Dermaspark Products Inc v. Patel

Dermaspark Products Inc. v. Patel
Court (s) Database
Federal Court Decisions
Date
2023-03-21
Neutral citation
2023 FC 388
File numbers
T-1308-20
Decision Content
Date: 20230321
Docket: T-1308-20
Citation: 2023 FC 388
Ottawa, Ontario, March 21, 2023
PRESENT: The Honourable Madam Justice Kane
BETWEEN:
DERMASPARK PRODUCTS INC
POLLOGEN LTD.
Plaintiffs/ Defendants by Counterclaim
and
BINAL PATEL
BALSAM SPA DBA BALSAM DAY SPA
Defendants/ Plaintiffs by Counterclaim
JUDGMENT AND REASONS
[1] The Defendants, Binal Patel and Balsam Day Spa, bring this motion for summary trial pursuant to Rules 213 and 216 of the Federal Courts Rules, SOR/98-106 [the Rules] in the context of the Plaintiffs’ action for trademark and copyright infringement.
[2] In their Notice of Motion for Summary Trial, the Defendants seek:
An order dismissing the Plaintiffs’ claims;
In the alternative, an order dismissing the claim against the Defendant, Binal Patel;
An order granting Balsam’s counterclaim and ordering the Plaintiffs to indemnify Balsam for all damages it has suffered and to pay aggravated, exemplary and/or punitive damages in the amount of $50,000.00 to Balsam;
Striking the Plaintiffs’ Statement of Claim in its entirety without leave to amend; and
Costs on an elevated scale.
[3] For the reasons that follow, the Court finds that summary trial is appropriate and has determined the claims on their merits. The Defendants’ motion is dismissed and judgment is granted in favour of the Plaintiffs. The Defendants’ Counterclaim is dismissed.
[4] Before explaining why this is an appropriate case for a summary trial and why the relief sought by the Defendants is not granted, the general background and the key aspects of the Plaintiffs’ claim and the Defendants’ defence are described.
I. Background
A. Overview
[5] The Plaintiffs and Defendants by Counterclaim (the Plaintiffs) in the underlying action are Pollogen Inc. and DermaSpark Products Inc. [to be referred to as DermaSpark unless necessary to distinguish Pollogen]. Pollogen is based in Israel and manufactures professional facial treatment products, including its OxyGeneo line of products. This product line includes the Geneo+ machine (marketed as the OxyGeneo machine in Canada), the Capsugen (a disposable component of the machine), and accompanying treatments such as NeoBright and NeoRevive. DermaSpark is the exclusive authorized distributor in Canada of Pollogen’s products.
[6] The Defendants and Plaintiffs by Counterclaim (the Defendants) in the underlying action are Binal Patel and Balsam Spa, also known as Balsam Day Spa [Ms. Patel and the Spa will be referred to as Balsam unless necessary to distinguish Ms. Patel]. Ms. Patel is the director of Yashvi Inc., the owner of Balsam Spa; she describes herself as the owner, operator, sole shareholder and director.
[7] DermaSpark claims that Balsam purchased a counterfeit of Pollogen’s machine and related products online and used these products at the spa from February 2018 to approximately March 2020. DermaSpark alleges that Balsam’s use of counterfeit products and DermaSpark’s advertising and marketing material infringed their rights under the Trademarks Act, RSC, 1985, c T-13 and the Copyright Act, RSC, 1985, c C-42.
[8] DermaSpark adds that the counterfeit products are dangerous to use and that the sale of the counterfeit machine is prohibited in Canada, noting that the OxyGeneo machine is a Class III medical device, licenced by Health Canada.
[9] Balsam denies infringement of DermaSpark’s copyright and trademark rights. Balsam contends that it purchased a “real” machine, albeit from a different seller via Alibaba (an online retailer) at a much lower cost, and used products that were the same as those sold by DermaSpark. Balsam adds that it immediately complied with DermaSpark’s cease and desist letter upon receipt.
[10] Balsam counterclaims that DermaSpark’s action is an abuse of process because DermaSpark failed to take prompt action to prevent infringement and threatened legal action against small businesses while encouraging them to buy DermaSpark products. Balsam seeks damages from DermaSpark and elevated costs.
B. The Plaintiffs’ (DermaSpark’s) Statement of Claim
[11] DermaSpark states that Pollogen has registered the trademarks of the products at issue in Canada and owns some of the copyright used in advertising material of its products. DermaSpark also owns some of the copyright of the advertising material for Pollogen’s products.
[12] DermaSpark states that products branded by Pollogen that are sold or distributed in Canada in any way other than through DermaSpark are counterfeit. DermaSpark claims that Balsam did not acquire the machine or treatments at issue from DermaSpark, nor inquire into the origin of the products. DermaSpark claims that Balsam knew or ought to have known that the machine and treatments were counterfeit given that Balsam apparently “came across” a DermaSpark sales presentation.
[13] DermaSpark claims that Balsam used the counterfeits to conduct skin treatments, while intentionally advertising and presenting the treatments and machine as the original.
[14] DermaSpark claims that purchase of the counterfeit machine and treatments deprived them of profits they would have made had the original been purchased.
[15] DermaSpark claims that Pollogen’s products are highly popular and well known by medical and aesthetic professionals across Canada and that these counterfeit products are of lesser quality. DermaSpark adds that the sale of services to customers using the counterfeit products prejudicially affected their relationship with their chain of legitimate customers and potential future customers and caused significant damage to the goodwill associated with their trademarks.
[16] DermaSpark also claims that Balsam used their logos and pictures from the Pollogen and DermaSpark website to advertise and promote Balsam’s counterfeit products and services. DermaSpark states that it did not consent to this use and that Balsam was not authorized or licenced to use the trademarks and copyrighted works.
[17] DermaSpark claims that as a result of Balsam’s actions, DermaSpark suffered damages, including to their reputation and goodwill. DermaSpark seeks a range of relief, including an injunction and statutory and punitive damages.
C. The Defendants’ (Balsam’s) Second Amended Statement of Defence and Counterclaim
[18] Balsam denies that DermaSpark is entitled to any relief and puts DermaSpark to the strict proof of their allegations.
[19] Balsam disputes that the machine and products it purchased in February 2018 from Alibaba were counterfeit.
[20] Balsam states that upon receiving a cease and desist letter in March 2020, it immediately disposed of the machine and products (although they cannot prove they did so) and stopped all use of DermaSpark’s promotional materials.
[21] Balsam disputes that DermaSpark has suffered any damages and seeks dismissal of DermaSpark’s claim with costs in their favour on an elevated scale.
[22] In the counterclaim, Balsam asserts that DermaSpark lost its “protection of copyright” due to its lack of action against online vendors.
[23] Balsam seeks a declaration that they have not infringed any of DermaSpark’s rights and that DermaSpark’s claim is an abuse of process, alleging, among other things that DermaSpark is intimidating small businesses and that DermaSpark permitted online sales to continue in order to later “extort” money from small businesses through demand letters and litigation.
[24] Balsam seeks $100,000 in damages from DermaSpark.
II. The Motion for Summary Trial
[25] As noted above, Balsam’s motion for summary trial seeks, among other things, an order dismissing DermaSpark’s claims, striking DermaSpark’s Statement of Claim, and granting Balsam’s counterclaim with costs.
[26] Balsam sets out several grounds in their Notice of Motion, some of which mirror Balsam’s Second Amended Statement of Defence, and additional responses, including:
DermaSpark has not pleaded any facts to make Ms. Patel liable for any cause of action asserted;
DermaSpark has not disclosed the details of the distribution agreement with Pollogen;
DermaSpark and Pollogen have not provided evidence that they own the trademarks or copyright at issue;
Balsam purchased online the same machine and products as marketed by DermaSpark;
Other online retailers sell DermaSpark products;
Balsam has not infringed the trademarks or copyrights at issue;
Balsam’s use of DermaSpark’s advertising material to market and sell the same products marketed by DermaSpark does not constitute a breach of copyright;
DermaSpark did not take any steps to prevent other retailers and suppliers from selling their products and, as a result, DermaSpark’s trademarks have lost their distinctiveness; and, DermaSpark’s lack of action shows that DermaSpark has been “laying in the weeds” in order to later seek damages from small businesses. (Balsam characterizes this as extortion and an unfair practice that should warrant an award of damages, including punitive and exemplary damages.)
[27] Balsam’s motion record consists of the Affidavit of Ms. Patel and several exhibits. Ms. Patel’s affidavit and her oral evidence is described in Annex A and also summarized below.
III. Is summary trial appropriate in this case?
[28] As this is a motion for summary trial, the first issue is whether summary trial is appropriate.
A. Principles Regarding Motions for Summary Trial
[29] In Collins v Canada, 2014 FC 307, at para 39 [Collins], the Court noted that the moving party bears the burden of demonstrating that a summary trial is appropriate (citing Teva Canada Ltd v Wyeth LLC, 2011 FC 1169 at para 35, rev’d on other grounds in 2012 FCA 141). The Court set out the relevant considerations at paras 40:
[40] In deciding whether summary trial is appropriate, the judge may consider, among other things: the amount involved; the complexity of the matter; the cost of a conventional trial in relation to the amount involved; the course of the proceedings; whether the litigation is extensive; whether credibility is a crucial factor; the urgency of the matter; whether the summary trial will involve a substantial risk of wasted time and effort; and whether the summary trial will result in litigating in slices (see e.g. Bosa Estate v Canada, 2013 FC 793 at para 22, 230 ACWS (3d) 425 [Bosa]; Tremblay v Orio Canada Inc, 2013 FC 109 at para 24, 230 ACWS (3d) 850 [Tremblay]).
[30] The Court in Collins explained at para 41 that once the Court finds that summary trial is appropriate, the Court should proceed to hear the case on its merits.
[31] In Viiv Healthcare Company v Gilead Sciences Canada, Inc, 2021 FCA 122, the Federal Court of Appeal elaborated on the principles and noted, at para 35:
[35] Rule 216 [of the Federal Courts Rules] governs the Court’s discretion as to whether to hold a summary trial. The Court may decline to do so if “the issues raised are not suitable for summary trial” or “a summary trial would not assist in the efficient resolution of the action”: subsection 216(5). The rule also provides that even if the amounts involved are high, the issues are complex or the evidence is conflicting, “the Court may grant judgment either generally or on an issue” unless “the Court is of the opinion that it would be unjust to decide the issues on the motion”: subsection 216(6).
[32] More recently in Ark Innovation Technology Inc v Matidor Technologies Inc, 2021 FC 1336 [Ark], this Court reiterated the established principles and acknowledged that the Court should also consider, as a relevant although not determinative factor, whether both parties support the motion for summary trial. The Court noted at paras 17-18:
[17] As the Court of Appeal confirmed recently, these provisions [Rule 216] must be interpreted and applied consistently with the general principle in Rule 3, which seeks “to secure the just, most expeditious and least expensive determination of every proceeding on its merits”: Viiv Healthcare Company v Gilead Sciences Canada, Inc, 2021 FCA 122 at paras 35–37. In assessing whether summary trial is appropriate, issues such as the complexity of the matter, urgency, cost, time, expert evidence, and whether a summary trial risks “litigating in slices” are relevant factors: Viiv Healthcare at para 38 citing with approval Wenzel Downhole Tools Ltd v National-Oilwell Canada Ltd, 2010 FC 966 at para 38; Bosa v Canada (Attorney General), 2013 FC 793 at para 22; Tremblay v Orio Canada Inc, 2013 FC 109 at para 24.
[18] In this case, the parties consent to the summary trial process. In my view, while this cannot be determinative, it is an important factor in assessing whether it is “suitable” and “just” to proceed by summary trial: Tremblay at para 26; Boulangerie Vachon Inc v Racioppo, 2021 FC 308 at paras 8, 12. If all parties are prepared to proceed through the simplified and typically less expensive summary trial process, this suggests it is just to proceed in this manner. I believe the Court should be reluctant in such circumstances to require the parties to incur the further cost and delay of proceeding to a full trial.
[33] In Ark, the Court added, at para 19, that “conflicting evidence and credibility issues do not preclude summary trial unless it would be unjust to decide the issues without trial.”
B. Balsam’s Submissions
[34] Balsam submits that the issues are not complex and that in the course of case management of this litigation, both parties agreed to pursue a summary trial.
C. DermaSpark’s Submissions
[35] DermaSpark cites the criteria in the jurisprudence as noted above. DermaSpark acknowledges that not all the criteria are met in this case. For example, there is controversy in the evidence and credibility is an issue. DermaSpark submits that this can be overcome because the affiants will be cross-examined in person in the course of the summary trial, which will permit the court to assess their credibility.
[36] DermaSpark submits that the issues are well defined and focus on the infringement of DermaSpark’s works (i.e., the copyright issues), the infringement of the trademarks, the quantification of the damages and, the costs to be awarded.
[37] DermaSpark submits that the facts necessary to establish their claims are clearly set out in the affidavit evidence and elaborated on in the oral testimony.
[38] DermaSpark notes that the only facts not present in the evidence on the record of either DermaSpark or Balsam are facts about the extent of Balsam’s use and the prejudice to DermaSpark. DermaSpark submits that the absence of this evidence is not an obstacle to the summary trial as similar issues arise in full trials. DermaSpark submits that there are other approaches to quantify the damages, including lump sum and nominal damages.
[39] DermaSpark submits that given that both Balsam and DermaSpark agree that this matter should proceed by summary trial, and most other criteria have been established, this Court should proceed to determine the matter on the merits by way of summary trial.
D. The Summary Trial Will Proceed
[40] The Court finds that a summary trial is appropriate.
[41] Although Balsam is the moving party, the submissions of DermaSpark regarding why the summary trial should proceed are more persuasive. In addition, this litigation has been prolonged for unexplained reasons and it is in the interest of both parties to bring this litigation to a conclusion.
[42] The jurisprudence has established that the substantive arguments raised on motion (not by the underlying claim) are to be decided (See for e.g., Mud Engineering Inc v Secure Energy (Drilling Services) Inc, 2022 FC 943 [Mud] paras 5, 6).
[43] In the present case, the moving party, Balsam, makes broad claims in their notice of motion with minimal reference to the law or the facts. Nonetheless, DermaSpark fully supports this matter proceeding as a summary trial. DermaSpark proposed to establish the allegations as set out in their Statement of Claim (which are also set out in their Responding Motion Record) and Balsam proposed to respond in accordance with their Statement of Defence.
[44] This approach should not be regarded as a model for the procedure applicable to a motion for summary trial; however, in the present circumstances, it is the more efficient and cost-effective approach. Therefore, I agree that the summary trial should proceed. The Court will not engage in the issue of the burden of proof on a motion of summary trial, considering the agreement by parties (see for e.g., Mud at paras 21-28).
IV. DermaSpark’s Submissions (Plaintiff’s Responding Motion Record)
A. Trademark and Copyright Ownership
[45] The Affidavit of Mr. Moshe Ben-Shlomo, the Director of DermaSpark, explains that DermaSpark is the exclusive distributor of Pollogen’s products in Canada, including the OxyGeneo machine and related products, that DermaSpark’s products are well known and that the OxyGeneo machine is a licensed medical device in Canada.
[46] DermaSpark explains that Pollogen is the sole and exclusive owner of several registered trademarks and that DermaSpark is authorized to use the trademarks and promote the products accordingly. The registered trademarks and their respective registration information are:
OxyGeneo (TMA1032944) – November 7, 2017;
NeoRevive (TMA1037225) – November 17, 2017;
NeoBright (TMA1035066) – November 17. 2017;
3-in-1 super facial (TMA1041360) – February 8, 2019;
Geneo+ (TMA1032928) – November 17, 2017.
[47] Mr. Ben-Shlomo’s affidavit attaches several exhibits that support the ownership of the trademarks at issue. The affidavits of Mr. Moshe Gurevitch and Ms. Allison Bran establish that DermaSpark and Pollogen’s have copyright in various promotional works.
B. Goodwill
[48] DermaSpark states that the Pollogen products are highly popular and well known by medical and aesthetic professionals across Canada. DermaSpark notes that through the use and promotion of its registered marks and rights, they have garnered a valuable reputation and goodwill in Canada, in association with skin care services. Mr. Ben-Shlomo’s evidence, as set out more fully in Annex A, supports this.
[49] DermaSpark also points to the evidence of Ms. Patel, who stated she was “impressed with the […] OxyGeneo branded products” from a sales presentation by DermaSpark in 2017.
[50] DermaSpark also asserts that its branded wares and services are, and are known to be, excellent quality, and are licensed by Health Canada. The exhibits attached to the affidavit of Mr. Ben-Shlomo and explained by him in oral testimony show the licencing requirements of Health Canada and the licence held for the products in issue.
C. Balsam’s Use of the Copyright and Trademarks
[51] DermaSpark submits that Balsam infringed upon their copyright, registered and unregistered trademarks.
[52] DermaSpark submits that Ms. Patel operated and managed or directed the operation and management of the key elements of the business of Balsam Spa at the material time, and has directly authorized, advertised, and conducted the acts that constitute the infringements of their rights.
[53] DermaSpark contends that at some unknown date and without any authorization, permission or a licence from DermaSpark, Balsam began to offer, sell, perform, advertise, and promote skin care services under the name OxyGeneo and 3-in-1 super facial and associated products, which constitutes unauthorized use of DermaSpark’s copyright and trademarks. This unauthorized use lasted approximately two years, until either January or March 2020.
[54] DermaSpark claims that Balsam offered to sell, sold, and performed OxyGeneo skin treatments using a counterfeit OxyGeneo machine while intentionally presenting it as the original. DermaSpark asserts that the machine was not supplied by DermaSpark who is the exclusive distributor of Pollogen products in Canada. DermaSpark alleges that Balsam did not inquire into the origin of the machine or products purchased.
[55] DermaSpark notes that, in addition to not gaining any profits from the sale of original products, the sale of counterfeit products that are not as effective as the original product, and may be dangerous, prejudicially affects DermaSpark’s relationship with its chain of legitimate customers and potential future customers.
[56] DermaSpark also claims that Balsam unlawfully used DermaSpark’s logos and pictures (their “works”) on Balsam’s website to advertise and promote Balsam’s products, and services, including an OxyGeneo Technology design in a blue round background, a picture of a Capsugen in brown, two yellow NeoBright packets, two pink NeoRevive packets and a set of three images showing how the OxyGeneo machine works on the skin. The affidavits of Mr. Ben-Shlomo and Mr. Gurevitch attach screen captures of Balsam’s online publications and promotions that use DermaSpark’s and Pollogen’s trademarked products and copyrighted works.
D. Damage to DermaSpark
[57] DermaSpark claims that Balsam’s unlawful actions caused significant irreparable damage to their reputation and to the goodwill associated with their trademarks.
[58] DermaSpark acknowledges that without a discovery process, DermaSpark cannot accurately assess the extent of Balsam’s use and the extent of damages; however, there are alternative approaches to determine the damages.
E. Relief Requested
[59] In their Second Amended Statement of Claim, DermaSpark seeks the following relief:
a Declaration that the Defendants have infringed the Plaintiffs’ Rights;
a Declaration that the Defendants’ acts constitute unfair competition;
a Declaration that the Defendants’ acts constitute trademark infringement, dilution of goodwill;
a permanent injunction restraining the Defendants from using Pollogen’s marks;
an order requiring the delivery or destruction of infringing material;
an order requiring the communication of the name and contact information of the entities supplying the infringing products;
damages for copyright infringement in the amount of $80,000.00 (At the hearing, DermaSpark noted that a lesser amount may be more appropriate);
damages for trademark violations in the amount of $100,000.00;
Punitive and exemplary damages in the amount of $40,000.00;
Interest; and,
Costs.
V. Balsam’s Position (Statement of Defence and Counterclaim)
[60] Balsam’s Statement of Defence and Counterclaim is set out above at paras 18-24. Balsam’s position is also described in their Notice of Motion for Summary Trial as set out at para 26. More generally, Balsam disputes that the machine it purchased was counterfeit, and suggests that instead, it may have been “grey goods” (i.e. a stolen or resold machine). Balsam asserts that DermaSpark has not established that the products were counterfeit. Balsam also submits that if the products were counterfeit, Ms. Patel was unaware. Balsam contends that DermaSpark did nothing to prevent infringement of their copyright or trademarks including via Alibaba and could or should have taken action against that online seller rather than against the purchaser of counterfeit products.
VI. The Issues
[61] I adopt the issues as set out by DermaSpark, which are:
Whether Balsam is liable for copyright infringement in violation of section 27 of the Copyright Act;
Whether Balsam has “used” DermaSpark’s trademark, as use is described in sections 2 and 4 of the Trademarks Act;
Whether Balsam is liable for passing off or substituting their goods for those of DermaSpark in violation of section 7 of the Trademarks Act;
Whether Balsam is liable for trademark infringement in violation of sections 19 and 20 of the Trademarks Act;
Whether Balsam’s acts have resulted in diminishing the goodwill of DermaSpark in violation of section 22 of the Trademarks Act;
Whether DermaSpark is entitled to the relief sought;
How damages should be quantified;
Whether DermaSpark is entitled to their costs on this motion;
Whether Balsam is entitled to their counterclaim for abuse of process, exemplary and/or punitive damages and costs.
VII. Assessment of the Evidence
[62] The evidence of the witnesses for DermaSpark, Mr. Ben-Shlomo, Mr. Gurevitch and Ms. Allison J. Bran is set out in Annex A. The evidence of the witness for Balsam, Ms. Patel, is also set out in Annex A. Specific aspects of the evidence are noted in the analysis of the issues.
[63] Based on my review and assessment of the affidavit evidence and exhibits and my assessment of the oral evidence of Mr. Ben-Shlomo, Mr. Gurevich and Ms. Patel—which is not consistent in several respects—I have given more weight to the evidence of Mr. Ben-Shlomo and Mr. Gurevitch.
[64] The evidence of Ms. Patel regarding her machine and communications with DermaSpark cannot be relied on. Her evidence was inconsistent, evasive and evolving.
[65] For example, in Ms. Patel’s oral testimony, she contends that Mr. Ben-Shlomo, the Director of DermaSpark, who is located in Vancouver, personally attended at her spa twice. She contends that on his first visit, he personally demonstrated the machine to her. Ms. Patel could not recall when Mr. Ben-Shlomo visited her spa, whether he arrived unannounced or by appointment, or how this personal visit and alleged demonstration—which she stated was on her—could be described as “coming across” a presentation, as she had stated in her affidavit. Ms. Patel also states that Mr. Ben-Shlomo attended at her spa for a second time “sometime” after January 30, 2020 to verify that she had disposed of her machine and products. Again, she could not say when this occurred. She could also not explain why Mr. Ben-Shlomo continued to send emails requesting that she provide a picture of the machine and the serial number if she had in fact previously provided the serial number to him by telephone. She could not explain why Mr. Ben-Shlomo asked that she return the machine to him and also would attend at her spa, but not view the machine. Mr. Ben-Shlomo vehemently denies ever attending at the Balsam Spa.
[66] In closing submissions, Counsel for Balsam suggested that whether Mr. Ben-Shlomo attended the spa was not material to the issue of infringement. However, Ms. Patel’s testimony regarding his visits, which are denied by Mr. Ben-Shlomo, is relevant to the Court’s assessment of Ms. Patel’s credibility.
[67] Ms. Patel’s evidence regarding her lack of awareness that the product she purchased from a seller in China via the Alibaba website was counterfeit is also not convincing. Given that she did not find the machine on any Canadian online platform but only on Alibaba, at a significantly lower price, she should have been alerted to the risk that this was a counterfeit product. In addition, the invoice from the sellers, Wuhan Gaze Laser Technology Co. Ltd [Wuhan] and Gracelaser Electronic Technology Co., Ltd. [Gracelaser] did not identify the products by exactly the same names as the Pollogen products. Her testimony that she only noticed the differences upon being asked on cross-examination to look at the invoice, which is an exhibit to her affidavit, confirms that she was reckless or willfully blind to the possibility that she was purchasing a counterfeit machine. Her response—that the extremely low price did not raise any red flags because products in Canada typically cost more—is not a reasonable explanation given that the machine purchased via Alibaba was only one fifth of the price of a genuine machine and she knew the price of a genuine machine. Ms. Patel testified that she did not make any inquiries to verify that her purchase was in fact a product manufactured by Pollogen.
[68] Ms. Patel’s testimony regarding the “WhatsApp” chat between her husband and the online seller evolved and was inconsistent. Ms. Patel flip-flopped regarding whether she was present during the chat and how the chat was reproduced and how the title, “Whats up chat with supplier,” was inserted.
[69] Similarly, her testimony evolved regarding whether she was present while her husband prepared the exhibit listing the sales to clients of the services using the counterfeit products.
[70] In addition, Ms. Patel’s evidence of her communications with Mr. Ben-Shlomo regarding the machine relies on selective parts of emails to bolster her claimed ignorance that the machine was counterfeit. For example, in her oral testimony, she contends that Mr. Ben-Shlomo told her that her machine was “real”; however, the email states that “if this is what we have spoken about [which appears to be whether her machine is one that was previously stolen], don’t worry about it as this is a real machine, please send me a photo of the back of the machine […].” Ms. Patel never sent a photo of the back of the machine and cannot reasonably explain why she did not, despite several requests to do so. Subsequent emails highlight that Mr. Ben-Shlomo alerted Ms. Patel and her husband that the machine she had purchased was not genuine.
[71] In closing submissions, Counsel for Balsam argued that there is no evidence that the machine is counterfeit because it was never inspected by DermaSpark and was destroyed. Counsel for Balsam suggested that Mr. Ben-Shlomo did not advise Balsam that the machine was counterfeit, only that the machine would be “considered” to be counterfeit, and that this communication followed only after Ms. Patel stated she was not willing to purchase genuine products from DermaSpark.
[72] Balsam’s interpretation is not supported by the evidence on the record or the testimony of the witnesses. For example, the email from Mr. Ben-Shlomo to Ms. Patel dated January 14, 2020 asked her to send him a picture of the back of the machine, as did the email of January 16, 2020. The email dated January 30, 2022 to Ms. Patel asked her to reply to Mr. Ben‑Shlomo’s messages “and call me back. Failure to do that, this will be considered a fake device and legal actions will commence […]” The email dated January 30, 2020 from Mr. Ben‑Shlomo to Mr. Patel (Ms. Patel’s husband) clearly states, “I must have the fake machine shipped to us, please let me know how you want to proceed and we will coordinate it.”
[73] Ms. Patel attests that she immediately complied with the cease and desist letter upon receipt and had the machine disposed of at a recycling depot. However, there is no evidence on the record that identifies the serial number of the machine (although she says she orally provided it to Mr. Ben-Shlomo, which he denies), and no picture of the machine.
[74] Ms. Patel’s claim that Mr. Ben-Shlomo pressured her to purchase a genuine machine and related products and suggested that no legal action would be taken after she ceased using the counterfeit machine is denied by Mr. Ben-Shlomo. The emails from Mr. Ben-Shlomo do offer genuine products to Balsam, and provide a link to a video explaining the OxyGeneo technology, but the emails do not suggest that purchase of the genuine products would be a way to avoid action against infringement. The emails, as noted above, stated that if the machine is not returned, legal action would commence. In addition, Ms. Patel’s allegations cannot be given any weight due to the overall evolving and inconsistent nature of her testimony.
[75] Ms. Patel contends that the machine she purchased was not a medical device requiring a licence from Health Canada, because the machine was “non-invasive.” Her view was based on her “understanding”, but she did not refer to any source for this understanding. She also explains that she contacted Health Canada to inquire about her obligations and was told that her machine was not a medical device. However, she has no record of when she called Health Canada or who she spoke to.
[76] Although Balsam’s submissions attempt to portray the evidence on the record in a more favourable manner to Ms. Patel, the record does not support Balsam’s interpretation. Moreover, Balsam’s portrayal of the evidence does not provide a defence to the claims of infringement or breach of copyright.
VIII. Is the Defendant liable for Copyright infringement in violation of section 27 of the Copyright Act?
[77] Subsections 27(1) and (2) provide:
27 (1) It is an infringement of copyright for any person to do, without the consent of the owner of the copyright, anything that by this Act only the owner of the copyright has the right to do.
27 (1) Constitue une violation du droit d’auteur l’accomplissement, sans le consentement du titulaire de ce droit, d’un acte qu’en vertu de la présente loi seul ce titulaire a la faculté d’accomplir.
(2) It is an infringement of copyright for any person to
(2) Constitue une violation du droit d’auteur l’accomplissement de tout acte ci-après en ce qui a trait à l’exemplaire d’une œuvre, d’une fixation d’une prestation, d’un enregistrement sonore ou d’une fixation d’un signal de communication alors que la personne qui accomplit l’acte sait ou devrait savoir que la production de l’exemplaire constitue une violation de ce droit, ou en constituerait une si l’exemplaire avait été produit au Canada par la personne qui l’a produit :
(a) sell or rent out,
a) la vente ou la location;
(b) distribute to such an extent as to affect prejudicially the owner of the copyright,
b) la mise en circulation de façon à porter préjudice au titulaire du droit d’auteur;
(c) by way of trade distribute, expose or offer for sale or rental, or exhibit in public,
c) la mise en circulation, la mise ou l’offre en vente ou en location, ou l’exposition en public, dans un but commercial;
(d) possess for the purpose of doing anything referred to in paragraphs (a) to (c), or
d) la possession en vue de l’un ou l’autre des actes visés aux alinéas a) à c);
(e) import into Canada for the purpose of doing anything referred to in paragraphs (a) to (c),
e) l’importation au Canada en vue de l’un ou l’autre des actes visés aux alinéas a) à c).
a copy of a work, sound recording or fixation of a performer’s performance or of a communication signal that the person knows or should have known infringes copyright or would infringe copyright if it had been made in Canada by the person who made it.
BLANC
[78] DermaSpark has established—by the evidence of Mr. Ben-Shlomo and Mr. Gurevitch and the exhibits attached to their affidavits—that Pollogen and DermaSpark own the copyright to the various works that Balsam has copied and posted on their own website. Balsam does not dispute that Pollogen owns these works or that DermaSpark is the only authorized Canadian distributor and is licensed to use the works. Balsam’s reproduction or copying of five works has been established in the exhibits on the record. Of note, Balsam also copied the indication that these are indeed trademarks.
[79] Balsam focusses only on the OxyGeneo machine and argues that if the machine is real, there would be no impediment to Balsam’ use of Pollogen’s and DermaSpark’s promotional works. However, it has been established that Balsam’s machine is not “real.” In addition, in oral evidence, Mr. Ben-Shlomo explained that owners of genuine machines still have to pay a fee to use the promotional works.
[80] Mr. Gurevitch provided a screen capture of Balsam’s website. The screen capture contains images including the OxyGeneo logo, the Capsugen picture, the NeoBright picture and NeoRevive picture. Mr. Gurevitch states that these images were authored by Pollogen’s employees and all rights in and to the images (the “works”) are owned by Pollogen. He states that Balsam has no right to use Pollogen’s works for any purpose.
[81] The exhibits noted by Mr. Ben-Shlomo also demonstrate that Balsam used the identical images from Pollogen’s and DermaSpark’s promotional materials on the Balsam website. Of note, the “before and after” images are identical.
[82] Mr. Ben-Shlomo also pointed to an exhibit which shows screen captures of Balsam’s website and explained that the “before-and-after” skin photos are taken from DermaSpark’s website and marketing materials, noting that these were Pollogen’s works. He identified each photo and text as belonging to DermaSpark and Pollogen and noted the use of “TM” beside the name OxyGeneo. These images are displayed on a copy of DermaSpark’s own website. Mr. Ben‑Shlomo attested that the animation of “Exfoliate, Infuse, Oxygenate” was designed in 2015 for DermaSpark.
[83] DermaSpark has established that Balsam infringed their copyright for several works.
IX. Has Balsam “used” DermaSpark’s trademarks?
[84] “Use” is defined in Section 2 of the Trademarks Act: “use, in relation to a trademark, means any use that by section 4 is deemed to be a use in association with goods or services; (emploi ou usage).”
[85] Section 4 provides:
4 (1) A trademark is deemed to be used in association with goods if, at the time of the transfer of the property in or possession of the goods, in the normal course of trade, it is marked on the goods themselves or on the packages in which they are distributed or it is in any other manner so associated with the goods that notice of the association is then given to the person to whom the property or possession is transferred.
4 (1) Une marque de commerce est réputée employée en liaison avec des produits si, lors du transfert de la propriété ou de la possession de ces produits, dans la pratique normale du commerce, elle est apposée sur les produits mêmes ou sur les emballages dans lesquels ces produits sont distribués, ou si elle est, de toute autre manière, liée aux produits à tel point qu’avis de liaison est alors donné à la personne à qui la propriété ou possession est transférée.
(2) A trademark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.
(2) Une marque de commerce est réputée employée en liaison avec des services si elle est employée ou montrée dans l’exécution ou l’annonce de ces services.
(3) A trademark that is marked in Canada on goods or on the packages in which they are contained is, when the goods are exported from Canada, deemed to be used in Canada in association with those goods.
(3) Une marque de commerce mise au Canada sur des produits ou sur les emballages qui les contiennent est réputée, quand ces produits sont exportés du Canada, être employée dans ce pays en liaison avec ces produits.
[86] DermaSpark has established that Balsam used the trademarks in accordance with the definition of “use” in Sections 2 and 4 of the Trademarks Act. Balsam used the marks in its advertising, promotion and sale of the spa services for the OxyGeneo treatments. This is confirmed by the evidence of Mr. Gurevitch and Mr. Ben-Shlomo.
[87] Mr. Gurevitch stated that DermaSpark is the only authorized distributor of Pollogen products in the Canadian market. He also stated that any alleged Pollogen device or alleged Pollogen products acquired from a source other than Pollogen’s exclusive distributors are counterfeit and are infringing devices and products. Mr. Gurevitch noted that Wuhan and Gracelaser are infringers known to Pollogen and stated that they are not authorized to manufacture or distribute Pollogen’s goods.
[88] Mr. Gurevitch explained that Pollogen does not work with or have distribution agreements with Wuhan or Gracelaser; products coming from these companies are counterfeit, as they do not come from Pollogen.
[89] As noted above, Mr. Gurevitch attached a screen capture of Balsam’s website. This exhibit establishes that Balsam used DermaSpark’s trademarks on their website: in particular, OxyGeneo, NeoBright, and NeoRevive.
[90] The exhibits to Mr. Ben-Shlomo’s affidavit also show a screen capture of Balsam’s use of the following trademarks on their website and Facebook page: OxyGeneo, NeoBright, NeoRevive, Geneo+, and 3-in-1 Facial (which mimics the “3-in-1 super facial” trademark).
[91] Ms. Patel’s own evidence also demonstrates Balsam’s use of DermaSpark’s trademarks in the performance of the services. Ms. Patel attached an exhibit to he