A decision rendered on February 20 2011 by the adjudicator for intellectual property at the Israeli Trademarks Office held that the registered trademark OF TENE should be cancelled and struck off the Israeli Trademarks Registry on account of non-use, pursuant to the provisions of Section 41 of the Trademarks Ordinance (New Version) 1972.(1)
It was held that the OF TENE mark should be cancelled due to non-use, mainly on the following grounds:
- Use of the mark by a company which is an unregistered licensee of the mark cannot be regarded as actual use by the owner of the mark;
- Use of a mark on its owners' tax invoices cannot, of itself, be regarded as actual use of the mark;
- The owner had the opportunity to use the mark by itself and to record the licence agreement with the Israeli Trademarks Office - therefore, no special circumstances in the trade existed that would justify non-use by the owner of the mark and no justification exists for the registrar of trademarks to exercise his discretion and order that the mark should not be cancelled despite the fact that no use had been made.
Before 1991 the owner of the OF TENE mark engaged in the field of the butchery and marketing of chickens using the mark. The applicant that requested cancellation of the mark had also engaged for some time in the rearing, butchery and marketing of chickens.
In 1991 the owner leased its factory to the applicant and also granted the applicant a non-exclusive licence to use the mark with respect to the sale of chickens that were butchered or processed in the factory. From 1991 onwards, the owner no longer engaged in such activity.
In 2005 the owner registered the mark with the Trademarks Office. The non-exclusive licence agreement was never registered.
In 2008 the applicant filed an application with the Trademarks Office to cancel the registration of the mark,(2) as it argued that no use had been made of the mark, at the very least, during the three years that preceded the filing of the application for cancellation.
In response, the owner argued that:
- it had used the mark by listing its name (ie, Of Tene Meat Industries Ltd) on its tax invoices;
- it had granted a licence to the applicant to use the mark; and
- under such licence, use by the applicant should be attributed as use by the owner.
The application for cancellation was accepted by the adjudicator on the following grounds.
According to the ordinance, in order for a licensing agreement to be in force, it must be duly recorded with the Trademarks Office.(3) In previous decisions, the Supreme Court had interpreted that the use of a registered trademark by a licensee will not be regarded as use by the owner of the trademark, unless the licence is duly recorded with the Trademarks Office. However, in the current circumstances, the licence agreement was not recorded and, therefore, the use made by the applicant could not be attributed to the owner.(4)
It was held, as a general rule, that if a company's name appears on a product or service which is listed in the specification of its registered trademark, this may be regarded as sufficient use of the registered trademark and thus prevent the cancellation thereof. In the current circumstances, the use of a mark on tax invoices alone could not be considered sufficient use of a registered trademark.(5)
The ordinance provides an exception according to which a trademark will not be cancelled when the non-use is due to "special circumstances in the trade", and not because of any intention not to use or to abandon the mark.(6) It was held that the owner could have made independent use of the mark with respect to its products, as the licence which was granted to the applicant was non-exclusive - thus, the grant of such a licence did not prevent the owner from making use of the mark. However, the owner chose not to use the mark as aforesaid and, therefore, the said exception should not apply in the present case.
Finally, even if no use was made during the three years preceding the application for cancellation and no special circumstances existed, in extraordinary cases the registrar may exercise its discretion and order that a registered trademark should not be cancelled. It was noted that the fact that the application for cancellation was filed by the licensee (ie, the applicant) after a business dispute had arisen between it and the owner could be considered, in certain cases, as circumstances in which the registrar will exercise its discretion. However, as the owner had the opportunity to make independent use of the mark (since the licence granted by it was not exclusive), but chose not to do so, this was not eh case here. It was further held that the registration of a licence constitutes a joint interest of the owner of the registered mark (the licensor) and the licensee. In the present case, the owner had already had the opportunity to register the licence agreement in 2005, but similarly chose not to do so. Thus, no justification existed for the registrar to exercise his discretion in this specific case.
The decision demonstrates the importance of registering a licence agreement with the Trademarks Office, particularly where the proprietor of a registered trademark has no intention of using such a mark itself.
For further information on this topic please contact Avi Ordo at S Horowitz & Co by telephone (+972 3 567 0876), fax (+972 3 566 0974) or email ([email protected]).
Endnotes
(1) According to Section 41(a) of the ordinance, an application for cancellation of the registration of a trademark may be filed by any interested party on the grounds that there was no bona fide intention to use the trademark in connection with the goods for which it is registered, and that there has been no bona fide use of the trademark in connection with those goods, or that there had not been any such use during the three years preceding the application for cancellation.
(2) Application for cancellation of registered trademark no 169322, Of Oz Industries 1991 Ltd v Of Tene Meat Industries Ltd, decision rendered on February 20 2011.
(4) It was further noted that, where the owner of the registered trademark and the licensee are affiliate companies, any separation between them will be regarded as artificial and insignificant, so that the use made by one company could be regarded as use by its affiliate. In any event, this was not the case here.
(5) In any event, the use on the tax invoices did not include the design logo, but only the words OF TENE (as part of the owner's name) in block letters.