LEVI STRAUSS (PHILS.), INC., PETITIONER, VS. VOGUE TRADERS CLOTHING COMPANY, RESPONDENT.

Levi Strauss Philippines versus Vogue Traders Clothing

The Case

This is a petition for review on certiorari brought by Levi Strauss (Phils.), Inc. against Vogue Traders Clothing Company. The dispute began as a complaint for damages filed by Vogue Traders after Levi Strauss caused the seizure of its goods under search warrants, and it grew into a contest over whether the trial court could act at all while trademark cancellation cases were pending before the Bureau of Patents, Trademarks and Technology Transfer. The case matters because it draws the boundary between administrative jurisdiction over trademark cancellation and the regular courts' jurisdiction over infringement, injunction, and damages, and because it states the rule on who must sign the certification against forum shopping.

Procedural History

Vogue Traders filed a complaint for damages in the Regional Trial Court of Manila, Branch 50, against Levi Strauss. On motion of Levi Strauss, the case was forwarded to the Executive Judge for re-raffle among the special courts designated to try intellectual property cases, and it was eventually assigned to Branch 1. When Vogue Traders failed to appear at the scheduled hearing, the trial court declared it to have waived its right to present evidence against the application for a writ of preliminary injunction. In an order dated December 10, 1996, the trial court found that Vogue Traders intended to copy and slavishly imitate the appearance of authentic Levi's jeans, and it issued a writ of preliminary injunction upon the filing of a bond of 500,000 pesos. The trial court denied Vogue Traders' motion for reconsideration in an order dated April 11, 1997.

Vogue Traders went to the Court of Appeals on certiorari and prohibition. On August 13, 1997, the Court of Appeals granted the petition, annulled and set aside the two orders for having been issued with grave abuse of discretion and in excess of jurisdiction, and directed the trial court to desist from proceeding with the civil case until the Bureau of Patents, Trademarks and Technology Transfer had finally resolved the two inter partes cases. The Court of Appeals denied reconsideration on March 5, 1998. Levi Strauss then filed the present petition for review on certiorari before the Supreme Court.

Facts

In 1972, Levi Strauss and Company, the principal based in Delaware, granted Levi Strauss (Phils.) a non-exclusive license to use the Levi's trademark, design, and name in manufacturing, marketing, distributing, and selling its clothing and other goods. The licensing agreement was renewed several times, the most recent under Certificate of Registration No. 1379-A. Levi Strauss and Company obtained certificates of registration from the Bureau of Patents, Trademarks and Technology Transfer for the marks Levi's, 501, the Two Horse Design, the Two Horse Label, the Two Horse Patch, the Two Horse Label with Patterned Arcuate Design, the Arcuate Design, and the composite marks.

Levi Strauss discovered that Vogue Traders held trademark registrations it considered confusingly similar to its own. It instituted two cases before the Bureau for cancellation: one against Certificate of Registration No. 53918 for the mark Live's, and another against Certificate of Registration No. 8868 for the Live's Label Mark. Levi Strauss then applied for search warrants before the Regional Trial Court of Manila, Branch 3, which on December 12, 1995 issued two search warrants on a finding of probable cause that Vogue Traders had violated Article 189 of the Revised Penal Code by manufacturing and selling jeans bearing marks confusingly similar to Levi's jeans. The warrants were enforced the next day and several goods were seized. Criminal charges were filed against Tony Lim of Vogue Traders, but these were eventually dismissed and the search warrants were quashed.

On February 1, 1996, Vogue Traders filed a complaint for damages, claiming it was the lawful assignee and authorized user of the Live's marks and copyright registrations, that its marks had no deceptive resemblance to those of Levi Strauss, and seeking recovery of the seized goods or their value, together with compensatory, exemplary, and other damages. Levi Strauss answered with a counterclaim, asserting that the Live's brand infringed its licensed Levi's brand, seeking cancellation of Vogue Traders' copyright registration, and asking that Vogue Traders be enjoined from manufacturing and selling jeans bearing a design similar to its trademarks. It was this counterclaim and its prayer for injunction that the trial court granted, and that the Court of Appeals set aside.

Issues

• Whether or not the doctrine of primary jurisdiction operates to suspend all proceedings in the civil case, including the trial court's authority to issue preliminary injunctive relief, while the cancellation cases are pending before the Bureau.
• Whether or not the certification against forum shopping attached by Vogue Traders to its petition was fatally defective because it was executed by its counsel rather than by a duly authorized officer.
• Whether or not the trial court committed grave abuse of discretion in declaring Vogue Traders to have waived its right to present evidence against the application for preliminary injunction.
• Whether or not the preliminary injunction issued in the civil case prejudged the case.

Applicable Provisions

Section 17 of Republic Act No. 166, the Trademark Law, provides:

Section 17. Grounds for cancellation. — Any person, who believes that he is or will be damaged by the registration of a mark or trade-name, may, upon the payment of the prescribed fee, apply to cancel said registration upon any of the following grounds: (a) That the registered mark or trade-name becomes the common descriptive name of an article or substance on which the patent has expired; (b) That it has been abandoned; (c) That the registration was obtained fraudulently or contrary to the provisions of section four, Chapter II hereof; (d) That the registered mark or trade-name has been assigned, and is being used by, or with the permission of, the assignee, so as to misrepresent the source of the goods, business or services in connection with which the mark or trade-name is used; or (e) That cancellation is authorized by other provisions of this Act.

This provision marks the administrative side of the boundary, since cancellation on these grounds belongs to the Bureau.

Section 151.2 of Republic Act No. 8293, the Intellectual Property Code of the Philippines, provides:

Notwithstanding the foregoing provisions, the court or the administrative agency vested with jurisdiction to hear and adjudicate any action to enforce the rights to a registered mark shall likewise exercise jurisdiction to determine whether the registration of said mark may be cancelled in accordance with this Act. The filing of a suit to enforce the registered mark with the proper court or agency shall exclude any other court or agency from assuming jurisdiction over a subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to cancel the mark with the Bureau of Legal Affairs shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to same registered mark may be decided.

This is the decisive provision, because it expressly answers whether a pending cancellation case bars an enforcement action.

Section 156.4 of the same Code provides:

The complainant, upon proper showing, may also be granted injunction.

This confirms that injunctive relief in an infringement action is a remedy the regular courts may grant.

Section 5, Rule 7 of the Rules of Civil Procedure provides:

Section 5. Certification against forum shopping. — The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

This governs the second issue, since it names the plaintiff or principal party as the signatory.

Ruling

On the first issue, the Court held that the petition has merit. The registration of the Levi's marks gives rise to a presumption of validity and the right to exclusive use, and Section 27 of the Trademark Law vests damage suits in the proper Regional Trial Court. Citing its earlier rulings, the Court explained that while administrative cancellation under Section 17 belongs to the Bureau, an action for infringement or unfair competition, together with injunction and damages, is explicitly and unquestionably within the competence and jurisdiction of the ordinary courts. An application for cancellation cannot per se restrain the courts from exercising their lawfully conferred jurisdiction, for that would unduly expand the doctrine of primary jurisdiction, which merely behooves regular courts, in controversies involving specialized disputes, to defer to administrative findings on certain technical matters. The Court then turned to the Intellectual Property Code, whose Section 151.2 provides that the earlier filing of a petition to cancel the mark shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to the same registered mark may be decided. It concluded that an infringement action, with its remedies of injunction and damages, can proceed independently or simultaneously with an administrative cancellation case, and that the prior filing of the two inter partes cases did not preclude Levi Strauss from including a counterclaim for infringement with a prayer for preliminary injunction in its answer.

On the second issue, the Court held that the certification against forum shopping must be executed by the petitioner himself, because only the petitioner has actual knowledge of whether he has initiated similar actions in other courts or agencies; even his counsel may be unaware of such fact. For corporations, the law requires that the certification be made by a duly authorized director or officer. The Court stressed that non-compliance cannot be rationalized by invoking the policy of liberal construction.

On the remaining issues, the Court held that the trial court did not commit grave abuse of discretion in declaring Vogue Traders to have waived its right to present evidence after it failed to appear at the scheduled hearing, and that the preliminary injunction, being merely provisional and not a disposition on the merits, did not prejudge the case.

Doctrine

First, an action for infringement or unfair competition, including the remedies of injunction and damages, may proceed independently or simultaneously with an administrative action for cancellation of a registered trademark before the Bureau. The earlier filing of a cancellation case does not constitute a prejudicial question that must first be resolved, and it does not suspend the regular court's authority to act, including its authority to issue injunctive relief. The doctrine of primary jurisdiction merely calls for deference to administrative findings on technical matters; it does not strip the courts of jurisdiction conferred by law.

Second, the certification against forum shopping must be executed under oath by the plaintiff or principal party, and in the case of a corporation, by a duly authorized director or officer, not by counsel, since only the party has actual knowledge of other pending actions. Failure to comply is not curable by mere amendment and cannot be excused by a plea for liberal construction.

Disposition

The Supreme Court granted the petition, set aside the decision and resolution of the Court of Appeals, and upheld the trial court's orders granting the writ of preliminary injunction and denying reconsideration.

Remember This

Memorize the line that the earlier filing of a petition to cancel a mark does not constitute a prejudicial question to an action enforcing the same mark. Examiners use this case to test the boundary between the Bureau's cancellation jurisdiction and the courts' infringement jurisdiction, and to test who must sign the certification against forum shopping.