Cancelling a Trademark – K Washer

This is an interim ruling regarding whether a sole distributor in Israel of trademarked goods has standing to request cancellation of a mark that is confusingly similar to the trademark covering the goods they distribute, and under what conditions can the owner of the trademark that is the basis of the challenge join the proceeding? Do they need to post a bond for costs? Does the counter-statement of case need substantive amendment and can the owner of the challenged mark requests costs for so doing?

KWASHER

Kärcher is a French company that has requested the cancellation of Israel Trademark No. 258749 to B.M. Peled-Technical Supplies LTD for the stylized “K-Washer” mark shown.

The basis for the cancellation request is that the K-Washer mark is confusingly similar to the Kärcher Mark.

Karcher

The request for cancellation was submitted by Dan Sheldon Ltd, which claimed to be the sole distributors of Kärcher in Israel. The Applicant for cancellation informed Kärcher about the issue and that they intended taking steps against the mark holder.

A letter of consent and a POA from Kärcher was attached to the cancellation request. In the letter of consent, Kärcher noted that they were not a party in the cancellation request but they agree to it occurring. In the POA it was emphasized that Dan Sheldon is the sole distributor of Kärcher products in Israel and that Kärcher delegates the right to take legal steps against K-Washer.

In response to the cancellation request, the trademark owner claimed that the party requesting cancellation of the mark had no connection to the registered Kärcher mark and no rights in the mark. In particular, the mark owner claimed that Sheldon had no standing and no legitimate interest that could serve as a basis for the cancellation request. Furthermore, he argued that the letter delegating authority showed that Kärcher had no interest in defending their mark in Israel.

In counter-response, to remove any doubt, Kärcher requested to be a party to the cancellation proceeding.

The cancellation request was submitted together with evidence from the requesters for cancellation and after the parties had submitted their statements of case. The mark owner has not yet submitted his evidence, and has already received an extension of time to do so.

The claims of the parties

Kärcher claims that their joining the cancellation request is essentially the same as if they had been a party from the beginning. It would not create damage, delay or affect the proceeding that has already started in any way, and their joining the proceeding does not in any way change the cancellation request.

Kärcher explained that their joining is merely a precaution to avoid the mark holder’s allegation that they have no interest in this proceeding, or in an infringement proceeding, Appeal 38680-11-17 in the District Court.

The mark holder counter claims that the fact that Kärcher has requested to join the proceeding is not a reason for them to do so, and Kärcher does not claim to be a necessary party in the proceeding. Furthermore, the mark holder notes that Kärcher has not explained how they would be hurt if their request to join the proceeding is refused, and the only reason why they requested to join the proceeding is that the respondent alleged that the party requesting cancellation has no rights in Kärcher’s mark and thus cannot themselves be a party to the proceeding.

Discussion and Ruling

First the Commissioner, Ofer Alon notes that he doesn’t think that the cancellation proceeding submitted by Dan Sheldon was submitted without right of standing. Section 38 of the Trademark Ordinance 1972 states that:

38.(a) Subject to the provisions of this Ordinance, any person aggrieved by the non-insertion or omission from the Register without sufficient cause, or by any entry wrongly remaining on the Register, or by any error or defect in any entry in the Register, may make application in the prescribed manner to the Supreme Court or may, at his option, make such application in the first instance to the Registrar.

The term any person aggrieved has been broadly interpreted, see Seligsohn “Trademark and Related Laws, 1973, page 105 and Appeal 94/05 The Vineyards of Rishon L’Zion and Zichron Yaakov Cooperative vs. The Vineyard Company ltd. P.d. 61(3), 350 (2006) and paragraphs 9 and 10.

The term “who is aggrieved” has been explained very liberally in the case-law, and includes all business competitors who lose out by a competitor benefitting from a trademark that he does not have rights to. This explanation is based on the explanation of the term Person Aggrieved in the English Law.

This was cited in Bagatz Klil vs. Commissioner of Patents and Trademarks, p.d. 42(1) 309 on pages 316 and 317 where the court related to the fact that the mandatory authority amended the term “person interested” that appeared in the original law to “party aggrieved” in  the 1938 Ordinance, and the term remained broad as explained above.

To demonstrate the trend to explain the term broadly, it is noted that in the new UK Trademark Law 1994, the term “person aggrieved” is also deleted, and anyone can request cancellation of a mark.

If there is a risk of misleading the public to think that K-Washer is connected to Kärcher, then Sheldon, who is Kärcher’s distributor in Israel, is within the ambit of a ‘person aggrieved’ and has the right to request cancellation of the mark.

It is noted that the mark owner simultaneously claims that there is no point adding Kärcher to the proceeding, and that only Kärcher has the right to request cancellation, implying that there is indeed a point in allowing him to join the proceeding.

It seems that the parties concur that Kärcher has the right to request cancellation of the mark, since they are also ‘aggrieved” by it being registered (should it be determined that there is indeed a danger of misleading as to the source of the goods).Consequently, if we were to refuse to allow them to join this proceeding, they could simply file a separate request to cancel the mark(which logically would be combined with this proceeding), and this justifies allowing them to join this proceeding at this time.

Regulation 72 of the Trademark Regulations 1940 lays out the conditions for a third-party to join a cancellation or correction proceeding for an issued trademark that are set out in regulation 70:

  1. Any person other than the registered owner, claiming a benefit in a registered trade mark in respect of which an application was made under clause 67, may apply to the Registrar, using the prescribed form, to permit it to intervene in the matter, and the Registrar may refuse or accede to the granting of permission for such, after hearing the parties in respect of the matter, on such terms as the Registrar may see fit. Prior to dealing with such application in whatever manner, the Registrar may demand that the applicant give an undertaking to pay the Registrar’s expenses incurred in deciding to the benefit of one of the parties under the circumstances.

The purpose for Regulation 72 is to allow third parties that claim a benefit in the registered mark, to have their day before the Commissioner. As then Commissioner Asa Kling stated, this is the right to a substantive hearing (see registered Israel trademark no. 216,916 (request to include a third-party) Danny Argon vs. Strauss Culture Factories ltd, 1 November 2012:

Where the third party claims apparent rights to a mark and excluding him from the proceeding would have negative consequences, it seems appropriate to include him in the proceedings as it seems improper to prevent him for stating his case.

As stated above, the cancellation proceedings is based on claims of misleading and unfair competition with respect to Kärcher products.so it seems appropriate to allow Kärcher to join the proceeding, and this accords with Regulation 72. Thus Commissioner Alon orders that Kärcher can join the proceeding as a third-party.

The trademark owner requested on 2 July 2018, that should Kärcher be allowed to join the proceeding, a procedural regime should be introduced wherein amended statements of case and amended evidence be resubmitted in consequence of them being added. Furthermore, the mark owner requests that should Kärcher be allowed to join the case, that they be required to deposit a bond to cover the mark owners costs and should bear the costs of the mark owner correcting their statement of case.

The parties requesting cancellation object to this procedural regime and contend that adding Kärcher does not require making substantive changes to the statement of case, and adding Kärcher does not require moving from where the case has got to and does not introduce new claims. As to requiring Kärcher to deposit a bond, they note that Kärcher is a company with a yearly turnover of billions of dollars and in the court proceedings Kärcher was added as a plaintiff without preconditions.

With respect to the posting of a bond, the mark owner did not provide justification for this request. However, the request to add Kärcher as a plaintiff was also not submitted with justifications for them not to post a bond other than their alleged turnover which was also not supported by any evidence.

In the Commissioner’s ruling of 19 June 2018, the time frame for the mark owner to submit evidence was set to 30 days after the requester for cancellation submit their evidence in a discovery procedure that the Commissioner initiated. It appears from the documents before him, that the requested documents were transferred to the mark owner on 26 June 2018, so the mark owner has until 26 July 2018 to submit their evidence.

In light of the above, the Commissioner rules as follows:

  1. The statement of case of the requester for cancellation of the mark shall be amended only by adding Kärcher as a co-plaintiff. The mark owner will have 21 days to amend their counter-statement of case from the date of this ruling.
  2. The challenger can amend their evidence by adding Kärcher as a plaintiff, and can add any new claims to their statement of case that result from this addition. The additional evidence should be submitted within 30 days of the amended counter-statement of case of the mark owner.
  3. The mark owner should submit their evidence within 30 days of the submission of the amended evidence by the original and the additional challenger. In accordance with Regulation 40 of the trademark regulations, the original requester for cancellation and the additional party will be able to submit their counter-evidence in accordance with the schedule laid out in the regulation.
  4. Despite allowing the addition of a second party to the challenge, no costs will be awarded for any need to amend the statement-of-case, or other reason.
  5. In light of the above, at this stage, the Commissioner does not see it appropriate to require Kärcher to post a bond to cover costs of the mark owner, should they prevail. If however, the mark owner considers it appropriate to require the challengers to post a bond, they can submit a detailed request and it will be considered on its merits.

Interim Ruling in Cancellation Proceeding of Israel Trademark No. 258749 “K-Washer” by Ofer Alon, 19 July 2018.

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