Matt Lonsdale is a JD candidate at Dalhousie University
In late 2009, the UK Border Agency (UKBA) seized several shipments of counterfeit Nike athletic shoes originating from an unknown source within China and destined for customers within the UK. The UKBA notified Nike of the seized shipments, and Nike brought an action for trademark infringement against the UK customers. The majority of the claims were either settled out of court or went undefended. The sole case in which a defence was entered was resolved in October by summary judgment in favour of Nike. The court held that the defendant’s defence that he did not know the shoes were counterfeit had no real chance of succeeding at trial. The language of the Trademarks Act makes it clear that “[W]hether or not the defendant believed the goods were authentic is irrelevant to the question of trade mark infringement”.
The case is interesting because of the relatively small financial value of the infringement: the defendant was an individual who had ordered a single pair of shoes over the Internet. The goods had been seized upon entry to the UK and had never reached the defendant. Nike defended their decision to bring the suit by noting that there were no viable alternative methods for them to enforce their rights. Judge Birss accepted this, though he noted that “[I]t may be questioned whether the sledge hammer of these proceedings is necessary in order to crack this nut of this magnitude”.
While he acknowledged their right to bring the suit, the relatively small amount at stake did play a part in the judge’s decision not to make any order as to costs. A settlement had been offered by Nike’s solicitors, the terms of which were that the defendant must “give an undertaking not to infringe in future, consent to destruction of the goods held by the UKBA and to provide details of where the goods had been purchased”. Nike’s solicitors also indicated that if this settlement was refused, they would seek a summary judgment and costs in court. It is unclear at what point the defendant replied to the letter indicating his acceptance of the offer, but as Nike did indeed seek a summary judgment with costs, it was apparently not within the deadline that their solicitors had in mind. Judge Birss held that the defendant had attempted to satisfy all the terms of the settlement and that even if the defendant’s letter indicating acceptance of the settlement arrived after the application for summary judgment was served, “it still seems to me that some sort of engagement with the Defendant would have been preferable in the circumstances”.
As one of the world’s largest manufacturers of athletic apparel and equipment, Nike is no stranger to the problem of dealing with counterfeit goods. Trade groups have placed the cost of counterfeiting operations to the Canadian economy in the billions, although figures like this have also been met with some criticism.