Published 21 February 2020, The Daily Tribune
In a previous article, I discussed the basics of the Philippine Trademark Law. As a follow-up, let us consider a Supreme Court (SC) decision that fills a lacuna in the law and clarifies the concept of use of registered trademarks.
Trademarks are part and parcel of a strong brand. The benefits of a strong brand such as product differentiation, premium pricing, insulation from product flaws and easier introduction of new products prompt companies to invest in protecting their brand identity. Through registration, the owner of the mark acquires the exclusive right to prevent all other parties from using the mark in the course of trade or business. However, registration does not guarantee perpetual enjoyment of a mark as the right over trademarks may be lost.
Under the Intellectual Property Code (IP Code), a registered mark may be canceled if the owner of the mark without legitimate reason fails to use it within the Philippines for an uninterrupted period of three years or longer.
The registered mark must be used or caused to be used by virtue of a license in the Philippines; however, the IP Code and the Trademark Regulations have not specifically defined what constitutes “use.” Fortunately, the SC had the opportunity to elucidate on the concept of use in the Philippines in W Land Holding Inc. vs Starwood Hotels and Resorts Worldwide Inc. (G.R. 222366. 4 December 2017).
In this decision, the Court recognized the peculiar nature of the hotel industry, as well as the pervasiveness of the Internet, and held that use of a mark in a website of a hotel that has no physical presence in the Philippines is sufficient to constitute actual use.
Starwood Hotels registered the “W” mark for its hotel and leisure business. It opposed the application for registration of the same mark by W Land for its real estate operations. W Land opined that Starwood has not used the “W” mark as it had no hotel or establishment in the Philippines rendering services covered by its registration. Consequently, W Land filed a Petition for Cancellation of Starwood’s service mark on the ground of non-use. Starwood, on the other hand, argued that it filed a Declaration of Actual Use and that it conducts business both directly and indirectly through subsidiaries and franchisees, and operates interactive websites for W Hotels worldwide.
The Bureau of Legal Affairs (BLA) cancelled Starwood’s registration on the ground that the Declaration of Actual Use and its attachments did not prove actual use in the Philippines of the “W” mark since the evidence adduced by Starwood pertained to hotels and establishments found abroad. The BLA reasoned that under the IP Code, the use of a trademark “refers to the actual attachment thereof to goods and services that are sold or availed of and located in the Philippines.”
This ruling was reversed by the Intellectual Property Office Director General, whose decision was affirmed by both the Court of Appeals and the SC.
The courts were unanimous in declaring that actual existence or presence of a hotel in the Philippines is not necessary before it can be considered as doing business in the country. Contrary to the BLA ruling, the SC held that Starwood’s interactive websites indicate actual use in the Philippines of the “W” mark.
Lest this be construed as a sweeping declaration, the Court went on to clarify that mere use of a mark on a website accessible anywhere in the world does not equate to the use of a mark in the ordinary course of trade in a particular country. The Court held that the “use of mark on the Internet must be shown to result into a within-State sale, or at the very least, discernibly intended to target customers that reside in that country. This being so, the use of the mark on an interactive website, for instance, may be said to target local customers when they contain specific details regarding or pertaining to the target State, sufficiently showing an intent towards realizing a within-State commercial activity or interaction.” (W Land Holding Inc. v. Starwood Hotels and Resorts Worldwide Inc., G.R. 222366, [4 December 2017])
In Starwood’s case, it proved that its interactive websites featuring the “W” mark provides a phone number that Philippine residents can call for information and other concerns. The website is in English, a language known to Philippine residents, and the hotel rates displayed can be converted into Philippine peso. Website users in the Philippines can also instantaneously confirm and pay for their bookings online. These are all indicators that the website caters to the Filipino market. Over all, Starwood was able to show that it maintained commercial transactions with Philippine consumers through its websites that featured the “W” mark. This was sufficient to keep its trademark registration in force.
To summarize, remember that when the law speaks of “use,” it means a bona fide use. As the Court emphasized in the case above, “it must be shown that the owner has actually transacted, or at the very least, intentionally targeted customers of a particular jurisdiction in order to be considered as having used the trademark in the ordinary course of his trade in that country. A showing of an actual commercial link to the country is therefore imperative.” (W Land Holding Inc. v. Starwood Hotels and Resorts Worldwide Inc., G.R. 222366 [4 December 2017])
For comments and questions, please send an email to cabdo@divinalaw.com.
