Kraft Canada Launches Another Round of Litigation Against Euro-Excellence

Not deterred by a loss in round one, Kraft Canada Inc (Kraft) has launched further proceedings against Euro-Excellence Inc (Euro) for alleged breach of copyright relating to the importation of Toblerone and Cote d'Or chocolate bars from Europe. Kraft is the exclusive authorized distributor of the chocolate bars in Canada, which are manufactured by Kraft's parent company in Europe. However, Euro purchases the same chocolate bars in Europe, and imports them into Canada for resale, an activity often referred to as "grey marketing". Kraft has an exclusive license to the copyright in the logos on the chocolate bar packaging. In the first proceedings, Kraft sued Euro under section 27(2) of the Copyright Act, alleging secondary infringement of the logo. Section 27(2) protects Canadian copyright holders against "parallel importation" by deeming an infringement of copyright to occur when an imported work "would infringe copyright if it had been made in Canada by the person who made it". As reported in a previous issue of E-TIPS, Kraft pursued the first round of litigation to the Supreme Court of Canada and lost. Kraft, said the Court, had failed to establish the "hypothetical infringement" required by an application of section 27(2) because, being merely a licensee and not an owner or assignee of the copyright in the work, Kraft did not have the requisite standing to assert infringement. In this second round of litigation, Kraft alleges that it has now become the assignee of the copyright to the logos, and therefore now has the requisite standing to sue. It remains to be seen whether this change of circumstances will be determinative, however, given that the Court had identified other policy-based reasons to rule against Kraft in the first round. Some commentators wonder whether the proper forum for a dispute relating to parallel imports ought to be the Competition Bureau, rather than the blunter instrument of intellectual property infringement proceedings. For commentary by Prof Richard Gold of McGill University in The Globe and Mail (entitled "How the Grinch stole chocolate"), see: http://tinyurl.com/2fxoyy Summary by: James Kosa