IL TM Update: Important Decision on Non-Use and Recordal of Trademark Licenses

In a recent important decision, the ILTMO held that revocation of a trademark registration on grounds of non-use is discretionary and that registrations of well-known trademarks will not be revoked even if the use requirements were not satisfied. The ILTMO also significantly mitigated the adverse non-use consequences in case of failure to record trademark licenses.

Under Israeli law, any interested party can petition to revoke a trademark registration if there were no good-faith intention to use the mark and no actual use of the mark, or if the mark had not been used for a period of at least three consecutive years as of the registration date. In addition, licenses to use the trademark must be recorded. Use of a trademark by an unrecorded licensee will not be attributed to the trademark owner and may render the registration vulnerable for revocation on grounds of non-use.

The petitioner applied to revoke the TOYOTA trademark registrations in class 37 for car repair services. While it was acknowledged that the mark is extensively used by Toyota’s authorized repair shops in Israel, the petitioner asserted that the licenses to use the mark were not recorded at the ILTMO and that, consequently, use by the licensees cannot be attributed to the trademark owner.

The ILTMO held that the recordal of all the licenses granted by Toyota to its network of repair shops in Israel would be an impractical requirement and is unnecessarily burdensome. In addition, the ILTMO held that even if non-use for a period of three years had been established due to the failure to record the licenses, revocation remains discretionary. In the present circumstances, in which the trademarks are used with the consent of the trademark owner, and are anyhow well-known trademarks which should not be open for use by unauthorized third parties, it was not warranted to revoke the registrations. The discretion to revoke trademark registrations should only be exercised if maintenance of the registration will unjustifiably prejudice the public interest to use the marks which is clearly not the situation in the case of the TOYOTA trademarks.

In addition to highlighting that revocation on grounds of non-use is discretionary, this important decision also mitigates the burdensome need to record trademark licenses at the ILTMO. Please contact us should you need more specific advice regarding the circumstances under which trademark licenses must be recorded at the ILTMO.

This update article is provided for general information only and is not in lieu of legal advice. Please contact us directly for any required advice on specific matters.