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Trademark infringement

The Landmark Case Forcing Israeli Directors into Trademark Infringement Personal Liability

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In a notable brand protection decision addressing trademark infringement personal liability, the Tel Aviv District Court (CC 13315-08-20: Lifestyle Equities C.V. et al. v. Don Gili Co. Ltd. et al.) has delivered a significant judgment, handing down a total monetary recovery exceeding 3 Million NIS (inclusive of legal fees and expert expenses).

The 50-page ruling, which was recently covered by Globes, Israel’s leading financial newspaper, addresses the scope of corporate risk management and executive exposure by holding the defendant company’s individual directors personally, jointly, and severally liable for post-termination trademark infringement.

Background and Plaintiffs’ Claims: An 11-Year Litigation Battle

The plaintiffs, global owners of the international lifestyle brand Beverly Hills Polo Club (BHPC), were represented by Yossi Sivan Law Firm.

The resolution of this dispute represents the culmination of a fierce, 11-year battle in court—a prolonged and highly complex litigation process that demanded a tremendous amount of firm energy, persistence, and deep operational resources to establish clear corporate executive exposure.

According to the plaintiffs’ claims in the operative lawsuit, a critical turning point occurred when BHPC initiated an exhaustive forensic accounting audit into the local Israeli licensee. This forensic investigation uncovered underreported direct import volumes calculated at approximately 13 Million NIS, which the plaintiffs asserted was a systemic attempt to evade contractually mandated 10% royalty fees.

Based on these alleged material breaches, the licensing agreement was legally terminated. The plaintiffs contended that following the expiration of a standard inventory run-off period, the licensee’s two directors and equal shareholders continued to import, market, and distribute the trademarked apparel without a valid license.

The defendants, conversely, denied the allegations of systemic underreporting, disputed the findings of the forensic audit, and contested the plaintiffs’ calculation of damages throughout the lengthy proceedings.

The Judgment: Establishing Trademark Infringement Personal Liability

Following an extensive evidentiary review spanning over a decade, the Tel Aviv District Court adopted the plaintiffs’ core legal arguments, creating a new standard for trademark infringement personal liability and resulting in two groundbreaking judicial achievements for our firm:

1. A Rare Milestone: Overcoming “Minimum Damages” with Full Gross Profits

Historically, the vast majority of trademark infringement awards in Israel have been limited to conservative statutory “minimum damages” or modest, heavily deducted net-profit figures. Infringing companies routinely shield their illicit gains by deducting extensive operational overhead, manufacturing costs, and executive salaries to artificially reduce the final judicial award.

Our firm successfully defeated this defense and shifted the legal precedent. Backed by the data established through our forensic accounting, the court ruled that the plaintiffs were entitled to a disgorgement of the complete, gross profits generated by the unauthorized use of the BHPC trademarks. By establishing that the financial remedy must reflect actual gross revenue rather than standard minimal caps, this case sets a powerful new benchmark for how intellectual property damages are calculated in Israel.

2. Passing the Bill Directly to Corporate Officers

To ensure the award could be fully recovered, our firm successfully applied tort law principles to bridge the gap between corporate debt and personal liability. The court found that because the individual directors possessed explicit knowledge of the contract’s termination, their operational decisions to continue trading under the brand name constituted personal and active trademark infringement.

Consequently, the court stripped away their corporate immunity, ordering that the company’s full gross profits must be paid by the individual directors out of their own private pockets. The court flatly rejected a defense raised by one director who claimed his role was limited to “logistics,” ruling that an active directorship and a 50% equity share made him a full partner in the operational infringement.

📋 Judicial Awards & Financial Breakdown

The final judgment allocates the total economic recovery across distinct categories of corporate exposure and trademark infringement personal liability:

  • Contractual Debt (Against the Corporate Entity): Don Gili Co. Ltd. was ordered to pay approximately 1.6 Million NIS for unpaid past royalties and contractual breaches determined during the pre-termination audit period, alongside associated legal expenses.

  • Trademark Infringement Gross Profits & Fees (Against the Directors Personally): For the post-termination phase, individual directors Shalva Gineli and Ilan Rozen were held jointly and severally liable to pay 1,419,195 NIS in personal trademark infringement damages (derived entirely from the company’s gross profits) and legal expenses.

🎙️ Firm Perspective: Shifting the Commercial Risk Landscape

This precedent-shifting case marks a profound evolution in how local courts handle intellectual property enforcement.

Historically, corporate defendants in Israel often approached trademark violations as a calculated business risk, assuming that an empty corporate shell would absorb the financial hit while they walked away with the revenue.

This ruling completely shatters that calculus. By combining the disgorgement of gross profits with direct trademark infringement personal liability after an 11-year uphill battle, the court has signaled that the financial consequences of bad-faith infringement will follow directors straight to their personal bank accounts.

For global brand owners, the judgment underscores the vital importance of pursuing rigorous forensic audits, maintaining long-term litigation stamina, and asserting aggressive personal liability claims when navigating post-termination licensing disputes.

Immediate Steps to Protect Your Clients

  • Enforce Strict “Run-Off” Deadlines: Closely monitor inventory sell-off periods post-termination. Any commercial use beyond the agreed-upon date now exposes directors to uninsulated personal liability.

  • Audit Local Licensee Reports: Implement forensic accounting checks on local partners. This case demonstrates that underreporting import volumes to evade royalties is an immediate trigger for contract termination and full asset exposure.

  • Pursue Gross Profits, Not Net: When acting as plaintiffs in Israel, seek a disgorgement of gross profits rather than net gains. The court ruled that infringers can no longer deduct overhead or executive salaries to artificially lower damages.

     For inquiries regarding international licensing frameworks, brand enforcement, or corporate risk mitigation in Israel, please contact us.

Case Reference: CC 13315-08-20 (Tel Aviv District Court), Lifestyle Equities C.V., Lifestyle Licensing B.V. v. Don Gili Co. Ltd., Shalva Gineli, and Ilan Rozen.

 

⚖️ Legal Disclaimer

The content of this article is provided for informational and educational purposes only and does not constitute formal legal advice or the formation of an attorney-client relationship. While this publication highlights a specific judicial precedent achieved by Yossi Sivan Law Firm regarding trademark infringement personal liability, legal outcomes depend substantially on the specific facts and circumstances of each individual case. Readers should not act upon this information without seeking professional legal counsel tailored to their corporate or jurisdictional needs.

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.