Case highlights adjudicator's power to require posting of bond

Reliance by the Israel Trademarks Office on the general rules of civil procedure extends to the power of the commissioner or adjudicator to require the posting of a bond by a non-Israel opponent. An instructive example of the exercise of this authority can be found in the recent decision of the adjudicator in an opposition filed by Super Medic (Medic Lite) Ltd and another against the registration of the mark NANOBIOTEX (Super Medic (Medic Lite) Ltd v Nanobiotex (Opposition No 243678, September 11 2014)). At issue was the request by the applicant that the court require the opponents to post a bond in the amount of IS80,000 (approximately $22,000).

The opponents relied on their registrations for the marks ACTIBIOTICA and ACTI-PEARL and a pending application for NANOBIOTICA as the basis for the opposition. Following the filing of the opposition, the applicant sought to have the adjudicator require the opponents to post a bond, arguing that the opponents may lack the economic means should they not prevail and costs be awarded. The applicant alleged that the opponents were private companies, with limited personal liability and effectively with only a sole shareholder, who operated the business from his home. The opponents challenged the claims made by the applicant as untrue and amounting to bad faith. The opponents stressed that their financial circumstances were solid and that their assets were not encumbered.

The adjudicator first stated that her authority to require the posting of a bond derived from the rules of civil procedure and the customary conduct in civil court cases, which was not in dispute. She explicitly referred to Section 353A of the Israel Companies Law, which empowers the court to impose a bond on the plaintiff at the request of the defendant, subject to the party proving sufficient financial wherewithal or that the particular facts do not justify the bond. If the party wanted to allege that the exception applied, it needed to do so by providing convincing evidence, especially with respect to its financial resources. While the opponents asserted in an affidavit that they possessed assets in addition to a private home, the adjudicator ruled that this showing was insufficient, stating that:

“we are dealing with private companies, whose manager is effectively the sole shareholder (holding 99% of the shares in opponent No 2 and all of the shares in opponent No 1). Except for the fact that the opponents do not have any income tax obligations, there is no other evidence regarding their financial condition.” 

The adjudicator observed that it may be appropriate to also consider the likelihood of success of the opposition on its merits in a situation where the likelihood was either very high or very weak. However, in the instant case, the parties had not submitted any evidence and, in any event, a ruling on this point was not necessary for the adjudicator to reach a decision on the motion. As a result, the adjudicator declined to apply an exception to the principle that the posting of a bond is applicable in such circumstances. However, taking all of the circumstances into account, she reduced the amount of the bond from the amount requested (IS80,000) to the amount of IS20,000 (approximately $5,500).

Despite the fact that the adjudicator stated that there was no dispute about her authority to impose a bond, the question can still be raised, as a matter of policy, of whether the application of the rules of civil procedure regarding the posting of a bond in connection with an opposition proceeding before the commissioner or adjudicator is as direct and straightforward as claimed.

Neil Wilkof, Dr Eyal Bressler & Co, Ramat-Gan