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Yahoo! Inc. v. Yahoo-Israel

By Adv. Haim Ravia
Jul 09, 1998

On 1st July 1998 the District Court of Tel Aviv awarded the force of a judgment to an understanding reached in the first Israeli dispute relating to domain names (CF 615/98, MA 6529/96). In the understanding, Yahoo Israel undertook to stop using the name "Yahoo" within 24 hours and to transfer to Yahoo! Inc. all the rights in the domain name and in the trademark registration applications filed by it, and also to pay it costs of US$ 5,000. Until payment has been made, Yahoo Israel's director is barred from leaving the country. This is therefore a far reaching settlement which was upheld by Judge Ephraim Shalev even before any formal trial had begun. Several well phrased statements and questions by the Court left no room to doubt what the Court's view was with regard to the proper decision and made Yahoo Israel's director reconsider the likely outcome of his battle.

Yahoo! Inc., a company registered in California, USA, operates the well known Internet search engine (http://www.yahoo.com), which receives millions of hits a day. It purchased the yahoo.com domain name in February 1995. On the other hand, the yahoo.co.il domain name was purchased by or for the defendants in December 1995. Yahoo Israel pleaded that for about two and a half years it had been operating a web site at that address, through which it was marketing its services as a web site builder. In 1997 it even made an application to the Registrar of Trademarks for the registration in its name of the trademark "Yahoo-Israel". In September last year Yahoo! Inc. discovered the Israeli company and contacted it, requiring it to stop using the domain name. When this did not help, it applied to the District Court of Tel Aviv, through its attorney, Adv. Eitan Shaulaski, for an injunction against the Israeli company, its shareholders and director. Yahoo Israel's reply was filed through its attorneys, Advs. Jonathan Agmon and Eran Sorroker. The parties' arguments were briefly as follows -

  • Yahoo! Inc. claimed damage to the domain name; Yahoo Israel answered that no such tort is recognised.
  • Yahoo! Inc. claimed international goodwill: it has been using the name since June 1994, registered appropriate trademarks around the world and also registered the same domain name. Yahoo Israel replied that not only did the American company not carry on business in Israel, but at the time the yahoo.co.il domain name was registered, the Yahoo search engine was not yet known in Israel and it therefore did not enjoy the goodwill which it now has. Moreover, the Israeli company had found dozens of sites using the name "Yahoo", quite independently of the famous search engine. It therefore sought to infer that Yahoo! Inc. had no exclusive rights in the name.
  • Yahoo! claimed trademark infringement; Yahoo Israel answered that it had no trademarks registered in Israel but merely applications for the registration of such marks.
  • Yahoo! Inc. asserted that web surfers might mistakenly think that yahoo.co.il was connected with its famous search engine and that this was exactly the reason why the Israeli company had chosen the domain name it had. Yahoo Israel answered that there could be no mistake between the two, since the graphic design was completely different and Yahoo! Inc. does not build web sites (although during the hearing it did transpire that in opposition to Yahoo! Inc.'s Israeli trademark registration applications, the Israeli company had argued the complete opposite, i.e. that a mistake might be made between the two...). Yahoo Israel pleaded delay: for two and a half years it had been operating the web site at yahoo.co.il before Yahoo! Inc. bothered to apply for an injunction. It added that it had chosen the name in good faith and that "yahoo" is a word that appears in the dictionary - it is the name of a race of brutish creatures resembling men in Jonathan Swift's Gulliver's Travels...

Although the settlement of the case obviated a trial, it did leave some fascinating questions, which could have gone to trial, unanswered:

  • International goodwill in the Internet era is something so self-evident that we tend to forget that until quite recently the Israeli Courts had not recognised such goodwill in similar contexts (e.g. in the tort of passing-off). Does a company which does not have commercial activity in Israel, like Yahoo! Inc., enjoy goodwill here merely because its web site can be accessed from computers in Israel? (Presumably it does, but where should the Court draw the line? Should it, for example, waive the need to obtain leave for service outside the jurisdiction in respect of a claim against a foreign company, merely because its web site is accessible from Israel?).
  • How should international goodwill on the Internet be proven? Presumably, the number of hits received by the site should be the basic measure of such goodwill.
  • What in fact is a company's cause of action in similar circumstances? It would appear that the only cause which is really appropriate in the particular circumstances is the "catch-all" one of unjust enrichment. If the one claiming the rights in the domain name has not registered an identical trademark, it cannot rely on the Trademarks Ordinance for protection.
  • What should the treatment be in respect of competition between a generic top level domain name, like yahoo.com and domain names which incorporate a suffix indicating the country of registration (like co.il)? Does one have priority over the other?
  • Does the requirement of good faith have a place in competition between domain names?

All these and many other questions have yet to be answered. Nevertheless, to the extent that one informal hearing can indicate the inclination of the Israeli Courts, companies which have goodwill on the Internet, even if they do not directly carry on business in Israel, will gain protection against third parties who adopt misleading domain names.

Translated by Word Power