Counterfeit merchandise is a problem for both consumers and businesses alike. Consumers may be duped into buying fake, low quality, imitation goods. While businesses deal with the fact that others are ripping off their products. Luckily, counterfeiting often comes hand in hand with trademark infringement. And, trademark law is great in that it provides a way for businesses to go after the infringers.
Legal action is expensive
In practice however, using legal action to stop the counterfeiters may not be so great, nor practical. One of the biggest issues facing our legal system today is the cost. Starting a legal action and prosecuting your case through trial can run costs into the hundreds of thousands of dollars. Recently, in Hryniak v. Mauldin, the Supreme Court of Canada had a chance to comment on this very issue and stated that a “culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system”. The Supreme Court of Canada, in turn, endorsed simplified and new models of adjudication as an alternative to conventional trials, when appropriate for certain cases.
Simplified court procedure
The Hryniak v. Mauldin decision has been considered recently by lower courts, such as the B.C. Supreme Court and the Canadian Federal Court (McLellan v. Shirley, 2015 BCSC 1930 (CanLII) at para 41; Asia Ocean Services, Inc. (UPS Asia Group Pte Ltd) v. Belair Fabrication Ltd, 2015 FC 1141 (CanLII) at para 45), in allowing certain cases to be heard by way of “summary trial” – which is a simplified and expedited trial process whereby evidence is presented in summary fashion. This shorter, and much less expensive, trial process is becoming more commonly used and it also appears that they are being used more often in intellectual property cases such as trademark infringement. For instance, in Chanel S. de R.L. v. Kee, the Federal Court allowed a trademark infringement claim to proceed via summary trial. The plaintiff in this case was fashion powerhouse “Chanel”. The proceeding was brought against several people and companies for selling counterfeit merchandise. Chanel argued that the case should proceed by summary trial. The defendants argued that the case was not appropriate for summary trial because there were credibility issues that required a full conventional trial. Justice Martineau of the Federal Court considered the defendants’ argument but disagreed. The case was allowed to proceed by way of summary trial.
Chanel vs counterfeiters
In Chanel S. de R.L. v. Kee, the defendant counterfeiters were importing, advertising and selling goods bearing Chanel’s various trademarks. The counterfeit merchandise included, amongst other things, wallets, earrings, cell phone covers, and jewelry. As is with most counterfeit merchandise, the counterfeit Chanel merchandise in this case differed from genuine Chanel products and was lower in quality. Based on the evidence, the Federal Court found that there was trademark infringement. In addition, the Court found that the counterfeiting likely had the effect of depreciating the goodwill attached to the Chanel trademarks. Chanel suffered damages as a result, and the Court ordered the counterfeiters to pay Chanel $314,000. This included punitive and exemplary damages. The court also ordered an injunction preventing further trademark infringement, delivery of all infringing articles to Chanel, and a legal cost award of $66,000.
If you are facing a trademark issue, or would like further information regarding summary trials contact our Business Real Estate Law lawyers.
This article is intended to be an overview of the law and is for informational purposes only. Readers are cautioned that this article does not constitute legal or professional advice and should not be relied on as such. Rather, readers should obtain specific legal advice in relation to the issues they are facing.
This article was written by a lawyer formerly with Lindsay Kenney LLP.