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

SEPARATE CONCURRING OPINION, LEONEN, J.

FACTS

This case involves a petition concerning unfair competition under the Intellectual Property Code. The Bureau of Legal Affairs of the Intellectual Property Office and its Director-General found respondent Paperone, Inc. liable for unfair competition. Their finding was based on a straightforward conclusion that both the complainant, Asia Pacific Resources International Holdings, Ltd. (APRIL), and the respondent were engaged in the paper business, selling paper products to the public. This established a relatedness of goods sufficient for a likelihood of confusion under prevailing jurisprudence.
The prevailing legal doctrine recognizes two types of confusion: confusion of goods and confusion of business. The determination of whether goods or services are related—and thus likely to cause confusion—is a highly fact-specific inquiry. Courts and the IPO assess factors such as whether the goods belong to the same class, share physical attributes or purposes, or are sold through the same channels. This case reached the Supreme Court for review of these findings.

ISSUE

Whether the current legal standard for determining the “relatedness of goods or services” in unfair competition and trademark infringement cases is sufficient, or if it should be refined.

RULING

Justice Leonen concurs in the result, agreeing that respondent is liable for unfair competition based on existing jurisprudence. However, he expresses discomfort with the prevailing subjective, ad hoc standard for determining likelihood of confusion. The current test relies on judicial or administrative inferences about similarity in class, physical attributes, purpose, or points of sale.
Justice Leonen proposes that the standard should be improved by incorporating objective, scientific, and economic measures. He suggests that the relatedness of goods in a market should be determined by analyzing consumer preferences and market behavior. Key economic concepts should be considered, such as whether two goods are perfect substitutes (having a constant marginal rate of substitution) or if they demonstrate significant cross-elasticity of demand, where a price change for one good affects the demand for another. Goods proven to be in the same relevant market could be deemed related for confusion analysis, even if they superficially differ in class or purpose. He cites U.S. jurisprudence, like Worthington Foods, Inc. v. Kellogg Co., which considers “reasonable interchangeability” and cross-elasticity of demand to define a relevant market. This more rigorous economic approach would provide a less arbitrary and more evidence-based framework for deciding cases of unfair competition and trademark infringement.