A Balanced Temporary Injunction Against Rami Levy

This case concerns ‘minute steaks’ supplied by Rami Levy – a supermarket chain in own-brand packaging that has some similarity to that of Baladi, a brand that had introduced the product to the frozen meat freezers in Israel. Baladi sued Rami Levy for passing off, copyright infringement and unjust enrichment and tried to obtain a temporary injunction against Rami Levy at what is the start of the Israel barbecue season.

steaks

This case concerns ‘minute steaks’ supplied by Rami Levy – a supermarket chain in own-brand packaging that has some similarity to that of Baladi, a brand that had introduced the product to the frozen meat freezers in Israel. Baladi sued Rami Levy for passing off, copyright infringement and unjust enrichment and tried to obtain a temporary injunction against Rami Levy at what is the start of the Israel barbecue season.

baladi minute steak

The claims of passing off and copyright infringement were considered unlikely to prevail and thus not grounds for a temporary injunction. However, Judge Avrahami saw fit to grant a temporary injunction on the grounds of unjust enrichment. Rather than have Rami Levy’s product removed from the shelves and repackaged which could result in the meat being lost, she ruled that a sticker in a contrasting colour should be attached to the packages indicating that Maadaniya was Rami Levy’s own brand. Rami Levy was also advised to work towards introducing a more different package. The parties were invited to try to settle their differences without the court having to hear the case in its

Baladi makes meat products including minute steak which are thinly sliced steak that can be roasted in a frying pan in one minute. Baladi claims to have designed the packaging that they use for minute steaks.

Rami Levi is a public company that runs supermarkets across Israel. The company stocks known brands and also sells popular products packaged for them under their own label.

Rami Levi sells Baladi products. It also sells minute steaks under their only  own label “Rami Levi’s Sycamore Marketing Delicatessen”. Rami Levi’s own label minute steaks are packaged by TBone Veal.

In a preliminary ruling, Baladi claimed that minute steaks were not sold in supermarkets until they launched this product in November 2017 with a massive and expensive sales campaign. From the launch until 19 March 2018, the product sold well due to the marketing campaign. On 19 March 2018, suddenly, without notice, Rami Levi forbade Baladi to replenish supplies and blocked the product, and instead supplied minute steaks under their own label.

baladi logo

Baladi claims that the own-label brand is packaged in a copycat package of that of their product, and that this was a calculated, organized action of Rami Levi in bad faith, to ride on Baladi’s advertising campaign and product launch, benefiting from their investment. Baladi’s campaign has drawn customers to want to purchase their product. The customers go to the meat refrigerators and find the infringing product that is a copy of their package and are misled into believing that they are purchasing Baladi’s product.

Baladi considers that the case is particularly serious since Rami Levi is a retailer that can block their product whilst offering the competing own-label product. This is particularly problematic since Rami Levi’s product launch was just before Pesach and close to Independence Day which is the start of the Israel barbecue season when sales go up significantly.

In light of the above, on 22 March 2018, Baladi sued for passing off, unfair trade practices, copyright infringement in the product package and unjust enrichment. They filed their case in the Tel Aviv and Jaffa District Court. Baladi requested a permanent injunction, compensation and production of sales data. For the purpose of assessing the court fees, Baladi assess the damages at 2,750,000 Shekels.

Baladi also requested a temporary injunction on Rami Levi to prevent them using the product sold under their private label or at least to prevent them selling the product in the packaging used at the time of filing, and to cease from blocking Baladi’s products, and to enable their products to be sold on an equal basis with other frozen meat products. The Request was supported by an affidavit from Ms Irene Feldman, the VCFO of Baladi, and was filed as an ex-partes action for immediate attention since any delay will cause irreparable damage.

El gaucho minute steak

In response, Yossi Sabato, the VCEO of Rami Levy submitted an Affidavit claiming that Baladi was acting in extreme bad faith by not telling the court that they were conducting a parallel action against El Gaucho which is a label of TBone Veal in the Central District Court as 4347-01-18. In that instance, they made similar accusations which were rejected. This action, in a different court, against a different label, was a type of forum shopping that was indicative of bad faith and should be sufficient for the case to be thrown out. This was simply an attempt to corner the market and to prevent competition. The Ex-partes actions in both the El Gaucho case and in the present instance are cynical exploitations of the legal system designed to get free publicity, and the plaintiff was suing for extreme damages without having first contacted the supermarket chain, which is itself inequitable behavior for which the case should be thrown out.

monopoly

With regards to the complaint itself, Rami Levy claims that Baladi is trying to obtain a monopoly on minute steaks, which is a term known in Israel and abroad and which they did not coin. Baladi also tried to obtain a trademark for this generic term. Minute steaks have been advertised in Israel in the past and are available in restaurants and from butchers, and even from supermarkets. Baladi has not been in the market long enough for minute steaks to be identified with them to the extent that they deserve a monopoly on the term (acquired distinctiveness), and a reputation that is protectable, and even Baladi does not claim to have rights to minute steaks but only to the sound of the name.

Rami Levy

Rami Levy claims that their product package is completely different from Baladi’s, including writing and visual elements, and there is no likelihood of confusion. Baladi advertises their product with their trade-name Baladi clearly written thereon and, in the absence of this term, there is no likelihood of confusion. Rami Levy’s private label HaMaadaniya (literally the delicatessen) is well-known to Rami Levy’s customers as a low price brand, and there is no likelihood of confusion.

“Rami Levy” is written clearly on the front and back of the packaging, and is a super brand that does not need to ride on the reputation of Baladi or anyone else. The difference in price also prevents confusion, and all Rami Levy’s own branded products are clearly sold as such in their stores, and there are loads of examples of private labels being sold alongside branded goods and the public are not misled in any way that they are purchasing something other than the own label.

boycott

As to the issue of marketing Baladi’s products in Rami Levy’s stores, Rami Levy contends that they are under no obligation by general law (in rem) or by contract (in personam) with Baladi, to purchase any of Baladi’s products, including their meat products. Baladi’s goods are available in other chains. At present, Rami Levy stores DO stock Baladi’s minute steaks but, in view of the high price that Baladi dictates for their product, Rami Levy is under no obligation to replenish stocks of something much more

In answer to Rami Levy’s response, Baladi reiterated that their issue is NOT the name ‘minute steak’, but the packaging and the product blocking. On 26 March 2018. a long hearing was held. There were many attempts to bring the parties into an understanding, and the affidavits were reviewed and the parties summarized their arguments. After the hearing the parties still refused to come to an understanding, and so there is no alternative but to reach a verdict in this instance.

Relevant Considerations Regarding Temporary Injunctions

Principles-Governing-Issuance-of-Temporary-Injunction

It is known that the party requesting a temporary injunction has to convince the Court, on the basis of apparently convincing evidence, that there is grounds for the complaint and the Court then has to balance the ease of implementing the different actions, i.e. the damage to the complainant if a temporary restriction order is not issued, vs. the damage to defendant if a temporary restriction order is issued but if it later transpires should not have been. The Court has to ascertain whether the temporary injunction was requested in good faith, and if the injunction is just and fitting in the circumstances and does not unduly damage the defendant – See Regulation 363 of the Civil Procedures Regulation 1984.

interests

The main considerations for requesting a temporary injunction are the likelihood of prevailing and the balance of interests of the two parties, but where the Court considers that the likelihood of prevailing is greater, they will be less concerned about the balance of interests, and the opposite is also true.

When deciding on a temporary injunction, the court also has to consider the honesty of the request and if it is appropriate in a specific circumstance. This necessitates the requester supplying ALL relevant information when making such a request.

The Supreme Court has ruled extensively on temporary injunctions. See for example Civil Appeal 6685/17 Mount of Salvation and Blessing ltd vs. Bank HaPoalim ltd, 10 September 2017; Civil Appeal 131/16 Ashbourne vs. Eisenberg 4 February 2016; Civil Appeal 8716/15 Maimon vs. Reitter 28 December 2015; Civil Appeal 5841/11 Axelrod vs. Bank Mizrachi 20 September 2011; Civil Appeal Representatives of the Communal House vs. Iyun 1 September 2009 and the appendices thereof.

The Question of Equitable Behaviour

faithRami Levy raised the issue of whether Baladi had acted in bad faith by requesting a temporary injunction without relating to the corresponding “El Gaucho” case they had filed with a different court.
On examination of the Baladi vs. El Gaucho case it transpires that that proceeding relates to the same product as the present one, and the requested actions are similar. That said, the cases are not identical, since the El Gaucho case relates to calling the product Minute Steak whereas this instance relates to the packaging design. Indeed, Baladi has brought the El Gaucho package as an example of how a package can be designed in such a way that it is not confusingly similar. The present case also relates to Rami Levy blocking Baladi’s product from their stores.

The Judge Tamar Avrahami concurs that it would have been appropriate for Baladi to have informed the court regarding the action against El Gaucho in the Central District Court, if only since monetary damages were requested for alleged transgressions regarding the same product, and ex-partes requests for injunctions were filed, and such proceedings require full disclosure. Nevertheless, at this stage she does not find that there was forum shopping involved in deciding to file the present action in the Tel Aviv – Jaffa Court. This itself should not prevent Baladi from obtaining a temporary injunction

Rami Levy’s other claims against Baladi are more serious. Baladi filed their that Rami Levy’s packaging was confusingly similar without first approaching Rami Levy orally or in writing with any complaint. See protocol of 22 March 2018. This is not an instance where a warning would have prevented an injunction being subsequently filed (and Baladi does not even claim that).

Furthermore, it appears that in the day before filing the request for a temporary restriction order there was a least one phonecall between the parties wherein Baladi complained about the cessation of orders and not receiving products. In that conversation there was no mention of the allegedly problematic packaging. Baladi di not alert Rami Levi in any way before filing suit against them.

Requesting temporary injunctions, particularly when requested by one party without informing the other, and where first approaching the other party with a cease and desist is problematic. One cannot ignore the defendant’s allegation that this was prompted by non-legal considerations such as business and publicity ones. One cannot ignore the possibility that Baladi simply wants to remove Rami Levi’s own label from the shelves for as long as possible, preferably until the end of the barbecue festivities.

In these circumstances, it is doubtful whether Baladi’s turning to the court was in accordance with the law and whether they are entitled to an injunction in such circumstances. Nevertheless, Judge Avrahami saw fit to relate to the request.

Apparent Chances of prevailing regarding to packaging

Passing Off

passing offBaladi’s main claim is “Passing Off” under Section 1(a) of the Trade Torts Act 1999. It has been ruled that to establish this tort one has to prove two things:

  1. That the plaintiff has a reputation and that there is a likelihood of the public being mislead into thinking that a good or service originated with the plaintiff. See for example, Civil Appeal Fisher Price vs. Doron Import Export ltd, 31 August 2017 https://blog.ipfactor.co.il/2016/06/22/israel-commissioner-vindicated-by-supreme-court/#more-36214, Civil Appeal Gift Center 2006 ltd. vs. Karashi International ltd, 9 September 2014 https://blog.ipfactor.co.il/2014/09/16/israel-supreme-court-overturns-ruling-concerning-unjust-enrichment/, Civil Appeal 5066/10 Shlomo Angel ltd vs. Berman ltd, 30 May 2014, https://blog.ipfactor.co.il/2010/05/10/another-poor-israel-trademark-ruling-this-time-for-health-bread/ and 9568/05 Shimoni vs Mobi Birnbaum ltd 25 June 2007; 4030/02 Amichai Trade ltd vs. Shoresh Travellers Systems ltd, p.d. 58(5) 632 (3 May 2004), and Judge Binyamini’s ruling concerning Plasto-wok (1990) ltd. vs M.A.G. Plastic ltd (26 November 2008).
  2. Passing Off is a tort designed to protect the plaintiff from damage to his reputation. Unlike trademarks, passing off is not designed to protect the public from unfare trade practices (see Angel paragraph 8, Appeal Dadon-Yifrach v. Snap ltd (12 March 2012 – paragraph 7; 5207/08 World ORT vs. Ort Israel 1 Feb 2011), 18/86 Israel Venetian Glass Factory ltd vs les Verreirs de Saint Gobain, p.d. 45(3) 224 (23 April 1991, pages 231-232.

The first condition is to prove that there is a property right that the tort is to protect. This is the ‘basis of the tort’ for which protection of reputation is its purpose. Without proof of reputation, the case of passing off will be dismissed without consideration of the likelihood of confusion. See 5292/99 Religious Family Communications (1997) ltd. The Family vs. N.S.B.S. Advertising, Marketing & Sales Promotions ltd. – Good Family, p.d. 55(3) 933 (23 May 2001) page 942, re Venetian Glass pages 231-232.

To establish a reputation for the purpose of claiming Passing Off, the Plaintiff should show that in the specific cases, the name, logo or description had a reputation that was identified with the plaintiff (se Angel, section 10). The identity of the plaintiff does not have to be known, bu it is necessary for the purchaser to believe that he is purchasing a product from a specific supplier (regardless of who is behind the label). There are no fixed guidelines for showing that a reputation exists and they are case specific.

In this instance, one has to clarify which reputation the alleged passing off relates to. The plaintiff relates to their packaging as having a reputation identified with their product and with them, with the emphasis on the visual appearance of the package. The defendant considers that the real issue is the wording Minute Steak and all agree that both parties use the term. The plaintiff denies that in this instance they are objecting to use of this term, although they do claim a reputation for this product. For the purposes of the hearing, the term minute steak will be considered as part of the packaging but not as a request for an injunction against the term itself.

A main issue, and some would say the main issue that the court considers when assessing reputation in passing off cases is indication of the public perception, such as surveys and the like. One can also consider the period that the product has been available, the scale of availability and the way the product is used. When relating to a popular product used by the public at large, the choice of product purchased if often determined by price and not by a preference for one supplier or another. However, a product aimed at a niche market may only need a less rigorous level of proof to show that a supplier has a reputation. See Fisher Price, Angel and Venetian Glass.

In this instance it is accepted that Baladi’s product has been available only for a short period of time. It was first marketed in November 2017 and so at the time this case was filed, had been available for five months. This does not aid the Plaintiff’s allegation that in his instance, the product is well-established with them as the supplier, and that on seeing the product, the public identifies it with them. Particularly as we are referring to a product intended for everyday use and available from supermarkets.

mangal (1)Rami Levy related to a series of meat products marketed under the slogon “On the Fire”. In that instance, prior to Yom HaAtzmaut (Israel Independence Day) the supplier invested heavily in marketing, but the court ruled “Deciding on whether there is a reputation requires that the product was available over time and cannot be ascertained based on an intensive marketing campaign. See Appeal Nazareth District Court 607/99 Zoglobeck Nahariya Sausage Factory ltd vs Tivo-Galilee and Jerusalem Delicatessen (1992) limited partnership p.m. 5759(1) 689 28 March 2000) page 715. In that instance, the product was available for a year and the court ruled that that was a very short time.

Without hammering down [the coffin lid], and on considering that in that case as well, the reputation claimed in that instance was for a known phrase, despite possible differences, it does seem that the present period is short and this makes it very difficult to show that the product is associated with a specific supplier.

Baladi did not bring any evidence to support the contention that consumers associated the product with them, and this is a central requirement for such cases. No market survey was brought in evidence no witnesses were brought. – No evidence whatsoever. In absence of evidence it is difficult to conclude that the minute steaks are associated with Baladi, particularly since the product is only recently available. The Plaintiff not submitting evidence of a reputation is very problematic.

(In the El Gaucho case, Baladi did submit a consumer survey that was conducted by a market survey expert. It is clear that Baladi are aware of this tool but they decided not to use it in his instance).

BaladiTo show that they have a reputation, Baladi used two indications “The product launch campaign” and wide-scale usage. They allege that these factors are sufficient to show that there is passing off.

Regarding the product launch campaign, Baladi related to section 30 of the Venetian glass ruling. Judge Avrahami does not see that this provides support for the claim. It could be that the intention is to relate to the scope of publicity and to efforts to link the product with the supplier. That as may be, at best this can be an indication when coupled with other evidence, since it can only indicate an attempt to create a reputation but cannot indicate that such a reputation indeed was created and exists in the eyes of the consumer.

As to widespread usage, the Applicants submitted sales since the beginning of January 2018, which is a two and a half month period. Apart from relating to a short period, they are lacking in that it is difficult to see their relevance. We do not know what the sales target was, and whether sales reached this, fell short or exceeded expectations. There is no comparison between sales of minute steaks and other meat products that may put the sales data into some sort of perspective.

The Plaintiff relates to the data from the same source that relates to their main competitor (Tbone Veal, who manufactures for defendant, and also manufactures the El Gaucho brand). This comparison is also lacking since Tbone Veal entered the market after the plaintiff and close to the period when data became available, and it is possible that the two products are not sold in the same outlets. It is known, for example, that El Gaucho is not available in Rami Levy outlets. In light of this, it is difficult to learn from the sales data, if there is a reputation or not in the sense indicated. Baladi’s product is available in more outlets. Even with that, in a relatively short time Tbone Veal’s brand has taken 20% of the market.

The plaintiff’s referring to he amount of sales as indicative of reputation is based on the Venetian Glass ruling. In that instance it was stated that the scale and period of use is less relevant than the way the product is used. Is the type of use something that creates a linkage between supplier and product in the eye of the consumer? In this instance there is no indication that this is the case. See 3471/98 Salam vs. Halabi p.d. 84(2) 681 11 May 2000 on page 701.

In summary, there is an insufficient basis to substantiate a case of ‘passing off’. This conclusion stands even when one considers the case-law not cited by the plaintiff, that copying a parties’ product without a functional purpose for the copying can be relevant (se re Snap page 8 and Re Shimoni page 9) but the mere copying does not indicate that there was a reputation in the copied good.

In light of the above, and since reputation is necessary to show passing off, the claim is dismissed without even considering whether or not there is a likelihood of confusion. In the Law, even where we to be considering a case of one on one copying, contrary to the present instance, until one shows a reputation, and damage to that reputation due to the copying, there is no passing off. The mere copying of a product does not indicate that the plaintiff had a reputation and copying products is legitimate and allowed, so long as it does not damage the plaintiff’s reputation (see re Fisher Price paragraph 6).

To complete the picture, determining that there is a likelihood of confusion is done by applying the triple test as per trademark infringement, where the clear thinking addition relates to the product and actions when considered as a whole. The test relates to the reasonable consumer who has imperfect recall and does not compare the products looking for differences. This is the case with day-to-day articles that are sold in high volumes in supermarkets, such as the present product. We are considering a product that is taken out of the freezer compartment by the consumer and not one that is ordered over the counter, and so the visual appearance is important but the name is not. When comparing the similarities and differences, considering the size of the suppliers’ name, product cost and the kashrut supervision, Judge Abrahami concludes that there is indeed a likelihood of confusion.

The Judge is aware of the difficulty in proving passing off. So was the plaintiff who also sued on grounds of copyright infringement and on grounds of unjust enrichment.

Copyright Infringement

 

copyright1The Plaintiff (Baladi) also claimed that the defendant (Rami Levy) had copied their packaging and had infringed their copyrights in the packaging design. It is alleged that the defendant’s design is a variation of the plaintiff’s.

In their summation Rami Levy noted that the plaintiff had not produced any evidence that the copyright in the product design was theirs. In the request for a temporary injunction and the appended affidavit it is claimed that the “plaintiff” designed the package and has copyrights therein.

It was not stated if the design was the work of an employee (or indeed whether Baladi had employees who worked in designing packaging) or by an outside contractor. There was no agreement appended to the statement of case to indicate that the rights were transferred from the designer to Baladi and there wasn’t even an indication that a designer was paid for his work, whereas the statement was resplendent with appendices relating to the sales campaign. In their response to the request for a temporary injunction, Rami Levy denied that Baladi had rights in the design and a response from Baladi was not forthcoming.

Baladi claimed that there is a rebuttable assumption that they have rights to the package designs and that the onus is on Rami Levy to rebut that assumption. However, Baladi’s representatives did not substantiate their assertion by reference to a clause in the Copyright Law that shows that such an assumption exists. Section 64(1) of the Israel Copyright Law 2007 states that there is an assumption that where he name of a creator appears on a creation as being the creator, this establishes a rebuttable assumption that the person is the creator of the creation. It is not clear that this assumption is relevant here, such that the name of a manufacturer appearing on a product package creates an assumption that the design of the package is theirs.

Sections 34 and 35 of the Law of Copyright cannot help. Even if one is relating to rebuttable assumptions, this is not what the plaintiff intended. Section 34 states that the employer of a creator owns copyright in the creation produced during his employment as part of his employment unless agreed differently, Since we do not know that this was created by an employee, this is not relevant. Section 35 states that where a creation is made on order, the rights are owned by the creator unless something else is agreed. If this was a designed ordered in this way, there is no indication that such an agreement transferring rights to Baladi was made.

Despite the above, I would appear that the rights to the packaging are indeed owned by the plaintiff. It does not appear that the design has much use beyond that made by the plaintiff . However, assumptions and burden of proof are two different things.

In addition it is noted that even were Baladi to demonstrate that they had copyright in their package, there are questions regarding the other aspects of their claim to establish that there is infringement.

The parties have not really addressed the issue of whether a product packaging design is something that is protectable by copyright and is not simply a cumulative protection of design elements. There was insufficient discussion as to whether the design in original. See 7996/11 Safecom ltd vs. Raviv (18 November 2013, where originality in a collection is the choice of and position of the elements (see section 4(b) of the Copyright Law. There was no discussion of whether this should be protected by copyright or by design rights, see for example, the Law of Industrial Designs 2017.

designFurthermore, there was no real discussion of the question that even if there is copyright protection in a packaging design and that this protection belongs to the plaintiff, that copying of the type involved here is indeed copyright infringement. In other words, is there a sufficient number of substantial design elements that are sufficiently copied for the Rami Levy packaging to be considered as infringing. This is a question of fact and degree and is not settled mechanically but rather by overall impression. See for example, 10242/08 Muzpi vs. Kabali (10 October 2012). With respect to the similarity required to establish copyright infringement, it is possible that there is a difference in how similar the products have to be, since the laws are different.

Unjust Enrichment

An additional ground that Baladi relates to is Section 1 of the Law of Unjust Enrichment 1979,. Section 1(a) of the law states that:

 “One who receives a property, service or other benefit, not in accordance with the law from another party, has to restore that obtained to the other party, and if it is impossible to restore the benefit itself, he should make financial retribution.”

unjust enrichmentWhen considering the grounds for compensation under the law of unjust enrichment, including the notorious ‘additional element’, one can find much case-law including gift Center paragraphs 22-28, Civil Appeal 5768/94 A.Sh.I.R. Import Export and Distribution vs. Forum for products and Essential Goods ltd P.d. 54(4) 289 (23 September 1998), and Civil Appeal 371/89 Leibovitz vs. N and Y Eliyahu ltd p.d. 44(2) 398 (18 January 1990).

In this instance, there is enrichment in that Rami Levy sells the product under their own label and makes a profit. There is also a sufficiently documented connection between the advertizing campaign for minute steaks and the increased market (including sales by TBone Veal), and this is adequate at this stage to show that enrichment is based on the sales campaign, even if insufficient to support a claim of passing off.

The plaintiff alleges that the defendant has taken advantage of the publicity campaign that they undertook to penetrate the market with their private label in a confusingly similar package to that of the plaintiff. The plaintiff does not complain that Rami Levy has launched a competing product, but rather that it has done so in a package inspired by their packaging that takes advantage of the advertising campaign. Under cross-examination, Baladi stated that were Rami Levy to have used a different packaging such as that used by the El Gaucho branding, they would not have had grounds to complain.

It is stated above that “apparently” the plaintiff does not object to Rami Levy selling their own brand, since the general circumstances show that on a rhetorical level they focus on the packaging design, but actually their problem is that third parties have entered the minute steak market that they have created by investing in advertizing. This is discussed above with respect to equitable behavior and the way that the case was filed.

Substantively, as far as the packaging design is concerned, after due consideration of the Law of Unjust Enrichment, Judge Avrahami considers that what she wrote above with respect to the tort of passing off are relevant here. After looking at the packaging from all sides, considering the general similarity and the differences and after reviewing the claims of the parties, she considers that Baladi has shown tha the product is sufficiently similar And this can be he basis of an injunction.

We now consider Rami Levy’s behaviour with regards to distributing Baladi’s products. From the limited information before her, it appears that close to launching r\their competing own-label brand, Rami Levy ceased to receive orders from Baladi. It is even possible that the branches made orders but the orders were not delivered. One cannot deny that Rami Levy is not obliged to order from Baladi. However there is sufficient evidence to conclude for the purposes of the injunction that the cessation of orders and the launch by Rami Levy of their own-brand in similar packaging could be the additional element of bad faith required to establish the tort of unjust enrichment.

In light of the above, there is sufficient evidence to establish that Baladi has a likelihood of prevailing on grounds of Unjust Enrichment.

As to whether this is sufficient to provide entitlement to an injunction based on the way the law is written, see Civil Appeal 563/11 Adidas Salomon vs. Yassin 27 August 2012, paragraph 20, and A.Sh.IR. page 448 and 484, 485, Appeal 347/90 Sodhagel lrd. vs. Speelman, p.d. 47(3) 459 (1 July 1993) page 470., and Leibowitz page 332, page 69 of Ofer Groskopf Defending Competition Law by the Law of Unjust Enrichment (2002).

In parallel to that said, and before further discussion, it is noted that the connection between laws of Intellectual Property and Unjust Enrichment is complicated, and one has to act with care, particularly with regard to temporary injunctions.

It should also be remembered, that unlike Intellectual Property, ‘the center of the gravity of the sp+here of unjust enrichment is in general concepts of justice, without a clear axis” and that protection under the laws of unjust enrichment is given “to interests that are not recognized rights…in accordance with feelings of right and appropriate legal policy” – see A.Sh.I.R. page 333 and 414, and also Sodagal.

Apparent Likelihood of the proceedings – selling plaintiff’s products in he defendant’s stores

The discussion until now dealt with the question of apparent grounds for a temporary injunction against Rami Levy selling own-brand minute steaks.

refuseIn addition to this temporary injunction Baladi requests to be able to continue selling its products in Rami Levy’s stores. Baladi does little to substantiate this ‘right’. In their summations they relate to the tort of unfair interference under Section 3 of the Unfair Trade Law which is a general clause preventing physical or technical interference with the marketing system of an entity. See re Angel paragraph 55 and Groskopf pages 234 to 239.\

In the hearing it transpired that contrary to the understanding that one could reach from the complaint, Baladi’s product was NOT taken off the shelves in Rami Levy’s stores. In the affidavit submitted by Baladi it was stated that their products were thrown out of the stores, but the products were not returned and stock of products remained on sale in the stores. However, Rami Levy stopped reordering.

Baladi acknowledged that Rami Levy had the right to reorder or not to reorder their products. They also acknowledged that the parties were not in court because of Rami Levy blocking their product but because of alleged copying of their product packaging, and that were Rami Levy not to have copied their packaging, Baladi would have no claim against them no longer purchasing their product. Baladi makes a range of products that Rami Levy does not stock, Rami Levy wanted to continue to sell Baladi’s products, but they were disinclined to following being sued “I was in shock” – page 1 lines 1-3 of the protocol.

In the circumstances, even if the behavior regarding selling Baladi’s products can be considered when considering the packaging, it is not likely that Rami Levy can be ordered to permanently stock and sell Baladi’s products in their stores, and a temporary order to do so is also not feasible. This does not prevent some sort of financial compensation being awarded.

Likelihood of Prevailing – summary

As far as a temporary injunction is concerned, there does not seem to be sufficient evidence to grant the injunction on the basis of passing off or copyright infringement. However, this is not the case with regard to unjust enrichment. There is little chance of Rami Levy being temporarily or permanently ordered to sell Baladi’s products.

Balance of Convenience

interestsThe discussion between the parties regarding the balance of convenience with regards to temporary injunctions was short. The plaintiff’s reference to this was focused on the losses they would suffer every day their products were not sold by Rami Levy. This focuses on the court giving an order forcing Rami Levy to stock and sell Baladi’s product, but there is no prima facie likelihood to assume that such an order is appropriate. Furthermore, Rami Levy has not actually removed Baladi’s products from its shelves, and current stocks are (or at least were) available.

As to other chains and stores, not managed by Rami Levy, not only can the plaintiff continue to sell their goods, but Rami Levy’s private label is not sold in such outlets.

Furthermore, as far as one is concerned with damage that can be compensated for by a monetary award, such an option should be considered, but the plaintiff does not raise this possibility. (See Civil Appeal 102777/09 Gasteneretec ltd. vs. Hebrew University of Jerusalem 12 March 2009, Civil Appeal Habboub Bros. vs Nike International p.d. (1) 614 (6 March 2000), Civil Appeal 188/77 Zeltzer vs. Worker’s Accommodation ltd. p.d. 31 (3) 583 (16 August 1977) and Civil Appeal Shor vs. Ben-Har, p.d. 30(3) 67(3) August 1976.

The plaintiff alleges that the balance of convenience is less important when considering property rights. Even assuming his is true (compare to Civil Appeal 10717/05 Florist of Kavacal b.v. vs. Ch.G.G.3 September 1986, and considering the difference between a permanent injunction after hearing the evidence and a temporary injunction, see Civil Appeal 5240/92 Halamish Govt Company for City Housing in Tel Aviv  Jaffa Ltd. vs. Ashraz Data Processing ld. P.d. 47(1) 45 (17 February 1992), for this claim to be relevant to this instance, there is a need to establish that there is indeed a property right, something which seems to be somewhat difficult.  The grounds under which there appears to be a likelihood of prevailing is Unjust Enrichment. This basis is sufficient for an injunction, but it should be considered with care.

In parallel to the above, Rami Levy did not bring any evidence whatsoever to show that a temporary injunction would not be the best course. Their Affidavit surprisingly did not relate to this point. As the Plaintiff notes, inclusion of this data in a response to a request for a temporary injunction is necessary. Baladi related to this lacuna in their response as something that Rami Levy saw fit not to supply. In these circumstances, it is impossible to consider alternative actions, and this lacuna works to the benefit of the plaintiff.

Together with this, there is no need to provide evidence to the generality (as opposed to the quantitative data) hat immediate cessation of sales of frozen food in a specific packaging could result in loss of the meat itself and not only of the packaging. This result is not necessarily the case if more moderate steps are considered.

Coming to the finish

finnishWe’ve seen that as far as the likelihood of the complaint succeeding, his is greatest with regard to the similarity between the packaging of the defendant and that of the plaintiff, but one cannot accept the attempt of the plaintiff to use this to prevent competition in the meat industry (whether by having products removed or by preventing them being sold for as long as possible). Judge Avrahami sees fit to give a temporary injunction that requires Rami Levy to adhere a sticker that is not red, white or black to their frozen meat packages that should be at least 11 cm by 8.5 cm, that is clearly printed and which states that the product is under Rami Levy’s own label. The sticker must not include the price or he words “Special Offer”, that could dilute the effect of differentiating between the products. The sticker will be applied to the front of the packaging at the top, under the term “Maadaniyah” (delicatessen).

The injunction will enter into effect after Baladi places a bond of 200,000 Shekels as per Regulation 364(a) of the Civil Court Regulations 1984, and will do so no later than 10 April 2018. The requirement for the sticker will come into effect six days after the bond is posted.

It may be estimated based on the discussion above, that Rami Levy will see fit to act in accordance with the discussion not in the protocol (beyond the letter of the law and with no ramifications) to take immediate action to create a larger difference between their own-brand packaging and that of Baladi.

Judge Avrahami did not see fit to change the preliminary agenda regarding the marketing campaign emphasizing the name Baladi, Baladi’s filing of a trademark application, allegations from both sides regarding relevant witnesses not being summoned, and the like.

Based on the above ruling and the behaviour of the parties, there is no cost ruling at this stage. However, costs may be sought following the main ruling.

As an afterword, but not peripheral to the issue, the parties are encouraged to discuss the issue and to try to settle their differences.

Interim Ruling by Judge Tamar Avrahami re Baladi vs. Rami Levy, 2 April 2018    

COMMENT

Rami Levy pastaIn February, Barilla succeeded in getting a temporary injunction against Rami Levy’s own brand pasta sold in confusingly similar packages. This seems to me to be reasonable explanation why for a similar action against Rami Levy, Baladi would chose the Tel Aviv District Court.

I find it unlikely that people would buy frozen meat without checking who the supplier is. It is possible, however, that some are less observant than me. There is certainly some similarities and some differences between the packaging and branding of Rami Levi’s own brand compared to the packaging of the firms that sue him alleging passing off, copyright, trademark and other infringement. Now, it is arguable whether the similarities give rise to an actionable tort or not, but what is clear is that despite Rami Levy claiming a reputation of quality for his own brands, different products packaged for Rami Levy are more similar to the brand leaders packaging than to each others. If Rami Levy adopted a font and packaging style for his own brand, and added a window to view contents or an image of the product, plus a name, competitors would still be annoyed with him undercutting them, but would not have an actionable tort.  I did a little googling for minute steak packages and have found that in other countries they are often packaged on a black tray or in black cardboard with he meat visible behind cellophane.

Minute steaks are a recent addition to the Israel supermarket frozen meat freezers. However, there does not seem to be anything wrong with Rami Levy or another supermarket chain marketing their own product line. Baladi are entitled to first mover rights, but free riding is a long way from passing off, copyright infringement and unjust enrichment.

I think that Judge Avrahami has done a good analysis here. It is far from clear what the final ruling will be. Rami Levy is sailing close to the wind, but will they win the race or capsize?

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