The Canadian Wine Market:

From State Monopoly and Trade Barriers to IP Regimes September 16, 2016

Ekaterina Tsimberis Partner

Barrister and Solicitor / Trademark Agent

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Canadian Market in a Glimpse

• Canada is a net importer of wine

• In 2012, approximately 2/3 of wine consumed, in value, was

imported.

• Imports value of $2.3 billion

• Ontario’s LCBO: One of world’s single largest purchasers

and retailers of alcoholic beverages

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A Fragmented Market

Federal Legislations Provincial Legislations

- Food standards,

Chemical Content

Requirements

- Consumer Packaging

and Labelling

- Excise and Customs

Tariffs

- Intellectual Property

- Distribution &

Retailing

- Production

- Applicable Permits

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Wine Monopoly in Canada

Wine

Producer

Wine

Producer

Government Owned

Retailers

(e.g.: SAQ; LCBO)

Restaurant

Consumer

Bar

Agent

Governmental Agency (eg: Régie des Alcools, des courses et des jeux;

Alcohol and Gaming Commission of Ontario)

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Alberta – the exception

Independent

Retailer

Independent

Retailer

Warehouse

(Connect Logistic)

Wine

Producer

Agent

Alberta Gaming and Liquor Board

Independent

Retailer

Independent

Retailer

Restaurant

Bar

Restaurant

Bar

Consumer

Independent

Retailer

Independent

Retailer

Independent

Retailer

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Impact of the Monopoly

Veuve Cliquot Ponsardin

France (Nicolas): 66.48$

Ontario (LCBO): 79.78$

Quebec (SAQ): 79.62$

↑26,5%

Cost Is Generally Higher in Canada

Marqués de Cáceres, Gran

Reserva 2008 (Rioja)

France (Vinissimus): $31.12

Ontario (LCBO): $37.22

Quebec (SAQ): $39.38

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Impact of the Monopoly

Product Diversity is Diminished

Exception: In Alberta where product offering is more diverse and

where smaller quantities of a product sold/tolerated

Product Availability Differs between each province

• Selection of products depend on the provincial retailers’ standards and

choices.

• Private Import is still marginal and more expensive

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Trade Barriers

Certification

Marks: eg: Organic;

VQA, Marque

Quebec

Labelling: Grape

Varietals, Name,

Year

Bottle: Volume;

Bottling; in Bulk

Geographical

Indications

Non IP related IP related

Content: Chemicals,

% of Alcohol, Sulfites Trademarks :

name, logos

Shape of the

Bottle

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Shape Of The Bottle

Choya plum wine Cognac Louis XIII

• Trademarks

• Industrial Designs

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Alcohol marketing and Advertising Overview

• Regulated at the provincial level.

• Provincial agencies (e.g. Ontario’s Alcohol and Gaming Commission) are invested with regulatory powers.

• Advertising intended for broadcast must also meet federal broadcast regulations (CRTC).

• Advertising Standards Canada (ASC) will review ads for compliance with CRTC, Ontario and BC requirements. • Not a legal requirement, but often practical to do so.

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Provincial Regulation Advertising

• Most jurisdictions: ads may

not imply that alcohol

consumption results in

certain consequences, such

as

• social success,

• athletic skill or

• enjoyment of an activity.

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Provincial Regulation Advertising

• Most jurisdictions: prohibit ads

from depicting situations

involving alcohol and

• Minors

• Vehicles, or

• Illegal activity.

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Provincial Regulation Marketing

• All Provinces:

• minimum pricing requirements.

• restrictions around distributing alcohol samples and conducting tastings.

• Most provinces:

• discounts or distribution of free liquor are restricted

• promotion and event sponsorship involving of a particular brand of alcohol is allowed, with restrictions

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Federal Regulations Broadcasting

Code for broadcast advertising of alcoholic beverages (1996)

• Objective: ensure that “alcoholic beverage advertising

does not contribute to the negative health and societal

effects relating to excessive or inappropriate alcohol

consumption.”

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Federal Regulations Broadcasting

• Forbidden types of content in commercial alcohol advertisements for broadcast in Canada.

• Endorsement by “role model”

for minors

• Influence non-drinkers to purchase alcohol

• Product as a status symbol

• Showing alcohol consumption

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General legislation Advertising/competition

• Cornerstone of Canadian advertising law Competition Act

• Targets false and misleading representations and deceptive marketing practices

• Criminal and civil recourses

• Provincial: Consumer protection legislation

• Advertising Standards Canada: • Non-profit national industry association

• Canadian Code of Advertising Standards

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Canadian Intellectual Property Regime

• Protection Regimes under the Canadian Trade-marks Act

• Trade-marks

• Unfair competition

• Geographical Indications

• Certification marks

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Trademarks – Clearance scenario 1

Words/Designs: registered vs. unregistered

Goodwill in Get-up

Casella Wines PTY Limited v.

Constellation Brands Canada

(T-1594-13)

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Trademarks – Clearance scenario 2

• A distinguishing guise may also be protected: e.g.: • shape of goods or their containers,

• color,

• way of wrapping or packaging goods that shows they have

been made by a specific individual or firm

TMA449,975

The distinguishing guise

comprises the combination of

the mode of packaging the ware

in a container having a shape

substantially as shown and

having a black matte colour

applied to substantially the

whole of the visible exterior

surface of the container. The

colour black matte is claimed as

a feature of the distinguishing

guise.

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Certification Marks

• A mark that is used for the purpose of distinguishing goods or services that are of a

defined standard:

• character or quality,

• working conditions,

• area within which the goods have been produced

• 23(3) The owner of a registered certification mark may prevent its use by unlicensed

persons or in association with any goods or services in respect of which the mark is

registered but to which the licence does not extend.

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Geographical Indications “CANADIAN CHAMPAGNE”

• 1994: Implementation of the GI protection regime in TMA.

• Exceptions made for certain “generic” terms (e.g.: Champagne,

Bourgogne) and for when GI was used in good faith since before 1994

• 2003: Signature of the Agreement between Canada and the

European Community on trade in wine and spirit drinks, which

provides a “phasing out” of some generic terms

• 2004: Bordeaux, Medoc, Chianti, Malaga (…)

• 2009: Bourgogne, Burgundy, Sauterne (…)

• 2014: Champagne, Chablis, Porto (…)

• Dec. 2015: Champagne becomes a registered GI

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Geographical Indications Scope of protection

• Prohibition to use/adopt protected GIs (or their translation):

• in association with wine

• that is not originating in the designated territory.

• Prohibition to register a trademark consisting of a protected

GI if the registration is directed at wine not originating in the

designated territory.

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Geographical Indications Example of Canadian protected GI

Example: Bordeaux

• Registered September 11, 2009 (no. 1,431,142)

• Products: Wine

• Protection: Wine originating from specified communes of France

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Geographical Indications Example of French Cahier des charges: Bordeaux

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Unfair Competition

7. No person shall

(c) pass off other goods or services as and for those ordered or requested; or

(d) make use, in association with goods or services, of any description that is

false in a material respect and likely to mislead the public as to

– (i) the character, quality, quantity or composition,

– (ii) the geographical origin, or

– (iii) the mode of the manufacture, production or performance of the

goods or services.

The test for passing off:

• Goodwill

• Misrepresentation

• Damages

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Unfair Competition INAO v Mosti Mondiale (2001)

• Mosti Mondiale:

Supplier of grape

juice and

winemaking kits

referring to various

protected GI (e.g.:

Saint-Emilion,

Bourgogne, etc.)

• Superior Court of

Quebec issued an

order prohibiting

Mosti from using

these GIs

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ON AN INTERNATIONAL LEVEL:

Comprehensive Economic and Trade Agreement

• Trade Agreement between Canada and EU

• Objective to progressively eliminate tariffs on wine and spirits

• Agreement provides a review mechanism 5 years following entry into

force (Annex 30-C).

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Thank You

Ekaterina Tsimberis

ektsimberis@smart-biggar.ca