Lexpert Magazine

LEXPERT MAGAZINE | JULY/AUGUST 2017 63 BY GEORGE TAKACH TECHNOLOGY A harmful regulatory regime was about to get downright dangerous — until the federal government backed off CASL: From Bad to Perhaps Worse REGULAR READERS of this column will remember that several years ago, when Canada's anti-spam legislation (generally referred to as CASL) came into effect, I predicted it was overly broad and would have a negative effect on economic activity. Well, I don't want to say "I told you so," but when you look at the recent CASL enforcement efforts you just have to shake your head. ankfully, on June 7, the fed- eral government announced that CASL's private right of action (PRA) provisions would not come into effect on July 1, 2017. is lied what would have been a very dark cloud hang- ing over our economy, although we may not be completely out of the woods yet; the government has sent the PRA to a parlia- mentary committee for review, so it's still too early to tell what we will get by way of a PRA — and of course, we are still stuck with CRTC enforcement of CASL, regard- less of the PRA. I act for a number of early-stage Silicon Valley companies when they choose Can- ada as their first jurisdiction of expansion outside of the US. ese businesses are careful to comply with the US anti-spam legislation; but when they hear about the CASL regime in Canada, they will oen skip Canada altogether, or will not bring their full business model to our country. Conversely, when I act for Canadian tech start-ups in the e-commerce space, and they learn about the hurdles CASL presents — well, you guessed it, a number of them shi certain economic activity and the jobs that go with it down to the United States. Sigh. In short, a federal government in Cana- da that wanted to commit itself to support- ing a truly world-class tech sector could creasingly common with automatic upgrades of soware releases being regularly distributed to computers and smart devices such as smart- phones, cars, appliances and more, which require soware upgrades. is is a very important aspect of CASL, since all sorts of previously exclusively mechanical products are now being supplemented with digital networked capabilities. is means the manufacturers are tran- sitioning from supplying merely products to making services avail- able, and services are a lot "stickier" in terms of customer loyalty and recurring revenue. is is an additional CASL com- pliance consideration. If you breach any of these rules, you can be subject to an administrative monetary penalty of up to $1 million per violation of the statute by individuals, and $10 million for corporations. When CASL came into effect a few years ago, we all wondered — and some of us dreaded — how these reme- dial provisions would be implemented. UNLIKELY ENFORCEMENT TARGETS We now know how these provisions would be implemented. ere have been a number of enforcement actions, and frankly, the re- cord is disheartening. In the CRTC's very first case, a small business sent out about 400,000 email ads during a series of campaigns over a pe- riod of several months. e bureaucracy that administers CASL sent the business's owner a notice of violation with a fine of $640,000. Talk about showing your en- forcement teeth! But really, a $640,000 fine for a small business? ankfully, the CRTC dug deeper into the small business's situation and deter- mined that a $640,000 fine would be more PHOTO: SHUTTERSTOCK | COLUMNS | start by simply revising CASL to make it align with anti-spam laws in the US. We'll see if the parliamentary committee review of the PRA will take us in that direction. A CASL REFRESHER Canada's anti-spam legislation is federal legislation that prohibits the sending of any commercial electronic message unless the recipient has consented, expressly or impliedly, to its receipt. is legislation has extremely broad coverage, not only capturing every commercial email sent in this country — including messages originating from outside of Canada — but also text messages and a host of other electronic transmissions. Moreover, when such a message is sent it has to be labeled properly and have an "un- subscribe" mechanism, so the recipient can elect to indicate that he or she does not wish to receive further commercial electronic messages from that particular sender. e unsubscribe feature has to be effective, and the deletion of the name from the distribu- tion list must be carried out in 10 days. CASL also prohibits the sending of so- ware to another person's computer without their consent, although this practice is in-

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