Israel Supreme Court Rules on Parallel Importing

November 19, 2014

Tommy Hilfiger

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

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

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

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

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

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

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

The Ruling

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

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

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

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

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

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

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

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

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

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

 


Transferring A Contested Trademark to a Limited Company

November 19, 2014

pama

Abad Elrazak Abido is the owner of a registered trademark number 244831 for Pama, for shoes. He wishes to transfer ownership to a limited company: Pama Shoe Manufacturers LTD and to a partnership called Pama Porza, and submitted a request for transfer of ownership signed by him and the company.

This is actually the second attempt to transfer ownership, where the first attempt was dismissed on procedural grounds. Following that first attempt, an appeal was filed to the District Court. This appeal is pending, but meanwhile the owner has again submitted a request to transfer the mark and the present ruling relates to this request.

Section 48a of the Trademark Ordinance 1972 allows both pending and issued marks to be transferred from one owner to another, but gives the commissioner the right to refuse to register the transfer of ownership if it appears to be likely to confuse the public as to the origin of the goods or apparently contravenes the common good.

Puma S.E. opposed the transferring, arguing that the request had procedural flaws. In addition, they claim that the request is designed to create anonymity regarding the source of the shoes. The logic presumably being that the mark is being used to sell counterfeit shoes and Puma prefer to litigate against a person than a company as it is easier to collect if they win.

The Applicant submitted a Palestinian Authority trademark decision concerning a similar opposition, where registration of the mark Pama was allowed, and also submitted a certificate of incorporation, showing that the company to which the mark is to be transferred is properly incorporated in the Palestinian Authority (West Bank). The Applicant further claimed that there was a mediated settlement between him and Puma that allowed him to sell shoes under the PAMA brand in Israel and in the West Bank. The existence of the partnership remains a little cloudy.

Ms Shoshani Caspi ruled that the parties should submit affidavits and then attend a hearing where the relationship between Abad Elrazak Abido, the company and the ‘partnership’ could be clarified by cross-examination of the parties by the parties. Until such a hearing, she felt unable to address the issue of the public good. She noted that Mr Abido rights were not being compromised, as he would have the opportunity to provide additional documentation to substantiate his case. In the meantime, the request for transfer of ownership is suspended and no costs were-ruled.

COMMENT

Those with an interest in trademarks that are inspired by and somewhat similar to the marks of leading brands will note the four striped sneaker opposed by Adidas that was appealed to and upheld by the Supreme Court. Also of note is the Tigris decision which I am somewhat critical of, as it doesn’t relate to sports goods.

I have a working relationship with a Shechem (Nablus) based trademark lawyer which may help clients registering and enforcing in both the West Bank as well as in Israel. I suspect that proceedings are very different before the two regimes.


Requests for Costs Must be Timely Filed

November 19, 2014

missed

Back in June 2014, I reported on a decision by the Israel Commissioner of Patents and Trademarks that the Chinese brand Lovol and the older and more established Swedish brand Volvo are not confusingly similar. Having persuaded the Israel Patent Office that their mark was registered in good faith and was not confusing, Hebei Aulion Heavy Industries LTD, who own the Lovol mark, were entitled to file a request for costs.

The request for costs should have been filed within two months, as per Patent Office Circular M.N. 80. Hebei missed this deadline and, three and a half months after the hearing, they filed a late request for an extension to file costs.

Volvo opposed this request.

Hebei argued that the delay was caused because they waited to see whether the ruling would be appealed. The Commissioner did not see that connection between a possible Appeal and the right to file, and the right to costs for one proceeding is quite independent of whether the ruling may eventually be appealed or overturned. Furthermore, appeals should be filed within one month of a trademark ruling, whereas a request for costs may be filed within two months of a ruling. Where an extension is requested in an ex-partes proceeding it should be requested in advance and not retroactively.

A further consideration submitted by Hebei’s agent-of-record (Wolf Bregman Goler) was that they were unaware of the Circular and their client should not be penalized for their ignorance in this manner.  The Commissioner noted that the Circular issued back in February 2010 and that the agent-of-record was experienced and regularly appeared before the patent office in hearings and the like.

Citing A. Goren on Civil Procedure, the Commissioner noted that ignorance of the Law may be an excuse if objectively the Law is unclear and there hasn’t been any case-law, or, if subjectively, the legal representative had made efforts to avoid the mistake. In this instance, no evidence or arguments were submitted to establish objective or subjective grounds for clemency.

The agent of record argued that his client had a basic right to costs, that the Trademark Ordinance and regulations doesn’t establish a deadline, and so the Circular should not be considered binding. The Commissioner rejected this argument, considering that the Circular filled a lacuna and gave certainty as to whether costs would be requested or not. He considered that different practitioners should be held to the same standards. Costs should be requested at the end of a proceeding and not any time thereafter. There were no good reasons to consider the two month period insufficient, so the request was thrown out.


Combining Similar Proceedings

November 19, 2014

combining hearings

C.T.S. LTD filed Israel trademark application numbers 2253382 and 253359 “Lactofil” and לקטופיל. The Mark covers Cosmetic preparations namely lotions, creams, mousses and soaps for nourishment and cleaning of the skin and face all in Class 3. “” Laboratorios Genesse, S.L. opposes the marks

Meanwhile, Laboratorios Genesse, SL. has filed Israel trademark application number 249389 for Lactivit for Soaps, gels, perfumery, essential oils, cosmetics, lotions for hair and skin care, creams for hair and skin care, and dentifrices also in Class 3. C.T. S. LTD are opposing this registration.

Both parties propose combining the hearings. The Lactofil hearing was scheduled for 29 October 2014.

The legal issue in both cases is likelihood of confusion with the similar product of the other party. The parties and the issues in both cases is the same. Combining the cases saves the parties time and expense, and saves judicial resources. In one case there are additional claims of inequitable behavior, but this is not seen as sufficient justification to hear the cases separately.

As both parties have equal rights, Ms Yaara Shoshani, Adjudicator at the Israel Patent and Trademark Office ruled the cases are to be combined, however in each case, at the combined hearing, the Opposer has the right to cross-examine the applicant’s witnesses and only then may the Opposer’s witnesses be cross-examined.

In the circumstances, no costs were awarded.

Decision to Combine Similar Trademark Proceedings, Yaara Shoshani Caspi 6 October 2014. 

COMMENT

Apart from the parties in question, there is a third party of importance, i.e. the public. It seems to me that combining the proceedings is not only economical for the parties and for the public purse in terms of judicial expense, but also is most likely to result in a sensible ruling.


Meet the Israel Trademark Examiners

November 12, 2014

Open Day

The Israel Patent and Trademark Office are having an Open Day, where lawyers and patent attorneys can meet the Examiners.

The meeting will take place on 25 November 2014 at 12:00 am in the lecture hall on the third floor at the Israel Patent Office.

The agenda which is based on suggestions from the Association of Israel Patent Attorneys, the AIPPI and the relevant committee of the Israel Bar includes discussion on:

  • whether office actions are sufficiently detailed or too laconic
  • whether someone submitting an affidavit in ex-partes proceedings should attend hearings
  • updates regarding when examination will occur
  • trademark searches under section 78 of the trademark ordinance 1940
  • correspondence with trademark department concerning International Applications under Madrid
  • updating contact details under circular 015/2012
  • working together to improve translation of lists of goods into Hebrew

So that they have an idea of numbers, people interested in attending are requested to contact the trademark department

 

 


Cofix and Cofizz, Lawyer Requests to Relinquish Representation

November 11, 2014

withdrawal

Israel trademark applications 261549 and 256612 for Cofizz and Cofix are considered competing marks.

Guy Ophir  is the agent of record for Mizrach and Amsalem, the applicants for Israel Trademark application number 261549 for Cofizz. On 21 September 2014 Adv Ophir requested to relinquish representation of his clients. The Deputy Commissioner, Ms Jacqueline Bracha asked Adv. Ophir how relinquishing him of his responsibilities would not adversely affect his client’s rights and cause the scheduled hearing to be delayed.

On 5 October 2014, Adv. Ophir submitted an affidavit to support his request. He detailed the steps he’d made to contact his clients, including proof that registered mail to his clients had been delivered.

Section 13 of the Israel Bar Law 1986 details professional ethical requirements for lawyers.  It requires that the lawyer acts promptly if he wishes to withdraw his representation and that the attorney receives dispensation from the court that is hearing the case. More details are set up in Appeal 15/05 Adv. Blatter et al. vs. Amitai Yigaeli 2005.  As stated by Judge Gronis, a central consideration is that hearings should not be postponed, leaving the court with empty slots. and that the opposing side may not want the hearing postponed and their wishes should be considered. As mentioned by Kling (the Commissioner’s father, Judge Kling) in Legal Ethics pages 344 and 345 (2001), a further consideration is the stage at which a proceeding has reached.

In this instance, a hearing has been set for 28 December 2014. The Deputy Commissioner has ruled that she is prepared to allow Adv. Ophir to withdraw from the case provided that the parties are contacted regarding the scheduled hearing at their registered address.

COMMENT

Details of why Adv. Ophir wishes to withdraw his representation is not clear. It does seem, however, that his clients are aware that he wishes to withdraw and are not responding to him.

I once had a client on Big Brother, where we had a contentious issue at the patent office, and a corresponding case (handled by a different firm) in the Jerusalem District Court. We could see the client on TV but couldn’t get instructions from him. Other clients have moved without updating addresses, etc. I can certainly sympathize with an attorney whose client is unresponsive. Here is seems that the client is aware that representation is being withdrawn, so it does seem fair.

 


Kerem Ben-Zimra – Competing Marks

November 10, 2014

competing wine

David Nachmias filed Israel TM Application no. 258163 for “Kerem Ben Zimra Winery” The Hebrew word kerem means vineyard). Not long afterwards, Yekev Ben Zimra LTD filed Israel trademark application number IL 258562 for יקב בן זמרה (transliterates as Yekev Ben Zimra and means Ben Zimra Winery) and IL 258563 for Ben Zimra Winery. All the marks cover wines in class 33.

Since the marks are similar and were co-pending, in January 2014, the Israel Trademark Office initiated a competing marks procedure under Section 29 of the Trademark Ordinance 1972.

In competing rights procedures, the first to file (in this case Nachmias) does not necessarily prevail. Other factors to be considered are the extent of use of the marks and whether there is inequitable behaviour of either or both parties. The parties are given an opportunity to file evidence to support their rights to the mark.

In this instance, the parties did not file evidence and in August 2014 the Trademark Office gave one month’s notice to the parties to file evidence or the marks would be considered withdrawn. This was ignored, so Ms Yaara Shoshani Caspi closed the files but noted that the parties could refile their applications.

COMMENT

Kerem Ben Zimra is a village near Tzfat that was founded in 1949. It takes its name from the Rabbi from the period of the Mishna, Rav Yossi Ben Zimra haCohen, whose grave is found in the village. David Nachmias and Yekev Ben Zimra both have addresses in the village.

There are other wineries in Kerem Ben Zimra. The Adir Winery has a range called Ben Zimra. The wines produced in Kerem Ben Zimra have a good reputation. As always with competing use for a place-name, it is not clear whether either or both parties should be able to register their marks. In this instance, the parties seem to have backed off a legal battle. It could, however, be a case of both sides losing. What is clear is that there is a likelihood of confusion if two or more wineries call their produce Ben-Zimra.


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