Default judgment can be an effective way to stop online infringement. The Federal Court’s decision in Kaira District Co-operative Milk Producers’ Union Limited v. AMUL Canada, 2021 FC 636 is the most recent example of the effectiveness of default judgment. Kaira District Co-Operative Milk Producers’ Union Limited and Gujarat Cooperative Milk Marketing Federation Ltd. (collectively, “Kaira”) commenced an action alleging passing off, trademark infringement, depreciation of goodwill and copyright infringement by, Amul Canada, Mohit Rana, Akash Ghosh, Chandu Das, And Patel Patel (collectively, the “Defendants”).
Kaira produces milk products. Kaira is based in India, has been in operation since 1946 and has over 3.2 million producer members. Kaira’s brand AMUL is internationally renowned and India’s largest food brand. Kaira has registered the AMUL trademark in Canada for use in association with milk products. Kaira also owns common law design marks which are displayed on the websites www.amul.com and www.amuldairy.com.
The Defendants were advertising, marketing and selling milk products in Canada through LinkedIn in association with the trademark AMUL and claiming to be Kaira.
Service – A Prerequisite for Default Judgment
Kaira commenced this action because the Defendants did not respond to Kaira’s demand letter. The Statement of Claim could not be served personally, as required by the Rules. The Defendants were evading service and an order for substituted service was granted. The Court found that Kaira had exhausted all reasonable attempts to reach the Defendants and that it had satisfied the prerequisites for bringing an ex parte motion for default judgment.
Default judgment requires a plaintiff to establish, on a balance of probabilities, that (i) that the defendants are in default of filing a statement of defence, and (ii) that the defendants are liable for the causes of action in the claim.
Kaira Successfully established Passing Off and Infringement
While Kaira’s motion for default judgment was initially submitted in writing, the Court requested an oral hearing to address certain questions raised by the written materials.
The Court held that all three elements of the passing off test had been met. First, Kaira provided evidence of the goodwill that the AMUL brand and designs have acquired globally and in Canada. Second, the Defendant was misrepresenting itself and creating confusion: they were using exact copies of Kaira’s marks and copyrighted works. Third, Kaira showed that the Defendants’ actions would likely cause damage in sales, marketing, distribution and in the recruitment of employees.
Kaira also established trademark infringement. Registration of the AMUL trademarks gave Kaira the exclusive right to use the trademark in Canada. This exclusive right was infringed because the Defendants’ falsely advertised themselves as Kaira, in a presumed effort to increase their own butter sales in Canada, or to attract Kaira’s prospective employees, distributors and consumers.
The Court did not grant default judgment on Kaira’s depreciation of goodwill claims. The elements of depreciation of goodwill require: (i) a registered trademark was used by the defendants in connection with the goods; (ii) their trademark is sufficiently well known to have significant goodwill attached to it; (iii) the defendants’ used the trademark in a manner likely to have the effect on that goodwill; and (iv) the likely effect would be to depreciate the value of its goods. The Court found there was no evidence that the Defendants had actually sold milk products in association with the AMUL trademark. Consequently, the Court held that there was no use of the trademark by the Defendants as required by the Trademarks Act. As such, Kaira had not met the test for depreciation of goodwill.
Finally, the Court found the reproduction of the Amul designs and corporate information on the Defendants’ LinkedIn pages infringed Kaira’s copyright.
The Court awarded damages of $10,000 in respect of the trademark claims, $5,000 in respect of the copyright claims and solicitor and client costs of $17,733 to Kaira. The Defendants were permanently enjoined from infringing Kaira’s trademark and copyright and were required to disclose the names of anyone participating in the infringing activities.
Included within Kaira’s request for relief was an order transferring ownership and all rights in the infringing LinkedIn and social media accounts. While the Court considered this to be a “somewhat unusual” request, it was not without precedent, and was grated by the Court – all rights in and to the LinkedIn accounts displaying Kaira’s trademarks or copyrighted words were ordered to be transferred to Kaira within 30 days of the judgment.
Default judgment is an effective enforcement mechanism. It can be used to protect copyright and trademark rights in cases where the infringers refuse to engage in the legal process.