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.
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 Design trademarks.
- Existence of goodwill: The Plaintiffs put forward evidence, in part, of TFI’s marketing and promotional efforts, and Canadian sales revenues of I-MEI products. The Court found that the Plaintiffs’ evidence readily established the goodwill associated with the I-MEI Design.
- Deception of the public due to a misrepresentation: Although such misrepresentation typically pertains to the use of a confusing trademark, the Court acknowledged that there are multiple ways in which a defendant can make a false representation, so long as it is related to a registered or unregistered trademark. Accordingly, Every Green’s labels, affixed to products bearing the registered I-MEI Design and falsely stating that Every Green is the exclusive Canadian distributor of the I-MEI branded products, constitute a deceptive misrepresentation under subsection 7(b).
The sale in Canada of grey market goods does not, in itself, infringe a registered trademark or constitute passing off. However, this does not excuse other acts or statements that misrepresent an association with a trademark owner.
- Actual or potential damage: As detailed further below, the Plaintiffs put forward evidence that showed actual or potential damage to I-MEI arising from Every Green’s conduct.
I-MEI would suffer irreparable harm
“Irreparable” refers to the nature of the harm suffered rather than its magnitude. It is harm that is not quantifiable in monetary terms, or that cannot be cured (e.g. permanent market loss or irrevocable damage to one’s business reputation).
The Plaintiffs argued that Every Green’s conduct had prompted retail customers to question why there are two “exclusive” distributors of the I-MEI products. Further, retailers are purchasing Every Green’s product based on its labels’ false representation. Finally, Every Green’s labels contained further inaccuracies in their ingredient list and nutrition facts. As a result, I-MEI’s reputation, and its ability to select and define its own authorized distribution network with reputable distributors, are irreparably harmed through the false association created by Every Green’s labels. The Plaintiffs argued that the damage to I-MEI’s reputation, goodwill, and business relationship with TFI, were unquantifiable and irreparable.
The Court, taking into account the clearly false nature of the statement on Every Green’s labels, and the potential impact on I-MEI, its customers, and consumers, found that I-MEI would suffer irreparable harm to the reputation and goodwill in the I-MEI Design if the requested injunction was not granted. Additionally, Every Green’s failure to respond to the motion, or to any of the Plaintiff’s correspondence, shows that damages are likely to be difficult to quantify and collect.
The balance of convenience weighed in the Plaintiffs’ favour
Finally, the balance of convenience favoured the injunction’s issuance. There is no evidence that Every Green would suffer harm if the injunction is granted. Any economic harm that may arise from Every Green being unable to hold itself out as I-MEI’s exclusive distributor would arise from its own wrongful conduct.
Accordingly, Every Green was enjoined from selling or offering for sale any products bearing the I-MEI trademark and labelled to claim that Every Green is the exclusive distributor of I-MEI. Further, Every Green was required to recall any products bearing the offending label.