Lexpert US Guides

Corporate 2013

The Lexpert Guides to the Leading US/Canada Cross-Border Corporate and Litigation Lawyers in Canada profiles leading business lawyers and features articles for attorneys and in-house counsel in the US about business law issues in Canada.

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DOING BUSINESS ONLINE IN CANADA "THE BIG-PICTURE CONCERN FOR BUSINESS IS THAT THE LAW GOES TOO FAR AND OVERREGULATES BY CATCHING WHAT MANY CONSIDER TO BE LEGITIMATE ELECTRONIC MARKETING INITIATIVES." David Elder; > Stikeman Elliott LLP "The intentions are good, but the implementation is very complex," says Paul Broad in Hicks Morley Hamilton Stewart Storie LLP's London, Ontario, office. "The legislation is structured as a complete prohibition out of which exceptions are carved, and that is a very hard compliance exercise because, among other things, most existing consents will not suffice." CASL is a much more burdensome piece of legislation than CAN-SPAM. Canada's statute applies not only to e-mail but to other forms of electronic communications, including instant and text messaging, and all social media. As well, CASL applies not only to business-to-consumer messages, but also affects business-to-business messages. Unlike any legislation elsewhere, CASL is not limited to messages that may be harmful in the sense that they contain some element of fraud or deceit; rather, CASL prohibits the sending of any "commercial electronic message" (defined as any telecommunication including text, sound, voice or image) to an electronic address without the recipient's prior consent, where the purpose of the message is to encourage participation in a commercial activity. "In other words, CASL will cover all sorts of marketing and advertising campaigns that depend on electronic messages," Broad notes. All of this is not to say that the laws in Canada and the US will be completely at odds. There are important similarities between the Canadian legislation and CAN-SPAM in the sense that the legislative purposes are the same. But the fact remains that CAN-SPAM is opt-out legislation whereas the CASL is premised on an opt-in principle premised on express consent, with certain exceptions for implied consent for existing business relationships, personal and family relationships, business-to-business e-mails and third-party referrals. Consent under CASL is implied when the sender and the recipient have in the past 18 months had an existing business or non-business relationship, both of which are defined by the statute. Where no such relationship exists, the sender must obtain the express consent of the recipient by setting out the purpose for which the consent is sought, information identifying the person seeking consent, and other information that may be required by regulation. There is also an exception for e-mail addresses that have been posted online without a notice that the poster does not wish to receive unsolicited commercial e-mail. In addition to the exceptions, the business community has a transition period that could run to 2017 before a business must switch to opt-in consent for its existing customers. Still, CASL's consent provisions are quite rigid. The statute is very clear that consent is required before a commercial electronic message can be sent, which means that businesses can't even send an e-mail asking for consent without first obtaining consent. By contrast, CAN-SPAM allows an initial mailing, as long as it contains the required information and has a simple unsubscribe function. "I'm not sure anyone has the answers to the questions that arise from the fact that an electronic message seeking consent is itself an electronic message that CASL prohibits because consent was not first obtained," Broad observes. Indeed, the statute does not permit consent for a solicitation to be inferred from publication of an e-mail address even if it would be reasonable to assume the message would be of interest to the individual or their organization, or more generally from the conduct of the individual or organizations concerned. "CASL will be out of sync with how many US businesses have set up their marketing activities, especially for those who rely on commercial e-mail communications," Kratz says. "The 14 | LEXPERT • June 2013 | www.lexpert.ca B-00-Features.indd 14 13-05-17 9:28 AM

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