Birkenstock Orthopaedie GmbH and Co. KG vs. Philippine Shoe Expo Marketing Corporation

Registration of a trademark merely creates a rebuttable prima facie presumption of ownership; ownership is acquired through actual use in commerce, not through registration. Failure to file the Declaration of Actual Use (DAU) within the prescribed period results in automatic cancellation of the trademark registration, effectively constituting abandonment or withdrawal of any right or interest over the mark.

Petitioner Birkenstock Orthopaedie GmbH and Co. KG, a corporation organized under German law, sought to register various "BIRKENSTOCK" trademarks in the Philippines for footwear and related goods under the International Classification of Goods and Services. The registration proceedings were suspended due to an existing registration held by respondent's predecessor-in-interest, Shoe Town International and Industrial Corporation, under Registration No. 56334 dated October 21, 1993. The dispute arose when the respondent, despite having its prior registration cancelled for failure to file the required 10th Year Declaration of Actual Use, opposed the petitioner's applications claiming continued use, copyright registration, and prior rights over the mark.

• Petitioner Birkenstock Orthopaedie GmbH and Co. KG, a German corporation, applied for registration of three trademarks: (a) "BIRKENSTOCK" under Class 25; (b) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE" under Class 25; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE" under Class 10, with filing dates of March 11, 1994 and September 5, 1994.
• Respondent's predecessor-in-interest, Shoe Town International and Industrial Corporation, had previously registered "BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated October 21, 1993, which was formally assigned to respondent on February 24, 2004.
• Registration No. 56334 was cancelled due to respondent's failure to file the required 10th Year Declaration of Actual Use on or before October 21, 2004, as mandated by Section 12 of Republic Act No. 166.
• Petitioner established that the "BIRKENSTOCK" mark was first adopted in Europe in 1774 by Johann Birkenstock, a shoemaker, and has been continuously used by his descendants and the petitioner-entity in the manufacture and sale of footwear worldwide, including in the Philippines.
• Respondent obtained Certificate of Copyright Registration No. 0-11193 for the word "BIRKENSTOCK" on November 15, 1991.
• Respondent presented sales invoices and advertisements as evidence of its continued use of the mark in commerce despite the cancellation of its registration.
• The documentary evidence submitted by petitioner in the opposition proceedings consisted of photocopies of certificates of registration from various countries and evidence of international use.

• It is the true and lawful owner and prior user of the "BIRKENSTOCK" marks, having used the mark since 1774 in Europe and internationally.
• Respondent's Registration No. 56334 was automatically cancelled due to failure to file the 10th Year DAU, removing any legal obstacle to petitioner's registration and constituting abandonment of rights.
• The documentary evidence submitted, though photocopies, should be admissible as the IPO had already obtained the originals in the related Cancellation Case, and strict technical rules should not frustrate substantial justice.
• Copyright registration is a different form of intellectual property from trademark and cannot be interchanged to establish trademark rights.
• Respondent was in bad faith in registering the mark as it is incredible that it would independently coin an identical highly distinct mark of German origin without intent to take advantage of petitioner's goodwill.

• Petitioner's documentary evidence are mere photocopies in violation of Section 8.1 of the Rules on Inter Partes Proceedings, which requires certified true copies or originals, and are therefore inadmissible.
• It has been using the Birkenstock marks in the Philippines for more than 16 years through Registration No. 56334, and the marks covered by the subject applications are identical or confusingly similar.
• Failure to file the 10th Year DAU did not deprive it of ownership of the mark since it submitted substantial evidence showing continued use, promotion, and advertisement up to the present.
• It obtained Certificate of Copyright Registration No. 0-11193 for the word "BIRKENSTOCK" on November 15, 1991, establishing prior rights.
• There was no bad faith in adopting the mark as there was neither an existing registration nor a pending application for "BIRKENSTOCK" when its predecessor-in-interest first adopted and used the mark.

• Procedural: Whether the IPO Director General gravely abused his discretion in admitting petitioner's documentary evidence which were mere photocopies, allegedly in violation of Section 8.1 of the Rules on Inter Partes Proceedings.
• Substantive Issues:
  1. Whether respondent's failure to file the 10th Year Declaration of Actual Use resulted in abandonment of its rights over the mark.
  2. Whether petitioner is the true and lawful owner of the "BIRKENSTOCK" marks entitled to registration.
  3. Whether respondent acted in bad faith in registering the marks.

• Procedural: The Supreme Court held that while petitioner submitted mere photocopies, the IPO had already obtained the originals of such documentary evidence in the related Cancellation Case earlier filed before it. Citing that quasi-judicial bodies like the IPO are not bound by strict technical rules of procedure, and that rules of procedure are mere tools to facilitate justice rather than frustrate it, the Court ruled that the IPO Director General's relaxation of procedure was a valid exercise of discretion in the interest of substantial justice.
• Substantive: The Court ruled in favor of the petitioner:
  1. Failure to file the DAU within the requisite period results in automatic cancellation of registration under Section 12 of RA 166, which is tantamount to abandonment or withdrawal of any right or interest the registrant has over the trademark. Respondent's failure to file the 10th Year DAU by October 21, 2004 resulted in the cancellation of Registration No. 56334 and the loss of all rights thereunder.
  2. Registration does not vest ownership; it merely creates a prima facie presumption of ownership that is rebuttable by evidence of prior use. Ownership is acquired through actual use in commerce. Petitioner established prior use since 1774 and presented superior evidence of ownership through certificates of registration in various countries and evidence of international use, overcoming the presumption of ownership from respondent's cancelled registration.
  3. Respondent was in bad faith in registering the mark. The Court found it incredible that respondent would independently coin a highly distinct and uncommon mark of German origin identical to petitioner's without intent to take advantage of the goodwill generated by petitioner's mark, given that respondent was in the same line of business and likely knew of petitioner's international reputation.

• Ownership Through Actual Use vs. Registration — Ownership of a trademark is acquired by its actual use in commerce, not merely by registration. Registration only creates a prima facie presumption of the validity of the registration and of the registrant's ownership, which is rebuttable by evidence of prior use by another person. A trademark is a creation of use and belongs to one who first used it in trade or commerce.
• Abandonment Through Failure to File DAU — Failure to file the Declaration of Actual Use (DAU) within the periods prescribed by Section 12 of RA 166 (or Sections 124.2 and 145 of the IP Code) results in the automatic cancellation of the trademark registration, effectively constituting abandonment or withdrawal of any right or interest the registrant has over the mark.
• Relaxed Rules in Administrative Proceedings — Quasi-judicial and administrative bodies, such as the IPO, are not bound by strict technical rules of procedure and evidence. Rules of procedure are mere tools aimed at facilitating the attainment of justice, and their relaxation or suspension is permitted in meritorious cases to relieve a litigant of injustice not commensurate with the degree of thoughtlessness in not complying with the procedure prescribed.

• "The rules of procedure are mere tools aimed at facilitating the attainment of justice, rather than its frustration. A strict and rigid application of the rules must always be eschewed when it would subvert the primary objective of the rules, that is, to enhance fair trials and expedite justice."
• "Registration of a trademark, by itself, is not a mode of acquiring ownership. If the applicant is not the owner of the trademark, he has no right to apply for its registration. Registration merely creates a prima facie presumption of the validity of the registration, of the registrant's ownership of the trademark, and of the exclusive right to the use thereof."
• "A trademark is a creation of use and belongs to one who first used it in trade or commerce."
• "The unanswered riddle is why, of the millions of terms and combinations of letters and designs available, [respondent] had to come up with a mark identical or so closely similar to the [petitioner's] if there was no intent to take advantage of the goodwill generated by the [petitioner's] mark."

• Berris Agricultural Co., Inc. v. Abyadang — Cited for the principle that the prima facie presumption of ownership arising from registration may be challenged and overcome by evidence of prior use by another, and that a trademark belongs to one who first used it in trade or commerce.
• Mattel, Inc. v. Francisco — Cited regarding the legal effect of failure to file the Declaration of Actual Use as constituting abandonment of rights.
• Shangri-La International Hotel Management, Ltd. v. Developers Group of Companies, Inc. — Cited for the distinction that registration does not vest ownership but merely creates a prima facie presumption of ownership and validity that must give way to evidence to the contrary.
• Alcantara v. Philippine Commercial and International Bank — Cited for the principle that rules of procedure are tools to facilitate justice and should not be used to defeat substantive rights.
• Asia United Bank v. Goodland Company, Inc. — Cited regarding the conditions for relaxation of procedural rules, i.e., for persuasive reasons and only in meritorious cases.
• E.Y. Industrial Sales, Inc. v. Shen Dar Electricity and Machinery Co., Ltd — Cited for the rule that quasi-judicial bodies are not bound by strict technical rules of procedure and may adopt modes of proceedings consistent with fair play.

• Section 12 of Republic Act No. 166 — Provides that registration shall remain in force for twenty years subject to the filing of affidavits of use on the 5th, 10th, and 15th anniversaries; failure to file results in cancellation by the Director.
• Section 2 and Section 2-A of Republic Act No. 166 — Define what marks are registrable and provide that ownership of trademarks is acquired through actual use in manufacture, trade, or business, not merely by registration.
• Section 236 of Republic Act No. 8293 (Intellectual Property Code) — Provides for the preservation of rights acquired under previous intellectual property laws; held inapplicable to respondent who had already lost rights through abandonment.
• Section 5 of the Rules on Inter Partes Proceedings — Provides that the Bureau of Legal Affairs shall not be bound by strict technical rules of procedure and may adopt modes of proceedings consistent with fair play and conducive to just, speedy, and inexpensive disposition of cases.
• Section 8.1 of the Rules on Inter Partes Proceedings — Requires filing of originals of documents or certified true copies in case of public documents.