Retail Therapy for Brand Owners: Counterfeit Goods & Director Liability


The U.S. Customs and Border Protection Office recently announced that the value of counterfeit and pirated products seized at the border had increased in 2008, up to $113.2 million. Of course, that’s just the stuff they seized, and countless other counterfeits and knock-offs are flowing in.

In Canada, the recent case of Louis Vuitton Malletier SA v. 486353 B.C. Ltd. 2008 BCSC 799, illustrates how one brand owner tackled the problem. Louis Vuitton’s investigations showed that counterfeit Louis Vuitton handbags were being sold at various retails locations throughout suburban Vancouver, all operated by one proprietor. The lawyers pounced, seized the counterfeit evidence, but avoided litigation by entering into a settlement agreement with the proprietors in 2006. This included a slap-on-the-wrist payment of $6,000 to Louis Vuitton. After monitoring the stores throughout 2007, it became apparent that the settlement agreement had been breached, and Louis Vuitton brought a second lawsuit, this time pushing it through trial to arrive at a significant damage award of close to $1 million, when all the trade-mark and copyright damages were added up. The court also made it clear that the directors would not avoid personal liability:

“A corporation cannot be used to shield an officer or director or a principal employee, when that individual’s actions amount to a deliberate, willful 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.”

The battle against counterfeits has spilled over into eBay where various luxury-goods brand owners such as Tiffany have complained that eBay had become a clearing house for counterfeits. A US judge recently decided that eBay was not liable for the providing the means of selling counterfeit goods, and the key to eBay’s win was its set of policies and procedures to respond to complaints of trade-mark infringement.

The take-home message is that brand owners must police their own brands both online and offline. Online venues such as eBay cannot be pressed into service as trademark watchdogs – though they must be prepared to react if notified of an infringement. Just as brand owners must be prepared to investigate and act decisively in maintaining their brand’s integrity.
Calgary – 22:00 MST

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Sticks & Stones: Online Defamation & Privacy Decision

What happens when a resident of B.C. posts defamatory comments on a usenet group about a resident of Australia?

In this case, two men were engaged in a protracted and ugly name-calling session in the usenet group “”, described as a discussion forum for persons who were feeling depressed and suicidal. In Griffin v. Sullivan, 2008 BCSC 827, a BC court has reviewed the issues around online defamation and breach of privacy.  The decision resulted in an award of damages for defamation of $150,000 and an award of $25,000 in damages for breach of privacy as well as a permanent injunction against the B.C. man.

The claim for breach of privacy arose when the B.C. man published the name and address of the plaintiff Australian man.  Names and addresses are often considered public information; however, the court found that the disclosure constituted breach of privacy (under the very seldom-used B.C. Privacy Act) since the Australian man had previously maintained his anonymity in the usenet group, and group members often shared sensitive information about themselves.

The other interesting element of the decision is that the court did not review the fundamental question of whether anyone in B.C. (or anywhere else in Canada) actually read the defamatory postings.   In Crookes v. Yahoo, 2008 BCCA 165, the Court of Appeal made it clear that merely alleging that something has been posted on the internet is not, on its own, sufficient to show that publication can be presumed, as we reported earlier.

Names can never hurt you… but they can result in significant damage awards.

Calgary – 14:30 MST

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File-Sharing: A Questionable Win for Recording Industry

The Quebec Torrent case (past stories here and here ) appears to have ended with the recording industry claiming victory.  Last week a Quebec court issued a permanent injunction against the operators of the P2P site, effectively shutting down the site and turning off the exchange of music files, television shows and other content.  The order prevents the site’s operators from using “any technology allowing the download of any work protected by copyright.” 

A victory? That part is questionable. This order was not a result of a full trial that would have canvassed the issues in court.  The defendant essentially capitulated at the eleventh hour, consenting to the order in exchange for an agreement by the recording industry to drop a $200,000 damages claim.  And remember the P2P site managed to defeat the recording industry’s application for a preliminary injunction earlier in the case.  So this order is by no means a definitive ruling by the court.

Canada is still waiting for its first direct decision on peer-to-peer file sharing.  Meanwhile, the recording industry is expected to use this order as a way of trying to shut down other P2P sites.  If you operate such a site, you can expect a letter containing a copy of the order in the near future if you haven’t received one already.

Calgary – 10:35 MST

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Online Copyright Liability

For IP lawyers, these are interesting times. It isn’t often that proposed intellectual property legislation makes front-page news and in Canada, the debate over Bill C-61 has been front and centre. There is ample coverage of the proposed law in the media across the country since the bill was introduced last month.  

You might think that all the debate is purely academic: sure, if you download a CD to your iPod and then give the CD away to your brother-in-law, a record company can claim infringement …in theory, but would they really bother?  (If you don’t believe that this is infringement under the proposed law, see here: Section 29.22(4) )

The answer is this, if the law contains a useful tool, copyright owners will use it.  To see how the new tools might be used, we can look to the US, where the DMCA notice-and-takedown system permits copyright owners to send notices of alleged infringement, and demand that the infringing content be removed.  In one recent US case, the notices were filed by Associated Press against independent bloggers for paraphrasing AP news stories in discussion forums.  The message was clear: don’t cut-and-paste or paraphrase any part of our news stories, or we’ll come after you for infringement.   “Fair use” or “fair dealing” exceptions should provide a defence to infringement claims, but of course the boundaries of that concept are open to interpretation.  AP later backed-down and promised certain “guidelines” on how to refer to AP news. 

In the meantime, the take-home message is this: when the US DMCA was introduced, its drafters might never have imagined that a news organization would send take-down notices for online references to its news stories – but the tool was available in the toolbox, and it was used.  Whatever is in Bill C-61 will also be used, sooner or later. 

Calgary – 11:45 MST 

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