The owners of Ottawa's first craft distillery say they're feeling bullied by the provincial government but are powerless to put up a fight.

In addition to facing new legislation that could put the screws to their fledgling operation, Greg Lipin and Jody Miall are now grappling with what they call threatening legal correspondence from the province's Ministry of Transportation.

It all stems from a North of 7 distillery logo that resembles a highway sign.

"Very out of the blue. And it seemed quite heavy handed to me too," said Lipin. "When I was working with a graphic artist designing the logo we used a sign from the 1940s ... The fact that the Ministry of Transportation thought they would be somehow related to our distillery was absurd to me."

Intellectual property dispute

While the MTO said it wouldn't conduct an interview with CBC Ottawa, it sent several email statements explaining its position on the issue.

"The products currently being advertised and sold in association with the Provincial Route Marker Shield could lead to the belief that the products have received endorsement or are produced and sold under governmental patronage, approval and authority. The Ministry does not consent to the reproduction and use of the Provincial Route Marker Shield by the North of 7 Distillery," reads the statement.

"MTO's mandate includes the provision of a safe and efficient road network system throughout Ontario … Again, a mark on liquor bottles consisting of, or so nearly resembling as to be likely to be mistaken for, the Provincial Route Marker Shield could lead to the belief that the products have received endorsement or are produced and sold under governmental patronage, approval and authority."

Province being hypocritical, owners say

North of 7

Greg Lipin, left, and partner Jody Miall, say they are not going to fight the province on the logo. (Mario Carlucci/CBC)

Both Lipin and Miall contend the province, whose LCBO operation is the world's single largest buyer and seller of alcohol, is being hypocritical. On the one hand, the crown corporation takes a handsome sum from each bottle of liquor they sell. On the other, the MTO doesn't want to be associated with alcohol consumption.

"That people would think, 'Oh, this is a Ministry of Transportation thing' because we're using a somewhat similar logo? It's crazy."

According to Lipin, it was made clear from the legal correspondence that fighting the MTO -- right or wrong -- would be a losing battle.

"In the correspondence there were five lawyers attached to that. Ready to go," said Lipin who maintains the logo looks nothing like the ones currently used on provincial highways.

"But, (the MTO alleges) "No, no, it looks too similar to our highway signs and people are going to associate your business with the Ministry of Transportation. I've never heard a single person ever mention that in three years."

'We're not a large corporation that has a legal department to go deal with it.' - Greg Lipin, co-owner of North of 7 distillery

Designing new logo

So rather than fight the province in court, Lipin and Miall are opting for the high road, so to speak.

"We have two logos. We just switched over to using the other one. I'm going to get that one redesigned ... It's money out of our pockets, again, to hire somebody to redo a new logo. To get everything changed over, but I did it. What choice right? That's a rabbit hole. We're not a large corporation that has a legal department to go deal with it," said Lipin.

What of the claim that the province is going after a local craft distiller that is actually making money for the LCBO?

The MTO had this to say in its statement: "The government continues to support small businesses in Ontario but, in these circumstances, cannot consent to the continued use of a prohibited mark."