Israeli Supreme Court Ruling Highlights Challenges in Enforcing Exclusive Distribution Agreements against Third Parties

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Imagine securing what you believe is an iron-clad exclusive distribution agreement, only to find another company selling the same products in your territory.

This was the case ruled recently by the Israeli Supreme Court on a significant appeal involving the difficulty of enforcing exclusive distribution agreements against third parties.

Background

The dispute centers around an alleged breach of an exclusive distribution agreement for RAC air conditioners in Israel.

Shiraor, holding exclusive distribution rights (2022-2025), discovered that Ningbo (The Manufacturer) had entered into a conflicting agreement with Tornado in 2024.

Shiraor’s request for temporary relief against Tornado was initially denied by the Central District Court, leading to an appeal to the Israeli Supreme Court.

While Shiraor had a clear agreement with Ningbo AUX, enforcing this against Tornado proved complex. The courts had to balance:

  1. Shiraor’s contractual rights
  2. Tornado’s reliance on its own agreement with Ningbo
  3. The potential economic impact on all parties

The Israeli Supreme Court upheld the lower court’s decision to deny Shiraor’s request for temporary relief against Tornado, emphasizing the complexity of enforcing exclusive distribution agreements against third parties and the need to balance the interests of all parties involved.

Key Takeaways:

  1. Courts are reluctant to grant injunctions that could harm third parties acting in good faith
  2. The potential for monetary compensation may outweigh the need for immediate injunctive relief

The Bigger Picture:

This case underscores the challenges businesses face in a globalized economy. While exclusive agreements can provide a competitive edge, their enforcement across borders and against third parties remains a complex legal terrain.

Optional Clause for Exclusivity

A good sanction to prevent breach of exclusivity in distribution agreements is a combination of liquidated damages and the right to terminate the agreement. Here’s a draft clause that incorporates these elements:

1. Liquidated damages for breach of exclusivity
2. Right to terminate the agreement upon breach
3. Injunctive relief to prevent further violations
4. Manufacturer’s warranty against conflicting agreements
5. Notification requirements for suspected breaches
6. Survival of obligations post-termination

These provisions act as a deterrent, providing clear consequences for the manufacturer if they breach the exclusivity clause by engaging with third parties.”

What strategies have you employed to protect your distribution rights in international markets?

Disclaimer: The information on this website is for general informational purposes only and does not constitute legal advice. This content should not be used as a substitute for professional legal counsel. We make no representations or warranties about the accuracy or completeness of this information. Your use of this website does not create an attorney-client relationship. Always consult a qualified attorney for legal matters.

 

Good News for Vespa Lovers: Iconic Scooter Design Now Legally Protected

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In the colorful landscape of the 1980s, when neon colors adorned the streets and synth-pop music filled nightclubs, many remember one vehicle that became an iconic symbol of the era: the legendary Vespa. A mere glance from afar was enough to recognize a Vespa. Its groundbreaking design, the rounded belly falling beneath the driver’s seat, and the rear that cleverly concealed the back wheel, like an artistic object telling the story of the time, were all symbols of Vespa’s uncompromising identity, making it one of the most popular vehicles.

Its round lines, chrome finish, and vibrant paint jobs reflected the enthusiasm and optimism of the era. Whether it was the red Vespa speeding by or the black Vespa with heavy rock decorations, each scooter told a different story, reflecting the personality and spirit of its rider. In every corner of the city, you could feel the noisy exhaust of the Vespa, as if the engine was demonstrating its love for everyone singing the famous pop songs of the time.

And the sound, how can we forget that sound? As if small stones were clattering inside the exhaust like popcorn in the exhaust pipe, creating a unique sound recognizable from afar that was associated only with the Vespa.

Riding a Vespa became a symbol of self-discovery, spirit, and the experience of true freedom that spread to every corner of the popular culture of that era. Riding a Vespa meant breaking away from traditional norms, embracing the spirit of adventure, and exploring the world independently. Thanks to its unique design, the Vespa became a true cultural motor phenomenon. When the adventurous riders got married and started families, they attached a funny little container on wheels with a seat and a windshield, turning the Vespa into a hybrid motorcycle for two, one next to the other, which they called the Vespa with a sidecar.

In Israel, two main models were imported, PX150 and PX200, with the difference being in the engine size and declared power – 9 HP for the 150 version versus 12 HP for the 200 version, with a maximum speed of around 90-100 km/h.

Almost forty years later, the Vespa brand is still alive and kicking, mainly in Italy. In Israel, however, you can hardly find any Vespas on the roads except for collector’s items and museums.

Recently, there has been a massive wave of motor nostalgia, with scooter manufacturers trying to revive the old success wave of the Vespa by designing their scooters similar to the original Vespa design. Vespa did not like this and began taking legal action against the Chinese company manufacturing these scooters.

During the legal discussions, the question arose whether Piaggio, the rights owner of the Vespa brand, is entitled to exclusivity on its unique design despite it being an old model produced decades ago, thereby preventing Chinese competitors from marketing various Vespa look-alikes. Additionally, the question arose whether car manufacturers are entitled to exclusivity on their vehicle designs.

The legal battle that began in 2017 recently ended with a resounding victory for Piaggio, the owner of the Vespa brand. The Italian court ruled that the external design of the Vespa has “artistic value” that far outweighs the technical and functional nature of the design and is therefore protected by copyright. This ruling means that manufacturing scooters whose external design is similar to the original Vespa design in Italy constitutes copyright infringement and is therefore prohibited.

Alfa Romeo Giulietta Case

Interestingly, this ruling contradicts another ruling by the Italian court in the case of Alfa Romeo and Lancia given about three years ago. Alfa Romeo is known for its fast sports cars, but more than anything it is known for the unique designs of its vehicles, evoking feelings of speed, status, and success. One of the most beautiful Alfa Romeo models is the Alfa Romeo Giulietta, produced from the 1950s in various versions. Anyone who grew up in the 1980s surely remembers this car and the looks it drew as it scorched the road with its amazing engine sound.

Recently, an interesting legal question arose in the Italian court – is the beauty and unique history of a vehicle a justification to grant it copyright protection?

The story began when a company manufacturing toy car models started marketing the Alfa Romeo Giulietta model without receiving permission from Alfa Romeo. Alfa Romeo filed a lawsuit in court, requesting an injunction to prevent the toy company from marketing these models, claiming that the toy models infringe on Alfa Romeo’s copyright on its original design.

This claim was rejected by the Turin court, which refused to grant any copyright protection to the vehicle designs. The court ruled that an industrial design intended for mass production may be protected by copyright if it has some “artistic value” that can be inferred from cultural recognition, museum displays, design awards, design by a famous artist, and a price far above the market price.

The court reviewed these conditions and ruled that the Alfa Romeo Giulietta design did not meet them, as the Giulietta model’s design did not meet the requirement of “artistic value” and did not provide added value to the design beyond the functionality inherent in similar vehicles from the same category. Additionally, it was determined that the designers of the models (the lawsuit was also filed regarding Lancia models) were talented designers but were not “artists” by profession, and therefore their work is not considered “artistic creation.”

But if we are talking about art, why is the legendary Vespa entitled to copyright protection while the Alfa Romeo Giulietta model is not? In my opinion, the external design of the Alfa Giulietta, reflecting style, sport, and motor art that no longer exists, has much higher artistic value than the Vespa. It seems that in this unique field, the last word has yet to be said, and it is likely that car manufacturers will continue to fight for the exclusivity of their designs, even for old models that are no longer in production.

The author is a lawyer specializing in intellectual property and brand protection.

The Hebrew version of this article was published in the Israeli car magazine Queen of the Road

Disclaimer: The information provided on this website is for general informational purposes only and does not constitute legal advice. The content on this site should not be relied upon or used as a substitute for consultation with professional legal advisors.

Counterfeit Goods

Combating Counterfeit Goods in Israel : Strategies for Brand Owners

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In recent years, Israel has emerged as a significant market for international brands, but with this growth comes the challenge of counterfeit goods. Brand owners must be proactive in protecting their intellectual property rights and combating the distribution of fake products. This article outlines effective strategies for brand owners to fight counterfeiting in Israel.

Understanding the Legal Framework

Israel’s robust legal system provides several tools for brand owners to protect their rights:

1. Trademark Ordinance (5732-1972): This law forms the backbone of trademark protection in Israel.

2. Customs Ordinance: Allows for the detention of imported goods suspected of infringing trademarks.

3. Commercial Torts Law (5759-1999): Provides additional protection against unfair competition.

Key Strategies for Brand Protection

1. Trademark Registration

Registering your trademark in Israel is crucial. It provides stronger legal protection and enables easier enforcement against counterfeiters.

2. Customs Recordal

While Israel doesn’t have a formal customs recordal system, brand owners can file complaints with Customs about specific suspected shipments. This proactive approach can help intercept counterfeit goods at the border.

3. Market Monitoring

Regularly monitor both physical and online marketplaces for counterfeit products. This can involve:

– Conducting online investigations
– Engaging investigation agencies
– Reviewing the Trademark Gazette

4. Collaboration with Law Enforcement

Israel’s police force has special units dedicated to intellectual property offenses. Collaborating with these units can lead to effective raids and seizures of counterfeit goods.

5. Border Measures

Work closely with Israeli Customs to prevent the import of counterfeit goods. This is particularly important for controlling the flow of fake products into the Palestinian territories, which often serve as entry points to the Israeli market.

6. Legal Action

When necessary, pursue civil litigation against infringers. Israeli courts have shown a willingness to protect trademark rights and can order significant damages.

7. Education and Training

Conduct training sessions for Customs officials to increase their awareness and ability to identify counterfeit products.

8. Online Enforcement

With the rise of e-commerce, implement robust online brand protection strategies. This may include monitoring online marketplaces and social media platforms for counterfeit listings.

9. Supply Chain Security

Implement stringent manufacturing and distribution agreements to prevent unauthorized distribution of goods by authorized manufacturers.

10. Public Awareness

Educate consumers about the risks of counterfeit products and how to identify genuine items. This can help reduce demand for fake goods.

Conclusion

Combating counterfeit goods in Israel requires a multi-faceted approach. By leveraging the legal framework, collaborating with authorities, and implementing proactive strategies, brand owners can effectively protect their intellectual property and maintain their market position in Israel.

For personalized legal advice on trademark protection and anti-counterfeiting strategies in Israel, consult with experienced intellectual property attorneys who specialize in Israeli trademark law.

 

alfa romeo junior

Trademark Protection of Cars Models : A Journey Through the Highways of Automotive History

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Trademark Protection of Cars Model is crucial for brand identity, protecting the unique names, logos, and designs associated with different vehicles. They help manufacturers differentiate their products in a competitive market and prevent unauthorized use or imitation by others. Trademarking ensures legal protection, allowing companies to maintain their reputation and market share by securing exclusive rights to their intellectual property. This not only enhances brand recognition but also builds consumer trust and loyalty, essential for long-term success in the automotive industry.

Italian Government vs. Alfa Romeo

The Italian government’s demand for Alfa Romeo to change the name of its new electric model reminded us how important a name is, and what a masterpiece lies behind the naming process. Here is an article about the Italian demand, similar cases, and historical car names, by Attorney Yossi Sivan, expert in intellectual property and protection of international brands.

Recently, a new model from Alfa Romeo was launched, named Alfa “Milano”. The new model caused a great stir worldwide, not because it’s the first electric car produced by Alfa Romeo, nor due to its stunning design. The storm occurred because of the model’s name.

 

Immediately after the launch of the “Milano”, the Italian government demanded that the Italian brand owner Alfa Romeo stop using the name “Milano”. The reason? The model is not manufactured in Italy, but in Poland (for cost reasons, of course). This is the first time Alfa Romeo has produced a model outside Italy, after decades of Alfa Romeo cars leaving the factory gates in the Lombardy region of Italy.

 

Italian Industry Minister Adolfo Urso argued that a car under the name “Milano” cannot be produced in Poland, because the Italian law from 2003 prohibits car companies from using model names associated with places in Italy if the car is not produced in the boot-shaped country. Eventually, Alfa Romeo decided to change the model name to “Junior”, which is the name of the successful historical model from the 70s.

 

False Geographical Designation – Consumer Deception

The Italian law reflects a principle similar to Israeli law, which prohibits consumer deception. According to Israeli law, trademark protection cannot be granted to a commercial name indicating any false geographical origin, meaning when the goods are not produced in that place, which could cause consumer deception. In Israel, protection can be granted to what is called an “appellation of origin”. An appellation of origin is protection in the field of intellectual property, given to names of products derived from the geographical name of a country, region, or origin, included in the product’s name, when the designation is intended to indicate that its origin is indeed there and that its quality or characteristics are mainly due to that geographical environment, its character, and uniqueness.

 

The conditions for obtaining a registered appellation of origin in Israel are very strict. In Israel, only a few appellations of origin have been registered over the last fifty years. For example, the name JAFFA was registered in 1968 for citrus fruits grown in various regions of Israel. Recently, the name “Yehuda” in the wine field was also registered as an appellation of origin granted to a group of wine growers in the Judean Hills area. The meaning of a registered appellation of origin is that only wine producers from the geographical area of Mateh Yehuda will be able to use the appellation of origin “Yehuda” on their wine bottles.

 

The Importance of Finding the Right Model Name

Finding the right name for a new car model is a task that requires a lot of thought and creativity, to the point of art. Behind every iconic model stands a carefully chosen name, often rooted in the brand’s history, culture, and aspirations. These names evoke emotions, ignite the imagination, and become an inseparable part of the car’s identity. Over the years, car companies have been careful to register their new brands as trademarks worldwide, thereby gaining exclusivity in these names, with the main goal being to prevent competitors from using an identical or similar name. There have been many conflicts between car companies regarding the use of certain names.

 

For example, the prolonged legal battle between Audi and its Chinese rival Nio – the dispute revolved around the model designations ES6, ES7, and ES8. Nio had already sold electric SUVs with these names and planned to launch them, but in Germany, there could have been a risk of confusion with Audi’s sporty S models (such as S6, S7, and S8), so Audi quickly filed a lawsuit with the Munich Regional Court, claiming that Nio’s model names could cause confusion among consumers. The Regional Court ruled in favor of Audi in January 2023.

“There is a risk that consumers will assume that the ‘ES 6’ is the ‘S 6’ in the electric version, that the two vehicles are from the same manufacturer. There is therefore a transfer danger of confusion through association that goes beyond pure association”.

It was determined that there is a risk that consumers would assume that the ES6 is an Audi S6 in an electric version, that both cars are from the same manufacturer, therefore there is a danger of confusion between the names. Nio appealed, but eventually its appeal was rejected in 2024 and the Higher Regional Court in Munich ruled in favor of Audi. This emphasizes how critical the model name is for car manufacturers, and how much they seek to protect their brand identities and avoid any potential confusion in the automotive industry.

 

The Stories Behind Known Car Model Names in the World

The stories behind some of the most famous car names that have graced Israel’s roads

 

Toyota Corolla

Let’s start with a name that has become synonymous with reliability and practicality: Toyota Corolla. The Corolla, first introduced in 1966, quickly became one of the best-selling cars in the world. Its name is derived from the Latin word for “crown”, and symbolizes Toyota’s aspirations for the compact sedan to reign supreme in its category. Over the years, the Corolla has undergone many changes, but its name remains a testament to its enduring legacy.

 

Ford Mustang

The designer of the Mustang, John Najjar, drew inspiration from the P-51 Mustang aircraft flown during World War II. Initially rejected by his boss, Najjar insisted and linked the name to a horse instead of an airplane, which later became the legendary American model “Mustang”.

 

Honda Civic

Honda Civic, another household name in the automotive world, boasts a name that embodies its civic ethos. Since its debut in 1972, the Civic has represented Honda’s commitment to providing efficient and accessible transportation to the masses. Its name reflects the car’s role in fostering community and progress, which has made it an integral part of Israeli roads for generations.

 

Volkswagen Golf

The Volkswagen Golf has a special place in the hearts of drivers around the world, including those in Israel. The model was first introduced in 1974. The Golf got its name from the North Atlantic Current, a strong ocean current famous for its speed and reliability. This name choice perfectly illustrates the Golf’s dynamic performance and consistent popularity over the years.

 

Toyota Prius

The popular Toyota Prius hybrid car gets its name from a French word meaning “prior” or “coming before”. The name reflects the car’s hydro-dynamic ideas and stability, and its high performance in every journey. We all witness that the Prius has become one of the most popular cars in Israel, among drivers interested in environmental conservation.

 

Volkswagen Beetle

Originally known as the KdF (Kraft-durch-Freude-Wagen), translated to “Strength-through-Joy Car” in German, the Beetle gained its iconic name after a New York Times article predicted that Germany’s autobahns would be flooded with “thousands upon thousands of shiny little beetles”. Over time, “Beetle” became the official name.

 

Hyundai Ioniq

According to Hyundai, the name is actually a successful wordplay. Ion: refers to the electrical element of the car, as electric vehicles use lithium-ion batteries. Iconic: refers to the car’s aspiration to be a symbol of change and a new era in the field of electric transportation. Hyundai themselves aimed for something like “iconic electric car”.

This is an AI creation of an imaginary Alfa Romeo:

The article was written by Attorney Yossi Sivan, specializing in intellectual property and international brands. The hebrew version was published Here

 

What is the Significance of Registering a Trademark in Israel?

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Registering a trademark in Israel, as in many other countries, provides several important benefits and protections for individuals and businesses. Here are some key reasons why you might want to register a trademark in Israel:

  1. Legal Protection:

    • Exclusive Rights: Registering a trademark in Israel grants you exclusive rights to use that mark in connection with the goods or services for which it is registered. This helps prevent others from using a similar or identical mark in a way that could confuse consumers.

  2. Brand Recognition and Reputation:

    • Building a Brand: A registered trademark helps build brand recognition and establishes your identity in the marketplace. This can be crucial for businesses seeking to create a distinct image and reputation for their products or services.

  3. Enforcement and Litigation:

    • Legal Recourse: If someone else begins using a similar or identical mark without your permission, having a registered trademark in Israel gives you legal grounds to take action against them. This can include filing lawsuits for trademark infringement.

  4. Deterrence:

    • Discouraging Infringement: The existence of a registered trademark can act as a deterrent to others who might be considering using a similar mark. Potential infringers are more likely to avoid using a mark if they know it is legally protected.

  5. Business Expansion:

    • Market Access: A registered trademark can facilitate business expansion and market access in Israel. It provides a basis for establishing and protecting your brand in the local market.

  6. Licensing and Franchising:

    • Monetization: If you choose to license or franchise your brand, having a registered trademark provides a valuable asset that can be monetized through such arrangements.

  7. Global Protection:

    • International Recognition: If you plan to expand your business internationally, having a registered trademark in Israel is part of a broader strategy for global brand protection. It can be a basis for filing for protection in other countries through international treaties and agreements.

  8. Investment and Funding:

    • Investor Confidence: Having a registered trademark can enhance investor confidence. Investors may view a registered trademark as an indication of a serious and committed business.

  9. Preventing Counterfeiting:

    • Anti-Counterfeiting Measures: Registering a trademark allows you to work with authorities to prevent the import and sale of counterfeit goods bearing your mark.

In summary, registering a trademark in Israel offers legal protection, helps build and maintain brand reputation, and provides a range of practical benefits for businesses operating in the Israeli market. It is a proactive step to safeguard your intellectual property and maintain a competitive edge.

Items sold by Rami Levy with BHPC trademark

Record-Breaking Trademark Infringement Award In Israel – Good News for Brand Owners

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In a groundbreaking legal ruling that has captured attention, the Tel Aviv District Court has recently delivered a record – breaking trademark infringement award with far-reaching implications.  

Rami Levi, one of the biggest supermarket chains in Israel, has been ordered to compensate Lifestyle Equities, the owner of the iconic BEVERLY HILLS POLO CLUB, in one of the highest awards in Israel for trademark infringement.

This landmark decision sets an extraordinary precedent in Israel’s legal arena, representing a remarkable triumph in the realm of trademark infringement.

The court ruling concluded a long-standing dispute between the parties, which lasted nearly a decade.

Here’s the story in a nutshell:

General Background

The plaintiffs, Lifestyle Equities C.V. and Lifestyle Licensing B.V., own the rights to the well-known BEVERLY HILLS POLO CLUB (BHPC) brand, featuring the iconic horse, rider, and polo stick, marketed in many countries worldwide, primarily in the fashion, footwear, bags, and more.

The plaintiffs granted a license to an Israeli company for the design, production, and distribution of BHPC products in Israel, specifically in the category of underwear.

The license included various restrictions, including a prohibition on distributing the products in food stores and marketing products not approved by the plaintiffs.

In 2014, the plaintiffs discovered that underwear products bearing their trademark, which were not approved as required, were imported to Israel by Yafiz and sold in Rami Levy stores.

Items sold by Rami Levy with BHPC trademark

The plaintiffs also learned that the license holder transferred her operations to another company without informing the plaintiffs or obtaining their approval. Under these circumstances, it was alleged that the products sold in Rami Levy stores were infringing.

In 2014, the plaintiffs sent warning letters to Rami Levy and Yafiz, demanding they cease the distribution of the infringing products.

However, the infringing products continued to be sold in Rami Levy stores despite the plaintiffs’ warnings, and this continued even after the license agreement was terminated and a lawsuit was filed against the company, claiming that it had stepped into the shoes of the license holder.

When Rami Levy and Yafiz refused to cease the distribution of the infringing products, the plaintiffs filed a lawsuit in 2017 against Rami Levy, Yafiz, and other importers.

The lawsuits led to a prolonged and complex legal battle, during which numerous pieces of evidence were presented regarding the trademark infringement, including findings by private investigators and expert opinions.

In 2022, the parties agreed to submit the dispute to the District Court (Judge Guntevenik) for a decision based on oral summaries by the parties, without cross-examinations.

The Judgment

On April 27, 2023, the court issued its judgment in the case.

The Tel Aviv District Court ruled that Rami Levy Shikma Marketing 2006 Ltd. and Yafiz Fashion Ltd. must compensate Lifestyle Equities C.V. and Lifestyle Licensing B.V., the owners of the BEVERLY HILLS POLO CLUB brand, in the amount of over 3,000,000  ₪ (2,413,836 ₪  plus interest and expenses) for trademark infringement.

This is one of the highest amounts awarded in Israel in recent years in the field of trademark infringement.

This landmark case sets a new benchmark in Israel’s legal landscape, representing one of the most substantial trademark infringement awards in recent years.

According to attorney Yossi Sivan representing Lifestyle Equities, there are several important and interesting elements in the court’s ruling:

One of the Highest Awards in Israel for Trademark Infringement

Firstly, the trademark infringement award is one of the highest awarded in Israel in recent years for trademark infringement. It includes compensation of all gross profit made by the Defendants amounting to approximately 2.4 million ₪, plus additional amounts for the filing date of the lawsuit and reimbursement of expenses, totaling over 3,000,000 millions NIS.

Attorney Yossi Sivan: “One of the Highest Trademark Infringement Awards in Israel”

Third-Party May be Liable for Trademark Infringement

Secondly, the court ruling indicates that a commercial party that received warnings about products it distributes cannot evade responsibility for potential intellectual property infringements and cannot place all the responsibility on the product supplier.

Failing to conduct a thorough investigation of the allegations while continuing to sell the infringing products might exposes the distributor to liability for trademark infringement.

The Judgment marks the first trademark case law in Israel where a third party (a commercial client such as supermarket chain of stores, who purchased the products from a supplier) is held responsible for trademark infringement and grants the brand owner a substantial compensation, one of the largest ever given in Israel.

Distribution Limitation of a License Agreement May Be Enforceable Against Third Parties

The third, ruling acknowledges that Rami Levy’s chain stores are “food stores” according to the license agreement. This establishes that the distribution of products bearing the trademark in food stores is prohibited.

The court accepted the plaintiffs’ position in this context, stating that distributors and marketers who did not directly contract with the rights-holding company are subject to the terms of the license agreement following the notices. 

Compensation Based on Unlawful Enrichment – Good News for Brand Owners 

The court’s compensation mechanism in this case is truly groundbreaking. Unlike typical instances of trademark infringement, where compensation is often estimated due to the challenge of proving financial damages, the court took a different approach.

Through meticulous analysis, the court accurately calculated the defendants’ actual gross profit, taking into account operational expenses. The plaintiffs provided comprehensive data, including import records, invoices, and receipts, enabling a precise calculation of compensation.

Rather than relying on the traditional compensatory damages mechanism established by the Trademark Law, the court applied an alternative remedy based on the unlawful enrichment law. This approach ensures that the compensation is directly tied to the actual gross profit derived from the infringement.

“… It should be noted here that “the rights holder can demand an injunction and compensation, but as an alternative to compensation, they can claim the unjust enrichment on the basis of unlawful enrichment act”.

Licensing Royalties Should Not Be The Basis of Compensation

The court firmly dismissed the defendants’ argument that only reasonable royalties should be awarded for using the plaintiffs’ trademark. Instead, it deemed the disgorgement of profits as the appropriate remedy, considering the nature of the case and the relationship between the parties.

The court recognized the plaintiffs’ efforts to trace the actual profits made, reinforcing the principle that compensation for trademark infringement should reflect the third party’s actual gross profit from the unauthorized sale of products.

” In light of the circumstances, it seems that returning the profits is indeed the suitable remedy… Therefore, it does not seem appropriate to award compensation in the form of reasonable royalty fees, a place where the profits can be traced.”

Furthermore, the court ruled that Rami Levy and Yafiz are jointly and severally liable for compensation, despite being separate entities. Their close collaboration and intertwined business activities justified this decision.

It’s worth noting that Rami Levy and Yafiz initially attempted to prevent the publication of the court ruling. However, the district court sided with the plaintiffs, acknowledging that there was no valid reason to withhold the ruling from public knowledge.

This trademark infringement award was granted under the provisions of Section 79A of the Israeli Court’s Law, wherein both parties consented to the Court exercising its discretion and making a judgment based on the available evidence and pleadings, without conducting cross-examinations.

The plaintiffs in this landmark case were represented by our law firm: Attorney Yossi Sivan of Yossi Sivan Law Firm 

Case Number TA 13671-02-17 Lifestyle Equities CV and others v. Rami Levi and Others (Tel Aviv District Court).

We would like to express our gratitude to Attorney Avi Ordo of Shorowitz & Co., who successfully cooperated with our firm and jointly represented in this case.

An appeal to the Supreme Court has been filed.

Please be aware that the information provided in this article is intended for general informational purposes only and should not be considered legal advice. For specific legal matters, it is recommended to consult with a licensed attorney.

The Importance of a Word Mark Registration in Israel  

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Filing a trademark application for a word mark can be a powerful tool for businesses and organizations looking to protect their brand and intellectual property.

This article describes the Importance of a Word Mark Registration in Israel.   

A word mark is a type of trademark that consists of words, phrases, or slogans, rather than a design or symbol.

In contrast, a design mark is a type of trademark that consists of a design, symbol, or logo.

There are several reasons why businesses and organizations may choose to file a trademark application for a word mark rather than a design mark.

One major reason is that a word mark can be a more effective and efficient way to protect a brand.

A word mark allows businesses and organizations to protect their brand name and any associated slogans or phrases, which can be a key part of their brand identity.

This can help to prevent competitors from using similar brand names or slogans that could confuse consumers or dilute the strength of the original brand.

A perfect example can be learned from the recent case of the Israeli Trademark Office.

An applicant (shoe store) has filed a trademark application for the following designed mark in class 25:

 

The Trademark Examiner has refused the trademark application based on a similarity to a trademark registration for the word mark BUTTERFLY in class 25 owned by Tamasu Butterfly Europa GmbH:

 

BUTTERFLY

The applicant argued against the Examiner’s decision and requested a hearing before the Trademark Registrar.

The Trademark Registrar has reviewed the matter and rendered the following decision:

The test for the existence of a confusingly similarity is called the “triple test” and it includes the following tests:

  1. The visual and sound test
  2. The type of goods and marketing channels test
  3. The specific circumstances test

Regarding the visual and sound test, it has been determined more than once that the marks must be examined as a whole, but with emphasis on the dominant features of the marks.

According to the Registrar, the dominant element in both marks is the word BUTTERFLY, and the addition of the words SUPREME QUALITY will not prevent confusion since the words are transparent to the end consumer.

Furthermore, the word mark BUTTERFLY was determined to be strong enough in the fashion industry to protect against different types of designs and that the design features of the requested mark, such as the green color and BUTTERFLY drawing, may not prevent confusion.

Finally, the Trademark Registrar has decided to reject the requested application based on likelihood of confusion to the BUTTERFLY registration.

This is an excellent example of why word mark registration is crucial for brand owners, as it guarantees better brand protection.

A note: It may be counterproductive for an applicant who already uses a trademark to request a hearing before the Trademark Registrar to clear the way for registration, since a judicial decision showing a likelihood of confusion may be used to support a claim of infringement by the owner of the cited mark.

The risk of a potential infringement claim can sometimes be higher than the risk of not having a registration.

______________________________

Disclaimer: Nothing in the above shall be considered as legal opinion whatsoever. 

Can Basketball Stripes Pattern Be Registered as 3D Trademarks ?

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Israel, October 26, 2022.

Is it possible to register stripes pattern on basketball as 3D trademarks ? A recent decision of the Israeli Trademark Commissioner addressed this question.

KABUSHIKI KAISHA MOLTEN has filed a trademark application for stripes pattern on basketball in class 28 for basketballs and toys:

The trademark office refused the application for lack of distinctive character. 

According to the applicant, the requested pattern has acquired distinctive character through extensive market use, and is therefore eligible for registration.

The Applicant requested a hearing. 

The Trademark Commisioner, Dr. Ravia Israeli, was requested to decide whether stripes pattern on basketball eligible for registration as a 3D trademark.

The trademark commissioner ruled that the requested mark is a position mark, part of a product’s shape and design, therefore it bears a higher burden of proof.

The Trademark Commissioner has decided to follow the EU regulations regarding  position marks: 

“The factors to be taken into account when examining shape marks are also relevant for position marks. In particular, the examiner must consider whether the relevant consumer will be able to identify a sign that is different from the normal appearance of the products themselves. A further relevant consideration in dealing with position marks is whether the positioning of the mark upon the goods is likely to be understood as having a trade mark context.”

In other words, the consumer’s perception must be examined in relation to the design of the products in the relevant field, and whether the consumer will recognize the source of the goods when he notices the design that constitutes the requested mark.

The Applicant’s Stripe Pattern Lacks an Inherent Distinguishing Character

The trademark Commissioner has decided that the design of the applicant’s basketball is not unusual, unique or surprising in relation to designs in the field.

The design of the requested mark based on the pattern of the applicant’s stripes or the location of this design on the basketball does not constitute an independent element capable of directing the reasonable consumer in the field to the applicant. Therefore, it was decided that the mark lacks an inherent distinguishing character.

 Has the applicant’s stripe pattern acquired a distinctive character ?

As a general rule, when coming to decide on the question of the acquisition of a distinctive character, one must examine the period of use of the mark, the degree of publicity it received and the effort invested by the owner of the mark in establishing a relationship between the product and the manufacturer.

Volume of sales is not enough to necessarily create the required connection between the mark and the origin of the goods.

The applicant has submitted sufficient evidence to prove a substantial market share, but applicant has failed to demonstrate that the totality of the evidence shows that the pattern of stripes on the applicant’s balls has acquired a distinctive character and is identified with the applicant as the source of the goods.

“I did not find that the presentation of the image of the basketballs, which bear the applicant’s striped pattern, in the various publications, turns the design in question into a trademark of a distinctive nature eligible for registration.

On the products presented in the publications, the applicant’s name “Molten” appears next to its stripe pattern. Therefore, it cannot be determined that the stripe pattern without the accompanying name “Molten” next to it acquired a distinctive character …”


Therefore, the application for the stripes pattern as a three-dimensional mark ( 3D Trademark) (as a shape of a product) was denied.

At the same time, the requested mark in its two-dimensional form (the circle mark) is eligible for registration and will be recorded in the register with the addition of a disclaimer stating that this registration does not grant the applicant an exclusive right to the three-dimensional image of the ball and the pattern of stripes imprinted on it.

The meaning is that the stripes may be protected as a standalone trademark but not as a shape or design of a product.

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Disclaimer: Nothing in the above shall be considered as legal opinion whatsoever. 

 

 

Summary of 2021 Israel Trademark and Patent Office Report

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Check Out the Latest Trademark Filing Statistics in Israel 2016 – 2021

1.      National trademark applications (3%) and international applications (14%) both increased in 2021.

2.      A total of about 9% more applications have been filed this year than the previous year.

3.      The number of applications submitted this year (2021) is the highest ever.

4.     48% of all trademark applications filed in Israel were national applications filed by local attorneys, which means trademark attorneys from other countries still prefer to file their trademark applications using local attorneys after seeking advice and counsel from local attorneys.

5.      Approximately 75% of trademark applications filed each year in Israel are from foreign applicants, meaning most come from outside Israel.

Registration of a trademark in Israel is best secured by working with local attorneys.

 

The Fatal Result of a Trademark Infringement Claim

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“Rules Written in Blood” is an old Israeli saying that perfectly sums up the need to learn from others’ mistakes before choosing the right path.

As a brand owner or trademark lawyer, taking enforcement action if you see any competitors or others using confusingly similar marks is the first step to consider.

However, suing for trademark infringement can sometimes result in a fatal result for the brand. 

One example can be found here.

What is an Indirect Attack ?

In Israel, the defendant may raise several defenses to a trademark infringement claim.

Indirect attack is one of the defenses.

In an Indirect Attack, a defendant may claim that the plaintiff’s trademark registration is invalid, or shouldn’t have been registered in the first place, and therefore should be cancelled.

The plaintiff could request cancellation based on a lack of distinctive character or descriptiveness of the trademark registration (absolute grounds).

This could be a majore risk for the brand owner.

Court is Examining The Registrability of the Mark

In a recent case brought by a cosmetic company, this risk was perfectly illustrated.

An infringement claim has been filed to the Israeli Tel Aviv Magistrates Court, in which the Plaintiff has claimed that the use of the mark “Messeia” by the defendants on cosmetic products constitutes trademark infringement.

The Plaintiff owns the trademark registration for the mark “Messiah” in class 3.

Photos of the Plaintiffs products and the Defendants are presented below:

Plaintiff’s Products:

Defandnat’s Products:

It should be noted that an indirect attack could be generaly initiated in a trademark infringement procedure within the framework of the infringement claim itself, even if no separate motion for cancellation has been filed to the Israeli Trademark Office or no separate declarative motion has been filed. 

In this case, the Court has taken one step further, and although the defendant did not specifically raise the claim of indirect attack, the Tel Aviv Court first examined the registrability of the plaintiff’s trademark registration.  

Court Ruled that the Plaintiff’s Trademark Should be Cancelled

The Court has ruled that according to Paragraph 11 (7) to the Trademark Ordinance, marks identical with or similar to emblems of exclusively religious significance are not registerable.

The mark “Messiah” is protected as a symbol with a clear and exclusive religious meaning, meaningful in both Jewish and Christian religions, therefore the mark is not registrable.    

Thus, the Court ruled that the Plaintiff’s trademark registration for the mark Messeia should be cancelled.

In order to formally cancel the mark, the Court requested to send a copy of the decision to the Trademark Office.

So, the Plaintiff sued for trademark infringement, but ultimately lost his registration.

A fatal result for the brand owner.

Owners of brands should carefully consider their risks before initiating a trademark infringement claim, including losing their registration.

 

Disclaimer: The above may not be considered as any legal opinion whatsoever and users are requested to get a professional advise.