CHUNG TE, PETITIONER, VS. NG KIAN GIAB AND THE HONORABLE DIRECTOR OF PATENTS, RESPONDENTS.

Chung Te versus Ng Kian Giab

The Case

This is an appeal by Chung Te from a decision of the Director of Patents in a trademark interference — a proceeding to determine who, between two applicants claiming the same mark, first adopted and used it. Chung Te and Ng Kian Giab each sought registration of the trademark Marca Piña and its representation for undershirts and similar garments. The Director gave due course to Ng Kian Giab's application and rejected Chung Te's. The case matters because it fixes the rule on how the Director's findings of fact are reviewed, and because it shows that when testimonial evidence is discarded, the filing dates of the applications — including an abandoned earlier application — become the measure of first use.

Procedural History

Chung Te filed his application for registration on November 25, 1958. Ng Kian Giab had filed his own application on July 16, 1957. Because of the confusing similarity between the two marks, the Director of Patents declared an interference between the applications. After hearing, with both parties presenting testimonial and documentary evidence on priority of adoption and use, the Director held that neither party had satisfactorily adduced definite and conclusive proof of the dates of first use alleged in their applications. Applying the rule that in such a case the date of first use is confined to the filing date of the application, he granted the application of the senior party applicant, Ng Kian Giab. Chung Te moved for reconsideration; the Director declined. Chung Te then interposed this appeal to the Supreme Court.

Facts

Chung Te alleged in his application that he had been using the trademark since January 8, 1951 on undershirts, T-shirts, and baby dresses. Ng Kian Giab alleged use on undershirts since December 6, 1955. Before the Director, Chung Te showed that he had long been purchasing agent for his father-in-law, owner of the Liong Bee Shirt Factory, who had been using Marca Piña and transferred it to him. In January 1951 he began laying the groundwork for his own factory, producing undershirts labeled Marca Piña but selling them under his father-in-law's firm name because he had no license in his own name. His employee Julieta Francisco testified that from 1951 she sewed and affixed the Marca Piña and Pineapple labels, which were pressed on the garments, wrapped in cellophane, and boxed in containers bearing the mark.

The factory joined the Philippine Chinese Underwear Manufacturers Association on November 20, 1951, submitting sample Marca Piña labels. Manila granted him a permit to operate a shirt factory on January 31, 1952; he paid business taxes on February 1, 1952; the Bureau of Commerce issued him a certificate as private merchant on February 5, 1952 and registered the business name Liong Sun Shirt Factory two days later. He bought Marca Piña box labels in February 1952 and large quantities of shirt and cover labels thereafter, and sold skippers under his firm name beginning February 1, 1952 to customers who testified that the goods bore the label.

Ng Kian Giab, by contrast, stated under oath in his application that he first used the mark on or about December 6, 1955, but at the hearing sought to carry the date back to 1946 through the testimony of his father, his brother, a seamstress, and two customers. The documentary evidence showed that the family business began operations only in December 1955, selling its first half dozen undershirts bearing the mark on December 5, 1955.

Issues

• Whether or not the Director of Patents erred in disregarding Chung Te's documentary evidence tending to prove use of the trademark since 1951.
• Whether or not the Director erred in not finding that Ng Kian Giab had admitted first use only in 1955.
• Whether or not the Director erred in disregarding Chung Te's prior abandoned application and thus finding that Ng Kian Giab filed earlier.
• Whether or not the Director erred in declaring Ng Kian Giab the prior user when there is no substantial evidence in support thereof.

Applicable Provisions

Section 10-A of Republic Act Number 166, as amended, defines the interference and provides:

Whenever application is made for the registration of a trademark, tradename or servicemark which so resembles a mark or tradename previously registered by another, or for the registration of which another had previously made application, as to be likely when applied to the goods or when used in connection with the business or services of the applicant to cause confusion or mistake or to deceive purchasers, the director may declare that an interference exists.

This is the provision under which the interference between the two applications was declared.

Rule 73 of the Revised Rules of Practice before the Philippines Patent Office in Trademark Cases provides:

In all inter partes proceedings, the allegations of date of use in the application for registration of the applicant or of the registrant cannot be used as evidence in behalf of the party making the same. In case no testimony is taken as to the date of use, the party will be limited to the filing date of the application as to the date of his first use.

This is the rule the Director applied in granting the senior application on the filing dates alone.

Rule 184 of the same Rules provides:

The party whose application or registration involved in the interference has the latest filing date is the junior party and will be regarded as having the burden of proof.

This fixes Chung Te as the junior party and explains why his abandoned earlier application was not counted for purposes of the interference.

Ruling

On the first issue, the Court held that findings of fact of the Director of Patents are conclusive on the Supreme Court provided they are supported by substantial evidence. But here the Director disregarded all the evidence of both parties and relied exclusively on the filing dates. The Court found substantial evidence for Chung Te: the testimony on production from 1951, the association membership, the permits and tax payments, the purchase of labels and boxes, and the sales receipts. The purchase of labels, taken with proof of sale of garments, reasonably gives rise to the presumption that the labels were used on the products sold.

On the second issue, the Court held that Ng Kian Giab's sworn statement of first use in December 1955 was true, and that his attempt to carry the date back to 1946 required clear and convincing evidence, which his purely testimonial proof did not supply. The Court noted the inconsistencies among his witnesses and the documentary evidence that the business began operations only in December 1955.

On the third issue, the Court conceded that the filing date of the abandoned application could not be considered in determining who was the junior party. But in the peculiar situation where testimonial evidence was entirely disregarded and reliance was placed solely on filing dates, the abandoned application became cogent evidence that Chung Te first used the trademark as of its filing date.

On the fourth issue, the Court concluded that Chung Te had established prior use and adoption of the mark, and that he, not Ng Kian Giab, was entitled to registration.

Doctrine

First, the findings of fact of the Director of Patents are conclusive on the Supreme Court when supported by substantial evidence, and will be overturned only where the Director overlooked some matter of substance in evaluating the evidence. Second, an applicant who states his earliest date of use under oath and later seeks to carry it back to an earlier date assumes a heavy burden and must present clear and convincing evidence of adoption and use as of that earlier date. Third, under Rule 73, where no testimony on date of use is credited, the party is limited to the filing date of his application as the date of first use. Fourth, an abandoned earlier application, while not counted in fixing junior party status under Rule 184, may still be cogent evidence of first use where the Director relies solely on filing dates.

Disposition

The Supreme Court reversed the decision of the Director of Patents, adjudged Chung Te the prior user of the trademark Marca Piña and its representation, ordered its registration in his name, set aside the resolution enjoining him to comply with the decision appealed from, and taxed costs against Ng Kian Giab.

Remember This

The one line to memorize: findings of the Director of Patents on priority of use are conclusive if supported by substantial evidence, but an applicant who amends his sworn date of first use must prove the earlier date by clear and convincing evidence. Examiners use this case on the standard of review of the Director's factual findings and on the evidentiary weight of an abandoned earlier trademark application.