Grey Goods And False Labels: Federal Court Grants Interlocutory Injunction In A Trademark Case

• Published date: 12 August 2020
• Subject Matter: Intellectual Property, Trademark
• Law Firm: Norton Rose Fulbright Canada LLP
• Author: Mr Mark Davis and Sarah Pennington

In a recent trademark passing off case TFI Foods Ltd. et al. v. Every Green International Inc. 2020 FC 808, the Canadian Federal Court granted an interlocutory injunction prohibiting the defendant from selling grey goods in Canada. Specifically, the defendant was enjoined from using labels falsely identifying it as the exclusive manufacturer of certain imported food products. Interlocutory injunctions in intellectual property cases are historically difficult to obtain making this decision a noteworthy one for intellectual property rights owners.

Background

TFI Foods Ltd. (TFI) is the exclusive Canadian distributor of I-MEI Foods Co., Ltd. (I-MEI), a Taiwanese food manufacturer. I-MEI owns a number of Canadian trademark registrations for designs that contain the name "I MEI" (or, in some cases, Chinese characters) on a shield under a crown, for use in association with food products (collectively the I-MEI Design).

TFI and I-MEI (together, the Plaintiffs) sought an interlocutory injunction to stop Every Green International Inc (Every Green) from selling products with labels bearing the I-MEI Design and the statement that Every Green is the "Exclusive Distributor of Canada/Distributeur Exclusive De Canada [sic]." I-MEI never authorized Every Green to distribute its products in Canada, or to place its labels on I-MEI products.

The Court found that I-MEI goods at issue in this case were likely "grey market goods" or "parallel imports". These terms refer to genuine goods sold outside of a manufacturer's authorized distribution channels by entities unaffiliated with the manufacturer.

Notably, the motion was not contested by Every Green.

The test for an injunction

An interlocutory injunction is available where:

• (i) there is a serious (i.e. neither frivolous nor vexatious) issue to be tried;
• (ii) the moving party will suffer irreparable harm if the injunction is not granted; and
• (iii) the balance of convenience favours granting the injunction.

There was a serious issue to be tried

Subsection 7(b) of the Trademarks Act prohibits a trader from directing public attention to their goods, services, or business in a manner likely to cause confusion between their goods, services, or business and those of another. Subsection 7(b) is considered to be a codification of the common law tort of passing off.

In considering the necessary components to a passing off claim, the Court found that the Plaintiffs raised a serious issue to be tried under subsection 7(b):

• Ownership of a valid registered or unregistered trademark: I-MEI owned multiple registered I-MEI...