“Wholesale” Adoption Of Draft Order Without More Is Inadequate Says Federal Court of Appeal

On August 6, 2026, the Federal Court of Appeal (FCA) released its decision in Lounge Medical Spa Ltd. v. DermaSpark Products Inc., 2026 FCA 135, allowing The Lounge Medical Spa Ltd. and Roula Hamdan’s (collectively, the Appellants’) appeal from a Federal Court decision finding that they infringed DermaSpark Products Inc. and Pollogen Ltd.’s (collectively, the Respondents’) trademark rights and were liable for damages.

In May 2025, the Federal Court granted a motion for summary trial brought by the Respondents and found that the Appellants infringed the Respondents’ trademark rights and damaged their goodwill, contrary to sections 19, 20 and 22 of the Trademarks Act. Among other relief, the lower court ordered the Appellants to pay to the Respondents “…nominal damages in the total amount of $50,000”. In July 2025, the Federal Court granted the Respondents’ motion for reconsideration, acknowledging that “a mistake/oversight” had occurred in preparing the May judgment, and the order should instead have required payment of “…punitive and exemplary damages in the total amount of $50,000”.

On appeal, the FCA noted that the lower court’s May judgment was, aside from minor changes, identical to the draft order included in the Respondents’ motion record for summary trial. Although a judge may adopt a party’s proposed order, the FCA emphasized that a reasonable person should still be able to conclude that the judge engaged with the issues and decided them independently and impartially, based on evidence and the law. The FCA found that the mistake in the May judgment originated in the Respondents’ draft order, and that “the wholesale adoption of the draft order, including its errors” may suggest that the Federal Court had not directed its mind to all the issues and evidence before it.

In reviewing the matter, the FCA ultimately determined that the Federal Court erred in law by providing inadequate reasons for its conclusions. In particular, the lower court failed to explain: (1) why damages for passing off were awarded; (2) how all the trademarks listed in the May judgement were infringed; (3) why it did not address conflicting evidence regarding the Respondents’ counterfeit allegations against the Appellants; and (4) the rationale for awarding the amounts and types of damages in the case.

As a result of these deficiencies, the FCA set aside the lower court’s findings and remitted the matter to the Federal Court for re-determination.

Summary By: Claire Bettio