Supreme Court of British Columbia Grants Injunctive Relief in Passing off Case Concerning Hermès Handbags

2005-01-01

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SUPREMECOURTOFBRITISHCOLUMBIAGRANTSINJUNCTIVERELIEFINPASSING
OFFCASECONCERNINGHERMÈSHANDBAGS

StellaSyrianos*
LEGERROBICRICHARD,Lawyers
ROBIC,Patent&TrademarkAgents
CentreCDPCapital
1001Square-Victoria–BlocE–8
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Montréal,Québec,CanadaH2Z2B7
Tel.:(514)987-6242-Fax(514)845-7874
info@robic.com–www.robic.ca
TheSupremeCourtofBritishColumbiagrantedinjunctiverelieftothePlaintiffs
HermesCanadaIncandHermesInternationalS.A.whosoughtaninterim
injunctiontoenjoinandrestraintheDefendant,YoungghulParkfromselling
“knockoff”Hermesstylepursesinhisretailstore(HermesCanadaInc.v.Henry
HighClassKellyRetailStore,2004BCSC1694-DocketS046494(December17
th,
2004,Boyd,J.)).
Thefacts
Sometimein2003,thedefendant’ssister-in-lawconceivedabusinessventure
inVancouverbasedonherknowledgeofherKoreanneighbour’soperations
involvingseveralHenryHighClassKellyretailstoresinKorea,Japan,Guam
andHawaii.Shequestionedifherbrother-in-lawMr.Park,theDefendantand
hiswifewereinterestedinopeningsuchastoreinVancouver“withherhelp”.
TheDefendant,aresidentofWinnipeg,begantosearchforalocationin
VancouverandonJune11th,2004,executedafive-yearlease.Noteworthyis
thatthisspacewaslocatedacrossthestreetfromtheHotelVancouverand
verynearbyRobsonStreet–averypopularshoppingstreetindowntown
Vancouver.Notcoincidentally,thePlaintiffsnotedthattheDefendant’s
premiseswerelocatedacrossthestreetfromtheverylocationwherea
Hermes-authorizedstoreonceoperated.
OnAugust18th,2004,Mr.ParkregisteredpersonallywiththeRegistrarof
CompaniesasanindividualdoingbusinessunderthebusinessnameHenry
HighClassKellyRetailStore(“HenryStore”).Defendant’swifeMrs.Parklivesin
VancouverandworksastheHenryStoremanagerwhileMr.Parkcontinued

©LEGERROBICRICHARD,2005.*LawyerwiththelawfirmLEGERROBICRICHARD,g.p.andofthepatentandtrademark
agencyfirmROBIC,g.p.Publication142.172.

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toresideinWinnipegwhereheoperatesagrocerystorewhilecontinuingto
tryandsellboththatbusinessandthefamilyhome.
Althoughtherewaslittleinformationconcerningthedetailsandstructureof
thebusinessrelationshipbetweentheParksandMrs.Park’ssister,itwasthe
latterwhotookchargeofobtainingtheHenryHighClassKellybagsand
accessories.
OnSeptember12
th,2005,theHenryStoreopenedforbusiness.ThePresident
andCEOofHermesCanada,whileonbusinessinVancouver,visitedthe
HenryStoreandfoundtheDefendantwasnotonlysellingafew“knockoff”
HermeshandbagsbutrathereverysingleitemsoldwasacopyofaHermes
product.
ApartfromsellingaduplicationoftheentirelineofHermeshandbags,the
HenryStorealsosoldcertainstylesofhandbagswhich,althoughsold
elsewherebyHermes,hadnotyetbeenreleasedforsaleinanyHermesstore
inCanada.
OnNovember12th,2004,aprivateinvestigatorattendedtheHenrystoreand
presentedanattendingsalesclerkwithaJapaneseHermescatalogue,
identifyingtheitemsshewishedtopurchase.Thecorrespondingproducts
wereselectedbytheclerkandpurchasedbytheinvestigator.
OnNovember22nd,2004,thePlaintiffscommencedtheinjunction
proceeding.On,November26,2004,theDefendantincludedanotherlineof
handbagsinitsinventoryforsaleattheHenryStore,underthenameBeniya.
Thelattertookupapproximately7%oftheretailspace.
TheHermesKellyandBirkinhandbagssellataretailpricerangeof$6,900-
$17,000and$7,990-$32,000respectivelywhiletheHenryHighClasshandbags
soldataretailpricesbetween$310-$1,545.
Testforpassingoff
TheissueaddressedbytheCourtwasasfollows:
DidHermesmeetthetestforthegrantingofaninjunctioninapassingoff
case?
Inordertorespondtothisquery,theCourtanalysedthethreeelements
requiredtosucceed:(i)theexistenceofgoodwill,(ii)thedeceptionofthe

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publicduetoamisrepresentationand(iii)actualorpotentialdamagetothe
plaintiff.
Goodwill
TheDefendantunsuccessfullyarguedthatHermeshadnoexclusivityinthe
handbaglinesinquestionbyrelyingonmanyadvertisements,catalogue
pagesandwebsiteexhibitsthatHermesstyles,inparticulartheKellyand
Birkinstyles,havebecomegeneric“classic”styleswhicharecopiedand
promotedbymerchantsworldwide.
TheCourtheldthattherewasnomerittotheDefendant’ssubmission.While
notignoringthatmanymerchantsworldwidepromotethesaleofHermes
handbag“knockoffs”,theCourtnotedthatthosepromotionsappeartobe
directedprimarilyatthereplicationofthetwoperhapsmostfamousHermes
styles–theBirkinbagandtheKellybag.However,thesemerchantsdidnot
appeartobeattempting,aswastheDefendant,tosellareplicationofthe
entirelineofHermeshandbags.Furthermore,andmoreimportantly,the
Courtjustifiablycautionedthatthislineofreasoning,thatbecauseoffensive
copyingconductissowidespread,theDefendant’sactionsshouldbe
condonedbytheCourt,couldnotserveasananswertoHermes’complaint.
TheDefendantalsotenderedthateveniftheHenrybagswere“knockoffs”of
Hermesdesigns,Hermescannotbepresumedtohaveanygoodwillinthe
designs,sinceithadnoregisteredtrademarkorindustrialdesigninany
handbagstyleinCanada.Inotherwords,theDefendantarguedthat
Hermesoughttobeconsideredtobeinnobetterpositionthantheholderof
anunregisteredmark.
TheCourtwasalsonotpersuadedbythisargumentandaptlystatedthatthe
absenceofaregisteredtrademarkdoesnotdisplaceanowner’sabilityto
launchacommonlawactionforpassingoffinaquesttosecureitsrightof
exclusiveuseanditsrighttoprotectagainstdilutionofitsgoodwillby
tarnishmentofreputation
TheCourtconcludedthatbasedonthematerialsbeforeit,itwassatisfied
Hermesestablishedastrongcasethatithasgoodwillinthename,reputation
andhandbagstylesinissueandthattherewasafairissuetobetried.

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Misrepresentation
TheDefendantarguedthatevenifoneacceptedHermeshadestablished
goodwillinitsname,therewasnoevidenceofanydeceptionthrough
misrepresentationinsofarashehadinnowayassociatedhimselfortheHenry
StorewiththeHermesname.TheDefendantsupportedthispretensionby
outliningthestepsthatweretakentodistinguishtheHenryhandbaglinefrom
theHermeshandbagline:
·themarkingsonthewares,thatisthenameHermesdoesnot
appearonthehandbags
·thelargesignabovetheentrancetothestorebearingthename
HENRYHIGHCLASSKELLY
·thatsamelogoappearsonthewallofthestore,inthefront
window,andonthefrontcashcounter
·thewords“madeinItaly”areprominentlydisplayedinthe
handbags
·theinteriordécorofthestoreisverydifferentfromthatofa
typicalHermesstoreandisthereforedistinguishable.
HermesrespondedtoDefendant’scontentionbysubmittingthiswasnotthe
focusoftheiractionandtheissuewaswhetheranordinaryconsumer,asa
matteroffirstimpressionandimperfectrecollection,wouldbelievetheHenry
handbagsweresomehowapproved,authorizedorendorsedbyHermes.
Moreover,HermesarguedthataconsumermaybelievethattheHenryStore
wasspecificallyauthorizedtosellaHermes“secondline”ofproductsorat
leastthattherewassomeconnectionbetweentheHenryStoreandHermes.
TheCourtopinedthatitacceptstheremaybesomeriskthatonenteringthe
HenryStoreandseeingthehandbagscarryingthenameHenryHighClass
insteadofHermes,acustomermightconcludethisstorewasauthorizedto
marketaHermes“secondline”,butabsentevidencebyeitherparty
regardingconsumerexperiencebywayofindividualaffidavitsorsurveysor
otherwise,itwasunabletoassestheextentofthatrisk.
WhiletheCourtconsideredthiselementtobetheweakestlinkofthecase,it
neverthelessstatedthatHermeshadafaircasetobetriedontheissue,
particularlysincetheDefendanthadveryclearlydedicatedhimselfto
matchingtheHermeshandbagline,productforproduct.
ActualorPotentialHarm

Hermesclaimedthatitwasimpossibletodeterminethedamagesinthiscase
butprovidedthatcustomerswhobelievedtheywerebuyingaHermes

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“secondline”product,wouldresultinitssufferingharmtoitsreputationand
accordinglysufferingafinancialloss.Hermesfurtherarguedthatalossof
controloveritsdesignswouldbeanalogoustothelossofcontroloverthe
reputation,imageandgoodwillassociatedwiththeHermesnameandthat
thislossofcontrolinitselfconstitutedirreparableharmtoHermes.
TheCourtagreedwithHermesandstatedthattherealissueatbarwasnot
lostsalesbutratherthelossofreputationwhichwouldflowfromthe
Defendant’soperationoftheHenryStore.
Asforthebalanceofconvenience,theCourtdecidedthatitweighedin
favourofHermes.ItrejectedDefendant’scharacterizationofhimselfasan
innocentimmigrantgrocerwhoriskedfinancialruinshouldtheinjunctionbe
granted.Althoughtheevidencewasnotclear,theCourtwaslefttoinferfrom
thematerialsbeforeitthatotherlarger,internationalplayerswerebehindthe
scenessincetheDefendantchosenottoprovidetheCourtwithbetter
particularsofthestructureofhisHenryStorenoritsinvestors.Further,
interestinglyenough,neithertheDefendantnorhiswifeMrs.Parks,had
identifiedhersisterbynameandaddress.
TheCourtconcludedthattheDefendantofferednoproofithadtheabilityto
satisfyaclaimfordamages,asopposedtoHermeswhoundoubtedly
establisheditwaswellabletosatisfyanydamagessufferedbytheDefendant
shouldtheinjunctionbeallowed.
Ingrantingtheinjunction,theCourtunderlinedthattheorderwasnotmeant
toclosetheDefendant’sbusinessandthathewasfreetomarkettheBeniya
lineofhandbagsorwhateverotherproductshechooseaslongasheno
longerofferedtheHenryHighClasshandbagsforsale,pendingtrial.
Conclusion
Thiscasemayserveasaremindertopetitionersforinterlocutoryinjunctionsin
passingoffactionsabouttheimportanceoftheissueofirreparableharmand
theevidentiaryhurdlesinestablishingsame.Asparticularlyconcernsluxury
goods,perhapstheemphasisplacedontheissueoflossofreputationrather
thanlossofsalesindeterminingirreparableharmcoupledwiththegranting
ofinjunctionsbytheCourts,maydissuadecounterfeiting-mindedmerchants
fromengaginginsuchactivities.

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