Chipsico – a Competing Marks Proceeding Where Both Marks were Refused

267474On 13 August 2014, the New Dubak Natsha ltd filed Israel trademark application no. 267474 in class 29 for chips (potato crisps). The stylized mark is shown alongside, and reads CHIPSICO Batates Modalaah – (Chipsico Crinkle-Cut Potato Chips).

The same day, the Halawani Industrial Company ltd filed two trademark applications for coffee, tea, cocoa, sugar, rice, tapioca, sago, coffee substitute, flour and grain products, bread, wafers, cakes and sweets, honey, treacle, yeast, baking powder, salt, mustard, pepper, vinegar, tomato paste, seasoning mixtures, spices, frozen foods, snacks and crackers. The first application was Israel Trademark No. 267770 CHIPSICO and the second, 267772 was for شيبسيكو, which is Chipsico written in Arabic.

crinkle cutThe trademark department considered the marks as being confusingly similar and the parties failed to reach an agreement, so on 8 May 2016, a competing marks proceeding under Section 29 of the Ordinance was initiated and the parties were invited to present their evidence.

New Dubak Natsha ltd submitted:

  • an Affidavit of Mr Kis Hamad Mahmad Shahda Oytzna, a distributor of Allakab the distributor of Halawani’s products
  • an Affidavit of Mr Hassam Issa Abad Elrachim Sabitaan, a former employee of Allakab
  • An Affidavit of Mr Salim Palah, Fruj, a former employee of Atahad Elhalal that claimed to be based in the Allahkab company’s premises, and used the same lorries for distribution purposes
  • An Affidavit of Mr Mahmad Najib Elnatscha, Dubak Natsha’s representative and a former director of the company
  • An Affidavit of Rezek Machmad Machmud Elshaib, an employee of Atahad Elhalal

The Halawani Industrial Company ltd submitted two Affidavits:

  • An Affidavit of Mr Ibrahim Taisir Abd Elcard Elhamarna a scheduler for Halawani Industrial Company ltd’s export department
  • An Affidavit from Farj Barhat Abd Elhapti Shahin who is a sales manager for Allakab Trade and Marketing, Halawani;s distributor.

[I have done my best to faithfully transliterate the various names which appear in the Decision in Hebrew lettering without vowels. No offence is intended, if I have inadvertently incorrectly rendered one or more of these names].

On 23 February 2017, New Dubak Natsha ltd requested to add a Ramallah Court ruling from 7 September 2016 to the evidence. This request was after the period for submitting evidence was over and about a month before a hearing was scheduled.

On 21 March 2017 a hearing took place. None of the New Dubak’s witnesses attended the hearing apart from Mr Natsha. However, none of Halawani’s witnesses turned up either.

RULING

The Additional Evidence

rulingThe additional evidence is a Ramallah court ruling from 7 September 2016. The second party (Halawani) could have objected to the late submission of this piece of evidence but did not do so within the time frame of Circular 006.2011, so was asked to respond to it during the hearing. Halawani objected to it being considered as New Dubak had the evidence earlier but decided to submit it only after the period for submitting evidence had formally ended. As to its importance in deciding the case, Halawani dismissed it as having no significance.

The Deputy Commissioner considered that the court ruling was relevant and in a conflict over competing marks, the decision could shed light on the usage of the marks, on the equitable behaviour of the parties or lack of it and on conflicting statements made in other courts. This is true even when the decision is from a different jurisdiction, so the Ramallah court decision should be considered on its merits with respect to whether it can shed light on the present issue.

Neither the Trademark Ordinance nor the Trademark Regulations provide instructions on how a competing marks proceeding of this type should be conducted. Patent Commissioner’s Circular 103.2012 instructs the parties to submit their evidence within three months of a competing marks proceeding under Section 29 being declared, and that each party should respond within 30 days to any submission by the competing party.

Regulation 41 states that the Commissioner has the authority to allow additional evidence to be submitted in opposition procedures under Section 24 as follows:

No party will submit additional evidence. However in all proceedings before the Commissioner, at all stages of the proceeding, the Commissioner has the discretion to allow additional evidence to be submitted as he sees fit, whether to enable costs to be calculated or for another purpose.

The principle embodied in Regulation 41 was previously applied in competing marks proceedings under Section 29, see Israel TMs 255089, 255109, 255111, 255112, 255816 Skara Ltd vs, Soap & Co ltd, 11 May 2014, so this principle may be applied to the present case.

The criteria for submitting an additional piece of evidence were detailed in Appeal 2813/07 Unipharm ltd vs Merck and Co. Inc. 30 January 2013 where it was ruled that one has to consider the nature of the evidence, whether it is technical and ‘simple’, the stage of the proceeding, if the party wishing to submit the additional evidence knew or should have known about it earlier and could have submitted it earlier.

Furthermore, in appeals against the Registrar of Trademarks in general, and regarding competing marks in particular, generally permission to submit additional evidence is granted. See 877/04 Yotvata vs. Tnuva 30 April 2007 and Appeal Yehuda Malchi vs. Sabon shel Paam 2000 ltd 9 October 2007. One has to show a serious reason such as obtaining an unfair advantage or massively complicating the proceeding to prevent the additional evidence being considered.

As the Ramallah court ruling was only given on 7 September 2016, the Applicant 1 could not have submitted it in accordance with the timetable provided in Circular 013/012. Furthermore, as Applicant 2 was the opposing party in that ruling, it should not have come as a surprise to them. The Ramallah ruling was a temporary order under which Applicant 2 was forbidden to trade under the name Chipsico, and goods of Applicant 2 that were marked Chipsico were confiscated. The decision was based on the fact that Applicant 2’s marks were for Halawani Chipsico, but the products were merely marked Chipsico.

Despite the ruling being a temporary one from outside Israel, it has relevance in that Applicant 2 acted against a court decision and distributed goods marked with a different mark from that registered.

In light of above, the Deputy Commissioner accepts the late submitted evidence as part of the weight of evidence to be considered.

Competing Marks

The Commissioner’s authority to decide which of competing marks goes through to examination is provided by Section 29a of the Trademark Ordinance:

Where separate applications are made by different persons to be registered as proprietors of identical trademarks or those that are similar so as to deceive, in respect of the same goods or description of goods, and the special application was submitted as the previous application was accepted, the Registrar may refrain from accepting any of the applications until their rights are determined by agreement between them approved by the Registrar, and in the absence of such agreement or approval the Registrar shall decide, for reasons that shall be recorded as to which application shall continue to be processed in accordance with this ordinance.

The parties accept that the marks are identical or at least confusingly similar. There is indeed a real potential for misleading since both Applicants make potato and corn chips. In a Ministry of Health form from August 2014 supplied by Applicant 1, it appears that the Hebrew name of their product is חטיף תירס – corn chips, and this was the name in the bill of lading. However, the ingredients include potato. Applicant 2 makes potato chips, but their wrapping states corn chips.

Although the applied for trademarks were in different categories, both Applicants’ products are made from both sweet-corn and potato. This is also clear from the cross-examination of the witnesses.

The test for deciding which mark takes priority in which mark was applied for first, the scale of use of the mark and whether there was inequitable behaviour in the choice of the mark.   See Orglold, Hugo Boss, Bacardi and Yotvata rulings.

The two marks were applied for on the same day which means that the first to file is irrelevant. However, this ‘coincidence’ suggests inequitable behavior of one or other Applicant.

Scale of Usage of the Marks

As stated above, Mr Najib Alnatsha appeared at the hearing on behalf of New Dubak Natasha. None of Halawani’s witnesses showed up. This made worthless the evidentiary weight of the statements of all other witnesses about from Najib Alnatsha – See Y Kedmi, On Evidence Vol 3, page 1706 (2003) and 743/89 Goldwasser vs. Kravitz p.d. 46(1) 485.

New Dubak Natasha does not use their mark in Israel at all. However, in recent evidence including the Palestine Ministry of the Economy, it appears that the mark has been used in Egypt since 1996. Both marks are in use in the Palestinian Autonomy.

Aljuhara uses the mark across the Arab world, especially in Iraq. New Dubak Natasha claims that the mark is used throughout the Territories, including Ramallah. The mark is not in use in Israel as they lack the authorizations to sell goods in Israel since they do not list the ingredients and nutritional value of the ingredients in Hebrew – which Applicant 1 understands to be a bar from sale in Israel. However, they plan to request Ministry of Health authorization in future to be able to distribute food under the mark in Israel. However, the Deputy Commissioner notes that declared intent to use has no legal value see J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition §16:12, pages 16-29, particularly in a section 29 proceeding.

Applicant 1 notes that their mark has WIPO approval. However, the Deputy Commissioner notes that even in cases where the International Application lists Israel, registration of the Madrid mark does not necessarily mean that the mark is valid in Israel and each jurisdiction is entitled to examine marks under local law. Section 56e states this clearly:

Where the Registrar has received notice from the International Bureau as to the filing of an Israel-designated application, he shall decide as to the eligibility for registration of the trademark whose registration is being sought,…

The Case-law states that in competing marks procedures, the scope of usage in Israel has to be considered (Appeal 11188/03 Contact Linsen Israel Ltd vs Commissioner of Patents Trademarks and Designs, 5 May 2005). This is because trademarks are territorial rights and their validity is determined locally. However, in some cases where there is extensive foreign usage that may result in a mark being known locally, foreign usage may be considered. See competing marks ruling re 258616 and 258341 Lemon Grass Global Ltd vs. Panda Restaurant Group, Inc 23 February 2017.

From Applicant 2’s affidavits it appears that their mark is in use in Jordan. The mark was in use since 2009 in Palestinian and international markets. However, since they did not bring witnesses to the hearing, their claimed usage and its scope were effectively unsubstantiated. Furthermore, their attorneys could not answer if any such usage was contrary to the Ministry of Health regulations.

Equitable Behavior of the Parties

Applicant 1 (Dubak Natsha) claims that Applicant 2 (Halawani) illegally uses their mark in Jerusalem since the packages do not include ingredients and health values in Hebrew, which is essential to obtain Ministry of Health approval.

Furthermore, Applicant 1 (Dubak Natsha) claims that Applicant 2 (Halawani) makes use of the mark in a manner that contravenes the Ministry of Finance of the Palestinian Authority. Since the outer wrapping includes the term Chipsico alone and not Halawani Chipsico, as registered with the Palestinian Authority, which apparently was required by the Palestinian Registrar of Trademarks in November 2015 to avoid confusion with Dubak Natsha’s marks. This also is apparent from the September 2016 Palestinian court ruling by which Applicant was supposed to refer to their products as Halawani Chipsico, and whilst Dubak Natsha was allowed to continue to use the term Chipsico alone, Halawani was forbidden to do so.

As to the claim regarding Ministry of Health marking, the Public Health Regulations Indicating Nutritional Data 1993 requires that nutritional information be displayed prominently in the form of a Hebrew table. Regulation 2(a) of the Public Health regulations is as follows:

Persons may not manufacture pre-packaged food, should not import, market, store or display for sale such goods unless marked with nutritional information.

Regulation 51 of the regulations states that

The nutritional data markings must be displayed prominently, in a frame, as a table in Hebrew and arranged by decreasing proportion of ingredients.

Applicant 2 (Halawani) has not proven any usage in Israel since their witnesses did not turn up for the hearing. It appears that any use that does occur is not in accordance with the Law. Since Applicant 2 (Halawani) did not produce information regarding usage, this acts against them and raises issues of inequitable behavior regarding the very filing of the mark. Since the parties conducted legal hearings abroad and Applicant 2 was forbidden to use the Chipsico mark, despite it having been submitted for registration in Israel, one can conclude that its submission in Israel was in bad faith.

On the other hand, examining  the mark submitted by Applicant 1 (Dubak Natsha) has its problems. From cross-examining Applicant 1’s witness, it transpires that the trademark application is actually owned by Aljuhara. Submitting a mark in this manner, without the owner’s permission and without the owner assigning the mark in Israel to the Applicant is also inequitable bahavior. It is noted that among the other affidavits submitted, there is one from Hamdi Abd Almaksur Alei Kartum, the owners of Aljuhara. Mahmud Najib ab’d Alhi Taha Alnitsha only has the right to register applications for companies that he owns.

During the hearing, when Najib ab’d Alhi Taha Alnitsha was asked to explain the registration in the name of his companyDubak Natsha, instead of Aljuhara, his response was inconsistent. At first he responded that he had intended to write his address and not the name of the mark owner. He then explained that Aljuhara had given him oral permission to register the mark under his company.  This was not proven and also contradicts the POA.

In these circumstances, it seems that the submission by Applicant 1 is preferable to that of Applicant 2, since Applicant 2 was clearly attempting to capitalize on the reputation of Applicant 1 abroad, and with due notice being given to the ruling by the Palestinian Authority.

With this, even if Applicant 1’s application is allowed to proceed, it is to be rejected under Section 17a that states:

Any person claiming to be the proprietor of a trade mark used or intended to be used by him who wants to register the same trade mark shall apply in writing to the Registrar in the prescribed manner.

Consequently BOTH applications are rejected. No costs ruling is made.

Competing marks Ruling by Ms J Bracha re Israel Trademark Application Nos. 267474, 46770 and 26772 ‘Chipsico’, 27 June 2017.

COMMENT

chips

The New Dubak Natsha ltd’s mark is more than a little similar to the logo of Israel’s leading brand, Tapuchips which in neighboring Egypt is known as Chipsy. These brands are all owned by Lays.

Ms Bracha is probably correct to refuse both markings, although in competing mark proceedings one mark should prevail and only then be examined. In other words, Dubak Natsha’s Chipsico logo should prevail in the competing marks proceeding, be examined on its merits, refused and then Halawani’s word mark should be considered and perhaps allowed with a disclaimer for potato chips.

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