~iP INTELLECTUAL PROPERTY PHILIPPINES

OFFICE OF THE DIRECrOR GENERAL

."QUINNS MARKETING SERVICES APPEAL NO. 14-07~53

',LIMI':J:'ED, IPC No. 14-2007-00071 Opposer-Appellant, "Opposition to: .

-versus- Appln. Serial No. 4-2003-011772 Date Filed: 23 December 2003

, Trademark: K'S KIDS AND ANIL KAPAHI AND SURAJ KAPAHI, DEVICE

Respondents-Applican.ts.-Appellees.

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NOTICE DF DECISION

DIRECTOR LENY B. RAZ VILLARAZA CRUZ . ~-' -;.J(~ MARCELO & ANGANGC r ~~llilJ~ Bureau of Trademarks

Counsel for Appellant ) I. l DEC 10 i Il Intellectual Property Office LTA Building, " ~ll IU Makati City 118 Perea Street, Legaspi Vill~]C~\Vi !'jVIJ1229 Makati City ViiiJrd!.J L~UZ ,\1cJ

ATTY. JORGE CESAR M. SANDIEpO , ~ IP PHILIPPINES LIBRARY~ 'v//llft Counsel for Appellees ~.e4.~ Intellectual Property Office .

Unit 421 SJB Condominium . AbN/~~ })1,JY!akati City ''71-/,,&130 Panay Avenue, Quezon City I

ESTRELLITA BELTRAN-ABELARDO Director, Bureau of Legal Affairs ...., . IJ Intellectual Property Office ~ /v tee ,~ Makati City­

·GREETINGS:

Please be irrformed that on 10 December 2008, the Office of the Director General rendered a Decision in the above-titled case (copy attached).

Makati Cit«, 10 December 2008. . ,

.. Very truly yours,

.ATTY. J>lAT ANIEL S. AREVALO Attor¢y VI Head, Office of Legal Counsel

, Republic of the PhiliPPfRhe of the Director General INTELLECTUAL PROPERTY OFFICE

\

~IP INTELLECTUAL PROPERTY PHILIPPINES

OFFICE OF THE DIRECTOR GENERAL

QUINNS MARKETING SERVICES LIMITED,

Opposer-Appellant,

-versus-

ANIL KAPAHI AND SURAJ KAPAHI, Respondents-Applicants-Appellees.

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APPEAL NO. 14-07-53 IPC No. 14-2007-00071 Opposition to:

Appln. Serial No. 4-2003-011772 Date Filed: 23 December 2003 Trademark: K'S KIDS AND

DEVICE

NOTICE OF DECISION

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I } 1 j(l

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VILLARAZA CRUZ MARCELO & ANGANGCO Counsel for Appellant LTA Building 118 Perea Street, Legaspi Village 1229 Makati City

ATTY. JORGE CESAR M. SANDIEGO Counsel for Appellees Unit 421 SJB Condominium 130 Panay Avenue, Quezon City

ESTRELLITA BELTRAN-ABELARDO Director, Bureau of Legal Affairs Intellectual Property Office Makati City

GREETINGS:

DIRECTOR LENY B. RAZ Bureau of Trademarks Intellectual Property Office Makati City

IP PHILIPPINES LIBRARY Intellectual Property Office Makati City

Please be informed that on 10 December 2008, the Office of the Director General rendered a Decision in the above-titled case (copy attached).

Makati City, 10 December 2008.

I Very truly yours,

I ATTY. 1\T ANIEL S. AREVALO

I Attor y VI Head, Office of Legal Counsel

Republic of the PhiliPPf~ of the Director General INTELLECTUAL PROPERTY OFFICEI 351 Sen. Gil Puvat Ave.. Makati City 1200 Philinnines s www.inonhil.zov.nh

, ~iP INTELLECTUAL PROPERTY PHILIPPINES

OFFICE OF THE DIRECTOR GENERAL

QUINNS MARKETING SERVICES Appeal No. 14-07-53 LIMITED,

Appellant, Inter Partes Case No. 14-2007-00071 Opposition to:

-versus- Application No. 4-2003-011772 Date Filed: 23 December 2003

ANIL KAPAHI and SURA] KAPAHI, Appellees. Trademark: K'S KIDS AND DEVICE

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DECISION

QUINNS MARKETING SERVICES LIMITED ("Appellant") appeals Decision No. 07-138, dated 28 September 2007, of the Director of the Bureau of Legal Affairs ("Director"). The Director denied the Appellant's opposition to Trademark Application No. 4-2003-011772.

Records show that ANIL KAPAHI and SURA] KAPAHI ("Appellees") filed on 23 December 2003 an application for the registration of the mark "K'S KIDS AND DEVICE"'.

1 For the following class of goods under the Nice Classification:

Class 03 - soaps, perfumes, detergents, shampoo, lotion, toiletries, talcum powder, bath oils, cotton buds, cotton hook Class 05 - pharmaceutical lotions, sterilizer tablets, sanitary pads, sanitary napkins, sanitary pants, sanitary panties Class 08 - spoon, fork, knife (plastic, stainless steel), nail clipper/cutter, nappy clamps, cutlery sets Class 10 - feeding bottles, pacifiers/soothers/pacifier holder; teethers and rattles (hard/soft bite, vinyl, waterfilled); teats/nipples; bottle nipple; thermometer, medical care kits, medicine spoon, medicine dropper, ear syringe, nasal aspirator, medicine syringe, sheets for incontinence for medical use, breast pump, medicine cases, breast nursing pads, cotton applicators Class 11 - bath tubs, hot plates, safety lamps, sterilizers, bottle heaters, bottle warmer, warmers Class 12 - baby strollers, baby stroller covers, baby carriage, baby carriers, walkers Class 16 - disposable diaper, baby napkins, tissue paper, baby wipes Class 18 - bags Class 20 - cribs, baby rocking chair, air cushions, bolsters, cabinets, chimes, hangers, covers, accessory display boards, dressing table, pillows, picture frame, shelves, cot bumper pads Class 21 - training cups, juice cups, snack cups, feeding dishes and bowls; tootbrush and its holder; melamine set [divider plate (round, rectangular, oval, plate and bowl with suction base)] milk powder container; brush, finger toothbrush, pins, bottle racks, hairbrush, haircomb, drinking cups, feeding cups, nursery cup-set, mugs, beakers, bottles, plates, saucers, dishes and bowls, tumblers, containers for mild powder, milk powder dispensers, powder puff containers, soap boxes Class 24 - wash cloth, hooded blanket, comforter, bed cloth, bed cover linen, pillow case, bolster cases, cot sheets, towels, cradle nets, mosquito nets, air cushions and matteresses for babies, towels Class 25 - tie side (sleeveless, short sleeves, long sleeves); t-shirt, undershirt, panty (training panty, plastic panty), shorts, pajama sets, romper, terry frog suit, gown, mittens, booties, bibs, shoes, baby clothing such as t-baby shirts, undershirts, baby dresses, shorts, gloves Class 26 - cloth hooks Class 27 - baby mats, mats and matting, rubber mats, rubber backed mats, rubber air filled cot sheets Class 28 - playthings, musical mobiles, activity play gym, rattles, toy blocks, toy cups and barrels, plush toys, balls, teddy bears.

The Nice Classifica tion is a classification of goods and services for the purpose of registering trademarks and service marks, based on a multilateral treaty administered by the World Intellectual Property Organization. This treaty is called the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks

quinns vs. kapahi page 1 of 11

Republic of tbe Pbilippines INTELLECTUAL PROPERTY OFFICE

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The application was published for opposition in the Intellectual Property Office E-Gazette for Trademarks on 17 November 2006. Consequently, the Appellant filed a verified "NOTICE OF OPPOSITION" on 19 March 2007 alleging the following:

1. The Appellant is a corporation formed and existing under the laws of Hong Kong, People's Republic of China, which is a signatory to the Paris Convention for the Protection of Industrial Property ("Paris Convention") and the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS"), and which extends reciprocal rights to nationals of the Philippines by law;

2. The Appellee's mark K'S KIDS AND DEVICE is confusingly similar to the Appellant's well-known mark "K'S KIDS & DEVICE" used for identical or similar goods and is, therefore, proscribed by Sec. 123.1(e) of the Intellectual Property Code of the Philippines ("IP Code");

3. The Appellee's trademark application should not be given due course for having been filed in utter bad faith;

4. The Appellant is the true owner of K'S KIDS & DEVICE which is a well­known mark under the criteria set forth by the Trademark Regulations;

5. The Appellant coined K'S KIDS & DEVICE where "K" stands for "KAREN", the first name of its major stockholder and director, thus, "K'S KIDS" denotes "KAREN'S KIDS";

6. The onion-shaped device was chosen because the Chinese words for "onion" and for "smart" are aurally identical, i.e., the words share the same pronunciation, thus, the onion-shaped device that resembles the head of a baby, denotes smartness; the two dots representing the eyes and the curved line underneath, both found inside the onion-shaped device, resemble a smiling face and symbolizes happiness; hence, K'S KIDS & DEVICE stands for a smart and happy child;

7. The Appellant is the prior user of the mark K'S KIDS & DEVICE in Hong Kong in 1998 and has, since 1999, exclusively registered K'S KIDS & DEVICE in its name in Hong Kong and in the European Union and has applied for its registration and its variations in several countries;

8. The Appellant started with only 6 product lines and the product lines bearing the mark K'S KIDS & DEVICE have grown in number and now totals to 23 different product lines;

9. The Appellant has advertised its goods through the distribution of "Collection Catalogues", promotional partnerships with different companies and through international publications;

concluded in 1957.

/.i I quinns vs, kapahi

page 2 of 11

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10. The Appellant has contracts with several distributors worldwide expanding to 56 countries and has invested substantial amounts of money by way of promotion and advertisement of K'S KIDS & DEVICE goods, including in several websites, specifically, in its own website http://www.kskids.com which is accessible to Philippine consumers, and participation in toys' fairs and exhibition;

11. The Appellant has experienced substantial growth in worldwide sales for its K'S KIDS & DEVICE goods and from July 2002 to 2003, its total worldwide sales amounted to HK$19,818,099.86;

12. The Appellant has gained immense goodwill for its mark by reason of the high quality of its goods and it has won several prestigious awards in the toy industry;

13. In the Philippines, the Appellant has been selling products bearing the mark K'S KIDS & DEVICE as early as 2002;

14. The Appellees' application covers goods falling under the same classes for which the Appellant's marks are registered worldwide or have pending applications;

15. If the Appellees' application is allowed, there is a high probability that purchasers will be confused as to the origin of such products, considering that the Appellant has already acquired tremendous goodwill; and

16. The Appellees' bad faith is made even more evident by the fact that they have a penchant and are actually notorious for filing trademark applications for marks that are identical with or similar to famous trademarks found on the internet.

The Appellees filed on 25 May 2007 a verified ANSWER alleging the following:

1. K'S KIDS & DEVICE is not internationally well-known in any class of goods and/or services based on the standards of the IP Code;

2. Under the "First-To-File Rule", their application should be allowed there being no application filed by the Appellant for the same mark which has an earlier filing date;

3. The opposition should be dismissed as the certification on non-forum shopping is defective; and

4- The documents enclosed in the verified Notice of Opposition are not admissible for being mere photocopies.

The Appellant submitted the following as its evidence:

quinns YS. kapahi page 3 of 11

1. Copy of the E-Gazette publication of the Appellee's application;' 2. Copy of the Annual Return Form (ARI) signed on 26 July and 09 August

2005 ;3

3. Two (2) Affidavits executed by Wong Kar Ling Karen on 13 March 2007;4

4. Copies of the certificates of registration for K'S KIDS & DEVICE issued in favor of the Appellant;"

5. Copies of the pending applications for K'S KIDS & DEVICE filed by the Appellant in several countries:"

6. Print out of samples of the Appellant's products and promotional advertisements;'

7. List ofAppellant's distributors:" 8. Table of the advertising expenses incurred by the Appellant in 2002-2006;9

9. Print out of the Appellant's products as shown in its website, the google website and other retail sites for the Appellant's products:"

10. Copies of the Appellant's Distributors Sales Report in 2002-2006;11

11. Copies of the certificates of awards given to the Appellant's products:" 12. E-mail communication between Sindy Lau of the Paka Preschool and

Vivian Padillo of Rustan's Commercial Corporation:" 13. Sales transaction and invoices on the Appellant's products ordered by and

delivered to Rustan Commercial Corporation:" 14. Articles ofIncorporation of Kidsmark Pacific Corporation:" 15. Index files of the trademark applications filed by the Appellee on marks

that are found in the internet and sample pages from the websites of these marks:"

16. Copy of the Director's Certificate executed on 25 January 2007.'7

The Appellees' evidence consists only of their "AFFIDAVIT".'8.

After the appropriate proceedings, the Director denied the opposition and gave due course to the Appellee's trademark application. She held that while the Appellant's and Appellee's marks are confusingly similar, the Appellant's mark is not a well-known mark and

2 Exhibit"A". 3 Exhibits "B" and "N". ~ Exhibits "C" and "S". 5 Exhibits "D", "D-1" and "D-2". 6 Exhibits "E", inclusive of sub-markings. 7 Exhibits "F', "G" and "H", inclusive of sub-markings. 8 Exhibits "I", 'T' and "U", inclusive of sub-markings. 9 Exhibit "K".

10 Exhibits "L" and "M", inclusive of sub-markings. II Exhibit "Q", inclusive of sub-markings. 12 Exhibits "P" and "Q", inclusive of sub-markings. 13 Exhibit "R" . U Exhibits "T", "T-1", "T_2" and "T-3". IS Exhibit "V" . 16 Exhibits "W", "X", "Y", and "Z", inclusive of sub-markings. 17 Exhibit"AN'.

18 Attached to the Appellees' answer and marked as Exhibit "1".

quinns YS. kapahi page 4 of 11

1 that the Appellee filed its trademark application for K'S KIDS AND DEVICE on 23 December 2003, ahead ofthe Appellant who filed an application on 26 November 2006.

On 23 November 2007 the Appellant filed the instant appeal. In its appeal, the Appellant alleges the following:

1. Contrary to the Director's unsubstantiated conclusion, its mark is internationally well-known in accordance with the standards set by the IP Code and as established by the overwhelming evidence it presented;

2. K'S KIDS & DEVICE has a unique origin which indicates that an identical mark thereof could not have been created if it was not copied;

3. The Appellant is the prior registrant and user of K'S KIDS & DEVICE and is the holder of several prior registrations and applications therefor in different jurisdictions;

4. The Appellant has expended considerable amount of time and financial resources by way of promotion and advertisement of K'S KIDS & DEVICE goods in numerous jurisdictions and has had contracts with several distributors worldwide;

5. The Appellant has experienced substantial growth in worldwide sales for its goods, has gained immense goodwill by reason of the high quality of its K'S KIDS & DEVICE goods and has won several prestigious awards in the toy industry;

6. The Appellant has shown that its K'S KIDS & DEVICE goods were delivered to its local distributors and subsequently sold in Philippine markets; and

7. The "First to File Rule" has no application in the instant case because the Appellee filed its registration of the subject mark in utter bad faith and that the Appellees have a penchant and are actually notorious for filing trademark applications for marks that are identical with, or similar to, famous marks found on the internet.

This Office issued on 03 December 2007 an Order giving the Appellees thirty (30)

days from receipt thereof within which to file their comment to the appeal. The Appellees, however, failed to file their comment to the appeal. Thus, this Office issued an Order on 04 February 2008 declaring that the appeal was deemed submitted for decision.

The main issues to be resolved in this case are the following:

1. Whether the Appellant's mark K'S KIDS & DEVICE is well-known internationally, and

I quinns vs, kapahi page 5 of 11

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I 1 2. Whether the Appellees' trademark application for K'S KIDS AND DEVICE

should be registered.

On the first issue, it is emphasized that the Paris Convention for the Protection of Industrial Property ("Paris Convention") to which the Philippines is a signatory'? expressly provides the protection of a well-known mark from translation that will create confusion. Art. 6bis of the Paris Convention provides in part that:

"Article 6bis [Marks: Well-Known Marks]

1

"(1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith."

On the other hand, Art. 16 of the TRIPSAgreement provides in part that:

"Article 16 Rights Conferred

"1. The owner of a registered mark shall have the exclusive right to prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a likelihood of confusion shall be presumed. The rights described above shall not prejudice any existing prior rights, nor shall they affect the possibility of Members making rights available on the basis of use."

"2. Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to services. In determining whether a trademark is well-known, Members shall take account of the knowledge of the trademark in the relevant sector of the public, including knowledge in the Member concerned which has been obtained as a result of the promotion of the trademark. x x x"

Accordingly, Rule 102 of the Trademark Regulations sets forth the criteria for determining whether a mark is well-known, to wit:

"RULE 102. Criteria for determining whether a mark is well-known.-In determining whether a mark is well-known, the following criteria or any combination thereof may be taken into account:

19 The Paris Convention entered into force in the Philippines on 27 Sept. 1965.

quinns YS. kapahi page 6 of 11

I (a) the duration, extent and geographical area of any use of the mark, in

particular, the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods and/or services to which the mark applies;

(b) the market share, in the Philippines and in other countries, of the goods and/ or services to which the mark applies;

(c) the degree of the inherent or acquired distinction of the mark;

(d) the quality-image or reputation acquired by the mark;

(e) the extent to which the mark has been registered in the world;

(f) the exclusivity of registration attained by the mark in the world;

(g) the extent to which the mark has been used in the world;

(h) the exclusivity of use attained by the mark in the world;

(i) the commercial value attributed to the mark in the world;

0) the record of successful protection of the rights in the mark;

(k) the outcome of litigations dealing with the issue of whether the mark is a well-known mark; and,

(1) the presence or absence of identical or similar marks validly registered for or used on identical or similar goods or services and owned by persons other than the person claiming that his mark is a well-known mark."

Contrary to the findings of the Director, the pieces of evidence submitted by the Appellant indicate that the mark K'S KIDS & DEVICE is well-known internationally and in the Philippines. The Appellant presented various certificates of registrations and pending trademark applications for K'S KIDS & DEVICE around the world and introduced as evidence a representative sampling of these registrations and applications." The Appellant also adduced evidence to prove its use in the Philippines of the mark K'S KIDS & DEVICE!l These pieces of evidence show that the Appellant's mark has attained recognition and distinction in various parts of the world including the Philippines.

The Appellant also presented figures of its advertising expenses and promotional activities and a breakdown of the worldwide sales of its products bearing the mark K'S KIDS & DEVICE during the period 2003 to 2006 to support its claim of immense goodwill for this mark." These documents were not specifically denied and overcome by the Appellee by contrary evidence. Moreover, there is also merit to the claim of the Appellant that the mark has become well-known in the Philippines through its local distributors like the Rustan Commercial Corporation and through its promotion in the various internet websites and the electronic media. The Appellant correctly pointed out that:

"Today, the trademark is not merely a symbol of origin and goodwill; it is often the most effective agent for the actual creation and protection of goodwill. It imprints upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfaction. In other words, the mark actually sells the goods. The mark has become the 'silent salesman', the conduit through which direct contact between the trademark owner and the consumer is assured. It has invaded popular culture in ways never anticipated that it has become a

20 Exhibits "0" and "E", inclusive of sub-markings. 21 Exhibits "R", "S", and "T', inclusive of sub-markings. 22 Exhibits "K" and "0", inclusive of sub-markings.

quinns vs. kapahi page 7 of 11

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more convincing selling point than even the quality of the article to which it refers. In the last half century, the unparalleled growth of industry and the rapid development of communications technology have enabled trademarks, tradenames and other distinctive signs of a product to penetrate regions where the owner does not actually manufacture or sell the product itself. Goodwill is no longer confined to the territory of actual market penetration; it extends to zones where the marked article has been fixed in the public mind through advertising. Whether in the print, broadcast or electronic communications medium, particularly on the internet, advertising has paved the way for growth and expansion of the product by creating and earning a reputation that crosses over borders, virtually turning the whole world into one vast marketplace.'?'

Thus, the Appellant has proved by substantial evidence that its mark K'S KIDS & DEVICE is well-known internationally and in the Philippines.

Having determined that the Appellant's mark is well-known, the applicable provision of law in resolving the second issue, therefore, is Sec. 123.1(e) of the IP Code, which provides that a mark cannot be registered ifit:

"(e) Is identical with, or confusingly similar to, or constitutes a translation of a mark which is considered by the competent authority of the Philippines to be well-known internationally and in the Philippines, whether or not it is registered here, as being already the mark of a person other than the applicant for registration, and used for identical or similar goods or services: Provided, That in determining whether a mark is well-known, account shall be taken of the knowledge of the relevant sector of the public, rather than of the public at large, including knowledge in the Philippines which has been obtained as a result of the promotion of the mark;"

Below is a comparison of the parties' marks.

_1('sJ(ids Appellant's marks

Appellee's mark

23 APPEAL MEMORANDUM [Of Decision No. 07-138 dated 28 September 2007], page 20 citing the case of Mirpnrivs. Courtof Appeals,et al., 318 SeRA 516 (1999).

quinns vs. kapahi page 8 of 11

It is not hard to see that Appellee's mark is identical to the Appellant's mark. Even the Director, in her assailed decision has found that the Appellant and Appellees' marks are confusingly similar, to wit:

"Except for the dotted ribbon-like figure between the figure of a head and the words 'K's Kids' in opposer's 'K'S KIDS AND DEVICE' mark, opposer's and respondents-applicants' respective marks are almost identical: The head figure starts with a line from the upper left going counterclockwise in circle, almost closing the circle but the line ends with an upward curving sweep to the right; in both head figures, two (2) dots denote the eyes while a curved line below the eyes denote the mouth; and the words 'K's Kids' are written below the head figure in the same scripted font. Visually, the two marks are almost identical. Aurally, the words 'K's Kids' for both marks are the sarne.?"

The goods of the parties are similar. The Appellant's and Appellees' respective goods cover babies and children products, toys and accessories. The Appellee's application enumerates among other things the products "playthings, musical mobiles, activity play gym, rattles, toy blocks, toy cups and barrels, plush toys, balls, and teddy bears" which are also covered by the Appellant's mark. The target market for the Appellant's goods is the same as the Appellees'. Accordingly, it is very likely that the buying public may assume the Appellees' products as originating from the Appellant or vice versa deceiving the public that there is some connection between the Appellant and the Appellee, which, in fact, does not exist. The likelihood of confusion subsists both on the purchaser's perception of goods and the origins thereof."

The Appellees' reliance on the "First-to-File Rule" is untenable. The so called "First-to­File Rule" refers to Sec. 123.1(d) of the IP Code. The the applicable provision of the IP Code in this case, however, is Sec. 123.1 (e).

It is stressed that the essence of trademark registration is to give protection to the owners of trademarks. 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 the 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."

The main characteristic of a registrable trademark is, therefore, its distinctiveness. A trademark must be a visible sign capable of distinguishing the goods or services of an enterprise." In this regard, the Appellant ably explained the distinctiveness of its mark K'S KIDS & DEVICE:

"First. Opposer-Appellant's 'K'S KIDS & DEVICE' mark has a unique origin which indicates that an identical mark thereof could not have been created if it were not copied. Opposer-Appellant's 'K'S KIDS & DEVICE' mark was coined by Opposer­

24 Decision No. 2007-138, dated 28 September 2007, pages 11 to 12. 2, See Converse Rllbber Corporation vs. Universal Rllbber Products, lnc., et al.,C. R. No. L-27906, 08 January 1987. 26 Pribhdas J. Mirpllrivs. Courtof Appeals, C.R. No. 114508, 19 November 1999. 27 Sec. 121.1 of the IP Code.

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Appellant itself. The 'K' therein stands for 'KAREN', the first name of the major stockholder and director of Opposer-Appellant. Thus, 'K'S KIDS' denotes 'KAREN KIDS'. The onion-shaped device was chosen because the Chinese words for 'onion' and for 'smart' are aurally identical, i.e., the words share the same pronunciation. Thus, the onion-shaped device, which is made to resemble the head of a baby, denotes smartness. The two dots representing the eyes and the curved line underneath, both found inside the onion-shaped device, resemble a smiling face and, therefore, symbolize happiness. Hence, Opposer-Appellant's mark 'K'S KIDS & DEVICE' stands for a smart and happy child.'?"

The mark K'S KIDS & DEVICE was created by the Appellant to distinguish its products and it is highly incredible that the Appellee would accidentally also come up with a similar if not an identical mark of K'S KIDS AND DEVICE. The Appellant has proven that it has been using its mark long before the Appellee filed the subject trademark application.

In contrast, the Appellees failed to explain how they came up with the mark K'S KIDS AND DEVICE. For the Appellee to have coined a mark similar to the Appellant's K'S KIDS AND DEVICE which is a highly distinctive mark, and to use it on goods which are also similar to that of the Appellant, without plausible explanation, is mind-boggling.

The Appellee was also silent on the Appellant's allegation that they have the penchant and are notoriously applying for registrations of trademarks which are well-known and are posted in the internet. These are serious accusations that could undermine the good faith of the Appellees in filing their trademark application. In this regard, the statement by the Supreme Court in one case is instructive.

"Of course, as in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and combinations of letters and designs available, the appellee had to choose those so closely similar to another's trademark if there was no intent to take advantage of the goodwill generated by the other mark."?

The Appellee's adoption of a mark containing the same exact words and an almost identical design shows their intention to ride on the goodwill generated by the Appellant's mark. Hence, the registration of the mark K'S KIDS AND DEVICE in favor of the Appellee will damage the interests of the Appellant.

To conclude, the intellectual property system was established to recognize creativity and give incentives to innovations. Similarly, the trademark registration system seeks to reward entrepreneurs and individuals who through their own innovations were able to distinguish their goods or services by a visible sign that distinctly points out the origin and ownership of such goods or services. The intellectual property system is not a haven for people who would take advantage of the intellectual creation of others, whether a local resident or a foreigner.

WHEREFORE, premises considered, the appeal is hereby GRANTED. Trademark Application No. 4-2003-011772 for the mark K'S KIDS AND DEVICE filed by the Appellees is hereby REJECTED. Let a copy of this Decision as well as the records be furnished and

2R APPEAL MEMORANDUM [Of Decision No. 07-138 dated 28 September 2007], page 8. 29 American Wire & Cable Company vs. Directorof Patents,G. R. No. L-26557, 18 Feb. 1970.

quinns vs. kapahi page 10 of t t

•• rreturned to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the Director of the Bureau of Trademarks and the library of the Documentation, Information and Technology Transfer Bureau be furnished a copy of this Decision for information, guidance, and records purposes.

SO ORDERED.

~DEC 10 2008 Makati City

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