Contempt of court order issued for infringement outside Canada

In LifeGear Inc v Urus Industrial Corporation, the Federal Court of Canada has held the defendant in contempt of court for continuing to offer for sale counterfeit products over the Internet following an earlier court order prohibiting such sale. The court came to this conclusion, in spite of the fact that the website appeared to be operated outside of Canada by a third party.

LifeGear Inc manufactures exercise equipment under the trademark SATURNE. Urus Industrial Corporation carries on a variety of commercial ventures, including distribution of consumer goods. It had a contract to distribute LifeGear's exercise equipment and did so under the name Koolatron. LifeGear later filed a trademark infringement complaint against Urus alleging that it was also selling counterfeit versions of the SATURNE-marked exercise equipment. It moved for summary judgment, which was granted in part. Reasons for the ruling were provided orally on December 6 2002 and in writing on December 10 2002. The formal order was issued on February 4 2003. The oral and written reasons for the summary judgment (i) indicated that Urus's actions had infringed LifeGear's SATURNE mark, and (ii) prohibited further breaches of the mark. Urus was also ordered to deliver up any infringing materials.

Urus continued to offer the infringing products for sale after December 6 2002 through its website located at 'koolatron.com'. LifeGear then brought a motion against Urus for contempt of court for the continued sale of the goods and for failure to deliver up all infringing materials. Urus responded that the website was operated by a third party in India.

The Federal Court held that Urus had a duty to comply with the earlier decision from the point at which it was rendered (ie, December 6 2002), whether or not a formal judgment had been signed. Despite the fact that the infringing products were offered for sale through a website apparently operated outside of Canada, the court held that LifeGear had proved beyond a reasonable doubt that Urus had failed to respect the previous ruling and had violated the formal order. Thus, its conduct amounted to contempt of court.

Glen A Bloom and Samantha J Gervais, Osler Hoskin & Harcourt LLP, Ottawa