The Israeli Supreme Court recently ruled in the case between the Worldwide Ort and Ort Israel. The dispute revolved around the rights to use the trademark ORT written in both the Hebrew and the English letters. The ORT organization was first founded in Russia in 1880 in order to develop and promote education and professional development in the Jewish communities in Russia. The ORT acronym stands for in Russian “the Society for Professional and Agricultural Work for the Jews in Russia”. Various additional ORT related organizations were created over the 20th century, the Appellant is one of them and is also known as ORT World. The parties to these lawsuit were in disagreement as to the standing of ORT World, also because ORT World used to send representatives to assist with forming national chapters. This happened when ORT Israel was established. ORT World argued that for many years in acted in concert with ORT Israel. When the two parties entered a dispute they also disagreed on the ownership and use of the ORT trademark.
In the District Court ORT Israel sought to prevent ORT World the use the ORT trademark in Israel. The lawsuit was based on the tort of passing off. While there was no dispute as to the reputation that ORT Israel gained through its use of the ORT trademark in Israel, ORT World argued this reputation belonged to her. The District Court ruled ORT Israel is a separate organization, not subject to ORT World control and therefore the reputation belonged to ORT Israel. The District Court based its finding on the basis of an analogy to the section of the Trademark Ordinance which states that rights are afforded to the owner of the registered trademark and that another cannot obtain rights in such a trademark unless he was registered as a registered licensee. ORT Israel argued this argument should be applied even when the trademark is not registered. The District Court held that since ORT Israel did not approve for ORT World to make use of the ORT trademark any such use was unauthorized and therefore prohibited.
On appeal the Supreme Court reviewed the elements of the tort of passing off now codified in Section 1 of the Commercial Torts Act which states that a business shall not cause that a good that he sells or a service that he provides shall be mistakenly considered to be the good or service of another business, or a good or a service having an association to another business.
Section 1 also provides that the use of a business of its own name in good faith for the sale of a good or service shall not be considered, of itself as passing off. The Supreme Court stated that the value protected by the passing off tort is designed to afford the protection of the law to prevent harm in the reputation acquired by a business. To protect the positive image a business has acquired in its goods or services. The elements of the passing off tort are two: first, that the business has acquired reputation in the goods or service such that the public identifies the positive image therewith; and second, the the actions of the defendant are such that the public is misled or is likely to be misled to think that the goods or services supplied by the defendants are those of the plaintiff. It is sufficient that there is a reasonable likelihood that the actions of the defendant would cause a regular consumer to mistakenly believe that the goods or services are provided by the plaintiff. It is, the Supreme Court stated, an objective standard and there is no need to show an intent to mislead or that any consumer was actually misled.
In this case the Court identified that the reputation is associated with the positive image of the ORT organization and not its products. The Court however noted that such reputation, associated with non-business activity, such as charity work, does not establish the reputation required for the tort of passing off. Since the reputation protected by the passing off tort is not an abstract interest, but rather an economic interest of the business “market power” – the consumer attraction power – the passing off tort deals with the commercial aspects of reputation and not the good name of a not for profit organization dealing mainly with charitable and philanthropic causes. While the Supreme Court raises the question of what kind of “business” reputation should a charitable organization should have to protect its interests in raising funds, the question remains unanswered. To continue the court does establish that to ORT trademark reputation did attach for the passing off tort.
As to the ownership of reputation, the Court states that first an examination has to take place of who the “original” owner of the reputation was; and second, whether the reputation remained with this “original” owner or transferred to another. When reviewing who the “original” owner of the reputation, the Court states that the District Court ignored the various international activity ORT World had which contributed to the good name of ORT in Israel. Moreover, the Court noted that surveys performed showed the public recognized the ORT trademark with both ORT World and ORT Israel. Therefore, the Court concluded both ORT Israel and ORT World own together the reputation in the ORT trademark.
The Supreme Court continued to review the issue of misleading. The Court cites the Look and Sound test as the major test to determine if the public could be mislead. Reviewing the various logos used by ORT World:
and ORT Israel:
the court finds that visually the public is not likely to be misled since while both use the ORT trademark they are visually very different, one is in Hebrew and the other in English with the globe in the background. These distinction, the Court ads, shows the fact that the parties are independent and separate bodies, stemming from the same original organization – a correct use – which do not lead to likelihood consumers would be misled.
The Supreme Court notes that the second test – the type of clients and goods – is not suitable for review when the reputation belongs to a public body associated with philanthropic and charitable services. In any case, the Court adds any potential philanthropist will likely review well who the body he contributes money to is and there is therefore little or even negligible likelihood of such philanthropists being misled.
The Court therefore finds that there is no likelihood of “consumers” being misled by the use of ORT World in its full English name or its two logos all written in English and without any Hebrew writings.
The Supreme Court seals its judgement citing from an English court in the Diabetic Organizations:
“A passing-off action by one charity against another is on the face of it… a deplorable, even scandalous thing to occur. Charities solicit donations from the public… in the expectation that donations will be spent on furtherance of the charity’s purposes. Even for a lawyer it is a difficult mental feat to recognise this very expensive litigation as helping the diabetics whose subscriptions and gifts will be the ultimate source of payment of the lawyers’ bills.”
The appeal is therefore accepted and the District Court judgement cancelled.