Canada: Court enforces agreement to stop grey marketing

Managing IP is part of Legal Benchmarking Limited, 1-2 Paris Gardens, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

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 SHARED ros bottom lb

More from across our site

Leaders at US law firms explain what attorneys can learn from AI cases involving Meta and Anthropic, and why the outcomes could guide litigation strategies
Attorneys reveal the trademark and copyright trends they’ve noticed within the first half of 2025
Senior leaders at TE Connectivity and Clarivate explain how they see the future of innovation
A new action filed by Nokia against Asus and a landmark ruling on counterfeits by South Africa’s Supreme Court were also among the top talking points
Counsel explain how they’re navigating patent prosecution matters and highlight key takeaways from Federal Circuit cases
A partner who joined Fenwick alongside two others explains what drew her to the firm and her hopes for growth in Boston
The England and Wales High Court has granted Kirkland & Ellis client Samsung interim declaratory relief in its ongoing FRAND dispute with ZTE
A UDRP decision that found in favour of a small business in a domain name dispute could encourage more businesses to take a stand in ‘David v Goliath’ cases
In Iconix v Dream Pairs, the Supreme Court said the Court of Appeal was wrong to interfere with an earlier ruling, prompting questions about the appeal court’s remit
Chris Moore at HGF reflects on the ‘spirit of collegiality’ that led to an important ruling in G1/24, a case concerning how European patent claims should be interpreted
Gift this article