However, to the extent that the defense's claim regarding the change in the agreement lacks evidentiary support and the provisions of the license agreement stand, and since it has been proven before me that no true reports were reported to the plaintiffs regarding the FOB rate and no license fees were paid pursuant thereto, then there will be room to examine and determine the amount of compensation to which the plaintiffs are entitled for the breach of the license agreement.
- I will precede the end of the beginning. From the fabric of the testimonies and evidence presented to me, I am of the opinion that even if at one stage or another there was a discussion between the parties regarding a change in the payment mechanism under the license agreement, including through the plaintiffs' agent, Mr. Hasson, this discourse did not mature into a real and late agreement to change it that binds the plaintiffs, and therefore the provisions of the license agreement with regard to the manner of calculating and paying the license fees according to it are still in place. And I will reason.
- The defendants' main defense argument is based almost entirely on the testimonies of Mr. Jinli and Mr. Hasson (who were brought to testify by the defendants), and lacks any positive evidence that might have supported it indirectly, even if only circumstantially.
Mr. Ginley stated in his affidavit (at paragraphs 8-9) that towards the end of the first year of the engagement, he contacted Mr. Hasson and stated to him that he did not intend to exercise the option period in light of "an unreasonable royalty rate". He also stated that after negotiations and with Mr. Hadad's approval, it was "decided" that Don Geely would pay annual royalties at the rate of $20,000, starting from the second year onwards, and that this was what the parties had done. According to Mr. Ginley, even in the course of his cross-examination, he dealt directly with Mr. Hasson, who presented him with the aforementioned representation regarding the change in the amount of the annual payment and its becoming permanent (see, inter alia, the minutes of the hearing of November 13, 2025, pp. 318, paras. 13-21; p. 322, 14; p. 323, 21; p. 324, 9-11; p. 330, 12-19; p. 339, 6-11; p. 340, s. 4; p. 347, s. 11-19).
- The aforesaid is consistent with Mr. Hasson's affidavit filed on behalf of the defendants (at paragraphs 57-58) which corroborated Mr. Ginley's statement, and stated that with Mr. Hadad's consent, it was "decided" that Don Gilley would pay fixed annual royalties at the rate of $20,000, from the second year to the sixth year, and $25,000 from the seventh year to the tenth year, in exchange for the exercise of the option periods. In his cross-examination, Mr. Hasson testified that in 2010 a "flat fee" was agreed, i.e., a fixed annual payment of $20,000 (transcript of the hearing of November 12, 2025, p. 283, paras. 11-24). Hasson further confirmed that the "discourse" surrounding the transition to payment in the form of a flat fee took place several times during Mr. Hadad's visit to Israel, despite the fact that there is no document that supports this (p. 278, paras. 13-16).
- However, as to the results of the "discourse" that allegedly took place on the issue of a transition to a fixed global payment, Mr. Hasson testified in his cross-examination: "I reiterate that as long as there is no written confirmation of this from the brand owner, it does not exist [...] That was the discourse. Haddad said to me, "Okay." But in practice, no document came out about it." Moreover, when asked by the court whether in its opinion the agreement as it continues and applies, it replied in the affirmative (transcript of the hearing of November 12, 2025, p. 289, s. 6 - p. 292, s. 21).
- Thus, even the version in the cross-examination of Mr. Hasson, who was sent on behalf of the plaintiffs and brought to testify on behalf of the defendants, does not support their version that any change was made in the payment mechanism under the license agreement, despite the fact that there was a "discourse" around this issue. This is sufficient to drop the basis under the defendants' main defense argument.
- However, in order not to find the paper missing, I will note a number of additional evidentiary indications that support the conclusion that the payment mechanism by virtue of the license agreement was not changed by late consent, and therefore the necessary conclusion is that the provisions of the license agreement with regard to the payment mechanism are in place.
- First, the alleged late agreement, the oral one, ostensibly does not contain any positive expression in any document, contrary to the license agreement, which requires that any change in the terms of the agreement be made in writing. It is certainly expected that such a fundamental change in the terms of the agreement will be expressed in any written document, including e-mail correspondence, letters, SMS messages , etc. However, any evidence that could have shown, even indirectly, that the parties had indeed agreed to change the payment mechanism in the license agreement, was not presented to the court. It is not for nothing that Mr. Jinli testified in his testimony: "It is my problem in this whole case that what was agreed upon, I do not have it written. This is my problem in this whole case" (Transcript of the hearing of November 13, 2025, p. 386, paras. 20-23).
- Second, from Exhibit 49 to the plaintiffs' exhibits, it appears that the payment from Ginley and Don Geely over the life of the agreement did not amount to $20,000 in each of the second to fifth years of the agreement. Thus, in the second year of the agreement, Don Gilley paid a sum of $26,616; in the third year, a total of $19,892; in the fourth year, $19,891; and in the fifth year, $12,425.
- When Mr. Jinli was asked in his interrogation why in the second year of the agreement, an amount was paid in excess of the minimum amount that was allegedly agreed upon by a belated oral agreement, he replied that the reason was "surplus dollars" that he had, and that he gave "a little more", about a third of the allegedly agreed amount, as a "bonus" and in order to "honor" (transcript of the hearing of November 13, 2025, pp. 363-364). These explanations, with all due respect, were not found to be satisfactory.
- Moreover, these explanations of Mr. Jinli in his cross-examination are inconsistent with the economic-commercial explanation he gave for the reason for which the mechanism of payment was allegedly changed by late agreement in the first place. And to be precise. As may be recalled, Mr. Ginelli stated in his affidavit that towards the end of the first year of the engagement, he contacted Mr. Hasson and noted that Don Gilley did not intend to exercise the option periods in light of the "unreasonable" royalty rate, and that after negotiations, it was decided to pay fixed annual royalties at the rate of $20,000 starting from the second year (paragraphs 8-9).
However, according to Exhibit 49 of the plaintiffs' exhibits, which was not contradicted by the defendants, in the first year of the license agreement, Genely/Don Gilly paid the plaintiffs royalties at the rate of $13,700, and as stated above, in the second to fifth year a royalty rate of more than $13,700 was paid, and in the second year even more than $20,000, in a manner that is inconsistent with that later alleged agreement that allegedly came into existence at the end of the first year.