Chanel S. de R.L. v. Kee, 2015 FC 1091

In a summary trial, the Federal Court has found the corporate defendants liable for selling knock-off Chanel merchandise, and found personal liability against the landlord who housed the businesses. The defendants had previously settled two 2006 actions and agreed to cease the sale of any merchandise bearing the Chanel trademarks.

Chanel had alleged that the corporate defendants were importing, advertising and selling fashion accessories that infringed and passed off various trademarks owned by Chanel. An additional claim was levied against the landlord of the relevant premises, alleging she aided and abetted, authorized, and sanctioned the importation, advertisement, offer for sale and/or sale of the fashion accessories. The evidence showed the landlord was also an officer and/or director of the corporate defendants. Although her husband was affiliated with the businesses, the Court found he was not involved in the business, as he was living in China, and he was subsequently not found to be personally liable.

The defendants had argued that one of the companies had been sold to their children with the express understanding that they must not sell any counterfeit products. This sale was alleged to have taken place just prior to Chanel issuing a cease and desist letter. Chanel disputed the sale of the business, or argued the transaction was meant to avoid the consequences of selling counterfeit goods. The Court found the change of ownership actually occurred two years later than when the alleged transfer occurred, and held the original owners and landlord liable for the infringing activities.

The Court found the subject defendants acted contrary to the prior settlement, prior orders, and to sections 7(b), 7(c),7(d), 19, 20 and 22 of the Trade-marks Act. Relief included injunctive relief, and delivery up of the infringing wares.

Using the general rule that awards $6,000 in damages per plaintiff for trademark infringement against retail establishments selling counterfeit goods, adjusted for inflation and per instance of infringement, nominal damages were calculated at $8,000 per infringement for each of four instances. This was awarded to both Chanel Inc. (the licensee) and Chanel Limited (the rights owner), for a total of $64,000. Punitive and exemplary damages of $250,000 were added, payable jointly and severally. The Court sanctioned the defendants' behaviour by awarding 60% of the plaintiff’s actual solicitor and client fees of $110,000 and awarded $66,000 in assessed costs.