Appeals Court Rebukes Department of Justice for Dismissing Infringement Complaint  

November 16, 2015

In what may be seen as a power struggle between the executive and judicial branches of government, the Court of Appeals issued a ten-page scathing decision declaring that the Department of Justice committed grave abuse of discretion in dismissing the trademark infringement complaint involving the HAVAIANAS trademark.

The case stemmed from a criminal complaint filed by the Brazilian company, Sao Paolo Alpargatas S.A. (SPASA), the registered owner of the HAVAIANAS trademark.  The complaint was filed with the Office of the City Prosecutor of Caloocan City against Kentex Manufacturing  Corporation (Kentex) and its owners for trademark infringement and damages.   SPASA alleged that Kentex offered and sold flip flops using the trademark HAVANA knowing that they were colorable imitations or copies of the popular and well-known HAVAIANAS flip flops. Kentex denied liability and pleaded absence of likelihood of confusion, claiming: (1) that SPASA and Kentex target different markets; (2) that the selling price range between SPASA and Kentex merchandise is very different; and (3) that SPASA and Kentex cater to different sets of purchasers who are clearly smart and discerning enough to distinguish the goods. Kentex submitted certifications of copyright registration, design registrations and copies of trademark applications.

The Prosecutor dismissed the complaint ruling that the HAVANA flip flops cater to a different class of buyers who will not likely be fooled into believing that what they are buying are the imported HAVAIANAS flip flops.   The Prosecutor observed that HAVANA flip flops are properly labeled as to their source and, that no evidence was presented to prove Kentex’s intent to deceive the public.  The Prosecutor further noted that buyers are sufficiently informed when buying HAVANA flip flops because the latter are offered at a different price point and they could distinguish them from the imported HAVAIANAS flip flops.

SPASA moved to reconsider the dismissal of its complaint on a Petition for Review with the Department of Justice, which the latter surprisingly affirmed, thereby prompting the former to elevate the matter to the Court of Appeals on a Petition for Certiorari.

The Appeals Court ruled for HAVAIANAS. It emphasized that the standard for filing a criminal information is not proof beyond a reasonable doubt.  A criminal information can be filed if there is probable cause to believe that defendant is guilty of the crime charged. After examining the records, the Court found that there was sufficient evidence to warrant the prosecution of Kentex and its officers for trademark infringement.

The Court dismissed Kentex’s argument that likelihood of confusion is merely speculative because HAVANA flip flops which are cheaper than HAVAIANA flip flops are targeted to a different market segment.  The Court explained that the purchasing public might still be mistaken into thinking that SPASA had ventured into a lower market segment, and consequently, may think that Kentex’s HAVANA trademark is associated with HAVAIANAS given that both companies manufacture the same products.  The Court admonished the prosecutor and the Justice Department for failing to see the glaring and obvious similarities of the contending marks.  The Court declared that the Justice Department committed grave abuse of discretion in affirming the Prosecutor’s dismissal of the complaint when there clearly existed facts sufficient to engender a well-founded belief that trademark infringement has been committed and that Kentex was probably guilty thereof.  The Court concluded that the Justice Department committed grave abuse of discretion because it unjustly withheld from SPASA a full-blown trial to ferret out the truth.

Kentex is the same company whose factory has earlier burned down in May of this year leaving more than70 factory workers dead.  Investigators concluded that its owners failed to maintain safe working conditions.  Kentex received a lot of flak from the public due to this grim incident, and the owners have now been indicted criminally as a result. This recent decision may similarly invite intense public interest as the general sentiment clamors for this company’s owners to be brought to justice.

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