H-D U.S.A., LLC and Harley-Davidson Motor Company, Inc. v. Jamal Berrada, 3222381 Canada Inc., and El Baraka Inc., 2015 FC 189 (St-Louis, J.)
February 17, 2015
Mark K. Evans for the Plaintiffs (Defendants by Counterclaim), H-D U.S.A., LLC and Harley-Davidson Motor Company, Inc. (together, “Harley-Davidson”)
Harold W. Ashenmil for the Defendants (Plaintiffs by Counterclaim), Jamal Berrada, 3222381 Canada Inc., and El Baraka Inc. (together, “Berrada”)
These are the reasons of Justice St-Louis on costs for an action decided on the merits by Justice Scott in 2014 FC 207. Justice Scott has since been appointed to the Federal Court of Appeal.
In the decision on the merits, Justice Scott declared that Harley-Davidson is entitled to distribute, advertise, offer for sale, and sell items that bear the mark Screamin’ Eagle in association with their registered trade-mark Harley-Davidson, but exclusively at Harley-Davidson dealerships, as this would not infringe any of Berrada’s rights. The declaration granted by the Court was narrower than the declaration sought by Harley-Davidson (Harley-Davidson did not propose limiting their entitlement to sell to only within Harley-Davidson dealerships). Justice Scott dismissed Berrada’s counterclaims for trade-mark infringement, confusion, and depreciation of goodwill. The action lasted more than seven years, involved substantial work, and saw several settlement offers made by Harley-Davidson rejected by Berrada. No settlement offers were made by Berrada.
Harley-Davidson requested a discretionary lump sum award totalling 50% of incurred legal fees plus reasonable disbursements. Harley-Davidson argued that, although cost awards of 33% of incurred legal fees is a common practice of the Court, Berrada’s conduct and the result of the proceedings warranted an upwards departure to 50%. In addition, Harley-Davidson sought double the amount for legal fees incurred during the period after they made a particular settlement offer. Harley-Davidson argued that the settlement offer was more favourable to Berrada than Justice Scott’s judgment. The total amount of costs and disbursements sought by Harley-Davidson was approximately $947,000.
Berrada requested that the Court exercise its discretion to have each party bear its own costs. In the alternative, Berrada argued that costs should be limited to an amount not exceeding $15,000.
Justice St-Louis held that Harley-Davidson was entitled to costs. Further, Justice St-Louis determined that substantial costs were warranted given the amount of work involved, the result of the proceedings, and Berrada’s approach towards settlement throughout. Justice St-Louis awarded 33% of incurred legal fees plus reasonable disbursements to Harley-Davidson, concluding that the 50% requested by Harley-Davidson would require exceptional circumstances that were not shown in this case. Total costs awarded to Harley-Davidson were just over $540,000.
Justice St-Louis found that Harley-Davidson was not entitled to the requested doubling of legal fees for the period after the settlement offer. Unlike the judgment of Justice Scott, the settlement offer did not restrict Harley-Davidson’s use of the Screamin’ Eagle mark to only Harley-Davidson dealerships. Harley-Davidson apparently did not address this issue, presenting no evidence to Justice St-Louis on how the settlement offer without the restriction might have been more favourable to Berrada than Justice Scott’s order.
By John Lucas, Deeth Williams Wall LLP