Ontario Superior Court of Justice Enjoins Software Licensor From Shutting Down Website

On August 11, 2017, the Ontario Superior Court of Justice (Court) issued its decision in Propurchaser.com v Wifidelity Inc (2017 ONSC 4905) enjoining the defendants, Wifidelity Inc and its principals, from shutting down the plaintiff’s website.

The parties had entered into a licensing agreement whereby the defendant would develop and host a website in exchange for the plaintiff paying ongoing licensing and support fees. Following subsequent negotiations this agreement was modified, resulting in the plaintiff paying increased fees. These fees gave rise to the present dispute.

The plaintiff believed that the base fee remained unchanged and that all additional amounts paid were attributed to increased support costs. On the other hand, the defendants claimed that the increased fees paid were allocated primarily to increased licensing costs. When the plaintiff became aware of the discrepancy, it refused to pay the fees as invoiced and only paid the licencing fee as set out in the original agreement. In response, Wifidelity threatened to discontinue the plaintiff’s access to the website.

The plaintiff sought relief from the Court to prevent the defendants from discontinuing its access to the website. In deciding the issue, the Court applied the three part test for injunctive relief set forth in RJR-MacDonald Inc v Canada (AG) ([1994] 1 SCR 311) as follows:

1. Whether there is a serious issue to be tried;

2. Whether the moving party will suffer irreparable harm if the injunction is not granted; and

3. Whether the balance of convenience favours the moving party.

The Court found that all 3 elements of the test were satisfied.

A serious issue was found to exist. The Court noted that the threshold to satisfy this element is low and the fact that the application was neither frivolous nor vexatious was sufficient to fulfil the serious issue prerequisite.

With respect to irreparable harm, the Court found that the plaintiff’s business would lose revenue, profits, market share, goodwill and reputation, thereby satisfying the requirement.

The balance of convenience was found to favour the plaintiff. The Court decided to maintain the status quo and keep the website operating until the rights of the parties could be determined.

Summary By: Jae Morris