Canadian Counterfeiting Case Results in $2.5 Million Judgment

The Federal Court has released its decision in Louis Vuitton Malletier SA et al v Singga Enterprises (Canada) Inc et al (Louis Vuitton), finding approximately $2.5 million in damages in what may be the largest Canadian award to date in a counterfeiting case. Three defendant companies were found liable on claims of trade-mark infringement, depreciation of goodwill, copyright infringement and passing-off for the manufacture, importing, advertising and sale of counterfeit handbags bearing the trade-marks or copyrighted works of manufacturers Louis Vuitton and Burberry. Although the case was largely uncontested, the reasons for judgment offer valuable insight into how to approach damages in counterfeiting cases, in which assessment is notoriously difficult. Quantifying loss of goodwill and lost profits can present significant challenges, and in Louis Vuitton the assessment was further frustrated by the absence of business records to evidence the counterfeit sales. In such a situation, the Court followed the practice of applying a scale of damages applicable to each single instance of counterfeiting which, modified for inflation in 2011 would be: $4,000 for operating out of a temporary premises (such as a flea market), $8,000 for operating out of a conventional retail premises, and $32,000 for manufacturing and distributing counterfeit goods. Deciding what constitutes a ‘single instance’ of counterfeiting can present its own challenge, and may depend strongly on the nature and quality of the evidence presented. However, in Louis Vuitton, perhaps in part to make up for any perceived shortcomings in calculating compensatory damages, the Court went on to award punitive and exemplary damages. For the full text of the reasons released June 27, 2011 and cited as 2011 FC 776, visit: http://tinyurl.com/3c6dcu5 For a news article on the decision in The Globe & Mail, see: http://tinyurl.com/3s88dj2 Summary by: John Lucas