In a decision dated September 23, 2015, a Canadian
Federal Court Judge ordered the principal of a corporation to be
imprisoned for a minimum of 14 days and to remain imprisoned until
payment is made of more than $100,000 in fines, costs and damages
awarded in a trademark infringement proceeding and subsequent
contempt proceeding. This decision represents a rare exercise of
the Court's power to enforce civil orders against corporations
through imprisonment of an officer and director of the
Judgment for Trademark Infringement
The original judgment in Trans-High
Corporation v. Hightimes Smokeshop and Gifts Inc. issued on
November 26, 2013. Trans-High Corporation ("Trans-High"),
was the owner of the trademark HIGH TIMES, used since 1982 in
Canada in association with a popular magazine called High
Times, which focuses on the "interests of counterculture,
including the medical and recreational uses of marijuana".
Hightimes Smokeshop and Gifts Inc. ("Hightimes"), was a
retail store selling smoking and marijuana accessories. The Court
found that the use of the name High Times Smoke Shop & Gifts
constituted trademark infringement and passing off of the trademark
HIGH TIMES. The Court ordered a permanent injunction against
further use of the term "High Times" and awarded payment
of $55,000 ($25,000 in damages and $30,000 in legal costs).
Respondent's Post-Judgment Conduct
Hightimes failed to make the required payment and Trans-High
subsequently discovered that it continued to infringe the HIGH
TIMES trademark despite having been served with the judgment. In
May 2014, Trans-High again served the judgment, explained its
effect to the employees of Hightimes, and threatened to bring
contempt proceedings against the company and its sole officer and
director, Ameen Muhammad.
Hightimes continued to ignore the terms of the judgment and
Trans-High began contempt proceedings in August 2014 against both
the company and Mr. Muhammad. In February 2015 the parties reached
a settlement which required full compliance with the original
judgment and the guilty pleas of Hightimes and Mr. Muhammud in the
pending contempt proceeding. Following settlement, Hightimes failed
to make the required payment and was slow in removing the trademark
from the store, but did eventually remove the mark. At the contempt
proceeding, the company and Mr. Muhammud entered a guilty plea.
In a decision dated July 27, 2015, the Court noted
that contempt has a public aspect (general deterrence) and private
aspect (specific deterrence). In this regard, the Court noted that
in intellectual property cases, general deterrence is a primary
consideration. The Court discussed several aggravating factors,
including the objective and subjective seriousness of the behaviour
and the lack of an explanation or apology. The Court also noted
certain mitigating factors, such as the guilty plea and the lack of
prior contempt convictions. Overall, the Court determined that it
was appropriate to order fines jointly payable by Hightimes and Mr.
Muhammud, with imprisonment for non-compliance.
The Court ordered payment of $50,000 in fines to the court,
$55,000 to Trans-High as required by the original judgment, and an
additional $62,000 to Trans-High in full reimbursement for costs
and disbursements related to the contempt hearings. The Court
further ordered that in the event of non-compliance within 30 days
Mr. Muhammed is liable to be imprisoned for not less than 14 days,
to continue until the contempt is purged and the penalties are
Hightimes and Mr. Muhammud failed to make the payment required
by the Court's contempt Order. By the decision dated September
23, 2015, the Court issued a warrant of committal to have Mr.
Muhammud arrested and imprisoned for not less than 14 days and to
remain until payment was made of fines, costs and other amounts
previously awarded by the Court. Mr. Muhammud may seek an Order for
his release upon filing evidence that the full amounts have been
It is established practice that contempt proceedings may be used
to secure compliance with Court orders, including in intellectual
property cases. This decision highlights the Federal Court's
willingness in appropriate cases to order remedies for contempt
against directors and officers of corporations that fail to comply
with Court Orders, including imprisonment.
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
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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