Canada: Court enforces agreement to stop grey marketing
Managing IP is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Canada: Court enforces agreement to stop grey marketing

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 agreement.

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 owners.

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 enjoined; and

  • sanction unacceptable behaviour with significant costs awards.

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 84Toronto  Ontario  M5J 2Z4Canadawww.nortonrosefulbright.com

Partner, Trade-mark Agent

* Certified Specialist in Intellectual Property (Patents/Trademarks/Copyright)

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.



more from across site and ros bottom lb

More from across our site

We provide a rundown of Managing IP’s news and analysis from the week, and review what’s been happening elsewhere in IP
Tennessee has passed the ELVIS Act, a law that fights against AI models that mimic the voice and likeness of music artists
Rob Stien, chief communications and public policy officer at InterDigital, says the EU has forgotten innovators while trying to solve an issue that doesn’t exist
As Australia’s Qantm IP leans towards being acquired by a private equity company, sources discuss what it could mean for IP firms
Law firms that are conscious of their role in society are more likely to win work, according to a survey of over 23,000 in-house professionals
Nghiem Xuan Bac Pham, managing partner of Vision & Associates, discusses opportunities created by the US-China rift as well as profitability issues facing IP practices
Douglas Leite and two of his colleagues were intrigued by Bhering Advogados’s mission to grow its patent litigation practice
Each week Managing IP speaks to a different IP practitioner about their life and career
Counsel explain how pricing flexibility, patent agents and being business partners can help them maintain profitable patent prosecution practices
We provide a rundown of Managing IP’s news and analysis from the week, and review what’s been happening elsewhere in IP
Gift this article