Trademark Confusion: When Similar Marks on Different Products Are Allowed

The Supreme Court recently settled a trademark dispute between a hotel and resort company and an appliance distributor, both using the word "KURA" in their marks. The case clarifies how Philippine law determines whether similar marks on different products create a likelihood of confusion — a question that affects businesses considering new brand registrations.

The Dispute

Adama Resorts and Hotels, Inc. registered the marks KURA HOTEL and KURA RESORT in 2019 for services such as temporary accommodation, food and drink provision, and travel arrangement. Prime Smartech Appliances Corporation later applied to register the mark KURA for air conditioners under product class 11.

Adama opposed Prime's application, arguing that the marks were confusingly similar because they shared the dominant word "KURA." Adama claimed that consumers might mistakenly believe Prime's air conditioners were made by Adama, or that Adama's hotels were operated by Prime.

The IPOPHL Bureau of Legal Affairs initially sided with Adama, but the Office of the Director General reversed, finding no likelihood of confusion. The Court of Appeals affirmed, and Adama elevated the case to the Supreme Court.

The Legal Framework

The Supreme Court, in Adama Resorts and Hotels, Inc. v. Prime Smartech Appliances Corporation (G.R. No. E-02159, February 26, 2026), applied the multifactor test established in Kolin Electronics Co., Inc. v. Kolin Philippines International, Inc. (2021).

Under the Intellectual Property Code, a mark cannot be registered if it is identical with a prior mark for closely related goods or services, or if it nearly resembles a prior mark such that it is likely to deceive or cause confusion.

The Court confirmed that the dominancy test is the sole test for comparing marks under the IP Code. This test asks whether the competing marks share a dominant feature that would likely be remembered by consumers. The holistic test, which compares marks as a whole, has been abandoned in Philippine jurisprudence.

Similar Marks Are Not Enough

Both the IPOPHL and the courts agreed that "KURA" was the dominant feature of all the competing marks. But the Supreme Court emphasized that sharing a dominant feature does not automatically mean there is a likelihood of confusion.

The Court applied the full multifactor test, which considers:

• The similarity of the marks
• The relatedness of the goods or services
• The strength of the prior mark
• The likelihood that the prior user will expand into the other's product area
• Evidence of actual confusion
• The defendant's good faith
• The sophistication of buyers

Why the Marks Could Coexist

The Court found that air conditioners and hotel or resort services are fundamentally different. An air conditioner is a tangible machine sold and packaged individually, while hotel services are intangible — a collection of tasks including room reservations, housekeeping, and guest security.

The Court rejected Adama's argument that air conditioners are complementary to hotel services because they provide comfort to guests. Under trademark law, complementarity requires commonality of marketing channels and appeal to purchasers, not just shared use. Adama failed to show that its services and Prime's air conditioners were sold through the same channels or to the same market.

Other factors also weighed against Adama:

• No bad faith: Prime registered its mark without prior knowledge of Adama's marks. Bad faith requires proof of knowledge of a prior identical or similar mark.
• No actual confusion: Adama presented no evidence that anyone actually confused the two brands.
• No natural expansion: The doctrine of natural expansion of business protects marks only for goods and services related to those already covered. The Court found no evidence that hotels normally expand into selling air conditioners.
• Sophisticated buyers: Air conditioners are expensive, infrequently purchased items that command greater buyer care. Both products also carry distinct visual elements — Prime's half-snowflake design versus Adama's geometric emblem — that help consumers tell them apart.

Practical Takeaways

• Dominancy test governs: When comparing marks, Philippine law focuses on the dominant feature, not the mark as a whole. But similarity alone does not establish confusion.
• Relatedness matters: Trademark protection extends only to closely related goods and services. Registering a mark in one class does not automatically block similar marks in unrelated classes.
• Document your expansion plans: To invoke the natural expansion doctrine, a business must show evidence that expanding into the other product area is normal for its industry.
• Preserve evidence of good faith: A junior user who adopts a mark without knowledge of a prior registration has a strong defense against opposition.
• Consider buyer sophistication: Products that are expensive or purchased infrequently receive less trademark protection because buyers are expected to be more discerning.

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