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How to Use Court Injunctions in Intellectual Property Disputes
Standard Injunctions
The three most common types of injunctions granted in Canada are interlocutory injunctions, interim injunctions, and permanent injunctions. They differ in four main ways: (1) the length of time for which they are valid; (2) how they can be obtained; (3) when they can be obtained; and (4) the level of difficulty in obtaining them.
An interlocutory injunction is an injunction that is obtained after legal proceedings have been commenced but before trial. The party who wishes to obtain an interlocutory injunction (generally the plaintiff) must bring a motion to ask for this relief. Notice to the defendant must be given so they can present their arguments in court and both sides can have a proper hearing. If granted, an interlocutory injunction usually lasts until the trial judgment is rendered by the court.
To succeed on a motion for an interlocutory injunction, the plaintiff must satisfy the court that: (1) there is a serious question to be tried; (2) that it will suffer irreparable harm if the relief is not granted; and (3) that the balance of convenience weighs in its favour. This test will be discussed in further detail below. If the injunction is granted, the defendant must stop its infringing activities (or whatever else the plaintiff has asked the court to order an injunction for).
It is notoriously difficult to obtain an interlocutory injunction in intellectual property cases; however, it is not impossible. The difficulty typically stems from the second requirement, that of irreparable harm. In most intellectual property matters, any harm incurred by the plaintiff can be remedied following trial with a monetary award and therefore the harm of not granting an interlocutory injunction cannot be said to be irreparable. If a plaintiff does succeed in obtaining an interlocutory injunction but loses at trial, they may have to pay damages to the defendant for the losses suffered by the defendant as a result of the injunction.
An interim injunction is the shortest type of injunction ordered by the courts. Like interlocutory injunctions, an interim injunction is generally obtained after legal proceedings have been commenced but before trial. The party seeking the interim injunction must bring a motion to ask for this relief. Unlike interlocutory injunctions, interim injunctions are for situations that need to be urgently addressed to prevent immediate harm to the plaintiff. The injunction can be granted on an ex parte basis, meaning in the absence of the defendant, where the matter is so urgent that no notice is possible or where giving notice to the other party would defeat the purpose of the motion. It is typically granted for a very short period of time. Under federal law, an interim injunction on an ex parte motion is granted for a period of not more than 14 days. The plaintiff will also have to satisfy the three-part test for interlocutory injunctions detailed above.
Forms of relief commonly sought with an interim injunction are the Mareva injunction and the Anton Piller order.
A Mareva injunction is a freezing injunction that prevents the defendant from moving or liquidating their assets. It is used where there is a risk that, by the time the court issues a decision on the merits of the case, the defendant will liquidate the funds which the plaintiff would otherwise have been entitled to after judgment. A Mareva injunction is sought ex parte, because if the defendant were aware that the plaintiff was pursuing such an injunction they may attempt to expedite the liquidation. There are four elements the plaintiff needs to establish to obtain a Mareva injunction: (1) the presence of a strong prima facie case; (2) full and frank disclosure; (3) grounds for believing the assets will vanish; and (4) grounds for believing the defendant has assets that the injunction will secure.
An Anton Piller order is a seizure order that prevents the defendant from destroying evidence and is in effect a civil search warrant. It may be useful in cases of intellectual property infringement where there is a strong belief that the defendant has capacity to and will destroy evidence of infringement before discovery is completed. Like Mareva injunctions, Anton Piller orders are sought ex parte. To grant an Anton Piller order, the court needs to be satisfied that the following four factors are present: (1) the plaintiff has a strong prima facie case; (2) the defendant’s alleged misconduct would cause serious damage to the plaintiff; (3) the plaintiff convincingly shows the defendant possesses the evidence in question; and (4) the plaintiff credibly shows that the defendant may destroy the evidence prior to completion of discovery. There are several notable constraints on the execution of an Anton Piller order, including ensuring that the order is drawn specifically and narrowly, that the seizure is restricted to the terms of the order, that a detailed record of seized evidence is kept and that a neutral lawyer conducts the seizure.
A permanent injunction, unlike interim and interlocutory injunctions, is granted after trial. Most plaintiffs ask for a permanent injunction in their pleading to stop the defendant from carrying on its infringing activities. There is no need for a separate motion to obtain this relief and the onerous three-part test does not apply. Courts generally grant a permanent injunction to successful plaintiffs after a trial.
Standard for Granting an Interim or Interlocutory Injunction
Plaintiffs seeking interim or interlocutory injunctions must satisfy the three-part test referred to above, which was first set out in the Supreme Court of Canada decision RJR-MacDonald Inc v Canada.
How stringently this test is applied depends on the type of relief that is sought. An interlocutory injunction can offer relief that is either prohibitive, mandatory or quia timet. Prohibitive injunctions ban the defendant from performing certain actions that are causing active and immediate harm to the plaintiff that cannot be compensated for using trial remedies. Because they do not force the defendant into action, there is a lower bar to obtain a prohibitive injunction than a mandatory injunction, which forces the defendant to perform an action that they would not otherwise perform. Finally, a quia timet injunction attempts to prevent an action that is threatened but has not yet violated the plaintiff’s rights. Quia timet literally means “because he fears”. Because of its speculative nature, plaintiffs who seek quia timet injunctions must prove that whenever the injurious circumstances arise, it would be impossible to protect the plaintiff’s interests if the injunction request is denied at present.
The first criterion of the test for granting an interlocutory injunction is whether there is a serious issue to be tried. This is generally easy to establish in intellectual property disputes. In the RJR-MacDonald Case, the Court held that "a prolonged examination of the merits [of the case] is neither necessary nor desirable."
The second criterion is whether the moving party would suffer irreparable harm if the injunction were not granted before the trial's completion (i.e., harm that cannot be compensated financially at the end of trial if the defendant is held liable). Evidence of irreparable harm must be clear and not based on speculation. This part of the test has historically been very difficult to prove in intellectual property cases. Recent decisions of the Federal Court found this criterion to have been satisfied where, in the absence of an injunction, the plaintiff’s trademark would lose distinctiveness, and where there is substantial doubt as to the defendant’s ability to pay a damages award after trial.
The third and final criterion is the balance of convenience, or which party will be more affected and suffer more harm if the injunction is granted pending the outcome of the trial. The effect on third parties may be considered at this stage of the test as well.
Although the balance of convenience is presumed to be in the favour of the defendant because the defendant is the one who has to alter their behavior if the injunction is granted, several notable requests for injunctions on intellectual property matters have been granted in favour of the plaintiff on this basis.
In Anne of Green Gables Licensing Authority v Avonlea Traditions, the judge ruled that the balance of convenience was in favour of the plaintiffs, because failing to issue an injunction against using the plaintiff’s intellectual property without a license would likely have resulted in other licensees also failing to pay fees to the plaintiff.
In Google Inc v Equiistek Solutions Inc, the Supreme Court of Canada also found the balance of convenience to be in favour of Equiistek (the original plaintiff), basing their reasoning on the quantum of damage to the plaintiff as compared to the relative ease of removing something from their search engine for Google. Other circumstances in which injunctions were granted in the plaintiff’s favour include where a farmer was order to dismantle a tower that was disrupting flights from the adjoining airport, and where a city was ordered to issue permits.
Importantly, the three-part RJR-MacDonald test does not apply to permanent injunctions.
Furthermore, the court may take into account a number of additional factors in considering whether to grant an injunction. These include delay, the conduct of the Applicant, contractual provisions, and policy considerations among others. If a plaintiff delays in seeking an injunction, this may lend support to the argument that the plaintiff will not, in fact, suffer the irreparable harm required by the three-part test. The applicant may also be denied an injunction where the applicant has not come to court with clean hands, meaning the applicant fails to act in good faith, has engaged in fraudulent conduct, or similar. Contractual provisions may also be relevant, where they provide that the plaintiff is entitled to an injunction upon breach. These provisions do not bind the court, which has full discretion to decide in favor of either party, but may be used to support the application for an injunction. Finally, policy considerations may motivate a court’s decision. For example, in Hanna v Sun West School Division No. 207, the court considered that the school board represented the public interest and should not be prevented from acting unless there is a strong prima facie case on the merits of the claim.
When to Seek a Court Injunction in an Intellectual Property Dispute
As evident from the above, obtaining an interim or interlocutory injunction in an intellectual property dispute can be difficult. As such, make sure to consider these questions before pursuing an interim or interlocutory injunction:
- Is the damage caused by the infringer's actions immediate and irreparable?
- Do you have evidence that you can provide to the court proving the immediacy and significance of the damages that you or your business have suffered or will suffer?
- What third parties are affected if an injunction is granted? Will they be affected positively or negatively?
- Is your opponent's infringing behavior ongoing or a one-time incident that has already occurred?
- Is the motion being filed in a timely manner (i.e., immediately after discovering the opponent's infringing activities)?
- Are there any arguments that your opponent is likely to present (more relevant for longer-term interlocutory injunctions) that may negatively impact your case?
If you have any further questions or would like our help with obtaining an injunction, please contact us for a complimentary and confidential initial telephone appointment with a member of our team.
