Supreme Court Says Pepsi’s Hoarding of Coke Bottles Not Unfair Competition
27 November 2012
Hoarding a competitor’s bottles does not constitute unfair competition as defined by the Philippines IP Code, according to a recent ruling by the Supreme Court of the Philippines. It may, however, fall under Sections 1 and 2 of RA 623, which have not been expressly repealed by the IP Code.
The Supreme Court recently upheld the decision of the Naga City Regional Trial Court declaring void a search warrant used in seizing 2,500 Coca-Cola Litro (1.5 and 2 litre bottles) and 3,000 eight- and 12 ounce empty Coke bottles from Pepsi’s Naga manufacturing facility. The warrant was issued based on Pepsi’s alleged violation of Section 168.3 (Unfair Competition) of the IP Code.
In finding no unfair competition, the High Court explained that the IP Code is “a set of rules that refer to a very specific subject – intellectual property.” Thus, any matters that do not refer to an intellectual property as defined by the code, “which relate specifically to patents, licensing, trademarks, trade names, service marks, copyrights, and the protection and infringement of the intellectual properties that these protective measures embody,” negates coverage by the IP Code.
“Under all the above approaches, we conclude that the ‘hoarding’ – as defined and charged by the petitioner – does not fall within the coverage of the IP Code and of Section 168 in particular. It does not relate to any patent, trademark, trade name or service mark that the respondents have invaded, intruded into or used without proper authority from the petitioner. Nor are the respondents alleged to be fraudulently “passing off” their products or services as those of the petitioner. The respondents are not also alleged to be undertaking any representation or misrepresentation that would confuse or tend to confuse the goods of the petitioner with those of the respondents, or vice versa. What in fact the petitioner alleges is an act foreign to the Code, to the concepts it embodies and to the acts it regulates; as alleged, hoarding inflicts unfairness by seeking to limit the opposition’s sales by depriving it of the bottles it can use for these sales,” the Supreme Court said.
The High Court held that RA 623 should have been the law used as a basis for applying for the assailed search warrant. Under Sections 1 and 2 thereof, it is unlawful for any person to fill, destroy, or use beverage bottles or other similar containers that are stamped or marked with a registered mark, for any other purpose than that registered by the manufacturer, bottler, or seller. The Court held that the IP Code has not expressly repealed these provisions of the law and such provisions are still in effect as it is “a law of specific coverage and application” in providing rights to the manufacturer, bottler, or seller of registered marked beverage containers.
Although the High Court found that Pepsi’s act of hoarding fell under RA 623, it had no choice but to void the search warrant, as the Rules governing search warrants mandates that such should only be issued for “one specific offense,” which must be stated upon application.
