Status of Animation Incentives in Nova Scotia? Keep the Cartoons Coming

May 12, 2015

By Adam Bata

In the past few years, Nova Scotia has fostered the development of video game and interactive media companies by offering a competitive digital media tax credit. Under Nova Scotia’s Digital Media Tax Credit Regulations, qualified companies were able to claim the lesser of:

  • 50% of eligible Nova Scotia labour (plus a regional credit of 10% if qualifying expenditures for productions are outside the Halifax Regional Municipality) or
  • 25% of total Nova Scotia expenditures (plus a regional credit of 5% of qualifying expenditures for productions outside the Halifax Regional Municipality).

Companies could also receive a credit on marketing and distribution expenditures to a maximum of $100,000 per product. These expenditures may be made outside the province. To be eligible for this tax credit, a company must be a taxable Canadian corporation with a permanent establishment in Nova Scotia, whose primary purpose is to develop interactive digital media products – an interactive digital media product must educate, inform or entertain and present information in at least two of text, sound or images.

As readers may know, the last few weeks of changes in the film tax credit available in Nova Scotia have created some confusion regarding the incentive regime under which animation companies in Nova Scotia will operate beginning on July 1, 2015. Animation companies have been clear that they need more support than will be provided under the revised film tax credit regime.

To their credit, these animation companies and the Government of Nova Scotia have negotiated a new stream of the digital media tax credit that fosters this specialized ecosystem and from July 1, 2015, incentives for animation companies will be provided under a new branch of the Digital Media Tax Credit. This new program was designed based on comparable regimes that currently exist in Ontario and British Columbia.

Under this new credit stream, animation companies (like all eligible companies under the Digital Medial Tax Credit rules) will benefit from the lower of:

  • 50% of eligible labour costs (which will be further described in coming regulations) or
  • 25% of total Nova Scotia production costs.

However, in addition, these companies will be able to access a bonus rebate of 17.5% on all animation labour costs (I note that the government release advises that there will be a maximum on salary levels eligible for consideration within the credit). An illustration of the new animation incentive calculation can be found here.

The finalization of the new regime should provide a few reasons for animators to feel relieved that they have almost successfully reached the end of this budget negotiation process. First, this novel tax credit stream would seem to be more advantageous than the revised film tax credit regime under which tax rebates per eligible company are less beneficial in the aggregate and the total fund is capped to the amount of the new Nova Scotia Film and Television Production Incentive Fund.

Second, initial analysis suggests that animation companies will receive around the same rebate this year as they were able to access under the film tax credit regime that existed in the 2014-2015 fiscal year (unless of course the definition of ‘eligible labour costs’ is slimmed down in the upcoming regulations which are due before July 1st).

Notwithstanding these good results, there are still some areas of confusion that will be need to be resolved in the upcoming week(s). The primary question that animators will want clarification on as they prepare to move forward under this system is whether the funds available under the altered regime are capped.

Premier Stephen McNeil has implied that the fund for this new steam of the Digital Media Tax Credit is capped at the $10 million mark (being the amount that the Government of Nova Scotia has set aside for the fund in this fiscal year). On the other hand, Finance Minister Diana Whalen told the media last week that the new program is tax credit not a set fund and will thus be available to all who meet the eligibility requirements (despite any depletion of the allocated funds).

This distinction is obviously key to animation companies as they were part of a group of companies that relied on approximately $24 million of funding under the film tax regime during the 2014-2015 fiscal year. The Government has indicated that beginning in the 2016-2017 fiscal year only $4 million will be budgeted for this animation specific program.

More to come – until then it seems that the show goes on.

By Adam Bata

In the past few years, Nova Scotia has fostered the development of video game and interactive media companies by offering a competitive digital media tax credit. Under Nova Scotia’s Digital Media Tax Credit Regulations, qualified companies were able to claim the lesser of:

  • 50% of eligible Nova Scotia labour (plus a regional credit of 10% if qualifying expenditures for productions are outside the Halifax Regional Municipality) or
  • 25% of total Nova Scotia expenditures (plus a regional credit of 5% of qualifying expenditures for productions outside the Halifax Regional Municipality).

Stewart McKelvey Tweets

Re:Sound Dancing Again

April 15, 2015

By Michelle Chai, Associate

As noted in a previous blog post on Re:Sound[1] Tariff No. 6.B (Use of Recorded Music to Accompany Physical Activities), sets the royalties to be paid for the performance in public or communication to the public of published sound recordings in any indoor or outdoor venue for the purposes of fitness, training, skating, dance instruction or any other physical activity. The Copyright Board has recently issued its final decision on this Tariff.

What does this mean for you?

If you operate a venue which holds fitness or dance classes or other kinds of physical activities, or you operate an indoor/outdoor skating venue, and sound recordings are played, Re:Sound can collect royalties retroactively to 2008 – 2012, based on the new tariff rates set out below:

Use of Music/Activities Royalties Payable
Background Music (Fitness)
In areas with weight training, cardiovascular training, circuit training, and other similar activities, other than fitness classes
- 3.2% of the amount paid to subscribe to a third-party music supplier, or
- 0.0831 ¢ per admission
Fitness Classes and Dance Classes
During fitness classes
Amount per class:
31.0 ¢ (2008)
31.9 ¢ (2009)
32.8 ¢ (2010)
33.8 ¢ (2011)
34.8 ¢ (2012)
Skating - 0.44% of the gross receipts from admissions, subject to a minimum of $38.18
- flat fee of $38.18 per year per venue if no admission fee is charged

The only real change from the previously certified tariff is to the tariffs for Fitness Classes and Dance Classes, which previously were a flat fee of $105.74 per year per venue and $23.42 per year per venue.

Given the Board’s comments (see below), it is likely that your organization will owe more under these new rates, although it may turn out that it is Re:Sound that owes you money.

Copyright Board’s Decision

The Board was asked to determine rates under Tariff 6.B related to fitness classes, dance instruction, and other physical activity.  Of interest, Re:Sound and Fitness Industry Council of Canada (“FIC”) and Goodlife Fitness Centres Inc. reached a settlement agreement on the rates to be charged prior to the Board’s decision.[2]

The Board commented on the Settlement, noting that:

  • An agreement between the parties should have been proposed prior to the Board’s 2012 decision and prior to the hearing.
  • Rates regarding Background Music (Fitness) and Skating were not being re-determined so it did not matter that the parties had agreed to different rates in the Settlement.
  • The Settlement was “substantially” different from the tariff originally proposed.  The new rates and formulas proposed would create administrative difficulties as retroactive payments would have to be recalculated.  The Board suggested:

[The] balance of convenience could lead Re:Sound to refrain from retroactively collecting royalties from users who have already paid under Tariff 6.B and who were not represented by the Parties during the negotiations leading to the Settlement…[3]

Some users may end up owing less than under the previously certified tariff.

  • The extent to which dance instruction venues was represented by FIC was unknown, and the lack of evidence prevented the Board from examining possible fairness issues in respect of dance instruction venues.
  • The tariff will generally result in higher royalties payable.

[1] Re:Sound obtains fair compensation for performers and makers (i.e. artists and record companies) for their performance rights through Re:Sound licenses and the collection of royalties, while SOCAN represents the performance rights of composers, authors, and music publishers – SOCAN covers the compositions while Re:Sound covers the recordings.

[2] Together, the Board noted that FIC and Goodlife account for over 5,000 fitness venues with over 4,000,000 members (para.55).

[3] Para.54.

By Michelle Chai, Associate

As noted in a previous blog post on Re:Sound[1] Tariff No. 6.B (Use of Recorded Music to Accompany Physical Activities), sets the royalties to be paid for the performance in public or communication to the public of published sound recordings in any indoor or outdoor venue for the purposes of fitness, training, skating, dance instruction or any other physical activity.

#SaveSunnyvale – Nova Scotia’s 2015 Budget and the Film Tax Credit

April 10, 2015

By Adam Bata and Christena McIsaac, Articled Clerk

Nova Scotia’s Minister of Finance Diana Whalen hinted in the weeks leading up to yesterday’s budget announcement that the provincial government was planning on amending Nova Scotia’s Film Industry Tax Credit.

As the tax credit has played a large role in fostering Nova Scotia’s film industry since its inception in 1993, proponents of the tax credit (including the Trailer Park Boys and Snoop Dogg) were quick to band together and articulate their support for the current regime.

Despite the strong social media campaign arranged by the film industry, the provincial government decided to proceed with some changes to the current regime. So what was actually changed?

Pre-Budget Regime

Prior to yesterday’s budget, the Film Industry Tax Credit was a fully refundable tax credit for costs directly related to the production of films in Nova Scotia. A company was eligible for the credit if it was an eligible corporation, producing an eligible film, with eligible salaries, as defined in the Regulations. In brief, these terms mean:

  • An eligible corporation had to be a taxable Canadian corporation, primarily carrying on business in film or video production. The corporation had to have a permanent establishment and at least 25% of the salaries and wages of the corporation had to be “eligible salaries”.
  • An eligible film was one which was a commercial venture and intended for a “television, cinema, videotape or non-theatrical production” with a subject matter of “drama, variety, performing arts, an animated or informational series, a documentary or music programming”.  There were certain restrictions which included news, weather, talk shows, and reality television.
  • Eligible salaries had to be reasonable in the circumstances; included in the cost of the eligible film; directly attributable to the production of the eligible film; and must have been incurred and paid within a prescribed time period.

For productions that commenced principal photography after November 30, 2010, the credit fully refunded an amount equivalent to 50% of the company’s eligible salaries. The credit was increased by 10% for productions that shot at least 50% of production days outside Halifax but still within Nova Scotia. Finally, the credit could also be increased by a further 5% for companies that had commenced production on at least two prior films within the last 24 months (known as the “frequent filmer credit”). Therefore, the maximum refundable tax credit available to companies that produced films in Nova Scotia was 65% of eligible salaries.

New Reality

Yesterday’s budget announcement has significantly changed the tax credit regime for film productions in Nova Scotia.

Primarily, the tax credit is no longer 100% refundable. The refundable portion of the tax credit has been decreased to 25%, meaning that a company will only receive a refund equivalent to 25% of its eligible salaries. The remaining 75% of the tax credit is now non-refundable, meaning that it will only operate to reduce any Nova Scotia taxes owing by eligible corporations. There has been no indication that any changes have been made or are anticipated to the eligibility criteria to be able to access the tax credit.

The changes will take effect July 1, 2015 and will not impact companies that commenced principal photography prior to that date. However, given that most films in Nova Scotia are produced by companies incorporated solely for the purpose of that production, you can expect to see this having a significant impact very soon.

One item which has not been highlighted in the coverage of these changes is that the reduction in benefits available under Nova Scotia’s provincial tax credit regime may be partially offset by the increased ability of producers to access federal film tax credits offered by CAVCO. Under the federal regime, any funding that is deemed assistance (i.e. benefits under Nova Scotia’s film tax credit regime) are deducted from the total production cost which is used in calculating the tax credit available.

By Adam Bata and Christena McIsaac, Articled Clerk

Nova Scotia’s Minister of Finance Diana Whalen hinted in the weeks leading up to yesterday’s budget announcement that the provincial government was planning on amending Nova Scotia’s Film Industry Tax Credit.

As the tax credit has played a large role in fostering Nova Scotia’s film industry since its inception in 1993, proponents of the tax credit (including the Trailer Park Boys and Snoop Dogg) were quick to band together and articulate their support for the current regime.

Despite the strong social media campaign arranged by the film industry, the provincial government decided to proceed with some changes to the current regime. So what was actually changed?

Pre-Budget Regime

Prior to yesterday’s budget, the Film Industry Tax Credit was a fully refundable tax credit for costs directly related to the production of films in Nova Scotia. A company was eligible for the credit if it was an eligible corporation, producing an eligible film, with eligible salaries, as defined in the Regulations. In brief, these terms mean:

  • An eligible corporation had to be a taxable Canadian corporation, primarily carrying on business in film or video production. The corporation had to have a permanent establishment and at least 25% of the salaries and wages of the corporation had to be “eligible salaries”.
  • An eligible film was one which was a commercial venture and intended for a “television, cinema, videotape or non-theatrical production” with a subject matter of “drama, variety, performing arts, an animated or informational series, a documentary or music programming”.  There were certain restrictions which included news, weather, talk shows, and reality television.
  • Eligible salaries had to be reasonable in the circumstances; included in the cost of the eligible film; directly attributable to the production of the eligible film; and must have been incurred and paid within a prescribed time period.

For productions that commenced principal photography after November 30, 2010, the credit fully refunded an amount equivalent to 50% of the company’s eligible salaries. The credit was increased by 10% for productions that shot at least 50% of production days outside Halifax but still within Nova Scotia. Finally, the credit could also be increased by a further 5% for companies that had commenced production on at least two prior films within the last 24 months (known as the “frequent filmer credit”). Therefore, the maximum refundable tax credit available to companies that produced films in Nova Scotia was 65% of eligible salaries.

New Reality

Yesterday’s budget announcement has significantly changed the tax credit regime for film productions in Nova Scotia.

Primarily, the tax credit is no longer 100% refundable. The refundable portion of the tax credit has been decreased to 25%, meaning that a company will only receive a refund equivalent to 25% of its eligible salaries. The remaining 75% of the tax credit is now non-refundable, meaning that it will only operate to reduce any Nova Scotia taxes owing by eligible corporations. There has been no indication that any changes have been made or are anticipated to the eligibility criteria to be able to access the tax credit.

The changes will take effect July 1, 2015 and will not impact companies that commenced principal photography prior to that date. However, given that most films in Nova Scotia are produced by companies incorporated solely for the purpose of that production, you can expect to see this having a significant impact very soon.

One item which has not been highlighted in the coverage of these changes is that the reduction in benefits available under Nova Scotia’s provincial tax credit regime may be partially offset by the increased ability of producers to access federal film tax credits offered by CAVCO. Under the federal regime, any funding that is deemed assistance (i.e. benefits under Nova Scotia’s film tax credit regime) are deducted from the total production cost which is used in calculating the tax credit available.

Element of Malice Imported into Definition of Cyberbullying

March 31, 2015

By Karen Bennett-Clayton

The Nova Scotia Supreme Court has finally given some much-needed judicial interpretation to the broadly worded definition of cyberbullying contained in the Cyber-safety Act, SNS 2013, c.2.

The Cyber-safety Act came into force on August 6, 2013.  It created both a tort of cyberbullying and also provided a procedure through which a complainant can seek a protection order against an individual or individuals to stop existing cyberbullying and prohibit future cyberbullying.

Both the tort and the protection order are based on the following definition of cyberbullying:

…any electronic communication through the use of technology including, without limiting the generality of the foregoing, computers, other electronic devices, social networks, text messaging, instant messaging, websites and electronic mail, typically repeated or with continuing effect, that is intended or ought reasonably [to] be expected to cause fear, intimidation, humiliation, distress or other damage or harm to another person’s health, emotional well-being, self-esteem or reputation, and includes assisting or encouraging such communication in any way.[1]

This definition of cyberbullying captures a wide range of communication, from the truly insidious statements calculated to cause fear and intimidation to statements that are simply embarrassing or somehow harmful to the recipient’s emotional well-being.  The definition contains no requirement to show motive or intent, nor does it require that the communication be false or misleading.  On a plain reading of it, true statements could be considered cyberbullying so long as they are repeated and are distressing or harmful to someone’s self-esteem.  Moreover, and as it includes those who “assist” in such communications, the definition is also arguably broad enough to include those who publish the electronic communication, such as web hosts or internet service providers (ISPs).

In Self v Baha’i, 2015 NSSC 94, the court considered the definition of cyberbullying in the context of whether it should vary, rescind or expand on a protection order.  In considering this motion, the court was clearly troubled by the expansive definition of cyberbullying in the Cyber-safety Act, stating that it went “far beyond the ordinary meaning of the term.”   In particular, it was concerned with the definition’s lack of requirement to show intent.

The following quote highlights the court’s concerns and provides a range of scenarios that, on a plain reading of the definition in the Cyber-safety Act, would be cyberbullying :

[25] The next thing to note is the absence of conditions or qualifications ordinarily part of the meaning of bullying. Truth does not appear to matter. Motive does not appear to matter. Repetition or continuation might (“repeated or with continuing effect”) or might not (“typically”) matter. A neighbour who calls to warn that smoke is coming from your upstairs windows causes fear. A lawyer who sends a demand letter by fax or e-mail causes intimidation. I expect Bob Dylan caused humiliation to P. F. Sloan when he released “Positively 4th Street”, just as a local on-line newspaper causes humiliation when it reports that someone has been charged with a vile offence. Each is a cyberbully, according to the literal meaning of the definitions, no matter the good intentions of the neighbour, the just demand of the lawyer, or the truthfulness of Mr. Dylan or the newspaper.

While the Bob Dylan reference may be lost on the under-40 crowd, the point is well made.  The definition, as it stands in the Cyber-safety Act, goes well beyond what is ordinarily understood as bullying.

To remedy this, the court in Self v Baha’i determined the definition of cyberbullying in the Cyber-safety Act was intended to include malice.

This is a critical, and much-needed, interpretation.

Self v. Baha’i establishes that one must show evidence of the author’s or publisher’s malice in addition to the recipient’s harm in order to satisfy the definition of cyberbullying.  It imports the element of intent and ill will into the communication.

This will potentially have a profound impact on the future application of the Cyber-safety Act.  For a plaintiff or complainant, it may make it more difficult to meet the definition of cyberbullying, whether that be for the purpose of obtaining a protection order or for pursuing a tort action in cyberbullying.  For a defendant, it should have the effect of removing the innocuous or innocent communications from the definition of cyberbullying.   It should also protect the passive web host and ISP publishers of the electronic communication in question from being the target of a cyberbullying claim.

Overall, the requirement to show malice should limit the cases of cyberbullying to those that perhaps were the intended target of this legislation.

This post is intended for informational purposes only and does not constitute legal advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if desired.


[1] Cyber-safety Act, SNS 2013, c.2, s.2.

By Karen Bennett-Clayton

The Nova Scotia Supreme Court has finally given some much-needed judicial interpretation to the broadly worded definition of cyberbullying contained in the Cyber-safety Act, SNS 2013, c.2.

The Cyber-safety Act came into force on August 6, 2013.  It created both a tort of cyberbullying and also provided a procedure through which a complainant can seek a protection order against an individual or individuals to stop existing cyberbullying and prohibit future cyberbullying.

Both the tort and the protection order are based on the following definition of cyberbullying:

…any electronic communication through the use of technology including, without limiting the generality of the foregoing, computers, other electronic devices, social networks, text messaging, instant messaging, websites and electronic mail, typically repeated or with continuing effect, that is intended or ought reasonably [to] be expected to cause fear, intimidation, humiliation, distress or other damage or harm to another person’s health, emotional well-being, self-esteem or reputation, and includes assisting or encouraging such communication in any way.[1]

This definition of cyberbullying captures a wide range of communication, from the truly insidious statements calculated to cause fear and intimidation to statements that are simply embarrassing or somehow harmful to the recipient’s emotional well-being.  The definition contains no requirement to show motive or intent, nor does it require that the communication be false or misleading.  On a plain reading of it, true statements could be considered cyberbullying so long as they are repeated and are distressing or harmful to someone’s self-esteem.  Moreover, and as it includes those who “assist” in such communications, the definition is also arguably broad enough to include those who publish the electronic communication, such as web hosts or internet service providers (ISPs).

In Self v Baha’i, 2015 NSSC 94, the court considered the definition of cyberbullying in the context of whether it should vary, rescind or expand on a protection order.  In considering this motion, the court was clearly troubled by the expansive definition of cyberbullying in the Cyber-safety Act, stating that it went “far beyond the ordinary meaning of the term.”   In particular, it was concerned with the definition’s lack of requirement to show intent.

The following quote highlights the court’s concerns and provides a range of scenarios that, on a plain reading of the definition in the Cyber-safety Act, would be cyberbullying :

[25] The next thing to note is the absence of conditions or qualifications ordinarily part of the meaning of bullying. Truth does not appear to matter. Motive does not appear to matter. Repetition or continuation might (“repeated or with continuing effect”) or might not (“typically”) matter. A neighbour who calls to warn that smoke is coming from your upstairs windows causes fear. A lawyer who sends a demand letter by fax or e-mail causes intimidation. I expect Bob Dylan caused humiliation to P. F. Sloan when he released “Positively 4th Street”, just as a local on-line newspaper causes humiliation when it reports that someone has been charged with a vile offence. Each is a cyberbully, according to the literal meaning of the definitions, no matter the good intentions of the neighbour, the just demand of the lawyer, or the truthfulness of Mr. Dylan or the newspaper.

While the Bob Dylan reference may be lost on the under-40 crowd, the point is well made.  The definition, as it stands in the Cyber-safety Act, goes well beyond what is ordinarily understood as bullying.

To remedy this, the court in Self v Baha’i determined the definition of cyberbullying in the Cyber-safety Act was intended to include malice.

This is a critical, and much-needed, interpretation.

Self v. Baha’i establishes that one must show evidence of the author’s or publisher’s malice in addition to the recipient’s harm in order to satisfy the definition of cyberbullying.  It imports the element of intent and ill will into the communication.

This will potentially have a profound impact on the future application of the Cyber-safety Act.  For a plaintiff or complainant, it may make it more difficult to meet the definition of cyberbullying, whether that be for the purpose of obtaining a protection order or for pursuing a tort action in cyberbullying.  For a defendant, it should have the effect of removing the innocuous or innocent communications from the definition of cyberbullying.   It should also protect the passive web host and ISP publishers of the electronic communication in question from being the target of a cyberbullying claim.

Overall, the requirement to show malice should limit the cases of cyberbullying to those that perhaps were the intended target of this legislation.

This post is intended for informational purposes only and does not constitute legal advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if desired.


[1] Cyber-safety Act, SNS 2013, c.2, s.2.

“Technically True” Is Not True Enough: Product Claims and Hidden Terms Are Major Traps in Advertising

March 17, 2015

By Burtley Francis and Laura Rhodes, Articled Clerk

In the digital economy, the ability to advertise across multiple platforms has exponentially increased the opportunities to market to consumers by removing the limits that exist in the physical marketplace (only so many billboards can be displayed along a highway, but how many more can be displayed on a single website?) As a result, consumers face intensified exposure to ads attempting to grab their attention. Businesses may now have only seconds to make positive impressions on consumers, putting more pressure to make impactful ads with bold claims to convince the viewer why they should consider a particular product or service over that of a competing business. What cannot be forgotten though is the legal requirement for both the impression and content of any ads to be accurate and substantiated.

The Competition Bureau in Canada (the “Bureau”) under the Competition Act is the principal regulator of false and misleading advertising in Canada and seeks to protect the consumer’s right to truth in advertising. In recent years, the Bureau has been particularly active with an increased scrutiny and pursuit of offending advertisers.

Below we highlight several recent investigations and decisions by the Bureau, to illustrate two key traps businesses may easily fall into in profiling their products and services; Product Claims and Hidden Terms.

Product Claims

The Bureau protects consumers against inaccurate or unsubstantiated product claims.

  • In 2007, the Bureau ordered clothing retailer Lululemon Athletica to remove tags from its VitaSea product line that made unproven claims that seaweed content in the material reduced the consumer’s stress level, and provided anti-inflammatory, antibacterial, hydrating and detoxifying benefits.
  • In 2011, the Bureau ordered the manufacturer of Nivea brand products to cease making unsubstantiated claims that Nivea’s “My Silhouette” product slims and reshapes a consumer’s body. The manufacturer was also ordered to offer a refund for any consumer purchases of the product.
  • In 2014, home retailer JYSK Canada discontinued sales and offered a full consumer refund on two of its duvet brands, following inspections by the Bureau that found misleading labeling with regard to the actual down content of the duvets.
  • In 2014, the Bureau ordered that Bauer Hockey Corp. cease running advertisements creating the impression that Bauer’s hockey helmets offer protection from concussions, as hockey helmet testing standards are not currently aimed at protecting players from concussions. In a settlement with the Bureau, Bauer agreed to donate $500,000 worth of equipment to a charity that supports youth participation in sport.

The take-away is that advertising claims that promise improvements to the consumer’s health, attractiveness, or safety should be examined with great care, as should any claims regarding the quality of the product. Accuracy is the hallmark, and businesses must validate claims made with the support of proper testing.

Hidden Terms

The Bureau wants to ensure consumers access clear and precise information when making their purchase decisions, including upfront information about any additional fees.

  • In 2013, the Bureau took action against home retailers Leon’s Furniture Limited and its subsidiary The Brick for “drip pricing”, in which consumers are not presented with the full price of a good or service until later in the purchase process. In the case, the retailers buried details of additional up-front fees in their fine print, which led to the final price of a product being higher than the advertised price for consumers who used a deferred payment option. This was characterized by the Bureau as a deceptive marketing practice.
  • In 2015, along similar lines, the Bureau announced action against Aviscar and Budgetcar, and their parent company, Avis Budget Group Inc., for the companies’ practice of collecting fees labeled as government surcharges and fees that the companies impose to recoup their own costs of doing business. The companies’ advertised rental prices were characterized by the Bureau as deceptive marketing because after paying these fees, consumers end up paying higher prices or receiving lesser discounts than advertised.

The take-away is that the advertised price should reasonably reflect the “full” price of the product or service, inclusive of any additional fees that most consumers would typically pay for the product or service.

Going forward, it will be interesting to see which other areas may be targeted by the Competition Bureau. In a speech made in 2014, Matthew Boswell, the Senior Deputy Commissioner of Competition, comments that although privacy issues do not fall squarely within the Bureau’s mandate, he believes that privacy issues “tie in” to the Bureau’s work in the digital economy. For example, the Bureau has taken increased interest in advertisers’ access to metadata and geolocations as recent innovations, but whether these will be targeted as the next priorities for the Bureau is a matter that remains to be seen.

This post is intended for informational purposes only and does not constitute legal advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if desired.

By Burtley Francis and Laura Rhodes, Articled Clerk

In the digital economy, the ability to advertise across multiple platforms has exponentially increased the opportunities to market to consumers by removing the limits that exist in the physical marketplace (only so many billboards can be displayed along a highway, but how many more can be displayed on a single website?) As a result, consumers face intensified exposure to ads attempting to grab their attention. Businesses may now have only seconds to make positive impressions on consumers, putting more pressure to make impactful ads with bold claims to convince the viewer why they should consider a particular product or service over that of a competing business. What cannot be forgotten though is the legal requirement for both the impression and content of any ads to be accurate and substantiated.

The Competition Bureau in Canada (the “Bureau”) under the Competition Act is the principal regulator of false and misleading advertising in Canada and seeks to protect the consumer’s right to truth in advertising. In recent years, the Bureau has been particularly active with an increased scrutiny and pursuit of offending advertisers.

Below we highlight several recent investigations and decisions by the Bureau, to illustrate two key traps businesses may easily fall into in profiling their products and services; Product Claims and Hidden Terms.

Product Claims

The Bureau protects consumers against inaccurate or unsubstantiated product claims.

  • In 2007, the Bureau ordered clothing retailer Lululemon Athletica to remove tags from its VitaSea product line that made unproven claims that seaweed content in the material reduced the consumer’s stress level, and provided anti-inflammatory, antibacterial, hydrating and detoxifying benefits.
  • In 2011, the Bureau ordered the manufacturer of Nivea brand products to cease making unsubstantiated claims that Nivea’s “My Silhouette” product slims and reshapes a consumer’s body. The manufacturer was also ordered to offer a refund for any consumer purchases of the product.
  • In 2014, home retailer JYSK Canada discontinued sales and offered a full consumer refund on two of its duvet brands, following inspections by the Bureau that found misleading labeling with regard to the actual down content of the duvets.
  • In 2014, the Bureau ordered that Bauer Hockey Corp. cease running advertisements creating the impression that Bauer’s hockey helmets offer protection from concussions, as hockey helmet testing standards are not currently aimed at protecting players from concussions. In a settlement with the Bureau, Bauer agreed to donate $500,000 worth of equipment to a charity that supports youth participation in sport.

The take-away is that advertising claims that promise improvements to the consumer’s health, attractiveness, or safety should be examined with great care, as should any claims regarding the quality of the product. Accuracy is the hallmark, and businesses must validate claims made with the support of proper testing.

Hidden Terms

The Bureau wants to ensure consumers access clear and precise information when making their purchase decisions, including upfront information about any additional fees.

  • In 2013, the Bureau took action against home retailers Leon’s Furniture Limited and its subsidiary The Brick for “drip pricing”, in which consumers are not presented with the full price of a good or service until later in the purchase process. In the case, the retailers buried details of additional up-front fees in their fine print, which led to the final price of a product being higher than the advertised price for consumers who used a deferred payment option. This was characterized by the Bureau as a deceptive marketing practice.
  • In 2015, along similar lines, the Bureau announced action against Aviscar and Budgetcar, and their parent company, Avis Budget Group Inc., for the companies’ practice of collecting fees labeled as government surcharges and fees that the companies impose to recoup their own costs of doing business. The companies’ advertised rental prices were characterized by the Bureau as deceptive marketing because after paying these fees, consumers end up paying higher prices or receiving lesser discounts than advertised.

The take-away is that the advertised price should reasonably reflect the “full” price of the product or service, inclusive of any additional fees that most consumers would typically pay for the product or service.

Going forward, it will be interesting to see which other areas may be targeted by the Competition Bureau. In a speech made in 2014, Matthew Boswell, the Senior Deputy Commissioner of Competition, comments that although privacy issues do not fall squarely within the Bureau’s mandate, he believes that privacy issues “tie in” to the Bureau’s work in the digital economy. For example, the Bureau has taken increased interest in advertisers’ access to metadata and geolocations as recent innovations, but whether these will be targeted as the next priorities for the Bureau is a matter that remains to be seen.

This post is intended for informational purposes only and does not constitute legal advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if desired.

Anti-Spam Just Got Real: CRTC Levies $1.1 Million Penalty for Sending Unsolicited Emails

March 17, 2015

By Burtley Francis

For those of us wondering when the first shot under Canada’s anti-spam law (“CASL”) would be heard, we now have our answer.  Last week the Canadian Radio-television and Telecommunications Commission (“CRTC”) issued the very first Notice of Violation under CASL levying a $1.1 million administrative monetary penalty against Compu-Finder, a company that provides training consulting services.

In its March 5th press release (available here) CRTC noted that within a day of CASL coming into force on July 1, 2014 the Spam Reporting Centre began receiving complaints about Compu-Finder’s email practices.  In fact, according to the press release, 26% of all of the complaints received by the Spam Reporting Centre for this industry sector were in relation to Compu-Finder’s activities.  This is even more astounding when you consider that Compu-Finder’s activities amount to just four violations that occurred between July 2, 2014 and September 16, 2014.

The Penalty

While the CRTC’s press release characterizes the activities of Compu-Finder as a “flagrant disregard” of CASL, the $1.1 million administrative monetary penalty does still fall short of the $10 million maximum allowable penalty.  Compu-Finder has 30 days to submit its written response, and pay the full penalty. They may also commit to an undertaking to correct their activities, which could result in a reduced penalty.

The Violations

From its investigation, the CRTC alleges that Compu-Finder sent commercial electronic messages (“CEMs”) without the necessary recipients’ consent and further that they sent CEMs in which the required unsubscribe mechanisms did not function properly.

The Consent Issues

The CRTC’s press release notes that Compu-Finder sent unsolicited emails to addresses for businesses it found by scouring websites.

CASL provides an exemption for sending CEMs between businesses (meaning no consent or unsubscribe requirements would apply). In order to be exempt, the businesses though must have a “relationship” (that term remains undefined) and the message must “concern the activities of the organization”.  While one could possibly argue that Compu-Finder’s offered management training services (which were noted to include topics such as management, social media and professional development) at least generally relate to or concern activities of most businesses (who would likely engage in some form of employee training), it is difficult to see a strong case being made that a relationship of any sort would exist between Compu-Finder and an unknown business when the email address of the business was found by mining the internet.

CASL also provides that a business will have implied consent to send CEMs if a person has conspicuously published their email address without indicating that they do not wish to receive unsolicited messages.  However, such messages must be relevant to the recipients’ business, role, function or duties in a business or official capacity to qualify.  Again, one could argue that Compu-Finder’s emails were relevant to the recipients’ role, function, duties, etc. in a general sense, but the CRTC statement (and the level of complaints) clearly shows the recipients in fact did not believe Compu-Finder’s emails were relevant.  This suggests a subjective test on the part of the recipient which will certainly change how the sender seeks to rely on this form of implied consent.

Hopefully more information will come to light in the coming weeks, including through Compu-Finder’s response to the Notice of Violation.  Of particular interest will be the CRTC’s analysis of what constitutes a “relationship” sufficient to allow businesses to avail themselves of the business to business exemption and if the test for whether a message is relevant to the intended recipients’ role, function, duties, etc. is in fact a subjective test considered from the perspective of the particular recipient.

For more information please see our Guide to Canada’s Anti-Spam Legislation available here.

By Burtley Francis

For those of us wondering when the first shot under Canada’s anti-spam law (“CASL”) would be heard, we now have our answer.  Last week the Canadian Radio-television and Telecommunications Commission (“CRTC”) issued the very first Notice of Violation under CASL levying a $1.1 million administrative monetary penalty against Compu-Finder, a company that provides training consulting services.

In its March 5th press release (available here) CRTC noted that within a day of CASL coming into force on July 1, 2014 the Spam Reporting Centre began receiving complaints about Compu-Finder’s email practices.  In fact, according to the press release, 26% of all of the complaints received by the Spam Reporting Centre for this industry sector were in relation to Compu-Finder’s activities.  This is even more astounding when you consider that Compu-Finder’s activities amount to just four violations that occurred between July 2, 2014 and September 16, 2014.

The Penalty

While the CRTC’s press release characterizes the activities of Compu-Finder as a “flagrant disregard” of CASL, the $1.1 million administrative monetary penalty does still fall short of the $10 million maximum allowable penalty.  Compu-Finder has 30 days to submit its written response, and pay the full penalty. They may also commit to an undertaking to correct their activities, which could result in a reduced penalty.

The Violations

From its investigation, the CRTC alleges that Compu-Finder sent commercial electronic messages (“CEMs”) without the necessary recipients’ consent and further that they sent CEMs in which the required unsubscribe mechanisms did not function properly.

The Consent Issues

The CRTC’s press release notes that Compu-Finder sent unsolicited emails to addresses for businesses it found by scouring websites.

CASL provides an exemption for sending CEMs between businesses (meaning no consent or unsubscribe requirements would apply). In order to be exempt, the businesses though must have a “relationship” (that term remains undefined) and the message must “concern the activities of the organization”.  While one could possibly argue that Compu-Finder’s offered management training services (which were noted to include topics such as management, social media and professional development) at least generally relate to or concern activities of most businesses (who would likely engage in some form of employee training), it is difficult to see a strong case being made that a relationship of any sort would exist between Compu-Finder and an unknown business when the email address of the business was found by mining the internet.

CASL also provides that a business will have implied consent to send CEMs if a person has conspicuously published their email address without indicating that they do not wish to receive unsolicited messages.  However, such messages must be relevant to the recipients’ business, role, function or duties in a business or official capacity to qualify.  Again, one could argue that Compu-Finder’s emails were relevant to the recipients’ role, function, duties, etc. in a general sense, but the CRTC statement (and the level of complaints) clearly shows the recipients in fact did not believe Compu-Finder’s emails were relevant.  This suggests a subjective test on the part of the recipient which will certainly change how the sender seeks to rely on this form of implied consent.

Hopefully more information will come to light in the coming weeks, including through Compu-Finder’s response to the Notice of Violation.  Of particular interest will be the CRTC’s analysis of what constitutes a “relationship” sufficient to allow businesses to avail themselves of the business to business exemption and if the test for whether a message is relevant to the intended recipients’ role, function, duties, etc. is in fact a subjective test considered from the perspective of the particular recipient.

For more information please see our Guide to Canada’s Anti-Spam Legislation available here.

No Host Liability for Readers’ Vitriol on Unmoderated Forum

February 22, 2015

By Nancy Rubin

Until very recently, news media and other forum hosts have been coping with a significant yet ill-defined area of Canadian law concerning their liability for third party user-generated content posted by their readers.

Weaver v. Corcoran, 2015 BCSC 165 is the first Canadian case to explicitly address whether the operator of an internet forum is liable for reader comments that may be defamatory of specific individuals.  The answer is no, unless the operator or forum host is aware of the comments and does not act immediately to remove them.

In the case, Dr. Weaver, a Canadian climate scientist and professor at the University of Victoria (and currently, B.C. MLA and deputy leader of the Green Party) sued the National Post for its own columns as well as responsive reader comments published on the National Post’s internet forum which “attacked the plaintiff’s character in a vitriolic manner”.   The practice of the National Post was not to actively moderate comments but instead, it relied on Terms of Use which prohibited defamatory and other such content, and it responded once a problematic post was brought to its attention.

The Court accepted as a fact that (1) the National Post had a passive instrumental role in the dissemination of the reader comments, but took no action amounting to approval, adoption, promotion or ratification of the content; and (2) once employees of the newspaper became aware of the defamatory nature of the specific comments, the comments were then removed from the website within 1-2 days. In these circumstances, the Court found there was no need to consider defences to defamation such as innocent dissemination since there was no “publication” by the National Post.

The case will be welcomed by forum hosts whose choices until now were to pre-vet every post or hopefully be able to rely on one of the defences to defamation such as truth, fair comment or the poorly defined (at least in Canada) defence of innocent dissemination.

The take-away is that on top of explicit terms of use, a complete hands-off approach paired with a prompt response to complaints, should relieve the forum host from a finding that it is a publisher for defamation purposes.

Going forward, it will be interesting to see what time frame is determined sufficient for an “immediate” response in other cases and whether the volume of comments on the National Post site versus another site will be a factor for consideration.

By Nancy Rubin

Until very recently, news media and other forum hosts have been coping with a significant yet ill-defined area of Canadian law concerning their liability for third party user-generated content posted by their readers.

Weaver v. Corcoran, 2015 BCSC 165 is the first Canadian case to explicitly address whether the operator of an internet forum is liable for reader comments that may be defamatory of specific individuals.  The answer is no, unless the operator or forum host is aware of the comments and does not act immediately to remove them.

Rihanna Publicity Case Shows Differences in UK Law

February 22, 2015

By Rob Aske

A very recent English Court of Appeal decision shows the distinct approach of English courts to publicity rights (Fenty v. Topshop [2015] EWCA Civ 3).

In 2012, the fashion retailer Topshop began selling in its UK stores and through its website a fashion t-shirt showing a clearly recognizable image of Rihanna, the well known pop singer.  The owner of copyright licensed the image to Topshop, but Topshop did not license rights from Rihanna. The image is below:

image001

The Court of Appeal noted that Topshop had previously sold garments bearing images of famous persons, some of which had been authorised and some of which had not. 

Topshop sold about 12,000 units of the Rihanna t-shirt between March and August 2012, at a price of £22.  Initially the shirt was described online as the “Rihanna tank” and “photographic Rihanna motif tank”, but by mid-March of 2012 those references to Rihanna had been removed, possibly because Rihanna is a registered trade-mark for clothing.

The Court noted that Rihanna had been active in the fashion sphere and exercised control over the garments she would wear.  For example, in June 2011 she had entered into an agreement with Armani relating to a women’s wear collection.

The trial judge found that Rihanna was regarded as a style icon, and that when consumers see Rihanna wearing an item of clothing they think it has been endorsed by her.

Topshop contended that the t-shirt was an item of fashion wear, and not a piece of promotional merchandise, and that consumers bought it simply because they liked the product and the image for their own qualities.

It was influential to the trial judge that Topshop and Rihanna had relationships in the past.  This included a shopping competition in 2010 in which Topshop offered entrants a chance to win a personal shopping appointment with Rihanna at its flagship London Oxford Circus store.  There was also a visit by Rihanna to Topshop in February 2012, which Topshop chose to publicise through Twitter, presumably to emphasize that Rihanna was wearing or thinking of wearing Topshop clothing.  So the trial judge concluded that Topshop had recognized and sought to take advantage of Rihanna’s position as a style icon.

The trial judge also found that the image on the t-shirt was significant as it was created during a video shoot for the “We Found Love” single, which was filmed in Northern Ireland, and received substantial press attention due to the risqué clothing that Rihanna was wearing, and because the owner of the land on which the video was recorded had complained about the shoot.

So it was a combination of the striking image, and Topshop’s link with famous stars, including Rihanna, that led the trial judge to conclude that a substantial portion of purchasers would consider the product to have been authorized by Rihanna.

The Court of Appeal confirmed that under English law there is no specific legal right which allows a celebrity to control the use of his or her name or image (unlike much of Canadian and American law). A celebrity must therefore rely on passing off or other grounds.

Passing off protects goodwill, and prevents one person passing off his/her goods or services as those of another.  To succeed in such a claim, the claimant must establish goodwill or reputation attached to the goods or services, that the defendant has made a misrepresentation so the public believes the goods or services are associated with the claimant, and the claimant must show damage because of the misrepresentation.

The Court of Appeal stated it by no means follows that simply because the name or image of a celebrity appears on a consumable commercial item that the public will assume it has been endorsed by that celebrity.  Each case is to be considered on its own facts, and the claimant must show that the activities of the defendant amount to a misrepresentation that the celebrity has endorsed or approved the goods or services.

So it is entirely possible to sell t-shirts with images of celebrities in the UK, which may not meet the test for passing off.

At least two of the three Court of Appeal judges in this case described Rihanna’s case as borderline, and noted that the trial judge relied on two key factors, namely Rihanna’s past association with Topshop, and the distinctive features of the image which was used.

But the Court of Appeal affirmed the trial judgement which found that Topshop’s activities amounted to passing off and which awarded an injunction prohibiting Topshop from dealing with the t-shirt further without informing potential purchasers that it had not been approved or authorized by Rihanna. Any monetary compensation is still to be determined, but already Topshop has been ordered to pay at least several hundred thousand pound sterling of Rihanna’s legal costs.

While Rihanna achieved the remedy she wanted in this case, the “borderline” comments of the Court of Appeal do not make English law entirely celebrity friendly.

By Rob Aske

A very recent English Court of Appeal decision shows the distinct approach of English courts to publicity rights (Fenty v. Topshop [2015] EWCA Civ 3).

In 2012, the fashion retailer Topshop began selling in its UK stores and through its website a fashion t-shirt showing a clearly recognizable image of Rihanna, the well known pop singer.  The owner of copyright licensed the image to Topshop, but Topshop did not license rights from Rihanna. The image is below:

image001

WHAT’S IN A NAME? (WHY THERE IS NO COPYRIGHT IN YOUR NAME)

January 12, 2015

By Michelle Chai

The Alberta Court of Queen’s Bench recently had to deal with a bizarre case in which the defendant obtained a Mastercard from Bank of Montreal, used it for 15 years, made payments on it for 15 years and then stopped paying it: Bank of Montreal v. Rogozinsky, 2014 ABQB 771.  The defendant was sued by BMO for the outstanding balance of $27,064 plus interest.  In defence, the defendant argued, amongst other things, that BMO was estopped from advancing their claim and counterclaimed against BMO for $6 million for trademark and copyright infringement.

Essentially, the defendant was a “freeman-on-the-land” – she claimed she was not a resident of Alberta (but was domiciled by birth), did not accept “joinder” between herself and her name, and (inexplicably) that slavery was illegal.  She also took exception to being called a “Freeman” and claimed such a title was discriminatory.

How does this relate to copyright?  Right before her credit card was suspended by BMO, the plaintiff sent to BMO a “Common Law Copyright Notice”.  It was a “foisted unilateral agreement” which claimed that if someone used the defendant’s name without her permission she could bill them $1 million.  BMO used the defendant’s name in its statement of claim and various court submissions, and thus, had allegedly breached the defendant’s copyright.

The defendant was claiming copyright and trademark in her name, as well as “her biological and physical properties” and “absolute control and mastery over the peaceful possession of [her] body, mind and mental facilities”.  BMO was allegedly interfering with the defendant’s peace of mind by suing her for repayment of her debt.

Astonishingly (at least to me), this defendant was not the first person to come before the Canadian courts and make this argument.  The Court dismissed the copyright and trademark claims of the defendant, and referred to Meads v. Meads, 2012 ABQB 571 (an entertaining and enlightening read on the various characteristics and permutations of freemen-on-the-land).

The issue in Meads was unpaid spousal and child support.  The defendant father and ex-husband attempted to defend against paying spousal and child support on the basis of a myriad of arguments, including that he was not Dennis Meads (his name) because it was a “corporate identity”.  The defendant also claimed copyright/trademark in his own name and argued that there had been breaches of both.

The Court in Meads noted that the special property interests provided by copyright and trademark flow from legislation (the Copyright Act and Trademarks Act).  The Court further noted there is no authority to establish that a personal name can form a creative work that would be subject to copyright (and if there was, such copyright would vest in the authors, presumably the defendant’s parents).  Similarly, no trademark in the defendant’s name had been registered.

If one day you decide to become a freeman-on-the-land, now you know that you can’t claim copyright or trademark in your own name.  Unless perhaps you’ve registered it…in which case, keep an eye out for Apple Inc. v. Apple Martin (Gwyneth Paltrow and Chris Martin’s famously named daughter).

By Michelle Chai

The Alberta Court of Queen’s Bench recently had to deal with a bizarre case in which the defendant obtained a Mastercard from Bank of Montreal, used it for 15 years, made payments on it for 15 years and then stopped paying it: Bank of Montreal v. Rogozinsky, 2014 ABQB 771.  The defendant was sued by BMO for the outstanding balance of $27,064 plus interest.  In defence, the defendant argued, amongst other things, that BMO was estopped from advancing their claim and counterclaimed against BMO for $6 million for trademark and copyright infringement.

Essentially, the defendant was a “freeman-on-the-land” – she claimed she was not a resident of Alberta (but was domiciled by birth), did not accept “joinder” between herself and her name, and (inexplicably) that slavery was illegal.  She also took exception to being called a “Freeman” and claimed such a title was discriminatory.

How does this relate to copyright?  Right before her credit card was suspended by BMO, the plaintiff sent to BMO a “Common Law Copyright Notice”.  It was a “foisted unilateral agreement” which claimed that if someone used the defendant’s name without her permission she could bill them $1 million.  BMO used the defendant’s name in its statement of claim and various court submissions, and thus, had allegedly breached the defendant’s copyright.

The defendant was claiming copyright and trademark in her name, as well as “her biological and physical properties” and “absolute control and mastery over the peaceful possession of [her] body, mind and mental facilities”.  BMO was allegedly interfering with the defendant’s peace of mind by suing her for repayment of her debt.

Astonishingly (at least to me), this defendant was not the first person to come before the Canadian courts and make this argument.  The Court dismissed the copyright and trademark claims of the defendant, and referred to Meads v. Meads, 2012 ABQB 571 (an entertaining and enlightening read on the various characteristics and permutations of freemen-on-the-land).

The issue in Meads was unpaid spousal and child support.  The defendant father and ex-husband attempted to defend against paying spousal and child support on the basis of a myriad of arguments, including that he was not Dennis Meads (his name) because it was a “corporate identity”.  The defendant also claimed copyright/trademark in his own name and argued that there had been breaches of both.

The Court in Meads noted that the special property interests provided by copyright and trademark flow from legislation (the Copyright Act and Trademarks Act).  The Court further noted there is no authority to establish that a personal name can form a creative work that would be subject to copyright (and if there was, such copyright would vest in the authors, presumably the defendant’s parents).  Similarly, no trademark in the defendant’s name had been registered.

If one day you decide to become a freeman-on-the-land, now you know that you can’t claim copyright or trademark in your own name.  Unless perhaps you’ve registered it…in which case, keep an eye out for Apple Inc. v. Apple Martin (Gwyneth Paltrow and Chris Martin’s famously named daughter).

Countdown to Anti-Malware/Spyware: CRTC Issues Guidance on Computer Program Installations Under CASL

December 22, 2014

By Laura Rhodes, Articled Clerk

In preparation for the January 15th, 2015, coming into force of section 8 of Canada’s Anti-Spam Legislation (“CASL”), and associated regulations, the Canadian Radio-television and Telecommunications Commission (“CRTC”) has provided an interpretation bulletin, entitled “CASL Requirements for Installing Computer Programs”.

The bulletin provides guidance on the applicability of CASL to software or computer program installations in the course of commercial activity, including requirements of disclosure and consent, and specific guidance on updates or upgrades to software.

If your business installs software or other computer programs on other people’s connected devices in Canada, including any installation of mobile apps as promotional tools, you should be aware of these significant new requirements coming in 2015.

Covers “Commercial Activity” Broadly. The legislation covers a broad range of installations of a commercial character. Limited exceptions are created for installations in support of law enforcement, protection of public safety, and national defence.

Self-Installations Excluded. In general, CASL does not apply to self-installed software. Therefore, any time an individual knowlingly downloads and installs an app or program, or loads software from a CD, or accepts a prompt to update an existing program, CASL will not apply. Similarly, if an employer installs software on its own network, CASL will not apply.

However, this exclusion will only apply if the scope of installation is consistent with the program functionalities the consumer expects. In other words, unexpected functionalities may not “tag along” with a consumer’s self-installation, as discussed below.

Disclosure & Consent Required. An organization or individual must have the express consent, in writing or given orally, of the owner or authorized user of the device for each act of software installation, including (as of January 15, 2018) for updates or upgrades to the consumer’s programs that were self-installed before January 15, 2015.

This initial consent may encompass the consumer’s consent to any future updates or upgrades to the program.

Informed consent generally requires that the installer disclose to the owner / authorized user of the device the following information: the identity of the installer, the function and purpose of the computer program, that consent may be withdrawn at any time, and an email address to which requests to remove the program may be directed.

The CRTC bulletin advises that this information is required to be provided separate and apart from any terms and conditions listed in a contract or end-user licensing agreement, and that valid consent cannot be obtained using pre-checked boxes or other forms of opt-out consent.

Enhanced Disclosure & Consent. If the program interferes with the owner / authorized user’s control of and access to the device, or causes the device to communicate with other devices, or performs certain functions such as the collection of personal information stored on the device, the installer will also be required under CASL to share information about that functionality’s purpose, the impact of that functionality on the device’s operation, and seek explicit acknowledgement from the owner / authorized user that they understand and agree that the program will perform these functions.

Implied Consent. For the first three years, computer programs that were installed before January 15, 2015 will benefit from implied consent until January 15, 2018, unless the owner / authorized user gives notification that they no longer consent to the original installation.

Deemed Consent. If the person’s conduct is such that it is reasonable to believe that they consent to the program’s installation, consent is deemed to have been provided for certain types of installations, including cookies, HTML code, Javascript, operating systems, and all programs executable through another program that was already consented to. However, if the owner / authorized user has, for example, disabled cookies or Javascript, or activated “do not track” functionality, this is sufficient (according to the CRTC) to negate deemed consent.

Penalties associated with non-compliance are significant, up to $10M for corporations and other organizations for an offence under CASL. A private right of action will become effective as of July 1st, 2017, allowing individual claims for damages. Class actions are expected.

Please see our Guide at Get Ready for CASL.

You may also contact Rob Aske, Practice Manager for IP/IT/Entertainment at Stewart McKelvey.

By Laura Rhodes, Articled Clerk

In preparation for the January 15th, 2015, coming into force of section 8 of Canada’s Anti-Spam Legislation (“CASL”), and associated regulations, the Canadian Radio-television and Telecommunications Commission (“CRTC”) has provided an interpretation bulletin, entitled “CASL Requirements for Installing Computer Programs”.

The bulletin provides guidance on the applicability of CASL to software or computer program installations in the course of commercial activity, including requirements of disclosure and consent, and specific guidance on updates or upgrades to software.