A-23-96
LINDEN, J.A.
ROBERTSON, J.A.
B E T W E E N:
PROFEKTA INTERNATIONAL INC.
Appellant (Plaintiff)
-and-
THERESA LEE
carrying on business in the business name and style of
FORTUNE BOOK & GIFT STORE
Respondent (Defendant)
HEARD at Toronto, Ontario,Wednesday, April 30, 1997.
JUDGMENT delivered from the Bench at Toronto, Ontario, on Wednesday, April 30, 1997.
REASONS FOR JUDGMENT BY: LINDEN, J.A.
A-23-96
LINDEN, J.A.
ROBERTSON, J.A.
B E T W E E N:
PROFEKTA INTERNATIONAL INC.
Appellant (Plaintiff)
-and-
THERESA LEE
carrying on business in the business name and style of
FORTUNE BOOK & GIFT STORE
Respondent (Defendant)
REASONS FOR JUDGMENT
(Delivered from the Bench at Toronto, Ontario,
Wednesday, April 30, 1997.)
LINDEN, J.A.:
The issue in this appeal is whether the Motions Judge erred in her assessment of damages for copyright infringement. The appellant, Profekta International Inc., is in the business of duplicating and distributing Asian language television programmes on video tapes. It possesses copyrights in the programmes through its association with Television Broadcasts Limited of Hong Kong ("TVB"), a television station which provides these programmes to the Canadian market. The respondent, Theresa Lee, operates the Fortune Book and Gift Store. Although she possessed a license to rent out Asian language programmes from TVB's main competitor, a station known as ATV, she was not licensed through Profekta to rent out the TVB programme tapes. As part of a settlement, in 1988, she pleaded guilty to one count of copyright infringement and was fined $50. In 1993, Profekta wrote a cease and desist letter which was ignored. Then followed a visit to her store and certain conversations took place. In March of 1994, the execution of an Anton Piller Order, which was obtained, produced 326 TVB tapes containing 104 programmes from the respondent's store. After finding that the respondent had illegally copied and rented TVB tapes over a period of eight months, the Motions Judge awarded the appellant $9,500. in general damages and costs of $2,500. but did not award any exemplary damages. The appellant takes issue with both the quantum of general damages and with the refusal to award exemplary damages.
In Woelk v. Halvorson (1980), 114 D.L.R. (3d) 385 at 388-89, the Supreme Court of Canada held that, in order to justify appellate intervention with the assessment of quantum of damages, there must be some evidence, inter alia, of a wrongly applied principle of law or the award reached must be "wholly erroneous". This standard is applicable, even where no viva voce evidence has been presented, in order to respect the "autonomy and integrity of the trial process", (see [1966] 1 S.C.R. 254">Schwartz v. Canada, [1966] 1 S.C.R. 254 at 278-79, per Cory J.). The assessment of damages in patent infringement actions proceeds on the principle that the infringer ought to be made pay that which he or she would have paid if he or she had entered into a legitimate licensing agreement with the patent holder, (see General Tire & Rubber Co. v. Firestone Tyre & Rubber Co. Ltd., [1975] 2 All E.R. 173, per Lord Wilberforce). This principle has been adopted and applied in this Court, (see Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd. (1983), 74 C.P.R. (2d) 199, per Heald J.).
In this case, the Motions Judge quite properly assessed general or compensatory damages against the respondent by considering both the fees paid by the appellant's only legitimate licensee in Windsor and the evidence on the extent and timing of the respondent's possession of TVB tapes. The Motions Judge also considered the effect of information given by a Profekta employee to the respondent on what the cost to her would be for a license. The appellant has raised several objections to the manner in which the Motions Judge interpreted the affidavit evidence. Among other things, it took issue with the fact that the Motions Judge assessed the damages on the basis of an eight month period rather than two annual licensing periods, and with respect to the fact that the fees paid by the only other legitimate TVB licensee in that area were significantly higher. In our view, however, each of the Motions Judge's findings is consistent with the proper method for awarding damages in patent infringement actions and are supported by evidence contained in the appellant's own affidavits. We, therefore, do not see any basis for interference with the general damage award.
On the issue of exemplary damages, the Supreme Court of Canada has held in Hill v. Church of Scientology of Toronto and Manning, [1995] 2 S.C.R. 1130 at 1208-1209, (per Cory J.), that such damages should only be awarded in cases "where the combined award of general damages and aggravated damages would be insufficient to achieve the goal of punishment and deterrence". This approach has been recently followed in this Court (see Lubrizol Corp. et al. v. Imperial Oil Ltd. et al., (1996), 197 N.R. 241). According to Cory J. in Hill, the question which this Court must ask, in reviewing the Motions Judge's refusal to award exemplary damages, is: "was the misconduct of the defendant so outrageous that punitive damages were rationally required to act as deterrence?"
It is not apparent from the reasons that the Motions Judge considered this question; she merely stated that, since the respondent had obeyed the injunction, punitive damages would not be awarded.
While Courts of Appeal rarely interfere with such decisions, we feel we must do so in this case for several reasons. First, the conduct of the respondent, in continuing to violate the copyright before the injunction was issued, was flagrant in the light of her criminal conviction earlier, the warning issued to her by Profekta and her irresponsible attitude as reflected in her statements to Mr. Cheung that she would rather spend $5,000. on legal fees to fight Profekta than abide by the copyright and enter a licence agreement. Second, the compensatory damage award, while not so low as to be altered by this Court, was modest, considering the financial benefit obtained by the respondent in violating the copyright. Third, the extra profit made by the respondent in not paying any license fees cannot be ignored. Thus, in our view, an award of punitive damages was required in addition to the compensatory damages in order to punish the respondent for the flagrant conduct and to deter her and others from similar conduct in the future.
In view of the amounts awarded in similar cases, the amount of $10,000. in punitive damages should be awarded.
The appeal will be allowed in part. The judgment will be modified to add $10,000. punitive damages to the amount awarded for compensatory damages. Because of the divided success, however, no costs will be awarded.
"Allen M. Linden"
J.A.
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
COURT NO: A-23-96
STYLE OF CAUSE: PROFEKTA INTERNATIONAL INC.
- and -
DATE OF HEARING: APRIL 30, 1997
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR JUDGMENT BY: LINDEN, J.A.
Delivered from the Bench at Toronto, Ontario
on Wednesday, April 30, 1997
APPEARANCES:
Mr. Gary J. McCallum
For the Appellant
Mr. John Weisdorf, Q.C.
For the Respondent
SOLICITORS OF RECORD:
Mr. Gary J. McCallum
Barrister & Solicitor
160 Torbay Road
Markham, Ontario
L3R 1G6
For the Appellant
John Weisdorf, Q.c.
Barrister & Solicitor
Suite 810-65 Queen Street West
Toronto, Ontario
M5H 2M5
For the Respondent
FEDERAL COURT OF CANADA
Court No.: A-23-96
Between:
PROFEKTA INTERNATIONAL INC.
Appellant
- and -
Respondent
REASONS FOR JUDGMENT
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