Trademark squatting is the unauthorized registration of a trademark or a service mark by a “trademark squatter” – a person who is not the real owner of the mark. The trademark squatter registers a mark in bad faith, that is, with knowledge of the existence of the mark and its ownership or prior use by another person (the “prior user”).
The trademark squatter unjustly takes advantage of the “first-to-file” system in trademark registration. Under the Intellectual Property Code (“IP Code”), the “first-to-file” system gives preference to the first person who applies for registration of a mark (the “first filer”), even if such person is not a prior user of the mark sought to be registered.
Implications of Trademark Squatting
The trademark squatter’s earlier application or registration, as may be the case, prevents the prior user from subsequently registering his or her own mark. The prior user might be compelled to purchase, for a fee, the earlier application or registration if only to register his or her own mark.
Alternatively, the prior user may be constrained to file suit against the trademark squatter. In most cases, such suit is in the form of an Inter Partes case, a legal proceeding heard and tried before the Bureau of Legal Affairs of the Intellectual Property Office.
Inter Partes Remedies against Trademark Squatting
An Inter Partes case is the usual route in challenging the trademark squatter’s bad faith application or registration. An Inter Partes case can be categorized into two (2) different actions, to wit:
i) Verified Notice of Opposition (“Opposition”) – Section 134 of the IP Code allows a person to file an Opposition against a trademark application if he or she believes that its registration will cause damage or prejudice to his or her right as prior user of the mark.
The Opposition can be filed within thirty (30) days from the time that the application has been published in the IPOPHL’s TM E-Gazette,[1] subject to allowable extensions under the Inter Partes rules.
ii) Petition for Cancellation – Filing an Opposition is no longer plausible after the 30-day period above or its extension, and especially, if the mark is already granted registration. This scenario usually happens when the prior user of the mark has not known of the trademark squatter’s application to register the subject mark.
In which case, the applicable remedy is to seek the cancellation of the bad faith mark. Section 151 of the IP Code allows a person to file a Petition, at any time, to invalidate a registered mark if its registration was obtained fraudulently or contrary to the provisions of the IP Code.
It should be underscored that the Supreme Court, in Zuneca Pharmaceutical, et al. vs. Natrapharm, Inc.,[2] reinforced the “first-to-file” rule by recognizing the preferred right of a first filer in good faith as opposed to the right of a prior user in good faith who did not file any application for registration. The prior user’s right is limited only to that stated in Section 159.1 of the IP Code.[3]
Given the foregoing ruling, it becomes incumbent that a prior user prove that the first filer applied or registered the mark in bad faith or with fraud.
Bad faith means that the trademark squatter had knowledge of the prior user’s creation and/or use of an identical or similar mark. Bad faith is thus equivalent to copying and using somebody else's mark.[4]
Fraud, on the other hand, is committed by making false claims in connection with the trademark application and registration, particularly, on the issues of origin, ownership, and use of the trademark in question, among other things. The concept of fraud is not a mere inaccurate claim as to the origin, ownership, and use of the trademark. Fraud has been defined as the deliberate intention to cause damage or prejudice. Fraud is intentionally making false claims to take advantage of another's goodwill thereby causing damage or prejudice to another.[5]
We write this article to provide a concise overview about inter partes remedies against trademark squatting. This article should not be taken as a form of legal advice. Should you need legal assistance on your trademark concerns in the Philippines, please send an email at ryan@romanolaw.ph.
[1] See https://onlineservices.ipophil.gov.ph/tmgazette/ [2] G.R. No. 211850, September 08, 2020 [3] Section 159. Limitations to Actions for Infringement. - Notwithstanding any other provision of this Act, the remedies given to the owner of a right infringed under this Act shall be limited as follows: 159.1. Notwithstanding the provisions of Section 155 hereof, a registered mark shall have no effect against any person who, in good faith, before the filing date or the priority date, was using the mark for the purposes of his business or enterprise: Provided, That his right may only be transferred or assigned together with his enterprise or business or with that part of his enterprise or business in which the mark is used. [4] See Zuneca Pharmaceutical, et al. vs. Natrapharm, Inc., supra note 2. [5] Ibid.