Supreme Court of Canada to Hear Chocolate Bar Copyright Case

In a period of unusual activity in hearing intellectual property cases, the Supreme Court of Canada has granted leave to appeal in a copyright case which raises a range of interesting issues. Primarily, the case involves parallel imports or "gray goods" and, in particular, raises the extent to which authorized distributors of imported products can use the copyright in packaging materials to block genuine but unauthorized products from entering Canada for sale. Kraft Foods Belgium SA makes Côte d' Or candy. Kraft Foods Schweiz AG makes Toblerone chocolate bars. For some years, Euro Excellence Inc (EE Inc) imported and distributed both products in Canada, but in December 2000 its distribution contract was not renewed. Kraft Canada Inc (KC Inc) began distributing the products under contract in 2001. However, EE Inc continued to purchase the products in Europe and sell them in Canada. In 2002, the Belgian and Swiss companies registered copyright in the product wrappers in Canada as artistic works and entered into an exclusive license agreement with KC Inc. When EE Inc refused to stop distributing the products, the Kraft companies brought an action in the Federal Court seeking an injunction and damages, alleging that the distribution of the products by EE Inc in Canada violated copyright in the artwork on the product wrappers. Under the Copyright Act, it is an infringement to import into Canada, for the purpose of sale, a copy of a copyrighted work that the person knows or should have known infringes copyright or would infringe copyright if it had been made in Canada. Subsidiary issues relating to packaging and labeling, as well as alleged non-competitive activity, were raised. The Federal Court issued the injunction and ordered EE Inc to pay damages. On appeal to the Federal Court of Appeal, the Court affirmed the injunction (which required EE Inc to cover the infringing parts of the wrapper with a sticker), but allowed the appeal as to damages and remitted the case to the trial judge for final disposition regarding damages. For the full text of the Federal Court of Appeal decision (Euro Excellence Inc v Kraft Canada Inc et al, 2005 FCA 427), see: http://decisions.fca-caf.gc.ca/fca/2005/2005fca427.shtml Summary by: Michael Erdle