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.

Previous ArticleNext Article