Hermès bags injunction against sale of knock-offs

In Hermès Canada Inc v Henry High-Class Kelly Retail Store, the Supreme Court of British Columbia has upheld the plaintiff's request for an interlocutory injunction restraining the defendant from selling or advertising products that employ the distinctive features of the plaintiff's goods.

In September of 2004, an individual named Youngghul Park opened a store in Vancouver, Canada under the name Henry High-Class Kelly Retail Store. The goods on sale in the Henry store were all copies of products manufactured by Hermès Canada Inc's parent company Hermès International SA. Although goods sold in the Henry store did not include the name Hermès, they were virtually identical in every other detail, including the unique and distinguishing features of the Hermès products. For example, many of the genuine Hermès products have three lines of embossed gold lettering saying 'Hermès Paris, made in France'. The Henry products have the same gold embossed lettering, but instead state 'Henry High-Class Kelly'.

A private investigator went to the Henry store on behalf of Hermès in November of 2004 and provided the sales clerk with a Japanese publication that detailed the Hermès line of leather products. The investigator identified a number of them to the clerk for purchase. These were obtained from the stock in the Henry store and were identified using the same model names as used by Hermès.

Hermès commenced an action against the Henry store with the Supreme Court of British Columbia on November 22 2004. It sought an interlocutory injunction to restrain the sale of products passing off on its goodwill.

The test for interlocutory injunction in British Columbia requires that the applicant demonstrate that (i) its claim is not frivolous, and (ii) the balance of convenience favours the granting of an injunction. Among other factors, the latter requirement includes the consideration of irreparable harm as may be experienced by either the applicant or the respondent.

As for the underlying cause of action, passing off, there are three elements that must be established:

• the existence of goodwill;
  
  
• the deception of the public due to misrepresentation; and
  
  
• actual or potential damage to the plaintiff.

The court concluded that Hermès had established a strong case that it had goodwill in its name, reputation and the style of goods at issue.

With respect to the question of misrepresentation, the court decided that there was a fair case to be tried on the issue of potential misrepresentation. In considering this issue, it stated that "a customer might conclude this was a store authorized to market an Hermès second line". On the subject of actual or potential harm, the court reasoned that the main issue was not lost sales but damage to the goodwill as a result of the Henry store's operation.

The court rejected an offer to post a sign in the Henry store advising that the products sold were Hermès copies. It stated that this would only exacerbate the matter and:

"telegraph to the Vancouver market specifically, and perhaps more generally to other international copiers, that such deliberate copying and marketing of Hermès knock-offs is both acknowledged and countenanced in the British Columbia business market, with no resulting exposure to a claim for damages and packaging of action. Such strategy offers no protection to Hermès's goodwill and as ... noted earlier, it effectively invites other like-minded merchants to adopt the same strategy."

The interlocutory injunction was granted restraining the sale or advertising of products that employ the distinctive features of Hermès's products.

David Wotherspoon, Fasken Martineau DuMoulin LLP, Vancouver