Trademark Ownership Rests on Prior Use, But Related Goods Still Matter

The Supreme Court recently settled a long-running trademark battle over the SAKURA mark between Kensonic, Inc. and Uni-Line Multi-Resources, Inc. (Phils.). The case clarifies two essential rules in Philippine trademark law: first, ownership of a mark is acquired through prior use, not mere registration; and second, a mark's protection extends only to goods that are actually related to those covered by the registration. The ruling in Kensonic, Inc. v. Uni-Line Multi-Resources, Inc. (Phils.) (G.R. Nos. 211820-21 and 211834-35, June 6, 2018) provides practical guidance for businesses navigating trademark registration and cancellation disputes.

The Dispute Over the SAKURA Mark

Uni-Line filed applications to register the SAKURA mark for goods across three classes of the Nice International Classification: Class 09 (electronics such as television sets, stereo components, DVD/VCD players, voltage regulators, and generators), Class 07 (washing machines, vacuum cleaners, and kitchen appliances), and Class 11 (refrigerators, air conditioners, rice cookers, and similar appliances).

Kensonic opposed and sought cancellation, claiming it had used the SAKURA mark since 1994 for its own Class 09 goods—amplifiers, speakers, car stereos, televisions, and other audio-video equipment. The Intellectual Property Office (IPO) and the Court of Appeals (CA) recognized Kensonic as the first user and owner of the mark. The central question became whether Uni-Line's goods were related to Kensonic's goods such that the registration should be cancelled.

Prior Use Determines Ownership

The Court affirmed that Kensonic's continuous use of the SAKURA mark since 1994 made it the owner of the mark. Under Philippine law, ownership of a trademark is acquired through actual use in commerce, not merely by filing an application. Uni-Line's challenge to Kensonic's ownership was rejected as a factual question already settled by the IPO and the CA, which the Supreme Court would not revisit on a petition for review on certiorari.

The Court also dismissed Uni-Line's argument that SAKURA was a generic term that could not be appropriated. While SAKURA refers to the Japanese flowering cherry, the mark did not describe Kensonic's electronic goods. The Intellectual Property Code bars registration of marks that are generic for the goods they seek to identify. A mark that is arbitrary or fanciful in relation to the goods—like SAKURA for electronics—is capable of appropriation.

The Test for Related Goods

The more nuanced issue was whether Uni-Line's goods were related to Kensonic's goods, thereby triggering the prohibition on confusingly similar marks. The Court applied the factors set out in Mighty Corporation v. E. & J. Gallo Winery (G.R. No. 154342, July 14, 2004), including the class of product, the nature and cost of the articles, the purpose of the goods, the fields of manufacture, and the channels of trade.

Applying these factors, the Court found that Uni-Line's Class 07 and Class 11 goods—home appliances like washing machines, refrigerators, and rice cookers—were not related to Kensonic's audio-video equipment. Their differences in class, purpose, and purchase conditions meant that consumers would not likely be confused as to their source.

Significantly, the Court also ruled that Uni-Line's Class 09 goods—voltage regulators, portable generators, switch breakers, and fuses—were not related to Kensonic's Class 09 goods. Citing Taiwan Kolin Corporation, Ltd. v. Kolin Electronics, Co., Inc. (G.R. No. 209843, March 25, 2015), the Court noted that not all goods in the same Nice Classification class are automatically related. Kensonic's goods were information technology and audiovisual equipment, while Uni-Line's were devices for controlling the distribution and use of electricity. The former were final consumer products; the latter were spare parts.

The Limits of Trademark Protection

The Court emphasized that the prohibition on registering confusingly similar marks extends only to goods that are actually related to the registered goods, not to goods that the registrant may produce in the future. To allow protection based on a theory of normal potential expansion would prevent future registrants from securing trademarks on the basis of mere possibilities and conjectures.

This ruling underscores a practical reality: a trademark registration does not give its owner a blanket monopoly over a mark across all goods and services. Protection is tied to the specific goods covered by the registration and those that are genuinely related to them.

Practical Takeaways

• Use your mark early and continuously. In the Philippines, ownership of a trademark is acquired through actual use in commerce, not by registration alone. Document your first use and maintain continuous use to strengthen your ownership claim.
• Related goods, not just same-class goods, matter. Goods in the same Nice Classification class are not automatically related. Assess the actual relationship based on factors like purpose, nature, and channels of trade.
• Trademark protection is specific, not universal. Registration protects a mark only for the goods covered and those closely related to them. A mark can coexist with an identical mark on unrelated goods.
• Generic marks are not always barred. A mark that is generic in ordinary meaning may still be registrable if it does not describe the goods it identifies. SAKURA for electronics is a valid mark; SAKURA for cherry blossom products would not be.
• Registration is not a shield against prior users. A later registrant cannot defeat the rights of a prior user of the same mark on related goods. Prior use, properly proven, prevails.

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