Counterfeiters beware: Canadian court's message to purveyors of 'knock offs'

In a case that is being hailed as the latest landmark decision in the recent trend of bringing counterfeiters to justice, the Federal Court of Canada (FC) awarded Louis Vuitton and Burberry the largest ever punitive damages award in a trademark counterfeiting and copyright case in Canada.

Louis Vuitton has taken an aggressive approach to combating counterfeiting in Canada and globally over the last several years, and was also the party responsible for the previous record damages given in a Canadian counterfeiting case, when it was awarded over $900,000 in 2008.

Earlier in 2011 in Louis Vuitton Malletier SA et al v Singga Enterprises (Canada) Inc et al, Mr Justice Russell ordered three Canadian companies to pay the plaintiffs a total of $2.5 million for activities the court characterised as “egregious”. According to the claim, the defendants were engaged in “large- scale, sophisticated manufacturing operations in China and were importing vast amounts of counterfeit products into Canada, with the intent of selling them nationwide in stores, at gift shows and online”.

The plaintiffs’ case proceeded by way of a motion for summary judgment and was essentially undefended. The court took note of the “significant time and resources” the plaintiffs were forced to expend in order to gather the evidence, which showed not only the wide scope of the infringing activities, but their continuation even after the action was started.

“THE COURT COMMENTED THAT THE CONCLUSIONS THE PLAINTIFFS ASKED THE COURT TO DRAW WERE ‘IF ANYTHING, DECIDEDLY ON THE CONSERVATIVE SIDE’.”

The court commented that, in light of the evidence, the conclusions the plaintiffs asked the court to draw were “if anything, decidedly on the conservative side”. The defendants’ minimal participation in the proceedings and repeated delay tactics also drew criticism from the judge, who noted that the defendants’ disrespectful disregard for the process of the court resulted in further unnecessarily increasing the plaintiffs’ costs.

This case represents a significant step forward for brand owners in their ongoing battle against a multi-billion dollar industry in Canada and around the world.

Domain name developments: Ontario Court of Appeal recognises domains as “personal property”

Tucows.com Co v Lojas Renner SA arose out of the filing of a UDRP complaint by Lojas Renner SA, a Brazilian department store chain, seeking the transfer of the domain name renner.com from its Canadian registrant, Tucows.com Co. Instead of responding to the complaint, Tucows turned to the Ontario court for declaratory relief, namely, confirmation that it had rights and legitimate interests in the domain name, that it had not registered the domain name in bad faith and that Renner was not entitled to the transfer of the domain name.

Renner then brought a motion under the Ontario Rules of Civil Procedure to set aside the extra-territorial service of the Tucows’ statement of claim and to permanently stay the action for lack of jurisdiction.

Renner was successful at first instance, as the motions judge agreed that service outside the province without leave was restricted by the Ontario Rules to cases involving real or personal property and the domain name at issue was neither (i) “personal property” within the meaning of the Rules, nor (ii) located in Ontario, as it had no physical presence. Moreover, a “real and substantial connection” between the domain and Ontario was not established, thus the court had no jurisdiction.

The Ontario Court of Appeal canvassed international jurisprudence in this area and reversed the decision, holding that a domain name, while intangible, is in fact personal property under the Rules. Noting that there is no definition for property in the Rules or common law, the court held that property must entail some exclusive right that is definable, capable of assumption by third parties and have some degree of permanence.

The “bundle of rights” acquired by a domain name registrant satisfies these criteria. The court similarly had little trouble finding the requisite connection between the domain and Ontario to establish jurisdiction on the basis that this was the location of the registrant, the registrant (and the servers), which was important and relevant to the question of enforceability of the court’s order.