Israel Supreme Court Rules that Rights Owners Should Bear the Costs of Destroying Infringing Goods Stopped by Customs Where Collecting from the Importer is not Possible

Back in January, I reported on a decision by Judge Abraham Yaakov of the Tel Aviv District Court, that ruled that the Israel Customs Authority was wrong to charge the rights owner for storage and / or destruction of imports that infringed copyright or trademarks in cases where the costs can’t be recouped from the defendant. See:

The Israel Supreme Court has now heard an appeal by the Customs Authority concerning a shipment of fake Christian Dior Couture shoes that were imported by a West Bank Arab that abandoned the shipment and proved impossible to collect from.

In accordance with Section 200A of the Customs Ordinance, which was legislated in 1999 to conform Israeli law with TRIPS, the Customs Authorities detained the shipment and notified Christian Dior, who initiated proceedings and provided bank guarantees of NIS 5000.

Dior claimed that the bank guarantees could only be used to compensate defendants in the event that the Court dismissed the charges of copyright or trademark infringement.  Customs claimed that the money could be used to cover costs of storage and destruction of the goods.

Judge Abraham Yaakov of the District Court (the same judge who ruled in the Levi’s case) ruled that the shipment was to be destroyed by the importer, which would bear the expenses. The District Court held that the Customs Authorities (i.e. the tax payers) should bear the costs of storing and destroying infringing goods should the importer default.

The Supreme Court reversed this judgement and ruled that the rights owners should bear the cost of storage and destruction of infringing goods where Customs cannot collect from the importer. The Court saw no justification to use public funds to cover the costs of protection of private property. It interpreted Section 200A of the Customs Ordinance, which complies with Section 53(1) of the TRIPS Agreement, as allowing the Customs Authorities to use the bank guarantee for that purpose. The decision was given by Judge Asher Gronis. Judge Elyakim Rubinstein concurred but also recommended that the government consider requesting further guarantees from importers to cover the IP rights owner’s expenses or used other means to facilitate collection such as withholding tax rebates.

The Case: 3960/10 Israel Customs Against Christian Dior Couture and Iyad Habas, before Judges Rubinstein, Arbel and Gronis.  June 20, 2011.


Although I enjoyed reading Judge Yaakov’s ruling, I think that the Supreme Court is correct to reverse it.

Categories: Copyright, counterfeit, infringement, Intellectual Property, Israel Copyright, Israel Court Ruling, Israel IP, Israel Related, Israel Trademark, World Trade Organization, WTO

2 replies

  1. Dear Dr Factor,

    I’m not familiar with the Israeli Patent Law, so I wonder if this decision also is applicable to patent infringing products, or just copyright, trademark (and I guess design) protected products?

    BR, Fredrik

    • Frederik,

      The question is a good one. Customs are not equipped to evaluate patent infringement and the design register is not available for on line inspection, so it is unlikely that the Customs Authority would take the initiative to stop incoming goods, but could do so if the agent of resord informs them of an incoming shipment or sends them a copy of what to look out for.

      I assume that if goods are held by customs or in an Anton Pillar action, the plaintiff will have to pay costs if the defendant defaults.

      It is conceivable that customs would confiscate what they believe to be a counterfeit good and the actual tort that would be grounds for suing would be a registered design or patent infringement.

      As you are apparently an employee of Ericssohn, I suspect that you are concerned with mobile phones similar can’t tell whether something like a mobile phone not carrying a name like Ericsson would be stopped by customs. Finally you will appreciate that this blog is not specific legal advice and if you are involved or contemplating action, we’d be happy to advise you or represent you.

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