For years, Y has been engaged in the parallel importation of famous brands, including shoes carrying the foreign brand MAGIC. Exclusive distributor X demands that Y cease importation because of his appointment as exclusive distributor of MAGIC shoes in the Philippines.
Y counters that the trademark MAGIC is not registered with the Intellectual Property Office as a trademark and therefore no one has the right to prevent its parallel importation.
a. Who is correct? Why? (2%)
b. Suppose the shoes are covered by a Philippine patent issued to the brand owner, what would your answer be? Explain. (2%)
Suggested answer only. Not an official answer and not legal advice.
X is correct in both instances, as Y's acts constitute unfair competition and patent infringement. Under Yu v. CA and Section 168 of R.A. 8293, exclusive distributorships are protected property rights, making unauthorized importation
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Quick check
Under Yu v. Court of Appeals, why can an exclusive distributor prevent unauthorized parallel importation of goods?
An exclusive distributorship is a recognized property right that can be protected against unfair competition caused by parallel importation.
Is registration of a trademark with the Intellectual Property Office necessary to file a claim for unfair competition?
Section 168 of R.A. 8293 provides that trademark registration is not required to maintain an action for unfair competition.
Under Section 71.1 of R.A. 8293, what exclusive right is conferred upon the owner of a Philippine patent?
Section 71.1 explicitly grants patent owners the exclusive right to prevent unauthorized importation of patented products.
What legal violation is committed when a party unauthorizedly imports goods covered by a valid Philippine patent?
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Which landmark case recognized that unauthorized parallel importation interfering with an exclusive distributorship constitutes unfair competition?
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Learn more about these topics
1. Exclusive Distributorship Protection
Under Yu v. Court of Appeals and Section 168 of the Intellectual Property Code of the Philippines (Republic Act Number 8293), an exclusive distributorship agreement creates a protected property right. Even if the foreign brand's trademark is unregistered in the Philippines, an exclusive distributor can prevent unauthorized parallel importation. Unauthorized parallel importers who reap where they have not sown commit unfair competition by unfairly riding on the goodwill, marketing investments, and established distribution channels created by the exclusive distributor.
2. Unfair Competition Protection
Under Section 168 of Republic Act Number 8293, trademark registration is not a prerequisite to maintain an action for unfair competition. Unfair competition protects established business goodwill, trade relations, and commercial reputation against unfair trade practices. When a parallel importer secretly or unauthorizedly imports genuine foreign goods into a territory granted exclusively to an authorized distributor, the importer deceives the purchasing public and unfairly undermines the exclusive distributor's contractual rights and local warranty support, constituting actionable unfair competition.
3. Patent Importation Rights
Under Section 71.1 and Section 76.1 of the Intellectual Property Code (Republic Act Number 8293), a Philippine patent owner possesses the exclusive right to restrain, prevent, and prohibit any unauthorized entity from importing the patented product into the Philippines. Unauthorized parallel importation of goods covered by a valid Philippine patent constitutes direct patent infringement. Unlike unregistered trademarks, patent rights explicitly grant statutory exclusivity over commercial importation, entitling the patent owner or authorized licensee to injunctive relief and civil damages.