McDonald's Corporation vs. L.C. Big Mak Burger, Inc.

A mark constitutes a colorable imitation of a registered trademark if it adopts the dominant features of the latter, creating a likelihood of confusion under the dominancy test; unfair competition is established when the imitative mark is used on identical goods without any notice of the true manufacturer, thereby passing off the goods as those of the trademark owner.

McDonald's Corporation owns the "Big Mac" mark for its double-decker hamburger sandwich, registered in the Philippine Principal Register in 1985 based on its Home Registration in the United States. Respondent L.C. Big Mak Burger, Inc., a domestic fast-food operator, applied to register the "Big Mak" mark for its hamburger sandwiches in 1988. McDonald's opposed the application and demanded that respondents desist from using the mark. After respondents refused, petitioners filed suit for trademark infringement and unfair competition.

• The Marks and Registration: McDonald's Corporation owns the "Big Mac" mark for its double-decker hamburger sandwich, registered in the United States in 1979 and in the Philippine Principal Register in 1985. Respondent L.C. Big Mak Burger, Inc. applied to register the "Big Mak" mark for its hamburger sandwiches with the Philippine Bureau of Patents, Trademarks and Technology (PBPTT) in 1988. McDonald's opposed the application, asserting its exclusive right to the "Big Mac" mark.
• The Products and Packaging: Both parties sell hamburger sandwiches. McDonald's uses the "Big Mac" mark on styrofoam boxes bearing the "McDonald's" logo in red block capital letters. Respondents initially used plastic wrappers and bags bearing the words "Big Mak" in orange silhouette letters, accompanied by the mascot "Macky," as established during the hearings for the injunctive writ. It was only during trial that respondents presented plastic wrappers and bags that included the words "L.C." above "Big Mak" and "Burger, Inc." below it.
• Derivation of the Mark: Respondents explained that the word "Mak" in their corporate name was derived from the first names of respondent Francis Dy's parents, Maxima and Kimsoy. Petitioners challenged this explanation as an afterthought, noting that a more natural derivation from the parents' names would have yielded a different combination.

• Colorable Imitation: Petitioners argued that "Big Mak" is a colorable imitation of "Big Mac" based on the dominancy test and the idem sonans test, resulting in a likelihood of confusion among the consuming public.
• Use as Trademark: Petitioners maintained that respondents used "Big Mak" as a trademark for their products, not merely as part of their corporate name, as evidenced by the markings on their food wrappers and cash invoices.
• Unfair Competition: Petitioners asserted that the inherent similarity between the marks indicates respondents' intent to deceive or defraud, which is sufficient to establish unfair competition.

• Procedural Impropriety: Respondents countered that the petition raises questions of fact, which are improper for a petition for review under Rule 45.
• No Colorable Imitation: Respondents argued that no likelihood of confusion exists due to the vast differences in the overall presentation, packaging, price, and sales outlets between the two products, applying the holistic test.
• Corporate Name vs. Trademark: Respondents contended that they use the business or corporate name "L.C. Big Mak Burger, Inc." in their restaurant business, not merely the trademark "Big Mak" on a specific product.
• No Bad Faith: Respondents maintained that the name "Mak" was derived from the parents' names and that there was no deliberate attempt to pass off their goods as those of petitioners, with the law presuming good faith.

• Propriety of the Petition: Whether the questions raised in the petition are proper for a petition for review under Rule 45.
• Use of the Mark: Whether respondents used the words "Big Mak" not only as part of their corporate name but also as a trademark for their hamburger products.
• Trademark Infringement: Whether respondent corporation is liable for trademark infringement.
• Unfair Competition: Whether respondent corporation is liable for unfair competition.

• Propriety of the Petition: The petition was accepted despite raising questions of fact because of the conflicting factual findings between the RTC and the Court of Appeals, an exception to the rule that only questions of law may be raised in a petition for review under Rule 45.
• Use of the Mark: Respondents used "Big Mak" as a trademark for their products. Evidence from the injunction hearings showed that plastic wrappers and bags bore the words "Big Mak" without the corporate name; the later presentation of wrappers with the full corporate name was an afterthought and cannot be considered the factual basis for the complaint, which stemmed from earlier facts.
• Trademark Infringement: Respondent corporation is liable for trademark infringement. The dominancy test, not the holistic test, is the prevailing standard; it focuses on the similarity of prevalent or dominant features in the competing marks that might cause confusion, giving greater weight to aural and visual impressions rather than minor differences in packaging or market segments. "Big Mak" adopts the dominant features of "Big Mac," creating aural and visual similarity. Likelihood of confusion exists for both goods and business, as the ordinary purchaser may be deceived into believing the products originate from the same source. Proof of actual confusion is not required, as the law only requires a likelihood of confusion.
• Unfair Competition: Respondent corporation is liable for unfair competition. The essential elements—confusing similarity in the general appearance of the goods and intent to deceive the public—are present. Using similar words on the same product (hamburgers) creates a similar general appearance. The absence of any notice on the original wrappers identifying "L.C. Big Mak Burger, Inc." as the true manufacturer demonstrates intent to deceive the public (passing off). Had respondents placed such a notice, there would only be trademark infringement, not unfair competition, because the public would not be deceived as to the origin of the goods.

• Dominancy Test — Focuses on the similarity of the prevalent or dominant features of competing trademarks that might cause confusion, giving greater weight to the similarity of appearance arising from the adoption of dominant features rather than minor differences. Applied to find "Big Mak" a colorable imitation of "Big Mac" due to aural and visual similarities, disregarding differences in packaging, price, and sales outlets.
• Confusion of Goods and Confusion of Business — Confusion of goods occurs when the ordinarily prudent purchaser is induced to purchase one product in the belief that he is purchasing the other (competing products). Confusion of business exists when the products are non-competing but related enough that the public would be deceived into believing there is a connection or affiliation between the plaintiff and defendant. Applied to find both types of confusion possible, as both parties sell hamburgers, and the low-income market might believe "Big Mak" is petitioners' low-end product.
• Elements of Unfair Competition — (1) Confusing similarity in the general appearance of the goods; and (2) Intent to deceive the public and defraud a competitor. The intent to deceive may be inferred from the similarity of appearance of the goods. Applied to find respondents liable because they used similar words on identical goods without indicating the true manufacturer.
• Passing Off (Palming Off) — Occurs when a defendant, by imitative devices on the general appearance of the goods, misleads prospective purchasers into buying his merchandise under the impression that they are buying that of his competitors. Applied because respondents used "Big Mak" on hamburgers without notice of the true manufacturer, leading the public to believe they were petitioners' products.

• "If the competing trademark contains the main or essential or dominant features of another, and confusion and deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to imitate."
• "The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual Property Code which defines infringement as the 'colorable imitation of a registered mark xxx or a dominant feature thereof.'"
• "Trademark infringement constitutes unfair competition when there is not merely likelihood of confusion, but also actual or probable deception on the public because of the general appearance of the goods. There can be trademark infringement without unfair competition as when the infringer discloses on the labels containing the mark that he manufactures the goods, thus preventing the public from being deceived that the goods originate from the trademark owner."

• Asia Brewery, Inc. v. Court of Appeals, G.R. No. 103543, 5 July 1993, 224 SCRA 437 — Followed. Applied the dominancy test in a suit for trademark infringement and unfair competition involving conflicting lower court findings.
• Societe Des Produits Nestlé, S.A. v. Court of Appeals, G.R. No. 112012, 4 April 2001, 356 SCRA 207 — Followed. Explicitly rejected the holistic test in favor of the dominancy test for determining confusing similarity.
• Co Tiong Sa v. Director of Patents, 95 Phil. 1 (1954) — Followed. Established that infringement is determined by the test of dominancy, where similarity in size, form, and color is not conclusive.
• Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 137 Phil. 838 (1969) — Cited. Distinguished confusion of goods from confusion of business.

• Section 22, Republic Act No. 166 (Trademark Law) — Defines trademark infringement as the use of a colorable imitation of a registered mark in connection with the sale of goods likely to cause confusion or mistake. Applied to find respondents liable for infringement based on likelihood of confusion of goods and business.
• Section 29, Republic Act No. 166 — Defines unfair competition as employing deception or any means contrary to good faith to pass off goods or business for those of another. Applied to find respondents liable for passing off their hamburgers as those of petitioners due to the general appearance and lack of manufacturer notice.
• Section 155.1, Republic Act No. 8293 (Intellectual Property Code) — Defines infringement as colorable imitation of a registered mark or a dominant feature thereof. Cited as the statutory incorporation of the dominancy test.
• Section 4, Republic Act No. 166 — Enumerates marks barred from registration on the principal register, including generic or merely descriptive marks. Cited to validate the "Big Mac" mark as a fanciful or arbitrary mark entitled to protection.

Davide, C.J. (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ.