Interlocutory Injunctions in the Federal Court

For the first time in recent memory, the Federal Court has issued an interlocutory injunction in an intellectual property proceeding. In April, the Federal Court of Appeal upheld the injunction issued to Rickett Benckiser LLC.

The standard test for issuing an injunction is set by the Supreme Court of Canada in RJR MacDonald which requires the moving party establish:

  • a serious issue to be tried;
  • irreparable harm will result to the moving party if the relief is not granted; and
  • the balance of convenience favours the moving party.

Of these three parts to the test, finding ‘irreparable harm’ is typically seen as the most difficult. The moving party must show that the damage caused by not granting the injunction “cannot be compensated by a monetary award.”

In part, the difficulty with proving ‘irreparable harm’ flows from a pair of decisions of the Federal Court of Appeal in the early 1990s. In Imperial Chemical Industries PLC v. Apotex, Inc., [1990] 1 F.C. 221 (F.C.A.), the Court held that evidence on irreparable harm must be “clear and not speculative”.

Subsequently, in Centre Ice Ltd. v. National Hockey League (1994), 53 C.P.R. (3d) 34 (F.C.A.), where the court allowed an appeal and dissolved an interlocutory injunction granted by the lower court, the court of appeal stated:

The loss of goodwill and the resulting irreparable harm cannot be inferred, it must be established by ‘clear evidence’.

… as this court’s jurisprudence has shown, in the absence of clear evidence that irreparable harm would result at this juncture, an interlocutory injunction should not be issued. [emphasis in original]

Many motions for interlocutory injunction have failed for not sufficiently meeting the test for showing irreparable harm. For example, in a motion for an interlocutory injunction sought by Pfizer against the introduction of CIALIS by Eli Lilly (see 2004 FC 223), Justice Blais summarized the evidence and held, “I am not convinced that the plaintiff will suffer irreparable harm since the losses that Pfizer will incur by sharing the market with Lilly are reasonably calculable, and the other harm claimed by Pfizer is entirely of a speculative nature.”

Therefore, the intellectual property profession took note when both the Federal Court and Federal Court of Appeal endorsed an interlocutory injunction. The decision, Jamieson Laboratories Ltd. v. Reckitt Benckiser LLC, 2015 FCA 104 affirming the decision of Justice Brown (2015 FC 215), related to the enforcement of the plaintiff’s MEGARED trade-mark against the defendant’s OMEGARED product.

The facts are recited in both decisions but generally related to a scenario where the plaintiff was in the process of launching its product under the MEGARED mark, when the defendant launched an OMEGARED brand in Canada, directed to similar end customers for similar products.

The Federal Court of Appeal upheld the lower court’s findings of serious issue, irreparable harm and the balance of convenience, although was critical of the findings going to the merits of the action.

On the findings of irreparable harm, the Federal Court of Appeal stated Jamieson:

[28] Turning to irreparable harm, I do not believe that the Federal Court judge erred in determining that such harm would befall Reckitt in the absence of the relief requested. I need only observe that Reckitt’s contention that its potential harm would be impossible to quantify has not been undermined by Jamieson’s submissions.

[29] Jamieson’s reliance on Centre Ice is misplaced given the facts of this case, wherein the party seeking to enforce its trade-mark entered the market in question after the alleged infringer. It of course makes no practical sense to require a plaintiff to demonstrate such damages as lost sales or price reductions when the only market environment in which the plaintiff has ever operated has been one in which the alleged infringer has operated as well.

The court appears to have endorsed the conclusions of the lower court that irreparable harm will be found where “there is no methodology available to quantify the loss arising from Jamieson’s misconduct and loss arising from normal market competition”.

Also, the lower court had concluded that damage to goodwill leads to irreparable harm stating at paragraph 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.” This finding will likely be cited often in future cases to support claims for irreparable harm.

With this decision of the Federal Court of Appeal intellectual property owners will be carefully reviewing the circumstances of their cases as to whether interlocutory injunctions will be sought. For many parties in fast moving markets, obtaining a quick injunction against an alleged infringer is important to stabilizing the market until a trial is scheduled, and providing leverage for possible settlement earlier in the proceeding.

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