Docket: T-2124-14
Citation:
2015 FC 215
Ottawa, Ontario, February 20, 2015
PRESENT: The Honourable Mr. Justice Brown
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BETWEEN:
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RECKITT BENCKISER LLC AND RECKITT BENCKISER (CANADA) LIMITED
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Plaintiffs
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and
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JAMIESON LABORATORIES LTD.
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Defendant
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ORDER AND REASONS
[1]
This is a motion on behalf of the Plaintiffs
for:
(1)
an order under the Federal Courts Rules,
SOR/98-106, Rule 373, forthwith prohibiting and restraining the Defendant,
Jamieson Laboratories Ltd. (Jamieson), its officers, directors, employees,
agents, related business entities, and all those over whom it exercises control
(the Related Parties), from any and all use of the word OMEGARED, or any other
word or mark confusingly similar to MEGARED, as a trade name, trade-mark, or
otherwise in association with its business, wares or products, until such time
as this Honourable Court renders a final determination in the within action;
(2)
an order under the Federal Courts Rules,
Rule 373, requiring Jamieson and the Related Parties to forthwith recall from
all distributors and retailers and destroy under oath all documents or records,
products, packaging, displays, advertisements, signs, whether in electronic
form or otherwise, the use of which would offend the terms of the Order sought
herein at paragraph 1;
(3)
costs of this motion; and
(4)
such further and other relief as this Honourable
Court deems just and appropriate.
The motion is
granted in part for the reasons that follow.
I.
Background
[2]
This is an application for an interlocutory
injunction by Reckitt Benckiser LLC and Reckitt Benckiser (Canada) Limited [Plaintiffs]; Reckitt Benckiser LLC being the owner of the registered
Canadian Trade-mark MEGARED, Registration No. TMA 793,186 and Reckitt Benckiser
(Canada) Limited, being the licensee and sole Canadian distributor of MEGARED
product, to restrain the Defendant from selling essentially the same product,
into the same channels of trade under the Defendant’s unregistered name
OMEGARED. The MEGARED Canadian trade-mark covers dietary and nutritional
supplements in capsule form containing (among other elements) omega-3 fatty
acids, to be used to support cardiovascular health, healthy cholesterol levels
and joint health. The Defendant’s OMEGARED is sold for essentially the same
purposes and in the same market. Both products contain omega-3 fatty acids. Both
MEGARED and OMEGARED (with one exception) are made exclusively from krill oil
which is red and does not have the unpleasant burp back that characterize
omega-3 products made with fish oils. While no MEGARED made from fish oil is
sold in Canada, the Defendant’s OMEGARED actually encompasses two products, the
biggest selling and most important product being made with krill oil, but
another less significant product is made with salmon oil.
[3]
The MEGARED trade-mark was applied for in 2008
and registered by the Canadian Intellectual Property Office (CIPO) on March 17,
2011, in association with dietary and nutritional supplements in capsule form
containing (among other elements) omega-3 fatty acids, to be used to support
cardiovascular health, healthy cholesterol levels and joint health.
[4]
In March 2012, Health Canada gave all necessary
approvals to sell MEGARED oral dietary supplements containing krill oil as the
active omega-3 ingredient. The Health Canada application was made in 2009.
[5]
MEGARED krill oil capsules were not sold
directly in Canada until December 2013, although it was available to the
Canadian market through various websites and was advertised and marketed in
Canada by way of various US TV shows, including “The
Doctors” and “The Dr. Oz Show”, which
were viewed by Canadian viewers through simulcasts into Canada at the rate of
96,700 and 308,900 views respectively during any given minute. As a result of
the extensive advertising and promotion in the US, MEGARED had already reached
Canadians. Prior to its Canadian launch, MEGARED television advertising on
major US networks was broadcast into Canada. For example, the American
television station WUTV-Buffalo is viewed by Canadians in Toronto and Hamilton, and some of that station’s programming is broadcast to Canadians by CITY Toronto and CHCH. When considering only those stations in the Toronto-Hamilton area,
MEGARED advertising was seen 11,773,000 times by Canadians in 2013 alone.
[6]
That said, until the December 2013 official
launch of the MEGARED krill oil capsules in Canada this product was not
generally available for sale in Canada. Although it is highly likely that
on-line sales of MEGARED krill oil capsules occurred to Canadians through
third-party websites such as www.amazon.com, www.luckyvitamins.com,
www.evitamins.com and www.walmart.com, the number of such sales is unknown.
Prior to December 2013, the only recorded sales of MEGARED to Canadians is
$465.05 USD in 2012, which occurred through the website www.schiffvitamins.com.
There were no recorded Canadian sales in 2013.
A.
Plaintiffs purchase Schiff and the Canadian
trade-mark MEGARED in December, 2012, after discussions with Schiff and the
Defendant Jamieson
[7]
The MEGARED trade-mark owned/licensed by the
Plaintiffs was previously owned by a US company called Schiff Nutrition
International, Inc. (Schiff). In addition to owning the Canadian registered trade-mark
MEGARED, Schiff held the US trade-mark registration for MEGARED in association
with dietary and nutritional supplements, dietary food supplements and dietary
supplements. Schiff’s US sales of MEGARED were very successful and worth
approximately £100,200,000 in 2013 alone.
[8]
It is fair to say that when Schiff and related
companies were purchased by the Plaintiffs in late 2012, the MEGARED brand was
identified as being the number one brand in the “healthy
heart segment” of the US vitamin, minerals and supplements market.
[9]
Schiff extensively advertised and sold
krill-based and other products in close association with the MEGARED mark in
the US. However, it did not use the MEGARED mark in association with fish oil
products (salmon oil or otherwise). Advertising and sales occurred through
Schiff’s own websites, www.schiffmegared.com and www.schiffvitamins.com, as
well as at numerous third party websites such as www.amazon.com,
www.luckvitamin.com, www.evitamins.com and www.walmart.com.
[10]
The Schiff krill oil capsules were displayed and
sold through numerous major retail stores throughout the US. At all times, MEGARED krill oil products have been sold in packaging prominently
displaying the mark MEGARED. This packaging has also been depicted for on-line
sales of MEGARED. At all times, krill oil MEGARED products have been advertised
and promoted in close connection with the MEGARED mark.
[11]
In mid-2012, the Plaintiffs, a large public
limited company organized under the laws of England and Wales, decided to enter the North American market. To this end, in the fall of 2012, the Plaintiffs
engaged in discussions with Schiff with respect to acquiring both its US and Canadian businesses.
[12]
The Plaintiffs also engaged in discussions with
the Defendant. Jamieson is a Canadian company in the vitamin, minerals and
supplements business and is a large, if not the largest of its type in Canada. While Schiff owned the Canadian and US trade-marks for MEGARED krill-based omega-3
capsules, Jamieson sold a very successful krill-based omega-3 product called
SUPER KRILL. Jamieson started to market SUPER KRILL in January, 2012. Jamieson
did not have a registered trade-mark for SUPER KRILL. Jamieson’s very
successful SUPER KRILL had 82-83% of the Canadian market for krill-based
omega-3 products despite very little advertising dollars and its very short
time on the market.
[13]
Discussions between the Plaintiffs and Schiff were
successfully completed in November 2012. The Plaintiffs became the lawful owner
of the Canadian (and US) registered trade-marks for MEGARED in December 2012.
Discussions between the Plaintiffs and Defendant ended.
[14]
The Plaintiffs purchased Schiff as part of their
strategy to enter the Canadian vitamin, minerals and supplements market. It is
noteworthy that Schiff, a large player in the US krill oil market, had the same
intent as can be seen from their 2008 application for the Canadian registration
of the trade-mark MEGARED, subsequently obtained in 2011. Further, Schiff had
all necessary Health Canada approvals for MEGARED by March of 2012, having
applied in 2009. Those approvals became the property of the Plaintiffs in
December, 2012 when they acquired Schiff.
B.
Plaintiffs planned and entered Canadian market with
MEGARED in December 2013/January 2014
[15]
The Plaintiffs, while owning the Canadian
trade-mark MEGARED as of December 2012, did not immediately enter the Canadian
market except, as noted, through cross-border marketing on US TV shows and
internet sales.
[16]
Instead, the Plaintiffs decided to market
MEGARED krill oil capsules in Canada starting in December 2013/January 2014, and
did so for two reasons. First, in the Canadian pharmacy business, the ideal
time to launch a new brand is at year end (called the “shelf
reset” time in the business), and it was far too late to do that for
year end 2012. The end/beginning of the calendar year is the ideal time to
launch a new brand. Given this, the Plaintiffs targeted - and achieved - the
start of their marketing of MEGARED krill oil capsules in Canada at year end 2013. The Plaintiffs started selling the MEGARED krill oil capsules in stores
across Canada and online in December 2013/January 2014.
[17]
The Plaintiffs had a second reason to launch in
December 2013/January 2014. Upon the acquisition of Schiff, there was a
misalignment between ownership of the trade-mark MEGARED and the legal situs
of control over the character or quality of the MEGARED product, such that
there was a risk of successful expungement proceedings under section 45 of the Trade-marks
Act, RSC, 1985, c T-13 [Trade-marks Act]. This required the
Plaintiffs to undergo a corporate reorganization to create the necessary
re-alignment of licensing relationship between several entities and agreements.
This reorganization started in September, 2013 and culminated in June, 2014,
when Schiff ceased to exist and merged into one of the Plaintiffs’ family of
entities namely the Plaintiff, Reckitt Benckiser LLC [RB LLC].
[18]
In this connection, the scale of the Plaintiffs’
business and its acquisition of Schiff is illustrated by the fact that Schiff
and RB LLC have made efforts to establish the MEGARED brand in many countries
outside the US, including registrations and pending registrations of the
MEGARED mark in over 60 countries. The Plaintiffs’ MEGARED krill oil products
are sold in over 25 countries including Canada and the US.
[19]
Even after Schiff ceased to exist in June, 2014,
the Plaintiff RB LLC continued promotional activities with respect to the
MEGARED krill oil product, including operation of the websites www.megared.com
and www.schiffvitamins.com, extensive use of social media, significant
television advertising and product placement.
C.
In January 2013, Jamieson plans OMEGARED launch
and executes it in June/July 2013
[20]
In January 2013, almost immediately after the
Plaintiffs acquired Schiff, Jamieson decided to launch a new brand of omega-3
krill oil capsules called OMEGARED into the Canadian marketplace. This action
gives rise to these proceedings.
[21]
The Defendant Jamieson decided to launch
OMEGARED knowing of the Plaintiffs’ acquisition of Schiff together with the
Schiff Canadian registered trade-mark MEGARED. Jamieson also knew of the Plaintiffs’
interest in entering the Canadian nutritional supplement business by virtue of the
fact Jamieson had also been a take-over target itself. Jamieson decided to
change the name of and to re-brand its successful SUPER KRILL to OMEGARED. This
involved a massive marketing promotion of OMEGARED, which took many months to
plan and execute.
[22]
In June/July, 2013 Jamieson launched OMEGARED products
in Canada. Jamieson started with a three month transition period. This provoked
not one but two legal warning letters from the Plaintiffs, pointing out the
similarity between MEGARED and OMEGARED and asserting the Plaintiffs’ rights
under Canadian trade-mark law. By these two letters, the Plaintiffs gave
advance warning to Jamieson that its conduct constituted a breach of its
exclusive Canadian trade-mark rights and would result in legal proceedings.
[23]
Jamieson replied by denying the allegations and
in effect claiming a right to use OMEGARED in association with omega-3 products
primarily based on krill oil, i.e., the same product, with the same associated
use, and distributed and sold in the same market through the same channels of
trade as MEGARED krill oil capsules.
[24]
Jamieson learned that the Plaintiffs owned the
MEGARED trade-mark when Jamieson applied to CIPO to register OMEGARED in
February, 2013. Jamieson’s trade-mark searches revealed to Jamieson that
MEGARED was already the subject of a registered Canadian trade-mark. Notwithstanding
this knowledge from CIPO and despite receipt of two warning letters from the
Plaintiffs, Jamieson elected to continue with its launch of OMEGARED in
June/July 2013.
[25]
In January and February 2014, at the very time
MEGARED krill oil capsules were being launched in Canada, Jamieson mounted an
extensive (“massive” in Jamieson’s words) advertising
campaign mainly in support of OMEGARED krill oil capsules. Jamieson says the
two events were coincidental. As Jamieson put it, the Plaintiffs’ launch “coincided with the massive advertising campaign of Jamieson
to promote krill oil and its Omega RED line of products”. In fact, it
was also the other way around i.e., Jamieson launched its massive advertising
campaign to promote OMEGARED krill oil capsules at the very time the Plaintiffs
were launching their MEGARED krill oil capsules.
[26]
The launch of OMEGARED was Jamieson’s greatest
marketing expenditure in its recent history. Jamieson spent $4.6M to market its
OMEGARED product. By comparison, the Plaintiffs spent approximately $1.7M to
promote their registered Canadian trade-mark brand MEGARED krill oil capsules.
From September 1, 2013 through August 3, 2014, Canadians have been exposed to
Jamieson's television advertising for the OMEGARED product 671,433,000 times,
while the Plaintiffs’ MEGARED krill oil capsule marketing reached Canadians
383,850,000 times.
[27]
Jamieson does not and has never challenged the validity
of the Canadian trade-mark registration for MEGARED.
D.
Confusion in the marketplace
[28]
Jamieson’s massive marketing campaign of its
OMEGARED product resulted in some instances where there was actual confusion on
the part of Canadian consumers and retailers with the Plaintiffs’ MEGARED krill
oil capsules:
(a)
In March of 2014, a consumer commented on the MEGARED
Canada Facebook page that although the MEGARED krill oil capsules were part of
her everyday diet, she did not like the commercial where a hand picks up the MEGARED
from the ocean floor under moving fish. In the consumer’s words: “It looks like you are picking up their poop! I had to get
that image out of my mind.” There is no such commercial for MEGARED krill
oil capsules, but the television advertisement on which Jamieson spent the bulk
of its $4.6M marketing expenditure fits this description.
(b)
In April of 2014, a Shoppers Drug Mart in Ottawa displayed the MEGARED krill oil capsules as being a Jamieson product.
(c)
In April of 2014, a consumer sent a message to
the MEGARED Canada Facebook page, requesting that she be provided a coupon for “omega red super krill”.
(d)
Searches for the term “megared”
on the Canadian Walmart websites and the publicly available online Health Canada database for licensed natural health products, yield search results bringing up
Jamieson’s OMEGARED products.
E.
Summary of market share at time of motion and
new development
[29]
Stepping back from the current dispute, it is
clear that both the Plaintiffs and Jamieson market and distribute vitamins,
minerals and dietary supplements to consumers across Canada. They are direct
competitors, in that they offer highly similar and competing products to
Canadian consumers through the same channels of trade. In terms of market share
at the time of the evidence relied upon at the hearing, Jamieson had dropped
from 82-83% to 63% of branded krill products, while the Plaintiffs’ sales
amounted to 20%.
[30]
In October, 2014, with both MEGARED krill oil
capsules and OMEGARED products on the market, the Plaintiffs brought this
action for infringement together with this motion for interlocutory injunctive
relief. The motion was adjourned to permit cross-examinations, and was subsequently
heard at General Sittings in Edmonton on January 19, 2015.
[31]
On November 10, 2014, the CIPO issued an
Approval Notice for publication of Jamieson’s trade-mark OMEGARED, which it
applied for in 2013, in association with vitamins, minerals, nutritional
supplements and dietary supplements.
II.
Discussion and analysis
[32]
The Supreme Court of Canada established the test
for obtaining an interlocutory injunction in RJR-MacDonald Inc v Canada (AG) [1994] 1 S.C.R. 311 [RJR] and Manitoba (AG) v Metropolitan Stores Ltd,
[1987] 1 S.C.R. 110. To obtain the relief they seek, the Plaintiffs must meet all
three parts of the tri-partite test, namely: (1) establish a serious issue to
be tried on the merits of the case; (2) demonstrate that the Plaintiffs will
suffer irreparable harm if this motion is refused; and (3) show that the
balance of convenience favours granting the injunction.
A.
Serious issue
[33]
I find that there is a serious issue raised in
this motion based on the evidence and material before the Court.
[34]
The Plaintiff RB LLC is undisputedly the owner
of the Canadian registered trade-mark MEGARED. As owner and licensee of a duly
registered Canadian trade-mark, the Plaintiffs have “the
exclusive right to the use throughout Canada of the trade-mark in respect of
those goods or services”, as provided in section 19 of the Trade-marks
Act. In my view, this is a powerful right granted to them by Parliament.
[35]
In terms of serious issue, I will consider
Jamieson’s reasons or motive for, and the timing of, its OMEGARED launch and
then consider the issues of the likelihood of confusion and trade-mark
infringement.
(1)
Reasons for Jamieson’s pre-emptive launch of
OMEGARED in face of impending branding of MEGARED
[36]
This motion is brought because the Plaintiffs
consider it necessary to preserve the commercial value of their MEGARED mark in
association with their krill oil capsules. They submit that if they are forced
to wait until trial before any relief is granted and Jamieson continues its
pattern of alleged wilful infringement and marketing of OMEGARED, the MEGARED
mark will lose all distinctiveness in the Canadian market, and I agree.
[37]
The Plaintiffs’ theory is that Jamieson’s
January, 2013 decision to “re-brand” SUPER KRILL
into OMEGARED occurred because of Jamieson’s concern that the MEGARED brand
would soon be launched in Canada and market competition would follow. This
inference is strengthened through the evidence which indicates that Jamieson
had specific knowledge that the Plaintiffs wished to enter the Canadian
vitamin, minerals and supplements market at that time, as a result of the
discussions between Jamieson and the Plaintiffs, and the fact that Jamieson was
aware of the very great success MEGARED krill oil capsules enjoyed in the US
market. It is the Plaintiffs’ theory that Jamieson set out to defeat the
Plaintiffs’ marketing efforts by creating a dominant brand before the
Plaintiffs could begin to sell, notwithstanding that the Plaintiffs enjoyed
exclusive rights in Canada to the MEGARED registered trade-mark in association
with krill oil capsules and more generally dietary and nutritional supplements
in capsule form containing (among other elements) omega-3 fatty acids, to be
used to support cardiovascular health, healthy cholesterol levels and joint
health. In my view this is an obvious inference drawn from the facts, which on
a balance of probabilities I accept.
[38]
Notably, nowhere in its sworn evidence does
Jamieson specifically deny that a pre-emptive attack on MEGARED was a major or
contributing reason for its decision to market OMEGARED in a “massive” way just ahead of, and ramping up at, the
time that MEGARED entered Canadian channels of trade. Jamieson argues that its
campaign to promote OMEGARED was a “coincidence”,
and was in fact undertaken for different reasons, propositions with which I
disagree.
[39]
In its material, Jamieson sets out two “main reasons” for the re-branding. I propose to set
these reasons out, the counter-arguments, and then draw factual conclusions for
the purposes of this motion.
[40]
Jamieson submitted that it launched its massive
OMEGARED marketing blitz because:
(a)
It allegedly wanted to invest much more
advertising support behind its SUPER KRILL products, and wanted to expand the
line to be more clearly an omega-3 line which provided premium benefits over
regular fish oil. Re-packaging and re-branding to OMEGARED allowed expansion of
the line to add additional krill oil product and one salmon oil product to
invest advertising in and spread out the cost of advertising over these
additional products.
(b)
The OMEGARED brand would allegedly stand out more
on store shelves than the “Super Krill” brand had, and this increased visibility
would make Jamieson’s advertising investment more efficient.
[41]
However, the Plaintiffs argue, and I agree, that
the evidence contradicts the alleged “main reasons”
for the massive effort to market OMEGARED products. As to the first alleged
reason, Jamieson’s evidence is that:
(a)
The SUPER KRILL brand had been very successful
for Jamieson, and in fact held 83.7% of the Canadian market share in krill oil
sales at the time SUPER KRILL was abandoned in favour of OMEGARED, despite
almost no advertising dollars having been invested to support the SUPER KRILL
unregistered brand.
While
Jamieson would likely be entitled to make the business choices it made in other
circumstances, I am not able to overlook the critical timing of its decision as
Jamieson asks me to do, nor may I overlook the effect of Jamieson’s actions. I
am entitled to presume a party intends the natural and probable consequences of
its actions. Given its knowledge that MEGARED was on the Canadian CIPO registry
as a valid Canadian trade-mark, the two lawyers’ letters, and my other findings
including those on confusion (to follow), I am led to conclude that Jamieson’s
marketing timing and entire strategy was designed as a pre-emptive strike at
the Plaintiffs’ MEGARED trade-mark and potential market, and was calculated to
prevent the Plaintiffs’ MEGARED krill oil capsules from gaining acceptance in
the Canadian marketplace.
(b)
The packaging promoting SUPER KRILL had already
plainly advertised that it was an omega-3 line of products (the term “Omega-3” was prominently placed directly above the
“Super Krill” mark on the packaging), and clearly claimed that it was “BETTER THAN FISH OIL” and had “No fishy repeat”.
I
do not dispute the Plaintiffs’ right to make these types of marketing decisions
in a different context, but the Plaintiffs in my opinion did not have that
freedom in this case given the pre-existing registered Canadian MEGARED
trade-mark. In the circumstances of this case, this factor makes it is
decreasingly tenable for Jamieson to allege its actions were but coincidence or
motivated by the reasons suggested.
(c)
Four of the five products currently included in
the OMEGARED lineup are krill products that could have easily been included
within the SUPER KRILL line.
I
repeat my comments on (b) above.
(d)
The vast majority of Jamieson’s advertising “spend”
on OMEGARED was on a television commercial that repeatedly emphasized the krill
products in that line, and never mentioned the salmon oil product, other than
showing a brief image of all OMEGARED products at the end of the commercial, in
which the salmon oil product is included.
(e)
Jamieson’s in-store advertising displays for
OMEGARED products and other promotional materials consistently claim that OMEGARED
is “Canada’s #1 Krill Oil”, such that the salmon
oil product cannot be placed in-store in the same area as the bulk of the
OMEGARED products, which are krill products.
(f)
While the terms “Omega”
and “Red” are both descriptive of Jamieson’s
OMEGARED krill products – a point emphasized by the Defendant – the same is not
true of the OMEGARED salmon oil product—while the krill products are a vivid
red colour, the salmon product is a bronze colour, as depicted on Jamieson’s
own packaging.
(g)
Jamieson had a history of branding numerous
products as “Salmon” and “Wild Salmon” Omega-3 products, and had established
lines under these names.
(h)
The OMEGARED salmon oil product makes up a small
proportion of OMEGARED sales (5-10%, depending on the month), and Jamieson had fully
expected and projected this to be the case at the outset of the re-branding.
On
these remaining points, I am driven to conclude in fact and on a balance of
probabilities that the salmon oil product in the OMEGARED “product line” (a line of only two products, one krill
oil, one salmon oil) had far less sales and was far less important than the
krill oil-based OMEGARED which was the real market Jamieson wanted to enter,
and wanted to enter before MEGARED krill oil capsules became established.
[42]
While Jamieson would achieve the benefits
outlined in its first main reason, I accept that the real and dominant purpose
of Jamieson’s massive marketing blitz for OMEGARED was to knowingly and pre-emptively
strike out and frustrate the marketing efforts of the Plaintiffs, thereby
defeating the Plaintiffs’ exclusive rights enjoyed by virtue of their ownership/licence
of the Canadian trade-mark Registration No. TMA 793,186 for MEGARED. I reject
the proposition that Jamieson’s advertising campaign was a coincidence. I have
considered but reject its argument that the Plaintiffs’ theory is wild
speculation, because the Plaintiffs’ theory is grounded in the evidence and
reasonable inferences drawn therefrom.
[43]
The Plaintiffs attack Jamieson’s second alleged “main reason” – to make the new brand OMEGARED stand
out more on the shelves:
(a)
There is a very large number of omega-3 products
competing for consumer attention on store shelves that prominently display the
term “Omega” or “Omega-3”,
including numerous products bearing one of Jamieson’s “family”
of OMEGA marks, plus many different other brand
owners.
This is established on the record.
(b)
As per Jamieson’s own admission, the use of OMEGA on product packaging to identify products is
commonplace in the Canadian marketplace. Numerous photographs were produced by
Jamieson showing store shelves packed with products prominently bearing the
word OMEGA.
This is clearly the case on the record.
(c)
The term SUPER KRILL was originally adopted by
Jamieson to stand out from this barrage of omega-3 products with branding prominently
using the term OMEGA, and would clearly stand
out on shelves better than another OMEGA brand
such as OMEGARED.
Super Krill was well chosen in my view, and I accept this
conclusion.
(d)
Jamieson could have altered the SUPER KRILL
brand’s packaging to better stand out on shelves.
In
my opinion, Jamieson’s decision to market OMEGARED at the time and in the
manner it chose, gives rise to likely confusion and infringement of the
Plaintiffs’ MEGARED mark for krill oil capsules.
[44]
In terms of shelf display, I find the effect and
the purpose of the re-packaging and change of brand was to make Jamieson’s
OMEGARED brand confusingly similar to the MEGARED trade-mark, and to thereby
pre-emptively strike at the MEGARED mark, notwithstanding the Plaintiffs’ registered
rights. That was the effect of the re-branding and re-packaging, and given the
general presumption that a party intends the natural and probable consequences
of its actions, I find those effects were intended by Jamieson.
[45]
While Jamieson’s actions might have a genuine
business purpose in another context, in my opinion that becomes much less
relevant, and ultimately irrelevant, given that the real and dominant purpose
of Jamieson’s historic “massive” OMEGARED
marketing blitz, timed as it was to “coincide”
with the launch of MEGARED krill oil capsules, was to pre-emptively strike out
the MEGARED krill oil omega-3 brand product the Plaintiffs were launching into
the Canadian market.
[46]
While the issuance of an injunction is a form of
equitable relief which is subject to the exercise of discretion, legal rights
are very alive and central to the issuance of an interlocutory injunction such
as this. I have outlined the arguments of the parties and my analysis of motive
because it has relevance in the equitable and discretionary nature of this
decision.
(2)
Confusion in the marketplace
[47]
The Plaintiffs also point to and in my view have
established confusion in terms of the packaging used by OMEGARED compared to
MEGARED. They correctly note that the Jamieson packaging displays the term
OMEGARED far more prominently than the word Jamieson. In addition, when spoken
or viewed, the terms MEGARED and OMEGARED look and sound very similar, even if
one were to insert a space between the terms OMEGA and RED.
[48]
Jamieson’s packaging since the OMEGARED launch
moved closer in appearance to the MEGARED packaging style in many respects.
First, Jamieson’s products make greater use of the colour red, it has added
what might be called a semi-starburst (made up of many small circles) emanating
from and underneath the term OMEGARED, which in fact is very similar to the
starburst emanating from and encircling the term MEGARED on the MEGARED krill
oil product. Further, it is significant in terms of confusion that Jamieson
packages OMEGARED in a box, as is the case with MEGARED, whereas no other
Jamieson omega-3 product is packaged in a box (Jamieson offers 5 different
OMEGA products).
[49]
No survey evidence was filed by either party on
the issue of confusion, a point criticized by the Defendant. The Court previously
noted the factual evidence of confusion filed by the Plaintiffs, which was mainly
contested by an assertion that it was insufficient and that better evidence
would have been survey evidence. However, survey evidence of confusion is not
necessary and indeed survey evidence has been subject to very recent criticism,
as for example in Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27
at paras 76-77.
[50]
In my view, confusion exists not only because of
the very great aural similarity between MEGARED and OMEGARED, but also because
of the very considerable written similarity between the Plaintiffs’ MEGARED
mark and Jamieson’s new entry OMEGARED which only differ by one letter. The
Court notes the similarity of packaging both in terms of colour and design,
Jamieson’s decision to package OMEGARED in a box as is the case with MEGARED
(but no other Jamieson OMEGA product), and Jamieson’s use of what might be
described as a loose semi-starburst pattern similar to MEGARED’s starburst pattern,
both boxes sharing a dominant red colouration. The Plaintiffs are correct to allege
that Jamieson’s launch of OMEGARED constituted a pre-emptive strike against a
direct competitor before the Plaintiffs could gain a foothold in the Canadian
market, and that Jamieson likely engaged in deliberate infringement and passing
off, knowing its conduct would breach the Plaintiffs’ legal rights under the Trade-marks
Act. On an interlocutory injunction, I am not required to find confusion,
only a serious issue on the trade-marks infringement allegation. Here, however,
I have no hesitation in finding that the Plaintiffs have established a very serious
issue with respect to the issues of confusion and trade-mark infringement.
B.
Irreparable harm
[51]
In my view, the Plaintiffs will suffer
irreparable harm if an interlocutory injunction is not granted. The Supreme
Court of Canada defined irreparable harm in RJR, supra as follows:
“Irreparable” refers to the nature of the
harm suffered rather than its magnitude. It is harm which either cannot be
quantified in monetary terms or which cannot be cured, usually because one
party cannot collect damages from the other.
The Federal Court of Appeal has emphasized
that evidence of irreparable harm must be clear and not speculative. In other
words, the moving party must show that harm “will”
or “would” result: Centre Ice Ltd v National
Hockey League (1994), 53 CPR (3rd) 34 at 50 (FCA). Accepting this
definition, and guided by the precedents from this Court, it is my view that
irreparable harm to the Plaintiffs will result in this case. It will be
difficult to the point of impossibility to calculate the Plaintiffs’ losses if
they succeed at trial.
[52]
It will not be possible to ascertain the
Plaintiffs’ before-OMEGARED launch market as a comparator to the after-launch
market because the Plaintiffs never had the proper opportunity they ought
lawfully to have had to enter the market with the exclusive rights to which
they are entitled.
[53]
The case law establishes that damages may not be
an adequate remedy when it is impossible for the plaintiff to calculate its
loss due to impossibility in determining lost sales. In cases where there is no
methodology available to quantify the loss arising from Jamieson’s misconduct
and loss arising from normal market competition, irreparable harm will be
found. That is the case here. See Ciba-Geigy Canada Ltd v Novopharm Ltd,
[1994] FCJ No 1120 at paras 144, 147, 152-158 (FC), Justice Rothstein (as he
was then) held the following:
144 I now turn to whether damages are
an adequate remedy for the plaintiff. Plaintiff's counsel submits, that if the
defendants are not enjoined by interlocutory injunctions from marketing
look-alike diclofenac slow-release tablets, it will be impossible for the
plaintiff to calculate the loss it will suffer should it ultimately be
successful at trial. He submits that it will be impossible to establish which
sales of the defendants' look-alike tablets were due to price or other
legitimate competitive reasons and which sales were due to passing-off.
[…]
147 I think the admissions of Mr. Dan
and Mr. Abboud are quite clear and unequivocal. They know of no way in which
the plaintiff could calculate its damages if no interlocutory injunction is
granted and the plaintiff is ultimately successful at trial.
[…]
152 In the result, there is no evidence
before me as to how the plaintiff's damages could be calculated if
interlocutory injunctions are not granted and the plaintiff is successful at
trial. Nor is it obvious to me how it would be possible to identify which of
the sales lost by the plaintiff would be due to legitimate competition and
which would be due to passing-off. Defendants' counsel, in argument, submitted
that these types of damages can always be calculated and experts can be called
by both parties on the subject. I have no doubt that experts can be called as
witnesses. The problem I have is that there is nothing before me to indicate
how they would estimate the plaintiff's damages.
153 Here, although questions directly
on point were asked during cross-examination of the defendants' deponents,
there is no evidence of any methodology or guidance as to how to make such an
estimate. The same problem was identified in Sodastream Ltd. v. Thorn
Cascade Co. Ltd. and Another, [1982] R.P.C. 459 (C.A.) at page 471 per Kerr
L.J.:
In this connection we were usefully
referred to a passage in the judgment of Fox J. in Combe International Ltd.
and others v. Scholl (UK) Ltd. [1980] R.P.C. 1 at 8. In that case he was
dealing with the question of confusion, and said:
“It would
be exceedingly difficult to ascertain how many sales which were lost by Combe
were lost as a result of legitimate trade, and how many were lost as a result
of passing off. (I am assuming, as I must for present purposes, that the
plaintiffs succeed at the trial). There is no doubt, I think, that some people
will know the difference between the two products perfectly well and will buy
the defendants' product as a matter of deliberate choice. The difficulty, and I
think it is a very great one, is to ascertain with any sort of certainty the
extent of the latter class.”
It seems to me likely that this point
will be taken against the plaintiffs at the trial on the issue of damages, and
there was no indication to the contrary before us on behalf of the defendants.
It therefore appears to me that it cannot be said at this stage that damages
will be an adequate remedy; indeed, my impression would be precisely the
opposite.
[emphasis added]
Also in Reckitt and Colman Products
Limited v. Borden Inc. and Others, [1987] F.S.R. 228 (C.A.), Nicholls L.J. states at page 239:
In the present case, Mr. Sparrow,
understandably, was not prepared to accept that, in the circumstances being
considered, all the sales of Mark II or Mark III lemons would be wrongful sales.
However, he was prepared to agree that if an inquiry as to damages should be
ordered in respect of Borden's marketing of lemon juice in Mark II and Mark
III, the court should be entitled to assume that the percentage of Borden's
products which ought properly to be regarded as goods supplied by way of trade
in the United Kingdom to the detriment and damage of Colman was not less than
the percentage of persons supplied with such products in the United Kingdom who
ought properly to be regarded as persons acquiring the same as and for Colman's
JIF products. To my mind, however, that offer, helpful although it may be so
far as it goes, does not assist in solving what is likely to be the most
difficult part of the exercise: ascertaining what percentage of the Mark II and
Mark III sales are to be regarded as sales made as a result of passing off. For
my part, I have to say that I think that if this inquiry ever had to be made in
this case, the court could easily find itself having to make little more than a
guess at this figure. If Borden were to sell its Mark II and Mark III lemons at
outlets not currently selling JIF lemons, it might be very difficult to arrive
at a figure fairly, if roughly, representing sales acquired by deception. I
differ with much diffidence from a judge so experienced in this particular
field, but on this I am unable to share his view on the adequacy of damages.
[emphasis added]
More recently in Ciba-Geigy PLC v. Parke
Davis & Co. Ltd., [1994] F.S.R. 8 (Ch.D.), Aldous J. states at page 22:
If the plaintiff succeeds at trial, I
do not believe that damages will be an adequate remedy. The suggestion that I
should follow Boots Co. Ltd. v. Approved Prescription Services Ltd.
[1988] F.S.R. 455, and conclude that damages would be equivalent to the
defendant's profits on sales, is not possible in this case, as it would not be possible
for the plaintiff to prove that every sale made by the defendant would have
been made by the plaintiff but for the acts of passing off. I conclude that if
no injunction is granted it will be difficult, if not impossible, accurately to
estimate the damage caused by the alleged misrepresentation. Further, and
perhaps more importantly, continued use by the defendant of an apple would
damage or destroy the goodwill attaching to it, which at the moment attracts
business to the plaintiff. [emphasis added]
154 Counsel for the defendants argued
that the courts are constantly assessing damages in difficult situations, e.g.
non-pecuniary damages for personal injuries. They also submit that if damages
could not be calculated in passing-off cases, all interlocutory injunction
applications in such cases would have to be granted, which has not been the
consistent practice of the courts. Finally, they say that this Court might
impose a condition in the orders refusing the interlocutory injunction
applications providing, for example, that the onus be on the defendants at
trial to prove what proportion of the plaintiff's lost sales was due to
legitimate marketing considerations such as price and what proportion was due
to passing-off.
155 It is true that the courts assess
damages in difficult situations but, as I understand the circumstances of the
examples cited by defendants’ counsel, in those cases, the courts are not left
in a position of having nothing upon which to base its assessment. There are
precedents and guidelines which have developed over the years which are, from
time to time, updated. This, in my view, would be analogous to formulae or
guidelines in passing-off jurisprudence by which a motions judge could
realistically ascertain which loss of sales was due to passing-off and which
loss was due to legitimate market conditions. But no such jurisprudence was
brought to my attention.
156 As to the argument that if damages
cannot be calculated in passing-off cases generally, an interlocutory
injunction would have to be ordered in all such cases, which the courts have
not done, I think the words of Nicholls L.J. at page 239 of Reckitt and
Colman, (supra), "that in this area of law each case must depend on
its particular facts" must be the explanation. Where the motions judge is
satisfied that damages may be calculated, impossibility of calculating damages
will not be grounds for granting an interlocutory injunction. Where this is not
the case, as in Sodastream, (supra), for example, an interlocutory
injunction will be granted. I do not say that damages can never be calculated
in passing-off cases such as this one. But upon my appreciation of the evidence
in this case, including reasonably thorough cross-examinations of deponents on
affidavits and argument on the subject, I think the trial judge will find
himself or herself in the position, as Nicholls L.J. put it at page 239 of Reckitt
and Colman, (supra), of “having to make little more than a guess at this
figure”.
157 As to defendants’ counsels’
suggestion of placing conditions in orders refusing the interlocutory
injunction applications, putting the onus on the defendants at trial in respect
of damages, I note that a similar approach was suggested in Reckitt and
Colman, (supra), but was not accepted. I also find difficulty with this
approach. First, as I understand the law, the onus is always on the plaintiff
to prove damages. No authorities were cited to me which indicated that when a
motions judge refuses to grant an interlocutory injunction, he or she might, in
his or her order of refusal, reverse this well-established principle. Even if
this were not the case, the onus would still be on the plaintiff to prove a
gross loss figure. Surely, defendants' counsel would not accept that the
plaintiff could, at trial, dream up any figure and have it accepted by the
Court subject to the defendants, by positive evidence of another figure,
disproving some portion of it. Secondly, at this stage of the proceedings, I
think it would be embarking upon an unacceptable intrusion into the conduct of
a pending trial for a motions judge to involve himself or herself in
determining how evidence may be adduced at trial and who may have the onus on
various issues. To the extent that they are matters for direction or
determination by the Court, they are properly for the trial judge to decide,
based upon the specific proceedings. A motions judge should not attempt to bind
the parties or the trial judge in such matters.
158 I must conclude, on the basis of
the evidence before me, that damages are not an adequate remedy for the
plaintiff and that this is a case of irreparable harm. As I have indicated in
relation to Dr. Sherman's evidence, the same would be true for the defendants
should they be enjoined but later be successful at trial.
To a similar effect is Eli Lilly and Co v
Novopharm Ltd, [1996] FCJ No 480 at paras 9, 34-35 (FC) (reversed on other
grounds in [1996] FCJ No 1208 (CA)), in which Justice Rothstein (as he was
then) held:
9 This issue has arisen in a number
of cases, for example, Combe International Ltd. and others v. Scholl
(U.K.) Ltd., [1980] R.P.C. 1 at 8, Sodastream Ltd. v. Thorne Cascade Co.,
[1982] R.P.C. 459 (C.A.) at p. 471, Reckitt & Colman Products Ltd. v.
Borden Inc., [1987] F.S.R. 228 (C.A.) at p. 239, CIBA-Geigy P.L.C. v.
Park Davis & Co., [1994] F.S.R. 8 (Ch.D.) at 22 and CIBA-Geigy
Canada Ltd. v. Novopharm Ltd. et al. (1995), 83 F.T.R. 161 at 197. The
argument is that if no interlocutory injunction is granted and the defendants
market in look-alike appearance to the plaintiffs pending trial, if a permanent
injunction is ultimately ordered after trial, it will be impossible to
distinguish between the market share the defendants obtained by reason of
legitimate competition, and that which was obtained through passing-off.
34 Evidence of irreparable harm must
be clear and non-speculative. In a case in which one party claims impossibility
of calculation, the difficulty of proving a negative arises. The difficulty
inherent in proving a negative is that there are an infinite number of
alternatives to discount before one could conclude with absolute confidence
that calculation was impossible. I do not think that the requirement to satisfy
the clear and non-speculative test can be taken to unreasonable proportions.
35 The plaintiffs have provided a
clear explanation for incalculability and the cases support impossibility of
calculation. On the other hand, the defendants, if the evidence was available,
could have demonstrated a method to calculate loss of market share due to
passing-off. They have not done so. Non-specific references to industry
statistics or experience in other countries does not satisfy me that a method
and data exist to calculate loss of market share due to passing-off in the
circumstances of this case. Nor, as I have already indicated, will actual
records provide information to prove loss of market share due to passing-off if
no interlocutory injunctions are ordered.
Also to the same effect is Woodpecker
Hardwood Floors (2000) v Wiston International Trade Co, unreported (2013,
Docket: S136046, BC SC) at paras 24-29; leave to appeal dismissed in 2013 BCCA
553 at paras 23-24, where Justice Silverman found that the plaintiff would be unable
to quantify the loss of reputation, consumer confidence and goodwill as a
result of confusion in the marketplace:
[24] The second prong, the question of
irreparable harm: the defence argues that evidence of irreparable harm must be
clear and non-speculative. A finding that irreparable harm is likely is not
sufficient, that in this case, any suggestion of future damage suffered by the
plaintiff is purely speculative. There is no evidence at all, the defendant
argues, of actual damages or lost sales, and the defendant cites a series of
cases for that proposition. The leading case that I am referred to is Mark
Anthony Group, Inc. v. Vincor International Inc., [1998] B.C.J. No. 716,
aff’d [1998] B.C.J. No. 2475.
[…]
[26] Finally, the defence argues that even
if damages could be established by evidence, it is compensable in money. The
defendants are substantial and successful and there can be no doubt that any
judgment with respect to money would be paid.
[27] I reject those arguments by the
defence. I am satisfied that the plaintiff would suffer irreparable harm if the
interlocutory injunction was not granted. I am also satisfied that this is not
speculative. There is a difference between saying that damages in the future
are speculative and saying that they are not quantifiable.
[28] The longer the defendants are
permitted to use marks confusingly similar to the “Woodpecker” marks, the more
their use becomes prevalent amongst the public – exacerbating the harm, and
making it more difficult to unscramble what business losses are due to this
confusion and what losses are due to the traditional kinds of business
considerations and competition in the marketplace.
[29] This kind of reasoning involving
the difficulty of unscrambling losses in the future was employed and resulted
in rejecting the irreparable harm arguments made by the defence in a number of
cases, including a decision by Judge Groberman when he was on this Court in MD
Management Ltd. V. Dhut, 2004 BCSC 513, a 2004 decision, and the Toronto
Cricket Skating & Curling Club v. Cricket Club Townhouse Inc., [2003]
O.J. No. 6261 case, a 2003 Ontario decision. This is the same reasoning which
causes me to reject the defence argument about the possibility that the defence
could simply pay damages as compensation. The problem is in unscrambling the
damages in order to determine what those damages will be. Even after the fact,
that may well be impossible. The plaintiff would be unable to quantify the loss
of reputation, consumer confidence and good will as a result of confusion in
the marketplace.
[54]
In all three cases, there was no methodology to
quantify the loss arising from conduct analogous to Jamieson’s misconduct in
the case at bar, and arising from normal market competition. That is the
situation here and for the same reasons I am reinforced in my finding of irreparable
harm.
[55]
In my view, where use of a confusing mark will
cause the Plaintiffs’ mark to lose its distinctiveness, that is, its ability to
act as a distinctive and unique signifier of the Plaintiffs’ wares or business,
such damage to goodwill and the value of the mark is impossible to calculate in
monetary terms. The courts have found that distinctiveness is lost when the
infringer engages in national marketing which repeatedly emphasizes the confusing
mark to the Canadian public. In my view, the evidence of confusion and my
findings in relation to confusion provide clear and sufficient support to find
irreparable loss of the MEGARED “name” goodwill
and reputation if Jamieson’s conduct is not enjoined.
[56]
In this connection I find the discussion by
Justice Teitelbaum instructive in Imax Corp v Showmax Inc, [2000] FCJ No
69 at paras 72, 77, 81-82 (FC):
72 In paragraphs 12 and 13 of his
affidavit, Dr. Pearce gives a summary of his conclusions.
12. Regarding the likelihood of
damage, it is my opinion that Imax will suffer serious damage to its goodwill
if the defendants use the SHOWMAX name with a large-format movie theatre in Montreal. The damage would arise once the SHOWMAX theatre received publicity, and it would
become increasingly more serious after the theatre opened and carried on
business using the SHOWMAX name.
13. Regarding the nature of the
damage, it is my opinion that use of the SHOWMAX mark will damage the brand
meaning or equity of the IMAX mark (that is, the ability of the IMAX mark to
act as a distinctive and unique signifier of the plaintiff's movie theatres).
The IMAX mark will no longer identify and distinguish theatres controlled by
Imax as strongly and clearly as it did before use began of the confusing
SHOWMAX mark. In my opinion, confusion will not only result in lost sales, but
also will cause damage to good will and to the value of the IMAX mark. This
latter type of damage will be impossible to calculate in monetary terms or to
remedy by restorative measures after it is inflicted.
[…]
77 Therefore, and basing myself on
the affidavit evidence of Dr. Pearce, I am satisfied that plaintiff will suffer
irreparable harm if the defendant were to be permitted to open a large-format
theatre under the name of SHOWMAX in Canada and in Montreal particularly.
[…]
81 In my opinion, there are numerous
pieces of evidence before the Court which lead me to believe, for the purpose
of showing a serious issue and irreparable harm, that the evidence of confusion
is clear and sufficient to support an inference of loss of "name"
goodwill and reputation.
82 It is correct to say that the
plaintiff has not adduced any evidence of loss of sales. This, of course, is
true. The defendant has not commenced business in Montreal and therefore one
cannot adduce direct evidence of loss of sales. I accept the statement of Dr.
Pearce in paragraph 22 of his affidavit.
22. In my opinion, it is
usually the case that a company will lose some or all of the ability to benefit
from the retail brand equity in its name, if a competitor adopts a confusing
name. Aside from the issue of lost sales or profits (which may be
quantifiable), the lost equity in a name undermines the ability of the company
to position itself in the marketplace, and to further develop and enhance its
business in the future. Once a name loses its unique or distinctive quality, it
is impossible to determine the value of what has been lost in terms of the
company's ability to expand and market itself in the future.
See also Kun Shoulder Rest Inc v Joseph
Kun Violin and Bow Maker Inc, [1997] FCJ No 183 at paras 12-15, 17 (FC),
where Justice Nadon (as he was then) held:
12 The Plaintiff has been using the “Kun”
name as its trade mark and trade name with respect to shoulder rests since the
1970’s. If the Defendants are permitted to attend the Frankfurt Fair, where
there will be a substantial concentration of the relevant market, and to use
the name “Kun” in association with shoulder rests there will certainly be a
dilution of the distinctiveness of the “Kun” name in relation to the production
and distribution of violin and viola shoulder rests. Dilution and the resulting
loss of distinctiveness would render the “Kun” name unregistrable and/or
expungable from the trade mark register.
13 Goodwill has been defined as “...the
drawing power...to attract and retain customers.” (Ciba-Geigy Canada Ltd. v.
Novopharm Ltd. (1994), 56 C.P.R. (3d) 289 at 326) and as:
[T]he benefit and advantage of the
good name, reputation, and connection of a business. It is the attractive force
which brings in custom. (Inland Revenue Commissioners v. Muller & Co.'s
Margarine Ltd., [1901] A.C. 217 (H.L.) at 223-224.)
14 By rendering the name “Kun” no
longer distinctive to a single manufacturer of shoulder rests, the Defendants
will be taking from the Plaintiff the goodwill on which the company is based.
Thus, the irreparable harm here is the loss of the distinctiveness of the name “Kun”
which will lead to the loss of the trademark and the consequential loss of the
goodwill.
15 For these reasons I find that the
Plaintiff has in fact adduced enough evidence to allow me to infer that the
continuance of two “Kun” companies in the shoulder rest business may well
eradicate the distinctiveness of the mark and subsequently erase all goodwill
the Plaintiff has created which attracts purchasers specifically to the
Plaintiff company.
17 The relief which I am giving the
Plaintiff is an order restraining the Defendants from, in effect, promoting and
selling their new KADENZA shoulder rest in association with the name “KUN”.
Consequently, nothing prevents Michael and Marika Kun from attending the
Frankfurt Fair and promoting their KADENZA as long as they abide by the
restraint which this Court is ordering.
Moreover, in S.C. Johnson & Son Inc v
Reckitt & Colman (Overseas) Ltd (1995), 59 CPR (3d) 317 at paras 31-32 (FC)
(noteworthy is the fact that the unsuccessful respondents took the risk and
proceeded to market even after an action had been started against them),
Justice Simpson held:
31 Both parties have agreed to keep
the necessary records and both are in a position to pay damages. The issue
therefore is whether damages are an adequate remedy for S.C. Johnson if Reckitt
& Colman continues to market its NEUTRA AIR products and S.C. Johnson is
successful at trial. S.C. Johnson's principal allegation of irreparable harm is
based on the belief that, because NEUTRA-FRESH and NEUTRA AIR are admittedly
confusing, the continued national "saturation" marketing of NEUTRA
AIR until trial will overwhelm the limited and non-competitive marketing of
NEUTRA-FRESH by Knight under its licence from S.C. Johnson. It is alleged that
Reckitt & Colman's marketing of NEUTRA AIR will destroy the distinctiveness
of NEUTRA-FRESH. Without the injunction, if S.C. Johnson wins at trial, it will
achieve a hollow victory as NEUTRA-FRESH will no longer be a commercially
viable trade mark.
32 The Federal Court of Appeal has
made it clear that the unauthorized use of a registered trade mark does not per
se result in irreparable harm to the owner of the mark. By analogy, it can be
said that the use of a confusing mark will not necessarily cause irreparable
harm by reason of a loss of distinctiveness. However, on the facts of this
case, with saturation marketing to the general public of a confusing mark,
there is no question in my mind that the distinctiveness of NEUTRA-FRESH will
be lost without the injunction. Accordingly, the plaintiffs have established
the irreparable harm necessary to support their application.
As in NEUTRA-FRESH, there is no question in
my mind that the distinctiveness of MEGARED will be lost without the interlocutory
injunction.
[57]
In my view, the likely infringing and confusing
market entry by OMEGARED is the very situation contemplated by RJR at
para 59 where our highest Court said that injunctive relief is available to
prevent permanent market loss or irrevocable damage to business reputation. That
is the situation here, irrevocable damage to the reputation of the registered
trade-mark. The Supreme Court of Canada stated:
It is harm which either cannot be quantified
in monetary terms or which cannot be cured, usually because one party cannot collect
damages from the other. Examples of the former include instances where one
party will be put out of business by the court's decision (R.L. Crain Inc.
v. Hendry (1988), 48 D.L.R. (4th) 228 (Sask. Q.B.)); where one party will
suffer permanent market loss or irrevocable damage to its business
reputation. [my emphasis]
[58]
I also find irreparable harm to the extent
confusion between the two marks imports a quality concern to those considering
the Plaintiffs’ MEGARED krill oil capsules, in that purchasers might be
confused that the Plaintiffs’ product might not contain krill oil, but fish oil
instead, because of the fact that OMEGARED products contain both krill oil and
fish oil (salmon oil). It is one thing for Jamieson to market both krill oil
and salmon/fish oil omega-3 products as it proposes to do under the OMEGARED
label in the abstract – the only potential confusion would be within its own
customer base, which is not in issue in this case. It is quite another for
Jamieson to market OMEGARED in the face of the Plaintiffs’ MEGARED registered
trade-mark where MEGARED has no association with fish or salmon oil whatsoever
in Canada. Even though Jamieson’s salmon oil OMEGARED is a minor player in the
scheme of things, Jamieson’s use of OMEGARED for fish oil products will dilute
the Plaintiffs’ MEGARED exclusively krill oil capsules.
[59]
There is no merit to Jamieson’s argument that it
is disingenuous for the Plaintiffs to argue non-krill oil products harm the
reputation of their brand because the Plaintiffs market non-krill oil omega-3
products under the MEGARED brand in the US. While the Plaintiffs do market non-krill
oil products in the US, the Plaintiffs do not market fish oil omega-3 in the US or Canada under the MEGARED mark. In fact, the Plaintiffs’ non-krill oil omega-3 products
marketed in the US come from vegetable sources, not fish oil.
[60]
Jamieson notes correctly that there are many
other health and nutrition supplements with the words OMEGA and RED. And I also
agree, as was common ground, that both words are descriptive. However the
observation is not relevant because the Plaintiffs own the Canadian registered
trade-mark MEGARED and have the right to use it exclusively in association with
their krill oil capsules. There is no challenge to the validity of the MEGARED
registration.
[61]
Jamieson also argues that there must be “use” in Canada to engage paragraph 7(b) of the Trade-marks
Act, and I agree. Jamieson correctly notes there were no sales in 2013, and
only $455 USD sales to Canadians in 2012. Jamieson therefore argues that the
Plaintiffs have no cause of action. However, this argument has no merit because
from the time of its launch in December 2013/January 2014, there is no doubt
that the Plaintiffs were making use and very considerable use of their MEGARED mark;
the Plaintiffs had 20% of the branded krill oil supplement market in Canada. It
used the Canadian registered trade-mark when pleadings were issued in October
2014. In addition, MEGARED was clearly used in the US where it was the dominant
player, and was also used in cross-border advertising and social media prior to
the Canadian marketing launch in December 2013/January 2014.
[62]
Jamieson also argues that the trade-mark MEGARED
is not distinctive. That argument is answered by the fact MEGARED is a validly registered
Canadian trade-mark in respect of which no challenge has been made.
C.
Balance of convenience
[63]
Balance of convenience in many respects resolves
into a question of who will be harmed most, the Plaintiffs or Jamieson, in
addition to consideration of all the circumstances. Each party in this case has
invested considerable sums into the Canadian marketplace: the Plaintiffs in
terms of their purchase of Schiff’s Canadian registered trade-mark MEGARED, re-organization
costs, advertising dollars, product launch and other related expenses. Jamieson
incurred the “massive” and historic costs of its
product launch, advertising dollars, and other related expenses also. The
Plaintiffs are certainly favoured in terms of balance of convenience by virtue
of their ownership of the Canadian registered trade-mark MEGARED, and the
statutory protection it affords. Given my serious issue findings coupled with
the “exclusive” rights granted to the Plaintiffs
by virtue of their registered trade-mark, the fact that the Plaintiffs have
every reason to expect and to enjoy the benefits of their statutory exclusivity
and protection, and the compelling fact that the Plaintiffs’ losses are
irreparable, I find that the balance of convenience favours the Plaintiffs.
This decision is supported by other factors as well.
[64]
At all material times, Jamieson proceeded at its
own peril and knowingly assumed the risks of infringing the Plaintiffs’
registered Canadian trade-mark. Jamieson proceeded, in other words, with its
eyes wide open. Within a month of deciding to compete on the basis of OMEGARED,
Jamieson itself discovered the MEGARED mark in its CIPO searches. Jamieson
decided to press on. Five months later, when Jamieson was starting its OMEGARED
product roll out nationwide, the Plaintiffs sent Jamieson not one, but two
legal letters from the Plaintiffs’ counsel bringing to Jamieson’s attention the
prior existence of the registered MEGARED mark and its exclusive rights in Canada. The Plaintiffs threatened Jamieson with legal action if it did not cease the OMEGARED
roll out. Again, Jamieson elected to take the risk and by doing so proceeded with
its eyes wide open. It is true Jamieson spent a great deal of money, but it
took that risk. Both parties went into their respective courses of business
with their eyes open. Any losses Jamieson will suffer are, in my view, self-inflicted.
[65]
I do not agree with Jamieson’s argument that the
Plaintiffs are guilty of delay or laches. In my view, it is not for Jamieson as
a likely infringer to determine or dictate the Plaintiffs’ timelines to market
their product in the circumstances outlined above. The Plaintiffs’ decision to
market in December 2013/January 2014 was a rational and sound business decision
that they were entitled to make. The Plaintiffs proceeded reasonably by deciding
to go to market at year end “shelf reset” time. Year
end “shelf reset” time is optimal for new
products in this business. Also, in my view, the Plaintiffs behaved to delay
marketing until they had completed the necessary corporate reorganizations and
agreements to ensure alignment of the ownership and control of the manufacture
of MEGARED krill oil capsules in accordance with section 45 of the Trade-marks
Act. The Plaintiffs behaved rationally and diligently in the circumstances.
Jamieson has no ground to complain in this respect, and certainly has no right
to force the Plaintiffs to act sooner than prudent business practice suggested.
Likely infringers may not defeat legitimate trade-mark holders simply by
getting into the market first with their confusing marks and infringing
products. Otherwise, the purpose and intent of the legislation would be
frustrated. Essentially, Jamieson says the race goes to the swift regardless of
infringement and the exclusive protection of section 19 of the Trade-marks
Act, a proposition which once stated must be rejected.
[66]
Nor do I agree with Jamieson that the Plaintiffs
are “second comers” to Jamieson. As between the
holder of a registered Canadian trade-mark and a likely infringer, the likely infringer
can only be a second comer, if the infringer has any rights at all.
[67]
Jamieson also argues it will suffer irreparable
harm if the injunction is granted because, essentially, it could not revert to
marketing SUPER KRILL. Therefore it claims an injunction will be judgment
before trial. I reject these assertions, first and very importantly because
there is no evidence to support the impossibility of re-marketing SUPER KRILL.
I recognize that an injunction changes the marketplace, but that is the point
of all injunctions such as this. Jamieson’s argument is essentially that
injunctions should never be granted against likely infringers. That is not the
law as I understand it, and certainly is contrary to the precedents noted
previously both from this Court and others. As to making findings before trial,
these characterize all interlocutory injunctions and therefore cannot be
accepted as grounds to refuse necessary relief to which a party is entitled.
The basic reality is that Jamieson is a likely trade-mark infringer marketing a
likely confusing product, and while it may have difficulties in re-entering the
market down the road, if permitted, the Plaintiffs are lawful owners of a
registered Canadian trade-mark, are entitled to exclusive use of same, and are
currently having difficulty entering the market because of Jamieson’s choice of
conduct as a direct result of which the Plaintiffs will suffer irreparable harm
if no interlocutory injunction is issued. In this context, and on the test for
balance of convenience generally, the Plaintiffs are entitled to succeed.
III.
Conclusion
[68]
Given the above, and the Plaintiffs having met
each part of the tri-partite test, the Plaintiffs’ motion for an interlocutory
injunction is granted, although I have modified the terms from those requested.
Costs will be in the cause.
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