A company engaged in the provision of laundry services sought to register a trademark for the purpose of its activity and discovered that there was already an identical registered trademark which was similarly deceptive. After the company and the owners of the registered mark reached a coexistence agreement that allows for the registration of the new mark and undertakes to act to avoid misleading consumers, the Registrar of Trademarks refused to accept the coexistence agreement as is and placed additional conditions for the registration of the new mark.
The Supreme Court held that the Trademarks Registrar has the authority to set conditions for the registration of a trademark even when there is a coexistence agreement. Israeli law grants the Registrar broad authority to reject or condition the registration of trademarks at its discretion. When there are two competing marks, the parties may sign a coexistence agreement in order to allow the existence of the marks side by side and to avoid misleading consumers. When there is such a coexistence agreement, the Registrar, as a rule, will give effect to the agreement and allow the registration of the marks without additional conditions, unless the agreement is tainted by clear illegality or causes certain or probable harm to third parties due to the existence of a real risk of deception. Here, the parties signed a coexistence agreement which included a general undertaking by the parties to act in a manner which will avoid misleading consumers due to the similarity between the marks. After the Registrar used its discretion and concluded that the risk of deception was not properly handled in the coexistence agreement, it was entitled by virtue of its authority to place conditions the registration of the mark in order to protect the consumers, and in light of the fact that the restrictions which were set were consistent with the coexistence agreement, there is no impediment to the imposition of such conditions.