IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

TELUS Communications Company v. Mobilicity,

 

2012 BCSC 1933

Date: 20121219

Docket: S128717

Registry: Vancouver

Between:

TELUS Communications Company

Plaintiff

And:

Data & Audio-Visual Enterprises Wireless Inc. doing business as Mobilicity

Defendant

Before: The Honourable Mr. Justice Grauer

Reasons for Judgment

Counsel for the Plaintiff/Applicant:

Robert S. Anderson, Q.C.

Nicholas T. Hooge

Counsel for Defendant/Respondent:

Craig P. Dennis

Salim M. Hirji

Place and Date of Hearing:

Vancouver, B.C.

December 14, 2012

Place and Date of Judgment:

Vancouver, B.C.

December 19, 2012


 

INTRODUCTION

[1]             As the Christmas buying season approaches, competition in the profitable field of cellular communications heats up.  Now, for the second time in four winters, Telus asks this Court to enjoin a competitor from proceeding with a winter advertising campaign on the basis that the advertising is false and misleading, and gives the competitor an unfair advantage.

[2]             Last time (Telus Communications Co. v. Rogers Communications Inc., 2009 BCSC 1610), the competitor was Rogers Communications, who, with Telus and Bell Mobility Inc., was one of the three major players in the wireless telecommunications industry in Canada.  My judgment issuing the injunction Telus requested, on terms, was upheld on appeal:  TELUS Communications Co. v. Rogers Communications Inc., 2009 BCCA 581.

[3]             This time, the competitor is an outsider, an upstart: Mobilicity, a provider of wireless services operated by the defendant Data & Audio-Visual Enterprises Wireless Inc.  Mobilicity is a new entrant in the market under a spectrum license granted by the Minister of Industry in 2009 pursuant to a new federal government policy decision to increase competition in the market.  It began its business operations in May of 2010 in the Toronto area, later expanding to Ottawa, Calgary, Edmonton and Vancouver.

[4]             For the reasons that follow, I find that in the circumstances that arise on this occasion, Telus has failed to satisfy the test for the granting of an interlocutory injunction.

BACKGROUND

[5]             When it entered a Canadian market long dominated by Bell, Telus and Rogers, Mobilicity employed a strategy of offering a service that would be seen as different.  To do so, it concentrated on offering plans that were not limited by the number of minutes a customer could talk on the phone, the number of text messages a customer could send, or the amount of data that the customer could access during a given period.  Of fundamental importance to its self-differentiating strategy, it did so with a business model that did not require customers to commit themselves to long-term service contracts.  Its advertising has highlighted these features since May of 2010, employing phrases such as "no contracts", “no bill surprises”, "no hidden fees", "unlimited talk & text”, “unlimited data" and “what you see is what you pay”.

[6]             Then, commencing November 21, 2012, Mobilicity launched a television commercial campaign that is scheduled to run until December 30, 2012.  Although Telus's application seeks to enjoin Mobilicity's print and Internet holiday advertising as well as television, it is the television commercial that is the focus of Telus's complaint.  It is, asserts Telus, the commencement of the television advertising campaign in late November, together with the particular juxtaposition of the representations contained in the television ad, that goaded Telus into bringing this application, notwithstanding that the marketing concepts and phrases have been employed by Mobilicity for some considerable time.

[7]             It is always difficult to describe a video presentation with words.  The ad shows a man standing in front of a number of large signs on coloured boards.  Telus complains that the colours used relate to Mobilicity's competitors, but the association was not immediately obvious to me.  The ad proceeds:

Walking around the signs, the man says, "When it comes to mobile networks, what you see isn’t always what you get". 
[A red sign displays “UNLIMITED PLANS"]

Man: "Look closer and sometimes you’ll find...”
[Man flips sign to read: "AFTER 6 PM EVENINGS & WEEKENDS"]

Man:  "...the great deal that you thought you were getting..."
[New sign reads: "$0 PHONES"]

Man:  “...isn’t really a deal at all".
[Man flips sign to read:  "WITH A 3-YEAR CONTRACT"]

[All signs go up in the air.]
Man:  "Unbelievable".

Man:  "Not with Mobilicity.  No contracts..."
[Pink sign comes down:  "NO CONTRACTS"]

Man:  "...no hidden fees..."
[New pink sign under first:  "NO HIDDEN FEES"]

[All signs go up in the air]

Man:  "...and for the holidays get 50% off all unlimited data, talk and text plans".
[Pink sign comes down:  "50% OFF UNLIMITED DATA + TALK + TEXT"]

Man:  "With Mobilicity, what you see is what you get."
[Sign flips:  "50% UNLIMITED DATA + TALK + TEXT"]

[Signs and man disappear]

Man's voice:  "Visit mobilicity.ca or your nearest Mobilicity dealer today.  Mobilicity; now that's smart!"
["mobilicity.ca" appears followed by Mobilicity logo and marks]

THE CLAIM

[8]             Telus claims that this ad contains three false and misleading representations. 

[9]             The first is that Mobilicity's competitors, particularly Telus, Bell and Rogers, make deceptive offers to their customers where "what you see isn’t always what you get", and specifically that they make offers of "unlimited plans" that are in fact limited to "after 6 PM evenings & weekends".

[10]         The second is that Mobilicity offers its customers wireless services with "no contracts", a representation also made in print and website advertising, when in fact Mobilicity does attach contractual terms to its services.

[11]         The third is that Mobilicity offers customers plans that include "unlimited data", a representation also contained in print and website advertising, when in fact Mobilicity's "unlimited" data plan is made subject to a fair use policy that has the effect of limiting data access.

[12]         It follows, Telus alleges, that these representations offend section 52 of the Competition Act, R.S.C. 1985, c. C-34, which provides, in part, as follows:

False or misleading representations

52. (1)  No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interests, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect.

...

General impression to be considered

      (4)  In a prosecution for a contravention of this section, the general impression conveyed by a representation as well as its literal meaning shall be taken into account in determining whether or not a representation is false or misleading in a material respect. 

[13]         Telus then relies on section 36(1) of the Act, which permits any person who has suffered loss or damage as a result of such false or misleading representations to sue and recover such loss or damage from the person who engaged in the prohibited conduct.

[14]         The question I have to decide is not whether Telus will succeed in its claim against Mobilicity for damages under section 36(1) of the Act.  My task is to determine whether the court should intervene at this early interlocutory stage by restraining Mobilicity from continuing through December 30, 2012, with the ad campaign that Telus alleges breaches section 52(1).  This involves a preliminary weighing, but not a final determination, of the merits of Telus's claim.

[15]         In the 2009 Telus litigation, it was argued in the Court of Appeal (although not before me) that this Court does not have jurisdiction to grant an interlocutory injunction, as section 36(1) of the Act appears to limit the remedy available to a private party to compensatory damages.  The Court of Appeal concluded at para. 44 that the inherent jurisdiction of the Supreme Court of British Columbia to grant an injunction was not displaced by any of the provisions of the Competition Act.  The Court went on to say this:

[46]      While we are of the view that the Supreme Court has jurisdiction to grant an interlocutory injunction in a claim brought under s. 36 of the Competition Act, the scheme of the Act, and its concentration on damages as the appropriate final remedy are important considerations for the court in considering whether interlocutory relief ought to be granted.  In particular, the court should be careful in considering whether the plaintiff can make out a case for "irreparable harm" in the analysis of the test for an interlocutory injunction.  [Emphasis original.] 

DISCUSSION

1.       The test for an interlocutory injunction

[16]         The parties do not dispute the applicable law.  The test has been discussed as both a two-pronged test (British Columbia (A.G.) v. Wale (1986), 9 B.C.L.R. (2d) 333 (C.A.), aff'd [1991] 1 S.C.R. 62; Bell Mobility Inc. v. Telus Communications Co., 2006 BCCA 578, 27 B.L.R. (4th) 194), and a three-pronged test (RJR-MacDonald Inc. v. Canada (A.G.), [1994] 1 S.C.R. 311).

[17]         The first prong is whether the applicant's claim raises a fair question to be tried.  The cases make it clear that this is a relatively low threshold.

[18]         The second prong is whether the balance of convenience favours the granting of the injunction.  One of the factors to be considered in this regard is whether either of the parties will suffer irreparable harm from allowing or denying the application.  In the three-pronged test, irreparable harm is considered separately from the balance of convenience, but in either event we are warned to view the picture as a whole, rather than concentrate on its individual components.

[19]         Other factors include, but are not limited to, which of the parties has acted to alter the balance of the relationship so as to affect the status quo, and matters affecting the public interest.  Also to be considered in assessing the balance of convenience is the strength of the applicant's case, particularly where the extent of incompensable disadvantage to each party would not differ significantly.  See, for instance, Canadian Broadcasting Corp. v. CKPG Television Ltd. (1992), 64 B.C.L.R. (2d) 96 (C.A.).

[20]         Other special factors may arise for consideration in the particular circumstances of individual cases.  It has also been noted that where the granting of an interlocutory injunction would effectively end the litigation, then the strength of the applicant's case should be the predominant consideration:  RJR-MacDonald at 403.

2.       Fair case to be tried

[21]         While emphasizing that the threshold is a low one, Telus submits that its case is strong, just as it was in 2009.  I disagree.

[22]         In 2009, the representation in question related to technical issues that a consumer is ill equipped to assess, and was based on test data comparing the defendant's network with a Telus network that had been superseded, and was no longer an appropriate benchmark for comparison.

[23]         In 2012, we are faced with a much more nuanced set of representations.  Turning to the first alleged misrepresentation, it is not clear to me from either the literal meaning of the words, or the overall impression of the entire ad, that Mobilicity is representing that its competitors make deceptive offers, as opposed to warning that their terms and conditions are frequently confusing, and it pays to read the fine print.  That caution, as we shall see, is as aptly directed at Mobilicity as it is at any of its competitors.  Nevertheless, while Telus has an arguable point here, there is a plausible alternative. 

[24]         Similarly, the consumer is well-equipped to judge whether competing plans described as "unlimited" are unlimited only after 6 PM evenings and weekends, or not.  There is evidence of at least one competitor offering a plan that would arguably meet this description.

[25]         At best, this aspect of the claim only limps across the threshold.

[26]         Turning to the second alleged misrepresentation, Telus correctly argues that on a literal interpretation, it is demonstrably untrue that Mobilicity has "no contracts".  Its relationship with its customers is clearly governed by terms and conditions that form a contract.  But taking the phrase in context, I entertain some doubt that a consumer, even a credulous and inexperienced one (see Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265 at paras. 77-78), would take it to mean that he or she can obtain wireless service from Mobilicity free of any contractual terms or conditions.  Given the juxtaposition of the signs reading "$0 PHONES” [flip] “3 YEAR CONTRACT” with the reference to "NO CONTRACTS", I think that a good arguable case can be made for the proposition that Mobilicity is representing nothing more than the fact that, unlike its competitors, it offers plans that do not lock the consumer in for a specified term of years. 

[27]         On this point, I conclude that Telus’s position, again, is arguable, but by no means constitutes a strong case.

[28]         Turning to the third alleged misrepresentation, Telus says that, contrary to the alleged representation that Mobilicity offers plans that give subscribers unlimited access to data, Mobilicity employs a fair use policy that intentionally reduces data speeds when customers exceed certain data usage levels, a process known as "traffic throttling".  This process, Telus asserts, has the effect of making the data service unusable for certain data-intensive functions such as video streaming and downloading large files.  In these circumstances, Telus submits, the data plan cannot properly be described as "unlimited".

[29]         Mobilicity does not dispute that its fair use policy results in a "traffic throttling" process, but maintains that the phrase "unlimited data" refers to the flow of data, unrestricted as to quantity, and not to a guaranteed speed of transmission.  Thus, it argues, the consumer still has unlimited access.  The amount of data that the consumer may download remains unrestricted—even if the heavy user may not necessarily access all of it at a speed that is helpful.  The speed can be boosted for an extra charge.

[30]         This is not the place to resolve the technical issue of the effect of traffic throttling on the veracity of Mobilicity's representation that its data plan is unlimited.  What is clear is that Telus's position is arguable.  It certainly appears that a consumer attracted to Mobilicity's offer of "unlimited data" would be wise to check the fine print.  Ironically, what you see may not necessarily be what you get.

[31]         It follows that on this issue, there is fair case to be tried.  But I make the following observation.  This is not a situation where Mobilicity has decided to commence an advertising campaign offering unlimited data under circumstances where that claim is debatable.  Rather, the ad ends by making a "holiday offer" of 50% off Mobilicity's already existing "unlimited data + talk + text plans"—plans that have been in place for some considerable time.

[32]         Viewing the ad as a whole, I conclude that Telus has met the first prong of the test, given that the threshold is low.  Its case, however, is not strong.  I turn to consider the second prong.

3.       Balance of convenience

[33]         Both parties argue that they will suffer irreparable harm if the injunction is or is not granted, as the case may be. 

[34]         Telus asserts that December is the busiest month of the year for consumer sales in the wireless service communication market, and the competition is severe.  Advertising related to wireless communication services is accordingly extremely important during the month of December.  According to Telus, it has suffered, and will continue to suffer loss, damage and expense as a result of Mobilicity's misrepresentations, including depreciation of its goodwill and competitive advantage, all of which is extremely difficult to assess.  This, it submits, is substantially greater than any harm that would be caused to Mobilicity as a result of being required to modify its advertising.

[35]         Mobilicity maintains that its purchase of television airtime for November and December 2012 was carefully planned and budgeted, and it will not be able to reschedule or transfer airtime if it is required to remove its television commercial; as a very much smaller player in the market, it will lose drastically by being curtailed from advertising at this most important time.

[36]         I conclude that the balance of convenience tilts in favour of Mobilicity.  I come to this conclusion on the following bases.

[37]         Neither side, in my view, is likely to suffer irreparable harm in the event that the injunction is either granted or refused, in the sense of loss or damage of a type that cannot be made good through an award of damages.  Although the quantification of damages may prove difficult, the evidence does not satisfy me that in either case the difficulty would be insuperable.  Both parties are sophisticated commercial enterprises capable of undertaking that task.

[38]         I note, however, that in relation to Mobilicity's representations, Telus’s position is no different from that of the other two corporations who, with Telus, account for over 90% of the market.  Telus is neither identified nor singled out.  As a newcomer in that market, Mobilicity's competitive position is significantly weaker than that of Telus, and incomparably weaker than that of Bell, Telus and Rogers as a group.  It follows that Mobilicity’s position is the more fragile.

[39]         The status quo favours Mobilicity.  Although Telus argued that the situation has changed because of the commencement of a television advertising campaign, and the juxtaposition of the three alleged misrepresentations in one ad, I am not persuaded that this represents a true change.  Mobilicity has been basing its marketing strategy on all three aspects of which Telus now complains, since 2010.  There is nothing new about its "no contracts" claim, its offer of "unlimited" plans, and its claim that what you see is what you get, all as features that distinguish it from its competitors.

[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.

CONCLUSION

[42]         In the circumstances I have reviewed, I decline to intervene by enjoining Mobilicity from continuing with the conduct of which Telus complains in its lawsuit.  That action will have to proceed in the ordinary way.  Telus's application for an injunction is dismissed, with costs.

"GRAUER, J."