Microsoft Corp. v. Microsoft Manufacturing Corp.

[SEC-SICD * CASE NO. 01-95-4964. September 17, 1996.] MICROSOFT CORPORATION , petitioner , vs . MICROSOFT MANUFACTURING CORPORATION , respondent . D E C I S I O N This is an action which seeks to require the respondent to change its corporate name and to desist from further using the word "MICROSOFT" as part of respondent's corporate name. In support thereof petitioner alleges that it is a corporation organized under the laws of the State of Washington, United States of America not presently doing business in the Philippines; that respondents is a domestic corporation organized and existing under the laws of the Republic of the Philippines; that since its founding in 1975, petitioner has designed, developed, marketed and supported a broad product line of microcomputer related products for personal, business and professional use under the name of "MICROSOFT CORPORATION" using the trademark and trade name "MICROSOFT", namely: a. System products including operating software, user interface software and local area network (LAN) management software; b. Applications software including word, processing software, spreadsheet software, database software, recreational software and language software such as compilers and assemblers; c. Hardware including mouse pointing devices; and d. Reference and instructional materials in book and optically readable (CD-ROM) form on software and computer related topics. That petitioner is one of the world's largest developers of microcomputer software with annual worldwide sales revenues exceeding US$4,600,000,000 and corporate assets exceeding US$5,000,000,000 in value that petitioner's computer software is running on over 50,000,000 computers throughout the world; that petitioner has subsidiaries which sell and support its products in 45 countries, has dealers and sales representatives in at least 53 countries, including the Philippines, and sells products in many more countries and all of petitioner's products and their packaging bear the MICROSOFT designation. That petitioner, its subsidiaries, distributors and dealers have extensively promoted the MICROSOFT mark in association with petitioner and petitioner's products throughout the world; that as a result of petitioner's marketing and sales activities and the extensive notoriety given the "MICROSOFT" mark and its associate products, the "MICROSOFT" name has gained a very strong reputation and acceptance not only in the Philippines, but throughout the world. That "MICROSOFT" is a registered trademark and trade name of petitioner in the United States and other countries and the "MICROSOFT" mark is registered or is in the process of registration in 85 countries in International Class 9, 16, 41 and 42 or the corresponding local classes; that petitioner is also the registered owner of the "MICROSOFT" trademark and trade name in the Philippines with the registration details as follows: Trademark : MICROSOFT Registration No. : 51533 Date Filed : 23 May 1990 Date Registered : 18 September 1991 Class : 9 Trademark : MICROSOFT Registration No. : 51510 Date Filed : 23 May 1990 Date Registered : 18 September 1991 Class : 42 Trademark : MICROSOFT Registration No. : 51729 Date Filed : 23 May 1990 Date Registered : 5 November 1991 Class : 16 On March 17, 1986, respondent, without petitioner's consent, authority, or license and with obvious knowledge of the worldwide fame of petitioner's name, incorporated a local company with the name "MICROSOFT MANUFACTURING CORPORATION" the primary purpose of which is to engage in manufacturing. Moreover, petitioner averred that when respondent filed its incorporation papers with the Commission, it submitted a written undertaking "to change its corporate name in the event that another person, firm, or entity has acquired a prior right to the use of said name of one similar to it." It is clear that petitioner has a prior right to the use of the name "MICROSOFT CORPORATION" as evidenced by its long and extensive worldwide use thereof coupled with its use and registration of the word MICROSOFT as a trademark and trade name in many countries; that the identity of respondent's corporate name with that of petitioner is likely to cause confusion in the minds of the public and particularly the business community regarding the identities of the parties and will also result in unfair competition to the irreparable damage of petitioner and confusion as to whether or not the parties are affiliates. The goodwill and business reputation developed and acquired by petitioner through the years by its continued use and advertisement of the name "MICROSOFT CORPORATION" is likely to be impaired if respondent is allowed to use the same name; that the Philippines and the United States are signatories of the Paris Convention for the Protection of Industrial property as revised at Lisbon in 1958 (hereinafter "the Paris Convention") which provides in part that: cdll Article I (1) The countries to which the present convention applies constitute themselves into a union for the protection of industrial property; (2) The protection of industrial property is concerned with patents, utility models industrial designs, trademarks, service marks, tradenames and indications of source or appellations of origin and the repression of unfair competition . . . Petitioner argued that the respondent's unauthorized appropriation of petitioner's name "MICROSOFT CORPORATION" calls for the application of the aforecited provisions of the "Paris Convention." Furthermore, petitioner, asserted that respondent since its incorporation has not: a) filed any of the yearly reports required by this Commission such as the General Information Sheet except for that filed immediately after its incorporation in 1986; (b) filed any financial statements since 1986; and (c) registered its stock and transfer book. The process server certified that summons could not be served on respondent because it could not be located in the address on file with this Commission. That having been the case, petitioner filed for leave to serve the summons by publication. In the Order of June 30, 1995, the Commission granted petitioner's motion to serve summons by publication. Despite service of summons by publication, respondent did not file any answer. Consequently. upon motion of petitioner and by Order of November 21 1995, respondent was declared in default. A hearing was conducted on December 21, 1995 and petitioner presented one (1) witness in the person of Atty. Anthony Bengzon. In the instant case, petitioner seeks to enforce; respondent's undertaking to change its corporate name. (Section 18 of the Corporation Code) to wit: 1. The petitioner corporation acquired a prior right over the use of a corporate name; and 2. The corporate name is either, (a) identical or (b) deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law; or (c) patently deceptive, confusing or contrary to existing law. . There is no doubt that the corporate name in question resembles each other principally on the use of the words "MICROSOFT CORPORATION". It has been held that a corporation can no more use a corporate name in violation of the rights of others that an individual can use his name legally acquired so as to mislead the public and injure another (Arlington v. Palmer, 21 Rl 109, 42 A 308). Moreover, the rule is well settled that the right to the exclusive use of a corporate name with freedom from infringement by similarity is determined by priority of adoption. (1 Thompson, p. 80, citing Munn v. Americana Co., 82 N Eq. 63, 88 Atl. 30; San Francisco Oyster House v. Mihich. 75 Wash. 274; 134 Pac. 921). In this regards, there is no doubt with respect to petitioner's prior adoption of the name "MICROSOFT" as part of its corporate name. It is also significant to note that even the Director of the Bureau of Patents, Trademarks and Technology Transfer had approved the registration of petitioner's trademark and service mark "MICROSOFT" for computer programming services. Having registered the trademark and tradename "MICROSOFT" in the United Kingdom in 1982 and in the United States in 1983, petitioner is entitled to protection and has the exclusive right to use the name "MICROSOFT". "What is lost sight of, however is that PHILIPS is a trademark or trade name which was registered as far back as 1922. Petitioners, therefore, have the exclusive right to its use which must be free from infringement by similarity. A corporation has an exclusive right to the use of its name, which may be protected by injunction upon a principle similar to that upon which persons are protected in the use of trademarks and tradenames (18 C.J.S. 574). Such principle proceeds upon the theory that it is a fraud on the corporation which has acquired a right to the name and perhaps carry its business thereunder, that another should attempt to use the same name, or the same name with a slight variation in such a way as to induce persons to deal with it in the belief that they are dealing with the corporation which had given a reputation to the name (6Fletcher [perm Ed]. Pp 39-40, citing Borden Ice Cream Co v. Borden's Condense Milk Co., 210 F 510). Notably too, Private Respondent's name actually contains only a single word, that is "STANDARD", different from that of Petitioners inasmuch as inclusion of the term "Corporation" or "Corp". Merely serves the purpose of distinguishing the corporation from partnerships and other business organizations. (Philips Export B.V et al. vs. Court of Appeals et al., G.R. No. 96161, February 21, 1992). Petitioner's name is also entitled to protection by the Paris Convention on Industrial Property to which the Philippines is a member. In the case of Puma Sportschuhfabriken Rudolf Dassler, K.G. vs. Intermediate Appellate Court, G.R. No. 75067, February 26, 1988, it has been held that the "ruling in the case of Converse Rubber Products Inc. (147 SCRA 165) is in consonance with the Convention of the Union of Paris for the Protection of Industrial Property to which the Philippines became a party on September 27, 1985, Article 8 thereof, provides that a trade name (corporate name) shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of the trademark." We see the reason presented by the petitioner that the goodwill and business reputation developed and acquired through the years by its continued use and advertisement of the name "MICROSOFT CORPORATION" and mark "MICROSOFT" is likely to be impaired if respondent is allowed to use its name. The subsequent appropriation of the name or one confusingly similar thereto usually seeks an unfair advantage, a free ride on another's goodwill. "As a general rule parties organizing a corporation must choose a name at their peril and the use of a name similar to one adopted by another corporation, whether a business or a non-business or non-profit organization if misleading and likely to injure it in the exercise of its corporate functions regardless of intent, may be prevented by the corporation having the prior right, by a suit for injunction against the new corporation to prevent the use of the name (American Gold Star Mothers, Inc. vs. National Gold Star Mothers Inc., et al. 89 App Dc 209, 191 F 2d 488)" WHEREFORE, considering the foregoing, respondent is hereby ordered to ,change its corporate name to another name by amending its articles of incorporation in accordance with Section 16 of the Corporation Code of the Philippines within thirty (30) days from finality thereof. Considering that respondent is in default, should respondent fails to voluntarily change its corporate name within the period prescribed, let the records of the respondent with this Commission reflect this Decision and the word "MICROSOFT" be deleted accordingly from its corporate name or in the event that it is not legally permissible, the Commission shall suspend and/or revoke the corporate franchise of a respondent. CSTcEI Let a copy of this Decision be furnished Corporate and Legal Department and Records Division of the Commission for their information and guidance. SO ORDERED. (SGD.) ELPIDIO S. SALGADO Hearing Officer