The Israeli Deputy Registrar, Ms. Jacqueline Bracha ("the Deputy Registrar"), recently issued a decision in two related cases which reinforced the conditions under which a use of a trademark will constitute a 'genuine use' under Section 41 of the Trademark Ordinance, [New Version] (the "Ordinance"), and also reinforces the tests under which confusing similarity between trademarks is to be established.
DreamWorks Animation LLC ("DreamWorks") wished to register in Israel trademark no. 264261 for "THE PENGUINS OF MADAGASCAR" in classes 9, 16, 25 and 28 ("DreamWorks' Mark"), which is the title of a famous television series and movie based on the images of the penguins in the well-known and popular movie series "MADAGASCAR". Perry Ellis International ("Perry Ellis"), a fashion company, has filed with the Israeli Trademark Office ("ITMO") an opposition to registration of DreamWorks' Mark, claiming that the DreamWorks' Mark is confusingly similar to its registered trademarks no. 202757 and no. 202758 for "An Original Penguin by Munsingwear" (stylized), in class 25 for clothing, footwear and headgear (collectively – "Perry Ellis' Marks"), and therefore is ineligible for registration pursuant to Sections 8(a), 11(5), 11(6) 11(9), 11(13) and 11(14) of the Ordinance. Perry Ellis, in essence, based its Opposition on the similarity of a single component "Penguin", which Perry Ellis claimed is a distinctive element associated with it, with regard to apparel and life style goods, while also claiming that there are similarities between the components "Munsingwear" and "Madagascar". It also claimed that its marks are well-known in Israel. Perry Ellis argued that registration of DreamWorks' Mark will allow DreamWorks to unlawfully benefit from the goodwill allegedly associated with Perry Ellis' Marks. Therefore, registration of DreamWorks' Mark will allegedly lead to unfair competition in the trade and will dilute Perry Ellis' Marks.
Following Perry Ellis' Opposition, DreamWorks filed with the ITMO an application for cancellation ("the Cancellation Application") of Perry Ellis' Marks due to non-use in Israel during the three years' period prior to the submission of the Cancellation Application ("the Relevant Period"). DreamWorks argued that its evidence proved that during the Relevant Period Perry Ellis did not use its marks in Israel. In addition, Perry Ellis did not file any evidence showing use in Israel during the Relevant Period (rather, its evidence related to use after the submission of the Cancellation Application, which is irrelevant). Furthermore, such use (following the submission of the Cancellation Application) is nothing more than an attempt to “artificially revive” Perry Ellis' Marks in order to overcome the Cancellation Application. It is, therefore, not surprising, that Perry Ellis failed to present any evidence of actual sales in Israel, such as sales reports. Alternatively, the quantity of sales indicated by Perry Ellis (especially bearing in mind that the goods in hand are clothing, footwear and headgear, which are daily goods) is insignificant and could not constitute genuine use in Israel. Perry Ellis attempted to establish genuine use, claiming that prior to the submission of the Cancellation Application, it was negotiating with a local distributor, but it only presented evidence of orders by the local distributor submitted one month after the submission of the Cancellation Application, and no evidence (such as e-mail correspondence, copy of the alleged agreement), indicating the existence of negotiations prior to the submission of the Cancellation Application.
On February 6, 2020 the the Deputy Registrar has issued her ruling on both the Opposition and the Cancellation Application, and ruled in favor of DreamWorks in both cases, accepting DreamWorks' position, in both cases, in its entirety ("the Ruling"). Therefore, the Deputy Registrar ruled that DreamWorks' Mark will be registered, and simultaneously, Perry Ellis' Marks will be canceled and as a result will be deleted from the Trademark Registry.
The Ruling on the Cancellation Application:
1. The Deputy Registrar ruled that there is no dispute that during the Relevant Period, Israeli consumers could not purchase products bearing Perry Ellis Mark in stores in Israel. There is also no dispute that there was no option to order delivery to Israel of Perry Ellis' products on its websites; therefore it is clear that Perry Ellis had no intention to sell its products in Israel.
2. Perry Ellis presented a Google analytics sales report ("the Google Report") for a five-years period (which covers part of the Relevant Period and about four additional years, preceding the Relevant Period), listing only 76 transactions originating from Israel. The Deputy Registrar pointed out that this report does not detail in which years these 76 transactions were conducted, therefore, it is possible that none of the transactions was conducted during the Relevant Period. Perry Ellis' failure to provide a Google Report specific to the Relevant Period acts against it, as it is presumed that a report for the Relevant Period would have refuted Perry Ellis claims. In addition, since Perry Ellis websites did not offer delivery of products to Israel, it can be assumed, as DreamWorks argued, that the transactions were conducted by tourist staying in Israel.
3. The Google Report presents minimal sales revenues (US$ 9,039 which translates to approximately US$ 2,000 per annum), which are especially conspicuous in view of Perry Ellis' claim that its worldwide revenues amount to US$ 900 million. Thus, it is clear that lack of sales in Israel is the outcome of the company's conscious decision.
4. The Deputy Registrar rejected Perry Ellis' claim that searching for a local distributor is equivalent to selling the goods bearing the mark. Sale to a consumer should be demonstrated and an internal use is merely a "token use".
5. As for the orders by and shipments to the local distributor following the submission of the Cancellation Application, the Deputy Registrar emphasized that these are irrelevant. In addition, orders by the local distributor do not constitute evidence of actual sales in Israel, or that products were actually offered for sale in Israel. Finally, the total sum of orders stated by Perry Ellis (72,000 Euros) is minor.
6. Perry Ellis' argument that since the Cancellation Application was filed as a defensive move, following its opposition to registration of DreamWorks Mark, there exist special circumstances justifying not striking out Perry Ellis' Marks, was rejected as well. The Deputy Registrar explained that filing a cancellation application, as a defensive move aimed to assist the applicant in its defense against an opposition is a reasonable behavior which does not amount to bad faith. In the present case, the Cancellation Application is not designed to burden Perry Ellis, but is well established in evidence.
7. The Deputy Registrar also clarified (contrary to Perry Ellis' assertion), that the objective of striking a mark on ground of non-use is not only to allow competitors to use the mark, but also to prevent trademark proprietors from using their marks as a "sword" in opposition proceedings, while, in practice, due to non-use of the marks, there is no likelihood of confusion or unfair competition, and clear the Trademarks Registry from marks that are not being used.
The Ruling on the Opposition:
8. First, the Deputy Registrar accepted DreamWorks' preliminary claim that reference to trademarks that were registered after the submission of the Opposition and to additional trademarks that were not mentioned in its opening pleadings in the Opposition constitutes a wrongful attempt to broaden the scope of the Opposition.
9. The Deputy Registrar stated that since the trademarks on which the Opposition was grounded (nos. 202757 and 202758) were cancelled according to the first part of the Ruling, there is no ground for the Opposition. Beyond necessary, she also addressed Perry Ellis' claims regarding likelihood of confusion.
10. The Deputy Registrar examined the likelihood of confusion according to the "triple test" considering the visual and phonetic resemblance of the respective trademarks, the type of goods/services for which the respective trademarks are used, the potential customers and additional circumstances, and concluded that there is no likelihood of confusion between the marks:
- Sight – the differences are greater than the resemblance between the marks and the total impression created by the marks is different. DreamWorks' Mark is the name of the hearos of the Madagascar movie series; the component "Madagascar" is as dominant as the "Penguins" component. The only similarity between the marks is the "Penguin'' component, but similarity in a single, even a dominant, component is not enough to establish likelihood of confusion. Perry Ellis does not have monopoly on any penguin.
- Sound – the only similarity is the component "Penguin" and the only similarity between the components "Madagascar" and "Munsingwear" is in the first letter "M". This is not enough to establish similarity between the marks.
- Type of goods – there is some overlap between the goods, but the type of consumers is different. DreamWorks' goods are connected to the reputation associated with the Madagascar movies; thus, consumers purchasing DreamWorks' goods are not interested in fashion but with the characters associated with the Madagascar movies. Perry Ellis' goods are claimed to be "high quality luxurious products". In addition, most of Perry Ellis' products do not display the full trademarks. Furthermore, the marketing channels are different as well.
- Meaning and general concept – Perry Ellis did not gain reputation in Israel and the only reputation that was proven is DreamWorks' reputation, as DreamWorks' penguins characters are well known in Israel. DreamWorks' goods are merchandise; therefore, the penguins in the DreamWorks' Mark have an entirely different meaning than the penguins in Perry Ellis' Marks which are not fictional characters but rather a logo.
11. As for the Opposition ground based on alleged rights to a well-known trademark, Perry Ellis also failed to establish that its marks are well-known marks in Israel. Perry Ellis has submitted neither publications in Hebrew directed to the Israeli public nor evidence of the familiarity of the Israeli Public with the marks.
The Ruling reinforces the requirement to prove genuine use by presenting evidence of actual sales in Israel, and the irrelevance of actions taken by the trademark proprietors after the date of a cancellation application. The Ruling also expresses Israeli law's reluctance to afford a monopoly on a single lexical word ("penguin"), particularly, when such component is the only similarity between trademarks containing a few components.