Presentation Materials

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McCarthy Tétrault Advance™
Building Capabilities for Growth
What Every Business Needs to Know
About Technology Law
September 20, 2012
McCarthy Tétrault LLP / mccarthy.ca
2
Tech and Public Procurement
Catherine Samuel, David Crane, and
Constance Ladell
Unique Aspects of Telecom Deals
¬ Telecom networks are becoming increasingly
critical to business success
¬ Regulated industry
¬ Mix of custom and commodity services in the
marketplace
¬ Greater choice of providers
¬ Telecom-related technology and services are
quickly involving and changing
3
Potential Pitfalls
¬ Procuring or signing up for services on an ad-hoc basis with
new providers or for additional services with existing providers
in a manner that can inadvertently result in:
¬
¬
¬
¬
staggered terms
higher pricing
incompatibility
inefficiency
¬ Using telecom provider standard form contracts or not
sufficiently negotiating provider standard terms
¬ Not negotiating sufficient flexibility to address change (in
particular, changes to technology and customer business
requirements)
4
Trends
¬ Develop a telecom plan
¬ take into account the current state of available telecom
products and your needs at least five years down the line
¬ map the plan to anticipated business changes
¬ Contract for services on a consolidated basis (across the
entire corporate group) to create additional negotiating
leverage and obtain better pricing
¬ Use a competitive procurement process to select providers
¬ Select providers based on their ability to be a strategic partner
¬ Consider using a “qualifying bundle” approach for deals
involving both tariffed and forborne services
¬ Contracting on a master agreement basis
5
Contracting Best Practices
¬ Telecom contracts best practices:
¬ a clearly defined scope of services
¬ service-quality levels and associated failed performance
remedies to ensure performance standards
¬ specific flexibility mechanisms to allow for changes to
the deal, so that you can take advantage of technological
advances and react to changes in your business
¬ pricing protection provisions to provide cost certainty
and ensure pricing remains competitive
¬ appropriate exit mechanisms
6
Beware of Provider Standard Form
Contracts
¬ Some terms to watch for in provider contracts:
¬ Inappropriate residential consumer terms
¬ Deficient service descriptions and specifications
¬ Purchase/revenue and exclusivity commitments and related
termination charges
¬ Unenforceable or weak service levels
¬ Sole remedy clauses
¬ Unfavourable billing and payment terms
¬ Compliance with provider acceptable use policies
¬ Overly broad force majeure clauses
¬ Insufficient confidentiality and security requirements
¬ Limitation of liability clauses that are overly favourable to the
provider
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Tech Deals – Trends & Tips
¬ Dual Track Negotiations
¬ Continuity of Resources
¬ Knowledge Transfer
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Dual Track Negotations
¬ Create effective competitive tension to get better
commercial and legal terms
¬ Especially important when purchasing
sophisticated solutions/services
¬ Consider cost-time-benefit analysis in context of
specific deal - dual track can be quicker
¬ Focus on getting the best from the supplier (not
just the best price)
¬ Manage the process
¬ Multi-vendor environments: drafting tips
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Continuity of Resources
¬
¬
¬
¬
¬
Why this is important
A Team / B Team (C Team…)
Identify key people / period of commitment
Include a cooling off period
Put people responsible for managing the deal
post-signing on the deal team
¬ Applies to both suppliers and customers
¬ Incentives to keep resources / remedies
11
Knowledge Transfer
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¬
¬
Once deal is signed, everyone scatters
People rarely read the contract
Ensure project budget includes knowledge transfer
Don’t lose the benefit of negotiated terms
User guide / training:
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¬
¬
contract summary (plain language)
calendar of specific dates (buried) in the contract
change orders
unusual clauses
¬ Applies to all groups working with supplier or supporting
business unit – ongoing support
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Negotiated RFP
•
Flexibility and reduction in risk
•
Potential for increased value
•
Specify in bid documents that the intent is non-binding
submissions and subsequent negotiations
•
Legal requirements (e.g. duty of fairness) still apply
•
Proponent representations can still be relied upon
•
Unless bid security (i.e deposit) is required, NRFP is used
13
Collaboration
•
Inter-jurisdictional collaborations successful
•
Two types – collaboration in the procurement process (e.g.
GMS) and collaboration to ultimately co-operate gambling (e.g.
Canadian Poker Network)
•
Relationship is established through MoU with ancillary
agreements drafted for each instance of collaboration
•
Potential for enhanced RFX documents, evaluation, negotiation
•
External costs are shared
14
Trade Agreement Implications
•
Northwest Partnership Trade Agreement (formerly TILMA)
– Thresholds
– Exceptions
– Agreement on Internal Trade – which prevails?
– Impact of CITT decisions and other jurisprudence
15
Specifying Technology by Manufacturer
•
Can the technical requirements set out in an RFX document
specify manufacturer, brand or trade-mark?
•
Arises in procurements for technology which involves
integration or inter-operation with existing systems
•
Specific vs. generic description
•
AG vs. Enterasys Networks of Canada
•
Federal Court of Appeal held that specifying brand is
acceptable if the procuring entity can demonstrate it is required
to avoid an unacceptable operational risk
16
Outsourcing: Mock Negotiation
Paul Armitage and David Crane
Agenda
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1. Service descriptions
8. Fees and economic model
2. Systems requirements
9. Risk transfer
3. Warranties
10. Term, termination and
termination assistance
4. Acceptance testing and
milestones
5. Dependencies
6. Service levels and related
remedies
7. Market protections
11. Change management
12. Audit rights
13. Intellectual property
14. Subcontracting
15. Engagement management and
dispute resolution
Service descriptions
• Description of the scope of the services to be
provided by the service provider
• An RFP process can play in the development of
the service descriptions
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Service descriptions
CUSTOMER
•
Include as much detail as possible
•
Ensure that it is objectively clear what
services you will be receiving
•
Include inherent, necessary or
customary services
•
Don’t rely on the service provider to tell
you what you want
•
To the extent applicable, it is also
important to ensure that the services
include all resources used by the
service provider to provide the services
SERVICE PROVIDER
•
“Off the shelf” services, and
changes/improvements to them over
time
•
RFP response contains marketing
“puff”/is taken out of context/is refined
during contract negotiation
•
“Inherent, necessary or customary
services” – you need to know what
services need to be performed, and to
receive payment for them!
System requirements
• Setting out the system requirements or
specifications (technical, functional, physical,
design, environmental, operational, performance
or other relevant specifications or requirements)
• Includes technology currency requirements
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Service requirements
CUSTOMER
•
•
The specifications are like the
architectural drawings for a house they define exactly what you are buying
from the service provider
If the specifications are incomplete or
vague, you will not receive what you
believe you are paying for
•
It is a real challenge to create clear,
complete and unambiguous
specifications for an agreement
•
Need to involve subject matter experts
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SERVICE PROVIDER
•
Customer does not know its
requirements and/or continually
changes them – need flexibility
•
Specifications are defined through a
post-contract process
•
Customer must tell you the
specifications – it’s the customer’s
responsibility
Warranties
• Warranties can be used to address performance
and quality standards, compatibility, functionality
and potential intellectual property issues (e.g. IP
infringement)
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Warranties
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CUSTOMER
SERVICE PROVIDER
•
Include all service provider promises as
“warranties”
•
Not all your promises are meant to be
warranties - marketing “puff”
•
Warranty period should reset if a
warranty breach occurs and service or
deliverable needs to be “fixed”
•
•
Warranty is distinct from acceptance
test period and system support /
maintenance
Performance warranties may not be
appropriate where there are service
levels and system support /
maintenance obligations
•
Revenue recognition extended for
period of re-performance of services or
refund of fees
•
Need broad warranty disclaimer
Acceptance testing and milestones
•
Outsourcings typically involve project work (e.g. transition, IT
development and business process transformation)
•
Identify deliverables and have a process for acceptance of those
deliverables by customer
•
Testing processes:
• Used to determine whether deliverables conform to their
specifications and other requirements
•
Project plans and milestones:
• Timelines and milestones for project-related services (including
transition / transformation-related services)
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Acceptance testing and milestones
CUSTOMER
SERVICE PROVIDER
•
Tie acceptance to fees, title transfer,
milestone achievement and
commencement of warranty periods
•
Avoid deemed acceptance of
deliverables and “joint” acceptance
•
Ensure testing processes are broad and •
flexible and try to agree to them upfront
•
Include pre-testing requirements where
possible
•
Avoid mutual agreement to test plans
and processes
•
•
Have appropriate remedies for failure to
meet milestones, such as:
Post-acceptance issues are dealt with
as service levels, maintenance or
support
•
Project plans are operational and
change over time, and largely due to
customer changes or dependencies
•
Bonus for early delivery
•
•
•
payment tied to meeting milestone
reduction in amount payable as delay
persists
termination rights
•
Revenue recognition: contingent
compensation cannot be recognized
until the contingency has been met; use
other ways to provide comfort to
customer (references, payment terms,
“start dates” for services, etc.)
Acceptance and testing is a customer
responsibility – you need clear time
limits, acceptance events, deemed
acceptance and production use
acceptance
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Dependencies
•
Drawing the line between the customer’s responsibilities, the service
provider’s responsibilities, and the consequences (i.e., relief to the
service provider) should the customer not fulfill its obligations
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Dependencies
CUSTOMER
SERVICE PROVIDER
•
Avoid vague responsibility matrices,
•
customer obligations and “assumptions”
•
Preferable to use dependencies
approach:
•
Involves identifying the specific tasks
and obligations that you must complete
in order for the service provider to meet
its deadlines, but results in relief of
service provider obligations rather than
contractual breach by you if you fail to
complete those tasks / obligations on
time
•
Tie to milestones and milestone
deadline dates
•
Limit ability of service provider to add
dependencies after the fact (e.g. time
limit, reasonably foreseeable etc.)
Many crucial performance
dependencies are on the customer side
– you can’t move forward without
customer’s cooperation, permissions,
and provision of complete and accurate
information
•
Can’t/unfair to exhaustively enumerate
customer responsibilities and make
service provider responsible for all other
delays
•
Equitable relief for customer delays: $
and time; may not be “dollar for dollar”
or “day for day”
Service levels and related remedies
• Service levels define what the customer is buying in
terms of expected performance, availability and
quality
• Service levels may be:
• Performance metrics for services
• Technical requirements (e.g., the time for an operation to
be performed by a machine)
• Services requirements (e.g., the time for a MAC to be
done)
• Measurements of conditions (e.g., 99.9% uptime)
• Service levels can be SLOs (no credits) or SLAs
(credits for misses)
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Service levels and related remedies
CUSTOMER
SERVICE PROVIDER
•
Need objectively clear definitions and
calculation methodologies
•
•
Ensure sufficient flexibility in
measurements and remedies (e.g. right
to “focus” service level measurements
and weight by importance)
Service levels must be measurable /
processes must exist to measure
metrics
•
Reactive vs. proactive service levels
•
Stabilization periods
•
Avoid determining later based on initial
performance and phasing in
•
Customer dependencies/factories out of
your control
•
Ensure what is being measured is what
you care about
•
•
Include processes for reporting,
investigation and remediation of service
level failures, including incidents
Credits: limited at-risk amount, relief
from “double jeopardy”; earn-backs;
sole remedy
•
Typically, two types of remedies:
•
•
Financial (discount or credit)
Termination
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Market protections
•
Mechanisms to ensure continuous improvement and
competitiveness of services and pricing
•
Benchmarking
•
•
A process through which the deal that a customer receives is compared to
comparable deals by an independent third party to assess whether the deal
remains competitive
•
May cover more than pricing (e.g. service levels)
•
Service tower vs. service basis
Most favoured customer (MFC)
•
Service provider certifies that its price is as good as it gives any other customer
for comparable services
•
Often combined with a promise to adjust pricing if service provider offers a better
deal to another customer
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Market protections - benchmarking
CUSTOMER
•
Most appropriate and effective when
you are captive to a service provider
under a long term agreement
•
Practically benchmarking rights are
rarely exercised but use as leverage to
the negotiation of pricing changes
•
Use of normalization to ensure
sufficient comparables
•
Remedies if deal is determined not to
be market competitive: adjustment of
terms or termination right
SERVICE PROVIDER
•
To be useful, must be possible to
identify a sufficient number of
comparable deals for which the
benchmarker has data in order to
perform a comparison; need an “apples
to apples” comparison
•
Control over the benchmarker, the
benchmarking process, the scope of
what can be benchmarked
•
Third party cannot set pricing, you
instead need to receive the report and
provide a proposal in response
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Market protections – MFC
CUSTOMER
•
You want to know getting “best” or “fair”
deal
•
More important if sole source
situation
•
Obtain audit rights to aid compliance
•
Hard to enforce but creates leverage to
open a pricing discussion after signing
SERVICE PROVIDER
•
Adjustments must be able to go both
ways: i.e., in favor of customer or you
•
Remedies: prospective vs. retroactive
changes, should be compensated if
customer terminates
•
Too difficult to administer, in particular
for large or global organizations
•
Need flexibility in future deals / certainty
in past deals
•
Comparables: services / markets /
geography / size / importance of deals
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Fees and economic model
• Fees and the basis for their calculation are set out in the
agreement
• An economic model sets out how the financial aspects of
the agreement were determined, including margins and
what the customer expects to pay over the life of the
contract
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Fees and economic model
CUSTOMER
•
•
In large deals where significant
changes to the services and
deliverables will likely be required, an
economic model (whether included or
cross-referenced) can be used to
protect against the risk of later price
gouging by the service provider
An economic model can also address
the sharing of cost savings over the life
of a contract
SERVICE PROVIDER
•
Economic model/cost structure is highly
confidential and cannot be revealed to
customer; if customer does have
visibility into economic model, must
include all service provider costs plus
mark-up
•
Service / volume / exclusivity
commitments for pricing
•
CPI and currency and labor costs
pricing adjustments over time
•
Limits on customer’s ability to withhold
amounts
•
Interest on late payments
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Risk transfer
•
Indemnities and limitations of liability
• Need to consider who controls the risk and can best manage it
•
Limitation of liability
• Limitation of liability clauses may limit:
• Types of damages for which a party may be held liable
• Total dollar value of a party’s potential liability
• Types of claims for which a party may be held liable
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Risk transfer
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CUSTOMER
•
Unlimited liability (in terms of the dollar
limit and the limit on the types of
damages recoverable) may be
appropriate for: breaches of
confidentiality by either party, breaches
of privacy by the service provider, third
party claims for intellectual property
infringement relating to the service
provider’s IP, personal injury or property
damage, negligence and other forms of
misconduct, such as fraud, and wilful
cessation of services
•
Indirect (including economic / data loss)
vs. direct damages
•
Factors for determining cap:
•
•
•
•
•
cap high enough to cover losses
fixed vs. variable amount
per claims vs. in the aggregate
industry / market practice
one versus multiple
SERVICE PROVIDER
•
Does not want to assume responsibility
for inherent “riskiness” of customer
business
•
Must include negligence
•
Use hard caps without vague or broad
exclusions
•
Unlimited liability of customer for IP
breaches
•
Different categories of privacy / security
breach – “stretch caps”
•
Different types of IP can be infringed,
including without service provider
culpability (e.g. patents)
Term, termination and termination
assistance
•
•
Term and termination
•
Consider how the term should be structured (e.g. “contract year”)
•
Consider impact of transition / migration services on the term
•
Termination right triggers (material breach (with or without cure periods), specific
breaches, change of control, insolvency, change in law, convenience (with or
without a termination fee being payable) etc.)
Termination assistance
•
Termination assistance addresses need to be able to effectively and efficiently
transition away from the service provider’s service in the event of termination or
expiration of the agreement or in the event of a significant reduction in scope of
services
• Termination assistance can cover things such as the transfer of assets and
employees, IP licenses, procurement assistance and knowledge transfer
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Term and termination
CUSTOMER
Want to lock customer in as long as
possible to increase revenue and
protect the pricing model
Consider specifically defining breaches
that give rise to a termination right
•
Avoid “death by a thousand cuts” by
taking into account cumulative effect of
numerous non-material breaches
Need to terminate for customer bad
behaviour (e.g. breach of IP or
confidence) or insolvency
•
Termination fees must cover:
Want flexibility to exit deal
•
Termination for breach
•
•
•
SERVICE PROVIDER
•
•
•
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Avoid reciprocal termination rights –
vendor termination rights, if any, should
be very limited (e.g. not just late paying
an invoice)
Any termination fee should be clear and
calculable and based upon objective
reasoning – resist paying for service
provider foregone profits
•
capital cost recovery
•
profit recovery
•
time value of money
•
disincentive to terminate
services
Termination assistance
CUSTOMER
SERVICE PROVIDER
•
Want flexibility in duration and scope
•
Duration / cost
•
Helps avoid exorbitant pricing or refusal
to cooperate
•
No services if termination is caused by
Customer breach
•
Need to ensure customer has ability to
carry on its business post-contract
•
•
In certain circumstances should not
have to pay for termination assistance
No assistance or disclosure of
confidential information to service
provider’s competitors
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Change management
40
• “Expect the unexpected” – You should expect that
changes to the agreement will need to be made
• The details of the services are often in flux
• Customer business requirements will change over time
Change management
CUSTOMER
•
Service provider should not be entitled
to refuse to make a change (unless the
change is not technically or legally
possible)
SERVICE PROVIDER
•
Service provider ability to request
changes
•
All changes are mutually agreed – can’t
be forced to provide a service
•
Have rules or principles for pricing of
changes and an arbitration procedure to •
follow if price can’t be agreed
•
It may be appropriate for responsibility
for costs to vary depending on the
circumstances
•
Non-material changes should not result
in additional charges
•
Price should adjust both ways and be
determined on a net basis
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•
Payment for preparation of change
request responses
Payment for any changes having a cost
impact
Audit rights
• Type and frequency of audits and related record keeping
requirements
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Audit rights
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CUSTOMER
SERVICE PROVIDER
•
Internal controls
•
•
Regulatory requirements: e.g. OSFI
supervision – accompany customer
audit, access to data and copies of
records / reports
No audit of sensitive internal operations
(unless regulatory-driven)
•
Provide industry standard audit reports
instead (e.g. CSAE 3416 Type II)
•
Controls on frequency and scope of
audits
•
No access to your other customers’
information
•
Costs of audits
•
Security audits
•
Remediation
Intellectual property
• Ownership of work product
• What IP does the customer need and how will
it be used?
• To own or license
• Standard product offering vs. unique custom
development
• Need to maintain technology currency
• Strategic considerations
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Intellectual property
45
CUSTOMER
•
•
Consider: non-assertion covenant,
•
residual rights and limits on service
provider’s ability to exploit IP it develops •
for you but owns (e.g. no offering to
your competitors)
Consider what IP rights are needed to
carry on business post-contract
SERVICE PROVIDER
Keep “IP whole”
Restrictions on use of developments:
•
need to know early in planning
process so controls can be put in
place
•
limit to matters of competitive
importance to customer
•
affect pricing since you are
restricted from making money from
them
Subcontracting
• Use of third parties by the service provider to
perform its obligations under the agreement
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Subcontracting
47
CUSTOMER
•
•
•
Depending on the nature of the
services, consider setting out rules or
limitations with respect to service
provider’s ability to subcontract
May need to push down certain
obligations to subcontractors (e.g.
confidentiality, security, privacy, audit
rights and IP)
May want direct agreements with
subcontractors for certain matters (e.g.,
confidentiality, security, privacy, dispute
resolution)
SERVICE PROVIDER
•
Who is a “subcontractor”? Consider
“suppliers” or “material men”
•
What if customer says “no” to a
subcontractor? You are responsible to
provide the services!
•
Accept responsibility for your
subcontractors by providing warranty
and performance covenants, and
backstopping these through your
subcontracts
Engagement management and
dispute resolution
•
Engagement management:
•
Having a defined governance structure is essential to managing the outsourcing
relationship
• Points of contact
• Committees
• Regular planned meetings
•
•
Identification of key personnel and special requirements related to them
Dispute resolution:
•
Should have a defined dispute resolution process with specific timelines that
leverage the governance model
•
•
•
•
Internal escalation based on governance structure
Mediation
Arbitration
Courts
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Engagement management and
dispute resolution
CUSTOMER
•
SERVICE PROVIDER
Consider designating critical service
provider personnel as “key personnel”
and restricting the ability of the service
provider to remove them from providing
the services
•
Need flexibility in business with respect
to personnel
•
Need to address leaves of absence,
firings, quittings, etc.
•
Control conduct of service provider
personnel (e.g. compliance with
policies)
•
Customer is obligated to continue
paying for the services while a dispute
is ongoing
•
Vendor should be obligated to continue
providing the services while a dispute is
ongoing
•
Mutuality in governance and decisionmaking
•
Consider whether expedited dispute
resolution process is needed
•
Access to court system in certain
circumstances
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September 20, 2012
51
Relevant Brand and Advertising
Issues
Beth Macdonald, Lisa Martz, and
Vincent Yip
Online Marketing
Social Media has changed the way
businesses interact with customers
Remember:
The same laws and standards apply online as in
traditional media:
•
•
•
•
•
•
Competition Act
provincial consumer protection legislation
IP laws
privacy laws
Criminal Code
Industry specific standards and regulations
52
Typical Competition Act Issues for
Advertisers
1. Making a representation that is false or
misleading in a material respect
•
What is “material”? – is the statement likely to
influence the consumer's purchasing decision?
Heavy criminal and civil penalties
•
•
•
•
Corporations – fines from $100K - $10 million for
first offense
Indictable or summary offense
Cease and desist orders, etc.
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Typical Competition Act Issues for
Advertisers cont…
2. Representations re: performance, efficacy or
length of product life
•
•
advance adequate and proper testing required
applies also to comparative advertising context
3. Contest requirements
4. Testimonials
5. Pricing claims – restrictions on “ordinary price”
representations
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Online Contests
Criminal Code prohibits illegal lotteries
• Contests must have:
• No purchase necessary (consider the entry format
carefully)
• An element of skill (e.g. the skill testing question)
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Online Contests
Competition Act
1. Adequate and Fair Disclosure Requirements for
Promotional Contests
• Number and approximate value of prizes
• Any regional prize allocation
• Any known fact that materially affects the chances of
winning
• Also:
• Selection of participants or winners must be made
randomly or on the basis of skill
• Prize distribution must not be delayed
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2. Mini Rules Are Outlined
•
•
•
•
No purchase necessary/how to enter & eligibility
criteria
Odds of winning/material facts
Closing date/number & value of prizes
Where to read full rules (onsite or instore)
(note Quebec legislation imposes additional
obligations)
57
Online Contests - User Generated
Content
What is this?
• Send in your crazy photo
• Write a poem about our product
• Send us a video clip of your pet
Typical Issues:
1. Inappropriate content
• Monitor entries before they are posted and inform
entrants of this
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Typical UGC Issues cont…
2. IP Rights
• Copyright (Q: is the submitted material “original”
to the entrant and owned by the entrant?)
• Note: inability to assign CR online (requirement of
CR assignments to be “in writing”)
• So when online - ask for a non-exclusive license
and a moral rights waiver
• Trade-marks (Q: Are third party trade-marks
being displayed?)
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Typical UGC Issues cont…
3. Privacy Law – (Q: Do we have waivers from all
identifiable people in the submission?)
4. Competition Law – (Q: Are there any
misleading advertising or comparative
advertising issues?)
5. Minors (in BC = under 19, in some provinces
21) see Infants Act, CMA Code of Ethics
6. Potential Computer/Technical Problems
60
Check “Terms of Use” for Social Media
Sites
• Facebook & Twitter – commercial use is not
expressly prohibited
• YouTube – content cannot be used for
commercial purposes (without consent)
• Facebook – contest restrictions
– advertising guidelines
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Blogging & Testimonials
• Get a written release from the person
giving a testimonial
• Ensure testimonial was given by a person who
used the product
• Do not mislead customers - typical use,
experience or knowledge of the person giving
the testimonial, payment/consideration and any
relationship between the bloggers and your
company
• Disclosures should be on the blog
• Do not let a testimonial outlive its accuracy or
the consent given
62
Expansion of Generic Top-Level
Domain Names (TLD’s)
¬ currently 22 gTLD’s (.com, .biz, .org, .net etc.)
¬ .com and country code top-level domain names (eg.
‘.ca’, ‘.uk’) dominate
¬ registration of second level domain names under
these TLD’s now an established part of commerce
(eg. ‘mccarthy.ca’)
¬ since 2007, ICANN working towards program for release
of new generic Top-Level Domains
¬ opportunity to apply for unlimited new gTLD’s of
applicant’s choice opened January 2012
63
New gTLD Program
¬ open to anyone to apply
¬ US $185,000 application fee
¬ successful applicants will become registrar of new gTLD
¬ responsible for operating registry that controls
second-level domains under that gTLD
¬ applications evaluated according to criteria including
applicant’s:
¬ technical and operational capacity
¬ financial capability
¬ background
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New gTLD’s: First Round
¬ deadline for first round of applications for new
gTLD’s was May 30, 2012
¬ 1,930 applications received
¬ ‘Reveal Day’ re: new gTLD’s applied for was
June 13, 2012
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New gTLD’s Under Consideration
Include:
.movie
.game
.bank
.hotel
.music
.christmas
.nike
.heinz
.berlin
.news
.app
.blog
.cloud
.inc
.doctor
.chanel
.apple
.nyc
[complete list at: http://newgtlds.icann.org]
67
New gTLD’s cont.
¬ applications submitted include domains that represent
specific:
¬ industries
¬ products
¬ geographic areas
¬ brands
¬ applications include Internationalized Domain Names
(IDN’s)
¬ TLD’s that display in non-English characters
¬ onus on concerned parties (including trade-mark rights
holders) to file objections
68
Objection Process
Objections can be filed based on following grounds:
¬ String Confusion Objection – The applied-for gTLD string is
confusingly similar to an existing TLD or to another applied- for
gTLD string in the same round of applications.
¬ Legal Rights Objection – The applied-for gTLD string infringes the
existing legal rights of the objector.
¬ Limited Public Interest Objection – The applied-for gTLD string is
contrary to generally accepted legal norms of morality and public
order that are recognized under principles of international law.
¬ Community Objection – There is substantial opposition to the
gTLD application from a significant portion of the community to
which the gTLD string may be explicitly or implicitly targeted.
69
Objection Process cont.
¬ World Intellectual Property Organization (WIPO) is
administrator of legal rights objections process
¬ filing fee of approx. US$10,000 must be paid by each
party
¬ objections filed electronically and limited to 5000
words/20 pages
¬ 30 day period for applicant to respond
¬ adjudication panel applies tests similar to those used for
domain name disputes
70
Objection Process cont.
¬ period to file objections runs to January 2013
¬ no objections filed to date (but 6000 comments
received)
¬ once new gTLD’s up and running, will be
“Trademarks Clearinghouse” where details of rights
can be registered to prevent infringing domain name
registrations
¬ source of info for gTLD registrars to access for
“sunrise periods” and domain name disputes
71
Where Do Things Go From Here
¬ results of initial evaluation of applications
projected for June 2013
¬ launch of new gTLD’s expected earliest
beginning August 2013
¬ further rounds of applications planned for future
72
Things to Think About
¬ ICANN expectation is dramatic increase in no. of
domain names
¬ benefits for brand-owners
¬ get to control second-level domain name
registrations (to sell/issue or not)
¬ own tLD clearly indicates legitimate websites
¬ opportunity for brand control
¬ could change the way users navigate the internet
-- and how organizations present themselves online
73
Relevant Brand and Advertising Issues
¬ Recent Developments in Trade-mark Law
¬ 1) Protection for non-traditional trade-marks
¬ 2) New way of litigating trade-marks
¬ 3) What we can learn from Apple v. Samsung
74
¬ What can be protected by a trade-mark
registration?
¬ traditionally, only marks that can be visually
represented are registrable
¬ examples include:
Design Mark
Distinguishing Guise
Certification Mark
75
¬ Protection for Non-traditional Trade-marks Sound Marks
¬ as of March 28, 2012, the Canadian Intellectual
Property Office began accepting applications to
register sound marks
¬ Capitol Records was able to get a trade-mark
registration for a sound (TMA359,318), but it was
expunged for failure to renew
¬ MGM filed a trade-mark application in 1992 to
protect the lion’s roar
76
¬ Sound Marks
¬ there were numerous delays and MGM’s
application was rejected by the Registrar of
Trade-marks in 2010
¬ MGM appealed to the Federal Court
¬ rather than issuing a full decision, the Federal
Court issued a consent order, directing
advertisement of MGM’s application
¬ MGM’s application went unopposed, and it is now
a registered trade-mark
77
¬ Sound Marks
¬ the Trade-marks Office issued a practice notice
setting out the requirements of an application for
a sound mark:
¬ 1) state that the application is for the registration
of a sound mark;
¬ 2) contain a drawing that graphically represents
the sound;
¬ 3) contain a description of the sound; and
¬ 4) contain an electronic recording of the sound.
78
79
¬ Example
¬ MGM’s ROARING LION (TMA828,890)
714314-mc-son-tm-sound.mp3
¬ Description: The trade-mark is a sound mark
consisting of a lion roaring. An electronic
recording of the sound has been placed on file.
80
¬ Protection of Non-traditional Marks
¬ the Trade-marks Office has been looking into
protection of non-traditional trade-marks
¬ colour
¬ 3D images
¬ holograms
¬ motion
¬ some or all of these are registrable in other
jurisdictions
¬ covered by proposed amendments to Trademarks Regulations
81
¬ Concerns
¬ 1) The legal basis granting such application
remains unsettled
¬ no change to statutory language
¬ legislation governs if practice notice is inconsistent
¬ 2) It may conflict with longstanding precedent of
the Federal Court of Appeal in Playboy
Enterprises Inc. v. Germain (No.1)
¬ FCA held that a mark must be something that can
be represented visually
82
¬ Concerns
¬ 3) How can confusion be assessed for sound
marks? What is the scope of protection?
¬ how similar do the sounds have to be to constitute
infringement?
¬ Is roar from a different lion infringement?
¬ jurisprudence will provide further insight into these
issues
83
¬ New Way of Litigating Trade-marks
¬ BBM Canada v. Research In Motion Ltd.
¬ on June 28, 2012, the Federal Court issued its first
ever decision in an infringement case brought by
an “application”
¬ traditionally, trade-mark infringement cases were
brought by way of an action
¬ in a 2011 decision, the Federal Court of Appeal
confirmed that a party can proceed by way of an
“application” in addition to an action
84
¬ BBM Canada has 9 Canadian trade-mark
registrations comprising “BBM” in connection with
its data collection and distribution services
¬ RIM uses BBM as an acronym for BlackBerry
Messenger and file a trade-mark application in
2009
¬ BBM Canada challenges RIM’s use of BBM by
way of an application alleging infringement,
depreciation of goodwill, and passing off
85
¬ Federal Court dismissed all of BBM’s claims
¬ key factors in decision: narrow scope of protection
and differences between services
¬ the “application” process is more summary and
expeditious
¬ the case is litigated by way of affidavit evidence
rather than oral testimony
¬ rather than waiting for years to reach a decision
at trial, the application process may only take
months
86
¬ Apple v. Samsung (August 2012)
¬ while the press has focussed on the patent and
design patent claims, the case also involved trade
dress infringement
¬ Apple owns a U.S. trade dress registration for the
iPhone 3G
87
¬ U.S. Trade-mark Registration No. 77303282
88
¬ the trade dress registration cover many elements
¬ colour, shape of the icons, shape of the device,
and arrangement of the icons
¬ Apple asserted unregistered trade dresses of the
iPhone and the iPad/iPad2
¬ Apple also tried to prove that its trade dresses are
famous
89
90
91
¬ jury had to decide on the following issues:
¬ whether the Apple trade dress is protectable
¬ whether Apple’s trade dress was famous before
Samsung started selling its accused products
¬ whether accused products cause confusion about
the source of Samsung’s goods
¬ whether Samsung’s accused products are likely to
cause dilution of the asserted Apple trade dresses
by impairing their distinctiveness
92
¬ jury considered multiple pieces of evidence,
including results from likelihood of confusion
surveys and secondary meaning surveys
¬ jury found the registered iPhone trade dress and
unregistered iPhone 3G trade dress to be
protectable and famous
¬ ultimately, jury found Samsung’s devices diluted
Apple’s registered and unregistered iPhone trade
dresses
93
¬ in Canada, trade dress is protected in Canada as
distinguishing guises
¬ the applicant has to show the distinguishing guise
has acquired sufficient distinctiveness as of the
application’s filing date
¬ applicant has to provide an affidavit or statutory
declaration
¬ if the applicant is unable to show acquired
distinctiveness across Canada, the resulting
registration may be geographically limited
94
¬ Key Takeaways
¬ multi-prong approach to intellectual property
protection
¬ patents
¬ trade dress/distinguishing guises
¬ industrial design (design patents in the U.S.)
95
96
September 20, 2012
97
Navigating the Cloud
Shanti Ariker, Cheryl Slusarchuk, and
Troy Lehman
Introduction
¬
Everyone is using the cloud
¬ Facebook, Gmail, Twitter, LinkedIn
¬
Common cloud applications
¬ Email, social networking, community communications, web presence,
content, collaboration, monitoring, CRM
¬ Database storage, networks, computer
¬
Near term expanding use of the cloud
¬ Mission critical enterprise solutions such as finance or billing
¬ Regulated industries for process, functions or data subject to regulated
requirements
¬ Broader social media strategy and community/employee engagement
(internal and external) including gamification
98
What is clouding computing and why
¬ Another way to procure computing services
¬ “Buy/Build It” model
¬ “IT Outsourcing” model
¬ “Cloud” model
¬ Why cloud
¬ Significant cost reductions
¬ Scalable and elastic
¬ Certain cloud applications becoming industry standard
99
What is “clouding computing” (cont’d)
¬ Software/Application (SaaS)
¬ salesforce.com
¬ Workday
¬ Platform (PaaS)
¬ IBM Smartcloud
¬ Windows Azure
¬ Infrastructure (IaaS)
¬ Amazon Web Services
¬ Rackspace Cloud
¬ [*]aaS - communication, database … everything
* Cloud graphic courtesy of Wikipedia
100
Head in the Cloud - Safety Tips
101
¬ Irresistible Price versus Immovable Laws
¬ Location – yours – What are your legal
compliance requirements?
¬ Location – theirs – What are their applicable laws?
¬ Location – ours – What does the contract say
about all this?
¬ Safety Tip 1 - Don’t get crunched as the
“Naysayer”
¬ Recognize IT procurement has changed.
¬ Get involved early – make it a business issue.
102
¬ Irresistible Price versus Immutable Service
Requirements
¬ Understanding the services.
¬ What is negotiable?
¬ Understanding services levels.
¬ Do traditional service levels apply?
¬ Understanding termination and transition.
¬ Is it realistic to switch or repatriate?
103
“Latecomer”
¬ Recognize IT contracts have changed.
¬ EULA versus SOW mindset.
¬ If “market forces” are your “remedies”, focus on:
due diligence, switching costs, and business
continuity.
104
¬ Irresistible Price versus Actual Price
¬ Costs still arise in each of the following 3 phases:
¬ Implementation
¬ Steady-State
¬ Transition-Out or Repatriation
¬ What do you own and what does that mean?
¬ Rethinking “I paid for it so I should own it”.
105
“Optimist”
¬ Recognize IT pricing has changed.
¬ Price the life-cycle, not just steady-state.
¬ Know what you need to own and why.
106
107
Hot Topics in Technology and
Intellectual Property Law
Barry Sookman, Beth Macdonald, and
Paul Armitage
Cases before the Supreme Court
¬ Entertainment Software Association v. Society of Composers,
Authors and Music Publishers of Canada, 2012 SCC 34 (ESA v
SOCAN)
¬ Rogers Communications Inc. v. Society of Composers, Authors and
Music Publishers of Canada, 2012 SCC 35 (Rogers v SOCAN)
¬ Society of Composers, Authors and Music Publishers of
Canada v. Bell Canada, 2012 SCC 36 (SOCAN v Bell)
¬
Alberta (Education) v. Canadian Copyright Licensing Agency
(Access Copyright), 2012 SCC 37 (Access Copyright)
¬ Re:Sound v. Motion Picture Theatre Associations of Canada, 2012
SCC 38 (RE:Sound)
108
Principles of construction
109
¬ The Act reflects a balance in copyright between promoting the public
interest in the encouragement and dissemination of works and obtaining a
just reward for the creator.
¬ The Act should be construed in a technologically neutral manner. ESA v
SOCAN, Rogers v SOCAN
¬ The Act should be interpreted to extend to technologies that were not or
could not have been contemplated at the time of its drafting. It exists to
protect the rights of authors and others as technology evolves. Rogers v
SOCAN
¬ Treaties to which Canada is a party can be used to construe the Act. Rogers
v SOCAN, ESA v SOCAN
¬ Foreign copyright cases must be scrutinized very carefully before being
applied in Canada because of the different wording and policy
considerations in the Canadian and foreign legislation. Rogers v SOCAN,
Re:Sound
Interpretation of the communication to the
public right
110
¬ In ESA v. SOCAN, the Court ruled that a download of a video game
was not a “communication” within the meaning of Section 3(1)(f).
¬ The right to “communicate” is connected to the right to perform a work
and not the right to reproduce permanent copies of the work.
¬ A “download” “is merely an additional, more efficient way to deliver
copies of the games to customers. The downloaded copy is identical
to copies purchased in stores or shipped to customers by mail, and
the game publishers already pay copyright owners reproduction
royalties for all of these copying activities.”
¬ The “Internet is simply a technological taxi that delivers a durable
copy of the same work to the end user”.
¬ Implications: Using the internet to deliver goods that contain music
e.g., video games, podcasts, movies and TV programs, software, AV
works, books, will not attract separate communication to the public
royalties or remuneration to Re:Sound.
Interpretation of the communication to the
public right
¬ In Rogers v. SOCAN, the Court ruled that on-demand transmissions of
music streams as part of online music services are communications that are
“to the public”.
¬ The term “telecommunication” should be broadly construed so as to apply to
communications that do not depend on the types of technology used to
effect the communication.
¬ An on-demand communication of a work to members of the public can be a
communication that is to the public. The Act applies to push as well as to
pull means of transmitting works to the public.
¬ The applicability of the communication to the public right is not dependant
on the arbitrary choice of business models.
¬ Implications: Online streaming services including on-demand online music
services, on-demand video rental/streaming services, TV video on demand,
UGC sites, interactive gaming sites etc, have to pay communication
(performance) royalties as well as reproduction royalties.
111
Interpretation of the fair dealing defence
¬ The Access Copyright case was a judicial review from a decision
of the Copyright Board which examined whether copying of short
extracts for classroom teaching purposes was a fair dealing. The
Board and the Federal Court of Appeal had found it was not. The
Supreme Court allowed the appeal and remitted the matter back
to the Board to reconsider its decision in accordance with its
construction of the fair dealing defence.
¬ The Bell v. SOCAN case addressed whether previews of music
made available by online music services were a fair dealing for
the purposes of research. The Board and the Federal Court of
Appeal held they were. The Court affirmed that holding.
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¬ Fair dealing is a “user right”.
¬ The term “private study” can include students in a classroom setting. The
word “private” in “private study” “should not be understood as requiring users
to view copyrighted works in splendid isolation. Studying and learning are
essentially personal endeavours, whether they are engaged in with others or
in solitude.” Providing excerpts of texts to students in class is private study.
¬ The term “research” must be given a large and liberal interpretation and can
include users listening to previews to decide whether to purchase music.
“Research” is not limited “to creative purposes”. It can be piecemeal, informal,
exploratory, or confirmatory. It can in fact be undertaken for no purpose
except personal interest.”
¬ “The relevant perspective when considering whether a dealing is for an
allowable purpose is that of the user and not the copier. The copier’s purpose
is relevant in the fairness analysis.” “copiers cannot camouflage their own
distinct purpose by purporting to conflate it with the research or study
purposes of the ultimate user”.
¬ Will be easier to establish that the purpose of a dealing is
allowable e.g. focus on users, and interpretations of research and
private study.
¬ Will potentially benefit online uses and online service providers.
¬ Will be even broader when C-11 comes into force.
¬ Brings Canada closer to U.S. fair use.
¬ “User rights”, focus on users rather than on copiers, and the ability
to establish fairness by showing a practice or system that is fair,
makes fair dealing extremely broad and unpredictable.
¬ Decisions will affect rights holders
114
Copyright Modernization Act
(a.k.a. Bill C-11)
115
Why?
• Because of World Intellectual Property treaty
obligations agreed to by Canada in 1997
• Because Parliament was dissolved the last 3
times that similar copyright reforms were
attempted
• Because the Copyright Act is way behind the
times (last amended in 1997)
Bill C-11 has passed the House of Commons & Senate
and received Royal Assent
Key Tech Related Amendments
1.
2.
3.
4.
5.
6.
New Fair Dealing Exceptions
Technological Protection Measures
New “Innovation” Exceptions to Infringement
Targeting Infringement Enablers
Safe Harbour for Service Providers
Qualifying Statutory Damages re: noncommercial infringement
116
1. New Fair Dealing Exceptions
A. Basic Exception – s. 29 “Fair dealing for the
purpose of research, private study, education,
parody or satire does not infringe copyright”
[emphasis added]
• What is “fair dealing” – undefined (but refer to the
new SCC decisions re: education) – future case
law to develop this
But:
• Moral rights still exist
• CR owner entitled to performing rights royalties
117
B. Exceptions for Individuals
a. User Generated Content – for non-commercial
purposes (i.e. your “Fluffy sings
Lady Gaga” YouTube video)
•
•
Source of work to be mentioned (if reasonable)
Other qualifications
b. Format shifting, time shifting (between devices
and/or for later viewing) **
c. Making backup copies of legally acquired
content to protect against damage or loss**
** note: Format shifting, time shifting and making backup copies are not
permitted if a TPM preventing this exists on the original copy
118
2. Technological Protection Measures
(TPMs)
What are they?
• Essentially- digital locks – can control access to or
copying of a work, a performer’s performance or
sound recording
• TPM must be authorized by the copyright owner
New s.41.1(1) No person shall…
a. circumvent a TPM
b. offer services primarily to circumvent TPMs
119
120
c. manufacture, distribute, sell or rent any
technology or device designed or produced
primarily to circumvent a TPM
[emphasis added]
Criminal offense if done knowingly for commercial
purposes (up to $1 million fine and 5 years in
prison)
3. Relevant TPM “Innovation” Exceptions
for Tech Companies
A. Encryption research (s. 30.62(1))
• It is not infringement of CR to reproduce a work for purposes of
encryption research if
a.
Not practical to do research otherwise
b.
Person has lawfully obtained the work
c.
Person has informed CR owner
B. Computer and network security (s. 30.63(1))
• It is not an infringement of CR to reproduce a work for the sole
purpose of assessing the vulnerability of the computer
system or network or of correcting any security flaws - with the
consent of the owners/administrator of a computer or computer
system or computer network
[emphasis added]
121
C. Limitations to Encryption and Security Exceptions
• s. 30.62(2) and (3); s. 30.63(2) and (3))
a.
These exceptions don’t apply if the information obtained is
used to commit an offence
b.
If vulnerability or security flaw is identified and the person
wishes to make these public, adequate notice must first be
given to the copyright owner
c.
This notice is not required if, in the circumstances, it is in
the public interest to have the vulnerability or flaw made
public without adequate notice
122
123
D. Interoperability of computer programs (s. 30.61(1) & (2))
• It is not infringement of CR in a computer program for a person
who owns a legal copy or has a license to a legal copy to
reproduce the copy for the sole purpose of obtaining information
that allows person to make the program and any other
programs interoperable; and
[emphasis added]
• Use of information restricted to making programs interoperable
or assessing the interoperability
(Q: does “interoperability” include reverse engineering? If so, are there any
limits to this?)
124
Canada’s New Anti-SPAM
Legislation
Program Outline
¬ Canada’s new anti-SPAM legislation (CASL)
¬ Anti-SPAM provisions
¬ Anti-spyware provisions
¬ Amendments to PIPEDA
¬ Amendments to the Competition Act
¬ Enforcement
125
CASL purpose
¬ The purpose of CASL is to promote the efficiency and adaptability of
the Canadian economy by regulating commercial conduct that
discourages the use of electronic means to carry out commercial
activities, because that conduct
¬ (a) impairs the availability, reliability, efficiency and optimal use of
electronic means to carry out commercial activities;
¬ (b) imposes additional costs on businesses and consumers;
¬ (c) compromises privacy and the security of confidential information;
and
¬ (d) undermines the confidence of Canadians in the use of electronic
means of communication to carry out their commercial activities in
Canada and abroad. (s. 3)
126
CASL history
¬ Received royal assent on December 15, 2010.
¬ Original draft regulations were published in the summer of 2011 by
the CRTC and Industry Canada. The Canadian business
community raised serious objections to their strict requirements.
¬ The CRTC enacted revised regulations, which were finalized on
March 28, 2012. The new regulations eased up on some of the
more onerous requirements.
¬ Revised draft regulations from Industry Canada are expected
shortly. They are also expected to ease up on certain requirements
and may contain new exceptions.
¬ Expected to be in force in 2013.
127
The Anti-SPAM Prohibition
S.6(1) It is prohibited to send or cause or permit to be sent to an
electronic address a commercial electronic message unless:
a) the person to whom the message is sent has consented to
receiving it, whether the consent is express or implied; and
b) the message complies with subsection (2).
(2) The electronic messages must be in a form that conforms to the
prescribed requirements and must:
a) set out prescribed information that identifies the person who
sent the message;
b) set out information enabling the person to whom the message
is sent to readily contact the sender; and
c) set out the prescribed unsubscribe mechanism.
128
What messaging systems are covered
¬ “electronic message” means a message sent by any means of
telecommunication, including a text, sound, voice or image
message. (s1(1)) (But, excludes interactive two-way voice
communication between individuals, fax messages to a telephone
account, voice recordings to a telephone account. (s.6(8))
¬ “electronic address” means an address used in connection with the
transmission of an electronic message to (a) an electronic mail
account; (b) an instant messaging account; (c) a telephone account;
or (d) any similar account. (s.1(1))
¬ Note how open ended Electronic Messages can be “sent by
any means of telecommunication” Electronic Addresses include
“any similar account” which will continually change
129
What is a CEM?
130
A “commercial electronic message” is “an electronic message that, having
regard to the content of the message, the hyperlinks in the message to
content on a website or other database, or the contact information contained
in the message, it would be reasonable to conclude has as its purpose, or one
of its purposes, to encourage participation in a commercial activity, including
an electronic message that:
(a) offers to purchase, sell, barter or lease a product, goods, a service, land
or an interest or right in land;
(b) offers to provide a business, investment or gaming opportunity;
(c) advertises or promotes anything referred to in paragraph (a) or (b); or
(d) promotes a person, including the public image of a person, as being a
person who does anything referred to in any of paragraphs (a) to (c), or
who intends to do so. (s.1(2))
General exception to CASL
¬ An inquiry or application related to a person engaged in a
commercial activity. (s.6(5))
¬ Personal or family relationships (s.6(5)(a))
¬ Telecommunication Service Providers (TSP)
¬ A class, or sent in circumstances, defined in regulations.
(s.6(5)).
¬ Additional exceptions and classes of implied consents could be
included in forthcoming Industry Canada regulations.
131
Consent exception to CASL
¬
132
The consent requirement does not apply to a CEM that solely (s.6(6)):
¬ provides a quote or estimate... if the quote or estimate was requested;
¬ facilitates, completes or confirms a commercial transaction that the person to whom
the message is sent previously agreed to enter into with the person who sent the
message;
¬ provides warranty information, product recall information or safety or security
information about a product, goods or a service that the person to whom the message
is sent uses, has used or has purchased;
¬ provides notification of factual information about (i) the ongoing use or ongoing
purchase by the person to whom the message is sent of a product, goods or a service
offered under a subscription, membership, account, loan or similar relationship by the
person who sent the message, or (ii) the ongoing subscription, membership, account,
loan or similar relationship of the person to whom the message is sent;
¬ provides information directly related to an employment relationship or related benefit
plan;
¬ delivers a product, goods or a service, including product updates or upgrades, that the
person to whom the message is sent is entitled to receive under the terms of a
transaction...
Implied consents to send CEMs
133
A consent is implied for the purpose of the anti-SPAM provisions if:
¬ there is “an existing business relationship” or an “existing non-business relationship”,
as those terms are defined. (s.10(9))
¬ “Existing business relationship” is a business relationship arising from (s.10(10)):
a) the purchase or lease of a product, goods, a service, land or an interest or right in
land, within the 2-year period immediately before the day on which the message was
sent;
b) the acceptance by the recipient, within the period referred to in paragraph (a), of a
business, investment or gaming opportunity;
c) the bartering of anything mentioned in paragraph (a)...
d) a written contract entered into between the recipient and the sender in respect of a
matter not referred to in any of paragraphs (a) to (c), if the contract is currently in
existence or expired within the period referred to in paragraph (a); or
e) an inquiry or application, within the 6-month period immediately before the day on
which the message was sent, made by the recipient to the sender, in respect of
anything mentioned in any of paragraphs (a) to (c).
Other Implied consents to send CEMs
134
¬ The only other implies circumstances are where:
¬ the person to whom the message is sent has “conspicuously
published” the electronic address without a statement that the
person does not wish to receive unsolicited commercial electronic
messages at the electronic address AND the message is relevant
to the person’s business, role, functions or duties in a business or
official capacity;
¬ the person to whom the message is sent has disclosed, to the
person who sends the message, the electronic address without
indicating a wish not to receive unsolicited commercial electronic
messages, AND the message is relevant to the person’s business,
role, functions or duties in a business or official capacity; or
¬ the message is sent in the circumstances set out in the regulations.
¬ The revised regulations may contain new categories of implied
consent.
135
“Existing non-business relationship” is a non-business relationship arising
from (s.10(13)):
a) a donation or gift made by recipient to the sender within the 2-year
period immediately before the day on which the message was sent,
where the sender is a registered charity, a political party or
organization, or a person who is a candidate for publicly elected office;
b) volunteer work performed by the recipient for the sender, or
attendance at a meeting organized by the sender, within the 2-year
period immediately before the day on which the message was sent,
where the sender is a registered charity, a political party or
organization, or a person who is a candidate for publicly elected office;
or
c) membership, as defined in the regulations, by the recipient, in the
sender, within the 2-year period immediately before the day on which
the message was sent, where the sender is a club, association or
voluntary organization, as defined in the regulations.
Draft Industry Canada reg. 4.(1) For the purposes of paragraph
10(13)(c) of the Act, membership is the status of having been
accepted as a member of a club, association or voluntary
organization in accordance with the membership requirements of
the club, association or organization.
(2) For the purposes of paragraph 10(13)(c) of the Act, a club,
association or voluntary organization is a non-profit organization
that is organized and operated exclusively for social welfare, civic
improvement, pleasure or recreation or for any purpose other than
profit, if no part of its income is payable to, or otherwise available
for the personal benefit of any proprietor, member or shareholder
of that organization unless the proprietor, member or shareholder
is an organization the primary purpose of which is the promotion of
amateur athletics in Canada.
136
Getting express consents to send CEMs
Express consents
¬ A person who seeks express consent must, when requesting
consent, set out clearly and simply the following information: (a)
the purpose or purposes for which the consent is being sought; (b)
prescribed information that identifies the person seeking consent
and, if the person is seeking consent on behalf of another person,
prescribed information that identifies that other person; and (c) any
other prescribed information. (s.10(1)). See also (s.6(2)).
137
Getting express consents to send CEMS
138
CRTC reg s.4. For the purposes of subsections 10(1) and (3) of the Act, a request for consent
may be obtained orally or in writing and must be sought separately for each act described in
sections 6 to 8 of the Act and must include
(a) the name by which the person seeking consent carries on business, if different from
their name, if not, the name of the person seeking consent;
(b) if the consent is sought on behalf of another person, the name by which the person
on whose behalf consent is sought carries on business, if different from their name,
if not, the name of the person on whose behalf consent is sought;
(c) if consent is sought on behalf of another person, a statement indicating which
person is seeking consent and which person on whose behalf consent is sought;
and
(d) the mailing address, and either a telephone number providing access to an agent or
a voice messaging system, an email address or a web address of the person
seeking consent or, if different, the person on whose behalf consent is sought; and
(e) a statement indicating that the person whose consent is sought can withdraw their
consent.
Conditions for getting consents
139
¬ Despite paragraph 10(1)(b), for the purposes of section 6, if a person is seeking
express consent on behalf of a person whose identity is not known, (a) the only
information that is required to be provided under that paragraph is prescribed
information that identifies the person seeking consent; and (b) the person seeking
consent must comply with the regulations in respect of the use that may be made of
the consent and the conditions on which the consent may be used. (s. 10(2))
¬ Draft: Industry Canada reg. 3(1) For the purposes of paragraph 10(2)(b) of the Act, a
person who obtained express consent on behalf of a person whose identity was
unknown may authorize any person to use the consent on the condition that the
person who obtained consent ensures that, in any commercial electronic message
sent to the person from whom consent was obtained,
(a) the person who obtained consent is identified; and
(b) the authorized person provides an unsubscribe mechanism that, in addition
to meeting the requirements set out in section 11 of the Act, allows the person
from whom consent was obtained to withdraw their consent from the person
who obtained consent or any other person who is authorized to use the
consent.
Conditions for getting consents
140
¬ Draft Industry Canada reg. 3(2) The person who obtained consent must
ensure that, on receipt of an indication of withdrawal of consent by the
authorized person who sent the commercial electronic message, that
authorized person notifies the person who obtained consent that consent has
been withdrawn from, as the case may be,
(a) the person who obtained consent;
(b) the authorized person who sent the commercial electronic message; or
(c) any other person who is authorized to use the consent.
¬ (3) The person who obtained consent must inform, without delay, a person
referred to in paragraph 2(c) of the withdrawal of consent on receipt of
notification of withdrawal of consent from that person.
¬ (4) The person who obtained consent must give effect to a withdrawal of
consent and, if applicable, ensure that a person referred to in paragraph 2(c)
gives effect to the withdrawal of consent, in accordance with subsection 11(3)
of the Act.
Information to be included in CEMs
¬
141
The electronic messages must be in a form that conforms to the prescribed requirements
and must: (a) set out prescribed information that identifies the person who sent the
message; and (b) set out information enabling the person to whom the message is sent
to readily contact the sender (the contact information must be valid for 60 days).
S. 2(1) CRTC reg: For the purposes of subsection 6(2) of the Act, the following
information must be set out in any commercial electronic message:
(a) the name by which the person sending the message carries on business, if different
from their name, if not, the name of the person;
(b) if the message is sent on behalf of another person, the name by which the person
on whose behalf the message is sent carries on business, if different from their
name, if not, the name of the person on whose behalf the message is sent;
(c) if the message is sent on behalf of another person, a statement indicating which
person is sending the message and which person on whose behalf the message is
sent; and
(d) the mailing address, and either a telephone number providing access to an agent or
a voice messaging system, an email address or a web address of the person
sending the message or, if different, the person on whose behalf the message is
sent.
Unsubscribe requirements
142
¬
The electronic messages must: (c) set out the prescribed unsubscribe mechanism.
(s.6(2) & (3)).
¬
The unsubscribe mechanism must (a) enable the recipient to indicate, at no cost to
them, the wish to no longer receive any commercial electronic messages, or any
specified class of such messages, from the sender, using (i) the same electronic means
by which the message was sent, or (ii) if using those means is not practicable, any other
electronic means that will enable the person to indicate the wish; and (b) specify an
electronic address, or link to a page on the World Wide Web that can be accessed
through a web browser, to which the indication may be sent (the address or Web page
must be valid for 60 days). (s.11(1) & (2))
¬
CRTC reg s.3(2) The unsubscribe mechanism referred to in paragraph 6(2)(c) of the
Act must be able to be readily performed. (emphasis added)
Methods of displaying information and
unsubscribe mechanism in CEMs
143
¬
CRTC reg s.3(1) The information referred to in section 2 and the unsubscribe
mechanism referred to in paragraph 6(2)(c) of the Act must be set out clearly and
prominently.
¬
CRTC reg s.2(2) If it is not practicable to include the information referred to in subsection
(1) and the unsubscribe mechanism referred to in paragraph 6(2)(c) of the Act in a
commercial electronic message, that information may be provided by a link to a web page
on the World Wide Web that is readily accessible by the person to whom the message is
sent at no cost to them by means of a link that is clearly and prominently set out in the
message. (emphasis added)
Timing to meet unsubscribe requirements
Such an indication must be given effect without delay, and in
any event no later than 10 business days after the indication
has been sent, without any further action being required on the
part of the person who so indicated. (s. 11(3))
144
Very high liability
145
¬ Administrative monetary penalties (AMPS) with caps up to $1 million
for an individual and $10 million for anyone else. (s.20(4))
¬ Private rights of action by anyone affected by a prohibited act (s.47(1))
with liability that consists of:
¬ compensation for loss, damages and expenses; and
¬ extensive awards that are capped at:
¬ $1 million per day for breach of SPAM, malware, spyware,
message routing, address and personal information harvesting,
and Competition Act provisions;
¬ $1 million for each act of aiding, inducing, or procuring a breach
of the SPAM, malware and spyware, and message routing
provisions, plus liability up to $1 million per day for breach of
SPAM, malware, spyware, and message routing provisions.
¬ Risk of class actions.
Extensive accessorial and vicarious liability
¬ Liability extends to any person who aids, induces or procures a
prohibited act. (s.9)
¬ Businesses are liable for acts of their employees within the
scope of their authority. (s.32, s.53)
¬ Liability extends to officers, directors, agents, mandataries if
they directed, authorized, assented to, acquiesced, or
participated in the prohibited act. (s.31, s.52)
¬  Businesses liable for employees businesses liable for
“aiding” businesses liable for massive AMPS and damages
class actions officers and directors ultimately liable.
¬  Businesses need to put policies and processes in place to
reduce risk.
¬  Insurance?
146
VANCOUVER
MONTRÉAL
Suite 1300, 777 Dunsmuir Street
P.O. Box 10424, Pacific Centre
Vancouver BC V7Y 1K2
Tel: 604-643-7100
Fax: 604-643-7900
Toll-Free: 1-877-244-7711
Suite 2500
1000 De La Gauchetière Street West
Montréal QC H3B 0A2
Tel: 514-397-4100
Fax: 514-875-6246
Toll-Free: 1-877-244-7711
CALGARY
QUÉBEC
Suite 3300, 421 7th Avenue SW
Calgary AB T2P 4K9
Tel: 403-260-3500
Fax: 403-260-3501
Toll-Free: 1-877-244-7711
Le Complexe St-Amable
1150, rue de Claire-Fontaine, 7e étage
Québec QC G1R 5G4
Tel: 418-521-3000
Fax: 418-521-3099
Toll-Free: 1-877-244-7711
TORONTO
Box 48, Suite 5300
Toronto Dominion Tower
Toronto ON M5K 1E6
Tel: 416-362-1812
Fax: 416-868-0673
Toll-Free: 1-877-244-7711
UNITED KINGDOM & EUROPE
125 Old Broad Street, 26th Floor
London EC2N 1AR
UNITED KINGDOM
Tel: +44 (0)20 7786 5700
Fax: +44 (0)20 7786 5702

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