Why Get An Injunction Anywhere Else? – Federal Court Grants Rare Interlocutory Injunction In Trademark Dispute

On February 9, 2017, the Federal Court granted a motion brought by Sleep Country Canada Inc. for an interlocutory injunction preventing Sears Canada Inc. from using the slogan “THERE IS NO REASON TO BUY A MATTRESS ANYWHERE ELSE”. Sleep Country had sued Sears for infringement of its registered slogan “WHY BUY YOUR MATTRESS ANYWHERE ELSE?” and depreciation of goodwill under s. 22 of the Trademarks Act.

The Court found that Sleep Country had met the three-part test set out by the Supreme Court of Canada in RJR-MacDonald. Sears conceded that there was a serious issue to be tried so the key issue was:

[9] … whether Sleep Country has established, with clear and non-speculative evidence, that it will suffer irreparable harm as a result of the alleged infringement, including confusion and/or depreciation of goodwill or loss of distinctiveness, between now and the time the action is finally determined and whether this harm can be quantified and compensated in damages. If it cannot be quantified, it is irreparable.

The Court found that Sleep Country had established confusion was likely. After reviewing the expert evidence , Justice Kane held that the Court “is equally capable of making this determination” and can “put itself into the shoes of the somewhat hurried consumer”. She then found that the slogans were almost identical and conveyed the same “value proposition” or idea, that both Sears and Sleep Country sell mattresses to the same consumers and advertise and promote their mattresses in the same ways. Justice Kane found that the evidence suggested that Sleep Country’s slogan, which had been used for 22 years, was etched in the mind of many consumers. In contrast, Sears only began to use its slogan in July 2016.

Citing the Federal Court of Appeal in Centre Ice Ltd. v. National Hockey League et al (1994), 53 C.P.R. (3d) 34, the Court held that while irreparable harm cannot be inferred, Sleep Country’s evidence was sufficient to establish that Sears’ use of its slogan would cause a loss of distinctiveness of Sleep Country’s mark and a depreciation of the goodwill associated with it, and that this damage would be impossible to calculate monetarily.

The Court also held that the likely confusion resulting from the use of the Sears’ slogan would result in lost sales that would be impossible to quantify, noting that if the damages cannot be quantified, they are irreparable. The Court found that the impact of the infringing mark would be impossible to parse out from other aspects of Sears’ marketing efforts, which had been revamped at the same tim eteh slogan was adopted. The Court concluded that quantifying Sleep Country’s losses using the methodology proposed by Sears’ expert would “be difficult to the point of impossibility”. Interestingly, the Court commented on the fact that the expert’s “core assumptions were not stated in his opinion as required by the Code of Conduct for Experts.”

With respect to depreciation of goodwill, the Court followed the test set out by the Supreme Court in Veuve Clicquot, holding:

[10]     The average consumer will likely make a mental connection between Sears’ use of its slogan and the Sleep Country slogan. The continuing use of the Sears slogan will erode the distinctiveness of Sleep Country’s slogan. As a result, the use by Sears of its slogan is likely to have an effect on the goodwill established by Sleep Country, and the likely result of that linkage is to depreciate the value of Sleep Country’s trade-marked slogan’s goodwill.

Finally, the Court found that the balance of convenience favoured Sleep Country, noting that Sleep Country had been using its slogan for 22 years, while Sears had only recently begun using its slogan. The Court held that enjoining Sears from use of its slogan should not cause it any harm. The public interest in protecting trademarks was also a relevant consideration in assessing the balance of convenience.

A copy of the Federal Court’s Reasons can be found here.