Vacuum Wars and Trademark Troubles: VPC Fails to Obtain Interlocutory Injunction

In 2572495 Ontario Inc. v. Vacuum Specialists (1985) Ltd., Justice Pentney of the Federal Court dismissed a motion for an interlocutory injunction in a trademarks case. 

Background

2572495 Ontario Inc., otherwise known as Vacuum Parts Canada, is the owner of the trademark “VPC” and the tradename “Vacuum Parts Canada”. VPC’s primary business is online sales of vacuum cleaner parts and accessories, including through Amazon. Several VPC products were “top-rated” on Amazon, including one product listed as the top selling vacuum accessory set on Amazon.ca. The defendant, Vacuum Specialists, is also in the business of selling vacuum cleaner parts and accessories, and similarly uses Amazon as an online retailer.

All new products offered for sale on the Amazon platform are assigned an Amazon Standard Identification Number. Other sellers can link their products to an existing ASIN if they are selling an identical product. Such linking is mandatory, presumably to avoid duplication of identical products on the website. In situations where the products were not identical, sellers are required to seek their own ASIN for their products.

VPC claimed that in February 2021, VS engaged in “concerted efforts” to target VPC products on Amazon. VS had linked approximately 60 of its products to VPC product pages and offered the same products at a lower price, undercutting VPC’s market. VPC claimed that this linking was likely to cause confusion in the marketplace because purchasers would not realize their Amazon order would be fulfilled by VS, despite purchasing from a VPC branded product page. The only indication that the product would be shipped by VS was a small text box on the product page, and VPC argued that customers were likely to miss this detail. VPC also claimed this infringing activity was causing irreparable harm to its reputation, since it had no control over the nature or quality of the VS products. VPC cited a customer complaint it had received about a product that had actually been sold by VS.

VPC sought an interlocutory injunction to stop VS from copying its photographs or using its trademark and its tradename.

Analysis

The Federal Court engaged in the familiar three-part test for the granting of an interlocutory injunction, as summarized by the Supreme Court in R v Canadian Broadcasting Corp:

• The applicant demonstrates a “serious question to be tried”, in the sense that the application is neither frivolous nor vexatious;
• The applicant will suffer irreparable harm if an injunction is refused; and
• The applicant will suffer greater harm from the refusal of the interlocutory injunction than the defendant will from the granting of the injunction.

Where a mandatory interlocutory injunction directing the defendant to undertake a positive course of action is sought, in this case de-listing VS’s product pages that are linked to VPC product pages, the “serious issue to be tried” threshold must be met by demonstrating a strong prima facie case. The application judge must be satisfied that there is a strong likelihood on the law and evidence presented, that the applicant will be ultimately successful. While Justice Pentney agreed that customers would likely fail to notice that VPC labelled products were being shipped by VS, resulting in possible confusion, this was not enough to establish a strong prima facie case. He also noted that VS was simply following Amazon’s Policy on Intellectual Property, a policy that VPC also agreed to before selling its products through the platform.

To establish irreparable harm, the applicant must demonstrate a high likelihood that the harm will occur. A mere possibility is not enough. VPC claimed it suffered reputational harm and that its products were losing their distinctiveness in the marketplace. However, other than a few complaints from customers who had purchased VS products and mistakenly contacted VPC, the evidence did not demonstrate any significant negative impact on VPC’s reputation as a result of VS’ activities. On the contrary, VPC had received very favourable customer ratings, which may have increased after VS began linking its products to the VPC product pages. Based on the evidence, Justice Pentney was not satisfied that VPC had demonstrated reputational harm that would justify interlocutory relief.

The third step of the test requires an assessment on the balance of convenience to identify the party that would suffer greater harm from either the granting or refusal of the interlocutory injunction. The factors considered vary with the circumstances of each case, and it is often at this stage that the trier of fact considers any public interest arguments. In light of his findings on the first two steps of the test, Justice Pentney found that the balance of convenience favoured VS.

For these reasons, VPC’s motion for interlocutory injunction was dismissed and VPC was ordered to pay costs calculated at the mid-point of Column III.