Counterfeit Goods: Statutory and Punitive Damages


Microsoft Corporation v. 1276916 Ontario Ltd. et al is not a trademark case.   However, it is a further illustration of Canadian courts’ willingness to award substantial statutory damages under the Copyright Act, together with punitive damages, in counterfeit goods cases.

In this case Microsoft had received ten reports of software privacy.  An investigator attended the Mississauga, Ontario store operated by the defendant numbered company and was offered a computer system with unlicensed software.  A cease and desist letter was sent, but Microsoft continued to receive piracy reports.  An investigator subsequently bought a computer system with various unauthorized software loaded on it and Microsoft commenced the action.  The action was initially defended by the defendant numbered company and its owner, but the defence was struck out after the owner failed to attend discoveries, alleged the store was out of business, when it was not, and failed to appoint new counsel.

Microsoft applied for default judgment.

Following cases such as Louis Vuitton Malletier S.A. v. Yang and Microsoft Corporation v. PC Village Co. Ltd., and noting the defendants’ bad faith and disregard for the plaintiffs’ rights as well as the need for deterrence, the Court awarded statutory damages of $10,000 for each work infringed, for a total of $70,000.

Following cases such as Louis Vuitton Malletier S.A. v. 486353 B.C. Ltd., which held that outrageous or highly reprehensible conduct and a disregard for the legal process were a basis for punitive damages, the Court awarded punitives of $50,000.

Finally, the Court found the owner personally liable as well, on the basis that he directed or participated in the activities, knowingly or with indifference.