G.R. Nos. 177974, 206121, 219072 and 228802. August 17, 2022.
CYMAR INTERNATIONAL, INC., PETITIONER, VS. FARLING INDUSTRIAL CO., LTD., RESPONDENT.

FACTS

The consolidated cases originated from a 1994 petition by Farling, a Taiwanese corporation, seeking the cancellation of five trademark registrations for “FARLIN” and related labels owned by Cymar, a Philippine corporation, covering various baby products. Farling claimed prior global use and registration of the “FARLIN” mark, alleging Cymar’s registration was fraudulent and violated the Paris Convention, as Cymar was allegedly once its distributor. Cymar defended its registrations, asserting it was the first actual user of the mark in the Philippines since 1983 and that Farling, as an unlicensed foreign corporation, lacked capacity to sue.
The Bureau of Legal Affairs of the Intellectual Property Office (BLA-IPO) initially denied Farling’s petition in 2002, ruling that Cymar’s prior actual use in the Philippines was paramount under the old Trademark Law. This decision was reversed by the IPO Director General in 2009, who cancelled Cymar’s marks, finding Farling to be the true owner based on prior global use and the well-known status of its mark. The Court of Appeals affirmed this reversal. Cymar elevated the matter to the Supreme Court, which also later reviewed subsequent related petitions concerning the mark’s use on additional goods.

ISSUE

The core issue is whether Farling, a foreign corporation, has a superior right to the “FARLIN” trademark in the Philippines over Cymar, the domestic registrant and claimed first user in the local market.

RULING

The Supreme Court ruled in favor of Farling, affirming the cancellation of Cymar’s trademark registrations. The Court’s legal logic centered on the principle of territoriality coupled with the protection of well-known marks under the Paris Convention, as incorporated into Philippine law via the Intellectual Property Code (IPC).
The Court held that while trademark rights are generally territorial and acquired through registration or use within the country, this principle is not absolute. An exception exists for well-known marks, which are protected even without local registration or use, to prevent consumer confusion and unfair practices like trademark piracy. The Court found Farling’s “FARLIN” mark to be well-known internationally prior to Cymar’s local registration. Evidence, including worldwide registrations, extensive global advertising, and export documents, established the mark’s international renown. Crucially, the Court found that Cymar, having acted as Farling’s distributor, registered the mark in bad faith with full knowledge of Farling’s prior rights.
Therefore, Cymar could not claim ownership based on prior use in the Philippines, as its use was not in good faith. The registrations were correctly cancelled for violating statutory provisions prohibiting the registration of marks identical to a well-known mark and for being filed in bad faith. The Court emphasized that the protection of well-known marks is a fundamental state policy aimed at securing fairness in trade and fulfilling treaty obligations.