Justice office recommends filing of charges vs Red Bull

THE Department of Justice (DOJ) has recommended the filing of criminal charges for violation of the Intellectual Property Code against officers of Bangkok-based manufacturer of energy drink Red Bull and its local product distributor for unfair trade competition and conspiracy to commit fraud through misbranding.

In a nine-page resolution, Justice Undersecretary Jose Vicente Salazar found probable cause to indict the officers of Thai company TC Pharmaceutical Industries Co. Ltd, makers of the popular energy drink, and Maryland Distributors Inc. for violation of Section 168 in relation to Section 170 of RA 8293 (Intellectual Property Code) and Sections 11(g) and 15(a) of RA 3720 (Food, Drug and Cosmetic Act).

Charged were Thai nationals Pavana Langthara, Suthirat Yoovidhya, Supreeya Yoovidhya, Nucharee Yoovidhya, and Visuit Chiemkitchavarote, who are all officers of TCP. Also named respondents were MDI officers Gino Baltao, Gina Tolentino, Ramoncito Abad, Benjamin Ros, and Nelson Escobar.

The complaint was filed by Energy Food and Drinks Inc., a local company originally appointed by TCP in March 2003 as its exclusive distributor of Red Bull Supreme Energy Drink. EFDI obtained a Certificate of Product Registration for Red Bull with the BFAD, which was to expire on March 31, 2013.

The case reached the DOJ after complainant appealed the findings of the city prosecutor of Legazpi, Albay that dismissed the charges it filed against its Thai partners and Maryland despite the evidence culled by the National Bureau of Investigation (NBI).

In its complaint, EFDI claimed that in 2009, it discovered the proliferation in the market of Red Bull bearing labels it registered with the Bureau of Food and Drugs but tampered with by Maryland, thus, prompting it to file a complaint with the NBI.

The NBI then conducted a series of test buys where Red Bull bottles with tampered labels of complainant were recovered. It found out that the bottles' logo stating that EFDI is the authorized Philippine importer of Red Bull was covered or superimposed with stickers that stated that it was manufactured by TCP and imported by Maryland, which is based in Taytay, Rizal.

The complainant said it only learned after TCP published an advertisement that the latter already terminated the appointment of EFDI as its Philippine distributor for Red Bull since October 2008, and that it had already filed with BFAD a notice to cancel the Certificate of Product Registration previously issued to EFDI.

This prompted EFDI to file a case before the Legazpi city prosecutor's office, which ruled to dismiss it on the ground that the issues raised in the case is not alleged violations of RA 8293 and RA 3720, but "a civil dispute over a product distributorship agreement."

The unfavorable ruling of the city prosecutor prompted it to file the case before the DOJ.

Ruling on the case, Salazar said there is sufficient evidence showing that respondent TCP and Maryland officers conspired "when they acted in unison in violating the property rights of EFDI."

"Complainant was able to adduce sufficient evidence that respondents, in conspiracy with one another, engaged in unfair competition. The importation of Red Bull products, the tampering of the product label and the proliferation thereof in the market constitute 'underground sales and marketing' of red Bull products, which undermined the property rights of herein complainant EFP," the resolution stated.

The DOJ added that a food shall be deemed misbranded if its labeling is false or misleading in any particular.

Salazar said that since complainant EFD was the exclusive distributor, its name must be indicated in the label of Red Bull products.

Citing a Supreme Court case, he said the right to perform an exclusive distributorship agreement and to reap profits resulting from such performance is a proprietary right that a party may protect.

"In the instant case, however, the bottles of Red Bull bore tampered stickers/label," the DOJ said in the resolution.

The DOJ noted that EFDI had established a trade or business in which it had acquired good will from 1993 up to the discovery in the market of Red Bull with tampered labels in 2009, or for a period of 16 years.

"In the course of its operation, EFDI's business has certainly acquired value beyond its assets, arising from the reputation complainant EFDI established with its retailers and clients. This goodwill, which results from being the exclusive distributor of Red Bull, is entitled to be protected from any illegal use by an person," the DOJ added. (ECV/Sunnex)