Many business owners believe that being the first to use a name or a mark automatically gives them ownership over it. After all, if you created the brand, marketed it, and built a following around it, it should be yours to own, right?
This is where many get it wrong.
While early use matters, the law is not so straightforward. In the Philippines, trademark rights follow the "first-to-file rule" as a standard principle, meaning the party who registers the trademark first with the Intellectual Property Office of the Philippines (IPOPHL) usually has the superior right, regardless of who used it first.
The General Rule: First-to-File
Republic Act No. 8293, as amended, otherwise known as the Intellectual Property Code of the Philippines (IP Code), expressly adopts the first-to-file system of trademark registration. Under the IP Code, ownership of a trademark is acquired through valid registration, not by mere prior use.
The first-to-file rule is laid down in Section 123. 1 (d) of the IP Code, which states:
“A mark cannot be registered if it is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date, in respect of (i) the same goods or services, or (ii) closely related goods or services, or (iii) if it nearly resembles such a mark as to be likely to deceive or cause confusion.”
In other words, the law prevents multiple businesses from claiming the same or confusingly similar trademarks. This rule promotes certainty and protects businesses by clearly establishing who legally owns a trademark.
The Exception: Prior Use in Good Faith
While the first-to-file rule is the general rule, it is not absolute.
In Manuel T. Zulueta v. Cyma Greek Taverna Co. (G.R. No. 248277, 15 February 2023), the Supreme Court clarified that trademark registrations filed in bad faith or through fraud are void from the beginning and do not confer any rights.
The High Court explained that where it is shown that another party already used or created the mark, and the trademark applicant had knowledge of such prior use at the time of filing, the application may be denied for bad faith. In such cases, the first-to-file rule cannot be used to unfairly appropriate an existing mark.
However, the Court also stressed that this exception is strictly applied.
Why This Matters for Business Owners
Relying on prior use alone is often risky because the law limits the circumstances under which it can defeat a registered trademark.
For example, while the Supreme Court no longer follows the Shen Dar ruling, which previously recognized prior use as overriding registration. Prior use may still be considered if bad faith is involved. Thus, a trademark application may be denied if:
1. Another party can show prior use, creation, or registration of the mark; and
2. The applicant knew about this prior use at the time of filing.
Even then, court applies this exception very strictly. The business claiming prior use must present clear and convincing evidence that it genuinely used the mark in commerce before the filing date. Proving this usually requires formal legal proceedings, such as opposition or cancellation cases, making it complex, costly, and uncertain.
Thus, without registration, enforcing rights can be costly, time-consuming, and uncertain.
Practical Takeaway
Being first in the market does not automatically mean you legally own a trademark. While prior use in good faith may offer limited protection, it offers no certainty.
Trademark registration does. Registering early secures nationwide rights, strengthens enforcement, and protects your brand from being taken by others. A valuable brand is worth protecting. Don’t wait. Register it now or risk losing it.
(Atty. Alexandria P. Gonzales is a Junior Associate of HG Law. She regularly advises clients on legal matters involving dispute resolution, intellectual property, and corporate law. For inquiries or comments regarding this article, she may be reached at apgonzales@hglaw.ph)