H Stern is a Brazilian jewellery manufacturer with an international presence, including many retail outlets in Israel. It sells a specific ring: a flat gold band with a diamond-encrusted oblong section (or "pavé") and the rest of the band polished to a mirror finish. The band is also decorated with a pentagram (the seal of Solomon) on the shiny part on each side of the diamond oblong. Five pointed stars are engraved on the inside of the band. The ring is known as the Juliana model.
Aryeh Poziloff, through various companies including Orneal LTD, Nitfaz and Poziloff Diamonds, marketed a similar but substantially cheaper ring with Star of David ("Magen David" or "hexagram") decorations. According to the court, the pentagram is a registered trademark of H Stern, chosen because "stern" means star.
H Stern sued Poziloff on various grounds, including:
- Trademark infringement.
- Well-known mark infringement.
- Passing off.
- Copyright infringement.
- Unjust enrichment.
- Theft of reputation and consumer confusion.
In regard to trademark infringement, Judge Drora Pilpel ruled that although a pentagram and a hexagram are arguably confusingly similar to look at, when buying jewellery, purchasers are particularly careful. She went on to rule that this is not that relevant since, according to Judge Gronish in the Taam Teva decision, applying the so-called "triple test", the appearance of the mark is of less importance than the sound of the mark when considering the "sight and sound" test, and "pentagram" sounds different from "Magen David". Therefore, there was no likelihood of confusion.
Although the products under consideration were both rings, since H Stern does not sell via third parties there was no real likelihood of confusion on the part of purchasers as to the origin of the jewellery. Finally, the judge applied the fourth part of the triple test – the "clear thinking" test – and decided that even though the sound of the mark was different, since the conceptual idea behind Stern's mark was to imply the maker by using a star as a maker's mark, whereas the defendant's Star of David implied that it was made in Israel, there was no likelihood of confusion.
In regard to whether the pentagram trademark was well known, the judge considered the issue at some length (which was rather surprising, since she had already decided that there was no trademark infringement). Nevertheless, she held that the mark was not well known.
The judge acknowledged that H Stern had a reputation for the Juliana design and that it was associated with the company to some extent, but she did not think that the public would be confused as to the source of the goods, since H Stern sold rings only in its own retail outlets.
The defendant argued that copyright could not be applied since the ring could and should have been protected as a design. The judge dismissed this, stating that this is true of mass-produced, machine-manufactured objects, but not of handmade goods, and that although clothing can and should be protected as designs rather than by copyright, jewellery can be protected by copyright. She went on to rule that the combination of the shiny band, diamond-encrusted oblong and stars was protected by copyright.
Having recognised copyright in the combination of the three design elements, the judge went on to rule that the fact that one ring had hexagrams and the other pentagrams was not significant enough to alter the fact that the defendant's ring was a blatant copy.
Since she had found copyright infringement, the judge considered the question of unjust enrichment to be irrelevant.
As for the claims of dilution and theft of reputation, the court threw these out for lack of proof of damage to H Stern.
In conclusion, the judge awarded statutory damages of NIS20,000 under the Copyright Ordinance of 1911, which was in force when the case was filed; in the alternative, she found that the plaintiff would be entitled to profits made by the defendant from the infringing rings. The judge also awarded costs of NIS40,000.
Finally, the judge ordered the unsold stock of rings and moulds be destroyed and that the defendant cease advertising and selling the rings (TA 1253/05 H Stern Brazil and H Stern Israel v Ornil and Pisiloff, 13th March 2011).
Had H Stern filed a design registration, it could have obtained an injunction and enforced its rights more simply and quickly.
The judge seemed to have little idea of how to apply the triple test. The test of the sound and appearance of a trademark has relevance for a word mark where goods are chosen by sound. In this case the fact that "pentagram" and "Magen David" sound different was irrelevant. The only question was whether the pentagram was recognisable as a trademark when applied to the ring, and whether the hexagram was confusingly similar. If the mark is seen as part of the design or if the two marks were considered to be distinctive in context, there was no trademark infringement. If, however, the marks were confusingly similar, there was trademark infringement. The fact that the word "hexagram" had two identical syllables to "pentagram" was irrelevant.
H Stern's Israel TM 170325 is for a five-pointed star, not for a pentagram at all. The stars on the inside of the band are a registered trademark; the pentagram on the outside with a diamond in it is not.
Does H Stern use the pentagram on all its jewellery? Is the symbol widely used by it on the reverse of pendants, bracelets and rings? If so, it could fairly be considered an unregistered trademark. Otherwise, it would probably be considered a design feature by the purchaser or receiver of the gift. Only if it could fairly be considered a trademark at all would the issue of whether the hexagram mark was confusingly similar arise.
As to the issue of Stern selling only via its retail outlets, the point has some relevance, but would the receiver of a gift know where it was bought? Is jewellery never sold secondhand? The clear thinking test was anything but: the judge should have said that the purchaser would consider the Magen David to be a design element, not an indication of the source of the goods. Therefore, there was no trademark infringement.
No design was registered, and therefore there was no infringement.
In regard to copyright in Israel, although the design law (which dates back to the British mandate) is sorely in need of revision, there are no unregistered design rights. Any mass-produced article is protectable as a registered design for up to 15 years. If copyright protection is allowed for such goods, presumably for the life of the creator plus 50 years, why would anyone register a design?
Since H Stern's ring was designed for mass production, no copyright ensued. However, having wrongly established copyright, the judge was correct to decide that it was infringed by the defendant's ring.
It was also surprising that the judge saw copyright in the combination of three design elements, since H Stern had argued that the pentagram was a trademark and not a design element. This should have estoppelled it from claiming it was part of the design; with just the polished band and diamond oblong, Stern's ring would not be sufficiently distinctive to attain copyright protection even if copyright applied, which in this case, under Israeli law, it should not have.
It is a shame that the judge did not rule on unjust enrichment, because one assumes that the finding of copyright infringement would not stand up in court. Following the controversial Supreme Court ruling in the A.Sh.I.R. case, which is good legal precedent (even if was arguably a poor decision), there are grounds to apply the Law of Unjust Enrichment where designs are unregistered if there is evidence of bad faith. It is not clear whether there were grounds in this case, since the unregistered design was in the public domain; nevertheless, the judge could have been more thorough.