In a long, detailed, but nevertheless, in my opinion, wrong ruling, the Arbitrator of Intellectual Property, Noach Shalev Shmulovich has ruled that two entities can both register the same name “XO” for energy drinks.
His tortuous reasoning is that there was no case of bad faith to answer for, with the Israeli company choosing a letter combination used to indicate quality of brandy. Since one drink is fizzy and the other is still, and since one drink is sold in PET bottles and the other is not, and one is available in a range of flavors means that apparently there is no likelihood of confusion and the customers are intelligent anyway.
So what may be wrong with the decision?
Well, none of the differences between the products is sufficient to overcome confusion.
For example, Cider HaGalil vends both carbonated and still apple juice in cans.
Coca Cola and very many other drinks are available in both PET bottles and Aluminium cans. Not only is the bottle design not part of the registered trademark, but with the Israel Patent Office has made it clear that they are against registering bottles as marks unless they acquire the sort of iconic recognition of the famous Coke bottle, since the Registrar, Dr. Meir Noam, believes that something that can be registered as a design should not be registered as a trademark.
One or both companies can change their packaging.
Coca Cola has ventured into other flavors, with their ill-fated attempt at marketing Cherry Coke, so flavoring per se. is not something distinctive.
It may be that customers buy soft drinks in supermarkets off the shelf, but sometimes drinks are ordered over the counter or from restaurant menus. Sometimes drinks are ordered from vending machines. The two marks are identical. The difference fails all tests, including the Israel Trademark Department’s three step confusion test.
The ruling, like many, is long and tortuous. This follows the trends of court rulings started by Former Chief Justice Barak. As with patents specifications, the advent of the word processor has led to rulings being longer than strictly necessary.
One wonders if the Arbitrator simply was spoiling for a chance to speak out on the Budweiser issue or other identical name mark that is being contested around the world and saw an opportunity here. Unlike Yekev HaGalil – Arak – and Yekev Harei haGalil – boutique wine, or Tania Vodka and Tanya wine where there is justification to allow similar marks in the same class, here not only is the class the same, but the name is identical and not merely similar. Whereas the target for boutique wines and for spirits is not the same, in this case, the product and thus the market segment is identical and the customers are the same.
It is clearly not in the public interest for there to be two popular beers sharing the name Budweiser, but the situation developed over time and the American beer (which holds 51% of the US market) has a history of over 100 years. XO is different pragmatically, if not philosophically, since both products are relatively new. This, in my opinion, strengthens the public interest vis-a-vis the respective manufacturers, and makes it important to apply some clear mechanism, such as first to register, first to manufacture or largest market share, to prevent two products being branded under identical names.
This decision does not serve the interests of the manufacturer or of the public.
There is no big deal in getting a registered trademark;- that simply incurs maintenance fees. One can manufacture and market without a trademark; YekevhaGalil successfully branded Arak for a hundred years. The purpose of a trademark is to prevent competitors from selling confusingly similar goods with confusingly similar names.
In this case, the goods are confusingly similar so only one mark should be allowed. If there is no extenuating circumstances the mark should go to the first to file. In this case there were reasons that could be used to cancel one of the applications, but even if there weren’t, one needs to be cancelled.
Googling XO reveals a Polish manufacturer of energy drinks. Can this third company also import into Israel?
Talmudic like pilpul is appropriate for theoretical issues, but is inappropriate for regulating a market place. I consider this a poor decision that is not made better by long pages of arguments and reasoning.