H-D U.S.A., LLC v. Berrada

H-D U.S.A., LLC v. Berrada
Court (s) Database
Federal Court Decisions
Date
2014-03-04
Neutral citation
2014 FC 207
File numbers
T-605-07
Notes
A correction was made on March 31, 2014
Decision Content
Date: 20140304
Docket:
T-605-07
Citation: 2014 FC 207
Ottawa, Ontario, March 4, 2014
PRESENT: The Honourable Mr. Justice Scott
BETWEEN:
H-D U.S.A., LLC AND HARLEY-DAVIDSON MOTOR COMPANY, INC.
Plaintiffs/
(Defendants by counterclaim)
and
JAMAL BERRADA, 3222381 CANADA INC. AND EL BARAKA INC.
Defendants/
(Plaintiffs by counterclaim)
REASONS FOR JUDGMENT AND JUDGMENT
I. INTRODUCTION
[1] The Plaintiffs, in this matter, claim several declarations with regards to their right in the sale and advertisement of the trade-mark “SCREAMIN’ EAGLE”.
[2] The Defendants issued a counterclaim alleging that the Plaintiffs have been selling and advertising clothing and accessories with SCREAMING EAGLE or marks confusingly similar thereto in an effort to diminish, destroy or acquire the goodwill of the Defendants who have been using the trade-marks SCREAMING EAGLE and SCREAMIN’ EAGLE for over 20 years.
[3] The Defendants allege that Plaintiffs, H-D U.S.A [HDUSA] and Harley-Davidson Motor Company Inc [HDMCI], both referred to as HARLEY-DAVIDSON [HD], are violating paragraphs 7(b) and 7(e), and sections 19, 20 and 22 of the Trade-Marks Act, RSC 1985, c T-13 [the Act].
[4] During Plaintiffs’ final argument, Defendants have accepted that their claim based on paragraph 7(e) cannot succeed as that paragraph was invalidated by the Supreme Court of Canada (see Kirkbi AG v Ritvik Holdings Inc, 2005 SCC 65 at para 34 [Kirkbi]; and Closing remarks, transcript, volume 8, page 70, lines 20 to 28).
[5] On March 28th, 2013, the Plaintiff HD USA filed a thrice Further Amended Statement of Claim stating that HDUSA (previously described as HD Michigan, LLC [HDML]) is now the owner of the trade-marks listed and is the corporate affiliate of HDMCI, previously described as HDMC, consequently the style of cause is so amended.
II. FACTS
A. The parties
Plaintiffs
[6] HDUSA is the corporate affiliate of HDMCI and is the owner of the HARLEY-DAVIDSON trade-marks. HDUSA has granted licenses to HDMCI to use its trade-marks.
[7] HD is in the business of distributing and selling motorcycles, motorcycle parts and accessories as well as clothing and other wares.
[8] HD has been manufacturing and selling motorcycles for the past 110 years. In Canada, HD has been selling motorcycles since 1917 (see the Agreed Statement of Facts and Admissions [ASFA] at para 3; and testimony of Ms. Bischmann, transcript, volume 1, page 96).
[9] HD owns several Canadian trade-marks in relation to HARLEY-DAVIDSON: the BAR AND SHIELD and EAGLE designs and the ORANGE STRIPE design. It also owns a SCREAMIN’ EAGLE trade-mark registered on May 10, 1999 in relation to motorcycles and motorcycle parts.
Defendants
[10] Mr. Jamal Berrada is the president and sole director of both 3222381 Canada Inc. and El Baraka Inc., corporations active in the business of selling clothing and accessories. Defendants own a registered SCREAMING EAGLE trade-mark for their stores.
B. Commercial activities
Plaintiffs
[11] HD and its predecessors have been manufacturing and selling HARLEY-DAVIDSON motorcycles for over 100 years. In 1983, HD adopted and introduced the trade-mark SCREAMIN’ EAGLE, whether alone or in association with “Performance Parts”, as the brand for its line of high performance motorcycle parts and accessories (see paras 17 to 20 of the ASFA). It was intended to recall and evoke the eagle imagery of the EAGLE/BAR AND SHIELD trade-mark.
[12] HD is the owner of the following trade-marks:
HARLEY DAVIDSON
Registration No.
Trade-mark
Registration date
TMDA028944
HARLEY-DAVIDSON
August 4, 1921
TMA356,958
HARLEY-DAVIDSON
June 9, 1989
TMA385,695
HARLEY-DAVIDSON
June 14, 1991
TMA455,683
HARLEY-DAVIDSON
March 22, 1996
TMA455,731
HARLEY-DAVIDSON
March 22, 1996
TMA524,013
HARLEY-DAVIDSON
February 29, 2000
TMA574,523
HARLEY-DAVIDSON
January 28, 2003
TMA649,923
HARLEY-DAVIDSON
October 6, 2005
HARLEY
Registration No.
Trade-mark
Registration date
TMA294,796
HARLEY
September 7, 1984
EAGLE design
Registration No.
Trade-mark
Registration date
TMA286,289
December 30, 1983
TMA364,501
January 19, 1990
BAR AND SHIELD designs
Registration No.
Trade-mark
Registration date
TMA286,290
December 30, 1983
TMA364,502
January 19, 1990
OTHER EAGLE designs
Registration No.
Trade-mark
Registration date
TMA524,796
March 14, 2000
TMA546,347
June 7, 2001
OTHER BAR AND SHIELD designs
Registration No.
Trade-mark
Registration date
TMA358,497
Jule 14, 1989
TMA528,480
May 29, 2000
ORANGE STRIPE design
Registration No.
Trade-mark
Registration date
TMA621,814
October 5, 2004
[13] HD is also the owner of Canadian Trade-mark Registration No. TMA511,652 SCREAMIN’ EAGLE registered on May 10, 1999, in relation to motorcycle parts and accessories (see para 21 of the ASFA and para 19 of the Statement Of Claim [SOC], dated May 31st, 2013).
[14] With regards to the use of SCREAMIN’ EAGLE on clothing and collateral items, these items were displayed in catalogues published and distributed by HD in 1985, 1987, 1988 and 1995. However, Defendants do not admit that these catalogues were distributed in Canada (see para 27 of the ASFA).
[15] HD is the registered owner of the trade-mark SCREAMIN’ EAGLE for clothing in the United States [US] and other countries (see para 28 of the ASFA), but does not have a registration in Canada for this mark with respect to clothing or clothing accessories.
[16] Between 1983 and 1994, gross worldwide sales of HD’s SCREAMIN’ EAGLE goods exceeded $20 million. By 1997, gross worldwide sales of SCREAMIN’ EAGLE goods exceeded $60 million (see para 29 of the ASFA).
[17] In Canada, from 2000 to 2007, sales of SCREAMIN’ EAGLE motorcycle parts and related goods exceeded $17 million (see para 30 of the ASFA).
[18] Since at least 2000, HD’s SCREAMIN’ EAGLE clothing has been sold throughout the US, and its trade-mark has been displayed in association with the sponsorship of motorcycle drag racing events held in Canada (see paras 32 and 33 of the ASFA).
[19] For several years, Canadian HARLEY-DAVIDSON motorcycle owners have been aware of and have purchased HD’s SCREAMIN’ EAGLE clothing.
[20] For several years, HD’s SCREAMIN’ EAGLE clothing has been re-sold to Canadians and, in Canada, by individuals that have purchased them in the US.
[21] HD’s SCREAMIN’ EAGLE clothing has been re-sold to Canadians on various internet websites, including Kijiji and eBay. This has been the case since at least as early as the institution of these proceedings.
[22] At motorcycle drag racing events held in both Canada and the US, HD’s SCREAMIN’ EAGLE clothing has been worn by some drag racers and attendees.
[23] According to the parties’ ASFA, since at least 2000, HD licensees have sold SCREAMIN’ EAGLE shirts and baseball caps to HD dealers in Canada (see para 39 of the ASFA). However, HD stopped selling SCREAMIN’ EAGLE clothing in Canada in or about 2001 (see testimony of Mr. Green, transcript, volume 3, page 49, lines 15-17).
[24] Since at least 1992, HD’s exclusive Canadian distributor, Fred Deeley Imports Limited [Deeley], has knowledge of the Defendants’ use of SCREAMING EAGLE (see para 88 of the ASFA).
[25] The parties have entered into a settlement with respect to the use by Defendants of the ORANGE STRIPE design trade-mark in contravention of HD’s registered trade-mark No. TMA 621,814 (see para 130 of the ASFA).
Defendants
[26] The Defendants have owned the following registered trade-marks:
SCREAMING EAGLE (for clothing and clothing accessories)
Registration No.
Trade-mark
Application and expungement date
TMA401,214
SCREAMING EAGLE
August 7, 1992 and
March 20, 2008
(first use declared as 1989)
SCREAMIN’ EAGLE (for clothing and clothing accessories)
Registration No.
Trade-mark
Application and expungement date
TMA433,020
SCREAMIN’ EAGLE
September 9, 1994 and
April 22, 2010
(first use declared as 1989)
SCREAMING EAGLE (for operating retail stores)
Registration No.
Trade-mark
Registration date
TMA519,633
SCREAMING EAGLE
November 1999
(first use declared as 1992)
[27] In November 1999, Defendants registered the trade-mark No. 519,633 SCREAMING EAGLE in association with the “business of operating retail stores selling clothing, belts, (…)” based upon use since at least 1992. No wares are registered under this trade-mark (see para 50 of the ASFA). Defendants continue to use this trade-mark in association with the operation of retail stores selling a wide range of goods including clothing and clothing accessories.
[28] Defendants applied for (on August 7, 1992) and obtained the trade-mark SCREAMING EAGLE under No. TMA401,214, based on use in Canada since at least January 1989, in association with clothing and clothing accessories as defined within their now expunged registration (see para 53 of the ASFA). This trade-mark was expunged on March 20, 2008. In the ASFA it is acknowledged that Defendants have been selling SCREAMING EAGLE clothing in Canada since 1988 (see para 62).
[29] Defendants have also applied for (on September 9, 1994) and obtained the registration of the trade-mark SCREAMIN’ EAGLE under No. TMA433,020, in association with clothing and clothing accessories, as defined within their now expunged registration (see para 55 of the ASFA). This trade-mark was expunged on April 22, 2010. The Defendants do not presently own a valid registration for either marks for clothing. These registrations lapsed and are no longer in force (see paras 53 to 56 of the ASFA).
[30] Notwithstanding the expungement, Defendants have continued to use the trade-mark SCREAMING EAGLE in Canada, in association with clothing and clothing accessories (see para 57 of the ASFA).
[31] In 1995, Defendants attempted to register SCREAMING EAGLE in relation to motorcycles and toy motorcycles in Canada but the application was subsequently abandoned (see exhibit P-371, Joint Record [JR]; and para 93 of the ASFA). At that time they argued there was no likelihood of confusion.
[32] Around 1988-1989 Defendants discussed with Mr. Doug Decent, the National Marketing Manager of Deeley, about their interest in becoming a HARLEY-DAVIDSON licensee but their application was rejected.
[33] Defendants opened their first store under the name SCREAMING EAGLE, in Montreal, in November 1992 (see paras 67 to 69 of the ASFA). They have also operated stores in Quebec City, Toronto, Trois-Rivières and St-Hubert, for short periods of time. These stores were closed for lack of appropriate manpower and dishonest personnel. Currently, the Defendants operate two SCREAMING EAGLE retail stores, one in Montreal and one in Laval.
[34] Prior to the 1992 opening of their SCREAMING EAGLE Montreal store, Defendants operated under the name El Baraka and sold clothing in association with the trade-marks SCREAMING EAGLE and/or SCREAMIN’ EAGLE (see para 74 of the ASFA).
[35] Mr. Jamal Berrada has been aware of the existence of HARLEY-DAVIDSON and the HARLEY-DAVIDSON trade-mark since at least the early 80’s (see para 85 of the ASFA).
[36] After opening their Montreal store in 1992 and being made aware of HD’s SCREAMIN’ EAGLE trade-mark for motorcycle parts, the Defendants purchased clothing described as “H.D. t-shirt SCREAM EAGLE”, and continued to sell HARLEY-DAVIDSON brand merchandise purchased from HD licensees, namely: Hush Puppy and Wolverine (HARLEY-DAVIDSON boots), Irwin Toys and Irwin Specialties, and different items and wares from Raintree Buckles and Jewellery Inc (see para 78 of the ASFA).
[37] The SCREAMING EAGLE clothing and clothing accessories produced by the Defendants are appropriate for fashion wear, athletic and outdoor activities and are not restricted to use by any segment of the Canadian public (see para 72 of the ASFA).
[38] The Defendants displayed the registered trade-mark HARLEY-DAVIDSON on some of their store bags while they were participating in a co-operative advertising relationship with licensed suppliers of HD boots (see para 78 of the ASFA).
[39] Since 2000 or 2002, the Defendants have been selling their SCREAMING EAGLE clothing and clothing accessories across Canada (except for British Columbia) during “road shows” and they continue to do so to this day (see para 96 ASFA).
III. ISSUES
[40] The parties have listed 7 issues to be determined by the Court:
1. Plaintiffs’ rights/reputation/goodwill in the trade-mark SCREAMIN’ EAGLE;
2. Defendants’ rights/reputation/goodwill in the trade-marks SCREAMING EAGLE and SCREAMIN’ EAGLE;
3. Plaintiffs’ rights/reputation/goodwill in the HARLEY-DAVIDSON trade-marks as defined in the Statement of Claim;
4. Co-existing use by others of SCREAMING EAGLE/SCREAMING EAGLES;
5. Plaintiffs’ entitlement to use the trade-mark SCREAMIN’ EAGLE in Canada in association with their registered trade-mark HARLEY-DAVIDSON;
6. The Plaintiffs’ bad faith; and
7. The Defendants’ bad faith and inequitable conduct.
IV. LEGISLATION
[41] The applicable sections of the Trade-Marks Act, cited above, are appended to this decision.
V. SUBMISSIONS OF THE PARTIES
A. Plaintiffs
[42] HD claims several declarations with regards to its right in the sale and advertisement of the trade-mark SCREAMIN’ EAGLE:
- A declaration that it is entitled to distribute, advertise, offer for sale and sell collateral items, including clothing, in connection with its trade-mark SCREAMIN’ EAGLE, in association with its registered trade-mark HARLEY-DAVIDSON;
- A declaration that the sale in Canada of its SCREAMIN’ EAGLE clothing and collateral items will not infringe or violate any valid rights of the Defendants; and
- A declaration that as a consequence of Defendants’ bad faith activities and inequitable conduct, they are not entitled to any equitable relief to prevent the sale and distribution in Canada of Plaintiffs’ SCREAMIN’ EAGLE clothing and collateral items.
[43] HD alleges that its registered SCREAMIN’ EAGLE trade-mark, in connection with motorcycle parts and related goods, has developed a significant and valuable reputation. It is well-known to the public as identifying motorcycle parts and accessories from HD and no other source (see para 21 of HD’s SOC). HD also points to its registration of the SCREAMIN’ EAGLE trade-mark in connection with clothing in several other countries.
[44] HD equally claims that in order to capitalize on the reputation and goodwill developed around its SCREAMIN’ EAGLE trade-mark in Canada it extended the use of this mark to additional goods in Canada since at least 1988. These additional goods have included baseball caps, t-shirts, lighters, and other wares. HD also asserts to have extended its SCREAMIN’ EAGLE trade-mark to clothing, since 1985 in the US (see para 23 of HD’s SOC).
[45] According to HD, Canadians have been purchasing HD SCREAMIN’ EAGLE clothing for several years and these items are recognized as originating from HD and no other source.
[46] HD alleges that Defendants do not own a valid Canadian trade-mark registration for either SCREAMING EAGLE or SCREAMIN’ EAGLE clothing. They once did, but these have been abandoned and are no longer in force or of any effect (see para 33 of HD’s SOC).
[47] According to HD, the Defendants’ clothing has been co-existing with third parties that are selling clothing in the US and Canada, under the same name, for many years and without confusion.
[48] HD posits that Defendants’ stores and clothing are unknown to HARLEY-DAVIDSON customers. HD claims that its SCREAMIN’ EAGLE clothing can co-exist with Defendants’ without any reasonable likelihood of confusion and without a reasonable likelihood of damage to the Defendants (see paras 34 to 38 and 52 of HD’s SOC).
B. Defendants
[49] Defendants deny that HD’s SCREAMIN’ EAGLE trade-mark is recognized and well-known to the public as identifying the wares of HD and no other source. They also deny that HD’s SCREAMIN’ EAGLE clothing has been frequently purchased by Canadians while visiting the US or repurchased in Canada. They submit that even if it was true, this would not entitle HD to use this trade-mark or any other trade-mark similar thereto in Canada in association with clothing and accessories (see paras 19 and 22 of Defendants’ Plea and Cross-Demand of June 21st, 2013 [Defendants’ PCD]).
[50] Defendants underline that they have been using the trade-mark SCREAMING EAGLE in Canada, in association with clothing and clothing accessories since at least 1987. Defendants deny having abandoned or ceased use in Canada of their SCREAMING EAGLE trade-mark in association with clothing and accessories. They claim to have never interrupted the use of this mark and continue to use it to this day (see paras 27 and 28 of Defendants’ PCD).
[51] Defendants deny that their clothing has co-existed without confusion with third parties that are also selling clothing under the names SCREAMING EAGLE or SCREAMING EAGLES. They also deny that their stores and clothing are unknown to HARLEY-DAVIDSON customers and that their trade-marks are able to co-exist with HARLEY-DAVIDSON’s trade-mark without confusion and without causing any damage (see paras 29 to 33 of Defendants’ PCD).
[52] Defendants deny having ever acted in bad faith and claim to have always acted in accordance with honest commercial practices. It is Defendants’ position that HD has and continues to act in bad faith and in disregard of their rights (see para 40 of Defendants’ PCD).
[53] The Defendants refute the acts claimed by HD with regards to having bought a HARLEY-DAVIDSON t-shirt described as “H.D. t-shirt SCREAM EAGLE” , displaying HARLEY-DAVIDSON on their store bags, or misleading the public by deliberately associating with HD (see paras 42 and 43 of Defendants’ PCD).
[54] Defendants reject HD’s allegations that they used confusing and infringing trade-marks in order to trade on HD’s alleged reputation and goodwill and to mislead the public in believing that they have been licensed or are somehow connected with HD (see para 45 of Defendants’ PCD).
[55] The Defendants equally assert that HD has no right to sell clothing and clothing accessories in association with SCREAMING EAGLE or SCREAMIN’ EAGLE, or any other mark similarly confusing thereto, whether such use is or not in association with any of Plaintiffs’ other trade-marks.
[56] The Defendants deny that items are recognized as originating from HD and no other source and that they do not infringe on their rights (see para 46 and 85 of Defendants’ PCD). They also deny being barred from any relief for alleged bad faith (see para 47 of Defendants’ PCD).
[57] Defendants also claim that when Mr. Doug Decent, the National Marketing Manager working for Deeley, attended their place of business prior to 1992, their use of the SCREAMING EAGLE and SCREAMIN’ EAGLE trade-marks was extensive and obvious. They add that at no time did he complain of their use of these names. When Mr. Decent came back in 1992 and informed them that they could not become an authorized licensee he did not discuss their right to use these trade-marks either, even though he inspected some of their clothing and accessories. They allege that he even asked them whether they were willing to sell their trade-marks (see paras 56 to 59 of Defendants’ PCD).
[58] The Defendants equally underline that they obtained a registration for SCREAMIN’ EAGLE and SCREAMING EAGLE in association with clothing and clothing accessories (see paras 63, 71-72 and 88 of Defendants’ PCD). They claim to have used the SCREAMING EAGLE trade-mark in association with clothing and clothing accessories, continuously, for more than 20 years, contributing to the development of considerable goodwill in said mark. Defendants claim that HD has been trying to misappropriate and destroy their goodwill (see paras 65 and 66 of Defendants’ PCD).
[59] It is Defendants’ position that any confusion with respect to the source of SCREAMING EAGLE clothing is HD’s doing. They claim that their enviable reputation in Canada related to clothing and clothing accessories with the name SCREAMING EAGLE, comes from their marketing efforts and cannot be attributed to HD. Defendants allege that HD has known about their trade-marks for at least 18 years prior to the institution of the present legal proceedings and have piggy-backed on their advertisings and marketing efforts (see paras 67 to 70 of Defendants’ PCD).
[60] Defendants explain that their two trade-marks have been expunged due to inadvertence for failure to renew, but have continued to use them without interruption in association with the same class of wares (see paras 71, 72, 89 and 90 of Defendants’ PCD). They allege that when this error was noted in 2011, they applied for registration (see para 91 of Defendants’ PCD). They add that it would be unfair to deny them of their rights in those trade-marks because of an innocent error (see para 91 of Defendants’ PCD). They claim that HD has been using the trade-mark SCREAMIN’ EAGLE or marks confusingly similar thereto, on clothing, in violation of their rights in an effort to diminish, destroy or acquire their goodwill (see paras 73 to 80 and 84 of Defendants’ PCD).
Defendants’ cross-demand
[61] Defendants claim several declarations with regards to the mark SCREAMING EAGLE or any mark confusingly similar thereto, in association with clothing and accessories, and with the operation of retail stores and retail sales events where clothing and clothing accessories are offered for sale (see paragraph 94 of Defendants’ PCD, subsection i-xvii):
- A declaration that they are the owners of and are entitled to use and continue to use in Canada, to the exclusion of HD and their distributors, SCREAMING EAGLE or any mark confusingly similar thereto;
- A declaration that HD has infringed their exclusive rights from trade-mark No. 519,633 contrary to sections 19 and 20 of the Act;
- A declaration that HD has directed public attention to their wares and business in a manner as to cause or be likely to cause confusion in Canada between the wares of HD and their wares, services and business, contrary to paragraph 7(b) of the Act;
- A declaration that HD has acted and continues to act in a manner to depreciate the value of the goodwill attaching to Defendants’ trade-mark and trade-name SCREAMING EAGLE;
- A declaration that HD has acted in contempt of the dignity of the Court as a result of having knowingly infringed their exclusive rights.
[62] Defendants also claim injunctory relief in relation to the trade-marks SCREAMING EAGLE and SCREAMIN’ EAGLE:
- An injunction ordering HD to cease using these trade-marks in Canada or any mark confusingly similar thereto;
- An injunction ordering HD to cease offering for sale, selling or advertising and promoting in Canada any articles of clothing and accessories in association with these trade-marks or any mark confusingly similar thereto;
- An Order of the Court directing HD to deliver-up articles of clothing and accessories which infringe upon their rights, as well as catalogues and other advertising materials, for destruction purposes.
VI. ANALYSIS
Defendants’ claim pursuant to section 22 of the Act
[63] This section of the Act states that no person shall use a trade-mark registered by another person in such a manner that it is likely to have the effect of depreciating the value of the goodwill attached to said trade-mark. The Court notes that this section is not frequently alleged in trade-mark cases and is resorted to primarily in disputes where there is a claim that “the infringer ‘uses’ its competitors trade-mark for the purpose of appealing to its competitor’s customers in an effort to weaken their habit of buying what they bought before” (see Hugues G Richard et al., Robic-Léger Canadian Trade-Marks Act Annotated, (loose-leaf consulted on October 28, 2013), (Toronto: Carswell, 2004) at 20-4.1). The "use" referred to in this section is use as defined in section 4 of the Act.
[64] Section 22 differs from section 20 of the Act because there may be depreciation of goodwill in the absence of any confusion. The onus of proof to establish the likelihood of depreciation rests in the present case on the Defendants, who allege that section in their cross‑demand. It is not for the Court to presume (see Veuve Clicquot Ponsardin v Boutiques Clicquot Ltée, [2006] SCJ no 22, at para 15 [Veuve Clicquot]).
[65] In Veuve Clicquot, the Supreme Court summarized the evidence that needs to be adduced in order to succeed in a claim based on section 22. Defendants in that instance “need only show that the respondents have made use of marks sufficiently similar to Veuve Clicquot to evoke in a relevant universe of consumers a mental association of the two marks that is likely to depreciate the value of the goodwill attaching to the appellant’s mark” (see para 38 of the judgment). The Supreme Court, in Veuve Clicquot, also underlined, in paragraph 46, that:
"Section 22 of our Act has received surprisingly little judicial attention in the more than half century since its enactment. It seems that where marks are used in a confusing manner the preferred remedy is under s.20. Equally, where there is no confusion, claimants may have felt it difficult to establish the likelihood that depreciation of the value of the goodwill would occur. Be that as it may, the two statutory causes of action are conceptually quite different. Section 22 has four elements. Firstly, that a claimant’s registered trade-mark was used by the defendant in connection with wares or services — whether or not such wares and services are competitive with those of the claimant. Secondly, that the claimant’s registered trade-mark is sufficiently well known to have significant goodwill attached to it. Section 22 does not require the mark to be well known or famous (in contrast to the analogous European and U.S. laws), but a defendant cannot depreciate the value of the goodwill that does not exist. Thirdly, the claimant’s mark was used in a manner likely to have an effect on that goodwill (i.e. linkage) and fourthly that the likely effect would be to depreciate the value of its goodwill (i.e. damage)." [Emphasis added]
Elements to be established by Defendants
[66] The Defendants must establish the following elements:
1) Their registered trade-mark has been used by HD in connection with wares or services
[67] This refers to “use” as described under section 4 of the Act, however it does not need to be use “as a trade-mark”. HD claims that the Defendants fail to meet that first element of the test for the following reason. HD maintains that they use their own mark and not the Defendants’. They assert that the situation is analogous to the A & W Food Services of Canada Inc v McDonald’s Restaurants of Canada Ltd, 2005 FC 406 [A & W Food], where the Court determined that notwithstanding that the marks seemed similar, on first impression, they were nonetheless distinct.
[68] "Whether the defendant must be using the identical trade-mark to the plaintiff’s registered trade-mark for purposes of s.22, as is the case with s.19, has not yet been finally determined. The better approach would appear to require substantial similarity as was the situation in the parody case of Source Perrier v. Fira-Less Marketing Co. Ltd." (see Kelly Gill and R Scott Jolliffe, Fox on Canadian Law of Trade-marks and Unfair Competition, (Thomson Reuters Canada Limited),West Law electronic version, chapter 7.8 (e), consulted on October 29, 2013).
[69] In the present case the evidence presented by HD establishes that it has been using its own trade-marks and not the Defendants’ which is in relation to clothing retail stores (see exhibit P-284, JR; testimony of Ms. Bischmann, transcript, volume 1, page 124, lines 7 to 24; also ASFA, paras 22 to 27).
2) Their registered trade-mark is sufficiently well known to have significant goodwill attached to it
[70] This concept was equally discussed in Veuve Clicquot at paragraph 50. It is the attractive force which brings in custom (the positive association in a consumer’s mind). It is generated by effort and adds to the value of the business.
[71] The test to establish whether it exists was framed in Parke Davis & Co v Empire Laboratories Ltd, [1963] Ex CJ No 5 at para 81 [Parke Davis & Co]. The party must establish that its goods are known in the market, have acquired a reputation in said market by reason of their distinguishing feature (a novel design). This goodwill or commercial reputation must have been created “through the exclusive association of the name, mark or other indicia relied upon with its business, wares or services” (see Donald M Cameron, Canadian Trade-Mark Law Benchbook, (Toronto: Carswell, 2012) at p 205 [Canadian Trade-Mark Law Benchbook]).
[72] "While “fame” is not a requirement of s. 22, a court required to determine the existence of goodwill capable of depreciation by a “non-confusing” use (as here) will want to take that approach into consideration, as well as more general factors such as the degree of recognition of the mark within the relevant universe of consumers, the volume of sales and the depth of market penetration of products associated with the claimant’s mark, the extent and duration of advertising and publicity accorded the claimant’s mark, the geographic reach of the claimant’s mark, its degree of inherent or acquired distinctiveness, whether products associated with the claimant’s mark are confined to a narrow or specialized channel of trade, or move in multiple channels, and the extent to which the mark is identified with a particular quality" (see Veuve Clicquot at para 54).
a) Volume of sales and market penetration
[73] In the present case, the Defendants claim to have used SCREAMING EAGLE in association with clothing sold at wholesale as early as 1985, 1988 or 1989, depending on their testimonies (see paragraph 169 of the judgment), and at retail since 1992 when they opened their first store in Montreal.
[74] The Court has closely reviewed the random copies of invoices filed by the Defendants to establish that they have been selling clothing at the wholesale level, using their SCREAMING EAGLE trade-mark since 1985, or shortly thereafter.
[75] The Court notes the following in relation to exhibit D-3 containing invoices denoting sales at the wholesale level by Defendants. Firstly, the earliest invoice indicating merchandise sold bearing the mention SCREAMING EAGLE is dated 8/02/90. Invoice number 8333 relates to merchandise sold to Tropicana, a retailer from Calgary, Alberta; it confirms the sale of 18 sweatpants bearing the name SCREAMING EAGLE (see exhibit D-3, JR).
[76] Having reviewed each of the 166 invoices produced by the Defendants, the Court also finds the following: the first time the name SCREAMING EAGLE appears along side El Baraka, on an invoice, is on invoice no 10181 which is dated 31/05/91.
b) Geographic reach
[77] The invoices (exhibit D-3, JR) also reveal that clothing apparel bearing SCREAMING EAGLE was sold in the provinces of Quebec, Ontario, Manitoba, Alberta, British Columbia, New Brunswick and Nova Scotia. The earlier invoices covering the period from 1988 to 1991 depict a minority of items listed as SCREAMING EAGLE apparel being sold to retailers. Rather it is a mixture of items and, in some instances, includes HD licensed items such as caps, t-shirts, bandanas, and belt buckles.
[78] Starting in 1992, the invoices indicate a greater number of SCREAMING EAGLE clothing apparel being sold to retailers. The bulk of these invoices relate to sales in Quebec and Ontario, with odd sales in Alberta, British Columbia and the Maritime provinces. In terms of indicating volumes of sales, these invoices on their own are far from being conclusive. They do not indicate repeated sales to the same retailers in a given city or geographic location, or any significant volumes for that matter.
[79] The Court, when applying the test as stated in Veuve Clicquot, cannot conclude, based on these invoices, that the SCREAMING EAGLE clothing produced by the Defendants had any significant market recognition or broad geographic reach.
[80] Mr. Berrada and his wife Mrs. Bashir have testified that they had more than a thousand customers at the wholesale level. The invoices filed in evidence do not substantiate that affirmation.
[81] In determining the amount of goodwill associated with the Defendants’ trade-mark, the Court must also consider the amount of money spent on publicity and its impact in terms of the fame and recognition claimed by the Defendants.
c) Advertising and publicity
[82] The Court acknowledges that Defendants have made significant investments in publicity advertising their SCREAMING EAGLE retail stores and road shows (see para 101 of the ASFA). Exhibits D-219 to D-232, inclusively, indicate that over a period of approximately 20 years, Defendants have invested more than $10 million in publicizing their SCREAMING EAGLE stores, clothing and itinerant sales events across Canada. Despite these significant investments, the Court has not received any evidence with respect to the actual sales revenues generated by Defendants’ SCREAMING EAGLE line of clothing, nor on the actual recognition of their brand by the general public. No survey was filed in evidence. The bulk of the evidence is found in copies of invoices for payment of advertisement and in the testimony of Mr. Berrada and Mrs. Bashir.
[83] Based on the exhibits filed by the Defendants, the Court can determine the following with regards to their advertisement. In the period extending from 2001-2003, the Defendants placed advertisements in newspapers and with radio stations. During these years, the advertising was placed through Quebec companies. These transactions were made with companies such as: L’Écuyer Communications, Cogeco, Éditions Nitram, Groupe TVA inc, TQS, Journal de Montréal, Journal de Québec, Astral Radio, Le Nouvelliste, CBC-Radio-Canada (see exhibit D‑5, JR).
[84] Beginning in 2004, the transactions also involved newspapers and radio stations from other provinces, although the majority of the advertisement continued to be placed through the above mentioned Quebec companies. In 2004, advertisements were also placed with companies from the Maritimes. For example, transactions appear for the months of June, August, September and November, relating to New Brunswick newspapers and radio stations such as: L’Acadie Nouvelle, Radio Moncton, Choix-fm Moncton, Radio Beauséjour. In Nova Scotia, advertisements were placed in the Chronicle Herald in August and, in Prince-Edward-Island publicity was bought from CHTN-AM 720 Charlottetown, CFCY-AM 630 Charlottetown and CHLQ Magic 93 in June (see exhibit D-5, JR).
[85] In 2005, apart from advertisements in Quebec, there were some transactions related to advertisements in the Maritimes, and also in Newfoundland and Ontario. Most transactions in those provinces were made over a period covering two to three months. For example, transactions were made with The Telegram, the Western Star and Newfoundland broadcasting Co in July, November and December. In Ontario, advertisements were bought from The Record and Q92 Sudbury in September, October and November. However, the majority of transactions disclosed for 2005 involved the Quebec companies enumerated above (see exhibit D-5, JR).
[86] The record indicates that in 2006, some advertisements were bought to cover the Maritimes, others for Ontario and one city in Alberta. Most of the advertisements cover a period of three to five months. Publicity was bought from New Brunswick radio stations and newspapers during April, May and September whereas Newfoundland was targeted in April-September (see exhibit D-5, JR).
[87] Although beginning in 2004, advertisements were made in other Canadian provinces; these advertisements appear to be for short periods of time, on average only for three to four months per year. The great majority of the advertisement since 2001 covers primarily the Province of Quebec.
[88] Exhibits D-6 to D-26 consist of invoices related to advertisements in the province of Quebec, in most part related to the Montreal region. Much of the advertisements found in these documents relate to motorcycle clothing and accessories such as boots (see exhibits D-8, D-10 and D-18, JR). One of the advertisements claims that Defendants’ store has “the biggest selection of motorcycle accessories in Quebec” (see exhibits D-11 and D-15, JR).
[89] Exhibits D-28 to D-37 consist of invoices relating to radio advertisements in the Province of Quebec and, more precisely, Montreal, Drummondville, Quebec City, Sherbrooke and Trois-Rivières. Exhibit D-38 consists of invoices for advertisements in Saskatchewan and Manitoba and exhibit D-39 consists of billboard advertisements for the stores in Montreal, Laval, St-Hubert and Trois-Rivières. The billboards depict motorcyclists beside their motorcycle.
[90] Exhibits D-40 to D-45 consist of invoices for advertisements placed in the Province of Quebec. Again, most of the advertisements found in these documents relate to motorcycle clothing and depict people in front of a motorcycle.
[91] Finally, exhibit D-56 consists of advertisements for Defendants’ itinerant sales in Sherbrooke, Quebec City, Drummondville and Halifax, which took place in a specific city for an average duration of three days.
[92] Exhibit D-331, produced by Defendants, lists the names of towns where direct mailing was distributed prior to road shows.
[93] It is obvious from the above-mentioned evidence that although a significant sum of money was invested in advertisement, the major portion of this investment focussed on the Province of Quebec, and specially the greater Montreal area where Defendants own permanent stores.
d) Brand recognition
[94] The Court is cognizant of the fact that the Defendants did receive Consumer Choice Awards for their operations in the greater Montreal area as a result of a survey conducted by Léger and Léger. The Defendants were recipients of that Award for the years 2000 and 2007 to 2009 inclusively (see exhibits D-69, D-193 and D-244, JR). The selection criteria are not apparent to the Court. The survey, as described in the documentation, reveals that 1900 persons or entities received a questionnaire of which 1000 consumers were actually interviewed. Beyond that, there is no descriptive methodology of the selection criteria, or of the categories (since there were actually more than 84 companies honoured in 2008), nor of the number of firms or enterprises competing in each category.
[95] The evidence in the record indicates that since as early as 2002, the Defendants have been holding itinerant sales events across Canada, save for the Province of British Columbia (see testimony of Mr. Berrada, transcript, volume 4, page 30, lines 19 to 28). The frequency of these events and their exact location and dates have not been established.
[96] Is a physical presence in a chosen hotel or vacant shopping mall outlet, for a maximum duration of a week, on average, sufficient to raise awareness of the Defendants’ trade-mark? (see testimony of Mr Berrada, transcript, volume 4, page 31, lines 7 to 11). In the Court’s view, the lack of a permanent physical presence in major cities outside of the Montreal area, somewhat diminishes the impact of the sums invested by Defendants to publicize their SCREAMING EAGLE marks. A permanent location in a given city raises a profile and brand awareness, whereas a 3-day visit once a year does not have the same impact, even if that visit is highlighted through a publicity blitz. On the other hand, it is to be noted that there are approximately 75 HD dealerships in Canada, the vast majority of which are permanently based in cities.
[97] The evidence also indicates a presence by Defendants at gift shows and more importantly, an annual presence at shows such as the Toronto motorcycle