Mobile wars heat up: Telus denied injunction against Mobilicity

It’s deja vu all over again in the mobile telephony industry. On Wednesday, December 19, 2012, The British Columbia Supreme Court denied an application by Telus for an injunction restraining Mobilicity from running television commercials that compare its pricing plans with those of unnamed competitors.

Grauer J. held that Telus’ case, at best, “limps across the threshold” of being a “fair case to be tried”, but was not a strong case. The balance of convenience favoured not granting the injunction. Grauer J. pointed out that where the case against the advertisement is weak, the balance tips towards free speech and non-intervention in a competitive marketplace:

[40]         Although public policy, as expressed in the Competition Act, favours restraining false or misleading advertising, the situation changes where, like here (but unlike the 2009 Telus case), the plaintiff does not have a strong case.  In these circumstances, another public interest comes to the fore, that of free commercial speech: see, for instance, Telus Communications Co. v. Bell Mobility Inc., 2007 BCSC 518 at paras. 26-27, citing Bell Mobility Inc. v. Telus Communications Co., 2006 BCSC 1954, aff’d 2006 BCCA 578.

[41]         Finally, it follows further from my finding that Telus lacks a strong case that the court should be reluctant to intervene in the competitive marketplace: see Bell Mobility Inc. at para. 4, quoting from Purolator Courier v. United Parcel Service Canada (1995), 60 C.P.R. (3d) 473 (Ont. S.C. Gen. Div.).  This is particularly so where, as here, the relief sought essentially determines the claim.  By the time Telus’s claim is tried, the Christmas buying season will be long past.  Even if Mobilicity is ultimately successful, it will have missed the opportunity the 2012 season presents to use its existing and well-established marketing strategy to make competitive gains.

Mobilicity’s reaction was gleeful. “Today is a big day for wireless consumers and continued competition in Canada,” said its President and Chief Operating Officer Stewart Lyons. “We are happy with the Court’s ruling and that Canadian wireless consumers are still free to engage in a dialogue with each other about the many challenges facing Canadian wireless consumers – that’s what our TV commercial is all about.”

Lyons also dismissed Telus’ claim as “a ridiculous bullying tactic and an unnecessary distraction during our busy holiday season”.

Telus’ application is but the latest attempt by a telecom company to restrain advertising by a competitor. The last major skirmishes were in 2009-2010.

In 2009, Rogers agreed to change parts of its “speeds you can count on” advertising campaign in response to a lawsuit by Bell. As a result, Bell was denied an injunction against Rogers. That same year, TELUS obtained an injunction from Grauer J. preventing Rogers from claiming to be “Canada’s most reliable network” as damages would be insufficient to compensate for the harm caused by the continued publication of the ads. The BC Court of Appeal maintained the injunction.

In May 2010, a New Brunswick court granted Bell Aliant an injunction to stop Rogers from claiming that its cable internet network offered the “fastest and most reliable speed”, even though Bell Aliant was claiming it had the “world’s fastest” network. The court suggested that someone who advertises having the fastest service should have to prove it.

Days later, however, in two separate decisions, judges in Ontario refused to grant Bell Canada injunctions against Rogers’ “fastest and most reliable speed” claim, and TV ads implying that Rogers internet and TV services were better than Bell’s. Bell had not shown irreparable harm caused by Rogers’ advertising. There was “no justification to interfere in the advertising war between these two large corporations”.

In August, a BC court granted Rogers an injunction to stop Bell from saying that its HSPA+ mobile network is the most reliable, but court refused to enjoin Bell from saying that it had larger HSPA+ coverage than Rogers, or from using other superlatives.

The Competition Bureau has also gotten in on the action. In 2010, it sued Rogers under the Competition Act’s civil marketing practices provisions for advertising that customers of its pseudo-new entrant brand, “Chatr”, experienced fewer dropped calls than Wind Mobile’s customers.

In 2011, Bell Canada agreed to pay a $10 million fine to settle the Bureau’s concerns that it was charging higher prices than it advertised for many of its services. Bell hid mandatory fees from consumers in fine-print disclaimers, the Bureau claimed. In settling, Bell did not admit liability.