A decision to read over coffee

In February 2008 Alon Intrade LTD filed a number of coffee related trademark applications that issued between December 2008 and August 2009. The marks include Si Caffé as text in Hebrew and English and a stylized application, and Si Espresso as text in Hebrew and English and as a stylized application.

Si Cafe  Si Espresso
The class 30 registration was for cold and hot drinks including tea and coffee, cocoa, rice, tapioca, sago, ersatz coffee, flour, baking foods and cereal grain products particularly bread, cakes and baked goods, pizza and frozen pizza, flat cakes cooked cakes (pancakes?) and frozen cakes, sweets, confectionery for baking, honey, honey like syrup (molasses?) yeast, baking powder, salt, mustard, vinegar, spicy sauces, sauces, spices, and ice for drinks.

The class 43 registration were for food and drink vending services including the sale of sandwiches, salads, cakes, hot and cold meat and milk products, sale and serving of all types of coffee, hot , cold and alcoholic beverages, all in class 43.
In December 2013, S.A.M. Coffee services LTD requested the cancellation of the marks. , S.A.M. Coffee services LTD has the following mark: The marks owned by S.A.M. Coffee services LTD ‘s marks were filed in December 2001, in classes 30 and 42 for coffee, ersatz coffee, flour and grain based products and baked goods and for providing food and drink.

S.A.M. Coffee services LTD claimed that they run an established chain of coffee shops called Sicaffe that is known in Israel and abroad for its high quality products and service. The chain roasts the coffee beans and bakes bread in house and has proprietary blends of coffee beans.

This is S.A.M.’s mark.

Sicaffe

S.A.M. Coffee services LTD claims that Alon Intrade LTD’s marks are confusingly similar to theirs, and that the word marks Si Café and Si Espresso lacked distinctiveness and create unfair competition and should therefore be canceled under Section 39a on the grounds that under sections 8(a), 11(6) and 11(9) they should never have been registered in the first place.

Furthermore, S.A.M. Coffee services LTD claim that they first learned about Alon Intrade LTD’s marks Si Café and Si Espresso when a consumer affairs program investigated Si Café and Si Espresso and concluded that they recycled their products to the customers, and that people wrongly attributed this behaviour to Sicaffe due to the similarity of the marks.

Sicaffe submitted an affidavit that supported their allegations nd that explained that the first Sicaffe shop opened in Ramat haChayal in 1998 and in 2011, a second shop opened in Tel Aviv. The chain opened two coffee shops in New York in 2003 and 2004 and two more in Russia in 2013.

Sicaffe further noted that Alon Intrade LTD used the two trademarks interchangeably. For example, in Netanya, workers in Si Caffé wore uniforms with Si Espresso printed on them, and the payment receipts used Si Espresso as well. In Si Espresso the name Si Caffé appears on the cups, sertviettes and take-away bags.

Alon Intrade LTD responded that they had set up a chain called Sigafreido Espresso Bar that, over the course of time was shortened to either Si Caffé or Si Espresso, depending on the character of the individual coffee shop.

The chain(s) include 16 shops along Route 6 and at Ben Gurion Airport and serve thousands of customers each year. The annual turnover is millions of Shekels and there was never a confusion with the Opposer’s chain. Furthermore, the marks were examined and allowed despite Sicaffe’s earlier registrations. Since Sicaffe had not objected over four years, they were estoppeled from so doing.

Alon Intrade LTD also argued that there was no likelihood of confusion between the marks which all comprised common words that no one was entitled to own. Furthermore, they had disclaimed rights in the elements of the marks.
Alon Intrade LTD explained that the Si Caffé and Si Espresso marks were the result of a rebranding in 2008 and that the marks have been in continuous use since then.

The Si Caffé mark is used in restaurants that offer a culinary menu that is a fusion of the Israeli and Italian kitchens, whereas the Si Espresso mark is used for self-service cafeterias. The outlets also use the non-registered mark ‘Si Express’ for the new Grab & Go concept.

Due to the location of the coffee shops and the cooperation between the chain and their customer club the registered marks are seen by 1.5 million customers a year. In addition the company invests millions of shekels in marketing and promoting the chain via advertising and managing the customer club, relationships with other customer clubs, works organizations in different sectors and the like. Because of cooperation with the popular navigation program WAYZ, drivers are alerted when they are near branches of the chain.

The witnesses were cross-examined on their statements on 12 January 2015.

Ruling

Section 39 of the Trademark Ordinance defines a 5 year period beyond when a mark is registered during which a mark that should not have registered due to one of the provisions of sections 7 to 11 can be canceled.

There is no argument that the cancellation procedure was initiated within this period, however the mark owner claims that the Applicant for cancellation is estopelled from so doing. This, is, however, not the case. Failure to oppose a mark does not deprive third parties from initiating cancellation procedures. The claim has no legal support and is also unreasonable. Not all players follow the trademark register avidly and so there are provisions for correcting the register, including cancellation of marks. Indeed, as is clear from the Versace case even unsuccessfully opposing a mark does not prevent the opposer from later initiating and winning cancellation proceedings – See here, here and here.

As the Ordinance itself gives 5 years from issuance for a mark to be cancelled for the grounds in Sections 7 to 11, there is no room to claim that a four year delay is covered by a statute of limitations. The defense of tardiness is inadequate. It would however be reasonable to rely on a specific surrendering of the right to challenge. In general, cancellation proceedings and oppositions by third parties are a way of ensuring the integrity of the trademark register, including uncovering and correcting mistakes made by the Israel Patent and Trademark Office. The cancellation procedure does not only serve the competitor who initiates it, but also serves the public good. The costs involved and the burden of proof are sufficient to limit third parties from filing frivolous cancelation proceedings.

In this regard, Ms Bracha refers to Kerly’s Law of Trade Marks and Trade Names”, 15th ed. (2011), p. 345 by James Mellor, David Llewelyn, Thomas Moody-Stuart, David Keeling, Iona Berkley which shows that UK and European law also have a similar five year period. She does, however note that a significant period of coexistence may indicate that consumers are aware of the subtle differences between similar brands. However the Applicant for cancelation’s statement of case concentrates on the similarity between marks which allegedly has resulted in consumer confusion and unfair competition.

Ms Bracha therefore applied the (five part) triple test and considered:

  • the appearance of the marks
  • the sound of the marks
  • the distribution channels
  • the customers
  • everything else of interest

and cited the relevant case law (pro-pro biscuits, Bak Igud vs. Bank Agudat Israel, HaMishpacha, Tam Teva and Ambrosia.

As to the appearance of the mark, the challenger’s mark is for Sicaffe with a white coffee bean within a black triangle. The challenged marks include graphic marks Si Café against a red background and Si espresso against a grey background and the word marks Si Caffé and Si espresso with disclaimers for the words café and espresso.

The challenger’s mark includes the words Si Caffe in common with the challenged mark. The Deputy Commissioner does not consider the extra f in caffe as having a major effect on the average consumer.

The word Si is the extra element where café and espresso are generic words. Si means yes in Italian and may be considered as being a laudatory word that indicates an Italian connection [which is considered as indicating quality and style as far as coffee is concerned].

Although in marks of this nature it is common to analyze the mark into its elements, really similarities of the marks as a whole should be considered when assessing the likelihood of confusion.

Both marks have graphic elements and use fonts that are somewhat different.

Citing Kerly page 313:

“It follows that if the respective marks are similar in respects which are distinctive and origin specific then this will tend to increase the likelihood of confusion. Conversely, if the marks are only similar in respects which are descriptive or origin neutral then this will tend to decrease the likelihood of confusion; indeed it may result in a finding that the marks are not even similar.
The public will not generally consider a descriptive element forming part of a complex (or composite) mark as the dominant element of the overall impression created by the mark; it is the dominant elements of the marks that are critical in the overall evaluation, although it is only if all the other components are negligible that the assessment can be carried out solely on the basis of the dominant element”.

Thus where the words selected are generic or common place and laudatory a greater emphasis may be given to the graphic elements. See the decision concerning Israel Trademark 223957 Chic Design.

In conclusion, the graphic marks are sufficiently different visually to coexist but the word marks, including Si Espresso are too similar to be valid. Sicaffe and Si café sound the same. Si espresso sounds rather different.

When comparing the relative importance of the appearance and the sound, the case law in 5066/10 Appeal Angel vs. Berman (30 July 2012) – specifically Section 27 explains that there is a difference between goods ordered over the counter, where the sound is more important, and goods selected from a shelf in a supermarket or the like, where the appearance is more significant in deciding whether or not there is a likelihood of confusion.

According to Deputy Commissioner Bracha, the mark holder himself notes that consumers select sandwiches and prepared portions from the shelves, apart from one branch which offers a full waiter service. Each package bears the logo and so, reasoned Ms Bracha, the visual aspects are more significant than the sound.

As to customers and distribution channels, the challenger has regular customers and the marks holder primarily serves passing traffic on route . That said, the challenger does serve passers-by and the mark holder may have regular customers. The customer base overlaps although is not identical.

The mark holder’s chains generally sell bars of chocolate, ice-cream and sometimes burgers and chips, chicken wings and the like, whereas the Applicant for cancellation makes salads and bakes bread, and even their thousand island dressing is prepared on premises and not poured from a bottle or dispensed in sachets [MF – I bet they don’t blend anywhere near a thousand islands together though].

Ms Bracha notes these differences but does not consider them significant enough to render the likelihood of confusion impossible as they are in the same class and are substitutes for each other to a large extent.

Other Considerations – Under this heading other relevant factors that might confuse the public or reduce sales are considered.

From the evidence it is clear that the two marks have coexisted since 2008 and since the challenged marks were the result of a rebranding exercise they were in wide-scale use from the beginning. The cancellation proceeding was initiated four years after the mark was registered. The failure of the initiator of cancellation proceedings to warn the mark holder or to otherwise express dissatisfaction does not prejudice his rights to initiate these proceedings.

Nevertheless, failure to act more promptly does to some extent indicate a lack of confusion The initiator of the cancellation proceedings alleges that the proceedings were initiated due to consumer comments and the Kolbotek consumer affairs program investigation.

It is not inconceivable that customers of the initiator of the cancellation proceedings believe that their shops are strewn along Route 6, but they haven’t supplied evidence that this is the case, and since this is a cancellation proceeding and not an opposition, the onus of proof is on the initiator of the proceedings.

The Deputy Commissioner considers that the word marks should never have been allowed to register in the first place and the passage of time is insufficient to remedy this.

Whilst the word marks do appear on receipts and the like, the main use is that of the visual elements in the signs and food markings. As the marks owner uses the logos and word marks almost interchangeably, their claims that the espresso mark is different is undermined.

In conclusion, the word marks 208117, 208121, 208119, 208124, 208128 208130 should not have issued under Section 11(9) of the Ordinance and are canceled.

The graphic marks 208116, 208120, 208127, 208130 are sufficiently distinct that the request for cancellation is rejected based on the analysis above.

Since six out of 10 marks are canceled, the 208116 the initiator of the cancellation proceedings is entitled to costs, but these should be reduced in view of the four marks that weren’t canceled. The initiator of the cancellation proceedings did supply figures but did not provide receipts and invoices to substantiate their claims.

In consequence, an award of 6000 Shekels and legal costs of 20,000 Shekels are appropriate.

COMMENT

I disagree with Ms Bracha’s logic as per the sight and sound of the marks. The goods within the shop are not sold side by side. The ambiance within the outlets may be different. The question is whether people arranging to meet at ‘SiCafe’ in, say Tel Aviv, could find themselves in different outlets and whether adverse publicity such as the consumer program report, or, for arguments sake, an incident involving a customer suffering an allergic reaction, a report regarding cockroach or rat infestation or an incident reported in the paper regarding Kashrut infringement in one chain could adversely affect the business of the other chain. I think that there is a real danger of this.

Si Café’ is a rebranding effort from Sigafreido Espresso Bar. Is it unlikely that a different logo might be considered updated packaging? Logos and packaging change over time. This is appreciated by the trademark office since no issue is ever totally put to rest and changing circumstances can result in a previously resolved dispute flaring up again and requiring a further ruling and possibly a different resolution.

In the case of Eden water, the word phrase Nature’s Champagne in an advertising slogan for still mineral water was considered a serious infringement. There was obviously no likelihood of confusion. There was, however, perhaps a case of ‘dilution’. A similar sounding mark can have this affect. An invitation for a business meeting at Sicaffe may sound less attractive to someone who stops for a coffee and a bag of chips at a self service cafeteria with a similar name.

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