Software Rewrites

May 11, 2015

medical software

ICM is a software program designed for doctors, clinics and hospitals. A Mr Yehuda Ungar had the requisite skill set and experience to develop the program and signed a founders agreement with Yaakov Cashdi and others, the result of which was ICM Links Technologies and Information LTD, a company dedicated to creation of the ICM software for managing a medical database.

Cashdi, the other founders and ICM LTD claim that Yehuda Ungar copied and marketed the program to Bircon LTD, infringing their rights and becoming enriched at their expense.

The plaintiffs have sued for a declarative judgment that Ungar has infringed the founders agreement; an accounting regarding Bircon LTD’s use of the program and 750,000 Shekels compensation.

Statement of Case

The plaintiffs, Yaakov, Eli and Milik are shareholders of Ordan Computers and Data Systems which is a software developer that specializes in administrative software for clinics and medical chains.

Yehuda Ungar developed his ICM system that is complimentary to Ordan’s program and Ungar approached Yaakov, Eli and Milik to create a business partnership for the continued development, marketing and sales of ICM in Israel and abroad. Yaakov, Eli and Milik agreed and ICM Links Technologies and Information LTD was established.

Under the agreement, Ungar was to transfer all rights, source code and documentation to the company and to make his experience and medical file management available to the company.

Yaakov, Eli and Milik were to dedicate their resources, knowledge and experience to the program and eventually to market it.
The contract also included a non-complete clause for a minimum of three years and at least six months longer than any of the founders were serving as director, employee or shareholder in the company. The shares were divvied up and all share holders were to serve as directors for at least 24 months.

In 2003, Yehuda Unger met with a Mr Tenne, the manager of a chain of clinics who agreed that the chain could serve as a beta site for the software. The plaintiffs thought that the beta testing was going well, but in March 2004, Unger informed them that Mr Tenne had given notice to stop the trials. The plaintiffs failed to raise investment capital and further development stopped, freezing the company.

Yehuda Unger offered to resign and find alternative employment until a further opportunity would present itself. As a severage package Unger requested the right to compete, and to use ICM’s program whilst remaining a director and shareholder. Yaakov, Eli and Milik refused these conditions and contact between the parties was lost. In July 2008, Yaakov, Eli and Milik discovered that despite being an employee and shareholder, Unger had continued to develop the software together with Mr Tenne through Mr Tenne’s company Bircon LTD, which had marketed the product, earning money for both Unger and Tenne.

Yaakov, Eli and Milik considered Unger’s behavior as breach of contract, unjust enrichment and fraud. They further considered Bircon LTD as guilty of unjust enrichment and copyright infringement and sued for:

  • A declaratory judgment that the program was the property of ICM that Yehuda Unger was in breach of contract and breach of trust as a shareholder and director
  • Copies of accounts regarding the software
  • An injunction against further use
  • 100,000 Shekels in statutory damages and
  • 750,000 Shekels in lost earnings resulting from the breach of contract.

Statement for the Defense
Yehuda Unger is a systems analyst with 30 years of experience in managing software projects. Via his wholly owned company Irit Model, he has been working since 1995 at developing the ICM medical record database platform.

Unger alleges that Yaakov, Eli and Milik approached him in 2002 and suggested that Ordan would market the ICM platform either as stand-alone software or together with their ‘Clinica’ program.

Following this approach, a marketing and joint venture agreement was signed in July 2002. Six months later, Yaakov approached Yuhuda Unger and offered that Yaakov, Eli and Milik would purchase his shares via Ordan.

Under the agreement, via Ordan, Yaakov, Eli and Milik would transfer 40,000 Shekels a month. However, they did not meet this, and in September 2003, they informed Unger that they did not have the resources to fund ICM.

According to Unger, at Bircon, he programmed from scratch using public domain code and his personal knowledge, without using ICM, its source code or other resources. Unger even filed a counter-claim but subsequently retracted it.

The subsequent case relied on testimony from the parties, software engineers of both Ordan and Bircon and Dr Matthew Golani as an expert witness to the court.

Ruling
Ordan marketed Clinica and Irit marketed an early version of ICM to the Eynayim chain of clinics that was under the management of a Dr Levinger. The sides realized that they each had complementary software products that were half a solution and they discussed working together. After negotiations, in July 2002, the parties signed a marketing agreement under which Ordan would market ICM. About six months later, at the beginning of 2003, the sides discussed Ordan purchasing ICM and a framework agreement was signed. Following this, Unger continued working on ICM, but as an employee of Ordan and the code was transferred to Ordan which allocated a programmer to the project and Milik undertook the marketing.

In parallel with the ongoing development work, the parties negotiated a full contract, under which Unger was to be paid “consultancy fees” and a new company was to be set up. The contract was signed in July 2003.

Judge Shwartz summarized the agreement and interpreted the lacuna. and the various parties’ actions in following signing of the agreement.
He found Unger’s programming for Bircon was unjust enrichment, breach of copyright and brach of contract, but held Tenne and Bircon innocent of wrong doing.In Conclusion, Judge Swartz ruled that:

ICM LTD was the right holder in the software.

  • Unger breached the founder’s agreement
  • Unger is forbidden to make any use of the software without permission from ICM LTD.
  • Unger has to pay ICM LTD 100,000 Shekels statutory damages.
  • Unger has to pay costs of 4500 Shekels and 25,000 Shekels legal fees.

47761-11-11 Cashdi et al. vs. Under et al., ruling by Judge Shwartz, 26 April 2015.

COMMENTS
To a large extent, the issue is factual rather than legal. Judge Shwartz has to rely on the agreement as signed to work out what the parties intended.


Madonna’s Apples

April 28, 2015

Madonna's apples

CNN broke a story over the weekend about a woman who has  had to copyright her breasts in response to revenge porn.

It seems that she enjoyed a long distance relationship and sent her significant other ‘selfies’ that would perhaps be best described as compromising. When the relationship petered out, she was aghast to discover that her significant other had uploaded the pictures to the Internet and they had gone viral.

Apparently, the constitutional right of ‘Freedom of Speech’ under the US Constitution may over-ride rights to privacy. The legal advice she got was to copyright the images.

Now, as the photographer of the selfies, she has rights in the image. If her boyfriend had photographed her, she would not have these rights. Copyright is automatic under International treaty, but to enforce in the US, registration is required. She dutifully, uploaded a hundred or so images to the Library of Congress, where apparently, the images are catalogued but restricted, so only one filing clerk there has seen the images.

Here is the problem. Let’s assume that Ms ‘Hozer B’Tzniyut’ discovers a compromising image on a website. She get’s a lawyer to send a Cease & Desist letter. The site owner may request proof, and will then be sent the full book of pictures. Now, whereas the individual image may come down, the others may be posted elsewhere. Very difficult to work out who has uploaded and to where. Oh, and there are video clips as well.

Madonna, who has an interest in Kabbala, has published a retelling of a story by the Hassidic Master, the Baal Shem Tov, comparing retracting libel and slander with ripping open a pillow on a hill top on  a blustery day, and then trying to collect all the feathers. If Esther Madonna ever decides to try to remove compromising pictures of herself from the Internet, she will discover that the problems are similar.

There is probably a moral in this story somewhere….

Talking of modesty, I was somewhat appalled to hear the opening item on the Mid Day News on Israel National Remembrance Day that a headmaster of a Convent School  Ulpana had invited ex-students now serving in the army to attend the school’s remembrance ceremony, and since they turned up in uniform, wearing trousers, that he asked them not to attend. This story was worrying for a number of reasons. The fact that it got on the news means that the headmaster was set up, and should have known better. The girl soldiers could, however, have worn a skirt uniform. That said, the impressionable school girls are presumably aware both of the school’s policy and of the fact that after leaving school, some girls young women may, nevertheless, wear slacks.

Travelling home for the Independence Day Celebrations, just after hearing this storm in a tea-cup, I picked up a hitch-hiker by Eli. the hitch-hiker teaches in the religious, pre-army program in Eli. He felt that the headmaster was right and and that there was an issue of modesty. I countered that it was an issue of fashion. He noted that one can see the shape a woman’s lower anatomy if she is wearing slacks. I was tempted to point out that he was wearing trousers and one could see the shape of his lower anatomy as well.  He could, of course, wear the dishdash (also referred to as dish-dasha or even gandoora, gandurah or even tawb or taub), the long white robe favoured by our Moslem cousins in the villages around Eli, or Begged Ivri, the style of dress of 2000 years ago, worn by actors playing Jews in films about Masada and the Crucifixion, like Ben Hur, Life of Brian, etc. In other words, clothing is far more about fashion than modesty.

Proverbs 30: 18-19:  “There are three things which are too wonderful for me, Four which I do not understand: The way of an eagle in the sky, The way of a serpent on a rock, The way of a ship in the middle of the sea, And the way of a man with a maid“.

What these verses mean, is that there are things that don’t leave a trace.

In the picture of Madonna above, with her sheitel like haircut and long sleeves, she looks more like a balabusta than like a Sem girl Like a Virgin.

Whilst watching the Ceremony distributing the Israel Prize to notable worthies the following day, I noted that the one female honoree, and also the President of the Supreme Court, Miriam Naor, in her official capacity, representing the Israel Legal System, both chose to wear slacks. This is fairly conclusive proof that slacks for women are an issue of fashion and not modesty.

Then again, bugger it! As the Honorable Miriam Naor walked away from the camera, I remembered, Mr Bumble’s famous saying, “the Law is an Ass.”


Vanunu’s hand

April 15, 2015

learned hand

Zoom 77 A. Sh. LTD has sued Buzz Television LTD for copyright infringement in that Buzz Television broadcast the well known photograph of Israeli traitor Mordechai Vanunu’s hand pressed against the van Uno car window, with the information that he was abducted in Rome by Israel’s Secret Service.

Instead of arguing for informational, non-profitable purposes, de minimis fair use, I am not reproducing the offending image here. Those interested in it can type Vanunu hand into their search engines.

Buzz Television LTD included the image (Vanunu’s Hand, not Learned Hand) in a documentary called the Israel Connection that was produced for Israel’s Educational Television channel. They did not receive permission to include the image and Israel’s Education Television was sued and obliged to pay compensation. See Civil Case 9260-09-12 Zoom 77 A. Sh. LTD vs. Israel Educational Television, 16 January 2014.

(ת”א (מחוזי י-ם) 9260-09-12 זום 77 א.ש (2002) בע”מ נ’ הטלוויזיה החינוכית הישראלית (16.1.2014
Buzz Television LTD used a clip including the image on their website as well, also without permission and without indicating the copyright owner. This second usage is the basis of the current law suit in which Zoom 77 claimed 80,000 NIS compulsory compensation without proof of damage under Section 56 of the Israel Copyright Act 2007.
Buzz Television LTD accepted that the image was owned by Zoom and that displaying it on Buzz’ website was an infringing use. The point of contention was the appropriate compensation in the circumstances.

Section 56b of the Law brings various relevant considerations for setting the compensation including the scope of infringement, its longevity, its seriousness, actual damages, profits to the infringer, the defendant’s activities, the relationship between plaintiff and defendant and inequitable behaviour.

In the present instance, Judge Gideon Gidoni of the Jerusalem Magistrate’s Court noted that the photograph has significant journalistic value and was used to market and promote the defendant’s activities. On the other hand, no evidence was given by the plaintiff regarding the traffic to the website in general and the clip in particular. The Defendant claimed that the clip was a minor component on the website and hardly watched.

No evidence was provided as to how long the image was displayed, but one can assume that the defendant was involved in the case against Israel Educational Television 18 months earlier, and could and should have taken down the clip. Buzz Television is a production company working in the media industry and should be aware of copyright issues and should consequently be highly aware of other’s creative rights. The cost of licensed use of the image was 1600 Shekels.

Judge Gidoni noted the damages paid by Israel Educational Television 18,000 Shekels for first infringement and then 50,000 Shekels for a second infringement last year, and that this was a repeat, albeit indirect infringement of the same product.

He also related to third parties reproducing other news images, including Rachmani v. Israel News 2011 (15000 Shekels for an iconic news image)  the learned, but perhaps not very analytic judge ruled compensation of 25000 Shekels. Civil Appeal Basketball League Management vs. Rachmani (the famous Tal Brody lifting the European trophy “we are on the tablecloth map” where 18000 Shekels was ruled and Kfar Blum Kayaks vs. Manara Cliff 2012, where 75000 Shekels was awarded for moral rights infringed by not mentioning the name of the photographer of the tourist attraction.

In another recent case, Zoom sued Tratkover and was awarded 22000 Shekels.

Judge Gidoni ruled 25000 Shekels compensation, 1000 Shekels costs and 3000 Shekels legal fees.

Sh-14-02-30214-730 Zoom 7 vs.Buzz television re Vanunu’s hnad photo, Judge Gidoni, Jerusalem Magistrates Court, 8 April 2015.

COMMENT

Vanunu set up the picture. The handwriting, font and content of the writing on his hand is his copyright. He was also responsible for positioning his hand on the car window and for his posture. Perhaps he deserves royalties as much as he is deserved his jail sentence?  The journalists that caught the image did very little artistic creation, and arguably whoever crops the image for insertion into a newspaper deserves as much credit and name recognition.

There is certainly a value in fidelity of the law, and levels of compensation for similar infringing acts by different parties should, perhaps, be similar. I would, however, like to feel that judges can analyze and reach sophisticated conclusions and not merely bean count.

I believe that there are iconic images, film clips, sound tracks and the like that have a place in any documentary or dramatization of significant history. I think it ridiculous that a birthday party in a film won’t include children singing Happy Birthday. A film of Martin Luther King couldn’t reproduce his “I have a dream” speech.

In Israel, Holocaust Memorial Day starts this evening. When looking for two rapper versions of Israel’s National ANthem, Hatikveh that were the basis of a copyright infringement proceedings, I discovered a BBC radio clip of the first Friday night Kabbalat Shabbat Service from Bergen Belsen after the camp was liberated. After singing the Hatikveh, one clearly hears the then British Chaplain, the Late Reverend Hardman announcing that the people of Israel live. I sent the clip to his grandson, Danny Verbov who thanked me, and told me that he;s sent the clip about one a month. He kindly sent me a copy of Rev Hardman’s sermons that he’d edited. (I am ashamed to say that I used to go out to play during the sermons).

Now, Danny (and presumably the BBC) could have sued me for downloading and copying or linking to copyright material. At one suing a month Danny would solve the problem of spam email and have a nice sideline. Thankfully he is a mensch and has more sense.

I’d like to see standard reproduction royalties for usage of these literary and artistic creations.

I have illustrated this post with a picture of the US judge who detailed the various considerations regarding compensation for patent infringement in Georgia Pacific vs. American Plywood. The reason for referencing this is not just that he found 15 Factors of relevance, which sounds like an extended family seder, or even that the judge is called Learned Hand. I think his analysis is of relevance when calculated copyright royalties as well as patent royalties.

As always, comments and feedback are welcome.


Sony Clamps Down on Pirate Computer Games

March 26, 2015

Pirate
Sony Entertainment sued Azam Gever claiming copyright infringement and unjust enrichment, alleging that Gever’s computer shop “McKan Computers” on the main road through Osefiya sold fake disks with games for the Sony Playstation console.
In his defense, Gever claimed to be ignorant of the fact that the disks he was selling were not originals. If Gever could successfully convince that he was unwittingly distributing fake disks, he would not be held responsible. If, however, this defense collapsed, he would be held responsible for damages.
Sony claimed to have copyright in the Playstation and Playstation 2, and in software for the Playstation. They also claimed to own trademarks 95025 and 95026 for Playstation. Sony Entertainment Europe was responsible for distributing in Europe, the Middle East, Africa and the Pacific Rim and franchised distribution rights for the software within those territories, including Israel.
Playstation programs can only be played using the Playstation interface due to special encryption. Any copying, burning to disk of a Playstation game will, inter alia, include copying of the encryption which is copyright infringement of Sony’s copyright. Sony claimed that they are in a perpetual war to prevent their software from being pirated, and that they have spent enormous sums in advertising and promoting the console, They have copyright notices on the disks, on the packages, and appearing on screen.
The defendant did not deny selling pirate CDs but denied knowing that they were pirate copies. Sony sent a private investigator to the shop to see what was being sold. The private investigator and his son testified that they were both independently told that the programs were copies, and that the owner had shown a box of bundles of 50 disks, containing 3 or 4 copies of each game. The private investigator testified that he bought five different games at 10 shekels ($2.50) each, paid 50 Shekels and received a tax invoice for 50 Shekels that indicated thatit was for Sony II disks. The private investigator filmed the visit and submitted the footage as an exhibit. The games purchased included Beyond Good and Evil, Dragon’s Quest, God’s hand, Spy Hunter, and Fifa 2013.
The Plaintiff alleged that inspection of the disks showed clearly that they were fakes that infringed Sony’s Copyright since they were not in cardboard packages with shrink-wrapped cellophane or new DVD boxes and did not include instruction booklets. Unlike the originals, the disks did not have pictures on them and were not stamped with Sony’s logo and copyright notice. Sony sent a Cease & Desist letter and asked for the pirated disks to be handed over and for accounts to be produced for calculating profits and infringement revenue. The parties were, however, unable to come to an amicable settlement and so this case was filed. In the statement of case, Gever was accused of copying or creating fraudulent copies, selling or offering to sell these in the course of his business, offering to sell and holding fake copies thereby infringing the copyright, without permission of Sony and without compensating Sony.
In addition to the copyright charges, Sony alleged unjust enrichment under the law of Unjust Enrichment 1979 and various trade related torts for damaging Sony’s reputation.
Sony sued for compulsory damages of 100,000 Shekels per infringement under Section 56a of the Copyright Law 2007. Claiming years of fraud, Sony requested increased damages of 150,000 Shekels and also applied for an injunction against Gever to prevent him from selling fake disks directly or indirectly.
Gever laconically acknowledged ownership of the shop and that he’d sold programs against the tax invoice, but denied selling or trading in fake software. Gever further alleged that he’d bring expert witness that the software was genuine.
In the preliminary hearing, Gever repeated that the disks were genuine and that he was unaware of “the material”. In a second preliminary hearing he again requested to examine the disks. After the parties held a brief discussion, the attorney for the plaintiff stated that the defendant claims that he sells computers, disks is a mere sideline that produces at most, 1% of income and that if it should transpire that the disks are indeed fake, he was unaware of this. In Gever’s own statement under cross-examination, he complained that he wasn’t warned, that he only sells a handful of disks each month and never claimed that they were originals. His lawyer clarified that the intention was to state that his client was unaware that the disks were not real. Meanwhile, the private investigator testified that there were a number of disks with the name of the program marked in permanent ink and that when discussing Playstation 3, the vendor had stated that copying it was problematic. Gever claimed that there weren’t more than 30 disks and that this wasn’t a commercial number. He admitted selling computers for 13 years and that he had sold Playstations for at least a decade, but claimed to sell very little software.
Under cross-examination, Gever claimed to obtain and sell original software on a request basis and to sell a handful of fakes each month. Some his brother supplied, some a friend, not sure from where, some he’d copied himself. He denied selling 60 a year, or 600 over the decade. He considered this non-commercial as he had a limited range of maybe 20 games.
The plaintiff requested to correct the statement of case to request 250,000 Shekels damages, alleging that even at the rate of 5 disks a month, this adds up to hundreds of disks over a decade. (I feel a lawyer joke coming on. It seems that neither the judge, not the attorneys were able to do the calculation).
The defendant objected to the sum being corrected. He also alleged that for sales prior to the new copyright law coming into effect in 2008, the maximum statutory damage is 10,000 Shekels (or 20,000 Shekels for willful infringement.

RULING
Despite Regulation 92 of the Civil Court Procedures 1984 allowing extensive corrections to the statement of case to enable the point of contention to be clarified, correcting the sum after the hearing and before ruling is not allowed as it does nothing to clarify the legal issues and will merely protract the proceedings. The plaintiffs alleged that Gever had sold tens if not hundreds of fakes over a period of years and nothing had changed, so the maximum sum claimed remains 150,000 Shekels.
Judge Weinstein ruled that merely selling fake disks was insufficient to be responsible, but the seller had to be aware that they were fakes. In this instance, some he’d scanned himself, others were supplied from an unknown source so it seems clear that he was aware. Furthermore, a computer seller would be expected to be able to differentiate between originals and fakes. The price of 10 Shekels a game was also a fair indication that they were fake.
The private investigator’s footage showed boxes of 50 or more games, and this was a commercial number. The private investigator’s testimony was sufficient to indicate that the vendor was aware that the goods were fake. However, the issue is moot as during cross-examination he admitted copying some of the programs himself.
The problem, was, as always, the burden of proof required. After humming and hawing about the need to warn others not to copy, the admitted sales of small amounts over time and the evidence of 5 separate games, Ms Weinstein ruled damages of 50,000 Shekels and costs of 10,000 Shekels.
52260-01-14 Sony vs. Gever, Ruling Judge Weinstein 16 March 2015

COMMENT
The disks were sold in Osefiya by Shfaram. In the past, a DVD copying factory was discovered in Kiryat Ata.
Personally, I am inclined to believe that Gever sold very little software. Why should anyone not picky about purchasing originals pay 10 shekels if blank DVDs cost half a shekel and everyone has a disk burner?
Not allowing the sum claimed to be increased is one thing, but I think that on the burden of evidence and not requiring actual damages, but statutory damages, Ms Weinstein had sufficient evidence to rule the 150,000 Shekels damages. Not unreasonable for a sideline operating 10 years.


IL 157,035 – If one accused of infringing a patent does not challenge its validity, is the accused estoppeled?

March 8, 2015

Fig. 3Fig. 6

Israel Patent Number 157,035 is owned by Moshe Lavi. It relates to a shelf for the compressor of an air conditioning unit.

The main claim is as follows:

 A modular bracket for an air conditioner compressor, said bracket comprising a substantially rectangular frame composed of at least two portions, being “U” or “L” shaped provided with surplus holes allowing adjustments to suit the thickness of an air-conditioning compressor to be seated thereon, at least one further structure being attachable to said rectangular frame to provide support thereto.

The patent application was filed in July 2003 and issued in May 2007. In April 2014, Zach Raz, represented by Pearl Adv. filed a cancellation proceedings and, on 27 July 2014 Moshe Lavi, represented by Pearl Cohen Tzedek Latzer Barats filed a request to have the case thrown out.

Note, the Pearls concerned are different lawyers with the same name. To differentiate between them, we will call one firm Pearl and the other Pearl Cohen – Brats.

In an earlier dispute, 47000-02-12 Moshe Lavi vs. Zach Oz Air Conditioning LTD., the parties agreed to an out-of-court settlement in which the applicants for cancellation undertook not to infringe the patent, and, consequently, Pearl Cohen Brats argued that they were estopelled from challenging the validity of the patent.

At this stage Pearl Cohen Brats claims that Zach Oz never raised validity issues which are generally the first line of defense that infringers take, and at this stage, they are estoppled and it is too late for the them to challenge the validity of the patent whether or not the grounds for so doing were known at the time of the previous ruling.

Moshe Lavi represented by Pearl Cohen Brats further alleged that Zach OZ was behaving inequitably and was misusing the legal procedures. This argument was based on the compensation damages awarded in the out-of-court settlement were minimum as the parties were keen to put the legal battles behind them, and, were Moshe Lavi to know that the validity would subsequently be challenged, they would never have agreed to reducing the compensation.

Zach Oz argued that there was no positive declaration of validity or admission of validity in the court case or in the out of court settlement. They further argued that the grounds for invalidating the patent were only discovered after the out-of-court settlement. They further opined that throwing a case out without discussing its merits should only be considered in extreme cases where it is clear that the case is frivolous. Since the issue of infringement and that of validity are not the same, one cannot consider that the previous court ruling prevents the patent office from hearing the case.

Ruling

The Commissioner, Asa Kling noted that throwing out a case on a technicality without hearing it on its merits was an extreme step, and that the Israel Patent Office had an obligation to ensure the integrity of the patent register (see section 73b of the Israel Patent Law 1967) so that the validity of any patent that arguably should never have issued should be challengeable.

Citing Judge Zamir in Appeal 3833/93 Levine vs. Levine:

Access to the Courts is a constitutional right despite there not being a constitution and this right is not yet written into the basic laws, and the courts will uphold this right.

Judge Heishin in 733/95 Orpal Aluminium vs. Klil Industries LTD PD 51(3) 755, 628:

Access to the courts is a basic right as basic rights are commonly understood.
Furthermore, access to the courts is considered a basic right, even if not literally stated in the Basic Laws. It is the air that allows the courts to breathe and is the basis of the judiciary and of the rule of law.

In other words, Heishin was noting that the courts need to be able to hear cases to function and so were loath to throw cases out on a technicality.

Commissioner Kling accepted the need for finality, but ruled that the need for access to courts  and for cleaning the patent register by voiding  a priori non-valid patents was a greater need. He didn’t consider that civil procedures were merely for the benefit of the warring parties and there was an overriding national interest in allowing cancellation proceedings to be judged on their merits. Section 73b rules that such cancellation proceedings could be submitted by anyone.

Based on the statements of case, this instance was not one of those rare cases where access to the courts should be denied.

In paragraph 2 of the statement of case, Lavi (represented by Pearl Cohen Brats) stated that “the patent was granted on 12 May 2007 and is in force for all purposes”. In paragraph 14 of the counter claims Zach Oz represented by Pearl stated that the patent is in force until 21 July 2013, i.e. a further year. It seems that this was simply a misreading of the register. One cannot deduce from this that they accepted that the patent was inviolate and could not be challenged.

Since anyway, anyone can challenge the validity of a patent, and in so doing, serves the public interest, the whole concept of judicial estoppels is irrelevant and this skirmish is simply a waste of precious judicial time.

Essentially the infringer, can, of right, challenge the validity of the patent in the patent office whilst defending himself from allegations of infringement. The legislators intentionally allowed this and the estoppel simply does not exist.

It appears that Lavi (represented by Pearl Cohen Brats) are attempting to learn ex silencio assent to the validity of a patent whose validity was never formally asserted. Although Section 182 allows the alleged infringer to raise invalidity issues in his defense, he is not obliged to do so.

The mere fact that in the previous court case, there were vague references to validity issues, the court never addressed those issues and it cannot be construed that the previous court had affirmed that the patent is valid.

Citing Zaltzman in Court Actions 1991, , the Commissioner ruled that an out-of-court settlement undertaking not to infringe that was subsequently endorsed by the court cannot be considered as if the parties had accepted validity of the patent or that there was indeed infringement. They had merely decided not to bother to have an adversarial dispute that could create estoppels.

Arguably, the claim that the token compensation would not have been accepted had the patentee known that the validity of the patent would subsequently be challenged might be grounds for ruling that the agreement was broken or for claiming inequitable behavior in an appropriate forum but this could not be used to argue that the case should be thrown out without relating to the issues raised, thereby preventing the validity of the patent from being challenged in the patent office.

The Commissioner ruled that each side should bear their own costs for this request to throw out the case.

The patentee was given three months to relate to the validity issue.

COMMENT

Disclosure – Way back in 2007 when Lavi sued Zach Oz, I was approached by Soroker-Agmon on behalf of the defendant to give an expert opinion concerning whether the patent was infringed. I came to the conclusion that there was no infringement unless the claims would be interpreted so broadly that they would be voidable as lacking novelty (the Gillette Defence). I requested a minimal budget to search the prior art as it seemed clear to me that the patent was for a shelf bracket with a triangular brace and it should never have issued anyway. The budget was not forthcoming, and I never got to present my arguments of non-infringement in court as the defendant got cold feet and agreed to the out-of-court settlement so my arguments were never heard. It was and is my belief that the patent in question was not infringed, could easily be voided as lacking inventive step and, with a little searching, should be easy to show was anticipated. No substantive judgment was given.

The issue before the Commissioner was a legal one and was simply whether the arguments for cancellation should be considered on their merits, or whether the party requesting cancellation should be legally prevented from presenting their arguments.

The commissioner is, of course correct to throw out the request to throw out the case on a technicality. Furthermore, as the request was frivolous, and as noted by the commissioner, the request was a waste of Judicial resources, I think he was more than generous in ruling that the parties should bear their own costs.

I understand that back when the infringement case was filed, Zach Oz had minimal resources to fight the patentee and was effectively bullied into submission. As with the Source Vagabond case, a more vigorous defense would have been that the whole lawsuit was frivolous, that the patent was not infringed. Maybe now they’ll do what they should have back then and show that the patent never should have issued.


Trademark for Kappa Cigarette Brand Opposed

February 26, 2015

Kappa

Karelia Tobacco Company Inc filed Israel trademark application 213924 for the word Kappa (non-stylized). The mark covers cigarettes, tobacco and tobacco products, lighters, matches and smoker’s requirements, all in class 34. The application was filed in August 2006, and was accepted in March 2010 and published for opposition purposes. Basic Trademarks S.A. opposed the application. Basic Trademarks S.A. has a brand of sports clothing Kappa – with the logo shown above.

Among other grounds, Basic Trademarks attempted to amend their statement of case to oppose the registration on the Section 7a(d) of the Law to Limit Advertising and marketing of tobacco products. This attempt was thrown out based on a ruling that limiting cigarette advertising was not grounds for preventing a trademark from being registered. Furthermore, tobacco brands could not fairly be considered unregisterable under grounds of Public Order.

Kappa appealed this interim ruling to the District Court (Appeal 15171-02-11) who ruled that public order was a consideration. The statement of case was then amended. The sides submitted their evidence, but forgo the need for a hearing, allowing the Israel Patent and Trademark Office to rule on the Opposition based on the written evidence and submissions.

Opposer’s Case

The Opposer argued that they were a world leading clothing company that made shoes, clothing and head-wear for leisure wear, sports, and for sporty fashion. The mark was well known in the US, Europe, Canada, China and Israel.

The Opposer has 13 marks including the name Kappa in various classes, with and without the logo shown above, where the word Kappa is dominant. The Opposer claims to have invested significant resources in advertising and marketing, worldwide including Israel. The turnover reaches millions of Euros a year. The company promotes sports and international sports competitions.

Due to the advertising, Kappa is a well known mark, as the term is defined in Section 1 of the Ordinance, and thus under Section 11(14) the mark cannot be registered by others in other classes as this would create a linkage to the clothing manufacturer which would damage their reputation.

The mark was also not registerable under Section 11(6) as to register it would dilute the sports company’s mark, damage their reputation and be unfair competition.

Furthermore, following the appeal, the application should be refused under Section 11(5) as being against the public good – Section 7a(d) of the Law to limit advertising and marketing of tobacco products was legislated since tobacco is unhealthy. Finally, the applicant had not actually sold tobacco products under the Kappa brand and so would not suffer significant losses from having the mark refused.

Applicant’s case

Karelia Tobacco Company Inc argued that Kappa is famous only for the word together with the back to back male and female and the word itself is not well known.

Trademarks and branding for cigarettes is allowed in Israel and so public order considerations should be considered irrelevant. The word Kappa is similar, but there is no conceptual relationship between the goods. (What the argument is really saying is that since Kappa promotes a healthy sporty image and cigarettes don’t fit into that image, noone would think that Kappa cigarettes are a product of the sporty fashion company. Both marks are used with other elements and the possibility of damage to Kappa sportswear from Kappa cigarettes is not proven.

The distribution channels and customer base is very different. Kappa is a Greek letter and like Delta, although can be monopolized, cannot be monopolized across classes. For example, the word Kappa is in use by third parties in the print industry.

Both in Israel and abroad the same mark may be used for cigarettes and for sports goods with both marks coexisting. (This argument is plausible, however, no examples are given).

In conclusion, applicant rejects claims of confusion, unfair competition and dilution, and argued that Kappa had not proven that their mark is well known in the meaning of the term as far as well known marks is concerned. Furthermore, the advertising limitations on cigarettes cannot be applied to prevent the mark from registering.

Kappa submitted evidence of turnover and advertising expenditures and a Wikipedia excerpt concerning fashion cigarettes.    It seems that Yves Saint Laurent, Givenchy, Versace, Pierre Cardin, Christian Lacroix and Cartier have, at one time, each allowed their name to be linked to cigarettes. It was argued that sine fashion brands do allow their names to be used with designer perfumes and cigarettes, a cigarette with the same name as a fashion brand could be considered as linked to the fashion brand, creating a confusion regarding origin.

The Ruling

Citing precedents, the Adjudicator Ms Shoshani Caspi ruled that in oppositions, the burden of proof lies with the Applicant. Nevertheless, the Opposer has to base their opposition on facts.

The parties forgo a formal hearing with cross-examination and allowed the Adjudicator to rule on the evidence submitted.

Firstly, Ms Shoshani Caspi examined whether Kappa could fairly be considered a well known mark for fashion at the time that Kappa was filed for cigarettes, allowing it to prevent marks from being registered in additional classes, i.e. not just for fashion accessories.

The determination of whether Kappa could be considered a well-known mark was based on market penetration in the relevant population sector, the extent of usage of the mark and its longevity, long term advertising, inherent distinctiveness, whether the mark was in exclusive use and to what extent the owners of the mark invest in combatting infringers. The mark had to be considered well-known in Israel and not just abroad.

Al the evidence pointed to the mark being well known, despite the fact that generally the name Kappa is generally used together with the logo. The mark has been in use since 1969 and is mostly used in connection with sporty clothing. The opposers have an international portfolio of 600 marks including the word Kappa alone, not just as part of Robe De Kappa or together with the emblem. They have sponsored various football teams in Italy, Holland, France and Spain. The brand has millions of dollars of annual income from sales in Israel and has sponsored various local football teams including HaPoel Tel Aviv and Betar Jerusalem.  Thus the KAPPA mark was well-known in Israel as well.

The second issue is whether, due to the phenomenon of fashion cigarettes, whether the public would identify KAPPA cigarettes with the fashion brand. Here, when extending a mark into new categories of goods, there is a need to act sensitively and to weigh up the interests of the competing parties.

Ms Shoshani Caspi was impressed that both fashion and cigarette usage are susceptible to trends and found the phenomenon of fashion cigarette branding persuasive.

The fact that the cigarette brand had not yet launched strengthened this, and she was also convinced that a brand associated with the fashion house could do harm to the fashion house’ image.

Since the fashion house had a sixty year history and the cigarette company could not provide any reasonable explanation for the choice of name, she suspected inequitable behavior and considered dilution a real possibiliity.

In conclusion, MS Shoshani Caspi ruled that the Kappa fashion mark was well known, that fashion and cigarettes could confuse confusion and dilution and rejected registration of the Kappa brand for cigarettes and rejected the registrations under Section 11(14 and 11(6).

Ruling re Opposition to by Kappa clothing to Kappa as Israel Trademark 213924 “Kappa” for cigarettes, Ms Shoshani Caspi, 22 January 2015

 

COMMENT

The fashion brand argument ignores the fact that haute-couture and sports goods are not the same, and that fashion cigarettes are a relic of a bygone era when smoking was certainly socially acceptable, but more was actually considered cool and sophisticated, and not just among teenagers. Put another way, when cigarettes were fashion accessories, fashion houses were happy to have their names associated with cigarette brands. That is not the case now, as evidenced by Kappa’s arguments. That said, the decision seems reasonable.

 


YES!

February 18, 2015
Yes!

Yes!

DBS Satellite Services 1988 LTD provides satellite television services in Israel that are branded as YES. The Service is licensed by the Communications Ministry.

DBS Satellite Services 1988 LTD sued the brothers Ahmed and Amar Hamuda for trademark and copyright infringement and damages, requesting the following sanctions:

  1. A permanent injunction against the defendants to prevent them from distributing, marketing of selling pirate transmission of the Plaintiff, to cease using the plaintiff’s trademarks, including in third party publications. They requested an injunction against them using the plaintiff’s equipment, or equipment supplied by the plaintiff to their customers, for any but personal use, and to cease any non-personal use immediately.
  2. An order to the defendants or to the receiver to destroy all equipment that enables copyright infringement and all material carrying the YES logo.
  3. An injunction to remove YES’ registered trademarks from the FACEBOOK page for Acre Satellites and from all other publications.
  4. A request to reveal accounts going back seven years.
  5. Statutory damages of 700,000 Shekels under Section 56a of the Copyright Act and Statutory Damages of 100,000 Shekels for trademark infringements (claiming single infringements merely to reduce the court fees) and double costs as a punishment for willful infringement.
  6. Alternatively, compensation of 1,900,000 Shekels for Unjust Enrichment,  (the figures capped to reduce the court fees).

These injunctions were granted by Judge Zernkin, and following the Anton Pillar injunction, equipment and computer records were seized and a summary report was filed to the court by the receiver.

The injunctions were kept in force until the end of proceedings, and for the purposes of the hearing, an order to produce documents and to fill out questionnaires was issued.  This happened in the presence of the defendants who then failed to respond. Consequently, using powers under Section 122 of the Civil Court Procedure 1984, the court ruled that the statement of defense be struck from the record. It is noted that the statement of defense was a mere denial without any explanations.

In a ruling of 27 December 2014, Judge Orit Weinstein requested that the Prosecution supply evidence to substantiate their case and on 15 January 2015 they submitted evidence and affidavits of private detectives, by the VP (Engineering) of YES and the Head of Development at YES.

Based of the evidence submitted, Judge Weinstein ruled that there was sufficient grounds for a judgment against the defendants:

The Defendants broke the security encryption of the satellite transmissions and created a pirate industry, marketing and selling YES’ transmissions piratically, without paying YES, and by undercutting YES’ prices, free-riding on YES. YES’ copyright was infringed by the packaging of the transmission channels and the content, and YES’ trademarks were infringed by being used without permission and illegally.

Consequently, Judge Weinstein ruled that the temporary injunctions would become permanent injunctions, that all equipment be destroyed, following the receiver declaring that he was not holding any assets, there was no need to issue an order against him. The FACEBOOK page should be amended and so should all other publications so as not to include the trademarks of the plaintiff. Judge Weinstein further ruled statutory damages of 700,000 Shekels for copyright infringement and of 100,000 Shekels for trademark infringement, 10,000 Shekels expenses and 40,000 Shekels legal costs.

Civil Proceedings 111147-10-13 DBS Satellite Services (1998) LTD vs. Ahmed and Amar Hamuda.

COMMENTS
I have no sympathy for the defendants in this case. Nevertheless, although the ruling seems very reasonable and the defendants didn’t exactly defend themselves, in the hands of a good lawyer, they could have raised a number of interesting questions. Free riding is not a crime. YES probably does not own very much of the copyright in their transmissions and creating a copyright in a package of channels is stretching things a little. In a recent Supreme Court Ruling concerning parallel imported Tommy Hilfiger shirts here, the Supreme Court allowed the parallel importer to advertise that it was selling Tommy Hilfiger shirts, but not to claim that it was a registered supplier, and to inform customers that they were not entitled to warranties from the official suppliers.  Can one really prevent someone from using the word ‘yes’ on their facebook page or in advertisements?

pirate

Piracy is the crime of boarding shipping on the high seas that is punishable under international maritime law by requiring the pirate to walk the plank.

Arguably with regular TV transmissions, there is a case for Ministry of Communications regulation to divide the radio frequencies into separate bands and to prevent channels interfering with each other. I am not sure that for digital signals sent by satellite this is the case. Certainly government tenders have been abused. The tender for commercial radio that then Govt. Minister Shulamit Aloni put together was designed to prevent Arutz 7 from obtaining a license. The same politicians who called the Arutz 7 team pirates and warned about pirate radios risking plane crashes lauded the late peace activist Abu Natan and his pirate radio ship the Voice of Peace and nominated him for a Nobel Prize. When the Supreme Court voted en banc against Arutz 7, without a dissenting voice even mentioning the value of free speech, it was clear that things have deteriorated a long way since Agranat’s deicison re Kol HaAm.


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