How much can an international trademark owner recover after proving infringement in Israel? The answer is not a fixed amount per counterfeit article or every appearance of a confusingly similar mark. Under Section 59(a) of the Israeli Trademarks Ordinance, an owner may seek damages, an injunction and other appropriate relief. But establishing infringement and proving entitlement to a particular monetary award are separate matters.
Israeli courts distinguish compensation for the proprietor’s proven loss, estimation of loss supported by evidence, restitution of profits attributable to unlawful use, and statutory damages under a separate cause of action where its conditions apply, such as passing off under the Commercial Torts Law. Choosing the correct route determines the documents to obtain, the relief to plead and whether a claim for substantial damages can succeed even when infringement itself has been established.
Does Trademark Infringement Automatically Entitle the Owner to Damages?
No. Section 59(a) of the Trademarks Ordinance [New Version], 5732-1972, authorizes claims for damages and injunctive relief. It does not create a fixed general statutory payment merely because a registered mark was infringed.
A court may prohibit continued use of a mark yet reject a financial claim if the plaintiff has not established the loss, causation or other necessary basis for the requested sum. Claims relying on disgorgement, accounting or passing off have additional requirements and should not be treated as interchangeable.
For overseas rights holders, the assessment should begin before litigation: what commercial harm occurred in Israel, what information is available, and which remedies can realistically be supported by evidence?
Proven Financial Loss: Lost Sales and Reduced Profits
Compensatory damages seek, as far as the law allows, to place the proprietor in the financial position it would have occupied without the infringement. Possible losses include diverted sales, diminished profit margins caused by price competition, necessary response expenditure and proved injury to the economic value of the brand.
Falling revenue during a period of infringement is not necessarily caused by that infringement. The business may have experienced changes in demand, seasonality, lawful competition, altered pricing or other market conditions. Causation must be addressed.
Even if 1,000 sales are proved to have been diverted, multiplying those units by the proprietor’s retail price would ordinarily confuse turnover with profit. The relevant analysis may need to account for per-unit margins, saved production and distribution costs, and whether the proprietor had the capacity to meet the additional demand.
Useful evidence includes contemporaneous sales records, forecasts, canceled orders, distribution figures, comparable periods and, where appropriate, accounting or economic opinions. Confidentiality arrangements may be needed when the defendant is a direct competitor.
Sony v. Matrix: Infringement Found but Monetary Damages Refused
In an Israeli lawsuit by Sony companies against Matrix Electronics and its management concerning controllers for PlayStation consoles, the judgment of 25 October 2023 found infringement of one trademark but rejected the monetary claim for lack of adequate proof of recoverable harm. The additional causes of action, including passing off, were not established on the facts.
The result illustrates why photographs of products bearing the mark and proof of commercial use do not automatically establish the sum of money the claimant should receive. The plaintiff must identify and support the specific damages route.
A comparable distinction arose in Adidas AG v. Batash, Tel Aviv District Court, Civil Case 2028/08 (30 July 2014). The court found infringement of the three-stripe trademark and ordered injunctive relief and destruction of infringing goods, but did not award damages or order accounts where the necessary financial basis had not been proved.
When Can the Court Estimate Trademark Damage?
Sometimes commercial loss is established but cannot be calculated precisely. In appropriate circumstances, the court may make a reasonable estimate from sufficient evidentiary material. Estimation is different from selecting an arbitrary number without proof of loss or causation.
In Tomaschover v. Art Optic Ltd., Israeli Supreme Court, Civil Appeal 1203/13 (6 May 2015), concerning counterfeit spectacle frames, the Court examined restitution and estimation of relevant profits. Justice Hendel stressed the need for concrete evidence and care in estimating amounts, while Justice Sohlberg recognized the practical necessity of estimation in intellectual property disputes. The Court estimated deductible costs to arrive at the relevant profits.
In Maadanei Hatzafon Ltd. v. Guetta, Civil Case 24515-06-17 (20 March 2023), concerning the SUPER BABA mark, the court awarded NIS 200,000 on the evidentiary basis developed in the litigation despite gaps in exact quantification. That figure is a case-specific outcome, not a standard amount payable for every infringement.
Disgorgement of the Infringer’s Profits: Revenue Is Not Enrichment
Restitution focuses on the benefit attributable to the defendant’s unauthorized exploitation rather than automatically replicating the proprietor’s lost sales. It can be relevant where the defendant gained from branded sales but the proprietor cannot show which customers it would otherwise have captured.
Turnover is not profit. The analysis may require deductions for relevant expenses and a further assessment of how much profit arose from the trademark rather than the product’s independent characteristics, location, price, customer service or other commercial factors.
For example, a retailer with NIS 1 million in sales of disputed goods has not necessarily obtained NIS 1 million in benefit from the infringement. Even after computing net commercial profit, only the attributable portion may be recoverable under the particular legal basis.
Israeli discussions of Versace and Tommy Hilfiger have emphasized the evidentiary difficulty of separating the commercial value of the protected mark from other sources of gain. This distinction should be considered when a foreign brand owner asks Israeli counsel to claim “all of the distributor’s profits.”
What Is an Order for Accounts in an Israeli Trademark Dispute?
Often the defendant controls the data needed to value the infringement: how many units were sold, at what prices, with which discounts, and what costs were incurred. An accounting claim may require disclosure of relevant financial records if the claimant establishes the underlying entitlement and procedural conditions.
Such proceedings may involve two stages: first deciding entitlement to accounts, then obtaining and examining the records necessary to calculate the monetary remedy. The right to demand accounts is not a general right to inspect all of a competitor’s books without a specific legal and factual basis.
In the Israeli Mizrach U’Maarav litigation concerning the use of a commercial name in food distribution, the court required a defendant to account for relevant transactions and net profits. The case illustrates how accounts may assist with a claim when the pertinent business records are held by the party accused of wrongful use.
The requested period, goods, costs, profit categories and protection of confidential information should be defined carefully. Targeted document disclosure may sometimes be more proportionate than a broad accounts demand.
Reasonable Trademark Royalties as a Valuation Method
One possible method is to ask what commercial parties would reasonably have paid for a licence covering the actual unauthorized use. The relevant rate may depend on the registered goods, volume of sales, period, territory, exclusivity, distribution channels and commercial importance of the mark.
Actual licence agreements, comparable commercial transactions and established royalty practices may provide evidence. A percentage negotiated for a nationwide franchise system does not automatically apply to a brief advertisement or a single product line. This method is not a compulsory retrospective licence imposed upon the proprietor, and the law does not prescribe a universal royalty rate for trademark infringement.
The relationship between royalty-based valuation and other claimed heads of loss must also be considered to avoid duplicate recovery.
Is There an Automatic NIS 100,000 Award Without Proof of Damage?
Not for every infringement of a registered trademark. The Israeli Trademarks Ordinance contains no general provision giving a fixed NIS 100,000 statutory award for the mere fact of registered trademark infringement.
Section 13 of the Commercial Torts Law, 5759-1999, permits compensation without proof of actual loss of up to NIS 100,000 for a qualifying commercial tort, such as passing off under Section 1, where its statutory elements are established. Those elements include goodwill and a likelihood of deception. Proof that a registered mark was infringed does not automatically establish passing off.
Section 13(b) treats multiple wrongs forming a single course of acts as one wrong for statutory calculation. The statutory ceiling is not a minimum and cannot simply be multiplied by each unit sold, advertisement placed or webpage viewed.
See Passing Off Lawsuits in Israel for the separate cause of action and evidence.
Why Seized Counterfeits Do Not Always Lead to Statutory Damages
In Maccabi Israel Movement v. Krankors Clothing Ltd., Tel Aviv District Court, Civil Appeal 39678-10-22 (19 January 2023), an appeal concerning football jerseys detained by customs and destroyed before sale was dismissed. The appellate court did not interfere with the refusal to award no-proof damages under the statutory route considered in that case.
This did not establish a universal exemption for goods seized before sale. Rather, the judgment demonstrates that any statutory award remains discretionary and must reflect the established wrong and facts, including whether the disputed articles were actually distributed or marketed. The number of seized items is not necessarily the number of separate statutory wrongs.
Damage to Goodwill and Alleged Trademark Dilution
Brand damage can arise independently of any one diverted sale. A claimant may allege that unauthorized use weakens a mark’s source-identifying capacity, harms consumer perception or creates an impression of commercial sponsorship that does not exist.
Such assertions still need a legal and evidentiary foundation. In Adidas Salomon AG v. Yassin, Israeli Supreme Court, Civil Appeal 563/11 (27 August 2012), the Court cautioned against using a broad concept of dilution to bypass the statutory conditions for the asserted trademark right. Not every similarity that fails to establish confusion necessarily establishes dilution.
Evidence of reputational harm may include changed consumer perception, targeted corrective advertising and other concrete market effects, depending on the claim.
Where a claimant invokes a well-known but unregistered trademark, Section 59(b) of the Trademarks Ordinance provides a particular limitation on relief for the infringement cause of action concerned, allowing injunctive relief only. Any independent passing-off claim must satisfy its own requirements.
Can a Claimant Recover Both Its Lost Profits and the Defendant’s Profits?
Alternative remedies and calculations may be pleaded where permitted, but they cannot be combined mechanically to provide double recovery for the same injury. Lost profits reflect the proprietor’s loss; disgorgement reflects gain attributable to the defendant’s conduct. The figures may concern overlapping periods and market effects.
Likewise, statutory compensation for passing off should not automatically be added to compensatory damages for the same economic harm. Counsel should identify which protected interest and which period each requested remedy addresses.
What Can Be Learned from SUPER BABA and Lifestyle Equities?
In Maadanei Hatzafon v. Guetta, the court awarded NIS 200,000 relating to the SUPER BABA mark after considering evidence and the difficulty of exact measurement. In Lifestyle Equities v. Yafiz Fashion, Class Action 13671-02-17, the court approved a total liability of NIS 2,413,836 with additional legal-fee amounts.
Importantly, the Lifestyle judgment was rendered by agreement using the court’s compromise authority under Section 79A of the Courts Law. It is not a reasoned formula for calculating the value of a comparable infringement. The Sony case, by contrast, resulted in no damages despite proof of infringement of one trademark. The comparison demonstrates how strongly the outcome depends on the claims, evidence and procedural setting.
Evidence to Prepare Before Claiming Monetary Relief
Preserve the infringement evidence and collect information about scale: product samples, invoices, sales records, advertising, alleged duration and the business entities involved. Separately prepare the claimant’s sales and profit data, relevant licensing agreements, canceled orders, customer complaints and documents linking alleged harm to the infringement.
Where the defendant controls material figures, consider whether a targeted disclosure or accounts application is available. Expert accounting may be valuable where causation, margins and attribution are disputed; confidentiality of proprietary financial records should be addressed from the outset.
The roles of a manufacturer, importer, distributor and corporate officer must be distinguished. The fact that several defendants participated in a supply chain does not justify attributing all profits to every individual without a legal basis. See Personal Liability in Israeli Trademark Infringement.
For the infringement process see Trademark Infringement Lawsuits in Israel, and for the firm’s practice see Trademark Litigation in Israel. For a fuller treatment of remedies see Yonatan Drori, Monetary Remedies in Intellectual Property Proceedings (Hebrew, 2015), Chapter 9, read with later Israeli case law.
