Law Times

Law timeS • September 26, 2011 FOCUS PAGE 11 Landmark counterfeit case sends message Louis Vuitton knockoff operation sparks $2.5-million court award BY KENNETH JACKSON For Law Times he buyers walk into a Vancouver warehouse and find the Louis Vuit- ton handbags they saw on the web site. T As they get closer, a woman calling herself Lisa greets them. She begins showing them the handbags up close. Lisa also has a catalogue illus- trating all of the designer items the customers can buy. She says the Louis Vuitton products are from China and that she also has warehouses in Edmonton, Toronto, and Halifax. Before long her associate, Kenny, arrives and tells the two buyers he can give them dis- counts on bulk orders of 200 to 300 items. They'll arrive within 45 days. But Kenny admits the de- signer items aren't real. They're knockoffs. The buyers aren't legitimate either. They're private investiga- tors hired by Louis Vuitton to ferret out the counterfeit sellers. That initial meeting back on March 9, 2009, was the begin- ning of what would turn out to be a lengthy investigation to slowly unravel the story of Ken- ny and Lisa and their Singga Enterprises Inc. warehouse full of knockoffs. The probe would lead to more knockoffs and distribu- tors and eventually a court- room where high-end design- ers Louis Vuitton and Burberry obtained the largest counter- feiting judgment in Canadian history to the tune of $2.5 mil- lion on June 27. Defendants Kenny Ko and Lisa Lam, also known as Shing Wai Lo and Wai Shing Lo, never showed up to court. They never chal- lenged one piece of evidence against them. Their co-accused, Monica Mac and Pablo Liang of Altec Productions, didn't show up ei- ther. Ko and Lam only wrote the court asking for an indefinite ad- journment due to health reasons. Mac and Liang went a step further and hired a paralegal to ask for the same indefinite ad- journment because a crisis had forced them to leave the coun- try. The court declined to grant either request. In fact, Altec kept selling knockoffs through- out the court case. Lam and Ko also led inves- tigators to Yun Jaun Guo, also know as Jessie Guo of Carnation Fashion Co. Guo did attend the hearings and provided informa- tion to suggest she didn't un- derstand Canada's intellectual property laws. Still, she admit- ted to selling the fake items. "These defendants have sim- ply ignored court procedure and directions and have at- tempted at the last minute to derail the hearing for no reason that they have thought it worth- while to substantiate," said Fed- eral Court Justice James Russell 00182DX-A26736-64364-7.875x9.75.indd 1 www.lawtimesnews.com 8/8/11 12:29 PM in his ruling. Russell ruled all of the defen- dants knowingly sold knock- offs over a span of several years. "The evidence reveals that the Singga defendants and the Al- tec defendants are sophisticat- ed operators and the evidence against them took a significant amount of time and resources to gather," Russell said. Michael Manson, a partner at Smart & Biggar/Fether- stonhaugh who represented the plaintiffs, said in court in March that Singga Enterprises had been placing large orders with Altec. It also referred cus- tomers to Altec for a commis- sion, according to a Toronto Star story on the case. "This is not a one-off sell by some little distributor," said Manson, who noted investiga- tors "were being offered not 10, 20, 50, but 500 [items]." According to Manson, the scheme involved a large-scale operation that saw Singga and Altec import large amounts of fake goods from China with the intention of selling them nationwide at stores, gift shows, and online. The hefty penalties should 'It's only through cases like this that future courts are able to impose greater damage,' says James Zibarras. have a ripple effect in the counterfeiting world, says law- yer James Zibarras of Brauti Thorning Zibarras LLP. "They are always looking to see what's happening, legally and en- forcement-wise, against others like them. This kind of thing always does have a ripple ef- fect. I think one of the reasons why counterfeiting has been so prolific today is because the community has always under- stood the penalties are really low compared to the level of income they are making." According to Zibarras, the challenge isn't only the fact that penalties have tradition- ally been on the low side. It's also a huge undertaking and expense for companies to go af- ter counterfeiters. "There have been companies that didn't take the steps to enforce the law because they weren't con- vinced the penalties send the right message," he says. "One of the worst things that can happen is to spend several years going through the courts pro- cess only to get a weak result because that has the opposite effect. It actually encourages counterfeiting." But Zibarras thinks the Lou- is Vuitton ruling will change that and give lawyers a prec- edent to argue for large penal- ties and judges a justification to grant them. "It's only through cases like this that future courts are able to impose greater damage," he says. "Here's a case where millions were awarded, so I can do it. Now I can compare my facts to their case. If the conduct is similar, I can impose that amount. If the conduct is worse, I can actually impose a higher amount." LT UNDERSTAND THE LATEST LAW INVOLVED IN CLAIMS AGAINST THE CROWN NEW EDITION LIABILITY OF THE CROWN, 4TH EDITION PETER W. HOGG, PATRICK J. MONAHAN AND WADE K. 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