Law & Practice

CANADA: Interlocutory Injunction Granted for Gray Market Goods

Published: September 9, 2020

Jacky Wong Borden Ladner Gervais, LLP Vancouver, Canada INTA Bulletins—North America Subcommittee

Verifier

Catherine M. Dennis Brooks Miller Thomson LLP Toronto, Canada INTA Bulletins—North America Subcommittee

Historically, it has been extremely difficult to obtain interlocutory injunctions in Canada in the context of trademark infringement actions, largely because courts have set a very high bar in finding that the plaintiff would suffer “irreparable harm.” However, in recent cases, Canadian courts have demonstrated an increased willingness to grant such injunctions.

Most recently, the Canadian Federal Court granted an interlocutory injunction prohibiting the sale of falsely labeled gray market goods in TFI Foods Ltd. et al. v. Every Green International Inc., 2020 FC 808 (Aug. 4, 2020).

TFI Foods Ltd. (TFI) is the exclusive Canadian distributor of I-MEI Foods Co., Ltd. (I-MEI), a Taiwanese food manufacturer, which owns registered Canadian trademarks. TFI and I-MEI sought an interlocutory injunction to stop Every Green International Inc. (Every Green) from selling products bearing I-MEI’s trademarks and labels falsely stating that Every Green is the “Exclusive Distributor of Canada.” The goods in question were gray market goods manufactured by I-MEI but imported by Every Green without the authorization of I-MEI or TFI.

In this case, the Court found that TFI and I-MEI met the three-part test for granting an interlocutory injunction, namely that:

  • There is a serious question to be tried;
  • The plaintiffs would suffer irreparable harm if the injunction is not granted; and
  • The balance of convenience favors granting the injunction.

The Court held that there was a serious question to be tried because there was sufficient evidence to establish the elements of a passing-off claim. With respect to irreparable harm, the Court found that I-MEI, being the true exclusive distributor in Canada, would suffer irreparable harm to its reputation and goodwill. Every Green’s complete lack of participation in the motion also suggested to the Court that damages would be difficult to quantify and collect, thus making the harm irreparable. Finally, the Court found that the balance of convenience favored granting the injunction because there was no evidence that Every Green would suffer harm from the injunction, and any such harm would be a result of its own false misrepresentation.

This case is consistent with Canadian courts’ increased willingness in granting interlocutory injunctions in recent cases. It also shows that, although the sale of gray market goods does not necessarily constitute passing off or trademark infringement, interlocutory injunctions can be an effective tool in preventing the sale of gray market goods in Canada.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest. Law & Practice updates are published without comment from INTA except where it has taken an official position.

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