Rare Interlocutory Injunction Granted by BC Supreme Court For Stores With Similar Signage

On January 2, 2024, the Supreme Court of British Columbia (the Court) granted an interlocutory injunction restraining the Defendant, Adidas Canada Limited, from using the name of its retail store in Vancouver.  The decision in Amer Sports Canada Inc. v Adidas Canada Limited, 2024 BCSC 3, reflects a rare case of a Court issuing an injunction in a trademark matter before trial.

Amer Sports Canada Inc. (the Plaintiff) is the owner of the registered trademark ARC’TERYX (the Mark) in association with retail store services and related online services (the Class 35 Registration). The Plaintiff has operated numerous stores in connection with the Mark over the years, including in the Vancouver area since 2013.  In late January 2023, the Defendant opened a store just a few doors down the street from the Plaintiff’s store that, instead of including the “adidas” trademark, featured signage with a combination of the following adidas design element and TERREX:

The Plaintiff alleged different breaches of the Trademarks Act, and sought, among other things, an interlocutory injunction to prevent further use of TERREX for retail store services, including online retail stores.

The Court addressed each of the following elements of the test in determining whether to issue an injunction:

1. There is a Serious Issue to Be Tried.
2. The Applicant Will Suffer Irreparable Harm Absent the Injunction.
3. A Balance of Convenience Favours the Granting of the Injunction.

On the part of the test regarding irreparable harm, the Court was persuaded that the distinctiveness of the Plaintiff’s trademark would be virtually impossible to regain once lost, and was not convinced that an award of damages would fully remedy this type of intellectual property trespass.

The Court’s holding on this issue diverges from the reasoning of Canadian courts, and in particular the Federal Court, which have generally dismissed applications for injunctions before trial in cases involving allegations of infringement of intellectual property rights, whether patents or trademarks, particularly where: (1) it is not a case of blatant counterfeiting; (2) the defendant, as appears to be the case here, is an established and reputable business that would be in a position to honour an award of damages if liability is established at trial;  (3) the defendant could be counted on to keep an accurate record of its sales until trial; and/or (4) there would not appear to be any immediate harm to third parties not before the Court (as might be the case where the impugned products or services may involve a health or safety risk).

Although the interlocutory injunction was granted, the Court expressly recognized that these types of injunctions are extraordinary and should be narrowly framed.  Therefore, the Court only issued the injunction with respect to the Defendant’s Vancouver store – not to any online retail stores.  The Court also added the following conditions:

1. the parties must immediately secure a trial date;
2. the injunction expires if and when the Defendant’s pending application for its TERREX mark for Class 35 retail store services is granted; and
3. the Plaintiff was also required to file the usual undertaking to pay any damages that the Court may order to be paid to the Defendant as a result of the injunction, if it turns out to have been wrongly granted.

It remains to be seen if this decision will be appealed.  Even if the interlocutory injunction stands, this decision can still be seen as an outlier in that the granting of injunctions before trial in Canadian intellectual property cases is the exception rather than the rule and tends to be reserved for the clearest and most exceptional of cases.

Summary By: Gary Daniel and Imtiaz Karamat