United Feature Syndicate, Inc. vs. Munsingwear Creation Manufacturing Company

A defect in a motion for reconsideration — such as the absence of a notice of hearing — may be excused and the period to appeal deemed tolled where strong considerations of substantial justice are present and the appeal appears impressed with merit. On the substantive law, a pictorial illustration or character protected by a valid copyright may not be subsequently registered as a trademark by another party; the exclusive right secured by copyright under Presidential Decree No. 49 precludes such appropriation as a trademark.

United Feature Syndicate, Inc., a foreign corporation, held worldwide copyrights and trademark registrations for the name and pictorial likeness of the “Peanuts” character “Charlie Brown,” with copyright registration dating back to 1950 and trademark registrations and applications as early as 1957. Munsingwear Creation Manufacturing Company, a Philippine entity, obtained Certificate of Registration No. SR-424 on September 12, 1979 for the trademark “CHARLIE BROWN” & DEVICE on children’s wear (T‑shirts, undershirts, sweaters, briefs, and sandos) under Class 25. Petitioner filed an inter partes case before the Philippine Patent Office seeking cancellation of the registration, alleging it was damaged and that respondent had no bona fide prior use of the mark in Philippine commerce. The Director of Patents ruled that a copyright registration does not provide a cause of action for cancellation of a trademark registration.

• The Parties and the Mark: Petitioner United Feature Syndicate, Inc. was the worldwide copyright owner since 1950 of the “Charlie Brown” pictorial illustration and character, and held trademark registrations and applications for the name and likeness of “Charlie Brown” on various goods as early as 1957. Respondent Munsingwear Creation Manufacturing Company obtained Registration No. SR-424 on September 12, 1979 for the trademark “CHARLIE BROWN” & DEVICE on children’s wear falling under Class 25.

• Cancellation Petition before the Patent Office: Petitioner filed Inter Partes Case No. 1350 seeking cancellation of the trademark registration, alleging that respondent was not entitled to registration because petitioner owned the copyright in the character, had used and reproduced it continuously and exclusively since 1950 in periodicals of worldwide circulation, and respondent had no bona fide prior use of the mark in commerce in the Philippines.

• The Director’s Decision and Procedural Aftermath: The Director of Patents rendered a decision on October 2, 1984 holding that a copyright registration could not provide a cause of action for trademark cancellation. A copy was received by petitioner’s counsel on October 3, 1984. The motion for reconsideration was filed on October 18, 1984, the fifteenth and last day of the period to appeal or seek reconsideration, but it did not include a notice of hearing. On October 31, 1984, petitioner filed a motion to set the motion for reconsideration for hearing. Respondent had meanwhile filed its opposition to the motion for reconsideration on November 20, 1984.

• Supervening Reversal in a Parallel Case: The Director’s ruling had been anchored on the conclusion in Children’s Television Workshop v. Touch of Class, a separate Patent Office decision. That case was appealed to the Intermediate Appellate Court (AC-G.R. SP No. 03432), which reversed the Director and held that the “Cookie Monster” character, being copyrighted, could not be appropriated as a trademark. The Supreme Court affirmed the appellate court’s reversal in G.R. No. 71210 on August 7, 1985.

• Reliance on Patent Office Policy, Not Strict Court Rules: Petitioner argued that the Court of Appeals acted in excess of jurisdiction and with grave abuse of discretion when it applied the strict technical rules of Rule 15 of the Rules of Court rather than relying on the more liberal policy of the Philippine Patent Office under Rule 169, as amended, of the Rules of Practice in Trademark Cases.

• Disregard of Binding Precedent on Copyrighted Characters: Petitioner maintained that the Court of Appeals committed grave abuse of discretion by dismissing the appeal and thereby knowingly disregarding its own ruling in AC-G.R. SP No. 03432, affirmed by the Supreme Court, which established that a copyrighted character cannot be appropriated as a trademark by another under Presidential Decree No. 49.

• Substantial Justice and Supervening Events: Petitioner contended that even assuming the Patent Office decision had become final, the demands of law, justice, and equity required the appellate court to harmonize that decision with the supervening Supreme Court affirmance of the favorable ruling in the “Cookie Monster” case.

• Finality of the Decision: Respondent countered that the Patent Office decision had become final and executory because the motion for reconsideration, filed on the last day without a notice of hearing, was a mere scrap of paper that did not interrupt the period to appeal.

• No Conflict in Use: On the merits, respondent argued that it used “CHARLIE BROWN” & DEVICE as a trademark on children’s wear, while petitioner used “Charlie Brown” solely as a character in a pictorial illustration appearing in comic strips; thus the mark had no trademark significance in petitioner’s use and there was no conflict between the parties’ respective uses.

• Procedural Default: Whether the Court of Appeals acted with grave abuse of discretion in dismissing the appeal on the strict ground that the motion for reconsideration lacked a notice of hearing and thus did not toll the period to appeal.

• Substantive Right: Whether a copyrighted character may serve as a basis for cancellation of a trademark registration under Presidential Decree No. 49.

• Procedural Default: The dismissal of the appeal was set aside. Although a motion for reconsideration without a notice of hearing is a mere scrap of paper that does not interrupt the period to appeal, the rules of procedure are not to be applied in a very rigid and technical sense when doing so would override substantial justice. The purpose of a notice of hearing is to afford the adverse party an opportunity to resist the motion; that purpose was served when Munsingwear filed its opposition on November 20, 1984, thereby curing the technical defect. Where an appeal is on its face meritorious and strong considerations of substantial justice are manifest, the Supreme Court may relax stringent procedural rules in the exercise of its equity jurisdiction. The delay in perfecting the appeal was not sufficient to deprive petitioner of a review, especially in light of the ostensible merit of the main case.

• Substantive Right: The trademark registration was cancelled. Section 2 of Presidential Decree No. 49, the Decree on Intellectual Property, grants exclusive rights from the moment of creation over, among others, “prints, pictorial illustrations, advertising copies, labels, tags and box wraps.” The name “CHARLIE BROWN” and its pictorial representation had been covered by copyright registration since 1950. The exclusive right secured by copyright precludes the appropriation of the copyrighted character as a trademark by another. The ruling in Children’s Television Workshop v. Touch of Class, reversing the Patent Office and affirmed by the Supreme Court, was controlling: a copyrighted character cannot be appropriated as a trademark by someone else. Petitioner’s prior copyright and trademark registrations established its superior right; respondent’s defense of non-conflicting use was unavailing. The Court further recognized the Philippines’ obligations under the Paris Convention for the Protection of Industrial Property to protect foreign intellectual property rights.

• Motion for Reconsideration Without Notice of Hearing as a Mere Scrap of Paper — A motion for reconsideration that does not contain a notice of hearing is a worthless pleading and does not toll the reglementary period for appeal. (Citing Agricultural and Industrial Marketing, Inc. v. Court of Appeals, 118 SCRA 492 and Republic Planters Bank v. Intermediate Appellate Court, 13 SCRA 631.)

• Liberal Construction of Procedural Rules in Meritorious Appeals — The rules of procedure are intended to secure, not override, substantial justice. The right to appeal should not be lightly disregarded by a stringent application of rules, especially where the appeal appears on its face to be meritorious and the interest of substantial justice would be served by permitting it. The Court may relax technical rules in the exercise of its equity jurisdiction when compelling considerations of justice are manifest, and the defect may be deemed cured where the adverse party ultimately filed an opposition, thereby serving the purpose of the notice requirement. (Citing Castro v. Court of Appeals, 123 SCRA 782; Siguenza v. Court of Appeals, 137 SCRA 570; Serrano v. Court of Appeals, 139 SCRA 179, among others.)

• Copyrighted Character Cannot Be Appropriated as a Trademark — Under Section 2 of Presidential Decree No. 49, the exclusive right to a pictorial illustration or character secured by copyright precludes the registration of the same character as a trademark by a third party. A prior copyright registration confers a better right that defeats a subsequent trademark application or registration for the same or similar material.

• “The rules of procedure are not to be applied in a very rigid and technical sense. The rules of procedure are used only to help secure not override substantial justice.”

• “An appeal is an essential part of our judicial system. We have advised the courts to proceed with caution so as not to deprive a party of the right to appeal.”

• “The Patents Office ruled that a trademark, unlike a label, cannot be copyrighted. The ‘Cookie Monster’ is not, however, a trademark. It is a character in a TV series entitled ‘Sesame Street.’ It was respondent which appropriated the ‘Cookie Monster’ as a trademark, after it has been copyrighted. We hold that the exclusive right secured by PD 49 to the petitioner precludes the appropriation of the ‘Cookie Monster’ by the respondent.” (Quoting the Court of Appeals in Children’s Television Workshop v. Touch of Class, adopted as controlling.)

• Children’s Television Workshop v. Touch of Class (AC-G.R. SP No. 03432, affirmed in G.R. No. 71210, August 7, 1985) — Followed. Established that a copyrighted character cannot be appropriated as a trademark under PD No. 49. The Patent Office’s contrary ruling in that case having been reversed, the same principle controlled the instant case.

• Agricultural and Industrial Marketing, Inc. v. Court of Appeals, 118 SCRA 492 (1982) and Republic Planters Bank v. Intermediate Appellate Court, 13 SCRA 631 (1984) — Cited for the rule that a motion for reconsideration without a notice of hearing is a mere scrap of paper that does not interrupt the period to appeal.

• Castro v. Court of Appeals, 123 SCRA 782 (1983) — Applied. Stressed the importance of the right to appeal and the need to afford litigants the amplest opportunity for a just disposition of their cause freed from the constraints of technicalities.

• Serrano v. Court of Appeals, 139 SCRA 179 (1985) — Applied. Allowed relaxation of technical rules in the exercise of equity jurisdiction where strong considerations of substantial justice are manifest, despite earlier negligence of counsel.

• La Chemise Lacoste S.A. v. Fernandez, 129 SCRA 373 (1984) — Cited. Recognized the duty of Philippine courts to uphold foreign intellectual property rights under the Paris Convention for the Protection of Industrial Property.

• Section 2, Presidential Decree No. 49 (Decree on Intellectual Property) — Enumerates the classes of works protected from the moment of creation, including “prints, pictorial illustrations, advertising copies, labels, tags and box wraps.” The provision was applied to hold that the pictorial illustration and name “Charlie Brown,” covered by copyright since 1950, could not be subsequently appropriated as a trademark by a third party.

• Rule 15, Rules of Court — Governs motions and the requirement of a notice of hearing. The Court recognized that petitioner’s motion for reconsideration technically violated this rule, but applied equity to relax its strict application.

• Paris Convention for the Protection of Industrial Property — Cited as a multilateral treaty commitment of the Philippines supporting the recognition and protection of foreign intellectual property rights in unfair competition and trademark infringement suits.

Justices Padilla, Sarmiento, and Regalado concurred. Justice Melencio-Herrera, Chairperson of the Second Division, was on leave.