Blocking distribution of fake products in Israel

Blocking distribution of fake products in Israel

Doron Afik, Esq.
March 1, 2017

The owner of an international brand suddenly discovers that products bearing the name of the brand are distributed in Israel but such are fake products that were not produced by it or under license.  One may of course approach the authorities but such do not always conduct their duty in the required speed.  The brand owner usually wishes not only to be compensated but also to block the distribution of the fake products.  Can such owner prevent the distribution?

The Israeli Trademarks Ordinance sets that the owner of a registered trademark or a well-known trademark (even if not registered) may file a claim in case of infringement of the trademark and move the Court for a cease and desist order and even seizing of fake goods.  The Court may order destruction of the goods or any other action in them.  The law sets that only in exceptional cases will the Court allow the infringer to receive back the infringing goods, even if the trademarks were removed from them.

The Trademarks Ordinance also sets criminal sanctions and if the State does not open proceedings one may open a criminal complaint – a type of criminal proceeding in which a person (or company) is the prosecutor in lieu of the States.  Such proceeding also enable seizing of the infringing goods and even their destruction or any other action in them.

Additionally, the Customs Ordinance also enables a motion to the Customs Manager to suspend the release of infringing goods and treat it as goods importation of which to Israel is prohibited.  Such motion requires the existence of a registered trademark in Israel but may be a very quick and useful tool to block importation of infringing goods into Israel.

One of the main disadvantages of the Trademarks Ordinance is that filing a monetary claim under it requires not only registration in Israel of a trademark but also proof of damage.  By contrast, the Commercial Torts Law provides protection in case of "passing off" - a situation in which a business displays goods that may be mistaken for goods that belong to, or have a connection with, another business. This tort does not require a registered trademark, but there is no doubt that the existence of a registered trade mark will facilitate the proceedings.

In the case of passing the law provides a series of effective legal tools such as a right to receive an injunction preventing the infringement and the appointment of a receiver who may perform a search and seizure of infringing goods (in which case the police will accompany the receiver in carrying out the task, if necessary and asked). The law provides for compensation without proof of damages of up to ILS 100,000 and the right to receive an accounting so that the owner of the rights may later file a claim for all the profits earned by the infringement.  However, the main strength of the law is the possibility of obtaining an ex-parte injunction and appointment of a receiver if one can show reasonable suspicion that awaiting a hearing may cause serious damage or concealment of the goods. In this case also at the end of the process the Court may decide on the destruction of the infringing goods or any other action in them.

It is important to note that the means of protection from trademark infringement are very strong and one need only show the existence of the infringement. Arguments of bona fide or lack of intent to deceive or mislead were held by the Courts to be irrelevant and it was decided that the existence of the infringement is sufficient to establish a cause of action and a right to protection.

Thus, it is advisable to register a trademark in Israel to allow broader protection and facilitate future legal proceedings. In the event that a substantial suspicion of trademark infringement exists it is important to act immediately and one may employ many tools to prevent the infringement, including personal action against the directors and managers of an infringing company. It is important, of course, to duly follow the procedures because due to the great power of the tools the Courts insist on due exercise of such powers and without such due exercise Court order may later be cancelled.