Corporation Fined, Director Imprisoned for Contempt in Copyright Infringement Decision

  • April 04, 2022
  • Sepal Bonni

In a rare decision, the Federal Court of Canada found a party in contempt of court for breaching the terms of two previous judgments concerning copyright infringement, resulting in a severe fine and imprisonment of a director of the infringing corporation in Canadian Standards Association v P.S. Knight Co. Ltd..

The parties to the decision, the respondents P.S. Knight Co. Ltd. (“Knight Co.”), Knight Americas, Mr. Gordon Knight (the sole directing mind of Knight Co.) (together, “Knight Parties”) and the applicant, Canadian Standards Association’s (“CSA”), are competitors. CSA, a not-for-profit standards development organization, which publishes and updates various voluntary safety standards, had published a 2015 edition of its Canadian Electrical Code, Part I (the “2015 Code”). Pursuant to a dispute between CSA and the Knight Parties, the Knight Parties had knowingly and willingly produced and threatened to distribute a “substantial copy” of the 2015 Code for one third of the price (the “Knight Code”).

Two judgments from 2016 had found that the Knight Co. and Mr. Knight infringed CSA’s copyright of the 2015 Code by reproducing, distributing and selling the 2015 Code. According to these judgments, they were ordered to deliver up all copies of the Knight Code, and CSA was awarded a permanent injunction against Knight Co. and Mr. Knight enjoining them from infringing CSA’s copyright in the 2015 Code. However, CSA brought the matter before court again, alleging contempt and arguing that since October 2020, the Knight Parties had deliberately disobeyed the injunction and resumed reproduction, distribution and sales of the Knight Code through a newly incorporated entity, Knight Americas, in an attempt to evade the injunction.

In examining the elements of contempt, the court found that there was a “clear and unequivocal” order from the courts in 2016. The order applied not only to Knight Co. and “its officers, directors, employees, and any related companies under its control." This included both Mr. Knight personally, who is a director of Knight Co., as well as the new Knight Americas corporation, which is a related company. The court also found that the Knight Parties had knowledge of the judgments. In fact, the Knight Parties had acknowledged the injunction in multiple online posts. Finally, the court found that the Knight Parties had knowingly and intentionally carried out acts prohibited by the two 2016 judgments. The Knight Parties were therefore found to be in contempt of the judgments, and Mr. Knight was found guilty of contempt, both in his personal capacity and as the directing mind of Knight Co. and Knight Americas.

In a subsequent ruling, the court ordered the Knight Parties to pay a fine of $100,000 directly to CSA. Further, and notably, Mr. Knight was sentenced to a term of imprisonment for a minimum of six months and ordered to remain imprisoned until the Knight Parties had purged their contempt by fully complying with the judgments and paying all fines and cost awards in full, to a maximum imprisonment term of five years less one day.

This decision is a helpful illustration of the lengths that Canadian courts will go, if necessary, to enforce the protection of intellectual property, particularly where an infringement has occurred and the infringing party continues to knowingly and intentionally infringe. As demonstrated in this case, in certain circumstances, liability can and will be imposed not only on infringing corporations, but on their directors as well.

About the author

Sepal Bonni is a partner with Carters in the Ottawa office, practicing exclusively in intellectual property and information technology law.  

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