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.
Issue link: https://digital.carswellmedia.com/i/138095
DOING BUSINESS ONLINE IN CANADA legislation's proclamation will require considerable work from US businesses seeking to avoid the substantial liabilities under the new law." Indeed, the legislation has sharp teeth. Offenders are liable to administrative monetary penalties of up to $1 million for individuals and up to $10 million for corporations. Officers, directors and agents are liable if they directed, authorized or participated in the violation. A due diligence defense is available. The Canadian Radio-television Telecommunications Commission (CRTC) will determine whether a violation has occurred and the amount of the penalty. The legislation provides for appeals to the Federal Court of Appeal. As for prohibited activities that originate outside Canada, CASL gives Canada's Privacy Commissioner the power to disclose and share information with foreign states; there is a similar provision in the US SAFE WEB Act. CASL also provides for a private right of action for individuals affected by offenders. These individuals may apply for a compensation order for actual loss, as well as a maximum of $200 daily for each contravention of the breached provisions, with a limit of $1 million for each day on which a contravention occurred. Officers, directors and agents of a corporation are subject to the private right of action if they directed, authorized or participated in the contravention. "There is a huge exposure to class-action liability under this legislation," says Barry Sookman in McCarthy Tétrault LLP's Toronto office. Following CASL's passage, the business community had hoped that the regulations the CRTC and Industry Canada were promulgating would ameliorate the law's harshness somewhat. The CRTC published its regulations, which deal with the form and content of CASLcompliant commercial electronic messages, in March 2012. For the most part, they disappointed the business community. "The final CRTC Regulations omitted some important clarifications of the language in CASL, failed to provide exemptions for certain businesses and behavior that should not be caught by the legislation, and continued the imposition of unworkable and unnecessary requirements that may have a disproportionate impact on technologies such as text messaging," says David Elder in Stikeman Elliott LLP's Ottawa office. "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." In terms of clarity, many grey areas remained. "One example is general promotional activities, as in the case of a pharmaceutical company that sends out invitations to a dinner with lecture series for physicians," Elder says. "It's not clear whether this kind of activity would be caught by the statute." Another substantial issue revolves around what amounts to consent. "Most people, for example, would say that you have given implied consent when, at a trade show, you put your business card in a fish bowl having a sign that says 'leave your card here to enter our draw and be added to our e-mail list,'" Elder says. "But whether that constitutes consent or implied consent under the law isn't at all clear." Fortunately, the latest version of the Industry Canada regulations, which addressed exclusions and exemptions from CASL, were somewhat more business-friendly. They broadened the meaning of "personal relationship" and "family relationship," both of which are exempt from the statute's anti-spam provisions. As well, the regulations exempted five business practices that the CASL was not intended to target. These include two new business-to-business exemptions; messages sent in response to a request or to enforce a legal right; messages sent by a foreign business to a foreign recipient but accessed while roaming in "BUSINESSES SHOULD SET OUT IMMEDIATELY TO GET EXPRESS CONSENTS WHERE THEY HAVEN'T DONE SO ALREADY, SO THERE WILL BE NO AMBIGUITY ABOUT DEALING WITH CANADIAN CUSTOMERS AND PROSPECTS." Canada; and third-party referrals from individuals or organizations that have a relationship with the sender and the recipient. Yet important issues remain. Perhaps the most significant for federally regulated industries, like financial institutions, airlines and telecommunications companies, is the failure to recognize consents under Canada's federal privacy legislation, the Personal Information Protection and Electronic Documents Act (PIPEDA), for the purposes of CASL. This means that organizations subject to PIPEDA may face considerable duplication of effort in obtaining consent; at the very least, they will have to ensure that their means of obtaining consent complies with both statutes. Other outstanding concerns include the failure to clarify the rights of manufacturers to contact consumers of their products with whom they do not have a direct relationship and the failure to deal with the practical hurdles inherent in the consent requirements. www.lexpert.ca | LEXPERT • June 2013 | 15 B-00-Features.indd 15 13-05-17 9:29 AM