The “Tommy Hilfiger” Parallel Importer Case in Israel
(Civ. File. [Tel-Aviv District Court] 11296-09-10 Tommy Hilfiger Licensing LLC. v. Elad Menachem)
For decades, it has been generally and almost axiomatically accepted that parallel (“gray”) importation of genuine goods, legitimately purchased from the trademark owner (or its licensed sales representative) is completely legal.
This concept was based on Section 47 of the Trademarks Ordinance stating that “registrations according to this ordinance shall not prevent a person from… using the true description of the nature or quality of his goods”.
However, since 2002, following the case of Toto Zahav Members Club Ltd. v. The Counsel for the Regulation of Gambling and Sports, Civ. File. 3559/02 [PD 59 (1), 873], this approach has changed. In the aforementioned case, the court adopted tests laid down by American courts, which suggest that parallel importation might be legitimate, subject to the following conditions:
- The product cannot be easily identified without the use of the trademark;
- The use of the trademark is made to the extent not exceeding the requirement of the said identification; and
- The use of the trademark is not made in a manner that implies it to be under the authority of the trademark owner.
In the Tommy Hilfiger case, the court found that the goods could not be easily identified by the public without bearing the Tommy Hilfiger trademark and logo.
Regarding the second test, the defendants could have used the Tommy Hilfiger mark, provided that they had clearly stated that the goods are parallel imports. However, the defendants behaved otherwise, namely:
- They put a sign on their business place reading “IMPORTER WAREHOUSE-TOMMY HILFIGER” (in Hebrew);
- They registered and used the domain name www.tommy4less.co.il, and throughout the website the typical colors of the Tommy Hilfiger logo (blue, red, and white) were widely used;
- They used the trademark in their commercial advertising; and
- They decorated their business place both inside and outside with the typical colors of the Tommy Hilfiger logo.
The defendants did all this without stating clearly that they have not been appointed as authorized dealers by the trademark owner, when in fact, they were parallel importers.
Therefore, it is clear that the defendants made all efforts to deceive the public and are accordingly guilty of trademark infringement.
The court found that the facts as discussed above also establish the cause of “Unjust Enrichment” (this is the Israeli equivalent to unfair competition as known in other jurisdictions) and therefore the plaintiffs were awarded restitution of the defendants’ profits.
The court also considered the tort of “Passing Off” (known as “Palming Off” in the US) and found against the defendants.
The court issued an injunction prohibiting the defendants from using the Hilfiger trademark except under severe restrictions.
In addition, the plaintiffs were also awarded damages in the amount of NIS 457,500 (approximately US$ 115,000) and legal fees of NIS 80,000 (approximately US$ 20,000).