Coexistence Agreement Rejected and Attorney Accused of Conflict of Interest

Kennedy Electricity and Assets Ltd filed Israel Trademark Application Number 246560 for “Belissima”.

Belissima

The application was filed on 15 May 2012 in class 8 for “hair straighteners, hair removers and hair curlers, electrical tongs, shavers et al.” and for hair dryers in class 11. The original application was for a somewhat wider range of goods, but this was narrowed in response to an office action on 31 July 2014.

Bellisima ImetecBefore this mark was registered, the Tenacta Group S.p.A. filed Israel Trademark Application Number 251952 for “Belissima Imetec”. The application was filed on 26 July 2012 under International Application Number 1140345 claiming priority from European trademark number 011073319, and was submitted for “Electric and electronic apparatus and instruments for curling, cutting, waving, straightening, styling, trimming hair; electric epilators; electric pulsed light epilators; electric razors; electric and non-electric apparatus for cutting nails; manicure sets, pedicure sets; electric apparatus for removing, softening nails, corns, bunions ; in class 10 for Ultrasound electric apparatus for medical purposes for cleaning the face and reducing wrinkles; electric radio-frequency apparatus for medical purposes for reducing wrinkles and toning the skin; electric apparatus for the care of skin and acne; electric apparatus for medical purposes which vibrates or rotates for the cleaning of the face, body and for massaging the body; electric apparatus for medical purposes for microdermabrasion and electrostimulators for toning the body”; in class 11 for “hair drying apparatus, electric; heated or LED apparatus for reducing blemishes or imperfections on the skin; electric apparatus for drying nail polish or for decorating the nails; steam facial apparatus (saunas)” and in class 21 for “Electric and non-electric apparatus for removing make-up; brushes and sponges for body care; combs”.

On 7 September 2015 the Trademark Department at the Israel Patent Office informed the applicants that in view of their not reaching agreement, a competing marks procedure would ensue under section 29 of the Trademark Ordinance 1972. On 21 September 2015 the parties submitted a joint statement to the effect that they did not consider the marks confusingly similar and would cooperate to prevent confusion and mistakes by the public. On the basis of this agreement the parties requested that the Section 29 objection be removed.

On 22 October 2015, the Examiner refused to retract the competing marks assessment and to allow coexistence, resulting in the case being transferred to the Commissioner for judicial review.

edward scissorhands

On 9 November 2015 the parties submitted their coexistence agreement to the Commissioner of Patents and Trademarks. The parties agreed between themselves that the marks could be registered in parallel. The Tenacta Group undertook to only use the term Belissima in conjunction with either Imetec or Italia to differentiate between the marks. The parties stated that the term Imetec is a trademark that is associated with  the Tenacta Group. Furthermore, the parties undertook to clarify any confusion, should it occur.

In her decision of 18 November 2015, the Deputy Commissioner Ms Jacqueline Bracha rejected the coexistence agreement. In that decision she ruled that:

From the agreement it transpires that not only is there no difference in the goods sold under the two marks, but that the first applicant (Kennedy Electricity and Assets ltd.) would be the distributor of the Tenacta Group’s products.

So the parties were invited to state their claims.

sweeneytoddOn 2 March 2016 the parties submitted a joint notice that the first applicant (Kennedy) will remove all goods in classes 8 and 11 from their application, and the Patent Office was asked to reconsider its ruling in light of this development.

In her ruling of 3 March 2016, Ms Bracha stated:

“After reviewing the details of the goods covered by the two marks it is possible to accept the coexistence agreement on condition that ‘combs’ are removed from the list of goods in class 21 for the 251952 mark and that the 246560 mark be combined with Kennedy’s logo and only used therewith. These conditions are intended to protect the public from confusion since the relevant public and the distribution channels are identical.”

Following this decision, the parties submitted additional notices. On 10 March 2015, the Tenacta group announced that its application was only for the stylized mark shown above that includes the term INTETEC and that its mark was for registration in classes 10 and 21 only, and that Kennedy was not attempting to register its mark for goods in those classes. Consequently there was no reason not to allow coexistence. However, Kennedy claimed in a notice of 13 March 2016 that it was not prepared to limit its application to goods carrying the Kennedy logo together with the stylized Belissima mark since it was not marketing the Belissima brand under the Kennedy logo, and they requested reinstatement of the competing marks procedure.

Following Kennedy’s submission, Ms Bracha gave the parties two months to submit their evidence. Some days later, the Tenacta Group again requested coexistence of the marks. On 18 April 2016 Ms Bracha again requested that the parties submit their evidence. On 19 April 2016, the Tenacta Group restated that the parties had reached agreement and that the marks could coexist. On 20 April 2016 Ms Bracha ordered the Tenacta Group to clarify how their notice fulfilled her request. In the same decision it was clarified that this clarification did not extend the deadline for submission of evidence. On 2 May 2016, the Tenacta Group detailed why coexistence was in order.

On 11 May 2016, Kennedy submitted their evidence and summarized their case. In paragraph 11 of the summary they stated that if the Patent Office declined to allow coexistence, the Tenacta Group would withdraw their application and allow  Kennedy’s mark to proceed to registration.

On 17 may 2016, Ms Bracha announced that the period for submitting evidence had past and that the parties were invited to a hearing where Kennedy’s statement could be cross-examined. Such a hearing was held on 16 June 2016.

The normative framework

Section 29 of the Ordinance orders the Commissioner to choose which of two competing marks should prevail:

(a) if different applicants file separate applications for identical or confusingly similar trademarks for the same goods or for goods in the same class, and the later filed application is filed before the first filed application is examined, the registrar may refuse to register the marks unless the parties come to an agreement acceptable to the Registrar, and in the event of the parties failing to reach an agreement or the agreement not being acceptable to the registrar, the registrar may divide which mark should continue to examination, providing justification for the decision.

The above section allows the parties to negotiate an agreement, however the negotiated agreement requires the Registrar’s endorsement and in the absence of such endorsement, the Registrar decides which mark should prevail.

Section 30 of the Ordinance discusses the Registrar’s authority to allow parallel registration of similar marks. This section applies to competing marks and to a mark that is apparently non-registerable in view of a previously registered mark due to Section 11(9) of the Ordinance (see Seligsohn “Trademark Laws and Laws that are Close to them” 1973, page 55.

Registration in Parallel Under Section 30

Throughout the proceedings before me the parties requested registration in parallel. Section 30(a) states:

If the Registrar sees that there was parallel usage in good faith, or other extenuating circumstances that according to the Registrar justifies registration in parallel of identical or confusingly similar marks in the name of different applicants, he may allow registration in parrallel with any limitations as seen fit.

 After examining the agreement reached by the parties, the oral and written claims made by the parties and the evidence submitted by Kennedy, Ms Bracha did not see fit to allow registration in parallel since it could mislead the public.

As the parties themselves claim, after the amendments to the lists of good, the applications no longer relate to goods in the same categories as defined by section 17b of the Law. Nevertheless, sections 29 and 30 relate to goods in the same category or goods of the same type. As expounded in the Automator decision the criteria for classification are the goods, the nature of the goods and their composition; their purpose; how they are used and marketing and distribution channels, see Sections 29  and paragraph 30 of the Automator Italia S.R.L. vs. M.B. Metal, 11 March 1999. In that ruling, then Commissioner M. Goldberg explains that the phrase ‘of the same type’ refers to goods that are substantially similar despite being in different classifications, including goods and services, and that the assessment of similarity should be made in each case on its merits, considering inter alia, the lifespan and distribution channels.

The Commissioner’s discretion to register the marks in parallel is contingent on the equitable behaviour of the parties, to be fair to them and on the question of misleading the public to protect the public interest in not being mislead as to the origin of the goods.These things are well explained in Appeal 8778/04 Yotvata Dairies ltd. vs. Tnuva Agricultural Cooperative ltd. 30 April 2007. where Judge Rubinstein stated:

In decisions under this section the emphasis is placed on the innocence with which the parties chose the same trademark, and on the need to protect the public from being mislead or from unfair business practices (Friedman page 431). With regards to the innocence of the parties, we have related to this previously with respect to Section 29 of the Ordinance. In addition, we consider that in the circumstances, parallel registration is likely to mislead the public. The huge similarity between the marks, despite the appellant using their name Yotvata, the weight is on the term ‘Eshel’ and since we are relating to the same goods, there is a very large likelihood of misleading consumers, resulting in the appellant benefitting from the reputation of the respondent. See Hugo Boss page 671, re Conneticut Linsen. See also the Registrar of Trademarks in Kellogg Company vs. Israel Food Products (not published, but cited in Friedman page 432). “It has been established many times that prefixes carry more weight in the issue of similarity of marks. This is logical since the typical consumer scans rows of goods and stops on the first word or dominant graphical element.”  

Applying these considerations in our case leads to the conclusion that we are dealing with goods of the same type and that there is a real danger of misleading the consumer. This is still the case despite the fact that the amended lists of goods no longer overlap.

The goods that carry Kennedy’s mark are electrical devices for hair care, hair dryers and shavers.As is evident from Mr Harouny’s statement and cross-examination, the goods are primarily distributed through pharmacist chains. Mr Harouny was unaware of the Tenacta Group’s goods and did not know how they were distributed (see page 39 lines 10-16 of the protocol). Mr [Ha]rouny also declared that the Applicant’s mark implied Kennedy’s line as the source, for example, hair stylers and shavers that we market, hair straighteners and hair dryers and the like (see paragraph 22 of his statement), and that the first applicant (Kennedy) is developing the mark to widen the registration and the usage to include electrical body-care devices in general, in the various categories. See paragraph 4 of his statement) including brushes and home laser devices (page 45 of the protocol).

In addition, from the agreement between the applicants from 9 November 2015 it is clear that the parties considered collaborating to distribute the Tenacta Group’s devices via Kennedy’s channels. They agreed that if they failed to establish collaborate to distribute the Tenacta Group’s devices, the Tenacta Group would pay compensation to Kennedy (paragraph 4 of the agreement). It was required that Kennedy would distribute the Tenacta Group’s devices.

From Mr Harouny’s words, from the agreement reached and other considerations, it can be concluded that the parties themselves saw themselves as having overlapping or joint distribution channels and a similar client base.

OmissionMs Bracha notes that she has no evidence of the goods, distribution channels and clientele of  the Tenacta Group since they did not submit any evidence. She can only surmise that had  the Tenacta Group any evidence that would have supported coexistence, that they would have submitted it, since failure to submit evidence supports the assumption that the non-submitted evidence does not support the case made by the party failing to submit (see Appeal 9656/05 Naftali Schwarz vs. Ramanoff trade and building supplies ltd. 27 July 2008:

That and more. Sometimes the way in which parties manage their affairs in court may have evidentiary value., similar to circumstantial evidence and, and it is possible to give evidentiary weight to failure to produce evidence. Such behaviour, without a reasonable and believable explanation, act against the party acting in such a manner as it creates an assumption based on logic and life-experience, that failure to deny is an admission, and failure to provide contrary evidence is an admission that opposing parties evidence is correct. In this manner evidentiary weight to the opposing party’s case is provided by a failure to submit evidence. Where a party has a reasonable explanation for not submitting testimony of a witness or not submitting evidence, the explanation can destroy the counter assumption created by not providing evidence. (see Appeal 55/89 Kopul (self driving) ltd. vs. Telecar Company ltd. p.d. 44(40 595 (1990). With respect to an opposer’s behaviour in a hearing, for example, refraining from submitting evidence, the court has determined on more than one occasion:

“… It is an established general approach of the courts that a party not providing evidence to the court that would help its case, where such evidence is on-hand and no reasonable explanation is given, one can deduce that were the evidence to be submitted, it would act against that party. This generalization is well rooted in both civil and criminal law, and where the evidence is more persuasive, the court can more certainly conclude more weighty and more extreme conclusions against the party failing to provide evidence. See Appeal 548/78 Jane Doe vs. John Doe., p.d. 35 (1) 736, 760 (1980) and Appeal 2275/90 via Dor Construction ltd. vs. Rosenberg, p.d. 47 (2) 605, 614 (1993).

The Deputy Commissioner emphasizes that the Tenacta Group received multiple warnings to submit evidence to enable her to determine which mark takes preference should the co-existence agreement be unacceptable. She considers the likelihood of third-party confusion as an objective issue of the specific case. During the hearing, the Applicant’s counsel (Hess Law Offices) requested to submit a collection of web-pages from client’s website, but without a witness who could be cross-examined at to their veracity. At that stage and in light of Kennedy’s opposition to them so-doing, the Deputy Commissioner refused to allow the pages to be submitted, considering them worthless without a witness to support them (see Kedmi “On Evidence, Updated version of 2009, Vol 2, on pages 908-909).

Consequently, the Deputy Commissioner saw no alternative but to conclude that the distribution channels, clientele and type of goods is similar and co-registration could lead to misleading the public. It is emphasized that even where the goods are not identical and even where there are slight differences in the mark, there is a danger of confusion. This is particularly the case for goods aimed at the home user rather than at professional hair-dressers.

This is even the case for medical goods intended for hospitals. This issue was discussed in the 239619, 239622 Biomatrix vs. Biometrix case, 23 February 2014. In that instance, co-registration for trademarks for different goods was not allowed because of the likelihood of confusion arising from the similarity of the marks, the distribution channels and clients, despite the parties requesting coexistence and stating that they would avoid overlap.

The matter was also related to by the District Court in an appeal to the above case, see 48837-03-15 Biosensors Europe S.A. vs. Commissioner of Patents, Trademarks and Designs, 22 February 2015. The Court emphasized the need to protect the public from mistaking the origin of the goods when examining a coexistence agreement under section 30 of the Ordinance:

As previously mentioned, in the Yotvata Dairy case section 30 of the Ordinance was explained that in rulings on this matter emphasis will be placed on the need to protect the consumers from trademarks so similar as to create unfair trade (see paragraph 40 of Judge Rubinstein’s comments there). It is not by chance that the parties have reached an arrangement for co-registration because this creates a market domination and limits approaching other players. the result is damage to free market competition and a potential of unfair trade.

That said, the Commissioner is able to allow co-registration ‘under conditions and limitations that he sees as correct’. In light of the parties submission, this option was considered and certain conditions were proposed as being acceptable to the Patent Office. Since the parties have turned down the conditions that the Deputy Commissioner has found to be correct to prevent misleading the public, she does not consider that the current applications are sufficiently different to make misleading the public no longer an issue.

It is stressed that when considering co-registration under Section 30, as when considering which mark takes precedence in competing marks proceedings under Section 29, the equitable behaviour o

f the parties is considered. see paragraphs 13 and 14 of the Biosensor ruling.

Note well, to favourably consider co-registation of trademarks under Section 30, the parties have to provide evidence that proving that their case is exceptional and co-registration is justified. See Judge Schitzer in Appeal 6473410-13 Japan Tobacco inc. vs. Philip Morris Products S.A. (18 May 2014):

Firstly, it is noted that the authority to allow coregistration under Section 30 is an option and not a requirement. Within the general balance of evidence, as stated above, the Appellant has failed to prove ‘extenuating circumstances’ that justify coregistration under Section 30 of the Ordinance, similarly to not having proven preference under Section 29 of the Ordinance. In fact the opposite, the requirement of ‘extenuating circumstances’ justifies not allowing co-registration by two different companies. 

From that stated previously, co-registration carries a risk of misleading the public and in the absence of convincing evidence that there is no likelihood of confusion, co-existence agreements are rejected.

Section 29 of the Ordinance

Having ruled that the two marks may not coexist, the Deputy Commissioner then went on to relate to which mark should take precedence.

As well established, the considerations that determine which application proceeds to examination are the extent of use in Israel of the marks and the equitable behaviour of the applicants. Only minimal weight is given to the issue of who filed first. See the Yotvata, Sabon Shel Pa’am and A Star is Born decisions.

The competing parties have the same onus to prove their case. See Appeal 460/87 Fuji Electronics vs. Commissioner of Patents et al. p.d. 42(2) 485. Furthermore, it has been ruled that parties that do not prove their advantage cannot prevail in such proceedings. See the Love Parade Decision, 124738-9, 127410, 127415 Musika Plus vs. Love Parade Berlin GmbH,  4 June 2007.

Of these three tests, the extent of use and equitable behaviour are the more important. See Seligsohn 1972, page 53. The first to file is only decisive in very rare cases (see Love Parade paragraph 14). this is not the case here.

Equitable Behaviour in Choosing the Marks

Kennedy provided evidence testifying to their equitable behaviour in the form of an Affidavit from Mr Yoni Zadok who was approached by Mr Harouny 12 years earlier to design the requested logo. Mr Zadok affirmed that Mr Harouny had approached him back then, but had no idea why the specific name was selected.

Mr Harouny was cross-examined about the choice of name. It was insinuated that he was aware of the Tenacta Group’s brand and chose the brand name for that reason. The Deputy Commissioner was very unhappy with this line of questioning in light of the fact that Wolf Goller Bregmanת Kennedy’s attorneys, had represented him in the past in the present matter, and it is likely that information obtained from him was now being used against him. That as may be, it is not proven that the mark was chosen by Kennedy with knowledge of the Tenacta Group’s mark, and it is not even likely since in all the years that it was active abroad, the Tenacta Group was not active in the Israeli market and did not have any reputation locally.

the Tenacta Group did not submit any evidence to explain their choice of name. Their attorneys claimed that the IMETEC element was the original name of the company, and the name was changed, but no evidence was submitted to support this. In the summary of their statement of claims, the Tenacta Group claimed that “the element IMETEC is a famous mark identified with them, and this may be proven by examination of their trademarks, goods and business.” However, since no evidence was submitted to support this contention, it is not proven.

From this it may be determined that Kennedy chose their mark in good faith, whereas the Tenacta Group did not provide any evidence to support a conclusion of good faith on their part.

Scope of usage of the marks in Israel

As far as Kennedy’s usage of their mark, Mr Harouny testified about 12 years continuous usage of the mark for electrical hair care products. He also testified that the goods are marketed across the country in both chemist and supermarket chains. Mr Harouny appended many invoices from the past three years to his affidavit, showing sales of some 700,000 items with a turnover of some 35-40 million shekels. Goods bearing the mark were appended and his claims were not undermined by the cross-examination.

The second applicant did not submit evidence of their activity and did not claim to be active in Israel, no evidence was submitted of activity abroad, although they claimed to be active in 42 countries. It is clear that legal council may not testify on behalf of the client – see Dr Gabriel Kling, Ethics in Advocacy, 2001, page 372. In this regard one cannot learn from the proposed coexistence agreement about actual or predicted usage. the only thing one can learn about the goods bearing the Tenacta Group’s mark is the list fo goods for which registration was sought. In this regard, reference is made to paragraph 37 of the AUTOMOTOR decision:

The basis of submission of a trademark request is usage of the mark of intended use. In the list of goods, the Applicant testifies about the goods marketed or intended to be marketed under the mark. As far as Section 29 is concerned, the Examiner only has what is shown in the list of goods on the application form. He is not allowed to assume that the actual range goods used with the mark is narrower than the protection sought, even if the applicant provides evidence that indicates this to be the case. to the extent that the list of goods is more general, so is the market segment for which usage is sought by attaining the monopoly [sic] for which the mark is sought.In light of this, there is a greater risk of the Applicant finding himself involved in a Section 29 proceedings or in a Section 11(9) objection to registering a mark for similar goods of the same category If, for example, the Applicant had originally restricted his application to piercing and cutting tools and the like, as he did after the Section 29 proceeding was initiated, rather than spreading over the entire list of goods available under category 7, he would have prevented the proceeding being initiated against him.

 To Mr Harouny who is familiar with the market, there was no knowledge of usage by the Tenacta Group’s mark in Israel from when it was filed four years earlier to the present day, and thus it is not clear that there is intent to use the mark in Israel.

From that above it transpires that Kennedy is the only party using their mark in Israel and so their position is stronger i this regard.

Closing remarks

Kennedy filed their request first. they have used their mark for a continuous period. the Deputy Commissioner does not think that the cross-examination fo Mr Harouny has provided a basis to conclude that Kennedy was acting in bad-faith in their choice of mark, although hints to that effect were raised in the cross-examination.

However, in the same cross-examination it transpired that Adv. Bregman who now represented the Tenacta Group had previously represented Mr Harouny it further transpired that Adv. Bregman had approached Kennedy and suggested that they register their marks in Israel. It is not clear whether the information regarding Kennedy’s registration came to him due to his having previously represented Mr Harouny. See protocol of the hearing, page 32 lines 22 to page 33 line 14.

Due to their familiarity with Adv. Bregman the parties signed an agreement between the parties where Adv. Bregman apparently represented both parties:

T. Listen, he is present, you, we have reached a state such that he apparently wants to use my services – this is what I understand, I don’t, I use the mark. This is what you advised me.

On Page 35 lines 5- 10:

Sh. We signed an agreement, you advised me, my agreement was a business agreement that I saw as economical and I did not want o find myself where We are now, You were my counsel I and I listened to you, I went in accordance with –

Deputy Commissioner: I don’t understand, Adv. Bregman represented you in the period of the agreement???!!! [MF – My punctuation for dramatic effect ;-)]

The Witness, Mr Harouny: I don’t have a lawyer. I know him and I asked him what to do… why did we get to this situation? He said that it was best for us to do 1 2 3, I thought, consulted and agreed. 

Deputy Commissioner: So Adv. Bregman represented two, sorry. Sir represented both sides in the period of the agreement???!!!

The Witness, Mr Harouny: No he did not represent, Cilla.

Adv. Bregman: certainly not, Patent Attorney Cilla [Hess] she represents him.

Witness, Mr Harouny: Cilla, but we were in communication as acquaintances, and I didn’t expect that he would treat me in this manner, and would bring me to these levels.

 Sh: Maybe Ms, I will simply clarify that this is the reason that I said earlier what I said, that Eitan and I know each other for 10 years if not longer, and that I represented him in other issues. Eitan is angry now. I understand that this is why he’s said what he’s said, but our relationship over the years was a good one.

Deputy Commissioner: No, the relationship does not interest me, it is irrelevant.

….

Deputy Commissioner: I wanted to know if on signing the agreement…

Adv. Levine: No, he’s angry. Eitan is angry,

Deputy Commissioner: Sir represented both parties.

The Witness, Mr Harouny: No, I got excited (emotional?) as I am not used to sitting [as a witness?]

Adv. Bregman, No, certainly not. Certainly not.

….

Adv. Bregman: But My Lady, since we know each other for years, Eitan, with [Adv] Cilla [Hess]’s agreement phoned me several times and we talked. And Cilla was obviously not in the secret of the matter but was in the matter and said what she needed to say.  

Deputy Commissioner: Oh….Kay…

Adv. Bregman: And in the end it was the correct thing, the direct connection between Eitan and me.

The feeling that information in the hands of the attorneys of the Tenacta Group (Wolf Bregman Goller) due to their long-term representation of Mr Harouny in this proceeding that became adversarial leaves one feeling uncomfortable. For usage by a lawyer of information regarding a former client against that client, see Kling page 172.

In conclusion, co-registration under Section 30 is rejected.

Kennedy’s mark will continue to examination and the Tenacta Group’s mark is withdrawn. In light of agreement between the parties, no costs are awarded.

Competing Marks Belissima and Bellissima Imetec, Ruling by Ms Bracha of 31 July 2016.

COMMENT

I find Adv. Bregman’s actions problematic. I wait to see if a complaint is filed for befriending the second applicant and selling him up the river. |that as may be, if Kennedy is distributing and providing maintenance in Israel for the Tenacta Group’s products, I wonder why the Tenacta group didn’t simply give Kennedy an exclusive license. This should have kept the Patent Office happy regarding likelihood of confusion, and the parties could have worked out the details between themselves.

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