The Federal Court considers the requirements for trademark and copyright infringement

In Popsockets LLC v. Case World Enterprises Ltd., 2019 FC 1154, the Federal Court (“Court”) considered an ex parte motion for default judgment brought by Popsockets LLC (“Popsockets”). Popsockets alleged that Case World Enterprises Ltd (“Case World”) had infringed, passed off and depreciated the goodwill in certain of its trademarks, and infringed its copyright, by selling counterfeit grips and phone holders at three retail locations in Surrey, British Columbia.

The Court’s decision in Popsockets provides an overview of the requirements for establishing liability for infringement under the Trademarks Act and the Copyright Act.

The Court granted Popsockets’ motion for default judgment, finding that Case World had infringed Popsockets’ trademark and certain registered copyrights. The Court awarded Popsockets the injunctive relief it had requested, and granted Popsockets nominal compensatory and statutory damages while declining to grant punitive damages against Case World. The Court did not find liability for passing off or depreciation of goodwill under sections 7 or 22 of the Trademarks Act, as Popsockets had not sufficiently demonstrated goodwill or reputation in Canada.

Background

Popsockets is the owner of the registered Canadian word mark “POPSOCKETS” (the “word mark”) and an unregistered design mark which was the subject of a pending Canadian trademark application (the “design mark”). Popsockets alleged that Case World sold counterfeit versions of Popsockets’ wares, employing marks and artistic works on goods and packaging that infringed, respectively, Popsockets’ rights under the Trademarks Act and the Copyright Act.

Popsockets retained an investigator to attend at Case World’s retail locations, and the investigator was able to purchase grips and phone holders that showed the word “Popsocket” on the Universal Product Code and on the receipt. The items sold by Case World were not manufactured by Popsockets, but nonetheless bore its name and mark. Additionally, the packaging included artistic works that were similar to copyrighted works owned by Popsockets, though there were differences in the use of colour between the copyrighted works and those displayed on Case World’s products.

With those circumstances in mind, Popsockets brought an action for trademark infringement, passing off, depreciation of goodwill and copyright infringement against Case World.

The Federal Court’s Decision

Likelihood of Confusion

Paragraph 20(1)(a) of the Trademarks Act states that a registered trademark is infringed where any person who is not entitled to the trademarks’ use sells, distributes or advertises any goods or services in association with a confusing mark. The likelihood of confusion is assessed with regard to all of the circumstances, including the factors prescribed by subsection 6(5) of the Trademarks Act.

The Court noted that only the word mark was registered in Canada, so it was the only mark that could be the subject of an infringement action under section 20 of the Trademarks Act. With that in mind, the Court concluded that infringement of the word mark was established, as there was a significant degree of resemblance between the word mark and the “Popsocket” mark that appeared on Case World’s goods. Given the similarities in the nature of the goods and the nature of the trade, and considering the subsection 6(5) factors, the Court was satisfied that there was a likelihood of confusion and that Case World had infringed Popsockets’ rights under the Trademarks Act.

Passing Off and Depreciation of Goodwill

The Court also considered Popsockets’ arguments under sections 7 and 22 of the Trademarks Act. Given the manner in which Popsockets framed its claim, the Court held that it was required to demonstrate goodwill or reputation in Canada to succeed under these sections.

The Court acknowledged that Popsockets’ sales had increased significantly in the past two years, and that the company had many followers on various social media platforms. However, the Court noted that there was no way to determine from social media evidence, either quantitatively or qualitatively, the total number of followers in Canada. Taking into consideration the evidence as provided, the Court held that the evidence of use relied on by Popsockets was insufficient to establish goodwill or reputation in Canada, precluding liability under sections 7 and 22 of the Trademarks Act.

Copyright Infringement

Popsockets’ claim for copyright infringement was based on similarities between artistic works depicted in several copyrights, owned by Popsockets and registered in Canada, and drawings that appeared on the packaging of the merchandise sold by Case World. The Court noted that there were subtle differences between the copyrighted works and the allegedly infringing works, particularly in the use or absence of colour. However, the Court also noted that copyright infringement can be established where only a substantial part of a copyrighted work is reproduced, or in circumstances where the reproduction was “strikingly similar” to the copyrighted work.

After comparing the copyrighted works to the drawings that appeared on Case World’s packaging, the Court found that the drawings were “strikingly similar” to Popsockets’ works, and therefore infringed on Popsockets’ rights under section 27 of the Copyright Act.

Remedy

In reliance on the foregoing findings, the Court ordered an injunction restraining Case World from continuing to sell the counterfeit phone holders and requiring delivery up of the infringing merchandise. The Court also granted Popsockets nominal compensatory damages arising from the infringement of the word mark, and statutory damages arising from the infringement of the copyright, while declining to grant an award for punitive damages.

Authors: Jordan Scopa, Jaclyn Tilak and Duncan Lurie