Oct 2022

Israel

Author

Contributing Firm

Introduction

The enforcement of IP rights and confronting the import and distribution of counterfeits is given great importance in IP laws and other legislation in Israel. The Israeli enforcement authorities provide rights owners with appropriate and efficient means for enforcing their IP rights. 

Israel is also a member of most major international treaties on Intellectual Property rights, including the Trade Related Aspects of Intellectual Property (TRIPS), which is the most relevant treaty to anti-counterfeiting. 

The laws governing anti-counterfeiting are:

  • Trademark Ordinance [New Version], 5732-1972. 
  • Copyright Law, 5768-2007.
  • Commercial Wrongs Law, 5759-1999.
  • Customs Ordinance [New Version].
  • Merchandise Marks Ordinance 1929, Amended. 
  • Consumer Protection Law, 5741-1981.
  • Unjust Enrichment Law, 5739-1979.
  • Design Law, 5777-2017(the former Patents and Designs Ordinance still governs designs filed before the new Law came into force).

A recent change to the legal framework in Israel is the legislation of the Design Law, 5777-2017, which took effect on 7 August 2018, and replaced the former Patents and Designs Ordinance (which still governs designs filed before the new Law came into force).

The importation and distribution of goods infringing a design registered in accordance with the new Law constitutes a criminal offence, whereas formerly, design infringement merely constituted a civil wrong. Furthermore, in accordance with the new Design Law, the Customs Authorities are authorized to detain goods suspected of infringing registered designs. 

Currently, there are no anticipated changes in the legislation in Israel.

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1 . Criminal prosecution & civil enforcement

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1.1. Criminal prosecution

Special units in the Israeli police force are dedicated to intellectual property offenses. 

These police IP units are an excellent resource for seizing counterfeits in the marketplace. By utilizing police resources, rights owners may conduct raids and seize counterfeit goods in an efficient and cost-effective manner. 

A successful search-and-seizure will ensure that counterfeit products are removed from the market and may reveal further information and documents related to the channels of importation and distribution, thereby potentially opening up additional avenues for stopping the distribution of counterfeits.

The rights owner must obtain evidence regarding the distribution of counterfeits before approaching the police IP units. Such evidence can include a purchased sample of the counterfeit goods. The rights owner may then file a complaint with the IP unit responsible for the region in which distribution of the counterfeits is taking place. The police will then initiate a criminal investigation and conduct a search-and-seizure on the counterfeiter’s premises.

The search-and-seizure will be accompanied by a representative on behalf of the rights owner, who has been authorized to provide an initial opinion on site regarding the counterfeit nature of the goods. Shortly after the seizure takes place, a detailed opinion including details as to why the goods have been determined as counterfeit should be filed with the police, along with the relevant Israeli trademark registration certificates. 

With this approach, the rights owner can seize counterfeit goods from the marketplace without having to file a civil ex parte search and seizure application, for which costs are considerably higher. 

Furthermore, a criminal investigation by the police could lead to filing of an indictment against the counterfeiter, creating a deterrent for other counterfeiters, who may not want to risk criminal charges and proceedings. 

Rights owners also have the right to file a private criminal complaint with the court, and possibly a petition for a criminal search-and-seizure order. In these cases, the rights owners fulfil the role of the state prosecutor and bear the burden of proof. In some cases, the state prosecution will assume responsibility over the complaint. While this right to file a private criminal complaint was commonly exercised in the past (before the police IP units were established), today, rights owners choose the option of utilizing police resources to handle criminal proceedings as well as seizures. 

Trademark infringement, copyright infringement, and, as of recently, the infringement of designs registered in accordance with the new Design Law, are typically the subject matter for criminal proceedings. 

The importation and distribution of counterfeit goods may amount to a criminal offence according to the following statutes:

  • Section 60 of the Trademark Ordinance [New Version], 5732-1972 (stipulates a penalty of a fine, or up to 3 years' imprisonment). 
  • Section 3(2) of the Merchandise Marks Ordinance 1929, Amended (stipulates a penalty of a fine, or up to 1 year imprisonment, or both).
  • Sections 61-63 of the Copyright Law, 5768-2007 (stipulates a penalty of a fine, or up to 5 years' imprisonment).
  • Sections 92-93 of the Design Law, 5777-2017 (stipulates a penalty of a fine).
  • Section 23(1) of Consumer Protection Law, 5741-1981(stipulates a penalty of a fine, or up to 1 year imprisonment).

The burden of proof is the burden required in a criminal proceeding, which is particularly strict - beyond any reasonable doubt.

Cooperation with the police depends on the rights owner’s support and willingness to provide the police, in a timely manner, with opinions regarding the counterfeit nature of the goods given by a competent officer of the rights owner, as well as support for the criminal proceedings, if initiated, to the extent required.

Israel has no dedicated or specialized courts to deal with Intellectual Property matters. 

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1.2. Civil enforcement

A civil action with respect to importation and distribution of counterfeits may be filed based on the causes listed in the following statutes: 

  • Trademark infringement under the Trademarks Ordinance [New Version], 5732-1972. 
  • Passing off under the Commercial Wrongs Law, 5759-1999.
  • Copyright infringement under the Copyright Law, 5768-200.
  • Design infringement under the Design Law, 5777-2017.
  • Consumer deception under the Consumer Protection Law, 5741-198.
  • Unjust enrichment under the Unjust Enrichment Law, 5739-1979.
  • Misappropriation of Goodwill.

Civil proceedings related to distribution of counterfeits, if conducted in full, may take about two years. In practice, most such proceedings are finalized at an early stage, by way of settlement.

The Magistrate's Court or the District Court are authorized to hear civil enforcement proceedings. The plaintiff should evaluate, even roughly, the value of the remedies sought by him. When the sum of the action is lower than ILS 2.5M, the assigned court is the Magistrate's Court, otherwise, or when the damage cannot be estimated, the case would be assigned to the District Court. In most cases, proceedings related to distribution of counterfeits are assigned to the Magistrate's Court.

The best way for rights owners to protect their IP rights is to consistently monitor the market, and swiftly take enforcement measures to stop the importation and distribution of counterfeit goods, thus deterring other counterfeiters, who may not want to risk criminal charges and civil actions. These actions also create awareness of the existence of a counterfeiting problem in relation to a particular product or brand among law enforcement authorities.

The reliefs sought in a civil action with respect to distribution of counterfeits usually includes:

  • A Permanent Prohibitory Injunction - an order prohibiting any counterfeit activity (including import, sale, marketing, distribution, production, advertising, storage, etc.).
  • Destruction of the counterfeits.
  • Receipt of details and documents related to the importing/manufacturing/distributing of the counterfeits.
  • Receipt of an accountant's report on the volume of importing/sales of the counterfeits.
  • Compensation for damages considering the report on the volume of sales.
  • Compensation without proof of damage with respect to passing off, up to ILS 100,000 under section 13 of the Commercial Wrongs Law, 5759-1999.
  • Compensation without proof of damage with respect to copyright infringement, up to ILS 100,000 under section 56 of the Copyright Law, 5768-2007.
  • Compensation without proof of damage with respect to design infringement, up to ILS 100,000 under section 75 of the Design Law, 5777-2017.

In the event of an urgent need to stop the importation and distribution of counterfeits, it is possible to file a motion for interim injunctions. It is also possible, to apply for an ex parte interim order as well as an Anton Piller-type order for a search-and-seizure. Such a petition should be accompanied by evidence in the form of an affidavit. 

However, as explained above, utilizing police resources to promptly seize counterfeits, and using customs measures to stop counterfeit goods at the port of entry, as explained below, are efficient and cost-effective methods, therefore applying for an ex parte interim order or Anton Piller-type order is usually unnecessary.

The court awards legal costs to the prevailing party. However, the costs awarded by the courts are not the actual costs incurred which are considerably lower.

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1.3. Grey market and counterfeit goods

Parallel importation or distribution of “grey market” goods is not prohibited per se according to Israeli law. 

There are certain limitations on parallel importers, to prevent “free-riding”, trademark dilution, and unjust enrichment. These limitations were summarized in CA 7629-12 Swissa v. Tommy Hilfiger Licensing LLC [November 16th, 2014], in which the court set criteria for permissible truthful use of a trademark by parallel importers, as follows:

  1. The 'identification' test - whether it is possible to identify the goods without referring to the trademark.
  2. The 'necessity of use' test – the extent to which use of the trademark is necessary.
  3. The 'sponsorship' test - whether use of the trademark creates confusion as to sponsorship by the trademark owner.

When it comes to parallel imports, the Supreme Court determined that the most important test is the third one, namely, whether consumers may be confused in assuming that there is a connection between the seller and the manufacturer, and whether the consumer is aware that the goods purchased by him may not be under the manufacturer’s warranty.

There are some laws which are not part of the core legislation of the Intellectual Property field, but are still useful in dealing with counterfeit products, for example:

  • Consumer Protection Law, 5741-1981, enacted to protect consumers from deception.
  • The Pharmacists Ordinance (New Version) 5741-1981, and The Pharmacist Regulations (Medical Preparations) 5746-1986, both of which regulate the manufacturing, marketing, prescribing, importation and registration of medicinal products.
  • The Standards Act, 5713-1953, which authorizes the Israeli Standards Institute to establish binding standards, and ensure an adequate level of product quality.

See Section 3. Online Anti-Counterfeiting Enforcement Strategies for further details of recent cases that have involved the distribution and sale of counterfeit goods. 

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1.4. Criminal v. civil enforcement

Criminal proceedings have the great effect of creating a deterrent to other counterfeiters and relaying a strong message. In addition, with the assistance of the police it is possible to seize counterfeit products in an efficient and cost-effective manner. On the other hand, only a low percentage of criminal cases end up in a criminal proceeding in court. 

Criminal and civil enforcement measures can be conducted simultaneously. Combining police search-and-seizures with civil proceedings against apprehended counterfeiters has proven to be effective and fruitful. 

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2 . Border enforcement

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2.1. Measures

Under the Customs IP procedure, as set out in Section 69A of the Trademarks Ordinance, Section 65 of the Copyright Law, Section 110 of the Design Law, and Section 200A of the Customs Ordinance, the Customs Authorities may detain shipments containing goods suspected of being counterfeit, on their own initiative, or pursuant to a complaint filed by the rights owner.

A complaint filed by the rights owner to Customs, requesting to detain future shipments containing goods suspected of being counterfeit, should include the following:

  • a copy of the relevant trademark registration certificate; 
  • a picture of a sample of the genuine product;
  • the importer's identity and any other available information regarding the counterfeit goods and their origin, such as pictures, descriptions, and, if possible, the shipment’s approximate arrival date and the port the shipment is set to arrive at; and
  • an undertaking for indemnification (UFI) to cover possible unjustified damages that may be caused to the importer as a result of the goods’ detention, as determined by a competent court, in which the rights owner undertakes to join legal proceedings regarding the release of the goods, should the importer of the shipment initiate such proceedings against Customs.

In addition to detaining specific shipments pursuant to complaints filed by the rights owners, Customs also conducts random inspections of shipments, and may detain goods suspected of being counterfeit on their own initiative.

Rights owners can help to make these random checks more effective by providing Customs with training sessions. Such training sessions alert officials to the presence of counterfeit goods, raise their awareness of the brand, and teach them how to recognize counterfeit goods. 

Upon a shipment’s detention, Customs notifies the rights owner through the firm indicated as the address for Customs matters, or the address for service for trademark matters in the trademark register, and will provide the rights owner with the option of pursuing one of two procedures, as detailed below.

Customs IP regular procedure: generally implemented in cases of shipments containing large quantities of goods suspected of being counterfeit. 

Customs notifies the rights owner upon the arrival of a shipment containing goods suspected of being counterfeit. The rights owner should then inform Customs as to whether the goods are counterfeit, within three business days (an extension of three business days may be requested). If the goods are found to be counterfeit, the rights owner should file a bank guarantee (bond) in a sum specified by Customs. 

Once the bank guarantee/deposit is filed, Customs will disclose the identity of the importer. In accordance with Customs’ IP regular procedure, the rights owner should subsequently file a regular civil action against the importer (without having to apply for an interlocutory injunction) with the court, within ten business days from the date the owner received Customs’ initial notice regarding the shipment (an extension of ten business days may be requested). If an action is filed, the goods will be detained until the end of court proceedings.

While, in accordance with Customs regular procedure, an action should be filed against the importer, right owners may take advantage of the time before the deadline for filing the action, to negotiate a settlement with the importer. 

Such a settlement will not only include the goods’ destruction, but also payment of storage and destruction costs by the importer, an undertaking signed by the importer, disclosure of information and documents regarding the goods’ supplier, and compensation for costs. 

In such cases, the rights owner may promptly finalize the matter without having to file an action, reducing legal costs considerably. In practice, most cases are resolved with a settlement, without filing an action, when this approach is taken.

In the framework of the regular procedure, the rights owner is responsible for the storage and destruction costs. However, in practice, these costs are borne by the importer in accordance with the settlement reached.

Customs IP expedited procedure: Customs may provide the rights owner with the option of pursuing the expedited procedure. The expedited procedure is the most commonly implemented procedure by Customs and, as described below, is a shorter process and a more cost-efficient option. However, unlike the regular procedure, when the expedited procedure is implemented, the Customs authorities do not provide the rights owner with details of the importer.

Within the framework of the expedited procedure, the rights owner should carry out the following within three business days from receiving Customs’ notice regarding the shipment: 

  • provide an opinion indicating whether the goods are infringing and brief details of their counterfeit nature; and
  • provide Customs with the UFI (as detailed above).

After the requested opinion and the signed UFI have been provided to Customs, the goods subject of the shipment will be destroyed. In this procedure, the rights owner is not required to submit a bank guarantee or deposit.

It should be mentioned that when the expedited procedure is implemented by the Customs Authorities, the rights owner has the right to choose implementing the regular procedure instead. Namely, when the expedited procedure is implemented, both procedures are available.

In the framework of the expedited procedure, the storage or destruction costs are borne by Customs.

A significant advantage of the Customs IP procedure is the possibility of preventing counterfeit goods from reaching the market in a cost-efficient manner. Once the counterfeits have entered the market, it is more challenging to locate and seize them. 

A downside of the expedited procedure is that Customs does not disclose the identity of the importer. Consequently, it is not possible to obtain an undertaking, nor information and documents regarding the source of the goods from the importer. 

However, when obtaining such information is of great importance to the rights owner this disadvantage can be easily overcome, by rights owners opting to implement the regular procedure, rather than the expedited procedure. 

By following the regular procedure and finding out the identity of the importer, the trademark owner has the opportunity to obtain information on the supplier and marketing chain, as well as to obtain an undertaking and compensation for costs from the importer during negotiations as part of the settlement, all of which facilitate the trademark owner's ongoing, worldwide enforcement efforts.

Over the past few years, the expedited procedure has been implemented more frequently.

Sometimes, various law enforcement authorities such as the police collaborate for enforcement actions.

When Customs detain goods, pictures of the goods, as well as information regarding the quantity of items detained is provided to the right owners. 

When the regular procedure is implemented, and the rights owner has determined that the goods are counterfeit and has filed the requested bank guarantee, Customs will provide the rights owner with the importer's details.

Additional information, such as the origin of the goods, as well as documents listing the supplier of the goods, may be obtained during negotiations with the importer, as part of the settlement, or in the framework of legal proceedings, if conducted.

The remedies that can be obtained against importers caught importing counterfeit goods are the same remedies detailed above for civil enforcement. Such importers are also subject to criminal proceedings that the State may initiate against them.

Israeli Customs allow training sessions to be conducted for Customs officials. Such training sessions may be conducted by the rights owners' representative, or by the rights owner's local attorney. Conducting customs training is a great way to assist Customs officials in identifying a client's potentially counterfeit products, and in becoming more aware of such counterfeits being imported into Israel. 

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2.2. Recent trends and COVID-19

The COVID-19 pandemic has not significantly impacted the regime; both the Customs Authorities and the police have continued to provide their support in all enforcement efforts.

However, there have been some trends in the type of counterfeit goods that have been imported and distributed in Israel during the COVID-19 pandemic. There has been an increase in distribution of counterfeit personal protective equipment (masks), especially at the beginning of the pandemic, as well as an increase in imports and trade in counterfeit goods on the Internet, mostly clothing articles and cosmetic products.

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3 . Online anti-counterfeiting enforcement strategies

In the absence of separate legislation regulating online distribution of counterfeits or online trademark infringement, the use of a mark online is treated the same way as other trademark use. 

In other words, the causes of action, measures and remedies employed for offline distribution of counterfeits are also applicable to online counterfeit distribution.

In C.A. 63470-05-10 Zohar v. Facebook Inc. and others, the Tel-Aviv District Court held that offering products for sale through the scheme of a “hidden link” is unlawful, as it aimed to camouflage trade of counterfeits. In this case, Diana Zohar promoted Adidas counterfeits through a sophisticated method intended to mask the true nature of a counterfeit product offered for sale on the Internet, and to conceal it from automatic search engines. The branded product displayed on her website was published for purchase on AliExpress, but when clicking on the link to AliExpress, the product on sale was a generic and non-infringing product, thus evading counterfeit technological detection tools. Diana Zohar served as the party connecting between the counterfeit seller and the consumer. The court stated that the purpose of the scheme using hidden links is to conceal the sale of counterfeits to bypass digital enforcement measures, which allow brand owners to detect and stop counterfeit activity on the Internet. The court ordered Diana Zohar to pay damages and costs to Adidas, and to cease advertising and marketing products bearing the Adidas trademarks. Diana Zohar filed an appeal. 

The Trademark Ordinance [New Version] 5732-1972 does not specifically address infringement made online, but rather refers to infringement in general, regardless of where the trademark was illegally used. 

The actions taken against an online infringer that also has a physical storefront, are identical to those that would have been taken had the infringer only had a brick-and-mortar store, regardless of the quantities or types of goods involved. If proceedings are initiated against such a counterfeiter, the lawsuit will be filed regarding the distribution of counterfeits in both channels, both online and in the physical storefront.

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3.1. Domain names

The Israel Internet Association provides IL-DRP, an alternative dispute resolution procedure intended to provide an expedited resolution to disputes regarding the allocation of Domain Names under the .IL ccTLD in accordance with the Rules for Allocation of Domain Names under .IL. 

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3.2. Social media

In recent years, counterfeits have increasingly been offered for sale on social media such as Facebook and Instagram in Israel, and more so during the recent Covid epidemic. In Israel, as in other jurisdictions, it is possible to approach Facebook and Instagram (in accordance with their policy), requesting removal of the pages offering counterfeits for sale. This is mostly done nowadays through online brand protection services for companies. However, this could turn out to be insufficient in stopping such illicit activity, since the offender may open a new account and continue selling counterfeits. Rights owners are encouraged to attempt to make a sample purchase in order to establish the identity of the person/company behind the activity and location of the goods, and then take measures, such as those detailed above, to stop counterfeit distribution.

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4 . Additional information

Israel has no national Intellectual Property law enforcement coordination body, however in some criminal investigations, when the need arises, the Israeli Police and the Israeli Customs Authorities do cooperate.

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5 . Frequently asked questions

1. Is it possible to take measures to prevent importing of counterfeits to the Palestinian National Authority? 

Imports into territory under the Palestinian National Authority (PNA), namely, the West Bank and the Gaza Strip, go through Israeli ports and are subject to Israeli Customs supervision. Border measures may be implemented with Israeli Customs assistance in order to prevent counterfeits from being imported into the West Bank and the Gaza Strip (from where they tend to enter the Israeli market).

As such, the importation of counterfeits to the West Bank and/or the Gaza Strip through Israel is considered an infringement of the rights of the owners of registered trademarks in Israel and thus constitutes trademark infringement in Israel.

2. Is there a Customs recordal service in Israel?

A separate service for trademark recordal at Customs does not exist as such in Israel. As explained above, it is possible to approach the Israeli Customs Authorities with respect to the importation of counterfeits by a specific importer. In addition, Israeli Customs regularly detain shipments which include products that are suspected of being counterfeit, on their own initiative, and approach the trademark owner representative for customs matters. In the absence of a customs recordal service, it is highly recommended to conduct customs training sessions, thereby increasing Customs officials' awareness of counterfeits being imported into Israel. 

EXPERT ANALYSIS

Chapters

Brazil

Tânia Aoki Carneiro

Canada

Lorne M. Lipkus
Melissa J. Tarsitano

China

Epstein Drangel - IP Counselors Beijing

Greece

Alkisti-Irene Malamis

Italy

Graziana Ercolanelli
Monica Bucarelli

Mexico

Diana Martínez
Roberto Arochi

The Netherlands

Fleur Boom
Gie van den Broek
Iris van der Wal

Spain

Ana Padial
Gonzalo Barboza
Miriam Anidjar Mogeda
Patricia Ramírez Melgen

Ukraine

Alexander Pakharenko

United Arab Emirates

Felicity Hammond
Munir Suboh

United Kingdom

Fiona Lawson
Simon Barker

United States

Ashly E. Sands
Danielle S. Futterman
Gabriela N. Nastasi
Jason M. Drangel
Kerry B. Brownlee

Uruguay

Agustina Viera
Daiana Pereira
Lucia Cantera
Virginia Cervieri