Canada: Prior Use Trumps Registration In Trade-mark Interlocutory Injunction

Interlocutory injunctions are rarely granted in trade-mark cases in Canada, principally due to the fact that irreparable harm – harm that cannot be quantified or recovered by the plaintiff – is difficult to prove.

However, in the recent decision of Woodpecker Hardwood Floors (2000) Inc. v. Wiston International Trade Co. Ltd. et al^1, the Supreme Court of British Columbia granted such an injunction, enjoining the Defendants' use of the word "woodpecker" in association with the sale of hardwood products, and associated wares and services.

Of particular note is that the injunction was granted against the Defendants despite the fact one of them owned a Canadian trade-mark registration for the word mark WOODPECKER².

As summarized by the Court, the Plaintiff, Woodpecker Hardwood Floors, sells hardwood flooring products and has, since 2000 or arguably 1987, used the trade-name WOODPECKER in association with its business. The Defendants, incorporated in 2009, also manufacture and sell hardwood flooring products. Until early 2013, the Defendants operated under the name "Wiston". However, following registration of the WOODPECKER trade-marks in January 2013, the Defendants began using the trade-name and trade-mark WOODPECKER. The parties' respective stores are located within approximately a mile of each other.

In deciding to grant the injunction the Court applied the well-established three part RJR-MacDonald Inc. v. Canada³ test, that is (i) whether there is a serious issue to be tried, (ii) if there will be irreparable harm to the plaintiff if the interlocutory injunction is not granted, and (iii) where the balance of convenience lies as between the parties.

Serious Issue to be Tried

The Defendants argued that the BC Court was without jurisdiction to decide the matter, namely that the remedy being sought by the Plaintiff resided in the exclusive jurisdiction of the Federal Court; that there was no serious issue to be tried as their ownership of the registered trade-mark WOODPECKER was a full defence, and; that there was no evidence to satisfy the elements of a passing-off action.

The Court disagreed with the Defendants on each ground.

The Court held that s.57(1) of the Trade-marks Act grants exclusive original jurisdiction to the Federal Court to strike out or amend an entry in the record. However, the Court stated that this was not the nature of the relief being sought. Consequently, the Court held that that it had the inherent jurisdiction to grant injunctive relief, based on s. 39(1) of the British Columbia Law and Equity Act, which provides that: "An injunction...may be granted...by an interlocutory order of the court in all cases in which it appears to the court to be just or convenient that the order should be made."⁴

The Court then held that for the purposes of granting injunctive relief, all that was necessary was for the Court to decide whether there was a serious issue to be tried, not whether the registered trade-mark was valid or not. The Court also rejected the proposition that it was necessary that the trade-mark be expunged before an order could issue enjoining its use. The rights granted by s.19 of the Trade-marks Act do not depend on whether the trade-mark at issue is expunged or not, rather the rights depend on whether the trade-mark at issue is invalid or not.

Irreparable Harm

Proof of irreparable harm – which must be clear and non-speculative - is difficult to prove. However, in this case, the Court found that if an injunction was not granted the Plaintiff would suffer irreparable harm. More particularly, the Court held that if the impugned use of the WOODPECKER trade-mark was permitted to continue it would be "more difficult to unscramble what business losses are due to [the confusion that would arise], and what losses are due to the traditional kinds of business considerations and competition in the marketplace."

As further support for its finding of irreparable harm, the Court concluded that "the plaintiff would be unable to quantify the loss of reputation, consumer confidence and good will as a result of confusion in the marketplace."⁵

Balance of Convenience

In assessing the balance of convenience, the Court considered five factors (i) the strength of the applicant's case, (ii) the adequacy of damages for either party, (iii) irreparable harm and the likelihood that if damages are awarded, they will be paid, (iv) the altering of the status quo and the balance of the relationship, and (v) factors affecting public interest.

The first two criteria were addressed in the earlier part of the Court's decision and favour the plaintiff. The third criteria was considered to be neutral.

The fourth factor also favoured the Plaintiff. Framed as an assessment of "altering of the status quo", the words of the Court are indicative that the assignment of fault was a relevant consideration in determining this factor. The Court specifically noted that "the defendant obtained the trademark registration knowing that the plaintiff was already using that name": as a result, "whatever interim negative consequences may have to be borne, those should be borne by the party altering the status quo."

As to considerations of public interest, the Court held, as is generally accepted to be the case, that it is in the public interest that there not be confusion between trade-marks. As found by the Court "having two "Woodpeckers" selling hardwood flooring within a mile of each other ...would seem to run contrary to the public interest."

Conclusion

Despite the traditional difficulty associated with obtaining interlocutory injunctive relief in trade-mark cases, such an extraordinary remedy can still be obtained when the underlying facts warrant such a remedy. This case is noteworthy as it demonstrates that in the right circumstances, irreparable harm can be inferred, and that the existence of a registration will not provide full immunity when it can be established that prior rights to the same trade-mark exist.

Footnote

1 Woodpecker Hardwood Floors (2000) Inc. v Wiston International Trade Co., Ltd. (13 September 2013), Vancouver S136046 (BC SC). ("Woodpecker Decision").

2 WOODPECKER: Reg'n No. TMA840289; see also associated trade-mark registrations TMA836079; TMA836081; TMA840290 and TMA779544

3 [1994] 1 S.C.R. 311.

4 Woodpecker Decision at para 14.

5 Woodpecker Decision at para 29.

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