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2022 Bar exams question on trademark infringement

Dennis Gorecho - Kuwentong Peyups

Will a prior user in good faith be enjoined from further using the trademark by a registrant of a similar mark?

This is one of the questions included in the 2022 Bar Examinations for Commercial Law.

Zui Cheneris Corp. is a pharmaceutical company operating in the Philippines since 1999. One of its products is a drug called carbamazepine under the brand name “CHENAPS,” which is an anticonvulsant used to control all types of seizure disorders of varied causes like epilepsy.

Nutty Pharma, also a pharmaceutical company in the Philippines, sells citicoline under the mark “CHENAPSE,” which is indicated for the treatment of cerebrovascular disease or stroke. “CHENAPSE” was registered as a trademark by Nutty Pharma with the Intellectual Property Office of the Philippines (IPO) on September 24, 2017.

On November 29, 2017, Nutty Pharma filed with the Regional Trial Court (RTC) a Complaint against Zui Cheneris for Trademark Infringement alleging that Zui Cheneris’s “CHENAPS” is confusingly similar to its registered trademark “CHENAPSE” and the resulting likelihood of confusion is dangerous because the marks cover medical drugs intended for different types of illnesses.

Zui Cheneris, in its Answer, countered that: (i) it has been selling carbamazepine under the brand name “CHENAPS” since 2004; (ii) it was impossible for Nutty Pharma not to have known the existence of “CHENAPS” before the latter’s registration of “CHENAPSE” because Nutty Pharma had promoted its products in the same publications where Zui Cheneris had advertised “CHENAPS”; (iii) despite its knowledge of prior use by Zui Cheneris of “CHENAPS”, Nutty Pharma had fraudulently appropriated the “CHENAPSE” mark by registering the same with the IPO; and, (iv) as the prior user, Zui Cheneris is the owner of “CHENAPS” and the continued use by Nutty Pharma of “CHENAPSE” will cause it grave and irreparable damage. Thus, Zui Cheneris prayed for the cancellation of the trademark registration of Nutty Pharma’s “CHENAPSE.”

(a) As the RTC judge, will you enjoin Zui Cheneris from further using the mark “CHENAPS”?

(b) Is Zui Cheneris’s prayer for cancellation of Nutty Pharma’s trademark registration tenable?  

The question is lifted from the actual trademark infringement case filed by Zuneca Pharmaceutical Inc. against Natrapharm Inc. (GR 211850, September 08, 2020).

The IP Code conveys the rule that ownership of a mark is acquired through registration with the exception created by Section 159.1 on prior use.

Prior users in good faith are protected in the sense that they will not be made liable for trademark infringement even if they are using a mark that was subsequently registered by another person.

Even if a mark was previously used and not abandoned by another person, a good faith applicant may still register the same and thus become the owner thereof, and the prior user cannot ask for the cancellation of the latter’s registration.

A prior user in good faith may continue to use its mark even after the registration of the mark by the first-to-file registrant in good faith, subject to the condition that any transfer or assignment of the mark by the prior user in good faith should be made together with the enterprise or business or with that part of his enterprise or business in which the mark is used.

While the IP Code mandates that the applicant or registrant of a mark must prove continued actual use of such mark, this does not imply that actual use is still a recognized mode of acquisition of ownership. Rather, this requirement is put in place in order for the registered owner of a mark to maintain his ownership.

While Natrapharm is the owner of the “ZYNAPSE” mark, this does not, however, automatically mean that its complaint against Zuneca’s “ZYNAPS” is with merit.

Since Natrapharm was not shown to have been in bad faith, it was considered to have acquired all the rights of a trademark owner upon the registration of the “ZYNAPSE” mark.

The Supreme Court found that Zuneca was exempted from liability for trademark infringement for being a prior user in good faith.

Just like the 2020-2021 Bar Exams which is not dependent on penmanship, this year’s exams were done digitally where 9,183 out of the 10,006 total examinees were able to complete the examinations held on two Wednesdays (November 9 and 16) and two Sundays (November 13 and 20).

Headed by Associate Justice Alfredo Benjamin Caguioa, the simultaneous digital and regionalized bar exams were administered at 14 local testing centers nationwide with eight in Luzon, three in Visayas, and three in Mindanao.

A total of 8,241 examinees out of the 11,402 takers passed the 2020/2021 bar exams with a passing rate of 72.28 percent with my UP Law professor SC Associate Justice Marvic Leonen as chairman.  

Peyups is the moniker of the University of the Philippines. Atty. Dennis R. Gorecho heads the seafarers’ division of the Sapalo Velez Bundang Bulilan law offices. For comments, e-mail info@sapalovelez.com, or call 0917-5025808 or 0908-8665786.

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