Canada: Can You Sleep At Night – You Need To Know About Injunctions In Canada

Last Updated: March 24 2017
Article by Colleen Spring Zimmerman

The mattress business is a competitive one! Trade-marks in the mattress business are valuable!

Sleep Country Canada Inc. is a major mattress retailer in Canada. It is best known for its slogan "Why Buy a Mattress Anywhere Else?". It owns two Canadian trade-mark registrations for this slogan. This trade-mark, together with its accompanying musical jingle, have been used by Sleep Country Canada in its promotional campaigns since 1994. Those campaigns have included television, radio, print and digital adverting. According to Sleep Country Canada, this slogan is and has been the cornerstone of its brand and marketing for its business. The jingle was ranked as one of Canada's 25 catchiest jingles and was inducted into the marketing Hall of Legends and the Retail Council of Canada Hall of Fame in 2005.

In 2016, Sears Canada Inc. began using what it called its "descriptive statement" or slogan, namely "There is no reason to buy a mattress anywhere else", in association with its mattress business. In association therewith, it launched a multi-faceted marketing plan, which included a price match guarantee.

Sleep Country Canada was unsuccessful in seeking an interim injunction in October of 2016, on the basis that irreparable harm (one of the factors for an injunction) had not been established. Sleep Country Canada was successful in the full hearing for the interlocutory injunction – on February 9, 2017, the injunction was granted against Sears Canada restraining its use of the phrase, "There is no reason to buy a mattress anywhere else" or any other phrase or mark confusingly similar to "Why Buy a Mattress Anywhere Else" as a trade name, trade-mark, or otherwise in association with its business, wares or products, until a final determination of the issues between the parties.

For an injunction, Sleep Country Canada must establish each element of the three- part test:

  1. that a serious issue has been raised (Sears Canada conceded this point);
  2. that it will suffer irreparable harm if the injunction is not granted (see below); and
  3. that the balance of convenience, which assesses the harm to Sleep Country Canada and to Sears Canada and includes an assessment of the public interest, favours Sleep Country Canada – the Court held that Sleep Country Canada had established this.

It is difficult to obtain an interlocutory injunction in a trade-mark matter in Canada. The key issue in this injunction application was whether Sleep Country Canada had established, with clear and non-speculative evidence, that it would suffer irreparable harm as a result of the infringement between the hearing and the time the action is finally determined and whether this harm can be quantified and compensated in damages. If it cannot be quantified, it is irreparable.

Confusion and loss of goodwill do not per se necessarily establish irreparable harm, i.e. harm not compensable in damages. That must be established by clear evidence. On the issue of showing that it would suffer irreparable harm, Sleep Country Canada led testimony from a number of experts.

Sleep Country Canada filed evidence from experts in the fields of marketing, brand valuation and accounting. These were supported by marketing studies and research in consumer behaviour. It argued that it would be impossible to isolate and quantify the impact of the use of the slogan by Sears Canada on its brand value or sales. One expert stated, "the big difference here is that we are measuring an idea that is a feeling to the customer, rather than something that inherently affects sales directly". Once the consumer is unable to link the slogan to a single source, i.e. Sleep Country Canada, the value, impact and distinctiveness of the slogan is lost. Experts argued that it would be impossible to recover that distinctiveness.

In this matter, the slogans were almost identical and conveyed the same "value proposition" or idea. The Court also found that Sleep Country Canada's slogan was etched in the mind of many consumers. Sears Canada's use of its slogan would cause a loss of distinctiveness of Sleep Country Canada's mark and depreciation of goodwill. This damage was impossible to calculate. It would be impossible to parse out from other aspects of Sears' marketing efforts the impact of the use of this slogan. Also, it would be impossible to calculate lost sales by Sleep Country Canada.

The average consumer would likely make a mental connection between Sears Canada's use of its slogan and the Sleep Country Canada slogan, which would erode the distinctiveness of Sleep Country Canada's slogan.

Sears Canada also filed expert testimony indicating that it would be possible to calculate Sleep Country Canada's losses, if any, using historical sales information, with adjustments. The Court held that applying quantification methodology would be difficult.

This case is a study in the extensive nature of the expert evidence required in order for the Federal Court in Canada to grant an interlocutory injunction in a trade-mark matter.

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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