INTELLECTUAL PROPERTY

COPYRIGHT

In copyright law, a derivative work is an expressive creation that includes major copyrightable elements
of a first, previously created original work. The derivative work becomes a second, separate work
independent in form from the first.

This court defined fair use as “a privilege to use the copyrighted material in a reasonable manner
without the consent of the copyright owner or as copying the theme or ideas rather than their
expression.” Fair use is an exception to the copyright owner’s monopoly of the use of the work to avoid
stifling “the very creativity which that law is designed to foster.”

Determining fair use requires application of the four-factor test. Section 185 of the Intellectual Property
Code lists four (4) factors to determine if there was fair use of a copyrighted work:

a. The purpose and character of the use, including whether such use is of a commercial nature or is for
non-profit educational purposes;

b. The nature of the copyrighted work;

c. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

d. The effect of the use upon the potential market for or value of the copyrighted work.

First, the purpose and character of the use of the copyrighted material must fall under those listed in
Section 185, thus: “criticism, comment, news reporting, teaching including multiple copies for classroom
use, scholarship, research, and similar purposes.”

The “transformative test” is generally used in reviewing the purpose and character of the usage of the
copyrighted work. This court must look into whether the copy of the work adds “new expression,
meaning or message” to transform it into something else. “Meta-use” can also occur without necessarily
transforming the copyrighted work used.

Second, the nature of the copyrighted work is significant in deciding whether its use was fair. If the
nature of the work is more factual than creative, then fair use will be weighed in favor of the user.

Third, the amount and substantiality of the portion used is important to determine whether usage falls
under fair use. An exact reproduction of a copyrighted work, compared to a small portion of it, can
result in the conclusion that its use is not fair.

There may also be cases where, though the entirety of the copyrighted work is used without consent, its
purpose determines that the usage is still fair.

Lastly, the effect of the use on the copyrighted work’s market is also weighed for or against the user. If
this court finds that the use had or will have a negative impact on the copyrighted work’s market, then
the use is deemed unfair.

Whether the alleged five-second footage may be considered fair use is a matter of defense. We
emphasize that the case involves determination of probable cause at the preliminary investigation stage.
Raising the defense of fair use does not automatically mean that no infringement was committed. The
investigating prosecutor has full

discretion to evaluate the facts, allegations, and evidence during preliminary investigation. Defenses
during preliminary investigation are subject to further proof and evaluation before the trial court. Given
the insufficiency of available evidence, determination of whether the Angelo dela Cruz footage is subject
to fair use is better left to the trial court where the proceedings are currently pending. GMA-7’s
rebroadcast of ABS-CBN’s news footage without the latter’s consent is not an issue. The mere act of
rebroadcasting without authority from the owner of the broadcast gives rise to the probability that a
crime was committed under the Intellectual Property Code.

Must Carry Rule – requires satellite and cable television provider to carry all local stations.

TRADEMARKS

Zuneca Pharmaceutical v Natrapharm, Inc. | G.R. 211850 | 08 September 2020

Facts:

Under the brand name “ZYNAPS,” Zuneca sells carbamazepine, an anti-convulsant used to treat a variety
of seizure disorders, including epilepsy. After obtaining a Certificate of Product Registration from the
Bureau of Food and Drugs in 2003, it has been selling the medicine under the aforementioned mark
since 2004. According to the organization’s president, she was unable to register her trademark since
she was unable to find the time owing to her father’s illness. On the other hand, Natrapharm sells a drug
called citicoline under the trademark “ZYNAPSE” for the treatment of cerebrovascular disease or stroke.
The trademark was registered with the IPOPHL in 2007. Prior to registration, the Vice President used a
research tool, which lists pharmaceutical products in the Philippines, to verify that no other product
used the abovesaid mark. Only after verification was the mark registered. Natrapharm filed a suit for
trademark infringement against Zuneca before the Quezon City Regional Trial Court. The RTC ruled for
Natrapharm. On appeal, the Court of Appeals sustained the RTC.

Issue: Whether Zuneca is liable for trademark infringement

The Supreme Court ruled in the negative. After a lengthy discussion regarding the legislative history of
Intellectual Property Law in the Philippines, the Supreme Court declared that, under the Intellectual
Property Code or R.A. 8293, the mode of acquiring ownership over trademark is by valid registration of
the same with the IPO in accordance with law. This is evidenced by Section 122 of the IP Code, and
Section 123 of the same Code or the first-to-file rule. Prior use in commerce is no longer a mode of
acquiring ownership over marks. However, actual use in commerce remains necessary for the purpose
of maintaining ownership over the marks. In light of the abovesaid ruling, the Court proceeded to state
that Natrapharm is the first-to-file registrant in good faith of “ZYNAPSE”. Thus, it acquired all the rights
of trademark owner over that mark. On the other hand, Zuneca is a prior user in good faith of the mark
“ZYNAPS”. Hence, the fact that Natrapharm was able to register “ZYNAPSE” first does not automatically
mean that Zuneca is liable for trademark infringement because it used the confusingly similar mark
“ZYNAPS”.
Doctrine of Secondary Meaning – a generic or descriptive mark may later acquire the characteristic of
distinctiveness and can later be registered if it acquires a meaning which is different from its ordinary
connotation. For this to happen, there must be exclusive and continuous use for a period of at least five
years.

Doctrine of “Secondary Meaning”

The function of a trade-mark is to point distinctively, either by its own meaning or by association, to the
origin or ownership of the wares to which it is applied. "Ang Tibay," as used by the respondent to
designate his wares, had exactly performed that function for twenty-two years before the petitioner
adopted it as a trade-mark in her own business. "Ang Tibay" shoes and slippers are, by association,
known throughout the Philippines as products of the "Ang Tibay" factory owned and operated by the
respondent. Even if "Ang Tibay," therefore, were not capable of exclusive appropriation as a trade-mark,
the application of the doctrine of secondary meaning could nevertheless be fully sustained because, in
any event, by respondent's long and exclusive use of said phrase with reference to his products and his
business, it has acquired a proprietary connotation. This doctrine is to the effect that a word or phrase
originally incapable of exclusive appropriation with reference to an article on the market, because
geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively
by one producer with reference to his article that, in that trade and to that branch of the purchasing
public, the word or phrase has come to mean that the article was his product.

Unfair Competition

The essential elements of an action for unfair competition are: (1) confusing similarity in the general
appearance of the goods, and (2) intent to deceive the public and defraud a competitor.

Types of Confusion

1. Confusion of Goods
2. Confusion of Business

Test

1. The resemblance between the trademarks (this is the most important factor)
2. The similarity of the goods to which the trademarks are attached
3. The likely effect on the purchaser; and
4. The registrant’s express or implied consent and other fair equitable considerations

DOMINANCY TEST - The prevailing test to determine the likelihood of confusion.

-it focuses on the similarity of the prevalent features of the competing trademarks which might cause
confusion or deception, and thus infringement.

-if the competing trademark contains the main, essential or dominant features of another, and
confusion or deception is likely to result, infringement takes place.

-the question is whether the use of the marks involved is likely to cause confusion or mistake in the
mind of the public or deceive purchasers.
Use of identical marks not necessarily prohibited – the use of identical mark does not by itself, lead to a
legal conclusion that there is trademark infringement if they are NOT used for identical, similar or
related goods.

Theory of dilution – trademark dilution is the lessening of the capacity of a famous mark to identify and
distinguish goods or services, regardless of the presence or absence of:

1. Competition between the owner of the famous mark and other parties; or
2. Likelihood of confusion, mistake or deception

A trade name need not be registered with the IPO before an infringement suit may be filed by its owner
against the owner of an infringing trademark.

Unfair competition – this involves employing deception or any other means contrary to good faith by
which a person passes off his goods or business or services for those of one who has already established
goodwill thereto.

PATENTS

3-Fold Purpose of Patent Law

1. Seeks to foster and reward invention