G.R. No. 31380 , January 13, 1930
E. SPINNER AND COMPANY vs. NEUSS HESSLEIN CORPORATION

FACTS

Plaintiff E. Spinner & Co., an English manufacturer, has sold khaki cloth in the Philippines since around 1900, using a registered trademark featuring two elephant heads. It marketed different grades of khaki under names like “Wigan,” “Stockport,” “Jackton,” and “Ashford,” with the specific grade (e.g., “Wigan”) stenciled on the bolts. The word “Wigan” is a geographical place name in England but was used arbitrarily by the plaintiff to indicate a quality of khaki. In 1924, the plaintiff discovered that defendant Neuss Hesslein Corporation, a local subsidiary of a New York firm, was selling its own khaki cloth with the word “Wigan” stenciled on the bolts, purportedly to indicate color. The defendant’s khaki was sold at a lower price than the plaintiff’s. In 1925, the plaintiff re-registered its trademark, this time explicitly including the word “Wigan” as part of the mark. The plaintiff sued to enjoin the defendant from using “Wigan” and to recover damages for trademark infringement and unfair competition. The trial court absolved the defendant.

ISSUE

Whether the defendant’s use of the word “Wigan” on its khaki cloth constitutes trademark infringement or unfair competition.

RULING

No, there is no trademark infringement, but yes, there is unfair competition.

The Supreme Court held that the plaintiff did not acquire an exclusive trademark right to the word “Wigan” because it was used merely to indicate quality or grade, not as a distinctive trademark. The word was not inherently distinctive and had not acquired a secondary meaning exclusively identifying the plaintiff’s goods at the time the defendant began using it. However, the Court found unfair competition under Section 7 of Act No. 666 . The defendant’s use of “Wigan” was calculated to deceive the public and misappropriate the plaintiff’s established goodwill, as “Wigan” had become associated in the Philippine market with the plaintiff’s high-quality khaki. The defendant’s use created a likelihood of confusion, leading purchasers to believe they were buying the plaintiff’s product.

The Court modified the trial court’s judgment. It enjoined the defendant from using the word “Wigan” on its khaki sold in the Philippines but absolved the defendant from paying damages because the plaintiff failed to prove actual damages. No costs were awarded.

DISSENTING OPINION:
Chief Justice Avanceña and Justice Malcolm argued that the word “Wigan” had become common in the trade to designate both a color of American khaki and a quality of English khaki. They found no deceitful similarity or evidence of actual consumer confusion, concluding it was fair competition, not unfair competition. They would have affirmed the trial court’s decision absolving the defendant entirely.