Trademark Infringement Search Warrants: Probable Cause in IP Cases Explained

The Supreme Court's ruling in Century Chinese Medicine Co. v. People (G.R. No. 188526, November 11, 2013) clarifies an important point for businesses and law enforcement alike: when a search warrant is applied for in anticipation of a criminal prosecution for trademark infringement or unfair competition, the ordinary rules of criminal procedure—not the special rules for civil IP seizure—govern its issuance. The case also reaffirms that probable cause for a search warrant requires only a reasonable belief, not proof beyond reasonable doubt.

The Facts of the Case

Ling Na Lau, doing business as Worldwide Pharmacy, was the registered owner of the trademark "TOP GEL T.G. & DEVICE OF A LEAF" for papaya whitening soap, with a certificate of registration issued by the Intellectual Property Office (IPO) in 2003. In November 2005, she sought assistance from the National Bureau of Investigation (NBI) after suspecting that several drugstores were selling counterfeit versions of her product.

An NBI agent conducted test buys from the drugstores, including the petitioners, and obtained receipts. The purchased soaps were examined by Lau's authorized representative, who certified them as counterfeit. Based on these affidavits and after personally examining the applicant and his witnesses, a Makati City trial court issued eight search warrants against the drugstores for trademark infringement and unfair competition under the Intellectual Property Code (RA 8293).

The drugstores moved to quash the warrants. The trial court granted the motion, ruling that the warrants were not supported by probable cause because of a pending dispute over who actually owned the trademark. The Court of Appeals reversed, and the drugstores appealed to the Supreme Court.

The Issue

The central question was whether the trial court erred in quashing the search warrants. This required the Court to determine the correct standard for probable cause in IP-related search warrants and whether the warrants were validly issued.

The Ruling

The Supreme Court denied the petition and affirmed the Court of Appeals' decision, holding that the search warrants were valid.

Rule 126 applies, not the civil IP seizure rules. The Court clarified that A.M. No. 02-1-06-SC, the Rules on Search and Seizure in Civil Actions for Infringement of Intellectual Property Rights, did not apply. The search warrants here were applied for in anticipation of criminal actions for violations of Sections 155 (trademark infringement) and 168 (unfair competition) of RA 8293. Therefore, Rule 126 of the Rules of Court on criminal procedure governed.

Probable cause was established. The Court defined probable cause as "the existence of such facts and circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been committed and that the objects sought in connection with the offense are in the place to be searched." The NBI agent's affidavit, corroborated by his witnesses, detailed the test buys, the receipts, and the certification that the purchased soaps were counterfeit. This was sufficient.

The ownership dispute did not negate probable cause. The petitioners argued that a third party, Benjamin Yu, was the true owner of the trademark. But the Court noted that the search warrants specifically covered the "TOP GEL T.G. & DEVICE OF A LEAF" mark registered to Lau. A pending civil case between Lau and Yu had already been dismissed, and the IPO had issued a preliminary injunction against Yu and his distributors. Furthermore, during the proceedings, Yu and Lau entered into a compromise agreement acknowledging Lau's exclusive rights to the mark.

Confiscating all counterfeit goods was proper. The Court distinguished this case from Summerville General Merchandising Co. v. Court of Appeals, where only samples were needed because the disputed item was a container design, not the product itself. Here, the counterfeit soap itself was the object of the offense, so seizing all of it was justified to protect the trademark owner's rights.

Practical Takeaways

• For trademark owners: To obtain a search warrant for counterfeit goods, file a complaint with the NBI or police, cooperate in test buys, and have an authorized representative certify that the purchased items are counterfeit. The affidavits of the investigating agent and witnesses are critical.
• For businesses: A pending civil dispute over trademark ownership does not automatically invalidate a search warrant. If an IPO injunction or compromise agreement already settles ownership, the registered owner can enforce rights through criminal process.
• For practitioners: Always determine whether a search warrant is sought in anticipation of a criminal case or a civil action. This determines which rules apply—Rule 126 for criminal, A.M. No. 02-1-06-SC for civil—and the evidentiary requirements differ.
• The probable cause standard is low: It is based on probability, not certainty. The judge must personally examine the applicant and witnesses, but the evidence need not prove guilt beyond reasonable doubt at this stage.

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