2008 BCSC 799 Louis Vuitton Malletier S.A. v. 486353 B.C. Ltd.

Before: The Honourable Madam Justice Boyd

Reasons for Judgment

In Chambers

Counsel for the Plaintiffs:	M.M. Manson, K.F. MacDonald, J.H. Gifford
Appearing on her own behalf (on June 5, 2008):	J. Lee
No one appearing on behalf of the other Defendants:
Date and Place of Trial/Hearing:	June 5-6, 2008
	Vancouver, B.C.

1.0 Introduction:

[1] The plaintiffs seek judgment pursuant to Rule 18A for declarations that each of the defendants have infringed the plaintiffs’ rights to the Louis Vuitton trademarks and the copyright to certain Copyrighted Works. Further they seek damages arising from certain of the defendants’ breach of a Settlement Agreement executed in March 2006. By virtue of all these breaches of contract and the infringement of their trademarks and copyrights, the plaintiffs seek general as well as punitive and exemplary damages.

[2] I should noted here that while each of the parties other than the W. Lee Corporation have participated in this action, in the sense that they have been served with the pleadings, have filed Statements of Defence, and in some cases have attended on discovery, none of the defendants other than Ms. Jacqueline Lee (“J. Lee”) attended at the hearing of this summary trial.

[3] While I rejected Ms. Lee’s application for a general adjournment to retain counsel (since she had earlier retained counsel and had deliberately elected to act on her own behalf), I agreed to adjourn that part of the hearing which would address the issue of the damages, if any, which ought to be awarded against her. She remained in the Courtroom for the first half day to hear part of the submissions regarding liability but did not attend further. The continuation of the hearing regarding damages to be awarded against her has been adjourned generally, with a date to be fixed sometime in the fall of 2008.

2.0 Background Facts:

[4] The plaintiff, Louis Vuitton Malletier S.A. (“Louis Vuitton”), is the owner of a number of trademarks (the Louis Vuitton or LV Trade-marks) related to fashion accessories, which marks have been registered in Canada since 1984 and have been used in connection with its fashion accessory products. Louis Vuitton also owns copyrights in Canada in association with multi-coloured monogram prints used on various products (“the Copyrighted Works”). Louis Vuitton is the only authorized manufacturer and distributor of genuine Louis Vuitton products and exclusively sells its products through its Canadian subsidiary, Louis Vuitton Canada, Inc. (“Louis Vuitton Canada”), which is the second plaintiff in this action.

[5] Louis Vuitton maintains strict quality control standards for all its products. All genuine Louis Vuitton products are inspected and approved by Louis Vuitton prior to distribution and sale and are sold only through Louis Vuitton stores and Louis Vuitton boutiques within department stores such as Holt Renfrew, or over the internet at the Louis Vuitton authorized web-site www.eluxury.com and www.louisvuitton.com. There are only nine Louis Vuitton stores or boutiques in Canada.

[6] Ms. Wynnie Lee (“W. Lee”) is the mother of Ms. Francisca Hung-Yee Ngan (“Ngan”). The defendants W. Lee and J. Lee are sisters. Ms. Lisa Le Dung Tran (“Tran”) is a former employee of W. Lee and the W. Lee Corporation. W. Lee is the sole officer and former sole director of the W. Lee Corporation. J. Lee is the sole director and officer of the J. Lee Corporation.

[7] From time to time, the defendants W. Lee, W. Lee Corporation, J. Lee Corporation, Tran and Ngan have operated a business under the tradename “Wynnie Lee”, with stores at the Metrotown Mall in Burnaby, B.C., (the “Wynnie Lee Metrotown store”), the Lansdowne Mall in Richmond, B.C. (the “Wynnie Lee Lansdowne store”), and the Surrey Place Mall in Surrey, B.C. (“the Wynnie Lee Surrey store”).

[8] In addition the defendants W. Lee and Ngan have operated a business together under the trade-name “Francisca’s Fashion Club” at the Crystal Mall in Burnaby, B.C.

[9] The defendant J. Lee has operated a business under the trade-name “Coloro” with stores located at the Crystal Mall in Burnaby, B.C. (“Coloro Crystal store”) as well as the Lansdowne Mall in Richmond, B.C. (the “Coloro Lansdowne store”).

[10] As a result of an intensive investigation, the plaintiffs learned that at least as early as 2004, the defendants W. Lee, J. Lee Corporation, Tran and Ngan were involved in the Wynnie Lee Metrotown store. The store had initially operated from one location but moved to another location within the same mall in 2004 or 2005. As of at least August 2004, J. Lee owned the business license for this location.

[11] The plaintiff also determined that the defendants W. Lee, W. Lee Corporation and Ngan were involved with the Wynnie Lee Lansdowne store. The W. Lee Corporation owned the business license for that location.

[12] On August 12, 2004, the plaintiffs executed an Anton Pillar order (the “Anton Pillar Order”) at the Wynnie Lee Metrotown store and the Wynnie Lee Lansdowne store, where hundreds of articles bearing the Louis Vuitton Trade-marks were seized.

[13] On the date of the execution of the order, Ngan, who is the daughter of W. Lee, was present at the Wynnie Lee Lansdowne store and in apparent control of the store. She telephoned Tran (who was then at the Wynnie Lee Metrotown store and in apparent control of that store) and told her to cooperate with the execution of the Anton Pillar Order at that location. In accordance with the terms of the Anton Pillar Order hundreds of articles bearing the Louis Vuitton Trade-marks were seized from the Metrotown and Lansdowne stores.

[14] On March 16, 2005, the plaintiffs obtained a Federal Court judgment against the defendants W. Lee Corporation, J. Lee Corporation, and Ngan. The Federal Court declared that the defendants W. Lee Corporation, J. Lee Corporation, and Ngan had infringed trade-marks of the plaintiff Louis Vuitton and ordered that they were permanently restrained from offering for sale, displaying, advertising, selling, manufacturing, distributing, or otherwise dealing in unauthorized or counterfeit Louis Vuitton merchandise. The Court awarded $6,000 in damages against the defendants W. Lee Corporation and Ngan, $6,000 in damages against the defendant J. Lee Corporation, and $750 in costs against the defendants.

[15] W. Lee and Ngan have admitted on examination for discovery that following the execution of the Anton Pillar Order on August 12, 2004, they were generally aware of the intellectual property rights of the plaintiffs.

[16] Following the execution of the Anton Pillar Order and service of the Federal Court judgment, the plaintiffs continued their investigation and determined, following a series of purchases of goods by private investigators and articled students of the plaintiff’s solicitors’ firm, that the defendants were continuing their infringement activities at the three different store locations.

[17] On January 23, 2006, numerous items bearing one or more of the Louis Vuitton Trade-marks and/or counterfeit copies of one of the Copyrighted Works, were purchased at the Wynnie Lee stores in Metrotown and Surrey.

[18] At the time of the January 2006 purchase, the W. Lee Corporation, and its sole director and officer, W. Lee, operated and controlled the Wynnie Lee Metrotown store. On discovery, W. Lee admitted that she controlled the store and that she personally imported the merchandise sold there.

[19] From the time the store opened in June 2005 and at the time of the January 2006 purchase, the defendant Tran held the business license for the Wynnie Lee Surrey Store and operated that store. While Tran operated the store, W. Lee also personally worked at and sold merchandise at this store. On discovery, W. Lee admitted she supplied the Surrey store with substantially the same merchandise which was sold at the Lansdowne store, including handbags.

[20] On February 21, 2006, as part of the settlement negotiations between the parties, W. Lee delivered up to the plaintiffs’ solicitors, Smart & Biggar, 25 infringing articles.

[21] In March 2006, the defendant W. Lee, on behalf of herself and the W. Lee Corporation, entered into a settlement agreement (the “Settlement Agreement”) with the plaintiffs. In substance, the terms of the Settlement Agreement were as follows:

(1) The defendants W. Lee Corporation and W. Lee acknowledged that Louis Vuitton is the exclusive owner of the Louis Vuitton trade-marks.

(2) The defendants W. Lee Corporation and W. Lee agreed to cease and desist from offering for sale, and selling any counterfeit Louis Vuitton Merchandise.

(3) The defendants W. Lee Corporation and W. Lee represented and warranted that neither had any remaining inventory of counterfeit Louis Vuitton Merchandise in their possession or control.

(4) The defendants W. Lee Corporation and W. Lee, together with their officers, agents, servants, representatives, employees, parent, subsidiary or affiliated companies, agreed to contractually enjoin and be permanently restrained from:

(a) directly or indirectly manufacturing, importing, exporting, distributing, offering for sale, selling, advertising or promoting any counterfeit Louis Vuitton Merchandise or goods which are likely to cause confusion, mistake or to deceive as to the origin, sponsorship or approval with the Louis Vuitton Trademarks or any Louis Vuitton goods; and

(b) directly or indirectly causing the dilution, blurring or tarnishment of the Louis Vuitton Trademarks or using any other name or trademark likely to cause dilution, blurring or tarnishment of any of the Louis Vuitton Trademarks; and

(c) directly or indirectly intentionally copying or appropriating any valid intellectual property rights of Louis Vuitton throughout the world, including, but not limited to, trademarks, copyrights, design patents, trade dress or shoes or handbags or accessory designs.

(5) Wynnie Lee undertook to pay to Louis Vuitton $6000 (the “Settlement Sum”).

(6) Upon receipt of an executed copy of the Settlement Agreement, together with the Settlement Sum, Louis Vuitton agreed to forbear in commencing an action against Wynnie Lee.

(7) In the event the Settlement Sum was not paid and in the further event Wynnie Lee breached any of the non-monetary terms of the settlement agreement, then in addition to any claim for damages arising therefrom, Louis Vuitton is at liberty to fully realize upon the monetary provisions of the Judgment, less any payments received to date.

[22] While the $6,000 “Settlement Sum” referred to in the Settlement Agreement has been paid, the remaining monetary award in the Federal Court Judgment, in the amount of $6,750, has not been paid to the plaintiffs.

[23] The plaintiffs continued their investigations and by virtue of certain observations and/or targeted purchases made at the various stores in June 2006, August 2006, September 2007, October 2007 and January 2008, determined that the defendants were continuing their infringement activities. I will briefly summarize the findings.

2.1 Continued sales activities through Francisca’s Fashion Club Store, Crystal Mall:

June 27, 2006: Plaintiffs’ agent’s purchase of handbag at Francisca’s Fashion Club at Crystal Mall, Burnaby, B.C. Handbag bore several LV trademarks and counterfeit copy of one of the Copyrighted works. Ngan’s business card is in handbag, describing her as Sale Manager of Wynnie Lee Fashions. The sales clerk on duty advised the investigator there was a 50% off sale because the store was closing and that the “other stores” were at Lansdowne Mall and the Surrey Central City Mall.

[24] I should note here W. Lee held the business license for the store. On discovery she has admitted that she controlled this store and supplied the merchandise. On discovery the defendant Ngan admitted that she also had control over the inventory of merchandise offered for sale at Francisca’s Fashion Club. While she could not be sure of the date she left the store’s employ, Ngan insisted that she had left before this purchase. I am satisfied that in all likelihood she was still directly involved particularly given the business card describing Ngan as “Sale Manager” (sic) for “Wynnie Lee Fashions” which was located inside the counterfeit item purchased. In any case this store did close later in June 2006.

2.2 Continued activities through the Wynnie Lee Lansdowne Location:

August 19, 2006: Plaintiff’s agent observed a number of purses bearing the trade-mark LV, upside-down, along with other items bearing the Louis Vuitton Trade-marks and/or counterfeit copies of the Copyrighted Works. Purchase of a bag bearing some of the Louis Vuitton Trade-marks. The clerk identified herself as “Francisca” (Ngan’s first name), and stated that she worked every day except Tuesdays. The clerk refused to accept payment by debit card and refused to provide a receipt because it was a “sensitive” time.

December 26, 2006: A scarf and a wallet, each bearing some of the Louis Vuitton Trade-marks, were purchased at the Wynnie Lee Lansdowne store.

[25] Prior to April 2006 the W. Lee Corporation, and its sole director and officer W. Lee, as well as the defendant Ngan controlled this store. From June 2000 until April 30, 2006, W. Lee was the sole director of the W. Lee Corporation. On April 30, 2006 the defendant, Bi Yan Chen (“Chen”) became the sole director of the company, in W. Lee’s stead, although W. Lee remained the sole officer of the company.

[26] Nevertheless, at the time of the August 2006 and December 2006 purchases, although W. Lee was no longer the named director of the W. Lee Corporation, the W. Lee Corporation continued to hold the business license for this store.

[27] As of November 8, 2007, the business license was transferred to a new company, 0735937 B.C. Ltd. W. Lee is the sole named officer of 0735937 B.C. Ltd.

[28] In my view, despite W. Lee’s efforts to distance herself from the Lansdowne store, by way of company transfers, business license transfers and resignation of directorships, it is clear that W. Lee has continued to be personally involved in the Wynnie Lee Lansdowne store.

[29] Further, based on the business card which was found inside the purse purchased on June 27, 2006 at Francisca’s Fashion Club, which identified Francisca Ngan as “Sale Manager” (sic) for “Wynnie Lee Fashions”, and the clerk’s own self identification on August 2006 as “Francisca” (who stated that she worked at the Wynnie Lee Lansdowne Location every day except Tuesday), I am satisfied that Ngan was personally involved in operating the Lansdowne store in August and December 2006.

2.3 Continued sales activities through the Wynnie Lee Surrey Location:

August 19, 2006: A paralegal observed a few small purses and wallets bearing some of the Louis Vuitton Trade-marks and/or counterfeit copies of the Copyrighted Works. He purchased a key chain wallet bearing some of the Louis Vuitton Trade-marks. The sales clerk told the paralegal that the articles were fakes and good imitations, and that Louis Vuitton products could only be purchased for cash.

September 22, 2007: A law student hired to conduct investigations observed two handbags and five belts, each bearing one or more of the Louis Vuitton Trade-marks and/or counterfeit copies of the Copyrighted Works. The student also observed W. Lee working in the Wynnie Lee Surrey store.

September 29, 2007, an investigator purchased a handbag and a male wallet, each bearing one or more of the Louis Vuitton Trade-marks and/or counterfeit copies of the Copyrighted Works. The investigator was also advised that the store sold a belt bearing one of the Louis Vuitton Trade-marks.

October 7, 2007: The law student again attended at the Wynnie Lee Surrey store and observed four belts, two shoulder bags, and one white purse, each bearing one or more of the Louis Vuitton Trade-marks. The store clerk attempted to remove the white purse while the student was present. However, the student asked about the white purse, and the store clerk later produced a matching handbag, also bearing one or more of the Louis Vuitton Trade-marks.

January 18, 2008: An investigator purchased a purse bearing the Louis Vuitton Trade-marks which was hidden behind the counter and brought out at the request from the investigator for “Louis Vuitton purses”.

[30] At the time of the August 2006, September 2007, October 2007 and January 2008 purchases and observations, the Wynnie Lee Surrey store was controlled and operated by the defendant Tran, in whose name the business licenses for that location were issued. However, the defendant W. Lee was also personally involved in the continued sale of counterfeit Louis Vuitton merchandise at this location.

2.4 Importation by the Defendant W. Lee:

[31] On discovery, W. Lee admitted that she imported all the counterfeit merchandise bearing the Louis Vuitton Trade-marks and/or the Copyrighted Works which, according to her testimony, was distributed through Francisca’s Fashion Club and all three Wynnie Lee Fashions stores. She admitted that she imported goods for those stores approximately three times each year.

2.5 Activities of the Defendant J. Lee:

[32] J. Lee is the sole director and sole officer of the defendant J. Lee Corporation, which was named as a defendant in the Federal Court Judgment. She was the sole director and officer of the J. Lee Corporation at the time of execution of the Anton Pillar Order at the Wynnie Lee Metrotown Location in August 2004, and had signed the lease under which that store operated. As I noted earlier, she is also W. Lee’s sister.

[33] J. Lee operates the Coloro Crystal store and the Coloro Lansdowne store. On discovery J. Lee claimed that while the business license for the Coloro Lansdowne Location was held by the J. Lee Corporation, this was only at the behest of the Lansdowne Mall management which had insisted that a corporation sign the lease. She insisted that in fact the company was not involved in any way in the operation of the businesses. In any case she testified that no one other than herself was responsible for the management of the Coloro stores.

[34] The plaintiffs’ investigations yielded the following observations and purchases:

August 18, 2006: A paralegal of Smart & Biggar attended at the Coloro Crystal store and observed three wallets, each bearing some of the Louis Vuitton Trade-marks, that were offered for sale, and purchased one of the wallets. The sales clerk admitted the article was fake and presented a binder showing a large number of additional goods, each also bearing some of the Louis Vuitton Trade-marks and/or counterfeit copies of the Copyrighted Works, that were available at the Lansdowne store. The clerk also advised that the store carried the same inventory as “Francisca”, which is the first name of the Defendant Ngan.

August 19, 2006: A paralegal of Smart & Biggar attended at the Coloro Lansdowne store where a clerk showed a large selection of small purses, each bearing some of the Louis Vuitton Trade-marks. Again a binder was presented displaying a large number of goods, each bearing some of the Louis Vuitton Trade-marks and/or counterfeit copies of the Copyrighted Works. A coin purse was purchased bearing some of the Louis Vuitton Trade-marks.

[35] On October 3, 2006, an investigator served a Cease and Desist letter on a sales clerk at the Coloro Crystal store, advising the defendant J. Lee, doing business as Coloro, that her activities infringed the intellectual property of Louis Vuitton and demanding that she cease such activities. The clerk was asked to voluntarily deliver up all inventory that bore the Louis Vuitton Trade-marks and 24 items, each bearing one or more of the Louis Vuitton Trade-marks, were delivered up.

[36] On discovery J. Lee testified that she personally imported the merchandise sold in the Coloro stores. While she alleged she imported the articles without seeing them first, she admitted she had personally seen the counterfeit items before the purchases made and before the delivery up, in response to the Cease & Desist letter in October 2006. She admitted on discovery that she imported four to six shipments in a typical year. She admitted that she knew of the plaintiff’s brand approximately 1½ years prior to her examination for discovery, that is as early as late 2005.

3.0 Default Judgment against the Defendant W. Lee Corporation:

[37] As I noted earlier, since April 30, 2006, Chen has been the sole Director of the W. Lee Corporation. Following the commencement of this action, a Demand for Discovery of Documents was served upon the corporation’s then solicitor. This demand was repeated on several occasions through various correspondence.

[38] On September 4, 2007, Chen, as the sole Director of the W. Lee Corporation, was served with an Appointment to Examine for Discovery, to be held on September 19, 2007, along with a letter which clearly outlined her obligations to attend.

[39] On October 16, 2007, the Court ordered that Chen produce a List of Documents and attend at an examination for discovery on October 18, 2007.

[40] The Court’s Order of October 16, 2007 was delivered to the address for delivery of the defendant W. Lee Corporation, and posted to the front and rear doors of Chen’s residence. Chen has never produced a List of Documents as required by the Court’s Order. She also failed to attend the Court-ordered Examination for Discovery on October 18, 2007.

[41] In all of these circumstances I am satisfied there are grounds to strike the Appearance or Statement of Defence of the Defendant W. Lee Corporation pursuant to Rule 2(2)(d) or (e), and an order will follow under Rule 18 granting default judgment against the W. Lee Corporation.

4.0 Summary Trial Judgment Against the Defendants W. Lee, Ngan, Tran, J. Lee Corporation and J. Lee:

[42] The plaintiffs have established, on a balance of probabilities, that the defendants, through their businesses operating at the three Wynnie Lee locations, Francisca’s Fashion Club, and the two Coloro locations, have, at least during the period 2004 to 2008, imported, advertised, offered for sale and/or sold counterfeit items bearing the Louis Vuitton Trade-marks, all without the authority of the plaintiffs. These activities constitute a violation of Sections 7(b), 19, 20 and 22 of the Trademarks Act.

[43] The plaintiffs have also established, on a balance of probabilities, that the defendants W. Lee, W. Lee Corporation, Ngan and Tran have imported, possessed (for the purpose of selling) and/or sold merchandise bearing at least one of the Copyrighted Works. Accordingly, those defendants are also in violation of sections 3 and 27 of the Copyright Act and have infringed the rights of Louis Vuitton in and to the Copyrighted Works.

[44] Various groupings of defendants have been involved in the activities of each of the store locations:

(a) W. Lee, W. Lee Corporation, J. Lee Corporation, Ngan were directly involved in the activities at the Wynnie Lee Metrotown Location and the Wynnie Lee Lansdowne Location;

(b) W. Lee and Tran were directly involved in the activities at the Wynnie Lee Surrey Location;

(d) the W. Lee Corporation and the J. Lee Corporation were involved in operating the Wynnie Lee Metrotown store and the Wynnie Lee Lansdowne store, at various points in time.

[45] While the personal defendants, W. Lee and Ngan may attempt to hide behind the W. Lee Corporation or the J. Lee Corporation in an effort to avoid liability for the activities carried on at those stores, such a defence is not available here. A corporation cannot be used to shield an officer or director or a principal employee, when that individual’s actions amount to a deliberate, wilful and knowing pursuit of a course of conduct which was likely to constitute infringement or at least where those actions reflect an indifference to the risk of an infringement (Mentmore Manufacturing Co. Ltd. v. National Merchandising Manufacturing Co. Inc. (1978), 40 C.P.R. (2d) 164 at 174 (F.C.A.); Visa International Service Association v. Visa Motel Corporation, [1983] B.C.J. No. 1670, 1 C.P.R. (3d) 109).

[46] The evidence establishes that W. Lee and Ngan were personally involved in the operation of both the Wynnie Lee Metrotown and Lansdowne stores. They engaged in an illegal course of conduct, namely selling counterfeit Louis Vuitton products, which is clearly outside the ordinary scope of any legitimate business which could be run by the W. Lee Corporation. Accordingly, W. Lee and Ngan are liable for the activities taking place at both stores.

[47] Further, based on her own admissions, I find that the defendant W. Lee was personally involved in the importation of the counterfeit goods into Canada, and the distribution of those counterfeit items to each of the Wynnie Lee stores and Francisca’s Fashion Club.

[48] Further, based on her admissions, I find that the defendant J. Lee was personally involved in importing counterfeit goods into Canada and offering those for sale and selling them through the Coloro Crystal and the Coloro Lansdowne store locations.

4.1 Remedies:

[49] The plaintiffs seeks declarations as to the validity and subsistence of its copyrights and trade-marks, delivery up to it of infringing material, statutory and punitive damages, an accounting of profits, a permanent injunction, interest and solicitor-client costs. I will consider each remedy in turn.

4.2 Declaration:

[50] A declaration shall issue that the copyrights and trademarks alleged in the proceeding are valid and subsisting and that the defendants have infringed those copyrights and trademarks. The Order reflecting this judgment shall contain each of the declarations set out at paragraphs 2(a) - (g) of the Notice of Motion filed April 7, 2008.

4.3 Delivery up:

[51] There shall be a delivery up of all infringing material.

4.4 Injunction:

[52] While there is no evidence that J. Lee has continued in the infringing activities since the service of the Cease & Desist letter upon her, there is still strong evidence that she, like all of the other defendants, has infringed the rights of the plaintiffs. Accordingly, there will be an order permanently restraining and enjoining all of the defendants and each of them from continuing in their infringing activities.

4.5 Damages:

[53] Section 53.2 of the Trade-marks Act provides for an award of damages or profits in relation to infringing activities. Sections 34 and 38.1 of the Copyright Act provide for an award of both damages and profits against an infringer of copyright, as well as for statutory damages, in the alternative, of no less than $500 and no more than $20,000 per infringed work.

[54] In terms of the approach to be taken in assessing damages, I adopt the passage from Fox’s Canadian law of Trade Marks and Unfair Compensation, recently adopted by Pelletier J. of the Federal Court in Ragdoll Productions (UK) Ltd. v. Jane Doe (2002), 21 C.P.R. (4th) 213:

On the question of the measure of damages it has been held that the defendant is liable for all loss actually sustained by the plaintiff that is the natural and direct consequence of the unlawful acts of the defendant, including any loss of trade actually suffered by the plaintiff, either directly from the acts complained of or properly attributable thereto, that constitute an injury to the plaintiff's reputation, business, goodwill or trade. Speculative and unproven damages must be deleted from the calculation. The court will estimate the damages on the same basis as would a jury and damages may take into contemplation injury to the plaintiff's goodwill, for the court, acting as a jury and applying ordinary business knowledge and common sense, is entitled to consider that there cannot be deceptive trading without inflicting some measure of damage on the goodwill. Difficulty in assessing damages does not relieve the court from the duty of assessing them and doing the best it can. The court is entitled to draw inferences from the actions of the parties and the probable results that they would have. If damages cannot be estimated with exactitude, the best reasonable estimate must be made. (para 40)

[55] As Pelletier J. further noted at para 45:

...once the plaintiff have proven infringement and that damages have occurred, they are entitled to the Court’s best estimate of those damages without necessarily begin limited to nominal damages.

[56] In assessing damages, the Court should also account for the defendant’s decision to continue to market its merchandise after receiving formal (and repeat) notification that the plaintiff was unwilling to tolerate further infringement (Société Pour L'Expansion Des Tissus Fins v. Marimac Inc. (1984), 78 C.P.R. (2d) 112 at 133 (Qué. S.C.)).

4.6 Damages for Trade-mark Infringement:

[57] In the past, where business records are not available to assess the wrongful profit earned by the defendants, the Federal Court has applied a scale of “nominal” damages in assessing damages. For example, in Nike Canada Ltd. v. Goldstar Design Ltd. et al. (Court File T-1951-95) (FCTD)), a 1997 decision, the Court held that the following scale would apply, depending on the circumstances: $3,000 where the defendants were operating from temporary premises such as flea markets; $6,000 where the defendants were operating from conventional retail premises; and $24,000 where the defendants were manufacturers and distributors of counterfeit goods.

[58] These damages awards of $6,000 and $24,000 were made in 1997 in an attempt to fairly approximate the plaintiff’s loss of profits resulting from trade-mark infringement where no records of actual retail sales were available to actually measure the profits earned by the defendant.

[59] More recently, in the case of a retail premises, Snider J. of the Federal Court increased the usual $6000 damage award per infringing activity for each plaintiff to $7250, by adjusting the $6000 figure for inflation (Louis Vuitton Malletier S.A. v. Lin Pi-Chu Yang, November 14, 2007, T-1236-07, FCTD), 2007 FC 1179, 62 C.P.R. (4th) 362 (“Yang”).

[60] Adopting this approach, the plaintiffs suggest that here, taking into account inflation based on the Bank of Canada statistics, $6,000 and $24,000 are equivalent to approximately $7,250 and $29,000 respectively in 2006. I agree that any award of “nominal” damages ought to be calculated on these inflated amounts and bases of $7,250 and $29,000 should be used in considering damages in relation to retail premises and manufacturers/distributors, respectively.

[61] It must be noted however that such a scale of nominal damages is usually applied in relation to the execution of an Anton Pillar order where a one time attendance and seizure of counterfeit goods takes place (Ragdoll Productions (UK) Ltd. and Oakley Inc. v. Jane Doe, (2000) 193 F.T.R. 42, 8 C.P.R. (4th) 506 (T.D.)).

[62] In Yang, in considering the remedies available to a plaintiff for multiple occasions of infringement, the Federal Court held that damages were to be quantified in respect of each infringement, irrespective of whether the multiple infringements are brought before the Court in a single action or in separate actions. In that case, the plaintiffs were able to adduce evidence of six instances when counterfeit merchandise had been delivered-up, purchased or viewed at the defendants’ business, over a period of 1½ years. In an effort to reflect the ongoing damages which had been suffered by the plaintiff, the Court applied the Anton Pillar order scale of damages on a “per instance of infringement” basis, that is six times.

[63] In this case, the plaintiffs submit that such an award should be made on a per-inventory turn-over basis, in relation to each of the different retail premises through which the infringing activities were, and are, carried out, and on a per importation basis at the importer/distributor level.

[64] They submit that in this case the Anton Pillar Order structure has clearly failed to prevent the recidivist infringing activities of the defendants and has caused a significant drain on both the resources of the Court and the plaintiffs. Accordingly they submit that to limit the plaintiffs to a once-only nominal damages award would effectively punish the plaintiffs for attempting to prevent the continuing and recidivist activities of the defendants outside of the Anton Pillar Order structure.

[65] I agree that the historical once-only nominal award of damages is inapplicable in the case of a group of defendants whose continuous and blatantly recidivist infringing activities have taken place over a period of three years since the date the Anton Pillar Order was served, and for a period of approximately six years in the case of J. Lee. If a plaintiff was only entitled to a single award of damages under the “nominal” damages scale for multiple occasions of infringement, then once a defendant was found liable for infringement, the defendant would essentially be immune from liability for damages for all subsequent infringements.

[66] Indeed I note that in Yang, the Court awarded damages of $7,250 per instance multiplied by six instances, multiplied by two plaintiffs ($7,250 x 6 = $43,500 x 2 = $87,000). What it was clearly inclined to do so, in obiter, the Court noted it was unable to assess damages based on the number of turnovers in the inventory per year since there was an insufficient evidentiary foundation for any finding regarding the numbers of turn-overs. In contrast, in the case at bar there is evidence available concerning the number of turn-overs of merchandise.

[67] Adopting the approach set out in Yang I agree that here each plaintiff should be entitled to damages assessed under the “nominal” damages scale, since a defendant would be liable for damages to each plaintiff, if each plaintiff had enforced its rights individually. There is no reason to limit damage awards merely because multiple plaintiffs advanced their claims in one action.

[68] I find on a balance of probabilities, that since the Anton Pillar Order seizure in August 2004 merchandise bearing the Louis Vuitton Trade-marks was sold through:

(a) the Wynnie Lee Metrotown store from at least September 2004 to January 2006 (a period of at least 17 months);

(b) the Wynnie Lee Lansdowne store, from at least September 2004 to December 2006 (a period of at least 28 months);

(d) Francisca’s Fashion Club, in at least June 2006.

[69] Here, there is W. Lee’s own admission on discovery that the inventory sold through the Wynnie Lee stores and Francisca’s Fashion Club was imported for distribution approximately every 4 months (3 times a year). Thus adopting a turn-over rate of approximately 3 times a year (or every 4 months), and using $7,250 as a starting point for “nominal” damages, I assess the following damages per plaintiff, as against the following defendants in respect of each of the retail locations:

(a) As against the defendants W. Lee, W. Lee Corporation, and Ngan, jointly and severally, the sum of $29,000 ($7,250 x at least 4 turn-overs) for activities carried on at the Wynnie Lee Metrotown store;

(b) As against the defendants W. Lee, W. Lee Corporation, and Ngan, jointly and severally, the sum of $50,750 ($7,250 x at least 7 turn-overs) for activities carried on at the Wynnie Lee Lansdowne store;

(c) As against the defendants W. Lee and Tran, jointly and severally the sum of $58,000 ($7,250 x at least 8 turn-overs) for activities carried on at the Wynnie Lee Surrey store; and

(d) As against the defendants W. Lee and Ngan, jointly and severally, the sum of $7,250 (based on the one known instance of infringement) for activities carried on at Francisca’s Fashion Club.

[70] As the importer and distributor of merchandise bearing the Louis Vuitton Trade-marks, W. Lee is also liable for damages starting at the higher level of $29,000 in accordance with the “nominal” damages scale. Since the Anton Pillar Order seizure in August 2004, she has continued to import and distribute merchandise bearing the Louis Vuitton Trade-marks, approximately every 4 months (3 times a year), over a period of at least 41 months.

[71] Applying $29,000 as a nominal damages award against W. Lee as an importer/distributor, on a per turn-over of inventory basis (at least 10 turn-overs), an appropriate total award of damages against her would be $290,000, per plaintiff. In order to avoid any double jeopardy, I will deduct from such an award the sum of $145,000, being the damages awarded against W. Lee above attributable to her retail activities, thus leaving a net award against her of $145,000.

[72] In summary, since each of the plaintiffs is entitled to recovery of its damages based on the “nominal” damages scale, the total compensatory damages for trade-mark infringement awarded are as follows:

(a) against the defendants W. Lee, W. Lee Corporation, and Ngan, jointly and severally in the amount of $159,500;

(b) against the defendants W. Lee and Tran, jointly and severally in the amount of $116,000;

(d) against the defendant W. Lee, in the amount of $290,000;

4.7 Damages for Copyright Infringement:

[73] In addition to the damages awarded for the defendants’ infringement of the plaintiffs’ rights under the Trade-marks Act, Louis Vuitton is entitled to recovery of statutory damages and profits in relation to infringement by the defendants W. Lee Corporation, W. Lee, Ngan and Tran of the Copyrighted Works.

[74] Pursuant to s. 38.1 of the Copyright Act, statutory damages for copyright infringement are awarded on a scale from $500 to $20,000 per work infringed. In exercising its discretion, the Court is required to consider all relevant factors, including good or bad faith, the conduct of the parties before and during the proceedings; and the need to deter other infringements of the copyrights in question.

[75] Where minimum statutory damages are grossly out of proportion with the probable profits of the infringer, in the sense that they are much lower than the probable profits, the Court should award a higher amount (Microsoft Corporation v. 9038-3746 Quebec Inc., 2006 FC 1509, 57 C.P.R. (4th) 204, at paras. 110 to 112) (“Microsoft”).

[76] Damages ought to be awarded on the high end of the scale where the conduct of the defendants, both before and during the proceedings, is dismissive of law and order and demonstrates a necessity for deterring future infringements (Microsoft at para. 113; Yang at paras. 21-25).

[77] In Yang, Snider J. eloquently addressed the issue of deterrence at para. 25:

….I turn to the need to deter others. The LV products that are the subject of copyright protection are highly-valued by consumers. Being seen with one of the Plaintiffs’ Copyrighted Works is a statement that carries significant societal weight in some sectors of the population. However, the continuing infringement of this and similar high-fashion accessories with similar copyright protection erodes the position that legitimate copyrighted products hold in the marketplace. Why would a person buy the Plaintiffs’ Copyrighted Works when “knock-offs” can be sold and bought with few negative consequences? More seriously, why buy the legitimate product when others seeing it will assume that it is not likely a “real” LV Copyrighted Work? Although, to many, this aspect of the infringement is not serious, the erosion of the market for which the Plaintiffs have worked very hard is a serious consequence of the continuing behaviour of the Defendants and others who may also be infringing the Copyrighted Works. Another aspect of deterrence that is relevant is the behaviour of the Defendants. The award in this case should attempt to deter conduct where orders of the Court and other legal remedies are blatantly ignored. In my view, a high award is necessary to deter future infringement and, secondarily, to deter open disrespect for Canada’s copyright protection laws.

[78] In my view, the evidence is clear that both before and following the commencement of this action the defendants W. Lee, W. Lee Corporation, Ngan and Tran have acted wilfully and knowingly in violation of the plaintiffs’ rights in the trademarks and copyrights. Neither the service of the Anton Pillar Order in August 2004, the seizure of hundreds of articles pursuant to that order, the service of the Federal Court Judgment in March 2005, nor the service of the Cease & Desist letters at the Wynnie Lee stores had any effect in terms of deterring the W. Lee Corporation, Tran, W. Lee or Ngan. The only exception would appear to be the defendant J. Lee, who discontinued all activities following the service of a Cease & Desist letter in October 2006.

[79] Further, following the commencement of this action in November 2006, the defendants’ activities remained ongoing with little cooperation in the conduct of the litigation itself. The defendants W. Lee and Ngan attempted to evade service of the Statement of Claim, ignoring a Demand for List of Documents and not showing up for W. Lee’s scheduled Examination for Discovery, even though an Appointment to Examine for Discovery was properly delivered and both Ngan and W. Lee were observed in the building where the Examine for Discovery was scheduled to take place. A Court Order for production of documents was finally obtained against W. Lee and Ngan in April 2007 and against Chen in October 2007. To this point none of those defendants have ever produced a List of Documents.

[80] Ultimately the plaintiffs were forced to obtain a Court order compelling W. Lee to attend on discovery. The defendant Ngan also provided an outdated address for delivery. The defendant Tran ignored the Demand for List of Documents and evaded service of an Appointment to Examine for Discovery. Similarly, Chen, as the sole Director of the W. Lee Corporation, attempted to evade service of any documents relating to this proceeding, ignored the Demand for List of Documents, failed to appear at her scheduled Examination for Discovery, and failed to appear at her subsequent Court Ordered Examination for Discovery.

[81] All the while the defendants W. Lee and Tran continued to carry out their illegal counterfeiting activities.

[82] In all of these circumstances, I agree with plaintiffs’ counsel’s submission that an award of statutory damages at the highest end of the scale—that is in the amount of $20,000 per each of the Copyrighted Works infringements, is appropriate. I will award that amount against each of the groups of joint tort feasors, as follows:

– against the defendants W. Lee, W. Lee Corporation and Ngan, jointly and severally, for their sale of infringing items through the Wynnie Lee Metrotown store and the Wynnie Lee Lansdowne store, in the amount of $20,000 for copies of the black Multicolour Monogram Copyrighted Work;

– against the defendants W. Lee and Tran, jointly and severally, for their sale of infringing items through the Wynnie Lee Surrey store, in the amount of $20,000 for copies of the white Multicolour Monogram Copyrighted Work;

– against the defendants W. Lee and Ngan, jointly and severally, for their sale of infringing items through Francisca’s Fashion Club, in the amount of $20,000 for copies of the white Multicolour Monogram Copyrighted Work; and

– against the defendant W. Lee, as the importer and distributor of infringing items, in the amount of $40,000 for copies of both of the Copyrighted Works.

5.0 Punitive and Exemplary Damages:

[83] I now turn to the issue of whether, on the facts of this case, punitive and exemplary damages ought to be awarded against the defendants.

[84] Punitive damages are awarded when a party’s conduct has been malicious, oppressive and high-handed, offends the court’s sense of decency, and it represents a marked departure from ordinary standards of decent behaviour (Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at para. 36).

[85] The Court will consider certain factors in assessing the defendant’s degree of blameworthiness: whether the conduct was planned and deliberate; the intent and motive of the defendant; whether the defendant has persisted in the outrageous conduct over a lengthy period of time; whether the defendant has concealed or attempted to cover up its misconduct; whether the defendant was aware of what he or she was doing was wrong; and finally whether the defendant profited from its misconduct. (Whiten at para. 36; Yang at para. 47).

[86] Punitive and exemplary damages have been awarded in cases of trade-mark and copyright infringement, where, for example, the conduct of the defendants was “outrageous” or “highly reprehensible”, or where the defendant’s actions constituted a callous disregard for the rights of the plaintiff or for injunctions granted by the Court. Similarly, in determining whether punitive and exemplary damages ought to be awarded, the Court will consider whether the defendant has little regard for the legal process, thus requiring the plaintiff to expend additional time and money in enforcing its rights (Microsoft at paras. 118 to 120; Yang at para. 48-49; Pro Arts, Inc. v. Campus Crafts Holdings Ltd. (1980), 50 C.P.R. (2d) 230 at 250-252 (Ont. H.C.J.).; 2703203 Manitoba Inc. v. Parks, 2006 NSSC 6, 47 C.P.R. (4th) 276 at paras. 37-40; Society of Composers, Authors and Music Publishers of Canada v. 728859 Alberta Ltd. (2000), 6 C.P.R. (4th) 354 at paras. 19-24 (F.C. T.D. Proth.).

[87] The defendants W. Lee, W. Lee Corporation, Ngan and Tran have been engaged in the sale of counterfeit Louis Vuitton merchandise since at least August 2004.

[88] As I have noted earlier, neither the service of the Anton Pillar Order, nor the service of the Federal Court Judgment or the Cease & Desist Orders had any effect upon any of the defendants, other than J. Lee in October 2006. Indeed all indications are that the defendants W. Lee and Tran continue to the present date to sell counterfeit merchandise bearing the Louis Vuitton Trade-marks through the Wynnie Lee Surrey store.

[89] Given the multiple notices provided by the plaintiffs regarding the illegality of the defendants’ activities, I infer that the defendants’ previous and ongoing actions are clearly knowing, planned and deliberate. Further, based on the evidence of the various investigators, it is clear that the defendants have also attempted to deliberately conceal or cover up their activities, by placing counterfeit Louis Vuitton merchandise in hidden displays and drawers and by often refusing to provide receipts.

[90] In all of these circumstances I will award punitive and exemplary damages, jointly and severally, against the defendants W. Lee Corporation, Ngan, and Tran in the total sum of $100,000.

[91] Since W. Lee is the principal of this enterprise, is personally involved in the infringing activities taking place at four separate retail locations, and is responsible for the importation and distribution of the counterfeit Louis Vuitton merchandise, I will award punitive and exemplary damages against her alone in the sum of $200,000.

6.0 Costs against the Defendants W. Lee Corporation, W. Lee, Ngan and Tran:

[92] The plaintiffs seek special costs against the defendants W. Lee Corporation, W. Lee, Ngan and Tran. Such costs may be awarded where a party has displayed reprehensible, scandalous or outrageous conduct. Special costs may also be awarded in cases where the defendant has committed a deliberate and inexcusable violation of the plaintiff’s rights. (Leung v. Leung (1993), 77 B.C.L.R. (2d) 314; Prise de Parole Inc. v. Guérin, Éditeur Ltée (1995), 104 F.T.R. 104, 66 C.P.R. (3d) 257 at 268-269 (T.D.), aff’d (1996), 121 F.T.R. 240 (note), 73 C.P.R. (3d) 557 )

[93] As I have noted earlier, since 2004, the defendants W. Lee Corporation, W. Lee, Ngan and Tran have knowingly committed deliberate and inexcusable repeat infringement of the plaintiffs’ trade-mark rights and copyrights. They have failed to cooperate to any significant degree in this litigation. I accept that as a result the plaintiffs have incurred substantially higher legal fees and disbursements than would otherwise have been necessary to prosecute this action.

[94] In the result I am satisfied it is appropriate to award special costs against the defendants W. Lee Corporation, W. Lee, Ngan and Tran.

6.1 Costs Against the Defendants J. Lee and J. Lee Corporation:

[95] The plaintiffs seek ordinary costs against the defendants J. Lee and J. Lee Corporation, in respect of this first leg of this application. I will make that award of costs.

7.0 Previous Applications to the Court:

[96] At the plaintiffs’ request I will also make an order confirming previous orders for costs, since no costs have been paid to date. The Orders are as follows:

(1) That the defendant W. Lee pay forthwith to the plaintiffs the amount of $506.46 as costs, in accordance with the Order of this Court dated June 11, 2007, and

(2) That the defendant W. Lee Corporation pay forthwith to the plaintiffs the amount of $2,050 as costs, in accordance with the Order of this Court dated October 16, 2007.

8.0 Contempt of Court:

[97] Finally, the plaintiffs seek a declaration from this Court that the defendants W. Lee, W. Lee Corporation, Ngan, Tran and J. Lee are in contempt of the Federal Court Order made March 16, 2005 since they were either directly served with a copy of the order or they had constructive knowledge of the Judgment, given their involvement in the stores where the Anton Pillar Order was executed. Despite the fact that each of the defendants had direct or indirect knowledge of the Judgment, the plaintiffs say that they each continued to carry out their infringing activities in clear violation of that judgment.

[98] While W. Lee, Tran, and J. Lee were not personally named in the judgment, the plaintiffs say that they may nevertheless be held in contempt, so long as the Court is satisfied they were aware of the judgment, which they say is the case here. (Greenpeace Canada v. Macmillan Bloedel Ltd. (1994), 96 B.C.L.R. (2d) 201 (C.A.) at para. 33-34.).

[99] The plaintiffs say that fines in the order of $10,000 to $50,000 are appropriate in cases of continued sale of counterfeit goods. (LifeGear Inc. v. Urus Industrial Corp. 2005 FCA 63, (2005), 38 C.P.R. (4th) 507 (F.C.A.); Louis Vuitton Malletier S.A. v. Bags O’Fun Inc., 2003 FC 1335, 242 F.T.R. 75.)

[100] While the plaintiffs submit that this Court has jurisdiction to levy such fines against the defendants, notwithstanding the fact it was a Federal Court Order which was the subject of the contempt, I am not inclined to levy such a fine. In any case, the award of punitive and exemplary damages (albeit recoverable by the plaintiffs and not by the Court), includes an element of rebuke regarding the breach of the Federal Court Order. Accordingly I will not grant this relief.

9.0 Conclusion:

[101] I leave it to the plaintiffs’ counsel to draft an Order reflecting this judgment. I waive the requirement for the Order to be circulated amongst the defendants for approval as to form. As I noted earlier, the balance of the hearing regarding damages recoverable against the defendant J. Lee is adjourned to the Fall of 2008. I leave it to the parties to contact the Registry to set a further day for that hearing.

“The Honourable Madam Justice Boyd”

Citation:	*Louis Vuitton Malletier S.A. v. 486353 B.C. Ltd.,*
	2008 BCSC 799