Bereskin & Parr LLP - Canada
Interlocutory injunctions can be an important litigation tool to remedy situations where quick relief is necessary to prevent damages from infringing activity. While the Federal Court is often the preferred venue for trademark and other IP litigation, until recently it was virtually impossible to obtain interlocutory relief ‒ largely because of the onus set by Federal Court jurisprudence to show irreparable harm with clear and non-speculative evidence. Other courts appear to approach the onus differently, including the Quebec Superior Court, which recently demonstrated that provincial courts can be a friendlier forum for injunctions in trademark law, even in cases involving unregistered rights.
In Pièces d’auto économiques inc v 9343-6137 Quebec Inc (2017 QCCS 757) the plaintiff, which had operated under the trade name Pièces d’auto économiques (‘Cheap Auto Parts’) for 40 years, obtained an interlocutory injunction until the decision on the merits against a business that had recently started operating under the name Pièces d’auto écono.
Both businesses offered the same goods and services. Although they were not located in the same city ‒ the plaintiff was based in the Quebec City region and the defendant in Longueuil ‒ the businesses’ customer pools were found to possibly overlap. The plaintiff demonstrated that it had clients in several other regions of Quebec, including Longueuil, in addition to operating a website that could be accessed throughout the province of Quebec. The extent of its goodwill outside the Quebec City region was unclear.
The plaintiff had made recent efforts to promote its business on social media. Notably, each party used different logos and colours and neither appeared to have a registered trademark or pending application for its respective name. Admittedly, both parties’ respective marks combined a generic term (‘auto parts’) with a common laudatory descriptive term (‘economic’ or its diminutive ‘econo’). However, the court did not seem to take that into account, possibly because the plaintiff had demonstrated use of its trademark for over 40 years.
The defendant started using the trade name Pièces d’auto écono on June 29 2016. It received the plaintiff's demand letter on August 8 2016, but chose to ignore it rather than take the warning seriously.
The court reiterated the criteria to be considered in this respect, namely:
- the colour of right;
- serious or irreparable harm; and
- the balance of inconvenience.
On the colour of right (also known as 'serious issue to be tried’), the court reviewed the confusion criteria of the Trademarks Act and found that since the plaintiff had been using its name for over 40 years and the parties offered the same products and operated the same types of business, there was a likelihood of confusion. As to serious harm, the court confirmed the jurisprudence on the matter, which holds that the potential loss of customers is generally considered as irreparable harm. Finally, the court held that the balance of convenience test need not be considered when a plaintiff's rights are clear. Nevertheless, the court pointed out that the balance of inconvenience was in favour of the plaintiff, commenting in passing that the defendant's decision to ignore the plaintiff’s demand letter had consequences.
The court therefore ordered the defendant to immediately cease all use of the name Pièce d’auto écono, remove all advertising with that name and notify its customers and suppliers of this order.
In this case, the Quebec Superior Court appears to have been influenced by the fact that the defendant had ignored a demand letter. However, the court’s analysis seems to be at odds with many Federal Court decisions, both in its assessment of ‘serious or irreparable harm’ and in the merging of evidence of harm and balance of convenience. Typically, without clear evidence of irreparable harm, as opposed to potential loss, the Federal Court will not grant interim relief. However, in the recent decision of Sleep Country Canada Inc vs Sears Canada Inc (2017 FC 148 (under appeal)) the Federal Court’s reasoning seemed to suggest that the impossibility of calculating damages could support a finding of irreparable harm. In addition, the Federal Court usually requires the plaintiff to clearly demonstrate how it will suffer more inconvenience than the defendant should the injunction not be granted.
The Quebec Superior Court’s approach seems much more informal. Having shown a ‘serious issue’ of confusion, a potential loss of customers satisfied the ‘irreparable harm’ test, which made a review of the balance of convenience test unnecessary.
The decision reiterates that courts may take discretionary provisional measures to protect trademark rights. This discretion may be in favour of a plaintiff which demonstrates use of a mark over a long period, even if the mark is not inherently distinctive and especially if the evidence shows that the defendant chose to ignore the plaintiff’s serious warning.
The decision is also instructive in suggesting that forum choice (ie, federal or provincial courts) may influence the likelihood of success. While a provincial decision might have applicability only in a single province, if that could significantly affect an infringer’s entire business activities, the provincial courts may be a preferred forum.
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