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

Converse Rubber versus Universal Rubber Products

The Case

This is a petition for review brought by Converse Rubber Corporation, a foreign corporation organized under the laws of Massachusetts in the United States, against Universal Rubber Products, Inc. and the Director of Patents. Converse asks the Supreme Court to overturn the Director's ruling that allowed Universal Rubber to register the trademark "UNIVERSAL CONVERSE AND DEVICE" for rubber shoes and slippers. The case matters because it settles two questions every trademark lawyer must know: whether a foreign corporation not licensed to do business here may still protect its corporate name and goodwill, and how the likelihood of confusion between marks is measured.

Procedural History

Universal Rubber filed with the Philippine Patent Office an application to register the trademark "UNIVERSAL CONVERSE AND DEVICE" for use on rubber shoes and rubber slippers. Converse filed an opposition, claiming that the mark was confusingly similar to the word "CONVERSE" in its corporate name and would deceive the public, and that registration would cause it great and irreparable injury within the meaning of Section 8 of Republic Act Number 166, as amended. After answer and pre-trial, the parties submitted a partial stipulation of facts, and trial was held. The Director of Patents dismissed the opposition and gave due course to the application. Converse moved for reconsideration, which the Director denied. Converse then instituted this petition for review before the Supreme Court, which decided the case in January 1987.

Facts

Converse Rubber Corporation has existed since July 31, 1946. It manufactures rubber shoes bearing the trademarks "CHUCK TAYLOR" and "ALL STAR AND DEVICE." The parties stipulated that Converse is not licensed to do business in the Philippines and is not doing business here on its own.

Converse's lone witness, Carmen B. Pacquing, a licensed private merchant with stores at the Sta. Mesa Market and in Davao City, testified that she had been selling Converse rubber shoes locally since 1956, averaging twelve to twenty pairs a month, bought mostly by basketball players from schools like Ateneo, La Salle, and San Beda. Her invoices described the shoes as "Converse Chuck Taylor," "Converse All Star," "All Star Converse Chuck Taylor," or "Converse Shoes Chuck Taylor." She affirmed she had no business connection with Converse.

Universal Rubber's lone witness, its secretary, testified that it had sold "Universal Converse" sandals since 1962 and "Universal Converse" rubber shoes since 1963. She had no idea why the corporation chose that mark and was unaware of the name "Converse" before its sales began. The Director of Patents dismissed the opposition, finding no proof that the word "CONVERSE" had become identified with Converse, that the sales were insignificant and made without Converse's participation, and that no specimen showed the word on the shoes.

Issues

• Whether or not Universal Rubber's partial appropriation of the word "CONVERSE" from Converse's corporate name is calculated to deceive or confuse the public to the injury of Converse.
• Whether or not a foreign corporation not licensed to do business and not actually doing business in the Philippines may protect its corporate name, reputation, and goodwill in our courts.
• Whether or not the trademark "UNIVERSAL CONVERSE AND DEVICE" is confusingly similar to Converse's corporate name and trademarks.

Applicable Provisions

Article 8 of the Convention of the Union of Paris for the Protection of Industrial Property, to which the Philippines became a party on September 27, 1965, provides:

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.

This is the treaty basis for protecting Converse's corporate name here even without registration.

Section 37 of Republic Act Number 166, the Trademark Law, implements that Convention and provides:

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… xxx

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.

This provision confirms that a qualified foreign national's trade name is protected in the Philippines without filing or registration.

Ruling

On the first issue, the Court ruled for Converse. The word "CONVERSE" is the dominant word identifying Converse among similar corporations. Universal Rubber's admission of Converse's existence since 1946 betrayed its knowledge of Converse's reputation even before it applied for registration. Knowing the word belonged to Converse, Universal Rubber had no right to appropriate it for similar products. Its unexplained choice of the mark, when a boundless field of words was open to it, raised the inference that it was chosen deliberately to deceive. The Court held that the word "CONVERSE" had grown to be identified with Converse's products and acquired a second meaning in trademark and trade name law.

On the second issue, the Court rejected the Director's premise that a foreign corporation not doing business here has no name to protect. A foreign corporation may maintain an action in the forum even if unlicensed and not doing business here, when it is widely and favorably known through the use of its products bearing its corporate and trade name. Its right to its corporate and trade name is a property right, a right in rem, which it may assert and protect against all the world, even in jurisdictions where it does not transact business. The Court also held that the sales of twelve to twenty pairs a month were not insignificant, and that any sale by a legitimate trader in due course of business establishes trademark rights.

On the third issue, the Court found confusing similarity. Both marks are imprinted in a circular manner on the side of rubber shoes. The test is likelihood of confusion, not actual confusion:

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.

Even assuming the marks were distinctively dissimilar, confusion would persist as to the origin of the goods, because by appropriating "CONVERSE," Universal Rubber's products are likely to be mistaken as produced by Converse.

Doctrine

A trade name identifies the business and its goodwill, while a trademark identifies the goods. Ownership of either is a property right the owner may protect against confusion of reputation or goodwill as well as confusion of goods. Appropriation by another of the dominant part of a corporate name is an infringement, and a corporation is entitled to the cancellation of a mark confusingly similar to its corporate name. A foreign corporation not licensed to do business and not actually doing business in the Philippines may still sue to protect its corporate name, reputation, and goodwill when it is widely and favorably known here through its products, consistent with Article 8 of the Paris Convention and Section 37 of Republic Act Number 166. Confusing similarity is tested by the likelihood of confusion among ordinary average purchasers, not actual confusion, and extends to confusion of origin even where the marks differ.

Disposition

The Supreme Court set aside the decision of the Director of Patents and entered a new one denying Universal Rubber Products, Inc.'s application for registration of the trademark "UNIVERSAL CONVERSE AND DEVICE" on its rubber shoes and slippers. Converse won.

Remember This

Memorize this line: a foreign corporation's right to its corporate and trade name is a property right, a right in rem, which it may assert and protect against all the world, even where it does not transact business. Examiners use this case for the protection of well-known foreign trade names under the Paris Convention and Section 37 of the Trademark Law, and for the likelihood-of-confusion test in trademark opposition.