“LA:. INSULAR” CIGAR AND CIGARETTE FACTORY, INC., PLAINTIFF AND APPELLANT, VS. B. E. JAO OGE, PROPRIETOR OF CIGARETTE FACTORY “LA CIUDAD,” DEFENDANT AND APPELLEE.

The plaintiff in this case conducts a
tobacco factory in the city of Manila for the manufacture of cigars and
cigarettes; and it is the owner of a registered trade-mark, which it
places upon the wrappers of its cigarettes and by which the plaintiff’s
product is generally recognized throughout the Philippine Islands and
elsewhere. This trade-mark consists of a decorative design printed in
colors on a strip of paper of appropriate size to envelope the packages
of cigarettes to which it is pasted. A specimen of said design is
exhibited with the complaint and appears in the records upon appeal as
Exhibit A.

In the complaint itself the same design is described as follows:

“On the first square is represented a matron seated
on a raised platform with steps leading up to it upon which there is a
rug, all on a background of palm leaves. This figure holds a smoking
torch in her right hand and in her left a streamer with the words ‘La
Insular’ inscribed thereon. At the left hand side of this figure are
the words ‘Marca de Fabrica’ underneath which is a five pointed star
with the initial ‘E’ on one side of it and ‘D’ on the other. Further
down are the words ‘La Insular Fabrica de Tabacos Manila,’ and still
further down appear a terrestrial globe, an anchor, a post, a ship with
three sails, with a mountain in the background.

“On the
second square is represented a sign placed diagonally from corner to
corner of the square with the word ‘Hebra’ written thereon in large
letters. On one side of this figure, are the words ’30 Cgiarrillos’ and
on the other side, the words ‘Entre Fuerte.’ Between the two squares in
large letters are the words ‘Plaza Binondo.’ “

The complaint, after setting forth the ownership of this trade-mark
and the continuous use of the same for nearly forty years by the
plaintiff and its predecessors in interest, alleges that in the year
1915 the defendant, B. E. Jao Oge, proprietor of the cigarette factory
“La Ciudad,” in the city of Manila, began to use two different labels
on packages of cigarettes offered for sale by him which are infringing
imitations of the plaintiff’s mark. Specimens of these alleged
imitations are exhibited with the complaint and appear in the record as
Exhibits B and C; but no attempt at verbal description of said
imitations is made in the complaint.

Paragraphs VII and IX of the complaint are textually as follows:

“VII. That the said defendant through the use of
said infringing labels (which closely imitate the label and mark of
plaintiff as aforesaid) in selling his cigarettes has given and is
giving the cigarettes offered for sale by him the appearance of the
cigarettes manufactured and offered for sale by plaintiff and its
predecessors in interest in such a way as to influence purchasers to
believe that the cigarettes offered for sale by defendant are those of
the plaintiff and that such appearance has so influenced and is now
influencing purchasers.

* * * * * * *

“IX. That the defendant imitates plaintiff’s mark
for the purpose of deceiving the public and of defrauding plaintiff of
its legitimate trade, and that the public has been and is being
deceived, and this plaintiff has been and is being defrauded thereby in
loss of sales to its damage in the sum of twenty thousand pesos
(P20,000).” * * *

In the petitory clause the plaintiff prays that the defendant be
perpetually enjoined from the further use of the alleged obnoxious
labels in the sale of cigarettes; that he be required to render a true
and complete account of his profits upon all cigarettes bearing such
labels sold or otherwise disposed of by him; that judgment be entered
in favor of the plaintiff and against the defendant for treble the
amount .thereof, which the plaintiff avers will amount to P20,000; and
finally that the plaintiff be granted any other appropriate remedy.

To this complaint the defendant interposed a general demurrer on
the ground that the facts stated did not constitute a cause of action.
This demurrer was sustained by the trial judge, to which action the
plaintiff excepted; and he having elected not to amend further,
judgment was entered dismissing the complaint. From this judgment the
plaintiff appealed.

In our opinion this complaint is sufficient, and the order sustaining the demurrer must be reversed.

Infringement of trade-mark, illegal use of trade-name, and unfair
competition are related torts and are commonly treated together by
authors of legal treatises. It is generally recognized that the generic
tort is unfair competition, of which the other two may be considered
special forms. The most fully developed branch of the subject is of
course that which relates to the law of trade-marks; for the reason
that trade-mark right was recognized and protected by the courts long
before relief was granted against the illegitimate use of trade-names
and unfair competition in general, and moreover the legislatures of the
different countries where commerce has thriven have made provision for
the registration of trade-marks and the protection of the rights
thereby secured. The common element in all of these wrongs consists of
the false representation to the public, by means of words, names,
pictures, or symbols, that the goods or business of one man are the
goods or business of another.

Owing to the close affinity existing between these wrongs, it was
but natural that the Philippine Commission, upon introducing into this
country the doctrines generally prevailing in the United States upon
the subject, should have incorporated into a single complete measure
the provisions relating to trade-marks, trade-names, and unfair
competition, as was accomplished by Act No. 666.

Upon examining the provisions of this law it will be found that
substantially the same remedies are conceded to the person injured
whether the wrong done in a particular case consists of infringement of
trade-mark, illegal use of trade-name, or unfair competition in
business,— which remedies consist of an award of damages, or double
damages, and a perpetual injunction against the continuance of the
injury. The same statute, in addition to giving the injured person the
civil remedies above-mentioned, also provides for the prosecution of
the offending party in a criminal action and annexes to each offense
its appropriate penalty, which is somewhat heavier in the case of
infringement of a trade-mark or trade-name than in case of unfair
competition.

If the question be asked what distinguishes infringement of
trade-mark from unfair competition, no entirely satisfactory answer can
be readily given, though certain points are so clear as not to admit of
doubt. For instance, in the first place, the infringement of a
trade-mark supposes that the injured party has a trade-mark, that is,
that he is using upon his goods a name, emblem, sign, or device of the
character defined in section 1 of Act No. 666 and that he has complied
with the conditions which are deemed essential by law for the creation
of the trade-mark right. Under section 4 of the Act continued user of a
trade-mark, under the conditions there mentioned, is sufficient,
whether the trade-mark has been registered or not.

In the second place, it is necessary to the infringement of a
trade-mark that the offending party should have used such trade-mark in
selling goods of a similar kind to those sold by the owner of the
trade-mark. The statute plainly says that the action for the
infringement of a trade-mark lies in favor of the injured person
against any one who sells goods of a similar kind “bearing such
trade-mark.” This language seems to suppose that the mark thus used by
the infringer is a counterfeit, or spurious imitation, of the genuine
trade-mark. This interpretation, if adopted, would make the remedy
available in very few cases, since most traders desirous of filching
the trade of others in this way will use colorable imitations, or
suggestive reproductions of the trade-mark which they intend to
appropriate rather than exact counterfeits.

However, the question of the exact scope of the action for the
infringement of trade-mark is in this jurisdiction at least more
academic than practical, because if a litigant’s right is doubtful
under that section of Act No. 666 which deals specially with the
infringement of trade-marks (sec. 3), he has only to claim the benefit
of the section dealing with unfair competition (sec. 7), which gives
precisely the remedies that he would have obtained under the other
provision ; and under this section it is immaterial what form the
deceptive practices of the infringer take.

Another point about which there can be no difference of opinion is
that the mere fact that a merchant owns a trademark, which he uses in
selling goods of a certain kind, does not in any wise discapacitate him
from maintaining an action for unfair competition in respect to the
sale of similar goods by a competitor; and of course one who fails to
establish the exclusive property right which is necessary to the
validity of a trade-mark may yet in an appropriate case obtain relief
on the ground of unfair competition. But even this point also is more
academic than practical in this jurisdiction because the same use of an
emblem, sign, or device that would be a necessary prerequisite to the
action for unfair competition also suffices under section 4 to confer
the actual trade-mark right.

A difference between the action for infringement of trademark and
the action for unfair competition has been pointed out with respect to
the relation which fraudulent intent on the part of the person to be
held liable has to the right of action in those two wrongs. Thus, we
find that in cases of infringement of trade-marks the law primarily
takes no account of the actual intent on the part of the infringer to
mislead the public and defraud the owner of the trademark; nevertheless
this factor, if present, may be taken, in the discretion of the court,
as a ground for the assessment of double damages (sec. 3). On the other
hand, in cases of unfair competition proper, actual intent to deceive
the public and defraud the person injured is declared to be essential
to the maintenance of the action; but it is immediately added that
“such intent may be inferred from similarity of the appearance of the
goods as packed or offered for sale to those of the complaining party.”
(Sec. 7.) These words lack but little, if anything, of putting the
action for unfair competition in cases of simulated wrappers, upon the
same practical footing as the action for infringement of trade-mark
even on the point of proof of intent to defraud.

It is thus seen that the action for infringement of trademark and
the action for unfair competition are interlaced with each other in
such manner that it is not always easy to point out exactly where one
ends and the other begins. But refinements on this point will usually
be found unnecessary, since the three wrongs recognized in the
statute—infringement of trade-marks, infringement of trade-names, and
unfair competition—together comprise all actionable injuries which one
person may inflict upon another as the result of the unfair use of
names, marks, and other trade-devices.

Passing to the question of the sufficiency of the complaint, it may
be observed that the plaintiff in any action is admonished in section
89 of our Code of Civil Procedure to set forth the facts constituting
his supposed grievance in ordinary and concise language. He is not
required to indicate the particular provision of law upon which he
relies for relief; and if he does so and is mistaken, this will not
preclude him from obtaining relief under a different conception of the
case, provided always that the facts stated and proved justify such
relief.

In the case before us the plaintiff’s attorney suggests that the
complaint states a good cause of action for unfair competition under
section 7 of Act No. 666. Upon analyzing that provision it will be
found that the essential elements of unfair competition are, first,
that the person complained of shall have given to his goods the general
appearance of the goods of the complaining party, either in the
wrapping of the packages in which they are contained, or the devices or
words thereon or in any other feature of their appearance which would
be likely to influence purchasers to believe that the goods offered are
those of the complaining party; and, secondly, that the person
complained of should have clothed the goods with such appearance for
the purpose of deceiving the public and defrauding the complaining
party of his legitimate trade.

In our opinion the complaint before us exhibits both of those
elements with all necessary precision. Upon the point of the appearance
of the defendant’s packages, we have the allegation that the label
which the defendant is using on his packages of cigarettes closely
imitates the label and mark of the plaintiff, and the further
allegation that the defendant is giving his cigarettes the appearance
of the cigarettes manufactured and offered for sale by the plaintiff.
In addition to this, for purposes of visual inspection, a copy of the
plaintiff’s trade-mark is exhibited along with copies of the two
different labels used by the defendant. Both of them, we may say in
passing, are in many respects strikingly similar to the plaintiff’s
trademark. When we take into account the closing words of section 7 of
Act No. 666, to the effect that the intent to deceive the public and
defraud a competitor may be inferred from similarity in the appearance
of the goods as packed or offered for sale, it is too clear for
argument that the allegations of the complaint, taken in connection
with the exhibits, show actionable imitation on the part of the
defendant. In this connection it is to be remembered that the demurrant
must be taken to admit the character of the two marks used by him in
the sense least favorable to himself.

In determining the sufficiency of this complaint upon demurrer, the
court is not required definitively to adjudicate that the marks used by
the defendant are sufficient per se to make out a case
against him. In addition to the proof supplied by those marks, we have
the admission of the demurrant that those marks closely imitate the
mark of the plaintiff, and that the packages of cigarettes of the
defendant have by means thereof been given the appearance of the
plaintiff’s packages for the purpose of deceiving the public and
defrauding the plaintiff. Of course if the marks of the defendant,
which are exhibited with the complaint, had been so far different from
the mark of the plaintiff as totally to refute the pretense of
fraudulent imitation, it would have been safe for the trial court to
sustain the demurrer. In such case the real evidence supplied by the
exhibits would have shown that the charge of objectionable imitation
was baseless. But as long as there is anything about the defendant’s
marks that could reasonably be considered objectionable, the plaintiff
is entitled, upon demurrer, to the benefit of the inference.

In this connection a rule has been laid down by the American courts
to the effect that where a demurrer is interposed to a complaint of the
kind now before us, the demurrer should not be sustained unless the
dissimilarity between the mark used by the plaintiff and that used by
the defendant is so manifest as to leave no doubt in the mind of the
court that unfair competition has not been practiced. In other words,
in order to justify the sustaining of the demurrer, it must be apparent
that there is no resemblance which could in any event be declared
objectionable. (Leidersdorf vs. Second Ward Savings Bank, 50 Wis., 406.)

In a case to restrain the infringement of a trade-mark called “Old
Joe,” long used by the plaintiff on bottles of whiskey, the Supreme
Court of Florida said:

“We are of opinion that the allegations of the bill
show that the appellants have rights in the exclusive use of the
trade-mark of their brand of whiskey called ‘Old Joe,’ described in the
bill, and we are unable to say, in the face of the admission by the
demurrer of those allegations, that a bare inspection of the exhibits
affords sufficient proof to do away with the effect of those admitted
allegations. The bill, among other things, alleges that complainants
had established a right to use the devices upon the bottles containing
the ‘Old Joe’ whiskey as a trade-mark, that the brand of the defendant
resembled that of complainants in size of package, shape, color and
appearance, and that the defendant is actually selling his brand of
‘Old Geo. Whiskey’ as and for the whiskey of complainants, and that
these acts of defendant constitute an unfair and fraudulent competition
in business. These allegations are admitted by the demurrer. If it be
true, as thus admitted, that there is such a resemblance as to enable
the defendant to actually sell his brand of whiskey for that of
complainants, we do not think it can be said the bill is without
equity.” (Bluthenthal and Bickart vs. Mohlmann, 49 Fla., 275, 279.)

We also quote, as instructive upon more than one point, the
following language used by one of the Circuit Courts of Appeal of the
United States, in a case where a demurrer to a complaint in a case not
unlike that now before us had been erroneously sustained by the
district judge.

Said the appellate court :

“The appellee insists at the outset that the bill
of complaint states a cause of suit for the infringement of a trademark
only, and not at all for unfair competition in trade. In this we think
counsel is in error. A suit for unfair competition may be maintained
where there is no lawful trade-mark involved, which consists
essentially in palming the goods of one manufacturer or vendor off for
the goods of another. This is a fraud not only upon the manufacturer
whose goods are assimilated and replaced in the market, but upon the
general public as well, which does not get what it supposes it is
bargaining for. For the fraud thus perpetrated, the individual or the
manufacturer, as the case may be, has his or its cause of suit to
prevent the recurrence of the imposition, and for such damages as may
have been sustained on account of it. [Citing authorities.] A fortiori
a suit may be maintained for unfair competition when the infringement
of a trade-mark is resorted to as a means of accomplishing the purpose.
As is said in the books, Trade-mark infringement is but one form of
unfair competition.’ (Hopkins on Trade-Marks, 44.) In such a case it is
altogether appropriate that the party claiming to be injured should
conjoin allegations of infringement with averments of unfair
competition. Indeed, he could not well state his case otherwise. There
can be no objection, therefore, to joining the two causes of suit in
one complaint, and it is true also that he might succeed in one cause
alone and fail in the other. By fair intendment the complaint in the
present cause combines both elements of fraud, infringement, and unfair
competition in trade.” (G. Heileman Brewing Co. vs. Independent Brewing Co., 112 C. C. A., 133.)

From something said in the opinion of the court below we infer that
his Honor, the trial judge, may have supposed that the complaint now
before us is defective by reason of the fact that it does not contain a
written description of the marks used by the defendant and a detailed
verbal exposition of the points of resemblance to be noted between them
and the plaintiff’s trade-mark. This cannot be considered necessary
where the offending marks, submitted for the purposes of actual
comparison, tell the whole story to the eye. These exhibits are as much
a part of the complaint as the verbal allegations contained in it; and
while admittedly exhibits cannot wholly take the place of necessary
allegations, when the latter are wanting (Canete vs.
Wislizenus and Serna, 36 Phil., 428) these exhibits nevertheless
supplement the allegations contained in this complaint and supply
material for interpreting them.

In conclusion we have only to add, in justice to the trial judge,
that his Honor was obviously misled by the discussion contained in Mr.
Justice Moreland’s opinion in Compania Gral. de Tabacos vs.
Alhambra Cigar, etc. Co. (33 Phil., 485). In that case this court held
that a manufacturer of tobacco who had long been accustomed to use the
expression “La Flor de la Isabela” upon packages of cigarettes of a
certain quality could not maintain an action to enjoin a competitor—the
Alhambra Company—from using the words “Alhambra Isabelas” on similar
packages sold by it, the term “Isabela” being the name of the province
where the tobacco used by both factories in making cigarettes of this
quality had been grown. So far as the point there actually decided is
concerned, the position of the court is in our opinion sound.
Unfortunately, however, the opinion written in that case by Mr. Justice
Moreland followed lines of reasoning which did not conform to the ideas
of other members of this court, with the result that two of the six
Justices taking part in the decision limited their concurrence to the
dispositive part of the opinion, while one member dissented altogether.
It will thus be seen that this Tribunal refused to assume
responsibility for what was said in that opinion, and most of it
probably reflects the individual views of its author. In the later case
of Clarke vs. Manila Candy Co. (36 Phil., 100), decided while
Mr. Justice Moreland was still a member of this body, the views
expressed by him in Compania Gral. de Tabacos vs. Alhambra Cigar, etc. Co., supra,
were in effect rejected by the court, with Mr. Justice Moreland
dissenting. The opinion referred to must therefore be considered as
devoid of authority except upon the point actually decided.

From what has been said it is obvious that the demurrer interposed
to the complaint is not well founded. The judgment must therefore be
reversed, and the cause will be remanded to the court of origin for
further proceedings in conformity with this opinion, without special
finding as to costs of this instance. So ordered.

Johnson, Araullo, Avancena, and Villamor, JJ., concur.