Jamieson Laboratories Ltd v Reckitt Benckiser LLC, 2015 FCA 104

The Federal Court of Appeal (“FCA”) upheld an interlocutory injunction preventing Jamieson Laboratories Ltd. (“Jamieson”) from selling its omega-3 fatty acid supplements under the name “OMEGARED” while the Federal Court determines if the name infringes the “MEGARED” trade-mark owned by Reckitt Benckiser LLC and licensed by Reckitt Benckiser (Canada) Limited (collectively “Reckitt”). The injunction also mandates a recall of Jamieson’s offending products. [1] The reason that this interlocutory injunction was awarded seems to be largely based on the finding that Jamieson had strategically rebranded its product line from “Super Krill” To “Omega Red” in order to frustrate the entrance of Reckitt’s “MEGARED” product line into the Canadian market.

Background

The history between Jamieson and Reckitt sheds a great deal of light on why this extraordinary remedy was awarded.

Jamieson and Reckitt both market a line of supplements containing omega-3 fatty acids. Jamieson was the first to market its product in Canada, but did so originally under the unregistered “Super Krill” trade-mark. [4] At the time, there was a third party who owned the “MEGARED” trade-mark and marketed an omega-3 supplement product in the United States. [5] Reckitt was not yet participating in the Canadian market.

When it decided it wanted to enter the Canadian market, Reckitt entered into acquisition talks with both Jamieson and the third party. Reckitt ultimately acquired the third party instead of Jamieson. [6]

The next month, Jamieson began rebranding its “Super Krill” products under the new brand name “Omega Red” and filed a trade-mark for the similar but not identical “Omega Red” for use in association with “vitamins, minerals, nutritional supplements and dietary supplements”. [7] Due to delays, which the Court took to be reasonable, [14] Jamieson was able to fully launch its rebranded product before Reckitt could enter the Canadian market. [8] Reckitt then launched an action for passing off and infringement of its “MEGARED” trade-mark.

The Interlocutory Injunction

Following the RJR-McDonald test for an interlocutory injunction, the Federal Court (“FC”) found a “very serious issue” to be tried. The FC thought that Jamieson had undertaken its rebranding effort with the dominant purpose of frustrating Reckitt’s entry into the Canadian market.  [12]

In finding irreparable harm, the FC found that the damages to Reckitt were incalculable because Reckitt would never have had the chance to operate its business in the absence of Jamieson’s infringing behaviour. [13] Loss of distinctiveness and confusion of Reckitt’s MEGARED line with Jamieson’s OmegaRed line were also cited. [13]

In finding that the balance of convenience favoured Reckitt, the FC reiterated its finding that Jamieson was aware of its strategy, and focused on how Jamieson was “eyes wide open” to the possibility of legal action ensuing. [14]

Arguments on Appeal

Jamieson argued that the FC erred in respect of every step of the RJR-MacDonald test. [15]

First, Jamieson argued that the FC’s analysis of whether there was a serious issue to be tried delved too far into the merits of the underlying action and thus controlled his analysis of the other two branches of the test, and that Jamieson’s motive for rebranding should take no part in the analysis. [16, 24] The FCA agreed that the FC’s analysis went too far into the merits, [25] but the FC’s reasons still supported a finding that there was a serious issue to be tried. [26] The FCA did not seem to fully rebut the argument that the FC improperly considered Jamieson’s motive, but seems to have simply found a serious issue to be tried in any event.

Second, Jamieson also argued that since Reckitt could not demonstrate any price reduction or loss of sales, it could not demonstrate irreparable harm. [17] However, the FCA rejected that such a requirement would be applicable to the facts of this case, given that the only market Reckitt ever operated in was one in which the infringer operated as well. [29]

Third, With respect to the balance of convenience, Jamieson argued that the FC did not properly balance the risk of harm to Jamieson, especially considering its products would be removed from store shelves, and that it would be forced to revert to its old “Super Krill” brand. [33-34] The FCA thought that, on the balance, the harm to Jamieson from converting to the old “Super Krill” could be compensable in damages, [35] whereas the harm to Reckitt could not. Furthermore, even though the FCA acknowledged “reputational damages of an irreparable nature could result from a precipitated removal of the products in question”, it thought that this harm would be due to the terms of implementation of the order rather than its issuance, and could be fixed. [36] As such, while it upheld injunction, the FCA removed the “forthwith” requirement and added a term of implementation of the injunction of 30 days. [37]

Commentary

This case is especially important for new or soon-to-be entrants to the Canadian market. It provides a compelling reason for why one might want to obtain Canadian trade-mark protection before entering the Canadian market: it seems to make it easier to obtain an interlocutory injunction against infringers in Canada.

Although some of the facts were unique to this case, Reckitt’s position of having not yet entered the Canadian market was essential to the determination that the harm to Reckitt was irreparable (the harm could not be calculated because Reckitt was not yet in the market), and thus to the granting of the interlocutory injunction.