Developments in intellectual property, tech, and privacy law

Nelson Godfrey :

Everyone, I think we'll get started here. So as I said, my name is Nelson Godfrey. I'm a partner in Gowling WLG's Vancouver office, I work exclusively in the field of intellectual property. And I work both on the soliciter side and in the litigation side, and work in all areas of intellectual property, including patent trademark and design law. And I'm here with Paul Armitage, who's also a partner in Gowling WLG, Vancouver office. Paul has extensive experience in the fields of technology licensing, outsourcing of procurement, life sciences, collaboration, privacy, law, anti spam, and many other areas of technology and privacy law. And we're here today to give you a talk on some recent developments in intellectual property law, technology law and privacy law, kind of spanning different jurisdictions across Canada. So the way our talks gonna be structured today, is I'm going to start us off I'm going to talk about specifically about intellectual property, and my topically broken down as, as mentioned there, with legislative kind of talking about some legislative changes over the last year at the outset. And then talking, talking about a few areas of case law, or some specific cases and give you a high level overview of some of the developments in the last year. And then Paul will take over. Paul will talk about some some recent case law tech contracts and big data, some recent case law on the constitutionality of CASL Canada's anti spam law, and then close with an update on privacy legislation. And I also just wanted to mention, if you have have any questions, please feel free to ask by the the q&a tab of your of your webinar screen. If you have any, any questions there, then we'll happy to address those. I'll address any for particular IP at the close my session, and then pass it over to Paul and then we'll wrap up at the end with any questions as well.

Okay, so as I mentioned, I'm going to go in in through some areas of legislative changes of the last year. Those include changes to the Trademarks Act, the Patent Act, inspection and patent rules, and then talk about some changes that may be and are likely to come in the future with the passage of the NAFTA 2.0 or the USMCA. And then I'm going to give you a little tasting menu of different cases from different areas of intellectual property through late 2019 and early 2020. And that'll be coming from kind of across the spectrum of IP law. And I've picked some cases from copyright from patent and from and from trademarks as well. Okay, to start us off on on the Trademarks Act, it's been some time now we're about a year and a half since the big changes to the trademarks act that were enacted in June 2019. These were the most significant changes to Canada's Trademarks Act, and in many years, the changes include, as mentioned on slide here, the adoption of good filing system, and NICE classification and class based filing fees, the elimination of Filing Basis as a requirement in any application, adding bad faith that's ground of opposition and invalidation and adding a ground of objection that trade to Pending trademark applications where an examiner considers that a mark is not inherently distinctive. So each of these significant changes and the many other changes have been added come with some some get significant consequences for Canadian applicants. And we've been dealing with those changes, as I said, since the the law was enacted, and and in fact entered into force in June 2019. There's any there's many other changes to come. As a result of these changes. These include some significant changes to opposition and expungement proceedings, including the filing confidential evidence, which has always been something that Canadian law has been sorely lacking in this area. In terms of the practical effect of these changes, we've unfortunately seen some real delay at CIPO as a result of implementing these new rules, and a significant number of incoming applications by our accession to the Madrid protocol. This has been exacerbated by the COVID pandemic, unfortunately, so there are some significant delays and examination Currently, our CIPO has hired a lot of new trademark examiner's to help address this. We've also seen a flurry of applications by trademark squatters and those primarily happened in the in the months leading up to institution of the new rules. And the institution of class based filing fees. Basically, people were trying to get in under a single filing fee for $250 and get their applications on file for multiple multiple classes, CIPO has again responded to that and has treated many of those those filings is bad faith filings and put them into default. However, it's certainly still recommended given the number of applications that were filed by third parties that that people assess whether their brands are available and file proactively to protect their brands, as we always read.

In terms of recent changes to the Patent Act, I highlighted some changes in late 2018. That's a little earlier than I wanted to talk about these but these are specifically relate to some of the case law and I want to mention them later, that's the institution of section 53.1 prosecution history estoppel. This basically means that patent Patent Office Communications for the first time in Canadian law are now admissible in Proceedings where those communications are prepared in respect of prosecution of an application, or in a disclaimer on a request for re-examination. Generally, foreign Patent Office Communications would not be admissible. But we have a case that that was specifically cited on that issue. And I'll provide some comments on that later. Another significant amendment amendment in late 2018 was the significant broadening of the prior user defense where basically the the prior use defense which previously was limited to specific devices, and the use and practices specific devices, has now been significantly broadened to cover the good the good faith preparations and, and this and broader acts, then what was previously caught by the priorities of events. They've also been in much more recently in October 2019. There's the implementation of the patent law treaty. And there were a number of of procedural changes to to patent law, patent rules, and patent law. I'm not going to go through those in detail, but I've listed them there. They generally relate to some tightening and shortening of windows for for prosecution, and taking various steps under under the patent rules. And in terms of changes to come, potentially the most significant changes in recent law, maybe soon in the future, with the designing of NAFTA 2.0. And the USMCA, I had to include a picture there of the three entirely uncontroversial politicians. And I'm sure you're not at all following what's going on. So the border today. So we have a signature to the replacement of NAFTA was enforced as of July 2020. But and there's a lot of big changes coming for intellectual property law as a result of signing that treaty. So in particular, there, the obligations on Canada include obligations to modernize many aspects of Canada's IP laws. This includes Copyright Term Extension, criminal penalties for tampering with digital rights management information, the restoration of patent term, this relates primarily to regulatory and administrative delays. People had people in the United States may be familiar with this in the pharmaceutical context, that type of those types of revisions are going to be coming to Canadian law also includes additional powers for customs officials to seize and destroy infringing goods, which in the trademarks bar, we've been looking for that for a long time, on behalf of brand owners. And then finally, new civil and criminal rights remedies for the misappropriation of trade secrets, we'll see what form that takes that may take the form of, of regional or national legislation to implement something similar to the Defend Trade Secrets Act, it's now enforced in the United States. And there'll be legislation to come to implement these changes, and it may be some some time before these changes are actually in effect, but big changes are coming. Okay, so case law. So I wanted to basically take a few examples of different cases, and give you kind of a high level overview and what I call before a tasting menu of different cases from the areas of intellectual property law over the last year. So I want to start in September 2019. This is the case of Canmar foods and TA foods. This was a case decided and considered the New File History estoppel provisions of the PAP Mac. This case is successfully argued by our colleagues and our Calgary office, including my colleague, Patrick Smith. It was brought in the context of motion for summary dismissal that was brought by the defendant in a patent patent infringement case. So the patent issue there claimed a method for roasting oil seed TA foods. The defendant argued that its roasting method differed from patented method because it didn't heat. The defendant didn't heat its flax seeds in a stream of air and didn't maintain the seeds in an insulated roasting chamber or tower. So the defendant argued that because these two elements were added intentionally during Canadian patent prosecution, they became essential elements of the claims. The defendants admitted that based on affidavit evidence, that it was clear from the the the evidence that the defendant did not do those things, and there was no genuine issue for trial and therefore it should be dismissed.

So the court found that with the new institution of the new section 53.1 and the private prosecution history estoppel provisions, it claimed destruction in Canada has three elements or three prongs, the claims the disclosure and the prosecution history most significantly. Court observed that while ordinarily only Canadian prosecution history is admissible for claim construction, under extraordinary circumstances, foreign prosecution histories may be may be admissible. And Canmar the plaintiff had specifically referenced the corresponding us application and acknowledged the amendments were to the Canadian plans to overcome a novelty and obviously, this objections that have been raised in US prosecution. So that specific reference was enough for the court to hold that this is an appropriate, quote, extraordinary case where foreign the foreign prosecution history was admissible. And therefore the court concluded that by making those amendments they were essential. In summary dismissal was therefore granted. This case is very significant because it's the first taste test case where prosecution history estoppel was applied. And it's also significant because the court decided the matter on a summary basis without expert evidence. Traditionally, Canadian courts have been reluctant to undertake construction on a summary basis, particularly without expert evidence. But recently in the in 2014, the Supreme Court of Canada and Ernie Acton Malden decision stated that a cultural shift is needed in favor of summary resolution. In recent recent months, and recent and often in 2020. There's the traditionally the Canadian courts and the federal court in particular was hesitant to decide construction on a summary basis. But we've increasingly seen courts taking steps to decide construction issues. On a instead of on a summary basis for Sorry, I've decided them on a summary basis. There. So we're thinking that we may see increasing adoption of Mark and stuff construction hearings for construction is resolved at the outset, rather than waiting for trial for construction issues to be resolved. So decision was appealed. And in fact, the appeal hearing was held today. So I haven't talked spoken with my colleague get to see how it went. But we'll we'll certainly see. And certainly it's one to watch because it was the first first test case to deal with prosecution history estoppel. Changing gears a little bit. This is a case from the the area of trademarks law, and in particular, the area of comparative advertising, which is an interesting subject is not litigated that often in Canadian law. So in this case, we're talking about the brands Duracell and Energizer and of the two of the leading. Battery brands energize with the Energizer Bunny of Energizer is of course well known. It's a subject of multiple trademark registrations, including the registration mentioned are shown there. In 2014, Duracell started using a sort of the defendant. The defendant, Gillette, it should say, Gillette started using on its Duracell brand batteries, claims that they were up to quote up to quote sorry, quote, up to 15% Longer Lasting versus the next leading competitive brand, close quote, and quote up to 20% Longer Lasting versus the buddy brand. Energizer the plaintiff filed an action for depreciation of goodwill and other relief and right relied upon its its registered trademarks and making that claim. So the decision that I'm talking about here was issued in February, and that was issued by the Federal Court of Appeal that relates to defendants motion to strike the plaintiffs claim. So at the first instance, the judge of the Federal Court refused to strike portions of claim related to the the use of the quote the bunny brand. And the court found there that somewhat hurried consumer would make a mental association between the words of the bunny brand, that Duracell use on this battery packages, and the Energizer Bunny trademarks. But in that first instance, the court agreed to strike the portions of the claim relating to the use of the next leading competitive brand. In doing so, the court found that summary judgment should not have been granted and that the federal court erred in depriving energiser the opportunity to make its case this is not withstanding, there was no reference to Energizer by name, the energizer bunny or any other mark. So this this decision really confirms the scope of section 22 of the trademarks act extends beyond a company's identical registered mark, which was established law through the Supreme Court of Canada. It also shows the advertisers to really take care with comparative advertising. It's very interesting to note that the Federal Court of Appeal refuse to strike this claim relating to depreciation and goodwill, even though there was no specific reference to Energizer by name or the energizer bunny or any other mark. And the fact that the Federal Court of Appeal refused to strike back claim leaves open the possibility that even oblique references to competitors and imperative advertising may be considered to appreciate goodwill. So the merits of his claim are certainly still to be resolved. The case is ongoing, and is one to watch in 2021, as parties get closer to an actual hearing on the merits.

Okay, so this relates to the law of copyright. It's kind of an interesting one here that that cinephiles may be familiar with some of these films. I'd certainly love at least two of them. I've never actually seen the documentary, but I love two of these films. So this is the case of Wiseco studio and Harper et al. This is a April decision from the Ontario Superior Court of Justice. So the film the room by Tommy wise. Oh, and that's the poster on the left, considered by many to be the worst film of all time. It's a fantastic extremely cheesy movie for anyone who has hasn't seen it. The disaster artists was a Hollywood Hollywood film is basically it's a dramatic dramatization of the making of the film and they do some really interesting things with like shot for side by side shot for shot. In the film The disaster artist it stars Dave Franco and James Franco, and it was released in May to November of 2017 and received a wide release in December of 2017. In 2016, before the release of that film, the defendants in this case completed the documentary roomful of spoons, the documentary that examined the room, its fans and the creator of that film. In June 2017, shortly before the release of that bad documentary in Canada, the plaintiff brought an ex parte motion in the Ontario Superior Court of Justice for an interlocutory injunction and that was brought without notice to the defendants. So the plaintiffs were awarded their injunctive relief, and they were awarded an injunction prohibiting the defendants distribution of the film. So because of that the defendants were unable to release their documentary to coincide with the release of the disaster artists which they had planned all along, to basically capitalize on the the added interest in the in the room generally, and, and the subject matter of their documentary. So in October 2017 pre trial, the injunction was lifted. And in lifting the injunction, the court had some very nasty things to say about plaintiffs, including the plaintiffs fell well short of the full and frank standard required to obtain an ex parte injunction. This Ontario Superior Court of Justice case released in April 2020 relates to the substantive playing for copyright infringement moral rights infringement. So after that injunction was dissolved, the plaintiffs push the case forward to trial, and this is the result of that trial. So in the result, this is a case relates specifically to copyright infringement, or factual background. First, approximately seven minutes of clips for the room were included in the documentary room full of spoons. And the court agreed with the plaintiffs that that seven minutes reproduce was a, quote, substantial part of the plaintiffs were finding that, from a from a substantive, sort of from a qualitative and quantitative perspective, seven minutes of clips worth of the plaintiffs work is enough to constitute a substantial part for the purposes of Canadian copyright law. But after finding that the defendants have taken a substantial part of the plaintiffs work, the court then went on to consider the Fair Dealing defense, which is available under copyright law to two users. It's been characterized by the Supreme Court of Canada as a user's right under copyright law, and that allows parties to reproduce works or research, private study, news report and criticism parody. There are specific defined categories that count as as fair dealing. And then there's the separate requirement that you're dealing actually has to be fair, it has to be fair what you've taken from the plaintiff and use for one of those purposes. So the the justice in that case, found that that the use of clips from the room was for the allowable purpose of criticism or review, and refer to the documentaries discussion analysis movie. The court also found that the clips were used to the level of person purpose news reporting, given the cultural phenomenon surrounding the movie and its director. And then considering all the circumstances the court found that dealing was fair, and the claim for copyright infringement was dismissed.

This claim is significant. They're sorry, this case is significant, because there really isn't that much law in Canada dealing with the Fair Dealing exception to copyright infringement. Generally speaking, it is it is often pleaded by defendants, but rarely is it made out. So this is a case where where it was it was made out and will provide some kind of guidance going in going forward in the future in circumstances where it may be allowable to make use of a another party's copyrighted work. And then the case is also interesting for the consequences for the plaintiffs as a result of their litigation tactics, so the court awarded the defendants 50 $550,000 USD in damages, resulting from the injunction that prevented the release the documentary at a critical time, the defendants, and then notably, the court also awarded $200,000 in Canadian dollars in punitive damages. In view of the plaintiffs bad faith negotiations with the defendants, basically the plaintiff had demanded exorbitant licensing fees. And the court also referred to the misleading and incomplete evidence presented on the motion to obtain an injunction misrepresentations to third parties about the documentary and repeated attempts to delay the trial. So in short, the court was not at all happy with the plaintiffs and how they had they approach the litigation and punish them accordingly with a very significant word of punitive damages. So this is another case kind of changing gears again, back to the area of of trademarks, law, and now we're talking about a decision released in August 2020. This is the case of TFSI foods and every green this is a case that concerns the law of gray good imports, which again is an area that's a little bit under litigated and Canadian law. So gray goods for those who don't know are basically goods that are imported through means that the plaintiff might not necessarily want them to be imported. They're often goods sold in other jurisdictions that may not be authorized for sale in in Canada are in the jurisdiction where the complaint is raised. So it may be the plaintiff, the defendant isn't strictly speaking infringing, because they are in fact reselling goods if the plaintiff, however, the plaintiff has an authorized their their use and sale in Canada. So there are some circuits. So generally, gray goods imports are not prohibited by Canadian law. But there are some circumstances where activity relating to Craig its imports may be offside of the law. This is one of those cases. So the case relates to a trademark infringement action brought by the plaintiff, either plaintiffs, the trademark owner of the trademark ima us in association with food products. And also another planet was TFSI, their exclusive Canadian distributor. release some products offered for sale by the defendant, every green in Canada. And those products feature the IMA trademarks along with a label saying that every green is the quote exclusive distributor of Canada. And that's not withstanding that ever, Evergreen had never been authorized by either the plaintiffs to distribute ima products in Canada. So the case at issue here and the decision released in August, was related to emotion for a luxury injunction. Excuse me.

Sorry about that not sure what happened there. So as much I mentioned before that the sale of gray market goods in Canada is not in and of itself infringe a registered trademark or constitute passing on. However, in this case, the Court held that evergreens false labels stating that it was the exclusive distributor of Canada was deceptive to retailers and the public. The court found that there was harm to the reputation and goodwill and the AMA trademarks as a result of the presence of false labels on handmade products and inaccuracies in the ingredient list and nutrition facts on the on the Evergreen labels. So the court the court found that the that the injunctive relief was appropriate and ordered, ordered the injunction. Finding that evergreen should step into has to cease offering for sale selling or labeling products vary in the MA trademarks with labels, falsely identifying them as the exclusive distributor of Canada and immediately recall all products bearing the offending labels from the marketplace. The injunction is interesting, of course, because it doesn't strictly prohibit every green from in the future selling products that are that are owned by the plaintiff. They simply can't sell them in the context of statements being made that they're an exclusive distributor in Canada. So the decision is an interesting one, and it recognizes that while Great, good, great good sales are not inherently objectionable, the decision does still give brand owners additional options for restraining sales and future. Okay, and finally, the decision of chewy body and Canada is a decision that was just released again in August. And this is this may be the most significant of all the decisions that we've we've discussed here today. This is a potentially landscape altering decision relating to to patent protection and the way that the Canadian trademark or the Canadian Patent Office approaches patentable subject matter and analysis of patent applications. So that case related to an appeal of commissioners decision rejecting the patent application, the patent application was for a method claim directed to a computer implementation of a new method for selecting and weighing investment portfolio asset. And that way that method basically minimizes risk risk without impacting returns of a reproduction of the claim one here the broadest claim of the of the patent. I won't go through it here or read it in detail, but it is there for your edification. So the the case is has an interesting background in that, for many years, notwithstanding the teachings of the Supreme Court of Canada, Canadian examiner's have applied what they call the problem solution test, which is effectively the same thing as the contribution approach to examining patent claims in this area. So in this approach, the the essential elements of a claim are those patent be that the examiner considers necessary to achieve the disclose, quote, solution to an identified quote problem. And really, a lot of those things are up for debate and discussion. And that is a significant part of patent prosecution and Canada's identifying what are the problem the problem and solution to be solved? And this is all notwithstanding that the Supreme Court of Canada effectively had rejected that test many years ago. So that that incorrect approach was until this decision was released, set out in the manual of patent office practice. And that manual dictates how examiner's will approach the construction of these types of patent claims. So in this decision, which was released in August, just as in found that the problem solution approach to claims construction is akin to using the substance of the invention approach, which was discredited by the Supreme Court of Canada and free world trust. And the court found that the Commission had erred in determining the essential elements the claim dimensioned by using that approach, instead of using the approach dictated votes during court. So I think that's right, I think it's just repeated that top bullet there. And really, it was really clear reading the decision that just doesn't recognize the import, and what this would mean for patent office practice in Canada. And I've quoted there the second bullet, quote, it is evident on a reading of Mo pop that the commissioner, notwithstanding stating that the patent claims are to be construed in a proposed manner, does not intend to direct patent examiners to follow the teachings of the of the Supreme Court of Canada in free world trust and Whirlpool. So a very significant decision certainly and effectively, the court is has indicated that patent examiner's and Mopar is not being applied in the way dictated by the Supreme Court of Canada, and justice and use that use that decision or use that finding to basically find that the patent should be should be granted and or sorry, send it back to the to the patent office sees me didn't find it, scratch should be granted, send it back to the patent office for termination is my recollection.

So similar to what what occurred following decision, Amazon CIPO. And the patent office have now put all related cases and these areas on hold, while they figure out how to deal with the decision, and the decision was not appealed. So there really are significant implications for many pending cases that are in the pipeline now and future cases. And in fact, just today, the Kenya electoral property office put out revised practice notices on how patent examiner's are to handle these types of these types of cases and future. So I'm going to pass it over to Paul now to continue with the with the talk and on the next section.

Paul Armitage 27:13

I thanks, Nelson. So you're going to start off the second part of the webinar by looking at a very interesting English case called Seven, seven and limited versus Ordnance Survey. So this is a big data case. It is also a case that involves what is an increasingly common business model. And maybe that's companies that find online datasets or online services, they extract the data from them, and they and they manipulate and combine that data to create their own new service.

Okay, so what seven seven m did in this case is that they created a product called matrix. Matrix is essentially a geospatial map of all the addresses in Great Britain. And matrix was created by combining and accessing at least 18 different datasets. Some of these datasets were publicly available under online terms. Some of them were available under negotiated licenses, some of them were available for free, and some of them they had to pay to access. And however matrix included some data that derived from Ordnance Survey data, Ordnance Survey being the national Mapping Agency for Great Britain.

So one of the first questions that the court looked at this whole concept of internal business use. So this is a concept that is used in a wide variety of different types of technology contracts. And it's essentially a type of term of art that's used to denote that the licensee can use the product or the service or their internal use if they can't use it outside of their organization. So one of the data sets that matrix had access to was called the Inspire geospatial data set. And it came with a set of online terms what the online tourist said was that you need to contact Ordnance Survey to get a license if you need to do either of two things. One is use the polygons the polygon is like a map representation of an address or location for a purpose other than commercial use within your organization. So in other words, if you want to use the polygon or commercial use outside of your organization, you have to get a license from Ordnance Survey. This is similar to an internal business use clause. And then secondly, or if you wanted to actually distribute the polygons outside of your organization you need to license from Ordnance Survey So of course, what seven seven m did was that they used the Inspire polygons to create matrix. And they but they did not actually distribute the polygons outside of their organization to their own users. And of course, since we're reading a case about it, they didn't go to Ordnance Survey to get a license to use the polygons. So here, I would like to pause and do a poll question for the members of the webinar. And the question is, you know, did seven, seven m breach those online terms by using the polygons to create their own commercial service?

Okay, I see the numbers jumping around here. So it looks like it looks like we have about 70 72% people saying, yes, they did breach the download terms. And 28% saying no. Okay, so now according to the way the court found, so the court found, that the those that particular clause did not prevent the use of the polygons to develop a service for sale to customers, as long as the polygons themselves were not supplied to the customer. In other words, in essence, what the court found was the words commercial use within your organization included developing a competing service.

So there are few takeaways to derive from this case. First of all, when you look at clauses that impose internal business use type restrictions, the clause has to be interpreted in the context of the overall con contract in order to determine what the meaning of those words actually are. And building on that simply using the words internal business use, that may not be enough if the license service could be used to create another service derived from the actual license service. So one thing to think about if you want to prevent that type of use of your product or service is to include more prescriptive terms in your agreement, for example, specifically saying that the licensee cannot use the licensed service to create a competitive product or service. So another thing that seven seven m did was that they, they scraped about three and a half million records from an online service called find a property. And this find a property service had online terms. And the online terms actually prevented scraping or using automated tools to extract data. However, the way the website worked was, you only had to affect you only had to accept the terms if you're going to make a purchase of data. And so what seven, seven m was able to do was they were actually able to access their data, or the data that they needed without actually purchasing the data. So in other words, they didn't actually accept the terms that prohibited scraping. And so the question was, you know, however, those those terms were still nonetheless posted on the website, even if a person wasn't required to specifically accepted unless they're making a purchase. So the court found that seven, seven m had in fact breached the prohibition on scraping, even though they had not proactively accepted the terms. And the reason for that was, the court found that a reasonable user would conclude that the license terms applied to the entire service even prior to accepting the license. So here, a couple of key takeaways are know if people are accessing publicly available datasets, you're always check the terms that apply even if you're not required to proactively accept them. And secondly, liability can arise even if the terms are not accepted. If the court finds that a reasonable user would have considered them binding or would have understood them to be the terms that applied to the use of the servic

Okay, so the final aspect of seven seven and we're gonna look at is was actually a negotiated license. So in addition to accessing these publicly available datasets, seven 7am actually negotiate a license with the Registrar of Scotland to use two types of data, house price data and house price information under the terms of the negotiated license, all other uses, or other parts of the data that we accessed can only be used for internal modeling purposes.

And so what something 7am actually did was, they weren't actually interested in the house price and the house that information, what they really wanted access to was all the geolocation data that was sort of embedded in the data they were accessing. And so what they did was they took the geolocation data, and they use that in order to create matrix. This, the court found to be a breach of the negotiated license, because they were using the geolocation data for purposes other than internal modeling. So here, the key takeaway is that when a person is negotiating a license, make sure it gives the organization all the rights that it needs. Okay, so we're gonna switch now and look at the copy fighter case, which deals with the constitutionality of Canada's anti spam law or CASL. So a quick recap of the facts. So copy finder is a professional training course company, and its primary means of business development was through email marketing. The CRTC, investigator investigated copy finder in 2014. And he found that can't be fined or had committed various breaches of CASL, specifically setting up email marketing messages without consent. And some of those messages had to unsubscribe makes one that worked, and one that didn't. And the court found that the presence of this non working was enough to cause a breach of CASLs unsubscribe requirements, the CRTC investigator issued a notice of violation for one point million dollars. Copy finder took that to a hearing before the CRTC, which reduced it to $200,000. And then copy finder appealed to the federal court. So federal court first looked at the whole question of constitutionality of CASL. And first thing we looked at is whether or not CASL is covered by the federal trade and commerce power, as opposed to being a matter of property and civil rights, which is a matter of provincial jurisdiction. And here, the court actually broke Kasam into three different pieces. It had the piece dealing with marketing emails, piece dealing with installation of computer programs, and the piece dealing with address data and things of that sort. And so looking at the CM regulatory scheme, we said that the Python substance or that regime is to protect Canada's economy against the threat of Spam. Spam was considered to pose a significant threat to privacy and security. And that B C M regulation scheme was directly tied to achieving the purpose of controlling spam. And because CASL applies to the nation as a whole, and not to a specific industry, it was founded, we hadn't had a national purpose and therefore fall within the trade and commerce power. The next question was whether or not CASL involved an infringement of the charter guarantee against restrictions on freedom of expression. So here, everyone actually accepted the council did restrict freedom of expression in the form of business communications. However, the Court held that this is a justified limitation. And here the court noted that inside CASL the definition of a commercial electronic message or CME is not vague, so as to be unconstitutional. So I'll pause here to make a general observation. So from the date that CASL was first introduced, there's been sort of two different views our CASL on the one hand there being, you know, commentators or people who say CASL, it's, it's too vague, it's too detailed, it's too difficult to apply in real life. No one really understands what it means we should just throw the whole thing out the window and start again. On the other hand, those types of arguments have been met by people particularly on the regulatory side with a certain degree of exasperation. And that basically said, you know, what is so difficult, all you have to do is read the act, read the guidelines you put out, follow the rules, and you can comply with CASL. So these two different views of CASL were on heavy display in this in this court judgment, with copy finder arguing things like vagueness to try to strike down CASL as unconstitutional. The court however heavily came down on the side of what's the big deal. All you have to do is understand the rules and comply with them. At one point the court even referred to copy finders submissions in this regard is hyperbole. From the perspective of the court CASL, in order to comply with CASL, all you need to do is have consent, include an unsubscribe mechanism, and include the necessary contact information with your message. So the court found that this regulation of cems was rationally tailored to its objective and it also found that it was a reasonable way to solve the problem or approach the problem and here the court contrasted CASL with a couple other um legal legal regimes out there that regulate spam so they looked at US caspam. So US can spam is purely an opt-out approach the court considered that to be insufficient as a way to combat spam because it doesn't prevent spam from actually reaching the inbox of the recipient they also looked at the Australian approach. So in Australia their anti-spam regulation it has a closed definition of what a CEMis but then an open-ended concept of the inferred consent. Whereas CASL works the opposite way it has an open-ended definition of what our CEM is and there's a series of closed categories of either exemptions or implied consents. But the court looked at this and said it's really just six of one one half dozen of the other one can't be said to you know restrict free speech more than the other. And then finally and perhaps most importantly the court commented that counsel deals with commercial expression and commercial expression is not as strongly protected under the constitution as other forms of expression.

So the court also said that CASL is not a criminal enforcement regime and therefore does not violate the presumption of innocence or security of the purpose of person and they also found that the the investigative powers under CASL do not constitute unreasonable search and seizure.

So setting aside the constitutional arguments the court also um touched on a few of the more of the actual substantive provisions of CASL and they looked first first at the business to business exemption so the B2B exemption as many people would be aware completely exempt from CASL cems that are sent between two organizations that have a relationship as long as the cems are relevant to the activities of the recipient so here what compufinda had argued was well we had provided training in the past to specific individuals at these companies that was enough to create a relationship between us two companies to allow us to send these messages the court agreed to the crtc that that was not that was not sufficient to create a relationship under the B2B exemption essentially what they said was under the bdp exemption but it allows organization a to send messages to anyone within organization b and therefore in order to establish that type of relationship it requires a much higher evidentiary hurdle on the other side however they found that when analyzing what the activities of the recipient are relevant to the analysis they said that one can't just look at the core business activities of the recipient one can consider other types of relevant relevant activities of the recipient when judging whether or not message is relevant to the recipient so the court then next turned to the implied consent for conspicuous publication so here um under CASL there's an implied consent to send a cem when a person has conspicuously published their email address and the message is relevant to the person's business role functions or duties so what copyfinder had done here is they've gone to a bunch of websites they've gone to the contact page they've put out some email addresses and it said you know we're only sending messages to people relevant people within the organization based on what we found on their website um the court found that that's not sufficient the court said that you can't simply for example by looking at a job title of a person that may be posted on a website um you know that easily come to the conclusion that the message is actually relevant to their role within the organization rather this relevance must be assessed on a case-by-case basis and this finding is consistent with previous decisions of the crtc on the same point.

Finally the court looked at the unsubscribe mechanism as I mentioned earlier there were actually two unsubscribed links in the messages one of the one of the unsubscribed links worked the other didn't work the court upheld that this was a breach of CASL on the basis that is confusing and frustrating to someone looking to unsubscribe so we're going to shift now to our privacy law review the first thing we're going to look at are the amendments to the BC freedom of information and protection of privacy act dealing with in Canada storage and access so just to level set under fipa a BC public body must ensure that personal information in its custody or control is stored and accessed only in Canada unless one of three things the individual consents to outside Canada storage and access the outside Canada storage of access is allowed under a fipa exception and there are a variety of specific and time limited exceptions to this basic requirement in fipa or if a ministerial order is made allowing the outside Canada access or storage and so the minister of citizen services has the power to issue these orders um over the course of depa um perhaps a dozen or so of these orders have been issued but generally speaking they are they're directed at very specific things they don't for example exempt entire use of a service or a typical product or anything of that sort we're going to come back to the ministerial order in a moment.

So what the amendments did is they added two new exceptions to the in Canada storage and access requirements first of all um automated processing of personal information outside of Canada but without storage outside of Canada is permitted as long as the data is only accessed by a machine and the access outside of Canada is temporary.

The second exception is that electronically generated metadata about the use of an electronic system can be disclosed outside of Canada as long as the personally identifiable information is removed if practicable so there's some you know permissive aspect to that or and this metadata is is not used for any other purpose for example no sort of secondary purpose.

Okay so what is going on here so effectively these are very targeted changes to fipa to deal with specific aspects of some commonly used business tools that involve online or cloud type services and they're really meant to be um create some narrow exceptions to deal with some specific circumstances the way certain services tend to operate such as aspects of email services spam filters web analytics services you know word processing programs that keep track of metadata perhaps that metadata is stored and processed outside of Canada as part of the functioning of that online service so in other words these are very limited specific new exceptions they don't permit sort of the general use of a cloud service but they are reflective of what's been an incremental approach under fipa to expanding outside Canada storage and access so rather than grant broad exemptions we've had um these most recent amendments customer amendments in the past much more specific and targeted incremental type changes.

Now perhaps reflective of um you know the strictness of the requirements of in Canada storage and access the Minister of Citizen ZZervices did issue a ministerial order earlier this year and it's time limited to stay in effect to the end of the year effectively to loosen up outside Canada storage and access of personal information in the context of dealing with the quoted 19 disease subject to certain conditions.

Okay so we're going to move now to um a brand new area of privacy law enforcement which is uh the signaling by the Competition Bureau of Canada. They will begin to police breaches of privacy law as breaches of the competition act so essentially what the competition bureau is doing here is that they're bringing truth and advertising regulation to privacy law practices so in other words if companies make false or misleading claims such as in a privacy policy about the type of data they collect why they collect the data and how the company will use the data that could be found to be a breach of the advertising rows enforced by the competition bureau and of course the significance to this is that the competition bureau has very strong enforcement powers they can levy administrative penalties against companies of up to 10 million dollars for a first offense and up to 50 million dollars for subsequent defenses so this can be contrasted with our privacy commissioners our proxy commissioners are really built on an ombudsman type model so the privacy commissioner can investigate they can report and if they find a violation they can try to resolve it amicably and if they can't resolve it they can publish a report and you know name and shame the company that committed the breach however they had no real enforcement power and specifically they have no power to administer fines or penalties themselves so with the competition viewer entering this area this this opens up um a much you know in terms of organizations privacy practices and what they disclose in their privacy policies this opens up a new dimension to the potential consequences of that.

So now i'm going to finish off the webinar just touching on some of the privacy law reform initiatives underway in Canada so at the federal level the peda in the most recent annual report the federal privacy commissioner indicated that uh papa is considered to be outdated it does not sufficiently deal with the digital environment and specifically deal with adequate regulation of new technologies secondly on top of that the privacy commissioner has asked for much greater remedial powers this picking up on uh the comments a few minutes ago about the objection type role of the practice commissioner they'd like to shift away from that model to really more of a european style data protection authority type model where the privacy commission will actually adjudicate disputes and have the power to award monetary penalties now it seems likely that that will be a major overhaul of paper in the near future however we don't yet know when this might occur the government actually first signaled that they were looking at after these types of issues over a year ago when they announced the digital chart so in the interim um quebec has moved forward with its own bill this this bill addresses the modernizing of quebec's both public sector and private sector privacy laws and essentially it's for the same reasons there's a feeling that the data protection laws are out of date and a complete overhaul is proposed so some of the things that are included in the quebec bill much more robust consent requirements they've also included a number of sort of GDPR type rights of the individual such as the right to be forgotten the right to be informed of automated decision making uh privacy by design concepts there's also um a new regime dealing with outside of quebec communication of personal information

Mandatory breach reporting which is not currently a feature of the quebec act and finally once again beefing up on the enforcement side so the quebec privacy commissioner will now have the ability to wood now once the bill gets passed the power to issue administrative monetary penalties about the 10 million dollars or 2 percent of worldwide turnover or for our offenses under the act those could be punishable up to four percent of worldwide turnover which of course is very reminiscent of you know the enforcement powers of the dpas in the GDPR and on top of that there would be a private rate of action and minimum damages for intentional or gross fault.

So Ontario in august of this year they similarly signaled that they are looking at overhauling ontario private sector privacy laws so as most people will be aware ontario does not currently have its own broad-based private sector privacy law instead it relies on paper so the ontario government released the consultation paper entitled improving private sector privacy for ontarians in a digital age so you can see the theme here once again the laws need to be updated to deal with new technologies and the digital environment and the consultation paper touched on a number of things that they may be looking at doing once again a new consent model much more closer to the consent model under GDPR which includes concepts such as legitimate purposes and then reserving opt-in consent for more specific things such as secondary purposes a number of GDPR type rights ready forgotten data portability yet another aspect to the consultation would be to fill in gaps under prepaid so currently the data does not apply to for example the non-profit or charitable sector and it doesn't apply to employee personal information outside of federal works and undertakings and once again the privacy commissioner would be looking to add the ability to levy fines so finally in british columbia we have our own review of the personal information protection act being done by a legislative committee this is the required review that is supposed to occur every six years um a variety of organizations have made submissions that that can be found on the BC government website and there will be reports slated for release in february of next year about whether or not any amendments to pippa will be recommended and that's the end of the official part of the presentation so we'd like to thank everyone for joining us today we do have a few minutes left here for question and answer so i'll just quickly see what questions we have.

Okay so the first question is for nelson um other than software patents and medical diagnostic methods is the problem solution approach used in other arts um so my my recollection is that uh and I haven't have not yet reviewed the the revised guidance from sipo um but my my recollection is that this will have uh significant impacts not only with respect to software patents uh and uh diagnostic methods which is recognized there but medical uses as well I think will be another area where uh this this could be could be highly relevant um so those are the those are some of the primary areas where this this approach was used um if the broader question is is it used in respect of you know simple machines and those basic types of patents um there is kind of an implicit recognition amongst examiners when you're discussing with examiners that's kind of what they're looking for um but it isn't uh it isn't enforced as strictly and wasn't specifically referred to in many other areas of the of moba and

Great so the next question is what is the rationale for the significant reduction in the monetary penalty in the copy fighter case so if you recall the original CRTC investigation levied a fine of 1.1 million dollars and the crtc on hearing reduced it to 200 000 so the the main reason for that was um so under CASL there are series of criteria that are go into assessing what the right penalty was and the CRTC hearing felt that the 1.1 million dollar fine or penalty it it had been assessed more on the theory of general deterrence to the industry or or any or any company out there whereas the CRTC said the correct analysis what is the right penalty to deter this particular company and so they felt that the 1.1 million dollars focused on general deterrence and the 200 000 is sufficient to deter that specific company.

So the next question is do you think BC would delay introducing changes into the federal updates to the peda. I think that's quite likely um so obviously PIPA has to maintain its substantially similar status to paper and so they can't really do that until until they know what the new potato looks like interestingly it's a bit of a it's a bit of a domino effect because paper has to maintain its adequacy to the GDPR in order to maintain the information flow from Europe into Canada so in other words the theta has to maintain its attitude adequacy status and so they're looking at what the the members to potato needed to do that and then once those are in place then PIPA has to look at what was needed to maintain substantially similar status to the data so um I’m not aware of any official word on that but I think that is quite likely how how things will play out.

Okay next question if my company follows the GDPR rules of engagement for privacy of data are we okay in Canada um yeah that's obviously quite a complicated complicated question so obviously GDPR is you know sort of a high water mark of current privacy law regulations and so if you're doing everything you're supposed to under GDPR you know you know this probably you're probably doing in some respects you're going above and beyond what may be required under Canadian privacy laws however the regimes are different for example in Canada it's essentially a consent based regime whereas in the GDPR you know they have this concept for example legitimate purposes where you don't necessarily need consent of the individuals to do certain things and so there's those types of differences and those types of variations so it's not something you can't automatically assume that because you can plan with GDPR you will comply with Canadian privacy laws although if you are complying with GDPR and all likelihood you have robust policies in place that are you know uh you know in some respects going beyond what's required in the Canadian law but in some respects they may not be the perfect fit.

Okay I think we'll just finish off in this one last question with the previous exemption that covers a public body that sends an email to a service provider and that email contains sensitive information that the email is routed to us servers.

Yeah sorry I think the question is so currently about a number of years ago there were some previous amendments made to PIPA essentially to allow the use of certain types of email services that were cloud-based but here the context of that amendment was really people using um email services that were not strictly solely based in Canada to email public bodies and then when the public body wanted to turn around and respond to that individual using the same means of email communication. There's no guarantee that that so the public bodies was under an obligation to make sure the data stayed in Canada but by simply by replying to an individual using one of the email services that the individual had used the data could transit outside of Canada and so there was a specific amendment made to PIPA a number of years ago in order to commit those types of responses however they did not actually permit the public body itself to use for example a cloud-based email service that would include storage your access of data outside of Canada so that previous that previous um amendment that still exists and still applies you know the new amendment um is really not so much about the email service itself it's really about if there's aspects of it for example metadata or temporary processing and things of this sort it won't actually permit you know the routing of personal information through email service you know through a foreign country okay um so I think we're at time so I think uh on behalf of Nelson and myself we'd like to thank everyone for joining us today and we wish you a pleasant rest of your day and we look forward to any further questions people may have and hopefully hearing from a number of you in the future. Bye for now.