Dear Clients and Friends,
We would like to inform you with this important trademarks-in-Israel update regarding the final decision in SCHWEPPES case:
Chief Justice Hayut handed down a final decision regarding SCHWEPPES trademarks, and affirmed the prior judgment re importation to Israel of trademark goods made by an entity unrelated to the trademark owner in Israel
Jafora-Tabori Ltd. is the second largest soft drink company in Israel, and the owner of the SCHWEPPES brand in Israel, purchased from Cadbury Schweppes years ago. On July 5, 2022, the Israeli Supreme Court accepted Jafora’s appeal, reversed a district court judgment and held that the importation of products carrying the SCHWEPPES trademarks from Ukraine is a trademark infringement, despite the fact that the manufacturer in Ukraine is the trademark owner there.
The importer filed a request to have a further hearing before a broader court. on January 1st, 2023 Chief Justice Hayut denied the request, and held that indeed, in such an unusual commercial situation of different and unrelated trademark owners, it is not a “parallel” importation but merely a trademark infringement, and that if, in the future, in other cases, there is a risk of anti-competitive behavior involving assignment of local trademark ownership to avoid parallel importation, the courts will consider each case to the merits of the facts and circumstances. Our firm (Tamir Afori head of IP litigation, with partners Ofer Shapira and Moshe Neeman), represented Jafora Tabori before the Supreme Court.
The legal question is known from the Schweppes case in the EU: is the local owner of the SCHWEPPES brand protected against unauthorized importation of branded products into Israel from another country, where the owner of the trademark in the other country is another company (in this case the Coca Cola group), that has no connection at all to the local owner.
In Israel, as a matter of principle, parallel importation is allowed.
Where a trademark owner “exhausted” its rights by selling products, whether in Israel or anywhere else in the world, importation of such goods and sale of the goods in Israel are no longer under the owner’s control. The Israeli Supreme Court has never before examined the unique situation of ownership split.
On July 5th, 2022, the Supreme Court accepted our appeal and declared that the territorial nature of trademarks must provide Jafora with the right to prohibit the importation of goods carrying the trademark. The majority opinion (Stein and Elron) held that there could be no exhaustion of right if the local owner of the trademark has no connection to the manufacturer in the other country. It further held that the lower court’s reliance on the narrow criminal liability in the Israeli trademark law is wrong and that the law expressly left the civil liability without making such exception as to allow the importation of goods that were legitimate in the country of origin.
The court further held that the importation of such goods is not “fair use” of the trademark under Israeli trademark law.
Justice Hendel, by a minority opinion, held that the importer may mark the goods in a way that will clarify that they are imported, are not made by the local trademark owner, and may be different from its goods, and in such case there is no risk of consumer confusion and the use of the trademark on the goods would be “fair”.
As stated above, a request for a further hearing before a broader court was denied by Chief Justice Hayut, putting an end to the legal procedures regarding this matter and making the judgment final.
We shall be pleased to answer any question or provide any clarification.
Intellectual Property Department
Shibolet & Co. Law Firm
This update is provided as general information only and may not be relied upon in any individual case without additional legal advice.
