Foreign mark may coexist with local identical mark

Israel

In New Sound for Artistic Creation Ltd v Master Cassette Ltd (Civil Case 8617/01), the Jerusalem Magistrate's Court has ruled that the representative in Israel of the owner of a ROTANA mark registered in Saudi Arabia had the same right to use the mark in Israel as the Israeli owner of an identical mark.

New Sound for Artistic Creation Ltd, an Israeli company, registered the mark ROTANA in Israel for use on audio cassettes and CDs. Rotana, a Saudi Arabian producer of Arabic music, is the owner of the registered mark ROTANA in Saudi Arabia but not in Israel. However, Master Cassette Ltd, Rotana's exclusive licensee and distributor, used the ROTANA mark in Israel on Rotana's cassettes and CDs. New Sound sought an injunction granting it exclusive rights to the ROTANA mark and Master Cassette filed a counterclaim seeking exclusive rights for itself.

The Jerusalem Magistrate's Court held that neither New Sound, as owner of the Israeli registration, nor Master Cassette, as Rotana's representative, had an exclusive right to use the trademark ROTANA in Israel. The court acknowledged that most IP laws are territorial, at least in a formal sense. However, in considering Rotana's right to use the trademark ROTANA in Israel through its exclusive licensee and distributor, it held that some factors should be considered, in particular (i) international exposure and global competition, and (ii) the difficulty and expense involved in registering a trademark all over the world, at a stage when it is unclear to the manufacturer whether it is interested in doing business in certain territories. This led the court to conclude that the owner of a mark first registered outside Israel may be allowed to use that trademark in Israel, even if (i) it is not well known, and (ii) an identical trademark has been registered in the meantime by a local manufacturer in Israel.

The court further held that the owner of an earlier trademark registered outside of Israel has the right to use the mark in Israel, regardless of whether a conflicting local mark has been registered in good faith. (However, the court deferred the question of whether to expunge New Sound's trademark on the grounds of bad faith to the trademark registrar.)

Therefore, the court held that the sole advantage redounding to New Sound, by virtue of its trademark registration in Israel, is that it may not be prevented from using the trademark within that territory.

By dismissing almost completely the territorial nature of IP rights, the court could create a situation whereby a local manufacturer that validly registered a trademark and even developed its own goodwill within Israel may not have the exclusive right to use its mark.

Neil Wilkof, Herzog Fox & Neeman, Tel Aviv (with the assistance of Anat Paz, Manor Law Offices)

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