Date: 20000829
OTTAWA, ONTARIO this 29th day of August 2000.
BEFORE: The Honourable Mr. Justice Pelletier
Docket: T-1403-99
BETWEEN:
OAKLEY, INC. and OAKLEY CANADA INC.
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT OAKLEY MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A"
TO THE STATEMENT OF CLAIM
Docket: T-550-99
BETWEEN:
VIACOM HA! HOLDING COMPANY and
TIME WARNER ENTERTAINMENT COMPANY, L.P.
carrying on business
in partnership as COMEDY PARTNERS
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT SOUTH PARK MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A" HERETO
Docket: T-551-99
BETWEEN:
RAGDOLL PRODUCTIONS (UK) LIMITED and
THE ITSY BITSY ENTERTAINMENT COMPANY and
THE ITSY BITSY ENTERTAINMENT COMPANY (CANADA), INC.
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT TELETUBBIES MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A" HERETO
Docket: T-1636-99
BETWEEN:
NIKE CANADA LTD. and NIKE INTERNATIONAL LTD.
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS,
NAMES UNKNOWN, WHO OFFER FOR SALE, SELL,
IMPORT, MANUFACTURE, DISTRIBUTE, ADVERTISE,
OR DEAL IN UNAUTHORIZED OR COUNTERFEIT
NIKE MERCHANDISE, AND THOSE PERSONS LISTED
IN SCHEDULE "A" TO THE STATEMENT OF CLAIM
Docket: T-823-99
BETWEEN:
NINTENDO OF AMERICA INC. and
NINTENDO OF CANADA LTD.
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT POKÉMON MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A"
TO THE STATEMENT OF CLAIM
Docket: T-945-98
BETWEEN:
FILA CANADA INC.
Plaintiff
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT FILA MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A"
TO THE STATEMENT OF CLAIM
Docket: T-2192-95
BETWEEN:
TOMMY HILFIGER LICENSING INC. and
TOMMY HILFIGER CANADA INC.
Plaintiffs
- and -
PHILLIPE SIMPSON, HARMONY APPAREL, MICHEL SOLIMAN,
GOLDSTAR DESIGN LTD., and JOHN DOE and JANE DOE
and OTHER PERSONS UNKNOWN TO THE PLAINTIFFS
WHO OFFER FOR SALE, SELL, IMPORT, MANUFACTURE,
ADVERTISE, OR DEAL IN COUNTERFEIT TOMMY HILFIGER CLOTHING
Docket: T-646-99
BETWEEN:
ADIDAS-SALOMON AG and ADIDAS (CANADA) LIMITED
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT ADIDAS MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A" HERETO
REASONS FOR ORDER
PELLETIER J.
[1] Seema and Jatinder Gupta's business took a turn for the worse on November 13, 1999. A team of lawyers and investigators representing various copyright and trade-mark holders showed up armed with a number of "rolling" Anton Piller Orders and seized a significant portion of their inventory. When the Guptas took stock of the wads of paper left with them by the team, they found nine Statements of Claim, nine Anton Piller Orders and nine Notices of Motion for the review of the execution of the Anton Piller Orders. They did not appear on the return of the Motion and allowed the Statements of Claim to be noted for default. They might not have done so had they would have known that a claim for judgments totalling some $42,750 would be made against them.
[2] When this matter came on before me on May 11, 2000, I issued directions dealing with the judgment which I was prepared to sign. Representations were received from counsel for the plaintiffs as a result of which a hearing was held. The issue in that hearing was whether nominal damages are still nominal damages if they are assessed nine times over. Specifically, each of the plaintiffs sought nominal damages for infringement in the amount of $3,000 and costs of $1,750 for the review of the execution of the Anton Piller Order and entry of default judgment. Simple arithmetic ( 4,750 x 9) leads to the conclusion that the Guptas' potential exposure was $42,750. This is not a number which leaps to the lips when lawyers gather to discuss nominal damages.
[3] This issue has been considered before. Counsel advises that the $3,000 amount was fixed as minimum nominal damages by Gibson J. in the course of disposing of motions for default judgment against one Angela Bali in file no. T-1951-95. Prior to that time, the practice on motions for default judgment had been to send the matters to a reference to determine damages. This proved to be cumbersome and a drain on the Court's resources. As a way of simplifying and speeding up the process, the Court assessed damages on a global basis at $3,000 per plaintiff in the case of defendants operating from temporary premises such as flea markets1. This has become the accepted measure of damages by the judges of this Court, though there have been instances where other amounts have been assessed.
[4] While there have been other instances of multiple applications for nominal damages against the same defendants, there does not appear to be any decisions dealing with the principles to be applied in such cases.
[5] One begins with the plaintiff's entitlement to damages. In these cases, the intellectual properties sought to be protected consist of trade-marks and works protected by copyright. The relevant legislation is the Trade-marks Act, R.S.C. 1985 c. T-13 and the Copyright Act, R.S.C. 1985 c. C-42. The relevant provisions of the Trade-marks Act are the following:
| 53.2 Where a court is satisfied, on application of any interested person, that any act has been done contrary to this Act, the court may make any order that it considers appropriate in the circumstances, including an order providing for relief by way of injunction and the recovery of damages or profits and for the destruction, exportation or other disposition of any offending wares, packages, labels and advertising material and of any dies used in connection therewith.
|
53.2 Lorsqu'il est convaincu, sur demande de toute personne intéressée, qu'un acte a été accompli contrairement à la présente loi, le tribunal peut rendre les ordonnances qu'il juge indiquées, notamment pour réparation par voie d'injonction ou par recouvrement de dommages-intérêts ou de profits, pour l'imposition de dommages punitifs, ou encore pour la disposition par destruction, exportation ou autrement des marchandises, colis, étiquettes et matériel publicitaire contrevenant à la présente loi et de toutes matrices employées à leur égard.
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[6] The Copyright Act speaks of damages in these terms:
| 34. (1) Where copyright has been infringed, the owner of the copyright is, subject to this Act, entitled to all remedies by way of injunction, damages, accounts, delivery up and otherwise that are or may be conferred by law for the infringement of a right.
35. (1) Where a person infringes copyright, the person is liable to pay such damages to the owner of the copyright as the owner has suffered due to the infringement and, in addition to those damages, such part of the profits that the infringer has made from the infringement and that were not taken into account in calculating the damages as the court considers just.
(2) In proving profits,
(a) the plaintiff shall be required to prove only receipts or revenues derived from the infringement; and
(b) the defendant shall be required to prove every element of cost that the defendant claims.
38.1 (1) Subject to this section, a copyright owner may elect, at any time before final judgment is rendered, to recover, instead of damages and profits referred to in subsection 35(1), an award of statutory damages for all infringements involved in the proceedings, with respect to any one work or other subject-matter, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than _$500 or more than _$20,000 as the court considers just.
|
34. (1) En cas de violation d'un droit d'auteur, le titulaire du droit est admis, sous réserve des autres dispositions de la présente loi, à exercer tous les recours -- en vue notamment d'une injonction, de dommages-intérêts, d'une reddition de compte ou d'une remise -- que la loi accorde ou peut accorder pour la violation d'un droit.
35. (1) Quiconque viole le droit d'auteur est passible de payer, au titulaire du droit qui a été violé, des dommages-intérêts et, en sus, la proportion, que le tribunal peut juger équitable, des profits qu'il a réalisés en commettant cette violation et qui n'ont pas été pris en compte pour la fixation des dommages-intérêts.
(2) Dans la détermination des profits, le demandeur n'est tenu d'établir que ceux provenant de la violation et le défendeur doit prouver chaque élément du coût qu'il allègue.
38.1 (1) Sous réserve du présent article, le titulaire du droit d'auteur, en sa qualité de demandeur, peut, avant le jugement ou l'ordonnance qui met fin au litige, choisir de recouvrer, au lieu des dommages-intérêts et des profits visés au paragraphe 35(1), des dommages-intérêts préétablis dont le montant, d'au moins 500_$ et d'au plus 20 000_$, est déterminé selon ce que le tribunal estime équitable en l'occurrence, pour toutes les violations -- relatives à une oeuvre donnée ou à un autre objet donné du droit d'auteur -- reprochées en l'instance à un même défendeur ou à plusieurs défendeurs solidairement responsables.
|
[7] A copyright holder is in a position to claim damages of at least $500 per work infringed (subject to certain exceptions which are not material here) without proof of actual damages by reason of section 38.1 of the Copyright Act. In the case of infringement of trade-marks and the related tort of passing off, the authorities are to the effect that damages are presumed upon proof of passing off.
| However, once passing off is established, there is injury to the goodwill and the Court must assess "... what is a fair and temperate sum to give to the plaintiff for that injury": Fox, supra, 3rd ed., p. 646. |
| It seems that in cases involving innocent passing off the Court generally awards nominal damages. Nominal damages, of course,"... does not mean small damages" per Lord Halsbury in The "Mediana", [1900] A.C. 113 at p. 116. |
| Seagoing Uniform Corp v. US Dungaree Seafarers Ltd (1975) 22 C.P.R. (2d) 199 Affirmed 34 C.P.R. (2d) 240. |
[8] In the present case, passing off is alleged in the Statement of Claim and the claim has been allowed to go by default. Even in a case of infringement without an allegation of passing off, the Court may award damages for loss of goodwill without proof of actual damage2.
[9] Proof of damages would be difficult in any case in this context. The damages may consist of lost sales but given the differences in price between the genuine article and the counterfeit ones, persons who buy the latter may be reluctant to spend the money to buy the former. It is more likely that the intellectual property holder's goodwill will be damaged by the presence of inferior quality goods bearing its marks or copyrighted material. A further difficulty in the assessment of damages is that information about the infringer's sales could only come from his/her records which are often non-existent.
[10] All this to say that the owners of intellectual properties have a right to damages arising from the infringement of each mark or work, which can be assessed without proof of actual damage or damage to goodwill. Setting aside the amount of the award for a moment, it does not seem unfair or unreasonable to approach the question of damages, in the case of judgments in default, from the perspective of a global assessment for which, by convention, a fixed amount is awarded.
[11] This is only true to the extent that the amount is seen to be fair. The $3,000 amount which has been used since approximately 1995 has achieved the status of precedent. It is not my intention to disturb it. But it is only precedent in the case of undefended claims. This does not prevent a defendant from putting the question of damages into issue, at which point the Court would decide the issue on the basis of the evidence before it.
[12] If one accepts that a conventional award of $3,000 for all claims by one plaintiff is fair, is it less fair if the same claim is advanced by multiple plaintiffs at the same time? This effectively amounts to asking whether the method of enforcement should affect the quantum of damages. If each plaintiff were to enforce its rights individually on successive days, it would be no defence for the defendant to say that the damages sought by the ninth plaintiff were excessive because of amounts paid to the first plaintiff. The number of plaintiffs involved in a particular enforcement action may be relevant to the question of costs but logically should be irrelevant to the question of damages.
[13] In the result, I conclude that if one is satisfied that a conventional damage award of $3,000 is a fair resolution of all claims which a single plaintiff could raise arising from the infringement of its marks or works, then it is not made less fair by being advanced by a number of plaintiffs at once. The fact that there are multiple plaintiffs is a result of the defendant's conduct, not the plaintiffs'.
| [14] The fact of multiple plaintiffs however does raise the issue of costs of the execution. This question was carefully canvassed by Gibson J. in Nike Canada Ltd. v. Jane Doe, [1999] F.C.J. No. 1018. In that case, my colleague carefully considered the rules applicable to the award of costs in this context and identified the following guiding principles: |
| While I have found no authority to support the following propositions, nor, for that matter, to contradict them, I am satisfied that they should apply on the facts here at issues: |
| - Costs awards should not be punitive. They should not amount to a disguised award of damages, nominal or otherwise; |
| - Costs awards should not be such as to benefit the plaintiffs from "economies of scale". A number of plaintiffs who agree to utilize a single observation and search team and a single counsel on the resulting appearance before the Court should not thereby reap a disproportionate reward in costs. Such plaintiffs have sought and obtained from the Court an extraordinary weapon in their very legitimate battle against "knock-offs" or counterfeit copies. They are generally in agreement that they must exercise prudence and restraint in the use of the weapon. That same prudence and restraint should extend to the claims of counsel on their behalf for costs awards. Put another way, plaintiffs such as those who appeared before the Court on the 19th of April are acknowledged to hold valuable intellectual property. They have the burden of ensuring the integrity of their intellectual property rights. They should not be able to cast the cost of that burden on defendants beyond what would normally be recoverable in costs, absent the existence of Anton Piller orders. |
[15] Gibson J. then considered how costs of the execution of the Anton Piller Order and costs of the review of the execution should be assessed. He concluded that certain caps should be applied:
| Costs awards on applications for orders reviewing the execution of Anton Piller orders, adding defendants and granting interlocutory injunctions should not exceed an amount in the range of $500, inclusive of disbursements, per order granted and should not exceed, in the aggregate, an amount in the order of $5,000, inclusive of disbursements, per appearance before the Court, no matter how many plaintiffs are represented and how many defendants have been served. Where the maximum of $5,000 per appearance is sought, it should be shared equally among all orders granted on the particular appearance before the Court. |
[16] It is to be noted that the costs being discussed are those relating to the execution and review of the execution of the Anton Piller Order and do not include the costs of entering default judgment. It should also be noted that the $5000 cap applies to the appearance in Court and not to the enforcement activity itself. The maximum amount only becomes an issue if counsel wishes to have the Court grant in excess of 10 orders at one appearance. The Court might well be grateful if it was not faced with requests for 80 orders at one sitting, as occurred to Reed J. on one occasion3, so that a $5,000 cap per appearance is perhaps in the Court's interest as well as the defendants'.
[17] The last issue is the question of costs for entry of default judgment. The usual practice of plaintiff's counsel is to request $500 inclusive of disbursements as costs for entry of default judgment. This includes preparation of the motion material, attendance in chambers and drawing the order.
[18] The considerations identified earlier apply equally to the award of costs on an application for default judgment. In examining the material filed on the original application for default judgment made pursuant to Rule 369, one notes that it consists of approximately 100 pages of material. Many of those pages consist of reproduction of material which has been used on other applications, specifically the motion for review of the execution of the Anton Piller Order (for which costs have already been settled). The Notice of Motion and written representations are essentially the same for every defendant except for the changes necessary to make the material refer to a specific defendant. It is clear that a fair amount of time is required to organize, copy and assemble the material but much of the legal work contained in the material has already been compensated for in the costs allocated for the review motion. Since the motions are disposed of pursuant to Rule 369, no appearance is required.
[19] The Tariff of Costs provides five columns within which costs may be assessed and a range of units within each column. As the difficulty and dollar value of a matter increase, so does the column in which costs are assessed. Each unit represents $100 (adjusted for inflation from the date the Tariff was set in 1998) which may be awarded for the service or per hour spent on the service as the Tariff dictates. These matters could be considered under either of Column I or Column II, given the volume of material and in recognition of the fact that the amount is to be inclusive of disbursements. A comparison of the two columns shows the following:
| 4. Preparation and filing of an uncontested 1-2 1-3 |
motion, including all materials
[20] In the circumstances, my view would be that a fair assessment of costs would be in the range of $250 per order with no cap for volume. This amount would be inclusive of disbursements, except where the plaintiff could show that special circumstances existed for allowing recovery of disbursements in addition to the $250 award for costs.
[21] In the end result, I would order that the costs and damages in this matter would be as follows:
| Costs of review motion 500 |
| Costs of default judgment 250 |
$ 3,750
Having arrived at this point, I wish to point out certain limiting factors.
[22] These conclusions were arrived at after hearing from Mr. Lipkus, counsel for the plaintiffs, but without having heard from anyone representing the particular defendants in this matter, the Guptas, or the defendants as a class. As a result, these conclusions (as they might apply to other defendants) are subject to review in the event of representations being made by defendants at some point in time.
[23] Since the damage award is by definition a conventional amount in the sense that it is fixed by reference to an arbitrary benchmark as opposed to evidence of actual losses, it is subject to being displaced by evidence of actual damages. Nor would this amount relieve a plaintiff from having to establish its damages in the event that a defendant put damages in issue.
[24] Finally, given that none of the material served upon defendants under the current practice would alert them to the quantum of the claim for damages and costs to be advanced against them, it would be appropriate for plaintiffs to bring to the attention of defendants the possibility of a judgment against them in this amount for each order obtained. This could be done as part of the process of explaining the Anton Piller Order and the associated legal process to the defendant in the course of the execution of the order. The fact that such notice was given could be taken into account by a judge dealing with the application for default judgment under Rule 369. This is not to say that the award of damages is contingent upon such notice being given but that a judge's concerns about the fairness of the cumulative effect of such awards might be allayed by the fact of notice having been given.
[25] In the end result, judgment and order will issue in favour of the plaintiff against the defendants in the amount of $3,000 for damages and $750 for costs. These reasons apply equally to the other plaintiffs on whose behalf orders were served upon the defendants in file numbers: T-1403-99, T-550-99, T-551-99, T-1636-99, T-823-99, T-945-98, T-2192-95 and T-646-99. Counsel shall provide draft orders incorporating these terms and any other terms sought in the motion for default judgment on each of these files.
"J.D. Denis Pelletier"
Judge
__________________
1 The Court also indicated that damages of $6,000 would be assessed against persons operating from conventional retail premises and $24,000 against manufacturers and distributors of counterfeit goods. These amounts are included where references is made in these reasons to the "conventional" damage awards.
2 "Even if no damages are held to have accrued, the Court may award damages for loss of goodwill, or an injunction." Hughes on Trademarks (April 2000 release) para. 60.
3 Tommy Hilfiger Licensing, Inc. v. Simpson, [1999] F.C.J. No. 1183
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