Supreme Court confirms decision in respondent’s favour, despite criticising its behaviour

In Shlomo A Angel Inc v Y & A Berman Inc (CA 5066-10, May 30 2013), upholding a decision of the Tel Aviv District Court, the Supreme Court has ruled that the respondent's use of the mark LA'INYAN for a product identical to that sold by the plaintiff under the trademark EYNAN did not infringe the plaintiff's rights. The Supreme Court also amended a mistake made by the district court regarding the scope of protection granted to an unregistered well-known trademark in Israel.

The plaintiff, Angel Bakery, is a major manufacturer of bread and baked goods. It has been producing pre-germinated whole wheat bread under the registered trademark EYNAN (the Hebrew word for 'euglena') for nearly 20 years. The bread is marketed in cellophane packaging, half of which is transparent, using the colours brown, gold, black and white, under the name Lechem Eynan ('Eynan Bread'). The method for producing such bread is not protected by a patent or trade secret.

Another large manufacturer, Berman Bakery, started manufacturing the same kind of bread in 2006. It markets its product in cellophane packaging, half of which is also transparent, in similar colours and under the name Berman La'Inyan ('la'inyan' means 'to the point' in Hebrew). The marks BERMAN LA'INYAN and LECHEM LA'INYAN ('bread to the point') were applied for in 2006 and registered in 2008.

The plaintiff brought an action on the grounds of infringement of the registered mark EYNAN and the well-known mark LECHEM EYNAN, passing off and unjust enrichment. The district court found that neither the word 'la'inyan' nor the mark BERMAN LA'INYAN was sufficiently similar to the marks EYNAN or LECHEM EYNAN to constitute infringement. As a result, the plaintiff appealed to the Supreme Court.

The Supreme Court upheld the district court's decision, notwithstanding its finding that the respondent's explanation for using the word 'la'inyan' (ie, to convey that its product was "proper, appropriate and to the point") was "unconvincing, to say the least". The court held that, even if there was an intention to mislead consumers, the fact that there was no likelihood of confusion precluded the possibility that such intent would create a likelihood of confusion.

As to the test of confusion, the court noted the general rule that, with regard to shelf products, weight must be given to the visual - rather than phonetic - similarity. However, the aural test would also be applicable with regard to products that are picked from the shelf (eg, where a consumer searches for a product for the first time after being told about it by a friend).

The Supreme Court also noted that the district court's reasoning was wrong in one respect. According to the district court, a well-known mark is protected only against the unauthorised use of the mark itself, but not against the use of a confusingly similar mark. The Supreme Court reaffirmed that a well-known mark, whether registered or not, was protected against the unauthorised use of an identical or confusingly similar mark for goods in the same class.

The Supreme Court also made an interesting observation with respect to the scope of protection afforded to registered and unregistered well-known trademarks. The court noted that, according to the Trademark Ordinance, in order to establish the infringement of a well-known trademark with respect to goods of the same description, the plaintiff must show a "likelihood of confusion", regardless of whether the trademark is registered or not. It is only with respect to goods of a different description that a likelihood of association (ie, an "indication of a connection") would be sufficient in order to establish infringement of a registered well-known mark, provided that the interests of the owner of the registered trademark are likely to be damaged by such use (see Article 16(3) of the Agreement on Trade-Related Aspects of Intellectual Property Rights).

The Supreme Court left unresolved the question of whether the protection afforded to well-known trademarks may extend to local marks that do not enjoy recognition outside the jurisdiction of Israel.

The court also rejected the claims of unjust enrichment, false description and unfair interference. The court noted that, as it did not approve of the respondent's choice to use the word 'la'inyan', no costs would be awarded to the respondent.

David Gilat and Matan Kovacs, Gilat Bareket & Co, Reinhold Cohn Group, Tel Aviv