Trademark Cancellation: When Registration Does Not Guarantee Ownership

A certificate of trademark registration gives its holder a legal presumption of ownership. But that presumption is not absolute. In Medina v. Global Quest Ventures, Inc. (G.R. No. 213815, February 8, 2021), the Supreme Court clarified when a registration can be cancelled—and why a registrant who copies another's mark cannot hide behind a certificate.

The Dispute Over "Mr. Gulaman"

Global Quest Ventures, Inc. manufactured and sold gulaman jelly powder mix under the name "Mr. Gulaman" with a distinctive logo. The company commissioned Benjamin Irao, Jr. to create the design, and Irao obtained a copyright registration for it in 1996. In February 2005, Irao assigned his rights to Global through a Deed of Assignment.

Meanwhile, Ma. Sharmaine R. Medina filed a trademark application for "Mr. Gulaman (Stylized)" in May 2005. Global opposed the application, claiming prior use and ownership. Despite the opposition, the Intellectual Property Office (IPO) issued a certificate of registration to Medina in June 2006.

Global then filed a petition to cancel Medina's registration. The IPO's Bureau of Legal Affairs granted the petition, finding that Medina's registration was obtained fraudulently and in violation of the Intellectual Property Code. The Office of the Director General and the Court of Appeals both affirmed. Medina appealed to the Supreme Court.

The Issue

The central question was whether the Court of Appeals erred in affirming the cancellation of Medina's certificate of registration.

Registration Creates a Presumption—Not Absolute Ownership

Under Section 122 of the Intellectual Property Code (Republic Act No. 8293), rights in a mark are acquired through valid registration. Section 138 provides that a certificate of registration is prima facie evidence of the validity of the registration, the registrant's ownership of the mark, and the registrant's exclusive right to use it.

The Supreme Court acknowledged this presumption in Medina's favor. However, it emphasized that the presumption is rebuttable. Citing Berris Agricultural Co., Inc. v. Abyadang (647 Phil. 517 [2010]), the Court noted that the presumption may be overcome by proof of prior use by another person. A trademark is a creation of use, and it belongs to one who first used it in trade or commerce.

The Court also cited Birkenstock Orthopaedie GmbH and Co. KG v. Phil. Shoe Expo Marketing Corp. (721 Phil. 867 [2013]), which stressed that it is not the application or registration of a trademark that vests ownership. Rather, ownership of a trademark confers the right to register it. The presumption of ownership must yield to superior evidence of actual and real ownership.

Bad Faith and Fraud as Grounds for Cancellation

The Court then discussed the evolution of trademark ownership rules. In Zuneca Pharmaceutical v. Natrapharm, Inc. (G.R. No. 211850, September 8, 2020), the Court explained that under the current IP Code, ownership is acquired through registration, not prior use. However, registration can still be cancelled if it was obtained in bad faith or fraudulently.

Section 151(b) of the IP Code allows cancellation of a registration at any time if, among other grounds, the registration was obtained fraudulently or contrary to the provisions of the Act. The Court defined bad faith as knowledge of prior creation, use, or registration of an identical or similar mark by another—essentially, copying someone else's trademark. Fraud involves making false claims about origin, ownership, or use.

The Evidence Against Medina

The IPO found that Medina copied Global's mark. The word "Mr. Gulaman" in both marks was identical in all aspects. More tellingly, Medina's own Declaration of Actual Use included photographs of Global's packaging bearing the "Mr. Gulaman" mark and logo.

Global presented substantial evidence of its prior use: the copyright registration in Irao's name, the Deed of Assignment, product packaging samples, and sales invoices showing sales dating back to 2000. Medina, by contrast, had been declared in default for failing to file her answer—a ruling that had already become final.

The Supreme Court noted that whether a party acted in bad faith is a factual question. The IPO, by reason of its special knowledge and expertise, is in a better position to make this determination. Its findings are given great respect and finality when supported by substantial evidence. The Court found no reason to overturn the IPO's factual findings.

Practical Takeaways

• A trademark registration is not a guarantee of ownership. It creates a presumption that can be overcome by evidence of another's prior use or by proof of bad faith or fraud.
• Bad faith can be inferred from copying. If a registrant adopts a mark identical to one already used by another, and even uses the other's packaging in a Declaration of Actual Use, the registration is vulnerable to cancellation.
• Keep evidence of first use. Sales invoices, packaging samples, copyright registrations, and deeds of assignment can defeat another's registration.
• Respond to IPO proceedings promptly. Failure to file an answer can result in a default declaration, which may be upheld on appeal and limit the registrant's ability to present a defense.
• The IPO's factual findings carry weight. Courts generally defer to the IPO's expertise on trademark matters, so building a strong record before the IPO is critical.

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