International/National Exhaustion of Copyrights
In the precedent ruling of Trendmasters Inc. v. Asher Ashkenazi the Tel Aviv District Court held for the first time that under Israeli law the exhaustion of copyrights in national and not international.
Although legal literature has dealt with the question of national versus international exhaustion of copyrights, Trendmaster marks the first time that the courts have ruled on this issue.
This question is of extreme importance in the parallel import market. The Israeli Supreme Court has previously allowed parallel import of products protected by trademark, holding that the exhaustion of trademarks is international (i.e. that a legitimate product sold abroad and protected by trademark may be imported into Israel without infringing on the trademark).
Honorable Judge Gadot presiding over the Trendmasters case held the Supreme Court’s ruling applied only to trademarks and not to the parallel import of products protected by copyrights. After analyzing the possible solutions Judge Gadot concluded the correct reading of the 1911 Copyright Act leads to the conclusion that the exhaustion of copyrights is on a national basis only, and therefore parallel import of copyright protected products is forbidden.
It should be noted that the Trendmasters ruling, which is not without doubt, is somewhat obiter dictum due to the Court’s finding of fact that plaintiffs did not manage to prove that the defendants actually infringed the plaintiff’s rights.
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