Monetary Relief – Damages


MONETARYRELIEF-DAMAGES

FrançoisM.Grenier*
LEGERROBICRICHARD,Lawyers
ROBIC,Patent&TrademarksAgents
CentreCDPCapital
1001Square-Victoria–BlocE–8
thFloor
Montreal(Quebec)H2Z2B7
Tel:514-987-6242-Fax:514-845-7874
info@robic.com–www.robic.ca
1.INTRODUCTION
Anyintellectualpropertyright,dulyrecognized(byregistrationorotherwise),
willconferuponitsowneralawfulmonopolyforapredeterminedperiodof
time(patents,twenty(20)yearsfromthefilingdateoftheapplication
1,
copyright,generallyfifty(50)yearsafterthedeathoftheauthor
2,industrial
design,ten(10)yearsbeginningonthedateofregistrationofthedesign
3)or
undetermined(atrade-markwillconferexclusiverightsforaslongasitis
distinctiveofitsowner’swaresorservices).
Whenintellectualpropertyrightsareinfringed,theirownermayinitiate
proceedingstohavesuchmonopolyrecognizedandenforcedinthefuture
(bywayofaninjunctionorderissuedbytheCourttopreventfurther
infringement)andobtainmonetarycompensationforpastinfringement.
2.DAMAGES
2.1General
a.generalprinciples
Damagesarecompensatoryinnature.DamagesareawardedtoaPlaintiff
ascompensationfortheactuallosssustainedbyitasaresultofinfringing

©LEGERROBICRICHARD,2002.*Lawyer,FrançoisM.GrenierisoneoftheseniorpartnerswiththelawfirmLEGERROBIC
RICHARD,g.p.andwiththepatentandtrademarkagencyfirmROBIC,g.p.Anotherversion
ofthisdocumentwaspublishedaspartofthereferencebookIntellectualPropertyDisputes–
ResolutionsandRemedies(Toronto,Carswell,2002).Publication292.
1PatentAct,(1985)R.S.C.c.P-4,s.442CopyrightAct,(1985)R.S.C.c.C-30,s.63IndustrialDesignAct,(1985)R.S.C.c.I-8,s.10


activitiesbytheDefendant.Issuesoffactrelatingtocausalityand
remotenessmayproperlybeexploredwhendamagesarebeingassessed
4.If
possible,theCourtmusttrytoputthePlaintiffbackinthepositionitwould
havebeenifithadnotsustainedthewrong
5.Infringementisacontinuing
wrong,untilenjoinedbytheCourt.Damageswillbeawardedonlyduringthe
periodsubjecttonolimitationbystatutes
6.
Itmaybedifficult,ifnotimpossible,toarriveatanamountwithanykindof
mathematicalaccuracywhenassessingdamagesand,whenimpossibleto
determinewithprecision,thedeterminationofdamagesmust,toalarge
extent,bearoughandreadyone.Assessmentmustbeaccomplishedbythe
exerciseofasoundimaginationandthepracticeofthebroadaxe.
Damagesareawardedbywayofcompensationandnotasapenaltyor
punishmentoftheDefendant
7.ATrialJudgemayorderthepaymentof
damagesconsideredfairinallthecircumstancesofthecase.Nomeasureof
damagesisapplicabletoallcases
8.
b.statutoryprovisions
Thissectiondealswithdamagesavailableunderstatutoryprovisionsfoundin
thePatentAct(S.55),theTrade-MarkAct(S.53.2),theCopyrightAct(Ss.34,
35,38,38.(1))andtheIndustrialDesignAct(S.15.1).Inpassing-offandunfair
competitioncases,themeasureofdamagesgrantedislargelyinspiredfrom
thecaselawdealingwithtrade-markinfringement.
c.procedure
Whetherdamageswillbeawardedinanygivencircumstancesisaquestion
ofsubstance,notaquestionofprocedure.Damagesmustbeallegedinthe
writtenpleadingsandprovenattrial.Incertainjurisdiction,thePlaintiffmight
havetooptbetweentheremedyofdamagesoranaccount,beforethe

4PrismHospitalSoftwareInc.etal.v.HospitalMedicalRecordsInstituteetal.op.cit.,at287;
LubrizolCorp.etal.v.ImperialOiletal.(1996)71C.P.R.(3d)26,at30(F.C.A.)Hugessen,J.
5AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at1396ConsolboardInc.v.MacMillanBloedel(Saskatchewan)Ltd.(1982)63C.P.R.(2nd)1at28
(F.C.T.D.),Cattanach,J.
7J.R.ShortMillingCo.(Canada)v.ContinentalSoyaCo.andGeorgeWestonBreadandCakes,
Ltd.(1943-44)3Fox’sPatentCases,18at29(Ex.Ct.),Duclos;SlumberMagicAdjustableBedCo.
Ltd.v.Sleep-KingAdjustableBedCo.Ltd.(1984)3C.P.R.(3d)81,at89;AlliedSignalInc.,op.cit.
at139;
8CanwestTelephoneCo.Inc.etal.v.CanwestCommercialPhoneCentreLtd.etal.(1985)8
C.P.R.(3d)360at365(B.C.S.C.)MacKinnon,J.;UnileverPLCetal.v.Proctor&GambleInc.etal.,
op.cit.499at524;


Defendantisrequiredtofileitsdefence9.BeforetheFederalCourtof
Canada,theassessmentofprofitsordamagesisgenerallyreferredafterthe
trial
10anddamagesneednotbespecificallypleaded;particularson
pleadingswillnotbeordered
11.
Areferenceisobtainedbymotionfiledatanytimebeforetrial,butpreferably
beforeAffidavitsofdocumentsareexchangedandthepartiesproceedto
discoveries,inordertoavoidhavingtodealwithdocumentaryandoral
evidenceconcerningdamagesorprofits,priortotheestablishmentofliability.
TherefereeisgenerallyaProthonotaryoraJudgeoftheCourtappointedby
theAssociateChiefJustice.Areferenceisinrealityatrialafterthetrialand
followsthesamerulesofprocedureandproof.Discoveriesontheissuesare
held,expertreportsareexchangedandahearingtakesplacebeforethe
referee.Oncetherefereeissueshisdecision,itmaybeappealed,asany
otherdecision.
Evenifareferencehasnotbeenordered,theTrialJudgemayorderoneat
theendofthetrialifheisunsatisfiedwiththeevidencebroughtattrial
12.
However,areferenceorderedbytheCourtdoesnotdeprivetheTrialJudge
fromdeterminingtheissuesoflaw.ATrialJudgemaylaydownprinciples
concerningthemeasureofdamagestoguidetherefereeincomputingthe
quantumofthedamageaward
13.Also,evenifareferencehasbeen
orderedandtheJudge,attrial,findsthatnodamagesweresufferedbythe
Plaintiff,hemaydeclinetoorderthatthereferencetakesplace.Whenan
issueoffacthasbeenmadesubjectofareference,pursuanttotheRulesof
theFederalCourtofCanada,theTrialJudgemustbesatisfied,atthe
conclusionofthetrial,thatitisanissuewhichremainstobedecidedonthe
reference
14.
Oncetheinfringementofanintellectualpropertyrighthasbeensuccessfully
demonstrated,theinjuredpartywillbeentitledtocompensationandthe

9Dablehv.Hydro-Québec(1992)41C.P.R.(3d)25610Dablehv.OntarioHydro(1993)50C.P.R.(3d)291at361(F.C.T.D.),MuldoonJ.;Rulesofthe
FederalCourt,1998,Rules107and153
11TeknionFurnitureSystemsetal.v.ArtopexInc.(1992)44C.P.R.(3d)504at506(F.C.T.D.),
Jerome,J.
12Dablehv.OntarioHydro,op.cit.at36613UnileverPLCetal.v.Procter&GambleInc.etal.(1995)61C.P.R.(3d)499at523(F.C.A.),
Isaac,J.
14Anheuser-BuschInc.v.Carling-O’KeefeBreweriesofCanadaLtd.(1986)10C.P.R.93d)433at
437-439(F.C.A.),Heald,J.


CourthasthediscretiontograntthePlaintiff’schoiceofremedies.Ifan
accountofprofitsisrefused,damages,evenifnominalshouldbeawarded
15.
d.judicialhistoryandtrends
Principlesrelatingtotheawardofdamagesandtheestablishmentof
quantumhavebeensetalongtimeagoanduniformlyappliedbyCanadian
courts.Evidently,eachcasewillbedecidedonitsownfacts.Experiencehas
shown,andthecaselawreflects,thatthedeterminationofdamagesin
intellectualpropertycasesisa“roughandready-one”.Fromthelate1970’s
upuntilrecently,whentheoptionwasavailable,Plaintiffshaveoptedtobe
compensatedbytakinganaccountofprofitsmadebytheDefendants,
mainlyfortwo(2)closelyrelatedreasons:wheretheburdenofproofliesand
thebeliefthattheawardgrantedwouldbelarger.
WhenreliefisgivenbywayofanaccountoftheDefendant’sprofits,the
Plaintiffonlyneedtoprovetherevenuesderivedfromtheinfringement.The
Defendantisthenrequiredtoproveeveryelementofcoststhatheclaims.If
theCourtisnotsatisfiedthattheclaimedcostsisdirectlyrelatedtothe
Defendant’sinfringingactivities,thedeductionwillberefused,whichwillresult
inanincreaseoftheawardforthePlaintiff.Asexplainedbelow,ifreliefis
givenbywayofdamagesandthePlaintiffwishestoreceivehislostprofits,he
mustshowthathewouldhavemadethesaleandwhatitslossprofitsare
(revenuesthePlaintiffwouldhavemadelessthecostsoradditionalcostshe
wouldhaveincurred).Iftheevidenceisunsatisfactoryastowhetherthe
Plaintiffwouldhavemadethesale,hewillbeentitledtoareasonableroyalty.
Again,thePlaintiffwillhavetoshowbyconclusiveevidencewhattheroyalty
rateshouldbe.IftheCourtisunsatisfiedwiththePlaintiff’sevidence,the
Courtmightawardnominaldamagesonly.Thisisthemaindifference
betweenanawardofdamagesandprofits
16.
Inthepast,therehadbeenabuseintheconductofaccountofprofitsandas
aresult,theirresourcesoflitigantandtheCourthavebeenoverburden.The
FederalCourtrecentlyexpressedreservationastotheavailability,inallcases,
oftheaccountofprofitsasareliefinindustrialpropertycases
17.

15Dablehv.OntarioHydro,op.cit.at366;UnileverPLCetal.v.Procter&Gamble,op.cit.at571;
PrismHospitalSoftwareInc.etal.v.HospitalMedicalRecordsInstituteetal.(1994)57C.P.R.(3d)
129at285;BeloitCanadaLtd.etal.v.Valmet-DominionInc.,op.cit.at362;
16TeledyneIndustriesInc.etal.v.LidoIndustrialProductsLtd.(1982)68C.P.R.(2d)205,at208-209;
Reading&BatesConstructionCo.v.BakerEnergyResourcesCo.(1995)1C.F.494
17AlliedSignalInc.v.DuPontCanadaInc.(1995)61C.P.R.(3d)417,at444-445


InacasewhereaproducthasnosubstituteonthemarketandthePlaintiffis
a“oneproductcompany”andderivesallofitspresumablysubstantialprofits
fromsaidproduct,itwouldmakesenseforthatPlaintifftoopttobe
compensatedbywayofdamages.Insuchcircumstances,itshouldbeeasy
forthePlaintifftoshowthatallthesalesoftheDefendantwouldhavebeen
madebythePlaintiffandtheamountofprofitsthePlaintiffwouldhave
derivedfromsuchsales.
e.burdenofproof
TheonustoprovedamagesrestentirelywiththePlaintiff.Thescopeof
damagestowhichaPlaintiffisentitledisnotbaseduponanassumption,but
ratheronafindingoffactssupportedbytheevidence
18.However,damages
shouldbeliberallyassessed
19.TheDefendantsareentitledtobeshielded
frommerespeculations,butcannotbeallowedtohidebehinddifficultiesof
proofarisingfromtheirownwrongfulacts
20
AdamageawardunderSub-section55(1)ofthePatentActislimitedonlyby
whatthepatenteemaylawfullyprove
21.
Inpreparationfortrial(orthereferencetoassessthedamagesifonehas
beenordered)thefollowinginformation,bywayofexample,shouldbe
obtainedwhendiscoveringtheDefendant:
-therevenueshederivedfromtheinfringement;
-theidentityofhiscustomers;
-themarketsize;
-themarketpositionoftheDefendant;
-theperiodofinfringement;
-thecompetitionandcompetitiveproducts;
-themaincostsassociatedwiththemanufactureandsaleofthe
infringingproducts(forpurposesofcomparisonandtoestablish
“industrystandards”);
-royaltyratepaidonlicenseagreementtowhichtheDefendantisa
party,ifany(toestablishthegoingrateoftheindustry);
2.2Patents

18BeloitCanadaLtd.etal.v.Valmet-DominionInc.,op.cit.at36619AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at12920PrismHospitalSoftwareInc.etal.v.HospitalMedicalRecordsInstituteetal.op.cit.,at28421UnileverPLCetal.v.Procter&GambleInc.etal.,op.cit.at524


a.beforetheissuanceofthepatent
UnderthePatentAct,patentapplicationsfiledinCanadamustbepublished
andopenedforinspectionbythepublic,nolaterthaneighteen(18)months
afterhavingbeenfiled
22.Foranyactthatwouldhavebeenaninfringement
(hadthepatentbeenissued)intheperiodbetweenthepublicationandthe
grantofthepatent,thepatenteeisentitledtoareasonablecompensation
foranydamagessustainedbyreasonofsuch“infringement”,pursuantto
Section55.(2)oftheAct.Todate,onlyonecasedealtwiththisspecific
section
23.ThisSectionrefersto“…reasonablecompensation…forany
damagesustained…”.Damagesandquantumofdamagesmustbeproven.
Intheabsenceofsuchproof,nominalcompensationwillbeawardedbefore
theissuanceofthepatent.
Ifdamagesareproven,thereasonablecompensationawardedunder
Section55.(2)oftheActshouldnormallybelessthantheactualdamages
sustainedbythepatentee.Section55.(2)doesnotcallforanawardof
damages,butratherforareasonablecompensation.HadParliamentwishto
fullycompensatethepatenteeforthedamagessustainedbeforethe
issuanceofthepatent,theSectioncouldhavebeenwordedaccordingly.
Also,duringthatperiod,alawfulmonopolyhasnotyetbeengrantedtothe
patentee.
b.aftertheissuanceofthepatent
i)salestobeconsidered
Theissueiswhetherdamagesshouldbeawardedconsideringthesalebythe
infringerofthepatentedarticleonly.Often,thepatentedarticleismerelya
componentofamorecomplexarticle,oracompletearticleinitselfbutsold
necessarilyinassociationwithothernon-infringingarticles.Apatenteemay
beentitledtodamagesassesseduponthesaleofnon-infringingcomponents
whenthereisafindingoffactthatsuchsalesarosefrominfringingthe
patentedcomponents
24.
ii)salesapatenteewouldhavemade-lostprofits-profitstobe
considered

22PatentAct,op.cit.,s.1023BakerPetroliteCorp.v.CanwellEnviro-IndustriesLtd.(2001)13C.P.R.(4th)193,at25324BeloitCanadaLtd.etal.v.Valmet-DominionInc.,op.cit.at366


Wheninfringementisfound,thepatenteewillbeentitledtodamages,either
equaltoprofitslostonsalesthepatenteewouldhavemadeorequaltoa
royaltyfortheuseoftheinfringedpatent
25.
TheCourtmustassesswhatwouldhavebeenthepatentee’spositionifthe
infringerhaveactedproperly.Thepatenteemustbecompensatedforthe
losssustainedbyitasaresultoftheinfringingsaleofapatentedproduct
which,butfortheinfringement,thepatenteewouldhavemade,thereby
realizingaprofitwhichwasultimatelylost.Themeasureofdamagesisthe
profitthePlaintiffwouldhavemadeonthesaleofeachinfringingitemssold
bytheinfringer
26.Profitisbasicallytheincomefromatraderepresentedby
thereceiptslesstheexpendituresandistobedetermineduponprinciplesof
businessandaccountancy
27.Thenetprofitsasopposedtothe
manufacturingprofitsmustbetakenintoconsideration.TheDefendant
shouldnotbecondemnedtopaymorethanthelossoftherealprofit,not
basedondebitingpartonlyoftheexpensesbutalltheexpenses,bothdirect
andindirect
28thatthepatenteewouldhaveincurredtomakethesale.
TherighttoclaimlossprofitsonsalesisnotlimitedtosaleswithinCanada.The
patenteemustbecompensatedforalldamagesflowingfromthe
infringementofthepatentwithinCanada,whichmayincludeprofitsloston
salesmadeoutsideCanada
29.
WhentryingtodeterminewhatportionoftheDefendant’ssalesthepatentee
wouldhavemade,theCourtmustexaminethehypotheticalsituationwhere
itisassumedthattheinfringingproductsneverenteredthemarket.The
followingfactorsmaybeconsidered:
a.presenceofcompetingproductsinthemarket
b.advantagesofthepatentedproductoverthecompeting
products
c.advantagesoftheinfringingproductsoverthepatented
products
d.marketpositionofthepatentee
e.marketpositionoftheinfringer

25AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at13926J.R.ShortMillingCo.(Canada)v.ContinentalSoyaCo.andGeorgeWestonBreadandCakes
Ltd.,op.cit.25;J.M.VoithGmbHetal.v.BeloitCorp.etal.(1993)47C.P.R.(3d)448at473
(F.C.T.D.)RouleauJ.
27ConsolboardInc.v.MacMillanBloedel(Saskatchewan)Ltd.,op.cit.at2128J.R.ShortMillingCo.(Canada)v.ContinentalSoyaCo.andGeorgeWestonBreadandCakes
Ltd.,op.cit.atp.25;AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at156
29AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at140


f.marketshareofthepatenteebeforeandafterthe
infringingproductenteredthemarket
g.sizeofthemarketbeforeandaftertheinfringingproduct
enteredthemarket
h.capacityofthepatenteetoproduceadditional
products
30.
Itwillgenerallynotberequiredfromthepatenteethatheestablisheswith
precisionthedefinitenumberofsaleshewouldhavemade,butforthe
infringement
31.
iii.salesapatenteewouldnothavemade-reasonableroyalty
Whenapatenteeitselfmanufacturestheinventionforprofits,damagesare
assessedonthebasisoflossofmanufacturingprofits.Whenthepatentee
merelyallowotherstousetheinventionandreturnforroyalties,thedamages
areassessedonthebasisoflossofroyalties.Thesetwo(2)measuresof
damagesaremutuallyexclusive
32.Incaseofdoubtastowhetherthe
patenteewouldhavemadethesale,theawardofareasonableroyaltyis
sometimesthesafestandbestwaytoarriveatasoundconclusionastothe
properevaluationofthedamages
33.Wherethepatenteehaslicensedits
inventioninthepast,themeasureofdamagesisequaltotheroyaltythe
infringerwouldhavehadtopayifithadenteredintoalegitimatelicensing
agreementwiththepatentee.Therateofroyaltyinsuchacaseisamatter
ofevidence.Thequestioniswhatawillinglicenseewouldpaytoawilling
licensorfortheuseofthepatent
34.
Whenthereisnodirectevidenceastotheamountthepatenteewouldhave
consideredtobeareasonableroyalty,itisnecessaryfortheCourtto
considerroyaltynegotiatedinothertrade,expertopinionexpressedin
publicationsorinthewitnessbox,theprofitabilityoftheinventionandany
otherfactorsonwhichtheJudgecandecidethemeasureofloss
35.
However,whenconsideringevidenceofotherlicensesatacertainroyalty
rateinthesameorinothertrades,itmustalsobeshowntotheCourtthatthe
circumstancesunderwhichsuchotherlicensesweregivenarethesameor

30AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at14131AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at14232ConsolboardInc.v.MacMillanBloedel(Saskatchewan)Ltd.,op.cit.,at733AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at15334ConsolboardInc.v.MacMillanBloedel(Saskatchewan)Ltd.,op.cit.at835AlliedSignalv.DuPontCanadaInc.,op.cit.at177


comparabletothecircumstancesunderwhichtheCourtmustfixtheroyalty
ratetheDefendantwillhavetopay
36.
TheonusofproducingreliableevidencetoallowtheCourttofixarateof
royaltyisonthepatentee
37.TheCourtisentitledtorelyonexpertevidence
andthefollowingfactorsmaybeconsidered:theneedtotransfer
technology,thedifferencesinthepracticeoftheinvention,thefactthatthe
licenceisnonexclusive,territoriallimitations,thetermofthelicense,the
competitivetechnology,thecompetitionbetweenthelicensorandthe
licensee,thedemandfortheproduct,therisk,thenoveltyoftheinvention,
thecompensationforresearchanddevelopmentcosts,thedisplacementof
businessandthecapacitytomeetmarketdemand
38.
TheTrialJudgeassessingthedamagesisaccordedalargemeasureof
freedomindealingwiththeevidencepresentedtotheCourt.Ifthe
evaluationpresentedisunusuallyhighorlow,theTrialJudgemayadjustit
downwardorupward
39.
iv.priceerosion
Wherecompetitionbytheinfringerforcesthepatenteetoreducetheselling
priceofitspatentedproduct,inprinciplethepatenteemaybeentitledtothe
profititlost,bothonthesalesitactuallymadeandthesalesthatitwould
havemade,atthesellingpriceitwouldhavemaintained,butforthe
presenceoftheinfringingproduct.Thepatenteemustprovethatitwasthe
competitionbytheinfringerandnootherfactorsthatpreventeditfrom
raisingitsprices.Itwillsufficeifthepatenteecanshowthatitpriceswere
affectedbytheinfringer’smarketpresencethroughmarketingschemeor
othermeans
40.

v.entitlement-patentee-personclaimingunderthepatentee
Theinfringerisliabletothepatenteeandallpersonsclaimingunderthe
patenteeforalldamagessustainedbythepatenteeandsuchpersons
41.A
licensee(exclusive
42ornon-exclusive43)andeventhepurchaserofthe

36ConsolboardInc.v.MacMillanBloedel(Saskatchewan)Ltd.,op.cit.at837ConsolboardInc.v.MacMillanBloedel(Saskatchewan)Ltd.,op.cit.at838AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at178-17939AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at16240AlliedSignalInc.v.DuPontCanadaInc.,op.cit.at18141PatentAct,op.cit.,s.55.(1)42FiberglasCanadaLtd.etal.v.SpunRockWoolsLtd.etal.(1947)6C.P.R.57


patentedarticle44orfoundtobepersonsclaimingunderthepatentee.In
anyproceedingswheredamagesareclaimed,thepatenteemustbea
party
45.
2.3Trade-marks
i)measureofdamages
Intrade-mark/tradenamecases,itisoftendifficultforthePlaintifftoprove
thatspecificdamagesweresustainedbyreasonsoftheinfringementbythe
Defendant.Whennospecificdamagesareproven,buttheevidence
establishesthatthePlaintiffhasinfactsuffereddamagestoitsreputationand
goodwillbyreasonsoftheDefendant’suseofitsname,thePlaintiffwillbe
entitledtonominaldamages
46.
Evenifatlarge,theCourtmustdoitsbesttoarriveatafigurewhichisjustin
allthecircumstancesofthecase
47.Whentheinfringementisdeliberateand
clearlyanattempttoattractthePlaintiff’sbusinessandgoodwill,theaward
ofdamagesmaybelargerthannominal,butcannotbeverysubstantial
whenthereislackofevidenceofspecificdamages
48.
Theword“goodwill”wasdefinedbyMr.JusticeThurlowasfollowsinthe
Clairol
49case“…thegoodwillattachingtoatrade-markis,Ithink,thatportion
ofthegoodwillofthebusinessofitsownerwhichconsistsofthewhole
advantage,whateveritmaybe,ofthereputationandconnection,which
mayhavebeenbuiltupbyyearsofhonestworkorgainedbylavish
expenditureofmoneyandwhichisidentifiedwiththegoodsdistributedby
theownerinassociationwiththetrade-mark”.
IndecidingwhetherthegoodwillofthePlaintiffwasaffectedbytheactions
oftheDefendant,thefollowingfacts,amongstothers,maybeconsideredby
theCourtinthepropercase:thenoveltyoftheparties’businessandits
attractivenesstothepublic;thetimingoftheparties’entryonthemarket;the

43AmericanCyanamidCo.v.NovopharmLtd.(1972)7C.P.R.(2nd)6144SignalisationdeMontréalInc.v.ServicesdeBétonUniverselsLtéeetal.(1992)46C.P.R.(2nd)
199at210-211(F.C.A.),Hugessen,J.
45PatentAct,op.cit.,s.55.(3)46VisaInternationalServiceAssociationv.VisaMotelCorp.(1984)1C.P.R.(3d)109at118-120
(B.C.C.A.),Nemetz,C.J.B.C.;GreystoneCapitalManagementInc.v.GreystonePropertiesLtd.et
al.(1999)87C.P.R.(3d)43at57-58(B.C.S.C.),Stromberg-Stein,J.
47Richardsonetal.v.Reedetal.(1988)21C.P.R.(3d)275at283(O.H.C.),Anderson,J.48Richardsonetal.v.Reedetal.op.cit.at28349ClairolInternationalCorp.v.ThomasSupplyandEquipmentCo.(1968)55C.P.R.176at199


awarenessofthePlaintiff’sbusinessandgoodwillbytheDefendantandhis
intentiontoderivesomebenefitfromsame;theperiodduringwhichthetort
lasted;theeffectofthetortonthePlaintiff’sbusinessevenafterthe
infringementstopped
50.
Whilespecificdamagesneednotbeproven,proofofdamagesmustbe
broughttotheCourt.Failingadequateproof,nodamages,whethergeneral,
specific,punitiveorexemplarywillbegranted
51.
ii)relevanceoflostsales
Damagesintrade-markcasesareusuallynotassessedonthebasisofthe
Plaintiff’slostprofitsonsalesitwouldhavemade,butfortheinfringementby
theDefendant.Thismaybelogicallyexplainedinviewofthedifficultyfora
Plaintifftoshowthatsalesarelostmerelybyreasonsoftheuseofatrade-
markinassociationwithaparticularproduct.Intoday’scompetitiveworld,
numeroussimilarproductsareavailableunderdifferenttrade-marksand
consequently,itwouldgenerallybeeasyfortheDefendanttoshowthata
salehemade,wouldnothavenecessarilygonetothePlaintiff,butmayhave
beenmadebymanyothercompetitors.Inpatentcases,wherethereisa
monopolyonauniquecharacteristicoftheproductitself(asopposedtoa
monopolyonthetrade-markitbearsoritsappearance),itmaybemore
difficultfortheDefendanttoshowthatmanyproductsofsubstitutionwere
available.
Evenwhencounterfeitingoffamoustrade-marksoccursandcopiesaresold
atthefractionofthepriceoftheoriginal,thePlaintiffwouldhavedifficultyto
showthatitwouldhavemadetheinfringingsales.
Inthecaseofaproductuniqueinitsclassandpricerange,havingalimited
periodofpopularity,aPlaintiffmaybeabletoshowthatitwouldhavemade
allthesalesmadebytheDefendantandwouldthereforebeentitledto
hislost
profitscalculatedaccordingtoprinciplesadoptedinpatentcases
52.In
Canwest
53,thePlaintifftriedtoprovedamagesbasedonlostprofits,butwas

50Lee’sFoodProductsLtd.v.Shafer-HaggartLtd.(1984)81C.P.R.(2nd)204,at214;Canwest
TelephoneCo.Inc.v.CanwestCommercialPhoneCentreLtd.etal.,op.cit.at365-366
51CartierInc.v.CartierOpticalsLtd.(1988)20C.P.R.(3d)68,at82(F.C.T.D.),Dubé,J.;Sprint
CommunicationsCompanyLPetal.v.MerlinInternationalCommunicationsInc.(2000)9C.P.R.
4th307at329(F.C.T.D.),O’Keefe,J.
52EmbeeElectronicAgenciesLtd.v.G.S.C.ElectronicsLtd.etal.(1981)70C.P.R.(2d)192
(F.C.A.),Pratte,J.


unsuccessful.Methodsofassessingdamagesinpatentcasesarenot
principlesoflaw
54.IntheEmbeecase(atrade-markcase),thedamages
wereassessedonthebasisofnetprofits(takingintoaccountalltheindirect
coststhatwouldhavebeenassumedbythePlaintiffifithadmadethe
sale
55).
iii)royalties
Itisalsounusualintrade-markcases,toassessdamagesonthebasisofa
“reasonableroyalty”.However,whenalicenseagreementbetweenthe
PlaintiffandtheDefendantwasinplaceandtheDefendantcontinuestosell
thetrade-markedgoodsaftertheterminationofthelicenseagreement(the
salesthusbecominginfringingsales)itisfairtocalculatethemeasureof
damagesbasedontheoriginalagreement
56.
iv)entitlement-trade-markowner-licensee
Proceedingsininfringingmaybeinitiatedbythetrade-markownerorits
licensee
57.Compensationforthedamagessustainedbyeithertheowneror
itslicenseemaybeawardedbytheCourtifsatisfiedthatanyacthasbeen
done,contrarytotheTrade-markAct
58.
2.4COPYRIGHT
i)generaldamages
Actualdamagesmaybeassessedonthebasisoftheprofitslostbythe
copyrightownerduetolostsalesofthecopyrightedmaterial,evenifthe
infringermadenoprofits
59or,alternatively,onthebasisoftheamountof

53CanwestTelephoneCo.Inc.etal.v.CanwestCommercialPhoneCenterLtd.etal.,op.cit.,at
360
54EmbeeElectronicAgenciesLtd.v.G.S.C.ElectronicsLtd.etal.,op.cit.at19955EmbeeElectronicAgenciesLtd.v.G.S.C.ElectronicsLtd.etal.,op.cit.at199(F.C.A.)56AnnofGreenGablesLicensingAuthorityInc.etal.v.AvonleaTraditionsInc.(2000)4C.P.R.
(4th)289at362
57Trade-markAct,op.cit.s.50.(3)58Trade-markAct,op.cit.s.53.(2)59Fletcherv.PolkaDotFabricsLtd.etal.(1993)51C.P.R.(3d)241at255;U&RTaxServicesLtd.v.
H.R.BlockCanadaInc.,op.cit.,at272


royaltythecopyrightownerwouldhavereceivedunderanegotiated
license
60.
Evenifevidencetosupportacalculationontheabove-mentionedbasisis
notavailable,damageswillneverthelessbeawarded.Copyrightissaidtobe
apropertythatisawastingasset
61.Whencopyrightinfringementis
establishedandactuallossorspecificdamagescannotbeprovenbut,
nevertheless,itisshownthatdamagesresulteddirectlyfromtheinfringement,
damageswillbegranted“atlarge”andmaybedealtwithbroadly,asa
matterofcommonsense,withoutprofessingtobeminutelyaccurate
62.
Acopyrightinfringercannotescapeacondemnationindamagesmerely
becausetheyareimpossibleordifficulttoprove.Damagescanbegranted
forbreachoftheCopyrightActwithoutthenecessitytoprovethemandif
damagesaredifficulttoassessorcannotbeevaluated,theCourtmustdo
thebestitcan,evenifitamountstoamatterofguessworkandthe
assessmentbecomesarbitrary
63.
TheCourthasawiderdiscretioninassessinggeneraldamagesincopyright
casesthaninotherbranchesofthelawinviewofthedifficultyofproving
preciselywhatlossofrevenueshasresultedfromtheDefendant’sillegaluse
ofthePlaintiff’sbusinessproperty.Whendamagescannotbedetermined
withprecision,thedeterminationofdamagesmust,toalargeextent,bea
roughandready-one
64.However,liabilitymustnotbespeculative,onlythe

60MCACanadaLtd.v.GillberryandHawkeAdvertisingAgencyLtd.etal.(1976)28C.P.R.(2d)52
at56;ProHartsInc.v.CampusCraftsHoldingsLtd.(1980)50C.P.R.(2d)230at243;MLWSystems
InEducationLtd.v.HartsSystemsLtd.(1988)22C.P.R.(3d)90at92;Cartes-En-CielInc.v.
BoutiqueElfeInc.(1991)43C.P.R.(3d)416at422
61Fox,HaroldG.,CanadianLawofCopyrightandIndustrialDesign,2nded.1967,atp.459;
NationalFilmBoardv.Bier(1970)63C.P.R.164at179;T.J.MooreCo.Ltd.v.Accessoiresde
BureaudeQuébecInc.(1973)14C.P.R.(2d)113at125
62T.J.Mooreco.Ltd.v.AccessoiresdeBureaudeQuébecInc.,op.cit.at125;C.P.KochLtd.et
al.v.ContinentalSteelLtd.etal.(1984)82C.P.R.(2nd)156at165;Bemben&KuzychArchitecset
al.v.Greenheaven-CarnegyDevelopmentsLtd.etal.(1992)45C.P.R.93d)499at493;Prism
HospitalSoftwareInc.etal.v.HospitalMedicalRecordsInstituteetal.,op.cit.,at225;
63Webb&Knapp(Canada)Ltd.v.Edmonton(City)(1970)S.C.R.588at601;LesRôtisseriesSt-
HubertLtéev.LeSyndicatdesTravailleurs(euses)delaRôtisserieSt-HubertdeDrummondville
C.S.N.etal.(1987)12C.I.P.R.89at106-107;Sedgewickv.AtlanticMediaWorksLtd.(1991)38
C.P.R.(3d)527;U&RTaxServicesLtd.v.H.R.BlockCanadaInc.(1995)62C.P.R.(3d)257at271
64Slumber-MagicAdjustableBedCo.Ltd.v.Sleep-KingAdjustableBedCo.Ltd.,op.cit.,at88-89;
PerformingRightsOrganizationofCanadaLtd.v.GlennGreening(1990)32C.P.R.(3d)211at
216;


measurementofliabilityintermsofdollars.Insuchcases,attheveryleast,
thePlaintiffwillbeentitledtonominaldamages,notnecessarilysmall
65.
Inassessingdamages,theCourtwillconsidertheamountofprofitsmadeby
theinfringerasaresultoftheinfringement,thelossofpublicandprofessional
recognitionofthecopyrightownerresultingfromtheinfringement,thefair
remunerationthecopyrightownershouldreceive
66,theconductofthe
infringerandwhetherhepersistedafternotice
67.TheCourtwillalsoconsider
thefactthatthecopyrightownermighthavebeendeprivedofthechance
tohavehispersonaandadvisereceivecreditforanysuccessderivedfrom
theusemadeofthecopyrightedpublicationandtheimproperattemptof
theinfringertoearnprofitsandgainsomefinancialadvantagefromthework
ofanother
68.Whentheinfringershowsthathewasunawareandcouldnot
suspectthatcopyrightexistedinthework,theonlyremedyisaninjunction
69.
ii)accountofprofits
Inadditiontodamages,theinfringerisliabletopaytothecopyrightowner
suchpartoftheprofitshemadefromhisinfringement,astheCourtconsiders
just
70.Theprofitsoftheinfringerwillbeestablishedfollowinganaccounting.
ThePlaintiffisrequiredtoproverevenuesandtheDefendanthastheburden
ofprovinganycostshewantstooffsetagainsttherevenues.Evenwhena
Defendantisuncooperativeanddeniesafullaccountingofhisprofits,the
Plaintiffmustpursuealllegalavenuestoobtainenoughinformationto
providetheCourtwithdataonwhichajudgmentcanbebased
71.
iii)conversion
Damagesfor“conversion”arenolongeravailableinCanada,exceptif
proceedingsintroducesimmediatelybeforethecomingintoforceofsection

65PerformingRightsOrganizationofCanadaLtd.v.GlennGreening,op.cit.,at213;RobertD.
SullivanArchitectsLtd.v.MontykolaInvestmentsInc.etal.(1995)61C.P.R.(3d)447at462-463;
Weissv.PrenticeHallCanadaInc.etal.(1995)66C.P.R.(3d)417at429-430;
66Bemben&KuzychArchitectsetal.v.Greenheaven-CarnegyDevelopmentsLtd.etal.,op.cit.,
at493
67TomHopkinsInternationalInc.v.Wall&RedekopRealtyLtd.(1984)1C.P.R.(3d)348at35368Weissv.PrenticeHallCanadaInc.etal.,op.cit.,at42969CopyrightAct,op.cit.s.39(1);Breenv.HancockHousePublishersLtd.etal.(1985)6C.P.R.(3d)
433at437
70CopyrightAct,op.cit.s.35.(1)71Huttonv.CanadianBroadcastingCorporation(1989)20C.PR.(3d)398at455-459,appeal
dismissed(1992)41C.P.R.(2d)45;seealsoFletcherv.PolkaDotFabricsLtd.etal.(1999)51C.P.R.
(3d)241at256


38.(1)oftheCopyrightAct(September1st,1997)72.Subjecttothose
transitionalrights,conversiondamageswereabolishedinCanadain1997
73.
Damageswereavailableforconversionbyvirtueofthepresumptionof
ownershipoftheinfringingcopiesinfavourofthecopyrightowner,when
suchinfringingcopiesweresoldordestroyed.Damagesforconversioncould
beawardedbytheCourtbutoverlapandduplicationhadtobeavoided
74.
iv)statutorydamages
Sincethecomingintoforceofs.38.(1)oftheCopyrightAct(inspiredfromUS
law)onOctober1st,1999,statutorydamages,inlieuofdamagesandprofits,
maybeawardedbytheCourtatanytimebeforejudgement
75ifthe
copyrightownersoelects.Section38.1hadnopredecessorintheCopyright
Act.
Withrespecttoallinfringementsofonework,theCourtmayawardbetween
$500and$20,000.Pursuanttoss.38.1(5),theCourtwillsettheamount
consideringallrelevantfactorsincludingthegoodfaithorbadfaithofthe
Defendant(goodfaithisalwayspresumed,badfaithmustbeestablished)
theconductofthepartiesandtheneedtodeterotherinfringementsofthe
copyrightinquestion.Thesecriteriaarenotexhaustive.Otherfactorshave
beenconsideredbyUSCourtssuchas;theattitudeandconductofthe
Defendantwhichmakedifficulttheassessmentofdamages
76,thefactthat
theoffenceisrepetitious
77,thefactthattheDefendantwasarepeat
offender
78,thedegreeofsophisticationoftheDefendant79,thelossofprofits
ofPlaintiffandgainsoftheDefendant
80.
Inoneofthefirstcaseinwhichss.38.1(5)wasconsidered,Mr.JusticeNadon
oftheFederalCourtofCanadaawardedthesumof$10,000
81.

72S.C.1997,c.24,s.20(2)73CopyrightAct,s.38.(5)74TomHopkinsInternationalInc.v.Wall&RedekopRealtyLtd.(1984)1C.P.R.(3d)348at353;Les
ÉditionsJCLInc.v.91439CanadaLtée(1995)1F.C.380at385-390
75F.W.WoolworthCo.v.ContemporaryArtsInc.95U.S.P.Q.396(SupremeCourt1952)at231-23376MonogramModelsInc.v.IndustroMotiveCorp.,181U.S.P.Q.425;R.S.O.RecordsInc.v.Perry,
225U.S.P.Q.407
77DelmanFabricsInc.v.HollandFabricsInc.,228U.S.P.Q.596;SuperiorFormBuildersInc.v.Dan
ChaseTaxidermySupplyCo.,37U.S.P.Q.(2nd)1571
78LauratexTextileCorp.v.AlltonKnittingMillsInc.,214U.S.P.Q.20379D.C.Comicsv.MiniGiftShop,15U.S.P.Q.(2nd)188880BasicBooksInc.v.Kinko’sGraphicCorp.,(1989-1990)C.L.D.no.26,70918U.S.P.Q.(2nd)143781Wingv.VanVelthuzen,2000CarswellNath2873


Ifthecopyrightownerelectstobecompensatedbystatutorydamages
pursuanttosection38.1,hisrighttoobtainexemplaryorpunitivedamagesis
notaffected(s.38.1(7)).
v)exemplarydamages
Exemplaryandpunitivedamagesareroutinelygrantedincopyrightcases
whenrequiredasadeterrent,whenthereisevidenceofmaliceorincaseof
flagrant,blatantandwilfulinfringementoroutrightcounterfeiting
82.When
allowed,exemplarydamagesshouldbeawardedinanamount
commensuratewiththegravityoftheactioncommittedandshouldreflect
theindignationoftheCourtattheconductoftheDefendant
83.No
exemplarydamageswillbegrantedwhentheconductoftheDefendant
canbecharacterisedascredulousratherthancalculatinglyfraudulent
84.
2.5Industrialdesigns
i)measureofdamages-relevanceofpatentcases
Veryfewcasesdealingspecificallywithdamagestobeawardedwhen
infringementofanindustrialdesignisfoundweredecidedinrecentyears.As
inpatentcases,generallythemeasureofdamagestobeawardedin
industrialdesigncaseswillbetheprofittheproprietorofthedesignwould
havemade,butfortheinfringement,ortheroyaltyhewouldhaveearned,
hadhelicensedtheuseofhisdesign.Onthispoint,decisionsinpatentcases
areauthoritative
85.
NodamagesareavailabletotheproprietorofadesigniftheDefendant
establishesthat,atthetimeoftheactthatisasubjectoftheproceedings,
theDefendantwasnotawareandhadnoreasonablegroundstosuspect
thatthedesignwasregistered
86.

82Zamacoisv.Douville&Marchand(1943)2C.P.R.270at302;MCA(Canada)Ltd.etal.v.
GilberrryandHawkeAdvertisingAgencyLtd.etal.,op.cit.,at56;PerformingRightsOrganisation
ofCanadaLtd.v.GlennGreeningop.cit.,at215;Carte-en-cielInc.v.BoutiqueElfeInc.(1991)
43C.P.R.(3d)416;U&RTaxServicesLtd.v.H.&R.BlockCanadaInc.,op.cit.,at272;Prisede
ParoleInc.v.GuérinÉditeurLtée(1995)66C.P.R.(3d)257;A&ETelevisionNetworksv.Alliance
CommunicationsCorp.(1998)82C.P.R.(3d)382at384;Weissv.PrenticeHallCanadaInc.etal.,
op.cit.at429-430
83PrismHospitalSoftwareInc.etal.v.HospitalMedicalRecordInstituteetal.,op.cit.,at285-28684Slumber-MagicAdjustableBedCo.Ltd.v.Sleep-KingAdjustableBedCo.Ltd.,op.cit.,at89-9085DutailierInc.v.MaribroInc.(1988)21C.P.R.(3d)563at547(F.C.T.D.)Rouleau,J.86IndustrialDesignAct,s.17


ii)lostsales-lostprofits-lostroyalty
Asthemonopolyliesinthedesignappliedtoanobjectandnottothe
functionoftheobjectitself,proofthatsaleswerelostbytheproprietor
becauseofthepresenceoftheDefendant’sproductonthemarketwillhave
tobeclearlyestablished.Theburdenofproofofactualdamagessufferedis
onthepartyseekingthedamages.Arbitraryandunjustifiedfigurescannot
beusedtoindicatethepossibleprofitslostbythePlaintiff.WhenaPlaintiff
showedthatitsufferedadecreaseinsales,itmustalsoshowthatthe
decreaseoccurredinregionswherethepartiesareincompetition.Also,the
effectonthePlaintiff’ssalesofthesalesofproductsbyothercompetitorsand
theincreaseordecreaseinmarketdemandfortheproductinissuemustalso
beconsidered.Iftheproprietorfailstoprovehisdamages,hewillbeentitled
tonominaldamagesonly
87.
iii)entitlement-proprietor-exclusivelicensee
Anactionforinfringementofanindustrialdesignmaybebroughtbythe
proprietorofthedesignorbyanexclusivelicensee
88.Ifinfringementisfound,
theCourtmaygrantdamagesoranaccountofprofits
89.
2.6Punitiveandexemplarydamages
Punitiveorexemplarydamagesareanexceptiontothegeneralrulethat
damagesarecompensatoryinnatureandarenotawardedtopunish.
PunitivedamagesmaybeawardedinsituationwheretheDefendant
misconductismalicious,oppressiveandhighhanded.Punitivedamagesare
grantedtopunishtheDefendant,inthenatureofafinetodeterthe
Defendantandothersfromactinginthesamemanner
90.
Astotheamounttobegranted,itshouldbeproportionaltothegravityofthe
wrong.Therelationshipbetweenthepartiesshouldbeexaminedandany
imbalanceintheirpositionconsideredtoascertainwhethertheDefendant
exploiteditsdominantposition.ThefinancialworthoftheDefendantshould
alsoinfluencetheamountoftheaward
91.

87DutailierInc.v.MaribroInc.,op.cit.at546-54788IndustrialDesignAct,op.cit.,s.1589IndustrialDesignAct,op.cit.,s.15.190Hillv.ChurchofScientologyofToronto(1995)2S.C.R.1130at120891Whitenv.PilotInsuranceCo.(1999)170D.L.R.(4th)280at298-300


TheCourtmayconsiderawardingexemplarydamageswhenaDefendant
clearlydisregardaninterlocutoryinjunctionissuedbytheCourt
92.

92ProArtsInc.v.CampusCraftsHoldingLtd.(1980)50C.P.R.(2d)230at249-254;LubrizolCorp.et
al.v.ImperialOilLtd.etal.,op.cit.,at478



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