IP Law Daily Harley-Davidson prevails in suit against counterfeiter
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Thursday, December 21, 2017

Harley-Davidson prevails in suit against counterfeiter

By Mark Engstrom, J.D.

The federal district court in Chicago has awarded Harley-Davidson $150,000 in statutory damages, a permanent injunction, and reasonable attorney fees and costs in the company’s trademark infringement suit against an entity that sold axle-nut covers bearing counterfeit versions of Harley-Davidson’s "Bar & Shield" logo. Summary judgment was awarded to Harley-Davidson on three claims: federal trademark infringement and counterfeiting, false designation of origin, and violation of the Illinois Uniform Deceptive Trade Practices Act. The defendant’s motion to lift an asset freeze was denied (H-D U.S.A., LLC v. Guangzhou Tomas Crafts Co. Ltd., December 18, 2017, Blakey, J.).

Plaintiff H-D U.S.A. (hereinafter "Harley-Davidson" or "H-D") holds an incontestable federal trademark registration for the Harley-Davidson "Bar & Shield Logo." Defendant Guangzhou Tomas Crafts sold—without authorization, through it eBay store—motorcycle axle-nut covers that displayed counterfeit versions of the logo. H-D sued Guangzhou for federal trademark infringement and counterfeiting under the Lanham Act, false designation of origin under the Lanham Act, and violation of the Illinois Uniform Deceptive Trade Practices Act (UDTPA). All three claims required H-D to show that: (1) its mark was protectable and (2) the defendant’s unauthorized use of the mark would likely cause consumer confusion.

Because trademark registration provided conclusive evidence of the validity of an incontestable mark, H-D’s registration showed that its logo was protectable. With respect to unauthorized use, the evidence showed that H-D had never given the defendant authorization to use the Bar & Shield Logo. Nevertheless, the defendant sold knockoff products bearing marks that were substantially indistinguishable from H-D’s logo. Finally, H-D showed that the defendant’s unauthorized use of the Bar & Shield Logo would likely cause consumer confusion. In the Seventh Circuit, producing counterfeit goods in an "apparent attempt to capitalize upon the popularity of, and demand for, another’s product" created a presumption of a likelihood of confusion. In light of the facts of record, the court presumed that a likelihood of confusion had arisen from the defendant’s use of a counterfeit mark.

Even if the court could not presume a likelihood of consumer confusion, the evidence established a likelihood of confusion under the Seventh Circuit’s confusion test. Although H-D did not provide any evidence of actual confusion, the remaining confusion factors favored H-D. The court noted that it could infer the defendant’s "intent" to confuse consumers, given the similarity of the marks and the "great notoriety" of H-D’s senior mark.

Harley-Davidson’s use of the Bar & Shield Logo began in the "early 1900s," the court noted, and H-D now owns "one of the most valuable brands in the world." Ultimately, given the similarity of the marks, the products at issue, and the notoriety of H-D’s logo, the evidence showed that the defendant had intended to "palm off" its axle-nut covers as Harley-Davidson products.

Statutory damages. The court concluded that the defendant had willfully infringed Harley-Davidson’s Bar & Shield Logo because: (1) products that featured the logo were widely recognized and associated exclusively with H-D and (2) the defendant had used a mark that was "virtually identical" to the H-D logo. Harley-Davidson’s motion for $150,000 in statutory damages benefited from the high value of its brand and the efforts that H-D had taken to protect that brand. Taking the defendant’s willful infringement and other factors into consideration, the court agreed that $150,000 in statutory damages was appropriate.

Permanent injunction. The court awarded a permanent injunction to H-D because H-D showed that: (1) it had suffered an irreparable injury; (2) legal remedies, such as monetary damages, could not adequately compensate H-D for its injury; (3) the balance of hardships between the parties warranted an equitable remedy; and (4) a permanent injunction would not harm the public interest.

According to the court, the damages caused by counterfeit goods constituted an irreparable injury that lacked an adequate legal remedy. Further, the balance of hardships favored H-D because the defendant lacked a legitimate interest in selling goods that bore a counterfeit mark, and because H-D’s goodwill would suffer if the defendant continued to sell its counterfeit goods. Finally, a permanent injunction would serve the public interest by removing counterfeit goods from the marketplace and reducing consumer confusion. For those reasons, the court granted H-D’s motion for a permanent injunction.

Fees and costs. The court found that H-D was entitled to reasonable attorney fees and costs, and thus instructed the parties to follow Local Rule 54.3 so the amount of fees and costs could be determined.

Asset freeze. The court denied the defendant’s request to modify the preliminary injunction and lift the asset freeze that was placed on the defendant’s PayPal account. However, rather proffer documentary proof, the defendant proffered an undated declaration from the manager of its eBay store. The declaration stated that "None of the $165,000 currently on deposit in bg27cyf’s Pay Pal account is derived from the sale of products in the United States bearing the Harley-Davidson trademark or logo." Aside from noting that evidentiary issues arose from the undated declaration, the court found that the defendant’s conclusory statement did not qualify as documentary proof that its PayPal account did not contain any proceeds from its counterfeiting activities.

The case is No. 16-cv-10096.

Attorneys: Justin R. Gaudio (Greer Burns & Crain Ltd.) for H-D USA, LLC.

Companies: H-D USA, LLC; Guangzhou Tomas Crafts Co., Ltd.

MainStory: TopStory Trademark IllinoisNews

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