Impotent Appellant Has No Standing

July 1, 2015

class action  no standing

The present ruling relates to a Class Action filed in bad faith. Since the Appellant acknowledged failing to take the preparation during the minimal period prescribed by the manufacturer is sufficient to cancel the standing of the Appellant as representing the class.

The Appellant purchased a preparation intended to strengthen the male libido. Prior to the Appellant finishing the prescribed course as detailed in the accompanying literature and as explained by the Supplier’s Helpline, the Appellant filed suit with the District Court claiming that the product is misleading, and requested that the case be considered as a class action.
The District Court refused to see this as a class action since the Appellant had no standing, and therefore could not represent the class.

Supreme Justice Danziger cancelled the Appeal without awarding costs to either party, and added that the need to test that the plaintiff behaves equitably is anchored in Section 8(a)4 of the Class Action Law. The ruling of this court does not indicate a general ruling of what is considered equitable behavior as far as Class Actions are concerned. In one case Inequitable behavior occurs when a case is filed due to false motivation, such as an intent to damage a competitor or to “squeeze a compromise”. In other instances, the mere fact that a plaintiff is acting commercially, looking to profit from the class action does not, in and of itself, indicate that he is behaving inequitably, however the plaintiff has to behave equitably during the hearing. This is significant where the plaintiff is representing a class and not merely himself and when a lawyer solicits plaintiffs for a class action.

In this instance, the District Court has determined, from the evidence before it, that the Appellant:

  • recorded conversations with the service hotline of the vendor
  • did not read the accompanying literature, tried the preparation for too short a period in direct contradiction of the instructions that he received with the preparation
  • contacted a lawyer prior to finishing the course; filed suite 5 days after stopping the treatment
  • via his attorney, submitted advertisements that were not related to his decision to take the treatment

These facts resulted in the District Court concluding that the plaintiff did not have standing in his own right and could therefore not represent the class of men with impotence issues due to a lack of standing.

The Court has concluded that the circumstances indicate that this is a rare case of someone initiating a Class Action inequitably, and contrary to Section 8(a)(4) of the Law. This conclusion is not based on the motive of the plaintiff, for one may be motivated by material gain, but by the inequitable behavior determined by the District Court. Simply not going the full course indicated by the manufacturer is sufficient to make the Appellant not appropriate to represent the class.

Oddly, and perhaps not inappropriately, this case was heard by three male judges, who agreed unanimously with the verdict.

4534/14 Appeal to Supreme Court, Eli Daniel vs. Direct Nature LTD

COMMENT
The Appellant, Eli Daniel, may not have had to pay compensation or costs, but, due to his actions, has entered the Israel legal text-books as having erectile dysfunction. Not the end of the world.

Substantively, the efficiency of all medicines, both classical and alternative (where there are active ingredients, as opposed to homeopathy) work to a greater or lesser extent in different patients due to personal physiology. A class of one is hardly a representative sample to test the efficiency of a treatment. There is a well documented placebo effect and presumably this works in both directions, so a patient lacking belief in a treatment is unlikely to see positive results. I assume that not everyone reacts the same way to aphrodisiacs, and there are large number of foods that are attributed as having both aphrodisiac and libido dampening effects. I understand that patients taking classical medical treatment for erectile dysfunction still need to feel aroused, and the medicine alone won’t work.  I therefore wonder whether the treatment in question works some of the time and for some men. Certainly, there is no indication in this class action that this is not the case.


Does Size Matter? Dun & Bradstreet Publish their Silly Stats Again

June 2, 2015

1.Does Size Matter

Dun and Bradstreet has published their annual IP rankings once again. See here for the Globes article based on the Dun & Bradstreet 2015 rankings.

As readers of this blog will know, I consider the rankings infantile. D & B ranks based on the number of patent attorneys and this year, Reinhold Cohn with 43 patent attorneys has been knocked off its perch as Israel’s largest IP firm by Pearl Cohen, the new branding of PCZ”L that allegedly employs 46 patent attorneys. It seems that Dun & Bradstreet would fail their matriculation in both Maths and Geography.

The problem is that whereas Reinhold actually employs 37 patent attorneys in Israel and a further several attorneys-in-law that work in Intellectual Property, and these are all bona fide employees or partners and are all licensed, Pearl Cohen does not employ 46 patent attorneys in Israel.

Unfortunately, Pearl Cohen and D&B are somewhat misleading regarding what a patent attorney is, what an Israel licensed patent attorney is, what an Israel firm is, what an employee is and what part of the world may be considered part of Israel.

Allow me to elaborate:

1. There is a confusion between general attorneys-at-law and patent attorneys. The 55,000 odd Israel licensed attorneys-at-law may practice before the Israel patent office, but only a small fraction have any IP competence whatsoever, and a smaller fraction still understand anything about patents.

2. To practice before the USPTO one needs to be an US Patent Agent or a US Patent Attorney.

3. Pearl Cohen has a US office, a Boston office and a UK office. The employees of these offices cannot be considered as being part of an Israel firm, unless, of course, one considers Finnegan, the US’s largest IP firm as being an Israel IP firm by virtue of their Israel office and website. Finnegan has only one attorney, Gerson Panitch, based, part-time in Israel (he is actually based in Washington DC according to Finnegan’s website). If Finnegan is an Israel IP Firm, they are clearly larger than Pearl Cohen. Actually, from his profile, I am not sure that Gerson is a patent attorney licensed to practice before the USPTO, but that’s beside the point. According to the warning previously published on the Israel Patent Office website, it is also illegal for anyone other than Israeli attorneys-at-law and Israel patent attorneys to advise clients in Israel:

הובא לידיעתנו, כי אנשים שאינם עורכי דין או עורכי פטנטים עוסקים לכאורה, בשכר, בפעילות שנתייחדה לעורכי דין ולעורכי פטנטים, ובכלל זה הכנת מסמכים המוגשים לרשם הפטנטים בישראל ובחו”ל, גם אם אינם חותמים על המסמכים בשם הלקוח.כל אדם מהציבור הזקוק לשירותי ייעוץ ורישום בתחום הפטנטים, סימני המסחר והמדגמים מוזהר בזאת שלא לפנות לאותם גורמים הפועלים בצורה בלתי חוקית, שכן הסתייעות באותם גורמים עלולה לגרום להם נזק בלתי הפיך.

This is a rough translation:

Let it be known that people who are not patent attorneys or attorneys at law apparently practice, for payment, services that can only be provided by patent attorneys or attorneys at law, including preparation of documents for submitting to the Israel Patent Office and to foreign patent offices, even if they don’t sign in the name of the client. Any member of the public who needs advice or registration services relating to patents, trademarks and designs is hereby warned not to turn to such illegal practitioners, since doing so may result in irreversible damage.

This is based on Section 20(4) of the Israel Bar Law (Professional Ethics) 1988 which forbids anyone who is not a licensed attorney-at-law in Israel (or an exception, such as a Patent Attorney for IP Law) from giving legal advice. Note, I am not sure that the Israel Patent Office’s interpretation of this law is in accordance with International Obligations, and arguably (as Mr Panitch argues), a US attorney can advise re US law. Even if he is correct, I suspect that the advice will be lacking when it comes from a US attorney not licensed in Israel, as there are Israel tax and other issues that affect the decision making process. Consequently, even when the jurisdiction of interest is the US, China or Europe, an Israel firm is advised to work with foreign counsel via a local practitioner.

The one shop model of a firm with US, Israel and European offices is also, not necessarily in the client’s interest. If a local firm drafts the application and a separate US firm (and not a branch of the same firm) makes a decision regarding whether or not to litigate in the US, it is likely that the additional level of review will avoid the filing of frivolous law suits such as the Source Origin case.

4. An employee is someone who works for a company and receives a salary. Pearl Cohen has a highly dubious arrangement by which attorneys and patent attorneys that work for them are considered as not being employees and new employees are coerced into signing a statement to that effect.  Pearl Cohen’s professional employees are perhaps best considered as being free-lancers. Pearl Cohen does not pay the license fees of these professionals.

5. There are 19 patent attorneys that list their address in the Israel Patent Office database as working for Pearl Cohen in Herzliya. This is a mere 41% of the 46 patent attorneys that Pearl Cohen claims to employ. This list includes Assaf Weiler who is living in the UK according to Pearl Cohen’s website. It also includes Zeev Pearl who according to Pearl Cohen’s website is considered the managing partner working from the New York office. Pearl is licensed in Israel, but is not licensed as a patent attorney in the US.

I can’t opine about the legality of this situation since I am not licensed in the US. For those interested in exploring this further, see New York City : 1st Department, Chief Counsel, First Judicial Department, Departmental Disciplinary Committee, 61 Broadway, 2nd Floor, New York, NY10006, (212) 401-0800, Fax: (212) 287-104, Website: www.courts.state.ny.us/ip/attorneygrievance/complaints.shtml Also see the unauthorized practice of law committee in New York.  Their contact information is as follows: Kathleen Mulligan Baxter, New York State Bar Association, One Elk Street, Albany, NY12207, Tel: 518/463-3200, Fax: 518/487-5694 kbaxter@nysba.org See also ABA Formal Opinion 01-423 Forming Partnerships With Foreign Lawyers (2001). Report 201H (Licensing of Legal Consultant) Report 201J (Temporary Practice by Foreign Lawyers) as presented by the ABA Multijurisdictional Practice Commission and adopted by the ABA House of Delegates in 2003. See Also Report 107C as Amended by the ABA Ethics 20/20 Commission (ABA Model Rule on Pro Hac Vice Admission) that was adopted by the House of Delegates in 2013.

Of course, size isn’t everything. Pearl Cohen’s employment arrangement is not limited to that firm, and some competing firms have similar practices. I consider the model unethical, not least because it is both open to abuse by the ’employer’ and is frequently abused.

Dun and Bradstreet’s table has other problems. For example, Colb does not appear in the table listing the top 12 firms, and I am fairly sure that they are larger in terms of number of Israel Patent Attorneys than some of the firms that are listed.  Despite losing much of his litigation team recently, I think Dr Shlomo Cohen Law Office has enough Lawyers and patent attorneys working in IP to enter the table. There are, of course, also very large Israel law firms that have one or more patent attorney or IP lawyer working for them. Shibboleth and Shin Horowitz come to mind.

What is, of course, of more interest to clients is the competence and track record of the individual attorney who handles their files. Some of Israel’s best patent practitioners in private practice, including patent attorneys work for small firms or are sole practitioners.  This is true of both patent attorneys that draft and prosecute patents, and litigators that fight validity issues. It is also true of trademark attorneys, many of the better ones in Israel work for small firms.

The size of an IP firm can provide depth of knowledge and experience, but this is not necessarily the case. There are few economies of scale in this industry, and Parkinson’s Laws go a long way to explain why the same service from larger firms is more expensive, yet the sole practitioners and partners of smaller firms are usually better off financially than their colleagues in the larger practices.

The lists of IP firms put out by the professional magazines is also skewed towards the larger firms. The more attorneys that club together to form a single shop window, the more and larger clients they are likely to attract. The irony is that the when a successful attorney decides to grow his or her firm, the head attorney does more administration and less legal work, and is likely to take on less competent staff who are less of a threat. The more competent staff tend to break away and form their own firms. The upshot is that the average ability per attorney is generally lower in the bigger firms. A more objective statistic of a firm is the average billing per attorney, or something similar that normalizes absolute values by the number of practitioners.


Software Rewrites

May 11, 2015

medical software

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

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

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

Statement of Case

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ICM LTD was the right holder in the software.

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

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

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


Vanunu’s hand

April 15, 2015

learned hand

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

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

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

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

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

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

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

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

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

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

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

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

COMMENT

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

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

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

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

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

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

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

As always, comments and feedback are welcome.


Patent Office Closures for Pesach

March 26, 2015

pesach cleaning

The Israel Patent Office will be closed from 3rd April 2015 to 11 April 2015 for Pesach (Passover), and will open again for business on 12 April 2015.

Deadlines falling during the period that the Israel Patent Office is closed are automatically extended until 12 April 2015.

However, trademarks and PCT Applications may be filed on line during the festival and will receive the date that they are filed. Notwithstanding this, according to discussion with Dr Michael Bart, the USPTO now accepts PCT applications that are filed late due to Israel Patent Office closures.


Sony Clamps Down on Pirate Computer Games

March 26, 2015

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

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

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


Israel Patent Office Circular on 3D Trademarks

March 18, 2015

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

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

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

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

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

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

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

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

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

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

COMMENT

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

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

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

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


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