Israel Supreme Court Overturns Ruling Concerning Unjust Enrichment

Reversed Challa Cover!

Reversed Challa Cover!

Back in January 2012, then Jerusalem District Court Judge Yaakov Shapira issued a permanent injunction against a Merkaz Matanot 2006, a competitor and former client of the plaintiff, Karshi, prohibiting them from importing, exporting or otherwise trading in ceremonial ritual challah cloths that had a similar general design to those that produced and distributed by Karshi. Their client, Ami Motzrei Noi LTD and their owner were also injuncted and they were See here for more details.

Essentially Judge Shapira who is now the State Comptroller ruled that there was Unjust Enrichment, breach of contract and passing off. I was very critical of the decision, and particularly that Shapira gave a world-wide injunction which seemed to have been beyond his judicial competence.

I am pleased to announce that the Israel Supreme Court has now reversed the ruling.

Essentially, Karshi ordered these ritual cloths having the words ‘שבת קודש’ – ‘Holy Shabbat’ in a fairly standard font embroidered on a piece of chiffon with a more solid fabric border from China.

Judge Chayot ruled that since Merkaz HaMatanot labeled their cloths with a tag stating that the supplier was Merkaz HaMatanot, there was no case of passing off. Merkaz HaMatanot was a retail customer of Karshi as wholesaler and not an agent of theirs, there was no contractual relationship and thus no breach of contract.

Karshi made no attempt to register the design and there was no additional consideration to imply that Karshi had rights in the design. There was no case of inequitable behaviour to answer for so there was no grounds for sanctions under the Law of Unjust Enrichment.

Case: Civil Appeal 1898/12 Merkaz Matanot 2006 LTD vs. Karshi Intenrational LTD. before Judges Solberg, Natyot and Chayot.  Hearing 25/6/2013, decision, August 2014.

COMMENTS

It seems that A.Sh.I.R. is still good case-law, but the judges want some real indication beyond competition to rule Unjust Enrichment.

The cloths in question were variations on a well-known theme. It is suprising how many of these are sold. I suspect that a lot of ritual Judaica (probably including mezuzot and tefilin) are made in China. Being an importer does not create a monopoly. The original decision was wrong (as were decisions by Shapira concerning the Hallel wine trademark and concerning alleged copyright infringement by Naomi Ragen. I am pleased he no longer rules on IP issues. Whether or not he will be a good state comptroller is beyond the scope of this blog, and beyond my competence to comment on.

 

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