Unjust Enrichment—Remedies When Intellectual Property Law Fails

Author:Mr Tal Band
Profession:S Horowitz & Co
 
FREE EXCERPT

A client comes to your office claiming that a competitor copied his product. Examining the fact, you realize that he does not have a recognised intellectual property right to prevent the copying of its product. Is it a lost case? According to a unique Supreme Court judgment (LCA 5768/94 A.SH.Y.R v. Forum)1, concerning the interrelations between the Law of Intellectual Property and the Unjust Enrichment Law, the answer is "not necessarily".

According to the Israeli Unjust Enrichment Law, the plaintiff in a claim for unjust enrichment has to prove three elements:

(i) enrichment on the part of the defendant;

(ii) that the enrichment of the defendant emanates from the plaintiff; and

(iii) that the enrichment of the defendant is unlawful.

In several Supreme Court decisions, it has been held that the question of whether the enrichment is lawful or not will often be decided by the answer to the question of whether the enrichment is just, and not only by the question whether the enrichment is expressly prescribed or expressly denied by the law.

As to the question of whether the enrichment is or is not unjust, it was held that this question will be determined by various considerations, including the extent of the plaintiff's right, the nature of the injury to his interest, the behavior of the parties and the nature of the activity by which the plaintiff obtained the profit.

Furthermore, it was held that a claim for unjust enrichment can be used to protect, not just proprietary or obligatory rights, but also "expectations". The Supreme Court held that interference with a commercial expectation in itself does not constitute unjust enrichment. However, in certain circumstances, where an "additional element" exists, it may be so considered. The "additional element" may be:

"(a) wrongful and unfair conduct of the competitor, including conduct lacking good faith;

(b) other circumstances which render the enrichment unjust."

According to these elements, the Supreme Court (in a majority decision) held in the A.SH.Y.R. Decision that the specific laws establishing intellectual property rights do not, in themselves, exclude the possibility of granting relief based on the Unjust Enrichment Law, even where the plaintiff does not meet the requirements for the establishment of the specific intellectual property rights, or where the plaintiff applies for a remedy where no recognized intellectual property right governs the subject-matter.

The Court reiterated the three elements mentioned above...

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