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.


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.


Plasson

January 25, 2015

PLasson

Plasson manufactures pipe couplings. Unidelta launched a competing product and Plasson claimed patent infringement of their patents IL 125899 and IL 127327 and passing off and requested an injunction. The District Court accepted the charges that the “main point of the patent” was infringed and issued an injunction preventing the manufacture, import or sale of Unidelta’s pipe connections in Israel as they are a copy of Plasson’s product. On Appeal, the Supreme Court overturned the finding of patent infringement and referred the case back to the District Court. The Supreme Court ruled that where the similarities between the allegedly infringing product and the patented invention lie in features that are in the public domain, there can be no case of infringement.

Background

In addition to literal infringement of the claims of a patent, Section 49 provides grounds for legal remedies where the kernel of the patent is copied. This is rather like the “pith and marrow” doctrine in the UK. Essentially, the Law provides remedies where claim infringement is avoided by a technicality, and may be seen as similar to the doctrine of equivalents. Arguably contributory infringement and inducement to infringe may be considered as judicial extensions of this doctrine. It is important to allow general inventing around, but to avoid situations where poor claim drafting can result in no literal infringement of the claims.  What the Supreme Court has done is to clarify the extent of application of Section 49.

Ruling

Judge Meltzer of the Israel Supreme Court ruled that Section 49 provides monopolistic powers to the patentee to prevent literal infringement of the claims defining the invention and also similar products / processes that infringe the kernel of the invention. In this instance, both parties accept that there is no literal infringement so the only issue is the kernel of the patent. The kernel cannot be wider than that described in the Specification and, where the patent is for a device or system comprising a combination of known parts, the kernel of the patent cannot include the parts themselves. In this instance, the District Court did not address the question of what the kernel of the patent is, and without identifying the kernel of the patent, it is impossible to establish that this is infringed by Unidelta’s product. Once the kernel is established, the court must consider whether the infringing product operates in a similar way to achieve similar results.

The Supreme Court ruled that the patent issued because of a limiting feature added to the other components.

The main claim recites:

“1. A pipe coupling comprising a tubular housing having an axial bore adapted to receive a pipe end to be coupled and having an externally threaded housing portion and an inner housing abutment; a pipe gripping sleeve having formed therein a plurality of substantially equiangularly distributed, axially directed slits extending from a first end thereof to a region adjacent to but spaced from a second and opposite end thereof thereby defining an integrally formed, axially distortable, ring-like sleeve end portion, a first axial portion of said sleeve, through which said slits extend, tapering externally from a peripheral, outwardly directed flanged portion towards said first end and being formed with a plurality of inwardly directed, axially spaced apart serrations; a tubular collar having a first inner axial portion tapering from an inner collar abutment to a first end of said collar and a second inner axial threaded portion extending from said collar abutment to a second and opposite end of said collar; and a flexible sealing ring; the arrangment of said coupling being such that with said pipe end extending through said collar, sleeve, sealing ring and housing, said collar is screw fitted on said housing, said sleeve is located in said housing and said collar with said flanged portion located between said collar abutment and an adjacent end of said housing and said sealing ring is located between said sleeve ring and said housing abutment; screw tightening of said collar on said housing causes the respective tapering portions of the collar and sleeve to be mutually displaced with the gripping contraction of said sleeve about said pipe end and the axial compression of said sealing ring about said pipe end”.

Plasson’s patent is for a ring fitting that includes a wide and flexible ring that enables different sized pipes to be attached together in one smooth motion without dismantling the connector. Since Unidelta’s system did not include this limiting feature, but merely combined pre-existing components to create an alternative pipe fitting, there was no infringement of the kernel of the patent.

Quoting from the specification:

Pipe couplings of the type herein described, which are presently in wide-spread use, normally require pushing the pipe through the seal (typically an O-ring) in the bore of the body member in order to achieve compression of the O-ring on the pipe, and thus a leak free joint. However, for pipes of large diameters, the operation of pushing the pipe through the O-ring seal requires a large force, making the operation very difficult, and sometimes even necessitating an extra operation of chamfering the pipe end for this purpose.

A further disadvantage in the pipe couplings of the type herein described now in use is that such couplings do not tolerate substantial variations in the pipe diameter so that precise pipe diameter tolerances must be maintained, or a large number of different-size couplings must be produced for the different diameter pipes to assure good sealing and gripping actions”.

“…a pipe coupling constructed in accordance with the foregoing features provides a number of important advantages including: convenient assembly, since the particular seal, in its relaxed condition, introduces very little resistance to the forceful entry of the pipe during assembly; …increased diameter range of pipes capable of being coupled, since the two-ribbed (or three-ribbed) sealing ring can accommodate substantial differences in diameter sizes…”.

This emphasizes that Plasson did not invent the only pipe coupling for joining pipes of different diameters, and there patent was limited to one that is easy to seal due to little resistance.

As to passing off, the Supreme Court was critical of the District Court for finding this without explanation of why they considered that this was applicable. The Supreme Court referred the case back to the District Court for further consideration on this issue.

Judge Meltzer established costs against Plasson of 75000 Shekels.

Judge Miriam Naor (now president of the Supreme Court) commended Judge Melzer on reducing the issue to non-technical matters without technalese that regular people could understand.

Appeal 6750/10 Unidelta vs. Palson, Supreme Court 18 December 2014

COMMENT

One wonders who the non-technical people are in this case, plumbers or the President of the Supreme Court? Is the technical issue here flanges and pipes, gaskets and washers, or non-literal infringement, pith & marrow and other legalese?


Chinese Copycat Products not illegal and down will come baby, cradle and all…

January 25, 2015

rockabye

Dvaron Import-Export sell a baby rocker.  The products were manufactured and imported from China. Fisher Price Inc. and Mattel Inc. sued claiming copyright infringement, passing off, trademark infringement and Unjust Enrichment. They alleged that their intellectual property was infringed by the product, it’s upholstery and instruction manual which they claimed were accurately copied. Both Dvaron Import-Export and directors Aharon Stein and David Ben Shushan were sued.

The Nazareth District Court threw out the charges noting that there was no patent or design registration and that the defendants had not infringed any trademark registered by Fisher Price or Mattel. Claims for reputation and confusing the public as required for a finding of “passing off” were also rejected.

The Court ruled that copying products per se. where there are no registered rights, does not, in and of itself, create grounds for an injunction. Each case has to be judged on its merits. There is no copyright in the design of functional articles, including their form, although sometimes articles includes artistic elements that are protectable.  Copyright does not apply to rocking chairs or to their upholstery which should be protected by a design registration.

Copyright does cover instruction manuals however, as these are literary creations. However, the defends are not responsible for the contents of the instruction manual infringing the copyright of Mattel or Fisher Price as they could not know that Mattel or Fisher Price had copyright in this, and they are thus innocent infringers. The Chinese manufacturer had indeed reproduced Fisher Price illustrations but one would not generally notice this or Fisher Price logos in the images, and purchasers would only see the instruction manual after purchase.

As to Unjust Enrichment, in 5768/94 A.Sh.I.R. the Supreme court found that applying this doctrine where there is no infringement of registered IP rights requires an additional element of bad faith which, in the present instance is not found

Fisher Price Inc. and Mattel Inc. could not show a reputation in the product. The mere copying is not in and of itself an additional element of bad faith and the charges were rejected.

As the charges were rejected, the issue of personal liability of the directors was moot.

Costs of 30,000 Shekels were awarded against  Fisher Price Inc. and Mattel Inc. As to goods seized under an Anton Pillar injunction by Tel Aviv Magistrate’s Court, Judge Ben Hamu referred the parties back to that court to rule on the issue.

T.A. 39534-02-12 Fisher Price et al vs. Dvarron et al., Judge Yosef Ben Hamu, 8 January 2015.


Israel Patent Application Number 142789 – The European Patent Wrapper

January 15, 2015

file wrapper

DSM IP Assets owns Israel Patent Application Number 142789.

PMS Armory Factory LTD opposed the patent issuing. The opposer wished to enter the file wrapper of the corresponding European patent application into the evidence, but the Adjudicator of IP, Ms Shoshani Caspi refused to allow this as the request was submitted late in the proceedings. The opposition was rejected on 17 October 2013 and the Opposer appealed to the District Court.

On 12 August 2014 Judge Shitzer ruled that the file-wrapper of corresponding patent application EP 1137828 should be admitted as evidence. See here. The Applicant appealed this to the Supreme Court who ruled that the case was ongoing and so they were not yet prepared to get involved.

The Applicant therefore requested an expedited decision by the Patent Office regarding EP 1137828 so that they would be able to benefit from the application before it finally lapsed in 4 1/2 years. The Opposer rejected this request, claiming that it gave the impression that they were time-wasting. They requested due process including the right to cross-examine the witness. Applicant argued that the file wrapper did not need to be submitted by a witness that would be available for cross-examination. The District Court merely ruled that the evidence was admissible. Submitting via a witness who would be cross-examinable was a mere time-wasting exercise.

The Opposer argued that the European file wrapper raised technical issues that required clarification, and the applicant argued that this was widening the grounds for opposition. The sides each tried to get the other’s case thrown out on technicalities and argued as to who should be cross-examined first to avoid giving one side an advantage over the other.

Ms Yaara Shoshani Caspi ruled that as the European file wrapper was ruled as admissible by the courts, its relevance should be determined and now was not the time to try to stop it being considered by a technicality. She went on to rule that the European file wrapper should be submitted with a statement of its relevance to why the claimed invention is not patentable and the applicant could respond to the statement. There was a need to finish the opposition without further ado to provide legal clarity to the sides and to third parties regarding the validity or otherwise of the patent.

The Opposer should submit the European file wrapper in full within 14 days with no moe than six sides of arguments and the applicant would have 14 days to respond. The opposer would then have 7 days to sum up in three sides. That would be the time to decide whether a witness should be available for cross-examination. Should there be a hearing the sides would be required to sum up orally, and a final ruling would issue soon after the summary / hearing. No costs were awarded at this time.

 


Trade Dress, Likelihood of Confusion and Passing Off

November 26, 2014
Not that kind of can can...

Not that kind of can can…

XL Energy International Corp. is a leading manufacturer of energy drinks.

Here is one of their cans:

classic XL can

Cool Trade & Industry Co. have twice tried to get large shipments of empty beverage pans into the West Bank (also known as the Palestinian Authority and as Judea & Samaria) over the Allenby Bridge from Jordan. The shipments were each of 600,000 cans. In the first case, Judge Gideon Ginat of the Tel Aviv District Court ruled that there was a likelihood of confusion between the Cool Trade & Industry Co cans and those of XL and that the cans should be destroyed or sent back to Jordan, whereas in the second case, he ruled that there was no likelihood of confusion and the cans could enter the country.

The decision highlights the fine differences between competing products that are legitimate alternatives, and those that are considered as copies.

Background

XL Energy International Corp. produces the XL energy drink in its factory in Poland. The product is described as being a carbonated energy drink containing and caffeine and taurine that is manufactured by Tempo Drinks LTD. The company claims to have sold hundreds of millions of cans since introduced into Israel in 2004. Tempo distributes in Israel and Unipal General Trading Co. distributes in the areas under the control of the Palestinian Autonomy.

On 19 March 2013, following a first shipment of 600,000 HipHop cans labeled X2 in a red font that is arguably confusingly similar to the XL log, in blue cans with darker blue bubbles, the Customs Authority held up the shipment and Tempo and XL sued for trademark infringement, passing off and Unjust Enrichment. On 30 April 2014 a second shipment of 600,000 was held up by customs and XL sued again. This time the cans do not have the darker bubbles and the X2 logo is in black and silver instead of in red.

XL has two Israel trademarks. Israel TM No. 216718 and 217476 reproduced below.

TM 216718   TM 217476

They sued for trademark infringement under the Trademark Ordinance 1972 and for passing off under Section 1a of the trade laws 1999.

The first set of imported cans are shown here.

first shipment   first shiment 2

The second set of imported cans are show here:

second shiment   second shiment 2

XL claims to have sold 53,000,000 cans in the Palestinian Autonomy during the years 2009 to 2013 and to have spent half a million dollars in advertising. The parties agree that their products are similar, are aimed at a similar market and are distributed via similar retail outlets and may even be sold on the same shelf.

The plaintiff argued that customers do not have perfect recall and may see a Hip-Hop can and think that it is an XL can. Their witness argued that customers spend three seconds in front of the beverage refrigerator and that this type of purchase is an impulse purchase. There are differences between the two cans, but the overall impression provided by the two cans is the same. Judge Ginat accepted this argument based on the case-law, particularly 5454/02 Taam Teva (1988) Tovoli vs. Ambrosa.

The defendant argued that XL were not entitled to a monopoly on the X or on blue cans. They claimed that their cans had different markings, different text and different text colour.

Judge Ginat was convinced that the defendant was well aware of the XL cans trade-dress and appearance before they designed the Hip-Hop can. The issue is the likelihood of confusion of customers.

Citing an ECJ ruling: Court of Justice of the European Communities, JUDGMENT OF THE GENERAL COURT (Eighth Chamber),  Tresplain Investments v. OHIM (9 Dec 2010)

“Under the laws of the United Kingdom, it is for the court in question to determine whether it is likely that the relevant public will be deceived. Examples of specific instances of confusion may be useful, but the decision of the court does not depend solely or even primarily on the evaluation of such evidence (Parker’Knoll Ltd v Knoll International Ltd (1962) R.P.C. 265, 285, 291 HL).”

Judge Ginat noted that although the case was brought in the Tel Aviv court and was cans were intended for the Palestinian market. The issue here is likelihood of confusion by West Bank and Gazan Arabs. Unfortunately, neither party has provided any evidence regarding the market, such as consumer, wholesaler or retailer testimonies. The defendant’s evidence was mumbled and unclear. What is clear is that there are other energy drinks such as Blu.

Judge Ginat noted that in the UK, the courts were wary of giving monopolies based on colours, and cited the following precedents:

  • Sodastream Ltd. v Thorn Cascade Co. Ltd. [1982] RPC 459
  • Roche Products v. Berk [1973] R P C 461
  • Cadbury-Schwepps . The Pub Squash [1981] R P C 429, 460-461

He also noted that Judge Dr Binyamini had rejected Straus’ claims against Noga Icecream as them having a monopoly for gold containers. Furthermore, a single letter such as X is not protectable as a trademark. See E! Entertainment vs. Duetche telekom A.G. and Dr Seligsohn “Law of Trademarks and related Laws, Schocken 1972.

He then went on to cite Qualitex v. Jacobson Products 514 U.S. 159 (1995) and Christian Louboutin v. Yves Saint Laurent America (5 Sep. 2012) to the effect that a colour can serve as a trademark, i.e. as an indication of origin.

“The question of whether a color can be protected as a trademark or trade dress was finally resolved in 1995 by the Supreme Court’s decision in Qualitex, which involved a claim for trade dress protection of the green-gold color of a dry cleaning press pad. The question presented was “whether the [Lanham Act] permits the registration of a trademark that consists, purely and simply, of a color.”  Qualitex, 514 U.S. at 160–61 (citation omitted). Reversing a decision of the Ninth Circuit that had declared color per se ineligible for trademark protection, the Court observed that “it is difficult to find, in basic trademark objectives, a reason to disqualify absolutely the use of a color as a mark.” Id. at 164. The Court held, among other things, that it could find no “principled objection to the use of color as a mark in the important ‘functionality’ doctrine of trademark law.” Id. It concluded that “color alone, at least sometimes, can meet the basic legal requirements for use as a trademark. It can act as a symbol that distinguishes a firm’s goods and identifies their source, without serving any other significant function.” Id. at 166 (emphasis added).”

However, the US Supreme Court acknowledged an Aesthetic Functionality Doctrine under which monolistic rights in a colour will not be granted where doing so undermines the competitor’s ability to compete in the relevant market.

“In short, a mark is aesthetically functional, and therefore ineligible for protection under the Lanham Act, where protection of the mark significantly undermines competitors’ ability to compete in the relevant market. See Knitwaves, Inc. v. Lollytogs Ltd., 71 F.3d 996, 1006 (2d Cir. 1995) (linking aesthetic functionality to availability of alternative designs for children’s fall-themed sweaters); Landscape 20 Forms, Inc., 70 F.3d at 253 (holding that “in order for a court to find a product design functional, it must first find that certain features of the design are essential to effective competition in a particular market”). In making this determination, courts must carefully weigh “the competitive benefits of protecting the source-identifying aspects” of a mark against the “competitive costs of precluding competitors from using the feature.” Fabrication Enters., Inc., 64 F.3d at 59. Finally, we note that a product feature’s successful source indication can sometimes be difficult to distinguish from the feature’s aesthetic function, if any. See, e.g., Jay Franco & Sons, Inc. v. Franek, 615 F.3d 855, 857 (7th Cir. 2010) (noting that “[f]iguring out which designs [produce a benefit other than source identification] can be tricky”). Therefore, in determining whether a mark has an aesthetic function so as to preclude trademark protection, we take care to ensure that the mark’s very success in denoting (and promoting) its source does not itself defeat the markholder’s right to protect that mark. See Wallace Int’l Silversmiths, Inc., 916 F.2d at 80 (rejecting argument that “the commercial success of an aesthetic feature automatically destroys all of the originator’s trademark interest in it, notwithstanding the feature’s secondary meaning and the lack of any evidence that competitors cannot develop noninfringing, attractive patterns”).

Because aesthetic function and branding success can sometimes be difficult to distinguish, the aesthetic functionality analysis is highly fact-specific. In conducting this inquiry, courts must consider both the markholder’s right to enjoy the benefits of its effort to distinguish its product and the public’s right to the “vigorously competitive market[ ]” protected by the Lanham Act, which an overly broad trademark might hinder. Yurman Design, Inc., 262 F.3d at 115 (internal quotation mark omitted). In sum, courts must avoid jumping to the conclusion that an aesthetic feature is functional merely because it denotes the product’s desirable source. Cf. Pagliero, 198 F.2d at 343.”

In summary, whether or not a colour mark is recognized is highly case-specific. This made the judge’s ruling difficult as neither side provided evidence regarding other energy drinks available in territories administered by the Palestinian Authority.

Conclusion

In conclusion, Judge Ginat felt that despite the obvious and non-accidental similarities, where other manufacturers are selling energy drinks in blue cans and using an X, or bubbles, noone is entitled to a monopoly for these with regards to carbonated energy drinks.

Judge Ginat considered that the first shipment of cans is confusingly similar to XL’s beverage cans and so there was passing off. Furthermore, the cans were marked in ways that are very similar to identical to XL’s registered marks.  However, the second shipment, where the cans were clearly labeled Hip Hop Energy X2 the background blue is different and there is no likelihood of customer confusion nor is there trademark infringement.

Verdict

The Customs Authority shall see to the destruction of the first shipment and the defendant is forbidden from importing or distributing cans of the first design. The second shipment shall be released and the storage costs incurred will be born by the plaintiff.

If Cool Trade & Industry Co. do not pay the storage costs, Customs may deduct this from the deposit made by XL who may then sue Cool Trade & Industry Co. to recover the costs.

In the cirucumstances, no costs were awarded to either party and no fines were imposed. 

Civil Ruling 38108-03-13 and 26979-05-13 XL Energy International Corp. vs. Cool Trade & Industry Co., Tel Aviv District Court, Judge Gidon Ginat, 16 November 2014.

Comment 

Blu and Red Bull both have blue cans. The size of the energy drink cans is standard. In other words, there is a standard appearance that says energy drink. Judge Ginat considers that the customer will recognize Cool Trade & Industry Co.’s cans as being cans of energy drink, but won’t be confused into thinking that the cans are XLs.

There is a problem though. X2 looks remarkably like XL, and this seems intentional. A single letter cannot be registered as a trademark, but two characters can. West Bank Arabs might well see X2 as XL.

This ruling brings to mind Judge Agmon Gonen’s ruling concerning four stripe trainers that are inspired by Adidas’ designs but not really confusingly similar therewith. It also brings to mind the rather odd XO decision wherein two different companies selling energy drinks were allowed to register the same mark!

Finally, we remember fondly that whilst Pepsi was boycotting Israel due to pressure from Arab countries, a Galilean Arab manufactured and sold Pips Cola.

Pips Cola

The courts ruled that Pepsi had given up on their rights in Israel, and lacking other alternatives, Pepsi eventually bought the rights to Pips Cola from the manufacturer.


Israel Supreme Court Rules on Parallel Importing

November 19, 2014

Tommy Hilfiger

The Israel Supreme Court has issued a ruling concerning the rights and wrongs of parallel importing and related marketing and advertising. This is the first time that they have ruled on this issue.

The Supreme Court ruled that parallel importing is legitimate, as is marking the goods with the trademarks. The licensed importer or franchisee cannot prevent parallel importing, but it is important that the name of the company doing the parallel importing does not imply that the parallel importer has a relationship with the mark holder and has to actively take steps to make clear that they are not the licensed importer. The licensed importer does not have to guarantee or provide a service for the parallel imported goods and the parallel importer that the public are made aware that the parallel imported goods are not covered by the importer’s warranty and servicing obligations.

The Israel Supreme Court partially upheld the ruling of the Court of First Instance that the parallel importers had infringed the registered licensee’s trademark and were also guilty of passing off. This was due to the name of their business, not the parallel importing itself. The Supreme Court decreased both the damages award and the restrictions imposed by the Court of First Instance.

The Appellants, Elad Suissa and Importer Warehouse 42 LTD. imported clothing carrying the Tommy Hilfiger brand, despite not being the licensed importer registered in the Trademark Register and also not having any contractual relationship with the licensee. The Appellants purchased the goods abroad from legitimate suppliers in countries where the prices were lower than in Israel. They traded under the name ‘Importer’s Warehouse – Tommy Hilfiger’ and advertised themselves as selling premium bands at discounted prices. They operated a website www.tomm4less.co.il.

The licensed importer Sea & Shells LTD, together with Tommy Hilfiger Licensing LLC. Tommy Hilfiger USA INC. and Tommy Hilfiger Europe BV sued Elad Suissa and Importer Warehouse 42 LTD on  various grounds of unfair trade and trademark issues.

The Court of First Instance ruled that the parallel importers should pay 457,000 NIS in damages and issued a permanent injunction against them. The Appellants argued that they should not be restricted from parallel importing in circumstances where this is legal.

The Supreme Court partially accepted Appeal 7629/12 by the parallel importer, and rejected the appeal 8848/12 by Tommy Hilfiger.

The Ruling

The starting position is that parallel importing is legal. Parallel Importing is not trademark infringement and is not Unjust Enrichment by the Parallel Importer. However this does not mean to say that there are no restrictions on the parallel importer. The parallel importer is subject to trademark law, fair trading laws and the Law Against Unjust Enrichment.

In Pezachim, using the registered trademark in connection with legitimate goods carrying the mark was considered “True Use” under Section 47 of the Trademark Ordinance. In Toto Zahav, it was ruled that such a use of original goods is an infringement. The case-law of the District Court adopted tests from US case law: If the items cannot be identified without using the trademark it is legitimate to use the trademark. However, usage must be limited to that which is necessary to identify the goods as being genuine and no more, and there should be no indication that the retail outlet is sponsored by or affiliated to the mark holder. Toto Zahav did not relate to parallel importing and, in cases of parallel importing, the Toto Zahav ruling should be modified.

Parallel Imported genuine items do not fall under the guidelines of Toto Zahav. Their sale is not trademark infringement and the goods do not have to have been purchased directly from the rights owner. However, marketing activity relating to such goods may be considered trademark infringement. Servicing and maintenance services have to be recognized for the servicing laboratory to be able to use the registered trademark. Parallel imported goods are not subject to warranties and guarantees of the registered importer and parallel importer has to take care that it is clear that his parallel imported goods are not covered by such warrantees.

Passing Off requires a reputation of the rights holder, and, in addition to the mark owner, the legitimate importer or licensee may have rights in the brand and may be able to sue for passing off. The concept of ‘dilution’ does not apply to parallel importing and cannot be claimed by either the mark owner or the licensed importer. However, where the reputation is built on service and the like, sale of the goods by a parallel importer such that the service agreement does not apply, may be considered passing off.

In the present case, sale and publicity of the goods themselves and the website www.tomm4less.co.il are considered as being truthful. Using the company’s colours is also unlikely, in and of itself to cause confusion.

Trading under the name ‘Importer’s Warehouse – Tommy Hilfinger’ is considered trademark infringement of the rights of Tommy Hilfiger Licensing LLC. Tommy Hilfiger USA INC. and Tommy Hilfiger Europe BV.  This is not infringement of the rights of the licensed importer Sea & Shells LTD however, since they themselves do not have a reputation.

There is no additional element such as bad faith to warrant granting damages under the Law of Unjust Enrichment.

The Parallel Importer must cease to use the name ‘Importer’s Warehouse – Tommy Hilfinger’ and have to pay 100,000 Shekels as estimated damages for their infringing use and have to mention in their advertising that they are not a franchise or otherwise acting under the supervision of Tommy Hilfiger.

The costs awarded by the District Court are canceled and Tommy Hilfiger et al. have to pay 25,000 Shekels costs to the parallel importer.

7629/12 Appeal to Israel Supreme Court (ruling by Dalia Barak-Erez et al): Elad Suissa and Importer Warehouse 42 LTD vs. Sea & Shells LTD, Tommy Hilfiger Licensing LLC. Tommy Hilfiger USA INC. and Tommy Hilfiger Europe BV, 16 November 2014

 


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