The Elephant Parades the Circus Ring: Grey Goods Versus Copyright -- No Clear Winner...Yet

Copyright monopolies exist to reward the creation and dissemination of works of the literary, artistic, dramatic and musical arts. Copyright attaches to original works and the threshold for originality in Canada is low. Copyright law does not distinguish between artistic or literary elements of product packaging designs and the latest best-selling novel or compact disc.Most products imported from abroad and sold in Canada bear or are accompanied by some kind of copyrightable subject matter. The marketing and distribution of these products are often in the hands of exclusive distributors who, with the foreign maker's assent develop and maintain a market for these products in Canada, often at considerable cost to the distributor.The success of an exclusive distributorship comes at yet another cost-parallel importers find ways to acquire the genuine products abroad and then import and sell these products in Canada, riding the coattails of the exclusive distributor's efforts.Exclusive distributors have long sought an effective remedy in intellectual property law to combat the parallel importation of these "grey goods". A recent Supreme Court of Canada decision, the "Kraft" decision,may provide exclusive distributors with the remedy they have been seeking through the application of the "secondary infringement" section of the Copyright Act some commentators argue that the application of copyright law principles to create a non-tariff barrier to the trade in genuine products strays far afield from Parliament's original intent in enacting the Copyright Act. They are concerned that such an approach unduly rewards the owners of copyright in such works at the unfair expense of consumers of products. Other commentators argue that exclusive distributors deserve protection from the "unfair" competition posed by parallel importers who reap the rewards of the exclusive distributors efforts, without any corresponding investment.This article looks at past attempts by exclusive distributors to resort to intellectual property rights to curtail the parallel importation of grey goods. In most cases, intellectual property rights have been ineffective in combating parallel importation. The various Court pronouncements in the series of Kraft decisions reveal a potentially effective remedy to combat parallel importation. However, given the divergence of opinions in the Supreme Court of Canada, the effectiveness of the remedy is still open to question.