G.R. Nos. 213365-66, December 10, 2018
ASIA PACIFIC RESOURCES INTERNATIONAL HOLDINGS, LTD., VS. PAPERONE, INC.

FACTS

Petitioner Asia Pacific Resources International Holdings, Ltd., a producer of pulp and premium paper, is the registered owner of the trademark “PAPER ONE,” with a Philippine registration issued in 2003. It alleged that its mark was well-known globally due to aggressive promotion. Petitioner filed a complaint for unfair competition and trademark infringement against respondent Paperone, Inc., a domestic corporation registered with the SEC in 2001, engaged in paper conversion (e.g., manufacturing napkins, notebooks). Petitioner claimed respondent’s use of “PAPERONE” in its corporate name was in bad faith, designed to ride on petitioner’s goodwill and mislead the public into believing an association existed between them.
Respondent countered that it was legally registered with the SEC and DTI, had no obligation to secure petitioner’s consent, and was unaware of petitioner’s mark as the latter was a foreign corporation not doing business in the Philippines. It argued its products did not bear the “PAPERONE” name, were sold locally before petitioner had any Philippine market presence, and thus no public deception was possible. The IPO Bureau of Legal Affairs and the Director General found respondent liable for unfair competition, a ruling reversed by the Court of Appeals, which found no deceptive intent or confusing similarity.

ISSUE

The core issues were: (1) Whether respondent is liable for unfair competition; and (2) Whether petitioner is entitled to actual damages.

RULING

The Supreme Court reversed the CA and reinstated the IPO decision, finding respondent liable for unfair competition. The legal logic centered on the protection of goodwill under Section 168 of the Intellectual Property Code, which safeguards a business’s property right in the public identification of its goods or services, regardless of trademark registration. The Court clarified that unfair competition exists when a party employs deception or any means contrary to good faith to pass off its business or goods as those of another with an established goodwill.
The Court found the essential elements present. First, petitioner established prior goodwill for “PAPER ONE” in the paper industry, evidenced by its international registrations and promotions, creating a property right protectable in the Philippines. Second, respondent’s use of the nearly identical “PAPERONE” in its corporate name, while also being in the paper business, was calculated to misappropriate this goodwill. The deceptive intent was inferred from the confusing similarity of names and the related field of business, which would likely cause public confusion as to the origin of the goods or a business connection. The fact that respondent did not place the name on its products was immaterial; the use in its corporate name alone, within the same industry, sufficed to constitute an act calculated to produce the forbidden result. Regarding damages, the Court affirmed the IPO’s denial of actual damages due to petitioner’s insufficient proof of the claimed loss.