FANDZ International Law Group | Washington - Seattle - Israel

Israel’s canon of intellectual property law, as with many other areas of Israeli law, is based in the English law that prevailed in Palestine during the time of the British Mandate, prior to the creation of the State of Israel in 1948. Since the founding of the state, however, this body of law has evolved independently, through the adoption of new statutes, extensive amendments to the mandatory ordinances and through a growing body of case law, in an ongoing effort to keep pace with the rapidly advancing modern-day technologies.

Each of the three main areas of intellectual property law – patents, copyrights and trade marks – is regulated by a separate statute, with ancillary statutes covering areas of lesser importance.

Patent rights in Israel are expressed in the Patents Law - 1967 (“the Patents Law”). Since 1995, the Knesset has made substantive amendments to this Law, one of the most significant of which is discussed below.

In order to obtain a patent in Israel, one must register a patentable invention with the Registrar of Patents at the Ministry of Justice, and thereafter receive a grant of patent from the Registrar. It is notable that the Patents Law does not explicitly define an invention, but rather establishes criteria for what constitutes a patentable invention. These criteria require that an invention be:

a) new; (meaning unpublished anywhere in the world, whether in written, visual or audible manner, in such a manner that a person of knowledge in the relevant field could perform it or by exploitation or exhibition in such a manner that a person of knowledge in the relevant field could perform it (though the Patents Law does list certain exceptions whereby the right of the owner to the grant of a patent is not affected by publication, most notably where publication is without the owner’s consent and where the invention is displayed at an industrial or agricultural exhibition));

b) useful (meaning the promises of the inventor as to the benefits of the invention are fulfilled when the invention is used in accordance with its description in the patent) ;

d) an inventive step which would not have been obvious to the average person in the relevant field based on publications prior to the date on which application was filed in Israel.

The Supreme Court of Israel has held that the inventive step requirement does not require a significant advance. A “modest step” is sufficient, so long as there is an “inventive spark.” Israeli courts have developed additional tests to help determine if an invention constitutes an “inventive step,” such as the "long-felt need," "the commercial success" and the "substantially identical" tests, though none of these tests are conclusive. Israel’s Supreme Court has held that the existence of an “inventive step” will not be examined with hindsight (C.A. 47/87 Chesem Limited et. al. vs. Abraham Bachari et. al., 45 P.D. (V), 194).

The Patents Law expressly classifies some inventions as unpatentable regardless of their utility. These include: inventions that are unrelated to the industrial or agricultural fields, new varieties of plants and animals (except human engineered microbiological organisms), and processes (but not products) used for therapeutic treatment of humans (though diagnostic methods are patentable).

In addition, the courts and the Registrar of Patents have decided that systems or methods of education are not patentable inventions under Israeli law, and that an invention which substitutes a mechanical or other process for a mental process is also not patentable.

Computer programs are patentable so long as they are new, useful, capable of industrial or agricultural application and consist of an inventive step, and produce a physical effect by the combination of the computer program and some other material. Computer programs by themselves are not patentable, unless they are coupled to a physical object, since computer programs, or algorithms, are intellectual creations with no concrete manifestation, and are thus most appropriately protected by copyright law which protects rights in non-physical matters. The Jerusalem District Court in United Technologies Corporation vs. The Registrar of Patents and Trade Marks (VA 23/94) held that the definition of “process” for the purpose of patentability may include a system where the only new element is a computer program.

It is notable that the Patents Law allows for the patentability of an invention which may be illegal, immoral or contrary to public policy, although the registration of the patent does not legitimise such use.

The first step in the Israeli patent registration process is for the owner of the invention, either himself or through an Israeli lawyer or patent agent, to file a patent application with the Patents Office. The application consists of a formal application form along with a specification detailing the features of the patent and the modes of its utilisation. The specification comprises a description, drawings when necessary, and at least one claim defining the invention. Soon after the application is filed, the Patents Office publishes a notice, at the applicant’s expense, detailing the application in the Official Gazette (“Reshumot”).

The next step in the patent registration process is for a patent examiner (the “Examiner”) to examine the application in order to satisfy himself that the proposed invention meets with the Patents Law’s criteria as set out above. Additionally, the Examiner checks to make sure that the application forms sufficiently disclose the nature of the invention. The examination process may take two to three years from the date the application is filed, though an application for acceleration of the examination process may be filed. The final step in the patent registration process occurs when the Examiner either refuses the application or provisionally accepts it. In the latter case, a notice of acceptance is published by the Patents Office in Reshumot, the Patent Office’s Official Gazette. This publication initiates a three month period during which time any person may lodge an objection to the grant of the patent.

The grounds for opposition, which are listed in the Patents Law, are as follows:

a) A reason exists for which the Examiner is justified in refusing to accept the application;

b) The invention was previously used or a description of the invention was published; or

c) The person filing the objection, and not the applicant, is the actual owner of the invention.

If the Examiner accepts the opponent’s claim that he or she is the actual owner of the invention, then the Examiner has the discretion to grant the patent to the opposing party. In the event that no opposition is filed, or if all opposition is dismissed, the patent will be granted.

A decision of the Examiner may be appealed to the Registrar of Patents under the Patents Law. The Patents Law also provides that decisions of the Registrar may be appealed to the District Court.

If more than one application is filed covering the same invention, the first to be filed will be granted the patent, assuming that it meets the above-mentioned legal requirements.

Under the Patents Law, the grant of a patent entitles the patent owner to prevent any other person from exploiting the invention without authorization. Unauthorized exploitation includes practicing exactly what is claimed in the patent, or alternatively whereby only the main features are exploited. “Exploitation” includes any use of the invention and the derivation of benefit therefrom, except where such use is not of a commercial nature and is not practised on a commercial scale. An exception to this principle is discussed in section 2.12 below.

The term of the patent is 20 years from the date the application is filed, provided that renewal fees are paid to the Patents Office on the sixth, tenth, fourteenth and eighteenth anniversary of the filing date. If the renewal fee is not paid within six months of the due date, the patent expires, although it is possible to apply for restoration of the patent. It is important to note that anyone who exploits the patented invention after such an expiration may continue to exploit the patent without the requirement to pay royalties even if the patent is subsequently restored.

Under Section 64 of the Patents Law, it is possible to apply for a patent term extension in the event that the patent application or the patent itself was subject to administrative delays. This section is similar to 35 U.S.C. 154, which also allows for patent term extension for certain delays. Under Israeli law, the patent term extension will only be granted for medical-related patents. The grant of the patent term extension cannot extend the normal period of patent protection (20 years from the date of filing the patent application) by more than 5 years. It is important to note that in the event a marketing licence is issued for the patent, then the total amount of patent protection, both the original patent term and the patent term extension together, cannot exceed 14 years from the date the first marketing license agreement was received in a Convention state.

The grant of a patent term extension does not confer the same rights as a patent receives under its normal period of protection. Section 64H (d) provides that during the patent term extension the patent holder may prevent someone else from “marketing” the invention or from producing the invention “in order to market” the invention. Thus, a patent holder can only prevent someone from practicing his patented invention if they are doing so for marketing purposes. So long as someone practices the invention for some other purpose they would appear not to infringe the grant of the patent term extension.

The one who files a patent application is regarded as the owner of the invention, absent proof to the contrary. However, any natural or legal person may acquire ownership of a patent if he derives this title from the inventor by agreement, by assignment, or by operation of law.

A patent may be jointly owned. In such a case, the joint owners are presumed, in the absence of a written agreement or contrary legal provision, to own the rights embodied in the patent on equal terms and shares. Thus, each joint owner may individually, and without the consent of the other owners (barring a written agreement to the contrary), exploit the invention. However, if by such exploitation one joint owner deprives other joint owners of their ability to exploit the patent themselves then the other joint owners have a right to a reasonable royalty or a share in the profits from the exploitation of the first joint owner.

If an employee invents an invention during his employment and in consequences of his employment, then, absent a written agreement, the invention becomes the property of the employer. In such a case, the employee is entitled to remuneration for his or her invention, the sum of which is to be determined by a special royalties committee convened by the Patents Office.

Patent rights may be transferred either in writing or by operation of law, such as in the case of an employee under the criteria discussed above. An owner of a registered patent may assign the patent to someone else, or may grant an exclusive or non-exclusive licence for the exploitation of the patented invention. An exclusive licence places the licensee squarely in the shoes of the patent owner, thus preventing all others, including the patent owner, from exploiting the invention in Israel in competition with the licensee. A non-exclusive licence allows the licensee to exploit the invention according to the conditions of the licence. Where a patent is jointly owned, all joint owners must consent to the granting of a licence. Both assignments and licences must be registered with the Registrar of Patents in order for the licence to be valid against third parties.

Section 2 of Israel’s Income Tax Ordinance, which was passed into law before Israel became a state, deals with the tax consequences of selling and licensing patents. Although Israel now has a capital gains tax, at the time that the Income Tax Ordinance was written, Israeli tax law did not recognize capital gains, meaning that all income received, including income from the sale of a patent or any other form of intellectual property, was subject to income tax.

If the permanent sale of a patent is done within the normal scope of one’s business, then the patent sale is to be treated as either business income (under Section 2 (1) of the Income Tax Ordinance) or employment income (under Section 2 (2) of the Income Tax Ordinance). This is also true of licensing of patent rights. Distinguishing whether the scope of the patent is related to the business that one is in determines whether the transfer of patent rights is to be treated as income or capital gains.

Today, Israeli tax law recognizes capital gains tax for the sale of a capital asset. Although the sale of a patent can be thought of as the sale of a capital asset, Section 89c of the Income Tax Ordinance states that when the sale of an asset might be liable both to income tax and to capital gains tax, it will be seen as liable to income tax only.

The consequence of subjecting the transfer of patent rights to income tax as opposed to capital gains tax is not as severe as one might think. Under Israeli tax law, there is no separate tax bracket for capital gains tax. Capital gains are charged as income, meaning that capital gains are simply added to one’s income in a particular tax year.

An important distinction between Israeli capital gains tax and Israeli income tax is that under Israeli tax law, capital gains can be spread out over the previous 4 tax years. This could be a significant tax advantage if the patent owner was not in the highest tax bracket during this period of time. On the other hand, if the transfer of patent rights is treated as income tax, then the patent owner may deduct all business-related expenses in developing the invention and pursuing the patent. Any loss can be carried forward to set off future business income. The rules for deduction of expenses and set-off of past losses in the future are much more restrictive for capital gains transactions in Israel.

It is essential to note that each individual case involving the transfer of patent rights under Israeli law must be examined on its own merits and it is important to seek professional tax advice in this area.

Israel is a signatory to the Paris Convention for the Protection of Industrial Property (the “Convention”), which is an international agreement between countries designed to allow an inventor to file a patent application in a member country while claiming priority back to an earlier filed foreign patent application filed in another member country. Under the Paris Convention, the Patents Office grants those filing a patent application in Israel the ability to get the protection of an earlier filing date from a patent application filed in one of the member countries under certain conditions. In order to receive the benefit of the earlier, foreign filing date, the Israeli filed application must be: 1) filed within 12 months after the filing of the foreign application; 2) the applicant must request the right to claim priority to the foreign filed application within two months from the Israeli filed application; 3) a certified copy of the foreign application must be submitted; and 4) the foreign application and the Israeli application must be prima facie identical in the eyes of the Patent Registrar.

On June 1, 1996, Israel became a member country to the Patent Cooperation Treaty (the “PCT”). Under the PCT, one can file an international patent application, designating any number of member countries to which the applicant desires to pursue patent protection. Under the terms of the treaty, a national or resident of one of the member countries can file an international application which will be subject to an international search. The applicant may then opt to proceed with an international examination or file patent applications directly in any number of member countries. If, after proceeding with an international examination, the applicant is satisfied with the results, the applicant may then file patent applications for his or her invention in any number of member countries. One of the benefits of the PCT is to create a uniform application, which will satisfy the requirements of the member countries and therefore streamline the patent application process in each member country.

Under the combined provisions of the Paris Convention and the PCT, a national or resident of Israel may file a patent application in Israel (or any other member country to the Paris Convention), and then within twelve months from the filing date of this application, file a PCT application claiming priority back to the first filed application. Once the PCT application is filed, the applicant has eight more months to decide whether to proceed directly to a member country for filing, or opt for a PCT examination. If the applicant opts for the PCT examination, the applicant has an additional ten months by which time he or she must either file national patent applications directly in the member countries of his or her choosing, or abandon the patent application. Therefore, under the provisions of the Paris Convention and the PCT, one can file a patent application in Israel and then have up to 30 months to file a patent application covering the same invention in another country through the PCT framework and still maintain the benefit of the original filing date. Alternatively, one can file a patent application in a member country other than Israel, and then have up to 30 months to file a patent application in Israel through the PCT framework and still maintain the benefit of the original, foreign filing date.

Israel is also a party to the Trade-related aspects of intellectual property rights (TRIPS) agreement. As part of the General Agreement, Tariffs and Trade (GATT) agreement, the TRIPS pact brings trade related aspects of intellectual property into the framework of international trade. The TRIPS agreement sets universal minimal standards for protection of intellectual property, including patents, and countries that do not maintain those standards can be both sued in the World Trade Organization (WTO) and subject to trade sanctions.

A patent, by its very nature, is a monopoly. A patent permits its owner to prevent all others from practicing his or her invention for 20 years from the filing of the patent application (enforceable from the date the patent is issued). According to the Controller of Restrictive Practices, all patent owners are monopolists, whether or not a declaration has been made to this effect.

Israeli antitrust law is embodied in the Restrictive Business Practices Law - 1988 (the “RBPL”). Under the RBPL, there are three kinds of potentially anti-competitive activity: restrictive arrangements, mergers, and monopolies.

Patents, so long as they are properly registered, are specifically excluded from the RBPL’s prohibitions against restrictive arrangements. Thus, restrictive licensing arrangements are allowed under the RBPL when they are entered into by patent owners, though case law has added that in order for this exemption to apply, all restrictions in the agreement must apply to the right of using the patent in question (and may not, for example, restrict the use of other products).

When a patent is acquired in a business merger, and the merger is one that requires approval of the Controller of Restrictive Trade Practices (the “Controller”), such as when the merged company’s share of a market exceeds 50 percent, the legality of the transfer of patent ownership to the merged company is contingent upon approval of the merger.

Although patents have been excluded from the RBPL’s provisions regarding restrictive licensing arrangements, the RBPL’s prohibitions as to monopolies do apply to all patent holders. A patent holder, as a monopolist, is prohibited from abusing his or her monopoly. Thus, for example, a patent holder may not unreasonably refuse to supply a patented product or method, and the patent holder may not abuse his or her market position in a way which is likely to damage the public.

Given that the rationale behind granting a monopoly in the form of a patent is to ultimately benefit society, the Patents Law encourages patent holders to exploit their patent to its fullest capacity. When the patent owner refuses to exploit their patent or grant others a license to do so, the Patents Law provides a remedy to ensure that society will benefit from the patented invention. For example, when a patent owner does not manufacture his or her patented invention in Israel and refuses to licence a local manufacturer to produce the invention in Israel, he or she may be deemed to be abusing his monopoly. In such a case, the Patents Law may provide for the grant of a compulsory license. In order to receive a compulsory license, the applicant must apply to the Registrar of Patents and demonstrate both that there is an abuse of monopoly, and that the applicant will be able to cure this abuse by being allowed to manufacture the patented product in Israel. In deciding whether to grant a compulsory license, the Patents Law requires that the Registrar consider both the public interest and the applicant’s ability to remedy the situation.

In the event that the Registrar grants a compulsory license, the patent owner is nevertheless entitled to royalties which, absent a written agreement between the parties, are determined by the Registrar.

To further prevent patent abuse, the Registrar is also authorized to revoke the patent upon which a compulsory license was granted, if the Registrar is of the opinion that the grant of the compulsory licence did not remedy the abuse of monopoly.

The State of Israel may use a patented invention (whether registered or not) if such use is necessary for the defence of the country or for assuring the continuation of necessary supplies or services. As with eminent domain property issues in most countries, the government of Israel is required to compensate the inventor in the event that the government practices the inventor’s invention by necessity. In the absence of an agreement between the parties, a royalty committee set up by the government establishes the amount and kind of compensation. The government also enjoys broad powers to delay, restrict or practice patents in specific areas, such as those relating to nuclear power.

Legal proceedings for patent infringement may be filed by a patent owner, a joint owner or an exclusive licensee. Although one may not file suit for patent infringement until after the patent has been issued, the Israeli courts are permitted to find damages from infringements occurring from any point following publication of the patent application.

Patent infringement may take its form in any kind of commercial utilisation or exploitation. A defendant is permitted, as a defence, to challenge the validity of a patent. If the patent is found to be invalid, then the court will find in favour of the defendant and may revoke part or all of the patent.

Relief for patent infringement in Israel is granted in the form of damages and injunction. Damages are ascertained based on the following criteria: 1) actual damage caused to the plaintiff; 2) extent of the infringement; 3) actual profits received by the infringer; and 4) reasonable royalties which the infringer would have had to pay had there been a license. Punitive damages are provided when the infringer knowingly infringed on the plaintiff’s patent after receiving a warning from the patent owner or exclusive licensee. This is one of the few instances that Israeli law recognizes the right to receive punitive damages.

A plaintiff in a patent infringement proceeding may request either a temporary or permanent injunction. Usually, the plaintiff will apply to the District Court for an interlocutory injunction until the main proceedings can determine if and to what extent patent infringement exists.

The controlling law in this area is found in the case American Cyanamide vs. Hirshorn Gillerman (C.A. 324/64, 19 P.D.(I) 62). In this decision, the Supreme Court held that the requirements for interlocutory injunctions for patent infringements are the same as those governing the granting of interlocutory injunctions for all types of intellectual property. In order for a plaintiff to obtain an interlocutory injunction, he or she must show: 1) that the refusal to grant an injunction may cause irreparable damage to the applicant; 2) that the applicant has established a prima facie case for ownership of the patent and infringement of the patent by the defendant; and 3) that the balance of convenience tilts in favour of the applicant. The Court added that in most cases the balance of convenience will tilt in favour of the applicant assuming that the plaintiff is able to establish both prima facie infringement and the possibility of resultant injury.

When seeking injunctive relief, the plaintiff must make a security deposit in a sum to be determined by the court. This money will be returned to the plaintiff only if the outcome of the main proceedings are in his or her favour.

A defendant in infringement proceedings is permitted to raise any defence that could have been submitted in opposing the original grant of the patent. If the court accepts one such defence, the court has the authority to order that patent to be fully or partially revoked. A recent amendment to the Patents Law has made it clear that the defendant is entitled to avail himself of such defences with no restriction as to statute of limitation. In addition, standard affirmative defences are available to a defendant in infringement proceedings, including the plaintiff’s failure to file his infringement claim prior to the expiration of the seven year statute of limitation, as well as laches and unclean hands.

In the event that a patent owner’s patent is invalidated, or the patent owner otherwise lacks sufficient grounds to sue for infringement, the patent owner may seek alternative relief under the Civil Wrongs Ordinance (New Version) - 1968 on the basis of the tort of passing off (see Section 5) or, possibly, under the Unjust Enrichment Law - 1979.

An additional remedy can be found in Israel’s customs law, which provides for the detention of products that may infringe intellectual property rights. This law is the equivalent of § 337 of the U.S. Customs Law that allows patent owners to stop patent-infringing goods at the border. Section 200 of Israel’s Customs Ordinance states that if the customs director receives notification of apparently infringing goods, he must order that they be held for 3 business days (under special circumstances, they can be held for an additional 3 days). The customs director must notify the owner of the goods of the detention. The customs director must also notify the intellectual property rights owner, and tell that person that he or she must post a bank guarantee (in addition to the personal guarantee required by 7D of the Copyright Ordinance or section 69A of the Trademarks Ordinance).

The detention of goods will be cancelled after 3 working days if the guarantee is not posted, and after 10 working days if suit has not been filed in court (under special circumstances, this latter period can be extended by 10 more days). The bank guarantee must be enough to cover the costs of the detention and of any damage caused as a result thereof. The customs director must also provide the intellectual property rights owner with samples of the detained goods so that comparison assessments may be carried out at the expense of the rights owner.

In early 1998, the Knesset passed an amendment to the Patents Law that allowed patented inventions to be produced by non-patent owners on an experimental basis in Israel before the patent for the original invention had expired. The purpose of the amendment, initiated by the Israeli pharmaceutical industry, was to streamline the transition from a patented drug to a generic drug. The amendment stated that experimental use by a third party of a patented invention will not constitute “exploitation of an invention” and is thus not patent infringement, if the third party is producing the drug as part of an attempt to obtain a permit to market a product upon the expiration of the patent, if two conditions are met: 1) the experimental use is for purposes of obtaining a licence in either Israel or a country which permits such experimental use for purposes of obtaining a permit before the expiration of a patent; and 2) any product produced as part of the experimental use is used only for the purpose of obtaining the permit. This latter limitation also extends to the period after the patent expires, thus preventing one from building stock in a patented drug under the guise of experimental use only to release the stock in the generic drug immediately upon expiration of the patent.

Due to the potential for watering down the rights of patent owners, the amendment also provides for certain patents to have their terms extended for up to five additional years. In order to qualify for this term extension, the scope of a patent must be concerned with a pharmaceutical preparation which is the subject of regulatory approval in Israel, and an application must be made by the patentee or by an exclusive licensee within sixty days of the date of the registration in Israel of the pharmaceutical preparation in accordance with the Pharmacists’ Regulations.

The United States, the European Union, and major foreign pharmaceutical companies opposed the amendment, claiming that it breached Israel’s obligations under various international treaties. Israel responded by stating that the “experimental use” falls within the “protected exceptions” under the various treaties and therefore the amendment was similar to existing law in the United States and Europe, and as such, does not violate treaty obligations.

Therefore, Israel’s law remains that producing a patented drug will not be patent infringement, if such production is solely for the purpose of obtaining regulatory approval for the sale and/or use of the subject matter of the patent after the expiry of the patent, whether in Israel or in any other country having similar provisions.

Another recent amendment extends Israel’s implementation of the international protection of a patent applicant’s priority rights when filing under the Paris Convention for the Protection of Industrial Property or under the Patent Cooperation Treaty, formerly available with regard to applications filed in one of the Union countries also to those filed in a country member of the World Trade Organization.

Finally, of direct relevance to Israel’s patent law and in particular to the latest amendments dealing with the pharmaceuticals are the recent changes to the Pharmacists Ordinance, 1981, which deal with the registration, marketing, sale and parallel importation of pharmaceuticals, as well as provision of requested information regarding the manufacture, marketing and use of pharmaceuticals to governmental officials of the Ministry of Health.

The Patent Law does not specifically deal with parallel imports of patented products.[1] The difficulty in determining the law concerning parallel imports derives from the implicit contradiction between the principle of the protection of the rights of owners on the one hand, and the desire to aid the consumer by promoting free competition on the other. This latter desire has given rise to the “doctrine of exhaustion”, which states that once a patented item is sold, the patent holder is no longer entitled to block the item’s resale, it being deemed that the patentee’s right is “exhausted” by such a sale.[2]

The doctrine of exhaustion is thus a creature born of the clash of two competing principles. Inherent in this clash is the question of the extent to which one should be allowed to enjoy prevalence over the other - in other words, to what extent the doctrine of exhaustion should be applied.

There are two possibilities. The first is that the “market” should be held to refer only to a particular domestic market, and that the first sale by a patent owner of his product in that market should exhaust his rights in relation to that market only. This is commonly referred to as “domestic exhaustion”, and as such affords a higher level of protection to the patent owner than the alternative formulation. This second possibility is that the “market” should be taken to refer to the entire world. Under such a doctrine, commonly known as “international exhaustion”, a first sale anywhere in the world would exhaust the patent owner’s rights over the product. Once the product would be placed on the market by the owner, in whatever country, his patent rights would be deemed to be exhausted, and he would be unable to prevent the re-sale of the product by a purchaser, even into a different country.

The phenomenon of parallel importation is of course characterised by precisely the latter situation – that a third party purchases the owner’s product in one country (on the market of which it was placed by or with the owner’s consent), and then places it on the market in another without the owner’s consent, on the basis that the owner no longer has any right to control the disposition of that particular product. While this would be permissible under the “international” formulation of the doctrine of exhaustion, this would not be so if the doctrine were to be applied in its “domestic” form.

There had until recent years been no Israeli judicial pronouncement on the question of the extent to which the doctrine should be applied. Indeed, such rulings which had been made have tended in favour of the consumer, the leading Israeli case in this area being Ilan Lebowitz v. A. & Y. Eliyahu Ltd., 44 (2) P.D. 309 (1989). This case suggested that the law in Israel generally frowned upon limitations on parallel importation and the granting of monopolistic powers or other restrictions on freedom of competition.

However, a 1997 decision of the Tel Aviv District Court seemed to indicate a new Israeli judicial direction in this area (though it should be noted that, as a District Court decision only, the decision, even if not appealed (and it was not), would, under Israeli law, be used for guidance only, and would not be a binding precedent).

In this case[3], it was held that a party with an exclusive licence to exploit a patent in Israel (whether as licensee or the owner of the patent), which is duly registered at the Patent Registry, may, provided that it has not done anything which would estop it from doing so, block the parallel importation of the same product even when such product was purchased outside Israel from a party legally entitled to sell it there.

The Lebowitz case, which concerns trademarks, was distinguished on two grounds. The first, stated the judge in the case, is that there are substantive public interest differences between patents and trademarks.

She stated that the aim of a trademark is to protect the interest of the public as consumers against deceit as to the product (such as an inferior product bearing the trademark of a superior product). Under trademark law, (see below) it is not a breach of a trademark owner’s exclusive rights to sell an authentic product with an authentic trademark, and there is nothing to prevent a trader from buying a product from a manufacturer and selling it in competition, even into a country where the manufacturer is an exclusive importer (Geigy –v- Pazchem Ltd., CA 471/70).

By contrast, the aim of patent law is to grant a monopoly for a limited time to the original inventor, in order to encourage technical development and new products. “The law is based on a balance between freedom of competition and other public interests, which under certain circumstances are preferred over the freedom of competition principle.” There is no justification in the area of trademark law for the restriction of competition, given that even when a party who purchased from a trademark holder is competing with that trademark holder, there is no deceit of the public as to the source of the product.

The second ground for distinction was that the Lebowitz case concerned the right of an exclusive distributor to prevent the parallel importation into the territory for which it had the exclusive right of the product for which it had the exclusive right. It was held there that “an exclusive distribution right is a contractual right…not a property right. It does not restrict everyone…its effect is only on relations between the manufacturer and the distributor.”

This is not the case, stated the judge, with patent rights. Registration in the Patent Registry creates a property right, as against everyone, for the period of the patent.

Recently, though, this case, and a similar decision, were called into question by a judgment of the High Court of Justice in Bristol-Myers and others -v- The Ministers of Health and Justice (HCJ 5379/00), handed down in June 2001. The case concerned a petition by a number of major pharmaceutical manufacturers against the legality of a 1999 amendment to the Pharmacy Ordinance, which had the effect of, inter alia, increasing the possibility of the parallel importation into Israel of pharmaceutical products by certain bodies, thereby infringing upon the intellectual property rights of registered importers and manufacturers.

The leading judgment noted the conflict of principles outlined above, and that the question of whether parallel importation constituted a breach of patent rights would depend on which formulation of the doctrine of exhaustion was adopted. The judge noted further that the current law in Israel was as stated in the two District Court decisions, neither of which were appealed, namely that the “domestic” formulation should prevail.

However, the judge quoted with approval from a recent decision of a Swiss federal court, Kodak S.A. -v- Jumbo-Markt AG, in which it had been stated, inter alia, that while the principle of patent law may be to protect the patent-holder within the territory to which the law applies, this principle in itself does not automatically lead to the conclusion that one must follow the domestic doctrine of exhaustion. The judge went on to note that the acts of the primary legislator in making its amendments to the Pharmacy Ordinance might indeed indicate a change of approach, and that “the current approach of the legal system in Israel leans towards the international doctrine of exhaustion.”

One should note that this could be seen as a somewhat odd approach – while the point of the case was to examine the effectiveness of the amendments in light of the existing body of patent law, the judge reversed this approach and instead used the amendments to determine the state of patent law, and even noted explicitly that he was doing so. Nevertheless, and although the judge did say that for current purposes, a final decision on the question of parallel imports and patents could be left for another day, his opinion was to favour the international doctrine of exhaustion. For this, and other reasons, the petition against the amendments to the Pharmacy Ordinance was denied.

It is probably safe to say that in the wake of this decision, the law in Israel as to parallel imports has been thrown back into a state of flux. While Bristol-Myers has not entirely overruled the previous District Court decisions, as it was not a decision of a directly higher court (the Supreme Court was sitting as the High Court of Justice, and not as the highest court of appeals), and moreover dealt with the question only as part of its judgment of a larger issue, it does, as noted by the leading judgment, potentially indicate a new approach, and further clarification will have to await subsequent case law.

The Plant Breeders’ Rights Law – 1973 gives plant breeders protection for the creation of new varieties of plants. To a large extent, the Plant Breeders’ Rights Law follows the provisions of the Patents Law.

In order to obtain protection, a plant breeder must apply for registration in the Plant Breeders’ Register (which operates, unlike other registers, under the auspices of the Ministry of Agriculture). A plant variety is eligible for registration if it is new, sufficiently uniform in its basic qualities, its basic qualities are stable, and its description and characteristics remain unchanged after reproduction.

A plant variety is considered to be new if its multiplication material was not exploited more than one year before the date the application was filed, or if the plant variety was not published anywhere in the world prior to the application date.

The law includes the details of the registration procedures, such as; (filing an opposition and eligibility criteria), priority rules (first to file), cancellation, the breeder’s rights (preventing others from exploiting the registered plant of another), validity, compulsory licences, plants bred during employment service, and infringement proceedings (only the breeder may bring such proceedings and may be entitled to an injunction and damages).

It is permissible for an Israeli resident or citizen to register a plant that was bred outside of Israel. A breeder who has registered his or her new variety of plant receives a breeder’s monopoly for 15 years.

The Protection of Integrated Circuits Law – 1999 is the Israeli law that codifies the Treaty on Intellectual Property in Respect of Integrated Circuits. The Protection of Integrated Circuits Law, which came into effect on January 1, 2000, provides protection for the topographical design of an integrated circuit produced by a citizen or resident of Israel, or, by virtue of an order implementing TRIPS agreement, of a WTO member country, or by an individual or corporation maintaining an active business operation for such production in Israel or in a WTO member country.

In order to obtain protection, the topography must be original, meaning that it either was independently developed (and not commonly used at the time by others) or the integrated circuit is made up of components and connections that are commonly used, but the combination is itself original. Other aspects of the Protection of Integrated Circuits Law deal with infringement, period of protection (10 years from commercialisation or 15 years from creation, whichever is earlier), transfer and compulsory licences (which are issued by the Registrar of Patents after viewing the integrated circuit as a patented invention for purposes of determining whether a compulsory licence is warranted)

3) Copyright Law

The area of copyright law in Israel is governed by two British statutes, Copyright Act, 1911, as amended, and Copyright Ordinance, 1924, as amended, which were made applicable in 1924 during the period of the British Mandatory Administration before the establishment of the State of Israel in 1948. Both the Act and the Ordinance were promulgated long before the major advance of the technology introduced totally new media such as television, video and audio recordings and the Internet. The statutory provisions have since been amended to reflect the changing needs in the sphere of arts and entertainment industry, and a comprehensive reform of copyright law is under discussion in the Israeli legislative commission. In developing Israeli case law on copyright, Israeli courts have extensively drawn on English case law and are increasingly turning to developments in US case law.

Recent amendments to the copyright statutes strengthen the protection of copyrighted works, in particular through imposing more stringent penalties for infringement. Specific provisions have been added regarding the copyright protection of computer software. Mere possession of an infringing copy of a work has been made infringement.

Amendments to the copyright statutes and orders issued by the Minister of Justice by virtue of his powers under these statutes implement Israel’s obligations as a signatory to the international conventions on copyright protection.

Under the Copyright Act, copyright subsists in any original literary, dramatic, musical and artistic work first published in Israel or, if unpublished, created by a national or a resident of Israel. A work concurrently published in Israel and other countries is deemed to have been first published in Israel. For the purpose of determining the date of the first publication, a work published in a number of countries within 30 days of the first publication is deemed to have been published concurrently.

Copyright is created automatically by the fact of publication or creation of copyrightable work. Unlike patents which require registration and unlike trade marks which, unless registered, are entitled to a relatively limited protection, the copyright requires no formal registration procedure in order to come into being and no formal acts for its maintenance during its term. In the absence of a registration procedure under Israeli law, it is a recommended procedure for authors to document the date of their work. Certain organizations in the entertainment industry maintain “unofficial” proceedings for preserving a first copy of a work, e.g., a recording of a musical work, primarily for evidentiary purposes.

For purposes of copyright protection, the work must materialize into tangible form. Only with regard to a dramatic work, which has no tangible form, is there a statutory requirement of fixation (such as recording). With regard to other forms, such as musical work and oral university lectures, scholarly opinions are divided.

Copyright covers a broad range of works, such as manuals, textbooks, lectures, telephone directories; functional products, such as clothing, jewellery, furniture, are accorded very limited protection. If a work is eligible for protection as industrial design, it is not copyrighted. Works of architecture are accorded copyright protection only if they are architectural “masterpieces”.

Computer software for copyright purposes is treated like a literary work. The criminal offences and torts relating to the use of computer software, in particular interference with computer material, have been addressed in the Computers Law, 1995.

As Israel is a signatory to the Brussels version of the Berne Convention for the Protection of Literary and Artistic Works (the “Berne Convention”) and has adopted its provisions into its domestic law, Israeli law extends to any work first published in a state signatory to the Berne Convention or to any unpublished work created by a national of such a state, the same copyright protection as if it were first published in Israel or created by a national of Israel.

Israel is also a signatory to the Universal Copyright Convention, Geneva, 1952, and extends protection to works created in a foreign state which is not a signatory to the Berne Convention but is a signatory to the Universal Copyright Convention. Unlike the Berne Convention, the Universal Copyright Convention requires that a work, in order to qualify for copyright protection, bear a © sign.

Israel is a signatory to the Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of their Phonograms, 1971, and extends protection to foreign sound recordings made in a foreign state which is a signatory to the Convention.

3.3.1 Economic Rights

The copyright confers on its owner the exclusive right to produce or reproduce the work in any material form, to publish and distribute the work, to lease it, publicly to perform the work, to prepare derivative work and to convert the work from one form to another (e.g., translation, novelisation of non-literary work, dramatization of non-dramatic work).

The author of a work enjoys certain “moral rights”: he is entitled that his work shall bear his name; he is entitled not to have his work distorted, mutilated or altered, or to be subject to other derogatory action likely to harm his reputation, his honour or the value of the work.

An author’s moral rights are separate from the economic rights in the work, and the author retains moral rights in the work when the economic rights in the work belong to another person or are transferred to another person, in whole or in part.

The term of copyright under Israeli law is the lifetime of the author plus 70 years. In cases of co-authorship, the period of 70 years begins to run upon the death of the last surviving author.

Since there is no special statutory provisions with regard to the term of protection for motion pictures and television programs, such works will be treated, for the purposes of determining the term of protection, as collective works.

The term of copyrights in respect of records and photographs is 50 years from the making of a master record or of a negative, respectively.

The term of copyright of governmental publications is 50 years from the date of the first publication.

The term of protection granted to a foreign work in accordance with the Berne Convention will not exceed the term of protection granted to such work under the laws of the foreign state where it was published or created.

Foreign sound recordings made in a foreign state which is signatories to the Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of their Phonograms, 1971, are protected, if published, for the same term as Israeli sound recordings, i.e., fifty years from the date of the making of a master recording, and, if unpublished, in accordance with the law of the state of nationality of the author.

3.5.1 Author the First Owner

The first owner of the copyright is the author of the work. Since there is no copyright in ideas, the person who proposes a subject or an idea for a work is not the copyright owner.

Since Israeli law does not specifically address the ownership of copyright in motion pictures and there is no statutory presumption of ownership of a motion picture by the executive producer, absent a contractual stipulation to the contrary, a motion picture will be deemed a joint work of its various creators.

The person who orders or commissions a work is not the copyright owner, with the exception of the case where the work ordered in return for consideration, constitutes an engraving, a photograph, or a portrait, in which case the person who commissioned the work would be its owner, in the absence of a contractual stipulation to the contrary. With respect to photographs, the owner of the negative at the time of making the photograph is the owner of the work and its copyright.

Absent a contractual stipulation to the contrary, the rights of a person who commissioned a work will be limited to a license to make such use of the work as is necessary for the purpose from which the work was originally commissioned.

The copyright in a work created by an employee created during and as a result of his employment belongs to the employer, absent a contractual stipulation to the contrary or the employer’s waiver of his rights.

Original works done by or under the directions of the government are the government’s property.

The owner of a copyright may assign all or some of his rights (for example, the right to convert into another form or to translate) or may grant an exclusive or non-exclusive license to use all or some of his rights. An assignment may be made, or a license granted, for a certain country or venue, or for a certain period of time.

An assignment of a copyright in the work or the grant of a license to exploit a copyright must be in writing and signed by the owner of the right or his duly authorized agent, but no further formalities are required.

Infringement of copyright in a work occurs whenever a third party performs without the copyright owner’s permission any action which the owner of the copyright had the exclusive right to perform. There is no requirement that the owner’s permission be in writing.

The infringement must relate to a substantial part of the copyrighted work, that is, to a significant part of the work, which needs not be large. In proving that a later work infringes on the protected elements of an earlier work, the court will decide, as a question of fact, whether in the light of all circumstances of the case the similarity between the allegedly infringing work and the protected work is substantial enough to warrant a conclusion of infringement.

Exceptions which do not constitute infringement include fair dealing with the work for private study, research critique, review or newspaper summary, publication of short passages from literary works in a collection intended for teaching purposes at schools, and publication in a newspaper of a report of a lecture or political address.

Recording and copying a work for non-commercial private or home use does not constitute infringement of either copyright or performers’ rights. The government compensates the owners of copyrights and performance rights for the loss of income caused by such recording and copying for private and home use through the payment of royalties to the representative royalties companies which represent the majority of the owners of copyrights and performance rights.

Where a third party has unintentionally created a work identical or similar to a copyrighted work, such act will not constitute an infringement since, contrary to patent law principles, copyright infringement does not occur unless the infringing party knowingly imitated a protected work. Therefore, the plaintiff will not be entitled to any remedy other than an injunction.

In a civil action for the infringement of copyright, the work will be presumed to be protected by copyright and the plaintiff will be presumed to be the owner of the copyright, unless the defendant raises the issue of the existence of copyright or the plaintiff’s title. For evidentiary purposes, a rebuttable presumption of authorship holds that the author is the person whose name is indicated as the author.

Only the owner of copyrights – and not the author of the copyrighted work - may initiate infringement proceedings. Thus, where a copyright has been assigned, the assignee is the one entitled to bring infringement proceedings. A co-owner of copyrights may bring a suit without the need to join the other co-owners. Infringement proceedings can be brought against anyone who directly or indirectly breached or authorized the breach of copyrights.

An owner of the copyright who has been injured by the copyright infringement is entitled to all civil remedies available, such as an injunction, damages, and accounting for profits. The statute of limitations period for infringement proceedings to be initiated is three years from the date of the infringement.

A copyright owner will recover damages which represent his proven losses. Absent proof of the losses caused by the infringement, the owner of copyright may be awarded statutory compensation in the sum of $2,500 to $5,000 for each case of infringement (not each infringing copy).

For the infringement of moral rights, the court may award damages at its discretion, even absent a showing of any pecuniary loss.

The owner of the copyright may obtain temporary and subsequently permanent injunctions against the infringing party, in addition to damages. There is no need to prove losses in order to obtain an injunction. The court may grant an injunction or refuse to do so, in its discretion. With respect to temporary injunctions, the court will be guided by the same principles that govern the granting of injunctions under general law, including the test of the balance of damage to the plaintiff and inconvenience to the defendant.

A plaintiff may call the infringing defendant to account for the profits resulting from the infringement. Such remedy may not be granted in addition to damages.

All infringing copies of any work in which copyrights subsist and all plates used or intended to be used for the production of such infringing copies, are deemed to be the property of the owner. He may initiate proceedings to recover them, have them seized or destroyed, and/or excluded from importation. The court may direct at the end of the proceeding that assets produced as the result of an infringement of copyright or used in the process of infringement be destroyed.

With regard to infringing works of architecture, the court will not issue an injunction against the continuation of construction of such work, nor order the destruction thereof. The plaintiff may not recover the property in such infringing work. The only remedy available to a plaintiff in respect of a work of architecture is damages.

Any person may request the court to issue a declaration stating that a given action is or is not an infringement of copyright.

In case where the defendant proves that that at the time of the infringement he did not know and had no reason to suspect that the work was protected by copyright, the court will not grant any remedies except for an injunction.

Anyone who knowingly makes, sells, leases, offers for sale or lease, distributes, publicly exhibits, imports, or makes any plate for making infringing copies of a protected work, or causes the public presentation of a protected work, for commercial purposes, commits an offence punishable by imprisonment of up to three years and substantial fines.

The Performers’ and Broadcasters’ Rights Law, 1984 grants any performer the right to prevent others from recording his performance in any manner, from making copies of a recording of such performance, from broadcasting it in any form and from selling, leasing, distributing, importing and holding copies of a recording of his performance for commercial purposes, without his authorization. No authorization is required for fair use for purposes of private study, non-profit instruction, research, criticism or newspaper summary. The performer’s own right to do any of such acts is subject to third parties’ copyrights in the work performed and co-performers’ rights in the performance.

A performer is entitled to adequate royalties in respect of playing or presenting his performance, payable to a royalties organization which represents the largest number of performers in the country.

There is no restriction in Israeli law limiting the assignability of performers’ rights.

A performer enjoys certain moral rights, such as the right to have his name stated with every performance and on every recording of his performance or copy thereof and to have the integrity of his performance or to any recording of his performance or copy thereof preserved.

The Law applies to performances that take place in Israel, irrespective of the nationality or place of residence of the performer, and does not apply to performances outside Israel unless the Minister of Justice by an order extends the application of all or some of its provisions to foreign performances, as required by an international convention. Pursuant to Performers’ and Broadcasters’ Rights Order (TRIPS Agreement), 1999, certain provisions of the Performers’ and Broadcasters’ Rights Law have been extended to apply to performances that take place outside Israel, in accordance with the requirements of the Agreement on Trade-related Aspects of Intellectual Property Rights, Including Trade in Counterfeit Goods.

The rights of a broadcaster, defined as a person who makes a radio or television broadcast by virtue of lawful authority, in his broadcast are essentially similar to a performer’s rights in his performance. A broadcaster has the right to prevent others from recording his broadcast, from making copies of a recording of such broadcast, from broadcasting such recordings or copies thereof and from selling, leasing, distributing, importing and holding copies of a recording of his broadcast for commercial purposes, without his authorization. No authorization is required for private use or for fair use for purposes of private study, non-profit instruction, research and criticism. No protection is accorded to broadcasts which infringe copyrights or performers’ rights.

The term of a performer’s right is 50 years from the end of the year in which the original performance took place. The term of a broadcaster’s right is 25 years after the end of the year of the original broadcast.

Where a performer engaged in the performance as an employee for another and in the course of his employment, absent a contractual stipulation to the contrary the performer’s rights will belong to the employer for the first fifteen years and to the employee performer for the rest of the term.

Performers and broadcasters whose rights under the law are infringed are entitled to all remedies available under any law for infringement of copyright, mutatis mutandis. The court may also order the seizure of recordings of the performance or broadcast, or prevent their distribution. A seizure order may be granted against a person who possesses such recordings for commercial purposes, even if he was not a party to the court’s proceedings.

A person who knowingly infringes performers’ or broadcasters’ rights commits an offence punishable by imprisonment or fine.

Relevant to the area of copyright law and performers’ rights is the Protection of Privacy Law, 1981 (the “Privacy Law”), which protects individuals’ privacy.

The Privacy Law makes certain actions, if done without the consent of the individual concerned, an unlawful infringement of his privacy. Such actions include, inter alia, photographing or filming an individual in the privacy of his home, publishing a photograph or a filming of an individual in circumstances where the publication is liable to be humiliating or embarrassing to him, copying or making use of the content of an individual’s letter or writing not intended for publication, unless such writing has historical significance and 15 years have elapsed from the date of its creation, making use of a person’s name, nickname, likeness or voice, for profit, as well as publishing anything obtained as a result of an infringement of privacy. Such infringements of privacy constitute torts to which the provisions of the Civil Wrongs Ordinance will apply, and if done wilfully, offences punishable by imprisonment.

The courts have awarded the compensation to celebrities whose right to privacy has been infringed through the use of their image had been used in advertising campaigns without their consent, including where the image used in a commercial was that of an individual similar in appearance to the celebrity. Thus, the courts in effect recognized the celebrities’ right of publicity, derived from their right to privacy.

The Privacy Law further regulates the management of databases, excepting databases for private noncommercial use and databases which contain only names, addresses and means of communicating with individuals. A database requires registration under the Privacy Law, inter alia, if it contains any of the following: (a) information relating to more than 10,000 persons, or (b) sensitive information, e.g., information relating to a individual’s personality, private life, health, economic status, opinions and beliefs, or (c) information about persons which has not been delivered to the database by themselves, on their behalf or with their consent. The registration requirement does not apply to databases which contains only information published or made available to public inspection under any law. The Privacy Law sets out the registration and maintenance procedures and individuals’ rights of inspecting and requesting the correction of the database information relating to them.

The law on trade marks is governed by the Trade Marks Ordinance (New Version) – 1972. The Trade Marks Ordinance extends the protection accorded to trade marks also to service marks, certification marks and collective marks.

Marks ineligible for registration under the Ordinance have only such protection as is accorded in the framework of the tort of passing off and other torts under the Commercial Wrongs Law - 1999, whereas registered trade marks are additionally protected by the Trade Marks Ordinance. Ancillary statutes are Merchandise Marks Ordinance and the Protection of Appellations of Origin Law - 1965.

A trade mark is defined as a mark (letters, numerals, words, devices or other signs or a combination thereof, whether two or three dimensional) actually used, or intended to be used, by a person in relation to goods which he manufactures or deals with or in relation to services rendered by him. It is noteworthy that in Israel even intended future use is sufficient for a mark. Open use suffices to make a mark a trade mark and there is no requirement that the use be intensive. A trade mark must relate to specific actual or future goods and cannot relate solely to a marketing slogan.

To qualify for registration as a trade mark, a mark must be distinctive, i.e., capable of distinguishing the goods or services of its owner from those of others. A mark may be either inherently distinctive or, if the mark has been in actual use, may have become distinctive through extensive use which causes the public at large to identify it with its owner. Such acquired distinctiveness is termed a mark’s “secondary meaning”.

Appellations of origin are eligible for registration as trade marks provided that they are represented in a special manner or have acquired distinctiveness.

Marks ineligible for registration as trade marks include flags and emblems of Israel or other countries, marks which may be injurious to public order or morality or liable to deceive the public, marks which contain a false indication of origin, marks which encourage unfair trade competition, marks which contain a misleading geographical appellation or a false representation of the geographic origin of the goods.

A mark will not be eligible for registration if it contains an image of a person without his consent, or if it is identical with, or closely resembles to the point of confusion, another owner’s mark registered in respect of the same goods.

A mark composed of numerals, letters or words which are in common use in trade to designate or describe goods or which bear direct reference to their character and quality, will not be eligible for registration unless it has acquired distinctiveness.

A mark consisting of a place name or family name will not be eligible for registration unless represented in a special manner or unless it has acquired distinctiveness.

If a mark includes a name or description of any goods, the Registrar may refuse to register it in respect of other goods but he may nevertheless register it if in actual use the mark varies according to the goods for which it is used and if the applicant adds a note to that effect to his application.

If a mark is identical with, or closely resembles to the point of confusion, a well known trade mark which is not registered in Israel, it will not be eligible for registration in respect of the category of goods for which the well known mark is known. Where a well known trade mark is registered in Israel, a mark identical or closely resembling it will not be eligible for registration also in respect of goods that are not of the same category, if the applied-for mark is likely to indicate a connection between the applicant’s goods and the owner of the registered well known trade mark, who is liable to be injured by the use of the applied-for mark.

A person claiming the ownership of a mark used or intended to be used by him and wishing to register such mark, with respect to his goods or services may submit an application for the registration of a trade mark to the Registrar of Trade Marks, who may reject or accept it. Upon examining the application, the Registrar may reject the application for registration, or accept it, unconditionally or subject to conditions.

Upon accepting an application, the Registrar causes it to be published in a prescribed manner. Within three months of the publication thereof, an opposition to the registration of the trade mark may be lodged, claiming a reason for refusing registration of the mark as ineligible for registration claiming the opponent’s ownership of the mark.

Where no opposition has been lodged or where the opposition has been dismissed, the Registrar will register a trade mark and issue an official certificate to the applicant.

The Registrar’s decision to reject an application for registration of a trade mark or to permit or refuse the application for registration following the opposition are subject to appeal to the Supreme Court.

Subsequent to the registration, the trade mark owner may request technical changes in registration or addition or alteration to the trade mark that does not affect its identity substantially.

If different applicants seek, separately, to be registered as owners of identical or similar trade marks in respect of the same goods, the Registrar may refrain from registering any of the applicants, until their respective rights are determined in an agreement; if no agreement is reached, the Registrar shall refer the dispute to the Supreme Court. Where the Registrar finds that there was concurrent use in good faith or other special circumstances, the Registrar may permit the registration of identical or similar trade marks in respect of the same goods in the names of rival applicants as several owners, subject to, or without, limitations.

The priority will not be determined by the date of the application, but will depend on the determination of an applicant’s priority right to make use of the mark. While actual use is not required to apply for the registration of a mark, in case of competing applications, the respective rights of competing applicants will be determined based on the extent and the nature of the use that each of the applicants made of the requested mark prior to the application. By the end of the proceedings the Registrar may decide to refuse to grant the registration of the mark to any of the applicants.

The owner of a registered trade mark has an exclusive right to use the registered mark on the goods or services of the category for which the trade mark has been registered, and may prevent others from using the mark or a misleadingly similar mark without his authorization. The date of filing the application for the registration of a trade mark is deemed to be the date of its registration.

A trade mark owner may not prevent a person from using his true full name for conducting his business, provided that such person uses his first name together with his surname, written in letters of equal size. For this purpose, a person’s name will not include a changed name or a name of a legal entity. A trade mark owner may not prevent any person from using the name of his business, of the geographic name of the place of his business or of a genuine description of the character or quality of his goods.

If several persons are the registered owners of the identical or essentially identical mark in respect of identical goods, each of the owners will have the rights that a sole registered owner of that trade mark would have, but none will have the right to the exclusive use of that trade mark vis-à-vis any of the other co-owners, except to the extent that their respective rights have been determined by the Registrar or by the Supreme Court.

The initial registration of a trade mark is in effect for seven years, thereafter it may be renewed, upon the owner’s request, for additional 14-year periods each time, subject to the payment of renewal fees. Proof of use is not required for the purpose of renewal.

Failure to pay renewal fees will result in the trade mark being removed from the Register; after such removal, the trade mark will continue to be treated as a registered mark for purpose of applications for trademark registration for one year after its removal, unless no bona fide use was made of the trade mark during two years prior to its removal, or unless the use of the trade mark that is the subject of the application for registration is not liable to cause deception or confusion because of previous use of the trademark that was removed.

The owner of a trade mark may assign it, in writing, either with or without the business’s goodwill in the goods for which the trade mark has been registered, or may grant a license to use the trade mark in relation to some or all of the goods in respect of which it has been registered. An assignment or license must be registered with the Registrar, who may refuse to register them if he suspects that the transfer is likely to deceive the public, or is contrary to public order, and may impose limitations on a license. Registrar’s decisions may be appealed to the Supreme Court.

Within five years following the issuance of the certificate of registration of the trade mark, any person aggrieved by the registration of such trade mark may submit an application to strike off a trade mark from the register, either due to its ineligibility for registration under the Ordinance or due to the fact that its registration creates unfair competition in respect of the applicant’s rights in Israel, may be filed with the Registrar within five years. An application to strike off a mark due to the fact that the application for its registration was not submitted in good faith may be filed at any time. A mark of a foreign resident registered in his country of origin will not be struck off other than for a reason which would have precluded its registration under the Ordinance as a trade mark registered abroad.

Any interested person may submit an application to strike off a registered trade mark registered on the grounds that the registered owner had no bona fide intention to use the mark with respect to the goods for which it has been registered and that no such bona fide use has in fact been made of the mark for a period of two years prior to the date on which the application for cancellation is filed. Merely advertising in Israel such goods or services to which the trade mark relates will not suffice to prevent cancellation, bona fide use must consist of actually offering the goods or services in the market.

A trade mark will not be cancelled on the grounds of no use if no use was made due to the existence of special circumstances in commerce, and not due to an intention not to use, or to abandon, the mark in respect of the goods for which it was registered.

A person who has applied for registration of a trade mark registered in a foreign state which is a member of the Union for the Protection of Industrial Property by virtue of the Paris Convention for the Protection of Industrial Property or a WTO member (or a state which has an agreement with Israel for the mutual protection of trade marks) has, for six months following the application in such foreign state, a priority right to have his trade mark registered in Israel over any application filed after the date when his application in the foreign state was filed. The owner of a foreign trade mark registered in Israel will not be entitled to recover damages for infringement which took place prior to the actual registration of his trade mark in Israel.

The discretion of the Registrar in registering a foreign trade mark is more restricted than with regard to local applications for registration, and the Registrar shall grant any application for the registration of a trade mark registered as a trade mark in a state which is a member of the Union for the Protection of Industrial Property under the Paris Convention, even though he would be authorized to refuse it had it been an Israeli application for registration, unless an exception exists. The registration of a foreign trade mark will be refused, under such exception, if (a) its registration in Israel will infringe rights acquired in Israel by another person; or (b) it lacks the element of distinctiveness; or (c) it consists exclusively of signs or indications which may serve in commerce to designate the type, quality, quantity, identity, place of origin, intended purpose, time of production or value of the goods; or (d) it is customarily used in current language or in trade practices established in Israel in good faith; or (e) it is contrary to public law or morality, or (f) it is liable to confuse the public. A foreign trade mark registered in a state member of the Union for the Protection of Industrial Property under the Paris Convention will not be removed from the register unless the request for removal is based upon one of the aforesaid exceptions.

If such registration would have been subject to opposition but for its being a registered foreign trade mark, such registration may be challenged upon the lapse of its validity in its country of origin.

Infringement proceedings in respect of a registered or well known trade mark must be brought by the owner thereof, who enjoys the exclusive right to use his trade mark in respect of the goods for which it is registered. A licensee may not bring infringement proceedings, unless the owner is the plaintiff or defendant in such proceedings. The court will not entertain an infringement action with respect to an unregistered trade mark, other than an unregistered well known trade mark.

Infringement is defined in the Trade Marks Ordinance defines as an unauthorized use of a registered trade mark or of a similar mark in relation to the goods in respect of which the trade mark is registered or in relation to similar goods, or the unauthorized use of a registered trade mark in advertising goods of the category of goods in respect of which the mark is registered or in advertising goods of the same description. With regard to unregistered well known trade marks, infringement consists of an unauthorized use of such trade mark or a confusingly similar mark in relation to goods, in respect of which the mark is known, or goods of the same category. If a registered trade mark is a well known trade mark, it is an infringement to use it or a confusingly similar mark also in relation to goods that are not of the same category as the goods in respect of which it is registered, if such use would indicate a connection between the goods and the owner of the registered trade mark, who is liable to be injured by such use.

The plaintiff must establish that the defendant has used a mark which is identical or sufficiently similar mark to the registered mark in respect of goods for which it was registered.

In testing the deceptive similarity of the infringing g mark to the original mark, the courts have used a “triple test”, where the court compares the marks in terms of their sight and sound, the type of the goods in respect of which the marks are used, the target markets of purchasers customarily buying such goods, and all other circumstances. The issue examined by the court is whether because of the similarity between the marks, the ordinary customers behaving with the ordinary level of care actually mistake, or are liable to mistake, the goods of the one trader for the goods of the other trader. The court will also take into account the marketing channels used to market each trader’s goods and the purpose served by each mark and will use the “common sense” test..

In his defence against the alleged infringement, the defendant in the infringement proceedings may claim, inter alia, (a) that he truthfully used his own name, the name of his place of business or a genuine description of the character or quality of his goods; (b) that the mark has expired or been abandoned; (c) that the mark on which the plaintiff has based his proceedings was ineligible for registration (d) that he is entitled to use the mark due to extended and bona fide use; (e) that his action did not constitute an infringement, due to the substantive difference between his trade mark and that of the plaintiff.

In an action for infringement, a plaintiff will be entitled to damages and to an injunction, in addition to any other relief which the court may be competent to grant.

The Trade Marks Ordinance makes it a criminal offence punishable by imprisonment or fine:

(a) for a non-owner to make use of a registered trade mark or of an imitation of such a mark upon the same class of goods as that in respect of which the mark is registered;

(c) to use a duly registered mark of another owner in respect of goods of the same class in order to advertise his goods;

(d) to make, engrave, print or sell plates, dyes, blocks or other representations of a duly registered mark or any imitation thereof in order to enable any person other than the registered owner of that mark to make use of it in connection with goods of the same class as those for which the mark is registered.

The court may grant an injunction in lieu of or in addition to other penalties in criminal proceedings for various trade mark offences set forth in the Trade Marks Ordinance.

The court may order the forfeiture or destruction of any goods, wrapping, packing or advertising material or of blocks, dyes or any other apparatus for printing the mark or any other material in respect of which the offence was committed.

The Merchandise Marks Ordinance - 1929, as amended, provides that commercial exploitation of goods under forged or false trade marks or descriptions is a criminal offence and grants the court the power to order search of premises for such goods and to order seizure, forfeiture or destruction of such goods. Any proceeds resulting from the forfeiture of such goods may be awarded to any aggrieved party.

The Merchandise Marks Ordinance forbids to import, on pain of forfeiture and disposal, foreign goods bearing the name or trade mark of any Israeli entity, unless such name or trade mark is accompanied by an indication of the country in which such goods were made or produced. The Director of Customs, Excise and Trade may, at his discretion, forfeit such imported goods.

The Merchandise Ordinance contains special provisions restricting the use of the appellation Jaffa and its variations other than in respect of citrus fruit and of the name Jerusalem.

The Protection of Appellations of Origin Law – 1965 provides for the registration of local and foreign appellations of origin.

Anyone wishing to protect an appellation of origin, the state of origin of which is Israel, may apply to the Registrar of Trade Marks for registration of the appellation, the product which it would designate and its owner. The Law defines an appellation of origin “the geographic name of a country, area or place, included in the name of a product and intended to convey that such product has its origin there and that its quality and properties are essentially due to that geographic area, including its nature and inhabitants”.

The Registrar, upon ascertaining that the applicant has complied with the formalities established by the law and that the appellation is prima facie an appellation of origin, publishes the accepted application. An objection may be filed within three month periods following the publication, claiming that (a) the appellation intended for registration is not an appellation of origin but merely an indication of the source or type; or (b) the party claiming to be the owner of the appellation is not actually the owner. Absent an objection, or if an objection is dismissed, the Registrar will register the appellation. Subsequently, any interested party may apply to the Registrar for the cancellation of a registered appellation, on the grounds that the appellation has become a mere indication of a source or type.

The registration is valid for ten years from the date of application, which period may be renewed for additional ten-year periods upon the owner’s request.

With regard to foreign appellations of origin, the statute implements the provisions of the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration. An owner of a registered Israel appellation of origin may, through the Israeli Registrar, apply for the registration in the register of the International Bureau; foreign appellations are reviewed by the Registrar upon their registration in the register of the International Bureau, whereupon he decides on their registration or non-registration in Israel. In the event of the decision not to register a foreign appellation, the Registrar submits to the International Bureau a reasoned notification of his inability to assure protection of such foreign appellation of origin in Israel.

A recent amendment protects consumers from misleading use of geographical appellations. Using geographical appellations referring to geographical areas of WTO member states for products not coming from such areas in a way likely to mislead are deemed constitute unlawful use of geographic appellations. Lawful use exceptions include customary usage in Israel of a geographical appellation as a product name and the use of a person’s name in good faith that is not misleading to the public.

An infringement of an appellation of origin or an unlawful use of a geographical appellation is treated like a false commercial description, which is an offence under the Merchandise Marks Ordinance.

6.11.2 International Registration of Appellations of Origin under Lisbon Arrangements; Israel Appellations of Origin

On application of the owner of an appellation of origin registered in Israel, the Registrar will apply to the International Register for the registration of the appellation of origin in the International Register.

Upon being notified of the registration of a foreign appellation of origin in the International Register, the Registrar will register in Israel such foreign appellations of origin registered in the International Register which he finds eligible for protection in Israel based on the same examination to which Israel appellations of origin are subjected and the same procedures of objection and cancellation will apply. Alternatively, a foreign appellation registered in a country which has concluded a reciprocal agreement with Israel, may be registered in Israel.

The Registrar will notify the International Bureau of the registration of a foreign appellation of origin or of his inability to accord the protection in Israel to such foreign application, with reasons.

The effect of the registration of a foreign application shall be the same as its effect in the country of origin. Any interested person may request that a foreign appellation of origin be cancelled if it is no longer protected in its country of origin.

The tort of passing off is defined in Section 1 of the recently adopted Commercial Wrongs Law - 1999, which replaces Section 59 of the Civil Wrongs Ordinance (New Version) – 1968. This and other provisions of the Commercial Wrongs Law -1999 may be available in addition to any remedies under the Patents Law - 1967 and under the Trade Marks Ordinance (New Version) - 1972 and may provide a remedy to the owners of a non-patentable invention or a non-registered mark, who are unable to rely on the Patents Law and the Trade Marks Ordinance respectively.

Section 1 of the Commercial Wrongs Law -1999 provides that it is a tortious act for a dealer to misrepresent his product or service so as to cause the public erroneously to attribute such product or service to another dealer or erroneously to suppose such product or service connected with another dealer. It is statutorily clarified that a dealer’s use in good faith of his own name for the sale of goods or the provision of a service shall not, by itself, be taken to constitute passing off. The courts have already ruled that the new definition of the tort of passing off is not substantially different from the definition which applied prior to the adoption of the Commercial Wrongs Law –1999, and therefore the criteria developed in the case law with regard to the elements of passing off will continue to be applied by the courts. The passing off tort seeks primarily to protect the proprietary interest of the owners of a reputation and goodwill in their goods or services in such reputation and goodwill.

In a claim of passing off, the plaintiff must prove that he has acquired a reputation and goodwill in the trade name, trade mark, trade dress or shape of the product, to such an extent that the ordinary purchaser recognizes his goods or services through such trade mark, name or dress; and that the defendant is using an identical or similar trade mark, name or dress for the same or similar goods or services, such that the ordinary purchaser may be misled into thinking that the defendant’s goods are those of the plaintiff. In deciding on the issue of misleading similarity between the defendant's and the plaintiff’s goods, the court will be use the principles applicable to an infringement procedure under the Trade Marks Ordinance.

The remedies in respect of passing off will consist of an injunction, absolute or qualified, to prevent the defendant from continuing the tortious conduct, or damages, representing the losses incurred by the plaintiff, or a combination of damages and an injunction. As an alternative to damages, the defendant may be required to provide an accounting for profits which he has derived by his act of passing off. Under the Commercial Wrongs Law –1999 a plaintiff may be awarded statutory compensation without proof of damage. The court further has the authority to order search at the defendant’s premises, seizure and destruction of goods wrongfully produced or assets used for the wrongful production, or a transfer of such goods or assets to the plaintiff against the payment of the value such goods or assets would have had but for the commission of the tort.

In addition to restating the tort of passing off, Chapter 1 of the Commercial Wrongs Law - 1999 makes it a wrongful act for a dealer to publish any false description in respect of his own business, product or service or that of another dealer. Chapter 2 of the Commercial Wrongs Law -- 1999 makes it a wrongful act to obtain by unlawful means a trade secret or make use of a trade secret so obtained.

A violation of provisions of the Commercial Wrongs Law constitutes a civil wrong, to which the Civil Wrongs Ordinance (New Version) will apply. In addition to any remedies available under the Civil Wrongs Ordinance (New Version), remedies for misappropriation of a commercial secret may, at the court’s discretion, include statutory compensation without proof of damage, accounting, search and seizure, and destruction of assets produced in the course of the commission of a wrong or used for its commission, or a transfer of such assets to the plaintiff against the payment of the value such assets would have had but for the commission of the wrong.

Craig Weiss, Esquire, member of the US Patent & Trademark Bar and Arizona Bar; Sonia Shnyder, Advocate, member of the Israeli Bar; L. Marc Zell, Advocate, member of the bars of Israel, Washington D.C., Maryland and Virginia; Keith Shaw, Advocate, member of the bar of Israel, Solicitor of the Supreme Court of England and Wales; Zell & Co. Law Offices: Jerusalem, Tel Aviv and Washington, DC.

We would also like to thank Howard Poliner for his assistance in the preparation of this article.

[1] By the phrase “parallel import” we mean a third party’s importation into Israel of a product it has legally purchased in a country where the product has been put on the market, without having obtained the permission to import the product by the party possessing the intellectual property rights to such property.

[2] The rationale behind such a doctrine is as follows: that the purpose of a patent is to accord to an inventor an exclusive right of first placing the particular product on the market, and by giving him such a monopoly, to obtain reward for his creative effort. However, the doctrine runs, such principle should not be allowed to impact adversely upon the principle of the free movement of goods. Accordingly, and in order to promote this latter principle, it places a limit on the ability of the patent holder to exploit his monopoly.

[3] Yu Zheng and others -v- El Shay Import and Marketing and others (CC 1182/95)