ALHAMBRA CIGAR AND CIGARETTE MANUFACTURING CO., PLAINTIFF AND APPELLEE, VS. PEDRO N. MOJICA, DEFENDANT AND APPELLANT.

This is an appeal from a judgment of the Court of First Instance of the city
of Manila declaring that the cigar bands or rings attached to the complaint and
those in evidence used by the defendant upon his cigars bear such a close
resemblance to those used on the cigars of the plaintiff that, taken together
with other circumstances, their use constituted unfair competition, and forever
prohibiting the defendant from using said bands or rings.

It appears from the evidence that the plaintiff has been manufacturing cigars
of a certain kind and form for a long period of years and during that time has
used upon said cigars a paper ring or band of a chocolate-brown color, with
letters and lines upon it in gold. This ring or band, having been used by the
plaintiff for many years, had become well-known to the trade and was of great
value in the sale of its cigars.

Within the last year or two the defendant commenced to use a band or ring
very similar to that of the plaintiff, and it is upon this use that the present
action is founded.

The band or ring of the plaintiff is of a dark brown color, about
seven-sixteenths of an inch wide, and divided into three parts or divisions by
gold lines. In the first division is the word “Manila” in capital letters of
gold. In the second or middle division are two words, “Excelentes” and
“Alhambra,” the former being above the latter, and the word “Alhambra” being
enclosed in quotation marks. In the third or last division or part are the
capital letters “A. C. Cy.,” of the same size as are used in the word
“Manila.”

The bands or rings of the defendant, so far as they appear in the evidence,
are of two different colors but of the same shape and with substantially the
same markings. They are about one-half of an inch xvide and, like those of, the
plaintiff, are divided into three parts. In the first part is the word “Manila”
in capital letters of the same form and of substantially the same size as used
by plaintiff in the same word. In the second or middle division are the words
“Excelentes” and “La Progresiva,” the former being above the latter and the
latter two words being enclosed in quotation marks. Here, again, the words
“Excelentes” and “La Progresiva” are in capital letters of the same form and of
substantially the same size as used by the plaintiff in the words “Excelentes”
and “Alhambra.” In the third or last division are the words “I. Luzon.” In
another band used by the defendant we have the same style with the exception of
color, with the same kind of lines and divisions and the same markings, with the
exception that the word “Excelentes” is substituted by the words “Best Quality.”
The color of defendant’s bands, as shown by the exhibits, is either a brown
exactly the shade of plaintiff’s or green with gold lines and gold letter
markings as already stated. The cigars sold by the defendant with the bands
described, whether of brown or of green, are formed almost exactly like the
cigars sold by the plaintiff, and with substantially the same color and style of
wrapper.

In determining whether or not the defendant is guilty of unfair competition
in using the bands, we have the right and it is our duty to take into
consideration all of the other features of the articles offered for sale to
ascertain whether, when taken together with the imitated band, there is
likelihood that the public may be deceived as to the article it is purchasing.
It is clear that, the cigars having substantially the same appearance and color,
the same size, the same shape, and the same style and color of band, the
deception is not only possible but is very probable. The cigar put out by the
defendant, taken as a whole, disarms and deceives the purchaser who is desirous
of purchasing cigars of plaintiff.

Section 7 of Act No. 666 reads :

“Any person who in selling his goods shall give them the general appearance
of goods of another manufacturer or dealer, either in the wrapping of the
packages in which they are contained, or the devices of words thereon, or in any
other feature of their appearance, which would be likely to influence purchasers
to believe that the goods offered are of a manufacturer or dealer other than the
actual manufacturer or dealer, and who clothes the goods with such appearance
for the purpose of deceiving the public and defrauding another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor engaged
in selling such goods with a like purpose, shall be guilty of unfair
competition, and shall be liable to an action for damages, in which the measure
shall be the same as that provided for a violation of trademark rights, together
with discretionary power in the court to impose double damages, if the
circumstances call for the same. The injured party may also have a remedy by
injunction similar to that provided for in cases of violation of trade marks.
This section applies in cases where the deceitful appearance of the goods,
misleading as to origin or ownership, is effected not by means of technical
trademarks, emblems, signs, or devices, but by the general appearance of the
package, containing the goods, or by the devices or words thereon, even though
such packages, devices, or words are not by law capable of appropriation as
trademarks; and in order that the action shall lie under this section, actual
intent to deceive the public and defraud a competitor shall affirmatively appear
on the part of the person sought to be made liable, but such intent may be
inferred from similarity in the appearance of the goods as packed or offered for
sale to those of the complaining party.”

The court found that: “An examination of the rings used upon the cigars by
the defendant as appears from the evidence in connection with the ring which the
plaintiff has adopted and has used for a long period of time before used by the
defendant shows that there can be no doubt but that those used by the defendant
are similar to the mark used by plaintiff and that they would tend to deceive
any purchaser using ordinary care in making a purchase. They are so similar,
packed as they are in a box, that one would have to examine closely the reading
upon the rings in order to distinguish the difference.”

Unfair competition consists in passing off or attempting to pass off upon the
public the goods or business of one person as and for the goods or business of
another. It consists essentially in the conduct of a trade or business in such a
manner that there is either an express or implied representation to that effect.
It may be stated broadly that any conduct the end and probable effect of which
is to deceive the public or pass off the goods or business of one person as and
for that of another, constitutes actionable unfair competition. Unfair
competition, as thus defined, is a legal wrong for which the courts afford a
remedy. It is a tort and a fraud. The basic principle is that no one has a right
to dress up his goods or otherwise represent them in such a manner as to deceive
an intending purchaser and induce him to believe he is buying the goods of
another. Protection against unfair competition is not intended to create or
foster a monopoly and the court should always be careful not to interfere with
free and fair competition, but should confine itself, rather, to preventing
fraud and imposition resulting from some real resemblance in name or dress of
goods. Nothing less than conduct tending to pass off one man’s goods or business
as that of another will constitute unfair competion. Actual or probable
deception and confusion on the part of customers by reason of defendant’s
practices must always appear.

Relief against unfair competition is properly afforded upon the ground that
one who has built up a good will and reputation for his goods or business is
entitled to all the benefits therefrom. Such good will is property and, like
other property, is protected against invasion. Deception of the public injures
the proprietor of the business by diverting his customers and depriving him of
sales which he otherwise would have made. This, rather than the protection of
the public against imposition, is the true basis for the private remedy,
although it is often said that the remedy proceeds in part upon the theory of
protection; to the public against fraud. No one has a right to avail himself of
another’s favorable reputation in order to sell his own goods.

A demand for goods created by advertising belongs to the advertiser and he
will be protected therein against unfair competition by another who seeks in any
way to take advantage of such advertisements to sell his own goods.

In order to make it a case of unfair competition it is not necessary to show
that any person has been actually deceived by defendant’s conduct and lead to
purchase his goods in the belief that they are the goods of plaintiff, or to
deal with defendant thinking that he was dealing with plaintiff. It is
sufficient to show that such deception will be the natural and probable result
of defendant’s acts. Either actual or probable deception and confusion must be
shown, for if there is no probability of deception there is no unfair
competition. As in the case of infringement by imitation of another’s trademark,
the true test of unfair competition is whether the acts of defendant are such as
are calculated to deceive the ordinary buyer making his purchases under the
ordinary conditions which prevail in the particular trade to which the
controversy relates. This has been said to include incautious, unwary or
ignorant purchasers, but not careless purchasers who make no examination. The
fact that careful buyers, who scrutinize closely, are not deceived, merely shows
that the injury is less in degree. It does not show that there is no injury. The
fact that careless purchasers are deceived simply by the use of ordinary and
common forms of putting up goods does not show unfair competition. The class of
purchasers who buy the particular kind of article manufactured, such as servants
or children, upon the one hand, or persons skilled in the particular trade, upon
the other, must be considered by determining the question of probable deception.
Purchasers may be deceived and misled into purchasing the goods of one person
under the belief that they are purchasing the goods of another person whose
goods they intended to buy although they do not know who is the actual
proprietor of the genuine goods. They are so deceived when they have in mind to
purchase goods coming from a definite, although unknown, source, with which
goods they are acquainted, although they neither know nor care who is the actual
proprietor of such goods. The ultimate purchaser is the one in view and it is
sufficient if he is liable to be deceived.

No inflexible rule can be laid down as to what will constitute unfair
competition. Each case is, in a measure, a law unto itself. Unfair competition
is always a question of fact. The question to be determined in every case is
whether or not, as a matter of fact, the name or mark used by the defendant has
previously come to indicate and designate plaintiff’s goods, or, to state it in
another way, whether defendant, as a matter of fact, is, by his conduct, passing
off defendant’s goods as plaintiff’s goods or his business as plaintiff’s
business. The universal test question is whether the public is likely to be
deceived.

It is often said that a fraudulent intent on the part of defendant to pass
off his goods or business as or for that of plaintiff is necessary to constitute
unfair competition. We think the better view is, however, that an actual
fraudulent intent need not be shown where the necessary and probable tendency of
defendant’s conduct is to deceive the public and pass off his goods or business
as and for that of another, especially where the only preventive relief against
continuance of the wrong is, sought or granted. Even if the resemblance is
accidental and not intentional, plaintiff is entitled to protection against its
injurious results to his trade.

Under the evidence in this case there is no doubt whatever in our minds that
the use of the chocolate-colored bands by the defendant, taken together with the
other circumstances under which the article in question is sold, constitutes
unfair competition. We do not believe, however, that the complaint against the
green band is well founded. That is clearly and easily distinguishable from the
band used by the plaintiff; and the ordinary purchaser of plaintiff’s goods
would be able, at a glance, to distinguish defendant’s cigars, when, surrounded
by the green band, from those of plaintiff.

The judgment appealed from is affirmed in all particulars except that with
reference to the green band, and in that regard is reversed; with costs against
the appellant.

Arellano, C. J., Carson and Araullo, JJ., concur.

Trent, J., concurs in the result.