The Trademarks Law Review: Israel
Israel's trademark registration and enforcement are governed by the Trademarks Ordinance (New Version) 1972 and the Trademark Regulations 1940. The Ordinance is a new version based on the British Trademarks Act of 1938, and deals with the civil and criminal aspects of trademarks. Israel is party to the Paris Convention and the Madrid Agreement, and in accordance with these, it also registers international trademarks. Trademark applications undergo substantial examination. The Israeli judicial system is based on Anglo–American law. Hence, the nature of both contentious proceedings before the registrar and enforcement proceedings before the courts is adversary and includes the hearing of evidence and cross-examinations of witnesses.
Year in review
Two important judgments have been given recently by the Supreme Court.
The first judgment involves a dispute over the Habitat mark between the UK owner of the international trademark and an Israeli trader who registered the Habitat mark in the 1970s after the registrar accepted his petition to cancel the UK company's prior trademarks because they were not used in Israel. The Trademarks Ordinance provides that an application to revoke a mark based on the ground that it was registered in bad faith may be filed at any time, unlike other grounds, which are limited to five years of the date of registration. It was ruled that there is no limitation on this cause of action of registration in bad faith in view of the specific provision in the Ordinance in this regard. The court also denied a contention that the UK company's action should have been denied in this instance due to laches because it acted decades after the registration of the mark in the name of the Israeli trader.
The second judgment dismissed an appeal of Nespresso against a competitor that used an advertisement with an actor imitating George Clooney and the famous advertisements of Nespresso by way of a parody. In terms of the rulings regarding dilution only, one of the arguments raised by Nespresso concerned the dilution caused by the defendant to Nespresso's goodwill created by the use of the character of the actor George Clooney for the promotion of its products. It was ruled that there can be no dilution of goodwill but only dilution of a registered mark and further that only a well-known registered mark can be diluted. It was also ruled that dilution can only occur when the defendant made use of the registered well-known mark. As the defendant had not used a registered well-known mark in this case, the dilution argument was denied.
The protection of trademarks in Israel is established by the Trademarks Ordinance, which deals with both the registration and the enforcement of trademarks.
The tort of passing off is regulated by the Commercial Torts Act 1999. Anti-counterfeiting enforcement carried out by customs authorities is established by the Trademarks Ordinance and the Customs Ordinance. The Merchandise Marks Ordinance deals mostly with false and deceptive use of registered and unregistered trademarks and provides remedies for violations of a criminal nature only.
Israel is party to the Agreement on Trade-Related Aspects of Intellectual Property Rights, the Paris Convention for the Protection of Industrial Property and, since 2010, the Madrid Agreement Concerning the International Registration of Marks. Israel is also a member of the Lisbon Agreement for the Protection of Appellations of Origin. The Israeli Trademark Office follows the Nice Classification system.
Trademarks are registered by the registrar of trademarks at the Israel Patent Authority within the Ministry of Justice. Trademark oppositions and cancellation actions are heard and decided by the Trademark Tribunal at the Trademark Office by the registrar and other hearing officers. Enforcement actions are tried in court – usually the district courts, which are authorised to grant injunctions to enforce trademark rights and to award monetary remedies. Israeli customs are active in seizing goods that are suspected as infringing registered trademarks and holding them until a court decides whether infringement has indeed occurred. Company names are recorded by the registrar of companies in the Israeli Corporations Authority at the Ministry of Justice. Domain names are registered by official registrars of domain names authorised by the Israel Internet Association (ISOC-IL), which also provides panels for dispute resolutions over the registration of domain names.
iii Substantive law
Trademark registration is made under the provision of the Trademarks Ordinance and provides for the registration of trademarks and service marks, as well as collective marks and certification marks. While trademarks can be registered by any legal entity, certification marks can only be registered by a person not a running business, and collection marks can only be registered by organisations. Certification and collection marks may be registered even if they lack distinctive character.
Unregistered well-known marks
The Trademarks Ordinance also provides for the protection of well-known marks. The protection of a registered well-known mark may expand beyond goods of the same description and apply to an identical or similar mark used in respect of goods not of the same description provided that the use points towards a connection between these goods and the owner of the registered mark, and that the owner may be harmed as a result of this use. Unregistered well-known marks may also be protected by the Trademarks Ordinance against use of identical or misleadingly similar marks in respect of the goods for which the mark is well known or goods of the same description.
Company names, trade names, business names and domain names
Company names are recorded by the registrar of companies (see Section IV.iii regarding the prevention of recording misleading company names). Trade names and business names may be recorded, but effective practical protection is obtained through the trademark systems. Domain names are registered by official registrars of domain names authorised by the ISOC-IL (see Sections II.ii and IV.iii).
The Trademarks Ordinance does not provide for a separate registration process for geographical indications, but such indications may be eligible for registration as trademarks. The Ordinance stipulates that a trademark is not eligible for registration if it contains a geographical indication in respect of goods that do not originate from the indicated geographical area or if it misleads regarding the true geographical area from which the goods originate. Israel is a member of the Lisbon Agreement for the Protection of Appellations of Origin.
Registration of marks
i Inherent registrability
Any legal entity may apply for the registration of a trademark; that is, any physical person or any kind of corporation, such as a company, partnership or society. Any mark that is capable of distinguishing the goods or services of the applicant from the goods or services of others may be the subject of a trademark application.
A mark is defined as letters, digits, words, images or other signs, or a combination of these, in two or three dimensions. These may include words, logos, pictures, devices and sounds.
Trademark application goes through substantial examination both for absolute and relative grounds. The applicant may argue with any objection raised by the examiner and is also entitled to request an oral hearing before the registrar.
It usually takes around 12 months to obtain a registration if there are no substantial objections raised by the examiner. This period includes the three-month opposition period. Multiple-class application is allowed in Israel (it was introduced into Israeli law when the Madrid Protocol came into force in 2010).
The official fee for filing an application in one class is 1,623 Israeli shekels, and is 1,219 Israeli shekels for each additional class. It is possible to apply for accelerated examination if the applicant can convince the registrar of the urgency in obtaining a registration. An official fee of 762 Israeli shekels has to be paid and the application for acceleration should be supported by an affidavit.
There are no additional official fees. Professional fees for filing an application are usually charged as a fixed price, and the prosecution of the application is usually charged on an hourly basis.
ii Prior rights
The Israeli Trademark Office will examine an application on relative grounds and will cite conflicting Israeli-registered trademarks against the application. If the examiner finds a pending but not yet accepted application for an identical or confusingly similar mark, applying for the same goods or goods of the same description, he or she will apply the provisions of Section 29 of the Trademarks Ordinance, under which the parties have to try to reach an agreement regarding the coexistence of their marks on the register; such an agreement is subject to the approval of the registrar. If no agreement is reached, the registrar will conduct rival application proceedings and decide whose application should prevail, and proceed with examination. In deciding whose rights to the mark prevail, the main criterion is the extent of actual use of the mark, while the filing dates of the rival applications are of less importance. The registrar will also check whether each of the applicants chose his or her mark in good faith.
iii Inter partes proceedings
Any person may oppose registration within three months of the date of publication of acceptance in the Trade Marks Journal. The notice of opposition and the statement of case setting out the grounds for the opposition must be answered by the applicant within two months. Evidence in the form of affidavits and expert opinions may be filed by each party. The opponent is entitled to submit evidence in reply. Cross-examinations take place in an oral hearing before the registrar, and a reasoned decision will be given after the parties have submitted written summations.
Revocation of a registration may be initiated by any aggrieved third party. A revocation action based on the ineligibility of the registered mark, or on the grounds that the registration creates unfair competition in respect of the petitioner's rights in Israel, must be filed within five years of the date of registration. A revocation action claiming that the application for registration was filed in bad faith may be filed at any time.
There is no limitation on the period in which a cancellation action based on non-use may be filed. Any interested person may initiate such an action if no use of the mark is made for three consecutive years from the date of registration. The procedure for revocations or cancellations is similar to that for oppositions.
If an application is finally denied by the registrar or hearing officer, an appeal may be lodged within 30 days to the district court.
Appeals against registrar or hearing officer decisions in oppositions or revocation actions should be filed to the district court within 30 days, and are heard by one judge. To contest a decision of the district court in an appeal against the registrar's decision, leave to appeal should be filed to the Supreme Court within 30 days of the decision, and the Supreme Court will only hear the appeal if leave is granted.
There are no specialised courts for trademark matters. Civil infringement actions for injunctive relief are tried in the district court. Actions for damages lower than 2.5 million Israeli shekels are within the jurisdiction of the magistrates' courts, but if the lawsuit seeks an injunction and damages, it would be tried before the district court, even though the monetary remedies are lower than the minimum sum within the jurisdiction of the district court.
ii Pre-action conduct
In Israel, there are no pretrial formalities, and the plaintiff is not required to take any steps before initiating legal proceedings. However, in practice, in interim proceedings, courts sometimes do not appreciate the plaintiff not sending a warning letter to the infringer before filing the law suit petitioning for interim injunctions. This approach may be expressed by judges in awarding low amount of costs or no costs at all to a successful plaintiff just because he or she did not send a warning letter and, therefore, did not make an attempt to avoid legal proceedings.
iii Causes of action
Trademark infringement is defined and established by the Trademarks Ordinance. Only the proprietor of a registered trademark is entitled to seek a remedy based on an infringement of its registration. The Israeli Supreme Court has ruled that a registered user (licensee) cannot sue for infringement of a registered mark for which it holds a recorded licence.
To establish the infringement contention, the plaintiff has to prove the defendant has used its registered mark or a mark resembling its mark in relation to goods in respect of which the mark is registered or goods of the same description, without being entitled to do so. The plaintiff has to prove the use of the mark by the defendant. The term 'use' is broadly interpreted by Israeli courts. Although the definition of an infringement in the Trademarks Ordinance requires only resemblance to the registered mark, the courts usually consider the question of the likelihood of confusion in deciding whether an infringement occurred.
'Misleading similarity' is a legal term to be determined and decided legally by the judge and not necessarily by evidence (see 'Passing off'). To determine misleading similarity, the court applies a test known as 'the triple test', namely testing:
- visual and phonetic similarity;
- the description of the goods in question and the target consumers of the goods in dispute; and
- other relevant circumstances of the case, such as the specific conduct of the parties, which may affect the question of misleading similarity.
Passing off is defined and established in the Commercial Torts Law 1999, according to which a trader should not cause an asset he or she sells or a service he or she provides to be erroneously considered to be an asset or service of another trader or an asset or service connected to another trader. The plaintiff has to prove two essential grounds to establish the tort: it must meet the burden of proof to establish its goodwill in the mark and must convince the court that the use made by the defendant could cause the defendant's goods or services to be considered the plaintiff's, or at least that such goods or services might be connected to the plaintiff. The likelihood of confusion is decided by the judge applying the triple test described above.
The doctrine of dilution
The doctrine of dilution has been recognised by the Israeli Supreme Court, but was recently limited to dilution of a trademark and only in matters of registered well-known marks; there is no possibility to sue for 'goodwill dilution' or for dilution of unregistered well-known marks. In an action based on dilution, the plaintiff must establish the goodwill it acquired in the mark (usually a strong internationally renowned mark) and convince the court that the use made by the defendant may dilute and tarnish this goodwill in the mark.
The registrar of companies is responsible for the recordal of company names, implementing the provisions of the Companies Law 1999 and preventing the recordal of misleading names. Section 27 of the Companies Law provides that a company will not be recorded under a name that is a registered trademark in respect of goods and services that are similar to the objectives of the company in question or under a name that is misleadingly similar to the registered trademark. The triple test is used to test for misleading similarities. The registrar is also authorised to require a company to change its name if it is found to be a misleading name, and, if the company does not comply by changing its name, the registrar will choose a name for it. Disputes over company names are tried before the district court, usually within the framework of trademark infringement proceedings, and the district court may also judicially review the discretion of the registrar of companies regarding the recordal of misleading names within the framework of a petition to the district court.
Disputes regarding the registration of domain names registered by the ISOC-IL are decided by a special board established by the association, which handles these disputes in accordance with its published rules and regulations. The general principles of misleading similarity in the field of domain names are adjusted by the board, meaning that more flexibility is allowed in this field in comparison with trademarks in other fields, and, sometimes, minor differences that would not normally suffice in distinguishing between trademarks may be deemed sufficient for the purposes of domain names. The infringement of a domain name may be brought to court within the framework of trademark infringement proceedings and other commercial torts, such as passing off or unfair interference, which has already been used by the court to prevent the use of a domain name by a trader. The district court has the power to prevent the use of a domain name or order a defendant to change an infringing domain name.
iv Conduct of proceedings
The case is always decided by one judge. If the plaintiff seeks interim injunctions, an application should be filed together with the main lawsuit. Such an application should be supported by an affidavit to prove a prima facie case. The respondent may submit a response within 20 days of receiving the application, unless otherwise ordered by the court, and the applicant may reply to this response within 10 days. The court may render its decision based on the application and the response, without a hearing. Usually, the court will summon the parties for a short oral hearing and will allow short cross-examinations, if there are disputed facts that it deems relevant to deciding the case, and will render its decision regarding the interim remedies shortly thereafter. The same procedure applies when the application for interim injunctions is filed ex parte. Applicants must submit with the application for interim injunctions a self-guarantee without which a temporary remedy may not be awarded. The guarantee is aimed at securing any damage that might be caused to the respondent if it is eventually decided that temporary injunctions were granted even though the applicant was not entitled to it. Usually, an application for interim injunction is decided within four to six weeks.
The main lawsuit for permanent injunctions and damages is filed as a statement of claim detailing the relevant facts and specifying the requested remedies. The defendant files a statement of defence within 60 days. Within the preliminary proceedings, discovery of documents is available to both parties, and interrogatories may take place.
Discovery proceedings are only available to the parties in the course of the main lawsuit and not during the interim relief proceedings. Within the preliminary proceedings of the main lawsuit, each party is entitled to demand a general discovery of documents, as well as a discovery of specific documents, provided that these are documents that are relevant to the disputed matters. After disclosing a document, the other party is entitled to see the document and obtain a copy of it. A refusal to discover documents may be brought before the court, which may order a party to disclose the requested documents. Documents that were not discovered are not admissible as evidence, unless specifically permitted by the court. Documents concerning the extent of the alleged infringement may not be disclosed within the process of discovery as the plaintiff may be entitled to see such documents only after an infringement has been found by the court. Injunctions ordering discovery by third parties are very rare.
After completion of the preliminary proceedings, the court orders the submission of evidence, usually in the form of affidavits. Expert opinions are allowed. No evidence in reply is admissible in court, unless allowed by the court as rebuttable evidence. During the court hearing, each party is entitled to cross-examine the other party's witnesses. Finally, the parties summarise their contentions, usually in writing. The court then renders its judgment. When the plaintiff seeks monetary remedies, the court will sometimes divide the proceedings into two stages: only if infringement and liability is found in the first stage is a second stage of deciding the damages tried.
In civil cases, the burden of proof is the regular civil burden, which is based on the balance of probabilities. A certified copy of the registration will be prima facie evidence of the validity of the registration.
It was decided that the question of the risk of confusion is a legal question and therefore the court may find such a risk, even without any actual evidence, although witnesses or any other evidence for actual confusion may help in convincing the court that injunctions should be granted for the benefit of both the registrant and the public.
If the action is based on common law rights (passing off), the plaintiff's case is significantly harder to prove in terms of bringing evidence to establish the goodwill acquired by the plaintiff in the trade dress, which is circumstantial. The courts have not limited the means by which this can be proved (witnesses, experts, public opinion polls, etc.).
The winning party is awarded with the proceeding's legal costs and attorneys' fees. Unfortunately, the costs awarded by the courts in the proceedings described above are not actual costs incurred. The courts tend to award a fixed amount of legal costs and usually include attorneys' fees in the fixed amount. When awarding costs, judges consider the extent of the proceeding, the amount of evidence, the number of witnesses, the number of hearings and each party's conduct (although costs should not be punitive). However, still, the costs and attorneys' fees awarded are almost always significantly lower than the actual costs incurred by the winning party. The situation is different in proceedings before the Trademark Tribunal (opposition and revocation actions) where, in recent years, the hearing officers consider actual costs incurred by the party and attempt to award costs based on the actual legal costs and attorneys' fees incurred, as long as they are reasonable. The result is that the registrar awards much higher costs than in the district courts.
The civil remedies available to enforce trademark rights include injunctive relief and damages. In its final judgment, the court also has the power to order the destruction of assets resulting from the infringement or that were used to perform the infringement. The court may also order the transfer of ownership in the infringing assets to the plaintiff, in consideration of their real value, had an infringement not occurred.
The most effective remedy to stop an infringement is an interim injunction sought by the plaintiff. An application for an interim injunction may be submitted together with the main lawsuit for the permanent injunction. These applications are decided on a prima facie basis within several weeks. An application for an interim injunction may be filed ex parte. The plaintiff may also apply ex parte for a search and seizure order, or what are known as Anton Piller orders, and this instrument is used in cases of counterfeited and pirated products that the plaintiff desires to seize as evidence and to prevent the infringer from flooding the market with the infringing goods.
The proprietor may also be entitled to monetary relief, such as damages or an account of profit. In an action that concerns an unregistered well-known mark, the plaintiff would be entitled to injunctive relief only.
The plaintiff may elect to receive damages based on the actual losses caused by the infringement or to receive all the profits made by the defendant due to the infringement, based on an account of profit.
In an action based on common law rights, such as passing off, statutory damages for up to 100,000 Israeli shekels for all the events of a particular infringement are available to the plaintiff.
Other enforcement proceedings
i Customs anti-counterfeiting activities
In accordance with the provisions of Section 200A of the Customs Ordinance, customs authorities are authorised to hold goods that prima facie constitute an infringement of a registered trademark, and notify the proprietor of the registration that these goods are held by customs and that the proprietor must deposit a guarantee fixed by customs within three days of the notice. Within 10 days of the notice, the proprietor must file a lawsuit against the importer. Failure to deposit said guarantee or file said lawsuit will result in customs releasing the goods. Customs are authorised to extend the above terms and usually grant such extensions to overseas proprietors. In such a lawsuit, the proprietor may obtain injunctive relief, damages and an order of the destruction of the goods. Customs hold goods because of a notice received from a proprietor or found by its own inspection. In recent years, customs have implemented these provisions intensively, and infringing goods are held every day. If customs seize small quantities of infringing goods, they usually implement a 'short procedure', whereby the goods are destroyed without a court order if the proprietor supplies customs with a written opinion that the seized goods are counterfeit, together with an undertaking for indemnification of any damage caused to the importer of the destroyed goods, if it is proved that the goods had not infringed the proprietor's trademark.
According to Section 69A of the Trademarks Ordinance, a trademark proprietor whose rights to a trademark are infringed or about to be infringed may send a written notice to the customs director asking him or her to detain the suspected goods and treat them as described above according to his or her powers under the Customs Ordinance (Section 200A).
ii Criminal proceedings
Trademark infringement may also constitute a criminal offence under the Trademarks Ordinance. Criminal proceedings are generally prosecuted by the state. Only in cases where the procedure of a private criminal complaint is available to a registered trademark proprietor may the proprietor file the complaint him or herself. Criminal offences under Section 60 of the Trademarks Ordinance or Section 3 of the Merchandise Marks Ordinance may be prosecuted by a private complainant who is the owner of the infringed trademark.
The Merchandise Marks Ordinance also provides for criminal offences committed by infringers who use deceptive descriptions for goods, and these infringing actions are also liable for penalties of a fine or imprisonment. The Ordinance also empowers the court to give a search and seizure order, which is carried out by the police.
In criminal proceedings, the prosecution has to prove the facts of the case beyond any reasonable doubt.
The defendant may be liable to a maximum of three years' imprisonment or a fine that could amount to a maximum of 1.4 million Israeli shekels.
There have been almost no court decisions regarding trademarks in the social media sphere, and, as trademarks are used extensively in social media, we expect this field to develop in coming years. In spite of the existence of several Supreme Court principal judgments in the fields of well-known marks and the doctrine of dilution, we feel that judicature in these areas has not yet matured and developments are to be expected. Parallel import is clearly defined by the courts as legal and allowed, but problems in this area arise every day because of the actions of the parallel importers. It appears that ruling on some issues in this respect will have to be better adjusted and fine-tuned by courts. The same goes for the question of exhaustion of rights, which arises every day in our global village.
Regarding legislation, it seems that the legislator will have to consider legislation to regulate the rights in types of marks that are not yet defined, such as scents, or more complex trademarks, such as audiovisual trademarks or motion marks.
1 Nahum Gabrieli is a senior partner at Seligsohn Gabrieli & Co.