Euro-Excellence Inc. v. Kraft Canada Inc.

“Copyright cannot be used to block genuine parallel imports.”

SHORT DESCRIPTION

The judgment in Euro-Excellence Inc. v. Kraft Canada Inc. is a landmark ruling that clarified the limits of copyright protection in commercial trade and intellectual property enforcement. The Supreme Court of Canada examined whether copyright law can be used as a tool to prevent the importation and sale of genuine goods lawfully manufactured abroad. This case is particularly significant for businesses involved in distribution, licensing, and parallel imports, as it draws a clear distinction between copyright protection and market control.

FACTS OF THE CASE

Euro-Excellence Inc. was a distributor of food products, including chocolates branded as “Toblerone” and “Côte d’Or,” which were manufactured by Kraft-affiliated companies outside Canada. These products were lawfully produced and sold abroad and subsequently imported into Canada by Euro-Excellence without authorization from Kraft Canada Inc., which held exclusive distribution rights within Canada.

Kraft Canada sought to stop the importation and sale of these chocolates by claiming copyright ownership over the logos and artistic designs printed on the product packaging. Kraft argued that importing and selling the chocolates amounted to copyright infringement, as Euro-Excellence did not have permission to reproduce or distribute the copyrighted works embodied in the packaging.

ISSUES INVOLVED

The primary issue before the Court was whether copyright law could be used to prevent the importation and sale of genuine goods based solely on the presence of copyrighted labels or designs. The Court also examined whether ownership of copyright in packaging artwork gives a distributor the right to control downstream resale of lawfully manufactured products.

ARGUMENTS OF THE PARTIES

Euro-Excellence argued that the chocolates were genuine products lawfully manufactured and sold, and that copyright law should not be misused to restrict trade or create artificial monopolies. It contended that allowing such claims would permit copyright holders to control markets far beyond the intended scope of copyright protection.

Kraft Canada argued that copyright in the packaging designs gave it exclusive rights over reproduction and distribution. It maintained that importing products bearing copyrighted artwork without authorization amounted to infringement, regardless of the authenticity of the goods.

FINDINGS AND OBSERVATIONS OF THE COURT

The Supreme Court of Canada delivered a split but decisive ruling, holding that copyright law cannot be used to block the parallel importation of genuine goods. The Court emphasized that copyright protects original artistic expression, not the commercial distribution of products. It observed that extending copyright to control market access would distort its purpose and allow rights holders to circumvent competition law and trade principles.

The Court further noted that once a copyrighted work is lawfully embodied in a product and sold, copyright should not be weaponized to restrict its resale. The judgment reinforced the principle that intellectual property rights must not be stretched beyond their legitimate boundaries.

SUGGESTION / PRACTICAL TAKEAWAY

This judgment serves as a critical safeguard against misuse of copyright law in commercial disputes. Businesses should rely on appropriate IP regimes such as trademarks or contractual arrangements to control distribution, rather than attempting to extend copyright protection to regulate market competition.

JUDGMENT

Year : 2007

The Supreme Court of Canada held that copyright law cannot be invoked to prevent the importation and sale of genuine goods lawfully manufactured abroad.