Overview
Eli Varzari sold electric bicycles through the website of his store East Van Chopcycles and through YouTube videos. The website advertised an electric bike called the “Harley Davidson Willie G Edition,” noting that the handgrips, pedals, axle bolt covers, and air valve caps were “all original parts from the factory.” His YouTube videos showed the bicycle being referred to as the “Harley Davidson Edition” built by East Van Chopcycles. Harley-Davidson trademarks were visible on the advertisements for Mr. Varzari’s bicycle, which was offered for sale for US$7,000.
Harley-Davidson trademarks are owned by H-D USA, LLC, which, in turn, licenses Harley-Davidson Canada LP to use its trademarks in Canada. Harley-Davidson trademarks are not licensed to others for the manufacture of vehicles; all Harley-Davidson motorcycles, including electric motorcycles, are manufactured by Harley-Davidson.
Harley-Davidson was not happy that Mr. Varzari was using its trademarks. Demand letters were sent to Mr. Varzari. He apparently changed his website so that it advertised the same electric bicycle under the name “H” edition. The reference to “original parts from the factory” was changed to “original parts from Harley Davidson.” Further correspondence from Harley-Davidson went unanswered.
Harley-Davidson sued Mr. Varzari for trademark infringement, passing off, and depreciation of goodwill in Canada’s Federal Court. Mr. Varzari did not defend but, under the rules of that court, in order to obtain relief, Harley-Davidson still had to prove its case.
The judge hearing the case had no problem finding that Mr. Varzari’s advertisement of electric bicycles in association with “Harley Davidson Willie G Edition” or “Harley Davidson Edition” was likely to cause confusion with the HARLEY-DAVIDSON trademark. There was, in the judge’s view, “little doubt a casual consumer somewhat in a hurry viewing an electric bicycle called the ‘Harley Davidson Edition’ would infer it was manufactured or sold by or under license of Harley-Davidson. Mr. Varzari’s use of this trademark infringes the HARLEY-DAVIDSON” trademark.
But what about the name change instituted by Mr. Varzari after the demand letters went out? The judge found that “[t]he surrounding circumstances in which the ‘The ‘H’ Edition’ name is used includes (a) Mr. Varzari having previously used the name “Harley Davidson Edition,” such that the consuming public would be more likely to continue to draw the connection between the “The ‘H’ Edition” and Harley-Davidson; (b) Mr. Varzari’s promotional materials referring to “The ‘H’ Edition” immediately above reference to “original parts from Harley Davidson,” an addition to the marketing text made apparently to ensure that the consumer made the connection between the “H” and Harley-Davidson; (c) Harley-Davidson’s trademarks being frequently represented in initials, as seen in the H-D Mark, as well as its registered trademark HDMC; and (d) the bicycle continuing to be associated with other Harley-Davidson trademarks …”.
Another issue Harley-Davidson had to overcome was that Mr. Varzari’s bikes apparently incorporated genuine Harley-Davidson parts. Was that enough to make the sale of the bicycles lawful? After all, as the judge noted, the resale of trademarked goods lawfully acquired is not, by itself, prohibited under Canada’s Trademarks Act. Unfortunately for Mr. Varzari, he was not simply reselling motorcycle parts bearing Harley-Davidson’s trademarks. He was found to be altering them and incorporating them into a new good in such a way that the new good, his electric bicycle, bore Harley-Davidson’s trademarks and suggested an association with the trademarks’ owner. As a result, the court concluded that Mr. Varzari’s sale of a bicycle incorporating handgrips and axle bolt covers bearing Harley-Davidson’s trademarks did not fall within the permitted resale of trademarked goods.
Although not every incorporation of a trademarked good into a new good will result in an actionable case of trademark infringement, care must always be taken to avoid the unfair use of someone else’s trademarks. Otherwise, like Mr. Varzari, one might find oneself on the wrong end of an injunction prohibiting sales and a money judgment in favour of the trademark owner.