Since time immemorial, a prominent beer manufacturing corporation has monopolized the market for beer drinkers in the Philippines. In the early 1980’s, however, a new corporation emerged and began manufacturing beer products as well. In 1988, the more established corporation (Corporation 1) filed a compliant against the new corporation (Corporation 2) for trademark infringement and unfair competition. It alleged that Corporation 2 copied its pale pilsen product, without its consent.
While the Regional Trial Court dismissed the complaint, the Court of Appeals (CA), on appeal, found Corporation 2 guilty of infringement of trademark and unfair competition, restraining Corporation 2 from manufacturing, putting up, selling, advertising, offering, or announcing for sale, or supplying its Beer Pale Pilsen product.
Nevertheless, the Supreme Court (SC) overturned the CA, ruling that Corporation 2’s lable and design did not infringe trademark laws. The fact that both beer products are ”bottled in amber-colored steinie bottles of 320 ml. capacity and also advertised in print, broadcast, and television media, does not necessarily constitute unfair competition.”
Under the Trademark Law, unfair competition is defined as the “employment of deception or any other means contrary to good faith by which a person shall pass off the goods manufactured by him or in which he deals, or his business, or services, for those of another who has already established goodwill for his similar goods, business or services, or any acts calculated to produce the same result.”
The universal question to be asked is whether the public is likely to be deceived by the product. It is “nothing less than conduct tending to pass off one man’s goods or business as that of another will constitute unfair competition. Actual or probable deception and confusion on the part of the customers by reason of defendant’s practices” must be evident. The Court further explained that the product must appear likely to mislead an ordinarily intelligent buyer who has a need to supply and is familiar with the article that he seeks to purchase.
The SC ruled that ordinary buyers would not be confused by both beer products using steinie bottles since beer consumers and retailers generally order their beer by brand –
Considering that SAN MIGUEL PALE PILSEN has virtually monopolized the domestic beer market for the past hundred years, those who have been drinking no other beer but SAN MIGUEL PALE PILSEN these many years certainly know their beer too well to be deceived by a newcomer in the market. If they gravitate to ABI’s cheaper beer, it will not be because they are confused or deceived, but because they find the competing product to their taste.
Moreover, protection against unfair competition is confined to nonfunctional features. The steinie bottle being of functional or common use, which is not the exclusive invention of any one, is available to all who might need to use it within the industry –
When the names of the competing products are clearly different and their respective sources are prominently printed on the label and on other parts of the bottle, mere similarity in the shape and size of the container and label, does not constitute unfair competition. The steinie bottle is a standard bottle for beer and is universally used. SMC did not invent it nor patent it… Registration of beer bottles does not give SMC a patent on the steinie or on bottles of similar size, shape or color (Asia Brewery, Inc. v. CA, G.R. No. 103543, 5 July 1993, J. Grino-Aquino).