Canada: Interlocutory Injunction In Trade-mark Infringement Action Upheld By Federal Court Of Appeal

On April 23, 2015, in Jamieson Laboratories Ltd. v. Reckitt Benckiser LLC and Reckitt Benckiser (Canada) Limited 2015 FCA 104, the Federal Court of Appeal upheld a decision granting an interlocutory injunction against a defendant in a trademark infringement suit.  Successful motions for such interlocutory relief are relatively rare in the Federal Court, and this case provides some interesting insight into the type of evidence that might allow a moving party to obtain such relief.

Background Facts

The facts of the case have their origin in activities undertaken in 2012, when Reckitt Benckiser LLC and Reckitt Benckiser (Canada) Limited (Reckitt) decided to enter the North American market in respect of supplements containing omega-3 fatty acids.  In pursuit of this goal, Reckitt engaged both Schiff International, Inc. (Schiff) and Jamieson Laboratories Ltd. (Jamieson) in acquisition talks.

Reckitt acquired Schiff in December 2012, and thereby gained rights to Schiff's trademark MEGARED, which had been used successfully in the United States in association with a line of omega-3 supplement products. 

The next month, Jamieson decided to undertake the rebranding of its own line of omega-3 fatty acid products in Canada from SUPER KRILL to OMEGARED.  In June 2013, Jamieson launched the new brand in Canadian stores.

This launch prompted two warning letters from Reckitt, which had not yet launched the MEGARED product in Canada.  Jamieson refused to withdraw or rebrand its product.  Accordingly, on October 16, 2014, Reckitt initiated an action for infringement of its MEGARED trademark.  On November 28, 2014, Reckitt also filed a motion seeking interlocutory injunctive relief to prohibit Jamieson from using the trademark OMEGARED, and mandating the recall of products and other materials that would offend the terms of the prohibition.

Test for Obtaining an Interlocutory Injunction

In determining whether to grant the interlocutory injunction, the Federal Court applied the tripartite test set out in RJR-MacDonald Inc. v. Canada (Attorney General) [1994] 1 SCR 311 [RJR-Macdonald],which required Reckitt to establish:  (1) a serious issue to be tried on the merits of the case;  (2) that Reckitt would suffer irreparable harm if the injunction were not granted; and (3) that the balance of convenience favours granting the injunction.

Court Analysis

(1)  Serious Issue to be Tried

The threshold for establishing a serious issue is a low one.  Unless it can be shown that the moving party's arguments are frivolous or vexatious, a serious issue will be made out.

In considering whether a serious issue of potential trade-mark infringement had been established by Reckitt, the Federal Court found that the timing of Jamieson's re-branding strategy was a deliberate strike to prevent MEGARED from gaining acceptance in the Canadian market, and the trial judge proceeded to conduct a fairly detailed overview of the merits of the case. 

On appeal, Jamieson argued (and the Federal Court of Appeal agreed) that the Federal Court judge delved too deeply into the merits of the underlying action.  However, the Court of Appeal found that the trial judge gave sufficient reasons to conclude that Reckitt had established a serious issue of potential trade-mark infringement.

(2)  Irreparable Harm

In RJR-Macdonald, the Supreme Court of Canada confirmed that the term "irreparable harm" defines "the nature of the harm suffered rather than its magnitude."  There is a high standard for establishing irreparable harm, and Federal Court case law requires specific and clear evidence demonstrating that monetary damages are insufficient relief.

In upholding the Federal Court's determination that Reckitt had, indeed, established irreparable harm, the Federal Court of Appeal agreed that Reckitt's potential harm would be impossible to quantify, and noted that it "makes no practical sense to require a plaintiff to demonstrate such damages as lost sales or price reductions when the only market environment in which the plaintiff has ever operated has been one in which the alleged infringer has operated as well".

(3)  Balance of Convenience

The trial judge decided that the balance of convenience favoured Reckitt, concluding that Jamieson had failed to demonstrate irreparable harm if the injunction issued.  The Federal Court found that the potential harm from reverting to the trademark SUPER KRILL was compensable by damages, and that Reckitt had made an undertaking to cover such damages.

The Federal Court of Appeal agreed that there may be potential irreparable harm to Jamieson's reputation, given the "forthwith" nature of the injunction originally sought.   To address this issue, the Federal Court varied the terms of the order to give Jamieson 30 days from the date of the order, as varied on appeal, to comply with the injunction.

Conclusion

The case provides interesting insight into the applicability of the RJR-Macdonald test in the context of a trademark infringement matter, and provides an additional opening to plaintiffs who have yet to enter a market to try to establish irreparable harm allowing for interlocutory relief.

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