Case Comment: Federal Court of Appeal Endorses Punitive Damages

October 18, 2016

Tamara Ramsey published a case comment in the INTA Bulletin about the case of Lam v. Chanel S. de. R.L. A copy of the case comment is reproduced below.



CANADA: Federal Court of Appeal Endorses Punitive Damages

Contributor: Tamara Ramsey, Chitiz Pathak LLP, Toronto, Canada

Verifier: Timothy O. Stevenson, Smart & Biggar/Fetherstonaugh, Ottawa, Canada
INTA Bulletins Law & Practice—North America Subcommittee

The Canadian Federal Court of Appeal (FCA) has endorsed the awarding of significant punitive damages in a decision in the case of Lam v. Chanel S. de. R.L.(2016 FCA 111), which was handed down on April 11, 2016. This is noteworthy because punitive damages are relatively rare in Canada. In the same decision, the FCA also endorsed the use of summary trial in cases involving counterfeit goods.
The appellant, a repeat infringer who flouted previous awards of the court, continued to deal in knock-off Chanel merchandise after purporting to sell her business to her children. In light of some ambiguity in the trial judge’s decision, the case was ultimately sent back to the trial judge for redetermination.
The FCA confirmed both the appropriateness of an award of nominal damages in cases involving counterfeit goods and the awarding of CA $8,000 per act of infringement to both the trademark owner and its Canadian licensee. More specifically, the FCA held, “The authorities support a nominal damages award in a case like this, where the defendants are uncooperative, proof of actual damages is difficult and it is hard to estimate the harm done to the trade-mark owner’s goodwill through the sale of inferior quality goods.” Para 17.
In endorsing an award of significant punitive damages, the FCA identified the factors that warrant an award of significant punitive damages as including the need for deterrence, compensatory damages being calculated on a nominal basis due to the nature of the appellant’s infringing acts, repeated violations, flouting of court orders, and the attempts of the appellant to obscure their involvement. Para 26
This decision clears the way for future cases involving counterfeit goods to proceed by way of summary trial. The FCA held that “[c]ases like the present, involving ongoing sales of counterfeit goods by a defendant that seeks to put forward a specious defense, are particularly well-suited to being decided by way of summary trial.” Para 16.In a summary trial, almost all of the evidence is in writing. The availability of summary trial is a discretionary decision based upon a number of factors, including whether credibility is in issue.

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