Protecting Trademarks: Unauthorized Refilling Constitutes Infringement And Unfair Competition

The Supreme Court has ruled that an independent LPG refilling plant commits trademark infringement and unfair competition when it refills cylinders bearing the registered marks of Petron and Shell without authorization. The ruling in Republic Gas Corporation v. Petron Corporation (G.R. No. 194062, June 17, 2013) clarifies that the unauthorized use of a container bearing a registered trademark—even if the contents are different—can deceive the public and violate the Intellectual Property Code.

The Facts

Republic Gas Corporation (REGASCO) operated an LPG refilling plant in Malabon. Petron and Pilipinas Shell are the registered owners and authorized distributors of the GASUL and SHELLANE trademarks and their respective LPG cylinders. Only these companies, and their authorized refillers, may refill, sell, or distribute cylinders bearing their marks.

In February 2004, NBI agents conducted a test-buy operation at REGASCO's plant. They brought empty GASUL and SHELLANE cylinders and had them refilled alongside a regular customer's purchase. The cylinders were later found to be underfilled and without proper seals. The NBI subsequently filed a complaint with the Department of Justice for trademark infringement and unfair competition under Sections 155 and 168 of Republic Act No. 8293 (Intellectual Property Code).

The DOJ dismissed the complaint, reasoning that refilling empty cylinders is not an offense in itself, and that customers know they are buying from an independent refilling station. The Court of Appeals reversed, and the Supreme Court affirmed the CA's ruling.

The Issue

The core question was whether probable cause existed to hold REGASCO and its corporate officers liable for trademark infringement and unfair competition under the Intellectual Property Code.

The Ruling

The Supreme Court ruled in favor of Petron and Shell, holding that the unauthorized refilling of LPG cylinders bearing registered trademarks constitutes both trademark infringement and unfair competition.

Trademark infringement. Under Section 155 of R.A. No. 8293, infringement occurs when a person, without the consent of the trademark owner, uses in commerce any reproduction or colorable imitation of a registered mark in connection with the sale or distribution of goods where such use is likely to cause confusion or deceive. The Court, citing the earlier case of Ty v. De Jemil (G.R. No. 182147, December 15, 2010), emphasized that the mere unauthorized use of a container bearing a registered trademark in connection with the sale of goods can constitute infringement. Here, REGASCO's refilling of GASUL and SHELLANE cylinders without authorization would inevitably confuse consumers, who have no way of knowing that the gas inside is not the trademark owner's product.

Unfair competition. Section 168.3 of the Intellectual Property Code defines unfair competition as passing off, or attempting to pass off, one's goods as those of another. The Court found that by refilling and selling LPG in cylinders bearing the registered marks, REGASCO gave its products the general appearance of Petron's and Shell's goods, misleading consumers into believing they were buying the genuine products.

Liability of corporate officers. The Court also rejected the argument that REGASCO's corporate officers could hide behind the separate corporate personality of the corporation. Corporate officers who knowingly cause the corporation to commit a crime may be individually held liable. Since the officers were in direct control of REGASCO's operations, they must have known of the unauthorized refilling activities.

Practical Takeaways

• Unauthorized refilling is risky. Refilling containers bearing another company's registered trademark, even without copying the mark itself, can expose a business to criminal prosecution for trademark infringement and unfair competition.
• The consumer's knowledge is not a defense. It does not matter that customers know they are buying from an independent refiller. The law protects against the likelihood of confusion, not just actual deception.
• Corporate officers are not immune. Directors and officers who knowingly participate in or allow the corporation to commit these acts can be held personally liable.
• Section 170 penalties. Those found guilty face imprisonment of two to five years and a fine of P50,000 to P200,000, independent of civil and administrative sanctions.
• Get written authorization. Any refiller or distributor using another's trademarked cylinders must secure and maintain proper authorization from the trademark owner.

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