VOL.

409, AUGUST 15, 2003

231

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

G.R. No. 148222. August 15, 2003.*
PEARL &

DEAN

(PHIL.),

INCORPORATED,

distinct and separate from one another, and the protection afforded by one cannot be
used interchangeably to cover items or works that exclusively pertain to the others.
Same; Same; Same; There can be no infringement of a patent until a patent

petitioner,vs. SHOEMART,

has been issued since whatever right one has to the invention covered by the patent

INCORPORATED and NORTH EDSA MARKETING, INCORPORATED,

arises alone from the grant of patent.For some reason or another, petitioner never

respondents.

secured a patent for the light boxes. It therefore acquired no patent rights which

Intellectual Property; Copyrights; Patents; Being a mere statutory grant, the

rights are limited to what the statute confers; It can cover only the works falling
within the statutory enumeration or description.Copyright, in the strict sense of
the term, is purely a statutory right. Being a mere statutory grant, the rights are
limited to what the statute confers. It may be obtained and enjoyed only with respect
to the subjects and by the persons, and on terms and conditions specified in the
statute. Accordingly, it can cover only the works falling within the statutory
enumeration or description.

patent, petitioner could not legally prevent anyone from manufacturing or

commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of
Appeals, we held that there can be no infringement of a patent until a patent has
been issued, since whatever right one has to the invention covered by the
patent arises alone from the grant of patent. x x x (A)n inventor has no common law
right to a monopoly of his invention. He has the right to make use of and vend his
invention, but if he voluntarily discloses it, such as by offering it for sale, the world
is free to copy and use it with impunity. A patent, however, gives the inventor the

_______________
*

could have protected its invention, if in fact it really was. And because it had no

right to exclude all others. As a patentee, he has the exclusive right of making,
selling or using the invention.

THIRD DIVISION.

Same; Same; Same; To be able to effectively and legally preclude others from
232
232

copying and profiting from the invention, a patent is a primordial requirement.To

SUPREME COURT REPORTS ANNOTATED
Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

Same; Same; Same; The three legal rights are completely distinct and
separate from one another and the protection afforded by one cannot be used
interchangeably to cover items or works that exclusively pertain to the others.
During the trial, the president of P & D himself admitted that the light box was
neither a literary not an artistic work but an engineering or marketing invention.
Obviously, there appeared to be some confusion regarding what ought or ought not
to be the proper subjects of copyrights, patents and trademarks. In the leading case
of Kho vs. Court of Appeals, we ruled that these three legal rights are completely

be able to effectively and legally preclude others from copying and profiting from
the invention, a patent is a primordial requirement. No patent, no protection. The
ultimate goal of a patent system is to bring new designs and technologies into the
public domain through disclosure. Ideas, once disclosed to the public without the
protection of a valid patent, are subject to appropriation without significant restraint.
Same; Same; Same; Patent law has a three-fold purpose.The patent law
has a three-fold purpose: first, patent law seeks to foster and reward invention;
second, it promotes disclosures of inventions to stimulate further innovation and to
permit the public to practice the invention once the patent expires; third, the
stringent requirements for patent protection seek to ensure that ideas in the public
domain remain there for the free use of the public.
233

VOL. 409, AUGUST 15, 2003

233

Poblador, Bautista & Reyes for private respondent SM.

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

Same; Same; Same; One who has adopted and used a trademark on his

Gonzales, Batiller, Bilog and Associates for respondent North Edsa Mktg.,
Inc.

goods does not prevent the adoption and use of the same trademark by others for
products which are of a different description.Under the circumstances, the Court
of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court, where we,
invoking Section 20 of the old Trademark Law, ruled that the certificate of
registration issued by the Director of Patents can confer (upon petitioner) the
exclusive right to use its own symbol only to those goods specified in the certificate,
subject to any conditions and limitations specified in the certificate x x x. One who
has adopted and used a trademark on his goods does not prevent the adoption and
use of the same trademark by others for products which are of a different
description. Faberge, Inc. was correct and was in fact recently reiterated in Canon
Kabushiki Kaisha vs. Court of Appeals.
Same; Same; Same; Unfair Competition; There can be no unfair competition
under the law on copyrights although it is applicable to disputes over the use of
trademarks.By the nature of things, there can be no unfair competition under the
law on copyrights although it is applicable to disputes over the use of trademarks.

CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Pearl & Dean (Phil.) Inc. (P & D)
234
234

SUPREME COURT REPORTS ANNOTATED

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

assails the May 22, 2001 decision1 of the Court of Appeals reversing the October 31,
1996 decision2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No.
92-516 which declared private respondents Shoemart, Inc. (SMI) and North Edsa
Marketing, Inc. (NEMI) liable for infringement of trademark and copyright, and
unfair competition.
Factual Antecedents

Even a name or phrase incapable of appropriation as a trademark or trade name may,

The May 22, 2001 decision of the Court of Appeals 3contained a summary of this

by long and exclusive use by a business (such that the name or phrase becomes

dispute:

associated with the business or product in the mind of the purchasing public), be

Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the

entitled to protection against unfair competition. In this case, there was no evidence

manufacture of advertising display units simply referred to as light boxes. These

that P & Ds use of Poster Ads was distinctive or well-known. As noted by the

units utilize specially printed posters sandwiched between plastic sheets and

Court of Appeals, petitioners expert witnesses himself had testified that Poster

illuminated with backlights. Pearl and Dean was able to secure a Certificate of

Ads was too generic a name. So it was difficult to identify it with any company,

Copyright Registration dated January 20, 1981 over these illuminated display units.

honestly speaking.

The advertising light boxes were marketed under the trademark Poster Ads. The

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.
Rilloraza, Africa, De Ocampo and Africa for petitioner.

application for registration of the trademark was filed with the Bureau of Patents,
Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl

and Dean employed the services of Metro Industrial Services to manufacture its

subsequently fabricated by Metro Industrial for SMI. After its contract with Metro

advertising displays.

Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising

Sometime in 1985, Pearl and Dean negotiated with defendant-appellant

Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM City

Corporation to make the light boxes. Some 300 units were fabricated in 1991. These
were delivered on a staggered basis and installed at SM Megamall and SM City.

North Edsa. Since SM City North Edsa was under construction at that time, SMI

Sometime in 1989, Pearl and Dean, received reports that exact copies of its light

offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean

boxes were installed at SM City and in the fastfood section of SM Cubao. Upon

agreed. On September 11, 1985, Pearl and Deans General Manager, Rodolfo

investigation, Pearl and Dean found out that aside from the two (2) reported SM

Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to

branches, light boxes similar to those it manufactures were also installed in two (2)

SMIs Advertising Promotions and Publicity Division Manager, Ramonlito Abano.

other SM stores. It further discovered that defendant-appellant North Edsa

Only the contract for SM Makati, however, was returned signed. On October 4,

Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services,

1985, Vergara wrote Abano inquiring about the other contract and reminding him

was set up primarily to sell advertising space in lighted display units located in

that their agreement for installation of light boxes was not only for its SM Makati

SMIs different branches. Pearl and Dean noted that NEMI is a sister company of

branch, but also for SM Cubao. SMI did not bother to reply.

SMI.

Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl

In the light of its discoveries, Pearl and Dean sent a letter dated December 11,

and Dean that it was rescinding the contract for SM Makati

1991 to both SMI and NEMI enjoining them to cease using the subject light boxes

_______________

and to remove the same from SMIs establishments. It also demanded the
discontinued use of the trademark Poster Ads, and the payment to Pearl and Dean

Penned by Associate Justice Salvador J. Valdez, Jr. and concurred in by

Associate Justices Wenceslao L. Agnir and Juan Q. Enriquez, Jr.

of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).

Upon receipt of the demand letter, SMI suspended the leasing of two hundred

Penned by Judge Napoleon E. Inoturan.

twenty-four (224) light boxes and NEMI took down its advertisements for Poster

Seventeenth Division; CAG.R. 55303.

Ads from the lighted display units in SMIs stores. Claiming that both SMI and
NEMI failed to meet all its demands, Pearl and Dean filed this instant case for

235
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235

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

due to non-performance of the terms thereof. In his reply dated February 17, 1986,
Vergara protested the unilateral action of SMI, saying it was without basis. In the
same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by
Pearl and Dean to fabricate its display units, offered to construct light boxes for
Shoemarts chain of stores. SMI approved the proposal and ten (10) light boxes were

infringement of trademark and copyright, unfair competition and damages.

In denying the charges hurled against it, SMI maintained that it independently
developed its poster panels using commonly known techniques and available
technology, without notice of or reference to Pearl and Deans copyright. SMI noted
that the registration of the mark Poster Ads was only for stationeries such as
letterheads, envelopes, and the like. Besides, according to SMI, the word Poster
Ads is a generic term which cannot be appropriated as a trademark, and, as such,
registration of such mark is invalid. It also stressed that Pearl and Dean is not

entitled to the reliefs prayed for in its complaint since its advertising display units
con-

(e)

costs of suit;
1. (2)to deliver, under oath, for impounding in the National Library, all light
boxes of SMI which were fabricated by Metro Industrial Services and

236
236

SUPREME COURT REPORTS ANNOTATED

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

EYD Rainbow Advertising Corporation;

2. (3)to deliver, under oath, to the National Library, all filler- posters using
the trademark Poster Ads, for destruction; and

tained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that
Pearl and Dean had no cause of action against it and that the suit was purely

3. (4)to permanently refrain from infringing the copyright on plaintiffs light

intended to malign SMIs good name. On this basis, SMI, aside from praying for the

boxes and its trademark Poster Ads.Defendants counterclaims are

dismissal of the case, also counterclaimed for moral, actual and exemplary damages

hereby ordered dismissed for lack of merit.

and for the cancellation of Pearl and Deans Certification of Copyright Registration
No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration

237
VOL. 409, AUGUST 15, 2003

No. 4165 dated September 12, 1988.

NEMI, for its part, denied having manufactured, installed or used any
advertising display units, nor having engaged in the business of advertising. It
repleaded SMIs averments, admissions and denials and prayed for similar reliefs
and counterclaims as SMI.

237

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

SO ORDERED.4
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as

The RTC of Makati City decided in favor of P & D:

either prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to

Wherefore, defendants SMI and NEMI are found jointly and severally liable for

be properly classified as a copyrightable class O work, we have to agree with SMI

infringement of copyright under Section 2 of PD 49, as amended, and infringement

when it posited that what was copyrighted were the technical drawings only, and not

of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized

the light boxes themselves, thus:

under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as

42. When a drawing is technical and depicts a utilitarian object, a copyright over the

amended. Accordingly, defendants are hereby directed:

drawings like plaintiff-appellants will not extend to the actual object. It has so been
held under jurisprudence, of which the leading case is Baker vs. Selden (101 U.S.

(1)to pay plaintiff the following damages:

(a)

actual damages representing profits derived by defendants as a - P16,600,000.00

result of infringement of plaintiffs copyright from 1991 to

841 (1879). In that case, Selden had obtained a copyright protection for a book
entitled Seldens Condensed Ledger or Bookkeeping Simplified which purported
to explain a new system of bookkeeping. Included as part of the book were blank

1992
(b)

moral damages

- P1,000.000.00

(c)

exemplary damages

- P1,000,000.00

(d)

attorneys fees plus

- P1,000,000.00

forms and illustrations consisting of ruled lines and headings, specially designed for
use in connection with the system explained in the work. These forms showed the
entire operation of a day or a week or a month on a single page, or on two pages
following each other. The defendant Baker then produced forms which were similar

to the forms illustrated in Seldens copyrighted books. The Court held that

architectural plan to construct a structure. This is because the copyright does not

exclusivity to the actual forms is not extended by a copyright. The reason was that

extend to the structures themselves.

to grant a monopoly in the underlying art when no examination of its novelty has
ever been made would be a surprise and a fraud upon the public; that is the province
of letters patent, not of copyright. And that is precisely the point. No doubt aware

In fine, we cannot find SMI liable for infringing Pearl and Deans copyright
over the technical drawings of the latters advertising display units.
xxx

xxx

xxx

that its alleged original design would never pass the rigorous examination of a patent

The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate

application, plaintiff-appellant fought to foist a fraudulent monopoly on the public

Appellate Court that the protective mantle of the Trademark Law extends only to the

by conveniently resorting to a copyright registration which merely employs a

goods used by the first user as specified in the certificate of registration, following

recordal system without the benefit of an in-depth examination of novelty.

the clear mandate conveyed by Section 20 of Republic Act 166, as amended,

The principle in Baker vs. Selden was likewise applied inMuller vs. Triborough
Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had
obtained a copyright over an unpublished drawing entitled Bridge Approachthe
drawing showed a novel bridge approach to unsnarl traffic congestion. The
defendant constructed a bridge approach which was alleged to be an infringement of
the new design illustrated in plaintiffs drawings. In this case it was held that
protection of the drawing
_______________

otherwise known as the Trademark Law, which reads:

SEC. 20. Certification of registration prima facie evidence of validity.A certificate
of registration of a mark or trade-name shall be prima facie evidence of the validity
of the registration, the registrants ownership of the mark or trade-name, and of the
registrants exclusive right to use the same in connection with the goods, business or
services specified in the certificate, subject to any conditions and limitations stated
therein. (italics supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the
registration of the trademark Poster Ads with the Bureau of Patents, Trademarks,

Records, pp. 620-621.

and Technology Transfer. Said trademark was recorded in the Principal Register on
September 12, 1988 under Registration No. 41165 covering the following products:

238
238

SUPREME COURT REPORTS ANNOTATED

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

does not extend to the unauthorized duplication of the object drawn because
copyright extends only to the description or expression of the object and not to the
object itself. It does not prevent one from using the drawings to construct the object
portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz
Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no copyright
infringement when one who, without being authorized, uses a copyrighted

stationeries such as letterheads, envelopes and calling cards and newsletters.

With this as factual backdrop, we see no legal basis to the finding of liability on
the part of the defendants-appellants for their use of the words Poster Ads, in the
advertising display units in suit. Jurisprudence has interpreted Section 20 of the
Trademark Law as an implicit permission to a manufacturer to venture into the
production of goods and allow that producer to appropriate the brand name of the
senior registrant on goods other than those stated in the certificate of registration.
The Supreme Court further emphasized the restrictive meaning of Section 20 when
it stated, through Justice Conrado V. Sanchez, that:

Really, if the certificate of registration were to be deemed as including goods not

xxx

specified therein, then a situation may arise

xxx

xxx

WHEREFORE, premises considered, the assailed decision is REVERSED and

SET ASIDE, and another is rendered DISMISSING the complaint and

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VOL. 409, AUGUST 15, 2003

239

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

whereby an applicant may be tempted to register a trademark on any and all goods

counterclaims in, the above-entitled case for lack of merit. 5

Dissatisfied with the above decision, petitioner P & D filed the instant petition
assigning the following errors for the Courts consideration:

which his mind may conceive even if he had never intended to use the trademark for

1. A.THE HONORABLE COURT OF APPEALS ERRED IN RULING

the said goods. We believe that such omnibus registration is not contemplated by our

THAT NO COPYRIGHT INFRINGEMENT WAS COMMITTED BY

Trademark Law.

RESPONDENTS SM AND NEMI;

While we do not discount the striking similarity between Pearl and Deans
registered trademark and defendants-appellants Poster Ads design, as well as the

_______________

parallel use by which said words were used in the parties respective advertising

Rollo, pp. 17-19, 21-22, 23-24, 26.

copies, we cannot find defendants-appellants liable for infringement of trademark.

240

Poster Ads was registered by Pearl and Dean for specific use in its stationeries, in
contrast to defendants-appellants who used the same words in their advertising

240

SUPREME COURT REPORTS ANNOTATED

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

display units. Why Pearl and Dean limited the use of its trademark to stationeries is
simply beyond us. But, having already done so, it must stand by the consequence of

1.

THAT NO INFRINGEMENT OF PEARL & DEANS TRADEMARK

the registration which it had caused.

xxx

xxx

POSTER ADS WAS COMMITTED BY RESPONDENTS SM AND

xxx

NEMI;

We are constrained to adopt the view of defendants-appellants that the words

Poster Ads are a simple contraction of the generic term poster advertising. In the

B.THE HONORABLE COURT OF APPEALS ERRED IN RULING

2.

C.THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING

absence of any convincing proof that Poster Ads has acquired a secondary

THE AWARD OF THE TRIAL COURT, DESPITE THE LATTERS

meaning in this jurisdiction, we find that Pearl and Deans exclusive right t o t he

FINDING, NOT DISPUTED BY THE HONORABLE COURT OF

use of Poster Ads is limited to what is written in its certificate of registration,

APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS

namely, stationeries.

NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL &

DEAN.

Defendants-appellants cannot thus be held liable for infringement of the

trademark Poster Ads.
There being no finding of either copyright or trademark infringement on the part
of SMI and NEMI, the monetary award granted by the lower court to Pearl and Dean
has no leg to stand on.

3.

D.THE HONORABLE COURT OF APPEALS ERRED IN NOT

HOLDING RESPONDENTS SM AND NEMI LIABLE TO PEARL &

DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES,

6

ATTORNEYS FEES AND COSTS OF SUIT.

by Metro and EYD Rainbow Advertising for its own account. Obviously,
petitioners position was premised on its belief that its copyright over the
engineering drawings extended ipso facto to the light boxes depicted or illustrated in

Issues

said drawings. In ruling that there was no copyright infringement, the Court of

In resolving this very interesting case, we are challenged once again to put into

Appeals held that the copyright was limited to the drawings alone and not to the

proper perspective four main concerns of intellectual property lawpatents,

light box itself. We agree with the appellate court.

copyrights, trademarks and unfair competition arising from infringement of any of

the first three. We shall focus then on the following issues:

First, petitioners application for a copyright certificateas well as Copyright

Certificate No. PD-R2588 issued by the National Library on January 20, 1981

1. (1)if the engineering or technical drawings of an advertising display unit

clearly stated that it was for a class O work under Section 2 (O) of PD 49 (The

(light box) are granted copyright protection (copyright certificate of

Intellectual Property Decree) which was the statute then prevailing. Said Section 2

registration) by the National Library, is the light box depicted in such

expressly enumerated the works subject to copyright:

engineering drawings ipso facto also protected by such copyright?

SEC. 2. The rights granted by this Decree shall, from the moment of creation,

2. (2)or should the light box be registered separately and protected by a

subsist with respect to any of the following works:

patent issued by the Bureau of Patents Trademarks and Technology

xxx

Transfer (now Intellectual Property Office)in addition to the copyright

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;

of the engineering drawings?

xxx

xxx
xxx

xxx
xxx

3. (3)can the owner of a registered trademark legally prevent others from

Although petitioners copyright certificate was entitled Advertising Display Units

using such trademark if it is a mere abbreviation of a term descriptive of

(which depicted the box-type electrical devices), its claim of copyright infringement

his goods, services or business?

cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a

On the Issue of Copyright Infringement

mere statutory grant, the rights are limited to what the statute confers. It may be

Petitioner P & Ds complaint was that SMI infringed on its copyright over the light

obtained and enjoyed only with respect to the subjects and by the persons, and on

boxes when SMI had the units manufactured

terms and conditions specified in the statute. 7 Accordingly, it can cover only the

_______________

works falling within the statutory enumeration or description.8

P & D secured its copyright under the classificationclass O work. This being

Rollo, p. 34.

so, petitioners copyright protection extended only to the technical drawings and not
to the light box itself because the latter was not at all in the category of prints,

241
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Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

241

pictorial illustrations, advertising copies, labels, tags and box wraps. Stated
otherwise, even as we find that P & D indeed owned a valid copyright, the same
could have referred only to the technical drawings within

_______________

one cannot be used interchangeably to cover items or works that exclusively pertain
to the others:

18 C.J.S. 161.

Trademark, copyright and patents are different intellectual property rights that

Joaquin vs. Drilon, 302 SCRA 225 [1999].

cannot be interchanged with one another. A trademark is any visible sign capable of
distinguishing the goods (trademark) or services (service mark) of an enterprise and

242
242

SUPREME COURT REPORTS ANNOTATED

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

the category of pictorial illustrations. It could not have possibly stretched out to
include the underlying light box. The strict application 9 of the laws enumeration in
Section 2 prevents us from giving petitioner even a little leeway, that is, even if its

shall include a stamped or marked container of goods. In relation thereto, a trade

name means the name or designation identifying or distinguishing an enterprise.
Meanwhile, the scope of a copyright is confined to literary and artistic works which
are
_______________

copyright certificate was entitled Advertising Display Units. What the law does

not include, it excludes, and for the good reason: the light box was not a literary or

10

artistic piece which could be copyrighted under the copyright law. And no less

TSN, February 3, 1993, pp. 11-13.

11

G.R. No. 115758, March 19, 2002, 379 SCRA 410.

clearly, neither could the lack of statutory authority to make the light box
copyrightable be remedied by the simplistic act of entitling the copyright certificate

Ibid.

243
VOL. 409, AUGUST 15, 2003

issued by the National Library as Advertising Display Units.

In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the

243

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

public without license from P & D, then no doubt they would have been guilty of

original intellectual creations in the literary and artistic domain protected from the

copyright infringement. But this was not the case. SMIs and NEMIs acts

moment of their creation. Patentable inventions, on the other hand, refer to any

complained of by P & D were to have units similar or identical to the light box

technical solution of a problem in any field of human activity which is new, involves

illustrated in the technical drawings manufactured by Metro and EYD Rainbow

an inventive step and is industrially applicable.

Advertising, for leasing out to different advertisers. Was this an infringement of

petitioners copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was
neither a literary not an artistic work but an engineering or marketing
invention.10 Obviously, there appeared to be some confusion regarding what ought
or ought not to be the proper subjects of copyrights, patents and trademarks. In the
leading case of Kho vs. Court of Appeals,11 we ruled that these three legal rights are
completely distinct and separate from one another, and the protection afforded by

On the Issue of Patent Infringement

This brings us to the next point: if, despite its manufacture and commercial use of
the light boxeswithout license from petitioner, private respondents cannot be held
legally liable for infringement of P & Ds copyright over its technical drawings of
the said light boxes, should they be liable instead for infringement of patent? We do
not think so either.
For some reason or another, petitioner never secured a patent for the light boxes.
It therefore acquired no patent rights which could have protected its invention, if in
fact it really was. And because it had no patent, petitioner could not legally prevent

anyone from manufacturing or commercially using the contraption. InCreser

12

privileges without the consent of the patentee. It was passed for the purpose of

Precision Systems, Inc. vs. Court of Appeals, we held that there can be no

encouraging useful invention and promoting new and useful inventions by the

infringement of a patent until a patent has been issued, since whatever right one has

protection and stimulation given to inventive genius, and was intended to secure to

to the invention covered by the patent arises alone from the grant of patent. x x x

the public, after the lapse of the exclusive privileges granted the benefit of such

(A)n inventor has no common law right to a monopoly of his invention. He has the

inventions and improvements.

right to make use of and vend his invention, but if he voluntarily discloses it, such as

The law attempts to strike an ideal balance between the two interests:

by offering it for sale, the world is free to copy and use it with impunity. A patent,

(The p)atent system thus embodies a carefully crafted bargain for encouraging the

however, gives the inventor the right to exclude all others. As a patentee, he has the

creation and disclosure of new, useful and non-obvious advances in technology and

13

exclusive right of making, selling or using the invention. On the assumption that

design, in return for the exclusive right to practice the invention for a number of

petitioners advertising units were patentable inventions, petitioner revealed them

years. The inventor may keep his invention secret and reap its fruits indefinitely. In

fully to the public by submitting the engineering drawings thereof to the National

consideration of its disclosure and the consequent benefit to the community, the

Library.

patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but upon

To be able to effectively and legally preclude others from copying and profiting
from the invention, a patent is a primordial requirement. No patent, no protection.
The ultimate goal of a patent system is to bring new designs and technologies into
the public do-

who are thus enabled to practice it and profit by its use. 17

The patent law has a three-fold purpose: first, patent law seeks to foster and reward
invention; second, it promotes disclosures of inventions to stimulate further

_______________

innovation and to permit the public to practice the invention once the patent expires;

12

286 SCRA 13 [1998].

third, the strin-

13

Id., at p. 21, citing Anchor Hocking Glass Corp. vs. White Cap Co., 47 F.

_______________

Supp. A 451, and Bauer & Cie vs. O Donnel, 229 US 1.

244
244

the expiration of that period, the knowledge of the invention inures to the people,

SUPREME COURT REPORTS ANNOTATED

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated
14

main through disclosure. Ideas, once disclosed to the public without the protection
of a valid patent, are subject to appropriation without significant restraint.

14

Bonito Boats, Inc. vs. Thunder Craft Boats, Inc., 489 US 141[1989].

15

Id., at p. 156.

16

Ibid., at p. 10.

17

Bonito Boats, Inc. vs. Thunder Craft Boats, Inc., ibid., p. 150, citing U.S. vs.

Dubilier Condenser Corp., 289 U.S. 178.

15

On one side of the coin is the public which will benefit from new ideas; on the
other are the inventors who must be protected. As held in Bauer & Cie vs.
ODonnel,16 The act secured to the inventor the exclusive right to make use, and
vend the thing patented, and consequently to prevent others from exercising like

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Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

gent requirements for patent protection seek to ensure that ideas in the public
domain remain there for the free use of the public. 18

It is only after an exhaustive examination by the patent office that a patent is

19

Sears Roebuck vs. Stiffel, 376 US 225, 229 [1964].

issued. Such an in-depth investigation is required because in rewarding a useful

20

Section 2, PD 49 (The Intellectual Property Decree).

invention, the rights and welfare of the community must be fairly dealt with and

21

101 US 102-105 [1879].

effectively guarded. To that end, the prerequisites to obtaining a patent are strictly
observed and when a patent is issued, the limitations on its exercise are equally
strictly enforced. To begin with, a genuine invention or discovery must be
demonstrated lest in the constant demand for new appliances, the heavy hand of
tribute be laid on each slight technological advance in art. 19
There is no such scrutiny in the case of copyrights nor any notice published
before its grant to the effect that a person is claiming the creation of a work. The law
confers the copyright from the moment of creation 20 and the copyright certificate is
issued upon registration with the National Library of a sworn ex parte claim of
creation.
Therefore, not having gone through the arduous examination for patents, the
petitioner cannot exclude others from the manufacture, sale or commercial use of the
light boxes on the sole basis of its copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity
for the patent office (IPO) to scrutinize the light boxs eligibility as a patentable
invention. The irony here is that, had petitioner secured a patent instead, its
exclusivity would have been for 17 years only. But through the simplified procedure
of copyright-registration with the National Librarywithout undergoing the rigor of
defending the patentability of its invention before the IPO and the publicthe
petitioner would be protected for 50 years. This situation could not have been the
intention of the law.
In the oft-cited case of Baker vs. Selden,21 the United States Supreme Court held
that only the expression of an idea is protected by
_______________

246
246

SUPREME COURT REPORTS ANNOTATED

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

copyright, not the idea itself. In that case, the plaintiff held the copyright of a book
which expounded on a new accounting system he had developed. The publication
illustrated blank forms of ledgers utilized in such a system. The defendant
reproduced forms similar to those illustrated in the plaintiff s copyrighted book. The
US Supreme Court ruled that:
There is no doubt that a work on the subject of bookkeeping, though only
explanatory of well known systems, may be the subject of a copyright; but, then, it is
claimed only as a book, x x x. But there is a clear distinction between the books, as
such, and the art, which it is, intended to illustrate. The mere statement of the
proposition is so evident that it requires hardly any argument to support it. The same
distinction may be predicated of every other art as well as that of bookkeeping. A
treatise on the composition and use of medicines, be they old or new; on the
construction and use of ploughs or watches or churns; or on the mixture and
application of colors for painting or dyeing; or on the mode of drawing lines to
produce the effect of perspective, would be the subject of copyright; but no one
would contend that the copyright of the treatise would give the exclusive right to the
art or manufacture described therein. The copyright of the book, if not pirated from
other works, would be valid without regard to the novelty or want of novelty of its
subject matter. The novelty of the art or thing described or explained has nothing to
do with the validity of the copyright. To give to the author of the book an exclusive
property in the art described therein, when no examination of its novelty has ever

Aronson vs. Quick Point Pencil Co., 440 U.S. 257, 262 [1979],

been officially made, would be a surprise and a fraud upon the public. That is the

citing Kewanee Oil Co. vs. Bicron Corp., 416 U.S. 470 [1994], cited Amador,

province of letters patent, not of copyright. The claim to an invention of discovery of

patents, p, 496.

an art or manufacture must be subjected to the examination of the Patent Office

18

before an exclusive right therein can be obtained; and a patent from the government
can only secure it.

The plausibility of the claim put forward by the complainant in this case arises
from a confusion of ideas produced by the peculiar nature of the art described in the

The difference between the two things, letters patent and copyright, may be

books, which have been made the subject of copyright. In describing the art, the

illustrated by reference to the subjects just enumerated. Take the case of medicines.

illustrations and diagrams employed happened to correspond more closely than

Certain mixtures are found to be of great value in the healing art. If the discoverer

usual with the actual work performed by the operator who uses the art. x x x The

writes and publishes a book on the subject (as regular physicians generally do), he

description of the art in a book, though entitled to the benefit of copyright, lays no

gains no exclusive right to the manufacture and sale of the medicine; he gives that

foundation for an exclusive claim to the art itself. The object of the one is

to the public. If he desires to acquire such exclusive right, he must obtain a patent

explanation; the object of the other is use. The former may be secured by copyright.

for the mixture as a new art, manufacture or composition of matter. He may

The latter can only be secured, if it can be secured at all, by letters patent. (italics

copyright his book, if he pleases; but that only secures to him the exclusive right of

supplied)

printing and publishing his book. So of all other inventions or discoveries.

The copyright of a book on perspective, no matter how many drawings and
illustrations it may contain, gives no exclusive right to the modes of drawing
described, though they may never have been known or used before. By publishing
the book without getting a patent for the art, the latter is given to the public.

On the Issue of Trademark Infringement

This issue concerns the use by respondents of the mark Poster Ads which
petitioners president said was a contraction of poster advertising. P & D was able
to secure a trademark certificate for it, but one where the goods specified were
stationeries

such

as

letterheads,

envelopes,

calling

cards

and

22

newsletters. Petitioner admitted it did not commercially engage in or market these

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Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

xxx

goods. On the contrary, it dealt in electrically operated backlit advertising units and
the sale of advertising spaces thereon, which, however, were not at all specified in
the trademark certificate.

Now, whilst no one has a right to print or publish his book, or any material part

Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs.

thereof, as a book intended to convey instruction in the art, any person may practice

Intermediate Appellate Court,23 where we, invoking Section 20 of the old Trademark

and use the art itself which he has described and illustrated therein. The use of the

Law, ruled that the certificate of registration issued by the Director of Patents can

art is a totally different thing from a publication of the book explaining it. The

confer (upon petitioner) the exclusive right to use its own symbol only to those

copyright of a book on bookkeeping cannot secure the exclusive right to make, sell

_______________

and use account books prepared upon the plan set forth in such book. Whether the
art might or might not have been patented, is a question, which is not before us. It
was not patented, and is open and free to the use of the public. And, of course, in
using the art, the ruled lines and headings of accounts must necessarily be used as
incident to it.

22

Exhibit B, Original Records, p. 63.

23

215 SCRA 316 [1992].

248
248

SUPREME COURT REPORTS ANNOTATED

Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

goods specified in the certificate, subject to any conditions and limitations specified
in the certificate x x x. One who has adopted and used a trademark on his
goods does not prevent the adoption and use of the same trademark by others for
products which are of a different description.24Faberge, Inc. was correct and was in
fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.25
Assuming arguendo that Poster Ads could validly qualify as a trademark, the
failure of P & D to secure a trademark registration for specific use on the light boxes
meant that there could not have been any trademark infringement since registration
was an essential element thereof.
On the Issue of Unfair Competition
If at all, the cause of action should have been for unfair competition, a situation
which was possible even if P & D had no registration. 26 However, while the
petitioners complaint in the RTC also cited unfair competition, the trial court did
not find private respondents liable therefor. Petitioner did not appeal this particular
point; hence, it cannot now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold
respondents guilty of unfair competition.
By the nature of things, there can be no unfair competition under the law on
copyrights although it is applicable to disputes over the use of trademarks. Even a
name or phrase incapable of appropriation as a trademark or trade name may, by
long and exclusive use by a business (such that the name or phrase becomes
associated with the business or product in the mind of the purchasing public), be
entitled to protection against unfair competition. 27 In this case, there was no
evidence that P & Ds use of Poster Ads was distinctive or well-known. As noted
by the Court of Appeals, petitioners expert witnesses himself had testified that
Poster Ads was too generic a name. So it was difficult to identify it with
_______________
24

Id., at p. 326.

25

336 SCRA 266 [2000].

26

Ogura vs. Chua, 59 Phil. 471.

27

Sapalo, The Law on Trademark Infringement and Unfair Competition, 2000

ed., p. 185.
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Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

any company, honestly speaking.28 This crucial admission by its own expert witness
that Poster Ads could not be associated with P & D showed that, in the mind of the
public, the goods and services carrying the trademark Poster Ads could not be
distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning.
Poster Ads was generic and incapable of being used as a trademark because it was
used in the field of poster advertising, the very business engaged in by petitioner.
Secondary meaning means that a word or phrase originally incapable of exclusive
appropriation with reference to an article in the market (because it is geographically
or otherwise descriptive) might nevertheless have been used for so long and so
exclusively by one producer with reference to his article that, in the trade and to that
branch of the purchasing public, the word or phrase has come to mean that the
article was his property.29 The admission by petitioners own expert witness that he
himself could not associate Poster Ads with petitioner P & D because it was too
generic definitely precluded the application of this exception.
Having discussed the most important and critical issues, we see no need to
belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals
when it reversed the Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of
Appeals dated May 22, 2001 is AFFIRMED in toto.
SO ORDERED.
Puno (Chairman), Panganiban, Sandoval-Gutierrez and Carpio-Morales,
JJ., concur.
Petition denied, assailed decision affirmed in toto.

Note.Intellectual and industrial property rights cases are not simple property
cases (Mirpuri vs. Court of Appeals, 318 SCRA 516 [1999]