From Importation to Digital Exhaustion : A Canadian Copyright Perspective

The doctrine of exhaustion is complex. The issue remains largely overlooked in Canada, and policy makers have until now failed to assess the impact of intellectual property on importation and its repercussions on the Canadian market and consumers.This article focuses on how the issue of parallel importation questions the reach of intellectual property rights in a free trade context and is consubstantial to the broader theme of distribution. Exhaustion shows how the classic rule of property (civil or common law property) supersedes intellectual property once a tangible object is put on the market for distribution. In the context of parallel importation, exhaustion mechanisms are essentially conflict of law rules between types of property and not infringement cases stricto sensu. The object of contention is not the production of a counterfeited good by imitation or reproduction, but rather a dispute over the authentic product, its circulation, and its market. Regional price discrimination and international demand and control over brand reputation are the principal drivers of strategic restrictions over parallel importation. The first part of this article discusses the current statutory provisions dealing with the distribution of goods in which copyright resides. A particular attention will be given to the inclusion in 2012 under Section 3 of the Canadian Copyright Act of a “first sale” right. The second part will examine the state of copyright law with respect to the importation provision in the aftermath of the 2007 Supreme Court decision in Kraft Canada v. Euro-Excellence. Finally, the difficult question of the distribution of works by electronic transmission will be addressed, including the possibility of a digital exhaustion