IP Philippines fines two food firms for IPR violation

        The Intellectual Property Office of the Philippines (IP Philippines) has penalized two local food companies for violating the provisions of the Intellectual Property Code.

        In a decision promulgated last 23 December 2005, IP Philippines Director General Adrian S. Cristobal Jr. found Sehwani, Inc. and Benita’s Frites, Inc. guilty of unfair competition and ordered them to pay In-N-Out Burger, Inc. a total of P1.2 million in damages and attorney’s fees. 

        In-N-Out Burger Inc. is an established US-based burger company with 93 stores in California, Nevada and Arizona while offices of both Sehwani and Benita’s Frites are located in Pasig City.  

        Cristobal also ordered the seizure and destruction of all the products of Sehwani and Benita’s Frites.

        “All products of appellees including the labels, signs, prints, packages, wrappers, receptacles and materials used by them in committing unfair competition should be, without compensation of any sort, be seized and disposed of outside the channels of commerce,” he said.  

        Cristobal said that the decision should serve as a warning to individuals and firms to strictly observe and respect the intellectual property laws of the country. The local companies appealed the decision to the Court of Appeals, but was dismissed.  

        The Director General issued the decision as he modified the earlier ruling of the agency’s Bureau of Legal Affairs (BLA) on the case after the American company appealed.

        On June 4, 2001, In-N-Out Burger Inc. filed with the BLA an administrative case against Sehwani, claiming that the latter has violated its IP rights on its trade and on the marks “In-N-Out,” burger and arrow design and “In-N-Out” burger logo.  

        The company, whose trademark and service mark applications have also been registered with various IP offices abroad, asked that Sehwani be stopped from using the trade name and its trademark registration be cancelled.  
        In the country, In-n-Out Burger Inc. filed its trademark and service mark applications with the IP Philippines on June 2, 1997.  

        Sehwani, however, dismissed the demand but said that together with Benita’s, they are willing to “buy peace” and “willing to surrender” the trademark registration for a “fair and reasonable consideration.”  

        The local company said that it has used the “In n Out” mark in the country as early as October 15, 1982 and that an application out of the trademark with the letter “O” formed like a star has been approved on December 17, 1993 by the former Bureau of Patents, Trademarks and Technology Transfer (BPTTT).  

        Later, Sehwani allowed Benita’s to use its mark.  

        On August 9, 2001, the BLA denied the request for the issuance of a temporary restraining order against Sehwani and Benita’s, and on December 22, 2003, it dismissed the charge of unfair competition against the two.  

        On February 13, 2004, In-N-Out Burger Inc. appealed by moving for a partial reconsideration but was denied by the BLA in a decision issued on April 25, 2005, hence the firm elevated the case to the Office of the Director General on appeal.  

        In reversing the decision of the BLA, Cristobal observed that the local companies have been using the American firm’s registered trademark, in place of their own.  

        “Appellee Sehwani, Inc, was issued a Certificate of Registration for “In N Out” (with the inside of the letter O formed like a star) for restaurant business in 1993. The restaurant opened only in 2000 but under the name In-N-Out Burger,” he said.  

        Cristobal said that it was apparent that the appellee only started to construct its restaurant after the US firm demanded that it refrain from claiming ownership of the mark and voluntarily cancel its registration.  

        “There is no evidence also that the appellees were authorized by the appellant to use the latter’s marks in their business. Appellees’ explanation that they are not using their own registered trademark due to the difficulty in printing the star does not justify the unauthorized use of the appellant’s trademark instead,” he added.
 
        The Director General also considered as illegal the acts of Sehwani and Benita’s in giving their products the “general appearance” resembling that of In-n-Out products.  

        “The intention to deceive may be inferred from the similarity of the goods as packed and offered for sale, and thus, action will lie to restrain such unfair competition,” he said.

        Elucidating on the use and importance of a trademark, Cristobal said: “The function of a trademark is to point out distinctly the origin or ownership of the goods to which it is affixed; to secure to him, who has been instrumental in bringing into market a superior article of merchandise, the fruit of his industry and skill; to assure the public that they are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against substitution and sale of an inferior and different article as his product.”