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.


Israel Patent Office Circular on 3D Trademarks

March 18, 2015

The Israel Patent Law 1967 is unequivocal in that three dimensional trademarks are registerable.

In the past, attempts to register the shape of objects and containers as trademarks was frowned upon by the Israel Patent and Trademark Office. Then, in 11487/03 August Storck KG vs. Alfa Intuit Food Products LTD, the Supreme Court ruled that the shape of the distinctive Toffiffee toffee and chocolate coated hazelnut snack could be registered as a design.

Since then, there have been a number of rulings (for and against) concerning trademark applications for  distinctive packaging, particularly for liquor and perfume bottles, and for various other objects such as Rubik’s cube.

The Israel Patent Office has now published a Commissioner’s Circular (no 032/2015) that attempts to provide clarity to this issue.

Essentially, three dimensional packaging or product shape should be protected with design registrations.

Consequently, inherent distinctiveness is insufficient grounds for registration.  However:

  1. if the three dimensional image serves as a trademark,
  2. is not significantly aesthetic or functional, and,
  3. through use, has acquired distinctiveness, it may be registered.

Since trademark registration does not provide protection to different elements of a composite mark, if a three dimensional representation includes the company’s name prominently, this may be used to enable registration without consideration of the three requirements above.

If allowable, the fact that the image is three dimensional will be stated.

The Circular comes into immediate effect and cancels previous circular MN 61, from 29 April 2008.

COMMENT

As guidelines, these are very sensible. However, one imagines there will be lots of arguments as to whether in specific cases, a three dimensional image serves as a trademark or not. Whether something is ‘significantly aesthetic or functional’ leaves a lot of grey areas, and the concept of acquired distinctiveness is also a difficult issue to quantify.

Substantially functional marks are related to in a decision concerning rifle sights. In a controversial ruling, the Rubik Cube was registered. In another ruling that I was less than happy with, the Crocs beach clog was registered.

Many rulings relate to bottle designs. For example the Kremlyovskaya vodka bottleEnergy Brands, Contreau, Fanta and Absolut Vodka. Also see here. Rulings for other containers include one for a cigarette box.

I suspect that we haven’t heard the last word on this subject.


B144.co.il vs New 144 on Competing Marks, distinctiveness of a number and cybersquatting

March 12, 2015

Directory Inquiries for Bezeq, Israel’s historic telephone service was reached by dialing 144. Since the mobile phone and fiber-optic cable revolution, there are now lots of competing cellular and satellite phone providers and cable entertainment networks also provide phone services. Each supplier has its own directory inquiries, and dedicated websites.

On 3 April 2012, Mr Yossi Lotem filed a trademark for New144, for advertising, business administration business services, office services and shops in Class 35.

On 22 July 2012, Bezeq Israel Telecommunications LTD submitted a number of trademarks for stylized logos for b144.co.il, which is the Internet address of their online telephone directory website. The marks were submitted for Computer applications, electronic indexes, Mobile phone applications, Internet Applications, digital databases, directories and different services in Class 9, for managing databases, publicity, providing business services, business consultancy, office services and business databases in class 35, for telecommunications, communications, providing communication services,

The various logos included different slogans “all businesses in one website”, “helps you to chose”, and “All business and all people in one website”

b144.co.il   b144.co.il1  b144.co.il2

The patent office considered the marks as confusingly similar and as the parties were unable to come to an understanding, a competing marks proceeding was initiated.

In addition to competing marks, this ruling relates to procedural issues, fighting trademark battles without legal representation, inequitable behavior and cybersquatting. It also touches on whether numbers alone are registerable.

Lotem submitted his affidavit requesting examination on the merits. Bezeq submitted a statement from their Head of Information Marketing and Databases. It transpired that both parties have been providing internet publicity services, creating mini-websites for companies together with contact details.

Originally Lotem was represented, but his counsel requested to be released from his obligations with client’s consent, and so Lotem was cross-examined without representation.

The parties filed summaries and responses to the summary. Before ruling on the main competing marks issue, the Deputy Commissioner, Ms Jacqueline Bracha addressed a request by Bezeq for various parts of Lotem’s summary to be struck from the record as being an inadmissible widening of issues under discussion.

The admissibility of evidence and new claims in summations 

Bezeq claimed that the material related to new issues raised without submitting evidence and so should be considered invalid. Some was hearsay, and some was irrelevant. Lotem claimed that the material was with his counsel and he only learned about them late in the proceedings, but the material related directly to whether Bezeq had rights in 144. The legal issue was essentially whether in a competing marks ruling, evidence regarding the cancellation of a mark could be submitted.

Lotem did not accept that this was new material that went beyond issues discussed in his statement and that of Bezeq’s witness. Bezeq argued that they could not relate to the issues as they weren’t submitted at the proper time and in the proper manner. The information that Lotem wished to submit related to regulatory rulings concerning Bezeq’s activities that were designed to limit their monopoly and Lotem further noted that attempts by Bezeq to obtain a trademark for the number 144 alone were rejected. Lotem’s case wasn’t helped by him submitting statements headed as “affidavit” and ‘legalized’ by his nephew rather than by a lawyer.

In her ruling, the Deputy Commissioner Ms Jacqueline Bracha noted that the alleged inequitable behavior of Bezeq in using the requested trademark was not raised as an issue at the proper time and evidence was submitted after the evidence stage was completed. Furthermore, the additional material was not submitted by requesting late submission with appropriate justification, but was slipped into the conclusions without prior approval from the patent office.

Lotem’s excuse was that he was not represented and was not familiar with procedural issues. Furthermore, the procedural laws for civil procedures 1984 are not actually binding on the patent office. Ms Bracha acknowledged that the laws regarding widening the legal issues at late stages of a proceeding were court procedures, but ruled that they were generally applicable to patent office proceedings with modifications as necessary. Support was given (or at least reference was made to earlier decisions) from 147565 Orbotech vs. Camtek and from TM 158670 ruling concerning deletion of evidence re On line Marketing LTD. vs. Yoval Gorali et al.

In competing marks proceedings, traditionally the parties submit their evidence but do not submit statements of case. In a Circular from commissioner 013/2012 in addition to presenting evidence, the parties are cross-examined and may request permission to file contrary evidence. In this case such a request was not made.

MS Bracha noted that competing marks proceedings are adversarial and so each side should have an opportunity to present evidence and to challenge each other’s evidence. A corollary of this is that one cannot allow one side to submit new evidence late in the proceedings if the other side disagrees. Consequently, she ruled that Lotem cannot submit this new evidence at this stage. Sections 18-32, 24-37 of Lotem’s summary and appendices 5, 6, 7 and 9 are struck from the record as are sections 8, 10 and12 and appendices 1-5 of the response Lotem made to Bezeq’s summary.

Which mark should be preferred? 

Substantively, in competing marks proceedings the issues include who filed first, but more importantly, the issue of extent of use and and equitable behavior is considered.

Lotem filed 3 1/2 months before Bezeq but this is considered insignificant. Indeed, Bezeq has other marks for “b144″ and for “b144.co.il all businesses” that predated Lotem’s filings. Lotem showed that he’s filed a trademark for new144.co.il in 2010, and, between 2019 and 2014 had invested 200,000 Shekels in the project.  By 2014 he’d accumulated 40 clients and was making up to 20000 Shekels a month.

Bezeq started using the b144 and “b144.co.il all people. All professions” marks in question in 2010 and had some use of b144 since 2007 on Bezeq’s website.  Over the period from January 2008to 2013 Bezeq’ website was receiving 203 million hits a month with significant advertising revenue. Furthermore, Bezeq’s marks include b144 as a dominant element.

Ms Bracha ruled that the issue of whether 144 is a well known mark or indeed registerable is irrelevant and concluded that Berzeq had adequately shown more significant usage than Lotem.

As to equitable behavior, Ms Bracha accepted that this was critical in this instance, but did not see how Bezeq, with usage of b144 from 2007 could be accused of aping Lotem.

Lotem had used the website Israeli-business but decided that it was too long and then purchased new 144 after seeking professional advice and learning that the word new was desirable. Lotem originally denied being familiar with Bezeq’s website before filing his domain request in 2009 and only discovered it when Israeli-business appeared on Bezeq’s website. He argued that he did not request the website and that it was opened automatically when he purchased a business line.  However, Bezeq showed that the entry on Bezeq’s directory included a description of his services that Lotem himself had written and then he admitted having some prior knowledge of b144.co.il and of b144.

Additionally, Lotem was using the slogan “all businesses all professions” in a manner that was also more than reminiscent of Bezeq’s website. Bezeeq claimed that this was hardly coincidental. Lotem countered that unlike Bezeq he was not providing personal contact data for individuals but only business data and that the slogan “all businesses all professions” and variations thereof were widely used by other information providers and this was descriptive or his services, and there were only so many ways of describing such services.

Lotem argued that he wanted to use the word “new” and 144 was chosen as it is easily remembered. When asked what the number signified, he responded that it was an integer between 143 and 145.

The Deputy Commissioner accepted that this was a random number between 143 and 145 but noted that Lotem referred to his mark as new one four four and not as new one-hundred-and-forty-four, indicating that the subconscious motivation behind the random selection appeared to be the dial up number of Bezeq, since phone numbers are usually remembered as strings of single digits. Consequently the Deputy Comissioner ruled that in addition to scale of use, in terms of equitable behaviour Bezeq had a stronger case.

Lotem suggested coexistence under Section 30. MS Bracha ruled that coexistence in the same class required equitable behavior of both parties and was not convinced that Lotem had behaved equitably. Furthermore, the differences between clientele were not real differences. Both parties were providing business card type mini-websites to clients which was the same service. Consequently, she ruled that coexistence was inappropriate. Lotem mark was refused and Bezeq’s marks were allowed to continue for examination.

Lotem was ordered to pay 2000 Shekels in legal fees and 12000 Shekels in costs to Bezeq.

COMMENTS

This decision is more than reasonable. Since Bezeq’s monopoly was destroyed other parties can provide telephony services and Lotem can certainly provide a business directory and min-websites. The issue here is one of the choice of name. Lotem is a cybersquatter.

Numbers per se. are not considered distinctive and cannot be registered as trademarks. Intel called their fifth generation processors Pentium since despite the success of 286, 286 an 486 series PCs that revolutionized the personal computer industry, they did not have rights to the number.

In June 1994 Brian Lara scored 501 runs for Warwickshire against Durham setting a new world cricketing record. The clothing company that Lara was contracted to could have celebrated by issuing a celebratory 501 jeans. They didn’t as Levi-Strauss’ 501 design is so well known.

One is generally not advised to fight companies such as Bezeq without legal representation. Lotem’s arguments for the slogan were reasonable. Arguing that 144 was selected randomly from the numbers between 143 and 145 was not such a good idea.

Bezeq should approach ICANN to have the new144 website taken down. One cannot claim distinctiveness for adding the word new.


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.

 


Clip Fresh Ruling Upheld On Appeal

February 25, 2015

clip-fresh

Back in July 2014, the Israel Patent Office allowed the Clip Fresh logo mark of Farm Chalk LTD to be registered despite an opposition from earlier registered ‘Click and Fresh’ to Millennium Marketing Intertrade (1999). The Examiner considered the likelihood of confusion to be unproven. See here for more details.

Millennium Marketing Intertrade (1999) appealed the decision and the decision regarding costs (reduced from 92,932 Shekels to 80,000 Shekels) to the Tel Aviv District Court under the Right to Appeal.

They considered that despite the different appearance of the marks, when the sound of the mark is considered, there is a likelihood of confusion.

Furthermore, “By Farm Chalk” –which appears in the mark, was never actually used, rather the mark holder used the slogan “Keep it Fresh”, so the decision to allow the registration on the grounds that the words By Farm Chalk prevented confusion should be reversed.

.The Appellant argued that the F of Fresh looks like an ampersand (&) and the mark holder simply adapted their mark and was confusingly similar in appearance. Furthermore, the costs of 80,000 Shekels were disproportionate to the work involved in the opposition.

The mark holder argued that the Appeal should have been filed within 45 days and was actually filed 4 months after it issued and so should be thrown out. Furthermore, the Click and Fresh mark only issued after disclaiming the descriptive words ‘click’ and ‘fresh’ and so cannot be considered misleading the public as to the source of the goods. The costs were not much different from costs awarded in other cases and Appeals to reduce costs should only be accepted in extreme circumstances.

The appeal was filed within 45 days of the costs ruling though not within 45 days of the main ruling. Judge Yehudit Shnitzer considered that the costs of 80,000 Shekels were indeed significant and could be grounds for deciding to file an appeal. She therefore was prepared to review the case and rule on its merits.

As to the phonetic similarity, Judge Shnitzer considered that food containers are not bought by requesting the goods by brand over the counter, but by picking up and examining the goods. She therefore considered that the difference in visual aspects of the marks outweighed the similarities in sound.

Neither mark would have issued for the words, only for the stylized logo. In an appeal regarding the registration of a mark there was no room to consider whether the mark was actually used as registered, since this was a separate ground for canceling a mark after a period of time, but not within the scope of the appeal. Since the click and fresh registration only issued by disclaiming the words ‘click’ and ‘fresh’, the protection afforded by the sounds of these words is very limited.

The marks have to be considered in their entirety, with the emphasis on the visual aspects not the audible ones, and noting similarities in disclaimed words, but not giving such disclaimed words much weight.

As there are a lot of similar goods on the market, someone interested in a specific brand would be expected to take care.

It is important to prevent trademark abuse and policy dictates having to avoid trademarks providing an effective monopoly on goods having certain characteristics, rather than serving as an indication of source. Allegations of free riding, unfair competition and confusing the public were rejected in favour of free competition.

As to the costs awarded, Judge Shitzer noted that the costs were based on actual cost submissions and were calculated and not random. She accepted that there were cases with a single hearing and no witnesses from abroad where the costs awarded were much lower. She did not, however, consider the costs to be outrageous and did not see fit to interfere.

After ruling to reject the Appeal, Judge Shitzer awarded a further 30,000 Shekels costs against Millenium Marketing Intertrade (1999).

Appeal to Tel Aviv District Court 27992-08-14 Millenium Marketing Intertrade 1999 vs. Farm Chalk Investment LTD. Concerning Israel trademark opposition ruling concerning Farm Chalk’s stylized graphic mark by Asa Kling, the appeal ruling by Judge Shnitzer, February 2015    

COMMENT

This decision vindicating the Commissioner’s ruling is correct. I think that the decision also shows that Ms Yaara Shoshani-Caspi’s ruling re Humus B’Ribua is wrong.


Old Jaffa

February 16, 2015

jaffa orange    old jaffa

A Mr Yehuda Malki filed two trademark applications, 220542 and 220581 for Old Jaffa, for Preserved, dried and cooked fruits and vegetables; jellies, jams, compotes; eggs, milk and milk products; edible oils and fats; all included in class 29 and for coffee, tea, cocoa, sugar, rice, semolina, tapioca, coffee substrates, cereals, breads and baked goods, sweets, ice-creams, honey, yeast, baking powder, salt, vinegary sauces (flavorings) and spices in class 30, respectively.

On allowance, the Council for Creating Plants and for their Marketing – Citrus Division opposed the marks.

Israel trademark no. 237678 which covers soaps, perfumery, essential oils, cosmetics, hair lotions and dentifrices, all included in class 3 issued without opposition, but the the Council for Creating Plants and for their Marketing – Citrus Division field for cancellation of the mark.

On 12 September 2012, the Commissioner Asa Kling ordered the cases to be heard together and on 31 October 2012, the three cases were heard.

The Applicant, unrepresented, informed the Commissioner that he did not intend cross-examining the Opposer, and so the Opposer was exempted from appearing.

The Opposer considered that using the term Jaffa for anything not including citrus fruits was false labeling as the term was understood in the trademark ordinance and registration of the mark was therefore against the public good.

The Applicant rejected this interpretation and considered that considerations regarding false labeling were beyond what should be considered when registering trademarks. The public good should allow him to go about his business.

Section 11(5) of the Trademark Ordinance 1972 states that trademarks that are immoral or against the public good cannot be registered.

Section 2a of the Ordinance states that Jaffa is an appellation of origin under the law of Appellations of Origin 1965, and suing the word Jaffa, Jaffas or Joppa in Hebrew or English, or marks including the word or sounding like the word was not allowed under Section 2. Section 2b states that addition of words such as kind, type, copy, goods originating or the like did not stop using these terms form being forbidden.

According to the Commissioner, the concept of “public good” is a general principle that the courts can apply wherever they consider it appropriate, and this changes from  time to time and from place to place. However, as far as the term Jaffa is concerned, it is an appellation of origin that has specific legislation designed to advance Israel’s citrus industry.

In the legislation relating to the appellation of origin it is noted that the special law was drafted as the term Jaffa was being used for citrus fruit not originating in Israel and for other goods that are not citrus fruit and are not necessarily from Israel.

Consequently, the Commissioner accepted that the appellation of origin was designed to promote Israel’s citrus industry worldwide. Marks such as Old Jaffa were, indeed, against the public interest.

The Applicant considered that the term ‘Old’ was different from type or kind, and effectively removed the term Old Jaffa from the special law protecting Jaffa.

The Commissioner considered that arguably a law from the Sixties may be no longer relevant and noted that back in 2005, the previous Commissioner considered whether or not to extend the appellation of origin protection for Jaffa, but noted that the protection was extended and is in force.

Furthermore, since the word JAFFA is protected as a trademark (Israel trademark 20481) the requested mark should not be considered distinct within classes 29 and 30, and shouldn’t be allowed to be registered.

Despite the fact that fresh fruit and dried goods are often sold in different places, this is not always the case. The term old is not enough to allow registration, since Old Jaffa refers to Jaffa (in other words, it’s  not like the difference between York and New York).

Were the applicants’ goods related to the Old City of Jaffa, possibly consumers would associate the location separately from citrus fruits but currently that is not the case. Consequently, trademarks 220541, 220542 are refused and 237678 is canceled. The parties are invited to request costs.

Decision re Opposition to 220542 and 220581,  and cancellation of 237678 re Old Jaffa; Malki vs. the Council for Creating Plants and for their Marketing – Citrus Division by Asa Kling, 4 January 2015.

Comment

Currently, to provide Jaffa oranges all year round, the term is used for marketing oranges originating in South Africa and not just in Israel.

Still, the District Court over-ruled the previous Commissioner and allowed the mark to be registered. See here.

Still, I think that the fact that the term is no longer an indication of the origins of the citrus fruit does provide justification to interpret the rule narrowly, and, in my opinion, the term Old Jaffa does conjure up the coastal town and not Jaffa Oranges. Certainly, 40 years ago, the restaurant in London called Old Jaffa was trying to invoke the place and not the fruit.  Nevertheless, following a court ruling, the issue may be beyond a Commissioner to cancel the law or to interpret it narrowly. If Yehuda Malki decides to appeal this ruling to the courts, it will be interesting to see what happens.

 

 


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