Written By Anthony L. Friend, Q.C., and Michael P. Theroux

Intellectual property (“IP”) rights usually give a party a monopoly to exclusive use of the rights for a limited time. If a third party breaches those rights, a trial several years later to recover damages can be an inadequate remedy, and it may difficult or impossible to calculate those damages. IP owners can move immediately to stop the third party from infringing their rights to protect the value of the IP.

Our courts offer a variety of injunctive remedies that can assist the holders of IP rights in such circumstances.

Interim or Interlocutory Injunction Preventing  Infringement of Intellectual
Property

A common remedy sought for breach of IP rights is a prohibitive injunction, a court order prohibiting a third party from continuing to use the IP of the plaintiff . An interlocutory as opposed to a final injunction is an order granted early in the litigation process, before the trial that will be the final resolution of the dispute.

Courts typically apply a three part test in deciding whether a party is entitled to an interlocutory injunction.

First, a preliminary assessment must be made of the merits of the court case that has been filed against those alleged to have infringed IP rights, to ensure that there is a “serious question to be tried”. The court must be satisfied that the plaintiff's claim is not frivolous and that there is at least a reasonable chance that the plaintiff will succeed at trial. The plaintiff's burden on this part of the test is relatively low, and in most cases a plaintiff will be able to show that there is a serious question to be tried.

Second, the plaintiff must show that it would suffer irreparable harm if the court refused to grant the injunction and the defendant was allowed to continue in its course of conduct. “Irreparable” in this context refers not to the size of the harm that would be suffered, but its nature. If the harm could not be quantified by payment of money, or if the harm is not readily calculated or estimated, this part of the test will usually be satisfied. In some IP cases, where a defendant appears to be clearly infringing the plaintiff 's rights, the court may conclude that the plaintiff would suffer irreparable harm absent a pre-trial injunction order. In some cases, however, the availability of damages often precludes such a finding.

The third part of the test involves, the court assessing which of the parties would suffer greater harm from the granting or refusal of the injunction pending trial. This part of the test is referred to as the “balance of convenience”. Here, the courts examine a variety of factors, including the harm likely to be suffered by both parties from the granting or refusal of the injunction, and the current status quo as at the time of the injunction. For example, if the status quo is that the defendant has been carrying on the activity complained of for a long period of time, and the plaintiff knew or should have known of the activity, but has not previously objected, the court will be reluctant to make an order preventing the defendant from continuing the conduct. On the other hand, if the defendant has only recently embarked on the conduct and has not expended significant resources, then this may well place the balance of convenience in favour of the plaintiff . It should also be noted that as a condition of granting injunction relief, the court will require the plaintiff to provide to the court an undertaking, reasonably supported by an ability to pay, to be responsible for any damages suffered by the defendant as a result of the injunction order, should the injunction order later be withdrawn by the court or shown not to have been justified.

Timing is significant in an injunction application. Since the plaintiff must show irreparable harm in order to obtain the injunction, the plaintiff must apply for an injunction quickly after learning of the defendant's conduct. If a plaintiff delays its applications for an injunction for many months after the defendant's conduct has commenced, the court may infer that the plaintiff will not suffer irreparable harm from the continued conduct of the defendant. IP holders concerned about infringement need to consider injunctive relief as soon as possible.

Permanent Injunction Preventing Infringement  of Intellectual Property

A permanent injunction is a remedy that can be granted after A Bennett Jones Publication www.bennettjones.ca A Bennett Jones Publication www.bennettjones.ca trial, once the court has heard all the evidence and concluded that the defendant has infringed the plaintiff 's IP rights. In IP cases, Canadian courts have usually been inclined to grant permanent injunctions to remedy infringement of IP rights. This is true even in cases where the plaintiff has suffered little or no actual loss. The courts' reasoning is that, because the plaintiff has proven that it is entitled to the monopoly represented by the IP rights, the defendant should be prevented from infringing those rights for as long as they continue to exist.

Preventing Infringing Conduct Before It Starts–  “Quiatimet” Injunctions

In contrast with interlocutory and permanent injunctions, quiatimet injunctions are designed to prevent harm that has not yet happened but is about to occur.

A plaintiff seeking a quiatimet injunction must first meet the three part test for an interlocutory injunction, described above. In addition, the plaintiff must show a strong probability that the feared conduct and resulting damage will occur.

Courts may grant quiatimet injunctions if it is apparent that the defendant is about to embark on a course of action that would infringe a plaintiff 's IP rights. For example, where a party has prepared marketing materials that would infringe a plaintiff 's trademark rights, but has not yet used the marketing materials, a quiatimet injunction may be granted.

The courts will particularly be inclined to grant quiatimet injunctions where there appears to be a clear breach of property rights, or where the potential harm that could flow should a court order not be granted is difficult or impossible to calculate and quantify at a later stage in the lawsuit.

Anton Pillar Injunctions: The Civil Search Warrant

Anton Pillar injunctions are unique as they are not aimed at preventing infringement of IP rights. Rather, these injunctions are designed to assist the plaintiff in gathering and preserving evidence in support of a claim that IP rights are being breached. The reason is that a defendant may be in a position to conceal, destroy or alter evidence that otherwise would have served to establish the plaintiff 's claim at trial if not prevented from doing so beforehand.

Anton Pillar injunctions authorize the plaintiff to seize documents or other property in the defendant's possession. The application is brought without prior notice to the defendant.

Because of the lack of notice and the strong impact on the rights of a defendant, courts are vigilant to ensure that plaintiff s meet a very stringent test. For an Anton Pillar injunction, there are three requirements to be met.

First, the plaintiff must demonstrate a very strong case on the merits.

Second, the damage to the plaintiff from the defendant's conduct must be very serious.

Third, the plaintiff must present convincing evidence that the defendant both has possession of relevant evidence and that there is a strong possibility that the defendant would hide or destroy the evidence if given notice of the application.

Mareva Injunctions: Preventing Dissipation of  Assets

A Mareva injunction is another form of application brought without notice to the defendant. It seeks to freeze the defendant's assets until trial. The purpose is to prevent an infringing party from disposing of its assets to thwart the owner from recovering damages following trial. As it prevents a defendant from using and accessing its assets, the applicant for such an injunction must make out a very strong case on the merits and show that there is a real risk that the defendant will attempt to move or disperse of assets outside the jurisdiction of a court.

Conclusion

Canadian courts have developed a broad range of injunctive remedies to add to the arsenal of IP owners whose rights are being infringed. In appropriate circumstances, courts can require defendants to cease infringing IP rights, order that incriminating evidence be preserved through the civil search warrant remedy and freeze the assets of the defendant who is disposing of assets to avoid judgment.