HELLO KITTY Sanrio Company Limited vs. Edgar C. Lim, doing business as ORIGNAMURA TRADING, respondent G.R. No.

168662 February 19, 2008 Facts of the case Petitioner Sanrio Company Limited, a Japanese corporation, owns the copyright of various animated characters such as "Hello Kitty," "Little Twin Stars," "My Melody," "Tuxedo Sam" and "Zashikibuta" among others.4 While it is not engaged in business in the Philippines, its products are sold locally by its exclusive distributor, Gift Gate Incorporated (GGI).5\ GGI entered into licensing agreements with JC Lucas Creative Products, Inc., Paper Line Graphics, Inc. and Melawares Manufacturing Corporation.6 These local entities were allowed to manufacture certain products (bearing petitioner's copyrighted animated characters) for the local market.

Due to the deluge of counterfeit Sanrio products, GGI asked IP Manila Associates (IPMA) to conduct a market research. The research's objective was to identify those factories, department stores and retail outlets manufacturing and/or selling fake Sanrio items.After conducting several test-buys in various commercial areas, IPMA confirmed that respondent's Orignamura Trading in Tutuban Center, Manila was selling imitations of petitioner's products.

IPMA forwarded the said affidavit to the National Bureau of Investigation (NBI) which thereafter filed an application for the issuance of a search warrant in the office of the Executive Judge of the Regional Trial Court of Manila.As a result thereof, they were able to seize various Sanrio products.

Petitioner filed a complaint affidavit with the Task-Force on Anti-Intellectual Property Piracy (TAPP) of the Department of Justice (DOJ) against respondent for violation of Section 217 of the Intellectual Property Code (IPC) but the same was dismissed by the DOJ due to insufficiency of evidence. And affirmed by the Office of the Chief State Prosecutor of the DOJ.

Petitioner filed a petition for certiorari in the CA. but the appellate court dismissed the petition on the ground of prescription.According to the CA, if no complaint was filed in court within two years after the commission of the alleged violation, the offense had already prescribed.25

On the merits of the case, the CA concluded that the DOJ did not commit grave abuse of discretion in dismissing the petition for review.26 To be criminally liable for violation of Section 217.3 of the IPC, the following requisites must be present: 1. possession of the infringing copy and 2. knowledge or suspicion that the copy is an infringement of the genuine article. The CA agreed with the DOJ that petitioner failed to prove that respondent knew that the merchandise he sold was counterfeit. Respondent, on the other hand, was able to show that he obtained these goods from legitimate sources.27 Petitioner moved for reconsideration but it was denied. ISSUE: Whether or not the alleged violation of the IPC had prescribed? HELD: NO. Section 2 of Act 3326 provides that the prescriptive period for violation of special laws starts on the day such offense was committed and is interrupted by the institution of proceedings against respondent (i.e., the accused). Petitioner in this instance filed its complaint-affidavit on April 4, 2002 or one year, ten months and four days after the NBI searched respondent's premises and seized Sanrio merchandise therefrom. Although no information was immediately filed in court, respondent's alleged violation had not yet prescribed. In the recent case of Brillantes v. Court of Appeals,3 we affirmed that the filing of the complaint for purposes of preliminary investigation interrupts the period of prescription of criminal responsibility.Thus, the prescriptive period for the prosecution of the alleged violation of the IPC was tolled by petitioner's timely filing of the complaint-affidavit before the TAPP. The prosecutors in this case consistently found that no probable cause existed against respondent for violation of the IPC. They were in the best position to determine whether or not there was probable cause. We find that they arrived at their findings after carefully evaluating the respective evidence of petitioner and respondent. Their conclusion was not tainted with grave abuse of discretion. WHEREFORE, the petition is hereby DENIED. Costs against petitioner. SO ORDERED.