McDonald's Corporation vs. MacJoy Fastfood Corporation

Under the dominancy test for confusing similarity between trademarks, the decisive comparison centers on the dominant features of the competing marks as they create aural and visual impressions upon the purchasing public; minor differences in design, color, and script are disregarded where the dominant elements — here the corporate “M” design and the “Mc/Mac” prefix — are substantially identical and are used on identical or closely related goods, resulting in a likelihood of confusion as to source or affiliation.

McDonald’s Corporation, a US corporation, held multiple Philippine trademark registrations for its family of marks — including the Golden Arches “M” design and marks commencing with the “Mc” prefix such as “McDonald’s,” “McChicken,” “Big Mac,” and “McSpaghetti” — registered as early as 1971. MacJoy Fastfood Corporation, a domestic corporation operating in Cebu City, filed an application in 1991 to register “MACJOY & DEVICE” for fried chicken, burgers, fries, and similar fast-food items, asserting first use in 1987. McDonald’s filed a verified opposition, asserting that MacJoy’s mark so resembled its well-known marks as to confuse or deceive purchasers and dilute the distinctiveness of the McDonald’s brand.

• Nature of the Action: MacJoy Fastfood Corporation, a domestic corporation selling fast food in Cebu City, sought registration of the trademark “MACJOY & DEVICE” for fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo, and steaks under Classes 29 and 30 of the International Classification of Goods. McDonald’s Corporation, a US corporation, opposed the application on the ground that the mark was confusingly similar to its internationally registered and well-known family of MCDONALD’S marks, including the Golden Arches “M” design, “McDonald’s,” “McChicken,” “MacFries,” “Big Mac,” “McDo,” “McSpaghetti,” “McSnack,” and “Mc.”

• McDonald’s Prior Registrations: McDonald’s registered its marks in the Philippines as early as 1971, with successive registrations for the corporate “M” or Golden Arches design, “McDonald’s” with the “M” design, “McChicken,” “Big Mac,” “MacFries,” “McSpaghetti,” “McDo,” and others, covering food and ingredients of food.

• MacJoy’s Mark and Claim of Prior Use: MacJoy’s application, filed on 14 March 1991, alleged first use in the Philippines on 7 December 1987 in Cebu City. The “MACJOY & DEVICE” mark consisted of the stylized word “MacJoy” in round script, with a picture of a chicken head wearing a cap and bowtie with wings on both sides, set in deep pink and white. McDonald’s first Cebu outlet opened only in 1992.

• IPO Findings: The IPO applied the dominancy test and found that the predominance of the letter “M” and the prefixes “Mc”/“Mac” in both marks created confusing similarity, particularly because both were used on nearly identical goods. The IPO rejected MacJoy’s application.

• Court of Appeals Findings: The CA, while claiming to apply the dominancy test, effectively employed the holistic test. It enumerated differences: “MacJoy” written in round script vs. “McDonald’s” in single-stroke gothic; the presence of a chicken head device in MacJoy’s mark vs. the arches “M” without any chicken picture; the deep pink-and-white color scheme vs. red, yellow, and black; and the entirely different store façades. The CA concluded the marks created distinct and disparate visual impressions negating any likelihood of confusion.

• Dominancy Test: Petitioner maintained that the Court of Appeals erred in not applying the dominancy test, which had been consistently applied in similar fact patterns. The dominant “Mc”/“Mac” prefix and the corporate “M” logo in both marks render them confusingly similar, irrespective of minor differences in color, script, or the chicken device.

• Family of Marks: Petitioner argued that its marks constitute a well-known and established family of marks distinguished by the use of the prefix “Mc” and/or “Mac” and the corporate “M” design, entitled to broad protection against any mark adopting the same dominant features for identical goods.

• International Protection: Petitioner asserted that its world-famous marks must be protected under the Paris Convention, to which the Philippines and the United States are member states.

• Substantial Evidence: Petitioner contended that the IPO decision was based on substantial evidence and that the CA erred in reversing it.

• Procedural Defect: Respondent argued that the petition should be dismissed because the person who signed the certification against forum shopping on behalf of petitioner was not specifically authorized to do so.

• Questions of Fact: Respondent maintained that the petition raised only factual issues which are not reviewable under Rule 45 of the Rules of Court.

• No Confusing Similarity: Respondent insisted that the CA correctly found no confusing similarity, given the glaring differences in color, design, spelling, size, concept, and overall appearance of the two marks.

• Prior Use and Good Faith: Respondent claimed it had used “MACJOY” for many years in good faith in Cebu City long before petitioner opened its outlet there in 1992, and that “Mac” is a personal name that cannot be monopolized.

• Procedural Issues: Whether the petition was procedurally defective for lack of authorized signatory on the certification against forum shopping; and whether the petition improperly raised questions of fact.

• Confusing Similarity and Applicable Test: Whether respondent’s “MACJOY & DEVICE” trademark is confusingly similar to petitioner’s family of MCDONALD’S marks, and whether the dominancy test or the holistic test should be applied.

• Ownership and Prior Use: Who between the parties has the superior right of ownership over the marks, considering the interplay of prior registration, actual use, and the territorial scope of trademark rights.

• Procedural Issues: The petition was not procedurally defective. The Board of Directors’ Resolution specifically authorized petitioner’s Managing Counsel to execute documents required for the protection of trademarks, an authority which necessarily encompassed the certification against forum shopping. The conflicting findings of the IPO and the CA — one finding confusing similarity and the other finding none — fell within the recognized exceptions to the rule that only questions of law may be raised in a petition for review under Rule 45.

• Confusing Similarity and Applicable Test: The dominancy test, not the holistic test, was the correct standard. Under the dominancy test, what is given decisive weight is the similarity of the prevalent features that create aural and visual impressions in the mind of the purchasing public; minor differences are disregarded. The dominant features here were the corporate “M” design logo and the “Mc”/“Mac” prefixes, which appeared prominently in both marks and were used on identical fast-food products. The CA’s focus on the differences in script style, color scheme, and the chicken device effectively applied the holistic test, which is contrary to the postulate that confusing similarity must be assessed by the overall impressions engendered in the marketplace, not by side-by-side visual comparison alone. The IPO correctly found that these minor variations were overshadowed by the dominant features, making it likely that ordinary purchasers would associate or connect the two marks.

• Ownership and Prior Use: Petitioner, as the prior registrant, held prima facie valid exclusive rights to the marks under the Trademark Law. A certificate of registration is prima facie evidence of validity and ownership, and respondent failed to overcome this presumption. The claim of prior use in Cebu City from 1987 was unmeritorious, as the statutory requirement of “actual use in commerce in the Philippines” refers to the entire territorial jurisdiction, not a localized area. Furthermore, respondent’s explanation that “MacJoy” was based on the name of the president’s niece was implausible and unsupported by evidence; the only logical conclusion was that respondent sought to capitalize on petitioner’s established goodwill. Consistent with applicable precedent, an application for a mark that closely resembles an already registered mark must be rejected outright.

• Dominancy Test in Trademark Confusing Similarity — The dominancy test focuses on the dominant features of the competing marks that create aural and visual impressions on the public, giving greater weight to the similarity of appearance arising from the adoption of the dominant features of the registered mark and disregarding minor differences. The holistic or totality test, which relies principally on a side-by-side visual comparison, is contrary to the principle that confusing similarity is determined by visual, aural, connotative comparisons and overall impressions as encountered in the marketplace. Applied here, the shared corporate “M” design and “Mc/Mac” prefix dominated the marks, and the differences in script, color, and the chicken device were minor and did not dispel the likelihood of confusion.

• Prima Facie Validity of Registration — A certificate of registration of a mark or trade name is prima facie evidence of the validity of the registration, the registrant’s ownership of the mark, and the registrant’s exclusive right to use it. The burden to overcome this presumption rests on the party contesting the validity or asserting a superior right. Respondent’s evidence was insufficient to rebut the prima facie validity of petitioner’s registrations.

• Territoriality of Trademark Use — “Actual use in commerce in the Philippines,” as a prerequisite to trademark registration under the Trademark Law, pertains to the entire Philippine territory and is not confined to a particular region, province, city, or barangay. Prior use in Cebu City alone did not confer a superior right over a nationwide prior registrant.

• Rejection of Confusingly Similar Marks — An application for registration of a trademark or label that is almost the same or closely resembles one already used and registered by another shall be rejected and dismissed outright, even without opposition, both to avoid public confusion and to protect the registered mark and its established goodwill.

• “Under the dominancy test, courts give greater weight to the similarity of the appearance of the product arising from the adoption of the dominant features of the registered mark, disregarding minor differences. Courts will consider more the aural and visual impressions created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets and market segments.”

• “The totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair competition that confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and overall impressions engendered by the marks in controversy as they are encountered in the marketplace. The totality or holistic test only relies on visual comparisons between two trademarks whereas the dominancy test relies not only on the visual but also on the aural and connotative comparisons and overall impressions between the two trademarks.”

• “When one applies for the registration of a trademark or label which is almost the same or very closely resembles one already used and registered by another, the application should be rejected and dismissed outright, even without any opposition on the part of the owner and user of a previously registered label or trademark, this not only to avoid confusion on the part of the public, but also to protect an already used and registered trademark and an established goodwill.”

• McDonald’s Corp. v. L.C. Big Mak Burger, Inc., G.R. No. 154342, 14 July 2004 — Followed. The Court relied on this case, where “Big Mak” was found confusingly similar to petitioner’s “Big Mac,” as a direct precedent for applying the dominancy test and finding ownership in favor of McDonald’s.

• Société des Produits Nestlé, S.A. v. CA, G.R. No. 112012, 4 April 2001 — Followed. This case was cited for its express rejection of the holistic test and its affirmation of the dominancy test, emphasizing that confusing similarity turns on aural, visual, and connotative impressions.

• Faberge Inc. v. IAC, G.R. No. 71189, 4 November 1992 and Chuanchow Soy & Canning Co. v. Director of Patents, 108 Phil. 833 (1960) — Followed for the rule that applications for marks closely resembling registered marks must be rejected outright to prevent confusion and protect established goodwill.

• Section 4(d), Republic Act No. 166 (old Trademark Law) — Bars registration of a mark that so resembles a registered or previously used mark as to be likely to cause confusion or mistake or to deceive purchasers. Applied as the statutory standard for determining confusing similarity between the MACJOY mark and the McDonald’s family of marks.

• Section 20, Republic Act No. 166 — Provides that a certificate of registration of a mark shall be prima facie evidence of the validity of the registration, the registrant’s ownership, and the registrant’s exclusive right to use the mark. Applied to hold that McDonald’s registrations established its prima facie superior right, which MacJoy failed to rebut.

• Section 2, Republic Act No. 166 — Requires that a trademark be actually in use in commerce in the Philippines before registration is filed. Interpreted to mean use throughout the territorial jurisdiction of the Philippines, not merely in a specific locality. MacJoy’s use in Cebu City was thus insufficient to overcome McDonald’s nationwide registrations.

• Section 37, Republic Act No. 166 — Grants to foreign nationals who are parties to international conventions the benefits of the Trademark Law. Applied to confirm McDonald’s entitlement to protection as a US corporation under the Paris Convention framework.

• Paris Convention for the Protection of Industrial Property, Article 2 — Guarantees that nationals of member countries shall enjoy in all other member countries the same protection and legal remedies against infringement as nationals, subject to compliance with domestic conditions and formalities. The Philippines and the United States being contracting parties, McDonald’s was entitled to the same protection as Philippine nationals.

Chief Justice Reynato S. Puno (Chairperson), Justice Angelina Sandoval-Gutierrez, Justice Renato C. Corona, Justice Adolfo S. Azcuna.