No Liability for Infringing Comparative Advertising

  • March 18, 2022
  • May M. Cheng

The Quebec Court of Appeal decision in Constellation Brands US Operations Inc. v. Société de vin internationale ltée 2021 QCCA 1664, which issued on Nov. 5, 2021, has received a lot of attention for its discussion of when comparative advertising constitutes infringement and whether comparative advertising can depreciate goodwill (including an article in The Lawyer’s Daily by John McKeown). However, the case is noteworthy for its consideration of the court’s discretion to refuse to grant an accounting of profits after having found infringement, and more discussion is merited on this aspect of the decision.

The defendant, Société de vin internationale ltée (SVI), in this case had distributed 2,500 promotional leaflets comparing its new collection of APOLLO wines to the MEOMI branded wines of the plaintiff, Constellation Brands US Operations Inc. (Constellation), using images of the plaintiff’s products and its trademarks and asserting that the new wines were comparable. Constellation sought the right to recover profits made by SVI from the new APOLLO collection of wines sold using the comparative advertising, by way of an accounting of profits for infringement, seeking in excess of $800,000 in profits, as well as punitive damages of $50,000.

The plaintiff’s claims for copyright infringement and depreciation of goodwill associated with its trademarks were dismissed at trial in the Quebec Superior Court, and the Quebec Court of Appeal also rejected the claims, dismissing the appeal with costs, but arriving at the same conclusions in a slightly different way.

Notably, the Appeal Court upheld the trial judge’s refusal to grant an accounting of profits despite the defendant’s admission that it had violated the plaintiff’s copyright in the images used on leaflets. The trial judge implicitly accepted that the distribution of the leaflets had resulted in an infringement of the plaintiff’s trademark and copyrights, based on other statements in the judgment, but did not accept that there was any causal connection established in evidence between the leaflets and the defendant’s profits. The trial judge also did not award punitive damages, indicating that the plaintiff did not demonstrate the existence of exceptional circumstances justifying such an award.