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ARTICLE · 08 JULY 2020

Think Bankruptcy Will Save You? Think Again, Counterfeiters

Norton Rose Fulbright Canada LLP
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One of the most oft heard "defence" from a purveyor of counterfeit goods, when faced with the prospect of a significant damages award, is "I'll just go bankrupt".

CanadaInsolvency/Bankruptcy/Re-Structuring
Karen MacDonald
Karen MacDonald
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One of the most oft heard "defence" from a purveyor of counterfeit goods, when faced with the prospect of a significant damages award, is "I'll just go bankrupt". The threat being that, unless the right holder lets the counterfeiter off the hook, the counterfeit will seek to render themselves judgment proof, looking to disincentivize legal action against them.

What right holders need to know, and what counterfeiters should be made to understand, is that if you are engaged in the sale of counterfeit goods, you are engaged in fraud. And fraud is an exception to bankruptcy that will allow a judgment to stick with a counterfeiter until it is paid.

This point has been illustrated by decisions of Canadian provincial courts, including recently by the Ontario Superior Court of Justice in Dead End Survival, LLC v. Marhasin, 2020 ONSC 766: the Plaintiff in that case had obtained a US judgment for the sale of counterfeit goods, for which it duly obtained an order for

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