In Paul Cheung et al. v. Target Event Production Ltd. (2010 FCA 255), the Federal Court of Appeal (“FCA”) allowed in part an appeal made by Paul Cheung and Lions Communications Inc. (collectively “Lions”) and dismissed a cross-appeal made by Target from a decision rendered of the Federal Court (“FC”) (2010 FC 27). The FCA upheld the FC’s finding that Lions infringed Target’s copyright in certain documents and passed off its trade-marks contrary to s. 7(b) of the Trade-marks Act, and also held that there were no grounds for rejecting the FC’s findings with respect to the joint and several liability of Cheung. The FCA rejected Lions’ argument that Target had failed to fulfill the damage requirement set out in the test for the tort of passing off, holding that use of a trade-mark causing loss of control by the owner is sufficient to establish damage. In partially allowing the appeal, the Court amended the terms of the injunction issued by the FC and the form of costs granted.

From 2000 to 2007 Target operated a successful Chinese night market located in Richmond, British Columbia (“Target Market”).  In 2002, Target’s president created a logo for the Target Market, which included the phrases “Richmond Night Market Summer Festival” and “Richmond Summer Night Market”, along with various vendor forms and a site plan. When Target failed to renew its lease at the end of 2007, Lions leased the same location and began holding its own night market, using the names “Summer Night Market” and “Richmond Summer Night Market”. Target subsequently brought an action in the FC against Lions, wherein the Court held that Lions had infringed Target’s copyright by using a part of its vendor application form, as well as by using its site plan and a substantial reproduction thereof. The FC also found that the names used by Lions constituted passing off of Target’s trade-marks in violation of s. 7(b) of the Trade-marks Act, applying the factors set out in s. 6(5) in order to determine whether the required element of confusion was present.  In arriving at its decision the FC also applied the tripartite test for the tort of passing off, which requires: (1) evidence of the existence of goodwill; (2) deception of the public due to a misrepresentation; and (3) actual or potential damage to the plaintiff (as affirmed by the Supreme Court of Canada in Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65).

On appeal and cross-appeal, the FCA held Target did possess valid trade-marks by January 2007, which had subsequently lost their distinctiveness by 2009.  Although Lions asserted that Target had failed to establish the damage component of the passing off test at trial, the FCA held that this point was irrelevant, as actual damage had in fact been proven. To this end the FCA outlined that “use of an owner’s trade-mark may cause the owner to suffer an actual loss of control over its mark, despite the owner’s absence from the relevant market”, which loss is sufficient to ground the damage component of the test. The FC’s $15,000 award of damages was therefore upheld by the FCA, and no error was found with respect to the FC’s finding of joint and several liability on the part of Cheung. However, the FCA agreed with Lions’ assertion that enjoining Lions from operating a night market was not a form of remedy for copyright infringement contemplated under the Copyright Act. The Court therefore set aside the FC’s order for injunctive relief and instead enjoined Lions from further infringing upon the copyrighted documents; it also set aside the FC’s award of costs, substituting an award of costs to Target on a party-and-party basis.