Superior Commercial Enterprises vs. Kennan Enterprises Ltd., GR No.

169974,
DOCTRINE
To establish trademark infringement, the following elements must be proven: (1) the validity of
plaintiffs mark; (2) the plaintiffs ownership of the mark; and (3) the use of the mark or its colorable
imitation by the alleged infringer results in "likelihood of confusion."
FACTS
SUPERIOR filed a complaint for trademark infringement and unfair competition with preliminary injunction
against KUNNAN and SPORTS CONCEPT with the RTC.
SUPERIORs claims:
it is the owner of the trademarks, trading styles, company names and business names
KENNEX, KENNEX & DEVICE, PRO KENNEX, AND PRO-KENNEX
it had prior use of these trademarks presenting evidence of ownership the Principal and Supplemental
Registrations of these trademarks in its name
it extensively sold and advertised sporting goods covered by its trademark registrations
it presented the Distributorship Agreement it executed with KUNNAN which states that KUNNAN
intends to acquire the ownership of KENNEX trademark registered by Superior in the Philippines.
Superior is desirous of having been appointed as the sole distributor by KUNNAN in the territory of the
Philippines."
KUNNANs claims:
it was incorporated in 1972, under the name KENNEX Sports Corporation and its products are
marketed in 31 countries including the Phils.
it created and first used PRO KENNEX derived from its original corporate name, as a distinctive
trademarks for its products in 1976
it appointed SUPERIOR as its exclusive distributor in the Phils under a Distributorship Agreement
(Oct. 6, 1982 until Dec. 31, 1991)
o Even though this Agreement clearly stated that SUPERIOR was obligated to assign the
ownership of the KENNEX trademark to KUNNAN, the latter claimed that the Certificate of
Registration for the KENNEX trademark remained with SUPERIOR because Mariano Tan Bon
Diong, SUPERIOR's President and General Manager, misled KUNNAN's officers into
believing that KUNNAN was not qualified to hold the same due to the "many requirements set
by the Philippine Patent Office" that KUNNAN could not meet.
o KUNNAN further asserted that SUPERIOR deceived it into assigning its applications for
registration of the "PRO KENNEX" trademark in favor of SUPERIOR, through an Assignment
Agreement.
Prior to and during the pendency of the infringement and unfair competition case before the RTC, KUNNAN
filed a petition for cancellation of the trademarks with the Bureau of Patents on the ground that SUPERIOR
fraudulently registered the trademarks.
The Distributorship Agreement expired thus KUNNAN appointed SPORTS CONCEPT as its new distributor.
RTC: KUNNAN is liable for trademark infringement and unfair competition and issued a writ of preliminary
injunction enjoining KUNNAN and SPORTS CONCEPT from using the disputed trademarks. SUPERIOR
sufficiently proved that it was the first user and owner of the disputed trademarks in the Philippines, based on
the findings of the Director of Patents. It also considered the "Whereas clause" of the Distributorship
Agreement, which categorically stated that "KUNNAN intends to acquire ownership of [the] KENNEX trademark
registered by SUPERIOR in the Philippines." This clause amounts to KUNNAN's express recognition of
SUPERIOR's ownership of the KENNEX trademarks.
KUNNAN and SPORTS CONCEPT appealed to the CA. In the course of its appeal,
KUNNAN filed a Manifestation and Motion praying that the decision of the Bureau of Legal Affairs (BLA) of the
IPO, dated October 30, 2003, in the Consolidated Petitions for Cancellation be made of record and be
considered by the CA in resolving the case. The BLA ruled in this decision: Kunnan has overwhelmingly and
convincingly established its rights to the mark "PRO KENNEX" because it was proven that actual use by
Respondent-Registrant is not in the concept of an owner but as a mere distributor. Trademarks issued in favor
of Superior Commercial Enterprises, Inc., are hereby CANCELLED.
CA: Reversed and set aside RTC decision and dismissed SUPERIORs complaint for infringement of
trademark and unfair competition. The Certificates of Principal and Supplemental Registrations and the
"whereas clause" of the Distributorship Agreement insufficient to support SUPERIOR's claim of ownership over
the disputed trademarks. Dominion over trademarks is not acquired by the fact of registration alone; at best,
registration merely raises a presumption of ownership that can be rebutted by contrary evidence. The

Certificates of Supplemental Registration issued in SUPERIOR's name do not even enjoy the presumption of
ownership accorded to registration in the principal register.
ISSUES
1.Who is the rightful owner of the trademarks? KUNNAN.
2.WON KUNNAN is guilty of trademark infringement. NO.
3.WON KUNNAN is guilty of unfair competition. NO.
HELD
1.KUNNAN is the owner of the trademarks. KUNNAN sufficiently established the fraudulent registration of the
questioned trademarks by Superior. The Certificates of Registration No. SR-4730 (Supplemental Register)
and 33487 (Principal Register) for the KENNEX trademark were fraudulently obtained by petitioner
Superior. Even before PROKENNEX products were imported by Superior into the Philippines, the same
already enjoyed popularity in various countries and had been distributed worldwide, particularly among the
sports and tennis enthusiasts since 1976. Riding on the said popularity, Superior caused the registration
thereof in the Philippines under its name when it knew fully well that it did not own nor did it manufacture the
PROKENNEX products. Superior claimed ownership of the subject marks and failed to disclose in its
application with the IPO that it was merely a distributor of KENNEX and PROKENNEX products in the
Philippines.
While Superior accepted the obligation to assign Certificates of Registration Nos. SR-4730 and 33487 to
Kunnan in exchange for the appointment by the latter as its exclusive distributor, Superior however breached
its obligation and failed to assign the same to Kunnan. In a letter dated 13 February 1987, Superior, through
Mr. Tan Bon Diong, misrepresented to Kunnan that the latter cannot own trademarks in the Philippines. Thus,
Kunnan was misled into assigning to Superior its (Kunnans) own application for the disputed trademarks. In
the same assignment document, however. Superior was bound to ensure that the PROKENNEX trademarks
under Registration Nos. 40326, 39254, and 49998 shall be returned to Kunnan clean and without any
incumbency when requested by the latter.
2.Section 22 of RA 166 defines trademark infringement as follows: Any person who [1] shall use, without the
consent of the registrant,any reproduction, counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection withthe sale, offering for sale, or advertising of any goods, business or services on or
in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such business; or [2] reproduce, counterfeit,
copy, or colorably imitate any such mark or trade-name and apply such reproduction, counterfeit, copy, or
colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services, shall be liable to a civil action by the
registrant for any or all of the remedies herein provided.
Essentially, Section 22 of RA 166 states that only a registrant of a mark can file a case for infringement.
Corollary to this, Section 19 of RA 166 provides that any right conferred upon the registrant under the
provisions of RA 166 terminates when the judgment or order of cancellation has become final. Thus,
we have previously held that the cancellation of registration of a trademark has the effect of depriving
the registrant of protection from infringement from the moment judgment or order of cancellation has
become final.
In the present case, by operation of law, specifically Section 19 of RA 166, the trademark infringement aspect
of SUPERIORs case has been rendered moot and academic in view of the finality of the decision in the
Registration Cancellation Case. In short, SUPERIOR is left without any cause of action for trademark
infringement since the cancellation of registration of a trademark deprived it of protection from infringement
from the moment judgment or order of cancellation became final. To be sure, in a trademark infringement, title
to the trademark is indispensable to a valid cause of action and such title is shown by its certificate of
registration. With its certificates of registration over the disputed trademarks effectively cancelled with finality,
SUPERIORs case for trademark infringement lost its legal basis and no longer presented a valid cause of
action.
Even assuming that SUPERIORs case for trademark infringement had not been rendered moot and academic,
there can be no infringement committed by KUNNAN who was adjudged with finality to be the rightful owner of
the disputed trademarks in the Registration Cancellation Case. Even prior to the cancellation of the
registration of the disputed trademarks, SUPERIOR as a mere distributor and not the owner cannot
assert any protection from trademark infringement as it had no right in the first place to the registration

of the disputed trademarks. In fact, jurisprudence holds that in the absence of any inequitable conduct
on the part of the manufacturer, an exclusive distributor who employs the trademark of the
manufacturer does not acquire proprietary rights of the manufacturer, and a registration of the
trademark by the distributor as such belongs to the manufacturer, provided the fiduciary relationship
does not terminate before application for registration is filed.
To establish trademark infringement, the following elements must be proven: (1) the validity of
plaintiffs mark; (2) the plaintiffs ownership of the mark; and (3) the use of the mark or its colorable
imitation by the alleged infringer results in "likelihood of confusion."
Based on these elements, we find it immediately obvious that the second element the plaintiffs ownership of
the mark was what the Registration Cancellation Case decided with finality. On this element depended the
validity of the registrations that, on their own, only gave rise to the presumption of, but was not conclusive on,
the issue of ownership.
In no uncertain terms, the appellate court in the Registration Cancellation Case ruled that SUPERIOR was a
mere distributor and could not have been the owner, and was thus an invalid registrant of the disputed
trademarks. Significantly, these are the exact terms of the ruling the CA arrived at in the present petition now
under our review. Thus, whether with one or the other, the ruling on the issue of ownership of the trademarks is
the same. Given, however, the final and executory ruling in the Registration Cancellation Case on the issue of
ownership that binds us and the parties, any further discussion and review of the issue of ownership although
the current CA ruling is legally correct and can stand on its own merits becomes a pointless academic
discussion.
3. The essential elements of unfair competition are (1) confusing similarity in the general appearance of the
goods; and (2) intent to deceive the public and defraud a competitor. "True test" of unfair competition: whether
the acts of the defendant have the intent of deceiving or are calculated to deceive the ordinary buyer making
his purchases under the ordinary conditions of the particular trade to which the controversy relates. One of the
essential requisites in an action to restrain unfair competition is proof of fraud; the intent to deceive, actual or
probable must be shown before the right to recover can exist.
In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold (i.e.
sportswear, sporting goods and equipment) as those of SUPERIOR. In addition, there is no evidence of bad
faith or fraud imputable to KUNNAN in using the disputed trademarks. Specifically, SUPERIOR failed to adduce
any evidence to show that KUNNAN by the above-cited acts intended to deceive the public as to the identity of
the goods sold or of the manufacturer of the goods sold.
Finally, with the established ruling that KUNNAN is the rightful owner of the trademarks of the goods that
SUPERIOR asserts are being unfairly sold by KUNNAN under trademarks registered in SUPERIORs name,
the latter is left with no effective right to make a claim. In other words, with the CAs final ruling in the
Registration Cancellation Case, SUPERIORs case no longer presents a valid cause of action. For this reason,
the unfair competition aspect of the SUPERIORs case likewise falls.
WHEREFORE, premises considered, we DENY Superior Commercial Enterprises, Inc.s petition for
review on certiorari for lack of merit. Cost against petitioner Superior Commercial Enterprises, Inc