GR 169974; (April, 2010) (Digest)
G.R. No. 169974 ; April 20, 2010
Superior Commercial Enterprises, Inc., Petitioner, vs. Kunnan Enterprises Ltd. and Sports Concept & Distributor, Inc., Respondents.
FACTS
Petitioner Superior Commercial Enterprises, Inc. (SUPERIOR) filed a complaint for trademark infringement and unfair competition against respondents Kunnan Enterprises Ltd. (KUNNAN) and Sports Concept & Distributor, Inc. The complaint alleged SUPERIOR’s ownership and prior use of the trademarks “KENNEX” and “PRO KENNEX,” supported by its certificate of registration. SUPERIOR claimed KUNNAN, its former principal, and its new distributor, Sports Concept, were selling goods using these marks, causing confusion.
KUNNAN disputed SUPERIOR’s ownership, asserting it was the true creator and first user of the “PRO KENNEX” mark globally since 1976. KUNNAN argued that SUPERIOR was merely its exclusive Philippine distributor from 1982 to 1991. It presented a Distributorship Agreement wherein SUPERIOR agreed to assign the “KENNEX” trademark registration to KUNNAN. KUNNAN further claimed SUPERIOR fraudulently registered the marks in its own name and deceived KUNNAN into executing an assignment of its “PRO KENNEX” applications.
ISSUE
The core issue was whether SUPERIOR was the lawful owner of the disputed trademarks, thereby entitling it to legal protection against alleged infringement and unfair competition by KUNNAN.
RULING
The Supreme Court ruled in favor of KUNNAN, affirming the Court of Appeals’ dismissal of the complaint. The legal logic centered on the principle that a certificate of registration is merely prima facie evidence of ownership, which can be rebutted by evidence of superior right. The Court found that KUNNAN successfully overturned the presumption from SUPERIOR’s registration.
The Distributorship Agreement was pivotal. Its “Whereas” clauses and specific provisions demonstrated KUNNAN’s pre-existing intent to acquire ownership of the mark registered by SUPERIOR and SUPERIOR’s contractual obligation to assign it. This established that SUPERIOR’s registration was merely held in trust for KUNNAN, the true owner. The subsequent Assignment Agreement for “PRO KENNEX” applications, procured under circumstances suggesting deception, did not legitimize SUPERIOR’s claim but instead reinforced KUNNAN’s original ownership. Since KUNNAN proved itself as the actual owner and prior user of the trademarks, SUPERIOR, as a mere distributor-turned-registrant in bad faith, acquired no valid rights. Consequently, SUPERIOR had no cause of action for infringement or unfair competition against the true owner, KUNNAN, and its authorized distributor.