On July 26, 2007, Canada’s highest court rendered an important decision which will be of interest to those who distribute imported goods in Canada. At issue was whether copyright law can be used to impede the sale of grey goods (authentic goods imported from abroad and sold in Canada in violation of the rights of a Canadian distributor). The Supreme Court’s answer: it depends.

The facts are simple: 

  • Euro-Excellence, a former Canadian distributor of Kraft’s TOBLERONE® and CÔTE D’OR® chocolate bars (which respectively bore the logos shown above), continued to acquire such confections in Europe and sold them in Canada, thereby competing with Kraft Canada Inc. 
  • In an attempt to restrain Euro-Excellence, Kraft Foods Schweiz AG (the manufacturer of the TOBLERONE® chocolate bars) and Kraft Foods Belgium S.A. (the manufacturer of the CÔTE D’OR® chocolate bars) respectively registered copyrights in the logos shown above. Both companies then granted Kraft Canada Inc. an exclusive licence for Canada with respect to these copyrights. 
  • Kraft Canada Inc. then instituted a copyright infringement action against Euro-Excellence because the TOBLERONE® and CÔTE D’OR® chocolate bars sold by Euro-Excellence in Canada reproduced the copyrighted logos.

While Kraft won in the lower courts (and thereby forced Euro-Excellence to go to the expense of covering the logos on the chocolate bars it sold), these decisions have been overturned by the Supreme Court for different reasons expressed by different judges: One group of judges held that Kraft Foods Schweiz AG and Kraft Foods Belgium S.A., which manufactured the packaging bearing the copyrighted designs, also owned the copyright in those designs and therefore there could be no copyright infringement in this circumstance. Another group of judges thought that the label copyright was “incidental”.

The Supreme Court has left open the possibility of a different result if Kraft Foods Schweiz AG and Kraft Foods Belgium S.A. had assigned their copyright to Kraft Canada Inc. However, some judges expressed reservations about copyright being used to control trade and a minority held that copyright protection should not extend to works which are incidental to consumer goods. In commenting on the decision, Kraft spokesperson Lynne Galia indicated: ‘‘Now that we’ve fully reviewed the judgment, we believe the outcome would have been in our favour if we’d had assignment of copyright and not simply an exclusive licence. So we see an opportunity to look at other options.”

The full text of the Supreme Court of Canada’s decision is available at: