This blog previously reported on Louis Vuitton Malletier S.A. v. 486353 B.C. Ltd., which, along with Louis Vuitton Malletier S.A. v. Yang and Microsoft Corp. v. 9038-3746 Quebec Inc., evidences a recent trend toward substantial damage awards in counterfeit goods cases. The April 2009 decision in Microsoft Corp. v. PC Village Co. Ltd. follows the approach taken in these cases and appears to confirm the courts’ commitment to cracking down on the sale of counterfeit goods in Canada.

In this most recent case, Microsoft Corporation brought an action for copyright and trademark infringement against corporate defendants known as PC Village Markham and PC Village Downtown, which were computer retailers in the Greater Toronto Area. The action was also brought against two employees that worked in sales at these stores. Evidence provided by the plaintiff’s investigators showed that both retail locations engaged in selling computers with unlicensed Microsoft software loaded onto the hard drives. The individual defendants served a Statement of Claim, but did not file it and proceeded to negotiate a settlement which was never finalized. Microsoft then brought a motion for default judgment.

The Court agreed that Microsoft was entitled to a default judgment, having proved that the Statement of Claim was served, no defence was filed and having established on a balance of probabilities that infringement occurred. The Court then went on to award damages for copyright infringement. Microsoft chose not to seek additional damages for trademark infringement, depreciation of goodwill or loss of direct sales. When assessing statutory damages under section 38.1 of the Copyright Act, the Court considered several relevant factors. The Court held that the defendants’ practice of continuing to sell unlicensed Microsoft products after they were aware that doing so violated copyright law demonstrated bad faith. The Court also held that the defendants’ attempts to deceive investigators demonstrated improper conduct. Furthermore, the Court held that there was a need to deter others from violating Microsoft’s copyrights in the future.

In accordance with section 38.1(5) of the Copyright Act and the decisions in Louis Vuitton Malletier S.A. v. Yang. and Microsoft Corp. v. 9038-3746 Quebec Inc., the Court concluded that the presence of these factors indicated a need for substantial statutory damages and awarded $10,000 for each copyright violation. In addition to statutory damages, the Court cited Louis Vuitton Malletier S.A. v. Yang and stated that because of the “outrageous” and “reprehensible” conduct of the defendants, this was an appropriate case for punitive damages. Additionally, the Court ordered injunctive relief against the defendants because of the continuing nature of the infringement.

The two sales representatives were personally liable for the activities of the corporations they worked for because they knowingly participated in the infringement of the plaintiff’s rights. The Court also allowed the action to be continued against the corporate defendants even though they had been dissolved. Thus, any property that would have been available absent the dissolution was available to satisfy the judgments. One individual was jointly and severally liable with one of the named corporations for $80,000.00, while the second individual and corporation jointly and severally liable for $70,000.00. All defendants were jointly and severally liable for the $50,000.00 punitive award and $50,000.00 in costs, for a total of $250,000.00.