Remedies limited due to lack of damages

In Target Event Production Ltd v Cheung (2010 FC 27, January 11 2010), a case involving the Richmond Night Market, the Federal Court has held that copyright infringement and passing off had occurred.

Night markets are events at which vendors sell a variety of food products and merchandise. In 2002 Raymond Cheung created a logo for the Richmond Night Market, which included the text 'Richmond Night Market Summer Festival' in English and 'Richmond Summer Night Market' in Chinese characters. During the summer months of 2000 through 2007, Target Event Production Ltd (whose president is Raymond Cheung) operated its night market in Richmond, British Columbia. In 2007, when Target was unable to renegotiate its lease, it was announced that the market would relocate, which it was unable to do. As a result, Target's night market ceased operating in 2008 and 2009.
The defendants (Lions Communications Inc and its director of operations, Paul Cheung) became aware of the available space previously used by Target. They negotiated a lease and opened their own night market in 2008, adopting the name Richmond Summer Night Market in English and in Chinese characters, while copying various documents that Target had created (application forms and site plans). The defendants also used a photo of Target's market on the home page of their website. 
Target sued for copyright infringement and passing off, alleging that the defendants had caused vendors to think that they were dealing with Target, thus persuading them to rent booths at its market. 
The court first held that Paul Cheung had infringed Target’s copyright when he downloaded the market site plan for Lions’ use. The first 40 vendors saw the exact copy of Target’s market site plan, whereas another 60 to 80 were shown Lions’ site plan, which was a substantial reproduction of Target’s. Targets’ site plan was used to construct the Lions’ market and this reproduction was clearly an infringing activity.
With regard to passing off, the court found that Target had used various names extensively in connection with its night market. Target had thus acquired common law rights to four trademarks: RICHMOND NIGHT MARKET, RICHMOND NIGHT MARKET SUMMER FESTIVAL and Chinese characters for each of these. By January 2007 Target’s names were valid trademarks, because they enjoyed substantial goodwill and had acquired distinctiveness. 
However, because Raymond Cheung and Target had failed to reopen a night market in 2009, Target’s names, which were inherently weak, lost their distinctiveness and associated goodwill. For these reasons, much of the declaratory and injunctive relief sought by Target was not granted.
The doctrine of passing off is a three-part test. A plaintiff must demonstrate:
  • the existence of goodwill;
  • deception of the public due to a misrepresentation; and
  • actual or potential damage suffered.
The court examined allegations of passing off while taking into account the elements of confusion, such as those listed in Section 6(5) of the Trademarks Act. Although Lions’ use of Target’s names (or names closely resembling them) would cause confusion, “surrounding circumstances”, such as Raymond Cheung’s conduct, the intense media coverage of the closing of the Richmond Night Market and the opening of Lions’ market, as well as the content of Lions’ website, virtually eliminated the likelihood that vendors would be confused.
On a balance of probabilities, the court concluded that vendors generally would not have been confused by Lions’ conduct. None of the vendors who signed Lions’ contracts were confused about the identity of the market organizer because they had been contacted by Alvin Au, Paul Cheung’s advisor. The court concluded that the evidence of confusion was insignificant. Lions’ event had approximately 120 vendors and attracted about 10,000 visitors. Twenty-five confused potential visitors over a three-month period was not a significant evidence of confusion. 
However, Target had enormous goodwill associated with its names. Lions chose names that would likely cause confusion in both Chinese and English, and used them in ways to confuse prospective visitors who were led to believe that the market in 2008 was a continuation of Target’s successful market. Had Target operated a market in 2008, Lions’ conduct would have damaged Target’s ability to attract visitors at its new location. The absence of Target in the market in 2008 or 2009 meant that it did not suffer any losses by virtue of Lions’ conduct.
Therefore, the defendants’ illegal actions did not harm Target in a monetary sense. Nevertheless, the defendants appropriated Target’s names, rules and market site plan, and misrepresented to prospective visitors that their market was Target’s successful market. As a result, the defendants were liable - both jointly and severally - for damages related to copyright infringement and passing off in the amount of $15,000 plus costs and interest.
Such infringement could have been avoided if Lions had purchased Target’s site plan, or Lions had redesigned the market or simply closed it down.
John Macera, Macera & Jarzyna - Moffat & Co, Ottawa

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