From skinny to slim: Former distributor’s dishonest dealings earn interlocutory injunction

New Skinny Mixes, a US manufacturer of sugar-free coffee syrups and low-calorie cocktail mixes, secured an interlocutory injunction against its former Canadian distributor 9335-5147 Quebec inc. and an associated corporation, Capital Nutrition Inc. Both 9335 and Capital Nutrition are controlled by the same person—Moishe Hartstein. The Quebec Superior Court prevented the defendants from copying copyrighted materials, making false statements about Skinny’s regulatory compliance, and controlling the skinnymixes.ca domain name and associated email.

In 2019, Skinny entered a trademark license agreement with 9335, granting Canadian distribution rights. The agreement stated that 9335 acknowledged Skinny’s ownership of licensed marks and that “all goodwill accruing therefrom shall inure solely to the benefit” of Skinny. After Skinny terminated the agreement in August 2022, the defendants developed their own competing brand while retaining control of the skinnymixes.ca domain and associated email addresses.

The underlying dispute concerns the defendants’ launch of their “Slim Syrups” products following termination of their distribution agreement.  New Skinny Mixes alleged that the defendants engaged in trademark infringement, copyright infringement, and unfair competition through confusing branding and false statements.

Digital Dishonesty

Justice Ouellet held that the defendants’ use of skinnymixes.ca as a domain name and email address was dishonest. Despite representations to earlier courts that skinnymixes.ca was used only for legitimate customer service, later evidence revealed systematic deception. The court noted that defendants used info@skinnymixes.ca to make “false assertions that Skinny’s products do not meet the requirements of the Canadian Food Inspection Agency” while redirecting customers to the defendants’ competing products.

The court characterized this as “difficult to imagine a more anti-competitive way to use this email address.” Justice Ouellet distinguished this case from earlier judicial decisions that had presumed defendants’ good faith, stating the interlocutory evidence demonstrated that “Hartstein’s answer on discovery was false.”

Shameless Copying

Justice Ouellet found that the defendants engaged in “shameless copying” of Skinny’s promotional materials. Even after prior judicial warnings, the defendants repeated the pattern of copying the plaintiff’s promotional materials. One example involved a Mint Mojito recipe copied word-for-word from Skinny’s website, with defendants forgetting to remove “Skinny” from the recipe directions: “Add white rum, ice and Skinny Mojito Mix.”

Justice Ouellet concluded this created “at the very least a serious question to be tried” regarding copyright infringement.

Application of RJR-MacDonald Test

Appearance of Right

The court applied different standards depending on whether relief was mandatory or prohibitive. For mandatory relief (domain transfer), Justice Ouellet required a “strong prima facie case” rather than merely a “serious question to be tried.”

The court found Skinny met the higher standard for domain transfer, noting the trademark license agreement’s goodwill provisions and defendants’ misuse of the domain for anti-competitive purposes.

For prohibitive relief regarding copyright infringement and false statements, the court found sufficient appearance of right under the lower standard.

Serious Prejudice

Justice Ouellet emphasized Quebec civil law’s broader approach to harm, noting that “serious prejudice is considered sufficient” even if not technically irreparable. The court pointed to Quebec case law for the finding that client loss constituted sufficient harm, and particularly so here given defendants’ misdirection of Skinny’s customers via email.

Balance of Convenience

The balance strongly favored Skinny for most relief sought. The court noted that Hartstein “admitted he no longer needs the skinnymixes.ca domain name” but refused transfer to avoid providing customer lists. Justice Ouellet found “the prejudice suffered by Skinny far outweighs that suffered by the Defendants.”

Relief Granted and Denied

Justice Ouellet ordered defendants to cease reproducing Skinny’s materials, transfer the domain, stop false affiliation claims, and end regulatory misrepresentations.

However, the court refused to order cessation of “Slim Syrups” branding or product recall, finding this would be “equivalent to a final determination of the action in favour of Skinny.” While marketplace confusion existed, the court determined this required trial resolution rather than interlocutory determination.

The injunction remains in force until final judgment or settlement.

The full decision can be read here.