GEOLOGÍA ESTRUCTURAL Y TECTÓNICA

contracts:

[PCAT]

88.1. That the laws of the Philippines shall govern the interpretation of the same and in the event of litigation, the venue shall be the proper court in the place where the licensee has its principal office;

88.2. Continued access to improvements in techniques and processes related to the technology shall be made available during the period of the technology transfer arrangement;

88.3. In the event the technology transfer arrangement shall provide for arbitration, the Procedure of Arbitration of the Arbitration Law of the Philippines or the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) or the Rules of Conciliation and Arbitration of the International Chamber of Commerce (ICC) shall apply and the venue of arbitration shall be the Philippines or any neutral country; and

88.4. The Philippine taxes on all payments relating to the technology transfer arrangement shall be borne by the licensor. (n)

Unenforceability of Non-Complying Technology Transfer Agreement

SEC 92. Non-Registration with the Documentation, Information and Technology Transfer Bureau. - Technology transfer arrangements that conform with the provisions of SECs 86 and 87 need not be registered with the Documentation, Information and Technology Transfer Bureau. Non-conformance with any of the provisions of SECs 87 and 88, however, shall automatically render the

technology transfer arrangement

unenforceable, unless said technology transfer arrangement is approved and registered with the Documentation, Information and Technology Transfer Bureau under the provisions of SEC 91 on exceptional cases. (n)

Compulsory Licensing

Ground for Grant of Compulsory License SEC 93. Grounds for Compulsory Licensing. - The Director of Legal Affairs may grant a license to exploit a patented invention, even without the agreement of the patent owner, in favor of any person who has shown his capability to exploit the invention, under any of the following circumstances:

[NPJPN]

93.1. National emergency or other circumstances of extreme urgency;

93.2. Where the public interest, in particular, national security, nutrition, health or the development of other vital sectors of the national economy as determined by the appropriate agency of the Government, so requires; or

93.3. Where a judicial or administrative body has determined that the manner of exploitation by the owner of the patent or his licensee is anti-competitive; or

93.4. In case of public non-commercial use of the patent by the patentee, without satisfactory reason;

93.5. If the patented invention is not being worked in the Philippines on a commercial scale, although capable of being worked, without satisfactory reason: Provided, That the importation of the patented article shall constitute working or using the patent. (Secs.

34, 34-A, 34-B, R.A. No. 165a) Terms and Conditions of Grant

SEC 100. Terms and Conditions of Compulsory License. - The basic terms and conditions including the rate of royalties of a compulsory license shall be fixed by the Director of Legal Affairs subject to the following conditions:

[SNNPTP]

100.1. The scope and duration of such license shall be limited to the purpose for which it was authorized;

100.2. The license shall be non-exclusive;

100.3. The license shall be non-assignable, except with that part of the enterprise or business with which the invention is being exploited;

100.4. Use of the subject matter of the license shall be devoted predominantly for the supply of the Philippine market: Provided, That this limitation shall not apply where the grant of the license is based on the ground that the patentee's manner of exploiting the patent is determined by judicial or administrative process, to be anti-competitive.

100.5. The license may be terminated upon proper showing that circumstances which led to its grant have ceased to exist and are unlikely to recur: Provided, That adequate protection

shall be afforded to the legitimate interest of the licensee; and

100.6. The patentee shall be paid adequate remuneration taking into account the economic value of the grant or authorization, except that in cases where the license was granted to remedy a practice which was determined after judicial or administrative process, to be competitive, the need to correct the anti-competitive practice may be taken into account in fixing the amount of remuneration. (Sec. 35-B, R.A. No. 165a)

Licensee’s Exemption from Liability

SEC 102. Licensee's Exemption from Liability. - Any person who works a patented product, substance and/or process under a license granted under this Chapter, shall be free from any liability for infringement: Provided however, That in the case of voluntary licensing, no collusion with the licensor is proven. This is without prejudice to the right of the rightful owner of the patent to recover from the licensor whatever he may have received as royalties under the license. (Sec. 35-E, R.A. No. 165a) Assignment or Transfer of Patent

Form

SEC 105. Form of Assignment. - The assignment must be in writing, acknowledged before a notary public or other officer authorized to administer oath or perform notarial acts, and certified under the hand and official seal of the notary or such other officer.

(Sec. 52, R.A. No. 165) [WAC]

Need for Recording to Bind Third Parties SEC 106. Recording. - 106.1. The Office shall record assignments, licenses and other instruments relating to the transmission of any right, title or interest in and to inventions, and patents or application for patents or inventions to which they relate, which are presented in due form to the Office for registration, in books and records kept for the purpose. The original documents together with a signed duplicate thereof shall be filed, and the contents thereof should be kept confidential. If the original is not available, an authenticated copy thereof in duplicate may be filed. Upon recording, the Office shall retain the duplicate, return the original or the authenticated copy to the party who filed the same and notice of the recording shall be published in the IPO Gazette.

106.2. Such instruments shall be void as against any subsequent purchaser or mortgagee for valuable consideration and

without notice, unless, it is so recorded in the Office, within three (3) months from the date of said instrument, or prior to the subsequent purchase or mortgage. (Sec. 53, R.A. No. 165a) Utility Models

SEC 109. Special Provisions Relating to Utility Models. - 109.1. (a) An invention qualifies for registration as a utility model if it is new and industrially applicable.

Term

109.3. A utility model registration shall expire, without any possibility of renewal, at the end of the seventh year after the date of the filing of the application.

17.6 Cases

Test of Infringement GODINES V CA

Facts:

The patent involved in this case is Letters Patent No. UM-2236 issued by the Philippine Patent Office to one Magdalena S. Villaruz on July 15, 1976. It covers a utility model for a hand tractor or power tiller. The above mentioned patent was acquired by SV-Agro Industries Enterprises, Inc., herein private respondent, from Magdalena Villaruz, its chairman and president, by virtue of a Deed of Assignment executed by the latter in its favor.

On October 31, 1979. In 1979, SV-Agro Industries suffered a decline of more than 50%

in sales in its Molave, Zamboanga del Sur branch. Upon investigation, it discovered that power tillers similar to those patented by private respondent were being manufactured and sold by petitioner herein. Consequently, private respondent notified Pascual Godines about the existing patent and demanded that the latter stop selling and manufacturing similar power tillers. Upon petitioner's failure to comply with the demand, SV-Agro Industries filed before the Regional Trial Court a complaint for infringement of patent and unfair competition.

RTC: held Pascual Godines liable for infringement of patent and unfair competition.

CA: decision was affirmed by the appellate court.

Issue: WON Petitioner is guilty of Patent Infringement.

Held: Yes Ratio:

We find no merit in his arguments. The question of whether petitioner was manufacturing and selling power tillers is a question of fact better

addressed to the lower courts. In dismissing the first argument of petitioner herein, the Court of Appeals quoted the findings of the court, to wit:

It is the contention of defendant that he did not manufacture or make imitations or copies of plaintiff's turtle power tiller as what he merely did was to fabricate his floating power tiller upon specifications and designs of those who ordered them. However, this contention appears untenable in the light of the following circumstances:

he admits in his Answer that he has been manufacturing power tillers or hand tractors, selling and distributing them long before plaintiff started selling its turtle power tiller in Zamboanga del Sur and Misamis Occidental, meaning that defendant is principally a manufacturer of power tillers, not upon specification and design of buyers, but upon his own specification and design;

it would be unbelievable that defendant would fabricate power tillers similar to the turtle power tillers of plaintiff upon specifications of buyers without requiring a job order where the specification and designs of those ordered are specified.

No document was (sic) ever been presented showing such job orders, and it is rather unusual for defendant to manufacture something without the specification and designs, considering that he is an engineer by profession and proprietor of the Ozamis Engineering shop.

On the other hand, it is also highly unusual for buyers to order the fabrication of a power tiller or hand tractor and allow defendant to manufacture them merely based on their verbal instructions.

This is contrary to the usual business and manufacturing practice. This is not only time consuming, but costly because it involves a trial and error method, repeat jobs and material wastage. Defendant judicially admitted two (2) units of the turtle power tiller sold by him to Policarpio Berondo.

Tests used in the case:

- Tests have been established to determine infringement.

These are :

LITERAL INFRINGEMENT: in using literal infringement as a test, ". . . resort must be had, in the first instance, to the words of the claim. If accused matter clearly falls within the claim, infringement is made out and that is the end of it."

To determine whether the particular item falls within the literal meaning of the patent claims, the court must juxtapose the claims of the patent and the accused product within the overall context of the claims and specifications, to determine whether there is exact identity of all material elements.

In appearance and form, both the floating power tillers of the defendant and the turtle power tiller of the plaintiff are virtually the same.

Viewed from any perspective or angle, the power tiller of the defendant is identical and similar to that of the turtle power tiller of plaintiff in form, configuration, design and appearance. The parts or components thereof are virtually the same.

Moreover, it is also observed that petitioner also called his power tiller as a floating power tiller.

(b) the DOCTRINE OF EQUIVALENTS:

according to this doctrine, “(a)n infringement also occurs when a device appropriates a prior invention by incorporating its innovative concept and, albeit with some modification and change, performs substantially the same function in substantially the same way to achieve substantially the same result.”

The reason for the doctrine of equivalents is that to permit the imitation of a patented invention which does not copy any literal detail would be to convert the protection of the patent grant into a hollow and useless thing.

A careful examination between the two power tillers will show that they will operate on the same fundamental principles.

More specifically, it is necessary and sufficient to constitute equivalency that the same function can be performed in substantially the same way or manner, or by the same or substantially the same, principle or mode of operation; but where these tests are satisfied, mere differences of form or name are immaterial.

Compulsory Licensing

SMITH KLINE & FRENCH LABORATORIES V CA Facts:

Petitioner is a foreign corporation with principal office at Welwyn Garden City, England. It owns Philippine Letters Patent No. 12207 issued by the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) for the patent of the drug Cimetidine.

Private respondent is a domestic corporation engaged in the business of manufacturing and distributing pharmaceutical products. On 30 March 1987, it filed a petition for compulsory licensing[3] with the BPTTT for authorization to manufacture its own brand of medicine from the drug Cimetidine and to market the resulting product in the Philippines. The petition was filed pursuant to the provisions of SEC 34 of Republic Act No. 165 (An Act Creating a Patent Office Prescribing Its Powers and Duties, Regulating the Issuance of Patents, and Appropriating Funds Therefor), which provides for the compulsory licensing of a particular patent after the expiration of two years from

the grant of the latter if the patented invention relates to, inter alia, medicine or that which is necessary for public health or public safety.

Private respondent alleged that the grant of Philippine Letters Patent No. 12207 was issued on 29 November 1978; that the petition was filed beyond the two-year protective period provided in SEC 34 of R.A. No. 165; and that it had the capability to work the patented product or make use of it in its manufacture of medicine.

Petitioner opposed, arguing that private respondent had no cause of action and lacked the capability to work the patented product; the petition failed to specifically divulge how private respondent would use or improve the patented product; and that private respondent was motivated by the pecuniary gain attendant to the grant of a compulsory license. Petitioner also maintained that it was capable of satisfying the demand of the local market in the manufacture and marketing of the medicines covered by the patented product.

BPTTT decided for the Private Respondent approving the application for a license. This was affirmed by the CA.

Issue: WON the grant of the license was proper

Held: Yes Ratio:

Article 5 of the Paris Convention for the Protection of Industrial Property,[8] or “Paris Convention,” for short, of which the Philippines became a party thereto only in 1965.[9]

Pertinent portions of said Article 5, SEC A, provide:

A. x x x

(2) Each country of the union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work.

x x x

(4) A compulsory license may not be applied for on the ground of failure to work or insufficient working before the expiration of a period of four years from the date of filing of the patent application or three years from the date of the grant of the patent, whichever period expires last; it shall be refused if the patentee justifies his inaction by legitimate reasons.

Such a compulsory license shall be non-exclusive and shall not be transferable, even in the form of the grant of a sub-license, except with that part of the enterprise or goodwill which exploits such license.

It is thus clear that SEC A(2) of Article 5 above unequivocally and explicitly respects the right of member countries to adopt legislative measures to provide for the grant of

compulsory licenses to prevent abuses which might result from the exercise of the exclusive rights conferred by the patent. An example provided of possible abuses is "failure to work;"

however, as such is merely supplied by way of an example, it is plain that the treaty does not preclude the inclusion of other forms or categories of abuses.

Also Article 34 of R.A. No. 165 states:

EC. 34. Grounds for Compulsory Licensing. -- (1) Any person may apply to the Director for the grant of a license under a particular patent at any time after the expiration of two years from the date of the grant of the patent, under any of the following circumstances:

(e) If the patented invention or article relates to food or medicine or manufactured products or substances which can be used as food or medicine, or is necessary for public health or public safety.

Parenthetically, it must be noted that paragraph (4) of SEC A, Article 5 of the Paris Convention setting time limitations in the application for a compulsory license refers only to an instance where the ground therefor is "failure to work or insufficient working," and not to any ground or circumstance as the treaty signatories may reasonably determine.

Neither may petitioner validly invoke what it designates as the GATT Treaty, Uruguay Round.

This act is better known as the Uruguay Final Act signed for the Philippines on 15 April 1994 by Trade and Industry Secretary Rizalino Navarro. Forming integral parts thereof are the Agreement Establishing the World Trade Organization, the Ministerial Declarations and Decisions, and the Understanding on Commitments in Financial Services. The Agreement establishing the World Trade Organization includes various agreements and associated legal instruments. It was only on 14 December 1994 that the Philippine Senate, in the exercise of its power under SEC 21 of Article VII of the Constitution, adopted Senate Resolution No. 97 concurring in the ratification by the President of the Agreement. The President signed the instrument of ratification on 16 December 1994. But plainly, this treaty has no retroactive effect. Accordingly, since the challenged BPTTT decision was rendered on 14 February 1994, petitioner cannot avail of the provisions of the GATT treaty.

It cannot likewise be claimed that petitioner was unduly deprived of its property rights, as R.A. No. 165 not only grants the patent holder a protective period of two years to enjoy his exclusive rights thereto; but subsequently, the law recognizes just compensation in the form of royalties.

In Parke, Davies & Co. v. Doctors' Pharmaceuticals, Inc., we held:

The right to exclude others from the manufacturing, using, or vending an invention relating to, food or medicine should be conditioned to allowing any person to manufacture, use, or vend the same after a period of three [now two] years from the date of the grant of the letters patent. After all, the patentee is not entirely deprived of any proprietary right. In fact, he has been given the period of three years [now two years] of complete monopoly over the patent.

Compulsory licensing of a patent on food or medicine without regard to the other conditions imposed in SEC 34 [now SEC 35] is not an undue deprivation of proprietary interests over a patent right because the law sees to it that even after three years of complete monopoly something is awarded to the inventor in the form of bilateral and workable licensing agreement and a reasonable royalty to be agreed upon by the parties and in default of such an agreement, the Director of Patents may fix the terms and conditions of the license.

Patent Infringement

CRESER PRECISION SYSTEMS V CA Facts:

Floro International Corp. (Floro) is a domestic corporation engaged in the manufacture, production, distribution and sale of military armaments, munitions, airmunitions and other similar materials.

January 23, 1990 Floro – granted a Patent by Bureau of Patents, Trademarks and Technology Transfer (BPTTT) covering an aerial fuze, duly published in the September-October-1990 issue of the Bureau of Patent's Official Gazette.

November 1993 Floro’s president, Mr. Gregory Floro, Jr., discovered that Creser Precision Systems, Inc. (Creser):

November 1993 Floro’s president, Mr. Gregory Floro, Jr., discovered that Creser Precision Systems, Inc. (Creser):