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.

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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.

Israel: New 2022 WTR Ranking for Yossi Sivan Law Firm

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We are glad to share with you that this year again, Yossi Sivan was ranked by the WTR 1000 with this amazing review:

”… A contentious ace who regularly racks up the wins before both courts and customs authorities, he runs his practice out of the eponymous Yossi Sivan & Co. … he won an unusual temporary seizure order on the real estate properties owned by the defendant’s shareholders.”

Yossi Sivan Law Firm was ranked in the following categories:

A. (Individual) Enforcement and litigation
B. (Individual) Prosecution and strategy

A big thank you to all of our clients and colleagues across the world. Contact Us.

 

Is There a Likelihood of Confusion Between EZ and EZ PUT?

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We are thrilled to share with you the fantastic victory our firm achieved in a recent trademark opposition case. The case centered on the use of a rapper’s merchandise in connection with his trademark, and whether it constituted use beyond his music services.

Our client, EZ PUT, a company specializing in mobile phone accessories, had their trademark application opposed by Israeli rapper, EZ, who claimed that the mark was too similar to his own, well-known mark in the music services category. EZ argued that his sales of shirts and hats with his trademark should broaden the protection of his mark.

However, EZ PUT countered that there was no likelihood of confusion between the two marks, citing differences in design, style, and meaning. They also contested that EZ’s trademark was not widely known and that the sale of fashion merchandise did not constitute valid trademark use outside of music services.

The TM Registrar ultimately dismissed the opposition, fully accepting EZ PUT’s arguments, including their use of the merchandise claim. As the Registrar noted, the purchase of a shirt with a band’s name is not meant to convey the quality or origin of the shirt, but to express the wearer’s musical preferences and cultural identity.

Our client was expertly represented by Yossi Sivan – Law Firm, and we are honored to have been a part of this successful outcome.

 

Can a Fin Shape Jewelry be Eligible for a 3D Trademark in Israel?

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Ronit Kopel filed a trademark application for a three-dimensional mark for a fin shape in class 14 for “jewelry and key holders” that looks like this:

The Trademark Office has issued a refusal based on the claim that the mark merely describes the goods as a three-dimensional product and therefore lacks a distinctive character, meaning that the mark is the product itself.

In Israel, it may be possible to register the shape of a good as a trademark in special cases, where sufficient evidence is provided to demonstrate three cumulative conditions ruled by the Supreme Court in the case of August Storck KG B v Alfa Intuit Food Productions Ltd (CA-11487- 03, March 23 2008) (The Toffefe Case), as follows: 

1. The image requested to be registered, in practice, functions as a trademark, namely it indicates the source of the goods intended to be sold under the mark. 

2. The image requested to be registered, does not serve solely an aesthetic or functional purpose.

3. As a result of use, the mark has acquired a distinctive character that indicates the source of the good. 

The above requirements were described later as the “Three Requirements Test” and was also adopted by the Israeli Trademark Registrar as the official requirements for the examination of three-dimensional marks.

The applicant responded that her mark meets the Three Requirements Test, that it is well known in Israel and that it has acquired distinctive character due to intensive use in the market.

The Trademark examiner rejected the applicant’s claims, so the applicant requested an oral hearing, trying to persuade the IP Commissioner that the Examiner’s decision was wrong.

The IP Commissioner relied upon the Supreme Court’s decision in The Toffefe Case, and analyzed the case as follows:

  1. Function as a Trademark

The IP Commissioner ruled that the fin shape functions as a trademark only for the bags and packages, sold under the mark, but not for the jewelry product itself, as can be seen from the following photos:

The IP Commissioner decided that the mere sale of fin shaped jewelry does not prove that the requested mark functions as a trademark, since it doesn’t serve as an indicator of origin that differentiate from other goods been sold in the market. The following are photos of  some of the applicant’s products: 

  1. Aesthetic or Functional Purpose

The IP Commissioner ruled that the shape of a fin as a jewelry or work of art is based purely on aesthetic reasons, since the consumer buys them for their aesthetic value of a fin, that attracts the eyes, and not for any other reason. Therefore, the aesthetic character of the fin shape is so material, it prevents any trademark protection.

  1. Acquired Distinctiveness – Secondary meaning  

Following the rejection of two of the three requirements test, IP Commissioner decided that there is no need to analyze if the mark has acquired distinctive character through intensive use in the market. The IP Commissioner’s opinion was that even if such acquired distinctiveness was established, the fact that the shape is based on a pure aesthetic character prevents any trademark protection.

The Applicant then claimed that the reason for applying for a three-dimensional application is to prevent competitors from selling confusingly similar fin shaped jewelry.

The IP Commissioner rejected this claim and decided that this reason does not justify a trademark protection and in fact was a reason NOT to approve the application.

The IP Commissioner ruled that the applicant should have filed for a registered design  for a limited protection under the law and that the registration of the three-dimensional trademark as the product image and as a defensive step in order to prevent others from using the fin image or similar figures does not meet the basic purposes of trademark law.

The application was denied. 

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.

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