Shuka is a fictitious insurance broker used in a long running and highly effective, humorous series of advertisements by IDI, an insurance company offering direct insurance services over the phone by dialing 9,000,000.
IDI is an insurance company. They applied for Israel Trademark No. 264302 for the word שוקה (Shuka) covering financial transactions, insurance and life insurance in class 36 on 2 April 2014. The mark was allowed on 16 July 2015.
The Association of Insurance Agents in Israel, which is a non-profit organization representing thousands of licensed insurance brokers, opposed the mark on 11 August 2015, alleging that it was misleading and its registration was contrary to Section 11(6) of the Trademark Ordinance 1972. The grounds of the Opposition were that the Applicants gave the impression that they were licensed insurance brokers and this is not the case.
There was a proceeding between the parties in the Tel Aviv District Court (28223-03-12) in which the Opposer requested that the court issue an injunction against the Applicant to stop their advertising which was alleged to be insulting slander and misleading, and created unjust competition. The District Court partially accepted the Opposer’s claims and forbade the Applicant from using the advertising campaign clips and radio advertisements and various other advertisements.
On appeal to the Supreme Court, this decision was overturned. In Civil Appeal 3322/16 and 4313/16 IDI Insurance ltd vs. The Association of Insurance Agents in Israel, 30 April 2017, the Supreme Court ruled that the advertisements did not create a tort and the appropriate grounds for the complaint was the Libel and Slander Act. However Section 54 of the Act relates to any community that is not a company, and so the civil case was inappropriate. The Court stated this in Section 31 of the ruling:
However, in this instance we are dealing with humorous advertisements wherein insurance brokers are indirectly represented in jest and parody that is so exaggerated that it is clear that the reasonable viewer will consider the claims accordingly. That as may be, one cannot state that, following the advertisements, a reasonable person would consider that the characteristics ascribed to Shuka in the advertisements, hedonistic, archaic, etc) apply to specific insurance brokers, and there isn’t even a hint of this.
The Supreme Court also ruled that the advertisements were not an insulting description, since the viewer would not consider the advertisements as information imparted to him seriously due to the dominant humorous elements of the advertisements (paragraph 64 of the advertisement.
The Association of Insurance Agents in Israel requested reconsideration.
The Chief Justice rejected this request on 30 July 2017, summarizing as follows:
In the ruling, the court reviewed the various claims of the Association of Insurance Agents in Israel and the relevant law and concluded that there is no legal basis to prevent he advertisements from being aired. There advertisements are not libelous under the Law of Libel and Slander 1965, since even if they were to be libelous which is no clear, Section 4 of the Law differentiates between individuals and groups….
The Deputy Commissioner saw fit to quote from this ruling since the parties disagree with what the Supreme Court actually ruled, and the Association of Insurance Agents in Israel brought the ruling in support of their position.
Summary of Grounds for the Opposition
The Association of Insurance Agents in Israel (Opposer) claims that the that the term ‘Shuka’ does not serve as a trademark or a service mark since it parodies the services of others rather than indicates the services of the applicant. IDI Insurance does not offer products or services under the name Shuka.
The Opposer claims that the name lacks distinctiveness since it is intended to be a general name for all insurance brokers and was used that way in trade purposes and so is ineligible for registration under Section 11(1) of the Ordinance. They claim that the term represents a parody of an insurance broker and is thus descriptive and ineligible for registration under Section 12 of the Ordinance.
The Association of Insurance Agents in Israel also claim that the term is contrary to public order and is anti-establishment in that it laughs and mocks the community of insurance brokers and encourages unfair competition. Consequently registration of the mark is contrary to Sections 11(5) and 11(6) of the Ordinance. The Opposer considers it wrong to allow the Applicants to perpetualize this fictitious image of insurance brokers via trademark registration.
In their statement of case, the Association of Insurance Agents in Israel alleged that the mark was the name of another, and its registration was thus contrary to Section 12 of the Ordinance.
The Opposer submitted an Affidavit of Arieh Abramovitz, the chosen president of the Association of Insurance Agents in Israel. Mr Abramovitz testified in this affidavit that the Applicant does not offer any service or product under the name “Shuka”, and the registration of the mark could deceive the community into believing that the Opposer acts via Insurance Brokers. A Statement of Case regarding a legal proceeding between the parties was appended to this Affidavit.
Applicant’s Claims and Evidence
The Applicant claims that the issue of whether the character Shuka is slanderous or not is irrelevant and the issue is whether or not this mark is registerable.
The Applicant also claims that the Opposer considering the marks as descriptive and thus non-registerable is an illegal widening of the Statement of Case and did not bring evidence to support this contention. The Applicant claims that the mark is distinctive since today the mark is strongly identified with the Applicant as testified by their witness, Mr Ronen Saad. The Applicant claims that there is nothing preventing an imaginary character as a trademark, even if the character is not a product being sold.
The Applicant further claims that the Opposer has to prove that the mark creates unfair competition since they themselves used the mark prior to the use made by the Applicants and the Applicant tried to build its reputation on this mark. The Applicant [probably the Opposer is intended –MF] coined the mark so their claim should be rejected.
The Applicant claims that the mark Shuka is not identical to the name of another individual. That the mark was the name of Insurance Broker Joshua Zohar was first raised in the proceeding, but it contradicts factual findings ruled in a different procedure between the parties (Civil Proceeding 37333-03-11 Zohar and Others vs. Chular et al.). This claim even stands in contradiction to the Opposer’s claim that Shuka is a fictitious character.
Mr Raanan Saad the Deputy CEO and Head of Marketing of the Applicant testified on behalf of the Applicant. He claims that the mark is identified by consumers with the Applicant which deals with direct sales of insurance without using brokers. Mr Saad related to previous proceedings between the parties and to attempts by the Opposers to prevent Applicant’s advertisements being screened by the Second Authority.
The Opposer’s Statement of Case does not relate to the claim that the mark is used in trade under Section 11(10) of the Ordinance and that the mark opposes the Public Order contrary to Section 11(5) of the Ordinance. These claims also do not find factual support in the Opposer’s evidence. The Opposer claimed in their counter-summation that we are dealing with legal claims that it was legitimate to raise even in the summation stage, basing themselves on Civil Appeal 724/87 Kalfa vs. Gold, p.d. 48(1) 220 where the court ruled that:
The Exception – in this case is to raise the legal claim (in contrast to factual claims) which are part of the basic grounds for complaint and which arise from the legal and factual data laid out before the Court and before the opposing side. Claims of this type (such as that before us) – should not lock the door to them being raised at the time of the Appeal.
As to the allegation that the requested mark is descriptive or acceptable in trade, the Deputy Commissioner does not think that there is sufficient evidence to support the allegation that the Opposer wishes her to conclude. It will be remembered that we are dealing with a fictitious character of an insurance broker. Even Mr Arieh Abramovitz notes this and points to it in his Affidavit, section 4:
Shuka is an imaginary character, a creation of the Applicant’s advertising campaign that makes fun of insurance brokers as parasites that are unnecessary and unwanted.
The name Shuka is an ‘imaginary’ insurance agent, i.e. a fabrication, a fictitious person who does not exist.
Also Mr Saad’s evidence on behalf of the Oposer supports the contention that we are dealing with an invented character:
The campaign made use of the fictitious character Shuka, after the Applicant ensured that there is no insurance brokers or insurance broker that has the fictitious name used in the advertisement.
There is an internal contradiction in the claim of the Opposer that the name is used in the trade and the claim that the character bearing the name slanders insurance brokers as parasites, since the Deputy Commissioner does not think that we are dealing with a mark that is in general use to describe insurance brokers and the services that they provide. On page 35 of “Trademark Law and Related Legislation” Seligsohn writes:
What is the meaning of ‘a mark that describes the services? First and foremost the intent is to the term used for and the name of the goods…
Then on Page 38:
The second type of descriptive marks are those that describe the nature of the goods and their properties. These include the general properties of the goods and the specific properties relating to specific goods.
From the files it is clear that not only was no evidence submitted to support a legal conclusion that the mark is used in trade and is therefore not registerable, but rather the evidence brought supports the opposite conclusion.
The claim that registration was contrary to public order or morality is not supported by the claims and evidence. Mr Abramovitz’ affidavit focuses on the allegation that the mark is misleading. So the Deputy Commissioner does not think that any factual basis was brought to support a conclusion that the mark was not registerable under Section 11(5) of the Law. The Deputy Commissioner herself does NOT think that the mark is contrary to public order or morality, as one is relating to a common personal name that is not insulting in Hebrew or any other language. It is also beyond dispute that the Applicants created the character and the mark as part of the company branding (see page 27 lines 9-18 of the protocol from the hearing of 16 May 2017), so the registration of the mark does not infringe the copyright of anyone.
As to the usage of the mark holder, this was widely discussed in the Supreme Court ruling which determined that the usage does not create grounds for awarding damages under the Law of Slander 1965, the Law of Trade Related Torts 1999 or the Law of Supervision of Financial Services (Insurance) 1981. To be accurate, it is noted that the ground of the Law of Supervision of Financial Services (Insurance) 1981 was rejected by the District Court and was not raised before the Supreme Court, so they did not relate to it.
Consequently, the Deputy Commissioner rejected the Opposer’s claims that the registration was against public order, as first raised in their summations in an illegitimate attempt to widen the basis of their opposition.
The discussion before us focuses on the Opposer’s claim that the trademark is likely to mislead the Committee regarding the services the Applicant offers. Section 11(6) of the Ordinance provides the normative framework of this allegation, and it states that:
These marks are not registerable:
(6) marks that are misleading to the public, a mark that includes a false indication of the source of goods that encourages unfair competition
As Seligsohn explained on page 30:
Marks that mislead the public: The mark itself needs to be misleading, and only in extreme cases is it possible to conclude that a mark includes this property, from usage of the mark.
In a similar way, J. Thomas McCarthy states in his book McCarthy on Trademarks (2014), pages 2-69:
“The consumer’s right to be told the truth not only extends to the facts about the nature and quality of the product, but also extends to the true facts about the source and sponsorship of the products purchased.”
The Opposer claims that the public are likely to believe that the applicants act via insurance brokers when in practice, they do not. The Deputy Commissioner does not consider that this claim was proven. Mr Abramovitz repeated this claim in their cross-examination, but this was not persuasive (Protocol page 18 line 27 to page 19 line 7:
Attorney: You think, I continue the question, you think that someone who sees the advertisements of the Applicant on television placed by Direct Insurance that feature the imaginary character of Shuka is confusing so that one might thing that they are actually insurance brokers?
Attorney: A person who sees the advertisements on television,
Abramovitz: My response was unclear? yes.
If the Opposers indeed think that someone watching advertisements believes that the Applicant operates via insurance brokers, the claim under Section 15 of the Complaint under the heading “The negative campaign of the Defendant that tries to undermine and wipe out the profession “insurance broker” is unclear since –
This claim deals with an well-designed integrated system spread over years… whose subject is a clever, false integrated aggressive campaign that is misleading and extremely malicious in that it is designed to increase their income and sales by totally wiping out the profession of insurance brokers as it exists and to wipe off the face of the earth the insurance brokers that compete with the defendant, who work within the framework of an established institution known to the public as ‘insurance brokers’, and thereby obtain the claimed profits.
Thus the Applicant is making contradictory allegations and Abramovitz had a problem reconciling them under cross-examination (see page 20 line 14 of the protocol.
Consequently, the Opposer has been unable to prove that registration of the mark would mislead the public. In their summary, the Opposer did not claim that registration would create unfair competition, and the Deputy Commissioner did not see fit to go into details of a claim that was abandoned.
She merely notes that to succeed with such a claim, the Opposer would have to show that they themselves own a trademark that is confusingly similar to the one under discussion. The Opposer does not own such a mark and so the claim is rejected.
A further allegation that the Opposer raised, and which Mr Saad was cross-examined over, is whether Shuka is used as a trademark. Mr Saad explained that the character of Shuka is part of the company’s image and is associated with the Applicant (page 27 lines 7-18 of the protocol).
The witness, Mr Saad:…People sometimes make mistakes with regards to branding. A brand is essentially the entirety of the feelings one has for a product of service. From when we created the virtual imaginary character called Shuka, this is what has built up the branding of 9000,000 [phone number of Direct Insurance – MF], Shuka is essentially something intuitive that us part of the branding of 9,000,000 which is identified unequivocally with the insurance company that works directly without insurance brokers, I don’t think it is possible to consider otherwise, this is a brand. This is how one build s a brand, this is similar to the Bamba baby or the pigeons used by Insurance Direct, these are characters that are part of a brand, this is how you creates emotions regarding a brand; it is \exctly like the logos on your shirts, this is how it is done, so yes, this virtual character of an insurance broker is part of the branding of 9,000,000.
This is the marketing aspect of the character but we will now consider the legal aspect. A trademark is defined in the Ordinance as:
A mark that serves or is intended to serve a person regarding goods he manufactures or sells.
This was applied to service marks by Section 2 of the Law. The Deputy Commissioner considers that the imaginary character Shuka does indeed serve the Applicant regarding the services they provide. The imaginary character of Shuka deserves protection as a trademark in addition to protection under Copyright Law. For discussion of this issue see “Protecting Fictional Characters: Defining the Elusive Trademark-Copyright Divide” by Kathryn M. Foley, 41 Conn. L. Rev. 921 (2009) which clarifies that the condition for receiving trademark protection for a character is that it serves to indicate the source of goods or services to the consumer:
“Trademark and unfair competition laws provide several avenues for the protection of fictional characters with an ability to serve as indicators of source. As with copyright protection, it is important that trademark protection be extended only where warranted. Courts have often failed to apply the statutory requirements of trademark law in a rigorous and principled manner, continually deciding cases based upon the general public recognition of a fictional character as opposed to the true source identifying nature of the proposed mark. Adherence to the statutory requirements set forth in the Lanham Act provides numerous methods for ensuring that trademark protection is extended only to fictional characters that serve the goals of trademark law. Acquired distinctiveness, single source identification and likelihood of confusion standards present important obstacles to trademark protection of fictional characters and each must be established independently before trademark protection is properly granted.”
It appears that the problem that the Author points out in her paper is reduced when the character is created with the intention of publicizing a product or service and its existence as a literary or cinema character is minor. Characters of this kind are referred to as ‘trade characters’ in the advertising related literature. See Barbara J. Phillips, Defining Trade Characters and Their Role In American Popular Culture, The Journal of Popular Culture, Vol. 29(4) p. 143.
It is worth noting in this context, that the ruling of the US Federal Circuit Court of Appeal related to the claim that use of one character in an advertisement infringes the mark of the competitor which is a different character – Reddy Kilowatt, Inc. v. Mid-Carolina Elec. Co-operative, Inc., 240 F.2d 282, 284 (4th Cir. 1957).
In that instance, the Court considered that the character of the plaintiff (Reddy Kilowatt) is indeed a trademark but ruled that the mark was not infringed by the competing mark (Willie Wiredhand) since they are not confusingly similar.
In this instance, the purpose of the Shuka character is to publicise insurance services without using an agent. It appears that the Opposer does not hold that one cannot create a fictitious character and use it as a trademark and does not even claim this. In paragraph 33 of their summation they state that “the Applicant has never used the character Shuka, other than to make fun of insurance brokers.
It is clear that the applicant is not happy with the Shuka character, but one cannot accept the claim that it is not use as a trademark that is as something that the public considers linked with the Applicant. The other claims of the Opposer regarding the unjust usage of the character were considered by two courts and were rejected by the Supreme Court, and the Deputy Commissioner does not have the authority to interfere with this decision.
The Opposition is rejected. The Opposer will bear Applicants costs of 3500 Shekels and attorneys fees of 32000 Shekels + VAT. These sums will incur interest if not settled in 30 days. In the cost ruling, the weight of submissions and evidence, the summation and the hearing were considered.
Ruling re Israel Trademark No. 264302 “Shuka” in IDI Insurance vs. The Association of Insurance Agents in Israel by Ms Jaqueline Bracha, 4 March 2018
Essentially the Shuka character was used in a series of advertisements advising the public to use a telephone based service instead of financing the office, lifestyle and holidays of their insurance broker Shuka (short for Yehoshua –Joshua or more generally the redeemer). To some extent, the campaign was reminiscent of British Telecom’s Beattie campaign that ran through the Eighties, which one suspects would not be used in the UK now, with current issues of anti-Semitism in the Labour Party and elsewhere.
On a personal level, I’ve found that having a private broker has been invaluable when needing copies of policies and payments for tax purposes, or making a claim, which is probably the downside of computer based mega-firms.
All professions have to deal with outsourcing and off-shoring, and the legal profession has had similar issues with companies offering ‘non-legal advice’ about submitting claims to national insurance. We are not Luddites. There are all sorts of professions that have become redundant, and it is possible that insurance brokers, like steam train boilermen, typists and freelance draftsmen have had their day.
Nevertheless, I think that the present decision is not convincing, no doubt because the Opposition was simply mishandled.
Whilst the mark IS used in advertising campaigns by the Applicant, but it is NOT used an indication of the source of origin of their goods for branding their services, but rather for branding the services of competitors, i.e. traditional insurance brokers.
A fictitious character can be used for branding purposes (think of Baby Bamba, the UK British Telecom Busby campaign or the Bezeq Parrot. The question is whether a character representing other options, can be considered as being a trademark?
I do not think that the ruling sufficiently addressed this narrow-focused question. That as may be, presenting arguments thrown out by the Supreme Court is generally not a good way to proceed.