Inter partes application proceeding does not preclude later opposition

In Sabon shel Pa'am (2000) Ltd v Yehuda Malchi (July 20 2006), the Israel commissioner of patents and trademarks has ruled that the resolution of an inter partes application proceeding in favour of one of the competing applicants does not necessarily preclude the unsuccessful party from subsequently challenging the competing mark in an opposition proceeding. However, the commissioner ruled that the doctrine of issue preclusion will apply with respect to those claims raised in the opposition that had previously been resolved between the parties in the inter partes proceeding.

Under Section 29 of the Israel Trademarks Ordinance, the commissioner may declare an inter partes proceeding between rival applications for identical or similar marks with respect to identical or similar goods or services. If the parties do not reach agreement, the commissioner shall determine which mark has superior rights. In this regard, the case law has developed a three-part test to determine superiority of right:

• priority of filing date;
  
  
• the extent of use of the mark by each party prior to the commencement of the proceeding (and even thereafter up to the time of the hearing); and
  
  
• the good faith of the respective applicants in the selection of their respective marks.

Under this procedure, the most important principle in determining the priority of right is that of good faith.

By contrast, under Section 24 of the ordinance, any person may file an opposition to a published mark. Here, the ultimate question is whether there is a likelihood of confusion (assuming that the opposition is not based on a claim of genericness and the like). The test for likelihood of confusion focuses on the following factors:

• the sight and sound of the two marks;
  
  
• the respective goods;
  
  
• the respective channels of trade;
  
  
• the respective types of customers;
  
  
• other relevant circumstances; and
  
  
• common sense.

In this case, the commissioner declared an inter partes proceeding under Section 29 of the ordinance between the rival marks, and ruled in favour of the mark SABON SHEL PA'AM. This mark proceeded to publication, whereupon the unsuccessful applicant filed an opposition. The successful applicant sought to dispose of the opposition by filing a motion for summary dismissal on the grounds that the alleged issues in dispute had already been resolved in the inter partes proceeding. The commissioner refused to grant the motion, noting that such a step is limited to extraordinary situations. Here, as described earlier, the test for determining priority of right in an inter partes proceeding differs from that for determining likelihood of confusion in an opposition. Thus, it cannot be categorically stated that a determination of a priority of right under Section 29 will necessarily dispose of the matters at issue within the context of an opposition proceeding.

That said, the commissioner recognized that there could be an overlap between the issues resolved in the inter partes proceeding and those subsequently raised in the opposition. To the extent that issues can be found to exist in a given situation, the commissioner was prepared to apply the doctrine of issue preclusion, whereby a party would be precluded from seeking to raise the claim again in the opposition. In the instant matter, the commissioner found that issue preclusion applied to two claims: (i) the good faith of the respondent in filing its application; and (ii) the amount of the respondent's investment in marketing and promotion. These issues could therefore not be raised again by the opponent. However, no other issues raised by the opponent were precluded by virtue of the commissioner's decision in the inter partes proceeding.

It would appear the commissioner's decision may well increase the potential costs in prosecuting a trademark application, since the resolution of the inter partes proceeding may have only a limited, if any, preclusive effect in a subsequent opposition action. In addition, one wonders whether the result in this case may affect the strategy employed in raising claims in an inter partes proceeding.

Neil Wilkof, Herzog Fox & Neeman, Tel Aviv