US decision against Israeli infringer enforceable in Israel, court rules

In Ahava USA Inc v JWG Ltd (Originating Motion 003137/04, October 10 2004), the District Court of Jerusalem has declared enforceable in Israel a trademark infringement ruling issued by the US District Court for the Southern District of New York against the operator of a website run from Israel.

The applicant, Ahava USA Inc, purchases skincare and beauty products manufactured in Israel by Dead Sea Laboratories Ltd. The products, which include minerals and other materials from the Dead Sea, are sold under the trademark AHAVA. Dead Sea Laboratories originally registered AHAVA in its name in the United States and on December 18 2003 it assigned the rights in the mark to Ahava USA.

The respondent, JWG Ltd, is an Israeli company that operates a website offering for sale around 2,000 products manufactured in Israel. JWG buys the products in Israel and sends them via courier or post to customers around the world, including the United States. Under a category called Dead Sea Cosmetics, JWG sold AHAVA-marked products made by Dead Sea Laboratories.

On January 29 2003 Ahava USA filed a lawsuit in the US District Court for the Southern District of New York claiming that JWG was in breach of the Lanham Act - the US trademark law - and the customs and importation laws of the United States and the state of New York. JWG argued that the court had no jurisdiction under the rules of private international law. The court rejected the contention and asserted that it had the authority to hear a claim that derives from US trademark law.

In the absence of a statement of defence, the court issued a judgment by default prohibiting JWG from importing, marketing or selling beauty and healthcare products that bear the AHAVA mark. The court also enjoined JWG from injuring Ahava USA's business reputation. JWG did not comply with the order, which lead Ahava USA to initiate contempt of court proceedings. On August 18 2003 the same court upheld Ahava USA's new claim and ordered JWG to pay $1,000 per day should it fail to obey the order. JWG ignored this second ruling.

On October 20 2003, the court issued another partial judgment by default ordering JWG to pay Ahava USA around $57,500 in compensation. JWG ignored this new judgment and Ahava USA moved to declare the US rulings enforceable in Israel.

The District Court of Jerusalem first noted that Section 3 of the Enforcement Law provides that a foreign judgment shall be enforceable in Israel only if its contents do not contradict public order. The court pointed out that considerations of public order should take into account globalization and the attempts to harmonize international laws - in particular in the field of intellectual property. The court also noted that its role was not that of an appeal court and, thus, it would not generally suffice for the defendant to claim that the foreign judgment was mistaken or causes injustice to obtain a new ruling in its favour.

In the case at hand, the court held that the US court's injunction against JWG on the basis of US trademark law did not go against public order in Israel. On the contrary, the court found that (i) the ruling was consistent with the Israeli unfair competition provisions, and (ii) trademark protection was expressed in a similar manner in the Lanham Act and Israeli trademark law.

The court considered at length JWG's claim that it was entitled to parallel import AHAVA products into the United States. The court noted that parallel importation is generally allowed under Israeli law as it balances the freedom of occupation against protection of intellectual property. Nevertheless, the court found that it is not possible to say that a foreign judgment that prohibits parallel exportation or importation is contrary to public order in Israel. Injury to a parallel importer is not synonymous with a reasonable negation of a basic right, although it entails injury to the freedom of occupation for the sake of a net benefit to the public. Indeed, while the mere prevention of parallel importation might be contrary to public order, Ahava USA had shown that the actual contents of the judgment did not conflict with public order.

The court then considered JWG's contention that Ahava USA's claim had not been served properly since (i) JWG had neither a representative nor an address in the United States, and (ii) JWG's entire activity, including its website, was run from Israel. The court held that the following facts were sufficient to create a link between JWG and the United States, giving the US court jurisdiction:

• JWG sent the products to the United States;
  
  
• the website was available in English;
  
  
• the prices were set in US dollars; and
  
  
• the website made some reference to a US tax issue.

Lastly, the court rejected JWG's contention that the transfer of the trademark rights had been made solely to prevent parallel importation and, thus, the US judgment was obtained by deceit. The court held that this claim required a very solid factual basis.

Thus, all of JWG's defences under Section 6 of the Enforcement Law failed, and the US ruling was deemed enforceable in Israel. JWG was also ordered to bear the costs of the proceeding, including attorneys fees, in the sum of IS10,000 (around $2,300).

David Gilat, Reinhold Cohn and Partners, Tel Aviv