G.R. No. L‑1999

FACTS
– A. S. Watson & Co., Ltd., a British corporation, manufactured and sold aerated waters in bottles embossed with its registered trademark (the words “A. S. Watson and Company, Limited” together with a unicorn, dragon and pagoda).
– The bottles were sold with a deposit slip, allowing the purchaser to return the empty bottle for a refund.
– Vicente Manuel, the accused, purchased such bottles (or identical ones) and refilled them with his own aerated waters, affixing his own labels that identified his product.
– The bottles retained Watson’s embossed trademark; only the exterior label bore Manuel’s name and product description.
– Watson alleged that Manuel’s bottles gave his goods the “general appearance” of Watson’s product, constituting “unfair competition” under Sec. 7 of Act No. 666.
– The trial court convicted Manuel, imposing a fine and costs.

ISSUE
Whether Manuel’s use of bottles bearing Watson’s trademark, albeit with his own labels, constitutes “unfair competition” under Sec. 7 of Act No. 666, requiring proof of an intent to deceive the public or to defraud the competitor.

RULING
The Court held that:

1. Sec. 7 penalizes the act of giving one’s goods the general appearance of another’s with intent to deceive. Such intent may be inferred from substantial similarity, but the inference must be supported by evidence that the ordinary purchaser is likely to be misled.

2. The only striking feature of Watson’s bottlesthe embossed trademarkwas plainly visible, yet Manuel’s labels, though less prominent, identified his own product. An ordinary purchaser who examined the label would not be compelled to rely solely on the embossed device; the presence of a distinct label defeats the inference of deception.

3. The bottles, once sold, became the property of the purchaser. Watson’s trademark registration covered the goods (the aerated water), not the empty bottles themselves. No evidence showed that Manuel stole, misappropriated, or intended to appropriate Watson’s trademark as his own.

4. Consequently, the factual circumstances did not satisfy the statutory requirement of actual intent to deceive or the necessary inference thereof.

The conviction was therefore reversed, and the defendant acquitted of the charge of unfair competition, with costs awarded to both parties de officio.