The Canadian Federal Court recently handed us an interesting decision, in H-D U.S.A. c. Varzari (2021 FC 620), in which it enjoined an individual (and his business) from continuing to offer a sort of Harley inspired motorcycle, built using a custom frame and genuine Harley-Davidson parts.

Though the above sounds a little outrageous, the story is of course a little more complicated than that and, NO, we’re not dealing with the owners of the Harley-Davidson trademarks nuking the harmless personal project of a biking enthusiast. Instead, the case deals with an individual who visibly really likes H-D bikes and who decided not only to build his own version of that type of motorcycle, but also started selling it, under a name referring expressly to Harley-Davidson, in addition to using a logo clearly copied from one of HARLEY’s, in addition to using the iconic orange color for the frame, and opting to HARLEY-DAVIDSON parts and, maybe, claiming he did so a little too enthusiastically in his promotional materials.

The bike at issue was initially offered as the “Harley Davidson Willie G Edition”, a name which the defendant changed upon being contacted by HARLEY to “The ‘H’ Edition”. To give  you an idea of what we’re dealing with, here is a picture of the bike at issue, including the copycat shield logo and the orange color reminiscent of Harley’s iconic color:

So as to set the stage as to where this is headed, I should mention HARLEY owns Canadian trademark registrations as to several logos, including the following, in connection with motorcycles and various types of parts and accessories:

Not surprisingly, the court finds several instances of infringement here, and enjoins the defendant from continuing with his sale of the motorcycle model at issue. Given that the court concludes that orange for bikes qualifies as a common law trademark, coupled with the issue of the logo itself, infringement seems easy to justify in such a case but isn’t all that interesting.

However, what IS worth mentioning is the treatment by the Federal Court in this case of the issue of the inclusion (in the “The ‘H’ Edition” bike) of genuine HARLEY-DAVIDSON parts, in addition to a custom frame that the enthusiast designed and presumably had built to imitate a Harley-type bike. According to the judgement at issue, inclusion of such genuine parts, along with repeatedly claiming the parts of this bike came from HARLEY, contributed to the giving the average person an overall impression that the whole motorcycle may have been produced by or for HARLEY, or at the very least under its authority.

For the court, the fact that the defendant conspicuously included genuine HARLEY parts that were of course visible in the end-product, contributed to giving an overall impression to the average buyer that the whole machine was a HARLEY-DAVIDSON, even though that specific name and mark did not appear on the cycle itself.

If you look at the picture above, it seems the bike may have been offered without any markings showing any original brand or name, perhaps leaving potential buyers to draw a conclusion as to the origin of the bike by seeing a H-D-like shield on the frame along with the orange color, as well as various HARLEY marks imprinted on (genuine) components like handlebars, foot pegs, etc. Indeed, looking at the resulting product, the Federal Court judge had little difficulty agreeing that an average consumer would more than likely conclude that this bike came from HARLEY-DAVIDSON, including because of the display and use of several of HARLEY’s mark on the machine and its components. Though the court rejected the suggestion that the shape of the frame itself was a problem, having found a likelihood of confusion with several registered and unregistered marks of HARLEY, it made sense to award an injunction as well as damages against the infringer.

Though the court stopped well short of saying that including genuine HARLEY parts was a problem in the general sense, it did state that, in this particular case, the presence of those genuine (branded) components WAS part of the reason for the probable confusion. Looking at the overall resulting bike, one would be naturally lead to the conclusion that this bike had something to do with HARLEY, above and beyond just supplying parts, hence the infringements.

Notwithstanding the foregoing, however, after reading the decision, I don’t think anyone should read into it any major change of Canadian trademark law in general, or that relating to trademark rights exhaustion in particular. As has always been the case, anyone may continue to resell branded goods without the need to normally worry about looking over your shoulder, so to speak. At law, generally, it remains that reusing of reselling branded products, even to make something new is NOT a problem. It is the case in the U.S. and in Canada, and that rule isn’t going anywhere.

What’s new here, I think, is a willingness by a court to read into the (re)use of numerous genuine (branded) parts, as components for a new thing, an attempt at creating an overall impression that the whole thing (i.e. the bike) was produce by or under the authority of the original trademark owner. Is this likely if a single branded component has been used? Likely not. Is this likely if the resulting product is itself adequately (clearly) branded with a non-infringing mark? Probably not. Is this likely if a resulting product is showing a patchwork of third-party marks on components? Definitely not. etc.

So, though the result of this case seems interesting, I don’t think we should read too much into it. The theory of trademark rights exhaustion is alive and well in Canada. Rest assured.