A Recent Look at Interlocutory Injunctions in Trademark Infringement Cases

Interlocutory injunctions remain difficult to obtain in trademark infringement cases. To obtain an interlocutory injunction, the moving party must satisfy a three-part test. A party must show that:  (1) a serious issue has been raised; (2) irreparable harm will result if the injunction is not granted; and (3) the balance of convenience favours the moving party. Over the years parties seeking injunctive relief in trademark infringement cases have faced difficulty satisfying the irreparable harm branch of the test. In order to satisfy the court that irreparable harm will result, the court requires clear and non-speculative evidence of harm that could not be compensated for by an award of damages at trial. This has proven to be difficult for parties for among other reasons, the fact that often in these cases it is in fact possible to quantify the harm that has and/or will be done and accordingly compensate the moving party through an award of damages at trial. Canadian courts have recently provided more insight on the evidence required to support a request for injunctive relief.

In the 2017 decision of Sleep Country Canada Inc. v. Sears Canada Inc., 2017 FC 148, Sleep Country Canada Inc. (“Sleep Country”) was granted an interlocutory injunction against Sears Canada Inc. (“Sears”) to prevent Sears from using its slogan: “THERE IS NO REASON TO BUY A MATTRESS ANYWHERE ELSE”, pending the final determination of Sleep Country’s trademark infringement action against Sears. Sleep Country alleged that Sears’ slogan infringed Sleep Country’s trademarked slogan of “WHY BUY A MATTRESS ANYWHERE ELSE”. The court accepted Sleep Country’s arguments and found that on a balance, there was a likelihood of confusion between the time of the motion and the disposition of the infringement action and that this confusion would result in lost sales as a result of consumers being less aware and familiar of the slogan’s association to Sleep Country. The court found that these associations would consequently result in a loss of distinctiveness for the brand of Sleep Country and this would in turn have an effect on the goodwill established by Sleep Country.

The key issue in this decision was whether Sleep Country had established, with clear and non-speculative evidence, that it would suffer irreparable harm as a result of the alleged infringement, between the time of the motion and the time the action was finally determined and whether this could be quantified and compensated in damages. Through its expert evidence, Sleep Country was able to show that it was not possible to quantify the harm that the court had accepted would result from the infringement. Sleep Country argued that in order calculate damages for lost sales, one would have to be able to identify the sales that were lost as a result of the infringing conduct and to separate this from sales lost as a result of normal competitive factors in the market. Sleep Country argued that this was simply not possible. Sears attempted to quash this argument with responding expert evidence proposing a model that the court could use to calculate Sleep Country’s damages, which consisted of preparing a comparison of Sleep Country’s sales when Sears used the new slogan versus Sleep Country’s sales when Sears did not use the new slogan. This method was rejected by the court due to its unreliability, including uncertainties associated with its application.

More recently, in Corus Radio Inc. v. Harvard Broadcasting Inc., 2019 ABQB 880, Corus Radio Inc. (“Corus”) was successful in obtaining an injunction to restrain Harvard Broadcasting Inc. (“Harvard”) from, among other things, using the POWER 107 name or logo in its radio broadcasting business in Edmonton. Corus argued that use of POWER 107 wrongfully traded on the reputation and goodwill of the POWER radio brand that Corus had already built in Edmonton and elsewhere in Canada. In doing so, Corus argued that Harvard wrongfully took Corus’ opportunity to use the POWER radio brand in the future, and violated laws respecting the protection of copyright and trademarks, the law of passing off and unfair competition. Corus argued that in absence of an injunction, it would continue to suffer irreparable damage to the ratings of its current radio brand (formerly POWER 92) and that it would lose the opportunity to use existing goodwill to introduce a POWER radio station again to the Edmonton market.

In its irreparable harm analysis, the court considered among other things Corus’ opportunity to resume use of the POWER 92 mark. The court found that the use by Harvard of the POWER 107 name would narrow any remaining opportunity that Corus had to re-enter the market relying on its goodwill and reputation on which it was entitled to trade. As long as Harvard was in the market as POWER107, Corus could not deploy its asset, being the goodwill it held in its brand and reputation. The court ultimately held that the injury to Corus extended beyond loss of revenue associated with loss of listenership. The goodwill of the business, the reputation on which it trades, would be damaged and the distinctiveness of its brand would continue to fade. The court held that this was not compensable in damages and granted Corus’ motion.

While there is no defined set of circumstances as to when courts will grant interlocutory injunctions in trademark infringement proceedings, this recent jurisprudence does suggest that the courts are increasingly willing to do so if parties advance clear non-speculative evidence of trademark infringement and unquantifiable harm. These cases are a helpful resource for parties to review and reflect on when preparing evidence to support or challenge a motion for an interlocutory injunction.

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Anastasia Reklitis maintains a broad commercial litigation, arbitration and dispute resolution practice.