Canada: Trademark Injunctions Alive And Well In Canada’s Federal Court

For the first time in more than 15 years the Federal Court of Appeal has upheld an interlocutory injunction in a trademark infringement case, significantly modifying the stringent test for irreparable harm.

On April 23, 2015, the Federal Court of Appeal in Reckitt Benckiser LLC et. al v. Jamieson Laboratories Ltd. 2015 FC 215 upheld the decision of the Federal Court which issued an interlocutory injunction prohibiting the Defendant Jamieson Laboratories Ltd. ("Jamieson") from using its offending trademark pending trial. The Court order also requires Jamieson to recall the products from stores across Canada, and destroy all of its product and marketing material which bear the offending trademark.

The Plaintiff Reckitt Benckiser LLC ("Reckitt Benckiser") is the owner of the MEGARED registered trademark for use in association with certain dietary and nutritional supplements, including omega-3 fatty acids and antioxidants. The MEGARED product is an oral dietary supplement containing krill oil as the active omega-3 ingredient.

In 2012 Reckitt Benckiser decided to enter the North American market and engaged in discussions with Schiff Nutrition International, Inc. ("Schiff"), who owned the MEGARED product and trademark at the time. Reckitt Benckiser also entered discussions with the Defendant Jamieson which had been offering a successful krill-based omega-3 product called SUPER KRILL. Ultimately, Reckitt Benckiser's discussions with Jamieson broke down and Reckitt Benckiser instead acquired Schiff's MEGARED product and trademark.

Just prior to Reckitt Benckiser's launch of its MEGARED product in Canada Jamieson rebranded its existing SUPER KRILL product as OMEGARED and launched a massive advertising campaign for the product.

Reckitt Benckiser brought an action for trademark infringement together with a motion for an interlocutory injunction. In granting the injunction the Federal Court considered the well established test which requires that a plaintiff establish:

  1. a serious issue to be tried on the merits of the case;
  2. that the moving party will suffer irreparable harm if the motion is refused; and
  3. that the balance of convenience favours the granting of the injunction.

The hurdle that most parties face in seeking an interlocutory injunction is demonstrating irreparable harm, which Canadian courts have defined as harm which is not compensable in monetary terms. The Federal Court has consistently applied a high standard, requiring the moving party to show on the basis of clear evidence that harm will result should the injunction not be granted. Speculation is not sufficient.

The Federal Court has now acknowledged that where there is no methodology to calculate the loss caused by a party's actions, the harm is irreparable. The Court found that there would be irreparable harm to the Plaintiff because it would be impossible to ascertain Reckitt Benckiser's pre-launch market as compared to its after-launch market since Reckitt Benckiser had been denied the opportunity to enter the market with the exclusive rights to which it was entitled.

Notable for trademark owners, the Court also held that where use of a confusing trademark will cause the plaintiff's trademark to lose its distinctiveness, the damage to the goodwill and value of the trademark is impossible to calculate in monetary terms. The Court found that had Reckitt Benckiser been required to wait until trial, the MEGARED trademark would lose all distinctiveness in the Canadian market.

The Court also found that the balance of convenience favoured the granting of the injunction even though the Defendant was required to retrieve thousands of products from retailers.

Factors that the Court considered in granting the injunction include:

  • The visual and phonetic similarity between the MEGARED and OMEGARED trademarks;
  • The identical nature of the products and channels of trade;
  • The similarity between the parties' respective packaging and that this was a departure from the Defendant's previous packaging;
  • Evidence of instances of actual confusion in the Canadian marketplace;
  • The Defendant's specific knowledge of the Plaintiff's trademark and of the Plaintiff's plans to enter the Canadian marketplace which the Court characterized as "eyes wide open"; and
  • The timing of the Defendant's decision to sell its OMEGARED product.

This case is significant in that the Court recognizes that damage to goodwill can constitute irreparable harm, and it signals the Federal Court's new willingness to issue an interlocutory injunction in appropriate circumstances to prevent further damage to a brand owner's trademark pending trial.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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