Arc’teryx v. Adidas: The Battle of TERREX
By Aviva Snitman
In the decision of Amer Sports Canada Inc. v. Adidas Canada Limited,[1] the Supreme Court of British Columbia granted Arc’teryx an interlocutory injunction, temporarily preventing Adidas from using the word “TERREX” in association with its retail stores until a decision is made at trial.
Arc’teryx is owned by Amer Sports Canada, which is a global group of sports and outdoor brands. Arc’teryx is a Canadian company that was founded in Vancouver in 1989 and is the owner of the registered trademark for ARC’TERYX, which grants the company exclusive use of the mark in association with various goods and services, including retail store services and online retailers across Canada.
In January 2023, Adidas Canada opened a new retail store at 2235 W. 4th Ave. in Kitsilano, Vancouver. The storefront banner includes the signature Adidas “performance bars” (pictured below), accompanied by the word “TERREX”. The name “Adidas” does not appear anywhere on the storefront banner. The store is located down the street from Arc’teryx’s Kitsilano flagship.
On February 13, 2023, Arc’teryx issued a Notice of Civil Claim against Adidas Canada in the Vancouver registry of the Supreme Court of British Columbia. Arc’teryx pleaded wrongful infringement by Adidas of the ARC’TERYX mark pursuant to s. 20 of the Trademarks Act (the “Act”).[2] Arc’teryx also claimed that Adidas’ use of the name “TERREX” in conjunction with the Adidas “performance bars” is a direct breach of s. 7(b) of the Act,[3] which prohibits direct public attention to goods, services or business in such a way as to cause confusion among consumers. Further, Arc’teryx alleged that Adidas breached s. 22 of the Act,[4] which prohibits the use of a trademark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attached to that trademark. Arc’teryx also pleaded that Adidas is liable for wrongful misappropriation of the goodwill and reputation of the Arc’teryx mark, in accordance with the common law tort of passing off. Finally, Arc’teryx alleged in its Notice of Civil Claim, that Adidas has wrongfully suggested an association between the two businesses, in contravention with s. 52(1) of the Competition Act.[5]
Arc’teryx applied for both interlocutory and permanent injunctions to prevent Adidas from using “TERREX” in any of its retail or online stores, including their store at 2235 W.
4th Ave. in Kitsilano. Arc’teryx also claimed damages against Adidas for wrongfully made profits, as well as exemplary and punitive damages and special costs.
Adidas filed its response to the application on April 13, 2023, stating that the application is bound to fail because Arc’teryx is “seeking to restrain legitimate competition”.[6]
On January 2, 2024, Arc’teryx was granted an interlocutory injunction, pending trial, restraining Adidas from using the name “TERREX” for its retail store, located at 2235 W. 4th Ave. in Kitsilano. In his analysis, Justice Kent applied the leading three-part test for interlocutory injunctions, referred to as the “RJR-MacDonald test”.[7] The applicant seeking an interlocutory injunction must establish three criteria:
1) that there is a serious issue to be tried;
2) the applicant will suffer irreparable harm, absent the injunction; and
3) the balance of convenience favors granting the injunction.
Justice Kent also referenced R v. C.B.C,[8] which states that in demonstrating that there is a serious issue to be tried, the applicant must prove that the application is neither frivolous nor vexatious.[9] However, in serious cases, the applicant must meet a higher threshold of demonstrating a strong prima facie case.[10] The higher threshold is triggered when the result of the interlocutory injunction would amount to a final determination of the action, the facts in issue are largely undisputed and there is a question of constitutional validity that presents itself as a simple question of law alone.[11] In such cases, the applicant must show that the case is of substantial merit and is very likely to succeed at trial.[12]
Justice Kent stated that Arc’teryx was required only to meet the minimum threshold of establishing that there was a serious issue to be tried, and it had. The court stated that “the similarity between the two [trademarks] and the potential for confusion is immediately obvious”.[13] Further, the court stated that Arc’teryx has shown that their company will suffer irreparable harm if the injunction is not granted, as use of the “TERREX” mark by Adidas will cause consumers to be diverted from the Arc’teryx store.[14] Furthermore, once the Arc’teryx brand loses its distinctiveness it would be impossible to regain.[15] Lastly, Justice Kent stated that the balance of convenience requirement was met and that it would be in the public interest to grant the interlocutory injunction.[16] Adidas had knowledge of the possible risks of infringing on Arc’teryx’s trademark and continued to act.
It is notable that Adidas has a trademark registration in Canada for “TERREX” in association with athletic footwear and clothing. On October 31, 2022, Adidas applied to register the mark “TERREX” in association with athletic accessories and “retail services for clothing, footwear and bags”. This application is still in the formalized stage.[17] In his decision, Justice Kent stated that the injunction would only cover the Adidas store located at 2235 W. Ave., and the injunction would expire should Adidas’ trademark application for “TERREX” proceed to registration in Canada.[18] Any further assessments with regards to damages, special costs and restricting the further use of the TERREX name will be addressed at trial.
[1] 2024 BCSC 3.
[2] RSC 1985, c. T-13, s. 20.
[3] Ibid at s. 7(b).
[4] Ibid at s. 22.
[5] RSC 1985, c. C-34, s. 52(1).
[6] Supra note 1, at para 26.
[7] RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 SCR 311.
[8] 2018 SCC 5.
[9] Ibid at para 12.
[10] Ibid at para 17.
[11] Supra note 7 at pp 401-404.
[12] Ibid.
[13] Supra note 1 at para 36.
[14] Supra note 1, at para 49.
[15] Ibid at para 50.
[16] Ibid at para 70.
[17] Ibid at para 64.
[18] Ibid at para 76.
