No one is higher than the law – Headshop trade-mark infringer jailed for contempt

Hightimes Smoke Shop and Gifts, a headshop located in Niagara Falls, was previously ordered to pay $55,000 in damages and costs relating to trade-mark infringement and passing off regarding Trans-High’s registered trade-mark, HIGH TIMES. Hightimes was also permanently enjoined from selling, distributing or advertising any goods or services in association the HIGH TIMES mark. Despite knowing about the injunction, Hightimes continued to use the trade-mark.

Hightimes did not participate in the underlying infringement and passing off proceeding but was served more than once with the ensuing Order of Justice Manson. Hightimes’ lawyer acknowledged receipt of the Order and asked for additional time for Hightimes to comply. The agreed upon deadline passed without any change to Hightime’s conduct.

Trans-High initiated contempt proceedings. After negotiations between the parties, the contempt hearing was adjourned on Hightimes undertaking that it would amend their corporate registration, remove HIGH TIMES form public view and printed materials and pay Trans-High $80,000 no later than February 17, 2015. However, High Times again failed to take the required actions or make any payment by the agreed upon deadline.

At the contempt hearing on June 18, 2015, Hightimes and its Officer and Director, Ameen Muhammad, pled guilty to contempt.

The Federal Court has authority to impose sanctions for contempt pursuant to Rule 466 of the Federal Courts Rules. Appropriate penalties will be influenced by aggravating and mitigating factors, and therefore will depend on the facts of each case. If contempt relates to a matter of intellectual property, general deterrence is a primary consideration.

Aggravating factors: The Court found Hightimes’ acts of contempt both objectively and subjectively serious, as these acts challenged the Court’s authority and the public’s confidence in the administration of justice. Hightimes did not provide any explanation for it failure to comply with its obligations under Justice Manson’s Order or the undertakings it provided to the Court. Conversely, Trans-High repeatedly contacted Hightimes to offer leniency in the contempt proceeding if it would just comply with the original Order.

Penalties: The Court further concluded that Hightimes had a long history of infringement, and therefore a fine of $50,000 for the five counts of contempt was appropriate. However, if Hightimes paid the original $55,000 in damages and costs from Justice Manson’s order and the $62,000 in solicitor-and-client costs from the show cause hearing within 30 days, the $50,000 contempt fine would be reduced to $10,000.

If no payment was made within 30 days, Justice Fothergill ordered that Mr. Muhammad would be imprisoned for 14 days and remain imprisoned until the penalties were paid. Again, Hightimes failed to make the required payment.

Trans-High then brought an ex parte motion to enforce the contempt Order. By Order dated September 23, 2015 Justice Fothergill held that High Times and Mr. Muhammad appear able but unwilling to pay the fines, costs and other amounts ordered by Justice Manson, and ordered a warrant for committal for Mr. Muhammad.

The contempt decision is available here.

The warrant of committal decision is available here.

Post-script: According to the court file, on October 23, 2015 Mr. Muhammad was ordered to be “released from his current incarceration” following full payment of $122,833.66 to Trans-High and the $50,000 fine to the Court.