THE USE OF COMPETING MARKS IN AN ECLUSIVELY SPONSORED EVENT

If the event is sponsored by Brand A and a non-sponsor brand e.g. Brand B which is a competing brand gives out tickets to such event wherein the recipient of such tickets are expected to wear or use something with a trademark or trade name of Brand B for brand exposure, would there be any violation or are there any liabilities attached against Brand B?

A good and effective marketing strategy is a very important factor for a business to become successful because it is essential that people or the purchasing public will know the brand as well as the products and services offered by a particular business enterprise.

Marketing strategy is the activity or process set by a business enterprise to make their product and services known to public at large. It aims to have a competitive advantage and dominant position in the market.

To help us answer intelligently the abovementioned scenario, we need first to understand some concepts of the law on trademarks, service marks and trade names relative to the abovementioned scenario. Likewise, we also need to analyze if the actuation of Brand B would be punishable under the said law, is Brand B liable for any damages, what are the rights of the trademarks holders, and is the marketing strategy/s made by Brand B allowed under our law. We also need to know and understand the concept of guerilla and ambush marketing.

In order to protect one’s trademark or trade name or a business trademark or trade name, there must be registration and of course market surveillance if the registered mark was used by a third person without the consent of the owner of such registered mark. Therefore, registration confers protection. The owner needs to be protected to the misuse of his designs. Many similar or related products in the market which will lead to an inevitable confusion to the minds of the purchasing public to the extent that some customers had purchased the product of their choice without noticing that such product is a different one until they get to consume it.  

Section 121.1 to Section 121.3 of Republic Act No. 8293 otherwise known as the Intellectual Property Code of the Philippines or the Law on trademarks, service marks, and trade names defines the following terms:

1.      “Mark” is any visible design capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods;

 

2.      “Collective mark” means any visible sign designated as such in the application for registration and capable of distinguishing the origin or any other common characteristic, including the quality of goods or services of different enterprises which use the sign under the control of the registered owner of the collective mark;

 

3.      “Trade name” means the name or designation identifying or distinguishing an enterprise;

The rights in a mark shall be acquired through registration made validly in accordance with the provisions of R. A. 8293. 1

A certificate of registration shall remain in force for ten (10) years: Provided, That the registrant shall file a declaration of actual use and evidence to that effect, or shall show valid reasons based on the existence of obstacles to such use, as prescribed by the Regulations, within one (1) year from the fifth anniversary of the date of the registration of the mark. Otherwise, the mark shall be removed from the Register by the Office. 2  

The certificate of such registration will be renewable for period/s of ten (10) years of its expiration, provided, that the owner of the trademark shall file a request and shall pay the prescribed fee thereof.

            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 or containers 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.3

The exclusive right of the owner of a well-known mark defined in Subsection 123.1(e) which is registered in the Philippines, shall extend to goods and services which are not similar to those in respect of which the mark is registered: Provided, That use of that mark in relation to those goods or services would indicate a connection between those goods or services and the owner of the registered mark: Provided, further, That the interests of the owner of the registered mark are likely to be damaged by such use.4

Section 155.1 and Section 155.2 of R.A. No. 8293 provides for cases of infringement of a registered mark, to wit;

1. Any person who shall, without the consent of the owner of the register mark use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

2. any person who shall, without the consent of the registered mark, reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.

The abovementioned violators shall be liable in a civil action for infringement by the registrant and infringement is committed regardless of whether there is actual sale of goods or services using the infringing material.

The owner of a registered mark may recover damages from any person who infringes his rights, and the measure of the damages suffered shall be either the reasonable profit which the complaining party would have made, had the defendant not infringed his rights, or the profit which the defendant actually made out of the infringement, or in the event such measure of damages cannot be readily ascertained with reasonable certainty, then the court may award as damages a reasonable percentage based upon the amount of gross sales of the defendant or the value of the services in connection with which the mark or trade name was used in the infringement of the rights of the complaining party.5

The said Act further provides that in cases where actual intent to mislead the public or to defraud the complainant is shown, the court on its discretion of the court may order that the damages to be doubled and an injunction may also granted.

In any suit for infringement, the owner of the registered mark shall not be entitled to recover profits or damages unless the acts have been committed with knowledge that such imitation is likely to cause confusion, or to cause mistake, or to deceive. Such knowledge is presumed if the registrant gives notice that his mark is registered by displaying with the mark the words “Registered Mark” or the letter R within a circle or if the defendant had otherwise actual notice of the registration.6

A person who has identified in the mind of the public the goods he manufactures or deals in, his business or services from those of others, whether or not a registered mark is employed, has a property right in the goodwill of the said goods, business or services so identified, which will be protected in the same manner as other property rights. 7

Any person who shall employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be subject to an action therefor. 8

Section 168.3 of R.A. No. 8293 provides that, “In particular, and without in any way limiting the scope of protection against unfair competition, the following shall be deemed guilty of unfair competition:

(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;

(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that such person is offering the services of another who has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature calculated to discredit the goods, business or services of another.

            In addition, R.A. 8293 also provides for a criminal penalty of imprisonment from two (2) years to five (5) years and a fine from P50, 000.00 to P200, 000.00 to be imposed on any person who is found guilty of committing of those prohibited acts mentioned under the said law.

            What is the concept or guerrilla marketing and ambush marketing?

                It was said that the original term was coined by Jay Conrad Levinson in his 1984 book “Guerrilla Advertising” which means advertising strategy that focuses on low-cost unconventional marketing tactics that yield maximum results. In addition, said Guerilla marketing has three (3) elements, to wit;

1.      Promotion of the brand at least possible cost

2.      “Strike-anywhere” mentality; and

3.      Maximum impact in favor of the brand

On the other hand, ambush marketing is being defined as a marketing technique or strategy to connect or introduce their product with a particular event in the minds of a purchasing public without the need to pay sponsorship of said event.

Whether or not, the actuations of Brand B will fall within the concept of either guerrilla or ambush marketing, such actuations or actions cannot be considered as prohibited acts or those acts that are considered trademark infringement as being provided under Republic Act No. 8293 otherwise known as the Intellectual Property Code of the Philippines.

            On the liberal side, as an spectator of that sporting event, I believe that the giving out of free tickets to such event which the recipient of such tickets are expected to wear or use something with a trademark or trade name of Brand B for brand exposure has no violation under the Philippine Law on Trademarks, service marks, and trade names  because what is considered as trademark infringement under the said law is when a person without the consent of the owner used in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or same container or a dominant feature thereof which would likely cause confusion, mistake, or deception upon the purchasing public.

            Therefore, Brand B did not commit any Trademark infringement. We knew for a fact that sponsorship in a sporting event involves a large amount of money and it is one of the marketing strategies employed by large and successful firms to maintain a dominant position or status in the market. However, small business enterprises, which do not have enough capital or money cannot afford to sponsor such similar event, must be given equal business opportunities to introduce their product in the market to help their business grow and achieve a dominant position in the market. In addition, almost all large firms have started from being small ones, and so it would be just that they should also give the small business enterprise the opportunity to at least promote their product or brand.

            Futhermore, there is no liability attached upon Brand B who gave those tickets to the spectators even if by giving those tickets the latter is expected to wear or use something with a trademark or trade name of Brand B. No liability on the part of Brand B regardless of the fact that its brand is a competing brand of Brand A for the reason that Brand B has no contract with the event organizer nor with Brand A. Of course it would be a different scenario if before hand it was announced to the public or to those who purchases the ticket or clearly indicated on the ticket a prohibition to that effect.

            Article 22 of the Civil Code provides that, “ Every person who through an act or performance by another, or any other means, acquires or comes into possession of something  at the expense of the latter without just cause or legal ground shall return the same to him.” This provision speaks of unjust enrichment. However, I think this provision on unjust enrichment will not be applicable in the scenario given because Brand B had purchased the tickets with the intention to give to others and in return those who were given tickets will wear or use something containing his brand. Therefore, Brand B did not unjustly enrich himself at the expense of Brand A, and besides there is no law punishing the acts of Brand B. As we all know that when there is no law prohibiting such acts, then a person cannot be held civilly or criminally liable.

            Likewise, being a spectator or a recipient of that ticket/s given by Brand B to watch the sporting event sponsored by Brand A with a condition that he should wear or use something with a trade name or trade mark of Brand B has also no liability with Brand A nor with the event organizer because the ticket did not show any prohibition to that effect. As along as a person has the ticket, he has then the right to enter in the venue and watch the sporting event.  

            However, I believe that Brand A has recourse on the sporting event organizer. Though it will not fall under the infringement of registered trademarks, service names, or trade names under Republic Act No. 8239, otherwise known as the Intellectual Property Code of the Philippines, Brand A will be entitled to recover damages or any other recourse would be available in favor of Brand A as against such sporting event organizer. Brand A has paid a large amount of money to sponsor the event with the understanding that his product or services will be promoted. Even if there is no express stipulation in the contract as between Brand A and the sporting event organizer as to the exclusivity of the event, it is implied that Brand A will be the only brand on a particular line of product that would be promoted, otherwise, he would not have invested large amount of money just to sponsor such event. Unless the contract itself has an express stipulation with regards to non-exclusivity wherein competing brands will be allowed also to promote on such event.

            The organizer of the sporting event will then be liable for damages for breach of contract because it is implied in the scenario that there was a contract between Brand A and the organizer of the sporting event for the exclusivity of Brand A to promote to the exclusion of all other brands on the same line of product. As what is being stated in Article 1305 of the Civil Code that, “a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.” It is very clear from that provision that there is already a contract even just by meeting of the minds between two persons and there is no need to execute a document in writing to have a contract.

            As a result of the breach of contract, Brand A will be entitled to damages as against the organizer of the sporting event. Article 1170 of the Civil Code provides that, “those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.”

            I personally believe that the amount paid by Brand A to sponsor the sporting event is a property right, therefore, it needs to be protected. As a property right, it therefore has the right against the organizer of the sporting event.

            Section 1, Article III of the 1987 Constitution provides that, “No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.”

            The Human Relations provision specifically Art. 19 of the Civil Code were likewise violated by the organizer of the sporting event. This Article provides that, “Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.”

           

           

 

 

 

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FOOTNOTES

1. Sec. 122, Republic Act 8293, otherwise known as the Intellectual Property Code of the Philippines

2. Sec. 124, ibid.

3. Sec. 147.1, ibid.

4. Sec. 147.2, ibid.

5. Sec. 156.1, ibid.

6. Sec. 158, ibid.

7. Sec. 168.1, ibid.

8. Sec. 168.2, ibid.

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