(Disponible uniquement en anglais)
Justice Lafrenière
Brendan van Niejenhuis, Andrea Gonsalves and Karen Bernofsky (Stockwoods LLP) for the Applicant
Bob Sotiriadis, Joanne Chriqui, Cara Parisien and Gabriel St-Laurent (Robic LLP) for the Respondent
Group III International Ltd v Travelway Group International Ltd, 2024 FC 1195
October 11, 2024
After years of litigation and appeals, the Applicant was ultimately successful in its application for trademark infringement and passing off against the Respondent. This decision dealt with the reference to quantify the profits earned by the Respondent for the products that were found to be passed off as those of the Applicant. The decision provides a detailed analysis of an accounting of profits, in particular on causation and deducting costs from profits.
On this reference, there was a question as to whether causation had been determined. Specifically, whether the prior Courts had determined what portion of the Respondent’s profits were causally connected to the passing off. The Court found that such a determination had not been made, and went on to consider what portion of the Respondent’s profits had the necessary causation to be disgorged to the Applicant.
The parties presented conflicting expert and fact evidence on the issue of causation. The Court ultimately accepted evidence submitted by the Respondent’s expert and fact witnesses, and found that 15% of the Respondent’s sales were causally connected to the passing off.
There was also a dispute over which costs ought to be considered to reduce the profits owed. The two main categories of costs considered were credit memo discounts and “omitted and miscellaneous costs” (which were described as “wrapping supplies, lab testing, marine insurance, sample costs, a portion of inland freight and gain or loss on foreign exchange”). There were also other categories of costs assessed. In this regard, the decision provides a detailed analysis of how to consider whether costs are deductible in an accounting of profits assessment.
In addition to causation and costs, there was also an issue of whether the Respondent was required to disgorge profits for the period when the infringing marks were registered until their expungement. The Court found that the issue had already been determined as part of the liability phase, and that the Respondent was required to disgorge such profits (subject to causation). The Court observed that on a reference, “it is important to bear in mind that I am not wearing the hat of a judge, but rather that of a referee.” As such, the findings in the prior decisions were binding on this reference, and this issue had already been determined.
Prepared by Will Boyer, Gowling WLG