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Israel - Intellectual Property Not Protected under Intellectual Property Laws May Be Protected under Unlawful Enrichment Law

Historically, protection of intellectual property in Israel has been expressly prescribed by the patent, copyright, design and trademark laws. However, a relatively recent but limited line of court cases applying the cause of unlawful enrichment may have expanded the scope of protection for intellectual property.

In Leibovitz v. Eliahu, the Israeli Supreme Court laid the foundation for a considerable broadening of the cause of unlawful enrichment and, possibly, for the development of a cause of unfair competition. In Leibovitz, the Court stated that the cause of unlawful enrichment includes three elements: (1) the element of "enrichment"; (2) whether or not the enrichment emanated from the plaintiff; and (3) whether or not the enrichment was unlawful. Where the defendant's right to the enrichment is neither expressly prescribed nor expressly denied by the law, the enrichment is unlawful if it is unjust. Whether the enrichment is just or unjust depends on various considerations, such as the force of the plaintiff's right, the nature of the injury to his interest, the behavior of the parties, and the nature of the activity by which the plaintiff obtained the profit. Moreover, the Court Leibovitz held that the cause of unlawful enrichment, which normally protects proprietary and obligatory rights, can also be used for protection against interference with commercial expectations, if an additional element exists, such as wrong and unfair conduct of the competitor, including conduct lacking good faith, or other circumstances which render the enrichment unjust.

A later Supreme Court case, SodaGal Ltd. v. Ricardo Spilman, relied on the Leibovitz decision in recognizing the appellant's right to an injunction against the respondent, where the respondent bought from the appellant's distributors used gas containers for homemade carbonated drinks produced by the appellant, then changed the label on the containers to a label bearing the name of the respondent's business, refilled the containers, and resold them. The Supreme Court ruled that the respondent's "wild competition" entitled the appellant to remedies under the cause of unlawful enrichment. Furthermore, the Court actually came close to recognizing a cause of unfair competition.

Two Tel Aviv District Court decisions in 1994 may have expanded the cause of unlawful enrichment even further. In Anima Fashion Ltd. v. Reuven Blan, the District Court in an unpublished decision relied on Leibovitz to rule that a dress design which was eligible for registration and protection under the design laws could be protected under the unlawful enrichment law if the designer failed to register the design. The judge gave weight in this ruling to the fact that it is costly for designers to register every article of clothing because clothing designs change every season. Prior to the enactment of the unlawful enrichment law, intellectual property could be protected only under the intellectual property laws. In Anima Fashion, however, the District Court held that some intellectual property, such as dress designs can also be protected under the unlawful enrichment law, if registration of the designs under the intellectual property laws is costly or burdensome.

In Spal s.r.l. v. Sagi, the Tel Aviv District Court, in another unpublished decision, expanded the protection offered under the unlawful enrichment law by holding that patentable subject matter is protected under the unlawful enrichment law if the inventor fails to obtain a patent. In Spal, the Petitioner had obtained patents in Europe and in the United States, but not in Israel, for an electrical device for raising windows in vehicles. The Petitioner's device was sold in Israel, and the Defendant copied the device and sold a "knock-off" version for less than the price of the Petitioner's device. The District Court in Spal expanded its Anima Fashion holding by ruling that the protection of intellectual property under the unlawful enrichment law should not be limited only to instances where it is costly or burdensome to obtain a patent or registration under the intellectual property laws. Moreover, the District Court held that all those who copy the ideas of another person without permission and who profit therefrom are liable under the unlawful enrichment law.

Anima Fashion and Spal are sui generis and have only persuasive effect, because decisions of the District Court are not binding precedent. Moreover, the judge who wrote the Anima Fashion and Spal decisions will soon retire. Nevertheless, these 1994 cases, and the Supreme Court decisions on which they relied, indicate that Israeli courts may be willing to protect intellectual property under the unlawful enrichment law, if the intellectual property laws provide no protection. On the other hand, it should be pointed out that this line of cases does not represent a clear and definitive trend or the prevailing opinion among Israeli judges


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