When "NANNY" Infringes "NAN": The Dominancy Test in Philippine Trademark Law

In trademark disputes, the central question is often whether one mark is so similar to another that it would confuse consumers. The Supreme Court's 2010 decision in Societe Des Produits Nestle, S.A. v. Martin T. Dy, Jr. (G.R. No. 172276) clarifies how Philippine courts determine this issue, reaffirming the dominancy test as the preferred approach in cases involving similar-sounding marks.

The case involved Nestle, the owner of the registered "NAN" trademark for infant powdered milk products, and Martin Dy, Jr., who sold "NANNY" full cream powdered milk for adults. Nestle sued for trademark infringement, arguing that "NANNY" was confusingly similar to "NAN." The trial court ruled in Nestle's favor, but the Court of Appeals reversed, finding the marks too dissimilar. The Supreme Court reinstated the trial court's decision, holding Dy liable for infringement.

The Legal Framework for Trademark Infringement

Trademark infringement is governed by statutory provisions that define what constitutes unauthorized use of a registered mark. The case cites Section 22 of Republic Act No. 166 (the old Trademark Law) and Section 155 of Republic Act No. 8293 (the Intellectual Property Code).

Under these provisions, infringement occurs when a person uses a reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale or advertising of goods, where such use is likely to cause confusion, mistake, or deception as to the source or origin of the goods.

The Supreme Court, citing Prosource International, Inc. v. Horphag Research Management SA, identified the elements of infringement: (1) the trademark is registered and actually used in commerce; (2) it is used by another person without consent; (3) the use is in connection with the sale or advertising of goods; and (4) the use is likely to cause confusion or deceive purchasers.

The Two Tests for Confusing Similarity

The gravamen of trademark infringement is the likelihood of confusion. Philippine jurisprudence recognizes two tests to determine this:

The dominancy test focuses on the similarity of the main, prevalent, or essential features of the competing trademarks. Infringement occurs when the competing mark contains the essential features of the registered mark, even if there are differences in other aspects. This test considers not only visual similarity but also aural and connotative comparisons.

The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity. The focus is on all features appearing on the labels, not just the predominant words.

In this case, the Supreme Court applied the dominancy test, noting that recent cases with similar factual circumstances have consistently used this approach.

Why "NANNY" Was Found to Infringe "NAN"

Applying the dominancy test, the Court found that "NAN" is the prevalent feature of Nestle's line of infant powdered milk products. It appears in bold letters across all products: PRE-NAN, NAN-H.A., NAN-1, and NAN-2.

"NANNY" contains the prevalent feature "NAN"—the first three letters are exactly the same. When pronounced, the aural effect is confusingly similar. The Court emphasized that in determining confusing similarity, it takes into account the aural effect of the letters contained in the marks, citing earlier cases where marks like "SALONPAS" and "LIONPAS" were found confusingly similar in sound.

Protection Extends to Related Goods

The Court also addressed the argument that NAN (infant formula) and NANNY (adult milk) target different markets. It held that the scope of protection for registered trademark owners extends to related goods and to market areas that are the normal expansion of business.

The Intellectual Property Code provides that a certificate of registration 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 the mark in connection with the goods or services specified in the certificate and those related thereto. The Court found that NANNY and NAN have the same classification, descriptive properties, and physical attributes—both are milk products in powder form, classified under the same class and displayed in the same section of stores.

The Court rejected the argument that price differences or target audiences negate infringement, holding that a registered trademark owner should be free to use its mark on similar products in different market segments and at different price levels.

Practical Takeaways

• The dominancy test prevails in cases involving similar-sounding marks. Courts focus on the dominant feature of the registered mark and whether the competing mark contains that feature, rather than comparing every detail of the labels.
• Aural similarity matters. Marks that sound alike when pronounced can be found confusingly similar, even if they look different visually.
• Registration protects related goods. Trademark protection is not limited to identical products but extends to related goods that might reasonably be assumed to originate from the same manufacturer.
• Differences in price or target market are not defenses. A junior user cannot avoid infringement simply by selling a cheaper product or targeting a different demographic.
• Each case is decided on its own merits. While the dominancy test is preferred in many cases, courts examine the specific facts, and the holistic test may apply in appropriate circumstances.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.