In E Mishan & Sons v Supertek Canada, 2016 FC 986, Justice Hughes of the Federal Court dismissed Supertek’s claim for damages stemming from statements made by Mishan. Both Mishan and Supertek sell expandable garden hoses in Canada. Mishan is a licensee of a Canadian patent and industrial design that relate to expandable garden hoses. Mishan sells its products to retailers, which in turn sell the products to consumers. Canadian Tire was one such retailer.
Supertek sought to sell its products to Canadian Tire, and offered an indemnity in respect of any lawsuit brought by Mishan. Canadian Tire purchased Supertek products for sale in its stores. In communication with Canadian Tire employees, Mishan mentioned the possibility of litigation against retailers carrying Supertek products. Ultimately, Canadian Tire sold the Supertek products it bought, but used Mishan as the sole supplier of expandable garden hoses going forward.
Mishan brought an action to enforce its intellectual property against Supertek. In previous decisions, Justice Hughes determined that the intellectual property was invalid (see our previous post regarding the patent, here, and the decision regarding the industrial design, here).
In its counterclaim, Supertek sought damages under section 7(a) of the Trade-marks Act, which provides:
7 No person shall
(a) make a false or misleading statement tending to discredit the business, goods or services of a competitor; …
Justice Hughes, following the decision of the Supreme Court of Canada in S & S Industries Inc. v, Rowell, held that three elements must be satisfied for a claim under section 7(a) of the Act:
- A false and misleading statement;
- Tending to discredit the business wares or services of a competition; and
- Resulting damages.
Justice Hughes found that an assertion of intellectual property that is subsequently found to be invalid is not enough, on its own, to constitute a false and misleading statement. However, Justice Hughes determined that the impression created by Mishan that Canadian Tire would be sued if it sold the Supertek products, coupled with the invalidity of the intellectual property, amounted to false and misleading statements tending to discredit the Supertek products.
At trial, a Canadian Tire employee testified that Canadian Tire stopped carrying Supertek products not because of the threat of litigation but because of potential inventory problems. As a result, Justice Hughes concluded that there was no causal link between the statements made by Mishan and the damage caused to Supertek. Supertek’s counterclaim was therefore dismissed.
A copy of the decision may be found here.