Lexpert US Guides

22 | LEXPERT • June 2016 | www.lexpert.ca/usguide-corporate/ download – a potentially serious violation of Canadian law. Martin Kratz, who leads the intellectual property and anti-spam practices at Calgary-based Bennett Jones LLP, says the anti-spam law "is oen still quite surprising to US in-house counsel. "In Canada's privacy law, being sensitive to the fact the US is our largest trading partner, we sought to balance with the US approaches to privacy. We didn't do that with our anti-spam law. Unlike the CAN-SPAM Act, we have comprehensive regulation of commercial electronic communications in any electronic form – SMS messages through emails and any other form – and it's comprehensive. "In Canada it's also based on an opt-in model, unlike the United States, which is an opt-out model. So generally speaking in the US, you can send the first email 'free' but you have to honor an unsubscribe. It requires the recipient to say: 'I don't want this stuff anymore' and unsubscribe." But that US company is not permitted to send that first email to a Canadian, he says, calling it a Catch-22 for business. "You can't use electronic means to ask for consent unless you have consent, or unless an exception applies. e law is very complex and it hasn't been judicially considered yet." But it will be. e right to communicate with former or exist- ing customers expires in July 2017, and a private right of action comes into effect. Kratz says many privacy and anti-spam lawyers expect to see a rash of class-action lawsuits, particularly targeting large US retail- ers with sophisticated email communication programs. "American companies oen have integrated marketing programs that include Canada and they've usually collected personal information. ey may have collected email addresses from Canadians that sometimes may not indicate whether they're Canadian or not. e company just knows this person was a customer in a Florida store and they got an email address — it could be a dot-com rather than a dot-ca. at makes compli- ance for American companies more difficult." Wendy Gross, Co-chair of the technology group at Osler, Hoskin & Harcourt LLP, says the other half of the new anti- spam regime is an anti-spyware provision that prohibits the download of any unsolicited computer program or soware. While designed to prevent malware from being installed on Canadians' computers, it catches much more. "e legislation is so all-encompassing it captures all forms of electronic messages — even in-app messaging could be covered. So whether the communications are coming from legitimate businesses or not, it's all caught by the anti-spam legislation," she says. "Most businesses in the United States would probably just assume that there is not a whole different regime that applies to legitimate businesses communicating with their customers. But here in Canada there is." In addition to the rules about consent there are rules around the actual consent form, rules around the ability to unsubscribe, the unsubscribe form and the contents of the unsubscribe notices, she says, making the rules broad and far-reaching. Every time a Canadian goes to the app store to download an app, for example, that's a download of a computer program under the meaning of CASL, says Gross, who is based in Toronto. "If I as the developer want to automatically push updates to my users, then there are rules around that. ink of this in the context of your automobile. If you have some sort of satellite help system on your car, your car is now just one large computer, so how does the automobile company push those downloads to your car and get your consent? It's not obviously practical to do that. "ese are things where if you're a US business – and we have this with many of our clients who are coming up here or do business internationally – you may need to figure out whether you need to re-engineer your whole download and sales process for Canadian customers. e standardized processes that work in the United States will not work up here." e legislation has led some US companies to make significant changes to their existing operational practices. But others are walking away from Canada, she says. "I've had some examples of clients where, when they're told about the extent to which they'd have to revise their processes in order to do business in Canada, have decided it's not worth it." Foreign companies that breach the rules are not out of reach of the Canadian Radio-television and Telecommunications Commission (CRTC), the key federal anti-spam regulator. e CRTC has warned it will be collaborating with its inter- national counterparts to investigate and enforce the Canadian legislation. e penalties for corporate non-compliance are up to C$10 million. "at's enough to get your attention," says Gross. It's not just the anti-spam law that has been retooled. Canada recently enacted the Digital Privacy Act, a series of changes designed to modernize the Personal Information Protec- tion and Electronic Documents Act. While the regulations are still being draed, the key change imposes a new standard of "valid consent" on every company that collects and uses a Canadian's private information. e Act stipulates that consent will only be considered valid "if it is reasonable to expect that an individual to whom the organi- zation's activities are directed would understand the nature, purpose and consequences of the collection, use or disclosure of the personal information to which they are consenting." at standard affects everyone from multi-national retailers and app developers to mom-and-pop businesses. Canadian law firms have been urging clients who do business north of the border to adjust their privacy policies and make "In Canada [our anti-spam law is] based on an opt-in model, unlike the United States, which is an opt-out model. So generally speaking in the US, you can send the first email 'free' but you have to honor an unsubscribe. It requires the recipient to say: 'I don't want this stuff anymore' and unsubscribe." Martin Kratz Bennett Jones LLP ONLINE BUSINESS

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