Coffee Partners, Inc. vs. San Francisco Coffee & Roastery, Inc.

A trade name need not be registered with the Intellectual Property Office to be protected from infringement, provided it has been previously used in trade or commerce in the Philippines and its subsequent use by a third party is likely to mislead the public.

Respondent San Francisco Coffee & Roastery, Inc. registered its business name with the Department of Trade and Industry (DTI) in June 1995 and engaged in the wholesale and retail sale of coffee, building a customer base that included several established coffee companies. In 1998, respondent formed a joint venture company, Boyd Coffee Company Philippines, Inc. (BCCPI), for the processing and roasting of coffee, and later conducted a project study for setting up coffee carts. Petitioner Coffee Partners, Inc. registered with the Securities and Exchange Commission (SEC) in January 2001 and secured a franchise from Coffee Partners Ltd. (CPL), a British Virgin Islands entity, to operate coffee shops in the Philippines using the mark "SAN FRANCISCO COFFEE." Petitioner opened its first coffee shop under this name in Libis, Quezon City in June 2001.

• Respondent's Business Operations: Respondent registered with the SEC in May 1995 and registered the business name "SAN FRANCISCO COFFEE & ROASTERY, INC." with the DTI in June 1995. It engaged in the wholesale and retail sale of coffee and built a customer base that included Figaro Company and Tagaytay Highlands. In 1998, respondent formed BCCPI, a joint venture with Boyd Coffee USA, to handle processing and roasting. Respondent later studied the establishment of retail coffee carts. Respondent's DTI business name registration expired on 16 June 2000 and was only renewed in 2001 after petitioner's shop opened.
• Petitioner's Franchise and Operations: Petitioner registered with the SEC in January 2001. It entered a franchise agreement with CPL, a company formed in 1997 by former Starbucks managers in the United States who adopted the name from the California city. Pursuant to this agreement, petitioner opened a coffee shop under the mark "SAN FRANCISCO COFFEE & DEVICE" in Libis, Quezon City in June 2001, with plans to open another in Glorietta Mall, Makati City. Petitioner had filed applications for registration of the mark with the IPO for class 42 in 1999 and class 35 in 2000.
• The Dispute: In June 2001, respondent discovered petitioner's upcoming coffee shop. Claiming that the similar name and business caused public confusion, respondent sent a demand letter and subsequently filed a complaint for infringement and/or unfair competition with the BLA-IPO.

• Registration Requirement: Petitioner argued that a suit for infringement is unavailable when the trade name is not registered with the IPO.
• Abandonment: Petitioner maintained that respondent abandoned its trade name by stopping its use after forming a joint venture with Boyd Coffee USA in 1998 and failing to promptly renew its DTI registration, which expired in June 2000.
• No Likelihood of Confusion: Petitioner contended that no confusion is likely because of notable distinctions in the marks' appearances and a wide divergence in the channels of trade—petitioner serving ready-made coffee, while respondent is in wholesale blending, roasting, and distribution.
• Generic and Geographic Terms: Petitioner averred that the proper noun "San Francisco" and the generic word "coffee" are not capable of exclusive appropriation.

• Protection Without Registration: Respondent countered that RA 8293 dispensed with IPO registration as a requirement for an infringement suit, requiring only that the trade name be previously used in trade or commerce in the Philippines.
• No Abandonment: Respondent argued it never abandoned its trade name, as evidenced by its demand letter, the filing of the infringement case, its continued importation and sale of coffee machines, and its ongoing research into retail coffee carts.
• Likelihood of Confusion: Respondent alleged that petitioner's trademark is confusingly similar to its trade name, likely misleading ordinarily prudent consumers about the source, affiliation, or sponsorship of the coffee products.

• Infringement of Unregistered Trade Name: Whether petitioner’s use of the trademark "SAN FRANCISCO COFFEE" constitutes infringement of respondent’s trade name "SAN FRANCISCO COFFEE & ROASTERY, INC.," even if the trade name is not registered with the IPO.

• Infringement of Unregistered Trade Name: Infringement was established, registration of a trade name with the IPO not being a prerequisite for an action under RA 8293. Section 165.2 of the Intellectual Property Code explicitly protects trade names against unlawful acts even prior to or without registration. Abandonment was not proven; the factual findings of the CA and BLA-IPO—that respondent continued using its trade name by importing coffee machines and researching coffee carts—are binding and negate the element of permanent, intentional, and voluntary disuse. Applying both the dominancy and holistic tests, confusing similarity exists because the dominant features of the marks are identical and both parties are engaged in the coffee business. While geographic or generic words alone are not subject to exclusive appropriation, their combination in a trade name used in relation to that specific business is protected to avoid deceiving the public.

• Infringement of Unregistered Trade Name — Infringement of a trade name does not require its registration with the IPO. The elements of infringement are: (1) the trademark being infringed is registered in the IPO, but in infringement of a trade name, the same need not be registered; (2) the trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer; (3) the infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods, business or services; (4) the use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services or the identity of such business; and (5) it is without the consent of the trademark or trade name owner or the assignee thereof.
• Dominancy Test vs. Holistic Test — The dominancy test focuses on the similarity of the prevalent or dominant features of the competing marks that might cause confusion. The holistic test entails a consideration of the entirety of the marks as applied to the products, including labels and packaging, to determine confusing similarity. Both tests were applied to find infringement based on the dominant words "SAN FRANCISCO COFFEE" and the identical nature of the business.
• Abandonment of Trade Name — For abandonment of a trade name to exist, the disuse must be permanent, intentional, and voluntary. Continued planning, research, and related business activities negate abandonment.

• "Clearly, a trade name need not be registered with the IPO before an infringement suit may be filed by its owner against the owner of an infringing trademark. All that is required is that the trade name is previously used in trade or commerce in the Philippines."
• "Geographic or generic words are not, per se, subject to exclusive appropriation. It is only the combination of the words 'SAN FRANCISCO COFFEE,' which is respondent’s trade name in its coffee business, that is protected against infringement on matters related to the coffee business to avoid confusing or deceiving the public."

• Prosource International, Inc. v. Horphag Research Management SA, G.R. No. 180073, 25 November 2009 — Followed. Laid down the five-point test for infringement of an unregistered trade name, which the Court applied to determine that registration is not required for a trade name infringement suit.
• Philips Export B.V. v. Court of Appeals, G.R. No. 96161, 21 February 1992 — Followed. Held that a corporation has an exclusive right to the use of its name, and it is a fraud for another to attempt to use the same name or a slight variation to induce the public to deal with it under the belief that they are dealing with the original corporation.
• Philip Morris, Inc. v. Fortune Tobacco Corporation, G.R. No. 158589, 27 June 2006 — Followed. Cited for the principle that likelihood of confusion is the gravamen of infringement and that there is no absolute standard for it, requiring evaluation in light of the particular circumstances of each case.
• New City Builders, Inc. v. NLRC, 499 Phil. 207 (2005) — Followed. Cited for the rule that factual findings of quasi-judicial bodies, when affirmed by the Court of Appeals, are binding on the Supreme Court.

• Section 22, Republic Act No. 166 (Trademark Law) — Distinguished. Previously required registration of a trade name as a condition for the institution of an infringement suit. Superseded by RA 8293.
• Section 165.2, Republic Act No. 8293 (Intellectual Property Code) — Applied. Provides that trade names shall be protected, even prior to or without registration, against any unlawful act committed by third parties, including any subsequent use of the trade name likely to mislead the public.

Velasco, Jr., P.J.; Del Castillo, M.C.; Abad, R.A.; Perez, J.P.