XL Energy International Corp. is a leading manufacturer of energy drinks.
Here is one of their cans:
Cool Trade & Industry Co. have twice tried to get large shipments of empty beverage pans into the West Bank (also known as the Palestinian Authority and as Judea & Samaria) over the Allenby Bridge from Jordan. The shipments were each of 600,000 cans. In the first case, Judge Gideon Ginat of the Tel Aviv District Court ruled that there was a likelihood of confusion between the Cool Trade & Industry Co cans and those of XL and that the cans should be destroyed or sent back to Jordan, whereas in the second case, he ruled that there was no likelihood of confusion and the cans could enter the country.
The decision highlights the fine differences between competing products that are legitimate alternatives, and those that are considered as copies.
XL Energy International Corp. produces the XL energy drink in its factory in Poland. The product is described as being a carbonated energy drink containing and caffeine and taurine that is manufactured by Tempo Drinks LTD. The company claims to have sold hundreds of millions of cans since introduced into Israel in 2004. Tempo distributes in Israel and Unipal General Trading Co. distributes in the areas under the control of the Palestinian Autonomy.
On 19 March 2013, following a first shipment of 600,000 HipHop cans labeled X2 in a red font that is arguably confusingly similar to the XL log, in blue cans with darker blue bubbles, the Customs Authority held up the shipment and Tempo and XL sued for trademark infringement, passing off and Unjust Enrichment. On 30 April 2014 a second shipment of 600,000 was held up by customs and XL sued again. This time the cans do not have the darker bubbles and the X2 logo is in black and silver instead of in red.
XL has two Israel trademarks. Israel TM No. 216718 and 217476 reproduced below.
They sued for trademark infringement under the Trademark Ordinance 1972 and for passing off under Section 1a of the trade laws 1999.
The first set of imported cans are shown here.
The second set of imported cans are show here:
XL claims to have sold 53,000,000 cans in the Palestinian Autonomy during the years 2009 to 2013 and to have spent half a million dollars in advertising. The parties agree that their products are similar, are aimed at a similar market and are distributed via similar retail outlets and may even be sold on the same shelf.
The plaintiff argued that customers do not have perfect recall and may see a Hip-Hop can and think that it is an XL can. Their witness argued that customers spend three seconds in front of the beverage refrigerator and that this type of purchase is an impulse purchase. There are differences between the two cans, but the overall impression provided by the two cans is the same. Judge Ginat accepted this argument based on the case-law, particularly 5454/02 Taam Teva (1988) Tovoli vs. Ambrosa.
The defendant argued that XL were not entitled to a monopoly on the X or on blue cans. They claimed that their cans had different markings, different text and different text colour.
Judge Ginat was convinced that the defendant was well aware of the XL cans trade-dress and appearance before they designed the Hip-Hop can. The issue is the likelihood of confusion of customers.
Citing an ECJ ruling: Court of Justice of the European Communities, JUDGMENT OF THE GENERAL COURT (Eighth Chamber), Tresplain Investments v. OHIM (9 Dec 2010)
“Under the laws of the United Kingdom, it is for the court in question to determine whether it is likely that the relevant public will be deceived. Examples of specific instances of confusion may be useful, but the decision of the court does not depend solely or even primarily on the evaluation of such evidence (Parker’Knoll Ltd v Knoll International Ltd (1962) R.P.C. 265, 285, 291 HL).”
Judge Ginat noted that although the case was brought in the Tel Aviv court and was cans were intended for the Palestinian market. The issue here is likelihood of confusion by West Bank and Gazan Arabs. Unfortunately, neither party has provided any evidence regarding the market, such as consumer, wholesaler or retailer testimonies. The defendant’s evidence was mumbled and unclear. What is clear is that there are other energy drinks such as Blu.
Judge Ginat noted that in the UK, the courts were wary of giving monopolies based on colours, and cited the following precedents:
- Sodastream Ltd. v Thorn Cascade Co. Ltd.  RPC 459
- Roche Products v. Berk  R P C 461
- Cadbury-Schwepps . The Pub Squash  R P C 429, 460-461
He also noted that Judge Dr Binyamini had rejected Straus’ claims against Noga Icecream as them having a monopoly for gold containers. Furthermore, a single letter such as X is not protectable as a trademark. See E! Entertainment vs. Duetche telekom A.G. and Dr Seligsohn “Law of Trademarks and related Laws, Schocken 1972.
He then went on to cite Qualitex v. Jacobson Products 514 U.S. 159 (1995) and Christian Louboutin v. Yves Saint Laurent America (5 Sep. 2012) to the effect that a colour can serve as a trademark, i.e. as an indication of origin.
“The question of whether a color can be protected as a trademark or trade dress was finally resolved in 1995 by the Supreme Court’s decision in Qualitex, which involved a claim for trade dress protection of the green-gold color of a dry cleaning press pad. The question presented was “whether the [Lanham Act] permits the registration of a trademark that consists, purely and simply, of a color.” Qualitex, 514 U.S. at 160–61 (citation omitted). Reversing a decision of the Ninth Circuit that had declared color per se ineligible for trademark protection, the Court observed that “it is difficult to find, in basic trademark objectives, a reason to disqualify absolutely the use of a color as a mark.” Id. at 164. The Court held, among other things, that it could find no “principled objection to the use of color as a mark in the important ‘functionality’ doctrine of trademark law.” Id. It concluded that “color alone, at least sometimes, can meet the basic legal requirements for use as a trademark. It can act as a symbol that distinguishes a firm’s goods and identifies their source, without serving any other significant function.” Id. at 166 (emphasis added).”
However, the US Supreme Court acknowledged an Aesthetic Functionality Doctrine under which monolistic rights in a colour will not be granted where doing so undermines the competitor’s ability to compete in the relevant market.
“In short, a mark is aesthetically functional, and therefore ineligible for protection under the Lanham Act, where protection of the mark significantly undermines competitors’ ability to compete in the relevant market. See Knitwaves, Inc. v. Lollytogs Ltd., 71 F.3d 996, 1006 (2d Cir. 1995) (linking aesthetic functionality to availability of alternative designs for children’s fall-themed sweaters); Landscape 20 Forms, Inc., 70 F.3d at 253 (holding that “in order for a court to find a product design functional, it must first find that certain features of the design are essential to effective competition in a particular market”). In making this determination, courts must carefully weigh “the competitive benefits of protecting the source-identifying aspects” of a mark against the “competitive costs of precluding competitors from using the feature.” Fabrication Enters., Inc., 64 F.3d at 59. Finally, we note that a product feature’s successful source indication can sometimes be difficult to distinguish from the feature’s aesthetic function, if any. See, e.g., Jay Franco & Sons, Inc. v. Franek, 615 F.3d 855, 857 (7th Cir. 2010) (noting that “[f]iguring out which designs [produce a benefit other than source identification] can be tricky”). Therefore, in determining whether a mark has an aesthetic function so as to preclude trademark protection, we take care to ensure that the mark’s very success in denoting (and promoting) its source does not itself defeat the markholder’s right to protect that mark. See Wallace Int’l Silversmiths, Inc., 916 F.2d at 80 (rejecting argument that “the commercial success of an aesthetic feature automatically destroys all of the originator’s trademark interest in it, notwithstanding the feature’s secondary meaning and the lack of any evidence that competitors cannot develop noninfringing, attractive patterns”).
Because aesthetic function and branding success can sometimes be difficult to distinguish, the aesthetic functionality analysis is highly fact-specific. In conducting this inquiry, courts must consider both the markholder’s right to enjoy the benefits of its effort to distinguish its product and the public’s right to the “vigorously competitive market[ ]” protected by the Lanham Act, which an overly broad trademark might hinder. Yurman Design, Inc., 262 F.3d at 115 (internal quotation mark omitted). In sum, courts must avoid jumping to the conclusion that an aesthetic feature is functional merely because it denotes the product’s desirable source. Cf. Pagliero, 198 F.2d at 343.”
In summary, whether or not a colour mark is recognized is highly case-specific. This made the judge’s ruling difficult as neither side provided evidence regarding other energy drinks available in territories administered by the Palestinian Authority.
In conclusion, Judge Ginat felt that despite the obvious and non-accidental similarities, where other manufacturers are selling energy drinks in blue cans and using an X, or bubbles, noone is entitled to a monopoly for these with regards to carbonated energy drinks.
Judge Ginat considered that the first shipment of cans is confusingly similar to XL’s beverage cans and so there was passing off. Furthermore, the cans were marked in ways that are very similar to identical to XL’s registered marks. However, the second shipment, where the cans were clearly labeled Hip Hop Energy X2 the background blue is different and there is no likelihood of customer confusion nor is there trademark infringement.
The Customs Authority shall see to the destruction of the first shipment and the defendant is forbidden from importing or distributing cans of the first design. The second shipment shall be released and the storage costs incurred will be born by the plaintiff.
If Cool Trade & Industry Co. do not pay the storage costs, Customs may deduct this from the deposit made by XL who may then sue Cool Trade & Industry Co. to recover the costs.
In the cirucumstances, no costs were awarded to either party and no fines were imposed.
Civil Ruling 38108-03-13 and 26979-05-13 XL Energy International Corp. vs. Cool Trade & Industry Co., Tel Aviv District Court, Judge Gidon Ginat, 16 November 2014.
Blu and Red Bull both have blue cans. The size of the energy drink cans is standard. In other words, there is a standard appearance that says energy drink. Judge Ginat considers that the customer will recognize Cool Trade & Industry Co.’s cans as being cans of energy drink, but won’t be confused into thinking that the cans are XLs.
There is a problem though. X2 looks remarkably like XL, and this seems intentional. A single letter cannot be registered as a trademark, but two characters can. West Bank Arabs might well see X2 as XL.
This ruling brings to mind Judge Agmon Gonen’s ruling concerning four stripe trainers that are inspired by Adidas’ designs but not really confusingly similar therewith. It also brings to mind the rather odd XO decision wherein two different companies selling energy drinks were allowed to register the same mark!
Finally, we remember fondly that whilst Pepsi was boycotting Israel due to pressure from Arab countries, a Galilean Arab manufactured and sold Pips Cola.
The courts ruled that Pepsi had given up on their rights in Israel, and lacking other alternatives, Pepsi eventually bought the rights to Pips Cola from the manufacturer.
There was an amendment to the Israel Patent Law earlier this year. This amendment (11th amendment) relates to patent term extensions. The amendment was announced, but did not go into immediate effect.
Wyeth filed a request to correct a mistake in the Patent Extension Order concerning Israel Patent Number 120701. The extension Order was given on 23 February 2014, and extends the basic patent for Bazedoxifene which, without the extension, would have lapsed on 18 April 2017. The intention to grant an extension until 26 August 2019 was given in October 2013 and published back then. The calculation was based on the Law prior to the eleventh amendment.
On 18 September 2014, Wyeth submitted a request to correct the Extension Order to provide protection according to the regime after the eleventh amendment.
Section 16 of the Amendment states:
16(a) this Law will apply to Extension Order requests that are pending before the Commissioner of Patents on the day that this Law comes into effect, and for future requests for patent term extension. …
Wyeth’s contention is that the amendment to the Law came into effect on 27 January 2014 and due to the publication for opposition purposes, the period for opposition finished on 31 January 2014, so, at the time the Law came into affect no Patent Term Extension had been granted and the request for patent term extension for IL 120701 must, therefore, be considered as pending at the time the amendment came into effect.
The amendment narrowed down the list of countries that could be relied upon for Israel to grant a corresponding extension. Instead of anywhere in Europe that grants an extension, only Italy, UK, Germany, Spain and France could be taken into account. Significantly, Japan was no longer considered a relevant country in regards to patent term extensions. Wyeth’s patent was extended on the basis of the extension of the corresponding Japanese patent. By ignoring Japan, a longer term could be requested.
There is an interesting twist here. In October 2013, the FDA issued approval for Bazedoxifene together with conjugated estrogens as Duavee. This fact was not taken into account in calculating the Patent term Extension and could act against Wyeth. The Commissioner ruled that it would be improper to apply some sections of the amendment and not others, and that the Israel Patent Office should consider the ramifications of this FDA approval as well. In consequence, the Commissioner did not amend the ruling, but rather canceled it as a wrongfully given bureaucratic decision. He ruled that the published patent term extension was null and void and that the Application would be subjected to accelerated re-examination under the amended Law with the ramifications, if any, of the FDA approval of Duavee also considered.
Various legal precedents were given to support this contention and the solution it offered. The Commissioner noted that Patent Term Extensions are not final and could be reconsidered, even previous to the eleventh amendment. He related to previous rulings concerning Teva vs. Abbott, Neurim, Lundbeck vs. Unipharm and Roche.
In addition to being able to oppose any subsequent patent term extension, the cancellation of the existing patent term extension may also be opposed by third parties.
Ruling Concerning Patent term extension to IL 120701 to Wyeth, 3 November 2014.
The first renewal of Israel Patent Number 178735 was paid on-line and the agent of the patentee faxed the proof of payment to the Israel Patent Office. He then phoned through to check that the proof of payment had arrived. On looking to pay the second renewal four years later, the agent of the patentee discovered that the patent had lapsed. Instead of taking action to reinstate, the agent of record asked to correct the register.
Ms Bracha, noting that the mistake was one of the Israel Patent Office, agreed to correct that record. She is leaving the issue of rights of third parties using the lapsed patent in good faith for the issue to become a practical one with such a third party coming forwards.
This decision is a correct one. It is somewhat of a precedent as well.
In previous cases where the fee was timely paid on line using the Patent Office website, but the patentee did not separately send the proof of payment, the Patent Office ruled that the case should publish for opposition purposes.
I had a case recently where I could prove that the proof of payment had been received since we renewed two applications at the same time and the other case was clearly filed in timely manner, but the receipts of payment was printed out together on the same piece of paper. That paper clearly reached the Patent Office as the second case was renewed. The proof of payment contained all the relevant details, including the file number, fee, description of what the fee was for and when the fee was paid. I was more interested in getting the case restored than in fighting so I paid the fees for restoration with a note that I would request a refund. The case was restored, and I requested the refund, but so far, no response.
The Patent Office has been threatening to become fully on line. We hope that soon, as with the USPTO and other patent offices, it will be possible to pay the fee and no further action will be necessary.