Supreme Court refuses stay of judgment execution, but stays destruction of packaging

Israel
In Anderson Medical Ltd v Unipharm Ltd (CA 5671/11, September 1 2011), the Supreme Court has refused to stay the execution of a district court judgment in which the latter had found Anderson Medical Ltd liable for the infringement of Unipharm Ltd's registered trademark MEMORIT and for passing off. The district court had also enjoined the sale of MEMORIX-branded medicines, ordered the recall and destruction of the products and awarded statutory damages. The Supreme Court agreed, however, to stay the destruction of the packaging and ordered that the products be stored under Unipharm's supervision.
 
Unipharm owns the registration of the MEMORIT trademark and, for 11 years, has marketed a preparation for the treatment of Alzheimer disease under this mark. Anderson markets a nutritional supplement intended to treat memory problems under the mark MEMORIX. Anderson abandoned its application to register MEMORIX by failing to respond to Unipharm's opposition. Unipharm sued Anderson, requesting that the court enjoin the use of the MEMORIX mark on the grounds of trademark infringement, passing off, misappropriation of goodwill and unjust enrichment.
 
The district court held that:

  • the marks were confusingly similar visually and phonetically; and
  • despite the differences between a prescription medicine in tablet form and a nutritional supplement in liquid form, the products were alternative or complementary and targeted the same consumers, thus creating a likelihood of confusion.
The court took into account the reputation acquired by MEMORIT and found that there was infringement. The court also found that there was passing off and misappropriation of goodwill. The court issued an injunction, awarded statutory damages of IS150,000 and ordered that the packaging bearing the infringing mark be destroyed.
 
Anderson appealed, citing the differences between the products and alleging that it had chosen the MEMORIX mark in good faith based on the word 'memory'. Anderson sought a stay of execution of the judgment pending the appeal, arguing that it had a good chance of prevailing on appeal and that it would suffer irreparable harm should the products be recalled and the packaging destroyed. The stay was refused by the district court and Anderson appealed to the Supreme Court.
 
The Supreme Court reiterated the principle that the filing of an appeal does not automatically stay the execution of the judgment appealed against. The court also reiterated that, under the law, an appellant seeking a stay must show that it has a good chance of prevailing on appeal and that the balance of convenience lies in its favour, in that the execution of the judgment would make it very difficult to restore the situation to what it was before the judgment. The balance of convenience is given less weight if the chances on appeal are either strong or weak, but becomes a weighty consideration if the chances are equal or unknown.
 
The Supreme Court held that, in the present case, the chances of prevailing on appeal did not constitute an argument for or against a stay. Therefore, the court would be guided by the balance of convenience.
 
Considering the balance of convenience, the court held that the destruction of the packaging would cause irreparable harm to Anderson and that storage of the goods under supervision would achieve the same result. With regard to the other remedies, the court found that Anderson had failed to prove that the balance of convenience tilted in its favour; as they were compensable, these remedies should not be stayed. While a defendant's financial difficulties may, in exceptional cases, tilt the balance of convenience towards a stay, Anderson had failed to support its contention that it would suffer from financial difficulties should the court refuse to stay the execution of the judgment.
    
David Gilat and Sonia Shnyder, Gilat Bareket & Co, Reinhold Cohn Group, Tel Aviv

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