GR 159938; (March, 2006) (Digest)
G.R. No. 159938 March 31, 2006
Shangri-La International Hotel Management, Ltd., et al. vs. Developers Group of Companies, Inc.
FACTS
Respondent Developers Group of Companies, Inc. (DGCI) is the registered owner in the Philippines of the “Shangri-La” mark and “S” logo, having secured Certificate of Registration No. 31904 from the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) on May 31, 1983. DGCI used the mark and logo for its restaurant business. Petitioners, comprising the Kuok Group of Companies, are part of an international hotel chain that has used the “Shangri-La” name since 1962 and the stylized “S” logo since 1975 in hotels worldwide. They registered the mark in various countries but began hotel operations in the Philippines only in 1987. Petitioners filed a petition to cancel DGCI’s registration and sought their own registration of the mark.
DGCI filed a complaint for infringement and damages against petitioners before the Regional Trial Court (RTC), alleging that petitioners’ use of a confusingly similar mark for their Philippine hotels violated its exclusive rights as the prior registered user in the country. The RTC ruled in favor of DGCI, a decision affirmed with modification by the Court of Appeals (CA). Petitioners elevated the case to the Supreme Court via a petition for review.
ISSUE
Whether the petitioners, as prior international users of the “Shangri-La” mark and “S” logo, have superior rights over the respondent, the registered owner in the Philippines, thereby negating the claim of trademark infringement.
RULING
The Supreme Court ruled in favor of the petitioners and reversed the CA decision. The Court held that ownership of a trademark is acquired by its registration and use in the Philippines. While DGCI possessed a certificate of registration, the petitioners successfully established that they were the prior and actual users of the mark internationally, and that DGCI’s registration was obtained in bad faith. The Court found that DGCI, aware of the international fame and prior use of the “Shangri-La” mark by the Kuok Group, fraudulently appropriated it for registration in the Philippines.
The legal logic centers on the principle that a registration obtained in bad faith confers no valid rights. The Court emphasized that trademark rights are built on good faith and actual use. Petitioners’ extensive global use since 1962, including advertisements accessible in the Philippines and the maintenance of local booking agents, demonstrated that the mark had acquired goodwill and international renown prior to DGCI’s local registration. Consequently, DGCI’s registration, being tainted by bad faith, did not entitle it to legal protection or to enjoin the petitioners’ use. The petitioners, as the true and prior users, possessed the superior right to use the mark in the Philippines.