Mobilicity says it will countersue Telus over false advertising claims

New entrant wireless carrier DAVE Wireless Inc. will launch a countersuit against Telus Corp., arguing the incumbent telco uses false advertising in its promotions, said Stewart Lyons, the company’s president and CEO. “I think you’ll see a counterclaim on our part because I think we can find a lot of stuff that’s misleading in Telus’ advertising,” Lyons said in an interview Tuesday. “I don’t want to get too much more into that, unfortunately, but a similar counterclaim.” In a lawsuit launched Friday in the Supreme Court of British Columbia, Telus alleged that a series of new TV and print ads DAVE is using to promote its wireless brand, Mobilicity, contain three “false and misleading representations” that harmed Telus’ wireless business. Telus said those false ads say that Telus and other large carriers falsely promote “unlimited” wireless plans, that Mobilicity offers an “unlimited data” plan, and that Mobilicity does not require its customers to sign a contract when acquiring their mobile service. Telus said the misleading ads, which have run “ince at least November 21,” caused Telus “loss, damage and expense, including depreciation of its goodwill and competitive advantage” in advance of the important holiday shopping season. “December is the busiest month of the year for consumer sales in the wireless service communication market, and competition for wireless service customers is extremely competitive during this time,” Telus said in its notice of civil claim, adding that year-end fiscal reports filed shortly after December also impact share prices. “Accordingly, advertising related to wireless communication services is extremely important during December for the wireless telecommunications industry in Canada.” Telus said the new Mobilicity commercials falsely tell potential customers that “what you see isn’t always what you get” with large mobile providers, such as Telus, BCE Inc. and Rogers Communications Inc. It said the ad claims the big carriers advertise “unlimited plans” when their plans only offer unlimited features on weeknights and weekends. “ isrepresentation is designed to create the impression, and does in fact create the impression for wireless communications customers that TELUS and other Canadian wireless service providers use deceiving or misleading advertising techniques,” Telus wrote. “In fact, there are no Canadian wireless service providers, including TELUS that justify offers of unlimited calling by limiting the offer to evenings and weekends.” Telus also took issue with Mobilicity advertising its own unlimited data packages. Those Mobilicity packages, Telus said, do not offer unlimited data because the company retains the right to slow down the data transmission speeds of heavy users. “This data throttling makes the data service unusable for certain data intensive functions, such as video streaming, downloading and large files and file sharing,” Telus said. Globalive Wireless Management Corp., which also offers unlimited mobile data services under its Wind Mobile brand, retains the right to throttle customers after a customer's monthly usage passes a pre-defined threshold, its website says. Telus accused Mobilicity of falsely advertising that the new entrant does not require its customers to sign a contract, arguing that Mobilicity requires its customers to sign a “Services Terms and Conditions” agreement. “s a result of Mobilicity’s wrongful acts and omissions … Mobilicity has been enriched and TELUS has been correspondingly deprived, all without juristic reason,” Telus wrote. Telus said it launched its lawsuit after Mobilicity “refused or neglected to comply” with a Nov. 27 request to discontinue the ads. It asked the court to issue an injunction ordering Mobilicity to pull the ads, or to require Mobilicity to pay Telus for “general, aggravated, exemplary and punitive damages,” as well as other funds relating to the cost of the court proceeding or “restitutionary relief.” Lyons said Tuesday Telus' ads are intended to “shut down a competitive dialogue” the company is trying to have with consumers and prevent it from effectively using television advertising to win customers from the larger players. “It’s our first TV commercial,” he said of Mobilicity's ads. “It’s more of an educational commercial talking about how we offer no contracts and things like that. We think Telus is trying to shut down this conversation.” He added: “This is bullying behaviour as far as we’re concerned, and we’re not going to stand for it.” Telus spokesman Shawn Hall said Telus is most concerned about how the ads will harm its reputation with consumers. “The ad has damaged Telus’ brand with false claims, and it’s got to be pulled from circulation immediately to avoid further damage," he said. He added in an emailed statement that it is too early to comment on the prospect of a countersuit by DAVE Wireless. “The claim is baseless,” he said of Lyons’ suggestion that Telus uses false advertising. “Mobilicity has not filed a defence yet, so we will wait to see that before commenting further.” For the court to order an injunction or the payment of damages, Telus must prove that the claims in the Mobilicity ad are not true and that they hurt Telus’ business, Lawson Hunter, counsel at Stikeman Elliott and a former Bell Canada executive, said in an interview. He said it is typically easier for companies to prove that they suffered enough damages to warrant an injunction than it is to receive a restitution order requiring a payout. “You need to demonstrate that you have suffered in a way that cannot be compensated, so injunctions are not east to get, but you would not need to prove as precisely what your harm was, or damages would be, as you would in trying to get monetary damages,” he said. He said the type of countersuit Lyons proposed is “pretty typical” of false advertising cases. “The best defence is a good offence,” Hunter said. Under Supreme Court of British Columbia rules, Mobilicity has 21 days from the day it received notice of Telus’ suit to file a response or a countersuit. nkyonka@thewirereport.ca

Mobilicity says it will countersue Telus over false advertising claims

News | December 11, 2012

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Mobilicity says it will countersue Telus over false advertising claims

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