Date: 20020124
Docket: T-2569-96
Neutral citation: 2002 FCT 78
Ottawa, Ontario, this 24th day of January, 2002
PRESENT: THE HONOURABLE MR. JUSTICE PELLETIER
BETWEEN:
LOUIS VUITTON MALLETIER, S.A. and
LOUIS VUITTON CANADA INC.,
Plaintiffs,
- and -
BAGS O'FUN INC., VEE BOUTIQUE & CLEANERS, HALLMARK GROUP,
NEW WORLD FASHION, KUN KOOK CHUN and PYONG LIM CHUNG
doing business under the trade name and trading style of DAISY GIFT
CENTRE, VIRGINIA CAMPBELL doing business under the trade name
and trading style of LEG-IN BOUTIQUE, MIDOPA GIFT SHOP,
174866 CANADA INC. doing business under the trading name
A. RINA CHAUSSURES, JOHN DOE and other persons unknown to
the Plaintiffs doing business under the trading names of CALIFORNIA
SUNGLASSES, S & M SALES, FRANÇOIS VILLON, JOHN DOE and
other persons unknown to the Plaintiffs doing business under the trade
name and trading style of TIM YOUNG FASHIONS, JOHN DOE and
other persons unknown to the Plaintiffs doing business under the trade
name and trading style of AKA FASHIONS, LA SCARPA EUROPEAN
FASHION LIMITED, PATRICK CHAN, John Doe's, Jane Doe's and
other persons unknown to the Plaintiffs doing business at A STREET
MARKET LOCATED IN OR ABOUT PENDER AND KEEFER STREETS
IN VANCOUVER, BRITISH COLUMBIA, CANADIAN QUALITY
OUTLET, ALL BAGS DISCOUNT HANDBAGS LTD., ALL BAGS
DISCOUNT (BRAND NAME SPECIALIST), PAUL CHUN
(A.K.A. SUI KEUNG), PUN CHUN, PO KING LAM, K.H. SUEN,
JOHN DOE'S, JANE DOE'S, and other persons unknown to the Plaintiffs,
doing business under the trade name of ALL BAGS DISCOUNT
(BRAND NAME SPECIALIST), and or doing business under the trade
name of CANADIAN QUALITY OUTLET and or doing business at AN
OUTDOOR MARKET LOCATED IN OR ABOUT THE CONTINENTAL
CENTER SHOPPING PLAZA IN RICHMOND, BRITISH COLUMBIA,
BOSSI TRADERS, and John Doe and Jane Doe and other persons
unknown to the Plaintiffs doing business under the trade name BOSSI
TRADER and other persons unknown to the Plaintiffs who offer for Sale,
Sell, Import, Manufacture, Print, Advertise, Promote, Ship, Store,
Display or otherwise Deal in Counterfeit LOUIS VUITTON ITEMS,
Defendants.
REASONS FOR ORDER AND ORDER
[1] This is an application for default judgment in which the plaintiffs claim a permanent injunction, damages in the amount of $3,000, and legal fees and disbursements of approximately $22,828.70 of which $12, 531.87 is private investigator's fees.
[2] The defendants are said to be Paul Chun, All Bags Discount Handbags Ltd. and All Bags Discount (Brand Name Specialist). No evidence has been offered as to the entity conducting business under the name of All Bags Discount (Brand Name Specialist). If it is either of Paul Chun or All Bags Discount Handbags Ltd., then no useful purpose is served by issuing judgment against them in their own name and in a business name. If the entity is someone other than these two, then no evidence has been led as to who that entity might be. The Court is disinclined to grant judgment against a trade name without knowing who is liable for the judgment. As a result, there will be no judgment against All Bags Discount (Brand Name Specialist).
[3] On the original return of the motion, fees and disbursement totalling $28,265.56 were claimed. The Court asked for further submissions on the recoverability of private investigator's fees as a disbursement and on the question of solicitor-client costs. In the Supplementary Submissions filed by the plaintiffs, the amount of fees and disbursements has been reduced to $22,828.70, as set out above. Submissions were received on the issue of solicitor-client costs but nothing was received on the specific question of the recoverability of private investigator's fees.
[4] The usual practice in Anton Piller matters such as this does not include an order for the recovery of private investigator's fees as disbursements. In Tommy Hilfiger Licensing, Inc. v. Simpson, [1999] F.C.J. No. 1442, Reed J. dealt with a case in which a number of orders were executed on a number of defendants on the same day. Her reasons refer to a claim for disbursements which would include private investigator's fees but it is not possible to discern whether, in the end, she allowed the fees or not. She indicated the fees had to be prorated among all the defendants and then awarded costs of $100, which presumably included disbursements. If that is so, then little or no account would have been taken of private investigator's fees.
[5] In Oakley Inc v. Jane Doe, [2000] F.C.J. No. 1388, I dealt with the question of fees and disbursements payable on applications for default judgments. The amounts which I found were payable were significantly less than those being claimed here and would not have included any amounts for private investigator's fees.
[6] In Coca-Cola Ltd. v. Pardhan, [2000] F.C.J. No. 91, Lutfy J., as he then was, dealt with the question of disbursements for private investigator's fees in the context of contempt proceedings. The evidence was that the plaintiffs had spent more than $100,000 on private investigators. Having regard to various factors, he allowed the plaintiffs $15,000 as disbursements in relation to the their private investigator's fees. Because contempt proceedings are to some extent sui generis, it is difficult to draw conclusions from the case. One notes, however, that one of the reasons which is suggested for discounting the amount of the private investigator's fees was the fact that the plaintiffs were protecting their trademarks.
[7] In Nike Canada v. Jane Doe, [1999] F.C.J. No. 1018, Gibson J. dealt with the amounts to be awarded for fees and disbursements in applications for default judgments. While the point of private investigator's fees is not specifically raised, one can assume that the judge, who is very experienced in Anton Piller matters, was aware that private investigators are involved in the execution of Anton Piller orders. The amounts which he awarded are not substantial enough to include any significant portion of private investigator's fees from which I conclude that he did not mean to include them.
[8] In U L Canada Inc. (c.o.b. Cheesebrough-Pond's Canada) v. Cantrade Entertainment Inc. (c.o.b. Cantrade), [1995] F.C.J. No. 795, Taxing Officer Smith allowed the full amount of investigator's fees on an assessment of fees and disbursements without any discussion as to the recoverability of such items.
[9] The issue raised by this question is the extent to which private investigator's fees incurred in the litigation process in Anton Piller matters should be treated as recoverable as opposed to a non-recoverable element of the plaintiffs' overhead. In other words, are investigator's fees simply part of the plaintiffs' cost of doing business or should they be recoverable from defendants as disbursements? At least one case has raised the question of whether they should be recoverable as damages rather than disbursements. See Coca-Cola Ltd. v. Pardhan , [1997] F.C.J. No. 963 at para. 14.
[10] In this case, the plaintiffs argue that the defendants' conduct has been such as to justify an award of costs on a basis other than party-and-party costs. There is evidence that the defendants continued to deal in counterfeit goods after an injunction had been issued restraining them from doing so. Reliance is placed on the case of Louis Vuitton S.A. v. Endo, (1991) 36 C.P.R. (3rd) 524, where the following appears:
Finally, I consider that blatant illegal and illicit activities such as those involved in the present case ought to be discouraged by adjudicating higher costs than those normally adjudicated on a client-to-client basis. In this particular case, however, the Defendant's operations are on a rather limited scale. Also, the Defendant has already remitted her unsold counterfeit products to Plaintiffs' counsel. Accordingly, in view of these particular circumstances, costs will be adjudicated in the amount of $12,000, being slightly more than half the value of the solicitor-client costs established by the evidence to be $23,681.94. No other punitive adjudication need be made in this matter.
However, it does not appear from the report whether the solicitor-client costs being spoken of included investigation fees.
[11] In my view, the recoverability of investigations fees ought not to depend upon a finding of outrageous conduct. It is well known that investigators are involved in many if not all Anton Piller matters. They are involved in locating counterfeiters as well as being involved in the execution of the Court's orders. If their fees are to be recoverable, it ought to be on the basis that they are incurred for purposes of the litigation and are a legitimate outlay by the plaintiff, in the same class as such outlays as expert's fees. The counter argument is that investigator's fees are simply part of the intellectual property holder's costs of doing business.
[12] While it is easy to say that certain expenses should be considered part of the plaintiff's cost of doing business, how does one distinguish recoverable expenses from costs which are deemed non-recoverable. One could say that expenses which would have been incurred in any event should not be recoverable as costs. What does this mean in the context of private investigator's fees in Anton Piller matters? There is no evidence before the Court on this issue but, on the basis of having dealt with a number of these matters, one can say that private investigators are routinely employed by the holders of intellectual property rights to locate and identify counterfeiters and to assist in the execution of Anton Piller orders. Are these expenses which would be incurred in any event?
[13] Holders of intellectual property rights are bound to take steps to oppose infringement of their property rights, failing which they may lose those rights. See, for example, Aladdin Industries Inc. v. Canadian Thermos Products Ltd and Registrar of Trade Marks (1969), 57 C.P.R. 230, affirmed (1972), 6 C.P.R. (2d) 1, in relation to the trade mark THERMOS passing into the public domain. To that extent, it is a necessary part of the business of exploiting intellectual property rights to protect the value of those rights by engaging in enforcement activity. It is an exercise in protecting the capital value of the intellectual property. In my view, therefore, enforcement activity is a necessary part of an intellectual property rights holder's business. To the extent that private investigators are a part of such necessary enforcement activity, their fees are expenses which would be incurred in any event and therefore are not recoverable.
[14] This still leaves the issue of whether costs should be awarded on a "premium" basis, akin to solicitor-and-client costs, as a result of the applicant's misconduct. While the applicant has offered to provide additional evidence of the defendants' misconduct, I am prepared to proceed on the basis that the defendants continued to trade in counterfeit goods after there was an injunction in place which prohibited them from doing so. This is established in the affidavit of Abe Snidako sworn August 23, 2001. The plaintiffs, as indicated above, rely upon the decision in Louis Vuitton S.A. v. Endo, supra, where costs which were essentially punitive in nature were awarded against a defendant whose conduct was particularly egregious.
[15] One would think that to the extent that legal fees were incurred in relation to issues of contempt, they ought to be recovered in the contempt proceedings. If the plaintiffs choose not to institute those proceedings, it is not obvious why those fees should be recoverable in the action itself. Apart from the activities related to possible contempt proceedings, there appears to be little which takes this matter outside the usual course of Anton Piller matters. The plaintiffs argue that the defendants consented to an interlocutory injunction against themselves and subsequently failed to comply with various filing deadlines imposed by the Court. Presumably that means that the plaintiffs were free to move for the relief they now seek earlier, when incurred fees were presumably less. I have not been provided with anything to suggest that motions or other proceedings were required once the review order was made.
[16] I also note in reviewing the fee invoices submitted with the material that some $5,800 of fees were incurred by plaintiffs' solicitors and another $4,500 incurred by their Vancouver agents, who actually attended at the seizure and attended upon the review motion in this file. There appears to be a certain amount of overlap, if not duplication.
[17] Given the amount of the fees claimed, I presume that the plaintiffs are not content to accept the scale of fees and disbursements set out in Oakley Inc. v. Jane Doe, supra. I will therefore refer the matter of costs to the assessment officer with the following guidelines:
- costs are to be assessed on the basis of column 2, at a point in the range to be determined by the assessment officer.
- no costs are to be allowed for overlapping or repetitious activities as between the Montreal and Vancouver solicitors
- only activities related to obtaining and executing the Anton Piller order, and bringing the matter to default judgment are recoverable. Activities related to possible contempt proceedings are not recoverable in this action.
ORDER
UPON application by the plaintiffs, and upon reviewing the material filed,
IT IS HEREBY ORDERED that:
1. The defendants shall pay to the plaintiffs the sum of $3,000 by way of damages.
2. The plaintiffs shall destroy or otherwise dispose of all goods in their possession which were seized from the defendants.
3. The defendants, their agents, administrators, officers, servants and employees and any successors and assigns, and each of them shall be restrained from:
(a) offering for sale, selling, importing, distributing, manufacturing, printing, advertising, promoting, shipping, storing or displaying any counterfeit VUITTON items in association with any of the VUITTON Registered Trademarks, namely:
Trademarks Registration Nos.
LV & Dessin 352,916
LV Logo 326,814
LV Logo 287,463
Keepall Bag 407,881
Noe Bag 407,882
Flower Design 401,088
L'Ame du Voyage (words) 372,032
Louis Vuitton (word) 288,667
Louis Vuitton (word) 237,219
Cuir Epi + Logo 384,607
Cuir Epi Noir 484,588
Cuir Epi 484,488
Cuir Epi Vert 448,621
Cuir Epi Jaune 455,587
Cuir Epi Fauve 455,586
Cuir Epi Gold 455,588
Cuir Epi Rouge 484,489
Cuir Epi Bleu 455,585
Toile Damier 492,021
TAIGA (word) 443,895
TAIGA + Logo 384,882
Or any other trademark confusingly similar therewith;
(b) from infringing the rights of the plaintiffs under the VUITTON Registered Trademarks;
(c) from infringing the rights of the plaintiffs under the VUITTON Proprietary Trade Dress;
(d) from depreciating the value of the goodwill attaching to the VUITTON Registered Trademarks;
(e) from directing public attention to its wares in such a way as to cause confusion between its wares and the wares of the plaintiffs; and
(f) from passing off its wares for those of the plaintiffs.
4. The plaintiffs shall have their costs to be assessed by the assessment officer in accordance with the guidelines set out in the reasons herein.
" J.D. Denis Pelletier"
Judge
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2569-96
STYLE OF CAUSE: LOUIS VUITTON MALLETIER, S.A. ET AL. v.
BAGS O'FUN INC. ET AL.
MOTION DEALT WITH IN WRITING WITHOUT THE APPEARANCE OF PARTIES
REASONS FOR ORDER AND ORDER : PELLETIER, J.
DATED: JANUARY 24, 2002
WRITTEN REPRESENTATIONS BY:
JACQUES A. LÉGER
ALAIN Y DUSSAULT FOR THE PLAINTIFFS
SOLICITORS OF RECORD:
LÉGER ROBIC RICHARD
MONTRÉAL FOR THE PLAINTIFFS
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