INTELLECTUAL PROPERTY OFFICE OF THE PHILIPPINES · I. t . i . INTELLECTUAL PROPERTY OFFICE OF THE PHILIPPINES . KUNNAN ENTERPRISES, INC., APPEAL NO. 14·03·34 . Petitioner-Appellee,

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INTELLECTUAL PROPERTY OFFICE OF THE PHILIPPINES

KUNNAN ENTERPRISES, INC., APPEAL NO. 14·03·34 Petitioner-Appellee,

Consolidated Inter Partes Cases Nos. 3709,3710,3811,3812,3813,3814, 4101, and 4102

Petitions for Cancellation: Registration Nos.: 41032, SR 6663,

• versus - 40326,39254,4730,49998

Oppositions to: Application Serial Nos.: 84565 & 84566

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SUPERIOR COMMERCIAL Trademark: KENNEX I PRO·KENNEX ENTERPRISES, INC., ti

j Respondent-Appellant,

f NOTICE OF DECISION II j I

i ATTY. EVENERVILLASANTA DIRECTOR LENY B. RAZ ! ~

j !Counsel for Respondent- Appellant Bureau of Trademarks 1 r: Floor, Citibank Center Intellectual Property Office l Paseo de Roxas, Makti l

DIRECTOR ESTRELLITA B. ABELARDO SYCIP SALAZAR HERNANDEZ AND Bureau of Legal Affairs I

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GATMAITAN Intellectual Property Office Counsel for Petitioner-Appellee ~ SSHG Law Center !

105 Paseo de Roxas, Makati City DIRECTOR CORAZON T. MARQUESES f Administrative, Finance, Human Resource Development Service Bureau

1 Intellectual Property Office

1 GREETINGS:

t Please be informed that on 08 December 2004, the Office of the Director General I 1 rendered a Decision in the above-titled case (copy attached).

Makati City, 08 December 2004.

Very truly yours,

A~ rH~ALO1

!Attorn IV/Overseer Offic of the Director General t

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Very truly yours,

ATTY.N H~ALO Attorn IVIOverseer Offic 'of the Director General

DIRECTOR CORAZON T. MARQUESES ~

Administrative, Finance, Human Resource' / U tTtf Development Service Bureau Intellectual Property Office

DIRECTOR ESTRELLITA B. ABEL~RD~ 1rf Bureau of Legal Affairs l • ,/1:: l t Intellectual Property Office 1"".--

Trademark: KENNEX / PRO-KENNE

APPEAL NO. 14-03-34


Petitions for Cancellation: Registration Nos.: 41032, SR 6663, 40326,39254,4730,49998


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INTELLECTUAL PROPERTY OFFICE OF THE PHILIPPINES

KUNNAN ENTERPRISES, INC., APPEAL NO. 14-03-34 Petitioner-Appellee,


Petitions for Cancellation: Registration Nos.: 41032, SR 6663,

- versus- 40326,39254,4730,49998


SUPERIOR COMMERCIAL Trademark: KENNEX I PRO-KENNEX ENTERPRISES, INC.,

Respondent-Appellant, x-----------.-.-------------------------.----x

DECISION

This concerns Decision No. 2003-35 dated 30 October 2003 rendered by

the Director of the Bureau of Legal Affairs (Director) granting the abovecaptioned

consolidated Petitions for Cancellation and Oppositions filed by KUNNAN

ENTERPRISES, INC. (Appellee)'. In said Decision, the Director ordered the

cancellation of Registration Nos. 41032, 40326, 39254, 4730, 49998 issued in

favor of Respondent-Appellant SUPERIOR COMMERCIAL ENTERPRISES, INC.

(Appellant)", and at the same time rejected Appellant's Trademark Application

Nos. 84565 and 84566. The registrations and the applications cover thep

1 A corporation organized and existing under the laws of Taiwan, Republic of China with offices at No. 33 Hsiang Ho Road, Lee Lin Village, Tan Tzu, Taichung, Taiwan, Republic of China. See Appellee's Opposition to the Appeal Memorandum dated 21 January 2004, page 1. 2 A corporation duly organized and existing under the laws of the Republic of the Philippines, principal offices located at No. 74 Timog Avenue, Quezon City. See Appeal Memorandum of Appellant dated 17 December 2003, page 2.

Page 1 of 15 PRO KENNEX

DEC 0 8 2004

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trademark PRO-KENNEX except Registration No. 4730 which refer to the

trademark KENNEX.

The controversy involves the determination as to who between the parties

is the prior user and owner of the mark KENNEX and PRO-KENNEX.

Records show that the Appellee filed with the defunct Bureau of Patents,

Trademarks and Technology Transfer (BPTTT) separate Petitions for

Cancellation of Trademark Registration Nos. 41032, SR 6663, 40326, 39254,

4730 and 49998 and Notices of Oppositions to Trademark Application Nos.

84565 and 84566.

The Petitions for Cancellation alleged the following common grounds:

1. The registrations and assignments of the trademarks were obtained

fraudulently by the Appellant;

2. Appellant, who is a mere distributor of Appellee, obtained the

registrations and assignments of the trademarks in violation of the

terms of its Distributorship Agreement with the Appellee dated 14 June

1983;

3. Appellant, being a mere distributor, is not the true and lawful owner

and first user of the marks and the registrations were aCCOrding~

Page 2 of 15 PROKENNEX

DEC 0 8 20D\

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secured contrary to the provisions of Sections 2-A and 17 of Republic

Act No. 166. as amended;

4. As a mere distributor of Appellee. Appellant cannot assert any right to

the trademarks against Appellee upon the termination of its rights

under the Distributorship Agreement;

5. Appellee's goods are identical or related to those of Appellant and its

use of the marks thereon will likely mislead the buying public into

believing that the goods of the Appellant are produced by. originate

from, or are under the sponsorship of Appellee;

6. The registrations of the trademarks KENNEX and PRO-KENNEX in the

name of. and its use in commerce by. Appellant amount to an

infringement of Appellee's rights as first user and lawful owner of the

trademarks KENNEX and PRO-KENNEX; and

7. The cancellation and/or compulsory assignment of the

registrations/application are authorized by the other provisions of the

Trademark Law and the Rules of Practice.

The Appellee cited the same grounds in opposing the Appellant's

trademark applications.


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In its answers, Appellant denied all the material allegations in the petitions

and in the oppositions.

Meanwhile, on 01 January 1998, Republic Act No. 8293 also known as the

Intellectual Property Code of the Philippines (IP Code) took effect. It abolished,

among other things, the BPTTT and transferred its functions to the newly created

Intellectual Property Office.

On 30 October 2003, the Director rendered the assailed Decision.' Not

satisfied with the said decision, the Appellant filed the instant appeal on 18

December 2003 contending that:"

1) The decision of the Regional Trial Court of Quezon City Branch 85 in Civil

Case No. Q-93-14888 for infringement of trademark and unfair

competition, upholding the ownership by Appellant of the trademarks

"KENNEX", "PRO KENNEX", "PRO-KENNEX & DEVICE", "KENNEX):r::'

3 The pertinent portion of which provides: "WHEREFORE, there being sufficient evidence to prove that the Petitioner/Opposer is the prior user and owner of the trademark 'PRO·KENNEX', the consolidated Petitions for Cancellation and the Notices of Opposition are hereby GRANTED. Consequently, the trademark 'PRO-KENNEX' bearing Registration Nos. 41032, 40326, 39254, 4730, 49998 for the mark PRO-KENNEX issued in favor of Superior Commercial Enterprises, Inc., herein Respondent-Registrant under the Principal Register and SR No. 6663 are hereby CANCELLED. Accordingly, trademark applications nos. 84565 and 84566, likewise for the registration of the mark PRO-KENNEX are hereby REJECTED.

"Let the file wrappers of PRO-KENNEX subject matter of these cases be forwarded to the Administrative Financial and Human Resources Development Service Bureau (AFHRD5B) for appropriate action in accordance with this Decision with a copy thereof to be furnished the Bureau of Trademarks (BOT) for information and update of its record.

50 ORDERED."

4 Appellant's Appeal Memorandum dated 17 December 2003, pages 11-12.


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DEVICE OF LETTER K INSIDE A CIRCLED THORNS" rendered the

consolidated cases moot and academic;

2) Under applicable law and jurisprudence, the Director gravely abused her

discretion and committed reversible error in proceeding to render the

assailed decision after the trial court passed upon and upheld the

ownership by Appellant of the abovementioned trademarks;

3) Under the facts and circumstances, and the evidence presented and

admitted in the consolidated cases and said civil case, Appellant proved

its ownership and prior use of the KENNEX and PRO-KENNEX

trademarks in the Philippines; and

4) Appellee successfully disputed the prima facie evidence of the validity of

the trademark registrations issued in favor of Appellant, the latter's

ownership of the trademarks covering said registrations, and of its

exclusive rights to use the registered trademarks in connection with the

goods, business or service specified in the aforesaid certificates of

registration.

In its Opposition to the Appeal Memorandum," the Appellee claims that

the decision in Civil Case No. Q-93-14888 does not render moot the instant Inter

5 Dated 21 January 2004 and filed on 22 January 2004.


OEC 0 8 2004

Partes cases." Appellee also contends that it is the first user of the marks

KENNEX and PRO KENNEX. According to the Appellee, it first used the mark

PRO KENNEX on sporting goods, particularly tennis racquets in 1976. The name

was derived from KENNEX Sports Centre which was established in 1972.7

Appellee further posits that Appellant is already estopped from claiming

ownership of the marks by admitting that it was a mere distributor of the

KENNEX and PRO KENNEX products manufactured by Appellee." Lastly, the

Appellee claims that Certificates of Registration No. SR-4730 (Supplemental

Register) and 34487 (Principal Register) for KENNEX mark were fraudulently

obtained."

After due consideration of the foregoing and review of the records of the

case, this Office finds the appeal devoid of merit.

This Office has observed that the assailed decision referred only to the

mark PRO KENNEX. Registration No. 4730, however, refers to the mark

~ KENNEX.

The Appellant contends that the decision in Civil Case No. 0-93-1488810

for infringement of trademark and unfair competition rendered the consolidated

6 Supra, page 7. 7 Infra, Appellee's Opposition to the Appeal Memorandum, page 12. 8 Infra, Appellee's Opposition to the Appeal Memorandum, page 15. 9 Infra, Appellee's Opposition to the Appeal Memorandum. 10 Appellant filed a Civil Case for Infringement of Trademark and Unfair Competition with a Prayer for the Issuance of a Writ of Preliminary Injunction which was docketed in the Regional Trial Court of Quezon City, Branch 85 as Civil Case No. Q-93-14888 entitled "Superior Commercial


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cases moot and academic." This Office finds otherwise. The argument of the

Appellant that Section 16112 of the Intellectual Property Code (IP Code) makes it

obligatory for the Intellectual Property Office to recognize and "be controlled by"

the determination made by the Court in respect of the right to registration in any

action involving a registered mark or tradename is untenable. It is premature for

the Appellant to rely on said provision of the IP Code and argue that the court's

decision upholding the Appellant's ownership of the trademarks "KENNEX",

"PRO KENNEX", "PRO KENNEX & DEVICE", KENNEX & DEVICE OF LETTER

K INSIDE A CIRCLED THORNS" rendered the consolidated cases moot and

academic."

As correctly observed" by the Director in the assailed decision, crucial in

the applicability of Section 161 of the IP Code is the last sentence thereof which

provides:

"Judgment and orders shall be certified by the court to the Director, who shall make appropriate entry upon the records of the Bureau, and shall be controlled thereby."

Enterprises, Inc. vs. Kunnan Enterprises Ltd. et al. See Appellant's Appeal Memorandum, supra, p.ages 5-6.

1 Supra, Appellant's Appeal Memorandum, page 11. 12 Section 161. Authority to Determine Right to Registration.- In any action involving a registered mark, the court may determine the right to registration, order the cancellation of a registration, in whole or in part, and otherwise rectify the register with respect to the registration of any party to the action in the exercise of this. Judgment and orders shall be certified by the court to the Director, who shall make appropriate entry upon the records of the Bureau, and shall be controlled thereby. 13 Supra, Appellant's Appeal Memorandum, page 16. 14 Supra, Decision No. 2003-35, page 9.


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This Office agrees with the Director that the judgment or order as certified

by the court must be final and executory so it can be entered in the records of the

Bureau, which in this case is the BLA. Therefore if the final judgment is final and

executory, it is ministerial on the part of the BLA to enter on its record the

decision rendered by the regular court." In this case, however, records16 show

that the court's decision was appealed to the Court of Appeals and that no

decision yet has been received by the trial court relative to the Appeal with the

Court of Appeals in CA - G.R. CV No. 60777.17 The consolidated inter partes

cases, therefore, were not rendered moot and academic by Civil Case No. 0-93

/cP15 Infra, Decision No. 2003-35. 16 Certification issued by Atty. Janice R. Yulo-Antero, RTC Branch Clerk of Court, Branch 85, Quezon City dated 24 July 2003. The pertinent portions of which state:

"xxx.

"This is to certify further that on 05 May 1998, an Order was issued by this Court granting the Notice of Appeal dated 16 April 1998 of the defendants. On 15 June 1998, the entire records including the transcript of stenographic notes and exhibits were received by the Court of Appeals.

"As per our records, a Resolution was rendered on 20 April 1999 by the Second Division, Court of Appeals (CA-G.R. CV No. 60777), to quote the last sentence:

'x x x. Accordingly, their appeal is DISMISSED by the Court.'

"On 29 April 1999, defendants-appellants filed a Motion for Reconsideration with the Court of Appeals.

"On 26 August 1999, a Resolution was rendered by the Former Second Division of the Court of Appeals, to quote pertinent portions:

'Accordingly, Our 20 April 1999 Resolution in this case is SET ASIDE and NULLIFIED, and a new one is entered, REINSTATING the appeal of defendants-appellants. x x x'

To date, no decision yet has been received by this Court relative to the appeal with the Court of Appeals in CA-G.R. CV No. 60777. x x x."

17 Supra Decision No. 2003-35, page 11 and the Certification of Atty. Antero, dated 24 July 2003, infra. The Certification of Atty. Janice R. Yulo-Antero, Branch Clerk of Court, Branch 85, RTC, Quezon City, was issued pursuant to the written request of Director Estrellita Beltran-Abelardo, Bureau of Legal Affairs, Office of the President, as stated in page 3 of the Certification.


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14888. Aptly, the determination of who is the prior user and owner of the

contested marks will depend on the evidence presented by the parties in the

case at bar.

The resolution of the instant controversy requires a scrutiny of the

documentary evidence on record. The Agreement entered into by the parties on

01 October 1982,18 read as follows:

"x x x.

"Whereas, KUNNAN intends to acquire the ownership of KENNEX trademark registered by the Superior in the Philippines. Whereas, the Superior isdesirous of having been appointed as the sole distributor by KUNNAN in the territory of the Philippines.

"Now therefore, the parties hereto agree as follows:

"1. KUNNAN, in accordance with this Agreement, will appoint the sole distributorship right to the Superior in the Philippines, and this Agreement could be renewed with the consent ofboth parties upon the time ofexpiration.

"2. The Superior, in accordance with this Agreement, shall assign the ownership of KENNEX trademark, under the registration of Patent Certificate No. 4730 dated 23 May 1980 to KUNNAN on the effects of its ten (10) years contract of distributorship, and it is required that the ownership ofthe said trademark shall be genuine, complete as awhole and without any defects. x x x.

"3. KUNNAN will guarantee to the Superior that no other third parties will be permitted to supply the KENNEX PRODUCTS in the Philippines except only to the Superior. If KUNNAN violates this stipulation, the transfer of the KENNEX trademark shall be null and void.

"4. If there is a necessity, the Superior will be appointed, for the protection of interest of both parties, as the agent in the Philippines with full power to exercise and granted the power of attorney, to pursue of any case of Pirating, Infringement and Counterfeiting the KENNEX trade mark in the Philippine territory. d"

18 Exhibit "I". l' Page 9 of 15

PRO KENNEX

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"5. The Superior will be granted from KUNNAN's approval before making and selling any KENNEX products made in the Philippines and the other countries, and if this is the situation, KUNNAN is entitled to have a royalty of 5%-8% of FOB as the right.

"6. Without KUNNAN's perrnission, the Superior cannot procure other goods supply under KENNEX brand of which are not available to supply by KUNNAN. However, in connection with the sporting goods, it is permitted that the Superior can procure them under KENNEX brand of which are not available tobe supplied by KUNNAN."

The Appellant advances the view that it is evident from the Agreement that

the Appellee conceded and acknowledged the Appellant's ownership of the mark

KENNEX.19 The Agreement, however, shows that the Appellant assigned the

ownership of the trademark KENNEX registered under Patent Certificate No.

4730 to the Appellee in exchange of the sole distributorship right of the Appellant

in the Philippines. Aptly, the ownership of the trademark KENNEX is now with the

Appellee because a valid assignment transfers ownership of the mark to the

assignee. The conditions or restrictions on the use of the mark KENNEX

provided in the agreement support this view.

On the other hand, in the Assignment Agreement2° executed on 14 June

1983 the parties agreed as follows:

"1. In consideration of the distributorship relationship between KUNNAN and Superior, KUNNAN, who is the seller in the distributorship relationship, agrees to assign the following trademark applications owned by itself in the Philippines toSuperior who isthe buyer in the distributorship relationSh .

r 19 Supra, Appellant's Appeal Memorandum, page 25. 20 Exhibits "S" to "S-1".


Trademark Application Number

PROKENNEX 49999 28

PROKENNEX 49998 25

PROKENNEX 49997 18

"2. Superior shall acknowledge that KUNNAN is still the real and truthful owner of the abovementioned trademarks, and shall agree that itwill not use the right of the abovementioned trademarks to do anything which is unfavorable or harmful to KUNNAN.

"3. Superior agrees that it will return back the abovementioned trademarks to KUNNAN without hesitation at the request of KUNNAN at any time. KUNNAN agrees that the cost for the concerned assignment of the above-mentioned trademarks shall be compensated by KUNNAN.

"4. Superior agrees that the abovementioned trademarks when requested by KUNNAN to return shall be clean and without any incumbency.

"5. Superior agrees that after the assignment of the abovementioned trademarks, it shall have no right to reassign or license the said trademarks to any other parties except KUNNAN,"

It is clear from the above document that the Appellee is the owner and first

user of the mark PRO KENNEX. While the Appellee assigned to the Appellant

the trademark PRO KENNEX in consideration of their distributorship agreement,

in effect, the same was not in the concept of transferring ownership but merely a

permission to use it. The conditions imposed upon such assignment of the mark,

without a doubt, shows that there is no intention on the part of the Appellee to

relinquish ownership of the mark in favor of the Appellant. In fact the Appellant

agreed to return the aforementioned trademarks to the Appellee at any time upon


the request of the latter. Records show that there were demands made by the

Appellee from the Appellant to return the trademark PRO KENNEX.21

On this light, a perceptive analysis of the following documents lends

substance to the observation of this Office that the true owner of the contested

marks is the Appellee. Other pieces of evidence on record support this finding. In

the Letter of Mr. Mariano Tan Bon Diong22 to Mr. Kunnan Lo23 dated 14 March

198324 , the Appellant in a way admitted that the Appellee is the owner of the

mark KENNEX and PRO KENNEX by requesting the Appellee to finalize a draft

certification regarding the Aqreernent" between the Appellee and Bonmark

Sportsmaster. This request of the Appellant to be appointed as the sole

distributor of the PRO KENNEX and KENNEX products negates the essence of

ownership of the subject marks as claimed by the Appellant.

21 See Exhibits ''T', "U" and "V" showing that the Appellee had asked the Appellant to return the trademark PRO KENNEX under Application Nos. 49997 (class 18),49998 (class 25) and 49999 ~class 28).

2 President and General Manager of the Appellant Superior Commercial Enterprises, Inc. 23 President of the Appellee Kunnan Enterprises, Inc. 24 Exhibits "0" to "0-2". 25 Pertinent portions of the letter certification provides that, to wit: "Dear Mr. Lo,

"Please find the enclosed, a copy of the drafted certification for you to retype and sign with the PRO KENNEX Letterhead. x xx.

This is to certify that the AGREEMENT between Kunnan Enterprises Co., Ltd. and Bonmark Sports Master, dated August 21, 1982, has already been rescinded and terminated by the Board of Directors of Kunnan Enterpises Co., Ltd. on January 03, 1983. Said Agreement was not confirmed and/or ratified by the Board of Directors and instead, they decided to retain their original exclusive distributorship with Superior Commercial Enteprises, Inc. of Ouezon City."


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Also, in its Letter to Brigadier General Jose Almonte dated 19 March

198626 the Appellant admitted and recognized the Appellee's ownership of the

subject marks when it claimed that it is the sole and exclusive licensee and

distributor in the Philippines of all KENNEX and PRO KENNEX products."

Notably, the consciousness displayed by the Appellant in the foregoing

instances is an act of estoppel that validates the outright rejection of its claim for

ownership over the aforesaid marks. On this vein, the High Court enunciated in

one case that the right to register is based on ownership. When the applicant is

not the owner of the trademark being applied for, he has no right to apply for the

registration of the same. Under the Trademark Law, only the owner of the

trademark, trade name or service mark used to distinguish his goods, business

or service from the goods, business or service of others is entitled to register the

same. The term owner does not include the importer of the goods bearing the

trademark, trade name, service mark, or other mark of ownership, unless such

importer is actually the owner thereof in the country from which the goods are

imported. Thus, where the applicant's alleged ownership is not shown in any

notarial document and the applicant appears to be merely an importer or

26 Exhibits "P" and "P-1". 27 Pertinent portions of the letter provides that, to wit: x x x. We wish to inform you that our company, Superior Commercial Enterprises, Inc. with office address at 74 Timog Avenue, Quezon City, is the sale and exclusive licensee and distributor in the Philippines of all its "KENNEX" and "PRO KENNEX" products, and being manufactured, distributed and sold to the public by American Sports Plaza and other firms are fake and/or illegally brought into the country.


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distributor of the merchandise covered by said trademark, its application cannot

be granted.28

Aptly, as held by the Supreme Court in several cases, an exclusive

distributor does not acquire any proprietary interest in the principal's trademark

and cannot register it in his own name unless it has been validly assigned to him.

Thus, one could not acquire, while acting as agent of another, the sole and

exclusive right to sell machines in the Philippines, nor is it entitled to have said

words and designs used upon said machines copyrighted, as an agent cannot

acquire the property of his principal." The relations of an agent to his principal

are fiduciary and it is an elementary and very old rule that in regard to property

forming the subject matter of the agency, an agent is estopped from acquiring or

asserting a title adverse to that of the principal. His position is analogous to that

of a trustee and he cannot, consistently with the principles of good faith, be

allowed to create in himself an interest in opposition to that of his principal or

cestui que trust.3D

Lastly, the contention of the Appellant that it is the owner of the marks

KENNEX and PRO KENNEX because of the issuance of the corresponding

reqistrations'" must fail since ownership of a trademark is not acquired by the

mere fact of registration alone. Registration merely creates a prima faciW

28 Unno Commercial Enterprises, Inc. vs. General Milling Corporation, 120 SCRA 804, 28 February 1983. 29 Munoz & Co. vs. Struckmann & Co., 9 Phil. 52,17 October 1907. 30 Thomas vs. Pineda, 89 Phil. 312, 28 June 1951. 31 Supra, Appellant's Appeal Memorandum, page 29.


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presumption of the validity of the registration, of the registrant's ownership of the

trademark and of the exclusive right to the use thereof. Registration does not

perfect a trademark right. Evidence may be presented to overcome the

presumption. Prior use by one will controvert a claim of legal appropriation by

subsequent users." In a nutshell, a certificate of registration of a trademark is

merely a prima facie evidence of its validity. It is not conclusive and is subject to

rebuttal.

WHEREFORE, premises considered, there is no cogent reason to disturb c Decision No. 2003-35 dated 30 October 2003 rendered by the Director of the

Bureau of Legal Affairs. Accordingly, the instant appeal is DENIED and the

appealed decision is hereby AFFIRMED.

Let a copy of this Decision be furnished the Director of the Bureau of

Legal Affairs for appropriate action, and the records be returned to her for proper

disposition. Further, let the Directors of the Bureau of Trademarks and the

C Administrative, Financial and Human Resource Development Service Bureau be

furnished copies hereof for information and/or appropriate action.

SO ORDERED.

0& Vftlt· ~2004, Makati City, Philippines.

AC.~~ISCO Director General

32 Supra, Unno Commercial Enterprises, Inc. vs. General Milling Corporation.


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Documents

INTELLECTUAL PROPERTY OFFICE OF THE PHILIPPINES · I. t . i . INTELLECTUAL PROPERTY OFFICE OF THE PHILIPPINES . KUNNAN ENTERPRISES, INC., APPEAL NO. 14·03·34 . Petitioner-Appellee,