Levi Strauss & Co. vs. Clinton Apparelle, Inc.

A writ of preliminary injunction will not issue where the applicant's legal right is not clearly and unmistakably demonstrated, such as when it is uncertain whether a single registration of a combined word-and-design trademark confers the right to prevent the use of a fraction thereof.

Petitioners LS & Co. and LSPI own the "Dockers and Design" trademark, registered as a single unit consisting of the word mark "Dockers" and a wing-shaped design. Respondent Clinton Apparelle manufactured "Paddocks" jeans using a different word mark but a logo allegedly similar to the "Dockers" design. Petitioners filed a complaint for trademark infringement and sought injunctive relief to stop respondent from using the assailed logo.

• Trademark Ownership: Petitioners LS & Co. and LSPI own the "Dockers and Design" trademark, evidenced by Certificate of Registration No. 46619 in the Principal Register for use on apparel under Class 25. The trademark was first used in the Philippines in May 1988. The registration consists of two elements as a single unit: the word mark "Dockers" and a wing-shaped design or logo.
• Alleged Infringement: Petitioners discovered "Paddocks" jeans in the local market bearing a device substantially similar to the "Dockers and Design" trademark. Respondent Clinton Apparelle allegedly manufactured the "Paddocks" jeans, utilizing the assailed logo but a different word mark.
• Injunctive Relief Application: Petitioners filed a complaint for trademark infringement with prayers for a TRO and preliminary injunction. The RTC granted the TRO on May 15, 1998, after respondents failed to appear at the summary hearing despite notice. The RTC subsequently granted the writ of preliminary injunction on June 4, 1998, based on the certificate of registration, sample pants, a Trends MBL Survey Report, and supporting affidavits, requiring an injunction bond of PHP 2,500,000.
• Appellate Reversal: The CA set aside the RTC's orders, holding that the TRO was improperly issued due to lack of notice, the survey evidence was inferior ex parte evidence, the injury was compensable in money, and the injunction would effectively shut down respondent's business.

• Scope of Certiorari: Petitioners argued that the CA disregarded the well-defined limits of certiorari by resolving questions of sufficiency of evidence.
• Likelihood of Confusion: Petitioners maintained that the CA erred in holding there was no confusion between the two marks.
• Trademark Erosion/Dilution: Petitioners asserted that the CA erred in ruling that the erosion of their trademark is not protectable by injunction, contending that a trademark owner need not wait until the mark loses its distinctiveness to obtain injunctive relief.
• Procedural Regularity: Petitioners argued that the CA ignored the procedure previously agreed upon and adopted by the trial court.
• Effect on Business: Petitioners contended that the CA erred in declaring that the injunction would lead to the closure of respondent's business.

• Rule 45 Limitations: Respondent countered that only questions of law may be raised in a petition for review on certiorari under Rule 45, and issues on survey evidence, confusion, and trademark erosion fall outside its ambit.
• Propriety of CA Ruling: Respondent argued that the CA correctly overturned the writ because it disturbed the status quo and effectively disposed of the main case without trial.

• Propriety of Injunction: Whether the trial court properly issued the writ of preliminary injunction and whether the CA erred in setting it aside.
• Trademark Dilution: Whether the erosion or dilution of petitioners' trademark entitles them to injunctive relief.
• Due Process: Whether respondent was denied due process in the issuance of the TRO and writ.

• Propriety of Injunction: The CA correctly set aside the writ. Petitioners failed to clearly and unmistakably demonstrate their right to injunctive relief. Given the single registration of the "Dockers and Design" mark, it is uncertain whether the owner has the right to prevent the use of a fraction thereof (the logo alone) when respondent uses a different word mark ("Paddocks"). The trial court also failed to adequately detail its reasons for granting the writ, merely stating that petitioners "appear to be entitled" and the "status quo shall be maintained," which is insufficient. Moreover, the injury claimed is compensable in monetary terms, negating the necessity for injunction. The issuance of the writ would also effectively dispose of the main case without trial, as it would enjoin the use of the "Paddocks" device without proof of basis.
• Trademark Dilution: Injunctive relief based on dilution was not justified. To be eligible for protection from dilution, the trademark must be famous and distinctive, the subsequent use must have begun after the mark became famous, and such use must defame the mark. Petitioners failed to establish these elements, and the Trends MBL Survey Report was insufficient proof of dilution.
• Due Process: No denial of due process occurred. A formal or trial-type hearing is not always essential for due process in injunction applications; the opportunity to be heard, which respondent had through submitting motions and memoranda, suffices. However, the CA overstepped its authority by declaring that there was "hardly confusing" similarity between the logos, as this touched on the merits of the infringement case pending before the RTC.

• Preliminary Injunction — An extraordinary remedy to preserve the status quo, resorted to only when there is a pressing necessity to avoid injurious consequences not remediable by standard compensation. A clear and positive right especially calling for judicial protection must be shown; it will not issue to protect contingent, abstract, or future rights, or a right not in esse. The trial court must state its own findings of fact and cite particular law to justify the grant; it is not enough to simply say the plaintiff appears entitled to the relief prayed for. Courts should avoid issuing a writ that would in effect dispose of the main case without trial.
• Trademark Dilution — The lessening of the capacity of a famous mark to identify and distinguish goods, regardless of competition or likelihood of confusion. To be eligible for protection from dilution, there must be a finding that: (1) the trademark sought to be protected is famous and distinctive; (2) the use by the other party began after the mark became famous; and (3) such subsequent use causes dilution of the distinctive quality of the mark (blurs distinctiveness or tarnishes it).

• "Injunction is accepted as the strong arm of equity or a transcendent remedy to be used cautiously as it affects the respective rights of the parties, and only upon full conviction on the part of the court of its extreme necessity."
• "Under the cited provision, a clear and positive right especially calling for judicial protection must be shown. Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or to restrain an act which does not give rise to a cause of action."
• "The trial court must state its own findings of fact and cite particular law to justify grant of preliminary injunction. Utmost care in this regard is demanded."
• "A writ of injunction should never have been issued when an action for damages would adequately compensate the injuries caused."

• University of the Philippines v. Hon. Catungal Jr., 338 Phil. 728 (1997) — Followed. Required trial courts to state their own findings of fact and cite particular law to justify the grant of preliminary injunction, utmost care being demanded.
• Developers Group of Companies, Inc. v. Court of Appeals, G.R. No. 104583 (1993) — Followed. Held that it is not enough for the trial court, in its order granting the writ, to simply say that it appeared the plaintiff was entitled to the relief prayed for.
• Government Service Insurance System v. Florendo, G.R. No. 48603 (1989) — Followed. Held that a writ of injunction should never be issued when an action for damages would adequately compensate the injuries caused.
• Searth Commodities Corp. v. Court of Appeals, G.R. No. 64220 (1992) — Followed. Established the prevailing rule that courts should avoid issuing a writ of preliminary injunction that would in effect dispose of the main case without trial.
• Co v. Calimag, Jr., 389 Phil. 389 (2000) — Followed. Rejected a claim of denial of due process where the claimant was given the opportunity to be heard through the submission of a counter-affidavit and memorandum, emphasizing that a formal or trial-type hearing is not at all times essential to due process.

• Section 1, Rule 58, Rules of Court — Defines a preliminary injunction as an order granted at any stage of an action prior to the judgment or final order requiring a party or a court, agency or a person to refrain from a particular act or acts.
• Section 3, Rule 58, Rules of Court — Enumerates the grounds for the issuance of a preliminary injunction: (a) applicant is entitled to the relief demanded; (b) the commission or non-performance of the act complained of would probably work injustice to the applicant; or (c) a party is doing or threatening to do acts probably in violation of the applicant's rights and tending to render judgment ineffectual.
• Section 138, Republic Act No. 8293 (Intellectual Property Code) — Provides that a Certificate of Registration is prima facie evidence of the validity of the registration, the registrant’s ownership of the mark, and the exclusive right to use the same in connection with the goods or services specified in the certificate.
• Section 147.1, Republic Act No. 8293 (Intellectual Property Code) — Grants the owner of a registered mark the exclusive right to prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered if such use results in a likelihood of confusion.

Reynato S. Puno (Chairman), Ma. Alicia Austria-Martinez, Romeo J. Callejo, Sr., Minita V. Chico-Nazario