Trademark Prosecution and Registration Strategies

Marks that are similar and were filed close together in time are normally examined by the registrar of trademarks who will render a decision based, among other things, on the good faith of the applicants and the extent of use of the marks at issue.

Commercial competition means that it is not uncommon for competitors to try and ride on the reputation of an existing mark by seeking to register one that is similar before the original mark is fully registered. Thus, in Israel it is increasingly frequent for similar trademarks to be filed more or less at the same time. Understanding the mechanism by which such conflicts are resolved will not only help trademark applicants to deal with unexpected clashes with similar trademarks, but will also provide a valuable tool in planning trademark registration strategies.

Section 29

Conflicting applications are regulated by Section 29 of the Trademarks Ordinance 1972: “Where separate applications are made by different persons to be registered as proprietors respectively of identical or similar to a misleading degree trademarks in respect of the same goods or description of goods, and the later application was filed before the acceptance of the prior application, the registrar may refrain from accepting the applications until their respective rights have been determined by agreement between them approved by the registrar. In the absence of such agreement or approval, the registrar shall decide, for reasons which shall be recorded, which application shall continue to be processed pursuant to the provisions of this ordinance.”

The first option to solve the conflict is to try to reach an agreement between the parties by which both trademarks proceed to registration. However, before deciding whether to embark on negotiations for this purpose it is important to understand the alternatives that will become relevant in the absence of an agreement. Furthermore, one must appreciate the considerations upon which the registrar of trademarks will base his or her decision, according to which in many cases he or she will grant to one of the two parties the sole right to register the trademark.

The registrar of trademarks and the courts have ruled extensively on this subject and, as a result, rules have crystallized for determining which application has the stronger right according to Section 29 of the ordinance. In short, the following will be considered:

• The good faith of each applicant in selecting the trademark it wishes to register;
• The extent of use of the mark made by the applicants up to the filing of their applications and beyond that time, up to the hearing in the Section 29 proceedings; and
• The filing dates of the competing trademark applications.

In Section 29 proceedings the filing dates carry the lightest evidentiary weight and the ruling relies heavily on issues of good faith and on the extent of use. However, the timing of the filing of a trademark application often has a bearing on the issue of the good faith of the applicant. For instance, the filing of a trademark application at a point in time when the competing mark was well known and widely used may indicate lack of good faith. On the other hand, a substantial delay in filing a trademark application may be considered a lack of diligence that may result in a loss of rights.

Burden of proof

An additional matter that should be taken into account is the burden of proof resulting from Section 29. In every legal proceeding between two parties the burden of proof is on the party that applies for a right or relief; however, in Section 29 proceedings both parties are equal and they both seek the same relief – that is, to prevent the registration of the competing mark. Accordingly, Section 29 proceedings put the same burden on both parties.

From the point of view of the registrar of trademarks, both parties to the proceedings are equal. Initially the registrar will investigate the reasons behind the selection of the marks to determine whether one of the parties (or both) made the selection in bad faith and with the intention to exploit the reputation of the other, or to damage it. If it is proved that the trademark was selected with the purpose of riding on the other party’s reputation through unfair competition, then that party's application will be rejected.

Use

Once both parties have passed the good- faith test the registrar will examine the extent of use that each has made of its mark. Initially, the registrar will examine the extent of use made up to the filing date of the application to determine whether the mark has acquired sufficient exposure to the relevant public in Israel, such that said public identifies the goods bearing the mark with the trademark owner. However, there is also a need to take into account the extent of use made in the period of time that has passed between the filing of the application and the hearing in the Section 29 proceedings – particularly if a number of years have gone by. As stated above, the filing date is of minor importance only and its weight will vary in each individual case.

Parallel use decision

The proceedings will usually end with a decision of the registrar of trademarks, which will grant seniority status to one of the two trademarks. However, the registrar has the power to rule that both trademarks can be used in parallel, under limitations decided by him or her, according to Section 30 of the ordinance: “Where it appears to the registrar that there is honest concurrent use, or where there are other special circumstances which in his [or her ] opinion justify the registration of identical or similar trademarks for the same goods or description of goods by more than one proprietor, the registrar may permit such registration subject to such conditions and limitations, if any, as he [or she] may think fit.”

Section 30 is not limited to cases of conflicting trademark applications according to Section 29, but it can also be applied in special cases in which an already registered trademark and a pending trademark application are involved. In the context of Section 29 it is a prerequisite for the application of Section 30 that none of the two conflicting marks has a preferred right over the other. In a case in which both parties have provided evidence of bona fide selection of their marks, when both marks are in use and both have acquired a reputation, and their respective filing dates do not impart a substantial advantage to one mark over the other, this option is viable. Such a ruling will also include special conditions that would make it possible for both trademarks to be used in parallel. Examples of such special conditions can be found in case law.

For instance, it was ruled that it is possible to rely on geographical limitations, although in view of the small size of Israel it is necessary to show that a local reputation has been acquired, taking into account the nature of the goods. On this basis competing marks for fitness clubs were registered (both including the words ‘GREAT SHAPE’ with added dissimilar graphics), under the condition that one club had to limit its use to a specific area, and the other was enjoined from operating in that area. In another decision regarding two manufacturers of alcoholic beverages, one of which produced wine and the other alcoholic beverages except wine, the registrar of trademarks ruled that this difference was sufficient to allow the registration of both competing marks (WINERIES OF GALILEE and WINERIES OF THE GALILEE MOUNTAINS, which in Hebrew sound even more similar) in Class 33.

This option of parallel use according to Section 30 is the exception to the rule, although the Supreme Court recently referred to it approvingly, which may encourage its wider use.

Abusing the proceedings

There is no statutory deadline to initiate proceedings according to Section 29 and therefore such proceedings can be misused to prevent or to delay substantially the registration of a trademark by the simple device of filing a competing application. A competitor may thus achieve two goals:

• To delay the registration of the competitor's mark.
• To put itself in a negotiating position.

Failing an agreement, such competitor will still stand to gain by confronting the competing mark through Section 29 proceedings rather than in opposition proceedings, in which the burden of proof is uneven.

Conclusion

Brand owners that are planning to file a trademark application in Israel and which are aware that conflicting marks exist in Israel or abroad should take all necessary steps, as early as possible, to show their good faith and use of their mark in commerce. Having this information ready will place them in a strong position should they need to initiate Section 29 proceedings.