New court ruling illustrates how not to sue Amazon in Israel

The Tel Aviv District Court has ruled in favor of, Inc. and quashed an extraterritorial service of process certification that was previously granted against Amazon, ex parte, at the request of Dead Sea Premier Cosmetics Laboratories Ltd. 

Premier engages in manufacturing and marketing of cosmetic products. Judge Hanna Plinner of the Tel Aviv District court held that Premier lacks a good case, if any, against Amazon; that none of the alternative provisions under regulation 500 of the Israeli Civil Procedure Regulations are applicable; that Israel is not the appropriate forum and that Premier's motion exhibits considerable factual inaccuracies detrimental to the relief Premier is seeking.

Premier alleged that Amazon's website is an e-commerce platform that allows any person to set up an account and offer their goods for sale, without any form of supervision being employed by Amazon, all the while violating Premier's rights, including its trademarks and copyrights.

The court underscored that a plaintiff seeking an extraterritorial service of process certification must show that its case falls within the scope of one of the causes set forth in regulation 500 of the Civil Procedure Regulations, and that it has a good arguable case and a serious question to adjudicate.

The court has discretion as to whether or not to permit the extraterritorial service of process, where, among other considerations, it also considers the appropriateness of the forum, that is – whether courts in Israel are the appropriate forum to adjudicate the claim.

Judge Plinner examined the question of "good arguable case", and opined that Amazon is a foreign corporation that operates a website offering various services to users. According to Judge Plinner, in order to impose liability on an online service provider, the aggrieved party must utilize the incremental process set forth in the Borochov case in Israel. In the present case, Premier merely submitted a demand letter to Amazon, seemingly inconsistent with Amazon's policies and procedures, and neglected to respond to follow-up emails Amazon had sent it.

The court emphasized that Premier, whether acting as an advertiser on Amazon or as a customer (ordering goods through Amazon in order to substantiate its claim), was knowledgeable, or should have been knowledgeable, of the binding procedures. It should have therefore acted in accordance with those procedures prior to filing a lawsuit against Amazon, in Israel. Since Premier did not comport with the binding and agreed-upon procedures, it did not earn the right to bring suit. 

Judge Plinner held that Premier lacks a good case against Amazon, in terms of evidence and substance. With respect to the factual basis, Premier only provided evidence of a purchase Premier made from a third party, and there is no controversy that the purchased product was shipped from Israel. Therefore, the only evidence presented is the purchase of an Israeli item, manufactured by an Israeli company and shipped from Israel. This, at best, amounts to a violation (if any) committed by another Israeli company. The court held that Premier failed to prove that Amazon stored or shipped the goods, other than merely operating an e-commerce platform.

Criticizing Premier, the court also held that its trademark infringement claims were not substantiated by evidence, and worse – it had mispresented facts, given that its registered trademarks in Israel were discontinued or abandoned (unlike its US trademark, which is still registered). The judge referred to the severity of the manner in which Premier presented the issue. She noted that Premier's abandonment of its trademark in Israel indicates that Premier seeks protection of its trademark abroad, rather than in Israel, and this impacts the analysis of the appropriateness of the forum to adjudicate the claim.

With respect to Premier's allegation that goods are marketed by an unauthorized party, the court held that Premier failed to prove that the goods offered through Amazon are not original. The court accepted Amazon's arguments with respect to contemporaneous import and agreed that Premier may not preclude others from selling original goods imported to Israel through contemporaneous importation. As to Premier's other alleged causes of action, such as use of copyrights, Plinner held that Amazon's use did not overstep permissible "Fair Use".

The cornerstone of the court's judgment is that Amazon's capacity as an e-commerce platform and the practices of Israelis ordering goods through Amazon are insufficient factors to hold Amazon liable for every advertisement of a product. The court opined that - 
  • From the Israeli forum's point of view, Amazon's e-commerce platform is intended first and foremost for Israeli consumers ordering products from abroad, and for selling Israeli products to consumers overseas. There is no other sense in using Amazon.
  • When Internet giants are sued in Israel due to online marketing, the existence of a good arguable case must be carefully evaluated, so as to filter out plaintiffs seeking a "deep pocketed" defendant or media buzz. Mere advertisement online is insufficient to substantiate a claim.
Next, the court considered whether an alternatively applicable provision exists under regulation 500 of the Civil Procedure Regulations, that justifies an extraterritorial service of process. The court found none, and held that the issue at hand does not fall within the scope of an "action, inaction or nuisance committed in Israel". The court held that the element of online marketing also reaching Israeli users, is insufficient to support a determination that an action or inaction was committed in Israel.

The court then went on to determine the appropriate forum for the claim. After applying the pertinent tests and examining the "majority of nexuses", the court found that the Israeli forum is not an appropriate one: Amazon is a foreign corporation, located in the United States; advertisements on Amazon are made pursuant to a contractual engagement drafted in English; and Amazon's argument as to US governing law was not rebutted. Judge Plinner held that there's no sense in subjecting Amazon to Israeli law, because Amazon operates an e-commerce platform spanning products from around the globe.

The court also addressed Premier's conduct in attempting to serve an apparent Amazon representative while he attended a conference in Israel, at the time Amazon's motion to quash the ex parte extraterritorial service of process certification was pending in court. The court held that Premier's intent was to circumvent the court's forthcoming decision and improve Premier's position with respect to the burden of proof. The court ordered that the extraterritorial service of process against Amazon be quashed and that Premier pay Amazon attorney fees in the amount of 20,000 NIS (approximately US$5,000). {The full decision, in Hebrew, is available here: CC 30008-10-13 Dead Sea Premier Cosmetics Laboratories Ltd. v., Inc.}