Appeal Regarding Infanti Baby Seats Virtually identical to those of Fisher Price (Mattel)

fisher price swing seatBaby swing-seats that were made in China and are identical to Fisher Price swing seats, down to the image of a lion on the upholstery, were imported and sold in Israel under the brand Infanti. Fisher Price obtained an Anton Pillar injunction and seized 1830 seats from the Importers’ warehouse. However, the Nazareth District Court rejected all attempts to obtain compensation under copyright infringement of the lion design printed on the seat upholstery and in the instruction manual, trademark infringement for the Fisher Price logo shown in the illustrations of the instruction manual, the trade tort of Passing Off, and the catch-all Law Of Unjust Enrichment following A.Sh.I.R. The case was then referred to the High Court.

This ruling by a panel of Israel High Court judges considers whether copyright subsists for a product design or artwork printed on a product where no design was registered for the product and whether there are grounds for sanctions under the trade-law of Passing Off or under the Law of Unjust Enrichment. The legal advisor to the government filed an amicus brief clarifying the position of the government in such issues.

judge elyakim rubinstenThe main ruling was given by Vice President of the High Court, Judge Elyakim Rubinstein who first considered the basic relationship between design law and copyright. Then, he ruled whether part of something that could have been registered as a design is entitled to copyright protection, and if so, whether the lion character is copyright protected even if the swing chair could have been registered as a design. Are the respondents direct or indirect infringers of the Appellant’s copyright? Do they have the defense of being unaware? Does trademark infringement require intent? And finally is there Passing Off or Unjust Enrichment?

Essentially Judge Rubinstein and Fogelman found copyright infringement due to the lion character on the upholstery, and Judge Meltzer also found that there was passing off, due to the products being virtually identical. Judges Rubinstein and Fogelman rejected the claims of passing off since although Fisher Price clearly had a reputation, they did not necessarily have a reputation for the baby swing seat. Infanti’s copies, though virtually identical to those of Fisher Price, were packaged in different boxes and the boxes were clearly labelled Infanti. The product itself was also labeled with the Infanti brand.

The main ruling is given below, followed by additional comments by Judges Fogelman and Meltzer. Since this is an important ruling, I have translated it in full. At the end are some comments and criticisms.

Background

This is an appeal against ruling 39534-02-15 by Nazareth district Court judge, Ben Chamo which was given on 8 January 2015 and in which Fisher Price lost their claim regarding copyright infringement in a child’s swing seat.

The ruling addresses the relationship between copyright and registered design rights. Judge Rubinstein notes that in the modern consumer society, the design of consumer goods has an increasing importance, and that manufacturers invest heavily  Consequently, many goods are some combination of functionality and artistic expression which makes it difficult to classify such goods in a single IP category and raises difficult legal questions. This appeal relates to a list of such questions of which the relationship between design law and copyright is central.

The Appellant, Mattel Inc. is a US Company that owns Fisher Price which makes baby goods, etc. The Respondent, Dvaron Import-Export Co. Ltd, is a company that imports various baby products into Israel. They and their directors and share holders were sued.

infantiMattel / Fisher-Price learned through Sakal which imports their products into Israel, that the respondents have been distributing a baby swing seat manufactured in China and branded as Infanti, which is a copy of the Fisher-Price swing seat. Mattel/Fisher-Price submitted a criminal complaint to the Tel Aviv Magistrate’s Court (4934-02-12) and got an Anton Pillar injunction to search and seize infringing goods. On 9 December 2012, 1830 units were seized at the respondent’s premises.

After seizing the goods, Mattel/Fisher-Price filed a complaint at the Nazareth District Court claiming that the respondent, Dvaron Import-Export Co. Ltd, were selling a copy of the Fisher Price seat under the name Infanti at 2/3 of the price for the Fisher-Price seat. Mattel/Fisher-Price claims to own the copyright in the seat and the sale by Dvaron is copyright infringement. According to Fisher-Price, the copyright includes the seat itself as a three-dimensional creation, and also the print of the fabric which includes the lion character from Fisher-Price’s “Precious Planet” series.

Furthermore, the Fisher-Price trademark appears in the accompanying instructions. Furthermore, Fisher-Price claims damages under the torts of Passing Off and of Unjust Enrichment.

The respondent, Dvaron Import-Export Co. Ltd claims that Fisher-Price does not have copyright, a trademark or a registered patent on the seat. There are many very similar seats on the market from various suppliers. The imported seat includes different parts to the Fisher-Price seat, and without the aid of a magnifying glass, one cannot distinguish the Fisher-Price logo in the instruction documentation.

The District Court Ruling

The District Court considered whether the Appellant was entitled to protection by patent or design law and ruled that since the Appellant neither filed a patent nor a design application, it was not entitled to protection under either category.

Then the District Court considered whether the seat, the fabric or the instruction booklet were entitled to copyright protection and concluded that the Israel Copyright Law 2007 did not provide protection for the seat or the fabric since section 7 of the Law states that items of industrial manufacture that may be protected by Design Law may not benefit from copyright. However, the contents of the instructions booklet were protected by copyright.

The Court then considered if the respondents had infringed the appellant’s copyrights. After considering the testimony and evidence, the court concluded that it was not proven that the respondents had prepared the infringing instructions leaflet and had not manufactured the child’s seat. Once it was clear that the respondents had not directly infringed the appellant’s copyright, it considered whether they were innocent of indirect infringement. The court concluded that the respondents were entitled to the defense of innocently infringing, since it was not convinced that they could know that the copyright of the text of the instructions leaflet was owned by the Appellant, who had not given consent for the material to be reproduced.

As to the use of the registered trademark of the Appellant, the District Court considered the intent of the respondent, and the reasons for their choice of mark. After considering the evidence and testimonies, the District Court ruled that the Appellant’s claims should be rejected. This was since it was the Chinese manufacturer who had laid out and printed the instruction booklet; the registered trademark needed a magnifying glass to discern and because the trademark appeared in the diagrams of the instruction manual, it was only on opening the box after purchase that the purchaser could become aware of the marks and so it transpires that the various factors taken together indicate that their inclusion cannot be influential in the sale, they cannot mislead the public or create unfair competition, and it was not even proven that the respondents were aware of the infringement. Consequently, the respondents were not found guilty of trademark infringement.

The District Court also rejected the Appellant’s claim of ‘passing off’, since this requires both a reputation of the Appellant and a risk of confusion. Finally, the District Court rejected the claim of Unjust Enrichment, since it did not find the “additional element” required by the A.SH.I.R. ruling that is necessary to give compensation under the Law of Unjust Enrichment in cases related to Intellectual Property.

The Essence of the Appeal

The Appellant claims that the District Court erred in not finding copyright residing in the lion drawing on the upholstery of the chair, in the instruction booklet, on the chair itself and those in the accompanying literature. The Appellant alleges that these images are two-dimensional creations that are not registerable as designs and thus do not fall within the Section 7 exception and are copyright protected. The Appellants also alleged that the District Court erred in not considering the baby chair itself as a three-dimensional copyright protectable creation, since the Appellant considered that Section 7 of the Israel Copyright Law of 2005 was different from Section 22 of the 1911 ordinance and only removed copyright protection where a design was actually registered and not in cases where a design could have been registered. The mere act of industrial scale manufacturing does not in and of itself remove copyright protection from a creation.

As to the instructions brochure, the Appellant considered that the District Court had erred here as well in not seeing direct copyright infringement. They claim that the evidence and testimony indicated that the defendants are part of a group of companies that manufactures in China under the name Infanti, and which manufactured the copied baby chair, and that the defendants has the onus to show that this is not the case. Furthermore, even if there was no direct infringement, the District Court erred in not finding indirect infringement.  The Appellant claims that the respondents translated sections of the instruction brochure into Hebrew, whilst referencing the figures and thus it is obvious that they were aware of the figures. Indeed, the second defendant testified that he had worked in the baby product field for decades. This removes the possibility that the infringement was in any way innocent.

It is also alleged that the District Court erred in considering whether the defendants had innocently infringed the Appellant’s trademark since intent is not required in cases of trademark infringement. Similarly, the District Court erred in considering the issue of passing off. Fisher-Price’s reputation is unquestionable, and there is passing off. The District Court likewise erred in concluding that there was no additional element of bad faith as required to rule Unjust Enrichment. The Appellant argued that the District Court had systematically favoured the respondent’s testimony and evidence, and had erred in ruling that reference to the earlier blue model was an illegitimate widening of the Statement of Case.

The Respondent’s Position

The respondent relies on the District Court’s ruling. The Respondent notes that most of the issues are factual and that the Court of Appeal does not generally reconsider factual findings of the District Court. The respondents allege that there was no reason for them to copy the Appellant’s chair since Fisher-Price’s reputation was damaged in recent years due to publications alleging use of carcinogenic materials. Furthermore, the respondents denied knowledge of the Fisher-Price seat and thus any infringement was innocent, as the District Court had found.

Requests to Add Evidence at the Appeal Stage

The two parties each applied for permission to submit further evidence at the appeal stage. The Appellant requested permission to submit a survey by The Marker (daily business newspaper), which showed that Israelis ranked Fisher-Price as 5th in a list of 160 brands, and which the Appellant wished to show that Fisher-Price had a reputation as required to establish the tort of Passing Off. It will be noted that at the end of the evidence stage, the Appellant (then plaintiff) requested submission of the same evidence to the District Court but was refused since the District Court did not consider that it would help in coming to a correct decision (see the 18 May 2014 ruling). The respondents requested submission of a catalogue from an exhibition of baby products in Hong Kong, showing a chair similar to that of Fisher-Price, but bearing the logo of a different entity, allegedly demonstrating that the chair in question is not distinctive and does not deserve special protection. Both the Appellant and the respondent opposed the other party submitting their additional evidence for similar reasons, in that they did not consider that there was real cause to add material at the Appeal stage, and the evidence was not compelling.

After considering the requests, the evidence and the counter-claims, the Court of Appeal rejected the requests, due to Regulation 457a of the Civil Procedure Regulations 1984, since the parties are generally not allowed to bring additional evidence, whether written or oral, before the Court of Appeal, unless the Court of First Instance refused to accept evidence that it should have been prepared to accept, or the Appeal Court considers the evidence essential to reach a decision or some other significant reason (see Appeal 7414/08 Taro Pharmaceuticals vs. Sun Pharmaceutical Industries Ltd, paragraph 35 (2010),  Appeal Miriam Evitsum Nahum vs. State of Israel, paragraph 11 (2015). The court did not consider that the proposed submissions should be accepted at the Appeal stage, as neither were required to establish the Appellant’s or the Respondent’s case, and certainly not to the extent to warrant making an exception.

The Position of the Legal Advisor to the Government

On 1 May 2016, close to the hearing of the 4 May 2016, the Legal Advisor to the Government requested to be party to the hearing and to submit an amicus brief. The Legal Advisor to the Government requested to relate to various legal matters that the District Court had considered in its ruling, that relate to the relationship between Copyright Law and Design Law.

The Legal Advisor to the Government considers that the District Court was correct in ruling that there was no copyright in the chair since it could have been registered as a design, and its reasoning was correct. Furthermore, there was no copyright in the upholstery, but for a different reason. Section 7 of the Israel Patent Law regulates the interface between patent and design law, and, according to the Legal Advisor to the Government, it relates to designs, whether or not registered. A design may deserve copyright protection only if all of the following conditions are met:

  • No design registrations are sought
  • The design is not mass-produced
  • The design is not intended for mass production

The Legal Advisor to the Government considers the registerability of the design is irrelevant.

The Legal Advisor to the Government then related to the scope of Section 7 of the Law of Copyright with regards to three-dimensional designs and opined that the correct balance is attained when the copyright protection is curtailed to the extent that the product is registerable as a design. The Patent and Design Ordinance 1924 and the 1925 Design Regulations state that a design exists for a product in one or more classes of goods. The scope of protection is limited to the goods for which protection is registered and the protection extents to blatant copies to the extent that they appear to be copies to the untrained eye. This means that a competing manufacturer who manufactures a product in the same class, that bears an image that is copyright protected, where the design owner can sue for design infringement, he no longer can sue for copyright infringement of the two-dimensional image under Copyright Law. However, in other categories of goods, where there is no registered design rights, and there are no grounds for suing for design infringement, the manufacturer can sue for copyright infringement under the Law of Copyright.

According to this position, the present case is one wherein theoretically, there was justification to consider if the two-dimensional lion image was registerable as a design by considering other two dimensional registered designs. This means to say that one cannot a priori cancel the copyright of the lion image for other purposes, that are not industrial or intended for industrial manufacture, but only the copyright for swing seat upholstery.

The opinion of the Legal Advisor to the Government also relates to another issue raised, that of whether trademark infringement requires intent. The Legal Advisor to the Government  considers that use of a registered trademark be considered trademark infringement, regardless of whether the user intended to mislead the public. The law requires this, since there is no reference to intent to mislead or cheat in the definition of trademark infringement. The District Court’s ruling is based on Section 30 of the Trademark Ordinance 1972 that relates to the process of trademark registration and to the relevant case-law. However, according to the Legal Advisor to the Government, there is no place to consider the intent of the infringer where a mark is registered since the ordinance is unequivocal in such instances.  Finally, the Legal Advisor to the Government related to the application of the Law of Unjust Enrichment and stated that the case-law ruled in Appeal 5768/94 A.SH.I.R. Import-Export vs. The Forum for Accessories and Basic Necessities Ltd p.d. 45(4) 289 1998) requires additional consideration.

On 4 May 2016, after a hearing on the Appeal, the parties were given 30 days to respond to the an opportunity to the position of the Legal Advisor to the Government, and the parties, including the Legal Advisor to the Government were invited to relate to the comparative law in other jurisdictions.

On 13 June 2016, the Legal Advisor to the Government submitted a summary of the comparative law and continuing from the hearing, explained the govt position regarding the A.Sh.I.R. ruling. The Legal Advisor to the Government considers that the A.Sh.I.R. ruling which enables parties to claim Unjust Enrichment in cases where Intellectual Property rights were not registered but there is some additional element of inequitable behaviour, should no longer be binding precedence and should not be followed. He considered that the A.Sh.I.R. ruling creates legal uncertainty, and that the Law of Unjust Enrichment should not be used to create rights or a defense that is neither implicitly nor explicitly recognized in the various kinds of intellectual property that are created by legislation.  The underlying justification of this position is that the formal name of the Law of Unjust Enrichment is the Law of Enrichment not in Accordance with the Law 1979, and there is a negative arrangement stated in Section 6a under which the Law is not applicable where there is legislation that specifically regulates an area of endeavor. Applying the Law of Unjust Enrichment in addition to and along side the laws of intellectual property undermines the logic and purpose of the IP laws. (in this instance, the Supreme Court did not see fit to apply the A.Sh.I.R. decision as the District Court did not find that there was the required additional element of bad faith, so it did not apply the A.Sh.I.R. judicial construction, so its validity is beyond the scope of this ruling.

The Appellant’s Response to the Legal Advisor to the Government’s Position

The Appellant claimed in their response that the Legal Advisor to the Government is wrong in claiming that copyright does not apply to mass-produced designs or to those intended for mass production. They posit that the language of the Law does not imply that artistic expression intended for commercial reproduction is not entitled to copyright protection. The issue of intent for industrial manufacture is only relevant to products that are characterized as registered designs, and there the issue is whether despite the registration as a design, there is also copyright protection. The Legal Advisor to the Government’s Position concerning Regulation 72 of the Design Regulations which explains what is considered as being an industrial product, is not relevant since Regulation 72 was voided by the legislation of the Law of Copyright.

The Respondent’s Response to the Legal Advisor to the Government’s Position

The respondents repeated their earlier assertion that the swing seat could have been registered, and failure to do so does not create an opportunity to obtain protection by Copyright Law due to Section 7 of the Law of Copyright. As to the question of the trademark infringer needing to intend to infringe, the respondent considers that the issue was dealt with by the Court of First Instance with respect to their infringement of a registered trademark, and they also referenced Appeal 8482/02 Aloniel ltd et al. vs. Ariel Macdonnel (2004) where it is stated that the general liability for trademark infringement should have exceptions.

Additional Considerations

Meanwhile, in 18 July 2017, the Applicant notified the court that the discussions around the proposed Design Law in 2015 rejected the government’s position that Section 7 of the Ordinance should be changed, and that it would be dealt with in the forthcoming regulations intended to clarify the scope of Section 7. On 26 July 2017, the respondents responded that they opposed relating to the protocol of the proposed legislation. They considered the protocol irrelevant to the present issue, so far as the Appellants understand it as resulting in section 7 providing them with legal recompense. The fact that this section has stayed the same neither helps nor hinders the Appellant’s claim. On 31 July 2017, the representative of the Legal Advisor to the Government provided a similar update to that of the Appellant, that the Ministry of Justice’s position regarding Section 7 had indeed not been accepted and under the new law it remains as it was with minor changes to the wording, however none of this is relevant since the New Law does not apply in this instance; the opinion of the Legal Advisor to the Government being what it may.

Discussion and Ruling

Judge Elyakim Rubinstein who wrote the main decision explains that he will first consider the basic relationship between design law and copyright. Then, he will consider whether part of something that could have been registered as a design is entitled to copyright protection, and if so, whether the lion character is copyright protected even if the swing chair could have been registered as a design. Are the respondents direct or indirect infringers of the Appellant’s copyright? Do they have the defense of being unaware? Does trademark infringement require intent? And finally is there Passing Off or Unjust Enrichment?

 Do Design and Copyright Law Provide Accumulated Protection or Are they Mutually Exclusive?

The main legal issue raised in this instance is the relationship between design law and copyright law, and whether the registerability of a product as a design cancels the protection under the Law of Copyrights for it or for part of it. Many pens have been worn out on this topic. At the start of this analysis we note that the Israel Design Law 2017 that was legislated on 26 July 2017 and published on 7 August 2017, which replaces the (design section) of the Mandatory Patent and Design Ordinance 1924 relates to this, but it will only enter into effect in July 2018, and so does not apply in this case. Furthermore, as updated by the Legal Advisor to the Government above, the framework of the new law does not substantively change the arrangement given in Section 7 of the Israel Copyright Law that is central to this issue, and so it appears that the ruling in this instance will apply after the implementation of the new Law. See also the words of the Head of the Economics Committee, MK Eitan Cabel, who introduced the law to the Knesset as follows:

I note that following criticisms heard in the committee stage, the government has decided to bring for ratification the sections of the law that were not included in the draft law that concern the overlap between design law and copyright, and I will explain: my intention is with regarding homogeneous creations as far as copyright in concerned, that are sold as mass-produced items, and as such may be protected by industrial design law, despite the lack of clarity in this regard, the government proposed law did not intend to change the status quo. In the committee stage, various criticisms from relevant parties were heard, and following this, at a relatively late stage of the proceedings, the government proposed a new arrangement of this issue. Since we are dealing with a very complex legal issue that other countries are trying to deal with as well, and where there is no appropriate model to rely upon, and due to the fact that the arrangement proposed by the government raises questions that remain unanswered due to doubts, and require further treatment that is likely to require further long discussion, the committee decided not to hold up the acceptance of the draft law and to leave this section as it was in the original draft (protocol of session 259 of the 20th Knesset, 26 July 2017-AR).   

We now refer to the issue itself.

The scope of protection is largely derived from the underlying purpose of the various laws.  In Israeli Law, the generally accepted justification for copyright is that of the incentive. According to this approach the purpose for granting copyright protection is to encourage the creation and distribution of the expressions, creations and other simplified goods. The purpose is achieved by providing a financial incentive in the form of copyright protection. This approach places the desire to promote development and to enrich the common good. Alongside this approach, Copyright Law rests on the desire to protect the private interest of the creator; the concept is to compensate the creator for the effort and expenses invested in producing the creation, and to recognize his right to benefit from the fruit of his labors (See Appeal 5077/07 Hebrew University of Jerusalem vs. The Shocken Publishing House Ltd (2011). For more details of the incentive and other approaches, see Guy Pesach “The Analytical Basis for Recognizing Copyright”, Mishpatim 31 (2) 359 (2001), and Lior Zamir “The Freedom to Create: Intellectual Property International Enquiries 99 (Miriam Markowitz-Biton and Lior Zamir Editors, Aviv Gaon Deputy Editor (2015).

The purpose for protecting industrial designs is largely similar. Judge Meny Alon related to it in Appeal 3406/96 Sela Concrete Manufacturing Company vs. Ackerstein Industries Ltd (1991):

The registered design is intended to provide its owners with a monopoly for a new or unique design. The protection is intended to further the private interest of the designer, and also the general well being, by development and progress. The interest that is protected is the property in the form itself. The definition of the right and its scope are measured in accordance with the specific needs (of? / for?) the industrial design (as it transpires from the definition). The industrial design serves as the first sales promotion of the product, the public relations representative of the product.  Consequently the main weight is given to the shape of the design as seen by the consumer. The shape needs to attract the relevant eye and this attraction is not a result of any aesthetic appearance, but rather of the basic shape which can affect the consumer’s choice” See also 7125/98 “Mipromal vs. Klil p.d. 57(3) 702, 709 (2003).

The underlying purpose of the Law is similar, but the object of the protection is different. Copyright protection is intended to protect original creations and is applicable to a wide range of creations: literary, artistic, etc. The term ‘creation’ is interpreted widely in the case-law. The case-law has recognized as copyright protectable works:

  • Tax deduction tables Civil Appeal 136/71 State of Israel vs. Ahiman p.d. 26(2) 259 (1972)
  • Advertising Signs – Civil Appeal 360/83 Strosky Ltd. vs. Whiteman Icecream Ltd, p.d. 40(3) 340 (1985)
  • Means for Teaching Mathematics – Civil Appeal 4500/90 Hershko vs. Orbauch, p.d. 49(1) 419 (1995)
  • Cartoon figures (Appeal 1687/92 Geva vs. Walt Disney Company p.d. 48(1) 251 (1993) [this is colloquially known as Donald Duck – MF]

See also 2173/94 Tele Event vs. Golden Channels and Partners 543-544 (2001) [this case related to copyright in sports events which are unscripted and thus not creations per se – MF] .

In contrast, Design Law is intended to protect the unique shape of products that attract the eye, and is not available for purely functional products. See Civil Appeal 2287/00 Shoham vs. Harar (2005).

There may be overlap between the two sets of laws, particularly with regards to functional designs. See Civil Appeal 513/89 Exin lines Bros S. A. vs. Interlego A/S p.d. 48(4) 133, 184-186 (1994).   It is possible that there will also be overlap with regard to other design fields, such as architecture; see Dr Meir Noam “Protection of Architectural Creations as Designs” Iyunei Mishpat 15 343 (1990). That said, each set of laws creates protection of a different nature. The owner of a copyright in a creation enjoys the exclusive right to make copies of his creation and to create derivative works; to distribute copies of the creation and to exhibit it in public. In contrast, the owner of a registered design has the right to stop others from manufacturing, using or selling the design. An example of the difference between the two types of protection is ‘self creation’. Theoretically two creators may individually create identical artistic creations and both will be entitled to copyright since each independently created the creation and did not copy it. In contrast, the design protection from when registered, provides total protection for the design, and independent design cannot be a defense. The period of protection, which is largely derived from the type of protection, is also different. The period of protection of a design is much shorter than that of copyright. In the present law, the protection of designs may be extended for 15 years and only then does the design enter the public domain. Copyright exists until 70 years beyond the creator’s death. A further important difference between the two sets of laws is the requirement for registration. To be entitled to copyright protection, the creator does not need to do anything, whereas design protection requires registration. In the Inter lego case, then President of the Supreme Court Shamgar related to the difference between copyright and design rights and stated that:

The starting point is that there is no a priori reason to prevent copyright protection of functional devices. However, these products create two special difficulties that other products do not have: The suspicion that providing copyright on a shape will provide a de facto monopoly on the concept behind the protectable expression of that concept, and the danger of unnecessarily limiting the world of forms in the future. The scope of protection that is given to functional devices needs to consider these specific difficulties on one hand, and the need to incentivize potential creators to continue to create novel expressions, to thereby vary and widen the world of extant expressions on the other hand. (page 133 there).

This is also the starting point for our discussion.

The overlap and the different nature of the protection provided by the different laws requires defining the relationship between design law and copyright law. In general, there seems to be three approaches to the relationship:

  1. Additive and Parallel
  2. Additive and Alternate
  3. Substitutive

Additive and Parallel is the regime under French law, see Jane C Ginsburg “French Copyright Law; A Comparative Overview 36 J. Copyright Society 269 (1988). In this regime, the rights are added together if the creation falls into both categories.

Additive and Alternate is the regime where both rights apply, but one is entitled to either or, or to limited damages.

Substitutive is the system in Israel and Canada and is explained hereunder.

See 5311-04-08 Narkis et al. v. Microsoft Israel Ltd et al. paragraph 21 of Judge Professor Groskopf’s ruling from 2010 [this deals with a Hebrew font that was bundled into Word and other software – MF]. See also Amnon Goldbert “Protection for Industrial Design” Festschrift Landoi vol 3 articles 1159, 1183, editors Aharon Barak and Elinor Mazuz, 1995. There are claims for and against each of the various options. So providing copyright protection for a non-registered design can create limitations and detract from the awareness of protection that registration provides. Providing copyright protection to a fairly standard design will detract from the special nature of copyright. However, one can claim that due to the similarity between the rights, there is a different purpose for them . so it is reasonable to conclude that they are complimentary. With this approach, the lack of copyright in products that could be registered as designs may be detrimental to small-scale manufacturers that do not register their designs due to a lack of awareness or limited economic justification (Goldberg p. 1181). Furthermore, some of the products that may be protected as designs, such as fashion items, often suffer from short shelf-life and the time required for registration may exceed the commercial life of the product and thus not provide effective protection (Section 31 requires that design applications are registered within 12 months from filing). [MF – I think this is incorrect. Examination has to be completed within 12 months of being initiated].

Under Israel Law, the relationship between the two systems of law is regulated by the Copyright legislation. Section 22(1) of the Copyright Law 1911, which was in effect prior to the legislation of the Israel Copyright Law 2007 stated:

  • This law will not cover designs that are fitting to be registered under the Patent and Design Law 1907, apart from designs that could have been and are fitting to be registered but are neither reproduced industrially or intended for reproduction.
  • It is possible to set general regulations under Section 86 of the Patent and Design Law 1907, to clarify when a design falls into this category.

In 2008 the Israel Copyright Law of 2007 entered into force, and Section 22(1) was replaced by Section 7 which states that:

Despite Section 4 (the section that determines what is entitled to copyright protection –AR), there will be no copyright in a design as defined in the Patent and Design Ordinance, unless it be a design that has not and will not serve for industrial manufacture.

Within the framework of the Design Law that recently passed, the wording of Section 7 was changed to read as follows:

Despite Section 4 (the section that determines what is entitled to copyright protection –AR), there will be no copyright in a design (מדגם) as defined in the Patent and Design Ordinance or a design(עיצוב) as defined in the Design Law, unless it be a design that has not and will not serve for industrial manufacture; the Minister (of Justice)is authorized to determine conditions under which a design (מדגם) or a design(עיצוב) serves for industrial manufacture.

[The term  מדגםas used in the old ordinance is perhaps best translated as model in the sense of a model or a car or the like – MF].

As it can be seen, and as clarified by the Legal Advisor to the Government in his additional submission of 31 July 2017, this is merely a change of language and anyway is not relevant to the specific case.

A design, according to Section 2 of the Ordinance “is not understood as other than the outlines, shape, example or decoration that is common to all copies produced by a common industrial manufacturing technique, whether hand manufactured, machined or by chemical action, in a separate image or in situ, that is visually distinctive to the viewer of the finished good, who can identify the good only by appearance, but the term does not include processes or building principles or anything else that is not essentially a mechanical device. Regulation 72 of the design regulations defines industrial manufacture as a batch exceeding 50 items. These regulations do not provide guidance on whether a specific product should be protected by copyright or by design law, but merely establishes the principle that something a design that is registered or intended to be industrially manufactured is not entitled to copyright.

Examination of the case-law shows inconsistencies in the application of Section 22(1) of the Ordinance and Section 7 of the present law with regards to excluding copyright protection from products that may be protected by design registration.

The District Courts ruled on the basis of the old law that under Section 22(1), copyright protection is not available for:

  • Lego® bricks in Civil Appeal Tel Aviv District Court 331/85 Exin lines Bros S. A. vs. Interlego A/S p.m. 740(2) 410 (1986)
  • Industrially produced artistic candlesticks in Civil Appeal Tel Aviv District Court 260605/01 HaZorfim Ltd. vs. Eichenbaum Industries Silver Containers ltd. (2002)
  • Dolls’ accessories in Civil Appeal Tel Aviv District Court 391/98 Hasbro International Inc. vs. Toy World Ltd. (1998)
  • Clothing design in Civil Appeal Tel Aviv District Court 1311/04 Alkrif vs. Karka Ltd (2010)

However, copyright was considered as existing in:

  • Game boards in Civil Appeal Tel Aviv District Court 2428/01 Koninklijke Housemann vs. Li-Dan Agencies Ltd (2006)
  • Puzzles in  Civil Appeal Haifa District Court 27452/97 Yair vs. Mango Toys Ltd. (1997)
  • Jewelry in Civil Appeal Tel Aviv District Court 331/85 Michal Nagrin Designs Ltd vs. Original Charm-Jewelry Israel Ltd (1995).

From when the Israel Copyright Law (2007) entered into force, it was ruled that the following items are not entitled to copyright protection:

These rulings teach that it is not sufficiently clear when copyright should be enjoyed by articles of manufacture since some have it and others do not.

The Supreme Court  rulings relevant to this issue is Civil Appeal 513/89 Exin lines Bros S. A. vs. Interlego A/S p.d. 48(4) 133, 184-186 (1994).  In that case, the manufacturer of “Duplo®” building blocks requested copyright in them. Whilst Judge Dorner considered that the case should be dismissed due to estoppels, President Shamgar chose to consider the relationship between copyright and design protection. Similar to our case, and with analysis of Section 22(1) of the old Copyright Law. It was ruled that Duplo® bricks are not artistic works as defined in Section 35 of the then Law, and so were not entitled to copyright protection. In his opinion, functional products, meaning designs and that suitable for protection as a design needs to be made within the framework of “craftsman’s work”, to protect the balance between the personal interest of the creator and the danger of limiting future creations. Consequently, so that a functional item will benefit from copyright protection, it requires not just creativity and originality but also artistry. In his opinion, Judge Shamgar provided a list of tests for artistry (artistic worth?) and found that the most appropriate was that of the creator’s intent. Under this test, one has to consider whether the creator, whilst designing the shape of the product, considered aspects beyond functionality and utility. (Interlego p. 180). However, Shamgar considered that this test was insufficient to deal with the problem of diminishing the world of shapes [in the public domain], and so it is necessary to also consider the result of providing copyright protection and to use the ‘choice test’.

So long as the design obtained is merely one of various alternatives that are effective. Effective variations are those that do not merely fulfill the functional purpose of the device but also do not minimize the range of alternatives due to the connection between form and function. There must be alternatives that in addition to being functional alternatives also have the form restrictions resulting from the functionality of the device…in other words, there must be a range of alternatives that all fulfill the form restrictions resulting from the function. So, for example, one will not provide copyright protection for elements provide aerodynamic form to a vehicle.   

In the law on this matter, based on that written hereabove, Judge Rubinstein did not think that one can accept the Appellant’s claim that the three-dimensional child’s swing seat has copyright protection. We are dealing with the overlap between two sets of Intellectual Property laws. Here, Judge Cheshin’s words in the  A.Sh.I.R. case are pertinent:

When entering the area of overlap between two branches of justice and when required to clarify which system prevails – the prevailing system is the one that is fitting to prevail – we have to check first if the legislators indicated that we should proceed in a particular direction. And if they indicated this, it should be our choice. So for example, the legislators can legislate that in a particular area a certain law or principle should apply, and in that area no other law or principle will apply. Such a clear-cut instruction is rare, but where it occurs, we will follow it.  (paragraph 15).

In his words, Judge Cheshin related to the overlap between two different branches of law. However, also within the same branch it is possible to have overlap between different laws and sometimes one needs to decide which law is applicable, and this is the issue here. The legislators apparently tried to leave the various categories of intellectual property separate, each one in a different field, and to try to attain a state wherein “no kingdom invades its neighbor, even a hair’s breadth” (Talmud Babli Yoma 38b). And if not a hair’s breadth, at least to the extent that is possible. The present case falls within the design domain and as such, is not entitled to copyright protection. I admit that one is unhappy with this result. The similarity between the chairs is self-evident, and the common man will detect copying. However, we should not circumvent the legislator.

In this instance, consideration of the relevant law and in particular, Section 7, teaches that the legislators explicitly ruled that something registerable as a design (whether registered or not) is not entitled to copyright protection, apart from the sole exception of something not mass-produced or intended for mass production. I emphasize that protection for non-registered designs that will be provided by the not-yet-implemented Design Law, will soften the blow to designers (manufacturers) that do not protect their products as a design providing that this protection accords with the international trends – see the explanations accompanying the proposed law of 2015, and Aryeh Reich “Globalization and Law: the influence of International Law on Israel Law in the coming Decade” Mechkarei Mishpat (Legal Research) 17, 27-29 (2001).

The District Court ruled that the swing seat was registerable as a design. It seems that the parties themselves concur with this finding. It is obvious that Appellant manufactured their seat industrially (mass production), both in accordance with Regulation 72 and in practice. The Law is clear – although it may be criticized with regards to the either / or regime it establishes, and it does not allow this mass-produced object in its entirety to benefit from copyright.  So the swing seat, despite not being registered as a design, is not protected by copyright since it could have been registered as a design.

Artistic Work Imprinted on an Article

After determining that the seat is not entitled to copyright protection, there is a derived question, which also arises from the overlap or the lack of it in the eyes of the legislator, with regards to copyright and design right, which is whether part of a design registerable item may be protected by copyright. The boundary between design that is part of a registered design and an artistic creation applied to the design creates a complicated question  which Israel courts have not previously dealt with.

In my opinion there is no a priori reason not to recognize copyright in a creation only because it is applied to an industrial design.  I think that this position is compatible with the language of the law and that it seems that the Legal Advisor of the Government does not  where an artistic work applied to an object that is itself protectable as a design will be entitled to copyright protection. However, with regards to determining whether the artistic work is entitled to copyright protection, I dissent from the opinion of the Legal Advisor of the Government as I will explain below.

The District Court did not relate to the issue of whether the upholstery with the lion image could be protected with copyright, but assumed that the upholstery and image was “absorbed into” the chair in its entirety. The Legal Advisor of the Government considered that the District Court had reached the correct verdict, but for the wrong reason. The Legal Advisor of the Government considered that the artistic image applied to a product that is protectable as a design can only be recognized if no design registration is sought. I (Judge Rubinstein) disagree with this position.

Copyright Law tries to encourage the creation and distribution of artistic expressions, creations and other simplified goods having social worth, that the market forces do not sufficiently encourage. This is achieved by providing a defense to the creator. However, there is always a tension between providing protection for the creator and providing too much protection, thereby making invention and development difficult, and in the specific example of artistic expressions applied to designs, will restrict future expression (See Inter-lego pages 153-154). Thus in Judge Rubinstein’s opinion, correct legal policy should not restrict artistic work from being copyright protected merely because it is applied to a product that is registerable as a design. In the introduction to the book ‘Intellectual Property: International Inquiry’ Judge Rubinstein tried to state that his basic approach asks “why should the creator not benefit from his creation, and why should others eat [the fruits of] his labour? In this instance the court’s role is to protect fairness within the framework of the law, and I believe that fairness is the keyword. It is not a case of “he who that grasps too much [does not grasp anything”.  Talmud Babli Sucka 5a – MF]. But it also not a question of ‘unjust enrichment’ in its simple understanding.  This does not only apply to moral rights, which themselves serves a significant societal value, but also to economic rights” (page 7) this words are apparently fitting in this case. When are they applicable?

We will take, as an example, the image of Mickey Mouse, the well-known drawing by Walt Disney. Nobody disputes the fact that the image is an artistic work under Copyright Law, which obtained the protection under the Law of Copyright. The Disney Corporation, owners of the copyright for Mickey Mouse, sell many items (merchandise) carrying his image, and many of these items are fitting to be protected as designs. Should we cancel the copyright in Mickey Mouse as long as it is being used on merchandise that is design registerable, from items of the same type? In general, is there justification to cancel copyright protection from an image simply because the image is applied to a design registerable item of merchandise? One can consider a different scenario that questions the logic behind the implementation proposed by the Legal Advisor of the Government. Had the Appellants turned to the court with the claim of copyright infringement in the lion character only, without noting that it was applied to a child’s swing seat that was copied from them, it would appear that he would have recognized copyright infringement (not relating for the sake of argument, to the issue of innocent infringement). Can the respondents claim, as a defense, that had they copied an image appearing on a mass-produced article of a similar type that could have been registered as a design, the artistic image should not be protected by copyright? Are we to award a prize for copying the image that appears on a similar competing article, for copying both the artistic design and the article? I think that these examples clarify the problems with the arrangement proposed by the Legal Advisor of the Government, and the need to try to arrive at a different arrangement.

Comparative Law

We will now turn to foreign systems of law that have and are dealing with this issue. Although “different systems of law do not have a unified approach when considering the relationship between the private and the public interest in intellectual property” (Miguel Deutch, Trade Torts and Trade Secrets 2002, page 109. However, “in the judicial field, comparative law serves as a tool for applying the current law by way of interpretation and completion of lacunae….It is acceptable to turn to solutions in other systems of law when they appear desirable and do not contradict the local system.” (Dafna Barak-Erez “Comparative Law in Practice, Establishment, Cultural and Practical Aspects” Din Udvarim (Law and Things ) 4, 81 page 86 (2007). This is particularly true when considering something widely discussed in the comparative law that has not been clarified by the Israeli courts and is not something wherein the Israeli situation is justifiably unique, such as regarding question between Religion and State, those relating to Judea and Samaria [the West Bank – i.e. land captured from Jordan and administered by Israel since 1967, but not annexed to date – MF].

UK FlagIn English Law, which is the source of Intellectual Property Law in Israel, the 1911 Law that was adopted by Israel was in force until 1968. In the English case-law under the old law it was ruled that the test for determining whether or not to give copyright to a design that could be protected by design registration is the “creator’s intent test”. In this test one considers the creator’s intent at the time of creation of the work; if it was not intended for mass production it is entitled to copyright protection. See R.P.C. 207 58 King Feature Syndicate v. Kleeman (1941). The present arrangement in English law is given by the Copyright, Designs and Patents Act 1988. This law tried to prevent, or to restrict, the overlap of copyright and design protection. A design is defined in Section 51(3) of the Act in a very wide manner:

   “The design of any aspect of the shape or configuration (whether internal or external) of the whole or part of an article”.

With this, in English Law, surface decoration is not included in the definition of a design. Section 52 of the Law applies to all artistic creations that are not covered by Section 51:

 (1) This section applies where an artistic work has been exploited, by or with the licence of the copyright owner, by—

(a) making by an industrial process articles falling to be treated for the purposes of this Part as copies of the work, and

 (b) marketing such articles, in the United Kingdom or elsewhere.

(2) After the end of the period of 25 years from the end of the calendar year in which such articles are first marketed, the work may be copied by making articles of any description, or doing anything for the purpose of making articles of any description, and anything may be done in relation to articles so made, without infringing copyright in the work.

The Section establishes that artistic creations serving as mass-produced articles by the artist or with the Artist’s permission, and articles sold in the UK or abroad enter the public domain after 25 years and anyone can copy the creation onto any article without it being considered copyright infringement. In other words, the British law provides limited protection for art that is applied to articles, decoration on the surface of practical goods enjoy regular copyright protection for only 25 years.

The British Supreme Court related to a similar case to that before us in ECDR 17 Flashing Badge Co. Ltd v. Brian David Groves [2007]. In that instance, graphical images were applied to badges having a similar shape. The court addressed the issue of whether to rule the existence of copyright in the graphic design or whether this was simply part of the product in which case is would be design protectable and not copyright protected. Judge Rimer found that despite the graphical design having the same shape as the badge, it is entitled to copyright protection, since the entire graphic design could exist separately from the article, and if it were separate, would be entitled to copyright protection:

 “It is true that the design of the shape of the badge follows the outline of the design for the artistic work on the face of each badge. But the latter design is in the nature of a graphic design which is in no sense something which … can only exist as part of the shape of the badge. It is a design which can be applied to any other substrate and which, if so applied, would enjoy copyright protection for the infringement of which section 51 would afford no defence”. 

US flag.jpgIn US Law, where one can obtain copyright in an article in its entirety, the issue was first raised in a 1954 Supreme Court decision, 347 U.S. 201 Mazer v. Stein. In this instance, the plaintiff fabricated statuettes of human that were intended to serve as lamp stands. The lamps were copied and the plaintiff claimed that his copyright in the statuettes was infringed. The US Supreme Court ruled that there is no reason to register and award copyright to creations that are intended to service as part of a functional item. It was ruled that an item is entitled to copyright protection, even if it is a part of or intended to be part of an item intended for mass-production.

In 1976 the US legislated the Copyright act of 1976. A design is defined in the law as “An article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.” Section 17 U.S.C. § 101 of the Law rules that only the following can have copyright:

 “works of artistic craftsmanship insofar as their form but not their mechanical or utilitarian aspects are concerned; the design of a useful article … shall be considered a pictorial, graphical, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic of sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article”.

This section tried to apply the test that the American Supreme Court established in the Mazer case in which copyright will not be provided for a form, unless one can separate the utilitarian and decorative parts of the article. See Robert C. Denicola Applied Art and Industrial Design: A Suggested Approach to Copyright in Useful Articles 67 Minn. L. Rev. 707 (1983).

After the law was legislated, the US courts struggled with its implementation. The main issue under dispute was the question of separation 0 if one has to be able to physically separate the artistic elements of the device, or if it is enough to be able to separately conceptualize them.

A large portion of the US case-law deals with instances where it is claimed that the design as a whole is a work of art, and such cases are not relevant to this discussion due to section 7 mentioned above. See Inter-lego 175-179; overview of US case-law, and see also Shira Perlmutter, Conceptual Separability and Copyright in the Designs of Useful Articles 37 J. Copyright Soc’y U.S.A 339 (1990);Barton R. Keyes, Alive and Well: The (Still) Ongoing Debate Surrounding Separability in American Copyright Law 69 Ohio St. L.J. 109 (2008). With this, the tests established in the US case-law and the academic discussion thereof may help decide if this test is applicable to the Israel Law, see below.

canada flagParticularly relevant to our issue is Canada, since this also has an exclusive IP regime similar to that of Israel, in that where copyright exists in a design that is useful or artistic, and the device is produced in more than 50 copies by the copyright owner or with his permission, there is no copyright or moral right infringement in copying the product design or making a design that is not significantly different from it. However, this general rule has an exception that is detailed in section 64 of the Canadian Copyright Law:

Subsection (2) does not apply in respect of the copyright or the moral rights in an artistic work in so far as the work is used as or for (a) a graphic or photographic representation that is applied to the face of an article; (b) a trade-mark or a representation thereof or a label; (c) material that has a woven or knitted pattern or that is suitable for piece goods or surface coverings or for making wearing apparel; (d) an architectural work that is a building or a model of a building; (e) a representation of a real or fictitious being, event or place that is applied to an article as a feature of shape, configuration, pattern or ornament; (f) articles that are sold as a set, unless more than fifty sets are made; or (g) such other work or article as may be prescribed by regulation” (Copyright Act (R.S.C., 1985, c. C-42)).  

Despite the fact that the Canadian law is an either/or exclusive regime, Section 63 establishes that certain creations that are applied to articles are exceptions, and are entitled to copyright protection; for example a graphical design or picture applied to the surface of an article or designs applied to an item of clothing.

From this short survey it is shown that foreign legal systems to provide some copyright protection to artwork that is part of a design. As a rule, there is no overlap and one is not entitled to full copyright and design protection for the same object, but in Canada, where there is an exclusive regime, copyright is not totally excluded from an artistic creation applied to articles (although this is explicit written in the Canadian Law). I think that the message that arises from this survey is that there is a feeling of need for fairness to creators, that their creations should not be benefitted from by others, without compensation.

The Scope of Protection in Israel

Israel-FlagSection 7 mentioned above, itself reflects the inherent difficulty in establishing a clear boundary between design law and copyright. Despite this difficulty, and perhaps due to it, it is necessary to aspire to establish a test that is as clear as possible.  See John B. Fowles, The Utility of a Bright-line Rule in Copyright Law: Freeing Judges from Aesthetic Controversy and Conceptual Seperability in Leicester v. Warner Bros. 12 UCLA Ent. L. Rev. 301 (2005).

According to the test that I propose, in order to provide copyright protection to two-dimensional creations applied to an article that is not itself protected in the current legal regime, it is necessary to be able to separate the artwork from the article, somewhat analogously to the test in US Law (for a critique of the US law, see page 177 of the Inter-lego ruling).

In order to grant copyright protection to a creation that is fixed to a registered design or to an item that is registerable as a design, one has to pass three stages:

In the first stage, one has to consider whether the article is registerable as a design. If the answer is negative, one can go straight to the third stage. Only if it is registerable, does one go to the second stage – the main stage – wherein one considers whether the artistic creation can be separated from the article. In the third stage, one considers whether the creation may be protected as an artistic work under Copyright Law. In this instance, no one disputes the fact that a child’s swing seat may be registered as a design, and so we can go straight to the second stage, that of separation.

The Physical Separation Test

When can one physically separate an artistic creation from the article to which it is applied? The United States Copyright Office defined this within the framework of COMPENDIUM OF U.S COPYRIGHT OFFICE PRACTICES III, § 924.2 :

“Physical separability means that the useful article contains pictorial, graphic, or sculptural features that can be physically separated from the article by ordinary means while leaving the utilitarian aspects of the article completely intact”.

An example of a creation that can be physically separated, is a car mascot that may be separated from the hood [bonnet for English readers – MF] without destroying or damaging the vehicle. However, the question of separation is not always simple. For example, if a statuette serves as a lamp stand in the Mazer case, can it be physically separated? One can physically separate the statuette base from the lamp, but the lamp cannot serve its functional purpose without a statuette at its base. Thus there are also cases where one cannot physically separate the creation from the article, and even so, there is room to acknowledge copyright protection, when considering the purpose of copyright protection, by applying the substantive separation test where the physical separation test has a certain artificial character in these cases, and we will return to this. Possible non-limiting examples are printed designs on a shirt, decoration on wallpaper, decoration on kitchenware. See the US Government’s Guide to Copyright section 924.2(B).

It is noted that in a recent US Supreme Court ruling, it was decided by majority that the physical separation test is not required, and the substantive conceptual division is sufficient. See Star Athletica, L.L.C. v. Varsity Brands, Inc, p. 15 of the majority opinion, delivered by Justice Thomas (U.S. Mar. 22, 2017).

In contradistinction, the minority opinion in the same instance claimed that there is room to use the physical separation test, in addition to the conceptual separation test, and this is learned from the words of the law:

“Unless the shape of an automobile, airplane, ladies’ dress, food processor, television set, or any other in­dustrial product contains some element that, physically or conceptually, can be identified as separable from the utilitarian aspects of that article, the design would not be copyrighted . . . .” (Ibid, at p. 2 of the minority opinion, referring to H. R. Rep. of the Copyright Act, at p. 55 ;emphasis added by Justice Breyer).

I also find justification in the position that one should apply the physical separation test in addition to the conceptual separation test, and refer to the explanation for the proposed US law. I also note that in Israel, the law is silent in this instance, and I will leave as requiring further consideration, the question of whether to adopt the physical separation test into our law, since it is not required in this instance as I have found that one can conceptually consider the artwork separate from the seat, and anyway the physical separation test is at best an alternative and secondary test to the conceptual separation test, and this also accords with common sense.

The Conceptual Separation Test

Where one cannot make a physical separation, it may still be possible to establish conceptual separation. S. Perlmutter emphasizes various tests which the US courts have used to determine whether an artistic creation can be conceptually separated; whether the creation could be separately sold as an artwork whether the creation was originally sold as an artwork, whether the creation was originally conceived as an artwork (Perlmutter 378). The US Supreme Court noted in the Athletic Star case that the two tests that helped them consider whether there is conceptual separation is whether one the artwork has a separate entity from the utilitarian aspects of the article, and, more importantly, whether it could have a separate existence from the utilitarian aspects of article, “If the feature is not capable of existing as a pictorial, graphic, or sculptural work once separated from the useful article, then it was not a pictorial, graphic, or sculptural feature of that arti­cle, but rather one of its utilitarian aspects.”

Judge Rubenstein thinks that the tests suggested in the US case-law put too high a barrier and unnecessarily restrict the range of creativity that can be protected by copyright, within appropriate reason. Furthermore, the US case-law shows that whilst the justices agree with the principle of conceptual separation, its application has been problematic.

In the Government Guide for Copyright, the US Copyright Office published a test for conceptual division. Under this test, one can conceptually divide a creation from an item if the creation can exist as a drawing on paper or as a three-dimensional statue, separately from the item without destroying its basic form. This condition exists only when the artistic creation and the item can exist one alongside the other and be considered as two separate creations, one being an artwork and the other, a device. In contrast, if only by reassembly of the artistic creation, the device is assembled, copyright will not be acknowledged (a similar test based on the US Copyright Office, was proposed in an amicus brief to the US Supreme Court by IP law lecturers in the Star Athletics case, see www.scotusblog.com/wp-content/uploads/2016/08/Star-Athletica.pdf

In Judge Rubenstein’s opinion, there is room to adopt this test, with appropriate changes, in Israel Law as well. To clarify the proposed test, I will bring a number of examples discussed in the US Law:

  • Heart shaped measuring spoons in Bonazoli v. R.S.V.P. Intern., Inc., 353 F. Supp. 2d 218 (D.R.I. 2005)
  • A nargila (bong? Hookah?) reservoir in Inhale, Inc. v. Starbuzz Tobbaco, Inc., 755 F.3d 1038 (9th Cir. 2014)
  • A bicycle rack in Brandir International Inc. v. Cascade Pacific Lumber Co., 834 F.2d 1142 (2nd Cir. 1987)

In all the above examples, the artistic creation claimed cannot exist separately from the device, and so there is no room to grant copyright protection, and at best there is design protection. However, the previously brought examples, for embroidery, decoration, print on a shirt, do pass the test and despite being applied to articles, are nevertheless capable of copyright protection.

In this instance,  an image of a lion can exist separately of a swing-seat, and still be considered as being a creation. The lion image does indeed appear separately from the swing seat on other Fisher Price items. So this passes the second stage, and continues to the third stage.

The examples given are not representative and one can assume that the law developed as a law of thumb. In this case, the famous words of Potter Stewart of the US Supreme Court concerning obscenity in Jacobellis v. Ohio, 378 U.S. 184 (1964) can be misappropriated “But I know it when I see it” . See also Judge Rubenstein’s opinion in the Safecom case.

Before finishing this section, there is point regarding consistency that is worthy of mention. When deciding whether or not to grant copyright in an artistic work attached to a design one should remember that the picture is generally in the grey area; opposite protecting the creator, there is a risk of providing a monopoly that may prevent competition and bring development and creativity to a halt. See Ofer Groskopf “Protection of Competition by Unjust Enrichment” (2002) 325-330; Inter-lego p. 156. The “Woe to me on account of my Creator (Yozer). Woe to me on account of my evil inclination (Yizri)” (Babylonian Talmud, Brachot 51a) test. Bringing the words of A. Goldberg on this:

Unlimited copying and lawless competition removes the comparative advantage from the creator, obtained by his effort or talent. This regime results in the lowest common denominator, since there is no difference between the copier and the independent creator. Here is the danger of freezing. One can assume that copying items will undermine the development of new products and examples that are improved and more efficient, and will make the effort of developing uneconomical.  However, the rigor-mortis things grinding to a halt may also be the result of a general prohibition of copying…the total forbidding of copying is also likely to result in development and creativity grinding to a halt and stopping (Goldberg pages 1160-1161).

I think that the way to deal with this risk is by limiting the scope of copyright protection to copies of the expression as given, or to very close copies. This is particularly true for creations with an inherent limited number of expressions. See Appeal 360/83 Strosky ltd vs Vitman Icecream Ltd. p.d. 40(3) 340 (1985). This interpretation allows maintaining copyright and also defending incentives to creators to vary the world of creativity. Whilst allowing use of their ideas to advance knowledge. (See the Safecom case, paragraph 26 of Judge Danziger’s ruling). Also, the compensation for copying has to be limited to that for copyright infringement and not for the device in its totality.

The Lion Picture – An artistic Creation?

Having passed the second test, and found ourselves able to separate the lion from the seat, we have to consider whether the lion itself is worthy of copyright protection. Section 4(a)(1) of the Law states that “there is copyright in original creations that are literary or artistic, dramatic or musical, that are fixed in some manner.” The lion picture is an artistic creation as defined in Section 1 of the Law. The originality requirement is the heart of copyright (Inter-lego p. 169), and this is self-evident: if there is no originality, what is the source of the right? The originality requirement includes three main tests – that of toil, that of creativity and that of novelty. (See Safecom paragraph 12 of Judge Danziger’s’s ruling).

The test of investment requires that the creator must toil in his creation in order to benefit from the fruit of his labors (Interlego p. 164). The creativity test has its origins in a conceptual framework laid out above, under which the purpose of Copyright Law is to enrich the world of creation. Within this framework, one has to consider the nature of the investment separately from its quantity Appeal 8485/08  The FA Premier League vs. The Authority for Regulating Sport Gambling (2010). However, the creativity required is not particularly high, and may be minimal. The source test requires that the source of the creation is with the creator, i.e. that the creation is not based on some over creative work (Safecom, paragraph 13 of Judge Danziger’s ruling). In this instance it seems that the lion picture is both the result of investment and is original, and satisfies these tests easily.

The Appelant’s employees invested in creating the lion character and no claims were made to challenge its originality. As to creativity, Judge Rubinstein agrees with Greenman that “generally, artwork will pass the creativity hurdle, since artwork intrinsically requires selecting from different ways of expressing (page 113) and as Judge Posner put it “Judges can make fools of themselves pronouncing on aesthetic matters”, Gracen v. Bradford Exch., 698 F.2d 300, 304 (7th Cir. 1983); meaning that judges in law do not [necessarily] have ability to express opinions on aesthetics and beauty, even if each of them is entitled to his or her opinion. Once one establishes a low bar, the lion passes the creativity requirement and the image is copyright protected.

Interim Summary: The District Court was right to refuse to see copyright in the seat itself which could have been registered as a design. However, the lion image applied to the seat is copyright protectable and it meets the requirements for having copyright protection.

Direct Infringement

The District Court ruled that the defendants did indeed infringe Fisher Price’s copyright residing in the instruction manual, but considered this indirect infringement and that the defendants were not knowingly infringing. Although not required to, the District Court considered that would copyright be found to subsist in the chair or the artwork, here again the defendants could claim that they were not knowingly infringing.

Since we have established infringement of the lion image, we now considered whether the infringement is direct or indirect.

Fisher Price disagrees with the district Court’s findings that the infringement in the copying of the instruction manual is indirect.

Copyright does indeed differentiate between direct and indirect infringement. Section 47 of the Copyright Law states that:

One who does one of the actions listed in Section 11 without permission of the copyright owner is considered as infringing unless the action is allowed under Chapter 4.

This section teaches that determining copyright infringement requires three conditions being met: One of the actions listed in Section 11 must be done. There must be a lack of permission by the copyright owner under Chapter 4. Section 11 includes copying as defined in Section 12. In this instance, no one disputes that the lion image and the instructions manual originated with Mattel Inc and their employees, and the imported chairs are copies. The issue is the role played by the defendants in the copying.

In the proceeding before the District Court, the defendants distanced themselves from the manufacturing of the seats and claimed to have merely imported them from the Chinese manufacturers. However, in the framework of criminal charges brought against them, the defendant wrote that “I further claim that the Infanti Company is registered in the US and is a collaboration of a number of businesses in a number of countries, including my company, that manufactures items in Chinese factories and sells this in various countries around the world, including Israel.” Also in their Statement of Defense to the Tel Aviv District Court they wrote: ” the defenders will claim that Infanti is a US registered company that is a collaboration of a number of businesses in a number of countries, including my company, that manufactures items in Chinese factories and sells this in various countries around the world, including Israel.”, this statement under which the importer is part of the Infanti company, was the original version that was shown to the District Court.

After considering the evidence and testimonies, the District Court ruled that it was not proven that the Defendants themselves manufactured the swing-seat, the upholstery, and instruction booklet, but this conclusion was reached without considering the earlier claim by the defendants as quoted hereabove, that they were party to the manufacturing. Judge Rubinstein finds it difficult to accept this conclusion. He considers that the above Statement, given in both this and the corresponding criminal case, estoppels the defendants from claiming that they did not manufacture the seat. The Defendant affirmed on two occasions, including before the Court of First Instance, that they were party to the manufacture and sale of the seats in Israel, and cannot subsequently claim to be an innocent importer of a chair that is made in China. As stated on other occasions, the Court is not at your service, such that one can swear what one likes when one likes. See Appeal 778/09 Legal Advisor to Government vs. Plony p.d. 63(3) 111, 118 (2009); and also see Appeal 739/13 Gur Ben Zion vs. the Even Yehuda Municipality, paragraph 10 there, 4506/12 Plony vs. Plonit, paragraph 8, 2012; 5855/14 Plony vs. Plony paragraph 6, 2014, 2940/14 Plonit vs Plony, paragraph 10, 2014. [Plony and Plonit just means John Doe and Jane Doe, or Anon – see Book of Ruth, 4: 1 MF].

Following on, as stated in re Ben Zion, “Even if the thing is not formally a legal estoppel, since it is not something that was said in a court proceeding that has run its course and been ruled on” see Appeal 4224/04 Bet Sasson Ltd vs Workers Homes and Investment Ltd, p.d. 59(6) 625, 632-635 (2005), “the requirement for fairness and equitable behavior is sufficient to prevent someone from claiming something and the opposite from expecting the court to accept his pleadings will be accepted.” The defendants did not supply an acceptable explanation, and essentially did not supply any explanation that bridges the gap between their previous claim that they were part of a consortium that own Infanti, and their current claim of being innocent importers, and so we can discount their claim that they did not manufacture the chair, because legally they did, even if technically it was fabricated in a Chinese factory.

Indirect Infringement

Beyond that which is necessary, Judge Rubinstein added that even were we to accept the defendants claim that they did not manufacture the swing seat (which we do not accept), there is room to see them as indirect infringers, without them having the defence of being innocently infringing. Beside the responsibility that the law confers on one copying without the manufacturer’s permission, Section 48 of the Copyright Law considers one who trades in copyright infringing goods as infringing:

A person who does one of the foregoing acts with respect to an infringing copy of a work, infringes the copyright, if at the time such act was done he knows, or he should have known, that said copy is an infringing copy:

  • Sells or lets for rental said infringing copy, including offering or displaying for sale or rental.
  • Possesses said infringing copy for a commercial purpose;
  • Distributes said infringing copy on a commercial scale; (4) Exhibits said infringing copy to the public in a commercial manner;
  • Imports into Israel said infringing copy that is not for personal use as provided for in section 129 of the Customs Ordinance.

Providing responsibility for indirect infringement ‘serves as an additional barrier to protect the interest of the copyright owner, and serves to widen the circle of responsiblity for copyright infringement – see 5067/11 “Telran Telecommunications (1986) ltd. vs Charlton Ltd. paragraph 18 of the ruling by Judge Zilbertal (2013). The need to be able to sue the indirect infringer is due to the direct infringer not always being reachable.

It is true, as can be seen from the language of the Law, that whilst Direct Infringement does not require the infringer to be aware, in order to consider indirect infringers responsible, the legislators did require that the indirect infringers have real or construed awareness that a copy is an infringing copy, and the indirect infringer may be considered aware due to circumstantial evidence such as the purchasing or sale of the articles at vastly discounted prices, purchase from a suspicious or unidentified source, suspicious behavior; where the infringer is active in the field, he has an increased burden to convince the court that he is unaware of the original see Afori 386-387.

The District Court ruled that the defendants were not indirect infringers since they could claim to be innocent of wrongdoing. This defense is given in Section 58 of the Law:

Where a copyright or a moral right has been infringed, but the infringer did not know, or could not have known, at the time of the infringement, that copyright subsists in the work, he shall not be obligated to pay compensation in respect of the said infringement.

Judge Rubinstein does not see eye to eye with the District Court considering indirect infringement under Section 58. Whilst Section 48 relates to indirect infringement, Section 58 relates to the lack of criminal responsibility for a direct infringer who is otherwise always responsible. In the words of explanation for Section 60 of the proposed law which became section 58 of the Law, it is written that:

As a general rule, the civil tort of copyright infringement is a type of complete responsibility that does not require knowledge of the infringement. There is an exception which relates to not knowing that there is copyright protection. If someone innocently believed that copyright in a work has lapsed, or that the work is not covered by copyright, the legal measures ruled against him will not include compensation, but only a ruling to desist from further usage – See Afori page 462.

From these words of explanation we learn that the defense of innocent infringement is not relevant in light of the District Court ruling that the infringement is only indirect. But I do not consider that the defendants have this defence, since it is only applicable in exceptional cases; where the existence of copyright is  in reasonable doubt, such as old creations where it is reasonable to assume that they are now in the public domain, or cases where the defendant could reasonably conclude that there is no copyright. Whereas in indirect infringement the burden of proof is on the plaintiff, the defence of unknowingly infringing in direct infringement cases is on the defendant, where, due to the nature of copyright infringement, the burden of proof is higher.

Although unnecessary, as part of the application of Section 48 which deals with indirect infringement, in this instance, we will consider if, on the basis of the evidence and testimonies, we will consider whether in the present instance, the defendants could reasonably conclude that the swing seats were infringing copies. Firstly, the defendants sold the swing seats at a discounted price below that of the plaintiff. Secondly, throughout the District Court proceeding, the defendants were evasive and refrained from giving clear answers with respect to their connection to “Infanti”. The District Court noted this in its decision of 1 November 201: “after hearing the claims of the parties, it appears to be that the defendants did not fulfill the court’s requirements regarding discovery and questionnaires, and this is not the first time, according to the counsel for the defence.. I consider the questions of the plaintiff are relevant and significant and the defendents should have responded, but have not responded appropriately. And to the extent that they have provided answers, they give the impression of being elusive to a greater or lesser extent. The discovery process in the pre-trial stage is designed to enable the court to drill down to the truth and to make the main proceeding more efficient (See 9265/06 Club Hotel Management (1996) Ltd vs Adv. Yael Dagan (2007); where the defendants have been elusive in their responses, it should act against them.

An additional piece of evidence is the fact that the defendant 1, is self-described as being a large company that has been importing and selling baby clothes for more than 20 years. This makes it clear that the defendants known the Israel baby goods market and know what is sold in the various stores, including brand-name articles that they do not carry. From this it appears that the defendants knew or should have known that the seats they were marketing are rip off copies. However, this is superfluous since the first defendant was a partner in the fabrication of the seats and thus a direct infringer.

Infringement of the Plaintiff’s Trademark

It will be recalled that the District Court found that the Instruction Booklet appended to the swing seat that was sold by the defendants includes a registered trademark of the Opposers. However, after examining the evidence and testimonies, conduced that the Defendants were inadvertently infringing and so rejected the Apellant’s claims. This raises the legal question of whether or not trademark infringement requires a certain state of mind. The District Court considered that the defendants were guilty only if they willingly infringed a trademark, and that it was possible to inadvertently infringe and one should not be considered responsible in such cases (paragraph 132). As stated above, the Legal Advisor to the Government considered that the state of mind of the defendants was irrelevant, since the Trademark Ordinance merely requires infringement. I will note at the beginning of this discussion that I agree with the final conclusion, but reach it via a different route from that taken by the District Court.

The purpose of the arrangement established in the Trademark Ordinance, is two-fold: On the one hand, to protect the public from being mislead, and on the other hand, to protect the individual from having damage to his goods and reputation. (See Appeal 5454/02 Taam Teva 1988, Tivoli Ltd vs Ambrosia Supherb Ltd (2003). Section 46a of the Trademark Ordinance states that a valid registration of a trademark to someone gives him the right to exclusive use of the mark for goods on which the mark is appended, and with respect to all that happens with them, within the framework of any conditions and restrictions recorded in the register. The Trademark Ordinance provides a monopoly to the registered trademark owner (See 3559/03 Gold Toto Subscriber’s Club Ltd. vs. The Authority for Regulating Sports Gambing p.d. 59(1) 873 (2004).

Section 1 of the Trademark Ordinance defines infringement:

Infringement” means the use by a person not entitled thereto of a registered trade mark, or of a mark resembling such a trade mark, in relation to goods in respect of which the trade mark is registered, or to goods of the same description; (2) of registered trade mark in advertising goods of the class in respect of which the mark is registered of goods of the same description; …

From these Sections, it is clear that the Trademark Ordinance is a system wherein there is absolute responsibility, and when considering infringement one considers the usage and not the invent of the infringer to mislead the public. This court has ruled that the intent to deceive or to mislead is not a foundation for claiming trademark infringemen. There can be infringement even in cases where the infringer is unaware of the existence of the competitor’s mark or if it is inadvertently copied; and it is sufficient for the plaintiff to collect the regular legal remedies for infringement See Appeal 715/68 Pro-Pro Buscuit vs. L Fromein Ltd. p.d. (2) 43, 48 (Judge Berenson  (1969).

Thus neither the written law nor the case-law require the infringer to be willfully infringing in a trademark infringement case. It appears, if not explicitly stated, that the District Court considered whether the defendants were acting inadvertently, since in this instance, there is no real danger that the purchasers would be mislead, and the concept of whether misleading is required has been considered in the case-law. The wording of the law, and following it, the case-law, differentiates between similar and identical marks (Section 1 of the Ordinance). In the Tiv Taam case, Judge Gronis ruled that in order to prove infringement with similar trademarks, one has to establish that the similarity is misleading – See 563/11 Adidas salomon A.G. vs G’lal Yasin (2012) and Appeal 6658/08 Multilock Ltd. vs Rav Bareakh (08) Ltd. (2010).

For a discussion of the need to mislead for  a mark to infringe, see V&S Spirt Aktiebolag Ltd. vs Absolut Shoes Ltd, p.d. 58(6) 869 (2004).

In Appeal 8432/02 Eloniel vs. McDonald (2004) which dealt with using a name for publicity purposes, Judge Rivlin ruled (in the majority opinion) that where marks are identical, the intent to mislead is unnecessary. See sections 13-15 of the ruling, and see also 1400/97 Picanti (Israel) Food Industries Ltd. vs. Osem Food Industries Ltd. p.d. 51(1)310 (1997).

Judge Naor (minority Opinion) ruled that one required an intent to deceive: “Trademark infringement needs a confusingly similar mark that is likely to cause someone using the mark will benefit from the mark owner’s reputation Paragraph 9 of the ruling. In the Toto Zahav case, Judge Beinish ruled that if there is no indication of misleading it is not clear that trademark registration gives such wide protection that one is entitled to sanctions, but leaves this question open. See also Katia Zichrov “The Scope of Protection for a Trademark Image following Appeal 8432/02 Eloniel vs. McDonald (2004)” Laws 35, 435 463-464.

From the above, it is seen that the law regarding identical marks, as in our case, is such that there is no need to establish an intent to mislead to establish legal responsibility (unlike with similar marks). Personally, Judge Rubinstein likes Judge Beinish’s and Naor’s positions, that as Judge Beinish stated “the status of a mark is primarily to prevent misleading the public with respect to the origin of goods (Toto Zahav paragraph 12). However, due to the position reached, he does not think that it is necessary to reconsider whether or not there is an attempt to deceive in trademark infringement cases. In summary, in Trademark Infringement cases, there is no need to consider the intent of the infringer where the marks are identical, and in the established case-law, there is also no need to consider whether there is misleading in practice or an attempt to mislead.

From the general to the specific: Everyone accepts that the instruction booklet includes registered trademarks of the Appellant, and the defendants marketed the swing-seat and the instruction booklet, and so, I consider their actions infringe the trademark. As to the instruction booklet, what did the defendants think when they saw the instruction booklet with the registered trademark? Did they think that there are free meals in the business world they operate in? After stating this, what is the legal sanction available to the Appellants? The Trademark Ordinance does not allow compensation without proof of damage (section 59 of the Ordinance). Although there is difficulty in estimating the damage in this instance  where we are considering intellectual property, but this difficulty does not free the plaintiff from his obligation to prove damage – see Appeal 7629 Elad Menachem Suissa vs. Tommy Helfiger Licencing LLC (2014).

In this instance, the Appellant did not set out a basis for proving damages from the trademark infringement, and the circumstances show that the damages caused, if there was damage, was very low. It appears that the infringement is subsidiary in this instance where the logo only appeared in the instruction booklet within the box, and it is difficult to see it at all with the naked eye. So despite noting there being infringement, no sanctions are available to the Appellant in this regard.

Passing Off and Unjust Enrichment

As to the Appellant’s claims of passing, off, Judge Rubinstein did not see justification to get involved in the decision of the District Court to the effect that the Appellant had failed to establish that there was a case.

Section 1(a) of the Trade Torts Law 1999 states:

No business shall cause third parties to believe that his products or services are the products or services of a different service provider or that they are related to the products or services of a different business.

The tort has two requirements that both must be met: there must be a reputation and a reasonable likelihood that third parties will be misled regarding to the origin of the goods or services. There are two types of reputation; that of the manufacturer and that of the product. See Appeal 945/06 General Mills vs. Meshubach Food Industries Ltd (2009). For a discussion regarding the basis of the tort, see Appeal 5066/10 Angel vs. Berman 2013. The Appellant claims a reputation of the first type, i.e. as a manufacturer. In such cases, one has to prove that the public sees the article for sale as connected to the plaintiff. Without connecting the product with the supplier, there cannot be proof that the product has a reputation. In this instance, the Appellant has failed to establish their case.

Here our journey in IP Law ends. Before, the end, we not one last basis for claiming compensation, that of “Unjust Enrichment. The legal framework for the tort of Unjust Enrichment where a product is copied is discussed at length in the A.Sh.I.R. case. And see the Angel ruling, paragraph 53 of Judge Amit’s ruling, and the references there; the Shoham case, Groskopf 303, Deutch 173-278; “The Vulture and the Princesses, the Relatonship between Unjust Enrichment and Copyright” in Copyright Readings, edited by Michael Birnhack and Guy Pesach, 2009. In the ruling it is stated that the mere duplication of a product that this not protected by IP Law, where the copying is not a breach of faith or of a trade secret – is insufficient to grant sanctions under the Law of Unjust Enrichment. In order to grant sanctions, it is necessary that there is:

  1. Enrichment
  2. The enrichment is at the expense of the plaintiff
  3. That it is illegal, i.e. that there is some additional element as Chief Judge Barak put it:

We all consider that copying a product that is not protected by statutory IP Law, where there is no passing off and no infringement of a trade secret or trust, is not an action that can be compensated for by the Law of Unjust Enrichment 1979: We all agree that a condition for compensation is some additional element of bad faith. Page 449 of the ruling.

The judges in the A.Sh.I.R. case were divided with regards to the additional element. However, as Judge Rivlin noted in the Shoham case, it seems that two conditions did receive the support of the majority of the judges. One was that the idea was well defined and quantified, original, unique and implementable, and that it was something that the owners were using or intended to implement themselves. The other condition was that the infringers were knowingly implementing someone elses idea (page 432). Other criteria were noted in the A.Sh.I.R. case, including the degree of novelty of the product and its contribution to society; the degree of investment in its development, and whether there was a one-off copying or systematic copying; whether the copying was partial or total; the time period over which the product was on sale, the degree of difficulty in copying; whether or not there are other alternatives available besides the copies, see Deutch page 223. Furthermore, one can see a certain narrowing of the A.Sh.I.R. precedent in later cases, see Appeal 9568/05 Shimoni vs. Moby Birnbaum Ltd, paragraph 15 of the Deputy President Rivlin’s comments  (2007) where it was ruled that:

Only is extreme cases where the basis of the invention is characterized by its uniqueness, novelty, and an investment of time, money and human resources to a large extent in its development is there a justification to tilt the balance and provide recourse under the laws of Unjust Enrichment, and not under the usual route of Intellectual property and tort law.

As emphasized above, one can leave the issue of the application of A.Sh.I.R. open since in this instance, the Appellant is not entitled to sanctions under the Law of Unjust Enrichment, and the  application of A.Sh.I.R. nowadays will be discussed in an appropriate case.

It is emphasized that in this instance, the Appellant claims that there is an additional element of bad faith without consideration of what this is taken to mean in the A.Sh.I.R. ruling, and so there is no proven basis for ruling Unjust Enrichment. Additionally, Judge Rubinstein considers the Application of the A.Sh.I.R. principles to this case shows that it is not appropriate to grant compensation under the Law of Unjust Enrichment. Some of the justifications do apply. The defendants knew or should have known that they were importing an exact copy of the Appellant’s product, and they could have designed a competing chair; the import of the Fisher Price chair started only a short period before the defendant’s chair was available, nevertheless, the circumstances taken as a whole do not create a situation wherein the Law of Unjust Enrichment should be applied:

  1. Was there this additional element regarding whether these rights in the chair could have been registered (A.Sh.I.R. pages 387, 433, 488, 501), General Mills paragraph 20). In this instance no design for the chair was registered and no reason for this failure to register the design was given. In such instances, only in rare and exceptional circumstances is there room to recognize the “additional element”.
  2. This is a copy but in the circumstances, the consumers are not confused as to the source of the goods. Only in rare circumstances can one say that a cheap copy that does not confuse the public is illegitimate. (See General Mills paragraph 22). In this case, the swing seat copies were sold under the brand Infanti and as such the vast majority of consumers would not think that they had purchased a Fisher Price seat.
  3. Finally, the Appellant has not provided evidence to support the contention that their seat is particularly original and deserving of wide protection. Since we have found that there is no basis for providing sanctions under the Law of Unjust Enrichment, there is no reason to address the Legal Advisor to the Government’s problems with A.Sh.I.R., and so for the present Unjust Enrichment can coexist with intellectual Property laws in certain circumstances.

CONCLUSION

Judge Rubinstein concludes that the Appellant’s copyright in the lion character and the sales brochure is infringed by the plaintiffs and they have also made infringing use of the Appellant’s trademark. He advises returning the case to the District Court to determine appropriate damages for the copyright infringement, and awards costs of 30,000 NIS.

Judge Melcer

Judge MelcerJudge Melcer agrees with the thorough and detailed ruling of Deputy Chief Judge Rubinstein. However, he considers that there is also room to give sanctions under the tort of passing off as follows:

The tort of passing off finds legal support in Section 1 of the Trade Torts Act 1999 which states:

1(a) A trader may not cause a product that he sells or a service that he provides to be wrongly considered as being provided by a different tradesman or service provider.

This tort is the tort of passing off which was previously stated as Section 59 of the Damages Law. Consequently it  is legitimate to use the case law relating to the original tort in its previous incarnation to explain its meaning within the new context of trade laws (See Appeal 5207/08 World ORT vs. ORT Israel, paragraph 15 (1 Feb 2011) and Miguel Deutsch “Trade Torts and Trade Secrets 2002, 60-57.

In our case-law it is stated that to benefit from this defense, the plaintiff must prove two conditions: Firstly that the trader has a reputation in the goods or services in a way that the public associates the goods or services with him in a positive manner, and secondly that the defendants actions create a situation wherein the public is misled or could be misled into thinking that the defendants goods o services originated with the plaintiff. See Appeal 5207/08 World ORT vs. ORT Israel, paragraph 16 (1 Feb 2011) and Appeal 523/08 Cohen vs. Nadir p.d. 49(2) 353, 359 (1995); Appeal 1898/12 Gift Center 2006 Ltd vs. Karshi International Ltd, Section 16 (09 September 2014).

The tort of passing off is intended to balance two competing interests. It attempts to protect the business interests of the vendor who has acquired a reputation in his business and to prevent others from benefiting from that reputation by misleading the public regarding the source of the goods or into believing that there is a business connection between the competitor and the original vendor. On the other hand, in setting boundaries to this tort, the court brings into consideration the need to protect other values such as freedom of occupation and the right to compete which opens the markets and serves consumers’ interests. See Appeal 7980/98 Freundland vs. Haliba p.d. 44(2) 856, 867 (2000) and Appeal 9070/10 Tali Dadon-Yifrach vs. A.T. Snap Ltd,  paragraph 7, (12 March 2012) paragraph 17 or the ORT ruling and Paragraph 16 of the Gift Center ruling.

In this instance, the District Court and colleague the Deputy Chief Judge Rubinstein ruled that the Appellant does not have the reputation in the goods in question, a nd despite the identical appearance of the infringing goods, there is no proven risk of confusion as I will now detail.

Reputation

Proof of a reputation is a precondition for the Plaintiff to prove passing off, and it has been ruled that “the question of reputation is difficult to define accurately and fully. The intention is the positive reputation of a good in the eyes of the public, which thanks to the good itself, there is a market of customers willing to buy. See Appeal 371/89 Leibovitz vs A. At Y. Eliyahu Ltd, p.d. 44(2) 309, 315-316 (1990); see also Appeal 5066/10 Shlomo A. Angel vs. A Berman Ltd, para 8 (2013).

It has also been ruled that it is not important that the product be identified with a specific manufacturer or group of products. It is sufficient that the consumer intended to purchase a specific item and conceptually linked this to a specific supplier or source (see General Mills paragraph 10). To prove a reputation, it is necessary for the plaintiff to show, depending on the specifics of each case, that the name, trademark, or description of the goods are recognized by the public who has got used to recognizing them as indicative of the business or goods of the plaintiff. As a rule, to the extent that the product is less distinctive and unique, one has to have greater usage to establish a reputation (see paragraph 10 of the Angel case).  However, when dealing with a staple product that serves the wider public, the burden of proof is not easily attained, since sometimes the consumer chooses a product, not because of the producer but because he prefers its shape, its ease of use or price (see Appeal 18/86 Israel Glass Factory Phoenicia vs. les verreies de saint gobain, p.d. 45(3) 224, 241 (1991).  On the other side of the coin, one can state that to the extent that one is relating to a unique product that is addressed to a specific consumer group, one can manage with less wide and extensive usage.  Widespread use can prove a reputation, and in general will be required, but it is not sufficient since “the type of usage is important. The plaintiff has to prove that the usage is such that the purchaser identifies the goods with them. This is the definition of reputation”. (Phoenicia p. 243). It is also ruled that the defendant copying a product is not, of itself, sufficient to show that the plaintiff has acquired a reputation in the product, since copying per se is legitimate and allowed so long as it does not trejudice the property rights – the reputation of the plaintiff (see Phoenicia p. 232).

Judge Melcer now applies these principles to the present case.

Judge Melcer considers that the Appellants succeeded in raising the burden of proof and have showed that they have an appropriate reputation to substantiate a claim of passing off. To the extent that this relates to Fisher Price’s reputation, the Appellants have testified that the company is the world’s largest company providing baby and pre-school products and that their annual turnover in Israel is 10 million shekels wholesale and 20 million shekels retail.

It was also testified that Sakal Toys who represents Fisher Price in Israel, spends significant sums on promoting Fisher Price, including TV and Internet advertisements and printed catalogues. Furthermore, the Appellants have shown that the Fisher Price brand is so well known in Israel that the sales portal ZAP has its own department for Fisher Price goods. This is sufficient to establish that Fisher Price has a reputation in Israel.

Furthermore, Judge Melcer considers that Fisher Price has a reputation in the specific swing seat in that it has sales of 5000 items a year which may be considered as being a commercial success. Furthermore, the Appellant has shown that the lion image on the chair, which has copyright protection, has contributed to the reputation since it is identified with Fisher Price by the public.

Is there a likelihood of misleading the public?

The tort of passing off, which requires misleading the consumer, exists where the defendants actions create a false impression regarding the source of a good or service where the purchaser mistakenly considers that (s)he has purchased a product or service from the plaintiff or that is otherwise connected with the plaintiff, when in fact he has purchased the goods or services from another – from the defendant who benefits from the mistake (see re Cohen , 362).  To reach the burden of proof to show misleading, one has to show that there is a false indication of the source of the goods. (see re Gift Center, para 17), however, one does not need to show consumers were actually confused, and a reasonable likelihood that a consumer will err and think he has purchased the plaintiff’s goods is sufficient. See Freudlich page 866, Appeal Vargus vs. Noga Hadassah Ltd, p.d. 52(1), 521, 532 (1998), and re Cohen 363.

The test for confusing similarity in the tort of passing off is similar to the ‘triple test’ for trademark infringement and includes the appearance and sound, the type of goods and consumers and all other considerations – see Cohen 363.

That said, it has been ruled that there is a significant difference between the two crimes. This was discussed in Appeal 5454/02 Taam Teva (1998) Tivoli Ltd vs Ambrosia Superherb Ltd, p.d. 57(2) 438, 450-451 (2003), where it is stated that:

Despite the similarity between the tests for confusing similarity with passing off and trademark infringement, there is, nevertheless, a substantial difference between the two instances. The difference is with regards to the defendant’s intent. With passing off, there has to be an attempt to deceive the consumer with regard to the source of goods, whereas with trademark infringement the issue is whether the marks are objectively confusingly similar.  In trademark infringement, less weight or in some cases no weight at all is given to the visual similarity of the goods or the packaging (See 563/11 Adidas Salomon A.G. vs Yasin, para 14 (27 August 2012) and Supreme Court Appeal 6658/14 Adidas A.G. vs. Yassin 22-18.

It was also ruled that the defendant’s intent to deceive is not essential in cases of passing off, although it does tilt the balance in favour of the plaintiff and make it easier for him to show a likelihood of consumers being misled. Thus it can happen that there is a danger of consumers being misled even in cases where the defendant did not intend to copy the products or services of the plaintiff, but the opposite is also true – intent may be insufficient if there is no confusing similarity or the plaintiff does not enjoy a reputation – see re Phoenicia 232-234; re Vergus 529-530; re Dadon para 11 and re Gift Center para 17.

Now, having summarized the laws and tests, Judge Melzer turns to test if the basis for misleading exists in this case.

  • The appearance and sound test is the central of the tests. (see Taam Teva, 451). The basis of this test is compares the appearances of the goods in question (and the sound where appropriate). To consider the similarity, there is an emphasis on the first impression given by the goods in their entirety (see Taam Teva 451, Appeal 1223/04 Canali S.P.A. vs. Canal Jean Co. para 5, 13 Jan 2005. In this instance, it will be remembered that the District Court Ruled that:
    The properties of the Fisher Price chair and that of Infanti, the upholstery and the instruction manual teach that their general appearance is practically identical (para 40). Also Judge Rubinstein ruled that “the similarity between the chairs is self-evident, and the man on the street will detect copying.” I have also considered the pictures submitted and have concluded that there is a confusing similarity, and the imported chair is practically an exact copy of the plaintiff’s chair.
  • The other considerations of the “Triple Test” also exist in this instance. Noone disputes that the class of goods and the consumer group is identical, and Judge Melzer does not consider that the consumer group is sophisticated and will not be confused (see Tiv Taam p. 453) and so there is a large danger of confusion. Furthermore, Judge Melzer does not accept that differences in packaging or the marketing under the Infanti brand are sufficient to prevent the public being mislead. Even if the public does not necessarily identify the seat with the Fisher Price that is not sufficient to prevent prevent passing off., since we are not talking about professionals that carefully check the source of goods, and the name of the manufacturer (See the Angel ruling, paragraphs 12-19 (30 May 2013) with regards to the different levels of awareness of different consumers).
  • The third test, the other circumstances, is a test that accompanies the main tests and considers the case specifics and anything not considered with respect to the sight and sound or the client base and distribution channels (Taam Teva 453, Adidas para 15). In this regard, the fact that the defendants describe themselves as having imported and marketed baby products for 20 years acts against them.  Logic and common sense lead one to conclude that the degendants knew or should have known that the chairs that they manufactured and imported are almost exact copies of the Appellant’s swing seats and that this may confuse the consumer.

The conclusion is that the tort of passing off exists in this instance. Here we note that unlike trademark law which does not enable the plaintiff to obtain compensation without proof of damages (Section 59 of the Trademark Ordinance), Section 13 of the Trade Tort Law states that a court can rule up to 100, 000 Shekels compensation without proof of damage, see Appeal 5671/11 Anderson Medical vs. Unipharm Ltd 15 July 2012, and the rules for statutory damages that are set out there.  That as may be, Judge Melzer agrees with the result suggested by Judge Rubinstein but considers it should be given for passing off, not for copyright infringement.

Judge Fogelman’s Ruling

Judge FogelmanAfter reviewing the position of Judge Rubinstein, Judge Fogelman finds himself agreeing with his analysis and result, and also with regards to passing off.

Judge Rubinstein dealt extensively with the development, basis and purpose of the tort of passing off as stated in Section 1 of the Trade Tort Law 1999, and so Judge Fogelman relates to this only briefly.

The tort of passing off is meant to prevent damage to the reputation earned by a tradesman in his business (See Appeals 9070/10 Dadon-Yiftach and 520/08 World ORT as above, and their citations. The plaintiff has to prove two things: that he has a reputation and that there is a reasonable likelihood of the consumers being confused as to the source of goods or services Gift Center, Angel, 9568/05 “Shimoni vs. Mobi Birnbaum ltd, para 8, 25 June 2007.

Over the years, the case-law has several times dealt with the problem of defining reputation – see for example, Appeal 371/89 Leibowitz vs. Eliyahu.

Apart from this, to establish a reputation, requires either the manufacturer having a reputation that indicates that their products are quality items or that the product itself is a quality one (Ort para 21 and General Mills para 2009). Judge Amit explained the difference in the Angel case:

Sometimes a reputation results from the good name of the manufacturer and sometimes from the marketing of the brand. Where there is passing off, protecting both types of reputation is appropriate when considering the underlying rationale of the tort of passing off, which is the protection of the plaintiff for his reputation. One can therefore consider the consumer’s awareness on a number of layers. At a high awareness layer the consumer wishes to purchase a specific product from a specific supplier that he can name. This is the classic passing off scenario where the consumer himself links the product with the supplier…in a medium awareness scenario the consumer wishes to purchase a specific product of a specific manufacturer but does not know the identity of the manufacturer. In the language of the Law there is nothing preventing such a scenario from being considered passing off. Since the result is the same in that the consumer mistakenly purchases a good believed to originate from a different supplier.  The fact that the consumer does not know the identity of the other manufacturer is irrelevant… In a low awareness scenario the consumer is interested in purchasing a specific product but is ambivalent to the identity of the manufacturer and does not link the product with a specific supplier…In such examples, even if there is similarity between the goods, the plaintiff is not entitled to compensation under the tort of passing off (paragraphs 19-20).

In this instance, Judge Fogelman dissents from Judge Melcer and does not consider that there was a reputation in the swing seat. The only piece of evidence was sales of 5000 items a year. This statistic is not connected to any context and does not clarify the Appellant’s market share for such seats in Israel (compate to re Angel para 22).

Anyway, it is unclear whether this statistic by itself is sufficient to base a reputation for the product. The Appellant used their ammunition to try to establish that Fisher Price had a reputation that extended to their products. In this regard, they provided a lot of different general information, annual sales and advertising budget. The Appellant also claimed that lion image common to the seat and other baby products were identified by the consumers with Fisher Price. In this regard, Judge Fogelman considers that the Appellant did indeed provide sufficient and necessary proof to support their basic assertion of Fisher Price’s reputation in the baby product market, such that the consumer would likely link the swing seat with the company. However, this is not enough to establish that consumers were misled. In his opinion, in the circumstances, they failed to show this was the case.

When considering the basis of misleading, one has to consider whether, when considered as a whole, there is a reasonable likelihood that the defendant’s actions will create a force impression and cause the consumer to think that he has purchased a service or product that connected to the plaintiff, when in fact it was supplied by the defendant (see ORT para 32, and Freundlich v. Haliba. This was the basis for the ‘triple test’ that includes the sound and sight, goods and distribution channels, other pertinent issues, and the common sense test (Appeal 8981/04 Avi Malcha “Golden Goose (Avazi) Restaurant vs. Avazi (Goose) Hatikveh (1997) para 12, 27 September 2006, and the references cited there. The case-law considers that the Appearance and Sound of the mark is the main test (Gift Center para 18, and Tam Teva since there cannot be confusion if the goods or services do not look (or sound) the same (depending on the type of good) and re Angel para 26.

It seems that at the end of the day, in this instance, the general appearance of the two swing seats including their packaging, leads to the conclusion that there is no passing off. Before explaining, Judge Fogelman notes that with respect to reputation, the question is not whether a consumer wanting to buy the chair and not knowing that it is a Fisher Price product will consider both chairs to be identical, but whether a consumer wanting to purchase a Fisher Price chair will inadvertently purchase an Infanti copy.

To test the similarity between the two products, Judge Melcer considers that in addition to a picture of the chair that was brought in Judge Rubinstein’s opinion, there is a real need to consider the packaging of the devices. For the sake of convenience, these are reproduced below.

boxes
It is clear to see that there is no similarity in the packaging (more about this below). It will be noted that the case-law stresses the importance of the appearance and packaging of the product (when selling goods that are sold in packages) when considering whether something is misleading to establish the tort of passing off, since “passing off is intended to prevent misleading when making the purchase” (General Mills para 15, Shimoni para 11, Appeal 4410/06 NRG Energy International Ltd, vs. Texaco Inc, para 25 (431 August 2010); Appeal 4322/09 Sh. A. Format Trade and Services (1994) Ltd. vs. A. Sh. Shnir Ltd, para 4-5 (3 August 2009); and compare Appeal 11487/03 Augustus Storck KG vs. Alfa Intuit Food Products Ltd. p.d. 62(4), 1, 7 (2008); Apeal 307/87 M. Weissbrod & Sons vs D.Y.G. Becher Electrical Products Ltd. 44(1) 629, 633 (1990).

In this instance, on one hand noone disagrees that there is a significant similarity between the Fisher Price and the Infanti seats, which are virtually identical – and go far beyond the similarity needed to fulfill the functional purpose. On the other hand, the two chairs are clearly marked on the chairs themselves (which the consumer could see on display in the shop) and on the box in a manner that prevents consumers purchasing an Infanti seat thinking it is a Fisher Price seat.

The Court of First Instance also noted other differences (see para 153 of the ruling).

It is stressed that the packaging is totally different; the manufacturer’s name is clearly discernable and emphasized and the label son the chairs themselves are clear, so that customers will be well aware that they are purchasing Infanti swing chairs and not Fisher Price chairs.

The weight one should give to the packaging when considering passing off is case specific, and should be judged on the individual merits. In this instance there were no claims that the good were sold unwrapped and so the similarity between the chairs themselves is insufficient to change my mind (Compare to Shimoni para 11). Note that the issue is at the time of purchase, when the product is purchased boxed. It should be added that the price difference also makes it clear to purchases which product they are buying and possibly indicates that there are separate groups of consumers. For these reasons, even if the Appellant has successfully shown that Fisher Price has a great reputation, they have not established a case for compensation under the Law of Passing Off.

Appeal 1248/15 Fisher Price (Mattel Inc) vs. Infanti et al. Ruling by Judges Rubinstein, Melcer and Fogelman, 31 August 2017.

COMMENT

When copyright was a limited monopoly provided to the printer to ensure a return on investment (and likewise the European Jewish system of bans) it was reasonable to conclude that the system was an inventive to publish. Creative artists and writers probably don’t need financial incentives, and the work performed for financial reward is rarely their best. No one needs life + 70 years as an incentive to do anything. Copyright protection is too long, and probably a registration system is needed to prevent every scribble, Facebook post and tweet from benefitting from life + 70 years.

Films and books generally have significant sales comparable to design protection. i.e. 15 years, to become 25 years. There are, of course, books, plays and concertos that have commercial interest after hundreds of years. However, there are also furniture designs and great car designs such as the Mini Cooper that have longer lifespans than that typically enjoyed by designs. If one size is to fit all, copyright protection is simply too long.

In this instance, Judge Rubinstein’s ruling has a logical fallacy. The seats were certainly copies, but the defendants can legitimately claim to have done due diligence regarding patents, designs and trademarks, and concluded as did the District Court, that there is no copyright in the lion image since it was  part of the seat. It is not clear that there was willful infringement, and it is clear from his ruling that Rubinstein was not happy with them being able to copy the seat. In other words, his position is based on the fact that copying a product of a third-party is forbidden, whereas the District Court and the Legal Advisor to the Government seem to be taking the position that there was no copyright in the seat image and copying it was not infringement. Even Judge Rubinstein seems to conclude that the defendants could have copied the seat design with a different image, and thus would have been acceptable.

Additionally, his finding that use of an identical trademark is automatically infringement regardless of intent to deceive is, to my mind, wrong. If I create a poster of famous trademarks is that infringement? If I reproduce a word-mark in this blog, that does not mean that I am infringing. I am not sure that a company or store using a competitor’s mark in a comparative analysis is infringing. In some cases it might be slander or libel, but it not trademark infringement.

Finding copyright infringement in the lion character and in the instruction manual is correct, but arguably these elements are marginal to the sale of the seat, and only a small percentage of the value of the infringing goods lies in the upholstery decoration. The infringers are actually able to legally import the same seat with a different pattern or character and if they do so, one can use this as a basis for calculating the value of the image. Alternatively, Fisher Price can go for maximum statutory damages of 100,000 Shekels, however with 1800 products infringing products, this seems too much. We await the District Court’s ruling.

Many goods are manufactured in the Far East and there is massive copying.  Over the years, we’ve represented Skechers against an Israeli chain of shoe shops for both shape up trademarks and the design of the sole of the shoe, we’ve had issues with copying of Carfoldio’s iconic seat design in various jurisdictions, and have had fake pipes with Huliot’s logo coming into Gaza. We regularly stop Strawberry Shortcake bearing pencil cases, back packs, bed linen, pyjamas and underwear at Israel customs.

We recommend clients to take advantage of the full range of IP and related rights to protect their goods and creations. Had Fisher Price registered their design, it would have helped them obtain an injunction.

I am against the A.Sh.I.R. ruling for the reasons given by the Legal Advisor to the Government. Recently the courts have moved away from applying the precedent, but it seems to me that in its role as guide to the lower courts, the Supreme Court could and should have availed itself of the opportunity to either cancel the precedent or to explain exactly when and how it is to be applied to provide the clarity that is needed.

One Response to  Appeal Regarding Infanti Baby Seats Virtually identical to those of Fisher Price (Mattel)

  1. Sharon says:

    Dear Michael,
    Regarding trademark infringement, although I think that the minority’s opinion of judge Naor in the Macdonald case is the correct one, i.e. that likelihood of confusion should be weighed in both when the accused mark is identical to the registered mark and not only if it’s just similar to it, it is nevertheless the established case law that likelihood of confusion is examined only when the marks are not identical.
    Also, the examples you give of making posters of famous marks etc. are not of use in commerce (unless you use it to advertise competing goods) so there is no infringement there and you may rest assured that you will not face charges for that.
    Also the question of comparative advertising was debated in the Macdonald case and decided the opposite of what you posit, to vit, the use of the Macdonald literal mark in Burger King ad was found to be infringing.
    Perhaps legislation in this field would be in order. But for now this is the law we are stuck with.
    Happy new year!

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