Trademark Ownership in the Philippines: Prior Use vs. Registration

The Supreme Court has long grappled with a fundamental question in Philippine trademark law: should ownership of a mark be determined by who used it first, or by who registered it first? In a consolidated decision involving Cymar International, Inc. and Farling Industrial Co., Ltd., the Court provided a definitive answer that clarifies the relationship between actual use and registration under the Intellectual Property Code.

The case, which consolidated four separate disputes spanning nearly three decades, involved competing claims over the "FARLIN" trademark for baby products. Cymar, a Philippine corporation, had registered the mark in its name in the early 1990s, while Farling, a Taiwanese manufacturer, claimed prior use and ownership dating back to 1978.

The Facts of the Case

Cymar registered several "FARLIN" trademarks in the Philippines between 1990 and 1993 for baby products such as feeding bottles, nipples, diaper clips, and cotton buds. Farling, which had registered the mark in Taiwan since 1978, sought to cancel Cymar's registrations, arguing that it was the true owner of the mark.

The evidence showed that Cymar had been importing and distributing Farling's products bearing the FARLIN mark since the early 1980s. Despite this distributor relationship, Cymar registered the mark in its own name without Farling's authorization.

When Farling filed cancellation petitions, Cymar invoked the "first-to-file" rule under the Intellectual Property Code, arguing that its registration gave it ownership rights. Farling countered that actual use, not registration, determines ownership.

The Issue

The central question before the Court was whether Cymar, as the first registrant of the disputed marks in the Philippines, should be considered the rightful owner under the first-to-file rule, or whether Farling's prior use of the mark abroad and its actual ownership prevailed.

The Ruling

The Supreme Court ruled in favor of Farling, holding that registration under the Intellectual Property Code creates only a prima facie presumption of ownership. This presumption can be overturned by evidence of actual and real ownership of the mark.

The Court emphasized that under Philippine law, as implemented through the TRIPS Agreement, it is the use of the mark that gives rise to ownership. Registration merely establishes a presumptive right that yields to superior evidence of actual ownership.

The Court found that Cymar was merely an importer and distributor of Farling's products. As a mere distributor, Cymar could not acquire ownership rights over the mark, even if it was the first to file an application for registration. The Court also rejected Cymar's argument that a 1988 "Authorization" from Farling transferred trademark rights, noting that the document only waived copyright over a box design and did not affect trademark ownership.

The First-to-File Rule Explained

The Court clarified that the first-to-file rule under Sections 122 and 138 of the Intellectual Property Code does not mean ownership is established by mere registration. Instead, registration creates a presumptive right over ownership, which can be rebutted by evidence showing that another party is the true owner.

This interpretation aligns with the TRIPS Agreement requirement that no existing prior rights shall be prejudiced. A "first filer" cannot invoke the rule to claim a mark when there is proof that it is not the first actual user, or worse, when it registered the mark in bad faith despite knowing that another party owned it.

Practical Takeaways

• Actual use matters more than registration. In the Philippines, trademark ownership is fundamentally anchored on actual use in commerce, not on who files first.
• Distributors cannot register the manufacturer's mark. A distributor or importer who merely sells another company's branded products cannot claim ownership of that brand by registering it in its own name.
• Registration creates only a rebuttable presumption. A certificate of registration is prima facie evidence of ownership, but this presumption can be overturned by clear evidence of another party's superior rights.
• Bad faith registration is fatal. Registering a mark with full knowledge that another party owns it, especially when the registrant had a business relationship with the true owner, will not be protected by the courts.
• Document your use and ownership. Companies should maintain clear records of first use, international registrations, and business relationships to protect their trademark rights.

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