Kraft loses copyright case

Both companies distribute Toblerone and Cote d'Or chocolate in Canada, made by Kraft Belgium.

Kraft Canada had objected to Euro-Excellence - which trades on the so-called grey market - using the picture of the "hidden" bear on Toblerone bar packaging, and an elephant on the wrapper of Cote d'Or bars.

The decision is likely to worry large food manufacturers, who are trying to stamp out grey market trading, where products are legally imported and then sold by a company other than the legal distributor.

Kraft objected to Euro-Excellence using copyright images on the chocolate labels, in particular the immediately recognisable animal pictures, and wants the smaller company to use alternative wrapping, the Toronto Star said.

Euro-Excellence reportedly argued in the Supreme Court that Kraft Canada is abusing copyright laws, saying that a win for Kraft would result in a legal precedent that hurts smaller companies.

Kraft had already successfully sued Euro-Excellence, which was ordered to pay CAD$300,000, (€208,000) by a lower court judge earlier this year.

According to Canada's Financial Post, Euro-Excellence continues to sell the chocolate, and has merely covered the pictures of the animals with stickers.

The grey market is a particularly controversial area of the food market because, although legal, it is generally unpopular with food companies, who claim that this kind of trading affects their profits and damages consumer choice.

Other cases over the issue this year include the EU reporting India to the World Trade Organisation, claiming that India's high spirit tax is causing a lot of grey-market trading in the country.

Grey markets are also a problem in Asia, where cosmetics are often traded for low prices in this way.