Major shareholder personally liable for infringement

Israel

In Onipharm Ltd v Anderson Medical Ltd (cc 20397-09-09), the Central District Court has ruled, among other things, that the corporate veil between a company and its major shareholder could be pierced because the shareholder had tried to register the trademark at issue in his own name.

Onipharm Ltd is a well-known producer of generic pharmaceuticals, including a drug called Memorit for the treatment of Alzheimer's disease. Onipharm has registered the name Memorit as a trademark. Anderson Medical Ltd specialises in the production and distribution of natural food supplements, which are intended for the treatment of various diseases. Yonatan Schreiber is the founder and sole shareholder of Anderson Medical.

In July 2009 Onipharm discovered that Schreiber had filed an application for the registration of MEMORIX in Class 5 of the Nice Classification for "a food supplement intended to enhance memory capabilities". As a result, Onipharm filed an opposition and Schreiber decided to abandon the application. At about the same time, Onipharm also discovered that Anderson Medical was distributing products bearing the trademark MEMORIX. It filed suit against Anderson Medical and Schreiber for infringement of its MEMORIT mark.

In deciding whether MEMORIX was confusingly similar to MEMORIT, the court applied the well-established three-part test - namely:

  • visual and phonetic similarity;
  • similarity between the products and their potential consumers; and
  • the totality of the circumstances.

The court stated that the marks were similar both visually and phonetically. The court also noted that, even though the Memorit products are prescription drugs, while the Memorix products are over-the-counter food supplements, there is still a risk of confusion because it is likely that consumers will not ask for assistance from the salespersons in the pharmacy and will just assume that the two products are related.

As for the likelihood of overlap of potential consumers, the court ruled that the marks were intended for the same group of customers, namely Alzheimer patients. Thus, the court concluded that Anderson Medical's MEMORIX mark was confusingly similar to Onipharm's MEMORIT mark.

The court also rejected Schreiber's claim that there was no privity between Onipharm and himself, since the actual infringer was Anderson Medical and not him personally. The court disagreed. It noted that, since Anderson Medical is solely owned by Schreiber, and because Schreiber tried to register MEMORIX in its own name rather than in the name of Anderson Medical, he was personally liable for any infringing uses of the mark made by Anderson Medical.

Neil Wilkof and Gilad Shay, Herzog Fox & Neeman, Tel Aviv

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