Strauss, which is part of Unilever, sells an ice-lolly called מטרה Matara – literally target. The lolly has been available since 1983 (we hope this means, similarly looking lollies, but I suppose if kept frozen, they can last 30 years…)
Noga, a competing ice-cream manufacturer, markets Nestle Ice-creams, including a banana chewing gum flavour that is also round and has three concentric colours as shown below:
Strauss sued Osem, claiming to have marketed the Target lollies for 30 years and have sold millions since the product was launched. They alleged enormous investment in marketing and advertising the product as evidenced by newspaper reports, consumer surveys and the like. Strauss noted that the wrapper of the Nestle product shows the ice-lolly clearly and this is an attempt to capitalize on Strauss’ reputation. Strauss noted that both products were aimed at the same market, and that often consumers asked for a product from a vendor in a kiosk or ice-cream van and couldn’t even select the real product.
Osem asked to be removed as a defendant as it was simply a shareholder in Noga and didn’t even manufacture ice-lollies. In response to the charges, defendants argued that targets were known objects and Strauss did not deserve a monopoly since they had not registered the design of their ice-lolly as a registered design or as a trademark. The concentric circles were identified with targets and not with Target ice-lollies, and over the years, other target like lollies were available on the market from various suppliers. Defendant also argued that the Target lolly was unpopular and had dwindling sales. They argued that the claims for significant advertising and large market share were unsubstantiated. In summary, the defendants noted the different size, colour scheme and wrapping and argued that there was no likelihood of confusion and therefore no grounds to claim Passing Off. Furthermore, plaintiffs hadn’t even alleged, let alone proved, lost market share.
In response to Osem requesting the case be thrown out as they weren’t the manufacturer, Strauss asked that Noga be added as a co-defendant. They also noted that Noga did not appear on the wrapping, whereas Nestle did and Nestle was owned by Osem. Finally, they noted that this point was not raised in the correspondence between the parties and anyway, Osem, as a shareholder, was responsible for Noga LTD.s debts.
Judge Ginat noted that Strauss had failed to show that Osem was a correct defendant, but agreed to allow Noga to be added as a co-defendant. He went on to rule that the exchange between the parties could be construed as Osem-Noga accepting the correction, and forfeiting the right to file an additional response.
As to the main charges, Judge Ginat noted that the issues were Passing Off, well known Trademark infringement and perhaps Unjust Enrichment.
Judge Ginat accepted that Strauss had proven a reputation in their product. He also accepted that the target market of the two products was the same and the distribution channels were the same. However, he noted that the goods were sold in different wrapping with different names, and, citing the Moby and Meshubach precedents, (competing maternity brassieres and generic Apropos or bugle snacks) came to the conclusion that there was no likelihood of confusion. He accepted that ice-cream kiosks and vans showed pictures of ice-creams and ice-lollies which the purchaser could select, but sales of this nature were only about 4% of total sales and that the product was still dispensed in its wrapping, enabling the purchaser to notice the mistake and request a different product.
There is a second issue, in that the product could be shared with a second party after purchase. This was discussed in the Apropos (Bugles) case where the Supreme Court ruled that the tort of Passing Off is of relevance when the product is sold, not later on. Since the allegedly infringing product is sold in its wrapping, he rejected the charges of Passing Off.
As to the charge that the shape of the lolly was a well known mark, he rejected this as well, mostly on the grounds that well known marks were well known internationally. He accepted that the target lolly had acquired distinctiveness, but believed that kids chose ice-lollies by flavour not shape. He noted that the Noga lolly had different colours and a different length stick.
In conclusion, Ginat ruled that as in the Meshubach case, as long as there is no likelihood of confusion, there was no justification to provide a monopoly on a shape. The shape is to enable the consumer to knowingly choose a competing product, not to confuse the consumer regarding the source of the goods. He simply did not believe that there was a likelihood of confusion. He justified this by noting the various peanut butter flavoured snacks that compete with Bamba and the various traffic light ice-lollies.
The charges of passing off and famous mark infringement were rejected.
T. A. 14824-10-13 Strauss vs. Osem et al. (Target ice-lolly wars) by Gideon Gilat, Tel Aviv Jaffa District Court, 13 February 2014
This is a well reasoned decision that relates to the extensive case-law. I enjoyed reading it. We note that there was a spat between the parties concerning gold ice cream tubs five years ago. See here. Judge Binyamini threw out that attempt by Strauss to gain a market advantage.