Following on the heels of the Izhimis family feud, we now report on a competing marks proceeding between Abu Shukra Import Export and Marketing Ltd and Strauss Coffee B.V.
Again, this relates to Turkish coffee. On 2 May 2013, Abu Shukra filed Israel TM application number 255526 in class 30 shown alongside.
This ruling relates to all over packaging designs being used as trademarks and to branding concepts. To my mind, it also raises issues of monopolies and market abuse, but this is beyond the competence of the adjudicator and commissioner to relate to, although I think judges might see things differently.
On 16 July 2014, but before Abu Shukra’s mark was examined, Strauss filed Israel TM Application No. 266680 for Coffee, roasted coffee, roasted and ground coffee and coffee substitutes, all in class 30, and also Israel TM Application No. 266683 for Turkish coffee, roasted Turkish coffee, roasted and ground Turkish coffee and Turkish coffee substitutes, all in class 30. Strauss Coffee’s marks are shown alongside.
[At this stage we note that Strauss Coffee owns the Elite brand among many others. Strauss employees 14,000 people in 20 countries. The empire was built on their Turkish coffee brand, but they also now own Sabra, the leading hummus brand in the US, are partners with Yotvata dairies and Yad Mordechai Honey – MF].
On 22 July 2014, Strauss requested expedited examination for various applications including the two in question, the request being supported by an affidavit from Mr Ronen Kurt, Strauss Coffee’s CFO.
Consequently, due to the similarity between Strauss’ and Abu Shukrun’s marks, the Patent Department initiated a competing marks proceeding under section 29 of the 1972 Trademark Ordinance. The Israel Trademark Ordinance also had section 11(9) issues with Strauss’ marks and Section 8a issues with Abu Shukrun’s.
On 1 April 2014, Rafit Abu Shukra, the main owner and CEO of the company, submitted an affidavit, receipts for the design of the mark and nine different packages that were claimed to show a single design commonality corresponding to the mark as common in the coffee industry.
Strauss submitted an affidavit from Kurt that related to Strauss Coffee’s business activities and usage of the marks over the years. It also related to Strauss Coffee’s marketing and advertising activities for these marks and in general.
Strauss also filed an affidavit from Mr Israel Olnik, the Israel representative of Millward Brown Research that related to results of two internet surveys that he had conducted. The surveys allegedly indicated that Strauss’ marks had clear design language that was associated with Strauss Coffee and that Abu Shukra’s mark was confusingly similar to Strauss Coffee’s.
Counter-evidence from Abu Shukra in the form of a second affidavit was submitted on 14 June 2015 and Strauss Coffee’s counter-evidence in the form of a second affidavit from Mr. Kurt and one from Mr. Zion Cohen, a technician at Strauss Coffee. This affidavit related to a visit by Strauss Coffee to Abu Shukra’s facility on 15 June 2003, and a visit from Abu Shukra representatives to Strauss Coffee on 2 December 2003.
On 1 May 2016 a hearing was held before Adjudicator of IP, Ms Yaara Shoshani Caspi, during which three additional packages were submitted at evidence. Both parties then filed their summations.
The Legal Question
The essential legal issue is whether a competing marks proceeding under Section 29 is appropriate? If so, which parties’ rights take priority in light of Section 29 and the case-law, and whether coexistence under Section 30 is permissible?
Abu Shukra’s Claims
Abu Shukra does not consider that their marks are confusingly similar to those of Strauss Coffee. This assertion is based on a number of visual differences that they consider prevent confusion. In this regard, Abu Shukra related to the case law and considered the triple test of the (1) appearance and sound of the mark; (2) the customers and distribution channels and (3) the everything else clause.
Abu Shukra notes that their product is much cheaper, and considers that this creates a difference between the marks. Furthermore, Abu Shukra claims to have heavily promoted their Eden brand whose name appears on their packages and this creates a difference between their products and those of Strauss Coffee.
Abu Shukra claims to have selected their mark in good faith, without attempting to ride on Strauss coffee’s reputation. Their target customers are Arab, whereas Strauss Coffee’s products are aimed at Hebrew speakers.
Abu Shukra notes that in 2010, Strauss Coffee representatives visited their factory, saw their packaging and did nothing. They consider that this should estoppel Strauss from preventing their using their logo due to the time passed. Abu Shukra also alleges that Strauss Coffee’s surveys are flawed. They noted that Mr Olinik admitted that the Israeli Arab sector was under represented in the population surveyed, and so they conclude that it cannot indicate the likelihood of confusion or [unfair] competition between the marks.
Strauss Coffee’s Claims
Strauss Coffee considers that the important issue is the extent of use which they claim gives them the upper hand. They have used packaging with the applied for marks since 2009, whereas Abu Shukra has only been using their mark since 2010. Strauss claims that their Turkish coffee packaging has had a common branding look since the 1960s and the current applied for marks reflect this general look. They consider that their marks are widely known by the public and are identified with them.
Strauss claims to have spent tens of millions of Shekels in marketing whereas Abu Shukra have not provided any evidence of incurring marketing expense or that their target population is indeed the Arab sector.
Strauss Coffee chose its trademarks in good faith, and these reflect 50 years of branding. They claim that Abu Shukra selected confusingly similar marks to ride on Strauss Coffee’s reputation.
Strauss notes that Abu Shukra filed first, but consider that this should be given minimum weight since in a competing marks proceeding, the issues of extent of use and good faith take precedent and the first to file is of secondary importance. What is more important than when the marks were filed, is when the marks were first used. They cited the Israel TM 251952 and 146560 Belissima, Belissima Imetec ruling, Kennedy Electrics and Property ltd. vs. Tenacta Group S.p.A.
As to Abu Shukra’s assertion of no likelihood of confusion and that the competing marks proceeding should not have been initiated, Strauss Coffee considers that the mere fact that the Examiner saw fit to initiate the proceeding is evidence that it was appropriate to do so and that likelihood of confusion should be considered with respect to the first general impression and this leads to the inescapable confusion that there is indeed a likelihood of confusion.
As to coexistence of the marks, Strauss Coffee considers this to be inappropriate in this instance since despite the obvious similarities and prima facie assumption that the marks could not both be registered, Abu Shukra did not refer to any extenuating circumstances that would justify this exceptional conclusion. Strauss alleges that the alleged different sector-territorial market segments are not justification for coexistence.
Strauss considers that their surveys show that their design elements have acquired distinctiveness and that Abu Shukra’s marks are confusingly similar. Allowing Abu Shukra’s marks to be registered would cause Strauss considerable damage, whereas forcing Abu Shukra to change their logo would not cause them damage.
Strauss has two applications. TM Application 266683 is a two dimensional logo, whereas 266680 is a three dimensional package.
The Adjudicator has chosen to consider 266683:
This ruling does not, therefore, relate to the registerability of the three-dimensional 266680 mark, which is a separate issue.
The marks were considered as being confusingly similar and so a competing marks procedure was initiated.
The Adjudicator was troubled that the Examiner had raised Section 11 and Section 8 objections against the Strauss Coffee and Abu Shukra marks respectively. This is problematic because the Competing marks proceeding is based on a prima facie assumption of registerability that, in view of the objections, is no longer the case. See Supreme Court 226/65 Fromein and Sons vs. Pro Pro Biscuit Ltd p.d. 19(3) 337 and Supreme Court 450/80 El Din vs. Commissioner of Patents p.d. 35(3) 187 on page 189. Where the assumption that the marks would otherwise be registerable is not the case, it seems more expedient to allow the applicants to individually prosecute their marks before embarking on a long, expensive and possible superfluous competing marks proceeding. See also the competing marks ruling concerning 262467, 262468 and 268703 Sons of George Shukha (Haifa vs. Fareed Khalaf Sons Company 27 November 2016.
After considering the marks, the claims of the parties and their evidence, The Adjudicator Ms Shoshani Caspi concluded that there was indeed a prima facie likelihood of confusion by the public. Both use pictures of coffee beans, a wavy gold line and large red and black areas, albeit in different areas, and a central coffee bean. There are other Turkish coffee suppliers that use similar motifs but Strauss takes legal action against them. The word Eden does little to prevent misleading since the public would assume that it is a variant coffee blend supplied by Strauss. The Adjudicator therefore concluded that a competing marks proceedings under Section 29 was indeed appropriate.
Having determined that a competing marks proceeding was appropriate, where the parties are unable to reach agreement, the Registrar of trademarks has to determine which mark takes precedence, see 8987/05 Yehuda Malki vs. Sabon Shel Paam (2000) ltd et al. 9 October 2007.
Section 29 of the Ordinance states:
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.
The case-law has developed three tests for determining which of the applications proceeds first to examination:
- the filing date
- the scale of use by both parties
- equitable behavior or the lack of it
See 11188/3 Contact Linsen Israel ltd. vs. Commissioner of Patents and Trademarks, 5 May 2005, 8778/04 Yotvata vs. Tnuva 30 April 2007, the Sabon Shel Paam ruling and Israel TM decision re 167390 and 166840 Cochav Nolad (Star is Born).
It is noted that the burden of proof is identical to both parties. See Bagatz 460/87 Fuji Electronics Manufacturing Co Ltd vs. Commissioner of Patents p.d. 42 (1) 485 and the side whose evidence regarding the three tests is strongest, will prevail.
The Scope of Use
In this test the issue is which party used their mark the most, both prior to filing, and even up until the submission of evidence. This test is conducted to determine whether there is, through usage, acquired distinction of the mark in Israel amongst the relevant population, and that they identify the mark with the supplier. See, for example, then Commissioner Meir Noam’s decision re 125438 and 126755 Anak Optica ltd vs. No Fear Inc, 20 October 2003. Since this is a basic product, i.e. Turkish coffee, it seems that the relevant population is the drinkers of Turkish coffee in Israel. The usage is not only related to time but also the scope and type of usage.
It is clear from the evidence and testimony of both parties that Strauss Coffee’s usage is massively larger than Abu Shukra’s. Abu Shukra claims that their mark was designed in 2010 and there is consensus that prior to this date they were not using the mark. Strauss Coffee, however, was using their mark in 2009, and from 1968 they were using packages with similar design elements.
Strauss Coffee also has more significant advertising and marketing and in 2014 they sponsored over 30 sporting events where their Turkish coffee packaging was displayed. They also entered their Turkish coffee in a number of competitions where it reached high rankings, and there were various advertisements and Apps that showed the mark. A simple Google search for Turkish Coffee images (in Hebrew) displays Strauss Coffee’s marks over the ages.
On the other hand, Abu Shukra’s claimed advertising was based on declarations by Mr. Abu Shukra, and the claimed commercial success in Arab villages was not substantiated by evidence:
“We sent out publicity to Arab villages…we circulated amongst the villages with 100 gram samples and gave them away to Arab homes as a publicity stunt. People responded very positively to this activity.”
When cross-examined on this, Mr. Abu Shukra responded:
“I took my people and car. We rented a car and circulated the villages for almost a week. We gave out both Turkish and Arabic coffee, and gave it to everyone to indentify the market. We also had newspaper advertisements.”
With respect to claims that the product was successful, Mr. Abu Shukra asserted that he has over 100 distributors and wholesalers all over Israel…Arabs, Jews and also in Gaza. However, this testimony is not supported by evidence and does not provide information regarding the amount of usage but it is clear that Abu Shukra’s usage was less than that claimed by Strauss Coffee and supported by evidence.
Mr. Kurt testified on behalf of Strauss that Strauss Coffee holds the lion’s share of the Israel market for roasted and ground coffee, with the firm owning 75% of the market by bulk and 72% of the market by value in the period 2011 to 2014. Kurt supported this claim with a survey by a market research firm and his testimony was not challenged.
In contrast, Abu Shukra did not provide any evidence of the scale of their usage. He did, however, provide invoices for tens of thousands of shekels allegedly for preparing a template and for creating packaging. However, these invoices were not detailed and did not indicate what services or goods they covered.
In light of the above it is clear that Strauss Coffee has wider and longer usage of their mark than does Abu Shukra of his. This conclusion is strengthened by the survey provided by Strauss Coffee that concluded that 97.8% of those surveyed that bought black coffee identified and were familiar with Strauss Coffee’s marks and identified it with them.
It is true that Abu Shukra dismisses Strauss Coffee’s commissioned surveys as biased and therefore challenges their validity. They claim that the Arab population is under represented and so the survey does not reflect the competition between the two brands in this market sector. Olinik’s expert opinion supports this allegation. Nevertheless, the Adjudicator was convinced that Strauss Coffee’s mark had acquired distinctiveness amongst Israel’s coffee drinkers who identified the trade-dress with Strauss Coffee and considered this as being indicative of quality and value.
To compete the picture, Mr. Abu Shukra himself admitted in his counter statement of case that:
“No one disputes that Strauss is the largest, most recognized coffee manufacturer in Israel.”
In summary, Strauss Coffee have proven their claim that their applied for mark has a larger market segment, type and extent of use.
Strauss Coffee claim that Abu Shukra has copied their branding lines in bad faith.
The analysis of non-equitable behaviour and bad faith is to determine whether one party is trying to build on the competitor’s reputation or to damage the competitor. In this regard, a finding of bad faith would result in a mark being refused from registration. See Supreme Court 95/68 Southern Sewers vs. H.D. Lee Co et al. p.d. 22(2) and 476/82 Orlogad ltd. vs. the Commissioner of Patents p.d. 39(2) 148. The analysis is centered on the choice of mark and it’s usage from when it is selected.
In this instance, Abu Shukra has not provided evidence of how and why the various design elements were selected and this raises eyebrows. In both his affidavit and his written evidence, Mr. Abu Shukra claimed to have invested heavily in the design, but this assertion was not substantiated. Similarly Mr. Abu Shukra claimed to have used a graphic artist but the identity of the graphic artist and the methodology of work with him/her is not detailed. These and other issues raise questions regarding the good-faith of Mr. Abu Shukra. That said, establishing inequitable behaviour requires a high burden of proof and it is not enough to merely assert this but it has to be proven by solid evidence. The Adjudicator was not sufficiently convinced that there was a solid case of inequitable behavior against Abu Shukra.
As to Strauss Coffee, the company has shown that the applied for trademark is a variation of a theme using elements that has been in use since 1968. Strauss Coffee certainly has a strong reputation in coffee market, as admitted by Abu Shukra, so it is clear that Strauss Coffee was not trying to build on Abu Shukra’s reputation. Furthermore, although filed later, the 266683 mark was in use before Abu Shukra’s mark. There is, therefore, no suspicion that Strauss acted in bad faith.
The Filing Date
There is no doubt that Abu Shukra was the first to file in May 2013 and Strauss Coffee’s mark was filed only in July 2014, some 14 months later. However, as established by Judge Alon in the Sabon Shel Paam ruling, this is the least important of the three tests:
“Of the three, the central tests are those of equitable behavior and usage of the mark, whereas the filing date is of only secondary importance and carries little weight.”
The filing date is really only an indication of when the mark was first in use – see Seligsohn “Trademark Laws and Similar Legislation” (1973), page 53. In this instance it is clear that Strauss Coffee was using their mark first and it was part of their long-established ‘look’ so the Adjudicator accepts Strauss Coffee’s argument that this test be given little weight, particularly as they were actually using their mark earlier.
The only remaining question is whether Abu Shukra’s mark can coexist with Strauss Coffee’s. Section 30a of the Ordinance states that:
Where it appears to the Registrar that there is honest concurrent use, or where there are other special circumstances which in his opinion justify the registration of identical or similar trade marks for the same goods or description of goods by more than one proprietor, the Registrar may permit such registration subject to such conditions and limitations, if any, as he may think fit.
It will be noted that the principle at the basis of the Trademark Ordinance is that similar or confusingly similar marks will not be registered. See 10959 Delta Lingerie S.A.O.L. Cachan vs. Tea Board, India 7 December 2006. So the onus on the applicant is to prove that despite the apparently confusing similarity, there is no real likelihood of confusion. See the 188396 and 188443 Mizumzum vs. Aviv Israel ruling (12 July 2010). See also the Supreme Court ruling in 8778/04 Yotvata vs. Tnuva 30 April 2007:
In rulings under this section [30a – YSC] the emphasis will be placed on the equitable behavior of all parties in adopting their trademarks and on the need to protect the consumers from confusingly similar trademarks that are liable to mislead or of unfair competition (Friedman, page 431). We’ve previously ruled on the question of equitable behaviour of the parties – see Section 29 of the Ordinance. Additionally, parallel registration is likely to mislead.
The Adjudicator notes that the more that the similarity between competing marks is stronger, the more solid evidence is needed to persuade the Registrar to allow coexistence under Section 30a. See ruling by Shoshani Caspi concerning 244886 and 233056 Orbanica Investments ltd. vs. Nov Investments Ohr Yehuda (1989) ltd. 24 July 2014.
In the circumstances, it appears that there is a strong similarity and likelihood of confusion between the marks and there is no indication of actual differentiation between them. In this regard, Abu Shukra’s allegation that the difference is the result of marketing to the Arab population only, is not sufficient since the mark was submitted in Hebrew and not Arabic and were the mark to be registered, Abu Shukra could sell their coffee anywhere in Israel and not in certain localities only. The argument that the markets are differentiated by differences in price is also not acceptable since black coffee is a basic food product and therefore there aren’t huge differences, nor was this claim substantiated. Furthermore, since no evidence of special trade exceptions were submitted and Strauss Coffee do not accept coexistence, the adjudicator does not see reason to her apply her discretion to allow coexistence.
Strauss Coffee’s trademark application numbers 266680 and 266683 are allowed to continue to examination and Abu Shukra’s 255526 trademark application number is closed.
Weighing up the general considerations in her authority under Section 69 of the Ordinance, the Adjudicator rules that Abu Shukra should pay costs of 10,000 Shekels including VAT to Strauss Coffee.
The Turkish Coffee in red bags with gold wavy line and coffee beans is identified with Elite. However, Strauss Coffee owns the Elite brand. I note this as there was a time when Strauss and Elite were competitors. Strauss is the Israeli equivalent of Unilever or Proctor & Gamble. It owns a very large number of brands.
Eden has the same initial letter as Elite. Abu Shukra claimed to have Jewish and Arab distributors and thus contradicted himself, and although the Adjudicator elegantly avoided having to rule on the issue of bad faith, there is some evidence that Abu Shukra were trying to pass off their coffee as Elite’s.
On one hand this ruling could be dismissed as a Jewish Goliath, Arab David battle, where the dominant market leader is using their considerable weight to stifle competition from a small family business. Strauss’ packaging looks like generic Turkish coffee packaging since they have indeed been developing a consistent look for decades and are the market leaders.
On the other hand, Nescafe and many others use red on coffee jars which seems to reflect the fact that coffee is drunk hot. Pictures of coffee beans would seem to be generic. One could argue that Abu Shukra is packaging their product as Turkish coffee and the name of the manufacturer or the particular brand is essential for product differentiation.
So is this a cheap generic equivalent in generic Turkish coffee packaging that should be allowed to challenge Strauss whose market share is arguably monopolistic? The courts might well rule differently as they are concerned with competitive markets. See for example the Apropos (Bugles) ruling. Also, the Strauss-Nestle ruling regarding gold ice-cream tubs and also target ice-lolly ruling. Strauss Coffee has a monopolistic market share. To me, it is not clear that Judge Ginat or former President of the Supreme Court Gronis would uphold this ruling, but the Trademark Department does not have such considerations and so this ruling is the correct one for the Adjudicator to reach.