In re Jotun Paints, Inc. & Jotun Powder Coatings, Inc.

August 8, 2005 SEC CASE NO. 02-05-46 IN THE MATTER OF JOTUN PAINTS, INC. & JOTUN POWDER COATINGS, INC. FOR : Petition to Change Name ORDER For consideration of the Commission is the letter-complaint dated 13 January 2005 filed by Jotun A/S ("JOTUN" for brevity) praying that an Order be issued requiring Jotun Paints, Inc. and Jotun Powder Coatings, Inc. to change their corporate names for being identical or deceptively or confusingly similar to that of petitioner and to cancel respondents' certificate of incorporation. Complainant is a corporation duly organized and existing under the laws of Norway, with principal office address at Hystadveien 167, 3200 Sandefjord, Norway. It is primarily engaged in the business of paint manufacturing, coatings and powder coatings. Respondents Jotun Paints, Inc. and Jotun Powder Coatings, Inc. are stock corporations registered on November 11, 1998 with SEC Company Registration No. A199816982 and A199816984 respectively, and with business office at 21/F, Pacific Star Bldg., Makati Avenue, Makati City. The primary purpose of Jotun Paints, Inc. is: "To engage in the business of manufacturing goods such as industrial and household paints and to trade the same on wholesale/retail basis." The primary purpose of Jotun Powder Coatings, Inc. is: "To engage in the business of manufacturing goods such as powder coating paints and to trade the same on wholesale/retail basis." On 13 September 1978, the Intellectual Property Office (IPO) granted JOTUN A/S its trademark and device, "Jotun" covering paints including ship's paint, varnishes, lacquers, preservatives against rust and against deterioration of wood, colouring matter and mordants. The device featured a penguin whose wings are represented by a globe design with a long bar on top containing the mark "Jotun". The trademark was registered for a term of twenty (20) years from 13 September 1978. STEacI On 29 December 1995, complainant decided to file two (2) new trademark applications covering the same classes of goods with the IPO involving the same mark but with a slight change in the device. The device still featured a penguin whose wings are represented by a globe design with a long bar on top. The application was published for opposition in the IPO Official Gazette Volume 1 Number 1 on July 30, 1998. On 13 December 1999, the two (2) applications were approved by IPO for a term of twenty years from said date. On 13 January 2005, complainant filed a letter-complaint alleging that respondents' names are identical, deceptive or confusingly similar to that of petitioner's name. On 17 February 2005, the Commission directed the parties to submit their respective position papers within fifteen (15) days from receipt hereof. Both parties submitted their pleadings. Hence, this petition. ISSUE Whether or not Jotun Paints, Inc. and Jotun Powder Coatings, Inc. are identical or deceptively or confusingly similar to Complainant's trademark Jotun registered with the Intellectual Property Office (IPO). RULING Corporate name is the appellation by which a corporation is designated in the same manner that the name of an individual designates the person. 1 Each corporation has a name by which it is to sue and be sued, and do legal acts. The right to use a corporate name is as much a part of the corporate franchise as any other privilege granted. Section 18 of the Corporation Code of the Philippines provides: "Section 18. Corporate Name No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When the change in corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name." This provision seeks to avoid a situation wherein the corporation adopts at pleasure the name of another corporation resulting in confusion, difficulty in identifying the corporation and unfair competition, thereby opening the doors to fraud and difficulties of administration and supervision. 2 In determining the existence of confusing similarity in the corporate names, the test is whether the similarity is such as to mislead a person using ordinary care and discrimination. It is settled, however, that proof of actual confusion need not be shown. It suffices that confusion is probably or likely to occur. 3 Respondents alleged that complainant's trademark had already expired on September 13, 1998 and was no longer effective on November 11, 1998 when respondents' name carrying the word "JOTUN" was incorporated with the Commission. Respondents further alleged that the word "JOTUN" is a generic term which cannot be appropriated exclusively by the complainant. DECSIT A trademark is defined as "any distinctive work, name, symbol, emblem, sign or device, or any combination thereof adopted and used by a manufacturing or merchant on his goods to identify and distinguished them from those manufactured, sold, or dealt in by other." 4 SEC Memorandum Circular No. 14, Series of 2000 on the Revised Guidelines in the Approval of Corporate and Partnership Names, provides in part, thus: " 13b No. 5 Tradename or trademark duly registered with the Intellectual Property Office can not be used as part of a corporate or partnership name without the consent of the owner of such trademark or tradename . The aforequoted provision of SEC Memorandum Circular No. 14 underscores the protection granted by the Commission to the owners of tradename or trademark duly registered with the IPO. Thus, tradename or trademark may be used solely by its owner as part of its corporate or partnership name to the exclusion of other. A careful review of complainant's name show that "JOTUN DEVICE" was registered as a trademark with the Intellectual Property Office on September 13, 1978 and with a term of twenty (20) years. Furthermore, complainant applied two (2) new trademarks at IPO on December 29, 1995 or exactly 2 years and 9 months prior to the expiration of the old trademark on 13 September 1998. Moreover, the applications were published in the Official Gazette of IPO prior to respondents' incorporation on 11 November 1998. We are convinced that complainant relentlessly pursued the protection of its trademark by filing the said application in December 1995 although said applications were belatedly approved only on December 13, 1999. It shall be construed that the approval of two trademark applications after the expiration of the old trademark shall retroact to 13 September 1998, the expiry date of the old trademark. Thus, it is quite clear in the case at hand that there is continuity of use of trademark granted by IPO to JOTUN. Hence, complainant's right to use the trademark JOTUN deserves protection and cannot be used as part of a corporate or partnership name without the consent of the owner of such trademark or tradename. Furthermore, respondents alleged that the term "JOTUN" cannot be appreciated as trade name or trademark for being a generic term which means "Giant" in Norse Mythology. Generally, a generic, descriptive or common term or symbol may not be registered as a trade-mark or trade name. However, if it is used in an arbitrary or fanciful manner and with no relation to the product it identifies, it may be monopolized and registered as trade-mark or trade name. 5 Generic terms are those which constitute "the common descriptive name of an article or substance or comprise the genus of which the particular product is a specie, or are commonly used as the name or description of a kind of goods, or imply reference to every member of a genus and the exclusion of individuating characters, or refer to the basic nature of the wares or services provided rather than to the more idiosyncratic characteristics of a particular product." 6 In the case at bar, the word JOTUN is an arbitrary generic term. It does not describe any genus of the goods sold by any merchant or the products manufactured by the complainant. It is a plain generic term meaning "Giant" in Norse Mythology. In view thereof, the word JOTUN for paint manufacturing, coatings and powder coatings may be appropriated and registered as trademark for such products. HIETAc Finally, in the registration or amendment of respondents' Articles of Incorporation, the corporation has made an undertaking to change its corporate name in the event another person, firm or entity has acquired a prior right to use the said firm or one deceptively or confusingly similar to it. Considering that complainant has acquired prior right to use the term "JOTUN" as trademark, respondents should now comply with the undertaking to change name to conform with Section 18 of the Corporation Code. WHEREFORE, premises considered, respondents are hereby directed to change or modify its corporate name within thirty (30) days from actual receipt hereof. SO ORDERED. 8 August 2005, Mandaluyong City. (SGD.) VERNETTE G. UMALI-PACO General Counsel Footnotes 1. Ballantine, Law Dictionary, p. 291 2. Red Line Transit vs. Rural Transit , 60 Phil. 549 3. Philips Export B.V. vs. Court of Appeals , 206 SCRA 457, [1992] 4. Section 38, Republic Act No. 166, as amended. 5. Agpalo, The Law on Trademark, Infringement and Unfair Competition, 2000 Edition, p. 29 6. Societe Des Produits Nestle', S.A. and Nestle' Philippines, Inc. v. Court of Appeals , 356 SCRA 207, 222-223, April 4, 2001 Published in the Manila Times on August 22, 2005 .