The Passing Off Tort in Israel

The Passing Off Tort in Israel

Yair Aloni, Adv.
July 6, 2016

Accumulating a good business reputation often takes a long time and certainly requiers investing many resources and effort. Sometimes business competitors or imitators attempt seek to ‘shorten processes’ by adopting trade names or using symbols that belong to other businesses in order to unfairly attract customers to their business. What protection does the law provide?

The Israeli Commercial Torts Law prohibits buisness owners from displaying goods or services that may be mistaken for goods or services that belong to, or have a connection to, another business and defined such tort as "Passing off". The purpose of such tort is to protect the reputation of a buisness and prevent unfair compettion and exploitation by others.

Proving the basis of the tort may enable several material remedies, such as an injunction relief in order to stop unlawful actions (temporary, until the end of the procedure, or permanently), monetary relief without need to proof of damage of up to ILS 100,000 and even a claim for compensation for damage, if such damage is proven. However, proof of the existence of the tort basis is not always a simple matter and involves several preconditions.

First, the victim has to prove that he has a proven reputation in relation to the service or the product. One need show that the public identifies the goods or services in question with the business compared to competitors in the market. For example, it is not sufficient to show that the business used the product before or for a long time, but one need show that the name, symbol or mark created reputation and recognition by the consumers and they identify the marks or names with the business.

In addition to proving the reputation, one also need prove that the goods or services which are offered by the tortfeasor may reasonably be deemed misleading to the public in such a manner that the consumers may be confused to think that the goods or services are related to the business, or associated with it. In doing so, the Court will employ several reference tests, including a test of sight and sound – whether there is any similarity of appearance or sound that can cause confusion; Test of type of goods and clientele – The more common grounds between the types of products or services and the more similar business territory, the more likely it is to be misleading; Test of other circumstances and common sense - The Court will examine if indeed under the particular circumstances a misleading can be formed.

Note, that the scope of protection given to a mark or description may vary according to its type. For example, generic names will have no protection at all (such as "law services", "diesel engine", "wood work", etc.) and a descriptive names, which is intended to describe the product or service or a terms which use is common among many, will receive only a light, if any at all, protection (such as "Italian food", "24/7", etc.). However, suggestive names will receive increased protection (e.g.: Waze for a company supplying navigation services, Pelephone for cellular market, etc.) and imaginary names will have the broadest protection (for example, Toto, Apple, Orange, etc.).

In any case where there is risk of damage to reputation (whether from the offending side or the offended side) one should be consulted as soon as possible with a lawyer specializing in this field and act to reduce the damage caused, including, at times, by submitting a request for a temporary injunction. It is important to remember that the passing of time may affect the result of the legal procedure.