Date: 20000106
Docket: T-1499-98
BETWEEN :
TAG HEUER S.A.
Plaintiff
- and -
JOHN DOE AND JANE DOE AND OTHER PERSONS UNKNOWN
TO THE PLAINTIFF WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, ADVERTISE, OR DEAL IN COUNTERFEIT
TAG HEUER WATCHES, CLOTHING AND ACCESSORIES
AND THOSE PERSONS LISTED IN APPENDIX A
Defendants
REASONS FOR ORDER
[1] The plaintiff Tag Heuer S.A. applies for default judgment against four defendants who were added to this claim on October 29, 1998. There is one application for default judgment, supported by one affidavit, with the defendants being identified in a table which is appended to the Motion Record. These reasons apply to all four defendants: Margueritte Takouchian, "Aidia", Any Yuk-Shi To and Hamid Khan Pathan.
[2] The application seeks a head of relief not pleaded in the Statement of Claim, specifically: " the plaintiff shall be at liberty to dispose of any items seized in this matter as it sees fit". Paragraph 15 of the Anton Piller order pursuant to which the goods were seized provides, among other things:
| The unauthorized or counterfeit TAG HEUER merchandise and other materials seized or delivered up pursuant to this order shall be utilized solely for the purpose of civil proceedings in relation to the enforcement of the plaintiff"s trademark and copyright rights or the trade-mark or copyright rights of any legitimately interested party respecting unauthorized or counterfeit merchandise. |
[3] The effect of this paragraph is spent once default judgment is issued. In the absence of a request that the property be disposed of, it would be released to the person from whom it was seized. The objective of the order sought is to prevent counterfeit goods from entering the channels of trade. There is, after all, some logic in not returning goods whose primary value is as inventory to someone who, by failing to defend the claim, is to be taken to have admitted dealing in counterfeit goods.
[4] There is provision in the Trade-Marks Act for the destruction of counterfeit goods.
53.2 Where a court is satisfied, on application of any interested person, that any act has been done contrary to this Act, the court may make any order that it considers appropriate in the circumstances, including an order providing for relief by way of injunction and the recovery of damages or profits and for the destruction, exportation or other disposition of any offending wares, packages, labels and advertising material and of any dies used in connection therewith.
53.2 Lorsqu'il est convaincu, sur demande de toute personne intéressée, qu'un acte a été accompli contrairement à la présente loi, le tribunal peut rendre les ordonnances qu'il juge indiquées, notamment pour réparation par voie d'injonction ou par recouvrement de dommages-intérêts ou de profits, pour l'imposition de dommages punitifs, ou encore pour la disposition par destruction, exportation ou autrement des marchandises, colis, étiquettes et matériel publicitaire contrevenant à la présente loi et de toutes matrices employées à leur égard.
It is to be noted that there is no reference in this section to any compensation to the defendant for the destruction of his/her goods. In practice, the question of compensation for surrender and destruction of counterfeit goods never arises, largely because so few of these claims are defended.
[5] It is clear that the defendant is not entitled to compensation for the value of the goods arising from their infringement of the plaintiff"s trade-marks. The wrongful appropriation of those trade-marks by the defendant is the heart of the plaintiff"s claim. Whether the defendant is entitled to compensation for the non-infringing value of the goods is a question which will have to await a case where such a claim is advanced. One can conceive of a situation in which the infringing goods can be made non-infringing, or where the goods can be broken down to components which are non-infringing and which have a value. Whether an order for the surrender for destruction of those goods without compensation would be granted over the defendant"s objection is a question which will have to be decided when it arises.
[6] In this case, the defendant has walked away from the goods and is allowing judgment to be entered in default. The only issue in this case is the propriety of allowing a remedy which has not been sought in the Statement of Claim, and of which no notice has been given to the defendant. As a general proposition, a plaintiff seeking default judgment is limited to the relief claimed in the Statement of Claim because the defendant might well have chosen to defend if some other relief had been claimed. In other words, the defendant can only be taken to have conceded that which the plaintiff has alleged or claimed. In the absence of a claim in the Statement of Claim, or of notice to the defendant that surrender of the goods for destruction would be sought, the basis for the making of such an order is uncertain.
[7] The practice has been that such orders have been granted. It would be unfair to this defendant to "move the goalposts" at this time without notice of an intention to do so. As a result, the judgment sought will be granted. However, it is not to be assumed that this will be the case in all instances, particularly where it appears that the goods in question have some non-infringing value, either on a break-up basis or by having the infringing marks removed where this is possible. Trade-mark holders who wish to avoid difficulties in this regard in the future should take care to claim surrender of the infringing goods for destruction in their Statement of Claim. It would also be prudent to give unequivocal notice to the defendants at the time of seizure that if they do not contest the plaintiff"s claim, their goods will be subject to destruction without prior notice to them. A paragraph to that effect could perhaps be inserted into the order which is now served upon the defendants at the time of seizure.
[8] This leaves the question of costs. Given that the defendants have already been awarded costs for the execution of the order for surrender of the goods, the only matter remaining is the costs of the default judgment. The plaintiff claims $500. Assuming a blended hourly rate (the average rate of all persons who may have worked on the file) of $150, the amount claimed represents slightly more than 3 hours spent on the file. This is not unreasonable. Costs will be awarded as claimed.
[9] Judgment will be issued separately.
"J.D. Denis Pelletier"
Judge
Ottawa, Ontario
January 6, 2000