Date:
20130617
Docket:
T-1135-11
Citation:
2013 FC 667
Ottawa, Ontario,
June 17, 2013
PRESENT: The
Honourable Madam Justice Kane
BETWEEN:
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MOROCCANOIL ISRAEL LTD.
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Plaintiff
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and
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GARY HOWARD LIPTON,
G. LIPTON SALES LTD.,
JOHN DOE o/a LND SALES,
PIERO SIVITILLI, NORTH ONE
INVESTMENTS INC. AND 2797836 CANADA INC. O/A CARRY’S COMPANY AND EDWARD
SIVITILLI
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Defendants
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REASONS FOR
ORDER AND ORDER
[1]
The
Plaintiff brought a motion for summary judgment seeking a declaration that the
Defendant, Edward Sivitilli, through his importation, manufacture, distribution,
advertisement, sale and/or offering for sale of hair care products, has
infringed the Registered Moroccanoil Trade-mark, including Canadian trade-mark
registration number TMA734,460 and other registered Canadian trade-marks in
association with Morocconoil hair care products contrary to sections 19 and 20
of the Trade-marks Act, R.S.C. 1985, c. T-13; a declaration that the
Defendant has infringed subsections 7 (b), (c) and (d) as described below; a
declaration that the Defendant has depreciated the value of the goodwill
attaching to the Registered Moroccanoil Trade-mark contrary to section 22 of
the Act; an interlocutory and permanent injunction restraining the Defendant; an
Order that the Defendant delivers up, recalls, destroys or disposes of the
offending products; an Order directing that the Defendant pay the costs
associated with storage and related matters; and an Order for damages or an
accounting of profits and pre- and post-judgment interest and costs of this
action.
[2]
The
detailed claims of the Plaintiff, as set out in their Statement of Claim, seek:
(a)
a
declaration that the Defendants’ importation, manufacture, distribution,
advertisement,
sale and/or offering for sale, in Canada, of hair care products, namely hair
treatment oil using the Registered Moroccanoil Trade-mark (as defined infra)
alone or in conjunction with one or more of the Moroccanoil Canadian Trade-mark
Applications (as defined infra), and/or the Moroccanoil Get-up (as
defined infra) all without the authority, license or permission of the
Plaintiff (the “Defendants’ Hair Care Products”) constitutes:
i)
an
infringement or a deemed infringement of the exclusive rights to the
use and benefit
of the Registered Moroccanoil Trade-mark (as defined infra) contrary to
sections 19 and 20 of the Trade-marks Act, RSC 1985 c T-13;
ii)
directing
public attention to the Defendants’ Hair Care Products in such a
way as to cause
or to be likely to cause confusion in Canada between the Defendants’ Hair Care
Products and business and the Plaintiff’s merchandise and business, contrary to
section 7(b) of the Trade-marks Act, supra;
iii)
passing
off of the Defendants’ Hair Care Products as and of those of the Plaintiff,
contrary to section 7(c) of the Trade-marks Act, supra;
iv)
making
use of a description that is false in a material respect that is likely to
mislead the public as to the character, quality or composition of the
Defendants’ Hair Care Products and/or as to the mode of the manufacture,
production or performance of the Defendants’ Hair Care Products, contrary to
section 7(d) of the Trade-marks Act, supra; and/or
v)
depreciation
of the value of the goodwill attaching to the Registered Moroccanoil Trade-mark
contrary to section 22 of the Trade-marks Act, supra;
(b)
an
interlocutory and permanent Order restraining the Defendants (including their
officers, directors, employees or agents, as applicable) from using the
Registered Moroccanoil Trade-mark or any other mark or logo confusing therewith
in association merchandise of any kind which is not manufactured by or for the
Plaintiff or in advertising, promoting or displaying same in association with
the Moroccanoil Trade-mark;
(c)
an
interlocutory and permanent Order restraining the Defendants (including their
officers, directors, employees or agents, as applicable) from manufacturing,
distributing, offering for sale, selling, displaying, advertising or otherwise
dealing in Canada (collectively referred to throughout this pleading as,
“Dealing In” or “Deal In” as may be appropriate) in the Defendants’ Hair Care
Products;
(d)
an
interlocutory and permanent Order restraining the Defendants (including their
officers, directors, employees or agents, as applicable) from directing public
attention to the Defendants’ Hair Care Products in such a way as to cause or be
likely to cause confusion in Canada between the Defendants’ Hair Care Products
and the Plaintiff’s hair care products contrary to section 7(b) of the Trade-marks
Act;
(e)
an
interlocutory and permanent Order restraining the Defendants (including their
officers, directors, employees or agents, as applicable) from passing off the
Defendants’ Hair Care Products as and for those of the Plaintiff, contrary to
section 7(c) of the Trade-marks Act, supra;
(f)
an
interlocutory and permanent Order restraining the Defendants (including their
officers, directors, employees or agents, as applicable) from using a
description that is false in a material respect that is likely to mislead the
public as to the character, quality or composition of the Defendants’ Hair Care
Products and/or as to the mode of the manufacture, production or performance of
the Defendants’ Hair Care Products, contrary to section 7(d) of the Trade-marks
Act, supra; and
(g)
an
interlocutory and permanent Order restraining the Defendants (including their
officers, directors, employees or agents, as applicable) from directing public
attention to the Defendants’ Hair Care Products in such a way as to cause or be
likely to cause depreciation of the valuable goodwill in Canada attached to the
Plaintiff’s exclusive right to Deal In merchandise bearing the Registered
Moroccanoil Trade-mark;
(h)
an
Order directing the Defendants (including their officers, directors, employees
or agents, as applicable) to deliver up immediately to the Plaintiff or its
agent, all of the Defendants’ Hair Care Products in the Defendants’ possession,
custody, power or control;
(i)
an
Order requiring each of the Defendants to immediately effect and implement, at
their sole cost and expense, a recall of the Defendants’ Hair Care Products
(hereinafter the, “Recalled Merchandise”) by, amongst other things, notifying
in writing each retail store or wholesaler to which it has sold the Defendants’
Hair Care Products advising them to immediately stop selling and return all
unsold Defendants’ Hair Care Products to the Plaintiff’s designated location,
at the Defendants’ expense, and to produce to the Plaintiff, evidence of
delivery of Defendants’ Hair Care Products;
(j)
an
Order authorizing the Plaintiff to destroy or otherwise dispose of, as it shall
in the exercise of its discretion determine, the Defendants’ Hair Care Products
including the Recalled Merchandise delivered in accordance with sub-paragraph
(i) supra, or as the Court may direct;
(k)
an
Order directing the Defendants to pay to the Plaintiff, or as the Plaintiff
shall direct, the costs associated with the cartage, storage and ultimate
destruction of the Defendants’ Hair Care Products including the Recalled
Merchandise delivered up pursuant to sub-paragraph (i) above;
(l)
damages
against the Defendants, for trade-mark infringement and/or passing off in the
amount of $500,000.00;
(m)
in
the alternative to the relief requested in sub-paragraph (l) supra, an
accounting of the Defendants’ profits arising from their Dealing In the
Defendants’ Hair Care Products, which the Plaintiff may elect after an
examination of any one or all of the Defendants on the extent of the
infringement and the quantum of profits generated therefrom, and judgment for
that amount;
(n)
pre-judgment
and post-judgment interest, pursuant to sections 36 and 37 of the Federal
Courts Act, RSC 1985, c F-7, as amended;
(o)
costs
of this action on a substantial indemnity basis together with any applicable
taxes; and
(p)
such
further and other relief as to this Honourable Court may seem just.
[3]
The
Plaintiff has settled all the issues with the Defendant 2797836 Canada Inc
(Carry’s Company) and with the Defendants, Gary Howard Lipton, G Lipton Sales
Ltd and John Doe, operating as LND Sales (also referred to as the Lipton
Group).
[4]
The
Plaintiff now seeks summary judgment against the Defendant, Edward Sivitilli.
[5]
The
Defendant, Edward Sivitilli, filed a statement of defence which denied the
allegations or claimed to have no knowledge of the facts. The Defendant
asserted: that any damages suffered by the Plaintiffs were not caused by the
Defendant’s actions; that any damages sustained are excessive and too remote to
be recoverable; and, that the Plaintiff did not hold registered trade-marks for
the products. The Defendant did not adduce or submit any evidence and did not
cross-examine any of the affiants.
[6]
The
Plaintiff has established through the affidavit evidence, including that of the
Defendant himself, the claims set out in its statement of claim.
[7]
A
short overview of the matters giving rise to the Plaintiff’s claim situates the
findings which follow. Mr Sivitilli sourced Moroccanoil products on at least
two occasions from American Industries LLC, a company which he found on the
Internet and with which he had no previous dealings. In one transaction, Mr
Sivitilli arranged for 10,800 bottles of the product to be sent directly to
LND. In a second transaction, Mr Sivitilli arranged for 2,520 bottles of the
product to be sent to LND. LND sold some of the product to Padinox. Padinox then
offered the product for sale at a trade show where it was discovered, through an
RCMP investigation, that the product was counterfeit. The products were then seized
from Padinox.
[8]
LND
had also sold the products to Carry’s Company who in turn sold it to a UK company. Both Carry’s Company and the UK company had concerns that the products could be
counterfeit. The UK company returned the prodcucts to Carry’s Company. The
shipment was then sent to and held in a warehouse of Adam’s Cargo. LND sales
consented to a preservation order. Sample testing was conducted by the Plaintiffs
and established that the products were not consistent with the authentic Moroccanoil
products.
[9]
Mr
Sivitilli claims that he never had control of the product and that his role was
to source the product, negotiate its price and have it sent directly to the
distributor. Mr Sivitilli received payment from the LND group through a now
cancelled corporation, North One Investments, that had been his father’s
company. Mr Sivitilli described the invoices sent to LND and the amounts paid
by them to him through North One as a finder’s fee or commission. Regardless of
how these amounts are characterised, Mr Sivittilli was remunerated for sourcing
the product, arranging for it to be sent to LND and directing that payment be
made to Daca Global Trading as requested by American Industries LLC. I note
that Mr Sivitilli indicated that he had no information about the role of Daca
Global Trading.
[10]
It
is well settled that a response to a motion for summary judgment must set out
specific facts and adduce evidence showing that there is a genuine issue for
trial. The defendant has the burden to show that there is a genuine issue
for trial. The defendant cannot rely on bald statements or lack of knowledge
and/or denials in its pleadings to raise a genuine issue for trial. The
defendant must put its “best foot forward” and this requires that the defendant
lead evidence and make an argument that there is a genuine issue requiring a
trial.
[11]
In
this case, the Defendant has put no evidence forward other than a list of
denials and assertions that he has no knowledge of the facts alleged. At
the oral hearing, the Defendant sought to raise new assertions, none of which
were supported by any evidence. For example, the Defendant suggested that
because he did not have control of the product at any time, and that the
product had been in transit and in a warehouse under the control of others, the
product could have been mixed up or switched and that the product he sourced
was real and the switched product could have been counterfeit. That suggestion
is completely speculative as there is not even a scintilla of evidence to
support that theory. Moreover, the Defendant admitted that he made no attempt
to ascertain that the product he sourced and offered for sale was genuine, that
he had never dealt with the supplier American Industries LLP previously and
that he did not have control of the product at any time. Therefore, he had no
knowledge of the product that he sourced and offered for sale and he cannot
suggest, even if he had raised this issue in his Statement of Defence, that the
product he sourced was genuine.
[12]
From
my review of the material submitted to the Court the following have been
proved:
a. The
Plaintiffs are the registered owners of the Moroccanoil trade-marks including
the Moroccanoil Get-up, used in association with hair care products;
b. The
Defendant, Mr Svitilli, purchased from American Industries LLC and sold, in at
least two transactions, 100ml bottles of Moroccanoil Oil Treatment which bears
a reproduction on its packaging and labeling of one or more of the Moroccanoil
Trade-marks and uses the Moroccanoil Get-up, without the authority, license or
permission of the Plaintiff;
c. That
the 100ml bottles of Moroccanoil Oil Treatment offered for sale and sold by the
Defendant, Mr Sivitilli, are not authentic Moroccanoil Oil Treatment because
they contain oil that is a different composition and is not consistent with the
authentic product;
d. That
the Defendant, Mr Sivitilli, admitted that he benefited from the sale of the
counterfeit products and received $33,184 for the first transaction and $8,316
on the second transaction for a total of $41,500.
[13]
I
find that the Plaintiff has also established, through the uncontradicted
affidavit evidence of Mr Zohar Pas, the President of Morroccanoil Inc, which is
affiliated with Morrocconoil Israel, the harm and damage caused by the offering
for sale of the counterfeit product. The distribution of the counterfeit product
damages the Plaintiff’s reputation and reduces potential revenue due to the
different quality of the counterfeit product, the lower price of the
counterfeit product, consumer reaction, impact on the brand image of the
product and on the retailers who sell the authentic product, and the inability
of the Plaintiff to control the quality of the design or material used in the
counterfeit product, among other harms.
[14]
I
find that there is evidence of infringement of the trade-mark through the
offering for sale, sale, and distribution by the Defendant of the counterfeit
Moroccanoil Oil Treatment in contravention of sections 19 and 20 of the Act.
[15]
I
also find that the Defendant, Mr Sivitilli, offered for sale and sold the
product in contravention of subsection 7(b), (c) and (d) of the Act.
[16]
I
am further satisfied that the Defendant has no valid defence to the Statement
of Claim.
[17]
I
am further satisfied that the Plaintiff has established that the Defendant
received the following amounts, which included amounts for GST/HST which, as
admitted by the Defendant, was not remitted but was retained by the Defendant.
Because the amounts attributed to the GST/ HST have not been paid, they must be
included in the profits of the Defendant.
[18]
For
the first transaction, Mr Sivitilli received $113,904 (including
GST/HST) by cheque payable to North One. He then paid $80,640 to American
Industries plus a handling fee of $80. For this transaction, Mr Sivitilli
netted $33,184.
[19]
For
the second transaction, Mr Sivitilli invoiced LND $28,476 (including GST/HST)
and directed that payment be made to Daca of $20,160. For this transaction Mr
Sivitilli netted $8,316. In total, Mr Sivitilli made a profit of $41,500 from
these sales.
[20]
Accordingly,
this motion for summary judgment is allowed pursuant to Rule 215.
ORDER
THIS COURT:
1. THIS COURT DECLARES AND
ADJUDGES that as between the Plaintiff and the Defendant, Edward
Sivitilli, (the Defendant), the Canadian Trade-mark TMA 734 460, the Registered Moroccanoil
Trade-mark (and the related Moroccanoil Canadian Trade-mark Applications and/or
the Moroccanoil Get-up) (referred to as the Trade-mark) has been infringed by
the Defendant by virtue of the sale of hair care products bearing the Trade-mark
without the consent, license or permission of the Plaintiff contrary to section
19 of the Trade-marks Act, [the Act] RSC 1985, c T-13, as amended.
2. THIS COURT ORDERS AND
ADJUDGES that
the Defendant has directed public attention to the Defendant’s hair care products
in such a way as to cause or be likely to cause confusion in Canada between the
products and the Plaintiff’s authorised product contrary to the provisions of
paragraph 7(b) of the Act.
3. THIS COURT ORDERS AND
ADJUDGES that
the Defendant has passed off the hair care products as those of the Plaintiff,
contrary to paragraph 7(c) of the Act.
4. THIS COURT ORDERS AND
ADJUDGES that
the Defendant has used the Trade- mark in a false and material way which misled
the public as to the character, quality or compositions of the Defendant’s hair
care products and as to the mode of the manufacture, production or performance
thereof contrary to the provisions of paragraph 7(d) of the Act.
5. THIS COURT ORDERS AND
ADJUDGES that
the Defendant has depreciated the value of the goodwill attaching to the
Trade-mark contrary to the provisions of subsection 22(1) of the Act.
6. THIS COURT ORDERS that the Defendant is
restrained from offering for sale, displaying , advertising, selling,
manufacturing, importing, exporting, distributing or otherwise dealing in hair
care products not being those of the Plaintiff, bearing the Trade-mark or
bearing any trade-mark or trade name confusing therewith.
7. THIS COURT ORDERS that the Defendant is
restrained from reproducing, copying, or in any way using the Trade-mark or any
other trade-marks or trade names confusing therewith in association with the
hair care products which are not manufactured by or for the Plaintiff or in the advertising,
promotion or displaying of same in association with such trade-mark.
8. THIS COURT ORDERS that
the
Defendant is restrained from directing public attention to the Defendant’s hair
care products in such a way as to cause or be likely to cause confusion in
Canada between its hair care products and the products of the Plaintiff
contrary to the provisions of paragraph 7(b) of the Act by the use of the
Trade-mark or any trade-mark or trade name confusingly similar thereto.
9. THIS COURT ORDERS that the Defendant shall
pay to the Plaintiff the sum of $41,000 on account of damages, plus pre-judgment
and post-judgment interest
at the rate of 3% per year.
10. THIS COURT RESERVES THE RIGHT
to make an Order as to costs of this motion and the action to date after
receiving submissions from the parties. The Plaintiff is to serve and file its
submissions within 7 days hereof, the Defendant shall then have 7 days to serve
and file his submissions and the Plaintiff shall have 3 days to file any
reply. Submissions are limited to a maximum of 5 pages and reply to 2 pages.
"Catherine M.
Kane"
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