I. Summary
In a precedential decision of the Israeli Registrar of Trade Marks dated July 9, 2006, it was held that, under certain conditions, identical marks may co-exist in the registry, subject to each registration being limited to a different or specific geographical area.
II. The Factual Background
1. On June 1996 an application was filed by Great Shape Ltd. to register the mark "GREAT SHAPE" in a stylized version in class 41 with respect to fitness clubs.
2. On September 1996 a similar application was filed by different applicants to register the mark "GREAT SHAPE" in a stylized version in class 41 with respect to aerobic exercise for women.
3. In view of the similarity between the applications, the Israeli Trade Marks Office informed the respective applicants that the applications will be regarded as rival applications and, subject to proceedings pursuant to Section 29 of the Trade Marks Ordinance, a decision as to which application will proceed to examination will be taken.
III. The Registrar's Decision
4. In general, when determining which applicant has a preferred right in a mark, the Registrar applies the following tests:
(a) the parties' good faith in choosing the requested mark;
(b) the scope of use of each party of the requested mark until the date of filing the application to register the mark and, also, until the date of the hearing before the Registrar; and
(c) the respective filing dates of the applications—this is a secondary test which does not provide significant preferability.
4. The above tests are not equally important and, sometimes, bad faith alone is sufficient to refuse an application.
5. Under certain circumstances, identical trademarks may co-exist in the same country. A geographical division between trademarks in Israel is very rare and may be permitted only in special circumstances where the basic principles of fair competition and the protection of consumers from being mislead are maintained.
6. Accordingly, the following accumulative criteria must be met for the purpose of considering co-existence of the sought marks:
(a) Neither of the parties has acquired worldwide or national goodwill in the mark.
(b) The product or service, subject of the relevant application, is of a local nature only.
(c) It is possible to clearly define the geographical area where each party carries out its business activity.
(d) Each party operates in a different and specific geographical area.
7. In view of Israel's small stature from a territorial aspect, the possibility of dividing use of a trademark according to geographical locations is limited and a decision allowing such division should be taken with caution.
8. Turning to the case at hand, the Registrar determined, inter alia, as follows:
(a) The fact that the name of one of the applicants is identical to the requested mark does not grant any preferability whatsoever. The registration of a company with the Registrar of Companies does not determine or establish rights in a trademark.
(b) Both parties failed to prove goodwill in the requested mark on a national scale. No surveys were filed in this respect and the evidence filed did not prove extensive investment in advertisements, but rather local publicity only. One of the applicants uses the requested mark only in Jerusalem while the other uses its mark only in other areas.
(c) The three-month difference in the filing dates of the respective applications is marginal.
(d) Both parties use the requested mark in good faith. Accordingly, it is not relevant who was the first to use the mark.
9. In the case at hand there is room for geographical division of the sought marks for the following reasons:
(a) Each party has local goodwill which may be clearly defined geographically.
(b) Subscription to a fitness club is of a local nature and a person usually becomes a member of a club near his home or work, and will seldom enter a fitness club bearing an identical name in a different city.
(c) One of the applicants operates only in Jerusalem and its surroundings, while the other operates in different areas.
(d) The two marks comprise a different design.
(e) The geographical division does not jeopardize the basic principles of the law of trademarks, namely—protecting a party's goodwill from exploitation by others and protecting the public from being mislead.
10. In view of the above, the examination of both applications shall proceed and in the event that both marks are accepted for registration, their registration will be conditional on limiting the use of each of the marks to different and specific geographical areas. Further, both registrations will include a disclaimer with respect to the words "GREAT" and "SHAPE", except when used in a combination of the mark.
Contributor:
Avi Ordo, Adv.
S. Horowitz & Co.
Tel-Aviv, Israel
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