Unjust Enrichment (Restitution)—the Elements Necessary to Establish a Claim for Unjust Enrichment

I. Summary

In a decision of the Israeli Supreme Court dated May†16, 2004, in the matter of L.C.A.†502/04 Buffalo Boots GMBH et al. v. GalióChain of Shoe Stores (TK-Supreme 2004(2), 1627), it was held, inter alia, that in order to establish that the enrichment of the defendant is unjust, it should be proven that an "additional element" exists (as previously held by the Court in L.C.A.†5768/94, 5614/95, 993/96 A.SH.I.R Import Manufacture & Distribution et al. v. Forum Consumer Product Ltd. et al. ("the ASHIR case")). Moreover, the plaintiffs' alleged investment in the development and/or promotion of its products would not suffice to establish said "additional element".

II. The Factual Background

The applicants (a German shoe manufacturing company and its exclusive Israeli distributor) filed a claim with the Tel-Aviv District Court, together with an application for an interlocutory injunction, asserting that the marketing of shoes by the respondents, whose shoe products are similar to those manufactured by applicant no.†1, constitutes, inter alia, unjust enrichment, the tort of passing-off and trademark infringement. It should be noted that no application was filed by applicant no.†1 to register its shoes as a design in Israel. The Tel-Aviv District Court rejected the plaintiffs' application for an interlocutory injunction, even though it held that the shoes marketed by the respondents indeed constitute prominent imitation of the shoe products manufactured by applicant no.†1. According to the District Court's decision: (i)†the trademarks used by the respondents to market their shoes were completely different from the applicants' trademarks; (ii)†the tort of passing-off did not exist in this case, inter alia, as the evidence presented by the applicants failed to establish the existence of goodwill in applicant no.†1's shoes.

The applicants filed leave to appeal the aforesaid decision focusing, inter alia, on the cause of action of unjust enrichment (which, according to the applicants, the District Court sought to ignore when considering and/or rendering its decision).

III. The Supreme Court's Decision

According to the Israeli Unjust Enrichment Law, 1979, the plaintiff in a claim for unjust enrichment is required to prove three cumulative 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 addition, in...