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Ruling an example of courts favouring well-known brands

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The Federal Court of Canada’s recent move to allow Harley-Davidson to continue to use its trademark in Canada in spite of a Canadian firm’s use of a similar trademark is the latest case that shows the court’s trend of ruling in favour of well-known brands, says Toronto IP lawyer John Simpson.

In H-D U.S.A. LLC v. Berrada, Bloomberg BNA reports, the Federal Court ruled that the motorcycle brand could continue to use its “Screamin’ Eagle” trademark on clothing at its dealerships in Canada, even though a Canadian clothing store chain had already registered the trademark. The court, according to the article, says the Canadian trademark holder did not establish that Harley-Davidson’s Screamin’ Eagle clothing “caused confusion for consumers or depreciated his stores' goodwill.”

“This is the latest example in a trend in Canadian trademark cases where the court is compelled by the notoriety of a well-known brand to decide in its owner’s favour,” says Simpson.

Another recent example of the trend, says Simpson, was the Empresa Cubana Del Tabaco v. Tequila Cuervo case, where the Federal Court rejected an application to register the Lazaro Cohiba trademark for rum, on the basis that it would be confusing with the well-known Cohiba cigar brand, despite the differences in the products and channels of trade.

“What the Screamin’ Eagle case adds to this trend is the idea that a lesser known trademark will not prevent use of a better known trademark unless the equities are clearly in favour of the owner of the lesser-known trademark. That wasn’t the case here, where there was evidence that Canadian owner of the Screamin’ Eagle trademark for clothing was trying to capitalize on an association with Harley-Davidson who hadn’t registered its well-known trademark in Canada,” he says.

“This strikes as one of those cases where the court will first decide what is fair and just and then find a legal basis to support it. The equities in this case were clearly in Harley-Davidson’s favour,” he adds.

Bloomberg BNA also reports that the Canadian trademark holder “sought declarations confirming his exclusive use of Screaming Eagle and similar trademarks and that Harley-Davidson had infringed those exclusive rights and depreciated the trademark's goodwill” – an argument that was rejected by the Federal Court.

“Owners of registered trademarks will often rely on the ‘depreciation of goodwill’ provision in the Trade-marks Act (s.22) where the evidence of confusion is weak or non-existent. S.22 says that you can prevent another person from using your registered trademark if it dilutes the brand equity associated with your trademark, even if their use isn’t confusing anyone,” says Simpson.

“The main problem with the Canadian trademark owner’s s.22 claim in this case was that Harley-Davidson’s Screamin’ Eagle trademark was better known in Canada and so likely added to the equity of Canadian owner’s mark rather than depreciating it,” he adds.

This case, Simpson writes in Lawyers Weekly, is an "interesting addition to the growing body of 'famous' trademark cases in Canada" for a few reasons. 

"First, it demonstrates how fame can negate the likelihood of confusion?—?the reverse of the more typical situation where the fame of a plaintiff’s trademark makes confusion with the defendant’s non-famous trademark more likely rather than less likely. In this case, the court found that confusion between the defendant’s Screaming Eagle trademark and Harley-Davidson’s Screamin’ Eagle was diminished because the latter is inextricably associated with the famous Harley-Davidson trademark and branding indicia. This shows how a non-famous sub-brand can benefit from the fame and goodwill of a house brand, not only from a marketing perspective but from a legal perspective as well."

And second, he adds, "the case includes a very thorough application of section 22 of the Trade-marks Act which prohibits the use of any trademark in a manner that depreciates the value of the goodwill in a registered trademark. The defendants claimed that Harley-Davidson’s use of Screamin’ Eagle was likely to depreciate the goodwill in their Screaming Eagle trademark."

"There is no question that the Screamin’ Eagle used on clothing is confusing with Screaming Eagle used with clothing and clothing stores. However,  fame changes everything?—?in life as well as in trademark law," writes Simpson.

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