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What is Left of Parallel Imports? Discussing the Israeli Supreme Court’s Judgment in Schweppes

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Notes

  1. CivA 7934/20, Jafora Tavori Ltd. v. Ben Shlush Import and Export Ltd. (Nevo, 5 July 2022) (Isr.) (hereinafter: the Schweppes case, at paras. 2–3 of Justice Stein's ruling. For a translation of this decision into English, see this issue of IIC at https://doi.org/10.1007/s40319-023-01370-3.

  2. Id., at paras. 4–5 of Justice Stein’s ruling.

  3. CivC (CT District Court) 11125-05-19, Ben Shlush Import and Export Ltd. v. Jafora Tabori Ltd. (Nevo, 19 October 2020) (Isr.) (hereinafter: district court ruling in Schweppes). Unlike common lawsuits in trademark practice, this motion was filed before Ben Shlush marketed the products; thus, in fact, it sought permission to market the products, which is similar to a pre-ruling proceeding.

  4. See in Israeli case law, CivA 8619/14, Tommy Hilfiger Licensing LLC v. Swisa (Nevo, 15 February 2015) (hereinafter: Swisa) (Isr.).

  5. Id. The district court further denoted that Jafora should have internalized the commercial risk of possible parallel imports.

  6. In this case, Cadbury distributed its trademark rights over Schweppes in different countries and territories. District court ruling in Schweppes, supra note 3, at para. 9 of Justice Amir’s ruling.

  7. Id., at para. 8 of Justice Amir’s ruling.

  8. According to Jafora, the trademark owner in Ukraine only has rights over its territory, and it has nothing to do with Jafora’s Schweppes products. The Schweppes case, supra note 1, at para. 13 of Justice Stein’s ruling.

  9. Id., at para. 15 of Justice Stein’s ruling. Art. 47 states as follows: “Registration under this ordinance shall not prevent any genuine use by a person in his own name or in the name of his business or in the geographical name of his place of business, or of any of his predecessors in business, or the use by any person of any genuine description of the character or the quality of his goods”.

  10. Id., at paras. 17–23 of Justice Stein’s ruling.

  11. Id., at paras. 17–23 of Justice Stein’s ruling.

  12. Id., at para. 32 of Justice Stein’s ruling.

  13. See CivA 471/70, Y.R. Gaygy S.A. v. Pazcim Ltd., PD 24(2) 705 (1970) (Isr.); CivA 371/89, Leibovitch v. A. AT Y. Eliyahu Ltd., PD 44(2) 309 (1990) (Isr.).

  14. The Schweppes case, supra note 1, at para. 29 of Justice Stein’s ruling.

  15. Justice Stein reasoned that he doubts if the wording “Schweppes” provides a real description of Ben Shlush’s products, as it does not describe their taste. Id., at para. 41 of Justice Stein’s ruling.

  16. Id., at paras. 41–43 of Justice Stein’s ruling. Justice Stein referred in this regard to US case law in New Kids on the Block v. News Am. Pub., Inc., 971 F.2d 302 (9th Cir. 1992).

  17. Id., at para. 45 of Justice Stein’s ruling.

  18. Id., at para. 46 of Justice Stein’s ruling.

  19. Id., at para. A of Deputy Chief Justice Hendel’s ruling.

  20. For example, he explained, a man who purchased a trademarked soft drink is allowed to drink it and then dump it. Id.

  21. As such, he explained, after all, the sold products were in any case produced by the trademark owner, thus reselling a trademarked product, even if not by its trademark owner, still incentivizes the trademark owner to invest in its products, reaping the fruits of its investment. Id.

  22. The first provides that the law does not prevent any use of a certain trademark; and the second provides that the trademark cannot be used without the permission of its owner.

  23. Id., at para. B(1) of Deputy Chief Justice Hendel’s ruling.

  24. Deputy Chief Justice Hendel explained that perhaps the opposite is true, as the reason for purchasing the trademark is the assumption that consumers are attracted to the strong global reputation of the trademark, which does not change when changing the legal ownership of it. Id., at para. B(2) of Deputy Chief Justice Hendel’s ruling.

  25. According to him, allowing this has the potential to incentivize global companies, on the one hand, to sell their trademark rights in Israel in order to prevent parallel imports, and local entities, on the other hand, to purchase the trademark to receive wider property rights. Id.

  26. For this Deputy Chief Justice Hendel discussed several cases, which although they do not share the exact circumstances of our case, in his opinion, illustrate examples where courts chose the “two users” model. Id.

  27. Id., at para. C of Deputy Chief Justice Hendel’s ruling.

  28. “Further hearing” is a process in which the Supreme Court may rule to hold a special expanded panel in matters that involve fundamental questions or legal issues of particular importance.

  29. CivA 4897/22, Ben Shlush Ltd. v. Jafora-Tavori Ltd. (Nevo, 1 January 2023) (Isr.).

  30. Id., at paras. 49–50 of Justice Stein’s ruling.

  31. Id., at para. B(2) of Deputy Chief Justice Hendel’s ruling.

  32. Id., at para. 51 of Justice Stein’s ruling.

  33. See accompanying text to supra note 23.

  34. Id., at para. C of Deputy Chief Justice Hendel’s ruling.

  35. Gal M (2003) Competition policy for small market economies. Harvard University Press.

  36. See these concerns in case law, Swisa, supra note 4, at para. 20 of Justice Barak-Erez’s ruling.

  37. See the amendment to the Economic Competition Law, 1988 (Chapter D1: Concentration Groups).

  38. For discussion regarding the drawbacks of monopolies in trademarks, and how courts play a key role in this regard, see Zemer L, Morag O, Rosner Y (2023) Re-striping: predatory trademarks and common signs. Cardozo Arts & Ent. L.J. 41:533).

  39. The Schweppes case, supra note 1, at para. 21 of Justice Stein’s ruling (referring to Posner RA (2014) Economic analysis of law, 9th edn).

  40. Korah V (2001) The interface between intellectual property and antitrust: the European experience. Antitrust L.J. 69:801.

  41. Coverdale JF (1984) Trademarks and generic words: an effect-on-competition test. U. Chi. L. Rev. 51:868

  42. The Schweppes case, supra note 1, at para. 51 of Justice Stein’s ruling.

  43. Harvard Law Review Note (2021) Trademark injury in law and fact: a standing defense to modern infringement. Harv. L. Rev 135:667

  44. Zemer L, Morag O, Rosner Y (2023) Re-striping: predatory trademarks and common signs. Cardozo Arts & Ent. L.J. 41:533.

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Authors and Affiliations

  1. Ph.D.; Senior Lecturer, Harry Radzyner Law School, Reichman University, Herzliya, Israel

    Aviv Gaon

  2. Graduate Research Associate and LL.M. Student, Harry Radzyner Law School, Reichman University, Herzliya, Israel

    Or Morag

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  1. Aviv Gaon
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  2. Or Morag
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Correspondence to Aviv Gaon.

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The authors wish to thank Omer Hermoni for his excellent research, notes and comments on an earlier draft of this paper.

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Gaon, A., Morag, O. What is Left of Parallel Imports? Discussing the Israeli Supreme Court’s Judgment in Schweppes. IIC 54, 1158–1167 (2023). https://doi.org/10.1007/s40319-023-01370-3

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