Minister of Fitness.
What can be learned from the case of the chain of fitness centers named after her? (Photo: Courtesy of Sher Fitness)
It was recently announced that the company founded by Shir Sanda, known as the "Minister of Fitness", the well-known fitness coach and sports priest, ran into debts of over NIS 24 million, which forced it to stop its activities and close all its network branches.
It was also reported that after quite a few debt claims were raised against the company, at the beginning of March the company applied to the court with requests to issue a stay of proceedings order and a debt settlement between the company and its creditors, in order to financially rehabilitate the company and avoid its liquidation or sale to others.
As part of the ongoing court proceedings, Sanda claimed that the name "Sher Fitness" which was used to brand the chain, is her private property and not owned by the company, and therefore it should be excluded from the settlement and should not be put up for sale as part of the company recovery procedures.
Recently, the District Court in Haifa rejected the company's requests and determined that the brand, reputation and registered trademarks "SHER FITNESS" will also be for sale as part of insolvency proceedings along with all the other assets of the company.
This, despite the fact that the trademarks "SHER FITNESS" are registered in the name of Shir Sanda and not in the name of the company (of which Sanda is the sole shareholder).
Attorney Lihya Katznelson (Photo: Yoram Rashef)
The question is whether this is a proper ruling given the circumstances?
To answer this question, one must understand exactly what a trademark is and what its registration means.
A trademark is a sign used or intended to be used by a person (or another legal entity, (such as a company, association, etc.) regarding the goods (goods, service, etc.) that it produces or trades in. A trademark is a proprietary asset for anything that grants its owner (person or
corporation on whose name the mark is registered) a right to unique and exclusive commercial use. In fact, sometimes a company's trademark constitutes its most significant and valuable asset
. This, Shir Sanda submitted an application for trademark registration in 2014 before the establishment of the company. Later, after the establishment of the company, in 2020 another designed mark was submitted for registration, but this time Sanda requested that the mark be registered in the company's ownership and not in her private ownership.
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The registrar did not allow the registration of similar or identical marks in the name of different entities and demanded that the owners of the marks be reconciled, so that despite her initial intention to register the mark in the name of the company, the additional mark was also finally registered in the name of Sanda as a private person (this may have been done to avoid transferring ownership of the mark The first is in the name of the company (something that may be considered a tax event with all its consequences).
These circumstances in themselves show Sanda's intention to link the name "Sher Fitness" (which was already a well-known brand in 2020) to the company that provides the services.
Here it should be noted that Sanda is the sole shareholder in the company. Therefore, this is an attempt to create an artificial separation between Sanda's private property and the company's property, when in fact that (intellectual) property is identified with the company and its services, serves as the "face" of the company for the Israeli consumer, and any attempt to separate the company from the trademark does not hold water, after all it is the company that provides the services under the actual trademark.
Furthermore, according to the court's decision, it was found that the promotion of the brand was financed and at the company's expense throughout all the years of the company's activity.
All these and more justify the ruling that considers the registered trademark as an asset of the company.
That is to say that although the trademarks were registered as private property of Sanda itself, it seems correct and appropriate to state that they are part of the company's assets and can be sold, in order to pay off the company's debts to its creditors.
From this, the obvious conclusion is that when registering the trademark, consideration must be given to the identity of the legal entity under whose name the trademark will be registered and which will own the intellectual property, both for taxation reasons, both for commercial reasons and the ability to perform such and such proprietary actions in the brand, and for reasons related to insolvency proceedings.
Adv. Lehia Katznelson is a partner in the Arnon firm, and Mayan Malka Roblin is an attorney in the firm.
Both have expertise in brand and trademark protection.
Minister of Fitness