The Supreme Court has ruled in favor of UFC Philippines, Inc. (now Nutri-Asia, Inc.) in a trademark dispute against Fiesta Barrio Manufacturing Corporation, emphasizing the importance of the dominancy test in assessing trademark similarity. The Court reversed the Court of Appeals’ decision, reinstating the Intellectual Property Office’s ruling that Fiesta Barrio’s “PAPA BOY & DEVICE” mark for lechon sauce was confusingly similar to Nutri-Asia’s “PAPA” mark for ketchup. This decision underscores the protection afforded to registered trademark owners and prevents potential consumer confusion by prioritizing the dominant features of trademarks in infringement analysis, safeguarding brand reputation and goodwill.

“PAPA” vs. “PAPA BOY”: When Trademark Similarity Leads to Market Confusion

The case revolves around the application filed by Barrio Fiesta Manufacturing Corporation (respondent) on April 4, 2002, for the trademark “PAPA BOY & DEVICE” intended for their lechon sauce product. UFC Philippines, Inc. (now Nutri-Asia, Inc., petitioner), opposed this application, arguing that the respondent’s mark was confusingly similar to their existing “PAPA” marks used on banana catsup and other related goods. The petitioner had been using the “PAPA” mark since 1954, with continuous registration and use by its predecessors-in-interest. The core legal question was whether the respondent’s “PAPA BOY & DEVICE” mark infringed on the petitioner’s registered “PAPA” trademark, potentially leading to consumer confusion in the marketplace.

The Intellectual Property Office (IPO) initially sided with the petitioner, applying the dominancy test and concluding that the dominant feature, the word “PAPA,” created a likelihood of confusion among consumers. The IPO Director General upheld this decision, emphasizing the prominence of “PAPA” in both marks. However, the Court of Appeals reversed these findings, favoring the holistic test. The appellate court held that when considering the trademarks as a whole, “PAPA BOY & DEVICE” was not confusingly similar to “PAPA KETSARAP,” citing differences in labels, product types (lechon sauce vs. banana catsup), and manufacturer identification. This divergence in rulings set the stage for the Supreme Court’s intervention.

The Supreme Court addressed the central issue of which test, dominancy or holistic, should apply in determining trademark infringement in this case. The Court highlighted that the dominancy test focuses on the similarity of the prevalent or dominant features of the competing trademarks, which might cause confusion, mistake, and deception in the mind of the purchasing public. The Intellectual Property Code explicitly incorporates this test in Section 155.1, defining infringement as the “colorable imitation of a registered mark… or a dominant feature thereof.”

Section 155.1 of the Intellectual Property Code defines infringement as the “colorable imitation of a registered mark x x x or a dominant feature thereof.”

Building on this principle, the Court reiterated that the findings of specialized administrative agencies like the IPO, which possess expertise in intellectual property matters, are generally accorded great respect. The Supreme Court has emphasized,

Verily, the protection of trademarks as intellectual property is intended not only to preserve the goodwill and reputation of the business established on the goods bearing the mark through actual use over a period of time, but also to safeguard the public as consumers against confusion on these goods. On this matter of particular concern, administrative agencies, such as the IPO, by reason of their special knowledge and expertise over matters falling under their jurisdiction, are in a better position to pass judgment thereon.

This deference stems from their specialized knowledge and expertise in evaluating trademark-related disputes. The Court noted that each trademark case is unique, requiring scrutiny of its specific circumstances. Relevant precedents should only apply if they are specifically in point.

In applying the dominancy test, the Supreme Court concurred with the IPO’s assessment that “PAPA” was indeed the dominant feature of both the petitioner’s “PAPA KETSARAP” mark and the respondent’s “PAPA BOY & DEVICE” mark. The Court reasoned that the term “KETSARAP” in the petitioner’s mark was descriptive, merely indicating the product’s nature (catsup) and a quality (delicious). Conversely, the Court emphasized that the word “PAPA” stood out prominently in the respondent’s mark, capturing the consumer’s initial attention. The IPO-BLA decision highlighted this, stating:

In Respondent-applicant’s mark, the word “PAPA” is written on top of and before the other words such that it is the first word figure that catches the eyes. The visual and aural impressions created by such dominant word “PAPA” at the least is that the respective goods of the parties originated from the other, or that one party has permitted or has been given license to the other to use the word “PAPA” for the other party’s product, or that there is a relation/connection between the two parties when, in fact, there is none.

The Court reasoned that the similarity in the dominant feature could lead consumers to believe the products originated from the same source, causing confusion of business. The close relationship between catsup and lechon sauce, both being condiments commonly found in the same grocery aisles, further heightened the likelihood of confusion. The fact that respondent’s label also included “Barrio Fiesta” did not eliminate the potential for confusion, as consumers might still associate the “PAPA BOY” product with the makers of “PAPA” catsup.

The Supreme Court emphasized that trademark protection extends beyond identical goods to related goods and market areas that represent the normal expansion of a business. Section 138 of the IP Code supports this principle, stating that a certificate of registration serves as evidence of the registrant’s exclusive right to use the mark for specified goods and related products. The Court cited several cases to illustrate this point, including Mighty Corporation v. E. & J. Gallo Winery, where it was held that “non-competing goods may be those which, though they are not in actual competition, are so related to each other that it can reasonably be assumed that they originate from one manufacturer, in which case, confusion of business can arise out of the use of similar marks.” This underscores the importance of protecting trademark owners from potential market encroachment.

Ultimately, the Supreme Court rejected the Court of Appeals’ conclusion that “PAPA” was merely a common term of endearment, incapable of exclusive appropriation. The Court clarified that the mark was registered as a family name, specifically the name of the brand’s originator. This rendered it an arbitrary mark eligible for protection. Even though “PAPA” may refer to “father,” this had no logical connection with catsup products, reinforcing its distinctiveness and registrability as a trademark. Since the petitioner was the prior user and registrant of a similar mark, the court protected the goodwill and reputation that the company built.

In summary, the Supreme Court’s decision reaffirms the importance of the dominancy test in trademark infringement cases, particularly in assessing the likelihood of consumer confusion. The ruling provides significant guidance on how courts should evaluate trademark disputes, balancing the need to protect registered trademarks with the interests of fair competition. The practical impact of this ruling is that it strengthens the rights of trademark owners, preventing others from capitalizing on established brand recognition. It also serves as a cautionary tale for businesses seeking to introduce new products with marks similar to existing ones, highlighting the need for thorough trademark clearance to avoid potential legal challenges.

FAQs

What was the key issue in this case?	The key issue was whether Barrio Fiesta’s “PAPA BOY & DEVICE” trademark for lechon sauce was confusingly similar to Nutri-Asia’s (formerly UFC Philippines) “PAPA” trademark for ketchup, leading to potential consumer confusion.
What is the dominancy test in trademark law?	The dominancy test focuses on the similarity of the dominant features of competing trademarks, assessing if these similarities could cause confusion among consumers. It gives greater weight to the prominent aspects that catch the eye and ear of the public.
What is confusion of business?	Confusion of business occurs when consumers mistakenly believe that products from different companies are related or originate from the same source. This type of confusion can damage a company’s reputation and goodwill.
Why did the Supreme Court side with Nutri-Asia?	The Supreme Court sided with Nutri-Asia because it found that “PAPA” was the dominant feature in both trademarks and that the products (ketchup and lechon sauce) were related, increasing the likelihood of consumer confusion.
What is the significance of prior registration in trademark disputes?	Prior registration of a trademark provides the registrant with a prima facie right to use the mark, giving them an advantage in disputes against later applicants. It establishes a presumption of ownership and the exclusive right to use the mark for related goods.
Can a common word be trademarked?	Yes, a common word can be trademarked if it is used in an arbitrary or fanciful way, meaning it has no logical connection to the product it represents. This allows the word to function as a unique identifier for the brand.
What is the holistic test in trademark law?	The holistic test considers the entirety of a trademark and compares it with another mark, looking at similarities and differences in appearance, sound, and meaning. It assesses whether the overall impression is likely to cause confusion, not just the dominant features.
Why was the Court of Appeals’ decision reversed?	The Court of Appeals applied the holistic test and found no confusing similarity, but the Supreme Court reversed this, emphasizing that the dominancy test was more appropriate given the circumstances. The products had the potential to create confusion for consumers.
What is the practical implication of this ruling?	The ruling strengthens the rights of trademark owners, making it more difficult for others to use similar marks on related goods, and safeguards consumers from potential market confusion.

In conclusion, this Supreme Court decision reinforces the importance of the dominancy test in trademark law and its application in assessing the likelihood of consumer confusion. It highlights the protection afforded to registered trademarks and provides valuable guidance for businesses seeking to protect their brand identity. This case serves as a reminder of the need for careful trademark selection and clearance to avoid infringing on existing rights.

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: UFC PHILIPPINES, INC. VS. FIESTA BARRIO MANUFACTURING CORPORATION, G.R. No. 198889, January 20, 2016