Trans-High Corp. v. Hightimes Smokeshop and Gifts Inc., [2015] F.T.R. TBEd. AU.010

• Judge: Fothergill, J.
• Court: Federal Court (Canada)
• Case Date: June 18, 2015
• Jurisdiction: Canada (Federal)
• Citations: [2015] F.T.R. TBEd. AU.010;2015 FC 919

Trans-High Corp. v. Hightimes Smokeshop, [2015] F.T.R. TBEd. AU.010

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Currently being edited for F.T.R. - judgment temporarily in rough form.

Temp. Cite: [2015] F.T.R. TBEd. AU.010

Trans-High Corporation (applicant) v. Hightimes Smokeshop and Gifts Inc. (respondent)

(T-1004-13; 2015 FC 919)

Indexed As: Trans-High Corp. v. Hightimes Smokeshop and Gifts Inc.

Federal Court

Fothergill, J.

July 27, 2015.

Summary:

The plaintiff successfully sued the defendant for trademark infringement and passing off (see 443 F.T.R. 195). In November 2013, Manson, J., permanently enjoined the defendant from selling, distributing or advertising any goods or services in association with the plaintiff's registered trademark. The decision also awarded damages of $25,000 and costs of $30,000 to the plaintiff. The defendant continued to use the plaintiff's trademark and name up to March 2015. In June 2015, the defendant and Muhammad, its officer and director, each pled guilty to five counts of contempt. At issue was the appropriate penalty.

The Federal Court held that the appropriate penalties were costs on a solicitor and client basis of $62,000; a fine of $50,000, payable on a joint and severable basis; and a suspended sentence of imprisonment for Muhammad. If, within 30 days of this order, the defendant paid the $55,000 already owing to the plaintiff together with the $62,000, the fine would be reduced to $10,000. If the order was not satisfied within 30 days, Muhammad was to be imprisoned for 14 days and remain imprisoned until the contempt was purged and the penalties paid.

Contempt - Topic 3301

Punishment - General (incl. considerations) - The plaintiff successfully sued the defendant for trademark infringement and passing off - In November 2013, Manson, J., permanently enjoined the defendant from selling, distributing or advertising any goods or services in association with the plaintiff's registered trademark - The decision also awarded damages of $25,000 and costs of $30,000 to the plaintiff - The defendant continued to use the plaintiff's trademark and name up to March 2015 - In June 2015, the defendant and Muhammad, its officer and director, each pled guilty to five counts of contempt - At issue was the appropriate penalty - The Federal Court discussed the aggravating and mitigating factors - The contemptuous acts were both objectively and subjectively serious - The defendant took 15 months to amend its corporate registration and 16 months to remove the offending signage - There was no explanation for the delay - This weighed in favour of significant penalties - The plaintiff's offers of leniency had been met with "obfuscation and evasion" and bad faith efforts to avoid compliance - The penalty had to have a sufficient deterrent effect - The absence of a prior conviction and the guilty pleas were mitigating factors - However, nothing suggested that the defendant or Muhammad had accepted responsibility or apologized for their continuous breach of the plaintiff's trademarks - No apology had been made to the court, except belatedly by counsel - See paragraphs 26 to 31.

Contempt - Topic 3301

Punishment - General (incl. considerations) - The plaintiff successfully sued the defendant for trademark infringement and passing off - In November 2013, Manson, J., permanently enjoined the defendant from selling, distributing or advertising any goods or services in association with the plaintiff's registered trademark - The decision also awarded damages of $25,000 and costs of $30,000 to the plaintiff - The defendant continued to use the plaintiff's trademark and name up to March 2015 - In June 2015, the defendant and Muhammad, its officer and director, each pled guilty to five counts of contempt - At issue was the appropriate penalty - The Federal Court held that the appropriate penalties were costs on a solicitor and client basis of $62,000; a fine of $50,000, payable on a joint and severable basis; and a suspended sentence of imprisonment for Muhammad - If, within 30 days of this order, the defendant paid the $55,000 already owing to the plaintiff together with the $62,000, the fine would be reduced to $10,000 - If the order was not satisfied within 30 days, Muhammad was to be imprisoned for 14 days and remain imprisoned until the contempt was purged and the penalties paid - The plaintiff's diligence in its efforts to rectify the defendant's contemptuous conduct warranted an award of solicitor and client costs - The defendant's history of trademark infringement and blatant non-compliance with Manson, J.'s order warranted imprisonment even where this was a first offence - The plaintiff's request that the fine be made payable to it was denied - Contempt was an assault on the court's authority - It was not appropriate to award damages under the guise of a fine for contempt - See paragraphs 32 to 39.

Contempt - Topic 3315

Punishment - Fines - [See second Contempt - Topic 3301 ].

Contempt - Topic 3325

Punishment - Imprisonment - When appropriate - [See second Contempt - Topic 3301 ].

Contempt - Topic 3326

Punishment - Suspended sentence - [See second Contempt - Topic 3301 ].

Contempt - Topic 5115

Practice - Hearing - Costs - [See second Contempt - Topic 3301 ].

Practice - Topic 7464

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - In contempt proceedings - [See second Contempt - Topic 3301 ].

Cases Noticed:

Trans-High Corp. v. Hightimes Smokeshop and Gifts Inc. (2013), 443 F.T.R. 195; 2013 FC 1190, refd to. [para. 1].

BBM Canada v. Research in Motion Ltd. (2011), 419 N.R. 166; 2011 FCA 151, refd to. [para. 8].

Minister of National Revenue v. Marshall (2006), 294 F.T.R. 297; 2006 FC 788, refd to. [para. 21].

Pro Swing Inc. v. Elta Golf Inc. (2006), 354 N.R. 201; 218 O.A.C. 339; 2006 SCC 52, refd to. [para. 21].

Montres Rolex S.A. and Rolex Watch Company of Canada v. Balshin et al. (1987), 12 F.T.R. 70 (T.D.), refd to. [para. 21].

Bremsak v. Professional Institute of the Public Service of Canada (2013), 449 N.R. 200; 2013 FCA 214, refd to. [para. 23].

Warman v. Canadian Human Rights Commission (2014), 464 N.R. 87; 2014 FCA 192, refd to. [para. 24].

Warman v. Tremaine - see Warman v. Canadian Human Rights Commission.

Apple Computer Inc. v. Minitronics of Canada Ltd. et al. (1988), 17 F.T.R. (T.D.), refd to. [para. 24].

Merck & Co. et al. v. Apotex Inc. (2003), 305 N.R. 68; 2003 FCA 234, leave to appeal denied (2004), 329 N.R. 198 (S.C.C.), refd to. [para. 25].

Louis Vuitton S.A. et al. v. Tokyo-Do Enterprises Inc. et al. (1990), 37 C.P.R.(3d) 8 (F.C.T.D.), refd to. [para. 25].

Lyons Partnership, L.P. v. MacGregor (2000), 186 F.T.R. 241 (T.D.), refd to. [para. 31].

Baxter Travenol Laboratories Inc. v. Cutter (Canada) Ltd., [1987] 2 F.C. 557; 81 N.R. 220 (C.A.), refd to. [para. 31].

Telewizja Polsat S.A. et al. v. Radiopol Inc. et al. (2006), 292 F.T.R. 195; 2006 FC 137, refd to. [para. 32].

Fisher (James) & Sons plc v. Pegasus Lines Ltd. S.A., [2002] F.T.R. Uned. 433; 2002 FCT 650, refd to. [para. 32].

Canadian Human Rights Commission v. Winnicki (2007), 359 N.R. 101; 2007 FCA 52, refd to. [para. 33].

Microsoft Corp. v. 9038-3746 Quebec Inc. et al. (2010), 403 N.R. 359; 2010 FCA 151, refd to. [para. 33].

Dursol-Fabrik Otto Durst GmbH Co. KG v. Dursol North America Inc. et al. (2006), 297 F.T.R. 301; 2006 FC 1115, refd to. [para. 34].

Louis Vuitton Malletier, S.A. et al. v. Bags O'Fun Inc. et al. (2003), 242 F.T.R. 75; 2003 FC 1335 (T.D.), refd to. [para. 34].

Counsel:

James Green and Charlotte McDonald, for the applicant;

Alpesh Patel, for the respondent.

Solicitors of Record:

Gowling Lafleur Henderson LLP, for the applicant;

AP Law, for the respondent.

This matter was heard at Toronto, Ontario, on June 18, 2015, by Fothergill, J., of the Federal Court, who delivered the following reasons for order at Ottawa, Ontario, on July 27, 2015.