The Mountains Are Calling – Rare Interlocutory Injunction in Outdoor Apparel Trademark Dispute

Interlocutory injunctions – a court order to prevent a party from conducting certain actions until a final determination of a case – are difficult to obtain in Canadian trademark matters. Nevertheless, the recent decision of the Supreme Court of British Columbia (the “Court”) granted such an order. Canadian-based Arc’teryx obtained a rare interlocutory injunction against Adidas Canada from using its TERREX mark on a retail store in Vancouver (Amer Sports Canada Inc. v. Adidas Canada Limited, 2024 BCSC 3).

In January 2023, Adidas Canada opened a retail store in the Kitsilano neighbourhood of Vancouver under the name TERREX, just a few doors down from the Vancouver-based Arc’teryx store. Arc’teryx operates retail stores selling outdoor apparel and equipment, and claims that Adidas Canada wrongfully traded on the reputation and goodwill of the Arc’teryx brand and violated laws related to the protection of trademarks, passing off, and unfair competition in using the name TERREX on its retail stores.

Arc’teryx owns Canadian trademark registration TMA954353 for the mark ARC’TERYX. It is directed to International Class 35 which grants the exclusive right to use the ARC’TERYX mark in connection with retail store services and online retail store services in Canada.

Adidas Canada is a wholly owned subsidiary of Adidas AG. Adidas AG owns several marks in Canada, including ADIDAS, the well-known three-stripe design and the “Performance Bars.” Another wholly owned subsidiary of Adidas AG owns the mark TERREX. Certain lines of Adidas gear include the TERREX mark alone, or a combination of the Performance Bars and TERREX as pictured below:

The storefront signage on the Adidas retail store in Kitsilano included the combination of the Performance Bars and TERREX. Arc’teryx claims that the triangular Performance Bars symbol resembles a letter “A” and its positioning in front of the word TERREX results in signage resembling “A TERREX,” a format which creates “consumer confusion” between the TERREX store and the ARC’TERYX store just a few doors down the street. They say that even without the letter “A,” the single name TERREX on the store and its proximity to the ARC’TERYX store is enough to create “consumer confusion” between the two stores.

In February 2023, Arc’teryx issued its Notice of Civil Claim against Adidas Canada, noting several causes of action and seeking various forms of relief, including an interlocutory injunction. In March 2023, Arc’teryx filed its Notice of Application seeking an interlocutory injunction restraining Adidas Canada from displaying the TERREX name on its retail stores, including the Kitsilano location.

RJR-MacDonald Test

In assessing the RJR-MacDonald three-element test ([1994] 1 S.C.R. 311) in order to obtain an interlocutory injunction, the Court determined:

• When placed side by side, the similarity and the potential for confusion between the combination of the Performance Bars and TERREX mark, and the ARC’TERYX mark is immediately obvious. Arc’teryx’s claim is neither frivolous nor vexatious. There are serious issues to be tried.
• Once lost, distinctiveness is virtually impossible to regain, and the impact on loss of emotional brand equity would be extremely difficult to quantify. This type of intellectual property trespass is not capable of being fully remedied by an award of damages.
• While each of Adidas and Arc’teryx are entitled to use their marks on the actual clothing and equipment that they sell in their stores – this case is about the use of the mark on the storefront. The Court was not persuaded by Adidas Canada’s submission that it may be forced to close its store should an injunction be granted. The balance of convenience and particularly the public interest in protecting registered trademarks favour the granting of an interlocutory injunction in this case.

Conclusion

At several times in its decision, the Court referenced the “David and Goliath” nature of the parties. This appears to have been a factual consideration that informed the Court in making its assessment of the RJR-MacDonald test. While interlocutory injunctions are extraordinary remedies, the Court issued the requested injunction restraining Adidas Canada from using TERREX on the Kitsilano retail store. The Court cautioned that an interlocutory injunction is premised on the fact that the parties actually proceed to trial, and it is not meant as an excuse for the plaintiff to cease its pursuit of its lawsuit. Accordingly, in its order, the Court also required the parties to immediately secure a trial date.

The Intellectual Property Litigation Group at Aird & Berlis LLP defends clients against invalid claims made by others, and IP rights from infringers, counterfeiters and cybersquatters. Please contact the author or a member of the group if you have questions or require any assistance with improper use of trademarks.