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.

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