Supreme Court recognizes use of a trademark in cyber space is an acceptable form of actual use to maintain a mark in the Philippines

This stemmed from the Petition for Cancellation filed by W Land Holdings, Inc. (“W Land”) against Starwood Hotels and Resorts Worldwide Inc.’s (“Starwood”) trademark registration for “W” covering services under Classes 43 and 44. The Petition for Cancellation is mainly based on Starwood’s claim that W Land has failed to use the “W” trademark in the Philippines. W Land argues that since Starwood has no hotel or establishment in the Philippines rendering the services covered by the trademark registration, the trademark registration should be cancelled.

For its defense, Starwood argued that it filed with the IPO a Declaration of Actual Use with the required evidence of use for the “W” trademark. Starwood explained that it conducts hotel and leisure business both directly and indirectly through subsidiaries and franchisees, and operates interactive websites for its W Hotels in order to accommodate its potential clients worldwide. These websites, Starwood posits, allow Philippine residents to make reservations and bookings, which presuppose clear and convincing use of the “W” mark in the Philippines.

The Bureau of Legal Affairs (BLA) of the IPO, in its decision, agreed with the position of W Land and cancelled Starwood’s trademark registration. It reasoned that the Declaration of Actual Use and evidence of use submitted did not prove actual use of the “W” trademark in the Philippines since the evidence of use submitted referred to hotels and establishments located outside the Philippines. The BLA pronounced that the use of the contemplated in the Intellectual Property Code of the Philippines refers to the actual attachment of the mark to goods and services that are sold or availed of and located in the Philippines.

On appeal, the Director General of the IPO, on the other hand, reversed the BLA’s decision and dismissed the Petition for Cancellation. It maintained that Starwood’s submission of the Declaration of Actual Use and evidence of use coupled by the acceptance of the IPO shows that the mark is still registered. There is a presumption that Starwood sufficiently complied with the registration requirements for the mark. The absence of an actual hotel or establishment in the country should not be equated to absence of use in the Philippines. It considered that the interactive websites of Starwood constitute actual use of the W trademark in the Philippines.

The Court of Appeals agreed with the decision of the Office of the Director General of the IPO.

While the Supreme Court also affirmed the decision, it elucidated that the trademark regulations were amended by Office Order No. 056-13 specifically as to that shall be accepted as proof of actual use of a mark. Rule 205 concerning the content of the Declaration and Evidence of Actual Use now provides a list of acceptable proof of use of a mark as follows:

labels of the mark as these are used;
downloaded pages from the website of the applicant or registrant clearly showing that the goods are being sold or the services are being rendered in the Philippines;
photographs (including digital photographs printed on ordinary paper) of goods bearing the marks as these are actually used or of the stamped or marked container of goods and of the establishment/s where the services are being rendered;
brochures or advertising materials showing actual use of the mark on the goods being sold or services being rendered in the Philippines;
for online sale, receipts of sale of the goods or services rendered or other similar evidence of use, showing that the goods are placed on the market or the services are available in the Philippines;
copies of contracts for services showing the use of the mark. Computer printouts of the drawing or reproductions of marks will not be accepted as evidence of use.

The same Office Order No. 056-13 allows the Director to issue a list of acceptable evidence of use and those that will not be accepted by the IPO.

From the amendment of the rules on Declaration of Actual Use, the IPO appears to be giving due regard to the advent of commerce on the internet since “downloaded pages from the website of the applicant or registrant clearly showing that the goods are being sold or the services are being rendered in the Philippines” and “for online sale, receipts of sale of the goods or services rendered or other similar evidence of use, showing that the goods are placed on the market or the services are available in the Philippines” are already accepted as evidence of actual use. Thus, the Supreme Court agreed with the position of the Director of the IPO and the Court of Appeals on this case.

Any trademark owner should be able to build goodwill of his trademark through the internet. To be an acceptable actual use, the use must be bona fide or of the genuine kind. Mere exhibition of the goods or services in the internet without more is not enough to constitute actual use. It must be shown that the trademark owner has actually transacted, or at the very least intentionally targeted customers of a particular jurisdiction in order to be considered as having used the mark in the ordinary course of his trade in that country. A showing of actual commercial link to the country is imperative.

What convinced the Supreme Court to accept the websites of Starwood as acceptable use in the Philippines is that Starwood owns the domain names www.whotels.ph, www.wreservations.ph, www.whotel.ph, www.wreservation.ph for its website to showcase its mark. Starwood was able to show that these websites were visited by Philippine consumers since 2003. These websites are accessible to Philippine citizens who can book and reserve Starwood’s amenities and services in any of Starwood hotels worldwide. Moreover, it provides a phone number for Philippine customers to call and is in the English language, which is considered an official language in the Philippines. The Supreme Court also noted that the prices for the rooms and/or services are shown in Philippine Peso, the Philippine local currency. These factors clearly show that the use of the “W” trademark in the websites is genuine and intended to produce a discernable commercial effect or activity within the Philippines.