Interlocutory injunctions make a comeback

Canada

The Federal Court has changed the enforcement landscape by granting its first interlocutory injunction in a trademark case in over 15 years. The decision sheds light on the 'irreparable harm' requirement which has frustrated brand owners for years.

In Reckitt Benckiser LLC v Jamieson Laboratories Ltd (2015 FC 215) (upheld by the Federal Court of Appeal, 2015 FC 104), the court prohibited Jamieson Laboratories Ltd from using the sign OMEGARED, or any other sign confusingly similar to MEGARED, in association with its products. Jamieson was also ordered to recall all products that would offend the terms of the injunction.

Reckitt Benckiser LLC was looking to enter the Canadian market and it held discussions with both Jamieson and Schiff Nutrition. In December 2012 it acquired Schiff and the registration for the trademark MEGARED for use with dietary and nutritional supplements in capsule form containing (among other elements) omega-3 fatty acids, to be used to support cardiovascular health, healthy cholesterol levels and joint health (essentially omega-3 krill oil). While the MegaRed product had been sold in the United States, it was not sold in Canada until December 2013.

Prior to 2013, Jamieson sold SUPER KRILL, an omega-3 product. In January 2013 it decided to rebrand the product as OMEGARED and the rebranded product (both krill oil based and salmon/fish oil based) was launched in the summer of 2013, prompting complaint letters from Reckitt. Jamieson supported OMEGARED with a $4.6 million marketing campaign in early 2014.

In October 2014 Reckitt sued for trademark infringement and sought an interlocutory injunction.

In assessing whether to grant the injunction, the Federal Court applied a tri-partite test:

  1. is there a serious issue to be tried on the merits of the case;
  2. will the plaintiff suffer irreparable harm if the injunction is refused; and
  3. does the balance of convenience favour granting the injunction.

The court accepted that Jamieson “set out to defeat the plaintiffs’ marketing efforts by creating a dominant brand before the plaintiffs could begin to sell, notwithstanding that the plaintiffs enjoyed exclusive rights in Canada to the MEGARED registered trademark” and that:

the real and dominant purpose of Jamieson’s massive marketing blitz for OMEGARED was to knowingly and pre-emptively strike out and frustrate the marketing efforts of the plaintiffs, thereby defeating the plaintiffs’ exclusive rights enjoyed by virtue of their ownership/licence of the Canadian trademark Registration No TMA 793,186 for MEGARED.

Concluding that there was “a very serious issue with respect to the issues of confusion and trademark infringement”, the court went on to find that Reckitt would suffer irreparable harm if an interlocutory injunction was not granted (ie, harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other). The court considered three factors in coming to its conclusion that damages would not be an adequate remedy:

  1. No methodology to quantify loss arising from Jamison’s conduct:

    It will not be possible to ascertain the plaintiffs’ before-OMEGARED launch market as a comparator to the after-launch market because the plaintiffs never had the proper opportunity they ought lawfully to have had to enter the market with the exclusive rights to which they are entitled.”
     
  2. Loss of distinctiveness in MEGARED:

    “… 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.”
     
  3. Confusion between the two marks imports a quality concern:

    It is one thing for Jamieson to market both krill oil and salmon/fish oil omega-3 products as it proposes to do under the OMEGARED label in the abstract – the only potential confusion would be within its own customer base, which is not in issue in this case. It is quite another for Jamieson to market OMEGARED in the face of the plaintiffs’ MEGARED registered trademark where MEGARED has no association with fish or salmon oil whatsoever in Canada. Even though Jamieson’s salmon oil OMEGARED is a minor player in the scheme of things, Jamieson’s use of OMEGARED for fish oil products will dilute the plaintiffs’ MEGARED exclusively krill oil capsules.”

Finally, the court considered the balance of convenience and noted that Jamieson “elected to take the risk and by doing so proceeded with its eyes wide open...  Any losses Jamieson will suffer are, in my view, self-inflicted”.

Notably, the court rejected the defendant’s delay/laches argument:

"Likely infringers may not defeat legitimate trademark holders simply by getting into the market first with their confusing marks and infringing products. Otherwise, the purpose and intent of the legislation would be frustrated."

The court granted the interlocutory injunction.

Jamieson applied to have the injunction stayed pending an appeal and the stay was granted by the Federal Court of Appeal, which noted:

"I am satisfied that a serious issues arises as to whether the Federal Court judge went too deeply into the merits and allowed his findings in this regard to dictate the outcome of his assessment of the other branches of the test."

That being said, the appeal proceeded on an expedited basis and, on April 23 2015, the Court of Appeal upheld the Federal Court. While the judge may have gone too far in assessing the merits of the case, the Court of Appeal concluded that he did not err in deciding that there was a serious issue to be tried or in deciding that Reckitt would suffer irreparable harm if an injunction was not granted. 

While the facts of this case may be somewhat unique, the decision has generated considerable interest in Canada because it may signal that the Federal Court is once again open for business when it comes to the issuance of interlocutory injunctions. This is important news for brand owners as they assess their litigation strategy in Canada.

Robert A MacDonald and Monique Couture, Gowling Lafleur Henderson LLP, Ottawa

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