H-DU.S.A.,LLCv. Berrada, 2014 FC 207

The Plaintiffs in this action, H-D U.S.A. and Harley-Davidson Motor Company Inc. (“Harley”), claimed several declarations with regard to their right in the sale and advertisement of the trade-mark “SCREAMIN’ EAGLE”. The Defendants counterclaimed, alleging that Harley has been selling and advertising clothing and accessories with SCREAMING EAGLE trade-mark or marks confusingly similar thereto in an effort to diminish, destroy or acquire the goodwill of the Defendants who have used the trade-marks SCREAMING EAGLE and SCREAMIN’ EAGLE for over 20 years. Specifically, the Defendants alleged that Harley was violating paragraphs 7(b) and 7(e), and sections 19, 20 and 22 of the Trade-marks Act (the “Act”).

Harley owns several Canadian trade-marks in relation to HARLEY-DAVIDSON, including the SCREAMIN’ EAGLE trade-mark in relation to motorcycles and motorcycle parts. Harley is also the owner of the trade-mark SCREAMIN’ EAGLE for clothing in the U.S., but not in Canada. There was evidence, however, that Canadians are aware of and have purchased Harley’s SCREAMIN’ EAGLE clothing. The Defendants, on the other hand, had registrations for SCREAMING EAGLE and SCREAMIN’ EAGLE for clothing, both of which have been expunged. The Defendants continue to use the trade-mark SCREAMIN’ EAGLE in association with clothing and clothing accessories, however. The Defendants counterclaimed pursuant to section 22 of the Act for depreciation of goodwill. In its analysis, the Court found that (i) Harley  has been using its own trade-marks and not the Defendants’; (ii) while there is some goodwill attached to the Defendants’ trade-mark, Harley’s marks are better known and enjoy much greater brand recognition and fame with Harley motorcyclists and motorcyclists in general; (iii) a reasonable buyer of Harley motorcycle clothing would not associate or think of the Defendants’ mark; and (iv) the Defendants have failed to adduce any evidence of lost sales or damage to their goodwill.

With respect to the Defendants’ counterclaims pursuant to sections 7 and 20 of the Act, they were required to prove (1) the existence of goodwill; (2) the likelihood of deception of the public due to a misrepresentation; and (3) actual or potential damages. With respect to the first element (i.e. reputation or goodwill with the average Harley motorcycle rider), the Court found that despite significant advertising expenditures by the Defendants, there was no evidence showing goodwill of this kind in the record, nor any such admission by Harley. With respect to the second element, the Court found that there was  no evidence that the average Canadian Harley motorcycle rider was led to believe by Harley that they were purchasing the Defendants’ clothing at Harley dealerships. Based on the evidence, the Court considered the factors found at section 6(5) of the Act, and found the likelihood of confusion of such a motorcyclist associating SCREAMIN’ EAGLE with the Defendants as being improbable, if not impossible. With respect to the third element (i.e. actual or potential damages), the Court could not find any actual evidence of damages. As such, the Defendants’ claims under sections 7 and 20 were dismissed.

With respect to the Defendants’ claim pursuant to section 19 of the Act, they had to adduce evidence that Harley used the identical trade-mark as the one registered and that it was in connection with identical wares or services covered by the registration. The Court could not find any evidence that Harley used a mark identical to that of the Defendants’ (prior to their expungements). The Defendants’ claim under section 19 was therefore  dismissed.

In view of the above, the Court granted Harley’s action, and declared that Harley was entitled to distribute, advertise, offer for sale and sell collateral items, including clothing, in connection with their trade-mark SCREAMIN’ EAGLE, throughout Canada but exclusively at Harley dealerships; as this will not infringe any valid rights of the Defendants. The Court dismissed all of the Defendants’ counterclaims, and requested submissions on costs.