The Type and Amount of Remedy Granted in a Trade-Mark Case

2005-01-01

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THETYPEANDAMOUNTOFREMEDYGRANTEDINATRADE-MARKCASE

By
CatherineBergeron*
LEGERROBICRICHARD,L.L.P.
Lawyers,PatentandTrademarkAgents
CentreCDPCapital
1001Square-Victoria-BlocE–8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.(514)9876242-Fax(514)8457874
info@robic.com-www.robic.ca

3925928ManitobaLtd.v.101029530SaskatchewanLtd.2005FC1465(Federal
CourtofCanada,JusticeSnider)

1.Judgmentandissue

ThePlaintiffsinthistrade-markdisputeseekdefaultjudgmentagainstthe
Defendantsfortheinfringementoftheirvarioustradenamesandtrade-
marksrelatedto“ShapesforLife”franchisefitnesscentres.TheFederalCourt
ofCanada(hereinafter“theCourt”)allowedthePlaintiffs’motionforan
interlocutoryinjunctionandgrantedanorderforthecustodyorpreservation
ofpropertythatisorwillbethesubjectmatteroftheproceeding.

ThePlaintiffsareentitledtodefaultjudgmentgiventhat:theDefendantsdid
notappearforthehearingofthepresentmotion,theCourtissatisfiedthat
thePlaintiffsholdtherightstothe“ShapesforLife”mark,theDefendants
knowinglyandwillinglyinfringedthePlaintiffs’trade-marks,andtheCourtis
satisfiedthattheDefendantshavefailedtocomplywiththeorderfor
custodyorpreservationofproperty.

Inadditiontoapermanentinjunctionandotherremedies,thePlaintiffsseek
twotypesofmonetaryremedy:anaccountingofprofitsanddamages.The
mainissuebeforetheCourtisthetypeandamountofremedythatshouldbe
grantedinthecircumstances.

2.Accountingofprofits

©CIPS,2005.
*Lawyer,CatherineBergeronisamemberofLEGERROBICRICHARD,L.L.P.,a
multidisciplinaryfirmoflawyers,andpatentandtrademarkagents.

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ThePlaintiffsseekanaccountingofprofitsbasedonfranchisefeesand
equipmentfeesallegedlyreceivedbytheDefendants.

Onthatissue,theCourtmentionsthat“theobjectofanaccountingofprofits
istogiveaplaintifftheactualprofitswhichthedefendanthasimproperly
made.Theplaintiffhastheonusoffirstprovingthedefendant’sgrossrevenue
fromtheinfringingproductorservice,andthenthedefendantmustprove
anyoffsettingexpenses,allowingthecourttoarriveatanetprofitamount.
Anaccountingisanequitableremedywherebytheownerofthemarkis
entitledtoreceivetheentirebenefitthattheinfringerhadgained.Ifthe
plaintiffelectsthismode,thentheharmordamagesufferedbytheplaintiffis
“completelyirrelevant”andcannotbetakenintoconsideration.”

Onthebasisofthreeaffidavits,theCourtgrantstothePlaintiffstheamount
ofmoneyrepresentingtherevenuereceivedbytheDefendantsfromthe
franchisefeesandequipmentfees,whichsalesweremadeincontravention
oftherightsofthePlaintiffs.

3.Damages

Inadditiontoanaccountingofprofits,thePlaintiffsalsoseekanawardof
damages.TheFederalCourtexplainsthat“intrademarkandpatentcases,
theplaintiffmustelectwhethertoreceivecompensationbyanaccounting
ofprofitsordamages.Sincethepurposeofdamages(excludingpunitive
damages)iscompensation,toallowbothanaccountingofprofitsand
damageswouldresultindoublerecovery.(…)Whileapartymaypleadboth
equitable[accountingofprofits]andlegal[damages]remedies,theyshould
onlyreceiveoneremedyinjudgment,aseachremedypurportsto
sufficientlyredressthewrong.”

Forlackofevidence,theCourtconcludesthatnogeneraldamageswillbe
awarded.

4.Punitivedamages

ThePlaintiffsalsoseek$1,000,000inpunitivedamages.

TheCourtisoftheviewthat“punitive”or”exemplary”damagesarenot
compensatoryinnature,butareawardedaspunishmentontheinfringer.
Theymustbesufficientlysubstantialtoactasadeterrent(LubrizolCorp.v.
ImperialOilLtd.,[1996]3F.C.40,F.C.J.No.454(F.C.A.)atpara.40).Acourt
mustfirstassessgeneraldamages;punitivedamagesshouldonlybeordered

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“inthosecircumstanceswherethecombinedawardofgeneraland
aggravateddamageswouldbeinsufficienttoachievethegoalof
punishmentanddeterrence”(Hillv.ChurchofScientologyofToronto,[1995]
2S.C.R.1130,perCoryJ.at1208-1209).”

AlthoughtheDefendantsfailedtocomplywiththeorderforcustodyor
preservationofproperty,theCourtdoesnotseeareasonablebasisfor
characterizingtheDefendants’conductinthislitigationasvindictive,
reprehensibleandmalicious,oppressive,orextreme.Therefore,theCourtdid
notawardanypunitivedamages.

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