Punitive Damages: Trademark and Copyright Infringement

The most recent case from the Federal Court continues the Court’s tough stance with respect to trademark and copyright infringement in Canada. 

In Harley-Davidson Motor Co. Group LLC v. Manoukian, the Court awarded significant compensatory and punitive damages against the Defendant company and its principal.

The Plaintiffs, H-D Michigan, LLC (“MI”), Harley-Davidson Motor Company Group, LLC (“MCG”) and Harley-Davidson Company, Inc. (“MCI”), hired an investigator to conduct an investigation into the alleged manufacture, offering for sale and sale of counterfeit Harley-Davidson clothing by the Defendants.  The investigator attended two separate locations of the Defendants.  While in attendance at both locations, the investigator was shown and purchased a number of counterfeit items including t-shirts, cloth and leather jackets and hooded sweatshirts, all of which contained unauthorised productions of the Harley-Davidson trademarks.

The Court was satisfied the matter could proceed on a motion for summary judgment.  In determining the damage award, the Court noted that where Defendants provide no records to substantiate the manufacture and sale of counterfeit wares, it is difficult to assess damages.  However, in these circumstances, the Court will apply a minimum compensatory damage award on a per infringing activity basis.

Following such cases as Ragdoll Productions (UK) Ltd v. Jane Doe and Oakley Inc. v. Jane Doe, the Court awarded damages for trademark infringement of $3,625 for each of the three occasions on which the Defendant was observed selling counterfeit goods at a flea market and $7,250 for each of the two occasions on which the Defendant was observed selling wares from a fixed retail establishment.  As the Plaintiffs were seeking damages on behalf of the trademark owner, MI, and the licensee/distributor, MCI/Fred Deeley, these amounts were doubled for a total of $65,250, payable jointly and severally by the Defendants.

In addition, although the Defendants’ lack of records made an accurate assessment of profits impossible, the Court found that the Plaintiffs were entitled to punitive damages of $50,000 to sanction the “blatant disregard” of the law by the Defendant.  In awarding the punitive damages, the Court noted that the Defendants had been offering for sale and selling counterfeit Harley-Davidson merchandise since as early as October 2006, and continued to do so despite the cease and desist letter served on the Defendants in 2010.  The Court also noted that there was evidence that the Defendant Manoukian, was well aware of the illegal nature of his trade.

The Court refused to award solicitor-client costs, since the evidence that the Defendants had missed a number of deadlines was not the kind of conduct attracting solicitor-client costs.  Further, the Defendants’ unjustifiable and inexcusable violation of the Plaintiff’s rights was covered by the punitive damages.

An Interplay of Canadian Official Marks and Canadian Trademarks

A February 2010 blog, “Professional Designations and Abbreviations, Acronyms and Initials” discussed the summary judgment and permanent injunction obtained by the College of Traditional Chinese Medicine Practitioners and Acupuncturists of British Columbia (“the College”) against the Council of Natural Medicine College of Canada (“the Council”) pursuant to which certain trademarks which the Council had registered, such D.C.T.M (DOCTOR OF TRADITIONAL CHINESE MEDICINE) and REGISTERED D.P.C.M, were expunged on the basis that the marks were clearly descriptive or deceptively misdescriptive (contrary to s.12(1)(b) of the Trade-Marks Act) and recognised in Canada as designating the services of doctors of Traditional Chinese Medicine and acupuncturists (and therefore contrary to s.10).  The Council was also enjoined from registering similar trademarks.  The Council appealed this decision, but subsequently discontinued the appeal.

The Council did, however, bring an application for judicial review asking the Federal Court to set aside the notice given by the Registrar of Trade-marks of the adoption and use by the College of various official marks, including D.C.T.M (DOCTOR OF TRADITIONAL CHINESE MEDICINE) and REGISTERED D.P.C.M.  Section 9(1)(n)iii) grants protection to “any public authority” in Canada that adopts and uses a mark and in respect of which the Registrar of Trade-marks has given notice.  In Council of Natural Medicine College of Canada v. College of Traditional Chinese Medicine Practitioners and Acupuncturists of British Columbia the Federal Court concluded that the official marks were valid and that section 9(1)(n)(iii) was constitutional.

As explained in the decision, the Council is a private non-profit company incorporated under federal legislation which created educational programs in traditional Chinese medicine.  The courses were offered by affiliated private schools.  Prior to the earlier Federal Court decision the Council also entered into trademark licence agreements with the graduates of its programs.  The College, however, had been established under the British Columbia Health Professions Act to regulate the practice of traditional Chinese medicine, including the titles that could be used by practitioners.  Read more

Significant Amendments to Canada’s Trade-marks Act Closer To Reality

Canada’s federal Government introduced Bill C-56 on March 1, 2013 – the Combating Counterfeit Products Act.   The primary focus of this Bill is to improve the ability of copyright and trade-mark owners to combat the manufacture, importation, sale and distribution of counterfeit goods in Canada. 

 While the primary focus of the Bill is on counterfeit goods, the Bill calls for amendments to both the Copyright Act and the Trade-marks Act that will have effects beyond counterfeiting. 

Should this Bill go through as is, the changes to the Trade-marks Act (the “Act”) include the following: 

–         “Wares” will become “goods” and the definition of a “distinguishing guise” will be repealed

–          “distinctive” in relation to a trademark will describe a trademark that actually distinguishes or that is inherently capable of distinguishing the goods and services of the trademark’s owner from those of others

–          The references to “mark(s)” throughout the Act will now be references to a “sign or combination of signs”

–          “sign” will include a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign

–          A trademark will not be registrable if its features are dictated primarily by a utilitarian function (codifying recent case law)

–          In order to make a priority filing date claim, an applicant will no longer be required to have a real and effective industrial or commercial establishment in the country where the first application to register the trademark was filed. 

–          A Counterstatement to a Statement of Opposition will only need to state that the applicant intends to respond to the opposition.

–          It will be made clear that the Trade-marks Opposition Board can, in applicable circumstances, refuse some goods/services and let the remainder of the goods/services through to Registration, when dealing with Opposition proceedings

–          Divisional applications will be permitted, as well as mergers of registrations that stem from an original application that was divided

–         Applications for proposed certification marks will be permitted

–          The Bill contains many provisions relating to offences arising out of manufacturing, sale, possession, importation, distribution, and the like of counterfeit goods, labels and packaging, with fines of up to $1,000,000 or imprisonment for up to 5 years, if convicted on indictment.  There are also a number of provisions dealing with detention and destruction of infringing goods

There are, unfortunately, a number of  other provisions in the Act that could have been modified, deleted or clarified, which this Bill does not currently deal with.  Time will tell what changes are made to this Bill as it proceeds through the legislative process, with input from various committees and special interest groups.

Bodum Gets French Pressed by Federal Court In Trademark Dispute

Canada’s Federal Court has recently handed Bodum USA, Inc. (Bodum) another loss in its ongoing fight to enforce its trademark and other intellectual property rights in this country.  In the most recent decision, the Court has found that the Canadian Registration for the trademark FRENCH PRESS is invalid and unenforceable.  This Registration is owned by Pi Design AG (Pi), a related entity to Bodum and the licensor of the mark to Bodum in Canada and covers wares described as non-electric coffee makers.

As a result,  Bodum’s infringement claims against Meyer Housewares Canada Inc. (Meyer) over its use of the FRENCH PRESS mark have been dismissed.  Even worse for Bodum, the Registration for FRENCH PRESS has been ordered expunged on the grounds that it should never have been issued in the first place and even if it was properly registered, that Registration is now invalid on the basis that the mark is descriptive and not distinctive of Bodum as the sole source of the goods that this mark is registered in association with.

When assessing the evidence presented by the parties, the Court found that the term “French Press” was already in widespread use in North America as a generic term describing a popular type of coffee making device in 1995, which Pi was aware of when it sought to register the mark in Canada and thereby claim exclusive rights to the mark.  The Registration for this mark issued in 1997.

Read more

RIM Wins Right To Continue Using BBM Trademark

Research in Motion Ltd. received some good news late last week, in the form of a Federal Court of Canada ruling that allows it to keep the BBM trademark for its popular messenger service.  BBM Canada, a Canadian television and radio research firm  that has been using the BBM mark for 60 years, commenced infringement proceedings on the basis that RIM’s use of the BBM mark  confused the public.  The Court disagreed, ruling that RIM’s use of the mark could peacefully co-exist with BBM’s use, which the Court said extended only to the field of broadcast measurement services.  News reports on the decisions suggest that BBM will appeal the decision.

Trademark Settlement Agreements: Lost in Translation

A recent Ontario case is a rare example of parties seeking a judicial interpretation of a trademark settlement agreement.  It also emphasizes the importance of understanding all possible translated meanings of a word before committing to refrain from using any translated versions, a challenge that often arises in a bilingual country.

In Skipper Online Services (SOS) Inc. v. 2030564 Ontario Inc., the Ontario Superior Court of Justice considered a settlement agreement that restricted Boatsmart from using translated versions of particular words.  Skipper and Boatsmart were competing companies that administered online training for the Pleasure Craft Operator Card as required by Transport Canada.  The parties had a trademark dispute regarding the words each party could use as metatags, which are “hidden keywords” affecting how the parties appear in search engine results.  The two companies entered into a settlement agreement, wherein Boatsmart agreed to refrain from using the following words or “any reversals, misspellings, translations or plurals” thereof in its metatags:  BOATER EXAM; EXAMEN DE BATEAU; EXAMEN BATEAU; BOATEREXAM; EXAMENBATEAU.

Boatsmart, however, continued to use the phrases “BOAT EXAM” and “BOATING EXAM”, both of which can be translated as “EXAMEN DE BATEAU”.  Skipper sought a declaration that Boatsmart’s continued use of “BOAT EXAM” and “BOATING EXAM” was in breach of the agreement, since the agreement plainly restricted translations of “EXAMEN DE  BATEAU”.

Boatsmart, on the other hand, contended that the agreement was ambiguous, and that the parties never intended to restrict the terms “BOAT EXAM” and “BOATING EXAM”.  It argued that the word “translations” in the agreement referred to translations into any languages other than English or French, since the agreement already included specific terms in English and French.  Boatsmart further asserted that any other interpretation would result in commercial absurdity and go beyond what was necessary for the agreement’s purpose.

The Court found that the plain meaning of the agreement restricted Boatsmart from using the translated terms of “EXAMEN DE BATEAU”, including “BOAT EXAM” and “BOATING EXAM”.  Furthermore, the Court disagreed that the agreement’s context indicated an intention to allow Boatsmart to use the terms.  The purpose of the agreement was to limit as much as possible the parties’ use of certain terms and phrases in relation to their websites, in order to affect the search engine results.  A finding that Boatsmart was restricted from using these terms did not go beyond what was necessary for the agreement’s purpose.  The application was therefore granted.

Social Media: A Lesson for Trademark Owners

A recent Quebec case and the resulting social media criticism provides a cautionary tale for trademark owners who aggressively assert their rights.  Success in the court room may in some instances have a negative impact on goodwill. Trademark owners should be taking social media into account when assessing their litigation options.

Deborah Kudzman, the founder of Olivia’s Oasis, Inc., was embroiled in a lengthy trademark dispute with Lassonde, the Quebec fruit-juice corporation. Kudzman’s company sells olive-oil based beauty products in association with the trademark OLIVIA’S OASIS & Design. Lassonde sells a line of juices in association with the trademark OASIS and other marks that include OASIS. In 2005, Lassonde commenced legal proceedings against Kudzman, alleging that Kudzman’s company was infringing its trademark rights.

In a judgment handed down in 2010, Justice Zerbisias of the Quebec Superior Court rejected Lassonde’s claim. The difference in the nature of the products, together with the visual disparities in the design of the marks, made confusion under s. 6 of the Trade-marks Act highly unlikely. Furthermore, while Lassonde’s juices and Kudzman’s beauty products were sold in some of the same stores, the placement of the OLIVIA’S OASIS products was in a completely different store section – in the non-edible, health and beauty section. Zerbisias J., in quashing Lassonde’s assertion of confusion, explained that “to impute the likelihood of confusion between Plaintiff’s and Defendant’s marks to the average consumer would insult him by assuming that such consumer is completely devoid of intelligence”.

Zerbisias J. also found that Lassonde’s action was an improper use of the legal process. Lassonde’s claim, with the unnecessary injunction application, threatening letters and overly complicated litigious conduct, was deemed to be “menacing and abusive”.  To compensate Kudzman and punish Lassonde, Kudzman was awarded $100,000 to cover her legal fees and $25,000 in punitive damages.

However, Kudzman’s story was not yet finished.  Lassonde appealed.  The Quebec Court of Appeal, while agreeing that there was no trademark infringement, reversed Zerbisias J.’s decision regarding Lassonde’s abuse of process and dismissed the $125,000 award. The Court of Appeal declined to hold that Lassonde’s behaviour was abusive, holding that Lassonde had every right to bring its trademark dispute before the court.

Little did Lassonde know, it was about to be inundated with social media criticism. La Presse, a Quebec newspaper, ran a story on April 7th, 2012 chronicling Kudzman’s battle with Lassonde. Within 8 hours, the story had been shared over 1000 times on Facebook, and #Oasis began trending in the Twittersphere, becoming the most used hashtag in Montreal that day. Hundreds of negative comments flooded Lassonde’s Facebook page. Guy Lepage, a Quebec media star, tweeted his boycott of OASIS juice products in protest to Lassonde’s actions.  Internet users reacted to the David and Goliath scenario that Kudzman’s story represented – almost universally decrying what they saw as Lassonde’s bullying tactics.

Lassonde, undoubtedly sensing a public relations nightmare, decided that same evening to offer a settlement. Although details are not available, Kudzman has assured the media that the settlement sum was similar to the amount that she was awarded in the lower-court decision – and was enough to cover the debts she had incurred during the protracted court case.

Ultimately, Lassonde’s success in the courtroom was irrelevant and it was public opinion as expressed in the social media that mattered. Whether Lassonde might have handled the litigation differently is an open question, but it is clear that owners, when enforcing trademark rights, need to consider the potential impact of social media.