Canada: Precedent-Setting Marlboro Decision Provides Guidance On Entitlement To Claim Profits In Trademark Infringement Cases

Last Updated: March 25 2015
Article by Jean-Sébastien Dupont

Another milestone has been reached in a case between tobacco industry giants Imperial Tobacco Canada Limited ("Imperial Tobacco") and Philip Morris, together with and its Canadian subsidiary Rothmans, Bensons & Hedges (collectively: "Philip Morris"). On March 23, 2015, the Federal Court confirmed that Imperial Tobacco is entitled to elect an accounting of Philip Morris' profits resulting from the infringement of its rights in the MARLBORO trademark in Canada. This important decision for the parties will also likely become a significant precedent for Canadian litigants as this was the first opportunity in decades for the Federal Court to conduct an in-depth assessment of the issue of entitlement to profits in the trademark context.

By way of background, Marlboro has been the best known and top selling cigarette brand in the world since the mid 1970's. It is being sold by Philip Morris in more than 160 countries except for Canada where the MARLBORO trademark was assigned to Imperial Tobacco in the 1920's. Philip Morris introduced on the Canadian market, in 2006, the first cigarette packaging in worldwide history to be sold without any brand name, that is, a packaging intentionally designed to emulate the design elements of its international Marlboro brand packaging but without the "Marlboro" name.

Trademark infringement proceedings were initiated in the Federal Court in 2006 that were concluded with the decision of the Federal Court of Appeal which found that Philip Morris had been infringing Imperial Tobacco's rights in its MARLBORO trademark, issued a permanent injunction and referred back various issues to the trial judge, including the question of Imperial Tobacco's entitlement to elect between damages or an accounting of profits. This decision of the Court of Appeal was the Managing Intellectual Property 2012 Canadian Trademark Milestone Case of the Year and was summarized in our July 5, 2012 IP Update.

In his detailed reasons, Mr. Justice de Montigny, noted that both remedies, damages and accounting of profits, are specifically provided for as alternatives in the Trademarks Act. While both remedies are designed to compensate the right holder for the wrongful use of its intellectual property, the underlying principles are very different. An accounting of profits is an equitable remedy, the purpose of which is to compel the wrongdoer to divest earnings to the party who was wronged. This is to be contrasted to damages, the aim of which is to put the injured party in the position it would have been in had the infringement not occurred.

The Court found that while Imperial Tobacco has no presumptive right to an accounting of profits, it should not be denied that option in the absence of any compelling reasons. Referring to well-established equitable defences, the Court reviewed the following considerations:

  • The lack of delay in commencing the proceedings and in bringing the matter to trial were considered to be relevant factors which favoured entitlement to an accounting of profits in this case.
  • The issue of "clean hands" and the fact that Imperial Tobacco kept selling and promoting its own products, were considered to be relevant and also favoured entitlement to an accounting of profits.
  • The Court considered the proportionality of an accounting of profits in view of the length and extent of the infringement and the likely benefit of the accounting exercise. However, in this case  the Court considered the alternative, the calculation of damages, to be likely to be equally complex and contentious. Ultimately in this case this factor was considered to weigh neither for nor against an accounting of profits.
  • The behaviour of Philip Morris was taken into consideration given the deterrence function of the accounting of profits (in addition to its purpose of providing restitution). However, the judge determined that Philip Morris' conduct in the present matter was not egregious. This was the only factor found to weigh nominally against an accounting of profits.

In addition, the Court addressed two factors or arguments raised by Philip Morris that were essentially found to be ill-founded as lacking legal and evidentiary support:

  • Philip Morris suggested that Imperial Tobacco could never have earned the profits made by Philip Morris from its infringing sales such that it would receive an inequitable windfall from an accounting of Philip Morris' profits. However, as noted by the judge, the claimant's damages are not relevant to the question of entitlement since the objective of an accounting of profits is to restore improperly received profits to their rightful owner.
  • Philip Morris also argued that there was no evidence of "actual confusion" as to source at trial and that the Court of Appeal merely made a finding of "deemed infringement" based on a likelihood of confusion which would weigh against entitlement to profits. The trial judge noted that the decision of the Court of Appeal was "crystal clear", that its focus was on name association which was found to create confusion as to source and that this liability finding could not be revisited.

In the end, the trial judge found that none of the factors considered precluded an accounting of profits and granted Imperial Tobacco the right to elect either remedy after discovery of Philip Morris. With this legal issue having been determined by the Court, the parties will now be able to proceed to a reference for the determination of the damages or profits to be paid by Philip Morris. Beyond the immediate effect on the parties, this decision will provide considerable guidance for litigants involved in trademark infringement proceedings and considering the issues of monetary remedies and entitlement in the future.

François Guay and Jean-Sébastien Dupont of Smart & Biggar acted as counsel on behalf of Imperial Tobacco. For further information, please contact a member of our firm's Trademarks group.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Jean-Sébastien Dupont
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.