G.R. No. L-19906; April 30, 1969
STERLING PRODUCTS INTERNATIONAL, INCORPORATED, plaintiff-appellant, vs. FARBENFABRIKEN BAYER AKTIENGESELLSCHAFT, and ALLIED MANUFACTURING AND TRADING CO., INC., defendant-appellants.

FACTS

Sterling Products International, Inc. (SPI) and Farbenfabriken Bayer Aktiengesellschaft (FBA) are both using the trademarks “BAYER” and “BAER CROSS IN CIRCLE” in the Philippines. SPI uses them for medicines (Bayer Aspirin, Aspirin for Children, Cafiaspirina). FBA, through Allied Manufacturing & Trading Co., Inc., uses them for industrial and agricultural chemicals like “Folidol.” SPI sought to cancel FBA’s registration of the mark for non-medicinal products from the supplemental register, while FBA sought to cancel SPI’s registration for medicines from the principal register. The trademarks originated from Friedrich Bayer’s German company. Due to World War I, the U.S. Alien Property Custodian seized the assets of The Bayer Co., Inc. of New York (a German subsidiary) and sold them to Sterling Drug, Inc., SPI’s parent. Agreements in 1923 divided trademark rights, giving the U.S. company (and later SPI) rights in the Philippines for medicines and aspirin, and the German company (FBA’s predecessor) rights for other products. These agreements were later declared unlawful under U.S. anti-trust laws, but the decrees preserved the parties’ rights to the trademarks. SPI registered the trademarks in the Philippines in 1939. FBA’s products bearing the mark were sold in the Philippines before World War II through Winthrop Chemical Co., Inc., which was distributing for the German company.

ISSUE

The core issue is which party has the right to use the trademarks “BAYER” and “BAYER CROSS IN CIRCLE” in the Philippines, and whether there is trademark infringement or unfair competition.

RULING

The Supreme Court modified the trial court’s decision. It held that SPI is the exclusive owner of the trademarks “BAYER” and “BAYER CROSS IN CIRCLE” for all products in the Philippines. The Court ordered the cancellation of FBA’s registration from the supplemental register and enjoined FBA from using the trademarks. The Court also ordered SPI to clearly indicate on its medicinal products that they are manufactured by or for SPI in the U.S.A. The ruling was based on the following: SPI acquired valid title through the 1919 purchase from the Alien Property Custodian and subsequent Philippine registrations in 1939. FBA’s use of the mark in the Philippines for non-medicinal products before the war did not establish prior use because it was done through Winthrop, which was acting as a distributor for the German company, not as an owner of the mark. The 1923 agreements, though later declared unlawful, effectively divided the world market and recognized the U.S. company’s rights in the Philippines. FBA’s registration on the supplemental register did not confer ownership rights, as it is merely a record of claims of ownership. SPI’s use of the mark for medicines had acquired a secondary meaning, identifying its goods. Allowing FBA to use the same mark for different but related chemical products would cause confusion.