Parallel Importing is not a Violation of Intellectual Property Rights
In Dyson Limited et al v. Y. Shalom Ltd. et al Plaintiffs sued the defendants for breaching their rights by the parallel importing of vacuum cleaners manufactured by Plaintiff no. 1 (“Manufacturer”), who granted Plaintiff No. 2 (“Agent”) exclusive rights to import the products to Israel. It was undisputed that the Defendants did not make any changes to the vacuum cleaners, merely imported them “as-is”. In addition, defendants also translated Manufacturer’s instruction booklets from English to Hebrew (with respect of products not imported by the Agent).
Defendants did not deny their actions but claimed rather that their actions were in fact legal. Plaintiffs acknowledged that although trademark law cannot prohibit defendants from parallel importing the vacuum cleaners the defendants violated their rights under other laws such as the Commercial tort Law 1999, Consumer Protection Law- 1981 and the Patent and Design Ordinance -1924 and therefore request that the court find in their favor. In addition the Plaintiffs claimed that the unauthorized translation of the booklets from English to Hebrew was a violation of the Manufacturer’s copyrights.
In denying the Plaintiffs’ claims, Hon. Judge Ginat held that the principle of “Exhaustion of Rights” limits the control the intellectual property holder has over the product after he has released the product into the stream of commerce. Said principle provides that once the holder receives his revenues from the sale of the product, the holder has no additional rights. The court further noted that according to Israeli case law the Exhaustion of Rights is international (not only national), which means that if the holder of the IP rights sold the product in any country in the world, it may be freely imported into Israel.
Therefore, an Israeli patent holder cannot stop the import of patented products legally purchased outside of Israel in a jurisdiction where similar patents to the Israeli patent apply to the product.
The court rejected the trademark claim and held that if the matter involves an original product, the holder of the trademark cannot prevent it from being sold in Israel even if done without the holder’s consent and even if it violates a contract between the holder and the exclusive agent. It is sufficient that that the product is original and not a counterfeit copy.
Judge Ginat further held that a copy of a copyrighted work made outside of Israel, with the consent of the copyright holder, may be freely imported into Israel (It should be noted that this ruling was made prior to the new Copyright Act of 2007 going into effect. The new Copyright Act leads to a similar conclusion).
Furthermore, according to the court, the production and marketing of a product includes providing an instruction booklet. As such, there is an implicit consent by a manufacturer to the translation of its instruction booklet to the user language of the destination country. Accordingly the court found that the translation of the instructions booklet by the defendants was in itself not a violation of the Manufacturer’s copyrights.
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