Canada: British Columbia Supreme Court Finds Defendants Liable For Trademark Infringement And Passing Off

Last Updated: September 19 2018
Article by Scott E. Foster and Kathy Tran

On July 30, 2018, after a 15-day trial in the British Columbia Supreme Court, Mr. Justice Sewell issued Reasons for Judgment in a trademark infringement and passing off claim brought by two Royal Pacific companies against a former sales agent, Vinh Phat Steven Dong, and two companies owned and controlled by Mr. Dong.

The Royal Pacific Plaintiffs have been in the real estate industry in Vancouver since the mid-1990s and have had enormous success.  For example, in 2016, they arranged $15 billion of sales.  As a result, the Royal Pacific trademark and the name ROYAL PACIFIC have become well known in Vancouver in connection with real estate related services. 

Mr. Dong became a real estate agent at one of the Royal Pacific Plaintiffs in 2012 and signed a Sales Representative Agreement ("SRA").  While the SRA authorized sales representatives to use the name and logo of Royal Pacific, the terms of agreement strictly limited this permission to activities in connection with the duties of a sales representative.  However, in 2012, Mr. Dong purchased the domain name.  In 2013, the Defendants attempted to launch a software service called Bliip Box, aimed at creating a social media referral system for real estate professionals.  The software platform displayed Royal Pacific's registered trademark and the launch of the business relied upon the use of the domain name , as well as false statements made to the public such as "Royal looking to endorse local business on our Bliip Box".  None of these statements or actions were authorized or consented to by the Plaintiffs.  They were also outside of the limited licence given to Mr. Dong in the SRA to use the name and logo of Royal Pacific.  The Defendants also created a Facebook page that displayed Royal Pacific's registered trademark. 

When the Defendants did not cease their infringing activities and refused to deliver the domain name to the Plaintiffs, Mr. Dong's SRA was cancelled.  After further refusals by the Defendants to comply, litigation was commenced in December 2013. 

The Judge ultimately held that the Defendants had infringed Royal Pacific's registered trademark and the Defendants had passed off their goods and services as approved or endorsed by the Royal Pacific group of companies.  Indeed, upon application of the confusion analysis set out in Masterpiece Inc v Alavida Lifestyles Inc., 2011 SCC 27, the Judge found that the mark the Defendants used was undeniably similar to Royal Pacific's registered mark.  Despite the Defendants' allegation that there was consent to use the registered trade-mark under the SRA, the Judge explained that no reasonable person in Mr. Dong's position could have believed that the Plaintiff was consenting to the Defendants' use of the Royal Pacific name and logo for purposes other than those which are expressly stated in the SRA.

Other interesting aspects of this case provide notable takeaways.  For instance, the Court addressed the issue of personal liability of a director of a company.  Relying on the B.C. Court of Appeal decision in Merit Consultants International v Chandler, 2014 BCCA 121, the Judge found that Mr. Dong personally committed tortious conduct and was liable for his own actions and the actions of the two Defendant companies of which he was the sole shareholder and director.  The Judge therefore awarded damages against all three Defendants. 

A further interesting point to note is that elevated costs were awarded to the Plaintiffs.  This is a reflection of the unusual and complicated nature of the case, owing in large part to the conduct of Mr. Dong and the numerous unmeritorious claims raised by the Defendants.  Citing the relevant factors that play into an assessment of the scale of costs as articulated in Mort v Saanich School District No 1, 2001 BCSC 1473, the Judge concluded that costs are to be assessed on scale C, which is normally reserved for matters of more than ordinary difficulty.  The factors in this case that led to elevated costs on scale C included the lengthy trial period and examinations for discovery and the numerous pre-trial applications made necessary by the conduct of Mr. Dong.

The Judge also issued a vexatious litigation order restraining Mr. Dong from commencing litigation against Gowling WLG Canada LLP without first obtaining leave of the Court.  The Judge expressed concerns about the Defendants' tendency throughout the trial proceedings to make unsubstantiated allegations against Plaintiffs' counsel. 

Scott Foster of Gowling WLG Canada LLP represented the Royal Pacific Plaintiffs with assistance of associates Siobhan McConnell and Nicholas Pike

Royal Pacific Real Estate Group Ltd. v Dong, 2018 BCSC 1272

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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