MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC., vs. E.

&
J. GALLO WINERY and THE ANDRESONS GROUP, INC.

FACTS:

Respondents:
Gallo Winery foreign corporation not doing business in the Philippines but organized
and existing under the laws of California, U.S., where all its wineries are located. They
produce different kinds of wines and brandy products and sells them in many countries
under different registered trademarks, including the GALLO and ERNEST & JULIO
GALLO wine trademarks. The GALLO trademark was registered in the Philippines in
1971 and renewed in 1991 for another 20 years

Andersons domestic corporation. Has been Gallo Winerys exclusive wine importer
and distributor since 1991. They sell the products in its own name and for its own
account.

Petitioners:
Mighty Corporation and La Campana (tobacco industries) sister companies. They
are engaged in the cultivation, manufacture, distribution and sale of tobacco products
for which they have been using the GALLO cigarette trademark since 1973

BIR approved the Tobacco Industries use of GALLO 100s cigarette mark on
September 14, 1973 and GALLO filter cigarette mark on March 26, 1976, both for
the manufacture and sale of its cigarette products.
On February 5, 1974, Tobacco Industries applied for, but eventually did not
pursue, the registration of the GALLO cigarette trademark
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La
Campana
On July 17, 1985, the National Library issued Certificate of Copyright
Registration No. 5834 for La Campanas lifetime copyright claim over GALLO
cigarette labels
La Campana authorized Mighty Corporation to manufacture and sell cigarettes
bearing the GALLO trademark.
BIR approved Mighty Corporations use of GALLO 100s cigarette brand under
licensing agreement with Tobacco Industries, on May 18, 1988, and GALLO
SPECIAL MENTHOL 100s cigarette brand on April 3, 1989.
Although the GALLO wine trademark was registered in the Philippines in 1971,
respondents claim that they first introduced and sold the GALLO and ERNEST &
JULIO GALLO wines in the Philippines circa 1974 within the then U.S. military
facilities only. By 1979, they had expanded their Philippine market through
authorized distributors and independent outlets.
Respondents claim that they first learned about the existence of GALLO
cigarettes in the latter part of 1992 when an Andresons employee saw such
cigarettes on display with GALLO wines in a Davao supermarket wine cellar
section.
 Respondents sent a demand letter to petitioners asking them to stop using the
GALLO trademark, to no avail.
Respondents:
Charged petitioners with violating Article 6bis of the Paris Convention
for the Protection of Industrial Property (Paris Convention) and RA 166
(Trademark Law), specifically, Sections 22 and 23 (for trademark
infringement), 29 and 30 (for unfair competition and false designation
of origin) and 37 (for tradename infringement).
Claimed that petitioners adopted the GALLO trademark to ride on
Gallo Winerys GALLO and ERNEST & JULIO GALLO trademarks
established reputation and popularity, thus causing confusion,
deception and mistake on the part of the purchasing public who had
always associated GALLO and ERNEST & JULIO GALLO trademarks
with Gallo Winerys wines.
Petitioners:
Their cigarette products and Gallo Winery wines were unrelated
products. Gallo Winerys GALLO trademark covers wine only, not
cigarettes.
GALLO cigarettes and GALLO wines were sold through different
channels of trade.
They also have different target markets cause Gallo Winerys wines
were for middle or high income groups while the GALLO cigarette
were for low income workers
The dominant feature of the GALLO cigarette mark was the rooster
device with the manufacturers name clearly indicated as MIGHTY
CORPORATION while, in the case of Gallo Winerys wines, it was
the full names of the founders-owners ERNEST & JULIO GALLO or
just their surname GALLO
RTC: denied the complaint filed by respondent. Held that respondents GALLO
trademark covered wines only. It also held that respondents wines and
petitioners cigarettes were not related goods.
CA: dismissed respondents petition for review
After trial on the merits, however, the Makati RTC, on November 26, 1998, held
petitioners liable for, and permanently enjoined them from, committing trademark
infringement and unfair competition with respect to the GALLO trademark.
CA: affirmed RTC

ISSUE:

WON Mighty is guilty of trademark infringement? - NO

HELD:

The Trademark Law and the Paris Convention are the applicable laws, not
the Intellectual Property Code so the lower courts erred in retroactively
applying the IP code.
 The IP Code, repealing the Trademark Law was approved on June 6,
1997. Section 241 thereof expressly decreed that it was to take effect only
on January 1, 1998, without any provision for retroactive application. Thus,
the Makati RTC and the CA should have limited the consideration of the
present case within the parameters of the Trademark Law and the Paris
Convention, the laws in force at the time of the filing of the complaint.
Trademark Infringement and Unfair Competition:
- Common concept: a person shall not be permitted to misrepresent his
goods or his business as the goods or business of another,
- the law on unfair competition is broader and more inclusive than the law
on trademark infringement. The latter is more limited but it recognizes a
more exclusive right derived from the trademark adoption and registration
by the person whose goods or business is first associated with it. Even if
one fails to establish his exclusive property right to a trademark, he may
still obtain relief on the ground of his competitors unfairness or
fraud. Conduct constitutes unfair competition if the effect is to pass off on
the public the goods of one man as the goods of another.
The Paris Convention protects well-known trademarks only (to be determined by
domestic authorities), while the Trademark Law protects all trademarks, whether
well-known or not, provided that they have been registered and are in actual
commercial use in the Philippines. Following universal acquiescence and
comity, in case of domestic legal disputes on any conflicting provisions between
the Paris Convention (which is an international agreement) and the Trademark law
(which is a municipal law) the latter will prevail
Under both laws, the protection of a registered trademark is limited only to goods
identical or similar to those in respect of which such trademark is registered and
only when there is likelihood of confusion and the time element in commencing
infringement cases is material in ascertaining the registrants express or implied
consent to anothers use of its trademark or a colorable imitation thereof. Hence,
proof of all the elements of trademark infringement is a condition precedent to any
finding of liability.
To prove commercial use of the GALLO wine trademark in the Philippines,
respondents presented sales invoice no. 29991 dated July 9, 1981 addressed to
Conrad Company Inc., Makati, Philippines and sales invoice no. 85926 dated
March 22, 1996 addressed to Andresons Global, Inc., Quezon City,
Philippines. Both invoices were for the sale and shipment of GALLO wines to the
Philippines during that period.
However, nothing was presented as evidence to prove the alleged sales of GALLO
wines in the Philippines in 1974 or, for that matter, prior to July 9, 1981.
BIR authorization letters, forms and manufacturers sworn statement, it appears
that petitioners and its predecessor-in-interest, Tobacco Industries, have indeed
been using and selling GALLO cigarettes in the Philippines since 1973 or before
July 9, 1981
So the actual commercial use of the GALLO wine trademark was
subsequent to its registration in 1971 and to Tobacco Industries
commercial use of the GALLO cigarette trademark in 1973 hence,
 respondents never enjoyed the exclusive right to use the GALLO wine
trademark to the prejudice of Tobacco Industries and its successors-in-
interest, herein petitioners, either under the Trademark Law or the Paris
Convention
Respondents GALLO trademark registration is limited to WINES ONLY.Their
certificates state that they cover wines only without any evidence or indication that
registrant Gallo Winery expanded or intended to expand its business to cigarettes.
So their exclusive right to the GALLO trademark should be limited to wines.
There is no likelihood of confusion, mistake or deceit as to the identity or source of
petitioners and respondents goods or business.
Two types of confusion:
1. Confusion of goods when an otherwise prudent purchaser is induced to
purchase one product in the belief that he is purchasing another, in which
case defendants goods are then bought as the plaintiffs and its poor quality
reflects badly on the plaintiffs reputation.
2. Confusion of business wherein the goods of the parties are different but
the defendants product can reasonably (though mistakenly) be assumed to
originate from the plaintiff, thus deceiving the public into believing that there
is some connection between the plaintiff and defendant which, in fact, does
not exist.
To determine the likelihood of confusion, the Court considers: [a] the
resemblance between the trademarks; [b] the similarity of the goods to
which the trademarks are attached; [c] the likely effect on the purchaser and
[d] the registrants express or implied consent and other fair and equitable
considerations.
The use of dominancy test and holistic test is also used to determine the
similarity and likelihood of confusion in trademark resemblance.
The Dominancy Test focuses on the similarity of the prevalent features of
the competing trademarks which might cause confusion or deception, and
thus infringement.
The Holistic Test requires that the entirety of the marks in question be
considered in resolving confusing similarity.
The many different features like color schemes, art works and other
markings of both products drown out the similarity between them the use
of the word GALLO a family surname for the Gallo Winerys wines and a
Spanish word for rooster for petitioners cigarettes.
The Court applied both dominancy and holistic test and found that the
GALLO cigarette trademark is the device of a large rooster facing left,
outlined in black against a gold background. The roosters color is either
green or red green for GALLO menthols and red for GALLO filters. Directly
below the large rooster device is the word GALLO. The rooster device is
given prominence in the GALLO cigarette packs in terms of size and
location on the labels.
The GALLO mark appears to be a fanciful and arbitrary mark for the
cigarettes as it has no relation at all to the product but was chosen merely
as a trademark due to the fondness for fighting cocks of the son of
 petitioners president. Furthermore, petitioners adopted GALLO, the
Spanish word for rooster, as a cigarette trademark to appeal to one of
their target markets, the sabungeros
On the side of the GALLO cigarette packs are the words MADE BY
MIGHTY CORPORATION, thus clearly informing the public as to the
identity of the manufacturer of the cigarettes.
GALLO Winerys wine and brandy labels are diverse. In many of them, the
labels are embellished with sketches of buildings and trees, vineyards or a
bunch of grapes while in a few, one or two small roosters facing right or
facing each other and directly below or above these sketches is the entire
printed name of the founder-owners, ERNEST & JULIO GALLO or just
their surname GALLO
Wines and cigarettes are not identical, similar, competing or related goods.
The question is: whether there exists a likelihood that an appreciable
number of ordinarily prudent purchasers will be misled, or simply
confused, as to the source of the goods in question.
There is due regard given to the goods usual purchasers character,
attitude, habits, age, training and education.
Petitioners use of the GALLO cigarette trademark is not likely to cause
confusion or mistake, or to deceive the ordinarily intelligent buyer of
either wines or cigarettes or both as to the identity of the goods, their
source and origin, or identity of the business of petitioners and
respondents.
Obviously, wines and cigarettes are not identical or competing
products. Neither do they belong to the same class of goods.
Respondents GALLO wines belong to Class 33 under Rule 84[a]
Chapter III, Part II of the Rules of Practice in Trademark Cases while
petitioners GALLO cigarettes fall under Class 34.
The lowers courts erred when it ruled that wines and cigarettes are
related products because they are related forms of vices and are
grouped in the same section in groceries.
The GALLO wine trademark is NOT a well-known mark in the context of the Paris
Convention in this case since wines and cigarettes are not identical or similar
goods.
GALLO wines and GALLO cigarettes are neither the same, identical,
similar nor related goods, a requisite element under both the Trademark
Law and the Paris Convention.
Second, the GALLO trademark cannot be considered a strong and distinct
mark in the Philippines.
Pursuant to the ruling in Canon Kabushiki Kaisha vs. Court of Appeals
and NSR Rubber Corporation GALLO cannot be considered a well-known
mark within the contemplation and protection of the Paris Convention in
this case since wines and cigarettes are not identical or similar goods.
(please read nalang yung portion sa full text )
It took respondents almost 20 years to know about the existence of GALLO
cigarettes and sue petitioners for trademark infringement despite the fact that
 petitioners were engaged in the market of GALLO cigarettes for a long period of
time. The Court held that equity, justice and fairness require them to rule in favor
of petitioners.
Petitioner is not liable for unfair competition.
Section 29 of the Trademark Law, any person who employs deception or
any other means contrary to good faith by which he passes off the goods
manufactured by him or in which he deals, or his business, or services for
those of the one having established such goodwill, or who commits any
acts calculated to produce said result, is guilty of unfair competition.
Petitioners never attempted to pass off their cigarettes as those of
respondents.
No bad faith or fraud imputable to petitioners