Chocolate Copyright Infringement
Lawyers Challenge Kraft’s Exclusive Licence to Export Candy Brands
Canadian importer Euro-Excellence is accused of illegally importing premium chocolate with trademarked Toblerone & Cote d'Or mountain & elephant logos on their packaging.
A divided Supreme Court of Canada recently reversed two previous federal court rulings that Quebec-based importer Euro-Excellence Inc. had violated the copyrights for Toblerone and Cote d’Or logos.
Copyright attorneys for Kraft Canada had successfully argued in front of federal courts that Euro-Excellence had illegally imported into Canada chocolate products packaged with the:
- copyrighted mountain image on the Toblerone box
- and elephant logo on Cote d’Or candy wrappers.
Kraft factories produce premium chocolates in Belgium and Switzerland.
Federal courts sided with Kraft’s assertion that the Canadian importer had violated the Copyright Act. Euro-Excellence was ordered to hide the legally protected logos with covering wrappers, and pay a US$280,000 fine (CDN$300,000).
Kraft Canada Doesn’t Own the Logos
While the Supreme Court agreed that the mountain and elephant image copyrights are valid, four judges ruled against Kraft Canada because its sister European companies legally own the actual logos. Most intellectual property lawyers agree that legitimate copyright protection must be afforded only to parties who directly own a copyright or trademark registration. Instead of using copyright law as intended, Kraft Canada appeared to be using the Copyright Act as an artificial barrier to prevent free trade.
Exclusive Distribution Channels
Kraft Canada does have an exclusive licence with third-party distributors in Europe to ship Toblerones and Cote d’Or chocolates to Canadian retailers. However, "parallel importers" like Euro-Excellence can legally buy products from Kraft’s third-party distributors as long as they purchase in Europe. Euro-Excellence can then bring Toblerone and Cote d’Or imports into Canada through non-exclusive distribution channels.
Some international trade consultants say that Kraft Canada should have pursued a lawsuit against its third-party distributors. By selling to the likes of Euro-Excellence in Europe, the third-parties appear to have strayed outside of Kraft’s exclusive distribution network.
Import Barriers Create a Monopoly
Even though Kraft Canada isn't the technical owner of the logo copyrights, hree of seven Supreme Court justices ruled that importers can’t bring a product bearing a trademarked or copyrighted image into a territory against the manufacturer's wishes. Proponents of free trade argue that this restriction will result on a virtual monopoly on trademarked or copyrighted retail imports. In turn, the absence of competition will drive up product prices for the importing nations.
Case for a Copyright Appeal
Intellectual property lawyers explain that a monopoly for Toblerone and Cote d’Or chocolates in Canada can still happen if the copyrighted logos are assigned or transferred from the sister companies to Kraft Canada.
In that scenario, the plaintiff (Kraft Canada) becomes the copyright owner rather than an exclusive distributor licensee. Copyright lawyers for Kraft would then enjoy a much stronger case for protecting against a non-exclusive trade partner from importing any product that features one or more of Kraft’s logos.
The Supreme Court of Canada may soon be forced by international law to exercise the provisions of the Copyright Act on behalf of the rightful copyright owners - regardless of whether an artificial restriction against imports goes against the principles of free trade.
Sources for this Article
This article presents independent insights based on arguments described in the article ‘Kraft loses right to use copyright as barrier’ (National Post – July 28, 2007).
