Coca-Cola loses unfair-competition suit vs Pepsi

MANILA, Philippines - The Supreme Court (SC) has barred Coca-Cola Bottlers Philippines, Inc. (Coca-Cola) from searching rival Pepsi Cola Products Phils., Inc.’s (Pepsi) plant in Naga City for soda bottles the latter had allegedly hoarded. In a 17-page decision penned by Associate Justice Arturo D. Brion, the high court’s 2nd Division said Coca-Cola had failed to show elements of unfair competition in its suit. The Municipal Trial Court of Naga City issued a search warrant in 2001 after security guards at the Coca-Cola plant, also in Bicol, alleged to have seen Coke bottles inside Pepsi cases. Coca-Cola sued Pepsi for unfair competition under the Intellectual Property Code. The Regional Trial Court of Naga nullified the warrant for lack of probable cause, as it ruled unfair competition had not been committed at all. But the court found no grave abuse of discretion on the part of the municipal trial court judge who issued the search warrant. Coca-Cola brought the issue to the Supreme Court, arguing that the Intellectual Property Code had been written to address various forms of unfair competition. The soft drink maker cited section 168.3 of the law, interpreting it to mean that unfair competition may include "other acts contrary to good faith of a nature calculated to discredit the goods, business or services of another." Coca-Cola said the hoarding of its empty bottles had been characterized by bad faith, adding that its bottling operations in Naga had been affected. "We hold that it is not. Hoarding as defined by the petitioner is not even an act within the contemplation of the Intellectual Property Code," the high court said. It said hoarding bottles does not have anything to do tampering of trademarks, trade names or any other service marks. The tribunal further noted that Pepsi had not passed off its products as those of its competitor. "What in fact the petitioner alleges is an act foreign to the Code, to the concept it embodies and to the act it regulates," the high court said. "As alleged, hoarding inflicts unfairness by seeking to limit the opposition’s sales by depriving it of the bottles it can use for these sales," the high court said. The act, however, is prohibited by other laws, which Coca-Cola had failed to cite in its search warrant application, it added. "Viewed in this light, the lack of probable cause to support the disputed search warrant at once becomes apparent," it said. — Ira P. Pedrasa, BusinessWorld