Trademark owners should be encouraged by the Ontario Court
of Appeal's decision to enforce an agreement to prevent grey
marketing (or parallel importing) in Mars Canada Inc. v.
Bemco Cash & Carry Inc., 2018 ONCA 239.
Mars Canada Inc. owns numerous well-known brands including
MARS, M&M's, MILKY WAY and SNICKERS. In 2006, Mars
discovered that Bemco Cash & Carry Inc. was undercutting
Mars' Canadian business by purchasing Mars products in the
United States and reselling them into Canada. Mars sued and the
action was settled with Bemco agreeing, on behalf of itself and
its related companies, not to import Mars products into Canada
without Mars' approval or a court order. Mars subsequently
discovered that Bemco was using a different company to continue
its grey market business. Mars sued to enforce the settlement
Although the court specifically recognized that, "The law is
unsettled as to whether a Canadian trademark holder can prevent
this [grey marketing] activity," it nevertheless found that the
settlement agreement was enforceable and enjoined Bemco from
continuing its grey marketing activities.
The motions judge awarded costs on a substantial indemnity
basis because Bemco had brazenly breached the settlement
agreement, contrived to avoid the settlement, raised trivial
grounds of argument and made the litigation lengthier and more
expensive than it ought to have been.
The Mars decision is the most recent setback for
grey marketers in Canada. In 2013, the Federal Court of Appeal,
in Beyond the Rack Enterprises Inc. v. Michael Kors,
2013 FCA 107, found that
a defendant in a grey marketing action bears the onus of
establishing that the exhaustion defence applies. Given that
grey market products routinely travel in the same channels as
counterfeit goods, this was a significant win for trademark
Mars is also important because it further evidences
Canadian courts' willingness to:
- decide trademark disputes in a summary manner;
- reduce costs by determining damages on a reference once
liability has been established and the offending behaviour
- sanction unacceptable behaviour with significant costs
Canadian trademark owners have not always been successful in
preventing parallel importing and although it remains a "grey"
area, there is recourse.
|Mark Edward Davis
Norton Rose Fulbright Canada LLP
Suite 3800, Royal Bank Plaza, South Tower, 200 Bay Street,
P.O. Box 84
Toronto Ontario M5J 2Z4
Partner, Trade-mark Agent
* Certified Specialist in Intellectual Property
Norton Rose Fulbright Canada LLP / S.E.N.C.R.L., s.r.l.
About the author: Mark Davis is a litigator with
significant experience in trademark and patent disputes, as
well as in anti-counterfeiting, trade secret and breach of
confidence, copyright and industrial design disputes. He has
successfully argued numerous precedent-setting intellectual
property cases at trial and on appeal. Mark is Certified as a
Specialist in Intellectual Property
(Patents/Trademark/Copyright) by the Law Society of Ontario and
is consistently recognized by clients and peers for his
litigation skills. Mark is a prolific writer, a popular
speaker, and has taken active leadership roles in many
important professional associations for intellectual property
law in Canada and the United States.