February 20, 2017

Unregistered mark with reputation can enjoy protection

Orit Gonen, Partner
Orit Gonen


Gilat, Bareket & Co.
David Gilat, Partner, Head of Legal Practice
David Gilat

Partner, Head of Legal Practice

Gilat, Bareket & Co.
Sonia Shnyder, Attorney at Law
Sonia Shnyder

Attorney at Law

Gilat, Bareket & Co.

In The National Aluminium & Profile Co (foreign company) v Extal Ltd (MCA (Jerusalem) 35620-02-16, November 1 2016), the Jerusalem District Court affirmed the deputy trademark registrar’s refusal to register a mark consisting of a lengthwise slit along aluminium profiles following an opposition by the owner of a long-used similar mark.

The deputy trademark registrar held that a pre- Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) statutory provision which bars registration in the event of unfair competition continues to protect unregistered marks, notwithstanding the enactment of a specific protection for well-known marks following TRIPs, and that this provision also applies where the reputation of the mark does not afford it the status of a well-known trademark. The court upheld the refusal to register a mark that was found to be confusingly similar to an unregistered mark that had acquired considerable reputation in the market, but was not well known in the statutory sense. In so holding, the court affirmed the current practice of the trademark office adjudicators.

The dispute arose between two manufacturers of aluminium profiles. Aluminium profiles are customarily marked, in accordance with the requirements of the Israeli Standards Institute, with grooves or ridges running along the length of the profile without interfering with its functionality. Other types of marking, which do not run along the profile, are deemed unsuitable as they may disappear once the profiles are cut into various lengths or coated.

The appellant, the National Aluminium & Profile Co, applied in 2011 for the registration of a device mark described as relating to “a surface including a lengthwise groove having an opening of 120 degrees, which appears on the unsubstantial surfaces of the profile” in Class 6 for aluminium profiles (Application 240139).

The applicant requested expedited examination. The mark was accepted and published for opposition.

The respondent, Extal Ltd, opposed the application on the grounds of the propounded mark’s confusing similarity to Extal’s long-established mark, arguing that it was thus barred from registration by Sections 11(5), 11(6) and 11(13) of the Trademarks Ordinance (New Version), 5732 – 1972:

l Section 11(5) bars marks which may harm public policy;

l Section 11(6) bars marks which may encourage unfair competition and cause public confusion; and

l Section 11(13) prevents registration of marks confusingly similar to a well-known mark (even if unregistered) with regard to goods of the same description.

Extal had designed, manufactured and marketed aluminium profiles since the 1980s. In 1998 it registered a trademark (Application 121163) in Class 6 which related to a single stripe alongside a profile, depicted as a V-shaped slit along the length of the profile and as a Λ-shaped ridge along the length of the profile.

In 2006 the registration lapsed due to non-renewal. After discovering the lapse in 2011, Extal reapplied for registration, just one day before the applicant submitted its application.

In its opposition Extal claimed rights in the ‘single stripe mark’ alongside a profile, whether a triangular slit or a triangular ridge, asserting that through years of use and investments in advertising the mark had become well known and associated with Extal. Extal also argued that the applicant’s mark was confusingly similar and had been applied for in bad faith.

The deputy registrar accepted the opposition and refused the registration on the grounds of Section 11(6) of the ordinance, which bars from registration, among other things, marks which would encourage unfair competition.

Having heard the evidence, the deputy registrar held that Extal succeeded in showing that the relevant public – consisting of warehouse operators, tradesmen and wholesalers – identified its products by a onestripe mark regardless of whether it was made by a slit or a ridge. Even the applicant’s witnesses had difficulty identifying the source of the profiles and distinguishing those of the applicant from those of the opponent. It was also found that Extal had continued to make use of its mark during the period when the registration had lapsed.

The deputy registrar thus concluded that Extal had showed substantial reputation in the single-stripe mark, both in its ridge form and in its slit form.

As to the applicant’s good faith, while it alleged that it had made use of the propounded mark alongside other marks since 1996, the deputy registrar held that such facts as registering its mark with the Standards Institute only in 2013 (while Extal’s mark had been on record with the institute since 1998), filing for trademark registration at the same time as Extal in 2011 and requesting expedited examination pointed to awareness of Extal’s use. These facts – along with Extal’s considerably greater market share and the applicant’s unexplained choice of its mark – raised doubts as to the applicant’s good faith, examined under an objective standard.

The appellant’s propounded mark was accordingly held ineligible for registration in accordance with Section 11(6) of the ordinance.

Interestingly, the deputy registrar determined that the opponent’s mark was not well known in the sense of the ordinance and therefore could not support a refusal based on Section 11(13). Despite Extal’s evidence of considerable investment in advertising, substantial product sales and recognition among the relevant consumer public of the company, its products and its single-stripe mark, the deputy registrar held that the mark was not unique and that the market segment of 20% did not warrant the mark being deemed well known.

The applicant appealed to have the opposition rejected and the mark registered; the opponent counterappealed to repeal the determination that its mark was not well known and to have actual expenses awarded.

The appellant’s main argument was that where an unregistered mark is not well known in the sense of Section 11(13) of the ordinance, Section 11(6) cannot be invoked other than where the propounded mark is liable to mislead the public as to the characteristics of the goods bearing such a mark.

The court refused to interfere with the deputy registrar’s factual determinations – such as the identification of the opponent with the single-stripe mark, its acquisition of goodwill and the likelihood of confusion between the marks – which were held to be well founded. The court also refused to interfere with the determination that the considerable reputation accrued by the mark was not tantamount to the status of a well-known mark in a field where the uniqueness of a mark was limited and the market segment, although considerable, was deemed insufficient.

The decision therefore focused on the question of whether an unregistered mark possessing considerable goodwill but determined not to be a well-known mark can bar registration of a conflicting mark based on Section 11(6), notwithstanding the enactment of specific protection for unregistered well-known marks in Section 11(13).

The court observed that the Supreme Court has not ruled out the application of Section 11(6) to protect marks which have considerable reputation, yet are not deemed well known, and in Delta Lingerie SA v Tea Board of India (CA 10959/05 (2006)) it expressly left open the question of the continued application of Section 11(6) following the enactment of Sections 11(13) and 11(14).

The court concluded that Section 11(6) continues to apply to unregistered marks with reputation, since such application was not ruled out by the Supreme Court, was not amended in any way by the legislature following the enactment of the TRIPs provisions and has remained a necessary ground applied by the trial instance even after the enactment of specific protection for well-known marks.

As to good faith under an objective auxiliary test in examining unfair competition, the court upheld the determination that the timing of the application (ie, during the window of lapsed registration) to the Israeli Standards Institute for trademark registration while aware of the opponent’s claims pointed to bad faith and a desire to free ride on the labours of a company which had used the mark for a long time, had become associated with it in the market and held a considerable market share.

Costs of IS 25,000 were adjudicated against the appellant.

This article first appeared on WTR Daily, part of World Trademark Review, in January, 2017. For further information, please go to www.worldtrademarkreview.com

This article is provided for general information only. It is not intended as legal advice or opinion and cannot be relied upon as such. Advice on specific matters may be provided by our group’s attorneys.

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