Date: 20001220
Docket: T-550-99
Ottawa, Ontario, this 20th day of December 2000
PRESENT: THE HONOURABLE MR. JUSTICE PELLETIER
BETWEEN:
VIACOM HA! HOLDING COMPANY and
TIME WARNER ENTERTAINMENT COMPANY, L.P.
carrying on business in partnership as COMEDY PARTNERS
Plaintiffs
and
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT SOUTH PARK MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A" HERETO
Defendants
REASONS FOR JUDGMENT
[1] I have before me an application for default judgment against 9024-7081 Quebec Inc. c.o.b. Dollar Encore, Kit Ping Cheung and Chi Kin (Kevin) Leung. The amount claimed by way of damages is $6,000 per defendant which implies that in the plaintiffs' view, these defendants were individually infringing the plaintiffs' intellectual properties in a retail business.
[2] The affidavit of service establishes that all three defendants were served at the same location on the same day, namely 6530 Somerled Avenue, Montreal, Quebec on July 6, 1999. One of the individual defendants claimed to be a half owner of the corporate defendant. The affidavit material is silent as to the status of the other individual defendant. The issuance of the review order establishes on a prima facie basis that counterfeit goods were being offered for sale from the premises. The defendants did not defend and as a result can be taken to have admitted their involvement in infringement.
[3] The conventional measure of nominal damages for the sale of counterfeit goods of the nature in question here from fixed retail premises is $6,000. The question is whether that amount is payable by each of the defendants or whether it should be payable by them jointly and severally. In the first case, the plaintiffs will hold three judgments, each of which is in the amount of $6,000, for a total of $18,000. In the second case, the plaintiffs will hold one judgment for $6,000 payable by each or all of the three defendants but in any case, the plaintiffs' recovery will not exceed $6,000. The practice in this Court in the past appears to have been to issue individual judgments.
[4] If one starts from the proposition that it is the activity of selling counterfeit goods which creates the liability for damages, and that by failing to appear at the review motion and not defending the claim, the defendants can be presumed to have admitted that they were engaged in the sale of counterfeit goods, it follows therefore they ought to be liable in damages. That admission however stops short of determining whether they were engaged as principals (who reap the profit from the venture) or as mere employees (who profit to the extent of their wages only). Should the plaintiffs' recovery depend upon the number of interested persons on the premises at the time of the seizure?
[5] In my view, the fact of fixing nominal damages at $6,000, as opposed to the $3,000 assessed against push cart operators and street vendors, was intended to reflect the greater potential economic impact of a fixed retail operation upon the plaintiffs' economic interests. While there is undoubtedly a large number of "Mom and Pop" operations which could be considered fixed retail operations, it is also true that fixed retail operations are far more likely to involve paid employees than push cart operators or street vendors. It cannot have been the intent, in setting nominal damages for fixed retail operations, to have the amount of recovery vary with the number of staff. It is the fact of a fixed retail operation which is significant, not the number of persons on the premises at the time of the seizure. There is but one undertaking and, as a result, there should only be one award of nominal damages.
[6] The counter argument is that the number of staff can be an indicator of the level of economic activity. The more staff, the more likely it is that a greater volume of business is being generated with correspondingly greater harm to the plaintiffs' interests. The difficulty is that this does not distinguish between those who reap the profit and those who merely mind the store. More fundamentally, however, such an argument puts into question the rationale for permitting the execution of a rolling Anton Piller Order against such premises. If the defendants operate from fixed retail premises and generate a significant level of economic activity, what is the justification for executing a rolling Anton Piller Order rather than obtaining a site specific order. The greater the apparent viability of the business, the less the justification for the recourse to a rolling Anton Piller Order, which is premised upon the existence of transient defendants who are beyond the reach of the Court's usual remedial orders.
[7] That said, even employees benefit from the unlawful commerce. If they felt they were being victimized by the possibility of judgment against them, presumably they would appear at the review of the execution of the order and they would file a Statement of Defence. Neither has happened in this case. Given the difficulty of determining who is a principal and who is simply an employee, the wisest course seems to be to assess damages on a joint and several basis, leaving it to the defendants to sort out their respective obligations among them. In the absence of any participation in the process by the defendants, the plaintiffs cannot be expected to draw fine distinctions as to culpability.
[8] The legislative scheme which protects the plaintiffs' intellectual properties contemplates joint and several liability. Section 38.1 of the Copyright Act provides as follows:
38.1 (1) Subject to this section, a copyright owner may elect, at any time before final judgment is rendered, to recover, instead of damages and profits referred to in subsection 35(1), an award of statutory damages for all infringements involved in the proceedings, with respect to any one work or other subject-matter, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than_$500 or more than_$20,000 as the court considers just. [Emphasis added].
38.1 (1) Sous réserve du présent article, le titulaire du droit d'auteur, en sa qualité de demandeur, peut, avant le jugement ou l'ordonnance qui met fin au litige, choisir de recouvrer, au lieu des dommages-intérêts et des profits visés au paragraphe 35(1), des dommages-intérêts préétablis dont le montant, d'au moins 500_$ et d'au plus 20 000_$, est déterminé selon ce que le tribunal estime équitable en l'occurrence, pour toutes les violations -- relatives à une oeuvre donnée ou à un autre objet donné du droit d'auteur -- reprochées en l'instance à un même défendeur ou à plusieurs défendeurs solidairement responsables.
[9] While the Trade-marks Act does not speak of joint and several liability, the Statement of Claim issued in this matter claims damages for passing off as well as for trade mark infringement. Passing off is a common law tort and as such, would be subject to the rules dealing with joint tortfeasors. Professor Fleming summarizes those rules as follows in The Law of Torts (9th Ed.) LBC Information Services, North Ryde NSW, 1998 at pp. 288-289:
| A tort is imputed to several persons as joint tortfeasors in three instances: agency, vicarious liability and concerted action ... The critical element of the third is that those participating in the commission of the tort acted in furtherance of a common design. There must be "concerted action to a common end" not mere parallel activity or "a coincidence of separate acts which by their conjoined effect cause damage". Broadly speaking, this means a conspiracy with all participants acting in furtherance of the wrong, though it is not necessary that they should realise they are committing a tort. All persons acting in pursuance of a common end, being thus identified with each other, are accordingly responsible for the entire result ... |
[10] The law of Quebec is to the same effect. The Code Civil du Québec provides as follows:
1480. Where several persons have jointly taken part in a wrongful act which has resulted in injury or have committed separate faults each of which may have caused the injury, and where it is impossible to determine, in either case, which of them actually caused it, they are solidarily liable for reparation thereof.
1480. Lorsque plusieurs personnes ont participé à un fait collectif fautif qui entraîne un préjudice ou qu'elles ont commis des fautes distinctes dont chacune est susceptible d'avoir causé le préjudice, sans qu'il soit possible, dans l'un ou l'autre cas, de déterminer laquelle l'a effectivement causé, elles sont tenues solidairement à la réparation du préjudice.
| ... ... |
1523. An obligation is solidary between the debtors where they are obligated to the creditor for the same thing in such a way that each of them may be compelled separately to perform the whole obligation and where performance by a single debtor releases the others towards the creditor.
1523. L'obligation est solidaire entre les débiteurs lorsqu'ils sont obligés à une même chose envers le créancier, de manière que chacun puisse être séparément contraint pour la totalité de l'obligation, et que l'exécution par un seul libère les autres envers le créancier.
[11] In the circumstances of cases such as these where a number of persons are found to be engaged in a business which is selling counterfeit goods, and where it is not possible to distinguish the individual contribution to the harm caused, and in the absence of any exculpatory plea on the part of any of them, it does not seem unfair to assess liability on a joint and several basis. In any event, it seems fairer than finding each defendant individually liable for the full amount of the conventional award for nominal damages, when it appears that there is only one undertaking or business which is causing the damage.
[12] For those reasons, judgment will issue against the defendants jointly and severally. Judgment will issue separately.
"J.D. Denis Pelletier"
Judge