- in Canada
- with readers working within the Law Firm industries
- within Cannabis & Hemp, Food, Drugs, Healthcare, Life Sciences, Litigation and Mediation & Arbitration topic(s)
- with Senior Company Executives, HR and Inhouse Counsel
The Federal Court's recent decision in Schlegel Health Care Inc. v Edgewood Health Network Inc., 2025 FC 1639 (Schlegel), highlights the importance of registering trademarks and the need for strong evidence of use when asserting an unregistered or common law trademark.
Schlegel Health Care Inc. (Schlegel) and Edgewood Health Network Inc. (Edgewood) are the largest providers of inpatient and outpatient mental health and addiction services in Canada. Both offer services and programs specifically targeted towards "guardians," such as first responders, military personnel, and veterans, and their families.1 Schlegel claimed rights in the common law trademark "GUARDIANS" on the basis that it's subsidiaries, Homewood Health Inc., and Homewood Health Centre Inc., developed the "Guardians Program" and have used the mark to market those services since 2017.2 Edgewood applied to register the trademark EHN GUARDIANS on April 10, 2024. Since then, Edgewood used EHN GUARDIANS on signage, in print advertising and marketing materials, and on websites and social media.3 Schlegel sought an interlocutory injunction to stop Edgewood from using its common law mark "GUARDIANS" in association with mental health and addiction services in Canada.4 The Court dismissed Schlegel's motion.
The Court identified the well-established test for an interlocutory injunction.5 Schlegel was required to show: (i) a serious issue to be tried; (ii) that it would suffer irreparable harm if an interlocutory injunction was not granted; and (iii) that the balance of convenience favours granting the injunction.6 It is normally easy to demonstrate that there is a serious issue to be tried. However, because the injunction requested by Schlegel would require Edgewood to take positive steps to comply (i.e., undo its existing use of the EHN GUARDIANS name by ceasing marketing and advertising, removing website and social media content, and taking down signage), the Court found that Schlegel needed to go further and show:7
- a strong prima facie case that Schlegel will succeed at trial. This requires a strong likelihood on the law and the evidence that Schlegel would ultimately succeed at trial;
- Schlegel would suffer irreparable harm if the injunction was not granted; and
- that the balance of convenience favours granting the injunction.
Schlegel's primary claim was for passing off under subsection 7(b) of the Trademarks Act (the Act). The Court noted that without a trademark registration, Schlegel did "not benefit from the presumption of validity that adheres to a registered trademark by virtue of [the Act]."8
To demonstrate its rights in the GUARDIANS trademark, Schlegel put forward evidence that it had applied to register the mark GUARDIANS on June 6, 20249 and that it licensed the use of the mark to its subsidiary companies through license agreements.10 Schlegel also stated that the mark arose in 2017 when its subsidiary company began to develop the "Guardians program" and that the mark was first used in its facilities starting in 2019.
The Court found that these submissions failed to address the threshold question of whether Schlegel possessed a valid trademark.11 Specifically, the Court referenced section 4 of the Act, which states that a trademark is deemed to be "used" if it is displayed in the performance or marketing of services. Schlegel's evidence, however, only showed use in conjunction with the "Guardian Program" and the GUARDIANS mark was in fact not used on its own or distinguished from the surrounding text (i.e., no visual distinction).12
Although dispositive of the issue, the Court nonetheless went on to consider the elements of passing off and considered whether there was:13
- existence of goodwill associated with the goods, services, or business;
- deception of the public due to a misrepresentation; and
- actual or potential damage to the plaintiff as a result of the misrepresentation.
Existence of Goodwill: The Court found that because Schlegel's evidence supporting its use of the mark GUARDIANS was weak, this undermined any claim of goodwill, which must attach to clearly defined services.14
Deception of the public due to misrepresentation: The Court accepted that there was a likelihood that customers will confuse Schlegel's GUARDIANS mark with Edgewood's EHN GUARDIANS mark given the strong resemblance between the marks, the similarity in the services offered by the parties, and the nature of their trade.15 However, the Court noted several factors that militate against Schlegel's claim of confusion: the cost of the services provided, the way in which customers enrol into the program, and conflicting evidence regarding the inherent distinctiveness of the mark and length of use.16
Actual or potential damage: The Court noted that Schlegel provided no evidence of lost sales or actual financial impact and no evidence that any customers purchased Edgewood's services instead of Schlegel's services because of the confusion.17
The Court concluded that Schlegel failed to establish a strong prima facie case to assert the unregistered trademark to the GUARDIANS word, stating that the evidence presented by Schlegel failed to demonstrate sufficient use of the unregistered mark and goodwill in the claimed mark.18
While Schlegel's failure to meet the serious issue portion of the test was sufficient to deny the injunction, the Court went on to assess the other branches of the RJR test.19
With respect to irreparable harm, Schlegel argued that damages would be impossible to calculate because it was denied the chance to operate its business in a clear market free of Edgewood's competing use and appropriation of the GUARDIANS mark. Schlegel also argued that loss of goodwill, particularly in this highly emotional and personal category of services, was virtually impossible to regain once lost, causing irreparable harm.20
The Court again noted the lack of evidence showing that Schlegel had suffered loss of sales or market share. The Court noted that "considering the parties have co-existed and presumably competed in the marketplace while both using the GUARDIANS word for at least 1 year I would have expected some evidence of financial impact if indeed there was irreparable harm."21
Having concluded that Schlegel did not satisfy the first two branches of the injunction test, the Court weighed the balance of convenience in favour of Edgewood and dismissed the motion.22
The Schlegel decision exemplifies the high evidentiary threshold for obtaining an interlocutory injunction in Canadian trademark cases. It also underscores the advantage of having a registered trademark when doing so.
Footnotes
1. Schlegel Health Care Inc v Edgewood Health Network Inc, 2025 FC 1639 at para 2 [Schlegel].
2. Schlegel at para 5.
3. Schlegel at para 18.
4. Schlegel at paras 1 and 2.
5. RJR-MacDonald Inc v Canada (AG), [1995] 3 SCR 199 [RJR].
6. Schlegel at para 2.
7. Schlegel at para 22; R v Canadian Broadcasting Corp, 2018 SCC 5 at para 18.
8. Schlegel at para 31.
9. At the time of the hearing the application was still pending.
10. Schlegel at para 28.
11. Schlegel at paras 32-36.
12. Schlegel at paras 37-39.
13. Schlegel at para 26.
14. Schlegel at para 48.
15. Schlegel at paras 50-54.
16. Schlegel at para 57.
17. Schlegel at para 69.
18. Schlegel at para 74.
19. Schlegel at para 78.
20. Schlegel at para 80.
21. Schlegel at para 83.
22. Schlegel at para 85.
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.
