(Sept. 5, 2019) On August 7, 2019, Israel’s Supreme Court upheld the Tel Aviv District Court’s decision to dismiss a claim by Nestle Nespresso (the appellant) that the Israeli coffee company Espresso Club (the respondent) had violated Nespresso’s copyright and trademark by broadcasting several commercials referencing its own ads. Nespresso had also alleged that the commercials by Espresso Club had harmed Nespresso’s reputation, constituted fraud, and contributed to Espresso’s unjust enrichment.  (CrimA 3425/17 Societe des Produit Nestle v. Espresso Club (in Hebrew) (all translations from Hebrew by author).)

The Court’s Determination

Supreme Court Justice Neal Hendel wrote the majority opinion, with Justices Noam Sohlberg and George Karra concurring. In rejecting Nespresso’s claim, Hendel determined that any reasonable person viewing the ads would easily understand that they were not intended to imitate Nespresso’s commercials but to ridicule them and create a different, perhaps even opposite identity for Espresso Club: instead of coffee culture and prestige, Espresso Club’s ads emphasize popular accessibility by using a critical parody of Nespresso’s chosen image.

Hendel determined that the mockery in Espresso Club’s ads was not for the sake of mockery but for illustrating a concrete and substantive point of view about Nespresso’s image, as it emerges from its ads. The emphasis was on refining Espresso Club’s business model, which includes free coffee delivery at no cost, compared with the model shown in Nespresso’s ads.

Hendel further clarified that

[c]opyright law is not intended to protect against the use of the creator’s reputation, but against copying his/her work. Here the advertisement exposes the appellant’s creation, while highlighting its weaknesses and presenting the respondent’s products’ advantages [both] indirectly as well as directly.

In addition to determining that a creation constitutes a parody or criticism, however, determining that it does not violate copyright and trademark requires that it meet “fairness tests, such as … the value of the creation and its potential market value. In addition, the creator has a moral right [to expect] that his/her creation will not be distorted, although this right is also balanced against other values.” Hendel determined that the respondent’s ads met the criteria of fair use, both by design and by being

[a] parody of a different and innovative nature, and not another copy with a slight change of the appellant’s advertisements. The competing ads … cannot be used as a substitute for one another. The market value of the advertisements – as creations traded for their use – was not harmed, except for possible harm as a result of ridicule, which the law was not intended to prevent. …

Hendel further held that there was no basis for the claim that the information published in the ads was false or that it had resulted in directing sales from the appellant to the respondent. There was similarly no indication that the respondent was unlawfully enriched at the expense of the appellants. (Paras. 24, 26, 35, 44.)

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