Israel: No Time Limit To Cancel Trademark Registrations Filed In Bad Faith

Last Updated: 15 December 2017
Article by Luiz Blanc and David Gilat
Most Popular Article in Israel, December 2017

In Habitat Ltd v Habitat International (CF (TA Distr) 29227-03-16, November 13 2017) the Tel Aviv District Court under Judge Altuvia rejected a trademark infringement claim which had been filed by Mr Meerovich, the owner of a local furniture chain, against the purported use of the mark HABITAT in Israel by the international furniture chain, Habitat International.

The court accepted Habitat International's defence that the several HABITAT registrations owned by Meerovich since 1976 had been filed in bad faith in order to exploit the global goodwill attached to the mark HABITAT since the 1960s. The court ordered the cancellation of Meerovich's trademark registrations and asserted that, unless the parties reached a different agreement concerning the respective use of the mark HABITAT, the international chain could use in Israel its trademark HABITAT for the products and HABITAT INTERNATIONAL for its promotional activities. The court further ruled that Meerovich could continue using the mark HABITAT for his local chain because Habitat International had tolerated its continuous use for over 40 years; and besides sporadic sales, it had no presence in the Israeli market during this period.

Habitat International is the successor in interest of Habitat Designs Limited (HDL), which was established in 1964 by the internationally recognised British interior designer Sir Terence Conran. At the end of 1972 or 1973, Meerovich opened a furniture shop in Israel using the brand name HABITAT. At that time, HDL had already been successfully using the trademark HABITAT in Europe with respect to furniture and a variety of decorative articles for home interiors.

In 1975 Meerovich established the local company Habitat Ltd, and in 1976 he filed several trademarkapplications for HABITAT. At that time, HDL owned Israeli trademark registrations for HABITAT dated 1973. These old registrations were cited against and blocked the registration of its applications during their examination by the Israeli Trademarks Office.

In order to overcome the citations, Meerovich had filed cancellation actions against the old registrations on the grounds of non-use in Israel between 1975 and 1977. HDL decided against defending the old registrations in Israel and submitted a notice to the Israeli Trademarks Office to that effect. The notice included a statement that HDL reserved its right to use the mark regardless of the result of the cancellation action. Consequently, the old registrations were cancelled in 1978 and Meerovich obtained several trademark registrations for HABITAT in 1979.

In July 2015 Habitat International's plan to enter the Israeli market under their famous trademark HABITAT was reported in the local media, and Meerovich sent a warning letter to Habitat International regarding trademark infringement. In response, Habitat International filed an application for the cancellation of Meerovich's registration before the Israeli Trademarks Office. The application for cancellation was based, among other things, on the claim that Meerovich's registrations of the trademark HABITAT and its use thereof were done in bad faith because the trademark HABITAT was already an internationally recognised trademark at the end of the 1960s, well before the date on which Meerovich and Habitat Ltd had allegedly registered and started using the trademark HABITAT.

In March 2016 Meerovich filed a motion for an interlocutory injunction and a lawsuit against Habitat International and its local distributor before the Tel Aviv District Court, which aimed at preventing their use of the mark HABITAT in Israel. In April 2016 Habitat International filed a counterclaim which aimed at stopping the plaintiff's use of the mark HABITAT on grounds that included the infringement of a well-known mark and passing off. The parties agreed to suspend the parallel cancellation proceedings before the Israeli Trademarks Office, and that the office's decision will rely on the district court's decision.

The court dismissed Meerovich's trademark infringement claim. Having determined that it had filed and used its HABITAT registrations in bad faith in order to benefit from the international goodwill attached to the mark, the court ordered the cancellation of the registrations. The court further held that unless the parties reached a different agreement concerning the respective use of their HABITAT marks, Habitat International would be Unfair use Cancellation Infringement permitted to use in Israel the trademark HABITAT for its products and HABITAT INTERNATIONAL for its promotional activities.

Altuvia established that in order to determine whether Meerovich had acted in bad faith it was necessary to examine whether, on the filing date of its trademark registrations, the trademark HABITAT had already acquired international goodwill, and whether it was aware of the activities of the international chain before the date on which he sought to cancel the old registrations.
Altuvia analysed the extensive evidence of use brought by Habitat International since the 1960s and concluded that, based on such evidence, between 1964 and 1976 the international chain had already acquired international goodwill in the trademark HABITAT and Meerovich had been aware of the trademark HABITAT and HDL's activities.

The court also attributed significance to:

  • the fact that Meerovich was the sole witness of the plaintiffs;
  • the plaintiff's inadequate evidence; and
  • the adoption of a foreign name for the plaintiff's shop in Israel.

The plaintiff failed to provide evidence to support its contention that an advertising agency had chosen the mark. The court found several contradictions in the plaintiff's testimony, and the general impression of the witness was one of selective memory.

Regarding Meerovich's claims concerning the non-use of the mark HABITAT in Israel by the international chain between 1964 and 1976, the court concluded that while it was possible that a portion of the Israeli public neither visited Europe nor were exposed to the mark at that time – bearing in mind the absence of the Internet – the relevant question was whether Meerovich, who was engaged in the relevant field of business, was aware of the international chain's activities and the international use of the mark HABITAT.

In this regard, Altuvia accepted the testimony of Mr Smoler – a former manager in the furniture business who was active during the 1960s and 1970s – who testified that, at the time, the people engaged in the field of design in Israel were aware of the activities of the international chain and its use of the mark HABITAT in the field of home furnishings.

Altuvia asserted that the protection of famous marks in Israel was an established authority and had been set out by the Supreme Court in Bacardi v Bakardi. Further, bad faith was an overarching principle, irrespective of the notoriety of the mark in Israel.

The court dismissed Meerovich's claim that Habitat International was precluded from seeking cancellation of its registrations on the grounds of res judicata given that it had successfully cancelled HDL's old registrations. It further dismissed Meerovich's argument that Habitat International's counterclaim seeking the cancellation of its trademarks were time barred due to statute of limitations, and held that an action for cancellation on the grounds of bad faith may be filed at any time under Section 39(a1) of the Trademark Ordinance. Finally, it rejected Habitat International's counterclaim, determining that Meerovich could continue to use the mark HABITAT for its local chain, and that the international chain's lack of action had been in bad faith.

The decision is subject to appeal to the Supreme Court.

This article first appeared on WTR Daily, part of World Trademark Review, in December 2017. For further information, please go to www.worldtrademarkreview.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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