Euro-Excellence Inc v Kraft Canada Inc, [2007] 2 SCR 20 (CanLII)

Key Principle:

Generally, a distributor of material subject to copyright will not be found to have infringed that copyright if they lawfully received the material in question from the party who owns the copyright. However, if a distributor knows or should have known the party they obtained the material from was not the copyright holder, or authorized to reproduce the material subject to copyright, they may be found to have infringed the copyright. The key question to ask is, “Would it have been a copyright infringement if the person from whom I am obtaining this material had made it in Canada?”

Secondly, a licence agreement does not grant the licence holder any property rights. It simply permits them to do what would otherwise amount to trespass. As such, a licence holder cannot sue another for copyright infringement. A party who has been assigned all or part of a copyright, on the other hand, can sue.

Summary:

The Situation:

You are a distributor of Lukken Waffles, gourmet waffle cookies manufactured in Belgium. You have a warehouse in Germany you use to store the cookies and ship them to Canada. You have a contract with the Butter Street Bakers, the manufacturers and copyright owners of Lukken Waffles. The Butter Street Bakers and Lukken Waffles brand names and logos are well respected in the waffle cookie market.

Heart Stopping Desserts has a licence agreement with Butter Street Bakers to be their exclusive Canadian distributor. They do not like that you are importing Lukken Waffles from Europe and competing with them in Canada. Heart Stopping Desserts sues you for copyright infringement.

The Conclusion:

Heart Stopping Desserts’ action against you will likely fail. You obtained the packages of Lukken Waffles lawfully from the current copyright owner. The general test is: would the makers of the material subject to copyright have infringed a copyright had they made the material in Canada? Butter Street Bakers made the waffles and they are the copyright owners. Therefore, had they made them in Canada there would have been no copyright infringement. A licensee, such as Heart Stopping Desserts, cannot sue the copyright owner for copyright infringement. Their only remedy in this case is to renegotiate their contract with Butter Street Bakers.