Jamieson Laboratories Ltd. v. Reckitt Benckiser LLC, 2015 FCA 104 (Noël C.J., Gauthier J.A., Webb, J.A.)
April 23, 2015
May M. Cheng and David Wotherspoon for Jamieson Laboratories
Chris B. Zelyas for Reckitt Benckiser
This was an appeal from a decision of the Federal Court (2015 FC 215) wherein Justice Henry S. Brown granted an interlocutory injunction pending disposition of an action brought by Reckitt to enforce its “Megared” trade-mark.
Reckitt’s trade-mark covers use of the word Megared in association with, among other things, supplements containing omega-3 fatty acids. The company uses this mark in connection with a line of supplements made exclusively from krill oil.
The Megared mark was registered in Canada in 2011 by Schiff Nutrition International Inc. At the time, Schiff was selling omega-3 supplements in association with that mark in the United States, but had not yet launched those products in Canada.
In 2012, Reckitt engaged in acquisition talks with both Schiff and Jamieson. In December 2012, the company acquired Schiff and terminated discussions with Jamieson.
Prior to 2013, Jamieson marketed a line of omega-3 supplements under the unregistered trade-mark “Super Krill”. These products only contained krill oil. In January 2013, the company undertook a rebranding effort that involved adding a fish oil-based product to this line and marketing the expanded product line under the new brand name “Omega Red”. The Omega Red line launched in Canada in June 2013, prior to the launch of Reckitt’s Megared brand in the Canadian market.
In response to the launch of Jamieson’s Omega Red line, Reckitt sent the company two warning letters. Jamieson disregarded these notices, and Reckitt eventually filed an action against the company for trade-mark infringement and passing-off. Reckitt successfully moved for an interlocutory injunction prohibiting Jamieson from marketing its Omega Red products pending disposition of the action, on a forthwith basis. Jamieson appealed the injunction to the Federal Court of Canada (FCA), and obtained a stay of the injunction pending disposition of the appeal.
At issue on the appeal was whether Justice Brown had erred in holding that the test for granting an interlocutory injunction was satisfied: whether there was a serious issue to be tried, irreparable harm would result to Reckitt if the injunction was not granted, and the balance of convenience favoured Reckitt.
Justice Brown had determined that there was a “very” serious issue to be tried with respect to trademark infringement. He found that it was likely that Jamieson had deliberately infringed the Megared mark, and that the dominant purpose behind Jamieson’s rebranding effort had been to frustrate Reckitt’s entry into the Canadian market. At the FCA, Jamieson contended that Justice Brown had delved too far into the merits in his assessment of the infringement issue, allowing his conclusions to taint his analysis at the other stages of the interlocutory injunction test. The FCA agreed that Justice Brown had delved too far into the merits of the underlying action, and that in finding that Jamieson had likely committed trade-mark infringement, Justice Brown went beyond the bounds of what was required of him. However, the Court was satisfied that the substance of Justice Brown’s reasons provided sufficient grounds for concluding that Reckitt had made out a serious issue of potential trade-mark infringement.
In holding that Reckitt would suffer irreparable harm if the injunction were not granted, Justice Brown had found that in the absence of an injunction, Reckitt’s damages in the event of success in the underlying action would be impossible to calculate, as Reckitt would never have had the chance to operate its business in the absence of Jamieson’s infringing behaviour. On appeal, Jamieson argued that Justice Brown erred in failing to require Reckitt to produce clear and specific evidence to show that its damages would be truly irreparable. The FCA rejected this argument, holding that “it makes no practical sense to require a plaintiff to demonstrate such damages as lost sales or price reductions when the only market environment in which the plaintiff has ever operated has been one in which the alleged infringer has operated as well”.
In finding that the balance of convenience favoured Reckitt, Justice Brown had cited his previous findings, and emphasized that Jamieson had proceeded with its rebranding activity with “eyes wide open” to the possibility of legal action by Reckitt. He rejected the argument that reverting to the “Super Krill” brand would cause Jamieson irreparable harm. On appeal, Jamieson argued that Justice Brown had disregarded the evidence it had advanced on the issue of irreparable harm and failed to undertake the required risk-balancing exercise. The FCA upheld Justice Brown’s finding that the potential harm from reverting to the “Super Krill” brand would be compensable through damages, but accepted Jamieson’s argument that precipitated removal of its products from stores in accordance with the terms of the injunction could cause irreparable damage to the company’s reputation. The FCA determined that it would be appropriate to vary the terms of the injunction to give Jamieson some time to implement the order.
Having failed to find any palpable and overriding error in Justice Brown’s decision, the FCA dismissed the appeal with costs to Reckitt, but varied the terms of the injunction so as to give Jamieson 30 days to implement the order.
By: Kathryn May