Copied from Nevo
- In its decision of 05.05.2026 (the decision that is the subject of the application for leave to appeal), the Court of First Instance ruled that the decision of the Honorable Judge Baum of January 11,2023 establishes a company estoppel, on the grounds that it is a matter of fact and legal identity between the company that was subject to discussion and decision in the decision of the Honorable Justice Baum and the dispute in the proceeding before it, and that in the decision of the Honorable Judge Baum "a factual finding was established with respect to the companies, after which the Applicant requested that the claim against Respondent 1 be deleted." (paragraph 21 of the decision, emphasis in the original - A.W.). The trial court further noted that in the decision of the Honorable Justice Baum, it was held that "the fact that respondent 2 provides services to respondent 1's clients does not make it qualified to receive court orders on its behalf."
The Trial Court further noted in its decision that in her testimony the Applicant confirmed the deletion of Respondent 1 from the letter of claim in a civil action in a quick hearing 30923-10-22 [Nevo] "constitutes in fact confirmation that it is not possible to deliver through Respondent 2... The Applicant, an attorney by profession, also confirmed the significance of estoppel" (paragraph 22 of the decision, emphasis in original).
Subsequently, the trial court ruled that in the framework of a civil case (Tel Aviv) 48651-03-21 [Nevo], a judgment was given effect to the agreements reached between the parties, and "it was determined that respondent 2 had no liability in connection with the activity of respondent 1". It was further noted that the Applicant herself testified that the invention to Respondent 2 was made "for reasons of convenience only", and that the real purpose of the Invention Regulations is to confer jurisdiction and not convenience.
- After referring to extensive parts of the testimony of Mr. David Shem Tov, CEO of Respondent No. 2, according to which, inter alia, "the formal respondent provides support on the trading platform of the American broker... and provides customer service about the platform" and that there is no identity between the shareholders of the two companies, the trial court ruled that it was not proven that the claim relates to "the same matter" in the relationship between respondent 1 and respondent 2. As to the area of contact, the trial court held that the testimony of the representative of respondent 2 indicates that the relationship between the respondents is purely technical, and that it is not an intensive connection for the purpose of respondent 1's activity.
- The trial court referred to the fact that in the judgments in the Microsoft case and in the Philip Morris case, it was held that a corporate relationship should not suffice, and ruled that apart from a technical and service relationship only, as arose in the testimony of the respondent's representative, the Applicant was unable to prove "additional connections such as joint ownership, corporate identity, legal contractual relationship and ongoing managerial relationship. The Applicant did not even seek to clarify these matters in the hearing."
- In view of all of the above, and more than necessary, the trial court ruled that the Applicant had not been able to prove the existence of the conditions required in accordance with Regulation 163(c), including the duration, nature and scope of the relationship between the Respondents, and therefore rejected the Applicant's request to provide the statement of claim to Respondent 1 through Respondent 2, as its representative.
Summary of the Applicant's Arguments
- According to the Applicant, the trial court erred in its determination regarding the existence of a company estoppel, as it relied on a concise interim decision by the Honorable Justice Baum, which was given without analyzing the evidentiary basis presented in that proceeding and without determining any positive factual finding in relation to this evidence, and on a settlement agreement in a previous proceeding that was reached without evidentiary clarification and without a judicial decision on the factual parties in dispute.
The Court of Appeals (the Honorable Justice Ziegler) expressly annulled the previous decision of the Court of First Instance of December 1,2024, ruled that it lacked a factual basis and sufficient reasoning, and ordered a real factual investigation and a ruling on its merits on the estoppel claim. Nevertheless, the trial court sufficed with a general determination that respondent No. 2's activity was purely "technical service" and refrained from examining the evidence and testimonies heard before it.
- It was argued that it was proven that Respondent 2 operates a trading room and a dedicated professional team, which provides Israeli clients with guidance, support and operational assistance in all matters relating to the financial activity carried out with Respondent 1. The CEO of respondent No. 2 admitted in his cross-examination that the company operates on a "referral broker" model and recruits customers for respondent No. 1. He also confirmed that Respondent 2 provides customers with a full service package in Hebrew and accompanies them throughout the stages of the engagement. The CEO also admitted that respondent No. 2 derives a direct economic profit from collecting higher commissions from its clients, as opposed to opening an account directly with the American broker. It was argued that the totality of these data shows that respondent 2 is not an external and independent entity, but rather the entity through which respondent 1 manages its ongoing relations with its clients in Israel, and therefore serves as its representative for the purpose of producing court documents. It was argued that Respondent 2 is raising capital investments in Israel for Respondent 1 and this activity fulfills the requirement of "the same interest" in Regulation 163(c) of the Regulations and clearly establishes the constructive presence of Respondent 1 in Israel.
THE APPLICANT FURTHER ARGUED THAT THE MICROSOFT RULING [CIVIL APPEAL AUTHORITY 7165/23 FAST CORPORATE LTD V. MICROSOFT ISRAEL LTD. [NEVO] (DECEMBER 14,2023)], HELD THAT EVEN A SERVICE OR TECHNICAL ENVELOPE, WHICH IS MADE ON A REGULAR BASIS AND IN RELATION TO THE PRODUCT OR SERVICE THAT IS THE SUBJECT OF THE LAWSUIT, IS SUFFICIENT TO ESTABLISH A "CONSTRUCTIVE PRESENCE" THAT JUSTIFIES AN INVENTION UNDER REGULATION 163(c).