Israeli Customs Cannot Detain Goods Infringing a Registered Design But Has Authority to Seize Goods which Would Lead to Consumer Confusion or Bearing False Commercial Marking

Crocs, the maker of unique plastic like shoes, owns various registered designs in Israel protecting the unique shape of the shoes it markets. Crocs also filed in 2006 applications for a logo showing a crocodile, but 5 years later these applications have yet to be accepted and issued.

In 2006, according to the “Little Consignment Procedure” the Israeli Customs seized and delayed the release of a consignment of Crocs like shoes having a crocodile logo thereon. After Customs discovered the crocodile logo has not been registered, Customs notified Crocs that the consignment was to be released. In turn, Crocs filed a lawsuit against the Israeli Customs seeking a declaratory judgment that Customs must avoid release of the consignment and destroy the shipment. At the same time Crocs also filed a motion for interlocutory remedies, including injunctive relief against Customs to prevent the release of the shoes into general circulation. The injunctive relief was granted in 2006, evidence was filed and the trial ended in March 2010. In the meantime the seized consignment was destroyed, making the case moot.

The judgment, issued June 19, 2011, revolved around the issue whether Israeli Customs has the authority to seize and detain goods that infringe on registered designs or other intellectual property.

Customs argued it had no authority to seize and delay infringing goods if they infringe IP rights other than trademarks or copyrights, such as registered designs.  The court agreed in part.

The court said that there is no doubt that the seizure of goods suspected of confusing consumers or that generally infringe on registered designs rights, as soon as they reach the ports of Israel, is in the public’s interest. However, the amending legislation, which enacted TRIPs in Israel, granted Customs with authority to seize and delay goods allegedly infringing registered trademarks or copyright only (Section 200A to the Customs Ordinance). Therefore, the court agreed that Customs have no authority to seize and delay goods infringing registered designs.

However, the court found that Customs has the discretion to seize and delay the release of goods that are likely to confuse consumers under section 35 of the Consumer Protection Act. The court found that the Israeli Customs has a general authority to seize and detain goods in the Customs Ordinance (prohibiting the importation of goods which are prohibited under other legislation). The court also found that Customs has authority  to seize and detain goods that have false commercial description under the Goods Marking Ordinance. The court also stated that Section 200A did not derogate from these additional authorities Customs has.

Because, Crocs didn’t request Customs to consider these statutory instruments when issuing the 2006 communication to Crocs, and since Customs did not make a decision with respect to these provisions, the court didn’t discuss their applicability to this case.

Crocs lawsuit resting on infringement of registered designs was therefore dismissed and the interlocutory remedies cancelled.