JURISDICTION REPORT: ISRAEL
COPYCAT SCOOTERS
Michael Factor JMB, Fa©tor & Co
Hsin Lung Accessories Co. Ltd. is a Taiwanese company that has developed and patented or registered designs for collapsible aluminium scooters. Tese are distinguished by having two back micro-wheels and one front wheel, and by incorporating a split base with a propulsion mechanism that enables users to drive them by shiſting weight from one foot to another and twisting the body. Te scooter is sold in Israel as ‘Streeter’ and worldwide as ‘Fliker’. It is patented in the United States, Germany and China.
Te official importer also claims copyright on the packaging, specifically on a unique design on the box.
When similar scooters started appearing in Israel, the patentee and its local distributor sued the competing importers and distributors, as well as the customs authority.
However, no designs or patents for the product were ever registered in Israel. Unperturbed, Hsin Lung Accessories and its importer sued for passing-off, unjust enrichment and copyright infringement.
Te defendants claimed that the generic scooter manufacturers had suggested the brand name ‘Mover’, and had given various packaging options in similar colours to those used by the complainants. What is clear, however, is that apart from differences in their names, the two scooters are essentially identical.
Te complainants asserted that the issue is not the parallel importing of similar goods, but rather the importing of fake goods. Tey had invested heavily in marketing to develop the market. Tey alleged that the choice of identical colours was intentional, and that the suffix ‘er’ on the name Mover was designed to create confusion with Streeter and Fliker.
Te defendants claimed to be acting properly because Hsin Lung Accessories had not registered its design or patent in Israel, the product names were different, and copyright on designs does not extend to goods that could have been registered but weren’t.
Judge Rafi Carmel of the Tel Aviv District Court found no infringement of copyright and further noted that the Mover scooters were sold under different names in different colours, which appear three times on the scooters. Judge Carmel also dismissed the free-riding charge since free- riding is not a tort in Israel.
Ruling that the complainants had not proved that enrichment rights in the scooter had accrued to them, he rejected the unjust enrichment charges. All charges were dismissed and the complainants were required to pay legal fees of NIS 20,000 (£5,300).
“ THE SUPREME COURT RULED IN THE 5768/94 A.SH.I.R. CASE THAT, IN CERTAIN CASES, IT IS POSSIBLE TO OBTAIN COMPENSATION UNDER THE DOCTRINE OF UNJUST ENRICHMENT, SPECIFICALLY WHERE THERE IS AN ADDITIONAL ELEMENT OF BAD FAITH, EVEN IF COMPLAINANTS HAVE FAILED TO REGISTER THEIR DESIGNS AND PATENTS LOCALLY.”
In this case, although the design is a clear copy, albeit with a different name, there is no case of passing-off and no trademark infringement.
I would argue that by failing to register its patent in Israel, Hsin Lung Accessories was opening the door to third parties marketing competing goods here. It had the opportunity to file for protection and failed to do so. Consequently, the plaintiffs have no case and the judge is correct.
However, the Supreme Court ruled in the 5768/94 A.Sh.I.R. case that, in certain cases, it is possible to obtain compensation under the doctrine of unjust enrichment, specifically where there is an additional element of bad faith, even if complainants have failed to register their designs and patents locally.
I would encourage exporters to Israel to ensure that they don’t have to rely on this case by registering their inventions as patents and registering their designs, thereby creating clear in rem rights in Israel. Nevertheless, A.Sh.I.R. is and remains good case law of the Supreme Court, and the Tel Aviv District Court is supposed to follow the precedent where applicable.
In this case, the plaintiff has a US patent that indicates that it is the inventor, while the competing manufacturers are selling as generic articles identical models to those of the patentees. In such a situation, I think that the A.Sh.I.R. ruling could be applied.
It would be useful for the plaintiffs to appeal the decision to the Supreme Court. Ten we would know if A.Sh.I.R is still good case law or not.
Dr. Michael Factor is a partner at JMB, Fa©tor & Co. He can be contacted at:
mfactor@israel-patents.co.il
84 World Intellectual Property Review September/October 2010
www.worldipreview.com
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