In Knowmadics v. Cinnamon, 2018 ONSC 4451 (CanLII) the plaintiff company sought an urgent interim, interim injunction regarding an app sold by the defendants pending the hearing of a motion for an interlocutory injunction.
The plaintiff sold specialized computer software. The individual defendant was employed by the plaintiff and signed an employment agreement, including a confidentiality and non-competition clause. The defendant also had a business, the corporate co-defendant, which did subcontracting work for the plaintiff after the defendant resigned from employment with the plaintiff. The corporate defendant signed a non-disclosure agreement with the plaintiff.
The plaintiff alleged that the defendants were selling certain software that directly competed with the plaintiff’s software and infringed the plaintiff’s copyrights. The plaintiffs commenced an action against the defendants. After commencing the action, the plaintiff alleged that they learned that the defendants were also selling a certain app over which the plaintiffs asserted ownership. The plaintiff brought to urgent motion for an interim, interim injunction to stop the defendants from selling the app. The judge considered the test for granting an injunction:
- Serious Issue to be Tried: the judge agreed that there were serious issues to be tried regarding the ownership of the app and whether the use of the app was a violation of the corporate defendant’s non-disclosure agreement.
- Irreparable harm: the judge stated that the plaintiff had not provided any specific examples of its allegations of lost sales or communications from customers or potential customers expressing confusion between the plaintiff’s and defendants’ products. However, the judge accepted that the plaintiff had brought its motion within four days of learning that the defendants were using the app, such that it was not possible for the plaintiff to collect specific examples. The judge found that the lack of specific examples of a lost sale or a confused existing or potential customer was not fatal to the plaintiff’s argument on the issue of irreparable harm. The judge accepted that the plaintiff would suffer irreparable harm if the relief requested was not granted on an interim basis.
- Balance of Convenience: the judge accepted that the plaintiff had been in business for a number of years, had an established customer base, and that there was a potential for erosion of that base if the defendants were permitted to continue to use the app pending the motion for an interlocutory injunction being heard. There was no evidence of potential erosion of the defendants’ customer base pending the motion for an interlocutory injunction being heard.
The judge granted the interim, interim injunction restraining the defendants from reproducing, selling, or offering for sale or installing the app, and requiring its removal from the corporate defendant’s website pending the hearing of the interlocutory injunction motion.
The lawyers at Gilbertson Davis LLP have experience with seeking and responding to injunctions in respect of non-competition, non-solicitation and non-disclosure agreements, as well as intellectual property litigation and business litigation. Please contact us for an initial consultation.
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