Canada: IP Monitor - Harley Revs Up Big Brand Power In Depreciation Of Goodwill Challenge

Case: H-D USA LLC et al. v Jamal Berrada et al., 2014 FC 207 ("H-D USA")
Successful party: H-D USA LLC et al. ("Harley-Davidson")
Date of Decision: March 4, 2014


In a recent decision, the Federal Court determined that Harley-Davidson was entitled to use its SCREAMIN' EAGLE trade-mark, in association with its registered HARLEY-DAVIDSON trade-mark, to sell clothing in Canada.  The Defendants, who owned two Canadian retail stores, and had been selling SCREAMING EAGLE clothing and merchandise for more than 20 years, failed to establish that Harley-Davidson's sale of SCREAMIN' EAGLE clothing constituted statutory passing-off, trade-mark infringement, or a depreciation of goodwill.

H-D USA signals an important victory for famous brands and is one of this Court's first detailed considerations of the depreciation of goodwill under section 22 of the Trade Marks Act1 since the Supreme Court of Canada's 2006 decision in Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée.2 Unlike Veuve Clicquot, however, the Defendants or the so-called "junior mark" alleged depreciation of goodwill in H-D USA.  The Court held that any mental association established between the marks was in favour of the "senior mark" HARLEY-DAVIDSON, and thus did not depreciate the goodwill of the Defendants in their registered trade-marks.  Despite the objective similarity between the parties' marks, the Court considered Harley-Davidson's trade-marks to be so well-known that the relevant consumer group was unlikely to ever confuse the two marks.


Harley-Davidson owns several Canadian trade-marks.  It registered a trade-mark for SCREAMIN' EAGLE on May 10, 1999 in relation to motorcycle and motorcycle parts and owns the U.S. registered trade-mark for SCREAMIN' EAGLE in relation to clothing. Harley-Davidson presented evidence that its SCREAMIN' EAGLE branded clothing was sold to and known by Canadians.  The Defendants own a registered trade-mark for SCREAMING EAGLE for retail stores.  The Defendants had allowed its other SCREAMING EAGLE trade-mark registrations for clothing to lapse.

Depreciation of goodwill

To determine whether there had been a depreciation of the Defendants' goodwill, the Court applied the four-part test established in Veuve Clicquot Ltée.3 First, the Defendants had to prove that their registered SCREAMING EAGLE trade-mark was used by Harley-Davidson in connection with its wares or services; second, the Defendants had to show that their mark was sufficiently well-known to have acquired goodwill; third, the Defendants' mark must have been used by Harley-Davidson in a manner likely to have an effect on that goodwill; and fourth, the likely effect would be to depreciate the value of the Defendants' goodwill.

The Court determined that the Defendants could not satisfy the four-part test. The Court found that: (i) Harley-Davidson was using its own trade-mark, rather than that of the Defendants; (ii) goodwill attributed to the Defendants was far outweighed by the "fame and recognition" attached to the Harley-Davidson brand by the general public and within the relevant consumer group of motorcycle enthusiasts; (iii) since it was much more likely that consumers made a mental association with the more famous Harley-Davidson brand, there was little impact on the Defendants' goodwill; and (iv) lastly, the Defendants failed to provide convincing evidence of any damage to their own goodwill.

Other allegations

The Defendants' passing off allegation was similarly rejected.  Applying the three-part Ciba-Geigy4 test on passing off, the Court held: (i) The Defendants failed to establish the prerequisite goodwill in their trade-mark with the average Harley-Davidson motorcycle rider.  The Court further noted that "..where a mark is famous and quite well known, the goodwill associated therewith may be broader than the specific wares and services for which it has been registered"5; (ii) the average Canadian Harley-Davidson motorcycle rider is not likely to believe that Harley-Davidson's SCREAMIN' EAGLE clothing was supplied by the Defendants; and (iii) no evidence of damages.  Evidence that the Defendants had at times even sought to associate themselves with the Harley-Davidson brand did not sit well with the Court who questioned the Defendants' good faith.

The Defendants' section 20 allegation was dismissed since it no longer owned a registered trade-mark in association with clothing.   The Defendants' section 19 allegation was dismissed for failing to relate to the use of an identical trade-mark.

An important decision for famous brands

H-D USA recognizes the power of a famous brand.  Although the Defendants had been selling clothing for 20 years in association with various trade-marks, the Court nonetheless found that Harley-Davidson's brand was well-known to Canadians.  This had a significant impact on the Courts' analysis regarding confusion – the Harley-Davidson brand was so famous, that it was more likely that consumers would mistake the Defendants' mark for that of the Plaintiff.

This decision shows the importance of supporting a family of trade-marks.  It was significant that consumers would recognize Harley-Davidson's other marks – the Orange Stripe, and the Bar and Shield.  Since these trade-marks were also well known, and used in conjunction with the SCREAMIN' EAGLE marks, it was even less likely that the public would mistake Harley-Davidson's mark for that of the Defendants.  

This outcome of this judgment is ultimately instructive to brands of all sizes: register your trade-marks, maintain the registrations, and make proper use of those registered rights to build a strong brand.

Link to decision:

H-D USA LLC et al. v Jamal Berrada et al., 2014 FC 207


1 RSC, 1985, c T-13 [the Act].

2 2006 SCC 23 [Veuve Clicquot Ltée].

3 2006 SCC 23 at para 46.

4 Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 SCR 120 at para. 33.

5 HD-USA, para. 128.

6 The authors wish to thank law student Joshua Stark for his help in preparing this IP Monitor.

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