Harley-Davidson takes MC Parts apart

The Maritime and Commercial Court has issued its decision in H-D Michigan Inc v MC Parts (V-70-06, April 15 2008).

 

Harley-Davidson Inc is a well-known manufacturer of motorcycles and their spare parts and accessories. MC Parts sells mainly used Harley-Davidson motorcycles, spare parts and accessories. Harley-Davidson owns two Danish registrations for the trademark HARLEY-DAVIDSON in Classes 18 and 25 of the Nice Classification, and two Community trademark registrations for the marks SHIELD (and design) and BAR (and design) in Classes 18 and 25. Following Harley-Davidson’s registration of its device marks, MC Parts began using a self-created device mark containing, among other things, the words ‘Harley Davidson’ and ‘MC Parts’.

 

In 1998 Harley-Davidson’s Danish trademark agent wrote to MC Parts objecting to its use of the words ‘Harley-Davidson dealer’. MC Parts asked the trademark agent for further elucidation; MC Parts’s device mark appeared on the letterhead. The trademark agent responded that HARLEY-DAVIDSON was protected as a registered trademark and that Harley-Davidson tried to ensure that only authorized dealers used the designation. MC Parts replied that it had expressed no wish to be an authorized dealer and all further correspondence stopped.

 

In 2006 Harley-Davidson seized a consignment of clothing bearing MC Parts’s device mark and initiated legal proceedings. Harley-Davidson alleged that MC Parts’s use of its mark was illegal and claimed damages and compensation for expenses incurred during the seizure.

 

The court ascertained that representatives from Harley-Davidson had been familiar with MC Parts’s use of its device mark since 1998, but found that Harley-Davidson’s rights had not lapsed due to passivity. The correspondence in 1998 concerned MC Parts’s use of the designation ‘Harley Davidson dealer’ and did not specifically concern the device mark containing Harley-Davidson’s name. Consequently, MC Parts had no grounds to believe that Harley-Davidson had agreed to MC Parts’s use of Harley-Davidson’s name and trademark. Few trademark owners would accept the unlawful use of their name in another company’s mark.

 

The court further stated that the use of the mark HARLEY-DAVIDSON may be lawful if the user runs a business selling Harley-Davidson products, including spare parts and accessories. However, such use must be neutral and not give rise to misunderstandings. The court found that MC Parts’s use went much further than is permitted under Section 5(3) of the Trademarks Act and consequently found for Harley-Davidson. MC Parts was ordered to pay Dkr50,000 plus Dkr15,000 in costs for the seizure, and an additional Dkr34,260 in costs.

 

Arguably, the court’s reasoning concerning the issue of passivity was unclear. Its argument that MC Parts had no grounds to believe that Harley-Davidson had agreed to MC Parts’s use of Harley-Davidson’s name and trademark corresponds neither to the wording of Section 9 of the act nor to previous practice in this field. Even though MC Parts acted in bad faith by using its device mark, it is debatable why eight years' passivity should not be sufficient grounds for a defence.