The Fake Rolex Has to Go as Per Canadian Courts…

The pirated DVDs? The fake Coach purse? The imitation I-Pod? Hide them. Burn them. Throw them away. Courts have brought the full wrath of law on those dealing in counterfeit goods in the form on substantial damage awards. Starting with Microsoft Corp v. 9038-3746 Quebec Inc., 2006 FC 1509, all the way to the most recent decision in Microsoft Corp. v. PC Village Co. Ltd, 2009 FC 401, the courts have been trending towards awarding maximum damages for cases dealing with counterfeit goods as per the Copyright Act.

2006 – Microsoft Corp. v. 9038-3746 Quebec Inc.

This 2006 Federal court decision was noteworthy mainly due to the statutory damages awarded under the Copyright Act and punitive damages. The courts considered the extent to which the defendants acted knowingly as well as the credibility of defendants when establishing statutory damages and personal liability.They determined that

knowledge, or lack thereof, has a considerable bearing on the personal liability of the two individual defendants who are, or were, directors of the corporate defendants and on the scope of the wide-ranging injunction, statutory damages, punitive damages and other remedies sought by Microsoft.

The defendants were deemed to be “liar and a scofflaw”, thus undermining their credibility.

Taking the above factors into consideration, the courts awarded the maximum amount of statutory damages available – $20,000 for each infringement – for the first time by Canadian courts. Section 38.1(5) of the Copyright Act explicitly sets out the test that gives the courts discretion to consider all relevant factors, including:

(a) the good faith or bad faith of the defendant
(b) the conduct of the parties before and during the proceedings; and
(c) the need to deter other infringements of the copyright in question.

The courts awarded statutory damages of $500,000 ($20,000 for each of the 25 works in question) $20,000 for each of the 25 infringements in question. The court concluded:

the defendants have acted in bad faith. Their conduct both before and during these proceedings has been dismissive of law and order, their failure to provide appropriate records, despite court order, demonstrates the necessity of deterring other infringements of the copyrights in question.

In addition to the statutory damages, the courts awarded $200,000 in punitive damages.

The $700,000 in damages drives home the point that any infringers of the Copyright Act will be liable for substantial damages, acting as a deterrent for future potential infringers.

2007 – Louis Vuitton Malletier S.A. v. Yang
The courts in Louis Vuitton v. Yang, 2007 FC 1179 reinforced the decision in Microsoft Corp. v. 9038-3746 Quebec Inc. The courts awarded the maximum damages of $20,000 for each infringement, to a total of $40,000, because of the conduct of the defendant. The courts determined that the defendant acted in bad faith by continuing to engage in infringing activities when repeatedly advised to desist, and found that the higher award was “necessary to deter future infringement and… to deter open disrespect for Canada’s copyright protection laws.”

Furthermore, the courts awarded punitive damages of $100,000, consistent with the decision in Microsoft v. 9038-3746 Quebec Inc., bringing the total award of damages to $263,699.14. The significant damages reiterated the sentiments of Microsoft Corp v. 9038-4736 Quebec Inc., acting as a new warning to counterfeiters everywhere.

2008 – Louis Vuitton Malletier S.A. v. 486353 B.C. Ltd.
In the 2008 decision of Louis Vuitton v. 486353 BC Ltd., 2008 BCSC 799, following the $700,000 payout in Microsoft Corp. v. 9038-3746 Quebec Inc., the Federal Court went a step further and awarded over $980,000 in damages – the highest amount ever awarded in a counterfeit goods case in Canada.

The defendants included two corporations and four individuals who were operating stores that were selling counterfeit Louis Vuitton merchandise. The courts awarded $20,000 damages per infringement, as well as $300,000 of punitive damages against the other defendants.

2009 – Microsoft Corp. v. PC Village Co. Ltd
The most recent decision in 2009 utilized the factors set out in the Louis Vuitton cases as well as the decision in Microsoft Corp v. 9038-3746 Quebec Inc., in accordance with section 38.1(5) of the Copyright Act, awarded statutory damages of $10,000 per infringement. The defendants were jointly and severally liable for the $50,000.00 punitive award and $50,000.00 in costs, for a total of $250,000.00.

The decisions above set out a useful precedent for intellectual property owners in the war against counterfeiters, and serve as a deterrent for current and future infringers by clearly defining the consequences of their actions. They establish that courts will show no leniency in copyright infringement cases, and those insisting on violating copyright laws need to be prepared to face substantial costs and damages. These decisions send a message out to counterfeiters to desist or face the financial consequences. The courts have made a stand against piracy of any sort. Now all that’s left to do is to spread the message, and wait for the impact of this stand in the real world.