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Lights Out: Interlocutory Injunction Forces Neon Sign Company to Change Name

On November 17, 2014, Justice Macintosh of the Supreme Court of British Columbia granted an interlocutory injunction that prevents the Defendants from using Alpha Neon as a business name.

Alpha Neon Ltd was founded by the Defendant in 1982 and went bankrupt in 2012. Subsequently, the Defendant consented to the incorporation of the Plaintiff business under the name Alpha Neon (2012) Ltd. The Plaintiff business hired the Defendant as its general manager and purchased the assets of the bankrupt company. The Defendant was dismissed for cause in 2013; he then began a competing business, which he renamed Alpha Neon Sign Consulting Ltd in 2014.

Justice Macintosh applied the three-part test for injunctive relief outlined in RJR-MacDonald Inc v Canada (Attorney General). The parties agreed that there was a serious question to be tried; Justice Macintosh held that the Plaintiff “had every reason to believe” that the Defendant had relinquished the name Alpha Neon to it.

The Court also concluded that the Plaintiff would suffer irreparable harm in the absence of an injunction because damages would be difficult to calculate. Justice Macintosh distinguished industries that are highly monitored and regulated, where damages are readily calculable, from the unregulated neon signage industry, where measuring competing market penetration “could be nothing more than guesswork”. Justice Macintosh also held that the Defendant’s potential inability to pay a damages award favoured the grant of an injunction.

Finally, Justice Macintosh concluded that the balance of convenience rested with the Plaintiff. The Court maintained the status quo that existed before the Defendant business was renamed Alpha Neon Sign Consulting Ltd.

A copy of Justice Macintosh’s Reasons for Judgement may be found here.