Israel

• Pages: 379-413

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Chapter XIII

ISRAEL

A. Introduction

When the State of Israel was established in 1948, the Provisional

State Council annulled the powers of the British Crown but kept in place

the British substantive law that existed on the eve of the establishment of

the State, subject to any new legislative enactments.1 Most aspects of

British law (including patent and copyright law) gradually have been

replaced in the following decades. The patent articles of the British

Patents and Designs Ordinance of 1925 were replaced by an original

Israeli statute in 1967,2 and the U.K. Copyright Act of 1911 was replaced

with an Israeli statute in 2007.3 However, many of the original British

provisions dealing with design patents remain in force today.4

During Israel’s early years, the lack of a substantial body of case law

in the new state, together with a strong linkage to English common law,

resulted in significant reliance on English case law, especially in areas

such as intellectual property where the statutory framework was set up

by the British mandate.5 The tendency to consider foreign case law (as a

persuasive, rather than authoritative, source) continues to this day, and

has spread beyond English (and Commonwealth) cases to other

jurisdictions, and beyond case law and law treatises to sources such as

parliamentary and regulatory reports.6

1. SUZIE NAVOT,CONSTITUTIONAL LAW OF ISRAEL 4 (2007); Law and

Administration Ordinance, § 11, 1948.

2. Patent Law, 5727-1967, 1967 S.H. 148, as amended.

3. Copyright Law, 5767-2007, 2007 S.H. 38.

4. Patents and Designs Ordinance, 1924, Laws of Palestine, Vol II. (H)

1053, (E) 1076. Articles 1-3, 30-56 are still in force.

5. AUTHORING RIGHTS—READINGS IN COPYRIGHT LAW (Michael Birnhack

& Guy Pessach, eds., 2009), p. 21; TONY GREENMAN,COPYRIGHT 13-15

(2nd ed. 2008) [hereinafter GREENMAN]

6. See, e.g., Mon. 1/93 Gen. Dir. v. Dubek Ltd. et al. [1995], Publication No.

3005459 (IAA Archive), available at http://archive.antitrust.gov.il/

files/1201/1-93.pdf. Among many other sources, the Tribunal referred

with approval to the U.S. Supreme Court decision in Aspen Skiing

Company v. Aspen Highlands Skiing Corporation, 472 U.S. 585 (1985),

380 Antitrust Issues in International IP Licensing Transactions

Israel’s Antitrust Tribunal (the Tribunal) has recognized that Israel’s

intellectual property laws and the Restrictive Trade Practices Law (RTPL)

share a common goal, namely, to enhance public welfare, although they

seek to achieve this common goal through seemingly conflicting means.7

While the Tribunal refused to accept the position that competition laws

are subordinate to intellectual property laws on the one hand, it would

not deny “the possibility that the social interest in incentivizing

innovation would result in a change of the point of balance” between the

two sets of laws.8

B. The Sources and Basics of Israel’s Competition Law

The Restrictive Trade Practices Law9 is Israel’s antitrust statute. It

regulates three main areas: (i) “restrictive arrangements”; (ii) the

unilateral conduct of monopolies; and (iii) mergers. Unfair trade

practices (essentially, unilateral conduct of businesses, including

nondominant firms) are generally regulated in a different statute, the

Commercial Wrongs Law (CWL).10

Restrictive arrangements are prohibited, unless approved under one

of the RTPL’s approval or exemptions routes. 11 Abusive unilateral

conduct is prohibited, and cannot be cleared by the regulator or a court.12

Certain mergers must be notified and may not be consummated without

regulatory clearance.13

The RTPL establishes and regulates the operation of the Antitrust

Authority (IAA), its head, the General Director of Restrictive Trade

Practices (General Director),14 and the Tribunal,15 which has the power to

clear restrictive arrangements and which also hears de novo appeals on

and to the EC Commission Decision 92/213/EEC: British Midland v. Aer

Lingus, OJ 1992 L96/34. See also D.3.a.(2); infra note 222.

7. AT (Jer) 3/97 Magal Sec. Sys. v. Antitrust Gen. Dir., [2001] Takdin-

District 2001(3) 39047 ¶¶ 82-88; Dinim-District 33(3) 770, translated in

Publication No. 3006703E, available at http://eng-

archive.antitrust.gov.il/ files/180/3-97.pdf.

8. Id.

9. Restrictive Trade Practices Law, 5748-1988, 1988 S.H. 128, as amended.

10. Commercial Wrongs Law, 5759-1999, 1999 S.H. 146.

11. RTPL ch. 2.

12. Id. ch. 4.

13. Id. ch. 3.

14. Id. ch. F.

15. Id. ch. E.

Israel 381

decisions of the General Director.16 The RTPL also makes breaches of

the RTPL a tort (actionable in civil courts, including as class claims) and

a criminal offense.17

The RTPL has no extra-territoriality provisions. However, Israeli

criminal law extends extra-territorially to offenses committed abroad

against, among other things, the state’s economy. Israeli rules of civil

procedure take a liberal approach to service of process on foreign

litigants.18 Because courts find both EU and U.S. doctrines persuasive

(especially with respect to antitrust),19 it cannot be ruled out that the

United States effects doctrine or the EU’s economic entity doctrine

would be adopted. There are no cases on point, but the General Director

has issued a decision suggesting that the effects doctrine applies in

Israel.20

1. Agreements that Restrict Competition

Article 2(a) of the RTPL prohibits “restrictive arrangements”

between persons carrying on business, “according to which at least one

of the parties restricts itself in a manner liable to eliminate or reduce the

business competition between it and the other parties to the arrangement,

or any of them, or between it and a person not party to the

arrangement.”21

Under Article 2(b) of the RTPL, certain arrangements are prohibited

per se:

(b) Without derogating from the generality of the provisions of

subsection (a), an arrangement involving a restraint relating

16. Id. arts. 15(a), 22, 28, 30(h).

17. Id. arts. 47-50.

18. Leave for Civil Appeal 2705/97 Chinese Gipsum v. Lockformer Co.

[1998] IsrSC 52(1) 109.

19. See Mon. 1/93 Gen. Dir. v. Dubek Ltd. et al. [1995], Publication No.

3005459 (IAA Archive), available at http://archive.antitrust.gov.il/

files/1201/1-93.pdf.

20. Determination pursuant to article 43(a)(1) of the Restrictive Trade

Practices Law, 5748-1988, In re Selective Fragrances Market, Premium

Fragrances (James Richardson PTY Israel), [1999] Publication No.

3002438 (IAA archive), translation available at

http://eng-archive.antitrust.gov.il/files/50/Perfumes%20Market.pdf,

Publication No. 3002438E.

21. RTPL art. 2(a).