Well-Known Foreign Trademarks Protected in the Philippines Even Without Local Registration

The Supreme Court has affirmed that internationally well-known foreign trademarks are protected in the Philippines even when the owner has not registered the mark locally and does not do business in the country. The ruling in Sehwani, Inc. v. IN-N-OUT Burger, Inc. (G.R. No. 171053, October 15, 2007) clarifies the scope of protection afforded to famous marks under Philippine law and international conventions, and serves as a warning to local entities that register marks belonging to established foreign brands.

The Case: A Local Company Registers "IN-N-OUT"

IN-N-OUT Burger, Inc., a California corporation, had used its "IN-N-OUT" trademark since 1948 and registered it in the United States and other countries. It did not, however, register the mark in the Philippines or conduct business there. In 1993, Sehwani, Inc. obtained a Philippine registration for the mark "IN N OUT" without the American company's authorization. Sehwani later licensed the mark to Benita's Frites, Inc. for use in a restaurant in Pasig City.

When IN-N-OUT Burger applied for registration in the Philippines in 1997, it discovered Sehwani's registration and filed an administrative complaint with the Intellectual Property Office (IPO) to cancel it.

The Issue: Can a Foreign Company Without Local Registration Sue?

The central legal question was whether IN-N-OUT Burger, as a foreign corporation not doing business in the Philippines and without a local trademark registration, had the legal capacity to sue for cancellation of Sehwani's registration and to protect its mark.

The Ruling: Well-Known Marks Enjoy Protection Regardless of Registration

The Supreme Court ruled in favor of IN-N-OUT Burger. The Court held that the company had legal capacity to sue under Section 160 of the Intellectual Property Code (R.A. No. 8293), which expressly allows foreign nationals or juridical persons who meet the requirements of Section 3 to bring actions for cancellation, infringement, or unfair competition, whether or not they are licensed to do business in the Philippines.

The Court also applied Article 6bis of the Paris Convention, which requires member countries to refuse or cancel registration of a mark that constitutes a reproduction or imitation of a well-known mark. The Philippines and the United States are both signatories to this convention. The Court noted that Article 6bis is self-executing and does not require legislative enactment to take effect.

Crucially, the Court held that the fact that IN-N-OUT Burger's marks were neither registered nor used in the Philippines was "of no moment." Citing the 1999 WIPO Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, the Court explained that a well-known mark should be protected in a country even if it is not registered or used there. A member state cannot require local registration, local use, or fame among the general public as conditions for determining that a mark is well-known.

Grounds for Cancellation and the Defense of Laches

The Court also rejected Sehwani's argument that no ground existed for cancellation of its registration. Under Section 151(b) of R.A. No. 8293, a registration may be cancelled at any time if it was obtained fraudulently or contrary to the provisions of the Intellectual Property Code. The evidence showed that Sehwani used the IN-N-OUT mark for its restaurant name and on hamburger wrappers and french-fry receptacles, effectively misrepresenting the source of its goods and services.

The Court likewise dismissed the defense of laches. Because Section 151(b) expressly allows cancellation petitions to be filed "at any time" for marks registered contrary to the law, laches could not prevail against this specific statutory provision. The Court emphasized that equity is applied in the absence of, not against, statutory law.

A Note on Procedure: Timely Appeals Matter

While the Court resolved the substantive issues, it also affirmed the dismissal of Sehwani's appeal for being filed out of time. The Court reiterated that the perfection of an appeal within the reglementary period is mandatory and jurisdictional. A lawyer's miscalculation of the appeal period—even by a solo practitioner with limited staff—was deemed inexcusable, and the client is bound by counsel's negligence.

Practical Takeaways

• Well-known foreign marks are protected in the Philippines even without local registration, local use, or a local business presence, provided the owner's home country is a party to the Paris Convention or extends reciprocal rights.
• The Paris Convention is self-executing in the Philippines, meaning its protections apply directly without further legislation.
• Local registrants of famous foreign marks face cancellation risk. A Philippine registration obtained for a mark that belongs to a well-known foreign brand may be cancelled as fraudulent or contrary to the Intellectual Property Code.
• Laches is not a defense against cancellation of a mark registered contrary to law, since the law allows cancellation petitions to be filed at any time.
• Strict compliance with appeal deadlines is essential. Errors in computing appeal periods by counsel are generally not excusable and will result in the dismissal of the appeal.

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