July 19, 2021
In H-D U.S.A., LLC v. Varzari, 2021 FC 620, Harley-Davidson brought an application to enforce its trademarks against Eli Varzari, who had offered for sale custom-built electric bicycles called the “Harley Davidson Willie G Edition” (later changed to “The ‘H’ Edition”) that incorporated Harley-Davidson motorcycle parts and bore a Harley-Davidson logo. Mr. Varzari did not respond to the application, which therefore proceeded unopposed.
It was found that Mr. Varzari infringed Harley-Davidson’s registered trademarks and that his actions constituted passing off and depreciation of goodwill. The Court issued an injunction, and awarded damages of $13,000, with costs in the further amount of $23,000.
The issues to be decided in this application were whether Harley-Davidson had established a violation of its trademark rights by Mr. Varzari, and in particular:
1. infringement under section 20 of the Trademarks Act (the “Act”);
2. passing off under paragraph 7(b) of the Act; and/or
3. a likely depreciation of goodwill under section 22 of the Act?
Harley-Davidson’s application relied on 5 registrations that it claimed Mr. Varzari had infringed: two word trademarks (namely “HARLEY-DAVIDSON” and “H-D”) and three design trademarks (namely “White Bar and Shield Mark”, “Black Bar and Shield Mark”, and “Skull Design Mark”).
At issue was an electronic bike Mr. Varzari’s company manufactured for sale. The bike bore the White Bar and Shield Mark, the H-D name, the Skull Design Mark, and was referred to on Mr. Varzari’s company's website as the “Harley Davidson Edition” (later changed to the “H edition” after Harley-Davidson sent demand letters).
It was clear to the Court that Mr. Varzari’s use of the “Harley Davidson Edition” mark was likely to cause confusion with the HARLEY-DAVIDSON Mark, and was thus an infringement under section 20 of the Act. The Court came to the very same conclusion when considering Mr. Varzari’s name change to the “H edition”.
The Court had little difficulty concluding the two Shield design marks were infringed. Mr. Varzari affixed a logo substantially identical in appearance to the Black Bar and Shield Mark to his electronic bicycles.
The Court also found the H-D Mark and Skull Design Mark were infringed. The marks were visible only on original parts manufactured by Harley Davidson. While the resale of goods bearing registered trademarks can be lawful under the Act, Mr. Varzari’s use of modified Harley-Davidson parts bearing the H-D Mark and Skull Design Mark, and the subsequent selling and advertising of those electric bicycles with the trademarks marked on them, were sufficient to take the situation outside that of simply lawfully reselling goods bearing registered trademarks.
2. Passing Off
Harley-Davidson’s arguments for passing off largely paralleled those it made in respect of infringement, although it relied on three additional arguments: Mr. Varzari’s use of a particular shade of orange, the shape of Mr. Varzari’s bicycles, and Harley-Davidson’s recent advertising of electric bicycles.
The Court disagreed that the shape of Mr. Varzari’s bicycles constituted passing off of Harley-Davidson products as there was insufficient evidence to establish a “shape” of motorcycle with respect to which Harley-Davidson had protectable trademark rights.
However, with respect to the colour orange, a finding of passing off was established. The 2019 amendments to the Act permit the particular orange colour associated with Harley-Davidson to be a valid and enforceable unregistered trademark. The color has historically been used to distinguish Harley-Davidson products. Harley-Davidson has shown significant sales volumes over a lengthy period and the intentional copying of the Harley-Davidson name, “Bar and Shield” logo, and “iconic orange” supported the existence of goodwill. Thus, the Court found that there was goodwill associated with the registered trademarks and the Harley-Davidson orange.
Lastly, the Court was satisfied that Mr. Varzari’s offering for sale of electric bicycles over which Harley-Davidson had no quality control and which also effectively misrepresented an association with Harley-Davidson, were sufficient to show damage arising from a loss of control over reputation, image, or goodwill.
3. Depreciation of Goodwill
Mr. Varzari “used” the H-D Mark, the White Bar and Shield Mark, and the Skull Design Mark on his electric bicycles exactly as registered. It was also found that it was highly likely consumers would make a link between Mr. Varzari’s use of the registered trademarks and the goodwill of Harley-Davidson.
Finally, the Court concluded Mr. Varzari’s use of the registered trademarks was likely to lower the value of the goodwill attaching to Harley-Davidson’s trademarks.
Author: Bayley Winkel