Electronic Commerce and Internet Law in Canada

Electronic Commerce and Internet Law in Canada Agenda Module 1: Canada’s Anti-Spam Legislation Module 2: Recent Changes to the Copyright Act Module...
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Electronic Commerce and Internet Law in Canada

Agenda

Module 1: Canada’s Anti-Spam Legislation Module 2: Recent Changes to the Copyright Act Module 3: Issues in Online Contracting Module 4: Protecting Trademarks Online

Polling Question #1 What statement most closely reflects you attitude to “spam”?

a)

It has proliferated to an extent that legal measures are necessary to limit it

b)

It is an annoyance but legal measures to control it are not necessary unless a request to opt out of receipt is ignored

c)

It is a form of commercial speech that should be accepted as it is in other media

Module 1: Canada’s Anti-Spam Legislation (CASL) 1.

Comprehensive covers commercial spam, phishing, harvesting, installation of code

2.

Prohibition without consent commercial electronic messages (“CEMs”) including text, sound, voice, or image messages, whether or not carried out for profit

3.

Jurisdiction applies to any message sent from or accessed by a computer device in Canada

Module 1: Implied Consent Positive “opt-in” consent required Recipient consent required to receive CEMs. Consent implied only if: • Existing business or non-business relationship (within past two years) • Recipient conspicuously publishes or discloses electronic address, with no statement indicating wish for no receipt of CEM • Prescribed by regulations • Transition period for existing relationships (3 years from date CASL comes into force, unless consent specifically withdrawn)

Module 1: Exemptions 1.

CEMs sent by an individual to an individual with whom they have a personal or family relationship, as defined by regulations

2.

CEMs sent to a person engaged in a commercial activity and consisting solely of an inquiry related to that activity

3.

CEMs of a class or sent in circumstances, specified in the regulations

Module 1: Mandatory CEM Content 1.

Prescribed information that identifies sender

2.

Information enabling recipient to readily contact the sender

3.

Unsubscribe mechanism

Module 1: CRTC Regulations Information that must be included in CEMs: • Name, mailing address, and either telephone number, email address, or web address of sender • If not practicable to include above information, the information must be accessible via link to a web page • Unsubscribe mechanism must be able to be readily performed • Express consent may be obtained orally or in writing and include statement that consent may be withdrawn • Separate consent required to install cookies, etc.

Module 1: Industry Canada Regulations Regulations not yet final: 2nd Draft January 4, 2013 Exemptions: • “Family Relationship” i. Individuals connected by a blood relationship, marriage, common-law partnership, and adoption • “Personal Relationship” i. Sender and recipient are individuals who have had direct, voluntary, two-way communications. Evidence includes shared interests, frequent communications, meeting in person (although could be only virtual); option to opt-out

Module 1: Industry Canada Regulations II “Excluded CEMs”: • Those sent by employee, representative, contractor, etc. of an organization to counterparts of the organization or of another organization if the organizations have a business relationship and message concerns affairs of the organizations • Those sent in response to a request, inquiry, complaint • Those sent by foreign persons or computer systems that relate to a product, service, organization located or provided outside Canada if the person sending message could not reasonably know the message would be accessed using a computer system in Canada • Those sent due to legal obligations or enforcement of legal right (e.g. Notice of IP rights violation)

Module 1: Enforcement 1.

Administrative monetary penalties of up to $1 million per violation for an individual, up to $10 million per violation for a corporation

2.

Private right of action to persons affected by contraventions of legislation. Court may order compensation for damages or expenses, as well as up to $200 per contravention to a maximum of $1 million per day for sending an unsolicited CEM (Potential for class actions)

Module 1

Questions & Answers

Polling Question #2 Which of the following best describes the goal of Copyright Law?

a)

To protect the rights of creators and to ensure that they are able to control and profit from their works

b) To sufficiently reward creators for their efforts while at the same time allowing users to access and interact with works in a variety of ways

Module 2: Recent Changes to the Copyright Act Bill C-11 came into effect on November 7, 2012 Introduced long overdue changes: • Amendments were close in time with 5 major Supreme Court of Canada decisions which both confirmed and expanded recent case law that gives greater scope to users’ rights and places certain restrictions on the extent or scope of owners’ copyrights

Module 2: Major Changes to Copyright Legislation 1. 2.

3. 4.

5.

Users’ rights are expanded e.g. fair dealing, user-generated content, private acts Statutory damages adjusted to distinguish sharply between commercial and non-commercial infringement Rules around copyright in photographs are “normalized” New provisions regarding the liability of ISPs and Intermediaries for copyright infringement by their users/clients New provisions to safeguard technical protection measures and rights management information

Module 2: Expansion of Users’ Rights SOCAN v Bell Canada: • “Users’ rights are an essential part of furthering the public interest objectives of the Copyright Act”

Module 2: Expansion of Users’ Rights II Fair dealing exception now includes “education” and “parody and satire”: • Education i. Very broad term, coupled with recent very broad definition of “private study” by the Supreme Court of Canada ii. Unclear how this exception will fit with very precisely tailored exceptions for educational institutions iii. Introduces a high level of uncertainty in this sector • Parody and Satire i. U.S. “fair use” defence has recognized parody, but not satire

Module 2: Changes 1.

Scope of changes is vast

2.

Recent Supreme Court of Canada decisions also raise significant questions about how the provisions might be interpreted

3.

Potential for conflict and confusion as well as unintended consequences is significant

4.

The example of the exception for user-generated content will be used to illustrate some of the potential conflicts and unintended consequences

Module 2: User Generated Content Exception 1.

UGC exception incorporates right not just to use the works of others to create new works, but also the right to disseminate the new work

2.

SOCAN v Bell Canada “the dissemination of artistic works is central to developing a robustly cultured and intellectual public domain”

3.

Key is that the new work must be non-commercial (but the dissemination vehicle need not be)

Module 2: User Generated Content Exception II Key elements: • “User” must be an individual (disseminator may be a corporation) • Source work must be a work in which copyright exists • Source work must be published or available to the public • Source work must be attributed if “it is reasonable to do so in the circumstances” • New work must be one in which copyright subsists (not a mere or barely modified copy) • User-creator may use their work or authorize anyone in their household to do so

Module 2: User Generated Content Exception III User-generated Content Exception: A Trojan Horse? • Referred to as the “You-Tube” exception, but this is a misleading paradigm • Might be broad enough to capture the “mix tape”, anthologies or other compilations • Even government works not licensed under an open license might be turned into UGC? • Does an unauthorized translation distributed non-commercially over the Internet qualify for the exception?

Module 2: Non-Commercial What does non-commercial mean? • It is only the user’s use of the new work that must be non-commercial • Is drawing benefits from enhanced reputation or professional advancement non-commercial use? Exception only available where there is no “substantial adverse effect financial or otherwise” on the actual or potential exploitation of the source work: • What is a “substantial” adverse effect? • What is “or otherwise”? Does it include reputational harm?

Module 2: Fair Dealing Some UGC will also qualify for “fair dealing” exceptions Fair dealing exceptions do not have the same restrictions; for example: • Dealing can be for commercial purposes • Adverse impact is only one of the factors to consider in the analysis

Module 2: Fair Dealing II But UGC exception may also be broader than fair dealing in other respects: • It may not be fair dealing for a work to be disseminated online (nature of dealing with work is one of the factors for consideration) • But UGC explicitly permits online dissemination Will permission for online dissemination for UGC influence interpretation of fair dealing exception?

Module 2

Questions & Answers

Polling Question #3 Should a person who clicks “I agree” be bound to multi-page terms and conditions?

a)

Yes

b) No

Polling Question #4 Should a person be bound to terms and conditions accessible by hyperlink, even though they have not accessed the hyperlink and have not clicked “I agree”? a)

Yes

b) No

Module 3: Issues in Online Contracting Electronic Contracting: • Uniform Electronic Commerce Act (“UECA”) • Model for electronic commerce legislation throughout Canada i. Functional Equivalency ii. Consent to accept information in electronic form may sometimes be inferred iii. Electronic actions to form contracts (touching, clicking)

Module 3: Issues in Online Contracting 1.

Contract can be formed by interaction with electronic agent

2.

Natural person can rectify errors if opportunity not given at time of contract formation

3.

Common law rules of contract formation apply

Module 3: Acceptance of Offer 1.

Case law indicates person sending bears risk of receipt

2.

Confirmation of receipt may be mere acknowledgment

Module 3: Notice of Terms 1.

2.

3.

4.

Rudder v Microsoft Clicking “I agree” binds parties to multi-page agreement Kanitz v Rogers Cable Posting amendments to user agreement on web site acceptable Dell Computer v Union des consommateurs Mandatory arbitration clause accessed via hyperlink enforceable Century 21 Canada v Rogers Communications Notice of terms must be clear, but not necessary to affirmatively acknowledge (“browsewrap agreements”)

Module 3: Legal Requirements of Writing/Signatures 1.

Generally satisfied by electronic equivalents

2.

Some exceptions e.g. wills, documents that transfer land interests, negotiable instruments

3.

No reliability test for electronic signatures up to jurisdiction to decide

Module 3: Mandatory Arbitration Clauses 1.

SCC generally enforceable, unless provincial/ territorial legislation stipulates otherwise

2.

Consumer legislation may vitiate

Module 3

Questions & Answers

Polling Question #5 Which of the following best represents your views on trademark protection online?

a)

Tools, recourses and strategies have sufficiently developed to make the problem manageable

b) Managing trademark rights in the online environment is an ever-changing minefield

Module 4: Protections of Trademarks Online Many issues affect trademark owners in the online environment, and the potential impact of the digital environment continues to grow: • Cross-border trademark protection/enforcement issues created by doing business online (e.g. Potential to infringe trademark rights in other countries) • Internet domain name/trademark issues continue to arise in existing domains • Launch of new generic TLDs will create many new conflicts and challenges for businesses who seek to protect their online trademark presence

Module 4: Protections of Trademarks Online II Many issues affect trademark owners in the online environment, and the potential impact of the digital environment continues to grow (Continued): • Expansion of trademark issues into new social networking domains (Facebook, MySpace, Twitter, Second Life) • New trademark issues with respect to the use of trademarks by internet search engines and in keyword advertising programs • Emergence of social-networking backlash related to trademark enforcement actions

Module 4: New Generic Top Level Domains 1.

Currently there are about 2 dozen top level domains (e.g., .com, .net, .biz, .xxx, etc.)

2.

Much competition for desired trademarks in key top level domains

3.

ICANN’s new process to create a substantial number of new sponsored top level domains formalized in 2011

4.

Application period for new sponsored gTLDs opened early in 2012

Module 4: New Generic Top Level Domains II 1.

New TLD applications were published in spring of 2012

2.

1,930 applications received from 60 countries application fee was $185,000

3.

18 applications have since been withdrawn

4.

Release of new domain names will begin in mid-2013 and will be staggered, likely beginning with non-English language domain names, followed by uncontroversial English language ones

Module 4: Applications Applications are either: • “Community-based” (84) i. e.g. A generic or descriptive term which the applicant undertakes to manage on behalf of eligible community members (ex: .wine) • “Standard” (1,846) i. Involves registration of one’s trademark as a gTLD, and controlling all domain name registrations within that domain

Module 4: Applications II Process of approval incorporates opportunities for objections to applications: • e.g. Can object to a particular organization controlling registrations in a domain identified by a generic or descriptive word • Can object to a word that is part of a community-based application but that is also a registered trademark

Review process must provide for resolution of conflicts, for example, between two owners of identical trademarks who have applied for same gTLD (751 instances of this have occurred: e.g. 11 applications for .INC; 7 for .HOTEL)

Module 4: Applications III Processes are in place for resolving issues of multiple applications: • Last resort is an auction between competitors (which will dramatically increase the cost of acquiring the domain) Legal Rights Objection process is available prior to the approval of a new gTLD by ICANN: • Trademark holders can object that a proposed gTLD takes unfair advantage of the distinctive character or reputation of a registered trademark, impairs the distinctive character or creates a likelihood of confusion • After gTLDs are approved, other dispute resolution mechanisms are available

Module 4: Trademark Clearinghouse Opened on March 26, 2013: • Owners of registered TMs can have them included in the TM Clearinghouse, a centralized database (fee-based service) • A mark may be included for a fee of around $150 per year; fee does not include actual sunrise registration

Module 4: Advantages of Trademark Clearinghouse Sunrise periods: • All new gTLD registries must offer a sunrise period for TM owners to register their TMs as domain names • Registration must be of exact TM • Sunrise periods are 30 days before general registration is opened up; as new gTLDs come online, it will be necessary to keep track of all relevant sunrise periods

Module 4: Advantages of Trademark Clearinghouse II Trademark claims notification period: • 60 days after sunrise period • Trademark registrants are notified if they attempt to register a possibly infringing domain name • TM owners are notified if the registration of a possibly infringing domain name is made Both sunrise and claims notification processes are of limited benefit since both depend on exact match (although this may change)

Module 4: URS Procedure Uniform Rapid Suspension Procedure (URS): • Low cost rapid recourse available in clear cut cases of bad faith registration of domain names • Meant to be faster and cheaper than UDRP • Only remedy is suspension of domain name for period of its registration (not transfer)

Module 4: PDDR Procedure & UDR Process Post-Delegation Dispute Resolution Procedure (PDDRP): • Process for complaints against administration of new domains where there is bad faith registration of multiple infringing domain names Uniform Dispute Resolution Process (UDRP): • Existing process for resolution of disputes regarding bad faith registration of trademarks

Module 4: Expansion Expansion has been criticized on a number of grounds: • Will increase the financial burden on trademark owners to protect their trademarks and enforce their trademark rights in an increasingly vast number of domains • Will dramatically increase risk of cybersquatting and costs of addressing this behaviour • Will generate consumer confusion as they try to find the products or services they seek across multiple new domains

Module 4

Questions & Answers

Thank You! For more information, please contact: Michael Deturbide [email protected]

CCH Customer Service [email protected]

Teresa Scassa [email protected]