Microsoft Corp. v. 9038-3746 Quebec Inc. et al., 2007 FC 659

• Judge: Harrington, J.
• Court: Federal Court (Canada)
• Case Date: June 11, 2007
• Jurisdiction: Canada (Federal)
• Citations: 2007 FC 659;(2007), 314 F.T.R. 217 (FC)

Microsoft Corp. v. 9038-3746 Que. Inc. (2007), 314 F.T.R. 217 (FC)

MLB headnote and full text

Temp. Cite: [2007] F.T.R. TBEd. JL.003

Microsoft Corporation (plaintiff) v. 9038-3746 Quebec Inc., 9014-5731 Quebec Inc., Adam Cerrelli and Carmelo Cerrelli (defendants)

(T-1502-00; 2007 FC 659)

Indexed As: Microsoft Corp. v. 9038-3746 Quebec Inc. et al.

Federal Court

Harrington, J.

June 20, 2007.

Summary:

Microsoft brought a copyright and trademark infringement action against the personal and corporate defendants, submitting that the defendants imported and resold counterfeit Microsoft products. Microsoft sought, inter alia, injunctive relief, a delivery up of the infringing material and statutory and punitive damages. The defendants claimed that they had no knowledge that the Microsoft products they dealt with were counterfeit. The defendants submitted that they legally purchased their Microsoft products on the "grey market", with assurances that they were purchasing genuine Microsoft products.

The Federal Court, in a judgment reported (2007), 305 F.T.R. 69, held that the defendants imported and sold counterfeit Microsoft products, violating both the Copyright Act and the Trade-marks Act. The court granted injunctive relief against the named parties respecting the copyrights and trademarks involved and ordered that the infringing material be delivered up. Microsoft elected statutory damages under the Copyright Act. The court awarded the maximum of $20,000 for each copyright infringement ($500,000) against one personal defendant (Carmelo) and the corporate defendants jointly and severally. Given the defendants' "outrageous" conduct, the court awarded $100,000 punitive damages against Carmelo and $100,000 jointly and severally against the corporate defendants.

The Federal Court subsequently awarded Microsoft lump sum solicitor-client costs plus a lump sum for disbursements. The personal defendant's conduct warranted solicitor-client costs.

Practice - Topic 7427.1

Costs - Solicitor and client costs - Measure of - Lump sum - [See Practice - Topic 7454 ].

Practice - Topic 7454

Costs - Solicitor and client costs - Entitlement to - Improper, irresponsible or unconscionable conduct - Microsoft brought a copyright and trademark infringement action against the personal defendants (Carmelo and Adam Cerrelli) and the corporate defendants, submitting that the defendants imported and resold counterfeit Microsoft products - The defendants submitted that they purchased their Microsoft products on the legal "grey market", with assurances that they were purchasing genuine Microsoft products - Microsoft, having repeatedly warned the defendants that the products they were selling were counterfeit, submitted that the defendants knew, or at least ought to have known, that the products were counterfeit - The trial judge held that the defendants imported and sold counterfeit Microsoft products, violating both the Copyright Act and the Trade-marks Act - The infringement involved 25 copyright and 10 trademark registrations - It was irrelevant whether the defendants knew that the imported products were counterfeit (Copyright Act, s. 27(3)) - In any event, Carmelo, the directing mind and will of the corporate defendants, knew that the products were counterfeit, or at least ought to have known (i.e., wilfully blind) - The court granted injunctive relief against the named parties respecting the copyrights and trademarks involved and ordered that the infringing material be delivered up - Microsoft, having elected statutory damages under the Copyright Act, was awarded the maximum of $20,000 for each copyright infringement (total of $500,000) against Carmelo and the corporate defendants jointly and severally - Given the defendants' "outrageous" conduct, the court awarded $100,000 punitive damages against Carmelo and $100,000 jointly and severally against the corporate defendants - The Federal Court awarded lump sum solicitor-client costs against Carmelo and the two corporate defendants (jointly and severally) - Carmelo was guilty of reprehensible, scandalous and outrageous behaviour before and during the proceedings (little regard for truth at discovery and trial, and failure to produce documents in spite of court orders) - Lump sum costs were appropriate to save the time and expense of what could be protracted accounting and taxation - Microsoft offered a 25% discount respecting costs requested - The court ordered a 30% discount.

Trademarks, Names and Designs - Topic 4424

Trademarks - Practice - Costs - [See Practice - Topic 7454 ].

Cases Noticed:

Young v. Young, [1993] 4 S.C.R. 3; 160 N.R. 1; 34 B.C.A.C. 161; 56 W.A.C. 161, refd to. [para. 11].

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22, refd to. [para. 11].

Apotex Inc. v. Canada (Minister of National Health and Welfare) (2000), 265 N.R. 90; 9 C.P.R.(4th) 289 (F.C.A.), refd to. [para. 11].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 14].

Wing et al. v. Van Velthuizen (2000), 197 F.T.R. 126; 9 C.P.R.(4th) 449 (T.D.), refd to. [para. 15].

Telewizja Polsat S.A. et al. v. Radiopol Inc. et al. (2006), 292 F.T.R. 195; 52 C.P.R.(4th) 445; 2006 FC 137, refd to. [para. 15].

Logiudice v. Minister of National Revenue (1997), 97 D.T.C. 1462 (T.C.C.), refd to. [para. 18].

Abbott Laboratories et al. v. Canada (Minister of Health) et al., [2007] F.T.R. Uned. 15; 2007 FC 50, refd to. [para. 23].

Consorzio Del Prosciutto Di Parma v. Maple Leaf Meats Inc., [2003] 2 F.C. 451; 297 N.R. 135; 2002 FCA 417, refd to. [para. 24].

Barzelex Inc. v. M.V. Ebn Al Waleed et al., [1999] F.T.R. Uned. 930 (T.D.), refd to. [para. 27].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al. (1998), 165 F.T.R. 316; 83 C.P.R.(3d) 31 (T.D.), refd to. [para. 27].

Doyle v. Olby (Ironmongers) Ltd. et al., [1969] 2 All E.R. 119 (C.A.), refd to. [para. 27].

Maison des Pâtes Pasta Bella Inc. v. Olivieri Foods Ltd. (1999), 163 F.T.R. 252 (T.D.), refd to. [para. 33].

Capital Life Insurance Co. v. Minister of National Revenue (1988), 87 N.R. 153 (F.C.A.), refd to. [para. 41].

N.V. Bocimar S.A. v. Century Insurance Co. of Canada (1984), 53 N.R. 383 (F.C.A.), revd. on other grounds [1987] 1 S.C.R. 1247; 76 N.R. 212, refd to. [para. 41].

Liquilassie Shipping Ltd. v. M.V. Nipigon Bay, Her Owners and Charterers; Ship Nipigon Bay, [1975] 2 Lloyd's Rep. 279 (F.C.T.D.), refd to. [para. 43].

Sunrise Co. v. Ship Lake Winnipeg (1988), 96 N.R. 310 (F.C.A.), refd to. [para. 44].

Counsel:

John C. Cotter and Tara James, for the plaintiff;

Dany S. Perras, for the defendants.

Solicitors of Record:

Osler, Hoskin & Harcourt LLP, Toronto, Ontario, for the plaintiff;

Michelin & Associates, Montreal, Quebec, for the defendants.

This matter was heard on June 11, 2007, at Toronto, Ontario, before Harrington, J., of the Federal Court, who delivered the following judgment on June 20, 2007.