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Civil Litigation

Decision useful for IP lawyers considering contempt proceedings

A recent decision shows Federal Court judges will resort to imprisonment in rare cases of contempt involving intellectual property infringement, according to Toronto civil litigator Kevin Fisher.

Fisher, a partner at Basman Smith LLP, says a hefty fine and the threat of jail time are usually enough to spur parties into compliance with court orders.

“What you hope is that a rational person will get counsel, go back to court, and show how they've purged the contempt,” he says. “Nobody really wants to put anyone in jail for these sorts of things, so the court only tends to use it as a last resort. But if you continually ignore an order, it shows complete disregard for the process. The more blatant the conduct, the easier it will be for the judge to make a detention order and not feel bad about it.”

One such blatant case arrived in late 2015, when Federal Court Justice Simon Fothergill sentenced Ameen Muhammad to two weeks behind bars for repeatedly failing to abide by court orders in a trademark infringement dispute.

Muhammad's Hightimes Smokeshop and Gifts store in Niagara Falls, Ont., was ruled to have infringed the trademark of the marijuana culture magazine High Times back in November 2013, and ordered to stop using the name, as well as pay costs to the magazine's publisher. More than a year later, despite the launch of contempt proceedings, the shop was still in business under the same name and had paid none of the costs ordered.

Fothergill's patience finally wore out in Trans-High Corporation v. Hightimes Smokeshop and Gifts Inc., when he imposed the jail sentence.

“I am left in no doubt that the Respondent and Mr. Muhammad are refusing to pay the amounts owed under the Contempt Order. They have had numerous opportunities to offer an explanation for their failure to pay, or to demonstrate an inability to pay, and they have not done so. Since the commencement of these proceedings, the Respondent and Mr. Muhammad have exhibited a brazen indifference towards the rights of the Applicants and the authority of this Court,” Fothergill wrote.

Prison was the only option, the judge said, “to compel compliance with this Court’s Orders and to deter other similar conduct. Mr. Muhammad is not subject to imprisonment as a result of the unpaid debt, but rather for his deliberate refusal to comply with the Contempt Order despite his ability to do so.”

Muhammad was eventually released from custody the next month after paying his full $122,000 debt to High Times' publisher, as well as a $50,000 fine for contempt. Fisher says the decision will prove useful to intellectual property lawyers like him considering contempt proceedings on behalf of clients in trademark and copyright infringement cases.

"I can definitely say that too many parties are thumbing their nose at the court process; it's something I encounter often,” Fisher says. “It can be difficult for anyone to figure out what are the circumstances in which a detention order might be appropriate, so it is helpful to see a case where that has happened, with an actual time-frame.”

Despite the potentially harsh sanctions available under a motion for contempt, Fisher says it is not always the best enforcement option for all clients.

“The whole process is very expensive and onerous on the party bringing proceedings, who really has to come forward with all the evidence,” he says. “ Even if you can get a warrant for committal, then you've got to get the police to enforce that against someone, which can also unfortunately be more difficult than it sounds.”

 

 

 

 

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