Zuneca Pharmaceutical vs Natrapharm,

G. R. No. 197802, Nov. 11, 2015

ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D. DBA ZUNECA PHARMACEUTICAL, Petitioners, v. NATRAPHARM, INC., Respondent.

Respondent is an all-Filipino pharmaceutical company which manufactures and sells a medicine bearing the generic name "CITICOLINE," which is indicated for heart and stroke patients. The said medicine is marketed by respondent under its registered trademark "ZYNAPSE," which respondent obtained from the Intellectual Property Office (IPO) on September 24, 2007 under Certificate of Trademark Registration No. 4-2007-005596. With its registration, the trademark "ZYNAPSE" enjoys protection for a term of 10 years from September 24, 2007.

Early 2001, petitioners have been selling a medicine imported from Lahore, Pakistan bearing the generic name "CARBAMAZEPINE," an anti-convulsant indicated for epilepsy, under the brand name "ZYNAPS," which trademark is however not registered with the IPO. "ZYNAPS" is pronounced exactly like "ZYNAPSE."

Respondent claimed that the drug CARBAMAZEPINE has one documented serious and disfiguring side-effect called "Stevens-Johnson Syndrome," and that the sale of the medicines "ZYNAPSE" and "ZYNAPS" in the same drugstores will give rise to medicine switching.

Petitioners claimed that they had prior use of the name "ZYNAPS" since year 2003, having been issued by the BFAD a Certificate of Product Registration (CPR) on April 15, 2003, which allowed them to sell CARBAMAZEPINE under the brand name "ZYNAPS."

Respondent filed a complaint against petitioners for trademark infringement for violation of Republic Act (R.A.) No. 8293, or the Intellectual Property Code of the Philippines (IPC).

In their answer, petitioners argued that they enjoyed prior use in good faith of the brand name "ZYNAPS," having submitted their application for CPR with the BFAD on October 2, 2001, with the name "ZYNAPS" expressly indicated thereon. The CPR was issued to them on April 15, 2003.Petitioners averred that under Section 159 of the IPC their right to use the said mark is protected.

 The Regional Trial Court (RTC) denied respondent's application for a TRO, ruling that even if respondent was able to first register its mark "ZYNAPSE" with the IPO in 2007, it is nevertheless defeated by the prior actual use by petitioners of "ZYNAPS" in 2003.

In this Court's objective evaluation, neither party is, at this point, entitled to any injunctive solace. Plaintiff, while admittedly the holder of a registered trademark under the IPC, may not invoke ascendancy or superiority of its CTR [certificate of trademark registration] over the CPR [certificate of product registration of the BFAD] of the defendants, as the latter certificate is, in the Court's opinion, evidence of its "prior use". Parenthetically, the plaintiff would have been entitled to an injunction as against any or all third persons in respect of its registered mark under normal conditions, that is, in the event wherein Section 159 would not be invoked by such third person. Such is the case however in this litigation. Section 159 of the IPC explicitly curtails the registrant's rights by providing for limitations on those rights as against a "prior user" under Section 159.

CA issued a Resolution denying respondent's application for TRO and/or preliminary injunction for lack of merit. The CA found no compelling reason to grant the application for TRO and/or preliminary injunction because there was no showing that respondent had a clear and existing right that will be violated by petitioners. Respondent moved for reconsideration but was denied by the CA in its July 31, 2008 Resolution.

Issue:

 Whether the CA may order a permanent injunction in deciding a petition for certiorari against the denial of an application for a preliminary injunction issued by the RTC?

Held:

Rule 58 of the Rules of Court provides for both preliminary and permanent injunction. Section 1, Rule 58 provides for the definition of preliminary injunction:

SECTION 1. Preliminary injunction defined; classes. — A preliminary injunction is an order granted at any stage of an action or proceeding prior to the judgment or final order, requiring a party or a court, agency or a person to refrain from a particular act or acts. It may also require the performance of a particular act or acts, in which case it shall be known as a preliminary mandatory injunction.

On the other hand, Section 9 of the same Rule defines a permanent injunction in this wise:

SEC. 9. When final injunction granted. — If after the trial of the action it appears that the applicant is entitled to have the act or acts complained of permanently enjoined, the court shall grant a final injunction perpetually restraining the party or person enjoined from the commission or continuance of the act or acts or confirming the preliminary mandatory injunction.

A writ of preliminary injunction is generally based solely on initial and incomplete evidence. The evidence submitted during the hearing on an application for a writ of preliminary injunction is not conclusive or complete for only a sampling is needed to give the trial court an idea of the justification for the preliminary injunction pending the decision of the case on the merits. As such, the findings of fact and opinion of a court when issuing the writ of preliminary injunction are interlocutory in nature and made even before the trial on the merits is commenced or terminated.

By contrast a permanent injunction, based on Section 9, Rule 58 of the Rules of Court, forms part of the judgment on the merits and it can only be properly ordered only on final judgment. A permanent injunction may thus be granted after a trial or hearing on the merits of the case and a decree granting or refusing an injunction should not be entered until after a hearing on the merits where a verified answer containing denials is filed or where no answer is required, or a rule to show cause is equivalent to an answer.

As such a preliminary injunction, like any preliminary writ and any interlocutory order, cannot survive the main case of which it is an incident; because an ancillary writ of preliminary injunction loses its force and effect after the decision in the main petition.

This Court is being asked to determine whether the CA erred by issuing a permanent injunction in a case which questioned the propriety of the denial of an ancillary writ. But with the RTC's December 2, 2011 Decision on the case for "Injunction, Trademark Infringement, Damages and Destruction," the issues raised in the instant petition have been rendered moot and academic. We note that the case brought to the CA on a petition for certiorari merely involved the RTC's denial of respondent's application for a writ of preliminary injunction, a mere ancillary writ. Since a decision on the merits has already been rendered and which includes in its disposition a permanent injunction, the proper remedy is an appeal from the decision in the main case.