Laying a Trap

Frustrated by light sentences for counterfeiters who scamper back into the dark forest after wrist slaps for counterfeiting, Louis Vuitton laid a trap in Canada and netted itself some big game.

Counterfeiting law in Canada resembles much of criminal law - light sentences for first-time offenders, with heavier sentences imposed for those who show a willful disregard for the law. Louis Vuitton took advantage of this escalating punishment system and human nature. According to this account found on IPBlog.ca, Louis Vuitton entered a settlement agreement with several proprietors of counterfeit goods in Vancouver in 2006. The amounts of the settlement barely amounted to wrist slaps - fines of $6,000 against each of three defendants (two corporations and one individual). After the settlement, though, Louis Vuitton kept paying attention to the defendants, who all reverted to their old counterfeiting ways. Armed with this previous settlement agreement, Louis Vuitton struck again, and obtained judgments nearing $1 million total. And, the judge allowed a "piercing of the corporate veil", enabling Louis Vuitton to hold the directors of these corporations personally liable for these bad corporate acts. Ouch.

The good news for the defendants? At least the presiding judge (the Honourable Madam Justice Mary Ellen Boyd) refrained from granting Louis Vuitton findings of contempt of court against the defendants. Which means that, if they decide to go to drink from that well again, the punishment could be worse.

UPDATED 08/08/08: More on this case here. The one defendant who did show up at trial left during a lunch break on the first day of trial and did not return.