In the case of Dermaline, Inc. v. Myra Pharmaceuticals, Inc., the Supreme Court held that the trademark “DERMALINE DERMALINE, INC.” could not be registered because it was confusingly similar to the already registered trademark “DERMALIN” owned by Myra Pharmaceuticals. This decision underscores the importance of trademark protection and highlights that even slight variations in spelling or presentation may not be enough to avoid confusion among consumers, especially in related product categories like skin care. The ruling protects established brands from potential market encroachment by similar-sounding trademarks.

Sound-Alike Showdown: Can a Letter Cause Trademark Turmoil in the Cosmetics Industry?

Dermaline, Inc. sought to register its trademark “DERMALINE DERMALINE, INC.” for health and beauty services. Myra Pharmaceuticals, Inc., opposed this registration, arguing that Dermaline’s mark was too similar to its own registered trademark “DERMALIN,” used for pharmaceutical skin disorder treatments. The core legal question revolved around whether the similarity between the two trademarks was likely to cause confusion among consumers, violating Section 123 of Republic Act No. 8293, also known as the Intellectual Property Code of the Philippines.

The Intellectual Property Office (IPO) sided with Myra, rejecting Dermaline’s application. The IPO relied on Section 123.1(d) of R.A. No. 8293, which states that a mark cannot be registered if it:

“(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date, in respect of:

(i) The same goods or services, or

(ii) Closely related goods or services, or

(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion;”

This provision is crucial for preventing trademark infringement and consumer deception. Dermaline appealed the IPO’s decision, but the Court of Appeals (CA) affirmed the rejection. Unsatisfied, Dermaline elevated the case to the Supreme Court, arguing that the differences between the two trademarks were significant enough to prevent any likelihood of confusion.

In its analysis, the Supreme Court emphasized that trademark disputes are highly fact-specific, necessitating a case-by-case evaluation. The Court acknowledged two primary tests for determining likelihood of confusion: the Dominancy Test and the Holistic Test. The **Dominancy Test** focuses on the similarity of the dominant features of the competing trademarks. This test is particularly relevant when the trademark sought to be registered contains the main, essential, and dominant features of an earlier registered trademark.

The Court noted that under Section 155.1 of R.A. No. 8293, a “colorable imitation” of a registered mark or a dominant feature thereof, used in commerce in a way that is likely to cause confusion, is prohibited. The **Holistic Test**, on the other hand, requires a consideration of the entirety of the marks as applied to the products, including labels and packaging, to determine whether they are confusingly similar.

Two types of confusion are relevant in trademark cases: confusion of goods (product confusion) and confusion of business (source or origin confusion). **Product confusion** occurs when a consumer purchases one product believing it to be another. **Source confusion** arises when consumers believe that the products, though different, originate from the same source or that there is some connection between the two parties.

In this case, the IPO applied the Dominancy Test, finding that both types of confusion were likely. The Supreme Court agreed with the IPO’s findings. Although Dermaline argued that its trademark “DERMALINE DERMALINE, INC.” was visually distinct from Myra’s “DERMALIN,” the Court found that the marks were aurally similar. The Court explained:

“While it is true that the two marks are presented differently – Dermaline’s mark is written with the first DERMALINE’ in script going diagonally upwards from left to right, with an upper case D’ followed by the rest of the letters in lower case, and the portion DERMALINE, INC.’ is written in upper case letters, below and smaller than the long-hand portion; while Myra’s mark DERMALIN’ is written in an upright font, with a capital D’ and followed by lower case letters – the likelihood of confusion is still apparent. This is because they are almost spelled in the same way, except for Dermaline’s mark which ends with the letter E,’ and they are pronounced practically in the same manner in three (3) syllables, with the ending letter E’ in Dermaline’s mark pronounced silently.”

The Court emphasized that when an ordinary purchaser hears an advertisement of Dermaline’s mark, they are likely to associate it with Myra’s registered mark. Furthermore, the Court rejected Dermaline’s argument that its product belonged to a different classification than Myra’s, noting that both classifications pertained to treatments for the skin, increasing the likelihood of confusion.

The Court cited McDonald’s Corporation v. L.C. Big Mak Burger, Inc., emphasizing that trademark protection extends to the normal potential expansion of a business. The Court stated:

“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, as where prospective purchasers would be misled into thinking that the complaining party has extended his business into the field or is in any way connected with the activities of the infringer; or when it forestalls the normal potential expansion of his business.”

This principle highlights that trademark law aims to prevent not only direct competition but also any use of a similar mark that could create a false association or limit the trademark owner’s ability to expand their business. Thus, consumers might mistakenly believe that Dermaline is associated with Myra, assuming that Myra has expanded its business from pharmaceutical topical applications to broader health and beauty services.

The Supreme Court’s decision underscored the importance of protecting registered trademarks and preventing consumer confusion. The Court emphasized that when a trademark application closely resembles an already registered mark, it should be rejected to avoid public confusion and protect the established goodwill of the existing trademark. This principle is rooted in preventing consumer deception and protecting the investments made by trademark owners in building their brand reputation.

Finally, the Supreme Court noted that the IPO’s findings, upheld by the CA, deserved deference due to the factual nature of trademark protection issues. The Court also pointed out that Dermaline’s failure to timely file its appeal with the IPO Office of the Director General meant that the IPO’s decision had already attained finality.

FAQs

What was the key issue in this case?	The key issue was whether the trademark “DERMALINE DERMALINE, INC.” was confusingly similar to the registered trademark “DERMALIN,” potentially violating the Intellectual Property Code.
What is the Dominancy Test?	The Dominancy Test focuses on the similarity of the dominant features of competing trademarks, assessing whether these similarities are likely to cause consumer confusion.
What is the Holistic Test?	The Holistic Test considers the entirety of the marks as applied to the products, including labels and packaging, to determine if they are confusingly similar.
What is confusion of goods?	Confusion of goods (or product confusion) occurs when a consumer purchases one product believing it to be another due to the similarity of the trademarks.
What is confusion of business?	Confusion of business (or source confusion) occurs when consumers believe that different products originate from the same source or that there is some connection between the businesses.
Why did the IPO reject Dermaline’s application?	The IPO rejected Dermaline’s application because it found that the trademark was confusingly similar to Myra’s registered trademark, applying the Dominancy Test.
How did the Court address the different product classifications?	The Court noted that both classifications pertained to treatments for the skin, increasing the likelihood of confusion, even though one was for pharmaceutical products and the other for beauty services.
What does the ruling mean for trademark owners?	The ruling emphasizes the importance of protecting registered trademarks and preventing consumer confusion, even when there are slight variations in spelling or presentation.
What is the significance of Section 123 of R.A. No. 8293?	Section 123 of R.A. No. 8293 (Intellectual Property Code) prevents the registration of marks that are identical or confusingly similar to existing registered trademarks.

This case serves as a reminder of the stringent standards applied in trademark law to protect consumers and established brands. Businesses must conduct thorough trademark searches and carefully consider the potential for confusion with existing marks before investing in a new brand. Seeking professional legal advice is essential to navigate the complexities of trademark registration and enforcement.

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: DERMALINE, INC. VS. MYRA PHARMACEUTICALS, INC., G.R. No. 190065, August 16, 2010