On June 12, 2017 Judgement was rendered in the case of Diageo Canada Inc vs. Heaven Hill Distilleries Inc. This case has come to be known as the “Captain Morgan Case”. It is noteworthy because it is one of the few recent cases on “distinguishing guise”. As defined is the Trademark Act a “distinguishing guise” means
(a) a shaping of goods or their containers, or
(b) a mode of wrapping or packaging goods
the appearance of which is used by a person for the purpose of distinguishing or so as to distinguish goods or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others;
The facts are that Diageo Canada is the owner of the highly successful “Captain Morgan” brand of rum. Heaven Hill launched their Admiral Nelson brand in an attempt to compete with the Captain Morgan brand. The gist of the dispute can be understood from the following excerpts taken from the Judgement:
“ I agree with Diageo that there is no requirement that a distinguishing guise must be registered under the Act in order to be a valid trademark enforceable as against Heaven Hill.”
“Diageo’s trade dress or distinguishing guise is embodied in the bottles of Original Spiced Rum, 100, Silver Spiced Rum, Gold, Dark, and White varieties of CAPTAIN MORGAN rum which bear a fanciful depiction of Sir Henry Morgan located generally at the center of the label, the CAPTAIN MORGAN brand name above the CAPTAIN MORGAN character with the rum variety below it, a classic sailing ship in the background, the bottle caps, the collar labels bearing the CAPTAIN MORGAN brand, and the colour scheme and design of the main label. All of these elements constitute the distinguishing guise of the CAPTAIN MORGAN rum products within the definition of a distinguishing guise under the Act and, accordingly, are a valid and enforceable trademark under the Act.”
“Diageo must establish goodwill in respect of the distinctiveness of its CAPTAIN MORGAN rum products. Although goodwill is not defined in the Act, the Supreme Court of Canada has described the goodwill associated with a trademark as being: “the positive association that attracts customers towards its owner’s wares or services rather than those of its competitors”). The evidence adduced by Diageo at trial shows there is considerable goodwill associated with the CAPTAIN MORGAN brand and the current manifestation of its associated trade dress. This is most evident by the quantity of sales of CAPTAIN MORGAN rum products, especially in relation to other rum producers and their rum products in Canada. Mr. Kourtis’ testimony was that approximately 200 million bottles of CAPTAIN MORGAN rum have been sold in Canada since 1994, with retail sales of roughly $5 billion, and that about 20% to 23% of Diageo’s total sales of spirits are attributable to CAPTAIN MORGAN. Mr. Kourtis further testified that: approximately 12 million bottles of CAPTAIN MORGAN rum and over 7 million bottles of CAPTAIN MORGAN Original Spiced Rum are sold annually in Canada; this is roughly equivalent to $320 million in retail sales annually in Canada, of which approximately $220 million is attributable to sales of CAPTAIN MORGAN Original Spiced Rum; CAPTAIN MORGAN was the best-selling rum in Canada in 2016, with some 32% share of the market for rum products, ahead of other well-known brands of rum such as BACARDI, LAMB’S and APPLETON ESTATE; and that, approximately 71.9% of the spiced rum market share in Canada is held by CAPTAIN MORGAN spiced rums. The goodwill associated with the CAPTAIN MORGAN brand is also evident by the extensive promotion, marketing, and advertising of CAPTAIN MORGAN. In the last 15 years or so, Diageo has spent about $150 million for promoting, marketing, and advertising its CAPTAIN MORGAN rum products, and within the last year roughly $17 million was expended.”
“As to the second element of a passing-off claim, namely the deception of the public due to a misrepresentation, it bears repetition to note here that the misrepresentation creating confusion in the public may be willful, negligent, or careless. Although Diageo pointed to some evidence and argued at trial that Heaven Hill intentionally or deliberately set out to mimic or copycat the trade dress of the CAPTAIN MORGAN rum products when it refreshed the ADMIRAL NELSON’S packaging, I find this evidence does not clearly or cumulatively establish any such intention on the part of Heaven Hill. The occasional references to CAPTAIN MORGAN in the documentation surrounding the redesign of the ADMIRAL NELSON’S bottle and labels and the testimony at trial, notably that of Hanna Venhoff, Heaven Hill’s Senior Brand Manager for its rum portfolio, do not, in my view, establish on a balance of probabilities that Heaven Hill intentionally or willfully set out to mimic or copycat the trade dress of the CAPTAIN MORGAN rum products. As the Court in Mr Submarine Ltd v Emma Foods Ltd,  OJ No 806 at para 6, 34 CPR (2d) 177 (Ont H Ct J), remarked, citing Baker et al v Master Printers Union of New Jersey (1940), 47 USPQ 69 at 72: “Of course, few would be stupid enough to make exact copies of another’s mark or symbol. It has been well said that the most successful form of copying is to employ enough points of similarity to confuse the public with enough points of differences to confuse the courts.”
“What the evidence does show, however, on a balance of probabilities, is that a casual or ordinary purchaser of rum products would likely be confused as to the source of ADMIRAL NELSON’S rum products as currently packaged and sold in Canada. At trial, Diageo tendered the expert report of Dr. Ruth Corbin who designed and oversaw the implementation of a consumer survey of 629 Canadian adults of legal drinking age, residing in four Canadian cities, who had recently purchased a bottle of rum. The survey’s mandate was two-fold: one, to assess general impressions of ADMIRAL NELSON’S Premium Spiced Rum; and two, to measure the extent, if any, to which purchasers of rum mistakenly infer that a bottle of ADMIRAL NELSON’S Premium Spiced Rum originates from the same source as CAPTAIN MORGAN rum. The in-person mall-intercept survey was conducted during July and August, 2016, in shopping malls in Moncton, Montreal, Toronto, and Edmonton, cities chosen to provide geographical coverage across Canada as well as to allow for a comparison between cities where ADMIRAL NELSON’S Premium Spiced Rum is available for sale (i.e., Moncton and Edmonton) and cities where it is not (i.e., Montreal and Toronto). A total of 629 persons participated in the study; 413 participants were shown a bottle of ADMIRAL NELSON’S Premium Spiced Rum (the Test Group), a picture of which is shown below, while 216 were shown a bottle of SAILOR JERRY Spiced Rum (the Control Group) which is also shown below:
Upon review and analysis of the survey results, Dr. Corbin concluded and testified at trial that there is statistically significant evidence that CAPTAIN MORGAN rum is spontaneously and almost exclusively brought to mind by the ADMIRAL NELSON’S Premium Spiced Rum bottle. Among the ADMIRAL NELSON’S Test Group, 21% noted similarity between ADMIRAL NELSON’S Premium Spiced Rum and CAPTAIN MORGAN rum (but did not reference the two brands as coming from the same source elsewhere in the survey). Dr. Corbin further concluded and testified that there is statistically significant evidence of misapprehension of source, meaning that rum purchasers are likely to mistakenly infer that a bottle of ADMIRAL NELSON’S Premium Spiced Rum originates from the same source as CAPTAIN MORGAN rum. In total, 23% of the 413 participants in the Test Group had a misapprehension as to source (whereas only 7% of the 216 participants in the Control Group mistakenly inferred that SAILOR JERRY Spiced Rum originates from the same source as CAPTAIN MORGAN). The most frequent reason given by the Test Group participants for inferring the same source as CAPTAIN MORGAN was the character displayed on the label. However, Dr. Corbin also noted during her testimony that more than just the character on the bottle was a source of confusion, testifying that:
…one can conclude with 95 per cent confidence that the inference of a same source between these two bottles, Admiral Nelson and Captain Morgan, arises from some elements on the Admiral Nelson’s bottle as opposed to the things we have controlled for, the placebo elements we have controlled for, random guessing or other irrelevant elements.
In short, the evidence adduced by Diageo at trial, notably the Corbin survey report, supports a finding that there is, on a balance of probabilities, confusion or deception of the public due to Heaven Hill’s misrepresentation as to the source of its ADMIRAL NELSON’S Spiced Rum. This finding also extends to each of the other varieties of ADMIRAL NELSON’S rum products, namely, Premium Dark, Premium Silver, Premium Gold, and Premium Coconut, because, save for some of the words on and the colouring of the ADMIRAL NELSON’S labels and the colour of the rum inside the bottles, each variety utilizes the same Admiral Nelson character with a ship behind the character and the same shaped bottle. Accordingly, I conclude that there would likely be confusion in a consumer’s mind as to the source of the ADMIRAL NELSON’S rum products. It is readily conceivable in this case that an ordinary or casual purchaser of rum products, somewhat in a hurry, could be caught off guard when reaching for what he or she perceives to be a bottle of CAPTAIN MORGAN rum but which is in fact a bottle of ADMIRAL NELSON’S rum.
If you had looked only at the brand names and asked a Trademark lawyer whether the Trademark Admiral Nelson would be considered confusing with the Trademark Captain Morgan, you would likely have been advised that the Trademarks are not confusing. However, as can be seen from the foregoing, when the “distinguish guise” with all surrounding circumstances were placed before the Court, the Court reached the conclusion that a case for confusion had been made out. Clearly the value of a distinguishing guise cannot be underestimated with well-known national brands.