Microsoft Corp. v. 9038-3746 Quebec Inc. et al., (2006) 305 F.T.R. 69 (FC)

• Judge: Harrington, J.
• Court: Federal Court (Canada)
• Case Date: Monday December 18, 2006
• Jurisdiction: Canada (Federal)
• Citations: (2006), 305 F.T.R. 69 (FC);2006 FC 1509

Microsoft Corp. v. 9038-3746 Que. (2006), 305 F.T.R. 69 (FC)

MLB headnote and full text

Temp. Cite: [2007] F.T.R. TBEd. JA.048

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

(T-1502-00; 2006 FC 1509)

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

Federal Court

Harrington, J.

December 18, 2006 and January 16, 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 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.

Copyright - Topic 4484

Infringement of copyright - Acts constituting an infringement - Copying or using computer programs - 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 Federal Court 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.

Copyright - Topic 4583

Infringement of copyright - Remedies - Injunctive relief - [See Copyright - Topic 4484].

Copyright - Topic 4584

Infringement of copyright - Remedies - Forfeiture of infringing works - [See Copyright - Topic 4484].

Copyright - Topic 4586

Infringement of copyright - Remedies - Damages - [See Copyright - Topic 4484].

Damage Awards - Topic 2028.2

Exemplary or punitive damages - Trademark infringement - [See Copyright - Topic 4484].

Damage Awards - Topic 2030.1

Exemplary or punitive damages - Copyright infringement - [See Copyright - Topic 4484].

Damage Awards - Topic 2423

Intellectual property - Copyright infringement - [See Copyright - Topic 4484].

Damage Awards - Topic 2426

Intellectual property - Trademark infringement - [See Copyright - Topic 4484].

Trademarks, Names and Designs - Topic 1816

Trademarks - Infringement - Remedies - Damages - [See Copyright - Topic 4484].

Trademarks, Names and Designs - Topic 1819

Trademarks - Infringement - Remedies - Injunctions - [See Copyright - Topic 4484].

Trademarks, Names and Designs - Topic 3068

Trademarks - Unfair competition - Passing off - [See Copyright - Topic 4484].

Cases Noticed:

Apple Computer Inc. et al. v. Mackintosh Computers Ltd. et al. (No. 1) (1987), 3 F.T.R. 118; 10 C.P.R.(3d) 1 (T.D.), affd. (1988), 81 N.R. 3; 18 C.P.R.(3d) 128 (F.C.A.), affd. [1990] 2 S.C.R. 209; 110 N.R. 66, refd to. [para. 10].

Kraft Canada Inc. v. Euro Excellence Inc. (2004), 252 F.T.R. 50; 33 C.P.R.(4th) 246 (T.D.), varied (2005), 346 N.R. 104; 47 C.P.R.(4th) 113 (F.C.A.), leave to appeal granted (2006), 356 N.R. 391 (S.C.C.), refd to. [para. 24].

Leefeunteum v. Beaudoin (1898), 28 S.C.R. 89, refd to. [para. 71].

Clark, Irwin & Co. v. Cole (C.) & Co., [1960] O.R. 117 (C.A.), refd to. [para. 78].

Simon & Schuster Inc. v. Coles Book Stores Ltd. (1975), 23 C.P.R.(2d) 43 (Ont. H.C.), refd to. [para. 78].

R. v. Laurier Office Mart Inc. (1994), 58 C.P.R.(3d) 403 (Ont. C.J. Prov. Div.), affd. (1995), 63 C.P.R.(3d) 229 (Ont. Gen. Div.), refd to. [para. 79].

R. v. Jorgensen (R.) et al., [1995] 4 S.C.R. 55; 189 N.R. 1; 87 O.A.C. 1, refd to. [para. 80].

Ship Princess Victoria, Re, [1953] 2 Lloyd's Rep. 619, refd to. [para. 89].

Mentmore Manufacturing Co. and Rotary Pen Corp. v. National Merchandise Manufacturing Co. (1978), 22 N.R. 161; 40 C.P.R.(2d) 164 (F.C.A.), refd to. [para. 91].

Ital Press Ltd. v. Sicoli et al. (1999), 170 F.T.R. 66; 86 C.P.R.(3d) 129 (T.D.), refd to. [para. 92].

Bow Valley Husky (Bermuda) Ltd. et al. v. Saint John Shipbuilding Ltd. et al., [1997] 3 S.C.R. 1210; 221 N.R. 1; 158 Nfld. & P.E.I.R. 269; 490 A.P.R. 269, refd to. [para. 94].

Ordon et al. v. Grail, [1998] 3 S.C.R. 437; 232 N.R. 201; 115 O.A.C. 1, refd to. [para. 94].

Canadian Private Copying Collective v. 9087-0718 Québec Inc. et al. (2006), 288 F.T.R. 127; 2006 FC 283, dist. [para. 97].

Penvidic Contracting Co. v. International Nickel Co. of Canada Ltd., [1976] 1 S.C.R. 267; 4 N.R. 1, refd to. [para. 103].

Boutique Jacob Inc. v. Pantainer Ltd. et al. (2006), 288 F.T.R. 78; 2006 FC 217, refd to. [para. 103].

3925928 Manitoba Ltd. et al. v. 101029530 Saskatchewan Ltd. et al., [2005] F.T.R. Uned. 874; 2005 FC 1465, refd to. [para. 104].

Kraft Canada Inc. v. Euro Excellence Inc. (2006), 290 F.T.R. 127; 2006 FC 453, refd to. [para. 110].

Minister of Employment and Immigration v. Satiacum (1989), 99 N.R. 171 (F.C.A.), refd to. [para. 111].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201, refd to. [para. 117].

Profekta International Inc. v. Lee et al. (1997), 214 N.R. 309; 75 C.P.R.(3d) 369 (F.C.A.), refd to. [para. 119].

MacMillan Bloedel Ltd. v. Greenpeace Canada et al., [1996] 2 S.C.R. 1048; 199 N.R. 279; 79 B.C.A.C. 135; 129 W.A.C. 135, refd to. [para. 126].

Sandwich West (Township) v. Bubu Estates Ltd. et al. (1986), 17 O.A.C. 177; 30 D.L.R.(4th) 477 (C.A.), refd to. [para. 126].

Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108; 245 N.R. 88; 127 B.C.A.C. 287; 207 W.A.C. 287, refd to. [para. 134].

Kanematsu GmbH v. Acadia Shipbrokers Ltd. et al. (2000), 259 N.R. 201 (F.C.A.), refd to. [para. 134].

Counsel:

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

Neil G. Oberman and 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 action was heard on October 31 and November 1-3, 6, 7, 9, 14-16 and 20-21, 2006, at Montreal, Quebec, before Harrington, J., of the Federal Court, who delivered confidential reasons for judgment on December 18, 2006, and an amended public version of reasons for judgment on January 16, 2007.