What Can Happen If a Business Infringes On a Trademark?
When An Infringement Happens the Trademark Owner May Sue the Party Who Infringed For Damages. Some Courts May Also Have the Power to Order An Infringing Party to Cease the Infringement.
Understanding Trademark or Copyright Infringement Litigation Including Basis For Valuing Damages
The improper use of a name, brand, logo, trademark, images, among other things, that belong to a person or business may be a form of trademark infringement or copyright infringement that is legally actionable, meaning conduct from which a lawsuit may arise. When such an infringement occurs, a lawsuit may allege various causes of action, being the legal term meaning reasons for suing, including the causes of action of trademark infringement, copyright infringement, passing off, misrepresentation, among others. A lawsuit may even allege many of these causes of action as alternatives to one another all within the same legal action.
Many of these forms of wrongdoing (and perhaps also the tort of misrepresentation if such a case were brought by a misled customer) occurred in the case of Kashruth Council of Canada v. 1412189 Ontario Inc., 2018 CanLII 130064 when the Defendant, 1412189 Ontario Inc. operating as Adee Flour Mills ("Adee"), continued to use logos and stamps belonging to the Kashruth Council of Canada without authorization to do so.
What happened that brought about the Kashruth lawsuit is interesting, and hopefully rare, and may be briefly summed up. Essentially, for a period of time, the Adee business was authorized to sell products displaying the logos and stamps or marks that were owned by Kashruth and where the logos or stamps or marks served the purpose of showing that the food products bearing such logos or stamps or marks were certified as kosher. However, after the period of time in which Adee was authorized to sell food products with the marks of Kashruth, Adee continued to do so, thereby infringing upon the various marks, as intellectual properties, of Kashruth. As was specifically said by the Judge:
 Mr. Rabkin stated that the effect of the transgressions is an egregious breach of the Council’s copyright and trademark rights, severely diluting the Kosher trademark, harming its goodwill, and putting the reputation of the Council into disrepute. The kosher Jewish community takes their dietary habits extremely seriously, and thus have placed enormous trust on the Council to maintain high standards of control. Mr. Rabkin stated that the actions of the defendants could have a long-term prejudicial impact on such trust throughout the Council’s constituency, since kosher food is a spiritual obligation and eating food that is labelled as kosher certified when it is not is a severe transgression. The actions have caused harm to both kosher consumers as well as the Council’s reputation as an upstanding kosher certifier.
In determining that such conduct was unlawful and deserving of compensation, the Judge in Kashruth relied upon statutory rights prescribed within the Trade-Marks Act, R.S.C. 1985, c. T-13 and stated:
22 (1) No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.
53 (1) Where a court is satisfied, on application of any interested person, that any registered trade-mark or any trade-name has been applied to any goods that have been imported into Canada or are about to be distributed in Canada in such a manner that the distribution of the goods would be contrary to this Act, or that any indication of a place of origin has been unlawfully applied to any goods, the court may make an order for the interim custody of the goods, pending a final determination of the legality of their importation or distribution in an action commenced within such time as is prescribed by the order.
 Section 52 of the Act defines “court” in section 53 to mean “the Federal Court or the superior court of a province”. The Small Claims Court, as a branch of the Superior Court of Ontario, has jurisdiction to consider a claim arising from the Act. See Laurentide Cabinet Corporation et al. v. Beyond Flooring, (2010), 323 D.L.R. (4th) (Ont. Div. Ct.),  O.J. No. 3355, at paragraph 15.
53.2 (1) If a court is satisfied, on application of any interested person, that any act has been done contrary to this Act, the court may make any order that it considers appropriate in the circumstances, including an order providing for relief by way of injunction and the recovery of damages or profits, for punitive damages and for the destruction or other disposition of any offending goods, packaging, labels and advertising material and of any equipment used to produce the goods, packaging, labels or advertising material.
In the Kashruth case, it was difficult to prove an actual damage; however, reputational damage was assessed at-large as $20,000 and a further $5,000 as a punitive damage to act as a punishing and detering effect was also applied:
 I am satisfied, based on the Council’s evidence given through Mr. Rabkin, that there has been damage to its reputation, but the damages are difficult to assess. In such circumstances, the Court must make its best assessment possible, based on the evidence of Mr. Rabkin and materials tendered. In all the circumstances, I find that $20,000 is a fair and reasonable assessment of damages.
 Punitive damages are only granted where there has been egregious conduct, such as conduct that is high-handed, malicious, arbitrary or highly reprehensible, departing markedly from the ordinary standards of decent behaviour.
 The defendant Adee is also ordered to pay to the plaintiff $5,000 for punitive damages. Adee’s breach of contract and breach of the trademark rights of the Council did not only harm the Council. Since the products that are not authorized to be kosher certified are sold to unsuspecting consumers who adhere to a kosher diet for religious reasons, the failure to adhere to a kosher diet could foreseeably result in spiritual trauma. I find that the defendant Adee’s actions are highly reprehensible, departing markedly from the ordinary standards of decent behaviour, as there is foreseeable harm to the innocent consumer. An award of punitive damages is necessary to punish and discourage such conduct, which blatantly disregards the foreseeable and far-reaching consequences of the defendant Adee’s breach of contract and breach of the Act, beyond the harm caused to the Council’s goodwill and reputation, and dilution of its COR trademark.
Infringing upon a trademark, or other intellectual properties of others, may give rise to statutory rights of action or common law rights of action in tort law and per the Kashruth case, even where an actual loss as special damages is difficult to prove, general reputation damages may be awarded to reflect injury to the reputation of the trademark as well as punitive damages to ensure discouragement of further similar behaviour.Learn More About