Federal Express Corporation vs. Federal Express Corporation

[SEC-SICD * CASE NO. 2785. May 29, 1992.] FEDERAL EXPRESS CORPORATION , petitioner , vs .FEDERAL EXPRESS 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 words "FEDERAL EXPRESS" as part of its corporate name. LibLex In support thereof, petitioner, alleged inter alia, that it is a corporation organized and existing under the laws of the State of Delaware, United States of America, not presently doing business in the Philippines; that respondent is a domestic corporation organized and existing under the laws of the Republic of the Philippines; that since its incorporation under the laws of the State of Delaware, United States of America on June 24, 1971, petitioner has engaged in the express services business, including but not limited to the pick-up, transportation and delivery of time sensitive documents and other articles and related courier internationally under the name and style of FEDERAL EXPRESS CORPORATION using the service mark FEDERAL EXPRESS; that by way of expanding its international operations, petitioner has acquired or incorporated certain subsidiaries the names of which are denominated by the words "FEDERAL EXPRESS" in several countries. Further, petitioner alleged that it has also registered its service mark FEDERAL EXPRESS throughout the world; that in the United States of America, the service mark FEDERAL EXPRESS is registered under No. 971.623, dated October 23, 1973; that likewise, its service mark is also registered in various countries; that in the course of its business operations, petitioner has adopted and is using the words "FEDERAL EXPRESS" as the principal part of its corporate name to denote the high quality and reliability of the service it renders to the public worldwide; that the name symbolizes an extremely valuable goodwill and an excellent business reputation internationally and petitioner has spent substantial amounts of money to promote and advertise its business under the name and style of FEDERAL EXPRESS CORPORATION in local and international print and broadcast media. Petitioner's business under the name and style of FEDERAL EXPRESS CORPORATION has also been the subject of numerous articles in various publications and magazines with international circulation; that as a result, petitioner's name has gained a very strong international reputation and acceptance. On October 28, 1981, 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 FEDERAL EXPRESS CORPORATION the primary purpose of which is to engage in the pick-up and delivery business, including international and local air freight forwarding and courier services. Moreover, petitioner averred that when respondent files 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 use of said name or one similar to it." It is clear that petitioner has a prior right to the use of the name FEDERAL EXPRESS CORPORATION" as evidenced by its long and extensive worldwide use thereof coupled with its use and registration of the worldwide use thereof coupled with its use and registration of the words FEDERAL EXPRESS as the service mark/trade name in many countries; that the identity of respondent's corporate name with that of petitioner coupled with the fact that respondent's proposed business is substantially identical to petitioner's established business 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 "FEDERAL EXPRESS 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 1883 International Convention for the Protection of Industrial Property as revised at Lisbon in 1958 (hereinafter the Paris Convention") which provides in part that: 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, trade names 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 "FEDERAL EXPRESS CORPORATION" calls for the application of the aforecited provisions of the "Paris Convention." Furthermore, petitioner asserted that when respondent was organized, its incorporators had previous knowledge that petitioner had long been using the trade name "FEDERAL EXPRESS CORPORATION" and the words "FEDERAL EXPRESS" as a service mark/trade name; that three of respondent's incorporators/directors, Messrs. Guy Coombs, Rodolfo Feliciano and Jose Feliciano are also directors/officers of DHL (Phil.) Services Corp. a local company engaged in the same business as that of respondent and a member of the DHL International Group which constitutes a major competitor of petitioner internationally. Since its incorporation in 1981, respondent has not: a) filed any of the yearly reports required by this Commission such as minutes of annual meetings and annual financial statements; (b) registered its corporate name with the Bureau of Domestic Trade as required by law; and (c) advertised its business in any of the local periodicals of general circular; that likewise, since its incorporation, respondent does not appear to have had any listing in local telephone directories thus raising the belief that respondent has not started its operations and/or that it is in a dormant status and that respondent was organized primarily for the purpose of pre-empting petitioner from using petitioner's corporate name "FEDERAL EXPRESS CORPORATION" in the Philippines and by reason of respondent's unauthorized appropriation of its name, petitioner is prevented from engaging in lawful business in the Philippines under a name which it rightfully owns. Respondent filed a motion to dismiss the instant petition on the following grounds: 1. Petitioner has no legal capacity to sue in the Philippines, particularly before this Commission; 2. This Commission has no jurisdiction over the subject matter or nature of the case because petitioner is not subject to the jurisdiction of this Commission; and LexLib 3. Assuming arguendo that petitioner has the legal capacity to sue in Philippine courts, its petition does not state any cause of action against the respondents. This Hearing Officer granted the motion to dismiss but on appeal, the Commission en banc reversed the order of dismissal and remanded the case for further proceedings. Respondent filed its answer thereto with affirmative defenses and averred that respondent is the first actual user of the corporate name in the Philippines, having used it in commerce since September 28, 1984; that aside from being the first actual user of the subject corporate name, respondent is the first to register the same in this Commission on October 26, 1981; that since the filing of the said articles and the registration thereof are matters of public record and therefore petitioner is presumed to have known this fact, and petitioner's failure to file any objection or to take any legal action regarding the registration and use by respondent of the subject corporate name amounts to laches or estoppel by acquiescence; that petitioner has no personality to file the present action and/or has no cause of action since it has not registered nor applied for use of subject corporate name nor has it used said name in the Philippines and furthermore it is not doing business in the Philippines. Hearings were conducted and petitioner presented one (1) witness in the person of Atty. Christopher Lim. On the other hand, respondent opted not to present any testimonial evidence. In the instant case, petitioner seeks to enforce respondent's undertaking to change its corporate name. (Section 18 of the Corporate Code) to wit: 1. The petitioner corporation acquired a prior right over the use of 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. Respondent argued that petitioner has not acquired any prior right in this jurisdiction to use of the subject corporate name and the Paris Convention does not apply to corporate names since it refers only to trademarks, tradenames, and, conditionally, to service mark and there is not even a remote reference to corporate names. There is no doubt that the corporate name in question resembles each other principally on the use of the words "FEDERAL EXPRESS" and the confusing similarity is aggravated by the fact that both corporations are engaged in the same courier business. 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, (Armington, vs. Palmer, 21 RI 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. (I Thompson, p. 80 citing Muno v. Americana Co.,82 N. Eg. 63, 88 ATL. 30; San Francisco Oyster House vs. Mihich, 75 Wash. 274; 134 Pac. 921).In this regard, there is no doubt with respect to petitioner's prior adoption of the name "FEDERAL EXPRESS" as part of its corporate name. In passing, while this Hearing Officer earlier opined in his resolution dated 27 November 1985 on the respondent's motion to dismiss that corporate names do not fall within the purview of the Paris Convention, however, it bears emphasizing that in the latest 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 Corporation vs. Universal Rubber Products, Inc., G.R. No. L-27906, January 8, 1987, 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 if forms part of the trademark". It is significant to note, however, that even the Director of the Bureau of Patents, Trademarks and Technology Transfer had even approved the registration of petitioner's trademark "FEDERAL EXPRESS" for transportation of cargoes by air and land vehicles sometime in May 9, 1988 (Exhibits "U" to "U-5"). Conformably, it has been established that petitioner is widely known worldwide through its subsidiaries which offers a wide range of customers, services for transportation and distribution of priority goods and documents throughout the world using its own fleet of aircraft and vehicles. (Exhibits "B" and "B-1"). As aptly held in Western Equipment and Supply Co. vs. Reyes, G.R. No. 27897, December 2, 1927, 51 Phil. 115 (1927), the court declared that a corporation's right to use its corporate name and trade name is a property right, a right in rem which it may assert and protect against the world in the same manner as it may protect its tangible property, real or personal, against trespass or conversion. It is regarded to a certain extent, as a property right and one which cannot be impaired or defeated by subsequent appropriating by another corporation in the same field. (Red Line Transportation Co. vs. Rural Transit Co., G.R. No. 41570, September 6, 1934, 60 Phil. 549) 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 "FEDERAL EXPRESS" 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 (American Gold Star Mothers, Inc. vs. National Gold Star Mothers Inc. et al.,89 App Dc 209, 191 F 2d 488. LLphil "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 Star Mothers, Inc. 89 App DC 269, 191 F 2d 488, 27 ALR 2d 948)" Besides, the nature and business of both corporations involved in this case are important factors bearing on the likelihood of deception from the use of similar names. Nevertheless, it is a cardinal principle that even the lack of or absence of confusion or deception of the public is immaterial since actual confusion need not be shown, but it is sufficient as in this case that confusion is probable or likely to occur. 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 hereof. Let copy of this Decision be furnished the Corporate and Legal Department and Records Division of this Commission for their information and guidance. No Costs. SO ORDERED. (SGD.) ENRIQUE L. FLORES, JR. Hearing Officer