Mighty Corporation v. E. & J. Gallo Winery

Gallo Winery, a California corporation, registered its GALLO wine trademark in the Philippines in 1971. It claimed its wines were first sold locally circa 1974 inside U.S. military facilities, but its earliest proof of Philippine sales was a 1981 invoice. Andresons was its exclusive importer and distributor. Petitioners' sister company Tobacco Industries had used the GALLO mark on cigarettes since 1973, with BIR approvals; it assigned the mark in 1984 to La Campana, which applied for registration in 1985 and authorized Mighty Corporation to make GALLO cigarettes. In 1993 Gallo Winery and Andresons sued for trademark and tradename infringement and unfair competition under RA 166 and Article 6bis of the Paris Convention. The Makati RTC first denied a preliminary injunction, finding the goods unrelated, but after trial held petitioners liable, enjoined them, and awarded damages, later increased to P19,929,000 in actual damages. The CA affirmed, treating wines and cigarettes as related because both are forms of vice sold in the same supermarket section, and applying the IP Code alongside RA 166.

1. 1Whether the IP Code (RA 8293) could be applied to acts committed and sued upon before it took effect.
2. 2Whether petitioners' use of GALLO on cigarettes infringed respondents' GALLO wine trademark.
3. 3Whether petitioners committed unfair competition.

No on all counts. The courts below erred in retroactively applying the IP Code, which took effect only on January 1, 1998 and has no retroactivity clause; the case is governed by the Trademark Law and the Paris Convention, in force when the complaint was filed. Under both, protection of a registered mark extends only to identical or similar goods and only where confusion is likely. Petitioners' actual commercial use from 1973 preceded respondents' proven use, and Gallo Winery's registration covered wines only under Section 20 of the Trademark Law. Applying the dominancy and holistic tests, the dominant feature of the cigarette mark was a rooster device, and the labels differed in overall presentation; "the use of an identical mark does not, by itself, lead to a legal conclusion that there is trademark infringement." Weighing the related-goods factors, the Court found wines and cigarettes "non-competing and are totally unrelated products not likely to cause confusion": they fall in different classes (33 and 34) and differ in physical attributes, price, buyers and channels of trade. Being vices sold in the same store was insufficient; following IDV v. S & M Brands, alcohol and tobacco are related only in special circumstances, which require a famous mark and a demonstrated intent to capitalize on it, both absent. GALLO was not a well-known mark under the Paris Convention in this case because the goods were not similar, and respondents' nearly 20-year delay weighed in petitioners' favor. With no passing off or bad faith, there was no unfair competition under Section 29. The petition was granted, the CA and RTC rulings were reversed, and the complaint was dismissed.