The IP Factor

In a strange ruling, the Israel Registrar of Trademarks cancelled six trademarks on the grounds of non-use, despite their usage by a licensee.
The case: Ilan Car Glaziery Ltd v Carglass Luxemburg Sarl (December 3 2008).

Ilan Car Glaziery Ltd is an Israeli company that provides car windows an windscreens to garages, insurance companies and car rental fleets. Ilan has used the mark CARGLASS (transliterated into Hebrew letters) on an unregistered basis since before 2002 when Carglass Luxemburg Sarl, an international company operating in the same market obtained six marks for CARGLASS in Israel. Although the mark was accepted as distinctive, the words ‘car’ and ‘glass’ were disclaimed as being generic.

In 2002 Ilan purchased the business and name of a local, well known Israeli company called RG Car Glass. Ilan claimed that the CARGLASS marks should not have been registered under the ordinance on the grounds that they: were confusingly similar to RG Car Glass’ well-known mark and created unfair competition. Alternatively, Ilan claimed that the CARGLASS marks should be cancelled on the grounds of non-use.

The registrar rejected the claim that the marks were confusingly similar despite being phonetically identical, relying, among other things, on an earlier ruling of the Israeli Supreme Court regarding Ilan’s request for injunctive relief against Carglass’s licensee. In that ruling, the court had held that the licensee could use the mark (and design) in its entirety.
The registrar also held that the marks at issue in the present case were not confusingly similar, emphasizing that the CARGLASS marks are written in English letters and in a stylized form, while Ilan’s marks are generally written in Hebrew letters. The registrar also noted that Carglass disclaimed the words ’car’ and ’glass’ and that Ilan had not registered its mark. Finally, the Registrar noted that the customers were professional car businesses and not end-users adn thus were sophisticated and would not be likely to confuse the two marks.

As to the unfair competition claim, the registrar focused on the fact that Carglass is a large, worldwide company, while Ilan is a local Israeli company. Therefore, it was reasonable to assume that the CARGLASS marks were registered in good faith and were not intended to build upon Ilan’s reputation. However, the registrar granted Ilan’s request for cancellation on the grounds of non-use. The registrar held that Ilan had met its burden of proof with respect to showing non-use by Carglass. As a result, the burden shifted to Carglass to prove use. However, Carglass did not submit any evidence to prove its use of the mark in Israel. Nevertheless, Carglass argued that its licensee in Israel had made use of the CARGLASS marks. Carglass claimed that use by a licensee was sufficient to show usage. The registrar disagreed, holding that use by the licensee had no legal effect since the licence had not been registered in the trademark registry under the provisions of the ordinance.

According to the registrar, for use by a licensee to be considered as use by the mark owner, the licence must be properly registered under Section 50 of the ordinance.

Comments
This does not seem to be one of the Israel Patent and Trademark Office’s better decisions. I find deciding that such a generic name distinctive and thus registerable, even when in prior use by two local companies, dificult to accept. I also think that usage by a licensee, even when not registered, is a normal business use. Thus I am not happy with this decision.
Nevertheless, despite considering this bad case law. It does highlight the need to register trademarks and not rely on Common Law rights, and also emphasizes the needs to register licensees in the trademark register.
The ruling about unfair competition seems reasonable though, in that there is no indication of bad faith. Probably the most important aspect of this ruling is the need to register rights for words in both Hebrew and English characters, and for word marks and stylized logos separately. Clearly filing mutliple marks like this is expensive, but it does seem necessary, at least where the marks themselves are not overly distinctive.