Lexpert US Guides

www.lexpert.ca | LEXPERT • June 2014 | 15 ing 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 fi rst obtained," Broad observes. Indeed, the statute does not permit consent for a solicitation to be inferred from publication of an email address even if it would be reasonable to assume the message would be of interest to the in- dividual or their organization or more generally from the conduct of the individual or organizations concerned. Furthermore, federally regulated industries, like fi nancial insti- tutions, airlines and telecommunications companies, should be aware that CASL does not explicitly recognize consents given un- der Canada's federal privacy legislation, the Personal Information Protection and Electronic Documents Act (PIPEDA). "" e regulators have indicated they will recognize consents given before CASL comes into force so long as the consents meet the requirements of federal privacy legislation," Elder says. "" e problem, however, is that implied consents are not recognized un- der privacy law." " is means that organizations subject to PIPEDA could experience duplication of eff ort 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 consum- ers of their products with whom they do not have a direct relationship and the failure to deal with various practical hurdles inherent in the consent requirements. "CASL will be out of sync with how many US busi- nesses have set up their marketing activities, especially for those who rely on commercial email communica- tions," Kratz says. "" e legislation's proclamation will require considerable work from US businesses seeking to avoid the substantial liabilities under the new law." " ere's no doubt the legislation has sharp teeth. Off enders are liable to administrative monetary penalties of up to C$1 million for individuals and up to C$10 million for corporations. Offi cers, directors and agents are liable if they directed, authorized or par- ticipated in the violation. A due diligence defense is available. " e Canadian Radio-television Telecommunications Com- mission (CRTC) will determine whether a violation has occurred and the amount of the penalty. " e legislation provides for appeals to the Federal Court of Appeal. As for prohibited activities that originate outside Canada, CASL gives Canada's Privacy Commis- sioner the power to disclose and share information with foreign states; there is a similar provision in the US SAFE WEB Act. As of July 1, 2017, CASL also provides for a private right of action for individuals aff ected by off enders. Claimants can receive up to C$200 per occurrence without proving damages, as well as what amounts to non-compensatory punitive damages of up to C$1 million per day. "" ere is a huge exposure to class-action liability under this legislation," says Sookman. "For example, a person that as part of some commercial activity makes malware-free open source so - ware available without charge to hundreds of thousands of Cana- dians using an ordinary web wrap or click wrap agreement or who, using an automated system, installs a security patch to prevent hacker attacks, could theoretically face threats of damages in the hundreds of million dollars." For US companies and others trying to avoid liability, what be- comes apparent is that CASL presents a host of practical diffi cul- ties that emanate from its complex legal requirements. "" e onus is on the sender of the CEM to show that it has con- sent or that it falls within one of the applicable exemptions," Elder says. "But many organizations are struggling to do so, because their contact lists, like many others out there, have been created without any real thought to the considerations that inform CASL." US companies that have integrated lists for Canada and the US face particular problems. "For example, how do you deal with the fact that US law allows your fi rst CEM to go out without consent but that's not the case in Canada?" Kratz asks. "For this reason and others, companies will have to ask themselves whether they should develop harmo- nized approaches or separate ones." " ere's also the question of who owns the consents. Is it the US parent or the Canadian subsidiary? "" at's important because CASL requires you to disclose who sent the email, and naming the sender is a high-level decision involving branding and a whole host of considerations," Kratz says. Long-term vacationers, like the proverbial Canadian "snow- birds," can also cause diffi culties. "Snowbirds could have US credit cards or they may sign up with US retailers," Kratz points out. "But what happens when they get back home? How then does an American company address the fact that their CEMs will now be received on computers located in Canada and therefore be subject to CASL?" " ese are not easy questions to answer. But the key to dealing with CASL on an operational level, lawyers say, is proactivity. "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," says Rich- ard Corley of Toronto's Goodmans LLP. Julius Melnitzer is a legal affairs writer in Toronto. "As currently written, the law will have a signifi cant impact on customer and prospect communications across a wide spectrum of Canadian business." > David Young; David Young Law ANTI-SPAM »

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