Connel Bros. Co. Pilipinas, Inc. v. The Connel Company Philippines

[SEC-SICD * CASE NO. 12-94-4944. September 23, 1996.] CONNEL BROS. CO. PILIPINAS INC. , petitioner , vs . THE CONNEL COMPANY PHILIPPINES , respondent . D E C I S I O N In this petition filed under Section 18 of the Corporation Code in relation to Section 21 of the Trademark Law on December 22, 1994, the petitioner Connel Bros. Co., Pilipinas Inc. ("Connell Bros.") alleges in esse that: LexLib 1. Petitioner has invested substantial capital for its business operations in the Philippines. Petitioner's investment now total P41.9 million and its total annual revenues as of the preceding year amounted P53.5 million. Petitioner's corporate name CONNELL has become well-known in the industry. 2. The Company's products are sold throughout the world. As a result the tradename and trademark CONNELL have become well-known in the industry and have been associated with those products sold and distributed by petitioner. 3. Petitioner has been incorporated under its present corporate name since 1982 under Registration Certificate No. 0104148 and has been transacting business under its corporate name since that date. However, the petitioner traces its history in the Philippines to as early as 1899, when John and Morris Connell, the original American owners of Connell Bros. Co. started their trading activities in the Philippines. In 1931, the Wilbur-Ellis Co. bought into Connell Bros. Co. In 1940, Connell Bros. Co. (Philippines) was organized in the Philippines as a joint venture company. Subsequently, Connell Bros. Co. (Philippines) was dissolved in April 1982 and a new company, the petitioner herein, was organized under the name Connell Bros. Co. Pilipinas, Inc.. From its incorporation, Wilbur-Ellis Co. has held 30% of the capital stock of the petitioner, while a new group of Filipinos owned 70% of the same. To date, Wilbur-Ellis Co. holds 40% of the capital stock while the Filipino group holds 60%. As a result of its continuous use in business, the corporate name CONNELL has accordingly become a distinctive name for petitioner to denote its business and the trademark CONNELL has been associated by consumers exclusively with those distributed and sold by petitioner. 4. Respondent, The Connell Company-Philippines ("TCCP") is a foreign corporation organized under the laws of the State of New Jersey, U.S.A. and licensed to do business in the Philippines under SEC Reg. No. AF093-000066 issued on December 15, 1993 with address at c/o 4th Floor, Valero Tower, Valero St., Salcedo Village, Makati City, where it may be served with summons and other processes through its resident agent Mr. Polo Pantaleon. It was organized for the following primary purpose: a. Liaise with potential and existing clients, or organizations who are interested in the Corporation's range of services/products, and with other parties, for the exchange of data, research, and technical knowledge; and b. Act as a center for the support and assistance of the Corporation's staff or principals who are travelling in the area. prLL 5. Although it knew of petitioner's exclusive ownership of the tradename CONNEL, respondent subsequently appropriated and used the confusingly similar name CONNELL as part of its corporate name' without petitioner's consent and used it in the pursuit of its competing and identical business with the evident purpose of riding upon petitioner's corporate name CONNELL. Confusion of the parties' identities, businesses and reputations in the consumer market is not only likely but has in fact already occurred in actual situations. For instance, in one occasion, a food company based in Cebu mistakenly called petitioner's office in Cebu requesting for maintenance service on an equipment sold by the respondent herein. Thus, petitioner prays for the issuance of a temporary restraining order and preliminary injunction enjoining respondent from "using Connell or any other analogous word or imitation of petitioner's name as part of respondent's corporate name, either singly or, in conjunction with other words, designs or emblems and other acts of similar nature" and from "committing other acts which could mislead the public into believing that respondent and its activities are affiliated with or are under the sponsorship of the petitioner". Petitioner also prays for judgment, as follows: a) deleting CONNELL from respondent's corporate name or, in the alternative, cancelling respondent's certificate of registration under the name THE CONNELL COMPANY PHILIPPINES. b) making permanent the preliminary writ of injunction aforesaid. c) sentencing respondent to pay petitioner (i) actual and compensatory damages in the amount of P100,000.00 for the injury and prejudice and impairment of petitioner's business and goodwill as a result of the acts and conduct pleaded as basis of this suit; (ii) exemplary and moral damages in the amount of P50,000.00; (iii) attorney's fees and expenses of litigation in the amount of P50,000.00. After a series of extensions, respondent filed its answer with counter claim on February 7, 1995 and averred: 1. Respondent is a foreign corporation with principal offices at 45 Cardinal Drive, Westfield, New Jersey, U.S.A. On 15 December 1993, respondent was authorized by this Honorable Commission to operate a representative office in the Philippines for the purpose, in part, of liaising with clients who are interested in its broad range of products and services. 2. Respondent is one of several wholly-owned subsidiary companies of the Connell Company ("Connell"), a foreign corporation with principal offices at the same address as respondent. Connell does business worldwide through six divisions and operates at least seven subsidiaries in the Philippines, Taiwan, Thailand and in the U.S.A. 3. Respondent's name derives from the name of its parent company, Connell. Connell was originally incorporated as Connell Rice and Commission Co. in the State of New York, U.S.A. in 1926. It is a leading exporter of rice worldwide and trades in a number of products in the Asia Pacific region, including the Philippines. 4. On 16 January 1973, Connell registered its mark "Connell's with the U.S. patents office. The same mark was registered with the Philippine Bureau of Patents, Trademarks, and Technology Transfer ("BPTT") on 24 July 1991. The mark "Connell's is also registered in the other countries and has become a well-known mark. In its answer with counter claims, respondent prayed for judgment: (a) dismissing the petition and ,denying petitioner's prayer for preliminary and final injunction, for obvious lack of merit; and (b) upon the counterclaims, ordering petitioner to pay respondent: (i) P20,000,000.00 in moral damages; (ii) P10,000,000.00 in exemplary damages; (iii) P1,000,000.00 as attorney's fees; and (iv) P500,000.00 as cost of suit. Under date of February 16, 1995, petitioner filed an Answer (to counterclaim) where it repleaded the affirmative allegations in its petition and prayed that after due hearing, judgment be rendered dismissing the counterclaims for obvious lack of merit. In support of its application for a writ of a preliminary injunction, petitioner presented at an ex parte hearing on January 9, 1995, Mr. Renato Florencio, its president and general manager and the following: LLpr Exhibits Documents "1" Affidavit of Grover Connell "2" Certification of Incorporation and Amend- ments of Connell Rice and Sugar Co., Inc. "3" Certificate of Incorporation of Connell (Taiwan), Ltd. "3-A" Certificate of Incorporation of Connell Foods, Inc. "3-B" Certificate of Incorporation of Connell Rice and Sugar (Thailand), Inc. "3-C" Certificate of Incorporation of Connell Finance Company, Inc. "3-D" Certificate of Incorporation of Connell Securities Corporation "3-E" Certificate of Incorporation of Connell Communications Co. "4" Certificate of Registration of "Connell's" trademark in the United States "5" Certificate of Registration of "Connell's trademark in the Philippines "6" Certificate of Registration of "Connell's" trademark in Aruba "7" Certificate of Registration of "Connell's trademark in Australia "8" Certificate of Registration of "Connell's trademark in Germany "9" Certificate of Registration of "Connell's trademark in Bahamas "10" Certificate of Registration of "Connell's trademark in Benelux "11" Certificate of Registration of "Connell's trademark in Taiwan "12" Certificate of Registration of "Connell's trademark in Denmark "13" Certificate of Registration of "Connell's trademark in France "14" Certificate of Registration of "Connell's trademark in West Germany "15" Certificate of Registration of "Connell's trademark in Italy. "16" Certificate of Registration of "Connell's trademark in Jamaica "17" Certificate of Registration of Connell's trademark in Colony of Montserrat "18" Certificate of Registration of "Connell's trademark in Norway "19" Certificate of Registration of "Connell's trademark in Castries, Santa Lucia "20" Certificate of Registration of "Connell's trademark in Saudi Arabia "21" Certificate of Registration of "Connell's trademark in Spain "22" Certificate of Registration of "Connell's trademark in Sweden "23" Certificate of Registration of "Connell's trademark in Switzerland "24" Certificate of Registration of "Connell's trademark in Trinidad and Tobago "25" Certificate of Registration of "Connell's trademark in the United Arab Emirates "26" Certificate of Incorporation of "The Connell Company-Philippines" in the State of New Jersey. U.S.A. "27" Brochure of the Connell Company "28" Brochure of Connell International Company "29" Brochure showing respondent Scientific products "30" Brochure captions "Connell's We serve the World" "31" "32" Various leaflets and "33" "34" SEC Verification Slip of the proposed name The Connell Company-Philippines with the remark: "available for use" "35" SEC Certification of Corporate Filing/ Information attesting that verifications made on the available records of The Connell Company Philippines on file with the Securities and Exchange Commission ("SEC") show that no undertaking to change name appears in its file. "36", "37", "38" Ads/Brochures used by Connell Inter "39" and "40" national Co. "41" Asia Food Expo '94 Directory "42" Certificate of Authentication of Affidavit of Grover Connell On May 15, 1995, these exhibits were admitted in evidence notwithstanding petitioner's comments/objection dated April 12, 1995. Then, petitioner presented Mr. Guillermo A. Gatdula, Jr., Vice-President for Finance and Administration and Mr. Geminiano V. Vazquez. These witnesses identified the following: prcd Exhibits Documents "H" Affidavit of Guillermo A. Gatdula "I" Amended Articles of Incorporation of Petitioner "J" Certification of Filing of Amended Articles of Incorporation "K" Certificate of Amendment of Articles of Incorporation "L" Bank Statement "M" Contracts "N" Brochure of Connell Bros., Co., Ltd. "O" Advertisements in various Trade Journals "P" Petitioner's Financial Statements from 1992 to 1994 "Q" Letter dated April 17, 1995 and List of Stockholders "R" Secretary's Certificate of April 4, 1978 "S" Letter of March 30, 1978 "T" Petitioner's General Information Sheet as of December 31, 1977 "U" General Information Sheet as of December 31, 1978 "V" Certificate of Filing dated April, 11, 1940 and Articles of Incorporation of Connell Bros. Co. (Phils.), Inc. dated March 19, 1940 "W" Affidavit of Geminiano V. Vasquez These exhibits were admitted as part of the testimony of the aforesaid witnesses in an Order dated August 18, 1995. Then respondents tried to submit as evidence the affidavit of Mr. Martin Simon and attachments as Exhibits "43" to "43-F". This Hearing Officer rejected exhibits "43", "43-A" to "43-F" in its Order of September 12, 1995. Thereafter, the parties agreed that the application for injunction will be resolved together with the main issues of the case. The hearing on the main case was held on January 10, 1996 and petitioner adopted its evidence in support of its application for a writ of preliminary injunction as its evidence in the main case and waived the right to adduce further evidence. On February 20, 1996, respondent adopted its evidence at the preliminary hearings as its evidence on the main case and recalled Mr. Kevin Ford who in turn identified the following: Exhibit Documents/Description "43-C" and "43-C-1" Documents for sale and shipment of rice by Connell Company in the Philippines in August to September 1994 "43-D" "43-D-1" Documents for sale and shipment of rice by to "43-D-6" Connell Company in the Philippines in May to June 1965 "43-E" "43-E-1" to Documents for sale and shipment of rice by "43-E-4" The Connell Company in the Philippines in September 1972 "44" and "44-A" Statement of Account and Official Receipt No. 33776 for attorney's fees in the sum total of P156,162.65 Despite petitioner's comment dated March 4 1996 these exhibits were admitted as evidence on March 16, 1996. Then the case was submitted for decision. Anent the main issues of this case the evidence presented at the trial disclosed the following facts: 1. Respondents is a foreign corporation organized under the laws of the State of New Jersey United States of America ("U.S.A") and licensed to do business in the Philippines under SEC Registration No. AF093 000066 issued on 15 December 1993 with address at c/o 4th Floor, The Valero Tower, Valero Street, Salcedo Village, Makati City. prcd 2. Respondent is a wholly owned subsidiary of the Connell Company ("Connell"), a corporation organized and existing under the laws of the State of New Jersey, U.S.A. with offices at Cardinal Drive, Westfield, New Jersey, 07090-1099, U.S.A. 3. Respondent derived its name" THE CONNELL COMPANY PHILIPPINES" from its mother company "THE CONNELL COMPANY". The latter existed since 1926 and does business under the name "Connell" worldwide, through various subsidiaries and corporate divisions. 4. Respondent and its mother company derived their names from the principal owners Grover Connell and his family. 5. Connell does business through numerous divisions including: Connell International Co. Connell Flavors & Bases Co. Connell Rice & Sugar Co. Connell Realty & Development Co. Connell Leasing Co., and Connell & Co. 6. In addition to respondent, Connell's wholly-owned subsidiaries include: Connell (Taiwan) Ltd., a New Jersey corporation formed 09 July 1973; Connell Foods, Inc., a New Jersey corporation formed 02 February 1977 (operating at times through its Connell Commodities Co. Division Connell Rice & Sugar (Thailand) Inc. a New Jersey corporation formed 13 August 1981 Connell Finance Company Inc. a New Jersey corporation formed 18 March 1986; and Connell Communications Co. a New Jersey corporation formed 02 July 1993 7. Connell is a leading exporter of rice world-wide. It has been in this business virtually since it's incorporation.' Connell's first significant sales of rice to the Philippines were in the 1960's. Connell is also engaged in the purchase and export of commodities food products and equipment; the leveraged leasing of equipment; and the development and leasing of commercial real estate. 8. Connell purchased and sold (under the CONNELL's brand) significant products over the years to other countries in the Asian Pacific area as well including Japan Taiwan Burma Thailand China Indonesia Korea Tahiti Guam and American Samoa. 9. Connell also registered its CONNELL trademark on 16 January 1973 with the United States Patent Office for goods falling under Class 29 and 30 as per Certificate of Registration No. 950, 912. This trademark was registered in the Republic of the Philippines, Department of Trade and Industry, Bureau of Patents, Trademark and Technology Transfer on 24 July 1991, Registration No. 51021. LLpr 10. The CONNELL trademark has also been registered in other countries including Aruba, Australia, Bahamas, Benelux, Taiwan (Republic of China), Denmark, France, West Germany, Italy, Jamaica, Montserrat, Norway, St. Lucia, Saudi Arabia, Spain, Sweden, Switzerland, Trinidad & Tobago and United Arab Emirates. 11. The Philippines is a signatory to the Paris Convention for the Protection of Industrial Property, which governs the protection of trade or business names. Applying the national treatment principle embodied in Articles 2 and 3 of the Paris Convention, respondent and/or its mother company are entitled to protection in this jurisdiction from the infringement of its registered business or tradename. Respondent and/or its mother company also has priority status in the registration of the business/tradename "Connell" in the Philippines (Article 4, Paris Convention). The records also disclosed that respondent never submitted an undertaking to change its corporate name with the Securities and Exchange Commission (Exhibit "35"). Moreover, the name "The Connell Company Philippines" was precleared by the SEC (Exhibit "34"), and respondent's corporate name conformed with the SEC Guidelines in the Approval of Corporate and Partnership Names (dated 07 September 1977). Paragraph "C" of said guidelines relevantly reads: xxx xxx xxx C. The name should not be similar to one already used by another corporation or partnership. If the proposed name contains a word similar to a word already used as part of the firm name or style of a registered company, the proposed name must contain two other words different from the name of the company already registered ." Respondent's name contained three (3) words different from the registered corporate name of the petitioner. 12. If at all, it is Connell Bros. name which violated the aforesaid SEC Guidelines. It is required: xxx xxx xxx d. If the name of surname of a person is used as part of a corporate name or style, the incorporators must have a basis for such name or surname. For instance, the name or surname may be that of one of the incorporators. If the name is that of another person, not an incorporator, the consent of said person or his heirs must be submitted; xxx xxx xxx Connell Bros. has not shown any basis for its use of the surname "Connell" in its corporate name. None of its incorporators uses the family name "Connell". Petitioner cannot invoke the rights of Connell Bros. Co. because this company was dissolved in 1982 and petitioner is an entirely different corporate entity. Finally, while in a number of countries, family names and surnames may be protected as a business or tradename in the same way as any other word, such protection did not confer the right to prevent the use of the family name by somebody who has the same name in connection with his business [Background Reading Material on Intellectual Property as published by the World Intellectual Property Organization or WIPO", 1988 Edition, Section 6.4.3, Item (a), p. 157] WHEREFORE, petitioner having failed to established that it has the exclusive use of the name "CONNELL", the herein petition should be, as it is hereby dismissed. LLphil SO ORDERED. (SGD.) ELPIDIO S. SALGADO Hearing Officer