G.R. No. 180677 ; February 18, 2013
VICTORIO P. DIAZ, Petitioner, vs. PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS (PHILS.), INC., Respondents.

FACTS

Petitioner Victorio P. Diaz was charged with two counts of trademark infringement under the Intellectual Property Code. The prosecution alleged that Diaz, through his tailoring shops, manufactured and sold counterfeit jeans bearing Levi Strauss’s registered trademarks, including the arcuate design, the tab, and the two-horse leather patch. Levi Strauss (Phils.), Inc., the licensee, conducted surveillance and, with the NBI, executed search warrants leading to the seizure of alleged fake jeans from Diaz’s establishments. The Regional Trial Court convicted Diaz, and the Court of Appeals dismissed his appeal for the late filing of his appellant’s brief.
Diaz denied the charges, asserting he did not manufacture Levi’s jeans but produced made-to-order jeans under his own registered trademark “LS Jeans Tailoring.” He argued that his products were labeled with his own mark and that the designs were made per customer specifications. He emphasized that his trademark was duly registered with the Intellectual Property Office, which he contended would not have granted registration if his mark was confusingly similar to Levi’s.

ISSUE

Whether the prosecution proved beyond reasonable doubt that Diaz committed trademark infringement by showing a likelihood of confusion between his “LS Jeans Tailoring” products and Levi’s registered trademarks.

RULING

The Supreme Court acquitted Diaz. The gravamen of trademark infringement is the likelihood of confusion between the registered mark and the allegedly infringing mark. The Court applied the dominancy test, focusing on whether the dominant features of the registered mark are copied, leading to consumer confusion. The prosecution’s evidence failed to establish this likelihood. Diaz’s registered mark, “LS Jeans Tailoring,” was distinct. His products bore his own label, and the mere presence of similar stitching patterns (arcuate design) on jeans, a common functional feature, did not constitute infringement without evidence that these features were used as a trademark to cause confusion. The Court noted that the Intellectual Property Office’s registration of Diaz’s mark supported the absence of confusing similarity. Consequently, the State did not meet the quantum of proof beyond reasonable doubt required for a criminal conviction. The dismissal of his appeal by the CA on procedural grounds was set aside in the interest of substantive justice, as the trial court’s conviction was fundamentally erroneous.