The Supreme Court held that the likelihood of confusion is the critical element in trademark infringement cases. The accused was acquitted because the prosecution failed to prove beyond reasonable doubt that the allegedly infringing mark would likely cause confusion among consumers. This decision emphasizes the importance of assessing the overall impression of the marks and considering the perspective of ordinary purchasers when determining infringement.

Levi’s vs. LS Jeans: How Similar is Too Similar in Trademark Law?

This case revolves around Victorio P. Diaz, who was accused of violating the Intellectual Property Code of the Philippines for allegedly infringing on Levi Strauss’ registered trademarks. Levi Strauss Philippines, Inc. (Levi’s Philippines) claimed that Diaz was selling counterfeit LEVI’S 501 jeans in his tailoring shops. The prosecution argued that the jeans sold by Diaz reproduced, counterfeited, copied, and colorably imitated Levi’s registered trademarks, such as the arcuate design, two-horse brand, and tab. Diaz, however, maintained that his products were distinct and carried the label “LS Jeans Tailoring,” which was also registered. He argued that his target market and channels of trade differed significantly from those of Levi Strauss.

The Regional Trial Court (RTC) initially found Diaz guilty, but the Court of Appeals (CA) dismissed his appeal due to the late filing of his appellant’s brief. The Supreme Court (SC), however, took cognizance of the case, emphasizing that it should not allow the inadvertence or incompetence of counsel to result in the deprivation of an appellant’s right to life, liberty, or property. The SC then proceeded to evaluate the merits of the case to ensure a just outcome.

The central legal question was whether Diaz’s use of the trademark “LS Jeans Tailoring” constituted an infringement of Levi Strauss’ registered trademarks. Section 155 of the Intellectual Property Code defines trademark infringement as using a reproduction, counterfeit, copy, or colorable imitation of a registered mark in commerce, which is likely to cause confusion, mistake, or deception. The elements of trademark infringement are (1) the trademark is registered, (2) the trademark is reproduced, counterfeited, copied, or colorably imitated, (3) the infringing mark is used in connection with the sale of goods or services, (4) the use of the infringing mark is likely to cause confusion, and (5) the use is without the consent of the trademark owner.

The Court focused primarily on the fourth element, the likelihood of confusion, which is the gravamen of the offense. To determine the likelihood of confusion, courts apply either the dominancy test or the holistic test. The dominancy test focuses on the similarity of the main, prevalent, or essential features of the competing trademarks. In contrast, the holistic test considers the entirety of the marks, including labels and packaging. The Court opted to apply the holistic test, noting that the case involved trademark infringement related to jeans products, similar to the case of Emerald Garment Manufacturing Corporation v. Court of Appeals. In this case, the Supreme Court emphasized that the likelihood of confusion should be determined from the perspective of an ordinary purchaser. The Court in Emerald Garment stated:

…. Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be cautious, is the cost of the goods. To be sure, a person who buys a box of candies will not exercise as much care as one who buys an expensive watch. As a general rule, an ordinary buyer does not exercise as much prudence in buying an article for which he pays a few centavos as he does in purchasing a more valuable thing. Expensive and valuable items are normally bought only after deliberate, comparative and analytical investigation. But mass products, low priced articles in wide use, and matters of everyday purchase requiring frequent replacement are bought by the casual consumer without great care….

The Court considered that LEVI’S 501 jeans were known to be a foreign brand, expensive, and sold in malls or boutiques as ready-to-wear items, not in tailoring shops like Diaz’s. The Court further reasoned that the consuming public could easily distinguish between original LEVI’S 501 jeans and imitations or other brands. This reduces the likelihood of confusion or deception.

Moreover, the Court noted several distinctions between the trademarks. Diaz used the trademark “LS JEANS TAILORING,” which was visually and aurally different from “LEVI STRAUSS & CO.” The addition of “TAILORING” suggested that the jeans came from Diaz’s tailoring shops, not from the official retailers of LEVI’S 501 jeans. The Court also highlighted that Diaz’s jeans featured a “buffalo design” instead of the “two horse design” associated with Levi’s and that the red tab on Diaz’s jeans displayed “LSJT” (LS Jeans Tailoring) instead of “LEVI’S.”

The Court also pointed out that Diaz had a registered trademark for “LS JEANS TAILORING,” which the Intellectual Property Office (IPO) had approved. This registration indicated that the IPO did not find Diaz’s trademark confusingly similar to the registered trademarks for LEVI’S 501 jeans. Given these considerations, the Court concluded that there was no likelihood of confusion between the trademarks, and the evidence of guilt did not satisfy the standard of proof beyond reasonable doubt. As Section 2, Rule 133 of the Rules of Court states:

Proof beyond a reasonable doubt does not mean such a degree of proof as, excluding possibility of error, produces absolute certainty.  Moral certainty only is required, or that degree of proof which produces conviction in an unprejudiced mind.

Consequently, the Court acquitted Diaz of the charges, underscoring the need for the prosecution to establish guilt beyond a reasonable doubt in trademark infringement cases.

FAQs

What was the key issue in this case?	The key issue was whether the use of the trademark “LS Jeans Tailoring” by Victorio P. Diaz constituted an infringement of Levi Strauss’ registered trademarks, specifically concerning the likelihood of confusion among consumers.
What is the “likelihood of confusion” in trademark law?	The “likelihood of confusion” refers to the probability that consumers will be misled or confused about the source or origin of goods or services due to the similarity of trademarks. It is a critical element in determining trademark infringement.
What is the difference between the dominancy test and the holistic test?	The dominancy test focuses on the similarity of the main features of the trademarks, while the holistic test considers the entirety of the marks, including labels and packaging. The choice between them depends on the specific facts of each case.
Why did the Supreme Court acquit Victorio P. Diaz?	The Supreme Court acquitted Diaz because the prosecution failed to prove beyond a reasonable doubt that his trademark “LS Jeans Tailoring” was likely to cause confusion among consumers with Levi Strauss’ registered trademarks.
What factors did the Supreme Court consider in determining the likelihood of confusion?	The Court considered that LEVI’S 501 jeans were expensive and sold in malls, while Diaz’s jeans were more affordable and sold in tailoring shops, targeting a different market segment. The differences in the trademarks, such as “LSJT” versus “LEVI’S” on the red tab, were also significant.
What is the significance of having a registered trademark?	Having a registered trademark provides legal protection and exclusive rights to use the mark in commerce. It also indicates that the Intellectual Property Office did not find the mark confusingly similar to existing registered trademarks.
What was the role of the Intellectual Property Office (IPO) in this case?	The Intellectual Property Office had previously registered Diaz’s trademark “LS JEANS TAILORING,” which suggested that the IPO did not consider it confusingly similar to Levi Strauss’ trademarks. This was taken into consideration by the court in their ruling.
What is the standard of proof required in criminal cases of trademark infringement?	In criminal cases, the standard of proof is beyond a reasonable doubt, meaning the prosecution must provide enough evidence to convince the court that there is no other logical explanation other than the defendant committed the crime.

The Supreme Court’s decision in this case serves as a reminder of the importance of proving the likelihood of confusion in trademark infringement cases. The Court’s application of the holistic test and its focus on the perspective of the ordinary purchaser provide valuable guidance for future cases. The decision underscores that mere similarity between trademarks is not enough; the critical factor is whether the allegedly infringing mark is likely to cause confusion, mistake, or deception in the minds of consumers.

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: VICTORIO P. DIAZ vs. PEOPLE, G.R. No. 180677, February 18, 2013