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Manage your Intellectual Property in South-East Asia

Case Study 12 – The Importance of Registering your Trade Mark in the Philippines

Background

In 1994, the German company Birkenstock Orthopaedie Gmbh & Co., filed several trade mark applications for its mark ‘BIRKENSTOCK’ and its variants in the Philippines. To its surprise, Birkenstock learned that its ‘BIRKENSTOCK’ trade mark was already registered to a Philippine company called Philippine Shoe Expo Marketing Corporation (Shoe Expo). 

Birkenstock quickly filed actions for cancellation against the registered mark. While the cancellation case was pending, Shoe Expo failed to file the required 10th year Declaration of Actual Use (DAU). Failure to file the DAU results in the trade mark registrations being deemed withdrawn. Because of this, the cancellation action filed by Birkenstock was dismissed for being moot and academic, paving the way for its own trade mark applications to be allowed. Shoe Expo, not deterred by the cancellation of its registration, filed oppositions to the trade mark applications of Birkenstock, on the grounds that it had been using the mark ‘BIRKENSTOCK’ for over 16 years in the Philippines and that it had re-applied for said trade marks, and had also obtained copyright registration for the word ‘BIRKENSTOCK’ in 1991.

The Bureau of Legal Affairs (BLA), adjudicating bureau of the Intellectual Property Office in the Philippines (IPOPHL), consolidated the opposition actions, and on May 28 2008 issued a decision sustaining ShoeExpo’s oppositions and rejecting the applications of Birkenstock based on the following:

(i) Shoe Expo was the prior user and adopter of the ‘BIRKENSTOCK’ trade mark in the Philippines.

(ii) Birkenstock did not present evidence of actual use of the mark in the Philippines.

(iii) The marks of Birkenstock are not internationally well-known.

(iv) Birkenstock submitted only photocopies of its certificates of registrations from other countries which were not considered admissible as evidence.

 

Action taken

Birkenstock appealed the BLA decision to the IPOPHL Director General (DG) who reversed the BLA, and held that with the cancellation of Shoe Expo’s registrations, the reason to reject Birkenstock’s applications on the ground of prior registration no longer existed, and that the evidence presented showed that Birkenstock was the true and lawful owner and prior user of the mark ‘BIRKENSTOCK’. The DG disregarded Shoe Expo’s copyright registration for the ‘Birkenstock’ word since copyright and trade marks are different forms of intellectual property rights and cannot be interchanged.

Dissatisfied, Shoe Expo appealed the DG’s decision to the Court of Appeals (CA) which reinstated the BLA decision. Birkenstock then appealed the CA decision to the Supreme Court.

 

Outcome

The Supreme Court, in its decision issued on November 20, 2013 (G.R. 194307), reversed the CA decision and held the following: 

(i) The photocopied documents submitted by Birkenstock were admissible in evidence since the IPOPHL is not bound by strict rules of evidence, and moreover, the IPOPHL already had the original documents in the earlier cancellation case.

(ii) The failure of Shoe Expo to file the DAU is tantamount to abandonment, hence, it had lost any right or interest over the said mark.

(iii) Birkenstock had proven by clear and convincing evidence that it was the true owner of the mark, citing evidence relating to the origin and history of the mark, and demonstrating that Shoe Expo registered an identical mark in its name in bad-faith.

The Supreme Court emphasised that it is not the registration of a mark by itself which is the mode of acquiring ownership since the applicant, if not the owner of the mark, has no right to apply for its registration; it is the ownership of a mark that confers the right to register it. The Supreme Court also, quoting the IPOPHL DG, stated that “BIRKENSTOCK is obviously of German origin and is a highly distinct and arbitrary mark”, adding that “it is very remote and incredible that two persons could coin the same or identical mark for use in the same line of business without any plausible explanation from Shoe Expo”.

It must be noted that this case went through four stages of contentious litigation, from the BLA up to the Supreme Court and that the estimated total cost of this litigation would not be below EUR 11,000.

 

Lessons Learned

  • For SMEs that have plans to enter foreign markets to sell their products or services, the importance of obtaining protection for their trade marks cannot be overemphasised.  
  • The costs of filing and obtaining trade mark registration in a foreign country are significantly lower than the costs of litigation which a SME may have to incur to protect its mark, and do business in said country.

 

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