Executive Summary: Key Legal and Evidentiary Issues

• Whether the motion judge properly awarded the plaintiff the defendant’s profits from sales of copyright-infringing materials based on the defendant’s own sales charts.
• Allocation of the burden of proof on the defendant to establish deductible expenses from infringing revenues under s. 35(2) of the Copyright Act.
• Adequacy of the defendant’s evidentiary record, given her failure to quantify alleged expenses (labour, taxes, rent, and other costs) or fulfill an undertaking to provide a breakdown of actual profits.
• The limits of raising new, unsupported expense calculations for the first time on appeal in a copyright infringement profits claim.
• The appellate standard of review for a motion judge’s assessment of profits and deductions on summary judgment.
• Entitlement to and quantum of costs of the appeal following dismissal of the defendant’s challenge to the monetary award.

Background and parties

The case arises from a copyright dispute between the Lakehead District School Board and Anna Mauro, who operated a business under the name 807 ISC Thunder Bay. The School Board sued Ms. Mauro, alleging that she had infringed its copyright through the production and sale of certain items, and sought both non-monetary remedies and an accounting of profits earned from the infringing sales. The dispute culminated in a summary judgment decision of the Superior Court of Justice in favour of the School Board, followed by an appeal to the Court of Appeal for Ontario focused solely on the monetary component of the judgment.

Facts of the case

On the summary judgment motion, the School Board alleged that Ms. Mauro had engaged in copyright infringement by selling products that made unauthorized use of the School Board’s copyrighted material. The motion judge concluded that the School Board owned the relevant copyright and that the items sold by Ms. Mauro infringed those rights. As part of the evidentiary record, Ms. Mauro had produced sales charts at her examination for discovery, which set out the revenues from the sale of the infringing items. Those charts became the foundation for calculating the profits she had earned from the infringement.

In response, Ms. Mauro argued that the raw sales totals overstated her true profits because they did not reflect the full range of business expenses associated with the sales, such as labour costs, taxes, rent, and other operational expenditures. However, while she identified these categories of expenses in general terms, she did not provide a quantified breakdown or documentary proof of the actual amounts corresponding to each category. The motion judge therefore had before her a clear record of revenues from infringing sales, but no concrete or reliable evidence of deductible expenses beyond those already apparent from the materials.

Proceedings in the Superior Court of Justice

The Superior Court motion judge granted summary judgment in favour of the Lakehead District School Board. She declared the School Board to be the copyright owner, issued an injunction restraining further infringements, and ordered the delivery up of infringing materials in Ms. Mauro’s possession. In addressing monetary relief, the judge treated the matter as an accounting of profits — that is, stripping the defendant’s gains from the infringement rather than awarding traditional compensatory damages.

Using the sales charts submitted by Ms. Mauro on discovery, the motion judge calculated that Ms. Mauro had earned profits of $23,891.52 from the sale of the infringing items. The defendant urged the court to deduct additional expenses for labour, taxes, rent, and other costs. The judge emphasized that on a summary judgment motion each party must “put their best foot forward” and that it was the defendant’s onus to prove any deductions she claimed should be made from the gross proceeds of sale. In the absence of quantified figures or supporting proof, the judge declined to make any further deductions and awarded $23,891.52 to the School Board as the amount of profits to be disgorged.

Issues on appeal

Ms. Mauro appealed only the monetary award to the Court of Appeal for Ontario. She did not challenge the findings of copyright ownership, infringement, or the non-monetary remedies (declaration, injunction, and delivery up). The appeal therefore focused exclusively on whether the motion judge erred in refusing to reduce the $23,891.52 award to account for expenses that Ms. Mauro said should have been deducted from her revenues.

The key issues were whether the motion judge had misapplied the governing principles under s. 35(2) of the Copyright Act, which places the burden on the defendant in a copyright infringement profits claim to prove any costs or expenses to be deducted from revenues, and whether the judge had treated the evidentiary record and the defendant’s self-represented status unfairly. In addition, the Court of Appeal had to consider whether new expense calculations, advanced for the first time on appeal without evidentiary support, could alter the result reached below.

Court of Appeal’s reasoning

The Court of Appeal held that the motion judge had made no reviewable error in her treatment of the evidence or in her application of the Copyright Act. It confirmed that, under s. 35(2), the defendant in a copyright infringement case bears the onus of proving the costs claimed as deductions from the revenues earned from the sale of infringing goods. Simply mentioning categories such as labour, taxes, or rent, without proof of actual figures, did not satisfy that burden. The appellate court observed that Ms. Mauro had been clearly on notice that the calculation of profits was in issue. She had provided sales charts on discovery, given an undertaking to supply a breakdown of her actual profits but had not fulfilled it by the time of the summary judgment motion, and her responding factum identified damages as an issue and advanced her position that no profits had been earned.

Given that history, the Court of Appeal was satisfied that, even though she was self-represented, Ms. Mauro understood that the quantification of her expenses was both contested and central to the calculation of profits. The motion judge was therefore entitled to rely on the evidence that was actually before the court and to draw the conclusion that unquantified, unsupported expense claims could not reduce the profits figure derived from the defendant’s own sales charts. The appellate court also declined to consider new calculations of expenses put forward by Ms. Mauro for the first time on appeal, as they were unaccompanied by evidentiary support and could not be used to re-write the factual record on which the summary judgment had been granted.

The Court of Appeal found no basis to interfere with the motion judge’s decision and dismissed the appeal. In doing so, it reaffirmed that defendants seeking to reduce an accounting of profits in copyright cases must marshal and present clear, admissible evidence of their expenses at first instance; failure to do so will generally preclude them from obtaining deductions later, including on appeal.

Ruling and overall outcome

The combined effect of the decisions at first instance and on appeal is that the Lakehead District School Board prevailed entirely in its copyright infringement claim and in the subsequent appeal. The Superior Court’s summary judgment stands, including the declaration of copyright ownership, the injunction restraining further infringement, the order for delivery up of infringing materials, and the monetary award of $23,891.52 representing Ms. Mauro’s profits from the infringing sales. The Court of Appeal dismissed Ms. Mauro’s challenge to that monetary award and ordered her to pay the School Board $5,000 in costs of the appeal, inclusive of disbursements and applicable taxes. As a result, the successful party is the Lakehead District School Board, and the total monetary amount ordered in its favour across the trial and appeal decisions is $28,891.52.