When Saying Kosher Isn't Kosher 

Misusing the name, brand, logo, trademark, images, among other things, belonging to others may be a form of tortious infringement that is actionable under a variety of tortious forms of wrongdoing such as trademark infringement, copyright infringement, passing off, among others, or even as a combination of many torts occuring together.  Many of these forms of wrongdoing (and perhaps also the tort of misrepresentation if such a case were brought by a misled customer) occurred in the case of Kashruth Council of Canada v. 1412189 Ontario Inc., 2018 CanLII 130064 when the Defendant, 1412189 Ontario Inc.  operating as Adee Flour Mills ("Adee"), continued to use logos and stamps belonging to the Kashruth Council of Canada without authorization to do so.

The facts of the Kashruth case are quite interesting and can be summarized in brief as being that Adee sold products displaying logos and stamps or marks owned by Kashruth where such logos or stamps or marks are intended to demonstrate that certain food products are certified kosher and that Adee did so despite expiry of the period of time in which Adee was licensed and entitled to use such logos and stamps or marks.  As was found and stated by the Judge in Kashruth:

[10]   Mr.  Rabkin stated that the effect of the transgressions is an egregious breach of the Council’s copyright and trademark rights, severely diluting the Kosher trademark, harming its goodwill, and putting the reputation of the Council into disrepute.  The kosher Jewish community takes their dietary habits extremely seriously, and thus have placed enormous trust on the Council to maintain high standards of control.  Mr.  Rabkin stated that the actions of the defendants could have a long-term prejudicial impact on such trust throughout the Council’s constituency, since kosher food is a spiritual obligation and eating food that is labelled as kosher certified when it is not is a severe transgression.  The actions have caused harm to both kosher consumers as well as the Council’s reputation as an upstanding kosher certifier.

In determining that such conduct was unlawful and deserving of compensation, the Judge in Kashruth relied upon statutory rights prescribed within the Trade-Marks ActR.S.C.  1985, c.  T-13 and stated:

[15]     The Trade-marks Act, R.S.C., 1985, c.  T-13 (“Act”) provides in section 22(1):

22 (1) No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.

[16]     The Act provides a remedy in section 53(1):

53 (1) Where a court is satisfied, on application of any interested person, that any registered trade-mark or any trade-name has been applied to any goods that have been imported into Canada or are about to be distributed in Canada in such a manner that the distribution of the goods would be contrary to this Act, or that any indication of a place of origin has been unlawfully applied to any goods, the court may make an order for the interim custody of the goods, pending a final determination of the legality of their importation or distribution in an action commenced within such time as is prescribed by the order.

[17]     Section 52 of the Act defines “court” in section 53 to mean “the Federal Court or the superior court of a province”.  The Small Claims Court, as a branch of the Superior Court of Ontario, has jurisdiction to consider a claim arising from the Act.  See Laurentide Cabinet Corporation et al.  v. Beyond Flooring, (2010), 323 D.L.R.  (4th) (Ont.  Div. Ct.), [2010] O.J.  No.  3355, at paragraph 15.

[18]     Section 53.2(1) of the Act also provides:

53.2 (1) If a court is satisfied, on application of any interested person, that any act has been done contrary to this Act, the court may make any order that it considers appropriate in the circumstances, including an order providing for relief by way of injunction and the recovery of damages or profits, for punitive damages and for the destruction or other disposition of any offending goods, packaging, labels and advertising material and of any equipment used to produce the goods, packaging, labels or advertising material.

Damages

In the Kashruth case, it was difficult to prove an actua damage; however, reputational damage was assessed 'at-large' as $20,000 and a further $5,000 as a punitive damage to act as a punishing and detering effect was also applied:

[27]     I am satisfied, based on the Council’s evidence given through Mr.  Rabkin, that there has been damage to its reputation, but the damages are difficult to assess.  In such circumstances, the Court must make its best assessment possible, based on the evidence of Mr.  Rabkin and materials tendered.  In all the circumstances, I find that $20,000 is a fair and reasonable assessment of damages.

[28]   The plaintiff is entitled to $20,000 in damages, in breach of contract and pursuant to section 53 of the Act against the defendant Adee.

[29]   Punitive damages are only granted where there has been egregious conduct, such as conduct that is high-handed, malicious, arbitrary or highly reprehensible, departing markedly from the ordinary standards of decent behaviour.

[30]   The defendant Adee is also ordered to pay to the plaintiff $5,000 for punitive damages.  Adee’s breach of contract and breach of the trademark rights of the Council did not only harm the Council.  Since the products that are not authorized to be kosher certified are sold to unsuspecting consumers who adhere to a kosher diet for religious reasons, the failure to adhere to a kosher diet could foreseeably result in spiritual trauma.  I find that the defendant Adee’s actions are highly reprehensible, departing markedly from the ordinary standards of decent behaviour, as there is foreseeable harm to the innocent consumer.  An award of punitive damages is necessary to punish and discourage such conduct, which blatantly disregards the foreseeable and far-reaching consequences of the defendant Adee’s breach of contract and breach of the Act, beyond the harm caused to the Council’s goodwill and reputation, and dilution of its COR trademark.

Summary Comment

Infringing upon a trademark, or other intellectual properties of others, may give rise to statutory rights of action or common law rights of action in tort law and per the Kashruth case, even where an actual loss as 'special damages' is difficult to prove, general 'reputation' damages may be awarded to reflect injury to the reputation of the trademark as well as punitive damages to ensure discouragement of further similar behaviour.

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