A recent decision from the Ontario Superior Court of Justice in Rheo Thompson Candies Limited v. Thompson 2013 ONSC 4932 confirms that an injunction will not issue to prevent the continued infringement of a registered trade-mark unless the owner of the mark can show that in the absence of an injunction, damages cannot be quantified or no remedy is possible.

Competing Chocolatiers battle over « mint smoothies »

The Stratford company, Rheo Thompson Candies Limited, is a well-established business which had earned a reputation over a number of years as a high quality candy confectioner and chocolatier with products that included the “mint smoothie”. Founded in 1969 by Rheo and Sally Thompson, their daughter, Marnie Thompson and eventually her husband, Alvin Bolkovic, worked in the business until it was sold in 2002 to a new owner (the “Trade-mark Owner”). Pursuant to a share purchase agreement, the Thompson family sold the business including the family recipes which had been held as trade secrets. In 2010, the Trade-Mark Owner learned that the Thompson family daughter and her husband had started their own chocolate business in Toronto under the name “R Thompson Chocolates” (collectively, the “Defendant Chocolatiers”). One of the products sold by the Defendant Chocolatiers was a “mint smoothie”. There was evidence that the Defendant Chocolatiers were trading-off the Thompson family reputation in their online advertising and advising customers that they were using the family recipes.

Round One

The Trade-mark Owner objected to the use of the name “R Thompson Chocolates” and asserted common law trade-mark rights in the “mint smoothie” name. While the Defendant Chocolatiers agreed to change their business name to “M Thompson Chocolates” they continued to use the term “mint smoothie” arguing that it was a generic term for which no confusion could result. The Trade-mark Owner applied for and obtained a trade-mark for“mint smoothie” and when the Defendant Chocolatiers failed to respond to the Trade-mark Owner’s requests to cease using the mark, it commenced an action against them seeking a permanent injunction, damages and declaratory relief in connection with their infringement of the MINT SMOOTHIE trade-mark and passing-off.

Round Two

Applying the well-known three-part test for the grant of an interlocutory injunction in RJR MacDonald v. Canada, [1994] 1 S.C.R. 311, the motions judge found that the Trade-mark Owner had met the low threshold for showing a serious issue to be tried on the merits of the action. Importantly, however, the motions judge expressly rejected a line of judicial authority which relieves a moving party from proving irreparable harm in the face of a clear breach of an intellectual property right. He held that the Federal Court of Appeal decision in Centre Ice Ltd. v. National Hockey League et al., [1994] F.C.J. No. 68 required the Trade-mark Owner to prove irreparable harm with evidence not only of goodwill in the trade-mark, but of confusion in the market place which has damaged that goodwill in a way that cannot be compensated for in damages. The motions judge considered that the Trade-mark Owner had failed to meet this burden on the basis of evidence he described as “anecdotal hearsay evidence of confusion”.

This decision is but one in a long line of judicial authorities which reaffirms that the mere fact that a litigant has a registered trade-mark does not alone provide a basis for prohibiting competition pending trial. The availability of interlocutory injunctions to protect intellectual property rights in Canada remains elusive and absent new judicial thinking which focuses on the strength of the plaintiff’s case and less on the nature of the resulting damage, litigants will continue to get the same results.