Kraft v. Euro -Excellence #2 Settled

The sequel involving the same parties to the 2007 Kraft v. Euro-Excellence case decided in the Supreme Court of Canada has been settled, according to a press release from Kraft, which describes this as an “important copyright case.” The press release says that “The Judgment is important as it supports the rights of owners of copyright in Canada to stop distributors from selling products without the consent of the owner of copyright in the product packaging.”

This, of course, is not correct. A consent judgment, which this was, reflects a settlement between the particular parties involved, which is usually made on a business decision basis. Such a judgment clearly affects those parties but does not have a legally binding precedential effect on the rest of the world. This particular litigation never really got off the ground and was at a very preliminary stage.

Kraft’s current theory following the 2007 Supreme Court decision is that calling a piece of paper an “assignment” rather than an “exclusive license” will enable the blocking of the parallel importation of chocolate bars and other non-copyrightable products based upon copyright in some element of the packaging or labelling. However, this strategy has not resulted in any reasoned decision blocking parallel imports to date in Canada.

In fact, any party now being sued for copyright infringement in respect of the parallel importation of legitimate goods based upon an “assignment” strategy involving an element of packaging or labelling should know that there are arguable defences available based upon such doctrines as copyright misuse, as explicitly mentioned and left open by the Supreme Court in its 2007 decision.

It is also quite possible, where appropriate, to convert any summary “application” brought by a plaintiff in these circumstances into a full-fledged “action” in order to ensure that all viable defences and counterclaims can be asserted.

My detailed comment on the 2007 Supreme Court decision can be found here. As I said in the conclusion of that comment:

Moreover, if lower courts are somehow persuaded to come to a different overall result than the one reached by the SCC, one can certainly expect pressure for an immediate amendment to restore the status quo ante of free trade and competition in the Canadian marketplace, unimpeded by assertions of copyright in mere elements of packaging material.

HK