Chanel S. de R.L. v. Kee, 2015 FC 1091 (Martineau, J.)
September 18, 2015
Karen MacDonald and Mathew Brechtel of Bull, Housser & Tupper LLP for the Plaintiffs Chanel S. de R.L., Chanel Limited and Chancel Inc.
Robert Watt of Watt & Sharma Barristers and Solicitors for the Defendants Lam Chan Kee Company Ltd., Annie Pui Kwan Lam and Siu-Hung Lam, Collectively doing business as Lam Chan Kee; and 2133694 Ontario Inc.
The Federal Court (“Court”) allowed in-part a motion for summary trial in an action relating to the sale of counterfeit Chanel goods, including that part of the motion seeking personal liability of A. Lam and default judgment against the corporate defendants, who presented no defence. The action was dismissed as against S. Lam for lack of evidence he was a controlling mind of the corporate defendants or personally involved.
A. Lam (and S. Lam) are directors of LCK Company. Following a previous infringement action brought by Chanel, LCK Company and A. Lam were ordered by consent judgment to cease the sale of counterfeit Chanel goods (action dismissed against S. Lam without costs). A. Lam was later among a different group of defendants sued by Chanel for infringement based on sales of counterfeit Chanel goods at a location different from the Lam Chan Kee store. As a result, A. Lam become the subject of a second, similarly worded consent judgment.
Chanel became aware that A. Lam and LCK Company continued to possess counterfeit goods for the purpose of sale at the Lee Chan Kee store and served a cease and desist letter, followed by institution of this action. A. Lam did not dispute trade-mark infringement. Rather, A. Lam contended that the assets of LCK Company were sold to 694 Inc., a company purportedly controlled by A. Lam’s children, prior to the incidents of infringement alleged by Chanel. A. Lam contended that this precludes infringement by herself or LCK Company, or at the least, raised issues surrounding the transaction that were inappropriate for determination by summary trial. Chanel argued that the transaction was either not effective or a fraudulent attempt by A. Lam to avoid liability.
The Court determined that the evidence was sufficient to proceed by summary trial and found that the purported asset transaction did not take place until after most of the infringing activities alleged by Chanel. Even after that time, the evidence indicated that A. Lam in fact controlled 694 Inc. She also continued to own the store and the land, leasing it to 694 Inc.
The Court granted, among other things: declarations of ownership and validity of Chanel’s asserted trade-marks; declarations that A. Lam and the corporate defendants were in breach of sections 19, 20, 22, and paragraphs 7(b), 7(c), and 7(d) of the Trade-marks Act; injunctions preventing A. Lam and the corporate defendants from further contravention of the same; an order for $64,000 in damages (calculated as $8,000 for each of four infringing acts, payable to each of two plaintiffs, a licensee and the licensor); $250,000 in punitive and exemplary damages; and $66,000 in solicitor and client costs in lieu of assessed costs for “reprehensible conduct in the proceeding.”
By: John Lucas, Deeth Williams Wall LLP