Category Archives: Trademark Confusion

A Sign of the Globalizing of U.S. Trademark Law?

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The U.S. Supreme Court is set to hear next year an appeal against a recent decision from Texas holding that American trademark law may sometimes be made to apply to foreign sales of trademarks merchandise. Yup, you read this right.

As one will remember, trademark law (as with most laws) may apply within a given country that adopted or applies this law but will not generally apply once you cross the border. Though there are plenty of exceptions to this, one can still rely on the fact that, in the normal course of things, rules that apply IN a country will not apply as to what goes on OUTSIDE of that country. For example, owning a Canadian trademark registration is nice, but it won’t allow you to stop a Brazilian company from selling goods in South America, even if they are stamped with that same specific trademark.

A recent American case (Abitron Austria v. Hetronic International) involves partly doing away with this, as the court at issue concluded that it could impose liability as to trademark infringement (to the sweet tune of $90M, no less) by basing the calculation of damages on worldwide sales by the infringer. According to the court in this case, demonstration by the plaintiff that it had lost sale IN the U.S. justifies granting it substantial damages because, well, you know, the bad guys caused an American company some lost sales, so they SHOULD be liable under American law, right? (This is a Texas case, need I say more?)

This is of course NOT how things work normally, which is why most businesses making sales abroad (including the likes of Amazon) can operate without getting constantly being sued in the U.S. because something they sold somewhere reflected a trademark that was protected in the U.S. Causing confusion in the U.S. that results in actual lost sales in the U.S. is one thing, but being on the hook just because you had the gull of making foreign sales is another altogether.

This may become really uncomfortable for a lot of business operating outside the U.S. if that specific case is allowed to stand and ends-up catching on. Were something like this to represent a shift in the way American trademark law handles U.S. trademark infringement claims when international sales by an “infringer” are involved, a lot of businesses (including Canadian ones) may end-up in trouble. Hmm, should I stop telling my clients that U.S. trademark registrations have an effect only in the U.S.?

The U.S. Supreme Court will hear this case next year and, hopefully for Canadian businesses, reconsider how damages were assessed in this particular case. We’ll see.

Federal Court Refuses to Consider Results of On-line Survey as to Trademark Confusion Analysis

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The Federal Court recently handed a decision on an appeal of a trademark opposition, in the context of which a party unsuccessfully sought to introduce into evidence the results of
an on-line survey, in Tokai of Canada Ltd. v. Kingsford Products Company, LLC (2021
FC 782).

Though surveys may sometimes be used in trademark cases, for example, to help judges reach conclusions as to the likelihood of confusion between marks (i.e. as to the initial
impressions of typical consumers), the court in this case rejected the survey altogether, for a number of reasons.

For example, the very content of the questions asked by that survey was an issue that warranted against accepting the results of the survey as valid, as were certain data manipulations upon analysis the results and producing the final report. The way the survey was held was also a problem for the court, as the survey allowed participants unlimited time to answer, something that was simply not conducive to obtaining “initial impressions” of those who responded. At the other end of the spectrum, the survey’s results were also tweaked by arbitrarily rejecting questionnaires filled too quickly by certain participants. In short, the court found the survey essentially asked the wrong question, in the wrong manner.

As to this last point and the format of the survey, the court objected to the holding of the survey on-line, by having participants simply fill a questionnaire on-screen, at their leisure, without sufficiently timing their responses to attempt at obtaining an idea of what their initial impressions were, when presented with certain trademarks. On that point, the court also held that the very format of such an online questionnaire was ill-suited to presenting participants with an adequate simulation of the kinds of circumstances where they might meet the trademarks at issue, for example on products, on store shelves, in actual stores.

All in all, the Federal Court held in Tokai that on-line surveys may be problematic when attempting to ascertain the likelihood of confusion between trademarks, especially when the goods or services at issue are provided or sold in brick-and-mortar establishments.

Harley-Davidson Manages to Stop Sales of a (Trademark) Infringing Bike Built With Some of its Genuine Parts

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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.