A scratch line on a profile as a trademark indicating origin

February 11, 2016

If a design feature on a profile serves to indicate the origin of that profile, it may be registered as a trademark.

Israel trademark application 240319 filed by AL-SHURKAH ALWATANEYA LISENAET AL-ALAMENYOM WALPROFILAT (National Aluminum & Profile Co.) or NAPCO is such a mark.

240139

The mark, as shown above, was applied for aluminium profiles in class 6.

To some extent, the mark is reminiscent of the three-stripe Adidas mark, but it seems that the intention here is to monopolize a nonfunctional scratch like indentation anywhere on any profile as an indication of origin. Furthermore, if the scratch were to have a function, such as engaging a seal or the like, it could still infringe.

To avoid such problematic protection, the applicant clarified that the mark was a lengthwise 120 degree scratch on non-significant parts of the profile.

We assume that non-significant parts is to exclude such scratches that serve an aesthetic or functional purpose.

The applicant requested immediate fast-tracked examination as new requirements of the Israel Standards Office required manufacturers of products for sale in Israel to have registered trademarks identifying the goods.

After a hearing at the Israel Patent Office, the mark was allowed with the above clarification and disclaimer on 28 November 2012.

On 27 February 2013, Extal LTD filed an opposition, claiming that the mark lacked distinguishing characteristics as required by Section 8a of the Trademark Ordinance 1972 and was confusingly similar to their mark and thus was non-registerable under Section 11(13) and was thus against the public ordre, was not registerable under Section 11(5), would create unfair competition, false identification of the origins of the goods, dilution of Extal’s reputation and was thus not registerable under Section 11(6).

This scratch seems to have caused an awful lot of trouble.

The opposer, Extal, was established in 1988 and claims to specialize in developing, manufacturing, designing and marketing quality aluminium profiles. The firm is active internationally and in Israel, and has invested in advanced manufacturing equipment, automated storage and powder painting. In 2005 Extal bought up the reputation and IP rights of Mipromal. This and sales in 2011 and 2012 of hundreds of millions of Shekels are the basis of their claims to a wide reputation in Israel.

In 1988 the Opposer filed Israel Trademark Number 121163 in class 6. The mark appears as follows:

121163

The mark lapsed in 2006 due to failure to pay the renewal fees and was resubmitted in August 2011 and, following office actions, was split into two marks, Israel TM Application Numbers 253416 and 240117, each consisting of one of the elements above. Those applications were suspended pending this hearing. The Deputy Commissioner noted that scratches on the side of profile are standardized symbols for marking sections of extrusions, and the intention of the mark is a protrusion along a profile or an indention on a profile.

Extal claimed that the single scratch/protrusion has become well known in Israel and is marked on and identified with their products. The pending application is confusingly similar to their well known mark and is used to mark aluminium profiles with a triangular scratch along the profile. The distribution channels and target consumers are identical. Since the requested mark is recognized by the Israel Standards Institute as indicating that the goods come from Extal, allowing NAPCO to register the mark contravenes public order.

Extal alleged that NAPCO’s marks were filed in bad faith, since they were filed soon after their marks lapsed, and further alleged that NAPCO had filed false information.

NAPCO filed their statement of case on 14 April 2013 and denied most of Extal’s allegations but admitted that the two companies’ products were aimed at the same target audience in Israel. NAPCO claimed to have independently invented the scratch sign and to have used it since 1996, and for many years in Israel thereby developing a reputation for their products. NAPCO argued that Extal’s 121163 mark was neither a protrusion or a scratch and could not protect a scratch on an aluminium profile. To the extent that it could have provided some protection for whatever it protected, Extal had abandoned the mark. Furthermore, the publications supplied by Extal indicated that they were marking their goods, de facto, with a protrusion not an indentation.

Both sides filed numerous affidavits from employees and from people in the industry. The witnesses were cross examined in March and June 2014.

One of Extal’s arguments was that a lengthwise scratch along a profile is to minimal to serve as an indication of origin and was unacceptable under Section 8a of the Ordinance. We find this argument odd for Extal to submit since they were concurrently prosecuting a similar mark themselves. We think that the statement could fairly be used to estoppel their application.

That as may be, Ms Bracha noted that the Israel Standards Organization requires that profiles are marked. Since they are extruded in long lengths and then cut to size, a mark at one end or another is insufficient and manufacturers mark their profiles with (combinations of) protrusions and / or scratches. The Israel Standards Organization keeps a register of the various manufacturers marks but also requires the manufacturers to register trademarks. See Accumulated Regulations 7012, 30 June 2011 Section 2.2. The regulation came into effect for imported profiles on 30 November 2012.

Clearly the Israel Standards Organization regulations are not binding on the Israel Trademark Office which may refuse a mark considered as generic, as too similar to a competing mark, or for some other reason. However, the guidelines for examiners considering trademark profile markings as trademarks require them to take into account the Israel Standards Organization’s regulations when considering whether marks are inherently distinctive or have acquired distinctiveness. Thus the profile itself is functional or aesthetic and longitudinal scratches or protrusions (certainly on non-visible faces) serve as an indication of source.

There are a number of such marks with two or three indentations or protrusions such as 96177 (Extal), 96178 (Extal) 67008 Klil and 124975 (Extel). None of these have accompanying explanations.

NAPCO’s mark is a single scratch but it includes a clarification that “the mark is a lengthwise 120 degree scratch on non-significant parts of the profile.”  Thus NAPCO’s mark has inherent distinctiveness and is designed to distinguish its products from those of competitors.

The question remains whether it is indeed distinctive and whether it could create unfair competition.

Section 11(6) states that a mark that could confuse the public, falsely indicate the origin of goods or promote unfair competition may not be registered.

In this instance, the question is different from that discussed in the caselaw, such as 10959/05 Delta Lingerie vs. Tea Board China, 2006, and  the Safari Surf and Enrico Coveri cases, in that the pending mark is arguably confusable with a non-registered mark. As Seligsohn wrote in his Biblical Epic monumental Trademark and Related Laws, Shocken 1973:

A mark will be considered as a misleading mark if the public would be mislead to believe that it was the mark of another. The English Courts have dealt with this issue and ruled that a mark that is confusingly similar to one that have been registered may not be registered. However, the Israel Law does not differentiate between a registered mark and one not registered but well known. In both instances the Commissioner will refuse the mark if he believes that it will confuse the public into thinking that the mark is that of the third party. Before the Commissioner takes this step, he must be persuaded that the established unregistered mark is so well known in Israel that the public will assume that the younger application is the product of the owner of the established mark.

Extal is the largest distributor of profiles in Israel will 20% of the market. Their mark is well known. The argument centered on whether Extal had a reputation for a single line mark as they claimed, or only for a single protrusion as NAPCO argued.

The Deputy Commissioner was persuaded that Extal has a reputation for a single line mark among the relevant market and fulfills the requirements set down in 18/86 Phoenician Glass vs. Les Verreries de Saint Gobain, PD 45 (3) 225, 245-146.

There is no doubt that the original 121163 application was for scratches or protrusions as both were shown and the description was for a single line on a profile wall. Furthermore, a letter from the Israel Standards Organization appended to the file wrapper also related to a single line. Furthermore, the registration at the Israel Standards Organization was for a single protrusion or a single indentation.

The Opposer, Extal, attempted to register the two marks in one application in 2011, but the Patent and Trademark Office ordered the application split into two applications, one for an indentation and the other for a protrusion.

The opposer had a registration, lost it unintentionally, but has marked their products with a single line since the 1990s. They also had registered a design for a profile with a single line.

About half of the opposer’s product are sold to warehouses, traders or wholesalers. A significant proportion of the products are sold to window and door manufacturers and to industry. The relevant public are thus wholesalers and tradesmen.

Extal claims that 99% of their profiles are marked and that the calendars they distribute to their customers in 1994 stated “One line – the indication mark of Extal Profiles”. Their 1996 catalogue has the letters ID standing for indentification along various images, and pointing to a line that is generally a protrusion, sometimes an indentation and sometimes not clear. The catalogue even states: NOTE – Extal’s identification mark – a single line.

A further catalogue from 2006 states Micropramel and Extel’s marks are one or 2 lines stamped on the profile. [The Hebrew word used indicates stamped into, but doesn’t rule out embossed, since the word is that used for coin manufacture- MF].

Mr Yatom, testifying for Extal, argued that the choice of protrusion or scratch was left to the technicians and both were considered as indicative marks.

The Deputy Commissioner Ms Bracha notes that most images show a protruding line but some show an indentation and she concluded that the relevant audience would consider both as being Extal’s marks.

She was also impressed that despite testifying that he and others in the field could differentiate between the two suppliers’ products, A Mr Altif failed to identify the source of a sample as did other witnesses. Rather damningly, a Mr Masaroy who testified for NAPCO had trouble identifying his client’s goods.

From Mr Altif’s testimony it transpired that after painting, other marks were eradicated. It was difficult to identify the source of goods and one had to cross-check profiles with those shown on invoices. Sometimes functional or aesthetic lines were confused with those allegedly serving as indication of origin. In practice, additional indications such as delivery papers were used to identify batches. He also indicated that there was a problem with fake imports on the market.

Although the registration had lapsed, the mark was still in use and was refiled a day before this case that is being opposed. Extal expressed doubts that NAPCO was using their mark.

Extel sent private investigators to eight distributors and, without relating to scratches or protrusions, these asked workers about Extal and NAPCO’s products and marks. The conversations were submitted as evidence. Whilst noting that the investigators knew what was expected of them, the Deputy Commissioner did not feel that they had concealed information as alleged by NAPCO . As transcripts and tapes were submitted, there was no need to submit a report. That said, the Opposer chose the distributors to send the private investigators to and could select companies that they had a good relationship with. Despite certain reservations about the private investigation, the Deputy Commissioner felt that the Opposers’ mark was well known and that they were considered as being a single stripe, without differentiating between protrusions and indentations.

As to Applicant’s good faith, it is noted that although they claimed usage of the 120 degree indentation from 1996, they do have other marks in use. The opposed mark was only registered with the Israel Standards Organization from 2013, which is AFTER the Applicant was aware of the Opposer’s claims to the mark. The marks were filed almost simultaneously but NAPCO requested accelerated examination. This and the large difference in market share indicate that NAPCO may have been acting inequitably.

NAPCO ‘s choice of mark remains unclear, but regardless of whether the mark was requested in bad faith, in practice it is confusingly similar to the Opposer’s mark and thus cannot be registered.

Since the mark is refused under Section 11(6) as potentially confusing the public, whether or not the Opposer’s mark is a well known mark under Section 11(13) is moot.

Nevertheless, although perhaps not a well known mark in the sense of Section 11(13) Extal does have a reputation in the industry.

The Opposition was allowed and the mark canceled. Nevertheless, as the Opposer had not filed clear marks and had not maintained their marks they were not entitled to full damages. Had the opposer’s mark been properly registered the applicant’s mark would not have been allowed and thus the opposition proceeding would have been superfluous. Showing a reputation in a non-registered mark made this opposition particularly difficult as it made it necessary to bring evidence of reputation and of Applicant’s bad faith in registering the design.

A firm claiming to be a market leader should be more professional in registering its marks to prevent a third party registering them. Similar considerations are true for the registration with the Israel Standards Office as well.

The parties’ behaviour in the proceedings and the intermediate rulings and cross-examinations and interference are also taken into account. Thus costs of 5000 Shekels including VAT are deemed appropriate.

COMMENT

At a Patent Conference at Bar Ilan University recently, the Commissioner of Patents and Trademarks discussed the pending design law and noted that designs were being used to protect extrusion profiles.

That as may be, although scratches seem to be odd types of trademarks, it is not easy to permanently mark extrusions to indicate origin. Furthermore, apparently the first makers’ marks were scratches and the like on pieces of armour.

The issue of non-functional elements in an extrusion serving as a trademark has been discussed by the Israel Patent Office before see here.

The prime example of case-law in Israel concerning a well known but non-registered mark is the Chanel ruling of 1950, where some Israeli market his products Chanel and the well known brand Coco Chanel had not registered their marks in Israel. Another case of interest is the Versace saga here, here and here. I don’t think that the single scratch/protrusion is that well known. Extel has at least two other registered marks for two triangular scratches, two triangular and two domed protrusions, implying that the single triangular scratch can at best be one of several lines. Nevertheless, it may well be a recognized marking in the industry.

It seems that this whole case hinged around the issue of whether Extal had a reputation for a single line or for a single protrusion, and whether, if only for a single protrusion, whether the two are confusingly similar. There is no doubt that ten or twenty years ago Extal was claiming a reputation for a single line or stripe, but that is not the issue. Nor is the registration at the Standards Institute. The issue is what people in the industry see as being Extal’s mark. The Israel Patent Office, by requiring Extal’s application to be split, has already determined that a scratch and a protrusion are not the same. The private investigator’s testimony was less than satisfactory. Indeed, NAPCO attempted to get it struck from the record – see here. I note that the sorely missed UK IP Judge from Golders Green, Hugh Laddie, apparently did his own market research when considering likelihood of confusion, such as with the Burton fashion brand. I wonder if Ms Bracha could have usefully visited one of the many wholesalers in Talpiot or Givat Mordechai, or sent an Examiner, and thus determined first hand, whether Extal had a reputation for a single scratch line or not. Certainly one doubts that calendars from 2006 are being referred to, even if some may still be hanging on walls somewhere.

 


Double Jeopardy in A Design Cancellation

January 13, 2016

Double Jeopardy        Hood

Diesel S.P.A. own Israel Design No. 51959 and Hoodies LTD  filed for cancellation of the design claiming that it was published in Israel prior to registration which is contrary to the current Design Ordinance. Diesel requested that the hearing before the Israel Patent Office be suspended whilst the District Court consider the on-going infringement proceeding and where the issue of validity based on prior disclosure is being considered.

As discussed this in a previous posting, the cancellation action in the Patent and Trademark Office was stayed at Diesel’s request, since Hoodies LTD did not file a response.

Hoodies LTD have now appealed this decision, claiming that they were only served the staying request three weeks after it was filed and did not have the statutory window of opportunity to respond.

In the circumstances, Deputy Commissioner Ms Jacqueline Bracha was prepared to reopen the case and reconsider her ruling, but since it was inefficient for two forums (fora?) to hear the same issue and could result in contrary rulings, she again concluded that the case before the patent office should be suspended, and requested an update regarding the progress of the complaint in the district court in three months time. No costs were awarded.

 


Hoodies and Diesel – Registered Clothing Design

December 9, 2015

Diesel Hoodie.jpg

Diesel have a registered design. They sued Hoodies in the Central District Court for infringement, and Hoodies then filed an Application to cancel Israel design Number 51959 as lacking novelty since the clothing was advertised prior to filing the design application and in Israel, absolute novelty is required.

In an interim ruling from 2 February 2015, the District Court concluded that from the evidence submitted, the advertising was not novelty destroying and the design was registerable.

Consequently, the design owner requested suspension of the design cancellation until the District Court finished its work. On 25 October 2015, Ms Jacqueline Bracha gave Hoodies 20 days to respond to this request. They did not respond so she is issuing a ruling anyway.

Ms Bracha noted that the Israel Patent Office is able to suspend proceedings if there is a corresponding proceeding between the parties in a different court. The suspension is discretionary and the guidelines for so doing are discussed in Appeal 3765/01 Phoenix vs. Alexander Caplan. Essentially the purpose of suspension is to prevent unnecessary work for the courts and for the parties and to avoid contrary rulings.

Ms Bracha concurred that suspension of the proceeding before the Israel Patent Office until the Court finishes its work was appropriate and suspended the cancellation proceeding until 1 March 2016.

 


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 Supreme Court Overturns Ruling Concerning Unjust Enrichment

September 16, 2014
Reversed Challa Cover!

Reversed Challa Cover!

Back in January 2012, then Jerusalem District Court Judge Yaakov Shapira issued a permanent injunction against a Merkaz Matanot 2006, a competitor and former client of the plaintiff, Karshi, prohibiting them from importing, exporting or otherwise trading in ceremonial ritual challah cloths that had a similar general design to those that produced and distributed by Karshi. Their client, Ami Motzrei Noi LTD and their owner were also injuncted and they were See here for more details.

Essentially Judge Shapira who is now the State Comptroller ruled that there was Unjust Enrichment, breach of contract and passing off. I was very critical of the decision, and particularly that Shapira gave a world-wide injunction which seemed to have been beyond his judicial competence.

I am pleased to announce that the Israel Supreme Court has now reversed the ruling.

Essentially, Karshi ordered these ritual cloths having the words ‘שבת קודש’ – ‘Holy Shabbat’ in a fairly standard font embroidered on a piece of chiffon with a more solid fabric border from China.

Judge Chayot ruled that since Merkaz HaMatanot labeled their cloths with a tag stating that the supplier was Merkaz HaMatanot, there was no case of passing off. Merkaz HaMatanot was a retail customer of Karshi as wholesaler and not an agent of theirs, there was no contractual relationship and thus no breach of contract.

Karshi made no attempt to register the design and there was no additional consideration to imply that Karshi had rights in the design. There was no case of inequitable behaviour to answer for so there was no grounds for sanctions under the Law of Unjust Enrichment.

Case: Civil Appeal 1898/12 Merkaz Matanot 2006 LTD vs. Karshi Intenrational LTD. before Judges Solberg, Natyot and Chayot.  Hearing 25/6/2013, decision, August 2014.

COMMENTS

It seems that A.Sh.I.R. is still good case-law, but the judges want some real indication beyond competition to rule Unjust Enrichment.

The cloths in question were variations on a well-known theme. It is suprising how many of these are sold. I suspect that a lot of ritual Judaica (probably including mezuzot and tefilin) are made in China. Being an importer does not create a monopoly. The original decision was wrong (as were decisions by Shapira concerning the Hallel wine trademark and concerning alleged copyright infringement by Naomi Ragen. I am pleased he no longer rules on IP issues. Whether or not he will be a good state comptroller is beyond the scope of this blog, and beyond my competence to comment on.

 


Similar watches with different brand names

February 13, 2014

Ice  s.a. (formerly TKS) and ICE IP s.a. (formerly Chinalux SA) vend watches that are known as ice-watches. A range of these watches are shown below.

ice party ice electric

They have all sorts of distinctive features, like a winder at 3 O’clock, a strap, a watch face and hands. There is also a sort of pseudo diver’s bevel. I would argue that the only thing distinctive is the brightly coloured plastic image that was popularized by swatch 25 years ago.

The watches are labeled ICE and not SWATCH. ‘Ice watch’ sounds a little like ‘Swatch’, and Swatch were less than pleased – but that is a different story.

Time Concept 1999 LTD also market watches.

Ice sued for a temporary injunction on grounds of Passing Off, Copyright Infringement and Unjust Enrichment.

The watches are not the same. There are similarities: a winder at 3 O’clock, a strap, a watch face and hands.

Ice started marketing in Israel in 2009, with their Ice Chrono Electrick model introduced in 2012 and their Ice Chrono Party model introduced in 2013.

Time Concept was established in 1999 by Raanan Katz, and follows another company, Gallery LTD., established in 1988. Their time concept is to choose from a range of fashion watches that are made in china and to import them into Israel.

Ice claims that their Electrick and Party watches have distinctive design characteristics that, when combined, provide a unique ‘get up’ that has defined the face of the company and on which it established its reputation. Whilst they were advertising their watches on hoardings, Time Concept was important allegedly almost identical watches and marketing them as Gallery watches.

Ice sent a Cease and Desist letter, and following up by suing.

Ice alleges that Time Concept sold their copies on stands near Ice’s watches. In an interesting choice of words, the plaintiff summed up to the effect that there was an accumulation of similarities that were non functional, yet could not be dismissed as random or chance. Consequently, Dan Adin and Eran Liss, representing ICE, requested the usual package of refraining from marketing, distributing, importing, advertising and offering to sell the offending watches, and to pay half-a-million Shekels in damages.

The defendants argued that they had ordered the watches from China and are from the Unisex range, which is one of the three ranges that is branded as Gallery in Israel. The Gallery brand includes some 170 fashion watches that have sold since 1988 at around 399 Shekels, whereas the ICE watch sells at 890 Shekels. After their marketing campaigns, gallery has some 200 outlets across the country.

The plaintiffs consider that the catalogue images show the similarities, such as three dials and beveled ring, missing numbers on quarters, and the like. They argue that the defendants watches are not copies per se., but appear to be additional watches in the same series.

The defendants stressed the differences.

In his ruling, Judge Gidon Ginat ruled that the defendants watches were indeed similar to the Party and Electrick watches of the plaintiffs. Other watches of other manufacturers were less similar.

However, from a legal position, the starting point has to be that without statutory protection from patent or design laws, copying does NOT give grounds for suing. Each case has to be examined on its merits.

He noted that the plaintiff had failed to register his design.  The question remains whether one of the other charges raised: (copyright, passing off, unjust enrichment) were grounds for sanctions.

Judge Ginat was not convinced that the models were well enough known to have a reputation to be passed off, even with the extensive advertising. The defendant’s watches also carried the name Gallery. Additionally, he wasn’t sure that the watches were that similar anyway. Finally, watches are occasional purchases where one would anticipate the purchaser noting the name and logo on the watch which is very different in the two cases.

the copyright claims were rejected since the product is a mass-produced object that is protectable by design registration. Copyright may cover exclusive watches in certain circumstances, but not mass-produced watches for the mass market.

As to Unjust Enrichment, following the precedent 5768/94 A.Sh.I.R., Ginat ruled that there wasn’t the additional element of bad faith that warranted compensation.

In conclusion, the case was thrown out. Both sides to bear their own costs.

T.A. 23036-09-13 ICE S.A. vs. Ice Concept 1999 LTD> et al., Ginat 10 Feb 2014

COMMENTS

I think this decision is correct. My brother Aharon led the defence, and I discussed the case with him in advance. (I’ve also met the Time Concept people on the long, boring, Saturday night flight to Hong Kong). There may be room for unregistered design rights or short-term fashion copyright, but at present, the Israel Law does not have such provisions. The fashion industry has designer shows where everyone goes to try to work out next season’s product, and everyone is inspired by everyone else. I don’t think the case should have been brought at all, and was surprised that Eran and Dan sued in the first place. The issues raised are important though, and not just in Israel.

In a recent post, the IPKAT has announced:

Miffy

Lookalike event — but it’s not a copy. The Kats’ friends at the Competition Law Association have another event coming up: it’s called “Lookalikes – an unfair practice and unfair competition?” No, it’s not a lookalike version of the recent JIPLP/GRUR Int event on a similar subject, but it does reflect the high level of interest which is currently being shown in this important topic.  Speakers are our good friends Johanna Gibson & John Noble. The date is Thursday, 13 March 2014, 6pm at the London office of Withers Worldwide LLP. You can get the details here.


Israel Supreme Court Upholds Ruling of Non-infringement of Breaking & Entering Patent, but does not Invalidate it

January 14, 2014

breaking and entering

In 1998, Ofer, Extinguishing, Extracting and Saving LTD supplied hydraulic systems for breaking into looked buildings manufactured by Holmatro to the Israel Ministry of Defense, where they were deployed by the armed forces for use in urban warfare. Further systems were sold in 1999 and 2000.

From 2000 to 2006, the Israel Ministry of Defense ceased to order from Holmatro and purchased systems from Hydro-Na LTD.

In 2007, needing to purchase 562 such systems, the Israel Ministry of Defense issued a tender in which Hydro-Na submitted a bid. However, in November 2011, the Israel Ministry of Defense announced that they would purchase future systems from Sun Hitech.

Hydro-Na filed Israel Patent Number 184211 on 25 June 2007 and it issued on 4 May 2009.

The first claim of Hydro-Na’s patent is as follows:

A system for forcible opening of an entryway by applying pressure to adjacent boundary surfaces, said system comprising:

  • a hydraulically operated pump unit for providing pressure to the system;
  • a hydraulic cylinder unit comprising a piston rod
  • a first anvil comprising a narrow wedge-shaped portion removably and rotatably mounted on the proximal end of said piston rod, said first anvil formed with downwardly facing friction gripping grooves on its surface; and
  • a second anvil comprising a pair of narrow, spaced-apart wedge-shaped prongs formed on the sides of a rotatable ring removably mounted on said hydraulic cylinder until, said second anvil formed with upwardly facing friction griping grooves on its surface;

Such that when the wedge-shaped portion of said first anvil is seated between the wedge shaped prongs of the second anvil so as to be aligned therewith and said first and second anvils are forcibly inserted in a seam between adjacent entryway boundary surfaces, operation of the pump unit applies pressure via the first anvil on a first adjacent boundary surface while said second anvil applies a contrary gripping counterforce on a second adjacent boundary surface, forcibly opening said entryway of said adjacent boundary surface.

There is a second independent claim and also a method claim, but the above claim illustrates the invention fairly well.

Hydro-Na also filed three Israel design applications for various sub-components.

Hydro Na tried unsuccessfully to obtain an injunction against Sun HiTech and to have their bid in the tender thrown out on various grounds as not fulfilling the tender requirements. The injunction was refused and the tender bid was upheld.

On allowance of the patent in May 2009 after accelerated examination, Hydro-Na sued Sun Hitech LTD, its shareholders and the Israel Defense Ministry for patent infringement and claimed 3,376,940 NIS (about a million dollars) in damages, filed for recall of the systems, and for a temporary injunction. The grounds were patent infringement, unjust enrichment, passing off, etc.

Judge Zerankin of the Haifa District Court ruled (T.A. 34912-11-09) that the patent was probably invalid since there were earlier systems known to Hydro-Na that were not disclosed to the patent office during prosecution, but noted that the rotatable ring was apparently novel and arguably inventive. He did not invalidate the patent, but found that there was no infringement since Sun HiTech’s system did not include this novel feature.

As to the designs, the Judge Zerankin ruled that the mechanical components weren’t designs in the meaning of Section 2 of the Patent and Design Ordinance.

Hydro-Na appealed to the Israel Supreme Court.

On appeal, Judge Amit noted that most of the issues were factual and had been examined by the Court of First Instance and appeals were not to retry evidence but only legal analysis.

In cases like this where the defense of the defendant is invalidity of the patent, the plaintiff has only to show infringement, since the rebuttable assumption is that the patent is valid and the defendant has to prove that this is not the case.

The expert witness for Sun Tech LTD, patent attorney Dr Goldreich, showed that there were a large amount of prior art, none of which was brought before the patent office.

Attorney Ed Langer appeared as expert witness for Hdro-Na, but since he wrote the patent and could not provide adequate justification for not relating to prior art, his testimony was found unreliable.

Judge Amit considered the Court of First Instance had been overly cautious in not canceling the patent in question, both on its merits and when considering the issue of equitable behavior with regards to the legal requirement of disclosing the prior art. He assumed that they not only withheld information from the court but also from their patent attorney. Nevertheless, he noted that he wasn’t required to relate to the validity of the patent since it could be shown that it wasn’t infringed.

As to various other claims by Hydro-Na, Judge Amit quoted Ecclesiastes (Koheleth) 7:14 ” It is good that you should take hold of this, and from that withhold not your hand, for the one who fears God shall come out from both of them.” Essentially, he dismissed them as “also ran”.

In conclusion, Judge Amit accepted the earlier court’s finding that ‘cold’ door forcing systems were on the market long before Hydro-Na’s application was filed. To the extent that Hydro-Na deserved a patent, it was for the rotatable ring which was not found in the competing system that won the tender. He noted that Hydro-Na failed to file abroad despite a market potential of NIS 150-225 Million Shekels and deduced that they were well aware that their patent was extremely narrow and easily invented around.

The appeal was unanimously rejected by a triumvirate of the Supreme Court consisting of Judge Amit (who wrote the appeal) and Judges Melzer and Solberg who affirmed his ruling.

Costs of NIS 50,000 were awarded to the Sun Hitech LTD and a similar sum to the Israel Ministry of Defense.

Civil Appeal: 7623/10 Hydro–Na et al. vs. Sun Hitech et al., 12 January 2014

COMMENT

The District Court applied the Gillette Test by declaring that the patent wasn’t restricted to the rotatable ring, it would not have issued.

The Supreme Court did a marvelous job citing the various sections of the Law and analyzing them. It was a little pedestrian and boring, so I haven’t reproduce in full.

I believe that the failure to disclose the prior art should have invalidated the patent and consider both Haifa Court and Supreme Court as being overly cautious in not doing so. What is the point of having a duty of disclosure if, on proof that the applicant withheld information, the court doesn’t invalidate the patent?

Whether or not Dr Goldreich was correct in her analysis that the rotatable ring wasn’t sufficient to be considered inventive, I wonder if there isn’t room for a procedure for referring a patent back to the patent office for reconsideration in view of additional prior art?

As to the registered designs, if Hydro-Na had sold them to the Israel Ministry of Defense prior to registering, they are invalid. Similarly if the same design is used by others. I haven’t read the original decision by Judge Zerankin but it seems that he considers such devices as inherently not-registerable, however, I think this understanding is incorrect. It is a shame that the Supreme Court hasn’t really addressed this issue, as although the Israel Patent Office has established practices regarding registering functional elements, there seems to be little binding legal precedent on this issue.

Finally,  is it ethical for attorneys-at-law or patent attorneys that drafted and prosecute a patent give a validity opinion? Is there attorney-client privilege and is it considered waived when client calls on the attorney as an expert witness? It would have been nice if the Surpreme Court had taken this opportunity to provide guidance to patent attorneys in this matter.


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