Second article in a series on legal pitfalls for Israeli businesses operating in the United States
In the previous article, we examined how Israeli businesses sometimes struggle to comply with U.S. labor laws, whether due to good faith mistakes or lack of understanding. In this article, we review another vulnerability that may harm Israeli businesses: intellectual property protection.
Trademarks, patents, or copyrights registered in Israel do not automatically protect Israeli entrepreneurs in the United States. Moreover, intellectual property rights are territorial. This means that protection in one U.S. state does not necessarily extend to another. Additionally, the U.S. principles of “first to use” and “first to file” may conflict with Israeli expectations. These principles determine priority in intellectual property rights.
For example, the “first to use” rule primarily applies to U.S. trademark law. It grants trademark rights to the party that first used the mark, even if it was never registered. However, registration provides significant advantages, such as stronger proof of ownership.
The “first to file” rule primarily applies to patent law in the U.S. It grants patent rights to the party that files a patent application first, regardless of who originally invented or used it. This highlights the importance of filing quickly.
U.S. courts take intellectual property infringement seriously and, at the same time, protect rights that are timely registered. Therefore, Israeli companies expanding into the American market and holding intellectual property should register their trademarks and patents in the U.S. as early as possible—ideally before launching their product. Additionally, they must conduct reviews and screenings of existing products to avoid infringing on current rights.
For instance, an Israeli medical device startup launched a product under a unique brand name derived from Hebrew. After a successful pilot with an American distributor, the company filed for trademark protection in the U.S.—only to discover that a Florida-based company had already registered the same name. The Florida company asserted its rights and threatened legal action. The Israeli company had to rebrand its product mid-launch. A simple preliminary search could have prevented unnecessary expenses, investment delays, and harm to the brand’s value.
Such mistakes happen frequently, partly because Israeli companies often delay filing for trademarks or patents in the U.S. until after they begin their market entry efforts. These companies mistakenly assume that prior use in Israel will protect them in the U.S.
Israeli businesses expanding into the American market and owning trademarks or patents can avoid problems by taking several key actions, including:
- Registering their trademarks and patents in the U.S. early—before launching, marketing, or distributing their product.
- Conducting market reviews and screenings for trademarks and patents with a U.S. legal advisor to avoid infringing on existing rights.
- Filing a provisional U.S. patent application even before finalizing a go-to-market strategy.
- Using nondisclosure agreements (NDAs) and contractual protections when exposing intellectual or technical property to partners or distributors in the U.S.
Legal Disclaimer: This article does not constitute legal advice. Its purpose is to raise awareness of compliance issues in the U.S. Israeli businesses should consult with a qualified American attorney for guidance tailored to their specific situation.
Attorney Michael Ehrenstein is the founder of the U.S.-based law firm Ehrenstein|Sager, which specializes in commercial law, litigation, and high-stakes international arbitration.
