MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC. petitioners, vs.

E. & J. GALLO WINERY and THE ANDRESONS GROUP, INC. respondents

Facts: Gallo Winery, producer of wines and brandy products which is based in California, U.S.A.,
registered its GALLO wine trademark in the Philippines in 1971. Gallo Winery produces different kinds of
wines and brandy products and sells them in many countries under different registered trademarks,
including the GALLO and ERNEST & JULIO GALLO wine trademarks.

On the other hand, petitioners Mighty Corporation and La Campana and their sister company,
Tobacco Industries of the Philippines (Tobacco Industries), are engaged in the cultivation, manufacture,
distribution and sale of tobacco products for which they have been using the GALLO cigarette trademark
since 1973.

In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana which,
on July 16, 1985, applied for trademark registration in the Philippine Patent Office. On July 17, 1985, the
National Library issued Certificate of Copyright Registration No. 5834 for La Campana lifetime copyright
claim over GALLO cigarette labels.

Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes

bearing the GALLO trademark.BIR approved Mighty Corporations use of GALLO 100s cigarette brand,
under licensing agreement with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL
100s cigarette brand on April 3, 1989.

Issue: Whether or not there was trademark infringement

Ruling: On 14 July 2004, the Supreme Court ruled that Mighty Corporation, et al. are not liable for
trademark infringement or unfair competition and reaffirmed the doctrine that the use of an identical mark
does not, by itself, lead to a legal conclusion that there is trademark infringement. A crucial issue in any
trademark infringement case is the likelihood of confusion, mistake or deceit as to the identity, source or
origin of the goods, or identity of the business as a consequence of using a certain mark.

According to the High Court, there are two types of confusion in trademark infringement, namely,
"confusion of goods" and "confusion of business." Confusion of goods is evident where the litigants are
actually in competition; but confusion of business may arise between non-competing interests as well.
Thus, there is likelihood of confusion when, although the goods of the parties are different, they are
so related that the defendant's product can reasonably be assumed to originate from the plaintiff.

In determining likelihood of confusion, the Supreme Court considered the following factors: [a] the
resemblance between the trademarks; [b] the similarity of the goods to which the trademarks are attached;
[c] the likely effect on the purchaser; and [d] the registrant's express or implied consent and other fair and
equitable considerations.
In comparing the resemblance or colorable imitation of marks, various elements were considered, such as
the dominant color, style, size, form, meaning of letters, words, designs and emblems used, the likelihood
of deception of the mark or name's tendency to confuse, and the commercial impression likely to be
conveyed by the trademarks if used in conjunction with the respective goods of the parties.

The Supreme Court found that the similarity between the parties' GALLO trademarks, i.e., the use of the
word "GALLO" - a family surname for Gallo Winery's wines and a Spanish word for "rooster" for Mighty
Corporation, et al.'s cigarettes, was overridden by their different features like color schemes, art works
and other markings of both products.

The Supreme Court distinguished between GALLO wines and GALLO cigarettes as follows: (1) wines are
bottled and consumed by drinking while cigarettes are packed in cartons or packages and smoked; (2)
there is a whale of a difference between their descriptive properties, physical attributes or essential
characteristics like form, composition, texture and quality; (3) GALLO cigarettes are inexpensive items
that appeal only to simple folks like farmers, fishermen, laborers and other low-income workers while
GALLO wines are patronized by middle-to-high-income earners; and (4) GALLO cigarettes are distributed
through sidewalk vendors, sari-sari stores and grocery stores in rural areas, mainly in Misamis Oriental,
Pangasinan, Bohol, and Cebu, whereas GALLO wines are imported and exclusively distributed by a local
entity and sold in hotels, expensive bars and restaurants, and high-end grocery stores and supermarkets.

Based on these distinctions, the High Tribunal declared that wines and cigarettes are non-competing and
totally unrelated products which are not likely to cause confusion vis-à-vis the goods or business of Gallo
Winery and Mighty Corporation, et al. Thus, even though similar marks are used, there is no trademark
infringement if the public does not expect the plaintiff to make or sell the same class of goods as those
made or sold by the defendant.