Captain Morgan Sails Away with the Treasure in Trademark Infringement Case

On June 12, 2017, the Federal Court (the Court) issued its judgment in Diageo Canada Inc v Heaven Hill Distilleries Inc et al, 2017 FC 571, a passing off and trademark infringement action. In this case, the Court awarded Diageo Canada Inc. (Diageo) costs, damages and a permanent injunction restraining Heaven Hill Distilleries Inc. et al (Heaven Hill) from using the Admiral Nelson’s character and labels in Canada, an example of which is shown below. 

Diageo alleged that Heaven Hill passed off their Admiral Nelson’s rum products as being those of Diageo, and infringed Diageo’s trademarks associated with its Captain Morgan rum products.

The Court found that there was significant goodwill associated with the Captain Morgan brand, and that there was confusion or misrepresentation as to the source of the Admiral Nelson’s rum products.  Thus, the Court held that Heaven Hill had passed off its Admiral Nelson’s rum products as being those of Diageo.  The Court also concluded that Heaven Hill had infringed nine of Diageo’s registered trademarks.

In determining the issue of depreciation of goodwill, the Court relied on the Supreme Court of Canada decision in Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23.  The Court held that although Heaven Hill had not actually used any of Diageo’s trademarks, use of the sufficiently similar Admiral Nelson’s trademark evoked a mental association with each of Diageo’s trademarks, which, due to Heaven Hill’s quality issues, would likely depreciate the value of goodwill attached to Diageo’s registered trademarks. 

Summary By: Michelle Noonan