This decision relates to parallel importing, to slander and to inequitable behavior.
Luxvision is the licensed importer of Zeiss lenses. Optika Halperin, a national chain of opticians in Israel (founded by a Rabbi who was a boxer, a world freestyle wrestling champion and bodybuilder, and then a Karate expert who introduced and promoted the sport to Israel) advertised multi-focal lenses that they sold as being Zeiss lenses.
Luxvision ran a vicious campaign of letters and advertisements from 2010-2011 arguing that Optika Halperin’s lenses were not original Zeiss lenses. Optika Halperin sued Luxvision, its CEO Erez Avner, and Ami Lapidot, who is the director of the Lapidot Group which owns Luxvision, claiming that this campaign caused then damages of 10 million shekels including cancellation of contracts with ELAL (Israel’s national airline) and with HaMashbir (Israeli department store), and had unjustly enriched the defendants. Luxvision counter-sued for 200,000 in 2011, as maximum statutory fine for willful slander without proof of damage, concerning four advertisements by Halperin, which they alleged were slanderous, defaming and insulting.
The relevant details are as follows:
On 22 December 2010, Avner sent an email to ELAL, and without revealing that he was an employee of Luxvision, informed them that the advertisement of a discount between Optica Halperin and ELAL infringed intellectual property since the guarantee was not recognized by Zeiss. On 13 April 2011 the defendants contacted HaMashbir in writing and informed them that Zeiss International had canceled the manufacturing and distribution rights of the Indian company from where Halperin had purchased the Zeiss lenses mentioned in the discount, and that the lenses were not merely imported without a license, but that there was a question regarding the origin of the lenses. Luxvision also contacted Halperin’s employees with a letter titled “Notice of Cancellation of Agreements” ordering them to cease and desist from selling or purchasing Zeiss lenses. Luxvision further published misleading notices in newspapers and on Internet websites regarding the origin of Halperin’s lenses that stated “Zeiss importers: Optika Halperin together with ELAL sell lenses from India. The [Halperin] chain: they are original”, and in an article in the financial supplement of Idiot Achronot, 2 February 2011, “Zeiss Germany does not stand behind the special offer and the Guarantee is not authorized.” In the business paper the Marker on 13 April 2011 the defendants allegedly planted an article titled “Optical Illusion, the German Company Zeiss: Optika Halperin sells Zeiss lenses that are not originals.”
In their defense, Luxvision denied any responsibility for articles published by newspapers and the alternative defense that the facts discussed in the articles were true. Luxvision further denied that they caused damage to Halperin and claimed that the damage was self-inflicted since they published false information regarding the source of their lenses, and this was self-risk or contributory damage to the extent that they were not entitled to any compensation or legal recourse. This was also the basis of their counter charges of 200,000 Shekels in compulsory compensation without proof of damage.
Both sides brought evidence regarding the relationship between Luxvision and Zeiss India, from which it seems that Luxvision had themselves purchased and sold Zeiss lenses from India. The relationship between Zeiss Germany and the Zeiss Middle East had apparently been broken however there was an agreement between them. Judge Ginat ruled that these details were not necessary to rule on the case in question.
Optika Halperin as an independent and private company that imports and sells optical equipment and eye-wear imported Zeiss lenses with the Zeiss logo from the Indian manufacturer, which is a factory established by Carl Zeiss Vision International Gmbh, the German mother company.
On 27 February 2008, Zeiss Germany set up a joint venture with GKB HI-Tech Lenses Private LTD, an Indian company set up to sell Zeiss lenses to the Middle East. Under the agreement, with GKB HI-Tech Lenses Private LTD would be allowed to sell lenses with the Zeiss label in the Middle East, including Israel. The Companies had their differences and went to court in India, after which the business relationship ceased as of October 2011. However, Zeiss continued to allow their name to be used on lenses from India that were sold in the Middle East.
On the basis of evidence filed, including affidavits, Zeiss never showed any reservation that lenses from the Indian company were being marketed as Zeiss lenses in Israel and elsewhere. Zeiss never complained to Halperin nor did they file suit in an Israel court. They are not a party in this dispute. Indeed, Zeiss India had initiated an action against Zeiss Germany and not the opposite. Judge Ginat therefore ruled that the evidence leads to the conclusion that the imported Indian lenses may be considered as ‘parallel imports’ and not as imports of the authorized Israel dealer. As with the Hilfiger case, this is perfectly legal.
Cancellation of the ELAL contract
In 2009 and 2010, ELAL and Yaakov Halperin signed various agreements under which Business and First Class passengers on ELAL flights would receive vouchers for purchasing Zeiss lenses at Optika Halperin. Luxvision wrote to ELAL claiming misrepresentation and the eventual upshot was that ELAL did not renew their contract with Optika Halperin who claimed damages of 2,515,000 Shekels in loss of contract and loss of future business.
Although eventually ELAL wrote to Luxvision that they were not renewing the contract with Optika Halperin so the charges were moot, Luxvision argued that this letter was not an indication that they canceled an agreement, nor was it an indication that the decision was the result of Luxvision’s campaigning.
What was clear was that Luxvision embarked on a media smear campaign against Optika Halperin, and the articles are available on line and still cause damage. Furthermore, they contacted third parties having contractual relations with Optika Halperin so Luxvision did do serious damage to Optika Halperin’s reputation. The articles were unequivocal and there is a basis for bringing charges of Slander under Sections 1 and 2 of the Slander Act.
However, it will be appreciated that Section 14 of the Slander Act provides the defense that the allegations are true. This requires that the publication is true and is of public interest. The truthfulness defense is objective. It is important as it strikes a balance between Freedom of Speech and the right to one’s good name. The public interest consideration is subjective, and the court has to rule on each case according to its merits. Regarding the truthfulness of Luxvision’s allegations, the onus is on them, as defendant to establish that their allegations are indeed true. However, Luxvision were within their rights to indicate that the lenses were not guaranteed by them and with multi-focals, there is a real likelihood of lenses being unsuitable and rejected as such.
Judge Ginat was impressed that Zeiss Germany would have gotten involved if there was any truth that the Indian lenses were substandard. Zeiss themselves and not the importer owns the rights in their name. Furthermore, Luxvision contacted ELAL before contacting Zeiss Germany. Judge Ginat concluded that this case is not one where the lenses are not originals or are fakes, but is a case of parallel importing, and, as established in Dyson and in the Tommy Hilfiger case, parallel importing is legal in Israel. Consequently, the defense that Luxvision told the truth is not a totally accurate reflection of reality and the defense is not available to them.
Contacting the media and Optika Halperin stores around the country does not seem to be a reasonable act that can be considered as equitable behavior as the publications were inaccurate and Luxvision was aware that the Indian company was authorized by the German company to produce Zeiss lenses, even if the relationship between the Germans and Indians was somewhat rocky. Consequently, Judge Ginat rejected the defense that the slander was unintentional.
Nevertheless, the estimate of 10,000,000 Shekels of damages was less than substantiated and consequently Luxvision was ordered to pay the maximum statutory damages of 50,000 Shekels for slander. The allegation of unjust enrichment was also not substantiated and was rejected.
Charges against Lapidot were rejected as any actions he conducted through the company were considered as the responsibility of the company and not personal responsibility.
Luxvision’s counter-claims of slander for Optika Halperin’s media campaign stating that ‘only companies that want to profit likes pigs sell expensively’, was rejected as Luxvision had started the smear campaign and the description seemed somewhat apt. Furthermore, there was nothing wrong with Optika Halperin showing the difference in price between themselves and competitors. In general, Optika Halperin’s campaign was considered acceptable. Luxvision, was, however, also ordered to pay 33,999 Shekels for causing the ELAL contract to be breached and they were also ordered to pay the court’s expenses including the cost of the court recorder, and 38,000 Shekels in legal fees incurred by Halperin.
28167-04-11 Optica Halperin vs. Luxvision LTD, by Gidon Ginat of Tel Aviv District Court, 29 April 2015