Year In Review ' Key Trademark Cases From 2020

• Published date: 19 January 2021
• Subject Matter: Intellectual Property, Trademark
• Law Firm: Bereskin & Parr LLP
• Author: Ms Meghan Dillon, Susan Keri, R. Scott MacKendrick and Mark Robbins

While 2019 was historic in terms of the changes it brought to Canadian trademark law, 2020 was unprecedented, bringing the world together in a common quest to combat the COVID-19 pandemic. Yet, despite considerable turmoil and disruption, Canadian trademark practitioners remained resilient and active. Many of the amendments to the Canadian Trademarks Act, implemented in 2019, received considerable attention and review by the Examination Section of the Trademarks Office as well as the Opposition Board. In addition, the Federal Court and Federal Court of Appeal provided valuable guidance in several noteworthy decisions. The following represents a summary of our "Top 10" trademark decisions from 2020.

Interlocutory Injunctions and Grey Market Goods

The Federal Court decision in TFI Foods Ltd. et al. v. Every Green International Inc., 2020 FC 808 (August 4, 2020) is helpful to brand owners faced with the sale of grey goods or parallel imports into the Canadian marketplace. Since grey goods are genuine products rather than counterfeits, preventing their sale in Canada is generally quite difficult.

TFI Foods Ltd. is the exclusive distributor in Canada of food products manufactured by I-MEI Foods Co. Ltd. bearing various I-MEI trademarks. TFI and I-MEI sought an injunction to prevent Every Green International Inc. from selling I-MEI branded products in Canada bearing a label falsely identifying Every Green as the exclusive distributor in Canada of such products. The Court concluded that the goods in question were likely "grey market goods" or "parallel imports" rather than counterfeits, namely, genuine goods manufactured by I-MEI that entered the Canadian marketplace without authorization of I-MEI or TFI.

The Court found that TFI and I-MEI met the three-part test for granting an interlocutory injunction, namely: (1) there is a serious issue to be tried; (2) the plaintiffs would suffer irreparable harm if the injunction is not granted; and (3) that the balance of convenience favours the granting of the injunction.

While numerous causes of action were alleged, the Court found a serious issue to be tried solely on the basis of the passing-off claim under Subsection 7(b) of the Trademarks Act, namely, that the plaintiff, I-MEI, had goodwill in its registered trademarks and that Every Green's false labelling was deceptive, resulting in actual or potential damage. The Court noted that the sale of grey market goods does not, in itself, constitute passing off; however, Every Green's false statement on the labels identifying it as the exclusive Canadian distributor of the products was a misrepresentation relating to the I-MEI trademarks, resulting in deception both to retailers and to the purchasing public. As such, Every Green's actions fell within the scope of the claim to passing off. While the misrepresentation element of a claim of passing off often pertains to the use of a confusing trademark, the Court noted that false claims, such as this one, may also constitute a misrepresentation for purposes of a claim in passing off.

On the issue of irreparable harm (namely, harm that cannot be quantified in a monetary damage award), the Court found that the continued presence in the marketplace of the I-MEI branded products bearing false labels improperly identifying Every Green as the exclusive distributor of the products in Canada, as well as inaccuracies in the ingredient list and nutrition facts, may damage the reputation and goodwill of the I-MEI products and business, and thereby cause irreparable harm. Moreover, the fact that Every Green did not respond to this motion suggested to the Court that damages were not only difficult to quantify, but also would be difficult to collect.

Finally, the Court found that the balance of convenience favoured the grant of the injunction. There was no evidence that Every Green would suffer any harm if the injunction was granted and, in any event, any such harm arose from its own conduct in making the false statements on the labels.

For the above reasons, the Court ordered Every Green to cease offering for sale, selling and/or labelling the products; to recall all products in the marketplace bearing the false label; and to preserve all unsold and recalled products pending trial.

Brand Parody and Depreciation of Goodwill

On June 11, 2020, the Federal Court rendered its decision in Toys "R" Us (Canada) Ltd. v. Herbs "R" Us Wellness Society, 2020 FC 682. The decision provides brand owners with some ammunition to prevent the use of a similar mark that trades off the goodwill or reputation of a well-known brand, even where the goods, services and businesses are very different and a claim in trademark infringement or passing off would be difficult to support.

Toys "R" Us is a well-known toy retailer and owns numerous registered trademarks for "TOYS R US" and "R US", including the following:

Herbs "R" Us operated a cannabis dispensary in association with the trademark and trade name HERBS R US, depicted in the following stylized manner:

Toys R Us brought an application in the Federal Court against Herbs R Us, alleging:

1. trademark infringement;
2. passing off (namely, directing public attention to its goods, services and business in such a way as to cause or be likely to cause confusion); and
3. depreciation of the value of the goodwill attached to the registered trademark TOYS R US &amp Design, contrary to Section 22 of the Trademarks Act

On the issue of trademark infringement, Toys R Us referred to a "family" of TOYS R US trademarks; however, it did not place much reliance on the broader scope of trademark protection that may have been granted to such a family of marks, relying instead on only two design mark registrations, and asserting that the design mark used by Herbs R Us infringed these two marks, contrary to Section 20 of the Trademarks Act. The Court dismissed the claim in trademark infringement, finding that the vast differences between the goods and services associated with the parties respective marks would render confusion unlikely: "...it strikes me as unlikely in the extreme that a Canadian consumer, even a casual one somewhat in a hurry with an imperfect recollection of the TOYS R US mark, would see the HERBS R US trademark and conclude that a well-known toy retailer had started branching out into storefront 'dispensary' services or cannabis sales...".

Similarly, having found no likelihood of confusion, the Court dismissed the passing-off claim as well.

The claim based on depreciation of goodwill under Section 22 of the Act, however, did succeed. Even where there is no likelihood of confusion, there may still be a depreciation of goodwill attaching to a registered trademark...