Civil Case (Tel Aviv) 13315-08-20 LIFESTYLE EQUITIES C.V v. Don Gilley Ltd. - part 7

See also: Civil Appeal 5328/21 Abu Rakiya v.  Handkalo, paras.  103-104 of the judgment of the Honorable Justice Kabub (Nevo, January 3, 2023); Civil Appeal 10489/09 A.  Netz Management and Holdings in Tax Appeal v.  Aluf, paras.  11-12 of the judgment of the Honorable Justice Amit (as he was then called) (Nevo, September 6, 2011); Aharon Barak, The Shlichut Law 713-717 (1996).

71. and in the application of the law to our case. From the fabric of evidence presented to me and the testimonies heard before me, a clear picture emerges that not only did the plaintiffs create a representation to the defendants regarding the existence of authorization from the outset to Global Brands and Mr. Hasson that they would serve as their sole representatives in all matters related to their conduct in Israel for the implementation of the license agreement and its commercial performance, and in all matters relating to the brand and its use, but even in practice - the communication between the parties was conducted almost entirely through Global Brands and Mr. Hasson, as the plaintiffs' representative, who served as the plaintiffs' agent.
72. As stated in detail above, Mr. Haddad testified on behalf of the plaintiffs himself, even in the course of his interrogation within the framework of the hearing of the motion for an injunction in the previous lawsuit, that there was very little direct communication between the plaintiffs, including Mr. Hadad, vis-à-vis the defendants, and that "everything was done through Hasson." As may be recalled, in the course of his said cross-examination, Mr. Haddad repeatedly referred to Mr. Hasson more than once as "our agent" (transcript of the hearing in the previous claim of September 16, 2015, pp. 7, paras.  3-5; pp.  8, paras.  19-20).
73. He also confirmed there that he "relied on the agent" Mr. Hasson, including everything related to the transfer of information relating to the brand's activity in Israel, including with regard to the transfer of the quarterly reports, which, according to Mr. Hadad, was within the scope of Mr. Hasson's responsibility (transcript of the hearing in the previous claim dated September 16, 2015, pp. 8, paras.  21-23; p.  9, paras.  13-16).  Against this background, it is not surprising that Mr. Haddad confirmed that he visited the offices of Jinli once during the period of the agreement, during 2013, and that this was the only time he met Mr. Jinli (ibid., pp.  8, 8-11).
74. To this should also be added, as detailed in detail above, the affidavit and testimony of Ms. Boritz, who confirmed that the ongoing work process throughout the life of the license agreement was carried out between the plaintiffs and the defendants through Mr. Hasson in accordance with the instructions of its managers, because he was responsible for representing the brand in Israel, including with regard to the approval of the models for marketing and sale (minutes of the hearing of November 10, 2025, pp. 25, 24 - p.  26, 8; p.  29, 6-18).
75. These representations made by the plaintiffs to Don Gilley were spread over a long period, during which the communication between the parties before me was conducted through Mr. Hasson, their representative and the plaintiffs' agent, with the exception of a few and very few communications that took place between the parties directly, in which the plaintiffs also did not express any reservations about Mr. Hasson's activity (until the plaintiffs' relationship with Mr. Hasson ran aground). From the material placed before the court, the conclusion is drawn that Mr. Hasson, as the plaintiffs' representative (the "agent", in Mr. Hadad's words), in fact served as the plaintiffs' agent in all matters related to the brand's activity in Israel, while his permission to act vis-à-vis the defendants was given by them in the first place.
76. Needless to say, it seems that this method of work, in which an agent, "representative" or "agent" on behalf of the plaintiffs represents their interest in the commercial relationship with the licensee, in each and every country, was found to be a convenient and preferred method of work for the plaintiffs and Mr. Hadad. This can be seen in his cross-examination in the course of the hearing on the request for an injunction in the previous lawsuit, when he was asked whether he had expressed reservations in the years 2012-2014 regarding the transfer of the quarterly reports, to which he replied: "I don't remember.  I have a worldwide business and I rely on my agent to provide me with information" (transcript of the hearing in the previous claim of September 16, 2015, p.  9, para.  14).  These words reinforce the conclusion regarding Mr. Hasson's status as an agent of the plaintiffs in representing their interest in Israel vis-à-vis the defendants in real time, and that this was done in a conscious and informed manner by the plaintiffs, in accordance with an accepted and customary method of work.
77. The plaintiffs claim in their summaries that the defendants have the burden of proving Mr. Hasson's authorization for his actions, and that this burden has not been lifted and they have not presented any evidence of this; that Mr. Hasson even lacked authority under the license agreement vis-à-vis the plaintiffs; and that Mr. Hasson served only as a liaison, a "conduit" for the transfer of information (paragraphs 13-14 of the plaintiffs' summaries). The defendants, for their part, claim that they acted "in absolute good faith" vis-à-vis Mr. Hasson, as someone who was presented to them as a manager and as the authorized representative of the plaintiffs, and that they "did not know and should not have known" any hidden internal limitations between the plaintiffs and Mr. Hasson, and that as far as they are concerned, Mr. Hasson's approval is an approval of the plaintiffs (paras.  10, 38 of the defendants' summaries).
78. I am of the opinion that as stated at length above, Mr. Hasson's activity within the framework of the license agreement was not limited to "intermediary" or being a mere "conduit" connecting the transfer of information between the parties to the license agreement. The court was presented with a consistent, uniform and coherent picture in which Mr. Hasson served as the plaintiffs' agent, and that he served as the plaintiffs' long arm in their relations with the defendants, and that this was acceptable to them, including to Mr. Hadad, who "relied on his agent" to pass on to him the information in his area of responsibility, while he himself was conducting a "worldwide business".
79. However, as will be discussed below, the commercial relationship between the parties before me is regulated, first and foremost, by means of contract law and drug law. Therefore, even if Mr. Hasson served as an agent in the legal sense, and even if he served as the long arm of the plaintiffs in their activity vis-à-vis the defendants and was even presented as such to the defendants, this cannot be used by the Ginley / Don Gilly Company as a "general permit" and it is absolute to assume that all of Mr. Hasson's actions throughout the life of the license agreement were done with the plaintiffs' permission and not in deviation from it.  In the sense that he is "exempt" from fulfilling the contractual obligations in the license agreement.
80. Therefore, with respect to each of the alleged breaches by the plaintiffs, it is necessary to examine, first and foremost, the state of affairs from the perspective of contract law, taking into account the obligations imposed on Jinli according to the license agreement it signed with plaintiff No. 2. In the second stage, it is necessary to examine whether the plaintiffs were presented with representations by the plaintiffs during the life of the license agreement from which it could reasonably be concluded that the agent, Mr. Hasson, was operating under the plaintiffs' permission.  In this manner, the plaintiffs' claims of breach of the license agreement will be examined below.

First Claim of Violation of the License Agreement - Transfer of Rights from Jinley to Don Geely

81. The first infringement alleged by the plaintiffs concerns the claim regarding the transfer of the rights from Jinley to Don Geely, and the execution of actions within the framework of the license agreement through Don Geely. The plaintiffs claim that all of the counterfeit products, according to them, were manufactured outside the framework of the license, because the defendants operated without a license due to the exchange of Jinli with Don Geely without a signed agreement, and in violation of clause 12.3 of the license agreement, which grants its immediate cancellation due to liquidation, and due to fundamental violations of the Terms of Use.  Therefore, it was argued that the plaintiffs' trademark was infringed, and it was proven that the defendants manufactured, sold and imported infringing products without authorization, outside the scope of the license (paragraph 19 of the plaintiffs' summaries).
82. After reviewing the arguments of the parties and the evidence placed before me, I am of the opinion that this claim does not constitute a breach of the license agreement in essence, and that it should be rejected. And I will reason.

1. The plaintiffs never raised a claim regarding the transfer of the activity from the Ginley company to the Don Geely company.  In fact, in an e-mail correspondence dated September 5, 2014 sent by Mr. Haddad to his lawyer (Appendix 2 to Mr. Hasson's affidavit), he explicitly referred to Don Gilly as the licensee under the license agreement, and at least saw Don Gilly and Ginelli as a single entity serving as his stakeholder, and in his words: "our licensee is Gineli / Don Gili...".
2. In the course of the hearing on the motion for an injunction in the previous lawsuit, which took place on September 16, 2015, when Mr. Haddad was asked whether the plaintiffs received a report submitted by Don Gilley in each quarter during the engagement period, he replied: "Correct.  Even though our agreement was with Jinli." (p.  8, paras.  24-25).  This, too, strengthens the plaintiffs' knowledge in real time, that the activity was transferred from Jinley to Don Geely, and that this was done without reservation or protest on the part of the plaintiffs, and in any case with their knowledge.
3. The quarterly reports that were sent in real time to the plaintiffs were sent on letter paper from Don Geely and signed by it with its seal (Exhibit 22 to the plaintiffs' exhibits).  No real-time evidence was presented to support that the plaintiffs saw this as a violation, or that they expressed a protest in connection with it.
4. From Exhibit 49 submitted by the plaintiffs, it appears that at the time they were aware that the payment of royalties under the license agreement was made by Don Geely and not by Ginley (except for the first payment).  This, too, should support the conclusion that the plaintiffs knew that the activity under the license agreement was carried out through the Don Geely company, in a manner that was acceptable to the plaintiffs.
5. And finally, even in Mr. Hadad's cross-examination in the lawsuit before me, a uniform and coherent picture emerged, according to which he accepted in real time that the activity was carried out through Don Gilley, and at least he did not see this as a violation.  Thus, when he was asked why he did not issue a notice of cancellation of the agreement after he moved on to filing the previous lawsuit, he claimed that he discovered that Genely had been replaced by Don Gilly, he replied "because I thought it was the same company," and that he first learned that there was a difference between the two "only when we started legal actions" in 2015 (transcript of the hearing of November 10, 2025, p.  84, paras.  1-8; p.  85, paras.  5-7).  In other words, the allegation of infringement at this point arose only after the plaintiffs began to take legal action against the defendants, even though he always thought, according to him, that Ginley and Don Gilly were "the same company." This explanation, with all due respect, is not found to be satisfactory.

83. Admittedly, the license agreement includes explicit provisions, such as clause 9.2, which prohibits the assignment of user rights without written approval, and clause 12.3, which allows for immediate cancellation in the event of liquidation of the company, which ostensibly support the plaintiffs' claim of a fundamental breach of the license agreement, and the plaintiffs' claim that as a result, all the activity was carried out outside the license agreement.
84. However, the legal test is not limited to the language of the agreement alone, and the conduct of the parties must be examined over time. In this case, it was proven that the plaintiffs knew in real time about the transfer of activity from Ginley to Don Gill, received reports and payments from Don Gill, and even their manager, Mr. Hadad, treated these two companies as a single entity.  This conduct, which lasted for years without protest or reservation on the part of the plaintiffs, establishes a waiver and impediments, since a party that knew of the alleged breach of the agreement and did not act to enforce its rights for a long period of time, may be considered to have waived them or refrained from arguing for them.
85. In order to conclude that a waiver of a contractual right is based on a person's conduct, this conduct must be clear, decisive and unambiguous, and must be substantiated by solid and clear evidence [see: Civil Appeal 767/77 Ben Haim v. Cohen, IsrSC 34(1) 564, 570 (1979); Additional Civil Hearing 1558/94 Nafisi v.  Nafisi, IsrSC 55(3) 573, 596 (1996); Civil Appeal 7156/10 Hayarkon Company in Tax Appeal v.  State of Israel Israel Lands Administration, para.  11 of the judgment of the Honorable Justice Hayut (as described at the time) (Nevo 11.10.2012)].
86. I am of the opinion that the totality of the evidence presented to the court is sufficient to establish the clear conclusion that the plaintiffs waived any claim of infringement stemming from the fact that the commercial activity under the license agreement was carried out through Don Geely instead of Ginley. Although the original provisions of the agreement are clear, the plaintiffs' consistent conduct in practice, as detailed above, created a contractual reality regarding the change in the license agreement by conduct.  The defendants acted in accordance with this contractual reality, and without any protest expressed by the plaintiffs in this regard.  This change in behavior negates the plaintiffs' ability to now claim a retroactive breach of the license agreement.
87. Even an examination of the level of emissary leads to the same conclusion in the circumstances of the case.  Thus, a sender may create a representation of authorization towards a third party, which binds it to the actions of its sender, even by silence or omission, when in the circumstances it would have been expected to take active action to revoke the authorization.  Thus it was held in the Vered Labasha case (at p.  815): "It is possible to have a situation in which the agent creates a representation towards the third party, and 'the absence of action on the part of the sender, when these circumstances require action on his part, may be considered conduct that creates a mission' [...] The source of the emissary is not found in the conduct of the emissary, but in the silence of the sender, which in the special circumstances of the case constitutes conduct on his part towards the third party.'" (emphases added).
88. Other Municipality Applications 8098/09 Cohen v. Union Bank of Israel in a Tax Appeal - Hadera Branch, IsrSC 65(2) 322, 350-351 (Nevo, January 3, 2012) held that:

"The starting point in this matter is that sometimes even silence and omission on the part of the sender to do something can be found to confer authorization, in one of two ways: retroactive approval or authorization in the first place.  The test is whether the sender, who wishes to revoke the permission to perform a certain action, as a reasonable person, should have stood up and took action, and in the failure of the failure to do so, he caused the sender or a third party to believe that permission to act had been given.  If the answer is yes, then the action can be seen as if permission has been given for it.  Certainly, not every silence will be interpreted as creating permission.  The court must conclude from the totality of the circumstances that a reasonable person would have acted and expressed his will if he had not wished to grant the mission.  Since the sender did not act, even though he could have been expected to do so, the conduct may be interpreted as creating permission to carry out the act of emissary.