MS Brewery Corporation (MS) is a manufacturer and distributor of the popular beer “MS Lite.” It faces stiff competition from BA Brewery Corporation (BA) whose sales of its own beer product, “BA Lighter,” has soared to new heights. Meanwhile, sales of the “MS Lite” decreased considerably. The distribution and marketing personnel of MS later discovered that BA has stored thousands of empty bottles of “MS Lite” manufactured by MS in one of its warehouses. MS filed a suit for unfair competition against BA before the Regional Trial Court (RTC). Finding a connection between the dwindling sales of MS and the increased sales of BA, the RTC ruled that BA resorted to acts of unfair competition to the detriment of MS. Is the RTC correct? Explain. (5%)
Suggested answer only. Not an official answer and not legal advice.
No, the RTC is not correct.
Under Section 168 of the Intellectual Property Code (RA 8293) and established jurisprudence, unfair competition requires passing off one's goods as those of another, or employing deception calculated to deceive the public. The hoarding or storing of a competitor's empty bottles does not constitute unfair competition because it does not involve any false representation or passing off.
Here, BA merely stored empty bottles of "MS Lite" in its warehouse without passing off its beer as that of MS or deceiving the purchasing public. The hoarding of empty bottles to impede product circulation does not constitute unfair competition under Section 168.
Therefore, the RTC erred in ruling that BA committed acts of unfair competition.
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Quick check
What is the indispensable element of unfair competition under Section 168 of the Intellectual Property Code?
Section 168 requires passing off or deception calculated to misrepresent the origin of goods.
Why does BA Brewery Corporation's hoarding of 'MS Lite' empty bottles not constitute unfair competition?
Hoarding empty bottles lacks the element of passing off or public deception required for unfair competition.
Under Section 168 of R.A. No. 8293, what is the legal effect when a competitor collects and stores an rival's empty containers without selling goods in them?
Storing empty containers without false representation does not constitute unfair competition.
Under what legal provision may a party potentially seek damages for bad faith commercial bottle hoarding that causes financial injury?
Civil Code provisions on human relations and quasi-delicts govern acts causing injury contrary to good morals.
Which primary statute defines unfair competition, passing off, and intellectual property remedies in the Philippines?
Republic Act Number 8293 is the Intellectual Property Code of the Philippines.
Learn more about these topics
1. Unfair Competition Elements
Under Section 168 of the Intellectual Property Code of the Philippines (Republic Act Number 8293), unfair competition is committed by any person who employs deception or any other means contrary to good faith by which he passes off the goods manufactured by him or in which he deals for those of the one having established goodwill. The essential elements of unfair competition are bad faith, intent to deceive the public, and passing off one's product as that of another. Without passing off or deception of the buying public, an act cannot constitute unfair competition under Section 168.
2. Bottle Hoarding Liability
Under Philippine jurisprudence, the mere hoarding or storing of a competitor's empty bottles does not constitute unfair competition under the Intellectual Property Code. While hoarding empty bottles may impede a competitor's product circulation and cause financial injury, it lacks the essential element of passing off or deceiving the purchasing public as to the origin of the goods. Although such conduct might give rise to liability under the Civil Code rules on human relations or trade restraint statutes, it does not fall within the statutory definition of unfair competition under Section 168 of Republic Act Number 8293.
3. Passing Off Requirement
Under Section 168.2 of Republic Act Number 8293, passing off is the indispensable nexus of unfair competition. Passing off occurs when a competitor induces the public to believe that his goods, business, or services are those of another person, either by simulating appearance, general feature, or trade dress. Where a commercial competitor merely collects and holds empty trademarked containers in a warehouse without selling its own product in those containers or misrepresenting their manufacturer, no passing off occurs. Consequently, trial courts commit legal error by equating bottle hoarding directly with unfair competition.