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Shangri-La Internaional vs. Court of Appeals

[G.R. No. 111580. June 21, 2001]

Facts:

The Shangri-La International Hotel Management, Ltd., Shangri-La Properties,

Inc., Makati Shangri-La Hotel and Resort, Inc. and Kuok Philippine Properties, Inc.(hereinafter collectively referred as the Shangri-La Group), filed with the Bureau of

Patents, Trademarks and Technology Transfer (BPTTT) a petition, docketed as Inter

Partes Case No. 3145, praying for the cancellation of the registration of the Shangri-Lamark and S device/logo issued to the Developers Group of Companies, Inc., on the

ground that the same was illegally and fraudulently obtained and appropriated for the

latters restaurant business.

The Shangri-La Group alleged that it is the legal and beneficial owners of thesubject mark and logo; that it has been using the said mark and logo for its corporate

affairs and business since March 1962 and caused the same to be specially designed for

their international hotels in 1975, much earlier than the alleged first use thereof by the

Developers Group in 1982. It claims that this mark is internationally well-known and isprotected under the Paris Convention. On the other hand, Developers is the registered

owner of the mark Shangri-La and S Logo in the Philippines under Regn. No. 31904issued on May 31, 1983, which it started using in 1982.

Likewise, the Shangri-La Group filed with the BPTTT its own application for

registration of the subject mark and logo. The Developers Group filed an opposition tothe application.

Almost three (3) years later, or on April 15, 1991, the Developers Group instituted

with the Regional Trial Court of Quezon City, Branch 99, a complaint for infringement

and damages with prayer for injunction. The Shangri-La Group moved for the suspensionof the proceedings in the infringement case on account of the pendency of the

administrative proceedings before the BPTTT. This was denied by the trial court in aResolution issued on January 16, 1992. The Shangri-La Group filed a Motion forReconsideration. Soon thereafter, it also filed a Motion to Inhibit against Presiding Judge

Felix M. de Guzman. On July 1, 1992, the trial court denied both motions.

The Shangri-La Group filed a petition forcertiorari before the Court of Appeals,docketed as CA-G.R. SP No. 29006. On February 15, 1993, the Court of Appeals

rendered its decision dismissing the petition for certiorari. The Shangri-La Group filed a

Motion for Reconsideration, which was denied on the ground that the same presented no

new matter that warranted consideration. Hence, the instant petition

Issue:

Whether or not Shangri-La International Hotel, etc. al. (Shangri-La Group)

committed trademark infringement against Developers Group of Companies, Inc.

(Developers) for its use of SHANGRI-LA mark and S device/logo?

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Held:

The Court ruled that Developers use of the SHANGRI-LA mark and S logo

was in evident bad faith and cannot therefore ripen into ownership. The Court said:

...It is truly difficult to understand why, of the millions of terms and combination ofletters and designs available, the respondent had to choose exactly the same mark and

logo as that of petitioners, if there was no intent to take advantage of the goodwill ofpetitioners mark and logo.

One who has imitated the trademark of another cannot bring an action forinfringement, particularly against the true owner of the mark, because he would be

coming to court with unclean hands. Priority is of no avail to the bad faith plaintiff. Good

faith is required in order to ensure that a second user may not merely take advantage ofthe goodwill established by the true owner.

Under Section 2, in order to register a trademark, one must be the owner thereof

and must have actually used the mark in commerce in the Philippines for 2 months priorto the application for registration. Since "ownership" of the trademark is required for

registration, Section 2-A of the same law sets out to define how one goes about acquiring

ownership thereof.

Additionally, it is significant to note that Section 2-A does not require that theactual use of a trademark must be within the Philippines. Hence, under R.A. No. 166, as

amended, one may be an owner of a mark due to actual use thereof but not yet have the

right to register such ownership here due to failure to use it within the Philippines for twomonths.

DGCI's registration of the subject mark and logo was void due to the existence of

bad faith and the absence of the requisite 2-month prior use.