In the Tel Aviv District Court, the first battle over domain names in Israel was decided by agreement. Under the agreement, which has the force of a court judgement, Yahoo! Israel undertook to cease, within 24 hours, to use the name Yahoo!, to transfer to Yahoo! International all rights in the domain name and in applications to register trademarks, and to pay $5,000 legal costs.
Until payment is made, Yahoo! Israel’s manager may not leave Israel. This is a far-reaching compromise. Several carefully worded statements and questions on the part of the court left no room for doubt about what it thought the appropriate outcome should be, and sent Yahoo! Israel’s manager off to reconsider what result he might expect from his fight.
Yahoo! Inc., a company registered in California, runs the famous Internet search engine which attracts millions of inquiries a day. In February 1995, Yahoo acquired the domain name yahoo.com. In December 1995, the domain name yahoo.co.il was registered by, or on behalf of, the respondents in the case.
Yahoo Israel claimed that it had operated an Internet site at this address for two-and-a-half years, and had marketed its services as a builder of Internet sites through it. In 1997, the company even applied to the Registrar of Trademarks to register the trademark "Yahoo Israel" in its name. In September last year, Yahoo International came across the Israeli company for the first time, and demanded that it stop using the domain name.
When this failed to produce results, the company petitioned the Tel Aviv District Court, requesting an injunction against the Israeli company, its shareholders and managers.
These, in brief, are the arguments of the two sides: The US Yahoo! claims damage to the reputation of the domain name; Yahoo! Israel responded that the law does not recognise any such wrong. Yahoo! International claimed an international reputation, having used this name since June 1994, registered appropriate trademarks throughout the world, and registered an identical domain name; Yahoo! Israel responded that, not only did the US company not conduct business in Israel, but when the domain name yahoo.co.il was registered, the Yahoo! search engine was unknown in Israel, and so did not enjoy the reputation it boasts today.
The Israeli company even found another ten sites that use the name yahoo and have no connection whatsoever to the famous search engine. It sought to draw the conclusion from this that the plaintiff-petitioner had no unique rights in the name.
Yahoo! claimed infringement of its trademarks; Yahoo Israel responded that it had no trademarks registered in Israel, but, at most, applications to register such trademarks. Yahoo! International claimed that Web surfers were liable to think, mistakenly, that yahoo.co.il was linked to the well-known search engine, and that this was precisely the reason why the Israeli company had chosen this name for itself and acquired this domain name; Yahoo! Israel responded that there was no possibility of confusing the two, as the graphic design was completely different, and Yahoo! International did not deal in setting up Internet sites.
The settlement of the case through a compromise may have saved the necessity for a court hearing, but it left some fascinating questions unanswered.
International reputation in the Internet era is something so self-evident that we tend to forget that, up until not many years ago, Israeli courts did not recognise the existence of such a reputation. Does a company that conducts no commercial activity in Israel, such as Yahoo! International, enjoy a reputation here merely because it is possible to enter its Internet site from computers in Israel? It seems that the obvious answer would be positive, but how far will the court stretch the principle? Will it, for example, waive the requirement for a permit for service of process outside the jurisdiction against a foreign company, just because its Internet site is accessible from Israel?
How should competition between a generic top level domain name like yahoo.com, and domain names that include suffixes that indicate the country of registration such as co.il, be treated? Does one registration take priority over the other? What requirements are there to demonstrate good faith in competition between domain names?
All these matters, and many others, will still not be clarified. However, insofar as one informal hearing can testify to the Israeli court’s inclinations, companies with reputations on the Internet will enjoy protection against third parties that adopt misleading domain names, even if they do not conduct business in Israel directly
Published by Israel's Business Arena on July 15, 1998