trademark. 
Such unexplained use by respondent of the dominant word of petitioner’s
corporate name lends itself open to the suspicion of fraudulent motive to trade
upon petitioner’s reputation, thus:

“A boundless choice of words, phrases and symbols is available
to one who wishes a trademark sufficient unto itself to distinguish his product
from those of others.  When, however, there is no reasonable explanation for the
defendant’s choice of such a mark though the field for his selection was so
broad, the inference is inevitable that it was chosen deliberately to
deceive.”^[13]

The testimony of petitioner’s witness, who is a legitimate
trader as well as the invoices evidencing sales of petitioner’s products in the
Philippines, give credence to petitioner’s claim that it has earned a business
reputation and goodwill in this country.  The sales invoices
submitted by petitioner’s lone witness show that it is the word “CONVERSE” that
mainly identifies petitioner’s products, i.e. “CONVERSE CHUCK
TAYLOR”,^[14] “CONVERSE ALL
STAR”,^[15] “ALL STAR CONVERSE
CHUCK TAYLOR”,^[16] or
“CONVERSE SHOES CHUCK and TAYLOR”.^[17]
Thus, contrary to the determination of the respondent Director of Patents, the
word “CONVERSE” has grown to be identified with petitioner’s products, and in
this sense, has acquired a second meaning within the context of trademark and
tradename laws.

Furthermore, said sales invoices provide the best proof that
there were actual sales of petitioner’s products in the country and that there
was actual use for a protracted period of petitioner’s trademark or part
thereof through these sales.  “The most convincing proof of use of
a mark in commerce is testimony of such witnesses as customers, or the orders of
buyers during a certain period.”^[18]
Petitioner’s witness, having affirmed her lack of business connections with
petitioner, has testified as such customer, supporting strongly petitioner’s
move for trademark pre-emption.

The sales of 12 to 20 pairs a month of petitioner’s rubber
shoes cannot be considered insignificant, considering that they appear to be of
high expensive quality, which not too many basketball players can afford
to buy.  Any sale made by a legitimate trader from his store is a
commercial act establishing trademark rights since such sales are made in due
course of business to the general public, not only to limited
individuals.  It is a matter of public knowledge that all brands of
goods filter into the market, indiscriminately sold by jobbers, dealers and
merchants not necessarily with the knowledge or consent of the
manufacturer.  Such actual sale of goods in the local market
establishes trademark use which serves as the basis for any action aimed at
trademark pre-emption.  It is a corollary logical deduction that
while Converse Rubber Corporation is not licensed to do business in the country
and is not actually doing business here, it does not mean that its goods are not
being sold here or that it has not earned a reputation or goodwill as regards
its products.  The Director of Patents was, therefore, remiss in
ruling that the proofs of sales presented “was made by a single witness who had
never dealt with nor had never known opposer
[petitioner] x x x without
Opposer having a direct or indirect hand in the
transaction to be the basis of trademark pre-emtpion.”

Another factor why respondent’s application should be denied
is the confusing similarity between its trademark “UNIVERSAL CONVERSE AND
DEVICE” and petitioner’s corporate name and/or its trademarks “CHUCK TAYLOR” and
“ALL STAR DEVICE” which could confuse the purchasing public to the prejudice of
petitioner.

The trademark of respondent “UNIVERSAL CONVERSE and DEVICE”
is imprinted in a circular manner on the side of its rubber shoes. 
In the same manner, the trademark of petitioner which reads “CONVERSE
CHUCK TAYLOR” is imprinted on a circular base attached to the side of its rubber
shoes.

The determinative factor in
ascertaining whether or not marks are confusingly similar to each
other “is not whether the challenged mark would actually cause confusion or
deception of the purchasers but whether the use of such mark would likely cause
confusion or mistake on the part of the buying
public.  It would be sufficient, for purposes of the law, that the similarity between the two labels is such that
there is a possibility or likelihood of the purchaser of the older brand
mistaking the new brand for it.”^[19] Even
if not all the details just mentioned were identical, with the general
appearance alone of the two products, any ordinary, or even perhaps even [sic] a
not too perceptive and discriminating customer could be deceived x
x x.”^[20]

When the law speaks of “purchaser”, the reference is to ordinary
average purchasers.^[21] “It is not
necessary in either case that the resemblance be
sufficient to deceive experts, dealers, or other persons specially familiar with
the trademark or goods involved.”^[22]

The similarity in the general appearance of respondent’s trademark
and that of petitioner would evidently create a likelihood of confusion among
the purchasing public.  But even assuming, arguendo, that the trademark sought to be registered by
respondent is distinctively dissimilar from those of the petitioner, the
likelihood of confusion would still subsist, not on the purchaser’s perception
of the goods but on the origins thereof.  By appropriating the word
“CONVERSE”, respondent’s products are likely to be mistaken as having been
produced by petitioner.  “The risk of damage is not limited to a
possible confusion of goods but also includes confusion of reputation if the
public could reasonably assume that the goods of the parties originated from the
same source.^[23]

It is unfortunate that respondent Director of Patents has
concluded that since the petitioner is not licensed to do business in the
country and is actually not doing business on its own in the Philippines, it has
no name to protect in the forum and thus, it is futile for it to establish that
“CONVERSE” as part of its corporate name identifies its rubber shoes. 
That a foreign corporation has a right to maintain an action in the forum
even if it is not licensed to do business and is not actually doing business on
its own therein has been enunciated many times by this Court.  In
La Chemise Lacoste, S.A. vs. Fernandez, 129 SCRA 373, this Court,
reiterating Western Equipment and Supply Co. vs. Reyes, 51 Phil. 115,
stated that:

“x x x a foreign corporation which has never done any business in
the Philippines and which is unlicensed and
unregistered to do business here, but
is widely and favorably known in the
Philippines through the use therein of its
products bearing its corporate and tradename, has a legal right to maintain an action
in the Philippines to restrain the residents and inhabitants
thereof from organizing a corporation therein bearing the
same name as the foreign corporation, when it
appears that they have personal knowledge
of the existence of
such a foreign corporation, and it is apparent
that the purpose of the proposed
domestic corporation is to deal
and trade in the same goods as those
of the foreign
corporation.

“We further held:

xxx       xxx      
xxx

” ‘ That company is not here seeking
to enforce any legal on control rights arising from,
or growing out of, any business which it has transacted in
the Philippine lslands.  The
sole purpose of the
action:

” ‘Is to protect its reputation, its
corporate name, its goodwill, whenever that reputation,
corporate name or goodwill have, through the natural development of its
trade, established themselves.’ And it contends that its rights to the
use of its corporate and trade name:

” ‘Is a property right, a right in rem, which it may
assert and protect against all the world, in any
of the courts of the world — even in
jurisdictions where it does not transact business — just
the same as it may protect its tangible property,
real or personal, against trespass, or conversion.  Citing sec, 10, Nims on
Unfair Competition and Trademarks and cases cited; secs. 21-22,
Hopkins
on Trademarks, Trade Names and Unfair Competition and cases
cited.’  That point is sustained by the
authorities, and is well stated in Hanover Star Mining Co. vs. Allen and Wheeler
Co. [208 Fed., 513], in which the syllabus says:

” ‘Since it is the trade
and not the mark that is to be protected, a
trademark acknowledges no territorial boundaries of
municipalities or states or nations, but extends to every market where the
trader’s goods have become known and identified by the use of the mark.’
“

The ruling in the aforecited case
is in consonance with the Convention of the Union of Paris for the Protection of
Industrial Property to which the
Philippines
became a party on September 27, 1965. 
Article 8 thereof provides that “a trade name [corporate
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 the trademark“. [underscoring supplied]

The object of the Convention is to accord a national of a
member nation extensive protection “against infringement and other types of
unfair competition” [Vanitary Fair Mills,
Inc. vs. T. Eaton Co., 234 F. 2d 633].

The mandate of the aforementioned Convention finds
implementation in Sec. 37 of RA No. 166, otherwise known as the Trademark
Law:

“Sec. 37. 
Rights of Foreign Registrants.-  Persons who are
nationals of, domiciled in,
or have a bona fide or effective business
or commercial establishment in
any foreign country, which is a party to an international
convention or treaty relating to
marks or tradenames on
the repression of unfair
competition to which the Philippines may
be a party, shall be entitled to
the benefits and subject to the provisions of this
Act…  x x x

“Tradenames of persons described in the
first paragraph of this section shall be protected without
the obligation of filing or registration whether or
not they form parts of marks.
“[underscoring
supplied.]

WHEREFORE, the decision of the Director of Patents is
hereby set aside and a new one entered denying Respondent Universal Rubber
Products, Inc.’s application for registration of the trademark “UNIVERSAL
CONVERSE AND DEVICE” on its rubber shoes and slippers.

SO
ORDERED.

Feria, (Chairman), Alampay,
Gutierrez, Jr., and Paras, JJ., concur.

^[2] TSN, pp. 7-8, 20-21, Feb. 24,
1965.

^[3] Exh. C.

^[4] Exh.
C-1.

^[5] Exh. C-3.

^[6] Exh. C-4.

^[7] pp. 11-12, Rollo.

^[8] Cia General de Tabacos
vs. Alhambra Cigar, 33 Phil. 485, underscoring supplied.

^[9] Nolledo, Commercial Law
Review, p. 839.

^[10] Ang vs. Toribio, 74 Phil. 219.

^[11] Callman, Vol. 4, p.
2185.

^[12] Ibid, Vol. 3, p. 1439.

^[13] III, Callman, Unfair Competition, 2^nd Ed.,
pp. 1527-1528.

^[14] Exh.
C.

^[15] Exh.
C-1.

^[16] Exh.
C-3.

^[17] Exh.
C-4.

^[18] Ault and Wibogr vs.
Ault, 50 App. B.C. 156, 269, Fed. 627, [1920] cited in Vol. 3, Callman, p. 1185.

^[19] American Wire and Cable Co.,
Inc. vs. Director of Patents, 31 SCRA 544.

^[20] Converse Rubber Corp. vs.
Jacinto Rubber and Plastics Co., Inc., 97 SCRA 169.

^[21] R.F. & J. Alexander &
Co., Ltd. vs. Ang. et. al., 97 Phil. 157.

^[22] 52 Am. Jur. p. 601.

^[23] Callman, Vol. 4, p. 2186.