Canada: Irreparable Harm Remains An Important And High Hurdle For Preliminary Injunctions In Canada's Federal Court

While the loss of distinctiveness and goodwill could in some circumstances justify a preliminary injunction, the Federal Court requires "clear and convincing" evidence. Here, there wasn't any. This decision illustrates that irreparable harm remains an important and high hurdle. One that must be overcome before Canada's Federal Court will grant a preliminary injunction under the circumstances presented by this case.

On March 19, 2020 the Federal Court delivered its judgement in Visionwerx Investment Properties Inc. v Strong Industries, Inc. 2020 FC 378. It is alleged in this case that the Defendants' hot tub infringes the distinguishing guise of Visionwerx's hot tub. This decision denies Visionwerx's motion for an interlocutory injunction that would have prevented the Defendants from marketing and selling the hot tub in issue.

In her analysis, Justice Kane relied on the well-established three part test for an interlocutory injunction established by the Supreme Court of Canada in RJR:¹ (i) is there a serious issue to be tried, (ii) will the party seeking the injunction suffer irreparable harm if it is not granted, and (iii) does the balance of convenience favour the party seeking the injunction.²

Visionwerx attempted to establish irreparable harm by arguing that it would lose sales on account of the Defendants selling a "cheaper version" of the Plaintiff's hot tub. Further, that its goodwill and reputation would be impaired because consumers of the "cheaper version" would believe they had bought a Visionwerx hot tub and were being "ripped off".³

The Court accepted that there was a serious issue to be tried because the plaintiff's claim was neither frivolous or vexatious.⁴ But the Court denied the preliminary injunction because Visionwerx failed to adduce "clear and convincing" evidence that it would suffer irreparable harm.

The Court noted that the evidence to establish loss of distinctiveness and goodwill was lacking. Confusion alone will not automatically result in a loss of distinctiveness: "[i]n the present case, if there is confusion between the [two hot tubs], this alone will not establish loss of distinctiveness or loss of any goodwill that the Plaintiff may have."⁵

In the end, the Court held that "[t]he dispute between the Plaintiff and the Defendants is about hot tubs, i.e., the sale of potentially infringing products. This type of possible harm is generally quantifiable."⁶ Given the quantifiable nature of the harm, the Court found that it was not irreparable and therefore dismissed the motion for the interlocutory injunction.

Footnotes

1 RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 SCR 311.

2 At para 36.

3 At para 24.

4 At para 70.

5 At para 84.

6 At para 98.

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