Executive Summary: Key Legal and Evidentiary Issues

• The Federal Court of Appeal reviewed whether the Federal Court's reasons for a $50,000 nominal damages award and a subsequently amended $50,000 punitive damages award were legally sufficient.
   
• Trademark infringement findings relied on registrations that were inconsistently identified across the statement of claim, the request to admit, supporting exhibits, and the judgment itself.
   
• Conflicting evidence about whether a cosmetic apparatus used by the appellants was counterfeit went unaddressed despite a deemed admission arising from Rule 256 of the Federal Courts Rules.
   
• Passing off damages were awarded even though no argument on that cause of action appeared in the respondents' notice of motion or memorandum of fact and law.
   
• Quantum of nominal damages exceeded the typical range identified in comparable cases without any explanation for the departure.
   
• Costs were assessed under an enhanced tariff column without justification for departing from the standard scale.
   

Facts of the case

This was a consolidated appeal from two unreported Federal Court judgments (Docket T-1741-23). In the first, dated May 12, 2025, the Federal Court granted a motion for summary trial brought by DermaSpark Products Inc. and Pollogen Ltd. against The Lounge Medical Spa Ltd. and Roula Hamdan, finding that the appellants had infringed the respondents' trademark rights and damaged their goodwill. The judgment ordered the appellants to pay the respondents nominal damages of $50,000 for infringement, passing off, and dilution of goodwill of Pollogen's trademarks, along with a separate $50,000 award under a second paragraph of the order. In the second judgment, dated July 28, 2025, the Federal Court granted the respondents' motion for reconsideration under Rule 397(2) of the Federal Courts Rules, acknowledging a "mistake/oversight" in the May judgment and amending the second $50,000 award to punitive and exemplary damages. The Court of Appeal noted that the May judgment closely mirrored the draft order included in the respondents' own motion record, and that the error corrected on reconsideration originated from that same draft order. A central factual dispute concerned an "Oxygeneo cosmetic apparatus" used by the appellants: the respondents alleged it was counterfeit, while Ms. Hamdan had sent a July 23, 2024 email asserting she possessed a "real machine," providing a serial number, a purchase agreement, and reference to four witnesses, and stating she had paid $12,000 for it.

Policy and legislative provisions at issue

The underlying infringement finding was based on sections 19, 20, and 22 of the Trademarks Act, R.S.C. 1985, c. T-13. The respondents' pleadings had also invoked subsections 7(b) and 7(c) of the Trademarks Act in relation to passing off, though the Court of Appeal found this claim was never actually argued in the summary trial motion materials. Procedurally, the reconsideration judgment was granted under Rule 397(2) of the Federal Courts Rules, S.O.R./98-106. The deemed-admission consequence under Rule 256 of the Federal Courts Rules, which applies where a party fails to serve a response in Form 256 to a request to admit, was central to the Federal Court's acceptance that the apparatus used by the appellants was counterfeit. Costs had been awarded under Column V of Tariff B, rather than the generally applicable Column III.

Reasoning and analysis

Applying the standard of review from Housen v. Nikolaisen, 2002 SCC 33, the Court of Appeal held that the Federal Court erred in law by providing inadequate reasons for its conclusions. Drawing on Cojocaru v. British Columbia Women's Hospital and Health Centre, 2013 SCC 30, and a line of authority on sufficiency of reasons including R. v. Sheppard, 2002 SCC 26, and Hill v. Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41, the Court identified several unexplained gaps. First, nominal damages for passing off had been granted despite the absence of any argument on that cause of action in the respondents' motion materials, distinguishing the case from Mud Engineering Inc. v. Secure Energy Services Inc., 2024 FCA 131. Second, the registered trademarks found to be infringed were inconsistently identified: TMA1032940 appeared in the May judgment but not in the statement of claim, the request to admit, or the CIPO exhibits; TMA1192569 appeared in the statement of claim and CIPO exhibits but was dropped from later pleadings and the judgment; and TMA1184661 appeared in the pleadings and judgment but not in the Authorization for Use document, though it was registered to Pollogen on June 14, 2023. Third, the Federal Court had not addressed conflicting evidence bearing on the counterfeit allegation, including Ms. Hamdan's July 23, 2024 email and attached documentation, an informational video (exhibit MB-22) showing a similarly formatted serial number on a legitimate machine, and a March 23, 2022 sales agreement, invoices, and related correspondence concerning the machine's provenance. Fourth, the $50,000 nominal damages award exceeded the typical range identified in comparable cases—described as generally between $15,000 and $25,000, with one specific case as low as $10,000 and one default judgment reaching $35,000 per plaintiff—without explanation for the higher figure. Fifth, the reasons did not engage with the punitive damages factors from Whiten v. Pilot Insurance Co., 2002 SCC 18. Finally, the enhanced Column V costs award was not justified against the usual Column III scale, particularly given the limited complexity of the proceeding.

Ruling and overall outcome

The Court of Appeal allowed the appeals brought by The Lounge Medical Spa Ltd. and Roula Hamdan, set aside the Federal Court's May 12, 2025 judgment as amended by the July 28, 2025 reconsideration judgment, and remitted the summary trial motion to the Federal Court for re-determination in accordance with its reasons; it also set aside the reconsideration judgment itself. No costs were awarded to the appellants for the appeal, as the Court found them partly responsible for the situation given their failure to formally respond to the request to admit or to the motion for summary trial. Because the matter was remitted rather than finally decided, no monetary award was made in favour of either party at this stage; the earlier $50,000 nominal damages and $50,000 punitive damages awards against the appellants were set aside and remain to be redetermined by the Federal Court.