Civil Case (Tel Aviv) 13315-08-20 LIFESTYLE EQUITIES C.V v. Don Gilley Ltd. - part 2

Summary of the plaintiffs' claims in the statement of claim

10. In the framework of the lawsuit before me, the plaintiffs claim that following the order to provide accounts, on May 10, 2020, an inspection was carried out in the warehouses of Don Geely Company, in which an inventory of various clothing items was located, but according to the plaintiffs' estimates, this is a small quantity estimated at no more than the sum of ILS 100,000. This amount is in line with Mr. Ginley's claim that he made during the investigation, according to which he intends to close down Don Gilly due to a difficult financial situation.  As part of the aforementioned examination, Mr. Jinli produced reports regarding the volume of imports of all the products manufactured by Don Geely over a period of 7 years.
11. The plaintiffs claim that after the judgment in the previous lawsuit, it became clear further that the defendants' books of accounts do not include a record of the import into Israel of counterfeit products that were carried out with their authorization through what they call in their lawsuit the "indirect import system", as defined below. They claim that various commercial entities, such as the Rami Levy chain and Yafiz Fashion (2004) in a tax appeal (hereinafter: "Yapiz"), participated in the process of production, import, marketing and distribution of the infringing products, together with Don Gilly and its managers.  These parties allegedly purchased the infringing products directly from China, from some supplier associated with Don Geely, and imported them.  According to the claim, they printed their trade name and trade logo on the packaging of the infringing products, and committed various violations of their rights (hereinafter, as the case may be: "the indirect import" or the "indirect import system").
12. It is worth noting that the plaintiffs filed an additional lawsuit against the Rami Levy and Vipiz chain in February 2017 to this court (Civil Case 13671-02-17), which ended in the judgment of the Honorable Judge Gontovnik dated April 27, 2023, in which these companies were ordered to pay the plaintiffs the sum of ILS 2,413,836 (hereinafter: "the judgment in the Rami Levy lawsuit") [Appeal and counter-appeal against this judgment were deleted by agreement on July 21, 2025 Other Municipality Requests 4918/23]. In the framework of the judgment in the Rami Levy lawsuit, it was determined that the plaintiffs were entitled to the remedy of restitution of profits, since after the plaintiffs had warned them of the infringement of their trademark, the Rami Levy and Vipiz chain chose not to speak with them in order to try to clarify the dispute in depth, and thus took the risk that they would be held liable by virtue of intellectual property law, including that they would be obligated to take the remedy of restitution of profits.
13. Copied from Navonshov to the claim before me. The plaintiffs claim that Don Geely does not and did not have any valid license agreement to use the plaintiffs' trademark, since the agreement was signed with Ginelli.  Therefore, according to them, the production, marketing, sale and import of counterfeit products establishes the right to claim the return of all Don Geely profits, as well as compensation without proof of damage.
14. It was further argued that even if the license agreement between the plaintiffs and the Ginley Company (which is owned only by Mr. Ginley) also applied to the Don Ginley Company (which is jointly owned by Mr. Ginley and Mr. Rosen), this license was blatantly violated, according to their claim, since the granting of the rights under the license agreement was conditioned and subject to a series of other material conditions that the defendants did not meet.
15. According to the plaintiffs, the defendants established and/or operated, either by themselves or through others or in cooperation with others, within the framework of the alleged indirect import system, a system of production, orders and importation into Israel of products bearing the plaintiffs' trademark, i.e., counterfeit products, without their knowledge or consent and in any case without their approval. In practice, it was claimed that the defendants allowed their customers to place orders and/or import counterfeit products in amounts amounting to millions of shekels, directly from factories in the Far East (hereinafter: "the manufacturing factories"), all behind the backs of the plaintiffs.
16. The plaintiffs claim that the defendants concealed from them not only the indirect import system and its enormous scope, but also, and possibly even mainly, the true scope of the plaintiffs' counterfeit products that were imported into Israel by them and/or manufactured for them by the manufacturing factories, as emerged from the accounting examination conducted by the plaintiffs after the judgment in the previous lawsuit.
17. The plaintiffs claim that the scope of production and import of the alleged counterfeit products amounts to no less than ILS 17,732,037. On the other hand, the defendants reported to the plaintiffs in practice the direct import of products in a total amount of only ILS 4,353,624.  This is a huge gap of at least ILS 13,378,413 (excluding the indirect import system), and together with the infringing import of counterfeit products that was carried out as part of the alleged indirect import system, this is a gap of ILS 16,266,137 (paragraph 93 of the statement of claim).
18. The plaintiffs further claim that the defendants also violated clause 2.3 of the license agreement, according to which the plaintiffs' products may not be marketed in food stores and street fairs. All the products bearing the plaintiffs' trademark that were sold or marketed by the defendants to food stores and street fairs or were imported by such entities as part of the indirect import system, were sold or marketed without the plaintiffs' approval, and therefore it was claimed that they constitute counterfeit products.
19. In addition, in clause 2.2 of the license agreement, it was determined that a condition for the manufacture or marketing of a product with the plaintiffs' brand is to obtain the approval of plaintiff 2 once every six months. According to the plaintiffs, according to its records, only 18 product models were approved.  The problem is that the vast majority of the products that were manufactured and/or imported and/or marketed by the defendants and/or were imported to Israel through the indirect import system claimed by the unauthorized importers were not approved by the plaintiffs at all, and therefore it was claimed that they constitute counterfeit products.
20. In any event, the plaintiffs claim, the defendants operated from the outset without any license, because the license agreement includes a prohibition on assignment and transfer of the rights under the license agreement, and accordingly it was determined that the rights and obligations under it are personal and that the licensee, Jinli, is not entitled to transfer or assign them or part thereof, including by way of granting sublicenses directly or indirectly in consideration or without obtaining the prior written consent of plaintiff No. 2. Jinli did not ask plaintiff No. 2 for permission to assign its rights and obligations to Don Gilly or any of the defendants, and in any event, consent was not given by the plaintiffs.  Therefore, the plaintiffs claim, the defendants committed all the fraudulent acts alleged in the statement of claim without a license.
21. According to the plaintiffs, the defendants' actions give rise to causes of action such as infringement of a registered trademark, infringement of a registered and well-known trademark, passing off, infringement of copyright, unjust enrichment, the tort of fraud, the tort of theft, the tort of negligence and the breach of the license agreement.
22. As of the date of filing the claim, the plaintiffs estimated the scope of imports of counterfeit products in a total amount of ILS 20,839,633, based on the data they disclosed to them and an accounting examination they conducted. They claim that they are entitled to all the profits of the defendants from their infringement acts in accordance with each of the following alternatives:
23. First Alternative: Calculation of the Defendants' profits from the sale of counterfeit products in Israel, for all products that were not reported and for which license fees were not paid in the sum of ILS 19,994,039 plus the Defendants' profits from the sale of counterfeit products imported by their customers from factories abroad (indirect imports) in the sum of ILS 1,330,902, for a total of ILS 21,324,942.
24. Second Alternative: The Defendants' profits from products manufactured by them without approval in the sum of ILS 24,803,024, plus the Defendants' profits from products sold by them to food chains in violation of the license restrictions in the sum of ILS 3,428,890.

Alternatively, and for the sake of caution, it was claimed that the plaintiffs are entitled to compensation for their damages as a result of the defendants' actions, including: damage to the reputation and image of the brand in the sum of ILS 20,000,000; damages without proof of damage for infringement of the plaintiffs' intellectual property rights in the sum of ILS 10,000,000; and estimated damages for trademark infringement in the sum of ILS 20,000,000.  In respect of legal expenses in the previous lawsuit, it was claimed that the plaintiffs were entitled to compensation in the amount of ILS 1,000,000.

23. For the purposes of the fee, the claim was set at the sum of ILS 7,000,000
24. In addition, the plaintiffs claim that defendants 2-3 should be held personally responsible for their damages, jointly and severally with Don Gilley. It was argued that defendants 2-3 did not renounce their personal responsibility and in any case they are silenced from denying it after the judgment was given in the previous lawsuit that determined that they were liable jointly and severally with Don Gilley.  Defendants 2-3 are directors and shareholders of Don Geely and are personally liable for the infringing activity, including by virtue of their personal involvement and personal knowledge of the infringing activity.

Summary of the defendants' arguments in the statement of defense

25. It was argued that the basis of the statement of claim is the claim that Don Geely, managed by defendants 2-3, violated the plaintiffs' rights by selling products (underwear and socks) bearing the plaintiffs' trademark or to any of them, without permission to Don Geely to do so. The defendants claim that this is not a claim of trademark infringement and/or illegal use of a trademark, but rather a claim of infringement of the license agreement.  According to them, the plaintiffs are trying to portray the dispute as a dispute for trademark infringement in order to be able to claim profits derived by Don Gilley from its actions, but in practice the main remedy and the dispute in essence is a claim of infringement of the license agreement signed between the parties in 2010.
26. According to the defendants, all the products that Don Geely imported and marketed in Israel with the brand during the relevant period were lawfully imported and sold in accordance with the license agreement between the parties, subject to the authorization received by Don Geely from the plaintiffs as well as from the plaintiffs' sole representative in Israel, Global Brands International in a tax appeal managed by Mr. Yoav Hasson (hereinafter: "Global Brands" and "Mr. Hasson") and/or other authorized representatives of Global Brands.
27. According to the defendants, Jinli did not breach the license agreement and paid the plaintiffs royalties in accordance with its provisions and a late agreement reached between the parties, according to which it was agreed to pay fixed annual royalties in the amount of $20,000 starting from the end of the first year of the license agreement. It was argued that there was no point in the plaintiffs' complex and complicated calculations regarding funds that they were not entitled to at all.  It is clear that over the years the plaintiffs were aware of all the conduct of Don Gilley and they did not raise any claim on the matter, and for good reason, and they agreed to continue to receive the royalties as paid by it.
28. It was claimed that Don Geely manufactured abroad and imported to Israel, whether by itself or through others, while the plaintiffs were aware of this, including through their authorized and exclusive representative in Israel, products bearing the brand in accordance with the authorization it received from Global Brands and the plaintiffs. Contrary to the plaintiffs' attempt to draw conclusions from the fact that the defendants do not have a product catalog, it was claimed that over the years, Don Geely issued dozens of catalogues of lingerie products that were known to hundreds of its customers.  Don Gilly did not keep the thousands of different catalogs and this is not her legal obligation.  Jinli cooperated fully with the plaintiffs and disclosed all relevant documents to them.
29. The defendants claim that between Don Geely and Global Brands there was a work procedure according to which Mr. Hasson would inspect the products on which Don Geely intended to make use of the brand and decide whether to approve them or not, and in any event, all the products and the manner of branding were approved by the authorized representatives of the plaintiffs. The defendants did not import counterfeit products into Israel while all imports were done under the lawful authorization of Global Brands, the plaintiffs' authorized and exclusive representative in Israel, and subject to their approval.  This process of approving the products was conducted directly with employees of Global Brands throughout the years, without any reservations on the part of the plaintiffs.
30. The defendants further claim that even the plaintiffs' claims regarding the "indirect import" are baseless, while all the products that carried the brand and were imported directly into Israel by Don Geely customers were imported with the approval of Global Brands, the plaintiffs' official representative in Israel, and as a result, with the approval of the plaintiffs themselves. These products were designed by Don Geely and manufactured on the same production line in factories in China, with the only difference between the products being the name that appeared on the final label.  The only reason why Don Geely chose the import format under the private label and with the approval of Global Brands was to save on import costs.
31. With regard to the claim regarding the sale of the products in food stores, the defendants claim that from the beginning of the business engagement, Global Brands, the plaintiffs' representative, knew that Don Geely sells the goods it imports to chains, stores and markets, while emphasizing that these are underwear and socks and not luxury products.
32. The same applies to the claim that Don Gilley operated without a license in the first place. It was argued by the defendants that both Global Brands and the plaintiffs were well aware that Don Geely had stepped into the shoes of Genely in relation to the agreement and that the plaintiffs gave their consent to this, as reflected in the actual conduct of the parties.
33. In light of the above, the defendants claim that Don Geely did not breach any agreement between the parties, and therefore the plaintiffs are not entitled to compensation without proof of damage in accordance with theCommercial Torts Law and/or compensation according to its estimate. The plaintiffs presented Global Brands and Mr. Hasson, with whom Don Geely operated, as authorized representatives on their behalf and are entitled to act in any matter regarding the brand and/or the transactions between the parties in Israel, including in the matter of import approval, product approval and approval of the manner in which the activity is managed.
34. With regard to the plaintiffs' claims of personal liability of defendants 2-3, it was argued that there is no rivalry between the plaintiffs and defendants 2-3 and the plaintiffs have no cause of action against any of them, since the entire engagement in relation to the use of the brand was made directly between the plaintiffs and Ginley and then with Don Geely, which stepped into the shoes of Ginley with the approval of Global Brands and the plaintiffs.
35. It was further claimed that Mr. Rosen had no connection to the management of Don Gilly and certainly had no personal knowledge of the alleged "infringing conduct", and that the plaintiffs did not know Mr. Rosen at all, did not meet him or deal with him, but only with Don Gilly, which acted with the plaintiffs or anyone on their behalf through Mr. Ginley only. In light of the aforesaid, it was argued that the personal claim against defendants 2-3 should be dismissed.

Summary of the sequence of events in the case

36. In a decision dated August 6, 2020 (the Honorable Justice Blecher), the plaintiffs' request for temporary foreclosure orders on the defendants' assets up to the amount of the claim was granted.
37. On November 23, 2022, affidavits of the main witness and opinions were submitted on behalf of the plaintiffs: the affidavit of Mr. Eli Haddad (hereinafter: "Mr. Hadad"), the plaintiffs' representative, formerly CEO and current owner, a manager, with a translation; an affidavit of Mr. Daniel Hadad, the plaintiffs' financial manager, with a translation; an affidavit of Ms. Alexandra Boritz, head of the design department at plaintiff No. 2, with a translation; an affidavit of Mr. Yosef (Joe) Haddad (hereinafter: "Mr. Yosef Hadad"), the plaintiffs' representative for the purpose of conducting the examination of the accounts and Mr. Hadad's brother; and an expert opinion by CPA Shai Medina dated September 21, 2022. In addition, an exhibits file containing about 1,200 pages was filed, a request for a protective order for confidential information contained in the plaintiffs' evidence, and a temporary protective order.
38. On May 11, 2023, affidavits of the main witness and opinion on behalf of the defendants were filed: the affidavit of the defendant Mr. Jinli - a shareholder and director of Don Gilly; the affidavit of Mr. Rosen, a shareholder and director of Don Gilly; the affidavit of Mr. Hasson - a shareholder and director of Global Brands; and an expert opinion by an accountant (jurist) Yossi Cohen.
39. On June 12, 2023, a second pre-trial hearing was held, in which a decision was made according to which there was no choice but to appoint an expert accountant by the court. On January 14, 2024, an expert was appointed by the court, CPA Uri Eliav, who submitted his opinion on July 18, 2024 (hereinafter: "the court expert" and the "court expert opinion", respectively).
40. The testimonies of the parties and the court-appointed expert were heard in evidentiary hearings on November 10, 2025, November 12, 2025, November 13, 2025, and December 15, 2025.
41. It should be noted that in a decision dated November 16, 2025, the court's expert was asked to detail the calculation of Don Geely's gross profit separately for the years 2011-2018. The expert submitted a supplementary opinion in which it was noted that he divided the total sales for all the years determined by the defendants in a proportional manner between the years, in accordance with the sales ratio detailed in the plaintiffs' documents, while noting that this division was inaccurate due to the existence of inventory at the beginning and end of each year (hereinafter: the "supplementary opinion").  The details of the amounts were attached as Appendix A to the supplementary opinion.
42. The plaintiffs' summaries were filed on January 13, 2026; the defendants' summaries were filed on February 26, 2026; the plaintiffs' reply summaries were filed on March 5, 2026. A request on behalf of the defendants to submit summaries of the reply and a repeated request to do so were rejected in decisions of March 17, 2026 and March 22, 2026.  And hence, to the decision.

Discussion and Decision

43. The relationship between the plaintiffs and the Ginley Company (and later Don Gilley) is a relationship to which contract law and drug law apply. However, in order to examine the disputed questions in this case and the plaintiffs' claims regarding alleged breaches of the license agreement or trademark infringement, it is also necessary to examine the identity of the parties who acted within the framework of the contractual-commercial relationship between the parties before me.  Even more so, it is necessary to address the role and legal status of Mr. Hasson in the said relationship, in which, as will be discussed below, I found that he served as a key key factor.  This has legal implications and implications as to the possibility of accepting the plaintiffs' claims regarding the breach of the license agreement.
44. For the sake of good order, it is clarified that the wording of the license agreement relevant to the hearing and decision of this judgment is the version of the agreement signed in English on March 24, 2010 (Exhibit 6 to the plaintiffs' exhibits), since this wording is signed by plaintiff No. 2, by Jinli, and by Global Brands. This is while the text of the agreement in Hebrew on which the defendants sought to rely was not signed by any of the plaintiffs, despite the fact that it was signed by Jinli and Global Brands (Exhibit 7 of the plaintiffs' exhibits).  In these circumstances, there is no reason to view the Hebrew version as the relevant version of the license agreement.  In any event, where the agreement was signed by Ginley, there is no basis for Mr. Ginley's claim that he did not read the license agreement in English that he signed, including because he claimed that he did not read English.  Therefore, as stated, the starting point is the English version of the license agreement of March 24, 2010.

Mr. Hasson as a significant factor in the negotiations that preceded the signing of the license agreement

45. From the testimonies heard before me, as well as from the transcripts of the interrogations in the application for an injunction that were heard before the Honorable Judge Altuvia in the framework of the previous lawsuit, a clear and coherent picture emerges according to which almost all of the communications undergoing the signing of the license agreement were carried out by Mr. Hasson, who was not only a "mediator" between the parties, but more than that, and he served as the plaintiffs' authorized representative in the negotiations and acted in accordance with their authorization. This is what Mr. Haddad admitted in his interrogation as part of the application for an injunction at the hearing that took place in the previous lawsuit, on September 16, 2015 (pp.  8, paras.  9-13):

"Q.  All the contacts between you and the Respondent prior to the signing of the agreement were carried out through Yoav Hasson.

1. A large part of it, but not all of it.
2. But you personally had no direct contact between you and Jinli before signing an agreement.
3. I try not to be in contact with those who are authorized to do so. I have a contact person for this. I only intervene when there are problems."
4. In his affidavit in the lawsuit before me, Mr. Haddad stated that due to the plaintiffs' desire to expand their activity in Israel and due to their lack of familiarity with the Israeli market, the plaintiffs used the services of Global Brands, and entered into an agency agreement with it (Exhibit 11 of the plaintiffs' exhibits) (hereinafter: the "Agency Agreement"). Haddad stated that as part of the Agency Agreement, Global Brands was granted an non-exclusive right to search for future licensees and to act as an exclusive representative in Israel for the purpose of assisting in licensing activities, subject to terms and conditions.  Mr. Haddad stated that Jinli was located by Global Brands, and the negotiations between the parties were carried out through it.  Mr. Haddad stated that Mr. Hasson was the mediator between the plaintiffs and Ginley Company also for the purpose of transferring the plaintiffs' demands and conditions to the license agreement (paragraphs 26-33 of Mr. Hadad's affidavit).
5. Already at the beginning of his testimony before me, Mr. Haddad testified that throughout his entire relationship with Ginley, he himself spoke with Mr. Ginley about 6 times. When asked how many of those times were before the license agreement was signed, he replied that he "does not remember," and confirmed that most of the times he spoke with him were after the disagreements arose (transcript of the hearing of November 10, 2025, p.  34, paras.  16-22).  He also confirmed that he had never spoken with Mr. Rosen (transcript of the hearing of November 10, 2025, p.  34, paras.  23-24).
6. In his testimony, Mr. Haddad confirmed that Mr. Hasson was a significant factor in the negotiations that preceded the signing of the license agreement, and that his role in the framework was to represent his interests, "on his behalf", while the degree of his own relationship with Jinli was low (transcript of the hearing of November 10, 2025, pp. 35, paras.  4-17):

"Q: So let's describe to the court what things you discussed with Jinli before signing the contract.