by | Mar 25, 2021

Doctrine: The element of intent to deceive and to defraud may be inferred from the similarity of the appearance of the goods as offered for sale to the public. Actual fraudulent intent need not be shown.



G.R. No. 213365-66 | December 10, 2018



PAPERONE, INC., respondent.

Ponente: Gesmundo, J.


The petitioner is engaged in the production, marketing and sale of pulp and premium wood free paper. It was alleged that it was the owner of a well-known trademark, PAPER ONE. Respondents allegedly used the trademark of the petitioner without the latter’s consent and its use was done in bad faith and designed to mislead the public into believing that the respondent’s products were manufactured by the petitioner. The respondent alleges that the DTI and SEC had allowed it to use the trademark, thereby negating any violation on the petitioner’s rights. Respondents also alleges that its products had been widely sold in the Philippines even before petitioner could claim any business transaction in the country.

The Supreme Court held that Paperone, Inc., herein respondent, is liable for unfair competition.

There court held that there are two elements of an action for unfair competition, first is a confusing similarity in the general appearance of the goods, and the second is the intent to deceive the public and defraud a competitor.

As to the first element, the confusing similarity may or may not result from similarity in the marks, but may result from other external factors in the packaging or presentation of the goods. Jurisprudence has noted two types of confusion: (1) confusion of goods, where the ordinarily prudent purchaser would be induced to purchase one product in the belief that he was purchasing the other; and (2) confusion of business, where the public would be deceived either in to the belief that there is some connection between the two parties, although inexistent.

The BLA director ruled that if the respondent were to continue using the same or identical trademark, their coexistence would result to confusion as to the source of goods and diversion of sales to respondent. The BLA director also ruled that the petitioner was the one who had priority rights over PAPER ONE. It was filed for trademark registration by respondent on March 22, 1999 while the respondent’s corporate or trade name was duly registered with the SEC on March 31, 2001.

The second element may be inferred from the similarity of the appearance of the goods. Actual fraudulent intent need not be shown. Factual circumstances were established showing respondent adopted PAPERONE in its trade name even with the prior knowledge of the existence of PAPER ONE as a trademark of petitioner. As in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and combinations of letters available, respondent had to choose those so closely similar to another’s trademark if there was no intent to take advantage of the goodwill generated by the other mark.

The petition was granted by the Supreme Court.

Digested by Joshua Christian Koppin, 2 – JD, S.Y. 2020-2021, Mindanao State University – College of Law Iligan Extension