Sehwani, Incorporated vs. In-N-Out Burger, Inc.

Perfection of an appeal within the statutory period is mandatory and jurisdictional, binding the client to counsel's negligence in computing deadlines; substantively, a foreign corporation not doing business in the Philippines has legal capacity to sue for trademark protection, its well-known marks are protected without local registration or use, and laches cannot bar a cancellation action filed at any time under Section 151(b) of RA 8293.

Respondent In-N-Out Burger, Inc., a California corporation not doing business in the Philippines, owns the internationally registered "IN-N-OUT" tradename and trademarks used since 1948. Petitioner Sehwani, Inc. registered the mark "IN N OUT" in the Philippines in 1993 without respondent's authority and subsequently licensed it to co-petitioner Benita's Frites, Inc. for use in a restaurant in Pasig City. Upon discovering the local registration during its own application process in 1997, respondent demanded that Sehwani, Inc. desist from claiming ownership and cancel its registration, but Sehwani refused.

• Respondent's Trademarks: Respondent In-N-Out Burger, Inc. is the owner of the tradename "IN-N-OUT" and trademarks "IN-N-OUT," "IN-N-OUT Burger & Arrow Design," and "IN-N-OUT Burger Logo," used in its business since 1948 and registered in the United States and other parts of the world.
• Petitioner's Registration: On December 17, 1993, petitioner Sehwani, Inc. obtained Trademark Registration No. 56666 for the mark "IN N OUT" (THE INSIDE OF THE LETTER "O" FORMED LIKE A STAR) from the IPO without respondent's authority. Sehwani subsequently entered into a Licensing Agreement granting co-petitioner Benita's Frites, Inc. the right to use the trademark "IN-N-OUT BURGER" in its restaurant in Pasig City for five years.
• Administrative Proceedings: On June 2, 1997, respondent applied for registration of its marks in the Philippines and discovered Sehwani's prior registration. After respondent's demand to cancel was refused, respondent filed an administrative complaint with the BLA-IPO for violation of intellectual property rights.
• BLA-IPO Decision: Bureau Director Estrellita Beltran-Abelardo found respondent to be the owner of internationally well-known trademarks and cancelled Sehwani's Certificate of Registration No. 56666, ordering petitioners to permanently cease and desist from using the "IN-N-OUT" and "Double-Double" marks. However, the Director found petitioners not guilty of unfair competition.
• Procedural Default: Petitioners received the BLA-IPO Decision on January 15, 2004, and filed a motion for reconsideration on January 30, 2004, leaving a balance of 15 days to appeal. Per BLA-IPO records, petitioners received the Resolution denying the motion on October 29, 2004, making the deadline for appeal November 13, 2004 (a Saturday), moved to November 15, 2004 (Monday). Petitioners claimed they received the resolution on November 3, 2004, and filed their appeal memorandum beyond the prescribed period. The ODG dismissed the appeal for being filed out of time based on the BLA-IPO records.

• Procedural Technicality: Petitioner contended that the Court of Appeals erred in dismissing the petition on a mere technicality, arguing that their counsel honestly believed in good faith that the resolution denying the motion for reconsideration was received on November 3, 2004. They maintained that they should not be prejudiced by their counsel's excusable mistake in computing the appeal period, noting counsel was a solo practitioner with minimal staff.
• Legal Capacity: Petitioner argued that respondent lacks the legal capacity to sue because it is not doing business in the Philippines and its mark is neither registered nor used locally.
• Grounds for Cancellation: Petitioner maintained that, other than bare allegations of fraud, respondent failed to show the existence of any ground for cancellation under Section 151 of RA 8293.
• Laches and Prescription: Petitioner asserted that the complaint is barred by laches, if not by prescription.

• Legal Capacity: Respondent anchored its capacity to sue on Articles 6bis and 8 of the Paris Convention, to which both the United States and the Philippines are signatories, as well as Section 160 of RA 8293, which allows foreign nationals not doing business in the Philippines to bring administrative actions for trademark enforcement.
• Well-Known Mark Protection: Respondent argued that its mark is internationally well-known, evidenced by its worldwide registrations and comprehensive advertisements, and is thus entitled to protection even without local registration or use.
• Misrepresentation: Respondent contended that petitioners not only used the IN-N-OUT Burger trademark for their restaurant name but also used identical or confusingly similar marks for their hamburger wrappers and french-fries receptacles, thereby misrepresenting the source of goods and services.

• Procedural Period: Whether the Court of Appeals erred in upholding the dismissal of the appeal based on a technicality regarding the period to appeal.
• Legal Capacity: Whether a foreign corporation not doing business in the Philippines has the legal capacity to sue for the protection of its trademarks.
• Well-Known Mark Protection: Whether a trademark must be registered or used in the Philippines to be protected as a well-known mark under the Paris Convention.
• Grounds for Cancellation: Whether grounds exist under Section 151 of RA 8293 to cancel the petitioner's certificate of registration.
• Laches and Prescription: Whether the action for cancellation is barred by laches or prescription.

• Procedural Period: The appeal was correctly dismissed. Perfection of an appeal within the statutory period is mandatory and jurisdictional; failure to do so renders the decision final and executory and deprives the appellate court of jurisdiction. Counsel's negligence or mistake in computing the appeal period is inexcusable and binds the client, regardless of counsel's status as a solo practitioner.
• Legal Capacity: Respondent possesses the legal capacity to sue. Section 160 in relation to Section 3 of RA 8293 explicitly allows a foreign national or juridical person who does not engage in business in the Philippines to bring an administrative action for opposition, cancellation, infringement, or unfair competition, whether or not licensed to do business in the country.
• Well-Known Mark Protection: Article 6bis of the Paris Convention, governing the protection of well-known trademarks, is a self-execing provision that does not require legislative enactment. The fact that the mark is neither registered nor used in the Philippines is of no moment; under the 1999 WIPO Joint Recommendation, local registration or use is not a requirement for a mark to be considered well-known. The IPO's factual finding that "IN-N-OUT" is an internationally well-known mark, supported by substantial evidence of worldwide registrations and comprehensive advertisements, is accorded respect and finality.
• Grounds for Cancellation: Cancellation is proper under Section 151(b) of RA 8293 because the registration was obtained contrary to the provisions of the Act (violating well-known mark protection) and the registered mark is being used to misrepresent the source of the goods or services, as petitioners used identical or confusingly similar marks on their hamburger wrappers and french-fries receptacles.
• Laches and Prescription: Laches and prescription do not apply. Section 151(b) of RA 8293 specifically provides that a petition to cancel a mark registered contrary to the Act or used to misrepresent source may be filed "at any time." Laches, being an equitable principle, cannot prevail against a specific provision of law.

• Perfection of Appeal is Jurisdictional — The right to appeal is not a natural right or part of due process but a procedural remedy of statutory origin. Perfection of an appeal within the reglementary period is mandatory and jurisdictional; failure to comply renders the decision final and executory and deprives the appellate court of jurisdiction. A lawyer's negligence in monitoring and computing deadlines binds the client.
• Protection of Well-Known Marks (Paris Convention Art. 6bis) — Member countries of the Paris Union are bound to refuse or cancel the registration and prohibit the use of a trademark that constitutes a reproduction, imitation, or translation liable to create confusion with a well-known mark. Article 6bis is self-execing and does not require local registration or use of the mark for protection to apply, as reinforced by the 1999 WIPO Joint Recommendation.
• Laches vs. Statutory Law — Equity, defined as justice outside legality, is applied only in the absence of, and not against, statutory law or rules of procedure. Laches cannot prevail against a specific statutory provision that explicitly allows an action to be filed "at any time."

• "Article 6bis which governs the protection of well-known trademarks, is a self-executing provision and does not require legislative enactment to give it effect in the member country. It may be applied directly by the tribunals and officials of each member country by the mere publication or proclamation of the Convention, after its ratification according to the public law of each state and the order for its execution."
• "The fact that respondent’s marks are neither registered nor used in the Philippines is of no moment."
• "[L]aches may not prevail against a specific provision of law, since equity, which has been defined as ‘justice outside legality’ is applied in the absence of and not against statutory law or rules of procedure."

• Mirpuri v. Court of Appeals, 376 Phil. 628 (1999) — Followed. Cited for the ruling that Article 6bis of the Paris Convention is a self-execing provision and for defining the "competent authority" empowered to determine whether a trademark is well-known.
• Velez v. Demetrio, 436 Phil. 1 (2002) — Followed. Cited for the doctrine that laches may not prevail against a specific provision of law, as equity is applied in the absence of, not against, statutory law.

• Section 160, Republic Act No. 8293 (Intellectual Property Code) — Allows any foreign national or juridical person who meets the requirements of Section 3 and does not engage in business in the Philippines to bring a civil or administrative action for opposition, cancellation, infringement, unfair competition, or false designation, whether or not licensed to do business in the Philippines.
• Section 3, Republic Act No. 8293 — Entitles nationals of countries party to intellectual property conventions, or those extending reciprocal rights to Filipinos, to benefits under such conventions.
• Section 151(b), Republic Act No. 8293 — Provides that a petition to cancel a registration of a mark may be filed at any time if the registration was obtained fraudulently or contrary to the provisions of the Act, or if the mark is used to misrepresent the source of goods or services.
• Article 6bis, Paris Convention — Mandates member countries to refuse or cancel registration and prohibit the use of a trademark liable to create confusion with a well-known mark.
• Article 8, Paris Convention — Provides that a tradename shall be protected in all countries of the Union without the obligation of filing or registration.
• Part I, Article 2(3), 1999 WIPO Joint Recommendation — Specifies that a member state shall not require local registration, local use, or knowledge by the public at large as a condition for determining whether a mark is well-known.
• Section 2, Article II, 1987 Constitution — Adopts the generally accepted principles of international law as part of the law of the land, giving the Paris Convention and WIPO Joint Recommendation the force and effect of law.

Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario, Antonio Eduardo B. Nachura, Ruben T. Reyes