Ang Si Heng vs. Wellington Department Store, Inc.

A geographical name or a surname is not susceptible of exclusive appropriation as a trademark or trade name under Philippine law, and therefore no statutory action for infringement will lie in its favour. Where unfair competition is claimed on the basis of a name that is not registrable, the plaintiff must prove that, through long and exclusive use, the name has acquired a secondary meaning denoting the plaintiff’s business, and that the defendant’s use is likely to confuse the public because the plaintiff’s business has attained a reputation and goodwill of such consequence that the defendant’s adoption of the name amounts to an unfair taking.

Plaintiffs Ang Si Heng and Salustiana Dee had manufactured shirts, pants, drawers, and other articles of wear since 1938. They registered the trademark “Wellington” for those goods and, in 1940, the business name “Wellington Company,” which was renewed in 1946. Their invoices, stationery, and signboard bore the trade name “Wellington Company,” and they advertised as “Wellington Shirt Factory.” Defendant Benjamin Chua applied for the business name “Wellington Department Store” on 7 May 1946, received a certificate from the Bureau of Commerce, and transferred the name to the corporate defendant Wellington Department Store, Inc., of which he was president. Plaintiffs alleged that the defendants’ use of “Wellington Department Store” misled the public into purchasing defendants’ goods under the mistaken impression that they originated from or were connected with plaintiffs’ enterprise.

• Nature of Plaintiffs’ Business: Since 1938, plaintiffs manufactured and sold shirts, pants, drawers, and other apparel for men, women, and children. They sold these goods under the trademark “Wellington,” which was registered for the articles on 27 August 1938, although it was not renewed thereafter. In 1940 they registered the business name “Wellington Company,” renewed on 11 June 1946. Their invoices, stationery, signboard, and newspaper advertisements displayed “Wellington Company” or “Wellington Shirt Factory.”
• Defendants’ Business Name and Enterprise: On 7 May 1946, Benjamin Chua applied for and obtained a certificate of registration for the business name “Wellington Department Store.” On 8 June 1946, the name was transferred to Wellington Department Store, Inc., a corporation in which Chua served as president. Neither the defendants’ business name registration nor the plaintiffs’ “Wellington Company” registration appeared to have been renewed after 1946.
• Plaintiffs’ Allegations: Plaintiffs charged that the defendants’ use of “Wellington Department Store” as a business and corporate name deceived the public into purchasing the defendants’ goods under the erroneous belief that the goods were plaintiffs’ products or shared the same source, thereby causing damage. They prayed for an injunction, cancellation of the business name registration by the Director of Commerce, and cancellation of the corporate name by the Securities and Exchange Commissioner.
• Defense: Defendants answered that they were not engaged in the same business as plaintiffs; while plaintiffs manufactured and sold garments, defendants kept a department store selling shoes, hats, toys, perfumes, bags, and other articles dissimilar to those produced by plaintiffs, and they did not sell goods bearing the “Wellington” trademark.
• Evidence at Trial: Plaintiffs’ store was located in a business district distant from the Escolta, where defendants’ department store operated. Plaintiffs’ witnesses did not claim to have actually purchased any article from defendants’ store; at most, two or more customers of plaintiffs speculated about a possible connection between the two businesses. The trial court found no prior appropriation of the corporate name and dismissed the complaint.

• Similarity and Confusion: Plaintiffs maintained that the defendants’ business was similar and identical to theirs and that the use of “Wellington Department Store, Inc.” misled and confused the public.
• Property Right in the Name: Plaintiffs argued that they had acquired a property right in the name “Wellington” through prior and continuous use in their manufacturing and commercial operations.
• Unfair Competition: In the alternative, plaintiffs contended that, even if no technical trade name infringement were found, the defendants were liable for unfair competition because their use of “Wellington” was calculated to divert the plaintiffs’ goodwill and deceive purchasers.

• Different Business: Defendants countered that they were not engaged in the manufacture or sale of articles bearing the “Wellington” mark; they operated a department store handling merchandise largely distinct from the garments produced by plaintiffs.
• No Deception or Confusion: Respondents argued that the name “Wellington Department Store” described a different type of enterprise, and that the dissimilarity of the goods, the absence of the “Wellington” mark on defendants’ merchandise, and the distance between the parties’ places of business negated any likelihood of public deception.

• Appropriability of “Wellington” as a Trade Name: Whether the term “Wellington” could be exclusively appropriated as a trademark or trade name, such that an action for infringement would lie under Republic Act No. 166.
• Unfair Competition: Whether the defendants’ use of the business and corporate name “Wellington Department Store” constituted unfair competition, given the nature of the respective businesses, the similarity of the names, and the absence of proof of actual consumer confusion or established reputation.

• Appropriability of “Wellington” as a Trade Name: The name “Wellington” is either a geographical name (referring to various places worldwide) or a surname. Under general principles, geographical names are common property and cannot be exclusively appropriated as a trademark or trade name. Even if treated as a surname, its registration as a trade name is prohibited by Section 4(e) of Republic Act No. 166. Because the term cannot be the subject of exclusive appropriation, no statutory right of action for infringement arises; Section 23 of the same Act grants relief only to those entitled to the exclusive use of a registered trademark or trade name. Thus, plaintiffs’ claim for infringement was correctly dismissed.
• Unfair Competition: The complaint, however, also alleged actual intent to mislead and defraud, thus invoking the law on unfair competition under Section 29 of Republic Act No. 166. To determine liability, all surrounding circumstances must be examined: the identity or similarity of the businesses, the descriptive character of the names, the extent of possible confusion, and the proximity of the establishments. Although the names share the word “Wellington,” no confusion or deception could arise because defendants ran a “department store,” not a manufacturing enterprise, and their store sold goods under other trademarks, not under the “Wellington” mark. The two businesses were situated in different commercial districts, and no witness testified to having been actually misled into purchasing defendants’ goods. The mere speculation of a few customers is insufficient proof of public deception. Furthermore, the principle recognized in Ang vs. Teodoro—that a name not registrable as a trade name may acquire protection against unfair competition through long and exclusive use—could not apply because plaintiffs failed to prove that their business had endured long enough or acquired such goodwill that its articles had achieved a well-known reputation. The defendants’ business and goodwill appeared to be the product of their own initiative, not something unfairly taken from the plaintiffs. Following Kalaw Ng Khe vs. Lever Brothers Co., while protection against unfair competition has been widened, the essential element of unfairness remains, and here no prior well-established reputation or goodwill was shown to have been appropriated. Accordingly, the unfair competition claim was not substantiated.

• Geographical Name Doctrine — Geographical names are ordinarily regarded as common property and may not be exclusively appropriated as a trademark or trade name. A plaintiff cannot maintain an infringement action based solely on such a term.
• Surname Rule — A surname cannot be validly registered as a trade name under Section 4(e) of Republic Act No. 166. Where the term used is a surname, it is equally incapable of exclusive appropriation, barring a claim for trade name infringement.
• Secondary Meaning in Unfair Competition — Even a name or phrase not registrable as a trademark or trade name may, by long and exclusive use, acquire a proprietary connotation such that the purchasing public associates it exclusively with a particular business or product. When such a secondary meaning has developed, the name is entitled to protection against unfair competition. The requisites are: (1) long and exclusive use in connection with the business or goods; (2) the name has come to denote the plaintiff’s enterprise in the mind of the public; and (3) the defendant’s use is likely to cause confusion because the plaintiff’s business has acquired substantial reputation and goodwill. In this case, the doctrine was not satisfied because the plaintiffs’ evidence failed to show that their business had attained sufficient duration, reputation, or goodwill.
• Unfair Competition — Scope and Elements — Unfair competition is not confined to exact identity of goods; it covers situations where a newcomer attempts to appropriate the reputation or goodwill of another, even if the articles fall merely within the same general category. The gravamen is unfairness. However, to succeed, the plaintiff must prove (a) a well-established reputation or goodwill attached to the name or mark, and (b) the defendant’s use constitutes a taking or freeriding on that reputation, leading to a likelihood of confusion. The decision further enumerates factors to be weighed: the similarity of the businesses, how far the names truly describe the goods or business, the extent of confusion likely to result, and the distance between the parties’ places of business.

• “But mere geographical names are ordinarily regarded as common property, and it is a general rule that the same cannot be appropriated as the subject of an exclusive trademark or trade name.” — This passage articulates the bedrock principle that defeated the trade name infringement claim.
• “Even if Wellington were a surname, which is not even that of the plaintiffs-appellants, it cannot also be validly registered as a trade name. (Section 4, Paragraph (e), Republic Act. No. 166.) As the term cannot be appropriated as a trademark or a trade name, no action for violation thereof can be maintained, as none is granted by the statute in such cases.” — The Court ties the unregistrability of surnames to the absence of a statutory cause of action.
• “It is not, however, competition that the law seeks to prevent, but unfair competition, wherein a newcomer in business tries to grab or steal away the reputation or goodwill of the business of another. … the tendency of the courts has been to widen the scope of protection in the field of unfair competition. They have held that there is no fetish in the word ‘competition,’ and that the invocation of equity rest more vitally on the element of unfairness.” — This excerpt, quoting Kalaw Ng Khe v. Lever Brothers Co., underscores the broader equitable foundation of unfair competition, while emphasizing that proof of pre-existing reputation remains essential.

• Compañia General de Tabacos vs. Alhambra Cigar & Cigarette Mfg. Co., 33 Phil. 485 — Cited by the trial court and acknowledged by the Supreme Court for the proposition that a corporate name not previously acquired or appropriated by another may be used.
• Walter E. Olsen & Co. vs. Lambert, 42 Phil. 633 — Cited alongside Compañia General de Tabacos in support of the trial court’s dismissal.
• Ang vs. Teodoro, 74 Phil. 50 — Distinguished. The Court recognized the doctrine that a name incapable of appropriation as a trade name may still be protected against unfair competition if it has acquired a secondary meaning, but found it inapplicable because the plaintiffs had not shown the requisite long and exclusive use or built-up goodwill.
• Teodoro Kalaw Ng Khe vs. Lever Brothers Co., G.R. No. 46817, 17 April 1941 (83 Phil. 947) — Relied upon for the principle that unfair competition can exist even when the parties’ goods are not exactly identical, so long as they fall within the same general category, and that the essence of the wrong is unfair appropriation of another’s reputation. Applied to confirm that no such reputation was proven.
• Chas S. Higgins Co. vs. Higgins Soap Co., 144 N.Y. 462 — Cited as persuasive authority enumerating the factors to be considered in determining whether a likelihood of confusion exists (identity or similarity of business, descriptiveness of names, extent of confusion, distance between places of business).

• Section 4(e), Republic Act No. 166 (Trademark Law) — Prohibits the registration of a surname as a trade name. Applied to rule that the term “Wellington,” being a surname, could not be validly registered, thereby precluding an infringement action.
• Section 23, Republic Act No. 166 — Grants the right to damages and injunction for infringement only to those entitled to the exclusive use of a registered trademark or trade name. Because plaintiffs held no registrable right over “Wellington,” they could not invoke this provision.
• Section 29, Republic Act No. 166 — Defines unfair competition. The Court treated the complaint as one falling under this provision and assessed it based on the surrounding circumstances, ultimately finding no actionable unfairness.

Paras, C.J., Pablo, Bengzon, Tuason, Montemayor, Jugo, and Bautista Angelo, JJ., concurred.