The Perennial Issue of Parallel Imports and Border Enforcement: Canada's Version of ACTA - Bill C-8

On April 24, 2014 I was a speaker and presented a talk entitled "The Perennial Issue of Parallel Imports and Border Enforcement: Canada's Version of ACTA - Bill C-8" at the 22nd annual Fordham IP conference.

Here's a summary of my talk:

Bill C-8 is now pending before Canada’s Parliament. According to the Legislative Summary:

Canada has not explicitly indicated its intention to ratify ACTA by introducing Bill C-8... However, when questioned on this issue by the Committee, the Honourable James Moore, Minister of Industry, and his deputy minister stated that although the bill is intended to respond to domestic pressures, it brings Canada in line with ACTA.

According to the IIPA, “Bill C-8 should be improved and then enacted as quickly as possible”. There is, however, concern that Bill C-8 goes far beyond what is required in terms of anti-counterfeiting, even as required by ACTA. This would be controversial enough, especially since ACTA shows no sign of imminently or even ever coming into force. Moreover, there is reason to believe that Bill C-8 could – whether inadvertently or otherwise – enable the use of copyright and even trade-mark law to block parallel imports, which are legitimate by definition and which have been legitimized by the Supreme Court of Canada.

Here are some questions I would have liked to see discussed more but the Moderator had other ideas:

1. How likely is it that ACTA will ever come into force?
2. How can the USA possibly expect to credibly oppose parallel imports in the TPP after its Supreme Court confirmed in Kirtsaeng last year that copyright law won’t work to block parallel imports and US TM law is generally ineffective?
3. Does the 301 process really have any consequences anywhere?

It’s always interesting that so many who profess to believe in free trade and believe that IP issues belong in free trade agreements are really hostile to parallel imports and use every possible means to erect “private tariffs” in these agreements.

The antipathy to parallel imports makes me even more concerned that Bill C-8 may have language in it that has been tainted by lobbyists and which may betray the Government’s stated intentions NOT to impede parallel imports. Having made the winning arguments in Canada’s leading Supreme Court case on parallel imports, I know how tricky every word and the placement and history of every word in the statute can be in this context.

Anyway, my slides contain a number of examples of the inconsistent and ambiguous wording that has crept into this bill that could impact the issue of parallel imports.

I’m also in good company here with Prof. Jeremy de Beer who told the Committee:

I admit that it was not easy for me, or a number of other IP experts

whom I consulted, to understand the intricacies of this bill's

provisions affecting parallel imports. The provisions are technical

and complex, and they interact with the provisions of the existing

legislation with effects that may not be immediately apparent.

The Committee hearings on Bill C-8 that took place last November were very unsatisfactory. The Committee would not hear from me, but did hear separate presentations from a father and son team of anti-counterfeiting lawyers from the same firm. This hearing was another example of the quote attributed to Bismarck “If you like laws and sausages, you should never watch either one being made”.

This is really too bad because I think that the Government and its officials have some good intentions here. Nobody supports counterfeiting. However, somewhere along the line, they are getting some not so good advice and the results could cause a lot of collateral damage to the free flow of legitimate goods - including medicines intended for sale in developing countries where lives may be at risk in the event of delayed delivery.

Lots more in my slides, which are available here.

HPK

Nifty Shades of Gray Marketing: A Split US Supreme Court - Majority Believes that Things Go Better with Coke

The U.S. Supreme Court yesterday delivered what is likely one of the most important copyright decisions from any court anywhere anytime. In a dramatically divided but decisively 6-3 decision in Kirtsaeng v. John Wiley, it held that copyright law could not be used to prevent the parallel importation into the USA of works lawfully made outside of the USA. In other words, legally made works can be bought and sold and resold on the “grey” (or “gray” for those not in the Commonwealth) market, according to common sense. As the EFF says, if "you bought it,you own it"'. If you own it, you can resell it. After the “first sale”, the copyright owner’s rights in the physical object are “exhausted” – hence the frequent reference to the doctrine of “exhaustion”.

In other words, copyright law will not be available to do what trade-marks law has also failed to do, which is to serve as a tool of international trade control, price discrimination, market segmentation and restraint of trade with respect to legitimately made goods for which the copyright owner has been paid and in respect of which the “first sale” has been made. Things are somewhat different in the EU - but that is not a jurisdiction that Canada would rush to emulate in this respect.

To be absolutely clear, the copies in question were not piratical or counterfeit. The American copyright owner got paid for these products manufactured abroad, with their permission. However, the quest to control the resale after the first sale, to control the channels of distribution and the pricing of the imported copies of these products into the USA, and to generally assert a right to control sale after “first sale” and to take advantage of higher American “what will the market bear” pricing was denied. As the EFF says, “You bought it – you own it”. It’s not quite that simple – but it’s now very close indeed. Basically, the owner of a copyrighted product can do with it what he or she wishes, other than copy it or infringe moral rights or break TPMs, where applicable.

The decision applies to all copies lawfully made anywhere – whether the product is a book, a chocolate bar, a wrist watch, a plane, train or automobile. It applies whether it is the product itself that is protected by copyright (i.e. books, in this case) or merely the packaging, labelling or other incidental aspect of the product. It should be noted that Canada has an elaborate sui generis regime to prevent the parallel importation of books – because book publishing has always been highly protected in Canada.

The Kirtsaeng decision could have important ramifications for Canada. It is consistent with the result of the six year old Supreme Court of Canada decision in Euro-Excellence v. Kraft, which involved copyright in a small logo on the packaging of Toblerone chocolate bars (I should disclose that I made the prevailing argument on behalf of an intervener, the Retail Council of Canada, in that case). The argument was highly technical, but essentially entailed that a copyright owner cannot infringe its own copyright. That argument carried the day in the only way that could have worked at the time – given the very inadequate record below. The two top courts of Canada and the USA have come to the same bottom line for most practical purposes, namely that copyright law will be ineffective to “thwart” parallel imports of grey goods – which are, by definition, legitimate. I’ll write a more detailed blog comparing the Kirtsaeng case with Canada’s Kraft case in the near future. 

It should be noted that some believe that the execution on paper of an assignment of copyright to a Canadian entity will entitle it to block parallel imports in accordance with the Kraft decision. However, such a tactic may very well backfire if adequately resisted. Such an assignment may be subject to attack as a sham or an abuse of copyright and may trigger unwelcome and unexpected tax consequences. More about this in the future. For now, see my comment prepared for the Law Society of Upper Canada. For practical purposes, copyright law is not a very practical way to block parallel importation into Canada.
 
The US decision is important to Canada for many reasons – not least of which is the imminent debate on Bill C-56, the anti-counterfeiting legislation, which includes several sometimes inconsistent references to parallel imports that could possibly have unintended or unforeseen results. Also, there can be little doubt that the lobbyists have already begun to work on Congress and the USTR to “undo” a result that some of their clients will find very difficult to accept. Such a development is a threat to Canada and other countries involved in trade negotiations with the USA, unless the negotiators stand their ground.

Kirtsaeng was a foreign student from Thailand studying in the USA. He figured out that he could import perfectly legitimate text books in English printed abroad and purchased by his friends and family in Thailand and resell them in the USA at a lower price than other channels. The profits from his little cottage industry import business helped finance his education. This is what most would consider to be free trade, competition and otherwise normal, entrepreneurial, and competitive capitalism His profits helped to finance his American university studies. The well-known publishers John Wiley decided to stamp out this very small challenge to the legacy business model of price discrimination based upon a tortured and technical result that been in place if not easily enforced as the result of lower court and two recent but inconclusive Supreme Court decisions itself over the years.

As is so often the case when copyright owners get excessively zealous in their quest for absolute control, multiple and layered payments, double-dipping and other excesses – they sometimes get more than they ask for. In this case, Wiley and an impressive alliance of amici representing the US copyright establishment went after a foreign grad student working his way through college. They must have been very pleased when a jury whacked him with $600,000 in statutory damages. But he appealed and Wiley and its supporters got a resounding defeat in the US Supreme Court that will be seen as a huge setback in the legacy book publishing, movie, music, entertainment, and more unenlightened quarters of the software sectors.

However, Wiley and other American copyright owners in various legacy and IP maximalist sectors believe that they are entitled to segment markets, practice international price discrimination and to charge what the market will bear in various geographic markets. Canadians are familiar with having to pay higher prices than Americans for precisely the same product – in part because not all Canadian importers are as aggressive as they could be in sourcing the perfectly legitimate “grey market” for “parallel imports” that would save their customers money and earn themselves greater profit.  Young Mr. Kirtsaeng, however, was undeterred. He succeeded in slaying the giant that even mighty CostCo had failed to successfully confront in the 2010 US Supreme Court in the 2010 CostCo v. Omega case.

At the risk of seriously oversimplifying  some complex jurisprudence and its consequences, the Americans have now caught up to Canada and perhaps even passed it for the moment with respect to “international exhaustion”, free trade and a judicial distaste for using IP laws for purposes for which they were never intended. Like, the Canadian decision, the US Court today was sharply divided – although the result and the splits are much clearer in the US case. The 6-3 arithmetic speaks for itself in this instance.

As per the Court’s summary, BREYER, J., delivered the opinion of the Court, in which ROBERTS, C. J., and THOMAS, ALITO, SOTOMAYOR, and KAGAN, JJ., joined. KAGAN, J., filed a concurring opinion, in which ALITO, J., joined. GINSBURG, J., filed a dissenting opinion, in which KENNEDY, J., joined, and in which SCALIA, J., joined except as to Parts III and V–B–1.

Note the additional shades of grey added by the Kagan + Alito concurrence and the partial reservation of Scalia's concurrence with Ginsburg and Kennedy.

Court watchers will immediately note that this alignment has nothing to do with traditional “liberal” v. “conservative”  or partisan appointment divide. Nor can it be said to reflect any “activist” v. “strict constructionist” divide. If anything, it may portend an emerging meeting of the minds of of a “purposive” and “libertarian” approach to intellectual property – and the solid rejection of the “maximalist” copyright views that one had come to expect from Justice Ginsburg, normally considered to be a “liberal” on other issues.

The result is not surprising for any who heard the oral argument – which featured a “parade of horribles”–  including why consumers and users’ rights in everything ranging from library books to used cars was on the line, if the overreaching position of Wiley and its supporters had been accepted. In the end, even the Government’s lawyer admitted that Kirtsaeng and his amici supporters’ list of “horribles” was “worse” (i.e. presumably even more horrible) than the alternative list.

The result is effectively a stinging rejection by her colleagues of Ginsburg, J.’s widely noted “obiter dicta” in the Quality King case a few years earlier. That case involved shampoo products that had been made in the USA, shipped abroad and imported back. She provocatively opined by way of obiter dicta in a concurrence that:

This case involves a “round trip” journey, travel of the copies in question from the United States to places abroad, then back again. I join the Court’s opinion recognizing that we do not today resolve cases in which the allegedly infringing imports were manufactured abroad. See W. Patry, Copyright Law and Practice 166—170 (1997 Supp.) (commenting that provisions of Title 17 do not apply extraterritorially unless expressly so stated, hence the words “lawfully made under this title” in the “first sale” provision, 17 U.S.C. § 109(a), must mean “lawfully made in the United States”); see generally P. Goldstein, Copyright §16.0, pp. 16:1—16:2 (2d ed. 1998) (“Copyright protection is territorial. The rights granted by the United States Copyright Act extend no farther than the nation’s borders.”). (emphasis added)

This time around, Wiley relied upon a passage from the majority in Quality King. In Breyer, J.’s words:

We cannot, however, give the Quality King statement the legal weight for which Wiley argues. The language “lawfully made under this title” was not at issue in Quality King; the point before us now was not then fully argued; we did not canvas the considerations we have here set forth; we there said nothing to suggest that the example assumes a “first sale”; and we there hedged our statement with the word “presumably.” Most importantly, the statement is pure dictum. It is dictum contained in a rebuttal to a counterargument. And it is unnecessary dictum even in that respect. Is the Court having once written dicta calling a tomato a vegetable bound to deny that it is a fruit forever after? (Emphasis added)

As for her controversial passage mentioned above, Justice Ginsburg admitted that her comment in Quality King was “dictum” but went on to say that “I disagree with the Court’s conclusion that this dictum was ill considered.”

Kagan, J. in her concurrence indicated that if Congress views yesterday’s decision “as a problem”, “it should recognize Quality King—not our deci­sion today—as the culprit.

The Kirtsaeng decision gets very technical, as inevitably do all decisions on parallel imports if adequately briefed and reasoned. It goes into great depth  based upon the interplay of key sections of the US legislation. But, in the end, it all boiled down to the common sense interpretation of five words: “lawfully made under this title”. In the end, the Court agreed with Kirtsaeng that this phrase was not subject to geographic limitation and applied to copies lawfully made abroad.

There is already much speculation about whether this decision could be a premonition of a surprise outcome in the pending Bowman v. Monsanto case about whether and how the “exhaustion” doctrine applies to patented seeds.

The importance of yesterday’s decision cannot be over stated. Two of the judges on the US Supreme Court who have long shown a great interest in copyright law and are both regarded as “liberals” on the Court have seriously split with each other. The split is symbolic in many respects of the overall state of affairs in copyright law, in which everyone professes to believe in “balance”, as long it is their own definition of balance. The result will be very inconvenient for the USTR in its trade negotiations in the TPP, where the Americans will find it virtually impossible – though it has rarely stopped them before – to say “Do as we say, not as we do”. No doubt, the lobbyists will be hard at work in that forum in order to “policy shop” a prohibition against parallel imports back into the US congress – but that won’t be easy, to say the least.

Ironically, Justice Ginsburg was explicitly very concerned about the future of US trade negotiations and treaties that are still only a glint in the USTR’s and various lobbyists’ eyes – a concern which many might find seriously out of place in a judgment of the  US Supreme Court: 

Quality King left open the question whether owners of U. S. copyrights could retain control over the importation of copies manufactured and sold abroad—a point the Court obscures, see ante, at 33 (arguing that Quality King “significantly eroded” the national-exhaustion principle that, in my view, §602(a)(1)embraces). The Court today answers that question with a resounding “no,” and in doing so, it risks undermining the United States’ credibility on the world stage. While the Government has urged our trading partners to refrain from adopting international-exhaustion regimes that could benefit consumers within their borders but would impact adversely on intellectual-property producers in the United States, the Court embraces an international-exhaustion rule that could benefit U. S. consumers but would likely disadvantage foreign holders of U. S. copyrights. This dissonance scarcely enhances the United States’ “role as a trusted partner in multilateral endeavors.” Vimar Seguros y Reaseguros, S. A. v. M/V Sky Reefer, 515 U. S. 528, 539 (1995).

In any case, her reference to the Vimar decision is misplaced, since the comment to which she apparently refers says that “courts should be most cautious before interpreting its domestic legislation in such manner as to violate International agreements”. In fact, not only are there no existing multilateral international treaties or agreements that prohibit international exhaustion. The TRIPS agreement expressly permits countries to come to their own conclusions on this issue. The fact that the USA may now want to forbid international exhaustion via future treaties should be of no relevance whatsoever to the US Supreme Court.

An aspect of this decision – which will be elevated no doubt to “sky is falling” proportions – is the often heard suggestion that US publishers, entertainment companies, software developers etc. may become reluctant to supply English language products to developing countries at lower prices for fear of seeing them shipped back to the USA as parallel imports. That argument may once have had some serious merit – but is increasingly moot as so many of these types of products are now provided digitally – and often controversially with DRMs of various stripes attached, including regional coding. This opens up a whole new debate about sale v. lease, and the future of TPMs, etc.  Moreover, the emergence of mega e-commerce entrepreneurs such as Amazon and the eBay phenomenon mean that the sustainability of price discrimination models is in serious doubt anyway. Finally, if students and other consumers in developing countries cannot get their needs for English language products legally satisfied at reasonable prices, they may resort to recourse to readily available online illegal sources and their governments may turn a blind eye except for token efforts at enforcement. That is simply a realistic observation. Don’t shoot the messenger.

The debate about domestic and international exhaustion has been going on for over a century. It is far from exhausted. But yesterday’s decision is a great victory for free traders and those who believe in the majesty and the wisdom of the common law (Lord Coke, no less who was referred to at length) and the role of the judiciary.

In closing, here’s the passage referring to Lord Coke (1552 to 1634) – which legal scholars will no doubt find to be delightful:

The “first sale” doctrine is a common-law doctrine with an impeccable historic pedigree. In the early 17th centuryLord Coke explained the common law’s refusal to permitrestraints on the alienation of chattels. Referring to Littleton, who wrote in the 15th century, Gray, Two Contributions to Coke Studies, 72 U. Chi. L. Rev. 1127, 1135 (2005), Lord Coke wrote:

“[If] a man be possessed of . . . a horse, or of any otherchattell . . . and give or sell his whole interest . . .therein upon condition that the Donee or Vendee shallnot alien[ate] the same, the [condition] is voi[d], because his whole interest . . . is out of him, so as he hath no possibilit[y] of a Reverter, and it is against Trade and Traffi[c], and bargaining and contracting betwee[n] man and man: and it is within the reason ofour Author that it should ouster him of all power given to him.” 1 E. Coke, Institutes of the Laws of England §360, p. 223 (1628).

A law that permits a copyright holder to control the resale or other disposition of a chattel once sold is similarly “against Trade and Traffi[c], and bargaining and contracting.” Ibid.

With these last few words, Coke emphasizes the importance of leaving buyers of goods free to compete with each other when reselling or otherwise disposing of those goods. American law too has generally thought that competition, including freedom to resell, can work to the advantage of the consumer. See, e.g., Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U. S. 877, 886 (2007) (restraints with “manifestly anticompetitive effects” are per se illegal; others are subject to the rule of reason (internal quotation marks omitted)); 1 P. Areeda & H.Hovenkamp, Antitrust Law ¶100, p. 4 (3d ed. 2006) (“[T]he principal objective of antitrust policy is to maximize consumer welfare by encouraging firms to behave competitively”).

The “first sale” doctrine also frees courts from the administrative burden of trying to enforce restrictions upon difficult-to-trace, readily movable goods. And it avoids the selective enforcement inherent in any such effort. Thus, it is not surprising that for at least a century the “first sale”doctrine has played an important role in American copyright law. See Bobbs-Merrill Co. v. Straus, 210 U. S. 339 (1908); Copyright Act of 1909, §41, 35 Stat. 1084. See also Copyright Law Revision, Further Discussions and Comments on Preliminary Draft for Revised U. S. Copyright Law, 88th Cong., 2d Sess., pt. 4, p. 212 (Comm. Print 1964) (Irwin Karp of Authors’ League of America expressing concern for “the very basic concept of copyright law that, once you’ve sold a copy legally, you can’t restrict itsresale”).

The common-law doctrine makes no geographical distinctions; nor can we find any in Bobbs-Merrill (where this Court first applied the “first sale” doctrine) or in§109(a)’s predecessor provision, which Congress enacted a year later. See supra, at 12. Rather, as the Solicitor General acknowledges, “a straightforward application of Bobbs-Merrill” would not preclude the “first sale” defense from applying to authorized copies made overseas. Brief for United States 27. And we can find no language, context, purpose, or history that would rebut a “straightforward application” of that doctrine here.

Yes – remembrances of the basic great principles of the common law do go better with Lord Coke.

HPK

Rev. March 20, 21 2013

Happy Birtday to ipwars.com and Warwick Rothnie

Happy 6th Birthday to Warwick Rothnie's blog. He is the extraordinary practitioner/scholar in Oz, who wrote what I believe is the first major monograph on parallel imports, and a brilliant book it was - and still is! It was invaluable to me in the Kraft case in the Supreme Court of Canada.

Come up soon from down under and pay us a visit!

Best,

Howard

ACTA, “Ex Officio” Enforcement, and Parallel Imports

In the latest ACTA leaked text, it’s disappointing to see that Canada is endorsing the following proposal on “ex officio” border enforcement, This refers to the giving of power to border officials to detain suspect goods on their own initiative on the basis of suspected IP infringement, without the need of a prior court order.

Here’s the text that Canada supports (see draft Article 2.7):

[Aus/Can/Sing: 1. Each Party shall provide that its customs authorities may act upon their own initiative, to suspend the release of or detain suspected counterfeit trademark goods or suspected pirated copyright goods with respect to imported goods including suspected counterfeit trademark goods or suspected pirated copyright goods admitted to, withdrawn from, or located in free trade zones. Each Party may provide its customs authorities the same authority as the foregoing provision of this Article in respect of exported and in-transit goods that are suspected counterfeit trademark goods or suspected pirated copyright goods.]

This is very unwise for many reasons:

• A judgment call about whether a particular product is “legal” or not is very often far from clear. For example, running shoes or handbags may be made “illegally” on the same assembly lines as the “real” product “after hours” and be identical in all physical respects to the “real” product. How is the border official supposed to make the determination as to whether the goods are “legal” or not?

• In the case of parallel imports (which by definition are perfectly legitimate and neither fake nor counterfeit), the factual and legal issues are extremely complex. The US Supreme Court is about to hear a case about whether perfectly legitimate Omega watches with a small copyrighted logo engraved on the back can be imported into the US by Costco. Some of the smartest lawyers and judges in the USA are bitterly divided over how this case should turn out. In Canada, we had the Kraft case involving Toblerone chocolate bars, which resulted in a victory for the parallel importer and a complex judgment from a very divided Supreme Court of Canada (I was counsel for the Retail Council of Canada, whose intervener’s arguments prevailed in the result). There was, of course, immediate speculation about how to get around the judgment but the subsequent court cases of which I am aware have settled or, in the case in which I was involved, fizzled.

• If the best lawyers and judges have to struggle intellectually about whether perfectly legitimate parallel import goods can be legally imported, are we ready to allow border guards with no legal education, and with no prior judicial oversight to make this initial determination and potentially tie up millions of dollars worth of merchandise for great lengths of time, forcing the importer to go to court to get the goods released?

• Border officials will inevitably be “educated” and provided with information about suspect shipments by those who may have a vested interest in keeping out parallel imports and may even have an interest in causing serious inconvenience to a legitimate competitor.

• The recent wrongful seizure of generic aids medicine in the Netherlands was vivid proof that empowering border officials to make difficult IP decisions can lead to serious and even potentially fatal consequences.

• Somebody should pay for the economic losses resulting from wrongful seizures. Who will that be?

• What remedies will there be for abuse or misuse of the “ex officio” system by competitors?

• What if the result of a wrongful seizure of medicine results in harm to health and safety?

• The empowering of “ex officio” action is simply not necessary in Canada. Justice Roger Hughes of the Canadian Federal Court (who had decades of successful experience in IP enforcement before his elevation to the bench) eloquently made this point at the 2008 Fordham Conference. He said that those seeking such a change should “stop whining” and just “roll up their sleeves” in order to use the current system, . The current system of obtaining a court order works perfectly well, he said, if only IP owners would do the necessary paper work. He regularly signs these orders when the proper documentation is presented.

• There is no reliable evidence that Canada has serious problems with the importation or transshipment of counterfeit or pirated goods. Those who claim to have “evidence” of such problems are often those who are opposed to the pro-competitive effect of perfectly legitimate parallel imports.

• As the late Sir Hugh Laddie and others have repeatedly pointed out, one of the most convenient places in the world to easily buy cheap counterfeit goods is the streets of New York. There is no such flagrant activity on Canadian streets.

Nobody supports or defends fake counterfeit or pirated goods. By definition, parallel imports are neither of these - though they are and probably forever will be viewed as controversial by those who oppose real free trade and vigorous competition.

However, one does not need to set up a system that will predictably catch lots of dolphins in the net and do little to stop shark activity, of which there is much talk and little evidence in any case.

Once again, we need to question why Canada would push for a policy that will very likely harm Canadians by fixing something that isn’t broken and has long worked perfectly well.

HK

Oz to Allow Parallel Importation of Books?

The Australian Government Productivity Commission has released an important report calling for lifting restrictions on parallel imports of books. Parallel imports are legitimate products that are imported from a source other than an "exclusive" national distributor.

Here's the media release and here's the Report.

The Commission found that:

By removing the restrictions, local booksellers would have the option of accessing better value books from overseas. Local publishers would have a strong incentive to make their prices more competitive and to look for greater efficiencies in their operations, the report said.

Some books have important cultural value, but the Commission found that the support to Australian authors provided by the restrictions is poorly targeted. 'One of the Commission's concerns is that consumers pay higher prices for books, regardless of their cultural significance' the Commission's Deputy Chairman, Mike Woods, said. 'A second concern is that these costs to consumers generate greater benefits for overseas authors and publishers than they do for our local writers. In effect, Australian consumers are subsidising foreign book producers.'

Any of this sound familiar? Canada has its own very complex protective sui generis regime to prevent the normal rule of "exhaustion" and to exclude parallel imports of books where there is an "exclusive" Canadian distributor. This is found in s. 27.1 of the Copyright Act and the Book Importation Regulations. This regime affects the price, availablity and access to both new and used books by Canadians.

Clearly, since this regime was put in place more than a decade ago, a lot has changed - including the advent of easy cross border e-commerce for printed books. At times, especially under certain currency conditions, there has been much debate about whether Canadians pay too much for books.

I must say that I have no strong views on this subject at the present time. Books are clearly different things than chocolate bars. I recognize that there have been strong cultural augments in the past for restrictions on the parallel importation of books into Canada.

Whether Canada's regime has accomplished its purpose and whether it works well now or should be adjusted or repealed are questions well worth pursuing by one or more of Industry Canada, Canadian Heritage and the Competition Bureau.

(HT to Jamie Love. Keep the tweets coming!)

HK

L’Oréal and parallel imports

Anyone who seriously does not think that attempts will not be made to use ACTA to get at parallel imports should look at the recent UK decision involving L'Oreal and eBay, which is almost 500 paragraphs in length and in the end refers several questions to the ECJ. The case concerns both counterfeits and parallel imports. While the judgment confirms that "a trade mark owner cannot request border control measures in respect of parallel imports" in the EU, it does show that major trade-mark owners regard both parallel imports and counterfeits as illegal and will what they can to stop both. It would be natural for the EU to "policy launder" though ACTA a change in its own law. Policy laundering is arranging for policy that is too controversial to legislate domestically being adopted in a treaty or agreement that "must" be implemented domestically.

Here's the decision from Justice Arnold of the UK High Court and some preliminary commentary from my friends at the IP Kat and IPWars.

HK

More on Euro-Excellence v. Kraft

I’ve just done a short talk on the Supreme Court of Canada’s important Kraft decision (in which I was involved) for a LSUC CLE programme on February 28, 2008 in Toronto. Here’s my brief paper.

Here’s a bit of the bottom line in that paper.

The doors have now been opened to new issues such as copyright abuse or misuse, or the argument that copyright law cannot be used to limit free trade in articles not protected by copyright. Other arguments are also open. Current and future potential plaintiffs contemplating the use of copyright law to bar parallel imports of consumer products not protected by copyright may wish to be careful about what they wish for.

HK

Kraft Redux

Richard Gold has an excellent op-ed in today's Globe and Mail, unfortunately buried behind a pay wall.

Kraft is suing Euro Excellence - again. Here's part of what Richard said:

Kraft is trying to get around the Supreme Court's decision through a technical legal change in the relationship between Kraft's parent company in Europe and itself. The only reason for this change - from an exclusive licence to an outright sale of the Canadian rights in the logo - was to sue Euro-Excellence. What is particularly offensive is that the Federal Court of Appeal indicated only a few years ago that this sort of manoeuvre could well violate Canada's competition laws. When the only reason behind the transfer of copyright is to prevent
competition from other importers, the transfer is suspect.

Nonetheless, Kraft did exactly this.

While Euro-Excellence could fight the case and, given the law, win, it is unfair to make this company pay all the expenses of a second long court battle to protect Canadian consumers. And make no mistake: It is Canadian consumers who lose when international companies such as Kraft prevent the importation of perfectly legitimate, fully paid products available on the international market. Free trade was designed to bring more competition and better value to consumers. Kraft's action seeks to prevent this.

(emphasis added)

Needless to say, I agree. I successfully made very similar arguments earlier this year in Kraft #1 at the Supreme Court. Kraft, apparently, is determined to attempt to use the Copyright Act to subvert free trade with a result that would resound throughout the Canadian economy and affect countless products to which the act was never meant to apply. Seven out of nine justices clearly had no sympathy for Kraft's position. But Kraft is oblivious.

When a company is as big and rich as Kraft, it seems that it can follow the old maxim: "if at first you don't succeed, try try again."

Let's see what the Courts have to say about this the second time around.

HK