IP News

SC Dismisses Unfair Competition Complaint Against LIVE’s Jeans Manufacturer

January 14, 2009

The Supreme Court has affirmed the dismissal of a complaint for unfair competition filed by Levi Strauss (Phil.), Inc. against the manufacturer of LIVE’s jeans, stating that unfair competition in this case must be determined at the point of sale.

In a decision promulgated on December 4, 2008 (G.R. No. 162311), the High Court agreed with the findings of the Court of Appeals that “the existence of some similarities between LIVE’s jeans and LEVI’s garments would not ipso facto equate to fraudulent intent” on the part of the manufacturer of LIVE’s jeans, as the former “used affirmative and precautionary distinguishing features in his products for differentiation.” In finding this, the appellate court “considered the spelling and pronunciation of the marks; the difference in the designs of the back pockets; the dissimilarity between the carton tickets; and the pricing and sale of [LEVI’s] products in upscale exclusive specialty shops.”

The Supreme Court, likewise, agreed with the appellate court’s rejection of LEVI’s “theory of post-sale confusion” and instead relied on the view that the probability of deception in unfair competition must be determined on a case to case basis, which in this case was “at the point of sale.”

Citing the words of the appellate court, the High Court said:

“No inflexible rule can be laid down as to what will constitute unfair competition. Each case is, in the measure, a law unto itself. Unfair competition is always a question of fact. The question to be determined in every case is whether or not, as a matter of fact, the name or mark used by the defendant has previously come to indicate and designate plaintiff’s goods, or, to state it in another way, whether defendant, as a matter of fact, is, by his conduct, passing off defendant’s goods as plaintiff’s goods or his business as plaintiff’s business. The universal test question is whether the public is likely to be deceived.

In the case before us, we are of the view that the probability of deception must be tested at the point of sale since it is at this point that the ordinary purchaser mulls upon the product and is likely to buy the same under the belief that he is buying another. The test of fraudulent simulation is to be found in the likelihood of deception or the possibility of deception of some persons in some measure acquainted with an established design and desirous of purchasing the commodity with which that design has been associated.”

The licensor of LEVI’s jeans in the Philippines had lodged a complaint against the manufacturer of LIVE’s jeans in 1995 claiming that LIVE’s products were colorable imitations of LEVI’s. After finding there was no probable cause to show that the respondent had committed unfair competition, the Department of Justice (DOJ) dismissed the charges against the manufacturer of LIVE’s jeans. This dismissal was affirmed by the Court of Appeals and the Supreme Court, which respected the DOJ’s exercise of discretion in determining there was no probable cause to prosecute him for unfair competition.

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