Legal Updates

Unlawful use of a business trademark may establish entitlement to business accounts

November 10, 2020

Two business partners in a business for the production and sale of food products and especially Hummus have separated and each set up his own business. During the joint activity a trademark was registered in the name of one of them and he also continued to use the business name after the separation. The other partner claimed half of the trademark rights despite the way it is registered in the Trademark Registry.
The Court held that the claim should not be dismissed outright because there is no need to first amend the Trademark Registry to claim eligibility for a mark that was incorrectly registered. When a trademark of a business is used illegally, a business partner is entitled to receive from the user a financial statement for the purpose of calculating the profits due to him for the use. An accounts procedure is conducted in two stages: In the first stage, the Court decides whether there is an entitlement to receive accounts. The source of the right may be by virtue of a fiduciary relationship, a partnership relationship, a license relationship, an agent and a supplier, etc. In the second stage, one will examine the scope of the requested accounts. A person's registration as a trademark holder gives him the right to use the mark uniquely and protect the mark but if a person sees that his partner has registered a trademark in his name in bad faith and contrary to the partnership agreement, he may demand restitution - and to do so he may first demand accounts to prove the profits - and then also the amendment of the registry.