Disproportional Damage Amounts Claimed are Abusive and May Cost a Claimant

In a recent patent and defamation case, the Québec Superior Court denied damages that were unsupported by evidence and which lacked a causal link to the infringement. The Court found the Plaintiff’s claim, which was wildly disproportionate to any actual damages, was an abuse of process under the Quebec Rules of Civil Procedure.

Patent Infringement and Damages

The Plaintiffs, Mr. Vishal Puni and his business, Per4ma Sports, owned patents relating to sports clothing. The Defendants, Howard Monk and his business, Chip Mink, manufactured sports clothing and agreed to help Mr. Puni by manufacturing and selling the patented items. After the parties’ relationship ended, Mr. Puni believed Chip Mink was selling patented products without permission. Mr. Puni had one of his physiotherapy patients, Mr. Spanier, agree to trap Chip Mink by placing an online order for the patented shorts. Chip Mink advised the shorts were no longer available, but Mr. Spanier was aggressive and persistent in demanding the shorts. The Court held that the Defendant eventually relented simply to put an end to the ordeal. Despite the conspiratorial nature of the transaction, the Defendants admitted the sales were infringing. There was no other instance of infringement.

In relation to this single sale, the Plaintiffs claimed $545,649 comprising $97,800 for R&D associated with the patent applications, $35,000 for marketing and branding, $60,000 for lost profits, and various other amounts. The Court held the Plaintiffs were not entitled to the amounts because a patentee cannot be put in a better position than they would otherwise have been. The lost profits claim was unfounded because Per4ma never made a profit on any piece of clothing.

Neither Party Defamed the Other

Mr. Puni claimed reputational damage and defamation based on conversations where Mr. Monk voiced his negative opinions about Mr. Puni and Per4ma’s business to Mr. Puni and one of Mr. Puni’s employees. The Court explained conversations held in private cannot give rise to defamation even if they may be harsh, hard to take, or even cruel. Furthermore, the conversations were not defamatory because Monk’s opinions were prompted by questions from Mr. Puni and his employees.

The Amounts Claimed were Abusive

The Defendants counterclaimed for $76,334 in damages, claiming the action was abusive and the amounts claimed disproportionate to the real financial stakes. Article 51 of the Quebec Code of Civil Procedure permits the Court to impose sanctions for abuses of process. The Court held the Plaintiff’s action was abusive because it was contrary to the principles of proportionality. The Plaintiffs knew the amounts claimed bore no relation to economic reality.  The Court held “it is not permissible to attempt to kill a fly with a cannon” in the court system. Suing for large amounts when actual damage is minimal thwarts the possibility of settlement and causes higher costs than if one claims realistic amounts.

The Court awarded the Defendants $20,000 for the higher extrajudicial fees caused by the disproportionate amounts claimed. However, the Court held the abuse did not fall into the category of abuses that gave rise to punitive damages.

The full decision can be found here (as of the time of writing, the decision is only available in French).