Docket: T-659-11
Citation: 2012
FC 404
Ottawa, Ontario, April 11,
2012
PRESENT: The Honourable Mr. Justice Zinn
BETWEEN:
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GUCCIO GUCCI S.p.A. and
GUCCI AMERICA, INC.
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Plaintiffs
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and
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MICHAEL MAZZEI
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Defendant
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REASONS FOR ORDER AND ORDER
[1]
The Plaintiffs
seek summary judgment on their claim against the Defendant in which they seek a
declaration that he infringed trade-marks TMA202,555 (“GUCCI”), TMA281,586 (“GG
DESIGN”), TMA656,141 (“GG & DESIGN”) and TMA713,111 (“GG (22) DESIGN”)
contrary to sections 19 and 20 of the Trade-marks Act, RSC 1985, c T-13,
together with related relief including damages.
BACKGROUND
[2]
The
facts as established by affidavits filed by the Plaintiffs are uncontested.
The Defendant neither cross-examined the affiants nor did he file any evidence
in response.
[3]
In
May 2010, the Defendant offered various luxury items for sale through a
classified advertisement on a website. An undercover investigator who was
trained to identify counterfeit items responded to the advertisement and
arranged to meet the Defendant at a gas station. They met on May 7, 2010. The
investigator purchased a Gucci purse for $140 and was given a free Louis
Vuitton wallet.
[4]
On
May 10, 2010 and January 8, 10 and 12, 2011, the Defendant posted similar
advertisements on a website. A second undercover investigator responded and
agreed to meet the Defendant at a storage facility. On January 14, 2011 the
undercover investigator was escorted into two separate storage units where he
saw and, with the help of a hidden camera, filmed hundreds of stored luxury
items. He purchased a Gucci belt, a Juicy Couture clutch, and a pair of UGG
boots for a total of $180. The investigator continued to correspond with the Defendant
and on February 1, 2011 he returned to the storage facility to purchase a Hugo
Boss wallet for $90. A second video filmed that day shows over one hundred
luxury items; approximately half of which bore Gucci trade-marks.
[5]
On
February 23, 2011, a third private investigator accompanied by a lawyer and a
Toronto Police Service detective attended at the Defendant’s storage units and
served him with several cease and desist letters. The private investigator
filmed the interaction with the Defendant and was able to observe numerous
counterfeit Gucci products on display.
[6]
Affidavits
filed by the Plaintiffs establish that the Gucci items purchased, advertised
and displayed were counterfeit. Specifically, the purse purchased by the first
investigator on May 7, 2010 bore the reproduction of trade-marks owned by the Plaintiffs,
was not manufactured in accordance with Plaintiffs’ specifications, and had
packaging and labeling which was inconsistent with that of original products.
Similarly, the belt purchased by the second investigator on January 14, 2011
bore one of the trade-marks owned by the Plaintiffs, was not being sold in a
wholly-owned or authorized store, and a portion of the fabric was not cut
according to Gucci standards. Screenshots of the Defendant’s three online
advertisements posted in January 2011 suggest that the Gucci products
advertised had similar deviations from authentic Gucci merchandise. Those
products bore Gucci trade-marks, were not being sold in wholly-owned or
authorized stores, and the fabric was not stitched and cut according to Gucci
standards. Moreover, the products on display on February 1 and 23, 2011 bore
the reproduction of trade-marks owned by the Plaintiffs, were not being sold in
wholly-owned or authorized stores, and had packaging and labeling which was
inconsistent with that of original products.
[7]
The Defendant
does not contest that the Plaintiffs have intellectual property rights in the
Gucci trade-marks and products bearing them and he admits that the Gucci belt
sold to the second investigator was “probably” a counterfeit. The Plaintiffs
have established on the balance of probabilities that the purse and belt bought
by the investigators, as well as the items advertised on May 10, 2010 and January
8, 10 and 12, 2011, and on display in his storage units on February 1 and 23,
2011, were counterfeit.
ISSUES
[8]
The
motion raises the following issues:
(i)
Is
there a genuine issue for trial with respect to the Defendant’s liability?
(ii)
If
not, what damages are appropriate in the circumstances?
(i) Is there a genuine issue for trial with
respect to the Defendant’s liability?
Test for summary
judgment
[9]
In Teva
Canada Ltd v Wyeth LLC, 2011 FC 1169 at para 34, summary judgment was said
to be warranted when the following factors are met:
a. the issues
are well defined and, while a disposition of the issues may not resolve every
issue in the action, they are significant issues and their resolution will
allow the action or whatever remains, to proceed more quickly or be resolved
between the parties acting in good faith;
b. the facts
necessary to resolve the issues are clearly set out in the evidence;
c. the
evidence is not controversial and there are no issues as to credibility; and
d. the
questions of law, though novel, can be dealt with as easily now as they would
otherwise have been after a full trial.
[10]
The
Court will grant a motion for summary judgment only if it is satisfied that
there is no genuine issue for trial: Rule 215(1) of the Federal Courts Rules.
The burden of proving that there is no genuine issue for trial rests on the
moving party (in this case, the Plaintiffs): Canada (Attorney General)
v Laneman, 2008 SCC 14 at para 11; Fero Holdings Ltd v Les Entreprises
Givesco Inc, [1999] FCJ No 1310 at para 10; and Grossman Holdings Ltd v
York Condominium Corp No 75, [1999] OJ No 3289 at para 7.
[11]
I am
satisfied that all of the criteria above are met and that this is an
appropriate case for summary judgment.
Infringement
[12]
Section
20 of the Trade-marks Act provides that: “The right of the owner of a
registered trade-mark to its exclusive use shall be deemed to be infringed by a
person not entitled to its use under this Trade-marks Act who sells,
distributes or advertises wares or services in association with a confusing
trademark [emphasis added].” In the present matter, the Defendant was not
entitled to use the Plaintiffs’ trade-marks and he sold and advertised products
that were specifically designed to be confused with those of the Plaintiffs.
The Plaintiffs submit that the eight following dealings amount to the
infringement of their trade-marks:
1. On May 7, 2010, the Defendant sold a counterfeit
Gucci purse to the first private
investigator;
2.
On
May 10, 2010, the Defendant posted a classified advertisement for the
sale of a counterfeit Gucci belt;
3. On
January 8, 2011, the Defendant posted a classified advertisement for the
sale of
various
counterfeit Gucci products;
4. On January 10,
2011, the Defendant posted a classified advertisement for the sale of
various
counterfeit Gucci products;
5.
On
January 12, 2011, the Defendant posted a classified advertisement for
the sale of various counterfeit Gucci products;
6.
On
January 14, 2011, the Defendant sold a counterfeit Gucci belt to the
second private investigator;
7.
On
February 1, 2011, the Defendant had on display various counterfeit Gucci
products in his storage units;
8.
On
February 23, 2011, the Defendant had on display various counterfeit
Gucci products in his storage units.
I find that all but one of these events amount
to infringement under the Trade-marks Act.
[13] The first six events are clearly
covered by section 20 of the Trade-marks Act which specifically provides
that there is infringement when a person who is not entitled use a trade-mark sells
or advertises wares or services with a confusing trade-mark. The last
two events, however, did not deal directly with the sale and advertisement of
goods; rather, they deal with their display.
[14] The Trade-marks Act does not
state that infringement arises from the display of counterfeit goods. In my
view, for infringement to occur from the display of a counterfeit item, the
display has to rise to the level of an advertisement. It must amount to an
invitation to purchase. I accept the Plaintiffs’ proposition that this level
was attained on February 1, 2011. The undercover investigator on that occasion
was escorted into a storage unit and was able to purchase two designer wallets
on display. I am persuaded that the Gucci items displayed that day served the
purpose of advertising to the investigator that they were for sale.
[15] On February 23, 2011, however, I am
unable to find that the items displayed in the storage units served the purpose
of an advertisement. The Defendant was being served with cease and desist
letters from two Gucci representatives and a Toronto Police Service detective.
Since the display of counterfeit items is not covered by the Trade-marks Act,
the Plaintiffs have not discharged their burden on that point. Only the first
seven infringements remain.
(ii) What are the appropriate damages?
[16] Sections 53 and 53.2 of the Trade-marks
Act give this Court the power to grant relief in cases of infringement.
The Defendant suggests that this Court should grant nominal damages which
correspond with the exact amount lost by the Plaintiffs and submits that
damages of $1400, the value of the authentic Gucci products that were
counterfeit and sold, is the appropriate award. I do not share his view.
Counterfeit items do not only rob the trade-mark owner of the sale of the
associated items, they also damage the owner’s reputation and goodwill.
[17] An award of damages for infringement
was a subject of discussion in Viacom Ha! Holding Co v Doe, T-550-99, Justice
Pelletier, dated December 20, 2000, Oakley, Inc v Jane Doe, [2000] FCJ
No 1388 and Ragdoll Productions (UK) Ltd v Jane Doe, 2002 FCT 918. In
those cases, this Court found it appropriate to award a minimum compensatory
damage where it was difficult or impossible to assess the true value of the
infringement. It was found fair to award damages of $3,000 per infringement
against flea market vendors, street vendors and itinerant sellers; $6,000
against fixed retail establishments; and $24,000 against importers,
distributors and manufacturers. More recently in Louis Vuitton Malletier
S.A. v Lin, 2007 FC 1179, the Court awarded a minimum compensatory damage
of $7,250 per infringement against a retail establishment by adjusting the $6,000
value for inflation. This represents approximately a 20.83% increase which I
am prepared to apply to the $3,000 minimum compensatory award against flea
market vendors, street vendors and itinerant sellers. Applying that same
factor of inflation, I find that the Defendant is liable to pay $3,625 for each
infringement. This results in a total award for seven infringements of
$25,375.
[18] Additionally, the Plaintiffs submit
that they are each entitled to an award of damages in that amount. I agree. Recently,
in Louis Vuitton Malletier S.A. v Singga Enterprises (Canada) Inc, 2011 FC 776 at para
134, Justice Russell wrote:
… Canadian courts have held that in
circumstances involving counterfeit activities by a Defendant in which the
intellectual property rights of multiple Plaintiffs' have been infringed, each
plaintiff is entitled to damages, as a Defendant would be liable for damages to
each plaintiff if each plaintiff enforced its rights individually. There is no
reason to limit damage awards merely because multiple Plaintiffs advanced their
claims in one action. Applying such damages to each plaintiff is available in
the case of a joint action brought by a trade-mark owner and its
licensee/distributor, to reflect damages suffered by both the trade-mark owner
and the licensee/distributor. See Oakley Inc. v. Jane Doe (2000), 193
F.T.R. 42, 8 C.P.R. (4th) 506 at paragraphs 12-13; Louis Vuitton Malletier
S.A. v. Lin Pi-Chu Yang, 2007 FC 1179, 62 C.P.R. (4th) 362 at paragraph 43;
and Louis Vuitton Malletier S.A. et al. v. 486353 B.C. Ltd. et al., 2008
BCSC 799, [2008] B.C.W.L.D. 5075 at paragraphs 67 and 72.
I adopt his reasoning as
my own. Had both Plaintiffs enforced their rights individually, they would
have each been entitled to the minimum compensatory damage. As a result, the Defendant
must pay each plaintiff damages in the amount of $25,375.
[19] Lastly,
although the Plaintiffs seek punitive damages, I find that no such award is
warranted as the exceptional circumstances required for such is not present
here: Whiten v Pilot Insurance Co, 2002 SCC 18 at para 36.
[20] The Plaintiffs
also seek their costs which they inform the Court amounts to $34,381.15. The Plaintiffs
are entitled to their reasonable costs which, in the circumstances I fix at $3,500
for the Plaintiffs collectively and not individually.
ORDER
THIS COURT
ORDERS AND ADJUDGES that:
1. As
between the Plaintiffs and the Defendant, the Canadian registered trade-marks
TMA202,555 (“GUCCI”),
TMA281,586 (“GG DESIGN”), TMA656,141 (“GG & DESIGN”) and TMA713,111 (“GG
(22) DESIGN”) (the Subject Trade-marks) have been infringed by the Defendant by
virtue of importing into Canada, advertising, offering for sale, selling and/or
otherwise dealing in Canada merchandise bearing one or more of the Gucci
Trade-marks without the consent, license or permission of the Plaintiffs (the
Subject Merchandise), contrary to sections 19 and/or 20 of the Trade-marks
Act, R.S.C. 1985,
c.
T-13;
2. The
Defendant has directed public attention to the Subject Merchandise in such a
way as to cause or be likely to cause confusion in Canada between the Subject
Merchandise and the Plaintiffs’ authorized merchandise contrary to the
provisions of section 7(b) of the Trade-marks Act;
3. The
Defendant has used the Subject Trade-marks in a false and material way which
misled the public as to the character, quality or compositions of the Subject
Merchandise and as to the mode of manufacture, production or performance
thereof contrary to the provisions of section 7(d) of the Trade-marks Act;
4. The
Defendant has depreciated the value of the goodwill attaching to the Subject
Trade-marks, contrary to the provisions of section 22(1) of the Trade-marks
Act;
5. The
Defendant is restrained from offering for sale, displaying, advertising,
selling, importing, exporting, manufacturing, distributing, or otherwise
dealing in merchandise not being that of the Plaintiffs, bearing any one or
more of the Subject Trade-marks;
6. The
Defendant is restrained from directing public attention to their wares in such
a way as to cause or be likely to cause confusion in Canada between his wares
and the wares of the Plaintiffs contrary to the provisions of section 7(b) of
the Trade-marks Act, by the use of the Subject Trade-marks or any
trade-mark confusingly similar thereto;
7. The
Defendant forthwith deliver up to the Plaintiffs or as the Plaintiffs may
direct, all Subject Merchandise in his possession, custody and control,
wheresoever situated;
8. The
Plaintiffs may destroy, or otherwise dispose of, as they shall see fit, all
Subject Merchandise delivered up by the Defendant;
9. The
Defendant shall pay Guccio Gucci S.p.A. damages in the amount of $25,375.00
arising from the infringement and passing off by the Defendant of the Subject
Trade-marks;
10. The
Defendant shall pay Gucci America, Inc. damages in the amount of $25,375.00
arising from the infringement and passing off by the Defendant of the Subject
Trade-marks; and
11. The
Defendant shall pay to the Plaintiffs forthwith, costs associated with the
action, in the amount of $3,500.00.
12. This
Judgment bears interest at the rate of 3% per year from its date.
"Russel W. Zinn"
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