Taming the internet

As the internet becomes central to business life across the globe, Amy-Lynne Williams and Jason Young of Deeth Williams Wall examine the legal issues surrounding its use in Canada.

Canada has one of the highest rates of internet usage in the world. It is no surprise that legal issues involving the internet, such as privacy, consumer protection, online defamation and copyright, have dominated headlines and legal minds across the country this year.

Privacy

Like the European Union, Canada has one of the most comprehensive privacy protection regimes in the world. This protection has been extended even more in 2005.

For example, this year British Columbia amended its privacy laws to make it more difficult for US-related companies to disclose or transfer personal information across borders. The effect of this amendment is to limit the ability of US officials, acting under the authority of the USA PATRIOT Act, to gain access to Canadians’ personal information in the hands of US-related companies. Violators can be subject to heavy fines and criminal penalties. The federal government and other provinces may soon consider similar amendments.

This amendment raises interesting issues both for Canadian subsidiaries of US companies who collect personal information and for Canadian companies who outsource to US companies.

Consumer protection

Most Canadian provinces have enacted internet-related consumer-protection regulations to govern online sales contracts. These regulations are aimed at providing greater certainty to online consumers. By way of example, Ontario e-merchants are now prohibited from making ‘material changes’ to sale provisions without prior notice to their customers.

Online defamation

Canadian courts have found online defamation to be more damaging than other forms of defamation, such as print. The courts believe that online defamatory statements are often more readily available, anonymous and permanent. Therefore, this form of defamation is more likely to attract punitive damages.

Copyright

The year 2005 has seen Canadian copyright law hotly debated, as courts and government struggle to keep up with the rapid changes in technology. One clear example is the internet.

The internet is widely used to freely download and share music. This has led many players in the music industry to allege copyright infringement. One issue emerges time and again – who should be held liable for this purportedly infringing conduct, the intermediaries (internet service providers) or the end users (subscribers)?

The Supreme Court of Canada recently answered this question in two separate decisions. In SOCAN v. Canadian Association of Internet Providers, the Court held that internet intermediaries who only act as the ‘conduit of communication’ will not be liable for the actions of their subscribers. The Court reached a similar conclusion in CCH Canadian Ltd. v. Law Society of Upper Canada. There, the Court found that a person is not liable for copyright infringement simply by allowing others to use equipment, such as file-sharing software, that can be used to infringe copyright.

These decisions effectively dashed the hopes of music licensing collectives to levy tariffs against intermediaries for music downloaded by their subscribers. Despite this setback, this has not halted music industry attempts to capture lost revenues.

For example, the music industry attempted to have consumers pay a tariff on digital audio recording devices, such as Apple’s iPod device. They argued that these devices are similar to blank audio cassettes and CD-Rs as they can be used to copy music for personal use. They argued then that such devices should therefore be subject to a ‘private copying levy’. The Federal Court of Appeal disagreed. In Canadian Private Copying Collective v. Canadian Storage Media Alliance, the Court ruled that it had never been Parliament’s intent to make the levy applicable to devices.

Against this backdrop, the Canadian government tabled a bill late this year to amend the Copyright Act. If passed, this bill will represent the most sweeping amendments to Canadian copyright law in two decades. To highlight just two proposed amendments, the bill introduces a requirement for internet service providers to forward written allegations of infringement from claimants to their allegedly infringing subscribers. 2It also introduces penalties for those who try to ‘break’ digitally-encrypted content, such as e-books. These amendments seem aimed at bringing greater clarity to business on and over the internet.