Main Body
VI. Actions and Remedies
Haley MacLean and Lucie Guibault
A. Introduction
Ownership of intellectual property rights only means something if it can be enforced in practice. Without an effective enforcement mechanism, any benefit from the creation and exploitation of a work, trademark, or invention can be reaped wittingly or not by third parties. Rights holders must have the power to take action to stop ongoing or future acts of infringement and to recover the losses from actual infringement. As the only international instrument in the field of intellectual property law that deals with the issue of enforcement, Part III of the TRIPS Agreement lays down a comprehensive set of obligations in this regard. Generally speaking, Contracting Parties have agreed that “enforcement procedures as specified in this Part [must be] available under their law so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements”. The TRIPS Agreement further requires Contracting Parties to give rights owners an opportunity for review by a judicial authority of final administrative decisions, to make available civil judicial procedures concerning the enforcement of IP Rights – including injunctions, damages, etc. -, to offer the possibility to order prompt and effective provisional measures, as well as to establish border measures and criminal procedures.
While the Canadian legal system already provided a solid set of enforcement measures in support of the intellectual property regimes before the adoption of the TRIPS Agreement, its ratification in 1996 gave Parliament the opportunity to review and improve the measures available to ensure compliance with the international norms. The judicial system also contributes to the development of procedural law in this field. This chapter describes the various aspects relevant to the enforcement of IP rights in Canada. First, it discusses the issue of jurisdiction of the Canadian Courts, with a focus on the exclusive jurisdiction of the Federal Court, on matters of concurrent jurisdiction with the provincial superior courts and the standard of review of the final decisions of administrative bodies, like the Copyright Board, the Registrar of Patents or the Trademarks Opposition Board. Next, we examine the civil procedures available in Canada to stop and compensate acts of infringement of IP rights, including special orders available to plaintiffs for effective relief. Finally, we shortly describe existing criminal and border procedures designed to combat counterfeiting and other forms of large-scale illegal practices. It is worth noting that each intellectual property statute may contain specific actions and remedies in addition to those described in this chapter. The reader is advised to consult each act to gain a full picture of the extant enforcement measures related to a particular IP right.
B. Jurisdiction of the Canadian Courts
The Canadian federal system is such that disputes relating to intellectual property law can theoretically be heard by the Federal Courts, the provincial superior courts, or either of them depending on the nature of the issue at stake. In practice, the Federal Courts adjudicate most intellectual property matters (some estimate that approximately 95% of all IP cases in Canada are heard at the Federal Court). Nevertheless, depending on the circumstances of each case, the provincial superior courts may be in a better position to hear and make orders in urgent matters, assess infringement cases and interpret licensing agreements. Determining the appropriate jurisdiction to bring an intellectual property case can be done by consulting the relevant statute, or by following legal precedents. Choosing the proper jurisdiction for the adjudication of an IP issue is necessary to ensure effective relief for the plaintiff and consistency in the case law.
1. Jurisdiction of the Federal Court
As previous chapters of this book have highlighted, intellectual property rights fall, for the most part, within the legislative authority of the Parliament of Canada under ss. 91(2), (22) & (23) of the Constitution Act, 1867. The federal nature of the relevant statutes means that the Federal Court has been conferred jurisdiction to hear matters arising from the Copyright Act, the Trademarks Act, and the Patent Act as well as from other federally enacted pieces of legislation, like the Industrial Design Act or the Plant Breeders’ Rights Act. The Federal Court’s jurisdiction in the field of intellectual property law has indeed been a constant since the early days of the Exchequer Court of Canada and is now codified in the Federal Courts Act and in the individual IP statutes.
The Federal Court plays a key role not only in the adjudication of private disputes relating to IPRs, but also in the oversight of decisions rendered by the several administrative bodies in charge of their administration. Since the initial grant or continued existence of most IP rights is conditional on their registration, the validity of such registration is often raised as a defence to an infringement claim. Independently from any infringement proceeding, the Federal Court has jurisdiction to review decisions rendered for example by the Commissioner of Patent or the Trademark Opposition Board, as it does in relation to any voluntary entry in the Copyright Registry or the approval of copyright tariffs by the Copyright Board of Canada.
Federal Courts Act
Application for judicial review
18.1 (1) An application for judicial review may be made by the Attorney General of Canada or by anyone directly affected by the matter in respect of which relief is sought.
(2) An application for judicial review in respect of a decision or an order of a federal board, commission or other tribunal shall be made within 30 days after the time the decision or order was first communicated by the federal board, commission or other tribunal to the office of the Deputy Attorney General of Canada or to the party directly affected by it, or within any further time that a judge of the Federal Court may fix or allow before or after the end of those 30 days.
(3) On an application for judicial review, the Federal Court may
(a) order a federal board, commission or other tribunal to do any act or thing it has unlawfully failed or refused to do or has unreasonably delayed in doing; or
(b) declare invalid or unlawful, or quash, set aside or set aside and refer back for determination in accordance with such directions as it considers to be appropriate, prohibit or restrain, a decision, order, act or proceeding of a federal board, commission or other tribunal.
(4) The Federal Court may grant relief under subsection (3) if it is satisfied that the federal board, commission or other tribunal
(a) acted without jurisdiction, acted beyond its jurisdiction or refused to exercise its jurisdiction;
(b) failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe;
(c) erred in law in making a decision or an order, whether or not the error appears on the face of the record;
(d) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it;
(e) acted, or failed to act, by reason of fraud or perjured evidence; or
(f) acted in any other way that was contrary to law.
Industrial property, exclusive jurisdiction
20 (1) The Federal Court has exclusive original jurisdiction, between subject and subject as well as otherwise,
(a) in all cases of conflicting applications for any patent of invention or for any certificate of supplementary protection under the Patent Act, or for the registration of any copyright, trademark, industrial design or topography within the meaning of the Integrated Circuit Topography Act; and
(b) in all cases in which it is sought to impeach or annul any patent of invention or any certificate of supplementary protection issued under the Patent Act, or to have any entry in any register of copyrights, trademarks, industrial designs or topographies referred to in paragraph (a) made, expunged, varied or rectified.
Section 18 of the Federal Courts Act grants jurisdiction in matters relating to the review of administrative decisions, while s.20(1) confers the Federal Court exclusive jurisdiction in matters directly affecting individual IP rights. The provisions of the Federal Courts Act are complemented by those of the relevant IP statutes which specify the matters that fall within the Courts’ exclusive jurisdiction. In short, any action that is likely to affect a right as it is registered, either as a result of a modification, impeachment or invalidation, will exclusively be heard by the Federal Court.
Consider the following examples taken from the different acts:
| Patent Act | Trademarks Act | Copyright Act | |
| Enforcement of rights | 54 (1) An action for the infringement of a patent may be brought in that court of record that, in the province in which the infringement is said to have occurred, has jurisdiction, pecuniarily, to the amount of the damages claimed and that, with relation to the other courts of the province, holds its sittings nearest to the place of residence or of business of the defendant, and that court shall decide the case and determine the costs, and assumption of jurisdiction by the court is of itself sufficient proof of jurisdiction.(2) Nothing in this section impairs the jurisdiction of the Federal Court under section 20 of the Federal Courts Act or otherwise. | 55 The Federal Court has jurisdiction to entertain any action or proceeding, other than a proceeding under section 51.01, for the enforcement of any of the provisions of this Act or of any right or remedy conferred or defined by this Act. | 41.24 The Federal Court has concurrent jurisdiction with provincial courts to hear and determine all proceedings, other than the prosecution of offences under sections 42 and 43, for the enforcement of a provision of this Act or of the civil remedies provided by this Act. |
| Challenge of individual rights | 60 (1) A patent or any claim in a patent may be declared invalid or void by the Federal Court at the instance of the Attorney General of Canada or at the instance of any interested person. | 18.1 The registration of a trademark may be expunged by the Federal Court on the application of any person interested if the Court decides that the registration is likely to unreasonably limit the development of any art or industry | |
| Rectification of register | 52 The Federal Court has jurisdiction, on the application of the Commissioner or of any person interested, to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged. | 57(1) The Federal Court has exclusive original jurisdiction, on the application of the Registrar or of any person interested, to order that any entry in the register be struck out or amended on the ground that at the date of the application the entry as it appears on the register does not accurately express or define the existing rights of the person appearing to be the registered owner of the trademark. | 57(4) The Federal Court may, on application of the Registrar of Copyrights or of any interested person, order the rectification of the Register of Copyrights by(a) the making of any entry wrongly omitted to be made in the Register,(b) the expunging of any entry wrongly made in or remaining on the Register, or(c) the correction of any error or defect in the Register,and any rectification of the Register under this subsection shall be retroactive from such date as the Court may order. |
| Appeal from admin body | 41 Every person who has failed to obtain a patent by reason of a refusal of the Commissioner to grant it may, at any time within six months after notice as provided for in section 40 has been mailed, appeal from the decision of the Commissioner to the Federal Court and that Court has exclusive jurisdiction to hear and determine the appeal. | 56 (1) An appeal lies to the Federal Court from any decision of the Registrar under this Act within two months from the date on which notice of the decision was dispatched by the Registrar or within such further time as the Court may allow, either before or after the expiration of the two months.(5) On an appeal under subsection (1), evidence in addition to that adduced before the Registrar may be adduced and the Federal Court may exercise any discretion vested in the Registrar. |
Second, is the fact that since the Federal Court traditionally hears the majority of IP related cases, the case law emanating from this Court show greater efficiency and better predictable outcomes. The volume of cases and the expertise developed by the bench are at the root of the Federal Court’s pilot project announced in March 2023 of the creation of a specialized IP and Competition Law Chamber. The primary goal of this pilot project is to streamline assignments among the justice of the Court.
Finally, the appeal of filing a case before the Federal Courts also lies in the fact that the Court’s jurisdiction extends to all provinces. Specifically, this means that court orders and rulings from the Federal Courts are directly enforceable in every province at once. For example, the Federal Court can grant injunctions enforceable across Canada.
2. Concurrent Jurisdiction Between Courts
As the language of s.20(2) of the Federal Court Act indicates, the Federal Court and provincial courts have concurrent jurisdiction for the enforcement of IP rights. This provision should be read in conjunction with the relevant provisions in the Patent Act (s. 54), the Trademarks Act (s.55) and the Copyright Act (s. 41.25).
Federal Courts Act
Industrial property, concurrent jurisdiction
20(2) The Federal Court has concurrent jurisdiction in all cases, other than those mentioned in subsection (1), in which a remedy is sought under the authority of an Act of Parliament or at law or in equity respecting any patent of invention, certificate of supplementary protection issued under the Patent Act, copyright, trademark, industrial design or topography referred to in paragraph (1)(a).
Concurrent jurisdiction simply means that two different courts have the authority to hear the same case. In IP matters, the Federal Courts and the provincial superior courts have concurrent jurisdiction both in civil and criminal matters. An example of concurrent jurisdiction in intellectual property law is an action for infringement, which can be adjudicated by either the federal or superior provincial courts.
Should a defendant in an infringement action filed before a provincial superior court raise the issue of invalidity by way of defence, the court may conclude, inter partes, that the patent or trademark in suit is invalid. However, such a finding of invalidity would not be enforceable erga omnes and would not lead to the expungement or impeachment of the right from the register. Only the Federal Court has jurisdiction to modify or strike an entry from the Patent or Trademark Register.
Provincial superior courts have inherent jurisdiction in at least two important aspects of the enforcement of IPRs: 1) the assessment of what constitutes infringement, akin to tort law; and 2) the interpretation of contracts relating to IPRs. However, as the case reproduced below demonstrates, the provincial superior court’s jurisdiction in contractual matters does not take away the Federal Court’s capacity to adjudicate a contract dispute relating to an IPR. Ultimately, the choice between filing an action before the superior court or the Federal Court in a case of infringement or contract is one of convenience and expected outcome for the plaintiff.
In 2018, the Federal Court had ruled in Farmobile, LLC v Farmers Edge Inc. that, in order to determine jurisdiction for IP contractual disputes, one must determine whether the contractual issue at hand is an essential element of the claim, or if it is ancillary or incidental to it. If the contractual issue is the centre issue at trial, then the superior provincial courts will have jurisdiction. However, if the contractual issue is simply one aspect of a broader issue then the Federal Courts can (and often always will) have jurisdiction. In the Farmobile case, the defendant argued that the essence of the claim was a contractual issue and therefore the provincial courts had jurisdiction. However, the Federal Court reasoned instead that the essential nature of the issue was that of patent infringement and therefore unquestionably fell within its jurisdiction.
Two years later, the Federal Court of Appeal reversed this line of reasoning in the case Salt Canada Inc. v. Baker 2020 FCA 127. In first instance, the Federal Court had dismissed an application brought by the appellant for an order directing the Commissioner of Patents to vary the records of the Patent Office to reflect it as owner of Canadian Patent No. 2,222,058. The question on appeal was whether the Federal Court had jurisdiction to hear the application, which required it to adjudicate a contractual dispute, a matter reserved to the provincial superior courts. After a review of numerous decisions in matters of federal jurisdiction (tax, intellectual property, administrative law, maritime law, privacy and access to information), the Federal Court of Appeal ruled that when dealing with an application under section 52 of the Patent Act, the Federal Court remains free to carry out the task Parliament has given to it—to determine who should be reflected on the records of the Patent Office as the owner of a patent—even if that involves interpreting agreements and other instruments. In reaching its decision, the Federal Court of Appeal emphasized:
“primarily a case in contract”or whether contractual interpretation will
“dictate”the end result.
3. Administrative Standard of Review
A large portion of the Canadian intellectual property system functions on the basis of decisions rendered by various administrative bodies, the most prominent of which are the Commissioner of Patents, the Registrar of Trademarks, the Trademark Opposition Board and the Copyright Board. Patents would not be granted on inventions, trademarks would not be registered and tariffs for the use of copyrighted works would not be issued without the involvement these bodies. Whether at the grant stage or at the enforcement stage, in defence of an infringement action or as strategic move against a competitor, decisions from these public bodies may be subject to judicial review in accordance with s.18 Federal Courts Act and in conjunction with the provisions of the relevant statute.
In all the possible instances of judicial review in the field of IP, the question of determining the proper standard of review periodically arises. How much deference should the Federal Court lend to the administrative body whose decision is being attacked? Does the standard developed by the Supreme Court in the 2019 case of Canada (Minister of Citizenship and Immigration) v Vavilov apply to IP decisions? Is the answer the same notwithstanding the circumstances of each case? As demonstrated below, the Federal Court of Appeal (FCA) plays a key role in providing guidance in the matter.
Following Vavilov, the generally applicable standard of review on questions of fact and of mixed fact and law is the standard of palpable and overriding error. Accordingly, except on questions of law, the Federal Courts will not intervene in a decision unless there is an error that is both palpable (obvious) and overriding (going to the very core of the outcome of the case). By contrast, the judicial review on questions of law demand the application of the standard of correctness.
In the area of patent law, courts apply the standard set out in Housen v. Nikolaisen, 2002 SCC 33, whereby issues of law are reviewed on a standard of correctness and issues of fact or of mixed fact and law from which no legal error is extricable are reviewed on a standard of palpable and overriding error. A palpable and overriding error is one that is obvious and goes to the very core of the outcome of the case. The determination of utility (Apotex Inc. v. Janssen Inc., 2021 FCA 45), novelty (Western Oilfield Equipment Rentals Ltd. v. M-I L.L.C., 2021 FCA 24) and obviousness (Halford v. Seed Hawk Inc., 2006 FCA 275) qualify as questions of mixed fact and law subject to the standard of palpable and overriding error.
Claims construction raises issues of law that are reviewable for correctness. The applicable standard of review is complicated by the fact that patent claims are interpreted from the point of view of a POSITA (Whirlpool at para. 48), and expert evidence is often considered in determining how such a person would have understood certain terms in a claim at the relevant date. The weighing of expert evidence is a question of mixed fact and law. Note however that while claims construction is a matter of law, the question of whether a defendant’s activities fall within the scope of the monopoly thus defined is a question of fact.
In trademark law, decisions of the Registrar of Trademark and the Trademark Opposition Board can be appealed to the Federal Court, pursuant to s.56(1) Trademarks Act. The FCA confirmed in Industria de Diseno Textil, S.A. v. Zara Natural Stones Inc., 2021 FCA 231, that the standard of correctness is to apply to questions of law, and the standard of palpable and overriding error applies to questions of fact or of mixed fact and law in which there is no extricable issue of law. This appellate standard should apply going forward to appeals from the Board, at least on issues in which no additional evidence has been introduced before the Federal Court.
Where new evidence is presented on appeal, pursuant to s.56(5) TMA, the FCA determined in Clorox Company of Canada, Ltd. v. Chloretec S.E.C., 2020 FCA 76, that the Supreme Court’s decision in Vavilov has no bearing on the standard of review. The FCA reiterated that “the applicable standard of review depends on whether there is new evidence on appeal that would have affected the Registrar’s decision materially. If there is, the Court undertakes a de novo review of issues that would have been affected by such evidence and is entitled to substitute its opinion for that of the Registrar“. “In assessing whether new evidence would have materially affected the Registrar’s decision, the Court considers whether the evidence is “sufficiently substantial and significant” and of probative value. New evidence may be material if it fills gaps or remedies a deficiency in the evidence before the Registrar”. Since s.56(5) of the Act states that the Federal Court “may exercise any discretion vested in the Registrar”, it ensues that the nature of this proceeding is an appeal de novo and that the applicable standard is that of correctness. This approach was recently followed in Smooth Payment Inc. v. Klarna Bank Ab, 2024 FC 1274.
In the context of copyright law, the Supreme Court discussed the applicable standard of review of a decision of the Copyright Board in Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association, 2022 SCC 30. In this case, the Supreme Court explained that
“[w]hen courts and administrative bodies have concurrent first instance jurisdiction over a legal issue in a statute is one of those rare and exceptional circumstances where it is appropriate to recognize a new category of correctness review. Applying correctness accords with legislative intent — by conferring concurrent first instance jurisdiction to courts and administrative bodies, it should be inferred that the legislature wanted to subject those decisions to appellate standards of review. Applying correctness also promotes the rule of law. First, when there is concurrent first instance jurisdiction, the legislature has expressly involved the courts in the interpretation of a statute, which necessarily carries with it the implication that, absent legislative direction to the contrary, courts will operate by their settled standards. Second, it avoids conflicting statutory interpretations, and it provides a way to manage differing decisions between courts and tribunals. Third, this correctness category can be defined with precision, as it will apply only when courts and administrative bodies have concurrent first instance jurisdiction over a legal issue in a statute.”
This specific case involved the interpretation of s.2.4(1.1) Copyright Act, to determine whether the statutory provision created a separate right of making available to the public, apart from the right of communication to the public by telecommunication under s.3(1)(f) CA. The Supreme Court ruled that the standard was correctness, since the interpretation of this provision should be uniform between the courts and the Copyright Board. In other matters administered by the Copyright Board, that may not be subject to concurrent jurisdiction, the proper standard of review would be that of palpable and overriding error.
C. Civil Remedies
While criminal remedies for intellectual property infringement do exist (and will be explored below), the vast majority of IP cases are civil and require owners of intellectual property to enforce their rights against infringers in private civil actions through civil remedies. Examples of civil remedies for intellectual property enforcement include injunctions, award of costs, damages or an account of profits, delivery up, destruction of infringing items (and possibly the items used to make them), and Norwich orders.
1. Injunctions
Injunctions are very common in the world of IP law, and are legally defined as a warning or order by the courts that restrains or prevents a person from undergoing or continuing an action that would threaten or infringe upon the legal right of another person. They are often used as remedies when it’s determined monetary damages are insufficient to fully remedy the damage for the intellectual property holder. For example, if a person is infringing a trademark and disparaging the goodwill of a brand in the process, issuing monetary damages would only account for the harm that has already been committed. A prohibitive injunction would prevent continued infringement from causing irreparable harm to the company in the future. Prohibitive/permanent injunctions are extremely common in IP proceedings and help IP holders protect their exclusive rights.
Injunctions are expressly permitted as a remedy to infringement in s.57 of the Patent Act, s.34(1)(2), 39, 39.1 and 40 of the Copyright Act, and s.53.2(1) of the Trademarks Act.
Interlocutory injunctions function similarly to prohibitive injunctions but differ in that they are court orders prohibiting or enforcing activities that are issued before the final determination of the case and remain in effect until trial. If there is a fear that damage will be caused even in the time before an interlocutory injunction can be awarded, a rights holder can seek an interim injunction which is a short and expedient procedure that can be obtained ex parte. They are used strictly for the short interim time before both parties can attend court for the formal application of an interlocutory injunction. However, under federal law interim injunctions cannot be maintained for a period longer than 14 days and they are used for only extremely urgent matters.
Other ex parte injunctions that can be requested alongside interim injunctions include a Mareva injunction that prevents a defendant from liquidating or moving their assets in case the plaintiff might be entitled to those funds and an Anton Piller order that prevents a defendant from destroying evidence before the trial.
The test for the granting of an interlocutory injunction comes from the 1994 case of R.J.R Macdonald Inc. v Canada (Attorney General) and requires a plaintiff to prove irreparable harm would occur if not for the application of an interlocutory injunction. The three-part tests asks
(1) whether there is a serious issue to be tried,
(2) will the applicant suffer irreparable harm if the injunction is not granted; and
(3) often called the balance of conveniences, asks which of the two parties which would suffer the most harm from granting or receiving the remedy pending a decision on the merits?
The first step has a low threshold, where it is accepted that so long as an application is not ‘vexatious nor frivolous’ the judge will move onto step two even if the plaintiff seems unlikely to succeed at trial. The second step requiring proof of evidentiary harm is a much higher bar to meet and is the step where most applications fail. While there is no specific legal definition for irreparable harm under this test, an applicant must essentially show that harm cannot be compensated with monetary value and an interlocutory injunction is the only possible process to prevent the harm. The final balance of conveniences step is determined based on the facts of the case, with instances where there is a greater potential harm to be suffered by the plaintiff pointing towards the necessity for an interlocutory injunction.
2788610 Ontario Inc. v. Bhagwani, 2022 ONSC 6098 (CanLII)
Overview
[1] The Appellants, Hemant Bhagwani, Fatima Bhagwani, 1727799 Ontario Inc. and Bombay Frankie Inc., appeal the order of C. Brown J. dated February 10, 2022 granting the Respondent, 2788610 Ontario Inc., an interlocutory injunction: 2788610 Ontario Inc. v. Bhagwani, 2022 ONSC 905 (the “Order”). The Order restrained the Appellants from using the term “Bombay Frankie” as the name of any restaurant or franchising business, from using “Bombay Frankie” on their social media accounts, and from using the website, www.bombay-frankie.com.
[2] The Appellants submit that in granting the interlocutory injunction, the motion judge erred in law by finding that the Respondent had legal rights to the Bombay Frankie trademark or name, in the absence of a registered trademark or goodwill.
[3] For the reasons that follow, I would allow the appeal.
Factual Background
The Dispute Over the Bombay Frankie Trademark
[4] The Respondent was incorporated in October 2020. At the same time, it filed an application to register the trademark “Bombay Frankies.” The Respondent is in the process of developing a franchise system of restaurants called “Bombay Frankies.” When it commenced the proceeding and when the motion was heard, the Respondent had not yet opened or advertised a restaurant with the name “Bombay Frankies.” At the hearing, counsel advised that the Respondent had recently opened a restaurant under that name.
[5] The Appellants are also in the restaurant business. Bombay Frankie Inc. was incorporated on March 12, 2021. In March 2021, 1727799 Ontario Inc. filed a trademark application to register the trademark “Bombay Frankie.” The Appellants registered the domain name www.bombay-frankie.com in February 2021 and had social media accounts using the Bombay Frankie name. The Appellants opened a restaurant called “Bombay Frankie – the Original Bombay Roll” in July 2021 and a second “Bombay Frankie” restaurant in October 2021.
[6] Prior to 2021, the Appellants established other Indian food restaurants including Amaya, Indian Street Food Co., Leela Indian Food Bar, and others. They used the term “frankie” on menu items at those restaurants. It is undisputed that a “frankie” is a type of Indian street food snack developed in the 1930s and refers to a type of wrap filled with various fillings.
[7] In September 2021, the Respondent commenced an action against the Appellants in this court for trademark infringement and passing off under ss. 7(b), 7(c), 19 and 20 of the Trademarks Act, R.S.C. 1985, c. T-13.
The Decision
[8] In October 2021, the Respondent brought a motion for an interlocutory injunction prohibiting the Appellants from using the term “Bombay Frankie” as the name of any restaurant or franchise business it owns or operates and from using the term as the name of any social media account or website. The Respondent argued that pursuant to the Trademarks Act, it had priority to register the trademark over a subsequent applicant. The Respondent submitted that the Appellants would have had notice of its trademark application prior to opening their restaurants because it would have appeared on a trademark search.
[9] Applying the RJR-MacDonald test, the motion judge granted the interlocutory injunction. First, the motion judge detailed the parties’ respective submissions as to who had prior use of the trademark and found that there was a serious issue to be tried. The motion judge made reference to a “novel issue” raised by the Respondent as to whether its claim crystallizes on the application date or on the registration date.
[10] Second, the motion judge found that the Respondent would suffer irreparable harm if the injunction was not granted. She found that until the “priority issues” were resolved, the Appellants would have “a significant advantage in terms of name recognition, goodwill and first mover advantage” if they were permitted to continue to operate under the Bombay Frankie name, despite having opened the restaurants after the Respondent applied for registration. The motion judge found that the Respondent would suffer undue disadvantage that could not be compensated monetarily.
[11] Finally, the motion judge found that the balance of convenience favoured the Respondent. She recognized that there would be some inconvenience to the Appellants but that one party should not have an advantage over the other in developing a reputation and goodwill under a confusing trademark.
[12] Before the motion judge, the question of which party began using the name “Bombay Frankie” first was hotly contested. However, for the purposes of the appeal, the Appellants do not claim to have used the name “Bombay Frankies” as the business name for their restaurant before the Respondent filed its application to register the name as a trademark. The Appellants take the position that their appeal must succeed irrespective of whether the Appellants used the name before the Respondent applied for registration of the trademark for two reasons: firstly, because when the action was commenced by the Respondent, the Respondent did not have a registered trademark in the name and, secondly, the Respondent had not used the name in the public marketplace and, as a result, had not established any goodwill in the name.
Issues
[13] This appeal raises the following issues:
(a) Did the motion judge make an error in principle in finding a serious issue to be tried?
(b) Did the motion judge make a palpable and overriding error in finding that the Respondent would suffer irreparable harm?
(c) Did the motion judge make a palpable and overriding error in finding that the balance of convenience favoured the Respondent?
Analysis
The Applicable Principles
[14] The appellate standards of review apply to this appeal. Questions of law are reviewable on a correctness standard. Questions of fact and questions of mixed fact and law from which the legal principle is not readily extricable are reviewable on a standard of palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8, 10, 36-37.
[15] A “palpable” error is an error that is plainly seen. An “overriding” error is an error that is sufficiently significant to vitiate the challenged findings of fact: Housen v. Nikolaisen, at paras. 1, 6. An example of a palpable error is a finding made in the absence of evidence or misapprehension of relevant evidence: Waxman v. Waxman (2004) 2004 CanLII 39040 (ON CA), 186 O.A.C. 201, at para. 296.
[16] I recognize that the decision to grant an extraordinary remedy such as an interlocutory injunction is a discretionary one. On an appeal of an order granting an interlocutory injunction, a motion judge’s exercise of discretion is entitled to deference, unless the motion judge erred in principle or was clearly wrong: Easyfinancial Services Inc. v. Ezmoney Tario Inc., [2018] O.J. No. 1275 (Div. Ct.). However, where an erroneous finding of fact can be attributed to the application of an incorrect legal standard, a failure to consider a required element of a legal test, or a similar error in principle, the error is one of law that must be reviewed on the standard of correctness: Housen v. Nikolaisen, at paras. 35-36.
Serious Issue To Be Tried
[17] In this case, the motion judge correctly stated the test for an interlocutory injunction and that the threshold for the first part of the test, a serious issue to be tried, is low.
[18] However, in my view, in finding a serious issue to be tried the motion judge made an error in principle. In finding a serious issue, the motion judge had to have found that the Respondent had a right to the Bombay Frankie’s trademark merely by virtue of its application or had to have presumed that the trademark would be registered. Either finding is an error of law.
[19] Under s. 19 of the Trademarks Act, the registration of a trademark in respect of goods or services gives the owner of the trademark the exclusive right to use the trademark throughout Canada in respect of those goods or services. Subsection 20(1) states that the right of the owner of a registered trademark to its exclusive use is deemed to be infringed by any person who, among other things, sells, distributes or advertises any goods or services in association with a confusing trademark or trade name. Therefore, in order to state a cause of action for trademark infringement under ss. 19 or 20 of the Trademarks Act, the claimant must have a registered trademark that is alleged to have been infringed.
[20] In this case, the Respondent has no registered trademark for “Bombay Frankies”. While the Respondent has filed an application to register the trademark, its application has yet to be examined, approved or advertised for opposition by the Registrar of Trademarks. A mere application to register a trademark is insufficient to support a cause of action for trademark infringement under the Act.
[21] Further, it is an error to presume that a trademark for which an application has been filed will be registered. Registration is not a foregone conclusion. The Registrar may refuse to register the trademark on the basis that it is, for example, not distinct within the meaning of the Act: Trademarks Act, s. 37(1). In addition, another party may oppose the registration of the trademark (s. 38(2)), as is likely to happen here.
[22] Because the Respondent has only made an application for a trademark and no registered trademark, it has no claim for trademark infringement under the Act. It has no right that could ultimately be vindicated at trial. As a result, its claim cannot meet even the low threshold of a serious issue to be tried.
[23] Having found that the Respondent met the serious issue part of the RJR-MacDonald test based on its cause of action for trademark infringement, the motion judge did not specifically consider whether the Respondent’s claim raised a serious issue in respect of its passing-off claim. In considering irreparable harm, however, the motion judge implicitly accepted that the Appellants should not be permitted to dilute or appropriate the Respondent’s goodwill.
[24] In my view, the Respondent’s claim for passing off under ss. 7(b) and (c) of the Act also fails to meet the threshold of a serious issue to be tried. The elements of a cause of action for passing off are: (i) the existence of goodwill in a trademark in association with the claimant’s goods or services; (ii) a misrepresentation to the public that creates or is likely to create confusion to the public; and (iii) actual or potential damages to the claimant: Kirkbi AG v. Ritvik Holdings Inc., [2005] 3 S.C.R. 302, 2005 SCC 65, at paras. 66-68; Ciba-Geigy Canada Ltd. v. Apotex Inc., 1992 CanLII 33 (SCC), [1992] 3 S.C.R. 120, at para. 12. The plaintiff must also show ownership of a valid registered or unregistered trademark: TFI Foods Ltd. v. Every Green International Inc., 2020 FC 808, at para. 21, citing Sandhu Singh Hamdard Trust v. Navsun Holdings Ltd., 2019 FCA 295, at paras. 36-39.
[25] In Veuve-Clicquot Ponsardin v. Boutiques Cliquot Ltée, [2006] 1 S.C.R. 824, 2006 SCC 23, at para. 50, the Supreme Court of Canada noted that goodwill is not defined in the Trademarks Act, but that “in ordinary commercial use, it connotes the positive association that attracts customers towards its owner’s wares or services rather than those of its competitors.” In Ciba-Geigy v. Apotex, the Supreme Court held that goodwill “must be understood in a very broad sense, taking in not only people who are customers but also the reputation and drawing power of a given business in its market.”
[26] In Kirkbi v. Ritvik Holdings Inc. (at para. 67), the Supreme Court further clarified that “the claimant must establish goodwill in respect of the distinctiveness of the product. Evidence of goodwill solely attached to the techniques and processes which create the product will not do. The doctrine of passing off did not develop to protect monopolies in respect of products but of guises, get-ups, names and symbols which identify the distinctiveness of a source.” (Internal citations omitted.)
[27] The case law demonstrates that goodwill attaches to a name or mark as it relates to the reputation or association with the goods or services provided by the owner of the mark. The Respondent’s evidence was that it had retained franchise lawyers and a marketing firm to develop the franchise. The Respondent also had discussions with landlords about renting locations for franchises and with suppliers of food products. In all of the interactions detailed by the Respondent, it was obtaining goods or services in connection with starting up a franchise business. The Respondent’s start-up activities do not constitute goodwill as that concept has been recognized in the case law.
[28] Given the Respondent’s franchising business, I recognize that goodwill in the Bombay Frankie’s name could exist from the perspective of potential franchisees, as opposed to customers of the restaurants or the general public. However, there was no evidence on the record from the perspective of potential franchisees that could support a finding that the Respondent had developed goodwill in the Bombay Frankie’s name as a franchising business. The Respondent’s evidence was that they had previously developed relationships in the course of conducting franchise businesses under a variety of different names. The Respondent provided no evidence of use of the Bombay Frankie’s name in providing any goods or services, including franchise services, to customers or to the public. See: Trademarks Act, ss. 4(1) and (2).
[29] Given the absence of evidence of goodwill, a finding that the Respondent’s passing-off claims raised a serious issue to be tried constitutes an error in principle.
[30] Having failed to meet the first part of the RJR-MacDonald test for an interlocutory injunction, in my view, the Respondent’s motion ought not to have been granted.
Irreparable Harm
[31] Given my finding above, it is not necessary to consider whether the trial judge erred in finding that the Respondent satisfied the other elements of the RJR-MacDonald test. However, and in case I have erred in my finding of an error in principle, I would also find that the motion judge made a palpable and overriding error in finding that the Respondent would suffer irreparable harm if an injunction was not granted.
[32] In Centre Ice Ltd. v. National Hockey League, 1994 CanLII 19510 (FCA), [1994] F.C.J. No. 68 (C.A.) at para. 9, the Federal Court of Appeal held that “confusion does not, per se, result in a loss of goodwill and a loss of goodwill does not, per se, establish irreparable harm not compensable in damages.” The Court further held that the loss of goodwill and resulting irreparable harm cannot be inferred, but must be established by clear evidence. In that case, the plaintiff had some evidence of confusion, but none demonstrating that the plaintiff’s reputation had been impeached or lessened in any way or that confusion led any customer to stop, or consider not, dealing with them.
[33] In this case, the motion judge found that the Respondent had demonstrated irreparable harm because “[l]andlords have questioned whether the plaintiff is affiliated with the term Bombay Frankie, have expressed concern at this confusion and are hesitating to lease space to the plaintiff as a result. They submit this will also affect any goodwill developed by them and that the potential exists to have any such goodwill appropriated by the defendants.”
[34] This finding, however, does not constitute clear, non-speculative evidence of irreparable harm, harm that cannot be compensated in money damages. If the potential harm is that landlords will not rent to the Respondent because of the confusion with the Appellants’ business, that harm is quantifiable. If the Respondent then has to rent an alternative premises at a higher price, it could then be compensated for the difference. Alternatively, if the Appellants secure a location because a landlord rents to them on the mistaken belief that they were the Respondent, that harm too could be quantified. Moreover, the available evidence suggesting confusion among prospective landlords was speculative hearsay.
[35] In any event, the confusion generated among landlords does not constitute confusion among customers or the public resulting in a loss of goodwill. Moreover, the motion judge’s reference to “any goodwill developed by them” speaks to prospective goodwill. The cause of action for passing-off protects existing goodwill. In order to demonstrate irreparable harm, the Respondent had to show that it had goodwill in the Bombay Frankie name and that it would lose its goodwill because of the Appellants’ confusing use.
[36] Further, the basis for the motion judge’s finding that the Respondent would suffer “undue disadvantage given the present circumstances and will suffer irreparable harm which is not compensable monetarily” is unclear. If the motion judge is referring to first mover advantage, based on my earlier analysis, absent a registered trademark or goodwill there is no basis to support a finding that the Respondent was entitled to first mover advantage when they were not “using” the Bombay Frankie’s name to sell goods or services.
Balance of Convenience
[37] As a result of the above determinations, I need not consider whether the motion judge erred in finding that the balance of convenience favoured that an injunction be granted. I note, however, the balance of convenience may have weighed in favour of the Appellants who, as a result of the relief claimed, were required to take down the signs bearing the Bombay Frankie’s name, as well as their website and social media accounts.
Conclusion
[38] Accordingly, the appeal is allowed and the Order is vacated.
2. Award of Costs
Litigation can be extremely expensive, so the Canadian courts have developed an award of costs system that seeks to compensate the winning party for costs incurred during the process. All provinces in Canada have adopted this system. Commercial litigation lawyer Grant Vogeli states in his blog that historically, successful litigants were awarded approximately 40-50% of their actual legal expenses under this English system. It is uncommon for a successful party to be awarded full indemnity or solicitor-client costs, which would cover all legal expenses, unless the losing parties’ actions were especially dishonest, scandalous, or outrageous.
As previously discussed, the Federal Court hears most IP cases in Canada. Part 11 of the Federal Court Rules lays out the process of granting award of costs in the federal jurisdiction. If an IP related case were to be considered at a provincial level (for tort or contract related disputes for example), you would consider the processes laid out in the province’s respective Civil Procedure Rules. Specifically, in Nova Scotia, Rule 77 of the Nova Scotia Civil Procedure Rules dictates the appropriate calculations to determine cost awards for the winning party under Tariffs A-F.
3. Damages and/or Account of Profits or Statutory Damages
Damages are awarded are compensation for the loss incurred by the rights holder caused by the infringement by the defendant’s actions. Since a rights holder has a monopoly on their work and the profits it may incur during a defined period of time allotted by the respective acts for each right (20 years for patents, 70 years after the death of an author for copyright, 10 years for trademarks with the option to renew), any infringement of that right within that time frame warrants monetary compensation for a loss of that monopoly. The onus to prove damages lies with the plaintiff and is assessed based on the facts of the case.
Damages are expressly permitted as a remedy to infringement in s.55 of the Patent Act, s.34, 35, 38 and 38.1 of the Copyright Act, and s.53.2 of the Trademarks Act.
Of the three IP statutes, the Copyright Act contains the most comprehensive set of provisions on civil remedies for the infringement of economic and moral rights. As shown in the textbox below, in case of infringement, a copyright owner may ask the court for either one, or a combination, of the following forms of monetary compensation:
- Actual damages; and/or
- Account of profit; or
- Statutory damages; and
- Punitive damages
Pursuant to s. 35(1) CA, copyright holders are entitled to an account of profits based on the circumstances, which requires the infringer to hand over all profits made by the process of infringement. According to s.35(2) CA, the plaintiff must only prove the receipts or revenues derived from the infringement, while the defendant must prove every element of cost that the defendant claims. If a defendant refuses to be cooperative with the court and prove every element of cost, the plaintiff may still obtain the information elsewhere to allow the court to make a fair judgement in the evaluation of total profits.
Instead of damages and profits referred to in subsection 35(1), a copyright owner may elect, at any time before final judgment is rendered, to recover an award of statutory damages. The grant and amount of the award are at the court’s discretion. Sections 38.1 and following CA fix the amounts and determine the circumstances giving rise to the grant of statutory damages. In the recent case Yayincilik A.S. v GLWiZ Inc. [2025 FC 1107], reproduced in part below, the Federal Court granted the plaintiffs one of the highest award of damages in Canadian legal history, reaching a sum just under six million dollars. The court considered the appropriateness of awarding statutory damages, compared to actual damages, and examined the need to award punitive damages.
[1] The Plaintiff, Yelda Haber Ve Görsel Yayincilik A.S., is one of Turkey’s largest broadcasters. It creates, owns, broadcasts and streams original, award-winning Turkish television series. It also broadcasts a free-to-air live television channel within Turkey.
[2] In 2021, the Plaintiff commenced this action against the Defendants who operate an Internet Protocol Television [IPTV] service, commonly known as streaming services, from their premises in Canada. The Plaintiff asserted that the Defendants had infringed, and had induced, enabled or authorized others to infringe, its copyright in twenty-two of its programs (2,974 episodes in total) and its live television channel.
[3] In the weeks leading up to trial, the Defendants conceded all liability issues, leaving only the issue of remedies for the Court’s determination. The Plaintiff seeks: (a) an award of statutory damages in the amount of $15,000 per episode of each program plus $20,000 for the live television channel, for a total statutory damages award of $44,630,000; (b) an award of punitive damages in the amount of $500,000; and (c) a wide injunction.
[4] The Defendants assert that a fair and proportionate statutory damages award would be in the range of $200 to $300 per each episode of the programs and the live television channel, for a total statutory damages award of $595,000 to $892,500. Further, the Defendants assert that no amount of punitive damages should be awarded and that the Plaintiff has not demonstrated that a wide injunction is warranted.
[5] For the reasons that follow, I find that: (a) the Plaintiff is entitled to an award of statutory damages in the amount of $2,000 per episode of each program plus $10,000 for the live television channel, for a total statutory damages award of $5,958,000; (b) no award of punitive damages is warranted; and (c) the Plaintiff has not demonstrated that it is entitled to a wide injunction.
(…)
V. Analysis
A. Statutory Damages
[294] The Plaintiff elected to recover an award of statutory damages instead of actual damages. While the Defendants acknowledge that an amount of statutory damages is owing, the parties’ positions differ significantly as to the appropriate quantum that should be awarded in all of the circumstances.
[295] The Plaintiff seeks $15,000 CAD per episode of the Programs and $20,000 CAD for the Live Channel, for a total statutory damages award of $44,630,000 CAD. The Plaintiff’s position is largely driven by its evidence regarding lost licensing revenues, the valuable nature of the Programs and the Defendants’ failure to remove the Plaintiff’s content from the GLWiZ Service following notices sent by the Plaintiff.
[296] The Defendants assert that, as a starting point, this Court has acknowledged in Vidéotron Ltée v Konek Technologies Inc, 2023 FC 741 [Vidéotron], that an award of statutory damages of more than $1 million CAD is rare. Based on all of the circumstances, the Defendants assert that this is not one of those rare cases where an award of over $1 million CAD is warranted. Rather, an award of $200–300 CAD per episode of the Programs and a nominal amount for the Live Channel, for a total award of $595,000 CAD to $892,500 CAD, would be just and fair in all of the circumstances. The Defendants’ primary argument is that the Court should award an amount of statutory damages lower than the $500 CAD per work minimum pursuant to paragraph 38.1(1)(b), as applying the lower limit of the range ($500 CAD) would result in a total award that is grossly out of proportion. In addition, the Defendants assert that they should benefit from subsection 39.1(2) of the Copyright Act, which permits the Court to reduce the statutory damages award to $200 CAD per work, on the basis that the Defendants were innocent infringers.
(1) General Principles
[297] Pursuant to section 38.1 of the Copyright Act, a copyright owner may elect recovery of statutory damages in lieu of damages and profits. Pursuant to paragraph 38.1(1)(a) of the Copyright Act, if infringement is for commercial purposes (such as is the case here), statutory damages may be awarded “in a sum of not less than $500 and not more than $20,000 that the court considers just, with respect to all infringements involved in the proceedings for each work or other subject-matter”.
[298] Determining the appropriate quantum of statutory damages is not an exact science and must be considered on a case-by-case basis. It involves consideration of all relevant circumstances, with the aim of yielding a just result [see Rallysport Direct LLC v 2424508 Ontario Ltd, 2020 FC 794 at para 6 [Rallysport], aff’d 2022 FCA 24 [Rallysport FCA]; Collett v Northland Art Company Canada Inc, 2018 FC 269 at para 59 [Collett], citing to Telewizja Polsat SA v Radiopol Inc, 2006 FC 584 at para 37 [Telewizja]]. This includes consideration of the factors set out in subsection 38.1(5) of the Copyright Act, which provides:
| Factors to consider | Facteurs |
| (5) In exercising its discretion under subsections (1) to (4), the court shall consider all relevant factors, including | (5) Lorsqu’il rend une décision relativement aux paragraphes (1) à (4), le tribunal tient compte notamment des facteurs suivants : |
| (a) the good faith or bad faith of the defendant; | a) la bonne ou mauvaise foi du défendeur; |
| (b) the conduct of the parties before and during the proceedings; | b) le comportement des parties avant l’instance et au cours de celle-ci; |
| (c) the need to deter other infringements of the copyright in question; and | c) la nécessité de créer un effet dissuasif à l’égard de violations éventuelles du droit d’auteur en question; |
| (d) in the case of infringements for non-commercial purposes, the need for an award to be proportionate to the infringements, in consideration of the hardship the award may cause to the defendant, whether the infringement was for private purposes or not, and the impact of the infringements on the plaintiff. | d) dans le cas d’une violation qui est commise à des fins non commerciales, la nécessité d’octroyer des dommages-intérêts dont le montant soit proportionnel à la violation et tienne compte des difficultés qui en résulteront pour le défendeur, du fait que la violation a été commise à des fins privées ou non et de son effet sur le demandeur. |
[299] The Federal Court of Appeal has confirmed that statutory damages can be awarded even if no monetary damages are suffered by the copyright holder and no business is lost [see Rallysport FCA, supra at para 29]. However, where actual damages can be quantified, they are a relevant factor in the analysis [see Vidéotron, supra at paras 80 and 84; Rallysport FCA, supra at para 28; Maier Estate v Bulger, 2024 FC 1267 at para 171].
[300] This Court has acknowledged that there should be some relationship between actual damages and statutory damages [see Pinto v Bronfman Jewish Education Centre, 2013 FC 945 at para 195]. The key term being “some” relationship. Actual and statutory damages must not be conflated. Statutory damages are not intended to be 1:1 proportional with provable “but-for” losses, as they incorporate additional considerations such as the need for deterrence [see Rallysport, supra at paras 8–9]. If damages were limited to the cost of a licence (i.e., a plaintiff’s actual losses), there would be no incentive for copyright infringers to abide by the law and to obtain such a licence. Instead, it would be in their interest to infringe copyright and run the risk of getting caught [see Vidéotron, supra at para 81]. By way of example, in Vidéotron, Justice Grammond noted that his award of statutory damages for the TVA Sports channels was five times the approximate damages suffered by the plaintiffs, which he found not to be grossly out of proportion in the circumstances of that matter given the need for deterrence and denunciation.
[301] Thus, while a plaintiff’s actual or probable damages is a relevant consideration, it is certainly not determinative and is but one of the many factors to be considered and weighed in determining the quantum of statutory damages that are fair and proportionate in all of the circumstances.
[302] The parties disagree as to whether the Defendants’ earnings from the infringement constitute a relevant consideration when determining the appropriate quantum of statutory damages. The Plaintiff asserts that they are irrelevant, yet offers no authority to support this assertion. Contrary to the Plaintiff’s assertion, this Court routinely considers the earnings made by a defendant from their infringing conduct (if such evidence is available, be it in the form of profits or revenues) and I am satisfied that this forms part of “all relevant circumstances” that the Court must consider in fixing the quantum of statutory damages [see Maier Estate v Bulger, supra at paras 186, 188, 191; Telewizja, supra at para 47; Trader v CarGurus, 2017 ONSC 1841 at para 67; Young v Thakur, 2019 FC 835 at para 50; Nicholas v Environmental Systems (International) Limited, 2010 FC 741 at para 105 [Nicholas]].
[303] The Copyright Act also expressly contemplates, in two separate provisions, discretionary reductions to the statutory minimum of $500 CAD per work.
[304] First, pursuant to subsection 38.1(2) of the Copyright Act, the Court has the discretion to lower the amount of statutory damages per work for commercial purposes to less than $500 CAD, but not less than $200 CAD, where “the defendant satisfies the court that the defendant was not aware and had no reasonable grounds to believe that the defendant had infringed copyright”. As is evident from the wording of the provision, the burden of proof lies with a defendant to demonstrate that the reduction contemplated by the provision should be made.
[305] Second, subsection 38.1(3) of the Copyright Act, entitled “Special case”, provides for a reduction below $500 CAD or $200 CAD per work (as the case may be) in certain circumstances:
| (3) In awarding statutory damages under paragraph (1)(a) or subsection (2), the court may award, with respect to each work or other subject-matter, a lower amount than $500 or $200, as the case may be, that the court considers just, if | (3) Dans les cas où plus d’une oeuvre ou d’un autre objet du droit d’auteur sont incorporés dans un même support matériel ou dans le cas où seule la violation visée au paragraphe 27(2.3) donne ouverture aux dommages-intérêts préétablis, le tribunal peut, selon ce qu’il estime équitable en l’occurrence, réduire, à l’égard de chaque oeuvre ou autre objet du droit d’auteur, le montant minimal visé à l’alinéa (1)a) ou au paragraphe (2), selon le cas, s’il est d’avis que même s’il accordait le montant minimal de dommages-intérêts préétablis le montant total de ces dommages-intérêts serait extrêmement disproportionné à la violation. |
| (a) either | |
| (i) there is more than one work or other subject-matter in a single medium, or | |
| (ii) the award relates only to one or more infringements under subsection 27(2.3); and | |
| (b) the awarding of even the minimum amount referred to in that paragraph or that subsection would result in a total award that, in the court’s opinion, is grossly out of proportion to the infringement. |
[306] Section 38.1(3) of the Copyright Act recognizes that there are cases where the statutory minimum amount of $500 CAD is not appropriate, as it would result in an excessive award not grounded in any reality [see Vidéotron, supra at para 85, citing Louis Vuitton Malletier SA v Wang, 2019 FC 1389 at para 153, and Thomson v Afterlife Network Inc, 2019 FC 545 at para 63].
(2) Application of the General Principles
[307] I will now consider the evidence and arguments presented regarding each of the factors listed in 38.1(5) of the Copyright Act, as well as the evidence and arguments related to the application of each of subsection 38.1(2) and subsection 38.1(3) of the Copyright Act.
(a) The Defendants are not innocent infringers as contemplated by subsection 38.1(2) of the Copyright Act
[308] I will begin by considering whether the Defendants have established that they are innocent infringers, as contemplated in subsection 38.1(2) of the Copyright Act, as this was certainly the focus of the parties at the commencement of trial; although certainly not the focus of the Defendants’ position (which focused heavily on the issue of proportionality) by the time the parties made their closing submissions.
[309] For subsection 38.1(2) to apply, the Defendants must establish that: (i) they were not aware they had infringed copyright; and (ii) they had no reasonable grounds to believe they had infringed copyright. The test is conjunctive.
[310] A defendant cannot rely on subsection 38.1(2) where they have received information that their activities could constitute copyright infringement and nonetheless carry on with their activities [see LS Entertainment Group Inc v Formosa Video (Canada) Ltd., 2005 FC 1347 at para 62; Century 21 Canada Ltd Partnership v Rogers Communications Inc, 2011 BCSC 1196 at para 418 [Century 21]; Nicholas, supra at para 104; Rallysport, supra at paras 3 and 37]. Even where a defendant believes that there is no merit to a notice of copyright infringement received, subsection 38.1(2) remains unavailable to them if they ignore the notice.
[311] As noted in Century 21 at paragraph 416:
…the defendants’ argument focuses on the legitimacy of the letters and ignores the fact of notice. Surely the point is that notice alerts them to a potential claim which may or may not be proven valid at a future date. To ignore a claim however is to run the risk of potential liability if breach of contract or ownership of copyright and its infringement is eventually proven.
[312] In Century 21, supra, the court went on to find that subsection 38.1(2) was not available to the defendants as a result of the notice of copyright infringement received.
[313] In Mejia v LaSalle College International Vancouver Inc, 2014 BCSC 1559 at paragraph 217, the British Columbia Supreme Court found that subsection 38.1(2) was unavailable to a defendant where, even if they may not have intended to infringe the plaintiff’s copyright, there was no evidence that the defendant considered the possibility of its “legal obligation to refrain from conduct that might constitute” infringement.
[314] The Defendants acknowledge that there are precedents in the case law stating that a defendant who receives notice of infringement and ignores it cannot then claim to be “innocent”. However, the Defendants assert that that is not what happened here. Rather, the Defendants assert that the Plaintiff’s notice of infringement was a “moving target” with notice of thirteen Programs in the 2019 Cease and Desist Letter, a different nine Programs in the 2019 Warning Letter and three additional Programs complained of for the first time in the Statement of Claim. The Defendants assert that they made “robust” efforts to remove the Programs immediately upon receipt of each notice.
[315] The Defendants further assert that their “innocence” should be assessed on a program-by-program basis, such that Programs for which no notice was given, or that were immediately removed after notice was provided, should be treated differently than Programs that were not removed after notice was given.
[316] I find that there is no merit to the Defendants’ assertions and that they are not entitled to benefit from the innocent infringer exception in relation to any of the Programs or the Live Channel. The Defendants’ argument is premised on a misguided interpretation of the innocent infringer exception. The Defendants do not become innocent infringers if they immediately remove content upon being put on notice of copyright infringement. In order to benefit from subsection 38.1(2), the Defendants had to demonstrate that they had no reasonable grounds to believe that they had infringed copyright. The “reasonable grounds” certainly disappear once the Defendants were put on notice of infringement, but the Defendants still need to establish that they had “reasonable grounds” to believe that they were not infringing copyright prior to being put on notice. For the reasons set out below, I am not satisfied that the Defendants have established that they had no reasonable grounds to believe that they had infringed copyright in relation to any of the Programs, such that a Program-by-Program analysis is not required.
(…)
[333] Accordingly, I decline to exercise my discretion to reduce the statutory minimum to $200 CAD per work pursuant to subsection 38.1(2) of the Copyright Act.
(b) The Plaintiff’s actual damages
[334] As noted above, the actual damages suffered, when it is possible to measure, is a relevant factor in assessing the amount to be awarded as statutory damages. In this case, for the reasons set out below, I find that the Plaintiff’s actual damages incurred as a result of the conduct of the Defendants are not easily quantifiable.
[335] I accept that, as a result of the conduct of the Defendants, the Plaintiff lost the opportunity to monetize the Programs for the Farsi-speaking population outside of Iran. That monetization could have occurred through: (a) licence fee revenues; (b) revenues earned through a Farsi service similar to the Spanish service operated by Plaintiff; or (c) additional revenues from the YouTube channel. I will address each of these lost opportunities in turn.
[336] However, before doing so, it is also important to keep in mind that these lost opportunities are only partially attributable to the conduct of the Defendants. The evidence before me is that GEM Media/GEM Music began broadcasting the Plaintiff’s Programs to the Farsi-speaking population prior to the Defendants. There is no clear evidence before me as to exactly when GEM Media/GEM Music began doing so and how shortly thereafter the Defendants put the Programs on the GLWiZ Service. At least for some portion of the episodes of the Programs, there would have been no meaningful delay (i.e., a matter of days or weeks) between when GEM Media/GEM Music and the Defendants broadcasted the Programs. The evidence was that from 2018 onward the Defendants recorded the episodes from GEM Media/GEM Music’s channels and then cut them and added them to the GLWiZ Service.
[337] There was minimal evidence led about GEM Media’s business as no witnesses from GEM Media/GEM Music testified at trial. The only evidence before the Court is from the Defendants’ witnesses (Mr. Reyhani and Mr. Moeini) who testified as to their understanding of GEM Media’s operations. Mr. Reyhani testified that GEM Media had one hundred million users, which he stated was at least 100 times more than the Defendants’ subscriber base. I do not accept this evidence, as it lacks foundation. Mr. Reyhani was never employed by any of the GEM companies and did not provide any basis for his understanding of the size of GEM Media’s audience. While it is certainly possible that GEM Media’s operations may have reached a larger viewing audience, the parties agree in the RASF that the GLWiZ Service is “the world’s largest supplier or source of streamed Persian media content”. As such, to the extent that the Farsi-speaking audience that the Plaintiff may have targeted for the purpose of monetizing its Programs was previously exposed to Farsi-dubbed/subtitled Programs, I find that such previous exposure was caused by both GEM Media/GEM Music and the Defendants in roughly equal measure.
[338] The Plaintiff has obtained the $27 million GEM Judgment against GEM Music for its conduct in relation to the same Programs but, as of the date of this trial, the Plaintiff had been unable to collect on the GEM Judgment. The Defendants assert that the GEM Judgment must be factored into the Court’s quantification of the statutory damages claim, otherwise the Plaintiff stands to “over recover”. Put differently, the Defendants assert that the GEM Judgment must be considered when assessing whether the amount of statutory damages awarded is proportionate. I agree with the Defendants that the GEM Judgment is a relevant consideration. However, I also find that the Defendants’ responsibility for the Plaintiff’s damages should not be discounted based on the GEM Judgment.
[339] I will now turn to consider lost licensing fee revenues. The Defendants made the Plaintiff’s Programs available on the GLWiZ Service without geographical limitation, although the majority of their subscribers were located in Canada, the United States of America, Australia and some European countries.
[340] The evidence before the Court is that the Plaintiff’s licences are limited geographically to generally one country and none of its licences grant global rights of online distribution.
(…)
[351] Overall, I have considered all of the licensing evidence before me. Unlike in many cases, the Plaintiff was not generally operating in the market in which the Defendants operated, be it with the Programs in Farsi or any other language. There is no evidence of any licences, for any Programs in any language, in Canada and there is limited evidence of licences in the United States of America. None of the parties brought to the Court’s attention any licences for Australia. The only Farsi licences are the GEM Licences, which have their limitations and issues as noted above. The remaining licences for the Programs are in other languages, are not comparable in their territorial scope and vary significantly from ||||||||||||||||||||||||| ||||||||||||||||||||||||| to |||||||||| |||||||||| per episode. This limits the Court’s ability to measure, with any degree of confidence, the Plaintiff’s actual lost licence fees.
(…)
(c) The Defendants’ revenues
[358] As noted above, the Plaintiff asserts that the Defendants’ revenues are not a relevant consideration. The Plaintiff argues that the conduct of the Defendants amounted to piracy and it is akin to a counterfeiter arguing that they sold 100 counterfeit purses for $5, such that $500 is the relevant number for the Court’s consideration. According to the Plaintiff, the fact that the Defendants make little money from their improper conduct should not factor into the quantification of the statutory damages so as to limit the amount the Plaintiff could recover. The focus should be on the Plaintiff’s losses and not the Defendants’ gains, otherwise all of the power is put into the “hands of the pirate”. While I appreciate the Plaintiff’s concern, the Defendants’ revenues are a factor that the Court must consider. That said, the weight that the Defendants’ revenues are afforded in the consideration of all of the factors remains at the Court’s discretion.
[359] Prior to trial, the parties reached an agreement regarding the Defendants’ revenues during the Relevant Period. Calculated as a pro rata share of revenues based on watched hours, the total revenue that the Programs and the Live Channel generated for the Defendants during the Relevant Period was $65,000 CAD or less. These revenues were comprised of earnings from customer subscriptions, set-top boxes and advertising. There is an issue with the expense data produced by the Defendants and I accept that not all documentation required to determine the Defendants’ profits has been produced to the Plaintiff or placed before the Court. As such, I will focus on the Defendants’ revenues and not their profits.
[360] While the Plaintiff has attempted to call into question the reliability of the Defendants’ revenue figures as a result of the CRA Issue, the Plaintiff is bound by their admission as to the quantum of the Defendants’ revenues attributable to the GLWiZ Service during the Relevant Period. Moreover, I have found that the evidence related to the CRA Issue is either inadmissible or I have given it no weight.
[361] The evidence before the Court is that the Defendants earned approximately $7.5 million CAD in revenues from the GLWiZ Service during the Relevant Period from its entire catalogue of 300 channels, 1,000 series and 3,000 movies. It remains open to the Plaintiff to contest how the Defendants arrived at attributing only $65,000 CAD of those revenues to the Programs. The Plaintiff has always contested that the amount of revenues attributable to the use of the Programs and the Live Channel on the GLWiZ Service should not be calculated as a pro rata share of revenues based on watch hours. During the closing arguments, I asked the Plaintiff what method of calculation it asserts would be more appropriate, but no other method was proposed. As such, I am left with only the $65,000 CAD revenue figure to consider.
[362] Is it possible that the Defendants could have earned higher revenues from the GLWiZ Service? The Defendants did not pay to license the content that it obtained from GEM Media, which reduced their costs and enabled them to charge less from their subscribers. Is it possible that they could have charged subscribers more? Is it possible that they could have generated significant advertising revenues? Mr. Turkmen certainly was of the view that the Defendants had not maximized the value of the Plaintiff’s content. However, Mr. Turkmen’s evidence alone is not sufficient for me to find that the revenues generated by the Defendants from their copyright infringement was or could have been more than $65,000 CAD during the Relevant Period.
(d) Bad faith of the Defendants and the conduct of the Defendants before and during the proceeding
[363] While bad faith and the conduct of the Defendants before and during the proceeding are different factors under subsection 38.1(5) of the Copyright Act, the Plaintiff did not provide any written submissions addressing these factors. In its oral closing argument, the Plaintiff conflated the two, providing the Court with no distinct submissions on either factor. The Defendants similarly provided no distinct submissions on these factors in either their written or oral submissions. As such, I have no choice but to consider them together.
[364] Bad faith must be understood in context and has been referred to as “conduct that is contrary to community standards of honesty, reasonableness or fairness” [see Century 21, supra at para 405]. What constitutes bad faith is contextual and may include the following: (i) ignoring a cease and desist letter [see Microsoft Corporation v PC Village Co Ltd, 2009 FC 401 at paras 33–35; Rallysport, supra at para 10; Century 21, supra at para 416]; (ii) repeatedly infringing different products [see Twentieth Century Fox Film Corp v Hernandez, 2013 CarswellNat 6160]; (iii) scraping or copying photos directly from a website [see Trader, supra at para 61]; (iv) ignoring offers not to litigate if they cease infringement [see Telewizja, supra at para 50]; and (v) using a false name to avoid being detected [see Collett, supra at para 64].
[365] The Plaintiff argues that the Defendants acted in bad faith in that they failed to stop infringing each time they were told by the Plaintiff to do so. The Defendants deny that they acted in bad faith, asserting that they always intended to remove the content and it was simply that their execution of the removal of the content was flawed. While the Defendants did not flagrantly disregard every communication from the Plaintiff and continue on with their infringement uninterrupted, I find that there is merit to the Plaintiff’s bad faith assertion.
[366] In November of 2017, Mr. Moeini was told that the Defendants were not authorized to use the Plaintiff’s content on the GLWiZ Service (as confirmed by the discovery evidence of Mr. Turna) and yet the Defendants did not take it down. While the Defendants state that they believed they had a valid licence from GEM Media to use the content, they did nothing to verify whether they did in fact have a valid licence. This is contrary to their asserted policy (or business practice) of always taking steps to ensure that they have the rights to use content and always taking allegations of infringement very seriously by removing the content and then conducting an investigation into the merits of the infringement allegation. The Defendants did not remove the Plaintiff’s content or conduct an investigation.
[367] When the Defendants received the 2019 Cease and Desist Letter, the Defendants took no steps to investigate whether they had any of the Programs listed in the Archive on the GLWiZ Service and as detailed above, their assertion that it would be too much work or impossible to do rings hollow. Again, the Defendants’ response to the 2019 Cease and Desist Letter does not align with their asserted policies. The Defendants did not investigate the validity of the complaint as they did not contact GEM Media to advise them of the Plaintiff’s allegation and to verify the validity of their licence. Mr. Reyhani admitted on cross-examination that the Defendants, through their lawyer, should have taken steps to verify whether GEM Media had the rights to the content provided to the Defendants, yet the Defendants offered no explanation for their failure to do so.
[368] I find that it defies common sense why the Defendants would not verify the validity of their licence from GEM Media in the face of the Plaintiff’s allegations, unless of course they actually believed that their licence from GEM Media had been terminated and did not want to bring their downloading of content from GEM Media’s satellites to the Plaintiff’s attention.
[369] That said, I accept that the Defendants did not entirely ignore the 2019 Cease and Desist Letter as the Plaintiff suggests. Mr. Bafekr and his team were tasked with removing some content. Those efforts, however, were clearly not entirely successful.
[370] The 2019 Warning Letter provided the Defendants with the 2019 Expert Report and advised that the Defendants continued to infringe the Plaintiff’s copyright. The Defendants made no effort to translate, or to obtain from the Plaintiff an English translation of, the 2019 Expert Report. There was also no evidence of any steps taken by Mr. Reyhani to investigate the Plaintiff’s complaint so as to confirm whether the Programs had in fact been deactivated, or to verify the Defendants’ rights to use the content with GEM Media. Again, this is contrary to the Defendants’ asserted policies.
[371] The Plaintiff further asserts that the Defendants have acted in bad faith by trying to paint GEM Media as the “villain” in this matter, having falsely represented to the Defendants that they could grant them a sublicence to use the Programs. I agree that this assertion is a tough pill to swallow when one considers all of the circumstances. I find that the evidence before the Court establishes that, prior to the commencement of the Relevant Period and continuing thereafter, the Defendants had been repeatedly told by GEM Media that the CLA was terminated and that the Defendants had no right to use any of the GEM Media content, which included the Programs. In the face of being told (rightly or wrongly) that they had no licence, the Defendants continued to use the Programs. However, I do not find that the Defendants’ efforts to characterize GEM Media as the true villain rises to the level of constituting bad faith.
[372] I also agree with the Defendants that their conduct is not akin to the forms of misconduct noted by this Court’s jurisprudence. The Defendants did not completely ignore all cease and desist letters, they did not ignore the Court’s proceedings or any orders or directions issued by the Court and they ceased all use of the Programs and the Live Channel once the action was commenced.
[373] During their oral closing submissions, the Plaintiff took the Court through the Defendants’ pleading (which the Defendants never amended) to demonstrate all of the denials that the Defendants made and the positions that the Defendants took, which the Plaintiff asserts were plainly untrue and completely at odds with the case the Defendants then put forward at trial. Specifically, the Defendants: (a) denied that they copied, stored or streamed any content; (b) denied that they copied any of the Plaintiff’s content; (c) pleaded that they streamed content directly from their licensors; (d) pleaded that their activities were undertaken with the Plaintiff’s authority; and (e) pleaded that the Plaintiff authorized some of their activities during the November 2017 meeting.
[374] I do not find that these positions pleaded in their Statement of Defence can be characterized as conduct amounting to bad faith, nor inappropriate conduct during the proceeding. It is open to a party to plead their case as they see fit. While it would have been of benefit for the Defendants to have amended their pleading as the case moved forward and their position changed, the Plaintiff was well aware that certain pleaded allegations had been abandoned by the Defendants prior to trial by virtue of what was agreed to in the original Agreed Statement of Facts and then in the RASF.
[375] The Plaintiff further relies on the fact that the Defendants completely changed course after the first trial date was adjourned by conceding infringement, abandoning the position that the Plaintiff had authorized their use of the Programs and the Live Channel and instead arguing that they had been under the reasonably held, but mistaken, belief that they had a valid licence from GEM Media to use the Programs. While I do not find that the aforementioned conduct constitutes bad faith on the part of the Defendants, I do find that their abrupt change in position as to the source of their licence is conduct during the proceeding that is worthy of the Court’s consideration in quantifying statutory damages.
[376] The Plaintiff also relies on the late-breaking explanation advanced by Mr. Bafekr as to why Ms. Barker was able to view certain Programs in 2021, even though the Defendants had represented to the Plaintiff that they had removed the Programs in 2019. Again, I do not find that this conduct constitutes bad faith, but I do find that it is worthy of the Court’s consideration in quantifying statutory damages.
(e) Need for deterrence
[377] As stated by Justice Fuhrer in Rallysport, supra at paragraph 42:
Deterrence ensures misconduct does not go unpunished simply because but-for causation cannot be proven for each image. Statutory damages “must be sufficiently high to serve a salutary message and deter future infringements on the part of the named Defendants and other parties”: PC Village, above at para 39. This is especially so where technology makes it easy to infringe. […]
[378] Preloaded set-top boxes, apps and internet streaming make it easy for the Defendants and others to infringe the Plaintiff’s copyright [see Bell Canada v L3D Distributing Inc (INL3D), 2021 FC 832 at para 96 [Bell Canada]]. The quantum of statutory damages must be significant enough to deter others who may wish to engage in similar illicit activities and also to deter these Defendants from resuming such activities [see Nintendo, supra at para 163]. This Court has recognized the “enduring harm” that results from unauthorized broadcasting and streaming which includes an unlimited potential for continued infringement due to the loss of control over the copyrighted works. It is a harm I found was suffered by the Plaintiff [see Bell Canada, supra at para 101]. I also do not accept the assertion that simply because the Live Channel is free-to-air, the amount of statutory damages awarded in relation thereto should be nominal (as was found in Vidéotron). Such a finding would remove any component of deterrence from an award of statutory damages. In the circumstances, I find that there is an acute need for deterrence that must be factored into the award of statutory damages in relation to both the Programs and the Live Channel.
[379] I also find that there is a need to deter these Defendants against future acts of infringement. While they made some efforts to cease their infringement in response to notifications from the Plaintiff, and have now completely ceased all acts of infringement of the Programs and the Live Channel, the conduct of the Defendants demonstrates a failure to abide by their own policy of ensuring that they have authorization to use the content on the GLWiZ Service. In that regard, the Defendants did not call any evidence to establish that they believed they had a licence to rebroadcast the Live Channel at any point during the Relevant Period and, thus, I find that they rebroadcasted the Live Channel knowing that they did not have the authorization to do so.
[380] Moreover, the Plaintiff produced videos and screenshots taken by Mr. Turkmen in November 2023 showing CNN Turk and Dream Turk (which are live channels owned by the Plaintiff’s parent company, DM) on the GLWiZ Service. Mr. Turkmen testified that he knew that the Defendants did not have the rights to broadcast either channel.
[381] Ms. Görür, who was an employee of the Plaintiff and also an employee of DM, testified that she visited the GLWiZ website in November or December 2023 and saw DM content thereon, including CNN Turk and various radio stations. She testified that the Defendants did not have the right to stream or do anything with this content. While she may not have cleared the cookies on her browser before viewing the GLWiZ website, her evidence was consistent with that of Mr. Turkmen’s.
[382] On cross-examination, Mr. Reyhani admitted that the aforementioned DM content was on the GLWiZ Service but stated that, due to an agreement between the parties for the purpose of trial, he was unable to say who authorized the use of those channels. Counsel for the Defendants provided no submissions on this issue but I presume it relates to the Defendants’ decision not to call Mr. Sarılar as a witness. In the absence of any evidence from the Defendants of authorization to use this content, and in light of the testimony of Mr. Turkmen and Ms. Görür, I find that the Defendants have used this DM content without authorization, contrary to their own asserted policy.
[383] Ms. Akar testified that the Defendants put ATV’s channel and programs on the GLWiZ Service without authorization, resulting in ATV sending the Defendants a cease and desist letter in 2022. Mr. Reyhani’s evidence regarding the Defendants’ authorization to use ATV’s content was evolving, first asserting the Defendants had a verbal licence from ATV and then asserting that the content was given to them by “GEM TV”. I do not find Mr. Reyhani’s evidence on this issue credible and prefer the evidence of Ms. Akar. Accordingly, I find that the Defendants have also used the content of ATV without authorization, contrary to their own asserted policy.
[384] The Defendants also failed to adhere to their policy of taking copyright complaints seriously by removing the content and then investigating whether the complaint had any merit. As detailed above, it is clear that the Defendants did not remove at least some of the Plaintiff’s content in response to notices delivered by the Plaintiff, did not investigate the Archive and never properly investigated whether the assertion that the Defendants had no licence to use the content had merit.
(f) A total award at $500 CAD per work would not be grossly out of proportion
[385] The Defendants assert that an award of statutory damages at the statutory minimum of $500 CAD per work would result in a total award that is grossly out of proportion to the infringement. Relying on subsection 38.1(3) of the Copyright Act, the Defendants assert that the Court should reduce the per work amount to between $200–$300 CAD. While the Defendants rely on subsection 38.1(3), they provided no written submissions to demonstrate how the first criterion set out in subsection 38.1(3) is met, which is a burden that the Defendants bear [see Nintendo, supra at paras 146 and 149; Rallysport, supra at para 12]. It must be recalled that subsection 38.1(3) has two criteria that must both be met — (i) that there is more than one work or other subject-matter in a single medium, or the award relates only to one or more infringements under subsection 27(2.3); and (ii) the awarding of even $500 CAD per work would result in a total award that in the Court’s view is grossly out of proportion to the infringement [see Rallysport, supra at para 7]. The Plaintiff similarly provided no written submissions on the first criterion and thus the Court was left only with the limited submissions made during the oral closing arguments.
[386] With respect to what constitutes a “single medium” (“même support matériel” in French), there has only been a handful of decisions from this Court and others that have considered this issue, the most comprehensive of which I have noted below.
[387] In Trader v CarGurus, supra, Justice Conway of the Ontario Superior Court of Justice held:
[57] Trader argues that the court cannot reduce the $500 minimum pursuant to s. 38.1(3) because the Trader photos are not in “a single medium”. I reject that submission. The word “medium” is not defined in the Act and is used broadly throughout the statute. I see no reason why the term “medium” cannot encompass an electronic (as opposed to physical) medium, given that it is a means through which the user can access the photos. In both Telewizja Polsat SA v. Radiopol Inc., supra, and Century 21 Canada Ltd. v. Rogers Communications Inc., supra, the court reduced the statutory damages pursuant to s. 38.1(3) where the infringement was through a website, implicitly accepting that a website can be a “medium”.
[58] Trader also argues that there is no “single” medium because the Trader photos can be accessed through both a desktop and a mobile application. In my view, the medium in this case is the CarGurus website. The desktop and mobile application are simply two user interfaces for accessing that website. The Trader photos are therefore in a single medium, meeting the first condition for reduced statutory damages in s. 38.1(3).
[388] In Vidéotron, supra, Justice Grammond considered the meaning of a “single medium” and held:
[105] […] I would point out that the purpose of this provision is to prevent a mechanical application of section 38.1 from leading to the awarding of disproportionate sums. It would be paradoxical if the purpose of this provision could be frustrated by interpreting it in a too technical or mechanical fashion. The concept of “medium” must be applied while taking into account the wide variety of types of works that can be subject to copyright and the growing diversity of technological means of reproducing or retransmitting these works. In my view, a pragmatic approach is called for.
[106] Moreover, I do not see anything in the wording of subsection 38.1(3) that requires works to be present simultaneously on a single medium, such as a hard drive or RAM. In my view, a “single medium” includes any technological infrastructure that makes it possible to reproduce, display or retransmit several works one after another. This is the situation in this case: the medium is Konek’s and Hill Valley’s network infrastructure, which makes it possible to retransmit several works one after another.
[107] There is little case law dealing with the application of subsection 38.1(3) to electronic means of communication, and there are no decisions that support a requirement of simultaneity. In Trader Corp v CarGurus Inc, 2017 ONSC 1841 at paragraphs 57–58, the court gave a broad interpretation to the concept of “single medium” and applied it to a collection of photographs available on a website. In Thomson, this Court applied subsection 38.1(3) to obituaries reproduced on a website without there being evidence establishing the conditions under which this information was recorded. In Telewizja Polsat, this Court applied subsection 38.1(3) to the retransmission of television programs over the Internet. The plaintiffs are seeking to distinguish this case, pointing out that it concerned an on-demand retransmission system and that the defendant kept all the programs on its server. I am not convinced that such a distinction is relevant; indeed, following the plaintiffs’ argument would lead to the conclusion that the defendant in Telewizja Polsat acquired the benefit of subsection 38.1(3) by retaining copies of the infringing works, which seems absurd to me.
[389] In Maier Estate v Bulger, supra, Justice Furlanetto held:
[175] I similarly find that subsection 38.1(3) of the Act (i.e., the single medium provision) cannot be used to lower the statutory damage amount. The Defendants argue that “medium” as used elsewhere in the Act refers to a single category of medium (subsection 13(4) of the Act) as opposed to a single item. They assert that subsection 38.1(3) is not to be interpreted in a manner that is “too technical or mechanical”; nor one that would result in an “astronomical” damages award: Vidéotron at paras 85, 105. However, as noted by Justice Pallotta in Patterned Concrete Mississauga Inc v Bomanite Toronto Ltd, 2021 FC 314 [Patterned Concrete], “[i]t is the works, not the copies, that must be in a single medium in order for section 38.1(3) to apply” (at para 65). The provision was intended to apply to works like newspapers or anthologies, where multiple copyrights may exist in a single copied medium (Nintendo of America Inc v King, 2017 FC 246 [Nintendo] at para 148), or to works that exist in an electronic medium like a website (Trader v CarGurus, 2017 ONSC 1841 at paras 57-58).
[176] The situation is very different here. In this case, the works infringed are those embodied in the B&W Negatives. As set out in my earlier findings, the infringing acts do not extend to the hard drives. The images as contained in the negatives are each separate and may be separately copied. They are not in a single medium where multiple copyrights are infringed through a single copy. Accordingly, it is my view that subsection 38.1(3) does not apply and that the appropriate quantum of statutory damages should fall within the range specified by the Act; that is, between $500 and $20,000 per work.
[390] The Plaintiff asserts that, even on a conservative interpretation of a “single medium”, subsection 38.1(1) has no application here as the works are found on two mediums — namely, on-demand and the live broadcast channel. The Plaintiff further asserts that a proper interpretation of “medium” should focus on the means by which the work is made available by the infringer, which, in this case, involved a website, a set-top box and an app. On either interpretation, the Plaintiff asserts that the works at issue are not in a single medium.
[391] The Defendants rely on Vidéotron to assert that the works are in a single medium — namely, the Defendants’ server — which is the technical infrastructure that makes it possible to reproduce, display or retransmit several works one after another.
[392] However, I need not make a determination as to whether the first criterion is met as, even assuming that the works at issue are in a single medium, I find that the Defendants have not demonstrated that an award of $500 CAD per work would result in a total award that is grossly out of proportion to the infringement. At $500 CAD per work (2,974 episodes of the Programs and the Live Channel), the total award would be $1,487,500 CAD. While I agree with the Defendants that a $44 million CAD statutory damages award as requested by the Plaintiff would be grossly disproportionate, I do not find that an award of $1,487,500 CAD would be grossly out of proportion in all of the circumstances.
(3) The Appropriate Quantum of Statutory Damages
[393] I appreciate that determining the appropriate quantum of statutory damages is not an exact science. As such, I have considered and weighed all of the relevant circumstances and the factors enumerated in subsection 38.1(5) of the Copyright Act, all as set out above.
[394] I have also conducted a comprehensive review of the jurisprudence to consider the amount of statutory damages awarded by the courts, particularly in those cases that have at least some factual similarities. The Defendants urge the Court to rely upon the decisions in Telewizja, Vidéotron and Odyssey Television Network Inc v Ellas TV Broadcasting Inc, 2018 FC 337, when selecting the appropriate quantum of statutory damages, arguing that, like here, those cases involved mass infringements of television series and broadcast signals in IPTV (or similar) services. In each case, this Court awarded per-episode amounts below the statutory minimums, and the substantial misconduct and bad faith of those defendants did not stop this Court from relying on paragraph 38.1(3)(b) of the Copyright Act. The Plaintiff urges the Court to rely upon the decisions in Bell Canada v Nie, 2022 CanLII 7552 (FC), Bell Canada, supra, and the GEM Judgment, where statutory damages were set at $10,000 CAD per work.
[395] In considering the GEM Judgment, I am mindful that the amount of statutory damages awarded by Justice Whyte Nowak for these same Programs during approximately the same period of time was done without the benefit of GEM Music’s participation on the summary judgment motion. Therefore, there was no party to cross-examine the Plaintiff’s witnesses and no party to push back on the arguments advanced by the Plaintiff regarding the appropriate quantum.
[396] I am also mindful of the nature of the works at issue. The Programs are award-winning, high-quality drama series (although at least one is a romantic comedy) and are among the most popular in the world next to English-language programming. The cost of creating a single episode of the Programs at the Relevant Time ranged from |||||||||| |||||||||| to |||||||||| ||||||||||. These are not photos of used cars like in Trader v CarGurus.
[397] In all of the circumstances, I am satisfied that an award of statutory damages of $2,000 CAD per episode, of each of the Programs, is justified. In relation to the Live Channel, I find that a larger amount is warranted due to the heightened need for deterrence vis-à-vis these Defendants and the public at large. Accordingly, I award statutory damages of $10,000 CAD in relation to the Live Channel. Therefore, the total amount of statutory damages awarded is $5,958,000 CAD.
B. Punitive Damages
[398] An election by the owner of copyright to seek statutory damages does not affect any right the copyright owner may have to exemplary or punitive damages [see Copyright Act, subsection 38.1(7)].
[399] Punitive damages are an exceptional remedy, designed to punish a defendant rather than compensate a plaintiff. They are in the nature of a fine, meant to act as a deterrent to a defendant and to others from acting in the impugned manner [see Bauer Hockey Corp v Sport Maska Inc (Reebok-CCM Hockey), 2014 FCA 158 at para 19 [Bauer Hockey]].
[400] In Whiten v Pilot Insurance Co, 2002 SCC 18 at paragraph 36, the Supreme Court of Canada explained that punitive damages are awarded where a party’s conduct has been malicious, oppressive and high-handed, such that it offends the court’s sense of decency. The test limits the award to misconduct that represents a marked departure from ordinary standards of decent behaviour.
[401] Punitive damages should only be awarded, however, if all other penalties and damages have been taken into account and are “found to be inadequate to accomplish the objectives of retribution, deterrence, and denunciation” [see Whiten v Pilot Insurance Co, supra at para 123; Microsoft Corporation v Liu, 2016 FC 950 at para 26; Thomson v Afterlife Network Inc, supra at para 74; Videotron, supra at para 118; Telewizja, supra at para 52].
[402] The determination of whether an award of punitive damages is appropriate and, if so, the amount of punitive and exemplary damages, is a highly contextual exercise. Factors to consider in assessing the appropriateness and quantum of a punitive damages award include: (a) whether the conduct was planned and deliberate; (b) the intent and motive of the defendant; (c) whether the defendant persisted in the outrageous conduct over a lengthy period of time; (d) whether the defendant concealed or attempted to cover up its misconduct; (e) the defendant’s awareness that what they were doing was wrong; (f) whether the defendant profited from their misconduct; and (g) whether the interest violated by the misconduct was known to be deeply personal to the plaintiff [see Whiten v Pilot Insurance Co, supra at para 113; Bauer Hockey, supra at para 20].
[403] The Plaintiff seeks an award of punitive damages in the amount of $500,000 CAD. However, I am satisfied that, in this case, the award of statutory damages already sufficiently fulfills a punitive and retributive function such that an award of punitive damages is not warranted.
(…)
E. Costs
[413] As agreed during closing arguments, the parties shall, within seven days of release of this Judgment and Reasons, provide the Court with a jointly-proposed timetable for the delivery of written cost submissions and any agreement as to the length thereof. Subject to any further order or direction of the Court, the issue of costs of this proceeding shall be determined in writing.
THIS COURT ORDER, DECLARES AND ADJUDGES is that:
(…)
6. The Plaintiff is the owner of the copyright in the 2,974 episodes of the 22 television programs listed in the chart at paragraph 7 of the Reasons [collectively, the Kanal D Programs].
7. The Defendants have infringed the Plaintiff’s copyright in each of the 2,974 works comprising the Kanal D Programs by copying, downloading, uploading and making available the Kanal D Programs on their GLWiZ IPTV service, including via their applications and website at www.glwiz.com [collectively, the GLWiZ Service], contrary to sections 2.4(1.1), 3(1)(a), 3(1)(f) and 27(1) of the Copyright Act, RSC, c C-42.
8. The Defendants have authorized the communication and infringement of the Plaintiff’s copyright in the Kanal D Programs and have induced those using its GLWiZ Service to infringe the copyright in the Kanal D Programs.
9. The Defendants have distributed copies of the Kanal D Programs which they knew or should have known infringe the copyright therein, in a manner that has prejudicially affected the Plaintiff as the copyright owner, contrary to section 27(2)(b) of the Copyright Act.
10. The Defendants have, by way of trade, distributed, exposed or offered for sale or rental, or exhibited in public, copies of the Kanal D Programs which they knew or should have known infringe the copyright therein, contrary to section 27(2)(c) of the Copyright Act.
11. The Defendants have possessed, for the purposes of doing those things referred to in subsections 27(2)(b) and 27(2)(c) of the Copyright Act, copies of the Kanal D Programs which they knew or should have known infringe the copyright therein, contrary to section 27(2)(d) of the Copyright Act.
12. The Defendants have infringed the Plaintiff’s copyright in its communication signal for its live Turkish-language Kanal D television channel [the Kanal D Live Channel], by retransmitting or rebroadcasting it to the public simultaneously with the Plaintiff’s own broadcast of that communication signal, contrary to section 21(1) of the Copyright Act.
13. The Defendants, including their shareholders, officers, directors, employees, agents, servants and assigns, and any other person or entity acting on their behalf, are hereby enjoined from directly or indirectly possessing, copying, reproducing, translating, dubbing, storing, downloading, uploading, broadcasting, distributing, streaming, or making available the Kanal D Live Channel or any episode of any of the Kanal D Programs, including any episodes of the 22 listed Kanal D Programs hereafter produced and/or released, in any language, including by broadcast or other linear means of delivery, on websites or social media sites that the Defendants directly or indirectly own, operate, and/or control, or via any IPTV service(s) that the Defendants directly or indirectly own, operate, and/or control, including the GLWiZ Service, and from authorizing or inducing any third party to engage in any of the aforementioned activities.
14. The Defendants shall, at their own cost and within fourteen (14) days of receiving a copy of this Judgment, delete and destroy all copies of the Kanal D Programs in their direct or indirect possession, power or control, howsoever or wheresoever those copies or files are maintained or stored, and shall deliver a sworn affidavit verifying compliance with this obligation to the Plaintiff via its legal counsel, Jim Holloway at Baker & McKenzie LLP.
15. The Defendants shall pay to the Plaintiff statutory damages in the amount of $5,958,000 CAD pursuant to section 38.1 of the Copyright Act.
16. The Defendants shall pay to the Plaintiff pre-judgment interest on the award of statutory damages calculated at the rate of 0.5% per annum, and not compounded, from February 3, 2021, to the date of this Judgment.
17. This Judgment bears interest at the rate of 4.0%, not compounded, from the date of issuance until the amounts ordered by this Court are paid in full.
18. The Defendants are jointly and severally liable for all amounts owing to the Plaintiff pursuant to this Judgment.
19. The parties shall, within seven (7) days of release of this Judgment and Reasons, provide the Court with a jointly-proposed timetable for the delivery of written cost submissions and any agreement as to the length thereof. Subject to any further order or direction of the Court, the issue of costs of this proceeding shall be determined in writing.
In comparison to the Copyright Act, the possible remedies for patent infringement are not as extensive, knowing that statutory damages are not among the options foreseen by the Patent Act. Nevertheless patent owners may ask the court either for a reasonable compensation, damages, or an accounting of profits,. In Nova Chemicals Corp. v. Dow Chemical Co. [2022 SCC 43 (CanLII)], the Supreme Court explains the three types of damages as follows:
| Term | Definition |
| Reasonable Compensation | Reasonable compensation can be granted for any loss caused by the infringer’s use of the invention between the patent’s publication and the grant of the patent.This remedy is authorized by s. 55(2) of the Patent Act, R.S.C. 1985, c. P-4.This remedy typically entitles a patentee to a “reasonable royalty” (S. J. Perry and T. A. Currier, Canadian Patent Law (4th ed. 2021), at §§17.93-17.94).A reasonable royalty is “that which the infringer would have had to pay if, instead of infringing the Patent, [the infringer] had come to be licensed under the Patent” (AlliedSignal Inc. v. Du Pont Canada Inc. (1998), 1998 CanLII 7464 (FC), 78 C.P.R. (3d) 129 (F.C. (T.D.)), at para. 199, quoting Unilever PLC v. Procter & Gamble Inc. (1993), 1993 CanLII 17527 (FC), 47 C.P.R. (3d) 479 (F.C. (T.D.)), at p. 571 (text in brackets in original)). “The test is what rate would result from negotiations between a willing licensor and a willing licensee” (para. 199). |
| Damages | Damages compensate the patentee for all pecuniary losses causally attributable to infringement after the grant of the patent.This remedy is authorized by s. 55(1) of the Patent Act.Damages can include lost profits on sales or due to depression of prices, and lost income from licensing opportunities, among others (Perry and Currier, at §17.9). |
| Accounting of Profits | An accounting of profits requires that the infringer disgorge all profits causally attributable to infringement of the invention after the grant of the patent.This remedy is authorized by s. 57(1)(b) of the Patent Act. This remedy is an alternative to an award of damages (Apotex Inc. v. ADIR, 2020 FCA 60, 172 C.P.R. (4th) 1, at para. 35). It is an equitable, discretionary remedy (AlliedSignal Inc. v. Du Pont Canada Inc. (1995), 1995 CanLII 19227 (FCA), 61 C.P.R. (3d) 417 (F.C.A.), at pp. 444-46). Judges may consider practical consequences, including expediency, misbehaviour by litigants, and whether the patentee practices the invention itself when exercising this discretion (K. Andrews and J. de Beer, “Accounting of Profits to Remedy Biotechnology Patent Infringement” (2009), 47 Osgoode Hall L.J. 619, at p. 641; Bayer Inc. v. Cobalt Pharmaceuticals Co., 2016 FC 1192, 142 C.P.R. (4th) 374, at paras. 6 and 10; Seedlings Life Science Ventures, LLC v. Pfizer Canada ULC, 2021 FCA 154, at paras. 76 and 79-81 (CanLII)). |
At paragraph 15 of the decision, the Court further conceptualizes an accounting of profits as a three-step test:
Step 1: Calculate the actual profits earned by selling the infringing product — i.e., revenue minus (full or differential) costs.
Step 2: Determine whether there is a non-infringing option that can help isolate the profits causally attributable to the invention from the portion of the infringer’s profits not causally attributable to the invention — i.e., differential profits. It is at this step that judges should apply the principles of causation. Causation “need not be determined by scientific precision: it is ‘essentially a practical question of fact which can best be answered by ordinary common sense’” (Merck & Co., Inc. v. Apotex Inc., 2015 FCA 171, [2016] 2 F.C.R. 202, at para. 44, quoting Snell v. Farrell, 1990 CanLII 70 (SCC), [1990] 2 S.C.R. 311, at para. 328).
Step 3: If there is a non-infringing option, subtract the profits the infringer could have made had it used the non-infringing option from its actual profits, to determine the amount to be disgorged.
This case Step 2 is the principal issue in this appeal. Nova asks the Court to deduct theoretical profits that it could have earned on an entirely unrelated product had it not infringed, from the profits that the company earned by selling products that infringed Dow’s patent. The difference between these values, Nova submits, should be the quantum payable to Dow. After examining the evidence, the appeal was dismissed.
It should be kept in mind that the dates of publication and issue of the patent play an important role in the determination of an account for profits in patent law. According to s.55(2) of the Patent Act if an infringement occurs in the period between the publication and granting of a patent, then the holder is only compensated for damages accounting for infringement and not any account of profits simply because the patented invention has not yet formally entered the market. However, after the granting of a patent a case of infringement can allow for an account of profits if the courts deem it appropriate. To determine the profits lost the court would consider the position of the patent holder if the defendant had not infringed their work.
In Colonial Fastener Co. Ltd. v Lightning Fastener Co. Ltd., the Supreme Court affirmed that only royalties can be awarded for patent infringement if the patent holder either does not manufacture or sell the patent-protected item, normally grants licences under the patent, or cannot prove the loss of a sale due to the activity of the infringer. In those instances, the patent holder would not be awarded lost profits and instead would receive a figurative royalty with the amount granted based on the price the infringer would have paid if they had taken the proper channels and entered into a licensing agreement with the patent holder.
In trademark law, it is more difficult to make an evaluation of lost profits since the profits gained by infringement could arguably have gone to another competitor in the same market besides the trademark holder in question. However, an account of profits can still be granted if the circumstances allow for a fair assessment of net profits loss. For example, if the trademark which was infringed has a monopoly in the market or if the product it represents is unique in its appearance, quality, or price compared to all other competitors, then an evaluation of lost profits could be determinable.
4. Delivery Up and Destruction of Infringing Items
Delivery up is defined as the act of giving a piece of property back to its original owner. In intellectual property law, this often means with the intention of destroying the item if it was made as a result of the infringement of an IP right. The purpose of delivery up is to aid prohibitive injunctions in their application, with the effect allowing the rights holder to avoid continued infringement issues in the future. Delivery up and destruction of items are remedies that apply to all types of intellectual property including patents, trademarks, and copyright. An order for the destruction of goods is granted only after a finding of infringement has occurred.
Delivery up is expressly permitted as a remedy to infringement in s.34, 41.1(2), and 41.22(2) of the Copyright Act, and s.53.2(1) of the Trademarks Act. There is no specific provision in the Patent Act that references delivery up, but it is still often used as a remedy in the recognition of the exclusive rights granted to the patent holder under s.42.
The TRIPS Agreement contains two provisions relating to this remedy under Article 46 and 59. Article 46 is a general application remedy that relates to the destruction of infringing goods in general. It also applies to items whose primary purpose was/is to make the infringing goods in question, stating the judicial authorities have the authority to, “…order that materials and implements the predominant use of which has been in the creation of the infringing goods be…disposed of outside the channels of commerce in such a manner as to minimize the risks of further infringements.” Whereas Article 59 specifically relates to the destruction of imported counterfeit goods in the possession of customs authorities under the same principles of Article 46. Article 59 also specifies that in regards to trademarks, “…the authorities shall not allow the re-exportation of the infringing goods in an unaltered state or subject them to a different customs procedure, other than in exceptional circumstances.”
5. Norwich Orders
Norwich orders are used to force an infringer to tell the courts where they received their supplies of infringing goods in order to track further infringement cases. Norwich orders are granted in specific circumstances, including: (1) where the information sought is necessary to identify wrongdoers; (2) to find and preserve evidence that may substantiate an action or determine whether an action exists against known or unknown wrongdoers; and (3) to trace and preserve assets.
A Norwich order on the other hand if a pre-trial remedy that is commonly used in copyright infringement cases against intermediaries like internet service providers to force them to provide their private information in order to identify infringers online. Norwich orders are a very intrusive remedy and must be used only in certain circumstances. They are also commonly used in cases of online defamation, like in the 2009 case of York University v Bell Canada Enterprises wherein York was requesting an order requiring Bell and Rogers to disclose info necessary to obtain the identity of anonymous authors of allegedly defamatory emails. This case laid out the requirements for an allowance of a Norwich order including sufficient evidence to show a bona fide reasonable claim, the applicant must establish the third-party is somehow involved in the acts, the third-party is the only practical source of info, the third-party can be indemnified for costs, and the interests of justice favour obtaining the disclosure. In York University, the Norwich order was granted because the internet service providers offered the platform for the defamatory emails to be sent, there were little to no costs associated with providing the information, and there was no other practical source to determine the identifies of the defendants in this instance.
Prior to 2015, ISPs could charge a fee against the copyright holder for the work associated with the compliance of a Norwich order. The 2018 case of Rogers Communications Inc. v Voltage Pictures addressed the issue of whether fees should still be required (as per common law) or if ISPs should be exempt from charging fees for their services in identifying users on their platforms (as per the notice and notice provisions under s. 41.25 and s.41.26 in the Copyright Act). Film production company Voltage Pictures requested a Norwich order on ISP Rogers to disclose the identities (including personal and contact information) of unidentified Internet subscribers who were sharing their films online using peer to peer file-sharing networks. The order was allowed and the federal court decided for Rogers stating it was able to recover all costs associated with identifying the individuals. However, the Federal Court of Appeal disagreed and stated the Copyright Act already requires ISPs to collect user identification information regardless of the presence of a Norwich order, so there should be no fees associated with requirements already existing under the act. However, Rogers did take on additional steps when collecting information on its users that was not required under the Act, and it could be compensated with fees for any additional steps taken to collect information that are not expressly required under the notice and notice regime. In this case, those additional steps included connecting the IP address to the person’s real-life identity and sharing that specific person’s identity with the copyright owner.
Another example of a request for a Norwich order during an intellectual property infringement case the 2019 case of ME2 Productions, Inc. v Doe, wherein the plaintiff companies were seeking a Norwich order against TekSavvy Solutions Inc. to obtain the names and addresses of some of TekSavvy’s users who were allegedly illegally downloading and sharing ME2’s films. TekSavvy questioned the motion stating ME2 had not produced sufficient evidence to warrant a Norwich order to obtain the identities of the alleged infringers. The courts decided there was not sufficient evidence to warrant a Norwich order calling it an “…equitable, discretionary and flexible remedy…an intrusive and extraordinary remedy that must be exercised with caution”, with Teksavvy being awarded partial costs. ME2 was still free to file a new Norwich order after this decision so long as it was filed with sufficient evidence to warrant its use.
Norwich orders may also be requested in patent related matters, subject to meeting the requirements for issue.
Seismotech IP Holdings Inc. v John Doe and Apple Canada Inc., 2023 FC 1649
[1] Seismotech wishes to sue consumers who bought, installed and used intelligent thermostats in their homes, because it alleges that these devices infringe certain patents it owns. To that end, it seeks a Norwich order to force Apple to disclose the names and addresses of consumers who downloaded the apps controlling such devices from the App Store.
[2] I am dismissing the motion. Seismotech has not shown that it has a bona fide claim. Moreover, the public interest does not favour the granting of a Norwich order. Given the inherent complexity of a patent infringement action and the nature of the technology at issue, individual consumers would be ill equipped to defend the action.
I. Background
[3] The plaintiffs, which I will refer to as Seismotech, own four patents, broadly related to methods, apparatuses, media and signals for the management, monitoring, controlling or billing of public utility usage. They allege that several brands and models of intelligent thermostats infringe their patents.
[4] Seismotech brought four actions in this Court in respect of such infringement. The action in court file no T-1147-23 is a simplified action against a category of as of yet unidentified persons, described as “John Does,” who purchased intelligent thermostats made by Canadian manufacturers. The defendants include persons residing in either Canada or the United States. Seismotech claims damages and an accounting of profits from each individual defendant, the “profits” being the savings made by each defendant on their public utility bills by using the allegedly infringing technology.
[5] The action in court file no T-1148-23 is similar, except that it targets purchasers of intelligent thermostats made by foreign manufacturers. The defendants reside in Canada only.
[6] Seismotech also brought two “reverse class actions,” that is, actions against a category of defendants comprising legal persons who manufactured, distributed or sold allegedly infringing intelligent thermostats in Canada. One of these actions pertains to thermostats made by Canadian manufacturers and the other, those made by foreign manufacturers. In both cases, the proposed representatives of the defendant class are Rona Inc. and Home Depot of Canada Inc.
[7] One of the Canadian manufacturers of intelligent thermostats, Ecobee Technologies ULC [Ecobee], sought leave to be added as a defendant in action no T-1147-23. I granted Ecobee’s motion in October 2023: Seismotech IP Holdings Inc v John Does, 2023 FC 1335. Seismotech appealed my order, but no decision regarding the appeal has been rendered yet.
[8] When the motion to add Ecobee as a defendant was being heard, Seismotech amended its statements of claim to assert only certain independent patent claims, which it describes as “method claims.”
[9] Seismotech now brings motions to obtain a Norwich Order against Apple Inc. and Apple Canada Inc. [collectively, Apple] in each of files T-1147-23 and T-1148-23 [the “John Doe actions”]. Seismotech alleges that the operation of an intelligent thermostat requires end-users to download an app designed by the manufacturer from an online commerce platform such as Apple’s App Store. Apple possesses its customers’ personal information, including their names, e-mail addresses or Apple IDs, IP addresses, credit card billing addresses and the date they downloaded the app. Seismotech asks the Court to order Apple to provide this information with respect to users who have downloaded the apps designed to control the intelligent thermostats at issue in both John Doe actions.
II. AnalysisA. Test for a Norwich Order
[10] In simple terms, a Norwich order requires a person who is not a party to a proceeding to provide information to assist a plaintiff in bringing an action, typically, but not always, by revealing the identity of potential defendants. It owes its name to Norwich Pharmacal Co v Customs and Excise Commissioners, [1974] AC 133 (HL), which has become the landmark case on this issue in the common law world. It is rooted in equity and finds its origins in what is known as the equitable bill of discovery.
[11] In this Court, a plaintiff who seeks a Norwich order may rely on rule 238 of the Federal Court Rules, SOR/98-106, which provides for the examination on discovery of non-parties, or they may seek an equitable bill of discovery. In BMG Canada Inc v John Doe, 2005 FCA 193 at paragraph 30, [2005] 4 FCR 81 [BMG], the Federal Court of Appeal noted that the test would be the same in either case.
[12] Adopting language from BMG, the Supreme Court of Canada recently summarized the factors usually taken into consideration for granting a Norwich order in Rogers Communications Inc v Voltage Pictures, LLC, 2018 SCC 38 at paragraph 18, [2018] 2 SCR 643 [Rogers]:
(a) [a bona fide claim] against the unknown alleged wrongdoer;
(b) the person from whom discovery is sought must be in some way involved in the matter under dispute, he must be more than an innocent bystander;
(c) the person from whom discovery is sought must be the only practical source of information available to the applicants;
(d) the person from whom discovery is sought must be reasonably compensated for his expenses arising out of compliance with the discovery order in addition to his legal costs;
(e) the public interests in favour of disclosure must outweigh the legitimate privacy concerns. [Emphasis omitted]
[13] Two elements of this test need to be further elucidated.
[14] First, to obtain a Norwich order, a plaintiff need not show that the claim is likely to succeed: BMG, at paragraphs 32–34; 1654776 Ontario Limited v Stewart, 2013 ONCA 184 at paragraphs 49–50 [Stewart]. Some evidence is typically required to satisfy the Court that there is a legitimate basis for the proposed claim. However, plaintiffs are not required to negate potential defences at this stage, for example allegations of invalidity in patent cases: Glaxo Wellcome PLC v Minister of National Revenue, 1998 CanLII 9071 (FCA), [1998] 4 FC 439 (CA) at 464 [Glaxo]. This relatively low threshold “is intended to ensure that actions for a bill of discovery are not brought frivolously or without any justification:” Glaxo at 461. The contrast between this threshold and the higher bar of a likelihood of success is often illustrated by the Latin expressions bona fide and prima facie.
[15] To suggest that no evidence is needed, Seismotech relies on a quote from BMG, at paragraph 34, where the Court states:
It is sufficient if [the plaintiffs] show a bona fide claim, i.e. that they really do intend to bring an action for infringement of copyright based upon the information they obtain, and that there is no other improper purpose for seeking the identity of these persons.
[16] This is a misreading of BMG. The Court denied a Norwich order in that case precisely because the evidence was lacking. In addition, Seismotech relied on a number of British cases, including Stanford Asset Holdings Ltd v AfrAsia Bank Ltd, [2023] UKPC 35 [Stanford Asset Holdings]. In that case, at paragraph 36, the Privy Council stated that a “good arguable case” was needed to issue a Norwich order. This shows that the mere assertion of a cause of action, without any factual foundation, is insufficient.
[17] The second issue pertains to the last criterion of the test. In BMG and Rogers, it is framed as a balance between the public interest in favour of disclosure and privacy concerns. This is because the main ground for opposing the motion in BMG was the privacy rights of Internet users. However, the fifth prong of the test is not limited to privacy concerns. As the Ontario Court of Appeal explained in Stewart, at paragraph 77:
The fifth Norwich factor is whether the interests of justice favour the obtaining of disclosure. This factor is broad and encompasses the interests of the applicant, the respondents, the alleged wrongdoers and the administration of justice.
[18] Indeed, this Court considers the interests of the alleged wrongdoers when it oversees the disclosure process and regulates the information that is provided to them: Voltage Pictures LLC v John Doe, 2014 FC 161, [2015] 2 FCR 540 [Voltage 2014]. The UK courts also appear to engage in a review of all the relevant circumstances, to determine whether the issuance of a Norwich order is “an appropriate and proportionate response”: Stanford Asset Holdings, at paragraph 36.
[19] Moreover, at this stage, the Court may take into account the apparent strength of the plaintiff’s case in the overall balance: Stewart, at paragraphs 59, 75 and 145.
[20] The breadth of the range of factors that may be considered is compatible with the principle that equitable remedies, such as a Norwich order, are discretionary in nature. This means that the Court is not bound by a rigid formula and can consider any relevant factor in deciding whether to issue the remedy. Discretion remains even where the power to grant relief has been codified in statute. See, for example, Strickland v Canada (Attorney General), 2015 SCC 37 at paragraphs 37–38, [2015] 2 SCR 713; Google Inc v Equustek Solutions Inc, 2017 SCC 34 at paragraph 25, [2017] 1 SCR 824.
B. Application to the Facts
[21] Seismotech’s motion for a Norwich order fails for two reasons. First, it has not shown a bona fide claim. Second, it would not be in the public interest to allow the action to proceed in a manner that will effectively deprive defendants of access to justice and any meaningful manner of defending the action. In my view, each of these two grounds, standing alone, is sufficient to deny relief. It follows that I need not consider the other parts of the test for issuing a Norwich order. Neither do I need to address the jurisdictional issues flowing from Seismotech’s attempt to bring a lawsuit in Canada against consumers in the United States.
(1) Lack of a Bona Fide Claim
[23] The only allegations pertaining to infringement in each amended statement of claim are the following:
[translation]
Each of the defendants employed methods, and in doing so reaped the benefits of the monopoly that was conferred upon the Plaintiffs through the Patents, by using the Products described in Schedule A which are manufactured and/or designed by the following companies located in Canada: [the manufacturers are listed]
The Defendants employed methods (below) by using the Products listed above and the methods employed by the Defendants contain all the elements of, and therefore infringe: [the asserted claims of the four patents are listed].
[24] In his affidavit in support of the present motions, Seismotech’s owner, Mr. Baraty, does not provide any particulars of the allegations of infringement. He merely tries to link the alleged infringement to the use of the apps downloaded from the App Store. He states:
Based on my understanding of my Patents and the smart thermostat devices listed in Schedule A of the Statement of Claim, I believe that use of the mobile applications listed in Schedule A of the Notice of Motion are covered by the claims in the Patents. I also believe that the mobile applications would be used to operate features of those smart thermostat devices that would be covered by the claims in the Patents.
[25] In cross-examination, Mr. Baraty was asked to explain the basis for this belief. Counsel for Seismotech objected to the question, alleging that it was not relevant. I am of the view that the question was indeed relevant and that the refusal to answer gives rise to the adverse inference that there is no factual basis for this assertion beyond Mr. Baraty’s subjective belief.
[26] Moreover, Mr. Baraty’s affidavit attaches information downloaded from the Internet regarding the intelligent thermostat manufacturers listed in the statements of claim. This information shows that these manufacturers offer apps on Apple’s App Store that, broadly speaking, allow users to control their heating systems remotely. Some of the advertisements contain promises of energy savings. There is no indication in the affidavit that Mr. Baraty, or anyone else on behalf of Seismotech, obtained or examined these devices or performed any analysis beyond a summary Internet search.
[27] I also note that Seismotech had been aware of Apple’s contention that there is no bona fide claim for at least three months before the hearing of this motion. Its only reaction has been to amend the statement of claim to narrow the asserted claims to those that it describes as “method claims.” It has not provided any additional basis for its allegations of infringement. Rather, it resisted attempts to obtain more clarity in this regard. This is simply not the behaviour of someone who has a bona fide claim.
[28] In my view, this evidence is wholly insufficient to establish a bona fide claim justifying the issuance of a Norwich order.
[29] A useful way of looking at the matter is to ask whether the statement of claim, together with Mr. Baraty’s evidence, would withstand a motion to strike. The test for striking out a claim does not have the exact same purpose as the requirement for a bona fide claim in the test for a Norwich order. Nevertheless, it is difficult to contemplate the issuance of a Norwich order where the statement of claim is so deficient that it is liable to be struck.
[30] A claim will be struck “if it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action” or, in other words, if “the claim has no reasonable prospect of success”: R v Imperial Tobacco Canada Ltd, 2011 SCC 42 at paragraph 17, [2011] 3 SCR 45. According to rule 174 of the Federal Courts Rules, a statement of claim must contain “a concise statement of the material facts.” As the Federal Court of Appeal noted in Mancuso v Canada (National Health and Welfare), 2015 FCA 227 at paragraph 17:
The proper pleading of a statement of claim is necessary for a defendant to prepare a statement of defence. Material facts frame the discovery process and allow counsel to advise their clients, to prepare their case and to map a trial strategy. Importantly, the pleadings establish the parameters of relevancy of evidence at discovery and trial.
[31] In actions for patent infringement, the statement of claim must allege “(a) facts by virtue of which the law recognizes a defined right as belonging to the plaintiff, and (b) facts that constitute an encroachment by the defendant on that defined right of the plaintiff”: Dow Chemical Co v Kayson Plastics & Chemicals Ltd, [1967] 1 ExCR 71 at 80–81 [Dow Chemical]. Here, the difficulty lies with the latter component.
[32] In Mostar Directional Technologies Inc v Drill-Tech Corp, 2017 FC 575 at paragraph 25, my colleague Justice Mandy Aylen stated that
A defendant is entitled to understand clearly and precisely the exact nature of the invention, as well as . . . the precise manner in which, according to the plaintiff, the defendant has infringed the claims of the patent . . .
[33] In that case, the plaintiff alleged that it was sufficient to identify the name or model number of the accused devices and to identify the patent claims that were allegedly infringed. At paragraph 33 of her decision, Justice Aylen found that this was entirely insufficient:
I reject the Plaintiff’s assertion that the identification of the Defendants’ model names and the enumeration of the claim numbers comprising the Asserted Claims are sufficient to enable the Defendants to know how they have allegedly infringed the Asserted Claims. In doing so, I note that the Plaintiff has failed to provide the Court with any case law that has recognized such a level of material facts as being sufficient to support a claim for patent infringement.
[34] The statement of claim in the present case suffers from the same defects. It merely names infringing devices and asserts, without any explanation, that these devices infringe certain patent claims, or that the use of these devices by the defendants infringes those claims. The defendants are left to guess how the claims are construed and which of the devices’ components infringe them. The words of President Jackett of the Exchequer Court in Dow Chemical, at 75, are apposite:
If, however, the plaintiff has no ground for asserting that the defendant had done any particular act that, according to him, constituted an infringement of his rights, I should have thought that he has no basis for institution of proceedings for such an infringement. If the plaintiff does not know what the claim is, “he has no right to make a statement of claim at all”. A bare assertion that the defendant has infringed the plaintiff’s rights is not an allegation of facts constituting a cause of action and a statement of claim in which that is the only assertion of infringement could be struck out as being an abuse of the process of the Court. [emphasis in original]
[35] Moreover, the evidence put forward in support of the motion does very little to remedy the deficiencies of the statement of claim. The only evidence concerning these devices consists of Internet research performed by counsel and Mr. Baraty’s unsupported belief. As previously mentioned, there is no indication that Seismotech obtained these devices, examined them or sought to understand how they work. Given the evidentiary record before me, I find the claim to be purely speculative. Hence, it can hardly be bona fide.
[36] It is useful to compare the evidence in this case to the evidence submitted in support of motions for Norwich orders in copyright infringement cases, such as BMG, Voltage 2014 or ME2 Productions, Inc v Doe, 2019 FC 214. Typically, the plaintiff provides a forensic investigation report showing that a person using a certain IP address downloaded a file containing music or a movie, in which the plaintiff holds the copyright. In such a case, the report provides a plausible basis for assuming that there was a copyright infringement, as the very act of unlawfully downloading the copyrighted work is the infringing act. The investigator is able to report that the work downloaded by the user and the copyrighted work are the same. In contrast, the mere fact that consumers downloaded the apps in this case does not give any indication that the apps, the devices or their use by the consumers infringe Seismotech’s patents.
[37] Seismotech seeks to distinguish these cases by saying that expert evidence is needed to tell the Internet service provider which IP addresses are involved in the illegal downloading of copyrighted works. Apple, in contrast, readily knows which App Store users have downloaded apps made by the intelligent thermostat manufacturers named in Seismotech’s statement of claim. In my view, however, the evidence tendered in the copyright cases is not simply meant to identify the potential defendants. It also provides the Court with the assurance that the claim is bona fide, in the sense that there is a plausible factual basis for the allegation of infringement. As explained above, this evidence is entirely lacking in this case.
[38] To summarize, Seismotech has not shown that it has a bona fide claim that the proposed defendants have infringed its patents. Its assertions of infringement are merely speculative. This is sufficient to dismiss Seismotech’s motion for a Norwich order. If there is no bona fide claim to begin with, the issuance of a Norwich order cannot be justified by the other four factors mentioned in BMG.
[39] I would simply add that I reach this conclusion without any need to consider the defences that the defendants might raise, in particular with respect to the validity of Seismotech’s patents.
(2) Public Interest
[41] It is useful to explain the public interest considerations that may favour the disclosure of information pursuant to a Norwich order. These considerations can be broadly linked to access to justice. As the Ontario Court of Appeal wrote in Stewart, at paragraph 58, Norwich orders aim at “facilitat[ing] access to justice by victims of wrongdoers whose identity is not known.” More specifically, they favour the correct disposal of litigation by revealing the defendant’s identity or other information needed to establish the rights of the parties. Simply put, a Norwich order facilitates the search for the truth.
[42] This, however, works both ways. Access to justice is important not only for plaintiffs, but also for defendants. Civil litigation is an adversarial process. Truth is expected to emerge from the process because assertions made by one party are subject to challenge by the other. For this to happen, both parties must have a genuine opportunity to put their cases forward. There is a serious risk that a matter will not be correctly adjudicated if the defendant is deprived of access to justice or is ill equipped to assert available defences.
[43] Concerns for the defendants’ access to justice were front and centre when the Court set the terms of Norwich orders in cases where the defendants were individuals or consumers. For example, in Voltage 2014, this Court regulated the manner in which the plaintiff was to communicate with potential defendants.
[44] Special considerations arise when a party proposes bringing an action in patent infringement against a large number of individual consumers, each having a relatively modest amount at stake. Patent infringement cases are inherently complex. Patents are intended to be read by a person of skill in the art, not by persons who lack technical skills, such as judges and lawyers and, a fortiori, individual consumers. For this reason, prosecuting or defending an action in patent infringement almost always requires the presence of expert witnesses. In a large proportion of such cases, the validity of the patent is challenged on a number of grounds, which reinforces the need for expert evidence. The quantification of damages also often raises complex issues. For all these reasons, patent litigation is costly. Costs awards made by this Court provide a glimpse of the magnitude of the financial resources needed to defend such an action, which are often measured in millions of dollars: see, for example, Nova Chemicals Corporation v Dow Chemical Company, 2017 FCA 25; Apotex Inc v Shire LLC, 2021 FCA 54; Seedlings Life Science Ventures, LLC v Pfizer Canada ULC, 2020 FC 505; Bauer Hockey Ltd v Sport Maska Inc (CCM Hockey), 2020 FC 862.
[45] The nature of the technology at stake in this case compounds the difficulty of defending the claim. Very broadly, Seismotech’s patents involve the use of information technology to provide sophisticated manners of controlling devices such as heaters, gas fireplaces and the like. End-users of intelligent thermostats cannot be expected to read the patents at issue and to construe their claims. Moreover, they do not have access to the inner workings of the device they own or the app they downloaded. Without the assistance of the manufacturer, it would require considerable effort and expertise to disassemble the device and its code to ascertain whether it infringes the claims of Seismotech’s patents. This is unlike simpler mechanical inventions that a layperson may more easily understand: see, for example, Fromfroid SA v 1048547 Ontario Inc, 2023 FC 925.
[46] It is obvious that meaningfully defending Seismotech’s action is entirely out of reach for the individual consumer. Even accepting Seismotech’s theory that it is entitled to recover each consumer’s utility bill savings, the amount at stake for each defendant is unlikely to exceed a few thousand dollars. The Court is not aware of any realistic manner of providing individual consumers with adequate legal representation in the defence of such an action that would be proportionate to their own potential liability. Seismotech explicitly declined to attempt to certify this action as a reverse class action. Seismotech’s suggestion that defendants could pool their resources to defend the action appears out of touch with reality, given the number of individual consumers involved and the amount at stake for each of them.
[47] Given the practical impossibility of defending the action, it is foreseeable that many defendants will feel compelled to accept an offer to settle regardless of the merits of the case. It is also foreseeable that many others will simply not respond and that Seismotech will bring a motion for default judgment against them. In this regard, Seismotech argues that the rules regarding default judgment provide sufficient safeguards and cites Voltage Holdings, LLC v Doe #1, 2023 FCA 194 as an example. It is true that on a motion for default judgment, the plaintiff must prove all the elements of its claim on a balance of probabilities. It is not the role of the Court, however, to raise defences that the absent defendant could have raised: Trimble Solutions Corporation v Quantum Dynamics Inc, 2021 FC 63 at paragraphs 35–37. Thus, the Court could conceivably grant default judgment without any discussion of the validity of the patents nor any challenge to the plaintiff’s proposed construction of the claims or theory of infringement. I have great concerns that such a situation will not be conducive to a correct disposal of the matter. Moreover, a default judgment obtained under these conditions could be used to pressure other defendants into accepting a settlement.
[48] The complexity of mounting a defence sets this case apart from copyright infringement cases in which a Norwich order was issued to identify a large number of individual defendants. In those cases, there is rarely any debate about the plaintiff’s copyright over the musical or cinematographic work that was copied or downloaded by the defendants. It appears that the defence is usually that the owner of the IP address is not the person who illegally copied the work. It stands to reason that the factual and legal complexity of such a defence bears no relationship to a patent infringement action.
[49] Seismotech also relied upon Wobben Properties GmbH v Siemens Public Ltd Co, [2014] EWHC 3173 (Pat), to argue that a Norwich order can properly be used to reveal the identity of the end-users of patented technology. It is obvious, however, that the proposed defendants in that case were large businesses that, one can assume, had the resources to defend a patent infringement action involving complex technology. If anything, this case shows that the character of the parties and the manner in which the proposed litigation is likely to unfold are relevant factors for deciding whether a Norwich order should be issued.
[50] In its reply submissions at the hearing of this motion, Seismotech suggested that manufacturers of intelligent thermostats would likely assist individual consumers in defending the action. This is doubly ironic, firstly because Seismotech structured its proceedings in a manner that does not afford the manufacturers any direct opportunity to defend the claim, and secondly because in response to Ecobee’s motion to be joined as a party, Seismotech argued that manufacturers had no obligations toward end-users. It is disingenuous for Seismotech to suggest the manufacturers bankroll the individual consumers’ access to justice, when it strenuously opposed the intervention of one of them, Ecobee, and appealed my order adding Ecobee as a party.
[51] Thus, issuing the proposed Norwich order will give rise to a situation in which the proposed defendants will be denied meaningful access to justice. It is not in the public interest to grant a Norwich order in these circumstances.
[52] I have not found it necessary to factor the apparent strength of Seismotech’s case into my assessment of the public interest. Having found earlier that Seismotech has not succeeded in satisfying the low threshold of a bona fide claim, this would only reinforce my conclusion that granting a Norwich order would run counter to public interest.
III. Disposition
[53] For these reasons, Seismotech’s motions for a Norwich order will be dismissed.
[54] Apple and Ecobee each claim their costs on an elevated basis. I agree with this request. This motion became particularly complex, largely because of the scope of Seismotech’s submissions. Moreover, Apple is not a party to the proceeding and has no interest in the outcome of the action. For these reasons, I am awarding costs in the amount of $8,000 to Apple and $4,000 to Ecobee.
6. Bifurcation Orders
It can sometimes be in the best interest of the IP holder to seek an order for a bifurcation, or splitting, of the issues at trial. If a defendant is found not liable, then there is no need to continue the trial in the assessment of damages, saving time and money not just for the parties but for the judicial system as well. This is permitted under Rule 107 of the Federal Court Rules, and in IP cases this would make the determination of liability and the determination of remedies/damages become separate issues at trial instead of being determined together as one issue. In 2011 the Federal Court also posted similar order solely for matters relating to intellectual property called the ‘model bifurcation order’.
The court will allow a bifurcation order if it satisfies the following factors from the 2003 case of Realsearch Inc. v Valone Kone Brunette Ltd listed in paragraph 10, including:
- Whether issues for the trial are relatively straightforward;
- The extent to which the issues proposed for the first trial are interwoven with those remaining for the second;
- Whether a decision at the first trial is likely to put an end to the action altogether, significantly narrow the issue for the second trial or significantly increase the likelihood of settlement;
- The extent to which the parties have already devoted resources to all of the issues;
- The timing of the motion and the possibility of delay;
- Any advantage or prejudice the parties are likely to experience; and
- Whether the motion is brought on consent or over the objection of one or more of the parties.
While there are some notable benefits to model bifurcation orders, some have rightly critiqued the issues they can sometimes create for the plaintiff’s wishing for a speedy resolution to IP infringement. Splitting up the issues might save the parties’ costs and time if the defendant is found non-liable in the first issue, but if they are found liable the plaintiff does not have to engage in a second proceeding with its own time constraints.
Exercise – When should you use a bifurcation order?
Should you request a model bifurcation order for the following situations? Yes/no, and why?
- The order may affect the ability of a party to prove or defend liability.
- It is later in the proceedings and the affidavits of documents have already been exchanged.
- You are representing the defendant and they have expressed to you they hope to publicly release as little information regarding their financial situation as possible.
- You are representing the plaintiff who is suffering irreparable harm from infringement and is hoping to have a speedy trial to stop it from damaging their business as quickly as possible. However, they expressed interest in splitting the issues because they want to make sure they don’t waste legal costs on accessing damages if the defendant is found not liable. Could they ‘have their cake and eat it too’?
D. Criminal Sanctions
In Canada there are criminal sanctions for specific actions relating to trademarks and copyright, but there are no criminal sanctions for infringement of patents in any manner.
1. International Requirements
Article 61 of the TRIPS agreement states, “[m]embers shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale.” For deterrence purposes the penalties must include monetary fines and/or imprisonment “… consistent with the level of penalties applied for crimes of a corresponding gravity.” The agreement then leaves it to the discretion of the members to decide whether criminal sanctions will be used for other forms of intellectual property infringement.
Trademark counterfeiting differs from trademark infringement under TRIPS as it requires, as Article 61 specifics, a ‘wilfulness’ to deceive or confuse the consumer with an identical or fairly indistinguishable trademark. For basic trademark infringement in Canada, a wilfulness to infringe a trademark is not a requirement for a plaintiff to collect the profits made by an infringer as an equitable remedy.
2. Trademark Criminal Sanctions
Sections 406-410 of the Criminal Code reference criminal offences of trademark forgery, passing off, and other more specific offences. s.406 lays out the preconditions for the forgery of a trademark, which includes (a) making or reproducing, without the consent of the proprietor of a trademark, a trademark or a mark so nearly resembling it as to be calculated to deceive or (b) falsifying, in any manner, a genuine trademark. To do either of these actions would make you liable for an offence under s. 407.
S. 408 references the common law tort of passing off. It seeks to target persons who are attempting to convey a false sense of origin, likely to trick the consumer into thinking their product is of equal quality to the trademarked product they are attempting to pass off. The provisions states that a person commits an offence who, with intent to deceive or defraud the public or any person, whether ascertained or not:
- (a) passes off other wares or services as and for those ordered or required; or
- (b) makes use, in association with wares or services, of any description that is false in a material respect regarding
- (i) the kind, quality, quantity or composition;
- (ii) the geographical origin; or
- (iii) the mode of the manufacture, production or performance of those wares or services.
The remaining provisions in the Criminal Code relating to trademarks reference the forbiddance of instruments used to forge trademarks, defacing, concealing or removing a trademark without consent, and manufacturing bottles of liquid using a trademark for the purposes of sale or traffic.
3. Copyright Criminal Sanctions
Under the TRIPS act, copyright piracy differs from copyright infringement in that it is for commercial purposes and requires the infringer to make an ‘illicit copy’. In Canada this was implemented into the Copyright Act under s.42(1) stating every person is guilty of a criminal offence who knowingly:
- (a) makes for sale or rental an infringing copy of a work or other subject-matter in which copyright subsists
- (b) sells or rents out, or by way of trade exposes or offers for sale or rental, an infringing copy of a work or other subject-matter in which copyright subsists;
- (c) distributes infringing copies of a work or other subject-matter in which copyright subsists, either for the purpose of trade or to such an extent as to affect prejudicially the owner of the copyright;
- (d) by way of trade exhibits in public an infringing copy of a work or other subject-matter in which copyright subsists;
- (e) possesses, for sale, rental, distribution for the purpose of trade or exhibition in public by way of trade, an infringing copy of a work or other subject-matter in which copyright subsists;
- (f) imports, for sale or rental, into Canada any infringing copy of a work or other subject-matter in which copyright subsists; or
- (g) exports or attempts to export, for sale or rental, an infringing copy of a work or other subject-matter in which copyright subsists.
s.42(2) lists the possession and performance offences and punishment for every person who knowingly, “…makes or possesses any plate for the purpose of making infringing copies of any work in which copyright subsists [or] for private profit causes to be performed in public, without the consent of the owner of the copyright, any work in which copyright subsists is guilty of an offence and liable.”
Under these provisions, the accused is liable either on summary conviction to a fine not exceeding twenty-five thousand dollars or to imprisonment for a term not exceeding six months or to both. Or on conviction on indictment, to a fine not exceeding one million dollars or to imprisonment for a term not exceeding five years, or to both. The final provisions under s.42(3) states that the court has full discretion to determine the infringing copies or plates for the purpose of making infringing copies be destroyed or delivered up to the copyright owner or dealt with in other methods as the court sees fit.
The 2014 case of R v Strowbridge saw a conviction for both the criminal sanctions within the Copyright Act and within the Criminal Code for trademark infringement. The accused was selling counterfeit brand-name car products from a van when $500 worth of product was seized. He plead guilty and was sentenced to 15 months in prison, six of which were for copyright and trademark infringement while the remaining nine were for fraud.
E. Border Measures
Canada has developed measures to ensure people and businesses can protect their IP rights both inside and at the Canadian borders. In January 2015, Canada adopted a new border enforcement system under the Combating Counterfeit Products Act that amended the copyright and trademark acts. It empowers officials of the Canada Border Services Agency (CBSA) to detain suspected counterfeit or pirated products as per s. 101 of the Customs Act. CBSA officials work with the RCMP at the border to prevent infringing importation.S. 44.04(1) of the Copyright Act lays out the prohibitions for import and exportation of copyrighted works. It states that copies of a work or other subject-matter in which copyright subsists shall not be imported or exported if, “(a) they were made without the consent of the owner of the copyright in the country where they were made; and (b) they infringe copyright or, if they were not made in Canada, they would infringe copyright had they been made in Canada by the person who made them.” An exception to this provision under s.44.01(2) states it does not apply to “…copies that are imported or exported by an individual in their possession or baggage if the circumstances, including the number of copies, indicate that the copies are intended only for their personal use.”
S. 51.03(1) of the Trademarks Act also sets prohibitions regarding the import and exportation of goods bearing protected trademarks stating, “[g]oods shall not be imported or exported if the goods or their labels or packaging bear — without the consent of the owner of a registered trademark for such goods — a trademark that is identical to, or that cannot be distinguished in its essential aspects from, that registered trademark.”
Exceptions for this provision under s.51.03(2) state it does not apply if (a) the trademark used had the consent of the owner of the trademark in the country where it was applied. (b) the sale or distribution of the trademarked goods in association with the labels or packaging would not be contrary to this Act, or (c) the individual who is importing or exporting the trademarked good(s) indicate that they are only intended for their personal use.
Under this section, there are also provisions that specify it is a violation of the act to import or export a wine, spirit, food, or agricultural product that bears a geographical indication if that product is not from the territory indicated by the indication or is from that territory but was not produced or manufactured in accordance with the law applicable to that territory.
S. 51.06 then empowers a CBSA officer who has reasonable grounds to suspect that the importation or exportation of the goods is prohibited under s.51.03 to provide the trademark owner with a sample of the goods and with information about the goods that could assist them in pursuing a remedy under the Trademarks Act.
There are no express provisions under the Patent Act (or the Industrial Design Act) that empower CBSA officials to act on allegations of infringement during the process of import and exportation. However, a trademark owner can still obtain a final order declaring unlawful importations by specific defendants to prevent them from doing so.
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