Allied Thread Co., Inc. vs. Alliance Thread Co., Inc.

[SEC-SICD * CASE NO. 2846. July 30, 1990.] ALLIED THREAD CO., INC. , petitioner , vs . ALLIANCE THREAD CO., INC. , respondent . D E C I S I O N In its petition filed on July 19, 1985, petitioner prayed to require respondent "to amend its Articles of Incorporation to change its present corporate name, ALLIANCE THREAD CO., INC. to some other corporate frame which is not confusingly or deceptively similar to petitioner's corporate name, ALLIED THREAD CO., INC. and to pay exemplary damages, attorney's fees and the cost of suit; and pending consideration and resolution of the instant petition to issue a writ of preliminary injunction or restraining order enjoining and restraining respondent and its agents, employees, privies, successors, assigns and all other persons acting by or under it from directly or indirectly using the "ALLIANCE THREAD" corporate name, or doing any act or thing likely to induce the belief on the part of the public that respondent or respondent's products are in any way connected with petitioner's products. LibLex In support thereof, petitioner alleged, among other things, that petitioner is a corporation duly organized and existing in accordance with the laws of the Philippines. Since its incorporation in September 1953, it is principally engaged in the business of manufacturing, producing, selling, importing or otherwise dealing in threads, textiles and textile products of all kinds and in connection therewith has acquired lands, factories, plants, warehouses, offices, machinery, equipment for its operations and by reason of its continuous use of its name since 1953 and its extensive advertising thereof, has acquired goodwill and a reputation for quality products. Petitioner further alleged that sometime on May, 1985, petitioner discovered that threads bearing the "ALLIANCE THREAD" labels were being sold in Farmers Plaza Market, Cubao, Quezon City, by a company called Alliance Thread Co., Inc.. Moreover, the said company's logo as appearing in the said labels is an exact replica of petitioner's former logo. Upon investigation, petitioner discovered that Alliance Thread Co., Inc. was incorporated as a domestic corporation on April 15, 1985 with the primary purpose "to engage in, operate, conduct and maintain the business of manufacturing, processing, buying, selling, importing, exporting and otherwise dealing in, in wholesale or retail quantities, threads, yards, twines, lace, and such other products of all kinds and descriptions . . .". Furthermore, petitioner alleged that the use by respondent of the corporate name "ALLIANCE THREAD" is confusingly and deceptively similar with petitioner's corporate name "ALLIED THREAD" and is being used for the purpose of taking full and undue advantage of the name and reputation of petitioner. In so doing, respondent has unduly prejudiced and injured the petitioner in terms of the identity and reputation which the latter has gained and developed throughout the years. Moreover, since respondent's products and business are of the same type and nature as those of petitioner, the public is deluded into believing that the products sold by respondent and the business the respondent is engaged in, are approved and sponsored by or affiliated with, petitioner. The aforesaid acts of respondent are calculated to and do result in the unjust enrichment of respondent since respondent is unfairly trading upon and appropriating the reputation and goodwill of petitioner and is imposing widespread fraud and deception upon the public. In answer to the petition, respondent averred, among other things, that in all instances known and made known to the respondent, its products have been offered to the domestic factory and industrial users as products solely under its tradename and trademark " ALLIANCE THREADS" or under its own labels, designs, etc., there had been no instance for respondent's products to be passed off as petitioner's; there is no need to pass them off under petitioner's tradename and trademark; respondent's products can compare and even excel petitioner's known products in the market. . . . Petitioner's logo and tags, labels and trademarks are so different from those of the respondent that there can be no chance for deception or confusion or fraud. There has been no single instance of any customer complaining of having been deceived, or confused or defrauded. Respondent having been compelled to litigate was constrained to engage the services of counsel for a fee. Hearings on the application for preliminary injunction were conducted where both parties presented their respective evidence. From the evidence adduced, this Hearing Officer had ruled, in his Order issued on April 27, 1990, to deny petitioner's application for a writ of preliminary injunction. Thereafter, the preliminary conference was set on May 17, 1990. However, instead of attending the preliminary conference, parties opted to submit the above-entitled petition for resolution based on the evidence adduced in the hearings for the application of a writ of preliminary injunction. The main issue posed for resolution in this case is whether or not the corporate name ALLIANCE THREAD CO., INC. is identical or confusingly similar to that of ALLIED THREAD CO., INC. as to cause deception or confusion in the public mind. Even by a mere glance at the two corporate names, one cannot help but declare that both corporate names are strikingly and confusingly similar. 'this is apparent from the fact that the only seeming difference between the corporate names of the parties are "ALLIED" and "ALLIANCE" but which words are also almost similar in sound and which are very prominent and dominant. The similarity in the words "ALLIED" and "ALLIANCE" is such that one word is used to define the other. The word "ALLIED" is deemed by Webster's Third New International Dictionary as "joined in Alliance by compact or treaty. On the other hand, the word "ALLIANCE" is defined as "the state of being allied or the action of allying or writing. This is aggravated by the fact that both corporations are engaged in similar business. Petitioner Allied Thread Co., Inc. has its primary purpose ". . . to carry on the business of merchants, brokers, traders, importers, exporters, manufacturers, processors and dealers in threads, textiles and textile products of all kinds with goods, wares, merchandise and commodities of every description, . . .". on the other hand, respondent Alliance Thread Co., Inc. was formed primarily "To engage in, operate, conduct and maintain the business of manufacturing, processing, buying, selling, importing, exporting and otherwise dealing in, in wholesale or retail quantities, threads, yarns, twines, lace and such other products of all kinds and description and to carry on such business as wholesalers, retailers, indentors, commercial factors, commercial brokers, manufacturers' representatives either as principal or agent . . .". From the foregoing, it is apparent that both from the standpoint of their corporate names and the purposes for which they were established or the businesses they were engaged in, there exist a similarity that could inevitably lead to confusion It was held that the nature and business of the corporations involved are important factors bearing on the likelihood of deception from the use of similar names (Fletcher Cyclopedia Corporations Vol. 6 Permanent Edition p. 117). Actual confusion need not be shown, but it is sufficient that confusion is probable or likely to occur. (Metal Craft Co. vs. Metalcraft Heater Corporation, 255 Michigan 642, 239, NW 364 cited in Fletcher Cyclopedia Corporation Vol. 6 Permanent Edition p. 133) And speaking of confusion, this Commission, in a case, had occasion to state which was subsequently quoted with approval by the Supreme Court that "It is precisely the duty of this Commission to prevent such confusion at all times and under all circumstances not only for the purpose of protecting the corporation involved but more so for the protection of the public". (Universal Textile Mills, Inc., G.R. No. L-28351, July 28, 1977) dctai The records show that petitioner Allied Thread Co., Inc. has the prior right to use its corporate name to the exclusion of others. It was registered with this Commission on September, 1953 while respondent Alliance Thread Co., Inc. was registered on April, 1985. By virtue of petitioner's prior appropriation and use of its name, it is entitled to protection against the use of identical or similar name of another corporation. (American Products Co. vs. Mexico Products Co., 42 F2D; Standard Oil Co., of New Mexico vs. Standard Oil Co. of California 56 FsD, 973, 977) It is worthy to mention in this connection that when respondent was registered as a corporation, it undertook "to change its corporate name in the event another person, firm or entity has acquired a prior right to use the same name or one deceptively or confusingly similar to it". On the petitioner's and respondent's claims for damages, suffice it to state that the Court of Appeals, in the case entitled Augusto Padilla, et al. vs. Securities and Exchange Commission, CA-G.R. SP No. 18630 had ruled: "We are aware of the fact that the Securities and Exchange Commission has adopted the practice of awarding actual and other damages without protest or objection on the part of the litigants. However, as explained above, we believe such practice to be unauthorized and illegal." WHEREFORE, premises considered, this Hearing Officer finds and hereby rules that the corporate names of petitioner and respondent are confusingly similar and, pursuant to its aforequoted undertaking, respondent Alliance Thread Co., Inc. is hereby ordered to amend its Articles of Incorporation to any other name which is not confusingly similar to that of the petitioner or any corporation or entity registered with this Commission, within thirty (30) days from the finality of this Decision. Let copy of this Decision be furnished the Corporate and Legal Department and the Administrative and Finance Department for their information and guidance. cdll SO ORDERED. (SGD.) ELPIDIO S. SALGADO Hearing Officer