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.


Intellectual Property Law in Israel – Book Review

October 31, 2013

RCIP Kukick

Intellectual Property Law in Israel is a 256 page soft back book published by Wolters Kluwer that was originally published as a monograph in the International Encyclopaedia of Laws/Intellectual Property Law.

The book has a general introduction consisting of a general background to Israel, and a historical background. It then has seven chapters, devoted respectively to Copyright and Neighboring Rights, Patents, Trademarks, Industrial Designs, Plant Variety Protection, Chip Protection and Unjust Enrichment. The layout of each chapter is well organized.

Partly reflecting the subject matter and the fact that this is a reference book not designed to be read from cover to cover, but also because the authors are not native English speakers and the grammar constructions used are both incorrect and arduous, the volume is as dry as a hand-baked matzo.  It is, nevertheless, a convenient and easy to use reference book to note the coverage and main points of Intellectual Property law in Israel, and its title is thus appropriate.

The background is a background to Israel and Israeli law. It is not a background to IP in Israel. If it were, as I believe it should have been, it could usefully have included some statistics regarding publishing of books in Israel and the numbers of patents and trademarks filed in Israel, and worldwide by Israeli applicants. There is brief mention elsewhere of the enforceability of Israeli trademarks in the Palestinian semi-autonomous territories, but the background could have dealt with intellectual property in these areas more thoroughly, not least because there is significant counterfeiting going on these areas. The background does note that Israel has peace treaties with Egypt and Jordan. It does not refer to the informal boycott of Israeli companies that Jordan lawyers participate in. A brief discussion of intellectual property in Jewish Law would also have been welcome. Indeed, this has impacted Israel court decisions on occasion.

 The sections on the different types of intellectual property law are comprehensive and well organized. Each chapter presents a portion that is short enough to be digestible. Nevertheless, the book is peppered with statements that are confusing. For example, and following the Israel Patent Law, we are informed that patent applications need titles in both Hebrew and English. There is, however, no statement to the effect that patent applications may be filed with the Israel patent office in English or Hebrew. One assumes that foreign applicants and their local counsel may be interested to know that patent applications may be filed in English and need not be translated into Hebrew. There is also a confusing statement that the fictitious man-of-the-art who knows everything but lacks creativity may actually be a group of fictitious persons. One wonders what this additional fiction adds. In the chapter on Trademark Law, after a general overview and a section on specific legislation, there is a section titled Trademark Jurisprudence. This section explains that Supreme Court decisions are binding precedent on the lower courts. It also explains that District courts are the court of first instance for trademark infringement and have appellate jurisdiction over the decisions of the registrar. Then we are informed that district court decisions have suggestive but not precedential value, which guide the magistrate’s courts. What is not explained however, is how magistrate courts, which don’t hear trademark disputes, are guided. It would be both useful and informative to note that despite the precedential or guiding nature of trademark decisions, since every case is considered on its merits, the caselaw provides arguments to each side, but it is next to impossible to anticipate how a specific case will be ruled.

Regarding Designs, as a quirk of the fact that Israel is still using the relevant section of the Patents and Design Law 1924, only local novelty is required. In 2008, the former registrar Dr Meir Noam interpreted this to include Internet publications whether viewed in Israel or not, to prevent parties from registering designs that are published in databases of foreign patent offices. The book takes the position that this is now the law, without noting that the relevant patent office circular is more akin to legislation by the registrar and is thus ultra vires and might well not stand up if challenged in court. In other cases, the authors note that various interpretations seem clear, despite never having been ruled on by the courts. I would agree with the authors that industrial designs are territorial, but former Jerusalem District Judge and current State Comptroller Shapira issued a worldwide injunction concerning unregistered designs for ceremonial challah cloths, and, given the dirth of design law from the courts, might have warranted a footnote. Actually, without specialist IP courts, there are a number of weird and wonderful rulings from the Israel District Courts that could be discussed to make the book more entertaining.

This volume is a four author publication written by an academic called Afiori and by attorneys at Gilat Bareket, one also being an Afiori, rasing the suspicion that two of the authors are probably related. The other two authors and Gilat and Bareket, the named partners of the litigation arm of the Reinhold Cohn group. The book is published by Wolters Kluwer. The entire volume, including index and selected bibliography is a mere 256 pages.

Noticeable in absentia is any reference in the selected bibliography to a volume with an almost identical title – Intellectual Property Law and Practice in Israel here  that was written by Eran Liss and Dan Adin of a competing firm of litigators that was published last year by Oxford University Press.  The Liss – Adin book is 632 pages with 50 pages of appendices, and is thus thicker and more impressive on the shelf, if a little bulkier and heavy to carry around. Both books contain typos, unnecessary verbosity, wrong long words and poor grammar, but the Kluwer volume is, nevertheless, in better English.

The focus on practice in the Liss – Adin book has lead to their copyright section relating to TV game-show formats which look as though they are a lawsuit waiting to happen. The Gilat, Bareket Anfori volume does not cover this area, possibly because thee are no relevant decisions.

As a reference work for foreign practitioners and as a revision tool for wannabee Israel Patent Attorneys prior to sitting the oral exam, this volume is preferable, since it is not burdened down with as much case-law. For reading on a plane to Israel, the fact that this volume weighs in at 386 g whereas the other book is over a kilogram, makes this more attractive. This book is also cheaper, although the Liss – Adin book works out more economical per page. As a reference to caselaw for academics or for Israel practitioners involved in prosecution or litigation, the Liss – Adin book is better.  Their cover also includes flaps life fly-leaves extending from the front and back boards which can be used as pagemarks.  Very few people need both volumes, which raises questions as to whether this book is necessary, following the recent publication of the other one.

Intellectual Property Law in Israel, by Orit Fischman Afori, David Gilat, Eran Bareket and tamir Afori, Wolters Kluwer, 2013, ISBN 978-90-411-4859-9 List price: £ 84,00 (GBP); $ 141,75 (USD)


Should the Shape of Rubik’s Cube be Protectable as a Trademark?

June 17, 2013

Cube

I received an email from an Israeli Patent Attorney last week with the rather inflammatory heading “is the Rasham [Israel Registrar of Patents and Trademarks MF] an idiot or was he bribed?”

Somewhat intrigued, as the patent attorney in question is one of the most intelligent people I know, I opened the email to see what was bothering him.  The email contained a link to an article in the business newsletter “Calcalist” to the effect that a company called Seven Towns had received trademark protection for the Rubik’s Cube, and an Israel IP law firm was sending out Cease & Desist letters to various toy shops with requests for damages. The article in question is to be found here.

From Wikipedia:

Rubik’s_Cube is a 3-D combination puzzle invented in 1974[1] by Hungarian sculptor andprofessor of architecture Ernő Rubik. Originally called the “Magic Cube”,[2] the puzzle was licensed by Rubik to be sold by Ideal Toy Corp. in 1980[3] via German businessman Tibor Laczi and Seven Towns founder Tom Kremer,[4] and won the German Game of the Yearspecial award for Best Puzzle that year. As of January 2009, 350 million cubes had been sold worldwide[5][6] making it the world’s top-selling puzzle game.[7][8] It is widely considered to be the world’s best-selling toy.[9]

Reading the article, and reading between the lines, it appears that the patent attorney in question (i) believed that the Israel Registrar had granted a three dimensional trademark for Rubik’s Cube, and (ii) considered this ridiculous.

In an earlier article I discussed a recent decision by the patent office to grant a three dimensional trademark for the Crocs  beach clog, and so could see how my colleague was envisioning a product that had not been patented or registered as a design back in  when it was invented, could somehow, after decades of being considered in the public domain, become private property, enabling a trademark registrant to sue third parties. (The Interlego decision makes it clear that 3D Lego bricks are not protectable by copyright, so we can assume that Rubik’s Cube isn’t either).

However, before assuming that the Israel Trademark Office had got it wrong, I checked the database. There are actually two trademark entries owned by Seven Towns, both covering the same mark, but in different classes. The mark in question  IL 228232 is reproduced below.

IL 228232

The mark covers three dimensional puzzles in class 28, but is not a three dimensional mark. It is a 2D visual representation of a cube. Of course, to be drawn on paper it has to be, but there are accepted ways of showing three dimensional designs on a flat piece of paper. One can show top, bottom, left, right, front and back elevations, with a perspective view. That is how design applications are filed. That was not done here. More importantly, there is no indication in the certificate that the trademark is for a three dimensional object.

We note however, that the mark issued under Section 16 on the basis of a foreign registration (European Community Trade Mark No. 162784), which arguably is for a three dimensional cube. That mark is under cancellation proceedings.

If the mark, whether 3 dimensional or flat, is used as an indication of origin, it may be what could be considered as trademark infringement.

According to the Calcalist the lawyers who are going after toy vendors include Adv. Noe Shalev Slyomovics, (pronounced Noach Shmulovits, and usually spelled that way in this blog, but I have copied his preferred Hungarian spelling from his business card).

Noe Shalev Slyomovics is the former Israel Deputy Commissioner of Patents & Trademarks. He returned to private practice after Adv. Assa Kling replaced Dr Meir Noam as Commissioner.

I sent Adv. Noe Slyomovics an email, and it transpires that he was able to convince the trademark office that making cubical shaped “Rubik’s Cubes” is arbitrary, since there are a number of other options that use the same mechanism and achieve the same result. Some examples of alternative “Rubik’s Cubes”, courtesy of Adv. Slyomovics are depicted below:

dsc02227 (1)dsc02349

There are also a number of similar sliding puzzles that are not actually 3×3 cubes, but use different mechanisms.

Adv. Slyomovics considers Rubik’s 3×3 cube choice as arbitrary and equivalent to the others, and successfully argued that like the Toffiffee candy or the Ferrero Roche praline, Rubik’s cube was entitled to trademark protection, and there are legitimate grounds to badger other toy manufacturers.

I disagree. I consider the fact that all the equivalent puzzles are generically referred to as spherical cubes and similar oxymora, is indicative that the cube is the natural shape and the variations are inferior. As with Crocs-  , I believe that the puzzle should be in the public domain as it was not protected.

Apropos, I also have problems reconciling Gronis’ Toffiffee decision with the Apropo-(bugles)  decision.


Israel Supreme Court Hears Design Infringement Case and Awards Damages

June 13, 2013

Car Flag

This case, concerning sales of flag poles for attaching flags to cars, that infringed a registered design, is a landmark case, in that this is the first time that the Israel Supreme Court has ruled on damages for design infringements. With the high-profile Apple vs. Samsung case in the US and Europe, and a new Israel Design Law in the works, this ruling is a significant one.

The case relates to a subcontractor who was contractually bound to use a supplier’s mold for fabricating plastic flag holder staves for hanging flags from cars. The design of the flag holder staves was registered. In the aftermath of the 9/11 disaster in the US, there was a tremendous demand for car flags as a sign of patriotism and empathy, and the subcontractor decided to make and supply such flag posts directly, bypassing the supplier.

The Case

They Appellant supplies flags on flagpoles, including flags on poles that are attachable to the windows of cars. These are very popular in Israel around Independence Day. The appellants have registered designs for car flag poles, The defendant, Super Plast Company Ltd., makes plastic products, and the second defendant is its owners. Super Plast signed an agreement with the appellants to manufacture car flag poles for them, in accordance with the registered design and using a mold for injection molding the car flag poles that is owned by the Appellant.

Following the 9/11 disaster, there was a surge of patriotism in the US that created a demand for flags and flagpoles, including car flags and car flag poles and the Appellant ordered more poles from Super Plast. However, Super Plast manufactured and sold approximately 1,000,000 flag poles directly to customers, in contravention of their contract, and in infringement of the registered design. They didn’t have time to fulfill the Appellant’s order, since they were using the appellant’s molds to manufacture flagpoles for third parties.

District Court’s Decision

The District Court set the damages due to the appellants by the defendant at NIS 200,000 or about $55,500, based on a calculation of 1 million infringing car poles being sold at a profit to Super Plast of 20 aggarot (about 5.5 ¢)  per pole.

The appellants claimed that the District Court erred in quantifying the damage as the profits made by the infringers – their unjust enrichment, but should be calculated on the basis of potential sales lost by the appellant, which they’d estimated as NIS 3.8 per product for a flag on a pole. According to appellants calculation, the damages should have been NIS 3,600,000. Alternatively, and noting that the defendants had provided partially records only, appellants claimed compensation without proof of damage as provided for in Section 13 of the Commercial Wrongs Act, at NIS 100,000 per infringement, and since defendants had dispatched 36 separate orders for flag poles over the 5 1/2 months period from 9/11 over which there was a high level of demand, the appellants reached the same sum of NIS 3.6 Million in statutory damages without proof.  The defendant accepted the district court’s ruling and noted that the issues were essentially factual and that the Court of Appeals rarely got involved in such issues.

The Ruling

The Supreme Court held that Section 37(2) of the Patent and Design Patent Ordinance – which deals with infringements of registered designs allows calculation of damages based on damage caused to the rights owner, i.e. the loss of potential profits that could have been made or compensation based on the infringer’s actual profits, (unjust enrichment).

The Supreme Court noted that it had never ruled on registered design law before, and believed that there were three main questions:

  1. What are the principles for calculating compensation for the to the owner of the design patent? Can compensation be granted on the basis of loss of profit caused to the designer or should it be based on actual profits of the infringer?
  2. Will compensation based on lost profit be calculated according to real profit loss or to potential profits lost? of profits? Specifically, should the compensation for infringement be based on estimated real damages caused to the appellants as a result of them not selling the flag poles, or should the damages be calculated on the basis of lost profits from not being able to sell a million car flags on their poles.
  3. Should the Court rule statutory compensation without proof of damage as a substitute remedy, and what constitutes an infringement? Specifically, should separate batches be considered as separate infringements, or should the whole case be considered as one registered design being infringed?

Since the current archaic ordinance is a leftover from the period of the British Mandate, the Supreme Court considered it reasonable to adopt common law principles and ruled that the Patent and Design Patents Ordinance should be interpreted to allow compensation for breach of right in registered designs on either the basis of loss of profits to the rights holder, or of infringer profits, which ever is higher.

In lieu of Israeli precedents, the ruling brought comparative analysis from UK and US case-law, including classic British cases relating to the equivalent of the Mandatory Ordinance still in force. The ruling quoted from American Plywood, the classic US case that relates to damage calculations, and also to the recent Apple vs. Samsung design cases.

The Supreme Court ruled that where a registered design owner bases a claim on lost profit, it is necessary to prove a causal link between the loss of profit claimed and the infringing act. For such proof, in line with the general Israel case-law on torts, the Supreme Court ruled that there is a requirement for the profits to be foreseeable and listed four conditions that are required to be fulfilled:

  1. proof of market demand for the product covered by the registered design
  2. lack of substitute products in the relevant market
  3. the plaintiff’s ability to supply the demand
  4.  the per unit potential profit loss to the registered designer

The Supreme Court went on to analyze the case in accordance with these principles and ruled that:

  1. a partial demand for the product, i.e. pole with flag, was proven, but that at least some of the flag poles sold would have been sold to manufacturers who would have assembled the flag and pole combination themselves. Indeed, the appellant had been known to sell flag poles only.
  2. the registered design is unique in the relevant market
  3. the lack of the designer’s ability to supply the demand stemmed from the defendant’s independent sale
  4. Fourth, during the high demand period following 11/9 events, sales of poles reflected the market demand for the whole product (pole+flag) and it was proven that, absent the infringements, the appellants would have sold the poles and flags in a similar amount as the defendants did.
  5.  This was constituted the basis in damage to the appellants for calculating the amount of compensation.

The Supreme Court found that, but for the infringement, the appellants would have sold at least 250,000 units of the whole product but no more than 377,100 units, these numbers being based on orders and inquiries to the appellant. It was noted that there were other car-flag posts on the market of other designs, and that eventually cheap car flagpoles were available from China. On the basis of this range, which indicates that potentially somewhere between a quarter and a third of flag poles would have been sold as whole units, but noting that the registered design didn’t actually cover the flag+pole but the pole only, for calculation purposes, the Supreme Court estimated the number of flag+Pole combinations that would have been sold was 300,000. However, the estimated profit of sales of pole + flag was NIS 2.65, since there were costs involved as well, thus, the loss of profit for appellants was estimated as being NIS 795,000.

In addition, there were a further 700,000 poles that the infringer made and sold, and the appellant was entitled to the unjust enrichment from these, which was calculated as a further NIS 121,006 due to unlawful production of poles prior to 11/9 attacks.

As for the statutory compensation, the Supreme Court ruled that in the specific circumstances there is no justification for ruling statutory damages  since there is a way to remedy the appellant based on loss of profits.

In conclusion, the total damages awarded were NIS 916,006, to which was added a NIS 150,000 in legal costs.

The case: Appeal to Israel Supreme Court, Ronit Digley Umot Ltd. v. Rony Shatan (Hon. Jdg. Solberg, May 13, 2013).

COMMENTS

Apart from the fact that this is the first time that the Supreme Court has addressed the issue of calculating design damages, we suspect that with the recent high profile Apple vs. Samsung cases concerning the design of smart phones, the judges couldn’t resist having their say.

In Apple vs. Samsung the functionality of a product is copied, and the design is part of a trend towards general simplification of design. The Apple i-Phone was certainly an inspiration of the Samsung design, and whether or not a court finds an allegedly infringing smart phone as too similar to a registered design in Europe or to a design patent in the US is merely a matter of whether it is too similar. It must be appreciated that there are arguments for both sides – which is probably at least contributory to the European and US courts reaching different verdicts. In this case, a subcontractor knowingly used a mold belonging to the plaintiff. This is a case of willful infringement that in the US would probably carry triple damages. Noone who follows this blog will accuse me of being anything a fan of A.Sh.I.R. and I believe that to obtain protection one should register one’s design. I am an unrepentant formalist. Nevertheless, in a case like this I see a justification in allowing claims of Unjust Enrichment, since the defendants willingly abused their contractual obligations to make a fast buck.

The issue of profit to infringer or loss to supplier is a general one. For example, the US calculates the value of infringing products originating in China in terms of value on arrival in the US, whereas China argues that the cost on exiting China should be used. The US suppliers sell the goods at about 10 times what they pay for them in China.


Design Registrations Cancelled After Court Rules Lack of Novelty on Filing Date

April 8, 2013

Eli Shafir owned three registered designs – 44798, 44799 and 44800.  On suing A. A. Maayanot LTD. for infringement in the Haifa District Court, A. A. Maayanot LTD. filed a cancellation action in the Israel Patent Office. Judge Dr. Adi Zarkan of the Haifa District Court ruled that the marks were invalid since they lacked absolute novelty when they were filed (there is no grace period under the Design Ordinance).

Consequently, the Patent Office cancelled the designs. The parties agreed to allow the patent office to decide appropriate costs. After comparing similar actions in Termo Gumi  see http://blog.ipfactor.co.il/2011/04/06/designs-for-rubber-seals/ and in Wolfman vs. Ackerstein  http://blog.ipfactor.co.il/2009/12/14/israel-patent-office-publishes-decision-on-design-for-kerb-stone/ and on weighing up the relative amounts awarded and the amount of material in each file, the adjudicator of Intellectual Property ruled costs of  NIS 2000 plus lawyer’s fees of NIS 10,000.

COMMENT

The decision doesn’t relate to the nature of the goods at all.  However, the court ruling indicates that the designs related to water purifying equipment imported from China. See ‘ת”א (חיפה) 21858-08-10 – אליהו שפיר ואח’ נ’ א.א. מעיינות בע”מ ואח

We note that under the relevant somewhat archaic design ordinance, an importer can register a design for something imported from abroad. Only absolute local novelty is required. Apparently, this wasn’t available locally.

it is not clear why the adjudicator compared this to other design rulings and not to patent or trademark cases, of which there are rather more and these are certainly more recent.


What happens to Rights where Israel Patent Office Mail Goes Astray?

October 30, 2012

Design examinations should take up to 12 months. If no response is sent to an office action, a notice of abandonment is eventually sent, that gives the applicant two weeks to respond.

Concerning Design Application Nos. 45247 and-45248, Safety Kleen Systems and their IP representative argued that they never received the office actions, nor the notice of abandonment, but only later discovered that the Application had gone astray when they requested that the Patent Office send copies of the most recent correspondence in the file by email.

The agent for the applicant claimed that an Office Action was not received and the Patent Office should have sent the notice by registered mail.

Ms Jaqueline Bracha, the Adjudicator at the Israel Patent Agency rejected this argument, pointing out that the relevant regulations allowed sending by mail, and that this was routinely done. She went on to rule that the corresponding civil court procedures were considered irrelevant where there were specific design regulations. Since the public could rely on the design register, it would be wrong to allow abandoned design applications to be resurrected.

COMMENT
This seems a little unfair as the Israel Patent Agency does send correspondence to the wrong address from time to time. I have certainly received correspondence addressed to other patent offices, but put in the wrong envelope, but then again the excuse of lost in the post is the oldest one in the book. In the specific case, there should have been two Office Actions and two Notices of Abandonment and the time lapse from filing until the issue of Examination was raised was a few years. In these circumstances, the decision not to reopen the case seems more reasonable.

 


Book Review: Intellectual Property Law and Practice in Israel

July 15, 2012

When I first saw this book I suspected from its thickness (36 mm (1 15/32″  thick) that the authors had resorted to the well known strategy of adding appendices such as copies of the Israel Patent Law, Trademark Regulations, Copyright Ordinance and the like. This is not the case. The book runs to 632 pages of analysis, with a further 50 pages taken up with a table of cases and an index. There is no gratuitous padding. The book is simply a fair attempt to provide a detailed overview of IP in Israel and its length reflects its comprehensiveness.

As a thorough overview of intellectual property law in Israel, the book succeeds. It covers patents, copyrights, trademarks and designs, unjust enrichment, trade secrets, passing off and related rights.  It is the result of significant research by the authors, and though one can quibble with the odd opinion expressed, the book is authoritative. It is certainly a worthwhile addition to the library of any practicing Israeli patent attorney or IP lawyer.

Unfortunately, the readability of the book suffers from the lack of professional editing and the writing style provides constant reminders that the authors are not native English speakers. Paragraphs are long-winded and repetitive. Sentence syntax reminds one that the authors are used to writing in Hebrew. Sometimes, such as where copyright infringement by DJs at ‘wedding hauls’ is discussed, the typos are amusing. Generally, they are simply tiresome. I suspect that tighter writing could have slimmed down the book, shortened paragraphs and made it easier to comprehend without compromising on its comprehensiveness. That said, when allowing for the fact that the authors are not writing in their native language, the standard of the English is impressive. It is certainly better than my Hebrew. Nevertheless, the book is a little tedious and difficult to read because of language issues, and it’s a shame.

As would be expected from a legal text, judicial doctrines are discussed with reference to the case-law. Since the cases referred to are rarely available in English, I believe that the book would have been enhanced by an appendix abstracting the details of each case and providing a one page overview covering the specific issues and the legal significance. The cases could be arranged by subject or chronologically, with reference keys to facilitate the reader to find precedents of interest. I note that Machshavot who publish such overviews of case-law (in Hebrew) do not have a volume covering IP decisions. Although such an appendix would make a long reference work even longer, I think this would be a worthwhile addition, and would probably result in the thematic sections being shortened and would minimize repetition.

I suspect that the authors, who are both attorneys-in-law, in choosing to refer to follow the US convention and refer to licensed Israel patent attorneys as ‘patent agents’ will not endear themselves to their fellow professionals with technical backgrounds who universally and correctly translate the Hebrew term as Patent Attorney and refer to themselves as such. The training in IP law that Israel Patent Attorneys undergo includes two-year mentoring which is twice as long as that of law students. Both the written and the oral exams are difficult and the oral exam in particular, has a very low pass rate, particularly when considering the academic qualifications of the participants. Indeed I suspect that this book will be very widely used by trainee patent attorneys preparing for the Israel Patent Office oral exam.

The book, including it’s cover, weighs in at 1022 grams. It’s an attractive volume.

Intellectual Property Law and Practice in Israel by Eran Liss and Dan Adin, Oxford University Press May 2012  – ISBN: 9780199917419 (13-digit)  ISBN: 0199917418 (10-digit) – $225 from the publishers.


Are ‘Design Concepts’ Protectable in Israel?

July 11, 2012

Haya Rivka Windling-Yoskovitz imports and sells wrapping materials and decorations for events through a company variously named “The Tasteful Choice”, Organza and Organza 2010, from 2006. Some of her wrapping materials were used in a retail outlet called ‘Petite Sweets’ in Ashdod. She carries a range of about 2000 goods.

Dekel Manufacturing, Import & Export of Decorative Goods LTD., managed by Amir and Haim Sandick imports and distributes ornaments and presents. Their catalog includes a range of some 6000 goods.

Windling-Yoskovitz sued Dekel and the Sandick brothers claiming that they were distributing two wrappings that she had designed and had manufactured in China. The first design was for “tallit bags” – organza bags with blue or black stripes and fringes, available in three sizes, that were intended to recall the Tallit, or ritual prayer shawl. The bags were intended for use for holding party favours or cutlery, and to be used for decoration at Bar Mitzva events.  The second design was for cellophane wrapping material including the words Yom Holedet Sameyach (Happy Birthday in Hebrew) and Mazal Tov (literally, good luck but perhaps congratulations would be a better translation).

Dekel had imported the cellophane wrapping material from China and it seems that it was superfluous manufacture from  Windling-Yoskovitz’ order that had found its way onto the Chinese wholesale market.  The tallit bags sold by Dekel were made from them, and were slightly different from Windling-Yoskovitz’ design, but clearly inspired by her.

The case was brought before Judge Grosskopf of the Tel Aviv District Court in September 2009, with a request for an injunction and that the defendants produce financial details regarding sales of these items. The defendants countered by requesting that the court throw out the charges, arguing that the plaintiff had no exclusive rights and that there was no legitimacy to prevent free competition regarding the distribution of these goods.

The plaintiff claimed a range of grounds using what Judge Grosskopf referred to as the “try it” approach. These included copyright, passing off, theft of trade secrets, misleading the consumer and unjust enrichment.

COPYRIGHT – Judge Grosskopf noted that Section 7 of the new Copyright Law follows Section 22(1) of the Copyright Ordinance and rules that there is no copyright in articles of manufacture that could be protected by a design registration, unless there was never any intention to mass produce. Since the plaintiff did not register her design, she was not entitled to IP protection under copyright or registered design rights.

PASSING OFF – As to passing off, quoting Judge Rivlin from the recent Tali Dadon Yifrach case and noted that the tort of ‘passing off’ created a  monopoly and so its use should be excised with care. The requirement for passing off to be grounds for legal recourse were that the plaintiff had a reputation for the goods and that consumers would wrongly assume that the goods originated the plaintiff.  In this case, he ruled based on witness statements, that the clientele were ambivalent as to who the importer was and were interested only in price.

THEFT OF TRADE SECRETS – Grosskopf dismissed this, since the articles were easily retro-engineered and purchasing or manufacturing in China wasn’t a trade secret.

MISLEADING THE CONSUMER – Grosskopf noted that the consumer here was the retailers, not the end users, and thus consumer protection was not an issue. Furthermore and unnecessarily, there is no likelihood of confusion, since the customers were ambivalent of who the importer was.

UNJUST ENRICHMENT - Judge Grosskopf established that this was the only real legal question and then embarked on a detailed analysis, widely quoting from Professor Grosskopf’s (himself) treatise on the topic. Grosskopf’s position is that enrichment for the innovator comes from market lead. Where appropriate, this can be extended by registering designs. Grosskopf felt that the organza bags were registerable but the cellophane wrapping lacked the minimal requirements to be considered a design. Were Dekel to have systematically copied the plaintiff’s designs, unjust enrichment would be appropriate, but that was not the case here. The cellophane was bought off-the-shelf in China and the bags were not on-on-one copies, but merely shared the same design concept and thus just enrichment should be limited to the natural advantage of the plaintiff by virtue of being the first to distribute.

Based on his analysis, Grosskopf dismissed the charges, but refrained from awarding costs.

The Case: T. A. 18395-09-09 Haya Rivka Windling-Yoskovitz vs. Dekel Manufacturing, Import & Export of Decorative Goods LTD., 10 June 2012 by Judge Professor Ofer Grosskopf.

COMMENTS

In my opinion, Judge Grosskopf is one of the better IP judges. This decision is erudite and generally correct, and contrasts nicely with the Karshi decision issued by Shapira of the Jerusalem District Court. See here.  Reading between the lines, and noting that Grosskopf mentioned that the wording Mazal Tov and happy birthday were rendered in simply fonts, I think it is clear that he was aware of Shapira’s decision and is criticizing it in veiled form. It is unfortunate that the verdict in these cases seems to depend more on the judge than on the facts of the case.

Neverthless, Grosskopf is wrong both in his original essay and in his quote of it, in stating that after seeing commercial success, creators can register their designs, and that failure to do so requires explanation. In Israel this is not the case. Once a product is available, it cannot be registered as a design as absolute (local) novelty is required. There is no grace period.

As to the cellophane with Hebrew writing on it lacking the minimal standards to be registered as a design, I am not convinced. By that I mean that the wrapping material is sufficiently designed to establish that it was designed by Windling-Yoskovitz  and purchased off the shelf in China by Dekel. It is an object of manufacture and can be described and illustrated. I think it is a design that could have been registered in Israel. Of course,  ruling is of value in indicating if a judge would uphold such a design registration.

 


Israel Court rules that there is copyright in a font and Microsoft ordered to pay 512,000 New Israel Shekels

July 9, 2012

Back in October 2010, we reported an interim decision by Judge Grosskopf that fonts are copyright protectable. See /copyright/

Professor Grosskopf has now issued a full ruling on the subject as follows:

Fonts are copyright protected. Koren is a copy of the famous font that Eliyahu Koren developed in the 1950s for printing the Bible which is copyright protected. Koren-Guttman, available in Hebrew Office packages is considered a copy of Koren’s font.

As of 1 January 2013, Microsoft will no longer be able to provide Koren-Guttman or Narkiss fonts bundled into Microsoft Office software but Microsoft will not have to recall software distributed that includes the font.   In addition, Microsoft will have to pay 400,000 New Israel Shekels in statutory damages and 112,000 New Israel Shekels costs to the plaintiffs, Zvi Rosenerg, Masterfont and Koren Publishers.

The statutory damage award was reached by awarding maximum statutory damages under the old copyright ordinance of NIS 20,000, but awarding this sum per font for each software program, and considering variant fonts such as bold and italic as separate infringements, noting that they are separate designed fonts and not created on-the-fly by applying a transformation to the main font.

The Case: T. A. 5315-04-08 Koren Publishing House and Others Vs. Microsoft Israel and Others. 

COMMENT

In the text shown above, the opening phrase of the Bible, “In the Beginning, G-d created…” is shown in both Koren and Microsoft’s variant font. The similarity is quite striking. Microsoft’s defence was that fonts should be protectable as designs and not as copyright, and where not registered, and therefore are in the public domain. Of course, were the font registered, it would have long ago entered the public domain as design registration in Israel is good for up to 25 years. Copyright is for life of author + 70 years. Eliyahu Koren passed away in 2001, so it will be a while before his iconic font can be distributed for free.

It is not clear that the standard term of copyright protection is appropriate for fonts. Grosskopf is critical of the one size fits all copyright approach but believes that the courts should apply the law, and leaves copyright reform to the Knesset.


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