Federal Court grants Toys "R" Us judgment in depreciation of goodwill claim against "Herbs R Us"

11 June 2020

Toys "R" Us (Canada) Ltd. v. Herbs "R" Us Wellness Society, 2020 FC 682

On June 11, 2020, the Federal Court granted well-known Canadian retailer Toys R Us judgment against the operator of a Vancouver-based retail marijuana "dispensary" operating as "Herbs R Us", a rare example of a successful claim for depreciation of good will.

Toys R Us brought enforcement proceedings against a business operating a "cannabis boutique" and "dispensary" under the trademark and trade name "Herbs R Us" in the Federal Court alleging "depreciation of goodwill" in its registered trademarks contrary to s. 22 of the Trademarks Act, among other claims.

The Court first found that the strong resemblance between the HERBS R US logo design and Toys R Us' registered design mark were "so similar that a link, connection or mental association" between to the two marks was "all but inevitable and must be inferred to have been intended" notwithstanding any differences. Second, the Court found that there was significant goodwill in the TOYS R US trademarks based on evidence of significant and extensive use of those trademarks in Canada for many years. Third, the Court found that the requisite likelihood of a linkage or mental association between the parties' trademarks was established given the obvious similarities between the marks and evidence before the Court of a news article which drew an immediate connection between the Herbs R Us trademark and Toys R Us. Finally, the Court appeared to have no difficulty finding that there was a likelihood that the goodwill in Toys R Us' registered trademarks would be damaged or depreciated.

In light of these findings, the Court awarded a permanent injunction against any further use of "Herbs R Us", and awarded Toys R Us damages and costs totalling $30,000.

Kelly Gill and James Green of Gowling WLG acted for Toys R Us.

Read our detailed case commentary here.

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