Copyright Versus Grey Marketing

Earlier this year, the Supreme Court of Canada heard oral arguments in the case of Euro Excellence Inc. v Kraft Canada Inc. in which Kraft Canada Inc. ("Kraft"), a large food and beverage company and exclusive Canadian distributor for the TOBLERONE brand of chocolate bars, sought to stop Euro Excellence ("Euro"), a Quebec-based importer and distributor of fine confectionery, from selling its foreign-sourced TOBLERONE bars in Canada. While such a practice, also referred to as "grey marketing", is not illegal per se, it ignores the use of authorized distribution channels and is therefore carried out at the expense of local rights-holders, presenting health and safety risks, as well as risks to their reputation.

Generally, trade-mark law has been used in attempts to block parallel importing in Canada. However, there are difficulties in relying on trade-mark law for such purposes in Canada. In the current case, Kraft argued that since it controlled the Canadian copyright to the logos appearing on the TOBLERONE packaging, Euro had committed secondary infringement under Section 27(2) of the Copyright Act (Canada). Kraft's arguments were successful both at the Federal Court and the Federal Court of Appeal. Consequently, the Supreme Court of Canada must now decide whether Canadian copyright law can, or should, be used as a tool against the practice of parallel importing.

This entry first appeared in the April 5, 2007 edition of lawsof.com. For the status of the case, click here.