Can we pursue a copyright infringement lawsuit against a Canadian company that is violating our copyrights

There is a lot to address in your question so let me try to break it down to your various concerns:

(1) Use of your copyrighted material: it is not clear from your question, but it appears you are saying that the rival company is repeating portions of your website language and then commenting on it. If that is the case, they are likely not violating your copyright because it might be "a fair use" also, the language from your site that they are repeating may not be unique enough to be "copyrightable." (I have looked at the site I believe you are referring to, but these comments likeley apply even if it is a differnet one you are talking about). To establish a copyright violation, you have to show that they are getting a business advantage by using copyrighted material you created.
(2) Libel - This is very hard to prove, but if they make false, written allegations about your business and that results in damage then you have a libel claim. You may not need to prove damages if it relates directly to your profession, however, as that is called libel per se. You have to be aware though, that statements of "opinion" are generally never libelous. Neither are statements that are wrong or incorrect but were made based on a good faith belief of their accuracy. In the 1990s, when the internet began to become a marketing force, many disgruntled ex-employees or customers of brand names began putting up "XXXsucks.com" websites. (Fill in your brand name of choice for XXX as virtuall every company in America has one of these domains against it)
All this was decided around 2001 or so with the flurry of "sucks.com" domain name cases both through the courts and ICANN's domain dispute process. There were several rulings in which the addition of "sucks" at the end of a company name was seen as "fair use" and so could be excluded from trademark disputes. The most famous case concerned "ballysucks" - which, although it was a web page and not the domain itself, the court decided the owner had a valid free speech interest in using Bally's mark.. The UDRP (ICANN's flawed domain arbitration system) eventually came to realize that "sucks" was a legitimate use (wallmartcanadasucks.com was the turning point, in fact so that I said US instead of Canada is not relevant). Although in some circumstances, forced transferring of "sucks" domains to the XXX company does occur. The Anti-Cybersquatting Legislation recently enacted has caused a flurry of litigation, but that is not what you are dealing with here. So the First Amendment gives a lot of protection to negative opinion and commentary. It is false FACTS which are libelous.
(3) Fair Trade or Fair Subisness Practice claim - again - Companies are given a lot of latitude to make claims or boasts. There is a difference between flase advertising and "puffing." It has been held for example, that to say you are "New York's Best Pizza" is not a false advertising claim, but merely permissible puffery and opinion.
If the company falsley claims to have customers in "All 50 States"and or if they don't deliver what they claim or if they claim to make arrangements by hand in their studio, when in fact thay import pre-made arrangements, then those might be complaints. The most important statements you made were "I cant prove that its hurting my business" and "There's room for everyone" It may not be worth your while to pursue these claims due to those statements.
(4) Interference with customers- This is a different story., If you can prove that they are directly interfering with your current, contracted-for customers, you can absolutely sue and bring a cease and desist proceeding as well.

These types of claims and issues are very fact-specific and as you can see involve complicated,complex legal issues. Talk to a qualififed practitioner and get an idea of the costs and time if you intend to proceed. I would be glad to discuss it with you generally though I am not admitted in Illinois

As Attorney Michelen mentoned above there is a lot going on in this scenario. As he said, libel is a very difficult cause of action to prove and is not your best option. However as this is web based, you do have several options under the Digital Millenium Copyright Act to stop their actions. You can go after the website directly with a DMCA letter or, in some instances, you can send a letter to the websites Internet Service Provider. Another avenue to consider if they are using your copyrights on eBay, is to contact the eBay VeRo program. VeRo allows you to remove auctions that use your copyrighted images.

Of course these are very general answers and I would have to take a look at both your website and theirs to make an accurate assessment of your claims against them. Feel free to contact me if you would like to discuss.

-Morgan

The following is not legal advice and should not be relied upon to take or refrain from taking any action.

You could not have gotten a better answer than the one Oscar provided. In short, competition in the marketplace is a contact sport that results in elbows flying and noses getting bloodied. Unless the rules are broken -- and, as noted, it does not appear that any have been -- the proper response is to fight back in the marketplace via your own (more classy) advertising campaign, smart and aggressive use of adwords to generate sponsored advertising (ask your attorney just how aggressive you can be), lower pricing, distinguishing your goods and services from this competitor's goods, etc.

As for Morgan's suggestion of possibly sending a take down notice under the Digital Millennium Copyright Act ("DMCA") you need to be very careful because it does not appear that any copyright violation has occurred (a prerequisite to sending a take down notice). Penalties can be assessed against you for improperly sending such a notice. Morgan's practical approach to this assault on your company is a good one however. You could find out the name of the company that hosts your competitor's website, evaluate its terms of service, and try to figure out if any of the conduct that you have complained about violates any of those terms. If so, you could have your attorney send the web host a letter explaining the situation and requesting (not demanding) that your competitor's website be taken down.