Docket: T-816-25
Citation: 2026 FC 504
Ottawa, Ontario, April 17, 2026
PRESENT: The Honourable Madam Justice Furlanetto
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BETWEEN: |
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CHANEL LIMITED; CHANEL CANADA ULC;
LOUIS VUITTON MALLETIER;
AND LOUIS VUITTON CANADA, INC |
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Plaintiffs |
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and |
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NICOLE G COLLECTION INC.;
ZI KE GAO AKA NICOLE GAO AKA NICO GAO AKA CLAUDIA GAO; AND CLAUDIA ZHAO; COLLECTIVELY DOING BUSINESS AS IF CLOTHING, IF CLOTHING STORE, CASA CHIC CO. AND FASHION HOUSE |
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Defendants |
JUDGMENT AND REASONS
I. Overview
[1] This is a motion for default judgment against the Defendants, brought pursuant to Rule 210 of the Federal Courts Rules, SOR/98-106 [Rules]. The underlying action is a trademark proceeding raising allegations under sections 19, 20 and 22, and subsections 7(b), (c) and (d) of the Trademarks Act RSC, 1985, c-T-13 [TMA].
[2] The Plaintiff, Chanel Limited [Chanel], is the owner of the trademarks listed in Schedule A to this decision [CHANEL Trademarks], which are registered in Canada for use in association with the luxury fashion goods and services noted in Schedule A. Chanel and its authorized licensees are the only authorized manufacturers and distributors of genuine products bearing the CHANEL Trademarks. Chanel Canada ULC [Chanel Canada] is a related company to Chanel [collectively, the Chanel Plaintiffs] and is an authorized distributor of CHANEL products in Canada.
[3] The Plaintiff, Louis Vuitton Malletier, formerly Louis Vuitton Malletier SA [Louis Vuitton], is the owner of the trademarks listed in Schedule B to this decision [LOUIS VUITTON Trademarks], which are registered in Canada for use in association with the luxury fashion goods and services noted in Schedule B. Louis Vuitton and its authorized licensees are the only authorized manufacturers and distributors of genuine products bearing the LOUIS VUITTON Trademarks. Louis Vuitton Canada, Inc [Louis Vuitton Canada] is a related company to Louis Vuitton [collectively, Louis Vuitton Plaintiffs] and is an authorized distributor of LOUIS VUITTON products in Canada.
[4] The Corporate Defendant, Nicole G Collection Inc. [NGCI], was a corporation incorporated pursuant to the laws of British Columbia. For the noted years, NGCI had a business license for businesses trading as “IF Clothing”
and the “IF Clothing Store”
(2018-2024), “Casa Chic Co”
(2020- August 2025), and “Fashion House”
(2019-2024), whose associated retail stores were selling counterfeit CHANEL and LOUIS VUITTON merchandise either directly, or through text messaging via the WeChat messaging platform. Throughout these periods, the Defendant Zi Ke Gao, also known as Nicole Gao, Nico Gao and Claudia Gao, was the sole Director and Officer of NGCI, while the individual Defendant, Claudia Zhao, was a principal employee who assisted with the offer for sale and sale of the counterfeit merchandise in 2024 and 2025.
[5] Based on the materials filed and submissions made, it is my view that the Defendants are in default and that a judgment should issue against the Defendants that includes declarations of trademark infringement under sections 19 and 20 of the TMA, depreciation of goodwill under section 22 of the TMA, and breaches of subsections 7(b), (c) and (d) of the TMA. I find liability should extend to each of the named Defendants, although in differing amounts. While I award a permanent injunction, delivery up, compensatory and punitive damages, and costs, I will not award the quantum of punitive damages and costs requested. My reasons for doing so are set out below.
II. Background
[6] Chanel and Louis Vuitton are manufacturers of high-end luxury fashion products over which they maintain strict quality control standards. These products are sold only through high-end retail locations. The CHANEL and LOUIS VUITTON Trademarks have been used extensively by the respective Plaintiffs to identify their products in Canada.
[7] Between 2018 and December 2025, private investigators for the Plaintiffs observed and recorded 30 (Chanel) and 27 (Louis Vuitton) instances of alleged unauthorized activity, involving the advertisement, offering for sale and/or sale of clothing and fashion accessories, including handbags, small leather goods, and jewelry, bearing one or more of the CHANEL and LOUIS VUITTON Trademarks. The unauthorized activities took place at the IF Clothing, Casa Chic Co, and Fashion House stores, through the WeChat profile Casa 2305Richmond, and text message/e-transfer purchases to gaozike1976@gmail.com. The instances of infringement are identified in Schedule 2 to the motion.
[8] The Plaintiffs filed evidence from in-house personnel from Chanel and Louis Vuitton who are trained to identify authentic and counterfeit Chanel and Louis Vuitton merchandise. Based on their review of photographs of merchandise from the IF Clothing, Casa Chic, and Fashion House stores and of purchases made by investigators, it was determined that the merchandise identified by the investigators as bearing the CHANEL and LOUIS VUITTON Trademarks was largely comprised of counterfeit product that had not been manufactured by the Chanel or Louis Vuitton Plaintiffs and was not authorized to be advertised, offered for sale or sold. The evidence indicated that the Defendants had never been authorized to advertise, offer for sale or sell CHANEL or LOUIS VUITTON merchandise.
[9] On at least four occasions, counsel for the Chanel Plaintiffs delivered a cease and desist letter to the IF Clothing Store, and on one of those occasions, enclosed a draft Statement of Claim. On at least two other occasions, counsel for the Chanel Plaintiffs delivered a cease and desist letter to the Casa Chic Store. On at least one occasion, counsel for the Louis Vuitton Plaintiffs delivered a cease and desist letter to a new location of the Casa Chic Store.
[10] At no time did any of the Defendants respond to the cease and desist letters, nor did the unauthorized activity cease. Accordingly, the Plaintiffs have now moved for judgment.
III. Analysis
[11] Rule 210 of the Rules provides that a plaintiff may bring an ex parte motion for judgment against a defendant who is in default of filing a statement of defence. To obtain judgment, a plaintiff must first establish the defendant was served with a statement of claim and has not filed a statement of defence within the deadline specified in Rule 204 of the Rules; and second, the evidence must enable the Court to find, on a balance of probabilities, that the plaintiff has established its claim: Louis Vuitton Malletier SA v Yang, 2007 FC 1179 [Yang] at para 4; Microsoft Corporation v 1276916 Ontario Ltd, 2009 FC 849 at para 32.
[12] In addition, where service of a statement of claim was effected pursuant to an order for substitutional service, the Court must not award judgment unless it is satisfied that it is just to do so having regard to all the circumstances: Rules, rule 211.
A. The Defendants are in Default
[13] Rule 204(a) of the Rules requires a defendant to defend an action by serving and filing a statement of defence within thirty (30) days after service of the statement of claim, if the defendant is served in Canada.
[14] Both Claudia Zhao and NGCI were personally served with the Statement of Claim on March 13, 2025 and April 8, 2025 respectively; however, no Statement of Defence has been filed. They are both in default.
[15] After twenty-one attempts at personal service on the individual Defendant Zi Ke Gao, the Plaintiffs obtained orders for substituted service of the Statement of Claim on April 19, 2025 and May 8, 2025. The Channel and Louis Vuitton Plaintiffs complied with those orders and Zi Ke Gao was substitutionally served with the Statement of Claim on May 7, 2025. This included posting a copy of the Statement of Claim together with the Substitutional Service Order to the door of four addresses, including the director mailing address and the address of her apparent residence, and sending a copy to Zi Ke Gao’s email address at gaozike1976@gmail.com. However, Zi Ke Gao did not file a Statement of Defence. Given the extensive steps taken to serve Zi Ke Gao with the Statement of Claim, and in view of the robustness of the approach, I agree that in all likelihood the Statement of Claim would have been brought to her attention. It is therefore, in my view, just to render Zi Ke Gao in default and to award judgment against her.
B. The Plaintiffs are Entitled to Judgment
[16] In their motion, the Plaintiffs request a judgment providing:
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1)declarations that the Defendants have infringed the CHANEL Trademarks and the LOUIS VUITTON Trademarks as per sections 19 and 20 of the TMA;
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2)a declaration that the Defendants have depreciated the value of the goodwill associated with the CHANEL Trademarks and the LOUIS VUITTON Trademarks contrary to section 22 of the TMA;
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3)declarations that the Defendants have acted contrary to subsections 7(b), (c) and (d) of the TMA;
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4)a permanent injunction;
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5)delivery up of offending goods;
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6)disclosure of the names and contact information of the manufacturer and supplier of the offending goods, and all documentation in the Defendants’ possession or control relating to the manufacture or supply, and the name and address of all persons or entities who have engaged in, or assisted with, the manufacture and supply;
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7)compensatory damages for infringement in the amount of $599,000 to be paid jointly, severally and forthwith to Chanel Limited and Chanel Canada;
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8)compensatory damages for infringement in the amount of $543,000 to be paid jointly, severally and forthwith to Louis Vuitton and Louis Vuitton Canada;
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9)$200,000 in punitive and exemplary damages, payable jointly and severally;
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10)an award of solicitor and client costs and disbursements, plus the amount of $3,750 which was awarded on the Plaintiffs’ motion for substitutional service; and
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11)post judgment interest on the damages awarded calculated from the date of Judgment at the rate of 4.45%, and at future rates prescribed by the Registrar of The British Columbia Supreme Court pursuant to the Court Order Interest Act, RSBC 1996, c 79.
[17] I will address each of these requests in turn.
(1) Declarations as to Infringement
[18] Section 19 of the TMA gives the owner of a registered trademark the exclusive right to use its trademark throughout Canada in respect of its registered goods and services. Any unauthorized use of the trademark as registered is trademark infringement.
[19] Section 20 of the TMA is broader in scope than section 19 and captures the unauthorized use of marks that are not identical but are confusingly similar to a registered mark: Sandhu Singh Hamdard Trust v Navsun Holdings Ltd, 2019 FCA 295 [Sandhu Singh] at para 20.
[20] In this case, I am satisfied that the evidence establishes that unauthorized goods bearing the CHANEL Trademarks and the LOUIS VUITTON Trademarks have been advertised, offered for sale, and sold such that infringement has occurred and as such, that declarations of infringement relating to sections 19 and 20 of the TMA should be issued.
(2) Depreciation of Goodwill
[21] Pursuant to subsection 22(1) of the TMA, “no person shall use a trademark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill”
in the mark. As explained in Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23 [Veuve Clicquot], goodwill is the “positive association that attracts customers towards its owner’s wares or services rather than those of its competitors”
(at para 50). The Supreme Court of Canada set out four elements that must be established to make out a claim under section 22 of the TMA (Veuve Clicquot at para 46):
[…] Firstly, that a claimant’s registered trade-mark was used by the defendant in connection with wares or services — whether or not such wares and services are competitive with those of the claimant. Secondly, that the claimant’s registered trade-mark is sufficiently well known to have significant goodwill attached to it. ... Thirdly, the claimant’s mark was used in a manner likely to have an effect on that goodwill (i.e., linkage) and fourthly that the likely effect would be to depreciate the value of its goodwill (i.e., damage).
[Italics in original]
[22] I am satisfied based on the evidence filed that the Chanel and Louis Vuitton Plaintiffs have established all four elements set out in Veuve Clicquot and that a declaration regarding section 22 of the TMA should also issue. By virtue of the extensive advertisement and sale of CHANEL and LOUIS VUITTON merchandise by the Chanel and Louis Vuitton Plaintiffs, the Chanel and Louis Vuitton Plaintiffs have used and developed a significant reputation and goodwill in association with the CHANEL and LOUIS VUITTON Trademarks. The advertisement, offer for sale, and sale of counterfeit CHANEL and LOUIS VUITTON merchandise by the Defendants, which is unauthorized and involves merchandise that is of a lower standard and quality to the authentic goods, is likely to have an effect on goodwill and to depreciate the value of the goodwill attaching to the CHANEL and LOUIS VUITTON Trademarks.
(3) Section 7 of the TMA
[23] Subsection 7(b) of the TMA provides that “no person shall direct public attention to his goods, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his goods, services or business and the goods, services or business of another.”
This provision is the statutory codification of the common law tort of passing off.
[24] There are three necessary components to establish passing off: (1) the existence of goodwill; (2) deception of the public due to a misrepresentation; and (3) actual or potential damage to the plaintiff: Ciba-Geigy Canada Ltd v Apotex Inc, 1992 CanLII 33 (SCC), [1992] 3 S.C.R. 120 at 132; Kirkbi AG v Ritvik Holdings Inc, 2005 SCC 65 at para 66.
[25] In addition, for an action under subsection 7(b), the plaintiff must also meet an initial threshold requirement of establishing possession of a valid and enforceable trademark, either registered or unregistered, at the time the defendant first began directing public attention to its own goods and services: Sandhu Singh at para 39.
[26] Subsection 7(c) of the TMA is focussed on substitution: Diageo Canada Inc v Heaven Hill Distilleries, Inc, 2017 FC 571 [Diageo] at para 96. For there to be an interference with subsection 7(c), there must be a substitution of one trader’s goods “as and for those ordered or requested”
: Positive Attitude Safety System Inc v Albian Sands Energy Inc, 2005 FCA 332 at para 34; see also Distrimedic Inc v Dispill Inc, 2006 FC 1229 at para 68; Diageo at para 97.
[27] For subsection 7(d) of the TMA, a plaintiff must establish that the defendant used the plaintiff’s mark in association with their own goods in a manner that amounted to a misrepresentation regarding the character, quality, quantity or composition of their goods, or the mode of the manufacture, production or performance of the goods.
[28] In this case, the conditions of each of subsections 7(b), (c) and (d) are met:
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Subsection 7(b):As the counterfeit merchandise sold by the Defendants bear the Plaintiffs’ CHANEL and LOUIS VUITTON Trademarks, the public is likely to be led to believe that this counterfeit merchandise is authentic CHANEL and LOUIS VUITTON merchandise, or that such items have been authorized, approved or manufactured by the Chanel and Louis Vuitton Plaintiffs. This conduct creates confusion between the Defendants’ goods and business and the Plaintiffs’ goods and businesses. It also causes harm to the reputation and to the superior quality that attaches to the CHANEL and LOUIS VUITTON Trademarks.
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Subsection 7(c):By responding to requests by investigators for Chanel and Louis Vuitton merchandise and supplying counterfeit goods bearing the CHANEL and LOUIS VUITTON Trademarks, the Defendants are passing off their goods as and for those of the Chanel and Louis Vuitton Plaintiffs.
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Subsection 7(d): By using the CHANEL and LOUIS VUITTON Trademarks in association with inferior quality counterfeit goods, while misrepresenting the merchandise as being that of the higher quality Chanel and Louis Vuitton products, the Defendants are also acting contrary to subsection 7(d).
[29] As the evidence establishes unauthorized activity contrary to subsections 7(b), (c) and (d) of the TMA, it is my view that it is appropriate to issue declarations relating to this unauthorized activity.
(4) Liability
[30] The Plaintiffs assert that the Defendants are jointly liable for the infringing activities.
[31] Based on the evidence filed, I am satisfied that NGCI operated the retail stores trading as IF Clothing, Casa Chic, and Fashion House on each of the dates identified by the Plaintiffs when counterfeit merchandise was offered for sale and sold until December 2024 when NGCI was dissolved. In particular:
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NGCI held an active business license issued by the City of Richmond for each store where the infringing activities took place. For the years 2018-2024, the business address listed on the license for IF Clothing was Unit 2410, Aberdeen Centre, 4151 Hazelbridge Way, Richmond BC, V6X 4J7. For the years 2020-2024, the business address listed on the license for Casa Chic Co was Unit 2870, Aberdeen Centre, 4151 Hazelbridge Way, Richmond BC, V6X 4J7 and for the license in effect until August 2025, Unit 2305, 4000 No 3 Rd, Richmond, BC, V6X 0J8. For the years 2019-2024, the business address listed on the license for Fashion House was Unit 2400, Aberdeen Centre, 4151 Hazelbridge Way, Richmond BC, V6X 4J7. These are the same addresses where the infringing merchandise was offered for sale and sold.
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The connection between NGCI and the stores operating at Aberdeen Centre, 4151 Hazelbridge Way, Richmond BC, Units 2410 and 2870, under the names IF Clothing and Casa Chic was known to building security at Aberdeen Centre.
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The connection between NGCI and the stores operating at Aberdeen Centre, 4151 Hazelbridge Way, Richmond BC, Units 2410 and 2870 was confirmed through correspondence from counsel at Aberdeen Centre.
[32] The Plaintiffs allege that the individual Defendants, Zi Ke Gao and Claudia Zhao, should also be personally liable along with NGCI.
[33] As noted earlier, Zi Ke Gao was identified on the business licensing documents as the sole Director and Officer of NGCI. At the time of incorporation and dissolution of NGCI, she also had the same listed mailing and delivery address as the registered company address of NGCI.
[34] As set out in Mentmore Manufacturing Co, Ltd v National Merchandising Manufacturing Co Inc, 1978 CanLII 2037 (FCA) at 204-205, a corporation will not be permitted to shield officers and directors from actions that demonstrate the deliberate, wilful and knowing pursuit of a course of conduct that is likely to constitute infringement or reflect an indifference to the risk of it. In the context of counterfeit cases, this extends to the actions of officers, directors and principal employees engaged in the wilful and knowing sale of counterfeit and infringing goods: Chanel S de RL v Lam Chan Kee Company Ltd, 2016 FC 987 at para 34(a); Louis Vuitton Malletier SA v Singga Enterprises (Canada) Inc, 2011 FC 776 [Singga] at para 113; Louis Vuitton Malletier SA v 486353 BC Ltd, 2008 BCSC 799 [486353 BC Ltd] at para 45.
[35] In this case, I agree that the evidence establishes that Zi Ke Gao was actively and personally involved in the offer for sale and sale of the counterfeit CHANEL and LOUIS VUITTON merchandise. During the investigations, Zi Ke Gao identified herself as the manager and employer of the IF Clothing Store and Casa Chic stores and was identified by employees of the Casa Chic Store as the “boss”
. She appeared as the person in charge of these stores and her phone number and email address (gaozike1976@gmail.com) were used to source and pay for counterfeit product. As observed by each of the four investigators for the Plaintiffs, she was actively involved in the offering for sale and sale of the counterfeit items. At least one of the Chanel cease and desist letters was given directly to Zi Ke Gao, who confirmed her understanding of the document and her refusal to deliver up the counterfeit Chanel merchandise. Through the delivery of additional cease and desist letters, Zi Ke Gao was given repeat notice of the ongoing infringing activity at the IF Clothing and Casa Chic stores, and on the WeChat profile connected to the new Casa Chic Store. However, she did not take any steps to stop the unlawful activities.
[36] While Claudia Zhao is not a named director of NGCI, the Plaintiffs assert that she was a principal employee who was knowledgeable about the counterfeit activity and assisted with the sale of the counterfeit merchandise. The Plaintiffs rely on interactions between the investigators and Claudia Zhao at the Casa Chic Store, including her conveying a “hidden cupboard”
with 15‑20 counterfeit Chanel handbags from which she could “source”
goods. The evidence indicates that starting in April 2024, the investigators witnessed Ms. Zhao working at the two locations of the Casa Chic store while it was offering counterfeit Chanel and Louis Vuitton items for sale. During this time, the investigators purchased various Chanel and Louis Vuitton counterfeit merchandise from Ms. Zhao and paid on-site and by e-transfer to gaozike1976@gmail.com.
[37] In April 2024, a cease and desist letter on behalf of the Chanel Plaintiffs was delivered to the Casa Chic store and given to Claudia Zhao. However, even after the letter was delivered, she continued to participate in the offering for sale and sale of the counterfeit items. She was similarly handed a cease and desist letter on behalf of the Louis Vuitton Plaintiffs in February 2025, after which she continued to work at the new Casa Chic store offering counterfeit Louis Vuitton items for sale for payment in cash or by e-transfer.
[38] Based on the evidence, I am satisfied that the actions of Claudia Zhao demonstrate sufficient deliberate, wilful and knowing conduct connected to the unauthorized acts and that personal liability should also extend to Ms. Zhao.
(5) Injunction, Delivery up, and the Request for Manufacturer/Supplier Information
[39] In view of the ongoing infringing acts of the Defendants, and pursuant to subsection 53.2(1) of the TMA, I agree with the Plaintiffs that a permanent injunction should be issued on the terms proposed.
[40] Further, I agree that to prevent further infringement, an order for delivery up of all articles in the Defendants’ possession, custody, or power which might offend the injunction should issue.
[41] The Plaintiffs request an order requiring the Defendant to provide the names and contact information of the manufacturer and supplier of the counterfeit items. They assert that this information will allow the Plaintiffs to take further steps to ensure that ongoing supply of the counterfeit items does not continue and that this is the type of information they would otherwise be entitled to receive on discovery.
[42] I agree that this provision should be included in the Judgment for the reasons provided by the Plaintiffs.
(6) Compensatory Damages
[43] The Defendants are liable for all loss actually sustained by the Plaintiffs that is “the natural and direct consequence of the unlawful acts of the defendant[s], including any loss of trade actually suffered by the plaintiff[s], either directly from the acts complained of, or properly attributable thereto, that constitute an injury to the plaintiff[s’] reputation, business, goodwill, or trade”
: Singga at para 125.
[44] Difficulty in assessing damages or profits does not relieve the court from the duty of assessing them. Once infringement is proven, if damages or profits cannot be estimated precisely, the best reasonable estimate must be made without being limited to nominal damages: Singga at para 126, citing to Ragdoll Productions (UK) Ltd v Jane Doe (TD), 2002 FCT 918 [Ragdoll] at paras 40–45; Yang at para 28; 486353 BC Ltd at paras 54–55.
[45] As noted by the Plaintiffs, there are two types of losses that damages in counterfeit cases are seeking to compensate: (1) those associated with depreciation of goodwill and reputational damage that indirectly lead to a loss of sales; and (2) those associated with the Defendant’s unauthorized activities that directly lead to lost sales that the Plaintiffs could have made: Yang at paras 30-31; Singga at para 127. Both types of losses are evident in counterfeit cases but have difficulties in their quantification.
[46] The Plaintiffs rely on the framework for quantification of damages established in Nike Canada Ltd v Goldstar Design Ltd et al (1997), T-1951-95 (FCTD) [Nike], unpublished, and summarized in Singga at paragraphs 129-132. This framework applies a standard nominal damage award per infringing activity. The rate in Nike was set at $6,000 per infringing activity where defendants are operating from conventional retail premises and has been consistently applied and adjusted for inflation since 1997.
[47] The Plaintiffs assert that the rate of damage per infringing activity adjusted for inflation as per the Bank of Canada rates should be:
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$8,500 for activities that took place in 2018;
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$9,000 for activities that took place in 2019 and 2020;
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$9,500 for activities that took place in 2021; and
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$10,500 for activities that took place in 2023, 2024 and 2025.
[48] Using the “instances of infringement”
identified in Schedule 2 to the motion, they contend this conservatively amounts to $299,500 in damages when applied to the 30 alleged instances of infringement involving the CHANEL Trademarks, as calculated using the following breakdown:
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2018: $8,500 x 1 instance of infringement = $8,500
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2019 and 2020: $9,000 x 7 instances of infringement = $63,000
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2021: $9,500 x 3 instances of infringement = $28,500
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2023-2025:$10,500 x 19 instances of infringement = $199,500
[49] As applied to the 27 alleged instances of infringement involving the LOUIS VUITTON Trademarks, the Plaintiffs contend this conservatively amounts to $271,500 in damages, as calculated using the following breakdown:
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2018: $8,500 x 2 instances of infringement = $17,000
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2019 and 2020: $9,000 x 4 instances of infringement = $36,000
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2021: $9,500 x 2 instances of infringement = $19,000
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2021-2025: $10,500 x 19 instances of infringement = $199,500
[50] The Plaintiffs assert that each Plaintiff entity has suffered loss and should be entitled to compensatory damages. They assert that the total award of compensatory damages that should be awarded to the Chanel Plaintiffs is $599,000 for infringement of the CHANEL Trademarks ($299,500 for each of Chanel and Chanel Canada). The Plaintiffs similarly assert that the total award of compensatory damages that should be awarded to the Louis Vuitton Plaintiffs is $543,000 for infringement of the LOUIS VUITTON Trademarks ($271,500 for each of Louis Vuitton and Louis Vuitton Canada).
[51] There are three aspects of the Plaintiffs’ request that require further discussion. First, whether the Plaintiffs may claim damages that extend beyond six years from when the action was commenced in view of subsection 39(2) of the Federal Courts Act, RSC, 1985 c F-7 [Federal Courts Act]. Second, whether the number of instances of infringement is justified and to whom they should be attributed. Third, the Plaintiffs’ request that the trademark owner and its related Canadian distributor each be entitled to a separate damages award must be considered in view of the Court’s recent decision in Louis Vuitton Malletier SA v Torf, 2024 FC 1152 [Torf], which denied a similar request.
(a) Can the Plaintiffs claim damages beyond six years?
[52] Subsection 39(2) of the Federal Courts Act provides that a cause of action in the Federal Court cannot be brought beyond six years after the cause of action arose. This would suggest that the recovery of damages can only extend back six years from when the proceeding was commenced and would exclude damages for incidents that took place before March 11, 2019.
[53] The Plaintiffs assert that to place a limit on the damages that can be recovered, the limitation period would have to be pled as a defence. They note the Court’s decision in Louis Vuitton Malletier SA v Wang, 2019 FC 1389 [Wang] where damages were awarded beyond six years from when the action was commenced (see paras 174-180).
[54] I cannot agree with the Plaintiffs’ assertion. In Wang, the Court did not make an express finding on whether recovery should be limited in view of subsection 39(2) of the Federal Courts Act. Further, the issue before the Court is one of recovery, not limitation on a plaintiff’s ability to raise a cause of action.
[55] As set out in Corpex (1977) Inc v The Queen in right of Canada, 1982 CanLII 213 (SCC), [1982] 2 S.C.R. 674, where a prescription period is absolute, the Court may apply it (see pages 660-661). Unlike section 43.1 of the Copyright Act, RSC, 1985, c C-42 [Copyright Act], which explicitly addresses the limitation for civil remedies and provides in subsection 43.1(2) that the limitation period only applies when it is pled, there is no such provision in the TMA. As such, the absolute language of subsection 39(2) of the Federal Courts Act applies.
[56] As held in Sandhu Singh Hamdard Trust v Navsun Holdings Ltd, 2021 FC 602 at paragraph 106, for trademark infringement subsection 39(2) of the Federal Courts Act limits recovery to six years from when the action is commenced in Federal Court. When applied to the facts here, this results in removal of the 2018 occurrences of infringement from the recoverable damages.
(b) The number of instances of infringement and their attribution
[57] The Plaintiffs identify the instances of alleged infringement in a table attached to the motion (Schedule 2), which provides dates and descriptions of the unauthorized activity along with references to the evidence where they are discussed. For the most part, between 2019 and the end of 2024 the instances of infringement include visits to the IF Clothing, Casa Chic, or Fashion House premises where counterfeit merchandise was identified as being offered for sale and/or sold. In 2025, the instances of infringement include observations that counterfeit merchandise was being advertised and offered for sale by posting on the WeChat profile Casa 2305Richmond and instances where counterfeit merchandise was offered for sale and sold at the new Case Chic store.
[58] In Singga the Court noted that the continuing nature of infringement justified a “per instance”
approach to the award of nominal damages (at para 132). However, in that case the Court appears to have reviewed and adjusted the number of instances of infringement on some basis to provide a more “conservative estimate”
. Little detail is provided to explain how the more conservative estimate was reached. It is also unclear from the facts which instances of infringement were treated as worthy of compensation by the Court in Singga and which were not. As such, this decision is of limited assistance when considering the discretionary limits placed on the number of instances claimed (see similar comments made by Justice Roy in Wang at para 155).
[59] In my view, parties and the Court would benefit from a statutory damages regime like the one that is in place for copyright infringement (see Copyright Act, s 38.1). Such a regime could provide needed guidance as to what constitutes a separate “instance of infringement”
and the types of factors that should be considered for assessing reasonable limits for compensation. As noted by counsel for the Plaintiffs, such statutory schemes exist for counterfeit goods in other jurisdictions (see for example, the United States scheme 15 USC §1117(c)).
[60] There is limited ability to evaluate this aspect further. The Court’s jurisprudence supports that purchases of counterfeit merchandise, offers for sale (whether made in-store or online), and advertisement all include acts that may be counted as an instance of infringement for assessing compensation. The evidence presented, which is not rebutted, supports the information in the table provided by the Plaintiffs which groups some of the observations made around the same time-period. The Plaintiffs describe the table as a conservative listing of the actual instances of infringement that have occurred. Without any evidence or argument to the contrary, the numbers are accepted and compensation shall be awarded accordingly.
[61] A second concern is whether all instances of infringement should be attributed to each Defendant. The Plaintiffs request joint and severable liability. However, the facts indicate that NGCI dissolved in December 2024. It therefore ceased to be a legal entity at that time: Business Corporations Act, SBC 2002, c 57, s 344(1). Thus, NGCI as an entity could not be responsible for the instances of infringement after that time. As such, I shall limit the liability of NGCI to 2019-2024. As set out earlier, the evidence also indicates that Claudia Zhao was only observed as being associated with infringing activity after April 2024. Therefore, her liability will be limited to infringing activities from April 2024 onward. Liability shall be attributable to Zi Ke Gao for all instances of infringement. Even after NGCI dissolved, the acts continued in her personal capacity. Here, it is noted that Zi Ke Gao’s email address also continued to be used for purchases even after NGCI’s dissolution and the new Casa Chic store remained in operation.
(c) Should damages be awarded to both the trademark owner and its related Canadian distributor?
[62] The third issue is whether both the trademark owner and its related Canadian distributor are each entitled to damage awards. The Plaintiffs assert that the “overwhelming majority”
of decisions from the Federal Court since 2007 involving counterfeit goods awarded damages to both the trademark owner and its authorized distributor in Canada: see for example, Yang at para 43; Singga at para 134; Chanel S de RL and Chanel Inc v Jiang Chu, 2011 FC 1303 (unpublished) at para 72; Wang at paras 148, 154, 174; and more recently in Burberry Limited v Ward, 2023 FC 1257 [Ward] at para 110. The Plaintiffs contend that this approach was “blessed”
by the Federal Court of Appeal [FCA] in Kwan Lam v Chanel S de RL, 2016 FCA 111 [Kwan] at paragraphs 17-18, affirmed on redetermination at 2017 FCA 38.
[63] The Plaintiffs acknowledge the recent decision of Justice Nicholas McHaffie in Torf. In that case, Justice McHaffie reviewed the prior jurisprudence and considered the nature of the rights and losses of the parties concluding that a separate damage award should not be granted to both the trademark owner and its authorized distributor in Canada based on the rights and losses suffered. The full discussion is found at paragraphs 111 to 122 of the decision, paragraphs 116-118 of which are reproduced below:
[116] As Louis Vuitton concedes, the goodwill in the trademarks is owned by the trademark owner. Damage to goodwill is thus harm suffered by the owner of the trademark: Smith & Nephew Inc v Glen Oak Inc, 1996 CanLII 4065 (FCA), [1996] 3 FC 565 (CA) at para 22; Trademarks Act, s 50(1). I agree with Louis Vuitton that a distributor may derive some benefit from the goodwill owned by the trademark owner. However, that benefit comes from the distributor’s ability to sell and profit from the sale of goods bearing the trademark, and the harm to the distributor thus comes from the loss of that ability, i.e., the lost sales arising from the loss of goodwill. That loss is already included in the standard estimate of damages. Conversely, where the loss primarily sounds in lost sales, damages are more directly suffered by the party that has lost the sales in Canada: Stork Market Inc v 1736735 Ontario Inc (Hello Pink Lawn Cards Inc), 2017 FC 779 at para 88.
[117] Where a trademark owner sells its own goods in Canada, it suffers both the loss of goodwill and the harm from any resulting lost sales. Where a distributor sells the goods in Canada, the owner primarily suffers the loss of goodwill, while the distributor primarily suffers the loss of sales. The total amount of the loss or harm does not double simply because there are two corporate entities involved in the process. To put it another way, it is difficult to see how a Canadian luxury brand owner that sells its own product in Canada should be considered to suffer only half as much damage from counterfeiting as a foreign brand owner that sells in Canada through a related Canadian company, simply because the latter has two companies involved.
[118] Louis Vuitton relies on the Court of Appeal’s decision in Kwan Lam #1, which upheld this Court’s award of damages to both a trademark owner and its Canadian licensee. The Court of Appeal noted that “there is significant authority […] to support awarding damages to both the trade-mark owner and Canadian licensee”: Kwan Lam #1 at para 18. I do not read Kwan Lam #1 as standing for the proposition that this Court’s assessment of damages on the evidence before it must include an assessment of a licensee’s damages that is equal to that of the trademark owner. In other words, nothing in Kwan Lam #1 undermines the general propositions that the plaintiffs bear the burden of establishing their damages, and that the goal of the exercise is to estimate those damages as best as possible in the circumstances based on the evidence before the Court.
[64] Torf was not appealed by the Louis Vuitton Plaintiffs and there have been no subsequent decisions since Torf addressing whether damages should be awarded to both a trademark owner and its related authorized distributor. The Plaintiffs characterize Torf as an outlier and assert that the Court is bound by its prior jurisprudence under the principles of stare decisis and judicial comity set out in R v Sullivan, 2022 SCC 19 [Sullivan].
[65] In Sullivan, the Supreme Court of Canada [SCC] reiterated the principle of vertical stare decisis that lower courts are bound by the decisions of higher courts: Sullivan at paras 59, 64-65, also citing to Malcolm Rowe & Leanna Katz, “A Practical Guide to Stare Decisis” (2020) 41 Windsor Rev Legal & Soc Issues 1 at 6; Debra Parkes, “Precedent Unbound - Contemporary Approaches to Precedent in Canada” (2006) 32:1 Man LJ 135 at 137. The SCC further addressed the principle of judicial comity at paragraph 75, noting that trial courts should only depart from binding decisions issued by a court of coordinate jurisdiction in three narrow circumstances:
1. The rationale of an earlier decision has been undermined by subsequent appellate decisions;
2. The earlier decision was reached per incuriam (“through carelessness” or “by inadvertence”); or
3. The earlier decision was not fully considered, e.g. taken in exigent circumstances.
[66] I agree with the Plaintiffs that the body of jurisprudence, including the FCA decision in Kwan, supports an award of damages to both the trademark owner and its Canadian distributor in counterfeit cases, irrespective of whether they are related companies.
[67] The FCA’s decision in Kwan was decided prior to Torf. It affirmed the lower court’s approach of awarding damages to both the trademark owner and its related Canadian licensee for each act of infringement. While only brief reasons were provided in Kwan, the FCA engaged with the compensatory damages award made by the trial judge and the issue of whether the damages should be awarded to each plaintiff in the counterfeit context, concluding that in addition to the nominal amount awarded for each act of infringement, the established jurisprudence supported an award of the damages to each of the trademark owner and its Canadian licensee:
[17] I also find no merit in the appellant’s submissions that it was inappropriate for the trial judge to have made a nominal damages award, to have set the nominal damages amount for each act of infringement at the level of $8,000.00 or to have awarded damages to both the trade-mark owners and the licensee for each act of infringement. The authorities support a nominal damages award in a case like this, where the defendants are uncooperative, proof of actual damages is difficult and it is hard to estimate the harm done to the trade-mark owner’s goodwill through the sale of inferior quality counterfeit goods: Ragdoll Productions (UK) Ltd. v. Jane Doe, 2002 FCT 918 at paragraphs 37-38, 223 F.T.R. 112; Louis Vuitton Malletier S.A. v. Yang, 2007 FC 1179 at paragraph 43, 62 C.P.R. (4th) 362 [Yang]; Louis Vuitton Malletier S.A. v. Singga Enterprises (Canada) Inc., 2011 FC 776 at paragraphs 127-135, 392 F.T.R. 258 [Singga]; Louis Vuitton Malletier S.A. v. 486353 B.C. Ltd., 2008 BCSC 799 at paragraphs 54-67, [2008] B.C.W.L.D. 5075 [486353 B.C. Ltd.]; Harley-Davidson Motor Company Group, LLC v. Manoukian, 2013 FC 193 at paragraphs 39-43, 428 F.T.R. 191 [Harley-Davidson].
[18] Likewise there is significant authority to support an award of $8,000.00 per act of infringement (adjusted as a result of inflation) and to support awarding damages to both the trade-mark owner and Canadian licensee in a case like the present: Harley-Davidson at paragraphs 41, 43; Singga at paragraphs 130, 133-134; Yang at paragraph 43; Oakley, Inc. v. Doe, 193 F.T.R. 42, 2000 CanLII 15963 (F.C.) at paragraphs 12-13; 486353 B.C. Ltd. at paragraphs 59-60, 66-67.
[68] In Wang, my colleague Justice Ivan Roy expressed concern with awarding exorbitant compensatory damages awards in counterfeit cases, and reservation in awarding damages to both the trademark owner and its related Canadian distributor. However, he found he was bound to do the latter in view of the binding jurisprudence and the limited record before him:
[154] The Singga court also accepted that “(t)here is no reason to limit damage awards merely because multiple plaintiffs advanced their claims in one action. Applying such damages to each plaintiff is available in the case of a joint action brought by a trade-mark owner and its licensee/distributor” (decision, para 134). While it stands to reason why various plaintiffs are entitled to damages for the infringement of their trade-mark, it is less clear what the basis is for allowing damages for each of the owner of the trade-mark and then its subsidiary in cases like Yang and Lee. The case law referred to in support simply accepts that many plaintiffs may be involved in the same lawsuit. It does not justify the same family of companies all having access to the damages.
[...]
[162] The awarding of damages in cases like the case at bar has evolved considerably in the past twenty years, from awards, said to be nominal, of a few thousand dollars in cases where Anton Piller Orders were executed resulting in seizures of many items, to an award of close to $2 M in Singga in favor of Louis Vuitton Malletier S.A. and its Canadian subsidiary, and Burberry Limited and its Canadian subsidiary. The amount reaches $1 M with respect to the Louis Vuitton Trade-marks and upwards of $800,000 with respect to the Burberry Trade-marks.
[163] This Court was concerned with the evolution of the model over time. Why the trade-mark owners and their Canadian subsidiary are compensated each for infringements of the marks they use, which has obviously the effect of doubling the amount of damages for that one set of trade-marks? And what about the use of infringements being the basis for the calculations where there does not appear to be a cap on the number of infringements, big or small? What about taking into account the value of items being the subject of infringements?
[164] The Federal Court of Appeal has not been confronted with an award of damages that would appear to be excessive and show what might well become deficiencies in the application of the model if applied without restraint. Obviously, the circumstances have not presented themselves yet. There is case law in this Court that support a “per infringement” basis using the scale and the Court of Appeal found support in our Court for the owner of the mark and its Canadian subsidiary to be granted damages each. Given that the matter has not been litigated in this case other than a remark in passing by the defendants that “the plaintiffs have failed to clearly submit how each of the plaintiffs have suffered damages” (Corporate defendant’s supplemental written representations on damages, para 34), the findings, endorsed by the Court of Appeal, should not be revisited on this record. The consistent jurisprudence, as endorsed by the Federal Court of Appeal, requires much more than what was offered in passing by the defendants in this case. However, the Singga Court appears to have modulated the general model as used. A model that would reach an absurd result could not be appropriate without adjustments.
[69] I agree with the concerns raised regarding the evolution of the model and that this would benefit from further consideration by the FCA. However, on the record before me in this case and in view of the FCA decision in Kwan, I have no basis to depart from the established and binding jurisprudence on this issue. I note that unlike in Torf, this matter has not come before me by way of summary trial. In this case, there is also no evidence or argument from the Defendants refuting the award of damages claimed. For all these reasons, damages shall be awarded to both the trademarks owners and their Canadian distributors for the acts of infringement.
[70] Noting the removal of the instances of infringement that took place in 2018, the total compensatory damages awarded to the Chanel Plaintiffs shall therefore be $582,000, and to the Louis Vuitton Plaintiffs $509,000.
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Both NGCI and Zi Ke Gao shall be jointly and severally liable for $225,000 of the Chanel damages (12 instances of infringement that took place between 2019 and April 2024), all three Defendants shall be jointly and severally liable for $147,000 (7 instances of infringement that took place between April 2024 and December 2024), and Zi Ke Gao and Claudia Zhao shall be jointly and severally liable for $210,000 (10 instances of infringement that took place in 2025).
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Similarly, NGCI and Zi Ke Gao shall be jointly and severally liable for $152,000 of the Louis Vuitton damages (8 instances of infringement that took place between 2019 and April 2024), all three Defendants shall be jointly and severally liable for $126,000 (6 instances of infringement that took place between April 2024 and December 2024), and Zi Ke Gao and Claudia Zhao shall be jointly and severally liable for $231,000 (11 instances of infringement that took place in 2025).
(7) Punitive Damages
[71] The Plaintiffs assert that the Defendants are also liable for punitive damages.
[72] As set out in Whiten v Pilot Insurance Co, 2002 SCC 18 [Whiten], punitive damages are for exceptional cases where “malicious, oppressive and high-handed”
misconduct represents a “marked departure from ordinary standards of decent behaviour”
and offends the court’s sense of decency (at paras 36 and 94).
[73] Relevant factors include: (a) whether the conduct was planned and deliberate; (b) the intent and motive of the defendant; (c) whether the defendant persisted in the outrageous conduct over a lengthy period of time; (d) whether the defendant concealed or attempted to cover up the misconduct; (e) the defendant’s awareness of the wrongdoing; (f) whether the defendant profited from the misconduct; and (g) whether the interest violated by the misconduct was known to be deeply personal to the plaintiff or a thing that was irreplaceable: Whiten at para 113.
[74] In this case, the Defendants’ conduct supports an award of punitive damages. The Defendants have engaged in planned and deliberate misconduct from which they have profited that has persisted over a lengthy period of time, despite their awareness of the wrongdoing. The Defendants’ unauthorized activities have been conducted without any recognition of Chanel and Louis Vuitton’s trademark rights.
[75] The Plaintiffs request an award of $200,000, which they assert is in line with the punitive damages awarded in other counterfeiting actions.
[76] In Torf, Justice McHaffie summarized the range of punitive damages awarded in prior counterfeit cases:
[134] In terms of quantum, this Court has awarded punitive damages in amounts ranging from $30,000 to $250,000, and up to $500,000 cumulatively, depending on factors such as the nature and scope of the counterfeiting operation; its duration; the extent to which the defendants have ignored legal processes or, importantly, Court orders; their efforts to conceal and/or continue their conduct through the use of aliases or other methods; and their conduct in the action: Yang at paras 50–53 ($100,000); Lee at paras 86–91 ($100,000 and $200,000 to different defendant groups); Singga at paras 170–180 ($50,000, $200,000, and $250,000 to different defendant groups); Harley-Davidson Motor Company Group, LLC v Manoukian, 2013 FC 193 at paras 49–51 ($50,000); Lam Chan Kee #2 at paras 68–79 ($250,000); Wang at paras 188–192 ($225,000); Lululemon at paras 58–66 ($30,000); Rosales at paras 59–64 ($30,000); Ward at paras 121–124 ($100,000); see also Dermaspark Products Inc c Étienne, 2023 QCCS 1268 at paras 59–64 ($30,000).
[77] Significantly, I note that punitive damages must also be proportionate when considered together with the other remedies provided. As noted in Whiten, compensatory damages also punish and may be all the punishment required. Punitive damages are only to be awarded if all other penalties have been taken into account and found to be inadequate to accomplish the objectives of retribution, deterrence, and denunciation (at para 123).
[78] In this case, the compensatory damage award is significant. Two of the Defendants are individuals and NGCI has already been dissolved. It will serve little added purpose, in my view, to add a large punitive damages award to the substantial compensatory damages award already given. For these reasons, I will limit the punitive damages awarded to the lower end of the scale at $30,000.
(8) Costs
[79] The Plaintiffs request an award of solicitor and client costs and recovery of their disbursements, along with a separate award of $3,750 for the costs awarded on April 29, 2025 in respect of the Plaintiffs’ motion for substitutional service. They do not provide any evidence as to the quantum of their alleged solicitor and client costs and provide limited submissions as to why this award should be granted, asserting only that this is in line with some of the earlier counterfeit cases.
[80] Considering the limited information before me as to the counsel fees actually incurred, and the recent cost awards relating to the court’s decisions in Torf and Ward, which awarded 50% and 35% of counsel’s fees, respectively (Louis Vuitton Malletier SA v Torf (4 November 2024), Ottawa T-1856-25 (FC); Burberry Limited v Ward (18 February 2026), Ottawa T-1553-22), it is my view that an award of costs of 40% of counsel’s fees and reasonable disbursements is more appropriate in the circumstances. While highlighted by the Plaintiffs, I note that the costs associated with the 21 attempts at service on Zi Ke Gao has already been dealt with through the award of costs for the motion for substitutional service.
[81] I find it impractical to order costs payable forthwith where a set quantum cannot be ordered as assessment will be required. As such, this will not form part of my judgment.
[82] With respect to post-judgment interest, I agree with the submissions made by the Plaintiffs and shall award the post-judgment interest rate requested.
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