Civil Case (Haifa) 26084-09-25 D.A.H. Import, Marketing and Distribution Ltd. v. Complex Chemicals Ltd. - part 3

Cause of breach of contract

31. As stated, this argument is based on the first agreement and the argument is that the respondent causes its engagement with Tarsen to be breached by the latter. The tort of causing breach of contract is defined in section 62 of the Torts Ordinance as follows:

A person who knowingly and without sufficient justification causes a person to breach a lawfully binding contract between him and a third person, he is committing a tort against that third person, but the third person will not be able to be compensated for this tort unless he has suffered pecuniary damage as a result.

32. Thus, the tort includes five elements, namely: the existence of a binding contract; a breach of the contract; awareness on the part of the defendant of the existence of the contract and the fact that his actions are liable to lead to its breach; a causal connection between the defendant's action and the breach of contract; and the lack of sufficient justification for the defendant's actions (see, for example: Civil Appeal 8191/16 Dyalit in a Tax Appeal v. Avraham Harar [Nevo] (June 17, 2019)).
33. A basic condition for proving the elements of the tort is therefore the existence of a binding contract, in which case a contract for the exclusive distribution of the Applicant's Tarsen products. In my opinion, there is a real difficulty in the evidence presented by the Applicant on this issue.  First, the agreement stated that it relates only to BONO products , while the Applicant wants to prevent the Respondent from entering into an agreement with Tersen for the manufacture of various products.  Second, the agreement does not include a minimum period of time in which Tarsen undertook exclusivity, and as is well known, "a distribution contract whose termination date has not been set, may be cancelled by giving notice within a reasonable period of time between the date of the notice and the date of termination of the contract" (Civil Appeal 2850/99 Ben Hamo v.  Tena Noga Ltd., IsrSC 55(4), 849, para.  11).  Third, the exclusivity clause is subject to the agreement to meet purchase targets, so it is not an absolute right (if it exists).  Fourth, the agreement stipulates that a company called SHINY will also be able to distribute Tarsen products in Israel, so it seems that this is not a true exclusivity, but rather a kind of "partnership" in exclusivity, when the "boundaries" of this "partnership" have not been clarified.
34. These are real difficulties (especially the first two) and to this it should be added that Tarsen, as stated, claimed in her letter to the Respondent that this was not an exclusivity agreement. Admittedly, this argument was not justified, but in my opinion this position, combined with the difficulties I pointed out above (which ostensibly indicate that this is not a baseless position) is sufficient to put into real question the claim regarding the existence of an exclusive distribution agreement, while it should be remembered that the Applicant did not allow a real discussion of these claims because it did not include Tersen.  To be precise: the Applicant did not dispute the authenticity of Tarsen's letter and the WhatsApp messages attached by the Respondent.  Her argument is that Tresen is saying this because she received money from the Respondent, but this argument does not help the Applicant, who, as stated, chose not to include Tresen and thereby prevented a discussion of these important issues.  Moreover, the Applicant claimed that since the Respondent made direct contact with Tarsen, the Applicant no longer responds to her requests.  This fact may indicate that Tarsen chose to cease the activity with her in the framework of the first agreement, as she ostensibly can (subject to reasonable notice that I am prepared for the purpose of the discussion to assume that it was not given).
35. The Applicant's arguments on this issue do not change the face of things. The condition that the agreement relates only to BONO products is explicitly written, and at this time it is difficult to see how the claim that it applies to all products manufactured at the Tarsen factory and marketed to Israel, overrides the clear language of the agreement, all the more so when Tarsen has not been attached and his voice has not been heard.  As for the claim that the very exclusion of SHINY products from the agreement shows that it applies to all products and not only to those of BONO, I do not believe that there is any substance to it.  On the face of it, it appears from the agreement that at the time of its signing, Tarsen was also working with SHINY, and therefore it was excluded and it is difficult to fit the explanation now given by the Applicant, which is not supported by any evidence.  Even the claim that Tarsen used to refer companies to the Applicant that approached her does not, in itself, indicate the existence of exclusivity with respect to all the products.  The Applicant showed only one such request, and once again we will mention that Tarsen did not have the privilege of explaining the matter.  There are several reasons for this behavior, including that Tressen preferred to work with a company she knows and with whom she maintains regular working relationships rather than an occasional client.  This is certainly true if the customer requested a low-volume order or a one-time order.  Indeed, this is only a possibility and I do not make findings on the matter since I cannot reach clear conclusions due to the lack of a full discussion on the subject, a situation that the Applicant caused and which she bears the consequences.
36. It should be noted here that in the application it was claimed that later on the first agreement was entered into (which, according to its wording, relates only to BONO products ) "even with respect to all the cleaning products manufactured by Tarsen for the Applicant, and later Tarsen even sent an e-mail message putting this in writing" (see paragraph 10 of the application where the reference is to Appendix 4). However, this email and the draft agreement attached to it (from 2022, Appendix 5) are not signed and are therefore a draft that has not been formulated into a binding agreement.  We should regret the manner in which the words were worded that are misleading (in that it was not stated that the draft was not signed) and we should recall that this is a request in which ex parte relief was also requested, which requires the Applicant to be careful in the manner in which the matters are presented so as not to be mistaken.  Suffice it to say that the Applicant's manager approved in his interrogation that no additional agreement regarding distribution in Israel was signed after the first agreement (p.  19, para.  12; and see the wording in the Request to Amend the Minutes) in order to understand that the Applicant no longer insists on this version.  Moreover, the very fact that the parties negotiated in order to expand the first agreement on all the products shows (at least prima facie and for the time being) that they did not see the existing agreement as establishing an exclusive right of distribution for all the products, and at least that there were disagreements on the issue.
37. I did not ignore the Applicant's argument that there is no business logic in working without an exclusivity agreement, otherwise it can be bypassed and work directly with the factory. This argument makes sense, but it alone cannot overcome the language of the agreement limiting itself to certain products and the fact that it does not include an end date.
38. The conclusion that arises from these statements is that from the evidence before me today, it is difficult to establish a prima facie evidentiary basis on its actual nature, and this has implications for the prima facie cause of action. In this regard, the points noted in the Shior case are appropriate:

"Although the District Court ruled that there was prima facie cause of action in Ningbo's case 'on the high side', this conclusion was determined on the basis of the Applicant's arguments and evidence, without Ningbo's version being presented to the court and without hearing her arguments (and it was not unheard of that Tornado also raised claims in her response in the Ningbo case).  In light of the aforesaid, it is difficult to determine that the Applicant has met the burden imposed on her to show that she has a prima facie cause of action against Ningbo."

39. The existence of a distribution contract in which a condition of exclusivity is in the middle of the elements of a tort that caused a breach of contract, and in light of my determination as to the chances of a claim on this ground, there is no need to discuss the other elements of the tort while noting that given good evidence of the existence of exclusivity, I accept that the other conditions are prima facie fulfilled and the respondent did not claim otherwise (and in the matter of the notices, since we are dealing with an injunction that looks to the future and not with the claim itself (which examines the past). It is sufficient that the awareness is from now on, if only because of the legal process).

Stealing a trade secret

40. Section 5 of the Commercial Torts Law defines a "trade secret" as follows: "business information, of any kind, which is not in the public domain and which cannot be lawfully disclosed easily by others, the confidentiality of which gives its owner a business advantage over its competitors, provided that the owner takes reasonable measures to maintain its confidentiality." Hence, in order to prove that certain information constitutes a trade secret, five cumulative conditions must be proved: that it is business information of any kind; that the information is not in the public domain; that the information cannot be lawfully disclosed easily by others; that its secrecy gives its owner a business advantage over its competitors; and that the owner takes reasonable measures to maintain his confidentiality.
41. When the Applicant petitions for an order for the protection of a trade secret, she must be convinced on the prima facie level that she is the owner of the protected right and that it is a trade secret worthy of protection. IN THIS REGARD, IT WAS HELD THAT "EVEN 'THE RIGHT TO COMMERCIAL CONFIDENTIALITY IS CREATED ON THE BASIS OF THE EXISTENCE OF CERTAIN OBJECTIVE FACTUAL CONDITIONS' (DEUTSCH, 282), AND THEREFORE A LITIGANT REQUESTING THE COURT FOR PROTECTION OF THE KIND REQUESTED BY THE RESPONDENTS FOR BUSINESS INFORMATION MUST FIRST PROVE THAT THIS INFORMATION DOES INDEED AMOUNT TO A DEFENSIBLE TRADE SECRET" (CIVIL APPEAL 10545/09 MORDECHAI BATAN V.  INC 1988 INTEGRA MICROSYSTEMS [NEVO] (MARCH 1, 2012)).  In order to prove the trade secret, the person claiming the secret must specify and describe the secret, and a general description should not suffice (Yitzhak Amit, Privileges and Protected Interests - Disclosure and Review Proceedings in Civil and Criminal Law (2021), chapter 40, at p.  1059; Civil Case (Tel Aviv District) 2056/06 Bamberger Rosenheim in Tax Appeal v.  Shalit Cohen Yoram [Nevo] (June 26, 2012)).  It was also determined that:

"'Trade secret' is not a magic word.  An employer claiming the existence of a 'trade secret' must prove its existence.  In other words, he must describe and detail what the secret is.  It is not sufficient to have a general description or a general claim about the existence of a 'secret', as happened in the present case, but rather to point to a certain software, formula, formula, a certain list of customers, a certain process, etc." (Labor Appeal 164/99 Check Point v.  Redguard Ltd., PDA 34 294, 320 [Nevo])

42. As stated, the Applicant's argument is that the formula for the manufacture of the products is her trade secret. It seems that there is no dispute that this is business information whose confidentiality (to the extent that it is proven) gives its owner a business advantage, and the Respondent did not claim otherwise.  Her argument is that the Applicant did not develop the formula but rather Tersen, and in any case it is not a development that justifies protection as a trade secret.  The respondent's manager also argued with respect to products that were previously manufactured in another factory (with the exception of "4-in-1 products") that there is no difficulty in producing them elsewhere since "the basis of the product is the same product...  Only the perfume is different." It should be noted here that in its response the Respondent did not elaborate on the matter except to claim that the agreement between the parties (embodied in the quote form) does not state that the ownership of the formulas belongs to the Applicant and that Tarsen claims that she is the owner of the rights.  However, during the hearing, the parties investigated the matter in more depth, and in the respondent's summaries broader arguments were made on the matter.  I do not believe that the missing argument in the response should be viewed as an agreement by the Respondent that it is a trade secret and no explicit denial of the subject matter was required in order to obligate the Applicant to prove this component, since in any event the Applicant should have submitted all the evidence even before the submission of the reply (and in the matter of ownership, the claim was explicitly claimed).  Moreover, here too the fact that Tarsen was not attached has an effect, and in light of the possibility that she will be harmed by the orders (independently of the Respondent), it is necessary to discuss the entire arguments even if the Respondent did not raise them explicitly.
43. And on the merits. There is no doubt that a chemical formula used in the manufacture of a detergent can constitute a trade secret, and I will refer in this matter to Civil Appeal 1142/92 Vargus in the Tax Appeal v.  Carmax Ltd., IsrSC 51(3), 421, where it was noted that "a professional secret includes any formula, plan, invention or combination of information that a person uses in his business and which gives him the opportunity to obtain priority over -The faces of his competitors that lack the same secret.  This secret can be a formula for a chemical compound, a manufacturing process, the secret of the handling or preservation of products, a diagram or plan of a machine or any other invention, or even a list of customers."
44. The formula can therefore be recognized as a trade secret in principle, but there are two hurdles facing the Applicant. The first is the position of Tarsen, who holds the formula and claims that she is the owner of the rights to it, and as stated, the fact that it was not included did not allow her to make her voice, to make arguments and to convince her that she is indeed the owner of the rights in the formula, at least together with the applicant.  Her absence therefore prevented a genuine discussion of the matter, and this is in accordance with the Applicant's obligation.  This also has implications for the claim that the Respondent "took the product formulas without the Applicant's consent and in contravention of the explicit obligation set forth in the first Tarsen Agreement", since, as was noted in the matter of the exclusivity claim, the first agreement relates according to its language only to BONO products, so that this claim encounters the same difficulties as stated above in the matter of the exclusivity agreement, all the more so against the background of Tarsen's absence from the hearing.  It should be noted here that indeed in the draft agreement (Appendix 4 to the Application) it was stated that the formulas (without limitation of products) would be the property of the Applicant, but as noted above, this is a draft that was never signed, so it is not possible to base a clear prima facie conclusion on this, certainly when Tarsen did not merit to be part of the proceeding and she claims otherwise (Appendix 9 to the Respondent's response).  In addition, I did not ignore the fact that in the price quote it was stated that the Applicant would provide the Respondent with a "sample of the fragrances of the products".  Indeed, this indicates that the Applicant was involved in the development of the product, as opposed to the Respondent, but the Respondent did not claim to be the developer and the main dispute of the Applicant is with Tersen, who claims ownership of the formulas, but her voice was not heard.
45. The second hurdle is that the Applicant did not make any effort to prove, even prima facie, that the information "is not in the public domain and cannot be legally disclosed easily by others". Thus, the Applicant did not elaborate on why this was information worthy of recognition as a trade secret, and in particular did not bother to explain why it was a production formula that included knowledge that is not in the public domain or that cannot be easily discovered by anyone engaged in this field.  This is a factual-professional claim that requires, first and foremost, factual details regarding the uniqueness of the formula or product, and in appropriate cases, the opinion of an expert in the field will even be required, who will explain why it is a composition of materials that is not known to those involved in the industry and why it deserves protection.  Thus, it can be explained, for example (and without revealing the secret, of course) that we are dealing with the use of materials in a composition that is not acceptable in the field, in some innovation (in the sense of information that is not known to the public, see: Miguel Deutsch, Commercial Torts and Trade Secrets (2002), at p.  500), or materials whose identity and composition cannot be easily disclosed, and so on, and so on, from which it will be possible to conclude that this is indeed information that is not in the public domain and cannot be easily discovered.
46. The Applicant did not attach an opinion and did not even detail the uniqueness of the product or the process related to it. However, it is claimed that she has conducted many experiments on chemical compositions and fragrances.  In my opinion, this is not sufficient to meet the burden of proof (even ostensibly for this stage) according to which this is information that is not in the public domain and cannot be easily discovered.  Indeed, evidence regarding studies and experiments that have been significant for a long period of time can sometimes indicate, in themselves, that this is information that is not in the public domain and cannot be easily discovered, especially when the experimenter has extensive knowledge and experience in the field (otherwise it is possible that the need for many experiments stems precisely from his lack of experience and not from the uniqueness of the process).  However, this is not the case in our case, since the degree of effort and research that justifies this conclusion has not been proven, and the alleged experiments and studies have not been detailed and remain at the level of the claim.  In his cross-examination, the Applicant's manager claimed that the idea of adding vanilla extract to the binder was his own, but in this matter too, no attempt was made to prove that it was an idea that was not known in the field, or that could not be easily discovered, to the extent that it deserved to be a protected trade secret.  Therefore, even if I accept the factual argument that this is an idea of the Applicant (and stated in Appendix 6 to the Application, where Tarsen admits that she was not involved in the selection of the scent extracts, this is consistent with this) this does not indicate that it is a trade secret (see the comparison Civil Case (Tel Aviv District) 4258-06-20RAM GROUP HOLDINGS, PTE).  LTD   B.G.  Negev Technologies and Applications in Tax Appeal [Nevo] (September 9, 2020); Civil Case (Haifa District) 51021-01-18 Reuven Ireland v.  Doron Peles [Nevo] (July 5, 2018)).  The claim that some products are based on BONO products does not change this conclusion either.  First of all, this claim has not been proved, even prima facie, to be factual (and I will reiterate again that no opinion was submitted and the claim remains only a claim) and in any event, it was not explained, and in any case not proven, what is the contribution of Bono products to the formula we are dealing with and whether this contribution deserves to constitute a trade secret (and no attempt was made to prove that the Bono products formula itself is a trade secret).
47. To complete the picture, I will note that after the hearing, the Applicant attached (on her own initiative) a signed envelope (for the eyes of the court only) and in the notice attached to it (which was submitted to the file) it was claimed that the relevant formulas were found. It was also noted that this was done in light of the court's comments during the hearing.  I asked for additional explanations for the need for formulas at this stage of the hearing, and the Applicant claimed that in her opinion they are not relevant to the proceeding, but if the court deems it necessary, it is entitled to review them.  In the decision of October 15, 2025, I noted that it was not clear why the formulas were submitted, since this is relevant at most to a situation in which there will be a dispute regarding the violation of the orders (if they are granted) and not to this stage.  I also noted that I will not review the material at this stage and that reference will be given to this in the decision regarding the temporary relief.  I have decided not to review the formulas as standing, and for the avoidance of doubt, I will note that it is clear that the formula itself cannot indicate that it is a trade secret, since it is not judicial knowledge and the court (even if it does examine it) does not have the tools to know this without professional "mediation".  In any event, the discussion on the matter, which of course must ensure the confidentiality of the information and prevent harm to the applicant, is supposed to be in the presence of both parties and allow for an argument, and this was not the case.
48. In summary: the Applicant did not elaborate or explain why the product formulas should be recognized as a trade secret. To this should be added that Strassen, which also claims ownership of the formula, was not added to the proceeding, and the combination of the matter leads to the conclusion that it is difficult to establish a prima facie evidentiary basis on its actual basis, and this has implications for the prima facie cause of action.  I have not ignored the claim of a breach of the agreement between the parties (the Applicant and the Respondent), but there is no dispute that this is an agreement that can be terminated at any time, and therefore it is clear that it does not justify an injunction that obligates the Respondent to continue to purchase products from the Applicant, and the wording of the requested order is also not intended for this outcome.  Therefore, I did not see the need to discuss the interpretation of the agreement and the parties' arguments on the subject are reserved for them for the main proceeding in which the matter will be relevant.

The Balance of Comfort

49. The Respondent is the Applicant's sole customer and its orders therefore constitute all of its income. In contrast, the scope of the Respondent's transactions with the Applicant constitutes only about 4% of its total activity.  The possibility that the Respondent will act directly with Tersen, if the orders are not granted, is therefore liable to cause significant damage to the Applicant.  In this sense, the balance of convenience is tilted in favor of the applicant.  However, if the orders are granted, it will obligate (even if in practice) the Respondent to purchase the products through the Applicant, and as is well known, the court will not easily force business cooperation between the parties to the dispute by means of a temporary order (Civil Appeal Authority 1227/24 Sarfati Zvi & Co.  Building Contracting Company in Tax Appeal v.  Gamul Yehud in Tax Appeal [Nevo] (February 19, 2024), para.  45).  However, in this case, it seems that this is not a significant cooperation, but rather a mere execution of purchase orders that does not require a close and day-to-day relationship (Civil Appeal Authority 59250-04-25 Ziv Israel in Tax Appeal v.  My Town Kiryat Malachi in Tax Appeal [Nevo] (August 17, 2025), para.  21).  In any event, the respondent's manager did not object to continuing to work with the Applicant even if he had no choice because of the order (at p.  46, at para.  32) and claimed that he would work to find an alternative supplier and that "it would happen very quickly" (at p.  46, at para.  32), so it seems that the fact that the issuance of the order will require business cooperation between the parties does not carry much weight in examining the balance of convenience that tends to, as stated, In favor of the Applicant.
50. If this had been the conclusion of the examination, it is possible that, despite the manner in which I assessed the strength of the prima facie cause of action, there would have been room to consider granting orders, even for a limited period that would allow both parties to organize and embark on a new path (since in any case the respondent is entitled to terminate the engagement between the parties by giving reasonable advance notice). However, at the same time, we must also take into account the damage that will be caused to Tersen, who was not added to the proceeding and was unable to defend herself and voice her arguments, and this point tipped the scales in favor of the Applicant, who chose not to join her and is the one who must bear the price of the default.
51. The Applicant argued in this matter that Tarsen would not be harmed by the fact that the requested orders would not impose a new restriction on her, since according to the agreement "the Applicant is the exclusive distributor of Tarsen in Israel and that the formulas constitute her intellectual property" (paragraph 49 of the summaries). For this reason, she also argues that there was no need to add Tarsen to the proceeding at all.  These arguments should not be accepted, since this is the assumption of the applicant, and in this matter I have determined above that the evidentiary basis presented does not establish prima facie cause of action on a real level, inter alia in light of Tarsen's position and the fact that she was not given an opportunity to defend herself.  I will also emphasize in this regard that the fact that the requested orders were drafted against the Respondent and not against Tarsen does not change the fact that Tarsen is liable to be harmed by them, since the request is to prohibit the Respondent from engaging with Tarsen and I will turn to the matter of Shiraur where it was noted that: "It is clear that the requested orders - even if they are directed only at Ningbo - have an impact on the matter of Tornado, and when examining the balance of convenience, it is not possible to ignore the damage that may be caused to it."
52. Another point to take into account when examining the comfort balance is that the first agreement (as opposed to the second) is not time-bound, and therefore it can be terminated at any given moment, subject to prior notice. From the Applicant's own words, it can be concluded that her relationship with Tarsen ran aground and she ceased to respond to her inquiries (at p.  20, at para.  31; at p.  21, at para.  6).  In addition, Tarsen provided the Respondent with letters from which a version contradicts that of the Applicant regarding her rights in the formulas as well as according to the agreement.  This behavior seems to indicate the existence of a substantive dispute, and it is possible that there is even an intention to bring the first agreement to an end.  However, there is no need to decide the matter in the framework of this decision, nor is there a need to discuss the length of the proper notice period in the event that Tarsen does indeed announce the cancellation of the first agreement.  Suffice it to say that even if I take into account a fair and significant notice period, the damage that may be caused to the Applicant due to the failure to grant the order is limited in scope to the notice period only, and in this state of affairs, it is clear that this is damage that can be compensated financially, and I will refer in this regard to what was said in the Shiraor case: "In examining the balance of damage between the parties, the District Court reached the conclusion that in view of the expected expiration of the agreement with Ningbo in 2025, The potential damage to the applicant, insofar as the orders are not granted, is limited in its scope." I am aware that this argument has good force in relation to the cause of action related to the exclusivity agreement and not to the matter of the trade secret, but this argument cannot be ignored when examining the balance of convenience, especially against the background of the missing evidentiary basis in the cause of trade secret.
53. In light of all this, and after taking into account all the considerations detailed above, I am of the opinion that there is no reason to grant a temporary injunction in this case. The evidentiary basis that exists at this stage does not establish a prima facie cause of action on a real basis, and the hearing was missing due to Tersen's absence.  The damage that may be caused to the Applicant, even if it should not be taken lightly, is limited in all that is related to the very engagement between the Respondent and Tersen, so that it is financially compensated and does not justify possible harm to Tersen that was not attached to the proceeding.  With regard to the use of formulas, here too, the harm that may be caused to Tersen, combined with the strength of the prima facie cause of action, which is not high at this stage, tip the scales towards the rejection of the application, while the subject will be able to find its solution in monetary compensation if, at the end of the day, the Applicant is able to prove that it is a trade secret that she owns.
54. The result is that the application is rejected. The Applicant will bear the Respondent's expenses in the sum of ILS 6,000 (including VAT).  In this matter, I have taken into account the nature of the matter, the scope of the argument, the conduct of the parties and the significance of the absence of an order for the Applicant.

Granted today, October 23, 2025, in the absence of the parties.