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Pearl and Dean Vs SM

The case involves Pearl and Dean (Phil.), Inc. suing Shoemart, Inc. and North Edsa Marketing, Inc. for copyright and trademark infringement regarding illuminated advertising display units known as light boxes. The Supreme Court upheld the Appeals Court's ruling that Pearl and Dean's copyright only covered technical drawings, not the light boxes themselves, and that the trademark 'Poster Ads' was generic and not protectable. Consequently, all claims of copyright, patent, trademark infringement, and unfair competition were denied.

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6 views6 pages

Pearl and Dean Vs SM

The case involves Pearl and Dean (Phil.), Inc. suing Shoemart, Inc. and North Edsa Marketing, Inc. for copyright and trademark infringement regarding illuminated advertising display units known as light boxes. The Supreme Court upheld the Appeals Court's ruling that Pearl and Dean's copyright only covered technical drawings, not the light boxes themselves, and that the trademark 'Poster Ads' was generic and not protectable. Consequently, all claims of copyright, patent, trademark infringement, and unfair competition were denied.

Uploaded by

MARIDOR BUENO
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PEARL & DEAN (PHIL.

), INCORPORATED, petitioner,
vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING,
INCORPORATED, respondents.
(G.R. No. 148222. August 15, 2003)

FACTS:

Plaintiff-appellant Pearl and Dean (Phil.), Inc., a corporation engaged


in manufacturing illuminated advertising display units known as light
boxes, holds a Certificate of Copyright Registration dated January 20,
1981. These units incorporate specially printed posters between plastic
sheets and are marketed under the trademark “Poster Ads,” which
received official registration on September 12, 1988. Between 1981 and
1988, Pearl and Dean partnered with Metro Industrial Services to produce
these displays. In 1985, negotiations with defendant-appellant Shoemart,
Inc. (SMI) were initiated for leasing and installation of light boxes at the
yet-to-be-constructed SM City North Edsa, eventually leading to
agreements for SM Makati and SM Cubao. The contract for SM Makati was
returned signed, but despite a follow-up inquiry, the contract for SM
Cubao remained unaddressed. On January 14, 1986, SMI's legal counsel
formally rescinded the contract for SM Makati.

In a reply dated February 17, 1986, Vergara contested SMI's


unilateral actions regarding a contract dispute, urging for the signing of
the contract for SM Cubao. Two years later, Metro Industrial Services,
previously contracted by Pearl and Dean, began fabricating ten light boxes
for SMI, which were later followed by an order of 300 units from EYD
Rainbow Advertising Corporation in 1991, installed across SM Megamall
and SM City. By 1989, Pearl and Dean discovered that similar light boxes
were used in several SM locations and found that North Edsa Marketing
Inc. (NEMI), a related company, was involved in selling advertising on
these units. Following their discovery, Pearl and Dean sent a letter on
December 11, 1991, demanding the cessation of light box use,
discontinuation of the “Poster Ads” trademark, and compensation of
Twenty Million Pesos. In response, SMI suspended the leasing of the light
boxes, but Pearl and Dean subsequently filed a case for trademark and
copyright infringement, as well as unfair competition. SMI defended itself
by asserting that the designs were independently developed and that the
term “Poster Ads” was generic and invalid as a trademark.

In a legal dispute, SMI claimed that Pearl and Dean's lawsuit lacked
merit due to the absence of copyright notices on advertising display units,
asserting that the suit aimed to tarnish its reputation. SMI sought
dismissal and counterclaimed for various damages and the cancellation of
Pearl and Dean’s copyright and trademark registrations. In response, NEMI
denied any involvement with advertising units and echoed SMI's claims
while seeking similar remedies. The Regional Trial Court of Makati City
ruled in favor of Pearl and Dean, holding SMI and NEMI jointly and
severally liable for copyright and trademark infringement, and imposed
appropriate penalties on the defendants.

However, the Appeals Court concluded that the light boxes did not
qualify for copyright protection. P&D had previously obtained a copyright
certificate for their illuminated advertising display units, marketed under
the trademark "Poster Ads." Nevertheless, the court clarified that while
the technical drawings could be copyrighted, the light box itself,
characterized as an engineering invention, did not meet the criteria for
copyrightability under Philippine law. This distinction was pivotal in the
appellate court's decision, leading to the dismissal of P&D's infringement
claims regarding the light boxes.

Additionally, the court determined that the term "Poster Ads" was
generic and overly descriptive, thus not eligible for trademark protection.
Testimonies from P&D's own expert witnesses reinforced the notion that
the term lacked distinctiveness and could not be linked to P&D, further
underscoring the insufficiency of claiming rights over such terminology.
Consequently, the court concluded that the doctrine of secondary
meaning could not be applied, which might have afforded P&D some
protection had the trademark acquired distinctiveness over time.

Ultimately, without a secured patent for the light boxes and with a
limited scope of copyright applicable only to the technical drawings, the
ruling established that P&D could not prevent SMI and NEMI from
manufacturing similar light boxes.

The Supreme Court ultimately affirmed the decision of the Court of


Appeals, emphasizing the importance of clear legal distinctions between
patents, copyrights, and trademarks.

ISSUES:

1. Whether there was a copyright infringement


2. Whether there was a patent infringement
3. Whether there was a trademark infringement
4. Whether there was unfair competition

RULING:
NO to all. Petition denied.

1. On the Issue of Copyright Infringement

The Court of Appeals rightly determined that the copyright


was confined solely to the drawings and did not extend to the light
box itself. Despite the petitioner’s copyright certificate being titled
'Advertising Display Units'—which illustrated the box-type electrical
devices—the claim of copyright infringement is not tenable.
Copyright, in its strictest interpretation, is a statutory right and thus
can only encompass works that fall within the statutory definitions.
While we acknowledge that P & D possessed a valid copyright, it
pertains exclusively to the technical drawings categorized as
'pictorial illustrations.' It cannot extend to the light box itself, as the
light box does not qualify as a literary or artistic work eligible for
copyright protection. The Court reaffirmed the principles established
in the case of Kho vs. Court of Appeals, which clarifies the
distinctions between patents, copyrights, and trademarks.

A trademark is any visible sign capable of distinguishing the


goods (trademark) or services (service mark) of an enterprise and
shall include a stamped or marked container of goods. In relation
thereto, a trade name means the name or designation identifying
or distinguishing an enterprise. Meanwhile, the scope of
a copyright is confined to literary and artistic works which are
original intellectual creations in the literary and artistic domain
protected from the moment of their creation. Patentable
inventions, on the other hand, refer to any technical solution of a
problem in any field of human activity which is new, involves an
inventive step and is industrially applicable.

2. On the Issue of Patent Infringement

The petitioner did not obtain a patent for the light boxes, thus
lacking any patent rights and the legal authority to stop others from
producing or commercially utilizing the device. To effectively and
legally prohibit others from replicating and benefiting from the
invention, securing a patent is essential. Without a patent, there is
no protection.

3. On the Issue of Trademark Infringement

In relation to the issue of trademark infringement, the


petitioner's president mentioned that 'Poster Ads' stands for 'poster
advertising.' P & D successfully secured a trademark certificate for
this term, but it was restricted to products classified as 'stationeries
like letterheads, envelopes, calling cards, and newsletters.' The
petitioner admitted that it did not sell or market these products.
Instead, it concentrated on electrically operated backlit advertising
units, which were not covered by the trademark certificate. Even if
we hypothetically consider 'Poster Ads' as a legitimate trademark, P
& D's failure to register it specifically for light boxes suggests that
trademark infringement could not have taken place, as registration
is a crucial prerequisite for such a claim.

4. On the Issue of Unfair Competition

There was insufficient evidence to show that P & D's use of


'Poster Ads' was unique or widely recognized. The Court of Appeals
pointed out that the expert witnesses for the petitioner testified that
'Poster Ads' was too generic, making it difficult to connect it to any
particular company. This important recognition that 'Poster Ads'
could not be associated with P & D indicated that, in the eyes of the
public, the goods and services linked to the trademark 'Poster Ads'
could not be distinguished from those of other companies. 'Poster
Ads' was classified as generic and inappropriate for trademark
protection, especially since it related to the poster advertising
industry, where the petitioner operated. The term 'secondary
meaning' describes a scenario where a word or phrase, initially not
eligible for exclusive use regarding a product in the market, may
have been used for such a long time and solely by one manufacturer
that, within the industry and among that segment of consumers, the
term has come to represent that the product is associated with that
manufacturer.

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