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“Innocent Infringer” Defence in Trademark Infringement Actions in Israel?
Israel’s Supreme Court, which is the highest judicial authority in the country, has just issued (24th November 2014) an interesting ruling on the question of whether or not there can exist an “innocent infringer” defence to trademark infringement actions in Israel.

The Supreme Court sat as court of appeal on a ruling issued by the Tel-Aviv District Court on November 13, 2012. The District Court’s ruling was upheld on appeal.

This case (pun intended…) relates to suitcases which were imported into Israel by the Respondents, via a broker, and which were marked with a trademark that was registered in Israel in the name of the Appellant. The suitcases were proved to be counterfeit, and were destroyed, but the Appellant sued the Respondents for damages on account of trademark infringement and related causes of action.

The District Court had ruled that
although the act of importation of counterfeit suitcases into Israel facts did amount to an infringement of the trademark, nevertheless, this infringement could not be attributed to the Respondents, since they had neither ordered, nor intended to order, counterfeit products; and the infringement was therefore carried out by third parties, without the knowledge or consent, and against the interests of, the Respondents.

On appeal, the Appellant argued that the District Court was, in effect, rejecting the claim of trademark infringement based on an absence of mens rea - culpable intent - on the part of the Respondents, even though Israeli trademark law (in line with trademark law in most countries of the world) does not require any culpable intent on the part of a trademark infringer.

In upholding the District Court’s ruling, however, the Supreme Court held that the District Court had not denied that trademark infringement had taken place, it had simply ruled that the infringement could not be attributed to the Respondents.

Upon careful consideration, this ruling does appear fair. In cases in which the defendants in a trademark infringement action succeed in proving to the court that they did not order counterfeit products, had no intention of purchasing counterfeit products, wished to purchased genuine products, and were simply the innocent victims of a third party scam, it would not be reasonable to order them to pay damages. The court did not sanction sale of the counterfeit items - it simply held that the Respondents could not be held responsible for the trademark infringement.

However, one cannot escape the feeling that this ruling is going to open the floodgates on “innocent infringement” arguments of defence in the face of trademark infringement lawsuits. It seems more than likely that every defendant in an infringement action will now argue that they were duped by a third party - most likely abroad, and out of reach.

Although this is a defence which will need to be proved by the defendant, with the burden of proof resting squarely with such defendant, it nevertheless has the potential of being somewhat problematic.

Up until now, an importer, being aware that it could be held liable for trademark infringement without the need for the plaintiff to prove any intent on the part of the importer, would have taken extra special care to make sure that the products it was importing were genuine. In the wake of this Supreme Court ruling, however, we may be faced with importers who go to great lengths to “cover their tracks” and leave what appears to be an innocent trail, even if they actually suspect the products not to be genuine, in the hope that this will enable them to support an “innocent infringer” defence, if caught. Their efforts, instead of being expended in verifying the genuine nature of the goods, might now be directed towards preparing the ground for future claims of innocence.

Such an infringer might weigh up the pros and cons and conclude that the potential benefits from the sale of counterfeit goods might well outweigh the relatively low exposure if caught, since it would not be ordered to pay damages if it could prove a defence of “innocence”.

The courts will need to be mindful of this, and establish a very high threshold of certainty in order for a defendant to lift the burden of proof and enjoy this defence.

Reif & Reif specialises in the field of intellectual property, in general, and matters of trademark enforcement, in particular. We will be happy to assist you with any action that you may need taken to protect your trademark rights in Israel, or to defend you against unjustified claims of trademark infringement.
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