Interlocutory Injunctions, Anton Piller Orders, Mareva Injunctions, and Norwich Orders: Counterfeit Goods

A. Interlocutory Injunctions

Irrespective of the nature of the injunctive relief being sought, the starting point is the test for the granting of an interlocutory injunction before trial. Certain types of injunctions are for the preservation of evidence, such as the Mareva Injunction, which is sought for the purpose of preventing goods or assets from being moved out of the jurisdiction where they are the subject of the action or the only assets available for the recovery of damages (Aetna Financial Services Ltd. v. Feigelman, [1985] S.C.J. No. 1; and Chitel v. Rothbart, [1982] O.J. No. 3197 (Ont. H.C.J.) ("Chitel").

A plaintiff may also apply for an interlocutory injunction against a defendant to prevent the selling off or disposing of the infringing goods before the disposition of the trial.

A trilogy of cases, consisting of one Supreme Court of Canada case and two Federal Court of Appeal cases, established the seminal three-part test for obtaining an interlocutory injunction (RJR-Macdonald Inc. v. Canada (A.G.), [1994] S.C.J. No. 17 ("RJR-Macdonald"); Turbo Resources Ltd. v. Petro Canada Inc., [1989] F.C.J. No. 14 (F.C.A.); and Nature Co. v. Sci-Tech Educational Inc., [1992] F.C.J. No. 266 (F.C.A.)):

1. the plaintiff must demonstrate a serious question to be tried;
2. the plaintiff must establish that damages will not be an adequate remedy and that it will suffer irreparable harm if the relief is not granted; and
3. the court must assess the balance of convenience, and find that it favours the plaintiff.

Most injunctions are either granted or refused on the second element of the test. Irreparable harm may include loss of distinctiveness or permanent loss of market share. However, such harm must be real and not speculative (Centre Ice Ltd. v. National Hockey League, [1994] F.C.J. No. 68 (F.C.A.)). Although this requirement for establishing concrete evidence of irreparable harm has arguably been relaxed by a few recent Federal Court decisions that have accepted that potential loss of goodwill qualifies as irreparable harm that cannot be quantified and issued interlocutory injunctions in trademark infringement cases (Reckitt Benckiser LLC v. Jamieson Laboratories Ltd., [2015] F.C.J. No. 996 (F.C.), [2015] F.C.J. No. 587 (F.C.A.), var'd on other grounds; and Sleep Country Canada Inc. v. Sears Canada Inc., [2017] F.C.J. No. 180 (F.C.A.)).

The quality of evidence needed to satisfy the second element of the test for an injunction was considered by Justice Pelletier in Newbould v. Canada (Attorney General), [2017] F.C.J. No. 515(C.A.), wherein he expressly allowed for the possibility of proof of damage by inference, rather than by clear and compelling evidence, depending on the circumstances:

"In my view, the presence of two lines of cases such as these shows that the quality of the evidence –"clear and compelling" or something less – is a function of the nature of the irreparable harm being alleged. Where the harm apprehended is financial, clear and compelling evidence is required because the nature of the harm allows it to be proven by concrete evidence …. In the case of harm to social interests such as reputation or dignity…the occurrence of irreparable harm can be satisfied by inference from the whole of the surrounding circumstances."

This is in keeping with a recent decision from the Federal Court which acknowledged that the burden can be satisfied, in some instances, by inference from the whole of the surrounding circumstances (Immigration Consultants of Canada Regulatory Council v. CICC The College of Immigration and Citizenship Consultants Corp., [2020] F.C.J. No. 1267(F.C.)).

An application for an interlocutory injunction is made by filing and serving a notice of motion and supporting affidavits, attesting to the urgency and harm, before the proposed date for hearing the motion. The defendant is entitled to file evidence in response and both parties are entitled to cross-examine each other's affiants. In contentious matters, where both parties file affidavits and cross-examine each other's affiants, the application is normally heard within a few months after the filing of the applicant's motion and can be expedited where circumstances warrant.

The Supreme Court of Canada has ruled that an interlocutory injunction can also be granted against a third party in Google v. Equustek Solutions Inc., [2017] S.C.J. No. 34, holding that: "Injunctive relief can be ordered against someone who is not a party to the underlying lawsuit. When non‑parties are so involved in the wrongful acts of others that they facilitate the harm, even if they themselves are not guilty of wrongdoing, they can be subject to interlocutory injunctions.' In the case at hand, Equustek was a small technology company in British Columbia that was being infringed through Internet sales by a defendant that was impossible to stop due to sales of the infringing product reappearing on Google. The injunction in the case was held to flow from the necessity of Google's assistance to prevent the facilitation of the defendant's ability to defy court orders and do irreparable harm to Equustek. Without the injunctive relief, it was clear that Google would continue to facilitate that ongoing harm. Despite this wide reaching and unprecedented Supreme Court of Canada decision, it should be noted that a California Court ruled that the decision could not be enforced in its jurisdiction subsequently.

The courts have continued to adapt interlocutory injunctions to new IP infringements arising from the Internet. In Teksavvy Solutions Inc. v. Bell Media Inc., [2021] F.C.J. No. 486(C.A), the Federal Court of Appeal unanimously upheld site-blocking orders against Internet Service Providers (ISPs) requiring them to block their customers from accessing infringing content streamed through illicit websites at goldtv.biz and goldtv.ca, to protect three major Canadian broadcasters claiming copyright infringement arising from the streamed content. Of note, the Federal Court of appeal rejected the arguments that it lacked jurisdiction to grant the remedies or that these were not contemplated by the Copyright Act, R.S.C. 1985, c. C-42.

Recently, the Federal Court expanded the precedent set in Teksavvy Solutions Inc. v. Bell Media Inc., [2021] F.C.J. No. 486(C.A). In Rogers Media Inc v John Doe 1, 2022 FC 775, the plaintiff media companies sought an interlocutory injunction requiring third-party ISPs to comply with a dynamic site blocking order during the 2021-2022 National Hockey League (NHL) season, Dynamic site blocking requires the ISPs to block IP addresses in live time as streamers move the IP address hosting the infringing content. The injunction was granted and limited to the 2021-2022 NHL season; however, similar injunctions may be sought in the future.

B. Anton Piller Orders

Counterfeiting is illegal, making it more likely that the defendants will act to hide their activities and destroy evidence if they are alerted to civil or criminal enforcement plans. Typically, these defendants are difficult to identify and/or locate, often possess little in the way of documents, and have few realizable assets against which a judgment for damages could be enforced. Such counterfeiters also tend to sell their goods through fixed location retailers, fixed or transient markets, or through street vendors with no fixed place of business.

With this in mind, ex parte Anton Piller Orders and John Doe Orders (against unknown persons) are issued by the Courts to empower the plaintiff (and other specified persons including an independent supervising solicitor) to attend and demand access to the defendants' business premises, without notice, and to search for and take possession of the infringing merchandise and any related documents, not subject to privilege, from known or previously unknown defendants, or both. These types of orders are powerful weapons against counterfeiters. Failure to comply with the terms of an Anton Piller Order risks exposure to a finding of contempt. The Federal Court has had a practice of granting such orders and is a favourable venue for issuance, although their use is in decline. It should be noted that the lynchpin of seeking an Anton Piller Order is the assertion that there are reasonable grounds to believe that evidence will be destroyed if the defendant is given advance notice of the proposed search and seizure. This is the basis upon which the motion for such an Order is made ex parte.

The following three conditions need to be satisfied before an Anton Piller Order will be granted in Canada (Anton Piller KG. v. Manufacturing Processes Ltd. et al, [1976] 1 All ER 779; Nintendo of America Inc. v. Coinex Video Games Inc., [1982] F.C.J. No. 197 (F.C.A.) ("Nintendo of America"); and Celanese Canada Inc. v. Murray Demolition Corp., [2006] 2 S.C.R. 189):

1. there is an extremely strong prima facie case of infringement;
2. the damage, potential or actual, to the plaintiff must be very serious; and,
3. there must be clear evidence that the defendants have in their possession incriminating documents or things and that there is a real possibility that they may destroy such material before any application brought on notice could be made.

The first requirement is more stringent than establishing a "serious issue to be tried", which is one of the necessary elements for obtaining an interlocutory injunction. In order to meet this higher test, the plaintiff must show that there has been a clear or wilful infringement of the plaintiff's rights. Demonstrating a strong prima facie case for infringement can include, by way of example, admission by the defendant acknowledging their actions infringed the plaintiff’s rights (Nintendo of America Inc v Coinex Video Games Inc., [1982] FCJ No 197 (FCA)).

If the Anton Piller Order includes "John Doe" defendants, it is necessary to show evidence of widespread sales of counterfeit goods, which is usually obtained through purchases from various local markets and street vendors.

An Anton Piller Order application may also be quia timet, that is, initiated before the infringing activity has taken place. For such an application, the evidence should establish past infringing activities and reasonable grounds for believing that similar counterfeiting will occur in the near future.

In order to meet the test for issuance of an Anton Piller Order, the plaintiff must establish that there is a high probability that essential evidence may be destroyed. The damage claimed may include potential flooding of the Canadian marketplace with counterfeit or infringing goods, or goods of inferior quality, or impairment of the plaintiff's case if the subject-matter of the action disappeared (Nintendo of America; Culinar Foods Inc. v. Mario's Food Products Ltee, [1986] A.C.F. No 759 (F.C.); and Aldrich v. Struk, [1985] B.C.J. No. 2057(B.C.S.A.).

Finally, the third requirement, which is most important, has two essential aspects. First, there must be clear evidence the defendants have infringing or counterfeit goods, incriminating documents or the like in their possession. Second, there must be a real possibility that these documents or materials will be destroyed or removed from the jurisdiction of the Court if the defendants receive notice that the proceedings have been commenced against them. In cases of blatant infringement, pirating or counterfeiting, this third requirement can typically be met where the material can be easily disposed of and probable destruction can be inferred from the defendants' apparent dishonest conduct (CCS Corp. v. Secure Energy Services Inc., [2009] A.J. No. 663 (Alta. Q.B.); and Microsoft Corp. v. Cerelli, [2007] F.C.J. No. 1783 (F.C.)); British Columbia (Attorney General) v. Malik, [2011] 1 S.C.R. 657(S.C.C.))

A Federal Court of Appeal decision in Bell Canada v. Lackman, [2018] F.C.J. No. 176, is a reminder that Anton Piller Orders are draconian orders that must not be abused. The review of the service of the Anton Piller Order had not gone well for the plaintiff broadcasters, with the result that the Anton Piller Order was vacated and the goods were ordered returned to the alleged infringers. The case was immediately appealed and a stay pending the appeal to the Federal Court of Appeal was granted in these exceptional circumstances where there were concerns evidence could be destroyed otherwise. On appeal, the Anton Piller Order was restored and the Court of Appeal granted an interlocutory injunction until trial.

C. Mareva Injunctions

A Mareva Injunction is an order sought to "freeze" assets to prevent them from being removed from the jurisdiction, hidden or destroyed. It is of the same nature as part of the Anton Piller Order, which also grants this form of relief, but is more commonly used in fraud cases, where there is no other evidence that needs to be seized such as counterfeit goods. In order to obtain a Mareva Injunction, the following test must be met, which includes as its third element the three part test for issuance of an interlocutory injunction:

1. The plaintiff must establish a strong prima facie case for potential success at trial;
2. The plaintiff must meet the following five guidelines set out in Third Chandris Shipping Corporation v. Unimarine S.A., [1979] 1 Q.B. 645, as re-articulated and modified in Chitel, namely (a) full and frank disclosure, (b) particulars of the claim, (c) assets within the jurisdiction, (d) risk of removal or dissipation of assets in order to frustrate judgment and (e) an undertaking as to damages; and
3. The plaintiff must satisfy the regular tripartite test for an interlocutory injunction described in RJR-Macdonald, namely (a) the presence of a serious question to be tried, (a) irreparable harm should the injunction not be granted and (c) that the balance of convenience favours the moving party.

The situations in which a Mareva injunction may be sought vary widely. However, typically the plaintiff is seeking to prevent dissipation or transfer of assets from the country in which the order is sought. By way of example, Novopharm sought a Mareva injunction to prevent Eli Lilly, a Canadian entity, from transferring assets to its U.S. parent. Novopharm was concerned that its Section 8 claim under the PMNOC Regulations may be rendered nugatory unless the requested relief was granted. However, Novopharm was denied relief sought, on the basis that it failed to provide an undertaking with respect to damages and did not establish that Lilly could not satisfy a judgment. Furthermore, Novopharm failed to show real risk that removal of assets from Canada would ensue in the absence of an injunction (Eli Lilly Canada Inc. v. Novopharm Ltd., [2010] F.C.J. No. 284 (F.C.)).

A Mareva injunction may also be granted where the Court is presented with evidence that there is a significant risk of the defendant's assets being dissipated based on a strong prima facie case of fraud, which can be shown based on communications with the defendant and other documentary evidence (see 1805753 Ontario Inc. v. Feldman, [2020] O.J. No. 4171(S.C.J) ).

The plaintiff may rely on evidence from confidential sources, such as informants, where that evidence can be corroborated by other witnesses (Warner Bros Entertainment Inc. v. White (Beast IPTV),[2021] F.C.J. No. 38 (F.C.)).

A Mareva injunction may also be effective in dealing with digital assets as, recently a Ontario Superior Court granted a Mareva injunction on an interim basis, to freeze cryptocurrency wallets (Li et al v Barber et al, 2022 ONSC 1176).

D. Norwich Orders

The use of Norwich Orders is an exceptional recourse, sought to obtain discovery from a third party, most commonly to assist a plaintiff in identifying the correct defendant, or obtaining evidence not available from the defendant.

The test for the issuance of a Norwich Order is somewhat different than for other injunctive remedies, and requires the following:

• the applicant must demonstrate a valid, bona fide or reasonable claim;
• the applicant must establish that the third party from whom information is sought is somehow involved in the acts complained of, but may be innocently involved;
• the third party is the only practicable source of the information, but need not be the only source;
• the third party should be reasonably compensated for any expenses arising from compliance with the order; and
• the interests of justice favour the granting of disclosure from the third party. (Isofoton S.A. v. Toronto Dominion Bank (c.o.b. TD Canada Trust), [2007] O.J. No. 1701 (Ont. C.J.) ("Isofoton S.A.").

The ability to obtain a Norwich Order is predicated on the potential culpability of the person against whom the order is made, in the sense that the person was somehow involved, innocently or otherwise, in the conduct complained of. The case law has described the responsibility as follows:

"A person who gets mixed up in the tortious acts of others so as to facilitate their wrong-doing...may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers."

In Isofoton S.A., the plaintiff sought a Norwich Order to compel production of bank records for various bank accounts of A.E.S., which is a defendant company that had defrauded Isofoton S.A. of $3 million. The Court held that any company acting fraudulently cannot reasonably expect to be entitled to privacy protection normally afforded to bank records.

The Ontario Court of Appeal added the requirement of "necessity" to the test, raising the bar for obtaining a Norwich Order (GEA Group AG v. Ventra Group Co., [2009] O.J. No. 3457 (Ont. C.A.)).

A Norwich Order has also been granted to compel third party ISPs to disclose names and addresses of their subscribers (corresponding to certain IP addresses) alleged to have downloaded the plaintiffs movies, on the basis that these defendants should not be allowed to hide behind the anonymity of the internet and continue to violate copyright (Voltage Pictures LLC v. Doe, [2011] F.C.J. No. 1260 (F.C.), affirmed [2018] S.C.J. No. 38).

Norwich Orders impose a high evidentiary burden on the plaintiff who must demonstrate evidence of substantial wrongdoing in order to be successful.

In Coty inc. c. Costco Wholesale Canada Ltd., [2020] J.Q. No. 3913(S.C.), the plaintiff manufacturer of brand name perfumes sought to require the retailer Costco to reveal the identity of its distributors. Costco was selling grey market versions of Coty's products for 50% of the manufacturer's suggested retail price. The plaintiff's evidence was held to only support a mere hypothesis that its exclusive distributors were breaching their contractual obligations in selling to Costco. The Court held that Costco's expectation of privacy takes precedence over the disclosure of Coty's supplier in the circumstances of the case.

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