Counterfeit Goods: Significant Statutory and Punitive Damages

We have been following the line of cases dealing with counterfeit goods and the resulting damage awards, and note the most recent case from the Federal Court makes clear that a tougher approach to trademark  and copyright infringement can now be expected in Canada.  In Louis Vuitton Malletier S.A. v. Singga Enterprises (Canada) Inc., the Court awarded significant damage awards as well as punitive damages against the three defendant companies and their principals.

The Plaintiffs, Louis Vuitton and Burberry, hired a number of investigators to attend the stores and warehouses of the defendants Singga Enterprises Canada, Altec Productions and Guo (doing business as Carnation Fashion Company), as well as purchase items from their websites. While in attendance at the stores and warehouses, the investigators were shown and purchased a number of counterfeit items including handbags, sunglasses and jewellery, all of which contained unauthorized productions of the Louis Vuitton and Burberry trade-marks. The Plaintiffs were successful in showing that the defendants’ activities of manufacturing, importing, distributing, offering for sale and actual sale of bulk quantities of counterfeit and/or infringing items had been ongoing and, in the case of one of the defendants, had continued after the commencement of the proceeding and the motion for summary trial brought by the Plaintiffs.

The Court noted that none of the defendants, with the exception of the defendant Guo, had filed any materials in response to the motion or attempted to cross-examine any of the Plaintiffs’ affiants on their affidavits. Additionally, none of the defendants, again with the exception of Guo, had attended the hearing of the matter.

Following cases such as Louis Vuitton Malletier S.A. v. Lin Pi-Chu Yang and Louis Vuitton Malletier S.A. et al v. 486353 B.C. Ltd., the Court took a tough stance toward the defendants.  Noting the defendants’ knowing and wilful behaviours, the Court awarded damages for trade-mark infringement of $30,000 for each instance of infringement against the Singga defendants and defendant Guo. Resultantly, the Singga defendants were found liable for a total of $300,000 to the Louis Vuitton Plaintiffs and $180,000 to the Burberry Plaintiffs, and the Guo defendant was required to pay $180,000 to the Louis Vuitton Plaintiffs and $120,000 to the Burberry Plaintiffs.

With regard to the Altec defendants, the evidence showed a high level of importation and inventory turn-over and was held to warrant an award of damages on a turn-over basis rather than simply a per instance basis of infringement. The Altec defendants were required to pay $480,000 in damages to the Louis Vuitton Plaintiffs, and $480,000 to the Burberry Plaintiffs. Additionally, the Singga and Altec defendants were found jointly and severally liable for the activities of the Altec defendants, for which the Singga defendants received a commission, and were required to pay $60,000 to the Louis Vuitton Plaintiffs and $60,000 to the Burberry Plaintiffs.

In addition to the damages awarded for the defendants’ infringement of the Trade-marks Act, Louis Vuitton was found to be entitled to recovery of damages and profits, pursuant to the Copyright Act, in relation to infringement by each of the groups of defendants. Statutory damages for copyright infringement were awarded at the high end of the scale due to the defendants’ bad faith conduct, which was found to be dismissive of law and order, and demonstrating a necessity for deterring future infringements. The Court awarded a total of $40,000 per group of defendants.

Additionally, the Court found that the Plaintiffs were entitled to punitive and exemplary damages as against each of the defendants. Following the earlier cases referenced above, which held that punitive and exemplary damages may be awarded where a defendant’s conduct is “outrageous” or “highly reprehensible” and with little regard for the legal process, the Court awarded punitive and exemplary damages against each of the defendants. The Louis Vuitton Plaintiffs were awarded $200,000 against the Singga defendants, $250,000 against the Altec defendants, and $50,000 payable by the defendant Guo.

Finally, citing the Louis Vuitton cases mentioned above, the Court awarded solicitor and client costs due to the defendants “disrespectful disregard” for the process of the Court, and the higher legal fees and disbursements incurred by the Plaintiffs as a result.

An appeal has now been filed by the Singga defendants, which means that there may eventually be a Federal Court of Appeal decision regarding the awards. We will continue to follow this story.

Sunrise For .xxx Domains Is Now Open

As reported in our recent Knowledge Bytes publication, today marks the beginning of the Sunrise period for the new .xxx domain.   Owners of registered trademarks who are not part of the adult entertainment industry may and should apply to block their registered marks from becoming part of a domain name with the new .xxx generic top level domain.  This Sunrise period is in effect until October 28, 2011.  Different Registrars are charging different amounts for this service, so shop around.

Stanley Cup Playoffs Spark Trademark Activity

The final round of the NHL Stanley Cup Playoffs is about to kick off here in Vancouver, with the hometown Canucks facing off for the first time ever in the playoffs against the storied Boston Bruins.   Perhaps not surprisingly, local businesses in Vancouver are looking to capitalize on this historic event in different ways.

For example, the Vancouver Province is reporting that the Boston Pizza chain has temporarily (and wisely) rebranded itself as Vancouver Pizza, for the duration of the series. 

Earlier in the playoffs, a local automobile dealership that was using the phrase “Go Canucks Go” and the team’s logo on the window of the dealership premises, received a cease and desist letter from the offices of the National Hockey League, demanding that the references to the CANUCKS word mark and logo be removed from their window.

No doubt as the series cranks up, other local businesses will find equally creative ways to get in on the action.

PETA’s Use Of Canadian Club Trademark Gets Whacked

People for the Ethical Treatment of Animals (PETA) is in the news again for its cheeky ad campaigns, which sometimes use well known trademarks of other parties to garner exposure for its views on Canada’s seal hunt.  We previously blogged about the use by PETA of an ad featuring the 2010 Winter Olympic and Paralympic Games mascots. 

A recent Globe & Mail article reports that PETA had been distributing postcards in a number of bars in Toronto, with plans to roll out the campaign across the country.  The postcards pictured on one side, a cartoon featuring a seal sitting at a bar and asking  the bartender for “Anything but a Canadian Club”.  The other side of the postcard featured a photograph of a hunter about to club a seal.

The North American distributor of Canadian Club Whisky didn’t see the humour in PETA’s cartoon and sent a cease and desist letter, claiming that the publication had caused degradation of Canadian Club’s corporate image and damage to its brand and trademark.

In response to the demand letter PETA agreed not to send out more postcards and to remove the cartoon from its website.   Notwithstanding its compliance with the demand, a spokesperson for PETA argued that it had the doctrine of fair use on its side, to permit the use of trademarks for parody or satire.  Unfortunately for PETA, fair use is a U.S. doctrine that doesn’t apply in Canada in the context of either copyright or trademarks.

Off-colour Trademark Decision Leaves Glaxo Purple With Frustration

In reasons issued late last year, the Federal Court of Appeal has upheld a decision to expunge a trademark registration obtained by Glaxo Group Limited (“Glaxo”) for two-tones of the colour purple as applied to the visible surface of an asthma inhaler. The decision raises interesting questions both about primary and secondary marks, and about the amount of evidence necessary to support a finding that a mark is distinctive.

Inhaler - Front ViewBy way of background, Glaxo registered its mark (depicted right, below) in May of 2007. A collection of generic drug manufacturers brought a Federal Court application to expunge the mark about 6 months later, alleging that the mark was not distinctive.

In its decision, the Federal Court concluded that for the mark to be distinctive the constituency of consumers for the inhaler (including physicians, pharmacists and patients) must relate the trade-mark to a single source, and thereby use the mark to make their prescribing, dispensingInhlaler - Top/Side View and purchasing choices. In market sectors where purchasing decisions are made by or on the advice of professionals, commercial distinctiveness of such marks will be inherently more difficult to establish: such persons will make purchasing or prescription decisions based on the specific properties of the product, and not on the packaging or marks associated with those products. Read more

Restaurant Trademarks: Worth their Salt?

The Globe and Mail is reporting on a dispute that has arisen between Vancouver’s Salt Tasting Room, which opened in 2006, and Toronto’s Salt Wine Bar, which opened in the summer of 2010.  The owner of the Vancouver Tasting Room apparently appealed to the Toronto Wine Bar owners to change their name, but without success. 

This dispute highlights the need for businesses, restaurant and otherwise, to register their trademarks in Canada and to register them sooner rather than later, since once a registration issues, it grants the registered owner the exclusive right to use that mark or one that is confusingly similar, throughout Canada in association with the claimed goods and services, even if that owner has only used its mark in one city or region of Canada.

In this case, the Vancouver owner waited until May of 2009 to file applications to register its SALT TASTING ROOM  and SALT marks, even though it claims in both applications to have used those marks since July of 2006.   Because of the timing of the start up of the Toronto restaurant and the current status of those applications, the position of the parties is murkier than it might otherwise be.  What further muddies the waters are several prior registrations for marks in Canada that include the word “Salt” that are registered to other entities.

As another recent article notes, the restaurant industry is no stranger to trademark issues, including the lawsuit recently launched by the Wild Wing restaurant chain in Aurora, Ontario against Buffalo Wild Wings, a United States franchise operator that is expanding into Canada.

The fact that the Salt story involves restaurants in Vancouver and Toronto is also of interest, given that we are waiting to hear how the Supreme Court of Canada will rule in Masterpiece Inc. v. Alavida Lifestyles Inc. where one of the issues is the likelihood of confusion between similar marks used in two geographically distinct areas; in that case, in the context of the ability of an earlier user’s ability to block a later user’s application for registration.

You Know The Olympics Are Over When…

The Canadian Intellectual Property Office (CIPO) sent out a reminder today, advising that pursuant to the Olympic and Paralympic Marks Act (OPMA), marks and expressions listed on Schedules 2 and 3 of that Act will expire on December 31, 2010.   As a result, commencing on January 1, 2011, CIPO will no longer raise an objection pursuant to Section 12(1)(i) of the Trade-marks Act on the basis that an applied for mark consists of or so nearly resembles as to be mistaken for a mark or expresssion found in either of those Schedules. 

As regular readers of this blog will recall, the Canadian government enacted this legislation well in advance of the 2010 Vancouver Olympic Winter Games (Vancouver Games), to provide the organizers of the Vancouver Games (VANOC) with another very useful tool in their fight against unauthorized use of numerous trademarks and symbols that are associated with the Olympics generally and more specifically those associated with the Vancouver Games.  Schedule 1 to the OPMA, which sets out various Olympic marks that are not specific to any particular Olympic Games, will remain in force.  Schedules 2 and 3 set out various marks and expressions that are specific to the Vancouver Games and as those games are now part of history, the need to protect those marks and expressions is no longer justifiable.

It was Schedule 3 in particular that raised the ire of some pundits, since it specified that a combination of words from Part 1 with words from Part 2 of that Schedule – including seemingly innocuous combinations of words such as “21st” or “Tenth”, with words such as “Winter” or “Whistler” – could be used as evidence in support of a finding that a person was promoting their business, goods or services in a manner likely to mislead the public into believing that there was an approval, authorization or endorsement by, or a business association with, the Canadian Olympic Committee (COC) or the Canadian Paralympic Committee (CPC).  This, coupled with the ability of VANOC or the COC/CPC to obtain an interlocutory injunction without having to prove that they would suffer irreparable harm, made the effect of these provisions very far reaching.