Diageo Canada Inc. v. Heaven Hill Distilleries, Inc., 2017 FC 571

In this case, Diageo brought suit against Heaven Hill, alleging passing off and infringement of Diageo’s trademarks associated with its CAPTAIN MORGAN rum products by Heaven Hill’s ADMIRAL NELSON’S rum products.

Heaven Hill argued that Diageo’s case was an abuse of process. However, the Court held that the evidence relied upon by Heaven Hill shows no collateral, extraneous, ulterior, improper or illicit purpose.  Furthermore, there was no other evidence before the Court to show that the action is anything other than one to enforce trademark rights.

Heaven Hill also argued latches and acquiescence as there was evidence of Diageo’s knowledge of ADMIRAL NELSON’S products in Canada as early as 2009, and it ought to have known of the products as early as 2003, yet it waited over a decade to take action.  Heaven Hill argued that Diageo permitted the ADMIRAL NELSON brand to establish itself in the market, and as such, if successful, an injunction should not be the remedy.  Diageo argued that it was not aware of the brand until 2013, and took immediate action.  After weighing the evidence, the Court held that Diageo was not aware of the ADMIRAL NELSON’S brand prior to 2013, and was not estopped in the action by reason of acquiescence, latches or delay.  As a result of the date finding, the Court also held that Diageo’s claims were not statute-barred.

The Court held that the allegation that some of Diageo’s registrations were abandoned should also fail.  Heaven Hill raised the point at trial, that despite admissions in its pleadings and in the agreed statement of facts, it did not sell ADMIRAL NELSON’S rum in Canada.  The Court considered the evidence, and held that not to be the case.

In considering the allegations of passing off, the Court held that Diageo had established goodwill.  The Court found no evidence of intentional misrepresentation on the part of Heaven Hill.  However, the Court did find misrepresentation due to confusion, on the basis of survey evidence submitted by Diageo.  Thus, the Court held that Diageo established, on a balance of probabilities, that Heaven Hill contravened subsection 7(b) of the Act.  However, there was no evidence that the ADMIRAL NELSON products were substituted for CAPTAIN MORGAN products.  Thus the allegations under subsection 7(c) were dismissed.  The Court also held that the requisite damages for a passing off claim were present.

The Court then considered the trademark infringement allegations.  After considering each of the elements of the test for trademark infringement, the Court held that Heaven Hill’s use of its character or label trademarks in association with ADMIRAL NELSON’S rum products infringes Diageo’s exclusive rights in 9 registered trademarks.  Furthermore, this use was held to likely have the effect of depreciating the value of the goodwill attached to Diageo’s trademarks.  Diageo was granted, inter alia, declarations of infringement of 9 trademarks, a permanent injunction, and delivery up of all ADMIRAL NELSON’S bottles in Canada.  Diageo was further granted damages and its costs.

Heaven Hill’s counterclaim, including for an injunction restraining Diageo from making false and misleading statements about its products and business, was dismissed.