Legal Updates

The existence of an Israeli trademark does not prohibit parallel import of the product

October 19, 2020

An importer acquired in the Ukraine Schweppes soft drinks and imported such to Israel in while such drinks are produced and sold in Israel by an Israeli company which also holds the trademark for the brand in Israel.
The Court held that the existence of an Israeli trademark does not prevent an importer from locally selling the products through parallel import. Parallel import is a recognized practice which does not constitute an infringements of intellectual property rights. The legitimacy of the practice is based on the conflict between the right to intellectual property and the right to freedom of occupation and the free market competition, when balance must be found between the right of the trademark owner to protect its right to sell its products without competition, and the rights of third parties wishing to seize on business opportunities and the general benefits of free market competition. When the product in question in a legally purchased original product, and not an infringing copy of the existing product, the rule of international exhaustion of rights sets that products may be legally purchased abroad, from the rights owner, and then imported to Israel. The same principle still applies when the owner of the rights abroad is a different entity then the one holding the rights in the country of import. Provided that the split in ownership of the rights between the territories was done willingly and knowingly, the local owner of the rights can not contend that its rights were infringed and parallel import must be seen as part of the business risks willingly taken on by the owner of the rights. The owner of a trademark can prevent the re-sale or export of its products to other countries or territories in the sales agreement, but such a restriction must be made clearly and explicitly, for as long as such a restriction in not explicitly included, once the owner of the trademark sold the products, the buyer is within its rights to do with them as it pleases. Including parallel import to a country where a trademark owner already exists. Here, the importer purchased original products, legally, from the owner of the rights in the country of origin, and legally imported them to Israel, which it was allowed to do because no restriction to the contrary existed in the agreement with the seller. The owner of the trademark was aware that there are other owners of the trademark in other territories when it acquired the rights to the trademark and should have taken parallel importing into consideration as a legitimate option. Thus, the existence of the local trademark does not prevent the importer from parallel importing the products.