In a landmark decision, the Supreme Court of the Philippines sided with McDonald’s, reinforcing the protection afforded to registered trademarks against infringement and unfair competition. The Court found L.C. Big Mak Burger, Inc. liable for using a confusingly similar mark, “Big Mak,” on their hamburger products. This ruling underscores the importance of safeguarding brand identity and preventing businesses from unfairly capitalizing on the goodwill established by others.

The “Big Mak” Attack: Did a Local Burger Joint Steal McDonald’s Sizzle?

This case revolves around the clash between McDonald’s Corporation, the global fast-food giant, and L.C. Big Mak Burger, Inc., a local burger chain in the Philippines. McDonald’s, owner of the registered trademark “Big Mac” for its signature hamburger, accused L.C. Big Mak Burger of trademark infringement and unfair competition for using the name “Big Mak” for its own hamburger sandwiches. The central legal question was whether “Big Mak” constituted a colorable imitation of “Big Mac,” thus creating a likelihood of confusion among consumers.

The trial court initially ruled in favor of McDonald’s, finding L.C. Big Mak Burger liable for both trademark infringement and unfair competition. However, the Court of Appeals reversed this decision, prompting McDonald’s to elevate the case to the Supreme Court. The Supreme Court, in turn, reversed the Court of Appeals’ ruling, siding with McDonald’s. The Court emphasized that the use of a mark or its colorable imitation, which is likely to cause confusion, is the heart of trademark infringement. In determining this, the Supreme Court applied the dominancy test.

The Court stated that there are two types of confusion, particularly, confusion of goods (product confusion) and confusion of business (source or origin confusion). Building on this principle, it cited the test of dominancy to determine the likelihood of confusion. Under this, courts give greater weight to the similarity of the appearance of the product arising from the adoption of the dominant features of the registered mark, disregarding minor differences. In its analysis, the Court focused on the aural and visual similarities between “Big Mac” and “Big Mak,” noting the near-identical pronunciation and spelling.

Crucially, the Supreme Court highlighted the significance of protecting a trademark owner’s potential for business expansion. Even if L.C. Big Mak Burger targeted a different market segment, the Court reasoned, McDonald’s had the right to extend its brand reach without facing unfair competition.

“Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his goods or business from actual market competition with identical or similar products of the parties, but extends to all cases in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of source…”

Addressing the issue of unfair competition, the Supreme Court examined whether L.C. Big Mak Burger intentionally misled consumers into believing their hamburgers were associated with McDonald’s. The Court noted the similarities in the product and the lack of clear differentiation in branding, particularly during the initial stages of the dispute. These factors indicated a deliberate attempt to capitalize on the reputation and goodwill of McDonald’s brand.

Under Section 29 (“Section 29”) of RA 166 defines unfair competition, thus:

(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 feature of their appearance, which would be likely to influence purchasers to believe 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, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;

Based on the ruling, proving actual confusion isn’t required, likelihood is sufficient. Section 22 requires the less stringent standard of “likelihood of confusion” only. In cases of trademark infringement and unfair competition, the successful plaintiff is entitled to injunctive and monetary reliefs to avoid future business downfalls.

FAQs

What was the key issue in this case?	The key issue was whether L.C. Big Mak Burger, Inc.’s use of the “Big Mak” mark infringed on McDonald’s registered trademark “Big Mac” and constituted unfair competition.
What is trademark infringement?	Trademark infringement occurs when someone uses a registered trademark or a similar mark without permission, causing confusion among consumers about the source or origin of the goods or services.
What is unfair competition?	Unfair competition involves deceptive or bad-faith practices that aim to pass off one’s goods, business, or services as those of another, thereby undermining the goodwill established by the latter.
What is the “dominancy test”?	The “dominancy test” focuses on the similarity of the dominant features of competing trademarks to determine the likelihood of consumer confusion, disregarding minor differences.
Did McDonald’s have to prove actual consumer confusion?	No, the Supreme Court clarified that proving a “likelihood of confusion” is sufficient for trademark infringement, and proof of actual confusion is not required.
What was the Court’s reasoning on unfair competition?	The Court inferred intent to deceive from the similarity of the marks, respondents chose to apply the “Big Mak” mark on hamburgers and the lack of clear notice to the public that “Big Mak” hamburgers were not products of McDonald’s.
What remedies are available for trademark infringement and unfair competition?	Victims of trademark infringement and unfair competition can seek injunctive relief (a court order to stop the infringing activity) and monetary damages (compensation for losses suffered).
What is the significance of this ruling?	This ruling reinforces the protection afforded to registered trademarks, signaling that businesses cannot unfairly capitalize on established brand names, especially where it may cause consumer confusion.

The Supreme Court’s decision serves as a stern warning against trademark infringement and unfair competition in the Philippines. It underscores the importance of protecting brand identity and ensuring fair business practices. This ruling provides valuable guidance for businesses seeking to protect their trademarks and for consumers who rely on trademarks to make informed purchasing decisions.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: McDonald’s Corporation vs L.C. Big Mak Burger, G.R No. 143993, August 18, 2004