Foreign Brand Owner was allowed to manage TM Opposition without Posting a Guarantee

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Generally, the Israeli case law requires foreign companies to post guarantee before managing a litigation, including Trademark Oppositions.

A very important decision of the Israeli IP Commissioner enabled a Nederland company to manage a Trademark Opposition against a local applicant without posting a guarantee, based on its wide reputation, evidence of extensive commercial activities in Israel and the valuable registrations.

Lifestyle Equities CV a Nederland company has filed an Opposition to a trademark application filed by David Ivgi as shown below:

Lifestyle Equities CV has claimed that the requested mark is confusingly similar to their well-known and registered mark “Beverly Hills Polo Club” as shown in the below logo:

Lifestyle Equities CV has claimed that the requested mark features a polo rider on a running horse and a circle element confusingly similar to Lifestyle Equities CV’s mark.

Ivgi requested that Lifestyle Equities CV post a bank guarantee to cover the expected costs should the Opposition be denied, according to the applicable law concerning corporations.

Ivgi’s Claims:

Ivgi has claimed that Lifestyle Equities CV is a Dutch  entity and therefore it would be very difficult to collect the expenses from them, should the opposition be rejected.

Ivgi also claimed that the chances of Lifestyle Equities CV prevailing were extremely small given the visual differences between the marks, therefore a guarantee must be posted.

In addition, Ivgi claimed that Lifestyle Equities CV didn’t prove actual assets in Israel since it has failed to file an affidavit to support its claims.

Ivgi also claimed that the burden of proof lies on Lifestyle Equities CV to prove that it has enough financial capabilities.

Lifestyle Equities CV’s claims:

Lifestyle Equities CV has claimed that Ivgy’s motion must be rejected and that Ivgi is acting in bad faith trying to register this mark.

Regarding the guarantee, Lifestyle Equities CV has claimed that the Trademark Registrar has a wide discretion not to order a guarantee to cover the expenses and that actually Ivgi did not prove that Lifestyle Equities CV would have difficulty in covering the expenses if their opposition was denied.

Lifestyle Equities CV has also claimed there is no need for posting a guarantee in light of their financial capabilities and the fact the Lifestyle Equities CV was a foreign entity was not by itself a ground for requesting a guarantee.

Lifestyle Equities CV has further claimed that since it owned the well-known Beverly Hills Polo Club fashion brand, who has a very high financial value there is no risk of not covering the expenses.

Lifestyle Equities CV further claimed to have valuable assets in Israel based on the high royalties collected from its licensees in various categories.

In addition to that, Lifestyle Equities CV has claimed that it has shown a good chance of winning the opposition case.

Lifestyle Equities CV further argued that the requirement of posting a guarantee was undermining their basic (constitutional) ownership property rights to access the judicial system in Israel, relative to local companies.

Lifestyle Equities CV further claimed that Lifestyle Equities CV is a Dutch company and the Nederland is a signatory of The Hague Treaty of 1954.

The Hague Treaty of 1954 prevents discrimination against foreign companies in relation to local companies, therefor the fact that Lifestyle Equities CV is a Dutch company cannot by itself justifies posting a guarantee.

The Decision

The IP Commissioner, Mrs. Yaara Shoshana Caspi, has accepted Lifestyle Equities CV’s claims that it should not be discriminate just based on the fact the it’s a Dutch company.

Lifestyle Equities CV has managed to show a considerable financial capability, even without submitting clear evidence such as financial reports.

Lifestyle Equities CV has proved (based on its evidence) a wide commercial activity in Israel, that it has valuable brand and that its brand is well known around the world.

The Commissioner further ruled that Lifestyle Equities CV’s trademark registrations in Israel are valuable enough and considered to be a tradable asset.

In addition, the Commissioner has ruled that there is a certain similarity between Lifestyle Equities CV’s mark and the requested mark and that Lifestyle Equities CV’s claim that this could confuse customers is not baseless.

The IP Commissioner has decided that there wasn’t reasonable chance that Lifestyle Equities CV could not cover the expenses and she actually suspects the sincerity of his claims.

Finally, Ivgi’s motion was denied and costs of 1500 Shekels were awarded to Lifestyle Equities CV.

Lifestyle Equities CV was represented by Yossi Sivan & Co. law Offices

Does Parallel Import of Baby Strollers without Serial Numbers Constitute an Infringement of Intellectual Property rights?

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Many international brands are being imported to Israel not only by the official importers, but also by Parallel importers.

As far as the consumer is concerned, as long as these products are authentic and not counterfeit, this parallel import is an acceptable and legitimate phenomenon, since it improves competition and results in lowered prices.

It is well known that brand owners are repeatedly trying to protect the interests of their local official importers by locating the source of the overseas parallel import to Israel for the purpose of stopping the parallel import and controlling the level of prices.

Locating the details of the supplier is possible through reading the bar codes and the serial numbers labels that appear on the imported products.

Does the manufacturer have any legitimate interest to prevent the removing of those serial numbers? This question has recently come up in a very interesting case ruled by the Central District Court in Israel.

Background:

STOKKE is a Norwegian Company and manufacturer of baby strollers that are distributed to many countries around the world.

Baby Love is an Israeli Company that imports STOKKE Strollers among other baby products, by parallel import.

STOKKE has filed a motion for a temporary injunction against Baby Love for importing and selling STOKKE baby strollers by parallel import without labels bearing the serial numbers of the manufacturer.

Stokke’s claims:
STOKKE argued that the original serial numbers have been removed by Baby Love and that the new labels that appear on the Baby Love strollers consist faked serial numbers.

STOKKE claimed that the sale of these parallel imported strollers is actually causing the nullification of any warranty granted by the manufacturer and preventing STOKKE from the  ability to trace the strollers for the purpose of consumer service and warranty.

STOKKE has also claimed that the Baby Love strollers are damaging its goodwill and its contractual relationships with the official importer in Israel, a company named Shem Tov.

In addition, STOKKE has claimed that these actions of Baby Love are harming its ability to perform a recall to handle any problems in the strollers.

Concerning the warranty issues, STOKKE has claimed that Baby Love’s actions are causing the consumers to think that they have purchased a STOKKE stroller with full warranty while in fact those
strollers have no official warranty by STOKKE.

STOKKE has also claimed that the removal of the serial numbers and the relabeling with faked serial numbers endangers the consumers, plain and simple.

Baby Love’s Claims:
Baby Love represented by Yossi Sivan & Co. has argued that the real purpose of the motion for injunction was to unlawfully block the commercial activity of Baby Love as a parallel importer in order to prevent competition in the market and to exaggerate the prices of the strollers with no interference.

Baby Love has argued that it doesn’t remove the labels, but purchases the strollers AS IS from the supplier outside Israel, that the parallel imported strollers are identical to the strollers imported by the official importer of STOKKE and that they are sold at lower prices compared to the strollers imported by Shem Tov.

Baby Love has also argued that the removal of the serial numbers is a consequence of the fact that STOKKE is trying to trace the origin of the strollers in order to prevent the parallel import to Israel, forcing the supplier to remove the labels.

Baby Love has also claimed that STOKKE is trying to trace the origin of the strollers in order to prevent the parallel import, to control the prices of the strollers and to dictate exaggerated prices, extremely harming the competition.

In addition, Baby Love has argued that the manufacturer has no legitimate right to control the distribution of the strollers and in fact, STOKKE has exhausted its rights after it sold the strollers to some supplier around the world according to the rules of exhaustion of intellectual property rights.

Baby Love has claimed that the interest lying in the parallel import by preventing STOKKE from tracing the details of the supplier overrides the interest of STOKKE to control the market and to exaggerate prices by blocking the market.

In addition, Baby Love has claimed that the strollers are not required to any recall according to the regulations of the Standards Institution of Israel and that the strollers are not products that require a safety standards such as safety chairs for cars.

Baby Love has also clarified that there is no misleading of the consumer since the name of the parallel importer appears all over the purchasing documentation and that the consumer knows that it is a product of parallel import.

Court’s Decision:
The Central District Court has denied the motion for the temporary injunction and ruled that allegedly there is no misleading of the consumer and that the consumer is aware that he is purchasing a parallel imported stroller and that the warranty is given by the parallel importer not by the official importer.

The court also ruled that Baby Love doesn’t remove the original labels and doesn’t fake the original labels but sticks on different labels that include its own serial numbers according to the regulations of the Standards Institute of Israel.

The court has also mentioned the active involvement of the official importer of STOKKE which implies that most of the claimed damage arising from the parallel import activity is the commercial damage of the official importer, not STOKKE.

The court also has clarified that parallel import is a positive phenomenon in its essence in light of the Supreme Court’s decision in case No. 7629/12 TOMMY HILFIGER V. Swisa and that the recognition of the legitimacy of parallel import is based on the doctrine of the exhaustion of intellectual property rights which is well based and obvious.

The District Court has also mentioned the proposed bill of the Restrictive Trade Practices Law (Antitrust Law) (removal of import barriers 2015) applying limitations that would prevent official importers from the exploitation of their status and abuse of their rights by opposing parallel importers.

The court also rejected the comparison between the number on a motor vehicle chassis to the serial number sticker on a stroller and determined that this comparison indicates the weakness in STOKKEs arguments.

The court has also rejected the claim that the removal of the labels (bar codes) “endangers the public” and ruled that this claim is very farfetched and lacks evidential basis.

Ultimately the Court dismissed the Motion of Temporary Injunction and ordered STOKKE to pay Baby Love expenses worth 15,000NIS and to deposit a guaranty of 75,000NIS within 20 days otherwise the lawsuit will be dismissed.

Although this decision is a temporary decision, it still constitutes a great victory for free competition and the legitimacy of parallel import in Israel.

Baby Love was represented by Yossi Sivan & Co. Law Offices

Disclaimer
Nothing in the above shall be considered as any legal advice or any legal opinion whatsoever. This is just an informative article. We strongly recommend consulting with a professional attorney in such matters.

Trademark Registration Procedure in Israel

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Registration of a trademark in Israel provides the owner a right of exclusive use of the registered mark for the registered goods or services. A trademark is registered by the Patent Authority at the Trademarks Registry.

A trademark application is made by filling out an application form and paying the registration fee. The application form specifies the name of the owner, the requested mark and the goods or services for which the mark is intended. A separate application must be made for each NICE Classification goods or services class.

Once an application is made, it will be examined by a Trademark Office’s examiner. The examiner will decide whether the mark is eligible for registration based on the Trademarks law and regulations. The examiner may issue an Office Action if he objects to the registration of the mark on any of the grounds set forth in the Trademarks Ordinance. The examiner may also condition the registration of the mark on a waiver by the applicant. The examination process takes approximately one year, assuming there are no Office Actions or Objections.

After an application is accepted for registration it is published on the official Trademarks Journal and it is open for opposition for three months. If no oppositions are filed the application will be registered and will be valid for 10 years from the date of the application. The registration may be perpetual subject to the renewal of the registration.

Section 29 of Trademarks Ordinance, Interference Procedure

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Section 29 of the Trademarks Ordinance is designed to deal with cases of conflicting trademark applications. When two separate applications are made by different applicants for marks that are identical or similar such as to cause confusion, for the same goods or goods of the same kind, the Trademarks Registrar may issue an Interference Procedure according to Section 29.

There are two ways to resolve cases of conflicting applications; the first is by an agreement between the two applicants. Once the Trademarks Registrar issues an Interference Procedure the conflicting applicants have three months to reach an agreement. Such an agreement must receive approval by the Trademarks Registrar. Alternatively, if no agreement is reached, the Trademarks Registrar will decide which application prevails or whether the two applications can co-exist.

When deciding which application to accept, the Trademarks Registrar will take into account considerations of good faith in filing the applications, the extent of use of the respective marks and, the date of filing the respective applications (in order of importance).

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Trademark Opposition Proceedings

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Once a trademark application is accepted for registration by the Trademarks Registrar, it is published in the official Trademarks Journal. Following such publication, any person may, within 90 days of the publication, file an opposition to the application.

The most common grounds for opposition is that an identical or confusingly similar mark is already registered. However, it is possible to base an opposition on any grounds that may render the application not eligible for registration, for example, that the mark is generic or descriptive and thus cannot be registered as a trademark.

Once an opposition is filed, an adversarial proceeding is carried out before the Trademarks Registrar. The Trademark Registrar will decide, upon evidence by both parties, whether the application should be registered. The Registrar’s decision may be appealed to the District Court.

Israeli Patent and Trademark Office Report for the Year 2012

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The Israeli Trademark Office has published i’ts Patent and Trademark Office report for the year 2012. The 2012 report reveals couple of interesting findings regarding the trademark filing policy of foriegn applicants in Israel.

Details show an increase in the international filings of trademarks in Israel by applicants from foriegn countries compared to previous years. Most of the applicants prefered the international filing (Madrid System) using their own legal attorneys over the national filing.

According to the report 2802 international applications have been filed in 2012 compared to 1777 national applications. Also most of the trademark applications were filed by US applicants.

While most of the European applicants, such as Germany, UK, France, Sweden and Switzerland prefered the international filing, the US applicants prefered the national filing (1,171 applications).

Although most of the foriegn applicant prefered the international filing, the picture is different when it comes to the most major international brands.

The report demonstrate the continues preferance of the leading brand owners to use their local Israeli attorneys in filing trademark applications insted of using their inside legal departments.

Most of the major international brand owners, such as HP, A&F, L’Oreal and Nestle, who filed most of the trademark applications in Israel, have filed national trademark application using their Israeli local attorneys.

According to the Table provided by the TMO 331 national tardemark applications have been filed by 17 international brand owners, in compare to 211 international applications using the Madrid System.

There could be number of reasons for this preferance:

One of the reasons could be untraditional trademark filings, such as trademark applications for three dimensional products, which always required the legal representation of local attorneys to handle the office actions.

Other reasons could be the constant need for a professional advice at the filing stage, in order to avoid any future office actions which require investing more legal expenses.

Israel Patent Office Annual Report of 2012

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The Israeli Trademark Office has published i’ts english version of the Patent and Trademark Office report for the year 2012. Here some of the basic statistic facts:

Patents : 
Total patent application filed in Israel – 6,793
Total patent granted – 3,386
Leading foriegn applicants: Raytheone Company – 235 patent applications, F. Hoffman La Roche AG – 229 applications, and Novartis AG – 165applications.
Number of patent Oppositions filed – 24

Trademarks
Total Trademark applications – 8,733
Domestic Applications 4,507
Foriegn Applications – 4,226
Leaders in Trademark fiiling – Israel Broadcasting Authority – applications 112 , Novartis – 41 applications.
Trademark Oppositions – 85. 

Design Applications
Total Design applications – 1,546 
Total applications registered – 636.
Foriegn comapnies leading in filing Design applications – Lsi Industries Inc USA and Saverglass France, Victaulic Comapny Usa and Diesel spa Italy.

 

Brand Owners ! Record your Licenses in Israel

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Many brand owners that distribute their products in Israel uses local licensees instead of operating Israeli subsidiaries companies. Using local licensees has many advantages, such as saving operation and management costs and minimizing financial investments.
According to the Israeli Law (Section 41 of the Trademark Ordinance) any trademark registration that has not been in used by its proprietor for a period of three consecutive years (from date of registration) can be cancelled on the grounds of non-use. Actual commercial use is required in order to meet the Use requirements.
It’s important to remember that using the mark in Israel only by a local licensee will not considered to be “use” by the proprietor of the mark according to the Law, unless the license is recorded.
The trademark Registrar has ruled based on the Supreme Court precedent, that since the proprietor of a registered trademark did not actually use the trademark on its own, but rather licensed the use to his licensee, without registering the licensee at the Trademark Gazette, the use by the licensee could not consider to be use by the proprietor. Therefore, the registered trademark can be canceled based on lack of use. Decision from February 20, 2011 – of Oz v. Of Tene (application for cancelation of the trademark no. 169322 “Of Tene – Mifaley Basar”).
It is imperative therefore to record the license with the Trademark Office using a Local representative in order to avoid the possibility of cancellation by third parties.

TM Application for “Hotels.co.il” rejected

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Buy-Tech Telecommunications LTD. , the owners of the domain name http://www.hotels.co.il/ has filed a trademark application for the mark hotels.co.il (application number 234287) in classes 35, 42, 43 and 39. The Trademark Examiner rejected the application, based on lack of distinctiveness.

The Applicant appealed and raised his claims before the Deputy Commissioner, Ms Jaqueline Bracha. The Applicant has argued that the website is well known, acquired a reputation with both hotel owners and tourists, and also generates 70 million Shekels per year.

The Deputy Commissioner rejected the applicant’s claims based on the Federal Circuit Decision from the United States re Hotels.com L.P. 573 F.3d 1300, 91 USPQd 1532, where the Court ruled that the generic term “hotels” did not lose its generic character by placement in the domain name HOTELS.COM. She also pointed out scholars opinions from Kerly’s Law of Trademarks, who claims that a registration of a domain name doesn’t by itself create an IP or monopoly right but, rather a contract with the domain name authorities.
The Deputy Commissioner has also ruled that the mark hasn’t acquired secondary meaning and rejected the Appeal.

Application number 234287 – hotels.co.il

Who Has Preferred Rights to the Mark ACTIVE in Class 34 ? Japan Tobacco Inc or Phillip Morris?

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The Israeli Trademark Registrar Mr. Asa Kling has ruled in an Interference Procedure according to Section 29 of the Trademark Ordinance, that the Applications for the marks ACTIVATE FRESHNESS and ACTIVE in class 34 for Cigarettes filed by Japan Tobacco Inc have preferred rights over the application for the mark L&M ACTIVATE 2 “IN 1 ACTIVATE FRESH FLAVOUR” of Phillip Morris Products SA.
Section 29 of the Trademarks Ordinance is designed to deal with cases of conflicting trademark applications. When two separate applications are made by different applicants for marks that are identical or similar such as to cause confusion, for the same goods or goods of the same kind, the Trademarks Registrar may issue an Interference Procedure according to Section 29.

When deciding which application to accept, the Trademarks Registrar will take into account the following considerations:
A. Good faith in filing the applications
B. The extent of use of the respective marks and
C. The date of filing the respective applications

Courts have ruled that the most important factors are the extent of use and the good faith of the applicants.
In this case the Registrar has ruled that Japan Tobacco Inc has managed to prove by persuasive evidence a wide use of the mark in Israel and over the world, while Phillip Morris has failed to prove any use of the mark in Israel or anywhere else. Therefore, it was decided that the trademark application of Phillip Morris will be rejected.
Japan Tobacco Inc v. Philip Morris Products S.A – Interference Procedure regarding applications Nos. 238943,236442,235858. September 30, 2013.