G.R. No. 211850, September 8, 2020
ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D., AND STYLE OF ZUNECA PHARMACEUTICAL, PETITIONERS, VS. NATRAPHARM, INC., RESPONDENT.

FACTS

Petitioners Zuneca Pharmaceutical, Akram Arain, and Venus Arain (Zuneca) have been importing and marketing generic drugs in the Philippines since 1999. For its anti-convulsant drug carbamazepine, Zuneca procured a Certificate of Product Registration from the Bureau of Food and Drugs (now FDA) on April 15, 2003, under the brand name “ZYNAPS,” and began local sales in 2004. Zuneca did not register the “ZYNAPS” trademark with the Intellectual Property Office (IPO). Respondent Natrapharm, Inc. (Natrapharm) registered the trademark “ZYNAPSE” with the IPO on September 24, 2007, for its stroke treatment drug citicoline. Natrapharm conducted a database search for similar products prior to registration, which yielded negative results, and later procured a Certificate of Product Listing from the FDA. Both parties advertised in the same pharmaceutical publications and conventions, though witness testimony indicated Natrapharm’s “ZYNAPSE” was not listed alongside Zuneca’s “ZYNAPS” in the Philippine Pharmaceutical Directory. After failed negotiations regarding the similarity of their marks, Natrapharm filed a Complaint for trademark infringement. The trial court and the Court of Appeals ruled in favor of Natrapharm, holding that trademark ownership is acquired by prior registration in good faith with the IPO, not by prior use.

ISSUE

Whether the ownership of a trademark for pharmaceutical products should be determined solely by prior registration with the Intellectual Property Office, or whether such determination must also consider compliance with food and drug safety regulations and the constitutional principle that property use bears a social function.

RULING

The dissenting opinion argues that the case presents an exception to the general rule of “first-to-file.” It posits that for trademarks used on medicines, ownership should not be conclusively acquired by prior registration with the IPO alone. Registration must be in good faith, which, for pharmaceuticals, requires consideration of laws regulating public health and safety, such as those enforced by the FDA. The right to use a trademark on a drug is conditioned upon compliance with safety regulations. The State has a constitutional duty (Article XII, Section 6) to ensure property use serves the common good, which extends to intellectual property and the regulation of the pharmaceutical industry. Therefore, the Intellectual Property Code’s provisions on trademark ownership must be read in conjunction with social legislation protecting public health. The dissenting opinion also notes that Natrapharm was proven to have actual knowledge of Zuneca’s drug, further complicating the good faith assessment. It concludes that a holistic reading of the law should prevent a registration that essentially trumps prior FDA approval and actual use of a similar mark for a similar product.