In Part 1 of this blog series on digital advertising, we canvassed the disclosure rules in light of the recent the U.S. Federal Trade Commission’s recent publication, “.com Disclosures, How to Make Effective Disclosures in Digital Advertising”. In Part 2 of this blog series, we will set out some tips and guidelines to assist businesses in complying with the disclosure rules and avoid falling afoul the FTC.

Entities conducting business online in the U.S. ought to consider whether its advertising meets these guidelines:

1. Prominent and Unavoidable: Disclosure should be at least as large as the related claim and should be in a colour that contrasts with the background. In some cases, graphics may help make the disclosure more prominent. Keep in mind that viewers will see the advertisement on a variety of devices, so websites should either be designed so that the disclosure is clear and conspicuous regardless of the type of device, or a mobile-specific website could be created.
2. Free from distraction: Avoid flashing or animated graphics, colours, distracting sounds or texts, links that lead to other sites and “add to cart” buttons that prevent the viewer from noticing, reading or listening to the disclosure.
3. Repeat important information: Long websites, or those that can be accessed through multiple points of entry may require the disclosure to be repeated to ensure that a viewer will see the disclosure, although disclosure should not be repeated so often that a viewer would see it as clutter and ignore it.
4. Suitable volume or duration: Audio claims should be accompanied by audio disclosures, and a reasonable consumer should be able to hear and understand the message. Where a claim is made in writing, disclosure should not be placed solely in an audio or video clip because viewers may not have speakers, or have their sound turned off.
5. In the appropriate language for the intended audience: Use plain language and syntax.
6. Track the viewer: Use technology to track how consumers are viewing the disclosure. For example, when hyperlinks are used, the advertiser should monitor viewers’ click-through rate as a measure of the effectiveness of the disclosure. Also, keep abreast of research about where consumers do and do not look on the screen.
7. Protect offline shoppers: When a product is also available for purchase at a “bricks and mortar” store, ensure that any required disclosure is included with the online ad – before the consumer heads to the shopping mall.
8. Free products: Bloggers who receive products for free for the purposes of review must disclose that fact, and the disclosure should be made prior to any hyperlinks on the page that may lead the viewer away from the page without having first viewed the disclosure.

Whether this is your first time enforcing your Canadian patent, or you’re a frequent flyer in the Canadian courts, it is important to cover your bases before firing off a claim.  Prudent planning will help to ensure that legal and financial resources are deployed efficiently.  Although not exhaustive, here are the top 5 things to consider before issuing your statement of claim.

1. In what jurisdiction should the lawsuit be pursued?  The plaintiff can choose between the Federal Court and the provincial courts.  Each has unique rules.  Consider where best to commence the action.  For example, summary judgment might be easier to obtain in Ontario with its relatively robust and modern summary judgment rules while Canada-wide enforcement may be simpler in the Federal Court.
2. Should you first threaten litigation?  Infringement lawsuits rarely come out of the blue.  They are often preceded by threats (e.g., the dreaded “cease and desist” letter).  While attempting resolution without a lawsuit is worthwhile, such threats (when not made properly) can have unintended consequences and should be carefully considered before being made.  For example, some threats may allow the alleged infringer to initiate the lawsuit, select the most favourable jurisdiction and put your patent at risk.  Furthermore, sending cease and desist letters to a wide audience can be dangerous, as it may give rise to a claim for damages.  For more information, check out this blog on 10 steps to take when Responding to Threats of Patent Infringement.
3. What does a win look like?  Usually, a win is securing the market via injunction and obtaining a monetary award.  It is going to take at least two years of litigation to achieve that and, unless you can show irreparable harm, you won’t get an interlocutory injunction.  Monetary recovery can be further delayed, as that issue is often bifurcated from the liability issues, and liability is tried first.  Plan to manage your business in the face of ongoing infringement during the litigation and don’t bank on the eventual award.  Evaluate the likely award early, collect the documentation necessary to prove it, and develop a comprehensive exit strategy.
4. Are you prepared to see the litigation through?  It has been said that patents are only as good as your ability to enforce them.  Only commence a lawsuit if you are prepared to see it through.  Have a clear picture of what you are getting into.  Patent lawsuits take time and resources.  Discovery can be distracting.  Resources will be spent on document collection, retention and disclosure.  There will be examinations for discovery.  Employees will be required to testify at trial.  Expert witnesses are almost always needed.  Develop a robust litigation plan with your lawyers. Where available, use project management tools to create a budget and set reasonable estimates of litigation expenses.
5. Who are the parties to the lawsuit? There are two sides to consider.

(a)    Plaintiffs: Patentee and licensees can sue for patent infringement in Canada.  The patentee is a necessary party.  Evaluate your physical/financial supply chain.  Identify entities harmed by the infringement.  Do they have standing to sue?  Take the steps necessary steps to properly name them as plaintiffs to maximize potential recovery.

(b)   Defendants: Direct and indirect infringers (i.e., inducers) can be sued.  They are usually easy to identify.  However, other parties may be drawn in; sometimes unintentionally.  For example, a third party may have indemnified the defendant in relation to some aspect of its infringing technology and might get named or take over the defence.  That can be concerning when the third party has a large war chest.  Worse when it is one of your own customers!  Try to deal with any such concerns in advance.

Does the medium matter? According to the U.S. Federal Trade Commission’s recent publication, “.com Disclosures, How to Make Effective Disclosures in Digital Advertising”, consumer protection laws apply equally to all forms of media and devices, including smartphones, tablets, Facebook, Twitter and the internet. The new FTC guidance, released on March 12, 2013, is an update to the FTC’s 2000 publication, “Dot Com Disclosures”.

As a general rule, the FTC requires that an advertiser provide additional information when an ad makes a claim, express or implied, that might be misleading without more information. To be effective, that additional  information must be presented in a way that is clear and conspicuous.

Advertisers looking for similar guidance on Canadian law should review the Competition Bureau’s “Enforcement Guidelines on the Application of the Competition Act to Representations on the Internet”, which was last updated in 2009.

Clear and Conspicuous

For disclosure to be effective, it must be clear and conspicuous to the reasonable consumer regardless of the device, media or platform.

Ensuring that a consumer sees the disclosure is the responsibility of the advertiser. The FTC gives substantial guidance on the placement of disclosure, in particular in regards to the proximity of the disclosure to the claim that requires the disclosure. In general, the closer the disclosure is placed to the claim it is modifying, the better.

The FTC states that disclosure is most effective when the claim and the disclosure are on the same screen. When the screen is small or the disclosure is long, an advertiser should include a prompt that encourages the viewer to scroll through all of the relevant information.  Prompts should be specific, i.e. “see below for important information on restocking fees” is better than “details below”.

Next week, we will publish additional tips on ensuring your disclosure is clear and conspicuous in “Part 2: Tips for Business Advertising Online in the U.S.”

Limited Space

When space is at a premium, in banner ads or on Twitter, for example, the advertiser must consider whether to place the disclosure in the ad itself or to hyperlink to the disclosure. Although the FTC frowns on the use of hyperlinks, they may be used as long as the disclosure doesn’t address key information, such as price, health and safety.

When hyperlinks are used, the link should be close to the relevant information and be obvious to the viewer. The hyperlink should provide sufficient details about the nature of the disclosure, and once a viewer clicks on the hyperlink they should be taken immediately to the page that contains the disclosure, which should be noticeable and understandable.

The FTC particularly discourages disclosure in the form of pop-up ads, because consumers often block pop-ups, or fail to make the association between the advertisement on one screen and potentially relevant information in the pop-up. Where pop-ups are used, they should require the consumer to complete an affirmative action before closing the pop-up window (i.e. clicking “yes” or “no”).

Endorsements

Bloggers or Twitter users who are paid to endorse products, or who receive free products for review purposes, need to disclose their relationship with the company. For example, a paid celebrity endorsement on Twitter should start with “Ad:”, followed by the advertiser’s message. Disclosure may not be effective if it follows in a subsequent tweet, as unrelated messages may be posted in the interim, and separate the claim from the disclosure. Additional information on disclosure rules for celebrity endorsers, bloggers and testimonial advertisments can be found in the FTC’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising”

The FTC publication is clear that if an advertisement requires disclosure to prevent it from being deceptive, but the necessary disclosure cannot be made clearly and conspicuously, the advertisement should not be run.

State Representative Jeff Leach of Texas recently proposed a bill that has generated significant discussion about the utility of social media in litigation proceedings. The yet untitled bill, HB No. 1989, proposes to allow substituted service in Texas through a social media website if a court finds that the social media account belongs to the defendant, is regularly accessed, and such service is likely to result in actual notice.

Texas is attempting to create with legislation a process that courts in Canada, Australia, New Zealand and the United Kingdom have developed through common law. Generally, courts in these jurisdictions will allow substitutional service through social media when all other methods of serving a party are exhausted. Courts consider whether the account belongs to the proper individual, and whether the account is frequently used, such that social media can affect proper notice.

Canadian Rules of Civil Procedure

In Canada, the ability for litigators to serve parties with substitutional means is enshrined in the rules of court both federally and for each province.[1] Despite some nuance between jurisdictions, a brief canvass of the rules in Alberta, Ontario, and British Columbia will show that the approach is generally analogous.

A typical example is rule 11.28 of the Alberta Rules of Court,[2] which states that an application must be supported by an affidavit that sets out (i) why service is impractical, (ii) proposing an alternative method of service (such as Facebook private messaging), and (iii) stating why the alternative method of service is likely to bring the document to the attention of the person to be served.

The language found in rule 16.04 of the Ontario Rules of Civil Procedure[3] provides a nearly identical mechanism for substitutional service:

Where it appears to the court that it is impractical for any reason to effect prompt service of an originating process or any other document required to be served personally or by an alternative to personal service under these rules, the court may make an order for substituted service or, where necessary in the interest of justice, may dispense with service.[4]

Master Dash in Chambers v Muslim (2007)[5] clarified that the Ontario rule requires the applicant to provide proper evidence that (i) all reasonable steps of service have been taken, and (ii) the proposed method of substituted service will have “some likelihood” or a “reasonable possibility” of bringing the action to the attention of the party to be served.

Rule 4-4(1)-(3) of the British Columbia Supreme Court Civil Rules[6] uses slightly different language to achieve the same result, providing a court with the capacity to allow substitutional service if the party being served (i) cannot be found after a diligent search, or (ii) is evading service of the documents.

Therefore, despite some nuance in rules between jurisdictions, the overall Canadian approach to substitutional service is typically congruent. Further, the courts have extended application to include social media. Specifically, when traditional modes of service are impractical, and social media is reliable, courts have the capacity to grant substitutional service through social media.

Canadian Jurisprudence

Most applications requesting an order for substitutional service are not reported and there is little Canadian jurisprudence discussing social media and substitutional service. However, the following two reported Alberta cases do provide some the context within which substitutional service has been granted.

In Knott Estate v Sutherland[7] the Alberta Court of Queen’s Bench considered the use of Facebook as a means of substitutional service in a medical negligence case. The defendant was a resident of the University of Alberta Hospital who had assisted in caring for Carol Diane Knott, who had passed away while at the hospital. The administrator of her estate brought this action claiming negligence. The plaintiffs brought an application for an order for substitutional service. Succeeding in this application, Master Breitkreuz ordered that the plaintiffs could serve the defendant, Abdulmutalib Al-Masloom, through a public notice in the Edmonton Journal, providing a copy of the statement of claim to the University of Alberta Hospital, and by sending a notice of the action to the Facebook profile of Abdulmutalib Al-Masloom.

Similarly, in 128005 Alberta Ltd. v Zaghloul[8]  the Alberta Court of Queen’s Bench considered the use of Facebook as a means of substitutional service in a case dealing primarily with fraudulent conveyance. In this instance, the plaintiff brought two actions against Hatim Zaghloul; first, an action for a debt of $120,000.00 owed through a promissory note, and second, an action for the fraudulent conveyance by Hatim Zaghloul of a house to his wife. The plaintiff obtained default judgment for the first action on February 16, 2010. To enforce the default judgment the plaintiff commenced the fraudulent conveyance action challenging the transfer of title to the home. The plaintiff obtained an order for service ex juris and substitutional service, allowing service on Hatim Zaghloul by email and Facebook private messaging.

Canadian courts have shown a willingness to allow social media as a means of substitutional service in the course of litigation. As will be shown, this trend not only domestic, but international in scope.

International Jurisprudence

 Courts in Australia, New Zealand, and the United Kingdom have also ordered substitutional service through social media. In Australia, the Capital Territory Supreme Court in MKM Capital Pty Ltd. v Corbo & Poyser[9] allowed substituted service of default judgment on certain mortgagees through a private message on Facebook. Personal details in the Facebook page were used to confirm the identity of the party being served. The High Court of New Zealand in Axe Market Gardens Ltd. v Axe[10] granted leave for service via Facebook on an individual whose present whereabouts were not known, but whose frequent access to the internet was proven. In AKO Capital LLP & Another v TFS Derivatives & Others[11] the United Kingdom High Court allowed the claimant to serve a claim on an individual defendant via Facebook. The Court in this case had evidence that the Facebook profile belonged to the defendant and that it was frequently active.

As shown above, common law countries are increasingly permitting substitutional service through social media. Common drivers for this trend include the difficulty of normal modes of service as weighed against the prevalence and increasing reliability of social media.

Tips for Litigators

 Both domestic and international courts are becoming more inclined to grant an order using social media for substitutional service. However, obtaining such an order requires certain considerations that may not exist when employing traditional means. Counsel seeking such an order should consider the following:

1.  Ensure that all normal methods of service are exhausted, and that such exhaustion is documented. This will lend evidence to the argument that traditional methods of service are proving ineffective.
2. Ensure that the social media account does belong to the party you are intending to serve. This is becoming increasingly significant as the use of social media grows, resulting in multiple accounts with the same or similar identifying information. Such evidence may include an accurate name, location, matching birthdates and a confirmation of identity through a posted picture.
3. Provide evidence that the party to be served uses the social media account within a reasonable amount of time. Being able to establish the frequency of use will lessen the courts concern that the use of social media will prove unsuccessful. This may include evidence of frequent Facebook updates, acceptance of friend requests, or frequent Twitter posts.

These factors have been discussed in context above. The respective rules and case law provide a basic framework for those seeking an order of this type. However, it is important to note that this area of law is still being developed, and courts hearing such an application will make their determination as to whether social media is an acceptable means of service on a case-by-case basis.

* Jeremy Busch-Howell is an Articling Student at McCarthy Tétrault.

Patent disputes have proliferated in Alberta.  As the economy has levelled-off in recent years, patentees have increasingly sought to enforce patents as part of their business strategy.  Threats of patent infringement have proliferated and infringement actions have been filed in all Courts, particularly the Federal Court.  Companies in the oil and gas sector must be ready to respond quickly and properly to the threat of patent infringement.

On March 27, we met with in-house counsel and other industry leaders at our Calgary office to discuss effective responses to threats of patent infringement.  By taking the 10 steps outlined below, a potential defendant will put itself in the best position to respond to threats of patent infringement.

1.      Investigate Business Relationship with the Patentee/Complainant

Understand the complainant.  In many instances, the complainant may be known to you or well known in the business.  You may already have a business relationship with the complainant.  Understanding the complainant may reveal business solutions that avoid litigation.

If the complainant is not active in the industry but rather is a patent holder seeking to enforce patent rights, a license may be a potential solution.  However, the merits of that approach can only be assessed after evaluating the strengths and weaknesses of the case and the merits of litigation.

2.      Review Patent Portfolio for Potential Counterclaims

If your business owns patents, consider whether any can be asserted against the complainant.  Threatening a complainant with a countersuit that can disrupt the complainant’s business puts you in a better position to find a settlement that avoids litigation.

3.      Retain Experienced Patent Counsel to Assess Merits of Threatened Litigation

Patent expertise is important, but litigation expertise is equally important.  Counsel who handle IP generally (e.g. trade-mark agents or patent agents) may not be well positioned to represent your interests in litigation.  Seek legal advice early from patent litigators who can help create a winning record from the outset of the dispute.

4.      Retain a Properly Qualified Expert in the Field of Technology of the Patent

Patents are directed to persons in the field to which the patents relate.  Any patent must be understood from the perspective of the ordinary person working in the field.  Retaining an expert early who can provide that understanding, if one is not available at your business, is an important step in determining how the Court would interpret the patent and, along with it, your odds of success.

5.      Determine Potential Liability

How much money may your company owe?  Your company’s potential exposure is a key driver in developing an appropriate response.  To assess your liability you must first determine when the alleged infringing acts occurred.  The complainant will typically seek the higher of its damages (how much it has lost) or your profits (how much your business profited from the infringement).  Because profits are an “equitable” remedy, you should be aware that they are not universally awarded.

A second key determinant in determining potential liability is to compare the alleged dates of infringement with the date the patent was issued.  Damages or profits are only available from the date the patent was issued.  “Reasonable compensation” may also be owed for the time period commencing on the date the patent application was published and ending on the date the patent issued.  Reasonable compensation may take the form of a royalty.

6.      Project Management

Project management can help organize your response and maintain efficiency throughout the process, including through litigation.  Using a project management platform early can save hassles and costs in the future as the file becomes larger and more difficult to manage.

7.      Limit Your Potential Losses

Once you understand what the patent claims and the alleged infringing activities are, you can determine whether a “work around” is available to limit your company’s future liability.  By making changes to essential elements of the complainant’s alleged invention, you may be able to continue your business and limit your exposure.  You also may be able to apply for your own patent if your “work around” is inventive.

8.      Document Retention

Once litigation has been threatened, you need to retain documents which may become relevant to the dispute.  This may include schematics of your machinery, work orders, invoices and correspondence relating to the complainant and his or her patent.  Ensuring that relevant custodians are identified early and their documents are retained will help you meet your legal obligations and respond to any assertion that relevant information has been destroyed.

9.      Consider Patent Impeachment Action in the Federal Court

Consider taking the initiative.  If a complainant threatens you with an infringement action, you may be best served by commencing litigation in the Federal Court to impeach the patent.  Such a step positions you as the plaintiff and allows you to better control the pace of litigation.  Also, by selecting the Federal Court as the forum, you may achieve important objectives.  For instance, the Federal Court is notoriously hesitant to enjoin activities pending trial.  By proceeding in the Federal Court you may be able to continue your business with minimal interference, prior to trial.

10.  Consider Settlement

Mediation should always be considered, and settlement (on your terms) is always a good solution.  Understand your situation so that you can enter any negotiation in a position of strength.  Settlement discussions prior to litigation may yield business solutions which are not available after the parties have expended significant sums in litigation.

Summary

Responding to threats of patent infringement in Alberta requires considered and deliberate steps.  Following the 10 steps set out above will put companies in a good position to effectively respond to any threat quickly and decisively.

With the launch of the Trademarks Clearinghouse, brand owners can now stake their territory In the brave new world of expanded generic top level domain names (“gTLD’s”).  The Internet Corporation for Assigned Names and Numbers (“ICANN”), the non-profit organization that manages and coordinates the system of domain names and IP addresses used on the internet, has put into operation what it calls “the most important rights protection mechanism built into ICANN’s new gTLD program”.

The Trademarks Clearinghouse (“Clearinghouse”), which is operated by Deloitte and IBM, is a centralized database of information submitted by brand owners that will be used by the ultimate operators of the new gTLD’s as part of their process of trying to avoid the infringement of trademark rights through the domain names applied for under their gTLD.  Through the Clearinghouse, ICANN  is attempting to address brand owners’ concerns about the increased risk of cybersquatting that comes with the introduction of the new gTLD’s.

Key Point for Brand Owners

With many new gTLD’s likely to be operating, the Clearinghouse offers brand owners a high level way of protecting their rights instead of having to take action (through domain name dispute resolution arbitrations or legal proceedings) regarding individual domain names.

In light of the pending release of the first new gTLD’s (expected later this year), brand owners should analyze their trademark holdings and determine if they would benefit from the trademark rights protection mechanisms that the Clearinghouse offers. While the Clearinghouse is not a substitute for other protection mechanisms, such as domain name monitoring services, it may be an important tool for brand owners in protecting their marks.

How the Trademarks Clearinghouse Will Work

The Clearinghouse is intended to be an inexpensive central repository for trademark data. It will authenticate and store the trademark data and disseminate it to all new gTLD registries for use in connection with the two mandatory trademark rights protection mechanisms that all gTLD registrars must provide, as follows.

• Sunrise Services: The Sunrise Services will ensure that brand owners who have registered their trademark with the Clearinghouse are given an advance opportunity to register a domain name incorporating their trademark before the opportunity to register domain names under a gTLD is open to the general public.
• Trademarks Claims Services: The Trademarks Claims Services will ensure that anyone who applies to register a domain name that matches a trademark registered with the Clearinghouse will receive a notification of the trademark holders rights.  To proceed, the applicant must warrant that the registration and use of the domain name is not infringing.  If the domain name is registered, the trademark holder will be notified.

Only brand owners who submit their trademark information to the Clearinghouse will get the benefit of these services.

Registration with the Trademarks Clearinghouse

To register with the Clearinghouse, the owner of an issued trademark must submit:

• a copy of the trademark registration (or other documentation showing ownership information, registration number and jurisdiction where issued);
• evidence of the use of the trademark in connection with the offering for sale of goods or services prior to the submission to the Clearinghouse (including a signed declaration and a single specimen of how the mark is used);
• an affidavit or other sworn statement declaring that the information is true and has not been submitted for an improper purpose and agreeing to keep the information provided current (including advising of transfer of ownership or abandonment of the trademark, failing which penalties may be imposed); and
• the required filing fee.

For a trademark validated through a court or other judicial proceeding, the trademark owner must submit filed court documents evidencing this, and for a trademark protected by statute or treaty, a copy of the relevant portion of these must be submitted.

The basic fee structure for submissions to the Clearinghouse is US$150 for a 1-year registration, US$435 for a 3-year registration and US$725 for a 5-year registration.  Volume discounts using a system of “Status Points” earned by registering or renewing trademarks in the Clearinghouse are also available (for details see: http://trademark-clearinghouse.com/content/trademark-clearinghouse-fees).

ICANN received 1,930 applications for new gTLD’s for domains (including many applications in non-English characters) ranging from types of consumer products and services (.car, .movie, .hotel),to industry or social sectors (.bank, .church, .career), to geographic names (.nyc, .berlin), to brands (.chanel, .nike, .apple) (a complete list of the gTLD’s applied for can be found at: http://newgtlds.icann.org/en/). These applications are now under review by ICANN to determine if the applicants meet the necessary criteria (including technical and financial capacity).

There are currently no set deadlines by which any of the new gTLD’s will be launched, as each application to operate a new gTLD must navigate its way through the evaluation process.  However, ICANN projects that the first new gTLD registries should be up and running later this year.  Brand owners who want to take advantage of the preventive protection offered by the Clearinghouse would therefore do well to register their information as soon as possible.

A controversial bill to amend the Charter of the French Language by the Quebec’s Parti Quebecois (“Bill 14”), has entered general consultations and public hearings. During March and April of 2013 interested parties and individuals may raise points of interest and relevant concerns. (To read more about our analysis about Bill 14, see our related post on this topic.) Various individuals and organizations have undergone this process in parallel through the media and other sources.

One such organization is the Conseil Québécois du Commerce de Détail (“CQCD”), whose mission is to represent, promote and enhance the image of the retail sector in Quebec and to develop ways to foster the advancement of its members.[1] On April 16, 2013, CQCD issued a press release[2] setting out its concerns with respect to Bill 14.

In particular, the CQCD expressed concern regarding:

1. Bill 14’s promotion of recourse to the judicial system, thereby bringing an end to the dialogue between businesses and the Office québécoise de la langue française (“OQLF”);
2. Bill 14’s use of coercive measures, as demonstrated in granting the OQLF the power to investigate without specific guidelines; and
3. Bill 14’s increase in regulatory and administrative burdens on businesses.

Despite these critizisms, the CQCD affirms the Quebec provincial government’s goal to promote the use of French in the work place and as such, proposes certain solutions to soften the measures proposed in Bill 14.

Suggested solutions include:

1. Offering businesses the necessary tools and environment to make the transition successful; and
2. Providing easy access to relevant information with respect to the rules businesses may be subject to.

These proposals offer a middle ground through facilitating businesses in protecting the French language. Further, softer policies will promote support for the Bill and higher compliance with its requirements. At present, CQCD’s press release is indicative of the criticisms shared by many members of the business community. Given the minority status of the current Quebec provincial government, the proposed amendments may not survive in their current form. Ideally, changes will result from the present consultations resulting in a Bill which reflects the needs and goals of all involved.

On February 25, 2013 the CRTC staff held an informal consultation with industry and consumer groups following the October 2012 release of CRTC’s guidelines regarding the interpretation of its CASL regulations (the “Consultation”) (To read a more detailed analysis of the Guidelines issued by the CRTC, see our related post on this topic).  On April 3, 2013, the CRTC published a brief report describing the discussions that took place during the Consultations.

The objective of the Consultation “was to facilitate a focused conversation and gather useful information regarding issues that businesses and consumer groups foresee when CASL comes into force.” The discussions focused on six topics, each of which is listed below together with a brief summary.

The report summarizes the concerns raised by participants, but does not provide solutions or concrete responses to any of the issues raised. It does, however, set out two “key conclusions”: (1) “there is no one-size-fits all answer that will assist every business in complying with CASL, as context is critical to an appropriate interpretation in the circumstances of each case”; and (2) businesses “require assistance in the form of greater clarity on certain provisions of CASL, and that the CRTC consider providing a framework of guiding principles to underpin compliance expectations.”

These key conclusions together with the discussion of issues at the Consultation will “serve to inform future compliance and communications materials for the purpose of assisting business in complying with the legislation and empowering consumers to protect themselves.”

Topics of Discussion at the Consultation:

• Means of obtaining “express” consent:

Participants discussed the need for additional clarity on a number of issues concerning the procurement of express consent, including: (1) whether or not express consent could be inferred from circumstances such as leaving a business card, or whether there must be a clear statement of express consent; and (2) whether express consent could validly be obtained by having a consumer sign or electronically submit a user agreement.

• Proof of consent:

Participants discussed the need for clarity on what would be considered adequate proof of consent.  The examples provided in the guidelines were considered by many to be too narrow and limited in their scope of relevance.

• Section 66 of CASL and the three-year transitional period:

Participants discussed the need for additional clarity regarding consent obtained prior to the coming-into-force of CASL and the extent to which such consent need conform to the CASL’s requirements.

• Obtaining consent to send a commercial electronic message (CEM) – seeking consent for affiliates:

Participants raised a number of concerns with the requirement to identify people on whose behalf CEM’s might be sent. Particularly the need for both context and the consumer’s “reasonable expectations” to play a role in the application of this requirement.

• Prescribed information in a CEM – “on behalf of”:

Participants discussed a number of issues in determining when the “on behalf of” provisions of CASL would apply.  Specifically, discussion centered around four sub-topics that highlight the material impact of the ambiguity in these sections in specific cases, including: (1) Email Service Providers; (2) Direct Marketing; (3) Gift Subscriptions; and (4) the Unsubscribe Mechanism.

• Installation of computer programs:

Participants discussed numerous and varied concerns with the impact of CASL’s provisions regarding the installation of computer programs. Specifically, concerns were raised regarding: (1) the point in time at which express consent would be required; (2) the impact of the subject provisions on the installation of software updates, and which types of updates could be considered part of the original consent; (3) what types of consent would be required during computer repair (i.e. would a technician need to procure consent to add or remove programs in the process of repair); (4) how to assess and apportion liability, especially in the application marketplace for mobile phones and tablet computers; and (5) how the due diligence defense will apply in the context of a private right of action.

CASL is expected to come into force in late 2013 or early 2014.  There are two sets of regulations accompanying the act, one published by the CRTC, and the other published by Industry Canada.  The final CRTC Regulations were published in March 2012. The draft Industry Canada regulations were published in January of 2013, and were subject to a 30 day public comments period (To read a more detailed discussion of the 30 day public comment period, see our related post on this topic).  The Industry Canada regulations are expected to be finalized within a matter of months and will be followed soon after by a final date for CASL’s coming-into-force.

The recent “Pastagate” story has brought Quebec’s language laws to international attention. In that matter, a Montreal Italian restaurant was investigated due to a complaint alleging the prominence of Italian words including “pasta” on its menu. In light of these events, it is timely to review Bill 14 entitled “An Act to amend the Charter of the French language, the Charter of the human rights and freedoms and other legislative provisions” (“Bill 14”) which, if adopted, will have far greater effects on common business practice in Quebec.

Bill 14 was introduced by the Quebec’s Parti Quebecois on December 5, 2012 in the provincial legislature, arriving in the wake of recent debates of the Quebec government with respect to preservation of the French language, including in relation to the use of French on public signs. Among other amendments, Bill 14 proposes to amend the Charter of the French Language (Quebec) (the “Charter”) by reinforcing certain rights of workers and consumers to work, be served and informed in French. It also affirms that the French language constitutes the foundation of Québec’s identity.

If Bill 14 becomes law, it will affect businesses in at least three significant ways: first, through creating new Francization obligations applicable to previously exempt businesses; second, by expanding employers’ obligations to use French in the workplace; and third, by expanding businesses’ obligations regarding consumers’ right to be informed and served in French. Each of these will be discussed in turn.

1.            New Francization Obligations for Employers with 26-49 Employees

Currently, employers with more than 50 Quebec-based employees are subject to “Francization requirements.” Specifically, the employer must register, obtain, and maintain a certificate from the Office de la langue française (“OQLF”) demonstrating that the use of French is generalized at all levels of the enterprise.

Bill 14 proposes to extend certain Francization requirements to employers with 26 to 49 Quebec-based employees. For determination of inclusion in this category, an employer is deemed to have 26 to 49 employees if 26 or more Quebec-based employees are maintained for more than 6 months over 2 consecutive years.

This compliance model is based on self-assessment. Namely, employers must adopt measures with the objective of making French the “normal and everyday language of work”. The success of these measures must then be self-assessed.

The considerations and consequences of these changes are numerous. For example, an employer must determine “the list of positions that require knowledge of a language other than French, specif[y] the date of the evaluation and the level of knowledge required for each; the transfer and promotion policy; [and] the use of French in meetings and internal communications.”

Moreover, Bill 14 states that the government may determine a Francization timeframe for enterprises that are subject to its obligations. Bill 14 also allows the OQLF to supervise the Francization process.

2.            The Worker’s Right to Work in French

Bill 14 outlines an employers’ obligations stemming from the workers’ right to work in French. Section 19 of Bill 14 provides that employers must use French in all written communications to staff and employees, employment agreements must be available in French (unless otherwise agreed upon by the parties), and all internal policies or other internal documentation and notices must be available in French. To a certain extent, these amendments represent a codification of commonly adopted interpretations of Section 41 of the Charter.

Currently, the Charter prohibits employers from requiring English fluency (unless the task requires it). Bill 14 maintains this feature, but further requires employers to evaluate and demonstrate strong reasons to necessitate fluency in languages other than French. In considering these reasons, the employer must assess whether other staff members have the linguistic ability required to satisfy the needs of the enterprise.

Moreover, pursuant to new provisions in Bill 14, employers cannot dismiss, lay off, transfer, take reprisals or impose any other sanctions on an employee because such employee does not speak or have knowledge of a language other than French, or because the person has asserted a right arising from the provisions of the Charter.

3.            Customer’s Right to Service in French

Under Bill 14, any enterprise selling goods or services must take reasonable steps to ensure that a customer’s right to be served and informed in French is respected. This provision essentially restates one of the core principles and objectives of the Charter, set out at Section 5.  However, whereas Section 5 is a mere statement of principle, the newly proposed Section 50.8 would be a source of specific legal rights and obligations. Courts have held that certain provisions of the Charter apply to website operators.  Accordingly, if adopted, it is possible that the range of website content that must be provided in to French by website operators that have a place of business in Quebec would increase.

4.            Conclusion

Bill 14 has not yet been adopted. In March 2013, interest groups were asked to present concerns and voice opinions regarding Bill 14 during a general consultation and public hearing. Such presentations are expected to conclude in April. It is difficult to predict the outcome of such debates. Many members of the business community have been quite critical of the proposed amendments. Given the minority status of the current Quebec provincial government, the proposed amendments may not survive in their current form.

Nevertheless, if adopted Bill 14 would have a significant impact on business owners, including those practicing e-commerce. Examples include:

• Certain previously exempt businesses will be required to meet Francization obligations and obtain approval from the OQLF.
• Bill 14 imposes a new obligation for businesses to take reasonable steps to respect consumers’ right to be informed and served in French. This consideration extends to web based content.
• New obligations will be imposed with respect to a worker’s right to work in French.

As has been demonstrated in the “Pastagate” story discussed above, these changes could have real and meaningful consequences for businesses and business owners.