VANCOUVER - Three Canadian companies caught selling Louis Vuitton and Burberry knock-offs committed more than just a fashion faux-pas, say lawyers for the haute couture giants, who are suing the companies in federal court.

Vancouver-based companies Singga Enterprises Inc. and Carnation Fashion Company, along with Altec Productions of Toronto, violated trademark law with their phoney fashions, said Michael Manson, lawyer for the fashion houses.

The plaintiffs are seeking up to $3 million in damages for trademark and copyright infringement in what could be the "largest anti-counterfeiting judgment in Canadian history," Manson told the court Tuesday, the first day of the hearing.

Singga and Altec were involved in large-scale, sophisticated manufacturing operations in China and imported vast amounts of fake goods with the intent of selling them nationwide at stores, gift shows and online, he said.

The lawsuit came after two years of private investigations by the fashion houses.

According to Manson, the two companies had a business arrangement whereby Singga Enterprises placed large orders to the Toronto-based company and referred customers to Altec for a commission.

"This is not a one-off sell by some little distributor... 1/8investigators 3/8 were being offered not 10, 20, 50, but 500," he said, adding that Louis Vuitton and Burberry were not targeting "mom and pop" stores.

Manson said despite the lawsuit, Altec Productions has continued its operations and shown a "blatant disregard for the law" in its attempts to have the hearing delayed. That is in part why the plaintiffs are seeking such high damages.

That's not the case with Jessie Guo, owner of Carnation Fashion Company of Vancouver, who lawyers say has been fairly co-operative throughout the legal proceedings.

They suggested she owes them one-half to one-third less than the damages the two larger companies should pay.

The investigators also looked into the back-room sales of fake bags.

The court was told that Guo sold fake handbags imported from China in a back room of her store. She was suspected of having links to the national operation because her shop was a storefront for Singga Enterprises, but Manson said there was no way to be sure that was the case.

Guo admitted to selling the bogus bags but said she wasn't aware of Canadian trademark and copyright laws. And she denied having links to Singga Enterprises or its owners, Lisa Lam and Kenny Ko.

"I didn't know selling counterfeit goods was that serious in nature," Guo, who represented herself, said through a Cantonese-language translator.

Guo said she only made purchases under $10,000 from China twice a year since her store opened in 2002. She also said she didn't know what the Louis Vuitton, Chanel and Burberry brands were until customers started asking for similar products.

"I went to the night market in Richmond and I saw there were those kinds of goods available," said Guo. She said she bought a few knock-offs to sell for $20 to $30 each and at first there wasn't much demand.

But Manson said fashion companies that rely on their brands for profits have been hit hard by the counterfeit fashion industry.

"If the RCMP and their prosecutors had more resources we might be in a different venue," he said, adding that the offending groups exhibited "obfuscation and subterfuge" and a blatant disregard for the law.

"They don't look at brand-owners' rights as something they have to respect."

But counterfeiting is not just bad for business -- there can be safety risks as well.

Most unregulated knockoffs from China do not conform to the same consumer product safety standards as legitimate goods.

Researchers have found fake batteries that contained mercury, while perfumes were found to contain high urine and alcohol levels. Additionally, clothing items were made with toxic dyes and flammable materials.

Louis Vuitton's adoption of a "zero-tolerance" policy in 2004 against fakers has led to over 13,000 legal actions, 6,000 raids and approximately 950 arrests, according to the company's website.

A crackdown against stores in Vancouver-area shopping malls led to a successful 2008 lawsuit in which Louis Vuitton claimed $980,000 in damages and about $50,000 for court costs.

The owners of Altec Productions or Singga Enterprises were not in court Tuesday, but a request for adjournment was denied.

A paralegal with Toronto-based Mary Lee and Associates requested an indefinite adjournment via videolink on behalf of Monica Mac and Pablo Liang, of Altec, saying they'd left Canada to deal with "a last-minute crisis."

The court was told their business associate, Gordon Chan, was detained indefinitely by the Chinese government when he tried to return to Canada to attend the hearing.

Lawyers for the plaintiffs said Altec was simply trying to delay the proceedings yet again.

The court case comes after a February crackdown on counterfeits in New Jersey where officials seized more than 5,000 counterfeit trademark items at a flea market. The goods had an estimated retail value of over $300,000 and included fake MAC and Estee Lauder cosmetics.

A ruling is expected in a couple of weeks.