Court File and Parties

Court File No.: CV-16-558902 Date: 2016-09-26 Superior Court of Justice – Ontario

Re: BELL CANADA, Plaintiff And: COGECO CABLE CANADA GP INC, Defendant

Before: Justice W. Matheson

Counsel: Ronald Foerster, Bevan Brooksbank, for the Plaintiff Benjamin Bathgate and Laura Brazil, for the Defendant

Heard: September 20, 2016

Endorsement

[1] Bell Canada seeks an interlocutory injunction against Cogeco Cable Canada GP Inc. in connection with two aspects of a new advertising campaign that Cogeco launched on the Internet in early August 2016. Bell claims that two allegedly false and/or misleading representations give rise to a number of causes of action against Cogeco. These claims are denied by Cogeco.

[2] The first of the two issues raised by Bell relates to Cogeco’s use of the phrase “the best Internet experience in your neighbourhood.” For the reasons set out below, I am satisfied that there should be an interlocutory injunction with respect to the use of this phrase.

[3] The second of the two issues raised by Bell arises from Cogeco’s rebranding of the packages it offers for Internet services. Although the packages themselves have not changed, they have been rebranded adding the prefix “Ultra” – for example, UltraFibre 15 or UltraFibre 250. For the reasons set out below, I am not granting an interlocutory injunction with respect to these new package names.

Ontario

[4] In this proceeding, Bell Canada is requesting an injunction with respect to Cogeco advertising in Ontario. Bell Canada and Cogeco both operate in Ontario, although Cogeco operates in only part of the province. These two Internet service providers directly compete for Internet customers in many Ontario communities, in a highly competitive marketplace.

[5] As of now, Internet service providers use three major types of technologies to provide Internet services to consumers:

(1) Cable providers such as Cogeco use technology within their cable television network to connect customers to the Internet, specifically hybrid fiber co-axial cable (or Cable/HFC).

(2) Traditionally, telecommunications providers such as Bell, have used Digital Subscriber Lines (or DSL) to connect customer computers to the Internet using existing telephone lines with additional hardware. DSL speeds exceed Cable/HFC in some but not all categories of DSL.

(3) The third major type of technology is called fiber-to-the-home (or FTTH). With a FTTH system, fiber optics extend all the way to a customer’s home or business, providing a continuous optical path, which is not available with the other two major technologies. FTTH provides significantly higher speeds and performance over both Cable/HFC and DSL and requires a major infrastructure investment.

[6] In addition to using DSL, Bell has been progressively rolling out FTTH technology across Ontario at great expense. For the most part, Cogeco uses Cable/HFC and there is no indication that Cogeco is retrofitting its existing cable network. It is only deploying FTTH technology in new residential developments that meet certain criteria.

[7] The different technologies used by Bell and Cogeco are reflected in the Internet speeds advertised to consumers in the marketplace. Bell offers packages with Internet service download speeds of up to 940 megabytes per second (Mbps) where the highest download speed offered by Cogeco is 250 Mbps. Similarly, the highest upload speed offered by Bell is 100 Mbps, as compared to 20 Mbps for Cogeco.

[8] In March 2016, the Canadian Radio-Television and Telecommunications Commission (CRTC) released a Report that it commissioned to evaluate the performance of broadband services sold to Canadian consumers. Cogeco agrees that the CRTC Report represents the best publicly available recent comparison of Internet technologies.

[9] The CRTC Report concluded that FTTH outperforms Cable/HFC on download speed, upload throughput speed, latency and packet loss.

[10] Thus, in addition to outperforming on speed, FTTH outperformed on reliability. Packet loss measures the risk that data will not reach its intended destination. The level of packet loss for FTTH was 0.04% on average, significantly better than 0.11% for Cable/HFC. Similarly, FTTH had the lowest incidence of latency, that is the measure of how long it takes a data packet to travel between two points.

[11] The CRTC Report also compared DSL technology and Cable/HFC, concluding that DSL largely outperformed Cable/HFC in all but the lowest category of DSL.

[12] The CRTC Report made the unremarkable observation that higher speeds are more desirable and observed that it was common for providers to differentiate their product offerings by speed, which was a key part of their advertising.

[13] The superior performance offered by FTTH technology has been recognized by Cogeco in its 2015 Annual Report, speaking about its limited plan to deploy FTTH in new residential developments. The Annual Report indicates that FTTH “offers increased reliability, lower maintenance costs and is an excellent platform for the delivery of enhanced video services and higher-speed Internet services in the future.”

[14] Consumers have access to FTTH through Bell in many areas in Ontario where Cogeco provides its services using Cable/HFC. However, the degree of FTTH availability varies widely. At the high end, there are eight areas where Bell makes FTTH available to more than 20% and up to 50% of the addresses where Cogeco Cable/HFC services are also available.

Advertising Campaign

[15] Cogeco announced a new “brand identity” as part of its August 2016 “Back To School” marketing campaign. It rebranded its residential Internet services with the name “UltraFibre” and implemented a new homepage for its website. There was also an associated press release, but the argument before me focused on the Cogeco website.

[16] This action relates to two aspects of the new campaign. The main text on the first screen of the homepage comprises two sentences: “There’s no limit to the things you can explore.” and “Enjoy unlimited entertainment with the best Internet experience in your neighbourhood.” The phrase “best Internet experience in your neighbourhood” is challenged by Bell.

[17] The new package names are also challenged. A hyperlink appears toward the top of the home page through which the consumer can go to another part of the website containing a description of all the Internet packages made available, newly branded as “UltraFibre” packages. Each package name also includes the maximum download speed, such as UltraFibre 250, offering the download speed of 250 Mbps.

[18] On or about August 9, 2016, Cogeco’s new advertising campaign came to Bell’s attention. After an unsuccessful attempt to work matters out between the parties, this action was commenced on August 19, 2016, followed by the motion for an interlocutory injunction.

[19] In this action, Bell asserts claims based on statutory causes of action arising from alleged breaches of s. 52 of the Competition Act, R.S.C. 1985, c. C-34 and s. 7 of the Trade-marks Act, R.S.C. 1985, c. T-13, as well as the common-law causes of action of injurious falsehood and the unlawful means tort.

Analysis

[20] The test for an interlocutory injunction is not at issue. It is set out in RJR-MacDonald Inc. v. Canada (Attorney-General), [1994] 1 S.C.R. 311, at para. 43, as follows:

(i) whether the moving party has demonstrated that there is a serious question to be tried (or, in certain circumstances not applicable here, a strong prima facie case);

(ii) whether the moving party will suffer irreparable harm if an injunction is not granted; and,

(iii) whether the balance of convenience favours granting the injunction.

[21] Bell has given the required undertaking as to damages.

(i) Serious question to be tried

[22] In determining whether there is a serious question to be tried, the Court is not required to engage in a prolonged assessment of the merits. As held in RJR-MacDonald, at para. 49, the threshold “is a low one.” I am satisfied that there is a serious question to be tried regarding the representation at the top of the homepage that Cogeco provides the “best Internet experience in your neighbourhood.”

[23] There is considerable overlap between the various causes of action. I find it sufficient to focus on the claim for breach of s. 52 of the Competition Act, which is actionable by virtue of s. 36 of that Act. Section 52 provides as follows, in relevant part:

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 interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect.

(1.1) For greater certainty, in establishing that subsection (1) was contravened, it is not necessary to prove that

(a) any person was deceived or misled;

(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 the representation is false or misleading in a material respect.

[24] As expressly provided for in subsection (4), the general impression conveyed by the advertisement must be considered. A representation is misleading in a material respect if an ordinary citizen would likely be influenced by that impression in deciding whether or not to purchase the product or service: Canada (Commissioner of Competition) v. Yellow Page Marketing B.V., 2012 ONSC 927, 101 C.P.R. (4th) 286, at para. 34, aff’d 2013 ONCA 71, [2013] O.J. No. 455.

[25] The advertisement must be looked at as a whole, from the perspective of an average consumer. The consumer perspective must be that of a credulous and technologically inexperienced consumer of Internet services: Canada (Commissioner of Competition) v. Chatr Wireless Inc., 2013 ONSC 5315, 288 C.R.R. (2d) 297, at paras. 128-132.

[26] In the Internet context, there is an issue regarding what constitutes looking at the advertisement as a whole. That question need not be finally resolved now. However, for the purpose of this motion, I do not accept Cogeco’s submission that I should proceed on the basis that the entirety of what a consumer can scroll down to or link to should be considered. The Cogeco homepage consists of five pages of text, graphics and hyperlinks and two pages of terms and conditions in the seemingly inevitable fine print. Cogeco asks me to proceed on the basis that the consumer would or should view all of this material. As I indicated at the hearing, I have some difficulty with that proposition. This sort of Internet homepage is not comparable to an ad published within a single page of a print newspaper or magazine: e.g., Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265.

[27] It is at least arguable that, for the purposes of s. 52, the court should consider what the consumer would see on a single screen, including the labels on the hyperlinks on that screen. I recognize that the amount of content presented on the screen could depend to some extent on the size of the screen on the device chosen by the consumer. Even taking that into account, much of what Cogeco seeks to rely upon would not appear on that first screen.

[28] Cogeco takes the position that an “Internet experience” consists of multiple factors including not only speed and reliability, but also customer service and security among other things. It emphasizes its customer service, submitting that the campaign was inspired by its ability to deliver an “outstanding client experience.” Some local customer service awards are shown a few screens down on the home page. Cogeco also relies on disclaimers and restrictions disclosed if a consumer clicks on various hyperlinks. If the consumer clicks the link to see the product offerings, and works his or her way through the content on the various packages, the consumer would find, at the bottom of the page, a block of fine print. That fine print says, in the last sentence, that Cogeco uses a combination of optical fibre and coaxial cable (in other words, Cable/HFC technology). It does not say what that means for speed or performance or for any other relevant measure. Cogeco relies on that disclosure.

[29] Bell agrees that there are multiple relevant factors involved in the customer experience, but submits that speed and performance are critical factors when speaking about “Internet experience”. In short, Bell submits that it is simply not possible to provide the “best Internet experience” without being able to provide the best speed and performance. And it is clear on the evidence that Cogeco does not provide the best speed and performance in every neighbourhood.

[30] In support of its assertion that it provides the “best Internet experience in your neighbourhood”, Cogeco relies on its own May 2016 customer study. In that study, customers ranked as their top “satisfaction driver” “overall Internet service satisfaction” which is obviously general and would include many factors including speed and performance. The isolated factor of upload and download speed was ranked sixth. However, in relation to the five key Internet service “acquisition drivers”, ranked first was better value for money, which would necessarily include speed and performance, ranked second was faster speed and ranked third was improved upload/download capacity.

[31] Cogeco concedes that it cannot claim that it provides the fastest Internet service in every neighbourhood it offers services in, or the highest Internet performance on other measures. However, it submits that its representations are qualitative only, rather than quantitative representations on matters such as speed, and bring to bear many factors other than speed such as customer service. I am not persuaded that the singular claim to providing “the best Internet experience” avoids consequences in this way: see, e.g., Bell Aliant Regional Communications Ltd. v. Rogers Communications Inc., 2010 NBQB 166, 361 N.B.R. (2d) 140.

[32] The reference to “your neighbourhood” is also significant in that it brings the representation home to a specific area for each consumer, rather than a more generic reference.

[33] I am satisfied that there is a serious question to be tried regarding whether the representation of “best Internet experience in your neighbourhood” is false or misleading in a material respect. Further, I am satisfied based largely on the CTRC Report, of which Cogeco was obviously well aware, that there is a serious question to be tried regarding whether the alleged misrepresentation was made knowingly or recklessly.

[34] The various causes of action alleged also require that the claimant suffer economic loss. Given the very recent introduction of this campaign, I do not agree with Cogeco that Bell must come forward with definitive evidence of lost customers, for example, at this early stage. Given the purpose of the advertising campaign itself, and the materials before me, I am satisfied that there is a serious question to be tried.

[35] This is sufficient to meet the first requirement with respect to the representation on the homepage.

[36] I have a different view regarding the rebranded product names. I accept Bell’s submission that the word “ultra” bears the definition “goes beyond others” or “extreme”, but it is not a singular claim (like “the best”) and is always used along with an actual speed commitment right in the package name. For example, one package is called UltraFibre 250, where 250 is an express reference to the download speed of 250 Mbps as highlighted in the package description. All of the package names follow this format. Whether it be under s. 52 or the other causes of action asserted, I have difficulty with the characterization of these names as false or misleading. The addition of the word “Ultra” strikes me as more in the category of puffery: Telus Communications Co. v. Bell Mobility Inc., 2007 BCSC 518, at para. 19. I am therefore not persuaded that there is a serious question to be tried with respect to these new names.

(ii) Irreparable harm

[37] I am also satisfied that the plaintiff has established that there will be irreparable harm for which it cannot be compensated for in damages. It would be difficult, if not impossible, to determine with any certainty which potential or existing customers were misled by the claim that Cogeco is the best, and which customers or potential customers made their choices for reasons unrelated to this advertising claim: BC Tel Mobility Cellular Inc. v. Rogers Cantel Inc., [1995] 63 C.P.R. (3d) 464 (B.C.S.C), at para. 31; Maple Leaf Foods Inc. v. Robin Hood Multifoods Inc., [1994] O.J. No. 2165 (Gen. Div.), at para 12; Church & Dwight Ltd. v. Sifto Canada Inc., [1994] O.J. No. 2139 (Gen. Div.), at para 18; Bell Aliant Regional Communications Ltd. v. Rogers Communications Inc.

(iii) Balance of convenience

[38] Cogeco argues that the balance of convenience favours it. In doing so, it relies primarily on two submissions. It first relies on the importance of the Fall “Back To School” marketing season. It describes it as a critical time for effective marketing and promotion of Internet services. It is apparently a key time period within which to attract new customers. In my view, this submission favours Bell at least as much as Cogeco. If this is a critical period for marketing to prospective Internet customers, Bell also could be significantly affected by the advertising campaign continuing during that period while Cogeco represents that it provides the “best Internet experience”.

[39] Cogeco also relies upon the substantial expenditure it has made developing its ad campaign and the potential cost of investing in a new or replacement campaign. I accept that Cogeco incurred significant costs in developing its campaign. However, it could be compensated for those costs. Further, the cost of removing the word “best” or replacing it would ordinarily be insignificant. Leaving aside the press release, which has already gone out, the phrase appears in one place, on the opening screen of the homepage. On the evidence before me, it is not, for example, preprinted in expensive packaging. I recognize that there may be some impact on the campaign by removing or replacing that word, but I am not persuaded that it tips the balance of convenience in favour of Cogeco.

[40] I also have a general reluctance to intervene in what is a very competitive marketplace. However, Cogeco has altered that marketplace by claiming to be the “best”, despite the fact that it is not providing the fastest or highest performing Internet service, in at least some of the areas in which these two companies compete. I am sufficiently concerned that the ordinary consumer may be misled by the representation that I factor in the public interest when considering the balance of convenience: BC Tel Mobility Cellular Inc., at para. 24.

[41] Cogeco also submits that the evidence put forward by Bell is inadequate in some respects, submitting that the failure to put forward certain types of evidence in certain areas should be considered not only under balance of convenience but the other aspects of the injunction test as well. I have considered these submissions, but they do not persuade me to reach a different outcome.

[42] I conclude that the balance of convenience favours granting injunctive relief with respect to the phrase “the best Internet experience in your neighbourhood.”

Order

[43] I therefore grant an interlocutory injunction restraining the defendant from stating, publishing or otherwise representing that it offers the “best Internet experience in your neighbourhood.” If further terms are requested regarding the scope of this injunction, the parties may arrange a conference call through my office.

[44] If the parties are unable to agree on costs, Bell Canada shall make its submissions by delivering brief written submissions together with a costs outline by October 3, 2016. Cogeco may respond by delivering brief written submissions and any other material by October 11, 2016. Any reply may be made by brief written submissions to be delivered by October 14, 2016. This timetable may be modified on agreement between the parties provided that I am notified of the new timetable by October 3, 2016.

Justice W. Matheson Date: September 26, 2016