Interlocutory Injunctions - Rare, but not Extinct

August 18, 2020

By Andrew McIntosh and Suzie Suliman

The recent decision in TFI Foods Ltd. and I-MEI Foods Co., Ltd. v Every Green International Inc. (2020 FC 808) confirms that injunctions in intellectual property cases, while rare, will still be granted when they are warranted. 

TFI Foods Ltd. (“TFI”) and I-MEI Foods Co., Ltd. (“I-MEI”) sought an interlocutory injunction to prevent Every Green International Inc. (“Every Green”) from selling or offering for sale any products bearing the I-MEI trademark, which also included a label indicating that Every Green was the exclusive distributor of I-MEI, when in fact it was not. TFI and I-MEI were unaware of the source of the I-MEI products sold by Every Green. However, the Court  held that the goods are likely “grey market goods” – namely, genuine goods produced by I-MEI that were imported to Canada without the approval of I-MEI.

The Court applied the test from RJR-MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311. TFI and I-MEI and found that: (1) there is a serious issue to be tried in respect of the claim against Every Green; (2) I-MEI would suffer irreparable harm if an injunction is not granted; and (3) the balance of convenience favours granting the injunction. Every Green did not respond to the motion, but given the evidence put forth by TFI and I-MEI, an injunction was held to be just and equitable in the circumstances.

Rather than relying on subsection 7(a) of the Trademarks Act or the Competition Act, Justice McHaffie concluded that there was a serious issue to be tried under subsection 7(b) of the Trademarks Act due to Every Green’s selling grey market goods in connection with a statement that misrepresented an association with the trademark owner. While Justice McHaffie regarded the sale of grey market goods alone as in and of itself not constituting infringement of a trademark or passing off, he held that this does not excuse other acts or statements that misrepresent an association with the trademark owner. Any misrepresentation must be related to a registered or unregistered trademark for passing off or to exacerbate confusion.

Justice McHaffie relied on the fact that I-MEI was a party to the proceeding and therefore, did not address whether TFI, the exclusive distributor of I-MEI goods in Canada, shares in the reputation and goodwill associated with the I-MEI trademark, or otherwise has standing to bring a passing off action.

In the decision, the Court considered only the actual or potential damages arising to I-MEI, rather than to TFI. It held that I-MEI would suffer irreparable harm to its reputation and damage to its goodwill if it was unable to select and define its own reputable distributors. The Court considered that the reputational harm was heightened by the fact that there were inaccuracies in the ingredient list and nutritional facts contained on Every Green’s labels. Further, although the process server noted that Every Green’s offices looked empty, this was given little weight due to the COVID-19 pandemic and the fact that many businesses have temporary closed or employees are working from home. However, the pandemic could not explain the lack of visible signage at the offices. Given the lack of signage and the reputational harm, and given that Every Green did not respond to the motion, the Court also held that damages would be very difficult to quantify and collect. Overall, the Court found that I-MEI would suffer irreparable harm if an injunction were not granted.

Finally, it was held that the balance of convenience favours granting the injunction. There was no evidence of harm to Every Green. It was noted that any economic harm suffered by Every Green would be harm arising from its own conduct in making false statements.

This is a rare example of an injunction granted in an intellectual property case. Other fairly recent intellectual property decisions in which an injunction was granted include: Arysta Life Science North America, LLC v AgraCity Crop & Nutrition Ltd., 2019 FC 530, Sleep Country Canada Inc v Sears Canada Inc, 2017 FC 148, and Reckitt Benckiser LLC v Jamieson Laboratories Ltd, 2015 FCA 104. These decisions show that the court will continue to grant injunctions in appropriate cases.

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Author(s):

Andrew McIntosh Andrew McIntosh
B.Sc. (Chem.), J.D., LL.B.
Partner
416.957.1677  
Suzie Suliman Suzie Suliman
B.Eng., J.D.
Associate
416.957.1698