Converse Rubber Corporation vs. Universal Rubber Products, Inc. and Tiburcio S. Evalle, Director of Patents

The Court held that a foreign corporation not licensed to do business in the Philippines may maintain an action to protect its corporate name and trademark from local appropriation if it has established a reputation and goodwill in the country through the actual sale of its products, even if such sales are conducted by independent third parties. The appropriation of the dominant and recognizable portion of a well-known corporate name for use on similar goods constitutes infringement and is likely to cause public confusion.

Petitioner Converse Rubber Corporation, a foreign corporation organized under the laws of Massachusetts, USA, manufactures rubber shoes using the trademarks "CHUCK TAYLOR" and "ALL STAR AND DEVICE." Although not licensed to do business in the Philippines, its products were sold in the local market by a merchant since 1956. Respondent Universal Rubber Products, Inc., a domestic corporation, filed an application with the Philippine Patent Office to register the trademark "UNIVERSAL CONVERSE AND DEVICE" for use on rubber shoes and slippers. Petitioner opposed the registration, claiming the mark was confusingly similar to its corporate name and would damage its business reputation.

• Petitioner Converse Rubber Corporation is a foreign corporation existing since 1946, engaged in manufacturing rubber shoes. It uses the trademarks "CHUCK TAYLOR" and "ALL STAR AND DEVICE."
• Petitioner is not licensed to do business in the Philippines and does not transact business here directly.
• A local merchant, Mrs. Carmen B. Pacquing, testified she had been selling CONVERSE rubber shoes in her stores since 1956, with average monthly sales of 12 to 20 pairs. Sales invoices described the products as "Converse Chuck Taylor," "Converse All Star," etc.
• Respondent Universal Rubber Products, Inc. filed an application to register the trademark "UNIVERSAL CONVERSE AND DEVICE" for rubber shoes and slippers.
• Respondent's witness admitted she had no idea why the company chose "Universal Converse" and was unaware of the name "Converse" prior to selling its products.
• The Director of Patents dismissed petitioner's opposition, finding insufficient proof that the word "CONVERSE" was identified with petitioner's corporation in the Philippines or that there was a likelihood of confusion.

• Petitioner argued that the trademark "UNIVERSAL CONVERSE AND DEVICE" is confusingly similar to the word "CONVERSE," which is the dominant part of its corporate name, and would likely deceive the purchasing public.
• Petitioner contended that registration would cause irreparable injury to its business reputation and goodwill in the Philippines, constituting damage under Section 8 of Republic Act No. 166 (Trademark Law).
• Petitioner asserted that its products had been sold in the Philippines for a protracted period, establishing a protectable reputation and goodwill, even without a local business license.

• Respondent Director of Patents, in his decision, argued that petitioner failed to prove the word "CONVERSE" had become so identified with its corporation that its use would confuse the public.
• The Director found the evidence of sales (by a single witness with no direct connection to petitioner) insignificant and insufficient to establish trademark pre-emption or a likelihood of confusion.
• The Director held that since petitioner was not licensed to do business and not doing business on its own in the Philippines, it had no name to protect in the forum.

• Procedural Issues: N/A
• Substantive Issues: Whether respondent's partial appropriation of petitioner's corporate name in its trademark is of such character that it is calculated to deceive or confuse the public to the injury of petitioner.

• Procedural: N/A
• Substantive: The Court ruled in favor of petitioner. It found that the word "CONVERSE" is the dominant and identifiable part of petitioner's corporate name. Respondent's unexplained appropriation of this word for similar goods, coupled with the similarity in the general appearance of the marks (both imprinted in a circular manner on shoes), created a likelihood of confusion as to the origin of the goods. The Court held that petitioner's sales in the Philippines through a legitimate trader, though not directly by petitioner, were sufficient to establish a protectable business reputation and goodwill. The Court emphasized that a foreign corporation not doing business locally can still protect its name and trademark if its products are known in the market.

• Trade Name Protection and Likelihood of Confusion — A trade name identifies a business and its goodwill, while a trademark identifies goods. The owner of a trade name is entitled to protect it from appropriation by others, especially when the appropriated part is the dominant and recognizable element. The test for infringement is whether the use of a similar mark would likely cause confusion or mistake in the mind of the ordinary purchasing public, not just as to the goods but as to their source or origin.
• Rights of Foreign Corporations Not Doing Business Locally — A foreign corporation which has never done business in the Philippines and is unlicensed, but is widely known through the use of its products bearing its corporate and trade name, has a legal right to maintain an action to restrain locals from using its name, where the purpose is to protect its reputation, corporate name, and goodwill. This right is a property right enforceable in any jurisdiction, consonant with the Paris Convention for the Protection of Industrial Property.

• "Appropriation by another of the dominant part of a corporate name is an infringement." — This passage underscores the legal principle that using the core, identifiable portion of another's corporate name constitutes infringement.
• "When, however, there is no reasonable explanation for the defendant's choice of such a mark though the field for his selection was so broad, the inference is inevitable that it was chosen deliberately to deceive." — This highlights the evidentiary inference of fraudulent motive drawn from the lack of justification for choosing a confusingly similar mark.
• "A trademark acknowledges no territorial boundaries of municipalities or states or nations, but extends to every market where the trader's goods have become known and Identified by the use of the mark." — This quote, from a cited American case, supports the principle that trademark protection is not limited by the corporation's licensing status but by the reach of its reputation.

• La Chemise Lacoste, S.A. vs. Fernandez, 129 SCRA 373 — Cited as controlling precedent establishing that a foreign corporation not licensed to do business in the Philippines can maintain an action to protect its corporate and trade name if it is widely known through its products.
• Western Equipment and Supply Co. vs. Reyes, 51 Phil. 115 — Reiterated in La Chemise Lacoste to support the right of a foreign corporation to protect its name and goodwill in the Philippines.
• American Wire and Cable Co., Inc. vs. Director of Patents, 31 SCRA 544 — Cited for the doctrine that the determinative factor in ascertaining confusing similarity is the likelihood of confusion for the ordinary purchaser, not actual confusion.
• Converse Rubber Corp. vs. Jacinto Rubber and Plastics Co., Inc., 97 SCRA 169 — Cited to support the point that the general appearance of products can lead to deception even if not all details are identical.

• Section 8, Republic Act No. 166 (Trademark Law) — Impliedly referenced as the basis for claiming damage from the registration of a confusingly similar mark.
• Section 37, Republic Act No. 166 — Explicitly cited. This section implements the Philippines' obligations under international conventions by granting rights to foreign nationals from member countries, including protection of trade names without the obligation of filing or registration.
• Article 8 of the Paris Convention for the Protection of Industrial Property — Cited to support the principle that a trade name (corporate name) shall be protected in all member countries without the obligation of filing or registration.