Habitat

2000px-Habitat_Logo.svg.png

This trademark ruling concerns marks for Habitat in Hebrew and English. Habitat Design International had registered the English word-mark Habitat as a trademark in Israel. In 1976 Abraham Myerovitz opened a local store under the name הביטאט (Habitat in Hebrew) and tried to register it as a trademark. Due to the earlier registrations by the international company, the marks were refused. However he applied to have the registered marks canceled due to non-use. The International company decided not to oppose the cancellation of their marks, so they were cancelled and Myerovitz registered the mark himself. In 2015 the International company decided to trade locally under the Habitat mark and they then tried to cancel the Hebrew Habitat mark on grounds of it being registered in bad faith so that they could register the mark themselves. The District Court ruled that they could use the mark, but only in English and had to refer to their stores as Habitat International. However, the local entity could continue trading as הביטאט since he’d spent 40 years developing the brand. Neither side was happy with this compromise and so it was appealed to the Israel Supreme Court.

The issue, according to the Supreme Court, is whether knowingly using a trademark used by another entity abroad is bad-faith if the mark is not considered a ‘well-known mark’ under the meaning of the law.

On 13 November 2017, in 29227-03-16, Judge Altuvia of the Tel Aviv District Court issued a ruling in which he rejected both claims and counter claims concerning trademarks for Habitat. He gave the parties 90 days to come to a mutually acceptable arrangement, or ruled that both parties could use the word mark Habitat.

This ruling was appealed to the Supreme Court.

Background

During the Seventies, Abraham Myerovitz opened a furniture store in Israel under the name הביטאט (Habitat in Hebrew). At that time, Habitat Design Ltd had an Israel Trademark for ‘habitat’. In 1976, Myerovitz and his company Habitat ltd filed to have that mark canceled on the grounds that it had not been in use over the previous three years, and then applied to register the Hebrew mark in their name. Habitat Design ltd decided not to fight the cancellation and informed the Patent Office that they would not be responding to the cancelation request. On 21 November 1978 the Commissioner of Patents and Trademarks ruled that the habitat mark should be canceled and subsequently on 28 February 1979 ” habitat הביטאט“ mark was registered as Israel Trademark Numbers 42243, 52244, 42245 , 42246 and 42248 by Myererovitz.

In 2015, CAFOM, Habitat International S.A. and Habitat Design International (UK entities owning the furniture chain Habitat in the UK) announced that they intended to start using the mark in Israel in cooperation with Carmel Holdings (E.L.) ltd, and they submitted a request to cancel the registered marks owned by Abraham Myerovitz on various grounds including them having been recorded in bad faith contrary to Section 39(1a) of the Trademark Ordinance 1972. They claimed to have used the mark developed in the UK in the Sixties around the world and, through their activities, it had become an internationally recognized mark for furniture. Consequently, they requested an injunction from the Court of First Instance to prevent usage of the “הביטאט” mark by Abraham Myerovitz, and to forbid any activities that could be construed as indicating a connection between the Israel entity and the international company. The Israel Company filed a counter suit to prevent the International company from using the term “הביטאט”.

In the Court of First Instance, the parties agreed to suspend the proceedings before the Patent and Trademark Office and not to change the status-quo prior to the court ruling. This agreement was ratified by the court.

The Court of First Instance then ruled that the Israel Company had indeed registered its marks in bad faith and the marks should therefore be canceled. It further ruled that when the Appellant had filed for cancellation of the marks in 1976, Habitat Design Limited already had a worldwide reputation. The court ruled, on the basis of evidence submitted, that Habitat Design Limited was established in 1964 and opened their first Habitat store in London that year. The company expanded until in 1976 when the cancellation request was submitted, it had over 30 stores in England, France, Belgium and Canada.

The Court of First Instance ruled that when the Israel company submitted their trademark application, they were aware of the Habitat Design Limited‘s trading activity around the world under the brand name Habitat, and were aware of the reputation acquired by the international company, from which they attempted to benefit. The Israeli entity’s submission that they were unaware of the international company when they filed a cancellation request in 1976 was deemed unreliable.

In reaching this conclusion, the Court gave weight to the fact that the Israeli entity did not mention the early proceedings to have the registered marks canceled and did not allow Abraham Myerovitz’s wife to give evidence, despite her involvement in the company; and did not provide a satisfactory explanation for the choice of name Habitat that was already registered, and there was a complete lack of any positive evidence to support their claim of having selected the Habitat name independently. In this regard, the issue of equitable behavior was deemed to be based on the applicant’s subjective choices and not on whether the wider Israel public was familiar with the international brand back in 1976. In this regard, a witness for Habitat Design Limited testified that already in the Sixties the design community in Israel were aware of the Habitat brand, and his testimony was found convincing.

The Court of First Instance rejected the Appellant’s allegation that Habitat Design Limited’s choice not to appeal the cancellation request estoppelled them from claiming that the Appellant had acted in bad faith since the issue of equitable behavior was not addressed by the Commissioner in the cancellation action. Similarly, the Appellant’s contention that due to tardiness, the Counter-claims should be rejected was also rejected since Section 39(1a) of the Ordinance states that a good faith request to cancel a trademark registration may be made at “any time”. The Court of First Instance also ruled that claims of damage to evidence caused by the Appellant should be ignored as these were first raised in the summations. Additionally, the court related to the Appellant’s claim that Habitat Design Limited’s reputation was not transferred to the respondents in the transfer of international rights, but decided that it was unnecessary for them to rule on this matter when considering the equitable behavior of the Appellant.

In light of the above, the Court concluded that the Appellant had tried to benefit from the international reputation of the international chain, and there was a real danger that they intended to mislead the consumers into thinking that their business was related to that of Habitat Design Limited and their stores. Consequently, the Court of First Instance rejected the appeal and ruled that the appellant’s registered marks should be canceled.

However, the Court of First Instance did not grant the respondent’s request. The respondent’s claim that the הביטאט mark was well-known was rejected, and the court ruled that they were not entitled to damages for passing off or dilution of reputation since they did not operate in Israel, had made no effort to market in Israel and had allowed a third-party (the appellant) to register the הביטאט mark in Hebrew and to develop that brand. Following this, the Court of First Instance did not see fit to prevent the Appellant from continuing to use the הביטאט brand in Hebrew, since the International chain had done nothing to prevent the Israel company from developing the brand over a 40 year period, and to take the brand away from the Israel company would amount to unjust enrichment by the International brand, and that the respondent did not deserve a monopoly on the הביטאט brand.

Finally, the Court of First Instance ruled that public interest requires differentiating between the mark that the Appellant uses and the mark that the respondent wants to use, and so the parties should come to an understanding regarding how the הביטאט mark is to be used. The Court of First Instance ruled that if the parties were not able to agree to a different arrangement, the respondent should relate to their business as Habitat International or הביטאט בינלאומי  in their marketing, but individual goods sold could be simply marked Habitat. This would not prevent the Appellant from continuing to use the הביטאט brand for his business.

The Appellant was not happy with this ruling, hence this appeal.

The Respondent’s Claims

The respondent alleged that the appeal was based on factual issues that the Court of First Instance had ruled on and there was no justification to reconsider the ruling. They stated, as the Court of First Instance had ruled, that already in the Sixties, those active in the design field were aware of the International Company, and back when the Appellant’s requested cancellation of the International company’s marks, the international company had already developed an international reputation. The Appellant was aware of this and chose the mark to benefit from the international reputation and had thus acted in bad faith when registering its marks. Furthermore, the respondent claimed that the Appellant’s assertion that knowledge of the international company is not sufficient to establish a case of bad faith is based on foreign case-law, and in Israel there is no need for a mark to have a local reputation for its registration by another to be considered bad faith.

The respondent claimed that all the requirements for cancelling the mark under Section 39(a1) of the Ordinance were met, There was no statute of limitations since the term “at any time” in Section 39(a1) over-rules the standard statute of limitations. They claim that the lack of timeframe for filing a request to cancel trademarks registered in bad-faith is not restricted to Israel. Furthermore, contrary to the Appellant’s position, a trademark does not have to be a well-known mark in the sense of the Law for it to be the basis of a claim that a registration by another was made in bad faith. Furthermore, the International mark was indeed a “well-known mark”. The test of bad faith is an objective one, but the Court had additionally found that the Appellant had subjectively acted in bad faith.

The respondent further claimed that the preliminary allegations of the Appellant should be rejected due to tardiness, estoppels and tthe statute of limitations. The respondent alleges that the International chain never ‘gave up’ on their right to use their mark in Israel, and even back when the Commissioner ruled that the marks should be canceled they informed him that they intended using the marks in the future. They allege that parties guilty of inequitable behavior are estopelled from claiming tardiness and the statute of limitations, and even if back in 1978 the chain had given up on their rights, that does not mean that all rights henceforth are canceled, and because of the behavior of the Appellant, their claim of evidence damage should be rejected. The Commissioner’s ruling was a technical ruling which did not examine the behavior of the Appellant and so cannot be used to estoppels the raising of this issue.

As to the rights of Habitat Design ltd, this does not relate to the inequitable behavior of the Appellant and substantively, Habitat Design ltd own the full rights of the Habitat brand and its international reputation.

Finally, the respondent claims that there is no basis for the claim that the ruling allowing usage of הביטאט in parallel by both parties would necessarily lead to customer confusion. The respondent considers that in similar cases international brands have been allowed to use their name despite a local entity having the same name. They consider that the compromise proposed by the Court of First Instance prevents confusion and the confusion was anyway caused by the local company trying to benefit from the reputation of the international chain.

RULING

The main issue is whether the mark registered in Israel by the Israeli Appellant was registered in bad faith and therefore should be canceled. In ruling on this issue, the question of whether knowingly registering a mark used by others that is not ‘a well known mark” is itself bad-faith.

The normative legal framework for this question is found in Section 39 of the Ordinance which is titled “Deleting a Mark”:

Removal of mark

(Amendment No. 5) 5763-2003 39 (a) An application under Section 38 for removal of a trademark from the register, in respect of all the goods or the classes of goods in respect of which, or some of which, the mark is registered, on the ground that the mark is not eligible for registration under Sections 7 to 11 of the ordinance, or on the ground that the mark creates unfair competition in respect of the applicant’s rights in Israel, must be made within 5 years of the issue of the certificate of registration under Section 28.

(Amendment No. 1) 5760-1999 (a1) Notwithstanding the provisions of subsection (a), an application for removal of a trademark because the application for registration for the mark was not submitted in good faith may be submitted at any time.

The charge of inequitable behavior which was raised in this instance is found in Section 39(a1) of the Ordinance. This Section was added to the Ordinance in the first amendment of 1999 as part of the 1999 amendment to Israel IP Law to conform it to TRIPS. The purpose of the amendment is to conform Israel Law to the Agreement on the Trade-Related Aspects of Intellectual Property Rights Including Trade in Counterfeit Goods – (TRIPS). Within the framework of the Law, the protection of well-known marks owned by a citizen or resident of a World Trade Organization country that is not registered or used in Israel was determined. For discussion on the widening of the definition of a well-known mark under TRIPS see 9191/03 Vin S&V Spirt Aktiebolag vs, Absolut Shoes ltd, p.d. 55(6) (2004) and also page 2819 of the explanation accompanying the Draft TRIPS amendment.

Furthermore, before the TRIPS amendment the Israel Supreme Court ruled that filing a trademark to benefit from the international reputation of services or goods of another was unfair use:

Use of the reputation of a famous business known across borders, by another to further his business is unjust competition. Trademarks that have international reputations of sufficient magnitude that they extend beyond the specific products sold by the mark holder deserve legal protection. Using such famous marks is not fair for at least two reasons – firstly, it  enables the user to harvest the fruits without effort and to benefit without deserve from the reputation of the well-known goods that he has not developed. Secondly, such use may damage the reputation of the owners of the mark due to dilution and erosion of the uniqueness of the mark (see 6181/96 Cardi vs. Bacardi & Company ltd, 1998 and 95/68 Southern Sewers ltd. vs. the H.D. Lee company, 1968, and 476/82 All Gold ltd. vs. the Commissioner of Patents and Trademarks 1985, 8778/04 Yotvata vs. Tnuva 30 April 2007.

Following the legislation of the Amendment, and like other parties to the TRIPS agreement, Israel provides protection to well-known marks that are registered in Israel. The words of explanation accompanying the draft TRIPS amendment relate to the Paris Convention which considers the application for a well-known mark belonging to another as bad faith. This is analogous with the 2008/95/EC  Directive of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks that states that the application for registration of a trade mark made in bad faith by the applicant is grounds for it not to issue. Similarly the UK Trade Marks Act 1994 (6) 3 states that

“A trade mark shall not be registered if or to the extent that the application is made in bad faith.”

Thus a foreign mark of another does not have to be a well-known mark for its attempted registration to be considered inequitable behavior. The term ‘good faith’ was defined in terms of the purpose and aims of the law by Aharon Barak in Judicial Discretion, 487 (1987) and the purpose of trademark law is to protect the consumer from erroneously purchasing the wrong goods and to protect the rights of the manufacture – see 563/1 Adidas Salomon A.G. vs. Yassin 27 August 2012, and Amir Fridman Trademarks Law, Case-Law and Comparative Law 2010. Thus one of the central purposes of good faith in this context is to prevent ‘hijacking’, i.e. preventing the original owners of a mark from using their mark if they have not previously used their mark in Israel, see Fridman page 658 and 9711/17 Chain Stores of Izhiman Coffee vs. Maazan Izhiman, 1 February 2018.

The Appellant claimed that even were they to have been aware of the International chain, since the chain did not operate in Israel, using the name of the chain did not promote their business and so one cannot rule that they acted in bad faith. This claim was supported by the Opposition to Israel TM 142266 Optical Giants ltd vs. ANTAS GESTAO E INVESTIMENTOS LDA from 2 May 2004. In that instance, the Commissioner ruled against the opposition to “No Limits” submitted by the Portuguese Company against an attempt to register the mark by the Israeli Company since the Portuguese Company was not operating in Israel and thus had no reputation in Israel. That case was referred to the Federal Circuit Court of Appeals ruling in Person’s Co., Ltd. vs. Person’s Christman, 900 F.2d 1565 (Fed. Cir. 1990. It is, however, worth noting that the Optical Giants ruling was a trademark opposition in which the Commissioner decided not to address the issue of whether cancelling a mark for bad faith should be grounds for not allowing it to be registered, since he did not consider that case to be related to issues of bad faith. Indeed in that instance, unlike this case, it was ruled that the goods were not of the same type which further lessened the likelihood of misleading consumers (see Fridman 395-396). In Person’s, the applicant became aware of the clothing mark whilst in Japan and it was ruled that since the company did not have a reputation in the United States, it could not be proven that its registration in the US was an attempt to benefit from the reputation of the Japanese company.

Judge Kara (who wrote up this ruling) considers that this approach goes against the rationale at the basis of the requirement for equitable behavior (good faith). The requirement is described by Fridman in his book as follows:

The test of equitable behavior is an objective test, whose purpose is to prevent attempts to take over a trademark or to prevent the original owners from using the mark, even if they are not yet active in Israel. The Section is intended to help the integration of the State of Israel with the European Union and with the World Trade Organization to widen the free market available to Israel (Fridman page 658).

If the Appellant’s claim requiring a local reputation in Israel despite there being a proven international reputation were to be accepted in order to establish a claim of bad faith, this would undercut the purpose of the trademark laws to prevent misleading, and would incentivize Israeli companies to try to milk the international reputation of foreign entities that are active in Israel. A relevant comment that critiqued the Person’s ruling is found in Mostert:

“..[T]he owner of the foreign mark is prevented from effectively expanding its business to the domestic jurisdiction under its own mark. The defendant’s interest’s on the other hand, cannot be given great weight if its objective is to prevent the foreign trademark’s owner’s entry into the domestic jurisdiction; to extract ransom from the foreign entity when it does enter the domestic market; or to trade on the international reputation of the foreign trademark”. (F.M Mostert Famous and Well- Known Marks: An International analysis (Butterworths, 1997)).

As stated, the hijacking of the Israeli brand of the trademark of an International brand becomes a barrier to the International brand and this is contrary to the purpose of the law which is to encourage foreign entities to access the Israel market. Compare with 513/89 S/interlego vs lines bros. S.a-exin, p.d. 48(4) 122, 202 (1994), Letting a local entity have rights to the international brand of another will deter the international brand from entering the local market, and even provide the local company with an unfair advantage over the local market, should the International company attempt to enter it.

In this regard, one should emphasize the public interest of preventing misleading since “the mistake and the danger of misleading is the living soul of the Ordinance”. See 10959/05 Tea Board of Cachan vs. Delta Lingerie S.A., 17 December 2006. In a globalization era, there is nothing to prevent Israeli consumers from being aware of international brands that are not active in Israel and they will be misled into thinking that the store of a local entity wishing to benefit from the trademark of a global brand is covered by the international company. The court related to this in the Cardi ruling (page 283):

The Court ruled that the tort of passing off (section 59 of the Torts Ordinance) applies even when the plaintiff does not have a reputation for the product in Israel and was not exposed to the product in Israel, because of the significant exposure of Israeli consumers to goods marketed abroad. For more on this, see Appeal 490/90 Morton et al. vs. Rimini Pizzas in Israel ltd et al. and Nash vs. St Ives.

domino.pngNevertheless, it is important to emphasize that one cannot learn from this that all registration of international marks in Israel are necessarily contaminated by bad faith. “Whether or not there is bad faith is a matter for the judge to determine from the testimony of the appellant before him” 494/63 Natan Adir s. Mayor and City Council Holon, p.d. 18(2) 463, 471 (1964). Similarly in the matter before us, whether or not there is inequitable behavior is determined by evidence and witness testimony with consideration of the reason for choice of mark. For example in Pizza Domino, the rights of the US Company Domino’s Pizza vis-a-vis the local company Pizza Domino was considered and in that instance the Commissioner ruled that both parties chose the mark independently and in good faith some 20-3o years before the legal proceedings were initiated (see Cancellation Proceedings re 61408 Nosel cs. Domino’s Pizza, page 32, 29 August 1004, and Fridman on page 592.

In the current instance, the Court of First Instance determined that when the Israeli company filed a request for cancellation in 1976, the Habitat chain had already developed an international reputation and the Israel applicant was aware of this, and subsequently registered the mark in his name. In this regard, Judge Kara agreed with the Court of First Instance that the Appellant’s claim that transfer of rights from Habit Design ltd to the other international owners is of no relevance whatsoever, since for determining whether the Appellant acted in bad faith it is merely necessary to determine that when they applied for the mark, the chain already had an international reputation for the brand. The Appellant’s claims were rejected due to their selective memory which left gaping holes in their reason for choosing the name, despite them having other data from the same period and even earlier. Similarly it was determined that the unsuccessful attempt by the Appellant to distance themselves from the international chain, increases the feeling of non-trustwariness regarding their version of events.

As is known, except in exceptional cases, the Court of Appeals does not generally interfere with factional determinations of the Court of First Instance.  The Court of First Instance detailed their findings based on the evidence and witness testimony and there is no reason to get involved. The choice of a foreign name and the similarity with the registered mark is itself indicative of inequitable behavior as this Court has previously ruled in Southern Sewers, in 2498/97 Robby Boss vs. Hugo Boss A.G. p.d. 52(5) (1998), 11188/03 Contact Linsen Israel ltd vs. Commissioner of Patents, Designs and Trademarks, 5 May 2005. This is even more obviously the case where the Applicant desired to register their mark after the International mark was already registered.

Thus the Court of First Instance’s ruling that the Appellant acted in bad faith and chose the name הביטאט (Habitat in Hebrew transliteration) whilst knowing of the activity of the International chain with its international reputation, whilst trying to benefit from that reputation is upheld. Having made that determination, it is necessary to determine whether there is room to rule that the mark should not be cancelled, due to the statute of limitations, tardiness, the international company having given up on the mark in Israel or estoppels.

The trademarks were registered in 1979 and the request to cancel them by the respondent to this Appeal was submitted in 2015, i.e. 36 years later. It will be noted that Section 39(1a) which authorizes cancellation of marks applied for in bad faith states that ‘these may be submitted at any time’. The Appellant’s claim that this is only intended to cancel the 5 year period of Section 39(a) of the Law, and not the general Statute of Limitations. They cited 1595/06 Estate of Edward Aridor Z”L vs. Petach Tikveh Municipality, 21 March 2013 which establishes that cancellation of the Statute of Limitations has to be done explicitly, and they submit that Section 39(1a) is not explicit. Consequently, they consider that since the International Company refrained from acting for 36 years over which it was fully aware of the Appellant’s activities, the request for cancelation should be rejected under the Statute of Limitations. The Court of First Instance rejected this argument and after examination of it, Judge Kara sees no reason to interfere.

Section 27 of the Statute of Limitations states that ‘this law does not come to damage the limitation period in any specific law unless this law explicitly states the contrary’. This law reflects the general principle that a specific law over-rules the general arrangement unless the opposite is specifically stated.

statute of limitationsIn Eridor, the Court related to the question of what is the statute of limitation for claims relating to compensation for taking over property for civil use. Then Deputy President Miriam Naor held that the Land Ordinance (Purchase for the Public) 1943 included a specific arrangement which over-ruled the general Statute of Limitations. However the majority held that the Statute of Limitations did apply in that case. Judge Edna Arbel noted in that instance that cancelling the application of the Statute of Limitations in a specific instance had to be based on a clear and explicit clause in the law. Judge Esti Chayot noted that there is no linguistic anchor, not even a hint, to allow the specific arrangement that Judge Naor desired.

In contradistinction to the arrangement in Eridor, in this instance, Section 39(1a) stated explicitly that requests to cancel trademarks that were applied for in bad faith can be submitted at any time. The simple meaning and correct understanding of the term ‘at any time’ is that there is no limitation to when this may be applied for.

Research into the source of the Section strengthens the case that the legislators intended that there should be no time limit for challenging marks which were applied for in bad faith. As mentioned above, the explanation of Section 39(1a) is in (3)bis6 of the Paris Convention which states that:

“No time limit shall be fixed for requesting the cancellation or the prohibition of the use of marks registered or used in bad faith.”     

This phrasing means that there should be no time constraints for requesting a cancellation or a prohibition to use a trademark that was registered in bad faith and it fits well with the wording of the Israeli law as legislated, but does not accord with the application of the Statute of Limitations to such cases. This is also noted in the words of explanation “if the application was made in bad faith, it may be canceled at any time despite the 5 year period in Section 39(a) of the Ordinance.”

The explanation under which the term “at any time” is not limited by the Statute of Limitation is also the explanation understood by Amir Fridman in Trademarks, Law, Case Law and Comparative Law, 2010. This was also the understanding of the Commissioner in Cancellation Request against Israel Trademark no. 60509 Gianni Versace SpA vs. Versace ltd, 29 June 2008, where he explained the rationale behind not limiting the cancellation of marks applied for in bad faith:

At a time when we are dealing with a person whose intellectual property was acquired in bad faith, the law states that his rights do not take precedent over the public good, since there was a flaw in the acquisition of his right. This is similarly true for someone who acquires his intellectual property rights properly but applies them in bad faith The property rights of a person take precedent over the public good only as long as they were received in good faith and used in good faith. If this is NOT the case, the precedence that the period of challenging passing usually provides is not applicable and the property rights no longer overcome the public good and market regulation (see Versace paragraph 12, and the Shukha decision of March 2009).

This aim also sits with the general principle that estoppels are subject to the principle of equitable behavior, and in cases where someone has acted inequitably, he cannot claim protection under the Statute of Limitations (Chavkin 40) and this is the case in this instance, where the purpose, as described at length hereabove, is to prevent taking possession of an international mark merely because the international mark was not in use in Israel, without limiting the time available for the foreign entity to enter the Israel market.

The Appellant claims that in other laws, including Section 73b of the Israel Patent Law 1967 and Section 51 of the Design Law 2017, the legislators explicitly canceled the application of the Statute of Limitations. Judge Kara does not find this argument persuasive with regards to alternative interpretations of Section 39(1a) that deny that this is an explicit arrangement. In this regard he notes that the purpose of the amendment was to adopt the general rules of the International treaties and so it is appropriate to understand Section 39(1a) in a way that achieves this aim.

An additional claim that the Appellant raised in their summations was that Section 39(1a) should not be applied in this instance, since it entered the Statute book after the relevant period of limitation had passed. This argument was first raised at the Appeal and was done half-heartedly and unclearly, so Judge Kara is not relating to it. Merely he notes that this claim was dealt with and rejected by the Tel Aviv District Court in 16540/06 N.V. Koninklijke Phillips Electronics vs. Sarig Electronics ltd, 28 November 2006. See also Commissioner of Patents in re Versace. He further notes without taking a position, that even before legislation of Section 39(1a) the Commissioner ruled that cancellation requests against marks applied for in bad faith could be submitted after the 5 years mentioned in Section 39a of the Ordinance. See Cancellation of 39920 Chemische Fabruk Grunau gmbH vs Camit ltd, 18 January 1998.

Despite the claim of aging, being rejected, Judge Kara IS willing to accept the Appellant’s claim that Section 39(1a) does not prohibit rejecting claims or refusing to cancel a mark dues to tardiness. By comparison, Section 27 of Statute of Limitations states that “this law does not cancel any authority under any law to reject a claim or to refuse to give a legal remedy due to tardiness.” Judge Kara does not consider that by removing the Statute of Limitation, the legislators intended to prevent arguing tardiness and long delays in requesting a remedy can be the basis of not granting that remedy:

The doctrine of Tardiness is a close relative to that of the Statute of Limitations, but the Statute of Limitations crystallizes the relevant parameters into a formal test, whereas the requirements to timely file a complaint are more flexible and the court has more discretion to take into account actual circumstances and not have to rule based on specific time periods passing, see 3602/97 Income and Property Tax Commissioners vs. Daniel Shachar, p.d. 56(2) 2001.

The doctrine of tardiness in civil law is limited to specific rare cases, and the party claiming this defense has a heavy burden to meet (See 6805/99 General Talmud Torah of Etz Chaim Yeshiva v. The Local Committee for Planning and Building in Jerusalem, p.d. 57(5) 2004, and 07/10152 Fadidia vs. Rafaeli,2010; 6182/14 Instalum Holdings ld vs. Yafet Library ltd, 2016.This is because the claim of tardiness is essentially a request to overrule the general Statute of Limitations, usually to the detriment of the plaintiff by shortening his opportunity to file a complaint.

In order to accept a claim of tardiness, it is necessary to clearly show that the plaintiff has either forgiven the infringement or at least decided not to fight for his rights.  These conditions do not apply in the present case. In their response of 1978, Habitat Design ltd declined to respond to the cancellation proceedings but also stated that they disagreed with all the claims of the challenger, and that they had used their mark in Israel in the past and intended to continue to do so in the future, and the fate of the marks will be what it will be. Although, as the Court of First Instance ruled, there was a flaw in the behavior of the International Rights holder at that time onwards, and that they had failed to raise a protest from that time onwards, so the Court of First Instance ruled that they did not deserve sole use of the mark. Nevertheless, the International chain stated that they did not give up on their rights and intended to continue using the mark. In consequence, one cannot state that the local company relied in good faith on the Habitat Design ltd having given up on the mark.

Nevertheless, a long time has passed and this is a relevant consideration.  Although the law does not prevent a complaint being considered after the passing of significant time in cases of inequitable behavior – see Section 29(1a), the basic reason for this is discussed above, but these apply also to alleged tardiness. However, claims of tardiness are difficult to accept from a party proven to have acted inequitably, and who has benefited for years from a trademark belonging to another.

As an afterword, Judge Kara notes that he rejects the claimed estoppels against raising bad faith considerations that the Appellant’s allege arises from the Commissioner accepting the cancellation of the mark. The basic requirement for an estoppels is that the previous legal proceeding had considered the issue and that it should not be reconsidered. However, the cancellation of the Habitat Design ltd marks was based on lack of use during the previous two years as testified by the Appellants in an affidavit, and the present issue is whether the subsequent registration of the current marks by the Israel company was made in good faith. The registration of the new marks did not involve a legal ruling on equitable behavior considerations. Furthermore, even the cancellation of the registered marks was based on a factual determination of whether they were being used, and not on whether the cancellation request was brought in good faith.

Finally, the Appellant’s claim of evidential damage, was submitted very late and was not considered by the Court of First Instance. Judge Kara contents himself by merely noting that the fact that the International chain claimed that they would continue using the mark should have caused the Israel company to keep records of how and why they had chosen the name despite the passage of time. The Appellant didn’t use the tools at their disposal to substantiate their claim that they had chosen the name in good faith.

CONCLUSION

The Appeal is refused and neither party will have exclusive rights to the name הביטאט (Habitat in Hebrew transliteration).

Since the parties have failed to reach an agreement regarding how they will differentiate themselves, and since there is a need to protect the public, Judge Kara concurs that the International chain may refer to Habitat International or הביטאט בין לאומי in their advertisements, but may label the goods sold with the name habitat. The Appellants may continue to use the name habitat in Hebrew or English.

Since the Appeal is rejected, the Israel chain is ordered to pay 25000 Shekels costs.

Habitat Design ltd et al. vs Habitat Ruling by Judge Kara, with Judge Solberg and Judge Elron concurring, 17 December 2018. 



Categories: bad faith, coexistence, estoppel, famous marks, inequitable behaviour, Intellectual Property, Israel IP, Israel Trademark, trademark, trademark cancellation proceedings, trademarks, Uncategorized, WIPO, WTO, החלטת בית משפט, סימן מסחר, סימני מסחר, סמני מסחר, קניין רוחני, קנין רוחני

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