Trademark Ownership in the Philippines: Prior Use vs. Registration

The Supreme Court recently settled a long-running trademark dispute between a Philippine company and a Taiwanese manufacturer, clarifying a fundamental question in Philippine intellectual property law: who truly owns a trademark—the party who first used it, or the party who first registered it? The answer has significant implications for businesses, distributors, and brand owners operating in the Philippines.

The Case at a Glance

The case involved Cymar International, Inc., a Philippine corporation that manufactured and sold baby products, and Farling Industrial Co., Ltd., a Taiwanese company that also produced baby products. Farling had been using the "FARLIN" mark since 1978 and had registered it in Taiwan. Cymar, which had been distributing Farling's products in the Philippines since the early 1980s, registered the "FARLIN" mark in its own name in the Philippines starting in 1990.

When Farling sought to cancel Cymar's registrations and oppose Cymar's new trademark applications, the dispute escalated through the Intellectual Property Office (IPO), the Court of Appeals, and finally to the Supreme Court. The cases were consolidated and decided in 2022.

The Core Issue: Who Owns the Mark?

The central question was whether Cymar, as the first to register the mark in the Philippines, owned it, or whether Farling, as the first and actual user of the mark, had superior rights.

Cymar argued that under the first-to-file rule in the Intellectual Property Code (Republic Act No. 8293), it was the rightful owner because it registered the mark first. Farling countered that it was the true owner because it had been using the mark long before Cymar, and Cymar was merely its distributor.

The Supreme Court's Ruling

The Supreme Court ruled in favor of Farling, holding that actual use of a trademark, not mere registration, is the foundation of ownership in the Philippines. The Court explained that while the Philippines follows a first-to-file system, this rule creates only a prima facie presumption of ownership. This presumption can be overturned by evidence showing that another party is the true owner.

The Court emphasized that a certificate of registration is not a source of ownership rights but merely prima facie evidence of ownership. When challenged, the registrant must prove actual ownership. In this case, the evidence clearly showed that:

1. Farling was the first user of the FARLIN mark, having used it since 1978.
2. Cymar was merely a distributor of Farling's products, not the owner of the mark.
3. Cymar knew of Farling's ownership but registered the mark in its own name anyway.

The Court also rejected Cymar's argument that a document called an "Authorization" transferred trademark rights to it. The document only waived Farling's rights over a copyright for a box design—not its trademark rights. The Court reiterated that trademark and copyright are distinct forms of intellectual property that cannot be interchanged.

Key Legal Principles Established

The decision reaffirms several important principles:

• Use Creates Ownership: In the Philippines, trademark rights are acquired through actual use in commerce, not through registration alone.
• Registration is Evidence, Not Title: A certificate of registration is prima facie evidence of ownership, but it can be rebutted by proof of another party's prior and continuing use.
• Distributors Cannot Claim Ownership: A distributor or importer who sells a manufacturer's branded products does not acquire ownership of the trademark, even if the distributor registers it.
• Good Faith Matters: A party who registers a mark with knowledge of another's prior use cannot claim the protections of the first-to-file rule.

Practical Takeaways

• For manufacturers and brand owners: Register your trademarks in every market where you do business, but also document your use. Keep records of sales, shipments, and advertisements showing your first use of the mark.
• For distributors and importers: Be cautious about registering the trademarks of the products you distribute. Unless you have a clear, written assignment of trademark rights, registering a supplier's mark in your own name is risky and may be invalid.
• For all businesses: Understand that the first-to-file rule is not absolute. It protects good-faith registrants, but it cannot defeat the rights of a true owner who has been using the mark.
• Document your relationships: If you have a distribution or licensing agreement, put it in writing and clearly state who owns the intellectual property rights involved.
• Act promptly: If you discover that someone has registered your mark without authorization, take action quickly. Delays can complicate your case and may prejudice your rights.

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