Israel Supreme Court Rules that Rights Owners Should Bear the Costs of Destroying Infringing Goods Stopped by Customs Where Collecting from the Importer is not Possible

August 4, 2011

Back in January, I reported on a decision by Judge Abraham Yaakov of the Tel Aviv District Court, that ruled that the Israel Customs Authority was wrong to charge the rights owner for storage and / or destruction of imports that infringed copyright or trademarks in cases where the costs can’t be recouped from the defendant. See: http://blog.ipfactor.co.il/2011/01/12/levis-successfully-sues-counterfeit-jean-importer-into-israel-judge-slams-israel-customs-for-billing-levis-for-storage-and-disposal-of-the-jeans/

The Israel Supreme Court has now heard an appeal by the Customs Authority concerning a shipment of fake Christian Dior Couture shoes that were imported by a West Bank Arab that abandoned the shipment and proved impossible to collect from.

In accordance with Section 200A of the Customs Ordinance, which was legislated in 1999 to conform Israeli law with TRIPS, the Customs Authorities detained the shipment and notified Christian Dior, who initiated proceedings and provided bank guarantees of NIS 5000.

Dior claimed that the bank guarantees could only be used to compensate defendants in the event that the Court dismissed the charges of copyright or trademark infringement.  Customs claimed that the money could be used to cover costs of storage and destruction of the goods.

Judge Abraham Yaakov of the District Court (the same judge who ruled in the Levi’s case) ruled that the shipment was to be destroyed by the importer, which would bear the expenses. The District Court held that the Customs Authorities (i.e. the tax payers) should bear the costs of storing and destroying infringing goods should the importer default.

The Supreme Court reversed this judgement and ruled that the rights owners should bear the cost of storage and destruction of infringing goods where Customs cannot collect from the importer. The Court saw no justification to use public funds to cover the costs of protection of private property. It interpreted Section 200A of the Customs Ordinance, which complies with Section 53(1) of the TRIPS Agreement, as allowing the Customs Authorities to use the bank guarantee for that purpose. The decision was given by Judge Asher Gronis. Judge Elyakim Rubinstein concurred but also recommended that the government consider requesting further guarantees from importers to cover the IP rights owner’s expenses or used other means to facilitate collection such as withholding tax rebates.

The Case: 3960/10 Israel Customs Against Christian Dior Couture and Iyad Habas, before Judges Rubinstein, Arbel and Gronis.  June 20, 2011.

COMMENT

Although I enjoyed reading Judge Yaakov’s ruling, I think that the Supreme Court is correct to reverse it.

2 Comments | Copyright, counterfeit, infringement, Intellectual Property, Israel Copyright, Israel Court Ruling, Israel IP, Israel Related, Israel Trademark, World Trade Organization, WTO | Permalink
Posted by Dr Michael Factor

Super-heroes get statutory damages under the wrong law

August 3, 2011

The new Israel Copyright Law 2007 entered the Statute books on 25 November 2007 and came into effect six months later in May 2008.

Prior to May 2008, the Copyright Ordinance of 1911, inherited from the British Mandate, was the copyright regime in effect in Israel. The Ordinance underwent some amendments over time and there have also been some creative case-law.

Under the Copyright Ordinance of 1911, statutory damages were limited to NIS 10,000 per infringing event. For willful infringement, double damages of NIS 20,000 could be awarded.

Under the new law however, damages of up to NIS 100,000 per infringing event may be awarded. According to the transition provisions (Clauses 78 to 79) the new law may be enforced for creative works predating its entering into effect  if the infringing act took place after the law came into effect. Thus an act that took place in 2005 or 2006 that was the cause of a suit filed in 2009 or 2010 would be tried under the old act. The statutory damages, per infringement are limited to NIS 10,000 to NIS 20,000.

Or so we thought…

Two cases regarding the manufacture of children’s watches were filed in 2008 and combined and tried by the Tel Aviv Magistrate’s Court. The watches feature Marvel and DC Comic Book characters including Spiderman, Superman and Batman. Because the events took place in 2006 the authorized licensees for the characters and the comic book publishers sued for statutory damages of NIS 10,000 to NIS 20,000 under the 1911 copyright ordinance.

(It should be noted that the plaintiffs sued, as an alternative grounds for damages, the statutory damages under fair trading laws, but it is clear that where there is a specific statutory damage, as for copyright infringement, this is the grounds for damages that apply).

In her ruling, Presiding Judge Channa Inon acknowledged that the correct law to apply depends on when the infringing actions took place. What is surprising is that after deciding that there were three infringing events per plaintiff, and not enough evidence to assess actual damages, she awarded damages of 3 x NIS 100,000 under the new copyright law, i.e. NIS 300,000 (almost $87,000) each, to Marvel and to DC Comics.

Perhaps the plaintiffs were awarded Super damages as befits superheroes?

The cases: T.A. 35389/08 DC Comics vs. Polo Publicity and Trade LTD. and T.A. 35390/08 Marvel Comics vs. Polo Publicity and Trade LTD.

Leave a Comment » | Copyright, counterfeit, Israel Copyright, passing off | Permalink
Posted by Dr Michael Factor

Counterfeit Tommy Hilfiger Clothing Seized by Israel Police

July 13, 2011

A clothing store called North Star, situated in Dvoriya, an Arab village in the Galilee, sold jeans, shirts and other items of clothing bearing the Tommy Hilfiger logo. The police raided the shop and confiscated 73 items of clothing that Tommy Hilfiger’s representative deemed to be fraudulent substandard articles.

Hilfiger sued claiming trademark infringement, passing off and unjust enrichment, requesting statutory damages of NIS 100,000.

However, the vendor Tsuna Shahidi claimed to have purchased the garments from wholesale market vendors in Tel Aviv and Jerusalem, and not to have been aware or interested in the designer logo and requested no fine, or a minimal symbolic fine.

The goods were purchased for a total of NIS 1400 which is an average of NIS 20 (about US $5-6) a piece. Original designer Tommy Hilfiger goods retail in Israel for 10 times that price.

In ruling, the judge, Deputy President Isaak Cohen of the Nazareth District Court considered the selection of so may garments all showing the same designer label and all purchased so very cheaply as undermining the vendor’s claim of ignorance. Furthermore, citing various precedents and the relevant textbooks,  he established that ignorance and lack of intent was not a defense, and that the standards of equitable behavior required were objective and not subjective, so the actual intention of the vendor is irrelevant.

In ruling, the Judge noted that there wasn’t proven damages from passing off, but noted that copyright infringement was also grounds of statutory damages. Using judicial discretion he ruled damages of NIS 50,000 and legal fees of a further NIS 10,000. Finally, Judge Cohen gave an injunction against Shahidi, preventing him from selling goods with the Hiflinger logo.

The case: T.A. 26614-07-10, Tommy Hilfinger et al. vs. Shehady.

Leave a Comment » | counterfeit, Intellectual Property, Israel, Israel IP, Israel Trademark, trademarks | Permalink
Posted by Dr Michael Factor

Israel Customs Seizures 1998-2010

January 25, 2011

The following graph, taken from a report published by the Israel Customs Authority, summarizes customs seizures over the past 12 years – excluding fake cigarettes.

The graph clearly shows increased Customs activity over the period.

Counterfeit goods are a global problem.

It appears that in 2010, 35% of Israel customs seizures were for textiles and footwear, 21% were for CDs and DVDs with copyright infringing music and software, 27% of seizures related to watches and children’s toys, 7% related to schoolbags, wallets and cases, with the remaining 10% covering other items, such as bed linen with football team logos.

As a firm, we represent Skechers, Manchester United, Strawberry Shortcake (American Greetings) and various purveyors of alcoholic beverages.

Israel Customs certainly proactively hold goods that are suspected of infringing copyrights and trademarks. There are, however, a number of counterfeit goods and products bearing trademark protected logos and symbols that find their way to the market.

Leave a Comment » | Copyright, counterfeit, Israel, Israel IP, Israel Related, Israel Trademark, trademarks | Permalink
Posted by Dr Michael Factor

Jeff Koons Files Twisted Infringement Suit

January 20, 2011

Jeff Koons is a talented pop artist. One of his brilliant sculptures is a 10 m representation of a balloon dog that sits on top of the New York Metropolitan Museum. I saw the sculpture when in New York on the way to Boston for an AIPPI Conference a couple of years ago.

I am a balloonologist myself, and have made literally thousands of one balloon dog sculptures at birthday parties, children’s wards in hospitals, busking on Jerusalem’s Ben Yehuda Pedestrian Precinct, as a student, in St Marco’s Square, Venice, and thanks to Lord Greville Janner, then MP, QC, and a fellow magician, in a conference room at the British Houses of Parliament.

None of my sculptures will ever be as famous as Jeff Koons’. I can, however, claim to inflate my regular sized versions made from a standard Qualatex 2 x 60 balloon, in the traditional way, by lung power, and due to also playing the trombone, can generally manage about 200 balloons in one session.

In what appears to me to be a total hutzpa, Koons has sent cease-and-desist letters to Park Life, a San Francisco gallery and store that sells the bookends, and Imm-Livinga distributor of balloon sculpture bookends. See  http://www.nytimes.com/2011/01/20/arts/design/20suit.html?_r=1

Unfortunately, Park Life‘s owner, Alexander has taken the bookends off sale and removed from his website.

In this instance, I am not impressed with Peter D. Vogl, the partner of Jones Day who sent the cease-and-desist letters.  We are all Intellectual Prostitutes, but some of us have standards! If the case was fought in Israel, I’d be honored to represent the bookend distributor pro bono myself.

If it will help Alexander’s cause, I am willing to sign an affidavit that his bookends are faithful copies of my sculptures, and to provide him with a non-exclusive license to continue manufacturing them. After all, the size and look are close to my models. The fee? a couple of bookends would be nice!

Apparently, lawyer Jed Wakefield of Fenwick and West LLP has now picked up the condom and asked for a declaratory judgement against Koons.

“It could bring freedom to balloon animals everywhere,” Wakefield said.

2 Comments | Copyright, counterfeit, design, infringement, Intellectual Property, Magic, News, Opinion, passing off | Permalink
Posted by Dr Michael Factor

West Bank Arab Prevails Against Adidas – Four Stripe Cheap Training Shoes Do not Infringe

January 12, 2011

In one of the more compelling Israel court rulings on an IP issue I’ve seen in a while, Judge Michal Agmon-Gonen dismissed claims by Adidas against Galel Yassin, a West Bank Arab who imported cheap training shoes from China.

Yassin imported trainers for retailing by market traders at NIS 20-30 (about $6-9). The shoes included four parallel diagonal stripes on each side and Adidas claimed that this infringed their famous three-stripe logo.

Judge Agmon-Gonen ruled that there was neither an objective nor a subjective likelihood of confusion. Customers was aware that the shoes were cheap substitutes and not the brand leaders.  The importer clearly marked the shoes with the brand ‘Sydney’ in three places and did not write Adidas or use the three-leaf symbol. 

The importer had tried to negotiate a compromise with Adidas, and had offered to add a line crossing through the four stripes, or to add a big cross on top, either solution to be implemented before release from the docks, but to no avail.

The gist of the ruling is that Agmon-Gonen is not enamoured with recent trends that see brands and trademarks as property themselves, and believes that trademarks should simply be an indication of the supplier or manufacturer of the goods thus marked. With such a narrow interpretation of trademark law, the legal issue is simply one of likelihood of confusion. Whilst prepared to acknowledge that the inspiration of the four stripe mark may well have been Adidas’ product line, there was, nevertheless, no likelihood of confusion. Rather Yassin was providing a cheap alternative for the financially deprived. 

Yassin provided evidence that other shoe manufacturers, notably Skechers, also used a four stripe decoration. Adidas cited previous rulings in their favour, both in Israel and abroad. Agmon-Gonen suggested that Adidas was aggressively throwing its weight against weak competitors, generally unable to suffer the financial strain of defending themselves and saw this as trademark abuse. Freedom of Occupation allows others to import footware and the public interest is for competition. In addition to leading brands, there is a market for unbranded, generic products, and the 4-striped trainer was such a generic alternative for those unable to pay for the brand leaders’ products.  

Whilst accepting the existence of various legal doctrines such as dilution of famous marks, Agmon-Gonen considered these trends an issue of policy, and generally considered the public good and competition of more importance.

Although some Israeli case-law was cited, the 46 page ruling is more notable for referring to both recent and classical journal articles and textbooks, and for quoting the minority opinion in the A.Sh.I.R. case. 

In conclusion, Adidas’ case was dismissed, Yassin is able to continue importing generic, non-branded training shoes and was awarded NIS 85,000 (about $23,600).

T. A. 2177/05 Adidas-Salomon vs Galel Yassin and others. 

COMMENTS
This ruling reminds me of a tweet put out by http://twitter.com/AntiIsraelPorn – a tongue-in-cheek satirical propaganda forum:

Israel refuses to lift the ban on left footed shoes into Gaza. Forces Gazans to walk uncomfortably.
Posted 8:19 PM Dec 28th, 2010 via Twitter for iPhone

Three stripes is a registered trademark of Adidas since 1949 and is well known worldwide.

For a general overview of other litigation on the subject, see http://en.wikipedia.org/wiki/Three_stripes

The ruling appears to be a departure from current trends. Although the job of setting legal policy should best be left to the Supreme Court, I suspect that Judge Agmon-Gonen’s ruling will be upheld if challenged on appeal, and even if not appealed, will be influencial since it makes a compelling case. Indeed, if she continues like this, I suspect she will be promoted to the Supreme Court eventually.

10 February 2011 – An appeal has been filed.

There is also a new decision from Italy that maintains that there is infringement  - see http://www.internationallawoffice.com/newsletters/detail.aspx?g=26e8f27a-005b-4861-949f-d422b1fa7ee9

1 Comment | counterfeit, design, famous marks, infringement, Intellectual Property, Israel, Israel Court Ruling, Israel Trademark | Permalink
Posted by Dr Michael Factor

Levi Strauss Successfully Sues Counterfeit Jean Importer into Israel; Judge slams Israel Customs for billing Levi’s for Storage and Disposal of the Jeans

January 12, 2011

In a very interesting ruling, Tel Aviv Judge Abraham Yaakov ruled that Israel Customs were wrong for attempting to charge Levi Strauss for the cost of storing and eventually destroying counterfeit jeans confiscated, according to Customs, on behalf of Levi Strauss.

Israel Customs attempted to argue that Section 200a of the Customs Ordinance provides that Customs can impound goods believed to infringe copyright or registered trademarks for three days, but further action requires the rights holder to post a deposit. Customs argued that the deposit was not only to compensate the importer if he were to prevail in court, but also to cover Customs expenses should the importer prove untraceable,  go into bankrupcy or liquidation, or otherwise default.   

The judge’s ruling included the following reasoning:

  1. The Customs Authority itself acknowledged that the primary party responsible for paying for destruction of infringing goods is the importer. Since the rights holder has done nothing wrong, why should they have to pay costs?
  2. Although Customs claimed that the rights holder is proactive in the legal proceedings, this is not necessarily the case.  Customs can seize and hold goods without the rights holder being an active party.
  3. Even if the rights holder informs Customs, about their rights and about an infringing shipment, Customs are obligated to act as a law enforcement agency, not merely as protecting the financial interest of the rights owner.
  4. Although Section 53(1) of the TRIPS agreement includes such a provision, the judge ruled that Section 200b of the Israel Customs Ordinance instituted in the wake of TRIPS rejected billing the rights holder for the actions performed by customs and established that the deposit paid by the rights holder to cover the seizure of goods should be refunded in full if the courts rule that the goods indeed infringe.

 The court pointed out that the interpretation of the Customs Authority was equivalent to arguing that the rights holder should serve as a guarantor the infringing importer.

As to the claim by Customs that the only party that benefits from destruction of the infringing goods is the rights holder, the judge succinctly stated that it would have been better had this never been claimed, and went on to rule that it was in the national interest to uphold intellectual property rights and to enforce the criminal law. Indeed, having signed TRIPS, the State had accepted the obligation to enforce IP rights.

In summary, the court ruled that the only reason for posting bond was to prevent frivolous actions and to protect the rights of wrongfully charged importers.

Levis was awarded NIS 100,000 for statutory damages and NIS 10,000 costs from the first defendant who did not attend the hearing, with the second defendant who did show up, having to pay a mere NIS 2500 costs with the goods to be destroyed.  The Customs and VAT Department of the State of Israel was ordered to pay NIS 10,000 in legal fees to Levis.

The Case: T.A. 3261-03/10 Levi Strauss & Co. vs. Algamal, Alnazer Odeh and The State of Israel Customs & VAT Authority 

1 Comment | counterfeit, famous marks, infringement, Intellectual Property, Israel, Israel Court Ruling, Israel IP, passing off, Uncategorized, World Trade Organization, WTO | Permalink
Posted by Dr Michael Factor

Four Suspected of Importing Fake Viagra into Israel Remanded in Custody

October 27, 2010

Judge Tamar Nayot has allowed four suspects accused of importing 75,000 fake Viagra pills to be remanded for six days following a request from the Haifa Tax and VAT Inquiries Department. apparently, this is follows a major operation by the Israel law enforcement agencies. In addition to tax evasion, there are trademark issues associated with the counterfeit pills.

Apparently, the pills, with a market value of NIS 5,000,000  were smuggled from Vienna on regular ElAl flights.   

Who says that the Israel Law Enforcement Agencies are impotent?

1 Comment | counterfeit, infringement, Intellectual Property, Israel | Permalink
Posted by Dr Michael Factor

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