PASCUAL GODINES, PETITIONER, VS. THE HONORABLE COURT OF APPEALS, SPECIAL FOURTH DIVISION AND SV-AGRO ENTERPRISES, INC., RESPONDENTS.

Through this petition for review on certiorari of a
decision of the Court of Appeals affirming the decision of the trial court,
petitioner Pascual Godines seeks to reverse the adverse decision of the Court a
quo that he was liable for infringement of patent and unfair
competition. The dispositive portion of
the assailed decision is hereby quoted to wit:

“WHEREFORE, with the elimination of the award for attorney’s
fees, the judgment appealed from is hereby AFFIRMED, with costs against
appellant.”^[1]

The patent involved in this case is
Letters Patent No. UM-2236 issued by
the Philippine Patent Office to one Magdalena S. Villaruz on July 15,
1976. It covers a utility model for a
hand tractor or power tiller, the main components of which are the
following: “(1) a vacuumatic house
float; (2) a harrow with adjustable operating handle; (3) a pair of paddy wheels;
(4) a protective water covering for the engine main drive; (5) a transmission
case; (6) an operating handle; (7) an
engine foundation on the top midportion of the vacuumatic housing float to
which the main engine drive is detachedly installed; (8) a frontal frame
extension above the quarter – circularly shaped water covering hold (sic) in
place the transmission case; (9) a V-belt connection to the engine main drive
with transmission gear through the pulley, and (10) an idler pulley
installed on the engine foundation.”^[2] The
patented hand tractor works in the following manner: “the engine drives the transmission gear thru the V-belt, a
driven pulley and a transmission
shaft. The engine drives the
transmission gear by tensioning of the V-belt which is controlled by the idler
pulley. The V-belt drives the pulley
attached to the transmission gear which in turn drives the shaft where
the paddy wheels are attached. The
operator handles the hand tractor
through a handle which is inclined upwardly and supported by a pair of
substanding pipes and reinforced by a U-shaped G.I. pipe at the V-shaped
end.”^[3]

The above mentioned patent was acquired by SV-Agro Industries
Enterprises, Inc., herein private respondent, from Magdalena Villaruz, its
chairman and president, by virtue of a Deed of Assignment executed by the
latter in its favor. On October 31,
1979, SV-Agro Industries caused the publication of the patent in Bulletin
Today, a newspaper of general circulation.

In  accordance with the
patent, private respondent manufactured and sold the patented power tillers
with the patent imprinted on them. In
1979, SV-Agro Industries suffered a decline of more than 50% in sales in its
Molave, Zamboanga del Sur branch. Upon
investigation, it discovered that power tillers similar to those patented by
private respondent were being manufactured and sold by petitioner herein. Consequently, private respondent notified
Pascual Godines about the existing patent and demanded that the latter stop
selling and manufacturing similar power tillers. Upon petitioner’s failure to comply with the demand, SV-Agro
Industries filed before the Regional Trial Court a complaint for infringement
of patent and unfair competition.

After trial, the court held Pascual Godines liable for
infringement of patent and unfair competition. The dispositive portion of the decision reads as follows:

“WHEREFORE, premises considered, JUDGMENT is hereby
rendered in favor of the plaintiff SV-Agro Industries Enterprises, Inc., and
against defendant Pascual Godines:

1. Declaring the writ of preliminary injunction
issued by this Court against defendant as permanent;

2. Ordering defendant Pascual Godines to pay
plaintiff the sum of Fifty Thousand Pesos (P50,000.00) as damages to its
business reputation and goodwill, plus the further sum of Eighty Thousand Pesos
(P80,000.00) for unrealized profits during the period defendant was
manufacturing and selling copied or imitation floating power tiller;

3. Ordering the defendant to pay the
plaintiff, the further sum of Eight Thousand Pesos (P8,000.00) as reimbursement
for attorney’s fees and other expenses
of litigation; and to pay the costs of the suit.

SO ORDERED.”^[4]

The decision was affirmed by the appellate court.

Thereafter, this petition was filed. Petitioner maintains the defenses which he raised before the
trial and appellate courts, to wit: that he was not engaged in the manufacture and sale of the power tillers
as he made them only upon the special order of his customers who gave their own
specifications; hence, he could not be liable for infringement of patent and
unfair competition; and that those made by him were different from those being
manufactured and sold by private respondent.

We find no merit in his arguments. The question of whether petitioner was manufacturing and selling
power tillers is a question of fact better addressed to the lower courts. In dismissing the first argument of
petitioner herein, the Court of Appeals quoted the findings of the trial court,
to wit:

“It is the contention of defendant that he did not manufacture
or make imitations or copies of plaintiff’s turtle power tiller as what he
merely did was to fabricate his floating power tiller upon specification and
designs of those who ordered them. However, this contention appears untenable in the light of the following
circumstances: 1) he admits in his
Answer that he has been manufacturing power tillers or hand tractors, selling
and distributing them long before plaintiff started selling its turtle power
tiller in Zamboanga del Sur and Misamis Occidental, meaning that defendant is principally
a manufacturer of power tillers, not upon specification and design of buyers,
but upon his own specification and design; 2) it would be unbelievable that
defendant would fabricate power tillers similar to the turtle power tillers of
plaintiff upon specifications of buyers without requiring a job order where the
specification and designs of those ordered are specified. No document was (sic) ever been presented
showing such job orders, and it is rather unusual for defendant to manufacture
something without the specification and designs, considering that he is an
engineer by profession and proprietor of the Ozamis Engineering shop. On the other hand, it is also highly unusual
for buyers to order the fabrication of a power tiller or hand tractor and allow
defendant to manufacture them merely based on their verbal instructions. This is contrary to the usual business and
manufacturing practice. This is not
only time consuming, but costly because it involves a trial and error method,
repeat jobs and material wastage. Defendant judicially admitted two (2) units of the turtle power tiller
sold by him to Policarpio Berondo.^[5]

Of general acceptance is the rule
imbedded in our jurisprudence that “x x x the jurisdiction of the Supreme
Court in cases brought to it from the Court of Appeals in a petition for certiorari
under Rule 45 of the Rules of Court is limited to the review of errors of law,
and that said appellate court’s findings of fact are conclusive upon this
Court.”^[6]

The fact that petitioner herein manufactured and sold power
tillers without patentee’s authority has been established by the courts despite
petitioner’s claims to the contrary.

The question now arises: Did petitioner’s product infringe upon the patent of private respondent?

Tests have been established to determine infringement. These are (a) literal infringement; and (b)
the doctrine of equivalents.^[7] In
using literal infringement as a test, “x x x resort must be had, in the
first instance, to the words of
the claim. If accused matter clearly
falls within the claim, infringement is made out and that is the end of
it.”^[8]
To determine whether the particular item falls within the literal meaning of the patent claims, the
Court must juxtapose the claims of the patent and the accused product within
the overall context of the claims and specifications, to determine whether
there is exact identity of all material elements.^[9]

The trial court made the following observation:

“Samples of the defendant’s floating power tiller have been
produced and inspected by the court and compared with that of the turtle power
tiller of the plaintiff (see Exhibits H to H-28). In appearance and form, both the floating power tillers of the
defendant and the turtle power tiller of the plaintiff are virtually the
same. Defendant admitted to the Court
that two (2) of the power tillers inspected on March 12, 1984, were
manufactured and sold by him (see TSN, March 12, 1984, p. 7). The three power tillers were placed
alongside with each other. At the
center was the turtle power tiller of plaintiff, and on both sides thereof were
the floating power tillers of defendant (Exhibits H to H-2). Witness Rodrigo took photographs of the same
power tillers (front, side, top and back views for purposes of comparison (see
Exhibits H-4 to H-28). Viewed from any
perspective or angle, the power tiller of the defendant is identical and
similar to that of the turtle power tiller of plaintiff in form, configuration,
design and appearance. The parts or
components thereof are virtually the same. Both have the circularly-shaped vacuumatic housing float, a pair of
paddy in front, a protective water covering, a transmission box housing the
transmission gears, a handle which is V-shaped and inclined upwardly, attached
to the side of the vacuumatic housing float and supported by the upstanding
G.I. pipes and an engine base at the top midportion of the vacuumatic housing
float to which the engine drive may be attached. In operation, the floating power tiller of the defendant operates
also in similar manner as the turtle power tiller of plaintiff. This was admitted by the defendant himself
in court that they are operating on the same principles. (TSN, August 19, 1987, p. 13)^[10]

Moreover, it also observed that
petitioner also called his power tiller as a floating power tiller. The patent issued by the Patent Office
referred to a “farm implement but more particularly to a turtle hand
tractor having a vacuumatic housing float on which the engine drive is held in
place, the operating handle, the harrow housing with its operating handle and
the paddy wheel protective covering.”^[11] It
appears from the foregoing observation of the trial court that these claims of
the patent and the features of the patented utility model were copied by
petitioner. We are compelled to arrive
at no other conclusion but that there was infringement.

Petitioner’s argument that his power tillers were different from
private respondent’s is that of a drowning man clutching at straws.

Recognizing that the logical fallback position of one in the
place of defendant is to aver that his product is different from the patented
one, courts have adopted the doctrine of equivalents which recognizes that
minor modifications in a patented invention are sufficient to put the item
beyond the scope of literal infringement.^[12]
Thus, according to this doctrine, “(a)n infringement also occurs when a
device appropriates a prior invention by incorporating its innovative concept
and, albeit with some modification and change, performs substantially the same
function in substantially the same way to achieve substantially the same
result.”^[13]
The reason for the doctrine of equivalents is that to permit the imitation of a
patented invention which does not copy any literal detail would be to convert
the protection of the patent grant into a hollow and useless thing. Such imitation would leave room for – indeed
encourage – the unscrupulous copyist to make unimportant and insubstantial changes and substitutions in
the patent which, though adding nothing, would be enough to take the copied
matter outside the claim, and hence outside the reach of the law.^[14]

In this case, the trial court observed:

“Defendant’s witness Eduardo Cañete, employed for 11 years as
welder of the Ozamiz Engineering, and therefore actually involved in the making
of the floating power tillers of defendant tried to explain the difference
between the floating power tillers made by the plaintiff and the power tillers
made by the defendant. But a careful
examination between the two power tillers will show that they will operate on
the same fundamental principles. And,
according to establish jurisprudence, in infringement of patent, similarities
or differences are to be determined, not by the names of things, but in the
light of what elements do, and substantial, rather than technical, identity in
the test. More specifically, it is
necessary and sufficient to constitute equivalency that the same function can
be performed in substantially the same way or manner, or by the same or
substantially the same, principle or mode of operation; but where these tests
are satisfied, mere differences of form or name are immaterial. x x x”^[15]

It also stated:

“To establish an infringement, it is not essential to show
that the defendant adopted the device or process in every particular; Proof of
an adoption of the substance of the thing will be sufficient. ‘In one sense,’ said Justice Brown, ‘it may
be said that no device can be adjudged an infringement that does not
substantially correspond with the patent. But another construction, which would limit these words to exact
mechanism described in the patent, would be so obviously unjust that no court
could be expected to adopt it. x x x.’

The law will protect a
patentee against imitation of his patent by other forms and proportions. If two devices do the same work in
substantially the same way, and accomplish substantially the same result, they
are the same, even though they differ in name, form, or shape.”^[16]

We pronounce petitioner liable for infringement in accordance
with Section 37 of Republic Act No. 165, as amended, providing, inter alia:

“Section 37. Right
of Patentees. – A patentee shall have the exclusive right to
make, use and sell the patented machine, article or product, and to use the
patented process for the purpose of industry or commerce, throughout the
territory of the Philippines for the terms of the patent; and such
making, using, or selling by any person
without the authorization of the patentee
constitutes infringement of the patent.”
(Underscoring ours)

As far as the issue
regarding unfair competition is concerned, suffice it to say that Republic Act
No. 166, as amended, provides, inter alia:

“Sec. 29. Unfair competition, rights
and remedies. – x x x.

x x x                                                             
x x x                                                    x
x x

In particular, and without
in any way limiting the scope of unfair competition, the following shall be
deemed guilty of unfair competition:

(a) Any person, who in selling his goods shall
give them the general appearance of goods of another manufacturer or dealer,
either as to the goods themselves or 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 that the goods
offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer, or who otherwise clothes the goods with such appearance
as shall deceive the public and defraud another of his legitimate trade. x x x.

x x x                                                        x
x x                                                  x
x x.”

Considering the foregoing, we find no reversible error in the
decision of the Court of Appeals affirming with modification the decision of
the trial court.

WHEREFORE, premises considered, the decision of the Court
of Appeals is hereby AFFIRMED and this petition DENIED for lack of merit.

Bidin, Melo, and Vitug,
JJ., concur.

Feliciano, J., (Chairman), on
official leave.

^[1]
Rollo, p. 33.

^[2]
Rollo, p. 19.

^[3]
Ibid.

^[4]
Rollo, p. 25.

^[5]
Rollo, pp. 31-32.

^[6]
Ronquillo v. Court of Appeals, G.R. No. 43346, March 20, 1991, 195 SCRA
433.

^[7]
Studiengesellschaft Kohle mbH v. Eastman Kodak Company, 616 F. 2d 1315,
at 1324 (1980).

^[8]
Ibid.

^[9]
Johnson and Johnson v. W.L. Gore and Assoc. Inc., 436 F. Supp. 704 at
728 (1977).

^[10]
Rollo, p. 21.

^[11]
Rollo, p. 12.

^[12]
Studiengesellschaft Kohle mbH v. Eastman Kodak Company, supra.

^[13]
Continental Oil Company v. Cole, 634 F. 2d 188 at 191 (1981).

^[14]
AGBAYANI, COMMENTARIES AND JURISPRUDENCE ON THE COMMERCIAL LAWS OF THE
PHILIPPINES, 489 (Vol. 2, 1986).

^[15]
Rollo, pp. 21-22.

^[16]
Rollo, pp. 20-21.