Canadian Parallel Import Decision

The Canadian Supreme Court just released its decision in Euro-Excellence Inc. v. Kraft Canada Inc., link here. The appeal was allowed in an opinions by Justice Rothstein, Fish, joined by Justices Binnie and Descamps. Justice Bastarche delivered an opinion for himself and Justices LeBel and Charron favoring allowing the appeal, but the majority rejected his reasoning. Chief Justice McLaughlin and Justice Abella dissented in an opinion delivered by the latter. The case turned on how to interpret the statutory language in Canadian Copyright Act section 27(2)(e), and arose out of the efforts of an exclusive Canadian distributor (Kraft) of Cote d'Or and Toblreone chocolate bars to prohibit another distributor (Euro-Excellence) through the artifice of obtaining a copyright registration on three of the Cote d'Or labels and two of the Toblerone bars as artistic works. Suit was then brought under the Copyright Act alleging Euro for unlawful importation. Kraft won below.

Efforts by distributors of consumer good to keep prices artificially high through importation claims based on the labels are common and were defeated in the U.S. in the Quality King case, although only because the labels had been manufactured in the U.S. Had they been manufactured abroad and imported into the U.S. in violation of an exclusive distribution agreement, the outcome likely would have been to bar importation. In the Canadian case the task was different: the exclusive copyright owner had to prove that the labels would have infringed copyright had they been made in Canada by the persons who made they outside of Canada. Since this could not be proved, the distributors lost.

The various opinions have a great deal of comparative law and discussions of statutory interpretation. Readers are referred to Canadian commentators for more in depth coverage, especially Howard Knopf's blog which have a post on the opinion later today.