A recent Canadian decision illustrates how powerful interlocutory injunctions can be for trademark owners involved in trademark infringement litigation in Canada.
On January 2, 2024, in Amer Sports Canada Inc v Adidas Canada Limited (2024 BCSC 3), the BC Supreme Court issued an interlocutory injunction restraining adidas Canada ("adidas") from displaying the TERREX name on its store located on West 4th Avenue in Vancouver. The injunction was sought and obtained by Arc'teryx Equipment ("Arc'teryx"), a Vancouver-based outdoor apparel and equipment retailer with a store located only a few doors down from the adidas store.
Background
Arc'teryx operates a retail store on West 4th Avenue in the Kitsilano area of Vancouver which prominently displays its ARC'TERYX registered trademark.
In January 2023, adidas opened its own retail store on the front of which appeared the adidas "Performance Bars" design followed by the TERREX trademark:
Arc'teryx claimed that the adidas triangular Performance Bars design resembled a stylized letter "A" and its positioning in front of the name TERREX created the name "A TERREX", which caused customer confusion with its ARC'TERYX store. It also claimed that the name "TERREX" alone was sufficient to create confusion with its registered trademark.
In February 2023, Arc'teryx filed a notice of civil claim in the BC Supreme Court against adidas for trademark infringement, passing-off, depreciation of goodwill and false and misleading representations. In March 2023, it subsequently filed an application for an interlocutory injunction seeking to restrain adidas from using TERREX for retail store services, including online store services, pending the outcome of the merits of the lawsuit.
Decision
The Supreme Court of Canada has established that in order to obtain an interlocutory injunction, the plaintiff must satisfy the following criteria:
- there is a serious issue to be tried;
- it will suffer irreparable harm if an interlocutory injunction is not granted; and
- the balance of convenience favours the plaintiff.
The BC Supreme Court held that there was indeed a serious issue to be tried with respect to confusion. It noted a similarity between the two trademarks when placed side by side and an immediate and obvious potential for confusion. The Court also took note of local media articles filed into evidence by Arc'teryx, where confusion was specifically noted. The Court also appears to have given some weight to a private investigator's report which noted that a certain number of customers that came into the adidas store had admitted to mistakenly believing they had come into the Arc'teryx store.
The Court concluded that Arc'teryx would suffer irreparable harm if adidas were allowed to continue to display the TERREX trademark on its storefront pending the outcome of the trial. The Court agreed that ongoing confusion between the marks could cause:
(1) casual consumers to be diverted from the Arc'teryx store, resulting in lost sales and loss of market share that would be practically impossible to calculate at trial, and;
(2) loss of distinctiveness of the ARC'TERYX registered trademark used in association with retail services, which would be practically impossible to regain.
Arc'teryx was favoured in terms of the balance of convenience criteria by virtue of its ownership of its registration in international class 35 for ARC'TERYX in association with retail store services. Arc'teryx benefits from the exclusive right in Canada to use its trademark for retail store services whereas adidas' TERREX trademark is not yet registered in Canada. The Court concluded that adidas altered the status quo by opening its store only a few blocks away from the Arc'teryx store without owning a registered trademark for TERREX in Canada, and as such, took a business risk with full knowledge of the situation.
The Court granted the injunction sought by Arc'teryx but limited it solely to the retail store located on West 4th Avenue in Vancouver as this was the only store that did not bear the name "adidas" in its signage. On January 11, 2024, adidas filed leave to appeal the Court's decision. The hearing at the Court of Appeal is scheduled for March 24, 2024.
Conclusion
This decision is a reminder that pre-trial injunctive relief can be extremely beneficial in preserving a brand's value while a trademark owner is engaged in ongoing litigation in Canada. Indeed, it forces one's opponent to modify its allegedly infringing behaviour during the proceedings, which can often span years.
Trademark owners should always consult with their counsel prior to launching trademark litigation in Canada to assess whether they can benefit from this powerful equitable tool, as each case is always heavily fact dependent, and injunctions can be granted by both provincial civil courts as well as the Federal Court.
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