November 2007

Damages for Counterfeit Goods – A Significant Award

By In Case Law, Famous Marks, Protection & Enforcement

Louis Vuitton Malletier S.A. et al v. Yang et al. provides a useful analysis of the damages that can be awarded against a Defendant trading in counterfeit goods.

In this case, the owners of the well-known brand had been attempting since 2001 to stop the sale of counterfeit goods at K2 Fashions, a Richmond, British Columbia retail store, having obtained two previous judgments, having sent numerous letters and having made a number of seizures. This latest action, against the persons who controlled and operated the business and premises, was not defended and the Plaintiffs brought a motion for default judgment, including an assessment of damages.

The Federal Court concluded that the Defendants had been properly served and the time to file a defence had expired. The Court was also satisfied that infringement was established.

The Court then assessed damages for both copyright and trademark infringement.  

The Plaintiffs had elected an award of statutory damages pursuant to section 38.1 of the Copyright Act. After considering the relevant factors set out in section 38.1(5) (the good or bad faith of the Defendant, the conduct of the parties during the proceedings and the need to deter other infringements of the copyright in question), the Court concluded that the Plaintiffs were entitled to the statutory maximum of $20,000.00 for each of the two copyrighted works at issue.

With regards to trademark infringement, the Court concluded that it could not quantify the damages suffered by the Plaintiffs, it being difficult to determine what depreciation of goodwill or loss of sales may have occurred.

The Court chose instead to assess the profits made by the Defendants “based on the best available evidence, reasonable inferences, the Plaintiffs’ experiences in similar situations and a dose of common sense”. However, since its estimate of $76,000.00 was only the minimum, the Court applied a “nominal award per infringing activity” and assessed damages at $87,000.00. To this the Court also added punitive damages of $100,000.00, being satisfied that the requisite elements were present (conduct that was planned and deliberate, outrageous conduct over a lengthy period of time, an attempt to conceal, an awareness by the Defendants that they were wrong, and profiting from the misconduct).

Finally, the Court awarded solicitor and client costs of $36,699.14, given the Defendants’ intentional infringement and ongoing behaviour that was “scandalous and outrageous”.

The total judgment amounts to $263,699.14.

A Globe & Mail article notes that this is believed to be the “highest amount ever awarded in an undefended action involving counterfeit goods”. Clearly, the Court is sending a message that counterfeiting should and will be treated harshly.

The Federal Court of Appeal Rules on Appeals from Decisions of the Registrar

By In Case Law, Registration

In Sadhu Singh Hamdard Trust v. The Registrar of Trade-marks, the Federal Court of Appeal refused to interfere with a decision of the Registrar allowing the registration of a trademark, particularly where the Appellant had not exercised another more appropriate remedy.

When the trademark at issue was advertised the Appellant requested a two-month extension to file a Statement of Opposition. However, the request for an extension was overlooked by the Registrar and the trademark was allowed.

The Appellant then sought to appeal the Registrar’s decision to the Federal Court under section 56 of the Trade-marks Act. The Trial Court concluded there was no decision of the Registrar to be challenged and the Federal Court of Appeal agreed.

The Appellant had failed to invoke its right under section 39(3) of the Act which specifically provides that the Registrar may withdraw an allowance where it has failed to consider a previously filed request for an extension of time to file an opposition.

The Appellant, relying on the earlier case of Ault Foods v. Canada (Registrar of Trade-marks), argued that it was still open to the Court to rely on its discretionary power under section 18 of the Federal Court Act and set aside the registration.

However, the Court of Appeal noted that following Ault Foods, the Trade-marks Act was amended so as to add section 39(3).

The Court also noted that in seeking to set aside the Registrar’s decision the Appellant was in effect seeking expungement, which required a challenge on substantive grounds under section 57. In Bacardi & Co. v. Havana Club Holding S.A. the Court held that a registration may not be brought into question in the course of opposition proceedings, which was what the Appellant was seeking to do by appealing the Registrar’s decision under section 56.

Fashionable, But No Injunction

By In Case Law, Protection & Enforcement

In Nada Fashion Design Inc. v. Designs by Nada et al., the Plaintiff sought an interlocutory injunction against the Defendants a few days before the Plaintiff and Defendants were to participate in Toronto’s L’Oréal Fashion Week. The Plaintiff alleged that it had prior use of the trademark NADA, although it had only recently applied to register the mark, and that the Defendants’ use of BY NADA and NADA YOUSIF constituted passing-off.

The Court applied the three-part test to determine whether an interlocutory injunction was warranted:

(1) the existence of a serious issue to be tried;
(2) the existence of irreparable harm if the injunction is not granted; and
(3) that the balance of convenience favours the granting of the injunction.

With regards to the first part of the test, the Court focused on whether, with regards to passing-off, there was likely to be confusion, concluding confusion was likely with BY NADA, but not with NADA YOUSIF.

However, with regards to the second part of the test, the Court decided that the Plaintiff had not provided the “clear evidence” necessary to establish irreparable harm. The Plaintiff’s allegations with regards to the importance of a brand in the fashion industry and its negotiations with major retailers was not sufficient. Thus, there was no irreparable harm and the balance of convenience favoured the Defendants.

No interlocutory injunction was granted and whether the Plaintiff continues with its action remains to be seen.

Another RIM Trademark Suit

By In Branding, Famous Marks, Protection & Enforcement

In a complaint filed in the U.S. District Court for the Central District of California, Research In Motion (“RIM”) based in Waterloo, Ontario, is again alleging that another company is using trademarks that are similar to those used by RIM. In this most recent complaint, RIM seeks to prevent LG Electronics Inc. from using such names as Black Label, Strawberry and Black Cherry. An earlier claim brought against Samsung Electronics regarding its use of the mark BlackJack was settled earlier this year.