April 13, 2015

Abbott Laboratories, the company responsible for bringing the nutrition drink ENSURE, which is popular among seniors and the elderly, has suffered a set back in the Philippines in relation to its infant formula bearing the trademark EYE-Q.  A local businessman applied for the trademark EYE Q in connection with school and office supplies in Class 16.  Abbott opposed the application claiming that it is the first to use and register the trademark EYE-Q in the Philippines in connection with infant formula.  Abbott alleged that since the application covers an identical trademark, registration is barred by Sections 123.1(d) to (g) of the IP Code.  Abbott further argued that the goods covered by the application are within its natural zone of potential business expansion.

The BLA rejected the opposition convinced that no consumer can possibly be deceived by the Applicant’s trademark and mistakenly purchase the Applicant’s goods while intending to purchase the Abbott’s goods.  On appeal, the Director General upheld the dismissal noting that the parties’ trademarks cover different and unrelated goods thereby negating likelihood of confusion.  The Director General rejected Abbott’s argument that the Applicant’s goods, i.e. school and office supplies, are within its natural zone of business expansion.  It noted that Abbott failed to explain why dealing with office supplies can be considered a normal expansion of its infant formula business.

Subsequently, Abbott went up to the Court of Appeals to question the Director’s ruling (Case No. CA-G.R. SP No. 131908).  Although the Court acknowledged that the parties’ trademarks are identical, it pointed out that the goods are not related as to create confusion.  Noting the two types of confusion, i.e., confusion as to goods and confusion as to business, the Court concluded that there can be no confusion as to goods because the goods involved are not identical, similar or related; that the business of Abbott, sale of EYE-Q infant formula, and that of the Applicant, EYE Q for school and office supplies, are not competing.  With respect to confusion of business, the Court of Appeals opined that such type of confusion may arise if goods or services of the senior user and the junior user are so related as likely to cause confusion of business or origin.  Goods are related when they belong to the same class or have the same descriptive properties, when they possess the same physical attributes or essential characteristics with reference to their form, composition, texture or quality.  They may also be related because they serve the same purpose.  These relatedness attributes are not present in this case; the Court concluded: “There is a whale of a difference between infant formula, on the one hand, and pencils, crayon, water and poster color, rulers, scissors, punchers, staplers, templates, artist brush, chalk, coloring paint, sharpeners, pens, adhesive, fastener, expanding file, paper clips, stamp pad, plastic material for packaging, blades, staple wire, dater, numbering machine, on the other hand.  These two kinds of goods neither belong to the same class nor possess the same physical attributes or essential characteristics with respect to form, composition or quality.  They do not also serve the same purpose…a consumer would find them in separate outlets, locations or stores.  Thus, it is inconceivable for a consumer on the look-out to buy petitioner’s products to be deceived or to commit a mistake into purchasing the respondent’s products or vice versa.”

With these observations, the Court of Appeals seems to have taken extra care to ensure that its conclusion does not change even if the applicant’s trademark is identical to Abbott’s registered trademark.  It reminded the parties that registration is limited to the goods on the registration and those related thereto; that, identical trademark can be used by different manufacturers for products that are non-competing and unrelated.  And, as if to remove all doubt as to this extreme position, the decision concluded that the Supreme Court’s decisions in many cases to the effect that use of an identical mark does not, by itself, lead to a legal conclusion that there is trademark infringement, is still good law.

Commenting on Abbott’s assertion that its mark “EYE-Q” is a fanciful mark, which should have been protected, the Court said that this deserves no consideration because this argument was never raised at the BLA level and even on appeal with the Director General. This assertion has been raised for the first time in this Petition for Review. It is a settled rule that an issue raised for the first time on appeal and not raised seasonably in the proceedings in the lower court or tribunal, in the case before the BLA and the IPO, is barred by estoppel.  The Court found no merit in Abbott’s appeal.

This case appears to have been decided around a single finding of fact, namely, that infant formula is unrelated to office supplies.  Possibly because Abbott neither raised nor forcefully argued for protection based on the strength of its highly arbitrary mark, the Court chose to gloss over that very obvious reality in this case, i.e., the fact that Applicant chose to register a mark that is identical to another mark that is already registered and previously owned by Abbott.  In many other cases, the BLA would express doubt as to the good faith of the junior user or junior applicant whose trademark is an exact copy of a senior user’s registered trademark.  This was not the case here.

And the Court did not examine likelihood of confusion from the point of view of relevant consumers.  In this case, it is obvious that mothers are the relevant purchasers of the EYE-Q infant formula.  And in many households, mothers are also responsible for buying school supplies such as pencils, crayons, water color, scissors, coloring paints – all of which are goods that were designated in the opposed application for EYE Q.  The limited level of scrutiny for likelihood of confusion did not extend to a discussion of the relevant consumers who must be protected from the possibility of mistake or deception.

Also of significance is Abbott’s belated argument based on the fanciful status of the EYE-Q trademark. Since Abbott was unable to rely on the two concepts of confusion (product confusion and business confusion), it therefore sought to bring in a third concept of confusion, one which involves fanciful marks.  In some cases, when a mark is deemed fanciful, this renders unnecessary issues of competition and relatedness of goods (where Abbott’s argument and evidence is weak) on the idea that fanciful marks are the “strongest” of all marks in the spectrum of distinctiveness, and are protected from the moment of use and registration, even against use of an identical mark on all other goods.  Fanciful marks are deemed to create a stronghold on purchasers that these marks by themselves stimulate sales not only for the trademark owners, but also for the infringing non-competitor and infringing manufacturer of unrelated goods.

Unfortunately for Abbott, categorizing a mark in the spectrum of distinctiveness is a factual issue. It should have therefore raised this at the first instance, and its failure to do so estops it from raising it for the first time at the appellate level.