Attorney Gil Nadel, Gilad Paz
The incidents of parallel import are increasing in our country. Many brand names are being imported not only by the exclusive/official importers, but by others as well.
As far as the consumer is concerned, as long as these products are authentic and not counterfeit, this parallel import is a welcome phenomenon, since it encourages competition and results in lowered prices. And yet, the consumer usually feels less confident that this is indeed an authentic product when purchasing it from a parallel importer.
When the parallel import is of an authentic product, clearly the parallel importer is permitted to make use of the product's trademark (if such exists) in order to sell said product. In the case of clothing apparel, the trademark is printed onto the tag or directly onto the article of clothing.
But is the parallel importer permitted to make extensive use of a registered trademark, using it in advertisements, on the importer's website, or in his business' name?
The District Court of Tel Aviv recently ruled on this matter, delineating the limits of what is and is not permitted regarding the use of a trademark in parallel importing. The court determined that the use of the "Tommy Hilfiger" trademark by the parallel importer of this brand in the business' name and in the domain of their internet site was beyond proportion and is therefore a breach of the trademark.
The case:
Tommy Hilfiger products are imported to Israel by the official importer- Sakal. In addition, these products are imported by parallel import by Mahsan Hayevuan 42 Ltd. The clothes imported by Mahsan Hayevuan are originals, imported by this company directly from the US using the stock method.
Tommy Hilfiger International and Sakal claimed, among other things, that Mahsan Hayevuan is committing a breach of the "Tommy Hilfiger" trademark in its use of this name in the business' name, in the domain of its website and on the various advertising leaflets dispersed by the company.
The suit was submitted for a copious sum of no less than 5 million NIS, and included the demand that a restraining order to be issued against Mahsan Hayevuan, which would prohibit them from making use of the "Tommy Hilfiger" trademark for purposes of promoting their business.
Verdict:
The court determined that Mahsan Hayevuan's use of the name "Tommy Hilfiger" in their various marketing operations (in the business' name and logo, the website's domain and its design, their advertising flyers, etc.) exceeded the permissible use of this name by the parallel importer.
Furthermore, the court determined that the fact that Mahsan Hayevuan is a parallel importer and not the official importer of Tommy Hilfiger to Israel was not sufficiently emphasized.
Granted, the court noted that the manufacturer or the exclusive distributor had no right to prevent the parallel import of their products to Israel, but even in this case, it is important to determine the permissible use of the trademark by the parallel importer.
The court referred to clause 47 of the trademark directive which allows for the honest use of a trademark, and furthermore added that honest use is such that allows the business owner to accurately present his products to the consumer, yet in so doing, the trademark must not be used in excess any more than is necessary.
Upon examining Mahsan Hayevuan's use of the trademark, the court determined that its use was imperative to identifying the origin of the clothes, and any use that exceeds the identification of the clothes necessitates the company to note that this is a parallel import. The court determined that the use of the trademark in the business' name and in the internet site's domain may deceive the consumer in respect to the products' origin, since the consumer may falsely concluded that these products were imported directly from the manufacturer.
Finally the court determined that the trademark had been breached and deferred all other claims made by Tommy Hilfiger and Sakal (passing off, false description, unjust enrichment).
In the end, the suit was partially accepted, and Mahsan Hayevuan and its owner, Mr. Elad Suissa, was charged with paying a compensation fee relatively lower than the original sum that was claimed, at a total of approximately NIS 460,000 and an additional NIS 80,000 for legal expenses and attorney fees. As for the restraining order, this was given only in reference to a number of trademark uses made by Mahsan Hayevuan.
[civil suite (district court of Tel Aviv) 11296-09-10 Tommy Hilfiger Licensing LLC and others vs. Elad Menahem Suissa and others, Judge Itzhak Inbar, verdict as of July 31, 2012. Party representatives: on behalf of Tommy Hilfiger- Attorneys Tzobri and Sheinin. On behalf of Mahsan Hayevuan- Attorney Hayat]
Notes:
Conflicts between an official importer and a parallel importer have often been brought to court. In the case of original goods, not counterfeit, the parallel importer usually has the upper hand. The courts have continuously stated that parallel importing is a welcome phenomenon, promoting free competition, benefiting the consumer and there is no real legal basis to prevent it so long as there is no doubt as to the products' authenticity, as opposed to counterfeit products that are liable to deceive the public.
For instance, in late 2011, the court deferred the attempt of an official importer of drawers and drawer fixtures for assembly manufactured in Germany to prevent parallel import of these products, claiming that the parallel importer was removing the product code from the products, was not properly packaging them and did not provide assistance after the purchase had been made [civil suite (Central district court) 22009-10-11 Birman Wood and Fixtures Ltd. vs. Nissim Farjun Trading (2000) Ltd. and others, decision of November 7, 2011, Judge Abraham Yaakov].
In addition, in late 2010, the television manufacturer, Philips, attempted to prevent the parallel import of LCD television sets from east Asia to Israel, claiming that the parallel importer was erasing the serial number and the model number off of the packaging and the products themselves, and in so doing was violating its rights, making it impossible for them to recall their products should a manufacturing defect be discovered, and illegally interfering with their chain of distribution. The court determined that so long as these are authentic products, there is no cause to restrict the parallel importer and deferred this claim. [civil suit (Central district court) 25756-06-10 Electronifs Koninklijke Philips and others vs. Electronika Raivy (2002) Ltd. (December 19, 2010)].
In 2007, Dyson, a manufacturer of vacuum cleaners, attempted to prevent the parallel import of vacuum cleaners to Israel claiming that the model numbers were removed from them, thereby rendering it impossible for them to trace the product seller to the parallel importer, and furthermore stating that these models had not been intended for sale in Israel, thereby deceiving the consumers. The court ruled that these are authentic products, and there was no proof of deception, thereby rejected this lawsuit. [Civil suite (District court of Haifa) 1089/05 Dyson Limited and others vs. Y. Shalom Ltd. and others (Nov. 14, 2007)]
In contrast, in 2006 a lawsuit served by the perfume manufacturer JOOP! against the parallel import of authentic perfumes was accepted. In this case, it was determined that in the event an assembly line mark is removed, while this does not constitute a breach of trademark since these are in fact authentic perfumes, in some cases this sort of action may be construed as cause for prosecution as unjust enrichment, and as the offence of causing a breach of contract since the parallel importer, according to the claim, knowingly causes a breach of the contract between the manufacturer and his official distributor in every country. In this case it was ruled that since these perfumes were purchased by the parallel importer in Europe in free trade territory, an area where JOOP! had an well-organized and supervised distribution network, this action harmed JOOP!'s legitimate expectation to supervise this network, and so the lawsuit was accepted and the parallel import was prevented. [ civil suite (District court of Tel Aviv) 1171/97 GmbH JOOP! and others vs. Kol Perfume Ltd. and others (June 18, 2006).
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