Trademark Infringement and Unfair Competition: 3 Legal Distinctions

November 6, 2024

At a glance, infringement and unfair competition may seem synonymous. This warrants the intervention of courts in identifying and applying the right legal standards to ensure a fair market landscape. The Intellectual Property Code (IP Code)1 provides these standards, further providing guidelines for trademark protection and defining their limitations.

This article will guide you in understanding the key distinctions between trademark infringement and unfair competition. 

The Importance of the Distinction

In cases of trademark infringement and unfair competition, courts face the challenge of drawing clear distinctions to prevent consumer confusion and overlapping perceptions of brand identity. Indeed, a confusing similarity will justify the intervention of equity.2 

It is important to understand the distinction between these legal concepts to efficiently apply the right standards in certain situations, especially if your trade is at risk. 

3 Legal Distinctions Between Trademark Infringement and Unfair Competition

To properly resolve the issue in the landmark case Del Monte Corporation and Philippine Packing Corporation v. Court of Appeals and Sunshine Sauce Manufacturing Industries,3 Justice Cruz listed the following distinctions between trademark infringement and unfair competition:

1. As to scope and nature.

Infringement of a trademark is the unauthorized use of a trademark, whereas unfair competition is the passing off of one's goods as those of another.

In McDonald’s Corp. v. L.C. Big Mak Burger, the Court noted that unfair competition is broader than trademark infringement and includes passing off goods with or without trademark infringement.4 This stems from the Del Monte case where the Court ruled that unfair competition is broader as it includes cases that are covered not only by the IP Code but also by the provisions of the New Civil Code.5

The same Court further emphasized that trademark infringement is a form of unfair competition. Trademark infringement constitutes unfair competition when there is not merely likelihood of confusion, but also actual or probable deception on the public because of the general appearance of the goods.6

2. As to fraudulent intent.  

It is not necessary to establish fraudulent intent in the infringement of a trademark, whereas fraudulent intent is essential in unfair competition. Sec. 168.2 of the IP Code states, viz: 

Any person who shall employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be subject to an action therefor.7

It follows then that the intent to deceive and defraud may be inferred from the similarity of the appearance of the goods as offered for sale to the public. As compared to trademark infringement, actual fraudulent intent must be shown to establish unfair competition. 

3. As to registration.

In trademark infringement, prior trademark registration is a prerequisite for filing an action, whereas in unfair competition registration is not necessary. Under Sec. 122 of the IP Code, the rights in a mark shall be acquired through registration with the IPO. Accordingly, registration is necessary before one can file an action for infringement.8 

Conclusion

To enforce your rights under the IP Code, you must be equipped with the proper understanding of the legal standards that draw the line between trademark infringement and unfair competition. 

Courts, by carefully analyzing these distinctions, provide effective remedies that safeguard businesses' reputations and protect consumers from misleading practices. Ultimately, enforcing these boundaries not only supports rightful ownership and honest competition but also enhances consumer trust and promotes a fair marketplace for intellectual rights.

To know more about trademark law and unfair competition, book a consultation with a trademark attorney. You may also email us at admin@pinollaw.com.

1 An Act Prescribing the Intellectual Property Code and Establishing the Intellectual Property Office, Providing for its Powers and Functions, and for other Purposes, Republic Act No. 8293, §1 (January 1, 1998) [hereinafter Intellectual Property Code of the Philippines].

2 Del Monte Corporation and Philippine Packing Corporation v. Court of Appeals and Sunshine Sauce Manufacturing Industries, G.R. No. L-78325, January 25, 1990. See also

3 Del Monte Corporation and Philippine Packing Corporation v. Court of Appeals and Sunshine Sauce Manufacturing Industries, G.R. No. L-78325, January 25, 1990 [hereinafter Del Monte case].

4 McDonald’s Corp. v. L.C. Big Mak Burger, G.R. No. 143993, August 18,2004.

5 Id.

6 Id at 4.

7 Intellectual Property Code of the Philippines, §168.2.

8 Id at §122.