Petitioner Coca-Cola applied for a search warrant against Pepsi for hoarding empty Coke bottles in Pepsi’s yard, an act allegedly penalized as unfair competition under the IP Code. MTC issued the search warrants and the local police seized the goods. Later, a complaint against respondents was filed for violation of the IP Code. Respondent contended that the hoarding of empty Coke bottles did not involve fraud and deceit for them to be liable for unfair competition. MTC upheld the validity of the warrants. RTC voided the warrant for lack of probable cause of the commission of unfair competition.
Whether or not respondent’s hoarding of Coke bottles constitute unfair competition.
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon the public the goods or business of one person as the goods or business of another with the end and probable effect of deceiving the public. One of the essential requisites in an action to restrain unfair competition is proof of fraud; the intent to deceive must be shown before the right to recover can exist. The advent of the IP Code has not significantly changed these rulings as they are fully in accord with what Section 168 of the Code in its entirety provides. Deception, passing off and fraud upon the public are still the key elements that must be present for unfair competition to exist.
As basis for this interpretative analysis, we note that Section 168.1 speaks of a person who has earned goodwill with respect to his goods and services and who is entitled to protection under the Code, with or without a registered mark. Section 168.2, as previously discussed, refers to the general definition of unfair competition. Section 168.3, on the other hand, refers to the specific instances of unfair competition, with Section 168.3(a) referring to the sale of goods given the appearance of the goods of another; Section 168.3(b), to the inducement of belief that his or her goods or services are that of another who has earned goodwill; while the disputed Section 168.3(c) being a “catch all” clause whose coverage the parties now dispute.
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. In this light, hoarding for purposes of destruction is closer to what another law, R.A. No. 623 covers.