Maguan vs CA, GR L-45101, November 28, 1986

FACTS:
Petitioner does business under firm name “Swan Manufacturing” while private respondent does business
under firm name “Susana Luchan Powder Puff Manufacturing”. Petitioner is a patent holder of powder
puff namely: UM-423, UM-450, UM-1184.

Petitioner sent a letter to private respondent that the powder puffs the latter manufactures and sells to
various enterprises, particularly those in the cosmetics industry, resembles identically or is substantially
identical to the former’s powder puffs which it is a patent holder of. Petitioner explained such production
and sale constitute infringement of said patents and therefore its immediate discontinuance is demanded,
otherwise it will be compelled to take judicial action.

Private respondent replied stating that her products are different and countered that petitioner's patents
are void because the utility models applied for were not new and patentable and the person to whom the
patents were issued was not the true and actual author nor were her rights derived from such author.

Later, private respondent assailed the validity of the patents involved and filed with the Philippine Patent
Office petitions for cancellation of: UM-109, UM-1184, UM-110. In view thereof, petitioner filed a
complaint for damages with injunction and preliminary injunction against private respondent with the
then CFI for infringing the aforesaid letters patent.

Trial Court granted the preliminary injunction, enjoining the herein private respondent and all other
persons employed by her, her agents, servants and employees from directly or indirectly manufacturing,
making or causing to be made, selling or causing to be sold, or using or causing to be used in accordance
with, or embodying the utility models of the Philippine Patent Office Utility Model Letters Patent.

In a MR, private respondent questioned the propriety of the trial court's issuance of the Writ of
Preliminary Injunction arguing that since there is still a pending cancellation proceedings before the
Philippine Patent Office concerning petitioner's patents, such cannot be the basis for preliminary
injunction. However, the trial court denied such MR.

CA initially denied private respondent’s petition for certiorari, but later reversed itself upon
reconsideration. Respondent court gave weight to private respondent's allegation that the latter's
products are not identical or even only substantially identical to the products covered by petitioner's
patents.

ISSUES:
1) Whether or not in an action for infringement the Court a quo had jurisdiction to determine the
invalidity of the patents at issue which invalidity was still pending consideration in the patent
office
2) Whether or not the evidence introduced by private respondent is sufficient to overcome the
presumption of correctness and validity of the patent.

RULING:
1) YES. A regular court (RTC) has jurisdiction to determine the issue of novelty or prior use when a
patent is sought to be enforced, for the purpose of deciding whether or not to issue a writ of
preliminary injunction.
A patentee shall have the exclusive right to make, use and sell the patented article or product and the
making, using, or selling by any person without the authorization of the patentee constitutes infringement
of the patent (Sec. 37, R.A. 165). Any patentee whose rights have been infringed upon may bring an action
before the proper CFI now (RTC) and to secure an injunction for the protection of his rights (Sec. 42, R.A.
165). Defenses in an action for infringement are provided for in Section 45 of the same law which in fact
were availed of by private respondent in this case. As correctly stated by the CA, Sec. 46 of the law
provides that if the Court "shall find the patent or any claim thereof invalid, the Director shall on
certification of the final judgment x x x issue an order cancelling the patent or the claims found invalid and
shall publish a notice thereof in the Official Gazette." Upon such certification, it is ministerial on the part
of the patent office to execute the judgment.

2) YES. After a careful review of the evidence consisting of 64 exhibits and oral testimonies of 5
witnesses presented by private respondents before the CFI, as well as those presented by the
petitioner, respondent CA was satisfied that there is a prima facie showing of a fair question of
invalidity of petitioner's patents on the ground of lack of novelty.
As pointed out by said appellate court said evidence appeared not to have been considered at all by the
court a quo for alleged lack of jurisdiction, on the mistaken notion that such question in within the
exclusive jurisdiction of the patent office.

The burden of proof to substantiate a charge of patent infringement lies with the plaintiff. But once the
patent is in evidence, there is created a prima facie presumption of its correctness and validity – the
burden of evidence is upon the defendant to overcome this presumption. The decision of the
Commissioner (now Director) of Patent in granting the patent is presumed to be correct. The burden of
going forward with the evidence (burden of evidence) then shifts to the defendant to overcome by
competent evidence this legal presumption.

It has been repeatedly held that an invention must possess the essential elements of novelty, originality
and precedence and for the patentee to be entitled to protection, the invention must be new to the
world. Accordingly, a single instance of public use of the invention by a patentee for more than two
years (now for more than one year only under Sec. 9 of the Patent Law) before the date of his
application for his patent, will be fatal to the validity of the patent when issued.

The law provides:

Private respondent contends that powder puffs identical in appearance with that covered by
petitioner's patents existed and were publicly known and used as early as 1963 long before petitioner
was issued the patents in question. As correctly observed by respondent CA, "since sufficient proofs have
been introduced in evidence showing a fair question of the invalidity of the patents issued for such
models, it is but right that the evidence be looked into, evaluated and determined on the merits so that
the matter of whether the patents issued were in fact valid or not may be resolved."
For failure to determine first the validity of the patents before aforesaid issuance of the writ, the trial
court failed to satisfy the two requisites necessary if an injunction is to issue, namely: the existence of the
right to be protected and the violation of said right. As found by respondent Court of Appeals, the
injunctive order of the trial court is of so general a tenor that petitioner may be totally barred from the
sale of any kind of powder puff.

Claim of prescription may be availed of by patent holder in petitions for cancellation at the Patent
Office, but not in ordinary civil actions for infringement of patent. As to petitioner's claim of prescription,
private respondent's contention that such refers to the filing of petitions for cancellation in the Patent
Office under Sec. 28 of the Patent Law and not to a defense against an action for infringement under Sec.
45 thereof which may be raised anytime, is evident under aforesaid law.