A POWERful Brand: Interlocutory Injunction Protects Residual Goodwill After 15 Years of Non-Use

December 5, 2019

An interlocutory injunction can be sought to prevent a defendant from making inroads in a market while an infringement proceeding is pending. Historically, however, interlocutory injunctions have been difficult to obtain in intellectual property cases. The tide may be turning: an Alberta court recently issued an interlocutory injunction to protect the residual goodwill in a trademark that hadn’t been used in the relevant market for 15 years.

Background

In Canada, to obtain an interlocutory injunction a plaintiff must establish:

(1) there is a serious question to be tried;

(2) it would suffer irreparable harm (i.e. harm which either cannot be quantified in monetary terms or which cannot be cured) if the injunction is not granted; and

(3) the balance of convenience favours the granting of the injunction.

For many years, interlocutory injunctions were rarely granted in intellectual property matters (except for counterfeiting cases). The “irreparable harm” branch of the test often proved difficult for a plaintiff to meet, as irreparable harm has to be proven on clear, convincing and non-speculative evidence.

In the recent decision in Corus Radio Inc v Harvard Broadcasting Inc, 2019 ABQB 880, the Court of Queen’s Bench of Alberta granted an interlocutory injunction in a passing off, trademark and copyright action. The decision is notable not only because it is a rare granting of the equitable remedy, but also because the decision was based upon “irreparable harm” to the residual goodwill in a mark that had not been used in the relevant market for 15 years.

Facts

The plaintiff (“Corus”) had operated a radio station in Edmonton under the name POWER 92 for over a decade in the 1990’s/ 2000’s. During that time, Corus held a popular “Phrase that Pays” contest, for which the prize-winning phrase was “POWER 92 Plays Today’s Best Music, Now Show Me My Money”.

In 2004, Corus rebranded its radio station and discontinued use of the POWER name in Edmonton. However, it had radio stations in other cities under the POWER brand, including POWER 107 in Calgary from 1997 to 2002 and POWER 97 in Winnipeg from 1996 to 2015 and from 2016 to present. 

In August 2019, the defendant (“Harvard”) started using the name POWER 107 in association with an Edmonton radio station. Harvard launched its POWER 107 station with a logo similar to the former POWER 92 logo and with the tag line “Edmonton’s Best Music”. Harvard’s marketing material included phrases such as: “POWER 107 Turn the POWER Back On”, “POWER 107 Feel the POWER Again”; and “POWER 107 plays Edmonton’s Best Music Now Show Me My Money! The return of the #PhraseThatPays COMING SOON!”

Corus asserted that notwithstanding the non-use for 15 years, goodwill in the POWER 92 name continued to exist and the activities of Harvard constituted passing off and trademark infringement. Corus also asserted that the POWER 107 logo and advertising materials adopted by Harvard were substantial copies of Corus’ logos and advertising materials, which constituted copyright infringement. 

Corus brought an application for an interlocutory injunction enjoining Harvard from engaging in the impugned activities until trial. 

Analysis

Under the first branch of the test for an interlocutory injunction, the Court concluded that Corus had demonstrated a “serious issue to be tried” in respect of the allegations of passing off, trademark infringement and copyright infringement.

On the second branch of the test, the Court accepted Corus’ argument that the erosion of the opportunity to use its existing goodwill to reintroduce a POWER radio station into the Edmonton market constituted irreparable harm.

The Court found that there was sufficient evidence that Corus had existing goodwill in the POWER name in Edmonton and there was confusion and a loss of distinctiveness caused by Harvard’s activities. In so concluding, the Court relied upon evidence that (i) Harvard had chosen the POWER name because of the goodwill in the POWER 92 brand; (ii) Harvard employees acknowledged the heritage of the POWER name in the Edmonton radio industry; (iii) Harvard assumed that listeners from the 1990s and 2000s would likely remember the POWER 92 station and (iv) Harvard had “liked”, “tweeted” or “re-posted” posts by the listening public that drew a connection between POWER 92 and POWER 107.

For the balance of convenience branch of the test, the Court acknowledged that Corus had permitted its registration for the POWER 92 mark to lapse, and that it had not used the mark since 2004. The Court also recognized that Harvard’s costs to comply with the injunction would be significant. However, the Court held that balance of convenience weighed in favour of granting the injunction. In this regard, the Court noted evidence that Harvard did have some intention of relying upon the residual goodwill in the POWER 92 name. This evidence included acknowledgements that Harvard:

  • anticipated that listeners from the 90s and 2000s would remember POWER 92;
  • designed the POWER 107 logo fully aware of the appearance of the POWER 92 Logo;
  • investigated the trademark registry and weighed the risks associated with using the POWER name and the POWER 107 logo;
  • admitted that its promotions of the POWER 107 station invited listeners to recall the POWER 92 station; and
  • had drawn connections between POWER 92 and POWER 107 by its promotions, advertising and on-air comments, and by “liking” “re-tweeting” and “re-posting” the connections drawn by the listening public.

Accordingly, the Court granted the injunction.

Key Takeaways

This case is a helpful reminder that with appropriate evidence of irreparable harm, Canadian courts are willing to grant interlocutory injunctive relief. Indeed, over the past few years, there has been a resurgence of interlocutory injunctions being granted in non-counterfeit IP proceedings, in particular in situations where the defendant engaged in the impugned activities with prior knowledge of the plaintiff’s rights (For example see: Sleep Country Canada Inc v Sears Canada Inc, 2017 FC 148; Arysta Lifescience North America, LLC v. Agracity Crop & Nutrition Ltd., 2019 FC 530; HTS Engineering Ltd. v. Marwah, 2019 ONSC 6351).

In addition, the case also highlights that protectable residual goodwill may continue to exist for long after a trademark owner has discontinued use of the mark. Therefore, care must be exercised when adopting a mark that is identical or similar to a mark that has been previously used by a competitor, even in situations where the mark has not been in use for many years.

The author would like to thank Laura Rowe for her contribution to this article.

 

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