CERTIFIED INTERNAL AUDITOR
מבקר פנימי מוסמך מטעם לשכת המבקרים הפנימיים – ישראל
This ruling relates to certification marks. It has ramifications for marks for the word Kosher and the like. The background is a fairly common occurrence where a local organization has ties with an international body and there is a dispute between them as to whether the local organization merely cooperates with the international body or is a branch thereof.
Israel Trademark Number 238007 for “CERTIFIED INTERNAL AUDITOR” was filed on 12 January 2011 by the Institute of Internal Auditors Inc. in Class 41 and covers “Testing services, namely developing, constructing and administering tests and testing programs for candidates as internal auditors.”.
On 13 September 2012, the Organization of Internal Auditors – Israel (OIA) (R.A) filed a certification mark number 249443 in Class 41 for “מבקר פנימי מוסמך מטעם לשכת המבקרים הפנימיים – ישראל”. Literally the mark means “Internal Auditor, Licensed by the Board of Internal Auditors”. The mark covers a virtually identical set of services.
On 24 September 2012, the Israel Patent Office declared a competing mark proceedings. Since the parties failed to come to an understanding, on 19 February 2013 they were asked to present their evidence.
On 2 March 2014 a hearing was held by the Israel Patent & Trademarks Office. The parties were asked to relate to the ramifications of 18306-07-10 The Non-Profit for Farm Animals vs. Man Hateva Beerotayim LTD et al. from 6 May 2013, which issued after the two trademark applications were filed. The parties chose to relate to this in their summations, which were filed in September 2014.
The Institute of Internal Auditors Inc. was founded in 1941 in the United States as a professional organization for internal auditors. Over the years, its activities widened and it s reputation in the US and elsewhere was strengthened. Currently it claims 175,000 members worldwide. It publishes the Internal Auditor journal both on line and in print form, and has a number of registered trademarks in Israel including. Israel Trademark No. 238471 for IIA in classes 35 and 42, Israel Trademark No. 238152 in classes 35, 41 and 42, Israel Trademark No. 235863 for CIA in class 41, all from 2012, and earlier graphic marks 88935 and 88936 both in class 35 from 1996.
The Organization of Internal Auditors – Israel (OIA) (R.A) started its activities in Israel in 1960 and was a registered organization since 1984. Its main purpose is to provide a professional organizational framework to represent, advance and train those practicing internal auditing in Israel. The organization claims 1200 members and claims to be legally recognized in the Law of Internal Auditors 1992.
Both parties acknowledge business dealings from the 1960s. They signed business agreements in 1980, 2004 and 2007. In 2011 the Institute of Internal Auditors Inc. gave the Organization of Internal Auditors – Israel (OIA) notice terminating their business relationship. There is a disagreement between the parties as to the nature of the business relationship up until that time. The Institute of Internal Auditors Inc.alleges that the Organization of Internal Auditors – Israel (OIA) was a local chapter of their international organization. Whereas the Organization of Internal Auditors – Israel (OIA) claims that it had a simple business relationship and it had full discretion regarding its activities in Israel.
Statement of Case of the Institute of Internal Auditors Inc.
- The Institute of Internal Auditors Inc. claims that their marks take precedent over the Organization of Internal Auditors – Israel (OIA) as they filed first.
- They claim to have used their mark in the US since 1972 and via the Organization of Internal Auditors – Israel (OIA), since 1993,whereas the Organization of Internal Auditors – Israel (OIA) had not used their mark at all.
- The Institute of Internal Auditors Inc. claims that the Organization of Internal Auditors – Israel (OIA) are acting in bad faith. The Organization of Internal Auditors – Israel (OIA) was founded as a branch of the Institute of Internal Auditors Inc., and it represented itself as the only representative of the Institute of Internal Auditors Inc. in Israel, throughout the 1980s and beyond. The Organization of Internal Auditors – Israel (OIA) used the standards, the Code of Ethics and the trademarks of the Institute of Internal Auditors Inc. for financial gain. Furthermore, in the signed agreements between the parties, the Organization of Internal Auditors – Israel (OIA) was obliged to help the Institute of Internal Auditors Inc. file their marks in Israel, but failed to do so. Only in 2011 following the Institute of Internal Auditors Inc. canceled the agreement on the basis of alleged breach of contract did the Organization of Internal Auditors – Israel (OIA) claim independent standing and file Israel Trademark Application No. 249443 which was inequitable behavior.
- The Institute of Internal Auditors Inc. claims that their mark is registerable under Sections 8a and 11(10 of the Trademark Ordinance. It has inherent distinctiveness. It also has acquired distinctiveness due to the long usage and is thus registerable under Section 8b of the Ordinance as well. The Institute of Internal Auditors Inc.denied that following the farm animals decision, its mark had become generic since the word certified had synonyms.
- Finally, the Institute of Internal Auditors Inc. claimed that their mark was registerable quelle telle on the basis of the US mark.
Statement of Case of the Organization of Internal Auditors – Israel (OIA)
- The Organization of Internal Auditors – Israel (OIA) claims precedence since it has more activity in Israel as the Institute of Internal Auditors Inc. have failed to show usage.
- The Organization of Internal Auditors – Israel (OIA) claims to be recognized as the official organization of Internal Auditors in Israel and that its activities are and always were independent. It claims that through its efforts it has developed a reputation for itself and its marks, and its relationship with the Institute of Internal Auditors Inc. are and always were merely cooperation.
- The Organization of Internal Auditors – Israel (OIA) claims to have advanced the legislation in Israel and to have statutory rights regarding Internal Auditing in Israel and that its educational program is recognized as further education in the relevant laws.
- The Organization of Internal Auditors – Israel (OIA) claims that following the Farm Animals decision, the application by the Institute of Internal Auditors Inc. is non-registerable as it lacks the distinctiveness required by Section 8a of the Ordinance. However, the Organization of Internal Auditors – Israel (OIA)’s mark is inherently distinct due to the identification sign noting that it is from the Organization of Internal Auditors – Israel (OIA), thereby making it easy for the public to differentiate between services they provide and competing services. They further allege that the Institute of Internal Auditors Inc.’s mark is descriptive and widely used in the field and therefore Non-registerable under Section 11(10) of the Ordinance. Additionally,since it is without acquired distinctiveness under Section 11(10), it also cannot be registered under Section 8b if the ordinance as it is not registerable. In contradistinction, the service mark of the Organization of Internal Auditors – Israel (OIA) does not attempt to monopolize the terms Registered Internal Auditor as it only claims these terms as part of a mark including the certifying body.
- Since the Institute of Internal Auditors Inc.’s mark is wholly generic, it cannot be registered under Section 16(2) on the basis of the US mark.
- The Organization of Internal Auditors – Israel (OIA) claims that as they monitor and have a mechanism, their mark is a certification, whereas the Institute of Internal Auditors Inc. do not have a mechanism behind the certification and thus their certification is not a certification of quality.
- The Organization of Internal Auditors – Israel (OIA) further claims that the proposed mark of the Institute of Internal Auditors Inc. is against the public order since it is confusing and prevents fair trade.
- Finally, the Organization of Internal Auditors – Israel (OIA) accuses the Institute of Internal Auditors Inc. of inequitable behavior since during the examination of Israel Trademark No. 154515 they had to file a disclaimer fo the term “Certified Internal Auditor” to get that mark registered.
On 16 July 2013, the Institute of Internal Auditors Inc. filed an affidavit from the legal representative and Vice Chairman of the organization in the US and one from Eliad Shlomovitz, a trainee of the Israeli legal counsel. The affidavit included copies of the 2004 and 2007 agreements and the letter terminating the relationship, publicity regarding the mark abroad and copies of the various trademark registrations including those in Israel.
On 2 July 2013, the Organization of Internal Auditors – Israel (OIA) filed an affidavit of Mr Mordechai Shnabel, the president of the Organization, copies of programs taught at various seminars and certificates issued to graduates of such courses, agreements between the organizations from 198 2004 and 2007, the constitution of the organization, the syllabuses for Internal Auditors and various agreements between the Organization of Internal Auditors – Israel (OIA) and third parties.
Section 29 states that:
Where separate claims are made by different persons to be registered as proprietors respectively of identical or similar trade marks in respect of the same goods or description of goods, the Registrar may refrain from registering any such persons until their rights have been determined by agreement between them approved by the Registrar. In the absence of such agreement, the Registrar shall refer the dispute to the Supreme Court.
Where a competing marks proceeding is initiated, the Israel Trademark Office considers: (a) which mark was filed first, (b) the usage of the marks and (c) good faith or the lack of it. See Yotvata, Malchi vs. Old Fashioned Soap 2000 and the Star is born rulings.
The Registrar decides which mark takes precedence and the question of registerability is not addressed until the mark taking precedence is decided. See Bagatz Fromein and Sons LTD. vs. Pro-Pro Biscuits LTD., PD 19(3) 337, where Judge Zusman ruled that a proceeding initiated under Section 17 of the ordinance (now section 29) is NOT designed to determine if a trademark will be granted. The proceeding is based on the assumption that both marks are registerable. Only later , on a mark registering and being opposed is registerability considered.
Furthermore, Judge Zusman ruled that the Registrar could initiate a competing marks proceeding only if he were prepared to assume that both marks were registerable per se if the competing mark was not filed. Otherwise it is pointless deciding which mark should be examined first.
In Bagatz Al Din vs. the Registrar of Trademarks PD 35(2) 187, on 189 Judge Aharon Barak repeated this ruling and stated that the registrar could decide that neither mark may be registered, and endorsed Zusman’s view that only if both marks were per se registerable was the exhausting competing marks procedure appropriate.
The case-law clarifies where, instead of a competing marks procedure, the judicial body can decide that a mark is non-registerable. The conditions are:
- the parties themselves raised non-registerability issues
- the parties had an opportunity to relate to registerability issues
- the parties knew that during the competing marks procedure the issue of registerability would be addressed.
Thus the Registrar may relate to registerability per se in a competing marks procedure. Deputy Registrar Israel Axelrod related to this in Yotvata vs. Tenuva regarding Eshel, and the Supreme Court endorsed his ruling. Similarly the issue was raised concerning Jerusalem Winery.
In this instance, the parties themselves each raised validity issues, specifically Sections 8 an 11(10) and the issue of registerability in the light of the Farm Animals decision was raised in the evidence stage. Furthermore, the adjudicator Ms Yaara Shoshani-Caspi noted in the hearing that she would relate to this issue. Thus, as a preliminary matter, before relating to which side prevails in a competing marks proceeding, Ms Shoshani-Caspi addressed the issue of registerability of each of the marks per se.
Section 1 of the Ordinance (definitions) states that:
A certification mark is defined as something intended to serve someone not providing a business regarding the sources of goods that he has some interest in, their components, method of manufacture, quality or some other property, or to provide assurance of their quality, nature or type.
There is no disagreement that the marks in question are intended to certify internal auditors. From the protocol, the marks are not intended to certify the services provided by either party, but rather to indicate the type and quality of service provided – specifically training and licensing of internal auditors. Therefore, it is clear that they are certification marks as per Section 1.
In Section 14 of the Ordinance the criteria for issuance of service marks states that:
The Registrar can authorize registration of a certification mark if (a) he is convinced that the applicant is able to provide the services covered, (b) a service mark can be registered even if it lacks inherent distinctiveness as per Section 8(a) and (c) such marks cannot be transferred without the Registrar’s authorization.
Thus certification marks are different from regular trademarks which require inherent or acquired distinctiveness.
The Farm Animals ruling (which issued after these applications were filed) relates to the distinctiveness requirement for certification marks. Nevertheless, Ms Shoshani-Caspi considers its teachings should be applied here. In the Farm Animals decision, Judge Amiram Binyamini related to the application of Section 14b to the term Free (Range) Eggs, and ruled that despite the Section of the Ordinance, service marks nevertheless require a distinctive characteristic. They do not have to allow indication of the supplier. Nevertheless, they have to be able to distinguish between services certified by one mark owner and those by another. The ruling states:
If so, one asks how Section 14b of the ordinance allowing certification marks lacking distinctiveness as per Section 8(a) should be interpreted. Although there is a lack of clarity in the Section, one cannot but conclude that the intention of Section 14b is not to give a blanket allowance for Service marks to lack distinctiveness, but only to be lenient regarding the requirements of Section 8a which enables differentiating between one provider and another. This specific requirement is not relevant for certification marks, since the owner of the certification mark is not the owner or supplier of the goods or the manager of the business. This is clear from the definition in Section 1.
From here, Section 14b is intended to provide a dispensation to certification marks from having a distinctive nature as per section 8a (indication of origin) but not from being distinctive.
….from the above, it is clear that certification marks are required to be distinctive, not of the supplier but of whether a good is certified or not.
Thus certification marks, though not requiring to indicate the origin of the good, are, nevertheless bound by Section 11(10).
A mark consisting of numbers, letters or words, that are used to mark or describe goods, types of goods or their quality cannot be registered unless they have distinctiveness as per Section 8b or 9.
Thus Section 11(10), when interpreted as per the Farm Animals decision, prohibits a service mark that is generic or widely used from being registered, even if it has acquired distinctiveness due to many years of use.
The Farm Animals decision reiterates the 5792/99 ruling regarding Family magazine that classifies marks as generic, descriptive, indicative, random and imaginary, and explains that generic marks cannot generally be registered.
Citing 144/85 Klil vs. Commissioner of Patents, the decision goes on to note that as a mark is more descriptive, it will require more indication of acquired distinctiveness due to actual usage to be registered, and for a descriptive mark to be monopolized, a great deal of evidence of acquired distinctiveness is required.
As to Free (Range) Eggs, the mark was considered as lacking inherent distinctiveness and being more descriptive than indicative, and being generic in the industry since there is no other way of saying Free Range than be saying Free Range. Consequently the mark should be available to all. Furthermore, there was not enough evidence to prove acquired distinctiveness to overcome the inherent lack of distinctiveness.
In summary, a certification mark needs to be inherently distinctive as to the certifying organization and not descriptive or generic for the products unless it has acquired distinctiveness. If a certification mark fulfills these conditions, it may be registered. Otherwise, it should be examined in accordance with Section 14 of the Ordinance.
In this instance, the term Certified Internal Auditor cannot be considered a Service Mark as it does not indicate the service provider. It can be considered as a certification mark only if it can be used to indicate whether a service provider is certified or not. Since it lacks inherent distinctiveness, it cannot be registered. It does not have the power to indicate the certifying body. It does not include a logo or something else linking it to the certifying body. The applicant does have other marks that indicate who the certifying body is, but the requested mark does not. It does not enable a third party to know who is certifying the service and to distinguish between different certifying bodies. Thus, when interpreting the Ordinance in the light of the Farm Animals decision, it cannot be considered registerable.
Furthermore, the term Certified Internal Auditor is descriptive of the services provided, i.e. training of internal auditors. Therefore under Section 11(10) of the law, such a mark cannot be registered. the wording of Section 11(10)of the Ordinance teaches that marks consisting of letters of numbers that are laudatory or descriptive are difficult for consumers to see as an indication of origin and should remain in the public domain and not become private property. The first mark is not stylized. The words are taken from a dictionary and cannot become private property – See the 2673/04 Copy To Go ruling. The phrase “Certified Internal Auditor” consists of the descriptive “Internal Auditor” to which the term “Certified” is added. It does not indicate who is doing the certification. The evidence submitted is insufficient to conclude that the certifying body is well known and established or that the mark is well known. Applicant’s arguments that there are synonyms for certified are not persuasive.
Thus allowing the first mark to be registered is not in the public interest.
The second mark indicates the certifying authority as the “Office of Internal Auditors of Israel” which is a real and actual organization that is a registered non-profit. It is not disputed that they have trained and certified internal auditors. Nevertheless, the second mark does not satisfy Section 11(10) of the Ordinance since the term “Certified Internal Auditor” is included. Whilst it is true that marks should be considered as a whole and not analyzed into separate elements (see 5454/02 Tiv Tam vs. Ambrosa Pd 57(2) 438), and the Applicant is not trying to monopolize the term “Certified Internal Auditor” by itself, but only in the framework of the mark. Nevertheless, the intention of the trademark applicant is immaterial. This is a word mark that by including the terms “Certified Internal Auditor” effectively monopolizes the terms and will prevent others from using it since it is a significant part of the mark. Consequently this should also be left in the public domain.
Here again, the words “Certified Internal Auditor” are descriptive and directly relate to the services provided. From Farm Animals, the mark is descriptive and thus a priori non-registerable unless it has acquired distinctiveness under Section 11(10). However, the second Applicant has not yet used the mark and thus does not fulfill the conditions of Section 11(10). Were the mark stylized, it would aid their case.
Although the second applicant has demonstrated having a training program as required under Section 14a, since their mark is not distinctive, it cannot be registered.
The Institute of Internal Auditors Inc. filed first but this only provides a small advantage and cannot be decisive where the parties had a long term relationship. Were the marks registerable it would be difficult to determine which side takes precedence.
Ms Shoshani Caspi concluded that neither mark was registerable and this rendered moot the necessity to rule on the relationship between the organizations from 1960 to 2011. Both files were closed and the parties were ordered to pay their own costs!
Since Hebrew switches the order of noun and adjective, one could fairly relate to the 18306-07-10 The Non-Profit for Farm Animals vs. Man Hateva Beerotayim LTD et al. as ‘Animal Farm’ and it is tempting to do so.
This decision gives some substance to the recently reported suggestion in the Asos vs. Assos case, that the Registrar relate to one or other mark substantively and, if allowing it, that the mark then be opposable by the other party instead of having a competing marks proceeding. It certainly seems preferable to only debate who takes precedence if the marks in question are inherently registerable.