For many years now, interlocutory injunction orders have been few and far between in IP cases in Canada’s Federal Court.
However, in a decision released February 20, 2015 (Reckitt Benckiser LLC v Jamieson Laboratories Ltd, 2015 FC 215), the Federal Court has issued a pre-trial/ interlocutory injunction in a trademark infringement case, which is the first reported decision of the Federal Court granting such an order in years (outside the context of outright counterfeiting). This follows many informal signals from the Court that it would be prepared to grant pre-trial injunctive relief in an IP case, if there was suitable evidence of irreparable harm.
An interlocutory injunction is an extraordinary remedy since, if granted, a defendant is prohibited from activities that have not been finally determined by the Court to be unlawful.
The tripartite legal test for obtaining an interlocutory injunction requires an applicant for such an injunction to establish:
- a serious issue to be tried (on the merits of the infringement claim);
- the applicant would suffer irreparable harm if the motion were refused; and
- the balance of convenience favours the applicant.
The “irreparable harm” aspect of the test has proved a difficult burden to overcome for many plaintiffs, particularly as the Federal Court has long applied a high standard to establishing irreparable harm, holding that evidence of such harm must be “clear and not speculative”, and that it must be established that the harm “will” or “would” result, rather than being a mere possibility. In cases where an award of monetary damages after trial would be sufficient to compensate the plaintiff, irreparable harm has generally not been found to be established.
In some provinces, the provincial courts have appeared somewhat more willing to grant interlocutory injunctions, though they are certainly still considered extraordinary remedies. For example, certain provincial jurisprudence has applied the tripartite test flexibly, requiring a lesser standard for showing irreparable harm where the plaintiff establishes a strong case on the merits, as opposed to merely a “serious issue”.
The Reckitt Benckiser decision arises from a trademark dispute between Reckitt Benckiser, which markets krill oil omega-3 supplements under the trademark MEGARED, and Jamieson Laboratories, which markets both krill oil omega-3 supplements and fish oil omega-3 supplements under the trademark OMEGARED. Reckitt alleges in the action that OMEGARED is confusing with its registered mark MEGARED.
Reckitt owned the registered trademark MEGARED, which had been registered in Canada since 2011 on the basis of use and registration in the United States. Subsequently, the MEGARED supplement was launched in Canada in late 2013. While Jamieson’s OMEGARED was launched earlier, near the beginning of 2013, the Court found that Jamieson launched OMEGARED, and engaged in a significant marketing campaign for the product, despite knowing of Reckitt’s prior trademark registration for MEGARED, and of Reckitt’s plans to enter the Canadian supplement business.
Serious issue to be tried
The Court found that Reckitt had established a “very” serious issue to be tried with respect to confusion and trademark infringement, noting that there were considerable aural and written similarities between the marks, and evidence of actual confusion in the marketplace. The Court also noted that survey evidence was not necessary to make this finding.
Further, the Court found as a fact that Jamieson’s motive for the launch of OMEGARED, and its marketing blitz, was “to pre-emptively strike out the MEGARED krill oil omega-3 brand product the Plaintiffs were launching into the Canadian market”. This finding appears to play a significant role in the decision. Although motive is typically not considered relevant to the issue of infringement per se, the Court considered Jamieson’s motive relevant to the equitable and discretionary nature of the decision.
The Court reiterated the test for irreparable harm set out in previous Federal Court jurisprudence, including that evidence of irreparable harm must be “clear and not speculative”.
However, the Court found that Reckitt met the burden in this case, finding that it would be “difficult to the point of impossibility” to quantify Reckitt’s damages, since there would be no way to accurately quantify what Reckitt’s launch market would have been if they had the proper opportunity to enter the market with the exclusive rights to which they were entitled.
The Court further held that “where use of a confusing mark will cause the Plaintiffs’ mark to lose its distinctiveness, that is, its ability to act as a distinctive and unique signifier of the Plaintiffs’ wares or business, such damage to goodwill and the value of the mark is impossible to calculate in monetary terms”. The Court held that this principle applied to this case, since “there [was] no question in [the Court’s] mind that the distinctiveness of MEGARED will be lost without the interlocutory injunction”.
The Court further held that irreparable harm would result from Jamieson’s use of OMEGARED in association with fish oil based supplements, since confused purchasers could be led to believe that MEGARED may contain fish oil rather than krill oil.
Balance of convenience
The Court found that the balance of convenience also favoured the plaintiffs on the facts of the case. The Court noted that, while the defendant went ahead with its launch of OMEGARED and spent almost $5 million in its marketing campaign, it did so with its “eyes wide open”, knowingly assuming the risks of infringing the plaintiffs’ registered Canadian trademark. As such, the Court gave relatively less weight to the losses the defendant would suffer as a result of the injunction, which the Court viewed as self-inflicted.
Having found in favour of the plaintiffs on all three elements of the tripartite test, the Court granted the interlocutory injunction.
The Federal Court’s interlocutory injunction order has been appealed by Jamieson to the Federal Court of Appeal. The Court of Appeal has granted a stay of the interlocutory injunction pending the appeal decision.
The decision in Reckitt Benckiser ends a long drought which saw no successful interlocutory injunction applications in the Federal Court in IP cases. While the Court’s decision is based on the particular facts of the case, it is hoped that the decision is an indication of the Federal Court’s future willingness to grant pre-trial injunctive relief in appropriate IP cases.
For further information, please contact a member of our firm’s Litigation group.
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